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                                                                   EXHIBIT 10.63

                            FIRST AMENDMENT TO LEASE

                                (Nexus/Epimmune)


         THIS FIRST AMENDMENT TO LEASE (this "Amendment") is effective as of
February 1, 1999, by and between NEXUS EQUITY VIII LLC, a California limited
liability company, and EPIMMUNE INC., a Delaware corporation, "Landlord" and
"Tenant", respectively, under that certain Lease (the "Lease") dated as of
November 1, 1998, for the Premises described in the Lease.

         The Lease is hereby amended as set forth herein.

         Section 1.1 is revised to correct the street address of the Premises
from 5880 Nancy Ridge Drive to 5820 Nancy Ridge Drive, San Diego, California.

         Section 2.1.1 is amended to correct the street address of the Project
from 5880 Nancy Ridge Drive to 5810 and 5820 Nancy Ridge Drive, San Diego,
California.

         Section 2.1.3 is amended to correct the approximate Rentable Area of
the Premises from 24,000 square feet to 24,299 square feet.

         Section 2.1.4 is amended to correct the Basic Annual Rent from $471,744
to $475,152 ($1.638 per square foot per month for the approximately 24,000
square feet of Rentable Area occupied by Tenant, and $.95 per square foot per
month for the approximately 299 square feet of the electrical room included in
the Rentable Area, subject to adjustment pursuant to Sections 4.3, 6.1, and
8.3).

         Section 2.1.5 is amended to correct the Monthly Installment of Basic
Annual Rent from $39,312 to $39,596 ($1.638 per square foot per month for the
approximately 24,000 square feet of Rentable Area occupied by Tenant, and $.95
per square foot per month for the approximately 299 square feet of the
electrical room included in the Rentable Area, subject to adjustment pursuant to
Sections 4.3, 6.1, and 8.3).

         Section 2.1.6 and Section 7.3 are amended to correct Tenant's Pro Rata
Share from 29.2% to 29.526%.

         Section 2.1.10 is amended to correct the address for notices to Tenant
after occupancy from 5880 Nancy Ridge Drive to 5820 Nancy Ridge Drive, San
Diego, California.


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         In all other respects, the Lease shall remain in full force and effect
as originally written.

         IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment to Lease as of the date first above written.

LANDLORD:

NEXUS EQUITY VIII LLC
A California limited liability company
By Nexus Properties, Inc.
A California corporation
Manager

By:      /s/ Miechael J. Reidy
         ------------------------------
         Michael J. Reidy
         Chief Executive Officer


TENANT:

EPIMMUNE INC.
A Delaware corporation


By:      /s/ Peter C. Wulff
         -------------------------------
         Peter C. Wulff
         Vice President, Finance and Secretary



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                                      LEASE

                                (Nexus/Epimmune)

         THIS LEASE ("Lease") is made as of November 1, 1998, by and between
Nexus Equity VIII LLC, a California limited liability company ("Landlord"), and
Epimmune Inc., a Delaware corporation ("Tenant").

         1. LEASE PREMISES.

            1.1 Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord those certain premises ("Premises") consisting of approximately 24,000
square feet of Rentable Area in Building One (the "Building") located at 5880
Nancy Ridge Drive, San Diego, California, on real property legally described as
Lot 101 of Lusk Industrial Park Unit No. 4, in the City of San Diego, County of
San Diego, State of California, according to Map thereof No. 10819, filed in the
office of the County Recorder of San Diego County, January 13, 1984. Building
One consists of approximately 34,080 square feet of Rentable Area, and Building
Two consists of approximately 48,218 square feet of Rentable Area. The two
buildings, the real property upon which the buildings are located, and all
landscaping, parking facilities, and other improvements and appurtenances
related thereto are hereinafter collectively referred to as the "Project." The
site plan for the Project is attached hereto as Exhibit "A", and the Premises
are outlined on Exhibit "B". All exterior portions of the Project which are for
the non-exclusive use of tenants of the Project, including without limitation
roadways, driveways, sidewalks, parking areas, and landscaped areas, are
hereinafter referred to as "Common Areas".

         2. BASIC LEASE PROVISIONS.

            2.1 For convenience of the parties, certain basic provisions of this
Lease are set forth herein, which provisions are subject to the remaining terms
and conditions of this Lease and are to be interpreted in light of such
remaining terms and conditions.

                2.1.1  Address of the Project: 
                       5880 Nancy Ridge Drive 
                       San Diego, California

                2.1.2  Designation of Tenant's Building:
                       Building One

                2.1.3  Rentable Area:
                       Approximately 24,000 square feet

                2.1.4  Basic Annual Rent:
                       $471,744 ($1.638 per square foot per month of Rentable
                       Area, subject to adjustment pursuant to Sections 4.3,
                       6.1, and 8.3)



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                2.1.5  Monthly Installment of Basic Annual Rent: $39,312 ($1.638
                       per square foot per month of Rentable Area, subject to
                       adjustment pursuant to Sections 4.3, 6.1 and 8.3)

                2.1.6  Tenant's Pro Rata Share: 29.2% of the Project (subject to
                       adjustment pursuant to Section 8.3)

                2.1.7  (a) Term Commencement Date: April 1, 1999 (subject to
                           adjustment pursuant to Section 3.2)

                       (b) Term Expiration Date: April 1, 2009

                2.1.8  Security Deposit: $471,744 Letter of Credit or
                       Certificate of Deposit (subject to adjustment pursuant to
                       Article 9)

                2.1.9  Permitted Use: Any lawful use permitted in the MIB Zone

                2.1.10 Address for Rent Payment and Notices to Landlord:

                       Nexus Properties, Inc.
                       4350 La Jolla Village Drive, Suite 930
                       San Diego, CA 92122

                       Address for Notices to Tenant Prior to Occupancy:

                       Epimmune Inc.
                       6555 Nancy Ridge Drive, Suite 200
                       San Diego, CA 92121

                       Address for Notices to Tenant After Occupancy:

                       Epimmune Inc.
                       5880 Nancy Ridge Drive
                       San Diego, California

            2.2. The following exhibits are attached hereto and incorporated
herein by this reference:

                 Exhibit "A"   Site Plan of the Project
                 Exhibit "B"   Outline of the Premises



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                 Exhibit "C"   Description of Building Shell and Site 
                               Improvements
                 Exhibit "D"   Floor Plan of Tenant Improvements
                 Exhibit "E"   Description and Budget of Tenant Improvements
                 Exhibit "F"   Rules and Regulations
                 Exhibit "G"   Property Removable by Tenant
                 Exhibit "H"   Disbursement Instructions

            2.3 Capitalized terms not defined when first used in this Lease
shall have the meaning ascribed to them in Article 42 below.

         3. TERM.

            3.1 This Lease shall take effect upon the date of execution hereof
by each of the parties hereto, and each of the provisions hereof shall be
binding upon and inure to the benefit of Landlord and Tenant from the date of
execution hereof by each of the parties hereto.

            3.2 The term of this Lease will be that period from the earlier of
(i) the date Tenant commences conduct of its business on the Premises after the
completion of Tenant Improvements or (ii) April 1, 1999, through April 1, 2009,
subject to earlier termination of this Lease or extension of the term as
provided herein.

         4. CONSTRUCTION AND POSSESSION.

            4.1 Landlord shall construct the Site Improvements and Building
Shell in accordance with the Site Plan and Building Shell Plans at Landlord's
expense, including but not limited to all construction necessary to allow the
issuance of a certificate of occupancy upon completion of the Tenant
Improvements.

            4.2 Tenant shall construct the Tenant Improvements in accordance
with the Tenant Improvements Plans at Tenant's expense, including the expense of
design, permitting and construction, subject to Landlord providing the Tenant
Improvement Allowance described in Section 4.3 below. In that part of the
Premises to be left in "shell" condition pursuant to the Tenant Improvement
Plans, which shall consist of no more than 7,000 square feet of Rentable Area,
Tenant shall install at a minimum the mechanical equipment for the anticipated
future load capacity of the space (but not the duct work and distribution
system), a fully operational fire sprinkler system, a demising wall to separate
the "shell" space from the balance of the Premises, and lighting, exiting and
other improvements required by applicable law for health and safety reasons. The
Tenant Improvement Plans, and any revisions and supplements thereto, shall be
subject to the approval of Landlord, which approval shall not be unreasonably
withheld or delayed. In the event of any unresolved dispute between Landlord and
Tenant regarding approval of the Tenant Improvement Plans, the dispute shall be
promptly resolved by binding arbitration under the Commercial Rules of the
American Arbitration Association. Tenant shall obtain and provide to Landlord a
certificate of occupancy upon completion of the Tenant Improvements.



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            4.3 Landlord shall contribute for the cost of Tenant Improvements
the amount of $1,465,000. By written notice given to Landlord prior to February
28, 1999, Tenant may require Landlord to contribute for the cost of Tenant
Improvements up to an additional $65.00 per square foot to fully improve some or
all of the no more than 7,000 square feet left in "shell" condition, in which
event the monthly installment of Basic Annual Rent will be increased by the
following formula: Divide the amount of Landlord's additional contribution by
the amount of additional space so improved, and multiply the quotient by $0.0127
divided by the ratio of the additional improved space to the total 24,000 square
feet of the Premises, rounded up to the nearest 1/10th of one percent. By way of
example, if Landlord contributes an additional $130,000 to improve 2,000 square
feet of the 7,000 square feet left in "shell" space, the Basic Annual Rent will
be increased an additional $0.069 per square foot per month, from $1.638 to
$1.707 per square foot, calculated as follows: ($130,000/2,000) x $0.0127 =
$0.8255, $0.8255 / (2,000/24,000) = $0.069. In addition, if the no more than
7,000 square feet left in "shell" condition are improved with Tenant
Improvements costing at least $15.00 per square foot, and the balance of the
Premises are improved with Tenant Improvements costing at least $80.00 per
square foot, Tenant may require Landlord, by written notice given to Landlord
prior to February 28, 1999, to contribute up to an additional $5.00 per square
foot for the fully-improved space, in which event the monthly installment of
Basic Annual Rent shall be increased in the ratio of $.01 per square foot for
every $24,000 so contributed by Landlord. Should Tenant use less than the
initial $1,465,000 Landlord is obligated to contribute for Tenant Improvements,
the monthly installment of Basic Annual Rent shall be reduced in the ratio of
$0.0123 per square foot for each $24,000 not contributed by Landlord, but to no
less than $1.534 per square foot. By way of example, if Landlord contributes
only $1,400,000, the monthly installment of Basic Annual Rent would be reduced
$0.033 per square foot, from $1.638 to $1.605 per square foot, calculated as
follows: $65,000/24,000 x $0.0123 = $0.033. The cost of Tenant Improvements in
excess of the costs to be borne by Landlord as set forth herein shall be paid by
Tenant (except that Tenant shall be required to pay for only Tenant's half of
any demising walls separating the Premises from space occupied by another tenant
in the Building). The entire amount to be contributed by Landlord for the cost
of Tenant Improvements under this Section 4.1 shall hereinafter be called the
"Tenant Improvement Allowance". The Tenant Improvement Allowance shall be
disbursed by Landlord as work progresses pursuant to the requirements of its
construction lender as set forth in Exhibit "H", concurrently with Tenant's
progress payments of its pro rata share of the Tenant Improvement budget
attached as Exhibit "E".

            4.4 Landlord shall tender possession of the Premises to Tenant for
construction of the Tenant Improvements, and for occupancy by Tenant thereafter,
promptly upon execution of this Lease. Tenant agrees that in the event
possession of the Premises is not promptly tendered to Tenant, this Lease shall
not be void or voidable and Landlord shall not be liable to Tenant for any loss
or damage resulting therefrom. However, if possession of the Premises is not
tendered to Tenant by December 1, 1998, the Term Commencement Date set forth in
Section 2.1.7(a) shall be postponed one day for each day of such delay after
December 1, 1998. Without limiting the generality of the foregoing, Tenant
expressly waives any right to terminate this Lease because of delays in
completion of construction of the Premises.



