<PAGE>   1
                                                                   Exhibit 10.25

                             BASIC LEASE INFORMATION
                                 INDUSTRIAL NET

LEASE DATE:
(same as date in first paragraph of Lease)   February 5, 1999

TENANT:                                      Aviron, a Delaware corporation

TENANT'S NOTICE ADDRESS:                     297 North Bernardo Ave., Mountain
                                             View, California 94043

TENANT'S BILLING ADDRESS:                    297 North Bernardo Ave., Mountain
                                             View, California 94043

TENANT CONTACT:                              Chief Financial Officer
PHONE NUMBER:                                (650) 919-6500
FAX NUMBER:                                  (650) 919-6612

LANDLORD:                                    Spieker Properties, L.P., a
                                             California limited partnership

LANDLORD'S NOTICE ADDRESS:                   2180 Sand Hill Road, Suite 100,
                                             Menlo Park, California 94025

LANDLORD'S REMITTANCE ADDRESS:               Spieker Properties, P.O. Box 45587,
                                             Department 10421, San Francisco,
                                             California 94145-0587 Lease ID No.
                                             AVIR--- 01

Premises:                                    3.82 acres of improved land
                                             commonly known as 3055 Patrick
                                             Henry Drive, Santa Clara,
                                             California, together with the
                                             Building (defined below)

Building:                                    One office/research and development
                                             building consisting of
                                             approximately 68,987 square feet,
                                             together with that certain 5,000
                                             square foot addition described on
                                             Schedule 2 attached hereto upon
                                             completion by Tenant (the
                                             "Additional Space")

Permitted Use:                               Subject to compliance with all
                                             laws, office, research and
                                             development, manufacturing, storage
                                             and related legal uses subject to
                                             Landlord's reasonable approval

Parking Density:                             Tenant shall be entitled to the
                                             non-exclusive use of all parking
                                             spaces at the Premises

Scheduled Term Commencement Date:            February 5, 1999

Scheduled Length of Term:                    Nineteen (19) years, 360 days

Scheduled Term Expiration Date:              January 31, 2019

Base Rent:                                   Base Rent shall commence on the
                                             Term Commencement Date and shall be
                                             paid pursuant to Schedule 1
                                             attached hereto and made a part
                                             hereof.

Estimated First Year Operating Expenses:     $8,315 per month

Security Deposit:                            $362,182

Tenant's Proportionate Share:                100%



<PAGE>   2

Of Premises:                                 100%


The foregoing Basic Lease Information is incorporated into and made a part of
this Lease. Each reference in this Lease to any of the Basic Lease Information
shall mean the respective information above and shall be construed to
incorporate all of the terms provided under the particular Lease paragraph
pertaining to such information. In the event of any conflict between the Basic
Lease Information and the Lease, the latter shall control.

LANDLORD                                  TENANT

Spieker Properties, L.P.,                 Aviron,
a California limited partnership          a Delaware corporation

By: Spieker Properties, Inc.,
a Maryland corporation,
its general partner



By: /s/ [Signature Illegible]                By:  /s/ Fred Kurland
   --------------------------------              ---------------------------

Its: Regional Senior Vice President          Its: Senior Vice President and
    --------------------------------              Chief Financial Officer
                                                 --------------------------


                                       II
<PAGE>   3
                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                    PAGE
                                                                                    ----
<S>                                                                                 <C>
1.      PREMISES......................................................................1

2.      POSSESSION AND LEASE COMMENCEMENT.............................................1

3.      TERM..........................................................................1

4.      USE...........................................................................2

        A.     General................................................................2

        B.     Limitations............................................................2

        C.     Compliance with Regulations............................................2

        D.     Hazardous Materials....................................................2

5.      RULES AND REGULATIONS.........................................................4

6.      RENT..........................................................................4

        A.     Base Rent..............................................................4

        B.     Additional Rent........................................................4

7.      OPERATING EXPENSES............................................................4

        A.     Operating Expenses.....................................................4

               (1)    Taxes...........................................................5

               (2)    Insurance.......................................................5

               (3)    Common Area Maintenance.........................................5

        B.     Payment of Estimated Operating Expenses................................7

        C.     Computation of Operating Expense Adjustment............................7

        D.     Net Lease..............................................................7

        E.     Tenant Audit...........................................................7

8.      INSURANCE AND INDEMNIFICATION.................................................8

        A.     Landlord's Insurance...................................................8

               (1)    Property Insurance..............................................8

               (2)    Optional Insurance..............................................8

        B.     Tenant's Insurance.....................................................8

               (1)    Property Insurance..............................................8

               (2)    Liability Insurance.............................................8

               (3)    Workers' Compensation and Employers' Liability Insurance........9

               (4)    Commercial Auto Liability Insurance.............................9

               (5)    General Insurance Requirements..................................9

        C.     Indemnification........................................................9

9.      WAIVER OF SUBROGATION........................................................10

10.     LANDLORD'S REPAIRS AND MAINTENANCE...........................................10

11.     TENANT'S REPAIRS AND MAINTENANCE.............................................10

12.     ALTERATIONS..................................................................11

13.     SIGNS........................................................................13

14.     INSPECTION/POSTING NOTICES...................................................13

15.     SERVICES AND UTILITIES.......................................................13

16.     SUBORDINATION................................................................14

17.     FINANCIAL STATEMENTS.........................................................14

18.     ESTOPPEL CERTIFICATE.........................................................15
</TABLE>



                                       I

<PAGE>   4

<TABLE>
<S>                                                                                  <C>
19.     SECURITY DEPOSIT.............................................................15

20.     LIMITATION OF TENANT'S REMEDIES..............................................15

21.     ASSIGNMENT AND SUBLETTING....................................................16

        A.     (1) General...........................................................16

               (2)Conditions of Landlord's Consent...................................16

               (3)...................................................................16

        B.     Bonus Rent............................................................17

        C.     Corporation...........................................................17

        D.     Unincorporated Entity.................................................17

        E.     Liability.............................................................18

22.     AUTHORITY....................................................................18

23.     CONDEMNATION.................................................................18

        A.     Condemnation and Rights to Terminate..................................18

        B.     Award.................................................................18

        C.     Waiver of CCP Section 1265.130........................................19

24.     CASUALTY DAMAGE..............................................................19

        A.     General...............................................................19

        B.     Rebuild and Repair....................................................19

        C.     Tenant's Fault........................................................19

        D.     Insurance Proceeds....................................................19

        E.     Waiver................................................................20

        F.     Tenant's Personal Property............................................20

25.     HOLDING OVER.................................................................20

26.     DEFAULT......................................................................20

        A.     Events of Default.....................................................20

               (1)    Abandonment....................................................20

               (2)    Nonpayment of Rent.............................................20

               (3)    Other Obligations..............................................20

               (4)    General Assignment.............................................21

               (5)    Bankruptcy.....................................................21

               (6)    Receivership...................................................21

               (7)    Attachment.....................................................21

               (8)    Insolvency.....................................................21

        B.     Remedies Upon Default.................................................21

               (1)    Termination....................................................21

               (2)    Continuation After Default.....................................21

               (3)    Increased Security Deposit.....................................21

        C.     Damages After Default.................................................22

        D.     Late Charge...........................................................22

        E.     Interest..............................................................22

        F.     Remedies Cumulative...................................................22

27.     LIENS........................................................................22

28.     [Intentionally Deleted]......................................................23

29.     TRANSFERS BY LANDLORD........................................................23

30.     RIGHT OF LANDLORD TO PERFORM TENANT'S COVENANTS..............................23
</TABLE>

                                       II

<PAGE>   5

<TABLE>
<S>                                                                                  <C>
31.     WAIVER.......................................................................23

32.     NOTICES......................................................................24

        A.     Rent..................................................................24

        B.     Other.................................................................24

        C.     Required Notices......................................................24

33.     ATTORNEYS' FEES..............................................................24

34.     SUCCESSORS AND ASSIGNS.......................................................24

35.     FORCE MAJEURE................................................................24

36.     SURRENDER OF PREMISES........................................................24

37.     MISCELLANEOUS................................................................25

        A.     General...............................................................25

        B.     Time..................................................................25

        C.     Choice of Law.........................................................25

        D.     Entire Agreement......................................................25

        E.     Modification..........................................................25

        F.     Severability..........................................................25

        G.     Recordation...........................................................25

        H.     Examination of Lease..................................................25

        I.     Accord and Satisfaction...............................................25

        J.     Easements.............................................................25

        K.     Drafting and Determination Presumption................................26

        L.     Exhibits..............................................................26

        M.     No Light, Air or View Easement........................................26

        N.     No Third Party Benefit................................................26

        O.     Quiet Enjoyment.......................................................26

        P.     Counterparts..........................................................26

        Q.     Multiple Parties......................................................26

        R.     Prorations............................................................26

38.     ADDITIONAL PROVISIONS........................................................26

        A.     Option to Extend......................................................26

        B.     Letter of Credit......................................................29

1.      Delivery of Letter of Credit.................................................29

2.      Replacement of Letter of Credit..............................................29

3.      Landlord's Right to Draw on Letter of Credit.................................29

4.      LOC Security Deposit.........................................................29

5.      Restoration of Letter of Credit and LOC Security Deposit.....................29

        C.     Option to Purchase....................................................29
</TABLE>

Exhibits:
    Exhibit A...............................Site Plan, Property Description



                                      III
<PAGE>   6
                                      LEASE


THIS LEASE is made as of the 5th day of February, 1999, by and between Spieker
Properties, L.P., a California limited partnership (hereinafter called
"LANDLORD"), and Aviron, a Delaware corporation (hereinafter called "TENANT").

                                  1. PREMISES

    Landlord leases to Tenant and Tenant leases from Landlord, upon the terms
and conditions hereinafter set forth, those premises (the "PREMISES") outlined
in red on EXHIBIT A, described in the attached legal description and in the
Basic Lease Information. The Premises shall consist of the building (the
"BUILDING") described in the Basic Lease Information. The common areas shall
consist of the public areas surrounding the building which shall constitute the
landscaping, walkways, driveways and parking lot and Tenant shall have the
exclusive use of the common areas.

                      2. POSSESSION AND LEASE COMMENCEMENT

Term commencement date ("TERM COMMENCEMENT DATE") shall be February 5, 1999. If
for any reason Landlord cannot deliver possession of the Premises to Tenant on
the scheduled Term Commencement Date, Landlord shall not be subject to any
liability therefor, nor shall Landlord be in default hereunder nor shall such
failure affect the validity of this Lease, and Tenant agrees to accept
possession of the Premises at such time as Landlord is able to deliver the same,
which date shall then be deemed the Term Commencement Date. Tenant shall not be
liable for any Rent (defined below) for any period prior to the Term
Commencement Date. Tenant acknowledges that Tenant has inspected and accepts the
Premises in their present condition, broom clean, "as is," and as suitable for,
the Permitted Use (as defined below), and for Tenant's intended operations in
the Premises, subject to remediation required for Regulatory Approval (as
defined below). Subject to remediation required for Regulatory Approval, Tenant
agrees that the Premises and other improvements are in good and satisfactory
condition as of when possession was taken. Tenant further acknowledges that no
representations as to the condition or repair of the Premises nor promises to
alter, remodel or improve the Premises have been made by Landlord or any agents
of Landlord unless such are expressly set forth in this Lease. Upon Landlord's
request, Tenant shall promptly execute and return to Landlord a true and correct
"Start-Up Letter" in which Tenant shall agree, among other things, to acceptance
of the Premises, in accordance with the terms of this Lease, but Tenant's
failure or refusal to do so shall not negate Tenant's acceptance of the Premises
or affect determination of the Term Commencement Date. Tenant acknowledges that
Landlord is in the process of obtaining regulatory approvals required for the
closure or cessation of the operations of the prior tenant, Celtrix
Pharmaceuticals (the "Regulatory Approval"). As an accommodation to Tenant,
Landlord will deliver the Premises to Tenant prior to obtaining Regulatory
Approval upon the following terms and conditions: Tenant shall cooperate with
Landlord and Celtrix to allow Landlord and Celtrix to comply with all terms and
conditions of the Regulatory Approval imposed by Celtrix Pharmaceuticals,
Landlord, the City and County of Santa Clara and any and all agencies having
jurisdiction over such Regulatory Approval process, including, but not limited
to, the California Department of Health Services and shall cooperate with such
parties as reasonably requested. Nothing herein shall entitle Tenant to
terminate this Lease as a result of Landlord's failure to obtain Regulatory
Approval. Notwithstanding anything contained in this Lease to the contrary,
Landlord shall have no obligation to obtain regulatory approvals for the closure
or cessation of the operations of Comparative Biosciences, a proposed subtenant
of the Premises ("Comparative").

                                    3. TERM

    The term of this Lease (the "TERM") shall commence on the Term Commencement
Date and continue in full force and effect for the number of months specified as
the Length of Term in the Basic Lease Information or until this Lease is
terminated as otherwise provided herein. If the Term Commencement Date is a date
other than the first day of the calendar month, the Term shall be the number of
months of the Length of Term in addition to the remainder of the calendar month
following the Term Commencement Date.



<PAGE>   7

                                     4. USE

A. GENERAL. Tenant shall use the Premises for the permitted use specified in the
Basic Lease Information ("PERMITTED USE") and for no other use or purpose.
Tenant shall control Tenant's employees, agents, customers, visitors, invitees,
licensees, contractors, assignees and subtenants (collectively, "TENANT'S
PARTIES") in such a manner that Tenant and Tenant's Parties cumulatively do not
exceed the parking density specified in the Basic Lease Information (the
"PARKING DENSITY") at any time. So long as Tenant is occupying the Premises,
Tenant and Tenant's Parties shall have the exclusive right to use the parking
areas, driveways and other common areas of the Premises, subject to the terms of
this Lease and such rules and regulations as Landlord may from time to time
prescribe. Landlord reserves the right, without notice or liability to Tenant,
and without the same constituting an actual or constructive eviction, to alter
or modify the common areas from time to time, including the location and
configuration thereof, and the amenities and facilities which Landlord may
determine to provide from time to time; provided, however, in the event Landlord
alters or modifies the common areas, amenities and/or facilities, Landlord shall
use reasonable efforts to avoid materially interfering with Tenant's Permitted
Use of the Premises.

B. LIMITATIONS. Tenant shall not permit any odors, smoke, dust, gas, substances,
noise or vibrations to emanate from the Premises or from any portion of the
common areas as a result of Tenant's or any Tenant's Party's use thereof, nor
take any action which would constitute a nuisance or would disturb, obstruct or
endanger any other tenants or occupants of areas near the Premises, or interfere
with their use of their respective premises or common areas. Tenant shall not
use or allow the Premises to be used for any improper or unlawful purpose, nor
shall Tenant cause or maintain or permit any nuisance in, on or about the
Premises. Tenant shall not commit or suffer the commission of any waste in, on
or about the Premises. Tenant shall not allow any sale by auction upon the
Premises, or place any loads upon the floors, walls or ceilings which could
endanger the structure, or place any harmful substances in the drainage system
of the Premises. No waste, materials or refuse shall be dumped upon or permitted
to remain outside the Premises except in trash containers placed inside exterior
enclosures designated for that purpose.

C. COMPLIANCE WITH REGULATIONS. By entering the Premises, Tenant accepts the
Premises in the condition existing as of the date of such entry. Tenant shall at
its sole cost and expense strictly comply with all existing or future applicable
municipal, state and federal and other governmental statutes, rules,
requirements, regulations, laws and ordinances, including zoning ordinances and
regulations, and covenants, easements and restrictions of record governing and
relating to the use, occupancy or possession of the Premises, to Tenant's use of
the common areas, or to the use, storage, generation or disposal of Hazardous
Materials (hereinafter defined) (collectively "REGULATIONS"), provided, however,
that Tenant shall not be responsible in any way for obtaining the Regulatory
Approval. Notwithstanding the foregoing, except if such preexisting condition is
aggravated or exacerbated by the willful affirmative act of Tenant or Tenant's
Parties, Tenant shall not be liable for any physical condition of the Premises
that exists prior to the date of execution of this Lease; provided, however,
Tenant acknowledges and agrees that it will repair water damage in the floor of
the Building due to water seepage and replace the existing roof. Tenant shall at
its sole cost and expense obtain any and all licenses or permits necessary for
Tenant's use of the Premises. Tenant shall at its sole cost and expense promptly
comply with the requirements of any board of fire underwriters or other similar
body now or hereafter constituted. Tenant shall not do or permit anything to be
done in, on, under or about the Premises or bring or keep anything which will in
any way increase the rate of any insurance upon the Premises or upon any
contents therein or cause a cancellation of said insurance or otherwise
adversely affect said insurance in any manner. Tenant shall indemnify, defend
(by counsel reasonably acceptable to Landlord), protect and hold Landlord
harmless from and against any loss, cost, expense, damage, attorneys' fees or
liability arising out of the failure of Tenant to comply with any Regulation.
Tenant's obligations pursuant to the foregoing indemnity shall survive the
expiration or earlier termination of this Lease.

D. HAZARDOUS MATERIALS. As used in this Lease, "HAZARDOUS MATERIALS" shall
include, but not be limited to, hazardous, toxic and radioactive materials and
those substances defined as "hazardous substances," "hazardous materials,"
"hazardous wastes," "toxic substances," or other similar designations in any
Regulation.

