<PAGE>

                                                                   EXHIBIT 10.10
                          ACTIVATED CELL THERAPY, INC.
                          ----------------------------

                      VANNI BUSINESS PARK INDUSTRIAL LEASE
                      ------------------------------------

                                   ARTICLE I
                                   ---------

                                    PARTIES
                                    -------

     This Lease, dated, for reference purposes only, October 27, 1992, is made
by and between the Vanni Business Park General Partnership ("Lessor") and
ACTIVATED CELL THERAPY, INC., a Delaware corporation ("Lessee").

                                  ARTICLE II
                                  ----------

                                   Premises
                                   --------

     Lessor hereby leases to Lessee and Lessee leases from Lessor for the term,
at the rental, and upon all of the conditions set forth herein, that certain
real property situated in the County of Santa Clara, State of California,
commonly known as 291 North Bernardo Avenue, Building "F", Mountain View,
California 94043, and more particularly described in the site plan prepared by
Dennis Kobza & Associates, A.I.A., marked Exhibit "A" which is attached hereto
and incorporated herein. Said real property, including the land and all
improvements therein, is called "the Premises".

                                  ARTICLE III
                                  -----------

                                     TERM
                                     ----

     Section 3.1    Term.  The term of this Lease shall be for eight (8)
     -----------    ----
years, commencing on the Commencement Date ("Commencement Date"). Lessor
understands that Lessee is in negotiations with the existing lessee on the
Premises, IDEC Pharmaceutical Corporation ("IDEC"), whereby Lessee would occupy
the Premises prior to the expiration of the term of IDEC's lease, and Lessor
shall attempt to accommodate Lessee to facilitate this early occupancy. In the
event that Lessee and IDEC reach an agreement, at Lessee's election it shall
either: (i) enter into a sublease with IDEC for the balance of the term of
IDEC's lease, in which event the Commencement Date of this Lease shall be
April 1, 1994; or (ii) request that Lessor terminate IDEC's lease and accelerate
the commencement of this Lease, in which event the Commencement Date shall be
the date on which Lessor delivers the Premises to Lessee in accordance with this
Lease.

     Section 3.2    Option to Extend.
     -----------    ----------------

          (a)       Lessee is given the option to extend the Lease term for one
(1) five year period following expiration of the initial Lease term, which
option may be exercised only by written notice ("Option Notice") from Lessee to
Lessor given not less than one hundred eighty (180) days prior to the end of the
initial Lease term; provided, however, if Lessee is in material

                                       1.
<PAGE>

default on the date of giving the Option Notice, the option Notice shall be
totally ineffective, or if Lessee is in material default on the date the
Extended Term is to commence, such Extended Term shall not commence and this
Lease shall expire at the end of the initial Lease term. In the event of an
Extended Term, the Extended Term shall be subject to all the terms and
conditions of this Lease excepting rent which shall be at 100% of the then fair
market rental value, as determined under subparagraph (b) below, but in no event
less than the monthly rent prevailing on the last month of the initial Lease
term.

          (b)  The parties shall agree on the fair market rental value of the
Premises for said Extended Term, including fair market periodic adjustments
thereto, during the first thirty (30) days of year five (5) of the Lease Term.
If the parties are able to agree on the fair market rental value for the
Extended Term, (including periodic adjustments thereto), then such agreed value
shall be the fair market-rental value for purposes of determining the rent for
the Extended Term.

     In the event the parties are unable to agree on the fair market rental
value for the Premises (including periodic adjustments) within that time, then
at Lessee's written request, within ten (10) days of the expiration of that
thirty (30) day period, each party shall separately designate an appraiser to
make this determination. Within five (5) business days of their appointment, the
two designated appraisers shall jointly designate a third appraiser. The failure
of either party to appoint an appraiser within the time allowed shall be deemed
equivalent to appointing the appraiser appointed by the other party. No person
shall be appointed or designated an appraiser unless he is then a member of MAI.
Appraisal shall be on the basis of the Premises "as is" except for improvements
and fixtures which are the sole property of Lessee. If, within ten (10) business
days after the appointment of all appraisers, a majority of the appraisers
concur on the value of the then current fair market rental value for the
Premises, including fair market periodic adjustments thereto, that appraisal
shall be the accepted fair market rental value. If a majority of the appraisers
do not concur within that period, the determination of the appraiser whose
appraisal is neither highest nor lowest shall be the accepted fair market rental
value. The parties shall share the appraisal expenses equally.

     Section 3.3    Delay in Possession.  The parties agree that if for any
     -----------    -------------------
reason Lessor cannot deliver possession of the Premises to Lessee on or before
April 1, 1994, such failure shall not constitute a breach of this agreement by
Lessor, and shall not entitle Lessee to terminate this Lease. Lessee shall not
be obligated to pay rent, nor shall the Lease Term commence until possession of
the Premises is tendered to Lessee.

     Section 3.4    Early Possession.  If Lessee occupies the Premises prior to
     -----------    ----------------
the Commencement Date other than as a Sublessee of IDEC, such occupancy shall be
subject to all provisions hereof, and Lessee shall pay rent for such period at
the initial monthly rates set forth below; provided, however, that Lessee may
enter the Premises prior to commencement solely for the purpose of installing
fixtures or equipment or improvements without being required to pay rent.

     Lessor agrees to attempt to locate three (3) offices in the Middlefield
Business Park for use by Lessee as office space by November l, 1992. In
addition, Lessor agrees to attempt to locate space in the Middlefield Business
Park for use by Lessee as one tissue culture lab by

                                       2.
<PAGE>

January l, 1993, additional space for use as a second tissue culture lab by
March l, 1993, and additional space for use as a main lab by June 1, 1993.
However, Lessor does not and cannot guarantee such space to Lessee, and this
Lease shall not be contingent on Lessee's occupancy of any such space prior to
the Lease Commencement Date.

                                   ARTICLE IV
                                   ----------

                            RENT: SPECIAL NET LEASE
                            -----------------------

     Section 4.1  Base Rent.  Upon the execution of this Lease, 'Lessee shall
     -----------  ---------
pay to Lessor the sum of $37,536.00 representing the first month's base rent.
Thereafter, beginning with the second month of the Lease, Lessee shall pay to
Lessor base rent for the Premises in advance, on the first day of each month
based on the following schedule of rents:

<TABLE>
<CAPTION>
                              Rent Per                  Square                   Monthly
Months                        Square Foot                Footage                 BaseRent
--------------------   ----------------------    -------------------------   ---------------------
<S>                    <C>                       <C>                         <C>
      02-24                    1.50 "NNN"                 25,024 sq. ft.            $37,536.00
      25-48                    1.60 "NNN"                 25,024 sq. ft.            $40,038.40
      49-72                    1.70 "NNN"                 25,024 sq. ft.            $42,540.80
      73-96                    1.80 "NNN"                 25,024 sq. ft.            $45,043.20
</TABLE>

     Rent for any period during the term hereof which is for less than one month
shall be a pro rata portion of the monthly installment. Rent shall be payable in
lawful money of the United States to Lessor at the address stated herein or to
such other persons or at such other places as Lessor may designate in writing.

     Section 4.2    Special Net Lease.  This Lease is what is commonly called a
     -----------    -----------------
"Net, Net, Net Lease", it being understood that, commencing with the first month
of the Lease Term, the Lessor shall receive the rent set forth in Section 4.1
free and clear of any and all other impositions, taxes, liens, charges or
expenses of any nature except as otherwise provided in this agreement. In
addition to the rent reserved by Section 4.1, Lessee shall pay to the parties
respectively entitled thereto all insurance premiums, taxes, assessments,
operating charges, management fees, maintenance charges, and any other charges,
costs and expenses which arise or may be contemplated under any provisions of
this Lease for the entire Premises during the term hereof. All of such charges,
costs and expenses shall constitute additional rent, and upon the failure of
Lessee to pay any of such costs, charges or expenses, Lessor shall have the same
rights and remedies as otherwise provided in this Lease for the failure of
Lessee to pay rent. It is the intention of the parties hereto that this Lease
shall not be terminable for any reason by the Lessee, and that Lessee shall in
no event be entitled to any abatement of or reduction in rent payable under this
Lease, except as herein expressly provided. Any present or future law to the
contrary shall not alter this agreement of the parties.