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         4.5 Tenant understands that the Site Improvements and Building
Shell will not be complete at the time possession of the Premises is tendered to
Tenant for construction of the Tenant Improvements, but will be in a condition
such that construction of the Tenant Improvements can commence. Landlord shall
complete construction of the Site Improvements and Building Shell no later than
the date Tenant completes construction of the Tenant Improvements. In the event
that the Site Improvements and Building Shell are not completed by the date
Tenant completes the Tenant Improvements, neither the term of this Lease nor
Tenant's obligation to pay Rent shall commence until the date a certificate of
occupancy for the Premises would have been issued but for such delay. If the
delay persists for more than four (4) months after the completion of the Tenant
Improvements, Tenant at its election may terminate this Lease.

                  4.6 Landlord and Tenant shall diligently and in good faith
cooperate with one another, and shall cause their architects and contractors to
    cooperate with one another, to insure timely and cost effective design,
permitting and construction of the Project Work.

         5. RENT.

            5.1 Tenant agrees to pay Landlord as Basic Annual Rent for the
Premises the sum set forth in Section 2.1.4, subject to adjustment as set forth
in Section 6.1. Basic Annual Rent shall be paid in the equal monthly
installments set forth in Section 2.1.5, subject to adjustment as set forth in
Sections 4.3, 6.1 and 8.1, each in advance on the first day of each and every
calendar month during the term of this Lease.

            5.2 In addition to Basic Annual Rent, Tenant agrees to pay to
Landlord as additional rent ("Additional Rent"), at the times hereinafter
specified in this Lease (i) Tenant's Pro Rata Share (as defined in Section
7.3(a) and as set forth in Section 2.1.6, subject to adjustment pursuant to
Section 8.3) of Operating Expenses as provided in Section 7 and (ii) all other
amounts that Tenant assumes or agrees to pay under the provisions of this Lease,
including but not limited to any and all other sums that may become due by
reason of any default of Tenant or failure on Tenant's part to comply with the
agreements, terms, covenants and conditions of this Lease to be performed by
Tenant.

            5.3 Basic Annual Rent and Additional Rent shall together be
denominated "Rent." Except as expressly set forth in this Lease, Rent shall be
paid to Landlord, without notice, demand, abatement, suspension, deduction,
setoff, counterclaim, or defense, in lawful money of the United States of
America, at the office of Landlord as set forth in Section 2.1.10 or to such
other person or at such other place as Landlord may from time to time designate
in writing.

            5.4 In the event the term of this Lease commences or ends on a day
other than the first day of a calendar month, then the Rent for such fraction of
a month shall be prorated for such period on the basis of a thirty (30) day
month and shall be paid at the then current rate for such fractional month prior
to the commencement of the partial month.

         6. RENTAL ADJUSTMENTS.

            6.1 The Basic Annual Rent then in effect (and as previously
increased pursuant to this Section 6.1) shall be increased each year by three
percent (3%) on each annual anniversary of the Term Commencement Date for so
long as this Lease continues in effect.

         7. OPERATING EXPENSES.

            7.1 As used herein, the term "Operating Expenses" shall include:



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                (a) Government impositions including, without limitation, real
and personal property taxes and assessments (but excluding personal property
taxes and assessments of other tenants of the Project) levied upon the Project
or any part thereof; amounts due under any improvement bond upon the Project and
assessments levied in lieu thereof (except to the extent they represent costs
related to the construction of the Project); any tax on or measured by gross
rentals received from the rental of space in the Project or tax based on the
square footage of the buildings in the Project to the extent such tax is in lieu
of or in the nature of a property tax; and any utilities surcharges or any other
costs levied, assessed or imposed by, or at the direction of, or resulting from
statutes or regulations, or interpretations thereof promulgated by, any federal,
state, regional, municipal or local government authority in connection with the
use or occupancy of the Building or Project, and any expenses, including the
cost of attorneys or experts, reasonably incurred by Landlord in seeking
reduction by the taxing authority of the applicable taxes not to exceed the
amount of any such reduction, less tax refunds obtained as a result of an
application for review thereof.

                (b) Except as set forth in Section 7.2 below, all other costs
paid or incurred by Landlord which, in accordance with accepted principles of
sound accounting practice as applied to the operation and maintenance of first
class buildings, are properly chargeable to the maintenance and operation of the
Project including, by way of examples and not as a limitation upon the
generality of the foregoing, costs of (i) maintenance, repairs and replacements
to improvements within the Project as appropriate to maintain the Project in
first class condition; (ii) utilities furnished to the Project (except those
utilities which are separately metered and paid by individual tenants); (iii)
sewer fees; (iv) trash collection; (v) cleaning (including windows); (vi)
maintenance of landscape and grounds; (vii) maintenance of drives and parking
areas, including periodic resurfacing; (viii) reasonable and customary security
services; (ix) maintenance, repair, and replacement of reasonable and customary
security devices; (x) building supplies; (xi) maintenance, repair, and
replacement of equipment utilized for operation and maintenance of the Project;
(xii) costs of maintenance, repairs and replacements of mechanical, plumbing,
electrical and other systems which are part of the Building Shell; (xiii)
insurance premiums; (xiv) portions of insured losses attributable to Tenant
Improvements deductible by reason of insurance policy terms; (xv) service
contracts for work of a nature before referenced; (xvi) costs of services of
independent contractors retained to do work of nature before referenced at
reasonable and customary rates; (xvii) costs of compensation (including
employment taxes and fringe benefits) of all persons who perform regular and
recurring duties connected with the day-to-day operation and maintenance of the
Project at reasonable and customary rates; and (xviii) reasonable costs of
management services equal to three percent (3.0%) of the Basic Annual Rent.

             7.2 Notwithstanding the foregoing, Tenant shall not be
responsible for the payment of the following costs and expenses:

                (a) costs incurred for the initial construction of the Project,
except for the costs of the Tenant Improvements in excess of Landlord's
contributions pursuant to Section 4.3;

                (b) costs incurred for the repair, maintenance or replacement of
the structural components of the footings, foundation, ground floor slab, and
load bearing walls of the buildings in the Project (but excluding painting and
ordinary maintenance and repair of exterior surfaces, which are Operating
Expenses under Section 7.1(b));



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                (c) costs of a capital nature, as defined by generally accepted
accounting principles, incurred for the replacement of all other components of
the Site Improvements and Building Shell, except to the extent caused by
Tenant's negligence;

                (d) costs incurred to correct any defects in design, materials
or construction of the Project other than the Tenant Improvements;

                (e) costs, expenses and penalties (including without limitation
attorneys fees) incurred as a result of the use, storage, removal or remediation
of any toxic or hazardous substances or other environmental contamination not
caused by Tenant or its employees, contractors, agents, representatives, or
invitees;

                (f) rentals and other payments by Landlord under any ground
lease or other lease underlying the Lease, and interest, principal, points and
other fees on debt or amortization of any debt secured in whole or part by all
or any portion of the Project (provided that interest upon a government
assessment or improvement bond payable in installments is an Operating Expense
under Section 7.1(a));

                (g) costs incurred in connection with the financing, sale or
acquisition of the Project or any portion thereof;

                (h) costs, expenses, and penalties (including without limitation
attorneys' fees) incurred due to the violation by Landlord of any underlying
deed of trust, mortgage or ground lease affecting the Project or any portion
thereof;

                (i) depreciation and amortization of any type (provided this
exclusion is not intended to delete from Operating Expenses actual costs of
maintenance, repairs and replacements which are otherwise included within
Operating Expenses);

                (j) any costs incurred as a result of Landlord's violation of
any statute, ordinance or other source of applicable law, or breach of contract
or tort liability to any other party, including without limitation, any
unrelated third party, or Landlord's employees, contractors, agents or
representatives;

                (k) costs incurred in leasing or procuring tenants (including,
without limitation, lease commissions, advertising expenses, attorneys' fees and
expenses of renovating space for tenants);

                (l) advertising, marketing, media and promotional expenditures
regarding the Project and costs of signs identifying the owner, lender or any
contractor thereof;

                (m) any fees or salaries of the principals of Landlord;

                (n) any rentals and related expenses incurred in leasing
equipment which may be classified as capital expenditures under generally
accepted accounting principles;



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                (o) any net income, franchise, capital stock, estate or
inheritance taxes or taxes which are the personal obligation of Landlord or of
another tenant of the Project;

                (p) expenses which relate to preparation of rental space for a
tenant;

                (q) legal expenses arising out of the initial construction of
the Project or any tenant improvements or for the enforcement of the provisions
of any tenant leases other than this Lease;

                (r) the cost of any work or service performed for or facilities
furnished to a tenant at such tenant's cost;

                (s) any interest or penalties imposed upon Landlord by any
taxing authority for late payment or otherwise; and

                (t) any other expense otherwise chargeable as part of the cost
of operation and maintenance but which is not of general benefit to the Project
but is primarily for the benefit of one or more specific tenants.

            7.3 Tenant shall pay to Landlord on the first day of each calendar
month of the term of this lease, as Additional Rent, Landlord's good faith
estimate of Tenant's Pro Rata Share (as set forth in 2.1.6) of Operating
Expenses with respect to the Project for such month.

                (a) "Tenant's Pro Rata Share" under this Lease shall mean 29.2%,
determined by dividing the Rentable Area of the Premises by the total Rentable
Area of the Project. In the event that Landlord divides the Project into more
than one lot, "Tenant's Pro Rata Share" shall be adjusted so that Tenant shall
pay its fair share, and no more than its fair share, of Operating Expenses for
Building One and the lot on which Building One is located, and for any Common
Areas located on another lot which are shared by the occupants of Building One.

                (b) Within sixth (60) days after the conclusion of each calendar
year, Landlord shall furnish to Tenant a statement (the "Annual Operating
Expense Statement") showing in reasonable detail the actual Operating Expenses
and Tenant's Pro Rata Share of Operating Expenses for the previous calendar
year. Any additional sum due from Tenant to Landlord shall be due and payable
within thirty (30) days of Tenant's receipt of such statement. If the amounts
paid by Tenant pursuant to this Section 7.3 exceed Tenant's Pro Rata Share of
Operating Expenses for the previous calendar year, the difference shall be
credited by Landlord against the Rent next due and owing from Tenant; provided
that, if the Lease term has expired, Landlord shall accompany said statement
with payment for the amount of such difference.

                (c) Any amount due under this Section 7.3 for any period which
is less than a full month shall be prorated for such fractional month.



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                (d) Notwithstanding this Section 7.3, Operating Expenses which
can fairly and reasonably be allocated to one or more tenants of the Project
shall be so allocated, and shall be separately scheduled on the Annual Operating
Expense Statement.

            7.4 Tenant shall have the right, at Tenant's expense, upon
reasonable notice during reasonable business hours, to inspect that portion of
Landlord's books which are relevant to preparation of the Annual Operating
Expense Statement provided any request for such review shall be furnished within
one hundred eight (180) days after Tenant's receipt of such statement as to a
prior year's Operating Expenses.

            7.5 Operating Expenses for the calendar year in which Tenant's
obligation to pay them commences and in the calendar year in which such
obligation ceases shall be prorated. Expenses such as taxes, assessments and
insurance premiums which are incurred for an extended time period shall be
prorated based upon time periods to which applicable so that the amounts
attributed to the Premises relate in a reasonable manner to the time period
wherein Tenant has an obligation to pay Operating Expenses.

         8. RENTABLE AREA.

            8.1 The Rentable Area of the Project is determined by making
separate calculations of the Rentable Area of each floor of both buildings and
totalling the Rentable Area of all floors within the buildings. The Rentable
Area of a floor is calculated by measuring to the outside finished surface of
each permanent outer building wall where it intersects the floor, or where it
would have intersected the floor except for recessed entryways, windows and the
like (also known as the "drip line", measured from where the outside finished
surface of the second floor wall intersects the roof). The full area calculated
as set forth above is included as Rentable Area of the Project without deduction
for (i) columns or projections, (ii) vertical penetrations including stairs,
elevator shafts, flues, pipe shafts, vertical ducts, and the like, and their
enclosing walls, (iii) corridors, equipment rooms, rest rooms, entrance ways,
elevator lobbies, and the like, and their enclosing walls, and (iv) any other
unusable area of any nature.

            8.2 The term "Rentable Area" when applied to Tenant is the
approximate area to be occupied by Tenant plus an equitable allocation of
Rentable Area within the Project which is not then utilized or expected to be
utilized by Tenant or other tenants of the Project, including but not limited to
the portions of the buildings devoted to corridors, equipment rooms, rest rooms,
elevator lobbies and mailrooms. In making such allocations, consideration will
be given to tenants benefited by space allocated such that areas which primarily
serve tenants of only one floor, such as corridors and rest rooms upon such
floor, shall be allocated to that tenant's Rentable area. If the Premises are
separated from space occupied by another tenant, the Rentable Area shall be
measured to the center of any interior demising walls.



