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                                                                    EXHIBIT 10.4
                                      LEASE


                                64 Sidney Street

                            Cambridge, Massachusetts








                                    LANDLORD
================================================================================
                       FOREST CITY 64 SIDNEY STREET, INC.




                                     TENANT
================================================================================
                                 ALKERMES, INC.

















                             Dated: October 26, 2000


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                                TABLE OF CONTENTS
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ARTICLE 1
RECITALS AND DEFINITIONS......................................................................1
         Section 1.1       Recitals...........................................................1
         Section 1.2       Definitions........................................................1

ARTICLE 2
PREMISES AND TERM.............................................................................4
         Section 2.1       Premises...........................................................4
         Section 2.2       Appurtenant Rights.................................................5
         Section 2.3       Landlord's Reservations............................................5
         Section 2.4       Parking Passes.....................................................6
         Section 2.5       Prior Leases Superseded; Commencement Date.........................6
         Section 2.6       Extension Options..................................................7
         Section 2.7       Expansion Rights...................................................9
         Section 2.8       Stub Period.......................................................11

ARTICLE 3
RENT AND OTHER PAYMENTS......................................................................11
         Section 3.1       Annual Fixed Rent.................................................11
         Section 3.2       Real Estate Taxes.................................................11
         Section 3.3       Operating Expenses................................................13
         Section 3.4       Utility Charges...................................................17
         Section 3.5       Above-standard Services...........................................17
         Section 3.6       No Offsets........................................................17

ARTICLE 4
ALTERATIONS..................................................................................18
         Section 4.1       Consent Required for Tenant's Alterations.........................18
         Section 4.2       Ownership of Alterations..........................................19
         Section 4.3       Construction Requirements for Alterations.........................20
         Section 4.4       Payment for Tenant Alterations....................................21

ARTICLE 5
RESPONSIBILITY FOR CONDITION OF BUILDING AND PREMISES........................................21
         Section 5.1       Maintenance of Building and Common Areas by Landlord..............21
         Section 5.2       Maintenance of Premises by Tenant.................................21
         Section 5.3       Tenant-Provided Services..........................................22
         Section 5.4       Delays in Landlord's Services.....................................22
         Section 5.5       Tenant's Responsibilities Regarding Hazardous Materials...........23
         Section 5.6       Landlord's Responsibilities Regarding Hazardous Materials.........24
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                                      (i)
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         Section 5.7       Cross Indemnification.....................................................24

ARTICLE 6
TENANT COVENANTS.....................................................................................24
         Section 6.1       Permitted Uses............................................................24
         Section 6.2       Laws and Regulations......................................................25
         Section 6.3       Rules and Regulations; Signs..............................................25
         Section 6.4       Safety Compliance.........................................................25
         Section 6.5       Landlord's Entry..........................................................26
         Section 6.6       Floor Load................................................................26
         Section 6.7       Personal Property Tax.....................................................26
         Section 6.8       Assignment and Subleases..................................................26

ARTICLE 7
INDEMNITY AND INSURANCE..............................................................................29
         Section 7.1       Indemnity.................................................................29
         Section 7.2       Liability Insurance.......................................................30
         Section 7.3       Personal Property at Risk.................................................30
         Section 7.4       Landlord's Insurance......................................................31
         Section 7.5       Waiver of Subrogation.....................................................31
         Section 7.6       Policy Requirements.......................................................31

ARTICLE 8
CASUALTY AND EMINENT DOMAIN..........................................................................32
         Section 8.1       Restoration Following Casualties..........................................32
         Section 8.2       Landlord's Termination Election...........................................32
         Section 8.3       Tenant's Termination Elections............................................32
         Section 8.4       Casualty at Expiration of Lease...........................................33
         Section 8.5       Eminent Domain............................................................33
         Section 8.6       Rent After Casualty or Taking.............................................34
         Section 8.7       Temporary Taking..........................................................34
         Section 8.8       Taking Award..............................................................34
         Section 8.9       Casualty or Eminent Domain Affecting Parking Privileges...................34

ARTICLE 9
DEFAULT..............................................................................................36
         Section 9.1       Tenant's Default..........................................................36
         Section 9.2       Damages...................................................................36
         Section 9.3       Cumulative Rights.........................................................37
         Section 9.4       Landlord's Self-Help......................................................38
         Section 9.5       Enforcement Expenses; Litigation..........................................38
         Section 9.6       Late Charges; Interest on Overdue Payments................................38
         Section 9.7       Landlord's Right to Notice and Cure; Tenant's Self-Help Rights............38
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                                      (ii)
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ARTICLE 10
MORTGAGEES' AND GROUND LESSORS' RIGHTS...........................................................................39
         Section 10.1      Subordination.........................................................................39
         Section 10.2      Prepayment of Rent not to Bind Mortgagee or Ground Lessor.............................39
         Section 10.3      Tenant's Duty to Notify Mortgagee and Ground Lessor; Mortgagee's and Ground
                           Lessor's Ability to Cure..............................................................39
         Section 10.4      Estoppel Certificates.................................................................40
         Section 10.5      Subordination, Nondisturbance and Attornment Agreements...............................41

ARTICLE 11
SECURITY DEPOSIT.................................................................................................41

ARTICLE 12
MISCELLANEOUS....................................................................................................42
         Section 12.1      Notice of Lease.......................................................................42
         Section 12.2      Notices...............................................................................43
         Section 12.3      Successors and Limitation on Liability................................................43
         Section 12.4      Waivers...............................................................................43
         Section 12.5      Acceptance of Partial Payments of Rent................................................43
         Section 12.6      Interpretation and Partial Invalidity.................................................44
         Section 12.7      Quiet Enjoyment.......................................................................44
         Section 12.8      Brokerage.............................................................................44
         Section 12.9      Surrender of Premises and Holding Over................................................44
         Section 12.10     Ground Lease..........................................................................45
         Section 12.11     Financial Reporting...................................................................45
         Section 12.12     Cambridge Employment Plan.............................................................45
         Section 12.13     Truck Delivery Routes; Traffic Mitigation Measures....................................45
         Section 12.14     Parking and Transportation Demand Management..........................................46
         Section 12.15     Laboratory Animals....................................................................46
         Section 12.16     No Consequential Damages..............................................................46
         Section 12.17     Governing Law.........................................................................46
</TABLE>

EXHIBIT A          -  Basic Lease Terms
EXHIBIT B          -  Legal Description
EXHIBIT B-1        -  Depiction of Premises
EXHIBIT B-2        -  Map of University Park
EXHIBIT C          -  Work Letter
EXHIBIT D          -  Standard Services
EXHIBIT E          -  Rules and Regulations
EXHIBIT F          -  Intentionally Omitted
EXHIBIT G          -  Form of MIT Non-Disturbance Agreement
EXHIBIT H          -  Intentionally Omitted

                                     (iii)
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EXHIBIT I          -  Expedited Dispute Resolution Procedure



                                      (iv)
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                                      LEASE


                                    ARTICLE 1

                            RECITALS AND DEFINITIONS

         Section 1.1 RECITALS. This Lease (this "Lease") is entered into this
26th day of October, 2000 by and between Forest City 64 Sidney Street, Inc. (the
"Landlord"), a Massachusetts corporation, and Alkermes, Inc. (the "Tenant"), a
Pennsylvania corporation.

         In consideration of the mutual covenants herein set forth, the Landlord
and the Tenant do hereby agree to the terms and conditions set forth in this
Lease.

         Section 1.2 DEFINITIONS. The following terms shall have the meanings
indicated or referred to below:

         "Additional Rent" means all charges payable by the Tenant pursuant to
this Lease other than Annual Fixed Rent, including without implied limitation
the Tenant's parking charges as provided in Section 2.4; the Tenant's Tax
Expense Allocable to the Premises as provided in Section 3.2; the Tenant's
Operating Expenses Allocable to the Premises in accordance with Section 3.3;
amounts payable to Landlord for separately submetered utilities and services
pursuant to Section 3.4; amounts payable for special services pursuant to
Section 3.5; costs for alterations or additions to the Premises exceeding the
Tenant's Allowance (as described in the Work Letter); and the Landlord's share
of any sublease or assignment proceeds pursuant to Section 6.8.

         "Annual Fixed Rent" - See EXHIBIT A, and Section 3.1.

         "Base Building Improvements" - See the Work Letter.

         "Building" means the building located at 64 Sidney Street, Cambridge,
Massachusetts.

         "Commencement Date" - See Section 2.5.

         "Common Areas" - see Section 2.2.

         "Declaration of Covenants" means that certain Declaration of Covenants
dated as of December 15, 1997 made by Massachusetts Institute of Technology, as
declarant, recorded on March 12, 1998 in the Middlesex South Registry of Deeds
as Instrument No. 1065 and filed on March 12, 1998 in the Middlesex South
Registry District of the Land Court as Document No. 1058425.

         "Default Interest Rate" - see Section 9.6.


<PAGE>   7


         "88 Sidney Lease" means that certain lease, dated as of even date
herewith, between the Landlord and the Tenant, of the building in University
Park located at 88 Sidney Street, Cambridge, Massachusetts.

         "88 Sidney Non-fruition Termination" - See Section 2.1(c).

         "88 Sidney Rent Commencement Date" - See Section 2.1(b).

         "Expedited Dispute Resolution Procedure" means the dispute resolution
procedure described in EXHIBIT I.

         "Extension Term" - See Section 2.6.

         "Excusable Delay" - See the Work Letter.

         "External Causes" means, when referring to a party's responsibilities
under this Lease, collectively Acts of God, war, civil commotion, fire, flood or
other casualty, strikes or other extraordinary labor difficulties or shortages
of labor or materials or equipment in the ordinary course of trade,
extraordinary weather conditions, government order or regulations or other cause
not reasonably within the control of such party, and not due to the fault or
neglect of such party. In no event shall financial inability be deemed to be an
External Cause.

         "Garage" - See EXHIBIT A.

         "Initial Leasehold Improvements" means the initial alterations and
additions which Tenant is undertaking pursuant to the Work Letter.

         "Initial Term" - See EXHIBIT A.

         "Land" means the parcel of land situated in Cambridge, Massachusetts,
described in EXHIBIT B.

         "Landlord's Original Address" - See EXHIBIT A.

         "Lease Year" means each period of one year during the Term commencing
on the Commencement Date or on any anniversary thereof.

         "Market Rate Parking Charge" means the monthly parking rate for
structured parking facilities charged from time to time by owners of parking
facilities of similar age and quality, providing similar convenience and
proximity to the work environment, and similar services and amenities, in the
geographical area in which the Garage is located. As of the date hereof, parking
facilities most similar to the Garage are the parking facilities of Cambridge
Center, Technology Square and One Kendall Square.


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<PAGE>   8


         "Parking Passes" - See EXHIBIT A.

         "Permitted Uses" - See EXHIBIT A.

         "Premises" means

                           (i) the entire rentable area of the fourth (plus the
                  acid neutralization room on the first floor) and fifth floors
                  of the Building, consisting of 27,083 rentable square feet on
                  the fourth floor (which includes the aforesaid first floor
                  space) and 26,148 rentable square feet on the fifth floor, for
                  an aggregate rentable area of 53,231 rentable square feet; and

                           (ii) the rentable area of Suite 300 on the third
                  floor of the Building, consisting of 4,335 rentable square
                  feet, and the rentable area of Suite 180 on the first floor,
                  consisting of 7,407 rentable square feet, for an aggregate
                  rentable area of 11,742 rentable square feet.

         See EXHIBIT A and Sections 2.1 and 2.3.

         "Property" means the Land and the Building.

         "Removable Alterations" - See Section 4.2.

         "Rules and Regulations" - See Section 6.3.

         "Stub Period" means the period, if any, from May 1, 2012 until the
scheduled expiration date of the initial term of the 88 Sidney Lease.

         "Substantial Completion" - See the Work Letter.

         "Tenant's Original Address" - See EXHIBIT A.

         "Term" means the Initial Term (plus any Stub Period added to the
Initial Term under Section 2.8) together with any Extension Term for which an
extension option is timely exercised by the Tenant under Section 2.6.

         "Termination Date" - See EXHIBIT A.

         "University Park" means the area in Cambridge, Massachusetts, bounded
on the North side by Massachusetts Avenue, Green and Blanche Streets, on the
East side by Landsdowne, Cross and Purrington Streets, on the South side by
Pacific Street and on the West side by Brookline Street, as shown on EXHIBIT
B-2.


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<PAGE>   9


         "Work Letter" means the letter agreement of even date herewith between
the Landlord and Tenant relating to the construction of the leasehold
improvements in the Premises attached hereto and made a part hereof as EXHIBIT
C. The Work Letter is incorporated by reference and shall be deemed to be a part
of this Lease.

                                    ARTICLE 2

                                PREMISES AND TERM

         Section 2.1 PREMISES.

                  (a) The Landlord hereby leases to the Tenant, and the Tenant
         hereby leases from the Landlord, for the Term, the Premises, which
         shall be comprised of the space illustrated on EXHIBIT B-1, subject to
         the exclusion hereinbelow set forth in this Section 2.1, Landlord's
         reservations set forth in Section 2.3, such easements, covenants and
         restrictions as may affect the Property and the terms and conditions of
         this Lease. The Tenant acknowledges that, except as expressly set forth
         in this Lease, there have been no representations or warranties made by
         or on behalf of the Landlord with respect to the Premises, the Building
         or the Property or with respect to the suitability of any of them for
         the conduct of the Tenant's business. The Premises shall exclude the
         entry and main lobby of the Building, first floor elevator lobby, first
         floor mail room, the common stairways and stairwells, elevators and
         elevator wells, boiler room, sprinklers, sprinkler rooms, elevator
         rooms, mechanical rooms, loading and receiving areas, electric and
         telephone closets, janitor closets, and pipes, ducts, conduits, wires
         and appurtenant fixtures and equipment serving exclusively or in common
         other parts of the Building. If the Premises at any time includes less
         than the entire rentable floor area of any floor of the Building, the
         Premises shall also exclude the common corridors, vestibules, elevator
         lobby, toilets, janitor's closet, electrical and telephone closet, and
         freight elevator vestibule located on such floor.

                  (b) The Tenant shall, on the thirtieth (30th) day following
         the occurrence of the "Rent Commencement Date" under the 88 Sidney
         Lease (the "88 Sidney Rent Commencement Date"), surrender a portion of
         the Premises comprised of Suites 300 and 180 (the "Surrender Space")
         upon the terms and conditions of Section 12.9 hereof, and thereupon the
         Surrender Space shall be deleted from the Premises demised hereunder
         except and to the extent thereafter reincorporated into the Premises in
         accordance with Section 2.7 hereof. In the event of an 88 Sidney
         Non-fruition Termination, the Tenant may not, and shall not, surrender
         the Surrender Space until the expiration or earlier termination of this
         Lease, except as otherwise expressly provided in Section 2.1(c) below.

                  (c) Notwithstanding anything to the contrary set forth in this
         Lease, if the 88 Sidney Lease should be terminated, whether by the
         Landlord or the Tenant, pursuant to either Section 2.7 of said 88
         Sidney Lease or Article 16 of Exhibit C thereto ("88 Sidney
         Non-fruition Termination"), then the Tenant shall have the option,

                                       4
<PAGE>   10

         exercisable by notice ("Expiration Acceleration Notice") given to the
         Landlord within one hundred eighty (180) days of the date of the 88
         Sidney Non-fruition Termination, to either (i) accelerate the
         Termination Date of this Lease with respect to the entire Premises, to
         the date specified in such Expiration Acceleration Notice, which may
         not be sooner than twelve (12) months nor later than fifteen (15)
         months following the date Expiration Acceleration Notice is so given or
         (ii) accelerate the Termination Date of this Lease only with respect to
         (x) Suite 300 and 180 only, (y) Suite 300 only or (z) Suite 180 only,
         in which case the portion of the Premises so identified will be deleted
         from the Premises on the date specified in such Expiration Acceleration
         Notice, which may not be sooner than twelve (12) months nor later than
         fifteen (15) months following the date the Expiration Acceleration
         Notice is so given. The Tenant's failure to accelerate the Termination
         Date of this Lease with respect to the entire Premises or just the
         portions thereof hereinabove described, by the giving of Term
         Expiration Acceleration Notice in accordance with this Section 2.1(c),
         during the aforesaid one hundred eighty (180) day period, time being of
         the essence without limitation of anything otherwise set forth in this
         Lease, shall result in the waiver of the Tenant's right to so
         accelerate the Termination Date, and this Lease shall remain in effect
         with respect to the entire Premises (including without limitation any
         portion of the Surrender Space not specified in the Expiration
         Acceleration Notice) subject to the terms and conditions of this Lease
         without giving effect to Section 2.1(b) and (c) hereof.

         Section 2.2 APPURTENANT RIGHTS.

                  (a) The Tenant shall have, as appurtenant to the Premises, the
nonexclusive right to use in common with others, subject to the Rules and
Regulations, (i) the entry, vestibules and main lobby of the Building, first
floor mail room, the common stairways, elevators, elevator wells, boiler room,
elevator rooms, sprinkler rooms, mechanical rooms, the pipes, sprinklers, ducts,
conduits, wires and appurtenant fixtures and equipment serving the Premises in
common with others, (ii) common walkways and driveways situated upon the land
that are necessary or reasonably convenient for access to the Building, and all
other areas in and amenities of University Park as are made available generally
to the occupants of University Park or the general public, (iii) access to, and
use of in common with other tenants, loading area and freight elevator,
janitor's closet, and electrical and telephone closets, portions of the rooftop
Penthouse reserved for Tenant use, provided Tenant has equipment located
therein, subject to Rules and Regulations, as hereinafter defined in Exhibit E,
then in effect and (iv) if the Premises at any time include less than the entire
rentable floor area of any floor, the common toilets, corridors, vestibules,
bridges and appurtenant right to the Premises the right to use portions of the
roof of the Building, outside of the Base Building Penthouse on the roof, as
shall be reasonably designed by Landlord for location of Tenant equipment. All
Tenant's installations of equipment on the roof and any required interior and/or
exterior ducts shall be subject to Landlord's reasonable approval, and in no
event shall such installation exceed the live load, or the Base Building System
capacity as allocated to Tenant or University Park design guidelines all as
approved by Landlord and permitted under the appropriate building code such
approval not to be unreasonably withheld or delayed (collectively, the "Common
Areas").

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                  (b) The Tenant shall have, as appurtenant to the Premises, the
right to enjoy such easements of ingress and egress over other land within
University Park as may benefit the Property as more particularly contemplated
under the Declaration of Covenants.

                  (c) The Tenant shall have, as appurtenant to the Premises, the
parking rights set forth in Section 2.4.

         Section 2.3 LANDLORD'S RESERVATIONS. The Landlord reserves the right
from time to time, without unreasonable interference with the Tenant's use to
alter or modify the Common Areas, provided that (i) the Landlord gives the
Tenant reasonable advance notice of the Landlord's contemplated alterations or
modifications, with respect to which the Tenant shall have reasonable approvals
rights, (ii) any such actions are effected in a good and workmanlike manner at
no additional cost to Tenant (other than improvements thereto the costs of which
are shared by tenants in University Park pursuant to the Declaration of
Covenants), and (iii) such alterations or modifications do not impair Tenant's
access to the Premises or its practical use and enjoyment thereof or of the
Common Areas.

         Section 2.4 PARKING PASSES. The Landlord shall provide and the Tenant
shall pay for Parking Passes (as defined in EXHIBIT A) for use by the Tenant's
employees in accordance with EXHIBIT A. Charges for the Tenant's parking
privileges hereunder shall be determined in accordance with EXHIBIT A, shall
constitute Additional Rent and shall be payable monthly to the Landlord, during
the Term, from and after the Rent Commencement Date. The Tenant agrees that it
and all persons claiming by, through and under it, shall at all times abide by
the Rules and Regulations set forth on EXHIBIT E and any other rules and
regulations promulgated by the Landlord in accordance with Section 6.3, of which
the Tenant is given written notice, with respect to the use of the parking
facilities provided by the Landlord pursuant to this Lease. The Landlord
acknowledges that it is the Landlord's responsibility to assure that holders of
Parking Passes who fulfill the requirements of the Rules and Regulations are
able to park their motor vehicles in the designated parking facilities.

         At the option of the Landlord, the Tenant shall enter into a separate
agreement, with the Landlord or a separate entity, or the Landlord may assign
the Landlord's rights and obligations with respect to such parking privileges to
a separate entity, upon the same terms and conditions contained in this Lease
(and cross-defaulted, both as to the Landlord's and Tenant's obligations, with
this Lease) for a period which shall have the same expiration date as the Term
and which, if this Lease provides for options on the part of the Tenant to
extend, shall be automatically extended upon the exercise of any of such
options.

         Section 2.5 PRIOR LEASES SUPERSEDED; COMMENCEMENT DATE. The Tenant is
currently occupying the Premises pursuant to that certain lease, dated September
18, 1991, as amended by that certain First Amendment of Lease, dated September
1, 1992 and that certain Second Amendment to Lease, dated December 20, 1993
(collectively referred to as the "Original 64 Sidney Lease") and pursuant to
that certain lease dated March 16, 1990, by and between Forest City 64 Sidney
Street, Inc., as Landlord, and Enzytech, Inc., as Tenant, as amended by


                                       6
<PAGE>   12


those certain letter agreements dated March 11, 1999, April 13, 1999 and
May 28, 1999, respectively, between the Landlord and the Tenant, as
successor to Enzytech (collectively, the "Former Enzytech Lease"), each of which
is terminated and superseded by this Lease. The Tenant acknowledges that, except
to the extent already paid, any amounts now due to the Landlord under the
aforesaid leases shall be immediately due and payable under this Lease and are
not affected by the termination of the aforesaid leases. In respect of the fifth
floor of the Building, which has been occupied by the Tenant since August 15,
2000 without a definitive rental rate with respect thereto having been
established, the Tenant shall pay the Landlord Annual Basic Rent with respect
thereto for the period from August 15, 2000 through the Commencement Date hereof
(less any amounts heretofore paid by the Tenant on account of basic rent
thereunder allocable to such period) at the rate of Thirty-Seven and 50/100
Dollars ($37.50) per rentable square foot of the fifth floor of the Building,
and shall be liable to the Landlord with respect to such space hereunder. The
"Commencement Date" of this Lease means the date hereof.

