<PAGE>   1
                                                                   EXHIBIT 10.26

                          SORRENTO VALLEY BUSINESS PARK


                                      LEASE

                                    SUITE 100

                                      From

                              HUB PROPERTIES TRUST
                     a Maryland Real Estate Investment Trust

                                       To

                          SIGNAL PHARMACEUTICALS, INC.
                            a California Corporation



                               5626 Oberlin Drive
                           San Diego, California 92121



<PAGE>   2

                               Table of Contents.


<TABLE>
<S>        <C>                                                                               <C>
ARTICLE 1  Reference Data....................................................................1
        1.1    Introduction and Subjects Referred To.........................................1

ARTICLE 2  Premises and Term.................................................................2
        2.1    Premises......................................................................2
        2.2    Term..........................................................................3
        2.3    Termination Option............................................................3

ARTICLE 3  Commencement and Condition .......................................................3
        3.1  Commencement Date...............................................................3
        3.2  Condition of Premises...........................................................3

ARTICLE 4  Rent and Other Charges............................................................4
        4.1  The Annual Fixed Rent...........................................................4
        4.2  Additional Rent.................................................................4
        4.3    Real Estate Taxes.............................................................5
        4.4  Personal Property Taxes.........................................................6
        4.5  Operating Costs.................................................................6
        4.6  Insurance.......................................................................9
        4.7  Utilities......................................................................11
        4.8  Late Payment of Rent...........................................................12
        4.9  Security Deposit...............................................................12

ARTICLE 5  Landlord's Covenants.............................................................14
        5.1  Heat and Air-Conditioning......................................................14
        5.2  Water..........................................................................14
        5.3  Cleaning.......................................................................14
        5.4  Lighting.......................................................................15
        5.5  Repairs........................................................................15
        5.6  Repair Cost Waiver.............................................................16
        5.7  Interruption...................................................................16
        5.8  Outside Services...............................................................16
        5.9  Access to Building.............................................................17
        5.10  Insurance.....................................................................17

ARTICLE 6  Tenant's Additional Covenants....................................................17
        6.1  Perform Obligations............................................................17
        6.2  Use............................................................................17
        6.3  Repair and Maintenance.........................................................18
        6.4  Compliance with Law............................................................18
        6.5  Indemnification................................................................19
        6.6  Landlord's Right to Enter......................................................19
        6.7  Personal Property at Tenant's Risk.............................................20
        6.8  Payment of Landlord's Cost of Enforcement......................................20
        6.9  Yield Up.......................................................................20
        6.10  Rules and Regulations.........................................................21
        6.11  Estoppel Certificate..........................................................21
        6.12  Landlord's Expenses Re Consents...............................................21
        6.13  Financial Information.........................................................21
        6.14  Assignment and Subletting.....................................................22
        6.15    Nuisance....................................................................25
        6.16  Equipment; Floor Load.........................................................26

</TABLE>



<PAGE>   3

                                      -ii-

<TABLE>
<S>           <C>                                                                           <C>
        6.17  Electricity...................................................................26
        6.18  Installations, Alterations or Additions.......................................26
        6.19  Signs.........................................................................28
        6.20  Hazardous Materials...........................................................28

ARTICLE 7  Casualty or Taking...............................................................30
        7.1  Termination....................................................................30
        7.2  Restoration....................................................................31
        7.3  Award..........................................................................31
        7.4  Termination Waiver.............................................................32

ARTICLE 8  Defaults.........................................................................32
        8.1  Default of Tenant..............................................................32
        8.2  Remedies.......................................................................33
        8.3  Remedies Cumulative............................................................35
        8.4  Landlord's Right to Cure Defaults..............................................35
        8.5  Holding Over...................................................................36
        8.6  Effect of Waivers of Default...................................................36
        8.7  No Waiver, etc.................................................................36
        8.8  No Accord and Satisfaction.....................................................36

ARTICLE 9  Rights of Holders................................................................37
        9.1  Rights of Mortgagees or Ground Lessors.........................................37
        9.2  Modifications..................................................................38

ARTICLE 10  Miscellaneous Provisions........................................................38
        10.1  Notices.......................................................................38
        10.2  Quiet Enjoyment; Landlord's Right to Make Alterations,
                      Etc...................................................................39
        10.3  Lease Not to be Recorded......................................................40
        10.4  Assignment of Rents and Transfer of Title; Limitation
                      of Landlord's Liability...............................................40
        10.5  Landlord's Default............................................................41
        10.6  Notice to Mortgagee and Ground Lessor.........................................41
        10.7  Building or Complex Name Change...............................................42
        10.8  Parking.......................................................................42
        10.9  Brokerage.....................................................................42
        10.10  Applicable Law and Construction..............................................42


        The Exhibits listed below are incorporated in this Lease by reference
and are to be construed as a part of this Lease.

EXHIBIT A.    Plan showing the Premises.
EXHIBIT B.    Rules and Regulations.
EXHIBIT C.    Alterations Requirements.
EXHIBIT D.    Contractor's Insurance Requirements.
EXHIBIT E.    Clerk's Certificate.

</TABLE>

<PAGE>   4

                                    ARTICLE 1

                                 Reference Data

        1.1    Introduction and Subjects Referred To

        This is a lease (this "Lease") entered into by and between HUB
PROPERTIES TRUST, a Maryland real estate investment trust ("Landlord") and
SIGNAL PHARMACEUTICALS, INC., a California corporation ("Tenant").

        Each reference in this Lease to any of the following terms or phrases
shall be construed to incorporate the corresponding definition stated in this
Section 1.1.

        Date of
        this Lease:          January __, 1998

        Complex:             The four (4) buildings (the "Buildings") of
                             the Sorrento Valley Business Park and the
                             parking facilities and all other
                             appurtenances, and the land parcels on which
                             they are located and the sidewalks adjacent
                             thereto, hereinafter referred to collectively
                             as the "Complex".

        Building:            That certain building in the Complex, known
                             as 5626 Oberlin Drive, San Diego, California
                             92121 (the "Building").

        Premises:            A portion of the first (1st) floor of the
                             Building substantially as shown on Exhibit A
                             hereto and known as Suite 100.

        Commencement
        Date:                January 1, 1998.

        Original Term:       Six (6) years, commencing as of the
                             Commencement Date and expiring December 31,
                             2003.

        Annual
        Fixed Rent:
<TABLE>
<CAPTION>
                                                     Annual             Monthly
                             Lease Year            Fixed Rent           Payment
                             ----------            ----------           -------
                             <S>                   <C>                  <C>
                                    1              $117,590.40          $ 9,799.20
                                    2              $256,085.76          $21,340.48
                                    3              $261,312.00          $21,776.00
                                    4              $267,844.80          $22,320.40
                                    5              $280,910.40          $23,409.20
                                    6              $287,443.20          $23,953.60
</TABLE>

        Lease Year:          The twelve (12) month period commencing on
                             the Commencement Date and ending on the day
                             immediately preceding the first anniversary
                             of the Commencement Date and each succeeding


<PAGE>   5


                                             -2-

                             twelve (12) month period thereafter during
                             the term of this Lease.

        Tenant's
        Percentage:          Ten and 41/100 percent (10.41%).

        Other Lease:         That certain lease between Sorrento Valley
                             Business Park, a California limited partnership and
                             Tenant dated as of April 30, 1993, as amended by
                             First Amendment to Lease dated November 4, 1994,
                             Second Amendment to Lease dated May 31, 1996 and
                             letter agreement dated the Date of this Lease.

        Permitted
        Uses:                Offices and laboratories for biotechnology
                             research and development, subject to the
                             provisions of Section 6.2.

        Commercial General
        Liability Insurance
        Limits:              $4,000,000 per occurrence (combined single
                             limit) for property damage, bodily and
                             personal injury and death.

        Original
        Address of
        Landlord:            c/o M&P Partners Limited Partnership
                             400 Centre Street
                             Newton, MA  02158
                             Attn:  John Mannix
                             Telephone #: (617) 928-1300

        Original
        Address of
        Tenant:              5555 Oberlin Drive
                             San Diego, CA  92121

        Security
        Deposit:             $21,340.48.


                                    ARTICLE 2

                                Premises and Term

        2.1 Premises. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord, subject to and with the benefit of the terms, covenants,
conditions and provisions of this Lease, the Premises, excluding exterior faces
of exterior walls, the common lobbies, hallways, stairways, stairwells, elevator
shafts and other common areas, and the escalators, elevators, pipes, ducts,
conduits, wires and appurtenant fixtures and other common


<PAGE>   6

                                             -3-

facilities serving the common areas, the Premises and the
premises of other tenants in the Building.

        Tenant shall have, as appurtenant to the Premises, rights to use, in
common with others, subject to reasonable rules of general applicability to
tenants of the Building from time to time made by Landlord of which Tenant is
given notice: (a) the common lobbies, hallways and stairways of the Building,
(b) the common escalators, elevators, pipes, ducts, conduits, wires and
appurtenant fixtures and other common facilities serving the Premises, (c)
common walkways and driveways (if any) necessary for access to the Building, and
(d) if the Premises include less than all of the rentable area of any floor of
the Building, the common toilets and other common facilities located on such
floor.

        2.2 Term. The term of this Lease shall be for a period beginning on the
Commencement Date (as hereinafter defined) and continuing for the Original Term
and any extension thereof in accordance with the provision of this Lease, unless
sooner terminated as hereinafter provided. The Original Term and any extension
thereof in accordance with the provisions of this Lease is hereinafter referred
to as the "term".

        2.3 Termination Option. Provided there shall exist no Default of Tenant,
Tenant may elect to terminate the term of this Lease effective as of December
31, 1998 by giving notice to Landlord of such election, which notice shall be
accompanied by (i) Tenant's check to the order of Landlord in the amount of
$52,500.00 (the "Termination Payment") and (ii) any plans and specifications
Tenant may have relating to the Premises, on or at any time prior to November
30, 1998 (the "Election Date"). If Tenant shall fail to give such notice or to
have paid the Termination Payment or to have delivered such plans and
specifications by the Election Date, however, this Lease shall continue in full
force and effect and Tenant shall have no further option to terminate this Lease
under this Section 2.3, it being agreed that time is of the essence with respect
to the exercise of Tenant's rights hereunder.


                                    ARTICLE 3

                           Commencement and Condition

        3.1 Commencement Date. The Commencement Date shall be January 1, 1998.

        3.2  Condition of Premises.  The Premises are leased in "as
is" condition, Tenant acknowledging that it has fully
investigated and become fully familiar with the condition of the
Premises and that Landlord has made no warranties or
representations as to the condition of the Premises.  Landlord


<PAGE>   7

                                       -4-

shall, however, comply with its obligations under Section 5.6 hereof.


                                    ARTICLE 4

                             Rent and Other Charges

        4.1 The Annual Fixed Rent. Tenant agrees to pay to Landlord's Agent, or
as otherwise directed by Landlord, commencing on the Commencement Date, without
offset, abatement (except as provided in Article 7), deduction or demand, the
Annual Fixed Rent. Such Annual Fixed Rent shall be payable in equal monthly
installments, in advance, on the first day of each and every calendar month
during the term of this Lease, at the Original Address of Landlord, or at such
other place as Landlord shall from time to time designate by notice, by check
drawn on a domestic bank.

        Annual Fixed Rent for any partial month shall be prorated on a daily
basis, and if Annual Fixed Rent commences on a day other than the first day of a
calendar month, the first payment which Tenant shall make to Landlord shall be
payable on the date Annual Fixed Rent commences and shall be equal to a
proportionate part of the monthly installment of Annual Fixed Rent for the
partial month in which Annual Fixed Rent commences plus the installment of
Annual Fixed Rent for the succeeding calendar month.

        "Index" shall mean the Consumer Price Index for Urban Wage Earners and
Clerical Workers, Los Angeles-Anaheim-Riverside, All Items, 1982-1984=100, (or
the Consumer Price Index for the smallest geographic area for which includes Los
Angeles-Anaheim-Riverside. The Index is presently published by the Bureau of
Labor Statistics of the United States Department of Labor. In the event
publication of the Index ceases, the computation of the Annual Fixed Rent due
from Tenant during each year of the term with respect to which the Index is to
be applied shall be computed upon the basis of whatever index published by the
United States Department of Labor at that time is most nearly comparable as a
measure of general changes in price levels for the area in which the Property is
located. In the event that the Index ceases to use 1982-84=100 as the basis of
calculation, then the Index shall be converted to the amount(s) that would have
resulted had the manner of calculating the Index in effect at the Date of this
Lease not been altered. Any decrease in the Index shall not cause Annual Fixed
Rent to be reduced.

        4.2 Additional Rent. Tenant covenants and agrees to pay Tenant's
Percentage of Taxes and Operating Costs as provided below, and all other charges
and amounts payable by or due from Tenant to Landlord (all such amounts referred
to in this sentence being "Additional Rent").


<PAGE>   8

                                       -5-

        4.3 Real Estate Taxes. Tenant shall pay to Landlord, as Additional Rent,
an amount ("Tenant's Tax Share") equal to Tenant's Percentage of the Taxes (as
hereinafter defined) due (or estimated to be due by governmental authority) for
any fiscal tax period (a "Tax Year") during the term hereof. Except as otherwise
provided in the immediately following paragraph, Tenant shall pay Tenant's Tax
Share to Landlord at least ten (10) days prior to the date or dates within any
year during the term hereof that the same, or any fractional share thereof,
shall be due and payable to any governmental authority responsible for
collection of same (as stated in a written notice to Tenant given at least
twenty (20) days prior to the date or dates any such payment shall be due, which
notice shall set forth the manner of computation of any Tenant's Tax Share due
from Tenant), except that such payment shall be made to Landlord not later than
ten (10) days after such notice to Tenant, if such notice is given subsequent to
the date twenty days prior to the date the same is due and payable as aforesaid.

        At Landlord's election, Tenant shall pay to Landlord, as Additional Rent
on the first day of each calendar month during the term but otherwise in the
manner provided for the payment of Annual Fixed Rent, estimated payments on
account of Tenant's Tax Share, such monthly amounts to be sufficient to provide
Landlord by the time Tax payments are due or are to be made by Landlord a sum
equal to Tenant's Tax Share, as reasonably estimated by Landlord from time to
time on account of Taxes for the then current Tax Year. If the total of such
monthly remittances for any Tax Year is greater than Tenant's Tax Share for such
Tax Year, Landlord shall credit such overpayment against Tenant's subsequent
obligations on account of Taxes (or promptly refund such overpayment if the term
of this Lease has ended and Tenant has no further obligations to Landlord); if
the total of such remittances is less than Tenant's Tax Share for such Tax Year,
Tenant shall pay the difference to Landlord within ten (10) days after being so
notified in writing by Landlord.

        If, after Tenant shall have made all payments due to Landlord pursuant
to this Section 4.3, Landlord shall receive a refund of any portion of Taxes as
a result of an abatement of such Taxes by legal proceedings, settlement or
otherwise (without either party having any obligation to undertake any such
proceed ings), Landlord shall pay or credit to Tenant Tenant's Percentage of
that percentage of the refund (after first deducting any reasonably incurred
expenses, including attorneys', consultants' and appraisers' fees, incurred in
connection with obtaining any such refund) which equals the percentage of the
applicable Tax Year included in the term hereof, provided however, in no event
shall Tenant be entitled to receive more than the sum of payments actually made
by Tenant on account of Taxes with respect to such Tax Year or to receive any
payment if Taxes for any Tax Year are less than Base Taxes.


