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                                                                   EXHIBIT 10.22


                                      LEASE


                                 by and between


                          SORRENTO VALLEY BUSINESS PARK

                                  ("Landlord")


                                       and
                          SIGNAL PHARMACEUTICALS, INC.
                                   ("Tenant")




                          For the 10,417 SF Premises at
                     5555 Oberlin Drive, San Diego, CA 92121




                                                    Multiple Tenant Modified Net
                                                    Multiple Building Project


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                                TABLE OF CONTENTS

                                                                      Page
                                                                      ----
 1.  PARTIES .........................................................  1
 2.  PREMISES ........................................................  1
 3.  LEASE TERM ......................................................  1
 4.  RENT ............................................................  1
 5.  CONDITION OF PREMISES ...........................................  2
 6.  USE .............................................................  2
 7.  ASSIGNMENT AND SUBLETTING .......................................  4
 8.  ALTERATIONS .....................................................  7
 9.  REPAIR AND MAINTENANCE ..........................................  8
10.  UTILITIES AND SERVICES .......................................... 11
11.  REAL PROPERTY TAXES ............................................. 11
12.  INSURANCE ....................................................... 13
13.  DAMAGE OR DESTRUCTION ........................................... 15
14.  NOTICES ......................................................... 16
15.  DEFAULT ......................................................... 17
16.  SURRENDER OF THE PREMISES ....................................... 20
17.  ATTORNEYS' FEES ................................................. 20
18.  LIENS ........................................................... 20
19.  RENTAL ADJUSTMENT ............................................... 21
20.  SUBORDINATION ................................................... 21
21.  MORTGAGEE PROTECTION ............................................ 21
22.  CONDEMNATION .................................................... 21
23.  HOLDING OVER .................................................... 22
24.  ENTRY BY LANDLORD ............................................... 22
25.  ESTOPPEL CERTIFICATES ........................................... 23
26.  TRANSFER OF THE PREMISES BY LANDLORD ............................ 23
27.  LANDLORD'S RIGHT TO PERFORM TENANT'S COVENANTS .................. 23
28.  TENANT'S REMEDY ................................................. 24
29.  SECURITY DEPOSIT ................................................ 24
30.  FINANCIAL COVENANTS ............................................. 24
31.  PARKING ......................................................... 24
32.  QUIET ENJOYMENT ................................................. 25
33.  MODIFICATIONS FOR LENDER ........................................ 25
34.  SIGNS ........................................................... 25
35.  ACCEPTANCE ...................................................... 25
36.  RECORDING ....................................................... 25
37.  QUITCLAIM ....................................................... 25
38.  BROKERS ......................................................... 25
39.  GENERAL ......................................................... 26


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EXHIBIT A              DIAGRAM OF PREMISES
EXHIBIT B              LEGAL DESCRIPTION
EXHIBIT C              WORK LETTER AGREEMENT
EXHIBIT D              COMMENCEMENT DATE MEMORANDUM
EXHIBIT E              TENANT IMPROVEMENT PLAN
EXHIBIT F              FIRST REFUSAL AREA
ADDENDUM


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                                  LEASE SUMMARY


Lease Date:              April 30, 1993

Landlord:                Sorrento Valley Business Park, a
                         California Limited Partnership

Address of Landlord      The Courson Company
                         2882 Sand Hill Road
                         Suite 250
                         Menlo Park, CA 94025

Tenant:                  Signal Pharmaceuticals, Inc.

Contact:                 Mark D. Carman, Ph.D.        Telephone: (619)756-9827
                         Jacqueline Johnson, Ph.D.

Premises:                10,417 Square Feet

Building Address:        5555 Oberlin Drive, Suite 100

City:                    San Diego

County:                  San  Diego

Tenant's Building Percentage:  44.74%

Tenant's Project Percentage:  9.96%

Anticipated Commencement Date:  October 1, 1993
Term:  Eighty-four (84) months
Initial Monthly Rent:  $16,146.35/month
Security Deposit:  $16,146.35
Broker:  CB Commercial Real Estate Group, Inc.


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                                      LEASE

                         (MULTIPLE TENANT MODIFIED NET)


PARTIES     1.    THIS LEASE (the "Lease"), dated April 30, 1993, is entered
            into by and between Sorrento Valley Business Park, a limited
            partnership ("Landlord"), whose address is 2882 Sand Hill Road,
            Suite 250, Menlo Park, CA 94025 and Signal Pharmaceuticals, Inc., a
            California corporation ("Tenant").

PREMISES    2.    Landlord hereby leases to Tenant and Tenant hereby leases from
            Landlord those certain premises consisting of approximately 10,417
            rentable square feet, as shown on Exhibit A attached hereto (the
            "Premises") , located in a one-story building (the "Building")
            commonly known as 5555 Oberlin Drive, Suite 100, San Diego,
            California 92121. The Premises are located on that real property
            commonly known as Sorrento Valley Business Park (the "Project") ,
            and more particularly described in Exhibit B attached hereto, which
            includes four buildings, adjacent parking areas, landscaping, and
            related improvements. Tenant's right to use the Outside Areas of the
            Project shall be a right in common with other tenants of the
            Project. For purposes of this Lease, "Outside Areas" shall mean all
            areas and facilities within the Project except for the Building and
            the other buildings located within the Project, including, but not
            limited to, parking areas, access and perimeter roads, sidewalks,
            landscaped areas, service areas, trash disposal facilities, and
            similar areas, subject to the reasonable rules and regulations and
            changes therein from time to time made by Landlord governing the use
            of the outside Areas.

LEASE       3.    A.    TERM. Except as set forth in the Letter Agreement by and
TERM        between Signal Pharmaceutical Inc. and the Landlord and dated July
            2, 1993 and July 7, 1993, respectively (the "Letter Agreements").
            The term of this Lease shall be a period of seven (7) years and zero
            (0) months commencing on the Commencement Date, hereinafter referred
            to as "Term" including any extensions hereunder.

                  B.    COMMENCEMENT DATE. The Commencement Date of the Lease
            shall be the earlier to occur of (i) the date Tenant begins to use
            the Premises for the conduct of its business therein, or (ii)
            December 1, 1993 ("Commencement Date"), which latter date may be
            adjusted by events of "Landlord Delay" or "Force Majeure" (as
            defined in the work letter agreement attached hereto as Exhibit C).

                  C.    COMMENCEMENT DATE MEMORANDUM. When the actual
            Commencement Date is determined, the parties shall execute a
            Commencement Date Memorandum setting forth such date in the form
            shown in Exhibit D.

                  D.    Deleted.

                  E.    EARLY ENTRY. At any time after the execution of this
            Lease, provided that Tenant shall not be in default hereunder beyond
            any applicable cure period, Tenant and Tenant's representatives may
            enter the Premises to install tenant improvements, trade fixtures
            and equipment in the Premises, and the date of such installation or
            work shall not be deemed the Commencement Date of the Lease or
            constitute possession of the Premises for purposes of this Lease;
            provided, however, that Tenant's use of the Premises during said
            period of time shall be at Tenant's sole risk and subject to all the
            terms and provisions applicable to Tenant under this Lease, except
            for the payment of Monthly Rent and Additional Rent, which shall
            commence on the Commencement Date.

                  F.    Deleted.

RENT        4.    A.    MONTHLY RENT. Tenant shall pay to Landlord, in lawful
            money of the United States, for each calendar month of the Term,


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            Monthly Rent in the amount of Sixteen Thousand One Hundred Forty-Six
            and 35/100ths Dollars ($16,146.35), subject to adjustment as
            provided in Paragraph 19, in advance, on the first day of each
            calendar month, without abatement, deduction, claim, offset, prior
            notice or demand, except as otherwise expressly provided herein.

                  B.    ADDITIONAL RENT. All monies required to be paid by
            Tenant under this Lease, including, without limitation, repair and
            maintenance charges pursuant to Paragraph 9, Real Property Taxes
            pursuant to Paragraph 11, and insurance premiums and deductibles
            pursuant to Paragraph 12, shall be deemed Additional Rent. The term
            "Rent" as used herein shall refer to Monthly Rent plus any
            Additional Rent.

                  C.    PRORATIONS. If the Commencement Date is not the first
            (1st) day of a month, or if the termination date of this Lease is
            not the last day of a month, a prorated installment of Monthly Rent
            based on a thirty (30) day month shall be paid for the fractional
            month during which the Lease commences or terminates.

CONDITION   5.    By taking possession of the Premises, Tenant shall be deemed
OF          to have accepted the Premises in good, clean and completed condition
PREMISES    and repair, subject to all applicable laws, codes and ordinances.
            Tenant acknowledges that neither Landlord nor its authorized agents,
            partners, subsidiaries, directors, officers, and employees
            ("Agents") have made any representations or warranties as to the
            suitability or fitness of the Premises for the conduct of Tenant's
            business or for any other purpose, nor has Landlord or its Agents
            agreed to undertake any Alterations (as defined below in Paragraph
            8) or construct any Tenant Improvements to the Premises except as
            expressly provided in this Lease.

USE         6.    A. TENANT'S USE. Tenant shall use the Premises solely for
            office, warehouse and biotechnology research (including animal
            research and a pilot plant manufacturing facility) as permitted in
            the current MlB zoning and shall not use the Premises for any other
            purpose, without the prior written consent of Landlord.

                  B.    CC&R'S. Tenant agrees that the Premises are subject and
            subordinate to those certain covenants, conditions and restrictions
            recorded at Series/Instrument #80-317016, of the Official Records of
            San Diego County, California, on September 29, 1980, a copy of which
            Tenant acknowledges has been delivered to it (the "CC&R's"). Tenant
            acknowledges that it has read the CC&R's and knows the contents
            thereof. Throughout the term, Tenant shall faithfully and timely
            perform and comply with the CC&R's and any modification or
            amendments thereto provided to Tenant, including the payment by
            Tenant of any periodic or special dues or assessments against the
            Premises.

                  C.    COMPLIANCE.

                        (i)   Tenant shall not use the Premises in a manner
            which will in any way conflict with any law, statute, zoning
            restriction, ordinance or governmental law, rule, regulation or
            requirement of duly constituted public authorities now in force or
            which may hereafter be in force, or the requirements of the Board of
            Fire Underwriters or other similar body now or hereafter constituted
            relating to or affecting Tenant's use or occupancy of the Premises.
            Tenant shall not commit any public or private nuisance or any other
            act or thing which might or would disturb the quiet enjoyment of any
            other tenant of Landlord or any occupancy of nearby property. Tenant
            shall place no loads upon the floors, walls or ceilings in excess of
            the maximum designed load determined by Landlord or which endanger
            the structure; nor place any harmful liquids in the drainage
            systems; nor dump or store (except to the extent such storage is
            provided for in


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            subparagraph (iv) below) waste materials or refuse or allow such to
            remain outside the Building proper, except in the enclosed trash
            areas provided. Tenant shall not store or permit to be stored or
            otherwise placed any other materials of any nature whatsoever
            outside the Building. Tenant shall, at its own cost and expense,
            promptly and properly observe and comply with, including the making
            by Tenant of any Alteration (as defined in Paragraph 8 below) to the
            Premises or any change to the Tenant Improvements prior to the
            Commencement Date, all present and future orders, regulations,
            directions, rules, laws, ordinances, and requirements of all
            governmental authorities (including, without limitation, state,
            municipal, county and federal governments and their departments,
            bureaus, boards and officials) arising from the use or occupancy of,
            or applicable to Tenant's use of, the Premises.

                        (ii)  Tenant shall, at Tenant's sole cost and expense,
            take all action, including required Alterations necessary to comply
            with the requirements of the Americans With Disabilities Act of 1990
            (the "ADA") , which shall arise from Tenant's specific use of the
            Premises, or any installations in the Premises, including without
            limitation the improvements to be provided under the Work Letter
            Agreement, or required by a breach of any of Tenant's covenants or
            agreements under this Lease, whether or not such requirements shall
            now be in effect or hereafter enacted. Landlord shall perform any
            work necessary for the Outside Areas to comply with Title III of the
            ADA, to the extent such work is not Tenant's obligation pursuant to
            the preceding sentence. The cost of any such work for which Landlord
            is obligated shall be included within the Outside Area Expenses.

                        (iii) In particular, Tenant, at its sole cost, shall
            comply with all laws relating to the storage, use, generation,
            transportation, disposal and release of hazardous, toxic or
            radioactive matter, including those materials identified in Sections
            66680 through 66685 of Title 22 of the California Administrative
            Code, Division 4, Chapter 30 ("Title 22"), as they may be amended
            from time to time (collectively, "Toxic Materials"). If Tenant does
            store, use, generate, transport or dispose of any Toxic Materials
            (except for the use or storage of usual and customary amounts of
            usual office and janitorial supplies), Tenant shall notify Landlord
            in writing at least ten (10) days prior to their first appearance on
            the Premises. Tenant shall be solely responsible for and shall.
            defend with counsel reasonably satisfactory to Landlord, protect,
            indemnify and hold Landlord and its Agents harmless from and against
            all claims, costs and liabilities, including attorneys' fees and
            costs, arising out of or in connection with Tenant's storage, use,
            generation, transportation, disposal or release of Toxic Materials,
            including without limitation, any such claims, costs, damages and
            liabilities, including attorneys' fees and costs, arising out of or
            in connection with any investigation, testing, removal, clean-up
            and/or restoration services, work, materials and equipment necessary
            to return the Premises, the Project and/or any other property of
            whatever nature to their condition existing prior to Tenant's or its
            Agents' use, storage, generation, transport, disposal or release of
            the Toxic Materials in, on or around the Premises or the Project,
            and to otherwise satisfactorily investigate and remediate the
            contamination arising therefrom. Tenant's obligations hereunder
            shall survive the termination of this Lease. If at any time during
            or after the term of this Lease, as it may be extended, Tenant
            becomes aware of any inquiry, investigation, administrative
            proceeding, or judicial proceeding by any governmental agency
            regarding the storage, use or disposition of any Toxic Materials by
            Tenant or its Agents on or about the Premises or the Project, Tenant
            shall within five (5) days after first learning of such inquiry,
            investigation or proceeding give Landlord written notice advising
            Landlord of same. Notwithstanding the foregoing, Landlord shall
            indemnify, defend by counsel reasonably satisfactory to Tenant,


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            protect and hold Tenant harmless from and against all claims, costs
            and liabilities, including attorneys' fees and costs, arising
            directly out of the use, generation, storage or disposal of Toxic
            Materials by Landlord. Landlord's obligations pursuant to the
            foregoing indemnity shall survive the termination of this Lease.

                        (iv)  At Tenant's sole cost and expense, Tenant may
            place no more than two (2) temporary, removable, no larger than five
            foot by eight foot (5' x 8') storage containers ("Containers") in an
            Enclosure (defined below) located within an area, designated by
            Landlord and comprising no more than two parking spaces behind the
            Premises, on and subject to the terms and conditions of this Lease
            (including without limitation Paragraph 6.C(iii) above), together
            with the following additional terms and conditions with which Tenant
            shall comply at its sole cost: (a) the Containers and Enclosure
            shall be designed, constructed, installed, maintained, used,
            replaced (if necessary), and repaired in a good, clean and neat
            condition and appearance, strictly in full compliance with all
            present and hereinafter enacted Requirements (as hereinafter
            defined); (b) the Containers shall be enclosed by a structure the
            design, construction, materials and placement of which must be
            approved in advance by Landlord (the "Enclosure"); (c) the design,
            construction and installation of the Containers and Enclosure shall
            be done by contractors approved by Landlord in accordance with plans
            and specifications prepared at Tenant's expense and subject to
            Landlord's written approval; (d) upon the expiration or earlier
            termination of this Lease, Tenant shall remove the Containers and
            Enclosure, repair any damage to the Project occasioned by
            installation or removal of same and restore the area in which such
            Containers and Enclosure were placed to the condition existing prior
            to placement thereof; and (e) Tenant shall obtain all necessary
            approvals, authorizations and permits for the design, construction,
            installation, use, maintenance and removal of the Containers and
            Enclosure (including, without limitation, any approvals,
            authorizations and permits required by the City and the County of
            San Diego and the CC&R's), and shall provide Landlord with true and
            complete copies of such approvals, authorizations and permits.
            Tenant represents, warrants and covenants that the design,
            construction and installation of the Containers and Enclosure and
            the use of same for the storage of any and all materials stored by
            Tenant is and at all times shall be in full compliance with the
            highest standards of the industry pertaining to storage of such
            materials and with all laws, rules, regulations, directions,
            ordinances, orders and requirements of all governmental
            authorities, the Board of Fire Underwriters or any successor or
            similarly constituted body, and any covenants, conditions and
            restrictions affecting the Premises, Building or Project
            (collectively, the "Requirements").


ASSIGN-     7.    A.    LANDLORD IS CONSENT. Tenant shall not enter into a
MENT AND    Sublet (defined below) without Landlord's prior written consent
SUB-        which consent shall not be unreasonably withheld or delayed. Any
LETTING     attempted or purported Sublet without Landlord's prior written
            consent shall be void and confer no rights upon any third person
            and, at Landlord's election, shall terminate this Lease. if Tenant
            attempts to Sublet without Landlord's prior written consent,
            Landlord may accept rent from the purported Subtenant (defined
            below) and apply such rent against Tenant's rental obligation under
            this Lease. No such acceptance of rent shall be deemed an express or
            implied waiver of Tenant's breach of this Paragraph 7.A unless such
            waiver is in writing and signed by Landlord, and Landlord reserves
            all rights and remedies arising with respect to such breach by
            Tenant, including, without limitation, the right to terminate the
            Lease. Such acceptance of rent shall not be construed to constitute
            a consent to the purported Sublet or to give the purported Subtenant
            a right of possession with respect to the Premises.


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<PAGE>   9
                  B.    SUBLET FORM. Each Sublet to which Landlord has consented
            shall be by an instrument in writing in a form satisfactory to
            Landlord, and shall be executed by Tenant and Subtenant. Each
            Subtenant shall agree in writing, for the benefit of Landlord, to
            assume, to be bound by, and to perform the terms, conditions, and
            covenants of this Lease to be performed by Tenant. Notwithstanding
            anything contained herein, Tenant shall not be released from
            personal liability for the performance of each term, condition and
            covenant of this Lease by reason of Landlord's consent to a Sublet
            unless Landlord specifically grants such release in writing.

                  C.    NO WAIVER. Consent by Landlord to one such Sublet shall
            not be deemed to be a consent to any subsequent Sublet.

                  D.    INFORMATION TO BE FURNISHED. If Tenant desires at any
            time to Sublet the Premises or any portion thereof, it shall first
            notify Landlord of its desire to do so and shall submit in writing
            to Landlord: (i) the name of the proposed Subtenant; (ii) the nature
            of the proposed Subtenant's business to be carried on in the
            Premises; (iii) the terms and provisions of the proposed Sublet and
            a copy of the proposed Sublet agreement and related agreements; (iv)
            such financial information, including financial statements, as
            Landlord may reasonably request concerning the proposed Subtenant.

                  E.    LANDLORD'S ALTERNATIVES. Tenant acknowledges that the
            terms of this Lease, including Rent, have been based on the
            understanding that Tenant shall physically occupy the Premises for
            the entire Term. Therefore, at any time within ten (10) business
            days after Landlord's receipt of the information specified in
            Paragraph 7.D., Landlord may, by written notice to Tenant, elect:
            (i) to Sublet from Tenant for Landlord's own account the Premises or
            the portion thereof so proposed to be Sublet by Tenant, upon the
            same terms as those offered to the proposed Subtenant but otherwise
            upon the form of this Lease, in which event this Lease shall
            continue in full force and effect and Landlord shall have the right
            to further Sublet the Premises or portion thereof to any person,
            including without limitation Tenant's proposed Subtenant, upon any
            terms desired by Landlord; (ii) if Landlord provides Tenant with a
            Limited Release Agreement as provided below, to lease for Landlord's
            own account the Premises or the portion thereof so proposed to be
            Sublet by Tenant to any person, including without limitation
            Tenant's proposed Subtenant, upon any terms desired by Landlord, in
            which event this Lease shall continue in full force and effect
            (subject to the Limited Release Agreement and Landlord's leasing
            rights under this election) ; (iii) to consent to the Sublet by
            Tenant; or (iv) to refuse its consent to the Sublet.

                  If Landlord fails to elect any of the alternatives set forth
            in Paragraph 7.E.(i) through Paragraph 7.E.(iv) above within the ten
            (10) business day period, it shall be deemed that Landlord has
            refused its consent to the Sublet.

                  If Landlord elects to proceed with Paragraph 7.E.(ii), and to
            lease the Premises or portion thereof proposed to be Sublet by
            Tenant on its own account, Landlord and Tenant shall enter into a
            Limited Release Agreement whereby Tenant is relieved of any
            liability, including the payment of Rent, with respect to such
            portion of the Premises leased by Landlord until the term of such
            lease expires or is terminated. Upon the expiration of the lease
            between Landlord and the new tenant for such released space,
            providing this Lease Term is still in effect, Landlord shall return
            possession of the released space to Tenant in substantially the same
            condition, normal wear and tear excepted, it was in when Landlord
            completed any alterations for its leasing of the Premises, and
            Tenant shall resume all its obligations under this Lease with
            respect to such space, including, without limitation, the payment of
            Rent attributable to such space.