                                       3.
<PAGE>

                                   ARTICLE V
                                   ---------

                                SECURITY DEPOSIT
                                ----------------

     Lessee shall deposit with Lessor, upon execution of this Lease, $45,043.20
as security for Lessee's faithful performance of Lessee's obligations hereunder.
If Lessee fails to pay rent or other charges due hereunder, or otherwise
defaults with respect to any provision of this Lease, Lessor may, without
waiving or releasing Lessee from any obligation under this Lease, and without
waiving Lessor's right to treat such failure as a default hereof, use, apply, or
retain all or any portion of said deposit for the payment of any rent or other
charge in default or for the payment of any other sum to which Lessor may become
obligated by reason of Lessee's default, or to compensate Lessor for any loss or
damage which Lessor may suffer thereby. If Lessor so uses or applies all or any
portion of said deposit, Lessee shall within ten (10) days after written demand
therefor deposit cash with Lessor in an amount sufficient to restore said
deposit to the full amount hereinabove stated and Lessee's failure to do so
shall be a material breach of this Lease. If Lessee performs all of Lessee's
obligations hereunder, said deposit shall be returned to Lessee (or, at Lessee's
option, to the last assignee, if any, of Lessee's interest 'hereunder) at the
expiration of the term hereof, including extension, and after Lessee has vacated
the Premises.

     No trust relationship is created herein between Lessor and Lessee with
respect to said security deposit, and Lessor may commingle it, use it in
ordinary business, transfer or assign it, or use it in any combination of those
ways. In the event of termination of Lessor's interest in this Lease, Lessor
shall transfer said deposit to Lessor's successor in interest, whereupon if such
successor acknowledges receipt thereof and assumes all of Lessor's obligations
under this Lease, Lessee agrees to release Lessor from all liability for the
return of such deposit or the accounting therefor.

                                   ARTICLE VI
                                   ----------

                                      USE
                                      ---

     Section 6.1    Use.  The Premises shall be used and occupied for offices,
     -----------    ---
research and development, and any other legal use which is otherwise in
compliance with the reasonable rules and regulations that may be imposed by
Lessor from time to time on the Premises or on the business park. Lessee shall
not use nor permit the use of the Premises in any manner that will create waste
or a nuisance or unreasonably disturb any other tenants. Lessee's use of the
Premises is on a non-exclusive basis with respect to any other Lessees of the
business park.

     Section 6.2    Compliance with Law.
     -----------    -------------------

          (a)       Lessor warrants to Lessee that, to the best of Lessor's
knowledge, the Premises, in its state existing on the Commencement Date, does
not violate any laws, permits, licenses, or covenants or restrictions of record,
or any applicable building code, regulation or ordinance in effect on such
Commencement Date.

          (b)       Except as provided in paragraph 6.2(a) or elsewhere in this
Lease, Lessee shall, at Lessee's expense, comply promptly with all applicable
statutes, ordinances, rules,

                                       4.
<PAGE>

regulations, orders, covenants, and restrictions of record in effect during the
term or any part of the term hereof, regulating the use by Lessee of the
Premises.

     Section 6.3    Condition of Premises.
     -----------    ---------------------

          (a)       Lessor shall deliver the Premises to Lessee clean and free
of debris on the Lease Commencement Date with the shell building completed and
Lessor further warrants to Lessee that such building shall be in good operating
condition on the Lease Commencement Date, that it was built in accordance with
the approved plans therefor, and in a workmanlike manner. In all other respects,
the Premises shall be delivered to Lessee in an "as is" condition.
Notwithstanding the foregoing, it is understood that Lessee may occupy the
Premises as successor-in-interest to IDEC with respect to certain improvements
made and fixtures added by IDEC on and to the Premises. Lessee shall be entitled
to the use and benefit of all such improvements and fixtures remaining on the
Premises upon IDEC's termination of occupancy.

          (b)       Except as otherwise provided in this Lease, Lessee hereby
accepts the Premises "as is" in their condition existing as of the Lease
Commencement Date, subject to all laws governing and regulating the use of the
Premises, and accepts this Lease subject thereto. Lessee acknowledges that
neither Lessor nor Lessor's agent has made any representation or warranty as to
the present or future suitability of the Premises for the conduct of Lessee's
business.

          (c)       Within thirty (30) days following the date on which this
Lease is executed by Lessor and Lessee, Lessor shall cause an environmental
consultant reasonably acceptable to Lessee to make an inspection of the Premises
for purposes of determining whether there are any hazardous or toxic materials
(as defined in Article VII) being used or which have been used on the Premises
in violation of any applicable law or ordinances or which, if so used by Lessee,
would place Lessee in breach of Article VII of this Lease. Such consultant shall
provide a written report of his findings to Lessor and Lessee upon completion of
his inspection. It is understood that Lessee shall have no liability to Landlord
or otherwise for any such violations existing on the Premises as of the date of
such inspection, or thereafter caused by IDEC. The costs of such inspection and
report shall be shared equally by Lessor and Lessee; provided, however, that
they shall endeavor to get the agreement of IDEC to share in such costs, in
which event the costs will be divided equally between the three.

                                  ARTICLE VII
                                  -----------

                          HAZARDOUS OR TOXIC MATERIALS
                          ----------------------------

     Lessee shall not emit, dump, dispose, or release on the Premises any Toxic
Materials, and Lessee shall not allow or permit any agent, vendor, or other
entity acting on Lessee's behalf to emit, dump, dispose, or release on the
Premises, any Toxic Materials. Lessee shall not bring, use, or store on the
Premises, or emit, dump, dispose, or release from the Premises, any Toxic
Materials in violation of any laws, regulations, ordinances, or statutes which
are now in existence or which may be enacted in the future. Lessee shall remain
in full and complete compliance with all laws, regulations, ordinances, and
statutes with respect to Toxic Materials, and Lessee shall

                                       5.
<PAGE>

install and keep in good working order any monitoring devices that are necessary
to insure Lessee's full and complete compliance therewith.

     Lessee shall indemnify and hold Lessor harmless from any claims,
liabilities, costs, or expenses incurred or suffered by Lessor arising from
Lessee's bringing, using, emitting, dumping, disposing, or releasing upon the
Premises, or generating or creating at or emitting, dumping, disposing, or
releasing from the Premises, any Toxic Materials, or arising from the bringing,
using, emitting, dumping, disposing, or releasing upon the Premises, or
generating or creating at or emitting, dumping, disposing, or releasing from the
Premises, any Toxic Materials by any agent, vendor, or other entity acting on
Lessee's behalf. Lessee's indemnification and hold harmless obligations as set
forth in this Article VII above include, without limitation, all of the
following: (i) claims, liabilities, costs or expenses resulting from or based
upon administrative, judicial (civil or criminal), or other action, legal or
equitable, brought by any private or public person under common law or any
Federal, State, County or Municipal law, ordinance or regulation, (ii) claims,
liabilities, costs, or expenses pertaining to the cleanup or containment of
Toxic Materials, the identification of the pollutants in the Toxic Materials,
the identification of the scope of any environmental contamination, the removal
of pollutants from soils, the provision of an alternative public drinking water
source, or the long term monitoring of ground water and surface waters, and
(iii) all costs of defending such claims. Lessee shall comply, at its sole cost,
with all laws pertaining to such Toxic Materials. Lessee's hold harmless and
indemnity obligations hereunder shall survive the expiration or termination of
this Lease.

