<PAGE>   1
                                                                   Exhibit 10.13


                   STANDARD NNN LEASE -- MULTI-TENANT PROPERTY



                               W I T N E S S E T H


This lease ("LEASE") is entered into by and between Limar Realty Corp. #13, a
California corporation ("LANDLORD") and Arena Pharmaceuticals, Inc., a Delaware
corporation ("TENANT"). For and in consideration of the payment of rents and the
performance of the covenants herein set forth by Tenant, Landlord does lease to
Tenant and Tenant accepts the Premises described below subject to the agreements
herein contained.

1.       BASIC LEASE TERMS

         a.       DATE OF LEASE:               May 4, 2000

         b.       TENANT:                      Arena Pharmaceuticals, Inc.

                  Address (of the Premises):   6138 and 6150 Nancy Ridge Drive,
                                               San Diego, CA

                  Address (for Notices):       6166 Nancy Ridge Drive,
                                               San Diego, CA

         c.       LANDLORD:                    Limar Realty Corp. #13

                  Address (for Notices):       1730 South El Camino Real,
                                               Suite 400
                                               San Mateo, California 94402
                                               Attn: Thomas A. Numainville

         d.       TENANT'S USE OF PREMISES:    Life Science research,
                                               manufacturing and  general office
                                               ("PERMITTED USE").

         e.       PREMISES:                    The Premises consist of the
                                               Ground Floor and the Second Floor
                                               and all lobbies, corridors and
                                               restrooms contained therein
                                               comprising the buildings commonly
                                               known as 6138 and 6150 Nancy
                                               Ridge Drive (the "BUILDINGS") as
                                               set forth in Exhibit A. The
                                               Premises also include the
                                               non-exclusive right to use the
                                               Common Areas of the Property.

         f.       PREMISES AREA:               1) INITIAL PREMISES -
                                                  6150 Nancy Ridge Drive -
                                                  26,324 Rentable Square Feet

                                               2) EXPANSION PREMISES -
                                                  6138 Nancy Ridge Drive -
                                                  26,324 Rentable Square Feet

         g.       PROPERTY:                    The buildings located at 6138 -
                                               6150 Nancy Ridge Drive,
                                               San Diego, California, the land
                                               on which the buildings sit (the
                                               "LAND") and all appurtenant
                                               structures and improvements
                                               including the parking lot, the
                                               Common Areas and all other
                                               driveways, sidewalks, entryways,
                                               patios and landscaping as set
                                               forth in Exhibit B.

         h.       INSURING PARTY:              Landlord is the "INSURING PARTY"
                                               unless otherwise stated herein.

         i.       TERM (inclusive):            Commencement Dates:  See P.30.
                                               ("COMMENCEMENT DATES")

                                               Expiration Date:  April 30, 2013
                                               ("EXPIRATION DATE")

         j.       TENANT'S SHARE OF PROPERTY:
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                 1) Initial Premises - 50% (26,324 sq. ft. / 52,648 sq. ft.)

                 2) Expansion Premises  -  50% (26,324 sq. ft. / 52,648 sq. ft.)
                                          ----
                                          100%
                                          ====

k.       TENANT'S NUMBER OF NON-RESERVED PARKING SPACES:

                 1) Initial Premises: 85 spaces

                 2) Expansion Premises: 85 spaces

l.       INITIAL BASE RENT:

                 1) Initial Premises: Twenty One Thousand Fifty Nine and 20/100
                    Dollars ($21,059.20) per month.

                 2) Expansion Premises:

                    a)   If Expansion Premises Commencement Date occurs prior to
                         September 1, 2001, the Initial Base Rent for the
                         Expansion Premises shall be $21,059.20 through August
                         31, 2001, and thereafter in accordance with P.1.m.
                         below.

                    b)   If Expansion Premises Commencement Date occurs on or
                         after September 1, 2001, the Initial Monthly Base Rent
                         shall be in accordance with P.1.m. below.

m.       BASE RENT ADJUSTMENT:

         The step adjustment provisions of P.4.b. apply for the periods
         shown below:

<TABLE>
<CAPTION>
                                                Monthly Base Rent
          Periods (inclusive)     Initial Premises         Expansion Premises
         ---------------------    -------------------------------------------
<S>                               <C>                      <C>
         9/1/2001 -- 8/31/2002       $21,690.98                 $21,690.98*
         9/1/2002 -- 8/31/2003       $22,341.71                 $22,341.71
         9/1/2003 -- 8/31/2004       $23,011.96                 $23,011.96
         9/1/2004 -- 8/31/2005       $23,702.32                 $23,702.32
         9/1/2005 -- 8/31/2006       $24,413.38                 $24,413.38
         9/1/2006 -- 8/31/2007       $25,145.79                 $25,145.79
         9/1/2007 -- 8/31/2008       $25,900.16                 $25,900.16
         9/1/2008 -- 8/31/2009       $26,677.16                 $26,677.16
         9/1/2009 -- 8/31/2010       $27,477.48                 $27,477.48
         9/1/2010 -- 8/31/2011       $28,301.80                 $28,301.80
         9/1/2011 -- 8/31/2012       $29,150.86                 $29,150.86
         9/1/2012 -- 4/30/2013       $30,025.38                 $30,025.38
</TABLE>

         *The timing of the commencement of monthly Base Rent for the Expansion
         Premises shall occur in accordance with the provisions of P.30.b.
         below.
<PAGE>   3
         n.       TOTAL TERM BASE RENT (assuming an exact 152 month Lease Term
                  for the Initial Premises and an exact 136 month Lease Term for
                  the Expansion Premises): $7,313,878.96.

         o.       PREPAID BASE RENT:      $42,118.40

         p.       SECURITY DEPOSIT:       $758,131.20 (subject to reduction as
                                          set forth in P.6. hereof)

         q.       BROKER(S):              CB Richard Ellis (Tenant) and Voit
                                          Commercial Brokerage (Landlord)

         r.                               EXHIBITS: Exhibits lettered "A"
                                          through "D" are attached hereto and
                                          made a part hereof.

2.       PREMISES, PARKING AND COMMON AREAS

         a.       PREMISES. The Premises as described in P.1. and Exhibit A, are
                  a portion of the Buildings, herein sometimes referred to as
                  the "BUILDINGS" identified in P.1. The Premises, the
                  Buildings, the Common Areas, the land upon which the same are
                  located, along with all other buildings and improvements
                  thereon or thereunder, are herein collectively referred to as
                  the "PROPERTY" as described in P.1. and Exhibit B. Landlord
                  hereby leases to Tenant and Tenant leases from Landlord for
                  the Term (as defined below), at the rental, and upon all of
                  the conditions set forth herein, the real property referred to
                  in the Basic Lease Terms, P.1. as the "PREMISEs", including
                  rights to the Common Areas as hereinafter specified. The
                  Initial Premises and Expansion Premises as set forth herein
                  shall collectively be known as the "PREMISES". Subject to any
                  additional work Landlord has agreed herein to do, Tenant
                  hereby accepts the Premises in their condition existing as of
                  the date of the execution hereof, subject to all applicable
                  zoning, municipal, county and state laws, ordinances and
                  regulations governing and regulating the use of the Premises,
                  and accepts this Lease subject thereto and to all matters
                  disclosed thereby and by any exhibits attached hereto. Tenant
                  agrees with the square footage specified for the Premises in
                  P.1. and will not hereafter challenge such determination and
                  agreement. The rental payable by Tenant pursuant to this Lease
                  is not subject to revision in the event of any discrepancy in
                  the rentable square footage for the Premises.

         b.       VEHICLE PARKING. So long as Tenant is not in default, and
                  subject to the Rules and Regulations attached hereto as
                  Exhibit C, and as reasonably established by Landlord from time
                  to time, Tenant shall be entitled to use the number of parking
                  spaces set forth in P.1. If Tenant commits, permits or allows
                  any of the prohibited activities described in the Lease or the
                  Rules and Regulations then in effect, then Landlord shall have
                  the right, without notice, in addition to such other rights
                  and remedies that it may have, to remove or tow away the
                  vehicle involved and charge the cost to Tenant, which cost
                  shall be immediately payable upon demand by Landlord.

         c.       COMMON AREAS -- DEFINITION. The term "COMMON AREAS" is defined
                  as all areas and facilities outside the Premises and within
                  the exterior boundary line of the Property that are provided
                  and designated by the Landlord from time to time for the
                  general non-exclusive use of Landlord, Tenant and of other
                  tenants of the Property and their respective employees,
                  suppliers, shippers, customers and invitees, including but not
                  limited to common entrances, lobbies, corridors, stairways and
                  stairwells, public restrooms, elevators, parking areas to the
                  extent not otherwise prohibited by this Lease, loading and
                  unloading areas, trash areas, roadways, sidewalks, walkways,
                  parkways, ramps, driveways, landscaped areas and decorative
                  walls.

         d.       COMMON AREAS -- RULES AND REGULATIONS. Tenant agrees to abide
                  by and conform to the Rules and Regulations attached hereto as
                  Exhibit C with respect to the Property and Common Areas, and
                  to cause its employees, suppliers, shippers, customers and
                  invitees to so abide and conform. Landlord, or such other
                  person(s) as Landlord may appoint, shall have the exclusive
                  control and management of the Common Areas and shall have the
                  right, from time to time, to reasonably modify, amend and
                  enforce said rules and regulations, provided that any such
                  modifications or amendments shall not materially interfere
                  with Tenant's Permitted Use of the Premises, and further
                  provided that none of the Rules and Regulations shall be
                  enforced so as to materially abrogate or impair any right or
                  privilege expressly granted to Tenant in this Lease. Landlord
                  shall not be responsible to Tenant for the non-compliance with
                  said rules and regulations by other tenants, their agents,
                  employees and invitees.
<PAGE>   4
         e.       BUILDINGS AND COMMON AREAS -- CHANGES. Landlord shall have the
                  right, in Landlord's reasonable discretion, from time to time:

                  1)       To make changes to the Buildings interior and
                           exterior and Common Areas, including, without
                           limitation, changes in the location, size, shape,
                           number and appearance thereof, including but not
                           limited to the lobbies, windows, stairways, air
                           shafts, elevators, restrooms, driveways, entrances,
                           parking spaces, parking areas, loading and unloading
                           areas, ingress, egress, direction of traffic,
                           decorative walls, landscaped areas and walkways so
                           long as Tenant's use and occupancy is not
                           unreasonably impaired thereby;

                  2)       To close temporarily any of the Common Areas for
                           maintenance purposes so long as reasonable access to
                           the Premises remains available;

                  3)       To designate other land and improvements outside the
                           boundaries of the Property to be a part of the Common
                           Areas, provided that such other land and improvements
                           have a reasonable and functional relationship to the
                           Property;

                  4)       To add additional buildings and improvements to the
                           Common Areas, so long as such addition does not
                           materially impair Tenant's access to or use and
                           occupancy of the Premises;

                  5)       To use the Common Areas while engaged in making
                           additional improvements, repairs or alterations to
                           the Property or any portion thereof, so long as such
                           use does not materially impair Tenant's quiet
                           enjoyment of the Premises; and

                  6)       To do and perform such other acts and make such other
                           changes in, to or with respect to the Common Areas
                           and Property as Landlord may, in the exercise of
                           sound business judgment deem to be appropriate so
                           long as Tenant's access to or use, occupancy and
                           quiet enjoyment of the Premises is not unreasonably
                           impaired thereby.

         f.       ACCEPTANCE; QUIET ENJOYMENT. Landlord represents that it is
                  the fee simple owner of the Premises and has full right and
                  authority to make this Lease. Landlord hereby leases the
                  Premises to Tenant and Tenant hereby accepts the same from
                  Landlord, in accordance with the provisions of this Lease.
                  Landlord covenants that Tenant shall have peaceful and quiet
                  enjoyment of the Premises during the Term (as defined below)
                  of this Lease. Tenant covenants that it will not interfere
                  with other tenants' quiet enjoyment of their premises.

3.       TERM. The term ("TERM") of this Lease is for the period that commences
         at 12:01 a.m. on the Commencement Date and expires at 11:59 p.m. on the
         Expiration Date. If Landlord, for any reason, cannot deliver possession
         of the Premises to Tenant on or before the Commencement Date, this
         Lease shall not be void or voidable, nor shall Landlord be liable to
         Tenant for any loss or damage resulting from such delay. In that event,
         however, there shall be an abatement of Rent (as defined below)
         covering the period between the Commencement Date and the date when
         Landlord delivers possession to Tenant, all other terms and conditions
         of this Lease shall remain in full force and effect. If a delay in
         possession is caused by Tenant's failure to perform any obligation in
         accordance with this Lease, the Term shall commence as of the
         Commencement Date, and there shall be no reduction of Rent between the
         Commencement Date and the time Tenant takes possession.