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<PAGE>   10
                  If Landlord proceeds with Paragraph 7.E.(iii) and consents to
            the Sublet, Tenant may thereafter enter into a valid Sublet of the
            Premises or portion thereof, upon the terms and conditions and with
            the proposed Subtenant set forth in the information furnished by
            Tenant to Landlord pursuant to Paragraph 7.D., subject, however, at
            Landlord's election, to the condition that fifty percent (50%) of
            any excess of the Subrent (defined below) over the Rent required to
            be paid by Tenant hereunder shall be paid to Landlord. Any such
            Subrent to be paid to Landlord pursuant hereto shall be payable to
            Landlord as and with the Monthly Rent payable to Landlord hereunder
            pursuant to Paragraph 4.A.

                  F.    PRORATION. If a portion of the Premises is Sublet, the
            pro rata share of the Rent attributable to such partial area of the
            Premises shall be determined by Landlord by dividing the Rent
            payable by Tenant hereunder by the total leasable square footage of
            the Premises and multiplying the resulting quotient (the per square
            foot rent) by the number of square feet of the Premises which are
            Sublet.

                  G.    EXECUTED COUNTERPART. No Sublet shall be valid nor shall
            any Subtenant take possession of the Premises until an executed
            counterpart of the Sublet agreement has been delivered to Landlord.

                  H.    DEFINITIONS. The following terms as used herein shall
            have the following meanings:

                        (i)   SUBLET. Any transfer, sublet, assignment, license
            or concession agreement, change of ownership, including, without
            limitation, a transfer of the beneficial ownership or effective
            voting control of Tenant from the person(s) having effective voting
            control as of Tenant's execution of this Lease (if Tenant is a
            corporation), the resignation or cessation of a general partner (if
            Tenant is a partnership) and a merger or consolidation of Tenant,
            any mortgage, or hypothecation of this Lease or the Tenant's
            interest in the Lease or in and to all or a portion of the Premises.
            If Tenant is a corporation the stock of which is publicly traded, no
            transfer of Tenant's stock shall be deemed to be a Sublet.

                        (ii)  SUBRENT. Any consideration of any kind received,
            or to be received, by Tenant from a Subtenant if such sums are
            related to Tenant's interest in this Lease or in the Premises. As to
            any Sublet which is a transfer of voting control or beneficial
            ownership of Tenant, Subrent shall include any payment or other
            consideration received by Tenant's shareholders or owners in
            connection with such transfer (including, but not limited to, bonus
            money and payments (in excess of book value) for Tenant's assets
            including its trade fixtures, equipment and other personal property,
            goodwill, general intangibles, and any capital stock or other equity
            ownership of Tenant), up to the bonus value of the Lease as
            represented by the present value of the difference between (i) fair
            market rent at the time of the Sublet, and (ii) the Rent specified
            in the Lease.

                        (iii) SUBTENANT. The person or entity with whom a Sublet
            agreement is proposed to be or is made.

                        (iv)  ASSIGNMENT AND SUBLETTING to AFFILIATE.
            Notwithstanding the foregoing, Tenant may without the consent of
            Landlord assign this Lease or sublet all or any part of the Premises
            to a parent or subsidiary of Tenant or affiliate under common
            ownership with Tenant, or to a corporation or other entity or
            persons succeeding to substantially all of the assets of Tenant as a
            result of consolidation or merger, or to a corporation or other
            entity which acquires substantially all of the assets of Tenant,
            provided, however, that (a) no such assignment or subletting shall
            result in Tenant being released or


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<PAGE>   11
            discharged from any liability under the Lease, (b) the proposed
            assignee or subtenant agrees in writing to be bound by all of the
            terms and conditions of this Lease, and (c) the use proposed by the
            proposed assignee or subtenant is, in the reasonable judgment of
            Landlord, consistent with the first class nature of the Building and
            shall not result in excessive wear or repairs to the Premises.

ALTER-      8.    A.    PERMITTED ALTERATIONS. Tenant shall not make or permit
ATIONS      any Alterations in, on or about the Premises without the prior
            written consent of Landlord (which shall not be unreasonably
            withheld or delayed) and according to plans and specifications
            approved in writing by Landlord, which consent shall not be
            unreasonably withheld or delayed. For purposes of this Lease,
            "Alterations" shall mean any alterations, additions or improvements
            made in, on or about the Premises after the Commencement Date,
            including, but not limited to, lighting, heating, ventilating, air
            conditioning, electrical, partitioning, fixtures, drapery and
            carpentry installations; provided, however, that Tenant, at Tenant's
            sole cost and expense, may install its necessary trade fixtures,
            equipment and furniture in the Premises without Landlord's consent,
            provided that such items are installed and are removable without
            damage to the Project or to any of its electrical, mechanical or
            plumbing systems, and such alterations do not cost more than
            $10,000.00 each. Notwithstanding the foregoing, Landlord may
            withhold Landlord's consent in its sole discretion (including,
            without limitation, on wholly aesthetic grounds) to any: (i)
            alterations to the exterior or structural component of the Building,
            including, without limitation, exterior walls and roof of the
            Building; and (ii) alterations visible from outside the Building,
            including Outside Areas. All alterations shall be installed at:
            Tenant's sole expense, in compliance with all applicable laws and
            the CC&R's by Landlord's contractor, shall be done in a good and
            workmanlike manner conforming in quality and design with the
            Premises existing as of the Commencement Date, and shall not
            diminish the value of the Premises. Landlord shall have the right to
            require that all Alterations shall be of first class quality
            consistent with the quality of the Project. All alterations made by
            Tenant, or by Landlord at Tenant's expense, shall at the termination
            or expiration of the Lease become the property of Landlord and shall
            remain upon and be surrendered with the Premises; provided, however,
            that Landlord may, at its option, require that Tenant, at Tenant's
            expense, remove any or all nonstructural Alterations installed by
            Tenant, or by Landlord at Tenant's expense, and return the Premises
            to their condition as of the Commencement Date of this Lease, normal
            wear and tear excepted and subject to the provisions of Paragraph
            13. If requested by Tenant, Landlord shall inform Tenant at the time
            Landlord consents to the Alteration as to whether or not the
            Alteration in question must be removed from the Premises upon the
            expiration or earlier termination of the Lease. Notwithstanding any
            other provision of this Lease, Tenant shall be solely responsible
            for the maintenance and repair of any and all Alterations to the
            Premises made by Tenant, or by Landlord at Tenant's expense.

                  B.    NOTICE. Tenant shall give Landlord written notice of
            Tenant's intention to perform work on the Premises which might
            result in any claim of lien at least ten (10) business days prior to
            the commencement of such work to enable Landlord to post and record
            a Notice of Nonresponsibility or other notice deemed proper before
            the commencement of any such work. If Tenant fails to cause any lien
            filed against the Premises in connection with any work performed or
            claimed to have been performed by or at the direction of Tenant to
            be released of record by payment or posting of a proper bond
            acceptable to Landlord within ten (10) days from the date of filing,
            then Landlord may do so at Tenant's expense and Tenant shall
            reimburse Landlord for such amount as Additional Rent. Such
            reimbursement shall include all sums disbursed, incurred or
            deposited by Landlord, including


                                       7
<PAGE>   12
            Landlord's costs, expenses and reasonable attorneys' fees with
            interest thereon at the Interest Rate from the date of payment by
            Landlord.

REPAIR
  AND
MAINTE-     9.    A.    BUILDING.
NANCE
                        (i)   LANDLORD'S OBLIGATIONS. Landlord shall keep in
            good order, condition and repair the structural parts of the
            Building, which structural parts include only the foundation,
            exterior walls (excluding the interior of all walls and the exterior
            and interior of all windows, doors, plateglass, showcases and
            interior ceiling), heating, ventilating and air conditioning systems
            ("HVAC"), roof and subflooring of the Building, except for any
            damage thereto caused by, the negligence or willful acts or
            omissions of Tenant or its Agents, or by reason of the failure of
            Tenant to perform or comply with any terms, conditions or covenants
            in this Lease, or caused by Alterations made by Tenant or its
            Agents. Landlord shall also maintain and repair all utility lines
            and installations serving the Premises at the date hereof to the
            extent they exist on the Project but outside the Premises, except
            for any damage thereto caused by the negligence or willful acts or
            omissions of Tenant or its Agents, or by reason of the failure of
            Tenant to perform or comply with any terms, conditions or covenants
            in this Lease, or caused by Alterations made by Tenant or its
            Agents. It is an express condition precedent to all obligations of
            Landlord to repair and maintain that Tenant shall have notified
            Landlord in writing of the need for such repairs or maintenance.

                        (ii)  TENANT'S OBLIGATIONS. Tenant shall at all times
            and at its own expense clean, keep and maintain in good, safe and
            sanitary order, condition and repair every part of the Premises
            which is not within Landlord's obligation pursuant to Paragraph
            9.A.(i). Tenant's repair and maintenance obligations shall include,
            without limitation, all plumbing and sewage facilities within the
            Premises, fixtures, interior walls, floors, ceilings, windows, store
            front, doors, entrances, plateglass, showcases, skylights, all
            electrical facilities and equipment, including lighting fixtures
            serving the Premises, lamps, fans and any exhaust equipment and
            systems, any automatic fire extinguisher equipment within the
            Premises, electrical motors and all other appliances and equipment
            of every kind and nature located in, upon or about the Premises.
            However unless the necessity for such repair arises out of the acts
            or omissions of Tenant or its Agents, Tenant shall not be obligated
            under this paragraph to repair: (i) damage for which Landlord is
            reimbursed under any insurance policy carried by Landlord under this
            Lease for which Tenant pays a prorata share of the premiums; (ii)
            damage caused by the negligence or willful misconduct of Landlord or
            Landlord's agents, employees or contractors; or (iii) damage the
            repair of which is paid for under the Outside Area Expenses. All
            glass, both interior and exterior, is at the sole risk of Tenant,
            and any broken glass shall promptly be replaced by Tenant and at
            Tenant's expense with glass of the same kind, size and quality. If
            any condition arises in the Premises or the Project which may be
            unsafe or dangerous to persons or property in the Project, Tenant
            shall immediately notify Landlord of such condition, regardless of
            whether the obligation to repair such condition is Tenant's
            obligation or Landlord's obligation. Tenant shall, at its own
            expense, provide, install and maintain in good condition all of its
            trade fixtures, furniture, equipment and other personal property
            ("Tenant's Personal Property") required in the conduct of its
            business in the Premises.

                  B.    OUTSIDE AREAS AND COMMON EXPENSES.

                        (i)   LANDLORD'S OBLIGATIONS. Landlord shall maintain
            all outside Areas in good order, condition and repair. The manner in
            which such areas shall be maintained and the expenditures therefor
            shall be at the reasonable discretion of


                                       8
<PAGE>   13
            Landlord. Landlord shall at all times have exclusive control of the
            Outside Areas and may at any time temporarily close any part
            thereof, exclude and restrain anyone from any part thereof, except
            the bona fide customers, employees and invitees of Tenant who use
            the Outside Areas in accordance with the rules and regulations as
            Landlord may from time to time promulgate, and may change the
            configuration or location of the Outside Areas. In exercising any
            such rights, Landlord shall make a reasonable effort to minimize any
            disruption of Tenant's business. Landlord shall have the right to
            reconfigure the parking area and ingress and egress to and from the
            parking area, and to modify the directional flow of traffic in the
            parking area from time to time during the term of this Lease,
            provided that Landlord continues to provide the parking provided in
            Paragraph 31 of this Lease.

                        (ii)  TENANT TO PAY OUTSIDE AREA EXPENSES AND COMMON
            EXPENSES. Tenant shall pay, as Additional Rent, Tenant's Project
            Percentage of all reasonable costs and expenses as; may be paid or
            incurred by Landlord in maintaining, operating and repairing the
            Outside Areas (the "Outside Area Expenses") during the Term. The
            Outside Area Expenses shall include, without limitation, CC&R
            assessments and dues, and the cost of labor, materials, supplies and
            services used or consumed in maintaining, operating and repairing
            the Outside Areas, including without limitation, the following:

                              (a)   Maintaining and repairing landscaping and
            sprinkler systems, together with all charges for water used in the
            Outside Areas of the Project;

                              (b)   Maintaining and repairing concrete walkways
            and paved parking areas;

                              (c)   Maintaining and repairing signs and site
            lighting in the Project;

                              (d)   Pest control, exterior janitorial, exterior
            window washing, sweeping services, and Building and Project
            security; and

                              (e)   A management fee equal to five percent (5%)
            of the total Outside Area Expenses, Real Property Taxes and
            insurance costs for the Project.

            Tenant may, at its sole expense, contract for or provide its own
            interior janitorial service. If Tenant does not contract for or
            otherwise provide for its own interior janitorial services, then
            Landlord may provide such services and the costs thereof may be
            included within Outside Area Expenses.

            The following shall not constitute Outside Area Expenses:

                  1.    Legal fees, brokerage commissions, advertising costs and
            other related expenses incurred in connection with the leasing by
            Landlord of the Project;

                  2.    Structural repairs of a capital nature;

                  3.    Damage the cost repair of which is reimbursed to
            Landlord under any insurance policy carried by Landlord under this
            Lease in connection with the Project;

                  4.    Damage and repairs necessitated by the negligence or
            willful misconduct of Landlord or Landlord's employees, agents or
            contractors;

                  5.    Executive salaries of Landlord;


                                       9
<PAGE>   14
                  6.    Salaries of service personnel to the extent such service
            personnel perform services not attributable to management,
            operation, repair or maintenance of the Project;

                  7.    Landlord's general overhead expenses not related to the
            Project;

                  8.    Payments of principal or interest on any mortgage or
            other encumbrance including ground lease payments and points,
            commissions and legal fees associated with financing;

                  9.    Depreciation;

                  10.   Legal fees, accountants' fees and expenses incurred in
            connection with disputes with Tenant or other tenants or occupants
            of the Project or associated with the enforcement of any leases;

                  11.   Costs, including permits, license and inspection fees
            incurred in renovating or otherwise improving, decorating, painting
            or altering space for other tenants in the Project;

                  12.   The cost of any service provided to Tenant or other
            tenants of the Project for which Landlord is reimbursed;

                  13.   Charitable or political contributions;

                  14.   Interest, penalties or other costs arising out of
            Landlord's failure to make timely payments of its obligations;

                  15.   Costs incurred in advertising and promotional activities
            for the Project;

                  16.   Outside Area Expenses charged Landlord by any of its
            affiliates for goods and services provided to the Project shall not
            exceed the prevailing costs thereof that would be charged to
            Landlord by non-affiliated parties;

                  17.   Repairs, alterations, additions, improvements or
            replacements to the Project made to comply with requirements of
            applicable governmental law in effect as of the date of this Lease,
            except for those repairs, alterations, additions, improvements or
            replacements for which Tenant is otherwise responsible under this
            Lease, and except for those arising out of or necessitated by
            Tenant's use, or any alterations or tenant improvements made by or
            for Tenant;

                  18.   Damage and repairs attributable to condemnation, fire or
            other casualty for which Landlord is reimbursed by condemnation or
            insurance proceeds; and

                  19.   The cost or expense of testing for, removal,
            transportation or storage of Toxic Materials (as defined above),
            except to the extent arising out of the storage, use, generation,
            transportation, disposal, or release of Toxic: Materials by Tenant,
            or its contractors, employees or invitees.

                        (iii) MONTHLY PAYMENTS. From and after the Commencement
            Date, Tenant shall pay to Landlord on the first day of each calendar
            month of the Term an amount estimated by Landlord to be the monthly
            Outside Area Expenses. The foregoing estimated monthly charge may be
            adjusted by Landlord at the end of any calendar quarter on the basis
            of Landlord's experience and reasonably anticipated costs. Any such
            adjustment shall be effective as of the calendar month next
            succeeding receipt by Tenant of written notice of such adjustment.

                        (iv)  ACCOUNTING. Within one hundred twenty (120) days
            following the end of each calendar year Landlord shall furnish
            Tenant a reasonably detailed statement of the actual outside Area


                                       10
<PAGE>   15
            Expenses for the calendar year and the payments made by Tenant with
            respect to such period. If Tenant's payments for the, Outside Area
            Expenses do not equal the amount of the actual Outside Area
            Expenses, Tenant shall pay Landlord the deficiency within twenty
            (20) days after receipt of such statement. If Tenant's payments
            exceed the actual Outside Area Expenses, Landlord shall either
            offset the excess against the Outside Area Expenses next thereafter
            to become due to Landlord, or shall refund the amount of the
            overpayments to Tenant, in cash, as Landlord shall elect. There
            shall be appropriate adjustments of the Outside Area Expenses as of
            the Commencement Date and expiration of the Term. If Tenant shall
            dispute any amounts set forth in the statement of actual Outside
            Area Expenses, Tenant shall have the right not later than ninety
            (90) days following receipt of such statement to cause Landlord's
            books and records with respect to the preceding calendar year to be
            audited by an accountant mutually acceptable to Landlord and Tenant.
            The Outside Area Expenses shall be appropriately adjusted on the
            basis of such audit. Tenant shall pay the cost and expense of such
            audit, unless such audit discloses a liability for a refund by
            Landlord to Tenant in excess of five percent (5%) of the payments
            previously made by Tenant for such calendar year, in which event
            Landlord shall pay the cost and expenses of such audit.

                  C.    WAIVER. Tenant waives the provisions of Sections 1941
            and 1942 of the California Civil Code and any similar or successor
            law regarding Tenant's right to make repairs and deduct the expenses
            of such repairs from the Rent due under this Lease.

UTILITIES   10.   A.    TENANT'S OBLIGATIONS.  Tenant shall be responsible for
AND         and shall pay promptly charges for gas, electricity, telephone,
SERVICES    refuse pickup, janitorial service, and all other utilities,
            materials and services furnished directly to or used by Tenant in,
            on or about the Premises during the Term, together with any taxes
            thereon. Landlord shall not be liable in damages or otherwise for
            any failure or interruption of any utility service or other service
            furnished to the Premises, except that resulting from the gross
            negligence or willful misconduct of Landlord. No such failure or
            interruption shall entitle Tenant to terminate this Lease or
            withhold Rent or other sums due hereunder.

                  B.    TENANT TO PAY BUILDING COMMON EXPENSES. Tenant shall
            pay, as Additional Rent, Tenant's Building Percentage of (i) all
            reasonable costs and expenses as may be paid or incurred by Landlord
            in maintaining, operating and repairing the HVAC, and (ii) the
            domestic water used in the Building. Tenant shall pay any such
            amounts pursuant to the procedure described in Paragraphs 9.B(iii)
            and (iv) above. If any of the utilities or services described above
            are not separately metered or are contracted for by the Landlord,
            the cost of such utilities or services shall be deemed Building
            Expenses and Tenant shall pay Tenant's Building Percentage of such
            items.

REAL        11.   A.    PAYMENT BY TENANT. On or before April 1 and December 1
PROP-       of each calendar year during the Term, Tenant shall pay to
ERTY        Landlord, as Additional Rent, Tenant's Project Percentage of all
TAXES       Real Property Taxes as set forth on the county assessor's tax
            statement for the Project. Landlord shall give Tenant at least
            fifteen (15) days' prior written notice of the amount so due. Upon
            Landlord's receipt of the Real Property Tax payment from Tenant,
            Landlord shall pay the taxes to the County. If Tenant fails to pay
            the Real Property Taxes on or before April 1 and December 1,
            respectively, Tenant shall pay to Landlord any penalty incurred by
            such late payment. Tenant shall pay any Real Property Tax not
            included within the County tax assessor's tax statement at least ten
            (10) days after being billed for same by Landlord. If Tenant shall
            fail to pay any Real Property Tax payment on time, such overdue
            amount and any penalty due hereunder shall bear interest at the
            Interest Rate until Paid. For


                                       11
<PAGE>   16
            purposes of this Lease, "Interest Rate" shall mean five percent (5%)
            per annum, plus the greater of (i) the Federal Reserve Bank rate,
            specified in Article 15, Section 1 of the California Constitution,
            prevailing on the 25th day of the month preceding execution of this
            Lease (it being understood that this Lease is not a contract to make
            a loan or forbearance), or (ii) such Federal Reserve Bank rate
            prevailing on the 25th day of the month preceding the date any
            defaulted payment was due. The foregoing dates for payment are based
            on the dates currently established by the County as the dates on
            which Real Property Taxes become delinquent if not paid. If such
            delinquency dates change, the dates on which Tenant must pay such
            taxes shall be at least ten (10) days prior to the delinquency
            dates.