     For the purposes of this Article VII, "Toxic Materials" includes, without
limitation, any toxic or hazardous gaseous, liquid, or solid materials or waste,
or any material or substance having characteristics of ignitability,
corrosivity, reactivity, or extraction procedure toxicity or substances or
materials which are listed on any of the Environmental Protection Agency's lists
of hazardous wastes or which are identified in Sections 66680 through 66685 of
Title 22 of the California Code of Regulations as the same may be amended from
time to time.

     Except as may be disclosed in the hazardous materials report delivered to
Lessee by Lessor, to the best knowledge of Lessor, there are no Toxic Materials
present on or about the Premises and no action, proceeding, or claim is pending
or threatened concerning the Premises concerning any Toxic Material or pursuant
to any environmental law.

                                  ARTICLE VIII
                                  ------------

                      MAINTENANCE, REPAIRS AND ALTERATIONS
                      ------------------------------------

     Section 8.1    Maintenance - Premises.  Throughout the term, Lessee agrees
     -----------    ----------------------
to keep and maintain all improvements and appurtenances in or serving the
Premises, excluding all sewer connections, plumbing, heating and cooling
appliances, and wiring, in the same order, condition and repair as they are in
on the Commencement Date, or may be put in during the term, reasonable use and
wear excepted. Lessee hereby expressly waives the provisions of any law
permitting repairs by a tenant at the expense of a landlord, including, without
limitation, all rights of Lessee under Sections 1941 and 1942 of the California
Civil Code. Lessee agrees to keep the Premises clean and in sanitary condition
as required by the health, sanitary and police ordinances and regulations of any
political subdivision having jurisdiction. Lessee further agrees

                                       6.
<PAGE>

to keep the interior of the Premises, such as the windows, floors, walls, doors,
showcases and fixtures clean and neat in appearance and to remove all trash and
debris which may be found in or around the Premises. If Lessee refuses or
neglects to commence such repairs and/or maintenance required under this
agreement or does not diligently prosecute same to completion within thirty (30)
days of written notice thereof, then Lessor may enter the Premises and cause
such repairs and/or maintenance to be made. Lessee agrees that upon demand, it
shall pay to Lessor the cost of any such repairs, together with accrued interest
from the date of payment at the prime commercial lending rate then in effect at
Bank of America. Notwithstanding anything to the contrary above, Lessor may
elect to enter into a maintenance contract with a third party for the provision
of all or a part of Lessee's maintenance obligations as set forth in this
Paragraph. Upon such election, Lessee shall be relieved from its obligations to
perform only those maintenance obligations covered by the maintenance contract,
and Lessee shall bear its pro rata share, as set forth in Paragraph 8.2 below,
of the costs of such maintenance contract which shall be paid in advance on a
monthly basis with Lessee's rent payments.

     Section 8.2    Maintenance - Common Areas.  Lessor shall be responsible for
     -----------    --------------------------
maintaining in a safe, good, and clean condition, the common areas of the
Premises and the common areas of the business park as a whole.  Lessee shall
have the obligation to notify Lessor, in writing, of any repairs or maintenance
to the common areas which may be required, and Lessor shall have a reasonable
time to make such repairs.

     Lessee shall pay to Lessor, as additional rent, in the manner and at the
time provided below, Lessee's proportionate share, as defined below, of all
costs and expenses incurred by Lessor in the operation and maintenance of the
common areas of the business park during the term of this Lease. Such costs and
expenses shall include, without limiting the generality of the foregoing, all
maintenance, pest control, security, gardening, landscaping, cost of public
liability, property damage, vandalism and malicious mischief, earthquake, and
other insurance deemed necessary by the Landlord, real property taxes, property
management costs, including a management fee equal to three percent (3%) of the
monthly rent set forth in Section 4.1, painting, lighting, cleaning, trash
removal, depreciation of equipment, fire-protection, and similar items.

 Lessee's proportionate share of such common area expenses shall be 10.28%.

     Lessor shall bill Lessee monthly for Lessee's proportionate share of such
common area costs, which proportionate Share shall be based upon the previous
month's actual costs and expenses. Lessee shall pay such proportionate share
within 15 days of receipt of said billing statement from Lessor. Lessor agrees
to make its books and records pertaining to the common area costs available for
Lessee's inspection upon request.

     Section 8.3    Alterations and Additions.  No structural alterations or
     -----------    -------------------------
structural additions shall be made to the Premises by Lessee without the prior
written consent of Lessor which Lessor will not unreasonably withhold. Nothing
in this section shall restrict Lessee's right to make any non-structural
additions or alterations provided that Lessee complies with all applicable laws
and ordinances. Lessee shall be provided a building which shall include concrete
floor, walls, roof, electrical and plumbing stubs, and utility service
connections (hereinafter "shell improvements") plus tenant improvements as
provided in Section 8.4.

                                       7.
<PAGE>

     As a condition to giving its consent, Lessor may require that Lessee agree
to remove any such structural alterations or improvements at the expiration of
the term and to restore the Premises to their prior condition. As a further
condition to giving such consent, Lessor may require Lessee to provide Lessor,
at the Lessee's sole cost and expense, with a lien and completion bond in an
amount equal to one and one-half (1-1/2) times the estimated costs of such
improvements to insure Lessor against any liability for mechanics' and
materialmen's liens and to insure completion of the work. All changes,
alterations, or additions to be made to the Premises shall be under the
supervision of a competent architect or competent licensed structural engineer
and made in accordance with plans and specifications which have been furnished
to and approved by Lessor prior to commencement of work. If the written consent
of Lessor to any proposed alterations by Lessee shall be been obtained, Lessee
agrees to advise Lessor in writing of the date upon which such alterations will
commence in order to permit Lessor to post a notice of non-responsibility. All
such alterations, changes and additions shall be constructed in good and
workmanlike manner in accordance with all ordinances and laws relating thereto.
Any such structural changes, alterations or additions to or on the Premises
shall remain for the benefit of and become the property of Lessor, unless Lessor
requires the removal by giving Lessee written notice at least thirty (30) days
before the date the Lessee is to vacate the Premises.

     Section 8.4    Tenant Improvements.
     -----------    -------------------

          (a)       Lessor shall not provide Lessee with any Tenant Improvement
allowance, and Lessor cannot and does not warrant that any of the Tenant
Improvements currently on the Premises that are the property of the current
lessee shall remain on the Premises at the commencement of this Lease. However,
Lessor shall not remove from the Premises prior to Lessee' occupancy thereof any
of the Tenant Improvements placed in the Premises by IDEC Pharmaceutical
corporation at IDEC's own expense as the current lessee. Lessor shall not
prohibit Lessee from purchasing from and/or otherwise negotiating with IDEC for
any such improvements on the Premises that Lessee wishes to remain on the
Premises.

          (b)       All changes, alterations or additions to be made to the
Premises pursuant to this section, shall be under the supervision of a competent
architect or competent licensed structural engineer and made in accordance with
plans and specifications which have been approved by Lessor prior to
commencement of work. All such alterations, changes, and additions shall be
constructed according to the approved plans, in a good and workmanlike manner,
and in compliance with all ordinances and laws relating thereto. Any such
structural changes, alterations or additions to or on the Premises shall remain
for the benefit of and become the property of Lessor.

     Section 8.5    Plumbing.  Lessee shall not use the plumbing facilities for
     -----------    --------
any purpose other than that for which they were constructed. The expense of any
breakage, stoppage or other damage relating to the plumbing and resulting from
the introduction by Lessee, its agents, employees, or invitees of foreign
substances into the plumbing facilities shall be borne by Lessee.

