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                                                                    Exhibit 4.12

                                      LEASE

                                 By and Between

                         Aid Association for Lutherans,
                             a Wisconsin Corporation

                                       and

                            Trega Biosciences, Inc.,
                             a Delaware Corporation

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                                      LEASE

        THIS LEASE is made as of September 24, 1997 (the "EffectiveDate"), by
and between Aid Association for Lutherans, a Wisconsin corporation ("Landlord")
and Trega Biosciences, Inc., a Delaware corporation ("Tenant").

1.      Lease of Premises

        1.1.    Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord upon the terms and conditions hereof those certain premises (the
"Demised Premises") within the building (the "Building") on the land described
on Exhibit "A-l" attached hereto, and to have the mailing address set forth in
Section 2.1.1. The Demised Premises are shown on the plans attached hereto as
Exhibit "A-2" and are situated on the such floors and /or suites in the Building
as set forth in Section 2.1.2. The land upon which the Building is located, the
Building located thereon and all landscaping, parking facilities and other
improvements and appurtenances related thereto, including, without limitation,
driveways, sidewalks, parking areas, and landscaped areas, shall be a part of
the development known as the 9880 Campus Point Drive Building and are
hereinafter collectively referred to as the "Project", the legal description and
site plan for which is attached hereto as Exhibit "A". All portions of the
Building which are for the nonexclusive use of the Tenant are hereinafter
referred to as "Building Common Areas". All portions of the Project which are
for the non-exclusive use of the Tenant at the Project, exclusive of the
Building Common Areas, hereinafter referred to as "Project Common Areas".
Building Common Areas and Project Common Areas may hereinafter be collectively
referred to as "Common Areas."

2.      Basic Lease Provisions

        2.1.    For convenience of the parties, certain basic provisions of this
Lease are set forth herein. The provisions set forth herein are subject to the
remaining terms and conditions of this Lease and are to be interpreted in light
of such remaining terms and conditions.

        2.1.1.  Address of the Building
                9880 Campus Point Drive
                San Diego, California 92121

        2.1.2.  Designation of Tenant's Building: 1
                Designation of Tenant's Suite: 100

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        2.1.3.  Initial Area of Demised Premises, Building and Project all as
                subject to adjustment in accordance with Section 8 hereof.

                (a)     Initial Area of the Demised premises:

                Initial Rentable Area: 71,625 sq. ft.

                (b)     Initial Area of the Building:

                Initial Rentable Area: 71,625

                (c)     Initial Area of the Project:

                Initial Rental Area: 71,625

        2.1.4.  Initial Basic Annual Rent:

                (71,625 sq. ft.) x ($2.25 per sq. ft.) x (12) = $1,933,875.00

        2.15.   Initial Monthly Rental Installments:

                (71,625 sq. ft.) x ($2.25 per sq. ft. ) = $161,156.25 2. 1 .6.

        Initial Tenant's Pro Rata Share of Building:

                100%

        2.1.7.  Initial Tenant's Pro Rata Share of Project: 100%

        2.1.8.  Term of Lease:

                (a)     Term Commencement Date:
                        As defined in Section 4.2 hereof.

                (b)     Term Expiration Date:
                        Ten (10) years from the Term Commencement Date, subject
                        to extension or earlier termination as provided herein.

        2.1.9.  Security Deposit: $161,156.25, subject to increase in accordance
                with Sections 10.2 and 10.3 hereof.

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        2.1.10. Permitted Use:
                Administrative and research facility and related offices
                consistent with Sections 10.2 and 10.3 hereof

        2.1.11. Address for Rent Payment:
                610 West Ash Street
                San Diego, California 92101-3351

                Address for Notices to Landlord:
                4321 North Ballard Road
                Appleton, Wisconsin 54919-0001

                Address for Notices to Tenant:
                9880 Campus Point Drive
                San Diego, California 92121
                Attention: Susan Hanan

                with a copy of Notices for Tenant to:
                Pillsbury Madison & Sutro LLP
                725 South Figueroa Street
                Suite 1200
                Los Angles, CA 90017
                Attention: Jackie Park, Esq.

        2.1.12. Tenant's Improvement Plan Approval Date: [Defined in Work Letter
                to be attached]

        2.1.13. Space Plan Approval Date: [Defined in Work Letter to be
                attached]

        2.1.14. The following Exhibits are attached hereto and incorporated
                herein: "A", "A-l", "A-2", "B", "C", "D", "E", and "F". [Form of
                Exhibits to be attached].

3.      Term

        3.1.    This Lease shall take effect upon the Effective Date, and,
except as specifically otherwise provided within this Lease, each of the
provisions hereof shall be binding upon and inure to the benefit of Landlord and
Tenant, and each of their respective successors and permitted assigns, from the
Effective Date.

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        3.2.    The term of this Lease (the "Term") shall be that period from
the Term Commencement Date as defined in Section 4.2 below through the Term
Expiration Date, as such may be terminated or extended as provided herein.

4.      Possession and Commencement Date

        4.1.    Landlord shall endeavor to tender possession of the Demised
Premises to Tenant on or before one hundred eighty (180) days from the date this
Lease is executed by both parties (the "Target Term Commencement Date") with
Landlord's Work (as defined in Exhibit "B" attached hereto (the "Work Letter"),
and Tenant's Improvement Work (as defined in the Work Letter) Substantially
Completed (as such in the Work Letter). Tenant agrees that, in the event
Landlord fails to tender possession of the Demised Premises with Landlord's Work
and Tenant's Improvement Work Substantially Completed on or before the Target
Term Commencement Date, Landlord shall not be liable to Tenant for any loss or
damage resulting therefrom, and this Lease shall not be void or voidable except
as provided below this Section 4.1. In such event, however, Tenant shall not be
liable for any Basic Annual Rent or Operating Expenses (as defined below) until
the Term Commencement Date set forth in Section 4.2 below. In the event Landlord
has not tendered possession of the Demised Premises to Tenant with Landlord's
Work and Tenant Improvement Work Substantially Completed on or before the date
which is six (6) months after the Target Term Commencement Date (as extended for
Tenant-Caused Delays and Force-Majeure Delays), then either Landlord or Tenant
may, by written notice to the other delivered within ten (10) days thereafter,
elect to terminate this Lease. In the event this Lease is terminated pursuant to
this Section 4.1, the Security Deposit shall be returned to Tenant and Landlord
shall pay to Tenant, the Tenant's out-of-pocket costs incurred in connection
with entering into this Lease and designing and constructing the Tenant
Improvements. Landlord shall make such payment within thirty (30) days following
receipt by Landlord of Tenant's notice of Tenant's election to terminate this
Lease. Upon such payment, neither Landlord nor Tenant shall have any further
duties or obligation under this Lease, except with respect to provisions which,
by their terms, survive a termination of the Lease.

        4.2.    The "Term Commencement Date" shall be the earlier of (i) the
date Landlord tenders possession of the Demised Premises to Tenant with
Landlord's Work and Tenant's Improvement Work Substantially Completed; (ii) the
date Tenant opens for business in the Demised Premises or any part thereof;
(iii) the date of issuance of a certificate of occupancy (either permanent or
temporary) for the Demised Premises by the [City of San Diego Building
Department or such other municipal agency having jurisdiction over the Demised
Premises]; (iv) the date Landlord would have tendered possession of the Demised
Premises to Tenant with Landlord's Work and Tenant's Improvement Work
Substantially Completed, but for any Tenant-Caused Delays; or (v) such earlier
date as is provided in the Work Letter. In no such event however, shall the

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Term Commencement Date occur later than two hundred twenty five (225) days from
the date this Lease is executed by both parties (as extended for Landlord-Caused
Delays and Force-Majeure Delays). Landlord and Tenant shall each execute and
deliver to the other written acknowledgment of the Term Commencement Date and
the Term Expiration Date when such is established and shall attach the
acknowledgment to this Lease as part of Exhibit "E"; however, failure to execute
and deliver such acknowledgment shall not affect Landlord's or Tenant's rights
or liabilities hereunder.

        4.3.    Landlord shall allow Tenant to enter upon the Demised Premises
prior to the Term Commencement Date for the purpose of performing Tenant's Work
(as defined in the Work Letter) provided such entry does not unreasonably
interfere with the performance by Landlord of Landlord's Work or Tenant's
Improvement Work. Such entry shall not advance the Term Commencement Date but
shall be subject to all the terms and conditions of this Lease other than the
payment of Basic Annual Rent or Operating Expense.

        4.4     Access to and possession of areas necessary for utilities,
services, safety and operation of the Building and the Project is reserved to
Landlord.

        4.5     Landlord shall cause to be constructed the tenant improvements
in the Demised Premises ("Tenant Improvements") pursuant to the Work Letter
attached hereto as Exhibit "B" at a cost to the Landlord not to exceed Forty
Dollars ($40.00) per rentable square foot of the Demised Premises ("Tenant
Improvement Allowance") which shall include the cost of construction, project
management by Landlord (the "Coordination Fee", as defined in the Work Letter
attached hereto), cost of space planning, architect, engineering and other
related services, building permits and other planning and inspection fees
incurred by Landlord on behalf of and pursuant to the consent thereto by Tenant.
If Landlord reasonably determines at any time that the total cost of the Tenant
Improvements will exceed the Tenant Improvement Allowance, then Tenant shall
immediately, and as a condition to Landlord's obligation to expend or disburse
any portion of the Tenant Improvement Allowance, deposit with Landlord an amount
sufficient to pay such excess. Tenant shall have three hundred sixty (360) days
from the date this Lease is executed by both parties to expend the unused
portion of the Tenant Improvement Allowance, after which date Landlord's
obligation to fund such costs shall expire.

5.      Rent

        5.1.    Tenant agrees, commencing on the Term Commencement Date, to pay
Landlord as Basic Annual Rent for the Demised Premises the sum set forth in
Section 2.1.4 subject to the rental adjustments provided in Article 6 hereof.
Basic Annual Rent shall be paid in the equal monthly installments set forth in
Section 2.1.5, subject to the

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rental adjustments provided in Article 6 hereof, each in advance on the first
day of each and every calendar month during the Term. Notwithstanding anything
to the contrary set forth herein, Tenant shall have no obligation to pay Basic
Annual Rent for any periods prior to the Term Commencement Date.

        5.2.    In addition to Basic Annual Rent, Tenant agrees to pay to
Landlord as additional rent ("Additional Rent") at times hereinafter specified
in this Lease (i) Tenant's pro rata share which is set forth in Section 2.1.6
and 2.1.7 ("Tenant's Pro Rata Share") of Operating Expenses for the Building and
the Project as provided in Article 7 and (ii) any other amounts that Tenant
assumes or agrees to pay under the provisions of this Lease that are owed to
Landlord, including, without limitation, any and all other sums that may become
due by reason of any default of Tenant or failure on Tenant's part to comply
with the agreements, terms, covenants and conditions of this Lease to be
performed by Tenant, after notice and lapse of applicable cure period. The pro
rata share of Tenant's portion of Building Operating Expenses which is set forth
in Section 2.1.6 ("Tenant's Pro Rata Share of Building") and of Tenant's portion
of Project Operating Expenses which is set forth in Section 2.1.7 ("Tenant's Pro
Rata Share of Project") shall be determined on or before the execution of this
Lease when the actual Rentable Square Footage of the Building, the Demised
Premises and the Project are established pursuant to Section 8 hereof, and
Landlord and Tenant shall attach an acknowledgment of such actual Tenant's Pro
Rata Share of Building and Tenant's Pro Rata Share of Project to this Lease as
part of Exhibit "E"; however, failure to execute and deliver such acknowledgment
shall not affect Landlord's or Tenant's rights or liabilities hereunder.

        5.3.    Basic Annual Rent and Additional Rent shall together be
denominated "Rent". Rent shall be paid to Landlord, without abatement,
deduction, or offset, in lawful money of the United States of America, at the
office of Landlord as set forth in Section 2.1.10 or to such other person or at
such other place as Landlord may from time designate in writing. In the event
Term commences or ends on a day other than the first day of a calendar month,
then the Rent for such fraction of a month shall be prorated for such period on
the basis of a thirty (30) day month and shall be paid at the then current rate
for such fractional month.

6.      Rent Adjustments

        The Basic Annual Rent shall be adjusted upward in the amount of three
and one-half percent (3.5%) of the prior year's Basic Annual Rent, beginning on
the first anniversary of the Term Commencement Date and every (12) months
thereafter throughout the Term.

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7.      Operating Expenses

        7.1.    As used herein, the term "Operating Expenses", with respect to
the Building or the Project, as applicable, shall include:

        7.1.1.  Government impositions including, without limitations, property
tax costs consisting of real and personal property taxes and assessments
(including amounts due under any improvement bond upon the Building or the
Project, including the parcel or parcels of real property upon which the
Building or Project, and areas serving the Building or Project, are located or
assessments levied in lieu thereof) imposed by any governmental authority or
agency; any tax on or measured by gross rentals received from the rental of
space in the Building or the Project, or tax based on the square footage of the
Demised Premise, the Building or the Project as well as any parking charges,
utilities surcharges, or any other costs levied, assessed or imposed by, or at
the direction of, or resulting from statutes or regulations, or interpretations
thereof, promulgated by any federal, state, regional, municipal or local
government authority in connection with the use or occupancy of the Building or
the Project or the parking facilities serving the Building or the Project; any
tax on this transaction or any document to which Tenant is a party creating or
transferring an interest in the Building or the Project; any fee for a business
license to operate an office building; and any expenses, including the
reasonable cost of attorneys or experts, reasonably incurred by Landlord in
seeking reduction by the taxing authority of the applicable taxes, less tax
refunds obtained as a result of an application for review thereof. Operating
Expenses shall not include any net income franchise, capital stock, estate or
inheritance taxes or taxes which are the personal obligation of Tenant or of
another tenant of the Project.