<PAGE>   9

                                       -6-

        In the event that the Commencement Date shall occur or the term of this
Lease shall expire or be terminated during any Tax Year, or should the Tax Year
or period of assessment of real estate taxes be changed or be more or less than
one (1) year, or should Tenant's Percentage be modified during any Tax Year due
to a change in the rentable area of the Building and/or the Premises or
otherwise, as the case may be, then the amount of Tenant's Tax Share which may
be otherwise payable by Tenant as provided in this Section 4.3 shall be
appropriately apportioned and adjusted.

        The term "Taxes" shall mean all taxes, assessments, excises and other
charges and impositions which are general or special, ordinary or extraordinary,
foreseen or unforeseen, of any kind or nature which are levied, assessed or
imposed at any time during the term by any governmental authority upon or
against the Complex, or taxes in lieu thereof, and additional types of taxes to
supplement real estate taxes due to legal limits imposed thereon. If, at any
time during the term of this Lease, any tax or excise on rents or other taxes,
however described, are levied or assessed against Landlord with respect to the
rent reserved hereunder, either wholly or partially in substitution for, or in
addition to, real estate taxes then assessed or levied on the Complex, such tax
or excise on rents shall be included in Taxes; however, Taxes shall not include
franchise, estate, inheritance, succession, capital levy, income or excess
profits taxes assessed on Landlord. Taxes also shall include all court costs,
attorneys', consultants' and accountants' fees, and other reasonably incurred
expenses incurred by Landlord contesting Taxes through and including all
appeals. Taxes shall include any estimated payment made by Landlord on account
of a fiscal tax period for which the actual and final amount of taxes for such
period has not been determined by the governmental authority as of the date of
any such estimated payment.

        4.4 Personal Property Taxes. Tenant shall pay all taxes charged,
assessed or imposed upon the personal property of Tenant in or upon the
Premises.

        4.5 Operating Costs. Tenant shall pay to Landlord, as Additional Rent,
an amount ("Tenant's Operating Cost Share") equal to Tenant's Percentage of
Operating Costs (as hereinafter defined) paid or incurred by Landlord in any
twelve-month period established by Landlord (an "Operating Year"). Except as
otherwise provided in the immediately following paragraph Tenant shall pay
Tenant's Operating Cost Share to Landlord within twenty (20) days from the date
Landlord shall furnish to Tenant an itemized statement thereof, prepared,
allocated and computed in accordance with then prevailing customs and practices
of the real estate industry in the San Diego area, consistently applied.

        At the election of Landlord, Tenant shall pay to Landlord, as Additional
Rent on the first day of each calendar month during the term but otherwise in
the manner provided for the payment of


<PAGE>   10


                                       -7-

Annual Fixed Rent, estimated payments on account of Tenant's Operating Cost
Share, such monthly amounts to be sufficient to provide to Landlord, by the end
of each Operating Year, a sum equal to Tenant's Operating Cost Share for such
Operating Year, as reasonably estimated by Landlord from time to time during
such Operating Year. If, at the expiration of each Operating Year in respect of
which monthly installments of Tenant's Operating Cost Share shall have been made
as aforesaid, the total of such monthly remittances is greater than the actual
Tenant's Operating Cost Share for such Operating Year, Landlord shall credit
such overpayment against Tenant's subsequent obligations on account of Operating
Costs (or promptly refund such overpayment if the term of this Lease has ended
and Tenant has no further obligation to Landlord); if the total of such
remittances is less than Tenant's Operating Cost Share for such Operating Year,
Tenant shall pay the difference to Landlord within ten (10) days after being so
notified by Landlord.

        In the event that the Commencement Date shall occur or the term of this
Lease shall expire or be terminated during any Operating Year or Tenant's
Percentage shall be modified during any Operating Year due to a change in the
rentable area of the Building and/or the Premises or otherwise, as the case may
be, then the amount of Tenant's Operating Cost Share which may be payable by
Tenant as provided in this Section 4.5 shall be appropriately apportioned and
adjusted.

        The term "Operating Costs" shall include, without limitation, all
reasonable costs and expenses as may be paid or incurred by Landlord in
maintaining, operating and repairing the common areas and facilities of the
Complex during the Term, including, 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 common areas and facilities,
including without limitation, the following:

        (a) maintaining and repairing landscaping and sprinkler systems,
together with all charges for water and sewer service used in the common areas
of the Complex;

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

        (c) maintaining and repairing signs and site lighting in the Complex;

        (d) pest control, exterior janitorial, exterior window washing, sweeping
services, and buildings and Complex security;

        (e) all electricity and other utilities supplied to the common areas of
the Complex;

        (f)  all costs of insurance maintained by Landlord;


<PAGE>   11


                                       -8-

        (g)  legal fees except as excluded below; and

        (h) a management fee equal to five percent (5%) of the total Operating
Costs and Taxes.

        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 Operating Costs.

        The following shall not constitute Operating Costs:

        1. Brokerage commissions, advertising costs and other related expenses
incurred in connection with the leasing by Landlord of the Complex;

        2.  Structural repairs of a capital nature;

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

        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;

        6. Salaries of service personnel to the extent such service personnel
performs services not attributable to management, operation, repair or
maintenance of the Complex;

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

        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 Complex 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 Complex;



<PAGE>   12


                                       -9-

        12. The cost of any service provided to Tenant or other tenants of the
Complex 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
Complex;

        16. Costs charged Landlord by any of its affiliates for goods and
services provided to the Complex to the extent in excess of the prevailing costs
thereof that would be charged to Landlord by non-affiliated parties;

        17. Except as otherwise provided in Section 6.2, repairs, alterations,
additions, improvements or replacements to the Complex 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 (excluding
reasonable wear and tear), or any alterations or tenant improvements made by or
for Tenant;

        18. Damage and repairs attributable to condemnation, fire and 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 Hazardous Materials, except to the extent arising out of the storage,
use, generation, transportation, disposal, or release of Hazardous Materials by
Tenant, or its contractors, employees or invitees.

        4.6 Insurance. Tenant shall, at its expense, take out and maintain, from
the date upon which Tenant first enters the Premises for any reason, and
throughout the term and thereafter so long as Tenant is in occupancy of any part
of the Premises, the following insurance:

        (a) Commercial general liability insurance, including bodily injury and
property damage (on an occurrence basis and on a 1988 ISO CGL form or its
equivalent or otherwise in the broadest form available, including without
limitation, broad form contractual liability, fire, legal liability, independent
contractor's hazard and, upon commencement of commercial product production,
completed operations coverage) under which Tenant is named as an insured and
Landlord and Landlord's Agent (and the holder of any mortgage on the Building or
the Complex, as set out in a notice from time to time) are named as additional
insureds as their interests may appear, in an amount which shall, at the


<PAGE>   13


                                      -10-

beginning of the term, be at least equal to the Commercial General Liability
Insurance Limit, and, which, from time to time during the term, shall be for
such higher limits, if any, as are customarily carried in the area in which the
Premises are located at property comparable to the Premises and used for similar
purposes;

        (b) Worker's compensation insurance with statutory limits covering all
of Tenant's employees working on the Premises; and

        (c) So-called "all-risk" property insurance on a "replacement cost"
basis with an agreed value endorsement covering all Tenant's furniture,
furnishings, fixtures and equipment and other personal property and all
improvements and betterments to the Premises performed at Tenant's expense.

        All such policies shall contain a clause confirming that such policy and
the coverage evidenced thereby shall be primary with respect to any insurance
policies carried by Landlord and shall be obtained from responsible companies
qualified to do business and in good standing in the State of California, which
companies shall have a general policy holder's rating in Best's of at least
A-VIII. A copy of each paid-up policy evidencing such insurance (appropriately
authenticated by the insurer) or a certificate of the insurer, certifying that
such policy has been issued, providing the coverage required by this Section and
containing provisions specified herein, shall be delivered to Landlord prior to
the commencement of the term of this Lease and, upon renewals, not less than
thirty (30) days prior to the expiration of such coverage. Tenant agrees to
furnish Landlord with certificates evidencing all such insurance prior to the
beginning of the term hereof. Tenant shall procure and pay for renewals of such
insurance from time to time before the expiration thereof, and Tenant shall
deliver to Landlord and any additional insured such renewal policy or a
certificate thereof at least thirty (30) days prior to expiration of any
existing policy. Each such policy shall be non-cancellable and not materially
changed with respect to the interest of Landlord and such mortgagees of the
Building or the Complex (and others that are in privity of estate with Landlord
of which Landlord provides notice to Tenant from time to time) without at least
ten (10) days' prior written notice thereto. Any insurance required of Tenant
under this Lease may be furnished by Tenant under a blanket policy carried by it
provided that such blanket policy shall reference the Premises, and shall
guarantee a minimum limit available for the Premises equal to the insurance
amounts required in this Lease. Landlord may, at any time, and from time to
time, inspect and/or copy any and all insurance policies required to be procured
by Tenant hereunder.

        Landlord and Tenant shall each endeavor to secure an appropriate clause
in, or an endorsement upon, each property damage insurance policy obtained by it
and covering the Building,


<PAGE>   14

                                      -11-

the Premises or the personal property, fixtures and equipment located therein or
thereon, pursuant to which the respective insurance companies waive subrogation
or permit the insured, prior to any loss, to agree with a third party to waive
any claim it might have against said third party. The waiver of subrogation or
permission for waiver of any claim hereinbefore referred to shall extend to the
agents of each party and its employees and, in the case of Tenant, shall also
extend to all other persons and entities occupying or using the Premises by,
through or under Tenant. If and to the extent that such waiver or permission can
be obtained only upon payment of an additional charge then the party benefiting
from the waiver or permission shall pay such charge upon demand, or shall be
deemed to have agreed that the party obtaining the insurance coverage in
question shall be free of any further obligations under the provisions hereof
relating to such waiver or permission from such insurance companies.

        Subject to the foregoing provisions of this Section 4.6, and insofar as
may be permitted by the terms of the insurance policies carried by it, each
party hereby releases the other with respect to any claim which it might
otherwise have against the other party for loss, damage or destruction of or to
its property to the extent such damage is or would be covered by policies of
insurance required by this Lease to be carried by the respective parties
hereunder. In addition, Tenant agrees to exhaust any and all claims against its
insurer(s) prior to commencing an action against Landlord for any property loss,
except for any loss or damage to property due to the gross negligence or willful
misconduct of Landlord or its agents or employees.

        4.7 Utilities. Tenant shall pay for the cost of all charges for
electricity, telephone and other utilities or services not supplied by Landlord
pursuant to Article 5, whether designated as a charge, tax, assessment, fee or
otherwise, all such charges to be paid as the same from time to time become due.
Except as otherwise provided in this Section 4.7 or Article 5, it is understood
and agreed that Tenant shall make its own arrangements for the installation or
provision of all utilities and services and that Landlord shall be under no
obligation to furnish any utilities to the Premises. Tenant acknowledges that
Annual Fixed Rent does not include the cost of providing such utilities and
services to the Premises.

        If the utility company serving the Premises shall agree to separate
metering of Tenant's electricity consumption in the Premises, such electricity
usage may (at Landlord's option) be separately metered.

        If Tenant's electricity consumption shall be separately metered for all
or any portion of the Premises at any time during the term hereof, then, for
those portions of the Premises that are separately metered, Tenant shall pay all
bills for such


<PAGE>   15


                                      -12-

electricity promptly to the utility company furnishing the same. If Tenant's
electricity consumption is not separately metered in all or any portion of the
Premises during all or any portion of the term, Tenant shall reimburse Landlord
for the costs incurred by Landlord (including any associated fees and expenses
reasonably incurred by Landlord) in supplying electricity to those portions of
the Premises which are not separately metered, within ten (10) days of
Landlord's invoice therefor.

        4.8 Late Payment of Rent. If any installment of Annual Fixed Rent or
Additional Rent is paid after the date the same was due, it shall bear interest
(as Additional Rent) from the date due at the Default Rate (as defined in
Section 8.4). Absent specific provision to the contrary, all Additional Rent
shall be due and payable in full ten (10) days after demand by Landlord.

        4.9 Security Deposit. Upon execution of this Lease, Tenant shall deposit
with Landlord the Security Deposit. The Security Deposit shall be held by
Landlord as security for the faithful performance of all the terms of this Lease
to be observed and performed by Tenant. The Security Deposit shall not be
mortgaged, assigned, transferred or encumbered by Tenant and any such act on the
part of Tenant shall be without force and effect and shall not be binding upon
Landlord.

        If the Annual Fixed Rent or Additional Rent payable hereunder shall be
overdue and unpaid or should Landlord make any payment on behalf of the Tenant,
or Tenant shall fail to perform any of the terms of this Lease, then Landlord
may, at its option, upon not less than three (3) days' prior notice to Tenant,
but without prejudice to any other remedy which Landlord may have on account
thereof, appropriate and apply the entire Security Deposit or so much thereof as
may be necessary to compensate Landlord toward the payment of Annual Fixed Rent,
Additional Rent or other sums or loss or damage sustained by Landlord due to
such breach by Tenant; and Tenant shall forthwith upon demand restore the
Security Deposit to the original sum deposited. So long as Tenant shall not be
in default of its obligations under this Lease, Landlord shall return the
Security Deposit, or so much thereof as shall have not theretofore been applied
in accordance with the terms of this Section 4.9, to Tenant promptly following
the expiration or earlier termination of the term of this Lease and the
surrender of possession of the Premises by Tenant to Landlord in accordance with
the terms of this Lease. While Landlord holds the Security Deposit, Landlord
shall have no obligation to pay interest on the same and shall have the right to
commingle the same with Landlord's other funds. If Landlord conveys Landlord's
interest under this Lease, the Security Deposit, or any part thereof not
previously applied, shall be turned over by Landlord to Landlord's grantee, and
Tenant shall look solely to such grantee for proper application of the Security
Deposit in accordance with the terms of this Section 4.9 and the return thereof
in accordance herewith. The holder of a


<PAGE>   16


                                      -13-

mortgage on the Property shall not be responsible to Tenant for the return or
application of the Security Deposit, whether or not it succeeds to the position
of Landlord hereunder, unless such holder actually receives the Security
Deposit.