                                       8.
<PAGE>

                                   ARTICLE IX
                                   ----------

                                   INSURANCE
                                   ---------

     Section 9.1    Property/Rental Insurance - Premises.  During the term,
     -----------    ------------------------------------
Lessor shall keep the Premises insured against loss or damage by fire and those
risks normally included in the term "all risk" including (a) flood coverage, (b)
earthquake coverage at the election of Lessor, (c) coverage for loss of rents
(provided that notwithstanding anything set forth herein to the contrary rent
shall abate at least to the extent of any rent insurance received by Lessor) and
(d) boiler and machinery coverage if the Lessor reasonably deems such coverage
necessary. Any deductibles shall be paid by Lessor if the deductible arises from
damage solely to the Premises. The amount of such insurance shall be not less
than one hundred percent (100%) of the replacement value of the Premises. Any
recovery received from said insurance policy shall be paid to Lessor.

     Lessee, in addition to the rent and other charges provided herein, agrees
to pay to Lessor its pro rata share of the premiums for all such insurance,
which pro rata share is identical to that provided in Section 8.2, above. The
insurance premiums shall be paid in accordance with Article IV, within thirty
(30) days of Lessee's receipt of a copy of Lessor's statement therefor.

     Section 9.2    Property Insurance--Fixtures and Inventory.  During the
     -----------    ------------------------------------------
term, Lessee shall, at its sole expense, maintain insurance with "all risk"
coverage on any fixtures, leasehold improvements, furnishings, merchandise,
equipment, or personal property in or on the Premises, whether in place as of
the date hereof or installed hereafter, for the full replacement value thereof,
and Lessor shall not have any responsibility nor pay any costs for maintaining
any types of such insurance. Any deductibles shall be paid by Lessee.

     Section 9.3    Lessor's Liability Insurance.  During the term, Lessor may
     -----------    ----------------------------
maintain a policy or policies of comprehensive general liability insurance
insuring Lessor and Lessee (and such others as designated by Lessor) against
liability for bodily injury, death and property damage on or about the Premises,
with combined single limit coverage of not less than Two Million Dollars
($2,000,000).

     Lessee, in addition to the rent and other charges provided herein, agrees
to pay to Lessor its pro rata share of the premiums for all such insurance,
which pro rata share is identical to that provided in Section 8.2, above. The
insurance premiums shall be paid in accordance with Article IV, within thirty
(30) days of Lessee's receipt of a copy of Lessor's statement therefor.

     Section 9.4    Lessee's Liability Insurance.  During the term, Lessee
     -----------    ----------------------------
shall, at its sole expense, maintain for the mutual benefit of Lessor and
Lessee, comprehensive general liability and property damage insurance against
claims for bodily injury, death or property damage occurring in or about the
Premises or arising out of the use or occupancy of the Premises, with combined
single limit coverage of not less than Two Million Dollars ($2,000,000). The
limits of such insurance shall not limit the liability of Lessee. Lessee shall
furnish to Lessor prior to the Commencement Date, and at least thirty (30) days
prior to the expiration date of any policy, certificates indicating that the
liability insurance required by Lessee above is in full force and effect; that
Lessor has been named as an additional insured; and that all such policies will
not be cancelled unless thirty (30) days' prior written notice of the proposed
cancellation has been given

                                       9.
<PAGE>

to Lessor. The insurance shall be with insurers approved by Lessor and with
policies in form satisfactory to Lessor, provided however, that such approval
shall not be unreasonably withheld. Said policies shall provide that Lessor,
although an additional insured, may recover for any loss suffered by Lessor by
reason of Lessee's negligence and shall include a broad form liability
endorsement.

     Section 9.5    Waiver of Subrogation.  Lessor hereby releases Lessee, and
     -----------    ---------------------
Lessee hereby releases Lessor, and their respective officers, agents, employees
and servants, from any and all claims or demands of damages, loss, expense, or
injury to the Premises, or to the furnishings and fixtures and equipment, or
inventory or other property of either Lessor or Lessee in, or about or upon the
Premises, or claims for bodily injury or death which is caused by or results
from perils, events or happenings which are the subject of insurance and carried
by the respective parties and in force at the time of any such loss; provided,
however, that such waiver shall be effective only to the extent permitted by the
insurance covering such loss and to the extent such insurance is not prejudiced
thereby. Each party shall cause each insurance policy obtained by it to provide
that the insurance company waives all right of recovery by way of subrogation
against either party in connection with any damages covered by any policy.

     Section 9.6    Indemnification.  Except in the case of Lessor's own acts or
     -----------    ---------------
omission, Lessee will indemnify Lessor and save it harmless from and against any
and all claims, actions, damages, liability and expense in connection with loss
of life, personal injury and/or damage to property arising from or out of any
occurrence in, upon or at the Premises (other than those arising from the
construction of the Premises or Building or the Tenant Improvements), or the
occupancy or use by Lessee of the Premises or any part hereof, or caused wholly
or in part by acts or omissions of Lessee, its agents, contractors, employees,
servants, licensees, or concessionaires or by anyone permitted to be on the
Premises by Lessee. In case lessor shall be made a party to any such litigation
commenced by or against lessee, then lessee shall protect and hold Lessor
harmless from all claims, liabilities, costs and expenses, and shall pay all
costs, expenses and reasonable legal fees incurred by Lessor in connection with
such litigation.

     Section 9.7    Plate Glass Replacement.  Lessee shall replace at its sole
     -----------    -----------------------
expense, any and all plate glass and other glass in and about the Premises which
is damaged or broken by vandalism. If any plate glass or other glass in and
about the Premises is damaged or broken by causes other than vandalism, then
Lessor shall replace the same and Lessee shall reimburse Lessor an amount equal
to Lessor's cost of replacement, provided that such amount shall not exceed the
deductible then in effect o Lessor's insurance policy, if any, covering the
damaged glass. Nothing herein shall be construed to require Lessor to carry
plate glass insurance.

                                   ARTICLE X
                                   ---------

                             DAMAGE OR DESTRUCTION
                             ---------------------

     Section 10.1   Right to Terminate on Destruction of Premises.  Lessor and
     ------------   ---------------------------------------------
Lessee shall have the right to terminate this Lease if, during the term, the
Premises are damaged to an extent exceeding fifty percent (50%) of the then
reconstruction costs of the Premises as a whole. Lessor and Lessee shall also
have the right to terminate this Lease if any portion of the Premises is damaged
by a peril not required to be insured hereunder. In either case, Lessor and
Lessee

                                      10.
<PAGE>

may elect to terminate as provided above by that written notice to Lessee or
Lessor delivered within sixty (60) days of the happening of such damage.

     Section 10.2   Repairs by Lessor.  If Lessor and Lessee shall not elect to
     ------------   -----------------
terminate this Lease pursuant to Section 10.1, Lessor shall, immediately upon
receipt of insurance proceeds paid in connection with such casualty, but in no
event later than one hundred eighty (180) days after such damage has occurred,
proceed to repair or rebuild the Premises, on the same plan and design as
existed immediately before such damage or destruction occurred and will proceed
expeditiously to complete such restoration, subject to such delays as may be
reasonably attributable to governmental restrictions or failure to obtain
materials or labor, or other causes beyond the control of Lessor. Lessee shall
be liable for the repair and replacement of all fixtures, leasehold
improvements, furnishings, merchandise, equipment and personal property not
covered by the property insurance described in Section 9.2.

     Section 10.3   Reduction of Rent During Repairs.  In the event Lessee is
     ------------   --------------------------------
able to continue to conduct its business during the making of repairs, the rent
then prevailing will be equitably reduced in the proportion that the square
footage of the unusable part of the Premises bears to the square footage of the
whole thereof for the period that repairs are being made. No rent shall be
payable while the Premises are wholly unusable due to casualty damage.