        7.1.2.  All other costs of any kind paid or incurred by Landlord in
connection with the operation and maintenance of the Building or the Project
including, by way of examples and not as a limitation upon the generality of the
foregoing, costs of repairs and replacements to the Building or improvements
within the Project as appropriate to maintain the Building or the Project as
required hereunder, including cost of funding such reasonable reserves as
Landlord, consistent with good business practice, may establish to provide for
future repairs and replacements; costs of utilities furnished to the Building or
Project Common Areas; sewer fees; cable T.V., when applicable; trash collection;
cleaning, including windows; heating, ventilation and air-conditioning;
maintenance of landscape and grounds; maintenance of drives and parking areas;
security services and devices; building supplies; maintenance and replacement to
equipment utilized for operation and maintenance of the Building or the Project;
license, permit and inspection fees; sales, use and excise taxes on goods and
services purchased by Landlord in connection with the operation, maintenance or
repair of the Project or the Building systems and equipment; telephone, postage,
stationary supplies and other expenses incurred in connection with the
operation, maintenance or repair of the Project; license,

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permit inspection fees; sales, use and excise taxes on goods and services
purchased by Landlord in connection with the operation, maintenance or repair of
the Building or the Project; accounting, legal and other professional fees and
expenses incurred in connection with the Building or the Project; the cost of
furniture, draperies, carpeting, landscaping and other customary and ordinary
items of personal property provided by Landlord for use in the Building or
Project Common Areas or in the management office of the Building or Project so
long as such office shall be strictly used by Landlord in connection with the
managing the Building and shall not be used by Landlord in connection with any
leasing activities or any other purpose for any other entity; capital
expenditures; costs of complying with any applicable laws; hazardous waste
remediation; rules or regulations; insurance premiums, including premiums for
public liability, property and casualty, earthquake and environmental coverages;
portions of insured losses paid by Landlord as part of the deductible portion of
such loss by reason of insurance policy terms; service contracts; costs of
services of independent contractors retained to do work of the nature or type
referenced herein; and costs of compensation (including employment taxes and
fringe benefits) of all persons at the level of Building Manager and below who
perform regular and recurring duties connected with the day-to-day operation and
maintenance of the Building, the Project, their respective equipment, the
adjacent walks, landscaped areas, drives, and parking areas, including without
limitation, janitors, floor waxers, window-washers, watchmen, gardeners,
sweepers, and handymen and costs of management services, which costs of
management services shall not exceed two percent (2%) of the annual Rent due
from Tenant.

                7.1.3.  Notwithstanding the foregoing, Operating Expenses shall
not include any: (i) ground lease rentals; (ii) costs of items for capital
repairs, replacements, improvements and equipment ("Capital Items") (iii)
marketing costs including, without limitation, leasing commissions, attorney's
fees in connection with the negotiation and preparation of letters, deal memos,
letters of intent, leases, and space planning costs; (iv) costs arising from
Landlord's charitable or political contributions; (v) costs associated with the
operation of the business of the partnership or entity which constitutes
Landlord as the same are distinguished from the costs of the operation of the
Project, including partnership accounting and legal matters, costs of defending
any lawsuits with any mortgagee (except as the actions of Tenant may be in
issue), costs of selling, syndicating, financing, mortgaging or hypothecating
any of Landlord's interest in the Project, costs of any disputes between
Landlord and its employees (if any) not engaged in Project operation, or
disputes of Landlord with Building management: (vi) costs of any flowers, gifts,
balloons, etc., provided to any entity whatsoever, to include, but not limited
to Tenant, employees, vendors, and contractors; (vii) any "finders fees",
brokerage commissions, job placement costs or job advertising cost, other than
with respect to a receptionist or secretary in the Building office, once per
year; (viii) costs of any magazine, newspaper, trade or other subscriptions;
(ix) costs for any "tenant relations" parties, events or promotion not consented
to by an authorized representative of Tenant in

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writing; (x) costs for any leasing commissions; (xi) costs for any expenses
which related to preparation of rental space for a tenant; (xii) costs relating
to the initial development and construction of the Building or the Tenant
Improvements, including but not limited to, grading, paving, landscaping, and
decorating (as distinguished from maintenance repair and replacement of the
foregoing); (xiii) legal expenses relating to other tenants; (xiv) costs of
repair to the extent reimbursed by payment received by Landlord of insurance
proceed; (xv) interest upon loans to Landlord or secured by mortgage or deed of
trust covering the Building or the Project or a portion thereof (provided
interest upon a government assessment or improvement bond payable in
installments is an Operating Expense under subparagraph 7.1.1 above); (xvi)
salaries of executive officers of Landlord; (xvii) depreciation claimed by
Landlord for tax purposes (provided this exclusion of "depreciation" is not
intended to delete from Operating Expenses actual costs of repairs and
replacements and reasonable reserves in regard thereto which are provided for in
subparagraph 7.1.2 above); and (xviii) taxes of the types set forth within the
last sentence of subparagraph 7.1.1 above.

                7.1.4,  Notwithstanding the foregoing, if during the Term of
this Lease, Landlord installs or replaces any Capital Items for items Landlord
is responsible for under Section 17.1 herein, Lessor may include in Operating
Expenses, charges for depreciation on the same so as to amortize the cost of
such Capital Item over a commercially reasonably warranty period for such
Capital Items on a straight line basis.

        7.2.    Tenant shall pay to Landlord on the first day of each calendar
month of the Term, as Additional Rent, Landlord's estimate of Tenant's Pro Rata
Share of Building Operating Expenses and Tenant's Pro Rata Share of Project
Operating Expenses for such month.

                7.2.1.  Within ninety (90) days after the conclusion of each
calendar year, (or such longer period as may be reasonably required but in no
event in excess of 180 days) Landlord shall furnish to Tenant a statement
showing on a line item by line item basis the actual Operating Expenses and
Tenant's Pro Rata Share of Building and Project Operating Expenses for the
previous two calendar years. Any additional sum due from Tenant to Landlord
shall be immediately due and payable within thirty (30) days of receipt by
Tenant of an invoice therefor from Landlord. If the amounts paid by Tenant
pursuant to Section 7.2 exceeds Tenant's Pro Rata Share of Building or Project
Operating Expenses for the previous calendar year, Landlord shall at Landlord's
option either (1) credit the excess to the next succeeding installments of
estimated Additional Rent or (2) pay the excess to Tenant within thirty (30)
days after delivery of such statement.

                7.2.2.  Any amount due under Section 7.2 for any period which is
less than a full month shall be prorated (based on a thirty (30) day month) for
such fractional month.

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        7.3.    Landlord's annual statement shall be final and binding upon
Tenant unless Tenant, within one hundred eighty (180) days after Tenant's
receipt thereof, shall contest in good faith any item therein by giving written
notice to Landlord, specifying each item contested and the reason therefor. If
during such one hundred eighty (180) day period, Tenant contests the correctness
of Landlords' statement of Tenant's Pro Rata Share of Building or Project
Operating Expanses, Landlord will provide Tenant with access to Landlord's books
and records and such information as Landlord reasonably determines to be
responsive to Tenant's questions, In the event that after Tenant's review of
such information, Landlord and Tenant cannot agree upon the amount of Tenant's
Pro Rata Share of Building or Project Operating Expenses, then Tenant shall have
the right to have an independent public accounting firm selected from among the
ten (10) largest in the United States hired by Tenant (at Tenant's sole cost and
expense, provided that if such audit and/or review reveals that Landlord's
determination of Tenant's Pro-Rata Share of Building and Project Operating
Expenses as set forth for the year in question was in error in Landlord's favor
by more than two percent (2%), Landlord shall pay the cost of such audit and/or
review) and approved by Landlord (which approval shall not be unreasonably
withheld or delayed) audit and/or review such Landlord's books and records for
the year in question (the "Independent Review"). The results of any such
Independent Review shall be binding on Landlord and Tenant. If the Independent
Review shows that Tenant's Pro Rata Share of Building or Project Operating
Expenses actually paid for the calendar year in question exceeded Tenant's
obligations for such calendar year, Landlord shall at Landlord's option either
(1) credit the excess to the next succeeding installments of estimated
Additional Rent or (2) pay the excess to tenant within thirty (30) days after
delivery of such statement. If the Independent Review shows that Tenant's
payments of Tenant's Pro Rata Share of Building or Project Operating Expenses
for such calendar year were less than Tenant's obligation for the calendar year,
Tenant shall pay the deficiency to the Landlord together with a fee of One
Thousand Dollars ($1,000) to reimburse Landlord for Landlord's cost in
connection with such audit and/or review within thirty (30) days after delivery
of such statement

        7.4.    Tenant shall not be responsible for Building or Project
Operating Expenses attributable to the time period prior to the Term
Commencement Date. The responsibility of Tenant for Tenant's Pro Rata Share of
Building and Project Operating Expenses shall continue to the latest of (i) the
date of termination of the Lease, (ii) the date Tenant has fully vacated the
Demised Premises (including, without limitation, the removal of all items
required hereby to be removed and the completion of all procedures necessary to
fully release and terminate any permits or licenses restricting the use of the
Demised Premises in any manner), or (iii) if termination of the Lease is due to
the default of Tenant, the date of rental commencement of a replacement tenant.

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        7.5.    Building and Project Operating Expenses for the calendar year in
which Tenant obligation to share therein commences and in the calendar year in
which such obligation ceases, shall be prorated on a basis reasonably determined
by Landlord. Expenses such as taxes, assessments and insurance premiums which
are incurred for an extended time period shall be prorated based upon time
periods to which applicable so that the amount attributed to the Demised
Premises relate in a reasonable manner to the time period wherein Tenant has an
obligation to share in Building and Project Operating Expenses.

8.      Rentable Area

        8.1.    Landlord and Tenant have agreed that on or before the execution
of this Lease, Chapo & Hall Architects, (the "Architect"') shall determine the
actual Rentable Areas of the Demised Premises, the Building, and the Project
(the "Rentable Area") and Landlord and Tenant shall attach an acknowledgment of
such actual Rentable Areas of the Demised Premises, the Building, and the
Project to this Lease as part of Exhibit "E"; however, failure to execute and
deliver such acknowledgment shall not affect Landlord's or Tenant's rights or
liabilities hereunder.

        8.2.    Review of allocations of Rentable Areas as between tenants of
the Building and/or the Project may be made as frequently as in Landlord's
opinion appears appropriate in order to facilitate an equitable apportionment of
any Operating Expenses which are incurred on a Building or Project basis, as
applicable. Such review shall be performed by the Architect or by another
licensed architect selected by Landlord, and, after consultation with Tenant and
certification as correct by such licensed architect, the parties shall be bound
by such certifications.

9.      Security Deposit

        9.1,    Tenant shall deposit with Landlord on the date of mutual
execution of this Lease the sum set forth in Section 2.1.9 (the "Security
Deposit"), which Security Deposit shall be held by Landlord as security for the
performance by Tenant of all of the terms, covenants and conditions of this
Lease to be kept and performed by tenant during the Term hereof. If Tenant
defaults with respect to any provision of this Lease and any applicable cure
periods provided for under Section 23.4 hereof have expired, including but not
limited to any provision relating to the payment of Rent, Landlord may (but
shall not be required to) use, apply or retain all or any.part of the Security
Deposit for the payment of any Rent or any other sum in default, or to
compensate Landlord for any other loss or damage which Landlord may suffer by
reason of Tenant default. If any portion of the Security Deposit is so used or
applied, Tenant shall, within thirty (30) days of receipt of demand therefor,
deposit cash with Landlord in an amount sufficient to restore the Security
Deposit to its original amount and Tenant's failure to do so shall be a

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material breach of this Lease. Landlord shall not be required to keep the
Security Deposit separate from its general fund. Tenant shall not be entitled to
any interest on the Security Deposit.

        9.2.    In the event of bankruptcy or other debtor-creditor proceedings
        against the Tenant, the Security Deposit shall be deemed to be applied
        first to the payment of Rent and other charges due Landlord for all
        periods prior to the filing of such proceedings.

        9.3.    Landlord shall deliver the Security Deposit by Tenant to any
purchaser of Landlord's interest in the Demised Premises and thereupon Landlord
shall be discharged from any further liability with respect to such Security
Deposit. This provision shall also apply to any subsequent transfers.

        9.4.    If Tenant shall fully and faithfully perform every provision of
this Lease to be performed by it, the Security Deposit, or any balance thereof,
shall be returned to Tenant (or, at Landlord's option, to the last assignee of
Tenant's interest hereunder) within thirty (30) days after the expiration or
earlier termination of this Lease.

        9.5.    Tenant agrees to provide Landlord with a Hazardous Materials
List (as defined in Section 38.1.1 hereof) prior to the Term Commencement Date
for review and approval by an environmental consulting firm licensed by the
State of California (the "Environmental Consultant") selected by Landlord. At
any time thereafter during the Term of this Lease, Tenant agrees upon written
notice from Landlord, to provide Landlord and the Environmental Consultant with
an updated Hazardous Materials List for Landlord's review. In the event that
upon the Environmental Consultant's review of the Hazardous Materials List, the
Environmental Consultant reasonably determines that Tenant's Hazardous Materials
categories used at the Demised Premises, the Building or the Project have
changed to a more toxic category, then upon Tenant's receipt of written notice
of such determination from the Landlord, Tenant shall deposit an additional
$322,312.50 with the Landlord, which amount shall be added to and treated as a
part of the Security Deposit.

10.     Use

        10.1.   Tenant shall use the Demised Premises for the purpose set forth
in Section 2.1.10 and shall not use the Demised Premises, or permit or suffer
the Demised Premises to be used, for any other purpose without the prior written
consent of Landlord which may be withheld in Landlord's sole discretion.