         Section 2.6 EXTENSION OPTIONS. Provided that there has been no Event of
Default which is uncured and continuing on the part of the Tenant, and the
Tenant is, as of the date of exercise and as of the commencement date of each
Extension Term, actually occupying at least fifty percent (50%) of the Premises
for its own business purposes, the Tenant shall have the right to extend the
Term hereof for two (2) successive periods of ten (10) years each (each such
period an "Extension Term") on the following terms and conditions:

                  (a) Such right to extend the Term shall be exercised by the
         giving of notice by Tenant to Landlord at least twelve (12) months
         prior to the expiration of the Initial Term or the then current
         Extension Term, as applicable (the "Extension Notice Deadline Date").
         Upon the giving of such notice on or before the Extension Notice
         Deadline Date, this Lease and the Term hereof shall be extended for an
         additional term, as specified above, without the necessity for the
         execution of any additional documents except a document memorializing
         the Annual Fixed Rent for the Extension Term to be determined as set
         forth below. Time shall be of the essence with respect to the Tenant's
         giving notice to extend the Term on or before the Extension Notice
         Deadline Date. In no event may the Tenant extend the Term under this
         Section 2.6 for more than twenty (20) years after the expiration of the
         Initial Term.

                  (b) Each Extension Term shall be upon all the terms,
         conditions and provisions of this Lease, except the Annual Fixed Rent
         payable during each Extension Term shall be the then Extension Fair
         Rental Value of the Premises for such Extension Term, to be determined
         under Section 2.6(d) or Section 2.6(e) below, but in no case less than
         the Annual Fixed Rent that was applicable thereto immediately preceding
         the Extension Term with respect to which the Extension Fair Rental
         Value is to be established (the "Then Applicable Annual Fixed Rental
         Rate"). For purposes of this Section 2.6, the "Extension Fair Rental
         Value" of the Premises shall mean the then current fair market annual
         rent, for leases of other space in Cambridge, Massachusetts similarly
         improved, taking into account the condition to which such premises have
         been

                                       7
<PAGE>   13

         improved (including any replacements of existing improvements or
         performance of maintenance obligations ("Replacements"), but excluding
         any capital improvements to the Premises (i.e., other than
         Replacements) that enhance the value thereof, provided the same are
         made by the Tenant during the sixty (60) month period immediately
         preceding the applicable Extension Notice Deadline Date), and the
         economic terms and conditions specified in this Lease that will be
         applicable thereto.

                  (c) If the Tenant makes a written request to the Landlord for
         a proposal for the Extension Fair Rental Value for the upcoming
         Extension Term ("Tenant's Extension Rental Request") on or before the
         day two (2) months prior to the Extension Notice Deadline Date, then
         the Landlord shall make such a written proposal ("Landlord's Proposal")
         to the Tenant within fifteen (15) days after receipt of Tenant's
         Extension Rental Request, but in no event shall the Landlord be
         required to deliver such a proposal sooner than fifteen (15) months
         prior to the scheduled commencement of such Extension Term. Following
         delivery by the Landlord of Landlord's Proposal to the Tenant, the
         parties will endeavor in good faith to reach agreement with respect to
         the establishment of the Extension Fair Rental Value for the Extension
         Term.

                  (d) Unless the parties have already mutually agreed upon such
         Extension Fair Rental Value, on or before the day that is ten (10) days
         prior to the applicable Extension Notice Deadline Date, the Landlord
         and the Tenant shall deliver to each other their final Landlord's
         Proposal (or any final change that the Landlord wishes to make to any
         previously furnished Landlord's Proposal) and a written proposal from
         the Tenant for the Extension Fair Rental Value of the Premises (the
         "Tenant's Proposal"), as the case may be, and each of such Landlord's
         Proposal and such Tenant's Proposal shall be binding on the Landlord
         and the Tenant, respectively, for the purpose of conducting the
         resolution procedure described in clause (e) below. Failure by the
         Landlord or the Tenant to timely deliver a final Landlord's Proposal or
         final Tenant's Proposal (time being of the essence), as the case may
         be, shall result in the other party's proposal being deemed the
         Extension Fair Rental Value, and failure by the Landlord or the Tenant
         to timely make any final change to the then most recently delivered
         Landlord's Proposal or Tenant's Proposal, as the case may be, shall
         render no longer subject to change the last previously delivered
         Landlord's Proposal or Tenant's Proposal, as the case may be, which
         shall thereupon become final.

                  (e) If the Tenant exercises its election to extend the Term
         under clause (a) above, without the Extension Fair Rental Value of the
         Premises having been established by mutual agreement of the parties as
         contemplated under clause (c) above, then unless a final Landlord's
         Proposal and a final Tenant's Proposal has been established under
         clause (d) above, the Landlord shall furnish a final Landlord's
         Proposal to the Tenant, and the Tenant shall furnish a final Tenant's
         Proposal to the Landlord, within thirty (30) days of the Tenant's
         having exercised its election to extend the Term. Within thirty (30)
         days after the later to occur of (x) the Tenant's exercise of its
         election to extend the Term or (y) the establishment of a final
         Landlord's Proposal and a final Tenant's Proposal in


                                       8
<PAGE>   14

         accordance with this clause (e), unless the parties have mutually
         agreed upon the identity of a real estate professional ("Arbiter") with
         at least ten (10) years continuous experience in the business of
         appraising or marketing similar commercial real estate in the
         Cambridge, Massachusetts area who has agreed to serve as hereinafter
         provided (the "Deciding Arbiter"), the Landlord and the Tenant shall
         each appoint an Arbiter who shall, within thirty (30) days of
         selection, select a third Arbiter to serve as the Deciding Arbiter. The
         Deciding Arbiter shall select either Landlord's Proposal or Tenant's
         Proposal as the proposal most accurately stating the Extension Fair
         Rental Value of the Premises. If the two Arbiters respectively selected
         by the parties (the "Party Selected Arbiters") cannot agree upon the
         selection of a Deciding Arbiter, then such two Party Selected Arbiters
         shall seek the selection of the Deciding Arbiter by the Greater Boston
         Real Estate Board. The Deciding Arbiter shall give notice of his or her
         selection to the Landlord and the Tenant and its selection of either
         Landlord's Proposal or Tenant's Proposal shall be final and binding
         upon the Landlord and the Tenant. Each party shall pay the fees and
         expenses of its real estate professional counsel and any Party Selected
         Arbiter that such party selects, if any, in connection with any
         proceeding under this paragraph, and one-half of the fees and expenses
         of the Deciding Arbiter. In the event that the commencement of the
         Extension Term occurs prior to a final determination of the Extension
         Fair Rental Value therefor (the "Extension Rent Determination Date"),
         then the Tenant shall pay the Annual Fixed Rent in effect immediately
         preceding the commencement of such Extension Term. If the Annual Fixed
         Rent for the Extension Term is determined to be greater than the Annual
         Fixed Rent paid with respect to the Premises prior to the Extension
         Rent Determination Date, then the Tenant shall pay to the Landlord the
         amount of such underpayment within thirty (30) days of the Expansion
         Rent Determination Date.

         Section 2.7 EXPANSION RIGHTS. Provided that there has been no Event of
Default which is uncured and continuing on the part of the Tenant, other than
any which have been waived by the Landlord and the Tenant, as of the date of
exercise of its rights under this Section 2.7, and the Tenant is in occupancy of
at least sixty percent (60%) of the Premises for its own business purposes, the
Tenant shall have the Right of First Opportunity (as hereinafter defined) to
lease the following spaces: (A) approximately 50,000 rentable square feet on
floors one, two and three ("Expansion Area 1") as shown on EXHIBIT B-1 as Suites
330, 200 and 150; (B) approximately 5,388 rentable square feet on the first
floor ("Expansion Area 2") as shown on EXHIBIT B-1 as Suite 100; and (C)
approximately 7,407 rentable square feet on the first floor ("Expansion Area 3")
as shown on EXHIBIT B-1 as Suite 180. Notwithstanding the foregoing, if at any
time during the Term of this Lease, the Tenant shall lease Expansion Area 1 in
accordance with this Section 2.7, the Tenant shall thereafter have the Right of
First Opportunity to lease any tenantable space in the Building which thereafter
may become available, subject to the other terms and conditions of this Section
2.7.

         With respect to each of Expansion Area 1, Expansion Area 2 and
Expansion Area 3, following the expiration or earlier termination of the term of
the lease for such space in effect as of the date of this Lease ("Existing Third
Party Lease"), as the term of such Third Party Lease

                                       9
<PAGE>   15

may have been or hereafter is extended, Tenant shall have the Right of First
Opportunity to lease the pertinent space as set forth below. Notwithstanding the
foregoing, the "Existing Third Party Lease" for Expansion Area 3 shall be the
new lease entered into by Landlord with a tenant thereof after Tenant has
vacated such space as contemplated by Section 2.1(b). If Tenant shall fail to
timely exercise its rights and thereafter lease any space in the Building to
which it has the Right of First Opportunity, then the lease or leases thereafter
entered into by the Landlord for such spaces shall be deemed the Existing Third
Party Lease with respect thereto.

         For purposes of this Section 2.7, the "Right of First Opportunity"
shall mean the Tenant's right, subordinate to the Landlord's right to negotiate
with the then existing tenant or other occupant of the space in question and
permit such tenant or occupant to continue in occupancy (notwithstanding that
such tenant or occupant may not have the right to extend the term of the
applicable Existing Third Party Lease for such space), to negotiate with
Landlord to lease the space in accordance with this Section 2.7. From time to
time during the Term of this Lease, the Landlord shall give written notice to
the Tenant ("Landlord's First Opportunity Notice") describing such space, the
date of its expected availability and the terms and conditions on which the
Landlord is interested in leasing such space, taking into account the then
current market conditions. The Tenant shall accept or decline Landlord's First
Opportunity Notice in writing, on or before the date which is ten (10) business
days after the date of Landlord's First Opportunity Notice. If the Tenant fails
to respond within such time period, or if the Tenant declines the Landlord's
offer, the Landlord shall thereafter be free to lease such space to any party on
such terms as the Landlord shall choose in the Landlord's discretion, and the
Tenant shall have no further rights to lease such space hereunder until the
space thereafter becomes available following its leasing by the Landlord, any
such lease becoming the Existing Third Party Lease with respect thereto. If the
Tenant shall accept Landlord's First Opportunity Notice, or if the Tenant shall
make a counterproposal within the foregoing ten (10) business day time period,
the Landlord agrees to negotiate in good faith with the Tenant with respect to
leasing of such space by the Tenant during the period ending fifteen (15) days
after the giving of such notice by the Tenant. If the parties cannot agree on
the Annual Fixed Rent or any other material economic terms associated with a
lease of such space within such 15 day period, but prior to the expiration of
such 15-day period the Tenant gives the Landlord notice that the Tenant commits
to lease the space in question (the "Expansion Space"), upon all of the terms
and conditions of the Landlord's last offer but for the calculation of Annual
Fixed Rent, then the Annual Fixed Rent for such Expansion Space shall be
determined in accordance with Section 2.6 above, except that the Annual Fixed
Rent shall equal the "Expansion Fair Rental Value" as defined hereinbelow, and
the Tenant shall be bound to lease such space on the terms and conditions
established under this Section 2.7.

         For purposes of this Section 2.7, the "Expansion Fair Rental Value" of
Expansion Space shall mean the then current fair market annual rent for leases
of space improved to the same level as the Premises and taking into account the
condition to which such premises have been improved (excluding Removable
Alterations) and the economic terms and conditions specified in this Lease that
will be applicable thereto (e.g. the amount of the fit-up allowance and the
absence of any rent-free period for construction of leasehold improvements),
determined as provided

                                       10

<PAGE>   16


below in this Section 2.7. If the Expansion Fair Rental Value of such Expansion
Space is not agreed upon by the Landlord and the Tenant within the 15-day period
referred to in the grammatical paragraph immediately above (the "Rental
Determination Commencement Date"), then each of the Landlord and the Tenant
shall retain a real estate professional with at least ten (10) years continuous
experience in the business of appraising or marketing similar commercial real
estate in the Cambridge, Massachusetts area who shall, within thirty (30) days
of his or her selection, prepare a written report summarizing his or her
conclusion as to the Expansion Fair Rental Value. The Landlord and the Tenant
shall simultaneously exchange such reports; provided, however, if either party
has not obtained such a report within ninety (90) days after the Rental
Determination Commencement Date, then the determination set forth in the other
party's report shall be final and binding upon the parties. If both parties
receive reports within such time and the lower determination is within ten
percent (10%) of the higher determination, then the average of these
determinations shall be deemed to be the Expansion Fair Rental Value for such
Expansion Space. If these determinations differ by more than ten percent (10%),
then the Landlord and the Tenant shall mutually select a person with the
qualifications stated above (the "Final Professional") to resolve the dispute as
to the Expansion Fair Rental Value for such Expansion Space. If the Landlord and
the Tenant cannot agree upon the designation of the Final Professional within
thirty (30) days of the exchange of the first valuation reports, either party
may apply to the American Arbitration Association, the Greater Boston Real
Estate Board, or any successor thereto, for the designation of a Final
Professional. Within ten (10) days of the selection of the Final Professional,
the Landlord and the Tenant shall each submit to the Final Professional a copy
of their respective real estate professional's determination of the Expansion
Fair Rental Value for such Space. The Final Professional shall not perform his
or her own valuation, but rather shall, within thirty (30) days after such
submissions, select the submission which is closest to the determination of the
Expansion Fair Rental Value for such Expansion Space which the Final
Professional would have made acting alone. The Final Professional shall give
notice of his or her selection to the Landlord and the Tenant and such decision
shall be final and binding upon the Landlord and the Tenant. Each party shall
pay the fees and expenses of its real estate professional and counsel, if any,
in connection with any proceeding under this paragraph, and one-half of the fees
and expenses of the Final Professional. In the event that the Tenant commences
occupancy of any Expansion Space prior to a final determination of the Expansion
Fair Rental Value therefor (the "Expansion Rent Determination Date"), then the
Tenant shall pay the Annual Fixed Rent at the rate specified in the Landlord's
written report of the Expansion Fair Rental Value until the Expansion Fair
Rental Value is established. If the Expansion Fair Rental Value is determined to
be greater than the Annual Fixed Rent paid with respect to the Expansion Space
prior to the Expansion Rent Determination Date, then the Tenant shall pay to the
Landlord the amount of such underpayment within ten (10) days of the Expansion
Rent Determination Date, and if the Expansion Fair Rental Value is determined to
be less than the Annual Fixed Rent paid with respect to the Expansion Space
prior to the Expansion Rent Determination Date, then the Landlord shall credit
the amount of such overpayment against the monthly installments of Annual Fixed
Rent thereafter coming due.

         Section 2.8 STUB PERIOD. The Landlord agrees that, if the scheduled
expiration date of the initial term of the 88 Sidney Lease should, pursuant to
the terms and conditions thereof, be

                                       11
<PAGE>   17

established as a date later than April 30, 2012, the Landlord shall, upon the
Tenant's request, agree to the extension of the Initial Term to include the Stub
Period, and a confirmatory amendment to this Lease shall be entered into by the
parties to memorialize the same at the time the parties confirm the commencement
and expiration dates of the 88 Sidney Lease.


                                    ARTICLE 3

                             RENT AND OTHER PAYMENTS

         Section 3.1 ANNUAL FIXED RENT. From and after the Commencement Date,
the Tenant shall pay, without notice or demand, monthly installments of
one-twelfth (1/12) of the Annual Fixed Rent in effect and applicable to the
Premises in advance for each full calendar month of the Term following the
Commencement Date and of the corresponding fraction of said one-twelfth (1/12)
for any fraction of a calendar month at the Commencement Date. The Annual Fixed
Rent applicable to the Premises during the Initial Term shall be as set forth in
EXHIBIT A.

         Section 3.2 REAL ESTATE TAXES. From and after the Commencement Date,
during the Term, the Tenant shall pay to the Landlord, as Additional Rent, the
Tenant's Tax Expenses Allocable to the Premises (as such term is hereinafter
defined) in accordance with this Section 3.2. The terms used in this Section 3.2
are defined as follows:

                  (a) "Tax Fiscal Year" means the 12-month period beginning July
         1 each year, or such other fiscal period in respect of which real
         estate taxes are due and payable to the appropriate governmental taxing
         authority.

                  (b) "The Tenant's Tax Expense Allocable to the Premises" means
         (i) that portion of the Landlord's Tax Expenses for a Tax Year which
         bears the same proportion thereto as the Rentable Floor Area of the
         Premises (from time to time) bears to the Total Rentable Floor Area of
         the Building and (ii) in the event that the Premises are improved to a
         standard which is higher than other portions of the Property, such
         portion of the Real Estate Taxes on the Property with respect to any
         Tax Year as is appropriate so that the Tenant bears the portion of the
         Real Estate Taxes which are properly allocable to the Premises, as
         reasonably determined by Landlord based on information with respect to
         the assessment process made available by the assessing authorities.

                  (c) "The Landlord's Tax Expenses" with respect to any Tax
         Fiscal Year means the aggregate Real Estate Taxes on the Property with
         respect to that Tax Fiscal Year, reduced by any abatement receipts with
         respect to that Tax Fiscal Year.

                  (d) "Real Estate Taxes" means (i) all taxes and special
         assessments of every kind and nature assessed by any governmental
         authority on the Property; (ii) reasonable expenses incurred in
         connection with negotiating with the city assessor's office, in advance
         of the establishment of the assessed valuation of the Property, to
         establish a

                                       12
<PAGE>   18

         mutually agreeable assessment therefor; and (iii) reasonable
         expenses incurred in connection with any proceedings for abatement
         of such taxes or special assessments. Any special assessments
         to be included within the definition of "Real Estate Taxes" shall be
         limited to the amount of the installment (plus any interest thereon) of
         such special tax or special assessment (which shall be payable over the
         longest period permitted by law) required to be paid during the Tax
         Fiscal Year in respect of which such taxes are being determined. There
         shall be excluded from such taxes all income, estate, succession,
         inheritance, excess profit, franchise and transfer taxes, all so-called
         linkage payments and delinquency interest or penalties; provided,
         however, that if at any time during the Term the present system of AD
         VALOREM taxation of real property shall be changed so that in lieu of
         the whole or any part of the ad valorem tax on real property, there
         shall be assessed on the Landlord a capital levy or other tax on the
         gross rents received with respect to the Property, or a federal, state,
         county, municipal or other local income, franchise, excise or similar
         tax, assessment, levy or charge (distinct from any now in effect)
         based, in whole or in part, upon any such gross rents, then any and all
         of such taxes, assessments, levies or charges, to the extent so based,
         shall be deemed to be included within the term "Real Estate Taxes,"
         based on the Building being the Landlord's only property. Landlord
         hereby agrees that it will cause the Land to constitute a separate
         parcel with respect to the assessment of Real Estate Taxes.

         Payments by the Tenant on account of the Tenant's Tax Expense Allocable
to the Premises shall be made monthly at the time and in the fashion herein
provided for the payment of Annual Fixed Rent and shall be in an amount of the
greater of (i) one-twelfth (1/12) of the Tenant's Tax Expense Allocable to the
Premises for the current Tax Fiscal Year as reasonably estimated by the
Landlord, or (ii) an amount reasonably estimated by any ground lessor of the
Land or holder of a first mortgage on the Property, to be sufficient, if paid
monthly, to pay the Tenant's Tax Expense Allocable to the Premises on the dates
due to the taxing authority.

         Not later than one hundred twenty (120) days after the Tenant's Tax
Expense Allocable to the Premises are determinable for the first Tax Fiscal Year
of the Term or fraction thereof and for each succeeding Tax Fiscal Year or
fraction thereof during the Term, the Landlord shall render the Tenant a
statement in reasonable detail showing for the preceding year or fraction
thereof, as the case may be, real estate taxes on the Property, and any
abatements or refunds of such taxes, together with a copy of the tax bill for
the Tax Fiscal Year in question. Reasonable expenses incurred in obtaining any
tax abatement or refund not previously charged may be charged against such tax
abatement or refund before the adjustments are made for the Tax Fiscal Year. If
at the time such statement is rendered it is determined with respect to any Tax
Fiscal Year, that the Tenant has paid (i) less than the Tenant's Tax Expense
Allocable to the Premises or (ii) more than the Tenant's Tax Expense Allocable
to the Premises, then, in the case of (i) the Tenant shall pay to the Landlord,
as Additional Rent, within thirty (30) days of such statement the amount of such
underpayment and, in the case of (ii) the Landlord shall credit the amount of
such overpayment against the monthly installments of the Tenant's Tax Expense
Allocable to the Premises next thereafter coming due (or refund such overpayment
within thirty (30) days if the Term has expired to the extent that such
overpayment exceeds any amount then due from the

                                       13
<PAGE>   19


Tenant to the Landlord). To the extent that real estate taxes shall be payable
to the taxing authority in installments with respect to periods less than a Tax
Fiscal Year, the statement to be furnished by the Landlord shall be rendered and
payments made on account of such installments. If the Commencement Date occurs
on other than the first day of a Tax Fiscal Year, or if the Termination Date
occurs on other than the last day of a Tax Fiscal Year, then the amount of
Tenant's Tax Expense Allocable to the Premises payable by the Tenant with
respect to such Tax Fiscal Year(s) shall be pro-rated based upon the ratio of
the length of the time period during such Tax Fiscal Year(s) in respect of which
the Tenant has an obligation to pay Tenant's Tax Expense Allocable to the
Premises to the length of such Tax Fiscal Year(s).