        (1) Tenant shall not cause, or allow any of Tenant's Parties to cause,
        any Hazardous Materials to be handled, used, generated, stored, released
        or disposed of in, on, under or



                                       2
<PAGE>   8

        about the Premises or surrounding land or environment in violation of
        any Regulations. In the event Tenant elects to introduce any Hazardous
        Materials onto the Premises, Tenant shall file a Hazardous Materials
        Plan with the appropriate agency in compliance with any Regulation and
        upon such filing, Tenant shall provide notice and a copy of such filing
        to Landlord and Landlord's insurance administrator at the address set
        forth in the Basic Lease Information. Notwithstanding the foregoing,
        Tenant may handle, store, use and dispose of products containing small
        quantities of Hazardous Materials for "general office purposes" (such as
        toner for copiers) to the extent customary and necessary for the
        Permitted Use of the Premises; provided that Tenant shall always handle,
        store, use, and dispose of any such Hazardous Materials in a safe and
        lawful manner and never allow such Hazardous Materials to contaminate
        the Premises or surrounding land or environment. Tenant shall
        immediately notify Landlord in writing of any Hazardous Materials'
        contamination of any portion of the Premises of which Tenant becomes
        aware, whether or not caused by Tenant. Landlord shall have the right at
        all reasonable times to inspect the Premises and to conduct tests and
        investigations to determine whether Tenant is in compliance with the
        foregoing provisions, the costs of all such inspections, tests and
        investigations to be borne by Tenant if and only if Tenant is required
        to indemnify Landlord as hereinafter provided. Tenant shall indemnify,
        defend (by counsel reasonably acceptable to Landlord), protect and hold
        Landlord harmless from and against any and all claims, liabilities,
        losses, costs, loss of rents, liens, damages, injuries or expenses
        (including attorneys' and consultants' fees and court costs), demands,
        causes of action, or judgments directly or indirectly arising out of or
        related to the use, generation, storage, release, or disposal of
        Hazardous Materials by Tenant or any of Tenant's Parties in, on, under
        or about the Premises or surrounding land or environment, which
        indemnity shall include, without limitation, damages for personal or
        bodily injury, property damage, damage to the environment or natural
        resources occurring on or off the Premises, losses attributable to
        diminution in value or adverse effects on marketability, the cost of any
        investigation, monitoring, government oversight, repair, removal,
        remediation, restoration, abatement, and disposal, and the preparation
        of any closure or other required plans, whether such action is required
        or necessary prior to or following the expiration or earlier termination
        of this Lease. Neither the consent by Landlord to the use, generation,
        storage, release or disposal of Hazardous Materials nor the strict
        compliance by Tenant with all laws pertaining to Hazardous Materials
        shall excuse Tenant from Tenant's obligation of indemnification pursuant
        to this Paragraph 4.D. Landlord shall indemnify, defend (by counsel
        reasonably acceptable to Tenant), protect and hold Tenant harmless from
        and against any and all claims, liabilities, losses, costs, damages,
        injuries or expenses (including attorneys' and consultants' fees and
        court costs), demands, causes of action, or judgments arising out of any
        Hazardous Materials contamination existing prior to the date of this
        Lease, excluding, however, any preexisting Hazardous Materials
        contamination which is aggravated or exacerbated by a willful
        affirmative act of Tenant or Tenant's Parties, to the extent of such
        aggravation or exacerbation, in such case Tenant shall be obligated to
        indemnify Landlord pursuant to this Section 4.D to the extent of such
        aggravation or exacerbation, which indemnity shall include, without
        limitation, damages for personal or bodily injury, property damage, the
        cost of any investigation, monitoring, government oversight, repair,
        removal, remediation, restoration, abatement, and disposal, and the
        preparation of any closure or other required plans. Tenant's and
        Landlord's obligations pursuant to the foregoing indemnity shall survive
        the expiration or earlier termination of this Lease.

        (2) Notwithstanding the provisions of sub-paragraph (1) above, Tenant
        may handle, store, and use Hazardous Materials, limited to the types,
        amounts, and use identified in EXHIBIT B attached hereto and made a part
        hereof. Tenant hereby certifies to Landlord that the information
        provided by Tenant pursuant to this Paragraph and on such Hazardous
        Materials Exhibit is true, correct, and complete. Tenant covenants to
        comply with the additional use restrictions, if any, shown on the
        attached Hazardous Materials Exhibit. Without limiting Landlord's prior
        approval rights hereunder, Tenant shall update such Hazardous Materials
        Exhibit prior to bringing any new Hazardous Materials or to the Premises
        or prior to substantially increasing the listed quantities. Tenant's
        business and operations, and more especially its handling, storage, use
        and disposal of Hazardous Materials in, on, under or about the Premises
        shall at all times comply with all Regulations pertaining to Hazardous
        Materials. Tenant shall secure and abide by all permits necessary for
        Tenant's operations at the Premises. Tenant shall give or post all



                                       3
<PAGE>   9

        notices required by all applicable Regulations pertaining to Hazardous
        Materials. Tenant shall immediately notify Landlord in writing of any
        Hazardous Materials' contamination of any portion of the Premises of
        which Tenant becomes aware, whether or not caused by Tenant. If Tenant
        shall at any time fail to comply with this Paragraph, Tenant shall
        immediately notify Landlord in writing of such noncompliance.

        (3) Any increase in the premiums for necessary insurance on the Property
        which arises from Tenant's use, placement and/or storage of Hazardous
        Materials at or on the Premises shall be solely at Tenant's expense.
        Tenant shall procure and maintain at its sole expense such additional
        insurance as may be necessary to comply with any requirement of any
        Federal, State or local governmental agency with jurisdiction over the
        Premises.

                            5. RULES AND REGULATIONS

    Tenant shall faithfully observe and comply with any rules and regulations
and any modifications thereto which Landlord may from time to time reasonably
prescribe in writing for the purpose of maintaining the proper care,
cleanliness, safety, traffic flow and general order of the Premises, provided
that such rules and regulations shall not materially interfere with Tenant's
Permitted Use and in the event of any conflict between the rules and regulations
and this Lease, the terms of the Lease shall control. Tenant shall cause
Tenant's Parties to comply with such rules and regulations.

                                    6. RENT

A. BASE RENT. Tenant shall pay to Landlord and Landlord shall receive, without
notice or demand throughout the Term, Base Rent as specified in the Basic Lease
Information, payable in monthly installments in advance on or before the first
day of each calendar month, in lawful money of the United States, without
deduction or offset whatsoever except for rent abatement specifically provided
for in this Lease,, at the Remittance Address specified in the Basic Lease
Information or to such other place as Landlord may from time to time designate
in writing. Base Rent for the first full month of the Term shall be paid by
Tenant upon Tenant's execution of this Lease. If the obligation for payment of
Base Rent commences on a day other than the first day of a month, then Base Rent
shall be prorated and the prorated installment shall be paid on the first day of
the calendar month next succeeding the Term Commencement Date. The Base Rent
payable by Tenant hereunder is subject to adjustment as provided elsewhere in
this Lease, as applicable. As used herein, the term "BASE RENT" shall mean the
Base Rent specified in the Basic Lease Information as it may be so adjusted from
time to time.

B. ADDITIONAL RENT. All monies other than Base Rent required to be paid by
Tenant hereunder, including, but not limited to, Tenant's Proportionate Share of
Operating Expenses, as specified in Paragraph 7 of this Lease, charges to be
paid by Tenant under Paragraph 15, the interest and late charge described in
Paragraphs 26.C. and D., and any monies spent by Landlord pursuant to Paragraph
30 or any other sums that become due and owing to Landlord pursuant to the terms
and conditions of this Lease, shall be considered additional rent ("ADDITIONAL
RENT"). "RENT" shall mean Base Rent and Additional Rent.

                             7. OPERATING EXPENSES

A. OPERATING EXPENSES. In addition to the Base Rent required to be paid
hereunder, Tenant shall pay as Additional Rent, Tenant's Proportionate Share of
the Premises, as defined in the Basic Lease Information, of Operating Expenses
(defined below) in the manner set forth below. Landlord's determination of
Tenant's Proportionate Share of the Premises shall be conclusive so long as it
is reasonably and consistently applied. "OPERATING EXPENSES" shall mean all
expenses and costs of every kind and nature which Landlord shall pay or become
obligated to pay, because of or in connection with the ownership, management,
maintenance, repair, preservation, replacement and operation of the Premises and
its supporting facilities and such additional facilities now and in subsequent
years as may be determined by Landlord to be necessary or desirable to the
Premises (as determined in a reasonable manner) other than those expenses and
costs which are specifically attributable to Tenant or which are expressly made
the financial responsibility of Landlord pursuant to this Lease. Operating
Expenses shall include, but are not limited to, the following:



                                       4
<PAGE>   10

        (1) TAXES. All real property taxes and assessments, possessory interest
        taxes, sales taxes, personal property taxes, business or license taxes
        or fees, gross receipts taxes, service payments in lieu of such taxes or
        fees, annual or periodic license or use fees, excises, transit charges,
        and other impositions, general and special, ordinary and extraordinary,
        unforeseen as well as foreseen, of any kind (including fees "in-lieu" of
        any such tax or assessment) which are now or hereafter assessed, levied,
        charged, confirmed, or imposed by any public authority upon the
        Premises, its operations or the Rent (or any portion or component
        thereof), or any tax, assessment or fee imposed in substitution,
        partially or totally, of any of the above. Operating Expenses shall also
        include any taxes, assessments, reassessments, or other fees or
        impositions with respect to the development, leasing, management,
        maintenance, alteration, repair, use or occupancy by Tenant of the
        Premises or any portion thereof, including, without limitation, by or
        for Tenant, and all increases therein or reassessments thereof whether
        the increases or reassessments result from increased rate and/or
        valuation (whether upon a transfer of the Premises or any portion
        thereof or any interest therein or for any other reason). Operating
        Expenses shall not include inheritance or estate taxes imposed upon or
        assessed against the interest of any person in the Premises, or taxes
        computed upon the basis of the net income of any owners of any interest
        in the Premises. If it shall not be lawful for Tenant to reimburse
        Landlord for all or any part of such taxes, the monthly rental payable
        to Landlord under this Lease shall be revised to net Landlord the same
        net rental after imposition of any such taxes by Landlord as would have
        been payable to Landlord prior to the payment of any such taxes.

        (2) INSURANCE. All insurance premiums and costs, including, but not
        limited to, any deductible amounts, premiums and other costs of
        insurance paid by Landlord, including for the insurance coverage set
        forth in Paragraph 8.A. herein.

        (3) COMMON AREA MAINTENANCE.

                (a) Repairs, replacements, and general maintenance of and for
                the Premises and public and common areas and facilities of and
                comprising the Premises, including, but not limited to, the
                landscaped areas, parking and service areas, driveways,
                sidewalks, truck staging areas, and any other items or areas
                which affect the operation or appearance of the Premises, which
                determination shall be at Landlord's reasonable discretion,
                except for: those items expressly made the financial
                responsibility of Landlord pursuant to Paragraph 10 hereof and
                those items to the extent paid for by the proceeds of insurance.

                (b) Repairs, replacements, and general maintenance shall include
                the cost of any capital improvements made to or capital assets
                acquired for the Premises that in Landlord's discretion may
                reduce any other Operating Expenses, including present or future
                repair work, are reasonably necessary for the health and safety
                of the occupants of the Premises, or are required to comply with
                any Regulation, such costs or allocable portions thereof to be
                amortized over such reasonable period as Landlord shall
                determine, which shall be substantially in compliance with
                generally accepted accounting principles, together with interest
                on the unamortized balance at the publicly announced "prime
                rate" charged by Wells Fargo Bank, N.A. (San Francisco) or its
                successor at the time such improvements or capital assets are
                constructed or acquired, plus two (2) percentage points, or in
                the absence of such prime rate, then at the U.S. Treasury
                six-month market note (or bond, if so designated) rate as
                published by any national financial publication selected by
                Landlord, plus four (4) percentage points, but in no event more
                than the maximum rate permitted by law, plus reasonable
                financing charges.

                (c) Payment under or for any easement, license, permit,
                operating agreement, declaration, restrictive covenant or
                instrument relating to the Premises.

                (d) All expenses and rental related to services and costs of
                supplies, materials and equipment used in operating, managing
                and maintaining the Premises, the equipment therein and the
                adjacent sidewalks, driveways, parking and service areas,
                including, without limitation, expenses related to service
                agreements regarding security, fire and other alarm systems,
                janitorial services to the extent not addressed in Paragraph 11
                hereof, window cleaning, elevator maintenance, Premises exterior
                maintenance, landscaping and expenses related to the




                                       5
<PAGE>   11

                administration, management and operation of the Premises,
                including without limitation salaries, wages and benefits and
                management office rent.

                (e) The cost of supplying any services and utilities which
                benefit all or a portion of the Premises to the extent not
                addressed in Paragraph 15 hereof.

                (f) Legal expenses and the cost of audits by certified public
                accountants.

                (g) A management fee equal to two and one-half percent (2 1/2%)
                of the Base Rent.

Operating Expenses shall not include except to the extent specifically provided
in Paragraph 7(a)(1)-(3) above,

                (a) The initial construction cost of the Premises;

                (b) Debt service on any mortgage or deed of trust recorded with
                respect to the Premises;

                (c) Costs of capital improvements, replacements or equipment and
                any amortization expenses thereon;

                (d) Costs incurred by Landlord for the repair of damage to the
                Premises, to the extent that Landlord is reimbursed by insurance
                proceeds;

                (e) Marketing costs, including leasing commissions, attorneys'
                fees in connection with disputes with tenants (including Tenant)
                or with the negotiation and preparation or enforcement of
                letters, deal memos, letters of intent, leases, subleases and/or
                assignments, space planning costs, and other costs and expenses
                incurred in connection with lease, sublease and/or assignment
                negotiations and transactions with prospective tenants or other
                occupants of the Building or the Premises;

                (f) Costs incurred by Landlord due to the violation by Landlord
                of the terms and conditions of any lease of space in the
                Building or the Premises;

                (g) Interest, principal, points and fees on debt or amortization
                payments on any mortgage or deed of trust or any other debt
                instrument encumbering the Premises or the land on which the
                Premises is situated;

                (g) Advertising and promotional expenditures;

                (i) Costs incurred in connection with upgrading the Premises to
                comply with disability, life, fire and safety codes in effect
                prior to the issuance of the temporary certificate of occupancy
                for the Building;

                (j) Interest, fines or penalties incurred as a result of a
                violation of law by Landlord or Landlord's failure to make
                payments when due unless such failure is commercially reasonable
                under the circumstances;

                (k) Costs for acquisition of sculpture, paintings or other
                objects of art in common areas;

                (l) The depreciation of the real property structures in the
                Premises;

                (m) Landlord's general corporate overhead and general
                administrative expenses not related to the operation of the
                Premises; and

                (n) Any bad debt loss, rent loss or reserves for bad debts or
                rent loss, or reserves for equipment or capital replacement.

                (o) Costs incurred by Landlord for remediation of Hazardous
                Materials existing on the Premises prior to the date of this
                Lease.

The above enumeration of services and facilities shall not be deemed to impose
an obligation on Landlord to make available or provide such services or
facilities except to the extent if any that



                                       6
<PAGE>   12
Landlord has specifically agreed elsewhere in this Lease to make the same
available or provide the same. Without limiting the generality of the foregoing,
Tenant acknowledges and agrees that it shall be responsible for providing
adequate security for its use of the Premises and that Landlord shall have no
obligation or liability with respect thereto, except to the extent if any that
Landlord has specifically agreed elsewhere in this Lease to provide the same.

B. PAYMENT OF ESTIMATED OPERATING EXPENSES. "ESTIMATED OPERATING EXPENSES" for
any particular year shall mean Landlord's estimate of the Operating Expenses for
such fiscal year made with respect to such fiscal year as hereinafter provided.
Landlord shall have the right from time to time to revise its fiscal year and
interim accounting periods so long as the periods as so revised are reconciled
with prior periods in a reasonable manner. During the last month of each fiscal
year during the Term, or as soon thereafter as practicable, Landlord shall give
Tenant written notice of the Estimated Operating Expenses for the ensuing fiscal
year. Tenant shall pay Tenant's Proportionate Share of the Estimated Operating
Expenses with installments of Base Rent for the fiscal year to which the
Estimated Operating Expenses applies in monthly installments on the first day of
each calendar month during such year, in advance. Such payment shall be
construed to be Additional Rent for all purposes hereunder. If at any time
during the course of the fiscal year, Landlord determines that Operating
Expenses are projected to vary from the then Estimated Operating Expenses by
more than five percent (5%), Landlord may, by written notice to Tenant, revise
the Estimated Operating Expenses for the balance of such fiscal year, and
Tenant's monthly installments for the remainder of such year shall be adjusted
so that by the end of such fiscal year Tenant has paid to Landlord Tenant's
Proportionate Share of the revised Estimated Operating Expenses for such year,
such revised installment amounts to be Additional Rent for all purposes
hereunder.

C. COMPUTATION OF OPERATING EXPENSE ADJUSTMENT. "OPERATING EXPENSE ADJUSTMENT"
shall mean the difference between Estimated Operating Expenses and actual
Operating Expenses for any fiscal year determined as hereinafter provided.
Within ninety (90) days after the end of each fiscal year, or as soon thereafter
as practicable, Landlord shall deliver to Tenant a statement of actual Operating
Expenses for the fiscal year just ended, accompanied by a computation of
Operating Expense Adjustment. If such statement shows that Tenant's payment
based upon Estimated Operating Expenses is less than Tenant's Proportionate
Share of Operating Expenses, then Tenant shall pay to Landlord the difference
within twenty (20) days after receipt of such statement, such payment to
constitute Additional Rent for all purposes hereunder. If such statement shows
that Tenant's payments of Estimated Operating Expenses exceed Tenant's
Proportionate Share of Operating Expenses, then (provided that Tenant is not in
default beyond any applicable cure period under this Lease) Landlord shall pay
to Tenant the difference within twenty (20) days after delivery of such
statement to Tenant. If this Lease has been terminated or the Term hereof has
expired prior to the date of such statement, then the Operating Expense
Adjustment shall be paid by the appropriate party within twenty (20) days after
the date of delivery of the statement. Should this Lease commence or terminate
at any time other than the first day of the fiscal year, Tenant's Proportionate
Share of the Operating Expense Adjustment shall be prorated based on a month of
thirty (30) days and the number of calendar months during such fiscal year that
this Lease is in effect. Notwithstanding anything to the contrary contained in
Paragraph 7.A or 7.B, Landlord's failure to provide any notices or statements
within the time periods specified in those paragraphs shall in no way excuse
Tenant from its obligation to pay Tenant's Proportionate Share of Operating
Expenses.