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            8.3 The Rentable Area as set forth in Section 2.1.3 is an estimate
of the area which constitutes the Rentable Area of the Premises, which, at the
request of either Landlord or Tenant made within ninety (90) days after the Term
Commencement Date, shall be adjusted in accordance with measurement and
certification of the Project architect. If the Rentable Area as determined
hereunder is more or less than the Rentable Area set forth in Section 2.1.3,
Basic Annual Rent and the monthly installments of Basic Annual Rent shall be
adjusted upward or downward, as the case may be, based on the actual Rentable
Area of the Premises. Rentable Area as adjusted shall also be utilized for
computation of Tenant's Pro Rata Share of Operating Expenses among tenants of
the Project.

         9. SECURITY DEPOSIT.

            9.1 Within thirty (30) days after the execution of this Lease,
Tenant shall deposit with Landlord an irrevocable stand-by letter of credit
("Letter of Credit"), or grant to Landlord a security interest in a certificate
of deposit ("Certificate of Deposit"), in favor of Landlord in the principal
amount of $471,744 in a form reasonably acceptable to Landlord, to be held by
Landlord as security for the faithful performance by Tenant of all of the terms,
covenants, and conditions of this Lease to be kept and performed by Tenant
during the term and any extension term hereof. If Tenant defaults with respect
to any provision of this Lease, including but not limited to any provision
relating to the payment of Rent, and subject to any notice requirements and cure
periods for Tenant's benefit set forth in Article 24, Landlord may (but shall
not be required to) draw from the Letter of Credit the amount required to cure
the default, or foreclose on and take possession of the Certificate of Deposit,
and to use, apply or retain the proceeds thereof for the payment of any Rent or
any other sum in default, or to compensate Landlord for any other loss or damage
which Landlord may suffer by reason of Tenant's default.

            9.2 The amount of the Letter of Credit or Certificate of Deposit
shall be reduced to $117,938 during any period Tenant has achieved a Standard &
Poor's investment-grade rating of BBB or better, or during any period Tenant's
obligations under this Lease are guaranteed by a parent or affiliate of Tenant
with such an investment grade, the form and substance of any such guaranty to be
reasonably satisfactory to Landlord. Tenant shall replenish the Letter of Credit
or Certificate of Deposit to the full amount of $471,744 during any period the
Standard & Poor's investment-grade rating of Tenant or the guarantor falls below
BBB.

            9.3 At the commencement of the sixth year of the term, if the amount
of the Letter of Credit or Certificate of Deposit is not then reduced pursuant
to Section 9.2, the amount shall be reduced to $353,808, on the conditions that
(i) Tenant has not been in default under Section 24.4(a) on more than three (3)
separate occasions for failure to make a payment of Rent, and (ii) Tenant then
has cash on hand, including cash equivalents and marketable securities, in an
amount in excess of Tenant's net loss, as determined under generally accepted
accounting principles, for the combined two (2) most recent calendar years.

            9.4 At the commencement of the ninth year of the term, if the amount
of the Letter of Credit or Certificate of Deposit is not then reduced pursuant
to Section 9.2, the amount shall be reduced to $235,872.

            9.5 Tenant shall be responsible for any expenses in obtaining and
maintaining the Letter of Credit or Certificate of Deposit. All interest earned
on any Certificate of Deposit shall belong to Tenant.



                                      -10-
<PAGE>   13


            9.6 The Letter of Credit, and any replacement Letter of Credit,
shall be issued by a financial institution reasonably acceptable to Landlord,
with an office in San Diego County authorized to disburse funds upon a draw
request. Should the institution be placed in conservatorship or receivership by
the Federal Deposit Insurance Corporation or any other state of federal
regulatory agency, Tenant shall, within thirty (30) days after written request
by Landlord, provide a replacement Letter of Credit from a financial institution
reasonably acceptable to Landlord, and in the event Tenant fails to do so,
Landlord may draw on the Letter of Credit and use the proceeds thereof as a
security deposit in accordance with the provisions of Section 9.1.

            9.7 The Letter of Credit shall provide (i) that the issuer of the
Letter of Credit shall pay to Landlord the amount in default immediately upon
presentation in San Diego County of a sight draft by Landlord accompanied by a
certified statement signed by an officer of the manager of Landlord (or, if any
successor Landlord is a corporation or a partnership, by any officer of the
corporation or general partner of the partnership, as the case may be) stating
that a default has occurred under the Lease as a result of which Landlord is
entitled to collect the amount specified in the site draft in order to cure the
default, and (ii) that the issuer shall have no obligation to confirm that a
default has occurred, or the amount which Landlord is entitled to draw, or that
notice of the default has been given to Tenant.

            9.8 The initial Letter of Credit shall be for a period of not less
than one (1) year, and any replacement Letter of Credit shall be for a period of
not less than one (1) year. The initial Letter of Credit (or any later
replacement Letter of Credit) shall be replaced by Tenant by delivering to
Landlord a replacement Letter of Credit at least thirty (30) days prior to the
expiration of the then current Letter of Credit. If Tenant fails to deliver a
replacement Letter of Credit at least thirty (30) days prior to the expiration
of the then current Letter of Credit, Landlord shall have the right to draw the
total amount of the then current Letter of Credit and hold the proceeds thereof
as a security deposit pursuant to the provisions of Section 9.1. The Letter of
Credit shall be successively renewed or replaced until that date which is
forty-five (45) days after the expiration of the initial or any extended term of
this Lease.

            9.9 In the event of a partial draw on the Letter of Credit, or the
use of any proceeds of the Certificate of Deposit, Tenant shall immediately
replenish the Letter of Credit or substitute a new Letter of Credit, or
replenish the Certificate of Deposit, to the full amount set forth above.

            9.10 Any Letter of Credit or security interest in a Certificate of
Deposit shall be transferable by Landlord to a successor Landlord or mortgagee
or beneficiary of a deed of trust encumbering the Premises, or, in the case of a
Letter of Credit, a substitute Letter of Credit shall be issued to any such
entity at the request of Landlord; provided, however, that Landlord shall pay
any expenses incurred by Tenant on account of any such transfer or issuance.

            9.11 In the event of bankruptcy or other debtor/creditor proceedings
against Tenant, the proceeds of the Letter of Credit or Certificate of Deposit
shall be deemed to be applied first to the payment of Rent and other charges due
Landlord for all periods prior to the filing of such proceedings.



                                      -11-
<PAGE>   14


             9.12 Landlord shall deliver the Letter of Credit or security
interest in the Certificate of Deposit, and any proceeds thereof, to any
purchaser of Landlord's interest in the Premises, and thereupon Landlord shall
be discharged from any further liability with respect thereto provided that such
purchaser has agreed to assume in writing the obligations of Landlord hereunder.
This provision shall also apply to any subsequent transfers.

             9.13 The Letter of Credit or Certificate of Deposit, and any
proceeds thereof, shall be returned to Tenant within thirty (30) days following
the expiration of this Lease, except for amounts which are needed by Landlord to
cure any default by Tenant.

         10. USE.

             10.1 Tenant may use the Premises for any use permitted by (i) the
MIB Zone, (ii) any other applicable laws, regulations, ordinances, requirements,
permits and approvals applicable to the Premises, and (iii) all covenants,
conditions and restrictions recorded against the property, and shall not use the
Premises, or permit or suffer the Premises to be used for any other purpose
without the prior written consent of Landlord.

             10.2 Tenant shall conduct its business operations and use the
Premises in compliance with all federal, state, and local laws, regulations,
ordinances, requirements, permits and approvals applicable to the Premises.
Tenant shall not use or occupy the Premises in violation of any law or
regulation or the certificate of occupancy issued for the Building, and shall,
upon five (5) days' written notice from Landlord, discontinue any use of the
Premises which is declared by any governmental authority having jurisdiction to
be a violation of law or the certificate of occupancy. Tenant shall comply with
any direction of any governmental authority having jurisdiction which shall, by
reason of the nature of Tenant's use or occupancy of the Premises, impose any
duty upon Tenant or Landlord with respect to the Premises or with respect to the
use or occupation thereof, including any duty to make structural or capital
improvements, alterations, repairs and replacements to the Premises; provided,
however, if the costs thereof exceed an amount equal to six (6) monthly
installments of the Basic Annual Rent then payable, Tenant may elect to
terminate the Lease if Landlord, after notice from Tenant, declines to pay such
excess.

             10.3 Tenant shall not do or permit to be done anything which will
invalidate or increase the cost (unless Tenant agrees to pay such increased
cost) of any fire, extended coverage or any other insurance policy covering the
Premises, or which will make such insurance coverage unavailable on commercially
reasonable terms and conditions, and shall comply with all rules, orders,
regulations and requirements of the insurers of the Premises.

             10.4 Subject to the warranty of Landlord in Section 14.3, Tenant
shall comply with the Americans with Disabilities Act of 1990 ("ADA"), and the
regulations promulgated thereunder, as amended from time to time. All
responsibility for compliance with the ADA relating to the Premises and the
activities conducted by Tenant within the Premises shall be exclusively that of
Tenant and not of Landlord, including any duty to make structural or capital
improvements, alterations, repairs and replacements to the Premises. Any
alterations to the Premises made by Tenant for the purpose of complying with the
ADA or which otherwise require compliance with the ADA shall be done in



                                      -12-
<PAGE>   15


accordance with Article 17; provided, that Landlord's consent to such
alterations shall not constitute either Landlord's assumption, in whole or in
part, of Tenant's responsibility for compliance with the ADA, or representation
or confirmation by Landlord that such alterations comply with the provisions of
the ADA. However, nothing in this Lease shall be construed to require Tenant to
make structural or capital improvements, alterations, repairs or replacements to
comply with ADA unless and until required to do so by order of any government
entity or court of law exercising proper jurisdiction with regard thereto,
subject to any right to appeal or otherwise contest any such order. Furthermore,
Landlord shall be responsible for compliance with ADA to the extent of a
violation of Landlord's warranty in Section 14.3.

             10.5 Tenant may install signage on and about the Premises to the
extent permitted by, and in conformity with, applicable provisions of the City
of San Diego Sign Ordinance, and to the extent approved by Landlord. Tenant
acknowledged that it understands that other tenants will occupy space in the
Project, and that the maximum allowable signage is to be shared among all of the
tenants on a fair and reasonable basis. Tenant further acknowledges it is
familiar with the restrictions of the City of San Diego Sign Ordinance, and is
not relying on any representations or warranty of Landlord regarding the number,
size or location of any signage. The expense of design, permits, purchase and
installation of any signs shall be the responsibility of Tenant and the cost
thereof shall be borne by Tenant. At the termination of the Lease, all signs
shall be the property of Tenant and may be removed from the Premises by Tenant,
subject to the provisions of Article 36. Any relocation of Tenant's signage
required by Landlord's division of the Project into more than one lot shall be
with the consent of Tenant and at Landlord's consent.

             10.6 No equipment shall be placed at a location within the Building
other than a location designed to carry the load of the equipment. Equipment
weighing in excess of floor loading capacity shall not be placed in the
Building.

             10.7 Tenant shall not use or allow the Premises to be used for any
unlawful purpose, nor shall Tenant cause, maintain or permit any nuisance or
waste in, on, or about the Premises.

         11. BROKERS.

             11.1 Landlord and Tenant represent and warrant one to the other
that there have been no dealings with any real estate broker or agent in
connection with the negotiation of this Lease other than CB Richard Ellis, whose
commission shall be paid by Landlord. Each shall indemnify, defend, protect, and
hold harmless the other from any claim of any other broker as a result of any
act or agreement of the indemnitor.

             11.2 Tenant represents and warrants that no broker or agent has
made any representation or warranty relied upon by Tenant in Tenant's decision
to enter into this Lease other than as contained in this Lease.