                  B.    REAL PROPERTY TAXES. For purposes of this Lease, Real
            Property Taxes shall mean any form of assessment, license, fee, rent
            tax, levy, penalty (if a result of Tenant's delinquency) , or tax
            of any nature imposed upon or with respect to the Premises or the
            Project or any part thereof (other than net income, estate,
            succession, inheritance, transfer or franchise taxes) (collectively
            "tax"), imposed by any authority having the direct or indirect power
            to tax, or by any city, county, state or federal government or any
            improvement or other district or division thereof, whether such tax
            is: (i) determined by the area of the Premises or Project or any
            part thereof or the rent and other sums payable hereunder by Tenant
            or by other tenants, including, but not limited to, any gross income
            or excise tax levied by any of the foregoing authorities with
            respect to receipt of such rent or other sums due under this Lease;
            (ii) levied or assessed upon any legal or equitable interest of
            Landlord in the Project or the Premises or any part thereof; (iii)
            levied or assessed upon this transaction or any document to which
            Tenant is a party creating or transferring any interest in the
            Premises; (iv) levied or assessed in lieu of, in substitution for,
            or in addition to, existing or additional taxes imposed on or with
            respect to the Project or the Premises, whether or not now customary
            or within the contemplation of the parties; or (v) surcharged
            against the parking area. Notwithstanding the foregoing, the
            following shall not constitute Real Property Taxes for the purposes
            of this Lease: (1) any state, local, federal, personal or corporate
            income tax of Landlord; (2) any estate or inheritance taxes; (3) any
            franchise, succession or transfer taxes, and (4) interest on taxes
            or penalties resulting from Landlord's failure to pay its taxes and
            not directly caused by Tenant's delinquency. The reasonable cost and
            expenses of contesting the amount or validity of any of the
            foregoing taxes shall be included in Real Property Taxes. Real
            Property Taxes shall also include all new and increased assessments,
            taxes, fees, levies and charges may be imposed by governmental
            agencies for such purposes as fire protection, street, sidewalk,
            road, utility construction and maintenance, refuse removal,
            libraries, street lighting, police services, and for other
            governmental services, or any gross or net rental income tax.

                  C.    TAX ON IMPROVEMENTS. Without limiting the generality of
            Paragraph 11.B. hereof, Tenant shall pay any increase in Real
            Property Taxes resulting from any and all Alterations and Tenant
            Improvements of any kind whatsoever placed in, on or about the
            Premises for the benefit of, at the request of, or by Tenant.

                  D.    PRORATION. Tenant's liability to pay Real Property Taxes
            shall be prorated on the basis of a 365-day year to account for any
            fractional portion of a fiscal tax year included at the commencement
            or expiration of the Term. With respect to any assessments which may
            be levied against or upon the Premises, or which under the laws then
            in force may be evidenced by improvement bonds or other bonds or may
            be paid in annual installments, only the amount of the annual
            installment due each year (with appropriate proration for any
            partial year) and interest due


                                       12
<PAGE>   17
            thereon shall be included within the computation of the annual Real
            Property Taxes levied against the Premises for such year.

                  E.    PAYMENT ON EXPIRATION OF TERM. If this Lease terminates
            on a date earlier than the end of a fiscal tax year, Landlord shall
            deliver to Tenant a statement setting forth the amount of Real
            Property Taxes to be paid by Tenant adjusted to the date of
            termination which shall be paid within five (5) days of such
            receipt.

                  F.    PERSONAL PROPERTY TAXES. Tenant shall pay prior to
            delinquency all taxes assessed or levied against Tenant's Personal
            Property in, on or about the Premises or elsewhere. When possible,
            Tenant shall cause its Personal Property to be assessed and billed
            separately from the real or personal property of Landlord.

INSURANCE   12.   A.    INDEMNIFICATION. Tenant hereby agrees to defend (with
            attorneys acceptable to Landlord), indemnify and, hold harmless
            Landlord and its Agents from and against any and all damage, loss,
            liability or expense including, without limitation, attorneys' fees
            and legal costs suffered directly or by reason of any claim, suit or
            judgment brought by or in favor of any person or persons for damage,
            loss or expense due to, but not limited to, bodily injury and
            property damage sustained by such person or persons which arises out
            of, is occasioned by or is in any way attributable to the use or
            occupancy of the Premises or any part thereof and adjacent areas by
            the Tenant, the acts or omissions of the Tenant or its Agents,
            except to the extent caused by the sole negligence or willful
            misconduct of Landlord or its Agents. Notwithstanding the foregoing,
            Landlord shall indemnify, defend and hold Tenant harmless from and
            against any damage, loss, liability, or expense, including without
            limitation reasonable attorneys' fees resulting from the negligence
            or willful misconduct of Landlord or its Agents. In no event,
            however, shall Landlord be liable to Tenant for any lost profits or
            consequential damages.

                  B.    TENANT'S INSURANCE. Tenant agrees to maintain in full
            force and effect at all times during the Term, at its own expense,
            for the protection of Tenant and Landlord, as their interests may
            appear, policies of insurance issued by a responsible carrier or
            carriers acceptable to Landlord which afford the following
            coverages:

                        (i)   Worker's compensation -- Statutory limits.

                        (ii)  Employer's liability -- Not less than one Hundred
            Thousand and no/100ths Dollars ($100,000.00).

                        (iii) comprehensive general liability insurance
            including blanket contractual liability broad form property damage,
            personal injury, completed operations, products liability, fire
            damage legal, in an amount not less than Three Million and no/100ths
            Dollars ($3,000,000.00) combined single limit for both bodily injury
            and property damage naming Landlord and its Agents as additional
            insureds.

                        (iv)  "All Risk" property insurance (including, without
            limitation, vandalism, malicious mischief, inflation endorsement,
            sprinkler leakage endorsement, and boiler and machinery coverage) on
            Tenant's Personal Property located on or in the Premises, and any
            Alterations constructed or installed on the Premises by Tenant or by
            Landlord at Tenant's expense. Such insurance shall be in the full
            amount of the replacement cost, as the same may from time to time
            increase as a result of inflation or otherwise, and shall be in a
            form providing coverage comparable to the coverage provided in the
            standard ISO All-Risk form now or hereafter in effect. As long as
            this Lease is in effect, the proceeds of such policy shall be used
            for the repair or


                                       13
<PAGE>   18
            replacement of such items so insured. Landlord shall have no
            interest in the insurance upon Tenant's Personal Property.

                  C.    BUILDING INSURANCE. During the Term Landlord shall
            maintain "All Risk" property insurance (including, at Landlord's
            option, earthquake and flood coverage, inflation endorsement,
            sprinkler leakage endorsement, and boiler and machinery coverage)
            covering the Project and the Premises, excluding coverage of all
            Tenant's Personal Property on or in the Premises, but including the
            Project and any Tenant Improvements. Such insurance shall also
            include insurance against loss of rents on an "All Risk" basis,
            including, at Landlord's option, earthquake and flood, in an amount
            equal to the Monthly Rent and Additional Rent, and any other sums
            payable under the Lease, for a period of twelve (12) months
            commencing on the date of loss. Such insurance shall name Landlord
            and its Agents as named insureds and include a lender's loss payable
            endorsement in favor of Landlord's lender (Form 438 BFU Endorsement
            or successor form). Tenant shall reimburse Landlord for Tenant's
            Project Percentage of the costs of such policies and any deductible
            amounts paid by Landlord under such policies, annually or upon such
            other periodic basis as Landlord shall elect, within ten (10) days
            of the date of receipt of a statement for the same, as Additional
            Rent. If the insurance premiums are increased after the Commencement
            Date due to an increase in premium rates, due to an increase in the
            valuation of the Premises or their replacement cost, due to
            additional or modified coverages, Tenant shall pay Tenant's Project
            Percentage of such increase within ten (10) days of notice of such
            increase. Tenant shall pay the entire increase in premium rates
            caused by Tenant's use of the Premises.

                  D.    DEDUCTIBLES. Any deductibles in connection with those
            items set forth in Paragraph 12.B. must be approved in writing by
            Landlord prior to issuance of such policies.

                  E.    CERTIFICATES. Tenant shall deliver to Landlord at least
            thirty (30) days prior to the time such insurance is first required
            to be carried by Tenant, and thereafter at least thirty (30) days
            prior to expiration of each such policy, certificates of insurance
            evidencing the above coverage with limits not less than those
            specified above. The certificates shall expressly provide that the
            interest of Landlord therein shall not be affected by any breach of
            Tenant of any policy provision for which such certificates evidence
            coverage. Further, all certificates shall expressly provide that no
            less than thirty (30) days' prior written notice shall be given
            Landlord in the event of cancellation of the coverages evidenced by
            such certificates.

                  F.    INCREASED COVERAGE. Deleted.

                  G.    CO-INSURER. If, on account of the failure of Tenant to
            comply with the foregoing provisions, Landlord is adjudged a
            coinsurer by its insurance carrier, then, any loss or damage
            Landlord shall sustain by reason thereof, including attorneys' fees
            and costs, shall be borne by Tenant and shall be immediately paid by
            Tenant upon receipt of a bill therefor and evidence of such loss.

                  H.    NO LIMITATION OF LIABILITY. Landlord and its Agents make
            no representation that the limits of liability specified to be
            carried by Tenant under this Lease are adequate to protect Tenant or
            that the limits of liability for insurance carried by Landlord will
            be equal to the full replacement value of the items insured. If
            Tenant believes that any such insurance coverage is insufficient,
            Tenant shall provide, at its own expense, such additional insurance
            as Tenant deems adequate.

                  I.    INSURANCE REQUIREMENTS. All such insurance shall be in a
            form satisfactory to Landlord and shall be carried with


                                       14
<PAGE>   19
            companies that have a general policyholder's rating of not less than
            "A" and a financial rating of not less than Class "X" in the most
            current edition of Best's Insurance Reports; shall provide that such
            policies shall not be subject to material alteration or cancellation
            except after at least thirty (30) days' prior written notice to
            Landlord; and shall be primary as to Landlord. The policy or
            policies, or duly executed certificates for them, together with
            satisfactory evidence of payment of the premium thereon, shall be
            deposited with Landlord prior to the Commencement Date, and upon
            renewal of such policies, not less than thirty (30) days prior to
            the expiration of the term of such coverage. If Tenant fails to
            procure and maintain the insurance required hereunder, or fails to
            provide Landlord with the policy, policies or duly executed
            certificates thereof required hereunder, Landlord may, but shall not
            be required to, order such insurance at Tenant's expense and
            Tenant's reimbursement to Landlord for such amounts shall be deemed
            Additional Rent. Such reimbursement shall include all sums
            disbursed, incurred or deposited by Landlord including Landlord's
            costs, expenses and reasonable attorneys' fees with interest thereon
            at the Interest Rate.

                  J.    LANDLORD'S DISCLAIMER. Landlord and its Agents shall not
            be liable for any loss or damage to persons or property resulting
            from fire, explosion, falling plaster, glass, tile or sheetrock,
            steam, gas, electricity, water or rain which may leak from any part
            of the Premises or the Project, or from the pipes, appliances or
            plumbing works therein or from the roof, street or subsurface or
            whatsoever, unless caused by or due to the sole negligence or
            willful acts of Landlord or Landlord's Agents. Landlord and its
            Agents shall not be liable for interference with the light, air, or
            any latent defect in the Premises or the Project. Tenant shall give
            prompt written notice to Landlord in case of a casualty, accident or
            repair needed in the Premises.

                  K.    WAIVER OF SUBROGATION. Landlord and Tenant each hereby
            waive all rights of recovery against the other on account of loss
            and damage occasioned to such waiving party for its property or the
            property of others under its control to the extent that such loss or
            damage is insured against under any insurance policies which may be
            in force at the time of such loss or damage. Tenant and Landlord
            shall, upon obtaining policies of insurance required hereunder, give
            notice to the insurance carrier that the foregoing mutual waiver of
            subrogation is contained in this Lease and Tenant and Landlord shall
            cause each insurance policy obtained by such party to provide that
            the insurance company waives all right of recovery by way of
            subrogation against either Landlord or Tenant in connection with any
            damage covered by such policy.

DAMAGE OR   13.   A.    LANDLORD'S OBLIGATION TO REBUILD. If the Premises are
DESTRUC-    damaged or destroyed, Landlord shall promptly and diligently repair
TION        the Premises unless it has the right to terminate this Lease as
            provided herein and it elects to so terminate.

                  B.    RIGHT TO TERMINATE. Landlord shall have the right to
            terminate this Lease in the event any of the following events
            occurs:

                        (i)   Net insurance proceeds (after deducting the cost
            of recovery of such proceeds) are not available to pay one hundred
            percent (100%) of the cost of such repair, excluding the deductible
            for which Tenant shall be responsible;

                        (ii)  The Premises or the Building cannot, with
            reasonable diligence, be fully repaired by Landlord within 120 days
            after the date of the damage or destruction; or

                        (iii) The Premises or the Building cannot be safely
            repaired because of the presence of hazardous factors, including,


                                       15
<PAGE>   20
            but not limited to, earthquake faults, radiation, chemical waste and
            other similar dangers.

                  If Landlord elects to terminate this Lease, Landlord may give
            Tenant written notice of its election to terminate within thirty
            (30) days after such damage or destruction, and this Lease shall
            terminate fifteen (15) days after the date Tenant receives such
            notice. If Landlord elects not to terminate the Lease, Landlord
            shall promptly, following the date of such damage or destruction,
            commence the process of obtaining necessary permits and approvals,
            and shall commence repair of the Premises or the Building as soon as
            practicable and thereafter prosecute the same diligently to
            completion, in which event this Lease will continue in full force
            and effect. All insurance proceeds from insurance under Paragraph
            12.B, excluding proceeds for Tenant's Personal Property, shall be
            disbursed and paid to Landlord, If the Premises is damaged or
            destroyed and cannot with reasonable diligence be repaired or
            restored within one hundred eighty (180) days after the date of the
            damage or destruction, then Tenant may terminate this Lease by
            giving Landlord written notice of such election.

                  C.    LIMITED OBLIGATION TO REPAIR. Landlord's obligation,
            should it elect or be obligated to repair or rebuild, shall be
            limited to the basic Building and the Tenant Improvements, if
            insurance proceeds are made available to Landlord therefor, and
            Tenant shall, at its expense, replace or fully repair all Tenant's
            Personal Property and any Alterations installed by Tenant and
            existing at the time of such damage or destruction.

                  D.    ABATEMENT OF RENT. Rent shall be temporarily abated
            proportionately, during any period when, by reason of such damage or
            destruction, there is substantial interference with Tenant's use of
            the Premises, having regard to the extent to which Tenant may be
            required to discontinue Tenant's use of the Premises. Such
            abatement shall commence upon such damage or destruction and end
            upon substantial completion by Landlord of the repair or
            reconstruction which Landlord is obligated or undertakes to do, or,
            if earlier, when Tenant's use of the Premises is no longer
            substantially interfered with as a consequence of such damage.
            Tenant shall not be entitled to any compensation or damages from
            Landlord for loss of the use of the Premises, damage to Tenant's
            Personal Property or any inconvenience occasioned by such damage,
            repair or restoration. Tenant hereby waives the provisions of
            Section 1932, Subdivision 2, and Section 1933, Subdivision 4, of the
            California Civil Code, and the provisions of any similar law
            hereinafter enacted.

                  E.    DAMAGE NEAR END OF TERM. Anything herein to the contrary
            notwithstanding, if the Premises are destroyed or damaged during the
            last twelve (12) months of the Term and the cost of the repair
            exceeds ten percent (10%) of the replacement cost of the Building,
            then Landlord or Tenant may, at its option, cancel and terminate
            this Lease as of the date of the occurrence of such damage. If
            Landlord or Tenant does not elect to so terminate this Lease, the
            repair of such damage shall be governed by Paragraphs 13.A., or
            13.B., as the case may be. If this Lease is terminated, Landlord may
            keep all the insurance proceeds resulting from such damage, except
            for those proceeds payable under policies obtained by Tenant which
            specifically insure Tenant's Personal Property.

                  F.    REPLACEMENT COST. The reasonable determination in good
            faith by Landlord of the estimated cost of repair of any damage, of
            the replacement cost, or of the time period required for repair
            shall be conclusive for the purposes of this paragraph.

NOTICES     14.   Any notice or demand required or desired to be given under
            this Lease shall be in writing and shall be personally delivered to
            the address herein provided for the addressee, or in lieu of


                                       16
<PAGE>   21
            personal delivery may be given by air courier or other commercial
            delivery service which guarantees overnight delivery, or messenger,
            or by express or regular mail. Notice given by mail (other than
            express mail) shall be effective on the day when such notice was
            deposited in the United States mail (as determined by the postmark
            or, if there is no postmark, then by other competent evidence),
            registered or certified, and postage prepaid, addressed to the party
            to be served, regardless of whether receipt therefor is given by the
            addressee. Notice by any other manner shall be deemed given when
            received at the address herein provided for the addressee. After the
            Commencement Date, the address of Tenant shall be the address of the
            Premises, provided that either party may change its address by
            giving notice of same in accordance with this paragraph.

DEFAULT     15.   A.    TENANT'S DEFAULT.  A default under this Lease by Tenant
            shall exist if any of the following events shall occur:

                        (i)   If Tenant shall have failed to pay Rent or any
            other sum required to be paid hereunder when due; provided, however,
            that Landlord shall exercise no remedies provided in Paragraph 15.B
            below for such default unless Tenant fails to cure such default
            within five (5) days after Landlord gives Tenant written notice of
            such default, and Landlord shall have the right to require Tenant to
            remit all future payments by certified check after the second such
            cure of a default by Tenant; or

                        (ii)  If Tenant shall have failed to perform any term,
            covenant or condition of this Lease except (a) those requiring the
            payment of money and (b) those defaults set forth in this Paragraph
            15.A. below, and Tenant shall have failed to cure such breach within
            thirty (30) days after written notice from Landlord where such
            breach could reasonably be cured within such thirty (30) day period;
            provided, however, that where such failure could not reasonably be
            cured within the thirty (30) day period, that Tenant shall not be in
            default if it has commenced such performance within the thirty (30)
            day period and diligently thereafter prosecutes the same to
            completion; or

                        (iii) If Tenant shall have assigned its assets for the
            benefit of its creditors; or

                        (iv)  If the sequestration or attachment of or execution
            on any material part of Tenant's Personal Property essential to the
            conduct of Tenant's business shall have occurred, and Tenant shall
            have failed to obtain a return or release of such Personal Property
            within thirty (30) days thereafter, or prior to sale pursuant to
            such sequestration, attachment or levy, whichever is earlier; or

                        (v)   If Tenant shall have abandoned or vacated the
            Premises, which shall be conclusively presumed if Tenant leaves the
            Premises closed or unoccupied by any individuals on the Premises
            doing business on behalf of Tenant (as observed by Landlord)
            continuously for twenty (20) days; or

                        (vi)  If a court shall have made or entered any decree
            or order other than under the bankruptcy laws of the United States
            adjudging Tenant to be insolvent; or approving as properly filed a
            petition seeking reorganization of Tenant; or directing a winding up
            or liquidation of Tenant and such decree or order shall have
            continued for a period of thirty (30) days; or

                        (vii) If Tenant shall have failed to comply with the
            provisions of Paragraphs 20, 25 or 30; or

                        (viii) If Tenant shall have Sublet the Premises or a
            portion thereof without Landlord's prior written consent; or


                                       17
<PAGE>   22
                        (ix)  If Tenant shall have created or maintained a
            nuisance or hazard, or unsightly condition on the Premises or which
            affects the Outside Areas, which continues unabated for more than 24
            hours.

            Any notice by Landlord under this Paragraph shall be sufficient if
            it informs Tenant of the general nature of Tenant's failure to
            perform Tenant's obligations hereunder. Any notice given by Landlord
            pursuant to Paragraph 15.A(i) above which is served in compliance
            with Paragraph 14 of this Lease shall be deemed to satisfy the
            requirements of California Code of Civil Procedure Section 1161, and
            under Code of Civil Procedure Section 1162 regarding the manner of
            giving notice, and acknowledges that no further notice shall be
            required prior to Landlord's exercise of the remedies specified in
            Paragraph 15.B or any other remedies provided by law.

                  B.    REMEDIES. Upon a default, Landlord shall have the
            following remedies, in addition to all other rights and remedies
            provided by law or otherwise provided in this Lease, to which
            Landlord may resort cumulatively or in the alternative, and without
            notice to Tenant where no cure period is, provided for Tenant's
            breach:

                        (i)   Landlord may continue this Lease in full force and
            effect, and this Lease shall continue in full force and effect as
            long as Landlord does not terminate this Lease, and Landlord shall
            have the right to collect Rent when due and enforce other
            obligations of Tenant hereunder.