D. NET LEASE. This shall be a triple net Lease and Base Rent shall be paid to
Landlord absolutely net of all costs and expenses, except as specifically
provided to the contrary in this Lease. The provisions for payment of Operating
Expenses and the Operating Expense Adjustment are intended to pass on to Tenant
and reimburse Landlord for all costs and expenses of the nature described in
Paragraph 7.A. incurred in connection with the ownership, management,
maintenance, repair, preservation, replacement and operation of the Premises and
its supporting facilities and such additional facilities now and in subsequent
years as may be determined by Landlord to be necessary or desirable to the
Premises.

E. TENANT AUDIT. If Tenant shall dispute the amount set forth in any statement
provided by Landlord under Paragraph 7.B. or 7.C. above, Tenant shall have the
right, not later than sixty (60) days following receipt of such statement and
upon the condition that Tenant shall first deposit with Landlord the full amount
in dispute, to cause Landlord's books and records with respect to Operating
Expenses for such fiscal year to be audited by certified public accountants
selected by Tenant and subject to Landlord's reasonable right of approval. The
Operating



                                       7
<PAGE>   13

Expense Adjustment shall be appropriately adjusted on the basis of such audit.
If such audit discloses a liability for a refund in excess of five percent (5%)
of Tenant's Proportionate Share of the Operating Expenses previously reported,
the cost of such audit shall be borne by Landlord; otherwise the cost of such
audit shall be paid by Tenant. If Tenant shall not request an audit in
accordance with the provisions of this Paragraph 7.E. within twenty (20) days
after receipt of Landlord's statement provided pursuant to Paragraph 7.B. or
7.C., such statement shall be final and binding for all purposes hereof.

                        8. INSURANCE AND INDEMNIFICATION

A. LANDLORD'S INSURANCE. All insurance maintained by Landlord shall be for the
sole benefit of Landlord and under Landlord's sole control.

        (1) PROPERTY INSURANCE. Landlord agrees to maintain property insurance
        insuring the Premises (excluding, however, the Initial Tenant
        Improvements and any Alterations owned by Tenant, which however, shall
        be insured by Tenant) ("LANDLORD'S PROPERTY INSURANCE") against damage
        or destruction due to risk including fire, vandalism, and malicious
        mischief in an amount not less than the replacement cost thereof, in the
        form and with deductibles and endorsements as selected by Landlord. At
        its election, Landlord may instead (but shall have no obligation to)
        obtain "All Risk" coverage, and may also obtain earthquake, pollution,
        and/or flood insurance in amounts selected by Landlord.

        (2) OPTIONAL INSURANCE. Landlord shall carry insurance against loss of
        rent, in an amount equal to the amount of Base Rent and Additional Rent
        that Landlord could be required to abate to Tenant in the event of
        condemnation or casualty damage for a period of twelve (12) months;
        provided, however, Landlord shall have the right, in its sole and
        absolute discretion, to terminate insurance coverage against loss of
        rent by providing Tenant fifteen (15) days written notice and upon
        receipt of such notice by Tenant, Tenant shall immediately maintain such
        insurance. Landlord may also (but shall have no obligation to) carry
        such other insurance as Landlord may deem prudent or advisable,
        including, without limitation, liability insurance in such amounts and
        on such terms as Landlord shall determine. Landlord shall not be
        obligated to insure, and shall have no responsibility whatsoever for any
        damage to, any furniture, machinery, goods, inventory or supplies, or
        other personal property or fixtures which Tenant may keep or maintain in
        the Premises, or any leasehold improvements, additions or alterations
        within the Premises.

B. TENANT'S INSURANCE.

        (1) PROPERTY INSURANCE. Tenant agrees to maintain property insurance
        insuring the Initial Tenant Improvements and any Alterations owned by
        Tenant against damage or destruction due to risk including fire,
        vandalism, and malicious mischief in an amount not less than the
        replacement cost thereof ("TENANT'S PROPERTY INSURANCE"). Tenant shall
        procure at Tenant's sole cost and expense and keep in effect from the
        date of this Lease and at all times until the end of the Term, insurance
        on all personal property and fixtures of Tenant and all improvements,
        additions or alterations made by or for Tenant to the Premises on an
        "All Risk" basis, insuring such property for the full replacement value
        of such property.

        (2) LIABILITY INSURANCE. Tenant shall procure at Tenant's sole cost and
        expense and keep in effect from the date of this Lease and at all times
        until the end of the Term Commercial General Liability insurance
        covering bodily injury and property damage liability occurring in or
        about the Premises or arising out of the use and occupancy of the
        Premises, and any part of either, and any areas adjacent thereto, and
        the business operated by Tenant or by any other occupant of the
        Premises. Such insurance shall include contractual liability coverage
        insuring all of Tenant's indemnity obligations under this Lease. Such
        coverage shall have a minimum combined single limit of liability of at
        least Two Million Dollars ($2,000,000.00), and a minimum general
        aggregate limit of Three Million Dollars ($3,000,000.00), with an
        "Additional Insured - Managers or Lessors of Premises Endorsement" and
        the "Amendment of the Pollution Exclusion Endorsement." All such
        policies shall be written to apply to all bodily injury (including
        death), property damage or loss, personal and advertising injury and
        other covered loss, however occasioned, occurring during the policy
        term, shall be endorsed to add Landlord and any party holding an
        interest to which this Lease may be subordinated as an additional




                                       8
<PAGE>   14

        insured, and shall provide that such coverage shall be "PRIMARY" and
        non-contributing with any insurance maintained by Landlord, which shall
        be excess insurance only. Such coverage shall also contain endorsements
        including employees as additional insureds if not covered by Tenant's
        Commercial General Liability Insurance. All such insurance shall provide
        for the severability of interests of insureds; and shall be written on
        an "OCCURRENCE" basis, which shall afford coverage for all claims based
        on acts, omissions, injury and damage, which occurred or arose (or the
        onset of which occurred or arose) in whole or in part during the policy
        period, provided, however, that the insurance may be written on a
        "CLAIMS MADE" basis if a) such claims-made policy has a retroactive date
        that precedes the commencement of this Lease, and b) Tenant purchases an
        extended reporting period of at least one year if, within the term of
        the Lease or three (3) years thereafter, such claims-made policy is
        canceled or non-renewed and not replaced with a policy having the same
        or an earlier retroactive date.

        (3) WORKERS' COMPENSATION AND EMPLOYERS' LIABILITY INSURANCE. Tenant
        shall carry Workers' Compensation Insurance as required by any
        Regulation, throughout the Term at Tenant's sole cost and expense.
        Tenant shall also carry Employers' Liability Insurance in amounts not
        less than One Million Dollars ($1,000,000) each accident for bodily
        injury by accident; One Million Dollars ($1,000,000) policy limit for
        bodily injury by disease; and One Million Dollars ($1,000,000) each
        employee for bodily injury by disease, throughout the Term at Tenant's
        sole cost and expense.

        (4) COMMERCIAL AUTO LIABILITY INSURANCE. Tenant shall procure at
        Tenant's sole cost and expense and keep in effect from the date of this
        Lease and at all times until the end of the Term commercial auto
        liability insurance with a combined limit of not less than One Million
        Dollars ($1,000,000) for bodily injury and property damage for each
        accident. Such insurance shall cover liability relating to any auto
        (including owned, hired and non-owned autos).

        (5) GENERAL INSURANCE REQUIREMENTS. All coverages described in this
        Paragraph 8.B. shall be endorsed to (i) provide Landlord with thirty
        (30) days' notice of cancellation or change in terms; and (ii) waive all
        rights of subrogation by the insurance carrier against Landlord. If at
        any time during the Term the amount or coverage of insurance which
        Tenant is required to carry under this Paragraph 8.B. is, in Landlord's
        reasonable judgment, materially less than the amount or type of
        insurance coverage typically carried by owners or tenants of properties
        located in the general area in which the Premises are located which are
        similar to and operated for similar purposes as the Premises or if
        Tenant's use of the Premises should change with or without Landlord's
        consent, Landlord shall have the right to require Tenant to increase the
        amount or change the types of insurance coverage required under this
        Paragraph 8.B. All insurance policies required to be carried by Tenant
        under this Lease shall be written by companies rated A IX or better in
        "Best's Insurance Guide" and authorized to do business in the State of
        California. In any event deductible amounts under all insurance policies
        required to be carried by Tenant under this Lease shall not exceed Five
        Thousand Dollars ($5,000.00) per occurrence. Tenant shall deliver to
        Landlord on or before the Term Commencement Date, and thereafter at
        least thirty (30) days before the expiration dates of the expired
        policies, certified copies of Tenant's insurance policies, or a
        certificate evidencing the same issued by the insurer thereunder; and,
        if Tenant shall fail to procure such insurance, or to deliver such
        policies or certificates, Landlord may, at Landlord's option and in
        addition to Landlord's other remedies in the event of a default by
        Tenant hereunder, procure the same for the account of Tenant, and the
        cost thereof shall be paid to Landlord as Additional Rent.

C. INDEMNIFICATION. Tenant shall indemnify, defend by counsel reasonably
acceptable to Landlord, protect and hold Landlord harmless from and against any
and all claims, liabilities, losses, costs, loss of rents, liens, damages,
injuries or expenses, including reasonable attorneys' and consultants' fees and
court costs, demands, causes of action, or judgments, directly or indirectly
arising out of or related to: (1) claims of injury to or death of persons or
damage to property occurring or resulting directly or indirectly from the use or
occupancy of the Premises by Tenant or Tenant's Parties, or from activities or
failures to act of Tenant or Tenant's Parties; (2) claims arising from work or
labor performed, or for materials or supplies furnished to or at the request of
Tenant in connection with performance of any work done for the account of Tenant
within the Premises; (3) claims arising from any breach or default on the part
of Tenant



                                       9
<PAGE>   15
in the performance of any covenant contained in this Lease; and (4) claims
arising from the negligence or intentional acts or omissions of Tenant or
Tenant's Parties. The foregoing indemnity by Tenant shall not be applicable to
claims to the extent arising from the gross negligence or willful misconduct of
Landlord. Landlord shall not be liable to Tenant and Tenant hereby waives all
claims against Landlord for any injury or damage to any person or property in or
about the Premises by or from any cause whatsoever (other than Landlord's sole
and active negligence, willful misconduct or Landlord's breach of this Lease)
and, without limiting the generality of the foregoing, whether caused by water
leakage of any character from the roof, walls, basement or other portion of the
Premises, or caused by gas, fire, oil or electricity in, on or about the
Premises. The provisions of this Paragraph shall survive the expiration or
earlier termination of this Lease.

                            9. WAIVER OF SUBROGATION

    To the extent permitted by law and without affecting the coverage provided
by insurance to be maintained hereunder or any other rights or remedies,
Landlord and Tenant each waive any right to recover against the other for: (a)
damages for injury to or death of persons; (b) damages to property, including
personal property; (c) damages to the Premises or any part thereof; and (d)
claims arising by reason of the foregoing due to hazards covered by insurance
maintained or required to be maintained pursuant to this Lease to the extent of
proceeds recovered therefrom, or proceeds which would have been recoverable
therefrom in the case of the failure of any party to maintain any insurance
coverage required to be maintained by such party pursuant to this Lease. This
provision is intended to waive fully, any rights and/or claims arising by reason
of the foregoing, but only to the extent that any of the foregoing damages
and/or claims referred to above are covered or would be covered, and only to the
extent of such coverage, by insurance actually carried or required to be
maintained pursuant to this Lease by either Landlord or Tenant. This provision
is also intended to waive fully, and for the benefit of each party, any rights
and/or claims which might give rise to a right of subrogation on any insurance
carrier. Subject to all qualifications of this Paragraph 9, Landlord waives its
rights as specified in this Paragraph 9 with respect to any subtenant that it
has approved pursuant to Paragraph 21 but only in exchange for the written
waiver of such rights to be given by such subtenant to Landlord upon such
subtenant taking possession of the Premises or a portion thereof. Each party
shall cause each insurance policy obtained by it to provide that the insurance
company waives all right of recovery by way of subrogation against either party
in connection with any damage covered by any policy.

                     10. LANDLORD'S REPAIRS AND MAINTENANCE

    Landlord shall at Landlord's expense maintain in good repair, reasonable
wear and tear excepted, the structural soundness of the roof, foundations, and
exterior walls of the Premises. The term "exterior walls" as used herein shall
not include windows, glass or plate glass, doors, dock bumpers or dock plates,
special store fronts or office entries. Landlord shall maintain in good repair,
reasonable wear and tear excepted, the common areas and the costs of such
maintenance shall constitute an Operating Expense pursuant to Paragraph 7 above.
Any damage caused by or repairs necessitated by any negligence or act of Tenant
or Tenant's Parties may be repaired by Landlord at Landlord's option and
Tenant's expense. Tenant shall immediately give Landlord written notice of any
defect or need of repairs in such components of the Premises for which Landlord
is responsible, after which Landlord shall have a reasonable opportunity and the
right to enter the Premises at all reasonable times to repair same. Landlord's
liability with respect to any defects, repairs, or maintenance for which
Landlord is responsible under any of the provisions of this Lease shall be
limited to the cost of such repairs or maintenance, and there shall be no
abatement of rent and no liability of Landlord by reason of any injury to or
interference with Tenant's business arising from the making of repairs,
alterations or improvements in or to any portion of the Premises or to fixtures,
appurtenances or equipment in the Premises, except as provided in Paragraph 24.
By taking possession of the Premises, Tenant accepts them "as is," as being in
good order, condition and repair and the condition in which Landlord is
obligated to deliver them and suitable for the Permitted Use and Tenant's
intended operations in the Premises, whether or not any notice of acceptance is
given.

                      11. TENANT'S REPAIRS AND MAINTENANCE

    Tenant shall at all times during the Term at Tenant's expense maintain all
parts of the Premises (except for those parts for which Landlord is responsible
under Paragraph 10 above) in a good, clean and secure condition and promptly
make all necessary repairs and replacements, as reasonably determined by
Landlord, including but not limited to, all windows, glass, doors,



                                       10
<PAGE>   16
walls, including demising walls, and wall finishes, floors and floor covering,
the roof and roof membrane, heating, ventilating and air conditioning systems,
ceiling insulation, truck doors, hardware, dock bumpers, dock plates and
levelers, plumbing work and fixtures, downspouts, entries, skylights, smoke
hatches, roof vents, electrical, mechanical, lighting or other systems, fire
sprinklers and fire sprinkler systems, mechanical rooms, alarm systems, pest
extermination, sanitary and storm sewer lines, utility services, telephone
equipment and wiring service, lighting, and any other items or areas which
affect the operation of appearance of the Premises, with materials and
workmanship of the same character, kind and quality as the original. Tenant
shall at Tenant's expense also perform regular removal of trash and debris. If
Tenant uses rail and if required by the railroad company, Tenant agrees to sign
a joint maintenance agreement governing the use of the rail spur, if any. Tenant
shall, at Tenant's own expense, enter into a regularly scheduled preventative
maintenance/service contract with a reputable, licensed maintenance contractor
for servicing all hot water, heating and air conditioning systems and equipment
within or serving the Premises. The service contract must include all services
suggested by the equipment manufacturer within the operation/maintenance manual
and must become effective and a copy thereof delivered to Landlord within thirty
(30) days after the Term Commencement Date. If Tenant is in default (after
notice and expiration of applicable cure period, if any), Landlord may, upon
notice to Tenant, enter into such a service contract on behalf of Tenant or
perform the work and in either case charge Tenant the cost thereof along with a
reasonable amount for Landlord's overhead. Notwithstanding anything to the
contrary contained herein, Tenant shall, at its expense, promptly repair any
damage to the Premises resulting from or caused by any negligence or act of
Tenant or Tenant's Parties. Nothing herein shall expressly or by implication
render Tenant Landlord's agent or contractor to effect any repairs or
maintenance required of Tenant under this Paragraph 11, as to all of which
Tenant shall be solely responsible.