4.       RENT

         a.       BASE RENT. Tenant shall pay Landlord in lawful money of the
                  United States, without notice, demand, offset or deduction,
                  rent in the amount(s) set forth in P.1. which shall be payable
                  in advance on the first day of each and every calendar month
                  ("BASE RENT") provided, however, the first month's Base Rent
                  is due and payable upon execution of this Lease. Unless
                  otherwise specified in writing by Landlord, all installments
                  of Base Rent shall be payable to Limar Realty Corp. #13,
                  Department #44294, P.O. Box 44000, San Francisco, California
                  94144-4294. Base Rent for any partial month at the beginning
                  or end of this Lease will be prorated in accordance with the
                  number of days in the subject month.
<PAGE>   5
                  For purposes of Section 467 of the Internal Revenue Code, the
                  parties to this Lease hereby agree to allocate the stated Base
                  Rent provided herein to the periods which correspond to the
                  actual Base Rent payments as provided under the terms and
                  conditions of this Agreement.

         b.       STEP INCREASE. The Base Rent shall be increased periodically
                  to the amounts and at the times set forth in P.1.

         c.       RENT WITHOUT OFFSET AND LATE CHARGE. All Rent shall be paid
                  without prior demand or notice and without any deduction or
                  offset whatsoever. All Rent shall be paid in lawful currency
                  of the United States of America. Tenant acknowledges that late
                  payment by Tenant to Landlord of any Rent will cause Landlord
                  to incur costs not contemplated by this Lease, the exact
                  amount of such cost being extremely difficult and
                  impracticable to ascertain. Such costs include, without
                  limitation, processing and accounting charges and late charges
                  that may be imposed on Landlord by the terms of any
                  encumbrance or note secured by the Premises. Therefor, if any
                  Rent is not received by Landlord within five (5) days of its
                  due date, Tenant shall pay to Landlord a late charge equal to
                  six percent (6%) of such overdue payment. Landlord and Tenant
                  hereby agree that such late charge represents a fair and
                  reasonable estimate of the costs that Landlord will incur by
                  reason of any such late payment and that the late charge is in
                  addition to any and all remedies available to the Landlord and
                  that the assessment and/or collection of the late charge shall
                  not be deemed a waiver of any other default. Additionally, all
                  such delinquent Rent or other sums, plus this late charge,
                  shall bear interest from the due date thereof at the lesser of
                  ten percent (10%) per annum or the maximum legal interest rate
                  permitted by law. Any payments of any kind returned for
                  insufficient funds will be subject to an additional handling
                  charge of $25.00, and thereafter for the remainder of the Term
                  hereof, Landlord may require Tenant to pay all future payments
                  of Rent or other sums due by cashier's check.

         d.       PREPAID BASE RENT. Upon the execution of this Lease, Tenant
                  shall pay to Landlord the Prepaid Base Rent set forth in P.1.,
                  and such Prepaid Base Rent shall be applied toward the Base
                  Rent due for the first month of the Term for which Base Rent
                  is due. Landlord shall be entitled to immediately endorse and
                  cash Tenant's Prepaid Base Rent.

         e.       RENT. The term "RENT" as used in this Lease shall refer to
                  Base Rent, Prepaid Base Rent, Real Property Taxes, Operating
                  Expenses, Insurance Costs, repairs and maintenance costs,
                  utilities, late charges and other similar charges payable by
                  Tenant pursuant to this Lease either directly to Landlord or
                  otherwise.

5.       OPERATING EXPENSES.

         a.       PAYMENT BY TENANT. During the Term of this Lease, Tenant shall
                  pay to Landlord, as additional Rent, on a monthly basis
                  Tenant's Share of the Operating Expenses. To the extent that
                  Operating Expenses are accounted for on a building by building
                  basis, the Tenant's Share of Building shall apply. To the
                  extent that Operating Expenses are accounted for on an overall
                  Property basis, then Tenant's Share of Property shall apply.

         b.       OPERATING EXPENSES. The term "OPERATING EXPENSES" shall mean
                  all expenses, costs and disbursements (not specifically
                  excluded from the definition of Operating Expenses below) of
                  every kind and nature which Landlord shall pay or become
                  obligated to pay because of or in connection with the
                  ownership, maintenance, repair and operation of the Property
                  or any portion thereof (including all Buildings and Common
                  Areas of the Property). Landlord's allocation to Operating
                  Expenses of any cost or expense incurred for the Property in
                  common with other property or activity shall be conclusive, so
                  long as such allocation is made on a reasonable basis.
                  Operating Expenses shall include, but not be limited to, the
                  following:

                  1)       Wages and salaries of all employees engaged in the
                           operation, maintenance and security of the Property,
                           including taxes, insurance and benefits relating
                           thereto, allocated in the case of employees whose
                           duties do not exclusively concern the Property to
                           reflect the proportion of working time devoted to the
                           Property; and the rental cost and overhead of any
                           office and storage space used to provide such
                           services.
<PAGE>   6
                  2)       All supplies and materials used in the operation,
                           repair or maintenance of the Property.

                  3)       Cost of all utilities, including surcharges, for the
                           Property, including the cost of water, power and
                           lighting which are not separately billed to and paid
                           for by Tenant.

                  4)       Cost of all maintenance and service agreements for
                           the Property and the equipment thereon, including but
                           not limited to, security services, exterior window
                           cleaning, janitorial service, engineers, gardeners
                           and trash removal services.

                  5)       All Insurance Costs, as such term is defined in P.16.

                  6)       Cost of all repairs and general maintenance
                           (excluding repairs and general maintenance paid by
                           proceeds of insurance or by Tenant or other third
                           parties, and alterations attributable solely to the
                           other tenants of the Property).

                  7)       A management fee for the property management of the
                           Property in a stipulated amount equal to three
                           percent (3%) of the total Rent.

                  8)       The costs of any additional services not provided to
                           the Property at the Commencement Date but thereafter
                           provided by Landlord in its management of the
                           Property.

                  9)       The cost of any capital improvements to the Property
                           or any part thereof which are made during the Term
                           hereof with such cost to be amortized over the useful
                           life of the improvement as reasonably determined by
                           Landlord.

                  10)      Real Property Taxes, as that term is defined in P.11.

                  11)      Assessments, dues and other amounts payable pursuant
                           to the CC&R's described in P.7.c.

                  12)      All costs billed by the Sorrento Ridge Business Park
                           Owner's Association ("SORRENTO RIDGE ASSOCIATION")
                           including without limitation the cost of any common
                           area maintenance provided by the Sorrento Ridge
                           Association.

         c.       OPERATING EXPENSES SHALL NOT INCLUDE:

                  1)       Costs paid for directly by Tenant or other tenants;

                  2)       Costs incurred in connection with the financing, sale
                           or acquisition of the Property or any portion
                           thereof;

                  3)       Costs incurred in leasing or procuring tenants
                           (including without limitation, lease commissions,
                           advertising expenses, attorneys' fees and expenses of
                           renovating space for tenants);

                  4)       Executive salaries of off-site personnel employed by
                           Landlord except for the charge (or pro rata share) of
                           the property manager of the Property;

                  5)       Subject to the provisions of P.5.b.9) above,
                           depreciation on the Buildings or other improvements
                           on the Property;

                  6)       Legal expenses for disputes with tenants and any
                           other professional fees of attorneys, auditors or
                           consultants not incurred in connection with the
                           normal maintenance and operation of the Property;

                  7)       Expenses which relate to the preparation of rental
                           space for tenants, including without limitation
                           building permit, license and inspection costs
                           incurred with respect to the installation or
                           improvements made for occupants of the Property or
                           incurred in renovating or otherwise
<PAGE>   7
                           improving, decorating, painting or decorating vacant
                           tenant space for the Property or other occupants of
                           the Property;

                  8)       Costs incurred that are reimbursed by tenants of the
                           Property, including Tenant, or third parties,
                           including insurers;

                  9)       Expenses for repair or replacement covered by
                           warranties, and any costs due to casualty that are
                           covered by insurance carried by Landlord;

                  10)      Rentals and other payments by Landlord under any
                           ground lease or other lease underlying the Lease, and
                           interest, principal, points and other fees on debt or
                           amortization of any debt secured in whole or part by
                           all or any portion of the Property;

                  11)      Repairs or replacements caused by Landlord's gross
                           negligence or the gross negligence of Landlord's
                           employees or agents;

                  12)      Net income, franchise, capital stock, estate or
                           inheritance taxes or taxes which are the personal
                           obligation of Landlord or another tenant of the
                           Property;

                  13)      Landlord's charitable or political contributions;

                  14)      Payments to subsidiaries and affiliates of Landlord
                           for services to the Property for supplies or other
                           materials to the extent that the cost of such
                           services, supplies or materials exceed the cost which
                           would have been paid had the services, supplies or
                           materials been provided by unaffiliated parties on a
                           competitive basis (provided, however, any fee for
                           management services paid to an affiliate of Landlord
                           shall be in the amount set forth in P.5.b.7);

                  15)      Any compensation paid to clerks, attendants or other
                           persons in commercial concessions operated by
                           Landlord;

                  16)      Advertising and promotional expenditures;

                  17)      Costs or repairs and other work occasioned by fire,
                           windstorm or other casualty of an insurable nature to
                           the extent covered by insurance (or to the extent the
                           casualty would have been insured but for a failure by
                           Landlord to obtain the insurance required by this
                           Lease);

                  18)      Costs for sculpture, paintings or other objects of
                           art other than for normal and customary lobby
                           furnishings (nor insurance thereon or extraordinary
                           security in connection therewith); or

                  19)      The cost of any item for administration and
                           management of the entity which constitutes Landlord
                           (as distinguished from costs of administration and
                           managing the Property), including costs of preparing
                           Landlord's financial statements (as opposed to
                           financial statements and reports for the Property)
                           and income tax returns, of disputes between Landlord
                           and its employees (if any), and of maintaining
                           Landlord's corporate, partnership or other entity
                           status.

         d.       EXTRAORDINARY SERVICES. Tenant shall pay within ten (10) days
                  of receipt of an invoice from Landlord the cost of additional
                  or extraordinary services provided to Tenant at Tenant's
                  request and not paid or payable by Tenant pursuant to other
                  provisions of this Lease.

         e.       IMPOUND. Landlord reserves the right, at Landlord's option, to
                  estimate the annual cost of Operating Expenses performed by
                  Landlord ("PROJECTED OPERATING EXPENSES") and to require same
                  to be paid in advance. Tenant shall pay to Landlord, monthly
                  in advance as additional Rent, one-twelfth (1/12) of the
                  Projected Operating Expenses.

         f.       ADJUSTMENT.
<PAGE>   8
                  1)       ACCOUNTING. Within ninety (90) days (or as soon
                           thereafter as possible) after the close of each
                           calendar year or portion thereof of occupancy,
                           Landlord shall provide Tenant a statement of such
                           year's actual Operating Expenses compared to the
                           Projected Operating Expenses. If the actual Operating
                           Expenses are more than the Projected Operating
                           Expenses then Tenant shall pay Landlord, within ten
                           (10) business days of receipt of a bill therefor, the
                           difference. If the actual Operating Expenses are less
                           than the Projected Operating Expenses, then Tenant
                           shall receive a credit against future Operating
                           Expenses payments equal to the difference; provided,
                           that in the case of an overpayment for the final
                           lease year of the Term, Landlord shall credit the
                           difference against any sums due from Tenant to
                           Landlord in accordance with the terms of this Lease;
                           and if no sums are due and unpaid, shall promptly
                           refund the net amount to Tenant.

                  2)       TENANT'S RIGHT TO AUDIT. Within sixty (60) days after
                           receipt of Landlord's statement setting forth actual
                           Operating Expenses (the "STATEMENT"), Tenant shall
                           have the right to audit at Landlord's local offices,
                           at Tenant's expense, Landlord's accounts and records
                           relating to Operating Expenses. Such audit shall be
                           conducted by a certified public accountant approved
                           by Landlord, which approval shall not be unreasonably
                           withheld. If such audit reveals that Landlord has
                           overcharged Tenant, the amount overcharged shall be
                           paid to Tenant within thirty (30) days after the
                           audit is concluded. If such audit reveals that
                           Landlord has undercharged Tenant, the amount of
                           undercharge shall be paid by Tenant to Landlord
                           within 30 days after the audit is conducted. In
                           addition, if the Statement exceeds the actual
                           Operating Expenses which should have been charged to
                           Tenant by more than six percent (6%), the cost of the
                           audit shall be paid by Landlord.

                  3)       PRORATION. Tenant's liability to pay Operating
                           Expenses shall be prorated on the basis of a 365 (or
                           366, as the case may be) day year to account for any
                           fractional portion of a year included at the
                           commencement or expiration of the Term of this Lease.

                  4)       SURVIVAL. Landlord and Tenant's obligations to pay
                           for or credit any increase or decrease in payments
                           pursuant to this P.5. shall survive this Lease.

         g.       FAILURE TO PAY. Failure of Tenant to pay any of the charges
                  required to be paid under this P.5. shall constitute a
                  material default and breach of this Lease and Landlord's
                  remedies shall be as specified in P.21.

6.       SECURITY DEPOSIT. Upon execution of this Lease, Tenant shall deposit a
         security deposit ("SECURITY DEPOSIT") in the amount set forth in P.1.
         with Landlord in the form of an irrevocable Letter of Credit issued by
         Silicon Valley Bank or other Bank reasonably acceptable to Landlord
         which Letter of Credit shall be in form customarily issued by the Bank
         and reasonably acceptable to Landlord. If Tenant is in default beyond
         applicable notice and cure periods, Landlord can (but without any
         requirement to do so) use the Security Deposit or any portion of it to
         cure the default or to compensate Landlord for any damages sustained by
         Landlord resulting from Tenant's default. Upon demand, Tenant shall
         immediately restore the Security Deposit to its full amount. In no
         event will Tenant have the right to apply any part of the Security
         Deposit to any Rent due under this Lease. Landlord's obligations with
         respect to the Security Deposit are those of a debtor and not a
         trustee, and Landlord can commingle the Security Deposit with
         Landlord's general funds. Landlord shall not be required to pay Tenant
         interest on the Security Deposit. Each time the Base Rent is increased,
         Tenant shall either deposit additional funds with Landlord or increase
         the Letter of Credit sufficient to increase the Security Deposit to an
         amount which bears the same relationship to the Base Rent as the
         initial Security Deposit bore to the initial Base Rent. If Tenant is
         not in default at the expiration or termination of this Lease and has
         fully complied with the provisions of P.9., P.13.d.6) and P.26.,
         Landlord shall authorize cancellation of the Security Deposit by
         Tenant. Notwithstanding the provisions of this P.6., upon written
         request by Tenant given anytime after August 31, 2002 and provided that
         Tenant has not been in default under the Lease beyond any applicable
         cure period, Landlord shall allow Tenant to cancel the Letter of Credit
         and deposit with Landlord a reduced cash Security Deposit equivalent to
         three (3) month's Base Rent.
<PAGE>   9
7.       USE OF PREMISES

         a.       TENANT'S USE. Tenant shall use the Premises solely for the
                  purposes stated in P.1. and for no other purposes without
                  obtaining the prior written consent of Landlord. Tenant
                  acknowledges that neither Landlord nor any agent of Landlord
                  has made any representation or warranty with respect to the
                  Premises or with respect to the suitability of the Premises to
                  the conduct of Tenant's business, nor has Landlord agreed to
                  undertake any modification, alteration or improvement to the
                  Premises, except as provided in writing in this Lease. Tenant
                  shall promptly comply with all laws, statutes, ordinances,
                  orders and governmental regulations now or hereafter existing
                  affecting the Premises. Tenant shall not do or permit anything
                  to be done in or about the Premises or bring or keep anything
                  in the Premises that will in any way increase the premiums
                  paid by Landlord on its insurance related to the Premises.
                  Tenant will not perform any act or carry on any practices that
                  may injure the Premises. Tenant shall not use the Premises for
                  sleeping, washing clothes, or the preparation, manufacture or
                  mixing of anything that emits any noxious odor, or creates
                  excessive noises, vibrations or lights affecting such other
                  tenants. If, in Landlord's reasonable judgment, sound
                  insulation is required to muffle noise produced by Tenant on
                  the Premises, Tenant at its own cost shall provide all
                  necessary insulation. Tenant shall not do anything on the
                  Premises which will overload any existing parking or service
                  to the Premises. Pets and/or animals of any type (other than
                  seeing eye dogs and laboratory animals) shall not be kept on
                  or about the Premises. Tenant covenants that it will not
                  interfere with other tenants' quiet enjoyment of their
                  premises.