        In addition, at the expiration of the term of the Other Lease, Tenant
shall deliver to Landlord a letter of credit (the "Letter of Credit"), which
shall (a) be unconditional and irrevocable and otherwise in form and substance
satisfactory to Landlord; (b) be at all times in the amount of $150,000, and
shall permit multiple draws without a corresponding reduction in the amount of
the Letter of Credit; (c) be issued by a commercial bank reasonably acceptable
to Landlord from time to time; (d) be made payable to, and expressly
transferable and assignable at no charge by, the owner from time to time of the
Property (which transfer/assignment shall be conditioned only upon the execution
by such owner of a written document in connection with such transfer/assignment;
(e) be payable at sight upon presentment to a local branch of the issuer of a
simple sight draft accompanied by a certificate of Landlord stating that Tenant
is in default under this Lease, and the amount that Landlord is owed (or is
permitted to draw) in connection therewith; and (f) shall either expire sixty
(60) days following the expiration of the term of this Lease, or be replaced not
less than thirty (30) days prior to the expiration of the then current Letter of
Credit so that the original Letter of Credit or a replacement thereof shall be
in full force and effect throughout the Term of this Lease and for a period of
sixty (60) days thereafter. Tenant shall deliver to Landlord any replacement
Letter of Credit not less than thirty (30) days prior to the expiration of the
then current Letter of Credit. Notwithstanding anything in this Lease to the
contrary, any grace period or cure periods which are otherwise applicable under
Section 8.1, hereof, shall not apply to any of the foregoing, and, specifically,
if Tenant fails to comply with the requirements of subsection (f) above,
Landlord shall have the immediate right to draw upon the Letter of Credit in
full and hold the proceeds thereof as a cash security deposit until such breach
or default shall be cured by Tenant. Each Letter of Credit shall be issued by a
commercial bank that has a credit rating with respect to certificates of
deposit, short term deposits or commercial paper of at least P-2 (or equivalent)
by Moody's Investor Service, Inc., or at least A-2 (or equivalent) by Standard &
Poor's Corporation. If the issuer's credit rating is reduced below P-2 (or
equivalent) by Moody's Investor Service, Inc., or at least A-2 (or equivalent)
by Standard & Poor's Corporation, or if the financial condition of the issuer
changes in any other materially adverse way, then Landlord shall have the right
to require that Tenant obtain from a different issuer a substitute Letter of
Credit that complies in all respects with the requirements of this Section, and
Tenant's failure to obtain such substitute Letter of Credit within ten (10) days
after Landlord's written demand therefor (with no other notice, or grace or cure
period being applicable thereto) shall entitle


<PAGE>   17

                                      -14-

Landlord to immediately draw upon the existing Letter of Credit in full, without
any further notice to Tenant until such substitute Letter of Credit is provided.


                                    ARTICLE 5

                              Landlord's Covenants

        5.1 Heat and Air-Conditioning. Landlord shall furnish heat and
air-conditioning ("HVAC") to the Premises (reserving the right, at any time, to
change energy sources) sufficient to maintain the Premises at comfortable
temperatures for the Permitted Uses and shall furnish ventilation to the
Premises in accordance with all legal requirements and in a fashion consistent
with similar space used for purposes similar to the Premises, subject to all
federal, state and municipal regulations. In the event Tenant makes any
alterations, locates an excessive number of persons or heat-generating equipment
in, or makes any other use of the Premises which overloads the capacity of the
Building HVAC systems or in any other way interferes with such system's ability
to perform adequately its proper functions, supplementary systems or alterations
may, if and as needed, at Landlord's option, upon reasonable prior notice to
Tenant be provided by Landlord, at Tenant's expense.

        5.2 Water. Landlord shall furnish water for ordinary drinking, lavatory
and toilet facilities. If Tenant uses a disproportionate amount of water as
compared to other tenants of the Building, Landlord may assess a reasonable
charge for the additional water so used, or install a water meter and thereby
measure Tenant's water consumption for all purposes. In the latter event, Tenant
shall pay the cost of the meter and the reasonable cost of installation thereof
and shall keep such meter and installation equipment in good working order and
repair. Tenant agrees to pay for water consumed, as shown on such meter,
together with the sewer charge based on such meter charges, as and when bills
are rendered, and if Tenant shall fail to make such payment, Landlord may pay
such charges and collect the same from Tenant as Additional Rent.

        5.3 Cleaning. Landlord shall provide cleaning to the Premises and the
common areas of the Building in accordance with standards generally prevailing
throughout the term hereof in comparable buildings in the San Diego area used
for similar purposes. Tenant shall pay to Landlord on demand the actual costs
incurred by Landlord for (a) extra cleaning work in the Premises required
because of carelessness, indifference, misuse or neglect on the part of Tenant
or its subtenants or its or their employees or visitors, and (b) removal from
the Premises and the Building of any refuse and rubbish of Tenant in excess of
that ordinarily accumulated in medical research and development office and
laboratory occupancy, including, without limitation,


<PAGE>   18

                                      -15-

kitchen refuse, or at times other than Landlord's standard cleaning times.
Notwithstanding the foregoing, Landlord shall not be required to clean any
portions of the Premises used for preparation, serving or consumption of food or
beverages or other special purposes if same require greater or more difficult
cleaning work than office areas, and Tenant agrees, at Tenant's expense, to
retain Landlord's cleaning contractor to perform such extra cleaning, provided
that the charges of such cleaning contractor shall be commercially reasonable.

        Landlord, its cleaning contractor and their respective employees shall
have access to the Premises after 6:00 p.m. and before 8:00 a.m. and shall have
the right to use, without charge therefor, all light, power and water in the
Premises reasonably required to clean the Premises as required hereunder.

        Notwithstanding anything contained herein to the contrary, Landlord
shall have no obligation to collect or dispose of any (a) Hazardous Materials
(as hereinafter defined) or any radioactive, volatile, highly flammable,
explosive or toxic or hazardous materials, (b) needles, syringes, lancets,
similar sharp objects or contaminated glassware, (c) blood products, (d) body
fluids, (e) human or animal tissue and (f) any materials identified in
California Administrative Code Sections 66680-66685 et seq., any item identified
in clauses (a) through (f), above, hereinafter referred to as "Excepted Waste".
Tenant agrees that title to and liability for any Excepted Waste shall remain
with Tenant, even if Landlord collects and/or disposes of any such Excepted
Waste.

        5.4 Lighting. Landlord shall purchase and install, at Tenant's expense,
all lamps, tubes, bulbs, starters and ballasts for lighting fixtures in the
Premises; and shall provide lighting to public and common areas of the Building.

        5.5 Repairs. Except as otherwise expressly provided herein, Landlord
shall make such repairs and replacements to the roof, exterior walls, floor
slabs and other structural components of the Building, and to the common areas
and facilities of the Building (including any plumbing, electrical, HVAC
equipment, elevators and any other common equipment or systems in the Building)
as may be necessary to keep them in good repair and condition (exclusive of
equipment installed by Tenant and except for those repairs required to be made
by Tenant pursuant to Section 6.3 and repairs or replacements occasioned by any
act or negligence of Tenant, its servants, agents, customers, contractors,
employees, invitees, or licensees). In no event shall Landlord ever be liable or
accountable to Tenant for loss of light or view occasioned by alteration or
construction of buildings or structures adjacent to the Building or the Complex.
Landlord shall provide maintenance and landscaping to the exterior common areas
of the Building in accordance with


<PAGE>   19

                                      -16-

standards generally prevailing throughout the term hereof in comparable office
buildings in the San Diego area.

        5.6 Repair Cost Waiver. Tenant hereby waives all rights it would
otherwise have under California Civil Code Sections 1932(1) and 1942(a), or any
successor statutes, to deduct repair costs from rent or terminate this Lease as
a result of any failure by Landlord to perform its maintenance or repair
obligations.

        5.7 Interruption. Landlord shall be under no responsibility or liability
for failure, interruption or unavailability of any services, facilities,
utilities, repairs or replacements or inability to provide access or inability
to perform any other obligation under this Lease caused by breakage, accident,
fire, flood or other casualty, strikes or other labor trouble, order or
regulation of or by any governmental authority, inclement weather, repairs,
inability to obtain or shortages of supplies, labor or materials, war, civil
commotion or other emergency, transportation difficulties or due to any act or
neglect of Tenant or Tenant's servants, agents, employees or licensees or for
any other cause beyond the reasonable control of Landlord, and in no event for
any indirect or consequential damages to Tenant; and failure or omission on the
part of Landlord to furnish any of same for any of the reasons set forth in this
paragraph shall not be construed as an eviction of Tenant, actual or
constructive, nor entitle Tenant to an abatement of rent, nor render the
Landlord liable in damages, nor release Tenant from prompt fulfillment of any of
its covenants under this Lease. Landlord shall, however, with due regard given
to the effect on Tenant's business, use all commercially reasonable efforts to
minimize, to the extent practical, the duration and extent of any such failure,
interruption, unavailability or inability to provide such services, facilities
and utilities.

        Landlord reserves the right temporarily to stop the services of the
HVAC, plumbing, electrical or other utilities, systems or facilities in the
Building when necessary from time to time by reason of accident or emergency, or
for repairs, alterations, replacements or improvements which in the reasonable
judgment of Landlord are desirable or necessary, until such repairs,
alterations, replacements or improvements shall have been completed. Landlord
shall use reasonable efforts to give to Tenant at least ten (10) days' notice if
service is to be stopped and to schedule such interruption at nights or on
weekends, except in cases of emergency.

        5.8 Outside Services. In the event Tenant wishes to provide outside
services for the Premises over and above those services to be provided by
Landlord as set forth herein, Tenant shall first obtain the prior approval of
Landlord (which approval shall not be unreasonably withheld or delayed provided
that Tenant agrees that it shall not be unreasonable for Landlord to


<PAGE>   20

                                      -17-

designate a sole provider of a given service for all tenants of the Building or
Complex) for the installation and/or utilization of such services. ("Outside
services" shall include, but shall not be limited to, cleaning services,
television, so-called "canned music" services, security services, catering
services and the like). In the event Landlord approves the installation and/or
utilization of such services, such installation and utilization shall be at
Tenant's sole cost, risk and expense.

        5.9 Access to Building. Tenant acknowledges that Tenant is responsible
for providing security to the Premises following Tenant's entry onto the
Premises for any reason and for its own personnel whenever located therein.
Subject to the foregoing, Landlord shall, at all times, retain the right to
control and prevent such access by all persons whose presence, in the reasonable
discretion of Landlord, may jeopardize the safety, protection, character,
reputation and interests of the Building and its tenants or occupants. Landlord
shall in no case be liable for damages resulting from any error with regard to
the admission or exclusion of any person from the Building.

        5.10 Insurance. Landlord shall carry (i) full replacement cost property
insurance (exclusive of footings and foundations, any betterments or
improvements performed by Tenant and subject to reasonable deductibles on the
Building) in at least the amount of coverage sufficient to prevent the
application of co-insurance provisions, and (ii) general liability insurance in
an amount consistent with that carried by other landlords of similar properties
in the San Diego metropolitan area.


                                    ARTICLE 6

                          Tenant's Additional Covenants

        6.1 Perform Obligations. Tenant shall, at all times during the term and
such further time as Tenant (or any entity claiming, whether in accordance with
this Lease or otherwise, by, through or under Tenant) occupies the Premises or
any part thereof, comply with all of the terms, provisions, covenants and
conditions on the part of Tenant to be performed under this Lease. Without
limiting the generality of the foregoing, Tenant shall perform promptly all of
the obligations of Tenant set forth in this Lease, including, without
limitation, the obligation to pay when due the Annual Fixed Rent and Additional
Rent and all other amounts which by the terms of this Lease are to be paid by
Tenant.

        6.2 Use. Tenant shall use the Premises only for the Permitted Uses and
only to the extent permitted by zoning and other land use ordinances and
regulations, and for no other purpose and from time to time to procure and
maintain all


<PAGE>   21


                                      -18-

licenses and permits necessary therefor and for any other use or activity
conducted at the Premises, at Tenant's sole expense.

        Tenant acknowledges 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.

        Tenant shall, at Tenant's sole cost and expense, take all action,
including any alterations necessary to comply with the requirements of the
Americans With Disabilities Act of 1990 (the "ADA"), which shall arise from
Tenant's use of the Premises, or any installations in the Premises, 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 common areas of the Complex 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 as an Operating Cost.

        6.3 Repair and Maintenance. Subject to Landlord's obligations under
Section 5.5, Tenant shall maintain the Premises in neat and clean order and
condition and shall perform all repairs to the Premises and all fixtures,
systems and equipment therein (including Tenant's equipment and other personal
property) as are necessary to keep them in good and clean working order,
appearance and condition, reasonable use and wear thereof and damage by fire or
by unavoidable casualty only excepted and shall replace any damaged or broken
glass in windows and doors of the Premises (except glass in the exterior walls
of the Building) with glass of the same quality as that damaged or broken.

        6.4 Compliance with Law. Tenant shall (a) make all repairs alterations,
additions or replacements to the Premises required by any law or ordinance or
any order or regulation of any public authority, but only to the extent either
arising out of Tenant's particular use of the Premises and not applicable
generally to properties used for office and laboratory purposes or arising out
of any work performed by Tenant, (b) keep the Premises equipped with all safety
appliances so required, but only to the extent either arising out of Tenant's
particular use of the Premises and not applicable generally to properties used
for office and laboratory purposes or arising out of any work performed by
Tenant; and (c) shall comply with the orders and regulations of all governmental
authorities with respect to zoning, building,


<PAGE>   22


                                             -19-

fire, health and other codes, regulations, ordinances or laws applicable to the
Premises and any use being conducted therein and any work being performed by
Tenant. Notwithstanding the foregoing, Tenant may defer compliance with any of
the foregoing if (i) the validity of any such law, ordinance, order or
regulation shall be contested by Tenant in good faith and by ap propriate legal
proceedings, (ii) Landlord shall not be subject to any fine or charge or other
cost, expense or liability, (iii) neither the Complex nor any portion thereof
shall be subject to being condemned or vacated, (iv) neither the Complex nor any
portion thereof shall be subject to any lien or encumbrance and (v) Tenant first
gives Landlord appropriate assurance or security against any loss, cost or
expense on account thereof.

        6.5 Indemnification. Tenant shall save Landlord harmless, and shall
exonerate and indemnify Landlord from and against any and all claims,
liabilities or penalties asserted by or on behalf of any person, firm,
corporation or public authority on account of nuisance or injury, death, damage
or loss to person or property in or upon the Premises and/or the Complex arising
out of the use or occupancy of the Premises by Tenant or by any person claiming
by, through or under Tenant (including, without limitation, all patrons,
employees, contractors, vendors, suppliers and customers of Tenant), or arising
out of labor disputes with Tenant's employees or strikes, picketing or other
similar actions, or on account of or based upon anything whatsoever done on or
occurring in the Premises except (and then only to the extent not subject to the
provisions of the last paragraph of Section 4.6) if the same were caused by the
gross negligence or willful misconduct of Landlord, its agents, servants or
employees. In respect of all of the foregoing, Tenant shall, except to the
extent due to the gross negligence or willful misconduct of Landlord, its
agents, servants or employees, indemnify Landlord (and such others as are in
privity of estate with Landlord) from and against all costs, expenses
(including, without limitation, reasonable attorneys' fees), and liabilities
reasonably incurred in or in connection with any such claim, action or
proceeding brought thereon; and, in case of any action or proceeding brought
against Landlord by reason of any such claim, Tenant, upon notice from Landlord
and at Tenant's expense, shall resist or defend such action or proceeding and
employ counsel therefor reasonably satisfactory to Landlord.

