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                                                                   Exhibit 10.34

                            OFFICE LEASE AGREEMENT

     This Office Lease Agreement (the "Lease") is made and entered into as of
the 9/th/ day of November, 2001, ("Effective Date") by and between, 1144
Eastlake LLC, a Washington limited liability company ("Landlord"), and
ZymoGenetics, Inc., a Washington corporation ("Tenant").

1.   Basic Lease Information.

     1.1  "Property" shall mean the building and associated real property
          located at 1144 Eastlake Avenue, Seattle, Washington and legally
          described on Exhibit A-2. "Building" is the structure located on the
          Property.

     1.2  "Premises" shall mean the entire Rentable Area, as defined below, of
          the fifth (5th) floor of the Building as depicted on the floor plan
          attached as Exhibit A-1 to this Lease. The "Rentable Area of the
          Premises" is approximately fifteen thousand six hundred forty (15,640)
          square feet, and the Rentable Area of the Building is approximately
          seventy-nine thousand eight hundred sixty-eight (79,868) square feet.
          "Rentable Area" shall have the same meaning as set forth in the 1996
          "BOMA Standard Method for Measuring Floor Area in Office Buildings"
          (American National Standard ANSI/BOMA Z65.1-1996) ("BOMA
          Measurement"). As soon as reasonably possible after execution of this
          Lease, and in no event later than the Commencement Date, as defined
          hereinafter, Landlord, at Landlord's expense, shall have the Rentable
          Areas of both the Premises and the Building measured by SPACE LLC,
          which shall also be instructed by Landlord to provide copies, in
          reasonable detail, of the bases for the final computations of such
          Rentable Areas to both Landlord and Tenant. The parties agree to
          accept the measurements, as so determined, and to thereafter enter
          into a Confirmation Statement to be attached to this Lease setting
          forth the agreed Rentable Areas of the Premises and the Building, as
          well as the "Tenant's Pro Rata Share," as provided for in Section 1.4,
          each of which shall thereafter be adjusted only in the event of an
          actual change in the Rentable Area of the Premises, as contemplated in
          Section 6 below, or the Building.

     1.3  "Base Rent":

<TABLE>
<CAPTION>
                                                                                      Annual Rate
                                   Period                                           Per Square Foot
                                   ------                                           ---------------
<S>                                                                                 <C>
           Lease Term Months One (1) through Thirty-Six (36)                        $26.50 per RSF

           Lease Term Months Thirty-Seven (37) through Sixty (60)                   $27.50 per RSF

           Lease Term Months Sixty-One (61) through Ninety-Six (96)                 $29.50 per RSF

           Lease Term Months Ninety-Seven (97) through One Hundred Twenty (120)     $30.50 per RSF
</TABLE>

     1.4  "Tenant's Pro Rata Share" is estimated to be twenty percent (20%), but
          shall be finally determined and confirmed by the parties in the manner
          described in Section 1.2.

     1.5  "Term": A period of One Hundred Twenty (120) months. The Term shall
          commence on the earlier of (i) the occupancy of the Premises by Tenant
          for normal business operations, or February 1, 2002 ("Commencement
          Date"), and, unless terminated early in accordance

                                                                          Page 1
                                                                November 9, 2001
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          with this Lease, end One Hundred Twenty (120) months thereafter (the
          "Termination Date"). By no later than November 21, 2001, Landlord
          shall deliver to Tenant a letter from Landlord's lender on the
          Property, KeyBank, N.A., confirming that Landlord has the financial
          ability to pay the Tenant Allowance and that the Tenant Allowance will
          be available and paid to or for the benefit of Tenant on a percentage-
          of-completion basis as the Tenant Improvement work is done.

     1.6  Tenant Allowance: Thirty Dollars ($30.00) per square foot of Rentable
          Area of the Premises, as more particularly described on Exhibit D.

     1.7  Security Deposit: Seventy Four Thousand Two Hundred Ninety Dollars
          ($74,290) ("Deposit"). The portion of the Deposit equal to the first
          full month's Base Rent to become payable hereunder shall be credited
          to payment of such first full month's Base Rent with the remainder of
          the Deposit held and applied as provided in this Lease.

     1.8  "Permitted Use": general business office and uses customarily
          incidental thereto.

     1.9  "Notice Addresses": Notices shall be sent to the parties at the
          following addresses:
               Tenant:          ZymoGenetics, Inc.
                                Attn: Shinko Campos
                                1201 Eastlake Ave. East
                                Seattle, WA  98102

               with a copy to:  Perkins Coie LLP
                                Attn: Craig H. Shrontz
                                411 - 108/th/ Ave. N.E.
                                Bellevue, WA  98004

               Landlord:        1144 Eastlake LLC
                                c/o JSH Properties
                                Attn: Diane Decker
                                14900 Interurban Ave. South, Suite 210
                                Seattle, WA 98168

          Rent (defined in Section 4.1) is payable to the order of Landlord at
          its notice address, or at such other address as Landlord may specify
          from time to time by written notice given in accordance with Section
          27.

     1.10 "Business Day(s)" are Monday through Friday (and Saturday mornings) of
          each week, exclusive of New Year's Day, President's Day, Memorial Day,
          Independence Day, Labor Day, Thanksgiving Day and Christmas Day
          ("Holidays"). Landlord may designate additional Holidays, provided
          that the additional Holidays are commonly recognized by other office
          buildings in the area where the Property is located.

     1.11 "Landlord Work" means the work, if any, that Landlord is obligated to
          perform in the Premises pursuant to Exhibit C.

     1.12 "Law(s)" means all applicable statutes, codes, ordinances, orders,
          rules and regulations of any municipal or governmental entity.

     1.13 "Normal Business Hours" for the Property are 7:00 a.m. to 6:30 p.m. on
          Business Days and 8:00 A.M. to 12:00 noon on Saturdays.

     1.14 "Property" includes the Building and the parcel(s) of land on which it
          is located and other improvements serving the Building, if any, and
          the parcel(s) of land on which they are located.

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     1.15 "Class A" building, or office building, as used in this Lease, shall
          mean first-class commercial office buildings of the type which are
          located in the South Lake Union area, and which are reasonably
          comparable in age and available amenities to the Building which is the
          subject of this Lease.

2.   Lease Grant.

     Landlord leases the Premises to Tenant and Tenant leases the Premises from
Landlord, together with the right in common with others to use any portions of
the Property that are designated by Landlord for the common use of tenants and
others, such as common corridors, elevator foyers, restrooms, vending areas and
lobby areas (the "Common Areas").

3.   Possession; Acceptance of Condition of Premises.

     3.1  If Tenant occupies the Premises prior to the Commencement Date for the
          purpose of completing Tenant's Work or for any other purpose with
          Landlord's prior written consent, such early occupancy shall be
          subject to all of the terms and conditions of this Lease, but Tenant
          will not be obligated to pay Base Rent or a Pro Rata Share of
          Expenses, Taxes or Insurance until the Commencement Date. Tenant and
          Landlord agree to cooperate with each other in making mutually
          acceptable arrangements for early occupancy by Tenant and to cooperate
          with Landlord's contractor during the period of any such early
          occupancy so as not to interfere with Landlord's ability to complete
          Landlord's Work.

     3.2  The work on the Premises to be performed by Landlord is described in
          Exhibit C ("Landlord's Work"). The parties hereby acknowledge that
          Landlord's Work is continuing as of the Effective Date , and that
          Tenant may reasonably commence Tenant's Work and installation of
          equipment (even though a portion of Landlord's Work may remain to be
          completed during Tenant's Work).

          Landlord's Work shall be (1) completed in accordance with the plans
          and specifications identified on Exhibit C, (2) completed in
          accordance with all Laws and governmental requirements, (3)
          constructed of all new materials, and (4) free of defects in materials
          and workmanship.  Landlord shall promptly correct all defects in
          Landlord's Work, and all failures of such work to conform to the plans
          and specifications for such work which have been agreed upon by
          Landlord and Tenant, which defects or non-conformities are discovered
          before or within one year after the Commencement Date.  Landlord shall
          bear all costs of correcting Landlord's Work.  Landlord and Tenant
          shall each give the other prompt written notice after discovering the
          existence of any such defects or nonconformities in Landlord's Work.

     3.3  Except as set forth in Section 1.5, Landlord shall not be liable for
          nor shall this Lease be affected by any delay in the occurrence of the
          Commencement Date because of delays caused to Landlord's Work by
          strikes, riots, fire, shortage of required materials, acts of God,
          governmental intervention, delays or the like which are not within its
          reasonable control.

     3.4  Notwithstanding anything to the contrary contained herein, the
          Commencement Date shall not be deemed to occur until the following
          conditions shall have been satisfied by Landlord:

               (1)  The utility and other systems servicing the Building and
          necessary for the operation of the Building or Tenant's occupancy and
          full enjoyment of the Premises (such as elevators, plumbing, heating,
          ventilating, air conditioning, electrical and security systems) shall
          be completed and in good order and operating condition except for
          details

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          of construction, decoration and mechanical adjustments which do not
          materially interfere with Tenant's use of the Premises;

               (2)  Landlord shall have obtained a temporary Certificate of
          Occupancy for the Building;

               (3)  The lobby of the Building and the entrances and public
          portions (including the garage), stairways, corridors and elevators
          (including freight elevators) of the Building, shall have been
          finished (except for details of construction, decoration and
          mechanical adjustments which do not materially detract from the
          appearance of such areas or materially interfere with their use for
          normal purposes) and shall be in a clean and orderly condition
          affording reasonable access to all portions of the Premises; and

               (4)  The exterior of the Building (including the installation of
          glass therein) shall have been completed except for portions thereof
          which in the aggregate do not materially affect Tenant's use of the
          Premises, and, in any event, Landlord's Work shall be substantially
          complete in all material respects by no later than January 25, 2002.

          The occurrence of the Commencement Date prior to the completion in
          full of all work required to be performed by Landlord as provided
          herein shall not relieve Landlord of its obligation thereafter to
          complete the same with due dispatch and in a workmanlike manner.

4.   Rent.

     4.1  Payments. As consideration for this Lease, Tenant shall pay Landlord,
          without any setoff or deduction (except as expressly set forth in this
          Lease), the total amount of Base Rent and Additional Rent due for the
          Term. "Additional Rent" means all sums (exclusive of Base Rent) that
          Tenant is required to pay Landlord. Additional Rent and Base Rent are
          sometimes collectively referred to as "Rent". Tenant shall pay and be
          liable for all rental, sales and use taxes (but excluding income
          taxes), if any, imposed upon or measured by Rent under applicable Law.
          Base Rent and recurring monthly charges of Additional Rent shall be
          due and payable in advance on the first day of each calendar month
          without notice or demand. All other items of Rent shall be due and
          payable by Tenant on or before 30 days after billing by Landlord. All
          payments of Rent shall be by good and sufficient check or by other
          means (such as automatic debit or electronic transfer) acceptable to
          Landlord. If Tenant fails to pay any item or installment of Rent
          within three (3) business days after such payment is due, Tenant shall
          pay Landlord an administration fee equal to five percent (5)% of the
          past due Rent. If the Term commences on a day other than the first day
          of a calendar month or terminates on a day other than the last day of
          a calendar month, the monthly Base Rent and Tenant's Pro Rata Share of
          Expenses (defined in Section 4.3) for the month shall be prorated
          based on the number of days in such calendar month. Landlord's
          acceptance of less than the correct amount of Rent shall be considered
          a payment on account of the earliest Rent due. No endorsement or
          statement on a check or letter accompanying a check or payment shall
          be considered an accord and satisfaction, and either party may accept
          the check or payment without prejudice to that party's right to
          recover the balance or pursue other available remedies. Tenant's
          covenant to pay Rent is independent of every other covenant in this
          Lease.