                                12. ALTERATIONS

A. Tenant shall not make, or allow to be made, any alterations, physical
additions, improvements or partitions, including without limitation the
attachment of any fixtures or equipment, in, about or to the Premises
("ALTERATIONS") without obtaining the prior written consent of Landlord, which
consent shall not be unreasonably withheld or delayed with respect to proposed
Alterations which: (a) comply with all applicable Regulations (including,
without limitation, the Americans With Disabilities Act) and (b) are, in
Landlord's opinion, compatible with the Premises and its mechanical, plumbing,
electrical, and heating/ventilation/air conditioning systems. Specifically, but
without limiting the generality of the foregoing, Landlord shall have the right
of written consent for all plans and specifications for the proposed
Alterations, construction means and methods, all appropriate permits and
licenses, any contractor or subcontractor to be employed on the work of
Alterations, and the time for performance of such work, and may impose rules and
regulations for contractors and subcontractors performing such work. Tenant
shall also supply to Landlord any documents and information reasonably requested
by Landlord in connection with Landlord's consideration of a request for
approval hereunder. Tenant shall cause all Alterations to be accomplished in a
good and workmanlike manner, and to comply with all applicable Regulations and
Paragraph 27 hereof. Tenant shall at Tenant's sole expense, perform any
additional work required under applicable Regulations (including, without
limitation, the Americans With Disabilities Act) due to the Alterations
hereunder. No review or consent by Landlord of or to any proposed Alteration or
additional work shall constitute a waiver of Tenant's obligations under this
Paragraph 12. Tenant shall reimburse Landlord for all costs which Landlord may
incur in connection with granting approval to Tenant for any such Alterations,
including any costs or expenses which Landlord may incur in electing to have
outside architects and engineers review said plans and specifications, provided
that in no event shall Tenant's reimbursement obligation exceed Five Hundred
Dollars ($500) per request for expenses incurred by Landlord in connection with
Landlord's consent to an Alteration. Except as provided in Section 24 to the
contrary, all such Alterations shall remain the property of Tenant, until the
expiration or earlier termination of this Lease, at which time they shall be and
become the property of Landlord; provided, however, that concurrently with
Tenant's written request for Landlord's consent to any Alteration pursuant to
this Paragraph 12, Tenant may request from Landlord a written statement as to
whether Landlord will require Tenant to remove such Alteration at the expiration
or earlier termination of this Lease. Landlord may, at Landlord's option,
require that Tenant, at Tenant's expense, remove any or all Alterations made by
Tenant and restore the Premises by the expiration or earlier termination of this
Lease, to their condition existing prior to the construction of any such
Alterations. All such removals and restoration shall be accomplished in a
first-class and good and workmanlike manner so as not to cause any damage to the
Premises whatsoever. If Tenant fails to remove



                                       11
<PAGE>   17

such Alterations or Tenant's trade fixtures or furniture or other personal
property, Landlord may keep and use them or remove any of them and cause them to
be stored or sold in accordance with applicable law, at Tenant's sole expense.
If Landlord fails to respond to Tenant's written request as to whether the
Alteration must be removed at the expiration or earlier termination of the Lease
within fifteen (15) days or Tenant fails to request a written statement from
Landlord, Tenant shall be obligated to remove the Alteration upon the expiration
of earlier termination of this Lease. In addition to and wholly apart from
Tenant's obligation to pay Tenant's Proportionate Share of Operating Expenses,
Tenant shall be responsible for and shall pay prior to delinquency any taxes or
governmental service fees, possessory interest taxes, fees or charges in lieu of
any such taxes, capital levies, or other charges imposed upon, levied with
respect to or assessed against its fixtures or personal property, on the value
of Alterations within the Premises, and on Tenant's interest pursuant to this
Lease, or any increase in any of the foregoing based on such Alterations. To the
extent that any such taxes are not separately assessed or billed to Tenant,
Tenant shall pay the amount thereof as invoiced to Tenant by Landlord.
Notwithstanding the foregoing, Tenant shall have the right, without consent of,
but upon at least ten (10) business days' prior written notice (as provided
under Paragraph 12.B below) to, Landlord, to make non-structural, Alterations
within the interior of the Premises (and which are not visible from the outside
of the Premises), which do not impair the value of the Premises, and which cost,
in the aggregate, less than Fifty Thousand Dollars ($50,000.00) in any twelve
(12) month period during the Term of this Lease, provided that such Alterations
shall nevertheless be subject to all of the remaining requirements of this
Paragraph 12, including without limitation, subparagraphs (a) and (b) above and
the requirement that Tenant seek a written determination from Landlord as to
whether such Alteration must be removed at the expiration or earlier termination
of the Lease, other than the requirement of Landlord's prior consent. In
addition, all Alterations shall be performed by duly licensed contractors or
subcontractors reasonably acceptable to Landlord, proof of insurance shall be
submitted to Landlord as required under Paragraph 8.B above, and Landlord
reserves the right to impose reasonable rules and regulations for contractors
and subcontractors. Tenant shall, if requested by Landlord, promptly furnish
Landlord with complete as-built plans and specifications for any Alterations
performed by Tenant to the Premises, at Tenant's sole cost and expense. Tenant
may finance Alterations and encumber them and its leasehold interest hereunder
with a first priority security interest in the leasehold interest, including,
but not limited to, the Alterations constructed thereon, so long as any
financing or encumbering by Tenant of its Alterations, including, without
limitation, Tenant's Improvements shall be subject to the terms and conditions
of this Lease and the rights of any mortgagee of Landlord, Tenant's lender shall
have executed Landlord's Disclaimer and Consent substantially in the form of
EXHIBIT F attached hereto and made a part hereof, and at the expiration or
earlier termination of this Lease any Alterations remaining on the Premises are
free and clear of any liens. Landlord and Tenant shall reasonably cooperate with
the other party's lender to effectuate such financing at no cost to the other
party.

B. In compliance with Paragraph 27 hereof, at least ten (10) business days
before beginning construction of any Alteration, Tenant shall give Landlord
written notice of the expected commencement date of that construction to permit
Landlord to post and record a notice of non-responsibility. Upon substantial
completion of construction, if the law so provides, Tenant shall cause a timely
notice of completion to be recorded in the Santa Clara County Recorder's office.

C. Notwithstanding anything contained in Sections 12.A and B to the contrary,
Tenant shall construct those certain tenant improvements (the "INITIAL TENANT
IMPROVEMENTS") described on and in accordance with EXHIBIT C attached hereto and
made a part hereof. Except for the Additional Space which shall be removed upon
the expiration or earlier termination of this Lease and in accordance with the
removal and restoration requirements hereinafter set forth in this Section 12.C,
upon the expiration or earlier termination of this Lease, Tenant shall not be
obligated to remove the Initial Tenant Improvements from the Premises. Upon the
expiration or earlier termination of this Lease, Tenant, at Tenant's expense,
shall remove Tenant's personal property and trade fixtures, a copy of such list
is attached hereto as EXHIBIT D ("TENANT'S PERSONAL PROPERTY"), and restore the
Premises to its condition as of the date of this Lease, normal wear and tear
excepted. All such removals and restoration shall be accomplished in a
first-class and good and workmanlike manner so as not to cause any damage to the
Premises whatsoever except that which Tenant can and does repair. If Tenant
fails to remove Tenant's Personal Property, Landlord may keep and use Tenant's
Personal Property or remove any of Tenant's Personal Property and cause Tenant's
Personal Property to be stored or sold in accordance with applicable law, at
Tenant's sole expense.



                                       12
<PAGE>   18

                                   13. SIGNS

Tenant shall not place, install, affix, paint or maintain any signs, notices,
graphics or banners whatsoever or any window decor which is visible in or from
public view or corridors, the common areas or the exterior of the Premises, in
or on any exterior window or window fronting upon any common areas or service
area or upon any truck doors or man doors without Landlord's prior written
approval which Landlord shall have the right to withhold in its absolute and
sole discretion; provided that Tenant's name shall be included in any
Premises-standard door and directory signage, if any, in accordance with
Landlord's signage program, including without limitation, payment by Tenant of
any fee charged by Landlord for maintaining such signage, which fee shall
constitute Additional Rent hereunder. Any installation of signs, notices,
graphics or banners on or about the Premises approved by Landlord shall be
subject to any Regulations and to any other requirements imposed by Landlord.
Tenant shall remove all such signs or graphics by the expiration or any earlier
termination of this Lease. Such installations and removals shall be made in such
manner as to avoid injury to or defacement of the Premises and any other
improvements contained therein, and Tenant shall repair any injury or defacement
including without limitation discoloration caused by such installation or
removal. Notwithstanding the foregoing, Tenant shall be entitled to use the two
(2) existing podiums to affix signs subject to any Regulations and the consent
of Landlord which shall not be unreasonably withheld, conditioned or delayed.

                         14. INSPECTION/POSTING NOTICES

Subject to Tenant's reasonable security requirements and the requirements of
Good Manufacturing Practice, after reasonable notice, except in emergencies
where no such notice shall be required, Landlord and Landlord's agents and
representatives, shall have the right to enter the Premises to inspect the same,
to clean, to perform such work as may be permitted or required hereunder, to
make repairs to the portion of the Premises, common areas or the exterior of the
Building for which Landlord is responsible, construct improvements or perform
alterations to the exterior of the Premises, to deal with emergencies, to post
such notices as may be permitted or required by law to prevent the perfection of
liens against Landlord's interest in the Premises or to exhibit the Premises to
prospective tenants, purchasers, encumbrancers or to others, or for any other
purpose as Landlord may deem reasonably necessary; provided, however, that
Landlord shall comply with Tenant's established procedures for entry and shall
use reasonable efforts not to unreasonably interfere with Tenant's business
operations. Tenant shall not be entitled to any abatement of Rent by reason of
the exercise of any such right of entry. Provided Landlord has materially
complied with the provisions of this Section 14, Tenant waives any claim for
damages for any injury or inconvenience to or interference with Tenant's
business, any loss of occupancy or quiet enjoyment of the Premises, and any
other loss occasioned thereby unless caused by Landlord's sole and active
negligence or willful misconduct. Landlord shall have the right to use any and
all means which Landlord may deem necessary or proper to open said doors in an
emergency, in order to obtain entry to any portion of the Premises, and any
entry to the Premises or portions thereof obtained by Landlord by any of said
means, or otherwise, shall not be construed to be a forcible or unlawful entry
into, or a detainer of, the Premises, or an eviction, actual or constructive, of
Tenant from the Premises or any portions thereof. At any time within six (6)
months prior to the expiration of the Term or following any earlier termination
of this Lease or agreement to terminate this Lease, Landlord shall have the
right to erect on the Premises a suitable sign indicating that the Premises are
available for lease.

                           15. SERVICES AND UTILITIES

A. Tenant shall pay directly for all water, gas, heat, air conditioning, light,
power, telephone, sewer, sprinkler charges and other utilities and services used
on or from the Premises, together with any taxes, penalties, surcharges or the
like pertaining thereto, and maintenance charges for utilities and shall furnish
all electric light bulbs, ballasts and tubes. All sums payable under this
Paragraph 15 shall constitute Additional Rent hereunder.

B. Tenant acknowledges that Tenant has inspected and accepts the water,
electricity, heat and air conditioning and other utilities and services being
supplied or furnished to the Premises as of the date Tenant takes possession of
the Premises, if any, as being sufficient in their present condition, "as is,"
for the Permitted Use, and for Tenant's intended operations in the Premises.

C. Landlord shall not be liable for any damages directly or indirectly resulting
from nor shall the Rent or any monies owed Landlord under this Lease herein
reserved be abated by reason of:



                                       13
<PAGE>   19

(a) the installation, use or interruption of use of any equipment used in
connection with the furnishing of any such utilities or services, or any change
in the character or means of supplying or providing any such utilities or
services or any supplier thereof; (b) the failure to furnish or delay in
furnishing any such utilities or services when such failure or delay is caused
by acts of God or the elements, labor disturbances of any character, or any
other accidents or other conditions beyond the reasonable control of Landlord or
because of any interruption of service due to Tenant's use of water, electric
current or other resource in excess of that being supplied or furnished for the
use of the Premises as of the date Tenant takes possession of the Premises; or
(c) the inadequacy, limitation, curtailment, rationing or restriction on use of
water, electricity, gas or any other form of energy or any other service or
utility whatsoever serving the Premises otherwise; or (d) the partial or total
unavailability of any such utilities or services to the Premises, whether by
Regulation or otherwise; nor shall any such occurrence constitute an actual or
constructive eviction of Tenant. Landlord shall further have no obligation to
protect or preserve any apparatus, equipment or device installed by Tenant in
the Premises, including without limitation by providing additional or
after-hours heating or air conditioning. Tenant may, but shall not be obligated
to, upon notice to Landlord, contract with or otherwise obtain any electrical or
other such service for or with respect to the Premises or Tenant's operations
therein from any supplier or provider of any such service. In the event Tenant
elects to obtain any electrical or other service, Tenant shall be solely
responsible for any installing, maintaining, repairing, replacing or upgrading
such service or any equipment or machinery associated therewith.

                               16. SUBORDINATION

Without the necessity of any additional document being executed by Tenant for
the purpose of effecting a subordination, this Lease shall be and is hereby
declared to be subject and subordinate at all times to: (a) all ground leases or
underlying leases which may now exist or hereafter be executed affecting the
Premises and/or the land upon which the Premises are situated, or both; and (b)
any mortgage or deed of trust which may now exist or be placed upon the Premises
and/or the land upon which the Premises are situated, or said ground leases or
underlying leases, or Landlord's interest or estate in any of said items which
is specified as security. Notwithstanding the foregoing, Landlord shall have the
right to subordinate or cause to be subordinated any such ground leases or
underlying leases or any such liens to this Lease. If any ground lease or
underlying lease terminates for any reason or any mortgage or deed of trust is
foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant
shall, notwithstanding any subordination, attorn to and become the Tenant of the
successor in interest to Landlord provided that Tenant shall not be disturbed in
its possession under this Lease by such successor in interest so long as Tenant
is not in default under this Lease. Within ten (10) days after request by
Landlord, Tenant shall execute and deliver any additional documents evidencing
Tenant's attornment or the subordination of this Lease with respect to any such
ground leases or underlying leases or any such mortgage or deed of trust, in the
form requested by Landlord or by any ground landlord, mortgagee, or beneficiary
under a deed of trust, subject to such nondisturbance requirement. In the event
this Lease shall be subject to the prior rights of any mortgagee or ground
lessor, then Landlord shall secure from such mortgagee or ground lessor an
agreement in writing whereby Tenant, so long as Tenant is not in default
hereunder, may remain in possession of the Premises pursuant to the terms hereof
and without any diminution of Tenant's rights should Landlord become in default
with respect to such mortgage or ground lease or should the Premises become the
subject of any action to foreclose any mortgage or to dispossess Landlord. Such
agreement would provide, among other things, that the new owner following any
foreclosure, sale or conveyance shall not be (i) liable for any act or omission
of any prior landlord or with respect to events occurring prior to acquisition
of ownership; (ii) subject to any offsets or defenses which Tenant might have
against any prior landlord; (iii) bound by prepayment of more than one (1)
month's Rent; or (iv) liable to Tenant for any security deposit not actually
received by such new owner. Each ground landlord, mortgagee, or beneficiary
under a deed of trust shall be an express third party beneficiary of the
provisions of this Paragraph 16 and any other provisions of this Lease that are
for the benefit of such party.

                            17. FINANCIAL STATEMENTS

At the request of Landlord from time to time, Tenant shall provide to Landlord
Tenant's then existing financial statements or other information discussing
financial worth of Tenant and any guarantor, which Landlord shall use solely for
purposes of this Lease and in connection with the ownership, management,
financing and disposition of the Premises.



                                       14
<PAGE>   20

                            18. ESTOPPEL CERTIFICATE

Tenant agrees from time to time, within ten (10) days after request of Landlord,
to deliver to Landlord, or Landlord's designee, an estoppel certificate stating
that this Lease is in full force and effect, that this Lease has not been
modified (or stating all modifications, written or oral, to this Lease), the
date to which Rent has been paid, the unexpired portion of this Lease, that
there are no current defaults by Landlord or Tenant under this Lease (or
specifying any such defaults), that the leasehold estate granted by this Lease
is the sole interest of Tenant in the Premises and/or the land at which the
Premises are situated, and such other matters pertaining to this Lease as may be
reasonably requested by Landlord or any mortgagee, beneficiary, purchaser or
prospective purchaser of the Premises or any interest therein. Landlord agrees
from time to time, within ten (10) days after request of Tenant, to deliver to
Tenant, or Tenant's designee, an estoppel certificate stating that this Lease is
in full force and effect, that this Lease has not been modified (or stating all
modifications, written or oral, to this Lease), to Landlord's knowledge the date
to which Rent has been paid, the unexpired portion of this Lease, that to
Landlord's knowledge there are no current defaults by Landlord or Tenant under
this Lease (or specifying any such defaults), that the leasehold estate granted
by this Lease is the sole interest of Tenant in the Premises and/or the land at
which the Premises are situated. Failure by Tenant to execute and deliver such
certificate shall constitute an acceptance of the Premises and acknowledgment by
Tenant that the statements included are true and correct without exception.
Tenant agrees that if Tenant fails to execute and deliver such certificate
within such ten (10) day period, Landlord may execute and deliver such
certificate on Tenant's behalf and that such certificate shall be binding on
Tenant. Landlord and Tenant intend that any statement delivered pursuant to this
Paragraph may be relied upon by any mortgagee, beneficiary, purchaser or
prospective purchaser of the Premises or any interest therein. The parties agree
that Tenant's obligation to furnish such estoppel certificates in a timely
fashion is a material inducement for Landlord's execution of this Lease, and
shall be an event of default (without any cure period that might be provided
under Paragraph 26.A(3) of this Lease) if Tenant fails to fully comply or makes
any material misstatement in any such certificate.

                              19. SECURITY DEPOSIT

Tenant agrees to deposit with Landlord upon execution of this Lease, a security
deposit as stated in the Basic Lease Information (the "SECURITY DEPOSIT"), which
sum shall be held and owned by Landlord, without obligation to pay interest, as
security for the performance of Tenant's covenants and obligations under this
Lease. The Security Deposit is not an advance rental deposit or a measure of
damages incurred by Landlord in case of Tenant's default. Upon the occurrence of
any event of default by Tenant, Landlord may from time to time, without
prejudice to any other remedy provided herein or by law, use such fund as a
credit to the extent necessary to credit against any arrears of Rent or other
payments due to Landlord hereunder, and any other damage, injury, expense or
liability caused by such event of default, and Tenant shall pay to Landlord, on
demand, the amount so applied in order to restore the Security Deposit to its
original amount. Although the Security Deposit shall be deemed the property of
Landlord, any remaining balance of such deposit shall be returned by Landlord to
Tenant at such time after termination of this Lease that all of Tenant's
obligations under this Lease have been fulfilled, reduced by such amounts as may
be required by Landlord to remedy defaults on the part of Tenant in the payment
of Rent or other obligations of Tenant under this Lease, to repair damage to the
Premises caused by Tenant or any Tenant's Parties and to clean the Premises.
Landlord may use and commingle the Security Deposit with other funds of
Landlord.