        6.6 Landlord's Right to Enter. Tenant hereby grants to Landlord and its
agents and invitees the right to enter into and examine the Premises at
reasonable times and to show the Premises to prospective lessees, lenders,
partners and purchasers and others having a bonafide interest in the Premises,
and to make such repairs, alterations and improvements and to perform such
testing and investigation as Landlord shall reasonably determine to make or
perform, and, during the last six (6) months prior to the expiration of this
Lease, to keep affixed in suitable places notices of availability of the
Premises. Except in instances


<PAGE>   23

                                             -20-

posing an imminent threat to life or property and except for any entry pursuant
to the performance of Landlord's obligations under Article 5, Landlord shall
give Tenant reasonable notice prior to making any entry onto the Premises
provided however notwithstanding Section 10.1 to the contrary, such notice may
be made orally.

        6.7 Personal Property at Tenant's Risk. Tenant hereby assumes all risk
of loss, damage or destruction to all furnishings, fixtures, equipment, effects
and property of every kind, nature and description brought to the Premises or
installed in the Premises by or on behalf of Tenant or any person claiming by,
through or under Tenant. If the whole or any part thereof shall be destroyed or
damaged by fire, water or otherwise, or by the leakage or bursting of water
pipes, steam pipes, or other pipes, by theft or from any other cause, Tenant
shall hold harmless and indemnify Landlord from and against any and all injury,
loss, damage or liability to Tenant and all other persons or entities arising
out of said loss or damage, except that Landlord shall in no event be
indemnified or held harmless or exonerated from any liability to Tenant or to
any other person or entity, for any injury, loss, damage or liability to the
extent prohibited by law or arising from the gross negligence or willful
misconduct of Landlord or its agents, servants or invitees, subject however (to
the extent not prohibited by law) to the provisions of Section 4.6.

        6.8 Payment of Landlord's Cost of Enforcement. Tenant shall pay on
demand such expenses, including, without limitation, reasonable attorneys' fees,
reasonably incurred by Landlord in enforcing any obligation of Tenant under this
Lease or in curing any default by Tenant under this Lease as provided in Section
8.4.

        6.9 Yield Up. At the expiration or earlier termination of the term of
this Lease Tenant shall (a) surrender all keys to the Premises; (b) remove all
of its trade fixtures and personal property in the Premises; (c) remove such
installations made by it as Landlord may request and any such installations or
improvements made by Tenant at its expense during the term of this Lease which
Tenant shall desire to remove and all Tenant's signs wherever located; (d)
repair all damage caused by such removal and (e) yield up the Premises
(including all installations and improvements made by Tenant except for such
installations or improvements as Tenant shall remove or as Landlord shall
request Tenant to remove), broom clean and in the same good order and repair in
which Tenant is obliged to keep and maintain the Premises by the provisions of
this Lease. Any property not so removed shall be deemed abandoned and may be
removed and disposed of by Landlord in such manner as Landlord shall determine
and Tenant shall pay Landlord the entire cost and expense reasonably incurred by
it in effecting such removal and disposition and in making any incidental
repairs and replacements


<PAGE>   24


                                      -21-

to the Premises and for use and occupancy during the period after the expiration
or earlier termination of the term of this Lease and prior to the performance by
Tenant of its obligations under this Section 6.9. Tenant shall further indemnify
Landlord against all loss, cost and damage resulting from Tenant's failure or
delay in surrendering the Premises as above provided.

        6.10 Rules and Regulations. Tenant shall observe and abide by the Rules
and Regulations of the Building set forth as Exhibit B, as the same may from
time to time be amended, revised or supplemented (the "Rules and Regulations").
Tenant shall further be responsible for compliance with the Rules and
Regulations by the employees, servants, agents and visitors of Tenant. The
failure of Landlord to enforce any of the Rules and Regulations against Tenant,
or against any other tenant or occupant of the Building, shall not be deemed to
be a waiver of such Rules and Regulations. Tenant shall be liable for all
injuries or damages sustained by Landlord or by other tenants, occupants or
invitees of the Building to the extent arising by reason of any breach of the
Rules or Regulations by Tenant or by Tenant's agents or employees, and not due
to the negligence or other wrongful conduct of Landlord or its agents, servants
or employees.

        6.11 Estoppel Certificate. Upon not less than ten (10) days' prior
written request by Landlord, Tenant shall execute, acknowledge and deliver to
Landlord a statement in writing certifying that this Lease is unmodified and in
full force and effect and that Tenant has no defenses, offsets or counterclaims
against its obligations to pay the Annual Fixed Rent and Additional Rent and any
other charges and to perform its other covenants under this Lease (or, if there
have been any modifica tions, that this Lease is in full force and effect as
modified and stating the modifications and, if there are any defenses, offsets
or counterclaims, setting them forth in reasonable detail), the dates to which
the Annual Fixed Rent and Additional Rent and other charges have been paid, and
any other matter pertaining to this Lease. Any such statement delivered pursuant
to this Section 6.11 may be relied upon by any prospective purchaser or
mortgagee of the Building or the Complex, or any prospective assignee of such
mortgage.

        6.12 Landlord's Expenses Re Consents. Tenant shall reimburse Landlord,
as Additional Rent, promptly on demand for all reasonable legal, engineering and
other professional services expenses incurred by Landlord in connection with all
requests by Tenant for consent or approval hereunder. Upon request by Tenant,
Landlord shall give to Tenant an estimate of such expenses.

        6.13 Financial Information. Tenant shall provide Landlord with such
information as to Tenant's financial condition and/or organizational structure
as Landlord or the holder of any mortgage of the Building or the Complex
requires, within fifteen


<PAGE>   25


                                      -22-

days of request. Landlord agrees (i) not to disclose such information except as
is required by law or necessary or appropriate for the enforcement of this Lease
or the present or future financing of the Building or Complex and (ii) to use
all reasonable efforts to respect the confidentiality of such information.

        6.14 Assignment and Subletting. Tenant shall not assign or transfer this
Lease, or any interests herein, or sublet the Premises or any part thereof, or
any right or privilege appurtenant thereto, or suffer any other person (the
agents and servants of Tenant excepted) to occupy or use the Premises, or any
portion thereof, without first obtaining the written consent of Landlord. Tenant
acknowledges that the use restrictions set forth in Section 6.2, among other
provisions, are material to Landlord in considering any assignment or sublet.

        Notwithstanding the foregoing, Tenant may, without the need for
Landlord's consent, assign its interest in this Lease (a "Permitted Assignment")
to (i) any corporation or entity which is a successor to Tenant either by merger
or consolidation, (ii) a purchaser of all or substantially all of Tenant's
assets or (iii) a corporation or other entity which shall (A) control, (B) be
under the control of, or (C) be under common control with, Tenant (the term
"control" meaning ownership, directly or indirectly, of at least fifty-one
percent (51%) of the outstanding voting stock of a corporation, or other
equivalent equity and control interest if Tenant or such other entity is not a
corporation) (an entity described in clause (iii) above being referred to herein
as an "Affiliate"), so long as (I) the principal purpose of such assignment is
not the acquisition of Tenant's interest in this Lease (except if such
assignment is made for a valid intracorporate business purpose to an Affiliate)
and is not made to circumvent the provisions of this Section 6.14, (II) except
if pursuant to clause (i) above, Tenant shall promptly furnish Landlord with
fully executed counterparts of any such assignment after consummation thereof
which assignment shall include an agreement by the assignee, in form reasonably
satisfactory to Landlord, to be bound by all of the terms of this Lease, and
(III) there shall not be a Default of Tenant at the effective date of such
assignment. Tenant shall also be permitted, without the need for Landlord's
consent, to enter into any sublease with any Affiliate provided that such
sublease shall expire upon any event pursuant to which the sublessee thereunder
shall cease to be an Affiliate. Any assignment to an Affiliate may, at
Landlord's election, be deemed void if during the term of this Lease Tenant
shall cease to control such assignee. In the event Tenant shall have entered
into a sublease with an Affiliate and thereafter such sublessee shall cease to
be an Affiliate, then the provisions of the following two paragraphs of this
Section 6.14 shall apply as if the term of such sublease were to commence as of
the date of the change of status as an Affiliate.



<PAGE>   26

                                      -23-

        In the event that Tenant shall intend to enter into any sublease or
assignment which requires Landlord's consent, then Tenant shall, not sooner than
one hundred twenty (120) days, and not later than sixty (60) days, prior to the
proposed effective date of such sublease or assignment, give Landlord notice of
such intent, identifying the proposed subtenant or assignee, all of the terms
and conditions of the proposed sublease or assignment and such other information
as the Landlord may reasonably request. Landlord may elect (a) to terminate this
Lease if Tenant intends to assign this Lease, or to sublease more than fifty
percent (50%) of the Premises or (b) to exclude from the Premises the portion
thereof to be sublet if such portion is fifty percent (50%) or less of the
Premises, by giving notice to Tenant of such election not later than thirty (30)
days after receiving notice of such intent from Tenant. If Landlord shall give
such notice within such thirty (30) day period, upon the later to occur of (A)
the proposed date of commencement of such proposed sublease or assignment, or
(B) the date which is thirty (30) days after Landlord's notice, this Lease shall
terminate or the Premises shall be reduced to exclude the portion of the
Premises intended for subletting, in which case Annual Fixed Rent and Tenant's
Percentage shall be correspondingly reduced. If Landlord shall give its consent,
Tenant may enter into such sublease or assignment on the terms and conditions
set forth in such notice from Tenant within the following one hundred and twenty
(120) days. If Tenant shall not enter into such sublease or assignment within
such following one hundred and twenty (120) day period and shall still desire to
enter into any sublease or assignment, or if Tenant shall change the terms and
conditions thereof following the date of Tenant's notice to Landlord, the first
sentence of this paragraph shall again become applicable.

        If Landlord shall not elect to terminate this Lease pursuant to the
preceding paragraph, then Landlord shall not unreasonably withhold its consent
to an assignment or subletting, provided that the proposed assignee or subtenant
(i) is reasonably satisfactory to Landlord with respect to credit
considerations, (ii) will use the Premises for the Permitted Uses set forth in
Section 1.1 hereof, and (iii) will not use the Premises for a purpose or in a
manner which is inconsistent with Landlord's commitments to other tenants in the
Complex, (iv) shall assume all obligations of Tenant under this Lease and shall
be and remain jointly and severally liable with Tenant for the performance of
all of the terms, covenants, conditions, and agreements to be performed by
Tenant under the terms of this Lease.

        Any sublease of all or any portion of the Premises shall provide that it
is subject and subordinate to this Lease and to the matters to which this Lease
is or shall be subject or subordinate, and that in the event of termination of
this Lease or reentry or dispossession of Tenant by Landlord under this Lease,
Landlord may, at its option, elect to continue such


<PAGE>   27


                                      -24-

sublease in effect as a direct lease between Landlord and Tenant and such
subtenant shall thereupon attorn to Landlord pursuant to the then executory
provisions of such sublease, except that neither Landlord nor any mortgagee of
the Property, as holder of a mortgage or as Landlord under this Lease if such
mortgagee succeeds to that position, shall (a) be liable for any act or omission
of Tenant under such sublease, (b) be subject to any credit, counterclaim,
offset or defense which theretofore accrued to such subtenant against Tenant, or
(c) be bound by any previous modification of such sublease or by any previous
prepayment of more than one (1) month's rent, (d) be bound by any covenant of
Tenant to undertake or complete any construction of the Premises or any portion
thereof, (e) be required to account for any security deposit of the subtenant
other than any security deposit actually received by Landlord, (f) be bound by
any obligation to make any payment to such subtenant or grant any credits, (g)
be responsible for any monies owing by Landlord to the credit of Tenant or (h)
be required to remove any person occupying the Premises or any part thereof; and
such sublease shall provide that the subtenant thereunder shall, at the request
of Landlord, execute a suitable instrument in confirmation of such agreement to
attorn. The provisions of this paragraph shall not be deemed a waiver of the
provisions set forth in the first paragraph of this Section 6.14.

        No subletting or assignment shall in any way impair the continuing
primary liability of Tenant hereunder, and no consent to any subletting or
assignment in a particular instance shall be deemed to be a waiver of the
obligation to obtain the Landlord's written approval in the case of any other
subletting or assignment. The joint and several liability of Tenant named herein
and any immediate and remote successor in interest of Tenant (by assignment or
otherwise), and the due performance of the obligations of this Lease on Tenant's
part to be performed or observed, shall not in any way be discharged, released
or impaired by any (a) agreement which modifies any of the rights or obligations
of the parties under this Lease, (b) stipulation which extends the time within
which an obligation under this Lease is to be performed, (c) waiver of the
performance of an obligation required under this Lease, or (d) failure to
enforce any of the obligations set forth in this Lease. No assignment,
subletting or occupancy shall affect the Permitted Uses. Any subletting,
assignment or other transfer of Tenant's interest in this Lease in contravention
of this Section 6.14 shall be voidable at Landlord's option. Tenant shall not
occupy any space in the Building (by assignment, sublease or otherwise) other
than the Premises.

        If the rent and other sums (including, without limitation, all monetary
payments plus the reasonable value of any services performed or any other thing
of value given by any assignee or subtenant in consideration of such assignment
or sublease), either initially or over the term of any assignment or sublease,


<PAGE>   28


                                      -25-

payable by such assignee or subtenant on account of an assignment or sublease of
all or any portion of the Premises exceed the sum of Annual Fixed Rent plus
Additional Rent called for hereunder with respect to the space assigned or
sublet, Tenant shall pay to Landlord as Additional Rent fifty percent (50%) of
such excess payable monthly at the time for payment of Annual Fixed Rent.
Nothing in this paragraph shall be deemed to abrogate the provisions of this
Section 6.14 and Landlord's acceptance of any sums pursuant to this paragraph
shall not be deemed a granting of consent to any assignment of this Lease or
sublease of all or any portion of the Premises.

        Following Landlord's consent, or refusal to consent, to any assignment
or sublease, Tenant shall pay Landlord, upon demand, a reasonable charge to
cover Landlord's administrative costs in connection therewith, plus the amount
of Landlord's out-of-pocket costs reasonably incurred including Landlord's
reasonable attorneys fees.

        Landlord may accept rent from any person other than Tenant pending
approval or disapproval of any assignment. Neither a delay in the approval or
disapproval of such assignment nor the acceptance of rent shall constitute a
waiver or estoppel of Lessor's right to exercise its remedies for the breach of
any of the terms or conditions of this Section 6.14. A consent to one
assignment, transfer, subletting, occupation or use by any other person shall
not be deemed to be a consent to any subsequent assignment, transfer,
subletting, occupation or use by another person. Any such subsequent assignment,
transfer, subletting, occupation or use without such consent hereunder shall be
void, and shall, at the option of Landlord, terminate this Lease. Landlord's
acceptance of any name for listing on the Building directory or any Building
signs will not be deemed, nor will it substitute for, Landlord's consent, as
required by this Lease, to any sublease, assignment, or other occupancy of the
Premises.

        Tenant shall not assign, mortgage, pledge, hypothecate or encumber its
interests hereunder as security for any obligation or otherwise, and any such
assignment, mortgage, pledge, hypothecation or encumbrance in violation of this
provision shall, at Landlord's option (exercised in Landlord's sole and absolute
discretion), be void.

