<PAGE>   1
                                                                   Exhibit 10.32


                                LEASE AGREEMENT

                                 BY AND BETWEEN

                         AETNA LIFE INSURANCE COMPANY,
                           a Connecticut corporation

                                  AS LANDLORD

                                      and

                         MOLECULAR DEVICES CORPORATION,
                            a California corporation

                                   AS TENANT

                               Dated May 26, 2000
<PAGE>   2
                               TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                            Page
<S>                                                                          <C>
Basic Lease Information ..................................................... iv
1.  Demise ..................................................................  1
2.  Premises ................................................................  1
3.  Term ....................................................................  2
4.  Rent ....................................................................  2
5.  Utility Expenses ........................................................  6
6.  Late Charge .............................................................  6
7.  Security Deposit ........................................................  7
8.  Use of Premises .........................................................  7
9.  Acceptance of Premises ..................................................  9
10. Surrender ...............................................................  9
11. Alterations and Additions ............................................... 10
12. Maintenance and Repairs of Premises ..................................... 12
13. Landlord's Insurance .................................................... 13
14. Tenant's Insurance ...................................................... 14
15. Indemnification ......................................................... 15
16. Subrogation ............................................................. 16
17. Signs ................................................................... 16
18. Free From Liens ......................................................... 16
19. Entry By Landlord ....................................................... 17
20. Destruction and Damage .................................................. 17
21. Condemnation ............................................................ 19
22. Assignment and Subletting ............................................... 20
</TABLE>

                                       i
<PAGE>   3

<TABLE>
<S>  <C>                                                                     <C>
23.  Tenant's Default ......................................................  22
24.  Landlord's Remedies ...................................................  24
25.  Landlord's Right to Perform Tenant's Obligations ......................  26
26.  Attorneys' Fees .......................................................  27
27.  Taxes .................................................................  27
28.  Effect of Conveyance ..................................................  27
29.  Tenant's Estoppel Certificate .........................................  28
30.  Subordination .........................................................  28
31.  Environmental Covenants ...............................................  29
32.  Notices ...............................................................  32
33.  Waiver ................................................................  32
34.  Holding Over ..........................................................  33
35.  Successors and Assigns ................................................  33
36.  Time ..................................................................  33
37.  Brokers ...............................................................  33
38.  Limitation of Liability ...............................................  33
39.  Financial Statements ..................................................  34
40.  Rules and Regulations .................................................  34
41.  Mortgagee Protection ..................................................  34
42   Entire Agreement ......................................................  35
43.  Interest ..............................................................  35
44.  Construction ..........................................................  35
45.  Representations and Warranties of Tenant ..............................  35
46.  Security ..............................................................  36
47.  Jury Trial Waiver .....................................................  36
</TABLE>



                                       ii
<PAGE>   4
48.   Option to Renew...............................................  36

49.   Right of First Offer..........................................  37

            Exhibit

               A        Rules and Regulations

               B        Hazardous Materials Disclosure Certificate

               C        Form of Tenant Estoppel Certificate


                                      iii
<PAGE>   5

                                LEASE AGREEMENT

                            BASIC LEASE INFORMATION

--------------------------------------------------------------------------------
               Lease Date:    May 26, 2000
--------------------------------------------------------------------------------
                 Landlord:    AETNA LIFE INSURANCE COMPANY,
                              a Connecticut corporation
--------------------------------------------------------------------------------
       Landlord's Address:    c/o UBS Brinson Realty Investors LLC
                              455 Market Street, Suite 1540
                              San Francisco, California 94105
                              Attention: Asset Manager
                                         Moffett Park
--------------------------------------------------------------------------------
                              All notices sent to Landlord under this Lease
                              shall be sent to the above address, with copies
                              to:

                                    Insignia/ESG of California, Inc.
                                    160 West Santa Clara Street, Suite 1350
                                    San Jose, California 95113
                                    Attention: Property Manager
                                               Moffett Park
--------------------------------------------------------------------------------
                   Tenant:    Molecular Devices Corporation,
                              a California corporation
--------------------------------------------------------------------------------
  Tenant's Contact Person:    Tim Harkness
--------------------------------------------------------------------------------
         Tenant's Address:    1311 Orleans Drive
                              Sunnyvale, California 94089
--------------------------------------------------------------------------------
  Premises Square Footage:    Approximately sixty thousand sixty-one (60,061)
                              rentable square feet
--------------------------------------------------------------------------------
         Premises Address:    1311 Orleans Drive
                              Sunnyvale, California
--------------------------------------------------------------------------------
                  Project:    1311 Orleans Drive, Sunnyvale, California,
                              together with the land on which the Project is
                              situated and all Common Areas
--------------------------------------------------------------------------------
 Building (if not the same
          as the Project):    Same as the Project
--------------------------------------------------------------------------------
           Length of Term:    Seventy-two (72) months
--------------------------------------------------------------------------------

                                       iv
<PAGE>   6
        Commencement Date:    November 1, 2001
--------------------------------------------------------------------------------
          Expiration Date:    October 31, 2007
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
        Monthly Base Rent:    Months         Monthly Base Rent
-------------------------------------------------------------------------------------
<S>                           <C>            <C>
                               1 - 12         $240,244.00
-------------------------------------------------------------------------------------
                              13 - 24         $249,853.76
-------------------------------------------------------------------------------------
                              25 - 36         $259,847.91
-------------------------------------------------------------------------------------
                              37 - 48         $270,241.83
-------------------------------------------------------------------------------------
                              49 - 60         $281,051.50
-------------------------------------------------------------------------------------
                              61 - 72         $292,293.56
-------------------------------------------------------------------------------------
         Security Deposit:    Two Hundred Ninety-Two Thousand Two Hundred
                              Ninety-Three and 56/100 Dollars ($292,293.56)
-------------------------------------------------------------------------------------
            Permitted Use:    General office or laboratory research and development
                              facility, including wet chemistry, manufacturing and
                              biology labs, clean rooms and instrument assembly
-------------------------------------------------------------------------------------
Unreserved Parking Spaces:    All nonexclusive and undesignated parking spaces
                              located on the Project
-------------------------------------------------------------------------------------
    Alterations Allowance:    Three Hundred Thousand Three Hundred Five Dollars
                              ($300,305.00)
-------------------------------------------------------------------------------------
                Broker(s):    Insignia/ESG of California, Inc. and CPS
                              (collectively, Landlord's Broker)

                              Cresa Partners (Tenant's Broker)
-------------------------------------------------------------------------------------
</TABLE>


                                       v
<PAGE>   7
                                LEASE AGREEMENT

                            BASIC LEASE INFORMATION

<TABLE>
<S>                              <C>
                  Lease Date:    May 26, 2000
--------------------------------------------------------------------------------
                    Landlord:    AETNA LIFE INSURANCE COMPANY,
                                 a Connecticut corporation
--------------------------------------------------------------------------------
          Landlord's Address:    c/o UBS Brinson Realty Investors LLC
                                 455 Market Street, Suite 1540
                                 San Francisco, California 94105
                                 Attention:   Asset Manager
                                              Moffett Park
--------------------------------------------------------------------------------
                                 All notices sent to Landlord under this Lease
                                 shall be sent to the above address, with copies
                                 to:

                                     Insignia/ESG of California, Inc.
                                     160 West Santa Clara Street, Suite 1350
                                     San Jose, California 95113
                                     Attention:   Property Manager
                                                  Moffett Park
--------------------------------------------------------------------------------
                      Tenant:    Molecular Devices Corporation,
                                 a California corporation
--------------------------------------------------------------------------------
     Tenant's Contact Person:    Tim Harkness
--------------------------------------------------------------------------------
            Tenant's Address:    1311 Orleans Drive
                                 Sunnyvale, California 94089
--------------------------------------------------------------------------------
     Premises Square Footage:    Approximately sixty thousand sixty-one (60,061)
                                 rentable square feet
--------------------------------------------------------------------------------
            Premises Address:    1311 Orleans Drive
                                 Sunnyvale, California
--------------------------------------------------------------------------------
                     Project:    1311 Orleans Drive, Sunnyvale, California,
                                 together with the land on which the Project is
                                 situated and all Common Areas
--------------------------------------------------------------------------------
Building (if not the same as
                the Project):    Same as the Project
--------------------------------------------------------------------------------
              Length of Term:    Seventy-two (72) months
--------------------------------------------------------------------------------
</TABLE>


                                       iv
<PAGE>   8
        Commencement Date:   November 1, 2001
--------------------------------------------------------------------------------
          Expiration Date:   October 31, 2007
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
        Monthly Base Rent:   Months         Monthly Base Rent
--------------------------------------------------------------------------------
<S>                          <C>            <C>
                              1 - 12           $240,244.00
--------------------------------------------------------------------------------
                             13 - 24           $249,853.76
--------------------------------------------------------------------------------
                             25 - 36           $259,847.91
--------------------------------------------------------------------------------
                             37 - 48           $270,241.83
--------------------------------------------------------------------------------
                             49 - 60           $281,051.50
--------------------------------------------------------------------------------
                             61 - 72           $292,293.56
</TABLE>
--------------------------------------------------------------------------------
          Security Deposit:  Two Hundred Ninety-Two Thousand Two Hundred Ninety-
                             Three and 56/100 Dollars ($292,293.56)
--------------------------------------------------------------------------------
             Permitted Use:  General office or laboratory research and
                             development facility, including wet chemistry,
                             manufacturing and biology labs, clean rooms and
                             instrument assembly
--------------------------------------------------------------------------------
 Unreserved Parking Spaces:  All nonexclusive and undesignated parking spaces
                             located on the Project
--------------------------------------------------------------------------------
     Alterations Allowance:  Three Hundred Thousand Three Hundred Five Dollars
                             ($300,305.00)
--------------------------------------------------------------------------------
                 Broker(s):  Insignia/ESG of California, Inc. and CPS
                             (collectively, Landlord's Broker)
--------------------------------------------------------------------------------
                             Cresa Partners (Tenant's Broker)



<PAGE>   9
improvements therefrom; (d) use the Common Areas while engaged in making
additional improvements, repairs or alterations to the Project or any portion
thereof, and (e) do and perform any other acts or make any other changes in, to
or with respect to the Common Areas and the Project as Landlord may, in its
sole discretion, deem to be appropriate; provided, however, that Landlord shall
not unreasonably interfere with Tenant's use and occupancy of the Premises (or
reduce the number of parking spaces by more than five percent (5%) of the
number provided to Tenant on the date of this Lease) in the exercise of its
rights hereunder.

3.   TERM

     The term of this Lease (the "TERM") shall be for the period of months
specified in the Basic Lease Information, commencing on November 1, 2001 (the
"COMMENCEMENT DATE") and expiring on October 31, 2007 (the "EXPIRATION DATE").

4.   RENT

     (a)  BASE RENT.  Tenant shall pay to Landlord, in advance on the first day
of each month, without further notice or demand and without offset, rebate,
credit or deduction for any reason whatsoever, the monthly installments of rent
specified in the Basic Lease Information (the "BASE RENT").

     (b)  ADDITIONAL RENT.  This Lease is intended to be a triple-net Lease
with respect to Landlord; and subject to Paragraph 12(b) below, the Base Rent
owing hereunder is (i) to be paid by Tenant absolutely net of all costs and
expenses relating to Landlord's ownership and operation of the Project and the
Building, and (ii) not to be reduced, offset or diminished, directly or
indirectly, by any cost, charge or expense payable hereunder by Tenant or by
others in connection with the Premises, the Building and/or the Project or any
part thereof. The provisions of this Paragraph 4(b) for the payment of Expenses
as hereinafter defined) are intended to pass on to Tenant all such costs and
expenses. In addition to the Base Rent, Tenant shall pay to Landlord, in
accordance with this Paragraph 4, all costs and expenses paid or incurred by
Landlord in connection with the ownership, operation, maintenance, management
and repair of the Premises, the Building and/or the Project or any part thereof
(collectively, the "EXPENSES"), including, without limitation, all the
following items (the "ADDITIONAL RENT"):

          (i)  Taxes and Assessments.  All real estate taxes and assessment,
which shall include any form of tax, assessment, fee, license fee, business
license fee, levy, penalty (if a result of Tenant's delinquency), or tax (other
than net income, estate, succession, inheritance, transfer or franchise taxes),
imposed by any authority having the direct or indirect power to tax, or by any
city, county, state or federal government or any improvement or other district
or division thereof, whether such tax is: (A) determined by the area of the
Premises, the Building and/or the Project or any part thereof, or the Rent and
other sums payable hereunder by Tenant or by other tenants, including, but not
limited to, any gross income or excise tax levied by any of the foregoing
authorities with respect to receipt of Rent and/or other sums due under this
Lease; (B) upon any legal or equitable interest of Landlord in the Premises,
the Building and/or the Project or any part thereof; (C) upon this transaction
or any document to which Tenant is a party creating or transferring any
interest in the Premises, the Building and/or the Project; (D) levied or
assessed in lieu of, in substitution for, or in addition to, existing or
additional taxes against the Premises,

                                       2
<PAGE>   10
the Building and/or the Project, whether or not now customary or within the
contemplation of the parties; or (E) surcharged against the parking area.
Tenant and Landlord acknowledge that Proposition 13 was adopted by the voters
of the State of California in the June, 1978 election and that assessments,
taxes, fees, levies and charges may be imposed by governmental agencies for
such purposes as fire protection, street, sidewalk, road, utility construction
and maintenance, refuse removal and for other governmental services which may
formerly have been provided without charge to property owners or occupants.  It
is the intention of the parties that all new and increased assessments, taxes,
fees, levies and charges due to any cause whatsoever are to be included within
the definition of real property taxes for purposes of this Lease.  "TAXES AND
ASSESSMENTS" shall also include legal and consultants' fees, costs and
disbursements incurred in connection with proceedings to contest, determine or
reduce taxes, Landlord specifically reserving the right, but not the
obligation, to contest by appropriate legal proceedings the amount or validity
of any taxes.

       (ii)  Insurance.  All insurance premiums for the Building and/or the
Project or any part thereof, including premiums for "all risk" fire and
extended coverage insurance, commercial general liability insurance, rent loss
or abatement insurance, earthquake insurance, flood or surface water coverage,
and other insurance as Landlord deems necessary in its sole discretion, and any
deductibles paid under policies of any such insurance.

       (iii) Utilities.  The cost of all Utilities (as hereinafter defined)
serving the Premises, the Building and the Project that are not separately
metered to Tenant, any assessments of charges for Utilities or similar
purposes included within any tax bill for the Building or the Project,
including, without limitation, entitlement fees, allocation unit fees, and/or
any similar fees or charges and any penalties (if a result of Tenant's
delinquency) related thereto, and any amounts, taxes, charges, surcharges,
assessments or impositions levied, assessed or imposed upon the Premises, the
Building or the Project or any part thereof, or upon Tenant's use and occupancy
thereof, as a result of any rationing of Utility services or restriction on
Utility use affecting the Premises, the Building and/or the Project, as
contemplated in Paragraph 5 below (collectively, "UTILITY EXPENSES").

       (iv) Common Area Expenses.  All costs to operate, maintain, repair,
replace, supervise, insure and administer the Common Areas, including supplies,
materials, labor and equipment used in or related to the operation and
maintenance of the Common Areas, including parking areas (including, without
limitation, all costs of resurfacing and restriping parking areas), signs and
directories on the Building and/or the Project, landscaping (including
maintenance contracts and fees payable to landscaping consultants), amenities,
sprinkler systems, sidewalks, walkways, driveways, curbs, lighting systems and
security services, if any, provided by Landlord for the Common Areas, and any
charges, assessments, costs or fees levied by any association or entity of
which the Project or any part thereof is a member or to which the Project or
any part thereof is subject.

       (v) Parking Charges.  Any parking charges or other costs levied,
assessed or imposed by, or at the direction of, or resulting from statutes or
regulations, or interpretations thereof, promulgated by any governmental
authority or insurer in connection with the use or occupancy of the Building or
the Project.



                                       3
<PAGE>   11
                                LEASE AGREEMENT

     THIS LEASE AGREEMENT is made and entered into by and between Landlord and
Tenant on the Lease Date. The defined terms used in this Lease which are
defined in the Basic Lease Information attached to this Lease Agreement ("BASIC
LEASE INFORMATION") shall have the meaning and definition given them in the
Basic Lease Information. The Basic Lease Information, the exhibits, the
addendum or addenda described in the Basic Lease Information, and this Lease
Agreement are and shall be construed as a single instrument and are referred to
herein as the "LEASE".

1.   DEMISE

     In consideration for the rents and all other charges and payments payable
by Tenant, and for the agreements, terms and conditions to be performed by
Tenant in this Lease, LANDLORD DOES HEREBY LEASE TO TENANT, AND TENANT DOES
HEREBY HIRE AND TAKE FROM LANDLORD the Premises described below (the
"PREMISES"), upon the agreements, terms and conditions of this Lease for the
Term hereinafter stated.

2.   PREMISES

     The Premises demised by this Lease is located in that certain building
(the "BUILDING") specified in the Basic Lease Information, which Building is
located in that certain real estate development (the "PROJECT") specified in
the Basic Lease Information. The Premises has the address and contains the
square footage specified in the Basic Lease Information; provided, however,
that any statement of square footage set in this Lease, or that may have been
used in calculating any of the economic terms hereof, is an approximation which
Landlord and Tenant agree is reasonable, and no economic terms based thereon
shall be subject to revision whether or not the actual footage is more or less.
Tenant shall have the non-exclusive right (in common with the other tenants,
Landlord and any other person granted use by Landlord) to use the Common Areas
(as hereinafter defined), except that, with respect to parking, Tenant shall
have only a license to use the parking spaces in the Project's parking areas
(the "PARKING AREAS"); provided, however, that Landlord shall not be required
to enforce Tenant's right to use such parking spaces; and provided, further,
that the parking spaces allocated to Tenant hereunder shall be reduced in the
event any of the parking spaces in the Parking Areas are taken or otherwise
eliminated as a result of any Condemnation (as hereinafter defined) or casualty
event affecting such Parking Areas. No easement for light or air is
incorporated in the Premises. For purposes of this Lease, the term "COMMON
AREAS" shall mean all areas and facilities outside the Premises and within the
exterior boundary line of the Project that are provided and designated by
Landlord for the non-exclusive use of Landlord, Tenant and other tenants of the
Project and their respective employees, guests and invitees.