         b.       RULES AND REGULATIONS. Tenant shall comply with and use the
                  Premises in accordance with the Rules and Regulations attached
                  hereto as Exhibit C and to any reasonable modifications to
                  such Rules and Regulations as Landlord may adopt from time to
                  time, provided however that if any rule or regulation is in
                  conflict with any term, covenant or condition of this Lease,
                  this Lease shall prevail. In addition, no such rule or
                  regulation, or any subsequent amendment thereto adopted by
                  Landlord, shall in any material way alter, reduce or adversely
                  affect any of Tenant's rights or materially enlarge Tenant's
                  obligations under this Lease.

         c.       CC&R'S. Tenant agrees that this Lease is subject and
                  subordinate to the Covenants, Conditions and Restrictions, a
                  copy of which is attached hereto as Exhibit D, as they may be
                  amended from time --------- to time ("CC&R'S"), and further
                  agrees that the CC&R's are an integral part of this Lease.
                  Throughout the Term or any extension thereof, notwithstanding
                  any other provision hereof, Tenant shall faithfully and timely
                  assume and perform all obligations of Landlord and/or Tenant
                  under the CC&R's and any modifications or amendments thereto,
                  including the payment of any periodic or special dues or
                  assessments against the Premises. Such dues and assessments
                  shall be included within the definition of Operating Expenses
                  pursuant to P.5.b.11), and Tenant shall pay such amounts as
                  further set forth in P.5. Tenant shall hold Landlord, its
                  subsidiaries, shareholders, directors, officers, agents and
                  employees harmless and indemnify Landlord, its subsidiaries,
                  shareholders, directors, officers, agents and employees
                  against any loss, expense and damage, including attorneys'
                  fees and costs, arising out of the failure of Tenant to
                  perform or comply with the CC&R's.

8.       EMISSIONS; STORAGE, USE AND DISPOSAL OF WASTE

         a.       EMISSIONS. Tenant shall not:

                  1)       Knowingly permit any vehicle on the Premises or in
                           the Commons Areas to emit exhaust which is in
                           violation of any governmental law, rule, regulation
                           or requirement;

                  2)       Discharge, emit or permit to be discharged or
                           emitted, any liquid, solid or gaseous matter, or any
                           combination thereof, into the atmosphere or on, into
                           or under the Premises, any building or other
                           improvements of which the Premises are a part, or the
                           ground or any body of water which matter, as
                           reasonably determined by Landlord or any governmental
                           entity to be in violation of law or regulation, and
                           does or may pollute or contaminate the same, or is,
                           or may become, radioactive or does, or may, adversely
                           affect (a) the health or safety of persons, wherever
                           located, whether on the Premises or anywhere else,
                           (b) the condition, use or enjoyment of the Premises
                           or any other real or personal property, whether on
                           the Premises or anywhere else, or (c) the Premises or
                           any
<PAGE>   10
                           of the improvements thereto including buildings,
                           foundations, pipes, utility lines, landscaping or
                           parking areas;

                  3)       Produce, or permit to be produced, any intense glare,
                           light or heat in violation of law or regulations;

                  4)       Create, or permit to be created, any sound pressure
                           level which will interfere with the quiet enjoyment
                           of any real property outside the Premises, or which
                           will create a nuisance or violate any governmental
                           law, rule, regulation or requirement;

                  5)       Create, or permit to be created, any vibration that
                           is discernible outside the Premises; or

                  6)       Transmit, receive or permit to be transmitted or
                           received from or to the Premises, any
                           electromagnetic, microwave or other radiation which
                           is or may be harmful or hazardous to any person or
                           property in, or about the Premises, or anywhere else.
                           Notwithstanding the provisions of this P.8,Tenant may
                           store and use Hazardous Materials in the ordinary
                           course of the Permitted Use, so long as such
                           Hazardous Materials are stored and used only in such
                           quantities as are reasonably incidental to the
                           Permitted Use and in strict compliance with this
                           Lease and all applicable governmental regulations.

         b.       STORAGE AND USE.

                  1)       STORAGE. Subject to the uses permitted and prohibited
                           to Tenant under this Lease, Tenant shall store in
                           appropriate leak proof containers all solid, liquid
                           or gaseous matter, or any combination thereof, which
                           matter, if discharged or emitted into the atmosphere,
                           the ground or any body of water would be in violation
                           of law or regulation and does or may (a) pollute or
                           contaminate the same, or (b) adversely affect the (i)
                           health or safety of persons, whether on the Premises
                           or anywhere else, (ii) condition, use or enjoyment of
                           the Premises or any real or personal property,
                           whether on the Premises or anywhere else, or (iii)
                           Premises. Tenant shall store all Hazardous Materials
                           in compliance with applicable federal, state and
                           local laws, ordinance, rules or regulations
                           (including the conditions of any licenses and permits
                           obtained by Tenant in connection with such use).

                  2)       USE. In addition, without Landlord's prior written
                           consent, Tenant shall not use, store or permit to
                           remain on or about the Premises any solid, liquid or
                           gaseous matter which is, or may become dangerously
                           radioactive. If Landlord does give its consent,
                           Tenant shall store the materials in such a manner
                           that no radioactivity will be detectable outside a
                           designated storage area and Tenant shall use the
                           materials in such a manner that (a) no real or
                           personal property outside the designated storage area
                           shall become contaminated thereby and (b) there are
                           and shall be no adverse effects on the (i) health or
                           safety of persons, whether on the Premises or
                           anywhere else, (ii) condition, use or enjoyment of
                           the Premises or any real or personal property thereon
                           or therein, or (iii) Premises or any of the
                           improvements thereto or thereon. Notwithstanding the
                           foregoing, Tenant may store and use radioactive
                           materials in the ordinary course of the Permitted
                           Use, so long as such radioactive materials are stored
                           and used only in such quantities as are reasonably
                           incidental to the Permitted Use and in strict
                           compliance with applicable federal, state and local
                           laws, ordinances, rules or regulations (including the
                           conditions of Tenant's radioactive materials
                           license).

                  3)       HAZARDOUS MATERIALS. Subject to the uses permitted
                           and prohibited to Tenant under this Lease, Tenant
                           shall store, use, employ, transport and otherwise
                           deal with all Hazardous Materials (as defined below)
                           employed on or about the Premises in accordance with
                           all federal, state, or local law, ordinances, rules
                           or regulations applicable to Hazardous Materials in
                           connection with or respect to the Premises.
<PAGE>   11
         c.       DISPOSAL OF WASTE.

                  1)       REFUSE DISPOSAL. Tenant shall not keep any trash,
                           garbage, waste or other refuse on the Premises except
                           in sanitary containers and shall regularly and
                           frequently remove same from the Premises. Tenant
                           shall keep all incinerators, containers or other
                           equipment used for storage or disposal of such
                           materials in a clean and sanitary condition.

                  2)       SEWAGE DISPOSAL. Tenant shall properly dispose of all
                           sanitary sewage and shall not use the sewage disposal
                           system (a) for the disposal of anything except
                           sanitary sewage or (b) for sewage in amounts in
                           excess of the lesser of: (i) that reasonably
                           contemplated by the uses permitted under this Lease
                           or (ii) that permitted by any governmental entity.
                           Tenant shall keep the sewage disposal system free of
                           all obstructions and in good operating condition.

                  3)       DISPOSAL OF OTHER WASTE. Tenant shall properly
                           dispose of all other waste or other matter delivered
                           to, stored upon, located upon or within, used on, or
                           removed from, the Premises in such a manner that it
                           does not, and will not, violate any law or regulation
                           and adversely affect the (a) health or safety of
                           persons, wherever located, whether on the Premises or
                           elsewhere, (b) condition, use or enjoyment of the
                           Premises or any other real or personal property,
                           wherever located, whether on the Premises or anywhere
                           else, or (c) Premises or any of the improvements
                           thereto or thereon including buildings, foundations,
                           pipes, utility lines, landscaping or parking areas.

         d.       INFORMATION. Tenant shall provide Landlord with any and all
                  information regarding Hazardous Materials in the Premises,
                  including copies of all filings and reports to governmental
                  entities at the time they are originated, and any other
                  information requested by Landlord. In the event of any
                  accident, spill or other incident involving Hazardous
                  Materials, Tenant shall immediately report the same to
                  Landlord and supply Landlord with all information and reports
                  with respect to the same. All information described herein
                  shall be provided to Landlord regardless of any claim by
                  Tenant that it is confidential or privileged.

         e.       COMPLIANCE WITH LAW. Notwithstanding any other provision in
                  this Lease to the contrary, Tenant shall comply with all laws,
                  statutes, ordinances, regulations, rules and other
                  governmental requirements now or hereafter existing in
                  complying with its obligations under this Lease, and in
                  particular, relating to the storage, use and disposal of
                  Hazardous Materials.
<PAGE>   12
         f.       INDEMNITY. Tenant hereby agrees to indemnify, defend and hold
                  Landlord, its agents, employees, lenders, shareholders,
                  directors, representatives, successors and assigns harmless
                  from and against any and all actions, causes of action,
                  losses, damages, costs, claims, expenses, penalties,
                  obligations or liabilities of any kind whatsoever (including
                  but not limited to reasonable attorneys' fees) arising out of
                  or relating to any Hazardous Materials employed, used,
                  transported across, or otherwise dealt with by Tenant (or
                  invitees, or persons or entities under the control of Tenant)
                  in connection with or with respect to the Premises and the
                  Property. Notwithstanding any of the provisions of this Lease,
                  the indemnity obligation of Tenant pursuant to this P.8.f.
                  shall survive the termination of this Lease and shall relate
                  to any occurrence as described in this P.8.f. occurring in
                  connection with this Lease. Landlord hereby agrees to
                  indemnify, defend and hold Tenant harmless from and against
                  any and all actions, causes of action, losses, damages, costs,
                  claims, expenses, penalties, obligations or liabilities of any
                  kind whatsoever (including reasonable attorneys' fees) arising
                  out of or relating to (i) Hazardous Materials employed, used,
                  transported to the Premises, for which the Premises are a part
                  thereof, by Landlord, its agents or employees or (ii)
                  Hazardous Materials existing on, in or under the Premises as
                  of the date of this Lease. For purposes of this Lease the term
                  "HAZARDOUS MATERIALS" shall mean any hazardous, toxic or
                  dangerous waste, substance or material, pollutant or
                  contaminant, as defined for purposes of the Comprehensive
                  Environmental Response, Compensation and Liability Act of 1980
                  (42 U.S.C. Sections 9601 et seq.), as amended, or the Resource
                  Conservation and Recovery Act (42 U.S.C. Sections 6901 et
                  seq.), as amended, or any other federal, state, or local law,
                  ordinance, rule or regulation applicable to the Premises, or
                  any substance which is toxic, explosive, corrosive, flammable,
                  infectious, radioactive, carcinogenic, mutagenic, or otherwise
                  hazardous, or any substance which contains gasoline, diesel
                  fuel or other petroleum hydrocarbons, polychlorinated
                  biphenyis (PCB's), or radon gas, urea formaldehyde, asbestos
                  or lead.

9.       SIGNS AND COMMUNICATIONS ANTENNAE. Tenant shall not place any sign or
         communications antennae upon or adjacent to the Premises, except that
         Tenant may, with Landlord's prior written consent, and at Tenant's sole
         cost and expense, install on the exterior of the Premises and on a
         monument sign in front of the Premises (but not on the roof) such signs
         as are reasonably required to indicate Tenant's company name or logo
         provided such signs are in compliance with Landlord's standard sign
         criteria or install communications antennae used exclusively by Tenant
         provided such signs and/or communications antennae are in compliance
         with all applicable governmental requirements and the CC&R's. The
         installation of any sign or communications antennae on or adjacent to
         the Premises by or for Tenant shall be subject to the provisions of
         P.13. (Repairs and Maintenance). Tenant shall remove any sign or
         communications antennae placed on or adjacent to the Premises by Tenant
         upon the expiration of the Term or sooner termination of this Lease,
         and Tenant shall repair any damage or injury to the Premises caused
         thereby, all at Tenant's expense. If any signs or communications
         antennae are not removed, or necessary repairs not made, Landlord shall
         have the right to remove the signs or communications antennae and
         repair any damage or injury to the Premises at Tenant's sole cost and
         expense. Notwithstanding any other provision of this Lease to the
         contrary, Landlord reserves all rights to the use of the roof and the
         right to install and receive all revenues from the installation of such
         other signs or communications antennae on the Premises, including the
         roof, as do not unreasonably interfere with the conduct of Tenant's
         business within the Premises.

10.      PERSONAL PROPERTY TAXES. Tenant shall pay at least ten (10) days prior
         to delinquency all taxes assessed against and levied upon Tenant owned
         leasehold improvements, trade fixtures, furnishings, equipment and all
         personal property of Tenant contained in the Premises or elsewhere.
         When possible, Tenant shall cause its leasehold improvements, trade
         fixtures, furnishings, equipment and all other personal property to be
         assessed and billed separately from the real property of Landlord. If
         any of Tenant's said personal property shall be assessed with
         Landlord's real property, Tenant shall pay Landlord the taxes
         attributable to Tenant within ten (10) days after receipt of a written
         statement setting forth the taxes applicable to Tenant's property.