                                      -13-
<PAGE>   16


         12. HOLDING OVER.

             12.1 If, with Landlord's consent, Tenant holds possession of all or
any part of the Premises after the expiration or earlier termination of this
Lease, Tenant shall become a tenant from month to month upon the date of such
expiration or earlier termination, and in such case Tenant shall continue to pay
in accordance with Article 5 the Basic Annual Rent as adjusted from the Term
Commencement Date in accordance with Article 6, together with Operating Expenses
in accordance with Article 7 and other Additional Rent as may be payable by
Tenant, and such month-to-month tenancy shall be subject to every other term,
covenant and condition contained herein.

             12.2 If Tenant remains in possession of all or any portion of the
Premises after the expiration or earlier termination of the term hereof without
the express written consent of Landlord, Tenant shall become a tenant at
sufferance upon the terms of this Lease except that monthly rental shall be
equal to one hundred twenty five percent (125%) of the Basic Annual Rent in
effect during the last twelve (12) months of the Lease term.

             12.3 Acceptance by Landlord of Rent after such expiration or
earlier termination shall not result in a renewal or reinstatement of this
Lease.

             12.4 The foregoing provisions of this Article 12 are in addition to
and do not affect Landlord's right to re-entry or any other rights of Landlord
under Article 24 or elsewhere in this Lease or as otherwise provided by law.

         13. TAXES ON TENANT'S PROPERTY

             13.1 Tenant shall pay not less than ten (10) days before
delinquency taxes levied against any personal property or trade fixtures placed
by Tenant in or about the Premises. Tenant shall not be responsible for taxes
levied against any personal property or trade fixtures of other tenants.

             13.2 If any such taxes on Tenant's personal property or trade
fixtures are levied against Landlord or Landlord's property or, if the assessed
valuation of the Project is increased by the inclusion therein of a value
attributable to Tenant's personal property or trade fixtures, and if Landlord
after written notice to Tenant pays the taxes based upon such increase in the
assessed value, then Tenant shall upon demand repay to Landlord the taxes so
levied against Landlord.

             13.3 If any improvements in or alterations to the Premises, whether
owned by Landlord or Tenant and whether or not affixed to the real property so
as to become a part thereof, are assessed for real property tax purposes at a
valuation higher than the valuation at which improvements in other spaces in the
Project are assessed, then the real property taxes and assessments levied
against Landlord or the Project by reason of such excess assessed valuation
shall be deemed to be taxes levied against personal property to Tenant and shall
be governed by the provisions of Section 13.2 above. Any such excess assessed
valuation due to improvements in or alterations to space in the Project leased
by other tenants of Landlord shall not be included in the Operating Expenses
defined in Section 7, but shall be treated, as to such other tenants, as
provided in this Section 13.3, and shall be allocated to such other tenants. If
the records of the County assessor are available and sufficiently detailed to
serve as a basis for determining whether said Tenant improvements or alterations
are assessed at a higher valuation than improvements in other spaces in the
Project, such records shall be binding on both Landlord and Tenant.



                                      -14-
<PAGE>   17


             13.4 To the extent Tenant fails to make any payment required by
this Article 13 and Landlord does so on Tenant's behalf, Tenant shall reimburse
Landlord for the cost thereof pursuant to the provisions of Sections 7.1 and
24.3.

         14. CONDITION OF PREMISES.

             14.1 Tenant acknowledges that neither Landlord nor any agent of
Landlord has made any representation or warranty, express or implied, with
respect to the condition of the Premises, or to the Project, except as set forth
herein, or with respect to their suitability for the conduct of Tenant's
business.

             14.2 Landlord warrants to Tenant that the Project (other than the
Tenant Improvements, which are the responsibility of Tenant), will be built in a
good and workmanlike manner and in substantial compliance with the project plans
and all applicable building code requirements, laws, rules, orders, ordinances,
directions, regulations, permits, approvals, and requirements of all
governmental agencies, offices, departments, bureaus and boards having
jurisdiction, and with the rules, orders, directions, regulations, and
requirements of any applicable fire rating bureau, and will be free of patent
and latent defects in design, materials and construction.

             14.3 Landlord warrants to Tenant that the Project (other than the
Tenant Improvements, which are the responsibility of Tenant) will be in
compliance with ADA, and the regulations promulgated thereunder, at such time as
the Site Improvements and Building Shell are completed.

         15. COMMON AREAS AND PARKING FACILITIES.

             15.1 Tenant shall have the nonexclusive right, in common with
others, to use the Common Areas, subject to the rules and regulations adopted by
Landlord and attached hereto as Exhibit "F" together with such other reasonable
and nondiscriminatory rules and regulations as are hereafter promulgated by
Landlord (the "Rules and Regulations").

             15.2 Tenant shall not place any equipment, storage containers or
any other property on the surface parking area or otherwise outside of the
Premises without the consent of Landlord. In the event Tenant elects to locate
Hazardous Material storage facilities, water systems, mechanical equipment,
emergency generators, or other Tenant Improvements in the parking area, the
space used for such facilities shall be deducted from Tenant's Pro Rata Share of
parking described below.

             15.3 As an appurtenance to the Premises, Tenant, and its employees
and invitees, shall be entitled to use a Pro Rata Share of the available
parking, which is approximately four (4) spaces per 1,000 square feet of
Rentable Area. Tenant shall be assigned ten (10) "reserved" parking spaces near
the entrance to Building One at locations mutually approved by Landlord and
Tenant, which spaces shall be included within Tenant's Pro Rata Share of
parking.



                                      -15-
<PAGE>   18


         16. UTILITIES AND SERVICES.

             16.1 Tenant shall pay for all water, gas, electricity, telephone,
cable television, and other utilities which may be furnished to the Premises
during the term of this Lease, together with any taxes thereon. If any such
utility is not separately metered to Tenant, Tenant shall pay a reasonable
proportion to be determined by Landlord of all charges jointly metered with
tenants of other premises as part of its share of Operating Expenses. Utilities
and services provided to the Premises which are separately metered shall be paid
by Tenant directly to the supplier of such utility or service, and Tenant shall
pay for such utilities and services prior to delinquency during the term of this
Lease.

             16.2 Landlord shall not be liable for, nor shall any eviction of
Tenant result from, any failure of any such utility or service, and in the event
of such failure Tenant shall not be entitled to any abatement or reduction of
Rent, nor be relieved from the operation of any covenant or agreement of this
Lease, and Tenant waives any right to terminate this Lease on account thereof.
However, notwithstanding the foregoing, in the event any such failure persists
for more than twelve (12) months, Tenant at its election may terminate this
Lease.

             16.3 Tenant shall provide and pay for janitors, maintenance
personnel, and other persons who perform duties connected with the operation and
maintenance of the interior of the Premises.

         17. ALTERATIONS.

             17.1 Tenant shall make no alterations, additions or improvements
(hereinafter in this section, "improvements") in or to the Premises, except for
non-structural improvements costing less than $50,000, without Landlord's prior
written consent, which shall not be unreasonably withheld. Tenant shall deliver
to Landlord final plans and specifications and working drawings for the
improvements to Landlord, and Landlord shall have ten (10) days thereafter to
grant or withhold its consent. If Landlord does not notify Tenant of its
decision within the ten (10) days, Landlord shall be deemed to have given its
approval.

             17.2 If a permit is required to construct the improvements, Tenant
shall deliver a completed, signed-off inspection card to Landlord within ten
(10) days of completion of the improvements, and shall promptly thereafter
obtain and record a notice of completion and deliver a copy thereof to Landlord.

             17.3 The improvements shall be constructed only by licensed
contractors. All contractors, except those constructing non-structural
improvements costing less than $50,000, shall be approved by Landlord, which
approval shall not be unreasonably withheld. Any such contractor must have in
force a general liability insurance policy of not less than $2,000,000 or such
higher limits as Landlord may reasonably require, which policy of insurance
shall name Landlord as an additional insured. Tenant shall provide Landlord with
a copy of the contract with the contractor prior to the commencement of
construction.



                                      -16-
<PAGE>   19


             17.4 Tenant agrees that any work by Tenant shall be accomplished in
such a manner as to permit any fire sprinkler system and fire water supply lines
to remain fully operable at all times except when minimally necessary for
building reconfiguration work.

             17.5 Tenant covenants and agrees that all work done by Tenant shall
be performed in full compliance with all laws, rules, orders, ordinances,
directions, regulations, permits, approvals, and requirements of all
governmental agencies, offices, departments, bureaus and boards having
jurisdiction, and in full compliance with the rules, orders, directions,
regulations, and requirements of any applicable fire rating bureau. Tenant shall
provide Landlord with "as-built" plans showing any change in the Premises within
thirty (30) days after completion.

             17.6 Before commencing any work (other than interior non-structural
alterations, additions or improvements), Tenant shall give Landlord at least
five (5) days' prior written notice of the proposed commencement of such work
and, for any such work which exceeds $25,000.00 in cost, if required by
Landlord, secure at Tenant's own cost and expenses a completion and lien
indemnity bond approved by Landlord, which approval will not be unreasonably
withheld.

         18. REPAIRS AND MAINTENANCE.

             18.1 Landlord shall repair and maintain the structural and exterior
portions and Common Areas of the Building and Project, including foundations,
exterior walls, load bearing walls, windows, plate glass, roofing, and roofing
covering materials, and plumbing, fire sprinkler system, heating, ventilating,
air conditioning, elevator, and electrical systems installed or furnished by
Landlord (and not part of the Tenant Improvements), subject to reimbursement by
Tenant as its Pro Rata Share of Operating Expenses to the extent provided by
Section 7. However, if such maintenance or repairs are required because of any
act, neglect, fault of or omissions of any duty by Tenant, its agents, servants,
employees or invitees, Tenant shall pay to Landlord the costs of such
maintenance and repairs attributable to Tenant's act, neglect, fault or
omission.

             18.2 Except as otherwise set forth in Section 18.1, Tenant shall,
throughout the term of this Lease, at Tenant's sole cost and expense keep the
Premises and every part thereof in good condition and repair, including
plumbing, fire sprinkler, heating, ventilating, air conditioning, elevator, and
electrical systems installed as part of the Tenant Improvements, except for
damage thereto from causes beyond the reasonable control of Tenant and ordinary
wear and tear. Tenant shall upon the expiration or earlier termination of the
term hereof surrender the Premises to Landlord in the same condition as when
received, ordinary wear and tear and damage from causes beyond the reasonable
control of Tenant excepted. Notwithstanding the foregoing, Tenant may elect not
to replace major components of the heating, ventilating, and air conditioning
system installed as part of the Tenant Improvements which fail after the first
eight (8) years of the term, except to the extent required by applicable law for
health and safety reasons; however, Landlord shall not be required to replace
such major components either, and there shall be no abatement or reduction of
Rent, nor shall Tenant be relieved from the operation of any covenant or
agreement of this Lease, in the event such components are not replaced. In the
event Tenant elects to replace such major components, Tenant may remove the
components at the termination of the Lease, subject to the provisions of Section
30.3. Landlord shall have no obligation to alter, remodel, improve, repair,
decorate or paint the Premises or any part thereof.



                                      -17-
<PAGE>   20


             18.3 Tenant hereby waives Civil Code Sections 1941 and 1942
relating to a landlord's duty to maintain the Premises in a tenantable
condition, and the under said sections or under any law, statute or ordinance
now or hereafter in effect to make repairs at Landlord's expense.

             18.4 There shall be no abatement of Rent and no liability of
Landlord by reason of any injury to or interference with Tenant's business
arising from the making of any repairs, alterations or improvements in or to any
portion of the Premises, or in or to improvements, fixtures, equipment and
personal property therein. If repairs or replacements become necessary which by
the terms of this Lease are the responsibility of Tenant and Tenant fails to
make the repairs or replacements, Landlord may do so pursuant to the provisions
of Section 24.3.

         19. LIENS.

             19.1 Tenant shall keep the Premises, the Building and the property
upon which the Building is situated free from any liens arising out of work
performed, materials furnished or obligations incurred by Tenant. Tenant further
covenants and agrees that any mechanic's lien filed against the Premises for
work claimed to have been done for, or materials claimed to have been furnished
to, Tenant, will be discharged by Tenant, by bond or otherwise, within thirty
(30) days after the filing thereof (or within ten (10) days after the filing
thereof if requested by Landlord as necessary to facilitate a pending sale or
refinancing), at the cost and expense of Tenant.

             19.2 Should Tenant fail to discharge any lien of the nature
described in Section 19.1, Landlord may at Landlord's election pay such claim or
post a bond or otherwise provide security to eliminate the lien as a claim
against title and the cost thereof shall be immediately due from Tenant as
Additional Rent.