        6.15 Nuisance. Tenant shall not injure, deface or otherwise harm the
Premises; nor commit any nuisance; nor permit in the Premises any vending
machine (except such as is used for the sale of merchandise to employees of
Tenant) or inflammable fluids or chemicals (except such as are customarily used
in connection with standard office and biotechnology research equipment); nor
permit any cooking to such extent as requires special exhaust venting; nor
permit the emission of any objectionable noise or odor; nor make, allow or
suffer any waste of the Premises; nor make any use of the Premises which is


<PAGE>   29


                                      -26-

improper, offensive or contrary to any law or ordinance or which will invalidate
or increase the premiums for any of Landlord's insurance or which is liable to
render necessary any alteration or addition to the Building which Landlord shall
not have approved in accordance with Section 6.1.8; nor conduct any auction,
fire, "going out of business" or bankruptcy sales.

        6.16 Equipment; Floor Load. Tenant shall not place a load upon any floor
of the Premises exceeding the lesser of the floor load capacity which such floor
was designed to carry or that which is allowed by law. Business machines and
equipment which emit vibration, noise or other emissions shall be placed and
maintained by Tenant at Tenant's expense in settings sufficient to absorb and
prevent vibration, noise and all other emissions. If any safe, machinery, heavy
equipment, freight, or fixtures requires special handling, Tenant agrees to
employ only persons suitably trained and experienced to do said work, and that
all work in connection therewith shall comply with applicable laws and
regulations. Any such moving shall be at the sole risk and hazard of Tenant and
Tenant hereby agrees to exonerate, indemnify and save Landlord harmless against
and from any liability, loss, injury, claim or suit resulting directly or
indirectly from such moving. To the extent such moving shall involve loading
docks or other common areas or facilities of the Building, Tenant shall schedule
such moving at such times as Landlord shall reasonably designate.

        6.17 Electricity. Tenant shall not connect to the electrical
distribution system serving the Premises a total load exceeding the lesser of
the capacity of such system or the maximum load permitted from time to time
under applicable governmental regulations. The capacity of the electrical
distribution system serving the Premises shall be the lesser of (i) the capacity
of the branch of the system serving the Premises exclusively or (ii) the
allocation to the Premises of the capacity of the system serving the entire
Building, Landlord and Tenant agreeing that such capacity shall be allocated
equally over the entire rentable area of the Building.

        6.18 Installations, Alterations or Additions. Tenant shall make no
installations, alterations or additions in, to or on the Premises and shall not
permit the making of any holes in the walls, partitions, ceilings or floors
without on each occasion obtaining the prior consent of Landlord, and then only
pursuant to plans and specifications approved by Landlord in advance in each
instance. Notwithstanding the foregoing, Landlord's consent shall not be
required for the performance by Tenant of any alteration, addition or
improvement to the Premises that shall not be visible from the exterior of the
Premises, shall not affect the mechanical, electrical, plumbing, heating,
ventilation, life safety or air-conditioning systems of the Building or any
structural or other common areas or elements of the Building (such alterations,
additions and improvements being


<PAGE>   30


                                      -27-

"Nonstructural Alterations") and shall not exceed $50,000 in cost, provided
however Tenant shall not perform any Nonstructural Alterations without giving
Landlord reasonable prior notice thereof, together with all plans and
specifications (if any). All work to be performed to the Premises by Tenant (a)
shall be performed in a good and workmanlike manner by contractors approved in
advance by Landlord and in compliance with the provisions of Exhibit C and all
applicable zoning, building, fire, health and other codes, regulations,
ordinances and laws, (b) shall be made at Tenant's sole cost and expense (except
as hereinafter provided) and at such times and in such a manner as Landlord may
from time to time designate, and (c) shall become part of the Premises and the
property of Landlord without being deemed Additional Rent for tax purposes,
Landlord and Tenant agreeing that Tenant shall be treated as the owner for tax
purposes until the expiration or earlier termination of the term hereof, subject
to Landlord's rights pursuant to Section 6.9 to require Tenant to remove the
same at or prior to the expiration or earlier termination of the term hereof.
Tenant shall pay promptly when due the entire cost of any work to the Premises
so that the Premises, Building and Complex shall at all times be free of liens
for labor and materials, and, at Landlord's request, Tenant shall furnish to
Landlord a bond or other security acceptable to Landlord assuring that any such
work will be completed in accordance with the plans and specifications
theretofore approved by Landlord and assuring that the Premises will remain free
of any mechanics' lien or other encumbrances that may arise out of such work.
Prior to the commencement of any such work, and throughout and until completion
thereof, Tenant shall maintain, or cause to be maintained, the insurance
required by Exhibit D, all with coverage limits as stated therein or such higher
limits as shall be reasonably required by Landlord. In addition, Tenant shall
save Landlord harmless and indemnified from all injury, loss, claims or damage
to any person or property occasioned by or arising out of such work. Whenever
and as often as any mechanic's or materialmen's lien shall have been filed
against the Building or the Complex based upon any act of Tenant or of anyone
claiming through Tenant, Tenant shall within three (3) days of notice from
Landlord to Tenant take such action by bonding, deposit or payment as will
remove or satisfy the lien.

        Landlord or its representatives shall have the right to post, and keep
posted upon the Premises, notices of non-responsibility or such other notices
which Landlord may deem to be proper for the protection of Landlord's interest
in the Premises and the Building. Tenant, before the commencement of any work
from which a mechanic's or materialmen's lien may arise, shall give to Landlord
written notice of Tenant's intention to commence such work in sufficient time to
enable Landlord to post such notices.



<PAGE>   31


                                             -28-

        If Tenant shall, having first received Landlord's prior approval, make
any leasehold improvement to the Premised during the term, then provided this
Lease is in effect and Tenant shall not have exercised its right to elect to
terminate the term of this Lease pursuant to Section 2.3, Landlord shall, within
thirty (30) days after request by Tenant following completion of such work and
delivery to Landlord of a certificate of occupancy for the entire Premises and
lien waivers from all of Tenant's contractors and subcontractors, make a
one-time payment to Tenant in the amount equal to the lesser of the cost of such
work as shown by such contractor invoices or $544,400.

        Tenant shall not, at any time, directly or indirectly, employ or permit
the employment of any contractor, mechanic or laborer in the Premises, if such
employment will interfere or cause any conflict with other contractors,
mechanics or laborers engaged in the construction, maintenance or operation of
the Building by Landlord, Tenant or others. In the event of any such
interference or conflict, Tenant, upon demand of Landlord, shall cause all
contractors, mechanics or laborers causing such interference or conflict to
leave the Building immediately.

        6.19 Signs. Tenant shall not paint or place any signs or place any
curtains, blinds, shades, awnings, aerials, or the like, visible from outside
the Premises. Landlord will not unreasonably withhold consent for signs or
lettering on or adjacent to the entry doors to the Premises provided such signs
conform to building standards adopted by Landlord and Tenant has submitted to
Landlord a plan or sketch of the sign to be placed on such entry doors. Landlord
agrees, however, to maintain a tenant directory in the lobby of the Building in
which will be placed Tenant's name and the location of the Premises in the
Building. Tenant shall not install any signs on the exterior of the Building.
However, if a monument sign now or hereafter located at the entrance of the
parking area serving the Building includes the names of the tenants of the
Building, Tenant's name or the name under which it operates as of the Date of
this Lease shall be placed on such sign.

        6.20 Hazardous Materials. Tenant shall not (a) introduce on or transfer
to or store on the Premises, the Building or the Complex or use on the Premises,
any Hazardous Materials (as hereinafter defined), except such Hazardous
Materials in such amounts as are reasonably necessary for the conduct of the
Permitted Uses, and then only in compliance with all Environmental and Health
Laws (as hereinafter defined) and the terms and conditions of recommendations,
policies or requirements of any insurer of the Building of Complex ("Insurance
Conditions"); (b) dump, flush or otherwise dispose of any Hazardous Materials
into the drainage, sewage or waste disposal systems serving the Premises, the
Building or the Complex, except in compliance with Environmental and Health Laws
and Insurance Conditions; (c) release, spill or dispose of any Hazardous


<PAGE>   32

                                      -29-

Materials in or on the Premises, the Building or the Complex, or (d) transfer
any Hazardous Materials from the Premises to any other location (except the
transfer of such Hazardous Materials expressly permitted to be used on the
Premises from the Premises for disposal and then only in compliance with all
Environmental and Health Laws and Insurance Conditions).

        Tenant agrees that if it or anyone claiming under it shall transfer to
the Premises, store, use or dispose (except to the extent expressly permitted
above), generate, release, threaten release or spill, any Hazardous Materials,
it shall forthwith remove the same, at its sole cost and expense, in the manner
provided by all applicable Environmental and Health Laws, regardless of when
such Hazardous Materials shall be discovered. Furthermore, Tenant shall pay any
fines, penalties or other assessments imposed by any governmental agency with
respect to any such Hazardous Materials and shall forthwith repair and restore
any portion of the Premises, the Building or the Complex which it shall disturb
in so removing any such Hazardous Materials to the condition which existed prior
to Tenant's disturbance thereof.

        Tenant agrees to deliver promptly to Landlord any notices, orders or
similar documents received from any governmental agency or official concerning
any violation of any Environmental and Health Laws or with respect to any
Hazardous Materials affecting the Premises, the Building or the Complex. In
addition, Tenant shall, within ten (10) days of receipt, accurately complete any
questionnaires from Landlord or other informational requests relating to
Tenant's use of the Premises and, in particular, to Tenant's use, generation,
storage and/or disposal of Hazardous Materials at, to, or from the Premises.

        For purposes of this Lease, the term "Hazardous Materials" shall mean
and include any Excepted Waste (as defined in Section 5.3 of this Lease),
asbestos and asbestos-containing materials, air pollutants or contaminants,
crude and refined oil and the products and by-products of oil and petroleum,
radioactive, biological, medical or infectious wastes or materials, and any
other toxic or hazardous wastes, materials and substances which are defined,
determined or identified as a hazardous substance or hazardous waste, extremely
hazardous waste, infectious waste, non-RCRA waste, retrograde material,
restricted hazardous waste, volatile organic compound, waste or similarly
defined, determined or identified in any Environmental and Health Laws, or in
any judicial or administrative interpretation of Environmental and Health Laws.

        "Environmental and Health Laws" shall mean any and all present and
future federal, state, county and municipal or other local statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, codes, plans,
injunctions, permits, concessions, grants, franchises, licenses, agreements or
other governmental


<PAGE>   33

                                      -30-

restrictions applicable to the Complex relating to Hazardous Materials or the
environment or to emissions, discharges or releases or threatened releases of
Hazardous Materials into the environment, including, without limitation, into
the ambient air, surface water, ground water or in, on or under any land, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, release or threatened release, disposal, transport or handling of
Hazardous Materials or the cleanup or other remediation thereof. Environmental
and Health Laws include, without limitation, the following: the Comprehensive
Environmental Response, Compensation and Liability At of 1980, as amended (42
U.S.C. Section 9601 et. seq.), the Hazardous Materials Transportation Act, as
amended (49 U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery
Act of 1976, as amended (42 U.S.C. Section 6901 et seq.), the California Safe
Drinking Water and Toxic Enforcement Act of 1986 (Health and Safety Code
Section 25249.5 et seq.), the California Hazardous Waste Control Act (Health and
Safety Code Section 25100 et seq.)

        The obligations of Tenant contained in this Section 6.21 shall survive
the expiration or termination of this Lease.


                                    ARTICLE 7

                               Casualty or Taking

        7.1 Termination. If: (i) the Building is substantially damaged by fire
or casualty (the term "substantially damaged" meaning for the purposes of this
paragraph only at least thirty (30) percent of the rentable area of the
Building, or any portion of a common area or facility necessary for the
efficient operation of the Building is damaged to such an extent that the repair
of the same in the ordinary course could not be expected to be completed within
one year of the fire or other casualty; or (ii) any material part of the
Building is permanently taken by any exercise of eminent domain or is condemned
(the term "material part" meaning (A) at least thirty (30) percent of the
rentable area of the Building or (B) convenient access or (C) any portion of a
common area or facility necessary for the efficient operation of the Building is
so taken or condemned) for a period of at least all or substantially all of the
remainder of the term of this Lease (the "Remainder") then Landlord shall have
the right to terminate this Lease by giving notice to Tenant of its election so
to do within ninety (90) days after either the occurrence of such casualty or
the effective date of such taking or condemnation (as applicable), whereupon
this Lease shall terminate thirty (30) days after the date of such notice with
the same force and effect as if such date were the date on which this Lease were
to expire by effluxion of time.

        In the event that (i) the Premises or any common areas of
the Complex necessary for Tenant's use and enjoyment of the


<PAGE>   34


                                      -31-

Premises are substantially damaged by fire or casualty (the term "substantially
damaged" meaning for purposes of this paragraph only damage to at least thirty
(30) percent of the Premises to such an extent that repair of the same in the
ordinary course could not be expected to be completed within one year of the
fire or other casualty) or (ii) at least thirty (30) percent of the Premises is
taken for the Remainder by any exercise of eminent domain, then in either case
Tenant shall have the right to terminate this Lease by giving notice of its
desire to do so to Landlord within thirty (30) days after such damage or taking,
and on the date thirty (30) days after the giving of such notice, this Lease
shall terminate with the same force and effect as if such day were the date on
which this Lease were to expire by effluxion of time. Notwithstanding the
foregoing to the contrary, Tenant shall have no right to terminate this Lease
pursuant to this Section 7.1 due to a fire or other casualty if the cause
thereof was due to the negligence or other wrongful conduct of Tenant or any
agent, employee or invitee of Tenant or any sublessee or other occupant
permitted on the Premises by Tenant.

        7.2 Restoration. If this Lease shall not be terminated pursuant to
Section 7.1, this Lease shall continue in force and a just proportion of the
Annual Fixed Rent and Additional Rent on account of Operating Costs and Taxes
shall be suspended or abated until the Premises (excluding any improvements to
the Premises made at Tenant's expense), or what may remain thereof, shall be put
by Landlord in proper condition for use. Landlord covenants to perform such
repairs with reasonable diligence and to the extent permitted by the net
proceeds of insurance recovered or damages awarded for such taking, destruction
or damage and subject to zoning and building laws or ordinances then in
existence. "Net proceeds of insurance recovered or damages awarded" refers to
the gross amount of such insurance or damages actually made available to
Landlord (and not retained by any Superior Lessor or Superior Mortgagee) less
the reasonable expenses of Landlord incurred in connection with the collection
of the same, including without limitation, fees and expenses for legal and
appraisal services.

        7.3 Award. Irrespective of the form in which recovery may be had by law,
all rights to damages or compensation shall belong to Landlord in all cases.
Tenant hereby grants to Landlord all of Tenant's rights to such damages and
covenants to deliver such further assignments thereof as Landlord may from time
to time request. Nothing contained herein shall be construed to prevent Tenant
from prosecuting in any condemnation proceedings a claim for the value of any of
Tenant's removable personal property and business machines and equipment
installed in the Premises by Tenant at Tenant's expense and which are subject to
a Taking (if such an award is available to Tenant) and for relocation expenses,
if such a claim shall not affect the amount of


<PAGE>   35

                                      -32-

compensation otherwise recoverable by Landlord from the Taking authority.