     4.2  Payment of Tenant's Pro Rata Share of Expenses, Taxes and Insurance.
          Tenant shall pay Tenant's Pro Rata Share of the total amount of
          Expenses and of Taxes and Insurance for each year during the Term.
          Landlord shall annually provide Tenant with a good faith estimate of
          the total amount of Expenses and the total amount of Taxes and
          Insurance for each calendar year during the Term. On or before the
          first day of each month, Tenant shall pay to Landlord a monthly
          installment equal to one-twelfth of Tenant's Pro Rata Share of
          Landlord's estimate of the total amount of Expenses, plus

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          one-twelfth of Tenant's Pro Rata Share of Landlord's estimate of the
          total amount of Expenses, plus one-twelfth of Tenant's Pro Rata Share
          of Landlord's estimate of the total amount of Taxes and Insurance. If
          Landlord determines that its good faith estimate was incorrect by a
          material amount, Landlord may provide Tenant with a revised estimate
          once per calendar year. After its receipt of the revised estimate,
          Tenant's monthly payments shall be based upon the revised estimate. If
          Landlord does not provide Tenant with an estimate of the total amount
          of Expenses and the total amount of Taxes and Insurance by January 1
          of a calendar year, Tenant shall continue to pay monthly installments
          based on the previous year's estimate until Landlord provides Tenant
          with the new estimate. Upon delivery of the new estimate, an
          adjustment shall be made for any month for which Tenant paid monthly
          installments based on the previous year's estimate. Tenant shall pay
          Landlord the amount of any underpayment within 30 days after receipt
          of the new estimate. Any overpayment shall be refunded to Tenant
          within 30 days or credited against the next due future installment(s)
          of Additional Rent.

          By May 1 following the end of each calendar year, Landlord shall
          furnish Tenant with a statement of the actual amount of Taxes and
          Insurance, and Tenant's Pro Rata Share of the actual amount of Taxes
          and Insurance for the prior calendar year. If the estimated amount of
          Taxes and Insurance for the prior calendar year is more than the
          actual amount of Taxes and Insurance for the prior calendar year,
          Landlord shall apply any overpayment by Tenant against Additional Rent
          due or next becoming due, provided if the Term expires before the
          determination of the overpayment, Landlord shall refund any
          overpayment to Tenant after first deducting the amount of Rent due. If
          the estimated amount of Taxes and Insurance for the prior calendar
          year is less than the actual amount of Taxes and Insurance for such
          prior year, Tenant shall pay Landlord, within 30 days after its
          receipt of the statement of Taxes and Insurance, any underpayment for
          the prior calendar year.

     4.3  Expenses Defined. "Expenses" means all costs and expenses incurred by
          Landlord in connection with owning, operating, maintaining, repairing,
          and managing the Premises as a "Class A office building," as defined
          herein, including, but not limited to (1) utilities, including, but
          not limited to, utilities and lighting for areas occupied by tenants
          as well as Common Areas; (2) maintenance costs for performance of any
          Landlord's maintenance and repair obligations hereunder for the
          Building located on the Property, Common Areas, Property, including,
          but not limited to parking facilities and landscaping, maintaining and
          repairing sewer main, ducts, conduits and similar items, fire
          protection systems, sprinkler and security alarm systems, elevators,
          storm and sanitary drainage systems and other utility and mechanical
          systems; materials and services for operation, maintenance or the
          security or protection of the Property including any janitorial
          services, pest control, HVAC service contracts, any other repair and
          maintenance by Landlord; (3) roof and other exterior maintenance; (4)
          the amortized cost of capital improvements made to the Property which
          are for the purpose of reducing operating expense costs, or which are
          required to comply with any laws, rules or regulations of any
          governmental authority first enacted after the Commencement Date or a
          requirement of Landlord's insurance carrier first enacted after the
          Commencement Date; (5) property management fees not exceeding three
          and one-half percent (3.5%) of Base Rent (calculated without regard to
          the management fee); (6) all sums expended in connection with any
          Common Areas for maintenance and repairs, (7) operation, maintenance
          and repair of any heating, ventilation and air conditioning system,
          including repair of any HVAC components or units as reasonably needed;
          (8) the cost of utilities consumed on the Property if paid for by
          Landlord; (9) the cost of any governmentally required license, permit,
          or inspection for or of the Property (other than those required in
          connection with Landlord's Work); (10) replacement or supplemental
          directional and other signage other than the initial signage installed
          in the Building or on the Property by Landlord as part of Landlord's
          Work; and (11) and any other costs and expenses of any other kind
          whatsoever which are generally considered expenses in accordance with
          generally accepted accounting principles and which are reasonably
          incurred by Landlord in connection with owning, operating or

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          maintaining the Property and any expense designated by this Lease to
          be an Expense. Expenses shall be "net" only and for that purpose shall
          be deemed reduced by the amounts of any insurance reimbursement or
          other reimbursement received by Landlord in connection with such
          expenses.

          The following shall not be Expenses: (1) repairs or other work
          occasioned by insured casualty except for the deductible portion of
          any insured casualty loss; (2) marketing costs including, without
          limitation, leasing commissions, attorneys' fees in connection with
          the negotiation and preparation of letters, deal memos, letters of
          intent, leases, subleases and/or assignments, space planning costs,
          tenant improvement costs, and other costs and expenses incurred in
          connection with lease, sublease and/or assignment negotiations,
          disputes and transactions with present or prospective tenants; (3)
          depreciation and amortization; (4) interest on debt or principal
          payments to a Lender or rental under a ground lease; (5) costs of
          Landlord's general overhead and general and administrative expense;
          provided this limitation shall not be construed to limit Landlord's
          right to require Tenant to pay as an Expense the property management
          fee provided for above; (6) specific costs incurred for the account of
          specific tenants only; (7) salaries of officers, executives and
          partners of Landlord, and salaries of Building employees to the extent
          allocated to properties other than the Property; (8) penalties
          incurred as a result of Landlord's negligence, inability or
          unwillingness to make payments, or penalties incurred due to the
          Building not being in compliance with applicable law; (9) capital
          improvements, except as otherwise provided above; (10) the cost of
          tenant improvements; (11) costs relating to any parking garage in the
          Building (such as utilities, attendants, cashiers and janitorial
          services); (12) costs resulting from the correction of any
          construction or design defects in all or any portion of the Premises
          or Building in connection with any of Landlord's Work; (13) penalties
          due to any violation of Law by Landlord; and (14) structural repairs
          or replacements.

     4.4  Taxes and Insurance Defined. "Taxes" shall mean: (1) all real estate
          taxes and other assessments on the Property, including, but not
          limited to, assessments for special improvement districts and building
          improvement districts, taxes and assessments levied in substitution or
          supplementation in whole or in part of any such taxes and assessments
          and the Premises' share of any real estate taxes and assessments under
          any reciprocal easement agreement, common area agreement or similar
          agreement as to the Property; (2) all personal property taxes for
          property that is owned by Landlord and used in connection with the
          operation, maintenance and repair of the Premises or the Property; and
          (3) all reasonable costs and fees incurred in connection with seeking
          reductions in any tax liabilities described in (1) and (2), including,
          without limitation, any costs incurred by Landlord for compliance,
          review and appeal of tax liabilities. Without limitation, Taxes shall
          not include any income, capital levy, franchise, capital stock, gift,
          estate or inheritance tax. If an assessment is payable in
          installments, Taxes for the year shall include the amount of the
          installment and any interest due and payable during that year. For all
          other real estate taxes, Taxes for that year shall, at Landlord's
          election, include either the amount accrued, assessed or otherwise
          imposed for the year or the amount due and payable for that year,
          provided that Landlord's election shall be applied consistently
          throughout the Term. If a change in Taxes is obtained for any year of
          the Term, then Taxes for that year will be retroactively adjusted and
          Landlord shall provide Tenant with a credit, if any, based on the
          adjustment. "Insurance" shall mean the cost of premiums for any hazard
          insurance or liability insurance carried by Landlord, for the benefit
          of Landlord or at the expense of Landlord, on or in connection with
          the Property.

     4.5  After first providing reasonable advance written notice to Landlord,
          Tenant or its accountants (so long as such accountant is not
          compensated on a contingent fee basis) shall have the right to inspect
          and audit Landlord's books and records with respect to this Lease to
          verify actual Expenses for the two (2) calendar years immediately
          preceding the year in which the inspection is made. Tenant's review
          shall be limited to Expenses

                                                                          Page 6
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          charged to Tenant during the immediately preceding two (2) calendar
          years only. The books and records shall be kept in accord with
          reasonable accounting principles. If Tenant's audit of the Expenses
          reveals an overcharge of more than five percent (5%), Landlord
          promptly shall reimburse Tenant for its reasonable out-of-pocket cost
          of the audit. Any overcharge or underpayment of Expenses shall be due
          from one party to the other within thirty (30) days after the amount
          of the overcharge or underpayment has been fixed.

     4.6  Deposit. The Deposit (after application of a portion thereof equal to
          the first month's Base Rent) shall be security for Tenant's full
          performance of Tenant's lease obligations. If Tenant fails to pay rent
          or any other charges due from Tenant under this Lease after the
          expiration of applicable notice and cure periods, Landlord may elect
          to apply the Deposit toward the payment of such default. If Landlord
          applies any portion of the Deposit, Tenant shall, on ten (10) days
          written notice, deposit cash with Landlord in an amount sufficient to
          restore the Deposit to the full amount stated above; Tenant's failure
          to do so shall be a default. Landlord may commingle the Deposit with
          Landlord's other funds and no interest shall be paid or accrued on the
          Deposit. If Tenant performs all of Tenant's lease obligations, the
          Deposit (or so much as has not been applied by Landlord) shall be
          returned to Tenant (or, at Landlord's option, to the last assignee, if
          any, or Tenant's interest under the Lease) within thirty (30) days.
          Landlord shall transfer the Deposit to the purchaser of its interest
          in the event of sale and Tenant shall look solely to such purchaser
          for return of the deposit.

5.   Compliance with Laws; Use.

     The Premises shall be used only for the Permitted Use and for no other use
whatsoever. Tenant shall not use or permit the use of the Premises for any
purpose which is illegal, dangerous to persons or property or which, in
Landlord's reasonable opinion, unreasonably disturbs any other occupants of the
Property or unreasonably interferes with the operation of the Premises or the
Property. Tenant shall comply with all Laws, including the Americans with
Disabilities Act, regarding the operation of Tenant's business and the use,
condition, configuration and occupancy of the Premises. Tenant, within 10 days
after receipt, shall provide Landlord with copies of any notices it receives
regarding a violation or alleged violation of any Laws relating to the use,
condition, configuration or occupancy of the Premises. Tenant shall comply with
the rules and regulations of the Property attached as Exhibit B and such other
reasonable rules and regulations adopted by Landlord from time to time. Tenant
shall also cause its agents, contractors, subcontractors, employees, customers,
and subtenants to comply with all rules and regulations. Landlord shall enforce
the rules and regulations uniformly with respect to violations thereof of which
it either has been notified or otherwise has actual knowledge, and shall not
knowingly discriminate against Tenant in Landlord's enforcement of the rules and
regulations.