        10.2.   Tenant shall not use or occupy the Demised Premises in violation
of any federal, state and local laws and regulations, zoning ordinances, or of
the certificate of occupancy issued for the Building, and shall, upon five (5)
days written notice from

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Landlord, discontinue any use of the Demised Premises which is declared or
claimed by any governmental authority having jurisdiction to be a violation of
law, regulation or zoning ordinance or of said certificate of occupancy, or
which in the reasonable opinion of Landlord violates law, regulation or zoning
ordinance or the certificate of occupancy; provided, however, that Tenant shall
have the right, in good faith, to contest such alleged violation. Tenant shall
comply with any direction of any governmental authority having jurisdiction
which shall, by reason of the nature of Tenant's use or occupancy of the Demised
Premises, impose any duty upon Tenant or Landlord with respect to the Demised
Premises or with respect to the use or occupation thereof.

        10.3.   Tenant shall not do or permit to be done anything which will
invalidate or increase the cost of any fire, environmental, extended coverage or
any other insurance policy covering the Building and Project and shall comply
with all rules, orders, regulations, and requirements of the insurers of the
Building and Project and Tenant shall promptly within thirty (30) days of
receipt of demand reimburse Landlord for any additional premium charged for such
policy by reason of Tenant's failure to comply with the provisions of this
section.

        10.4.   Tenant shall keep all doors opening onto public corridors
closed, except when in used for ingress and egress.

        10.5.   No additional locks or bolts of any kind shall be placed upon
any of the doors or windows by Tenant nor shall any changes be made in existing
locks or the mechanism thereof without the prior written consent of Landlord
which consent shall not be unreasonably withheld. Tenant must, upon termination
of this Lease return to Landlord all keys to offices and restrooms, either
furnished to, or otherwise procured by Tenant. In the event any key so furnished
is lost, Tenant shall pay to Landlord the cost of replacing the same or of
changing the lock or locks opened by such lost key if Landlord shall deem it
necessary to make such change.

        10.6.   No awnings or other projection shall be attached to any outside
wall of the Building. No curtains, blinds, shades or screens shall be attached
to or hung in, or used in connection with, any window or door of the Demised
Premises other than Landlord's standard window coverings. Neither the interior
nor exterior of any windows shall be coated or otherwise sunscreened without the
express written consent of Landlord, nor shall any bottles, parcels, or other
articles be placed on the windowsills. No equipment, furniture or other items of
personal property shall be placed on any exterior balcony without the express
written consent of Landlord.

        10.7.   Tenant will have the exclusive right to display it's signs on
the Building subject to Landlord's prior written approval, (which approval shall
not be unreasonably

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withheld or delayed), and subject to all restrictions and requirements of
applicable law and of any covenants, conditions and restrictions or other
written agreements now or hereinafter applicable to the Project. No other sign,
advertisement, or notice shall be exhibited, painted or affixed by Tenant on any
part of the Demised Premises or the Building without the prior written consent
of Landlord.

        10.8.   No equipment weighing five hundred (500) pounds, or greater,
shall be placed upon the Demised Premises without advance notice to and approval
by Landlord and placement, if approved by Landlord, shall be at a location
designed to carry the weight of such equipment.

        10.9.   Tenant shall not do or permit anything to be done in or about
the Demised Premises, Building or Project which use shall in any way be for an
immoral, unlawful or objectionable purpose, nor shall Tenant knowingly cause,
maintain or permit any nuisance or waste in, on, or about the Demised Premises,
Building or Project.

        10.10.  Notwithstanding any other provision herein to the contrary,
Tenant shall be responsible for all liabilities, costs and expense arising out
of or in connection with the compliance of the Demised Premises, Building or
Project with the Americans With Disabilities Act, 42 U.S.C. Sec. 12101, et seq.
(together with regulations promulgated pursuant thereto, "ADA") and Tenant shall
indemnify, defend and hold harmless from and against any loss, cost, liability
or expense (including reasonable attorneys fees and disbursements) arising out
of any failure of the Demised Premises, Building or Project to comply with the
ADA.

11.     Brokers

        11.1.   Tenant and Landlord represent and warrant to each other that it
has had no dealings with any real estate broker or agent in connection with the
negotiation of this Lease other than John Burnham & Company and The Sande
Company (collectively, the "Brokers"), as has been disclosed in writing to each
party and that it knows of no other real estate broker or agent who is or might
be entitled to a commission with this Lease. Landlord shall pay the Brokers a
leasing commission pursuant to a separate agreement.

        11.2.   Tenant agrees to indemnify, defend, hold and save Landlord
harmless from and against any and all claims for any commission for fees in
connection with this Lease made by any broker or finder having worked, or
claiming to have worked, on behalf of Tenant, other than Brokers.

        11.3.   Tenant represents and warrants that no broker or agent has made
any representation or warranty relied upon by Tenant in Tenant's decision to
enter into this Lease other than as contained in this Lease.

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        11.4.   Tenant acknowledges and agrees that the employment of brokers by
Landlord is for the purpose of solicitation of offers of lease from prospective
tenants and no authority is granted to any broker to furnish any representation
(written or oral) or warranty from Landlord unless expressly contained within
this Lease. Landlord in executing this Lease does so in reliance upon Tenant's
representations and warranties contained within Sections 11.1 and 11.3 herein.

12.     Holding Over

        12.1.   If, with Landlord's express written consent, Tenant holds
possession of all or any part of the Demised Premises, Building or Project after
the expiration or earlier termination of the Term, Tenant shall become a tenant
from month-to-month upon the date of such expiration or earlier termination, and
in such case Tenant shall continue to pay Basic Annual Rent in the amount
payable upon the date of the expiration or earlier termination of this Lease,
and all other provisions, representations, covenants and agreements contained
herein, other than with respect to the Term and any extension thereof, but
specifically including, without limitation, the adjustment of Basic Annual Rent
pursuant to Section 6 hereof, shall remain in full force and effect,

        12.2.   Notwithstanding the foregoing, if Tenant remains in possession
of the Demised Premises, Building or Project after the expiration or earlier
termination of the Term without the express written consent of Landlord, Tenant
shall become a tenant at sufferance upon the terms of this Lease except that the
monthly rental shall be equal to the greater of (i) one hundred fifty percent
(150%) of the Rent (Basic Annual Rent and Additional Rent) in effect during the
last thirty (30) days of the Term or (ii) the prevailing market rate as
established by an M.A.I. appraiser selected by Landlord.

        12.3.   Acceptance by Landlord of Rent after such expiration or earlier
termination of the Term shall not result in a renewal or reinstatement of this
Lease.

        12.4.   The foregoing provisions of this Article 12 are in addition to
and do not affect Landlord's right to re-entry or any other rights of Landlord
hereunder or as otherwise provided by law.

13.     Taxes on Tenant's Property

        13.1.   Tenant shall pay, prior to delinquency any and all, taxes levied
against any personal property or trade fixtures placed by tenant in or about the
Demised Premises, Building or Project; provided, however that Tenant shall have
the right, in good faith, to contest such taxes.

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        13.2.   If any such taxes on Tenant's personal property or trade
fixtures are levied against Landlord or Landlord's property or, if the assessed
valuation of the Building or Project is increased by the inclusion therein of a
value attributable to Tenant's personal property or trade fixtures, and if
Landlord, after written notice to Tenant pays the taxes based upon such increase
in the assessed valued, then Tenant shall within thirty (30) days of receipt of
demand to repay to Landlord the taxes so levied against Landlord.

14.     Common Areas, Parking Facilities

        14.1.   Tenant shall have the exclusive right to use the Common Areas,
subject to the rules and regulations adopted by Landlord and attached hereto as
Exhibit "C" together with such other reasonable and nondiscriminatory rules and
regulations as are hereafter promulgated by Landlord in its discretion (the
"Rules and Regulations").

        14.2.   As an appurtenance to the Demised Premises, Tenant shall have an
        exclusive revocable license to use the entire parking facilities within
        the Project during the entire Lease Term and any extensions thereto at
        no additional charge to Tenant.

        14.3    Landlord reserves the right to modify the Common Areas
        (including the right to add or remove exterior landscaping).

15.     Utilities and Services

        15.1.   Tenant shall pay for all water, (including the cost to service,
repair and replace reverse osmosis, deionized and other treated water) gas,
heat, light, power, telephone and other utilities supplied to the Demised
Premises, Building or Project together with any fees, surcharges and taxes
thereon.

        15.2.   Landlord shall not be liable for nor shall any eviction of
Tenant result from the failure to furnish any such utility or service whether or
not such failure is caused by accident, breakage, repairs, strikes, lockouts or
other labor disturbances or labor disputes of any character, governmental
regulation, moratorium or other governmental action, inability despite the
exercise of reasonable diligence or by any other cause. In the event of such
failure, Tenant shall not be entitled to any abatement or reduction of Rent, nor
be relieved from the operation of any covenant or agreement of this Lease.

        15.3.   Tenant shall pay directly to the applicable utility or service
provider, prior to delinquency, for any separately metered utilities and
services which may be furnished to Tenant or the Demised Premises, Building or
Project during the Term.

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        15.4.   Tenant shall not, without the prior written consent of Landlord,
use any device in the Demised Premises, including, but without limitation, data
processing machines, which will in any way increase the amount of ventilation,
air exchange, gas, steam, electricity or water beyond the existing capacity of
the Building Systems.

        15.5.   Landlord shall provide water in Common Areas for drinking and
lavatory purposes only, but if Tenant requires, uses or consumes water for any
purpose in addition to ordinary drinking and lavatory purposes Landlord may
install a water meter and thereby measure Tenant's water consumption for all
purposes. Tenant shall pay Landlord for Landlord's actual cost of the meter and
the cost of the installation thereof and throughout the duration of Tenant's
occupancy, thereof and through the duration of Tenant's occupancy, Tenant shall
keep said meter and installation equipment in good working order and repair at
Tenant's own cost and expense, the default of which Landlord may cause such
meter and equipment to be replaced or repaired and collect the cost thereof from
Tenant. Tenant agrees to pay for water consumed, as shown on said meter, as and
when bills are rendered, and on default in making such payment, Landlord may pay
such charges and collect the same from Tenant. Any such costs or expenses
incurred, or payments made by Landlord for any of the reasons or purposes
hereinabove stated shall be deemed to be Additional Rent payment by Tenant and
collectible by Landlord as such.

        15.6.   Landlord reserves the right to stop service of the elevator,
plumbing, ventilation, air conditioning and electric systems, when necessary, by
reason of accident or emergency or for repairs, alterations or improvements, in
the judgment of Landlord desirable or necessary to be made, until said repairs,
alterations or improvements shall have been completed, and Landlord shall
further have no responsibility or liability for failure to supply elevator
facilities, plumbing, ventilation, air conditioning or electric service, when
prevented from doing so by strike or accident, or by laws, rules, order,
ordinances, directions, regulations or requirements of any federal, state,
county or municipal authority or failure to deliver gas, oil or other suitable
fuel supply or inability by exercise of reasonable diligence to obtain gas, oil
or other suitable fuel. It is expressly understood and agreed that any covenants
on Landlord's part to furnish any service pursuant to any of the terms,
covenants, conditions, provisions or agreements of this Lease, or to perform any
act or thing for the benefit of Tenant, shall not be deemed breached if Landlord
is unable to furnish or perform the same by virtue of a strike or labor trouble
or any other cause whatsoever.

16.     Alterations

        16.1.   Other than Tenant's Work, Tenant shall make no alterations,
additions or improvements in or to the Demised Premises, Building or Project
without Landlord's prior written consent, which approval shall not be
unreasonably withheld (provided,

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however that in the event any proposed alteration, addition or improvement
affects (i) any structural portions of the Building including exterior walls,
roof, foundation and core of the Building, (ii) the exterior of the Building or
(iii) any Building systems, including elevator, plumbing, air conditioning,
heating electrical, security, life safety and power, then Landlord may withhold
its consent with respect thereto in its sole and absolute discretion), and then
only by architects, contractors, suppliers or mechanics approved by Landlord in
Landlord's reasonable discretion. In seeking Landlord's approval, Tenant shall
provide Landlord, at least fourteen (14) days in advance of any proposed
construction, with plans, specifications, bid proposals, work contracts and such
other information concerning the nature and cost of the alterations as may be
reasonably requested by Landlord.

        16.2.   Tenant agrees that there shall be no construction of partitions
or other obstructions which might interfere with free access to mechanical
installation or service facilities of the Building or interfere with the moving
of Landlord's equipment to or from the enclosures containing said installations
or facilities.

        16.3.   Tenant agrees that any work by Tenant shall be accomplished in
such a manner as to permit any fire sprinkler system and fire water supply lines
to remain fully operable at all times.

        16.4.   All alterations by Tenant shall be done at such times and in
such manner as Landlord may from time to time reasonably designate. Tenant
covenants and agrees that all work done by Tenant shall be performed in full
compliance with all laws, rules, orders, ordinances, directions, regulations,
and requirements of all governmental agencies, offices, departments, bureaus and
boards having jurisdiction, and in full compliance with the rules, orders,
directions, regulations, and requirements of any applicable fire rating bureau.
Tenant shall provide Landlord with "as-built" plans snowing any change in the
Demised Premises.

        16.5.   Before commencing any work, Tenant shall give Landlord at least
fourteen (14) days prior written notice of the proposed commencement of such
work.