        7.4 Termination Waiver. Tenant waives the provisions of California Civil
Code Sections 1932(2) and 1933(4) (and all similar or successor statutes) which
relate to the termination of leases when the thing leased is destroyed, and
agrees that such event shall be governed by the terms of this Lease.


                                    ARTICLE 8

                                    Defaults

        8.1 Default of Tenant. The occurrence of any one or more of the
following shall constitute a "Default of Tenant" under this Lease:

               (a) The failure by Tenant to make any payment of Annual Fixed
Rent, Additional Rent or any other payment required to be made by Tenant
hereunder (collectively, "Rent"), as and when due, where such failure shall
continue for seven (7) days after notice thereof from Landlord to Tenant;
provided, however, that any such notice shall be in lieu of, and not in addition
to, any notice required under California Code of Civil Procedure Section 1161.

               (b) The failure by Tenant to observe or perform any of the
express or implied covenants or provisions of this Lease to be observed and
performed by Tenant, other than as specified in subsection (a) above, where such
failure shall continue for a period of thirty (30) days after written notice
thereof from Landlord to Tenant; provided, however, that any such notice shall
be in lieu of, and not in addition to, any notice required under California Code
of Civil Procedure Section 1161; provided, further, that if the nature of
Tenant's default is such that more than thirty (30) days are reasonably required
for its cure, then Tenant shall not be deemed to be in default if Tenant shall
commence such cure within such thirty (30) day period and thereafter diligently
prosecute such cure to completion within sixty (60) days from the date of such
notice from Landlord.

               (c) An assignment by Tenant or any guarantor of Tenant for the
benefit of creditors.

               (d) The taking by execution or levy of Tenant's leasehold
interest.

               (e) The filing of a lien or other involuntary encumbrance against
Tenant's leasehold interest or Tenant's other property, including said leasehold
interest, or against the property of any guarantor of Tenant, which filing shall
not be


<PAGE>   36


                                      -33-

discharged within thirty (30) days after Tenant receives notice thereof.

               (f) The filing of a petition by Tenant or any guarantor of Tenant
for liquidation, or for reorganization or an arrangement under any provision of
any bankruptcy law or code as then in force and effect.

               (g) The filing of an involuntary petition under any of the
provisions of any bankruptcy law or code against Tenant or any guarantor of
Tenant and such involuntary petition shall not be dismissed within sixty (60)
days thereafter.

               (h) The appointment of a custodian, receiver or similar agent
shall be authorized or appointed to take charge of all or substantially all of
the assets of Tenant or any guarantor of Tenant.

               (i) The dissolution or liquidation (except in connection with a
transaction permitted pursuant to the second paragraph of Section 6.14) of
Tenant or any guarantor of Tenant or the adoption of any plan or the
commencement of any proceeding, the result of which is or is intended to include
the dissolution or liquidation of Tenant or any guarantor of Tenant.

               (j) The entry of an order in any proceeding by or against Tenant
or any guarantor of Tenant decreeing or permitting the dissolution of Tenant or
any guarantor of Tenant or the winding up of its affairs.

               (k) The occurrence of a default by Tenant under the Other Lease,
Tenant hereby also agreeing that a Default of Tenant under this Lease shall be
deemed a default of Tenant under the Other Lease, affording Landlord all of the
remedies available under Section 15 B of the Other Lease.

        8.2 Remedies. In the event of a Default of Tenant, in addition to all
other rights or remedies Landlord may have, Landlord, acting through its
employees, agents or servants, may terminate this Lease by notice to Tenant in
the manner provided in Section 10.1. In addition to all other rights or remedies
Landlord may have, in the event of a Default of Tenant, Landlord shall have the
immediate right to re-enter and repossess the Premises. Should Landlord elect to
re-enter as herein provided, or should Landlord take possession pursuant to
legal proceedings or pursuant to any notice provided by law, and should Landlord
elect to terminate this Lease, Landlord may recover from Tenant:

               (1) The worth at the time of the award of the unpaid Rent which
is due, owing and unpaid by Tenant to Landlord at the time of termination; and



<PAGE>   37

                                      -34-

               (2) The worth at the time of the award of the amount by which the
unpaid Rent which would have been earned after termination until the time of the
award exceeds the amount of the rent loss Tenant proves could have been
reasonably avoided; and

               (3) The worth at the time of the award of the amount by which the
unpaid Rent for the balance of the Term after the time of award exceeds the
amount of rental loss which Tenant proves could be reasonably avoided; and

               (4) All other amounts necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its obligations
under this Lease or which in the ordinary course of events are likely to result
therefrom including all costs (including attorneys' fees) of recovering
possession of the Premises, removing persons or property from the Premises,
repairs, brokers' fees, advertising and alterations to the Premises in
connection with reletting the Premises; and

               (5) At Landlord's election, other amounts in addition to or in
lieu of the above as may be permitted from time to time by applicable law.

        All computations of the worth at the time of amounts recoverable by
Landlord under clauses (1), (2) and (4) above shall be computed by allowing
interest at the Default Rate (as defined in Section 8.4). The worth at the time
of award recoverable by Landlord under clause (3) above shall be computed by
discounting the amount otherwise recoverable by Landlord at the discount rate of
the Federal Reserve Bank of San Francisco plus one percent (1%).

        If Landlord takes possession of the Premises pursuant to legal
proceedings or pursuant to any notice provided by applicable law, and if
Landlord does not elect to terminate this Lease, Landlord may from time to time,
without terminating this Lease, recover all Rent as it becomes due and, at
Landlord's election, relet the Premises or any part of the Premises upon such
terms, at such rent, upon such conditions and for such a period of time as
Landlord in its sole discretion may deem advisable. Landlord shall also have the
right to make such alterations, repairs and decorations in the Premises as
Landlord in its sole judgment considers advisable and necessary for the purpose
of reletting the Premises; and the making of such alterations, repairs and
decorations shall not operate or be construed to release Tenant from liability
hereunder as aforesaid. Landlord shall apply to any unpaid amounts due Landlord
hereunder the net proceeds, if any, of any reletting of the Premises, after
deducting all expenses in connection therewith, including, without limitation,
all repossession costs, brokerage commissions, legal expenses, attorneys' fees,
advertising, expenses of employees, alteration costs and expenses of preparing
the Premises for such reletting. Tenant hereby


<PAGE>   38


                                      -35-

waives all right to receive all or any portion of the net proceeds of any such
reletting. Landlord shall in no event be liable for failure to relet the
Premises, or, in the event that the Premises are relet, for failure to collect
the rent under such reletting.

        In the event that Tenant should breach this Lease, Landlord may, at it
option, enforce all of its rights and remedies under this Lease, including the
right to recover the Rent as it becomes due hereunder. Additionally, Landlord
shall be entitled to recover from Tenant all costs of maintenance and
preservation of the Premises, and all costs, including attorneys' fees, to
protect the Premises and Landlord's interest under this Lease.

        At any time after a Default of Tenant occurs, Landlord may 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 into 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.

        To the fullest extent permitted by law, Tenant hereby waives all rights
of redemption or relief from forfeiture under California 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.

        8.3 Remedies Cumulative. Any and all rights and remedies which Landlord
may have under this Lease, and at law and equity (including without limitation
actions at law for direct, indirect, special and consequential (foreseeable and
unforeseeable) damages, for Tenant's failure to comply with its obligations
under this Lease shall be cumulative and shall not be deemed inconsistent with
each other, and any two or more of all such rights and remedies may be exercised
at the same time insofar as permitted by law.

        8.4 Landlord's Right to Cure Defaults. At any time with or without
notice, Landlord shall have the right, but shall not be required, to pay such
sums or do any act which requires the expenditure of monies which may be
necessary or appropriate by reason of the failure or neglect of Tenant to comply
with any of its obligations under this Lease (irrespective of whether the same
shall have ripened into a Default of Tenant), and in the event of the exercise
of such right by Landlord, Tenant agrees to pay to Landlord forthwith upon
demand, as Additional Rent, all such sums including reasonable attorneys fees,
together with interest thereon at a rate (the "Default Rate") equal to the
greater of 6% over the Prime Rate or twelve percent (12%) per annum, but in no
event in excess of the maximum rate of interest


<PAGE>   39


                                      -36-

then permitted to be agreed to by the parties under applicable law. "Prime Rate"
shall mean the annual floating rate of interest, determined daily and expressed
as a percentage from time to time announced by the largest national or
state-chartered banking institution in the state or district in which the
Complex is located as its "prime" or "base" rate. If, at any time, both the
largest national and state-chartered banking institutions having their principal
offices in the City of San Diego, shall cease to announce such a floating rate,
Prime Rate shall mean a rate of interest, determined daily, which is two (2)
percentage points above the 14-day moving average closing trading price of
90-day Treasury Bills.

        8.5 Holding Over. Any holding over by Tenant after the expiration or
early termination of the term of this Lease shall be treated as a daily tenancy
at sufferance at a rate equal to 1.75 times the greater of the fair market
rental value for the Premises on a month-to-month basis or the Annual Fixed Rent
in effect immediately prior to the expiration or earlier termination of the term
plus Additional Rent and other charges herein provided (prorated on a daily
basis). Tenant shall also pay to Landlord all damages, direct and/or
consequential (foreseeable and unforeseeable), sustained by reason of any such
holding over. Otherwise, such holding over shall be on the terms and conditions
set forth in this Lease as far as applicable.

        8.6 Effect of Waivers of Default. Any consent or permission by Landlord
to any act or omission by Tenant shall not be deemed to be consent or permission
by Landlord to any other similar or dissimilar act or omission and any such
consent or permission in one instance shall not be deemed to be consent or
permission in any other instance.

        8.7 No Waiver, etc. The failure of Landlord or Tenant to seek redress
for violation of, or to insist upon the strict performance of, any covenant or
condition of this Lease shall not be deemed a waiver of such violation nor
prevent a subsequent act, which would have originally constituted a violation,
from having all the force and effect of an original violation. The receipt by
Landlord of rent with knowledge of the breach of any covenant of this Lease
shall not be deemed to have been a waiver of such breach by Landlord, or by
Tenant, unless such waiver be in writing signed by the party to be charged. No
consent or waiver, express or implied, by Landlord or Tenant to or of any breach
of any agreement or duty shall be construed as a waiver or consent to or of any
other breach of the same or any other agreement or duty.

        8.8 No Accord and Satisfaction. No acceptance by Landlord of a lesser
sum than the Annual Fixed Rent, Additional Rent or any other charge then due
shall be deemed to be other than on account of the earliest installment of such
rent or charge due, nor shall any endorsement or statement on any check or any
letter


<PAGE>   40


                                      -37-

accompanying any check or payment as rent or other charge be deemed an accord
and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such installment or
pursue any other remedy in this Lease provided.


                                    ARTICLE 9

                                Rights of Holders

        9.1 Rights of Mortgagees or Ground Lessors. This Lease, and all rights
of Tenant hereunder, are and shall be subject and subordinate to any ground or
master lease, and all renewals, extensions, modifications and replacements
thereof, and to all mortgages, which may now or hereafter affect the Building or
the Complex and/or any such lease, whether or not such mortgages shall also
cover other lands and/or buildings and/or leases, to each and every advance made
or hereafter to be made under such mortgages, and to all renewals,
modifications, replacements and extensions of such leases and such mortgages and
all consolidations of such mortgages. This Section shall be self-operative and
no further instrument of subordination shall be required. In confirmation of
such subordination, Tenant shall promptly execute, acknowledge and deliver any
instrument that Landlord, the lessor under any such lease or the holder of any
such mortgage or any of their respective successors in interest may reasonably
request to evidence such subordination. Any lease to which this Lease is subject
and subordinate is herein called "Superior Lease" and the lessor of a Superior
Lease or its successor in interest, at the time referred to, is herein called
"Superior Lessor"; and any mortgage to which this Lease is subject and
subordinate, is herein called "Superior Mortgage" and the holder of a Superior
Mortgage is herein called "Superior Mortgagee".

        If any Superior Lessor or Superior Mortgagee or the nominee or designee
of any Superior Lessor or Superior Mortgagee shall succeed to the rights of
Landlord under this Lease, whether through possession or foreclosure action or
delivery of a new lease or deed, or otherwise, then at the request of such party
so succeeding to Landlord's rights (herein called "Successor Landlord") and upon
such Successor Landlord's written agreement to accept Tenant's attornment,
Tenant shall attorn to and recognize such Successor Landlord as Tenant's
landlord under this Lease and shall promptly execute and deliver any instrument
that such Successor Landlord may reasonably request to evidence such attornment.
Upon such attornment, this Lease shall continue in full force and effect as a
direct lease between the Successor Landlord and Tenant upon all of the terms,
conditions and covenants as are set forth in this Lease, except that the
Successor Landlord (unless formerly the landlord under this Lease) shall not be
(a) liable in any way to Tenant for any act


<PAGE>   41


                                      -38-

or omission, neglect or default on the part of Landlord under this Lease, (b)
responsible for any monies owing by or on deposit with Landlord to the credit of
Tenant, (c) subject to any counterclaim or setoff which theretofore accrued to
Tenant against Landlord, (d) bound by any modification of this Lease subsequent
to such Superior Lease or Superior Mortgage, or by any previous prepayment of
Annual Fixed Rent or Additional Rent for more than one (1) month, which was not
approved in writing by the Successor Landlord, (e) liable to the Tenant beyond
the Successor Landlord's interest in the Complex and the rents, income,
receipts, revenues, issues and profits issuing from the Complex, (f) responsible
for the performance of any work to be done by Landlord under this Lease to
render the Premises ready for occupancy by the Tenant, or (g) required to remove
any person occupying the Premises or any part thereof, except if such person
claims by, through or under the Successor Landlord. Tenant agrees at any time
and from time to time to execute a suitable instrument in confirmation of
Tenant's agreement to attorn, as aforesaid.

        9.2 Modifications. If any Superior Lessor or Superior Mortgagee shall
require any modification(s) of this Lease, Tenant shall, at Landlord's request,
promptly execute and deliver to Landlord such instruments effecting such
modification(s) as Landlord shall require, provided that such modification(s) do
not adversely affect in any material respect any of Tenant's rights or increase
any of Tenant's obligations under this Lease. In addition, and notwithstanding
Section 9.1 to the contrary, any Superior Lessor or Superior Mortgagee may, at
its option, subordinate the Superior Lease or Superior Mortgage of which it is
the lessor or holder to this Lease by giving Tenant ten (10) days prior written
notice of such election, whereupon this Lease shall, irrespective of dates of
execution, delivery and recording, be superior to such Superior Lease or
Superior Mortgage and no other documentation shall be necessary to effect such
change.