     Section 10.4   Arbitration.  Any controversy or claim arising out of or
     ------------   -----------
relating to this Article shall be settled by arbitration in accordance with the
rules of the American Arbitration Association as then in effect, and judgment
upon the award rendered by the arbitration may be entered in any court having
jurisdiction. The expenses of arbitration shall be borne by the parties as
allocated by the arbitrators. The party desiring arbitration shall serve notice
upon the other party, together with designation of the first party's arbitrator.

     Section 10.5   Lessor's Overriding Right to Terminate.  Notwithstanding
     ------------   --------------------------------------
anything to the contrary herein, during the last twelve (12) months of the Lease
Term and during an Extended Term, if any, if the discounted present value of the
rent due hereunder for the balance of the term, using as the discount rate the
prime commercial lending rate in effect at the Bank of America as of the date
Lessor is to commence repairs pursuant to Section 10.2 hereof, is less than the
cost of repairing the damage to the Premises, Lessor may at its option terminate
this lease upon thirty (30) days' written notice.

                                   ARTICLE XI
                                   ----------

                              REAL PROPERTY TAXES
                              -------------------

     Section 11.1   Payment of Taxes.  Lessee shall pay the real property tax,
     ------------   ----------------
as defined in Section 11.2, applicable to the Premises during the term of this
Lease. All such payments shall be made at least twenty (20) days prior to the
delinquency date of such payment. If any such taxes paid by Lessee shall cover
any period of time prior to or after the expiration of the term hereof, Lessor
shall pay such taxes and Lessee shall reimburse Lessor therefor. Lessee's share
of such taxes shall be equitably prorated to cover only the period of time
within the tax fiscal year during which this Lease shall be in effect, and
Lessor shall reimburse Lessee to the extent required. If Lessee shall fail to
pay any such taxes, Lessor shall have the right to pay the same,

                                      11.
<PAGE>

in which case Lessee shall repay such amount to Lessor with Lessee's next rent
installment together with interest at the prime commercial lending rate then in
effect at the Bank of America.

     Section 11.2  Definition of "Real Property Tax".  As used herein, the term
     ------------  ---------------------------------
"real property tax" shall include any form of real estate tax or assessment,
general, special, supplemental, ordinary or extraordinary, and any license fee,
commercial rental tax, improvement bond or bonds, levy or tax (other than
inheritance, personal income, corporate, franchise or estate taxes) imposed on
the Premises by any authority having the direct or indirect power to tax,
including any improvement district thereof, as against any legal or equitable
interest of Lessor in the Premises or in the real property of which the Premises
are a part, as against Lessor's right to rent or other income therefrom, and as
against Lessor's business of leasing the Premises.

     Section 11.3  Joint Assessment.  If the Premises are not separately
     ------------  ----------------
assessed, Lessee's liability shall be an equitable proportion of the real
property taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be determined by Lessor in accordance with
Lessee's proportionate share of the total square footage of the business park.
Lessee shall reimburse Lessor said proportionate amount at least ten (10) days
prior to the delinquency date of the real property tax.

     Section 11.4  Personal Property Taxes.
     ------------  -----------------------

          (a) Lessee shall pay prior to delinquency all taxes assessed against
and levied upon trade fixtures, furnishings, equipment and all other personal
property of Lessee contained in the Premises or elsewhere.  When possible,
Lessee shall cause said trade fixtures, furnishings, equipment and all other
personal property to be assessed and billed separately from the real property of
Lessor.

          (b) If any of Lessee's said personal property shall be assessed with
Lessor's real property, Lessee shall pay Lessor the taxes attributable to Lessee
within 10 days after receipt of a written statement setting forth the taxes
applicable to Lessee's property.

          (c) If Lessee shall fail to pay any such taxes, Lessor shall have the
right to pay the same, in which case Lessee shall repay such amount to Lessor
with Lessee's next rent installment together with interest at the prime
commercial lending rate then charged by the Bank of America.

                                  ARTICLE XII
                                  -----------

                           UTILITIES AND JANITORIAL
                           ------------------------

     Lessee shall pay prior to delinquency throughout the term the cost of
water, gas, heating, cooling, sewer, telephone, electricity, garbage, air
conditioning and ventilation, janitorial service, and all other materials and
utilities supplied to the Premises. If any such services are not separately
metered to Lessee, Lessee shall pay a reasonable proportion of all charges which
are jointly metered, the determination to be made by Lessor in good faith, and
payment to be made by Lessee within fifteen (15) days of receipt of the
statement for such charges.

                                      12.
<PAGE>

                                 ARTICLE XIII
                                 ------------

                           ASSIGNMENT AND SUBLETTING
                           -------------------------

       Section 13.1  Lessor's Consent Required.  Lessee shall not voluntarily or
       ------------  -------------------------
by operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of Lessee's interest in this lease or in the Premises,
without Lessor's prior written consent which Lessor shall not unreasonably
withhold. Lessor shall respond to Lessee's request for consent hereunder within
ten (10) days after Lessee's request and any attempted assignment, transfer,
mortgage, encumbrance, or subletting without such consent shall be void, and
shall constitute a breach of this lease.

     Section 13.2  Lessee Affiliate.  Lessee may assign or sublet the premises,
     ------------  ----------------
or any portion thereof, to any corporation which controls, is controlled by, or
is under common control with Lessee, or to any corporation resulting from the
merger or consolidation with Lessee, or to any person or entity which acquires
all, or substantially all of the assets of Lessee as a going concern of the
business that is being conducted on the Premises, provided that said assignee
assumes, in full, the obligations of Lessee under this Lease.  Any such
assignment shall not, in any way, affect or limit the liability of Lessee under
the terms of this Lease.

     Section 13.3  No Release of Lessee.  Regardless of Lessor's consent, no
     ------------  --------------------
subletting or assignment shall release Lessee of Lessee's obligation or alter
the primary liability of Lessee to pay the rent and to perform all other
obligations to be performed by Lessee hereunder.  The acceptance of rent by
Lessor from any other person shall not be deemed consent to any subsequent
assignment or subletting.  In the event of default by any assignee of Lessee or
any successor of Lessee, in the performance of any of the terms hereof, Lessor
may proceed directly against Lessee without the necessity of exhausting remedies
against said assignee.

     Section 13.4  Attorneys' Fees.  In the event Lessee shall assign or sublet
     ------------  ---------------
the Premises or request the consent of Lessor to any assignment of subletting or
if Lessee shall request the consent of Lessor for any act Lessee proposes to do
then Lessee shall pay Lessor's reasonable attorneys' fees incurred in connection
therewith.

     Section 13.5  Excess Rent.  In the event Lessor shall consent to a sublease
     ------------  -----------
or an assignment under the lease, Lessee shall pay to Lessor with its regularly
scheduled rent payments fifty percent (50%) of all sums collected by Lessee from
a sublessee or assignee which are/in excess of the rent then owing pursuant to
Article IV above and after subtracting all leasing commissions, reasonable
attorneys' fees and other costs, reasonable expenses and liabilities incurred by
Lessee in connection with the sublet or assignment.  Lessor shall not share
compensation received by Lessee for its trade fixtures, goodwill, stock, or
property other than the Lease.

     Section 13.6  No Impairment of Security.  Lessee's written request to
     ------------  -------------------------
Lessor for consent to an assignment or subletting shall be accompanied by (a)
the name and legal composition of the proposed sublessee; (b) the nature of the
proposed sublessee's business to be carried on in the Premises; (c) the terms
and provisions of the proposed sublease; and (d) such financial and other
reasonable information as Lessor may request concerning the proposed sublessee.
Lessor's

                                      13.
<PAGE>

consent shall not be deemed unreasonably withheld if consent is denied because
the prospective sublessee or assignee will impair Lessor's security.