     Tenant shall have access to the Premises 24 hours per day, 365 days per
year. Landlord initially shall provide all Tenant employees assigned to the
Premises, not exceeding fifty-five (55), with door keys and access cards at no
additional costs to Tenant. If reasonably achievable within the design of
Landlord's security system, Landlord will reasonably attempt to program its
security system for the Building in a manner to allow Tenant's employees to
utilize their access cards used at Tenant's headquarters (1201 Eastlake Avenue
East). If the Premises are subsequently expanded pursuant to the provisions of
Section 6 below, or otherwise, Landlord shall provide Tenant with additional
door keys and access cards at no additional cost to Tenant, and the number of
such additional no-cost keys and cards issued with respect to the additional
Rentable Area of the expanded Premises shall be in the same proportion as the
fifty-five (55) cards issued initially bears to the initial Rentable Area of the
Premises. Landlord may impose a reasonable charge, however, to replace keys
and/or access cards which are lost or damaged, or to issue keys or access cards
in addition to those which Landlord is required to initially provide to Tenant
at no cost pursuant to this Section 5.

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6.  25/th/ Month Expansion; Option to Renew; First Right of Refusal To Lease.

     6.1  25/th/ Month Expansion. If, by the twenty-third (23/rd/) full calendar
          month following the Commencement Date, Tenant has not leased at least
          the entirety of the fourth (4/th/) floor or third (3/rd/) floor of the
          Building, whether by exercise of its first right of refusal provided
          in Section 6.3 below or by other agreement with Landlord, this Lease
          shall be deemed automatically amended to incorporate within the
          definition of the Premises the entirety of the fourth (4/th/) floor of
          the Building, if then available for lease, or otherwise the entirety
          of the third (3/rd/) floor of the Building, if then available for
          lease; provided, however, that Tenant shall not be required to lease
          either the remaining portion of the third or the fourth floors of the
          Building pursuant to this Section 6.1 if only a portion of such
          floor(s) is then available for lease. In the event Tenant leases the
          third or fourth floor pursuant to this Section 6.1, all of the terms
          of this Lease shall apply to such expanded Premises as of the first
          (1/st/) day of the twenty-fifth (25/th/) full calendar month following
          the Commencement Date, including the agreement to pay Base Rent in the
          then applicable amount per square foot of Rentable Area (provided if
          such expanded Premises consists of the third (3/rd/) floor and not the
          fourth (4/th/) floor, the Base Rent for such newly leased area shall
          be two dollars ($2.00) per Rentable Square Foot less than otherwise
          applicable) and Tenant's Pro Rata Share shall be adjusted upwards
          accordingly. Upon the effective date of such expansion, Tenant shall
          be entitled to receive from Landlord a Tenant Allowance of Thirty
          Dollars ($30.00) per square foot of Rentable Area contained in such
          newly leased area on the same terms and conditions as described in
          Exhibit D; Landlord shall pay additional commissions as provided in
          Section 31.7 below and Landlord shall not be obligated to provide any
          other improvements to the expansion area of the Premises.

     6.2  Option to Renew.

          6.2.1  Tenant has the option to renew this Lease for up to two (2)
                 additional terms, each of sixty (60) months, commencing on the
                 day following expiration of the preceding Term. Tenant shall
                 exercise the Option to Renew by providing a written notice of
                 exercise to Landlord no less than two hundred seventy (270)
                 days prior to the end of the then current term of this Lease
                 and as provided more specifically below. All of the terms and
                 conditions of this Lease will remain the same during such
                 renewal term except for the Base Rent which shall be the fair
                 market rental value of the Premises as of the commencement of
                 the renewal term; fair market rental value of the Premises
                 shall be the amount of rent which a well-informed tenant,
                 willing, but not obliged to lease the property, would pay, and
                 which a well-informed landlord, willing, but not obligated to
                 lease, would accept, taking into consideration all uses to
                 which the property is adapted and might in reason be applied,
                 the then market terms being offered in the Lake Union area of
                 Seattle for space reasonably comparable to the Premises in
                 size, location, parking availability and quality.

          6.2.2  If, after bargaining in good faith for no less than thirty (30)
                 days, either party determines, by written notice to the other
                 party, that the parties cannot agree on the amount of the then
                 fair market rental value of the Premises, then the fair market
                 rental value shall be established by binding arbitration with a
                 single arbitrator in accordance with the following procedures.
                 The arbitrator shall be an MAI real estate appraiser with at
                 least ten (10) years experience in appraising commercial real
                 property in the Seattle metropolitan area ("Arbitrator")
                 selected jointly by the parties; if the parties do not agree as
                 to the identity of the Arbitrator within twenty (20) days after
                 the end of the thirty (30) day bargaining period, the then
                 Presiding Judge of the Superior Court for King County, upon an
                 appropriate request which either party may make, shall appoint
                 the Arbitrator. Within ten (10) days of the appointment of the
                 Arbitrator, the parties each shall submit in

                                                                          Page 8
<PAGE>

               writing to Arbitrator the amount which they propose be
               established as the Base Rent at the commencement of such renewal
               term ("Submissions"); such Submissions shall not be disclosed to
               the parties by Arbitrator until the Arbitrator has received both
               parties' Submission. Each party may include in such Submissions
               any information which such party deems relevant or helpful to the
               Arbitrator in determining the fair market rental value of the
               Premises including costs or benefits which such party or the
               other party would enjoy in the event of a renewal of the lease or
               amenities and advantages of the Premises and Property not likely
               to be available to a party in another location. Arbitrator shall
               study such evidence and information in determining such Base
               Rent; provided that the Arbitrator's determination of the amount
               of such Base Rent shall be confined and strictly limited to
               selection, as the more reasonable approximation of the fair
               market rental value of the Premises, of the amount stated in the
               Submission of Tenant or the Submission of Landlord, and
               Arbitrator may not select or declare any third number to be such
               Base Rent. Except as to the Parties' Submissions, any other
               communication by a party to Arbitrator shall be in writing with a
               copy to the other party. Upon completion of his investigation of
               such Base Rent, Arbitrator shall, no later than thirty (30) days
               after delivery of the Submissions, report in writing to each of
               the parties which party's Submission has been selected by him as
               the more reasonable approximation of the fair market rental value
               of the Premises without requirement of further substantiation or
               information. In no event may the new Base Rent be less than the
               average Base Rent payable during the last year of the preceding
               term. Each party shall pay its own costs of arbitration and one-
               half of the Arbitrator's fee.

       6.2.3   In the event of any renewal, Landlord shall have no obligation to
               make any improvements to the Premises, to provide to Tenant any
               funds for any improvement, pay or make any other concessions or
               to pay any commission to Tenant's broker. After the exercise of
               the option to extend, all references in this Lease to the Term
               shall be considered to mean the Term as extended, and all
               references to the Termination Date or to the end of the Term
               shall be considered to mean the Term as extended.

       6.2.4   Tenant's right to exercise the options to renew is subject to the
               following conditions precedent:

               6.2.4.1   The Lease must be in effect at the time the notice of
       exercise is given and on the last day of the term immediately preceding
       commencement of the renewal term.

               6.2.4.2   Tenant may not be in default beyond applicable notice
       and cure periods under any provision of this Lease at the time notice of
       exercise is given or on the last day of the term immediately preceding
       commencement of the renewal term.

               6.2.4.3   At least two hundred seventy (270) days before the last
       day of such term, Tenant shall, in writing, have given Landlord notice
       irrevocably and unconditionally exercising the option.

       Each party shall, at the request of the other, endorse on the original
       lease that party's signature or signatures, and date the option was
       exercised, and the words "Option Exercised". Alternatively, each party
       shall, at the request of the other, execute a memorandum, in recordable
       form, acknowledging the fact that the option has been exercised.

6.3    Right of First Refusal. If, during the period ("RFR Period") commencing
       on the mutual execution of this Lease and expiring on the last day of the
       twenty-fourth (24/th/) full calendar

                                                                          Page 9
<PAGE>

          month following the Commencement Date, Landlord receives a letter of
          intent or other offer to lease all or a portion of the fourth (4/th/)
          floor of the Building which has been accepted in writing by Landlord,
          Landlord shall deliver a copy to Tenant, who shall then have ten (10)
          business days following receipt to notify Landlord that Tenant elects
          to lease the same portion of the Building on the same terms and rental
          rate as contained in this Lease, including, without limitation, that
          Tenant shall be entitled to receive from Landlord a Tenant Allowance
          of Thirty Dollars ($30.00) per square foot of Rentable Area contained
          in such newly leased area on the same terms and conditions as
          described in Exhibit D, but Landlord shall not be obligated to provide
          any other improvements to the expansion area of the Premises; provided
          that if Tenant leases only part of the 4/th/ floor by exercising its
          right of first refusal, Landlord shall not be obligated to construct a
          demising wall or multi-tenant hallway to separate such space from the
          remaining Rentable Area of the 4/th/ floor. In addition to the
          foregoing, if the terms of the offer include space on other floors in
          addition to the fourth floor, Tenant shall be required to lease such
          other space as well. If Tenant does not elect to so lease within such
          ten (10) business day period, Tenant's preferential right to lease the
          area subject to such offer shall lapse and Landlord may lease such
          area to the third party free of any further rights of Tenant. In the
          event that Landlord leases any portion of the fourth (4/th/) floor to
          a third party after Tenant was offered such first right of refusal
          which right Tenant did not exercise, Tenant's right of first refusal
          with respect to the remainder of the fourth (4/th/) floor shall
          thereafter lapse, but Tenant instead shall have the same right of
          first refusal in accordance with the above terms as to the third
          (3/rd/) floor during the remainder of the RFR Period, unless any
          portion of the third (3/rd/) floor was leased to a third party before
          Tenant was required to exercise its right of first refusal with
          respect to the fourth (4/th/), and in such latter event Tenant shall
          not have a right of first refusal with respect to the third (3/rd/)
          floor. Tenant shall not have any such preferential right to lease
          during the continuation of any default by Tenant under the terms of
          this Lease beyond applicable notice and cure periods.

7.   Services and Utilities.

     7.1  Landlord shall furnish Tenant with the following services: (1) hot and
          cold water service for use in the lavatories and kitchen on each floor
          on which the Premises are located, and for drinking purposes
          (provided, that Landlord shall not be required to provide special
          filtration or otherwise provide treatment to the available tap water
          in order to make it more desirable to Tenant for drinking or cooking
          purposes); (2) heat, ventilation and air conditioning in season during
          Normal Business Hours, at such temperatures and in such amounts as are
          standard for comparable Class A office buildings or as required by
          governmental authority. Tenant, upon such advance notice (which may be
          telephonic) as is reasonably required by Landlord, shall have the
          right to receive HVAC service during hours other than Normal Business
          Hours (Tenant shall pay Landlord's reasonable charge for the
          additional service, which charge shall approximate Landlord's actual
          expense in providing such additional service); (3) maintenance and
          repair of the Premises or Property as described in Section 9.2 and to
          fulfill its obligations in Section 4.3.; (4) elevator service; (5)
          electricity and other utilities to the Premises for general office
          use, in accordance with and subject to the terms and conditions in
          Article 10 and Exhibit C; (5) washing of interior and exterior
          surfaces of exterior windows with reasonable frequency; and (7) such
          other services as Landlord reasonably determines are necessary or
          appropriate for the Premises or the Property as a Class A office
          building.