         At the reasonable request of the Tenant, the Landlord shall use
reasonable efforts to contest or seek abatement of any Real Estate Taxes
affecting the Premises. Should the Landlord contest or seek abatement of such
taxes, then it shall do so with diligence and shall keep the Tenant
appropriately informed, in the Landlord's reasonable discretion, as to such
action. If there shall be any dispute between the Landlord and the Tenant
regarding whether or not the Landlord is being reasonable in electing not to
contest or seek abatement of any Real Estate Taxes that the Tenant desires be
contested or with respect to which the Tenant desires to seek abatement, such
dispute shall, at the election of either the Landlord or the Tenant, be resolved
by the Expedited Dispute Resolution Procedure.

        Section 3.3 OPERATING EXPENSES. From and after the Commencement Date,
during the Term, the Tenant shall pay to the Landlord, as Additional Rent, the
Tenant's Operating Expenses Allocable to the Premises, in accordance with this
Section 3.3 including, without limitation, the conditions and limitations set
forth in clauses (a) through (k) below, with respect to each 12-month period
beginning February 1 each year or such other fiscal period of twelve (12)
consecutive months hereinafter adopted by the Landlord for lease administration
purposes ("Operating Fiscal Year"). "The Tenant's Operating Expenses Allocable
to the Premises" means that portion of the Operating Expenses for the Property
which bears the same proportion thereto as the Rentable Floor Area of the
Premises bears to the Total Rentable Floor Area of the Building. The term
"Operating Expenses for the Property" means the Landlord's actual cost of
operating, cleaning, maintaining and repairing the Property, the roads,
driveways and walkways for providing access to the Building, and shall include
without limitation, the cost of fulfilling the maintenance and repair
obligations required to be performed by Landlord under Section 5.1 and, subject
to the exclusions set forth below, the cost of services specified on EXHIBIT D;
premiums for insurance carried pursuant to Section 7.4; the amount of any
deductible associated with an insurance claim of the Landlord; compensation
including, without limitation, fringe benefits, worker's compensation insurance
premiums and payroll taxes paid to, for or with respect to all persons
(University Park/Building general manager and below) engaged in the operating,
maintaining or cleaning of the Property; interior landscaping and maintenance;
steam, water, sewer, gas, oil electricity, telephone and other utility charges
(excluding any such utility charges either separately metered or separately
chargeable to the Tenant for either measured or additional or special services);
cost of providing HVAC services other than such services described in Section
3.4; cost of building and cleaning supplies; the costs of routine environmental
management programs operated by Landlord; market rental costs (or alternatively

                                       14
<PAGE>   20

the Amortization Charge-off [as hereinafter defined] so long as the expenses
which are the subject of such Amortization Charge-off would have been permitted
Operating Expenses had the item in question been purchased) with respect to
equipment used in the operating, cleaning, maintaining or repairing of the
Property; cost of cleaning; cost of maintenance, and non-capital repairs and
replacements; cost of snow removal; cost of landscape maintenance; security
services; payments under service contracts with independent contractors;
management fees at reasonable rates consistent with comparable single-tenant or
multi-tenant buildings, as applicable, in the Cambridge market with the type of
occupancy and services rendered (the parties agree that for the first Lease
Year, this shall equal $0.85 per rentable square foot, and shall be subject to
reasonable adjustments during subsequent Lease Years); the cost of any capital
repairs, replacements or improvements: (i) required by any law or regulation
enacted or promulgated after the issuance of a building permit for the
construction of the Building, (ii) which is required in order to maintain the
Property in the condition it is required to be kept and maintained under Section
5.1, (iii) which reduces the Operating Expenses for the Property, or (iv) which
improves the management and operation of the Property in a manner reasonably
acceptable to Tenant (all such capital costs to be amortized on a straight-line
basis in accordance with generally accepted accounting principles, together with
interest on the unamortized balance at such rate as may have been paid by the
Landlord on funds borrowed for the purpose of making such capital repairs,
replacements or improvements (or if the Landlord did not borrow such funds, then
at the base lending rate announced by a major commercial bank designated by the
Landlord), with only the annual amortization amount ("Amortization Charge-off")
being included in Operating Expenses with respect to any Operating Fiscal Year);
charges equitably and reasonably allocated to the Building for the operating,
cleaning, maintaining, securing and repairing of the Common Areas excluding the
initial capital improvement costs associated with initially establishing the
Common Areas; and all other reasonable and necessary (in the Landlord's
reasonable judgment) expenses paid in connection with the operation, cleaning,
maintenance and repair of the Property.

Operating Expenses for the Property shall not include the following:

(a)      any cost or expense to the extent to which Landlord is paid or
         reimbursed, or which is reimbursable to the Landlord, from the Tenant
         or a third party (other than as a payment for Operating Expenses),
         including but not necessarily limited to: (1) work or service performed
         for Tenant at its cost and (2) the cost of any item for which the
         Landlord is paid or reimbursed, or which is reimbursable, by insurance,
         warranties, service contracts, condemnation proceeds, insurance
         reimbursements or otherwise;

(b)      salaries and bonuses of officers or executives of Landlord or
         administrative employees above the grade of University Park/Building
         general manager, and if personnel below such grades are shared with
         other buildings or have other duties not related to the Building, only
         the allocable portion of such person or persons salary shall be
         included in Operating Expenses;


                                       15
<PAGE>   21


(c)      interest on debt or principal amortization payments (except as
         expressly otherwise provided) or any other payments on any mortgage or
         any payments under any ground lease;

(d)      any fees, costs, and commissions incurred in procuring or attempting to
         procure other tenants including, but not necessarily limited to
         brokerage commissions, finders fees, attorneys' fees and expenses,
         entertainment costs and travel expenses;

(e)      any cost included in Operating Expenses representing an amount paid to
         a person, firm, corporation or other entity related to Landlord which
         is in excess of the amount which would have been paid on an
         arms'-length basis in the absence of such relationship (provided that
         nothing herein shall be construed as requiring that the cost in
         question equal the lowest possible cost; only that the cost not be
         inflated solely due to the absence of an arms'-length relationship);

(f)      any cost or expense which is applicable to or incurred for any parking
         garage or parking lots, or any costs of personnel used to park cars,
         collect money or provide special security, and garage management fees;

(g)      depreciation of the Building or any part thereof;

(h)      replacement or contingency reserves;

(i)      legal, auditing, consulting and professional fees and other costs
         (other than those legal, auditing, consulting and professional fees and
         other costs incurred in connection with the normal and routine
         maintenance and operation of the Building), including, without
         limitation, those: (i) paid or incurred in connection with financings,
         refinancings or sales of any Landlord's interest in the Building or
         University Park, (ii) relating to specific disputes with tenants, and
         (iii) relating to any special reporting required by securities laws;

(j)      penalty interest, late charges, penalties and similar charges
         associated with any failure by the Landlord and fulfill its obligations
         under this Lease;

(k)      bad debt loss or rent loss; and

(l)      any cost incurred primarily as a consequence of the Landlord's
         negligence or willful misconduct.

         Any costs related to the Common Areas shall, for the purposes of
determining Operating Expenses for the Property, be allocated to the Building
based upon the methodology set forth in the Declaration of Covenants.

                                       16

<PAGE>   22


         Payments by the Tenant for its share of the Tenant's Operating Expenses
Allocable to the Premises shall be made monthly at the time and in the fashion
herein provided for the payment of Annual Fixed Rent. The amount so to be paid
to the Landlord shall be an amount from time to time reasonably estimated by the
Landlord to be sufficient to aggregate a sum equal to the Tenant's share of the
Tenant's Operating Expenses Allocable to the Premises for each Operating Fiscal
Year.

         Not later than one hundred twenty (120) days after the end of each
Operating Fiscal Year or fraction thereof during the Term or fraction thereof at
the end of the Term, the Landlord shall render the Tenant a statement in
reasonable detail and according to usual accounting practices certified by an
officer of the Landlord, showing for the preceding Operating Fiscal Year or
fraction thereof, as the case may be, the Operating Expenses for the Property
and Tenant's Operating Expenses Allocable to the Premises. Said statement to be
rendered to the Tenant also shall show for the preceding Operating Fiscal Year
or fraction thereof, as the case may be, the amounts of Operating Expenses
already paid by the Tenant. If at the time such statement is rendered it is
determined with respect to any Operating Fiscal Year, that the Tenant has paid
(i) less than the entirety of the Tenant's Operating Expenses Allocable to the
Premises or (ii) more than the Tenant's Operating Expenses Allocable to the
Premises, then, in the case of (i) the Tenant shall pay to the Landlord, as
Additional Rent, within thirty (30) days of such statement the amounts of such
underpayment and, in the case of (ii) the Landlord shall credit the amount of
such overpayment against the monthly installments of the Tenant's Operating
Expenses Allocable to the Premises next thereafter coming due (or refund such
overpayment within thirty (30) days if the Term has expired to the extent that
such overpayment exceeds any amount then due from the Tenant to the Landlord).
If the Commencement Date occurs on other than the first day of an Operating
Fiscal Year, or if the Termination Date occurs on other than the last day of an
Operating Fiscal Year, then the amount of Tenant's Operating Expenses Allocable
to the Premises payable by the Tenant with respect to such Operating Fiscal
Year(s) shall be pro-rated based upon the ratio of the length of the time period
during such Operating Fiscal Year(s) in respect of which the Tenant has an
obligation to pay Tenant's Operating Expenses Allocable to the Premises to the
length of such Operating Fiscal Year.

         The Tenant may examine or audit the accounts and original bills for
Operating Expenses for the Property upon ten (10) days' prior written notice to
the Landlord, but no more often than one (1) time in any Operating Fiscal Year;
provided however, that if, during the course of any such examination or audit,
the Tenant reasonably believes that it has discovered an error in the amount of
Operating Expenses for the Property, the Tenant may review the accounts and
bills for the immediately two (2) preceding Operating Fiscal Years relating to
the subject matter of such error. The Landlord agrees that it will make
available to the Tenant in the Landlord's office in University Park, during
regular business hours, such information as the Landlord has available at such
office. In similar manner, the Tenant may examine such further records as the
Landlord (or its affiliates) may have, but such matters will be conducted where
the Landlord customarily keeps such records, which may be at the headquarters of
the Landlord's parent company. The Tenant shall bear the cost of any such audit,
unless the same discloses a discrepancy in excess of three percent (3%) of the
Tenant's Operating Expenses Allocable to the Premises, in which event


                                       17
<PAGE>   23

the Landlord shall reimburse the Tenant for such costs reasonably incurred. For
any given Operating Fiscal Year of the Landlord, the Tenant must, except in
connection with errors discovered during the course of an examination, as
provided above, make any such audit within twenty four (24) months after the
Tenant's receipt of itemized statements (and any supporting documentation
requested by the Tenant) referred to in the preceding paragraph. The Tenant
must, except in connection with errors discovered during the course of an
examination, as provided above, further make any claim for revision of Tenant's
Operating Expenses Allocable to the Premises for such Operating Fiscal Year by
written notice to the Landlord within said twenty four (24) month period. If the
Tenant and the Landlord determine that Tenant's Operating Expenses Allocable to
the Premises are more or less than reported, either the Landlord shall provide
the Tenant with a refund or a credit against the next installment of Annual
Fixed Rent and other charges or the Tenant shall pay the Landlord the amount of
any underpayment within thirty (30) days of billing, provided that if the refund
or credit to which the Tenant is entitled relates to an error in Landlord's
statement of Tenant's Operating Expenses Allocable to the Premises which
overstates the Tenant's Operating Expenses Allocable to the Premises by more
than three percent (3%), then interest at the Default Interest Rate accrue on
any such discrepancy from the date of overpayment by the Tenant to the date the
Tenant is credited or reimbursed in full therefor. The Landlord shall have no
right to give the Tenant any adjustment billing on account of Tenant's Operating
Expenses Allocable to the Premises incurred in any Operating Fiscal Year later
than the date two (2) years after the expiration of such Operating Fiscal Year.

         Section 3.4 UTILITY CHARGES. During the Term, the Tenant shall pay
directly to the provider of the service, all charges for steam, gas,
electricity, fuel, water, sewer and other services and utilities furnished to
the Premises and separately metered.

         Section 3.5 ABOVE-STANDARD SERVICES. If the Tenant requests and the
Landlord elects to provide any services to the Tenant in addition to those
described in EXHIBIT D, the Tenant shall pay to the Landlord, as Additional
Rent, the amount billed by Landlord for such services at Landlord's standard
rates as from time to time in effect, so long as such rates are consistent with
comparable services in comparable buildings within the Cambridge market. If the
Tenant has requested that such services be provided on a regular basis, the
Tenant shall, if requested by the Landlord, pay for such services at their
actual cost to Landlord, including, without limitation, a reasonable overhead
component, at the time and in the fashion in which Annual Fixed Rent under this
Lease is payable. Otherwise, the Tenant shall pay for such additional services
within thirty (30) days after receipt of an invoice from the Landlord.

         Section 3.6 NO OFFSETS. Annual Fixed Rent and Additional Rent shall be
paid by the Tenant without offset, abatement or deduction except as provided
herein.


                                       18
<PAGE>   24


                                    ARTICLE 4

                                   ALTERATIONS

         Section 4.1 CONSENT REQUIRED FOR TENANT'S ALTERATIONS. The Tenant shall
not make alterations or additions to the Premises except in accordance with the
Tenant Design and Construction Manual, and with plans and specifications
therefor first approved by the Landlord, which approval shall not be withheld
unreasonably, conditioned or delayed. Notwithstanding the foregoing, the Tenant
may, from time to time without the Landlord's prior consent and at the Tenant's
own expense, make interior non-structural alterations and changes in and to the
Premises, provided that such alterations or changes (i) do not diminish the
value of the Building, (ii) are not incompatible with existing mechanical or
electrical, plumbing, HVAC or other systems in the Building, and (iii) do not
affect the exterior appearance of the Building. Whether or not the Tenant's
changes and/or alterations require the Landlord's consent pursuant to this
paragraph, the Tenant shall, in each instance, give reasonable prior notice to
the Landlord of any alterations and changes in and to the Premises costing
$50,000.00 or more which the Tenant intends to undertake, together with a
reasonable description of the proposed work and such plans and specifications,
if any, as the Tenant has therefor and promptly following the performance of any
alterations or additions to the Premises, the Tenant shall furnish Landlord an
"as-built" set of plans and specifications for the Premises, modified
mechanical, electrical or plumbing work, specifying the alterations or additions
in question, in each case in a fashion reasonably required by the Landlord, in
addition to any other plans and specifications furnished by Tenant to Landlord
from time to time. The Landlord shall not be deemed unreasonable for withholding
approval of any alterations or additions which (i) would, in the Landlord's
reasonable judgment, adversely affect any structural or exterior element of the
Building, (ii) would in the Landlord's reasonable judgment, adversely affect the
general utility of the Building for use by prospective future tenants thereof,
(iii) would affect the exterior appearance of the Building in a manner which is
not acceptable to the Landlord, in its sole discretion, (iv) will require
unusual expense to readapt the Premises to normal use as a biotechnology office
and research and development facility unless the Tenant first gives assurance
acceptable to the Landlord that such readaptation will be made prior to such
termination without expense to the Landlord; or (v) would not be compatible with
existing mechanical or electrical, plumbing, HVAC or other systems in the
Building, in each case, as reasonably determined by the Landlord; provided,
however, that the Landlord shall specify in any notice withholding approval
specifying, in reasonable detail, the nature of the Landlord's objection, and if
the Tenant shall, at its sole cost and expense, cure the Landlord's objections
(in the Landlord's reasonable judgment except in the case of the subject matter
of clause (iii) above), then the Landlord shall not withhold its approval. If
the Tenant shall request the Landlord's approval of proposed alterations under
this Section 4.1, and the Landlord fails to respond to the Tenant's request
within ten (10) business days thereof, then the Landlord shall be deemed to have
given its approval thereto if Landlord fails to respond to the Tenant's request
within five (5) business days following the delivery to the Landlord of a
written reminder notice, given by the Tenant on or following the expiration of
the aforementioned 10-day period, which reminder notice states the "deemed
approval" consequences of failure to respond. Neither the Landlord's failure to
object to any proposed alterations or additions, nor the

                                       19
<PAGE>   25


Landlord's approval of any plans and specifications furnished by Tenant to
Landlord, shall be construed as superseding in any respect, or as a waiver of
Landlord's right to enforce, the Tenant's obligation to fulfill all of the terms
and conditions of this Lease applicable to any work contemplated thereby.

         Notwithstanding anything to the contrary contained in this Section 4.1,
if any of the Tenant's proposed alterations and/or additions affect the roof or
the envelope of the Building, the following additional conditions shall apply:

                  (a) Such alterations and changes will not in any way interfere
         with the proper functioning of and Landlord's access to equipment
         located on the roof of the Building; and

                  (b) Adequate measures are taken to screen and otherwise reduce
         the visibility and noise of such mechanical equipment, antennae and
         dishes consistent with the appearance and design scheme required by the
         City of Cambridge and other structures in University Park.

         Section 4.2 OWNERSHIP OF ALTERATIONS. All alterations and additions
shall be part of the Building and owned by the Landlord; provided, however, that
the Landlord may require removal by the Tenant of all or any portion of any
alterations and additions made to the Premises, so long as the Landlord advised
the Tenant of such requirement prior to the installation of the alteration or
addition by the Tenant. If the Tenant fails to inform the Landlord, in writing,
at least ten (10) days prior to the installation of the alteration or addition,
thereby preventing the Landlord from making a determination as to whether it
will want such addition or alteration removed from the Premises prior to its
installation, then the Landlord shall advise the Tenant in writing of such
determination within ten (10) days after the Tenant gives the Landlord written
notice requesting that the Landlord make such determination. All movable
equipment, trade fixtures and furnishings not attached to the Premises shall
remain the personal property of the Tenant and shall be removed by the Tenant
upon termination or expiration of this Lease. Notwithstanding anything to the
contrary contained in this Section 4.2, any alterations and additions funded by
the Landlord, and installed as part of the Initial Leasehold Improvements (as
defined in the Work Letter) or otherwise (the "Landlord Funded Improvements"),
and all alterations and additions which are necessary for the use of the
Premises as an operational biotechnology laboratory (the "Base Laboratory
Improvements"), regardless of who funded their acquisition and installation,
shall be part of the Building and owned by the Landlord, and shall in no event
constitute the Tenant's personal property. For purposes of this Lease, "Base
Laboratory Improvements" shall include equipment that is integrated into the
Building which is consistent with and necessary for the operation of a standard,
high quality biotechnology research laboratory. Such equipment would include,
but would not be limited to, supply and exhaust ventilation systems; fume hoods
in reasonable quantity; environmental rooms in reasonable quantity; laboratory
benches in reasonable quantity, casework with associated shelving (whether fixed
or adjustable or otherwise capable of being relocated) in reasonable quantity,
fixtures, plumbing supply/waste lines and equipment associated therewith, gas
supply lines, a back-up electrical generator sufficient to

                                       20
<PAGE>   26


meet critical power requirements, and similar improvements. Base Laboratory
Improvements does not include stand-alone equipment such as autoclaves,
cagewashers, glasswashers, refrigerators, biosafety cabinets, NMR equipment,
benchtop equipment, and similar equipment.

         Any alterations and additions which are neither Landlord Funded
Improvements nor Base Laboratory Improvements shall remain the property of the
Tenant, and, if required to be removed upon the termination or expiration of
this Lease as hereinabove provided, shall be removed by the Tenant with
reasonable care and diligence, including the capping off of all utility
connections behind the adjacent interior finish, and the restoration of such
interior finish to the extent necessary so that the Premises are left with
complete wall, ceiling and floor finishes.

         Section 4.3 CONSTRUCTION REQUIREMENTS FOR ALTERATIONS. All construction
work performed by or on behalf of the Tenant ("Tenant's Work"), including
without limitation any Initial Leasehold Improvements, shall be done in a good
and workmanlike manner employing only first-class materials and in compliance
with Landlord's construction rules and regulations and with all applicable laws
and all lawful ordinances, regulations and orders of Governmental authority and
insurers of the Building. The Landlord or Landlord's authorized agent may (but
without any implied obligation to do so) inspect the work of the Tenant at
reasonable times and shall give notice of observed defects. Tenant's Work and
the installation of furnishings shall always be coordinated in such manner as to
maintain harmonious labor relations within University Park and not to damage the
Building or interfere with Building construction or operation. Tenant's Work
shall be performed by contractors or workmen first approved by the Landlord,
which approval the Landlord agrees not to unreasonably withhold or delay. The
Landlord agrees to cooperate with the Tenant to develop a list of contractors
and workmen (which may change, from time to time) who are mutually acceptable
and are permitted to perform work in the Building. The Tenant, before starting
any work, shall receive and comply with the Landlord's construction rules and
regulations and shall cause the Tenant's contractors to comply therewith, except
in the case of the Initial Leasehold Improvements obtain "builder's risk"
coverage (in an amount that is reasonable given the quality and quantity of the
work to be undertaken) to enhance the insurance coverage otherwise required to
be carried by the Tenant, secure all licenses and permits necessary for such
work, and deliver to the Landlord a statement of the names of its general
contractor (or construction manager) and subcontractors who are to perform
mechanical, electrical or plumbing work or are otherwise to perform work that
will affect the structure or base building systems of the Building, and the
estimated cost of all labor and material to be furnished by them and security
satisfactory to the Landlord in its reasonable discretion and consistent with
the security requirements for comparable work in comparable buildings in the
Cambridge market protecting the Landlord against liens arising out of the
furnishing of such labor and material; and cause each contractor to carry
worker's compensation insurance in statutory amounts covering all the
contractors' and subcontractors' employees and comprehensive general public
liability insurance with limits (except as otherwise provided in the Work Letter
with respect to Initial Leasehold Improvements) of $1,000,000 (individual) and
$5,000,000 (occurrence), or in such lesser amounts as Landlord may accept,
covering personal injury and death and property damage (all such insurance to be
written in companies approved reasonably by the Landlord and insuring the
Landlord, such individuals and entities affiliated

                                       21
<PAGE>   27

with the Landlord as the Landlord may designate, any ground lessor or mortgagee
that the Landlord may designate, and the Tenant as well as the contractors and
to contain a requirement for at least thirty (30) days' notice to the Landlord
prior to cancellation, nonrenewal or material change), and to deliver to the
Landlord certificates of all such insurance.