        16.6.   All alterations, attached equipment, decorations, fixtures,
trade fixtures, additions and improvements, subject to Section 16.8, attached to
or built into the Demised Premise, made by either Landlord or Tenant, including
(without limiting the generality of the foregoing) all floor and wallcovering,
built-in cabinet work and paneling, sinks and related plumbing fixtures,
exterior venting fume hoods and walk-in freezers and refrigerators, clean rooms,
climatized rooms, ductwork, conduits, electrical panels and circuits, shall
become the property of Landlord upon the expiration or earlier termination of
the term of this Lease, and shall remain upon and be surrendered with the
Demised Premises as a part thereof; provided, however, that Landlord may at any
time

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elect to cause Tenant to remove any such items from the Demised Premises upon
the expiration or earlier termination of this Lease and, if Landlord so elect,
Tenant shall remove such alterations attached equipment, decorations, fixtures,
trade fixtures, additions and improvements upon the expiration or earlier
termination of this Lease and restore any damage caused by or occasioned as a
result of such removal.

        16.7.   Tenant shall repair any damage to the Demised Premises caused by
Tenant's removal of any property from the Demised Premises. During any such
restoration period, Tenant shall pay Rent to Landlord as provided herein as if
said space were otherwise occupied by Tenant.

        16.8.   Except as to those items listed on Exhibit "F" attached hereto
and incorporated herein, all business and trade fixtures, machinery and
equipment, built-in furniture and cabinets, together with all additions and
accessories thereto, installed in and upon the Demised Premises shall be and
remain the property of Landlord and shall not be moved by Tenant at any time
during the Term. If Tenant shall fail to remove all of its effects from the
Demised Premises prior to termination of this Lease, then Landlord may, at its
option, remove the same in any manner that Landlord shall choose, and store said
effects without liability to Tenant for loss thereof or damage thereto, and
Tenant agrees to pay Landlord upon demand any expenses incurred to such removal
and storage or Landlord may, at its option, without notice, sell said property
or any of the same, at private sale and without legal process, for such price as
Landlord may obtain and apply the proceeds of such sale against any amounts due
under this Lease from Tenant to Landlord and against any expenses incident to
the removal, storage and sale of said personal property.

        16.9.   Notwithstanding any other provision of this Article 16 to the
contrary, in no event may Tenant remove any improvement from the Demised
Premises as to which Landlord contributed payment, including, without
limitation, the Tenant Improvements made pursuant to the Work Letter without
Landlord's prior written consent, which may be withheld in Landlord's sole
discretion.

        16.10.  Tenant shall pay to Landlord an amount equal to five percent
(5%) of the cost to Tenant of all charges incurred by Tenant, its contractors or
agents in connection with any alterations, additions or improvements to the
Demised Premises to cover Landlord's overhead and expenses for plan review,
coordination, scheduling and supervision thereof, for purposes of payment of
such sum, Tenant shall submit to Landlord copies of all bills, invoices, and
statements covering the costs of such charges, which will be accompanied by
payment to Landlord of the percentage fee set forth above. Tenant shall
reimburse Landlord for any extra expense incurred by Landlord by reason of
faulty work done by Tenant or its contractors, or by reason of delays caused by
such work, or by reason of inadequate cleanup.

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17.     Repairs and Maintenance

        17.1.   Landlord shall repair and maintain the structural and exterior
portions and Common Areas, including, without limitations, roofing and covering
materials, foundations, exterior walls, the plumbing, fire sprinkler system (if
any), heating, ventilating, air conditioning, elevator, and electrical systems
installed or furnished by Landlord (and the full cost thereof shall be included
as a part of Operating Expenses), unless such maintenance or repairs are
required in whole or in part because of any act, neglect, fault of or omissions
of any duty by Tenant, its agents, servants, employees or invitees, in which
case Tenant shall pay to Landlord the cost of such maintenance and repairs to
the extent Landlord has not been reimbursed for the cost of such maintenance and
repairs from insurance proceeds.

                17.1.1. Landlord will not replace Capital Items, if any,
required by Section 17.1,during the first seven (7) years of the Term of this
Lease, unless such Capital Item is recommended in a report prepared by an
engineer, acceptable to both Landlord and Tenant and duly licensed by the State
of California, a copy of which will be provided to the Tenant for their review
and approval.

                17.1.2. Landlord will not be required to replace Capital Items,
if any, required by Section 17.1 during the first seven (7) years of the Term of
this Lease, requested in writing by Tenant, unless such Capital Item is
recommended in a report prepared by an engineer, acceptable to both Landlord and
Tenant and duly licensed by the State of California, a copy of which will be
provided to the Landlord for their review and approval.

                17.1.3. Landlord and Tenant agree that Landlord will not be
required to purchase and install any Capital Items, if any, required by Section
17.1 during the final three (3) years of the Term of this Lease, unless such
purchase and installation is mutually agreed to by both Landlord and Tenant in
writing and recommended in a report prepared by an engineer, acceptable to both
Landlord and Tenant and duly licensed by the State of California, a copy of
which will be provided to both Landlord and Tenant for their review and
approval.

        17.2.   Except for services of Landlord, if any, required by Section
17.1, Tenant shall at Tenant's sole cost and expense keep the Demised Premises
and every part thereof in as good condition and repair, damage thereto from
ordinary wear and tear and events of casualty which terminates the Lease
excepted. Tenant shall, upon the expiration or earlier termination of the Term,
surrender the Demised Premises to Landlord in as good as condition as when
received, ordinary wear and tear and events of casualty which terminates the
Lease excepted. Other than as specifically set forth in the Work Letter,

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Landlord shall have no obligation to alter, remodel, improve, repair, decorate
or paint the Demised Premises or any part thereof.

        17.3.   Landlord shall not be liable for any failure to make any repairs
or to perform any maintenance which is an obligation of Landlord unless such
failure shall persist for an unreasonable time after written notice of the need
of such repairs or maintenance is given to Landlord by Tenant. Tenant waives the
rights under Section 1941 and 1942 of the California Civil Code or under any
similar law, statute or ordinance now or hereafter in effect to make repairs at
Landlord's expense.

        17.4.   This Article 17 relates to repairs and maintenance arising in
the ordinary course of operation of the Building, the Project and any related
facilities. In the event of fire, earthquake, flood, vandalism, war, or similar
cause of damage or destruction, this Article 17 shall not be applicable and the
provisions of Article 21 entitled "Damage or Destruction" shall apply and
control.

18.     Liens

        18.1.   Tenant shall keep the Demised Premises, the Building, the
Project and the real property upon which the Building and the Project are
situated free from any liens arising out of work performed, materials furnished
or obligations incurred by Tenant. Tenant further covenants and agrees that any
mechanic's lien filed against the Demised Premises or against the Building or
the Project for work claimed to have been done for, or materials claimed to have
been furnished to Tenant, will be discharged by Tenant, by bond or otherwise,
within ten (10) days after the filing thereof, at the sole cost and expense of
Tenant.

        18.2.   Should Tenant fail to discharge any lien of the nature described
in Section 18.1 within ten (10) days after the filing thereof, Landlord may at
Landlord's election pay such claim or post a bond or otherwise provide security
to eliminate the lien as a claim against title and the cost thereof shall be
immediately due from Tenant as Additional Rent.

        18.3.   In the event Tenant shall lease or finance the acquisition of
office equipment, furnishings, or other personal property of a removable nature
utilized by Tenant in the operation of Tenant's business, Tenant warrants that
any Uniform Commercial Code Financing Statement executed by Tenant will upon its
face or by exhibit thereto indicate that such Financing Statement is applicable
only to removable personal property of Tenant located within the Demised
Premises. In no event shall the address of the Building be furnished on the
statement without qualifying language as to applicability of the lien only to
removable personal property. Should any holder of a Financing Statement executed
by Tenant record or place of record a Financing Statement

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which appears to constitute a lien against any interest of Landlord or against
equipment which may be located other than within the Demised Premises, Tenant
shall within ten (10) days after filing such Financing Statement cause (i) a
copy of the Security Agreement or other documents to which Financing Statement
pertains to be furnished to Landlord to facilitate Landlords being in a position
to show such lien is not applicable to Landlord's interest, and (ii) cause
Tenant's lender to amend any documents of record so as to clarify that such lien
is not applicable to any interest of Landlord in the Building of the Project.

19.     Indemnification and Exculpation

        19.1.   Tenant agrees to indemnify, defend, hold and save Landlord
harmless from and against any and all demands, claims, liabilities, losses,
costs, expenses, actions, causes of action, damages or judgments, and all
reasonable expenses incurred in investigating or resisting the same (including,
without limitation, reasonable attorneys' fees, charges and disbursements), for
injury or death to person or injury to property occurring within or about the
Demised Premises, arising directly or indirectly out of Tenant's, its employees,
agents or guests use or occupancy of the Demised Premises or a breach or default
by Tenant in the performance of any of its obligations hereunder except to the
extent due to the willful act or gross negligence of the Landlord or its agents,
contractors or employees.

        19.2.   Landlord shall not be liable to Tenant and Tenant assumes all
risk of damage to personal property or scientific research, including loss of
records kept within the Demised Premises if the cause of such damage is of a
nature which, if Tenant had elected to maintain fire and theft insurance with
extended coverage and business records endorsement available on a commercially
reasonable basis, would be a loss subject to settlement by the insurance
carrier, including, but not limited to, damage or losses caused by fire,
electrical malfunctions, gas explosion, and water damage of any type, including
but not limited to, broken water lines, malfunction of fire sprinkler system,
roof leakage or stoppages of lines unless and except if such loss is due to
willful disregard of Landlord after written notice by Tenant of need of a repair
which Landlord is responsible to make for an unreasonable period of time. Tenant
further waives any claim for injury to Tenant's business or loss of income
relating to any such damage or destruction of personal property including any
loss of records.

        19.3.   Landlord shall not be liable for any damages arising from any
act, omission or neglect of any other third party.

        19.4.   Security devices and services, if any, while intended to deter
crime may not in given instances prevent theft or other criminal acts and it is
agree that Landlord shall not be liable for injuries or losses caused by
criminal acts of third parties and the

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risk that any security device or service may malfunction or otherwise be
circumvented by a criminal is assumed by Tenant. Tenant shall at Tenant's cost
obtain insurance coverage to the extent Tenant desires protection against such
criminal acts.

20.     Insurance " Waiver of Subronation

        20.1.   Landlord, as part of Operating Expenses, shall carry insurance
upon the Building, in an amount equal to full replacement cost (exclusive of the
costs of excavation, foundations, and footings, and without reference to
depreciation taken by Landlord upon its books or tax returns) or such lesser
coverage as Landlord may elect provided such coverage is not less than ninety
percent (90%) of such full replacement cost or the amount of such insurance
Landlord's mortgage lender requires Landlord to maintain, providing protection
against any peril generally included within the classification "Fire and
Extended Coverage" together with insurance against sprinkler damage (if
applicable), vandalism and malicious mischief. Landlord, subject to availability
thereof and, as part of Operating Expenses, shall further insure as Landlord
deems appropriate coverage against flood, environmental hazard and earthquake,
loss or failure of building equipment, rental loss during the period of repair
or rebuild, workmen's compensation insurance and fidelity bonds for employees
employed to perform services. Notwithstanding the foregoing, Landlord may, but
shall not be deemed required to, provide insurance as to any improvements
installed by tenant or which are in addition to the standard improvements
customarily furnished by Landlord without regard to whether or not such are made
apart of the Building.

        20.2.   Landlord, as part of Operating Expenses, shall further carry
public liability insurance with a single loss limit of not less than One Million
Dollars ($1,000,000.00) for death or bodily injury, or property damage with
respect to the Project.

        20.3.   Tenant at its own cost shall procure and continue in effect from
the Term Commencement Date or the date of occupancy, whichever first occurs, and
continuing throughout the Term (and occupancy by Tenant, if any, after
expiration or earlier termination of this Lease) comprehensive public liability
insurance with limits of not less than Three Million Dollars ($3,000,000.00) per
occurrence for death or bodily injury and not less than Three Million Dollars
($3,000,000.00) for property damage with respect to the Demised Property.

        20.4.   The aforesaid insurance required of Tenant shall name Landlord
as an additional insured. Said insurance shall be with companies having a rating
of not less than policyholder rating of A and financial category rating of at
least Class XII in "Best's Insurance Guide." Tenant shall obtain for Landlord
from the insurance companies or cause the insurance companies to furnish
certificates of coverage to Landlord. No such policy shall be cancelable or
subject to reduction of coverage or other modification or

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cancellation except after thirty (30) days prior written notice to Landlord from
the insurer. All such policies shall be written as primary policies, not
contributing with and not in excess of the coverage which Landlord may carry.
Tenant's policy may be a "blanket policy" which specifically provides that the
amount of insurance shall not be prejudiced by other losses covered by the
policy. Tenant shall, at least twenty (20) days prior to the expiration of such
policies, furnish Landlord with renewals or binders. Tenant agrees that if
Tenant does not take out and maintain such insurance, Landlord may (but shall
not be required to) procure said insurance on Tenant's behalf and at its cost to
be paid as Additional Rent.

        20.5.   Tenant assumes the risk of damage to any fixtures, goods,
inventory, merchandise, equipment, and leasehold improvements, and Landlord
shall not be liable for injury to Tenant's business or any loss of income
therefrom relative to such damage all as more particularly heretofore set forth
within this Lease. Tenant at Tenant's cost shall carry such insurance as Tenant
desires for Tenant's protection with respect to personal property of Tenant or
business interruption.

        20.6.   In each instance where insurance is to name Landlord as an
additional insured, Tenant shall upon written request of Landlord also designate
and furnish certificates so evidencing Landlord as an additional insured to (i)
any lender of Landlord holding a security interest in the Building or real
property upon which the Building is situated, and /or (ii) the Landlord under
any lease wherein Landlord is tenant of the real property whereupon the Building
is located if the interest of Landlord is or shall become that of a tenant under
a ground lease rather than that of a fee owner, and/or (iii) any management
company retained by Landlord to manage the Building or Project as long as the
names and addresses of such entities set forth in (i), (ii) and (iii) have been
provided by Landlord to Tenant.