     7.2  Tenant's failure to receive or any interruption or termination of,
          services due to the application of Laws, the failure of any equipment,
          the performance of repairs, improvements or alterations, or the
          occurrence of any event or cause beyond the reasonable control of
          Landlord (a "Service Failure") shall not render Landlord liable to
          Tenant, constitute a constructive eviction of Tenant, give rise to an
          abatement of Rent, nor relieve Tenant from the obligation to fulfill
          any covenant or agreement. However, if the Premises, or a material
          portion of the Premises, is made untenantable for a period in

                                                                         Page 10
<PAGE>

          excess of 3 consecutive Business Days as a result of the Service
          Failure due to Landlord's negligence or willful misconduct, then
          Tenant, as its sole remedy, shall be entitled to receive an abatement
          of Rent payable hereunder during the period beginning on the 4th
          consecutive Business Day of the Service Failure and ending on the day
          the service has been restored. If the entire Premises has not been
          rendered untenantable by the Service Failure, the amount of abatement
          that Tenant is entitled to receive shall be prorated based upon the
          percentage of the Premises rendered untenantable and not used by
          Tenant. In no event, however, shall Landlord be liable to Tenant for
          any loss or damage, including the theft of Tenant's Property (defined
          in Article 15), arising out of or in connection with the failure of
          any security services, personnel or equipment not caused by Landlord's
          negligence or willful misconduct. If the Premises are so untenantable,
          Landlord will use its commercially reasonable best efforts to provide
          Tenant with alternative space in the Building until the Premises are
          restored.

8.   Leasehold Improvements.

     All improvements to the Premises other than Tenant's personal property and
trade fixtures (collectively, "Leasehold Improvements") shall be owned by
Landlord and shall remain upon the Premises without compensation to Tenant.
However, Landlord, by written notice to Tenant within 30 days prior to the
Termination Date, may require Tenant to remove, at Tenant's expense: (1) Cable
(defined in Section 9.1) installed by or for the exclusive benefit of Tenant and
located in the Premises or other portions of the Premises or the Property; and
(2) any Leasehold Improvements that are performed by or for the benefit of
Tenant and, in Landlord's reasonable judgment, are of a nature that would
require removal and repair costs that are materially in excess of the removal
and repair costs associated with standard office improvements (collectively
referred to as "Required Removables"). Without limitation, it is agreed that
Required Removables include internal stairways, raised floors, personal baths
and showers, vaults, rolling file systems and structural alterations and
modifications of any type. The Required Removables designated by Landlord shall
be removed by Tenant before the Termination Date. Tenant shall repair damage
caused by the installation or removal of Required Removables. If Tenant fails to
remove any Required Removables or perform related repairs in a timely manner,
Landlord, at Tenant's expense, may remove and dispose of the Required Removables
and perform the required repairs. Tenant, within 30 days after receipt of an
invoice, shall reimburse Landlord for the reasonable costs incurred by Landlord.
Notwithstanding the foregoing, Tenant, at the time it requests approval for a
proposed Alteration (defined in Section 9.3), may request in writing that
Landlord advise Tenant whether the Alteration or any portion of the Alteration
will be designated as a Required Removable. Within 10 days after receipt of
Tenant's request, Landlord shall advise Tenant in writing as to which portions
of the Alteration, if any, will be considered to be Required Removables, and if
Landlord does not respond within such 10 day period, such Alterations will not
be considered Required Removables (and, in such event, Landlord shall not have
the right under the second sentence of this Section 8 to later require Tenant to
remove such Alterations).

9.   Repairs and Alterations.

     9.1  Tenant's Repair. Except as provided in Sections 4.3 and 9.2, Tenant
          shall, at its sole cost and expense, keep the interior, non-structural
          portions of the Premises in good condition and repair, reasonable wear
          and tear excepted. Tenant's repair obligations include, without
          limitation, repairs to: (1) floor covering, if needed due to abnormal
          wear and tear; (2) interior partitions; (3) interior doors; (4) the
          interior side of demising walls; (5) electronic, phone and data
          cabling and related equipment (collectively, "Cable") that is
          installed by or for the benefit of Tenant and located in the Premises
          and that was not part of or included in Landlord's Work; (6)
          supplemental air conditioning units, hot water heaters, plumbing, and
          similar facilities serving Tenant exclusively; and (7) Alterations
          performed after the Commencement Date by contractors retained by
          Tenant, including related HVAC balancing. All work shall be performed
          in accordance with the rules and procedures described in Section 9.3
          below. If Tenant fails to make any repairs to the

                                                                         Page 11
<PAGE>

          Premises for more than 30 days after notice from Landlord (although
          notice shall not be required if there is an emergency), Landlord may
          make the repairs, and Tenant shall pay the reasonable cost of the
          repairs to Landlord within 30 days after receipt of an invoice,
          together with an administrative charge in an amount equal to 10% of
          the cost of the repairs.

     9.2  Landlord's Maintenance and Repair. Landlord shall provide daily
          janitorial service to the Premises (exclusive of Saturdays, Sundays
          and holidays) including vacuuming, dusting, trash removal and such
          regular maintenance as is normally conducted in a comparable Class A
          office building in the geographical area of the Premises including but
          not limited to window cleaning, pest control and snow shoveling;
          provided that janitorial service shall not include shampooing the
          carpets, except for the Common Areas. Tenant shall make repairs and
          replacements to the Premises, common area, or Property needed because
          of any negligent or intentional act or omission of Tenant or Tenant's
          agents, employees or invitees, except to the extent that the repairs
          or replacements are covered by Landlord's insurance. Except for the
          repairs and replacements that Tenant must make under the preceding
          sentence and in Section 9.1 regarding Tenant's repairs, Landlord shall
          pay for, subject to reimbursement as an Expense if and to the extent
          provided in Section 4.3, and make all other repairs and replacements
          to the Common Area and Building, and shall maintain the Building in
          good condition as a Class A office building, including, but not
          limited to, structural parts of the Building, foundations, bearing and
          exterior walls (including glass), subflooring and roof (including roof
          membrane and skylights), electrical, plumbing and sewage systems,
          Cable installed as part of Landlord's Work, gutters and down spouts,
          the heating, ventilating and air conditioning system, interior walls,
          floors, ceilings, interior and exterior doors and windows and their
          appurtenant sills and frames, together with all fixtures, lighting,
          appliances, elevators, equipment, and plumbing and utility lines, and
          the sidewalks, grounds, landscaping, parking and loading areas. In no
          event shall Tenant be entitled to undertake any such maintenance or
          repairs, whether at the expense of Tenant or Landlord, and Tenant
          hereby waives the benefits of any law now or hereafter in effect which
          would otherwise provide Tenant with such right. The Lease and Tenant's
          obligation hereunder shall in no way be affected, impaired or excused
          because Landlord is unable to fulfill any of its obligations under
          this Lease due to fire, earthquake, inclement weather or other acts of
          God, acts of the public enemy, riot, insurrection, governmental
          regulation of the sales of materials or supplies or the transportation
          thereof, strikes or boycotts, shortages of materials or labor, or any
          other cause beyond the control of Landlord.

     9.3  Alterations. Tenant shall not make alterations, additions or
          improvements to the Premises or other portions of the Property after
          the Commencement Date which are not part of the initial Tenant's Work
          provided for herein (collectively referred to as "Alterations")
          without first obtaining the written consent of Landlord in each
          instance, which consent shall not be unreasonably withheld or delayed.
          If Landlord does not respond to Tenant's request for consent within
          ten (10) business days, Landlord shall be deemed to have granted its
          consent. However, Landlord's consent shall not be required for any
          Alteration that satisfies all of the following criteria (a "Cosmetic
          Alteration"): (1) is of a cosmetic nature such as painting,
          wallpapering, hanging pictures and installing carpeting; (2) is not
          visible from the exterior of the Premises or Property; (3) will not
          affect the systems or structure of the Property; and (4) does not
          require work to be performed inside the walls or above the ceiling of
          the Premises (other than installation of telephone, computer, data
          transmission, internet and other telecommunications cables and wires).
          However, even though consent is not required, the performance of
          Cosmetic Alterations shall be subject to all the other provisions of
          this Section 9.3. Prior to starting work, Tenant shall furnish
          Landlord with plans and specifications reasonably acceptable to
          Landlord; names of contractors reasonably acceptable to Landlord
          (provided that Landlord may designate specific contractors with
          respect to Property systems); necessary permits and approvals; and
          evidence of contractor's and subcontractor's insurance in

                                                                         Page 12
<PAGE>

          amounts reasonably required by Landlord. Material changes to the plans
          and specifications must also be submitted to Landlord for its
          approval, which approval shall not be unreasonably withheld or
          delayed. Alterations shall be constructed in a good and workmanlike
          manner using materials of a quality that is at least equal to the
          quality designated by Landlord as the minimum standard for the
          Premises. Landlord may designate reasonable rules, regulations and
          procedures for the performance of work in the Premises and, to the
          extent reasonably necessary to avoid disruption to the occupants of
          the Building, shall have the right to designate the time when
          Alterations may be performed. Tenant shall reimburse Landlord within
          30 days after receipt of an invoice for reasonable sums paid by
          Landlord for third party examination of Tenant's plans for non-
          Cosmetic Alterations, provided that no such reimbursement shall be due
          with respect to Tenant's initial Alterations in the Premises (or in an
          expansion of the Premises under Sections 6.1 or 6.3). Upon completion,
          Tenant shall furnish "as-built" plans (except for Cosmetic
          Alterations), completion affidavits, full and final waivers of lien
          and receipted bills covering all labor and materials. Tenant shall
          assure that the Alterations comply with all insurance requirements and
          Laws. Landlord's approval of an Alteration shall not be a
          representation by Landlord that the Alteration complies with
          applicable Laws or will be adequate for Tenant's use.

10.  Use of Electrical Services by Tenant.

     10.1 Electricity used by Tenant in the Premises shall be paid for by Tenant
          through inclusion in Expenses (except as provided in Section 10.2 for
          excess usage). Electrical service to the Premises may be furnished by
          one or more companies providing electrical generation, transmission
          and distribution services, and the cost of electricity may consist of
          several different components or separate charges for such services,
          such as generation, distribution and stranded cost charges. Landlord
          shall have the exclusive right to select any company providing
          electrical service to the Premises, to aggregate the electrical
          service for the Property and Premises with other buildings, to
          purchase electricity through a broker and/or buyers group and to
          change the providers and manner of purchasing electricity. In the
          event that any other tenant of the Building utilizes such tenant's
          premises, or any material portion thereof, for permitted uses which
          cause such tenant to use electrical service in excess of that
          associated with general office purposes, Landlord shall provide a
          separate meter to such tenant and separately charge such tenant for
          its electrical service, so that Tenant is not required to pay for any
          such excess use of electrical service by another tenant as part of the
          Expenses.

     10.2 Tenant's use of electrical service shall not exceed, either in
          voltage, rated capacity, use beyond Normal Business Hours or overall
          load, that which Landlord reasonably deems to be standard for normal
          office use in Class A office buildings. If Tenant requests permission
          to consume excess electrical service, Landlord may condition consent
          upon conditions that Landlord reasonably elects (including, without
          limitation, the installation of utility service upgrades, meters,
          submeters, air handlers or cooling units), and the additional usage
          (to the extent permitted by Law), installation and maintenance costs
          shall be paid by Tenant. Landlord shall have the right, at Landlord's
          cost, to separately meter electrical usage for the Premises and to
          measure electrical usage by survey or other commonly accepted methods.