         Section 4.4 PAYMENT FOR TENANT ALTERATIONS. The Tenant agrees to pay
promptly when due the entire cost of any work done on the Premises by the
Tenant, its agents, employees or independent contractors, and not to cause or
permit any liens for labor or materials performed or furnished in connection
therewith to attach to the Premises or the Property and promptly to discharge or
bond over any such liens which may so attach. If any such lien shall be filed
against the Premises or the Property and the Tenant shall fail to cause such
lien to be discharged, or bonded over, within fifteen (15) days after receipt by
the Tenant of notice of the filing thereof, the Landlord after a further five
(5) days' written notice may cause such lien to be discharged by payment, bond
or otherwise without investigation as to the validity thereof or as to any
offsets or defenses which the Tenant may have with respect to the amount
claimed. The Tenant shall reimburse the Landlord, as additional rent, for any
cost so incurred and shall indemnify and hold harmless the Landlord from and
against any and all claims, costs, damages, liabilities and expenses (including
reasonable attorneys' fees) which may be incurred or suffered by the Landlord by
reason of any such lien or its discharge. The Tenant's obligations under this
Section 4.4 with respect to the Initial Leasehold Improvements that are,
pursuant to the Work Letter, to be paid for with the proceeds of Landlord's
Contribution, are conditioned upon the Landlord's payment to the Tenant of
Landlord's Contribution in accordance with the Work Letter.

                                    ARTICLE 5

              RESPONSIBILITY FOR CONDITION OF BUILDING AND PREMISES

         Section 5.1 MAINTENANCE OF BUILDING AND COMMON AREAS BY LANDLORD.
Except as otherwise provided in Article 8, the Landlord shall make such repairs
to the foundation system, roof, exterior walls (including exterior glass), floor
slabs, and any other structural elements of the Building as may be necessary to
keep them in good order, condition and repair, and make such repairs to the
mechanical systems and equipment serving the Building, except for any mechanical
systems and equipment that serve the Premises exclusively ("Tenant's Dedicated
Mechanical Systems and Equipment"), as are necessary to keep them in good order,
condition and repair. The Landlord shall further perform the services designated
as Landlord's Services on EXHIBIT D. Costs and expenses incurred by the Landlord
under this Section 5.1 shall be included in Operating Expenses of the Property
only as permitted under Section 3.3. Subject to Section 7.5, the Tenant shall be
responsible for 100% of the cost of any repair to the Premises, the Building, or
the Land caused by the negligence or misconduct of the Tenant, or any agent,
employee or contractor of the Tenant, notwithstanding anything to the contrary
provided in Section 3.3.

         Section 5.2 MAINTENANCE OF PREMISES BY TENANT. The Tenant shall keep
and maintain in good order, condition and repair the Premises and every part
thereof and all of Tenant's

                                       22
<PAGE>   28


Dedicated Mechanical Systems and Equipment, reasonable wear and tear and damage
by fire or other casualty excepted (provided that subject to Section 7.5, the
Landlord shall be responsible for damage caused by the fault or neglect of the
Landlord, or the Landlord's agents, employees or contractors), excluding those
repairs for which the Landlord is responsible pursuant to Sections 5.1, 8.1 and
8.5, and shall surrender the Premises and all alterations and additions thereto,
at the end of the Term, in such condition, first removing all personal property
of the Tenant and, to the extent required pursuant to this Lease, all
alterations and additions made by the Tenant, repairing any damage caused by
such removal and restoring the Premises and leaving them in broom clean
condition. If the Tenant elects to provide the Tenant-Provided Services,
identified as such in Section 5.3, the Tenant shall perform the Tenant-Provided
Services promptly, as necessary and appropriate, with due diligence and in
accordance with the standards therefor established under Section 5.3. The Tenant
shall not permit or commit any damage (waste), and the Tenant shall, subject to
Section 7.5, be responsible for the cost of repairs which may be made necessary
by reason of damage to the Property caused by the negligence or misconduct of
the Tenant, or any of the contractors, employees, or agents of the Tenant.
Tenant's Dedicated Mechanical Systems and Equipment, and all other laboratory
systems and equipment, shall be maintained in good order, condition and repair
consistent with prevailing standards at comparable first-class leased
biotechnology facilities, reasonable wear and tear, damage by fire or other
casualty, and subject to Section 7.5, damage caused by the fault or neglect of
the Landlord, or the Landlord's agents, employees, or contractors excepted.

         Section 5.3 TENANT-PROVIDED SERVICES. Notwithstanding anything to the
contrary contained in this Article 5, the Tenant may choose to provide, at its
own cost and expense, in lieu of the Landlord providing the same under this
Lease, the building services specified in clauses H and I of EXHIBIT D, and such
other services as the Landlord may approve in its reasonable discretion. Such
services which are paid for and provided by the Tenant are hereinafter referred
to as the "Tenant-Provided Services." The provision by Tenant of Tenant-Provided
Services shall be subject to reasonable standards imposed by Landlord for the
purpose of assuring the fulfillment of the requirements of any ground lessee,
mortgagee, tenant, governmental authority or other third party pertaining to the
maintenance and operation of the Building in good order, condition and repair
and in compliance with all legal requirements.

         Section 5.4 DELAYS IN LANDLORD'S SERVICES. The Landlord shall not be
liable to the Tenant for any compensation or reduction of rent by reason or
inconvenience or annoyance or for loss of business arising from the necessity of
the Landlord or its agents entering the Premises for any purposes authorized in
this Lease, or for repairing the Premises or any portion of the Building. In
case the Landlord is prevented or delayed from making any repairs, alterations
or improvements, or furnishing any services or performing any other covenant or
duty to be performed on the Landlord's part, by reason of any External Cause,
the Landlord shall not be liable to the Tenant therefor, nor, except as
expressly otherwise provided in this Lease, shall the Tenant be entitled to any
abatement or reduction of rent by reason thereof, nor shall the same give rise
to a claim in the Tenant's favor that such failure constitutes actual or
constructive, total or partial, eviction from the Premises.


                                       23
<PAGE>   29


         The Landlord reserves the right to stop any service or utility system
the Landlord provides or causes to be provided under this Lease (i.e. exclusive
of any Tenant-Provided Services or other obligations of the Tenant under this
Lease) when necessary by reason of accident or emergency, or until necessary
repairs have been completed; provided, however, that in each instance of
stoppage, the Landlord shall exercise reasonable diligence to eliminate the
cause thereof. Except in case of emergency repairs, the Landlord will give the
Tenant reasonable advance notice of the contemplated stoppage and will schedule
contemplated stoppages at times reasonably approved by the Tenant and will use
reasonable efforts to avoid unnecessary inconvenience to the Tenant by reason
thereof. To the extent that the Landlord is providing or causing to be provided
heat, light or any utility or service, in no event shall the Landlord have any
liability to the Tenant for the unavailability of the same to the extent that
such unavailability is caused by External Causes, provided, however, that the
Landlord is obligated to exercise reasonable efforts to restore such services or
utility systems' operation. The Landlord agrees to carry rent interruption
insurance in commercially reasonable amounts which permits recovery within, to
the extent reasonably available, five (5) days after the insured peril.

         If the unavailability of heat, light or any utility or service provided
or caused to be provided by the Landlord other than the unavailability of the
same due to the Tenant's acts or omissions renders all or any portion of the
Premises untenantable for the Tenant's use as permitted under this Lease, and
the Tenant ceases to occupy the same for the conduct of its business, the Tenant
shall receive an equitable abatement of rent, taking into account the extent of
the Tenant's loss of use of the Premises, following the condition of
untenantability on and after the day following the expiration of the deductible
period provided in the Landlord's rent interruption insurance policy. For all
purposes of this Lease, if Tenant has responsibility for maintenance and repair
of any aspect of the Building or any equipment or system therein, the
functioning and performance of the same shall be the responsibility of the
Tenant under this Lease, and shall in no event constitute a service or utility
system that the Landlord provides or causes to be provided under this Lease.

         Section 5.5 TENANT'S RESPONSIBILITIES REGARDING HAZARDOUS MATERIALS.
The Tenant covenants and agrees that the Tenant shall not use, generate, store
or dispose, nor shall the Tenant suffer or permit the use, generation, storing
or disposal in the Premises or otherwise by any of Tenant's contractors,
licensees, invitees, agents or employees, of any oil, toxic substances,
hazardous wastes or hazardous materials (collectively, "Hazardous Materials")
in, on or about the Premises, the Building or the Land, except for Hazardous
Materials that are necessary for Tenant's operation of Tenant's Permitted Use,
as set forth on EXHIBIT A, and in all cases such Hazardous Materials must be
used, generated, stored and disposed of in compliance with all applicable law
and regulations. The Tenant covenants and agrees that the Tenant shall comply
with all applicable laws and regulations and in handling and disposing of
materials used in its research and other uses of the Premises, whether or not
considered Hazardous Materials, and no dumping, flushing or other introduction
of Hazardous Materials or such other inappropriate materials into the septic,
sewage or other waste disposal systems serving the Premises shall occur, except
as specifically permitted by law and subject to the conditions and
qualifications imposed by any governmental license or permit. The Tenant shall
provide to the Landlord copies

                                       24
<PAGE>   30


of all licenses and permits that the Tenant has been required to obtain prior to
the handling of any such Hazardous Materials, and the Tenant must obtain all of
such licenses and permits prior to the commencement of operations in the
Premises requiring the same. From time to time during the Term of this Lease,
and thereafter during which the Tenant occupies any portion of the Premises, the
Tenant shall provide the Landlord with such reasonable substantiation of the
Tenant's compliance with the requirements of this Section 5.5 and any additional
requirements set forth in Section 6.2 as the Landlord may reasonably request.
The Tenant covenants and agrees that the Tenant shall, at its sole cost,
promptly remove or remediate all Hazardous Materials that are found upon the
Premises, the Building or the Land by virtue of the failure of the foregoing
covenants and agreements to have been fulfilled, or otherwise as the result of
the act or omission of Tenant or its contractors, licensees, agents or
employees, in a manner complying with all applicable laws and regulations and
the provisions of this Lease. If the Tenant should have any responsibility under
this Section 5.5 to remove or remediate Hazardous Materials, the Tenant shall
keep the Landlord reasonably informed as to the status of the environmental
condition at issue, promptly furnish to the Landlord copies of all regulatory
filings with any governmental regulatory agencies in connection therewith, and
substantiate the performance of its obligations under this Section 5.5.

         Section 5.6 LANDLORD'S RESPONSIBILITIES REGARDING HAZARDOUS MATERIALS.
During the Term of this Lease, if the removal or remediation of Hazardous
Materials from the Premises, Building or Land is required to be undertaken, then
except to the extent such obligation is the responsibility of the Tenant under
Section 5.5 hereof, the Landlord covenants and agrees to undertake the same
without charge to the Tenant. Without limitation of the foregoing, if necessary
to comply with any applicable legal requirements, should the existing
environmental condition of the Land require the removal or remediation of
Hazardous Materials, the Landlord shall perform such removal or remediation,
without charge to the Tenant, when and if required by applicable legal
requirements. The Landlord shall keep the Tenant reasonably informed as to the
status of the environmental condition at issue, promptly furnish to the Tenant
copies of all regulatory filings with any governmental regulatory agencies in
connection therewith, and substantiate the performance of its obligations under
this Section 5.6.

         If the Premises shall be rendered no longer reasonably occupiable as a
consequence of the presence of Hazardous Materials for which the Landlord is
responsible for undertaking remediation under this Section 5.6, and the presence
of such Hazardous Materials is introduced to the Premises by the Landlord, then
until the Premises is again reasonably occupiable, the Annual Fixed Rent and
Additional Rent shall be justly and equitably abated and reduced according to
the nature and extent of the loss of use thereof suffered by the Tenant.

         Section 5.7 CROSS INDEMNIFICATION. Each of the Landlord and the Tenant
shall defend and indemnify the other and hold the other harmless from and
against any damages, liability or expense associated with claims by governmental
or other third parties arising out of the presence, removal or remediation of
Hazardous Materials for which the indemnifying party is responsible for removal
or remediation under this Lease.


                                       25
<PAGE>   31
                                    ARTICLE 6

                                TENANT COVENANTS

         The Tenant covenants during the Term and for such further time as the
Tenant occupies any part of the Premises:

         Section 6.1 PERMITTED USES. The Tenant shall occupy the Premises only
for the Permitted Uses, and shall not injure or deface the Premises or the
Property, nor permit in the Premises any auction sale. The Tenant shall give
written notice to the Landlord, within twenty (20) days prior to the
Commencement Date and thereafter once annually within twenty (20) days of each
anniversary of the Commencement Date, of any materials on OSHA's right to know
list or which are subject to regulation by any other federal, state, municipal
or other governmental authority and which the Tenant intends to have present at
the Premises. The Tenant shall comply with all requirements of public
authorities and of the Board of Fire Underwriters in connection with methods of
storage, use and disposal thereof although nothing herein shall prevent the
Tenant from challenging the validity of such requirements. The Tenant shall not
permit in the Premises any nuisance, or the emission from the Premises of any
reasonably objectionable noise, odor or vibration, nor use or devote the
Premises or any part thereof for any purpose which is contrary to law or
ordinance, or liable to invalidate or increase premiums (above those normally
incurred for Permitted Uses) for any insurance on the Building or its contents
(unless the Tenant pays for any such increase in premiums and provided such
actions do not interfere with the use and enjoyment of the Land by the Landlord,
other tenants, visitors or invitees of University Park) or liable to render
necessary any alteration or addition to the Building, nor commit or permit any
waste in or with respect to the Premises.

         Section 6.2 LAWS AND REGULATIONS. The Tenant shall comply with all
federal, state and local laws, regulations, ordinances. executive orders,
federal guidelines, and similar requirements in effect from time to time,
including, without limitation, City of Cambridge ordinances numbered 1005 and
1086 and any subsequently adopted ordinance for employment and animal
experimentation with respect to animal experiments and hazardous waste and any
such requirements pertaining to employment opportunity, anti-discrimination and
affirmative action. Tenant shall have the right to contest any notice of
violation for any of the foregoing by appropriate proceedings diligently
conducted in good faith.

         Section 6.3 RULES AND REGULATIONS; SIGNS. The Tenant agrees to comply
with such reasonable and non-discriminatorily enforced rules and regulations of
general applicability ("Rules and Regulations") as (i) may from time to time be
made by the Landlord of which the Tenant is given written notice, so far as the
same relate to the use of the Building, the Land and the Tenant's appurtenant
parking privileges and (ii) may from time to time be promulgated under the
Declaration of Covenants with respect to all or any portion of University Park.
The Tenant shall not obstruct in any manner any portion of the Property; and,
except as set forth in this Lease, shall not permit the placing of any signs,
curtains, blinds, shades, awnings or flagpoles, or the like, visible from
outside the Building.

                                       26
<PAGE>   32


         Section 6.4 SAFETY COMPLIANCE. The Tenant shall keep the Premises
equipped with all safety appliances required by law or ordinance or any other
regulations of any public authority because of the manner of use made by the
Tenant and to procure all licenses and permits so required because of such
manner of use and, if requested by the Landlord, do any work so required because
of such use, it being understood that the foregoing provisions shall not be
construed to broaden in any way the Tenant's Permitted Uses. Tenant shall
conduct such periodic tests, evaluations or certifications of safety appliances
and laboratory equipment as are required or recommended in accordance with
generally accepted standards for good laboratory practice to ensure that such
safety appliances and equipment remain in good working order, and shall, upon
Landlord's reasonable request but not more often than two (2) times in any
calendar year, provide to Landlord copies of such reports, evaluations and
certifications.

         Section 6.5 LANDLORD'S ENTRY. The Tenant shall permit the Landlord and
it agents, after at least twenty four (24) hours' notice except in the case of
emergencies, to enter the Premises at all reasonable hours for the purpose of
inspecting or making repairs to the same, monitoring Tenant's compliance with
the requirements and restrictions set forth in this Lease, and for the purpose
of showing the Premises to prospective purchasers and mortgagees at all
reasonable times and to prospective tenants within twelve (12) months of the end
of the Term provided that in connection with such entry, Tenant may provide
procedures reasonably designed so as not to jeopardize Tenant's trade secrets,
proprietary technology or critical business operations, including accompaniment
of all such persons by an employee of the Tenant. In case of an emergency, the
Landlord shall make good faith efforts to notify the Tenant in person or by
telephone prior to such entry, and in any event, the Landlord shall notify
Tenant promptly thereafter such entry.

         Section 6.6 FLOOR LOAD. The Tenant shall not place a load upon any
floor in the Premises exceeding the floor load per square foot of area which
such floor was designed to carry, and which is allowed by law. The Tenant's
machines and mechanical equipment shall be placed and maintained by the Tenant
at the Tenant's expense in settings sufficient to absorb or prevent vibration or
noise that may be transmitted to the Building structure.

         Section 6.7 PERSONAL PROPERTY TAX. The Tenant shall pay promptly when
due all taxes which may be imposed upon personal property (including, without
limitation, fixtures and equipment) in the Premises to whomever assessed. Tenant
shall have the right to contest the validity or amount of any such taxes by
appropriate proceedings diligently conducted in good faith.

         Section 6.8 ASSIGNMENT AND SUBLEASES. The Tenant shall not assign this
Lease or sublet (which term, without limitation, shall include granting of
concessions, licenses and the like) the whole or any part of the Premises, nor
permit the further underletting or assignment of any sublease or other occupancy
agreement (each a "Transfer") without, in each instance, having first received
the consent of the Landlord which consent shall not be unreasonably withheld or
delayed, except in the case of Permitted Transfers, with respect to which the
Landlord's consent shall not be required so long as a condition constituting an
Event of Default is not then

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<PAGE>   33


subsisting. In no event shall any of the Tenant's rights with respect to the
roof of the Building, if any, be assigned or sublet other than in connection
with a Transfer of the whole or any part of the Premises for purposes of
enabling the transferee to occupy the same for the conduct of its business
therein (provided that the occupancy of part of the Premises in service of a
business the substantial orientation of which is roof communications shall not
qualify as such an occupancy), or to a service provider using such roof rights
exclusively for the purpose of providing services to the Tenant in connection
with the conduct of the Tenant's business (other than a communications
business). Any purported Transfer made without such consent or otherwise not
fulfilling the conditions and requirements of this Section 6.8 shall be void,
and except as specifically permitted in this Section 6.8, in no event shall the
Tenant or anyone claiming by, through or under the Tenant have the right to
mortgage, pledge, hypothecate or otherwise transfer this Lease. The Landlord
shall not be deemed to be unreasonable in withholding its consent to any
proposed Transfer that is subject to the Landlord's consent based on any of the
following factors:

                  (a) If the manner in which the proposed occupant conducts its
         business operations is not consistent, in Landlord's reasonable
         opinion, with the image and character of the University Park
         development as a first-class office/research and development park, then
         the withholding of consent by the Landlord shall be considered
         reasonable and

                  (b) If the proposed Transfer is (i) an assignment of this
         Lease, or (ii) a sublease where as a result of the consummation of such
         sublease, the then Tenant shall no longer be in occupancy of at least
         sixty five percent (65%) of the rentable floor area of the Premises
         (e.g. any sublease that would result in more than thirty five percent
         (35%) of the rentable floor area of the Premises being subject to a
         sublease, subleases or other occupancy agreements), then in either of
         such cases, if the proposed occupant is not sufficiently creditworthy
         in the reasonable opinion of the Landlord with reference to the
         obligations which are to be fulfilled by the tenant under this Lease,
         and the reasonable needs of the Landlord to protect the value of the
         Building, then the withholding of consent by the Landlord shall be
         considered reasonable.

         If the proposed occupant is already involved in discussions with either
the Landlord or any affiliate of the Landlord regarding space within University
Park that is or is to become available for lease, then the withholding of
consent by the Landlord shall be considered reasonable.

         Notwithstanding anything to the contrary contained in this Section,
Tenant shall have the right to assign or otherwise transfer this Lease or the
Premises, or part of the Premises, without obtaining the prior consent of
Landlord, (a) to an entity owning a majority of Tenant or to a majority owned
subsidiary or to an entity which is majority owned by the same entity which owns
a majority of Tenant (any of the foregoing being referred to herein as a "Tenant
Affiliate"), provided that (i) the transferee shall, subject to applicable law,
regulation or prior binding agreement, prior to the effective date of the
transfer, deliver to Landlord instruments evidencing such transfer and its
agreement to assume and be bound by all the terms, conditions and

                                       28
<PAGE>   34

covenants of this Lease to be performed by Tenant, all in form reasonably
acceptable to Landlord, and (ii) at the time of such transfer there shall not be
an uncured Event of Default under this Lease; or (b) to the purchaser of at
least fifty percent (50%) of its assets or stock, or to any entity into which
the Tenant may be merged or consolidated (along with all or substantially all of
its assets) (the "Acquiring Company"), provided that (i) the net worth of the
Acquiring Company upon the consummation of the transfer or merger shall not be
less than the net worth of the Tenant at the time immediately prior to such
transfer or merger, (ii) the Acquiring Company continues to operate the business
conducted in the Premises consistent with the Permitted Uses described in
Exhibit A hereto, (iii) the Acquiring Company shall assume in writing, in form
reasonably acceptable to Landlord, all of Tenant's obligations under this Lease,
(iv) Tenant shall provide to Landlord such additional information regarding the
Acquiring Company as Landlord shall reasonably request, and (v) Tenant shall pay
Landlord's reasonable out-of-pocket expenses incurred in connection therewith.
Unless Landlord shall have objected to such assignment or transfer by Tenant
within ten (10) business days following Landlord's receipt of the information or
items described in (b)(i) and (iii) above, then Landlord shall be deemed to have
waived its right to object thereto. Each of the transfers described in this
paragraph is referred to hereinafter as "Permitted Transfers." In no event shall
any transaction consummated for the purpose of evading Tenant's obligation to
obtain Landlord's consent under this Section 6.8 be construed as a Permitted
Transfer, notwithstanding that such transaction otherwise qualifies as a
Permitted Transfer.