                                  ARTICLE XIV
                                  -----------

                              DEFAULTS; REMEDIES
                              ------------------

       Section 14.1  Defaults.  The occurrence of any one or more of the
       ------------  --------
following events shall constitute a material default and breach of this Lease by
Lessee:

          (a) The abandonment of the Premises by Lessee;

          (b) The failure by Lessee to make any payment of rent or any other
payment required to be made by Lessee hereunder, as and when due, where such
failure shall continue for a period of five (5) days after such payment is due.
In the event that Lessor serves Lessee with a Notice to Pay Rent or Quit
pursuant to applicable Unlawful Detainer statutes such Notice to Pay Rent or
Quit shall constitute notice under this Section;

          (c) The failure by Lessee to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by Lessee,
other than described in paragraph (b) above, where such failure shall continue
for a period of thirty (30) days after written notice hereof from Lessor to
Lessee; provided, however, that if the nature of Lessee's default is such that
more than 30 days are reasonably required for its cure, then Lessee shall not be
deemed to be in default if Lessee commences such cure within said 30 day period
and thereafter diligently prosecutes such cure to completion;

          (d) (i) The making by Lessee of any general arrangement or assignment
for the benefit of creditors; (ii) Lessee becomes a "debtor" as defined in 11
U.S.C. Section 101 or any successor statute thereto; (iii) the taking or
suffering of any action by Lessee under any insolvency or bankruptcy act; (iv)
the appointment of a trustee or receiver to take possession of substantially all
of Lessee's assets located at the Premises or of Lessee's interest in this
Lease, or (v) the attachment, execution or other judicial seizure of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease.  Provided, however, in the event that any provisions of
this Section 14.1(d) is contrary to any applicable law, such provision shall be
of no force or effect;

          (e) The discovery by Lessor that any financial statement given to
Lessor by Lessee, any assignee of Lessee, any successor in interest of Lessee or
any guarantor of Lessee's obligation hereunder, and any of them, was materially
false.

     Section 14.2  Remedies.  In the event of any such material default or
     ------------  --------
breach by Lessee, Lessor may at any time thereafter, with or without notice or
demand and without limiting Lessor in the exercise of any right or remedy which
Lessor may have by reason of such default or breach:

          (a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession of the Premises to Lessor.  In such event
Lessor shall be entitled to recover from

                                      14.
<PAGE>

Lessee all damages incurred by Lessor by reason of Lessee's default including,
but not limited to, the cost of recovering possession of the Premises and
reasonable attorney's fees related thereto; the worth at the time of award
determined by the court having jurisdiction thereof of the amount by which the
unpaid rent for the balance of the term after the time of such award exceeds the
amount of such rental loss for the same period that Lessee proves could be
reasonably avoided.

          (b) Maintain Lessee's right to possession in which case this Lease
shall continue in effect whether or not Lessee shall have abandoned the
Premises.  In such event Lessor shall be entitled to enforce all of Lessor's
rights and remedies under this Lease, including the right to recover the rent as
it becomes due hereunder.

          (c) Pursue any other remedy now or hereafter available to Lessor under
the laws or judicial decisions of the state of California.  Unpaid installments
of rent and other unpaid monetary obligations of Lessee under the terms of this
Lease shall bear interest from the date due at the prime rate then charged by
Bank of America.

     Section 14.3  Default by Lessor.  Lessor shall not be in default unless
     ------------  -----------------
Lessor fails to perform obligations required of Lessor within a reasonable time,
but in no event later than thirty (30) days after written notice by Lessee to
Lessor and to the holder of any first mortgage or deed of trust covering the
Premises whose name and address shall have theretofore been furnished to Lessee
in writing, specifying wherein Lessor has failed to perform such obligation;
provided, however, that if the nature of Lessor's obligation is such that more
than thirty (30) days are required for performance then Lessor shall not be in
default if Lessor commences performance within such 30-day period and thereafter
diligently prosecutes the same to completion.  In the event Lessor does not
commence performance within the thirty (30) day period provided herein, or does
not diligently prosecute the same to completion, Lessee may perform such
obligation and will be reimbursed for its expenses by Lessor together with
interest thereon at the prime commercial lending rate then charged by the Bank
of America, provided, however, that if the parties are in dispute as to what
constitutes Lessor's obligations under this agreement, any such dispute shall be
resolved by arbitration in a manner identical to that provided in Section 10.4
above.

     Nothing herein shall be deemed applicable in the event of Lessor's delay in
delivery of the Premises.  In that situation, all rights and remedies shall be
determined under Section 3.3 above.

     Section 14.4  Late Charges.  Lessee hereby acknowledges that late payment
     ------------  ------------
by Lessee to Lessor of rent and other sums due hereunder will cause Lessor to
incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain.  Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed on
Lessor by the terms of any mortgage or trust deed covering the Premises.
Accordingly, if any installment of rent or any other sum due from Lessee shall
not be received by Lessor or Lessor's designated agent within five (5) days
after such amount is due and owing, Lessee shall pay to Lessor a late charge
equal to 10% of such overdue amount.  The parties hereby agree that such late
charge represents a fair and reasonable estimate of the costs Lessor will incur
by reason of late payment by Lessee.  Acceptance of any such late charge by
Lessor

                                      15.
<PAGE>

shall in no event constitute a waiver of Lessee's default with respect to such
overdue amount, nor prevent Lessor from exercising any of the other rights and
remedies granted hereunder. In the event that a late charge is payable
hereunder, whether or not collected, for three (3) consecutive installments of
rent, then rent shall automatically become due and payable quarterly in advance,
rather than monthly, notwithstanding section 4.1 or any other provision of this
Lease to the contrary.

     Section 14.5  Impounds.  In the event that a late charge is payable
     ------------  --------
hereunder, whether or not collected, for three (3) installments of rent or any
other monetary obligation of Lessee under the terms of this Lease within a
twelve (12) month period, Lessee shall pay to Lessor, if Lessor shall so
request, in addition to any other payments required under this Lease, a monthly
advance installment, payable at the same time as the monthly rent, as estimated
by Lessor, for real property tax and insurance expenses on the Premises which
are payable by Lessee under the terms of this Lease.  Such fund shall be
established to insure payment when due, before delinquency, of any or all such
real property taxes and insurance premiums.  If the amounts paid to Lessor by
Lessee under the provisions of this paragraph are insufficient to discharge the
obligations of Lessee to pay such real property taxes and insurance premiums as
the same become due, Lessee shall pay to Lessor, within three (3) business days
after Lessor's demand, such additional sums necessary to pay such obligations.
All moneys paid to Lessor under this paragraph may be intermingled with other
moneys of Lessor and shall not bear interest.  In the event of a default in the
obligations of Lessee to perform under this Lease, then any balance remaining
from funds paid to Lessor under the provisions of this paragraph may, at the
option of Lessor, be applied to the payment of any monetary default of Lessee in
lieu of being applied to the payment of real property tax and insurance
premiums.

                                  ARTICLE XV
                                  ----------

                           CONDEMNATION OF PREMISES
                           ------------------------

     Section 15.1  Total Condemnation.  If the entire Premises, whether by
     ------------  ------------------
exercise of governmental power or the sale or transfer by Lessor to any
condemnor under threat of condemnation or while proceedings for condemnation are
pending, at any time during the term, shall be taken by condemnation such that
there does not remain a portion suitable for occupation, this Lease shall then
terminate as of the date transfer of possession is required.  Upon such
condemnation, all rent shall be paid up to the date transfer of possession is
required, and Lessee shall have no claim against Lessor for the value of the
unexpired term of this Lease.