11.  Entry by Landlord.

     Landlord, Landlord's agents, contractors and representatives may enter the
Premises to inspect or show the Premises, to clean and make repairs, alterations
or additions to the Premises, and to conduct or facilitate repairs, alterations
or additions to any portion of the Property, including other tenants' premises.
Except in emergencies or to provide janitorial and other Property services after
Normal Business Hours, Landlord shall provide Tenant with reasonable prior
notice of entry into the Premises,

                                                                         Page 13
<PAGE>

which may be given orally. If reasonably necessary for the protection and safety
of Tenant and its employees, Landlord shall have the right to temporarily close
all or a portion of the Premises and/or the Premises to perform repairs,
alterations and additions. However, except in emergencies, Landlord will not
close the Premises or the Premises if the work can reasonably be completed on
weekends and after Normal Business Hours. Entry by Landlord shall not constitute
constructive eviction or entitle Tenant to an abatement or reduction of Rent.
Any entry by Landlord and its agents and employees (including, but not limited
to the janitorial company servicing the Premises), shall be conducted in
compliance with reasonable confidentiality and security measures which may be
required by Tenant (including, but not limited to, an escort by one of Tenant's
employees and execution of confidentiality or nondisclosure agreements) in order
to protect the confidentiality and security of Tenant's business and employees,
and Landlord acknowledges and accepts that Tenant considers the entire Premises
as highly confidential and Landlord would have access to the Premises only if
escorted by one of Tenant's employees.

12.  Assignment and Subletting.

     12.1  Except in connection with a Permitted Transfer (defined in Section
           12.4 below), Tenant shall not assign, sublease, transfer or encumber
           any interest in this Lease or allow any third party to use any
           portion of the Premises (collectively or individually, a "Transfer")
           without the prior written consent of Landlord, which consent shall
           not be unreasonably withheld or delayed. Without limitation, it is
           agreed that Landlord's consent shall not be considered unreasonably
           withheld if: (1) in the event of a proposed assignment, the proposed
           transferee's financial condition does not meet Landlord's reasonable
           criteria used to select Building tenants having similar leasehold
           obligations; (2) the use of the Premises by the proposed transferee
           is not substantially the same as Tenant's use of the Premises (3) the
           proposed transferee is a governmental agency, or occupant of the
           Property with whom Landlord is then negotiating for other space in
           the Building; or (4) Tenant is in default after the expiration of the
           notice and cure periods in this Lease. Tenant shall not be entitled
           to receive monetary damages based upon a claim that Landlord
           unreasonably withheld its consent to a proposed Transfer and Tenant's
           sole remedy shall be an action to enforce any such provision through
           specific performance or declaratory judgment. Any attempted Transfer
           in violation of this Article shall, at Landlord's option, be void.
           Consent by Landlord to one or more Transfer(s) shall not operate as a
           waiver of Landlord's rights to approve any subsequent Transfers. In
           no event shall any Transfer or Permitted Transfer release or relieve
           Tenant from any obligation under this Lease.

     12.2  As part of its request for Landlord's consent to a Transfer, Tenant
           shall provide Landlord with financial statements for the proposed
           transferee (in the event of a proposed assignment), a complete copy
           of the proposed assignment, sublease and other contractual documents
           and such other information as Landlord may reasonably request.
           Landlord shall, by written notice to Tenant within 15 business days
           of its receipt of the required information and documentation, either
           consent to the Transfer by the execution of a consent agreement in a
           form reasonably designated by Landlord or reasonably refuse to
           consent to the Transfer in writing. Tenant shall pay Landlord a
           review fee not exceeding $2,500.00 for Landlord's review of any
           Permitted Transfer or requested Transfer for its actual reasonable
           costs and expenses (including reasonable attorney's fees).

     12.3  Tenant shall pay Landlord 50% of all rent and other consideration
           which Tenant receives as a result of a Transfer that is in excess of
           the Rent payable to Landlord for the portion of the Premises and Term
           covered by the Transfer. Tenant shall pay Landlord for Landlord's
           share of any excess within 30 days after Tenant's receipt of such
           excess consideration. Tenant may deduct from the excess all
           reasonable and customary expenses directly incurred by Tenant
           attributable to the Transfer (other than Landlord's review fee),
           including brokerage fees, legal fees and construction costs. If
           Tenant is in Monetary Default (defined in Section 19.1 below),
           Landlord may require that all sublease

                                                                         Page 14
<PAGE>

           payments be made directly to Landlord, in which case Tenant shall
           receive a credit against Rent in the amount of any payments received
           (less Landlord's share of any excess).

     12.4  Notwithstanding anything to the contrary contained in this Lease,
           Tenant may assign its entire interest under this Lease to a successor
           to Tenant by purchase, merger, consolidation or reorganization
           without the consent of Landlord, provided that all of the following
           conditions are satisfied (a "Permitted Transfer"): (1) Tenant is not
           in default under this Lease beyond applicable notice and cure
           periods; (2) Tenant's successor shall own all or substantially all of
           the assets of Tenant; (3) no material change of use of the Premises
           occurs; (4) Tenant shall give Landlord written notice at least 15
           days prior to the effective date of the proposed purchase, merger,
           consolidation or reorganization; and (5) all individuals then
           existing as guarantors execute a reaffirmation of the guarantee
           provided for by this Lease, if any, which is reasonably satisfactory
           in substance and form to Landlord. Tenant's notice to Landlord shall
           include information and documentation showing that each of the above
           conditions has been satisfied. If requested by Landlord in the event
           of an assignment, Tenant's successor shall sign a commercially
           reasonable form of assumption agreement. Notwithstanding anything to
           the contrary contained in this Lease, Tenant may sublet all or a
           portion of the Premises without Landlord's consent to an entity that
           qualifies as a permitted transferee under the foregoing provisions
           concerning Permitted Transfers, and Tenant may sublet a portion of
           the Premises which is less than 50% hereof to any contractors,
           vendors or other third parties who may be required by Tenant to work
           in conjunction with Tenant at the Premises on a project-specific
           basis.

13.  Liens.

     Tenant shall not permit mechanic's or other liens to be placed upon the
Property, the Premises or Tenant's leasehold interest in connection with any
work or service done or purportedly done by or for benefit of Tenant. If a lien
is so placed, Tenant shall, within 10 days of notice from Landlord of the filing
of the lien, fully discharge the lien by settling the claim which resulted in
the lien or by bonding or insuring over the lien in the manner prescribed by the
applicable lien Law, unless the lien arises out of Landlord's failure to pay the
Tenant Allowance in accordance with Exhibit D (in which event Landlord shall be
responsible for discharging the lien). If Tenant fails to discharge the lien
when Tenant is required to do so, then, in addition to any other right or remedy
of Landlord, Landlord may bond or insure over the lien or otherwise discharge
the lien. Tenant shall reimburse Landlord for any amount paid by Landlord to
bond or insure over the lien or discharge the lien, including, without
limitation, reasonable attorneys' fees (if and to the extent permitted by Law)
within 30 days after receipt of an invoice from Landlord.

14.  Indemnity and Waiver of Claims.

     14.1  Except to the extent caused by the negligence or willful misconduct
           of Landlord or any Landlord Related Parties (defined below), Tenant
           shall indemnify, defend and hold Landlord, its trustees, members,
           principals, beneficiaries, partners, officers, directors, employees,
           Mortgagee(s) (defined in Article 25) and agents ("Landlord Related
           Parties") harmless against and from all liabilities, obligations,
           damages, penalties, claims, actions, costs, charges and expenses,
           including, without limitation, reasonable attorneys' fees and other
           professional fees (if and to the extent permitted by Law), which may
           be imposed upon, incurred by or asserted against Landlord or any of
           the Landlord Related Parties and arising out of or in connection with
           any damage or injury occurring in the Premises or any acts or
           omissions (including violations of Law) of Tenant, the Tenant Related
           Parties (defined below) or any of Tenant's contractors or licensees.

     14.2  Except to the extent caused by the negligence or willful misconduct
           of Tenant or any Tenant Related Parties (defined below), Landlord
           shall indemnify, defend and hold

                                                                         Page 15
<PAGE>

           Tenant, its trustees, members, principals, beneficiaries, partners,
           officers, directors, employees and agents ("Tenant Related Parties")
           harmless against and from all liabilities, obligations, damages,
           penalties, claims, actions, costs, charges and expenses, including,
           without limitation, reasonable attorneys' fees and other professional
           fees (if and to the extent permitted by Law), which may be imposed
           upon, incurred by or asserted against Tenant or any of the Tenant
           Related Parties and arising out of or in connection with the acts or
           omissions (including violations of Law) of Landlord, the Landlord
           Related Parties or any of Landlord's contractors.

     14.3  Except to the extent such damage or loss results from the negligence
           or willful misconduct of Landlord or any Landlord Related Parties,
           Landlord and the Landlord Related Parties shall not be liable for,
           and Tenant waives, all claims for loss or damage to Tenant's business
           or loss, theft or damage to Tenant's Property or the property of any
           person claiming by, through or under Tenant resulting from: (1) wind
           or weather; (2) the failure of any sprinkler, heating or air-
           conditioning equipment, any electric wiring or any gas, water or
           steam pipes; (3) the backing up of any pipe or drain; (4) the
           bursting, leaking or running of any tank, water closet, drain or
           other pipe; (5) water, snow or ice upon or coming through the roof,
           skylight, stairs, doorways, windows, walks or any other place upon or
           near the Property; (6) any act or omission of any party other than
           Landlord or Landlord Related Parties; and (7) any causes not
           reasonably within the control of Landlord. Tenant shall insure itself
           against such losses under Article 15 below.

15.   Insurance.

      15.1  By Tenant. Tenant shall carry and maintain the following insurance
            ("Tenant's Insurance"), at its sole cost and expense: (1) Commercial
            General Liability Insurance, written on a claims made basis,
            applicable to the Premises and its appurtenances providing a minimum
            combined single limit of $2,000,000.00; and (2) All Risk
            Property/Business Interruption Insurance, including flood and
            earthquake (if available at reasonable cost), written at replacement
            cost value and with a replacement cost endorsement covering all of
            Tenant's trade fixtures, equipment, furniture and other personal
            property within the Premises ("Tenant's Property"). Any company
            writing any of Tenant's Insurance shall have an A.M. Best rating of
            not less than A-VIII. All Commercial General Liability Insurance
            policies shall name Tenant as a named insured and Landlord (or any
            successor), as additional insureds. All policies of Tenant's
            Insurance shall contain endorsements that the insurer(s) shall give
            Landlord and its designees at least 30 days' advance written notice
            of any cancellation, termination or lapse of insurance. Tenant shall
            provide Landlord with a certificate of insurance evidencing Tenant's
            Insurance prior to the earlier to occur of the Commencement Date or
            the date Tenant is provided with possession of the Premises for any
            reason, and upon renewals at least 15 days prior to the expiration
            of the insurance coverage.

15.2  By Landlord.

      15.2.1  Building and Improvements. Landlord shall obtain and keep in force
              during the term of this Lease a policy or policies in the name of
              Landlord, with loss payable to Landlord and to any Lender(s),
              insuring against loss or damage to the Property with such
              commercially reasonable deductible amount as is selected by
              Landlord. Such insurance shall be for full replacement cost, as
              the same shall exist from time to time, or the amount required by
              any Lender(s), but in no event more than the commercially
              reasonable and available insurable value thereof if, by reason of
              the unique nature or age of the improvements involved, such latter
              amount is less than full replacement cost. If the coverage is
              available and commercially reasonable, Landlord's policy or
              policies may insure against all risks of direct physical loss or
              damage (including flood and/or earthquake), including coverage for
              any additional costs resulting from debris removal and reasonable
              amounts of

                                                                         Page 16
<PAGE>

              coverage for the enforcement of any ordinance or law regulating
              the reconstruction or replacement of any undamaged sections of the
              Premises required to be demolished or removed by reason of the
              enforcement of any building, zoning, safety or land use laws as
              the result of a covered loss. Such policies may also contain an
              agreed valuation provision in lieu of any co-insurance clause,
              waiver of subrogation, and inflation guard protection causing an
              increase in the annual property insurance coverage amount by a
              factor selected by the insurer.