                      20. LIMITATION OF TENANT'S REMEDIES

The obligations and liability of Landlord to Tenant for any default by Landlord
under the terms of this Lease are not personal obligations of Landlord or of the
individual or other partners of Landlord or its or their partners, directors,
officers, or shareholders, and Tenant agrees to look solely to Landlord's
interest in the Premises for the recovery of any amount from Landlord, and shall
not look to other assets of Landlord nor seek recourse against the assets of the
individual or other partners of Landlord or its or their partners, directors,
officers or shareholders. Any lien obtained to enforce any such judgment and any
levy of execution thereon shall be subject and subordinate to any lien, mortgage
or deed of trust on the Premises. Under no circumstances shall Tenant have the
right to offset against or recoup Rent or other payments due and to become due
to Landlord hereunder except as expressly provided in Paragraph 23.B. below,
which Rent and



                                       15
<PAGE>   21
other payments shall be absolutely due and payable hereunder in accordance with
the terms hereof.

                         21. ASSIGNMENT AND SUBLETTING

A.      (1) GENERAL. Tenant shall not assign or pledge this Lease or sublet the
Premises or any part thereof, whether voluntarily or by operation of law, or
permit the use or occupancy of the Premises or any part thereof by anyone other
than Tenant, or suffer or permit any such assignment, pledge, subleasing or
occupancy, without Landlord's prior written consent which consent shall not be
unreasonably withheld, delayed or conditioned except as provided herein. If
Tenant desires to assign this Lease or sublet any or all of the Premises, Tenant
shall give Landlord written notice (the "TRANSFER NOTICE") (except when no such
notice is required under Section 21.A(3) below) at least thirty (30) days prior
to the anticipated effective date of the proposed assignment or sublease, which
shall contain all of the information reasonably requested by Landlord. Landlord
shall then have a period of fifteen (15) days following receipt of the Transfer
Notice to notify Tenant in writing that Landlord elects to consent to the
proposed assignment or sublease, subject, however, to Landlord's prior written
consent of the proposed assignee or subtenant and of any related documents or
agreements associated with the assignment or sublease. Consent to any assignment
or subletting shall not constitute consent to any subsequent transaction to
which this Paragraph 21 applies.

        (2)     CONDITIONS OF LANDLORD'S CONSENT. Without limiting the other
                instances in which it may be reasonable for Landlord to withhold
                Landlord's consent to an assignment or subletting, Landlord and
                Tenant acknowledge that it shall be reasonable for Landlord to
                withhold Landlord's consent in the following instances: if the
                proposed assignee does not agree to be bound by and assume the
                obligations of Tenant under this Lease in form and substance
                satisfactory to Landlord; the use of the Premises by such
                proposed assignee or subtenant would not be a Permitted Use; the
                proposed assignee or subtenant is not of sound financial
                condition as determined by Landlord in Landlord's reasonable
                discretion; the proposed assignee or subtenant is a governmental
                agency; the proposed assignee or subtenant is a person with whom
                Landlord is negotiating to lease space in the Premises or is a
                present tenant of the Premises; the assignment or subletting
                would entail any Alterations which would lessen the value of the
                leasehold improvements in the Premises or use of any Hazardous
                Materials or other noxious use; or Tenant is in default beyond
                any applicable cure period of any obligation of Tenant under
                this Lease, or Tenant has defaulted under this Lease on three
                (3) or more occasions during any twelve (12) months preceding
                the date that Tenant shall request consent. Failure by or
                refusal of Landlord to consent to a proposed assignee or
                subtenant shall not cause a termination of this Lease. At the
                option of Landlord, a surrender and termination of this Lease
                shall operate as an assignment to Landlord of some or all
                subleases or subtenancies. Landlord shall exercise this option
                by giving notice of that assignment to such subtenants on or
                before the effective date of the surrender and termination. In
                connection with each request for assignment or subletting,
                Tenant shall pay to Landlord Landlord's standard fee for
                approving such requests which shall not exceed Two Hundred Fifty
                Dollars ($250), as well as all reasonable costs incurred by
                Landlord or any mortgagee or ground lessor in approving each
                such request and effecting any such transfer, including, without
                limitation, reasonable attorneys' fees.

        (3)     Tenant shall be permitted to transfer to an Affiliate (as
                defined below) without the consent of Landlord so long as the
                following conditions are met: (a) unless such notice is
                prohibited by law in which case no prior notice shall be
                required, at least ten (10) business days before any such
                assignment of sublease, Landlord receives written notice of such
                assignment or sublease (as well as any documents or information
                reasonably requested by Landlord regarding the proposed intended
                transfer and the transferee); (b) Tenant is not then and has not
                been in default under this Lease after notice and expiration of
                any applicable cure period; (c) if the transfer is an assignment
                or any other transfer to an Affiliate other than a sublease, the
                intended assignee assumes in writing all of Tenant's obligations
                under this Lease relating to the Premises in form satisfactory
                to Landlord or, if the



                                       16
<PAGE>   22

                transfer is a sublease, the intended sublessee accepts the
                sublease in form reasonably satisfactory to Landlord; (d) the
                use of the Premises by the intended transferee would be a
                Permitted Use; and (e) the intended transferee has a tangible
                net worth, as evidenced by financial statements delivered to
                Landlord and certified by an independent certified public
                accountant in accordance with generally accepted accounting
                principles that are consistently applied, of at least equal to
                the net worth of Tenant at the time of the proposed transfer. No
                transfer to an Affiliate in accordance with this subparagraph
                shall relieve Tenant name herein of any obligation under this
                Lease or alter the primary liability of Tenant named herein for
                the payment of Rent or for the performance of any other
                obligation to be performed by Tenant. An "AFFILIATE" means any
                entity that (i) controls, is controlled by, or is under common
                control with Tenant, (ii) results from the transfer of all or
                substantially all of Tenant's assets or stocks, or (iii) results
                from the merger or consolidation of Tenant with another entity.
                "CONTROL" means the direct or indirect ownership of more than
                fifty percent (50%) of the voting securities of an entity or
                possession of the right to vote more than fifty percent (50%) of
                the voting interest in the ordinary direction of the entity's
                affairs. Without limiting the effect of Section 21C, below,
                notwithstanding anything to the contrary contained herein,
                Tenant shall have a one (1) time right during the initial Term
                of this Lease to a transfer by sale or assignment of the
                interest of Tenant to a publicly held company ("Public
                Company"), provided that the transferee shall have a tangible
                net worth, as evidenced by financial statements delivered to
                Landlord and certified by an independent certified public
                accountant in accordance with generally accepted accounting
                principles that are consistently applied, of at least equal to
                the net worth of Tenant at the time of the proposed transfer.

B. BONUS RENT. Any Rent or other consideration realized by Tenant under any such
sublease or assignment in excess of the Rent payable hereunder, shall be divided
and paid, fifty percent (50%) to Tenant, fifty percent (50%) to Landlord after
amortization over the balance of the Term of the following actual and reasonable
costs incurred by Tenant: (i) brokerage commission, (ii) legal fees, (iii)
additional improvements for the subtenant or assignee and (iv) a portion of the
unamortized cost of the Initial Tenant Improvements paid for by Tenant and
listed on EXHIBIT C which for purposes of calculating bonus rent, shall be an
amount equal to the total cost of the Initial Tenant Improvements amortized at a
simple interest rate of ten percent (10%) per annum. Within thirty (30) days
after substantial completion of the Initial Tenant Improvements, Landlord and
Tenant shall execute an agreement setting forth the actual cost of such Initial
Tenant Improvements. Notwithstanding the foregoing, Tenant shall be entitled to
retain any Rent or other consideration realized by Tenant (in excess of the Rent
payable hereunder) under its sublease with Comparative dated as of February 1,
1999 (the "COMPARATIVE SUBLEASE"). Landlord hereby approves the Comparative
Sublease. In any subletting or assignment undertaken by Tenant, Tenant shall
diligently seek to obtain the maximum rental amount available in the marketplace
for comparable space available for primary leasing.

C. CORPORATION. If Tenant is a corporation, a transfer of corporate shares by
sale, assignment, bequest, inheritance, operation of law or other disposition
(including such a transfer to or by a receiver or trustee in federal or state
bankruptcy, insolvency or other proceedings) resulting in a change in the
present control of such corporation or any of its parent corporations by the
person or persons owning a majority of said corporate shares, shall constitute
an assignment for purposes of this Lease. Notwithstanding anything to the
contrary in this Lease, the transfer of outstanding capital stock or other
listed equity interests, or the purchase of outstanding capital stock or other
listed equity interests, or the purchase of equity interests issued in an
initial public offering of stock, through the "over-the-counter" market or any
recognized national or international securities exchange shall not constitute an
assignment for purposes of this Lease.

D. UNINCORPORATED ENTITY. If Tenant is a partnership, joint venture,
unincorporated limited liability company or other unincorporated business form,
a transfer of the interest of persons, firms or entities responsible for
managerial control of Tenant by sale, assignment, bequest, inheritance,
operation of law or other disposition, so as to result in a change in the
present control of said entity and/or of the underlying beneficial interests of
said entity and/or a change in the identity of the persons responsible for the
general credit obligations of said entity shall constitute an assignment for all
purposes of this Lease.



                                       17
<PAGE>   23

E. LIABILITY. No assignment or subletting by Tenant, permitted or otherwise,
shall relieve Tenant of any obligation under this Lease or alter the primary
liability of the Tenant named herein for the payment of Rent or for the
performance of any other obligations to be performed by Tenant, including
obligations contained in Paragraph 25 with respect to any assignee or subtenant.
Landlord may collect rent or other amounts or any portion thereof from any
assignee, subtenant, or other occupant of the Premises, permitted or otherwise,
and apply the net rent collected to the Rent payable hereunder, but no such
collection shall be deemed to be a waiver of this Paragraph 21, or the
acceptance of the assignee, subtenant or occupant as tenant, or a release of
Tenant from the further performance by Tenant of the obligations of Tenant under
this Lease. Any assignment or subletting which conflicts with the provisions
hereof shall be void.

                                 22. AUTHORITY

Landlord represents and warrants that it has full right and authority to enter
into this Lease and to perform all of Landlord's obligations hereunder and that
all persons signing this Lease on its behalf are authorized to do. Tenant and
the person or persons, if any, signing on behalf of Tenant, jointly and
severally represent and warrant that Tenant has full right and authority to
enter into this Lease, and to perform all of Tenant's obligations hereunder, and
that all persons signing this Lease on its behalf are authorized to do so.

                                23. CONDEMNATION

A. CONDEMNATION AND RIGHTS TO TERMINATE. If the whole or any substantial part of
the Premises should be taken or condemned for any public use under any
Regulation, or by right of eminent domain, or by private purchase in lieu
thereof, and the taking would prevent or materially interfere with the Permitted
Use of the Premises, either party shall have the right to terminate this Lease
at its option. If any material portion of the Premises is taken or condemned for
any public use under any Regulation, or by right of eminent domain, or by
private purchase in lieu thereof, Landlord may terminate this Lease at its
option. Notwithstanding anything contained in this Paragraph 23.A to the
contrary, in the event Landlord elects to terminate the Lease, Landlord shall
provide written notice to Tenant of Landlord's intention to terminate the Lease,
and, within ten (10) days after receipt of such written notice from Landlord,
Tenant may elect to keep the Lease in full force and effect by delivering
written notice thereof (the "ELECTION NOTICE") in which case (i) Tenant shall
pay all costs and expenses necessary to restore the Premises and to enable
Tenant to use the Premises in accordance with the terms and conditions of this
Lease; (ii) Tenant shall continue to pay Rent for the remainder of the Term and
all other monetary sums due under this Lease without abatement; and (iii)
Landlord shall receive a credit for all sums received or to be received by
Tenant from the condemning authority except to the extent specifically provided
in Paragraph 23.B to the contrary. In the event Landlord does not deliver
written notice to Tenant of Landlord's intention to terminate the Lease as
provided herein, (i) Tenant shall continue to pay Rent for the remainder of the
Term and all other monetary sums due under this Lease without abatement and (ii)
Landlord shall receive a credit for all sums received or to be received by
Tenant from the condemning authority except to the extent specifically provided
in Paragraph 23.B to the contrary. Notwithstanding anything to the contrary
contained in this Paragraph, if the temporary use or occupancy of any part of
the Premises shall be taken or appropriated under power of eminent domain during
the Term, this Lease shall be and remain unaffected by such taking or
appropriation and Tenant shall continue to pay in full all Rent payable
hereunder by Tenant during the Term; in the event of any such temporary
appropriation or taking, Tenant shall be entitled to receive that portion of any
award which represents compensation for the use of or occupancy of the Premises
during the Term, and Landlord shall be entitled to receive that portion of any
award which represents the cost of restoration of the Premises and the use and
occupancy of the Premises.

B. AWARD. Landlord shall be entitled to (and Tenant shall assign to Landlord)
any and all payment, income, rent, award or any interest therein whatsoever
which may be paid or made in connection with such taking or conveyance and
Tenant shall have no claim against Landlord or otherwise for any sums paid by
virtue of such proceedings, whether or not attributable to the value of any
unexpired portion of this Lease, except as expressly provided in this Lease.
Notwithstanding the foregoing, any compensation specifically and separately
awarded Tenant for Tenant's personal property and trade fixtures, Initial Tenant
Improvements and relocation costs, shall be and remain the property of Tenant.



                                       18
<PAGE>   24
C. WAIVER OF CCP SECTION 1265.130. Each party waives the provisions of
California Civil Code Procedure Section 1265.130 allowing either party to
petition the superior court to terminate this Lease as a result of a partial
taking.

                              24. CASUALTY DAMAGE

A. GENERAL. If the Premises should be damaged or destroyed by fire, tornado, or
other casualty (collectively, "CASUALTY"), Tenant shall give immediate written
notice thereof to Landlord.

B. REBUILD AND REPAIR. If the Premises should be damaged by Casualty in whole or
in part, then Landlord may elect, in its sole and absolute discretion, to
rebuild or repair the Premises by delivering written notice to Tenant of its
election within thirty (30) days after Landlord's receipt of notice of the
damage or destruction. Upon such election, Landlord shall proceed to rebuild and
repair the Premises diligently and to substantially the same condition as the
Premises existed at the time of the Casualty with such modifications and
alterations as mutually agreed upon by Landlord and Tenant in their respective
reasonable discretion. Notwithstanding the above, in the event Landlord elects
to rebuild or repair the Premises as provided herein, Landlord shall not be
required to rebuild, repair or replace any part of any Alterations (including
without limitation, the Initial Tenant Improvements) which may have been placed,
on or about the Premises by Tenant and Tenant shall continue to pay Base Rent
and Additional Rent under this Lease, with no right to rent abatement unless and
to the extent any proceeds of rental interruption insurance are paid. If
Landlord elects not to rebuild or repair the Premises, in its sole and absolute
discretion, then Landlord shall notify Tenant by delivering written notice of
such election within thirty (30) days after Landlord's receipt of notice of the
damage or destruction and Landlord shall retain all proceeds of Landlord's
Property Insurance. Within ten (10) days after receipt of Landlord's written
notice, Tenant, at Tenant's sole cost and expense, may elect by delivering
written notice to Landlord to proceed to rebuild and repair the Premises
diligently to substantially the same condition as the Premises existed at the
time of the Casualty, with such modifications and alterations as mutually agreed
upon by Landlord and Tenant in their respective reasonable discretion. Upon such
election by Tenant to repair or rebuild the Premises, Tenant shall deposit such
amount required to rebuild or repair the Premises as reasonably determined by
Landlord with a bank selected by Tenant and approved by Landlord as security for
the performance of Tenant's obligations under this Section 24.B. Notwithstanding
the foregoing, if the Premises should be damaged by Casualty and Tenant elects
to rebuild and repair the Premises, then (i) Tenant shall continue to pay Rent
under this Lease, with no right to rent abatement, unless and to the extent any
proceeds of rental interruption insurance are paid, (ii) Landlord shall keep any
and all insurance proceeds received by Landlord, under any insurance policies
maintained by Landlord's Property Insurance, as a result of such Casualty, and
shall have no obligation to contribute any of such proceeds to the rebuilding or
repairing of the Premises. In the event that Landlord does not elect to rebuild
or repair the Premises and/or Tenant does not elect to rebuild or repair the
Premises, then either party may terminate this Lease upon ten (10) days advance
written notice to the other party and Tenant shall retain all proceeds of
Tenant's Property Insurance. Notwithstanding anything contrary contained in this
Lease, immediately following the repair or rebuilding of the Premises, Landlord
shall be the owner of the Premises and any part that is rebuilt or repaired,
regardless of which party pays for the costs of rebuilding or repairing.

C. TENANT'S FAULT. Notwithstanding anything herein to the contrary, if the
Premises or any portion thereof is damaged by Casualty resulting from the fault,
negligence, or breach of this Lease by Tenant or any of Tenant's Parties, Base
Rent and Additional Rent shall not be diminished during the repair of such
damage except and to the extent of proceeds are paid through rental interruption
insurance and Tenant shall be liable to Landlord for the cost and expense of the
repair and restoration of the Premises caused thereby.

D. INSURANCE PROCEEDS. Notwithstanding anything herein to the contrary, except
if Tenant elects to rebuild or repair the Premises pursuant to Section 24.B
above, if the Premises is damaged or destroyed and are not fully covered by the
insurance proceeds received by Landlord or if the holder of any indebtedness
secured by a mortgage or deed of trust covering the Premises requires that the
insurance proceeds from Landlord's Property Insurance be applied to such
indebtedness, then in either case Landlord shall have the right to terminate
this Lease by delivering written notice of termination to Tenant within thirty
(30) days after the date of notice to Landlord that said damage or destruction
is not fully covered by insurance or such



                                       19
<PAGE>   25
requirement is made by any such holder, as the case may be, whereupon this Lease
shall terminate.

E. WAIVER. This Paragraph 24 shall be Tenant's sole and exclusive remedy in the
event of damage or destruction to the Premises. As a material inducement to
Landlord entering into this Lease, Tenant hereby waives any rights it may have
under Sections 1932, 1933(4), 1941 or 1942 of the Civil Code of California with
respect to any destruction of the Premises, Landlord's obligation for
tenantability of the Premises and Tenant's right to make repairs and deduct the
expenses of such repairs, or under any similar law, statute or ordinance now or
hereafter in effect.