                        (ii)  Landlord may terminate Tenant's right to
            possession of the Premises at any time by giving written notice to
            that effect, and relet the Premises or any part thereof. Tenant
            shall be liable immediately to Landlord for all costs Landlord
            incurs in reletting the Premises or any part thereof, including,
            without limitation, broker's commissions, expenses of cleaning and
            redecorating the Premises required by the reletting and like costs.
            Reletting may be for a period shorter or longer than the remaining
            term of this Lease. No act by Landlord other than giving written
            notice to Tenant shall terminate this Lease. Acts of maintenance,
            efforts to relet the Premises or the appointment of a receiver on
            Landlord's initiative to protect Landlord's interest under this
            Lease shall not constitute a termination of Tenant's right to
            possession. On termination, Landlord has the right to remove all
            Tenant's Personal Property and store same at Tenant's cost and to
            recover from Tenant as damages:

                              (a)   The worth at the time of award of unpaid
            Rent and other sums due and payable which had been earned at the
            time of termination; plus

                              (b)   The worth at the time of award of the amount
            by which the unpaid Rent and other sums due and payable which would
            have been earned or payable after termination until the time of
            award exceeds the amount of such Rent loss that Tenant Proves could
            have been reasonably avoided; plus

                              (c)   The worth at the time of award of the amount
            by which the unpaid Rent and other sums due and payable for the
            balance of the Term after the time of award exceeds the amount of
            such Rent loss that Tenant proves could be reasonably avoided; plus

                              (d)   Any other amount necessary which is to
            compensate Landlord for all the detriment proximately caused by
            Tenant's failure to perform Tenant's obligations under this Lease,
            or which, in the ordinary course of things, would be likely to
            result therefrom, including, without limitation, any costs or
            expenses incurred by Landlord: (i) in retaking


                                       18
<PAGE>   23
            possession of the Premises; (ii) in maintaining, repairing,
            preserving, restoring, replacing, cleaning, altering or
            rehabilitating the Premises or any portion thereof, including such
            acts for reletting to a new tenant or tenants; (iii) for leasing
            commissions; or (iv) for any other costs necessary or appropriate to
            relet the Premises; plus

                              (e)   At Landlord's election, such other amounts
            in addition to or in lieu of the foregoing as may be permitted from
            time to time by the laws of the State of California.

                  The "worth at the time of award" of the amounts referred to in
            Paragraphs 15.B.(ii)(a) and 15.B.(ii)(b) is computed by allowing
            interest at the Interest Rate on the unpaid Rent and other sums due
            and payable from the termination date through the date of award. The
            "worth at the time of award" of the amount referred to in Paragraph
            15.B.(ii)(c) is computed by discounting such amount at the discount
            rate of the Federal Reserve Bank of San Francisco at the time of
            award plus one percent (1%). Tenant waives redemption or relief
            from forfeiture under California Code of Civil Procedure Sections
            1174 and 1179, or under any other present or future law, in the
            event Tenant is evicted or Landlord takes possession of the Premises
            by reason of any default of Tenant hereunder.

                        (iii) Landlord may, with or without terminating this
            Lease, re-enter the Premises and remove all persons and property
            from the Premises; such property may be removed and stored in a
            public warehouse or elsewhere at the cost of and for the account of
            Tenant. No re-entry or taking possession of the Premises by Landlord
            pursuant to this paragraph shall be construed as an election to
            terminate this Lease unless a written notice of such intention is
            given to Tenant. In addition to the above remedies, Landlord shall
            have all rights under the Uniform Commercial Code of a secured party
            with respect to Tenant's Personal Property in which a security
            interest is granted.

                  C.    LATE CHARGES. Tenant acknowledges that late payment by
            Tenant to Landlord of Rent and other charges provided for under this
            Lease will cause Landlord to incur costs not contemplated by this
            Lease, the exact amount of such costs being extremely difficult or
            impracticable to fix. Such costs include, but are not limited to,
            processing and accounting charges, and late charges that may be
            imposed on Landlord by the terms of any encumbrance and notes
            secured by any encumbrance covering the Premises, or late charges
            and penalties due to late payment of Real Property Taxes due on the
            Premises. Therefore, if any installment of Rent or any other charge
            due from Tenant is not received by Landlord within three (3) days of
            the due date, Tenant shall pay to Landlord an additional sum equal
            to five percent (5%) of the amount overdue as a late charge for
            every month or portion thereof that the Rent or other charges remain
            unpaid, whether or not Landlord has given Tenant written notice of
            the non-receipt of the Rent or other charges or has exercised any
            remedy herein provided for default by Tenant. The parties agree that
            this late charge represents a fair and reasonable estimate of the
            costs that Landlord will incur by reason of the late payment by
            Tenant. Acceptance of any late charge shall not constitute a waiver
            of Tenant's default with respect to the overdue amount, nor prevent
            Landlord from exercising any of the other rights and remedies
            available to Landlord.

                  D.    LANDLORD'S DEFAULT. Landlord shall not be deemed to be
            in default in the performance of any obligation required to be
            performed by it hereunder unless and until it has failed to perform
            such obligation within thirty (30) days after receipt of written
            notice by Tenant to Landlord specifying the nature of such default;
            provided, however, that if the nature of Landlord's obligation is
            such that more than thirty (30) days are required for its
            performance, then Landlord shall not be deemed to be in


                                       19
<PAGE>   24
            default if it shall commence such performance within such thirty
            (30) day period and thereafter diligently prosecute the same to
            completion.

SURRENDER   16.   Upon the expiration or earlier termination of the term, Tenant
OF THE      shall surrender the Premises to Landlord in its condition existing
PREMISES    as of the Commencement Date, normal wear and tear and fire or other
            casualty not caused by Tenant excepted, with all interior walls
            repaired and repainted if marked or damaged, all carpets shampooed
            and cleaned, and all floors cleaned and waxed, all to the reasonable
            satisfaction of Landlord. Tenant shall remove from the Premises all
            of Tenant's Alterations required to be removed pursuant to Paragraph
            8 and all Tenant's Personal Property, and shall repair any damage
            and perform any restoration work caused by such removal. If Tenant
            is then in default, Tenant shall only remove such Alterations and
            Tenant's Personal Property as specified in written notice from
            Landlord to Tenant. If Tenant fails to remove such Alterations and
            Tenant's Personal Property, and such failure continues after the
            termination of this Lease or after Tenant has abandoned or
            surrendered the Premises, Landlord may retain such property and, at
            Landlord's option, may apply it toward the satisfaction of Tenant's
            obligations under this Lease, and all rights of Tenant with respect
            to the property shall cease, or Landlord may place all or any
            portion of such property in public storage for Tenant's account.
            Tenant shall be liable to Landlord for the reasonable costs of
            removal of any such Alterations and Tenant's Personal Property and
            storage and transportation costs of same, and the cost of repairing
            and restoring the Premises, together with interest at the Interest
            Rate from the date of expenditure by Landlord. If the Premises are
            not so surrendered at the termination of this Lease, Tenant shall
            indemnify Landlord and its Agents against all loss or liability
            resulting from delay by Tenant in so surrendering the Premises,
            including, without limitation, any claims made by any succeeding
            tenant, losses to Landlord due to lost opportunities to lease to
            succeeding tenants, and attorneys' fees and costs.

ATTORNEYS'  17.   If either party brings any action or legal proceeding for
FEES        damages for an alleged breach of any provisions of this Lease, to
            recover Rent, or other sums due, to terminate the tenancy of the
            Premises or to enforce, protect or establish any term, condition or
            covenant of this Lease or right of either party, the prevailing
            party shall be entitled to recover as a part of such action or
            proceedings, or in a separate action brought for that purpose,
            reasonable attorneys' fees and costs.

                  Notwithstanding the foregoing and in addition thereto,
            Landlord shall be entitled to immediate receipt from Tenant for each
            breach hereof of such reasonable attorneys' fees, but not less than
            Fifty and no/100ths Dollars ($50.00), as may be incurred in
            connection with each notice or demand delivered to Tenant pursuant
            to Paragraph 15. Tenant agrees that such sums constitute
            reimbursement to Landlord only of the reasonable costs to Landlord
            of the preparation and delivery of each notice caused by Tenant's
            breach hereunder.

LIENS       18.   Tenant shall keep the Premises and the Project free from any
            liens arising out of any work performed, materials furnished or
            obligations incurred by or on behalf of Tenant and hereby
            indemnifies and holds Landlord and its Agents harmless from all
            liability and cost, including attorneys' fees and costs, in
            connection with or arising out of any such lien or claim of lien.
            Tenant shall cause any such lien imposed to be released of record by
            payment or posting of a proper bond acceptable to Landlord within
            ten (10) days after the earlier of imposition of the lien or written
            request by Landlord.


                                       20
<PAGE>   25
RENTAL      19.   As of the commencement of the second lease year measured from
ADJUST-     the lease commencement date, the base Monthly Rental provided in
MENT        Paragraph 4.A. hereof shall be adjusted annually by multiplying the
            base monthly rental in effect immediately prior to such adjustment
            by 1.05. The base rent in months 13-24 shall be $1.63/s.f.; months
            25-36 shall be $1.71/s.f.; months 37-48 shall be $1.79/s.f.; months
            49-60 shall be $1.88/s.f.; months 61-72 shall be $1.98/s.f.; and
            months 73-84 shall be $2.08/s.f.

SUBORDI-    20.   A. DOCUMENTATION. This Lease is subject and subordinate to all
NATION      ground and underlying leases, mortgages and deeds of trust
            (collectively "Encumbrances") which now or may hereafter affect the
            Premises, to the CC&R's and to all renewals, modifications,
            consolidations, replacements and extensions thereof; provided,
            however, if the holder or holders of any such Encumbrance ("Holder")
            shall require that this Lease be prior and superior thereto, within
            ten (10) days of written request of Landlord to Tenant, Tenant shall
            execute, have acknowledged and deliver any and all documents or
            instruments, which Landlord or Holder reasonably deems necessary or
            desirable for such purposes. Landlord shall have the right to cause
            this Lease to be and become and remain subject and subordinate to
            any and all Encumbrances which are now or may hereafter be executed
            covering the Premises or any renewals, modifications,
            consolidations, replacements or extensions thereof, for the full
            amount of all advances made or to be made thereunder and without
            regard to the time or character of such advances, together with
            interest thereon and subject to all the terms and provisions
            thereof; provided only, that in the event of termination of any such
            ground or underlying lease or upon the foreclosure of any such
            mortgage or deed of trust, so long as Tenant is not in default,
            Holder shall agree not to disturb Tenant's tenancy as long as Tenant
            shall pay the Rent and observe and perform all the provisions of
            this Lease to be observed and performed by Tenant. Within ten (10)
            days after Landlord's written request, Tenant shall execute any and
            all documents required by Landlord or the Holder required to
            effectuate such subordination to make this Lease subordinate to any
            lien of the Encumbrance.

                  B.    ATTORNMENT. Notwithstanding anything to the contrary set
            forth in this paragraph, Tenant hereby attorns and agrees to attorn
            to any entity purchasing or otherwise acquiring the Premises at any
            sale or other proceeding or pursuant to the exercise of any other
            rights, powers or remedies under such Encumbrance.

MORTGAGEE   21.   In the event of any default on the part of Landlord, Tenant
PROTEC-     will give written notice as provided in Paragraph 14 to any
TION        beneficiary of a deed of trust or mortgagee of a mortgage covering
            the Premises, and shall offer such beneficiary or mortgagee a
            reasonable opportunity to cure the default, but in no event more
            than ninety (90) days from the date of delivery of written notice
            of such default from Tenant.

CONDEMNA-   22.   A. TOTAL TAKING - TERMINATION. If title to all of the Premises
TION        or so much thereof is taken for any public or quasi-public use under
            any statute or by right of eminent domain so that reconstruction of
            the Premises will not, in Landlord's reasonable opinion, result in
            the Premises being reasonably suitable for Tenant's continued
            occupancy for the uses and purposes permitted by this Lease, this
            Lease shall terminate as of the date that possession of the Premises
            or part thereof be taken.

                  B.    PARTIAL TAKING. If any part of the Premises is taken and
            the remaining part is reasonably suitable for Tenant's continued
            occupancy for the purposes and uses permitted by this Lease, this
            Lease shall, as to the part so taken, terminate as of the date that
            possession of such part of the Premises is taken and the Rent and
            other sums payable hereunder shall be reduced in the same proportion
            that the floor area of the portion of the


                                       21
<PAGE>   26
            Premises so taken (less any addition thereto by reason of any
            reconstruction) bears to the original floor area of the Premises.
            Landlord shall, at its own cost and expense, make all necessary
            repairs or alterations to the Premises so as to make the portion of
            the Premises not taken a complete architectural unit. Such work
            shall not, however, exceed the scope of the work done by Landlord in
            originally constructing the Premises, or require Landlord to expend
            sums in excess of the net proceeds of such condemnation or taking.
            Rent and other sums payable hereunder shall be temporarily abated
            during such restoration proportionately in the degree to which
            Tenant's use of the Premises is impaired. Each party hereby waives
            the provisions of Section 1265.130 of the California Code of Civil
            Procedure allowing either party to petition the Superior Court to
            terminate this Lease in the event of a partial taking of the
            Premises.

                  C.    NO APPORTIONMENT OF AWARD. No award for any partial or
            entire taking shall be apportioned. Tenant assigns to Landlord its
            interest in any award which may be made in such taking or
            condemnation, together with any and all rights of Tenant arising in
            or to the same or any part thereof. Nothing contained herein shall
            be deemed to give Landlord any interest in or require Tenant to
            assign to Landlord any separate award made to Tenant for the taking
            of Tenant's Personal Property, for the interruption of Tenant's
            business, or its moving costs, or for the loss of its goodwill.

                  D.    TEMPORARY TAKING. No temporary taking of the Premises
            shall terminate this Lease or give Tenant any right to any abatement
            of Rent. Any award made to Tenant by reason of such temporary taking
            shall belong entirely to Tenant and Landlord shall not be entitled
            to share therein. Each party agrees to execute and deliver to the
            other all instruments that may be required to effectuate the
            provisions of this paragraph.

                  E.    SALE UNDER THREAT OF CONDEMNATION. A sale by Landlord to
            any authority having the power of eminent domain, either under
            threat of condemnation or while condemnation proceedings are
            pending, shall be deemed a taking under the power of eminent domain
            for all purposes of this paragraph.

HOLDING     23.   If Tenant remains in possession of all or any part of the
OVER        Premises after the expiration of the Term, with the express or
            implied consent of Landlord, such tenancy shall be month-to-month
            only and shall not constitute a renewal or extension for any further
            term. In such event, Monthly Rent shall be increased to an amount
            equal to one hundred fifty percent (150%) of the Monthly Rent
            payable by Tenant prior to the expiration of the Term and any other
            sums due hereunder shall be payable in the amount and at the times
            specified in this Lease. Such month-to-month tenancy shall be
            subject to every other term, condition, and covenant contained
            herein.

ENTRY BY    24.   Tenant shall permit Landlord and its Agents to enter the
LANDLORD    Premises at all reasonable times with reasonable notice, except for
            emergencies in which case no notice shall be required, to inspect
            the same, to post Notices of Nonresponsibility and similar notices
            and "For Sale" signs, to show the! Premises to interested parties
            such as prospective lenders and purchasers, to make necessary
            Alterations or repairs, to discharge Tenant's obligations hereunder
            when Tenant has failed to do so within a reasonable time (but no
            less than the time period described in paragraph 15A(ii)) after
            written notice from Landlord, and at any reasonable time within one
            hundred and eighty (180) days prior to the expiration of the Term,
            or at any time during the Term hereof if Tenant is in default
            hereunder, to place upon the Premises ordinary "For Lease" signs and
            to show the Premises to prospective tenants. The above rights are
            subject to security regulations imposed upon Tenant by any
            governmental agency, it being understood that Tenant will advise
            Landlord in writing as


                                       22
<PAGE>   27
            to such security regulations, and to the requirement that Landlord
            shall at all times act in a manner to avoid unreasonable
            interference with Tenant's business. Landlord shall not be liable to
            Tenant for any entry permitted hereunder unless the loss or damage
            to Tenant therefrom is the direct result of the negligence or
            willful misconduct of Landlord or Landlord's Agents, and provided
            that in no case shall Landlord be responsible to Tenant for any lost
            profits, damage to Tenant's business, or any other consequential
            damages. Landlord's entry shall not be construed to be a forcible or
            unlawful entry into, or a detainer of, the Premises.

ESTOPPEL    25.   Tenant shall have ten (10) days following written request by
CERTIFI-    Landlord to:
CATES

                  (i)   Execute and deliver to Landlord any documents, including
            estoppel certificates, in the form prepared by Landlord (a)
            certifying that this Lease is unmodified and in full force and
            effect or, if modified, stating the nature of such modification and
            certifying that this Lease, as so modified, is in full force and
            effect and the date to which the Rent and other charges are paid in
            advance, if any, and (b) acknowledging that there are not, to
            Tenant's knowledge, any uncured defaults on the part of Landlord,
            or, if there are uncured defaults on the part of the Landlord,
            stating the nature of such uncured defaults, and (c) certifying any
            other matters pertaining to this Lease as to which Tenant has actual
            knowledge and as may be reasonably required either by a lender
            making a loan to Landlord to be secured by deed of trust or mortgage
            covering the Premises or a purchaser of the Premises from Landlord.

                  Tenant's failure to deliver an estoppel certificate within ten
            (10) days after delivery of Landlord's written request therefor
            shall be conclusive upon Tenant (a) that this Lease is in full force
            and effect, without modification except as may be represented by
            Landlord, (b) that there are now no uncured defaults in Landlord's
            performance and (c) that no Rent has been paid in advance.

                  (ii)  Deliver to Landlord the most current financial
            statements of Tenant, and financial statements of the two (2) years
            prior to such current financial statements, including current and
            past balance sheets and profit and loss statements, all prepared in
            accordance with generally accepted accounting principles
            consistently applied. If Tenant has any financial statements for
            such periods as to which a certified public accountant has expressed
            an opinion, Tenant shall provide such statements to Landlord.

TRANSFER    26.   In the event of any conveyance of the Premises and assignment
OF THE      by Landlord of this Lease, Landlord shall be and is hereby entirely
PREMISES    released from all liability under any and all of its covenants and
BY          obligations contained in or derived from this Lease occurring after
LANDLORD    the date of such conveyance and assignment.

LAND-       27.   If Tenant shall at any time fail to make any payment or
LORD'S      perform any other act on its part to be made or performed under this
RIGHT TO    Lease within any applicable cure period provided herein, Landlord
PERFORM     may, but shall not be obligated to and without waiving or releasing
TENANT'S    Tenant from any obligation of Tenant under this Lease, make such
COVENANTS   payment or perform such other act to the extent Landlord may deem
            desirable, and in connection therewith, pay reasonable expenses and
            employ counsel. To compensate Landlord for its administrative and
            direct expenses of such performance, Tenant shall pay 105% of all
            sums so paid by Landlord and all penalties, interest and costs in
            connection therewith, together with interest thereon at the Interest
            Rate from the date of payment by Landlord to the date of payment
            thereof by Tenant to Landlord, plus collection costs and attorneys'
            fees, within


                                       23
<PAGE>   28
            twenty (20) days of request therefor by Landlord. Landlord shall
            have the same rights and remedies for the nonpayment thereof as in
            the case of default in the payment Of Rent.

TENANT'S    28.   If Landlord shall fail to perform any covenant, term, or
REMEDY      condition Of this Lease upon Landlord's part to be performed, Tenant
            shall be required to deliver to Landlord written notice of the same.
            If, as a consequence of such default, Tenant shall recover a money
            judgment against Landlord, such judgment shall be satisfied only out
            of the proceeds of sale received upon execution of such judgment and
            levied thereon against the right, title and interest of Landlord in
            the Project and out of Rent or other income from such property
            receivable by Landlord or out of consideration received by Landlord
            from the sale or other disposition of all or any part of Landlord's
            right, title or interest in the Project, and neither Landlord nor
            its Agents shall be liable for any deficiency.

SECURITY    29.   Tenant has deposited with Landlord the sum of Sixteen Thousand
DEPOSIT     One Hundred Forty-Six and 35/100ths Dollars ($16,146.35) as the
            Security Deposit for the full and faithful performance of every
            provision of this Lease to be performed by Tenant. Title to the
            Security Deposit has been transferred to Landlord subject only to
            Tenant's right to the return of the Security Deposit as set forth
            below. If Tenant defaults with respect to any provision of this
            Lease, Tenant's right to the return of the Security Deposit shall
            terminate to the extent of any payments due hereunder, and Landlord
            may apply all or any part of the Security Deposit for the payment of
            any Rent or other sum in default, the repair of such damage to the
            Premises or the payment of any other amount which Landlord may spend
            or become obligated to spend by reason of Tenant's default or to
            compensate Landlord for any other loss or damage which Landlord may
            suffer by reason of Tenant's default to the full extent permitted by
            law. If any portion of the Security Deposit is so applied, Tenant
            shall, within ten (10) days after written demand therefor, deposit
            cash with Landlord in an amount sufficient to restore the Security
            Deposit to its original amount. Landlord shall not be required to
            keep the Security Deposit separate from its general funds, and
            Tenant shall not be entitled to interest on the Security Deposit. If
            Tenant is not otherwise in default, the Security Deposit or any
            balance thereof shall be returned to Tenant at its last address
            known to Landlord within thirty (30) days of termination of the
            Lease.