      15.2.2  Rental Value. Landlord also may obtain and keep in force during
              the term of this Lease a policy or policies in the name of
              Landlord, with loss payable to Landlord and any lender(s) to
              Landlord, insuring the loss of the full rental and other charges
              (including Operating Expenses) payable by all tenants of the
              Premises to Landlord for one year. Said insurance may provide that
              in the event the Lease is terminated by reason of an insured loss,
              the period of indemnity for such coverage shall be extended beyond
              the date of the completion of repairs or replacement of the
              Premises, to provide for one full year's loss of rental revenues
              from the date of any such loss. Said insurance shall contain an
              agreed valuation provision in lieu of any co-insurance clause, and
              the amount of coverage shall be adjusted annually to reflect the
              projected payments payable by Tenant for the next 12-month period.

      15.2.3  Increases Caused by Tenant. Tenant shall pay for any increase in
              the premiums charged to Landlord for the Property or Common Areas
              if said increase is caused by Tenant's acts, omissions, use or
              occupancy of the Premises.

      15.2.4  Liability for Common Areas. Landlord shall carry and maintain with
              respect to the Common Areas Commercial General Liability
              Insurance, written on a claims made basis, applicable to the
              Premises and its appurtenances providing a minimum combined single
              limit of $2,000,000.00, which shall name Landlord as a named
              insured and Tenant as an additional insured. Upon Tenant's
              request, Landlord shall provide Tenant with a certificate of
              insurance evidencing such liability insurance.

16.  Subrogation.

     Notwithstanding anything in this Lease to the contrary, Landlord and Tenant
hereby waive, and shall cause their respective insurance carriers to waive, any
and all rights of recovery, claim, action or causes of action against the other
and their respective trustees, principals, beneficiaries, partners, officers,
directors, agents, and employees, for any loss or damage that may occur to
Landlord or Tenant or any party claiming by, through or under Landlord or
Tenant, as the case may be, with respect to Tenant's Property, the Property, the
Premises, any additions or improvements to the Property, or Premises, or any
contents thereof, including all rights of recovery, claims, actions or causes of
action arising out of the negligence of Landlord or any Landlord Related Parties
or the negligence of Tenant or any Tenant Related Parties, which loss or damage
is (or would have been, had the insurance required by this Lease been carried)
covered by insurance.

17.  Casualty Damage.

     17.1  If all or any part of the Premises is damaged by fire or other
           casualty, Tenant shall immediately notify Landlord in writing. During
           any period of time that all or a portion of the Premises is rendered
           untenantable as a result of a fire or other casualty, the Rent shall
           abate for the portion of the Premises that is untenantable and not
           used by Tenant. Landlord shall have the right to terminate this Lease
           if: (1) the Property or the Premises shall be damaged so that, in
           Landlord's reasonable judgment, substantial alteration or

                                                                         Page 17
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           reconstruction of the Property not covered by insurance shall be
           required (whether or not the Premises has been damaged) and Landlord
           is therefore terminating all leases in the Building; (2) Landlord is
           not permitted by Law to rebuild the Property or the Premises in
           substantially the same form as existed before the fire or casualty
           (in which event Tenant may also terminate this Lease); (3) the
           Premises have been materially damaged and there is less than 2 years
           of the Term remaining on the date of the casualty; (4) any Mortgagee
           requires that such insurance proceeds be applied to the payment of
           the mortgage debt; or (5) a material uninsured loss to the Property
           or the Premises occurs. Landlord may exercise its right to terminate
           this Lease by notifying Tenant in writing within 90 days after the
           date of the casualty. If Landlord does not terminate this Lease,
           Landlord shall commence and proceed with reasonable diligence to
           repair and restore the Premises and the Leasehold Improvements
           (excluding any Alterations that were performed by Tenant in violation
           of this Lease). However, in no event shall Landlord be required to
           spend more than the insurance proceeds received by Landlord. Landlord
           shall not be liable for any loss or damage to Tenant's Property or to
           the business of Tenant resulting in any way from the fire or other
           casualty or from the repair and restoration of the damage. Landlord
           and Tenant hereby waive the provisions of any Law relating to the
           matters addressed in this Article, and agree that their respective
           rights for damage to or destruction of the Premises shall be those
           specifically provided in this Lease.

     17.2  If all or any portion of the Premises shall be made untenantable by
           fire or other casualty, Landlord shall, with reasonable promptness,
           cause an architect or general contractor selected by Landlord to
           provide Landlord and Tenant with a written estimate of the amount of
           time required to substantially complete the repair and restoration of
           the Premises and make the Premises tenantable again, using standard
           working methods ("Completion Estimate"). If the Completion Estimate
           indicates that the Premises cannot be made tenantable within 180 days
           from the date the repair and restoration is started, then regardless
           of anything in Section 17.1 above to the contrary, either party shall
           have the right to terminate this Lease by giving written notice to
           the other of such election within 10 days after receipt of the
           Completion Estimate.

18.  Condemnation.

     Either party may terminate this Lease if the whole or any material part of
the Premises shall be taken or condemned for any public or quasi-public use
under Law, by eminent domain or private purchase in lieu thereof (a "Taking").
Landlord shall also have the right to terminate this Lease if there is a Taking
of any portion of the Property or the Premises which would leave the remainder
of the Property or the Premises unsuitable for use as an office building in a
manner comparable to the Property's or the Premises' use prior to the Taking. In
order to exercise its right to terminate the Lease, Landlord or Tenant, as the
case may be, must provide written notice of termination to the other within 45
days after the Taking. Any such termination shall be effective as of the date
the physical taking of the Premises or the portion of the Property or the
Premises occurs. If this Lease is not terminated, the Rentable Area of the
Property, the Rentable Area of the Premises, Tenant's Pro Rata Share shall, if
applicable, be appropriately adjusted. In addition, Rent for any portion of the
Premises taken or condemned shall be abated during the unexpired Term of this
Lease effective when the physical taking of the portion of the Premises occurs.
All compensation awarded for a Taking, or sale proceeds, shall be the property
of Landlord, any right to receive compensation or proceeds being expressly
waived by Tenant. However, Tenant may file a separate claim at its sole cost and
expense for Tenant's Property and Tenant's reasonable relocation expenses,
provided the filing of the claim does not diminish the award which would
otherwise be receivable by Landlord.

19.  Events of Default.

     Tenant shall be considered to be in default of this Lease upon the
occurrence of any of the following events of default:

                                                                         Page 18
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     19.1   Tenant's failure to pay when due all or any portion of the Rent, if
            the failure continues for 3 business days after written notice to
            Tenant ("Monetary Default").

     19.2   Tenant's failure (other than a Monetary Default) to comply with any
            term, provision or covenant of this Lease, if the failure is not
            cured within 30 days after written notice to Tenant. However, if
            Tenant's failure to comply cannot reasonably be cured within 30
            days, Tenant shall be allowed additional time as is reasonably
            necessary to cure the failure so long as: (1) Tenant commences to
            cure the failure within 30 days, and (2) Tenant diligently pursues a
            course of action that will cure the failure and bring Tenant back
            into compliance with the Lease. However, if Tenant's failure to
            comply creates a hazardous condition, the failure must be cured
            immediately upon notice to Tenant.

     19.3   Tenant or any Guarantor becomes insolvent, makes a transfer in fraud
            of creditors or makes an assignment for the benefit of creditors, or
            admits in writing its inability to pay its debts when due.

     19.4   The leasehold estate is taken by process or operation of Law.

20.  Remedies.

     20.1   Upon any default, Landlord shall have the right without notice or
            demand (except as provided in Article 19) to pursue any of its
            rights and remedies at Law or in equity, including any one or more
            of the following remedies:

            20.1.1  Terminate this Lease, in which case Tenant shall immediately
                    surrender the Premises to Landlord. If Tenant fails to
                    surrender the Premises, Landlord may, in compliance with
                    applicable Law and without prejudice to any other right or
                    remedy, enter upon and take possession of the Premises and
                    expel and remove Tenant, Tenant's Property and any party
                    occupying all or any part of the Premises. Tenant shall pay
                    Landlord on demand the amount of all past due Rent and other
                    losses and damages which Landlord may suffer as a result of
                    Tenant's default, whether by Landlord's inability to relet
                    the Premises on satisfactory terms or otherwise, including,
                    without limitation, all Costs of Reletting (defined below)
                    and any deficiency that may arise from reletting or the
                    failure to relet the Premises. "Costs of Reletting" shall
                    include all costs and expenses incurred by Landlord in
                    reletting or attempting to relet the Premises, including,
                    without limitation, reasonable legal fees, brokerage
                    commissions, the cost of alterations and the value of other
                    concessions or allowances granted to a new tenant.

            20.1.2  Terminate Tenant's right to possession of the Premises and,
                    in compliance with applicable Law, expel and remove Tenant,
                    Tenant's Property and any parties occupying all or any part
                    of the Premises. Landlord may (but shall not be obligated
                    to, except to the extent required by law) relet all or any
                    part of the Premises, without notice to Tenant, for a term
                    that may be greater or less than the balance of the Term and
                    on such conditions (which may include concessions, free rent
                    and alterations of the Premises) and for such uses as
                    Landlord in its absolute discretion shall determine.
                    Landlord may collect and receive all rents and other income
                    from the reletting. Tenant shall pay Landlord on demand all
                    past due Rent, all Costs of Reletting and any deficiency
                    arising from the reletting or failure to relet the Premises.
                    Landlord shall not be responsible or liable for the failure
                    to relet all or any part of the Premises or for the failure
                    to collect any Rent. The re-entry or taking of possession of
                    the Premises shall not be construed as an election by
                    Landlord to terminate this Lease unless a written notice of
                    termination is given to Tenant.

                                                                         Page 19
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            20.1.3  In the event that Landlord shall elect to terminate this
                    Lease under Section 20.1.1, then upon such termination
                    Tenant shall (if it has not already done so) quit and
                    surrender the Premises to Landlord and Landlord may recover
                    from Tenant:

                         (i)   The worth at the time of award of any unpaid
                    Rent which had been earned at the time of such termination;
                    plus

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

                         (iii) The worth at the time of award of the amount by
                    which the unpaid Rent for the balance of the term after the
                    time of award exceeds the amount of such rental loss that
                    Tenant proves could be reasonably avoided; plus

                         (iv)  Any other amount necessary to compensate Landlord
                    for all the damage proximately caused by Tenant's failure to
                    perform Tenant's obligations under this Lease or which in
                    the ordinary course of things would be likely to result
                    therefrom.

                    As used in (i) and (ii) above, the "worth at the time of
                    award" is computed by allowing interest at 12% per annum. As
                    used in (iii) above, the "worth at the time of award" is
                    computed by discounting such amount at the discount rate of
                    the Federal Reserve Bank of San Francisco at the time of
                    award plus 1%.