         Whether or not the Landlord consents, or is required to consent, to any
Transfer, the Tenant named herein shall remain fully and primarily liable for
the obligations of the Tenant hereunder, including, without limitation, the
obligation to pay Annual Fixed Rent and Additional Rent provided under this
Lease.

         The Tenant shall give the Landlord notice of any proposed Transfer
(other than a Permitted Transfer), specifying the provisions thereof, including
(i) the name and address of the proposed occupant, subtenant, assignee,
mortgagee or other transferee, (ii) a copy of the proposed occupant's,
subtenant's, assignee's, mortgagee's or other transferee's most recent annual
financial statement, and (iii) all of the terms and provisions upon which the
proposed Transfer is to be made including, without limitation, all of the
documentation effectuating such Transfer (which shall be subject to the
Landlord's approval not to be unreasonably withheld) and such other reasonable
information concerning the proposed Transfer or concerning the proposed
occupant, subtenant, assignee, mortgagee or other transferee as the Tenant has
obtained in connection with the proposed Transfer. The Tenant shall reimburse
the Landlord promptly for reasonable legal and other reasonable expenses
incurred by the Landlord in connection with any request by the Tenant for
consent to any Transfer. If this Lease is assigned, or if the Premises or any
part thereof is sublet or occupied by anyone other than the Tenant, or there is
otherwise a Transfer, then during any time when an Event of Default is
subsisting, the Landlord may, at any time and from time to time, collect rent
and other charges from the assignee, sublessee, occupant, mortgagee or
transferee, and apply the net amount collected to the rent and other charges
herein reserved, but no such assignment, subletting, occupancy or collection
shall be deemed a waiver of the prohibitions contained in this Section 6.8 or
the acceptance of the assignee, sublessee or

                                       29
<PAGE>   35


occupant as a tenant or a release of the Tenant from the further performance by
the Tenant of covenants on the part of the Tenant herein contained.

         The Tenant shall pay to the Landlord fifty percent (50%) of any amounts
the Tenant receives from any occupant, subtenant, assignee or other transferee
other than a Permitted Transferee, as rent, additional rent or other forms of
compensation or reimbursement (if any) in excess of the aggregate amount of (i)
the proportionate monthly share of Annual Fixed Rent, Additional Rent and all
other monies due to Landlord pursuant to this Lease (allocable in the case of a
sublease to that portion of the Premises being subleased), (ii) brokerage
commissions and fees for legal services associated with the transaction, (iii)
any expenses incurred by the Tenant in connection with preparing the Premises or
applicable portion thereof for occupancy by such subtenant, assignee or other
transferee and (iv) any monetary concessions paid to the subtenant, assignee or
other transferee such as, but not limited to, reimbursement of moving expenses
(collectively "Sublease Transaction Expenses"). In the circumstances where the
transferee pays the consideration due to the Tenant on account of such transfer
over time (e.g. monthly rental payments under a sublease), Sublease Transaction
Expenses shall be amortized on a straight-line basis over the term of the
transfer in question, together with interest at a rate which is reasonably
satisfactory to the Landlord. Neither the fact that the Landlord's consent may
not be required in order for the Tenant to effectuate a Permitted Transfer, nor
the consent by the Landlord to a Transfer for which the Landlord's consent is
required shall be construed to relieve the Tenant from the obligation to obtain
the express consent in writing of the Landlord to any further Transfer whether
by the Tenant or by anyone claiming by, through or under the Tenant including,
without limitation, any occupant, assignee, subtenant, mortgagee or other
transferee, excluding any Permitted Transfer.

         The Landlord may elect, within thirty (30) days of receipt of written
notice from the Tenant of any proposed assignment of this Lease prior to
approving or disapproving any such proposed assignment, to repossess the
Premises. The Landlord may thereafter lease the Premises in such a manner as the
Landlord may in its sole discretion determine. In the event the Landlord elects
to repossess the Premises as provided above, then all of the Tenant's rights and
obligations hereunder with respect to the Premises shall cease and shall be of
no further force and effect. The provisions of this paragraph shall not apply to
Permitted Transfers.

         If the Landlord withholds consent to a proposed Transfer, in any case
where the Landlord is bound by this Lease not to unreasonably withhold such
consent, and the Tenant disputes the reasonability of the Landlord's withholding
of such consent, then either party may, at its election, have the dispute
resolved by the Expedited Dispute Resolution Procedure. The Landlord shall have
no liability for having unreasonably withheld consent to such a Transfer
provided that the Landlord may be required to give such consent pursuant to the
Expedited Dispute Resolution Procedure.


                                       30

<PAGE>   36
                                    ARTICLE 7

                             INDEMNITY AND INSURANCE

         Section 7.1 INDEMNITY. The Tenant shall indemnify and save harmless the
Landlord and the Landlord's ground lessees, mortgagees and managing agent for
the Building from and against all claims, loss, or damage of whatever nature
arising from (i) any breach by Tenant of any obligation of Tenant under this
Lease, or (ii) any negligence or misconduct of the Tenant, or the Tenant's
contractors, licensees, agents, servants or employees, or (iii) any accident,
injury or damage whatsoever caused to any person or property in the Building or
on or about the Land, occurring after the Commencement Date (or such earlier
date upon which the Tenant first commences occupancy of all or any part of the
Premises) and until the end of the Term and thereafter, so long as the Tenant is
in occupancy of any part of the Premises, provided that the foregoing indemnity
shall not include any claims, loss or damage to the extent arising from any
negligence or misconduct of the Landlord, or the Landlord's contractors,
licensees, agents, servants or employees or the Landlord's ground lessees,
mortgagees or managing agent for the Building.

         The Landlord shall indemnify and save harmless the Tenant from and
against all claims, loss, or damage of whatever nature arising from (i) any
breach by Landlord of any obligation of Landlord under this Lease or (ii) from
any negligence or misconduct of the Landlord, or the Landlord's contractors,
licensees, agents, servants or employees, provided that the foregoing indemnity
shall not include any claims, loss or damage to the extent arising from any act,
omission or negligence of the Tenant, or the Tenant's contractors, licensees,
agents, servants or employees, occurring following the Commencement Date and
until the expiration of earlier termination of the Term of this Lease.

         The foregoing indemnity and hold harmless agreements shall include
indemnity against reasonable attorneys' fees and all other costs, expenses and
liabilities incurred in connection with any such claim or proceeding brought
thereon, and the defense thereof, but shall be subject to the limitations
specified in Sections 7.5 and 12.16.

         Section 7.2 LIABILITY INSURANCE. The Tenant agrees to maintain in full
force from the Commencement Date (or such earlier date upon which the Tenant
first commences occupancy [as distinguished from construction of Initial
Leasehold Improvements by the Contractor (as defined in the Work Letter)] of all
or any part of the Premises), throughout the Term, and thereafter, so long as
the Tenant is in occupancy of any part of the Premises, a policy of commercial
general liability insurance under which the Landlord (and any individuals or
entities affiliated with the Landlord, any ground lessor and any holder of a
mortgage on the Property of whom the Tenant is notified by the Landlord) are
named as additional insureds, and under which the insurer provides a contractual
liability endorsement insuring against all cost, expense and liability arising
out of or based upon any and all claims, accidents, injuries and damages
described in Section 7.1, in the broadest form of such coverage from time to
time available. Each such policy shall be noncancelable and nonamendable (to the
extent that any proposed

                                       31
<PAGE>   37

amendment reduces the limits or the scope of the insurance required in this
Lease) with respect to the Landlord and such ground lessors and mortgagees
without thirty (30) days' prior notice to the Landlord and such ground lessors
and mortgagees and at the election of the Landlord, either a certificate of
insurance or a duplicate original policy shall be delivered to the Landlord. The
minimum limits of liability of such insurance as of the Commencement Date shall
be Ten Million Dollars ($10,000,000.00) for combined bodily injury (or death)
and damage to property (per occurrence) with an aggregate annual limit of
liability of Ten Million Dollars ($10,000,000.00), and from time to time during
the Term such limits of liability shall be increased to reflect such higher
limits as are customarily required pursuant to new leases of space in the
Boston-Cambridge area with respect to similar properties. Such insurance may be
effected with a combination of a base commercial general liability policy and
umbrella insurance.

         Section 7.3 PERSONAL PROPERTY AT RISK. The Tenant agrees that all of
the furnishings, fixtures, equipment, effects and property of every kind, nature
and description of the Tenant and of all persons claiming by, through or under
the Tenant which, during the continuance of this Lease or any occupancy of the
Premises by the Tenant or anyone claiming under the Tenant which, during the
continuance of this Lease or any occupancy of the Premises by the Tenant or
anyone claiming under the Tenant, may be on the Premises or elsewhere in the
Building or on the Property or parking facilities provided hereby, shall be at
the sole risk and hazard of the Tenant, and if the whole or any part thereof
shall be destroyed or damaged by fire, water or otherwise, or by the leakage or
bursting of water pipes, steam pipes, or other pipes, by theft or from any other
cause, no part of said loss or damage is to be charged to or be borne by the
Landlord, except that the Landlord shall in no event be exonerated from any
liability to the Tenant or to any person, for any injury, loss, damage or
liability to the extent caused by Landlord's or its employees', agents' or
contractors' negligence or willful misconduct.

         Section 7.4 LANDLORD'S INSURANCE. The Landlord shall, from and after
the Commencement Date and until the expiration or earlier termination of the
Term of this Lease, carry such "all risk" casualty in an amount equal to at
least the replacement cost for the Building with a deductible in amounts carried
at comparable buildings with similar uses within the Cambridge market or
required by any mortgagee holding a mortgage thereon or any ground lessor of the
Land, in an amount equal to the replacement cost of the Building, including all
leasehold improvements, exclusive of foundations, site preparation and other
nonrecurring construction costs. The Landlord shall also, during the aforesaid
period, carry commercial general liability insurance with the same limits which
the Tenant is required to carry from time to time upon and with respect to
operations at the Building, which shall similarly be noncancellable and
nonamendable (to the extent that any proposed amendment reduces the limits or
the scope of insurance required in this Lease) with respect to the Tenant
without thirty (30) days' prior notice to the Tenant.

         Section 7.5 WAIVER OF SUBROGATION. Any casualty insurance carried by
either party with respect to the Building, Land, Premises, parking facilities or
any property therein or occurrences thereon shall, without further request by
either party, include a clause or endorsement denying to the insurer rights of
subrogation against the other party (and the

                                       32
<PAGE>   38


Landlord's policy shall also deny the insurer rights of subrogation against any
permitted subtenant and any such subtenant shall be required to carry a policy
that denies the insurer rights of subrogation against the Landlord) to the
extent rights have been waived by the insured prior to occurrence of injury or
loss. Each party, notwithstanding any provisions of this Lease to the contrary,
hereby waives any rights of recovery against the other (and the Landlord hereby
waives any right of recovery which the Landlord has against any permitted
subtenant, and any sublease will require that the subtenant waive any right of
recovery which any such subtenant may have against the Landlord) for loss or
damage to property, including, without limitation, loss or damage caused by
negligence of such other party, due to hazards covered by casualty insurance
which such party is required to carry hereunder, except with respect to any
damage within the deductible under such insurance policy.

         Section 7.6 POLICY REQUIREMENTS. Any required insurance may be in the
form of blanket coverage, so long as the coverage required herein is maintained.
Each party shall cause a certificate, providing such information as reasonably
requested by the other party, evidencing the existence and limits of its
insurance coverage with respect to the Premises and the Building, as the case
may be, to be delivered to such other party upon the commencement of the Term.
Thereafter, each party shall cause similar certificates evidencing renewal
policies to be delivered to such other party at least thirty (30) days prior to
the expiration of the term of each policy and at such other times as reasonably
requested by the other party. The insurance policies and certificates required
by this Article 7 shall contain a provision requiring the insurance company to
furnish Landlord and Tenant, as the case may be, thirty (30) days' prior written
notice of any cancellation or lapse, or the effective date of any reduction in
the amounts or scope of coverage. The Landlord shall have reasonable approval
over the identity of the Tenant's insurance underwriter.

                                    ARTICLE 8

                           CASUALTY AND EMINENT DOMAIN

         Section 8.1 RESTORATION FOLLOWING CASUALTIES. If, during the Term, the
Building or the Premises shall be damaged by fire or casualty, subject to
termination rights of the Landlord and the Tenant provided below in this Article
8, the Landlord shall proceed promptly to exercise diligent efforts to restore,
or cause to be restored, the Building to substantially the condition thereof
just prior to time of such damage, but the Landlord shall not be responsible for
delay in such restoration which may result from External Causes. Provided that
the Landlord complies with its obligations to carry casualty insurance in
accordance with Section 7.4, the Landlord shall have no obligation to expend in
the reconstruction of the Building more than the sum of the amount of any
deductible and the actual amount of insurance proceeds made available to the
Landlord by its insurer, and any additional costs associated with changes to the
Premises desired by the Tenant and permitted by Article 4 shall be paid by the
Tenant in the manner reasonably required by the Landlord. Any restoration of the
Building or the Premises shall be altered to the extent necessary to comply with
then current and applicable laws and codes. The Landlord shall, as soon as
possible after any casualty, but in any event no later than sixty (60) days
after such

                                       33
<PAGE>   39

casualty, provide to the Tenant a reasonable written estimate ("Architect's
Estimate") from a reputable architect or other design professional as to the
time frame within which the Landlord will be able to repair the casualty damage
and the cost of repairing such damage, and the Landlord's reasonable
determination ("Insurance Proceeds Estimate") as to the amount of insurance
proceeds which will be available to repair such damage.

         Section 8.2 LANDLORD'S TERMINATION ELECTION. If the Landlord reasonably
determines, based upon the Architect's Estimate and the Insurance Proceeds
Estimate, that (a) the amount of insurance proceeds available to the Landlord is
insufficient (by more than the amount of any deductible) to cover the cost of
restoring the Building by more than the amount of any deductible (provided
however, that the Landlord shall not have the right to terminate the Lease
pursuant to this clause (a) if the casualty would have been covered by casualty
insurance which the Landlord is required to obtain pursuant to Section 7.4), or
(b) the Landlord will be unable to restore the Building within twelve (12)
months from the date of such casualty, then the Landlord may terminate this
Lease by giving notice to the Tenant at the time that the Landlord provides to
the Tenant the Architect's Estimate and the Insurance Proceeds Estimate. Any
such termination shall be effective on the date designated in such notice from
the Landlord, but in any event not later than sixty (60) days after such notice,
and if no date is specified, effective upon the delivery of such notice. Failure
by the Landlord to give the Tenant notice of termination within ninety (90) days
following the occurrence of the casualty shall constitute the Landlord's
agreement to restore the Building as contemplated in Section 8.1.

         Section 8.3 TENANT'S TERMINATION ELECTIONS. If, based upon the
Architect's Estimate and the Insurance Proceeds Estimate, the time period for
repairing any casualty damage will exceed twelve (12) months after the date of
any casualty, then the Tenant shall have the right, exercisable by written
notice given on or before the date thirty (30) days after the Landlord gives to
the Tenant the Architect's Estimate and the Insurance Proceeds Estimate, to
terminate this Lease.

         If neither the Landlord nor the Tenant exercise their termination
rights based upon the Architect's Estimate and the Insurance Proceeds Estimate,
but the Landlord has failed to restore the Building, within twelve (12) months
from the date of the casualty or taking, such period to be subject, however, to
extension (which extension shall not exceed an additional one hundred eighty
(180) days) where the delay in completion of such work is due to External
Causes, the Tenant shall have the right to terminate this Lease at any time
after the expiration of such 12-month period (as extended by delay due to
External Causes as aforesaid), as the case may be, until the restoration is
substantially completed, such termination to take effect as of the date of the
Tenant's notice. However, if the Landlord has been diligently prosecuting the
repair of all casualty and damage, and if the Landlord reasonably determines at
any time, and from time to time, during the restoration, based upon
certification by its architect or other design professional, that such
restoration will not be able to be completed before the deadline date after
which the Tenant may terminate this Lease under this Section 8.3, and the
Landlord specifies in a notice to Tenant to such effect a later date that the
Landlord estimates will be the date upon which such restoration will be
completed, then the Tenant may terminate this Lease within thirty (30) days of


                                       34
<PAGE>   40

the Landlord's notice as aforesaid, failing which the deadline date shall be
extended to the date set forth in Landlord's notice (as extended by delay due to
External Causes as aforesaid). The Landlord shall exercise reasonable efforts to
keep the Tenant advised of the status of restoration work from time to time, and
promptly following any request for information during the course of the
performance of the restoration work.

         Section 8.4 CASUALTY AT EXPIRATION OF LEASE. If the Premises shall be
damaged by fire or casualty in such a manner that the Premises cannot, in the
ordinary course, reasonably be expected to be repaired within one hundred twenty
(120) days from the commencement of repair work and such damage occurs within
the last twenty four (24) months of the Term (as the same may have been extended
prior to such fire or casualty), either party shall have the right, by giving
notice to the other not later than sixty (60) days after such damage, to
terminate this Lease, whereupon this Lease shall terminate as of the date of
such notice. Notwithstanding the foregoing, the Landlord shall not have the
right to terminate this Lease as aforesaid provided that the Tenant shall have
exercised its right to extend the Term of this Lease pursuant to Section 2.6
hereof not later than forty-five (45) days after the date of damage to the
Premises.

         Section 8.5 EMINENT DOMAIN. Except as hereinafter provided, if the
Premises, or such portion thereof as to render the balance (if reconstructed to
the maximum extent practicable in the circumstances) unsuitable for continued
occupancy for the purposes contemplated under this Lease, shall be taken by
condemnation or right of eminent domain, and the Landlord and the Tenant shall
each have the right to terminate this Lease by notice to the other of its desire
to do so, provided that such notice is given not later than thirty (30) days
after receipt by the Tenant of notice of the effective date of such taking. If
so much of the Building shall be so taken that the Landlord reasonably
determines, in good faith, that it would be necessary to substantially alter the
Building so that a rebuilt Building will not be substantially similar to the
Building before such taking, the Landlord shall have the right to terminate this
Lease by giving notice to the Tenant of the Landlord's desire to do so not later
than thirty (30) days after the effective date of such taking.

         Should any part of the Premises be so taken or condemned during the
Term, and should this Lease be not terminated in accordance with the foregoing
provisions, the Landlord agrees to use reasonable efforts to put what may remain
of the Premises into proper condition for use and occupation as nearly like the
condition of the Premises prior to such taking as shall be practicable, subject,
however, to applicable laws and codes then in existence. The Landlord shall have
no obligation to expend in the aforesaid restoration more than the proceeds of
any award received in any condemnation or eminent domain proceeding, or any sum
paid in lieu thereof.

         Section 8.6 RENT AFTER CASUALTY OR TAKING. If the Premises shall be
damaged by fire or other casualty, until the Lease is terminated or the Premises
is restored, the Annual Fixed Rent and Additional Rent shall be justly and
equitably abated and reduced according to the nature and extent of the loss of
use thereof suffered by the Tenant. In the event of a taking which

                                       35
<PAGE>   41

permanently reduces the area of the Premises, a just proportion of the Annual
Fixed Rent and applicable Additional Rent shall be abated for the remainder of
the Term.

         Section 8.7 TEMPORARY TAKING. In the event of any taking of the
Premises or any part thereof for a temporary use not in excess of twelve (12)
months, (i) this Lease shall be and remain unaffected thereby and Annual Fixed
Rent and Additional Rent shall not abate, and (ii) the Tenant shall be entitled
to receive for itself such portion or portions of any award made for such use
with respect to the period of the taking which is within the Term.

         Section 8.8 TAKING AWARD. Except as otherwise provided in Section 8.7,
the Landlord shall have and hereby reserves and accepts, and the Tenant hereby
grants and assigns to the Landlord, all rights to recover for damages to the
Building and the Land, and the leasehold interest hereby created, and to
compensation accrued or hereafter to accrue by reason of such taking, damage or
destruction, as aforesaid, and by way of confirming the foregoing, the Tenant
hereby grants and assigns to the Landlord, all rights to such damages or
compensation. Nothing contained herein shall be construed to prevent the Tenant
from prosecuting in any condemnation proceedings a claim for relocation expenses
and improvements made by the Tenant in the Premises that constitute Tenant's
personal property, including the Removable Alterations.

         Section 8.9 CASUALTY OR EMINENT DOMAIN AFFECTING PARKING PRIVILEGES.
If, during the Term, there shall be damage by fire or casualty, or a taking by
condemnation or right of eminent domain, that results in the Landlord reducing
the number of Parking Passes that permit the Tenant to park in parking spaces
within University Park (a "University Park Parking Privileges Reduction"), then
notwithstanding anything to the contrary provided in EXHIBIT A, the Landlord may
substitute alternative parking arrangements ("Temporary Substitute Parking
Arrangements") within a one-mile radius of University Park that will provide
parking areas with respect to which the Tenant may (using the Parking Passes
that may no longer be used for parking within University Park) enjoy the parking
privileges contemplated hereby, provided that any such alternative parking areas
shall be reasonably well lit, and there shall be provided shuttle bus
transportation to and from University Park from such alternative parking areas,
on terms reasonably satisfactory to the Tenant. The Landlord's furnishing of
Temporary Substitute Parking Arrangements shall constitute a satisfactory curing
of the adverse effects of a University Park Parking Privileges Reduction,
subject to the further provisions of this Section 8.9 below.