11.      REAL PROPERTY TAXES

         a.       PAYMENT OF TAXES. Landlord shall pay the Real Property Taxes,
                  as defined in P.11.c., imposed or allocated exclusively to
                  the Property, during the Term of this Lease. Subject to
                  P.11.b., Tenant shall promptly reimburse Landlord according to
                  P.5. for Tenant's Share of Property of such Real Property
                  Taxes imposed on or allocated to the Property and paid by
                  Landlord.
<PAGE>   13
         b.       ADVANCE PAYMENT. In order to ensure payment when due and
                  before delinquency of any or all Real Property Taxes, Landlord
                  shall estimate the current Real Property Taxes applicable to
                  the Property, and require Tenant to pay monthly in advance
                  with the payment of the Base Rent Tenant's Share of an amount
                  which, over the number of months remaining before the month in
                  which the applicable tax installment would become delinquent,
                  would provide a fund large enough to fully discharge before
                  delinquency the estimated installment of Real Property Taxes
                  to be paid. When the actual amount of the applicable tax bill
                  is known, Landlord may, but is not required to, adjust the
                  amount of such equal monthly advance payment so as to provide
                  the funds needed to pay the applicable Real Property Taxes
                  before delinquency. If the amounts paid to Landlord by Tenant
                  under the provisions of this P.11. are insufficient to
                  discharge the obligations of Tenant to pay such Real Property
                  Taxes as the same become due, Tenant shall pay to Landlord,
                  upon Landlord's demand, such additional sums as are necessary
                  to pay such obligations. All moneys paid to Landlord under
                  this P.11. may be intermingled with other moneys of Landlord
                  and shall not bear interest.

         c.       DEFINITION OF "REAL PROPERTY TAXES". As used herein, the term
                  "REAL PROPERTY TAXES" shall include any form of real estate
                  tax or assessment, general, special, ordinary or
                  extraordinary, and any license fee, commercial rental tax,
                  improvement bond or bonds, levy or tax or other fee, charge,
                  or excise which may be imposed as a substitute for any of the
                  foregoing (excluding inheritance, income or estate taxes and
                  any franchise taxes on the privilege of maintaining Landlord's
                  entity status) imposed upon the Property by any authority
                  having the direct or indirect power to tax, including any
                  city, county, state or federal government, or any school,
                  agricultural, sanitary, fire, street, drainage or other
                  improvement district thereof, levied against any legal or
                  equitable interest of Landlord in the Property, Landlord's
                  right to rent or other income therefrom, and/or Landlord's
                  business of leasing the Property. The term "Real Property
                  Taxes" shall also include any tax, fee, levy, assessment or
                  charge, or any increase therein, imposed by reason of events
                  occurring, or changes in applicable law taking effect, during
                  the Term of this Lease, including but not limited to a change
                  in the ownership of the Property or in the improvements
                  thereon, the execution of this Lease, or any modification,
                  amendment or transfer thereof, and whether or not contemplated
                  by the parties hereto.

12.      UTILITIES. Tenant shall pay for all water, gas, heat, light, power,
         telephone, trash disposal and other utilities and services supplied to
         the Premises, together with any taxes thereon. If any such services are
         not separately metered to Tenant, Tenant shall pay that proportion
         allocated to the Premises, as reasonably determined by Landlord, of all
         charges jointly metered with other premises, provided, however, that if
         separate meters are not installed in the Premises as of the date of
         this Lease, then Tenant shall have the right to install separate meters
         for all such utilities at Tenant's sole cost and expense.

13.      REPAIRS AND MAINTENANCE

         a.       LANDLORD'S OBLIGATIONS. Landlord shall keep the Property,
                  including the foundation, exterior walls, roof, and Common
                  Areas of the Property, and the equipment whether used
                  exclusively for the Premises or in common with other premises,
                  in good condition and repair subject to reimbursement by
                  Tenant in accordance with P.5. There shall be no abatement of
                  Rent or liability to Tenant on account of any injury or
                  interference with Tenant's business with respect to any
                  improvements, alterations or repairs made by Landlord to the
                  Property or any part thereof.

         b.       TENANT'S OBLIGATIONS.

                  1)       GENERAL. Tenant shall, at Tenant's sole cost and
                           expense and at all times, contract for janitorial
                           services and supplies, keep the Premises in good
                           order, condition and repair, including, without
                           limiting the generality of the foregoing, all
                           equipment or facilities serving the Premises, such as
                           plumbing, heating, air conditioning, ventilating,
                           electrical, lighting facilities, boilers, fired or
                           unfired pressure vessels, fixtures, interior walls,
                           ceilings, floors, windows, window frames, interior
                           and exterior doors and door frames, plate glass and
                           skylights. Tenant shall not cause or permit any
                           Hazardous Material to be spilled or released in, on,
                           under or about the Premises (including through the
                           plumbing or sanitary sewer system) and shall
                           promptly, at Tenant's expense, take all investigatory
                           and/or remedial action reasonably recommended,
                           whether or not formally ordered or
<PAGE>   14
                           required by applicable law, for the cleanup of any
                           contamination of, and for the maintenance, security
                           and/or monitoring of the Premises, the elements
                           surrounding same, or neighboring properties, that was
                           caused or materially contributed to by Tenant, or
                           pertaining to or involving any Hazardous Materials
                           and/or storage tank brought onto the Premises by or
                           for Tenant or under its control. Tenant, in keeping
                           the Premises in good order, condition and repair,
                           shall exercise and perform good maintenance
                           practices. Tenant's obligations shall include
                           restorations, replacements or renewals when necessary
                           to keep the Premises and all improvements thereon or
                           a part thereof in good order, condition and state of
                           repair.

                  2)       CONTRACTS. Tenant shall keep a detailed preventative
                           maintenance schedule and log showing the frequency of
                           maintenance on all HVAC, mechanical, electrical and
                           other systems servicing the Premises and provide
                           Landlord with a copy of same quarterly. If Landlord
                           is not reasonably satisfied that Tenant's maintenance
                           program is adequate to maintain the heating, air
                           conditioning and ventilation equipment serving the
                           Premises ("HVAC"), then Tenant shall, at Tenant's
                           sole cost and expense, procure and maintain
                           contracts, with copies to Landlord, in customary form
                           and substance for, and with contractors specializing
                           and experienced in, the inspection, maintenance and
                           service of the HVAC serving the Premises.

                  3)       AS-IS CONDITION. The parties affirm that Landlord,
                           its subsidiaries, officers, shareholders, directors,
                           agents and/or employees have made no representations
                           to Tenant respecting the condition of the Premises
                           except as specifically stated herein.

                  4)       AMERICANS WITH DISABILITIES ACT. Tenant acknowledges
                           that as of the Commencement Date, the Premises may
                           not comply with the Americans with Disabilities Act
                           of 1990 ("ADA"), and that Landlord shall have no
                           obligation with respect to any such failure of the
                           Premises to so comply. Tenant shall, at its cost, at
                           any time during the Term as required by any
                           applicable governmental agency having jurisdiction
                           over the Premises, make such modifications and
                           alterations to the Premises as may be required in
                           order to fully comply with the provisions of the ADA,
                           as from time to time amended, and any and all
                           regulations issued pursuant to or in connection with
                           the ADA in such a manner as to satisfy the applicable
                           governmental agency or agencies requiring
                           remediation. Tenant shall at least thirty (30) days
                           prior to the commencement of any construction in
                           connection with satisfaction of the ADA, give written
                           notice to Landlord of its intended commencement of
                           construction together with sufficient details so as
                           to reasonably disclose to Landlord the nature of the
                           proposed construction, copies of any notices received
                           by Tenant from applicable governmental agencies in
                           connection with the ADA and such other documents or
                           information as Landlord may reasonably request.

         c.       COMPLIANCE WITH GOVERNMENTAL REGULATIONS. Tenant shall, at its
                  own cost and expense, promptly and properly observe and comply
                  with all present and future orders, regulations, directions,
                  rules, laws, ordinances, and requirements of all governmental
                  authorities (including but not limited to state, municipal,
                  county and federal governments and their departments, bureaus,
                  boards and officials) arising from the use or occupancy of, or
                  applicable to, the Premises or privileges appurtenant to or in
                  connection with the enjoyment of the Premises. Tenant shall
                  also comply with all such rules, laws, ordinances and
                  requirements at the time Tenant makes any alteration, addition
                  or change to the Premises.

         d.       MISCELLANEOUS.

                  1)       Landlord and Tenant shall each do all acts required
                           to comply with all applicable laws, ordinances and
                           rules of any public authority relating to their
                           respective maintenance obligations as set forth
                           herein.

                  2)       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 and the
                           Property in good order, condition and repair.
                           Specifically, Tenant waives the provisions of
                           California Civil Code Sections 1941 and 1942 with
                           respect to Landlord's obligations for Tenant
                           tenantability of the Premises and Tenant's right to
                           make repairs and deduct the expenses of such repairs
                           from Rent.
<PAGE>   15
                  3)       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 made by Landlord's
                           structural engineer shall be paid for by Tenant upon
                           demand.

                  4)       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 Landlord making any repairs or
                           changes which Landlord is required to make or is
                           permitted to make by this Lease or by any tenant's
                           lease or is required by law to make in or to any
                           portion of the Premises. Landlord shall nevertheless
                           use reasonable efforts to minimize any interference
                           with Tenant's business in the Premises.

                  5)       Tenant shall give Landlord prompt notice of any
                           damage to or defective condition in any part or
                           appurtenance of the Premises' mechanical, electrical,
                           plumbing, HVAC or other systems serving, located in
                           or passing through the Premises. Upon request by
                           Landlord, Tenant shall provide Landlord with evidence
                           reasonably acceptable to Landlord of service
                           contracts on such systems, or other evidence of
                           regular maintenance of such systems.

                  6)       Upon the expiration or early 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 and
                           except for alterations which Landlord has elected to
                           remain in the Premises pursuant to P.14. 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 shall be
                           repaired by Tenant prior to the end of the Term at
                           Tenant's expense.

                  7)       If Tenant shall fail to perform its obligations
                           hereunder after reasonable notice from Landlord, then
                           Landlord may, at Landlord's option, choose to perform
                           any of the Tenant's obligations in this P.13. The
                           cost of any such Tenant's obligations so performed by
                           Landlord shall be at Tenant's sole cost and expense.
                           Tenant shall reimburse Landlord for any such costs
                           incurred by Landlord in the performance of such
                           Tenant's obligations within ten (10) days of receipt
                           of a billing from Landlord.

14.      ALTERATIONS. Tenant shall not make any alterations to the Premises or
         the Property without Landlord's prior written consent, which consent
         shall not be unreasonably withheld. Notwithstanding the foregoing,
         Tenant may make non-structural alterations costing less than $25,000
         per event and undertake customary laboratory rearrangement and
         reconfiguration, all without Landlord's consent. Regardless of whether
         Landlord's consent for alteration is required, Tenant must provide
         Landlord at least fifteen (15) business days prior to the commencement
         of any alteration with a complete description of each such alteration
         including any building permit drawing(s) and specifications provided,
         however, that with respect to minor non-structural alterations or
         rearrangements costing less than $1,000 each ("MINOR ALTERATIONS"),
         Tenant shall not be required to give prior notice to Landlord but shall
         report all Minor Alterations to Landlord on a quarterly basis. If such
         quarterly report describes Minor Alterations the cost of which exceeds
         $25,000 in the aggregate for two consecutive calendar quarters, then
         Landlord shall be entitled to demand thereafter prior notification of
         all alterations, regardless of cost. Landlord may post notices
         regarding non-responsibility in accordance with the laws of the state
         in which the Premises are located. All alterations made by Tenant,
         whether or not subject to the approval of Landlord, shall be performed
         by Tenant and its contractors in a first class workmanlike manner and
         permits and inspections shall be obtained from all required
         governmental entities. Any alterations made shall remain on and be
         surrendered with the Premises upon expiration or termination of this
         Lease, except that Landlord may, at least thirty (30) days before the
         expiration of the Term, elect to require Tenant to remove some or all
         of the alterations which Tenant may have made to the Premises. If
         Landlord so elects, Tenant shall at its own cost restore the Premises
         to the condition designated by Landlord in its election, before the
         last day of the Term or within thirty (30) days after notice of its
         election is given, whichever is later. If requested by Tenant at the
         time of Tenant's request for approval of alterations or improvements,
         Landlord shall advise Tenant in writing whether Landlord shall require
         Tenant to remove some or all of said alterations or improvements upon
         expiration or termination of the Lease. Should Landlord consent in
         writing to Tenant's alteration of the Premises, Tenant shall contract
         with a contractor approved by Landlord for the construction of such
         alterations, shall secure all appropriate governmental approvals and
         permits, and shall
<PAGE>   16
         complete such alterations with due diligence in compliance with plans
         and specifications approved by Landlord. Tenant shall pay all costs for
         such construction and shall keep the Premises free and clear of all
         mechanics' liens which may result from construction by Tenant.

15.      RELEASE AND INDEMNITY. As material consideration to Landlord, Tenant
         agrees that Landlord shall not be liable to Tenant for any damage to
         Tenant or Tenant's property from any cause, except for damages
         resulting from Landlord's gross negligence or willful misconduct, and
         Tenant waives all claims against Landlord for damage to persons or
         property arising for any reason, except for damage resulting directly
         from Landlord's breach of its express obligations under this Lease
         which Landlord has not cured within a reasonable time after written
         notice of such breach from Tenant. Tenant shall indemnify and hold
         Landlord harmless from all damages including attorneys' fees and costs
         arising out of any damage to any person or property occurring in, on or
         about the Premises or Tenant's use of the Premises or Tenant's breach
         of any term of this Lease.

16.      INSURANCE

         a.       PAYMENT FOR INSURANCE. Regardless of whether the Landlord or
                  Tenant is the Insuring Party, Tenant shall pay for its
                  proportionate share of all insurance required under this P.16.
                  ("INSURANCE COSTS") either directly or by reimbursement to
                  Landlord as specified in this P.16. Premiums for policy
                  periods commencing prior to or extending beyond the Lease Term
                  shall be prorated to correspond to the Lease Term. Payment
                  shall be made by Tenant to Landlord within thirty (30) days
                  following receipt of an invoice for any amount due.

         b.       LIABILITY INSURANCE.