     20.2   Unless expressly provided in this Lease, the repossession or re-
            entering of all or any part of the Premises shall not relieve Tenant
            of its liabilities and obligations under the Lease. No right or
            remedy of Landlord shall be exclusive of any other right or remedy.
            Each right and remedy shall be cumulative and in addition to any
            other right and remedy now or subsequently available to Landlord at
            Law or in equity. If Landlord declares Tenant to be in default,
            Landlord shall be entitled to receive interest on any unpaid item of
            Rent at a rate equal to 12% per annum. Forbearance by Landlord to
            enforce one or more remedies shall not constitute a waiver of any
            default.

21.  Landlord's Default; Limitation of Liability.

     Landlord's failure to perform or observe any of its obligations under this
Lease or to correct a breach of any warranty or representation made in this
Lease within thirty (30) days after receipt of written notice from Tenant
setting forth in reasonable detail the nature and extent of the failure (or if
more than thirty (30) days is required to cure the breach, Landlord's failure to
begin curing within the thirty (30) day period and diligently prosecute the cure
to completion) shall constitute a default by Landlord. If Landlord commits a
default, Tenant may, without waiving any claim for damages for breach of
agreement or any other rights or remedies it may have under this Lease at law,
at any time thereafter do any of the following:

     Provided Tenant has given notice of such default to Landlord's mortgage
lender and reasonable opportunity for said lender to cure the default, Tenant
may cure the default for the account of the Landlord, and any amount paid or any
contractual liability incurred by Tenant in so doing shall be deemed paid or
incurred for the account of Landlord, and Landlord shall reimburse Tenant within
thirty (30) days of demand. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED
IN THIS LEASE, THE LIABILITY OF LANDLORD (AND OF ANY SUCCESSOR LANDLORD) TO
TENANT SHALL BE LIMITED

                                                                         Page 20
<PAGE>

TO THE INTEREST OF LANDLORD IN THE PROPERTY AND ANY PROCEEDS THEREOF. TENANT
SHALL LOOK SOLELY TO LANDLORD'S INTEREST IN THE PROPERTY AND ANY PROCEEDS
THEREOF FOR THE RECOVERY OF ANY JUDGMENT OR AWARD AGAINST LANDLORD. NEITHER
LANDLORD NOR ANY LANDLORD RELATED PARTY SHALL BE PERSONALLY LIABLE FOR ANY
JUDGMENT OR DEFICIENCY. BEFORE FILING SUIT FOR AN ALLEGED DEFAULT BY LANDLORD,
TENANT SHALL GIVE LANDLORD AND THE MORTGAGEE(S) (DEFINED IN ARTICLE 25 BELOW)
WHOM TENANT HAS BEEN NOTIFIED HOLD MORTGAGES (DEFINED IN ARTICLE 25 BELOW) ON
THE PROPERTY, BUILDING OR PREMISES, NOTICE AND REASONABLE TIME TO CURE THE
ALLEGED DEFAULT. IN ADDITION, TENANT ACKNOWLEDGES THAT ANY ENTITY MANAGING THE
PREMISES ON BEHALF OF LANDLORD, OR WHICH EXECUTES THIS LEASE AS AGENT FOR
LANDLORD, IS ACTING SOLELY IN ITS CAPACITY AS AGENT FOR LANDLORD AND SHALL NOT
BE LIABLE FOR ANY OBLIGATIONS, LIABILITIES, LOSSES OR DAMAGES ARISING OUT OF OR
IN CONNECTION WITH THIS LEASE, ALL OF WHICH ARE EXPRESSLY WAIVED BY TENANT,
UNLESS DUE TO THE NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH ENTITY OR AGENT.

22.  No Waiver.

     Either party's failure to declare a default immediately upon its
occurrence, or delay in taking action for a default shall not constitute a
waiver of the default, nor shall it constitute an estoppel. Either party's
failure to enforce its rights for a default shall not constitute a waiver of its
rights regarding any subsequent default. Receipt by Landlord of Tenant's keys to
the Premises shall not constitute an acceptance or surrender of the Premises.

23.  Quiet Enjoyment.

     Tenant shall, and may peacefully have, hold and enjoy the Premises, subject
to the terms of this Lease, provided Tenant pays the Rent and fully performs all
of its covenants and agreements. This covenant and all other covenants of
Landlord shall be binding upon Landlord and its successors only during its or
their respective periods of ownership of the Premises, and shall not be a
personal covenant of Landlord or the Landlord Related Parties.

24.  Holding Over.

     Except for any permitted occupancy by Tenant under Article 8, if Tenant
fails to surrender the Premises at the expiration or earlier termination of this
Lease, occupancy of the Premises after the termination or expiration shall be
that of a tenancy at sufferance. Tenant's occupancy of the Premises during the
holdover shall be subject to all the terms and provisions of this Lease and
Tenant shall pay an amount (on a per month basis without reduction for partial
months during the holdover) equal to 150% of the sum of the Base Rent and
Additional Rent due for the period immediately preceding the holdover. No
holdover by Tenant or payment by Tenant after the expiration or early
termination of this Lease shall be construed to extend the Term or prevent
Landlord from immediate recovery of possession of the Premises by summary
proceedings or otherwise. In addition to the payment of the amounts provided
above, if Landlord is unable to deliver possession of the Premises to a new
tenant, or to perform improvements for a new tenant, as a result of Tenant's
holdover and Tenant fails to vacate the Premises within 15 days after Landlord
notifies Tenant of Landlord's inability to deliver possession, or perform
improvements, Tenant shall be liable to Landlord for all damages, including,
without limitation, consequential damages, that Landlord suffers from the
holdover.

25.  Subordination to Mortgages; Estoppel Certificate; Mortgagee Protection.

     Subject to the terms of this Section 25, Tenant accepts this Lease subject
and subordinate to any mortgage(s), deed(s) of trust or other lien(s) now or
subsequently arising upon the Premises or the Property, and to renewals,
modifications, refinancings and extensions thereof (collectively referred to as
a

                                                                         Page 21
<PAGE>

"Mortgage"). The party having the benefit of a Mortgage shall be referred to as
a "Mortgagee". This clause shall be self-operative, but upon request from a
Mortgagee, Tenant shall execute and deliver a subordination agreement in favor
of the Mortgagee within ten (10) business days of the request, provided that the
Mortgagee shall agree, in a non-disturbance agreement, to recognize this Lease
in the event of foreclosure if Tenant is not in default at such time subject to
such provisions relating to the disposition or application of insurance or
condemnation proceeds as may be contained in such Mortgagee's loan documents.
Tenant agrees to execute any reasonable documents required to effectuate such
subordination. In lieu of having the Mortgage be superior to this Lease, a
Mortgagee shall have the right at any time to subordinate its Mortgage to this
Lease. If requested by a successor-in-interest to all or a part of Landlord's
interest in the Lease, Tenant shall, without charge, attorn to the successor-in-
interest. Landlord and Tenant shall each, within 10 business days after receipt
of a written request from the other, execute and deliver an estoppel certificate
to those parties as are reasonably requested by the other (including a Mortgagee
or prospective purchaser). The estoppel certificate shall include a statement
certifying that this Lease is unmodified (except as identified in the estoppel
certificate) and in full force and effect, describing the dates to which Rent
and other charges have been paid, representing that, to such party's actual
knowledge, there is no default (or stating the nature of the alleged default)
and indicating other matters with respect to the Lease that may reasonably be
requested.

     Tenant agrees to give any mortgagee or deed of trust holder, by certified
mail, a copy of any notice of default served upon the Landlord, provided that
prior to such notice Tenant has been notified in writing (by way of Notice of
Assignment of Rents and Leases, or otherwise) of the addresses of such mortgagee
or deed of trust holder. Tenant further agrees that if Landlord shall have
failed to cure such default within the time provided for in this Lease, then the
mortgagees and/or trust deed holders have an additional thirty (30) days within
which to cure such default or if such default cannot be cured within that time,
then such additional time as may be necessary if within such 30 days any
mortgagee or deed of trust holder has commenced and is diligently pursuing the
remedies necessary to cure such default (including but not limited to
commencement of foreclosure proceedings if necessary to affect such cure), in
which event this Lease shall not be terminated if such remedies are being so
diligently pursued.

     Landlord represents that Landlord is the sole owner in fee simple of the
Property and that KeyBank, N.A. is the only mortgagee having a lien on the
Property as of the date of execution of this Lease. Landlord shall deliver to
Tenant, in recordable form, a subordination, nondisturbance and attornment
agreement from Mortgagee (the "Nondisturbance Agreement"), in such Mortagee's
customary form which shall be reasonably acceptable to Tenant, providing
substantially the same protections to Tenant as set forth above in this Section,
within twenty (20) days after execution of this Lease. If the Nondisturbance
Agreement is not so delivered, Tenant shall have the right to terminate this
Lease if it is not thereafter delivered within thirty (30) days after the giving
by Tenant to Landlord of written notice of Tenant's intent to terminate as a
result of Landlord's failure to so deliver.

26.  Attorneys' Fees.

     If either party institutes a suit against the other for violation of or to
enforce any covenant or condition of this Lease, or if either party intervenes
in any suit in which the other is a party to enforce or protect its interest or
rights, the prevailing party shall be entitled to all of its costs and expenses,
including, without limitation, reasonable attorneys' fees.

27.  Notice.

     If a demand, request, approval, consent or notice (collectively referred to
as a "notice") shall or may be given to either party by the other, the notice
shall be in writing and delivered by hand or sent by registered or certified
mail with return receipt requested, or sent by overnight or same day courier
service at the party's respective Notice Address(es) set forth in Article 1,
except that if Tenant has vacated the Premises (or if the Notice Address for
Tenant is other than the Premises, and Tenant has vacated such

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address) without providing Landlord a new Notice Address, Landlord may serve
notice in any manner described in this Article or in any other manner permitted
by Law. Each notice shall be deemed to have been received or given on the
earlier to occur of actual delivery or the date on which delivery is refused,
or, if Tenant has vacated the Premises or the other Notice Address of Tenant
without providing a new Notice Address, three (3) days after notice is deposited
in the U.S. mail or with a courier service in the manner described above. Either
party may, at any time, change its Notice Address by giving the other party
written notice of the new address in the manner described in this Article.

28.  Excepted Rights.

     This Lease does not grant any rights to light or air over or about the
Property or the Premises.  Landlord excepts and reserves exclusively to itself
the use of:  (1) roofs, (2) telephone, electrical and janitorial closets, (3)
equipment rooms, Property risers or similar areas that are used by Landlord for
the provision of Property services, (4) rights to the land and improvements
below the floor of the Premises, (5) the improvements and air rights above the
Premises, (6) the improvements and air rights outside the demising walls of the
Premises, and (7) the areas within the Premises used for the installation of
utility lines and other installations serving occupants of the Property.
Landlord  shall also have the right to make such other changes to the Property
(but not the interior of the Premises) as Landlord deems appropriate, provided
the changes do not materially affect Tenant's ability to use or access the
Premises for the Permitted Use.  Landlord shall also have the right (but not the
obligation) to temporarily close the Property if Landlord reasonably determine
that there is an imminent danger of significant damage to the Property or of
personal injury to Landlord's employees or the occupants of the Property.   The
circumstances under which Landlord may temporarily close the Property shall
include, without limitation, electrical interruptions, hurricanes and civil
disturbances.  A closure of the Property under such circumstances shall not
constitute a constructive eviction nor entitle Tenant to an abatement or
reduction of Rent.  Landlord shall have the right at any time, without thereby
creating an actual or constructive eviction or incurring any liability to Tenant
therefor, to change the arrangement or location of such of the following as are
not contained within the Premises or any part thereof (provided such change does
not adversely affect Tenant's use of or access to the Premises): entrances,
passageways, doors and doorways, corridors, stairs, toilets and other like
public service portions of the Property.