FINANCIAL   30.   Tenant represents and warrants that all financial information
COVENANTS   provided by Tenant to Landlord prior to execution of this Lease is
            true and complete and fairly represents the actual financial
            condition of Tenant as of the date specified therein. Tenant agrees
            that any misrepresentation to Landlord as to Tenant's financial
            condition, or any failure to provide financial information required
            to be provided by Tenant hereunder shall constitute a default under
            this Lease. Tenant agrees that in the event that Tenant fails to
            perform any obligation of Tenant hereunder, or if Tenant commits any
            act or omission or is the subject of any information which, in the
            judgment of Landlord, raises any reasonable question as to whether
            Tenant's financial condition has materially changed for the worse
            since the execution of this Lease or whether Tenant will have
            sufficient financial resources to meet its obligations under this
            Lease and its financial obligations generally, then Tenant shall
            within ten (10) days after receipt of a written request from
            Landlord furnish Landlord with any financial information requested
            by Landlord and reasonably available to Tenant.

PARKING     31.   Tenant shall be provided on a non-exclusive basis and at no
            additional cost with forty-one (41) nonreserved automobile parking
            spaces in the Project's parking facilities. Tenant agrees not to
            overburden the parking facilities and to cooperate


                                       24
<PAGE>   29
            with Landlord and other tenants in the use of the parking
            facilities. Landlord reserves the right in its absolute discretion
            to determine whether the parking facilities are becoming crowded and
            to allocate and assign parking spaces among Tenant and the other
            tenants, or to impose validated parking restrictions or parking
            charges.

QUIET       32.   Landlord covenants that Tenant, upon performing the terms,
ENJOY-      conditions and covenants of this Lease, shall have quiet and
MENT        peaceful possession of the Premises as against any person claiming
            the same by, through or under Landlord.

MODIFI-     33.   If, in connection with obtaining financing for the Premises or
CATIONS     any portion thereof, Landlord's lender shall request reasonable
FOR         modification to this Lease as a condition to such financing, Tenant
LENDER      shall not unreasonably withhold, delay or defer its consent thereto,
            provided such modifications do not materially adversely affect
            Tenant's rights hereunder, or increase the amount of Rent to be paid
            by Tenant hereunder.

SIGNS       34.   Landlord shall provide for Tenant an exterior Tenant
            identification sign located on the Premises. Tenant shall not
            maintain a Tenant identification sign in any other location in, on
            or about the Premises and shall not display or erect any other
            Tenant identification sign, display or other advertising material
            that is visible from the exterior of the Building. The size, design,
            color and other physical aspects of the Tenant identification sign
            shall be subject to the Landlord's written approval prior to
            installation, which shall not be unreasonably withheld or delayed,
            giving due regard to the Building's architecture and color scheme,
            the CC&R's, and any appropriate municipal or other governmental
            approvals. The cost of the sign, its installation, maintenance and
            removal expense shall be Tenant's sole expense. If Tenant fails to
            maintain its sign, or if Tenant fails to remove its sign upon
            termination of this Lease, Landlord may do so at Tenant's expense
            and Tenant shall reimburse Landlord for such amounts as Additional
            Rent. Such reimbursement shall include all sums disbursed, incurred
            or deposited by Landlord including Landlord's costs, expenses and
            reasonable attorneys' fees with interest thereon from the date of
            such expenditure at the Interest Rate.

ACCEP-      35.   Delivery of this Lease, duly executed by Tenant, together with
TANCE       payment of the Monthly Rent for the first month of this Lease and
            the Security Deposit required hereunder, constitutes an offer to
            lease the Premises, and under no circumstances shall such delivery
            and payment be deemed to create an option or reservation to lease
            the Premises for the benefit of Tenant. This Lease shall only become
            effective and binding upon full execution hereof by Landlord and
            delivery of a signed copy to Tenant. If Landlord declines said
            offer, any such payments shall be returned to Tenant.

RECORDING   36.   Neither party shall record this Lease nor a short form
            memorandum thereof.

QUITCLAIM   37.   Upon any termination of this Lease, Tenant shall, at
            Landlord's request, execute, have acknowledged and deliver to
            Landlord a quitclaim deed of the Premises.

BROKERS     38.   Except as disclosed in the Lease Summary attached hereto,
            Landlord and Tenant 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 and that it knows of no real
            estate broker or agent who is or might be entitled to a commission
            in connection with this Lease. Landlord and Tenant agree to
            indemnify and hold harmless each other, and Landlord's Agents, from
            and against any and all liabilities or expenses, including
            reasonable attorneys' fees and costs, arising out of or


                                       25
<PAGE>   30
            in connection with claims made by any broker or individual for
            commissions or fees resulting from the execution of this Lease.

GENERAL     39.   A.    CAPTIONS. The captions and headings used in this Lease
            are for the purpose of convenience only and shall not be construed
            to limit or extend the meaning of any part of this Lease.

                  B.    EXECUTED COPY. Any fully executed copy of this Lease
            shall be deemed an original for all purposes.

                  C.    SEPARABILITY. In case any one or more of the provisions
            contained herein, except for the payment of Rent, shall for any
            reason be held to be invalid, illegal or unenforceable in any
            respect, such invalidity, illegality, or unenforceability shall not
            affect any other provision of this Lease, but this Lease shall be
            construed as if such invalid, illegal or unenforceable provision had
            not been contained herein.

                  D.    CHOICE OF LAW. This Lease shall be construed and
            enforced in accordance with the laws of the State of California. The
            language in all parts of this Lease shall in all cases be construed
            as a whole according to its fair meaning and not strictly for or
            against either Landlord or Tenant.

                  E.    GENDER; SINGULAR, PLURAL. When the context of this Lease
            requires, the neuter gender includes the masculine, the feminine, a
            partnership or corporation or joint venture, and the singular
            includes the plural.

                  F.    BINDING EFFECT. The covenants and agreement contained in
            this Lease shall be binding on the parties hereto and on their
            respective successors and assigns to the extent this Lease is
            assignable.

                  G.    WAIVER. No covenant, term or condition of this Lease
            shall be deemed to have been waived by Landlord unless such waiver
            is in writing and signed by Landlord. The waiver by Landlord of any
            breach of any term, condition or covenant of this Lease shall not be
            deemed to be a waiver of such provision or any subsequent breach of
            the same or any other term, condition or covenant of this Lease.
            Landlord shall have the right to accept Monthly Rent and other
            payments due from Tenant hereunder with knowledge of a preceding
            breach of this Lease, and no such acceptance shall be deemed an
            express or implied waiver of such breach unless such waiver is in
            writing and signed by Landlord. No further reservation of rights
            shall be required of Landlord under this Lease to reserve all rights
            and remedies of Landlord arising with respect to such preceding
            breach.

                  H.    NON-LIABILITY OF LIMITED PARTNERS. Tenant acknowledges
            that Landlord is a California limited partnership ("Partnership").
            Tenant further acknowledges that it is aware that, under the
            California Revised Limited Partnership Act, limited partners are not
            liable for any obligations of the Partnership. Accordingly, Tenant
            agrees to look only to the Partnership and its general partners for
            the collection of any monies which may become due under it, and that
            it will not assert any claim against the limited partners of the
            Partnership by reason this Lease.

                  I.    ENTIRE AGREEMENT. Except as set forth in the Letter
            Agreements, (_____, ____). This Lease is the entire agreement
            between the parties, and this Lease expressly supersedes all prior
            negotiations, representations and agreements of the parties
            respecting the Premises or the Project. Except as set forth in the
            Letter Agreements, (_____, ____). There are no agreements or
            representations between the parties except as expressed herein.
            Except as set forth in the Letter Agreements, (_____, ____). Except
            as otherwise provided herein, no subsequent change or addition to
            this Lease shall be binding unless in writing and signed by the
            parties hereto.


                                       26
<PAGE>   31
                  J.    AUTHORITY. If Tenant is a corporation or a partnership,
            each individual executing this Lease on behalf of said corporation
            or partnership, as the case may be, represents and warrants that he
            is duly authorized to execute and deliver this Least on behalf of
            said entity in accordance with its corporate bylaws, statement of
            partnership or certificate of limited partnership, as the case may
            be, and that this Lease is binding upon said entity in accordance
            with its terms. Landlord, at its option, may require a copy of such
            written authorization to enter into this Lease. The failure of
            Tenant to deliver the same to Landlord within ten (10) business days
            of Landlord's written request therefor shall be deemed a default
            under this Lease. If Landlord is a corporation or a partnership,
            each individual executing this Lease on behalf of said corporation
            or partnership, as the case may be, represents and warrants that he
            is duly authorized to execute and deliver this Lease on behalf of
            said entity in accordance with its corporate bylaws, statement of
            partnership or certificate of limited partnership, as the case may
            be, and that this Lease is binding upon said entity in accordance
            with its terms. Tenant, at its option, may require a copy of such
            written authorization to enter into this Lease. The failure of
            Landlord to deliver the same to Tenant within ten (10) business days
            of Tenant's written request therefore shall be deemed a default
            under this Lease.

                  K.    EXHIBITS. All exhibits, amendments, riders and addenda
            attached hereto are hereby incorporated herein and made a part
            hereof.

                  L.    LEASE SUMMARY. The Lease Summary attached to this Lease
            is intended to provide general information only. In the event of any
            inconsistency between the Lease Summary and the specific provisions
            of this Lease, the specific provisions of this Lease shall prevail.

                  M.    SURVIVAL. Landlord's and Tenant's covenants shall
            survive termination of this Lease where reasonably appropriate to
            accomplish the purpose thereof.

                  N.    TIME. Time is of the essence for the performance of each
            term, condition and covenant of this Lease.

                  0.    NO JURY TRIAL. Landlord and Tenant hereby waive their
            respective right to trial by jury of any cause of action, claim,
            counterclaim or cross-complaint in any action, proceeding and/or
            hearing brought by either Landlord against Tenant or Tenant against
            Landlord on any matter 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 Premises, or any claim of injury or
            damage, or the enforcement of any remedy under any law, statute, or
            regulation, emergency or otherwise, now or hereafter in effect.

      THIS LEASE is effective as of the date the last signatory necessary to
execute the Lease shall have executed this Lease.


                                        TENANT:


Dated: 7/19/93                          SIGNAL PHARMACEUTICALS, INC.,
       -----------------                a California corporation

                                        By: /s/ MARK D. CARMAN
                                            ------------------------------------
                                            Its: V.P. Operations
                                                 -------------------------------


                                        By:
                                            ------------------------------------
                                            Its:
                                                 -------------------------------


                                       27
<PAGE>   32
                                        LANDLORD:

Dated:  7/3/93                          SORRENTO VALLEY BUSINESS PARK,
       ----------------                 a California limited partnership

                                        By: /s/ ROBERT COURSON
                                            ------------------------------------
                                            Its: General Partners
                                                 -------------------------------


                                        By:
                                            ------------------------------------
                                            Its:
                                                 -------------------------------


                                       28
<PAGE>   33
                                  THE PREMISES





                                  [MAP DIAGRAM]





                                   EXHIBIT A


<PAGE>   34
                                   THE PROJECT





                                  [MAP DIAGRAM]





                                   EXHIBIT B


<PAGE>   35
                                  THE PROJECT





                                  [MAP DIAGRAM]





                                   EXHIBIT B
<PAGE>   36
                                  EXHIBIT "C"

                              WORK LETTER AGREEMENT


      1.    Tenant's Work. Tenant at its cost (subject to Landlord's
contribution provided in Paragraph 3 below) shall perform tenant improvement
work for the Premises in accordance with plans and specifications approved by
Landlord and Tenant. Tenant's work shall include, without limitation, all design
and space planning work, all interior partitions, interior doors, corridor
entrance doors, cabinets, lock sets and latch sets, electrical outlets,
telephone outlets, light fixtures, heating ventilation and air conditioning
distribution ducting and heat pumps, plumbing, any fire protection system other
than Landlord's existing sprinkler system, any modifications to Landlord's
sprinkler system, floor coverings, perimeter and interior wall surfaces, and
Building Standard window coverings.

      2.    Standards for Tenant's Work. Tenant's work shall be completed
pursuant to the following provisions:

            (a)   Tenant shall prepare and submit to Landlord two (2) sets of
final plans and specifications showing the architectural design of the Premises,
including the basic mechanical system and electrical system within the Premises,
plumbing, partitions and doors, complete fixturing information, and material
selections and finishes. Within five (5) working days after receipt of such
final plans and specifications, Landlord shall approve or suggest modifications
to such final plans and specifications. Landlord shall not unreasonably refuse
or delay approval of Tenant's final plans and specifications. Tenant may object
to any of the suggested modifications by notice to Landlord within five (5)
working days after receipt of such suggested modifications, and unless Tenant so
objects such suggested modifications shall be deemed approved by Tenant. Tenant
shall also submit all proposed change orders in writing (with sufficient detail
to enable Landlord to understand the nature of the proposed change) to Landlord
for Landlord's prior written approval, which shall not be unreasonably refused
or delayed. Landlord's consent shall not be required for any change order for
work costing less than Five Thousand Dollars ($5,000.00), provided that there
are no more than five (5) such change orders in any thirty (30) day period. Any
proposed change order shall be deemed approved by Landlord unless Landlord
disapproves same within three (3) business days after the proposed change order
is received by Landlord, provided that Tenant's notice requesting approval of
such change order clearly notifies Landlord that the proposed change order shall
be deemed approved if not disapproved within such three (3) business day period.
The individuals to whom Tenant shall submit plans and specifications for
approval shall be Robert E. Courson, with a copy to Cindy Jacob, and the
individual to whom Landlord shall communicate regarding plans and specifications
shall be either Jackie Johnson or Bruce Birch. While Landlord has the right to
approve the plans and specifications, Landlord's sole interest in doing so is to
protect the Building and Landlord's interests. Accordingly, Tenant shall not
rely on Landlord's approvals and Landlord shall not be the guarantor of, nor in
any way responsible for, the accuracy or correctness of any such plans and
specifications, or the compliance thereof with applicable laws, and Landlord
shall incur no liability of any kind by reason of granting any such approvals.

            (b)   Tenant shall complete all work in accordance with the final
plans and specifications approved by Landlord. Tenant shall make no alterations,
additions, or reinforcements to the structure of the Building except as
specifically approved by Landlord in such final plans and specifications.
Tenant, at its expense, shall procure all building and other permits required
for completion of Tenant's work. Tenant agrees that all work done by Tenant and
its contractors and subcontractors shall be performed in full compliance with
all laws, rules, orders, permits, ordinances, directions, regulations and
requirements of all governmental agencies, offices, and departments having
jurisdiction, including without limitation applicable provisions pertaining to
use of hazardous or toxic materials during construction, and in full compliance
with rules, orders, directions, regulations and requirements of any insurance
underwriting


<PAGE>   37
board, inspection bureau or insurance carrier insuring the Premises or Building.

            (c)   At least thirty (30) days before commencement of construction,
Tenant shall submit to Landlord the names and addresses of the general,
mechanical, and electrical contractors which Tenant intends to engage for
construction of Tenant's improvements, the commencement date of construction,
and the estimated date of completion of construction. Landlord shall have the
right to enter the Premises at any time to post any notice of nonresponsibility
or other notice on the Premises during Tenant's construction. All contractors
and subcontractors retained by Tenant shall be subject to the approval of
Landlord, which shall not be unreasonably refused or delayed. Landlord hereby
consents that Tenant may employ David Begent & Co. as general contractor. All
contractors retained by Tenant shall be bondable, licensed contractors,
possessing good labor relations and capable of performing quality workmanship
and working in harmony with Landlord's general contractor and other contractors.

            (d)   During the course of construction, Tenant shall maintain
builder's risk insurance in form and content satisfactory to Landlord. Tenant's
insurance shall name Landlord as an additional insured and shall provide that it
may not be canceled or amended without twenty (20) days prior written notice to
Landlord. At least ten (10) days prior to commencement of construction, Tenant
shall provide Landlord with a certificate of such insurance and evidence of any
required bonds in form satisfactory to Landlord. Tenant or Tenant's contractor
shall provide to Landlord a surety bond issued by a company acceptable to
Landlord guaranteeing performance of its construction obligations and payment
for all work and materials to be provided to the job.

            (e)   Tenant's work shall be completed with reasonable diligence and
in such a manner as not to interfere with the use or enjoyment of other portions
of the Building or common areas by Landlord or other tenants. Tenant's
contractors shall provide and pay for all temporary power, water, and other
utility facilities as required in connection with the construction of Tenant's
improvements. Tenant's contractors shall provide their own, dumpster for
collection and disposition of construction debris, which shall be located at a
location approved by Landlord, and all construction debris from Tenant's
construction shall be disposed of in Tenant's contractor's dumpster and not in
trash facilities for the Project. Tenant's contractor's construction material,
tools, equipment, and debris shall be stored only within the Premises, or in
areas designated for that purpose by Landlord. Work space exterior to the
Premises shall be available only in the discretion of Landlord. Tenant's work
shall be subject to the inspection of Landlord and Landlord's architect and
general contractor during the course of construction.

            (f)   Tenant shall indemnify and hold harmless Landlord for any and
all claims arising from Tenant's work as provided in Paragraph 12.A and
Paragraph 18 of the Lease. Tenant's construction contracts shall include a
similar indemnification from its contractors for the benefit of Landlord. Tenant
shall pay for all damage to the Building, the Project, or appurtenant areas or
equipment, as well as all damage to tenants or occupants thereof or their
property caused by Tenant, its agents, employees, contractors, licensees, or
invitees. Tenant acknowledges that Tenant's obligation set forth in Paragraph 18
of the Lease to keep the Building and Premises free of all liens shall include,
but not be limited to, an obligation at Tenant's expense to obtain and record a
release bond as provided in Section 3143 of the California Civil Code or other
provision of law, as requested by Landlord.

            (g)   Tenant shall be solely responsible for the adequacy in all
respects of the final plans and specifications, including without limitation
compliance with all governmental requirements, compatibility with the Building
shell, and any special requirements of Tenant's proposed improvements, equipment
or machines with respect to ambient temperatures, electrical use or current,
water availability or otherwise. Tenant acknowledges that in connection with
obtaining Landlord's approval of the final plans and specifications, Tenant may
provide Landlord with certain information regarding its specific needs relating
to the Premises in


<PAGE>   38
developing plans and specifications for its improvements and that Tenant may
provide some of its own equipment for installation in the Premises. Tenant
further acknowledges that Landlord will make no independent review of any such
information and that Landlord does not warrant, either expressly or impliedly,
the adequacy of the plans and specifications for the said improvements, or the
adequacy of Tenant's improvements or Tenant's equipment for Tenant's intended
purpose.

            (h)   All improvements made pursuant hereto shall during the term of
this Lease, as it may be extended, constitute the property of Tenant. Upon
expiration or termination of this Lease, however, unless Landlord shall require
the removal or consent in writing to the removal thereof by Tenant, all such
improvements shall remain in place and the ownership thereof shall revert to
Landlord.

      3.    Landlord's Contribution. Landlord shall contribute to the cost of
Tenant's Work an improvement allowance ("Allowance") in an amount equal to Five
Hundred Thousand Dollars ($500,000). Any and all costs associated with Tenant's
Work in excess of such contribution shall be paid by Tenant. Landlord's
contribution shall be paid on behalf of Tenant directly to Tenant's architect or
Tenant's general contractor as the case may be. Payments by Landlord shall be
made not more often than monthly and shall be made on the basis of billings for
work completed which are approved by Tenant and submitted to Landlord together
with evidence reasonably satisfactory to Landlord of completion of the work for
which the billing is submitted. Payments to Tenant's general contractor shall be
made on a percentage of work completed basis (that is, for example, upon
completion of 20% of Tenant's total work Tenant shall be entitled to 20% of
Landlord's contribution to the cost of such work) pursuant to the standard
procedures for percentage of completion disbursements using forms adopted by the
American Institute of Architects or other procedures required by Landlord, each
payment to be made within twenty (20) days after presentation to Landlord of the
following:

            (a)   A certificate of Tenant's general contractor showing the
percentage of Tenant's work which has been completed pursuant to the approved
plans and specifications, or other evidence satisfactory to Landlord that the
specified percentage of the improvements have been completed pursuant to the
approved plans and specifications.

            (b)   Evidence of payment by Tenant of the portion, if any, of such
progress payment to be made by Tenant.

            (c)   Partial waivers to date of all mechanic's and materialmen's
liens of any kind (which may be conditional upon payment as to the work
currently invoiced but shall be unconditional as to all previously invoiced
work) in form and substance satisfactory to Landlord and Landlord's construction
lender.

            (d)   Any other documentation reasonably required by Landlord.

      Before commencement of Tenant's construction, the total cost of
construction, and Landlord's contribution as a percentage of such total cost
("Landlord's Percentage"), shall be determined by Landlord, with the total job
cost as the denominator and Landlord's contribution as the numerator. In no
event shall any payment to Tenant's architect or any construction progress
payment by Landlord exceed Landlord's Percentage of the total progress billing
submitted by Tenant's contractor.

      Landlord shall withhold ten percent of the Allowance until completion of
all of Tenant's work and the lien-free expiration of the time for the filing of
any mechanics' liens claimed or which might be filed on account of any work
ordered by Tenant or its contractors or subcontractors.

      The cost of any change orders shall be paid by Tenant to the extent the
cost thereof is not included within the Allowance. If any change order
materially changes the total cost of construction, Landlord's Percentage shall
be redetermined by Landlord and Landlord's disbursements shall thereafter be
made in such amounts that the aggregate Landlord's disbursements do not exceed
the aggregate amount required under the


<PAGE>   39
foregoing procedure. Tenant shall be liable for that portion of all taxes levied
against its improvements.