                                   ARTICLE 10

                            Miscellaneous Provisions

        10.1 Notices. All notices, requests, demands, consents, approvals or
other communications to or upon the respective parties hereto shall be in
writing and delivered by hand or mailed by certified or registered mail, return
receipt requested, or a nationally recognized courier service that provides a
receipt for delivery such as Federal Express, United Parcel Service or U.S.
Postal Service Express Mail and shall be effective on the date delivered (or the
first date such delivery is attempted and refused) in writing to the party to
which such notice, request, demand, consent, approval or other communication is
required or permitted to be given or made under this Lease,


<PAGE>   42


                                      -39-

addressed if intended for Landlord, to the Original Address of Landlord set
forth in Section 1.1 of this Lease with a copy by regular mail to Warren M.
Heilbronner, Esq., Sullivan & Worcester LLP, One Post Office Square, Boston,
Massachusetts 02109 (or to such other address or addresses as may from time to
time hereafter be designed by Landlord by like notice); and if intended for
Tenant, addressed to Tenant at the Original Address of Tenant set forth in
Section 1.1 of this Lease until the Commencement Date and thereafter to the
Premises and in either case with a copy to Frederick Muto, Esq., Cooley,
Godward, 4365 Executive Drive, Suite 1100, San Diego, CA 92121 (or to such other
address or addresses as may from time to time hereafter be designated by Tenant
by like notice). Notices from Landlord may be given by Landlord's Agent, if any,
or Landlord's attorney.

        10.2 Quiet Enjoyment; Landlord's Right to Make Alterations, Etc.
Landlord agrees that, upon Tenant's paying the rent and performing and observing
the agreements, conditions and other provisions on its part to be performed and
observed, Tenant shall and may peaceably and quietly have, hold and enjoy the
Premises during the term hereof without any manner of hindrance or molestation
from Landlord or anyone claiming under Landlord, subject, however, to the terms
of this Lease; provided, however, Landlord reserves the right at any time and
from time to time, without the same constituting breach of Landlord's covenant
of quiet enjoyment or an actual or constructive eviction, and without Landlord
incurring any liability to Tenant or otherwise affecting Tenant's obligations
under this Lease, to make such changes, alterations, improvements, repairs or
replacements in or to the interior and exterior of the Building (including the
Premises) and the fixtures and equipment thereof, and in or to the Building or
the Complex, or properties adjacent thereto, as Landlord may deem necessary or
desirable, and to change (provided that there be no unreasonable obstruction of
the right of access to the Premises by Tenant and that Landlord use commercially
reasonable efforts to minimize, to the extent practical, any interference with
the conduct of business at the Premises) the arrangement and/or location of
entrances or passageways, doors and doorways, corridors, elevators, or other
common areas of the Building and the Complex. Landlord shall give Tenant
reasonable prior notice of any alterations which shall adversely affect Tenant
in any material respect.

        Without incurring any liability to Tenant, Landlord may permit access to
the Premises and open the same, whether or not Tenant shall be present, upon any
demand of any receiver, trustee, assignee for the benefit of creditors, sheriff,
marshal or court officer Landlord reasonably believes is entitled to such access
for the purpose of taking possession of, or removing, Tenant's property or for
any other lawful purpose (but this provision and any action by Landlord
hereunder shall not be deemed a recognition by Landlord that the person or
official making such demand has any right or interest in or to this Lease,


<PAGE>   43

                                      -40-

or in or to the Premises), or upon demand of any representative of the fire,
police, building, sanitation or other department of the city, state or federal
governments.

        10.3 Lease Not to be Recorded. Tenant agrees that it will not record
this Lease. Both parties shall, upon the request of either, execute and deliver
a notice or short form of this Lease in such form, if any, as may be acceptable
for recording with the land records of the governmental entity responsible for
keeping such records. In no event shall such document set forth the rent or
other charges payable by Tenant pursuant to this Lease; and any such document
shall expressly state that it is executed pursuant to the provisions contained
in this Lease and is not intended to vary the terms and conditions of this
Lease.

        10.4 Assignment of Rents and Transfer of Title; Limitation of Landlord's
Liability. With reference to any assignment by Landlord of Landlord's interest
in this Lease, or the rents payable hereunder, whether absolute or conditional
in nature or otherwise, which assignment is made to the holder of a mortgage on
property which includes the Premises, Tenant agrees that the execution thereof
by Landlord, and the acceptance thereof by the holder of such mortgage shall
never be treated as an assumption by such holder of any of the obligations of
Landlord hereunder unless such holder shall, by notice sent to Tenant,
specifically otherwise elect and that, except as aforesaid, such holder shall be
treated as having assumed Landlord's obligations hereunder (subject to the
limitations set forth in Section 9.1) only upon foreclosure of such holder's
mortgage and the taking of possession of the Premises.

        The term "Landlord" as used in this Lease, so far as covenants or
obligations to be performed by Landlord are concerned, shall be limited to mean
and include only the owner or owners at the time in question of Landlord's
interest in the Complex, and in the event of any transfer or transfers of such
title to said property, Landlord (and in case of any subsequent transfers or
conveyances, the then grantor) shall be concurrently freed and relieved from and
after the date of such transfer or conveyance, without any further instrument or
agreement, of all liability with respect to the performance of any covenants or
obligations on the part of Landlord contained in this Lease thereafter to be
performed, it being intended hereby that the covenants and obligations contained
in this Lease on the part of Landlord, shall, subject as aforesaid, be binding
on Landlord, its successors and assigns, only during and in respect of their
respective period of ownership of such interest in the Complex. Notwithstanding
the foregoing, in no event shall the acquisition of Landlord's interest in the
Building or the Complex by a purchaser which, simultaneously therewith, leases
Landlord's entire interest in the Building or the Complex back to Landlord or
the seller thereof be treated as an assumption by operation of law or otherwise,
of Landlord's obligations hereunder. Tenant


<PAGE>   44


                                      -41-

shall look solely to such seller-lessee, and its successors from time to time in
title, for performance of Landlord's obligations hereunder. The seller-lessee,
and its successors in title, shall be the Landlord hereunder unless and until
such purchaser expressly assumes in writing the Landlord's obligations
hereunder.

         Tenant, its successors and assigns, shall not assert nor seek to
enforce any claim for breach of this Lease against any of Landlord's assets
other than Landlord's interest in the Complex, and Tenant agrees to look solely
to such interest for the satisfaction of any liability or claim against Landlord
under this Lease, it being specifically agreed that in no event whatsoever shall
Landlord (which term shall include, without limitation, any general or limited
partner, trustees, beneficiaries, officers, directors, or stockholders of
Landlord) ever be personally liable for any such liability.

        10.5 Landlord's Default. Landlord shall not be deemed to be in default
in the performance of any of its obligations hereunder unless it shall fail to
perform such obligations and such failure shall continue for a period of thirty
(30) days or such additional time as is reasonably required to correct any such
default after written notice has been given by Tenant to Landlord specifying the
nature of Landlord's alleged default. Tenant shall have no right to terminate
this Lease for any default by Landlord hereunder and no right, for any such
default, to offset or counterclaim against any rent due hereunder. In no event
shall Landlord ever be liable to Tenant for any punitive damages or for any loss
of business or any other indirect, special or consequential damages suffered by
Tenant from whatever cause.

        Where provision is made in this Lease for Landlord's consent and Tenant
shall request such consent and Landlord shall fail or refuse to give such
consent, Tenant shall not be entitled to any damages for any withholding by
Landlord of its consent, it being intended that Tenant's sole remedy shall be an
action for specific performance or injunction (and reimbursement of Tenant's
reasonable legal fees and other out-of-pocket expenses incurred in successfully
obtaining a final, unappealable injunction against Landlord), and that such
remedy shall be available only in those cases where Landlord is expressly
required not to withhold its consent unreasonably.

        10.6 Notice to Mortgagee and Ground Lessor. After receiving notice from
any person, firm or other entity that it holds a mortgage which includes the
Premises as part of the mortgaged premises, or that it is the ground lessor
under a lease with Landlord, as ground lessee, which includes the Premises as
part of the demised premises, no notice from Tenant to Landlord shall be
effective unless and until a copy of the same is given to such holder or ground
lessor, and the curing of any of


<PAGE>   45

                                      -42-

Landlord's defaults by such holder or ground lessor shall be treated as
performance by Landlord.

        10.7 Building or Complex Name Change. Landlord shall have the right to
change the name of the Building or the Complex at any time and Tenant expressly
waives any and all claims for damages against Landlord resulting therefrom.

        10.8 Parking. So long as this Lease is in force and effect, Landlord
shall maintain a ratio of 3.28 space(s) in the parking areas in the Complex for
every 1,000 rentable square feet located within the Complex. All parking shall
be provided without charge on an unreserved un-assigned basis.

        10.9 Brokerage. Tenant warrants and represents that it has dealt with no
broker in connection with the consummation of this Lease other than Irving
Hughes Group, Inc., and in the event of any brokerage claims or liens against
Landlord or the Property predicated upon or arising out of prior dealings with
Tenant including any claim or lien by Irving Hughes Group, Inc. (which
commission Tenant agrees to pay in full), Tenant agrees to defend the same and
indemnify and hold Landlord harmless against any such claim, and to discharge
any such lien.

        10.10 Applicable Law and Construction. This Lease shall be governed by
and construed in accordance with the laws of the state or district in which the
Complex is located and if any provisions of this Lease shall to any extent be
invalid, the remainder of this Lease shall not be affected thereby. Tenant
expressly acknowledges and agrees that Landlord has not made and is not making,
and Tenant, in executing and delivering this Lease, is not relying upon, any
warranties, representations, promises or statements, except to the extent that
the same are expressly set forth in this Lease or in any other written agreement
which may be made between the parties concurrently with the execution and
delivery of this Lease and which shall expressly refer to this Lease. All
understandings and agreements heretofore made between the parties are merged in
this Lease and any other such written agreement(s) made concurrently herewith,
which alone fully and completely express the agreement of the parties and which
are entered into after full investigation, neither party relying upon any
statement or representation not embodied in this Lease or any other such written
agreement(s) made concurrently herewith. This Lease may be amended, and the
provisions hereof may be waived or modified, only by instruments in writing
executed by Landlord and Tenant. The titles of the several Articles and Sections
contained herein are for convenience only and shall not be considered in
construing this Lease. The submission of this document for examination and
negotiation does not constitute an offer to lease, or a reservation of, or
option for, the Premises, and Tenant shall have no right to the Premises
hereunder until the execution and delivery hereof by both Landlord and Tenant.
Except as herein


<PAGE>   46


                                      -43-

otherwise provided, the terms hereof shall be binding upon and shall inure to
the benefit of the successors and assigns, respectively, of Landlord and Tenant
and, if Tenant shall be an individual, upon and to his heirs, executors,
administrators, successors and assigns. If two or more persons are named as
Tenant herein, each of such persons shall be jointly and severally liable for
the obligations of the Tenant hereunder, and Landlord may proceed against any
one without first having com menced proceedings against any other of them. Each
term and each provision of this Lease to be performed by Tenant shall be
construed to be both an independent covenant and a condition and time is of the
essence with respect to the exercise of any of Tenant's rights under this Lease.
The reference contained to successors and assigns of Tenant is not intended to
constitute a consent to assignment of Tenant. Except as otherwise set forth in
this Lease, any obligations of Tenant (including, without limitation, rental and
other monetary obligations, repair obligations and obligations to indemnify
Landlord), shall survive the expiration or earlier termination of this Lease,
and Tenant shall immediately reimburse Landlord for any expense incurred by
Landlord in curing Tenant's failure to satisfy any such obligation
(notwithstanding the fact that such cure might be effected by Landlord following
the expiration or earlier termination of this Lease).

        WITNESS the execution hereof under seal on the day and year first above
written.

                                        Landlord:

                                        HUB PROPERTIES TRUST


                                        By:  /s/ DAVID J. HEGARTY
                                             --------------------------------
                                                 David J. Hegarty, President


                                        Tenant:

                                        SIGNAL PHARMACEUTICALS, INC.


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



<PAGE>   47

                                    EXHIBIT A

                                   [GRAPHIC]



<PAGE>   48


                                    EXHIBIT B

                              RULES AND REGULATIONS

      1. The sidewalks, entrances, passages, corridors, vestibules, halls,
elevators or stairways in or about the Building shall not be obstructed by
Tenant or used by Tenant for any purpose other than for access to the Premises
and the common areas.

      2. Tenant shall not place objects against glass partitions, doors or
windows which would be unsightly from the Building corridor or from the exterior
of the Building. No signs, advertisements, placards, pictures, names, notices,
or lettering shall be exhibited, inscribed, painted or fixed by Tenant on any
window or part of the outside or inside of the Building or the Complex without
the prior consent of Landlord.

      3. All window coverings shall be of a uniform shape, color, material and
design as prescribed by Landlord.

      4. Tenant shall not place a load upon any floor of the Building exceeding
the lesser of the floor load which such floor was designed to carry or that
allowed by law.

      5. Tenant shall not waste electricity or water in the Build ing and shall
cooperate fully with Landlord to assure the most effective operation of the
Building HVAC system.

      6. No additional or different locks or bolts shall be affixed on doors by
Tenant without reasonable prior notice to Landlord. Tenant shall return all keys
to Landlord upon termination of Tenant's lease. Tenant shall not allow peddlers,
solicitors or beggars in the Building.

      7. Tenant shall not use the Premises so as to cause any increase above
normal insurance premiums on the Building.

      8. No vehicles or animals (except a seeing-eye dog) shall be brought into
or kept in or about the Premises. No space in the Building shall be used for
manufacturing (as opposed to development) or for the sale of merchandise of any
kind at auction or for storage thereof preliminary to such sale.

      9. Tenant shall not engage or pay any employees of the Building without
approval from the Landlord. Tenant shall not employ any persons other than the
janitor or employees of Landlord for the purpose of cleaning Premises without
the prior written consent of Landlord.

      10. All removals from the Building or the carrying in or out of the
Premises of any freight, furniture or bulky matter of any description which
removal involves loading docks or other common areas or facilities of the
Building must take place at such time and in such manner as Landlord may
determine from time to time.


<PAGE>   49

                                       -2-

Landlord reserves the right to inspect all freight to be brought into the
Building and to exclude from the Building all freight which violates any of the
rules and regulations or provisions of Tenant's lease. Heavy objects shall, if
considered necessary by Landlord, stand on reinforcing plates of such thickness
and size as is necessary to properly distribute the weight. Landlord will not be
responsible for loss of or damage to any such property from any cause and all
damage done to the Building by moving or maintaining any such property shall be
repaired at the sole cost and expense of Tenant.

      11. Tenant shall cooperate with Landlord in minimizing loss and risk
thereof from fire and associated perils.

      12. Tenant shall, at Tenant's expense, provide artificial light and
electric current for the Landlord and/or its contractors, agents and employees
during the making of repairs, alterations, additions or improvements in or to
the demised premises.

      13. The water and wash closets and other plumbing fixtures shall not be
used for any purposes other than those for which they were designed and
constructed and no sweepings, rubbish, rags, acid or like substance shall be
deposited therein. All damages resulting from any misuse of the fixtures shall
be borne by Tenant. Any equipment or apparatus within the Premises, including,
without limitation, x-ray effluent drains, shall be maintained by Tenant
throughout the term hereof, at Tenant's sole cost and expense.

      14. Tenant may request HVAC service outside of Normal Building Operating
Hours by submitting a request in writing to the Building Manager's office by
noon of the preceding workday.

      15. Landlord reserves the right to establish, modify and enforce parking
rules and regulations.

      16. All refuse from the Premises shall be disposed of in accordance with
the requirements established therefor by Landlord and no dumpster shall be
overloaded by Tenant.