F. TENANT'S PERSONAL PROPERTY. In the event of any damage or destruction of the
Premises, under no circumstances shall Landlord be required to repair any injury
or damage to, or make any repairs to or replacements of, Tenant's personal
property or Initial Tenant Improvements.

                                25. HOLDING OVER

Unless Landlord expressly consents in writing to Tenant's holding over, Tenant
shall be unlawfully and illegally in possession of the Premises, whether or not
Landlord accepts any rent from Tenant or any other person while Tenant remains
in possession of the Premises without Landlord's written consent. If Tenant
shall retain possession of the Premises or any portion thereof without
Landlord's consent following the expiration of this Lease or sooner termination
for any reason, then Tenant shall pay to Landlord for each day of such retention
one hundred seventy five percent (175%) of the amount of daily rental as of the
last month prior to the date of expiration or earlier termination. Tenant shall
also indemnify, defend, protect and hold Landlord harmless from any loss,
liability or cost, including consequential and incidental damages and reasonable
attorneys' fees, incurred by Landlord resulting from delay by Tenant in
surrendering the Premises, including, without limitation, any claims made by the
succeeding tenant founded on such delay. Acceptance of Rent by Landlord
following expiration or earlier termination of this Lease, or following demand
by Landlord for possession of the Premises, shall not constitute a renewal of
this Lease, and nothing contained in this Paragraph 25 shall waive Landlord's
right of reentry or any other right. Additionally, if upon expiration or earlier
termination of this Lease, or following demand by Landlord for possession of the
Premises, Tenant has not fulfilled its obligation with respect to repairs and
cleanup of the Premises or any other Tenant obligations as set forth in this
Lease, then Landlord shall have the right to perform any such obligations as it
deems necessary at Tenant's sole cost and expense, and any time required by
Landlord to complete such obligations shall be considered a period of holding
over and the terms of this Paragraph 25 shall apply. The provisions of this
Paragraph 25 shall survive any expiration or earlier termination of this Lease.

                                  26. DEFAULT

A. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute an
event of default on the part of Tenant:

        (1) ABANDONMENT. Abandonment of the Premises for a continuous period in
        excess of five (5) days. Tenant waives any right to notice Tenant may
        have under Section 1951.3 of the Civil Code of the State of California,
        the terms of this Paragraph 26.A. being deemed such notice to Tenant as
        required by said Section 1951.3.

        (2) NONPAYMENT OF RENT. Failure to pay any installment of Rent or any
        other amount within three (3) days after the Rent or such other amount
        is due and payable hereunder, as to which time is of the essence.

        (3) OTHER OBLIGATIONS. Failure to perform any obligation, agreement or
        covenant under this Lease other than those matters specified in
        subparagraphs (1) and (2) of this Paragraph 26.A. and Paragraphs 8, 18
        and 38, such failure continuing for fifteen (15) days after written
        notice of such failure, as to which time is of the essence; provided,
        however, Tenant shall not be deemed to be in default if the nature of
        such failure is of a type that cannot reasonably be cured within such
        fifteen (15) day period and Tenant commences to cure within fifteen (15)
        days and diligently prosecutes such cure to completion but in no event
        shall such period to cure exceed ninety (90) days after written notice
        of such failure to perform by Tenant (except as provided in Paragraph 30
        below); Provided, however, that so long as Tenant is diligently pursuing
        such cure and there is no



                                       20
<PAGE>   26

        decrease in the value of the Premises as a result of such default, the
        Landlord in its reasonable discretion may extend the cure period as
        Landlord deems appropriate.

        (4) GENERAL ASSIGNMENT. A general assignment by Tenant for the benefit
        of creditors.

        (5) BANKRUPTCY. The filing of any voluntary petition in bankruptcy by
        Tenant, or the filing of an involuntary petition by Tenant's creditors,
        which involuntary petition remains undischarged for a period of sixty
        (60) days. If under applicable law, the trustee in bankruptcy or Tenant
        has the right to affirm this Lease and continue to perform the
        obligations of Tenant hereunder, such trustee or Tenant shall, in such
        time period as may be permitted by the bankruptcy court having
        jurisdiction, cure all defaults of Tenant hereunder outstanding as of
        the date of the affirmance of this Lease and provide to Landlord such
        adequate assurances as may be necessary to ensure Landlord of the
        continued performance of Tenant's obligations under this Lease.

        (6) RECEIVERSHIP. The employment of a receiver to take possession of
        substantially all of Tenant's assets or the Premises, if such
        appointment remains undismissed or undischarged for a period of thirty
        (30) days after the order therefor.

        (7) ATTACHMENT. The attachment, execution or other judicial seizure of
        all or substantially all of Tenant's assets or Tenant's leasehold of the
        Premises, if such attachment or other seizure remains undismissed or
        undischarged for a period of thirty (30) days after the levy thereof.

        (8) INSOLVENCY. The admission by Tenant in writing of its inability to
        pay its debts as they become due.

B. REMEDIES UPON DEFAULT.

        (1) TERMINATION. In the event of the occurrence of any event of default,
        Landlord shall have the right to give a written termination notice to
        Tenant, and on the date specified in such notice, Tenant's right to
        possession shall terminate, and this Lease shall terminate unless on or
        before such date all Rent in arrears and all costs and expenses incurred
        by or on behalf of Landlord hereunder shall have been paid by Tenant and
        all other events of default of this Lease by Tenant at the time existing
        shall have been fully remedied to the satisfaction of Landlord. At any
        time after such termination, Landlord may recover possession of the
        Premises or any part thereof and expel and remove therefrom Tenant and
        any other person occupying the same, including any subtenant or
        subtenants notwithstanding Landlord's consent to any sublease, by any
        lawful means, and again repossess and enjoy the Premises without
        prejudice to any of the remedies that Landlord may have under this
        Lease, or at law or equity by any reason of Tenant's default or of such
        termination. Landlord hereby reserves the right, but shall not have the
        obligation, to recognize the continued possession of any subtenant. The
        delivery or surrender to Landlord by or on behalf of Tenant of keys,
        entry codes, or other means to bypass security at the Premises shall not
        terminate this Lease.

        (2) CONTINUATION AFTER DEFAULT. Even though an event of default may have
        occurred, this Lease shall continue in effect for so long as Landlord
        does not terminate Tenant's right to possession under Paragraph 26.B.(1)
        hereof, and Landlord may enforce all of Landlord's rights and remedies
        under this Lease and at law or in equity, including without limitation,
        the right to recover Rent as it becomes due, and Landlord, without
        terminating this Lease, may exercise all of the rights and remedies of a
        landlord under Section 1951.4 of the Civil Code of the State of
        California or any successor code section. Acts of maintenance,
        preservation or efforts to lease the Premises or the appointment of a
        receiver under application of Landlord to protect Landlord's interest
        under this Lease or other entry by Landlord upon the Premises shall not
        constitute an election to terminate Tenant's right to possession.

        (3) INCREASED SECURITY DEPOSIT. If Tenant is in default under Paragraph
        26.A.(2) hereof and such default remains uncured for ten (10) days after
        such occurrence or such default occurs more than three (3) times in any
        twelve (12) month period, Landlord may require that Tenant increase the
        Security Deposit to the amount of three (3) times the current month's
        Rent at the time of the most recent default.



                                       21
<PAGE>   27

C. DAMAGES AFTER DEFAULT. Should Landlord terminate this Lease pursuant to the
provisions of Paragraph 26.B.(1) hereof, Landlord shall have the rights and
remedies of a Landlord provided by Section 1951.2 of the Civil Code of the State
of California, or any successor code sections. Upon such termination, in
addition to any other rights and remedies to which Landlord may be entitled
under applicable law or at equity, Landlord shall be entitled to recover from
Tenant: (1) the worth at the time of award of the unpaid Rent and other amounts
which had been earned at the time of termination, (2) the worth at the time of
award of the amount by which the unpaid Rent and other amounts that would have
been earned after the date of termination until the time of award exceeds the
amount of such Rent loss that Tenant proves could have been reasonably avoided;
(3) the worth at the time of award of the amount by which the unpaid Rent and
other amounts for the balance of the Term after the time of award exceeds the
amount of such Rent loss that the Tenant proves could be reasonably avoided; and
(4) any other amount and court costs necessary to compensate Landlord for all
detriment proximately caused by Tenant's failure to perform Tenant's obligations
under this Lease or which, in the ordinary course of things, would be likely to
result therefrom. The "worth at the time of award" as used in (1) and (2) above
shall be computed at the Applicable Interest Rate (defined below). The "worth at
the time of award" as used in (3) above shall be computed by discounting such
amount at the Federal Discount Rate of the Federal Reserve Bank of San Francisco
at the time of award plus one percent (1%). If this Lease provides for any
periods during the Term during which Tenant is not required to pay Base Rent or
if Tenant otherwise receives a Rent concession, then upon the occurrence of an
event of default, Tenant shall owe to Landlord the full amount of such Base Rent
or value of such Rent concession, plus interest at the Applicable Interest Rate,
calculated from the date that such Base Rent or Rent concession would have been
payable.

D. LATE CHARGE. In addition to its other remedies, Landlord shall have the right
without notice or demand to add to the amount of any payment required to be made
by Tenant hereunder, and which is not paid and received by Landlord on or before
the first day of each calendar month, an amount equal to six percent (6%) of the
delinquency for each month or portion thereof that the delinquency remains
outstanding to compensate Landlord for the loss of the use of the amount not
paid and the administrative costs caused by the delinquency, the parties
agreeing that Landlord's damage by virtue of such delinquencies would be
extremely difficult and impracticable to compute and the amount stated herein
represents a reasonable estimate thereof. Any waiver by Landlord of any late
charges or failure to claim the same shall not constitute a waiver of other late
charges or any other remedies available to Landlord.

E. INTEREST. Interest shall accrue on all sums not paid when due hereunder at
the lesser of eighteen percent (18%) per annum or the maximum interest rate
allowed by law ("APPLICABLE INTEREST RATE") from the due date until paid.

F. REMEDIES CUMULATIVE. All rights, privileges and elections or remedies of the
parties are cumulative and not alternative, to the extent permitted by law and
except as otherwise provided herein.

                                   27. LIENS

A. Tenant shall at all times keep the Premises free from liens arising out of or
related to work or services performed, materials or supplies furnished or
obligations incurred by or on behalf of Tenant or in connection with work made,
suffered or done by or on behalf of Tenant in or on the Premises.
Notwithstanding the foregoing, the Tenant shall have the right to encumber its
leasehold interest hereunder and its interest in the Tenant's Initial Tenant
Improvements and/or Alterations with a first prior security interest in the
leasehold interest including, without limitation, the Alterations constructed
thereon, so long as any financing or encumbering by Tenant of Tenant's Initial
Tenant Improvements and/or Alterations shall be subject to the terms and
conditions of this Lease and to the rights of any mortgagee of Landlord,
Tenant's lender shall have executed Landlord's Disclaimer and Consent
substantially in the form of EXHIBIT F attached hereto and made a part hereof,
and at the expiration or earlier termination of this Lease any Initial Tenant
Improvements or Alterations remaining on the Premises are free and clear of any
liens. If Tenant shall not, within ten (10) days following the imposition of any
such lien, cause the same to be released of record by payment or posting of a
proper bond, Landlord shall have, in addition to all other remedies provided
herein and by law, the right, but not the obligation, to cause the same to be
released by such means as Landlord shall deem proper, including payment of the
claim giving rise to such lien. All sums paid by Landlord on behalf of Tenant
and all expenses incurred by Landlord in connection therefor shall be payable to



                                       22
<PAGE>   28
Landlord by Tenant on demand with interest at the Applicable Interest Rate as
Additional Rent. Landlord shall have the right at all times to post and keep
posted on the Premises any notices permitted or required by law, or which
Landlord shall deem proper, for the protection of Landlord, the Premises and any
other party having an interest therein, from mechanics' and materialmen's liens,
and Tenant shall give Landlord not less than ten (10) business days prior
written notice of the commencement of any work in the Premises which could
lawfully give rise to a claim for mechanics' or materialmen's liens to permit
Landlord to post and record a timely notice of non-responsibility, as Landlord
may elect to proceed or as the law may from time to time provide, for which
purpose, if Landlord shall so determine, Landlord may enter the Premises. Tenant
shall not remove any such notice posted by Landlord without Landlord's consent,
and in any event not before completion of the work which could lawfully give
rise to a claim for mechanics' or materialmen's liens.



                          28. [INTENTIONALLY DELETED]

                           29. TRANSFERS BY LANDLORD

In the event of a sale or conveyance by Landlord of the Premises or a
foreclosure by any creditor of Landlord, the same shall operate to release
Landlord from any liability upon any of the covenants or conditions, express or
implied, herein contained in favor of Tenant, to the extent required to be
performed after the passing of title to Landlord's successor-in-interest. In
such event, Tenant agrees to look solely to the responsibility of the
successor-in-interest of Landlord under this Lease with respect to the
performance of the covenants and duties of "Landlord" to be performed after the
passing of title to Landlord's successor-in-interest. This Lease shall not be
affected by any such sale and Tenant agrees to attorn to the purchaser or
assignee. Landlord's successor(s)-in-interest shall not have liability to Tenant
with respect to the failure to perform any of the obligations of "Landlord," to
the extent required to be performed prior to the date such
successor(s)-in-interest became the owner of the Premises.

              30. RIGHT OF LANDLORD TO PERFORM TENANT'S COVENANTS

All covenants and agreements to be performed by Tenant under any of the terms of
this Lease shall be performed by Tenant at Tenant's sole cost and expense and
without any abatement of Rent. If Tenant shall fail to pay any sum of money,
other than Base Rent, required to be paid by Tenant hereunder or shall fail to
perform any other act on Tenant's part to be performed hereunder, including
Tenant's obligations under Paragraph 11 hereof, and such failure shall continue
for fifteen (15) days after notice thereof by Landlord, in addition to the other
rights and remedies of Landlord, Landlord may make any such payment and perform
any such act on Tenant's part; provided, however, in the event that Tenant's
failure to perform relates to regulations pertaining to Tenant's Permitted Use
and Tenant is diligently pursuing the cure of such failure, notwithstanding the
provisions of Paragraph 26.B to the contrary, Landlord shall not be entitled to
perform Tenant's obligations if and only to the extent that the performance by
Landlord would materially and adversely affect Tenant's rights to cure such
failure and such failure by Tenant continues for less than ninety (90) days. In
the case of an emergency, no prior notification by Landlord shall be required.
Landlord may take such actions without any obligation and without releasing
Tenant from any of Tenant's obligations. All sums so paid by Landlord and all
incidental costs incurred by Landlord and interest thereon at the Applicable
Interest Rate, from the date of payment by Landlord, shall be paid to Landlord
on demand as Additional Rent.

                                   31. WAIVER

If either Landlord or Tenant waives the performance of any term, covenant or
condition contained in this Lease, such waiver shall not be deemed to be a
waiver of any subsequent breach of the same or any other term, covenant or
condition contained herein, or constitute a course of dealing contrary to the
expressed terms of this Lease. The acceptance of Rent by Landlord shall not
constitute a waiver of any preceding breach by Tenant of any term, covenant or
condition of this Lease, regardless of Landlord's knowledge of such preceding
breach at the time Landlord accepted such Rent. Failure by Landlord to enforce
any of the terms, covenants or conditions of this Lease for any length of time
shall not be deemed to waive or decrease the right of Landlord to insist
thereafter upon strict performance by Tenant. Waiver by Landlord of any term,




                                       23
<PAGE>   29

covenant or condition contained in this Lease may only be made by a written
document signed by Landlord, based upon full knowledge of the circumstances.

                                  32. NOTICES

Each provision of this Lease or of any applicable governmental laws, ordinances,
regulations and other requirements with reference to sending, mailing, or
delivery of any notice or the making of any payment by Landlord or Tenant to the
other shall be deemed to be complied with when and if the following steps are
taken:

A. RENT. All Rent and other payments required to be made by Tenant to Landlord
hereunder shall be payable to Landlord at Landlord's Remittance Address set
forth in the Basic Lease Information, or at such other address as Landlord may
specify from time to time by written notice delivered in accordance herewith.
Tenant's obligation to pay Rent and any other amounts to Landlord under the
terms of this Lease shall not be deemed satisfied until such Rent and other
amounts have been actually received by Landlord.

B. Other. All notices, demands, consents and approvals which may or are required
to be given by either party to the other hereunder shall be in writing and
either personally delivered, sent by commercial overnight courier, mailed,
certified or registered, postage prepaid or sent by facsimile with confirmed
receipt (and with an original sent by commercial overnight courier), and in each
case addressed to the party to be notified at the Notice Address for such party
as specified in the Basic Lease Information or to such other place as the party
to be notified may from time to time designate by at least fifteen (15) days
notice to the notifying party. Notices shall be deemed served upon receipt or
refusal to accept delivery. Tenant appoints as its agent to receive the service
of all default notices and notice of commencement of unlawful detainer
proceedings the person in charge of or apparently in charge of occupying the
Premises at the time, and, if there is no such person, then such service may be
made by attaching the same on the main entrance of the Premises.

C. Required Notices. Tenant shall immediately notify Landlord in writing of any
notice of a violation or a potential or alleged violation of any Regulation that
relates to the Premises, or of any inquiry, investigation, enforcement or other
action that is instituted or threatened by any governmental or regulatory agency
against Tenant or any other occupant of the Premises, or any claim that is
instituted or threatened by any third party that relates to the Premises.

                              33. ATTORNEYS' FEES

If Landlord places the enforcement of this Lease, or any part thereof, or the
collection of any Rent due, or to become due hereunder, or recovery of
possession of the Premises in the hands of an attorney, Tenant shall pay to
Landlord, upon demand, Landlord's reasonable attorneys' fees and court costs,
whether incurred at trial, appeal or review. In any action which Landlord or
Tenant brings to enforce its respective rights hereunder, the unsuccessful party
shall pay all costs incurred by the prevailing party including reasonable
attorneys' fees, to be fixed by the court, and said costs and attorneys' fees
shall be a part of the judgment in said action.