     Landlord has the right, in its sole discretion, from time to time, to: (a)
make changes to the Common Areas, including, without limitation, changes in the
location, size, shape and number of driveways, entrances, parking spaces,
parking areas, ingress, egress, direction of driveways, entrances, corridors
and walkways; (b) close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains available; (c)
add additional buildings and improvements to the Common Areas or remove
existing buildings or

                                       1
<PAGE>   12
          (vi) Maintenance and Repair Costs.  Except for costs which are the
responsibility of Landlord pursuant to Paragraph 12(b) below, all costs to
maintain, repair, and replace the Premises, the Building and/or the Project or
any part thereof, including, without limitation, (A) all costs paid under
maintenance, management and service agreements such as contracts for
janitorial, security and refuse removal, (B) all costs to maintain, repair, and
replace the roof coverings of the Building or the Project or any part thereof,
(C) all costs to maintain, repair and replace the heating, ventilating, air
conditioning, plumbing, sewer, drainage, electrical, fire protection, life
safety and security systems and other mechanical and electrical systems and
equipment serving the Premises, the Building and/or the Project or any part
thereof (collectively, the "SYSTEMS"), and (D) all costs and expenses incurred
in causing the Project to be Year 2000 Compliant (as defined below).  "YEAR
2000 COMPLIANT" shall mean that all Systems containing or using computers or
other information technology will function without material error or
interruption resulting from the date change from year 1999 to year 2000, to the
extent that information technology of third parties properly communicates
date/time data with the Systems.

          (vii) Life Safety Costs.  All costs to install, maintain, repair and
replace all life safety systems, including, without limitation, all fire alarm
systems, serving the Premises, the Building and/or the Project or any part
thereof (including all maintenance contracts and fees payable to life safety
consultants) whether such systems are or shall be required by Landlord's
insurance carriers, Laws (as hereinafter defined) or otherwise.

          (viii) Management and Administration.  All costs for management and
administration of the Premises, the Building and/or the Project or any part
thereof, including, without limitation, a property management fee, accounting,
auditing, billing, postage, salaries and benefits for clerical and supervisory
employees, whether located on the Project or off-site, payroll taxes and legal
and accounting costs and fees for licenses and permits related to the ownership
and operation of the Project.

          Notwithstanding anything in this Paragraph 4(b) to the contrary, with
respect to all sums payable by Tenant as Additional Rent under this Paragraph
4(b) for the replacement of any item or the construction of any new item in
connection with the physical operation of the Premises, the Building or the
Project (i.e., HVAC, roof membrane or coverings and parking area) which is
capital item the replacement of which would be capitalized under Landlord's
commercial real estate accounting practices, Tenant shall be required to pay
only the prorata share of the cost of the item falling due within the Term
(including any Renewal Term) based upon the amortization of the same over the
useful life of such item, as determined in accordance with generally accepted
accounting principles consistently applied ("GAAP").

     (c)  PAYMENT OF ADDITIONAL RENT.

          (i) Upon commencement of this Lease, Landlord shall submit to Tenant
an estimate of monthly Additional Rent for the period between the Commencement
Date and the following December 31 and Tenant shall pay such estimated
Additional Rent on a monthly basis, in advance, on the first day of each
month.  Tenant shall continue to make said monthly payments until notified by
Landlord of a change therein.  If at any time or times Landlord determines that
the amounts payable under Paragraph 4(b) for the current year will vary from
Landlord's estimate given to Tenant, Landlord, by notice to Tenant, may revise
the estimate for such year,



                                       4
<PAGE>   13
and subsequent payments by Tenant for such year shall be based upon such
revised estimate.  By April 1 of each calendar year, Landlord shall endeavor to
provide to Tenant a statement (each, an "EXPENSE STATEMENT") showing the actual
Additional Rent due to Landlord for the prior calendar year, to be prorated
during the first year from the Commencement Date.  If the total of the monthly
payments of Additional Rent that Tenant has made for the prior calendar year is
less than the actual Additional Rent chargeable to Tenant for such prior
calendar year, then Tenant shall pay the difference in a lump sum within
ten(10) days after receipt of such Expense Statement from Landlord.  Any
overpayment by Tenant of Additional Rent for the prior calendar year shall be
credited towards the Additional Rent next due.

          (ii) Landlord's then-current annual operating and capital budgets for
the Building and the Project or the pertinent part thereof shall be used for
purposes of calculating Tenant's monthly payment of estimated Additional Rent
for the current year, subject to adjustment as provided above.  Landlord shall
make the final determination of Additional Rent for the year in which this
Lease terminates as soon as possible after termination of such year.  Even
though the Term has expired and Tenant has vacated the Premises, Tenant shall
remain liable for payment of any amount due to Landlord in excess of the
estimated Additional Rent previously paid by Tenant, and, conversely, Landlord
shall promptly return to Tenant any overpayment.  Failure of Landlord to submit
Expense Statements as called for herein shall not be deemed a waiver of
Tenant's obligation to pay Additional Rent as herein provided.

     (d)  AUDIT RIGHTS.  Provided that Tenant is not in Default under the terms
of this Lease (nor is any event then occurring and continuing which with the
giving of notice of the passage of time, or both, would constitute a Default
hereunder), Tenant shall have the right at its sole cost and expense within
thirty (30) days after the delivery of the applicable Expense Statement to
review and audit Landlord's books and records regarding such Expense Statement
for the sole purpose of determining the accuracy of such Expense Statement.
Such review or audit shall be performed by a nationally recognized accounting
firm that calculates its fees with respect to hours actually worked and that
does not discount its time or rate (as opposed to a calculation based upon
percentage of recoveries or other incentive arrangement), shall take place
during normal business hours in the office of Landlord or Landlord's property
manager and shall be completed within three (3) business days after the
commencement thereof.  If Tenant does not so review or audit Landlord's books
and records, Landlord's Expense Statement shall be final and binding upon
Tenant.  In the event that Tenant determines on the basis of its review of
Landlord's books and records that the amount of Expenses paid by Tenant
pursuant to this Paragraph 4(d) for the period covered by such Expense
Statement is less than or greater than the actual amount properly payable by
Tenant under the terms of this Lease, Tenant shall promptly pay any deficiency
to Landlord or, if Landlord concurs with the results of such audit, Landlord
shall promptly refund any excess payment to Tenant, as the case may be.

     (e)  GENERAL PAYMENT TERMS.  The Base Rent, Additional Rent and all other
sums payable by Tenant to Landlord hereunder, including, without limitation,
any late charges assessed pursuant to Paragraph 6 below and any interest
assessed pursuant to Paragraph 43 below, are referred to as the "RENT".  All
Rent shall be paid without deduction, offset or abatement in lawful money of
the United States of America.  Checks are to be made payable to Aetna Life
Insurance Company and shall be mailed to: Aetna Life Insurance Company, c/o
Moffett Park, Department No.0394, Los Angeles, California 90084-0394, or to
such other person or place as Landlord



                                       5
<PAGE>   14
     may,from time to time, designate to Tenant in writing. The Rent for any
fractional part of a calendar month at the commencement or termination of the
Lease term shall be a prorated amount of the Rent for a full calendar month
based upon a thirty(30)day month.

5. UTILITY EXPENSES

     (a) Tenant shall pay the cost of all water,sewer use, sewer discharge fees
and permit costs and sewer connection fees, gas, heat, electricity, refuse
pick-up, janitorial service, telephone and all materials and services or other
utilities  (collectively, "UTILITIES") billed or metered separately to the
Premises and/or Tenant, together with all taxes, assessments, charges and
penalties added to or include within such cost. Tenant acknowledges that the
Premises, the Building and/or the Project may become subject to the rationing of
Utility services of restrictions on Utility use as required by a public utility
company, governmental agency or other similar entity having jurisdiction
thereof. Tenant acknowledges and agrees that its tenancy and occupancy hereunder
shall be subject to such rationing or restrictions as may be imposed upon
Landlord,tenant, the Premises, the Building and/or the Project, the Tenant shall
in no event be excused or relieved from any covenant or obligation to be kept or
performed by tenant by reason of any such rationing or restrictions. Tenant
agrees to comply with energy conservation programs implemented by Landlord by
reason of rationing, restrictions or Laws.

     (b) Landlord shall not be liable for any loss, injury or damage to property
caused by or resulting from any variation, interruption, failure of Utilities
due to any cause whatsoever, or from failure to make any repairs or perform any
maintenance. No temporary interruption or failure of such services incident to
the making of repairs,alterations, improvements, or due to accident,strike, or
conditions or other events shall be deemed an eviction of Tenant or relieve
Tenant from any of its obligations hereunder. In no event shall Landlord be
liable to Tenant for any damage to the Premises or for any loss, damage or
injury to any property therein or thereon occasioned by bursting, rupture,
leakage, or overflow of any plumbing or other pipes (including, without
limitation, water, steam, and/or refrigerant lines), sprinklers, tanks, drains,
drinking fountains or washstands, or other similar cause in, above, upon or
about the Premises, the Building, or the Project.

6. LATE CHARGE

     Notwithstanding any other provision of this Lease, Tenant hereby
acknowledges that late payment to Landlord of Rent, or  other amounts due
hereunder will cause Landlord to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult to ascertain. If any Rent or
other sums due from Tenant are not received  by Landlord or by Landlord's
designated agent within three (3) days after their due date, then Tenant shall
pay to the Landlord a late charge equal to ten percent(10%) of such overdue
amount, plus any costs and attorneys' fees incurred by Landlord by reason of
Tenant's failure to pay Rent and/or other charges when due hereunder. Landlord
and Tenant hereby agree that such late charges represent a fair and reasonable
estimate of the cost that Landlord will incur by reason of Tenant's late payment
and shall not be construed as a penalty. Landlord's acceptance of such late
charges





                                       6
<PAGE>   15
shall not constitute a waiver of Tenant's default with respect to such overdue
amount or estop Landlord from exercising any of the other rights and remedies
granted under this Lease.

               Initials:
                         -----------------        ------------------
                            Landlord                   Tenant

7.   SECURITY DEPOSIT

     Prior to the date hereof, Tenant has delivered a Security Deposit to
Landlord in the amount of Forty-Five Thousand Forty-Five and 75/100 Dollars
($45,045.75) in accordance with the terms and provisions of the Prior Lease (as
hereinafter defined). Concurrently with Tenant's execution of the Lease, Tenant
shall deposit with Landlord additional funds such that the total Security
Deposit held by Landlord equals the amount specified in the Basic Lease
Information as security for the full and faithful performance of each and every
term, covenant and condition of this Lease. Landlord may use, apply or retain
the whole or any part of the Security Deposit as may be reasonably necessary (a)
to remedy Tenant's default in the payment of any Rent, (b) to repair damage to
the Premises caused by Tenant, (c) to clean the Premises upon termination of
this Lease, (d) to reimburse Landlord for the payment of any amount which
Landlord may reasonably spend or be required to spend by reason of Tenant's
default, or (e) to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of Tenant's default. Should Tenant faithfully and
fully comply with all of the terms, covenants and conditions of this Lease,
within thirty (30) days following the expiration of the Term, the Security
Deposit or any balance thereof shall be returned to Tenant or, at the option of
Landlord, to the last assignee of Tenant's interest in this Lease. Landlord
shall not be required to keep the Security Deposit separate from its general
funds and Tenant shall not be entitled to any interest on such deposit. If
Landlord so uses or applies all or any portion of said deposit, within five (5)
days after written demand therefor Tenant shall deposit cash with Landlord in an
amount sufficient to restore the Security Deposit to the full extent of the
above amount, and Tenant's failure to do so shall be a default under this Lease.
In the event Landlord transfers its interest in this Lease, Landlord shall
transfer the then remaining amount of the Security Deposit to Landlord's
successor in interest, and thereafter Landlord shall have no further liability
to Tenant with respect to such Security Deposit.

8.   USE OF PREMISES

     (a)  PERMITTED USE. The use of the Premises by Tenant and Tenant's agents,
advisors, employees, partners, shareholders, directors, invitees and independent
contractors (collectively, "TENANT'S AGENTS") shall be solely for the Permitted
Use specified in the Basic Lease Information and for no other use. Tenant shall
not permit any objectionable or unpleasant odor, smoke, dust, gas, noise or
vibration to emanate from or near the Premises. The Premises shall not be used
to create any nuisance or trespass, for any illegal purpose, for any purpose not
permitted by Laws, for any purpose that would invalidate the insurance or
increase the premiums for insurance on the Premises, the Building or the Project
or for any purpose or in any manner that would interfere with other tenants' use
or occupancy of the Project. Tenant agrees to pay Landlord, as Additional Rent,
any increases in premiums on policies resulting from Tenant's Permitted Use or
any other use or action by Tenant or Tenant's Agents which increases Landlord's
premiums or requires additional coverage by Landlord to insure the Premises.
Tenant agrees not to overload the floor(s) of the Building.

                                       7
<PAGE>   16
     (b)  COMPLIANCE WITH GOVERNMENTAL REGULATIONS AND PRIVATE RESTRICTIONS.
Tenant and Tenant's Agents shall, at Tenant's expense, faithfully observe and
comply with (i) all municipal, state and federal laws, statutes, codes, rules,
regulations, ordinances, requirements, and orders (collectively, "LAWS"), now in
force or which may hereafter be in force pertaining to the Premises or Tenant's
use of the Premises, the Building or the Project, including, without limitation,
any Laws requiring installation of fire sprinkler systems, seismic reinforcement
and related alterations, and removal of asbestos, whether substantial in cost or
otherwise; provided, however, that except provided in Paragraph 8(c) below,
Tenant shall not be required to make or, except as provided in Paragraph 4
above, pay for, structural changes to the Premises or the Building not related
to Tenant's specific use of the Premises unless the requirement for such changes
is imposed as a result of any improvements or additions made or proposed to be
made at Tenant's request; and provided, further, that Tenant shall not be
required to remove any asbestos from the Premises, unless such asbestos was
placed on the Premises by Tenant or Tenant's Agents; (ii) all recorded
covenants, conditions and restrictions affecting the Project ("PRIVATE
RESTRICTIONS") now in force or which may hereafter be in force; and (iii) any
and all rules and regulations set forth in EXHIBIT A and any other rules and
regulations now or hereafter promulgated by Landlord related to parking or the
operation of the Premises, the Building and/or the Project (collectively, the
"RULES AND REGULATIONS").  The judgment of any court of competent jurisdiction,
or the admission of Tenant in any action or proceeding against Tenant, whether
Landlord be a party thereto or not, that Tenant has violated any such Laws or
Private Restrictions, shall be conclusive of that fact as between Landlord and
Tenant.

     (c)  COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT.  Landlord and Tenant
hereby agree and acknowledge that the Premises, the Building and/or the Project
may be subject to, among other Laws, the requirements of the Americans with
Disabilities Act, a federal law codified at 42 U.S.C. Section 12101 et seq.,
including, but not limited to, Title III thereof, and all regulations and
guidelines related thereto, together with any and all laws, rules, regulations,
ordinances, codes and statutes now or hereafter enacted by local or state
agencies having jurisdiction thereof, including all requirements of Title 24 of
the State of California, as the same may be in effect on the date of this Lease
and may be hereafter modified, amended or supplemented (collectively, the
"ADA"). Any Alterations to be constructed hereunder shall be in compliance with
the requirements of the ADA, and all costs incurred for purposes of compliance
therewith shall be a part of and included in the costs of the Alterations.
Tenant shall be solely responsible for conducting its own independent
investigation of this matter and for ensuring that the design of all Alterations
strictly complies with all requirements of the ADA.  Subject to reimbursement
pursuant to Paragraph 4 above, if any barrier removal work or other work is
required to the Building, the Common Areas or the Project under the ADA, then
such work shall be responsibility of Landlord; provided, however, that if such
work is required under the ADA as a result of Tenant's use of the Premises or
any work or Alteration (as hereinafter defined) made to the Premises by or on
behalf of Tenant, then such work shall be performed by Landlord at the sole cost
and expense of Tenant.  Except as otherwise expressly provided in this
provision, Tenant shall be responsible at its sole cost and expense for fully
and faithfully complying with all applicable requirements of the ADA, including,
without limitation, not discriminating against any disabled persons in the
operation of Tenant's business in or about the Premises, and offering or
otherwise providing auxiliary aids and services as, and when, required by the
ADA.  Within ten (10) days after receipt, Tenant shall advise Landlord in
writing, and provide Landlord with copies of (as applicable), any notices
alleging violation of the ADA relating to any portion of the


                                       8
<PAGE>   17
Premises, the Building or the Project; any claims made or threatened orally or
in writing regarding noncompliance with the ADA and relating to any portion of
the Premises, the Building, or the Project; or any governmental or regulatory
actions or investigations instituted or threatened regarding noncompliance
with the ADA and relating to any portion of the Premises, the Building or the
Project.  Tenant shall and hereby agrees to protect, defend (with counsel
acceptable to Landlord) and hold Landlord and Landlord's agents, advisors,
employees, partners, shareholders, directors, invitees and independent
contractors (collectively, "LANDLORD'S AGENTS") harmless and indemnify Landlord
and Landlord's Agents from and against all liabilities, damages, claims,
losses, penalties, judgments, charges and expenses (including attorneys' fees,
costs of court and expenses necessary in the prosecution or defense of any
litigation including the enforcement of this provision) arising from or in
any way related to, directly or indirectly, Tenant's or Tenant's Agents'
violation or alleged violation of the ADA.  Tenant agrees that the obligations
of Tenant herein shall survive the expiration or earlier termination of this
Lease.