         The Landlord hereby covenants and agrees that any University Park
Parking Privileges Reduction shall be made on a fair and equitable basis with
respect to all of the tenants in University Park. The Landlord shall, within one
hundred twenty (120) days of any fire, casualty or taking affecting parking
facilities within University Park that results in a University Park Parking
Privileges Reduction, give the Tenant written notice ("Parking Notice") (i)
describing to what extent the Landlord will be able to provide Temporary
Substitute Parking Arrangements that fulfill the requirements of the immediately
prior paragraph of this Section 8.9 and (ii) providing an estimate of the likely
duration of such University Park Parking Privileges Reduction. The Landlord
shall, in the Parking Notice, designate the number of affected Parking Passes
and the location of the substitute parking areas, and cooperate with the Tenant
to establish

                                       36
<PAGE>   42

reasonably satisfactory terms for shuttle bus transportation, as soon as
reasonably possible following the occurrence of an event resulting in a
University Park Parking Privileges Reduction.

         If the Landlord (i) does not, in the Parking Notice, make Temporary
Substitute Parking Arrangements within one hundred twenty (120) days of the
commencement of a University Park Parking Privileges Reduction that fulfill the
requirements of the first paragraph of this Section 8.9 with respect to at least
fifty percent (50%) of the Parking Passes to which the Tenant is entitled under
this Lease, (ii) specifies in the Landlord's estimate of the likely duration of
the University Park Parking Privileges Reduction that the period during which
the Tenant must suffer a reduction of more than fifty percent (50%) of its
Parking Passes (i.e., not replaced through Temporary Substitute Parking
Arrangements) will exceed one (1) year, or (iii) specifies in the Landlord's
estimate of the likely duration of the University Park Parking Privileges
Reduction that the period during which a University Park Parking Privileges
Reduction will exist will likely exceed twenty four (24) months, then the Tenant
shall have the right, exercisable upon written notice to the Landlord within
thirty (30) days after the Tenant receives the Parking Notice, to terminate this
Lease.

         If the Tenant does not exercise its termination right, as aforesaid,
then the Landlord shall, to the extent practicable, proceed promptly after the
occurrence of a University Park Parking Privileges Reduction affecting the
Tenant to restore, or cause to be restored, sufficient parking areas in
University Park to permit the Tenant to have the number of Parking Passes
contemplated in EXHIBIT A to be able to be used in parking areas within
University Park. However, if the Landlord is unable to so restore the Tenant's
parking privileges within University Park within twenty four (24) months from
the date of the University Park Parking Privileges Reduction, then the Tenant
shall have the right to terminate this Lease by notice to the Landlord of its
desire to do so, provided such notice is given not later than thirty (30) days
after the Landlord notifies the Tenant as aforesaid.

         The Tenant's termination rights set forth in this Section 8.9 shall be
the Tenant's sole remedy for the Landlord's inability to provide the parking
privileges contemplated under this Lease in the event of a casualty or taking
affecting parking in University Park, provided that the Landlord has complied
with its obligation to act on a fair and equitable basis. Any such termination
of this Lease by the Tenant, as aforesaid, shall be effective thirty (30) days
after notice is so given to the Landlord, or such later date specified by the
Tenant in such termination notice not exceeding one hundred eighty (180) days
after termination notice is given. Failure by the Tenant to timely exercise any
right to terminate this Lease under this Section 8.9 shall result in the waiver
by the Tenant of any such right to terminate this Lease.

                                       37


<PAGE>   43


                                    ARTICLE 9

                                     DEFAULT

         Section 9.1 TENANT'S DEFAULT. Each of the following shall constitute an
Event of Default:

                  (a) Failure on the part of the Tenant to pay the Annual Fixed
         Rent, Additional Rent or other charges for which provision is made
         herein on or before the date on which the same become due and payable,
         if such condition continues for ten (10) days after written notice that
         the same are due.

                  (b) Failure on the part of the Tenant to perform or observe
         any other term or condition contained in this Lease if the Tenant shall
         not cure such failure within thirty (30) days after written notice from
         the Landlord to the Tenant thereof, provided that in the case of
         breaches that are not reasonably susceptible to cure within thirty (30)
         days through the exercise of due diligence, then so long as the Tenant
         commences such cure within thirty (30) days, and the Tenant diligently
         pursues such cure to completion, such breach shall not be deemed to
         create an Event of Default.

                  (c) The taking of the estate hereby created on execution or by
         other process of law; or a judicial declaration that the Tenant, or any
         guarantor of this Lease, is bankrupt or insolvent according to law; or
         any assignment of the property of the Tenant, or any guarantor of this
         Lease, for the benefit of creditors; or the appointment of a receiver,
         guardian, conservator, trustee in bankruptcy or other similar officer
         to take charge of all or any substantial part of the property of
         Tenant, or any guarantor of this Lease, by a court of competent
         jurisdiction, which officer is not dismissed or removed within ninety
         (90) days; or the filing of an involuntary petition against the Tenant,
         or any guarantor of this Lease, under any provisions of the bankruptcy
         act now or hereafter enacted if the same is not dismissed within ninety
         (90) days; the filing by the Tenant, or any guarantor of this Lease, of
         any voluntary petition for relief under provisions of any bankruptcy
         law now or hereafter enacted.

         If an Event of Default shall occur, then, in any such case, whether or
not the Term shall have begun, the Landlord lawfully may, immediately or at any
time thereafter, give notice to the Tenant specifying the Event of Default and
this Lease shall come to an end on the date specified therein as fully and
completely as if such date were the date herein originally fixed for the
expiration of the Lease Term, and the Tenant will then quit and surrender the
Premises to the Landlord, but the Tenant shall remain liable as hereinafter
provided.

         Section 9.2 DAMAGES. In the event that this Lease is terminated, the
Tenant covenants to pay to the Landlord punctually all the sums ("Periodic
Payments") and perform all the obligations which the Tenant covenants in this
Lease to pay and to perform in the same manner and to the same extent and at the
same time as if this Lease had not been terminated, and all of

                                       38
<PAGE>   44

the Landlord's expenses in connection with reletting the Premises including,
without limitation, all repossession costs, brokerage commissions, fees for
legal services and expenses of preparing the Premises for such reletting.
However, the Landlord may elect, at any time, to demand in lieu of any further
obligations to make Periodic Payments, and payments on account of the Landlord's
reletting costs thereafter accruing, as compensation, an amount (the "Lump Sum
Payment") equal to the excess, if any, of the discounted present value of the
total rent reserved for the then remainder of the Term over the then discounted
present fair rental value of the Premises for the then remainder of the Term.
The discount rate for calculating such sum shall be the then current rate of
United States Treasury securities having a maturity date as close as possible to
the end of the Term (had the Lease not been terminated). In calculating the rent
reserved, there shall be included, in addition to the Annual Fixed Rent and all
Additional Rent, the value of all other considerations agreed to be paid or
performed by the Tenant over the remainder of the Term.

         In calculating the Periodic Payments to be made by the Tenant under the
foregoing covenant, the Tenant shall be credited with the net proceeds of any
rent obtained by reletting the Premises, after deducting all the Landlord's
expenses in connection with such reletting, including, without limitation, all
repossession costs, brokerage commissions, fees for legal services and expenses
of preparing the Premises for such reletting. The Landlord may (i) relet the
Premises, or any part or parts thereof, for a term or terms which may, at the
Landlord's option, exceed or be equal to or less than the period which would
otherwise have constituted the balance of the Term, and may grant such
concessions and free rent as the Landlord in its reasonable commercial judgment
considers advisable or necessary to relet the same and (ii) make such
alterations, repairs and improvements in the Premises as the Landlord in its
reasonable commercial judgment considers advisable or necessary to relet the
same. No action of the Landlord in accordance with foregoing or failure to relet
or to collect rent under-reletting shall operate to release or reduce the
Tenant's liability. The Landlord shall be entitled to seek to rent other
properties of the Landlord prior to reletting the Premises. Notwithstanding the
foregoing, the Landlord shall offer such Premises to lease in the same manner as
the Landlord offers other vacant space for lease in University Park.

         Section 9.3 CUMULATIVE RIGHTS. The specific remedies to which either
party may resort under the terms of this Lease are cumulative and are not
intended to be exclusive of any other remedies or means of redress to which it
may be lawfully entitled in case of any breach or threatened breach by the other
party of any provisions of this Lease. In addition to the other remedies
provided in this Lease, each party shall be entitled to seek the restraint by
injunction of the violation or attempted or threatened violation of any of the
covenants, conditions or provisions of this Lease or to a decree compelling
specific performance of any such covenants, conditions or provisions. Nothing
contained in this Lease shall limit or prejudice the right of the Landlord to
prove for and obtain in proceedings for bankruptcy, insolvency or like
proceedings by reason of the termination of this Lease, an amount equal to the
maximum allowed by any statute or rule of law in effect at the time when, and
governing the proceedings in which, the damages are to be proved, whether or not
the amount be greater, equal to, or less than the amount of the loss or damages
referred to above.

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<PAGE>   45


         Section 9.4 LANDLORD'S SELF-HELP. If there shall be an Event of
Default, or if emergency circumstances should exist where, upon the giving of
notice or passage of time, such circumstances would constitute an Event of
Default, then the Landlord shall have the right, but not the obligation, after
the giving by the Landlord of notice thereof to the Tenant (except in case of
emergency circumstances in which case no prior notice need be given), to perform
such obligation. In the event the Landlord exercises its rights under this
Section 9.4 in case of emergency, the Landlord shall notify the Tenant as soon
as reasonably possible after the taking of such action. The Landlord may
exercise its rights under this Section without waiving any other of its rights
or releasing the Tenant from any of its obligations under this Lease. The Tenant
shall be liable to the Landlord for all of the Landlord's reasonable costs
associated with effecting such cure.

         Section 9.5 ENFORCEMENT EXPENSES; LITIGATION. Each party hereto shall
promptly reimburse the other for all costs and expenses, including without
limitation legal fees, incurred by such party in exercising and enforcing its
rights under this Lease following the other party's failure to comply with its
obligations hereunder, whether or not such failure constitutes an Event of
Default pursuant to Sections 9.1 or 9.7 hereof.

         If either party hereto be made or becomes a party to any litigation
commenced by or against the other party by or against a third party, or incurs
costs or expenses related to such litigation, involving any part of the Property
and the enforcement of any of the rights, obligations or remedies of such party,
then the party becoming involved in any such litigation because of a claim
against such other party hereto shall receive from such other party hereto all
costs and reasonable attorneys' fees incurred by such party in such litigation.

         Section 9.6  LATE CHARGES; INTEREST ON OVERDUE PAYMENTS.

                  (a) In the event that any payment of Annual Fixed Rent or
         Additional Rent shall remain unpaid for a period of ten (10) days
         following notice by the Landlord to the Tenant that such payment is
         overdue, there shall become due to the Landlord from the Tenant, as
         Additional Rent and as compensation for the Landlord's extra
         administrative costs in investigating the circumstances of late rent, a
         late charge of two percent (2%) of the amount overdue.

                  (b) Any Annual Fixed Rent and Additional Rent or other amount
         which is due from either party to the other party which is not paid
         within ten (10) days after the same is due and payable shall bear
         interest from the date due until paid at the variable rate (the
         "Default Interest Rate") equal to the annual rate from time to time
         announced by Fleet Bank as its base rate, plus two percent (2%), or if
         such rate can no longer be determined, the annual prime rate from time
         to time announced by THE WALL STREET JOURNAL, plus two percent (2%).

         Section 9.7 LANDLORD'S RIGHT TO NOTICE AND CURE; TENANT'S SELF-HELP
RIGHTS. The Landlord shall in no event be in default in the performance of any
of the Landlord's obligations

                                       40
<PAGE>   46


hereunder unless and until the Landlord shall have failed to perform such
obligations within thirty (30) days, or such additional time as is reasonably
required to correct any such default, after written notice by the Tenant to the
Landlord expressly specifying wherein the Landlord has failed to perform any
such obligation. If the Landlord has failed to make any repair which results in
a material risk of damage or injury to persons or property within the Premises
within thirty (30) days of such notice, or such additional time as is required
(provided the Landlord shall have commenced to undertake such repair within
thirty (30) days of such notice and then diligently prosecutes such repair work)
to make such repair, then the Tenant shall have the right, after providing an
additional ten (10) days' written notice to the Landlord, and any Mortgagee and
Ground Lessor, to perform such obligation so long as the same may be done solely
on the Property. Notwithstanding the foregoing, in the case of an emergency, the
Tenant shall have the right to perform any such obligation without regard to the
thirty (30) day notice period, so long as (a) the Tenant makes a good faith
attempt to notify the Landlord prior to taking such action and (b) notifies the
Landlord as soon as possible thereafter. The Landlord shall be liable to the
Tenant for all of the Tenant's reasonable costs associated with effecting such
cure, provided that in no event shall the Tenant be entitled to abate any Annual
Fixed Rent or Additional Rent or otherwise offset such costs against sums due
the Landlord under this Lease.


                                   ARTICLE 10

                     MORTGAGEES' AND GROUND LESSORS' RIGHTS

         Section 10.1 SUBORDINATION. This Lease shall be subject and subordinate
to any and all ground leases of the Property, and therefore the terms and
conditions of any such ground lease shall be superior to all rights hereby or
hereafter vested in the Tenant, subject however to Section 10.5 hereof. There
are no obligations imposed upon the Tenant under the ground lease except as
expressly set forth in this Lease. At the election of the holder of any mortgage
encumbering the Landlord's interest in the Property, which under this Lease
means the Landlord's leasehold interest under a ground lease, this Lease shall
be subject and subordinate to the lien of any mortgages thereon, so that the
rights of any such mortgagee shall be superior to all rights hereby or hereafter
vested in the Tenant, subject however to Section 10.5 hereof.

         Section 10.2 PREPAYMENT OF RENT NOT TO BIND MORTGAGEE OR GROUND LESSOR.
No Annual Fixed Rent, Additional Rent (other than estimated monthly payments on
account of Additional Rent which the Tenant is required to pay pursuant to the
provisions of this Lease), or any other charge payable to the Landlord shall be
paid more than thirty (30) days prior to the due date thereof under the terms of
this Lease and payments made in violation of this provision shall (except to the
extent that such payments are actually received by a mortgagee or ground lessor)
be a nullity as against such mortgagee or ground lessor and the Tenant shall be
liable for the amount of such payments to such mortgagee or ground lessor.

         Section 10.3 TENANT'S DUTY TO NOTIFY MORTGAGEE AND GROUND LESSOR;
MORTGAGEE'S AND GROUND LESSOR'S ABILITY TO CURE. The Tenant hereby agrees that,
if the Tenant provides the

                                       41
<PAGE>   47


Landlord with any notice of default or claimed default on the part of the
Landlord under the Lease, the Tenant shall concurrently therewith send a copy of
such notice to any mortgagee and ground lessor of whom the Tenant has been given
prior written notice ("Mortgagee" or "Ground Lessor" as applicable). In such
event, the Mortgagee and Ground Lessor shall be permitted (but not obligated) to
cure any such default. No act or failure to act on the part of the Landlord
which would entitle the Tenant under the terms of this Lease, or by law, to be
relieved of the Tenant's obligations to pay Annual Fixed Rent or Additional Rent
hereunder or to terminate this Lease, shall result in a release or termination
of such obligations of the Tenant or a termination of this Lease unless (i) the
Tenant shall have first given written notice of the Landlord's act or failure to
act to any Mortgagee and Ground Lessor, specifying the act or failure to act on
the part of the Landlord which would give basis to the Tenant's rights; and (ii)
no such Mortgagee or Ground Lessor, after receipt of such notice, shall have
corrected or cured the condition complained of within a reasonable time
thereafter (which shall include a reasonable period of time for such mortgagee
or ground lessors, not to exceed thirty (30) days after receipt of such notice,
to obtain possession of the Property if possession is necessary for the
mortgagee or ground lessor to correct or cure the condition and if the mortgagee
or ground lessor notifies the Tenant of its intention to take possession of the
Property and correct or cure such condition).

         Section 10.4 ESTOPPEL CERTIFICATES. The Tenant shall from time to time,
upon not less than fifteen (15) days' prior written request by the Landlord,
execute, acknowledge and deliver to the Landlord a statement in writing
certifying to the Landlord or an independent third party, with a true and
correct copy of this Lease attached thereto, to the extent such statements
continue to be true and accurate, (i) that this Lease is unmodified and in full
force and effect (or, if there have been any modifications, that the same is in
full force and effect as modified and stating the modifications); (ii) that the
Tenant has no knowledge of any defenses, offsets or counterclaims against its
obligations to pay the Annual Fixed Rent and Additional Rent and to perform its
other covenants under this Lease (or if there are any defenses, offsets, or
counterclaims, setting them forth in reasonable detail); (iii) that there are no
known uncured defaults of the Landlord or the Tenant under this Lease (or if
there are known defaults, setting them forth in reasonable detail); (iv) the
dates to which the Annual Fixed Rent, Additional Rent and other charges have
been paid; (v) that the Tenant has (if true) accepted, is satisfied with, and is
in full possession of the Premises, including all improvements, additions and
alterations thereto required to be made by Landlord under the Lease; (vi) that
(if true) the Landlord has satisfactorily complied with all of the requirements
and conditions precedent to the occurrence of the Commencement Date with respect
to the entire Building; (vii) that (if true) the Tenant has been in occupancy
since the Commencement Date and paying rent since the specified dates; (viii)
that no monetary or other considerations, including, but not limited to, rental
concessions for Landlord, special tenant improvements or Landlord's assumption
of prior lease obligations of Tenant have been granted to Tenant by Landlord for
entering into Lease, except as set forth in this Lease or as otherwise specified
in such estoppel; (ix) that (if true) the Tenant has no notice of a prior
assignment, hypothecation, or pledge of rents or of the Lease; (x) that the
Lease represents the entire agreement between Landlord and Tenant; (xi) that any
notice to Tenant may be given it by certified or registered mail, return receipt
requested, or delivered, at the Premises, or at another address specified; and
(xii) such factual other matters with respect to the Tenant and this Lease as

                                       42
<PAGE>   48


the Landlord may reasonably request. On or following the Commencement Date, the
Tenant shall, within ten (10) days after receipt of Landlord's request therefor,
promptly execute, acknowledge and deliver to the Landlord a statement in writing
that the Commencement Date has occurred, that the Annual Fixed Rent has begun to
accrue with respect thereto, and that the Tenant has taken occupancy of such
portion of the Premises. Any statement delivered pursuant to this Section may be
relied upon by any prospective purchaser, mortgagee or ground lessor of the
Premises or any interest therein, and shall be binding on the Tenant.

         Landlord shall from time to time, upon not less than fifteen (15) days'
prior written request by the Tenant, execute, acknowledge and deliver to the
Tenant a statement in writing certifying to the Tenant or an independent third
party, with a true and correct copy of this Lease attached thereto, to the
extent such statements continue to be true and accurate (i) that this Lease is
unmodified and in full force and effect (or, if there have been any
modifications, that the same is in full force and effect as modified and stating
the modifications); (ii) that the Landlord has no knowledge of any defenses,
offsets or counterclaims against its obligations to perform its covenants under
this Lease (or if there are any defenses, offsets, or counterclaims, setting
them forth in reasonable detail); (iii) that there are no known uncured defaults
of the Tenant or the Landlord under this Lease (or if there are known defaults,
setting them forth in reasonable detail); (iv) the dates to which the Annual
Fixed Rent, Additional Rent and other charges have been paid; (v) that the
Tenant is in full possession of the Premises; (vi) that Landlord has no notice
of a prior assignment of the Lease or sublease of space therein; (vii) that the
Lease represents the entire agreement between Landlord and Tenant; (viii) that
any notice to Landlord may be given if by certified or registered mail, return
receipt requested, or delivered to the Landlord's address listed on EXHIBIT A,
or at another address specified; and (xii) such other factual matters with
respect to the Tenant and this Lease as the Tenant may reasonably request. Any
statement delivered pursuant to this Section may be relied upon by any
prospective assignee or sublessee of Tenant and shall be binding on the
Landlord.

         Section 10.5 SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENTS.
The subordination of the Tenant's rights under this Lease to ground lessors and
mortgagees now existing or hereafter granted, as contemplated in Section 10.1,
is subject to the condition that any such mortgagee or ground lessor shall have
entered into a subordination, nondisturbance and attornment agreement with the
Tenant, the form of which shall be furnished by the mortgagee or ground lessor,
as the case may be, with such reasonable modifications as Tenant shall request
within a reasonable time period. The form of non-disturbance and attornment
agreement attached hereto as EXHIBIT G is acceptable to Tenant in connection
with the Ground Lease held by MIT (as such terms are defined in Section 12.10).

                                       43


<PAGE>   49


                                   ARTICLE 11

                                SECURITY DEPOSIT




                                       44
<PAGE>   50

         Section 11.1 Tenant has paid to Landlord $422,833.00 a security deposit
(the "Lease Security Deposit"). The Landlord may apply such Security Deposit,
including all interest thereon accrued but not yet paid to the Tenant, as
provided in this Article 11, upon any Event of Default by the Tenant hereunder.
Provided there is no then subsisting default by the Tenant under this Lease with
respect to which the Landlord has given the Tenant notice, and thereafter only
at such time as there is no such default by the Tenant then subsisting: (i) on
each anniversary of the date upon which the Commencement Date has occurred with
respect to the entire Original Premises, all interest which shall have
theretofore accrued on the Lease Security Deposit shall be disbursed to Tenant
and (ii) within thirty (30) days after the expiration of this Lease, any
remaining portion of the Lease Security Deposit not theretofore applied shall be
disbursed to Tenant. However, upon any termination of this Lease, the Lease
Security Deposit may first be applied by the Landlord to any amounts for which
the Tenant is liable under this Lease. In the event the Landlord applies any
funds constituting the Lease Security Deposit, the Tenant shall deliver to the
Landlord as Additional Rent, within ten (10) days after invoice therefor, the
amount of the Lease Security Deposit applied by the Landlord, such that the
balance of the Lease Security Deposit shall be restored to the appropriate
amount specified herein. Failure by the Tenant to timely make the Lease Security
Deposit shall constitute a condition to the effectiveness of this Lease, failure
of which to be timely satisfied by the Tenant shall entitle the Landlord to
terminate this Lease.