                           34. SUCCESSORS AND ASSIGNS

This Lease shall be binding upon and inure to the benefit of Landlord, its
successors and assigns, and shall be binding upon and inure to the benefit of
Tenant, its successors, and to the extent assignment is approved by Landlord or
as otherwise permitted hereunder, Tenant's assigns.

                               35. FORCE MAJEURE

If performance by a party of any portion of this Lease is made impossible by any
prevention, delay, or stoppage caused by strikes, lockouts, labor disputes, acts
of God, inability to obtain services, labor, or materials or reasonable
substitutes for those items, government actions, civil commotions, fire or other
casualty, or other causes beyond the reasonable control of the party obligated
to perform, performance by that party for a period equal to the period of that
prevention, delay, or stoppage is excused. Tenant's obligation to pay Rent,
however, is not excused by this Paragraph 35.

                           36. SURRENDER OF PREMISES

Subject to the provisions of Paragraph 12, Tenant shall, upon expiration or
sooner termination of this Lease, surrender the Premises to Landlord in the same
condition as existed on the date



                                       24
<PAGE>   30

Tenant originally took possession thereof, including, but not limited to, all
interior walls cleaned, all holes in walls repaired, all carpets cleaned, all
HVAC equipment in operating order and in good repair, and all floors cleaned,
and free of any Tenant-introduced marking or painting, all to the reasonable
satisfaction of Landlord. Tenant shall remove all of its debris from the
Premises. At or before the time of surrender, Tenant shall (i) comply with the
terms of Paragraph 12 hereof with respect to Alterations to the Premises and all
other matters addressed in such Paragraph, and (ii) obtain regulatory approvals
required for closure or cessation of the operations of Tenant and any subtenant.
If the Premises are not so surrendered at the expiration or sooner termination
of this Lease, the provisions of Paragraph 25 hereof shall apply. All keys to
the Premises or any part thereof shall be surrendered to Landlord upon
expiration or sooner termination of the Term. Tenant shall give written notice
to Landlord at least thirty (30) days prior to vacating the Premises and shall
meet with Landlord for a joint inspection of the Premises at the time of
vacating, but nothing contained herein shall be construed as an extension of the
Term or as a consent by Landlord to any holding over by Tenant. In the event of
Tenant's failure to give such notice or participate in such joint inspection,
Landlord's inspection at or after Tenant's vacating the Premises shall
conclusively be deemed correct for purposes of determining Tenant's
responsibility for repairs and restoration. Any delay caused by Tenant's failure
to carry out its obligations under this Paragraph 36 beyond the term hereof,
shall constitute unlawful and illegal possession of Premises under Paragraph 25
hereof.

                               37. MISCELLANEOUS

A. GENERAL. The term "Tenant" or any pronoun used in place thereof shall
indicate and include the masculine or feminine, the singular or plural number,
individuals, firms or corporations, and their respective successors, executors,
administrators and permitted assigns, according to the context hereof.

B. TIME. Time is of the essence regarding this Lease and all of its provisions.

C. CHOICE OF LAW. This Lease shall in all respects be governed by the laws of
the State of California.

D. ENTIRE AGREEMENT. This Lease, together with its Exhibits, addenda and
attachments and the Basic Lease Information, contains all the agreements of the
parties hereto and supersedes any previous negotiations. There have been no
representations made by the Landlord or understandings made between the parties
other than those set forth in this Lease and its Exhibits, addenda and
attachments and the Basic Lease Information.

E. MODIFICATION. This Lease may not be modified except by a written instrument
signed by the parties hereto. Tenant and Landlord accept the area of the
Premises as specified in the Basic Lease Information as the approximate area of
the Premises for all purposes under this Lease, and acknowledge and agree that
no other definition of the area (rentable, usable or otherwise) of the Premises
shall apply. Neither Landlord nor Tenant shall be entitled to a recalculation of
the square footage of the Premises, rentable, usable or otherwise, and no
recalculation, if made, irrespective of its purpose, shall reduce Tenant's
obligations under this Lease in any manner, including, without limitation, the
amount of Base Rent payable by Tenant or Tenant's Proportionate Share of the
Premises.

F. SEVERABILITY. If, for any reason whatsoever, any of the provisions hereof
shall be unenforceable or ineffective, all of the other provisions shall be and
remain in full force and effect.

G. RECORDATION. Tenant shall not record this Lease or a short form memorandum
hereof.

H. EXAMINATION OF LEASE. Submission of this Lease to Tenant does not constitute
an option or offer to lease and this Lease is not effective otherwise until
execution and delivery by both Landlord and Tenant.

I. ACCORD AND SATISFACTION. No payment by Tenant of a lesser amount than the
total Rent due nor any endorsement on any check or letter accompanying any check
or payment of Rent shall be deemed an accord and satisfaction of full payment of
Rent, and Landlord may accept such payment without prejudice to Landlord's right
to recover the balance of such Rent or to pursue other remedies. All offers by
or on behalf of Tenant of accord and satisfaction are hereby rejected in
advance.




                                       25
<PAGE>   31

J. EASEMENTS. Landlord may grant easements on the Premises and dedicate for
public use portions of the Premises without Tenant's consent; provided that no
such grant or dedication shall materially interfere with Tenant's Permitted Use
of the Premises. Upon Landlord's request, Tenant shall execute, acknowledge and
deliver to Landlord documents, instruments, maps and plats necessary to
effectuate Tenant's covenants hereunder.

K. DRAFTING AND DETERMINATION PRESUMPTION. The parties acknowledge that this
Lease has been agreed to by both the parties, that both Landlord and Tenant have
consulted with attorneys with respect to the terms of this Lease and that no
presumption shall be created against Landlord because Landlord drafted this
Lease. Except as otherwise specifically set forth in this Lease, with respect to
any consent, determination or estimation of Landlord required or allowed in this
Lease or requested of Landlord, Landlord's consent, determination or estimation
shall be given or made solely by Landlord in Landlord's good faith opinion,
whether or not objectively reasonable. If Landlord fails to respond to any
request for its consent within the time period, if any, specified in this Lease,
Landlord shall be deemed to have disapproved such request.

L. EXHIBITS. The Basic Lease Information, and the Exhibits, addenda and
attachments attached hereto are hereby incorporated herein by this reference and
made a part of this Lease as though fully set forth herein.

M. NO LIGHT, AIR OR VIEW EASEMENT. Any diminution or shutting off of light, air
or view by any structure which may be erected on lands adjacent to or in the
vicinity of the Premises shall in no way affect this Lease or impose any
liability on Landlord.

N. NO THIRD PARTY BENEFIT. This Lease is a contract between Landlord and Tenant
and nothing herein is intended to create any third party benefit.

O. QUIET ENJOYMENT. Upon payment by Tenant of the Rent, and upon the observance
and performance of all of the other covenants, terms and conditions on Tenant's
part to be observed and performed, Tenant shall peaceably and quietly hold and
enjoy the Premises for the term hereby demised without hindrance or interruption
by Landlord or any other person or persons lawfully or equitably claiming by,
through or under Landlord, subject, nevertheless, to all of the other terms and
conditions of this Lease. Landlord shall not be liable for any hindrance,
interruption, interference or disturbance by other third persons, nor shall
Tenant be released from any obligations under this Lease because of such
hindrance, interruption, interference or disturbance.

P. COUNTERPARTS. This Lease may be executed in any number of counterparts, each
of which shall be deemed an original.

Q. MULTIPLE PARTIES. If more than one person or entity is named herein as
Tenant, such multiple parties shall have joint and several responsibility to
comply with the terms of this Lease.

R. PRORATIONS. Any Rent or other amounts payable to Landlord by Tenant hereunder
for any fractional month shall be prorated based on a month of thirty (30) days.
As used herein, the term "fiscal year" shall mean the calendar year or such
other fiscal year as Landlord may deem appropriate.

                           38. ADDITIONAL PROVISIONS

A. OPTION TO EXTEND.

        (1) Subject to the terms and conditions of this Section 38.A, Tenant
        shall have one (1) option to extend the Term of this Lease with respect
        to all of the Premises for a period of seven (7) years commencing on the
        expiration date of the Term (the "Extension Period"). The option to
        extend is sometimes referred to herein as the "Option to Extend".

                (a)     The Option to Extend shall be exercised, if at all, by
                        written notice of exercise given to Landlord by Tenant
                        not earlier than August 30, 2017 and not later than
                        October 31, 2017 (the "Expiration Date"). In the event
                        that Tenant fails to deliver such exercise notice to
                        Landlord as provided herein, the Option to Extend shall
                        be null and void and of no further force or effect.

                (b)     Anything herein to the contrary notwithstanding, if
                        Tenant is in default of any monetary obligation
                        hereunder (without regard to any notice or cure period)
                        or is in default of any material non-monetary obligation
                        hereunder following the



                                       26
<PAGE>   32

                        expiration of any applicable notice and cure period,
                        either at the time Tenant exercises the Option to Extend
                        or on the commencement date of the Extension Period,
                        then Landlord shall have, in addition to all of
                        Landlord's other rights and remedies provided in this
                        Lease, the right to terminate the Option to Extend upon
                        written notice to Tenant.

        (2) In the event the Option to Extend is exercised in a timely fashion,
        this Lease shall be extended for an additional seven (7) years upon all
        of the terms and conditions of this Lease, provided that (i) Tenant
        shall not receive any tenant improvement allowance or other allowance,
        (ii) Tenant shall take the Premises in its AS-IS condition, (iii) the
        Rent for such Extension Period shall be adjusted to equal the "Fair
        Market Rent" for the Premises and (iv) Tenant shall have no further
        options to extend the Term of this Lease. For purposes hereof, "Fair
        Market Rent" shall mean the prevailing gross rental rate per annum per
        square foot as of the commencement date of the Extension Period,
        including, without limitation, base rent, additional rent and all other
        monetary payments (including base rent increases and step-ups) agreed to
        be paid by new tenants generally for first-class fully improved research
        and development space with ancillary office space in a condition
        (including the state of build out) and location comparable to the
        Premises in comparable first-class buildings in the City of Santa Clara
        for seven (7) year terms, pursuant to new leases entered into by such
        other tenants, and considering any rental abatement and any other
        similar concessions granted in connection with new leases for such
        comparable space (and other similar items). For purposes of this Section
        38.A, "fully improved research and development space with ancillary
        office space" shall mean such facilities which are improved with
        research and development space with ancillary office space comparable to
        those in existence in the Premises on the date of this Lease.

        (3) Within thirty (30) days after receipt of Tenant's written notice of
        its to exercise the Option to Extend, Landlord shall notify Tenant in
        writing of Landlord's proposed Fair Market Rent for the term of the
        Extension Period, based on the provisions of Section 2 above. Within
        thirty (30) days after receipt of such notice from Landlord, Tenant
        shall have the right either to (i) accept Landlord's statement of Fair
        Market Rent as the Fair Market Rent for the Extension Period, or (ii)
        elect to arbitrate Landlord's estimate of Fair Market Rent, such
        arbitration to be conducted pursuant to the provisions hereof. Failure
        on the part of Tenant to require arbitration of Fair Market Rent within
        thirty (30) such day period shall constitute acceptance of the Fair
        Market Rent for the Extension Period, as proposed by Landlord. If Tenant
        elects arbitration, the arbitration shall be concluded within ninety
        (90) days after the date of Tenant's election. To the extent that
        arbitration has not been completed prior to the expiration of the Term
        of the Lease, Tenant shall pay Fair Market Rent in an amount equal to
        the rate proposed by Landlord, and the Fair Market Rent shall be
        adjusted, if necessary, once the Fair Market Rent is ultimately
        determined by arbitration. Should the monthly installments of Fair
        Market Rent as adjusted for the period following the completion of such
        arbitration exceed the amount previously paid by Tenant for such period,
        Tenant shall pay the entire difference to Landlord within thirty (30)
        days following delivery of written demand. Should the monthly
        installments of Fair Market Rent as adjusted following completion of
        such arbitration be less than the amount previously paid by Tenant for
        such period, Landlord shall credit such difference against the next
        installment(s) of Fair Market Rent coming due. Upon determination of the
        Fair Market Rent for the Extension Period (whether by mutual agreement
        or by arbitration), the parties shall enter into an amendment to this
        Lease memorializing such determination.

        (4) In the event of arbitration, the judgment or the award rendered in
        any such arbitration may be entered in any court having jurisdiction and
        shall be final and binding between the parties. The arbitration shall be
        conducted and determined in the City and County of Santa Clara in
        accordance with the then prevailing rules of the American Arbitration
        Association or its successor for arbitration of commercial disputes
        except to the extent that the procedures mandated by said rules shall be
        modified as follows:

                (a)     Tenant shall make demand for arbitration in writing
                        within thirty (30) days after service of Landlord's
                        determination of Fair Market Rent given under Section 3
                        above, specifying therein the name and address of the
                        person to act as the arbitrator on its behalf. The
                        arbitrator shall be a leasing agent with at least ten
                        (10) years experience and otherwise familiar with the
                        Fair Market Rent of first-



                                       27
<PAGE>   33

                        class fully improved research and development and office
                        space in the City of Santa Clara who would qualify as an
                        expert witness over objection to give opinion testimony
                        addressed to the issue in a court of competent
                        jurisdiction. Failure on the part of Tenant to make a
                        proper demand in a timely manner for such arbitration
                        shall constitute a waiver of the right thereto. Within
                        fifteen (15) days after the service of the demand for
                        arbitration, Landlord shall give notice to Tenant,
                        specifying the name and address of the person designated
                        by Landlord to act as arbitrator on its behalf who shall
                        be similarly qualified. If Landlord fails to notify
                        Tenant of the appointment of its arbitrator, within or
                        by the time above specified, then the arbitrator
                        appointed by Tenant shall be the arbitrator to determine
                        the issue.

                        (b) In the event that two (2) arbitrators are chosen
                        pursuant to Section 4(a) above, the arbitrators so
                        chosen shall, within fifteen (15) days after the second
                        arbitrator is appointed, appoint a third arbitrator, who
                        shall be a competent and impartial person with
                        qualifications similar to those required of the first
                        two (2) arbitrators pursuant to Section 4(a). In the
                        event the two (2) arbitrators are unable to agree upon
                        such appointment within ten (10) days after expiration
                        of said fifteen (15) day period, the third arbitrator
                        shall be selected by the parties themselves, if they can
                        agree thereon, within a further period of fifteen (15)
                        days. If the parties do not so agree, then either party,
                        on behalf of both, may request appointment of such a
                        qualified person by the then Chief Judge of the United
                        States District Court having jurisdiction over the City
                        and County of Santa Clara, acting in his private and not
                        in his official capacity, and the other party shall not
                        raise any question as to such Judge's full power and
                        jurisdiction to entertain the application for and make
                        the appointment. The third arbitrator shall decide the
                        dispute if it has not previously been resolved by
                        following the procedure set forth below.

                        (c) Where the determination of Fair Market Rent cannot
                        be resolved by settlement between the parties during the
                        course of arbitration, the issue shall be resolved by
                        the third arbitrator in accordance with the following
                        procedure. The arbitrator selected by each of the
                        parties shall state in writing his or her determination
                        of the Fair Market Rent supported by the reasons
                        therefor with counterpart copies to each party. The
                        arbitrators shall arrange for a simultaneous exchange of
                        such proposed resolutions. The role of the third
                        arbitrator shall be to select which of the two proposed
                        resolutions most closely approximates his or her
                        determination of Fair Market Rent. The third arbitrator
                        shall have no right to propose a middle ground or any
                        modification of either of the two proposed resolutions.
                        The resolution he or she chooses as most closely
                        approximating his or her determination shall constitute
                        the decision of the arbitrators and be final and binding
                        upon the parties.

                        (d) In the event of a failure, refusal or inability of
                        any arbitrator to act, his or her successor shall be
                        appointed by him, but in the case of the third
                        arbitrator, his or her successor shall be appointed in
                        the same manner as provided for appointment of the third
                        arbitrator. The arbitrators shall decide the issue
                        within fifteen (15) days after the appointment of the
                        third arbitrator. Any decision in which the arbitrator
                        appointed by Landlord and the arbitrator appointed by
                        Tenant concur shall be binding and conclusive upon the
                        parties. Each party shall pay the fee and expenses of
                        its respective arbitrator and both shall share the fee
                        and expenses of the third arbitrator. The attorneys'
                        fees and expenses of counsel for the respective parties
                        and of witnesses shall be paid by the respective party
                        engaging such counsel or calling such witnesses.

                        (e) The third arbitrator shall have the right to consult
                        experts and competent authorities to obtain factual
                        information or evidence pertaining to a determination of
                        Fair Market Rent, but any such consultation shall be
                        made in the presence of both parties with full right on
                        their part to cross-examine. The third arbitrator shall
                        render his or her decision in writing with counterpart
                        copies to each party. The third arbitrator shall have no
                        power to modify the provisions of this Lease.



                                       28
<PAGE>   34

                        (f) The Option to Extend granted to Tenant pursuant to
                        this Section 38.A shall be personal to Aviron and shall
                        not be assigned, transferred or otherwise conveyed by
                        Aviron, provided, that Aviron shall be entitled to
                        assign, transfer or otherwise convey the Option to
                        Extend and the Lease to an Affiliate or a Public Company
                        to the extent provided and subject to the terms and
                        conditions of Section 21.A.3. Except as provided in the
                        previous sentence, in the event Aviron attempts to or
                        assigns, transfers or otherwise conveys the Option to
                        Extend granted hereunder or the Lease or attempts any of
                        the foregoing, the Option to Extend granted herein and
                        the Lease shall automatically terminate.