                  1)       CARRIED BY TENANT. Whether or not Tenant is the
                           Insuring Party, Tenant shall obtain and keep in force
                           during the Term of this Lease a commercial general
                           liability policy of insurance protecting Tenant and
                           Landlord (as an additional insured) against claims
                           for bodily injury, personal injury and property
                           damage based upon, involving or arising out of the
                           ownership, use, occupancy or maintenance of the
                           Premises and all areas appurtenant thereto. Such
                           insurance shall be on an occurrence basis providing
                           single limit coverage in an amount not less than
                           $2,000,000 per occurrence with an "Additional
                           Insured-Managers or Landlords of Premises"
                           endorsement and contain an "Amendment of the
                           Pollution Exclusion" for damage caused by heat, smoke
                           or fumes from a hostile fire. The policy shall not
                           contain any intra-insured exclusions as between
                           insured persons or organizations, but shall include
                           coverage for liability assumed under this Lease as an
                           "insured contract" for the performance of Tenant's
                           indemnity obligations under this Lease. The limits of
                           said insurance required by this Lease or as carried
                           by Tenant shall not, however, limit the liability of
                           Tenant nor relieve Tenant of any obligation
                           hereunder. All insurance to be carried by Tenant
                           shall be primary to and not contributory with any
                           similar insurance carried by Landlord, whose
                           insurance shall be considered excess insurance only.
                           All insurance coverage required pursuant to this
                           P.16. which is to name Landlord as a named insured
                           shall also name Landlord's subsidiaries, directors,
                           agents, officers and employees as named insureds.

                  2)       CARRIED BY LANDLORD. In the event Landlord is the
                           Insuring Party, Landlord shall also maintain
                           liability insurance as described in P.16.b.1), in
                           addition to, and not in lieu of the insurance
                           required to be maintained by Tenant. In the event
                           Tenant is the Insuring Party, Landlord shall in
                           addition carry Landlord's Risk Coverage and insure
                           the Premises on Landlord's umbrella policy and Tenant
                           shall reimburse Landlord the cost thereof. Tenant
                           shall not be named as an additional insured therein
                           under any insurance obtained by Landlord in
                           accordance with this P.16.b.2).

         c.       PROPERTY INSURANCE - BUILDING, IMPROVEMENTS AND RENTAL VALUE.

                  1)       BUILDING AND IMPROVEMENTS. The Insuring Party shall
                           obtain and keep in force during the Term of this
                           Lease a policy or policies in the name of Landlord,
                           with loss payable to Landlord and to the holders of
                           any mortgages, deeds of trust or ground leases on the
                           Property ("LENDER(S)"), insuring loss or damage to
                           the Property. The amount of such insurance shall be
                           equal to the full replacement cost of the Property,
                           as the same shall exist from time to time, or the
                           amount
<PAGE>   17
                           required by Lender(s), but in no event more than the
                           commercially reasonable and available insurable value
                           thereof if, by reason of the unique nature or age of
                           the improvements involved, such latter amount is less
                           than full replacement cost. Such policy or policies
                           shall insure against all risks of direct physical
                           loss or damage (including Boiler and Machinery
                           coverage and the perils of flood and earthquake),
                           including coverage for any additional costs resulting
                           from debris removal and reasonable amounts of
                           coverage for the enforcement of any ordinance or law
                           regulating the reconstruction or replacement of any
                           undamaged sections of the Property required to be
                           demolished shall also contain an agreed valuation
                           provision in lieu of any coinsurance clause, waiver
                           of subrogation and inflation guard protection causing
                           an increase in the annual property insurance coverage
                           amount by a factor of not less than the adjusted U.S.
                           Department of Labor Consumer Price Index for All
                           Urban Consumers for the city nearest to where the
                           Property is located. If such insurance coverage has a
                           deductible clause, then Tenant shall be liable for
                           its proportionate share of such deductible amount.
                           Even if Landlord is the Insuring Party, Tenant's
                           personal property shall be insured by Tenant under
                           P.16.d. rather than by Landlord.

                  2)       RENTAL VALUE. The Insuring Party shall, in addition,
                           obtain and keep in force during the term of this
                           Lease a policy or policies in the name of Landlord,
                           with loss payable to Landlord and Lender(s), insuring
                           the loss of the full rental and other charges payable
                           by Tenant to Landlord under this Lease for one (1)
                           year (including all Real Property Taxes, Insurance
                           Costs and any scheduled Rent increases). Said
                           insurance shall provide that in the event the Lease
                           is terminated by reason of an insured loss, the
                           period of indemnity for such coverage shall be
                           extended beyond the date of the completion of repairs
                           or replacement of the Premises, to provide for one
                           full year's loss of Rent from the date of any such
                           loss. Said insurance shall contain an agreed
                           valuation provision in lieu of any coinsurance
                           clause, and the amount of coverage shall be adjusted
                           annually to reflect the projected Rent, Real Property
                           Taxes, Insurance Costs and other expenses, if any,
                           otherwise payable by Tenant, for the next twelve (12)
                           month period. Tenant shall be liable for any
                           deductible amount in the event of such loss.

                  3)       ADJACENT PREMISES. If the Premises are part of a
                           larger building, or if the Premises are part of a
                           group of buildings owned by Landlord which are
                           adjacent to the Premises, the Tenant shall pay for
                           any increase in the premiums for the property
                           insurance of such building or buildings if said
                           increase is caused by Tenant's acts, omissions, use
                           or occupancy of the Premises.

                  4)       TENANT'S IMPROVEMENTS. If the Landlord is the
                           Insuring Party, the Landlord shall not be required to
                           insure Tenant's personal property and leasehold
                           improvements unless the item in question has become
                           the property of Landlord under the terms of this
                           Lease. If Tenant is the Insuring Party, the policy
                           carried by Tenant under this P.16.c. shall insure
                           Tenant's personal property and leasehold
                           improvements.

         d.       TENANT'S PROPERTY INSURANCE. Subject to the requirements of
                  P.16.e., Tenant at its cost shall either by separate policy or
                  by endorsement to a policy already carried, maintain insurance
                  coverage on all of Tenant's personal property and Tenant's
                  leasehold improvements in, on or about the Premises similar in
                  coverage to that carried by the Insuring Party under P.16.c.
                  Such insurance shall be full replacement cost coverage with a
                  deductible of not to exceed $10,000 per occurrence. The
                  proceeds from any such insurance shall be used by Tenant for
                  the replacement of personal property or the restoration of
                  Tenant owned leasehold improvements. Tenant shall be the
                  Insuring Party with respect to the insurance required by
                  this P.16.d. and shall provide Landlord with written evidence
                  that such insurance is in force.

         e.       INSURANCE POLICIES. If Tenant is the Insuring Party, insurance
                  required per this P.16. shall be with companies duly licensed
                  to transact business in the state where the Premises are
                  located, and maintaining during the policy term a "General
                  Policyholders Rating" of at least A- X, or such other minimal
                  rating as may be required by Lender(s) as set forth in the
                  most current issue of "Best's Insurance Guide." Tenant shall
                  not do or permit to be done anything which shall invalidate
                  the insurance policies referred to in this P.16. If Tenant is
                  the Insuring Party, Tenant shall cause to be delivered to
                  Landlord certified copies of policies of such insurance or
                  certificates evidencing the existence and amounts of such
                  insurance with the insureds and loss payable clauses as
                  required by this Lease. No such policy shall be cancelable or
                  subject to modification or lapse except after thirty (30) days
                  prior written notice to Landlord. Tenant shall
<PAGE>   18
                  at least thirty (30) days prior to the expiration of such
                  policies, furnish Landlord with evidence of renewals or
                  "insurance binders" evidencing renewal thereof, or Landlord
                  may order such insurance and charge the cost thereof to
                  Tenant, which amount shall be payable by Tenant to Landlord
                  upon demand. If the Insuring Party shall fail to procure and
                  maintain the insurance required to be carried by the Insuring
                  Party under this P.16., the other Party may, but shall not be
                  required to, procure and maintain the same, but at Tenant's
                  expense.

         f.       MUTUAL WAIVER. Notwithstanding anything to the contrary
                  contained in this Lease, to the extent that this release and
                  waiver does not invalidate or impair their respective
                  insurance policies, the parties hereto release each other and
                  their respective agents, employees, officers, directors,
                  shareholders, successors, assignees and subtenants from all
                  liability for injury to any person or damage to any property
                  that is caused by or results from a risk which is actually
                  insured against pursuant to the provisions of this Lease
                  without regard to the negligence or willful misconduct of the
                  parties so released. Each party shall use its best efforts to
                  cause each insurance policy it obtains to provide that the
                  insurer thereunder waives all right of recovery by way of
                  subrogation as required herein in connection with any injury
                  or damage covered by the policy. If such insurance policy
                  cannot be obtained with such waiver of subrogation, or if such
                  waiver of subrogation is only available at additional cost and
                  the party for whose benefit the waiver is not obtained does
                  not pay such additional costs after reasonable notice, then
                  the party obtaining such insurance shall promptly notify the
                  other party of the inability to obtain insurance coverage with
                  the waiver of subrogation.

17.      DAMAGE AND DESTRUCTION

         a.       DAMAGE - RESTORATION REQUIRED. In the event that the Buildings
                  containing the Premises are damaged by fire or other casualty
                  which is covered under insurance pursuant to the provisions
                  of P.16. above, Landlord shall with reasonable promptness
                  repair the damage and restore the Premises as nearly as
                  practicable to their previous condition provided that: (i) the
                  destruction of the Buildings containing the Premises does not
                  exceed sixty percent (60%) of the then replacement value of
                  the Buildings containing the Premises; (ii) the insurance
                  proceeds are available (inclusive of any deductible amounts)
                  to pay one hundred percent (100%) of the cost of restoration;
                  and (iii) in the reasonable judgment of Landlord, the
                  restoration can be completed within two hundred and seventy
                  (270) days after the date of the damage or casualty under the
                  laws and regulations of the state, federal, county and
                  municipal authorities having jurisdiction. The deductible
                  amount of any insurance coverage for damage to the Premises
                  shall be paid by Tenant. If such conditions apply so as to
                  require Landlord to restore such damage pursuant to this
                  P.17.a., this Lease shall continue in full force and effect,
                  unless otherwise agreed to in writing by Landlord and Tenant.
                  Tenant shall be entitled to a proportionate reduction of Rent
                  while such restoration takes place, such proportionate
                  reduction to be based on the extent to which the damage and
                  restoration efforts interfere with Tenant's business in the
                  Premises. Tenant's right to a reduction of Rent hereunder
                  shall be Tenant's sole and exclusive remedy in connection with
                  any such damage.

         b.       DAMAGE - RESTORATION NOT REQUIRED. In the event that the
                  Buildings containing the Premises are damaged by a fire or
                  other casualty and Landlord is not required to restore such
                  damage in accordance with the provisions of P.17.a.
                  immediately above, Landlord shall have the option to either
                  (i) repair or restore such damage, with the Lease continuing
                  in full force and effect, but Rent to be proportionately
                  abated as provided in P.17.a. above; or (ii) give notice to
                  Tenant at any time within thirty (30) days after the
                  occurrence of such damage terminating this Lease as of a date
                  to be specified in such notice which date shall not be less
                  than thirty (30) nor more than sixty (60) days after the date
                  on which such notice of termination is given. In the event of
                  the giving of such notice of termination, this Lease shall
                  expire and all interest of Tenant in the Premises shall
                  terminate on the date so specified in such notice and the
                  Rent, reduced by any proportionate reduction in Rent as
                  provided for in P.17.a. above, shall be paid to the date of
                  such termination. Notwithstanding the foregoing, if Tenant
                  delivers to Landlord the funds necessary to make up the
                  shortage (or absence) in insurance proceeds and the
                  restoration can be completed in a two hundred seventy (270)
                  day period, as reasonably determined by Landlord, and the
                  destruction of the Buildings containing the Premises does not
                  exceed sixty percent (60%) of the then replacement value,
                  Landlord shall restore the Premises as provided in P.17.a.
                  above.

         c.       END OF TERM CASUALTY. Notwithstanding the provisions of
                  P.17.a. and P.17.b. above, either Landlord or Tenant may
                  terminate this Lease if the Buildings containing the Premises
                  are damaged by fire or other
<PAGE>   19
                  casualty, Landlord's reasonably estimated cost of restoration
                  of the Buildings containing the Premises exceeds ten percent
                  (10%) of the then replacement value of the Buildings
                  containing the Premises and such damage or casualty occurs
                  during the last twelve (12) months of the Term of this Lease
                  (or the Term of any renewal option, if applicable) by giving
                  the other notice thereof at any time within thirty (30) days
                  following the occurrence of such damage or casualty. Such
                  notice shall specify the date of such termination which date
                  shall not be less than thirty (30) nor more than sixty (60)
                  days following the date on which such notice of termination is
                  given. In the event of the giving of such notice of
                  termination, this Lease shall expire and all interest of
                  Tenant in the Premises shall terminate on the date so
                  specified in such notice and the Rent shall be paid to the
                  date of such termination.

         d.       TERMINATION BY TENANT. In the event that the destruction to
                  the Buildings containing the Premises cannot be restored as
                  required herein under applicable laws and regulations within
                  two hundred thirty (230) days of the damage or casualty,
                  notwithstanding the availability of insurance proceeds, or if
                  Landlord does not, within thirty (30) days after Tenant's
                  written inquiry, acknowledge Landlord's obligation under this
                  Lease to repair and restore the damage areas, Tenant shall
                  have the right to terminate this Lease by giving the Landlord
                  notice thereof within thirty (30) days of date of the
                  occurrence of such casualty specifying the date of termination
                  which shall not be less than thirty (30) days nor more than
                  sixty (60) days following the date on which such notice of
                  termination is given. In the event of the giving of such
                  notice of termination, this Lease shall expire and all
                  interest of Tenant in the Premises shall terminate on the date
                  so specified in such notice and the Rent, reduced by any
                  proportionate reduction in Rent as provided for in P.17a.
                  above, shall be paid to the date of such termination.

         e.       RESTORATION. Landlord agrees that, in any case in which
                  Landlord is required to, or otherwise agrees to restore the
                  Buildings containing the Premises, Landlord shall proceed with
                  due diligence to make all appropriate claims and applications
                  for the proceeds of insurance and to apply for and obtain all
                  permits necessary for the restoration of the Buildings
                  containing the Premises. Landlord shall use reasonable efforts
                  to enforce any and all provisions in any mortgage, deed of
                  trust or other encumbrance on the Buildings containing the
                  Premises requiring Landlord and Lender to permit insurance
                  proceeds to be used for restoration. Landlord shall restore
                  the Premises at least equal to the condition existing prior to
                  the date of the damage if permitted by applicable law.
                  Landlord shall not be required to restore alterations made by
                  Tenant, Tenant's improvements, Tenant's trade fixtures and
                  Tenant's personal property, such excluded items being the sole
                  responsibility of Tenant to restore provided, however, that
                  Landlord shall, to the extent of available insurance proceeds,
                  restore Tenant Improvements to the Premises made by Tenant
                  such as interior offices, lab and production improvements and
                  other like improvements.

         f.       WAIVER. Tenant waives the provisions of Civil
                  CodeSection 1932(2) and Civil CodeSection 1933(4) with
                  respect to any destruction of the Premises.