        20.7.   Landlord and Tenant each hereby waive any and all rights of
recovery against the other or against the officers, directors, employees,
agents, and representatives of the other, on account of loss or damage
occasioned to such waiving party or its property or the property of others under
its control to the extent that such loss or damage is insured against under any
fire and extended coverage insurance policy which either may have in force at
the time of such loss or damage. Such waivers shall continue as long as their
respective insurers so permit. Any termination of such a waiver shall be by
written notice of circumstances as hereinafter set forth. Landlord and Tenant
upon obtaining the policies of insurance required or permitted under this Lease
shall give notice to the insurance carrier or carriers that the foregoing mutual
waiver of subrogation is contained in this Lease. If such policies shall not be
obtainable with such waiver or shall be so obtainable only at a premium over
that chargeable without such waiver, the party seeking such policy shall notify
the other thereof, and the latter shall have ten (10) days thereafter to either
(i) procure such insurance with companies reasonably

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satisfactory to the other party or (ii) agree to pay such additional premium. If
neither (i) nor (ii) are done, the other party is relieved of the obligation to
obtain a waiver of subrogation with respect to the particular insurance
involved. If such policies shall at any time be unobtainable, but shall be
subsequently obtainable, neither party shall be subsequently liable for a
failure to obtain such insurance until a reasonable time after notification
thereof by the other party.

        20.8.   Landlord may require insurance policy limits to be raised to
conform with requirements of Landlord's lender and/or to bring coverage limits
to levels then being required of comparable tenants in comparable buildings.

21.     Damage or Destruction

        21.1.   In the event of a partial destruction of the Building by fire or
other perils covered by extended coverage insurance which can be repaired,
reconstructed or restored within a period of six (6) months from the date of the
happening of such casualty, Landlord shall commence and proceed diligently with
the work of repair, reconstruction and restoration and this Lease shall continue
in full force and effect.

        21.2.   In the event of any damage to or destruction of the Building,
other than as provided in Section 21.1, either Landlord or Tenant may, at its
option, upon written notice to the other party given within sixty (60) days
after the occurrence of such damage or destruction elect to terminate this Lease
as of the date of occurrence of the damage or destruction. In the event neither
Landlord nor Tenant shall elect to terminate this Lease, Landlord shall repair,
reconstruct and restore the Building, in which case this lease shall continue in
full force and effect.

        21.3    Within thirty (30) days of the date of occurrence of the damage
or destruction, Landlord shall give written notice to Tenant of its
determination of whether the damage or destruction can be completed within six
(6) months from the date of the damage or destruction.

        21.4.   Upon any termination of this Lease under any of the provisions
of this Article, the parties shall be released thereby without further
obligation of the other from the date possession of the Demised Premises is
surrendered to the Landlord except for items which have theretofore occurred.

        21.5.   In the event of repair, reconstruction and restoration as herein
provided, the rental provided to be paid under this Lease shall be abated
proportionately based on the extent to which Tenant's use of the Demised
Premises is impaired during the period of such repair, reconstruction or
restoration.

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        21.6    Notwithstanding anything to the contrary contained in this
Article, should Landlord be delayed or prevented from completing the repair or
restoration of the damage to the Demised Premises after the occurrence of such
damage or destruction by reason of acts of God or war, governmental
restrictions, inability to procure the necessary labor or materials, strikes, or
other uses beyond the control of the Landlord, the time for Landlord to commence
or complete repairs shall be extended, provided, at the election of Landlord,
Landlord shall be relieved of its obligation to make such repairs or restoration
and Tenant shall be released from its obligation under this Lease as of the end
of eight (8) months from date of destruction, if repairs required to provide
Tenant use of the Demised Premises are not then substantially complete.

        21.7.   If Landlord is obligated to or elects to repair or restore as
herein provided, Landlord shall be obligated to make repairs or restoration only
of those portions of the Building and the Demised Premises which were originally
provided at Landlord's expense; the repair and restoration of items not provided
at Landlord's expense shall be the obligation of Tenant. In the event Tenant
elected to upgrade certain improvements from the standard normally provided by
Landlord, Landlord shall upon the need for replacement due to an insured loss,
provide only the standard Landlord improvements unless Tenant shall elect to
again upgrade and pay any additional cost of such upgrades, except to such
extent as insurance proceeds which, if received, the excess proceeds are
adequate to provide such upgrades, in addition to providing for basic
reconstruction and standard improvement.

        21.8.   Notwithstanding anything to the contrary contained in this
Article, Landlord shall not have any obligation whatsoever to repair,
reconstruct or restore the Demised Premises when the damage resulting from any
casualty covered under this Article occurs during the last twenty-four (24)
months of the term of this Lease or any extension hereof, or to the extent that
insurance proceeds are not available therefor. If Landlord makes such election,
Tenant shall have the right to terminate this Lease as of the date of the
occurrence of the damage or destruction upon written notice to Landlord within
sixty (60) days after the occurrence of the damage or destruction.

22.     Eminent Domain

        22.1.   In the event the whole of the Demised Premises, or such part
thereof as shall substantially interfere with the Tenant's use and occupancy
thereof, shall be taken for any public or quasi-public purpose by any lawful
power or authority by exercise of the right of appropriation, condemnation or
eminent domain, or sold to prevent such taking, Tenant or Landlord may terminate
this Lease effective as of the date possession is required to be surrendered to
said authority.

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        22.2.   In the event of a partial taking of the Building, the
Project or of drives, walkways, and parking areas serving the Building or the
Project for any public or quasi-public purpose by any lawful power or authority
by exercise of right of appropriation, condemnation, or eminent domain, or sold
to prevent such taking, then without regard as to whether any portion of the
Demised Premises occupied by Tenant was so taken, Landlord may elect to
terminate this Lease as of such taking if such taking is, in the sole opinion of
the Landlord, of a material nature such as to make it uneconomical to continue
use of the unappropriated portion for purposes of office rentals or laboratory
space.

        22.3.   Tenant shall be entitled to any award which is specifically
awarded as compensation for the taking of Tenant's personal property, which was
installed at Tenant's expense and for costs of Tenant moving to a new location.
Except as before set forth, any award for such taking shall belong to Landlord.

        22.4.   If upon any taking of the nature described in this Article 22
this Lease continues in effect, the Landlord shall promptly proceed to restore
the Demised Premises, Building, and the Project to substantially their same
condition prior to such partial taking. To the extent such restoration is
feasible, as determined by Landlord in its reasonable discretion, the Rent shall
be abated proportionately based upon the extent to which Tenant's use of the
Demised Premises has decreased on the basis of the percentage of the rental
value of the Demised Premises after such taking and the rental value of the
Demised Premises prior to such taking.

23.     Defaults and Remedies

        23.1.   Late Payment by Tenant to Landlord of Rent and other sums due
will cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which will be extremely difficult and impracticable to ascertain. Such
costs include, but are not limited to, processing and accounting charges and
late charges which may be imposed on Landlord by the terms of any mortgage or
trust deed covering the Demised Premises. Therefore, if any installment of Rent
due from Tenant is not received by Landlord within five (5) days after the date
such payment is due, Tenant shall pay to Landlord an additional sum of six
percent (6%) of the overdue Rent as a late charge. The parties agree that this
late charge represents a fair and reasonable estimate of the costs that Landlord
will incur by reason of late payment by Tenant. In addition to the late charge,
Rent not paid when due shall bear interest from the 5th day after date due until
paid at the lesser of (i) twelve percent (12%)per annum or (ii) the maximum rate
permitted by law.

        23.2.   No payment by Tenant or receipt by Landlord of a lesser amount
than the Rent payment herein stipulated shall be deemed to be other than on
account of the Rent, 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 Landlord may

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accept such check or payment without prejudice to Landlord's right to recover
the balance of such Rent or pursue any other remedy provided. If at any time a
dispute shall arise as to any amount or sum of money to be paid by Tenant to
Landlord, Tenant shall have the right to make payment "under protest" and such
payment shall not be regarded as a voluntary payment, and there shall survive
the right on the part of Tenant to institute suit for recovery of the payment
paid under protest.

        23.3.   If Tenant fails to pay any sum of money (other than Basic Annual
Rent) required to be paid by it hereunder, or shall fail to perform any other
act on its part to be performed hereunder and the applicable cure periods
provided for under Section 23.4 hereof have expired, Landlord may, without
waiving or releasing Tenant from any obligations of Tenant, but shall not be
obligated to, make such payment or perform such act. All sums so paid or
incurred by Landlord, together with interest thereon, from the date such sums
were due until Landlord receives the payment, at the annual rate equal to twelve
percent (12%) per annum or highest rate permitted by law, whichever is less,
shall be payable to Landlord on demand as Additional Rent.

        23.4.   The occurrence of any one or more of the following events shall
constitute a "Default" hereunder by Tenant:

                23.4.1  The abandonment or vacation of the Demised Premises by
Tenant;

                23.4.2. The failure by Tenant to make any payment of Rent, as
and when due, and said failure is either the first or second such failure within
any calendar year, and such failure shall continue for a period often (10) days
after written notice thereof from Landlord to Tenant. Such notice shall be in
lieu of, and not in addition to, any notice required under California Code or
Civil Procedure Section 1161. On the third failure by Tenant to make any payment
of Rent, as and when due, during any calendar year, no notice from Landlord will
be required.

                23.4.3. The failure by Tenant to observe or perform any
obligation or covenant contained herein (other than described in Section 23.4.1
and 23.4.2)to be performed by Tenant, where such failure shall continue for a
period of ten (10) days after written notice thereof from Landlord to Tenant.
Such notice shall be in lieu of, and not in addition to, any notice required
under California Code or Civil Procedure Section 1161; provided that if the
nature of Tenant's default is such that it reasonably requires more than ten
(10) days to cure, then Tenant shall not be deemed to be in default if Tenant
shall commence such cure within said ten (10) day period and thereafter
diligently prosecute the same to completion provided, however, that such cure is
completed no later than thirty (30) days from the date of written notice;

                23.4.4. Tenant makes an assignment for the benefit of creditors;

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                23.4.5. A receiver, trustee or custodian is appointed to, or
does, take title, possession or control of all, or substantially all, of
Tenant's assets;

                23.4.6. Tenant files a voluntary petition under the Bankruptcy
Code (or any similar law) or an order for relief is entered against Tenant
pursuant to a voluntary or involuntary proceeding commenced under any chapter of
the Bankruptcy Code;

                23.4.7  Any involuntary petition if filed against the Tenant
under any chapter of the Bankruptcy Code and is not dismissed within ninety (90)
days; or

                23.4.8. Tenant's interest in this Lease is attached, executed
upon, or otherwise judicially seized and such action is not released within
ninety (90) days of the action.

Notices given under this Section shall specify the alleged default and shall
demand that Tenant perform the provisions of this Lease or pay the Rent that is
in arrears, as the case may be, within the applicable period of time, or quit
the Demised Premises. No such notice shall be deemed a forfeiture or a
termination of this Lease unless Landlord elects otherwise in such notice.

        23.5.   In the event of a Default by Tenant, and at any time thereafter,
with or without notice or demand and without limiting Landlord in the exercise
of any right or remedy which Landlord may have, Landlord shall be entitled to
terminate Tenant's right to possession of the Demised Premises by any lawful
means, in which case this Lease shall terminate and Tenant shall immediately
surrender possession of the Demised Premises to Landlord. In such event,
Landlord shall have the immediate right to re-enter and remove all persons and
property, and such property may be removed and stored in a public warehouse or
elsewhere at the cost of, and for the account of Tenant, all without service
notice or resort to legal process and without being deemed guilty of trespass,
or becoming liable for any loss or damage which may be occasioned thereby. In
the event that Landlord shall elect to so terminate this Lease, then Landlord
shall be entitled to recover from Tenant all damages incurred by Landlord by
reason of Tenant's Default, including:

                23.5.1. The worth at the time of award of any unpaid Rent which
had been earned at the time of such termination; plus

                23.5.2. The worth at the time of award of the amount by which
the unpaid Rent which would have been earned after termination until the time of
award exceeds that portion of such rental loss which Tenant proves could have
been reasonably avoided; plus

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                23.5.3. The worth at the time of award of the amount by which
the unpaid Rent for the balance of the term after the time of award exceeds the
amount of such rental loss which Tenant proves could have been reasonably
avoided; plus

                23.5.4. Any other amount necessary to compensate Landlord for
all the detriment proximately caused by tenant's failure to perform its
obligation under this Lease or which in the ordinary course of things would be
likely to result therefrom, including, but not limited to, the cost of restoring
the Demised Premises to the condition required under the terms of this Lease;
plus

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

As used in Subsections 23.5.1 and 23.5.2 above, "worth at the time of award"
shall be computed by allowing interest at the rate specified in Section 23.1. As
used in Subsection 23.5.3 above, the "worth at the time of the award" shall be
computed by taking the present value of such amount, by using the discount rate
at the Federal Reserve Bank of San Francisco at the time of the award plus six
(6) percentage points.

        23.6.   If Landlord does not elect to terminate this Lease as provided
in this section, then Landlord may, from time to time, recover all Rent as it
becomes due under this Lease. At any time thereafter, Landlord may elect to
terminate this Lease and to recover damage to which Landlord is entitled.