             19.3 In the event Tenant shall lease or finance the acquisition of
office equipment, furnishings, or other personal property utilized by Tenant in
the operation of Tenant's business, Tenant warrants that any Uniform Commercial
Code financing statement executed by Tenant will upon its face or by exhibit
thereto indicate that such financing statement is applicable only to personal
property of Tenant specifically described in the financing statement, and that
such property is subject to the provisions of Section 30 regarding the removal
of property on the expiration or earlier termination of this Lease. In no event
shall the address of the Building be furnished on the financing statement
without qualifying language as to applicability of the lien only to personal
property of Tenant described in the financing statement. Should any holder of a
security agreement executed by Tenant record or place of record a financing
statement which appears to constitute a lien against any interest of Landlord,
Tenant shall within ten (10) days after the filing of such financing statement
cause (i) copies of the security agreement or other documents to which the
financing statement pertains to be furnished to Landlord to facilitate
Landlord's being in a position to show such lien is not applicable to any
interest of Landlord, and (ii) the holder of the security interest to amend
documents of record so as to clarify that such lien is not applicable to any
interest of Landlord in the Premises.



                                      -18-
<PAGE>   21


         20. INDEMNIFICATION AND EXCULPATION.

             20.1 Except to the extent of the responsibility of Landlord
pursuant to Section 20.2 hereof, Tenant agrees to indemnify Landlord, and its
partners and affiliates, and their respective shareholders, directors, officers,
agents, contractors and employees (collectively, "Landlord's Agents"), against,
and to protect, defend, and save them harmless from, all demands, claims, causes
of action, liabilities, losses and judgments, and all reasonable expenses
incurred in investigating or resisting the same (including reasonable attorneys'
fees), for death of or injury to person or damage to property arising out of (i)
any occurrence in, upon or about the Premises during the term of this Lease,
(ii) Tenant's use, occupancy, repairs, maintenance, and improvements of the
Premises and all improvements, fixtures, equipment and personal property
thereon, and (iii) any act or omission of Tenant, its shareholders, directors,
officers, agents, employees, servants, contractors, invitees and subtenants,
except to the extent caused by the negligence or willful misconduct of Landlord.
Tenant's obligation under this Section 20.1 shall survive the expiration or
earlier termination of the term of this Lease.

             20.2 Landlord agrees to indemnify Tenant and Tenant's shareholders,
directors, officers, agents, and employees (collectively "Tenant's Agents")
against and save them harmless from all demands, claims, causes of action and
judgments, and all reasonable expenses incurred in investigating or resisting
the same (including reasonable attorneys' fees), for death of, or injury to, any
person or damage to property arising from or out of any occurrence in, upon, or
about the Premises during the term of this Lease if caused by the negligence or
willful misconduct of Landlord or Landlord's directors, officers, agents,
employees, servants, contractors, invitees and subtenants, unless caused in part
by the negligence or willful misconduct of Tenant or Tenant's Agents. Landlord's
obligations under this Section 20.2 shall survive the expiration or earlier
termination of the term of this Lease.

             20.3 Notwithstanding any provision of Sections 20.1 and 20.2 to the
contrary, Landlord shall not be liable to Tenant and Tenant assumes all risk of
damage to any fixtures, goods, inventory, merchandise, equipment, records,
research, experiments, animals and other living organisms, computer hardware and
software, leasehold improvements, and other personal property of any nature
whatsoever, and Landlord shall not be liable for injury to Tenant's business or
any loss of income therefrom relative to such damage, unless caused by
Landlord's or Landlord's Agents' willful misconduct or gross negligence.

             20.4 The indemnity obligations of both Landlord and Tenant under
this Section 20 shall be satisfied to the extent of proceeds of applicable
insurance maintained by the indemnifying party to the extent thereof, and
thereafter to proceeds of any applicable insurance maintained by the other
party; Landlord and Tenant shall be required to satisfy any such obligation only
to the extent it is not satisfied by proceeds of applicable insurance as set
forth above.



                                      -19-
<PAGE>   22


             20.5 Security devices and services, if any, while intended to deter
crime may not in given instances prevent theft or other criminal acts and it is
agreed that Landlord shall not be liable for injuries or losses caused by
criminal acts of third parties and the risk that any security device or service
may malfunction or otherwise be circumvented by a criminal is assumed by Tenant.
Tenant shall at Tenant's cost obtain insurance coverages to the extent Tenant
desires protection against such criminal acts.

             20.6 Landlord shall not be liable for any damages arising from any
act or neglect of any other tenant in the Building or Project.

         21. INSURANCE - WAIVER OF SUBROGATION.

             21.1 Commencing prior to Tenant's first entry onto the Premises for
purposes of installing any improvements, fixtures or personal property, but no
later than the Term Commencement Date, and continuing at all times during the
term of this Lease, Tenant shall maintain, at Tenant's expense, commercial
general liability insurance, on an occurrence basis, insuring Tenant and
Tenant's agents, employees and independent contractors against all bodily
injury, property damage, personal injury and other covered loss arising out of
the use, occupancy, improvement and maintenance of the Premises and the business
operated by Tenant, or any other occupant, on the Premises. Such insurance shall
have a minimum combined single limit of liability per occurrence of not less
than $1,000,000.00 and a general aggregate limit of $2,000,000.00. Such
insurance shall: (i) name Landlord, and Landlord's lenders if required by such
lenders, and any management company retained to manage the Premises if requested
by Landlord, as additional insureds; (ii) include a broad form contractual
liability endorsement insuring Tenant's indemnity obligations under Section
20.1; (iii) include a products liability coverage endorsement (with limits of
$2,000,000.00 on a "claims made" basis), a boiler and machinery liability
endorsement, and a products completed operations coverage endorsement; (iv)
provide that it is primary coverage and noncontributing with any insurance
maintained by Landlord or Landlord's lenders, which shall be excess insurance
with respect only to losses arising out of Tenant's negligence; and (v) provide
for severability of interests or include a cross-liability endorsement, such
that an act or omission of an insured shall not reduce or avoid coverage of
other insureds.

             21.2 At all times during the term of this Lease, Landlord shall
maintain, subject to reimbursement by Tenant as an Operating Expense under
Section 7.1(b), "all risk" insurance, including, but not limited to, coverage
against loss or damage by fire, vandalism, and malicious mischief covering the
Project (exclusive of excavations, foundations and footings), the Tenant
Improvements, and all other improvements and fixtures that may be constructed or
installed on the Premises, in an amount equal to one hundred percent (100%) of
the full replacement value thereof. If any boilers or other pressure vessels or
systems are installed on the Premises, Landlord shall maintain, subject to
reimbursement by Tenant as an Operating Expense under Section 7.1(b), boiler and
machinery insurance in an amount equal to one hundred percent (100%) of the full
replacement value thereof. At all times during the course of any major
demolition or construction permitted hereunder, or any restoration pursuant to
Articles 22 or 23, Tenant shall maintain, at Tenant's expense, "all risk"
builder's risk insurance, including, but not limited to, coverage against loss
of damage by fire, vandalism and malicious mischief, covering improvements in



                                      -20-
<PAGE>   23


place and all material and equipment at the job site furnished under contract,
in an amount equal to one hundred percent (100%) of the full replacement value
thereof. The insurance described in this Section 21.2 shall: (i) insure
Landlord, and Landlord's lenders if required by such lenders, as their interests
may appear; (ii) contain a Lender's Loss Payable Form (Form 438 BFU or
equivalent) in favor of Landlord's lenders and name Landlord, or Landlord's
lender if required by such lender, as the loss payee; (iii) provide for
severability of interests or include a cross-liability endorsement, such that an
act or omission of an insured shall not reduce or avoid coverage of other
insureds; (iv) include a building ordinance endorsement, an agreed amount
endorsement and an inflation endorsement; and (v) provide that it is primary
coverage and noncontributing with any insurance maintained by Landlord or
Landlord's lenders, which shall be excess insurance. The full replacement value
of the Project, the Tenant Improvements and other improvements and fixtures
insured thereunder shall, for the purpose of establishing insurance limits and
premiums only, be determined by the company issuing the insurance policy and
shall be redetermined by said company within six (6) months after completion of
any material alterations or improvements to the Premises and otherwise at
intervals of not more than three (3) years. Landlord shall promptly increase the
amount of the insurance carried pursuant to this Section 21.2 to the amount so
redetermined. The proceeds of the insurance described in this Section shall be
used for the repair, replacement and restoration of the Premises and the Tenant
Improvements and other improvements and fixtures insured thereunder, as further
provided in Article 22; provided, however, if this Lease is terminated after
damage or destruction, the insurance policy or policies, all rights thereunder
and all insurance proceeds shall be assigned to Landlord.

             21.3 At all times during the term of this Lease, Tenant shall
maintain, at Tenant's expense, business interruption insurance in order to
insure that the Basic Annual Rent and Operating Expenses provided for hereunder
will be paid for a period of up to one (1) year after any casualty insured
against by all risk policy of insurance described in Section 21.2 above or any
restriction of access to the Premises as a result of such casualty.

             21.4 At all times during the term of this Lease, Tenant shall
maintain, at Tenant's expense, "all risk" insurance against all other personal
property, including trade fixtures, equipment and merchandise, of Tenant or any
subtenant of Tenant that may be occupying the Premises, or any portion thereof,
from time to time, in an amount equal to the full replacement value thereof.

             21.5 At all times during the term of this Lease, Tenant shall
maintain workers' compensation insurance in accordance with California law, and
employers' liability insurance with limits typical for companies similar to
Tenant.

             21.6 All of the policies of insurance referred to in this Article
21 shall be written by companies authorized to do business in California and
rated A+VII or better in Best's Insurance Guide. Each insurer referred to in
this Article 21 shall agree, by endorsement on the applicable policy or by
independent instrument furnished to Landlord, that it will give Landlord, and
Landlord's lenders if required by such lenders, at least ten (10) days' prior
written notice by registered mail before the applicable policy shall be
cancelled for non-payment of premium, and thirty (30) days' prior written notice
by registered mail before the applicable policy shall be cancelled or altered in
coverage, scope, amount or other material term for any other reason (although
any failure of an insurer to give notice as provided herein shall not be a
breach of this Lease by Tenant). No policy shall provide for a deductible amount



                                      -21-
<PAGE>   24


in excess of $100,000, unless approved in advance in writing by Landlord, which
approval shall not be unreasonably withheld. Tenant shall deliver to Landlord,
and to Landlord's lenders if required by such lenders, copies of the insurance
policies required to be carried by Tenant, certified by the insurer, or
certificates evidencing such insurance policies, issued by the insurer, together
with evidence of payment of the required premiums, prior to the required date
for commencement of such coverage. At least thirty (30) days prior to expiration
of any such policy, Tenant shall deliver to Landlord, and Landlord's lenders if
required by such lenders, a certificate evidencing renewal, or a certified copy
of a new policy or certificate evidencing the same, together with evidence of
payment of the required premiums. If Tenant fails to provide to Landlord any
such policy or certificate by the required date for commencement of coverage, or
within fifteen (15) days prior to expiration of any policy, or to pay the
premiums therefor when required, Landlord shall have the right, but not the
obligation, to procure said insurance and pay the premiums therefor. Any
premiums so paid by Landlord shall be repaid by Tenant to Landlord with the next
due installment of rent, and failure to repay the same shall have the same
consequences as failure to pay any installment of Rent.

             21.7 Landlord may provide the property insurance required under
this Article 21 pursuant to a so-called blanket policy or policies of property
insurance maintained by Landlord.