      4.    Adjustment of Commencement Date. The Commencement Date shall be
delayed by one (1) business day for each business day of actual delay in the
design or construction of the tenant improvement work that is caused by any
Force Majeure Delay or Landlord Delay. "Force Majeure Delay" shall mean any
actual delay which is attributable to any: (i) actual, industry-wide strike,
lockout or other labor or industrial disturbance, civil disturbance, act of the
public enemy, war, riot, sabotage, blockade, or embargo; (ii) earthquake, fire,
hurricane, tornado, flood, explosion, or other casualty beyond the control of
the party for whom performance is required or of its contractors or other
representatives. No Force Majeure Delay shall be deemed to have occurred unless
and until the party claiming such Force Majeure Delay has provided written
notice to the other party specifying the action or inaction that such notifying
party contends constitutes a Force Majeure Delay. If such action or inaction is
not cured within two (2) business days after receipt of such notice, then a
Force Majeure Delay, as set forth in such notice, shall be deemed to have
occurred commencing as of the date after such notice was received and continuing
for the number of days the substantial completion of the Premises was in fact
delayed as a direct result of such action or inaction.

      "Landlord Delay" as used in this Agreement shall mean actual delay in the
design or construction of the Tenant Improvement Work directly attributable to
Landlord's failure to approve or disapprove the tenant improvement plans within
the time periods provided in paragraph 2 (a) hereof. No Landlord Delay shall be
deemed to have occurred unless and until Tenant has given written notice to
Landlord specifying the action or inaction which Tenant contends constitutes a
Landlord delay. If such action or inaction is not cured within two (2) business
days after Landlord's receipt of such notice, then a Landlord Delay, as set
forth in such notice, shall be deemed to have occurred commencing as of the date
after Landlord receives such notice and continuing for the number of days
substantial completion of the Premises was in fact delayed as a direct result of
such action or inaction.

      5.    No Fee to Landlord. Except as otherwise provided herein, Landlord
shall receive no fee for supervision, profit, overhead or general conditions in
connection with the tenant improvements work.

      6.    No Miscellaneous Charges. Neither Tenant nor its contractor shall be
charged by Landlord for parking (to the extent parking is available) or for the
use of electricity, water or HVAC during the construction of the tenant
improvements.


<PAGE>   40
                                    EXHIBIT D

                          COMMENCEMENT DATE MEMORANDUM


LANDLORD:         SORRENTO VALLEY BUSINESS PARK, a limited partnership


TENANT:           SIGNAL PHARMACEUTICALS, INC., a California corporation


LEASE DATE:       April 30, 1993

PREMISES:         5555 Oberlin Drive, Suite 100
                  San Diego, California

      Pursuant to Paragraph 3.C. of the above referenced Lease, the Commencement
Date is hereby established as ___________________________, 19___.


                                       LANDLORD:

                                       SORRENTO VALLEY BUSINESS PARK,
                                       a California limited partnership

                                       By: /s/ ROBERT COURSON
                                           -------------------------------------
                                          Its: General Partner
                                               ---------------------------------


                                       By:
                                           -------------------------------------
                                          Its:
                                               ---------------------------------


                                       TENANT:

                                       SIGNAL PHARMACEUTICALS, INC.,
                                       a California corporation

                                       By: /s/ MARK D. CARMAN
                                           -------------------------------------
                                          Its: V.P. Operations
                                               ---------------------------------


                                       By:
                                           -------------------------------------
                                          Its:
                                               ---------------------------------


<PAGE>   41
                                  EXHIBIT "E"

                            TENANT IMPROVEMENT PLAN



                            [PRELIMINARY FLOOR PLAN]





<PAGE>   42
                                   EXHIBIT F



                             [PREMISE MAP DIAGRAM]


<PAGE>   43
                                ADDENDUM TO LEASE

      THIS IS AN ADDENDUM TO THAT CERTAIN LEASE ("LEASE") DATED APRIL 30, 1993,
BY AND BETWEEN SORRENTO VALLEY BUSINESS PARK, A CALIFORNIA LIMITED PARTNERSHIP
("LANDLORD"), AND SIGNAL PHARMACEUTICALS, INC., A CALIFORNIA CORPORATION
("TENANT"), WITH RESPECT TO THOSE CERTAIN PREMISES LOCATED AT 5555 OBERLIN
DRIVE, SUITE 100, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA.

      The terms of this Addendum are hereby incorporated into and made a part of
the Lease, and shall supersede any inconsistent provisions of the Lease.
Capitalized terms not otherwise defined herein shall have the meanings
attributed thereto in the Lease.

      1.    Option to Extend. Landlord hereby grants to Tenant the option to
renew this lease for two (2) additional consecutive terms of three (3) years
each. The base monthly rent payable for each year of each option term exercised
shall be adjusted annually, commencing with the commencement of the first
extended term, by multiplying the base monthly rent payable for the last month
prior to such adjustment, by 1.05. All other terms and conditions of the
original Lease shall be the same, except that Tenant will not be provided any
tenant improvement dollars or free rent for extending the term of their Lease.
This extension is only valid provided that the Tenant is not in default under
the Lease at the time the option is exercised, and at any such time from
Tenant's exercise of the option to the commencement date of the option term.
This option must be exercised by written notice to Landlord, accompanied by a
payment of first month's rental for the extended term, no earlier than one
hundred eighty (180) days, and no later than one hundred twenty (120) days prior
to the expiration of the applicable term of the Lease. The option granted in
this paragraph shall be terminated and of no further force and effect if at any
time provided herein for the exercise of the option by Tenant, any federal,
state or local law or regulation invalidates or modifies any provision of the
option. Tenant shall have no right to extend the term of the lease beyond the
additional terms set forth above.

      2.    Right of First Refusal. Landlord hereby grants to Tenant a right of
first refusal, on the terms and conditions herein set forth, on the office area
in the Building adjacent to the Premises comprising approximately 4,585 rentable
square feet, and identified on Exhibit F hereto as the "First Refusal Area". If,
during the term of this Lease, Landlord reasonably expects that any portion of
the First Refusal Area shall become available for lease (as hereinafter defined)
, Landlord shall offer to lease such area to Tenant at the then prevailing
rental rate and terms and conditions then offered by Landlord for new leases of
comparable space within the Building, as follows: Landlord shall give Tenant
written notice describing the additional area available for lease ("Additional
Area" hereafter), and stating the terms and conditions (including anticipated
availability date) upon which the Additional Area is offered for lease to
Tenant. Within five (5) business days after such notice is given, Tenant may
accept such offer by written notice to Landlord accompanied by payment of one
month's rental. Office area subject to this paragraph shall be deemed to become
available upon expiration or other termination of a lease to another tenant
covering the First Refusal Area or any part of it, taking into account any
renewals or extensions of such lease or new lease of such office area to such
existing tenant, and vacation of such office area by such tenant.
Notwithstanding any provisions of this paragraph, it is understood and agreed
that the right of refusal to lease all or any part of First Refusal Area set
forth in this paragraph shall at Landlord's option terminate and be of no
further force or effect if:

            A.    Landlord gives Tenant a written notice of the availability of
                  all or any part of the First Refusal Area, and Tenant does not
                  notify Landlord, in writing, of Tenant's acceptance of such
                  area when and as hereinabove provided, time being of the
                  essence.

            B.    At any time that any portion of the First Refusal Area becomes
                  or is available until an "Amendment to Lease" is executed,
                  Tenant is in default in the performance of any of


<PAGE>   44
                  the covenants, conditions or agreements to be performed under
                  this Lease;

            C.    At any time provided herein for exercise of the right of
                  refusal by Tenant, any federal, state, or local law or
                  regulation invalidates or modifies any provision of the
                  foregoing right of first refusal. It is understood and agreed
                  that if Tenant fails to exercise its right of refusal as to
                  any area which becomes available to lease pursuant to this
                  paragraph, the right of refusal shall terminate completely as
                  to the entire First Refusal Area and this paragraph shall be
                  of no further force or effect. It is further understood and
                  agreed that if part, but not all, of the First Refusal Area
                  becomes available to lease under this paragraph, and Tenant
                  exercises its right to lease such area as herein provided, the
                  right of refusal granted herein shall remain in effect as to
                  the remainder of the First Refusal Area until such area
                  becomes available to lease as provided herein.

            D.    The original term of the Lease expires or is terminated.

      3.    Additional Security. As additional security for the performance of
Tenant's obligations under this Lease, in addition to the cash security deposit
provided by Tenant pursuant to Paragraph 29 of the Lease, Tenant shall upon
execution of this Lease deposit with Landlord an irrevocable standby letter of
credit ("Letter of Credit") in the face amount of One Hundred Fifty Thousand
Dollars ($150,000) issued by a financial institution reasonably acceptable to
Landlord in form acceptable to Landlord, which shall permit Landlord to draw any
amount necessary to compensate Landlord for a breach of Tenant on the sole
condition that Landlord deliver to such institution a signed statement by
Landlord certifying that Tenant has breached an obligation under this Lease. The
term of the Letter of Credit shall be renewed annually, and, subject to the
remaining provisions of this paragraph, Tenant shall deliver to Landlord at
least 30 business days before such Letter of Credit is scheduled to expire a
renewal or replacement thereof in terms and amount identical to the initial
Letter of Credit. Landlord shall be entitled to draw the entire amount of the
Letter of Credit if Tenant should fail to renew or replace the Letter of Credit
prior to its expiration. If Tenant shall have faithfully observed and performed
all of the terms and conditions of this Lease, then, at the end of the
twenty-fourth (24th) month of the Lease term, Tenant shall be entitled to
replace the existing Letter of Credit with a Letter of Credit in the face amount
of one Hundred Thousand Dollars ($100,000) and otherwise upon the same terms of
the initial Letter of Credit. Thereafter, and subject to the same condition that
Tenant shall have faithfully observed and performed under the Lease, Tenant may,
at the end of the thirty-sixth (36th) month of the Lease term, substitute a
Letter of Credit in the amount of Fifty Thousand Dollars ($50,000), and, ten
(10) business days after the end of the forty-eighth (48th) month of the Lease
term, subject to the same condition that Tenant shall have faithfully observed
and performed under the Lease, Tenant may permit the Letter of Credit to expire
without replacement.

      4.    Annual Cap on Controllable Outside Area Expenses. The amount payable
by Tenant under this Lease as Tenant's Project Percentage of controllable
Outside Area Expenses shall not increase by more than five percent (5%) per
annum during the Lease term.

      5.    Subordination, Non-Disturbance, Attornment Agreement. Landlord shall
use its commercially reasonable efforts to obtain and provide to Tenant prior to
occupancy of the Premises a Subordination, Non-Disturbance and Attornment
Agreement from Landlord's lender.

            [SIG]                               [SIG]
------------------------------      -------------------------------
LANDLORD'S INITIALS                 TENANT'S INITIALS


<PAGE>   45
                                Letter Agreement




                                  July 2, 1993


Mr. Robert Courson
2882 Sand Hill Road
Suite 250
Menlo Park, CA 94025


Dear Bob:

      As we have agreed, Signal will sign the lease that we have negotiated over
the past several weeks (a copy of which is attached as Exhibit A). As Dr.
Johnson has discussed with you, we have not yet closed on the total amount of
the A2 round. Accordingly, our financial position is temporarily impaired.
Signal will post its Letter of Credit upon closing the remainder of the A2
round; however, this will not occur for 60 days.

      Based on your conversation with Dr. Johnson, the following interim plan
will serve as a basis for our ongoing relationship:

      1.    Signal Pharmaceuticals, Inc. will sign the Lease by and between
Sorrento Valley Business Park and Signal Pharmaceuticals for the 10,417 sq. ft.
premises at 5555 Oberlin Drive, San Diego, CA 92121 (a copy of which is attached
as Exhibit A) (the "Lease"). It is expressly understood and acknowledged by both
parties, however, that the terms of the Lease are subordinate to the further
terms set forth in this Letter Agreement.

      2.    Signal will assume all financial responsibility for the planning and
permitting process which will start immediately upon your signing the contract
with McGraw Baldwin Architectural Firm.


<PAGE>   46
Mr. Robert Courson                                                       Page 2.
July 2, 1993


      3.    During this 60 day period which will commence July 5, 1993, Signal
will be moving ahead with planning and permitting (at our expense) but will not
start any actual tenant improvements.

      4.    At the posting of the $150,000.00 Letter of Credit (the "Letter of
Credit"), the tenant improvements can begin. TI payments will be made as
detailed in the Lease with The Courson Company and Signal paying on a formula
based on $500,000.00 of TI money from Courson Co. and the remainder
(approximately $189,000.00) from Signal Pharmaceuticals.

      5.    Signal Pharmaceuticals expects to begin paying rent on December 1,
1993 as outlined in the Lease.

      6.    With respect to obligations incurred as a result of the signing of
the Lease, the total liability incurred by Signal Pharmaceuticals or those
associated with Signal over this interim 60 day period is the Security Deposit
of $16,146.35. This Security Deposit is enclosed. In the event that Signal is
for any reason unable to post the Letter of Credit within such interim 60 day
period, the parties will negotiate in good faith with respect to whether they
should continue their relationship under the Lease. In the event that the
parties are unable to reach agreement with respect thereto, the Lease and this
Letter Agreement will terminate and neither party shall have any further
liability or obligation with respect to the Lease or this Letter Agreement.

      Thank you for your cooperation.

                                       Sincerely,

                                       SIGNAL PHARMACEUTICALS, INC.


                                       /s/ LUKE EVNIN
                                       ------------------------------
                                       Luke Evnin, President and
                                       Chief Executive Officer


ACKNOWLEDGED AND AGREED:


/s/ ROBERT COURSON
------------------------------
Mr. Robert Courson
Sorrento Valley Business Park


<PAGE>   47
                   [HOFFMAN, FINNEY & KLINEDINST LETTERHEAD]

                                  July 7, 1993




VIA FEDERAL EXPRESS

Jacqueline Johnson, Ph.D.
Signal Pharmaceuticals, Inc.
11545 Sorrento Valley Road, Suite 315
San Diego, CA 92121

      RE:  Lease of Premises at 5555 Oberlin Drive, San Diego,
           California 92121

Dear Dr. Johnson:

      As we discussed this morning, enclosed please find four counterparts of
the Lease and Letter Agreement between Sorrento Valley Business Park and
Signal Pharmaceuticals, Inc. and one original of the Architect's Agreement
dated June 21, 1993, all of which have been signed by Sorrento Valley Business
Park.

      As a follow-up to your discussions with Bob Courson, these documents are
executed and being delivered to you by the Landlord subject to the following
understanding:

      1.    Signal Pharmaceuticals is presently unable to post the required
            letter of credit. You have advised the Landlord that you are now in
            the process of finalizing a license agreement which will trigger the
            release of financing that will enable you to post the $150,000.00
            letter of credit as required under Paragraph 3 of the Addendum. You
            mentioned to me this morning that you expect this process to take
            less than the 60 day period ("Contingency Period") indicated
            in the Letter Agreement.


      2.    References to "The Courson Company" are hereby deemed replaced with
            "Sorrento Valley Business Park" in each place they occur in the
            Letter Agreement.

      3.    Notwithstanding anything to the contrary in the Lease or Letter
            Agreement, if for any reason Signal Pharmaceuticals fails to deliver
            to Landlord the letter


<PAGE>   48

Jacqueline Johnson, Ph.D.
July 7, 1993
Page 2


          of credit on or before September 5, 1993 then Landlord may retain the
          Security Deposit, Signal will provide Landlord with all plans,
          specifications and permits developed and obtained or in process, and,
          at Landlord's option, Landlord may terminate the Lease with no
          liability whatsoever to Signal, including, without limitation, any
          liability or obligation respecting any amounts incurred by Signal in
          connection with the Premises, for its tenant improvement costs, or
          otherwise.

     4.   Notwithstanding anything to the contrary in Paragraph 4 of the Letter
          Agreement, Signal Pharmaceuticals shall be responsible for all costs
          associated with the improvement work in excess of the Allowance.

     5.   Notwithstanding Paragraph 5 of the Letter Agreement, rent shall be
          paid starting with the earlier of December 1, 1993, or the date
          Tenant begins to use the Premises for the conduct of its business, as
          provided in the Lease.

     6.   Paragraph 6 of the Letter Agreement is hereby deemed deleted.

     7.   Notwithstanding execution of the Architect Agreement (Proposal for
          Professional Services dated June 21, 1993, Project 93482) by
          Landlord, if the Lease is terminated by Landlord pursuant to this
          letter, the Architect Agreement shall thereupon be void and of no
          further force and affect. All costs and expenses incurred in
          connection therewith during the Contingency Period shall be Signal's
          sole responsibility, and the Architect shall look solely to Signal
          for payment thereof. Signal shall obtain the Architect's confirmation
          of this provision, to be signified by the Architect's execution of
          this letter in the space provided below.

     Please countersign four counterparts of the enclosed photocopy of this
letter, obtain the Architect's signature below,
<PAGE>   49
Jacqueline Johnson, Ph.D.
July 7, 1993
Page 3

and return two original execution counterparts of the Lease, and the July 2 and
this letter agreement to my attention at your earliest convenience. Please call
me if you have any questions.


                         Very truly yours,


                         /s/ CHARLES P. SANDEL
                         ----------------------
                         Charles P. Sandel

CPS/nlh
Enclosure

AGREED:  Signal Pharmaceuticals, Inc.


By:       [SIG]
   -------------------------------

Its: Vice President Operations
   -------------------------------


AGREED as to Paragraph 76 above:

McGraw/Baldwin Architects



By:       [SIG]
   -------------------------------

Its: Principal
   -------------------------------
<PAGE>   50
                   [HOFFMAN, FINNEY & KLINEDINST LETTERHEAD]


                                  July 19, 1993


Jacqueline Johnson, Ph.D.
Signal Pharmaceuticals, Inc.
11545 Sorrento Valley Road, Suite 315
San Diego, CA 92121


      RE:   LEASE OF PREMISES AT 5555 OBERLIN DRIVE

Dear Dr. Johnson:

      I have not yet received countersigned copies of the Lease, and the July 2,
and July 7 letter agreements regarding the captioned Premises.

      Please telephone me at your earliest convenience.

                                        Very truly yours,


                                        /s/ CHARLES P. SANDEL
                                        --------------------------

                                        Charles P. Sandel


CPS/psl


<PAGE>   51
                   [HOFFMAN, FINNEY & KLINEDINST LETTERHEAD]


                                  July 7, 1993


VIA FEDERAL EXPRESS

Jacqueline Johnson, Ph.D.
Signal Pharmaceuticals, Inc.
11545 Sorrento Valley Road, Suite 315
San Diego, CA 92121

      RE:   LEASE OF PREMISES AT 5555 OBERLIN DRIVE, SAN DIEGO, CALIFORNIA 92121

Dear Dr. Johnson:

      As we discussed this morning, enclosed please find four counterparts of
the Lease and Letter Agreement between Sorrento Valley Business Park and Signal
Pharmaceuticals, Inc. and one original of the Architect's Agreement dated June
21, 1993, all of which have been signed by Sorrento Valley Business Park.

      As a follow-up to your discussions with Bob Courson, these documents are
executed and being delivered to you by the Landlord subject to the following
understanding:

      1.    Signal Pharmaceuticals is presently unable to post the required
            letter of credit. You have advised the Landlord that you are now in
            the process of finalizing a license agreement which will trigger the
            release of financing that will enable you to post the $150,000.00
            letter of credit as required under Paragraph 3 of the Addendum. You
            mentioned to me this morning that you expect this process to take
            less than the 60 day period ("Contingency Period") indicated in the
            Letter Agreement.

      2.    References to "The Courson Company" are hereby deemed replaced with
            "Sorrento Valley Business Park" in each place they occur in the
            Letter Agreement.

      3.    Notwithstanding anything to the contrary in the Lease or Letter
            Agreement, if for any reason Signal Pharmaceuticals fails to deliver
            to Landlord the letter


<PAGE>   52
Jacqueline Johnson, Ph.D.
July 7, 1993
Page 2


            of credit on or before August 15, 1993, then Landlord may retain the
            Security Deposit, Signal will provide Landlord with all plans,
            specifications and permits developed and obtained or in process,
            and, at Landlord's option, Landlord may terminate the Lease with no
            liability whatsoever to Signal, including, without limitation, any
            liability or obligation respecting any amounts incurred by Signal in
            connection with the Premises, for its tenant improvement costs, or
            otherwise.

      4.    Notwithstanding anything to the contrary in Paragraph 4 of the
            Letter Agreement, Signal Pharmaceuticals shall be responsible for
            all costs associated with the improvement work in excess of the
            Allowance.

      5.    Notwithstanding Paragraph 5 of the Letter Agreement, rent shall be
            paid starting with the earlier of December 1, 1993, or the date
            Tenant begins to use the Premises for the conduct of its business,
            as provided in the Lease.