        23.7.   In the event Landlord elects to terminate this Lease and relet
the Demised Premises, it may execute any new lease in its own name. Tenant
hereunder shall have no right or authority whatsoever to collect any Rent from
such tenant. The proceeds of any such reletting shall be applied as follows:

                First, to the payment of any indebtedness other than Rent due
hereunder from Tenant to Landlord, including, but not limited to, storage
charges or brokerage commissions owing from Tenant to Landlord as the result of
such reletting;

                Second, to the payment of the costs and expenses of reletting
the Demised Premises, including alterations and repairs which Landlord deems
reasonably necessary and advisable and reasonable attorneys' fees, charges and
disbursements incurred by Landlord in connection with the retaking of the
Demised Premises and such reletting;

                Third, to the payment of Rent and other charges due and unpaid
hereunder; and

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                Fourth, to the payment of future Rent and other damages payable
by Tenant under this Lease.

        23.8.   All rights, options, and remedies of Landlord contained in this
Lease shall be construed and held to be nonexclusive and cumulative. Landlord
shall have the right to pursue any one or all of such remedies or any other
remedy or relief which may be provided by law, whether or not stated in this
Lease. No waiver of any default of Tenant hereunder shall be implied from any
acceptance by Landlord of any Rent or other payments due hereunder or an
omission by Landlord to take any action on account of such default if such
default persists or is repeated, and no express waiver shall affect defaults
other than as specified in said waiver.

        23.9.   Termination of this Lease or Tenant's right to possession by
Landlord shall not relieve Tenant from any liability to Landlord which has
therefore accrued or shall arise based upon events which occurred prior to the
last to occur of (i) the date Lease termination or (ii) the date possession of
Demised Premises is surrendered.

        23.10.  Landlord shall not be in default unless Landlord fails to
perform obligations required of Landlord within a reasonable time, but in no
event shall such failure to continue be for more than thirty (30) days after
written notice by Tenant specifying wherein Landlord has failed to perform such
obligation; provided, however, that if the nature of Landlord's obligation is
such that more than thirty (30) days are required for performance, then Landlord
shall not be in default if Landlord commences performance within such thirty
(30) day period and thereafter diligently prosecutes the same to completion.

        23.11.  In the event of any default on the part of Landlord, Tenant will
give notice by registered or certified mail to any beneficiary of a deed of
trust or mortgagee of a mortgage covering the Demised Premises and to any
landlord of any lease of any building in which the Demised Premises are located
whose address shall have been furnished, and Tenant shall offer such
beneficiary, mortgagee and/or landlord a reasonable opportunity to cure the
default, including time to obtain possession of the Building by power of sale or
a judicial action if such should prove necessary to effect a cure, provided the
Landlord shall have furnished to Tenant in writing the names and addresses of
all such persons who are to receive such notices.

24.     Assignment or Subletting

        24.1.   Except as hereinafter provided, Tenant shall not, either
voluntarily or by operation of law, directly or indirectly, sell, hypothecate,
assign, pledge, encumber or otherwise transfer this Lease, or sublet the Demised
Premises or any part thereof, or permit or suffer the Demised Premises or any
part thereof to be used or occupied as work

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space, storage space, mailing privileges, concession or otherwise by anyone
other than Tenant or Tenant's employees, without the prior written consent of
Landlord in each instance, which consent shall not unreasonably withheld.

        24.2.   If Tenant is a corporation, the shares of which are not actively
traded upon a stock exchange or in the over-the-counter market, a transfer or
series of transfers whereby fifty percent (50%) or more of the issued and
outstanding shares of such corporation are, or the voting control is,
transferred (but excepting transfers upon deaths of individual shareholders)
from a person or persons or entity or entities which were owners thereof at time
of execution of this Lease to persons or entities who were not owners of shares
of the corporation at time of execution of this Lease shall be deemed an
assignment of this Lease requiring the consent of Landlord as provided in
Section 24.1 above.

        24.3    If Tenant desires to assign this Lease to an affiliate of
Tenant, provided that the assignee first executes, acknowledge and delivers to
Landlord an agreement whereby the assignee agrees to be bound by all of the
covenants and agreements in this Lease and that the assignee shall have a net
worth (determined in accordance with generally accepted accounting principles
consistently applied) immediately after such assignment which is at least equal
to the net worth (as so determined) of Tenant immediately prior to the
assignment (or as of the date hereof, if greater), then Landlord, upon receipt
of proof of foregoing, shall acknowledge such assignment, and such assignment
will not be subject to Landlord's consent.

        24.4.   If Tenant desires to assign this Lease to any entity into which
Tenant is merged, with which Tenant is consolidated, or which acquires all or
substantially all of the assets of Tenant, provided that the assignee first
executes, acknowledge and delivers to Landlord an agreement whereby the assignee
agrees to be bound by all of the covenants and agreements in this Lease and that
the assignee shall have a net worth (determined in accordance with generally
accepted accounting principles consistently applied) immediately after such
assignment which is at least equal to the net worth (as so determined) of Tenant
immediately prior to the assignment (or as of the date hereof, if greater), then
Landlord, upon receipt of proof of foregoing, agrees not to unreasonably
withhold consent from such assignment.

        24.5.   In the event Tenant desires to assign, sublease, hypothecate or
otherwise transfer this Lease or sublet the Demised Premises, then at least
forty-five (45) days, but not more than ninety (90) days, prior to the date when
Tenant desires the assignment or sublease to be effective (the "Assignment
Date"), Tenant shall give Landlord a notice (the "Assignment Notice") containing
information (including references) concerning the character of the proposed
assignee or sublessee, the Assignment Date, any ownership or commercial
relationship between Tenant and the proposed assignee or sublessee, and the

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consideration and all other material terms and conditions of the proposed
assignment or sublease along with such other information as Landlord may
reasonably require, all in such detail as Landlord shall reasonably require.
Tenant shall also tender to Landlord reasonable attorneys fees and other costs
or overhead expenses incurred by Landlord in reviewing Tenant's request for such
assignment.

        24.6.   Landlord in making its determination as to whether consent
should be given to a proposed assignment or sublease, may give consideration to
the financial strength of such successor to undertake the obligation of the
transfer (notwithstanding the assignor remaining liable for Tenant's
performance), any change in use which such successor proposes to make in use of
Demised Premises and desire of Landlord to exercise rights under Section 24.11
to obtain cancellation of this Lease. In no event shall Landlord be deemed to be
unreasonable for declining to consent to transfer to a successor of poor
reputation, lacking financial qualifications to undertake the obligations of the
transfer, or seeking change in use.

        24.7.   As conditions precedent to Landlord considering a request by
Tenant to Tenant's transfer of rights or sharing of the Demised Premises,
Landlord may require any or all of the following:

                24.7.1. Tenant shall remain fully liable under this Lease during
the unexpired Term;

                24.7.2. Tenant shall provide Landlord with evidence reasonably
satisfactory to Landlord that the value of Landlord's interest under this Lease
will not thereby be diminished or reduced. Such evidence shall include, but need
not be limited to, evidence respecting the relevant business experience and
financial responsibility to undertake the obligations of the transfer and status
of the third party concerned;

                24.7.3. Tenant shall pay Landlord's actual costs and expenses,
including, without limitation, reasonable attorneys' fees, charges and
disbursements incurred in connection with the review, processing and
documentation of such request;

                24.7.4. If Tenant's transfer of rights or sharing of the Demised
Premises provides for the receipt by, on behalf or on account of Tenant of any
consideration of any kind whatsoever (including, but not by way of limitation, a
premium rental for a sublease or lump sum payment for an assignment) in excess
of the rental and other charges due Landlord under this Lease, Tenant shall pay
Fifty percent (50%) of the Profits (as hereinafter defined) to Landlord. If said
consideration consists of cash paid to Tenant, said payment to Landlord shall be
made upon receipt by Tenant of said cash payment. With respect to any assignment
or sublease, the definition of Profits shall be the sum of the gross revenue
received from the sublessee or assignee during the period of the

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sublease term or during the assignment with respect to the space covered by the
sublease or the assignment less the Rent paid to Landlord by Tenant during the
period of the sublease term or during the assignment with respect to the space
covered by the sublease or the assignment;

                24.7.5. Written agreement from any third party concerned that in
the event Landlord gives such third party notice that Tenant is in default under
this Lease, such third party shall hereafter make all payments otherwise due
Tenant directly to Landlord, which payments will be received by Landlord without
any liability on Landlord except to credit such payment against those due under
the Lease from Tenant, and any such third party shall agree to attorn to
Landlord or its successors and assigns should this Lease be terminated for any
reason; provided, however that in no event shall Landlord or its successors or
assigns be obligated to accept such attornment;

                24.7.6. Any such transfer and consent shall be effected on forms
reasonably approved by Landlord as to form and substance;

                24.7.7. Tenant shall not then be in default hereunder in any
respect;

                24.7.8. Such third party's proposed use of the Demised Premises
shall be the same as Tenant's permitted use;

                24.7.9. Landlord shall not be bound by any provision of any
agreement pertaining to Tenant's transfer of rights or sharing of the Demised
Premises;

                24.7.10. Tenant shall deliver to Landlord one executed copy of
any and all written instruments evidencing or relating to Tenant's transfer of
rights or sharing of the Demised Premises; and

                24.7.11. A list of Hazardous Materials (as defined in Section
38.6 below), certified by the proposed sublesseee to be true and correct, which
the proposed sublessee intends to use or store in the Demised Premises shall be
delivered to Landlord. Additionally, Tenant shall deliver to Landlord, on or
before the date any proposed sublessee takes occupancy of the Demised Premises,
all of the items relating to Hazardous Materials of such proposed sublessee as
described in Section 3 8.1.1 below.

        24.8.   Any sale, assignment, hypothecation or transfer of this Lease or
subletting of the Demised Premises that is not in compliance with the provisions
of this Article 24 shall be void and shall, at the option of Landlord, terminate
this Lease.

        24.9.   The consent by Landlord to an assignment or subletting shall not
relieve Tenant or any assignees of this Lease or sublessee of the Demised
Premises from

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obtaining the consent of Landlord to any further assignment or subletting nor
shall it release Tenant or any assignee or sublessee of Tenant from full and
primary liability under the Lease.

        24.10.  Notwithstanding any subletting or assignment, Tenant shall
remain fully and primarily liable for the payment of all Rent and other sums
due, or to become due hereunder, and for the full performance of all other
terms, conditions, and covenants to be kept and performed by Tenant. The
acceptance of Rent or any other sum due hereunder or the acceptance of
performance of any other term, covenant, or condition thereof, from any other
person or entity shall not be deemed to be a waiver of any of the provisions of
this Lease or a consent to any subletting, assignment or other transfer of the
Demised Premises.

        24.11.  If Tenant delivers to Landlord an Assignment Noticed indicating
a desire to transfer all of the entire Demised Premises of this Lease to a
transferee, then Landlord shall have the option, exercisable by giving notice to
Tenant at any time within ten (10) days after Landlord's receipt of the
Assignment Notice, to terminate this Lease as of the date specified in the
Assignment Notice as the Assignment Date. If Landlord exercises such option,
then Tenant shall have the right to withdraw such Assignment Notice by delivery
to Landlord written notice of such election within five (5) days after
Landlord's delivery of notice electing to exercise such option to terminate. In
the event Tenant withdraws the Assignment Noticed as hereinabove provided, this
Lease shall continue in full force and effects as if such Assignment Notice as
hereinabove provided, this Lease, and the term and estate herein granted, shall
terminate as of the Assignment Date. No failure of Landlord to exercise any such
option to terminate this Lease shall be deemed to be Landlord's consent to the
proposed Assignment, Sublease or other Transfer.

        24.12.  If Tenant shall sublet the Demised Premises or any part, Tenant
hereby immediately and irrevocably assigns to Landlord, as security for Tenant's
obligations under this Lease, all rent from any subletting of all or a part of
the Demised Premises and Landlord as assignee and as attorney-in-fact for
Tenant, or a receiver for Tenant appointed on Landlord's application, may
collect such rent and apply it toward Tenant's obligations under this Lease;
except that, until the occurrence of an act of Default by Tenant, Tenant shall
have the right to collect such rent.

25.     Attorneys' Fees

        25.1.   If either party commences an action against the other party
arising out of or in connection with this Lease, the prevailing party shall be
entitled to have and recover from the non-prevailing party reasonable attorneys'
fees, charges and disbursements and costs of suit.

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26.     Bankruptcy

        26.1,   In the event a debtor, trustee, or debtor in possession under
the Bankruptcy Code, or other person with similar rights, duties and powers
under any other law, proposes to cure any default under this Lease or to assume
or assign this Lease, and is obligated to provide adequate assurance to Landlord
that (i) a default will be cured, (ii) Landlord will be compensated for its
damages arising from any breach of this Lease, or (iii) future performance under
this Lease will occur, then adequate assurance shall include any or all of the
following, as designated by Landlord:

                26.1.1. Those acts specified in the Bankruptcy Code or other law
as included within the meaning of adequate assurance, even if this Lease does
not concern a shopping center or other facility described in such laws;

                26.1.2. A prompt cash payment to compensate Landlord for any
monetary defaults or actual damages arising directly from a breach of this
Lease;

                26.1.3. A cash deposit in an amount at least equal to the
Security Deposit as referenced in 2.1.9 originally required at time of execution
of this Lease.