         Section 11.2 The Landlord may pledge its right and interest in and to
such Lease Security Deposit to any mortgagee or ground lessor and, in order to
perfect such pledge, have such cash held in escrow by such mortgagee or ground
lessee or grant such mortgagee or ground lessee a security interest therein. In
connection with any such pledge or grant of security interest by the Landlord to
a mortgagee or ground lessee ("Security Deposit Pledgee"), Tenant covenants and
agrees to cooperate as reasonably requested by the Landlord, in order to permit
the Landlord to implement the same on terms and conditions reasonably required
by such mortgagee or ground lessee including, without limitation. Whether or not
a Security Deposit Pledgee shall have a security interest therein, the Lease
Security Deposit shall be deposited in a separately maintained and accounted
escrow account established with a bank or other financial institution reasonably
acceptable to the Tenant (the "Escrow Holder"). The Tenant agrees that any
Security Deposit Pledgee may be the Escrow Holder so long as the Security
Deposit Pledgee is a bank or other financial institution. The Landlord and the
Tenant agree that a separate three-party escrow agreement, in form and substance
satisfactory to the Landlord, the Tenant and the Escrow Holder, will be entered
into prior to the date upon which the Tenant may deposit any such sums in cash,
and the Tenant agrees to reasonably cooperate from time to time as requested by
the Landlord in order to effectuate the holding of any cash amount comprising a
portion of the Lease Security Deposit by the Escrow Holder in accordance with
terms and conditions reasonably required by such Escrow Holder. Notwithstanding
anything in this Lease to the contrary, the Lease Security Deposit shall at all
times constitute the property of the Tenant and title to the Security Deposits
shall remain with the Tenant. To the extent, if any, the Security Deposits are
deemed to be held by the Landlord they shall be deemed to be held in trust for
the benefit of the Tenant, in all cases, subject however to the Landlord's
rights pursuant to this Article 11.


                                       45
<PAGE>   51


                                   ARTICLE 12

                                  MISCELLANEOUS

          Section 12.1 NOTICE OF LEASE. The Tenant agrees not to record this
Lease, but upon request of either party, both parties shall execute and deliver
a memorandum of this Lease in form appropriate for recording or registration, an
instrument acknowledging the Commencement Date of the Term, and if this Lease is
terminated before the Term expires, an instrument in such form acknowledging the
date of termination.

         Section 12.2 NOTICES. Whenever any notice, approval, consent, request,
election, offer or acceptance is given or made pursuant to this Lease, it shall
be in writing. Communications and payments shall be addressed, if to the
Landlord, at the Landlord's Address for Notices as set forth in EXHIBIT A or at
such other address as may have been specified by prior notice to the Tenant; and
if to the Tenant, at the Tenant's Address or at such other place as may have
been specified by prior notice to the Landlord. Any communication so addressed
shall be deemed duly given on the earlier of (i) the date received, or (ii) on
the next business day if sent by a nationally recognized overnight courier
service. If the Landlord by notice to the Tenant at any time designates some
other person to receive payments or notices, all payments or notices thereafter
by the Tenant shall be paid or given to the agent designated until notice to the
contrary is received by the Tenant from the Landlord.

         Section 12.3 SUCCESSORS AND LIMITATION ON LIABILITY. The obligations of
this Lease shall run with the land, and this Lease shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, except that the original Landlord named herein and each successor
Landlord shall be liable only for obligations accruing during the period of its
ownership. Neither the Tenant, nor anyone claiming by, under or through the
Tenant, shall be entitled to obtain any judgment in enforcing the terms and
conditions of this Lease creating personal liability on the part of the Landlord
or enforcing any obligations of the Landlord against any assets of the Landlord
other than its interest in the Property and, without limitation of the
foregoing, in no event shall any personal liability arise on the part of any of
the Landlord's officers, employees, directors or shareholders. Likewise, no
personal liability shall arise on the part of the Tenant's officers, employees,
directors or shareholders, as this Lease shall create liability on the part of
the Tenant and not personal liability on the part of such officers, employees,
directors or shareholders.

         Section 12.4 WAIVERS. The failure of the Landlord or the Tenant to seek
redress for violation of, or to insist upon strict performance of, any covenant
or condition of this Lease, shall not be deemed a waiver of such violation nor
prevent a subsequent act, which would have originally constituted a violation,
from having all the force and effect of an original violation. The receipt by
the Landlord of Annual Fixed Rent or Additional Rent with knowledge of the
breach of any covenant of this Lease shall not be deemed a waiver of such
breach. No provision of this Lease shall be deemed to have been waived by the
Landlord or the Tenant, as the case may be, unless such waiver be in writing
signed by the Landlord or the Tenant, as the case may

                                       46
<PAGE>   52

be. No consent or waiver, express or implied, by the Landlord or Tenant to or of
any breach of any agreement or duty shall be construed as a waiver or consent to
or of any other breach of the same or any other agreement or duty.

         Section 12.5 ACCEPTANCE OF PARTIAL PAYMENTS OF RENT. No acceptance by
either party of a lesser sum than the amount then due to such party shall be
deemed to be other than a partial installment of such rent due, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment as rent be deemed an accord and satisfaction, and either party may
accept such check or payment without prejudice to the other party's right to
recover the balance of such installment or pursue any other remedy in this Lease
provided. The delivery of keys to any employee of the Landlord or to the
Landlord's agent or any employee thereof shall not operate as a termination of
this Lease or a surrender of the Premises.

         Section 12.6 INTERPRETATION AND PARTIAL INVALIDITY. If any term of this
Lease, or the application thereof to any person or circumstances, shall to any
extent be invalid or unenforceable, the remainder of this Lease, or the
application of such term to persons or circumstances other than those as to
which it is invalid or unenforceable, shall not be affected thereby, and each
term of this Lease shall be valid and enforceable to the fullest extent
permitted by law. The titles of the Articles are for convenience only and not to
be considered in construing this Lease. This Lease contains all of the
agreements of the parties with respect to the subject matter thereof and
supersedes all prior dealings between them with respect to such subject matter.

         Section 12.7 QUIET ENJOYMENT. So long as the Tenant pays Annual Fixed
Rent and Additional Rent, performs all other Tenant covenants of this Lease and
observes all conditions hereof, the Tenant shall peaceably and quietly have,
hold and enjoy the Premises free of any claims by, through or under, or superior
title to, the Landlord including, without limitation, any Ground Lessor or
manager exercising rights under the Declaration of Covenants.

         Section 12.8 BROKERAGE. Each party represents and warrants to the other
that it has had no dealings with any broker or agent other than Meredith & Grew,
Incorporated (the "Broker") in connection with this Lease and shall indemnify
and hold harmless the other from claims for any brokerage commission (other than
by the Broker) arising out a breach of the foregoing representations. Landlord
shall be responsible for any commission due to the Broker pursuant to the terms
of a separate agreement.

         Section 12.9 SURRENDER OF PREMISES AND HOLDING OVER. The Tenant shall
surrender possession of the Premises on the last day of the Term and the Tenant
waives the right to any notice of termination or notice to quit at the end of
the Term. The Tenant covenants that upon the expiration or sooner termination of
this Lease, it shall, without notice, deliver up and surrender possession of the
Premises in the same condition in which the Tenant has agreed to keep the same
during the continuance of this Lease and in accordance with the terms hereof,
normal wear and tear and damage by fire or other casualty excepted, first
removing therefrom all goods and effects of the Tenant and any leasehold
improvements Landlord specified for removal

                                       47
<PAGE>   53


pursuant to Section 4.2, and repairing all damage caused by such removal. Upon
the expiration of this Lease or if the Premises should be abandoned by the
Tenant, or this Lease should terminate for any cause, and at the time of such
expiration, vacation, abandonment or termination, the Tenant or Tenant's agents,
subtenants or any other person should leave any property of any kind or
character on or in the Premises after having vacated the Premises, the fact of
such leaving of property on or in the Premises shall be conclusive evidence of
intent by the Tenant, and individuals and entities deriving their rights through
the Tenant, to abandon such property so left in or upon the Premises, and such
leaving shall constitute abandonment of the property. Landlord shall have the
right and authority without notice to the Tenant or anyone else, to remove and
destroy, or to sell or authorize disposal of such property, or any part thereof,
without being in any way liable to the Tenant therefor and the proceeds thereof
shall belong to the Landlord as compensation for the removal and disposition of
such property.

         If the Tenant fails to surrender possession of the Premises upon the
expiration or sooner termination of this Lease, the Tenant shall pay to
Landlord, as rent for any period after the expiration or sooner termination of
this Lease an amount equal to one hundred fifty percent (150%) of the Annual
Fixed Rent and the Additional Rent required to be paid under this Lease as
applied to any period in which the Tenant shall remain in possession. Acceptance
by the Landlord of such payments shall not constitute a consent to a holdover
hereunder or result in a renewal or extension of the Tenant's rights of
occupancy. Such payments shall be in addition to and shall not affect or limit
the Landlord's right of re-entry, Landlord's right to collect such damages as
may be available at law, or any other rights of the Landlord under this Lease or
as provided by law.

         Section 12.10 GROUND LEASE. The Land is owned by the Massachusetts
Institute of Technology ("MIT"). MIT as lessor and the Landlord as lessee (or a
limited partnership of which the Landlord would be the general partner (the
"Limited Partnership") and to whom all of the Landlord's rights and obligations
under this Lease may be assigned in the Landlord's sole discretion) shall enter
into a ground lease (the "Ground Lease") of the Land, and this Lease shall in
all respects be subject to such Ground Lease. If the Ground Lease shall
terminate during the Term for any reason whatsoever, except as may otherwise be
agreed between MIT and the Tenant, this Lease shall terminate with the same
force and effect as if such termination date had been named herein as the date
of expiration hereof. However, this Lease is subject to the execution by MIT,
the Tenant and the Landlord of a non-disturbance agreement in the form attached
hereto as EXHIBIT G. Each party shall pay its own expenses related to such
non-disturbance agreement. The Landlord represents and warrants to the Tenant
that, upon execution of the Ground Lease by the Landlord, or upon assignment of
this Lease to the Limited Partnership and the execution of the Ground Lease by
the Limited Partnership, the Landlord or the Limited Partnership, as the case
may be, shall have the full right and authority to grant the estate demised
herein and the appurtenant rights granted herein.

         Section 12.11 FINANCIAL REPORTING. Tenant shall from time to time (but
not less frequently than quarterly) provide Landlord with financial statements
of Tenant, together with related statements of Tenant's operations for Tenant's
most recent fiscal year then ended,

                                       48
<PAGE>   54


certified by an independent certified public accounting firm. Notwithstanding
the foregoing, so long as the Tenant is a public company, it shall be in
compliance with its financial reporting obligations provided that it submits,
upon request by the Landlord, all 10-Q and 10-K reports to the Landlord within
ten (10) business days of filing the same with the Securities and Exchange
Commission.

         Section 12.12 CAMBRIDGE EMPLOYMENT PLAN. The Tenant agrees to sign an
agreement with the Employment and Training Agency designated by the City Manager
of the City of Cambridge as provided in subsections (a)-(g) of Section 24-4 of
Ordinance Number 1005 of the City of Cambridge, adopted April 23, 1984.

         Section 12.13 TRUCK DELIVERY ROUTES; TRAFFIC MITIGATION MEASURES.
Tenant agrees to exercise good faith efforts to cooperate with any efforts by
the City of Cambridge to direct truck traffic to certain streets and away from
certain other streets, in connection with the making of deliveries to the
Premises, and to comply with any traffic mitigation measures of the City of
Cambridge applicable to the Building, and Tenant shall otherwise comply with all
legal requirements of the City of Cambridge pertaining thereto.

         Section 12.14 PARKING AND TRANSPORTATION DEMAND MANAGEMENT. Tenant
covenants and agrees to work cooperatively with Landlord to develop a parking
and transportation demand management ("PTDM") program that comprises part of a
comprehensive PTDM for University Park. In connection therewith, the use of
single occupant vehicle commuting will be discouraged and the use of alternative
modes of transportation and/or alternative work hours will be promoted. Without
limitation of the foregoing, Tenant agrees that its PTDM program (and Tenant
will require in any sublease or occupancy agreement permitting occupancy in the
Premises that such occupant's PTDM program) will include offering a subsidized
MBTA transit pass, either constituting a full subsidy or a subsidy in an amount
equal to the maximum deductible amount therefor allowed under the federal tax
code, to any employee working in the Premises requesting one. The Tenant agrees
additionally to comply with any other requirements of the City of Cambridge or
other governmental authorities associated with parking or transportation
management that are now in effect or hereafter adopted.

         Section 12.15 LABORATORY ANIMALS. The Landlord acknowledges that the
Tenant will be conducting biotechnology research and development at the Premises
and as such may require the use of certain laboratory animals at the Premises in
order to carry out such research and development.

         Section 12.16 NO CONSEQUENTIAL DAMAGES. In no event shall either
Landlord or Tenant be liable to the other for consequential damages, provided
that damages incurred by the Landlord in connection with any holding over by
Tenant in the Premises, including without limitation those associated with loss,
cost, liability or expense arising by virtue of the existence of aggrieved third
parties (e.g. lenders and prospective tenants), shall not constitute
consequential damages.


                                       49
<PAGE>   55


         Section 12.17 GOVERNING LAW. This Lease shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts.


            (The remainder of this page is intentionally left blank)

                                       50
<PAGE>   56


         IN WITNESS WHEREOF, this Lease has been executed and delivered as of
the date first above written as a sealed instrument.

                                    LANDLORD:

                                    FOREST CITY 64 SIDNEY STREET, INC.


                                    By: /s/ Gayle Farris
                                       -----------------------------------------
                                        Gayle B. Farris
                                        Vice President

                                    TENANT:

                                    ALKERMES, INC.


                                    By: /s/ James M. Frates
                                       -----------------------------------------

                                    Title: Vice President
                                          --------------------------------------

                                       51


<PAGE>   57


                                    EXHIBIT A

                                BASIC LEASE TERMS


Annual Fixed Rent
for the Initial Term:       -   With respect to the Rentable Floor Area of the
                                5th Floor: (i) $37.50 per rentable square foot
                                for the period from the Commencement Date until
                                April 30, 2007 (provided that if there is a Stub
                                Period, then this date shall be extended for a
                                period equal to the number of days of the Stub
                                Period) and (ii) $40.50 per rentable square foot
                                for the remainder of the Initial Term.

                            -   With respect to the Rentable Floor Area of the
                                4th Floor: (i) $26.42 per rentable square foot
                                for the period from the Commencement Date until
                                March 31, 2002, (ii) $37.50 per rentable square
                                foot for the period from April 1, 2002 until
                                April 30, 2007 (provided that if there is a Stub
                                Period, then this date shall be extended for a
                                period equal to the number of days of the Stub
                                Period) and (iii) $40.50 per rentable square
                                foot for the remainder of the Initial Term.

                            -   With respect to the Rentable Floor Area of Suite
                                300: (i) $25.24 per rentable square foot for the
                                period from the Commencement Date until the
                                later of (x) March 31, 2002 or (y) the date
                                thirty (30) days following the 88 Sidney Rent
                                Commencement Date, (ii) if an 88 Sidney
                                Non-fruition Termination should occur, then
                                $37.50 per rentable square foot for the period
                                from the later of (x) April 1, 2002 or (y) the
                                date of such 88 Sidney Non-fruition Termination
                                until April 30, 2007, and (iii) $40.50 per
                                rentable square foot for the remainder of the
                                Initial Term. Notwithstanding the foregoing, if
                                the Tenant should hold over in this space in
                                contravention of the Tenant's obligation to
                                surrender the same under Section 2.1(b) hereof,
                                then the rate of Annual Fixed Rent thereafter
                                applicable thereto, including without limitation
                                for purposes of the calculation of holdover
                                payments under Section 12.9, shall equal $37.50
                                per rentable square foot.

                            -   With respect to the Rentable Floor Area of Suite
                                180: (i) $15.25 per rentable square foot for the
                                period from the Commencement Date until the
                                later of (x) March 31, 2002 or


                                      A-1
<PAGE>   58

                                (y) the date thirty (30) days following the 88
                                Sidney Rent Commencement Date, (ii) if an 88
                                Sidney Non-fruition Termination should occur,
                                then $37.50 per rentable square foot for the
                                period from the later of (x) April 1, 2002 or
                                (y) the date of such 88 Sidney Non-fruition
                                Termination until April 30, 2007, and (iii)
                                $40.50 per rentable square foot for the
                                remainder of the Initial Term. Notwithstanding
                                the foregoing, if the Tenant should hold over in
                                this space in contravention of the Tenant's
                                obligation to surrender the same under Section
                                2.1(b) hereof, then the rate of Annual Fixed
                                Rent thereafter applicable thereto, including
                                without limitation for purposes of the
                                calculation of holdover payments under Section
                                12.9, shall equal $37.50 per rentable square
                                foot.

Initial                         Term: Approximately eleven (11) years and
                                six (6) months (subject to the provisions of
                                Section 2.1), commencing on the Commencement
                                Date, and expiring on April 30, 2012 or such
                                later date upon which the Stub Period
                                expires, if applicable ("Termination Date").

Extension Options:              Tenant shall have options to extend the Initial
                                Term of this Lease for two (2) additional
                                periods of ten (10) years each, all as described
                                in Section 2.6 of the Lease.

Landlord's Original
Address:                        Forest City 64 Sidney Street, Inc.
                                1130 Terminal Tower
                                50 Public Square
                                Cleveland, Ohio 44113-2203
                                Attention: James Ratner

Landlord's Address for
Notices:                        Forest City 64 Sidney Street, Inc.
                                38 Sidney Street
                                Cambridge, Massachusetts 02139-4234
                                Attention: Gayle B. Farris

                                With a copy to:

                                Forest City Commercial Management
                                38 Sidney Street
                                Cambridge, Massachusetts 02139-4234
                                Attention: General Manager

                                      A-2

<PAGE>   59


Premises:                       Approximately 64,973 rentable square feet
                                ("rsf"), consisting of all of the rentable area
                                of floors 4 and 5 of the Building (and including
                                the acid neutralization room on the first floor
                                of the Building) and Suite 300 on the third
                                floor of the Building and Suite 180 on the first
                                floor of the Building.

Parking Privileges:             During the Term, Landlord shall cause to be
                                provided to Tenant 1.5 parking passes per 1,000
                                rentable square feet of the Premises, provided
                                that the Landlord shall not provide fractional
                                parking passes (each a "Parking Pass"), each of
                                which shall entitle the parking of a single
                                motor vehicle in an unreserved parking space in
                                University Park, the charges for which shall
                                equal the Market Rate Parking Charge per Parking
                                Pass. Such parking spaces shall be accessible
                                twenty four (24) hours per day, seven (7) days
                                per week. In no event are Parking Passes
                                transferable other than to the holder, from time
                                to time, of the tenant's interest under this
                                Lease or a subtenant that has been demised all
                                or a portion of the Premises in conformity with
                                the requirements of this Lease, and is limited
                                to use by employees of either of the foregoing.
                                If the Tenant requests additional Parking
                                Passes, and at the time in question there are
                                surplus Parking Passes that are not committed to
                                others, then they may be made available by the
                                Landlord, on a month-to-month basis, subject to
                                availability.

Permitted Uses:                 General business and administrative offices,
                                research and development and customary accessory
                                uses supporting the foregoing, all as defined by
                                and as permitted under the Zoning Ordinances of
                                the City of Cambridge.

Commencement Date:              See Section 2.5.

Commencement Date:              See Section 2.5.

Tenant's Address:               Alkermes, Inc.
                                64 Sidney Street
                                Cambridge, MA  02139-4211
                                Attention:  James M. Frates,
                                Chief Financial Officer

                                With copies to:

                                Ballard Spahr Andrews & Ingersoll, LLP
                                1735 Market Street, 51st Floor
                                Philadelphia, PA 19103-7599

                                      A-3
<PAGE>   60


                                Attention:  Michael D. Silbert, Esq.



                                      A-4
<PAGE>   61



                                    EXHIBIT B

                                LEGAL DESCRIPTION




                                      B-1
<PAGE>   62



                                   EXHIBIT B-1

                              DEPICTION OF PREMISES






                                      B-1-1
<PAGE>   63



                                   EXHIBIT B-2

                             MAP OF UNIVERSITY PARK





                                     B-2-1


<PAGE>   64


                                    EXHIBIT C

                                   WORK LETTER

         1. Landlord shall provide to Tenant an allowance (the "Leasehold
Improvements Allowance") equal to (i) the product of Five and 00/100 Dollars
($5.00) times (ii) the rentable square footage of the Premises (as determined in
accordance with paragraph 2 below), for application to certain costs and
expenses, more particularly set forth below, incurred by or on behalf of Tenant.
If Tenant incurs costs in excess of the Leasehold Improvements Allowance, then
all such costs shall be borne solely by Tenant.