18.      CONDEMNATION

         a.       DEFINITIONS. The following definitions shall apply: (1)
                  "CONDEMNATION" means (a) the exercise of any governmental
                  power of eminent domain, whether by legal proceedings or
                  otherwise by condemnor, or (b) the voluntary sale or transfer
                  by Landlord to any condemnor either under threat of
                  condemnation or while legal proceedings for condemnation are
                  proceeding; (2) "DATE OF TAKING" means the date the condemnor
                  has right to possession of the property being condemned; (3)
                  "Award" means all compensation, sums or anything of value
                  awarded, paid or received on a total or partial Condemnation;
                  and (4) "CONDEMNOR" means any public or quasi-public
                  authority, or private corporation or individual, having power
                  of Condemnation.

         b.       OBLIGATIONS TO BE GOVERNED BY LEASE. If during the Term of the
                  Lease there is any Condemnation of all or any part of the
                  Buildings containing the Premises, the rights and obligations
                  of the parties shall be determined strictly pursuant to this
                  Lease. Each party waives the provisions of Code of Civil
                  Procedure Section 1265.130 allowing either party to petition
                  the Superior Court to terminate this Lease in the event of a
                  partial condemnation of the Premises.

         c.       TOTAL OR PARTIAL TAKING. If the Buildings containing the
                  Premises are totally taken by Condemnation, this Lease shall
                  terminate on the Date of Taking. If any portion of the
                  Buildings containing the Premises is
<PAGE>   20
                  taken by Condemnation, this Lease shall remain in effect,
                  except that Tenant can elect to terminate this Lease if the
                  remaining portion of the Premises is rendered unsuitable for
                  Tenant's continued use of the Premises. If Tenant elects to
                  terminate this Lease, Tenant must exercise its right to
                  terminate by giving notice to Landlord within thirty (30) days
                  after the nature and extent of the Condemnation have been
                  finally determined. If Tenant elects to terminate this Lease,
                  Tenant shall also notify Landlord of the date of termination,
                  which date shall not be earlier than thirty (30) days nor
                  later than ninety (90) days after Tenant has notified Landlord
                  of its election to terminate; except that this Lease shall
                  terminate on the Date of Taking if the Date of Taking falls on
                  a date before the date of termination as designated by Tenant.
                  If any portion of the Premises is taken by Condemnation and
                  this Lease remains in full force and effect, on the Date of
                  Taking the Base Rent shall be reduced by an amount in the same
                  ratio as the total number of square feet in the Premises taken
                  bears to the total number of square feet in the Premises
                  immediately before the Date of Taking, provided, however, that
                  if the Condemnation materially affects Tenant's access to the
                  Parking and materially reduces its parking rights, an
                  additional reduction in Base Rent shall be reasonably
                  allocated by Landlord. Any Award for the Condemnation of all
                  or any part of the Premises under the power of eminent domain
                  or any payment made under threat of the exercise of such power
                  shall be the property of Landlord, whether such Award shall be
                  made as compensation for diminution in value of the leasehold
                  or for the taking of the fee, or as severance damages;
                  provided, however, that Tenant shall be entitled to any
                  compensation separately awarded to Tenant for Tenant's
                  relocation expenses and/or loss of Tenant's trade fixtures.

19.      ASSIGNMENT OR SUBLEASE

         a.       Tenant shall not assign or encumber its interest in this Lease
                  or the Premises or sublease all or any part of the Premises or
                  allow any other person or entity (except Tenant's authorized
                  representatives, employees, invitees or guests) to occupy or
                  use all or any part of the Premises without first obtaining
                  Landlord's consent, which consent shall not be unreasonably
                  withheld. Any assignment, encumbrance or sublease without
                  Landlord's prior written consent shall be voidable and at
                  Landlord's election, shall constitute a default.
                  Notwithstanding the foregoing, Landlord's consent shall not be
                  required for any assignment or subletting to (i) an affiliate
                  of Tenant, so long as such assignment or sublease is not
                  simply one step in a transaction through which an interest of
                  Tenant is or under this Lease or in the Premises is being
                  transferred ultimately to a person which is not an affiliate
                  of Tenant, or (ii) an entity occupying space within the
                  Premises solely in connection with joint development projects
                  with Tenant. If Tenant is a partnership, a withdrawal or
                  change, voluntary, involuntary or by operation of law of any
                  partner, or the dissolution of the partnership, shall be
                  deemed a voluntary assignment. If Tenant consists of more than
                  one person, a purported assignment, voluntary or involuntary
                  or by operation of law from one person to the other shall be
                  deemed a voluntary assignment. If Tenant is a corporation, any
                  dissolution, merger, consolidation or other reorganization of
                  Tenant, or sale or other transfer of a controlling percentage
                  of the capital stock of Tenant, or the sale of at least fifty
                  percent (50%) of the value of the assets of Tenant shall be
                  deemed a voluntary assignment. Notwithstanding the sentence
                  immediately above, if the Tenant is a corporation, the Tenant
                  shall be entitled to assign this Lease without Landlord's
                  prior written consent to: (i) a successor corporation related
                  to Tenant by merger, consolidation or non-bankruptcy
                  reorganization, provided that the surviving corporation in
                  connection with any such assignment shall have a minimum net
                  worth as of the date of the assignment at least equal to that
                  of Tenant immediately prior to completion of the subject
                  merger, consolidation or reorganization, (ii) a purchaser of
                  substantially all of Tenant's assets, provided that
                  immediately following such purchase, such purchaser shall have
                  a net worth at least equal to that of Tenant immediately prior
                  to the completion of the subject purchase, or (iii) a
                  reorganization of Tenant through the sale of all or a portion
                  of Tenant's Capital Stock by Initial Public Offering (an event
                  described in (i), (ii) or (iii) above shall be referred to as
                  a transfer to a "PERMITTED TRANSFEREE"). In connection with
                  any assignment as described in the sentence immediately above,
                  Landlord shall be entitled to require an increase in the
                  Security Deposit to the extent that such increase should be
                  commercially reasonable in Landlord's discretion given the
                  financial condition of Tenant and the assignee following such
                  event. Tenant shall give Landlord at least thirty (30) days
                  prior written notice of any intended transfer to a Permitted
                  Transferee and in connection with such transfer shall provide
                  to Landlord copies of any documents or other information as
                  Landlord may reasonably request. Unless otherwise expressly
                  agreed in writing by Landlord, no assignment shall relieve
                  Tenant of any of its obligations pursuant to this Lease. All
                  Rent received by Tenant from its subtenants in excess of the
                  Rent payable by Tenant to Landlord under this Lease applicable
                  to the portion of the Premises subleased, after deducting
<PAGE>   21
                  therefrom the commercially reasonable brokerage commissions,
                  moving allowance to subtenants, tenant improvements made at
                  the request of subtenants and attorneys' fees incurred by
                  Tenant in negotiating and documenting the sublease, shall be
                  deemed "BONUS RENT" and Seventy-five percent (75%) of the
                  Bonus Rent shall be promptly paid to Landlord, or, as the case
                  may be, Seventy-five percent (75%) of all sums (determined in
                  the same manner as Bonus Rent) to be paid by an assignee to
                  Tenant in consideration of the assignment of this Lease shall
                  be promptly paid to Landlord. Notwithstanding the foregoing,
                  during the first thirty six (36) months of the Term of this
                  Lease Tenant shall be required to pay only 50% of the Bonus
                  Rent to Landlord with respect to the Sublease of any portion
                  of the Expansion Premises. If Tenant requests Landlord to
                  consent to a proposed assignment or subletting, Tenant shall
                  pay to Landlord, whether or not consent is ultimately given,
                  an amount equal to Landlord's reasonable attorneys' fees and
                  costs incurred in connection with such request. Each request
                  for consent to an assignment or subletting shall be in
                  writing, and shall be accompanied by information as may be
                  relevant to Landlord's determination as to the financial and
                  operational responsibility and stability of the proposed
                  assignee or sublessee and the appropriateness of the proposed
                  use by such assignee or sublessee. Such information shall
                  include a summary of the proposed use of, and any proposed
                  modifications to, the Premises. Tenant shall provide Landlord
                  with such other or additional information and/or documentation
                  as may reasonably be requested by Landlord. Tenant shall, upon
                  completion of any assignment or subletting of all or any
                  portion of the Premises, immediately and irrevocably assign to
                  Landlord as security for Tenant's obligations under the Lease,
                  all Rent from any such subletting or assignment. Landlord, as
                  assignee and attorney in fact for Tenant, shall have the right
                  to collect all rent and other revenues collectable pursuant to
                  any such sublet or assignment and apply such rent and other
                  revenues towards Tenant's obligations under the Lease.

         b.       No interest of Tenant in this Lease shall be assignable by
                  involuntary assignment through operation of law (including
                  without limitation the transfer of this Lease by testacy or
                  intestacy). Each of the following acts shall be considered an
                  involuntary assignment: (a) if Tenant is or becomes bankrupt
                  or insolvent, makes an assignment for the benefit of
                  creditors, or institutes proceedings under the Bankruptcy Act
                  in which Tenant is the bankrupt; or if Tenant is a partnership
                  or consists of more than one person or entity, if any partner
                  of the partnership or other person or entity is or becomes
                  bankrupt or insolvent, or makes an assignment for the benefit
                  of creditors; or (b) if a writ of attachment or execution is
                  levied on this Lease; or (c) if in any proceeding or action to
                  which Tenant is a party, a receiver is appointed with
                  authority to take possession of the Premises. An involuntary
                  assignment shall constitute a default by Tenant and Landlord
                  shall have the right to elect to terminate this Lease, in
                  which case this Lease shall not be treated as an asset of
                  Tenant.

         c.       Notwithstanding any provision to this Lease to the contrary,
                  in any event where Landlord's consent is required for
                  assignment or sublease, Landlord may, at its option, elect to
                  terminate the Lease instead of approving the requested
                  assignment or sublease. Should Landlord so elect to terminate
                  this Lease, all of the obligations of the parties thereunder
                  shall terminate on the later of sixty (60) days following
                  Landlord's notice to Tenant of its election hereunder, or the
                  effective date of the proposed assignment or subletting sought
                  by the Tenant, but in no event later than one hundred twenty
                  (120) days following the date of Landlord's election under
                  this P.19.c. At the time of termination, all obligations of
                  both parties hereunder shall terminate as to obligations
                  thereafter accruing except as otherwise expressly provided in
                  this Lease.

20.      DEFAULT. The occurrence of any of the following shall constitute a
         default by Tenant: (a) a failure of Tenant to pay Rent within ten (10)
         days of its due date or a failure of Tenant to pay Operating Expenses
         and all other charges within ten (10) days of Tenant's receipt of
         Landlord's billing for same; (b) abandonment of the Premises; or (c)
         failure to timely perform any other provision of this Lease where such
         failure continues for a period in excess of thirty days following
         written notice of such failure, provided however, that if the nature of
         such failure is such that it cannot reasonably be cured within thirty
         days, then Tenant shall not be in default if Tenant commences to cure
         such failure within thirty days and thereafter diligently prosecutes
         the cure to completion. Tenant shall give written notice to Landlord of
         any default by Landlord of its obligations pursuant to this Lease
         asserted by Tenant (with a copy of such notice to any lender ("LENDER")
         against the Premises whose address has been provided to Tenant for such
         purpose). Landlord and Landlord's Lender shall be afforded a reasonable
         opportunity to cure any claimed default by Landlord and Landlord shall
         not be considered in default so long as Landlord (or Landlord's Lender)
         commences such cure within a reasonable period of time and thereafter,
         continues to attempt to complete such cure. Landlord, from time to
         time, shall provide Tenant with the name and address of its Lender.
<PAGE>   22
21.      LANDLORD'S REMEDIES. Landlord shall have the following remedies upon
         and following a default by Tenant and the expiration of all applicable
         cure periods. (These remedies are not exclusive; they are cumulative
         and in addition to any remedies now or later allowed by law):

         a.       Landlord may continue this Lease in full force and effect, and
                  this Lease will continue in effect so long as Landlord does
                  not terminate Tenant's right to possession, and Landlord shall
                  have the right to collect Rent when due. During the period
                  Tenant is in default, Landlord can enter the Premises and
                  relet the Premises, or any part of the Premises, to third
                  parties for Tenant's account. Tenant shall be liable
                  immediately to Landlord for all costs Landlord incurs in
                  reletting the Premises, including without limitation, brokers'
                  commissions, expenses of remodeling the Premises required by
                  the reletting, and like costs. Reletting can be for a period
                  shorter or longer than the remaining Term of this Lease.
                  Tenant shall pay to Landlord the Rent due under this Lease on
                  the dates the Rent is due, less the Rent Landlord receives
                  from any reletting. No act by Landlord allowed by this P.21.a.
                  shall terminate this Lease unless Landlord notifies Tenant in
                  writing that Landlord elects to terminate this Lease. After
                  Tenant's default and for so long as Landlord does not
                  terminate Tenant's right to possession of the Premises, if
                  Tenant obtains Landlord's consent, Tenant shall have the right
                  to assign or sublet its interest in this Lease, but Tenant
                  shall not be released from liability. Landlord's consent to
                  such a proposed assignment or subletting shall not be
                  unreasonably withheld or delayed. If Landlord elects to relet
                  the Premises as provided in this P.21.a., Rent that Landlord
                  receives from reletting shall be applied to the payment of:
                  first, any indebtedness from Tenant to Landlord other than
                  Rent due from Tenant; second, all costs, including for
                  maintenance incurred by Landlord in reletting; and third, Rent
                  due and unpaid under this Lease. After deducting the payments
                  referred to in this P.21.a., any sum remaining from the Rent
                  Landlord receives from reletting shall be held by Landlord and
                  applied in payment of future Rent as Rent becomes due under
                  this Lease. In no event shall Tenant be entitled to any excess
                  Rent received by Landlord. If, on the date Rent is due under
                  this Lease, the Rent received from the reletting is less than
                  the Rent due on that date, Tenant shall pay to Landlord, in
                  addition to the remaining Rent due, all costs including for
                  maintenance Landlord incurred in reletting that remain after
                  applying the Rent received from the reletting as provided in
                  this P.21.a.; and

         b.       Landlord may terminate Tenant's right to possession of the
                  Premises at any time. No act by Landlord other than giving
                  express written notice thereof to Tenant shall terminate this
                  Lease. Acts of maintenance, efforts to relet the Premises, or
                  the appointment of a receiver on Landlord's initiative to
                  protect Landlord's interest under this Lease shall not
                  constitute a termination of Tenant's right to possession. Upon
                  termination of Tenant's right to possession, Landlord has the
                  right to recover from Tenant: (1) the Worth of the unpaid Rent
                  that had been earned at the time of termination of Tenant's
                  right to possession; (2) the Worth of the amount by which the
                  unpaid Rent that would have been earned after the date of
                  termination until the time of award exceeds the amount of the
                  loss of Rent that Tenant proves could have been reasonably
                  avoided; (3) the Worth of the amount of the unpaid Rent that
                  would have been earned after the award throughout the
                  remaining Term of the Lease to the extent such unpaid Rent
                  exceeds the amount of the loss of Rent that Tenant proves
                  could have been reasonably avoided; and (4) any other amount,
                  including but not limited to, reasonable expenses incurred to
                  relet the Premises, court costs, attorneys' fees and
                  collection costs necessary to compensate Landlord for all
                  detriment caused by Tenant's default. The "Worth", as used
                  above in (1) and (2) in this P.21.b. is to be computed by
                  allowing interest at the lesser of 18 percent per annum or the
                  maximum legal interest rate permitted by law. The "Worth", as
                  used above in (3) in this P.21.b., is to be computed by
                  discounting the amount at the discount rate of the Federal
                  Reserve Bank of San Francisco at the time of the award, plus
                  one percent (1%).