             21.8 Landlord and Tenant each hereby waive any and all rights of
recovery against the other or against the officers, directors, partners,
employees, agents, and representatives of the other, on account of loss or
damage to such waiving party's property or the property of others under its
control, to the extent that such loss or damage is caused by or results from
risks insured against under any insurance policy which insures such waiving
party's property at the time of such loss or damage, which waiver shall continue
in effect as long as the parties' respective insurers permit such waiver under
the terms of their respective insurance policies or otherwise in writing. Any
termination of such waiver shall be by written notice as hereinafter set forth.
Prior to obtaining policies of insurance required or permitted under this Lease,
Landlord and Tenant shall give notice to the insurers that the foregoing mutual
waiver is contained in this Lease, and each party shall use its best efforts to
cause such insurer to approve such waiver in writing and to cause each insurance
policy obtained by it to provide that the insurer waives all right of recovery
by way of subrogation against the other party. If such written approval of such
waiver of subrogation cannot be obtained from any insurer or is obtainable only
upon payment of an additional premium which the party seeking to obtain the
policy reasonably determines to be commercially unreasonable, the party seeking
to obtain such policy shall notify the other thereof, and the latter shall have
twenty (20) days thereafter to either: (i) identify other insurance companies
reasonably satisfactory to the other party that will provide the written
approval and waiver of subrogation; or (ii) agree to pay such additional
premium. If neither (i) nor (ii) are done, the mutual waiver set forth above
shall not be operative, and the party seeking to obtain the policy shall be
relieved of the obligation to obtain the insurer's written approval and waiver
of subrogation with respect to such policy during such time as such policy is
not obtainable or is obtainable only upon payment of a commercially unreasonable
additional premium as described above. If such policies shall at any subsequent
time be obtainable or obtainable upon payment of a commercially reasonable
additional premium, neither party shall be subsequently liable for failure to
obtain such insurance until a reasonable time after notification thereof by the
other party. If the release of either Landlord or Tenant, as set forth in the
first sentence of this Section 21.8, shall contravene any law with respect to
exculpatory agreements, the liability of the party in question shall be deemed
not released but shall be secondary to the other's insurer.



                                      -22-
<PAGE>   25


         22. DAMAGE OR DESTRUCTION.

             22.1 In the event of damage to or destruction of all or any portion
of the Premises or the improvements and fixtures thereon (collectively,
"improvements") arising from a risk covered by the insurance described in
Section 21.2, Landlord shall within a reasonable time commence and proceed
diligently to repair, reconstruct and restore (collectively, "restore") the Site
Improvements and Building Shell to substantially the same condition as they were
in immediately prior to the casualty, and Tenant shall within a reasonable time
commence and proceed diligently to restore the Tenant Improvements to
substantially the same condition as they were in immediately prior to the
casualty, whether or not the insurance proceeds are sufficient to cover the
actual cost of restoration. Landlord shall be responsible for all insurance
deductibles attributable to the Site Improvements and Building Shell, and for
all costs of restoration of the Site Improvements and Building Shell in excess
of insurance proceeds for the Site Improvements and Building Shell. Tenant shall
be responsible for all insurance deductibles attributable to the Tenant
Improvements, and for all costs of restoration in excess of insurance proceeds
for the Tenant Improvements, as an Operating Expense under Section 7.1(b).
Except as expressly set forth below, this Lease shall continue in full force and
effect, notwithstanding such damage or destruction.

             22.2 In the event of any damage to or destruction of all or any
portion of the improvements arising from a risk which is not covered by the
insurance described in Section 21.2, Landlord shall within a reasonable time, at
its expense, commence and proceed diligently to restore the Site Improvements
and Building Shell to substantially the same condition as they were in
immediately prior to the casualty, and Tenant shall within a reasonable time, at
its expense, commence and proceed diligently to restore the Tenant Improvements
to substantially the same condition as they were in immediately prior to the
casualty. This Lease shall continue in full force and effect notwithstanding
such damage or destruction; provided, however, that if the damage or destruction
(i) occurs during the last two years of the term and the expense of restoration
to either Landlord or Tenant exceeds $200,000, or (ii) occurs at any other time
and the expense of restoration to either Landlord or Tenant exceeds $500,000,
the party responsible for the cost may at its election terminate the Lease
unless the other party elects to pay the full cost of restoration.

             22.3 In satisfying its obligations under this Article 22, neither
party shall be required to fulfill its restoration responsibilities with
improvements identical to those which were damaged or destroyed; rather, with
the consent of the other party, which consent will not be unreasonably withheld,
the restoring party may restore the damage or destruction with improvements
reasonably equivalent or of reasonably equivalent value to those damaged or
destroyed.

             22.4 In the event of damage, destruction and/or restoration as
herein provided, there shall be no abatement of Rent, and Tenant shall not be
entitled to any compensation or damages occasioned by any such damage,
destruction or restoration. Notwithstanding the foregoing, in the event
restoration of the Site Improvements and Building Shell cannot reasonably be
completed within nine (9) months following the damage or destruction, Landlord
will give notice thereof to Tenant within sixty (60) days following such damage
or destruction, and Tenant at its election may by written notice to Landlord
terminate this Lease effective nine (9) months following such damage or
destruction. In the event of such termination, Tenant shall have no
responsibility for contributing to the expense of restoration.



                                      -23-
<PAGE>   26


             22.5 Notwithstanding anything to the contrary contained in this
Article, should Landlord be delayed or prevented from completing the restoration
of the improvements after the occurrence of such damage or destruction by reason
of acts of God, war, government restrictions, inability to procure the necessary
labor or materials, strikes, or other causes beyond the control of Landlord (but
excluding economic conditions or financial inability to perform), the time for
Landlord to commence or complete restoration shall be extended for the time
reasonably required as a result of such event.

             22.6 If an insured casualty occurs, Landlord shall make the loss
adjustment with the insurance company, which adjustment shall be subject to the
approval of Tenant, which approval shall not be unreasonably withheld, and the
proceeds shall be paid to a fund control escrow established by Landlord and
Tenant for the purpose of paying for the restoration required by this Article
22.

             22.7 Tenant waives the provisions of Civil Code Section 1932(2) and
1933(4) or any similar statute now existing or hereafter adopted governing
destruction of the Premises, so that the parties' rights and obligations in the
event of damage or destruction shall be governed by the provisions of this
Lease.

         23. EMINENT DOMAIN.

             23.1 In the event the whole of the Premises shall be taken for any
public or quasi-public purpose by any lawful power or authority by exercise of
the right of appropriation, condemnation or eminent domain, or sold to prevent
such taking, Tenant or Landlord may terminate this Lease effective as of the
date possession is required to be surrendered to said authority.

             23.2 In the event of a partial taking of the Premises for any
public or quasi-public purpose by any lawful power or authority by exercise of
right of appropriation, condemnation, or eminent domain, or sold to prevent such
taking, then Landlord may elect to terminate this Lease if such taking is of a
material nature such as to make it uneconomical to continue use of the
unappropriated portions for the purposes for which they were intended, and
Tenant may elect to terminate this Lease if such taking is of material detriment
to, and substantially interferes with, Tenant's use and occupancy of the
Premises. In no event shall this Lease be terminated when such a partial taking
does not have a material adverse effect upon Landlord or Tenant or both.
Termination by either party pursuant to this section shall be effective as of
the date possession is required to be surrendered to said authority.



                                      -24-
<PAGE>   27


             23.3 If upon any taking of the nature described in this Article 23
this Lease continues in effect, then Landlord shall promptly proceed to restore
the remaining portion of the Premises, and all improvements and fixtures located
thereon, to substantially their same condition prior to such partial taking;
provided, however, Landlord's obligation hereunder shall be limited to the
amount of the condemnation proceeds. Basic Annual Rent shall be abated
proportionately on the basis of the rental value of the Premises, including
improvements and fixtures, as restored after such taking compared to the rental
value of the Premises prior to such taking.

         24. DEFAULTS AND REMEDIES.

             24.1 Late payment by Tenant to Landlord of Rent and other sums due
will cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which will be extremely difficult and impracticable to ascertain. Such
costs include, but are not limited to, processing and accounting charges and
late charges which may be imposed on Landlord by the terms of any mortgage or
trust deed covering the Premises. Therefore, if any installment of Rent due from
Tenant is not received by Landlord within ten (10) days of the date such payment
is due, Tenant shall pay to Landlord an additional sum of five percent (5%) of
the overdue rent as a late charge. The parties agree that this late charge
represents a fair and reasonable estimate of the costs that Landlord will incur
by reason of late payment by Tenant. In addition to the late charge, Rent not
paid within thirty (30) days of the date such payment is due shall bear interest
from thirty (30) days after the date due until paid at the lesser of (i) ten
percent (10%) per annum or (ii) the maximum rate permitted by law.

             24.2 No payment by Tenant or receipt by Landlord of a lesser amount
than the rent payment herein stipulated shall be deemed to be other than on
account of the rent, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as rent 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 rent or pursue any other remedy
provided. If at any time a dispute shall arise as to any amount or sum of money
to be paid by Tenant to Landlord, Tenant shall have the right to make payment
"under protest" and such payment shall not be regarded as a voluntary payment,
and there shall survive the right on the part of Tenant to institute suit for
recovery of the payment paid under protest.

             24.3 If Tenant fails to pay any sum of money (other than Basic
Annual Rent) required to be paid by it hereunder, or shall fail to perform any
other act on its part to be performed hereunder, Landlord may, without waiving
or releasing Tenant from any obligations of Tenant, but shall not be obligated
to, make such payment or perform such act; provided, that such failure by Tenant
continued for ten (10) days after written notice from Landlord demanding
performance by Tenant was delivered to Tenant, or that such failure by Tenant
unreasonably interfered with the use or efficient operation of the Premises, or
resulted or could have resulted in a violation of law or the cancellation of an
insurance policy maintained by Landlord. All sums so paid or incurred by
Landlord, together with interest thereon, from the date such sums were paid or
incurred, at the annual rate equal to ten percent (10%) per annum or highest
rate permitted by law, whichever is less, shall be payable to Landlord on demand
as Additional Rent.

             24.4 The occurrence of any one or more of the following events
shall constitute a default hereunder by Tenant:



                                      -25-
<PAGE>   28


                  (a) The failure by Tenant to make any payment of Rent, as and
when due, where such failure shall continue for a period of ten (10) days after
written notice thereof from Landlord to Tenant. Such notice shall be in lieu of,
and not in addition to, any notice required under California Code of Civil
Procedure Section 1161;

                  (b) The failure by Tenant to observe or perform any obligation
other than described in Section 24.4(a) to be performed by Tenant, where such
failure shall continue for a period of thirty (30) days after written notice
thereof from Landlord to Tenant; provided, however, that if the nature of
Tenant's default is such that more than thirty (30) days are reasonably required
to cure the default, then Tenant shall not be deemed to be in default if Tenant
shall commence such cure within said thirty (30) day period and thereafter
diligently prosecute the same to completion. Such notice shall be in lieu of,
and not in addition to, any notice required under California Code of Civil
Procedure Section 1161;

                  (c) Tenant makes an assignment for the benefit of creditors;

                  (d) A receiver, trustee or custodian is appointed to, or does,
take title, possession or control of all, or substantially all, of Tenant's
assets;

                  (e) An order for relief is entered against Tenant pursuant to
a voluntary or involuntary proceeding commenced under any chapter of the
Bankruptcy Code;

                  (f) Any involuntary petition is filed against the Tenant under
any chapter of the Bankruptcy Code and is not dismissed within ninety (90) days;
or

                  (g) Tenant's interest in this Lease is attached, executed
upon, or otherwise judicially seized and such action is not released within
ninety (90) days of the action.

                  Notices given under this Section shall specify the alleged
default and shall demand that Tenant perform the provisions of this Lease or pay
the Rent that is in arrears, as the case may be, within the applicable period of
time, or quit the Premises. No such notice shall be deemed a forfeiture or a
termination of this Lease unless Landlord elects otherwise in such notice, and
in no event shall a forfeiture or termination occur without such written notice.

            24.5 In the event of a default by Tenant, and at any time
thereafter, and without limiting Landlord in the exercise of any right or remedy
which Landlord may have, Landlord shall be entitled to terminate Tenant's right
to possession of the Premises by any lawful means, in which case this Lease
shall terminate and Tenant shall immediately surrender possession of the
Premises to Landlord. In such event Landlord shall have the immediate right to
re-enter and remove all persons and property, and such property may be removed
and stored in a public warehouse or elsewhere at the cost of, and for the
account of Tenant, all without service of notice and without being deemed guilty
of trespass, or becoming liable for any loss or damage which may be occasioned
thereby. In the event that Landlord shall elect to so terminate this Lease, then
Landlord shall be entitled to recover from Tenant all damages incurred by
Landlord by reason of Tenant's default, including:



                                      -26-
<PAGE>   29


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

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

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

                  (d) Any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its obligation
under this Lease or which in the ordinary course of things would be likely to
result therefrom, including, but not limited to, the cost of restoring the
Premises to the condition required under the terms of this Lease; plus

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

                  As used in Subsections (a), (b) and (c), the "time of award"
shall mean the date upon which the judgment in any action brought by Landlord
against Tenant by reason of such default is entered or such earlier date as the
court may determined. As used in Subsections (a) and (b), the "worth at the time
of award" shall be computed by allowing interest at the rate specified in
Section 24.1. As used in Subsection (c) above, the "worth at the time of award"
shall be computed by taking the present value of such amount using the discount
rate of the Federal Reserve Bank of San Francisco at the time of award plus one
percentage point.