      6.    Paragraph 6 of the Letter Agreement is hereby deemed deleted.

      7.    Notwithstanding execution of the Architect Agreement (Proposal for
            Professional Services dated June 21, 1993, Project 93482) by
            Landlord, if the Lease is terminated by Landlord pursuant to this
            letter, the Architect Agreement shall thereupon be void and of no
            further force and effect. All costs and expenses incurred in
            connection therewith during the Contingency Period shall be Signal's
            sole responsibility, and the Architect shall look solely to Signal
            for payment thereof. Signal shall obtain the Architect's
            confirmation of this provision, to be signified by the Architect's
            execution of this letter in the space provided below.

      Please countersign four counterparts of the enclosed photocopy of this
letter, obtain the Architect's signature below,


<PAGE>   53
Jacqueline Johnson, Ph.D.
July 7, 1993
Page 3


and return two original execution counterparts of the Lease, and the July 2 and
this letter agreement to my attention at your earliest convenience. Please call
me if you have any questions.

                                        Very truly yours,


                                        /s/ CHARLES P. SANDEL
                                        --------------------------

                                        Charles P. Sandel

CPS/nlh
Enclosure

AGREED:

Signal Pharmaceuticals, Inc.

By: /s/ [SIG]
    --------------------------------

Its: V.P. Operations
     -------------------------------


AGREED as to Paragraph 7 above:

McGraw/Baldwin Architects

By: [SIG]
    --------------------------------

Its: Principal
     -------------------------------


<PAGE>   54
SIGNAL PHARMACEUTICALS INC.
11545 Sorrento Valley Rd. Ste. 315
San Diego, CA 92121







                                Charles P. Sandel
                                Hoffman, Finney & Klinedinst
                                Attorneys at Law
                                351 California St.
                                San Francisco, CA 94104



<PAGE>   55
                            FIRST AMENDMENT TO LEASE

      This First Amendment to Lease ("Amendment") dated as of November 4, 1994
is entered into by and between Sorrento Valley Business Park, a California
limited partnership ("Landlord") , and Signal Pharmaceuticals, Inc., a
California corporation ("Tenant"), and is made with reference to the following
facts:

                                    Recitals

      A.    Landlord and Tenant previously entered into a Lease dated April 30,
1993 ("Lease") pursuant to which Tenant has leased from Landlord certain
premises consisting of approximately 10,417 rentable square feet and sometimes
referred to as Suite 100 ("Existing Premises"), located in a building at 5555
Oberlin Drive, San Diego, California 92121 ("Building"). Unless otherwise
indicated, capitalized terms herein shall have the same meanings as in the
Lease.

     B.    Tenant desires to lease additional space in the Building consisting
of approximately 4,341 rentable square feet, as updated (down from 4,585
rentable sq. ft.) and sometimes referred to as Suite 114 ("New Premises"),
pursuant to the right of first refusal set forth in paragraph 2 of the Addendum
to Lease also dated April 30, 1993 ("Addendum"). Unless otherwise expressly
indicated in this Amendment, any reference herein to the Lease shall be deemed
to refer to both the Lease and the Addendum.

      C.    Landlord and Tenant desire to amend the Lease to provide for the New
Premises, an extension of the Lease term and certain other matters, all as set
forth below.

      NOW, THEREFORE, the parties hereby agree as follows:

     1.    New Premises and Its Term. Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord the New Premises, the location of which is
indicated on the diagram of the Building attached hereto as Exhibit 1. The term
of such lease of the New Premises shall be for a period of six (6) years
("6-Year Term"), commencing on the earlier to occur of (i) substantial
completion of the "Tenant Improvements" (described in paragraph 7 below) or (ii)
February 1, 1995 (which earlier date is hereinafter referred to as the
"Extension Commencement Date"). When the actual Extension Commencement Date is
determined, the parties shall execute a memorandum setting forth such date which
shall be attached to this Amendment at that time.

      2.    Extension of Term for Existing Premises. The expiration date of the
term for Tenant's lease of the Existing Premises shall be extended to coincide
with the expiration date of the term for the New Premises. Accordingly, the term
of the lease of the Existing Premises shall likewise expire at the end of the
6-Year Term.

     3.    Base Monthly Rent. Beginning on and as of the Extension Commencement
Date and continuing thereafter throughout the 6-Year Term, the Tenant shall pay
to Landlord as minimum Monthly Rent for the entire Premises (consisting of both
the Existing Premises and New Premises) for each calendar month, the amount of
$25,158.15 ($1.70 per square foot) per month, subject to adjustment as provided
below, in advance, on the first day of each calendar month during the 6-Year
Term. Such Monthly Rent for the entire Premises is calculated and allocated as
follows: (1) $16,953.66 Monthly Rent for the Existing Premises (10,417 rentable
sq. ft. @ $1.63); and (2) $8,204.49 Monthly Rent for the New Premises (4,341
rentable sq. ft. @ $1.89). Monthly Rent for any partial month shall be prorated
and paid in advance on the Extension Commencement Date.

     4.    Rental Adjustments for Existing Premises. The base Monthly Rent for
the Existing Premises shall continue to be adjusted during the 6-Year Term in
the same manner as provided in Paragraph 19 of the Lease. Accordingly, as of the
beginning of the second lease year measured from the Extension Commencement
Date, the base Monthly Rent for the Existing Premises shall be adjusted annually
by multiplying the base Monthly Rent (for the Existing Premises) in effect
immediately prior to such adjustment by 1.05. For example, the base Monthly Rent
for the Existing Premises for the second lease year of the 6-Year Term shall be
$17,801.34 ($16,953.66 x 1.05) per month.


                                     - 1 -
<PAGE>   56
     5.    CPI Adjustment for New Premises. The base Monthly Rent for the New
Premises shall be adjusted upwards (but not downwards) at the beginning of each
lease year during the 6-Year Term commencing with the second lease year of the
6-Year Term (hereinafter called the "Adjustment Date"), based upon and in direct
proportion to any increase in the Consumer Price Index (1988 Revised CPI for
Urban Wage Earners and Clerical Workers - Los Angeles - Anaheim - Riverside All
Items - 1982-84 = 100) established by the United States Department of Labor,
Bureau of Labor Statistics, or any similar successor index established by any
other agency of the United States Government, measured by the difference between
the Index for the month in which the 6-Year Term begins and the Index for the
month of the Adjustment Date. The calculation of such increase in Monthly Rent
shall be made by multiplying the initial base Monthly Rent for the New Premises
($8,204.49) by a fraction whose denominator is the Index for the month in which
the 6-Year Term begins and whose numerator is the Index for the month of the
Adjustment Date. Following the publication of such Index for the month of the
Adjustment Date, Landlord shall calculate and notify Tenant of the amount of the
base Monthly Rent payable per month for the New Premises, as so adjusted
(hereinafter called the "Adjusted Rent") during said lease year. Pending receipt
by Tenant of such calculation and notice from Landlord, Tenant shall continue to
pay, in advance, the same base Monthly Rent per month as paid during the prior
lease year for the New Premises. Upon receipt of such calculation and notice,
Tenant shall commence to pay the Adjusted Rent per month, and shall also pay
such additional amount as may be necessary to increase the base Monthly Rent
payments already made during said period to the amount of the Adjusted Rent, so
that said increase shall be effective retroactively from the Adjustment Date.
Provided, however, in no event shall the percentage increase as determined
herein be less than 4% nor more than 6% from one lease year to the next.

      6.    Additional Rent. Any base Monthly Rents specified above are
exclusive of all further or additional rents for the 6-Year Term, which rents
the Tenant shall also be obligated to pay in accordance with the Lease and this
Amendment. Provided further, for the 6-Year Term, the percentages chargeable to
Tenant for "Additional Rent" (as referred to in the Lease) shall be as follows:

           Tenant's Building Percentage -       64.54%
           Tenant's Project Percentage -        14.12%

For the 6-Year Term, the amount payable by Tenant as Tenant's Project Percentage
(14.12%) of controllable Outside Area Expenses shall not increase by more than
5% per annum during the 6-Year Term.

      7.    Tenant Improvements for New Premises. The Landlord shall contribute
to the cost of the proposed tenant improvements in the New Premises as further
described on Exhibit 2 hereto ("Tenant Improvements") an allowance in the
aggregate sum of up to $284,034.89. Any and all costs associated with the Tenant
Improvements in excess of such contribution by Landlord shall be paid by Tenant.
Tenant shall promptly cause to be prepared plans and specifications for such
Tenant Improvements in accordance with the Work Letter Agreement attached hereto
as Exhibit 3 and incorporated by reference herein.

      8.    Letter of Credit. The $150,000 Letter of Credit referred to in
paragraph 3 of the Addendum shall remain on deposit with Landlord and shall
continue to be renewed annually by Tenant (at least 30 business days before any
expiration thereof) in the full face amount of $150,000 without any reduction,
except as otherwise provided immediately below. If Tenant shall have faithfully
observed and performed all of the terms and conditions of the Lease (including
this Amendment), then, at the end of the fifty-second (52nd) month of the 6-Year
Term, the Tenant shall be entitled to replace the existing Letter of Credit with
a Letter of Credit in the face amount of $100,000 and otherwise upon the same
terms as the initial Letter of Credit. Thereafter, and subject to the same
condition that Tenant shall have faithfully observed and performed under the
Lease (including this Amendment), Tenant may, at the end of the sixty-second
(62nd) month of the 6-Year Term, substitute a Letter of Credit in the amount of
$50,000 and otherwise upon the same terms as the initial Letter of Credit.
Additionally, when the existing Letter of Credit is next renewed, the incorrect
reference therein to "Lease Agreement dated July 19, 1993", shall be corrected
to read "Lease dated April 30, 1993". Except as otherwise


                                     - 2 -
<PAGE>   57
provided in this paragraph 8, all provisions of paragraph 3 of the Addendum
shall continue to apply to the Letter of Credit, which may be drawn upon by
Landlord as provided in such paragraph of the Addendum. None of the provisions
of the Addendum have been modified or otherwise affected by this Amendment
except as specifically provided herein.

      9.    Right of First Offer On Additional Space (Suites 116 and 120).
Reference is made to certain additional space in the Building consisting of
approximately 8,341 rentable square feet sometimes referred to as Suite 116
(2,560 rentable sq. ft.) and Suite 120 (5,781 rentable sq. ft.) as further
indicated on the diagram attached as Exhibit 1 ("Additional Premises") . The
Additional Premises is leased by Landlord to Mizuho USA, Inc. ("Mizuho") who is
now in possession thereof. If prior to any termination or expiration of the
Lease the Landlord receives notice from Mizuho or otherwise itself reasonably
determines that Mizuho intends by a date certain to vacate the Additional
Premises, the Landlord shall promptly give written notice to Tenant specifying
the basic terms and conditions ("Landlord's Offer") under which Landlord would
then be willing to lease the Additional Premises to Tenant. Tenant may accept or
reject Landlord's Offer by giving written notice to Landlord at any time prior
to the expiration of thirty (30) days ("30-Day Period") immediately following
the date on which Landlord gives its written notice specifying the Landlord's
Offer. If Tenant does not so accept Landlord's Offer within the 30-Day Period
and/or if Tenant does not give any written notice to Landlord prior to the
expiration of the 30-Day Period, the Landlord's Offer shall be deemed withdrawn,
rejected and revoked. In such event, Landlord shall not have any further
obligation to Tenant of any kind relating to or concerning the Additional
Premises and Landlord may then or thereafter market or otherwise use the
Additional Premises in any manner as Landlord may desire in its sole and
absolute discretion.

      10.   Prior Exercise of Right of First Refusal for New Premises. Tenant
acknowledges that it has exercised its right of first refusal to lease the space
in the Building which is the New Premises. Accordingly, paragraph 2 of the
Addendum is hereby cancelled and shall be of no further force or effect.

     11.   Change of Landlord's Address. For the purpose of giving any notice or
demand to Landlord under the Lease (including this Amendment), the Landlord's
address is hereby changed to and designated as: Sorrento Valley Business Park,
c/o Pardee Brothers, 8530 Wilshire Boulevard, Suite 509, Beverly Hills,
California 90211, Attn: Hoyt S. Pardee.

      12.   Full Force and Effect. The Lease, as modified herein, shall be and
remain in full force and effect. All of the terms and provisions set forth in
the Lease shall apply to the New Premises except as otherwise indicated in this
Amendment. Without limiting the generality of the foregoing and except as
otherwise indicated herein, the term "Premises" as used in the Lease shall be
deemed to include both the Existing Premises and the New Premises.

      13.   Counterparts. This Amendment may be executed in counterparts each of
which shall be deemed an original and all of which shall constitute one and the
same agreement.

            IN WITNESS WHEREOF, the parties have executed this Amendment as of
the date set forth above.


"Tenant":                              "Landlord":

SIGNAL PHARMACEUTICALS, INC.,          SORRENTO VALLEY BUSINESS PARK,
a California corporation               a California limited partnership

                                       By  HSP Sorrento, Inc. a Cal. corp.
By  /s/ BRADLEY B. GORDON                  General Partner
    --------------------------

Title  V.P. Finance, CFO                By  [SIG]
       -----------------------              ------------------------------------
                                       Title  President
                                              ----------------------------------


                                     - 3 -
<PAGE>   58











                             [PREMISE MAP DIAGRAM]










                                   EXHIBIT 1
<PAGE>   59
                TENANT IMPROVEMENTS FOR NEW PREMISES (Suite 114)


Tenant Improvements per plans and specifications dated 10/13/94 prepared and
submitted by David Begent & Co. (DBC)

Tenant Improvements to be provided are outlined as follows:

<TABLE>
<S>                                                      <C>
            Architecture & Engineering (DBC)             $ 25,000 *
            Fees & Permits                                 15,000 *
            Base Construction Contract (DBC)              306,982
            Lyline (millwork)                              63,379
            Protection One (fire-life safety)               3,990
                                                          -------
            TOTAL TENANT IMPROVEMENTS                    $414,351
</TABLE>


*     current estimates




                                    EXHIBIT 2
<PAGE>   60
                              WORK LETTER AGREEMENT


      1.    Tenant's Work. Tenant at its cost (subject to Landlord's
contribution provided in Paragraph 3 below) shall perform tenant improvement
work for the New Premises in accordance with plans and specifications approved
by Landlord and Tenant. Tenant's work shall include, without limitation, all
design and space planning work, all interior partitions, interior doors,
corridor entrance doors, cabinets, lock sets and latch sets, electrical outlets,
telephone outlets, light fixtures, heating ventilation and air conditioning
distribution ducting and heat pumps, plumbing, any fire protection system other
than Landlord's existing sprinkler system, any modifications to Landlord's
sprinkler system, floor coverings, perimeter and interior wall surfaces, and
Building Standard window coverings.

      2.    Standards for Tenant's Work. Tenant's work shall be completed
pursuant to the following provisions:

          (a)   Tenant shall prepare and submit to Landlord two (2) sets of
final plans and specifications showing the architectural design of the New
Premises, including the basic mechanical system and electrical system within the
New Premises, plumbing, partitions and doors, complete fixturing information,
and material selections and finishes. Within five (5) working days after receipt
of such final plans and specifications, Landlord shall approve or suggest
modifications to such final plans and specifications. Landlord shall not
unreasonably refuse or delay approval of Tenant's final plans and
specifications. Tenant may object to any of the suggested modifications by
notice to Landlord within five (5) working days after receipt of such suggested
modifications, and unless Tenant so objects such suggested modifications shall
be deemed approved by Tenant. Tenant shall also submit all proposed change
orders in writing (with sufficient detail to enable Landlord to understand the
nature of the proposed change) to Landlord for Landlord's prior written
approval, which shall not be unreasonably refused or delayed. Landlord's consent
shall not be required for any change order for work costing less than Five
Thousand Dollars ($5,000), provided that there are no more than five (5) such
change orders in any thirty (30) day period. Any proposed change order shall be
deemed approved by Landlord unless Landlord disapproves same within three (3)
business days after the proposed change order is received by Landlord, provided
that Tenant's notice requesting approval of such change order clearly notifies
Landlord that the proposed change order shall be deemed approved if not
disapproved within such three (3) business day period. The individuals to whom
Tenant shall submit plans and specifications for approval shall be Elizabeth A.
Gallagher, with a copy to Hoyt S. Pardee, and the individual to whom Landlord
shall communicate regarding plans and specifications shall be either Jackie
Johnson or Bruce Birch. While Landlord has the right to approve the plans and
specifications, Landlord's sole interest in doing so is to protect the Building
and Landlord's interests. Accordingly, Tenant shall not rely on Landlord's
approvals and Landlord shall not be the guarantor of, nor in any way responsible
for, the accuracy or correctness of any such plans and specifications, or the
accuracy or correctness of any such plans and specifications, or the compliance
thereof with applicable laws, and Landlord shall incur no liability of any kind
by reason of granting any such approvals.

            (b)   Tenant shall complete all work in accordance with the final
plans and specifications approved by Landlord. Tenant shall make no alterations,
additions, or reinforcements to the structure of the Building except as
specifically approved by the Landlord in such final plans and specifications.
Tenant, at its expense, shall procure all building and other permits required
for completion of Tenant's work. Tenant agrees that all work done by Tenant and
its contractors and subcontractors shall be performed in full compliance with
all laws, rules, orders, permits, ordinances, directions, regulations and
requirements of all governmental agencies, offices and departments having
jurisdiction, including without limitation applicable provisions pertaining to
use of hazardous or toxic materials during construction, and in full compliance
with rules, orders, directions,


                                   EXHIBIT 3
<PAGE>   61
regulations and requirements of any insurance underwriting board, inspection
bureau or insurance carrier insuring the New Premises or Building.

            (c)   Tenant shall immediately submit to Landlord the names and
addresses of the general, mechanical, and electrical contractors which Tenant
intends to engage for construction of Tenant's improvements, the commencement
date of construction, and the estimated date of completion of construction.
Landlord shall have the right to enter the New Premises at any time to post any
notice of nonresponsibility or other notice on the New Premises during Tenant's
construction. All contractors and subcontractors retained by Tenant shall be
subject to the approval of Landlord, which shall not be unreasonably refused or
delayed. Landlord hereby consents that Tenant may employ David Begent & Co. as
general contractor. All contractors retained by Tenant shall be bondable,
licensed contractors, possessing good labor relations and capable of performing
quality workmanship and working in harmony with Landlord's general contractor
and other contractors.

            (d)   During the course of construction, Tenant shall maintain
builder's risk insurance in form and content satisfactory to Landlord. Tenant's
insurance shall name Landlord as an additional insured and shall provide that it
may not be canceled or amended without twenty (20) days prior written notice to
Landlord. Prior to commencement of construction, Tenant shall provide Landlord
with a certificate of such insurance and evidence of any required bonds in form
satisfactory to Landlord.

            (e)   Tenant's work shall be completed with reasonable diligence
and in such a manner as not to interfere with the use or enjoyment of other
portions of the Building or common areas by Landlord or other tenants. Tenant's
contractors shall provide and pay for all temporary power, water, and other
utility facilities as required in connection with the construction of Tenant's
improvements. Tenant's contractors shall provide their own dumpster for
collection and disposition of construction debris, which shall be located at a
location approved by Landlord, and all construction debris from Tenant's
construction shall be disposed of in Tenant's contractor's dumpster and not in
trash facilities for the Project. Tenant's contractor's construction material,
tools, equipment, and debris shall be stored only within the New Premises, or in
areas designated for that purpose by Landlord. Work space exterior to the New
Premises shall be available only in the discretion of Landlord. Tenant's work
shall be subject to the inspection of Landlord and Landlord's architect and
general contractor during the course of construction.

            (f)   Tenant shall indemnify and hold harmless Landlord for any and
all claims arising from Tenant's work as provided in Paragraph 12.A and
Paragraph 18 of the Lease. Tenant's construction contracts shall include a
similar indemnification from its contractors for the benefit of Landlord. Tenant
shall pay for all damage to the Building, the Project, or appurtenant areas or
equipment, as well as all damage to tenants or occupants thereof or their
property caused by Tenant, its agents, employees, contractors, licensees, or
invitees. Tenant acknowledges that Tenant's obligation set forth in Paragraph 18
of the Lease to keep the Building and Premises (including the New Premises) free
of all liens shall include, but not be limited to, an obligation at Tenant's
expense to obtain and record a release bond as provided in Section 3143 of the
California Civil Code or other provision of law, as requested by Landlord.

            (g)   Tenant shall be solely responsible for the adequacy in all
respects of the final plans and specifications, including without limitation
compliance with all governmental requirements, compatibility with the Building
shell, and any special requirements of Tenant's proposed improvements, equipment
or machines with respect to ambient temperatures, electrical use or current,
water availability or otherwise. Tenant acknowledges that in connection with
obtaining Landlord's approval of the final plans and specifications, Tenant may
provide Landlord with certain information regarding its specific needs relating
to the New Premises in developing plans and specifications for its improvements
and that Tenant may Provide some of its own equipment for installation in the
New Premises. Tenant further acknowledges that Landlord will make no independent
review of any such information and that Landlord does not warrant, either
expressly or impliedly, the adequacy of the plans and specifications for the
said


                                     - 2 -
<PAGE>   62
improvements, or the adequacy of Tenant's improvements or Tenant's equipment for
Tenant's intended purpose.