22.      ENTRY OF PREMISES. Landlord and/or its authorized representatives shall
         have the right after reasonable advance notice except for emergencies
         to enter the Premises at all reasonable times for any of the following
         purposes: (a) to determine whether the Premises are in good condition
         and whether Tenant is complying with its obligations under this Lease;
         (b) to do any necessary maintenance and to make any restoration to the
         Premises that Landlord has the right or obligation to perform; (c) to
         post "for sale" signs at any time during the Term, or to post "for
         rent" or "for lease" signs during the last one hundred eighty (180)
         days of the Term or during any period while Tenant is in default; (d)
         to show the Premises to prospective brokers, agents, buyers, tenants or
         persons interested in leasing or purchasing the Premises, at any time
         during the Term; or (e) to repair, maintain or improve
<PAGE>   23
         the Premises and to erect scaffolding and protective barricades around
         and about the Premises but not so as to prevent entry to the Premises
         or to unreasonably interfere with Tenant's use of the Premises and to
         do any other act or thing necessary for the safety or preservation of
         the Premises. Landlord shall not be liable in any manner for any
         inconvenience, disturbance, loss of business, nuisance or other damage
         arising out of Landlord's entry onto the Premises as provided in this
         P.22, unless caused by Landlord's gross negligence or willful
         misconduct. Tenant shall not be entitled to an abatement or reduction
         of Rent if Landlord exercises any rights reserved in this P.22.
         Landlord shall conduct its activities on the Premises as provided
         herein in a commercially reasonable manner so as to minimize the
         inconvenience, annoyance or disturbance to Tenant.

23.      SUBORDINATION.

         a.       AUTOMATIC SUBORDINATION. Without the necessity of any
                  additional document being executed by Tenant for the purpose
                  of effecting a subordination, and at the election of Landlord
                  or Landlord's Lender, this Lease shall be subject and
                  subordinate at all times to (i) all ground leases or
                  underlying leases which may now exist or hereafter be executed
                  affecting the Premises, (ii) the lien of any mortgage or deed
                  of trust which may now exist or hereafter be executed
                  affecting the Premises, and (iii) the lien of any mortgage or
                  deed of trust which may hereafter be executed in any amount
                  for which the Premises, ground leases or underlying leases, or
                  Landlord's interest or estate in any of said items is
                  specified as security. In the event that any ground lease or
                  underlying lease terminates for any reason or any mortgage or
                  deed of trust is foreclosed or a conveyance in lieu of
                  foreclosure is made for any reason, Tenant shall,
                  notwithstanding any subordination, attorn to and become the
                  Tenant of the successor in interest (including without
                  limitation to Lender) to Landlord ("SUCCESSOR"). In connection
                  with any such termination of a ground lease or underlying
                  lease or any foreclosure or conveyance in lieu of foreclosure
                  made in connection with any mortgage or deed of trust, then so
                  long as Tenant is not in default after all applicable notice
                  and cure periods pursuant to this Lease, Tenant shall not be
                  disturbed in its possession of the Premises or in the
                  enjoyment of its rights pursuant to this Lease during the Term
                  of this Lease or any extension or renewal thereof.
                  Notwithstanding any subordination of this Lease to the lien of
                  any mortgage or deed of trust, the Lender, at any time, shall
                  be entitled to subordinate the lien of its mortgage or deed of
                  trust to this Lease by filing a notice of subordination in the
                  County in which the Premises are located, and Lender shall
                  agree in connection with any such filing, that Tenant shall
                  not be disturbed in its possession of the Premises so long as
                  Tenant is not in default after all applicable notice and cure
                  periods pursuant to this Lease. In connection with any such
                  filing, Tenant shall be obligated to attorn to and to become a
                  Tenant of any Successor.

         b.       ADDITIONAL SUBORDINATION. From time to time at the request of
                  Landlord, Tenant covenants and agrees to execute and deliver
                  within ten (10) business days following the date of written
                  request from Landlord, documents evidencing the priority or
                  subordination of this Lease with respect to any ground lease
                  or underlying lease or the lien of any mortgage or deed of
                  trust in connection with the Premises. Any and all such
                  documents shall be in such form as is reasonably acceptable to
                  the Lender(s). Any subordination agreement so requested by
                  Landlord shall provide for Tenant to attorn to the Successor
                  and shall further provide that Tenant shall not be disturbed
                  in its possession of the Premises or in the enjoyment of its
                  rights pursuant to this Lease so long as Tenant is not in
                  default after all applicable notice and cure periods with
                  respect to its obligations pursuant to the Lease. Any such
                  Subordination, Non-disturbance and Attornment Agreement shall
                  be recorded in the official records of the office of the
                  County Recorder in the County in which the Premises is
                  located.

         c.       NOTICE FROM LENDER. Tenant shall be entitled to rely upon any
                  notice given by a Lender in connection with the Premises
                  requesting that Tenant make all future Rent payments to such
                  Lender, and Tenant shall not be liable to Landlord for any
                  payment made to such Lender in accordance with such notice.
                  Notwithstanding any provision to the contrary of this Lease, a
                  Successor shall not be (i) obligated to recognize the payment
                  of Rent for a period of more than one month in advance; (ii)
                  responsible for liabilities accrued pursuant to this Lease
                  prior to the date ("SUCCESSION DATE") upon which the Successor
                  becomes the "Landlord" hereunder; (iii) responsible to cure
                  defaults of the Landlord pursuant to this Lease existing as of
                  the Succession Date, except for defaults of a continuing
                  nature of which Successor received notice (as provided in
                  P.20.) and in respect of which Tenant afforded Successor a
                  reasonable cure period following such notice; (iv) responsible
                  for any Security Deposit delivered by Tenant pursuant to this
                  Lease not actually received by the Successor; or (v) bound by
                  any execution, modification, termination or
<PAGE>   24
                  extension of this Lease or any grant of a purchase option or
                  right of first refusal or any other action taken by the
                  Landlord pursuant to this Lease, except in accordance with the
                  provisions of an assignment of leases executed by Landlord in
                  favor of a Lender.

24.      ESTOPPEL CERTIFICATE; TENANT FINANCIAL STATEMENTS. Tenant, at any time
         and from time to time, upon not less than ten (10) business days
         written notice from Landlord, will execute, acknowledge and deliver to
         Landlord and, at Landlord's request, to any existing or prospective
         purchaser, ground lessor or mortgagee of any part of the Premises, a
         certificate of Tenant stating: (a) that Tenant has accepted the
         Premises (or, if Tenant has not done so, Tenant has not accepted the
         Premises and specifying the reasons therefor); (b) the Commencement and
         Expiration Dates of this Lease; (c) that this Lease is unmodified and
         in full force and effect (or, if there have been modifications, that
         same is in full force and effect as modified and stating the
         modifications); (d) whether or not to the best of Tenant's knowledge
         there are then existing any defenses against the enforcement of any of
         the obligations of Tenant under this Lease (and, if so, specifying
         same); (e) whether or not to the best of Tenant's knowledge there are
         then existing any defaults by Landlord in the performance of its
         obligations under this Lease (and, if so, specifying same); (f) the
         dates, if any, to which the Rent and other charges under this Lease
         have been paid; (g) whether or not there are Rent increases during the
         Lease Term and if so the amount of same; (h) whether or not the Lease
         contains any options or rights of first offer or first refusal; (i) the
         amount of any Security Deposit or other sums due Tenant; (j) the
         current notice address for Tenant; and (k) any other information that
         may reasonably be required by any of such persons. It is intended that
         any such certificate of Tenant delivered pursuant to this P.24. may be
         relied upon by Landlord and any existing or prospective purchaser,
         ground lessor or mortgagee of the Buildings containing the Premises.
         Tenant agrees, at any time upon request by Landlord, to deliver to
         Landlord the most recent financial statements of Tenant with an opinion
         from a certified public accountant, if available, including a balance
         sheet and profit and loss statement for the most recent prior three
         years, all prepared in accordance with generally accepted accounting
         principles consistently applied. Landlord agrees to hold such financial
         statements confidential and to share them only with prospective lenders
         and purchasers of the Premises. Other than for prospective lenders and
         purchasers, Landlord shall not request financial statements more often
         than twice in any calendar year.

25.      WAIVER. No delay or omission in the exercise of any right or remedy by
         Landlord shall impair such right or remedy or be construed as a waiver.
         No act or conduct of Landlord, including without limitation, acceptance
         of the keys to the Premises, shall constitute an acceptance of the
         surrender of the Premises by Tenant before the expiration of the Term.
         Only written notice from Landlord to Tenant shall constitute acceptance
         of the surrender of the Premises and accomplish 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. Any waiver by Landlord of any Default must be in writing and
         shall not be a waiver of any other Default concerning the same or any
         other provision of the Lease.

26.      SURRENDER OF PREMISES. Upon expiration of the Term, Tenant shall
         surrender to Landlord the Premises and all tenant improvements and
         alterations in the same condition as existed at the Commencement Date,
         except for ordinary wear and tear and alterations which Tenant has the
         right or is obligated to remove under the provisions of P.14. herein.
         Tenant shall remove all personal property including, without
         limitation, all wallpaper, paneling and other decorative improvements
         or fixtures and shall perform all restoration made necessary by the
         removal of any alterations or Tenant's personal property before the
         expiration of the Term, including, for example, restoring all wall
         surfaces to their condition as of the Commencement Date. Landlord can
         elect to retain or dispose of in any manner Tenant's personal property
         not removed from the Premises by Tenant prior to the expiration of the
         Term. Tenant waives all claims against Landlord for any damage to
         Tenant resulting from Landlord's retention or disposition of Tenant's
         personal property. Tenant shall be liable to Landlord for Landlord's
         reasonable cost for storage, removal and disposal of Tenant's personal
         property.

27.      HOLDOVER. If Tenant with Landlord's consent remains in possession of
         the Premises after expiration of the Term or after the date in any
         notice given by Landlord to Tenant terminating this Lease, such
         possession by Tenant shall be deemed to be a month to month tenancy
         cancelable by either party on thirty (30) days written notice given at
         any time by either party and all provisions of this Lease, except those
         pertaining to Term, renewal options and Base Rent, shall apply and
         Tenant shall thereafter pay monthly Base Rent computed on a per-month
         basis, for each month or part thereof (without reduction for any
         partial month) that Tenant remains in possession,
<PAGE>   25
         in an amount equal to one hundred fifty percent (150%) of the Base Rent
         that was in effect for the last full calendar month immediately
         preceding expiration of the Term.

         If Tenant holds over after the expiration or earlier termination of the
         Term hereof, without the consent of Landlord, Tenant shall become a
         Tenant at sufferance only with a continuing obligation to pay Rent
         provided that the Base Rent shall be one hundred fifty percent (150%)
         of the Base Rent that was in effect for the last full calendar month
         immediately preceding expiration of the Term for the first thirty (30)
         days of such holdover, and two hundred percent (200%) of such Base Rent
         thereafter during the pendency of such holdover. Acceptance by Landlord
         of Rent after expiration or earlier termination of the Term shall not
         constitute a consent to a holdover hereunder or result in a renewal.
         The foregoing provisions of this P.27. are in addition to and do not
         affect Landlord's right of re-entry or any rights of Landlord hereunder
         or as otherwise provided by law. If Tenant fails to surrender the
         Premises upon the expiration of this Lease despite demand to do so by
         Landlord, Tenant shall indemnify and hold Landlord harmless from all
         loss or liability arising out of such failure, including without
         limitation, any claim made by any succeeding tenant founded on or
         resulting from such failure to surrender. No provision of this P.27.
         shall be construed as implied consent by Landlord to any holding over
         by Tenant. Landlord expressly reserves the right to require Tenant to
         surrender possession of the Premises to Landlord as provided in this
         Lease upon expiration or other termination of this Lease. The
         provisions of this P.27. shall not be considered to limit or
         constitute a waiver of any other rights or remedies of Landlord
         provided in this Lease or at law.

28.      NOTICES. All notices, demands, or other communications required or
         contemplated under this Lease, including any notice delivered to Tenant
         by the Lender, shall be in writing and shall be delivered either by
         receipted courier service, or by the United States Postal Service,
         first class registered or certified mail, postage prepaid, return
         receipt requested, at the address for notices set forth in P.1. A
         notice shall only be deemed to have been duly given upon the date of
         actual delivery or attempted delivery, as evidenced by receipt. Either
         Tenant or Landlord may change the address to which notices are to be
         given to such party hereunder by giving written notice of such change
         of address to the other in accordance with the notice provisions
         hereof.