      17. A Building directory will be provided for the display of the name and
location of the Tenant named on the Lease and Landlord reserves the right to
exclude any other names therefrom. Tenant shall be entitled to initial listings
on the directory for each Tenant indicated on the Lease. Additional listings
thereafter, if approved in writing by Landlord, shall be at the sole cost and
expense of the Tenant. Landlord's acceptance of any name for listing on the
building directory will not be deemed, nor will it substitute for, Landlord's
consent, as required by this Lease, to any sublease, assignment, or other
occupancy of the demised Premises. All orders for directory listings should be
given to Landlord in writing by Tenant. No


<PAGE>   50

                                       -3-

oral orders, changes, additions or deletions shall be accepted by Landlord.

      18. Landlord will direct electricians and telephone installers as to where
and how electrical and telephone wires are to be installed by Tenant except
where Landlord has previously reviewed and approved such plans. No boring or
cutting for wires will be allowed without the written consent of the Landlord.

      19. There shall not be used in any space, or in the public halls of the
Building, either by any Tenant or others, any hand trucks except those equipped
with rubber tires and side guards.

      20. No air conditioning or heating unit or other similar apparatus shall
be installed or used by any Tenant without the prior written consent of
Landlord, which consent shall not be unreasonably withheld or delayed provided
that such installation or use shall not affect the HVAC system or its operation,
or any other mechanical, electrical, plumbing or structural element or system of
the Building.

      21. All doors opening onto public corridors and stairwells shall be kept
closed as required by state and local fire codes, except when being used for
ingress and egress, and shall be securely locked by Tenant before leaving the
Premises.

      22. No cooking shall be done or permitted by Tenant on the Premises and no
vending machines of any description shall be installed, maintained or operated
upon the Premises without the prior written consent of Landlord.

      23. No smoking is allowed in the Building (including the Premises) or any
other building or structure in the Complex.

      24. No Tenant shall make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere with occupants of the Complex, Buildings or
Premises or those having business with them by the use of any musical
instrument, radio, stereo, television or in any other way.

      25. The requirements of Tenant to which it is entitled hereunder will be
attended to only upon application at the Building office. Employees of Landlord
shall not perform any work or do anything outside of their regular duties unless
under special written instructions from Landlord, and no employee will admit any
person (Tenant or otherwise) to any office, or sign acceptance of delivery for
any Tenant, without written specific instructions from Tenant.

      26. Landlord shall furnish restroom supplies for public area restrooms
only. Tenant shall purchase supplies for any toilet rooms within such Tenant's
Premises and shall not be allowed to supply its private toilet areas from
Building supplies.


<PAGE>   51


                                             -4-

      27. Landlord reserves the right at any time to rescind, alter or waive any
rule or regulation at any time prescribed for the Building and to impose
additional rules and regulations when in its judgment reasonably exercised
Landlord deems it necessary, desirable or proper for its best interest and for
the best interest of tenants and other occupants and invitees thereof. No
alteration or waiver of any rule or regulation in favor of one Tenant shall
operate as an alteration or waiver in favor of any other Tenant. Landlord shall
not be responsible to any Tenant for the non-observance or violation by any
other Tenant however resulting of any rules or regulations at any time
prescribed for the Building. In the event of any conflict between these Rules
and Regulations, or any further or modified rules and regulations from time to
time issued by Landlord, and the Lease provisions, the Lease provisions shall
govern and control.


<PAGE>   52

                                    EXHIBIT C

                            ALTERATIONS REQUIREMENTS

A.    General

      1. All alterations, installations or improvements ("Alterations") to be
      made by Tenant in, to or about the Premises shall be made in accordance
      with the requirements of this Exhibit and by contractors or mechanics
      approved by Landlord, which approval shall not be unreasonably withheld or
      delayed.

      2. Tenant shall, prior to the commencement of any Alterations, submit for
      Landlord's written approval, complete plans of the Premises, or of the
      floor on which the Alterations are to occur, including mechanical,
      electrical, plumbing and architectural drawings. Drawings are to be
      complete with full details and specifications for all of the Alterations
      and shall be stamped by an architect licensed in the state or district in
      which the Complex is located certifying compliance with building codes.

      3. The proposed Alterations must comply with the building code in effect
      for the City of San Diego and the requirements, rules and regulations and
      any governmental agencies having jurisdiction.

      4. No work shall be permitted to commence without the Landlord being
      furnished with a valid permit from the building department and/or other
      agencies having jurisdiction in the City of San Diego.

      5. All demolition, removals or other categories of work that may
      inconvenience other tenants or disturb Building operations, must be
      scheduled and performed before or after Building hours (unless Landlord
      agrees otherwise) and Tenant shall provide the Building manager with at
      least 24 hours' notice prior to proceeding with such work.

      6. All inquiries, submissions, approvals and all other matters shall be
      processed through the Building manager.

B.    Prior to Commencement of Work

      1. Tenant shall submit to the Building manager a request to perform the
      Alterations. The request shall include the following enclosures:

             (i)      A list of Tenant's contractors and/or
             subcontractors for Landlord's approval.

             (ii)     Three complete sets of plans and specifications
             properly stamped by a registered architect or


<PAGE>   53

                                       -2-

             professional engineer certifying compliance with
             applicable building codes.

             (iii) A properly executed building permit application form.

             (iv) Four executed copies of the Insurance Requirements agreement
             in the form set forth in Exhibit D from Tenant's contractor and if
             requested by Landlord, from the contractor's subcontractors.

             (v) Contractor's and subcontractor's insurance certificates
             including an indemnity in accordance with the Insurance
             Requirements agreement.

      2. Landlord will return the following to Tenant:

             (i) Plans approved or returned with comments (Such approval or
             comments shall not constitute a waiver of Building Department
             approval or approval of other governmental agencies).

             (ii)     Two fully executed copies of the Insurance
             Requirements agreement.

      3. Tenant shall obtain a building permit from the building department and
      necessary permits from other governmental agencies. Tenant shall be
      responsible for keeping current all permits. Tenant shall submit copies of
      all approved plans and permits to Landlord and shall post the original
      building permit on the Premises prior to the commencement of any work. All
      Alterations shall be subject to reasonable supervision and inspection by
      Landlord's representative. Such supervision and inspection shall be at
      Tenant's sole expense and Tenant shall pay Landlord's reasonable charges
      for such supervision and inspection. Landlord shall notify Tenant if it
      estimates that the expense of supervision and inspection for any project
      shall exceed $1,000, if Tenant shall first request such estimate.

C.    Requirements and Procedures

      1. All structural and floor loading requirements shall be subject to the
      prior approval of Landlord's structural engineer.

      2. All mechanical (HVAC, plumbing and sprinkler) and electrical
      requirements shall be subject to the approval of Landlord's mechanical and
      electrical engineers. When necessary, Landlord will require engineering
      and shop drawings, which drawings must be approved by Landlord before work
      is started. Drawings are to be prepared by Tenant and all approvals shall
      be obtained by Tenant.


<PAGE>   54


                                       -3-


      3. Elevator service for construction work shall be charged to Tenant at
      standard Building rates. Prior arrangements for elevator use shall be made
      with the Building manager by Tenant. No material or equipment shall be
      carried under or on top of elevators. If an operating engineer is required
      by any union regulations, such engineer shall be paid for by Tenant.

      4. If shutdown of risers and mains for electrical, HVAC, sprinkler and
      plumbing work is required, such work shall not be undertaken without prior
      approval of Landlord. No work will be performed in Building mechanical
      equipment rooms without Landlord's approval and, if required by Landlord,
      under Landlord's supervision.

      5. Tenant's contractor shall:

             (i)      have a superintendent or foreman on the Premises
             at all times;

             (ii)     police the job at all times, continually keeping
             the Premises orderly;

             (iii) maintain cleanliness and protection of all areas,
             including elevators and lobbies;

             (iv)     protect the front and top of all peripheral HVAC
             units and thoroughly clean them at the completion of
             work;

             (v) block off supply and return grills, diffusers and ducts to keep
             dust from entering into the Building HVAC system; and

             (vi)     avoid the disturbance of other tenants.

      6. If Tenant's contractor is negligent in any of its responsibilities,
      Tenant shall be charged for any necessary or appropriate corrective work.

      7. All equipment and installations must be equal to the Building
      standards. Any deviation from such standards will be permitted only if
      indicated or specified on the plans and specifications and approved by
      Landlord.

      8. A properly executed air balancing report signed by a professional
      engineer shall be submitted to Landlord upon the completion of all HVAC
      work.

      9. Upon completion of the Alterations, Tenant shall submit to Landlord the
      final Department of Building and Safety


<PAGE>   55


                                       -4-

      permit card and final approval by all other governmental
      agencies having jurisdiction.

      10. Tenant shall submit to Landlord a final "as-built" set of sepia
      drawings showing all items of Alterations in full detail.

      11. Additional and differing provisions in the Lease, if any, will be
      applicable and will take precedence.


<PAGE>   56

                                    EXHIBIT D

                       CONTRACTOR'S INSURANCE REQUIREMENTS


Building:

Tenant:

Premises:

      The undersigned contractor or subcontractor ("Contractor") has been hired
by the tenant or occupant (hereinafter called "Tenant") of the Building named
above or by Tenant's contractor to perform certain work ("Work") for Tenant in
the Premises identified above. Contractor and Tenant have requested the
undersigned landlord ("Landlord") to grant Contractor access to the Building and
its facilities in connection with the performance of the Work and Landlord
agrees to grant such access to Contractor upon and subject to the following
terms and conditions:

      1. Contractor agrees to indemnify and save harmless the Landlord, and if
      Landlord is a general or limited partnership each of the partners thereof,
      and if Landlord is a nominee trust the trustee(s) and all beneficiaries
      thereof, and all of their respective officers, employees and agents, from
      and against any claims, demands, suits, liabilities, losses and expenses,
      including reasonable attorneys' fees, arising out of or in connection with
      the Work (and/or imposed by law upon any or all of them) because of
      personal injuries, including death, at any time resulting therefrom and
      loss of or damage to property, including consequential damages, whether
      such injuries to person or property are claimed to be due to negligence of
      the Contractor, Tenant, Landlord or any other party entitled to be
      indemnified as aforesaid except to the extent specifically prohibited by
      law or where such losses and expenses arise from the gross negligence or
      willful misconduct of Landlord or its agents or servants (and any such
      prohibition shall not void this agreement but shall be applied only to the
      minimum extent required by law).

      2. Contractor shall provide and maintain at its own expense, until
      completion of the Work, the following insurance:

             (a) Workmen's Compensation and Employers Liability Insurance
      covering each and every workman employed in, about or upon the Work, as
      provided for in each and every statute applicable to Workmen's
      Compensation and Employers' Liability
      Insurance.

             (b)     Commercial General Liability Insurance including
      coverages for Protective and Contractual Liability (to


<PAGE>   57


                                      -2-

      specifically include coverage for the indemnification clause of this
      agreement) for not less than the following limits:

<TABLE>
<S>                                       <C>
      Bodily Injury:                      $2,000,000 per person
                                          $2,000,000 per occurrence

      Property Damage:                    $2,000,000 per occurrence
                                          $2,000,000 aggregate
</TABLE>

      (c) Commercial Automobile Liability Insurance (covering all owned,
      non-owned and/or hired motor vehicles to be used in connection with the
      Work) for not less than the following limits:

<TABLE>
<S>                                       <C>
      Bodily Injury:                      $2,000,000 per person
                                          $2,000,000 per occurrence

      Property Damage:                    $2,000,000 per occurrence.
</TABLE>

      Contractor shall furnish a certificate from its insurance carrier or
      carriers to the Building office before commencing the Work, showing that
      it has complied with the above requirements regarding insurance and
      providing that the insurer will give Landlord ten (10) days' prior written
      notice of the cancellation of any of the foregoing policies.

      3. Contractor shall require all of its subcontractors engaged in the Work
      to provide the following insurance:

             (a) Commercial General Liability Insurance including Protective and
             Contractual Liability coverages with limits of liability at least
             equal to the limits stated in paragraph 2(b).

             (b) Commercial Automobile Liability Insurance (covering all owned,
             non-owned and/or hired motor vehicles to be used in connection with
             the Work) with limits of liability at least equal to the limits
             stated in paragraph 2(c).

      Upon the request of Landlord, Contractor shall require all of its
      subcontractors engaged in the Work to execute an Insurance Requirements
      agreement in the same form as this Agreement.

      Agreed to and executed this      day of              , 19  .
                                  ----        -------------    --

Contractor:                               Landlord:

                                          BY:
                                             -----------------------------------

                                          BY:
                                             -----------------------------------


<PAGE>   58

                                    EXHIBIT E

                               CLERK'S CERTIFICATE


      I, Brad Gordon, the duly elected and acting [Secretary/Clerk] of Signal
Pharmaceuticals California, a corporation (the "Corporation"), hereby certify
that:

      (A) at a meeting of the board of directors of the Corporation held on
November 4, 1997 in accordance with law and the Bylaws of the Corporation the
following resolutions were duly adopted:

      VOTED:         a.     To approve a lease of approximately 10,888
      rentable square feet of space for terms of 6 years with respect to Suite
      100 in the building commonly known as 5626 Oberlin Drive in San Diego,
      which lease grants the Corporation an option to extend the term for n/a
      terms of n/a years each, substantially in the form of the draft presented
      at this meeting, a copy of which shall be placed on file in the office of
      the [Secretary/Clerk] and be incorporated by reference in this vote;

                     b.     To authorize Brad Gordon and Alan Lewis, or any one
      of them (each hereinafter referred to as a "Signatory"), to execute and
      deliver in the name and on behalf of the Corporation the above-described
      lease and to execute and deliver all other documents, agreements and
      instruments, including, without limitation, notices of lease, and to take
      all other actions with respect to the foregoing which any Signatory, in
      such Signatory's discretion, shall determine to be necessary or
      appropriate to effect or secure the transactions contemplated herein, the
      execution and delivery of any of the foregoing or the taking of any such
      action to be conclusive evidence of such Signatory's determination and of
      the Signatory's authority so to do granted by this vote;

      (B) as of this date the following individuals are duly elected and
qualified officers of the Corporation holding at this date, the offices
specified next to their names and the signature next to each such name is such
individual's true signature.

NAME                               OFFICE                     SIGNATURE

Bradley Gordon                CFO                      /s/ BRAD GORDON
-----------------------       --------------------     -------------------------
Alan J. Lewis                 President/CEO            /s/ ALAN LEWIS
-----------------------       --------------------     -------------------------
Carl F. Bobkoski              E.V.P                    /s/ CARL BOBKOSKI
-----------------------       --------------------     -------------------------
David Anderson                V.P. R&D                 /s/ DAVID ANDERSON
-----------------------       --------------------     -------------------------

      (C) The form of lease attached to this Certificate is the form referred to
in the foregoing vote.


<PAGE>   59

                                       -2-

      (D) The resolutions set forth above are unmodified and continue to be in
full force and effect and the Corporation has adopted no other resolutions in
respect of the subject matter thereof.

      In witness whereof, I have hereunto set my hand and affixed the seal of
the Corporation this day of , 19 .


                                        [SIG]
                                        ----------------------------------------
                                          [Secretary/Clerk]



[SEAL]