29.  Surrender of Premises.

     At the expiration or earlier termination of this Lease or Tenant's right of
possession, Tenant shall remove Tenant's Property (defined in Article 15) from
the Premises, and quit and surrender the Premises to Landlord, broom clean and
otherwise in the condition required by Section 9.1, ordinary wear and tear
excepted.  Tenant shall also be required to remove the Required Removables in
accordance with Article 8.  If Tenant fails to remove any of Tenant's Property
within 2 days after the termination of this Lease or of Tenant's right to
possession, Landlord, at Tenant's sole cost and expense, shall be entitled (but
not obligated) to remove and store Tenant's Property.  Landlord shall not be
responsible for the value, preservation or safekeeping of Tenant's Property.
Tenant shall pay Landlord, upon demand, the expenses and storage charges
incurred for Tenant's Property.  In addition, if Tenant fails to remove Tenant's
Property from the Premises or storage, as the case may be, within 30 days after
written notice, Landlord may deem all or any part of Tenant's Property to be
abandoned, and title to Tenant's Property shall be deemed to be immediately
vested in Landlord.

30.  Parking.

     30.1  Tenant agrees to further rent from Landlord and Landlord agrees to
           rent to Tenant the use, on a non-exclusive basis, of 1.7 parking
           stalls in the Building for each one thousand (1,000) square feet of
           Rentable Area of the Premises; provided Tenant shall be required to
           pay a parking fee for such use which fee shall be subject to change
           by Landlord (or Landlord's parking administrator) from time to time,
           but which fee shall not exceed the

                                                                         Page 23
<PAGE>

           market rate in the Lake Union area of Seattle for reasonably
           comparable parking facilities in reasonably comparable buildings. For
           the first twenty-four(s) months following the Commencement Date,
           Tenant and Landlord agree the fee shall be One Hundred Dollars ($100)
           per parking stall per month. Tenant's use of the parking shall be
           subject to such reasonable rules and regulations as Landlord may
           determine are appropriate.

     30.2  Tenant shall cooperate and comply with any legal requirements for the
           dissemination of information to commuters and visitors to the
           Property to encourage the use of available transportation
           alternatives and shall offer incentives to their employees to use
           such alternatives and otherwise comply with any governmentally
           sponsored traffic management or reduction plan. Landlord shall, at
           its cost, install a bicycle parking cage in the parking area.

31.  Miscellaneous.

     31.1  If Tenant's Premises become equal to at least two (2) full floors of
           the Building, Tenant, at Tenant's own expense, may place a ground
           level exterior monument sign, not exceeding four (4) feet in height
           or width, stating Tenant's name on the Building at the south side of
           the Building so long as (i) Tenant has obtained Landlord's prior
           written consent for the specific sign and location proposed by Tenant
           which consent shall not be unreasonably withheld, (ii) such sign
           shall conform to all applicable governmental rules and regulations,
           (iii) Tenant maintains such sign in good condition and appearance and
           (iv) at the termination of this Lease, Tenant, at Tenant's sole
           expense, shall remove such sign and repair any damage caused by such
           sign or its removal.

     31.2  This Lease and the rights and obligations of the parties shall be
           interpreted, construed and enforced in accordance with the Laws of
           the State of Washington and Landlord and Tenant hereby irrevocably
           consent to the jurisdiction and proper venue of such state. If any
           term or provision of this Lease shall to any extent be invalid or
           unenforceable, the remainder of this Lease shall not be affected, and
           each provision of this Lease shall be valid and enforced to the
           fullest extent permitted by Law. The headings and titles to the
           Articles and Sections of this Lease are for convenience only and
           shall have no effect on the interpretation of any part of the Lease.

     31.3  Tenant shall not record this Lease without Landlord's prior written
           consent, but the parties shall, at the request of either party,
           promptly execute a memorandum of this Lease which may be recorded in
           the real property records.

     31.4  Landlord and Tenant hereby waive any right to trial by jury in any
           proceeding based upon a breach of this Lease.

     31.5  Whenever a period of time is prescribed for the taking of an action
           by Landlord or Tenant, the period of time for the performance of such
           action shall be extended by the number of days that the performance
           is actually delayed due to strikes, acts of God, shortages of labor
           or materials, war, civil disturbances and other causes beyond the
           reasonable control of the performing party ("Force Majeure").
           However, events of Force Majeure shall not extend any period of time
           for the payment of Rent or other sums payable by either party.

     31.6  After the Notice Date and the substantial completion of Landlord's
           Work, Landlord shall have the right to transfer and assign, in whole,
           all of its rights and obligations under this Lease and in the
           Premises or the Property referred to herein, and upon such transfer
           and transfer of the Deposit, and provided the assignee assumes in
           writing all of Landlord's obligations hereunder, Landlord shall be
           released from any further obligations hereunder, and Tenant agrees to
           look solely to the successor in interest of Landlord for the
           performance of such obligations.

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31.7  Broker.

      31.7.1   Tenant represents and warrants to Landlord that it has not
               engaged nor dealt with any broker, finder or other person who
               would be entitled to any commission or fees for the negotiation,
               execution, or delivery of this Lease except for Teutsch Partners
               and Colliers International ("Landlord's Broker") and The Staubach
               Company ("Tenant's Broker"). Landlord agrees to pay and be
               responsible for any commissions owing to Landlord's Broker.
               Landlord agrees to pay in full satisfaction of any commission to
               Tenant's Broker due from Landlord arising out of this transaction
               and lease a commission equal to (i) Five Dollars ($5.00) per
               Rentable Square Foot of the Premises, as calculated at the
               commencement of this Lease (subject to adjustment if the Rentable
               Area of the Premises is re-calculated by the Commencement Date
               pursuant to Section 1.2), which commission shall be payable one-
               half (1/2) on mutual execution of this Lease and one-half (1/2)
               on occupancy of the Premises by Tenant and commencement of
               Tenant's obligation to pay Base Rent. In the event that the
               Premises are expanded by virtue of the 25th Month Expansion
               provided for in Section 6.1 above or by virtue of Tenant's
               exercise of its first right of refusal to lease provided for in
               Section 6.3 above, Landlord agrees to pay, in full satisfaction
               of any additional commission to Tenant's Broker, a commission
               equal to (i) Four Dollars ($4.00) per Rentable Square Foot the
               expanded portion of the Premises, which commission shall be
               payable upon commencement of Tenant's obligation to pay Base Rent
               for the expanded portion of the Premises. In the event of any
               renewal or extension of this Lease, Landlord shall have no
               obligation to pay any commission to Tenant's Broker. Tenant shall
               indemnify and hold Landlord harmless against any loss, cost,
               liability or expense incurred by Landlord as a result of any
               claim asserted by any such broker (other than Tenant's Broker and
               Landlord's Broker) on the basis of any arrangements or agreements
               made or alleged to have been made by or on behalf of Tenant in
               violation of Tenant's warranty in this Section.

      31.7.2   Agency Disclosure. At the signing of this Lease, Landlord was
               represented by Landlord's Broker. Each party signing this
               document confirms that the prior oral and/or written disclosure
               of agency was provided to such party in this transaction, as
               required by RCW 18.86.030(1)(g). Landlord and Tenant, by their
               execution of this Lease, each acknowledge and agree that they
               have timely received a pamphlet on the law of real estate agency
               as required under RCW 18.86.030(1)(f).

31.8  Tenant covenants, warrants and represents that: (1) each individual
      executing, attesting and/or delivering this Lease on behalf of Tenant is
      authorized to do so on behalf of Tenant; (2) this Lease is binding upon
      Tenant; and (3) Tenant is duly organized and legally existing in the state
      of its organization and is qualified to do business in the state in which
      the Premises are located. If there is more than one Tenant, or if Tenant
      is comprised of more than one party or entity, the obligations imposed
      upon Tenant shall be joint and several obligations of all the parties and
      entities. Notices, payments and agreements given or made by, with or to
      any one person or entity shall be deemed to have been given or made by,
      with and to all of them.

31.9  Time is of the essence with respect to Tenant's exercise of any expansion,
      renewal or extension rights granted to Tenant. This Lease shall create
      only the relationship of landlord and tenant between the parties, and not
      a partnership, joint venture or any other relationship. This Lease and the
      covenants and conditions in this Lease shall inure only to the benefit of
      and be binding only upon Landlord and Tenant and their successors and
      permitted assigns.

                                                                         Page 25
<PAGE>

     31.10  The expiration of the Term, whether by lapse of time or otherwise,
            shall not relieve either party of any obligations which accrued
            prior to or which may continue to accrue after the expiration or
            early termination of this Lease. Without limiting the scope of the
            prior sentence, it is agreed that Tenant's obligations under
            Sections 4.1, 4.2, 8, 14, 20 and 25 shall survive the expiration or
            early termination of this Lease.

     31.11  All understandings and agreements previously made between the
            parties are superseded by this Lease, and neither party is relying
            upon any warranty, statement or representation not contained in this
            Lease. This Lease may be modified only by a written agreement signed
            by Landlord and Tenant.

     31.12  Tenant, within 15 days after request (but not more than once per
            year), shall provide Landlord with a current financial statement and
            such other information as Landlord may reasonably request in order
            to create a "business profile" of Tenant and determine Tenant's
            ability to fulfill its obligations under this Lease. Landlord,
            however, shall not require Tenant to provide such information unless
            Landlord is requested to produce the information in connection with
            a proposed financing or sale of the Property. Upon written request
            by Tenant, Landlord shall enter into a commercially reasonable
            confidentiality agreement covering any confidential information that
            is disclosed by Tenant.

     31.13  The name of the Property may be changed by Landlord, provided it is
            not named after any biotechnical or pharmaceutical company.

     31.14  Tenant shall not be deemed to be a third party beneficiary of any
            other lease of the Property; Landlord retains the sole right to
            determine, in its reasonable discretion, whether to enforce and the
            method of enforcement of compliance by other tenants and their
            employees with the terms of their respective leases including any
            restrictions on use and parking; the existence of any violation of
            any lease provision by any other tenant shall not be deemed to be a
            violation of this Lease by Landlord.

     31.15  Submission of this Lease for examination, even though executed by
            Tenant, shall not bind Landlord in any manner, and no Lease or other
            obligation on the part of the Landlord shall arise, until this Lease
            is executed and delivered by Landlord to Tenant.

32.  Entire Agreement.

     This Lease and the following exhibits and attachments constitute the entire
agreement between the parties and supersede all prior agreements and
understandings related to the Premises, including all lease proposals, letters
of intent and other documents: Exhibit A-1 (Outline and Location of Premises),
Exhibit A-2 (Legal Description of Property), Exhibit B (Rules and Regulations),
Exhibit C (Landlord Work), Exhibit C-1 (Landlord's Plans and Specifications) and
Exhibit D (Tenant Allowance).



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<PAGE>

     Landlord and Tenant have executed this Lease as of the day and year first
above written.


                    LANDLORD:

                    1144 Eastlake LLC, a Washington limited liability company


                    By:  /s/ Illegible
                       --------------------------------------------------------
                         Managing Member                  ,its authorized agent
                       -----------------------------------


                    TENANT:

                    ZymoGenetics, Inc., a Washington corporation


                    By:    /s/ Shinko Campos
                           ---------------------------------------------------
                    Name       Shinko Campos
                           ---------------------------------------------------
                    Title: Sr. VP. Operations
                           ---------------------------------------------------

                                                                         Page 27