         2. For purposes of calculating the rentable floor area of the Premises
under this Work Letter, the square footage calculations specified for portions
of the Building set forth in Section 1.2 shall govern. For purposes of
determining the space within the Building that shall be included in the Premises
for purposes of calculating the Leasehold Improvements Allowance, the Premises
shall be deemed to be established upon the occurrence of the 88 Sidney Rent
Commencement Date, or such earlier date upon which Tenant's right to cause an 88
Sidney Non-fruition Termination has either expired because all of the conditions
to such right cannot any longer occur (and Tenant confirms this is the case in
writing), or Tenant earlier waives in writing any right to cause an 88 Sidney
Non-fruition Termination. In such event, the Premises shall be deemed
constituted of the rentable area of the fourth and fifth floors of the Building
and will exclude the Surrender Space. However, in the event of an 88 Sidney
Non-fruition Termination, then the Premises for purposes of calculating the
Leasehold Improvements Allowance shall be established only upon the expiration
of the period within which Tenant may either terminate this Lease in its
entirety, or just with respect to the Surrender Space or a portion thereof as
contemplated under Section 2.1(c), or Tenant's earlier written waiver of any
such right to terminate this Lease. The Premises shall, in such event, be deemed
constituted of only such space as Tenant will be leasing for a term expiring
upon the originally scheduled Termination Date of this Lease. If Tenant
terminates this Lease under said Section 2.1(c), there shall not be any
Leasehold Improvements Allowance hereunder, notwithstanding anything to the
contrary provided in this Lease. Only upon the determination of the space within
the Building to be included in the Premises for purposes of calculating the
Leasehold Improvements Allowance, as herein set forth, may Tenant draw all or
any portion of the Leasehold Improvements Allowance.

         3. The application of the Leasehold Improvement Allowance by Landlord
shall be limited to payment of the following costs and expenses incurred by or
on behalf of Tenant in connection with leasehold improvements to the Premises
that constitute the Base Laboratory Improvements (collectively "Eligible
Leasehold Improvement Expenses"): the actual documented and verified cost
pursuant to Tenant's construction contract, including without limitation the
associated contractor's overhead and profit and general conditions incurred in
the construction of the leasehold improvements to the Premises, except for the
making of improvements, installation of fixtures or incorporation of other items
which (x) by virtue of their quantity or quality (whether greater or less) would
not be of general utility to other laboratory tenants that might later occupy
the Premises, whether at the expiration of the Term or by virtue

                                      C-1
<PAGE>   65

of the earlier termination of this Lease, or (y) are moveable rather than
permanent improvements, examples of which may include furniture, telephone
communications and security equipment, and bench-top laboratory equipment items
such as microscopes.

         During the construction of any leasehold improvements with respect to
which Tenant desires to have the Leasehold Improvement Allowance applied, and in
accordance with the commercially reasonable terms and conditions typically
imposed upon a landlord pursuant to a construction loan agreement, such as,
without limitation, retainage, lien waiver, and other requisition conditions,
Tenant shall, on a monthly basis (as the Tenant's contractor submits to Tenant
its application for payment), deliver to Landlord a requisition for payment
showing the cost of the leasehold improvements in question and the amount of the
current payment requested from Landlord for disbursement from the Leasehold
Improvements Allowance. Payments made on account of Tenant's requisitions shall
be made from the Leasehold Improvement Allowance. Following the completion of
any such leasehold improvements, Tenant shall deliver to the Landlord, within
ninety (90) days of completion, a statement showing the final costs of such
leasehold improvements, the amounts paid to date to, or on behalf of the Tenant,
and any amounts available for release of retainage.

         4. Any improper failure by Landlord to make payment of all or any
portion of the Leasehold Improvements Allowance shall constitute a default by
Landlord under this Work Letter and consequently under the Lease, and shall
therefor be governed in accordance with Section 9.7. However, after the
expiration of the notice and cure periods set forth in Section 9.7 of the Lease,
and subject in any case to the proviso set forth in the last sentence of said
Section 9.7, Tenant shall have the right to offset such payments owing to Tenant
against sums otherwise due and owing by Tenant to Landlord under the Lease.



                                      C-2
<PAGE>   66

                                    EXHIBIT D

                                STANDARD SERVICES


         The following services will be provided exclusively by the Landlord:

         A.       Regular maintenance of exterior and parking lot landscaping
                  and University Park common areas.

         B.       Regular maintenance, sweeping and snow removal of building
                  exterior areas such as roadways, driveways, sidewalks,
                  parking areas and courtyard paving.

         C.       Maintenance and repair of base building surveillance and alarm
                  equipment, base building elevators, base building mechanical,
                  electrical and plumbing systems, and base building life safety
                  systems.

         D.       Building surveillance and alarm system operation and the
                  Landlord's live monitoring service to building standard
                  specifications.

         E.       Complete interior and exterior cleaning of all windows two
                  times per year.

         F.       Daily, weekday maintenance of hallways, passenger elevators,
                  bathrooms, lobby areas and vestibules.

         G.       Periodic cleaning of stairwells, freight elevators, and back
                  of house areas.

         H.       Daily, weekday rubbish removal of all tenant trash
                  receptacles.

         I.       Daily, weekday cleaning of Tenant space to building standard.

         J.       Surveillance personnel having a desk in the building lobby.


                                      D-1
<PAGE>   67


                                    EXHIBIT E

                              RULES AND REGULATIONS


DEFINITIONS

         Wherever in these Rules and Regulations the word "Tenant" is used, it
shall be taken to apply to and include the Tenant and its agents, employees,
invitees, licensees, contractors, any subtenants and is to be deemed of such
number and gender as the circumstances require. The word "Premises" is to be
taken to include the space covered by the Lease. The word "Landlord" shall be
taken to include the employees and agents of Landlord. Other capitalized terms
used but not defined herein shall have the meanings set forth in the Lease.

The following Rules and Regulations apply to buildings that are wholly occupied
by a single tenant.

         A.       No actions shall be taken by Tenant that modify the exterior
                  appearance of the Premises or the Building, unless
                  expressly permitted by the Lease or the Landlord.

         B.       No blinds, shades, awnings or other window treatments shall be
                  placed or installed in windows or curtain wall glazing other
                  than those approved and installed as Building Standard.

         C.       No sign, advertisement, notice or the like, shall be posted on
                  the Building exterior, in windows visible from the exterior of
                  the building, or in the building lobby except as permitted
                  under the terms of the Lease or as reasonable necessary in the
                  operation of Tenant's business without prior approval of
                  Landlord, not to be unreasonably withheld.

         D.       The Building lobby shall be open to the public during normal
                  business hours (at a minimum 9:00 a.m. through 5:00 p.m.,
                  Monday through Friday except legal holidays). Tenant shall be
                  responsible for locking of doors to the Premises. All locksets
                  shall accept the Best key system. If the Building key system
                  is maintained by Tenant, designated representatives of
                  Landlord shall be provided with keys and/or access cards so as
                  to facilitate access to all spaces within the Building in case
                  of emergency. No locks or similar devices not on the master
                  key system shall be attached to any doors.

         E.       All deliveries to the Building, other than envelopes and small
                  packages that can legitimately be delivered by hand or bicycle
                  courier service, shall be accepted only through the building
                  loading dock and not through the main lobby.


                                      E-1
<PAGE>   68


         F.       Bicycles may only be stored in designated bicycle racks
                  provided in University Park garages or elsewhere on the
                  grounds of University Park. Bicycles shall not be fastened to
                  fences, signposts, or other non-designated equipment, nor
                  shall bicycles or vehicles of any kind shall be brought into
                  or kept in or about the building lobby or the Premises.

         G.       Tenant shall not cause or permit any unusual or objectionable
                  odors, noises or vibrations to emanate from said Premises.

         H.       No pets or other animals, excepting those used for research
                  purposes or by a disabled person, shall be permitted in
                  or about the Building or the grounds of the Park.

         I.       Unless specifically authorized by Landlord, employees or
                  agents of Landlord shall not perform for nor be asked by
                  Tenant to perform work other than their regularly assigned
                  duties.

         J.       Canvassing, soliciting and peddling in the Building is
                  prohibited and Tenant shall cooperate to prevent the same
                  from occurring.

         K.       Access roads and loading areas, parking areas, sidewalks,
                  entrances, lobbies, halls, walkways, elevators, stairways and
                  other common area provided by Landlord shall not be obstructed
                  by Tenant, or used for other purpose than for ingress and
                  egress.

         L.       Landlord shall have the right to make such other and further
                  reasonable rules and regulations as in the judgment of
                  Landlord, may from time to time be needed for the safety,
                  appearance, care and cleanliness of the Building or the park
                  and for the preservation of good order therein. All reasonable
                  parking, building operation, or construction rules and
                  regulations which may be established from time to time by
                  Landlord and enforced on a uniform basis (i.e.
                  non-discriminatory) shall be respected and obeyed, subject to
                  the requirements of this Lease.

         M.       Landlord shall not be responsible to Tenant for any violation
                  of rules and regulations by other tenants except that Landlord
                  shall use good faith efforts to uniformly enforce such rules
                  and regulations.


                                      E-2

<PAGE>   69


                                    EXHIBIT F

                              INTENTIONALLY OMITTED




                                      F-1
<PAGE>   70



                                    EXHIBIT G

                      FORM OF MIT NON-DISTURBANCE AGREEMENT

         Agreement dated as of March __, 2000 (this "Agreement"), by and between
MASSACHUSETTS INSTITUTE OF TECHNOLOGY, a Massachusetts educational corporation
chartered by Massachusetts law (the "Ground Lessor"), FC 88 SIDNEY, INC., a
Massachusetts corporation ("Landlord") and ALKERMES, INC., a Pennsylvania
corporation ("Tenant").

                                   BACKGROUND

         Ground Lessor and Landlord are parties, as landlord and tenant
respectively, to a Construction and Lease Agreement ("Ground Lease") dated
________________, 2000, for certain real property located at 88 Sidney Street in
Cambridge, Massachusetts, as more particularly described on EXHIBIT A attached
hereto ("Land"). A Notice of Lease pertaining to the Ground Lease has been
recorded at the Middlesex South District Registry of Deeds and filed for
registration in the Middlesex South Registry District of the Land Court.
Landlord intends to construct a building (the "Building") on the Land. Tenant
has entered into a lease dated as of _______________, 2000 ("Lease") with
Landlord for certain premises in the Building ("Premises"), the Premises being
more particularly described in the Lease.

                                   AGREEMENTS

         1. NON-DISTURBANCE. If the Ground Lease is terminated, for any reason,
Ground Lessor shall not disturb Tenant in Tenant's possession of the Premises
and without any hindrance or interference from the Ground Lessor, shall permit
Tenant peaceably to hold and enjoy the Premises for the remainder of the
unexpired term of the Lease, together with any extension periods provided for
therein, upon and subject to the same terms, covenants and conditions as are
contained in the Lease, and shall recognize the Lease as modified hereby. The
foregoing is on the condition that Tenant is not in default under the Lease
beyond any applicable notice and grace periods contained in the Lease.

         2. ATTORNMENT. Tenant hereby agrees that if the Ground Lease is
terminated for any reason, Tenant shall attorn to Ground Lessor and shall be
liable to and recognize Ground Lessor as Landlord under the Lease for the
balance of the term of the Lease upon and subject to all of the terms and
conditions thereof. In such case, upon receipt of notice from Ground Lessor
setting forth the effective date of the termination of the Ground Lease, Tenant
shall pay to the Ground Lessor all obligations required to be paid and performed
by Tenant under the Lease arising after the date of termination. The Lease shall
continue in full force and effect as a direct lease between Ground Lessor and
Tenant.

         3. ADDITIONAL CONDITIONS. Tenant agrees that Ground Lessor shall not
be: (i) liable for any act or omission of any person or party who may be
landlord under the Lease prior to any


                                      G-1
<PAGE>   71


termination of the Ground Lease ("Prior Landlord"); (ii) subject to any offsets
or defenses which Tenant might have against Prior Landlord; (iii) bound by any
prepayment of rent or additional rent, or any other charge which Tenant might
have paid to Prior Landlord for more than the then current month (other than a
bona fide security deposit paid by Tenant to Landlord under the Lease, estimated
monthly payments made on account of additional rent as and when required to be
made pursuant to the provisions of the Lease, or other rent, additional rent or
charges which have been received by Ground Lessor); and (iv) bound by any
amendment, modification or termination of the Lease made without Ground Lessor's
express agreement when such agreement is required under the Ground Lease. Tenant
additionally agrees with Ground Lessor that Tenant shall not enter into any
assignment of the Lease or sublease of all or any part of the Premises in cases
where Landlord's consent is required thereto, unless Ground Lessor shall have
also given its consent thereto, which consent shall not be unreasonably withheld
or delayed. Nothing herein, however, shall constitute a waiver of Tenant's
rights as against such individual or entity which is the landlord under the
Lease as of the time of any event or circumstances which may give rise to a
claim of the Tenant against such individual or entity. In addition, nothing
herein shall relieve any successor landlord under the Lease from its obligation
to comply with those obligations of a Landlord under the Lease during the period
for which it is the owner of the Landlord's interest in the Lease.

         4. LANDLORD'S DEFAULTS. Tenant hereby agrees that, if Tenant provides
Landlord with any notice of default or claimed default on the part of Landlord
under the Lease, Tenant shall concurrently therewith send a copy of such notice
to Ground Lessor. In such event, Ground Lessor shall be permitted (but not
obligated) to cure any such default within the period of time allotted thereto
in the Lease. If Landlord shall fail to cure such default within the period of
time allocated thereto in the Lease (or, if Landlord shall not within such time
period have commenced diligent efforts to remedy a default that cannot be fully
cured within such time period) then Tenant shall provide Ground Lessor with
notice of such failure. Upon receipt of such notice of Landlord's failure to
cure, Ground Lessor shall be granted an additional thirty (30) days during which
it shall be permitted (but not obligated) to cure such default. In the case of a
default, which cannot with diligence be remedied by Ground Lessor within thirty
(30) days, Ground Lessor shall have such additional period of time as may be
reasonably necessary in order for Ground Lessor to remedy such default with
diligence and continuity of effort, provided that Ground Lessor has commenced to
cure such default within such thirty (30) day period.

         5. NOTICES. Duplicates of all notices delivered by any party to another
party and required by this Agreement shall be delivered concurrently to all
other parties to this Agreement. All notices shall be written, delivered by
certified or registered mail, and sent, if to Ground Lessor, to 238 Main Street,
Suite 200, Cambridge, Massachusetts 02142, Attention: Director of Real Estate,
if to Tenant to 64 Sidney Street, Cambridge, Massachusetts 02139-4211,
Attention: James M. Frates, Chief Financial Officer, before the commencement of
Tenant's occupancy in the Premises, and to the Premises after the Commencement
Date shall have occurred with respect to the entire Original Premises, and if to
Landlord to 38 Sidney Street, Cambridge, MA 02139-4234, Attention: Ms. Gayle B.
Farris, or such addresses as may, from time to time, be set forth in notices to
the other parties hereunder.

                                      G-2
<PAGE>   72


         6. EXCULPATION OF GROUND LESSOR. Ground Lessor shall not be personally
liable hereunder. Tenant agrees to look to Ground Lessor's interest in the Land
and Building only for satisfaction of any claim against Ground Lessor hereunder.

         7. SUCCESSORS AND ASSIGNS. This Agreement shall bind Tenant, its
successors and assigns, and shall benefit Tenant and only such successor and
assigns of Tenant as are permitted by the Lease and shall bind and benefit
Ground Lessor and its successors and assigns (provided that after transfer of
Ground Lessor's entire interest in the Land to another party, Ground Lessor
shall have no liability for any act or omission of such party) and shall bind
and benefit Landlord and its successors and assigns.

         EXECUTED as an instrument under seal as of the date set forth above.

                                          MASSACHUSETTS INSTITUTE OF TECHNOLOGY
                                          Ground Lessor


                                          By:
                                             -----------------------------------



                                          ALKERMES, INC.
                                          Tenant


                                          By:
                                             -----------------------------------


                                          FOREST CITY 64 SIDNEY, INC.
                                          Landlord


                                          By:
                                             -----------------------------------


                                      G-3
<PAGE>   73


COMMONWEALTH OF MASSACHUSETTS       )
                                    )        ss:
COUNTY OF MIDDLESEX                 )

         BEFORE ME, a Notary Public in and for said County and State, personally
appeared the MASSACHUSETTS INSTITUTE OF TECHNOLOGY, by _____________, its
Director of Real Estate and Associate Treasurer, who acknowledged that he did
sign the foregoing instrument and that the same is his free act and deed and the
free act and deed of said corporation.

         IN TESTIMONY HEREOF, I set my hand and official seal at ______________,
this _____ day of _______________, ____.


                                       Notary Public
                                       My Commission Expires:
                                                            --------------------



COMMONWEALTH OF MASSACHUSETTS       )
                                    )        ss:
COUNTY OF MIDDLESEX                 )

         BEFORE ME, a Notary Public in and for said County and State, personally
appeared the above-named ALKERMES, INC., by ______________________ who
acknowledged that he/she did sign the foregoing instrument and that the same is
his/her free act and deed and the free act and deed of said corporation.

         IN TESTIMONY HEREOF, I set my hand and official seal at ______________,
this _____ day of _______________, ____.


                                       Notary Public
                                       My Commission Expires:
                                                             -------------------



                                      G-4
<PAGE>   74


COMMONWEALTH OF MASSACHUSETTS       )
                                    )        ss:
COUNTY OF MIDDLESEX                 )

         BEFORE ME, a Notary Public in and for said County and State, personally
appeared the above-named FC 88 SIDNEY, INC., by _______________________ who
acknowledged that he/she did sign the foregoing instrument and that the same is
his/her free act and deed and the free act and deed of said corporation.

         IN TESTIMONY HEREOF, I set my hand and official seal at ______________,
this _____ day of _______________, ____.


                                       Notary Public
                                       My Commission Expires:
                                                             -------------------


                                      G-5

<PAGE>   75



                                    EXHIBIT H

                              INTENTIONALLY OMITTED



                                      H-1
<PAGE>   76



                                    EXHIBIT I

                     EXPEDITED DISPUTE RESOLUTION PROCEDURE


         Any dispute or determination by a party hereto which, pursuant to the
terms of this Lease, may be resolved by the "Expedited Dispute Resolution
Procedure," shall be undertaken in accordance with the following provisions:

         (a) In the event of any such dispute, the complaining party (the
"Claimant") shall serve upon the other party (the "Respondent") by registered
mail or hand delivery a written demand for arbitration (the "Dispute Notice"),
setting forth with particularity the nature of the dispute. The Claimant shall
simultaneously serve any request (the "Document Request") for production of
relevant documents from the Respondent. The service of such Dispute Notice and
Document Request shall be effective upon receipt thereof. Failure to serve a
Document Request shall constitute a waiver by the Claimant of any right to
demand documents from the Respondent, except as provided in Subparagraph (c)
below. The Dispute Notice shall also be delivered to J.A.M.S./Endispute, 73
Tremont Street, 4th floor, Boston, Massachusetts 02108, for mediation as part of
that firm's national mediation services expertise. J.A.M.S./Endispute shall
select a member of the company to conduct the arbitration (hereinafter the
"Arbitrator"), the choice of which shall be binding on the parties. If
J.A.M.S./Endispute believes it has a material conflict of interest with any of
the parties, it shall select an alternative nationally recognized firm to
conduct the arbitration, within ten (10) business days of receipt of the Dispute
Notice. If J.A.M.S./Endispute shall cease to exist and/or shall decline to serve
under this Lease as to all or any particular dispute submitted thereto for
arbitration, and within ten (10) business days of receipt of a Dispute Notice,
shall fail to select an alternative nationally recognized firm, then, and in any
such event, the parties shall mutually select an alternative arbitrator for
their dispute(s) and, in the absence of agreement within a period of ten (10)
days, either party shall have the right, on notice to the other, to apply to the
President of the Boston Bar Association for selection of an independent
arbitrator.

         (b) RESPONSE BY RESPONDENT. Within ten (10) business days of receipt of
a Dispute Notice and Document Request, the Respondent shall serve a detailed
written response to the Dispute Notice, including any arbitrable counterclaims,
and shall produce all non-privileged documents called for in the Document
Request. At the same time, Respondent shall serve any Document Request on
Claimant, failing which Respondent shall be deemed to have waived any right to
demand documents from Claimant. Within two (2) business days of delivery of the
response, all undisputed amounts shall be paid by Respondent by wire transfer.

         (c) RESPONSE BY CLAIMANT. Within ten (10) business days of receipt of
such written response, the Claimant shall serve a reply to any counterclaims
asserted by Respondent and shall produce all non-privileged documents requested
by Respondent. At the same time, the Claimant may serve a second Document
Request limited to documents relevant to Respondent's

                                      I-1
<PAGE>   77

counterclaim. Within two (2) business days of delivery of the reply to any
counterclaims, all undisputed amounts shall be paid by the Claimant by wire
transfer.

         (d) RESPONSE BY RESPONDENT. Respondent shall produce all non-privileged
documents called for in any such second Document Request within ten (10)
business days of service thereof.

         (e) APPEARANCE BEFORE ARBITRATOR. Within thirty-five (35) business days
of service of the Dispute Notice, any arbitrable dispute shall be submitted to
the Arbitrator, whose decision shall be final, binding and non-appealable, and
may be entered and enforced as a judgment by any court of competent
jurisdiction. The Arbitrator shall consider and determine only matters properly
subject to arbitration pursuant to this Lease.

         The Arbitrator shall, in consultation with the parties, establish such
further procedures, including hearings, as he or she deems appropriate,
provided, however, that a decision of the dispute (including counterclaims)
shall be rendered no later than sixty (60) business days after service of the
Dispute Notice.

         (f) FINAL DECISION; FEES AND EXPENSES. The Arbitrator's decision shall
be in writing, and shall include findings of fact and a concise explanation of
the reasons for the decision. The decision shall be delivered to the parties
immediately. The Arbitrator's fees and expenses shall be borne by one or both of
the parties in accordance with the direction of the Arbitrator, who shall be
guided in such determination by the results of the arbitration. If any party
refuses to appear before the Arbitrator or to respond as required in
subparagraphs (a) through (e) above, the Arbitrator shall decide the matter as
by default against the non-appearing party, and such decision shall be final,
binding and non-appealable to the same extent as a decision rendered with the
full participation of such party.

                                      I-2