     Section 15.2  Partial Condemnation.  If any portion of the Premises is
     ------------  --------------------
taken by condemnation during the term, whether by exercise of governmental power
or the sale or transfer by Lessor to a condemnor under threat of condemnation or
while proceedings for condemnation are pending, this Lease shall remain in full
force and effect except that in the event a partial taking leaves the Premises
unfit for normal and proper conduct of the business of Lessee, as reasonably
determined by Lessee, then Lessee shall have the right to terminate this Lease
effective upon the date transfer of possession is required.  Moreover, Lessor
and Lessee shall have the right to terminate this Lease effective on the date
transfer of possession is required if more than thirty-three percent (33%) of
the total square footage of the Premises is taken by condemnation.  Lessee and
Lessor may elect to exercise their respective rights to terminate this

                                      16.
<PAGE>

Lease pursuant to this Section by serving written notice to the other within one
hundred twenty (120) days of their receipt of notice of condemnation. All rent
shall be paid up to the date of termination, and Lessee shall have no claim
against Lessor for the Lease value of any unexpired term of this Lease. If this
Lease shall not be cancelled, the rent after such partial taking shall be that
percentage of the adjusted base rent specified herein, equal to the percentage
which the square footage of the untaken part of the Premises, immediately after
the taking, bears to the square footage of the entire Premises immediately
before the taking. Any sums owing hereunder which are calculated on the basis of
Lessee's pro rata share (as set forth in Section 8.2) shall also be adjusted to
reflect the decreased square footage of the Premises due to the condemnation.
During the last twelve (12) months of the Lease Term and during the Extended
Term, if any, if Lessee's continued use of the Premises requires alterations and
repair by reason of a partial taking, all such alterations and repair shall be
made by Lessee at Lessee's expense.

     Section 15.3  Award to Lessee.  In the event of any condemnation, whether
     ------------  ---------------
total or partial, Lessee shall have the right to claim and recover from the
condemning authority such compensation as may be separately awarded or
recoverable by Lessee for loss of its business fixtures, or equipment belonging
to Lessee immediately prior to the condemnation or for the interruption of
Lessee's business, or its moving costs.  The balance of any 15 condemnation
award shall belong to Lessor and Lessee shall have no further right to recover
from Lessor or the condemning authority for any additional claims arising out of
such taking.

                                  ARTICLE XVI
                                  -----------

                                ENTRY BY LESSOR
                                ---------------

     Lessee shall permit Lessor and its agent to enter the Premises at all
reasonable times for any of the following purposes: to inspect the Premises; to
maintain the building in which the Premises are located; to make such repairs,
alterations; and additions to the Premises as Lessor is obligated or may elect
to make; to show the Premises and post "To Lease" signs for the purposes of
reletting during the last ninety (90) days of the term; to show the Premises as
part of a prospective sale by Lessor or to post notices of non-responsibility.
Lessor shall have such right of entry without any rebate of rent to Lessee for
any loss of occupancy or quiet enjoyment of the Premises thereby occasioned.

                                 ARTICLE XVII
                                 ------------

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

          (a) Lessee shall at any time upon not less than fifteen (15) days'
prior written notice from Lessor execute, acknowledge and deliver to Lessor a
statement in writing (i) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect) and the
date to which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to Lessee's knowledge, any uncured defaults on
the part of Lessor hereunder, or specifying such defaults if any are claimed.
Any such statement may be conclusively relied upon by any prospective purchaser
or encumbrancer of the Premises.

                                      17.
<PAGE>

          (b) Lessee's failure to deliver such statement within such time shall
be conclusive upon Lessee (i) that this Lease is in full force and effect,
without modification except as may be represented by Lessor, (ii) that there are
no uncured defaults in Lessor's performance, and (iii) that not more than one
month's rent has been paid in advance; or such failure may be considered by
Lessor as a default by Lessee under this Lease.

                                 ARTICLE XVIII
                                 -------------

                              LESSOR'S LIABILITY
                              ------------------

     The term "Lessor" as used herein shall mean only the owner or owners at the
time in question of the fee title or a Lessee's interest in a ground lease of
the Premises.  In the event of any transfer of such title or interest, and
provided such successor assumes all obligations of Lessor hereunder, Lessor
herein named (and in case of any subsequent transfers then the grantor) shall be
relieved from and after the date of such transfer of all liability as respects
Lessor's obligations thereafter to be performed, provided that any funds in the
hands of Lessor or the then grantor at the time of such transfer, in which
Lessee has an interest, shall be delivered to the grantee.  The obligations
contained in this Lease to be performed by Lessor shall, subject as aforesaid,
be binding on Lessor's successors and assigns, only during their respective
periods of ownership.

                                  ARTICLE XIX
                                  -----------

                           EXPIRATION ON TERMINATION
                           -------------------------

       Section 19.1  Surrender of Possession.  Lessee agrees to deliver up and
       ------------  -----------------------
surrender to Lessor possession of the Premises and all improvements thereon, in
as good order and condition as when possession was taken by Lessee, excepting
only ordinary wear and tear or any permitted alterations.  Upon termination of
this Lease, Lessor may reenter the Premises and remove all persons and property
therefrom.  If Lessee shall fail to remove any effects which it is entitled to
remove from the Premises upon the termination of this Lease, for any cause
whatsoever, Lessor, at its option, may remove the same and store or dispose of
them, and Lessee agrees to pay to Lessor on demand any and all reasonable
expenses incurred in such removal and in making the Premises free from all dirt,
litter, and debris, including all storage and insurance charges.  If the
Premises are not surrendered at the end of the Term, Lessee shall indemnify
Lessor against loss or liability resulting from delay by Lessee in so
surrendering the Premises, including, without limitation, actual damages for
lost rents.

     Section 19.2  Holding Over.  If Lessee, with or without Lessor's consent,
     ------------  ------------
remains in possession of the Premises after expiration of the term and if Lessor
and Lessee have not executed an express written agreement as to such holding
over, then such occupancy shall be a tenancy from month to month, at a monthly
rental equivalent to 200% of the monthly rental in effect immediately prior to
such expiration if the remainder in possession is without Lessor's consent, and
at a monthly rental equivalent to 125% of the monthly rental in effect
immediately prior to such expiration if the remainder in possession is with
Lessor's consent, such payments to be made as herein provided.  In the event of
such holding over all of the terms of this Lease

                                      18.
<PAGE>

including the payment of all charges owing hereunder other than rent shall
remain in force and effect on said month to month basis.

                                  ARTICLE XX
                                  ----------

                           MISCELLANEOUS PROVISIONS
                           ------------------------

     Section 20.1  Severability.  The invalidity of any provision of this
     ------------  ------------
Lease as determined by a court of competent jurisdiction, shall in no way affect
the validity of any other provision hereof.

     Section 20.2  Interest on Past-due Obligations.  Except as expressly herein
     ------------  --------------------------------
provided, any amount due to Lessor not paid when due shall bear interest at the
prime commercial lending rate then in effect at Bank of America.  Payment of
such interest shall not excuse or cure any default by Lessee under this Lease.

     Section 20.3  Time of Essence.  Time is of the essence in the performance
     ------------  ---------------
of all obligations under this Lease.

     Section 20.4  Additional Rent.  Any monetary obligations of Lessee to
     ------------  ---------------
Lessor under the terms of this Lease shall be deemed to be rent.

     Section 20.5  Incorporation of Prior Agreements; Amendments.  This Lease
     ------------  ---------------------------------------------
contains all agreements of the parties with respect to any matter mentioned
herein.  No prior agreement or understanding pertaining to any such matter shall
be effective.  This Lease may be modified in writing only, signed by the parties
in interest at the time of the modification.  Except as otherwise stated in this
Lease, Lessee hereby acknowledges that neither the Lessor nor any employees or
agents of the Lessor has made any oral or written warranties or representations
to Lessee relative to the condition or use by Lessee of said Premises and Lessee
acknowledges that Lessee assumes all responsibility regarding the Occupational
Safety Health Act, the legal use and adaptability of the Premises and the
compliance thereof with all applicable laws and regulations in effect during the
term of this Lease except as otherwise specifically stated in this Lease.