                26.1.4. The assumption or assignment of all of Tenant's interest
and obligations under this Lease.

27.     Estoppel Certificate

        Tenant shall within ten (10) days of written notice from Landlord,
execute, acknowledge and deliver a statement in writing substantially in the
form attached to this Lease as Exhibit "D" with the blanks filled in, and on any
other form reasonably requested by a proposed lender or purchaser, (i)
certifying that this Lease is unmodified and in full force and effect (or, if
modified, stating the nature of such modification and certifying that this Lease
as so modified is in full force and effect) and the dates to which the rental
and other charges are paid in advanced, if any, (ii) acknowledging that there
are not, to Tenant's knowledge, any uncured defaults on the part of Landlord
hereunder, or specifying such defaults if any are claimed and (iii) setting
forth such further information with respect to this Lease or the Demised
Premises as may be requested thereon. Any such statement may be relied upon by
any prospective purchaser or encumbrancer of all or any portion of the real
property of which the Demised Premises are a part. Tenant's failure to deliver
such statement within such time shall, at the option of Landlord, constitute a
Default under this Lease, and, in any event, shall be conclusive upon Tenant
that the Lease is in full force and effect and without modification except as
may be represented by Landlord in any certificate prepared by Landlord and
delivered to Tenant for execution.

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28.     Joint and Several Obligations

        28.1.   If more than one person or entity executes this Lease as Tenant,

                28.1.1. Each of them is jointly and severally liable for the
keeping, observing and performing of all of the terms, covenants, conditions,
provisions and agreements of this Lease to be kept, observed and performed by
Tenant, and

                28.1.2. The term "Tenant" as used in this Lease shall mean and
include each of them jointly and severally. The act of, notice from, notice to,
refund to, or the signature of, any one or more of the, with respect to the
tenancy of this Lease, including, but not limited to, any renewal, extension,
expiration, termination or modification of this Lease, shall be binding upon
each and all of the persons executing this Lease as Tenant with the same force
and effect as if each and all of them had so acted, so given or received such
notice or refund or so signed.

29.     Definition of Landlord: Limitation of Landlord's Liability

        29.1.   The term "Landlord" as used in this Lease, so far as covenants
or obligations on the part of Landlord are concerned, shall be limited to mean
and include only Landlord or the successor-in-interest of Landlord under this
Lease at the time in question. In the event of any transfer, assignment or the
conveyance of Landlord's title or leasehold, the Landlord herein named (and in
case of any subsequent transfers or conveyances, the then grantor) shall be
automatically freed and relieved from, and after the date of such transfer,
assignment or conveyance, of all liability for the performance of any covenants
or obligations contained in this Lease thereafter to be performed by Landlord
and, without further agreement, the transferee of such title or leasehold shall
be deemed to have assumed and agreed to observe and perform any and all
obligations of Landlord hereunder, during its ownership or ground lease of the
Demised Premises. Landlord may transfer its interest in the Demised Premises or
this Lease without the consent of Tenant and such transfer or subsequent
transfer shall not be deemed a violation on the part of Landlord or the then
grantor of any of the terms or conditions of this Lease.

        29.2.   If Landlord is in default of this Lease, and as a consequence,
Tenant recovers a money judgment against Landlord, the judgment shall be
satisfied only out of Landlord's equity interest in the Project, insurance
proceeds received by Landlord or the proceeds of sale received on execution of
the judgment and levy against the right, title and interest of Landlord in the
Building, and out of rent or other income from such real property receivable by
Landlord or out of the consideration received by Landlord from the sale,
financing, refinancing, or other disposition of all or any part of Landlord's
right, title, and interest in the Building.

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        29.3.   Landlord shall not be personally liable for any deficiency. If
Landlord is a partnership or joint venture, the partners of such partnership
shall not be personally liable and no partner of Landlord shall be sued or named
as a party in any suit or action or service of process be made against any
partner of Landlord except as may be necessary to secure jurisdiction of the
partnership or joint venture. If Landlord is a corporation, the shareholders,
directors, officers, employees, and/or agents of such corporation shall not be
personally liable and no shareholder, director, officer, employee or agent of
Landlord shall be sued or named as a party in any suit or action or service of
process made against any shareholder, director, officer, employee or agent of
Landlord. No partner, shareholder, director, employee, or agent of Landlord
shall be required to answer or otherwise plead to any service of process and no
judgment will be taken or writ of execution levied against any partner,
shareholder, director, employee or agent of Landlord.

        29.4.   Each of the covenants and agreements of this Article 29 shall be
applicable to any covenant or agreement either expressly contained in this Lease
or imposed by statute or by common law and shall survive the termination of this
Lease.

30.     Project Control bv Landlord

        30.1.   Landlord reserves full control over the Building and the Project
to the extent not inconsistent with Tenant's enjoyment of the Demised Premises.
This reservation includes but is not limited to right of Landlord to expand the
Project, the right to grant easements and licenses to others and the right to
maintain or establish ownership of the Building separate from fee title to land
on which the Building is located as long as Tenant's use of and quiet enjoyment
of the Demised Premises shall not be adversely affected.

        30.2.   Tenant shall, should Landlord so request, promptly join with
Landlord in execution of such documents as may be reasonably appropriate to
assist Landlord to implement any such action provided Tenant need not execute
any document which is of nature wherein liability is created in Tenant, Tenant's
obligations under this Lease are materially changed or increased or if by reason
of the terms of such document, Tenant will be deprived of the quiet enjoyment
and use of the Demised Premises as granted by this Lease.

        30.3.   Landlord may, at any and all reasonable times during
non-business hours (or during business hours if Tenant so requests), and upon
reasonable advance notice (provided that no time restrictions shall apply or
advance notice need be given if an emergency necessitates an immediate entry),
enter the Demised Premises to (a) inspect the same and to determine whether
Tenant is in compliance with its obligations

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hereunder, (b) supply any service Landlord is required to provide hereunder, (c)
show the Demised Premises to prospective lenders, insurers, investors,
purchasers or tenants, (d) post notices of nonresponsibility, (e) access the
telephone equipment, electrical substation and fire risers, and (f) alter,
improve or repair any portion of the Building other than the Demised Premises,
but for which access to the Demised Premises is necessary. Such entry shall be
accomplished as expeditiously as reasonably possible and in a manner so as to
cause as little interference to Tenant as reasonably possible. In connection
with any such alteration, improvement or repair, Landlord may erect in the
Demised Premises or elsewhere in the Building or the Project scaffolding and
other structures reasonably required for the work to be performed. In no event
shall Tenant's Rent abate as a result of any such entry or work; provided,
however, that all such work shall be done in such a manner as to cause as little
interference to Tenant as reasonably possible. Landlord shall at all times
retain a key with which to unlock all of the doors in the Demised Premises. If
an emergency necessitates immediate access to the Demised Premises, Landlord may
use whatever forces necessary to enter the Demised Premises and any such entry
to the Demised Premises shall not constitute a forcible or unlawful entry to the
Demised Premises, a detainer of the Demised Premises, or an eviction of Tenant
from the Demised Premises, or an portion thereof.

31.     Quiet Eniovment

        So long as Tenant is not in default, Landlord covenants that Landlord or
anyone acting through or under Landlord will not disturb Tenant's occupancy of
the Demised Premises except as permitted by the provision of this Lease.

32.     Quitclaim Deed

        Tenant shall execute and deliver to Landlord on the expiration or
termination of this Lease, immediately on Landlord's request, in recordable
form, a quitclaim deed to the Demised Premises or such other documentation
reasonably requested by Landlord evidencing termination of this Lease.

33.     Rules and Regulations

        Tenant shall faithfully observe and comply with the Rules and
Regulations attached hereto as Exhibit "C" and all reasonable and
nondiscriminatory modifications thereof and additions thereto from time to time
put into effect by Landlord. Landlord agrees that the Rules and Regulations
shall not be changed, revised or enforced in any unreasonable way by Landlord,
nor modified or added to by Landlord in such a way as to interfere with Tenant's
permitted use of the Demised Premises set forth in the Lease. Landlord shall not
enforce the Rules and Regulations in an unreasonable manner or in a manner which
shall unreasonably interfere with the normal and customary use of the

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Demised Premises by Tenant for normal and customary business operations
permitted under Lease Section 2.1.10,

34.     Subordination and Attornment

        34.1.   This Lease shall be subject and subordinate to the lien of any
first mortgage, first deed of trust, or lease in which Landlord is tenant
("Superior Lienholder") now or hereafter in force against the Project and the
Building and to all advances made or hereafter to be made upon the security
thereof without the necessity of the execution and delivery of any further
instruments on the part of Tenant to effectuate such subordination. The
enforceability of the proceeding by a Superior Lienholder shall be subject to
Tenant's receipt of a nondisturbance and attornment agreement from the Superior
Lienholder in the form customarily provided by such Superior Lienholder. Such
agreement shall be in recordable form and Tenant shall pay all reasonable fees
and expenses associated with obtaining such agreement.

                34.1.1. Landlord hereby represents and warrants to Tenant that
as of the effective date of this Lease, no first mortgage, first deed of trust,
or lease in which Landlord is tenant, is in force against the Project.

        34.2.   Tenant shall execute and deliver upon demand such further
instrument or instruments evidencing such subordination of this lease to the
lien of any such mortgage or mortgages or deeds of trust or lease in which
Landlord is tenant as may be required by Landlord. However, if any such
mortgagee, beneficiary or Landlord under lease wherein Landlord is tenant so
elects, this Lease shall be deemed prior in lien to any such lease, mortgage, or
deed of trust upon or including the Demised Premises regardless of date and
Tenant will execute a statement in writing to such effect at Landlord's request.
If Tenant fails to execute any document required from Tenant under this Section
within ten (10) days after written request therefor, Tenant hereby constitutes
and appoints Landlord or its special attorney-in-fact to execute and deliver any
such document or documents in the name of Tenant. Such power is coupled with an
interest and is irrevocable.

        34.3.   In the event any proceedings are brought for foreclosure, or in
the event of the exercise of the power of sale under any mortgage or deed of
trust made by the Landlord covering the Demised Premises, the Tenant shall at
the election of the purchaser at such foreclosure or sale attorn to the
purchaser upon any such foreclosure or sale and recognize such purchaser as the
Landlord under this Lease.

35.     Surrender

        35.1.   No surrender of possession of any part of the Demised Premises
shall release Tenant from any of its obligations hereunder unless accepted by
Landlord.

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        35.2.   The voluntary or other surrender of this Lease by Tenant shall
not work a merger, unless Landlord consents and shall, at the option of
Landlord, operate as an assignment to it of any or all subleases or
subtenancies.

        35.3.   The voluntary or other surrender of any ground or underlying
lease that now exists or may hereafter be executed affecting the Building or
Project, or a mutual cancellation thereof, or of Landlord's interest therein,
shall not work a merger and shall, at the option of the successor of Landlord's
interest in the Building or Project, operate as an assignment of this Lease.

        35.4.   Upon the expiration or sooner termination of this Lease, Tenant
shall surrender the Demised Premises to Landlord broom clean and free of debris,
with all of Tenant's personal property and effects removed therefrom, with all
alterations, improvements and fixtures required by Landlord to be removed from
the Demised Premises actually removed and all damage as a result of or cause by
such removal repaired, and with all licenses, permits and similar items which
restrict or affect the use of the Demised Premises release and fully terminated.

36.     Waiver and Modification

        No provision of this Lease may be modified, amended or added to except
by an agreement in writing executed by both Landlord and Tenant. The waiver by
Landlord or Tenant of any breach of any term, covenant or condition herein
contained shall not be deemed to be a waiver or any subsequent breach of the
same or any other term, covenant or condition herein contained.

37.     Waiver of Jury Trial and Counterclaims

        THE PARTIES HERETO SHALL AND THEY HEREBY DO WAIVE TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO
AGAINST THE OTHER ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE
OR OCCUPANCY OF THE DEMISED PREMISES, AND OR ANY CLAIM OF INJURY OR DAMAGE.

38.     Hazardous Materials

        38.1.   Prohibition/Compliance Tenant shall not cause or permit any
Hazardous Material (as hereinafter defined) to be brought upon, kept or used in
or about the Demised

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Premises, the Building or the Project violation of applicable law by Tenant, its
agents, employees, contractors, or invitees. If Tenant breaches the obligation
stated in the preceding sentence, or if the presence of Hazardous Materials
results as a result of the activities of the Tenant, its contractors, invitees,
guests, agents or employees results in contamination of the Demised Premises,
the Building, the Project or any adjacent property, or if contamination of the
Demised Premises, the Building, the Project or any adjacent property by
Hazardous Material otherwise occurs during the term of this Lease or any
extension or renewal hereof or holding over hereunder, then Tenant shall
indemnify, defend and hold Landlord, its officers, directors, employees, agents
and contractors harmless from any and all claims, judgments, damages, penalties,
fines, costs, liabilities, or losses (including, without limitation, diminution
in value of the Demised Premises, the Building or any portion of the Project,
damages for the loss or restriction on use of rentable space or of any amenity
of the Demised Premises, the Building or the Project, damages arising from any
adverse impact on marketing of space in the Demised Premises, the Building or
the Project, and sums paid in settlement of claims, attorneys' fees, consultant
fees and expert fees) which arise during or after the Lease Term as a result of
such contamination as a result of the activities of the Tenant. This
indemnification of Landlord by Tenant includes, without limitation, costs
incurred in connection with any investigation of site conditions or any cleanup,
remedial, removal, or restoration work required by any federal, state or local
governmental agency or political subdivision because of Hazardous Material
present in the air, soil or ground water on or under the Demised Premises as a
result of the activities of the Tenant. Without limiting the foregoing, if the
presence of any Hazardous Material on the Demised Premises, the Building, the
Project or any adjacent property, caused or permitted by Tenant results in any
contamination of the Demised Premises, the Building, the Project or any adjacent
property, Tenant shall promptly take all actions at its sole expense as are
necessary to return the Demised Premises, the Building, the Project or adjacent
property to the condition existing prior to the time of such contamination,
provided that Landlord's approval of such action shall first be obtained, which
approval shall not unreasonably be withheld so long as such actions would not
potentially have any material adverse long-term or short-term effect on the
Demised Premises, the Building or the Project.