            24.6 In the event of a default by Tenant, and if Landlord does not
elect to terminate this Lease as provided in Section 24.5 or otherwise terminate
Tenant's right to possession of the Premises, Landlord shall have the remedy
described in Section 1951.4 of the Civil Code. Landlord may continue this Lease
in effect for so long as Landlord does not terminate Tenant's right to
possession of the Premises, and may enforce all of its rights and remedies under
the Lease, including the right from time to time to recover Rent as it becomes
due under the Lease. At any time thereafter, Landlord may elect to terminate
this Lease and to recover damages to which Landlord is entitled.

            24.7 Notwithstanding anything herein to the contrary, Landlord's
reentry to perform acts of maintenance or preservation of, or in connection with
efforts to relet, the Premises, or any portion thereof, or the appointment of a
receiver upon Landlord's initiative to protect Landlord's interest under this
Lease, shall not terminate Tenant's right to possession of the Premises or any
portion thereof and, until Landlord does elect to terminate this Lease, this
Lease shall continue in full force and Landlord may pursue all its remedies
hereunder, including, without limitation, the right to recover from Tenant as
they become due hereunder all Rent and other charges required to be paid by
Tenant under the terms of this Lease.



                                      -27-
<PAGE>   30


             24.8 All rights, options, and remedies of Landlord contained in
this Lease shall be construed and held to be nonexclusive and cumulative.
Landlord shall have the right to pursue any one or all of such remedies or any
other remedy or relief which may be provided by law, whether or not stated in
this Lease. No waiver of any default of Tenant hereunder shall be implied from
any acceptance by Landlord of any rent or other payments due hereunder or by any
omission by Landlord to take any action on account of such default if such
default persists or is repeated, and no express waiver shall affect defaults
other than as specified in said waiver.

             24.9 Termination of this Lease or Tenant's right to possession by
Landlord shall not relieve Tenant from any liability to Landlord which has
theretofore accrued or shall arise based upon events which occurred prior to the
last to occur of (i) the date of Lease termination or (ii) the date possession
of Premises is surrendered.

             24.10 Landlord shall not be in default unless Landlord fails to
perform obligations required of Landlord within a reasonable time, but in no
event later than thirty (30) days after written notice by Tenant specifying
wherein Landlord has failed to perform such obligation; provided, however, that
if the nature of Landlord's obligation is such that more than thirty (30) days
are required for performance, then Landlord shall not be in default if Landlord
commences performance within such thirty (30) day period and thereafter
diligently prosecutes the same to completion.

             24.11 In the event of any default on the part of Landlord, Tenant
will give notice by registered or certified mail to any beneficiary of a deed of
trust or mortgagee of a mortgage covering the Premises whose address shall have
been furnished and shall offer such beneficiary and/or mortgagee a reasonable
opportunity to cure the default, including time to obtain possession of the
Premises by power of sale or a judicial action if such should prove necessary to
effect a cure.

         25. ASSIGNMENT OR SUBLETTING.

             25.1 Except as hereinafter provided, Tenant shall not, either
voluntarily or by operation of law, sell, hypothecate or transfer this Lease, or
sublet the Premises or any part thereof, or permit or suffer the Premises or any
part thereof to be used or occupied as work space, storage space, concession or
otherwise by anyone other than Tenant or Tenant's employees, without the prior
written consent of Landlord in each instance, which consent shall not be
unreasonably withheld or delayed.

             25.2 If Tenant desires to assign this Lease to any entity into
which Tenant is merged, with which Tenant is consolidated, or which acquires all
or substantially all of the assets of Tenant, provided that the assignee first
executes, acknowledges and delivers to Landlord an agreement whereby the
assignee agrees to be bound by all of the covenants and agreements in this Lease
arising after the effective date of the transfer, then Landlord upon receipt of
proof of foregoing, will consent to the assignment.



                                      -28-
<PAGE>   31


             25.3 In the event Tenant desires to assign, hypothecate or
otherwise transfer this Lease or sublet the Premises or any part thereof to a
transferee other than one set forth in Section 25.2, then at least ten (10)
days, but not more than forty-five (45) days, prior to the date when Tenant
desires the assignment or sublease to be effective (the "Assignment Date"),
Tenant shall give Landlord a notice (the "Assignment Notice") which shall set
forth the name, address and business of the proposed assignee or sublessee,
information (including references and financial statements) concerning the
reputation and financial ability of the proposed assignee or sublessee, the
Assignment Date, any ownership or commercial relationship between Tenant and the
proposed assignee or sublessee, and the consideration and all other material
terms and conditions of the proposed assignment or sublease, all in such detail
as Landlord shall reasonably require.

             25.4 Landlord in making its determination as to whether consent
should be given to a proposed assignment or sublease, may give consideration to
the reputation of a proposed successor, the financial strength of such successor
(notwithstanding the assignor remaining liable for Tenant's performance), and
any use which such successor proposes to make of the Premises. If Landlord fails
to deliver written notice of its determination to Tenant within fifteen (15)
days following receipt of the Assignment Notice and the information required
under Section 25.3, Landlord shall be deemed to have approved the request. As a
condition to any assignment or sublease to which Landlord has given consent, any
such assignee or sublessee must execute, acknowledge and deliver to Landlord an
agreement whereby the assignee or sublessee agrees to be bound by all of the
covenants and agreements in this Lease.

             25.5 Any sale, assignment, hypothecation or transfer of this Lease
or subletting of Premises that is not in compliance with the provisions of this
Article 25 shall be void and shall, at the option of Landlord, terminate this
Lease.

             25.6 The consent by Landlord to an assignment or subletting shall
not relieve Tenant or any assignee of this Lease or sublessee of the Premises
from obtaining the consent of Landlord to any further assignment or subletting
or as releasing Tenant or any assignee or sublessee of Tenant from full and
primary liability.

             25.7 If Tenant shall sublet the Premises or any part thereof Tenant
hereby immediately and irrevocably assigns to Landlord, as security for Tenant's
obligations under this Lease, all rent from any subletting of all or a part of
the Premises, and Landlord as assignee of Tenant, or a receiver for Tenant
appointed on Landlord's application, may collect such rent and apply it toward
Tenant's obligations under this Lease; except that, until the occurrence of an
act of default by Tenant, Tenant shall have the right to collect such rent.

             25.8 Notwithstanding any subletting or assignment Tenant shall
remain fully and primarily liable for the payment of all Rent and other sums
due, or to become due hereunder, and for the full performance of all other
terms, conditions, and covenants to be kept and performed by Tenant. The
acceptance of rent or any other sum due hereunder, or the acceptance of
performance of any other term, covenant, or condition hereof, from any other
person or entity shall not be deemed to be a waiver of any of the provisions of
this Lease or a consent to any subletting or assignment of the Premises.
Landlord shall not withhold consent to an assignment back to the original Tenant
hereunder from a subsequent assignee.



                                      -29-
<PAGE>   32


             25.9 Any sublease of the Premises shall be subject and subordinate
to the provisions of this Lease, shall not extend beyond the term of this Lease,
and shall provide that the sublessee shall attorn to Landlord, at Landlord's
sole option, in the event of the termination of this Lease. Landlord and any
lender shall upon Tenant's request provide any subtenant of the entirety of the
Premises with a recognition and nondisturbance agreement in the form set forth
in Article 35 hereof on the condition that the sublessee agrees to attorn to
Landlord on exactly the same terms and conditions as this Lease.

             25.10 In the event Tenant assigns, hypothecates or otherwise
transfers this Lease or sublets the Premises to a transferee other than one set
forth in Section 25.2, Tenant shall pay to Landlord, as Additional Rent, fifty
percent (50%) of the rent and other consideration received from the transferee
during the term of this Lease in excess of Rent payable to Landlord under this
Lease, after Tenant has recouped any reasonable commission, legal, improvement
and other out-of-pocket expenses occasioned by such transfer and payable to
third parties, and after Tenant has recouped any expenses incurred for tenant
improvements to the transferred space constructed after the Term Commencement
Date.

         26. ATTORNEY'S FEES.

             26.1 If either party becomes a party to any action or proceeding
concerning this Lease, the Premises, or the Building or Project in which the
Premises are located, by reason of any act or omission of the other party or its
authorized representatives, and not by any act or omission of the party that
becomes a party to that litigation or any act or omission of its authorized
representatives, the party that causes the other party to become involved in the
litigation shall be liable to that party for reasonable attorneys' fees, expert
witness fees, and court costs incurred by it in the litigation.

             26.2 If either party commences an action or proceeding against the
other party arising out of or in connection with this Lease, the prevailing
party shall be entitled to have and recover from the other party reasonable
attorneys' fees, expert witness fees and costs of suit.

         27. BANKRUPTCY.

             27.1 In the event a debtor or trustee under the Bankruptcy Code, or
other person with similar rights, duties and powers under any other law,
proposes to cure any default under this Lease or to assume or assign this Lease,
and is obliged to provide adequate assurance to Landlord that (i) a default will
be cured, (ii) Landlord will be compensated for its damages arising from any
breach of this Lease, or (iii) future performance under this Lease will occur,
then adequate assurance shall include any or all of the following, as determined
by the Bankruptcy Court: (a) those acts specified in the Bankruptcy Code or
other law as included within the meaning of adequate assurance; (b) a cash
payment to compensate Landlord for any monetary defaults or damages arising from
a breach of this Lease; (c) the credit worthiness and desirability, as a tenant,
of the person assuming this Lease or receiving an assignment of this Lease, at
least equal to Landlord's customary and usual credit worthiness requirements and
desirability standards in effect at the time of the assumption or assignment, as
determined by the Bankruptcy Court; and (d) the assumption or assignment of all
of Tenant's interest and obligations under this Lease.



                                      -30-
<PAGE>   33


         28. DEFINITION OF LANDLORD.

             28.1 The term "Landlord" as used in this Lease, so far as covenants
or obligations on the part of Landlord are concerned, shall be limited to mean
and include only Landlord or the successor-in-interest of Landlord under this
Lease at the time in question. In the event of any transfer, assignment or
conveyance of Landlord's title or leasehold, the Landlord herein named (and in
case of any subsequent transfers or conveyances, the then grantor and any prior
grantors) shall be automatically freed and relieved from and after the date of
such transfer, assignment or conveyance of all liability for the performance of
any covenants or obligations contained in this Lease thereafter to be performed
by Landlord and, without further agreement, the transferee of such title or
leasehold shall be deemed to have assumed and agreed to observe and perform any
and all obligations of Landlord hereunder, during its ownership of the Premises.
Landlord may transfer its interest in the Premises or this Lease without the
consent of Tenant and such transfer or subsequent transfer shall not be deemed a
violation on the part of Landlord or the then grantor of any of the terms or
conditions of this Lease.

         29. ESTOPPEL CERTIFICATE.

             29.1 Each party shall, within fifteen (15) days of written notice
from the other party, execute, acknowledge and deliver to the other party a
statement in writing on a form reasonably requested by a proposed lender,
purchaser, assignee or subtenant (i) certifying that this Lease is unmodified
and in full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease as so modified is in full force and
effect) and the dates to which the rental and other charges are paid in advance,
if any, (ii) acknowledging that there are not, to each party's knowledge, any
uncured defaults on the part of Landlord or Tenant hereunder (or specifying such
defaults if any are claimed) and (iii) setting forth such further information
with respect to this Lease or the Premises as may be reasonably requested
thereon. Any such statement may be relied upon by any prospective lender,
purchaser, assignee or subtenant of all or any portion of the Premises.