     Section 20.6  Notices.  Any notice required or permitted to be given
     ------------  -------
hereunder shall be in writing and may be given by personal delivery or by
facsimile, Federal Express, or certified mail, and if given personally or by
mail, shall be deemed sufficiently given if addressed to Lessee or to Lessor at
the address noted below the signature of the respective parties, as the case may
be.  Either party may by notice to the other specify a different address for
notice purposes.  A copy of all notices required or permitted to be given to
Lessor hereunder shall be concurrently transmitted to such party or parties at
such addresses as Lessor may from time to time hereafter designate by notice to
Lessee.  Notice shall be considered effective either 72 hours after mailing or
upon actual receipt, whichever is earlier.

     Section 20.7  Waivers.  No waiver by Lessor of any provision hereof shall
     ------------  -------
be deemed a waiver of any other provision hereof or of any subsequent breach by
Lessee of the same or any other provisions.  Lessor's consent to, or approval
of, any act shall not be deemed to render unnecessary the obtaining of Lessor's
consent to or approval of any subsequent act by Lessee.  The acceptance of rent
hereunder by Lessor shall not be a waiver of any preceding breach by

                                      19.
<PAGE>

Lessee of any provision hereof, other than the failure of Lessee to pay the
particular rent so accepted, regardless of Lessor's knowledge of such preceding
breach at the time of acceptance of such rent.

     Section 20.8  Recording.  Either Lessor or Lessee shall, upon request of
     ------------  ---------
the other, execute, acknowledge and deliver to the other a "short form"
memorandum of this Lease for recording purposes.

     Section 20.9  Cumulative Remedies.  No remedy or election hereunder shall
     ------------  -------------------
be deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.

     Section 20.10  Covenants and Conditions.  Each provision of this Lease
     -------------  ------------------------
performable by Lessee or Lessor shall be deemed both a covenant and a condition.

     Section 20.11  Binding Effect; Choice of Law; Venue.  Subject to any
     -------------  ------------------------------------
provisions hereof restricting assignment or subletting by Lessee and subject to
the provisions of Article XVIII, this Lease shall bind the parties, their
personal representatives, successors and assigns. This Lease shall be governed
by the laws of the State of California. Venue for any action or proceeding
brought to enforce or defend this agreement, and for any other purpose
hereunder, shall be Santa Clara County.

     Section 20.12  Subordination of Leasehold.  Lessee agrees that this Lease
     -------------  --------------------------
is and shall be, at all times, subject and subordinate to the lien of any
mortgage or other encumbrances which Lessor may create against the Premises
including all renewals, replacements and extensions thereof; provided, however,
that regardless of any default under any such mortgage or encumbrance or any
sale of the Premises under such mortgage, so long as Lessee performs all
covenants and conditions of this Lease and continues to make all payments
hereunder, this Lease and Lessee's possession and rights hereunder shall not be
disturbed by the mortgagee or anyone claiming under or through such mortgagee.

     Section 20.13  Attorneys' Fees.  If either party herein brings an action to
     -------------  ---------------
enforce the terms hereof or declare rights 'hereunder, the prevailing party in
any such action, on trial or appeal, shall be entitled to reasonable attorneys'
fees to be paid by the losing party as fixed by the Court.

     Section 20.14  Auctions.  Lessee shall not conduct, nor permit to be
     -------------  --------
conducted, either voluntarily or involuntarily, any auction upon the Premises
without first having obtained Lessor's prior written consent.  Notwithstanding
anything to the contrary in this Lease, Lessor shall not be obligated to
exercise any standard of reasonableness in determining whether to grant such
consent.

     Section 20.15  Signs.  Lessee shall not place any sign upon the Premises
     -------------  -----
without Lessor's prior written consent, which consent shall not be unreasonably
withheld; provided, however, that Lessee shall have the right to display its
name on the building "tombstone" in accordance with applicable law.

     Section 20.16  Voluntary Surrender or Merger.  The voluntary or other
     -------------  -----------------------------
surrender of this Lease by Lessee, or a mutual cancellation thereof, or a
termination by Lessor, shall not work a

                                      20.
<PAGE>

merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to Lessor
of any or all of such subtenancies.

     Section 20.17  Guarantor.  In the event that there is a guarantor of this
     -------------  ---------
Lease, said guarantor shall have the same obligations as Lessee under this
Lease.

     Section 20.18  Quiet Possession.  Upon Lessee paying the rent for the
     -------------  ----------------
Premises and observing and performing all of the covenants, conditions and
provisions on Lessee's part to be observed and performed hereunder, Lessee shall
have quiet possession of the Premises for the entire term hereof subject to all
of the provisions of this Lease.  The individuals executing this Lease on behalf
of Lessor represent and warrant to Lessee that they are fully authorized and
legally capable of executing this Lease on behalf of Lessor and that such
execution is binding upon all parties holding an ownership interest in the
Premises.

     Section 20.19  Rules and Regulations.  Lessee agrees that it will abide by,
     -------------  ---------------------
keep and observe all reasonable rules and regulations which Lessor may make from
time to time for the management, safety, care and cleanliness of the building
and grounds, the parking of vehicles and the preservation of good order therein
as well as for the convenience of other occupants and tenants of the building.
The continued violations of any such rules and regulations shall be deemed a
material breach of this Lease.  Lessee, however, shall not be bound by any
future rules or regulations, unless it shall approve same, which approval shall
not be unreasonably withheld.

     Section 20.20  Easements.  Lessor reserves to itself the right, from time
     -------------  ---------
to time, to grant such easements, rights and dedications that Lessor deems
necessary or desirable, and to cause the recordation of Parcel Maps and
restrictions, so long as such easements, rights, dedications, Maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee.  Lessee shall sign any of the aforementioned documents upon three (3)
days written notice of Lessor and failure to do so shall constitute a material
breach of this Lease.

     Section 20.21  Corporate Authority.  Each individual executing this Lease
     -------------  -------------------
on behalf of a corporation represents and warrants that he is duly authorized to
execute and deliver this Lease on behalf of the corporation in accordance with a
duly adopted resolution of the Board of Directors of the corporation, and that
this Lease is binding upon said corporation in accordance with its terms.

     Section 20.22  Delays for Cause.  In any case where either party hereto is
     -------------  ----------------
required to do any act, delays caused by or resulting from Acts of God, war,
civil commotion, fire, flood or other casualty, labor difficulties, shortages of
labor, materials or equipment, government regulations, unusually severe weather,
or other causes beyond such party's reasonable control shall not be counted in
determining the time during which work shall be completed, whether such time be
designated by a fixed date, a fixed time or "a reasonable time", and such time
shall be deemed to be extended by the period of such delay.

     Section 20.23  Square Footage.  The parties agree that the leased Premise
     -------------  --------------
is approximately 25,024 square feet, said square footage being measured from the
face of the outside (concrete) walls and includes the covered docks and entry
ways.

                                      21.
<PAGE>

     Section 20.24  Brokers.  Cornish and Carey Commercial represents both the
     -------------  -------
Lessor and the Lessee in this Lease, and both Parties agree thereto.  Cornish
and Carey Commercial broker's commission shall be paid as agreed among itself
and the Lessor.

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED
AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS
LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND
EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.

The Parties hereto have executed this Lease at the place on the dates specified
immediately adjacent to their respective signatures.

     Executed at Menlo Park, California, on October 27, 1992.

Lessor:                                      Address:

VANNI BUSINESS PARK GENERAL                  c/o Jay Paul Company
PARTNERSHIP                                  5619 Scotts Valley Dr.
                                             Suite 280
                                             Scotts Valley, CA 95066
By:   /s/ Jay Paul
   -----------------------------------
          Jay Paul, General Partner

Lessee:

ACTIVATED CELL THERAPY, INC.,                 ________________________________
a Delaware corporation .
                                              ________________________________

By:  /s/ Illegible
     ---------------------------------

                                      22.