9.   ACCEPTANCE OF PREMISES

     Tenant has been in possession of the Premises prior to the Commencement
Date under that certain Lease Agreement dated January 17, 1994 (the "PRIOR
LEASE").  Tenant shall continue to occupy the Premises in its "AS IS" condition
from and after the Commencement Date under the terms of this Lease, and
Landlord shall have no obligation to improve, remodel or otherwise alter the
Premises at any time during the Term.  By its execution hereof, Tenant accepts
the Premises as suitable for Tenant's intended use and as being in good and
sanitary operating order, condition and repair, AS IS, and without
representation or warranty by Landlord as to the condition, use or occupancy
which may be made thereof.  Any exceptions to the foregoing must be by written
agreement executed by Landlord and Tenant.

10.  SURRENDER

     Tenant agrees that on the last day of the Term, or on the sooner
termination of this Lease, Tenant shall surrender the Premises to Landlord (a)
in good condition and repair (damages by acts of God, fire, and normal wear and
tear excepted), but with all carpets cleaned and all floors in "broom clean"
condition, and (b) otherwise in accordance with Paragraph 31(h). Normal wear
and tear shall not include any damage or deterioration to the floors of the
Premises arising from the use of forklifts in, on or about the Premises
(including, without limitation, any marks or stains on any portion of the
floors), and any damage or deterioration that would have been prevented by
proper maintenance by Tenant, or Tenant otherwise performing all of its
obligations under this Lease. On or before the expiration or sooner termination
of this Lease, (i) Tenant shall remove all of Tenant's Property (as hereinafter
defined) and Tenant's signage from the Premises, the Building and the Project
and repair any damage caused by such removal, and (ii) except as provided in
the last sentence of this Paragraph 10, Landlord may, by notice to Tenant given
not later than ninety (90) days prior to the Expiration Date (except in the
event of a termination of this Lease prior to the scheduled Expiration Date, in
which event no advance notice shall be required), require Tenant at Tenant's
expense to remove any or all Alterations and to repair any damage caused by
such removal. Any of Tenant's Property not so removed by Tenant as required
herein shall be deemed abandoned and may be stored, removed, and disposed of by
Landlord at Tenant's expense, and Tenant waives all claims against Landlord for
any damages resulting from Landlord's retention and disposition of such
property; provided


                                       9
<PAGE>   18
however, that Tenant shall remain liable to Landlord for all costs incurred in
storing and disposing of such abandoned property of Tenant. All Alterations
except those which Landlord requires Tenant to remove shall remain in the
Premises as the property of Landlord. If the Premises are not surrendered at
the end of the Term or sooner termination of this Lease, and in accordance with
the provisions of this Paragraph 10 and Paragraph 31(h) below, Tenant shall
continue to be responsible for the payment of Rent (as the same may be
increased pursuant to Paragraph 34 below) until the Premises are so surrendered
in accordance with said Paragraphs, and Tenant shall indemnify, defend and hold
Landlord harmless from and against any and all loss or liability resulting from
delay by Tenant in so surrendering the Premises including, without limitation,
any loss or liability resulting from any claim against Landlord made by any
succeeding tenant or prospective tenant founded on or resulting from such delay
and losses to Landlord due to lost opportunities to lease any portion of the
Premises to any such succeeding tenant or prospective tenant, together with, in
each case, actual attorneys' fees and costs. Notwithstanding the terms of this
Paragraph 10, if Tenant made Alterations to the Premises during the term of the
Prior Lease, and if at the time such Alterations were made, Landlord did not
inform Tenant that such Alterations would be required to be removed at the
expiration of the Term, then Tenant shall be entitled to leave such Alterations
in the Premises upon the expiration or sooner termination of this Lease and
Landlord shall not have the right to require removal in accordance with clause
(ii) above of this Paragraph 10.

11.  ALTERATIONS AND ADDITIONS

     (a)  Tenant shall not make, or permit to be made, any alteration, addition
or improvement (hereinafter referred to individually as an "ALTERATION" and
collectively as the "ALTERATIONS") to the Premises or any part thereof without
the prior written consent of Landlord, which consent shall not be unreasonably
withheld; provided, however, that Landlord shall have the right in it sole and
absolute discretion to consent or to withhold its consent to any Alteration
which affects the structural portions of the Premises, the Building or the
Project or the Systems serving the Premises, the Building and/or the Project or
any portion thereof (collectively, "STRUCTURAL ALTERATIONS"). Notwithstanding
the foregoing, Tenant shall have the right to make Alterations (specifically
excluding, however, Structural Alterations) to the Premises with prior notice
to but without the consent of Landlord, provided that such Alterations are
constructed and performed in full compliance with the terms of Paragraphs 11(b)
through (g) and do not exceed five thousand dollars ($5,000.00) in cost
on an individual basis or fifteen thousand dollars ($15,000.00) in the
aggregate over the Term of this Lease.

     (b)  Any Alteration to the Premises shall be at Tenant's sole cost and
expense, in compliance with all applicable Laws and all requirements requested
by Landlord, including, without limitation, the requirements of any insurer
providing coverage for the Premises or the Project or any part thereof, and in
accordance with plans and specifications approved in writing by Landlord, and
shall be constructed and installed by a contractor approved in writing by
Landlord. As a further condition to giving consent, Landlord may require Tenant
to provide Landlord, at Tenant's sole cost and expense, a payment and
performance bond in form acceptable to Landlord, in a principal amount not less
than one and one-half times the estimated costs of such Alterations, to ensure
Landlord against any liability for mechanic's and materialmen's liens and to
ensure completion of work. Before Alterations may begin, valid building permits
or other permits or licenses required must be furnished to Landlord, and, once


                                       10


<PAGE>   19
the Alterations begin, Tenant will diligently and continuously pursue their
completion. Landlord may monitor construction of the Alterations and Tenant
shall reimburse Landlord for its costs (including, without limitation, the
costs of any construction manager retained by Landlord) in reviewing plans and
documents and in monitoring construction; provided, however, that such costs
shall not exceed five percent (5%) of the total cost ("hard" and "soft" costs)
of the applicable Alterations. Tenant shall maintain during the course of
construction, at its sole cost and expense, builders' risk insurance for the
amount of the completed value of the Alterations on an all-risk non-reporting
form covering all improvements under construction, including building
materials, and other insurance in amounts and against such risks as Landlord
shall reasonably require in connection with the Alterations. In addition to and
without limitation on the generality of the foregoing, Tenant shall ensure that
its contractor(s) procure and maintain in full force and effect during the
course of construction a "broad form" commercial general liability and property
damage policy of insurance naming Landlord, Landlord's investment advisor and
agent, UBS Brinson Realty Investors LLC, Tenant and Landlord's lenders as
additional insureds. The minimum limit of coverage of the aforesaid policy
shall be in the amount of not less than Three Million Dollars ($3,000,000.00)
for injury or death of one person in any one accident or occurrence and in the
amount of not less than Three Million Dollars ($3,000,000.00) for injury or
death of more than one person in any one accident or occurrence, and shall
contain a severability of interest clause or a cross liability endorsement.
Such insurance shall further insure Landlord and Tenant against liability for
property damage of at least One Million Dollars ($1,000,000.00).

     (c)  Excluding any Specialized Laboratory Equipment (as hereinafter
defined), all Alterations, including, but not limited to, heating, lighting,
electrical, air conditioning, fixed partitioning, drapery, wall covering and
paneling, built-in cabinet work and carpeting installations made by Tenant,
together with all property that has become an integral part of the Premises or
the Building, shall at once be and become the property of Landlord, and shall
not be deemed trade fixtures or Tenant's Property. If requested by Landlord,
Tenant will pay, prior to the commencement of construction, an amount
determined by Landlord necessary to cover the costs of demolishing such
Alterations and/or the cost of returning the Premises and the Building to its
condition prior to such Alterations.

     (d)  No private telephone systems and/or other related computer or
telecommunications equipment or lines may be installed without Landlord's prior
written consent, which consent shall not be unreasonably withheld; provided,
however, that Landlord shall have the right in its sole and absolute discretion
to consent or to withhold its consent to the installation of any such systems,
equipment or lines which affect the structural portions of the Premises, the
Building or the Project or the Systems serving the Premises, the Building
and/or the Project or any portion thereof. If Landlord gives such consent, all
equipment must be installed within the Premises and, at the request of Landlord
made at any time prior to the expiration of the Term, removed upon the
expiration or sooner termination of this Lease and the Premises restored to the
same condition as before such installation.

     (e)  Notwithstanding anything herein to the contrary, before installing
any equipment or lights which generate an undue amount of heat in the Premises,
or if Tenant plans to use any high-power usage equipment in the Premises,
Tenant shall obtain the written permission of Landlord, which permission shall
not be unreasonably withheld; provided, however, that Landlord may refuse to
grant such permission unless Tenant agrees to pay the costs to Landlord


                                       11
<PAGE>   20
for installation of supplementary air conditioning capacity or electrical
systems necessitated by such equipment.

     (f)  Tenant agrees not to proceed to make any Alterations, notwithstanding
consent from Landlord to do so, until Tenant notifies Landlord in writing of the
date Tenant desires to commence construction or installation of such Alterations
and Landlord has approved such date in writing, in order that Landlord may post
appropriate notices to avoid any liability to contractors or material suppliers
for payment for Tenant's improvements. Tenant will at all times permit such
notices to be posted and to remain posted until the completion of work.

     (g)  Promptly following the Commencement Date, Landlord shall provide an
allowance (the "ALTERATIONS ALLOWANCE") to Tenant in the amount specified in the
Basic Lease Information to reimburse Tenant for costs actually incurred for the
planning and construction of Alterations made by Tenant to the Premises between
the date of this Lease and the Commencement Date (the "PRE-COMMENCEMENT
ALTERATIONS"). The Alterations Allowance shall be the maximum contribution by
Landlord toward the cost of the Pre-Commencement Alterations. Landlord shall
disburse the Alterations Allowance to Tenant following the completion of the
Pre-Commencement Alterations, the inspection of the same by Landlord and the
review and approval by Landlord of invoices, lien waivers, certificates of
occupancy and other documentation required by Landlord to substantiate the cost
of the Pre-Commencement Alterations and the completion thereof in a lien-free
manner and in accordance with all Laws, the requirements of Paragraph 11 of the
Prior Lease and any additional requirements set forth in this Paragraph 11.
Notwithstanding the foregoing, Landlord's obligation to provide the Alterations
Allowance to Tenant shall terminate on the thirtieth (30th) day after the
Commencement Date and any portion of the Alterations Allowance which remains
undisbursed to Tenant as of such date shall no longer be available for
disbursement to Tenant.

12.  MAINTENANCE AND REPAIRS OF PREMISES

     (a)  MAINTENANCE BY TENANT. Throughout the Term, Tenant shall, at its sole
expense, (i) keep and maintain in good order and condition the Premises, and
repair and replace every part thereof, including glass, windows, window frames,
window casements, skylights, interior and exterior doors, door frames and door
closers; interior lighting (including, without limitation, light bulb and
ballasts), the plumbing and electrical systems exclusively serving the Premises,
all communications systems serving the Premises, Tenant's signage, interior
demising walls and partitions, equipment, interior painting and interior walls
and floors, and the roll-up doors, ramps and dock equipment, including, without
limitation, dock bumpers, dock plates, dock seals, dock levelers and dock lights
located in or on the Premises (excepting only those portions of the Building or
the Project to be maintained by Landlord, as provided in Paragraph 12(b) below),
(ii) furnish all expendables, including light bulbs, paper goods and soaps, used
in the Premises, and (iii) keep and maintain in good order and condition, repair
and replace all of Tenant's security systems in or about or serving the Premises
and, except to the extent that Landlord notifies Tenant in writing of its
intention to arrange for such monitoring, cause the fire alarm systems serving
the Premises to be monitored by a monitoring or protective services firm
approved by Landlord in writing. Tenant shall not do nor shall Tenant allow
Tenant's Agents to do anything to cause any damage, deterioration or
unsightliness to the Premises, the Building or the Project.



                                       12


<PAGE>   21
     (b)  MAINTENANCE BY LANDLORD. Subject to the provisions of Paragraphs
12(a), 20 and 21, and further subject to Tenant's obligation under Paragraph 4
to reimburse Landlord, in the form of Additional Rent, for the cost and expense
of the following items, Landlord agrees to repair and maintain the following
items: the roof coverings (provided that Tenant installs no additional air
conditioning or other equipment on the roof that damages the roof coverings, in
which event Tenant shall pay all costs resulting from the presence of such
additional equipment); the Systems serving the Premises and the Building,
excluding the plumbing and electrical systems exclusively serving the Premises;
and the Parking Areas, pavement, landscaping, sprinkler systems, sidewalks,
driveways, curbs, and lighting systems in the Common Areas. Subject to the
provisions of Paragraphs 12(a), 20 and 21, Landlord, at its own cost and
expense, agrees to repair and maintain the following items: the structural
portions of the roof (specifically excluding the roof coverings), the
foundation, the footings, the floor slab, and the load bearing walls and
exterior walls of the Building (excluding any glass and any routine
maintenance, including, without limitation, any painting, sealing, patching and
waterproofing of such walls). Notwithstanding anything in this Paragraph 12 to
the contrary, Landlord shall have the right to either repair or to require
Tenant to repair any damage to any portion of the Premises, the Building and/or
the Project caused by or created due to any act, omission, negligence or
willful misconduct of Tenant or Tenant's Agents and to restore the Premises,
the Building and/or the Project, as applicable, to the condition existing prior
to the occurrence of such damage; provided, however, that in the event Landlord
elects to perform such repair and restoration work, Tenant shall reimburse
Landlord upon demand for all costs and expenses incurred by Landlord in
connection therewith. Landlord's obligation hereunder to repair and maintain is
subject to the condition precedent that Landlord shall have received written
notice of the need for such repairs and maintenance and a reasonable time to
perform such repair and maintenance. Tenant shall promptly report in writing to
Landlord any defective condition known to it which Landlord is required to
repair, and failure to so report such defects shall make Tenant responsible to
Landlord for any liability incurred by Landlord by reason of such condition.

     (c)  TENANT'S WAIVER OF RIGHTS. Tenant hereby expressly waives all rights
to make repairs at the expense of Landlord or to terminate this Lease, as
provided for in California Civil Code Sections 1941 and 1942, and 1932(1),
respectively, and any similar or successor statute or law in effect or any
amendment thereof during the Term.

13.  LANDLORD'S INSURANCE

     Landlord shall purchase and keep in force fire, extended coverage and "all
risk" insurance covering the Building and the Project. Tenant shall, at its
sole cost and expense, comply with any and all reasonable requirements
pertaining to the Premises, the Building and the Project of any insurer
necessary for the maintenance of reasonable fire and commercial general
liability insurance, covering the Building and the Project. Landlord, at
Tenant's cost, may maintain "Loss of Rents" insurance, insuring that the Rent
will be paid in a timely manner to Landlord for a period of at least twelve
(12) months if the Premises, the Building or the Project or any portion thereof
are destroyed or rendered unusable or inaccessible by any cause insured against
under this Lease.


                                       13
<PAGE>   22
14.   TENANT'S INSURANCE

      (a) COMMERCIAL GENERAL LIABILITY INSURANCE. Tenant shall, at Tenant's
expense, secure and keep in force a "broad form" commercial general liability
insurance and property damage policy covering the Premises, insuring Tenant, and
naming Landlord, Landlord's investment advisors and agents from time to time,
including, without limitation, UBS Brinson Realty Investors LLC, and Landlord's
lenders as additional insureds, against any liability arising out of the
ownership, use, occupancy or maintenance of the Premises. The minimum limit of
coverage of such policy shall be in the amount of not less than Three Million
Dollars ($3,000,000.00) for injury or death of one person in any one accident or
occurrence and in the amount of not less than Three Million Dollars
($3,000,000.00) for injury or death of more than one person in any one accident
or occurrence, shall include an extended liability endorsement providing
contractual liability coverage (which shall include coverage for Tenant's
indemnification obligations in this Lease), and shall contain a severability of
interest clause or a cross liability endorsement. Such insurance shall further
insure Landlord and Tenant against liability for property damage of at least
Three Million Dollars ($3,000,000.00). Landlord may from time to time require
reasonable increases in any such limits if Landlord believes that additional
coverage is necessary or desirable. The limit of any insurance shall not limit
the liability of Tenant hereunder. No policy maintained by Tenant under this
Paragraph 14(a) shall contain a deductible greater than Two Thousand Five
Hundred Dollars ($2,500.00). No policy shall be cancelable or subject to
reduction of coverage without thirty (30) days' prior written notice to
Landlord, and loss payable clauses shall be subject to Landlord's approval. Such
policies of insurance shall be issued as primary policies and not contributing
with or in excess or coverage that Landlord may carry, by an insurance company
authorized to do business in the State of California for the issuance of such
type of insurance coverage and rated A:XIII or better in Best's Key Rating
Guide.

      (b) PERSONAL PROPERTY INSURANCE. Tenant shall maintain in full force and
effect on all of its personal property, furniture, furnishings, trade or
business fixtures and equipment, including, without limitation, all specialized
laboratory equipment (collectively, "SPECIALIZED LABORATORY EQUIPMENT") such as
lab benches, fume hoods, cold rooms and specialized processing equipment
(collectively, "TENANT'S PROPERTY") in the Premises, a policy or policies of
fire and extended coverage insurance with standard coverage endorsement to the
extent of the full replacement cost thereof. No such policy shall contain a
deductible greater than Two Thousand Five Hundred Dollars ($2,500.00). During
the term of this Lease the proceeds from any such policy or policies of
insurance shall be used for the repair or replacement of the fixtures and
equipment so insured. Landlord shall have no interest in the insurance upon
Tenant's equipment and fixtures and will sign all documents reasonably necessary
in connection with the settlement of any claim or loss by Tenant. Landlord will
not carry insurance on Tenant's possessions.

      (c) WORKER'S COMPENSATION INSURANCE; EMPLOYER'S LIABILITY INSURANCE.
Tenant shall, at Tenant's expense, maintain in full force and effect worker's
compensation insurance with not less than the minimum limits required by law,
and employer's liability insurance with a minimum limit of coverage of One
Million Dollars ($1,000,000.00).

      (d) EVIDENCE OF COVERAGE. Tenant shall deliver to Landlord certificates
of insurance and true and complete copies of any and all endorsements required
herein for all insurance required to be maintained by Tenant hereunder at the
time of execution of this Lease by Tenant. Tenant

                                       14
<PAGE>   23
shall, at least thirty (30) days prior to expiration of each policy, furnish
Landlord with certificates of renewal or "binders" thereof. Each certificate
shall expressly provide that such policies shall not be cancellable or
otherwise subject to modification except after thirty (30) days' prior written
notice to Landlord and the other parties named as additional insureds as
required in this Lease (except for cancellation for nonpayment of premium, in
which event cancellation shall not take effect until at least ten (10) days'
notice has been given to Landlord).

15.  INDEMNIFICATION

     (a)  OF LANDLORD. Tenant shall indemnify and hold harmless Landlord and
Landlord's Agents against and from any and all claims, liabilities, judgments,
costs, demands, causes of action and expenses (including, without limitation,
reasonable attorneys' fees) arising from (i) the use of the Premises, the
Building or the Project by Tenant or Tenant's Agents, or from any activity
done, permitted or suffered by Tenant or Tenant's Agents in or about the
Premises, the Building or the Project, and (ii) any act, neglect, fault,
willful misconduct or omission of Tenant or Tenant's Agents, or from any breach
or default in the terms of this Lease by Tenant or Tenant's Agents, and (iii)
any action or proceeding brought on account of any matter in items (i) or (ii).
If any action or proceeding is brought against Landlord by reason of any such
claim, upon notice from Landlord, Tenant shall defend the same at Tenant's
expense by counsel reasonably satisfactory to Landlord. As a material part of
the consideration to Landlord, Tenant hereby releases Landlord and Landlord's
Agents from responsibility for, waives its entire claim of recovery for and
assumes all risk of (A) damage to property or injury to persons in or about the
Premises, the Building or the Project from any cause whatsoever (except that
which is caused by the gross negligence or willful misconduct of Landlord or
Landlord's Agents or by the failure of Landlord to observe any of the terms and
conditions of this Lease, if such failure has persisted for an unreasonable
period of time after written notice of such failure), or (B) loss resulting
from business interruption or loss of income at the Premises. The obligations
of Tenant under this Paragraph 15(a) shall survive any termination of this
Lease.

     (b)  OF TENANT. Landlord shall indemnify and hold harmless Tenant against
and from any and all claims, liabilities, judgments, costs, demands, causes of
action and expenses (including, without limitation, reasonable attorneys' fees)
arising from (i) the gross negligence of Landlord or from any breach or default
in the terms of this Lease by Landlord (if such breach or default has persisted
for an unreasonable period of time after written notice of such failure), and
(ii) any action or proceeding brought on account of any matter in item (i). If
any action or proceeding is brought against Tenant by reason of any such claim,
upon notice from Tenant, Landlord shall defend the same at Landlord's expense
by counsel reasonably satisfactory to Tenant. The obligations of Landlord under
this Paragraph 15(b) shall survive any termination of this Lease.

     (c)  NO IMPAIRMENT OF INSURANCE. The foregoing indemnities shall not
relieve any insurance carrier of its obligations under any policies required to
be carried by either party pursuant to this Lease, to the extent that such
policies cover the peril or occurrence that results in the claim that is
subject to the foregoing indemnity.


                                       15
<PAGE>   24
16.  SUBROGATION

     Landlord and Tenant hereby mutually waive any claim against the other and
its Agents for any loss or damage to any of their property located on or about
the Premises, the Building or the Project that is caused by or results from
perils covered by property insurance carried by the respective parties, to the
extent of the proceeds of such insurance actually received with respect to such
loss or damage, whether or not due to the negligence of the other party or its
Agents. Because the foregoing waivers will preclude the assignment of any claim
by way of subrogation to an insurance company or any other person, each party
now agrees to immediately give to its insurer written notice of the terms of
these mutual waivers and shall have their insurance policies endorsed to prevent
the invalidation of the insurance coverage because of these waivers. Nothing in
this Paragraph 16 shall relieve a party of liability to the other for failure to
carry insurance required by this Lease.

17.  SIGNS

     Tenant shall not place or permit to be placed in, upon, or about the
Premises, the Building or the Project any exterior lights, decorations,
balloons, flags, pennants, banners, advertisements or notices, or erect or
install any signs, windows or door lettering, placards, decorations, or
advertising media of any type which can be viewed from the exterior the Premises
without obtaining Landlord's prior written consent or without complying with
Landlord's signage criteria, as the same may be modified by Landlord from time
to time, and with all applicable Laws, and will not conduct, or permit to be
conducted, any sale by auction on the Premises or otherwise on the Project.
Notwithstanding the foregoing, Tenant shall not be required to remove any signs
placed on the Premises in accordance with the terms of the Prior Lease. Tenant
shall remove any sign, advertisement or notice placed on the Premises, the
Building or the Project by Tenant upon the expiration of the Term or sooner
termination of this Lease, and Tenant shall repair any damage or injury to the
Premises, the Building or the Project caused thereby, all at Tenant's expense.
If any signs are not removed, or necessary repairs not made, Landlord shall have
the right to remove the signs and repair any damage or injury to the Premises,
the Building or the Project at Tenant's sole cost and expense.

18.  FREE FROM LIENS

     Tenant shall keep the Premises, the Building and the Project free from any
liens arising out of any work performed, material furnished or obligations
incurred by or for Tenant. In the event that Tenant shall not, within ten (10)
days following the imposition of any such lien, cause the lien 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 same to be released by such means as it shall deem proper,
including payment of the claim giving rise to such lien. All such sums paid by
Landlord and all expenses incurred by it in connection therewith (including,
without limitation, attorneys' fees) shall be payable to Landlord by Tenant upon
demand. Landlord shall have the right at all times to post and keep posted on
the Premises any notices permitted or required by law or that Landlord shall
deem proper for the protection of Landlord, the Premises, the Building and the
Project, from mechanics' and materialmen's liens. Tenant shall give to Landlord
at least five (5) business days' prior written notice of commencement of any
repair or construction on the Premises.


                                       16


<PAGE>   25


19. ENTRY BY LANDLORD

      Tenant shall permit Landlord and Landlord's Agents to enter into and upon
the Premises at all reasonable times, upon reasonable notice (except in the case
of an emergency, for which no notice shall be required), and subject to
Tenant's reasonable security arrangements, for the purpose of inspecting the
same or showing the Premises to prospective purchasers, lenders or tenants or to
alter, improve, maintain and repair the Premises or the Building as required or
permitted of Landlord under the terms hereof, or for any other business purpose,
without any rebate of Rent and without any liability to Tenant for any loss of
occupation or quiet enjoyment of the Premises thereby occasioned (except for
actual damages resulting from the sole active gross negligence or willful
misconduct of Landlord); and Tenant shall permit Landlord to post notices of
non-responsibility and ordinary "for sale" or, during the last six (6) months of
the Term, "for lease," signs. No such entry shall be construed to be a forcible
or unlawful entry into, or a detainer of, the Premises, or an eviction of Tenant
from the Premises. Landlord may temporarily close entrances, doors, corridors,
elevators or other facilities without liability to Tenant by reason of such
closure in the case of an emergency and when Landlord otherwise deems such
closure necessary; provided, however, that except in the case of an emergency,
Landlord shall use reasonable efforts to avoid materially interfering with
Tenant's use and occupancy of the Premises in the exercise of Landlord's rights
under this sentence.

20. DESTRUCTION AND DAMAGE

      (a) If the Premises are damaged by fire or other perils covered by
extended coverage insurance, Landlord shall, at Landlord's option:

          (i) In the event of total destruction (which shall mean destruction or
damage in excess of twenty-five percent (25%) of the full insurable value
thereof) of the Premises, elect either to commence promptly to repair and
restore the Premises and prosecute the same diligently to completion, in which
event this Lease shall remain in full force and effect; or not to repair or
restore the Premises, in which event this Lease shall terminate. Landlord shall
give Tenant written notice of its intention within sixty (60) days after the
date (the "CASUALTY DISCOVERY DATE") Landlord obtains actual knowledge of such
destruction. If Landlord elects not to restore the Premises, this Lease shall be
deemed to have terminated as of the date of such total destruction.

          (ii) In the event of a partial destruction (which shall mean
destruction or damage to an extent not exceeding twenty-five percent (25%) of
the full insurable value thereof) of the Premises for which Landlord will
receive insurance proceeds sufficient to cover the cost to repair and restore
such partial destruction and, if the damage thereto is such that the Premises
may be substantially repaired or restored to its condition existing immediately
prior to such damage or destruction within one hundred eighty (180) days from
the Casualty Discovery Date, Landlord shall commence and proceed diligently with
the work of repair and restoration, in which event the Lease shall continue in
full force and effect. If such repair and restoration requires longer than one
hundred eighty (180) days or if the insurance proceeds therefor (plus any
amounts Tenant may elect or is obligated to contribute) are not sufficient to
cover the cost of such repair and restoration, Landlord may elect either to so
repair and restore, in which event the Lease shall continue in full force and
effect, or not to repair or restore, in which event the Lease shall
<PAGE>   26
terminate. In either case, Landlord shall give written notice to Tenant of its
intention within sixty (60) days after the Casualty Discovery Date. If Landlord
elects not to restore the Premises, this Lease shall be deemed to have
terminated as of the date of such partial destruction.

          (iii) Notwithstanding anything to the contrary contained in this
Paragraph, in the event of damage to the Premises occurring during the last
twelve (12) months of the Term, Landlord may elect to terminate this Lease by
written notice of such election given to Tenant within thirty (30) days after
the Casualty Discovery Date.

     (b) If the Premises are damaged by any peril not covered by extended
coverage insurance, and the cost to repair such damage exceeds any amount
Tenant may agree to contribute, Landlord may elect either to commence promptly
to repair and restore the Premises and prosecute the same diligently to
completion, in which event this Lease shall remain in full force and effect; or
not to repair or restore the Premises, in which event this Lease shall
terminate. Landlord shall give Tenant written notice of its intention within
sixty (60) days after the Casualty Discovery Date. If Landlord elects not to
restore the Premises, this Lease shall be deemed to have terminated as of the
date on which Tenant surrenders possession of the Premises to Landlord, except
that if the damage to the Premises materially impairs Tenant's ability to
continue its business operations in the Premises, then this Lease shall be
deemed to have terminated as of the date such damage occurred.

     (c) Notwithstanding anything to the contrary in this Paragraph 20,
Landlord shall have the option to terminate this Lease, exercisable by notice
to Tenant within sixty (60) days after the Casualty Discovery Date, in each of
the following instances:

          (i) If more than twenty-five percent (25%) of the full insurable
value of the Building or the Project is damaged or destroyed, regardless of
whether or not the Premises are destroyed.

          (ii) If the Building or the Project or any portion thereof is damaged
or destroyed and the repair and restoration of such damage requires longer than
one hundred eighty (180) days from the Casualty Discovery Date.

          (iii) If the Building or the Project or any portion thereof is
damaged or destroyed and the insurance proceeds therefor are not sufficient to
cover the costs of repair and restoration.

          (iv) If the Building or the Project or any portion thereof is damaged
or destroyed during the last twelve (12) months of the Term.

     (d) In the event of repair and restoration as herein provided, the monthly
installments of Base Rent shall be abated proportionately in the ratio which
Tenant's use of the Premises is impaired during the period of such repair or
restoration, but only to the extent of rental abatement insurance proceeds
received by Landlord; provided, however, that Tenant shall not be entitled to
such abatement to the extent that such damage or destruction resulted from the
acts or inaction of Tenant or Tenant's Agents. Except as expressly provided in
the immediately preceding sentence with respect to abatement of Base Rent,
Tenant shall have no claim against Landlord for, and hereby releases Landlord
and Landlord's Agents from responsibility for and waives its entire claim of
recovery for any cost, loss or expense suffered or incurred by Tenant as a
result of any damage to or destruction of the Premises, the Building or the
Project or the repair


                                       18


<PAGE>   27


or restoration thereof, including, without limitation, any cost, loss or expense
resulting from any loss of use of the whole or any part of the Premises, the
Building or the Project and/or any inconvenience or annoyance occasioned by such
damage, repair or restoration.

     (e)  If Landlord is obligated to or elects to repair or restore as herein
provided, Landlord shall repair or restore only the initial Building shell and
tenant improvements, if any, constructed by Landlord in the Premises pursuant to
the terms of this Lease, substantially to their condition existing immediately
prior to the occurrence of the damage or destruction; and Tenant shall promptly
repair and restore, at Tenant's expense, all interior improvements.

     (f)  Tenant hereby waives the provisions of California Civil Code Section
1932(2) and Section 1933(4) which permit termination of a lease upon destruction
of the leased premises, and the provisions of any similar law now or hereinafter
in effect, and the provisions of this Paragraph 20 shall govern exclusively in
case of such destruction.

21.  CONDEMNATION

     (a)  If twenty-five percent (25%) or more of either the Premises, the
Building or the Project or the parking areas for the Building or the Project is
taken for any public or quasi-public purpose by any lawful governmental power or
authority, by exercise of the right of appropriation, inverse condemnation,
condemnation or eminent domain, or sold to prevent such taking (each such event
being referred to as a "CONDEMNATION"), Landlord may, at its option, terminate
this Lease as of the date title vests in the condemning party. If twenty-five
percent (25%) or more of the Premises is taken and if the Premises remaining
after such Condemnation and any repairs by Landlord would be untenantable for
the conduct of Tenant's business operations, Tenant shall have the right to
terminate this Lease as of the date title vests in the condemning party. If
either party elects to terminate this Lease as provided herein, such election
shall be made by written notice to the other party given within thirty (30) days
after the nature and extent of such Condemnation have been finally determined.
If neither Landlord nor Tenant elects to terminate this Lease to the extent
permitted above, Landlord shall promptly proceed to restore the Premises, to the
extent of any Condemnation award received by Landlord, to substantially the same
condition as existed prior to such Condemnation, allowing for the reasonable
effects of such Condemnation, and a proportionate abatement shall be made to the
Base Rent corresponding to the time during which, and to the portion of the
floor area of the Premises (adjusted for any increase thereto resulting from any
reconstruction) of which, Tenant is deprived on account of such Condemnation and
restoration, as reasonably determined by Landlord. Except as expressly provided
in the immediately preceding sentence with respect to abatement of Base Rent,
Tenant shall have no claim against Landlord for, and hereby releases Landlord
and Landlord's Agents from responsibility for and waives its entire claim of
recovery for any cost, loss or expense suffered or incurred by Tenant as a
result of any Condemnation or the repair or restoration of the Premises, the
Building or the Project or the parking areas for the Building or the Project
following such Condemnation, including, without limitation, any cost, loss or
expense resulting from any loss of use of the whole or an part of the Premises,
the Building, the Project or the parking areas and/or any inconvenience or
annoyance occasioned by such Condemnation, repair or restoration. The provisions
of California Code of Civil Procedure Section 1265.130, which allows either
party to petition the Superior Court to terminate the Lease in the event of a
partial taking of the Premises, the Building or the Project or the parking areas

                                       19
<PAGE>   28


for the Building or the Project, and any other applicable law now or hereafter
enacted, are hereby waived by Tenant.

     (b)  Landlord shall be entitled to any and all compensation, damages,
income, rent, awards, or any interest therein whatsoever which may be paid or
made in connection with any Condemnation, and Tenant shall have no claim against
Landlord for the value of any unexpired term of this Lease or otherwise;
provided, however, that Tenant shall be entitled to receive any award separately
allocated by the condemning authority to Tenant for Tenant's relocation expenses
or the value of Tenant's Property (specifically excluding fixtures, Alterations
and other components of the Premises which under this Lease or by law are or at
the expiration of the Term will become the property of Landlord), provided that
such award does not reduce any award otherwise allocable or payable to Landlord.

22.  ASSIGNMENT AND SUBLETTING

     (a)  Tenant shall not voluntarily or by operation of law, (i) mortgage,
pledge, hypothecate or encumber this Lease or any interest herein, (ii) assign
or transfer this Lease or any interest herein, sublease the Premises or any part
thereof, or any right or privilege appurtenant thereto, or allow any other
person (the employees and invitees of Tenant excepted) to occupy or use the
Premises, or any portion thereof, without first obtaining the written consent of
Landlord, which consent shall not be unreasonably withheld; provided, however,
that (A) Tenant is not then in Default under this Lease nor is any event then
occurring which with the giving of notice or the passage of time, or both, would
constitute a Default hereunder, and (B) the proposed transfer is not an
assignment or a sublease under a previous assignment or an existing sublease.
When Tenant requests Landlord's consent to such assignment or subletting, it
shall notify Landlord in writing of the name and address of the proposed
assignee or subtenant and the nature and character of the business of the
proposed assignee or subtenant and shall provide (1) a fully completed Hazardous
Materials Disclosure Certificate for such assignee or subtenant in the form of
EXHIBIT B hereto, and (2) current and prior financial statements for the
proposed assignee or subtenant, which financial statements shall be audited to
the extent available and shall in any event be prepared in accordance with GAAP.
Tenant shall also provide Landlord with a copy of the proposed sublease or
assignment agreement, including all material terms and conditions thereof.
Landlord shall have the option, to be exercised within thirty (30) days of
receipt of the foregoing, to (1) terminate this Lease as of the commencement
date stated in the proposed sublease or assignment, (2) sublease or take an
assignment, as the case may be, from Tenant of the interest, or any portion
thereof, in this Lease and/or the Premises that Tenant proposes to assign or
sublease, on the same terms and conditions as stated in the proposed sublet or
assignment agreement, (3) consent to the proposed assignment or sublease, or (4)
refuse its consent to the proposed assignment or sublease, provided that such
consent shall not be unreasonably withheld so long as Tenant is not then in
Default under this Lease nor is any event then occurring which with the giving
of notice or the passage of time, or both, would constitute a Default hereunder.
In the event Landlord elects to terminate this Lease or sublease or take an
assignment from Tenant of the interest, or portion thereof, in the Lease and/or
the Premises that Tenant proposes to assign or sublease as provided in the
foregoing clauses (1) and (2), respectively, then Landlord shall have the
additional right to negotiate directly with Tenant's proposed assignee or
subtenant and to enter into a direct lease or occupancy agreement with such
party on such terms a shall be acceptable to Landlord in its sole and absolute
discretion, and

                                       20
<PAGE>   29
Tenant hereby waives any claims against Landlord related thereto, including,
without limitation, any claims for any compensation or profit related to such
lease or occupancy agreement.

     (b) Without otherwise limiting the criteria upon which Landlord may
withhold its consent, Landlord shall be entitled to consider all reasonable
criteria including, but not limited to, the following: (i) whether or not the
proposed subtenant or assignee is engaged in a business which, and the use of
the Premises will be in an manner which, is in keeping with the then character
and nature of all other tenancies in the Project; (ii) whether the use to be
made of the Premises by the proposed subtenant or assignee will conflict with
any so-called "exclusive" use then in favor of any other tenant of the Building
or the Project, and whether such use would be prohibited by any other portion
of this Lease, including, but not limited to, any rules and regulations then in
effect, or under applicable Laws, and whether such use imposes a greater load
upon the Premises and the Building and Project services then imposed by Tenant;
(iii) the business reputation of the proposed individuals who will be managing
and operating the business operations of the assignee or subtenant, and the
long-term financial and competitive business prospects of the proposed assignee
or subtenant; and (iv) the creditworthiness and financial stability of the
proposed assignee or subtenant in light of the responsibilities involved. In
any event, Landlord may withhold its consent to any assignment or sublease, if
(A) the actual use proposed to be conducted in the Premises or portion thereof
conflicts with the provisions of Paragraph 8(a) or (b) above or with any other
lease which restricts the use to which any space in the Building or the Project
may be put, or (B) the proposed assignment or sublease requires alterations,
improvements or additions to the Premises or portions thereof.

     (c) If Landlord approves an assignment or subletting as herein provided,
Tenant shall pay to Landlord, as Additional Rent, the difference, if any,
between (i) the Base Rent plus Additional Rent allocable to that part of the
Premises affected by such assignment or sublease pursuant to the provisions of
this Lease, and (ii) the rent and any additional rent payable by the assignee
or sublessee to Tenant, less reasonable and customary market-based leasing
commissions and reasonable legal fees, if any, incurred by Tenant in connection
with such assignment or sublease, which commissions and fees shall, for
purposes of the aforesaid calculation, be amortized on a straight-line basis
over the term of such assignment or sublease. In any subletting undertaken by
Tenant, Tenant shall list or offer the sublease premises at a rental rate not
less than Landlord's then current asking-rate for similarly situated space in
the Project (the "ASKING RATE") and shall diligently seek to obtain not less
than the Asking Rate for the space so sublet. In any assignment of this Lease
in whole or in part, Tenant shall list or offer the premises subject to such
assignment at a rate not less than the Asking Rate and shall diligently seek to
obtain from the assignee consideration reflecting a value of not less than
Asking Rate for the space subject to such assignment. The assignment or
sublease agreement, as the case may be, after approval by Landlord, shall not
be amended without Landlord's prior written consent, and shall contain a
provision directing the assignee or subtenant to pay the rent and other sums
due thereunder directly to Landlord upon receiving written notice from Landlord
that Tenant is in default under this Lease with respect to the payment of Rent.
In the event that, notwithstanding the giving of such notice, Tenant collects
any rent or other sums from the assignee or subtenant, then Tenant shall hold
such sums in trust for the benefit of Landlord and shall immediately forward
the same to Landlord. Landlord's collection of such rent and other sums shall
not constitute an acceptance by Landlord of attornment by such assignee or
subtenant. A consent to one assignment, subletting, occupation or use shall not
be deemed to be a consent to any other or subsequent

                                       21
<PAGE>   30
assignment, subletting, occupation or use, and consent to any assignment or
subletting shall in no way relieve Tenant of any liability under this Lease. Any
assignment or subletting without Landlord's consent shall be void, and shall, at
the option of Landlord, constitute a Default under this Lease.

        (d) Notwithstanding any assignment or subletting, Tenant and any
guarantor or surety of Tenant's obligations under this Lease shall at all times
remain fully responsible and liable for the payment of the Rent and for
compliance with all of Tenant's other obligations under this Lease (regardless
of whether Landlord's approval has been obtained for any such assignment or
subletting).

        (e) Tenant shall pay Landlord's reasonable fees (including, without
limitation, the fees of Landlord's counsel, not to exceed $1,000.00), incurred
in connection with Landlord's review and processing of documents regarding any
proposed assignment or sublease.

        (f) Notwithstanding anything in this Lease to the contrary, in the event
Landlord consents to an assignment or subletting by Tenant in accordance with
the terms of this Paragraph 22, Tenant's assignee or subtenant shall have no
right to further assign this Lease or any interest therein or thereunder or to
further sublease all or any portion of the Premises. In furtherance of the
foregoing, Tenant acknowledges and agrees on behalf of itself and any assignee
or subtenant claiming under it (and any such assignee or subtenant by accepting
such assignment or sublease shall be deemed to acknowledge and agree) that no
sub-subleases or further assignments of this Lease shall be permitted at any
time.

        (g) Tenant acknowledges and agrees that the restrictions, conditions and
limitations imposed by this Paragraph 22 on Tenant's ability to assign or
transfer this Lease or any interest herein, to sublet the Premises or any part
thereof, to transfer or assign any right or privilege appurtenant to the
Premises, or to allow any other person to occupy or use the Premises or any
portion thereof, are, for the purposes of California Civil Code Section 1951.4,
as amended from time to time, and for all other purposes, reasonable at the time
that the Lease was entered into, and shall be deemed to be reasonable at the
time that Tenant seeks to assign or transfer this Lease or any interest herein,
to sublet the Premises or any part thereof, to transfer or assign any right or
privilege appurtenant to the Premises, or to allow any other person to occupy or
use the Premises or any portion thereof.

23. TENANT'S DEFAULT

        The occurrence of any one of the following events shall constitute an
event of default on the part of Tenant ("DEFAULT"):

        (a) The vacation or abandonment of the Premises by Tenant for a period
often (10) consecutive days or any vacation or abandonment of the Premises by
Tenant which would cause any insurance policy to be invalidated or otherwise
lapse, or the failure of Tenant to continuously operate Tenant's business in the
Premises, in each of the foregoing cases irrespective of whether or not Tenant
is then in monetary default under this Lease. Tenant agrees to notice and
service of notice as provided for in this Lease and waives any right to any
other or further notice or service of notice which Tenant may have under any
statute or law now or hereafter in effect;


                                       22
<PAGE>   31

        (b) Failure to pay any installment of Rent or any other monies due and
payable hereunder, said failure continuing for a period of three (3) days after
the same is due;

        (c) A general assignment by Tenant or any guarantor or surety of
Tenant's obligations hereunder (collectively, "GUARANTOR") for the benefit of
creditors;

        (d) The filing of a voluntary petition in bankruptcy by Tenant or any
Guarantor, the filing by Tenant or any Guarantor of a voluntary petition for an
arrangement, the filing by or against Tenant or any Guarantor of a petition,
voluntary or involuntary, for reorganization, or the filing of an involuntary
petition by the creditors of Tenant or any Guarantor, said involuntary petition
remaining undischarged for a period of sixty (60) days;

        (e) Receivership, attachment, or other judicial seizure of substantially
all of Tenant's assets on the Premises, such attachment or other seizure
remaining undismissed or undischarged for a period of sixty (60) days after the
levy thereof;

        (f) Death or disability of Tenant or any Guarantor, if Tenant or such
Guarantor is a natural person, or the failure by Tenant or any Guarantor to
maintain its legal existence, if Tenant or such Guarantor is a corporation,
partnership, limited liability company, trust or other legal entity;

        (g) Failure of Tenant to execute and deliver to Landlord any estoppel
certificate, subordination agreement, or lease amendment within the time periods
and in the manner required by Paragraphs 29 or 30 or 41, and/or failure by
Tenant to deliver to Landlord any financial statement within the time period and
in the manner required by Paragraph 39;

        (h) An assignment or sublease, or attempted assignment or sublease, of
this Lease or the Premises by Tenant contrary to the provision of Paragraph 22,
unless such assignment or sublease is expressly conditioned upon Tenant having
received Landlord's consent thereto;

        (i) Failure of Tenant to restore the Security Deposit to the amount and
within the time period provided in Paragraph 7 above;

        (j) Failure in the performance of any of Tenant's covenants, agreements
or obligations hereunder (except those failures specified as events of Default
in any other subparagraphs of this Paragraph 23, which shall be governed by such
other Paragraphs), which failure continues for ten (10) days after written
notice thereof from Landlord to Tenant, provided that, if Tenant has exercised
reasonable diligence to cure such failure and such failure cannot be cured
within such ten (10) day period despite reasonable diligence, Tenant shall not
be in default under this subparagraph so long as Tenant thereafter diligently
and continuously prosecutes the cure to completion and actually completes such
cure within thirty (30) days after the giving of the aforesaid written notice;

        (k) Chronic delinquency by Tenant in the payment of Rent, or any other
periodic payments required to be paid by Tenant under this Lease. "CHRONIC
DELINQUENCY" shall mean failure by Tenant to pay Rent, or any other payments
required to be paid by Tenant under this Lease within three (3) days after
written notice thereof for any three (3) months (consecutive or nonconsecutive)
during any period of twelve (12) months. In the event of a Chronic delinquency,
in addition to Landlord's other remedies for Default provided in this Lease, at


                                       23
<PAGE>   32

Landlord's option, Landlord shall have the right to require that Rent be paid by
Tenant quarterly, in advance;

        (l) Any insurance required to be maintained by Tenant pursuant to this
Lease shall be canceled or terminated or shall expire or be reduced or
materially changed, except as permitted in this Lease; and

        (m) Any failure by Tenant to discharge any lien or encumbrance placed on
the Project or any part thereof in violation of this Lease within ten (10) days
after the date such lien or encumbrance is filed or recorded against the Project
or any part thereof.

        Tenant agrees that any notice given by Landlord pursuant to Paragraph
23(j) or (k) above shall satisfy the requirements for notice under California
Code of Civil Procedure Section 1161, and Landlord shall not be required to give
any additional notice in order to be entitled to commence an unlawful detainer
proceeding.

24. LANDLORD'S REMEDIES

        (a) TERMINATION. In the event of any Default by Tenant, then in addition
to any other remedies available to Landlord at law or in equity and under this
Lease, Landlord shall have the immediate option to terminate this Lease and all
rights of Tenant hereunder by giving written notice of such intention to
terminate. In the event that Landlord shall elect to so terminate this Lease
then Landlord may recover from Tenant:

               (i) the worth at the time of award of any unpaid Rent and any
other sums due and payable which have been earned at the time of such
termination; plus

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

               (iii) the worth at the time of award of the amount by which the
unpaid Rent and any other sums due and payable for the balance of the term of
this Lease after the time of award exceeds the amount of such rental loss that
Tenant proves could be reasonably avoided; plus

               (iv) any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its obligations
under this Lease or which in the ordinary course would be likely to result
therefrom, including, without limitation: (A) any costs or expenses incurred by
Landlord: (1) in retaking possession of the Premises; (2) in maintaining,
repairing, preserving, restoring, replacing, cleaning, altering, remodeling or
rehabilitating the Premises or any affected portions of the Building or the
Project, including such actions undertaken in connection with the reletting or
attempted reletting of the Premises to a new tenant or tenants; (3) for leasing
commissions, advertising costs and other expenses of reletting the Premises; or
(4) in carrying the Premises, including taxes, insurance premiums, utilities and
security precautions; (B) any unearned brokerage commissions paid in connection
with this Lease; (C) reimbursement of any previously waived or abated Base Rent
or Additional Rent or any free rent or reduced rental rate granted hereunder;
and (D) any concession made or


                                       24
<PAGE>   33

paid by Landlord to the benefit of Tenant in consideration of this Lease
including, but not limited to, any moving allowances, contributions, or
assumptions by Landlord of any of Tenant's previous lease obligations; plus

               (v) such reasonable attorneys' fees incurred by Landlord as a
result of a Default, and costs in the event suit is filed by Landlord to enforce
such remedy; and plus

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

As used in subparagraphs (i) and (ii) above, the "WORTH AT THE TIME OF AWARD" is
computed by allowing interest at an annual rate equal to twelve percent (12%)
per annum or the maximum rate permitted by law, whichever is less. As used in
subparagraph (iii) above, the "WORTH AT THE TIME OF AWARD" is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award, plus one percent (1%). Tenant waives redemption
or relief from forfeiture under California Code of Civil Procedure Sections 1174
and 1179, or under any other pertinent present or future Law, in the event
Tenant is evicted or Landlord takes possession of the Premises by reason of any
Default of Tenant hereunder.

        (b) CONTINUATION OF LEASE. In the event of any Default by Tenant, then
in addition to any other remedies available to Landlord at law or in equity and
under this Lease, Landlord shall have the remedy described in California Civil
Code Section 1951.4 (Landlord may continue this Lease in effect after Tenant's
Default and abandonment and recover Rent as it becomes due, provided that Tenant
has the right to sublet or assign, subject only to reasonable limitations). In
addition, Landlord shall not be liable in any way whatsoever for its failure or
refusal to relet the Premises. For purposes of this Paragraph 24(b), the
following acts by Landlord will not constitute the termination of Tenant's right
to possession of the Premises:

               (i) Acts of maintenance or preservation or efforts to relet the
Premises, including, but not limited to, alterations, remodeling, redecorating,
repairs, replacements and/or painting as Landlord shall consider advisable for
the purpose of reletting the Premises or any part thereof; or

               (ii) The appointment of a receiver upon the initiative of
Landlord to protect Landlord's interest under this Lease or in the Premises.

        (c) RE-ENTRY. In the event of any Default by Tenant, Landlord shall also
have the right, with or without terminating this Lease, in compliance with
applicable law, to re-enter the Premises and remove all persons and property
from the Premises; such property may be removed and stored in a public warehouse
or elsewhere at the cost of and for the account of Tenant.

        (d) RELETTING. In the event of the abandonment of the Premises by Tenant
or in the event that Landlord shall elect to re-enter as provided in Paragraph
24(c) or shall take possession of the Premises pursuant to legal proceeding or
pursuant to any notice provided by law, then if Landlord does not elect to
terminate this Lease as provided in Paragraph 24(a), Landlord may from time to
time, without terminating this Lease, relet the Premises or any part thereof for
such term or terms and at such rental or rentals and upon such other terms and
conditions as Landlord in its sole discretion may deem advisable with the right
to make alterations and repairs to the Premises in Landlord's sole discretion.
In the event that Landlord shall elect to so relet, then


                                       25
<PAGE>   34

rentals received by Landlord from such reletting shall be applied in the
following order: (i) to reasonable attorneys' fees incurred by Landlord as a
result of a Default and costs in the event suit is filed by Landlord to enforce
such remedies; (ii) to the payment of any indebtedness other than Rent due
hereunder from Tenant to Landlord; (iii) to the payment of any costs of such
reletting; (iv) to the payment of the costs of any alterations and repairs to
the Premises; (v) to the payment of Rent due and unpaid hereunder; and (vi) the
residue, if any, shall be held by Landlord and applied in payment of future Rent
and other sums payable by Tenant hereunder as the same may become due and
payable hereunder. Should that portion of such rentals received from such
reletting during any month, which is applied to the payment of Rent hereunder,
be less than the Rent payable during the month by Tenant hereunder, then Tenant
shall pay such deficiency to Landlord. Such deficiency shall be calculated and
paid monthly. Tenant shall also pay to Landlord, as soon as ascertained, any
costs and expenses incurred by Landlord in such reletting or in making such
alterations and repairs not covered by the rentals received from such reletting.

        (e) TERMINATION. No re-entry or taking of possession of the Premises by
Landlord pursuant to this Paragraph 24 shall be construed as an election to
terminate this Lease unless a written notice of such intention is given to
Tenant or unless the termination thereof is decreed by a court of competent
jurisdiction. Notwithstanding any reletting without termination by Landlord
because of any Default by Tenant, Landlord may at any time after such reletting
elect to terminate this Lease for any such Default.

        (F) CUMULATIVE REMEDIES. The remedies herein provided are not exclusive
and Landlord shall have any and all other remedies provided herein or bylaw or
in equity.

        (G) NO SURRENDER. No act or conduct of Landlord, whether consisting of
the acceptance of the keys to the Premises, or otherwise, shall be deemed to be
or constitute an acceptance of the surrender of the Premises by Tenant prior to
the expiration of the Term, and such acceptance by Landlord of surrender by
Tenant shall only flow from and must be evidenced by a written acknowledgment of
acceptance of surrender signed by Landlord. The surrender of this Lease by
Tenant, voluntarily or otherwise, shall not work a merger unless Landlord elects
in writing that such merger take place, but shall operate as an assignment to
Landlord of any and all existing subleases, or Landlord may, at its option,
elect in writing to treat such surrender as a merger terminating Tenant's estate
under this Lease, and thereupon Landlord may terminate any or all such subleases
by notifying the sublessee of its election so to do within five (5) days after
such surrender.

25. LANDLORD'S RIGHT TO PERFORM TENANT'S OBLIGATIONS

        (a) Without limiting the rights and remedies of Landlord contained in
Paragraph 24 above, if Tenant shall be in Default in the performance of any of
the terms, provisions, covenants or conditions to be performed or complied with
by Tenant pursuant to this Lease, then Landlord may at Landlord's option,
without any obligation to do so, and without notice to Tenant perform any such
term, provision, covenant, or condition, or make any such payment and Landlord
by reason of so doing shall not be liable or responsible for any loss or damage
thereby sustained by Tenant or anyone holding under or through Tenant or any of
Tenant's Agents.


                                       26
<PAGE>   35

        (b) Without limiting the rights of Landlord under Paragraph 25(a) above,
Landlord shall have the right at Landlord's option, without any obligation to do
so, to perform any of Tenant's covenants or obligations under this Lease without
notice to Tenant in the case of an emergency, as determined by Landlord in its
sole and absolute judgment, or if Landlord otherwise determines in its sole
discretion that such performance is necessary or desirable for the proper
management and operation of the Building or the Project or for the preservation
of the rights and interests or safety of other tenants of the Building or the
Project.

        (c) If Landlord performs any of Tenant's obligations hereunder in
accordance with this Paragraph 25, the full amount of the cost and expense
incurred or the payment so made or the amount of the loss so sustained shall
immediately be owing by Tenant to Landlord, and Tenant shall promptly pay to
Landlord upon demand, as Additional Rent, the full amount thereof with interest
thereon from the date of payment by Landlord at the lower of (i) ten percent
(10%) per annum, or (ii) the highest rate permitted by applicable law.

26. ATTORNEYS' FEES

        (a) If either party hereto fails to perform any of its obligations under
this Lease or if any dispute arises between the parties hereto concerning the
meaning or interpretation of any provision of this Lease, then the defaulting
party or the party not prevailing in such dispute, as the case may be, shall pay
any and all costs and expenses incurred by the other party on account of such
default and/or in enforcing or establishing its rights hereunder, including,
without limitation, court costs and reasonable attorneys' fees and
disbursements. Any such attorneys' fees and other expenses incurred by either
party in enforcing a judgment in its favor under this Lease shall be recoverable
separately from and in addition to any other amount included in such judgment,
and such attorneys' fees obligation is intended to be severable from the other
provisions of this Lease and to survive and not be merged into any such
judgment.

        (b) Without limiting the generality of Paragraph 26(a) above, if
Landlord utilizes the services of an attorney for the purpose of collecting any
Rent due and unpaid by Tenant or in connection with any other breach of this
Lease by Tenant, Tenant agrees to pay Landlord actual attorneys' fees as
determined by Landlord for such services, regardless of the fact that no legal
action may be commenced or filed by Landlord.

27. TAXES

        Tenant shall be liable for and shall pay, prior to delinquency, all
taxes levied against Tenant's Property. If any Alteration installed by Tenant or
any of Tenant's Property is assessed and taxed with the Project or Building,
Tenant shall pay such taxes to Landlord within fifteen (15) days after delivery
to Tenant of a statement therefor.

28. EFFECT OF CONVEYANCE

        The term "LANDLORD" as used in this Lease means, from time to time, the
then current owner of the Building or the Project containing the Premises, so
that, in the event of any sale of the Building or the Project, Landlord shall be
and hereby is entirely freed and relieved of all covenants and obligations of
Landlord hereunder, and it shall be deemed and construed, without further
agreement between the parties and the purchaser at any such sale, that the
purchaser of


                                       27
<PAGE>   36

the Building or the Project has assumed and agreed to carry out any and
obligations of Landlord hereunder.

29. TENANT'S ESTOPPEL CERTIFICATE

        From time to time, upon written request of Landlord, Tenant shall
execute, acknowledge and deliver to Landlord or its designee, an Estoppel
Certificate in substantially the form attached hereto as EXHIBIT C and with any
other statements reasonably requested by Landlord or its designee. Any such
Estoppel Certificate delivered pursuant to this Paragraph 29 may be relied upon
by a prospective purchaser of Landlord's interest or a mortgagee of Landlord's
interest or assignee of any mortgage upon Landlord's interest in the Premises.
If Tenant shall fail to provide such certificate within ten (10) days of receipt
by Tenant of a written request by Landlord as herein provided, such failure
shall, at Landlord's election, constitute a Default under this Lease, and Tenant
shall be deemed to have given such certificate as above provided without
modification and shall be deemed to have admitted the accuracy of any
information supplied by Landlord to a prospective purchaser or mortgagee.

30. SUBORDINATION

        This Lease, and all rights of Tenant hereunder, are and shall be subject
and subordinate to all ground leases, overriding leases and underlying leases
affecting the Building or the Project now or hereafter existing and each of the
terms, covenants and conditions thereto (the "SUPERIOR LEASE(S)"), and to all
mortgages which may now or hereafter affect the Building, the Project or any of
such leases and each of the terms, covenants and conditions thereto (the
"SUPERIOR MORTGAGE(S)"), whether or not such mortgages shall also cover other
lands, buildings or leases, to each and every advance made or hereafter to be
made under such mortgages, and to all renewals, modifications, replacements and
extensions of such leases and such mortgages and spreaders and consolidations of
such mortgages. This Paragraph shall be self-operative and no further instrument
of subordination shall be required. Tenant shall promptly execute, acknowledge
and deliver any reasonable instrument that Landlord, the lessor under any such
lease or the holder of any such mortgage or any of their respective successors
in interest may reasonably request to evidence such subordination; if Tenant
fails to execute, acknowledge and deliver any such instrument within ten (10)
business days after request therefor, Tenant hereby irrevocably constitutes and
appoints Landlord as Tenant's attorney-in-fact, coupled with an interest, to
execute and deliver any such instrument for and on behalf of Tenant. Without
limiting the foregoing, Tenant's failure to execute, acknowledge and deliver
such instrument within the aforesaid time period shall constitute a Default
hereunder. As used herein the lessor of a Superior Lease or its successor in
interest is herein called "SUPERIOR LESSOR"; and the holder of a Superior
Mortgage is herein called "SUPERIOR MORTGAGEE".

        Notwithstanding the foregoing terms of this Paragraph 30 if a Superior
Lease or Superior Mortgage is hereafter placed against or affecting any or all
of the Building or the Premises, Landlord shall use reasonable efforts to obtain
an agreement from the holder thereof in form and substance acceptable to such
holder, whereby such holder agrees that Tenant, upon paying the Base Rent and
all of the Additional Rent and other charges herein provided for, and observing
and complying with the covenants, agreements and conditions of this Lease on its
part to be observed and complied with, shall lawfully and quietly hold, occupy
and enjoy the Premises


                                       28
<PAGE>   37

during the Term of this Lease (including any exercised renewal term), without
hindrance or interference from anyone claiming by or through said Superior
Mortgagee or Superior Lessor and that said Superior Mortgagee or Superior Lessor
shall respect Tenant's rights under the Lease and, upon succeeding to Landlord's
interest in the Building and Lease, shall observe and comply with all of
Landlord's duties under the Lease.

        If any Superior Lessor or Superior Mortgagee shall succeed to the rights
of Landlord under this Lease, whether through possession or foreclosure action
or delivery of a new lease or deed (such party so succeeding to Landlord's
rights herein called "SUCCESSOR LANDLORD"), then Tenant shall attorn to and
recognize such Successor Landlord as Tenant's landlord under this Lease (without
the need for further agreement) and shall promptly execute and deliver any
reasonable instrument that such Successor Landlord may reasonably request to
evidence such attornment. This Lease shall continue in full force and effect as
a direct lease between the Successor Landlord and Tenant upon all of the terms,
conditions and covenants as are set forth in this Lease, except that the
Successor Landlord shall not (a) be liable for any previous act or omission of
Landlord under this Lease, except to the extent such act or omission shall
constitute a continuing Landlord default hereunder; (b) be subject to any
offset, not expressly provided for in this Lease; or (c) be bound by any
previous modification of this Lease or by any previous prepayment of more than
one month's Base Rent, unless such modification or prepayment shall have been
expressly approved in writing by the Successor Landlord (or its predecessor in
interest).

31. ENVIRONMENTAL COVENANTS

        (a) Prior to executing this Lease, Tenant has completed, executed and
delivered to Landlord a Hazardous Materials Disclosure Certificate ("INITIAL
DISCLOSURE CERTIFICATE"), a fully completed copy of which is attached hereto as
EXHIBIT B and incorporated herein by this reference. Tenant covenants,
represents and warrants to Landlord that the information on the Initial
Disclosure Certificate is true and correct and accurately describes the
Hazardous Materials which will be manufactured, treated, used or stored on or
about the Premises by Tenant or Tenant's Agents. Tenant shall, on each
anniversary of the Commencement Date and at such other times as Tenant desires
to manufacture, treat, use or store on or about the Premises new or additional
Hazardous Materials which were not listed on the Initial Disclosure Certificate,
complete, execute and deliver to Landlord an updated Disclosure Certificate
(each, an "UPDATED DISCLOSURE CERTIFICATE") describing Tenant's then current and
proposed future uses of Hazardous Materials on or about the Premises, which
Updated Disclosure Certificates shall be in the same format as that which is set
forth in EXHIBIT B or in such updated format as Landlord may require from time
to time. Tenant shall deliver an Updated Disclosure Certificate to Landlord not
less than thirty (30) days prior to the date Tenant intends to commence the
manufacture, treatment, use or storage of new or additional Hazardous Materials
on or about the Premises, and Landlord shall have the right to approve or
disapprove such new or additional Hazardous Materials in its sole and absolute
discretion. Tenant shall make no use of Hazardous Materials on or about the
Premises except as described in the Initial Disclosure Certificate or as
otherwise approved by Landlord in writing in accordance with this Paragraph
31(a).

        (b) As used in this Lease, the term "HAZARDOUS MATERIALS" shall mean and
include any substance that is or contains: (i) any "hazardous substance" as now
or hereafter defined in


                                       29
<PAGE>   38
Section 101(14) of the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended ("CERCLA") (42 U.S.C. Section 9601 et seq.) or
any regulations promulgated under CERCLA; (ii) any "hazardous waste" as now or
hereafter defined in the Resource Conservation and Recovery Act, as amended
("RCRA") (42 U.S.C. Section 6901 et seq.) or any regulations promulgated under
("RCRA"); (iii) any substance now or hereafter regulated by the Toxic Substances
Control Act, as amended ("TSCA") (15 U.S.C. Section 2601 et seq.) or any
regulations promulgated under TSCA; (iv) petroleum, petroleum by-products,
gasoline, diesel fuel, or other petroleum hydrocarbons; (v) asbestos and
asbestos-containing material, in any form, whether friable or non-friable; (vi)
polychlorinated biphenyls; (vii) lead and lead-containing materials; or (viii)
any additional substance, material or waste (A) the presence of which on or
about the Premises (1) requires reporting, investigation or remediation under
any Environmental Laws (as hereinafter defined), (2) causes or threatens to
cause a nuisance on the Premises or any adjacent area or property or poses or
threatens to pose a hazard to the health or safety of persons on the Premises or
any adjacent area or property, or (3) which, if it emanated or migrated from the
Premises, could constitute a trespass, or (B) which is now or is hereafter
classified or considered to be hazardous or toxic under any Environmental Laws.

        (c) As used in this Lease, the term "ENVIRONMENTAL LAWS" shall mean and
include: (i) CERCLA, "RCRA" and TSCA; and (ii) any other federal, state or local
laws, ordinances, statutes, codes, rules, regulations, orders or decrees now or
hereinafter in effect relating to (A) pollution, (B) the protection or
regulation of human health, natural resources or the environment, (C) the
treatment, storage or disposal of Hazardous Materials, or (D) the emission,
discharge, release or threatened release of Hazardous Materials into the
environment.

        (d) Tenant agrees that during its use and occupancy of the Premises it
will: (i) not (A) permit Hazardous Materials to be present on or about the
Premises except in a manner and quantity necessary for the ordinary performance
of Tenant's business or (B) release, discharge or dispose of any Hazardous
Materials on, in, at, under, or emanating from, the Premises, the Building or
the Project; (ii) comply with all Environmental Laws relating to the Premises
and the use of Hazardous Materials on or about the Premises and not engage in or
permit others to engage in any activity at the Premises in violation of any
Environmental Laws; and (iii) immediately notify Landlord of (A) any inquiry,
test, investigation or enforcement proceeding by any governmental agency or
authority against Tenant, Landlord or the Premises, Building or Project relating
to any Hazardous Materials or under any Environmental Laws or (B) the occurrence
of any event or existence of any condition that would cause a breach of any of
the covenants set forth in this Paragraph 31.

        (e) If Tenant's use of Hazardous Materials on or about the Premises
results in a release, discharge or disposal of Hazardous Materials on, in, at,
under, or emanating from, the Premises, the Building or the Project, Tenant
agrees to investigate, clean up, remove or remediate such Hazardous Materials in
full compliance with: (i) the requirements of (A) all Environmental Laws and (B)
any governmental agency or authority responsible for the enforcement of any
Environmental Laws; and (ii) any additional requirements of Landlord that are
reasonably necessary to protect the value of the Premises, the Building or the
Project.

        (f) Upon reasonable notice to Tenant, Landlord may inspect the Premises
and surrounding areas for the purpose of determining whether there exists on or
about the Premises any


                                       30
<PAGE>   39

Hazardous Material or other condition or activity that is in violation of the
requirements of this Lease or of any Environmental Laws. Such inspections may
include, but are not limited to, entering the Premises or adjacent property with
drill rigs or other machinery for the purpose of obtaining laboratory samples.
Landlord shall not be limited in the number of such inspections during the Term
of this Lease. In the event (i) such inspections reveal the presence of any such
Hazardous Material or other condition or activity in violation of the
requirements of this Lease or of any Environmental Laws, or (ii) Tenant or its
Agents contribute or knowingly consent to the presence of any Hazardous
Materials in, on, under, through or about the Premises, the Building or the
Project or exacerbate the condition of or the conditions caused by any Hazardous
Materials in, on, under, through or about the Premises, the Building or the
Project, Tenant shall reimburse Landlord for the cost of such inspections within
ten (10) days of receipt of a written statement therefor. Tenant will supply to
Landlord such historical and operational information regarding the Premises and
surrounding areas as may be reasonably requested to facilitate any such
inspection and will make available for meetings appropriate personnel having
knowledge of such matters. Tenant agrees to give Landlord at least sixty (60)
days' prior notice of its intention to vacate the Premises so that Landlord will
have an opportunity to perform such an inspection prior to such vacation. The
right granted to Landlord herein to perform inspections shall not create a duty
on Landlord's part to inspect the Premises, or liability on the part of Landlord
for Tenant's use, storage, treatment or disposal of Hazardous Materials, it
being understood that Tenant shall be solely responsible for all liability in
connection therewith.

        (g) Landlord shall have the right, but not the obligation, prior or
subsequent to a Default, without in any way limiting Landlord's other rights and
remedies under this Lease, to enter upon the Premises, or to take such other
actions as it deems necessary or advisable, to investigate, clean up, remove or
remediate any Hazardous Materials or contamination by Hazardous Materials
present on, in, at, under, or emanating from, the Premises, the Building or the
Project in violation of Tenant's obligations under this Lease or under any
Environmental Laws. Notwithstanding any other provision of this Lease, Landlord
shall also have the right, at its election, in its own name or as Tenant's
agent, to negotiate, defend, approve and appeal, at Tenant's expense, any action
taken or order issued by any governmental agency or authority with regard to any
such Hazardous Materials or contamination by Hazardous Materials. All costs and
expenses paid or incurred by Landlord in the exercise of the rights set forth in
this Paragraph 31 shall be payable by Tenant upon demand.

        (h) Tenant shall surrender the Premises to Landlord upon the expiration
or earlier termination of this Lease free of debris, waste or Hazardous
Materials placed on, about or near the Premises by Tenant or Tenant's Agents,
and in a condition which complies with all Environmental Laws and any additional
requirements of Landlord that are reasonably necessary to protect the value of
the Premises, the Building or the Project, including, without limitation, the
obtaining of any closure permits or other governmental permits or approvals
related to Tenant's use of Hazardous Materials in or about the Premises.
Tenant's obligations and liabilities pursuant to the provisions of this
Paragraph 31 shall survive the expiration or earlier termination of this Lease.
If it is determined by Landlord that the condition of all or any portion of the
Premises, the Building, and/or the Project is not in compliance with the
provisions of this Lease with respect to Hazardous Materials, including, without
limitation, all Environmental Laws, at the expiration or earlier termination of
this Lease, then at Landlord's sole option, Landlord may require Tenant to hold
over possession of the Premises until Tenant can surrender the Premises


                                       31
<PAGE>   40

to Landlord in the condition in which the Premises existed as of the
Commencement Date and prior to the appearance of such Hazardous Materials except
for normal wear and tear, including, without limitation, the conduct or
performance of any closures as required by any Environmental Laws. The burden of
proof hereunder shall be upon Tenant. For purposes hereof, the term "NORMAL WEAR
AND TEAR" shall not include any deterioration in the condition or diminution of
the value of any portion of the Premises, the Building, and/or the Project in
any manner whatsoever related to directly, or indirectly, Hazardous Materials.
Any such holdover by Tenant will be with Landlord's consent, will not be
terminable by Tenant in any event or circumstance and will otherwise be subject
to the provisions of Paragraph 34 of this Lease.

        (i) Tenant agrees to indemnify and hold harmless Landlord from and
against any and all claims, losses (including, without limitation, loss in value
of the Premises, the Building or the Project, liabilities and expenses
(including attorneys' fees)) sustained by Landlord attributable to (i) any
Hazardous Materials placed on or about the Premises, the Building or the Project
by Tenant or Tenant's Agents, or (ii) Tenant's breach of any provision of this
Paragraph 31.

        (j) The provisions of this Paragraph 31 shall survive the expiration or
earlier termination of this Lease.

32. NOTICES

        All notices and demands which are required or may be permitted to be
given to either party by the other hereunder shall be in writing and shall be
sent by United States mail, postage prepaid, certified, or by personal delivery
or overnight courier, addressed to the addressee at Tenant's Address or
Landlord's Address as specified in the Basic Lease Information, or to such other
place as either party may from time to time designate in a notice to the other
party given as provided herein. Copies of all notices and demands given to
Landlord shall additionally be sent to Landlord's property manager at the
address specified in the Basic Lease Information or at such other address as
Landlord may specify in writing from time to time. Notice shall be deemed given
upon actual receipt (or attempted delivery if delivery is refused), if
personally delivered, or one (1) business day following deposit with a reputable
overnight courier that provides a receipt, or on the third (3rd) day following
deposit in the United States mail in the manner described above.

33. WAIVER

        The waiver of any breach of any term, covenant or condition of this
Lease shall not be deemed to be a waiver of such term, covenant or condition or
of any subsequent breach of the same or any other term, covenant or condition
herein contained. The subsequent acceptance of Rent by Landlord shall not be
deemed to be a waiver of any preceding breach by Tenant, other than the failure
of Tenant to pay the particular rental so accepted, regardless of Landlord's
knowledge of such preceding breach at the time of acceptance of such Rent. No
delay or omission in the exercise of any right or remedy of Landlord in regard
to any Default by Tenant shall impair such a right or remedy or be construed as
a waiver. Any waiver by Landlord of any Default must be in writing and shall not
be a waiver of any other Default concerning the same or any other provisions of
this Lease.


                                       32
<PAGE>   41

34. HOLDING OVER

        Any holding over after the expiration of the Term, without the express
written consent of Landlord, shall constitute a Default and, without limiting
Landlord's remedies provided in this Lease, such holding over shall be construed
to be a tenancy at sufferance, at a rental rate equal to the greater of one
hundred fifty percent (150%) of the fair market rental value for the Premises as
determined by Landlord or two hundred percent (200%) of the Base Rent last due
in this Lease, plus Additional Rent, and shall otherwise be on the terms and
conditions herein specified, so far as applicable; provided, however, that in no
event shall any renewal or expansion option or other similar right or option
contained in this Lease be deemed applicable to any such tenancy at sufferance.
If the Premises are not surrendered at the end of the Term or sooner termination
of this Lease, and in accordance with the provisions of Paragraphs 10 and 31(h),
Tenant shall indemnify, defend and hold Landlord harmless from and against any
and all loss or liability resulting from delay by Tenant in so surrendering the
Premises including, without limitation, any loss or liability resulting from any
claim against Landlord made by any succeeding tenant or prospective tenant
founded on or resulting from such delay and losses to Landlord due to lost
opportunities to lease any portion of the Premises to any such succeeding tenant
or prospective tenant, together with, in each case, actual attorneys' fees and
costs.

35. SUCCESSORS AND ASSIGNS

        The terms, covenants and conditions of this Lease shall, subject to the
provisions as to assignment, apply to and bind the heirs, successors, executors,
administrators and assigns of all of the parties hereto. If Tenant shall consist
of more than one entity or person, the obligations of Tenant under this Lease
shall be joint and several.

36. TIME

        Time is of the essence of this Lease and each and every term, condition
and provision herein.

37. BROKERS

        Landlord and Tenant each represents and warrants to the other that
neither it nor its officers or agents nor anyone acting on its behalf has dealt
with any real estate broker except the Broker(s) specified in the Basic Lease
Information in the negotiating or making of this Lease, and each party agrees to
indemnify and hold harmless the other from any claim or claims, and costs and
expenses, including attorneys' fees, incurred by the indemnified party in
conjunction with any such claim or claims of any other broker or brokers to a
commission in connection with this Lease as a result of the actions of the
indemnifying party.

38. LIMITATION OF LIABILITY

        Tenant agrees that, in the event of any default or breach by Landlord
with respect to any of the terms of the Lease to be observed and performed by
Landlord: (a) Tenant shall look solely to the then-current Landlord's interest
in the Building for the satisfaction of Tenant's remedies for the collection of
a judgment (or other judicial process) requiring the payment of money by
Landlord; (b) no other property or assets of Landlord, its partners,
shareholders, officers,


                                       33
<PAGE>   42

directors, employees, investment advisors, or any successor in interest of any
of them (collectively, the "LANDLORD PARTIES") shall be subject to levy,
execution or other enforcement procedure for the satisfaction of Tenant's
remedies; (c) no personal liability shall at any time be asserted or enforceable
against the Landlord Parties; and (d) no judgment will be taken against the
Landlord Parties. The provisions of this section shall apply only to the
Landlord and the parties herein described, and shall not be for the benefit of
any insurer nor any other third party.

39. FINANCIAL STATEMENTS

        Within ten (10) days after Landlord's request, Tenant shall deliver to
Landlord the then current financial statements of Tenant (including interim
periods following the end of the last fiscal year for which annual statements
are available), prepared or compiled by a certified public accountant, including
a balance sheet and profit and loss statement for the most recent prior year,
all prepared in accordance with GAAP.

40. RULES AND REGULATIONS

        Tenant agrees to comply with such reasonable rules and regulations as
Landlord may adopt from time to time for the orderly and proper operation of the
Building and the Project. Such rules may include but shall not be limited to the
following: (a) restriction of employee parking to a limited, designated area or
areas; and (b) regulation of the removal, storage and disposal of Tenant's
refuse and other rubbish at the sole cost and expense of Tenant. The then
current rules and regulations shall be binding upon Tenant upon delivery of a
copy of them to Tenant. Landlord shall not be responsible to Tenant for the
failure of any other person to observe and abide by any of said rules and
regulations. Landlord's current rules and regulations are attached to this Lease
as Exhibit A.

41. MORTGAGEE PROTECTION

        (a) MODIFICATIONS FOR LENDER. If, in connection with obtaining financing
for the Project or any portion thereof, Landlord's lender shall request
reasonable modifications to this Lease as a condition to such financing, Tenant
shall not unreasonably withhold, delay or defer its consent to such
modifications, provided that such modifications do not materially adversely
affect Tenant's rights or increase Tenant's obligations under this Lease.

        (b) RIGHTS TO CURE. Tenant agrees to give to any trust deed or mortgage
holder ("HOLDER"), by registered mail, at the same time as it is given to
Landlord, a copy of any notice of default given to Landlord, provided that,
prior to such notice, Tenant has been notified, in writing (by way of notice of
assignment of rents and leases, or otherwise) of the address of such Holder.
Tenant further agrees that if Landlord shall have failed to cure such default
within the time provided for in this Lease, then the Holder shall have an
additional twenty (20) days after expiration of such period, or after receipt of
such notice from Tenant (if such notice to the Holder is required by this
Paragraph 41(b)), whichever shall last occur within which to cure such default
or if such default cannot be cured within that time, then such additional time
as may be necessary if within such twenty (20) days; any Holder has commenced
and is diligently pursuing the remedies necessary to cure such default
(including, but not limited to, commencement of


                                       34
<PAGE>   43

foreclosure proceedings, if necessary to effect such cure), in which event this
Lease shall not be terminated.

42. ENTIRE AGREEMENT

        This Lease, including the Exhibits and any Addenda attached hereto,
which are hereby incorporated herein by this reference, contains the entire
agreement of the parties hereto, and no representations, inducements, promises
or agreements, oral or otherwise, between the parties, not embodied herein or
therein, shall be of any force and effect.

43. INTEREST

        Any installment of Rent and any other sum due from Tenant under this
Lease which is not received by Landlord within ten (10) days from when the same
is due shall bear interest from the date such payment was originally due under
this Lease until paid at an annual rate equal to the maximum rate of interest
permitted by law. Payment of such interest shall not excuse or cure any Default
by Tenant. In addition, Tenant shall pay all costs and attorneys' fees incurred
by Landlord in collection of such amounts.

44. CONSTRUCTION

        This Lease shall be construed and interpreted in accordance with the
laws of the State of California. The parties acknowledge and agree that no rule
of construction to the effect that any ambiguities are to be resolved against
the drafting party shall be employed in the interpretation of this Lease,
including the Exhibits and any Addenda attached hereto. All captions in this
Lease are for reference only and shall not be used in the interpretation of this
Lease. Whenever required by the context of this Lease, the singular shall
include the plural, the masculine shall include the feminine, and vice versa. If
any provision of this Lease shall be determined to be illegal or unenforceable,
such determination shall not affect any other provision of this Lease and all
such other provisions shall remain in full force and effect.

45. REPRESENTATIONS AND WARRANTIES OF TENANT

        Tenant hereby makes the following representations and warranties, each
of which is material and being relied upon by Landlord, is true in all respects
as of the date of this Lease, and shall survive the expiration or termination of
the Lease.

        (a) If Tenant is an entity, Tenant is duly organized, validly existing
and in good standing under the laws of the state of its organization and the
persons executing this Lease on behalf of Tenant have the full right and
authority to execute this Lease on behalf of Tenant and to bind Tenant without
the consent or approval of any other person or entity. Tenant has full power,
capacity, authority and legal right to execute and deliver this Lease and to
perform all of its obligations hereunder. This Lease is a legal, valid and
binding obligation of Tenant, enforceable in accordance with its terms.

        (b) Tenant has not (i) made a general assignment for the benefit of
creditors, (ii) filed any voluntary petition in bankruptcy or suffered the
filing of an involuntary petition by any creditors, (iii) suffered the
appointment of a receiver to take possession of all or substantially all of its


                                       35
<PAGE>   44

assets, (iv) suffered the attachment or other judicial seizure of all or
substantially all of its assets, (v) admitted in writing its inability to pay
its debts as they come due, or (vi) made an offer of settlement, extension or
composition to its creditors generally.

46. SECURITY

        (a) Tenant acknowledges and agrees that, while Landlord may engage
security personnel to patrol the Building or the Project, Landlord is not
providing any security services with respect to the Premises, the Building or
the Project and that Landlord shall not be liable to Tenant for, and Tenant
waives any claim against Landlord with respect to, any loss by theft or any
other damage suffered or incurred by Tenant in connection with any unauthorized
entry into the Premises or any other breach of security with respect to the
Premises, the Building or the Project.

        (b) Tenant hereby agrees to the exercise by Landlord and Landlord's
Agents, within their sole discretion, of such security measures as, but not
limited to, the evacuation of the Premises, the Building or the Project for
cause, suspected cause or for drill purposes, the denial of any access to the
Premises, the Building or the Project and other similarly related actions that
it deems necessary to prevent any threat of property damage or bodily injury.
The exercise of such security measures by Landlord and Landlord's Agents, and
the resulting interruption of service and cessation of Tenant's business, if
any, shall not be deemed an eviction or disturbance of Tenant's use and
possession of the Premises, or any part thereof, or render Landlord or
Landlord's Agents liable to Tenant for any resulting damages or relieve Tenant
from Tenant's obligations under this Lease.

47. JURY TRIAL WAIVER

        Tenant hereby waives any right to trial by jury with respect to any
action or proceeding (a) brought by Landlord, Tenant or any other party,
relating to (i) this Lease and/or any understandings or prior dealings between
the parties hereto, or (ii) the Premises, the Building or the Project or any
part thereof, or (b) to which Landlord is a party. Tenant hereby agrees that
this Lease constitutes a written consent to waiver of trial by jury pursuant to
the provisions of California Code of Civil Procedure Section 631, and Tenant
does hereby constitute and appoint Landlord its true and lawful
attorney-in-fact, which appointment is coupled with an interest, and Tenant does
hereby authorize and empower Landlord, in the name, place and stead of Tenant,
to file this Lease with the clerk or judge of any court of competent
jurisdiction as a statutory written consent to waiver of trial by jury.

48. OPTION TO RENEW

        Tenant shall have one (1) option (the "RENEWAL OPTION") to extend the
Term for a period of five (5) years beyond the Expiration Date (the "RENEWAL
TERM"). The Renewal Option is personal to Tenant and may not be exercised by any
sublessee or assignee, or by any other successor or assign of Tenant. The
Renewal Option shall be effective only if Tenant is not in Default under this
Lease, nor has any event occurred which with the giving of notice or the passage
of time, or both, would constitute a Default hereunder, either at the time of
exercise of the Renewal Option or the time of commencement of the Renewal Term.
The Renewal Option must be exercised, if at all, by written notice (the
"ELECTION NOTICE") from Tenant to Landlord


                                       36
<PAGE>   45

given not more than twelve (12) months nor less than nine (9) months prior to
the expiration of the initial Term. Except as hereinafter provided in this
Paragraph 48, any such notice given by Tenant to Landlord shall be irrevocable.
If Tenant fails to exercise the Renewal Option in a timely manner as provided
for above, the Renewal Option shall be void. The Renewal Term shall be upon the
same terms and conditions as the initial Term, except that the annual Base Rent
during the Renewal Term (the "RENEWAL RATE") shall be equal to a rate specified
by Landlord in writing and furnished to Tenant. Landlord shall endeavor to
notify Tenant in writing (such notice being hereinafter referred to as the
"RENEWAL RATE NOTICE") of the Renewal Rate for the Renewal Term within thirty
(30) days after Landlord's receipt of the Election Notice. Tenant shall have ten
(10) days after receipt of the Renewal Rate Notice (the "RESPONSE PERIOD") to
advise Landlord whether or not Tenant accepts the Renewal Rate. If Tenant agrees
to pay the Renewal Rate, then Landlord and Tenant shall promptly enter into an
amendment to this Lease providing for the lease of the Premises by Tenant during
the Renewal Term upon the terms stated in the Renewal Rate Notice. If Tenant
does not agree to pay the Renewal Rate, Tenant shall have the right to rescind
its Election Notice in writing within the Response Period and neither party
shall have any further rights or obligations under this Paragraph 48. If Tenant
fails to provide Landlord with written notice of rescission prior to the
expiration of the Response Period, then Tenant shall be deemed to have agreed to
pay the Renewal Rate. No further renewal option shall be available to Tenant at
the end of the Renewal Term.

49. RIGHT OF FIRST OFFER

        (a) Subject to the terms of this Paragraph 49, Tenant shall have a
recurring right of first offer (the "RIGHT OF FIRST OFFER") during the Term to
lease space that becomes available during such period in the building commonly
known as 1320 Orleans Drive, Sunnyvale, California (the "1320 BUILDING"). The
Right of First Offer is personal to Tenant and may not be exercised by any
sublessee or assignee, or by any other successor or assign of Tenant. The Right
of First Offer shall be effective only if Tenant is not in Default under this
Lease, nor has any event occurred which with the giving of notice or the passage
of time, or both, would constitute a Default hereunder, either at the time of
exercise of the Right of First Offer or on the applicable Expansion Commencement
Date (as hereinafter defined).

        (b) In the event that, during the Term, Landlord elects to market or
offer to the public for lease any space in the 1320 Building (each such space
being herein referred to as an "EXPANSION SPACE"), or Landlord receives a
proposal to lease any Expansion Space which Landlord desires to accept (a
"PROPOSAL"), Landlord shall notify Tenant in writing of the terms and conditions
upon which Landlord would be willing to lease such Expansion Space to Tenant
(each such written notice being herein referred to as an "EXPANSION SPACE
AVAILABILITY NOTICE". Tenant shall thereafter have the right to lease such
Expansion Space on the terms and conditions specified in the Expansion Space
Availability Notice by written notice (an "EXPANSION NOTICE") to Landlord given
not later than five (5) business days after Tenant's receipt of the Expansion
Space Availability Notice. Notwithstanding anything herein to the contrary,
Tenant's Right of First Offer shall not apply to, and Tenant shall have no right
to Lease pursuant to this Paragraph 49, any space that Landlord elects to lease
to a then-current tenant of the 1320 Building.

        (c) In the event Tenant fails to exercise its Right of First Offer with
respect to any Expansion Space in a timely manner as provided herein, such
Right of First Offer shall lapse and


                                       37
<PAGE>   46

Landlord shall thereafter have the right to lease such Expansion Space to any
party or parties on terms deemed acceptable to Landlord in its sole and absolute
discretion. If Tenant validly exercises such Right of First Offer, then (i)
Tenant's lease of the applicable Expansion Space shall commence on a date (an
"EXPANSION COMMENCEMENT DATE") specified in the Expansion Space Availability
Notice, (ii) the Expansion Space shall be leased to Tenant upon the terms and
conditions set forth in the applicable Expansion Space Availability Notice, and
(iii) except to the extent that the applicable Expansion Space Availability
Notice provides a tenant improvement allowance or a tenant improvement loan to
Tenant, the Expansion Space shall be delivered to Tenant in its "AS IS"
condition on the Expansion Commencement Date, Tenant acknowledging and agreeing
that Landlord shall have no obligation to improve, remodel or otherwise alter
such Expansion Space prior to or after the Expansion Commencement Date, except
to the extent expressly provided in the Expansion Space Availability Notice.

        (d) In the event Tenant exercises its Right of First Offer with respect
to any Expansion Space, then from and after the applicable Expansion
Commencement Date, the term "Premises," whenever used in this Lease, shall mean
the original Premises demised under this Lease, any Expansion Space previously
leased by Tenant and the Expansion Space then being leased.

        Landlord and Tenant have executed and delivered this Lease as of the
Lease Date specified in the Basic Lease Information.

                    LANDLORD:           AETNA LIFE INSURANCE COMPANY,
                                        a Connecticut corporation

                                        By: UBS Brinson Realty Investors LLC
                                            Its Investment Advisor and Agent

                                            By:
                                               ---------------------------------
                                                       Cynthia Stevenin
                                                        Vice President

                    TENANT:             MOLECULAR DEVICES CORPORATION,
                                        a California corporation


                                        By:
                                            ------------------------------------
                                        Name:
                                             -----------------------------------
                                        Title:
                                              ----------------------------------


                                       38
<PAGE>   47

                                   EXHIBIT A

                             RULES AND REGULATIONS

        This exhibit, entitled "Rules and Regulations," is and shall constitute
Exhibit A to the Lease Agreement, dated as of the Lease Date, by and between
landlord and Tenant for the Premises. The terms and conditions of this Exhibit A
are hereby incorporated into and are made a part of the Lease. Capitalized terms
used, but not otherwise defined, in this Exhibit A have the meanings ascribed to
such terms in the Lease.

        1. Tenant shall not use any method of heating or air conditioning other
than that supplied by Landlord or the utility company providing service to the
Building without the consent of Landlord.

        2. All window coverings installed by Tenant and visible from the outside
of the building require the prior written approval of Landlord.

        3. Tenant shall not use, keep or permit to be used or kept any foul or
noxious gas or substance or any flammable or combustible materials on or around
the Premises, except to the extent that Tenant is permitted to use the same
under the terms of Paragraph 31 of the Lease.

        4. Tenant shall not alter any lock or install any new locks or bolts on
any door at the Premises without the prior consent of Landlord.

        5. Tenant shall not make any duplicate keys without the prior consent of
Landlord.

        6. Tenant shall not park motor vehicles in designated parking areas
after the conclusion of Tenant's normal daily business activity.

        7. No person shall go on the roof without Landlord's permission.

        8. Business machines and mechanical equipment belonging to Tenant which
cause noise or vibration that may be transmitted to the structure of the
Building, to such a degree as to be objectionable to Landlord, shall be placed
and maintained by Tenant, at Tenant's expense, on vibration eliminators or in
noise-dampening housing or other devices sufficient to eliminate noise or
vibration.

        9. All goods, including material used to store goods, delivered to the
Premises of Tenant A shall be immediately moved into the Premises and shall not
be left in parking or receiving areas overnight.

        10. Tractor trailers which must be unhooked or parked with dolly wheels
beyond the concrete loading areas must use steel plates or wood blocks under the
dolly wheels to prevent damage to the asphalt paving surfaces. No parking or
storing of such trailers will be permitted in the auto parking areas of the
Project or on streets adjacent thereto.

        11. Forklifts which operate on asphalt paving areas shall not have solid
rubber tires and shall only use tires that do not damage the asphalt.


                                      A-1
<PAGE>   48

        12. Tenant is responsible for the storage and removal of all trash and
refuse. All such trash and refuse shall be contained in suitable receptacles
stored behind screened enclosures at locations approved by Landlord.

        13. Tenant shall not store or permit the storage or placement of goods
or merchandise in or around the common areas surrounding the Premises. No
displays or sales of merchandise shall be allowed in the parking lots or other
common areas.

        14. Tenant shall not permit any animals, including, but not limited to,
any household pets, to be brought or kept in or about the Premises, the
Building, the Project or any of the common areas.


                                      A-2
<PAGE>   49

                                    EXHIBIT B

                   HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE

        Your cooperation in this matter is appreciated. Initially, the
information provided by you in this Hazardous Materials Disclosure Certificate
is necessary for the Landlord to evaluate your proposed uses of the premises
(the "PREMISES") and to determine whether to enter into a lease agreement with
you as tenant. If a lease agreement is signed by you and the Landlord (the
"LEASE AGREEMENT"), on an annual basis in accordance with the provisions of
Paragraph 31 of the Lease Agreement, you are to provide an update to the
information initially provided by you in this certificate. Any questions
regarding this certificate should be directed to, and when completed, the
certificate should be delivered to:

        Landlord:   Aetna Life Insurance Company
                    c/o UBS Brinson Realty Investors LLC
                    455 Market Street, Suite 1540
                    San Francisco, California 94105
                    Attention: Cynthia Stevenin
                    Phone: (415) 538-4800

        Name of (Prospective) Tenant: Molecular Devices Corporation

        Mailing Address:

        ------------------------------------------------------------------------
        Contact Person, Title and Telephone Number(s):

        ------------------------------------------------------------------------
        Contact Person for Hazardous Waste Materials Management and Manifests
        and Telephone Number(s):

        ------------------------------------------------------------------------
        Address of (Prospective) Premises:

        ------------------------------------------------------------------------
        Length of (Prospective) Initial Term:

        ------------------------------------------------------------------------

1. GENERAL INFORMATION:

                Describe the proposed operations to take place in, on, or about
        the Premises, including, without limitation, principal products
        processed, manufactured or assembled, and services and activities to be
        provided or otherwise conducted. Existing tenants should describe any
        proposed changes to on-going operations.

        ------------------------------------------------------------------------

        ------------------------------------------------------------------------


                                      B-1
<PAGE>   50


2. USE, STORAGE AND DISPOSAL OF HAZARDOUS MATERIALS

        2.1     Will any Hazardous Materials (as hereinafter defined) be used,
                generated, treated, stored or disposed of in, on or about the
                Premises? Existing tenants should describe any Hazardous
                Materials which continue to be used, generated, treated, stored
                or disposed of in, on or about the Premises.

                Wastes                                   Yes [ ]        No [ ]
                Chemical Products                        Yes [ ]        No [ ]
                Other                                    Yes [ ]        No [ ]

                If Yes is marked, please explain:

        2.2     If Yes is marked in Section 2.1, attach a list of any Hazardous
                Materials to be used, generated, treated, stored or disposed of
                in, on or about the Premises, including the applicable hazard
                class and an estimate of the quantities of such Hazardous
                Materials to be present on or about the Premises at any given
                time; estimated annual throughput; the proposed location(s) and
                method of storage (excluding nominal amounts of ordinary
                household cleaners and janitorial supplies which are not
                regulated by any Environmental Laws, as hereinafter defined);
                and the proposed location(s) and method(s) of treatment or
                disposal for each Hazardous Material, including the estimated
                frequency, and the proposed contractors or subcontractors.
                Existing tenants should attach a list setting forth the
                information requested above and such list should include actual
                data from on-going operations and the identification of any
                variations in such information from the prior year's
                certificate.

3. STORAGE TANKS AND SUMPS

        3.1     Is any above or below ground storage or treatment of gasoline,
                diesel, petroleum, or other Hazardous Materials in tanks or
                sumps proposed in, on or about the Premises? Existing tenants
                should describe any such actual or proposed activities.

                Yes [ ]             No [ ]

                If yes, please explain:

                ----------------------------------------------------------------

                ----------------------------------------------------------------

                ----------------------------------------------------------------


                                      B-2
<PAGE>   51


4. WASTE MANAGEMENT

        4.1     Has your company been issued an EPA Hazardous Waste Generator
                I.D. Number? Existing tenants should describe any additional
                identification numbers issued since the previous certificate.

                Yes [ ]    No [ ]

        4.2     Has your company filed a biennial or quarterly reports as a
                hazardous waste generator? Existing tenants should describe any
                new reports filed.

                Yes [ ]    No [ ]

                If yes, attach a copy of the most recent report filed.

5. WASTEWATER TREATMENT AND DISCHARGE

        5.1     Will your company discharge wastewater or other wastes to:

                ___ storm drain?        ___ sewer?

                ___ surface water?      ___ no wastewater or other wastes
                                            discharged.

                Existing tenants should indicate any actual discharges. If so,
                describe the nature of any proposed or actual discharge(s).

                ----------------------------------------------------------------

                ----------------------------------------------------------------

        5.2     Will any such wastewater or waste be treated before discharge?

                Yes [ ]    No [ ]

                If yes, describe the type of treatment proposed to be conducted.
                Existing tenants should describe the actual treatment conducted.

                ----------------------------------------------------------------

                ----------------------------------------------------------------


                                      B-3
<PAGE>   52

6. AIR DISCHARGES

        6.1     Do you plan for any air filtration systems or stacks to be used
                in your company's operations in, on or about the Premises that
                will discharge into the air; and will such air emissions be
                monitored? Existing tenants should indicate whether or not there
                are any such air filtration systems or stacks in use in, on or
                about the Premises which discharge into the air and whether such
                air emissions are being monitored.

                Yes [ ]    No [ ]

                If yes, please describe:

                ----------------------------------------------------------------

                ----------------------------------------------------------------

        6.2     Do you propose to operate any of the following types of
                equipment, or any other equipment requiring an air emissions
                permit? Existing tenants should specify any such equipment being
                operated in, on or about the Premises.

                ___ Spray booth(s)      ___ Incinerator(s)

                ___ Dip tank(s)         ___ Other (Please describe)

                ___ Drying oven(s)      ___ No Equipment Requiring Air Permits

                If yes, please describe:

                ----------------------------------------------------------------

                ----------------------------------------------------------------

        6.3     Please describe (and submit copies of with this Hazardous
                Materials Disclosure Certificate) any reports you have filed in
                the past [thirty-six] months with any governmental or
                quasi-governmental agencies or authorities related to air
                discharges or clean air requirements and any such reports which
                have been issued during such period by any such agencies or
                authorities with respect to you or your business operations.


                                      B-4
<PAGE>   53
7. HAZARDOUS MATERIALS DISCLOSURES

        7.1     Has your company prepared or will it be required to prepare a
                Hazardous Materials management plan ("MANAGEMENT PLAN") or
                Hazardous Materials Business Plan and Inventory ("BUSINESS
                PLAN") pursuant to Fire Department or other governmental or
                regulatory agencies' requirements? Existing tenants should
                indicate whether or not a Management Plan is required and has
                been prepared.

                Yes [ ]    No [ ]

                If yes, attach a copy of the Management Plan or Business Plan.
                Existing tenants should attach a copy of any required updates to
                the Management Plan or Business Plan.

        7.2     Are any of the Hazardous Materials, and in particular chemicals,
                proposed to be used in your operations in, on or about the
                Premises listed or regulated under Proposition 65? Existing
                tenants should indicate whether or not there are any new
                Hazardous Materials being so used which are listed or regulated
                under Proposition 65.

                Yes [ ]    No [ ]

                If yes, please explain: ----------------------------------------

                ----------------------------------------------------------------

                ----------------------------------------------------------------

8. ENFORCEMENT ACTIONS AND COMPLAINTS

        8.1     With respect to Hazardous Materials or Environmental Laws, has
                your company ever been subject to any agency enforcement
                actions, administrative orders, or consent decrees or has your
                company received requests for information, notice or demand
                letters, or any other inquiries regarding its operations?
                Existing tenants should indicate whether or not any such
                actions, orders or decrees have been, or are in the process of
                being, undertaken or if any such requests have been received.

                Yes [ ]    No [ ]

                If yes, describe the actions, orders or decrees and any
                continuing compliance obligations imposed as a result of these
                actions, orders or decrees and also describe any requests,
                notices or demands, and attach a copy of all such documents.
                Existing tenants should describe and attach a copy of any new
                actions, orders, decrees, requests, notices or demands not
                already delivered to Landlord pursuant to the provisions of
                Paragraph 31 of the Lease Agreement.

                ----------------------------------------------------------------

                ----------------------------------------------------------------

                ----------------------------------------------------------------


                                      B-5
<PAGE>   54

        8.2     Have there ever been, or are there now pending, any lawsuits
                against your company regarding any environmental or health and
                safety concerns?

                Yes [ ]    No [ ]

                If yes, describe any such lawsuits and attach copies of the
                complaint(s), cross complaint(s), pleadings and other documents
                related thereto as requested by Landlord. Existing tenants
                should describe and attach a copy of any new complaint(s),
                cross-complaint(s), pleadings and other related documents not
                already delivered to Landlord pursuant to the provisions of
                Paragraph 31 of the Lease Agreement.

                ----------------------------------------------------------------

                ----------------------------------------------------------------

                ----------------------------------------------------------------


        8.3     Have there been any problems or complaints from adjacent
                tenants, owners or other neighbors at your company's current
                facility with regard to environmental or health and safety
                concerns? Existing tenants should indicate whether or not there
                have been any such problems or complaints from adjacent tenants,
                owners or other neighbors at, about or near the Premises and the
                current status of any such problems or complaints.

                Yes [ ]    No [ ]

                If yes, please describe. Existing tenants should describe any
                such problems or complaints not already disclosed to Landlord
                under the provisions of the signed Lease Agreement and the
                current status of any such problems or complaints.

                ----------------------------------------------------------------

                ----------------------------------------------------------------

                ----------------------------------------------------------------

9. PERMITS AND LICENSES

        9.1     Attach copies of all permits and licenses issued to your company
                with respect to its proposed operations in, on or about the
                Premises, including, without limitation, any Hazardous Materials
                permits, wastewater discharge permits, air emissions permits,
                and use permits or approvals. Existing tenants should attach
                copies of any new permits and licenses as well as any renewals
                of permits or licenses previously issued.

        As used herein, "HAZARDOUS MATERIALS" shall mean and include any
substance that is or contains (a) any "hazardous substance" as now or hereafter
defined in Section 101(14) of the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended ("CERCLA") (42 U.S.C.
Section 9601 et seq.) or any regulations promulgated under CERCLA; (b) any
"hazardous waste" as now or hereafter defined in the Resource Conservation and
Recovery Act, as amended ("RCRA") (42 U.S.C. Section 6901 et seq.) or any
regulations promulgated under RCRA;


                                      B-6
<PAGE>   55
(c) any substance now or hereafter regulated by the Toxic Substances Control
Act, as amended ("TSCA") (15 U.S.C. Section 2601 et seq.) or any regulations
promulgated under TSCA; (d) petroleum, petroleum by-products, gasoline, diesel
fuel, or other petroleum hydrocarbons; (e) asbestos and asbestos-containing
material, in any form, whether friable or non-friable; (f) polychlorinated
biphenyls; (g) lead and lead-containing materials; or (h) any additional
substance, material or waste (i) the presence of which on or about the Premises
(A) requires reporting, investigation or remediation under any Environmental
Laws (as hereinafter defined), (B) causes or threatens to cause a nuisance on
the Premises or any adjacent property or poses or threatens to pose a hazard to
the health or safety of persons on the Premises or any adjacent property, or (C)
which, if it emanated or migrated from the Premises, could constitute a
trespass, or (ii) which is now or is hereafter classified or considered to be
hazardous or toxic under any Environmental Laws; and "ENVIRONMENTAL LAWS" shall
mean and include (a) CERCLA, RCRA and TSCA; and (b) any other federal, state
or local laws, ordinances, statutes, codes, rules, regulations, orders or
decrees now or hereinafter in effect relating to (i) pollution, (ii) the
protection or regulation of human health, natural resources or the environment,
(iii) the treatment, storage or disposal of Hazardous Materials, or (iv) the
emission, discharge, release or threatened release of Hazardous Materials into
the environment.

        The undersigned hereby acknowledges and agrees that this Hazardous
Materials Disclosure Certificate is being delivered to Landlord in connection
with the evaluation of a Lease Agreement and, if such Lease Agreement is
executed, will be attached thereto as an exhibit. The undersigned further
acknowledges and agrees that if such Lease Agreement is executed, this Hazardous
Materials Disclosure Certificate will be updated from time to time in accordance
with Paragraph 31 of the Lease Agreement. The undersigned further acknowledges
and agrees that the Landlord and its partners, lenders and representatives may,
and will, rely upon the statements, representations, warranties, and
certifications made herein and the truthfulness thereof in entering into the
Lease Agreement and the continuance thereof throughout the term, and any
renewals thereof, of the Lease Agreement. I [print name] __________________,
acting with full authority to bind the (proposed) Tenant and on behalf of the
(proposed) Tenant, certify, represent and warrant that the information contained
in this certificate is true and correct.

(PROSPECTIVE) TENANT:

MOLECULAR DEVICES CORPORATION,
a California corporation

By:
   -------------------------------------
Title:
      ----------------------------------
Date:
     -----------------------------------




                                      B-7
<PAGE>   56
                                   EXHIBIT C

                      FORM OF TENANT ESTOPPEL CERTIFICATE

   ________________________ (herein "TENANT") hereby certifies to
________________________ and its successors and assigns that Tenant leases from
_______________________ ("LANDLORD") approximately _____ square feet of space
(the "PREMISES") in _____________ pursuant to that certain Lease Agreement dated
___________, _____ by and between Landlord and Tenant, as amended by
__________________________ (collectively, the "LEASE"), a true and correct copy
of which is attached hereto as Exhibit A. Tenant hereby certifies to
___________________, that as of the date hereof:

   1.   The Lease is in full force and effect and has not been modified,
supplemented or amended, except as set forth in the introductory paragraph
hereof.

   2.   Tenant is in actual occupancy of the Premises under the Lease and Tenant
has accepted the same. Landlord has performed all obligations under the Lease to
be performed by Landlord, including, without limitation, completion of all
tenant work required under the Lease and the making of any required payments or
contributions therefor. Tenant is not entitled to any further payment or credit
for tenant work.

   3.   The initial term of the lease commenced ____________, _____ and shall
expire ___________, ____. Tenant has the following rights to renew or extend the
term of the Lease or to expand the Premises: ________________________.

   4.   Tenant has not paid any rentals or other payments more than one (1)
month in advance except as follows: _______________________.

   5.   Base Rent payable under the Lease is ___________________________ Dollars
($________________). Base Rent and additional Rent have been paid through
________________, _____. There currently exists no claims, defenses, rights of
set-off or abatement to or against the obligations of Tenant to pay Base Rent or
Additional Rent or relating to any other term, covenant or condition under the
Lease.

   6.   There are no concessions, bonuses, free months' rent, rebates or other
matters affecting the rentals except as follows: ___________________________.

   7.   No security or other deposit has been paid with respect to the Lease
except as follows: ___________________________________.

   8.   Landlord is not currently in default under the Lease and there are no
events or conditions existing which, with or without notice or the lapse of
time, or both, could constitute a default of the Landlord under the Lease or
entitle Tenant to offsets or defenses against the prompt payment of rent except
as follows: ________________________________________. Tenant is not in default
under any of the terms and conditions of the lease nor is there now any fact or
condition which, with notice or lapse of time or both, will become such a
default.

                                      C-1
<PAGE>   57


      9.    Tenant has not assigned, transferred, mortgaged or otherwise
encumbered its interest under the lease, nor subleased any of the Premises nor
permitted any person or entity to use the Premises except as follows:
______________________________________.

      10.   Tenant has no rights of first refusal or options to purchase the
property of which the Premises is a part.

      11.   The Lease represents the entire agreement between the parties with
respect to Tenant's right to use and occupy the Premises.

      Tenant acknowledges that the parties to whom this certificate is
addressed will be relying upon the accuracy of this certificate in connection
with their acquisition and/or financing of the Premises.

      IN WITNESS WHEREOF, Tenant has caused this certificate to be executed
this ____ day of _________, ____.

                        TENANT:     ___________________________________________,

                                    a __________________________________________


                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________


                                      C-2