B. LETTER OF CREDIT.

        1.      DELIVERY OF LETTER OF CREDIT. In lieu of depositing a security
                deposit with Landlord, Tenant shall, on execution of this Lease,
                deliver to Landlord and cause to be in effect during the Lease
                Term an unconditional, irrevocable letter of credit ("LOC") in
                the amount specified for the Security Deposit in the Basic Lease
                Information, as it may be increased as provided in this Lease
                (the "LOC Amount") which LOC shall renew automatically from year
                to year. The LOC shall be in a form reasonably acceptable to
                Landlord and shall be issued by an LOC bank selected by Tenant
                and acceptable to Landlord. An LOC bank is a bank that accepts
                deposits, maintains accounts, has a local office that will
                negotiate a letter of credit, and the deposits of which are
                insured by the Federal Deposit Insurance Corporation. Tenant
                shall pay all expenses, points, or fees incurred by Tenant in
                obtaining the LOC. The LOC shall not be mortgaged, assigned or
                encumbered in any manner whatsoever by Tenant without the prior
                written consent of Landlord. Tenant acknowledges that Landlord
                has the right to transfer or mortgage its interest in the
                Premises, the Building and in this Lease and Tenant agrees that
                in the event of any such transfer or mortgage, Landlord shall
                have the right to transfer or assign the LOC and/or the LOC
                Security Deposit (as defined below) to the transferee or
                mortgagee, and in the event of such transfer, Tenant shall look
                solely to such transferee or mortgagee for the return of the LOC
                and/or the LOC Security Deposit.

        2.      REPLACEMENT OF LETTER OF CREDIT. Tenant may, from time to time,
                replace any existing LOC with a new LOC if the new LOC (a)
                becomes effective prior to the expiration of the LOC that it
                replaces; (b) is in the required LOC amount; (c) is issued by an
                LOC bank reasonably acceptable to Landlord; and (d) otherwise
                complies with the requirements of this Paragraph 38.B.

        3.      LANDLORD'S RIGHT TO DRAW ON LETTER OF CREDIT. Landlord shall
                hold the LOC as security for the performance of Tenant's
                obligations under this Lease. If, after notice and failure to
                cure within any applicable period provided in this Lease, Tenant
                defaults on any provision of this Lease, Landlord may, without
                prejudice to any other remedy it has, draw on that portion of
                the LOC necessary to (a) pay Rent or other sum in default; (b)
                pay or reimburse Landlord for any amount that Landlord may spend
                or become obligated to spend in exercising Landlord's rights
                under Paragraph 30; and/or (c) compensate Landlord for any
                expense, loss, or damage that Landlord may suffer because of
                Tenant's default. If Tenant fails to renew or replace the LOC
                prior to its expiration, Landlord may, without prejudice to any
                other remedy it has, draw on the entire amount of the LOC.

        4.      LOC SECURITY DEPOSIT. Any amount of the LOC that is drawn on by
                Landlord but not applied by Landlord shall be held by Landlord
                as a security deposit (the "LOC SECURITY DEPOSIT") in accordance
                with Paragraph 19 of this Lease.

        5.      RESTORATION OF LETTER OF CREDIT AND LOC SECURITY DEPOSIT. If
                Landlord draws on any portion of the LOC and/or applies all or
                any portion of such draw, Tenant shall, within five (5) business
                days after demand by Landlord, either (a) deposit cash with
                Landlord in an amount that, when added to the amount remaining
                under the LOC and the amount of any LOC Security Deposit, shall
                equal the LOC Amount then required under this Paragraph 38.B; or
                (b) reinstate the LOC to the full LOC Amount.



                                       29
<PAGE>   35
C. OPTION TO PURCHASE.

        (1) Landlord hereby grants to Tenant an option to purchase the Premises
        (the "First Option to Purchase") pursuant to the terms and conditions of
        this Section 38.C and the Purchase Agreement attached hereto as EXHIBIT
        E. The First Option to Purchase shall be exercisable at any time from
        the Term Commencement Date until September 30, 2000 (the "First Option
        Term") and subject to the requirements contained herein. The First
        Option to Purchase may be exercised by: (a) delivering written notice to
        Landlord (the "First Option Exercise Notice") not later than ninety (90)
        days prior to the proposed Closing Date (as defined in the Purchase
        Agreement) but in any event not later than September 30, 2000 and not
        earlier than one hundred twenty (120) days prior to the proposed Closing
        Date and in accordance with the notice provisions contained in the Basic
        Lease Information, (b) delivering a copy of the Purchase Agreement
        executed by Tenant, and (c) depositing the sum of Five Hundred Thousand
        Dollars ($500,000) with the Title Company (as defined in the Purchase
        Agreement) and held in accordance with the terms and conditions of the
        Purchase Agreement. The First Option Exercise Notice shall affirmatively
        state that the Tenant exercises the First Option to Purchase without
        condition or qualification. Subject to the terms and conditions of the
        Purchase Agreement, in the event Tenant exercises the First Option to
        Purchase, in no event shall the Closing Date be later than January 31,
        2001.

        (2) In the event Tenant does not exercise the First Option to Purchase
        as set forth herein, Landlord hereby grants to Tenant an option to
        purchase the Premises (the "Second Option to Purchase," together with
        the First Option to Purchase hereinafter referred to collectively as the
        "Option to Purchase") pursuant to the terms and conditions of this
        Section 38.C. and the Purchase Agreement attached hereto as EXHIBIT E.
        The Second Option to Purchase shall be exercisable from April 1, 2018 to
        May 31, 2018 (the "Second Option Term") and subject to the requirements
        contained herein. The Second Option to Purchase may only be exercised
        by: (a) delivering written notice to Landlord (the "Second Option
        Exercise Notice") not later than May 31, 2018 and not earlier than April
        1, 2018 and in accordance with the notice provisions contained in the
        Basic Lease Information, (b) delivering a copy of the Purchase Agreement
        executed by Tenant, and (c) depositing the sum of Five Hundred Thousand
        Dollars ($500,000) with the Title Company (as defined in the Purchase
        Agreement) and held in accordance with the terms and conditions of the
        Purchase Agreement; provided, however, prior to delivering the Second
        Option Exercise Notice, Tenant shall have first exercised the Option to
        Extend pursuant to the terms and conditions of Section 38.A. above. The
        Second Option Exercise Notice shall affirmatively state that the Tenant
        exercises the Second Option to Purchase without condition or
        qualification. Subject to the terms and conditions of the Purchase
        Agreement, in the event Tenant exercises the Second Option to Purchase,
        the Closing Date shall be January 31, 2019.

        (3) The purchase price (the "Purchase Price") for the First Option to
        Purchase or the Second Option to Purchase, as applicable, shall be equal
        to the "Fair Market Value" for the Premises at the time Tenant delivers
        the First Option Exercise Notice or the Second Option Exercise Notice,
        as applicable. For purposes hereof, "Fair Market Value" shall mean the
        amount that a third party independent buyer would pay for the Premises
        and the amount that a third party independent seller would accept for
        the Premises under no compulsion to buy or sell, respectively, and
        taking into account all circumstances of the Premises, including, but
        not limited to, the physical, economic and other market conditions of
        the Premises, and purchase price for first-class space in a condition
        (including the state of build out) and location comparable to the
        Premises in comparable first-class "biotech" buildings in the San Mateo,
        Santa Clara, Alameda and San Francisco counties. In addition, for
        purposes of determining "Fair Market Value", the appraisers shall be
        instructed to appraise the Premises on the basis that it is an income
        producing property. For purposes of the appraisal, the appraisers shall
        be instructed to assume that this Lease will remain in effect during the
        entire Term (and the Term as extended pursuant to the Option to Extend
        in the case of the Second Option to Purchase); that Tenant will pay when
        due all Base Rent (calculated pursuant to Section 38.A above in the case
        of the Second Option to Purchase), Additional Rent and all other sums
        due hereunder (including, without limitation, all adjustments thereto
        provided for hereunder); and that the Tenant will comply with the terms
        of the Lease during the Term hereof (and



                                       30
<PAGE>   36


        the Term as extended pursuant to the Option to Extend in the case of the
        Second Option to Purchase).

                (a) On or before the date that is fifteen (15) days after
                receipt of the First Option Exercise Notice or Second Option
                Exercise Notice, as applicable, Landlord shall notify Tenant in
                writing of Landlord's proposed Purchase Price, based on the
                provisions of Section 3 above. Within fifteen (15) days after
                receipt of such notice from Landlord, Tenant shall have the
                right either to (i) accept Landlord's statement of Purchase
                Price as the Purchase Price for the Premises, or (ii) elect to
                arbitrate the Fair Market Value of the Premises, such
                arbitration to be conducted pursuant to the provisions hereof.
                Failure on the part of Tenant to require arbitration of Fair
                Market Value within such fifteen (15) day period shall
                constitute acceptance of the Purchase Price for the Premises, as
                proposed by Landlord. If Tenant elects arbitration, the
                arbitration shall be concluded as expeditiously as possible but
                in any event within sixty (60) days after the date of Tenant's
                election. To the extent that arbitration has not been completed
                as provided herein, Tenant shall pay the Purchase Price proposed
                by Landlord, and the Purchase Price shall be adjusted, if
                necessary, pursuant to a provision in the Purchase Agreement
                which shall survive the Closing Date, once the Fair Market Value
                is ultimately determined by arbitration. Should the Purchase
                Price as determined by arbitration exceed the Purchase Price
                previously paid by Tenant, Tenant shall pay the entire
                difference to Landlord within thirty (30) days following
                delivery of written demand. Should the Purchase Price as
                determined by arbitration be less than the Purchase Price
                previously paid by Tenant, Landlord shall pay the entire
                difference to Tenant within thirty (30) days following delivery
                of written demand. Upon determination of the Purchase Agreement
                (whether by mutual agreement or by arbitration), the parties
                shall incorporate the Purchase Price into the Purchase
                Agreement.

                (b) In the event of arbitration, the judgement or award rendered
                in any such arbitration may be entered in any court having
                jurisdiction and shall be final and binding between the parties.
                The arbitration shall be conducted and determined in the City
                and County of Santa Clara in accordance with the then prevailing
                rules of the American Arbitration Association or its successor
                for arbitration of commercial disputes except to the extent that
                the procedures mandated by said rules shall be modified as
                follows:

                (c) Tenant shall make demand for arbitration in writing within
                fifteen (15) days after service of Landlord's delivery of notice
                of the Purchase Price, specifying therein the name and address
                of the person to act as the arbitrator on its behalf. The
                arbitrator shall be a MAI appraiser with at least ten (10) years
                experience and otherwise familiar with the Fair Market Values of
                first-class buildings in a condition (including the state of
                build out) and location comparable to the Premises in comparable
                first-class "biotech" buildings in the San Mateo, Santa Clara,
                Alameda and San Francisco counties who would qualify as an
                expert witness over objection to give opinion testimony
                addressed to the issue in a court of competent jurisdiction.
                Failure on the part of Tenant to make a proper demand in a
                timely manner for such arbitration shall constitute a waiver of
                the right thereto. Within fifteen (15) days after the service of
                the demand for arbitration, Landlord shall give notice to
                Tenant, specifying the name and address of the person designated
                by Landlord to act as arbitrator on its behalf who shall be
                similarly qualified. If Landlord fails to notify Tenant of the
                appointment of its arbitrator, within or by the time above
                specified, then the arbitrator appointed by Tenant shall be the
                arbitrator to determine the issue.

                (d) In the event that two (2) arbitrators are chosen pursuant to
                Section 4(a) above, the arbitrators so chosen shall, within
                fifteen (15) days after the second arbitrator is appointed,
                appoint a third arbitrator, who shall be a competent and
                impartial person with qualifications similar to those required
                of the first two (2) arbitrators pursuant to Section 4(a). In
                the event the two (2) arbitrators are unable to agree upon such
                appointment within ten (10) days after expiration of said
                fifteen (15) day period, the third arbitrator shall be selected
                by the parties themselves, if they can agree thereon, within a
                further period of five (5) days. If



                                       31
<PAGE>   37

                the parties do not so agree, then either party, on behalf of
                both, may request appointment of such a qualified person by the
                then Chief Judge of the United States District Court having
                jurisdiction over the City and County of Santa Clara, acting in
                his private and not in his official capacity, and the other
                party shall not raise any question as to such Judge's full power
                and jurisdiction to entertain the application for and make the
                appointment. The third arbitrator shall decide the dispute if it
                has not previously been resolved by following the procedure set
                forth below.

                (e) Where the determination of Fair Market Value cannot be
                resolved by settlement between the parties during the course of
                arbitration, the issue shall be resolved by the third arbitrator
                in accordance with the following procedure. The arbitrator
                selected by each of the parties shall state in writing his or
                her determination of the Fair Market Value supported by the
                reasons therefor with counterpart copies to each party. The
                arbitrators shall arrange for a simultaneous exchange of such
                proposed resolutions. The role of the third arbitrator shall be
                to select which of the two proposed resolutions most closely
                approximates his or her determination of Fair Market Value. The
                third arbitrator shall have no right to propose a middle ground
                or any modification of either of the two proposed resolutions.
                The resolution he or she chooses as most closely approximating
                his or her determination shall constitute the decision of the
                arbitrators and be final and binding upon the parties.

                (f) In the event of a failure, refusal or inability of any
                arbitrator to act, his or her successor shall be appointed by
                him, but in the case of the third arbitrator, his or her
                successor shall be appointed in the same manner as provided for
                appointment of the third arbitrator. The arbitrators shall
                decide the issue within ten (10) days after the appointment of
                the third arbitrator. Any decision in which the arbitrator
                appointed by Landlord and the arbitrator appointed by Tenant
                concur shall be binding and conclusive upon the parties. Each
                party shall pay the fee and expenses of its respective
                arbitrator and both shall share the fee and expenses of the
                third arbitrator. The attorneys' fees and expenses of counsel
                for the respective parties and of witnesses shall be paid by the
                respective party engaging such counsel or calling such
                witnesses.

                (g) The third arbitrator shall have the right to consult experts
                and competent authorities to obtain factual information or
                evidence pertaining to a determination of Fair Market Value, but
                any such consultation shall be made in the presence of both
                parties with full right on their part to cross-examine. The
                third arbitrator shall render his or her decision in writing
                with counterpart copies to each party. The third arbitrator
                shall have no power to modify the provisions of this Lease.

        (4) So long as all conditions to the exercise of the Option to Purchase
        are satisfied or are waived in writing by Landlord, Tenant may exercise
        the Option to Purchase in accordance with this Section 38.C and in no
        other manner. In the event that Tenant fails to deliver the First Option
        Exercise Notice or the Second Option Exercise Notice to Landlord as
        provided herein, the First Option Exercise Notice or the Second Option
        Exercise Notice, as applicable, shall be null and void and of no further
        force or effect.

        (5) Anything herein to the contrary notwithstanding, if Tenant is in
        default of any monetary obligation hereunder (without regard to any
        notice or cure period) or is in default of any material non-monetary
        obligation hereunder following the expiration of any applicable notice
        and cure period, either at the time Tenant exercises the Option to
        Purchase or on the Closing Date, then Landlord shall have, in addition
        to all of Landlord's other rights and remedies provided in this Lease,
        the right to terminate the First Option to Purchase, or the Second
        Option to Purchase, as applicable, upon written notice to Tenant. Any
        inspection or testing of the Premises by Tenant shall be conducted in
        accordance with the Purchase Agreement.

        (6) The First Option to Purchase and the Second Option to Purchase
        granted to Tenant pursuant to this Section 38.C shall be personal to
        Aviron and shall not be assigned, transferred or otherwise conveyed by
        Aviron; provided, that Aviron shall be entitled to assign, transfer or
        otherwise convey the First Option to Purchase or the Second Option to
        Purchase, as applicable, or assign the Lease to an Affiliate or a Public




                                       32
<PAGE>   38

        Company to the extent provided and subject to the terms and conditions
        of Section 21.A.3. Except as provided in the previous sentence, in the
        event Aviron attempts to or assigns, transfers or otherwise conveys the
        First Option to Purchase and/or the Second Option to Purchase granted
        hereunder or assign the Lease or attempts any of the foregoing, both the
        First Option to Purchase and the Second Option to Purchase granted
        herein and the Lease shall automatically terminate.

        (7) Landlord and tenant agree that Tenant's failure to perform as
        required in this Section 38.C may result in substantial losses to
        Landlord, including, but not limited to, the loss of prospective tenants
        and/or purchasers of the Premises. As a consequence thereof, Landlord
        and Tenant agree that time is truly of the essence of each of the
        provisions of this Section 38.C and the Purchase Agreement.

        (8) On the Closing Date, this Lease shall automatically terminate, Rent
        and other charges owing to Landlord, if any, shall be prorated as of the
        Closing Date and neither Landlord nor Tenant shall have any further
        obligations hereunder except as specifically provided herein to the
        contrary.



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


                                       LANDLORD

                                       Spieker Properties, L.P.,
                                       a California limited partnership

                                       By:  Spieker Properties, Inc.,
                                            a Maryland corporation,
                                            its general partner


                                            By:  /s/ [Signature Illegible]
                                                --------------------------------

                                            Its:  Regional Senior Vice President
                                                --------------------------------


                                       Date: February 5, 1999

                                       TENANT

                                       Aviron,
                                       a Delaware corporation


                                       By:   Fred Kurland
                                           -------------------------------------

                                       Its:  Senior Vice President and Chief
                                             Financial Officer
                                           -------------------------------------

                                       Date: February 5, 1999



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<PAGE>   39
                                    EXHIBIT A

                         SITE PLAN, PROPERTY DESCRIPTION



All of that real property situated in the City of Santa Clara, County of Santa
Clara, State of California, described as follows:

Parcel B, as shown on that Parcel Map filed for record in the Office of the
Recorder of the County of Santa Clara, State of California on October 10, 1979
in Book 450 of Maps, page(s) 56. ARB No. 104-4-42.08.