29.      TENANT IMPROVEMENTS. Landlord shall deliver the Premises in its current
         "as is" condition and Tenant, at Tenant's sole cost and expense, shall
         cause to be installed in the Premises additional tenant improvements,
         subject to Landlord's prior written approval of the final scope of work
         (the "APPROVED Work"). Tenant agrees to spend at least $1,500,000 for
         Approved Work by August 31, 2002 and provide Landlord by said date with
         written evidence of such expenditures. Landlord acknowledges and agrees
         that it shall not unreasonably withhold, delay or condition its
         approval of tenant improvements to build-out the Premises as a biotech
         facility provided that the type of improvements and the quality of
         construction are reasonably consistent with the other biotech
         facilities located in San Diego County, California. Landlord shall have
         the right to approve all of Tenant's proposed contractors and
         subcontractors relating to the installation of the Approved Work.
         Tenant shall have the right to access the Premises upon full execution
         and delivery of the Lease for the purpose of installing the Approved
         Work (the "CONSTRUCTION PERIOD") provided, however, Tenant shall be
         bound by the terms and conditions of the Lease during the Construction
         Period except for Tenant's obligation to pay Base Rent or Operating
         Expenses.

30.      COMMMENCEMENT DATES.

         a.       INITIAL PREMISES COMMENCEMENT DATE. The Term of the Lease (and
                  the commencement of Rent) as to the Initial Premises shall
                  commence on the earliest to occur of (i) commencement of
                  occupancy of the Initial Premises by Tenant's personnel, (ii)
                  substantial completion of the Approved Work in the Initial
                  Premises as determined by the building architect, or (iii)
                  September 1, 2000.

         b.       EXPANSION PREMISES COMMENCEMENT DATE. The Term of the Lease
                  (and the commencement of Rent) as to the Expansion Premises
                  shall commence upon the delivery of the Expansion Premises to
                  Tenant, which delivery shall occur no sooner than June 1, 2001
                  and no later than January 1, 2002.

31.      OPTION(S) TO RENEW.

         a.       GRANT OF OPTION(S). Tenant shall have the right, at its
                  option, to extend the Lease for two (2) period(s) of five (5)
                  years each ("EXTENDED TERM(S)") on an "as is" basis for the
                  Initial Premises and the Expansion Premises on an "all or
                  none" basis commencing at the expiration of the previous Term,
                  provided that at
<PAGE>   26
                  the time of exercise and at the time of commencement of each
                  Extended Term, Tenant is not in default beyond any applicable
                  cure period under this Lease.

         b.       EXERCISE OF OPTION(S). If Tenant decides to extend the Lease
                  for an Extended Term, Tenant shall give written notice to
                  Landlord of its election to extend not less than twelve (12)
                  months prior to the expiration of the previous Term. Tenant's
                  failure to give timely notice to Landlord of Tenant's election
                  to extend shall be deemed a waiver of Tenant's right to
                  extend. The terms and conditions applicable to each Extended
                  Term shall be the same terms and conditions contained in this
                  Lease except that Tenant shall not be entitled to any further
                  option to extend beyond the second Extended Term. The Base
                  Rent for each Extended Term shall be as determined in
                  accordance with P.31.c.

         c.       DETERMINATION OF BASE RENT DURING THE EXTENDED TERM(S).

                  1)       AGREEMENT ON INITIAL BASE RENT. Landlord shall not be
                           obligated to provide Tenant with the proposed fair
                           market rental value until three (3) months prior to
                           the expiration of the previous Term. Landlord and
                           Tenant shall have thirty (30) days after Landlord
                           provides the proposed fair market rental value in
                           which to agree on the Base Rent during each Extended
                           Term, which shall be the fair market rental value of
                           the Premises during said Extended Term. The fair
                           market rental value of the Premises during said
                           Extended Term shall be based on the uses of the
                           Premises permitted under this Lease, the quality,
                           size, design and location of the Premises, and the
                           rental value for lease renewals or extensions of
                           comparable size, quality and location and shall
                           include annual CPI or similar periodic adjustments.
                           If Landlord and Tenant agree on the Base Rent for
                           each Extended Term during the thirty (30) day period,
                           they shall immediately execute an amendment to this
                           Lease stating the new Base Rent.

                  2)       SELECTION OF APPRAISERS. If Landlord and Tenant are
                           unable to agree on the Base Rent (including any
                           periodic adjustments) for the subject Extended Term
                           within the thirty (30) day period, then within ten
                           (10) days after the expiration of the thirty (30) day
                           period and provided that Tenant has timely exercised
                           the subject renewal option in accordance with
                           P.31.b., Landlord and Tenant each at its own cost and
                           by giving notice to the other party, shall appoint a
                           competent and disinterested real estate appraiser
                           with at least five (5) years full-time commercial
                           appraisal experience in the Silicon Valley market
                           area to appraise the fair market rental value of the
                           Premises and set the Base Rent (including periodic
                           adjustments) during said Extended Term. If either
                           Landlord or Tenant does not appoint an appraiser
                           within said ten (10) days, the single appraiser
                           appointed shall be the sole appraiser and shall set
                           the Base Rent (including periodic adjustments) during
                           said Extended Term. If two (2) appraisers are
                           appointed by Landlord and Tenant as stated herein,
                           they shall meet promptly and attempt to set the Base
                           Rent for said Extended Term. If the two (2)
                           appraisers are unable to agree within thirty (30)
                           days after the second appraiser has been appointed,
                           they shall attempt to select a third appraiser
                           meeting the same qualifications within ten (10) days
                           after the last day the two (2) appraisers are given
                           to set the Base Rent (including periodic
                           adjustments). If they are unable to agree on the
                           third appraiser, either Landlord or Tenant, by giving
                           ten (10) days' notice to the other party, can apply
                           to the then President of the Real Estate Board or to
                           the Presiding Judge of the Superior Court of the
                           County in which the Premises are located, for the
                           selection of a third appraiser who meets the
                           qualifications stated herein. Landlord and Tenant
                           each shall bear one-half (-1/2) of the cost of
                           appointing the third appraiser and of paying the
                           third appraiser's fee. The third appraiser, however
                           selected, shall be a person who has not previously
                           acted in any capacity for either Landlord or Tenant,
                           or their affiliates.

                  3)       VALUE DETERMINED BY THREE (3) APPRAISERS. Within
                           thirty (30) days after the selection of the third
                           appraiser, a majority of the appraisers shall set the
                           Base Rent (including periodic adjustments) for each
                           Extended Term. If a majority of the appraisers are
                           unable to set the Base Rent (including periodic
                           adjustments) within the stipulated period of time,
                           Landlord's appraiser shall arrange for simultaneous
                           exchange of written appraisals from each of the
                           appraisers and the three (3) appraisals shall be
                           added together and their total divided by three (3);
                           the resulting quotient shall be the Base Rent
                           (including periodic adjustments) for the Premises
                           during each Extended Term. If, however, the low
                           appraisal and/or the high appraisal are/is more than
                           fifteen
<PAGE>   27
                           percent (15%) lower and/or higher than the middle
                           appraisal, such low appraisal and/or high appraisal
                           shall be disregarded. If only one (1) appraisal is
                           disregarded, the remaining two (2) appraisals shall
                           be added together and their total divided by two (2);
                           the resulting quotient shall be the Base Rent for the
                           Premises (including periodic adjustments) during each
                           Extended Term. If both the low appraisal and the high
                           appraisal are disregarded as stated in this
                           P.31.c.3), the middle appraisal shall be the Base
                           Rent (including periodic adjustments) for the
                           Premises during each Extended Term.

         d.       MINIMUM BASE RENT LEVEL. Notwithstanding any other provision
                  of this Lease, in no event shall the initial Base Rent for the
                  subject Extended Term be less than the Base Rent prevailing
                  immediately prior to the expiration of the previous Term.

32.      MISCELLANEOUS PROVISIONS.

         a.       TIME OF ESSENCE. Time is of the essence of each provision of
                  this Lease.

         b.       SUCCESSOR. This Lease shall be binding on and inure to the
                  benefit of the parties and their successors, except as
                  provided in P.19.

         c.       LANDLORD'S CONSENT. Any consent required by Landlord under
                  this Lease must be granted in writing and may be withheld or
                  conditioned by Landlord in its sole and absolute discretion
                  unless otherwise provided.

         d.       PERSONAL RIGHTS. Notwithstanding any other provision(s) of
                  this Lease to the contrary, any provisions of this Lease
                  providing for the renewal, extension or early termination of
                  the Lease and/or for the expansion of the Premises (to include
                  without limitation rights to negotiate, rights of first
                  refusal, etc.) shall be (i) personal to the original Tenant
                  and shall not be assignable or otherwise transferable other
                  than to a Permitted Transferee (either voluntarily or
                  involuntarily) to any third party for any reason whatsoever,
                  and (ii) conditioned upon Tenant not then being in default
                  under this Lease.

         e.       COMMISSIONS. Each party represents that it has not had
                  dealings with any real estate broker, finder or other person
                  with respect to this Lease in any manner, except for the
                  Broker(s) identified in P.1., who shall be compensated by
                  Landlord in accordance with the separate agreement between
                  Landlord and the Broker(s).

         f.       OTHER CHARGES; LEGAL FEES. If Landlord becomes a party to any
                  litigation concerning this Lease or the Premises by reason of
                  any act or omission of Tenant or Tenant's authorized
                  representatives, Tenant shall be liable to Landlord for
                  reasonable attorneys' fees and court costs incurred by
                  Landlord in the litigation. Should the court render a decision
                  which is thereafter appealed by any party thereto, Tenant
                  shall be liable to Landlord for reasonable attorneys' fees and
                  court costs incurred by Landlord in connection with such
                  appeal.

                  If either party commences any litigation against the other
                  party or files an appeal of a decision arising out of or in
                  connection with the Lease, the prevailing party shall be
                  entitled to recover from the other party reasonable attorneys'
                  fees and costs of suit. If Landlord employs a collection
                  agency to recover delinquent charges, Tenant agrees to pay all
                  collection agency and attorneys' fees charged to Landlord in
                  addition to Rent, late charges, interest and other sums
                  payable under this Lease.

         g.       LANDLORD'S SUCCESSORS. In the event of a sale or conveyance by
                  Landlord of the Buildings containing the Premises, the same
                  shall operate to release Landlord from any liability under
                  this Lease, including as to any Security Deposit to the extent
                  transferred to Landlord's successor-in-interest, and in such
                  event Landlord's successor in interest shall be solely
                  responsible for all obligations of Landlord under this Lease.

         h.       INTERPRETATION. This Lease shall be construed and interpreted
                  in accordance with the laws of the state in which the Premises
                  are located. This Lease constitutes the entire agreement
                  between the parties with respect to the Premises, except for
                  such guarantees or modifications as may be executed in writing
                  by the parties from time to time. When required by the context
                  of this Lease, the singular shall include the plural,
<PAGE>   28
                  and the masculine shall include the feminine and/or neuter.
                  "Party" shall mean Landlord or Tenant. If more than one person
                  or entity constitutes Landlord or Tenant, the obligations
                  imposed upon that party shall be joint and several. The
                  enforceability, invalidity or illegality of any provision
                  shall not render the other provisions unenforceable, invalid
                  or illegal.

         i.       AUCTIONS. Tenant shall not conduct, nor permit to be
                  conducted, either voluntarily or involuntarily, any auction
                  upon the Premises without first having obtained Landlord's
                  prior written consent. Notwithstanding anything to the
                  contrary in this Lease, Landlord shall not be obligated to
                  exercise any standard of reasonableness in determining whether
                  to grant such consent.

         j.       QUIET POSSESSION. Upon payment by Tenant of the Rent for the
                  Premises and the observance and performance of all of the
                  covenants, conditions and provisions on Tenant's part to be
                  observed and performed under this Lease, Tenant shall have
                  quiet possession of the Premises for the entire Term hereof
                  subject to all of the provisions of this Lease.

         k.       CONFLICT. Any conflict between the printed provisions of this
                  Lease and the typewritten or handwritten provisions shall be
                  controlled by the typewritten or handwritten provisions,
                  provided such typewritten or handwritten provisions are
                  initialed by the parties hereto.

         l.       OFFER. Preparation of this Lease by Landlord or Landlord's
                  agent and submission of same to Tenant shall not be deemed an
                  offer to lease to Tenant. This Lease is not intended to be
                  binding until executed by all parties hereto.

         m.       AMENDMENTS. This Lease may be modified only in writing, signed
                  by the Parties in interest at the time of the modification.
                  The parties shall amend this Lease from time to time to
                  reflect any adjustments that are made to the Base Rent or
                  other Rent payable under this Lease. As long as they do not
                  materially increase Tenant's obligations hereunder or
                  materially interfere with Tenant's use of the Premises for the
                  Permitted Use, Tenant agrees to make reasonable non-monetary
                  modifications to this Lease as may be reasonably required by
                  Lender(s) in connection with the obtaining of normal financing
                  or refinancing of the property of which the Premises are a
                  part.

         n.       CONSTRUCTION. The Landlord and Tenant acknowledge that each
                  has had its counsel review this Lease, and hereby agree that
                  the normal rule of construction to the effect that any
                  ambiguities are to be resolved against the drafting party
                  shall not be employed in the interpretation of this Lease or
                  in any amendments or exhibits hereto.

         o.       CAPTIONS. Article, section and paragraph captions are not a
                  part hereof.

         p.       EXHIBITS. For reference purposes the Exhibits are listed
                  below:

                  Exhibit A: The Premises
                  Exhibit B: The Property
                  Exhibit C: Rules and Regulations
                  Exhibit D: Covenants, Conditions And Restrictions



LIMAR REALTY CORP. #13,               ARENA PHARMACEUTICALS, INC.,
 A CALIFORNIA CORPORATION              A DELAWARE CORPORATION

By:    /s/ Theodore H. Kruttschnitt   By:    /s/ Jack Lief

Name:     Theodore H. Kruttschnitt    Name:     Jack Lief

Title:    President                   Title:    President & CEO

Date:                                 Date:
<PAGE>   29
By:    /s/ Theodore H. Kruttschnitt   By:    /s/ Richard P. Burgoon, Jr.

Name:     Theodore H. Kruttschnitt    Name:     Richard P. Burgoon, Jr.

Title:    Secretary                   Title:    Senior Vice President,
                                                Operations, General Counsel
                                                and Secretary

Date:                                 Date: