<PAGE>
                                                                   EXHIBIT 10.20

                                      LEASE

                                     BETWEEN

                 METROPOLITAN LIFE INSURANCE COMPANY (LANDLORD)

                                       AND

                      ARGONAUT TECHNOLOGIES, INC. (TENANT)

                                 SEAPORT CENTRE

                            Redwood City, California

<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                      PAGE
<S>                                                                                                   <C>
ARTICLE ONE - BASIC LEASE PROVISIONS...............................................................    1
         1.01     BASIC LEASE PROVISIONS...........................................................    1
         1.02     ENUMERATION OF EXHIBITS & RIDER(S)...............................................    2
         1.03     DEFINITIONS......................................................................    2

ARTICLE TWO - PREMISES, TERM, FAILURE TO GIVE POSSESSION, COMMON AREAS AND PARKING.................    6
         2.01     LEASE OF PREMISES................................................................    6
         2.02     TERM (See Rider 2)...............................................................    6
         2.03     FAILURE TO GIVE POSSESSION (See Rider 2).........................................    6
         2.04     AREA OF PREMISES.................................................................    6
         2.05     CONDITION OF PREMISES (See Rider 2)..............................................    6
         2.06     COMMON AREAS & PARKING...........................................................    6

ARTICLE THREE - RENT...............................................................................    7

ARTICLE FOUR - OPERATING EXPENSES RENT ADJUSTMENTS AND PAYMENTS....................................    7
         4.01     TENANT'S SHARE OF OPERATING EXPENSES.............................................    7
         4.02     RENT ADJUSTMENTS.................................................................    8
         4.03     STATEMENT OF LANDLORD............................................................    8
         4.04     BOOKS AND RECORDS................................................................    8
         4.05     TENANT OR LEASE SPECIFIC TAXES...................................................    9

ARTICLE FIVE - SECURITY DEPOSIT....................................................................    9

ARTICLE SIX -UTILITIES & SERVICES..................................................................   10
         6.01     LANDLORD'S GENERAL SERVICES......................................................   10
         6.02     TENANT TO OBTAIN & PAY DIRECTLY..................................................   10
         6.03     TELEPHONE SERVICES...............................................................   11
         6.04     FAILURE OR INTERRUPTION OF UTILITY OR SERVICE....................................   11
         6.05     CHOICE OF SERVICE PROVIDER.......................................................   12
         6.06     SIGNAGE..........................................................................   12

ARTICLE SEVEN - POSSESSION, USE AND CONDITION OF PREMISES..........................................   12
         7.01     POSSESSION AND USE OF PREMISES...................................................   12
         7.02     HAZARDOUS MATERIAL...............................................................   13
         7.03     LANDLORD ACCESS TO PREMISES; APPROVALS...........................................   14
         7.04     QUIET ENJOYMENT..................................................................   15

ARTICLE EIGHT - MAINTENANCE........................................................................   15
         8.01     LANDLORD'S MAINTENANCE...........................................................   15
         8.02     TENANT'S MAINTENANCE.............................................................   15

ARTICLE NINE - ALTERATIONS AND IMPROVEMENTS........................................................   16
         9.01     TENANT ALTERATIONS...............................................................   16
         9.02     LIENS............................................................................   16

ARTICLE TEN - ASSIGNMENT AND SUBLETTING............................................................   17
         10.01    ASSIGNMENT AND SUBLETTING........................................................   17
         10.02    RECAPTURE........................................................................   18
         10.03    EXCESS RENT......................................................................   18
         10.04    TENANT LIABILITY.................................................................   19
         10.05    ASSUMPTION AND ATTORNMENT........................................................   19

ARTICLE ELEVEN - DEFAULT AND REMEDIES..............................................................   19
         11.01    EVENTS OF DEFAULT................................................................   19
         11.02    LANDLORD'S REMEDIES..............................................................   20
         11.03    ATTORNEY'S FEES..................................................................   21
         11.04    BANKRUPTCY.......................................................................   21
         11.05    LANDLORD'S DEFAULT...............................................................   22

ARTICLE TWELVE - SURRENDER OF PREMISES.............................................................   22
         12.01    IN GENERAL.......................................................................   22
         12.02    LANDLORD'S RIGHTS................................................................   22

ARTICLE THIRTEEN - HOLDING OVER....................................................................   22
</TABLE>

                                       i
<PAGE>

<TABLE>
<CAPTION>
                                                                                                      PAGE
<S>                                                                                                   <C>
ARTICLE FOURTEEN - DAMAGE BY FIRE OR OTHER CASUALTY................................................   23
         14.01    SUBSTANTIAL UNTENANTABILITY......................................................   23
         14.02    INSUBSTANTIAL UNTENANTABILITY....................................................   24
         14.03    RENT ABATEMENT...................................................................   24
         14.04    WAIVER OF STATUTORY REMEDIES.....................................................   24

ARTICLE FIFTEEN - EMINENT DOMAIN...................................................................   24
         15.01    TAKING OF WHOLE OR SUBSTANTIAL PART..............................................   24
         15.02    TAKING OF PART...................................................................   24
         15.03    COMPENSATION.....................................................................   24

ARTICLE SIXTEEN - INSURANCE........................................................................   25
         16.01    TENANT'S INSURANCE...............................................................   25
         16.02    FORM OF POLICIES.................................................................   25
         16.03    LANDLORD'S INSURANCE.............................................................   25
         16.04    WAIVER OF SUBROGATION............................................................   25
         16.05    NOTICE OF CASUALTY...............................................................   26

ARTICLE SEVENTEEN - WAIVER OF CLAIMS AND INDEMNITY.................................................   26
         17.01    WAIVER OF CLAIMS.................................................................   26
         17.02    INDEMNITY BY TENANT..............................................................   26
         17.03    WAIVER OF CONSEQUENTIAL DAMAGES..................................................   27

ARTICLE EIGHTEEN - RULES AND REGULATIONS...........................................................   27
         18.01    RULES............................................................................   27
         18.02    ENFORCEMENT......................................................................   27

ARTICLE NINETEEN - LANDLORD'S RESERVED RIGHTS......................................................   27

ARTICLE TWENTY - ESTOPPEL CERTIFICATE..............................................................   28
         20.01    IN GENERAL.......................................................................   28
         20.02    ENFORCEMENT......................................................................   28

ARTICLE TWENTY-ONE - RELOCATION OF TENANT..........................................................   28

ARTICLE TWENTY-TWO - REAL ESTATE BROKERS...........................................................   28

ARTICLE TWENTY-THREE - MORTGAGEE PROTECTION........................................................   28
         23.01    SUBORDINATION AND ATTORNMENT.....................................................   28
         23.02    MORTGAGEE PROTECTION.............................................................   29

ARTICLE TWENTY-FOUR - NOTICES......................................................................   29

ARTICLE TWENTY-FIVE - EXERCISE FACILITY............................................................   30

ARTICLE TWENTY-SIX - MISCELLANEOUS.................................................................   30
         26.01    LATE CHARGES.....................................................................   30
         26.02    NO JURY TRIAL; VENUE; JURISDICTION...............................................   30
         26.03    DEFAULT UNDER OTHER LEASE........................................................   31
         26.04    OPTION...........................................................................   31
         26.05    TENANT AUTHORITY.................................................................   31
         26.06    ENTIRE AGREEMENT.................................................................   31
         26.07    MODIFICATION OF LEASE FOR BENEFIT OF MORTGAGEE...................................   31
         26.08    EXCULPATION......................................................................   31
         26.09    ACCORD AND SATISFACTION..........................................................   31
         26.10    LANDLORD'S OBLIGATIONS ON SALE OF BUILDING.......................................   31
         26.11    BINDING EFFECT...................................................................   31
         26.12    CAPTIONS.........................................................................   31
         26.13    TIME; APPLICABLE LAW; CONSTRUCTION...............................................   32
         26.14    ABANDONMENT......................................................................   32
         26.15    LANDLORD'S RIGHT TO PERFORM TENANT'S DUTIES......................................   32
         26.16    SECURITY SYSTEM..................................................................   32
         26.17    NO LIGHT, AIR OR VIEW EASEMENTS..................................................   32
         26.18    RECORDATION......................................................................   32
         26.19    SURVIVAL.........................................................................   32
         26.20    RIDERS...........................................................................   33
</TABLE>

                                       ii
<PAGE>

                                      LEASE

                                   ARTICLE ONE
                             BASIC LEASE PROVISIONS

1.01     BASIC LEASE PROVISIONS

In the event of any conflict between these Basic Lease Provisions and any other
Lease provision, such other Lease provision shall control.

(1) BUILDING AND ADDRESS:

         220 Saginaw Drive
         Redwood City, California  94063

         Building Number 27, located in Phase II ("Tenant's Phase") of Seaport
         Centre

(2) LANDLORD AND ADDRESS:

         Metropolitan Life Insurance Company,
         a New York corporation

         Notices to Landlord shall be addressed:

                  Metropolitan Life Insurance Company
                  c/o Seaport Centre Manager
                  701 Chesapeake Drive
                  Redwood City, CA 94063

                  with copies to the following:

                           Metropolitan Life Insurance Company
                           400 South El Camino Real, Suite 800
                           San Mateo, CA  94402
                           Attention:  Assistant Vice President

(3)      TENANT; CURRENT ADDRESS & TAX ID:

         (a)      Name: Argonaut Technologies, Inc.
         (b)      State of incorporation: Delaware
         (c)      Tax Identification Number: 94-3216714
         Tenant shall notify Landlord of any change in the foregoing.

         Notices to Tenant shall be addressed:

                  Before the Delivery Date

                  Argonaut Technologies, Inc.
                  1101 Chess Drive
                  Foster City, CA 94404
                  Attention:  Chief Financial Officer

                  After the Delivery Date

                  Argonaut Technologies, Inc.
                  220 Saginaw Drive
                  Redwood City, CA 94063
                  Attention:  Chief Financial Officer

(4)      DATE OF LEASE:  as of March ____, 2004

(5)      LEASE TERM:  seven (7) years commencing on the Commencement Date

(6)      PROJECTED COMMENCEMENT DATE: August 1, 2004

(7)      EXPIRATION DATE: The day before the seventh (7th) anniversary of the
Commencement Date

                                       1
<PAGE>

(8)      MONTHLY BASE RENT (initial monthly installment due upon Tenant's
execution):

<TABLE>
<CAPTION>
Period from/to starting
on Commencement Date          Monthly                       Rentable Area
-----------------------       -------                       -------------
<S>                         <C>                             <C>
Months 01 - 12              $25,712.40                         24,488
Months 13 - 24              $26,483.77                         24,488
Months 25 - 36              $27,278.29                         24,488
Months 37 - 48              $28,096.63                         24,488
Months 49 - 60              $28,939.53                         24,488
Months 61 - 72              $29,807.72                         24,488
Months 73 - 84              $30,701.95                         24,488
</TABLE>

(9)      RENT ADJUSTMENT DEPOSIT (initial monthly rate, until further notice):
$14,937.68 (initial monthly installment due on the Projected Commencement Date)

(10)     RENTABLE AREA OF THE PREMISES:     24,488 square feet

(11)     RENTABLE AREA OF THE BUILDING      32,400 square feet

(12)     RENTABLE AREA OF THE PHASE:        235,620 square feet

(13)     RENTABLE AREA OF THE PROJECT:      537,444 square feet

(14)     SECURITY DEPOSIT: The cash and/or Letter of Credit in the amount of One
         Hundred Fifty-Three Thousand Five Hundred Ten and no/100 Dollars
         ($153,510.00) (and any proceeds of the Letter of Credit drawn and held
         by Landlord) as provided in Article Five, due upon Tenant's execution

(15)     SUITE NUMBER &/OR ADDRESS OF PREMISES: the address of the Building

(16)     TENANT'S SHARE:

                  Tenant's Building Share:  75.58%
                  Tenant's Phase Share:     10.39%
                  Tenant's Project Share:    4.56%

(17)     TENANT'S USE OF PREMISES: General office use, research and development,
         laboratory (including wet lab and engineering lab), manufacturing and
         storage use.

(18)     PARKING SPACES:                    3.3/1,000

(19)     BROKERS:

         Landlord's Broker:         Cornish & Carey Commercial

         Tenant's Broker:           CB Richard Ellis

1.02     ENUMERATION OF EXHIBITS & RIDER(S)

The Exhibits and Rider(s) set forth below and attached to this Lease are
incorporated in this Lease by this reference:

EXHIBIT A  Plan of Premises
EXHIBIT B  Workletter Agreement
EXHIBIT C  Site Plan of Project
EXHIBIT D  Permitted Hazardous Material

RIDER 1     Commencement Date Agreement
RIDER 2     Additional Provisions

1.03     DEFINITIONS

For purposes hereof, the following terms shall have the following meanings:

ADJUSTMENT YEAR: The applicable calendar year or any portion thereof after the
Commencement Date of this Lease for which a Rent Adjustment computation is being
made.

AFFILIATE: Any Person (as defined below) which is controlled by, controls, or is
under common control with Tenant. The word Person means an individual,
corporation, limited liability company, partnership, trust, firm or other
entity. For purposes of this definition, the word "control," shall mean, with
respect to a Person that is a corporation or a limited liability company, the
right to exercise, directly or indirectly, more than fifty percent (50%) of the
voting rights attributable to the shares or membership interests of the
controlled Person and, with respect to a Person that is not a corporation, the
possession, directly or indirectly, of the power at all times to direct or cause
the direction of the management of the controlled Person.

                                       2
<PAGE>

BUILDING: Each building in which the Premises is located, as specified in
Section 1.01(1).

BUILDING OPERATING EXPENSES: Those Operating Expenses described in Section 4.01.

COMMENCEMENT DATE: The date specified in Section 1.01(6) as the Projected
Commencement Date, unless changed by operation of Article Two or Rider 2.

COMMON AREAS: All areas of the Project made available by Landlord from time to
time for the general common use or benefit of the tenants of the Building or
Project, and their employees and invitees, or the public, as such areas
currently exist and as they may be changed from time to time.

DECORATION: Tenant Alterations which do not affect the facade or roof of the
Building, or involve any of the structural elements of the Building, or involve
any of the Building's systems, including its electrical, mechanical, plumbing,
security, heating, ventilating, air-conditioning, communication, and fire and
life safety systems, and which either (a) do not require a building permit or
(b) cost less than Ten Thousand Dollars ($10,000.00).

DEFAULT RATE: Two (2) percentage points above the rate then most recently
announced by Bank of America N.T.& S.A. at its San Francisco main office as its
corporate base lending rate, from time to time announced, but in no event higher
than the maximum rate permitted by Law.

DELIVERY DATE: The date for Landlord's delivery to Tenant of possession of the
Premises, if different from the Commencement Date, as provided in Rider 2.

ENVIRONMENTAL LAWS: All Laws governing the use, storage, disposal or generation
of any Hazardous Material or pertaining to environmental conditions on, under or
about the Premises or any part of the Project, including the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended (42
U.S.C. Section 9601 et seq.), and the Resource Conservation and Recovery Act of
1976, as amended (42 U.S.C. Section 6901 et seq.).

EXPIRATION DATE: The date specified in Section 1.01(7) unless changed by
operation of Article Two or Rider 2.

FORCE MAJEURE: Any accident, casualty, act of God, war or civil commotion,
strike or labor troubles, or any cause whatsoever beyond the reasonable control
of Landlord or Tenant as the case may be, including water shortages, energy
shortages or governmental preemption in connection with an act of God, a
national emergency, or by reason of Law, or by reason of the conditions of
supply and demand which have been or are affected by act of God, war or other
emergency.

HAZARDOUS MATERIAL: Such substances, material and wastes which are or become
regulated under any Environmental Law; or which are classified as hazardous or
toxic or medical waste or biohazardous waste under any Environmental Law; and
explosives, firearms and ammunition, flammable material, radioactive material,
asbestos, polychlorinated biphenyls and petroleum and its byproducts.

INDEMNITEES: Collectively, Landlord, any Mortgagee or ground lessor of the
Property, the property manager and the leasing manager for the Property and
their respective directors, officers, agents and employees.

LAND: The parcel(s) of real estate on which the Building and Project are
located.

LANDLORD WORK: The construction or installation of improvements to be furnished
by Landlord, if any, specifically described in Rider 2 and the Workletter
attached hereto.

LAWS OR LAW: All laws, ordinances, rules, regulations, other requirements,
orders, rulings or decisions adopted or made by any governmental body, agency,
department or judicial authority having jurisdiction over the Property, the
Premises or Tenant's activities at the Premises and any covenants, conditions or
restrictions of record which affect the Property.

LEASE: This instrument and all exhibits and riders attached hereto, as may be
amended from time to time.

LEASE YEAR: The twelve month period beginning on the first day of the first
month following the Commencement Date (unless the Commencement Date is the first
day of a calendar month in which case beginning on the Commencement Date), and
each subsequent twelve month, or shorter, period until the Expiration Date.

MONTHLY BASE RENT:  The monthly rent specified in Section 1.01(8).

MORTGAGEE: Any holder of a mortgage, deed of trust or other security instrument
encumbering the Property.

NATIONAL HOLIDAYS: New Year's Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day and other holidays recognized by the Landlord
and the janitorial and other unions servicing the Building in accordance with
their contracts.

                                       3
<PAGE>

OPERATING EXPENSES: Without duplication, all Taxes, costs, expenses and
disbursements of every kind and nature which Landlord shall pay or become
obligated to pay in connection with the ownership, management, operation,
maintenance, replacement and repair of the Property (including the amortized
portion of any capital expenditure or improvement, together with interest
thereon, expenses of changing utility service providers, and any dues,
assessments and other expenses pursuant to any covenants, conditions and
restrictions, or any reciprocal easements, or any owner's association now or
hereafter affecting the Project). Operating Expenses shall be allocated among
the categories of Project Operating Expenses, Building Operating Expenses or
Phase Operating Expenses as provided in Article Four. If any Operating Expense,
though paid in one year, relates to more than one calendar year, such expense
shall be proportionately allocated among such related calendar years. Operating
Expenses shall include the following, by way of illustration only and not
limitation: (1) all Taxes; (2) all insurance premiums and other costs (including
deductibles), including the cost of rental insurance; (3) all license, permit
and inspection fees; (4) all costs of utilities, fuels and related services,
including water, sewer, light, telephone, power and steam connection, service
and related charges; (5) all costs to repair, maintain and operate heating,
ventilating and air conditioning systems, including preventive maintenance; (6)
all janitorial, landscaping and security services; (7) all wages, salaries,
payroll taxes, fringe benefits and other labor costs, including the cost of
workers' compensation and disability insurance; (8) all costs of operation,
maintenance and repair of all parking facilities and other common areas; (9) all
supplies, materials, equipment and tools; (10) dues, assessments and other
expenses pursuant to any covenants, conditions and restrictions, or any
reciprocal easements, or any owner's association now or hereafter affecting the
Project; (11) modifications to the Building or the Project occasioned by Laws
now or hereafter in effect, but only as amortized over the useful life of the
capital item; (12) the total charges of any independent contractors employed in
the care, operation, maintenance, repair, leasing and cleaning of the Project,
including landscaping, roof maintenance, and repair, maintenance and monitoring
of life-safety systems, plumbing systems, electrical wiring and Project signage;
(13) the cost of accounting services necessary to compute the rents and charges
payable by tenants at the Project; (14) exterior window and exterior wall
cleaning and painting; (15) managerial and administrative expenses; (16) all
costs in connection with the exercise facility at the Project; (17) all costs
and expenses related to Landlord's retention of consultants in connection with
the routine review, inspection, testing, monitoring, analysis and control of
Hazardous Material, and retention of consultants in connection with the clean-up
of Hazardous Material (to the extent not recoverable from a particular tenant of
the Project), and all costs and expenses related to the implementation of
recommendations made by such consultants concerning the use, generation,
storage, manufacture, production, storage, release, discharge, disposal or
clean-up of Hazardous Material on, under or about the Premises or the Project
(to the extent not recoverable from a particular tenant of the Project); (18)
all capital improvements made for the purpose of reducing or controlling other
Operating Expenses, and all other capital expenditures, but only as amortized
over the useful life of the capital improvement or capital expenditure item,
together with interest thereon at eight percent (8%) per annum; (19) all
property management costs and fees, including all costs in connection with the
Project property management office; and (20) all fees or other charges incurred
in conjunction with voluntary or involuntary membership in any energy
conservation, air quality, environmental, traffic management or similar
organizations. Operating Expenses shall not include: (a) costs of alterations of
space to be occupied by new or existing tenants of the Project; (b) depreciation
charges; (c) interest and principal payments on loans (except for loans for
capital expenditures or improvements which Landlord is allowed to include in
Operating Expenses as provided above); (d) ground rental payments; (e) real
estate brokerage and leasing commissions; (f) advertising and marketing
expenses; (g) costs of Landlord reimbursed by insurance proceeds; (h) expenses
incurred in negotiating leases of other tenants in the Project or enforcing
lease obligations of other tenants in the Project; (i) Landlord's or Landlord's
property manager's corporate general overhead or corporate general
administrative expenses, (j) costs occasioned by the act, omission or violation
of Law by Landlord, any other occupant of the Project, or their respective
agents, employees or contractors; (k) costs which would be properly capitalized
under generally accepted accounting principles except as set forth in items (11)
and (18) of this paragraph; (l) costs to correct any construction defect in the
Premises, the Building or the Project or to comply with any covenants,
conditions or restrictions or Law applicable to the Premises or the Project on
the Commencement Date; (m) costs incurred in connection with disputes with any
other occupant of the Project and costs arising from the violation by Landlord
or any occupant of the Project (other than Tenant) of the terms and conditions
of any lease or other agreement; (n) expense reserves; (o) insurance costs for
coverage not customarily paid by tenants of similar projects in the vicinity of
the Premises, increases in insurance Costs caused by the activities of another
occupant of the Project, insurance deductibles, and co-insurance payments; (p)
costs of earthquake insurance premiums to the extent they exceed three (3) times
the cost of insurance premiums for standard fire insurance; (q) wages, salaries
and compensation for any employee above the level of the Property manager not
stationed on the Project, or any fee, profit or compensation retained by
Landlord or its affiliates for management and administration of the Project in
excess of the management fee which would be charged by a professional management
services company for management of comparable projects in the vicinity; (r)
executives' salaries; (s) costs occasioned by condemnation; and (t) costs
(including those described in Item (17) of this paragraph) incurred in
connection with any Hazardous Materials to the extent such Hazardous Materials
were present on the Project prior to the Delivery Date.

PHASE: Phase means any individual Phase of the Project, as more particularly
described in the definition of Project.

PHASE OPERATING EXPENSES: Those Operating Expenses described in Section 4.01.

PREMISES: The space located in the Building at the Suite Number listed in
Section 1.01(15) and depicted on Exhibit A attached hereto.

                                       4
<PAGE>

PROJECT or PROPERTY: As of the date hereof, the Project is known as Seaport
Centre and consists of those buildings (including the Building) whose general
location is shown on the Site Plan of the Project attached as Exhibit C, located
in Redwood City, California, associated vehicular and parking areas, landscaping
and improvements, together with the Land, any associated interests in real
property, and the personal property, fixtures, machinery, equipment, systems and
apparatus located in or used in conjunction with any of the foregoing. The
Project may also be referred to as the Property. As of the date hereof, the
Project is divided into Phase I and Phase II, which are generally designated on
Exhibit C, each of which may individually be referred to as a Phase. Landlord
reserves the right from time to time to add or remove buildings, areas and
improvements to or from a Phase or the Project, or to add or remove a Phase to
or from the Project. In the event of any such addition or removal which affects
Rentable Area of the Project or a Phase, Landlord shall make a corresponding
recalculation and adjustment of any affected Rentable Area and Tenant's Share.

PROJECT OPERATING EXPENSES:  Those Operating Expenses described in Section 4.01.

REAL PROPERTY:  The Property excluding any personal property.

RENT: Collectively, Monthly Base Rent, Rent Adjustments and Rent Adjustment
Deposits, and all other charges, payments, late fees or other amounts required
to be paid by Tenant under this Lease.

RENT ADJUSTMENT: Any amounts owed by Tenant for payment of Operating Expenses.
The Rent Adjustments shall be determined and paid as provided in Article Four.

RENT ADJUSTMENT DEPOSIT: An amount equal to Landlord's estimate of the Rent
Adjustment attributable to each month of the applicable Adjustment Year. On or
before the Commencement Date and the beginning of each subsequent Adjustment
Year or with Landlord's Statement (defined in Article Four), Landlord may
estimate and notify Tenant in writing of its estimate of Operating Expenses,
including Project Operating Expenses, Building Operating Expenses and Phase
Operating Expenses, and Tenant's Share of each, for the applicable Adjustment
Year. The Rent Adjustment Deposit applicable for the calendar year in which the
Commencement Date occurs shall be the amount, if any, specified in Section
1.01(9). Nothing contained herein shall be construed to limit the right of
Landlord from time to time during any calendar year to revise its estimates of
Operating Expenses and to notify Tenant in writing thereof and of revision by
prospective adjustments in Tenant's Rent Adjustment Deposit payable over the
remainder of such year. The last estimate by Landlord shall remain in effect as
the applicable Rent Adjustment Deposit unless and until Landlord notifies Tenant
in writing of a change.

RENTABLE AREA OF THE BUILDING: The amount of square footage set forth in Section
1.01(11)

RENTABLE AREA OF THE PHASE: The amount of square footage set forth in Section
1.01(12)

RENTABLE AREA OF THE PREMISES: The amount of square footage set forth in Section
1.01(10).

RENTABLE AREA OF THE PROJECT: The amount of square footage set forth in Section
1.01(13), which represents the sum of the rentable area of all space intended
for occupancy in the Project.

SECURITY DEPOSIT: The cash or Letter of Credit specified in Section 1.01(14), if
any, paid or delivered by Tenant to Landlord as security for Tenant's
performance of its obligations under this Lease, and any proceeds of the Letter
of Credit drawn and held by Landlord, all as more particularly provided in
Article Five.

SUBSTANTIALLY COMPLETE: The completion of the Landlord Work or Tenant Work, as
the case may be, except for minor insubstantial details of construction,
decoration or mechanical adjustments which remain to be done.

TAXES: All federal, state and local governmental taxes, assessments (including
assessment bonds) and charges of every kind or nature, whether general, special,
ordinary or extraordinary, which Landlord shall pay or become obligated to pay
because of or in connection with the ownership, leasing, management, control or
operation of the Property or any of its components (including any personal
property used in connection therewith), which may also include any rental or
similar taxes levied in lieu of or in addition to general real and/or personal
property taxes. For purposes hereof, Taxes for any year shall be Taxes which are
assessed for any period of such year, whether or not such Taxes are billed and
payable in a subsequent calendar year. There shall be included in Taxes for any
year the amount of all fees, costs and expenses (including reasonable attorneys'
fees) paid by Landlord during such year in seeking or obtaining any refund or
reduction of Taxes. Taxes for any year shall be reduced by the net amount of any
tax refund received by Landlord attributable to such year. If a special
assessment payable in installments is levied against any part of the Property,
Taxes for any year shall include only the installment of such assessment and any
interest payable or paid during such year. Taxes shall not include any federal
or state inheritance, general income, gift or estate taxes, except that if a
change occurs in the method of taxation resulting in whole or in part in the
substitution of any such taxes, or any other assessment, for any Taxes as above
defined, such substituted taxes or assessments shall be included in the Taxes.

TENANT ADDITIONS: Collectively, Landlord Work, Tenant Work and Tenant
Alterations.

TENANT ALTERATIONS: Any alterations, improvements, additions, installations or
construction in or to the Premises or any Real Property systems serving the
Premises done or caused to be done by Tenant after the

                                       5
<PAGE>

date hereof, whether prior to or after the Commencement Date (including Tenant
Work, but excluding Landlord Work).

TENANT DELAY: Any event or occurrence which delays the Substantial Completion of
the Landlord Work which is caused by or is described as follows:

         (i) special work, changes, alterations or additions requested or made
         by Tenant in the design or finish in any part of the Premises after
         approval of the plans and specifications (as described in Rider 2 or
         the Workletter);

         (ii) Tenant's delay in submitting plans, supplying information,
         approving plans, specifications or estimates, giving authorizations or
         otherwise;

         (iii) failure to approve and pay for such work as Landlord undertakes
         to complete at Tenant's expense;

         (iv) the performance or completion by Tenant or any person engaged by
         Tenant of any work in or about the Premises; or

         (v) failure to perform or comply with any obligation or condition
         binding upon Tenant pursuant to Rider 2 or the Workletter, including
         the failure to approve and pay for such Landlord Work or other items if
         and to the extent Rider 2 and the Workletter provide they are to be
         approved or paid by Tenant.

TENANT WORK: All work installed or furnished to the Premises by Tenant in
connection with Tenant's initial occupancy pursuant to Rider 2 and the
Workletter.

TENANT'S BUILDING SHARE: The share as specified in Section 1.01(16) and Section
4.01.

TENANT'S PHASE: The Phase in which the Premises is located, as indicated in
Section 1.01(1).

TENANT'S PHASE SHARE: The share as specified in Section 1.01(16) and Section
4.01.

TENANT'S PROJECT SHARE: The share as specified in Section 1.01(16) and Section
4.01.

TENANT'S SHARE: Shall mean collectively, Tenant's respective shares of the
respective categories of Operating Expenses, as provided in Section 1.01(16) and
Section 4.01.

TERM: The term of this Lease commencing on the Commencement Date and expiring on
the Expiration Date.

TERMINATION DATE: The Expiration Date or such earlier date as this Lease
terminates or Tenant's right to possession of the Premises terminates.

WORKLETTER: The Agreement regarding the manner of completion of Landlord Work,
if any, and Tenant Work set forth on Exhibit B attached hereto.

                                   ARTICLE TWO
      PREMISES, TERM, FAILURE TO GIVE POSSESSION, COMMON AREAS AND PARKING

2.01     LEASE OF PREMISES

Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the
Premises for the Term and upon the terms, covenants and conditions provided in
this Lease.

2.02     TERM (See Rider 2)

2.03     FAILURE TO GIVE POSSESSION (See Rider 2)

2.04     AREA OF PREMISES

Landlord and Tenant agree that for all purposes of this Lease the Rentable Area
of the Premises, the Rentable Area of the Building, the Rentable Area of the
Phase and the Rentable Area of the Project as set forth in Article One are
controlling, and are not subject to revision after the date of this Lease,
except as otherwise provided herein.

2.05     CONDITION OF PREMISES (See Rider 2)

2.06     COMMON AREAS & PARKING

         (a) Right to Use Common Areas. Tenant shall have the non-exclusive
right, in common with others, to the use of any common entrances, ramps, drives
and similar access and serviceways and other Common Areas in the Project. The
rights of Tenant hereunder in and to the Common Areas shall at all times be
subject to the rights of Landlord and other tenants and owners in the Project
who use the same in common with Tenant, and it shall be the duty of Tenant to
keep all the Common Areas free and clear of any

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obstructions created or permitted by Tenant or resulting from Tenant's
operations. Tenant shall not use the Common Areas or common facilities of the
Building or the Project, including the Building's electrical room, parking lot
or trash enclosures, for storage purposes. Nothing herein shall affect the right
of Landlord at any time to remove any persons not authorized to use the Common
Areas or common facilities from such areas or facilities or to prevent their use
by unauthorized persons.

         (b) Changes in Common Areas. Landlord reserves the right, at any time
and from time to time to (i) make alterations in or additions to the Common
Areas or common facilities of the Project, including constructing new buildings
or changing the location, size, shape or number of the driveways, entrances,
parking spaces, parking areas, loading and unloading areas, landscape areas and
walkways, (ii) designate property to be included in or eliminate property from
the Common Areas or common facilities of the Project, (iii) close temporarily
any of the Common Areas or common facilities of the Project for maintenance
purposes, and (4) use the Common Areas and common facilities of the Project
while engaged in making alterations in or additions and repairs to the Project;
provided, however, that reasonable access to the Premises and parking at or
adjacent to the Project remains available and the foregoing in Landlord's
reasonable judgment does not materially and adversely detract from the
appearance of the Project.

         (c) Parking. During the Term, Tenant shall have the right at no
additional cost to use the number of Parking Spaces specified in Section
1.01(18) for parking on an unassigned basis on that portion of the Project
adjacent to the Building designated by Landlord from time to time for parking.
Tenant acknowledges and agrees that the parking spaces in the Project's parking
facility may include a mixture of spaces for compact vehicles as well as
full-size passenger automobiles, and that Tenant shall not use parking spaces
for vehicles larger than the striped size of the parking spaces. Tenant shall
not park any vehicles at the Project overnight. Tenant shall comply with any and
all parking rules and regulations if and as from time to time established by
Landlord. Tenant shall not allow any vehicles using Tenant's parking privileges
to be parked, loaded or unloaded except in accordance with this Section,
including in the areas and in the manner designated by Landlord for such
activities. If any vehicle is using the parking or loading areas contrary to any
provision of this Section, Landlord shall have the right, in addition to all
other rights and remedies of Landlord under this Lease, to remove or tow away
the vehicle without prior notice to Tenant, and the cost thereof shall be paid
to Landlord within ten (10) days after notice from Landlord to Tenant.

                                  ARTICLE THREE
                                      RENT

Tenant agrees to pay to Landlord at the first office specified in Section
1.01(2), or to such other persons, or at such other places designated by
Landlord, without any prior demand therefor in immediately available funds and
without any deduction or offset whatsoever, Rent, including Monthly Base Rent
and Rent Adjustments in accordance with Article Four, during the Term. Monthly
Base Rent shall be paid monthly in advance on the first day of each month of the
Term. Monthly Base Rent shall be prorated for partial months within the Term.
Unpaid Rent shall bear interest at the Default Rate from the date due until
paid. Tenant's covenant to pay Rent shall be independent of every other covenant
in this Lease.

                                  ARTICLE FOUR
                OPERATING EXPENSES, RENT ADJUSTMENTS AND PAYMENTS

4.01     TENANT'S SHARE OF OPERATING EXPENSES

Tenant shall pay Tenant's Share of Operating Expenses in the respective shares
of the respective categories of Operating Expenses as set forth below.

                  (a) Tenant's Project Share of Project Operating Expenses,
         which is the percentage obtained by dividing the rentable square
         footage of the Premises for the building(s) in which the Premises is
         located by the rentable square footage of the Project and as of the
         date hereof equals the percentage set forth in Section 1.01(16);

                  (b) Tenant's Building Share of Building Operating Expenses,
         which is the percentage obtained by dividing the rentable square
         footage of the Premises respectively for each building in which the
         Premises is located by the total rentable square footage of such
         building and as of the date hereof equals the percentage set forth in
         Section 1.01(16);

                  (c) Tenant's Phase Share of Phase Operating Expenses, which is
         the percentage obtained by dividing the aggregate rentable square
         footage of the Premises located in Tenant's Phase by the total rentable
         square footage of Tenant's Phase and as of the date hereof equals the
         percentage set forth in Section 1.01(16);

                  (d) Project Operating Expenses shall mean all Operating
         Expenses that are not included as Phase Operating Expenses (defined
         below) and that are not either Building Operating Expenses or operating
         expenses directly and separately identifiable to the operation,
         maintenance or repair of any other building located in the Project, but
         Project Operating Expenses includes operating expenses allocable to any
         areas of the Building or any other building during such time as such
         areas are made available by Landlord for the general common use or
         benefit of all tenants of the Project, and their employees and
         invitees, or the public, as such areas currently exist and as they may
         be changed from time to time;

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<PAGE>

                  (e) Building Operating Expenses shall mean Operating Expenses
         that are directly and separately identifiable to each building in which
         the Premises or part thereof is located;

                  (f) Phase Operating Expenses shall mean Operating Expenses
         that Landlord may allocate to a Phase as directly and separately
         identifiable to all buildings located in the Phase (including but not
         limited to the Building) and may include Project Operating Expenses
         that are separately identifiable to a Phase;

                  (g) Landlord shall have the right to reasonably allocate a
         particular item or portion of Operating Expenses as any one of Project
         Operating Expenses, Building Operating Expenses or Phase Operating
         Expenses; however, in no event shall any portion of Building Operating
         Expenses, Project Operating Expenses or Phase Operating Expenses be
         assessed or counted against Tenant more than once; and.

                  (h) Notwithstanding anything to the contrary contained in this
         Section 4.01, as to each specific category of Operating Expense which
         one or more tenants of the Building either pays directly to third
         parties or specifically reimburses to Landlord (for example, separately
         contracted janitorial services or property taxes directly reimbursed to
         Landlord), then, on a category by category basis, the amount of
         Operating Expenses for the affected period shall be adjusted as
         follows: (1) all such tenant payments with respect to such category of
         expense and all of Landlord's costs reimbursed thereby shall be
         excluded from Operating Expenses and Tenant's Building Share, Tenant's
         Phase Share or Tenant's Project Share, as the case may be, for such
         category of Operating Expense shall be adjusted by excluding the square
         footage of all such tenants, and (2) if Tenant pays or directly
         reimburses Landlord for such category of Operating Expense, such
         category of Operating Expense shall be excluded from the determination
         of Operating Expenses for the purposes of this Lease.

4.02     RENT ADJUSTMENTS

Tenant shall pay to Landlord Rent Adjustments with respect to each Adjustment
Year as follows:

                  (a) The Rent Adjustment Deposit representing Tenant's Share of
         Landlord's estimate of Operating Expenses, as described in Section
         4.01, for the applicable Adjustment Year (or portion thereof) monthly
         during the Term with the payment of Monthly Base Rent, except the first
         installment which shall be paid by Tenant to Landlord concurrently with
         the Commencement Date; and

                  (b) Any Rent Adjustments due in excess of the Rent Adjustment
         Deposits in accordance with Section 4.03.

4.03     STATEMENT OF LANDLORD

Within one hundred twenty (120) days after the end of each calendar year or as
soon thereafter as reasonably possible, Landlord will furnish Tenant a statement
("Landlord's Statement") showing the following:

                  (a) Operating Expenses for the last Adjustment Year showing in
         reasonable detail the actual Operating Expenses categorized among
         Project Operating Expenses, Building Operating Expenses and Phase
         Operating Expenses for such period and Tenant's Share of each as
         described in Section 4.01 above;

                  (b) The amount of Rent Adjustments due Landlord for the last
         Adjustment Year, less credit for Rent Adjustment Deposits paid, if any;
         and

                  (c) Any change in the Rent Adjustment Deposit due monthly in
         the current Adjustment Year, including the amount or revised amount due
         for months preceding any such change pursuant to Landlord's Statement.

Tenant shall pay to Landlord within twenty (20) days after receipt of such
statement any amounts for Rent Adjustments then due in accordance with
Landlord's Statement. Any amounts due from Landlord to Tenant pursuant to this
Section shall be credited to the Rent Adjustment Deposit next coming due, or
refunded to Tenant within twenty (20) days if the Term has already expired
provided Tenant is not in default hereunder. No interest or penalties shall
accrue on any amounts which Landlord is obligated to credit or refund to Tenant
by reason of this Section 4.02, provided that the same are timely credited or
refunded in accordance herewith. Landlord's failure to deliver Landlord's
Statement or to compute the amount of the Rent Adjustments shall not constitute
a waiver by Landlord of its right to deliver such items nor constitute a waiver
or release of Tenant's obligations to pay such amounts. The Rent Adjustment
Deposit shall be credited against Rent Adjustments due for the applicable
Adjustment Year. During the last complete calendar year or during any partial
calendar year in which the Lease terminates, Landlord may include in the Rent
Adjustment Deposit its estimate of Rent Adjustments which may not be finally
determined until after the termination of this Lease. Tenant's obligation to pay
Rent Adjustments accruing prior to the expiration or termination of the Lease
survives such expiration or termination of the Lease. Notwithstanding the
foregoing, in no event shall the sum of Monthly Base Rent and the Rent
Adjustments be less than the Monthly Base Rent payable.

4.04     BOOKS AND RECORDS

Landlord shall maintain books and records showing Operating Expenses and Taxes
in accordance with sound accounting and management practices, consistently
applied. The Tenant or its representative (which

                                       8
<PAGE>

representative shall be a certified public accountant licensed to do business in
the state in which the Property is located and whose primary business is
certified public accounting) shall have the right, for a period of sixty (60)
days following the date upon which Landlord's Statement is delivered to Tenant,
to examine the Landlord's books and records with respect to the items in the
foregoing statement of Operating Expenses and Taxes during normal business
hours, upon written notice, delivered at least three (3) business days in
advance. If Tenant does not object in writing to Landlord's Statement within
sixty (60) days of Tenant's receipt thereof, specifying the nature of the item
in dispute and the reasons therefor, then Landlord's Statement shall be
considered final and accepted by Tenant. If Tenant elects to have Landlord's
books and records audited, Tenant agrees to diligently pursue and complete (or
abandon) any audit commenced by Tenant. Tenant shall provide Landlord a copy of
such audit, whether such audit shows an overstatement or understatement of
Operating Expenses. All fees and costs of the audit shall be at Tenant's
expense, unless such audit correctly reveals that the total Operating Expenses
for the entire period under audit were overstated by more than five percent
(5%), in which event Landlord shall pay for the reasonable, third-party,
non-contingency fee costs of such audit. To the extent Landlord must pay the
cost of such audit, such cost shall not exceed a reasonable hourly charge for a
reasonable amount of hours spend by such third-party in connection with the
audit, and in no event will exceed the amount of the overcharge. After correct
determination of the amount of Operating Expenses for the entire period under
audit, Landlord shall promptly refund to Tenant any amount so determined to be
an overcharge of Tenant's Share of Operating Expenses and Tenant shall pay any
amount so determined to be an underpayment of Tenant's Share of Operating
Expenses within (30) days after such determination and written demand therefor
by Landlord. Pending resolution of any disputes as to Operating Expenses, Tenant
shall pay to Landlord any Rent Adjustments alleged to be due from Tenant as
reflected on Landlord's Statement or any invoice issued on the basis thereof.

4.05     TENANT OR LEASE SPECIFIC TAXES

In addition to Monthly Base Rent, Rent Adjustments, Rent Adjustment Deposits and
other charges to be paid by Tenant, Tenant shall pay to Landlord, upon demand,
any and all taxes payable by Landlord (other than federal or state inheritance,
general income, gift or estate taxes) whether or not now customary or within the
contemplation of the parties hereto: (a) upon, allocable to, or measured by the
Rent payable hereunder, including any gross receipts tax or excise tax levied by
any governmental or taxing body with respect to the receipt of such rent; or (b)
upon or with respect to the possession, leasing, operation, management,
maintenance, alteration, repair, use or occupancy by Tenant of the Premises or
any portion thereof; or (c) upon the measured value of Tenant's personal
property or trade fixtures located in the Premises or in any storeroom or any
other place in the Premises or the Property, or the areas used in connection
with the operation of the Property, it being the intention of Landlord and
Tenant that, to the extent possible, Tenant shall cause such taxes on personal
property or trade fixtures to be billed to and paid directly by Tenant; (d)
resulting from Landlord Work, Tenant Work or Tenant Alterations to the Premises,
whether title thereto is in Landlord or Tenant; or (e) upon this transaction.
Taxes paid by Tenant pursuant to this Section 4.05 shall not be included in any
computation of Taxes as part of Operating Expenses.

                                  ARTICLE FIVE
                                SECURITY DEPOSIT

         (a) Tenant shall provide Landlord, concurrently with execution of this
Lease, the Security Deposit specified in Section 1.01(14) as security
("Security") for the full and faithful performance by Tenant of each and every
term, provision, covenant and condition of this Lease. As such Security Tenant
may at its election provide Landlord with immediately available funds in the
amount of the Security Deposit or Tenant may at its election provide Landlord
with the "Letter of Credit" (defined below) as such Security. If Tenant fails
timely to perform any of the terms, provisions, covenants and conditions of this
Lease or any other document executed by Tenant in connection with this Lease,
including, but not limited to, the payment of the Monthly Base Rent, Rent
Adjustment Deposits, Rent Adjustments or the repair of damage to the Premises
caused by Tenant (excluding normal wear and tear), then Landlord may use, apply,
or retain the whole or any part of the Security for the payment of any such
Monthly Base Rent, Rent Adjustment Deposits or Rent Adjustments not paid when
due, for the cost of repairing such damage, for the cost of cleaning the
Premises, for the payment of any other sum which Landlord may expend or may be
required to expend by reason of Tenant's failure to perform, and otherwise for
compensation of Landlord for any other loss or damage to Landlord occasioned by
Tenant's failure to perform, including, but not limited to, any loss of future
Rent and any damage or deficiency in the reletting of the Premises (whether such
loss, damages or deficiency accrue before or after summary proceedings or other
reentry by Landlord) and the amount of the unpaid past Rent, future Rent loss,
and all other losses, costs and damages, that Landlord would be entitled to
recover if Landlord were to pursue recovery under California Civil Code Section
1951.2 or 1951.4. If Landlord so uses, applies or retains all or part of the
Security, Tenant shall within five (5) business days after demand pay or deliver
to Landlord in immediately available funds the sum necessary to replace the
amount used, applied or retained, except as specified in (d) below. If Tenant
has fully and faithfully performed and observed all of Tenant's obligations
under the terms, provisions, covenants and conditions of this Lease, the
Security (except any amount retained for application by Landlord as provided
herein) shall be returned or paid over to Tenant no later than sixty (60) days
after the latest of: (i) the Termination Date; (ii) the removal of Tenant from
the Premises; (iii) the surrender of the Premises by Tenant to Landlord in
accordance with this Lease; or (iv) the date Rent Adjustments owed pursuant to
this Lease have been computed by Landlord and paid by Tenant, but no later than
sixty (60) days after the latest to occur of (i), (ii) or (iii). Provided,
however, in no event shall any such return be construed as an admission by
Landlord that Tenant has performed all of its obligations hereunder.

                                       9
<PAGE>

         (b) The Security, whether in the form of cash, Letter of Credit and/or
Letter of Credit Proceeds (defined below), shall not be deemed an advance rent
deposit or an advance payment of any kind, or a measure of Landlord's damages
with respect to Tenant's failure to perform, nor shall any action or inaction of
Landlord with respect to it or its use or application be a waiver of, or bar or
defense to, enforcement of any right or remedy of Landlord. Landlord shall not
be required to keep the Security separate from its general funds and shall not
have any fiduciary duties or other duties (except as set forth in this Section)
concerning the Security. Tenant shall not be entitled to any interest on the
Security. In the event of any sale, lease or transfer of Landlord's interest in
the Building, Landlord shall have the right to transfer the Security, or balance
thereof, to the vendee, transferee or lessee and any such transfer shall release
Landlord from all liability for the return of the Security. Tenant thereafter
shall look solely to such vendee, transferee or lessee for the return or payment
of the Security. Tenant shall not assign or encumber or attempt to assign or
encumber the Security or any interest in it and Landlord shall not be bound by
any such assignment, encumbrance, attempted assignment or attempted encumbrance,
and regardless of one or more assignments of this Lease, Landlord may return the
Security to the original Tenant without liability to any assignee. Tenant hereby
waives any and all rights of Tenant under the provisions of Section 1950.7 of
the California Civil Code, and any and all rights of Tenant under all other
provisions of law, now or hereafter enacted, regarding security deposits.

         (c) If Tenant fails timely to perform any obligation under this Article
Five, such breach shall constitute a Default by Tenant under this Lease without
any right to or requirement of any further notice or cure period under any other
Article of this Lease, except such notice and cure period expressly provided
under this Article Five.

         (d) As used herein, "Letter of Credit" shall mean an unconditional,
irrevocable sight draft letter of credit issued, presentable and payable at a
Northern California Bay Area office of a major national bank satisfactory to
Landlord in its sole discretion (the "Bank"), naming Landlord as beneficiary, in
an amount equal to One Hundred Fifty-Three Thousand Five Hundred Ten Dollars
($153,510.00). The Letter of Credit shall provide: (i) that Landlord may make
partial and multiple draws thereunder, up to the face amount thereof, and that
Landlord may draw upon the Letter of Credit up to the full amount thereof, as
determined by Landlord, and the Bank will pay to Landlord the amount of such
draw upon receipt by the Bank of a sight draft signed by Landlord without
requirement for any additional documents or statements by Landlord; and (ii)
that, in the event of assignment or other transfer of either Landlord's interest
in this Lease or of any interest in Landlord (including, without limitation,
consolidations, mergers, reorganizations or other entity changes), the Letter of
Credit shall be freely transferable by Landlord, without charge and without
recourse, to the assignee or transferee of such interest and the Bank shall
confirm the same to Landlord and such assignee or transferee. The Letter of
Credit shall be in the form attached as Exhibit E hereto. Landlord may (but
shall not be required to) draw upon the Letter of Credit and use the proceeds
therefrom (the "Letter of Credit Proceeds") or any portion thereof in any manner
Landlord is permitted to use the Security under this Article Five. In the event
Landlord draws upon the Letter of Credit and elects not to terminate the Lease,
but to use the Letter of Credit Proceeds, then within five (5) business days
after Landlord gives Tenant written notice specifying the amount of the Letter
of Credit Proceeds so utilized by Landlord, Tenant shall immediately deliver to
Landlord either immediately available funds or an amendment to the Letter of
Credit or a replacement Letter of Credit sufficient to cause the Security
hereunder to equal one hundred percent (100%) of the then-required amount of the
Security. Tenant's failure to deliver such amendment or replacement of the
Letter of Credit to Landlord within five (5) business days after Landlord's
notice shall constitute a Default by Tenant under this Lease. The Letter of
Credit shall have an initial term of no longer than one (1) year, shall be
"evergreen", and shall be extended, reissued or replaced by Tenant, in each case
at least thirty (30) days prior to its expiration in a manner that fully
complies with the requirements of this Article Five, so that in all events the
Letter of Credit required hereunder shall be in full force and effect
continuously until the date (the "L/C Expiration Date") for return of the
Security described in Subsection (a) above. No more often than once per year,
Landlord shall have the right to require Tenant to deliver to Landlord, on 15
days prior notice, a replacement Letter of Credit on the same terms and
conditions set forth in this Article Five, in the event that Landlord
determines, in its good faith judgment (based on a reasonable concern that the
issuing Bank will not be able to fulfill its obligations under the Letter of
Credit), that the issuing Bank is no longer satisfactory to remain as the issuer
of the Letter of Credit. Any advice from the issuer that it intends to withdraw
or not extend the Letter of Credit prior to any scheduled annual expiration or
the L/C Expiration Date shall entitle the Landlord to immediately draw upon the
Letter of Credit unless Tenant provides a replacement Letter of Credit or
immediately available funds in the amount of the then-required Security at least
thirty (30) days prior to the expiration or withdrawal of the Letter of Credit.

                                   ARTICLE SIX
                              UTILITIES & SERVICES

6.01     LANDLORD'S GENERAL SERVICES

Landlord shall provide maintenance and services as provided in Article Eight.

6.02     TENANT TO OBTAIN & PAY DIRECTLY

         (a) Tenant shall be responsible for and shall pay promptly all charges
for gas, electricity, sewer, heat, light, power, telephone, refuse pickup (to be
performed on a regularly scheduled basis so that accumulated refuse does not
exceed the capacity of Tenant's refuse bins), janitorial service and all other
utilities, materials and services furnished directly to or used by Tenant in, on
or about the Premises, together with all taxes thereon. Tenant shall contract
directly with the providing companies for such utilities and

                                       10
<PAGE>

services. Landlord shall make available for Tenant's use at all times any
heating, ventilation and air conditioning systems serving the Premises, if any,
on an as is, where is basis without any obligation of Landlord to repair or
maintain same except as otherwise set forth herein.

         (b) Notwithstanding any provision of the Lease to the contrary,
without, in each instance, the prior written consent of Landlord, as more
particularly provided in Article Nine, Tenant shall not: (i) make any
alterations or additions to the electric or gas equipment or systems or other
Building systems. Tenant's use of electric current shall at no time exceed the
capacity of the wiring, feeders and risers providing electric current to the
Premises or the Building. The consent of Landlord to the installation of
electric equipment shall not relieve Tenant from the obligation to limit usage
of electricity to no more than such capacity.

6.03     TELEPHONE SERVICES

All telegraph, telephone, and communication connections which Tenant may desire
outside the Premises shall be subject to Landlord's prior written approval, in
Landlord's reasonable discretion, and the location of all wires and the work in
connection therewith shall be performed by contractors approved by Landlord and
shall be subject to the direction of Landlord, except that such approval is not
required as to Tenant's cabling from the Premises in a route designated by
Landlord to any telephone cabinet or panel provided for Tenant's connection to
the telephone cable serving the Building, so long as Tenant's equipment does not
require connections different than or additional to those to the telephone
cabinet or panel provided. As to any such connections or work outside the
Premises requiring Landlord's approval, Landlord reserves the right to approve
in its sole discretion the entity or entities providing telephone or other
communication cable installation, removal, repair and maintenance outside the
Premises and to restrict and control access to telephone cabinets or panels. In
the event Landlord designates a particular vendor or vendors to provide such
cable installation, removal, repair and maintenance for the Building, Tenant
agrees to abide by and participate in such program. Tenant shall be responsible
for and shall pay all costs incurred in connection with the installation of
telephone cables and communication wiring in the Premises, including any
hook-up, access and maintenance fees related to the installation of such wires
and cables in the Premises and the commencement of service therein, and the
maintenance thereafter of such wire and cables; and there shall be included in
Operating Expenses for the Building all installation, removal, hook-up or
maintenance costs incurred by Landlord in connection with telephone cables and
communication wiring serving the Building which are not allocable to any
individual users of such service but are allocable to the Building generally. If
Tenant fails to maintain all telephone cables and communication wiring in the
Premises and such failure affects or interferes with the operation or
maintenance of any other telephone cables or communication wiring serving the
Building, Landlord or any vendor hired by Landlord may enter into and upon the
Premises forthwith and perform such repairs, restorations or alterations as
Landlord deems necessary in order to eliminate any such interference (and
Landlord may recover from Tenant all of Landlord's costs in connection
therewith). No later than the Termination Date, Tenant agrees to remove all
telephone cables and communication wiring installed by Tenant for and during
Tenant's occupancy, which Landlord shall request Tenant to remove. Tenant agrees
that neither Landlord nor any of its agents or employees shall be liable to
Tenant, or any of Tenant's employees, agents, customers or invitees or anyone
claiming through, by or under Tenant, for any damages, injuries, losses,
expenses, claims or causes of action because of any interruption, diminution,
delay or discontinuance at any time for any reason in the furnishing of any
telephone or other communication service to the Premises and the Building,
except to the extent of the gross negligence or willful misconduct of Landlord
or its agents or contractors.

6.04     FAILURE OR INTERRUPTION OF UTILITY OR SERVICE

To the extent that any equipment or machinery furnished or maintained by
Landlord outside the Premises is used in the delivery of utilities directly
obtained by Tenant pursuant to Section 6.02 and breaks down or ceases to
function properly, Landlord shall use reasonable diligence to repair same
promptly. In the event of any failure, stoppage or interruption of, or change
in, any utilities or services supplied by Landlord which are not directly
obtained by Tenant, Landlord shall use reasonable diligence to have service
promptly resumed. In either event covered by the preceding two sentences, if the
cause of any such failure, stoppage or interruption of, or change in, utilities
or services is within the control of a public utility, other public or
quasi-public entity, or utility provider outside Landlord's control,
notification to such utility or entity of such failure, stoppage or interruption
and request to remedy the same shall constitute "reasonable diligence" by
Landlord to have service promptly resumed. Notwithstanding any other provision
of this Section to the contrary, in the event of any failure, stoppage or
interruption of, or change in, any utility or other service furnished to the
Premises or the Project resulting from any cause other than the gross negligence
or willful misconduct of Landlord or its agents or contractors, including
changes in service provider or Landlord's compliance with any voluntary or
similar governmental or business guidelines now or hereafter published or any
requirements now or hereafter established by any governmental agency, board or
bureau having jurisdiction over the operation of the Property: (a) Landlord
shall not be liable for, and Tenant shall not be entitled to, any abatement or
reduction of Rent; (b) no such failure, stoppage, or interruption of any such
utility or service shall constitute an eviction of Tenant or relieve Tenant of
the obligation to perform any covenant or agreement of this Lease to be
performed by Tenant; (c) Landlord shall not be in breach of this Lease nor be
liable to Tenant for damages or otherwise. Notwithstanding anything to the
contrary in this Lease, if there is any interruption, failure, stoppage or
interference of or with the utilities, services, or access furnished to the
Premises under the Lease, or in the event Tenant is prevented from accessing or
safely occupying the Premises due to the presence of any Hazardous Materials on
or about the Building (except to the extent due to any Hazardous Material used,
stored, handled, released, emitted, discharged or disposed of by Tenant or any
Tenant Parties [defined in Section 7.02 below]) in violation of Environmental
Laws, that lasts for more than ten (10) consecutive days, then commencing with
the eleventh (11th) consecutive day Tenant shall be entitled to an

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equitable abatement of rent to the extent of any material interference with
Tenant's use of the Premises occasioned thereby.

6.05     CHOICE OF SERVICE PROVIDER

Tenant acknowledges that Landlord may, at Landlord's sole option, to the extent
permitted by applicable law, elect to change, from time to time, the company or
companies which provide services (including electrical service, gas service,
water, telephone and technical services) to the Property, the Premises and/or
its occupants. Notwithstanding anything to the contrary set forth in this Lease,
Tenant acknowledges that Landlord has not and does not make any representations
or warranties concerning the identity or identities of the company or companies
which provide services to the Property and the Premises or its occupants and
Tenant acknowledges that the choice of service providers and matters concerning
the engagement and termination thereof shall be solely that of Landlord. The
foregoing provision is not intended to modify, amend, change or otherwise
derogate any provision of this Lease concerning the nature or type of service to
be provided or any specific information concerning the amount thereof to be
provided. Tenant agrees to cooperate with Landlord and each of its service
providers in connection with any change in service or provider.

6.06     SIGNAGE

Except as set forth in Rider 2 hereto, Tenant shall not install any signage
within the Project, the Building or the Premises without obtaining the prior
written approval of Landlord, which approval shall not be unreasonably withheld,
and Tenant shall be responsible for procurement, installation, maintenance and
removal of any such signage installed by Tenant, and all costs in connection
therewith. Any such signage shall comply with Landlord's current Project signage
criteria and all Laws.

                                  ARTICLE SEVEN
                    POSSESSION, USE AND CONDITION OF PREMISES

7.01     POSSESSION AND USE OF PREMISES

         (a) Tenant shall occupy and use the Premises only for the uses
specified in Section 1.01(17) to conduct Tenant's business and for no other uses
without Landlord's prior written consent, which consent shall not be
unreasonably withheld. Tenant shall not occupy or use the Premises (or permit
the use or occupancy of the Premises) for any purpose or in any manner which:
(1) is unlawful or in violation of any Law or Environmental Law; (2) may be
dangerous to persons or property or which may increase the cost of, or
invalidate, any policy of insurance carried on the Building or covering its
operations; (3) is contrary to or prohibited by the terms and conditions of this
Lease or the rules and regulations as provided in Article Eighteen; (4) contrary
to or prohibited by the articles, bylaws or rules of any owner's association
affecting the Project; (5) is improper, immoral, or objectionable; (6) would
obstruct or interfere with the rights of other tenants or occupants of the
Building or the Project, or injure or annoy them, or would tend to create or
continue a nuisance; or (7) would constitute any waste in or upon the Premises
or Project. In the event that Tenant shall do or permit to be done in or about
the Premises anything which increases the cost of any policy of insurance
carried on the Building, then Tenant shall pay to Landlord such increases within
ten (10) days following Landlord's written demand therefor.

         (b) Landlord and Tenant acknowledge that the Americans With
Disabilities Act of 1990 (42 U.S.C. Section 12101 et seq.) and regulations and
guidelines promulgated thereunder, as all of the same may be amended and
supplemented from time to time (collectively referred to herein as the "ADA")
establish requirements for business operations, accessibility and barrier
removal, and that such requirements may or may not apply to the Premises, the
Building and the Project depending on, among other things: (1) whether Tenant's
business is deemed a "public accommodation" or "commercial facility", (2)
whether such requirements are "readily achievable", and (3) whether a given
alteration affects a "primary function area" or triggers "path of travel"
requirements. The parties hereby agree that: (a) Landlord shall be responsible
for ADA Title III compliance in the Common Areas, except as provided below, (b)
Tenant shall be responsible for ADA Title III compliance in the Premises,
including any leasehold improvements or other work to be performed in the
Premises under or in connection with this Lease, (c) Landlord may perform, or
require that Tenant perform, and Tenant shall be responsible for the cost of,
ADA Title III "path of travel" requirements triggered by Tenant Additions in the
Premises, and (d) Landlord may perform, or require Tenant to perform, and Tenant
shall be responsible for the cost of, ADA Title III compliance in the Common
Areas necessitated by the Building being deemed to be a "public accommodation"
instead of a "commercial facility" as a result of Tenant's use of the Premises.
Tenant shall be solely responsible for requirements under Title I of the ADA
relating to Tenant's employees.

         (c) Landlord and Tenant agree to cooperate and use commercially
reasonable efforts to participate in traffic management programs generally
applicable to businesses located in or about the area and Tenant shall encourage
and support van and car pooling by, and staggered and flexible working hours
for, its office workers and service employees to the extent reasonably permitted
by the requirements of Tenant's business. Neither this Section or any other
provision of this Lease is intended to or shall create any rights or benefits in
any other person, firm, company, governmental entity or the public.

         (d) Tenant agrees to cooperate with Landlord and to comply with any and
all guidelines or controls concerning energy management imposed upon Landlord by
federal or state governmental organizations or by any energy conservation
association to which Landlord is a party or which is applicable to the Building.

                                       12
<PAGE>

         (e) Tenant shall comply with and shall cause all Tenant Parties to
comply with all Laws pertaining to Tenant's particular occupancy and particular
use of the Premises. Notwithstanding anything to the contrary in the Lease,
except as specifically set forth in Section 7.01(b) of the Lease with respect to
the ADA, Tenant shall not be required to comply with or cause the Premises to
comply with any Laws requiring alterations or improvements which would properly
be capitalized under generally accepted accounting principles unless the
compliance with any of the foregoing is necessitated solely due to Tenant's
particular use of the Premises, except with respect to Tenant's express
obligations under the Work Letter.

7.02     HAZARDOUS MATERIAL

         (a)      Tenant shall not use, generate, manufacture, produce, store,
handle, release, discharge, or dispose of, on, under or about the Premises or
any part of the Project, or transport to or from the Premises or any part of the
Project, any Hazardous Material, or allow its employees, agents, contractors,
licensees or invitees ("Tenant Parties") to do so except to the extent expressly
provided below. Provided that the Premises are used only for the uses specified
in Section 1.01(15) above, Tenant shall be permitted to use and store in, and
transport to and from, the Premises Hazardous Material identified on Exhibit D
hereto and by this reference incorporated herein ("Permitted Hazardous
Material") so long as: (i) each item of the Permitted Hazardous Material is used
or stored in, or transported to and from, the Premises only to the extent
necessary for Tenant's operation of its business at the Premises; (ii) at no
time shall any Permitted Hazardous Material be in use or storage at the Premises
materially in excess of the quantity specified therefor in Exhibit D; (iii)
Tenant shall not install any underground tanks of any type; and (iv) the
conditions and provisions set forth in this Section 7.02 are complied with.
Tenant shall be entitled from time to time to update Exhibit D to include
additional Hazardous Material or to increase the quantities specified, subject
to Landlord's written approval of such updates, which Landlord may grant in its
sole discretion. Tenant shall pay all costs of Landlord, including reasonable
attorneys' and consultants' fees, incurred in connection with Landlord's review
of such updates to Exhibit D. Tenant shall comply with and shall cause all
Tenant Parties to comply with all Environmental Laws and other Laws pertaining
to Tenant's occupancy and use of the Premises and concerning the proper use,
generation, manufacture, production, storage, handling, release, discharge,
removal and disposal of any Hazardous Material introduced to the Premises, the
Building or the Property by Tenant or any of the Tenant Parties. Without
limiting the generality of the foregoing:

         (1) Tenant shall provide Landlord promptly with copies of: (x) all
         permits, licenses and other governmental and regulatory approvals with
         respect to the use, generation, manufacture, production, storage,
         handling, release, discharge, removal and disposal by Tenant or Any of
         the Tenant Parties of Hazardous Material at the Project; and (y) each
         hazardous material management plan or similar document ("Plan(s)") with
         respect to use, generation, manufacture, production, storage, handling,
         release, discharge, removal or disposal of Hazardous Material by Tenant
         or any of the Tenant Parties necessary to comply with Environmental
         Laws or other Laws prepared by or on behalf of Tenant or any of the
         Tenant Parties (whether or not required to be submitted to a
         governmental agency).

         (2) If Tenant is notified of any investigation or violation of any
         Environmental Laws or other Laws arising from any activity of Tenant or
         any of the Tenant Parties at the Property, or if Tenant knows, or has
         reasonable cause to believe, that a Hazardous Material has come to be
         located in, on, under or about the Premises or the Project, other than
         as previously consented to by Landlord, Tenant shall immediately give
         written notice of such fact to Landlord, and provide Landlord with a
         copy of all reports, notices, claims or other documentation which it
         has concerning the presence of such Hazardous Material. In such event
         or in the event Landlord reasonably believes that there exists a
         violation of this Lease or Environmental Law or other Laws by Tenant or
         any of the Tenant Parties, Landlord may conduct, at Landlord's expense,
         such tests and studies as Landlord deems desirable relating to
         compliance by Tenant or any of the Tenant Parties with this Lease,
         Environmental Laws, other Laws, or relating to the alleged presence of
         Hazardous Material introduced to the Premises, the Building or the
         Property by Tenant or any of the Tenant Parties. In the event that such
         tests and studies reasonably indicate that Tenant or Tenant Parties
         have violated any Environmental Laws in the Premises, or caused a
         release of Hazardous Materials, Tenant shall reimburse Landlord the
         cost of such tests and studies.

         (3) Neither Tenant nor any of the Tenant Parties shall cause or permit
         any Hazardous Material to be released, discharged or disposed of in,
         on, under, or about the Premises or the Project (including through the
         plumbing or sanitary sewer system) and shall promptly, at Tenant's
         expense, take all investigatory and/or remedial action reasonably
         recommended, whether or not formally ordered or required, for the
         cleanup of any contamination of, and for the maintenance, security
         and/or monitoring of the Premises, the Project or neighboring
         properties, that was caused or contributed to by Tenant, but only to
         the extent of such causation or contribution) or to the extent
         pertaining to or involving any Hazardous Material brought onto the
         Premises or the Project by Tenant or any of the Tenant Parties.

         (4) Tenant shall, no later than the Termination Date, surrender the
         Premises to Landlord free of Hazardous Materials used or released by
         Tenant or Tenant Parties and with all remedial and/or closure plans
         completed (and deliver evidence thereof to Landlord) to the extent
         required under Environmental Laws with respect to Tenant's or Tenant
         Parties' use of such Hazardous Materials.

         (b)      To the extent permitted by law, Tenant hereby indemnifies and
agrees to protect, defend

                                       13
<PAGE>

and hold the Indemnitees harmless against all actions, claims, demands,
liability, costs and expenses, including reasonable attorneys' fees and expenses
for the defense thereof, to the extent arising from the use, generation,
manufacture, production, storage, handling, release, threatened release,
discharge, disposal, transportation to or from, or presence of any Hazardous
Material on, under or about the Premises or any part of the Project caused by
Tenant or by any of the Tenant Parties, whether before, during or after the
Term. Provided that Tenant's use of Hazardous Materials is in compliance with
Environmental Laws and the terms of this Lease, Landlord shall not make a claim
or demand for, or be entitled to, indemnification for consequential damages.
Tenant's obligations under this Section 7.02 shall survive the expiration or
earlier termination of this Lease. In case of any action or proceeding brought
against the Indemnitees by reason of any such claim, upon notice from Landlord,
Tenant covenants to defend such action or proceeding by counsel acceptable to
Landlord, in Landlord's sole discretion. Landlord or Tenant may settle,
compromise or dispose of any and all actions, claims and demands related to the
foregoing indemnity, subject to the prior written approval of the other, which
approval shall not be unreasonably withheld.

         (c)      The right to use and store in, and transport to and from, the
Premises the Permitted Hazardous Material is personal to Argonaut and may not be
assigned or otherwise transferred by Argonaut without the prior written consent
of Landlord, which consent may be withheld in Landlord's sole discretion, except
(i) to a Permitted Transferee which is an assignee of the Lease and which has
satisfied the requirements of Sections 10.01 and 10.05 of this Lease; and (ii)
Argonaut may permit a Permitted Transferee which is a sublessee to use and store
in, and transport to and from, the Premises the Permitted Hazardous Material to
the same extent as Argonaut has such right under this Lease, subject to all the
provisions of this Lease. Any consent by Landlord pursuant to Article Ten to an
assignment, transfer, subletting, mortgage, pledge, hypothecation or encumbrance
of this Lease, and any interest therein or right or privilege appurtenant
thereto, shall not constitute consent by Landlord to the use or storage at, or
transportation to, the Premises of any Hazardous Material (including a Permitted
Hazardous Material) by any such assignee, sublessee or transferee unless
Landlord expressly agrees otherwise in writing. Any consent by Landlord to the
use or storage at, or transportation to or from the Premises, of any Hazardous
Material (including a Permitted Hazardous Material) by an assignee, sublessee or
transferee of Tenant shall not constitute a waiver of Landlord's right to refuse
such consent as to any subsequent assignee or transferee.

         (d)      Tenant acknowledges that the sewer piping at the Project is
made of ABS plastic. Accordingly, without Landlord's prior written consent,
which may be given or withheld in Landlord's sole discretion, only ordinary
domestic sewage is permitted to be put into the drains at the Premises. UNDER NO
CIRCUMSTANCES SHALL Tenant EVER DEPOSIT ANY ESTERS OR KETONES (USUALLY FOUND IN
SOLVENTS TO CLEAN UP PETROLEUM PRODUCTS) IN THE DRAINS AT THE PREMISES. If
Tenant desires to put any substances other than ordinary domestic sewage into
the drains, it shall first submit to Landlord a complete description of each
such substance, including its chemical composition, and a sample of such
substance suitable for laboratory testing. Landlord shall promptly determine
whether or not the substance can be deposited into the drains and its
determination shall be absolutely binding on Tenant. Upon demand, Tenant shall
reimburse Landlord for expenses incurred by Landlord in making such
determination. If any substances not so approved hereunder are deposited in the
drains in Tenant's Premises, Tenant shall be liable to Landlord for all damages
resulting therefrom, including but not limited to all costs and expenses
incurred by Landlord in repairing or replacing the piping so damaged.

7.03     LANDLORD ACCESS TO PREMISES; APPROVALS

         (a)      Tenant shall permit Landlord to erect, use and maintain pipes,
ducts, wiring and conduits in and through the Premises, so long as Tenant's use,
layout or design of the Premises is not materially affected or altered. Landlord
or Landlord's agents shall have the right to enter upon the Premises in the
event of an emergency, or to inspect the Premises, to perform janitorial and
other services (if any), to conduct safety and other testing in the Premises and
to make such repairs, alterations, improvements or additions to the Premises or
the Building or other parts of the Property as Landlord may deem necessary or
desirable (including all alterations, improvements and additions in connection
with a change in service provider or providers). Janitorial and cleaning
services (if any) shall be performed after normal business hours. Any entry or
work by Landlord may be during normal business hours and Landlord may use
reasonable efforts to ensure that any entry or work shall not materially
interfere with Tenant's occupancy of the Premises.

         (b)      If Tenant shall not be personally present to permit an entry
into the Premises when for any reason an entry therein shall be necessary or
permissible, Landlord (or Landlord's agents), after attempting to notify Tenant
(unless Landlord believes an emergency situation exists), may enter the Premises
without rendering Landlord or its agents liable therefor, and without relieving
Tenant of any obligations under this Lease.

         (c)      Landlord may enter the Premises for the purpose of conducting
such inspections, tests and studies as Landlord may deem desirable or necessary
to confirm Tenant's compliance with all Laws and Environmental Laws or for other
purposes necessary in Landlord's reasonable judgment to ensure the sound
condition of the Property and the systems serving the Property. Landlord's
rights under this Section 7.03 (c) are for Landlord's own protection only, and
Landlord has not, and shall not be deemed to have assumed, any responsibility to
Tenant or any other party as a result of the exercise or non-exercise of such
rights, for compliance with Laws or Environmental Laws or for the accuracy or
sufficiency of any item or the quality or suitability of any item for its
intended use.

         (d)      Landlord may do any of the foregoing, or undertake any of the
inspection or work described in the preceding paragraphs without such action
constituting an actual or constructive eviction of Tenant, in

                                       14
<PAGE>

whole or in part, or giving rise to an abatement of Rent by reason of loss or
interruption of business of the Tenant, or otherwise.

         (e)      The review, approval or consent of Landlord with respect to
any item required or permitted under this Lease is for Landlord's own protection
only, and Landlord has not, and shall not be deemed to have assumed, any
responsibility to Tenant or any other party, as a result of the exercise or
non-exercise of such rights, for compliance with Laws or Environmental Laws or
for the accuracy or sufficiency of any item or the quality or suitability of any
item for its intended use.

         (f)      Notwithstanding the foregoing, any entry by Landlord or
Landlord's agents hereunder shall be upon at least one (1) business day's prior
notice to Tenant (except in the event of an urgent or emergent situation, as
reasonably determined by Landlord) and shall be subject to Tenant's reasonable
security measures.

7.04     QUIET ENJOYMENT

Landlord covenants, in lieu of any implied covenant of quiet possession or quiet
enjoyment, that so long as Tenant is in compliance with the covenants and
conditions set forth in this Lease within applicable notice and cure periods,
Tenant shall have the right to quiet enjoyment of the Premises without hindrance
or interference from Landlord or those claiming through Landlord, and subject to
the covenants and conditions set forth in the Lease and to the rights of any
Mortgagee or ground lessor.

                                  ARTICLE EIGHT
                                   MAINTENANCE

8.01     LANDLORD'S MAINTENANCE

Subject to Article Fourteen and Section 8.02, Landlord shall maintain the
structural portions of the Building, the roof, exterior walls and exterior
doors, exterior windows, all electrical, water, sewer, and plumbing systems not
exclusively serving the Premises, sprinkler systems, life safety systems,
foundation, and underslab standard sewer system of the Building in good, clean
and safe condition, and shall through, among other things, Landlord's program of
regularly scheduled preventive maintenance, keep the Building's standard
heating, ventilation and air conditioning ("HVAC") equipment in reasonably good
order and condition. Notwithstanding the foregoing, Landlord shall have no
responsibility to repair the Building's standard heating, ventilation and air
conditioning equipment exclusively serving the Premises, and all such repairs
shall be performed by Tenant pursuant to the terms of Section 8.02. Landlord
shall also (a) maintain the landscaping, parking facilities and other Common
Areas of the Project, and (b) wash the outside of exterior windows at intervals
determined by Landlord. Except as provided in Article Fourteen and Article
Fifteen, there shall be no abatement of rent, no allowance to Tenant for
diminution of rental value and no liability of Landlord by reason of
inconvenience, annoyance or any injury to or interference with Tenant's business
arising from the making of or the failure to make any repairs, alterations or
improvements in or to any portion of the Project or in or to any fixtures,
appurtenances or equipment therein. Tenant waives the right to make repairs at
Landlord's expense under any law, statute or ordinance now or hereafter in
effect, except to the extent expressly provided in this Lease.

8.02     TENANT'S MAINTENANCE

Subject to the provisions of Article Fourteen, Tenant shall, at Tenant's sole
cost and expense, make all repairs to the Premises and fixtures therein which
Landlord is not required to make pursuant to Section 8.01, including repairs to
the interior walls, ceilings and windows of the Premises, the interior doors,
Tenant's signage, and the electrical, plumbing and heating, ventilation and air
conditioning systems exclusively serving the Premises and shall maintain the
Premises, the fixtures and utilities systems therein, and all garbage/refuse
enclosures used by Tenant located outside the Premises, in a good, clean and
safe condition. Tenant shall deliver to Landlord a copy of any maintenance
contract entered into by Tenant with respect to the Premises. Tenant shall also,
at Tenant's expense, keep any non-standard heating, ventilating and air
conditioning equipment and other non-standard equipment in the Building in good
condition and repair, using contractors approved in advance, in writing, by
Landlord. Notwithstanding Section 8.01 above, but subject to the waivers set
forth in Section 16.04, Tenant will pay for any repairs to the Building or the
Project which are caused by any negligence or carelessness, or by any willful
and wrongful act, of Tenant or its assignees, subtenants or employees, or of the
respective agents of any of the foregoing persons, or of any other persons
permitted in the Building or elsewhere in the Project by Tenant or any of them.
Tenant will maintain the Premises, and will leave the Premises upon termination
of this Lease, in a safe, clean, neat and sanitary condition. Notwithstanding
the foregoing, Landlord shall perform and construct, and Tenant shall have no
responsibility to perform or construct, any repair, maintenance or improvement
which is covered by warranty or for which Landlord has a right of reimbursement
from others. To the extent that capital expenditures must be made to properly
repair, maintain, or replace any portion of the Premises of which Tenant is
responsible hereunder, Landlord shall cause such work to be completed and such
capital expenditure shall be amortized over the useful life of the capital item,
and Tenant shall pay the amortized portions of the cost thereof.

                                       15
<PAGE>

                                  ARTICLE NINE
                          ALTERATIONS AND IMPROVEMENTS

9.01     TENANT ALTERATIONS

         (a)      The following provisions shall apply to the completion of any
Tenant Alterations:

                  (1)      Tenant shall not, except as provided herein, without
         the prior written consent of Landlord, which consent shall not be
         unreasonably withheld, make or cause to be made any Tenant Alterations
         in or to the Premises or any Property systems serving the Premises.
         Prior to making any Tenant Alterations, Tenant shall give Landlord five
         (5) days prior written notice (or such earlier notice as would be
         necessary pursuant to applicable Law) to permit Landlord sufficient
         time to post appropriate notices of non-responsibility. Subject to all
         other requirements of this Article Nine, Tenant may undertake
         Decoration work without Landlord's prior written consent. Tenant shall
         furnish Landlord with the names and addresses of all contractors and
         subcontractors and copies of all contracts. All Tenant Alterations
         shall be completed at such time and in such manner as Landlord may from
         time to time designate, and only by contractors or mechanics approved
         by Landlord, which approval shall not be unreasonably withheld,
         provided, however, that Landlord may, in its sole discretion, specify
         the engineers and contractors to perform all work relating to the
         Building's systems (including the mechanical, heating, plumbing,
         security, ventilating, air-conditioning, electrical, communication and
         the fire and life safety systems in the Building). The contractors,
         mechanics and engineers who may be used are further limited to those
         whose work will not cause or threaten to cause disharmony or
         interference with Landlord or other tenants in the Building and their
         respective agents and contractors performing work in or about the
         Building. Landlord may further condition its consent upon Tenant
         furnishing to Landlord and Landlord approving prior to the commencement
         of any work or delivery of materials to the Premises related to the
         Tenant Alterations such of the following as specified by Landlord:
         architectural plans and specifications, opinions from Landlord's
         engineers stating that the Tenant Alterations will not in any way
         adversely affect the Building's systems, necessary permits and
         licenses, certificates of insurance, and such other documents in such
         form reasonably requested by Landlord. Landlord may, in the exercise of
         reasonable judgment, request that Tenant provide Landlord with
         appropriate evidence of Tenant's ability to complete and pay for the
         completion of the Tenant Alterations such as a performance bond or
         letter of credit. Upon completion of the Tenant Alterations, Tenant
         shall deliver to Landlord an as-built mylar and digitized (if
         available) set of plans and specifications for the Tenant Alterations.

                  (2)      Tenant shall pay the cost of all Tenant Alterations
         and the cost of decorating the Premises and any work to the Property
         occasioned thereby. In connection with completion of any Tenant
         Alterations, Tenant shall pay Landlord `s actual and reasonable costs
         to review the plans and specifications for such Tenant Alterations and
         to monitor their performance (including a construction administration
         fee) and all elevator and hoisting charges at Landlord's then standard
         rate. Upon completion of Tenant Alterations, Tenant shall furnish
         Landlord with contractors' affidavits and full and final waivers of
         lien and receipted bills covering all labor and materials expended and
         used in connection therewith and such other documentation reasonably
         requested by Landlord or Mortgagee.

                  (3)      Tenant agrees to complete all Tenant Alterations (i)
         in accordance with all Laws, Environmental Laws, all requirements of
         applicable insurance companies and in accordance with Landlord's
         standard construction rules and regulations, and (ii) in a good and
         workmanlike manner with the use of good grades of materials. Tenant
         shall notify Landlord immediately if Tenant receives any notice of
         violation of any Law in connection with completion of any Tenant
         Alterations and shall immediately take such steps as are necessary to
         remedy such violation. In no event shall such supervision or right to
         supervise by Landlord nor shall any approvals given by Landlord under
         this Lease constitute any warranty by Landlord to Tenant of the
         adequacy of the design, workmanship or quality of such work or
         materials for Tenant's intended use or of compliance with the
         requirements of Section 9.01(a)(3)(i) and (ii) above or impose any
         liability upon Landlord in connection with the performance of such
         work.

         (b)      All Tenant Additions to the Premises whether installed by
Landlord or Tenant, shall without compensation or credit to Tenant, become part
of the Premises and the property of Landlord at the time of their installation
and shall remain in the Premises, unless pursuant to Article Twelve, Tenant may
remove them or is required to remove them at Landlord's request. Notwithstanding
anything in the contrary to the Lease or the Workletter, all Tenant Alterations,
trade fixtures and personal property installed in the Premises at Tenant's
expense (Tenant's Property") shall at all times remain Tenant's property and
Tenant shall be entitled to all depreciation, amortization and other tax
benefits with respect thereto. Except for Tenant Alterations which cannot be
removed from the Premises without structural injury to the Premises, at any time
Tenant may remove Tenant's Property from the Premises, provided that Tenant
repairs all damage caused by such removal.

9.02     LIENS

Tenant shall not permit any lien or claim for lien of any mechanic, laborer or
supplier or any other lien to be filed against the Building, the Land, the
Premises, or any other part of the Property arising out of work performed, or
alleged to have been performed by, or at the direction of, or on behalf of
Tenant. If any such lien or claim for lien is filed, Tenant shall within ten
(10) days of receiving notice of such lien or claim (a) have such lien or claim
for lien released of record or (b) deliver to Landlord a bond in form, content,
amount, and

                                       16
<PAGE>

issued by surety, satisfactory to Landlord, indemnifying, protecting, defending
and holding harmless the Indemnitees against all costs and liabilities resulting
from such lien or claim for lien and the foreclosure or attempted foreclosure
thereof. If Tenant fails to take any of the above actions, Landlord, in addition
to its rights and remedies under Article Eleven, without investigating the
validity of such lien or claim for lien, may pay or discharge the same and
Tenant shall, as payment of additional Rent hereunder, reimburse Landlord upon
demand for the amount so paid by Landlord, including Landlord's expenses and
attorneys' fees.

                                   ARTICLE TEN
                            ASSIGNMENT AND SUBLETTING

10.01    ASSIGNMENT AND SUBLETTING

         (a)      Without the prior written consent of Landlord, which may be
withheld in Landlord's sole discretion, Tenant may not sublease, assign,
mortgage, pledge, hypothecate or otherwise transfer or permit the transfer of
this Lease or the encumbering of Tenant's interest therein in whole or in part,
by operation of Law or otherwise or permit the use or occupancy of the Premises,
or any part thereof, by anyone other than Tenant, provided, however, if Landlord
chooses not to recapture the space proposed to be subleased or assigned as
provided in Section 10.02, Landlord shall not unreasonably withhold its consent
to a subletting or assignment under this Section 10.01. Tenant agrees that the
provisions governing sublease and assignment set forth in this Article Ten shall
be deemed to be reasonable. If Tenant desires to enter into any sublease of the
Premises or assignment of this Lease except to an Affiliate, Tenant shall
deliver written notice thereof to Landlord ("Tenant's Notice"), together with
the identity of the proposed subtenant or assignee and the proposed principal
terms thereof and financial and other information sufficient for Landlord to
make an informed judgment with respect to such proposed subtenant or assignee at
least thirty (30) days prior to the commencement date of the term of the
proposed sublease or assignment. If Tenant proposes to sublease less than all of
the Rentable Area of the Premises, the space proposed to be sublet and the space
retained by Tenant must each be a marketable unit as reasonably determined by
Landlord and otherwise in compliance with all Laws. Landlord shall notify Tenant
in writing of its approval or disapproval of the proposed sublease or assignment
or its decision to exercise its rights under Section 10.02 within thirty (30)
days after receipt of Tenant's Notice (and all required information). In no
event may Tenant sublease any portion of the Premises or assign the Lease to any
other tenant of the Project without Landlord's prior written consent, which
Landlord may grant or withhold in its sole discretion. Tenant shall submit for
Landlord's approval (which approval shall not be unreasonably withheld) any
advertising which Tenant or its agents intend to use with respect to the space
proposed to be sublet.

         (b)      With respect to Landlord's consent to an assignment or
sublease, Landlord may take into consideration any factors which Landlord may
reasonably deem relevant, and the reasons for which Landlord's denial shall be
deemed to be reasonable shall include, without limitation, the following:

         (i)      the business reputation or creditworthiness of any proposed
         subtenant or assignee is not reasonably acceptable to Landlord; or

         (ii)     in Landlord's reasonable judgment the proposed assignee or
         subtenant would diminish the value or reputation of the Building or
         Landlord; or

         (iii)    any proposed assignee's or subtenant's use of the Premises
         would violate Section 7.01 of the Lease;

         (iv)     the proposed assignee or subtenant is either a governmental
         agency, a school or similar operation, or a medical care practice; or

         (v)      the proposed subtenant or assignee is a bona fide prospective
         tenant of Landlord in the Project as demonstrated by a written proposal
         dated within ninety (90) days prior to the date of Tenant's request; or

         (vi)     the proposed subtenant or assignee would materially increase
         the estimated pedestrian and vehicular traffic to and from the Premises
         and the Building.

In no event shall Landlord be obligated to consider a consent to any proposed
assignment of the Lease which would assign less than the entire Premises. In the
event Landlord wrongfully withholds its consent to any proposed sublease of the
Premises or assignment of the Lease, Tenant's sole and exclusive remedy therefor
shall be to seek specific performance of Landlord's obligations to consent to
such sublease or assignment.

         (c)      Any sublease or assignment shall be expressly subject to the
terms and conditions of this Lease. Any subtenant or assignee shall execute such
documents as Landlord may reasonably require to evidence the terms of Landlord's
consent to the sublease or assignment, including agreement to the effect set
forth in Section 10.01(e) and Section 10.05 below. Tenant shall deliver to
Landlord a copy of all agreements executed by Tenant and the proposed subtenant
and assignee with respect to the Premises. Landlord's approval of a sublease,
assignment, hypothecation, transfer or third party use or occupancy shall not
constitute a waiver of Tenant's obligation to obtain Landlord's consent to
further assignments or subleases, hypothecations, transfers or third party use
or occupancy.

         (d)      For purposes of this Article Ten, an assignment shall be
deemed to include a change in the majority control of Tenant, resulting from any
transfer, sale or assignment of shares of stock or membership

                                       17
<PAGE>

interests of Tenant occurring by operation of Law or otherwise, and includes any
merger, acquisition, consolidation or reorganization, except as otherwise
provided in this Subsection below. Notwithstanding any provision of this Section
to the contrary, an assignment for purposes of this Article does not include any
transfer of control of the stock or membership interests of Tenant through (i)
any public offering of shares of stock in Tenant in accordance with applicable
State and Federal law, rules, regulations and orders if thereafter the stock
shall be listed and publicly traded through the New York Stock Exchange or the
NASDAQ national market and its price listed at least daily in the Wall Street
Journal; or (ii) public sale of such stock effected through such Exchange or the
NASDAQ national market. If Tenant is a partnership, any change in the partners
of Tenant shall be deemed to be an assignment.

         (e)      (e) For purposes of this Lease, a "Permitted Transferee" shall
mean any Person which: (i) is an Affiliate; or (ii) is the corporation or other
entity (the "Successor") resulting from a merger, consolidation or
non-bankruptcy reorganization with Tenant; or (iii) is otherwise a deemed
assignee due to a change of control under section 10.01(d) above; or (iv)
purchases substantially all the assets of Tenant as a going concern (the
"Purchaser"). Notwithstanding anything to the contrary in Sections 10.01(a) and
(b), 10.02 and 10.03, Tenant shall have the right, without the prior written
consent of Landlord, to assign this Lease to a Permitted Transferee or to
sublease the Premises or any part thereof to a Permitted Transferee provided
that: (1) Landlord receives thirty (30) days prior written notice of an
assignment or sublease; (2) with respect to an assignment of the Lease or a
sublease of more than half the Premises to an entity described in subparts (ii)
or (iv) of this Section 10.01(e), the Permitted Transferee's net worth is not
less than Tenant's net worth immediately prior to such assignment or subletting;
(3) with respect to an assignment of the Lease or a sublease of more than half
the Premises to an entity described in subparts (i) or (iii) of this Section
10.01(e), Tenant (as the assignor or sublandord) continues in existence with a
net worth not less than Tenant's net worth immediately prior to such assignment
or subletting; (4) the Permitted Transferee expressly assumes (except in the
event of a sublease) in writing satisfactory to Landlord all of the obligations
of Tenant under this Lease and delivers such assumption to Landlord no later
than fifteen (15) days prior to the effective date of the assignment; (5)
Landlord receives no later than five (5) days after the effective date a fully
executed copy of the applicable assignment or sublease agreement between Tenant
and the Permitted Transferee; and (6) promptly after Landlord's written request,
Tenant and the Permitted Transferee provide such reasonable documents or
information which Landlord reasonably requests for the purpose of substantiating
whether or not the assignment or sublease is to a Permitted Transferee.

         (f)      With respect to any sublease to a Permitted Transferee
pursuant to Subsection (e) above, Tenant hereby irrevocably assigns to Landlord,
effective upon any such sublease, all rent and other payments due from subtenant
under the sublease, provided however, that Tenant shall have a license to
collect such rent and other payments until the occurrence of a default by Tenant
under any of the provisions of the Lease, and notice to Tenant of such default
shall not be a prerequisite to Landlord's right to collect subrent. At any time
at Landlord's option, Landlord shall have the right to give notice to the
subtenant of such assignment. Landlord shall credit Tenant with any rent
received by Landlord under such assignment but the acceptance of any payment on
account of rent from the subtenant as the result of any such default shall in no
manner whatsoever serve to release Tenant from any liability under the terms,
covenants, conditions, provisions or agreement under the Lease. No such payment
of rent or any other payment by the subtenant directly to Landlord and/or
acceptance of such payment(s) by Landlord, regardless of the circumstances or
reasons therefor, shall in any manner whatsoever be deemed an attornment by the
subtenant to Landlord in the absence of a specific written agreement signed by
Landlord to such an effect. For purposes of this Subsection, any use or
occupancy by a Permitted Transferee (unless it is an assignee) without a formal
sublease shall for the purposes of this Subsection be deemed to be a sublease at
the same rental rate as provided in the Lease.

10.02    RECAPTURE

Except with respect to an assignment or sublease to a Permitted Transferee in
accordance with the provisions of Section 10.01(e), Landlord shall have the
option to exclude from the Premises covered by this Lease ("recapture"), the
space proposed to be sublet or subject to the assignment, effective as of the
proposed commencement date of such sublease or assignment. If Landlord elects to
recapture, Tenant shall surrender possession of the space proposed to be
subleased or subject to the assignment to Landlord on the effective date of
recapture of such space from the Premises, such date being the Termination Date
for such space. Effective as of the date of recapture of any portion of the
Premises pursuant to this section, the Monthly Base Rent, Rentable Area of the
Premises and Tenant's Share shall be adjusted accordingly.

10.03    EXCESS RENT

Except with respect to an assignment or sublease to a Permitted Transferee in
accordance with the provisions of Section 10.01(e), Tenant shall pay Landlord on
the first day of each month during the term of the sublease or assignment, fifty
percent (50%) of the amount by which the sum of all rent and other consideration
(direct or indirect) on account of the leasehold interest due from the subtenant
or assignee for such month exceeds: (i) that portion of the Monthly Base Rent
and Rent Adjustments due under this Lease for said month which is allocable to
the space sublet or assigned; and (ii) the following costs and expenses for the
subletting or assignment of such space: (1) brokerage commissions and attorneys'
fees and expenses, (2) the actual costs paid in making any improvements or
substitutions in the Premises required by any sublease or assignment; and (3)
"free rent" periods, costs of any inducements or concessions given to subtenant
or assignee, moving costs, and other amounts in respect of such subtenant's or
assignee's other leases or occupancy arrangements. All such costs and expenses
shall be amortized over the term of the sublease or assignment pursuant to sound
accounting principles.

                                       18
<PAGE>

10.04    TENANT LIABILITY

In the event of any sublease or assignment, whether or not with Landlord's
consent, Tenant shall not be released or discharged from any liability, whether
past, present or future, under this Lease, including any liability arising from
the exercise of any renewal or expansion option, to the extent such exercise is
expressly permitted by Landlord. Tenant's liability shall remain primary, and in
the event of default by any subtenant, assignee or successor of Tenant in
performance or observance of any of the covenants or conditions of this Lease,
Landlord may proceed directly against Tenant without the necessity of exhausting
remedies against said subtenant, assignee or successor. After any assignment,
Landlord may consent to subsequent assignments or subletting of this Lease, or
amendments or modifications of this Lease with assignees of Tenant, without
notifying Tenant, or any successor of Tenant, and without obtaining its or their
consent thereto, and such action shall not relieve Tenant or any successor of
Tenant of liability under this Lease. If Landlord grants consent to such
sublease or assignment, Tenant shall pay all reasonable attorneys' fees and
expenses incurred by Landlord with respect to such assignment or sublease, not
to exceed the amount of Five Thousand Dollars ($5,000.00) for each request for
consent. In addition, if Tenant has any options to extend the term of this Lease
or to add other space to the Premises, such options shall not be available to
any subtenant or assignee, directly or indirectly without Landlord's express
written consent, which may be withheld in Landlord's sole discretion.

10.05    ASSUMPTION AND ATTORNMENT

If Tenant shall assign this Lease as permitted herein, the assignee shall
expressly assume all of the obligations of Tenant hereunder in a written
instrument satisfactory to Landlord and furnish it to Landlord not later than
fifteen (15) days prior to the effective date of the assignment. If Tenant shall
sublease the Premises as permitted herein, Tenant shall, at Landlord's option,
within fifteen (15) days following any request by Landlord, obtain and furnish
to Landlord a written agreement satisfactory to Landlord to the effect that (a)
the subtenant will attorn to Landlord and will pay all subrent directly to
Landlord in the event of any termination of this Lease for any reason, including
rejection or deemed rejection in any bankruptcy proceeding, and (b) that in the
event of any default by Tenant under this Lease, subtenant will pay all subrent
directly to Landlord.

                                 ARTICLE ELEVEN
                              DEFAULT AND REMEDIES

11.01    EVENTS OF DEFAULT

The occurrence or existence of any one or more of the following shall constitute
a material default and breach (a "Default") by Tenant under this Lease:

                  (i) Tenant fails to pay any installment or other payment of
         Rent including Rent Adjustment Deposits or Rent Adjustments (x) within
         three (3) days after Landlord's written notice to Tenant with respect
         to the first two such failures to pay during the Term and (y) within
         three (3) days after the date when due for every other failure to pay;

                  (ii) Tenant fails to observe or perform any of the other
         covenants, conditions or provisions of this Lease or the Workletter
         and, unless the failure to perform is a Default for which this Lease
         expressly specifies there is no cure or grace period, fails to cure
         such default within thirty (30) days after written notice thereof to
         Tenant, provided that, if Tenant has exercised reasonable diligence to
         cure such failure and such failure cannot reasonably be cured within
         such thirty (30) day period despite reasonable diligence, Tenant shall
         not be in default under this subsection so long as Tenant diligently
         and continuously prosecutes the cure to completion;

                  (iii) the interest of Tenant in this Lease is levied upon
         under execution or other legal process and is not released or
         discharged within thirty (30) days;

                  (iv) a petition is filed by or against Tenant to declare
         Tenant bankrupt or seeking a plan of reorganization or arrangement
         under any Chapter of the Bankruptcy Act, or any amendment, replacement
         or substitution therefor, or to delay payment of, reduce or modify
         Tenant's debts, which in the case of an involuntary action is not
         discharged within thirty (30) days;

                  (v) Tenant is declared insolvent by Law or any general
         assignment of Tenant's property is made for the benefit of creditors;

                  (vi) a receiver is appointed for Tenant or Tenant's property,
         which appointment is not discharged within thirty (30) days;

                  (vii) any action taken by or against Tenant to reorganize or
         modify Tenant's capital structure in a materially adverse way which in
         the case of an involuntary action is not discharged within thirty (30)
         days;

                  (viii) upon the dissolution of Tenant; or

                  (ix) upon the second occurrence within any Lease Year that
         Tenant fails to pay Rent when due or has breached a particular covenant
         of this Lease provided as to each of such first two failures Tenant
         received notice and failed to cure such failure within applicable cure
         periods.

                                       19
<PAGE>

11.02    LANDLORD'S REMEDIES

         (a)      A Default shall constitute a breach of the Lease for which
Landlord shall have the rights and remedies set forth in this Section 11.02 and
all other rights and remedies set forth in this Lease or now or hereafter
allowed by Law, whether legal or equitable, and all rights and remedies of
Landlord shall be cumulative and none shall exclude any other right or remedy.

         (b)      With respect to a Default which is continuing, at any time
Landlord may terminate Tenant's right to possession by written notice to Tenant
stating such election. Upon the termination of Tenant's right to possession
pursuant to this Section 11.02, Tenant's right to possession shall terminate and
this Lease shall terminate, and Tenant shall remain liable as hereinafter
provided. Upon such termination, Landlord shall have the right, subject to
applicable Law, to re-enter the Premises and dispossess Tenant and the legal
representatives of Tenant and all other occupants of the Premises by unlawful
detainer or other summary proceedings, or otherwise as permitted by Law, regain
possession of the Premises and remove their property (including their trade
fixtures, personal property and those Tenant Additions which Tenant is required
or permitted to remove under Article Twelve), but Landlord shall not be
obligated to effect such removal, and such property may, at Landlord's option,
be stored elsewhere, sold or otherwise dealt with as permitted by Law, at the
risk of, expense of and for the account of Tenant, and the proceeds of any sale
shall be applied pursuant to Law. Landlord shall in no event be responsible for
the value, preservation or safekeeping of any such property. Tenant hereby
waives all claims for damages that may be caused by Landlord's removing or
storing Tenant's personal property pursuant to this Section or Section 12.01,
and Tenant hereby indemnifies, and agrees to defend, protect and hold harmless,
the Indemnitees from any and all loss, claims, demands, actions, expenses,
liability and cost (including attorneys' fees and expenses) arising out of or in
any way related to such removal or storage. Upon such written termination of
Tenant's right to possession and this Lease, Landlord shall have the right to
recover damages for Tenant's Default as provided herein or by Law, including the
following damages provided by California Civil Code Section 1951.2:

                  (1) the worth at the time of award of the unpaid Rent which
         had been earned at the time of termination;

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

                  (3) the worth at the time of award of the amount by which the
         unpaid Rent for the balance of the term of this Lease after the time of
         award exceeds the amount of such Rent loss that Tenant proves could be
         reasonably avoided; and

                  (4) 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 of things
         would be likely to result therefrom. The word "rent" as used in this
         Section 11.02 shall have the same meaning as the defined term Rent in
         this Lease. The "worth at the time of award" of the amount referred to
         in clauses (1) and (2) above is computed by allowing interest at the
         Default Rate. The worth at the time of award of the amount referred to
         in clause (3) above 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%). For the purpose of determining unpaid
         Rent under clause (3) above, the monthly Rent reserved in this Lease
         shall be deemed to be the sum of the Monthly Base Rent, and monthly
         Storage Space Rent, if any, and the amounts last payable by Tenant as
         Rent Adjustments for the calendar year in which Landlord terminated
         this Lease as provided hereinabove.

         (c)      Even if Tenant is in Default and/or has abandoned the
Premises, this Lease shall continue in effect for so long as Landlord does not
terminate Tenant's right to possession by written notice as provided in Section
11.02(b) above, and Landlord may enforce all its rights and remedies under this
Lease, including the right to recover Rent as it becomes due under this Lease.
In such event, Landlord shall have all of the rights and remedies of a landlord
under California Civil Code Section 1951.4 (lessor may continue Lease in effect
after Tenant's Default and abandonment and recover Rent as it becomes due, if
Tenant has the right to sublet or assign, subject only to reasonable
limitations), or any successor statute. During such time as Tenant is in
Default, if Landlord has not terminated this Lease by written notice and if
Tenant requests Landlord's consent to an assignment of this Lease or a sublease
of the Premises, subject to Landlord's option to recapture pursuant to Section
10.02, Landlord shall not unreasonably withhold its consent to such assignment
or sublease. Tenant acknowledges and agrees that the provisions of Article Ten
shall be deemed to constitute reasonable limitations of Tenant's right to assign
or sublet. Tenant acknowledges and agrees that in the absence of written notice
pursuant to Section 11.02(b) above terminating Tenant's right to possession, no
other act of Landlord shall constitute a termination of Tenant's right to
possession or an acceptance of Tenant's surrender of the Premises, including
acts of maintenance or preservation or efforts to relet the Premises or the
appointment of a receiver upon initiative of Landlord to protect Landlord's
interest under this Lease or the withholding of consent to a subletting or
assignment, or terminating a subletting or assignment, if in accordance with
other provisions of this Lease.

         (d)      In the event that Landlord seeks an injunction with respect to
a breach or threatened breach by Tenant of any of the covenants, conditions or
provisions of this Lease, Tenant agrees to pay the premium for any bond required
in connection with such injunction.

                                       20
<PAGE>

         (e)      Tenant hereby waives any and all rights to relief from
forfeiture, redemption or reinstatement granted by Law (including California
Civil Code of Procedure Sections 1174 and 1179) in the event of Tenant being
evicted or dispossessed for any cause or in the event of Landlord obtaining
possession of the Premises by reason of Tenant's Default or otherwise;

         (f)      When this Lease requires giving or service of a notice of
Default or of a failure of Tenant to observe or perform any covenant, condition
or provision of this Lease which will constitute a Default unless Tenant so
observes or performs within any applicable cure period, and so long as the
notice given or served provides Tenant the longer of any applicable cure period
required by this Lease or by statute, then the giving of any equivalent or
similar statutory notice, including any equivalent or similar notices required
by California Code of Civil Procedure Section 1161 or any similar or successor
statute, shall replace and suffice as any notice required under this Lease. When
a statute requires service of a notice in a particular manner, service of that
notice (or a similar notice required by this Lease) in the manner required by
Article Twenty-four shall replace and satisfy the statutory service - of -
notice procedures, except that any notice of unlawful detainer required by
California Code of Civil Procedure Section 1161 or any similar or successor
statute shall be served as required by Code of Civil Procedure Section 1162 or
any similar or successor statute, and for purposes of Code of Civil Procedure
Section 1162 or any similar or successor statute, Tenant's "place of residence"
and "usual place of business" shall mean the address specified by Tenant for
notice pursuant to Section 1.01(3) of this Lease, as changed by Tenant pursuant
to Article Twenty-four of this Lease.

         (g)      The voluntary or other surrender or termination of this Lease,
or a mutual termination or cancellation thereof, shall not work a merger and
shall terminate all or any existing assignments, subleases, subtenancies or
occupancies permitted by Tenant, except if and as otherwise specified in writing
by Landlord.

         (h)      No delay or omission in the exercise of any right or remedy of
Landlord upon any default by Tenant, and no exercise by Landlord of its rights
pursuant to Section 26.15 to perform any duty which Tenant fails timely to
perform, shall impair any right or remedy or be construed as a waiver. No
provision of this Lease shall be deemed waived by either party unless such
waiver is in a writing signed by the waiving party. The waiver by either party
of any breach of any provision of this Lease shall not be deemed a waiver of any
subsequent breach of the same or any other provision of this Lease.

11.03    ATTORNEY'S FEES

In the event any party brings any suit or other proceeding with respect to the
subject matter or enforcement of this Lease, the prevailing party (as determined
by the court, agency or other authority before which such suit or proceeding is
commenced) shall, in addition to such other relief as may be awarded, be
entitled to recover attorneys' fees, expenses and costs of investigation as
actually incurred, including court costs, expert witness fees, costs and
expenses of investigation, and all attorneys' fees, costs and expenses in any
such suit or proceeding (including in any action or participation in or in
connection with any case or proceeding under the Bankruptcy Code, 11 United
States Code Sections 101 et seq., or any successor statutes, in establishing or
enforcing the right to indemnification, in appellate proceedings, or in
connection with the enforcement or collection of any judgment obtained in any
such suit or proceeding).

11.04    BANKRUPTCY

The following provisions shall apply in the event of the bankruptcy or
insolvency of Tenant:

         (a)      In connection with any proceeding under Chapter 7 of the
Bankruptcy Code where the trustee of Tenant elects to assume this Lease for the
purposes of assigning it, such election or assignment, may only be made upon
compliance with the provisions of (b) and (c) below, which conditions Landlord
and Tenant acknowledge to be commercially reasonable. In the event the trustee
elects to reject this Lease then Landlord shall immediately be entitled to
possession of the Premises without further obligation to Tenant or the trustee.

         (b)      Any election to assume this Lease under Chapter 11 or 13 of
the Bankruptcy Code by Tenant as debtor-in-possession or by Tenant's trustee
(the "Electing Party") must provide for:

         The Electing Party to cure or provide to Landlord adequate assurance
         that it will cure all monetary defaults under this Lease within fifteen
         (15) days from the date of assumption and it will cure all nonmonetary
         defaults under this Lease within thirty (30) days from the date of
         assumption. Landlord and Tenant acknowledge such condition to be
         commercially reasonable.

         (c)      If the Electing Party has assumed this Lease or elects to
assign Tenant's interest under this Lease to any other person, such interest may
be assigned only if the intended assignee has provided adequate assurance of
future performance (as herein defined), of all of the obligations imposed on
Tenant under this Lease.

         For the purposes hereof, "adequate assurance of future performance"
         means that Landlord has ascertained that each of the following
         conditions has been satisfied:

                  (i) The assignee has submitted a current financial statement,
         certified by its chief financial officer, which shows a net worth and
         working capital in amounts sufficient to assure the future performance
         by the assignee of Tenant's obligations under this Lease; and

                                       21
<PAGE>

                  (ii) Landlord has obtained consents or waivers from any third
         parties which may be required under a lease, mortgage, financing
         arrangement, or other agreement by which Landlord is bound, to enable
         Landlord to permit such assignment.

         (d)      Landlord's acceptance of rent or any other payment from any
trustee, receiver, assignee, person, or other entity will not be deemed to have
waived, or waive, the requirement of Landlord's consent, Landlord's right to
terminate this Lease for any transfer of Tenant's interest under this Lease
without such consent, or Landlord's claim for any amount of Rent due from
Tenant.

11.05    LANDLORD'S DEFAULT

Landlord shall be in default hereunder in the event Landlord has not begun and
pursued with reasonable diligence the cure of any failure of Landlord to meet
its obligations hereunder within thirty (30) days after the receipt by Landlord
of written notice from Tenant of the alleged failure to perform. In no event
shall Tenant have the right to terminate or rescind this Lease as a result of
Landlord's default as to any covenant or agreement contained in this Lease.
Tenant hereby waives such remedies of termination and rescission and hereby
agrees that Tenant's remedies for default hereunder and for breach of any
promise or inducement shall be limited to a suit for damages and/or injunction.
In addition, Tenant hereby covenants that, prior to the exercise of any such
remedies, it will give Mortgagee notice and a reasonable time to cure any
default by Landlord.

                                 ARTICLE TWELVE
                              SURRENDER OF PREMISES

12.01    IN GENERAL

Upon the Termination Date, Tenant shall surrender and vacate the Premises
immediately and deliver possession thereof to Landlord in a clean, good and
tenantable condition, ordinary wear and tear, and damage caused by Landlord and
damage from casualty and the presence of Hazardous Materials not released by
Tenant or Tenant Parties excepted. Tenant shall deliver to Landlord all keys to
the Premises. Tenant shall remove from the Premises all movable personal
property of Tenant and Tenant's trade fixtures, including, subject to Section
6.04, cabling for any of the foregoing. Tenant shall be entitled to remove such
Tenant Additions which at the time of their installation Landlord and Tenant
agreed may be removed by Tenant. Tenant shall also remove such other Tenant
Additions as required by Landlord, including any Tenant Additions containing
Hazardous Material. Tenant immediately shall repair all damage resulting from
removal of any of Tenant's property, furnishings or Tenant Additions, shall
close all floor, ceiling and roof openings and shall restore the Premises to a
tenantable condition as reasonably determined by Landlord. If any of the Tenant
Additions which were installed by Tenant involved the lowering of ceilings,
raising of floors or the installation of specialized wall or floor coverings or
lights, then Tenant shall also be obligated to return such surfaces to their
condition prior to the commencement of this Lease. Tenant shall also be required
to close any staircases or other openings between floors created by Tenant, if
any. Notwithstanding any of the foregoing to the contrary: (i) Landlord will not
require Tenant to remove such Tenant Work as is described in the Preliminary
Plans (as defined in the Workletter), or is consistent with or a logical,
detailed expression of the Preliminary Plans; or (ii) if so requested by Tenant
in writing (and prominently in all capital and bold lettering which also states
that such request is pursuant to Section 12.01 of the Lease) at the time Tenant
requests approval of any other Tenant Work or subsequent Tenant Alterations,
Landlord shall advise Tenant at the time of Landlord's approval of such Tenant
Work or Tenant Alterations as to whether Landlord will require that such Tenant
Work or Tenant Alteration(s) be removed by Tenant from the Premises; provided
however, regardless of the foregoing, in any event, Landlord may require removal
of any Tenant Additions containing Hazardous Material and all Tenant's trade
fixtures, and, subject to Section 6.04, cabling installed for Tenant's personal
property or trade fixtures. In the event possession of the Premises is not
delivered to Landlord when required hereunder, or if Tenant shall fail to remove
those items described above, Landlord may (but shall not be obligated to), at
Tenant's expense, remove any of such property and store, sell or otherwise deal
with such property as provided in Section 11.02(b), including the waiver and
indemnity obligations provided in that Section, and undertake, at Tenant's
expense, such restoration work as Landlord deems necessary or advisable.

12.02    LANDLORD'S RIGHTS

All property which may be removed from the Premises by Landlord shall be
conclusively presumed to have been abandoned by Tenant and Landlord may deal
with such property as provided in Section 11.02(b), including the waiver and
indemnity obligations provided in that Section. Tenant shall also reimburse
Landlord for all costs and expenses incurred by Landlord in removing any Tenant
Additions required to be removed under Section 12.01 above and in restoring the
Premises to the condition required by this Lease at the Termination Date.

                                ARTICLE THIRTEEN
                                  HOLDING OVER

Tenant shall pay Landlord the greater of (i) one hundred fifty percent (150%) of
the monthly Rent payable for the month immediately preceding the holding over
(including increases for Rent Adjustments which Landlord may reasonably
estimate) or, (ii) double the fair market rental value of the Premises as
reasonably determined by Landlord for each month that Tenant retains possession
of the Premises after the Termination Date (prorated on a per diem basis for any
partial month that Tenant retains possession). Tenant shall also pay all damages
sustained by Landlord by reason of such retention of possession. The provisions
of this

                                       22
<PAGE>

Article shall not constitute a waiver by Landlord of any re-entry rights of
Landlord and Tenant's continued occupancy of the Premises shall be as a tenancy
in sufferance.

                                ARTICLE FOURTEEN
                        DAMAGE BY FIRE OR OTHER CASUALTY

14.01    SUBSTANTIAL UNTENANTABILITY

         (a)      If any fire or other casualty (whether insured or uninsured)
renders all or a substantial portion of the Premises or the Building
untenantable, Landlord shall, with reasonable promptness after the occurrence of
such damage, estimate the length of time that will be required to substantially
complete the repair and restoration and shall by notice advise Tenant of such
estimate ("Landlord's Notice"). If Landlord estimates that the amount of time
required to substantially complete such repair and restoration will exceed one
hundred eighty (180) days from the date such damage occurred, then Landlord, or
Tenant if all or a substantial portion of the Premises is rendered untenantable,
shall have the right to terminate this Lease as of the date of such damage upon
giving written notice to the other at any time within twenty (20) days after
delivery of Landlord's Notice, provided that if Landlord so chooses, Landlord's
Notice may also constitute such notice of termination.

         (b)      In the event that the Building is damaged or destroyed to the
extent of more than twenty-five percent (25%) of its replacement cost or to any
extent if no insurance proceeds or insufficient insurance proceeds are
receivable by Landlord, and regardless of whether or not the Premises be
damaged, Landlord may elect by written notice to Tenant given within thirty (30)
days after the occurrence of the casualty to terminate this Lease in lieu of so
restoring the Premises, in which event this Lease shall terminate as of the date
specified in Landlord's notice, which date shall be no later than sixty (60)
days following the date of Landlord's notice.

         (c)      Unless this Lease is terminated as provided in the preceding
Subsections 14.01 (a) and (b), Landlord shall proceed with reasonable promptness
to repair and restore the Premises, including Tenant Work paid for out of the
Allowance (as defined in the Workletter) but excluding all other Tenant
Additions, to its condition as existed prior to such casualty, subject to
reasonable delays for insurance adjustments and Force Majeure delays, and also
subject to zoning Laws and building codes then in effect. Landlord shall have no
liability to Tenant, and Tenant shall not be entitled to terminate this Lease if
such repairs and restoration are not in fact completed within the time period
estimated by Landlord so long as Landlord shall proceed with reasonable
diligence to complete such repairs and restoration.

         (d)      Tenant acknowledges that Landlord shall be entitled to the
full proceeds of any property insurance coverage, whether carried by Landlord or
Tenant, for damages to the Premises, except for those proceeds of Tenant's
insurance of its own personal property and equipment which would be removable by
Tenant at the Termination Date. All such insurance proceeds shall be payable to
Landlord whether or not the Premises are to be repaired and restored, provided,
however, if this Lease is not terminated and the parties proceed to repair and
restore Tenant Additions at Tenant's cost, to the extent Landlord received
proceeds of Tenant's insurance covering Tenant Additions, such proceeds shall be
applied to reimburse Tenant for its cost of repairing and restoring Tenant
Additions.

         (e)      Notwithstanding anything in this Article Fourteen to the
contrary: (i) Landlord shall have no duty pursuant to this Section to repair or
restore any portion of any Tenant Additions (other than Tenant Work paid for out
of the Allowance) or to expend for any repair or restoration of the Premises or
Building amounts in excess of insurance proceeds paid to Landlord and available
for repair or restoration, except as provided in Subsection (g) below; and (ii)
Tenant shall not have the right to terminate this Lease pursuant to this Section
if any damage or destruction was caused by the gross negligence or the willful
and wrongful act of Tenant, its agent or employees. Whether or not the Lease is
terminated pursuant to this Article Fourteen, in no event shall Tenant be
entitled to any compensation or damages for loss of the use of the whole or any
part of the Premises or for any inconvenience or annoyance occasioned by any
such damage, destruction, rebuilding or restoration of the Premises or the
Building or access thereto.

         (f)      Any repair or restoration of the Premises performed by Tenant
shall be in accordance with the provisions of Article Nine hereof.

         (g)      In determining the amount or sufficiency of insurance proceeds
paid to Landlord wherever in this Article Fourteen it affects Landlord's right
to terminate the Lease or Landlord's obligation to rebuild, in the event that
Landlord failed to purchase and maintain the property insurance which it is
required to carry under this Lease, with respect to the cause and type of
casualty damage in question Landlord shall be deemed to have received insurance
proceeds in the amount it would have received if Landlord had not breached its
obligation to maintain such insurance. In the event of casualty damage which is
not required to be covered by Landlord's insurance under the Lease, Landlord
shall not have the right to terminate the Lease if (i) the cost to repair and
restore the damage does not exceed three percent (3%) of the replacement cost
(without depreciation) of the Building (above foundations and excluding Tenant
Additions or comparable improvements in space occupied by other occupants of the
Building, but including Tenant Work paid for out of the Allowance) (hereafter
"Replacement Cost"); or (ii) Tenant agrees to pay the cost of repair and
restoration in excess of three percent (3%) of Replacement Cost and deposits
such amount with Landlord within ten (10) days after written notice from
Landlord.

                                       23
<PAGE>

14.02    INSUBSTANTIAL UNTENANTABILITY

Unless this Lease is terminated as provided in the preceding Subsections 14.01
(a) and (b), then Landlord shall proceed to repair and restore the Building or
the Premises, including Tenant Work paid for out of the Allowance, but excluding
other Tenant Additions, with reasonable promptness, unless such damage is to the
Premises and occurs during the last six (6) months of the Term, in which event
either Tenant or Landlord shall have the right to terminate this Lease as of the
date of such casualty by giving written notice thereof to the other within
twenty (20) days after the date of such casualty. Notwithstanding the foregoing,
Landlord's obligation to repair shall be limited in accordance with the
provisions of Section 14.01 above.

14.03    RENT ABATEMENT

Except for the willful and wrongful act of Tenant or its agents, employees,
contractors or invitees, and in the event of negligence of Tenant or its agents,
employees, contractors or invitees only if and to the extent Landlord receives
rental abatement insurance proceeds covering abatement of the Rent hereunder, if
all or any part of the Premises are rendered untenantable by fire or other
casualty and this Lease is not terminated, Monthly Base Rent and Rent
Adjustments shall abate for that part of the Premises which is untenantable on a
per diem basis from the date of the casualty until Landlord has Substantially
Completed the repair and restoration work in the Premises which it is required
to perform, provided, that as a result of such casualty, Tenant does not occupy
the portion of the Premises which is untenantable during such period.

14.04    WAIVER OF STATUTORY REMEDIES

The provisions of this Lease, including this Article Fourteen, constitute an
express agreement between Landlord and Tenant with respect to any and all damage
to, or destruction of, the Premises or the Property or any part of either, and
any Law, including Sections 1932(2), 1933(4), 1941 and 1942 of the California
Civil Code, with respect to any rights or obligations concerning damage or
destruction shall have no application to this Lease or to any damage to or
destruction of all or any part of the Premises or the Property or any part of
either, and are hereby waived.

                                 ARTICLE FIFTEEN
                                 EMINENT DOMAIN

15.01    TAKING OF WHOLE OR SUBSTANTIAL PART

In the event the whole or any substantial part of the Building or of the
Premises is taken or condemned by any competent authority for any public use or
purpose (including a deed given in lieu of condemnation) and is thereby rendered
untenantable, this Lease shall terminate as of the date title vests in such
authority or any earlier date on which possession is required to be surrendered
to such authority, and Monthly Base Rent and Rent Adjustments shall be
apportioned as of the Termination Date. Further, if at least twenty-five percent
(25%) of the rentable area of the Project is taken or condemned by any competent
authority for any public use or purpose (including a deed given in lieu of
condemnation), and regardless of whether or not the Premises be so taken or
condemned, Landlord or Tenant may elect by written notice to the other to
terminate this Lease as of the date title vests in such authority or any earlier
date on which possession is required to be surrendered to such authority, and
Monthly Base Rent and Rent Adjustments shall be apportioned as of the
Termination Date. Landlord may, without any obligation to Tenant, agree to sell
or convey to the taking authority the Premises, the Building, Tenant's Phase,
the Project or any portion thereof sought by the taking authority, free from
this Lease and the right of Tenant hereunder, without first requiring that any
action or proceeding be instituted or, if instituted, pursued to a judgment.
Notwithstanding anything to the contrary herein set forth, in the event the
taking of the Building or Premises is temporary (for less than the remaining
term of the Lease), Landlord may elect either (i) to terminate this Lease or
(ii) permit Tenant to receive the entire award attributable to the Premises in
which case Tenant shall continue to pay Rent and this Lease shall not terminate.

15.02    TAKING OF PART

In the event a part of the Building or the Premises is taken or condemned by any
competent authority (or a deed is delivered in lieu of condemnation) and this
Lease is not terminated, the Lease shall be amended to reduce or increase, as
the case may be, the Monthly Base Rent and Tenant's Share to reflect the
Rentable Area of the Premises or Building, as the case may be, remaining after
any such taking or condemnation. Landlord, upon receipt and to the extent of the
award in condemnation (or proceeds of sale) shall make necessary repairs and
restorations to the Premises (including Tenant Work paid for out of the
Allowance, but excluding other Tenant Additions) and to the Building to the
extent necessary to constitute the portion of the Building not so taken or
condemned as a complete architectural and economically efficient unit.
Notwithstanding the foregoing, if as a result of any taking, or a governmental
order that the grade of any street or alley adjacent to the Building is to be
changed and such taking or change of grade makes it necessary or desirable to
substantially remodel or restore the Building or prevents the economical
operation of the Building, Landlord shall have the right to terminate this Lease
upon ninety (90) days prior written notice to Tenant.

15.03    COMPENSATION

Landlord shall be entitled to receive the entire award (or sale proceeds) from
any such taking, condemnation or sale without any payment to Tenant, and Tenant
hereby assigns to Landlord Tenant's interest, if any, in such award; provided,
however, Tenant shall have the right separately to pursue against the condemning

                                       24
<PAGE>

authority a separate award in respect of the loss, if any, to Tenant Additions
paid for by Tenant without any credit or allowance from Landlord, for fixtures
or personal property of Tenant, or for relocation or business interruption
expenses, so long as there is no diminution of Landlord's award as a result.

                                 ARTICLE SIXTEEN
                                    INSURANCE

16.01    TENANT'S INSURANCE

Tenant, at Tenant's expense, agrees to maintain in force, with a company or
companies acceptable to Landlord, during the Term: (a) Commercial General
Liability Insurance on a primary basis and without any right of contribution
from any insurance carried by Landlord covering the Premises on an occurrence
basis against all claims for personal injury, bodily injury, death and property
damage, including contractual liability covering the indemnification provisions
in this Lease. Such insurance shall be for such limits that are reasonably
required by Landlord from time to time but not less than a combined single limit
of Five Million and No/100 Dollars ($5,000,000.00); (b) Workers' Compensation
and Employers' Liability Insurance to the extent required by and in accordance
with the Laws of the State of California; (c) "Special Form Causes of Loss"
property insurance (at least as broad as ISO Special Form Causes of Loss, CP
0010) in an amount adequate to cover the full replacement cost of all Tenant
Additions to the Premises (excluding Tenant Work paid for out of the Allowance),
equipment, installations, fixtures and contents of the Premises in the event of
loss; (d) In the event a motor vehicle is to be used by Tenant in connection
with its business operation from the Premises, Comprehensive Automobile
Liability Insurance coverage with limits of not less than Three Million and
No/100 Dollars ($3,000,000.00) combined single limit coverage against bodily
injury liability and property damage liability arising out of the use by or on
behalf of Tenant, its agents and employees in connection with this Lease, of any
owned, non-owned or hired motor vehicles; and (e) such other insurance or
coverages as Landlord reasonably requires provided the same are customarily
carried by tenants in Seaport Centre or provide coverage with respect to a type
of business or activity (or manner of conducting the same) particular to
Tenant's business or activity at Seaport Centre. The foregoing coverages may be
carried using a combination of primary coverage and umbrella or excess coverage
provided that all umbrella and excess coverage policies must be absolutely
concurrent in all respects regarding the coverage afforded by the policies. The
coverage of any excess or umbrella policy must be at least as broad as the
coverage of the primary policy and shall be issued and maintained on an
"occurrence" basis.

16.02    FORM OF POLICIES

Each policy referred to in 16.01 shall satisfy the following requirements. Each
policy shall (i) name Landlord and the Indemnitees as additional insureds except
Workers' Compensation and Employers' Liability Insurance and except that the
Landlord (and any Mortgagee and ground lessor upon written notice to Tenant)
shall be named loss payees of the "Special Form Causes of Loss" property
insurance as to Tenant Additions, excluding Tenant Work paid for out of the
Allowance (the proceeds of which shall be held or released by Landlord as
provided in Section 14.01(d) above), (ii) be issued by one or more responsible
insurance companies licensed to do business in the State of California
reasonably satisfactory to Landlord, (iii) where applicable, provide for
deductible amounts satisfactory to Landlord and not permit co-insurance, (iv)
shall provide that such insurance may not be canceled or amended without thirty
(30) days' prior written notice to the Landlord, and (v) each policy of
"All-Risks" property insurance shall provide that the policy shall not be
invalidated should the insured waive in writing prior to a loss, any or all
rights of recovery against any other party for losses covered by such policies.
Tenant shall deliver to Landlord, certificates of insurance and at Landlord's
request, copies of all policies and renewals thereof to be maintained by Tenant
hereunder, not less than ten (10) days prior to the Commencement Date and not
less than ten (10) days prior to the expiration date of each policy.

16.03    LANDLORD'S INSURANCE

Landlord agrees to purchase and keep in full force and effect during the Term
hereof, including any extensions or renewals thereof, insurance under policies
issued by insurers of recognized responsibility, qualified to do business in the
State of California on the Building (including Tenant Work paid for out of the
Allowance) in amounts not less than the full Replacement Cost (as defined in
Section 14.01(g)), against fire and such other risks as may be included in
standard forms of all risk coverage insurance reasonably available from time to
time. Landlord agrees to maintain in force during the Term, Commercial General
Liability Insurance covering the Building on an occurrence basis against all
claims for personal injury, bodily injury, death and property damage. Such
insurance shall be for a combined single limit of Five Million and No/100
Dollars ($5,000,000.00). Neither Landlord's obligation to carry such insurance
nor the carrying of such insurance shall be deemed to be an indemnity by
Landlord with respect to any claim, liability, loss, cost or expense due, in
whole or in part, to Tenant's negligent acts or omissions or willful misconduct.
Without obligation to do so, Landlord may, in its sole discretion from time to
time, carry insurance in amounts greater and/or for coverage additional to the
coverage and amounts set forth above.

16.04    WAIVER OF SUBROGATION

         (a)      Landlord agrees that, if obtainable at no, or minimal,
additional cost, and so long as the same is permitted under the laws of the
State of California, it will include in its "All Risks" policies appropriate
clauses pursuant to which the insurance companies (i) waive all right of
subrogation against Tenant with respect to losses payable under such policies
and/or (ii) agree that such policies shall not be invalidated should the insured
waive in writing prior to a loss any or all right of recovery against any party
for losses covered by such policies.

                                       25
<PAGE>

         (b)      Tenant agrees to include, if obtainable at no, or minimal,
additional cost, and so long as the same is permitted under the laws of the
State of California, in its "Special Form Causes of Loss" insurance policy or
policies on Tenant Additions to the Premises (other than Tenant Work paid for
out of the Allowance), whether or not removable, and on Tenant's furniture,
furnishings, fixtures and other property removable by Tenant under the
provisions of this Lease appropriate clauses pursuant to which the insurance
company or companies (i) waive the right of subrogation against Landlord and/or
any tenant of space in the Building with respect to losses payable under such
policy or policies and/or (ii) agree that such policy or policies shall not be
invalidated should the insured waive in writing prior to a loss any or all right
of recovery against any party for losses covered by such policy or policies. If
Tenant is unable to obtain in such policy or policies either of the clauses
described in the preceding sentence, Tenant shall, if legally possible and
without necessitating a change in insurance carriers, have Landlord named in
such policy or policies as an additional insured or loss payee. If Landlord
shall be named as an additional insured or loss payee in accordance with the
foregoing, Landlord agrees to endorse promptly to the order of Tenant, without
recourse, any check, draft, or order for the payment of money representing the
proceeds of any such policy or representing any other payment growing out of or
connected with said policies, and Landlord does hereby irrevocably waive any and
all rights in and to such proceeds and payments except as provided in Section
14.01(d).

         (c)      Provided that Landlord's right of full recovery under its
policy or policies aforesaid is not adversely affected or prejudiced thereby,
Landlord hereby waives any and all right of recovery which it might otherwise
have against Tenant, its servants, agents and employees, for loss or damage
occurring to the Real Property and the fixtures, appurtenances and equipment
therein, except Tenant Additions (other than Tenant Work paid for out of the
Allowance), to the extent the same is covered by Landlord's insurance,
notwithstanding that such loss or damage may result from the negligence or fault
of Tenant, its servants, agents or employees. Provided that Tenant's right of
full recovery under its aforesaid policy or policies is not adversely affected
or prejudiced thereby, Tenant hereby waives any and all right of recovery which
it might otherwise have against Landlord, its servants, and employees and
against every other tenant in the Real Property who shall have executed a
similar waiver as set forth in this Section 16.04 (c) for loss or damage to
Tenant Additions, whether or not removable, and to Tenant's furniture,
furnishings, fixtures and other property removable by Tenant under the
provisions hereof to the extent the same is covered or coverable by Tenant's
insurance required under this Lease, notwithstanding that such loss or damage
may result from the negligence or fault of Landlord, its servants, agents or
employees, or such other tenant and the servants, agents or employees thereof.

         (d)      Landlord and Tenant hereby agree to advise the other promptly
if the clauses to be included in their respective insurance policies pursuant to
subparagraphs (a) and (b) above cannot be obtained on the terms hereinbefore
provided and thereafter to furnish the other with a certificate of insurance or
copy of such policies showing the naming of the other as an additional insured,
as aforesaid. Landlord and Tenant hereby also agree to notify the other promptly
of any cancellation or change of the terms of any such policy which would affect
such clauses or naming. All such policies which name both Landlord and Tenant as
additional insureds shall, to the extent obtainable, contain agreements by the
insurers to the effect that no act or omission of any additional insured will
invalidate the policy as to the other additional insureds.

16.05    NOTICE OF CASUALTY

Tenant shall give Landlord notice in case of a fire or accident in the Premises
promptly after Tenant is aware of such event.

                                ARTICLE SEVENTEEN
                         WAIVER OF CLAIMS AND INDEMNITY

17.01    WAIVER OF CLAIMS

To the extent permitted by Law, Tenant releases the Indemnitees from, and waives
all claims for, damage to person or property sustained by the Tenant or any
occupant of the Building or Premises resulting directly or indirectly from any
existing or future condition, defect, matter or thing in and about the Property
or the Premises or any part of either or any equipment or appurtenance therein,
or resulting from any accident in or about the Property, or resulting directly
or indirectly from any act or neglect of any tenant or occupant of the Building
or of any other person, except to the extent caused by the gross negligence or
willful and wrongful act of any of the Indemnitees. If any such damage, whether
to the Premises or the Property or any part of either, or whether to Landlord or
to other tenants in the Building, results from any act or neglect of Tenant, its
employees, servants, agents, contractors, invitees or customers, Tenant shall be
liable therefor and Landlord may, at Landlord's option, repair such damage and
Tenant shall, upon demand by Landlord, as payment of additional Rent hereunder,
reimburse Landlord within ten (10) days of demand for the total cost of such
repairs, in excess of amounts, if any, paid to Landlord under insurance covering
such damages. Tenant shall not be liable for any such damage caused by its acts
or neglect if Landlord or a tenant has recovered the full amount of the damage
from proceeds of insurance policies and the insurance company has waived its
right of subrogation against Tenant.

17.02    INDEMNITY BY TENANT

To the extent permitted by Law, Tenant hereby indemnifies, and agrees to
protect, defend and hold the Indemnitees harmless, against any and all actions,
claims, demands, liability, costs and expenses, including reasonable attorneys'
fees and expenses for the defense thereof, arising from Tenant's occupancy of
the Premises, from the undertaking of any Tenant Additions or repairs to the
Premises, from the conduct of

                                       26
<PAGE>

Tenant's business on the Premises, or from any breach or default on the part of
Tenant in the performance of any covenant or agreement on the part of Tenant to
be performed pursuant to the terms of this Lease, or from any willful act or
negligence of Tenant, its agents, contractors, servants, employees, customers or
invitees, in or about the Premises or the Property or any part of either. In
case of any action or proceeding brought against the Indemnitees by reason of
any such claim, upon notice from Landlord, Tenant covenants to defend such
action or proceeding by counsel approved by Landlord, in Landlord's sole
discretion. Landlord or Tenant may settle, compromise or dispose of any and all
actions, claims and demands related to the foregoing indemnity, subject to the
prior written approval of the other, which approval shall not be unreasonably
withheld. The foregoing indemnity shall not operate to apply or relieve an
Indemnitee of liability to the extent such liability is caused by the gross
negligence or willful and wrongful act of such Indemnitee. Further, the
foregoing indemnity is subject to and shall not diminish any waivers in effect
in accordance with Section 16.04 by Landlord or its insurers to the extent of
amounts, if any, paid to Landlord under its "All-Risks" property insurance.

17.03    WAIVER OF CONSEQUENTIAL DAMAGES

To the extent permitted by law, Tenant hereby waives and releases the
Indemnitees from any consequential damages, compensation or claims for
inconvenience or loss of business, rents or profits as a result of any injury or
damage, whether or not caused by the willful and wrongful act of any of the
Indemnitees.

                                ARTICLE EIGHTEEN
                              RULES AND REGULATIONS

18.01    RULES

Tenant agrees for itself and for its subtenants, employees, agents, and invitees
to comply with all reasonable rules and regulations for use of the Premises, the
Building, the Phase and the Project imposed by Landlord, as the same may be
revised from time to time, including the following: (a) Tenant shall comply with
all of the reasonable requirements of Landlord's emergency response plan, as the
same may be amended from time to time; and (b) Tenant shall not place any
furniture, furnishings, fixtures or equipment in the Premises in a manner so as
to obstruct the windows of the Premises to cause the Building, in Landlord's
good faith determination, to appear unsightly from the exterior. Such rules and
regulations are and shall be imposed for the cleanliness, good appearance,
proper maintenance, good order and reasonable use of the Premises, the Building,
the Phase and the Project and as may be necessary for the enjoyment of the
Building and the Project by all tenants and their clients, customers, and
employees.

18.02    ENFORCEMENT

Nothing in this Lease shall be construed to impose upon the Landlord any duty or
obligation to enforce the rules and regulations as set forth above or as
hereafter adopted, or the terms, covenants or conditions of any other lease as
against any other tenant, and the Landlord shall not be liable to the Tenant for
violation of the same by any other tenant, its servants, employees, agents,
visitors or licensees. Landlord shall use reasonable efforts to enforce the
rules and regulations of the Building in a uniform and non-discriminatory
manner.

                                ARTICLE NINETEEN
                           LANDLORD'S RESERVED RIGHTS

Landlord shall have the following rights exercisable without notice to Tenant
and without liability to Tenant for damage or injury to persons, property or
business and without being deemed an eviction or disturbance of Tenant's use or
possession of the Premises or giving rise to any claim for offset or abatement
of Rent: (1) to change the Building's name or street address upon thirty (30)
days' prior written notice to Tenant (provided that Landlord shall reimburse
Tenant's actual out of pocket costs (not to exceed Five Thousand Dollars
($5,000.00) in the aggregate) resulting therefrom unless Landlord is being
required to make such change by a governmental entity; (2) to install, affix and
maintain all signs on the exterior and/or interior of the Building; (3) to
designate and/or approve prior to installation, all types of signs, window
shades, blinds, drapes, awnings or other similar items, and all internal
lighting that may be visible from the exterior of the Premises; (4) upon not
less than one (1) day's prior notice to Tenant, to display the Premises to
prospective purchasers at reasonable hours at any time during the Term and to
prospective tenants at reasonable hours during the last twelve (12) months of
the Term; (5) to change the arrangement and/or location of entrances or
passageways, doors and doorways, corridors, elevators, stairs, washrooms or
public portions of the Building, and to close entrances, doors, corridors,
elevators or other facilities, provided that such action shall not materially
and adversely interfere with Tenant's access to the Premises or the Building;
(6) to have access for Landlord and other tenants of the Building to any mail
chutes and boxes located in or on the Premises as required by any applicable
rules of the United States Post Office; and (7) to close the Building after
Standard Operating Hours, except that Tenant and its employees and invitees
shall be entitled to admission at all times, under such reasonable regulations
as Landlord prescribes for security purposes.

                                       27
<PAGE>

                                 ARTICLE TWENTY
                              ESTOPPEL CERTIFICATE

20.01    IN GENERAL

Within fifteen (15) days after request therefor by Landlord, Mortgagee or any
prospective mortgagee or owner, Tenant agrees as directed in such request to
execute an Estoppel Certificate in recordable form, binding upon Tenant,
certifying (i) that this Lease is unmodified and in full force and effect (or if
there have been modifications, a description of such modifications and that this
Lease as modified is in full force and effect); (ii) the dates to which Rent has
been paid; (iii) that Tenant is in the possession of the Premises if that is the
case; (iv) that to the best of Tenant's knowledge Landlord is not in default
under this Lease, or, if Tenant believes Landlord is in default, the nature
thereof in detail; (v) that to the best of Tenant's knowledge Tenant currently
has no offsets or defenses to the performance of its obligations under this
Lease (or if Tenant believes there are any offsets or defenses, a full and
complete explanation thereof); (vi) that the Premises have been completed in
accordance with the terms and provisions hereof, that Tenant has accepted the
Premises and the condition thereof and of all improvements thereto and has no
claims against Landlord or any other party with respect thereto; (vii) that if
an assignment of rents or leases has been served upon the Tenant by a Mortgagee,
Tenant will acknowledge receipt thereof and agree to be bound by the provisions
thereof; (viii) that Tenant will give to the Mortgagee copies of all notices
required or permitted to be given by Tenant to Landlord; and (ix) to any other
information reasonably requested.

20.02    ENFORCEMENT

In the event that Tenant fails to deliver an Estoppel Certificate and such
failure continues for one (1) business day after written notice of such failure,
then such failure shall be a Default for which there shall be no cure or grace
period. In addition to any other remedy available to Landlord, Landlord may
impose a charge equal to $500.00 for each day that Tenant fails to deliver an
Estoppel Certificate and Tenant shall be deemed to have irrevocably appointed
Landlord as Tenant's attorney-in-fact to execute and deliver such Estoppel
Certificate.

                               ARTICLE TWENTY-ONE
                             Intentionally omitted.

                               ARTICLE TWENTY-TWO
                               REAL ESTATE BROKERS

Tenant represents that, except for the broker(s) listed in Section 1.01(19),
Tenant has not dealt with any real estate broker, sales person, or finder in
connection with this Lease, and no such person initiated or participated in the
negotiation of this Lease, or showed the Premises to Tenant. Tenant hereby
agrees to indemnify, protect, defend and hold Landlord and the Indemnitees,
harmless from and against any and all liabilities and claims for commissions and
fees arising out of a breach of the foregoing representation. Landlord agrees to
pay any commission to which Landlord's Broker listed in Section 1.01(19) is
entitled in connection with this Lease pursuant to Landlord's written agreement
with such broker. Landlord and Tenant agree that any commission payable to
Tenant's Broker shall be paid pursuant to a separate agreement between
Landlord's Broker and Tenant's Broker to share the commission paid to Landlord's
Broker by Landlord.

                              ARTICLE TWENTY-THREE
                              MORTGAGEE PROTECTION

23.01    SUBORDINATION AND ATTORNMENT

Subject to Section 23.01(b) hereof, this Lease is and shall be expressly subject
and subordinate at all times to (i) any ground or underlying lease of the Real
Property, now or hereafter existing, and all amendments, extensions, renewals
and modifications to any such lease, and (ii) the lien of any mortgage or trust
deed now or hereafter encumbering fee title to the Real Property and/or the
leasehold estate under any such lease, and all amendments, extensions, renewals,
replacements and modifications of such mortgage or trust deed and/or the
obligation secured thereby, unless such ground lease or ground lessor, or
mortgage, trust deed or Mortgagee, expressly provides or elects that the Lease
shall be superior to such lease or mortgage or trust deed. If any such mortgage
or trust deed is foreclosed (including any sale of the Real Property pursuant to
a power of sale), or if any such lease is terminated, upon request of the
Mortgagee or ground lessor, as the case may be, Tenant shall attorn to the
purchaser at the foreclosure sale or to the ground lessor under such lease, as
the case may be, provided, however, that such purchaser or ground lessor shall
not be (i) bound by any payment of Rent for more than one month in advance
except payments in the nature of security for the performance by Tenant of its
obligations under this Lease; (ii) subject to any offset, defense or damages
arising out of a default of any obligations of any preceding Landlord, except
any defense or damages to the extent arising out of a default continuing after
any such foreclosure or termination of lease; or (iii) bound by any amendment or
modification of this Lease made without the written consent of the Mortgagee or
ground lessor; or (iv) liable for any security deposits not actually received in
cash by such purchaser or ground lessor. This subordination shall be
self-operative and no further certificate or instrument of subordination need be
required by any such Mortgagee or ground lessor. In confirmation of such
subordination, however, Tenant shall execute promptly any reasonable certificate
or instrument that Landlord, Mortgagee or ground lessor may request. Tenant
hereby constitutes Landlord as Tenant's attorney-in-fact to execute such
certificate or instrument for and on behalf of Tenant upon Tenant's failure to
do so within fifteen (15) days of a request to do so. Upon request by such
successor in interest, Tenant shall execute and deliver reasonable

                                       28
<PAGE>

instruments confirming the attornment provided for herein.

         (b)      Notwithstanding any provision of this Lease to the contrary,
provided that: (i) Tenant executes and delivers a subordination, nondisturbance
and attornment agreement substantially in the form of Exhibit F hereto, with
such changes thereto as any lessor under a ground or underlying lease or
mortgagee or beneficiary may reasonably require ("Nondisturbance Agreement") and
complies with the provisions thereof, and (ii) Tenant is not in default under
this Lease beyond applicable notice and cure periods, no termination of any
ground lease or underlying lease and no foreclosure, sale pursuant to power of
sale or conveyance by deed in lieu of foreclosure shall affect Tenant's rights
under this Lease, except to the extent provided by such Nondisturbance
Agreement. If Tenant fails to execute and deliver any Nondisturbance Agreement
within fifteen (15) days of a request therefor from Landlord, Tenant hereby
constitutes Landlord as Tenant's attorney-in-fact to execute and deliver such
instrument. Landlord's inability to obtain the signature of any such lessor or
Mortgagee on any such Nondisturbance Agreement shall not constitute a default by
Landlord under this Lease, but so long as default by Tenant under this Lease
beyond applicable notice and cure periods is not the reason for Landlord's
inability to obtain such signature, this Lease shall be superior to the lease,
mortgage or deed of trust in question, and Tenant shall, at the request of such
lessor, mortgagee or beneficiary (or purchaser at any sale pursuant to the
mortgage or deed of trust), attorn to any such party or enter into a new lease
with such party (as Landlord) for the balance of the Term then remaining
hereunder upon the same terms and conditions as those herein, provided, however,
that such party shall not be (i) bound by any payment of Rent for more than one
month in advance except payments in the nature of security for the performance
by Tenant of its obligations under this Lease; (ii) subject to any offset,
defense or damages arising out of a default of any obligations of any preceding
Landlord, except any defense or damages to the extent arising out of a default
continuing after any such foreclosure or termination of lease; or (iii) bound by
any amendment or modification of this Lease made without the written consent of
the Mortgagee or ground lessor; or (iv) liable for any security deposits not
actually received in cash by such purchaser or ground lessor. Upon request by
such successor in interest, Tenant shall execute and deliver reasonable
instruments confirming the attornment provided for herein.

23.02    MORTGAGEE PROTECTION

Tenant agrees to give any Mortgagee or ground lessor, by registered or certified
mail, a copy of any notice of default served upon the Landlord by Tenant,
provided that prior to such notice Tenant has received notice (by way of service
on Tenant of a copy of an assignment of rents and leases, or otherwise) of the
address of such Mortgagee or ground lessor. Tenant further agrees that if
Landlord shall have failed to cure such default within the time provided for in
this Lease, then the Mortgagee or ground lessor shall have an additional thirty
(30) days after receipt of notice thereof within which to cure such default or
if such default cannot be cured within that time, then such additional notice
time as may be necessary, if, within such thirty (30) days, any Mortgagee or
ground lessor has commenced and is diligently pursuing the remedies necessary to
cure such default (including commencement of foreclosure proceedings or other
proceedings to acquire possession of the Real Property, if necessary to effect
such cure). Such period of time shall be extended by any period within which
such Mortgagee or ground lessor is prevented from commencing or pursuing such
foreclosure proceedings or other proceedings to acquire possession of the Real
Property by reason of Landlord's bankruptcy. Until the time allowed as aforesaid
for Mortgagee or ground lessor to cure such defaults has expired without cure,
Tenant shall have no right to, and shall not, terminate this Lease on account of
default. This Lease may not be modified or amended so as to reduce the Rent or
shorten the Term, or so as to adversely affect in any other respect to any
material extent the rights of the Landlord, nor shall this Lease be canceled or
surrendered, without the prior written consent, in each instance, of the ground
lessor or the Mortgagee.

                               ARTICLE TWENTY-FOUR
                                     NOTICES

         (a)      All notices, demands or requests provided for or permitted to
be given pursuant to this Lease must be in writing and shall be personally
delivered, sent by Federal Express or other reputable overnight courier service,
or mailed by first class, registered or certified United States mail, return
receipt requested, postage prepaid.

         (b)      All notices, demands or requests to be sent pursuant to this
Lease shall be deemed to have been properly given or served by delivering or
sending the same in accordance with this Section, addressed to the parties
hereto at their respective addresses listed in Sections 1.01(2) and (3).

         (c)      Notices, demands or requests sent by mail or overnight courier
service as described above shall be effective upon (i) in the case of delivery
by mail, the date of receipt on the return receipt of the notice, demand or
request by the addressee thereof, or (ii) in the case of delivery by Federal
Express or other overnight courier service, the date of acceptance of delivery
by an employee, officer, director or partner of Landlord or Tenant. Rejection or
other refusal to accept or the inability to deliver because of changed address
of which no notice was given, as indicated by advice from Federal Express or
other overnight courier service or by mail return receipt, shall be deemed to be
receipt of notice, demand or request sent. Notices may also be served by
personal service upon any officer, director or partner of Landlord or Tenant,
and shall be effective upon such service.

         (d)      By giving to the other party at least twenty (20) days written
notice thereof, either party shall have the right from time to time during the
term of this Lease to change their respective addresses for notices, statements,
demands and requests, provided such new address shall be within the United
States of America.

                                       29
<PAGE>

                               ARTICLE TWENTY-FIVE
                                EXERCISE FACILITY

Tenant agrees to inform all employees of Tenant of the following: (i) the
exercise facility is available for the use of the employees of tenants of the
Project only and for no other person; (ii) use of the facility is at the risk of
Tenant or Tenant's employees, and all users must sign a release; (iii) the
facility is unsupervised; and (iv) users of the facility must report any needed
equipment maintenance or any unsafe conditions to the Landlord immediately.
Landlord may discontinue providing such facility at Landlord's sole option at
any time without incurring any liability. As a condition to the use of the
exercise facility, Tenant and each of Tenant's employees that uses the exercise
facility shall first sign a written release in form and substance acceptable to
Landlord. Landlord may change the rules and/or hours of the exercise facility at
any time, and Landlord reserves the right to deny access to the exercise
facility to anyone due to misuse of the facility or noncompliance with rules and
regulations of the facility. To the extent permitted by Law, Tenant hereby
indemnifies, and agrees to protect, defend and hold the Indemnitees harmless,
against any and all actions, claims, demands, liability, costs and expenses,
including attorneys' fees and expenses for the defense thereof, arising from use
of the exercise facility in the Project by Tenant, Tenant's employees or
invitees. In case of any action or proceeding brought against the Indemnitees by
reason of any such claim, upon notice from Landlord, Tenant covenants to defend
such action or proceeding by counsel chosen by Landlord, in Landlord's sole
discretion. Landlord reserves the right to settle, compromise or dispose of any
and all actions, claims and demands related to the foregoing indemnity.

                               ARTICLE TWENTY-SIX
                                  MISCELLANEOUS

26.01    LATE CHARGES

         (a)      The Monthly Base Rent, Rent Adjustments and Rent Adjustment
Deposits shall be due when and as specifically provided above. Except for such
payments and late charges described below, which late charge shall be due when
provided below (without notice or demand), all other payments required hereunder
to Landlord shall be paid within twenty (20) days after Landlord's demand
therefor. All Rent and charges, except late charges, not paid when due shall
bear interest from the date due until the date paid at the Default Rate in
effect on the date such payment was due.

         (b)      In the event Tenant is more than five (5) days late in paying
any installment of Rent due under this Lease, Tenant shall pay Landlord a late
charge equal to five percent (5%) of the delinquent installment of Rent. The
parties agree that (i) such delinquency will cause Landlord to incur costs and
expenses not contemplated herein, the exact amount of which will be difficult to
calculate, including the cost and expense that will be incurred by Landlord in
processing each delinquent payment of rent by Tenant, and (ii) the amount of
such late charge represents a reasonable estimate of such costs and expenses and
that such late charge shall be paid to Landlord for each delinquent payment in
addition to all Rent otherwise due hereunder. The parties further agree that the
payment of late charges and the payment of interest provided for in subparagraph
(a) above are distinct and separate from one another in that the payment of
interest is to compensate Landlord for its inability to use the money improperly
withheld by Tenant, while the payment of late charges is to compensate Landlord
for its additional administrative expenses in handling and processing delinquent
payments. Notwithstanding the foregoing, Tenant shall be entitled to one (1)
notice and five (5) day cure period during a calendar year before any late
charges accrue.

         (c)      Payment of interest at the Default Rate and/or of late charges
shall not excuse or cure any default by Tenant under this Lease, nor shall the
foregoing provisions of this Article or any such payments prevent Landlord from
exercising any right or remedy available to Landlord in the event of a Default
by Tenant that is continuing, including the right to terminate this Lease.

26.02    NO JURY TRIAL; VENUE; JURISDICTION

Each party hereto (which includes any assignee, successor, heir or personal
representative of a party) shall not seek a jury trial, hereby waives trial by
jury, and hereby further waives any objection to venue in the County in which
the Project is located, and agrees and consents to personal jurisdiction of the
courts of the State of California, in any action or proceeding or counterclaim
brought by any party hereto against the other on any matter whatsoever arising
out of or in any way connected with this Lease, the relationship of Landlord and
Tenant, Tenant's use or occupancy of the Premises, or any claim of injury or
damage, or the enforcement of any remedy under any statute, emergency or
otherwise, whether any of the foregoing is based on this Lease or on tort law.
No party will seek to consolidate any such action in which a jury has been
waived with any other action in which a jury trial cannot or has not been
waived. It is the intention of the parties that these provisions shall be
subject to no exceptions. By execution of this Lease the parties agree that this
provision may be filed by any party hereto with the clerk or judge before whom
any action is instituted, which filing shall constitute the written consent to a
waiver of jury trial pursuant to and in accordance with Section 631 of the
California Code of Civil Procedure. No party has in any way agreed with or
represented to any other party that the provisions of this Section will not be
fully enforced in all instances. The provisions of this Section shall survive
the expiration or earlier termination of this Lease.

                                       30
<PAGE>

26.03    DEFAULT UNDER OTHER LEASE

It shall be a Default under this Lease if Tenant or any Affiliate holding any
other lease with Landlord for premises in the Project defaults under such lease
and as a result thereof such lease is terminated or terminable.

26.04    OPTION

This Lease shall not become effective as a lease or otherwise until executed and
delivered by both Landlord and Tenant. The submission of the Lease to Tenant
does not constitute a reservation of or option for the Premises, but when
executed by Tenant and delivered to Landlord, the Lease shall constitute an
irrevocable offer by Tenant in effect for ten (10) days to lease the Premises on
the terms and conditions herein contained.

26.05    TENANT AUTHORITY

Tenant represents and warrants to Landlord that it has full authority and power
to enter into and perform its obligations under this Lease, that the person
executing this Lease is fully empowered to do so, and that no consent or
authorization is necessary from any third party. Landlord may request that
Tenant provide Landlord evidence of Tenant's authority.

26.06    ENTIRE AGREEMENT

This Lease, the Exhibits and Riders attached hereto contain the entire agreement
between Landlord and Tenant concerning the Premises and there are no other
agreements, either oral or written, and no other representations or statements,
either oral or written, on which Tenant has relied. This Lease shall not be
modified except by a writing executed by Landlord and Tenant.

26.07    MODIFICATION OF LEASE FOR BENEFIT OF MORTGAGEE

If Mortgagee of Landlord requires a modification of this Lease which shall not
result in any increased cost or expense to Tenant or in any other substantial
and adverse change in the rights and obligations of Tenant hereunder, then
Tenant agrees that the Lease may be so modified.

26.08    EXCULPATION

Tenant agrees, on its behalf and on behalf of its successors and assigns, that
any liability or obligation of Landlord in connection with this Lease shall only
be enforced against Landlord's equity interest in the Property up to a maximum
of Five Million Dollars ($5,000,000.00) and in no event against any other assets
of the Landlord, or Landlord's officers or directors or partners, and that any
liability of Landlord with respect to this Lease shall be so limited and Tenant
shall not be entitled to any judgment in excess of such amount.

26.09    ACCORD AND SATISFACTION

No payment by Tenant or receipt by Landlord of a lesser amount than any
installment or payment of Rent due shall be deemed to be other than on account
of the amount due, and no endorsement or statement on any check or any letter
accompanying any check or payment of Rent shall be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such installment or payment of Rent
or pursue any other remedies available to Landlord. No receipt of money by
Landlord from Tenant after the termination of this Lease or Tenant's right of
possession of the Premises shall reinstate, continue or extend the Term. Receipt
or acceptance of payment from anyone other than Tenant, including an assignee of
Tenant, is not a waiver of any breach of Article Ten, and Landlord may accept
such payment on account of the amount due without prejudice to Landlord's right
to pursue any remedies available to Landlord.

26.10    LANDLORD'S OBLIGATIONS ON SALE OF BUILDING

In the event of any sale or other transfer of the Building, Landlord shall be
entirely freed and relieved of all agreements and obligations of Landlord
hereunder accruing or to be performed after the date of such sale or transfer
provided the transferee assumes all of Landlord's obligations hereunder accruing
thereafter, and any remaining liability of Landlord with respect to this Lease
shall be limited to Five Million Dollars ($5,000,000.00) and Tenant shall not be
entitled to any judgment in excess of such amount.

26.11    BINDING EFFECT

Subject to the provisions of Article Ten, this Lease shall be binding upon and
inure to the benefit of Landlord and Tenant and their respective heirs, legal
representatives, successors and permitted assigns.

26.12    CAPTIONS

The Article and Section captions in this Lease are inserted only as a matter of
convenience and in no way define, limit, construe, or describe the scope or
intent of such Articles and Sections.

                                       31
<PAGE>

26.13    TIME; APPLICABLE LAW; CONSTRUCTION

Time is of the essence of this Lease and each and all of its provisions. This
Lease shall be construed in accordance with the Laws of the State of California.
If more than one person or entity signs this Lease as Tenant, the obligations
hereunder imposed shall be joint and several. If any term, covenant or condition
of this Lease or the application thereof to any person or circumstance shall, to
any extent, be invalid or unenforceable, the remainder of this Lease, or the
application of such term, covenant or condition to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby and each item, covenant or condition of this Lease shall be
valid and be enforced to the fullest extent permitted by Law. Wherever the term
"including" or "includes" is used in this Lease, it shall have the same meaning
as if followed by the phrase "but not limited to". The language in all parts of
this Lease shall be construed according to its normal and usual meaning and not
strictly for or against either Landlord or Tenant.

26.14    ABANDONMENT

In the event Tenant vacates or abandons the Premises but is otherwise in
compliance with all the terms, covenants and conditions of this Lease, Landlord
shall (i) have the right to enter into the Premises in order to show the space
to prospective tenants, and (ii) have the right to reduce the services provided
to Tenant pursuant to the terms of this Lease to such levels as Landlord
reasonably determines to be adequate services for an unoccupied premises. Tenant
expressly acknowledges that in the absence of written notice pursuant to Section
11.02(b) or pursuant to California Civil Code Section 1951.3 terminating
Tenant's right to possession, none of the foregoing acts of Landlord or any
other act of Landlord shall constitute a termination of Tenant's right to
possession or an acceptance of Tenant's surrender of the Premises, and the Lease
shall continue in effect.

26.15    LANDLORD'S RIGHT TO PERFORM TENANT'S DUTIES

If Tenant fails timely to perform any of its duties under this Lease beyond
applicable notice and cure periods, if any, Landlord shall have the right (but
not the obligation), to perform such duty on behalf and at the expense of Tenant
without prior notice to Tenant, and all sums expended or expenses incurred by
Landlord in performing such duty shall be deemed to be additional Rent under
this Lease and shall be due and payable upon demand by Landlord.

26.16    SECURITY SYSTEM

Landlord shall not be obligated to provide or maintain any security patrol or
security system. Landlord shall not be responsible for the quality of any such
patrol or system which may be provided hereunder or for damage or injury to
Tenant, its employees, invitees or others due to the failure, action or inaction
of such patrol or system.

26.17    NO LIGHT, AIR OR VIEW EASEMENTS

Any diminution or shutting off of light, air or view by any structure which may
be erected on lands of or adjacent to the Project shall in no way affect this
Lease or impose any liability on Landlord.

26.18    RECORDATION

Neither this Lease, nor any notice nor memorandum regarding the terms hereof,
shall be recorded by Tenant. Any such unauthorized recording shall be a Default
for which there shall be no cure or grace period. Tenant agrees to execute and
acknowledge, at the request of Landlord, a memorandum of this Lease, in
recordable form.

26.19    SURVIVAL

The waivers of the right of jury trial, the other waivers of claims or rights,
the releases and the obligations of Tenant under this Lease to indemnify,
protect, defend and hold harmless Landlord and/or Indemnitees shall survive the
expiration or termination of this Lease, and so shall all other obligations or
agreements which by their terms survive expiration or termination of the Lease.

                                       32
<PAGE>

26.20    RIDERS

All Riders attached hereto and executed both by Landlord and Tenant shall be
deemed to be a part hereof and hereby incorporated herein.

IN WITNESS WHEREOF, this Lease has been executed as of the date set forth in
Section 1.01(4) hereof.

TENANT:                                      LANDLORD:
------                                       --------

Argonaut Technologies, Inc.                 Metropolitan Life Insurance Company,
a Delaware corporation                      a New York corporation

By  ________________________________        By  ________________________________

    ________________________________            ________________________________
             Print name                                 Print name
Its ________________________________        Its ________________________________
(Chairman of Board, President or
 Vice President)

By  ________________________________

    ________________________________
             Print name
Its ________________________________

(Secretary, Assistant Secretary, CFO or Assistant Treasurer)

                                       33
<PAGE>

                                    EXHIBIT A

                                PLAN OF PREMISES

                               Exhibit A - Page 1
<PAGE>

                                    EXHIBIT B
                              WORKLETTER AGREEMENT
                                 (TENANT BUILD)

         This Workletter Agreement ("Workletter") is attached to and a part of a
certain Office Lease dated as of March ____, 2004 by and between Metropolitan
Life Insurance Company, a New York corporation, as Landlord, and Argonaut
Technologies, a Delaware Corporation, as Tenant, for the Premises (the "Lease").
Terms used herein and not defined herein shall have the meaning of such terms as
defined elsewhere in the Lease. For purposes of this Workletter, references to
"State" and "City" shall mean the State and City in which the Building is
located.

         1.       Base Building.

         All work performed during the Building's initial course of construction
and modifications thereto, excluding all original and modified build-outs of any
tenant spaces, shall be referred to as the "Base Building Work" or ""Base
Building", as applicable. Neither Landlord nor Landlord's representatives have
made any representations or promises with respect to the Premises or the Base
Building except as herein expressly set forth or as set forth in the Lease.
Provided however, Landlord agrees that the Building Systems (defined in Section
3.2 below) and the roof will be delivered by Landlord in good working order and
condition.

         2.       Landlord Work.

         There shall be no Landlord Work.

         3.       Tenant's Plans.

         3.1.     Description. At its expense, Tenant shall employ:

                  (i) one or more architects reasonably satisfactory to Landlord
         and licensed by the State ("Tenant's Architect") to prepare
         architectural drawings and specifications for all layout and Premises
         improvements not included in, or requiring any change or addition to,
         the AS IS condition.

                  (ii) one or more engineers reasonably satisfactory to Landlord
         and licensed by the State ("Tenant's Engineers") to prepare mechanical,
         structural and electrical working drawings and specifications for all
         Premises improvements not included in, or requiring any change or
         addition to, the AS IS condition. If/when Tenant's Engineers require
         any roof penetration, Tenant Engineers shall work in good faith with
         Landlord's roofing contractor/consultant to make sure all roof
         penetration improvements shall be satisfactory to Landlord.

All such drawings and specifications are referred to herein as "Tenant's Plans".
Tenant's Plans shall be in form and detail sufficient to secure all applicable
governmental approvals. Tenant's Architect shall be responsible for coordination
of all engineering work for Tenant's Plans and shall coordinate with any
consultants of Tenant (the use of which is subject to Landlord's consent), and
Landlord's space planner or architect to assure the consistency of Tenant's
Plans with the Base Building Work and Landlord Work (if any).

Tenant shall pay Landlord, within thirty (30) days of receipt of each invoice
from Landlord, the reasonable out-of-pocket cost incurred by Landlord for any
outside architects and engineers Landlord requires to review Tenant's Plans for
consistency of same with the Base Building Work and Landlord Work (if any),
provided however, Landlord will not charge Tenant for Landlord's use of any
outside architects and engineers provided that Tenant's Plans are consistent
with the Preliminary Plans (defined in Section 3.2 below). Tenant's Plans shall
also include the following:

                  (a)      Final Space Plan: The "Final Space Plan" for the
         Premises shall include a full and accurate description of room titles,
         floor loads, alterations to the Base Building or Landlord Work (if any)
         or requiring any change or addition to the AS IS condition, and the
         dimensions and location of all partitions, doors, aisles, plumbing (and
         furniture and equipment to the extent same affect floor loading). The
         Final Space Plan shall be (i) compatible with the design, construction,
         systems and equipment of the Base Building and Landlord Work, if any;
         (ii) comply with Laws, (iii) be capable of logical measurement and
         construction, and (iv) contain all such information as may be required
         for the preparation of the Mechanical and Electrical Working Drawings
         and Specifications (including, without limitation, a capacity and usage
         report, from Landlord's engineers pursuant to Section 3.1(b). below,
         for all mechanical and electrical systems in the Premises).

                  (b)      Mechanical and Electrical Working Drawings and
         Specifications: Tenant shall employ engineers reasonably approved by
         Landlord to prepare Mechanical and Electrical Working Drawings and
         Specifications showing complete plans for electrical, life safety,
         automation, plumbing, water, and air cooling, ventilating, heating and
         temperature control and shall employ Landlord's mechanical engineer and
         Landlord's electrical engineer to prepare a capacity and usage report
         ("Capacity Report") for all mechanical and electrical systems in the
         Premises.

                  (c)      Issued for Construction Documents: The "Issued for
         Construction Documents" shall consist of all drawings (1/8" scale) and
         specifications necessary to construct all Premises improvements
         including, without limitation, architectural and structural working
         drawings and specifications and Mechanical and Electrical Working
         Drawings and Specifications and all applicable

                               Exhibit B - Page 1
<PAGE>

         governmental authorities plan check corrections.

         3.2.     Approval by Landlord. Tenant's Plans and any revisions thereof
         shall be subject to Landlord's approval, which approval or disapproval:

                           (i)      shall not be unreasonably withheld, provided
         however, that Landlord may disapprove Tenant's Plans in its sole and
         absolute discretion if they (a) adversely affect the structural
         integrity of the Building, including applicable floor loading capacity;
         (b) substantially and adversely affect any of the Building Systems (as
         defined below), the Common Areas or any other tenant space (whether or
         not currently occupied); (c) fail to fully comply with Laws, (d) affect
         the exterior appearance of the Building; (e) provide for improvements
         which do not meet or exceed the Building Standards; or (f) adversely
         affect the integrity of the roof or the roof membrane. Building Systems
         collectively shall mean the structural, electrical, mechanical
         (including, without limitation, heating, ventilating and air
         conditioning), plumbing, fire and life-safety (including, without
         limitation, fire protection system and any fire alarm), communication,
         utility, gas (if any), and security (if any) systems in the Premises
         and the Building. Landlord hereby approves of the preliminary plans
         described on Exhibit B-1 (the "Preliminary Plans") and agrees that it
         shall not withhold approval to Tenant's Plans to the extent that they
         are consistent with and a logical, detailed expression of the
         Preliminary Plans.

                           (ii)     shall not be delayed beyond seven (7)
         business days with respect to initial submissions and major change
         orders (those which impact Building Systems or any other item listed in
         subpart (i) of Section 3.2 above) and beyond four (4) business days
         with respect to required revisions and any other change orders.

If Landlord disapproves of any of Tenant's Plans, Landlord shall advise Tenant
of what Landlord disapproves in reasonable detail. After being so advised by
Landlord, Tenant shall submit a redesign, incorporating the revisions reasonably
required by Landlord and reasonably acceptable to Tenant, for Landlord's
approval. The approval procedure shall be repeated as necessary until Tenant's
Plans are ultimately approved. Approval by Landlord shall not be deemed to be a
representation or warranty by Landlord with respect to the safety, adequacy,
correctness, efficiency or compliance with Laws of Tenant's Plans. Tenant shall
be fully and solely responsible for the safety, adequacy, correctness and
efficiency of Tenant's Plans and for the compliance of Tenant's Plans with any
and all Laws.

         3.3.     Landlord Cooperation. Landlord shall cooperate with Tenant and
make good faith efforts to coordinate Landlord's construction review procedures
to expedite the planning, commencement, progress and completion of Tenant Work.
Landlord shall complete its review of each stage of Tenant's Plans and any
revisions thereof and communicate the results of such review within the time
periods set forth in Section 3.2 above.

         3.4.     City Requirements. Any changes in Tenant's Plans which are
made in response to requirements of the applicable governmental authorities
and/or changes which affect the Base Building Work shall be immediately
submitted to Landlord for Landlord's review and approval.

         3.5.     "As-Built" Drawings and Specifications. A CADD-DXF diskette
file and a set of mylar reproducibles of all "as-built" drawings and
specifications of the Premises (reflecting all field changes and including,
without limitation, architectural, structural, mechanical and electrical
drawings and specifications) prepared by Tenant's Architect and Engineers or by
Contractors (defined below) shall be delivered by Tenant at Tenant's expense to
the Landlord within thirty (30) days after completion of the Tenant Work. If
Landlord has not received such drawings and diskette(s) within thirty (30) days,
Landlord may give Tenant written notice of such failure. If Tenant does not
produce the drawings and diskette(s) within ten (10) days after Landlord's
written notice, Landlord may, at Tenant's sole cost which may be deducted from
the Allowance, produce the drawings and diskette(s) using Landlord's personnel,
managers, and outside consultants and contractors. Landlord shall receive an
hourly rate reasonable for such production.

4.       Tenant Work.

         4.1.     Tenant Work Defined. All tenant improvement work described by
the Issued for Construction Documents (including, without limitation, any
approved changes, additions or alterations pursuant to Section 7 below) is
referred to in this Workletter as "Tenant Work."

         4.2.     Tenant to Construct. Tenant shall construct all Tenant Work
pursuant to this Workletter, and except to the extent modified by or
inconsistent with express provisions of this Workletter, pursuant with the
provisions of the terms and conditions of Article Nine of the Lease, governing
Tenant Alterations (except to the extent modified by this Workletter) and all
such Tenant Work shall be considered "Tenant Alterations" for purposes of the
Lease.

         4.3.     Construction Contract. All contracts and subcontracts for
Tenant Work shall include any terms and conditions reasonably required by
Landlord.

         4.4.     Contractor. Tenant shall select one or more contractors to
perform the Tenant Work ("Contractor") so long as reasonably satisfactory by
Landlord.

         4.5.     Division of Landlord Work and Tenant Work. Tenant Work is
defined in Section 4.1. above and Landlord Work, if any, is defined in
Section 2.

                               Exhibit B - Page 2
<PAGE>

5.       Tenant's Expense.

         Tenant agrees to pay for all Tenant Work, including, without
limitation, the costs of design and permitting thereof and Landlord's
construction administration fee (collectively, the "Improvement Costs"). The
Improvement Costs shall not include costs of "Tenant's FF&E" (defined below). To
the extent the "Allowance" (defined below) is available, and subject to the
terms and conditions of this Workletter, Tenant shall apply the Allowance to
payment of the Improvement Costs. Landlord shall provide Tenant a tenant
improvement allowance ("Allowance") in the amount of Five Hundred Sixty-three
Thousand Two Hundred Twenty-four and no/100 Dollars ($563,224.00). The Allowance
shall be used solely to reimburse Tenant for the Improvement Costs. For purposes
of this Workletter, "Tenant's FF& E" shall mean furniture, furnishings,
telephone systems, computer systems, equipment, any other personal property or
unattached fixtures and installation thereof. Tenant shall pay all costs of
Tenant's FF&E. If Tenant does not utilize one hundred percent (100%) of the
Allowance for Improvement Costs within twelve (12) months after the Delivery
Date of the Premises, Tenant shall have no right to the unused portion of the
Allowance.

         Notwithstanding anything to the contrary herein, the Improvements Cost
shall not include and Landlord shall be solely responsible for (and Tenant shall
have no responsibility for and the Allowance shall not be used for) the costs of
Landlord's obligations for Title III ADA compliance in the Common Areas pursuant
to Section 7.01(b) of the Lease.

6.       Application and Disbursement of the Allowance.

         6.1.     Tenant shall pay and disburse its own funds for that portion
of the Improvement Costs in excess of the Allowance, plus any amount payable
covered by the "Landlord's Retention" (defined below) subject to subsequent
disbursement of the Landlord's Retention as provided below. "Landlord's
Retention" shall mean an amount equal to fifteen percent (15%) of each
disbursement of the Allowance, which Landlord shall retain out of the Allowance
and shall not be obligated to disburse unless and until after Tenant has
completed the Tenant Work and complied with Section 6.4 below. Further, Landlord
shall not be obligated to make any disbursement of the Allowance unless and
until Tenant has provided Landlord with (a) bills and invoices covering all
labor and material expended and used, (b) an affidavit from Tenant stating that
all of such bills and invoices have either been paid in full by Tenant or are
due and owing, (c) contractors affidavit covering all labor and materials
expended and used, (d) Tenant, contractors and architectural completion
affidavits (as applicable), and (e) valid mechanics' lien releases and waivers
pertaining to any completed portion of the Tenant Work which shall be
conditional or unconditional, as applicable, all as provided pursuant to Section
6.2 and 6.4 below.

         6.2.     Upon Tenant's full compliance with the provisions of
Section 6, and if Landlord determines that there are no applicable or claimed
stop notices (or any other statutory or equitable liens of anyone performing any
of Tenant Work or providing materials for Tenant Work) or actions thereon,
Landlord shall disburse the applicable portion of the Allowance to pay
Improvement Costs on a monthly basis as follows:

                  (a)      In the event of conditional releases, to the
         respective contractor, subcontractor, vendor, or other person who has
         provided labor and/or services in connection with the Tenant Work, upon
         the following terms and conditions: (i) such costs are covered by the
         Allowance, and Tenant has completed and delivered to Landlord a written
         request for payment, in form reasonably approved by Landlord, setting
         forth the exact name of the contractor, subcontractor or vendor to whom
         payment is to be made and the date and amount of the bill or invoice,
         (ii) the request for payment is accompanied by the documentation set
         forth in Section 6.1; and (iii) Landlord, or Landlord's appointed
         representative, has inspected and reasonably approved the work for
         which Tenant seeks payment; or

                  (b)      In the event of unconditional releases, directly to
         Tenant upon the following terms and conditions: (i) Tenant seeks
         reimbursement for costs of Tenant Work which have been paid by Tenant
         and are covered by the Allowance; (ii) Tenant has completed and
         delivered to Landlord a request for payment, in form reasonably
         approved by Landlord, setting forth the name of the contractor,
         subcontractor or vendor paid and the date of payment, (iii) the request
         for payment is accompanied by the documentation set forth in Section
         6.1; and (iv) Landlord, or Landlord's appointed representative, has
         inspected and approved the work for which Tenant seeks reimbursement.

         6.3.     Tenant shall provide Landlord with the aforementioned
documents by the 15th of the month and payment shall be made by the 30th day of
the month following the month in which such documentation is provided.

         6.4.     Prior to Landlord disbursing the Landlord's Retention to
Tenant, Tenant shall submit to Landlord the following items within thirty (30)
days after completion of the Tenant Work: (i) "As Built" drawings and
specifications pursuant to Section 3.5 above, (ii) all unconditional lien
releases from all general contractor(s) and subcontractor(s) performing work,
(iii) a "Certificate of Completion" prepared by Tenant's Architect, and (iv) a
final budget with supporting documentation detailing all costs associated with
the Improvement Costs.

7.       Changes, Additions or Alterations.

         If Tenant desires to make any non-de minimis change, addition or
alteration or desires to make any change, addition or alteration to any of the
Building Systems after approval of the Issued for Construction

                               Exhibit B - Page 3
<PAGE>

Documents, Tenant shall prepare and submit to Landlord plans and specifications
with respect to such change, addition or alteration. Any such change, addition
or alteration shall be subject to Landlord's approval in accordance with the
provisions of Section 3.2 of this Workletter. Tenant shall be responsible for
any submission to and plan check and permit requirements of the applicable
governmental authorities.

8.       Miscellaneous.

         8.1.     Scope. Except as otherwise set forth in the Lease, this
Workletter shall not apply to any space added to the Premises by Lease option or
otherwise.

         8.2.     Tenant Work shall include (at Tenant's expense subject to the
Allowance) for all of the Premises:

                  (a)      Building approved lighting sensor controls as
necessary to meet applicable Laws;

                  (b)      Building Standard fluorescent fixtures in all
Building office areas;

                  (c)      Building Standard meters for each of electricity and
chilled water used by Tenant shall be connected to the Building's system and
shall be tested and certified prior to Tenant's occupancy of the Premises by a
State certified testing company; and

                  (d)      Building Standard ceiling systems (including tile and
grid).

         8.3.     Sprinklers. Subject to any terms, conditions and limitations
set forth herein, Landlord shall provide an operative sprinkler system
consisting of mains, laterals, and heads "AS IS" on the date of delivery of the
Premises to Tenant. Tenant shall pay for piping distribution, drops and
relocation of, or additional, sprinkler system heads and Building firehose or
firehose valve cabinets, if Tenant's Plans and/or any applicable Laws
necessitate such.

         8.4.     Floor Loading. Floor loading capacity shall be within building
design capacity. Tenant may exceed floor loading capacity with Landlord's
consent, at Landlord's sole discretion and must, at Tenant's sole cost and
expense, reinforce the floor as required for such excess loading.

         8.5.     Work Stoppages. If any work on the Real Property other than
Tenant Work is delayed, stopped or otherwise affected by construction of Tenant
Work, Tenant shall immediately take those actions necessary or desirable to
eliminate such delay, stoppage or effect on work on the Real Property other than
Tenant Work.

         8.6.     (Intentionally omitted.)

         8.7.     Life Safety. It is agreed that Tenant (or Contractor) shall
employ the services of a fire and life-safety subcontractor reasonably
satisfactory to Landlord for all fire and life-safety work at the Building.

         8.8.     Locks. Tenant agrees to purchase from Landlord or its
representative all cylinders and keys used in locks used in the Premises.
Notwithstanding any provision of the foregoing to the contrary, Tenant shall
have the right to obtain cylinders and keys for locks to and in the Premises
from its own vendor, provided that (a) the vendor develops a master key system
with a grand master key for all locks; (b) Tenant furnishes Landlord a copy of
the grand master key which Landlord may cause to be placed in the "knox box" for
use by the fire department in event of an emergency, and another grand master
key if requested by Landlord for Landlord's use for entry permitted under the
Lease; and (c) the name and contact information for Tenant's vendor for locks
used in the Premises.

         8.9.     Authorized Representatives. Tenant has designated Owen Gooding
of Argonaut Technologies to act as Tenant's representative with respect to the
matters set forth in this Workletter. Landlord has designated George Chu,
Managing Architect, MetLife Real Estate Investments, 400 South El Camino Real,
Suite 800, San Mateo, CA 94402, to act as Landlord's representative with respect
to the matters set forth in this Workletter. Such representative(s) shall have
full authority and responsibility to act on behalf of Tenant or Landlord, as the
case may be, as required in this Workletter. Tenant and Landlord may add or
replace their respective authorized representatives upon five (5) business days
notice to the other party.

         8.10.    Access to Premises. After Landlord has recovered possession of
the Premises from any prior Tenant, prior to delivery of possession to Tenant,
Tenant and its architects, engineers, consultants, and contractors shall have
access at reasonable times and upon advance notice and coordination with the
Building management, to the Premises for the purpose of planning Tenant Work.
Such access shall not in any manner interfere with Landlord Work, if any. Such
access, and all acts and omissions in connection with it, shall be subject to
and governed by all other provisions of the Lease, including, without
limitation, Tenant's indemnification obligations, insurance obligations, etc,
except for the payment of Base Rent and Additional Rent. To the extent that such
access by Tenant delays the Substantial Completion of the Landlord Work (if
any), such delay shall be a Tenant Delay and the Landlord Work shall be deemed
Substantially Complete on the date such Landlord Work would have been completed
but for such access.

         8.11.    Fee. Landlord shall receive a fee equal to two percent (2.0%)
of the Improvement Costs (excluding however, the fee itself) up to a maximum of
two percent (2.0%) of the total Allowance. Such fee is

                               Exhibit B - Page 4
<PAGE>

in addition to Tenant's reimbursement of out-of-pocket costs incurred by
Landlord pursuant to other provisions hereof.

9.       Force and Effect.

         The terms and conditions of this Workletter shall be construed to be a
part of the Lease and shall be deemed incorporated in the Lease by this
reference. Should any inconsistency arise between this Workletter and the Lease
as to the specific matters which are the subject of this Workletter, the terms
and conditions of this Workletter shall control.

10. Landlord Delay and Force Majeure.

         "Landlord Delay" shall consist of any delay in the construction of the
Tenant Work resulting from any delay by Landlord in approving Tenant's Plans or
a change order beyond the periods set forth in Section 3.2 of this Workletter.
In the event of any delay in the substantial completion of the Tenant Work
beyond the Commencement Date resulting from a Landlord Delay or Force Majeure,
the Commencement Date of the Term pursuant to Section 3.2(a) of Rider 2 shall be
extended one (1) day for each day of delay resulting therefrom.

11.      Early Access.

         Landlord shall provide access to the Premises to Tenant upon execution
of this Lease for Tenant's space planning purposes and for Tenant's preparation
of the Premises for occupancy. Such access shall be subject to all of the terms
of the Lease except the obligation to pay Monthly Base Rent, Rent Adjustment
Deposits or Rent Adjustments as provided in Section 3.2 of Rider 2.

12.      Pre-existing Hazardous Material.

         In the event that in the course of planning for and construction of the
Tenant Work, Tenant discovers that the Premises contain a Hazardous Material
which was present at the time Landlord delivered the Premises to Tenant and that
was not introduced by Tenant or Tenant's Agents ("Pre-existing Hazardous
Material"), Tenant shall immediately give Landlord written notice specifying in
reasonable detail such Hazardous Material discovered by Tenant, its location and
what action Tenant requests Landlord to take. Landlord shall either (a) promptly
establish that the substance is not a Hazardous Material, or that it was
introduced to the Building by Tenant or Tenant's Agents, or that Required
Remediation would not have been required but for aggravation of the Pre-existing
Condition by Tenant or Tenant's Agents, or that the Pre-existing Condition is in
compliance with Law applicable to the Building, in effect and interpreted as of
the Execution Date ("Applicable Law"), in any of which cases Landlord shall not
be responsible for the presence or Required Remediation (defined below) of such
Hazardous Material; or (b) with respect to the presence of Hazardous Material
for which Landlord is responsible, complete any "Required Remediation" with
reasonable diligence after Landlord's receipt of Tenant's notice, at Landlord's
sole cost and expense (the cost of which shall not be reimbursed to Landlord out
of the Allowance or be included in Operating Expenses). The term "Required
Remediation" shall mean such removal, reduction to a lower level of
concentration or exposure, encapsulation or other remediation required or
permitted by Applicable Law as a means of remediating any Hazardous Material
contained in the Premises. Provided however, to the extent that an act or
omission of Tenant or Tenant's Parties aggravates such Pre-existing Condition,
Landlord not be responsible for such aggravation or Required Remediation of such
aggravation of the Pre-existing Condition. If the presence of Hazardous Material
for which Landlord is responsible as set forth above causes Tenant to incur
increased design or construction costs in performing the Tenant Work that it
would not otherwise have incurred, the actual and reasonable additional,
incremental costs shall be reimbursed by Landlord to Tenant within forty-five
(45) days after receipt by Landlord from Tenant of an invoice documenting and
evidencing such increased costs with respect to work done and/or materials
supplied to the Premises. Any such reimbursement shall be separate and apart
from, and in addition to, the Allowance and shall not be deducted from the
Allowance. If such presence of Hazardous Material for which Landlord is
responsible, as set forth above, causes Substantial Completion of the Tenant
Work to be delayed until after the Commencement Date, such delay shall
constitute a Landlord Delay as provided in Section 10 of this Workletter.

                               Exhibit B - Page 5
<PAGE>

                                   EXHIBIT B-1
                                 (TO WORKLETTER)
                        DESCRIPTION OF PRELIMINARY PLANS

For purposes of Section 3.2 of the Workletter, the "Preliminary Plans" shall
mean those preliminary plans and specifications on the basis of which Tenant
shall prepare the Final Space Plan, which preliminary plans are as described
below and as attached as part of this Exhibit B-1, including the schematic space
plan labelled "Argonaut Technologies, Inc. Space Plan 220 Saginaw Redwood City,
CA 94063" prepared by aai, dated 11/12/03 on behalf of Tenant consisting of one
page.

The following general and specific descriptions of the Tenant Work accompany the
schematic space plan attached as a second page of this Exhibit, and the Room #
references correspond to those on such plan.

GENERAL DEMOLITION AND CONSTRUCTION:

Contractors will demolish approximately 550 lineal feet of existing walls and
adjacent flooring and T-bar ceiling. Approximately 900 lineal feet of new walls
will be installed as per attached schematic space plan. T-bar ceiling repair and
fire sprinkler modification will be required due to new wall configurations. New
flooring and paint will be installed throughout the Premises.

SPECIFIC DESCRIPTION OF TENANT IMPROVEMENTS (SEE SCHEMATIC SPACE PLAN):

<TABLE>
<CAPTION>
Room #         Description
------         -----------
<S>            <C>
107            Build conference room wall, install door
116            Build conference room wall, install door
120            Build storage room-install shelving
121            Build server room-Install fixtures to support servers and phone equipment
122            Build storage room-install shelving
124            Build mailroom-Install casework to support copy and mail equipment
130            Build lunchroom-Install plumbing and cabinetry in small kitchen area, install glass
               storefront windows
132            Build manufacturing floor-Install wire mould, compressed air and nitrogen lines, and
               ventilation ducts
134            Build service room- Install wire mould, compressed air and nitrogen lines
135            Build warehouse-Install shelving
136            Build machine shop-Install wire mould, compressed air
137            Build engineering wet lab- Install wire mould, compressed air, nitrogen lines, fume hoods,
               casework and sink
139            Build demo lab- Install wire mould, compressed air, nitrogen lines, fume hoods, casework and
               sink
140            Build engineering prototype- Install wire mould, compressed air and nitrogen lines
147            Build office, install door
148            Build office, install door
149            Build office, install door
150            Build office, install door
151            Build office, install door
152            Build conference room, install door
Rear Room      Build storage area for air compressor, nitrogen gas tank storage
</TABLE>

                               Exhibit B - Page 6
<PAGE>

                                   EXHIBIT B-1
                                 (TO WORKLETTER)
                        DESCRIPTION OF PRELIMINARY PLANS

                   ATTACH SCHEMATIC PLAN BY aai DATED 11/12/03

                               Exhibit B - Page 7
<PAGE>

                                    EXHIBIT C
                              SITE PLAN OF PROJECT

                               Exhibit C - Page 1
<PAGE>

                                    EXHIBIT D
                          PERMITTED HAZARDOUS MATERIAL

Permitted Hazardous Material includes insignificant amounts of substances listed
below so long as (i) such substances are maintained only in such quantities as
are reasonably necessary for Tenant's operations in the Premises, or such other
specific quantity limit as specified below, (ii) such substances are used
strictly in accordance with the manufacturers' instructions therefor and all
applicable laws, (iii) such substances are not disposed of in or about the
Building or the Project in a manner which would constitute a release or
discharge thereof, and (iv) all such substances are removed from the Building
and the Project by Tenant no later than the Termination Date.

<TABLE>
<CAPTION>
Type:                                                                                   Quantity:
-----                                                                                   ---------
<S>                                                                                     <C>
Substances typically found or used in general office applications, to
the extent the Premises is used for general offices                                     as noted above
</TABLE>

Permitted Hazardous Material also includes the substances listed below to the
extent of the quantities listed below:

<TABLE>
<CAPTION>
                                                    Average       Largest
Chemical Name                       Max Stored      Daily         Container           Physical Hazard
-------------                       ----------      -----         ---------           ---------------
<S>                                 <C>             <C>           <C>             <C>
ETHYL ALCOHOL                       8 gal.          4 gal.        1 gal.              Flammable liquid
METHANOL                            8 gal.          4 gal.        1 gal.              Flammable liquid
TETRAHYDROFURAN                     8 gal.          4 gal.        1 gal.              Flammable liquid
ACETONE                             8 gal.          4 gal.        1 gal.              Flammable liquid
ACETONITRILE                        8 gal.          4 gal.        1 gal.              Flammable liquid
2-PROPANOL                          8 gal.          4 gal.        1 gal.              Flammable liquid
DICHLOROETHANE                      8 gal.          4 gal.        1 gal.              Flammable liquid
TOLUENE                             8 gal.          4 gal.        1 gal.              Flammable liquid
PROPYLENEGLYCOL                     8 gal.          4 gal.        1 gal.              Flammable liquid
DIMETHYLFORMAMIDE                   8 gal.          4 gal.        1 gal.              Flammable liquid
SYLTHERM                            10 gal          5 gal         5 gal.              Flammable liquid
DICHLOROMETHANE                     8 gal.          4 gal.        1 gal.             Combustible liquid
ETHYLENE GLYCOL                     8 gal.          4 gal.        1 gal.             Combustible liquid
ACETIC ACID                         5 L             2.5 L         2.5 liter           Corrosive liquid
SULFURIC ACID                       5 L             2.5 L         2.5 liter           Corrosive liquid
SODIUM HYDROXIDE                    2 Kg            1 Kg          1 Kg                 Corrosive solid
AMMONIUM HYDROXIDE                  5 L             2.5 L         2.5 L               Corrosive liquid
                                    912 cubic feet  456 cubic     304 cubic
Nitrogen (compressed)                               feet          feet                 Compressed gas
Nitrogen (Liquid)                   750 L           500 L         250 liters          Cryogenic liquid
Hydrogen (compressed)               216 cubic ft    108 cubic ft  216 cubic       Compresses flammable gas
                                                                  feet
Helium (compressed)                 582 cubic feet  261 cubic     291 cubic            Compressed gas
                                                    feet          feet
</TABLE>

                                   Exhibit D
<PAGE>

                                    EXHIBIT E

                            FORM OF LETTER OF CREDIT

                    FOR INTERNAL IDENTIFICATION PURPOSES ONLY

                    Our No. __________ Other __________

                    Applicant ___________________________

TO:      Metropolitan Life Insurance Company
         [Address]
         Attention: EIM Manager

IRREVOCABLE LETTER OF CREDIT NO. ___________

         We hereby establish this irrevocable Letter of Credit in favor of the
aforesaid addressee ("Beneficiary") for drawings up to United States $__________
effective immediately. This Letter of Credit is issued, presentable and payable
at our office at [issuing bank's address in City specified by Landlord] and
expires with our close of business on ___________, 20___.

         The term "Beneficiary" includes any successor by operation of law of
the named Beneficiary including, without limitation, any liquidator,
rehabilitator, receiver or conservator.

         We hereby undertake to promptly honor your sight draft(s) drawn on us,
indicating our Credit No. ________, for all or any part of this Credit if
presented at our office specified in paragraph one on or before the expiry date
or any automatically extended expiry date.

         Except as expressly stated herein, this undertaking is not subject to
any agreement, condition or qualification. The obligation of [issuing bank]
under this Letter of Credit is the individual obligation of [issuing bank], and
is in no way contingent upon reimbursement with respect thereto.

         It is a condition of this Letter of Credit that it is deemed to be
automatically extended without amendment for one year from the expiry date
hereof, or any future expiration date, unless at least thirty (30) days prior to
an expiration date we notify you by registered mail that we elect not to
consider this Letter of Credit renewed for any such additional period.

         This Letter of Credit is transferable by the Beneficiary and by any
successive transferees at no charge or cost to Beneficiary or any transferee.
Transfers of this Letter of Credit are subject to receipt of Beneficiary's (and
subsequently, transferee's) instructions in the form attached hereto as Exhibit
A accompanied by the original Letter of Credit and amendments(s) if any.

         This Letter of Credit is subject to and governed by the Laws of the
State of New York and the 1993 revision of the Uniform Customs and Practice for
Documentary Credits of the International Chamber of Commerce (Publication 500)
and, in the event of any conflict, the Laws of the State of New York will
control. If this Credit expires during an interruption of business as described
in article 17 of said Publication 500, the bank hereby specifically agrees to
effect payment if this Credit is drawn against within 30 days after the
resumption of business.

                                                     Very truly yours,

                                                     -------------------------
                                                              [issuing bank]

                                    Exhibit E

<PAGE>

                         Exhibit A to Letter of Credit

_____________________________
c/o _________________________
_____________________________
_____________________________
Attention:____________________

             Re: Irrevocable Letter of Credit No. ________________

Ladies & Gentlemen:

         The undersigned acknowledges receipt of your advice No. ______________
of a credit issued in our favor, the terms of which are satisfactory. We now
return the original advice of the said credit with all amendments and
extensions, if any, and hereby irrevocably transfer the said credit and all
amendments and extensions thereof, if any, to:

                         _____________________________
                              [Name of Transferee]

                         _____________________________
                                    [Address]

         You are to inform the transferee of this transfer and such transferee
shall have sole rights as beneficiary under the credit, including any
amendments, extension or increases thereof, without notice to or further assent
from us.

         This transfer is at no charge or cost to Beneficiary or the transferee.

                                    Yours very truly,

                                    Beneficiary

                                    By:_______________________

                                    _______________________
                                              (Bank

                                    Exhibit E

<PAGE>

                                    EXHIBIT F
          FORM OF SUBORDINATION, NONDISTURBANCE & ATTORNMENT AGREEMENT

RECORDING REQUESTED
BY AND WHEN
RECORDED RETURN TO:

____________________, Esq.
____________________
____________________
____________________

                                 SUBORDINATION,
                                 NONDISTURBANCE
                            AND ATTORNMENT AGREEMENT

NOTICE:  THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT RESULTS IN
         YOUR LEASEHOLD ESTATE IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER
         PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT.

                                  DEFINED TERMS

EXECUTION DATE:
--------------------------------------------------------------------------------
BENEFICIARY & ADDRESS:

Attn:
with a copy to:

--------------------------------------------------------------------------------
TENANT & ADDRESS:

--------------------------------------------------------------------------------
LANDLORD & ADDRESS:

--------------------------------------------------------------------------------
LOAN: A first mortgage loan in the original principal amount of $
     from Beneficiary to Landlord.
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NOTE: A Promissory Note executed by Landlord in favor of Beneficiary in the
      amount of the Loan dated as of
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DEED OF TRUST: A Deed of Trust, Security Agreement and Fixture Filing dated as
of executed by Landlord, to       as Trustee, for the benefit of Beneficiary
securing repayment of the Note to be recorded in the records of the County in
which the Property is located.

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LEASE AND LEASE DATE: The lease entered into by Landlord and Tenant dated as of
              covering the Premises.
[Add amendments]

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PROPERTY:  [Property Name]
           [Street Address 1]
           [City, State, Zip]

           The Property is more particularly described on Exhibit A.

                  THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT
(the "Agreement") is made by and among Tenant, Landlord, and Beneficiary and
affects the Property described in Exhibit A. Certain terms used in this
Agreement are defined in the Defined Terms. This Agreement is entered into as of
the Execution Date with reference to the following facts:

                  A.       Landlord and Tenant have entered into the Lease
covering certain space in the improvements located in and upon the Property (the
"Premises").

                  B.       Beneficiary has made or is making the Loan to
Landlord evidenced by the Note.

                                   Exhibit F
<PAGE>

The Note is secured, among other documents, by the Deed of Trust.

                  C.       Landlord, Tenant and Beneficiary all wish to
subordinate the Lease to the lien of the Deed of Trust.

                  D.       Tenant has requested that Beneficiary agree not to
disturb Tenant's rights in the Premises pursuant to the Lease in the event
Beneficiary forecloses the Deed of Trust, or acquires the Property pursuant to
the trustee's power of sale contained in the Deed of Trust or receives a
transfer of the Property by a conveyance in lieu of foreclosure of the Property
(collectively, a "Foreclosure Sale") but only if Tenant is not then in default
under the Lease beyond applicable notice and cure periods and Tenant attorns to
Beneficiary or a third party purchaser at the Foreclosure Sale (a "Foreclosure
Purchaser").

                  NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows:

                  1.       Subordination. The Lease and the leasehold estate
created by the Lease and all of Tenant's rights under the Lease are and shall
remain subordinate to the Deed of Trust and the lien of the Deed of Trust, to
all rights of Beneficiary under the Deed of Trust and to all renewals,
amendments, modifications and extensions of the Deed of Trust.

                  2.       Acknowledgements by Tenant. Tenant agrees that: (a)
Tenant has notice that the Lease and the rent and all other sums due under the
Lease have been or are to be assigned to Beneficiary as security for the Loan.
In the event that Beneficiary notifies Tenant of a default under the Deed of
Trust and requests Tenant to pay its rent and all other sums due under the Lease
to Beneficiary, Tenant shall pay such sums directly to Beneficiary or as
Beneficiary may otherwise request; (b) Tenant shall send a copy of any default
notice under the Lease to Beneficiary at the same time Tenant sends such default
notice to Landlord; and (c) this Agreement satisfies any condition or
requirement in the Lease relating to the granting of a nondisturbance agreement.

                  3.       Foreclosure and Sale. In the event of a Foreclosure
Sale:

                           (a)      So long as Tenant complies with this
         Agreement and is not in default under any of the provisions of the
         Lease beyond applicable notice and cure periods, the Lease shall
         continue in full force and effect as a direct lease between Beneficiary
         and Tenant, and Beneficiary will not disturb the possession of Tenant,
         subject to this Agreement. To the extent that the Lease is extinguished
         as a result of a Foreclosure Sale, a new lease shall automatically go
         into effect upon the same provisions as contained in the Lease between
         Landlord and Tenant, except as set forth in this Agreement, for the
         unexpired term of the Lease. Tenant agrees to attorn to and accept
         Beneficiary as landlord under the Lease and to be bound by and perform
         all of the obligations imposed by the Lease, or, as the case may be,
         under the new lease, in the event that the Lease is extinguished by a
         Foreclosure Sale. Upon Beneficiary's acquisition of title to the
         Property, Beneficiary will perform all of the obligations imposed on
         the Landlord by the Lease except as set forth in this Agreement;
         provided, however, that Beneficiary shall not be: (i) liable for any
         act or omission of a prior landlord (including Landlord) except to the
         extent arising out of a default continuing after Beneficiary's
         acquisition of title to the Property; or (ii) subject to any offsets or
         defenses that Tenant might have against any prior landlord (including
         Landlord); or (iii) bound by any rent or additional rent which Tenant
         might have paid in advance to any prior landlord (including Landlord)
         for a period in excess of one month or by any security deposit,
         cleaning deposit or other sum that Tenant may have paid in advance to
         any prior landlord (including Landlord) except to the extent actually
         received by Beneficiary; or (iv) bound by any amendment, modification,
         assignment or termination of the Lease made without the written consent
         of Beneficiary; (v) obligated or liable with respect to any
         representations, warranties or indemnities contained in the Lease; or
         (vi) liable to Tenant or any other party for any conflict between the
         provisions of the Lease and the provisions of any other lease affecting
         the Property which is not entered into by Beneficiary.

                           (b)      Upon the written request of Beneficiary
         after a Foreclosure Sale, the parties shall execute a lease of the
         Premises upon the same provisions as contained in the Lease between
         Landlord and Tenant, except as set forth in this Agreement, for the
         unexpired term of the Lease.

                           (c)      Notwithstanding any provisions of the Lease
         to the contrary, from and after the date that Beneficiary acquires
         title to the Property as a result of a Foreclosure Sale, (i)
         Beneficiary will not be obligated to expend any monies to restore
         casualty damage in excess of available insurance proceeds; (ii) tenant
         shall not have the right to make repairs and deduct the cost of such
         repairs from the rent without a judicial determination that Beneficiary
         is in default of its obligations under the Lease; (iii) in no event
         will Beneficiary be obligated to indemnify Tenant, except where
         Beneficiary has been actively negligent in the performance of its
         obligations as landlord; and (iv) other than determination of fair
         market value, no disputes under the Lease shall be subject to
         arbitration unless Beneficiary and Tenant agree to submit a particular
         dispute to arbitration.

                  4.       Subordination and Release of Purchase Options. Tenant
represents that it has no right or option of any nature to purchase the Property
or any portion of the Property or any interest in the Borrower. To the extent
Tenant has or acquires any such right or option, these rights or options are
acknowledged to be subject and subordinate to the Mortgage and are waived and
released as to Beneficiary and any Foreclosure Purchaser.

                                   Exhibit F
<PAGE>

                  5.       Acknowledgement by Landlord. In the event of a
default under the Deed of Trust, at the election of Beneficiary, Tenant shall
and is directed to pay all rent and all other sums due under the Lease to
Beneficiary.

                  6.       Construction of Improvements. Beneficiary shall not
have any obligation or incur any liability with respect to the completion of the
improvements in which the Premises are located at the commencement of the term
of the Lease.

                  7.       Notice. All notices under this Agreement shall be
deemed to have been properly given if delivered by overnight courier service or
mailed by United States certified mail, with return receipt requested, postage
prepaid to the party receiving the notice at its address set forth in the
Defined Terms (or at such other address as shall be given in writing by such
party to the other parties) and shall be deemed complete upon receipt or refusal
of delivery.

                  8.       Miscellaneous. Beneficiary shall not be subject to
any provision of the Lease that is inconsistent with this Agreement. Nothing
contained in this Agreement shall be construed to derogate from or in any way
impair or affect the lien or the provisions of the Deed of Trust. This Agreement
shall be governed by and construed in accordance with the laws of the State of
in which the Property is located.

                  9.       Liability and Successors and Assigns. In the event
that Beneficiary acquires title to the Premises or the Property, Beneficiary
shall have no obligation nor incur any liability beyond the lesser of (a) Five
Million Dollars ($5,000,000.00) or (b) Beneficiary's then equity interest in the
Property and Tenant shall look solely to Beneficiary's then equity interest for
the payment and performance of any obligations imposed upon Beneficiary under
this Agreement or under the Lease but Tenant's recourse against Beneficiary
shall in no event exceed the amount of Five Million Dollars ($5,000,000.00).
This Agreement shall run with the land and shall inure to the benefit of the
parties and, their respective successors and permitted assigns including a
Foreclosure Purchaser. If a Foreclosure Purchaser acquires the Property or if
Beneficiary assigns or transfers its interest in the Note and Deed of Trust or
the Property, all obligations and liabilities of Beneficiary under this
Agreement shall terminate and be the responsibility of the Foreclosure Purchaser
or other party to whom Beneficiary's interest is assigned or transferred. The
interest of Tenant under this Agreement may not be assigned or transferred
except in connection with an assignment of its interest in the Lease which has
been consented to by Beneficiary.

                  IN WITNESS WHEREOF, the parties have executed this
Subordination, Nondisturbance and Attornment Agreement as of the Execution Date.

NOTICE:                    THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
                           AGREEMENT CONTAINS PROVISIONS WHICH ALLOW THE PERSON
                           OBLIGATED ON THE LEASE TO OBTAIN A LOAN, A PORTION OF
                           WHICH MAY BE EXPENDED FOR OTHER PURPOSES THAN
                           IMPROVEMENT OF THE PROPERTY.

IT IS RECOMMENDED THAT THE PARTIES CONSULT WITH THEIR ATTORNEYS PRIOR TO THE
EXECUTION OF THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT.

BENEFICIARY:                                ___________________________________,
                                            ___________________________________

                                            By _________________________________
                                            Its ____________________________

TENANT:                                     ___________________________________,
                                            a _________________________________

                                            By ________________________________
                                            Its ____________________________

LANDLORD:                                   ___________________________________,
                                            a _________________________________

                                            By ________________________________
                                            Its ____________________________

                                   Exhibit F
<PAGE>

                                    EXHIBIT A

                              PROPERTY DESCRIPTION

                                   Exhibit F
<PAGE>

State of _____________

County of ____________

On ______________, 200___ before me, ____________________, personally appeared
___________________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and official seal.

Signature ________________________________           (Seal)

*****************

State of _____________

County of ____________

On ______________, 200___ before me, ____________________, personally appeared
___________________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and official seal.

Signature ________________________________           (Seal)

*****************

State of _____________

County of ____________

On ______________, 200__ before me, ____________________, personally appeared
___________________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and official seal.

Signature ________________________________           (Seal)

                                   Exhibit F
<PAGE>

                                     RIDER 1
                           COMMENCEMENT DATE AGREEMENT

Metropolitan Life Insurance Company, a New York corporation ("Landlord"), and
Argonaut Technologies, Inc., a Delaware corporation ("Tenant"), have entered
into a certain Lease dated as of March , 2004 (the "Lease").

WHEREAS, Landlord and Tenant wish to confirm and memorialize the Commencement
Date and Expiration Date of the Lease as provided for in Section 2.02(b) of the
Lease;

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained herein and in the Lease, Landlord and Tenant agree as follows:

         1.       Unless otherwise defined herein, all capitalized terms shall
have the same meaning ascribed to them in the Lease.

         2.       The Commencement Date (as defined in the Lease) of the Lease
is __________________.

         3.       The Expiration Date (as defined in the Lease) of the Lease is
 __________________.

         4. Tenant hereby confirms the following:

                  (a)      That it has accepted possession of the premises
                           pursuant to the terms of the Lease;

                  (b)      That the Landlord Work, if any, is Substantially
                           Complete; and

                  (c) That the Lease is in full force and effect.

         5.       Except as expressly modified hereby, all terms and provisions
of the Lease are hereby ratified and confirmed and shall remain in full force
and effect and binding on the parties hereto.

         6.       The Lease and this Commencement Date Agreement contain all of
the terms, covenants, conditions and agreements between the Landlord and the
Tenant relating to the subject matter herein. No prior other agreements or
understandings pertaining to such matters are valid or of any force and effect.

         IN WITNESS WHEREOF, Landlord and Tenant have executed this Commencement
Date Agreement and such execution and delivery have been duly authorized.

TENANT:                                     LANDLORD:
------                                      --------

Argonaut Technologies, Inc.                 Metropolitan Life Insurance Company,
a Delaware corporation                      a New York corporation

By  ________________________________        By  ________________________________

    ________________________________            ________________________________
             Print name                                    Print name
Its ________________________________        Its ________________________________
(Chairman of Board, President or
 Vice President)

By  ________________________________

    ________________________________
             Print name
Its ________________________________

(Secretary, Assistant Secretary, CFO or Assistant Treasurer)

                             Rider 1 - Page 1 of 1

<PAGE>

                                     RIDER 2
                              ADDITIONAL PROVISIONS

         This Rider 2 ("Rider") is attached to and a part of a certain Lease
dated as of March __, 2004, executed concurrently herewith by Metropolitan Life
Insurance Company, a New York corporation, as Landlord, and Argonaut
Technologies, Inc., a Delaware corporation (for purposes of this Rider,
"Argonaut"), as Tenant, for the Premises as described therein (the "Lease").

SECTION 1.        DEFINED TERMS; FORCE AND EFFECT

Capitalized terms used in this Rider shall have the same meanings set forth in
the Lease except as otherwise specified herein and except for terms capitalized
in the ordinary course of punctuation. This Rider forms a part of the Lease.
Should any inconsistency arise between this Rider and any other provision of the
Lease as to the specific matters which are the subject of this Rider, the terms
and conditions of this Rider shall control.

SECTION 2.        (intentionally omitted)

SECTION 3.        CONDITION OF PREMISES; DELIVERY; CONSTRUCTION PERIOD;
COMMENCEMENT DATE; TERM

         3.1.     AS-IS Condition. Tenant hereby leases and Landlord shall
deliver the Premises to Tenant in its AS IS condition, without any express or
implied representations or warranties of any kind by Landlord, its brokers,
manager or agents, or the employees of any of them regarding the Premises; and
Landlord shall not have any obligation to construct or install any tenant
improvements or alterations or to pay for any such construction or installation
except to the extent of any Allowance specifically provided in the Workletter.
Any Tenant Work and Landlord Work, if any, shall be subject to and governed by
the Workletter and other applicable provisions of this Lease.

         3.2.     Projected Delivery Date; Delivery Date; Commencement Date:
Tenant's Obligations During Construction Period; Term.

         (a)      Landlord shall tender possession of the Premises to Tenant no
later than April 1, 2004 (the "Projected Delivery Date"). On the date Landlord
actually tenders possession of the Premises to Tenant in the required condition
(the "Delivery Date"), the Premises shall be subject to, and Tenant shall
observe and perform, all the conditions and covenants applicable to Tenant under
this Lease, except as otherwise expressly provided in this Rider. During the
period (the "Construction Period") from the Delivery Date until the Commencement
Date (defined below), in recognition of Tenant's construction and installations
in, and preparation of, the Premises for the use and occupancy permitted by this
Lease, Tenant shall not be obligated to pay Monthly Base Rent, Rent Adjustment
Deposits or Rent Adjustments. The Term of this Lease shall be as shown in
Section 1.01(5) of the Basic Lease Provisions and shall commence on the date
specified in Section 1.01(6) of the Basic Lease Provisions as the Projected
Commencement Date, which same date shall be the Commencement Date of the Term,
except as provided in Section 3.3 below with respect to late delivery.

         (b)      If the Commencement Date occurs on any date other than the
Projected Commencement Date, then within thirty (30) days following the
occurrence of the Commencement Date, upon request by Landlord, Tenant and
Landlord shall enter into an agreement (which is attached to this Lease as Rider
1) confirming the Commencement Date and the Expiration Date. If Tenant fails to
enter into such agreement, then the Commencement Date and the Expiration Date
shall be the dates designated by Landlord in such agreement.

         3.3      Failure to Deliver Possession.

         (a)      If Landlord shall be unable to give possession of the Premises
on the Projected Delivery Date by reason of the following: (i) the holding over
or retention of possession of any tenant, tenants or occupants, or (ii) for any
other reason beyond the reasonable control of Landlord, then Landlord shall not
be subject to any liability for the failure to give possession on said date so
long as Landlord has used and continues to use reasonable efforts to deliver
possession to Tenant as soon as possible. Under such circumstances the Projected
Commencement Date and Commencement Date shall be delayed by a number of days
equal to the days of delay in Landlord's delivery of possession to Tenant. No
such failure to give possession on the originally scheduled Projected
Commencement Date shall affect the validity of this Lease or the obligations of
the Tenant hereunder. If Rider 2 or the Workletter requires that any Landlord
Work or Tenant Work or both be Substantially Complete as an element of
determining when the Delivery Date or Commencement Date occurs, then such work
shall be deemed Substantially Complete if the delay in achieving actual
Substantial Completion shall be due to any Tenant Delay and/or default on the
part of Tenant. In the event of any dispute as to whether the applicable work is
Substantially Complete, the decision of Landlord's architect shall be final and
binding on the parties.

         (b)      Notwithstanding any of the foregoing provisions of this
Section 3.3 to the contrary, if Landlord has not tendered possession of the
Premises on or before the Sunset Date (defined below), then, as Tenant's sole
and exclusive remedy, Tenant shall have the option to terminate this Lease
exercisable by giving written notice to Landlord within three (3) business days
after the Sunset Date. If Tenant does not timely give notice of its election to
terminate this Lease as aforesaid and delivery of possession does not occur on
or before the date which is thirty (30) days following the Sunset Date, then
Tenant shall again have such option to terminate this Lease in the manner
described above and such date shall constitute the new

                              Rider 2 - Page 1 of 5
<PAGE>

Sunset Date; it being the intention of the parties that Tenant shall have a
recurring termination option after each such thirty (30) day period following
the initial Sunset Date if Landlord has not tendered possession by the end of
each such thirty (30) day period. As used in this Lease, "Sunset Date" means the
initial Sunset Date which is thirty (30) days after the Projected Delivery Date
and any succeeding new Sunset Dates (at thirty (30) day intervals after the
initial Sunset Date). On or before the Sunset Date, if such date includes any
period of Force Majeure, Landlord shall give Tenant written notice of the
resulting calendar date which is the Sunset Date.

SECTION 4.        MONUMENT SIGNAGE.

         (a)      Grant of Right. Notwithstanding any provision of Section 6.06
of the Lease to the contrary, Tenant shall have the right to place Tenant
identification on one line of the existing, exterior monument sign for the
Building in which the Premises are located, subject to the terms and conditions
set forth in this Section ("Exterior Sign Right").

         (b)      General Conditions & Requirements. The size, type, style,
materials, color, method of installation and exact location of the sign, and the
contractor for and all work in connection with the sign, contemplated by this
Section shall (i) be subject to Tenant's compliance with all applicable laws,
regulations and ordinances and with any covenants, conditions and restrictions
of record which affect the Property; (ii) be subject to Tenant's compliance with
all requirements of Landlord's current Project signage criteria at the time of
installation; (iii) be consistent with the design of the Building and the
Project; (iv) be further subject to Landlord's prior written consent, which
consent shall not be unreasonably withheld. Tenant shall, at its sole cost and
expense, procure, install, maintain in first class appearance and condition, and
remove such sign.

         (c)      Removal & Restoration. Upon the expiration or termination of
the Exterior Sign Right, but in no event later than the expiration of the Term
or earlier termination of the Lease, Tenant shall, at its sole cost and expense,
remove such sign and shall repair and restore the area in which the sign was
located to its condition prior to installation of such sign.

         (d)      Right Personal. The Exterior Sign Right under this Section is
personal to Argonaut and may not be used by, and shall not be transferable or
assignable (voluntarily or involuntarily) to any person or entity other than an
assignee of the Lease or a subtenant of all or substantially all the Premises,
in each case which is either a Permitted Transferee or approved by Landlord
pursuant to the Lease.

SECTION 5.        TENANT'S TERMINATION OPTION.

Landlord hereby grants Tenant a single option (the "Termination Option") to
accelerate the Expiration Date of the Term of the Lease, upon and subject to the
terms and conditions set forth below:

         (a)      Exercise. The Termination Option is exercisable only by
written notice (the "Termination Notice") given by Tenant to Landlord no later
than the last day of the thirty-ninth (39th) month after the Commencement Date.
Exercise of this Termination Option shall accelerate the Expiration Date to that
date (the "Early Termination Date") which is the last day of the forty-eighth
(48th) month after the Commencement Date.

         (b)      Termination Fee. Within thirty (30) days after notice from
Landlord, Tenant shall pay Landlord the "Termination Fee", which as used herein
shall mean the amount equal to the unamortized portion as of the Early
Termination Date of the "Transactional Costs" (as defined below) plus interest
at eight percent (8%) per annum amortized on a straight line basis in equal
monthly installments over a period of five (5) years (beginning on the
Commencement Date). As used herein, "Transactional Costs" means Seven Hundred
Eighty-six Thousand Seventy-one Dollars ($786,071.00).

         (c)      Conditions. Notwithstanding anything to the contrary contained
herein, all rights of Tenant pursuant to the Termination Option shall terminate
at Landlord's option upon written notice from Landlord to Tenant, and shall be
of no further force and effect, whereupon no prior or subsequent exercise of the
Termination Option shall be of any force or effect, and the Lease shall continue
in full force and effect in any of the following events:

         (1) Tenant does not timely pay Landlord the Termination Fee as provided
         above; or

         (2) at the time of exercise of the Termination Option or at any time
         thereafter through the Early Termination Date, Tenant shall be in
         breach of and default under the Lease or there exists any act or
         omission on the part of Tenant which, with the passage of time or the
         giving of notice, or both, would constitute a breach of and default
         under the Lease, and in such event, any Termination Fee paid to
         Landlord shall be held by Landlord as a Security Deposit governed by
         the provisions of Article Five of the Lease.

         (d)      After Exercise. Upon and after Tenant's exercise of the
Termination Option, all of the terms and conditions of the Lease shall continue
to apply except the Expiration Date of the Lease shall be the Early Termination
Date and the term of the Lease shall be adjusted accordingly. Without limiting
the generality of the foregoing, in addition to payment of the Termination Fee,
Tenant shall timely pay Landlord all other amounts as and when they become due
and payable under the Lease accruing through the Early Termination Date.

                              Rider 2 - Page 2 of 5
<PAGE>

         (e)      Time. Without limiting the generality of any provision of the
Lease, time shall be of the essence with respect to all of the provisions of
this Section.

         (f)      Option Personal. The Termination Option is personal to
Argonaut and may not be exercised by, and shall not be transferable or
assignable (voluntarily or involuntarily) to any other person or entity other
than a Permitted Transferee which is an assignee of the Lease and which has
satisfied the requirements of Sections 10.01 and 10.05 of this Lease, and such
Permitted Transferee may exercise the right without Tenant joining in or
consenting to such exercise, and notwithstanding anything to the contrary,
Tenant shall remain liable for all obligations under the Lease, including those
resulting from any such exercise with the same force and effect as if Tenant had
joined in such exercise.

SECTION 6.        OPTION TO EXTEND.

         (a)      Landlord hereby grants Tenant a single option ("Option") to
extend the initial Term of the Lease for an additional period of three (3) years
(such period may be referred to as the "Option Term"), as to the entire Premises
as it may then exist, upon and subject to the terms and conditions of this
Section (the "Option To Extend"), and provided that at the time of exercise of
the option: (i) Tenant or a Permitted Transferee must be in occupancy of at
least seventy-five percent (75%) of the Premises; and (ii) there has been no
material adverse change in Tenant's financial position from such position as of
the date of execution of the Lease, as certified by Tenant, and as supported by
Tenant's certified financial statements prepared by Tenant's independent
certified public accountants, copies of which shall be delivered to Landlord
with Tenant's written notice exercising its option hereunder. Without limiting
the generality of the foregoing, Landlord may reasonably conclude there has been
a material adverse change if Tenant does not certify there has been no such
change and provide the supporting financial statements.

         (b)      Tenant's election (the "Election Notice") to exercise the
Option To Extend must be given to Landlord in writing no earlier than the date
which is twelve (12) months prior to, and no later than the date which is nine
(9) months prior to, the Expiration Date . If Tenant either fails or elects not
to exercise the then applicable Option to Extend by not timely giving its
Election Notice, then such Option to Extend shall be null and void.

         (c)      The Option Term shall commence immediately after the
expiration of the preceding initial Term or Option Term, as applicable. Tenant's
leasing of the Premises during the Option Term shall be upon and subject to the
same terms and conditions contained in the Lease except that: (i) the Monthly
Base Rent shall be amended to an amount to equal the "Option Term Rent", defined
and determined in the manner set forth in the immediately following Subsection
(and otherwise, Tenant shall continue to pay Rent Adjustments, all other Rent
and all other charges pursuant to the Lease and Tenant shall continue to pay
directly the utility or service provider for all utilities or services which
Tenant is to obtain directly pursuant to other provisions of the Lease); (ii)
the Security Deposit, if any, shall be increased within fifteen (15) days after
the Fair Market Rental Rate (defined below) has been determined to equal five
hundred percent (500%) of the highest monthly installment of Monthly Base Rent
thereunder, but in no event shall the Security Deposit be decreased; and (iii)
Tenant shall accept the Premises in its "AS-IS" condition without any obligation
of Landlord to repaint, remodel, repair, improve or alter the Premises or to
provide Tenant any allowance therefor. If Tenant timely and properly exercises
the Option To Extend, references in the Lease to the Term shall be deemed to
mean the initial Term as extended by the Option Term unless the context clearly
requires otherwise.

         (d)      The Option Term Rent shall mean the greater of (i) the Monthly
Base Rent payable by Tenant under this Lease calculated at the rate applicable
for the last full month of the initial Term (respectively, the "Preceding Rent")
(during the Option Term, Tenant shall continue to pay Rent Adjustments and other
charges pursuant to the Lease and Tenant shall continue to pay directly the
utility or service provider for all utilities or services which Tenant is to
obtain directly pursuant to other provisions of the Lease, but such amounts
shall not be counted as part of the Preceding Rent as used herein) or (ii) the
"Fair Market Rental Rate". "Fair Market Rental Rate" shall mean as to Monthly
Base Rent the monthly net rental (exclusive of expenses and taxes) per rentable
square foot which a tenant would pay and which a willing landlord would accept
for first class office and laboratory space comparable to the Premises in the
Project for the period for which such rental is to be paid and for a lease on
terms substantially similar to those of the Lease (including, without
limitation, those applicable to Taxes, Operating Expenses and exclusions, but
also considering so-called net and triple net leases, and leases utilizing
operating expense stops or base years, and making appropriate adjustment between
such leases and this Lease, as described below), based on prevailing market
conditions in the Project at the time such determination is made ("Comparable
Transactions"). Without limiting the generality of the foregoing, Comparable
Transactions shall be for a term similar to the term of tenancy and for space
comparable in use, floor layout and levels (if the Building has more than one
level), square footage and location within the Project as the transaction for
which Fair Market Rental Rate is being determined; however, leases of unusual or
odd shaped spaces shall not be considered. In any determination of Fair Market
Rental Rate, the stated or contract monthly net rental in Comparable
Transactions shall be appropriately adjusted to take into account the different
terms and conditions prevailing in such transactions and those present in the
Lease, including, without limitation: (1) the extent to which average annual
expenses and taxes per rentable square foot payable by tenants in Comparable
Transactions vary from those payable by Tenant under the Lease; (2) the
concessions, if any, being given by the landlord in Comparable Transactions,
such as presence or absence of parking charges, abatement of any such charges,
rental abatement periods, loans at below-market interest rates, moving
allowances, space planning allowances, lease takeover payments and work
allowances, as compared to any tenant improvement, refurbishment or repainting
allowance given to Tenant under the Lease for the space for which Fair Market
Rental Rate is being determined; (3)

                              Rider 2 - Page 3 of 5
<PAGE>

the brokerage commissions, fees and bonuses payable by landlords in Comparable
Transactions (whether to tenant's agent, such landlord or any person or entity
affiliated with such landlord), as compared to any such amounts payable by
Landlord to any recognized broker(s) on account of the transaction for which
Fair Market Rental Rate is being determined; (4) the time value of money; and
(5) any material difference between the definition of rentable area and the
ratio of project rentable to useable square feet in Comparable Transactions, as
compared to such figures applicable to the space for which Fair Market Rental
Rate is being determined.

         (e)      The determination of Fair Market Rental Rate based upon the
foregoing criteria shall be made by Landlord, in the good faith exercise of
Landlord's business judgment. Within forty-five (45) days after Tenant's
exercise of the Option To Extend, Landlord shall notify Tenant of Landlord's
determination of Option Term Rent for the Premises. If Landlord notifies Tenant
that the Option Term Rent shall equal the Preceding Rent, such determination
shall be conclusive and binding to set the Preceding Rent as the Option Term
Rent for the then applicable Option Term, and Tenant shall not be entitled or
required to give further notice, and the extension shall be effective and
binding (subject to Subsection (j) below). Provided however, if Landlord
notifies Tenant that Landlord has determined that the Fair Market Rental Rate is
greater than the Preceding Rent and that Landlord will require such Fair Market
Rental Rate as the Option Term Rent, Tenant may, within fifteen (15) days after
receipt thereof, deliver to Landlord a written notice either accepting
Landlord's estimate of Fair Market Rental Rate or setting forth Tenant's
estimate of Fair Market Rental Rate, in which case Landlord and Tenant will
promptly meet and attempt to agree upon Fair Market Rental Rate. Tenant's
failure to timely deliver such notice within such fifteen (15) day period shall
be deemed its cancellation of the Option. If no agreement in writing on Fair
Market Rental Rate can be reached within ten (10) business days after Landlord's
receipt of Tenant's estimate, Landlord and Tenant shall meet within an
additional ten (10) business days and each simultaneously submit to the other in
a sealed envelope its good faith estimate of Fair Market Rental Rate (the
"Estimates"). If the higher Estimate is not more than one hundred five percent
(105%) of the lower Estimate, then Fair Market Rental Rate shall be the average
of the two Estimates. If such simultaneous submission of Estimates does not
occur within such ten (10) business day period, then either party may by notice
to the other designate any reasonable time within five (5) business days
thereafter and any reasonable place at or near the Building for such meeting to
take place. In the event only one party submits an Estimate at that meeting,
such Estimate shall be Fair Market Rental. In the event neither party submits an
Estimate at that meeting, the transaction for which Fair Market Rental Rate is
being determined shall be deemed canceled and of no further force or effect.

         (f)      If the higher Estimate is more than one hundred five percent
(105%) of the lower Estimate, then either Landlord or Tenant may, by written
notice given to the other at any time within five (5) business days after
receipt of the Estimates, require that the disagreement be resolved by
arbitration. In the event neither party gives such written notice within such
period, the transaction for which Fair Market Rental Rate is being determined
shall be deemed canceled and of no further force or effect. Within five (5)
business days after such notice, the parties shall select as arbitrators three
(3) mutually acceptable independent MAI appraisers with experience in real
estate activities, including at least five (5) years experience in appraising
space in the San Bernardino-Riverside warehouse/industrial market ("Qualified
Appraisers"). If the parties cannot timely agree on such arbitrators, then
within the following five (5) business days, each shall select and inform the
other party of one (1) Qualified Appraiser and within a third period of five (5)
business days, the two appraisers (or if only one (1) has been duly selected,
such single appraiser) shall select as arbitrators a panel of three additional
Qualified Appraisers, which three arbitrators shall proceed to determine Fair
Market Rental Rate pursuant to Section 4 below. Both Landlord and Tenant shall
be entitled to present evidence supporting their respective positions to the
panel of three arbitrators.

         (g)      Once a panel of arbitrators has been selected as provided
above, then as soon thereafter as practicable each arbitrator shall select one
of the two Estimates as the one which, in its opinion, is closer to Fair Market
Rental Rate. The determination by the arbitrators shall be in accordance with
the definition and standards for the determination of the Fair Market Rental
Rate as set forth above, and in no event shall any arbitrator modify any
provision of the Lease in arriving at his or her determination. Upon an
Estimate's selection by two (2) of the arbitrators, it shall be the applicable
Fair Market Rental Rate and such selection shall be binding upon Landlord and
Tenant. If the arbitrators collectively determine that expert advice is
reasonably necessary to assist them in determining Fair Market Rental Rate, then
they may retain one or more qualified persons, including but not limited to
legal counsel, brokers, architects or engineers, to provide such expert advice,
provided however, any such advice and consultation shall be in the presence of
all the arbitrators, Landlord and Tenant, with full right on the part of each to
cross-examine. The party whose Estimate is not chosen by the arbitrators shall
pay the costs of the arbitrators and any experts retained by the arbitrators.
Any fees of any counsel or expert engaged directly by Landlord or Tenant,
however, shall be borne by the party retaining such counsel or expert.

         (h)      In the event the determination of the Fair Market Rental Rate
has been submitted to arbitration but such arbitration has not been concluded
prior to the commencement of the applicable Option Term, Tenant shall pay to
Landlord the amount set forth in Landlord's Estimate under Subsection (e) above
(plus all other Rent due for the Option Term). In the event the Fair Market
Rental Rate determined by arbitration results in any Monthly Base Rent different
from such amount, Tenant shall immediately pay to Landlord any greater amount so
determined by arbitration and if a lesser amount is determined due by
arbitration, Landlord shall give Tenant a credit against the next Monthly Base
Rent installments due from Tenant to Landlord under the Lease.

         (i)      This Option to Extend is personal to Argonaut and may not be
used by, and shall not be

                              Rider 2 - Page 4 of 5
<PAGE>

transferable or assignable (voluntarily or involuntarily) to any person or
entity other than a Permitted Transferee which is an assignee of the Lease and
which has satisfied the requirements of Sections 10.01 and 10.05 of this Lease,
and such Permitted Transferee may exercise the right without Tenant joining in
or consenting to such exercise, and notwithstanding anything to the contrary,
Tenant shall remain liable for all obligations under the Lease, including those
resulting from any such exercise with the same force and effect as if Tenant had
joined in such exercise.

         (j)      Upon the occurrence of any of the following events, Landlord
shall have the option, exercisable at any time prior to commencement of the
Option Term, to terminate all of the provisions of this Section with respect to
the Option to Extend, with the effect of canceling and voiding any prior or
subsequent exercise so this Option to Extend is of no force or effect:

                  (i)      Tenant's failure to timely exercise the Option to
     Extend in accordance with the provisions of this Section.

                  (ii)     The existence at the time Tenant exercises the Option
     to Extend or at the commencement of the Option Term of any Default.

         (k)      Without limiting the generality of any provision of the Lease,
time shall be of the essence with respect to all of the provisions of this
Section.

         IN WITNESS WHEREOF, the parties hereto have executed this Rider 2 as of
the date first set forth in the Lease.

TENANT:                                     LANDLORD:

Argonaut Technologies, Inc.                 Metropolitan Life Insurance Company,
a Delaware corporation                      a New York corporation

By  ________________________________        By  ________________________________

    ________________________________            ________________________________
             Print name                                    Print name
Its _________________________________       Its ________________________________
(Chairman of Board, President or
 Vice President)

By  ________________________________

    ________________________________
             Print name
Its ________________________________

(Secretary, Assistant Secretary, CFO or Assistant Treasurer)

                             Rider 2 - Page 5 of 5