            (h)   All improvements made pursuant hereto shall during the term of
this Lease, as it may be extended, constitute the property of Tenant. Upon
expiration or termination of this Lease, however, unless Landlord shall require
the removal or consent in writing to the removal thereof by Tenant, all such
improvements shall remain in place and the ownership thereof shall revert to
Landlord.

            (i)   Tenant shall provide Landlord with a complete copy of "as
built" construction drawings at the completion of the tenant improvement work.

     3.    Landlord's Contribution. Landlord shall contribute to the cost of
Tenant's work for the New Premises an improvement allowance ("Allowance") in an
amount equal to $284,034.89. Any and all costs associated with Tenant's work in
excess of such Allowance shall be paid by Tenant. The Allowance shall be paid
directly to Tenant as reimbursement to it for such costs actually paid by
Tenant, as further specified below. Payments by Landlord shall be made not more
often than monthly and shall be made on the basis of billings for work completed
which are approved and paid by Tenant and submitted to Landlord together with
evidence reasonably satisfactory to Landlord of completion of the work for which
the billing is submitted and Tenant's prior payment thereof. For each such
billing Landlord shall pay to Tenant as reimbursement to it an amount equal to
sixty-nine and one-tenth percent (69.1%) of the full amount of such billing
previously paid by Tenant (but in no event more than the aggregate sum of
$284,034.89 as and for the Allowance), each payment to be made within twenty
(20) days after presentation to Landlord of the following:

            (a)   A certificate of Tenant's general contractor showing the
portion of Tenant's work which has theretofore been completed pursuant to the
approved plans and specifications or other evidence satisfactory to Landlord
specifying the portion of the improvements theretofore completed pursuant to the
approved plans and specifications.

            (b)   Evidence of prior payment by Tenant of the full amount of such
billing.

            (c)   Partial waivers to date of all mechanic's and materialmen's
liens of any kind (which may be conditional upon payment as to the work
currently invoiced but shall be unconditional as to all previously invoiced
work) in form and substance satisfactory to Landlord.

          (d) Any other documentation reasonably required by Landlord.

     Landlord shall withhold ten percent of the Allowance until completion of
all of Tenant's work and the lien-free expiration of the time for the filing of
any mechanics' liens claimed or which might be filed on account of any work
ordered by Tenant or its contractors or subcontractors. The cost of any change
orders shall be paid by Tenant without any reimbursement to the extent the cost
thereof is not included within the Allowance. Tenant shall be liable for that
portion of all taxes levied against its improvements.

      4.    Adjustment of Extension Commencement Date. The Extension
Commencement Date shall be delayed by one (1) business day for each business day
of actual delay in the design or construction of the tenant improvement work for
the New Premises that is caused by any Force Majeure Delay. "Force Majeure
Delay" shall mean any actual delay which is attributable to any: (i) actual,
industry-wide strike, lockout or other labor or industrial disturbance, civil
disturbance, act of the public enemy, war, riot, sabotage, blockade, or embargo;
(ii) earthquake, fire, hurricane, tornado, flood, explosion, or other casualty
beyond the control of the party for whom performance is required or of its
contractors or other representatives. No Force Majeure Delay shall be deemed to
have occurred unless and until the party claiming such Force Majeure Delay has
provided written notice to the other party specifying the action or inaction
that such notifying party contends constitutes a Force Majeure Delay. If such
action or inaction is not cured within two (2) business days after receipt of
such notice, then a Force Majeure Delay, as set forth in such notice, shall be
deemed to have


                                     - 3 -
<PAGE>   63
occurred commencing as of the date after such notice was received and continuing
for the number of days the substantial completion of the tenant improvement work
for the New Premises was in fact delayed as a direct result of such action or
inaction.

      5.    No Fee to Landlord. Except as otherwise provided herein, Landlord
shall receive no fee for supervision, profit, overhead or general conditions in
connection with the tenant improvement work.

      6.    No Miscellaneous Charges. Neither Tenant nor its contractor shall be
charged by Landlord for parking (to the extent parking is available) or for the
use of electricity, water or HVAC during construction of the tenant improvements
for the New Premises.


                                     - 4 -
<PAGE>   64
                            SECOND AMENDMENT TO LEASE

      This Second Amendment to Lease ("Amendment") dated as of May 31, 1996 is
entered into by and between Sorrento Valley Business Park, a California limited
partnership ("Landlord") , and Signal Pharmaceuticals, Inc., a California
corporation ("Tenant") , and is made with reference to the following facts:

                                    Recitals

      A.    Landlord and Tenant previously entered into a Lease dated April 30,
1993 ("Lease") pursuant to which Tenant has leased from Landlord certain
premises consisting of approximately 10,417 rentable square feet and sometimes
referred to as Suite 100 ("Existing Premises"), located in a building at 5555
Oberlin Drive, San Diego, California 92121 ("Building") . Landlord and Tenant
previously executed the First Amendment to Lease dated November 4, 1994,
pursuant to which Tenant has leased from Landlord approximately 4,341 square
feet and sometimes referred to as Suite 114 ("New Premises") . Unless otherwise
indicated, capitalized terms herein shall have the same meanings as in the
Lease.

      B.    Tenant desires to lease additional space in the Building consisting
of approximately 8,341 rentable square feet, and sometimes referred to as Suites
116 and 120 ("Additional Premises"), pursuant to the right of first offer set
forth in paragraph 9 of the First Amendment to Lease dated November 4, 1994.
Unless otherwise expressly indicated in this Amendment, any reference herein to
the Lease shall be deemed to refer to both the Lease and the First Amendment to
Lease.

      C.    Landlord and Tenant desire to amend the Lease to provide for the
Additional Premises.

      NOW, THEREFORE, the parties hereby agree as follows:

      1.    Additional Premises and Its Term. Landlord hereby leases to Tenant
and Tenant hereby leases from Landlord the Additional Premises, the location of
which is indicated on the diagram of the Building attached hereto as Exhibit 1.
The term of such lease of the Additional Premises shall be for a period of
fifty-six (56) months, commencing June 1, 1996 and ending January 31, 2001 (the
"56-Month Term").

     2.    Base Monthly Rent for Additional Premises. Tenant shall pay to
Landlord as minimum Monthly Rent including all annual rental adjustments for the
Additional Premises for each calendar month, payable monthly in advance, the
following:

            a.    Except as hereinafter provided, no base rent shall be payable
      during the period commencing June 1, 1996 through September 30 , 1996.

            b.    $4,170.50 ($0.50 NNN per square foot) per month commencing
      October 1, 1996 through December 31, 1996.

            c.    $13,429.01 ($1.61 NNN per square foot) per month commencing
      January 1, 1997 through December 31, 1997.

            d.    $13,929.47 ($1.67 NNN per square foot) per month commencing
      January 1, 1998 through December 31, 1998.

            e.    $14,513.34 ($1.74 NNN per square foot) per month commencing
      January 1, 1999 through December 1999.

            f.    $15,097.21 ($1.81 NNN per square foot) per month commencing
      January 1, 2000 through December 31, 2000.

            g.    $15,681.08 ($1.88 NNN per square foot) for the month
      commencing January 1, 2001 through January 31, 2001.

      3.    Additional Rent. Any base Monthly Rents specified above are
exclusive of all further or additional rents for the 56-month Term, which rents
the Tenant shall also be obligated to pay in accordance with the Lease and this
Amendment. Provided further, for the 56-month Term, the percentages chargeable
to Tenant for "Additional Rent" (as referred to in the Lease) for the Additional
Premises shall be as follows:


                                     - 1 -
<PAGE>   65
            Tenant's Building Percentage -        100%
            Tenant's Project Percentage -         22.13%

For the 56-month Term, the amount payable by Tenant as Tenant's Project
Percentage (22.13%) of controllable Outside Area Expenses shall not increase by
more than 5% per annum during the 56-month Term.

      4.    Tenant Improvements for New Premises. After September 30, 1996, the
Landlord shall contribute to the cost of the proposed tenant improvements in the
Additional Premises ("Tenant Improvements") an allowance in the aggregate sum of
up to $300,000.00. Any and all costs associated with the Tenant Improvements in
excess of such contribution by Landlord shall be paid by Tenant. Tenant shall
cause to be prepared plans and specifications for such Tenant Improvements in
accordance with the Work Letter Agreement attached hereto as Exhibit 2 and
incorporated by reference herein.

      5.    Letter of Credit. The $150,000 Letter of Credit on deposit with
Landlord shall secure Tenant's obligations under this Second Amendment to Lease.

      6.    Prior Exercise of Right of First Refusal for Additional Premises.
Tenant acknowledges that it has exercised its right of first refusal to lease
the space in the Building which is the Additional Premises. Accordingly,
paragraph 9 of the First Amendment to Lease is hereby canceled and shall be of
no further force or effect.

      7.    Right to Terminate. Notwithstanding anything herein contained to the
contrary, Tenant shall have the right to cancel and terminate the Lease as to
the Additional Premises only on or before September 30, 1996 in the event, and
only in the event, that Tenant's second strategic partnership in inflammation
(the "Strategic Partnership") is not consummated by said date. Such right of
termination shall be exercised, if at all, by notice in writing to Landlord,
which notice shall be certified by an officer of Tenant that the Strategic
Partnership has not been consummated. If such written notice is not received by
Landlord on or before September 30, 1996, this right to terminate shall be
deemed to have been waived, and Tenant shall be bound by the provisions of this
Amendment.

            In the event that Tenant exercises such right of termination,
Tenant shall vacate the Additional Premises within thirty (30) days of the date
of such notice, and Tenant shall pay to Landlord as rent for the Additional
Premises the sum of $5,922.11 ($.71 NNN per square foot) per month commencing
June 1, 1996 to the date that Tenant vacates the Additional Premises. Rent for
any partial month shall be prorated.

      8.    Full Force and Effect. The Lease, as modified herein, shall be and
remain in full force and effect. All of the terms and provisions set forth in
the Lease shall apply to the Additional Premises except as otherwise indicated
in this Amendment. Without limiting the generality of the foregoing and except
as otherwise indicated herein, the term "Premises" as used in the Lease shall be
deemed to include both the Existing Premises, the New Premises, and the
Additional Premises.

      9.    Counterparts. This Amendment may be executed in counterparts each of
which shall be deemed an original and all of which shall constitute one and the
same agreement.


                                     - 2 -
<PAGE>   66
            IN WITNESS WHEREOF, the parties have executed this Amendment as of
the date set forth above.


"Tenant":                               "Landlord":

SIGNAL PHARMACEUTICALS, INC.,           SORRENTO VALLEY BUSINESS PARK,
a California corporation                a California limited partnership

                                        By  HSP Sorrento, Inc. a Cal. corp.
By  /s/ BRADLEY B. GORDON  6-17-96          General Partner
    ------------------------------

Title  V.P. Finance, CFO                By  [SIG]
       ---------------------------          --------------------------------
                                        Title  Vice President
                                               -----------------------------


                                     - 3 -
<PAGE>   67









                             [PREMISE MAP DIAGRAM]










<PAGE>   68
                              WORK LETTER AGREEMENT



      1.    Tenant's Work. Tenant at its cost (subject to Landlord's
contribution provided in Paragraph 3 below) shall perform tenant improvement
work for the New Premises in accordance with plans and specifications approved
by Landlord and Tenant. Tenant's work shall include, without limitation, all
design and space planning work, all interior partitions, interior doors,
corridor entrance doors, cabinets, lock sets and latch sets, electrical outlets,
telephone outlets, light fixtures, heating ventilation and air conditioning
distribution ducting and heat pumps, plumbing, any fire protection system other
than Landlord's existing sprinkler system, any modifications to Landlord's
sprinkler system, floor coverings, perimeter and interior wall surfaces, and
Building Standard window coverings.

      2.    Standards for Tenant's Work. Tenant's work shall be completed
pursuant to the following provisions:

            (a)   Tenant shall prepare and submit to Landlord two (2) sets of
final plans and specifications showing the architectural design of the New
Premises, including the basic mechanical system and electrical system within the
New Premises, plumbing, partitions and doors, complete fixturing information,
and material selections and finishes. Within five (5) working days after receipt
of such final plans and specifications, Landlord shall approve or suggest
modifications to such final plans and specifications. Landlord shall not
unreasonably refuse or delay approval of Tenant's final plans and
specifications. Tenant may object to any of the suggested modifications by
notice to Landlord within five (5) working days after receipt of such suggested
modifications, and unless Tenant so objects such suggested modifications shall
be deemed approved by Tenant. Tenant shall also submit all proposed change
orders in writing (with sufficient detail to enable Landlord to understand the
nature of the proposed change) to Landlord for Landlord's prior written
approval, which shall not be unreasonably refused or delayed. Landlord's consent
shall not be required for any change order for work costing less than Five
Thousand Dollars ($5,000), provided that there are no more than five (5) such
change orders in any thirty (30) day period. Any proposed change order shall be
deemed approved by Landlord unless Landlord disapproves same within three (3)
business days after the proposed change order is received by Landlord, provided
that Tenant's notice requesting approval of such change order clearly notifies
Landlord that the proposed change order shall be deemed approved if not
disapproved within such three (3) business day period. The individuals to whom
Tenant shall submit plans and specifications for approval shall be Elizabeth A.
Gallagher, with a copy to Hoyt S. Pardee, and the individual to whom Landlord
shall communicate regarding plans and specifications shall be either Jackie
Johnson or Bruce Birch. While Landlord has the right to approve the plans and
specifications, Landlord's sole interest in doing so is to protect the Building
and Landlord's interests. Accordingly, Tenant shall not rely on Landlord's
approvals and Landlord shall not be the guarantor of, nor in any way responsible
for, the accuracy or correctness of any such plans and specifications, or the
accuracy or correctness of any such plans and specifications, or the compliance
thereof with applicable laws, and Landlord shall incur no liability of any kind
by reason of granting any such approvals.

            (b)   Tenant shall complete all work in accordance with the final
plans and specifications approved by Landlord. Tenant shall make no alterations,
additions, or reinforcements to the structure of the Building except as
specifically approved by the Landlord in such final plans and specifications.
Tenant, at its expense, shall procure all building and other permits required
for completion of Tenant's work. Tenant agrees that all work done by Tenant and
its contractors and subcontractors shall be performed in full compliance with
all laws, rules, orders, permits, ordinances, directions, regulations and
requirements of all governmental agencies, offices and departments having
jurisdiction, including without limitation applicable provisions pertaining to
use of hazardous or toxic materials during construction, and in full compliance
with rules, orders, directions,


                                   EXHIBIT 2
<PAGE>   69
regulations and requirements of any insurance underwriting board, inspection
bureau or insurance carrier insuring the New Premises or Building.

          (c)   Tenant shall immediately submit to Landlord the names and
addresses of the general, mechanical, and electrical contractors which Tenant
intends to engage for construction of Tenant's improvements, the commencement
date of construction, and the estimated date of completion of construction.
Landlord shall have the right to enter the New Premises at any time to post any
notice of nonresponsibility or other notice on the New Premises during Tenant's
construction. All contractors and subcontractors retained by Tenant shall be
subject to the approval of Landlord, which shall not be unreasonably refused or
delayed. Landlord hereby consents that Tenant may employ David Begent & Co. as
general contractor. All contractors retained by Tenant shall be bondable,
licensed contractors, possessing good labor relations and capable of performing
quality workmanship and working in harmony with Landlord's general contractor
and other contractors.

            (d)   During the course of construction, Tenant shall maintain
builder's risk insurance in form and content satisfactory to Landlord. Tenant's
insurance shall name Landlord as an additional insured and shall provide that it
may not be canceled or amended without twenty (20) days prior written notice to
Landlord. Prior to commencement of construction, Tenant shall provide Landlord
with a certificate of such insurance and evidence of any required bonds in form
satisfactory to Landlord.

            (e)   Tenant's work shall be completed with reasonable diligence and
in such a manner as not to interfere with the use or enjoyment of other portions
of the Building or common areas by Landlord or other tenants. Tenant's
contractors shall provide and pay for all temporary power, water, and other
utility facilities as required in connection with the construction of Tenant's
improvements. Tenant's contractors shall provide their own dumpster for
collection and disposition of construction debris, which shall be located at a
location approved by Landlord, and all construction debris from Tenant's
construction shall be disposed of in Tenant's contractor's dumpster and not in
trash facilities for the Project. Tenant's contractor's construction material,
tools, equipment, and debris shall be stored only within the New Premises, or in
areas designated for that purpose by Landlord. Work space exterior to the New
Premises shall be available only in the discretion of Landlord. Tenant's work
shall be subject to the inspection of Landlord and Landlord's architect and
general contractor during the course of construction.

          (f)   Tenant shall indemnify and hold harmless Landlord for any and
all claims arising from Tenant's work as provided in Paragraph 12.A and
Paragraph 18 of the Lease. Tenant's construction contracts shall include a
similar indemnification from its contractors for the benefit of Landlord. Tenant
shall pay for all damage to the Building, the Project, or appurtenant areas or
equipment, as well as all damage to tenants or occupants thereof or their
property caused by Tenant, its agents, employees, contractors, licensees, or
invitees. Tenant acknowledges that Tenant's obligation set forth in Paragraph 18
of the Lease to keep the Building and Premises (including the New Premises) free
of all liens shall include, but not be limited to, an obligation at Tenant's
expense to obtain and record a release bond as provided in Section 3143 of the
California Civil Code or other provision of law, as requested by Landlord.

            (g)   Tenant shall be solely responsible for the adequacy in all
respects of the final plans and specifications, including without limitation
compliance with all governmental requirements, compatibility with the Building
shell, and any special requirements of Tenant's proposed improvements, equipment
or machines with respect to ambient temperatures, electrical use or current,
water availability or otherwise. Tenant acknowledges that in connection with
obtaining Landlord's approval of the final plans and specifications, Tenant may
provide Landlord with certain information regarding its specific needs relating
to the New Premises in developing plans and specifications for its improvements
and that Tenant may provide some of its own equipment for installation in the
New Premises. Tenant further acknowledges that Landlord will make no independent
review of any such information and that Landlord does not warrant, either
expressly or impliedly, the adequacy of the plans and specifications for the
said


                                       2
<PAGE>   70
improvements, or the adequacy of Tenant's improvements or Tenant's equipment for
Tenant's intended purpose.

            (h)   All improvements made pursuant hereto shall during the term of
this Lease, as it may be extended, constitute the property of Tenant. Upon
expiration or termination of this Lease, however, unless Landlord shall require
the removal or consent in writing to the removal thereof by Tenant, all such
improvements shall remain in place and the ownership thereof shall revert to
Landlord.

            (i)   Tenant shall provide Landlord with a complete copy of "as
built" construction drawings at the completion of the tenant improvement work.

      3.    Landlord's Contribution. Landlord shall contribute to the cost of
Tenant's work for the New Premises an improvement allowance ("Allowance") in an
amount equal to $300,000.00. Any and all costs associated with Tenant's work in
excess of such Allowance shall be paid by Tenant. The Allowance shall be paid
directly to Tenant as reimbursement to it for such costs actually paid by
Tenant, as further specified below. Payments by Landlord shall be made not more
often than monthly and shall be made on the basis of billings for work completed
which are approved and paid by Tenant and submitted to Landlord together with
evidence reasonably satisfactory to Landlord of completion of the work for which
the billing is submitted and Tenant's prior payment thereof. For each such
billing, Landlord shall pay to Tenant as reimbursement to it a fraction of the
full amount of such billing previously paid by Tenant of which $300,000.00 is
the denominator and the total cost of the Tenant Improvements is the numerator
(but in no event more than the aggregate sum of $300,000.00 as and for the
Allowance) , each payment to be made within twenty (20) days after presentation
to Landlord of the following

            (a)   A certificate of Tenant's general contractor showing the
portion of Tenant's work which has theretofore been completed pursuant to the
approved plans and specifications or other evidence satisfactory to Landlord
specifying the portion of the improvements theretofore completed pursuant to the
approved plans and specifications.

            (b) Evidence of prior payment by Tenant of the full amount of such
billing.

            (c)   Partial waivers to date of all mechanic's and materialmen's
liens of any kind (which may be conditional upon payment as to the work
currently invoiced but shall be unconditional as to all previously invoiced
work) in form and substance satisfactory to Landlord.

            (d)   Any other documentation reasonably required by Landlord.

      Landlord shall withhold ten percent of the Allowance until completion of
all of Tenant's work and the lien-free expiration of the time for the filing of
any mechanics' liens claimed or which might be filed on account of any work
ordered by Tenant or its contractors or subcontractors. The cost of any change
orders shall be paid by Tenant without any reimbursement to the extent the cost
thereof is not included within the Allowance. Tenant shall be liable for that
portion of all taxes levied against its improvements.

      4.    No Fee to Landlord. Except as otherwise provided herein, Landlord
shall receive no fee for supervision, profit, overhead or general conditions in
connection with the tenant improvement work.

      5.    No Miscellaneous Charges. Neither Tenant nor its contractor shall be
charged by Landlord for parking (to the extent parking is available) or for the
use of electricity, water or HVAC during construction of the tenant improvements
for the New Premises.


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