                38.1.1. Business Landlord acknowledges that it is not the intent
of this Article 38 to prohibit Tenant from operating its business as described
in Section 2.1.6 above. Tenant may operate its business according to the custom
of the industry so long as the use or presence of Hazardous Material is strictly
and properly monitored according to all applicable governmental requirements. As
a material inducement to Landlord to allow Tenant to use Hazardous Material in
connection with its business, Tenant agrees to deliver to Landlord prior to the
Term Commencement Date a list identifying each type and category for each type
of Hazardous Material to be present on the Demised Premises and setting forth
any and all governmental approvals or permits required in connection with the
presence of such Hazardous Material on the Demised Premises ("Hazardous

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Material List"). Tenant shall deliver to Landlord an updated Hazardous Material
List at least once a year and shall also deliver an updated list before any new
Hazardous Material is brought onto the Demised Premises. Tenant shall deliver to
Landlord true and correct copies of the following documents (the "Documents")
relating to the handling, storage, disposal and emission of Hazardous Material
prior to the Term Commencement Date, or if unavailable at that time, concurrent
with the receipt from or submission to a governmental agency: permits;
approvals; reports and correspondence; storage and management plans, notice of
violations of any laws; plans relating to the installation of any storage tanks
to be installed in or under the Building or the Project (provided, said
installation of tanks shall only be permitted in Landlord's sole and absolute
discretion); and all closure plans or any other documents required by any and
all federal, state and local governmental agencies and authorities for any
storage tanks installed in, on, or under the Building or the Project for the
closure of any such tanks. Tenant is not required, however, to provide Landlord
with any portion(s) of the Documents containing information of a proprietary
nature which, in and of themselves, do not contain a reference to any Hazardous
Material or hazardous activities. It is not the intent of this Section to
provide Landlord with information which could be detrimental to Tenant's
business should such information become possessed by Tenant's competitors.

        38.3.   Testing. At any time, and from time to time, prior to the
expiration or earlier termination of the Term, Landlord shall have the right to
conduct appropriate tests of the Demised Premises, Building and Project to
demonstrate that contamination has occurred as a result of Tenant's use of the
Demised Premises. Tenant shall be solely responsible for and shall defend,
indemnify and hold the Landlord, its agents and contractors harmless from and
against any and all claims, costs and liabilities including actual attorneys'
fees, charges and disbursements, arising out of or in connection with any
removal, clean up, restoration and materials required hereunder to return the
Demised Premises and any other property of whatever nature to their condition
existing prior to the time of any such contamination. Tenant shall pay for the
cost of the tests of the Demised Premises.

                38.3.1. Testing Prior to Term Commencement Date Landlord shall,
at its sole cost and expense and prior to delivering possession of the Demised
Premises to Tenant, conduct a Base Line Phase I Environmental Assessment ("Base
Line Study") a copy of which shall be provided to the Tenant.

                38.3.2. Testing at Lease Termination Landlord shall, at the sole
cost and expense of the Tenant, conduct a Base Line Study at the end of the Term
of the Lease or the Termination of the Lease, a copy of which shall be provided
to the Tenant. If the Base Line Study reveals contamination not revealed in the
Base Line Study conducted prior to the Term Commencement Date and such
contamination is the result of the activities of the Tenant, it's contractors,
invitees, guests, agents or employees, Tenant

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shall be solely responsible for and shall defend, indemnify and hold the
Landlord, its agents and contractors harmless from and against any and all
claims, costs and liabilities including actual attorneys' fees, charges and
disbursements, arising out of or in connection with any removal, clean up,
restoration and materials required hereunder to return the Demised Premises and
any other property of whatever nature to their condition existing prior to the
time of any such contamination.

        38.4.   Underground Tanks If underground or other storage tanks storing
Hazardous Materials are located on the Demised Premises or are hereafter placed
on the Demised Premises by any party, to the extent Tenant has actual knowledge
of the presence of such storage tanks on the Demised Premises, Tenant shall
monitor the storage tanks, maintain appropriate records, implement reporting
procedure, properly close any underground storage tanks, and take or cause to be
taken all other steps necessary or required under the California Administrative
Code, Title 23, chapter 3, Subchapter 16, "Underground Storage Tank
Regulations," and Division 20, chapter 6.7 of the California Health & Safety
Code, "Underground Storage of Hazardous Substances," as they now exist or may
hereafter be adopted or amended.

        38.5.   Tenant's Obligations Tenant's obligations under this Article 38
shall survive the expiration or earlier termination of the Lease. During any
period of time employed by Tenant or Landlord after the termination of this
Lease to complete the Removal from the Demised Premises of any such Hazardous
Materials and the release and termination of any licenses or permits restricting
the use of the Demised Premises, Tenant shall continue to pay the full Rent in
accordance with this Lease, which Rent shall be prorated daily.

        38.6.   Definition of "Hazardous Material." As used herein, the term
"Hazardous Material" means any hazardous or toxic substance, material or waste
which is or becomes regulated by any local governmental authority, the State of
California or the United States government. The term "Hazardous Material"
includes, without limitation, any material or substance which is defined as a
"hazardous waste", "extremely hazardous waste" or "restricted hazardous waste"
under Section 25515 or 25117, or listed pursuant to Section 25140, of the
California health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste
Control Law), (ii) defined as a "hazardous substance" under Section 25316 of the
California Health and Safety Code, Division 2, Chapter 6.8
(Carpenter-Presly-Tanner Hazardous Substance Account Act), (iii) defined as a
"hazardous material", "hazardous substance" or "hazardous waste" under Section
25501 of the California Health and Safety Code, Division 20, Chapter 6.95
(Hazardous Substances), (v) petroleum, (vi) asbestos, (vii) listed under Article
9 and defined as hazardous or extremely hazardous pursuant to Article 11 of the
Title 22 of the California Administrative Code, Division 4, Chapter 20, (viii)
designated as a "hazardous substance" pursuant to Section 311 of the Federal
Water Pollution Control Act (33 U.S.C. Section 1317), or (ix) defined as a
"hazardous waste"

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pursuant to Section 1004 of the Federal Resource Conversation and Recovery Act,
42 U.S.C. Section 6901, et. seq. (52 U.S.C. Section 6903), or (x) defined as a
"hazardous substance" pursuant to Section 101 of the Comprehensive Environmental
Response Compensation and Liability Act, 42 U.S.C. Section 9601 et. seq. (42
U.S.C. Section 9601).

39.     Miscellaneous

        39.1.   Terms and Headings Where applicable in this Lease, the singular
includes the plural and the masculine or neutral includes the masculine,
feminine and neuter. The section headings of this Lease are not a part of this
Lease and shall have no effect upon the construction or interpretation of any
part hereof.

        39.2.   Examination of Lease Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of or
option for lease, and it is not effective as a lease or otherwise until
execution by and delivery to both Landlord and Tenant.

        39.3.   Time is of the essence with respect to the performance of every
provision of this Lease in which time of performance is a factor. 39.4.
Covenants and Conditions Each provision of this Lease performable by Tenant
shall be deemed both a covenant and a condition.

        39.5.   Consents Whenever consent or approval of either party is
required, that party shall not unreasonably withhold, delay or condition such
consent or approval, except as maybe expressly set forth to the contrary.

        39.6.   Entire Agreement The terms of this Lease are intended by the
parties as a final expression of their agreement with respect to the terms as
are included herein, and may not be contradicted by evidence of any prior or
contemporaneous agreement. The Basic Lease Provisions, General Provisions, Work
Letter and Exhibits all constitute a single document and are incorporated
herein.

        39.7.   Severability Any provision of this Lease which shall provide to
be invalid, void, or illegal in no way affects, impairs or invalidates any other
provision hereof, and such other provisions shall remain in full force and
effect.

        39.8.   Recording Landlord may, but shall not be obligated to, record a
short form memorandum hereof without the consent of Tenant. Neither party shall
record this Lease. Landlord shall be responsible for the cost of recording any
Memorandum of Lease, including any transfer or other taxes incurred in
connection with said recordation,

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        39.9.   Impartial Construction. The language in all parts of this Lease
shall be in all cases construed as a whole according to its fair meaning and not
strictly for or against either Landlord or Tenant.

        39.10.  Inurement Each of the covenants, conditions and agreements
herein contained shall inure to the benefit of and shall apply to and be binding
upon the parties hereto and their respective heirs, legatees, devises,
executors, administrators, successors, assigns, sublessees, or any part thereof
in any manner whatsoever. Nothing in this Section 39.10 contained shall in any
way alter the provisions against assignment or subletting in this Lease
provided.

        39.11.  Notices Any notice, consent, demand, bill, statement, or other
communication required or permitted to be given hereunder must be in writing and
may be given by personal delivery, reputable overnight courier or by mail, and
if given by mail shall be deemed sufficiently given two (2) days after time when
deposited in United States Mail if sent by registered or certified mail, and if
given by other means shall be deemed given when received, addressed to Tenant or
Landlord at the addresses shown in Section 2.1.11 of the Basic Lease Provisions.
Either party may, by notice to the other given pursuant to this Section, specify
additional or different addresses for notice purposes.

        39.12.  California Jurisdiction This Lease has been negotiated and
entered into in the State of California and shall be governed by, construed and
enforced in accordance with the laws of the State of California, applied to
contracts made in California for California domiciliaries to be wholly performed
in California.

        39.13   Authority That individual or those individuals signing this
Lease guarantee, warrant and represent that said individuals have the power,
authority and legal capacity to sign this Lease on behalf of and to bind all
entities, corporations, partnerships, joint ventures or other organizations
and/or entities on whose behalf said individual or individuals have signed.

40.     Option to Extend Term

        40.1,   Tenant shall have the option ("Option") to extend the term of
this Lease upon the following terms and conditions:

                40.1.1. Tenant shall have one (1) option to extend the term of
this Lease five (5) years on the same terms and conditions as this Lease. Basic
Annual Rent shall be adjusted on the first day of the renewal term to the then
prevailing market rental rate for buildings of similar age, size and
construction. On the date Tenant exercises the Option such prevailing market
rental rate will be negotiated between Landlord and Tenant.

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                40.1.2. The Option is not personal to Tenant and may be
exercised by any assignee or the Lease permitted under the terms of the Lease.
However, the Option herein granted is not assignable separate and apart from
this Lease.

                40.1.3. The Option is conditional upon Tenant giving Landlord
written notice of its election to exercise the Option at least one (1) year
prior to the end of the expiration of the initial term of this Lease.

                40.1.4. The Landlord and Tenant shall have sixty (60) days to
agree as to the prevailing market rate for the term of the Option. If the
Landlord and Tenant are unable to agree on the prevailing market rate, Landlord
and Tenant shall each engage an M.A.I. appraiser who shall then select a third
independent M.A.I. appraiser who shall, within sixty (60) days after the
appointment set the prevailing market rental rate for the term of the Option.
After the prevailing market rental rate has been set, the third independent
M.A.I. appraiser shall immediately notify both parties. If Tenant objects to the
prevailing market rental rate, Tenant shall have the right to have this Lease
expire at the end of the Term, and Tenant and Landlord shall share equally all
the costs in connection with the appraisal procedure that set the prevailing
market rental rate. Tenant's election to allow this Lease to expire at the end
of the Term must be exercised within ten (10) days after Tenant's receipt of
notice by the third independent appraiser of the prevailing market rental rate
for the Option. If Tenant does not exercise its election within the ten (10) day
period, the Term of this Lease shall be extended as provided in this Article 40.
In no event shall the prevailing market rental rate be less than the rental rate
of the final month of the Term of this Lease.

                40.1.5. Tenant shall not have the right to exercise any Option,
notwithstanding anything set forth above to the contrary:

                        a.      During the time commencing from the date
Landlord gives to Tenant a written notice that Tenant is in default under any
provisions of this Lease and continuing until the default alleged in said notice
is cured; or

                        b.      At any time after an event of Default as
described in Article 23, of the Lease (without any necessity of Landlord to give
notice of such default to Tenant) and continuing until any such default is
cured, if curable; or

                        c.      In the event that Tenant has defaulted in the
performance of its obligations three (3) or more times and a service charge has
become payable under Section 23.1 for each of such defaults during the
twelve-month period immediately prior to the date that Tenant intends to
exercise the Option, whether or not the defaults are cured.

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                40.1.6. The period of time within which the Option may be
exercised shall not be extended or enlarged by reason of the Tenant's inability
to exercise the Option because of the foregoing provisions of this Section.

                40.1.7. All rights of Tenant under the provisions of the Option
shall terminate and be of no further force or effect even after Tenant's due and
timely exercise of an Option, if, after such exercise, but prior to the
commencement date of the new term, (1) Tenant fails to pay to Landlord a
monetary obligation of Tenant for a period of Ten (10) days after written notice
from Landlord to Tenant; (2) Tenant fails to commence to cure a default (other
than monetary default) within Ten (10) days after the date Landlord gives notice
to Tenant of such default; or (3) Tenant has defaulted three (3) or more times
and a service charge under Section 23.1 has become payable for any such default,
during the period from the date of the exercise of such option to the date of
the commencement of such option term, whether or not such defaults are cured.

IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date
first above written.

                                        "TENANT"

                                        Trega Biosciences, Inc.
                                        a Delaware corporation

                                              By: /s/ Robert Whitehead
                                                 -------------------------------
                                              Robert S. Whitehead
                                              Its: President & CEO

                                        "LANDLORD"

                                        Aid Association for Lutherans
                                        a Wisconsin corporation

                                        By: /s/ Wayne Streck
                                           -------------------------------------
                                              Wayne C. Streck
                                              Its: Vice President, Mortgages and
                                              Real Estate

                                        By: /s/ Kenneth Podell
                                           -------------------------------------
                                              Kenneth E. Podell
                                              Its: Assistant Secretary

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