         30. REMOVAL OF PROPERTY.

             30.1 Except as provided below, all fixtures and personal property
owned by Tenant shall be and remain the property of Tenant, and may be removed
by Tenant at the expiration or earlier termination of the term of this Lease;
however, only those major items of equipment which are built in to the Premises
listed on Exhibit "G" ("Tenant's Removable Property"), and any HVAC package
units Tenant elects to install after the first eight (8) years of the term
pursuant to Section 18.2, may be removed by Tenant. Other equipment, such as
fume hoods, chemistry hoods, cabling for telecom and computers, package HVAC
units, and case work, including lab benches and sinks, may not be removed by
Tenant.



                                      -31-
<PAGE>   34


             30.2 The Project, Building and Tenant Improvements, and all
fixtures and personal property owned by Landlord, shall be and remain the
property of Landlord, and shall, upon the expiration or earlier termination of
this Lease, remain upon and be surrendered with the Premises as a part thereof.

             30.3 Notwithstanding Sections 30.1, Tenant may not remove any
property if such removal would cause material damage to the Premises, unless
such damages can be and is repaired by Tenant. Furthermore, Tenant shall repair
any damage to the Premises caused by Tenant's removal of any such property, and
shall, prior to the expiration or earlier termination of this Lease, restore and
return the Premises to the condition they were in when first occupied by Tenant,
reasonable wear and tear excepted. At a minimum, even if they are determined to
be fixtures or personal property owned by Tenant, Tenant shall leave in place
and repair any damage to the interior floors, walls, doors and ceilings of the
Premises, and the heating, ventilation, air conditioning, plumbing, and
electrical systems; all such property shall become the property of Landlord upon
the expiration or earlier termination of this Lease, and shall remain upon and
be surrendered with the Premises as a part thereof. The provisions of Article 17
shall apply to any restoration work under this Article as if the restoration was
an alteration, addition or improvement thereunder. Should Tenant require any
period beyond the expiration or earlier termination of the Lease to complete
such restoration, Tenant shall be a tenant at sufferance subject to the
provisions of Section 12.2 hereof.

             30.4 If Tenant shall fail to remove any fixtures or personal
property which it is entitled to remove under this Article 30 from the Premises
prior to termination of this Lease, then Landlord may dispose of the property
under the provisions of Section 1980 et seq. of the California Civil Code, as
such provisions may be modified from time to time, or under any other applicable
provisions of California law.

         31. LIMITATION OF LANDLORD'S LIABILITY.

             31.1 If Landlord is in default of this Lease, and as a consequence,
Tenant recovers a money judgment against Landlord, the judgment shall be
satisfied only out of the proceeds of sale received on execution of the judgment
and levy against the right, title, and interest of Landlord in the Project of
which the Premises are a part, and out of rent or other income from the Project
receivable by Landlord or out of the consideration received by Landlord from the
sale or other disposition of all or any part of Landlord's right, title, and
interest in the Building and Project of which the Premises are a part, or by
offsetting Rent under this Lease.

             31.2 Neither Landlord nor Landlord's Agents shall be personally
liable for any deficiency except to the extent liability is based upon willful
and intentional misconduct. If Landlord is a partnership or joint venture, the
partners of such partnership shall not be personally liable and no partner of
Landlord shall be sued or named as a party in any suit or action, or service of
process be made against any partner of Landlord, except as may be necessary to
secure jurisdiction of the partnership or joint venture or to the extent
liability is caused by willful and intentional misconduct. If Landlord is a
corporation, the shareholders, directors, officers, employees, and/or agents of
such corporation shall not be personally liable and no shareholder, director,



                                      -32-
<PAGE>   35


officer, employee, or agent of Landlord shall be sued or named as a party in any
suit or action, or service of process be made against any shareholder, director,
officer, employee, or agent of Landlord, except as may be necessary to secure
jurisdiction of the corporation. If Landlord is a limited liability company, the
members, managers, officers, employees, and/or agents of such limited liability
company shall not be personally liable and no member, manager, officer,
employee, or agent of Landlord shall be sued or named as a party in any suit or
action, or service of process be made against any member, manager, officer,
employee, or agent of Landlord, except as may be necessary to secure
jurisdiction of the corporation. No partner, shareholder, director, member,
manager, employee, or agent of Landlord shall be required to answer or otherwise
plead to any service of process and no judgment will be taken or writ of
execution levied against any partner, shareholder, director, member, manager,
employee, or agent of Landlord.

             31.3 Each of the covenants and agreements of this Article 31 shall
be applicable to any covenant or agreement either expressly contained in this
Lease or imposed by statute or by common law.

         32. CONTROL BY LANDLORD.

             32.1 Landlord reserves full control over the Building and Project
to the extent not inconsistent with Tenant's quiet enjoyment and use of
Premises. This reservation includes the right to establish ownership of the
buildings separate from fee title to the real property underlying the Buildings,
and to divide the Project into more than one lot.

             32.2 Tenant shall, should Landlord so request, promptly join with
Landlord in execution of such documents as may be appropriate to assist Landlord
to implement any such action provided Tenant need not execute any document which
is of a nature wherein liability is created in Tenant or if by reason of the
terms of such document Tenant will be deprived of the quiet enjoyment and use of
the Premises as granted by this Lease.

         33. QUIET ENJOYMENT.

             33.1 So long as Tenant is not in default, Landlord covenants that
Landlord or anyone acting through or under Landlord will not disturb Tenant's
occupancy of the Premises except as permitted by the provisions of this Lease
and that Landlord shall use reasonable efforts to enforce the lease obligations
of tenants of the balance of the Building and Project to the extent they might
otherwise disturb Tenant's occupancy.

         34. QUITCLAIM DEED.

             34.1 Tenant shall execute and deliver to Landlord on the expiration
or termination of this Lease, immediately on Landlord's request, a quitclaim
deed to the Premises and Project or other document in recordable form suitable
to evidence of record termination of this Lease and the right of first refusal
and option contained herein.



                                      -33-
<PAGE>   36


         35. SUBORDINATION AND ATTORNMENT.

             35.1 Unless the mortgagee or beneficiary elects otherwise at any
time prior to or following a default by Tenant, this Lease shall be subject to
and subordinate to the lien of any mortgage or deed of trust now or hereafter in
force against the Project and Building of which the Premises are a part, and to
all advances made or hereafter to be made upon the security thereof without the
necessity of the execution and delivery of any further instruments on the part
of Tenant to effectuate such subordination, provided that the lienholder,
beneficiary, or mortgagee has previously executed and delivered to Tenant a
non-disturbance, attornment, and subordination agreement in such form as the
lienholder, beneficiary, or mortgagee may request and as the Tenant may approve,
which approval will not be unreasonably withheld, setting forth that so long as
Tenant is not in default hereunder, Landlord's and Tenant's rights and
obligations hereunder shall remain in force and Tenant's right to possession
shall be upheld. Furthermore, Landlord shall provide to Tenant, within
forty-five (45) days after execution of this Lease by both parties, such a
nondisturbance agreement from the beneficiary of any mortgage presently
encumbering the Project.

             35.2 Notwithstanding the foregoing, Tenant shall execute and
deliver upon demand such further instrument or instruments evidencing such
subordination of this Lease to the lien of any such mortgage or deed of trust as
may be required by Landlord and in a form reasonably satisfactory to Tenant,
provided that the lienholder, beneficiary, or mortgagee has previously executed
and delivered to Tenant a non-disturbance agreement in recordable form. However,
if any such mortgagee or beneficiary so elects at any time prior to or following
a default by Tenant, this Lease shall be deemed prior in lien to any such
mortgage or deed of trust regardless of date and Tenant will execute a statement
in writing to such effect at Landlord's request in a form reasonably
satisfactory to Tenant.

             35.3 In the event any proceedings are brought for foreclosure, or
in the event of the exercise of the power of sale under any mortgage or deed of
trust made by the Landlord covering the Premises, the Tenant shall at the
election of the purchaser at such foreclosure or sale attorn to the purchaser
upon any such foreclosure or sale and recognize such purchaser as the Landlord
under this Lease in accordance with the terms of the non-disturbance Agreement.

         36. SURRENDER.

             36.1 No surrender of possession of any part of the Premises shall
release Tenant from any of its obligations hereunder unless accepted by
Landlord.

             36.2 The voluntary or other surrender of this Lease by Tenant shall
not work a merger, unless Landlord consents, and shall, at the option of
Landlord, operate as an assignment to it of any or all subleases or
subtenancies.



                                      -34-
<PAGE>   37


         37. WAIVER AND MODIFICATION.

             37.1 No provision of this Lease may be modified, amended or added
to except by an agreement in writing. The waiver by Landlord of any breach of
any term, covenant or condition herein contained shall not be deemed to be a
waiver of any subsequent breach of the same or any other term, covenant or
condition herein contained.

         38. WAIVER OF JURY TRIAL.

             38.1 The parties hereto shall and they hereby do waive trial by
jury in any action, proceeding or counterclaim brought by either of the parties
hereto against the other on any matters 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, and/or any claim of injury or damage.

         39. HAZARDOUS MATERIAL.

             39.1 During the term, Tenant, at its sole cost, shall comply with
all federal, state and local laws, statutes, ordinances, codes, regulations and
orders relating to the receiving, handling, use, storage, accumulation,
transportation, generation, spillage, migration, discharge, release and disposal
of Hazardous Material (as defined below) in or about the Premises. Tenant shall
not cause or permit any Hazardous Material to be brought upon, kept or used in
or about the Premises by Tenant, its agents, employees, contractors, invitees or
subtenants, in a manner or for a purpose prohibited by any federal, state or
local agency or authority. The accumulation of Hazardous Material shall be in
approved containers and removed from the Premises by duly licensed carriers.

             39.2 Tenant shall immediately provide Landlord with telephonic
notice, which shall promptly be confirmed by written notice, of any and all
spillage, discharge, release and disposal of Hazardous Material onto or within
the Premises, including the soils and subsurface waters thereof, which by law
must be reported to any federal, state or local agency, and any injuries or
damages resulting directly or indirectly therefrom. Further, Tenant shall
deliver to Landlord each and every notice or order, when said order or notice
identifies a violation which may have the potential to adversely impact the
Premises, received from any federal, state or local agency concerning Hazardous
Material and the possession, use and/or accumulation thereof promptly upon
receipt of each such notice or order by Tenant. Landlord shall have the right,
upon reasonable notice, to inspect and copy each and every notice or order
received from any federal, state or local agency concerning Hazardous Material
and the possession, use and/or accumulation thereof.

             39.3 Tenant shall be responsible for and shall indemnify, protect,
defend and hold harmless Landlord and Landlord's Agents from any and all
liability, damages, injuries, causes of action, claims, judgments, costs,
penalties, fines, losses, and expenses which arise during or after the term of
this Lease and which result from Tenant's (or from Tenant's Agents, assignees,
subtenants, employees, agents, contractors, licensees, or invitees) receiving,
handling, use, storage, accumulation, transportation, generation, spillage,
migration, discharge, release or disposal of Hazardous Material in, upon or
about the Premises, including without limitation (i) diminution in value of the
Premises or any portion of the Project, (ii) damages for the loss or restriction
on use of any portion or amenity of the Premises or Project, (iii) damages
arising from any adverse impact on marketing of space in the Premises or the
Project, (iv) damages and the costs of remedial work to other property in the



                                      -35-
<PAGE>   38


vicinity of the Project owned by Landlord or an affiliate of Landlord, and (v)
consultant fees, expert fees, and attorneys' fees. Landlord shall be responsible
for and shall indemnify, protect, defend and hold harmless Tenant on the same
basis as above for any claims which result from Landlord's or from Landlord's
Agents receiving, handling, use, storage, accumulation, transportation,
generation, spillage, migration, discharge, release or disposal of Hazardous
Material in, upon or about the Premises.

             39.4 The indemnification of Landlord and Landlord's Agents by
Tenant pursuant to the preceding Section 39.3 includes, without limiting the
generality of Section 39.3, reasonable costs incurred in connection with any
investigation of site conditions or any cleanup, remedial, removal or
restoration work required by any federal, state or local governmental agency or
political subdivision because of Hazardous Material present in the soil,
subsoil, ground water, or elsewhere on, under or about the Premises, or on,
under or about any other property in the vicinity of the Project owned by
Landlord or an affiliate of Landlord. Without limiting the foregoing, if the
presence of any Hazardous Material on the Premises caused or permitted by Tenant
results in any contamination of the Premises, or underlying soil or groundwater,
Tenant shall promptly take all actions at its sole expense as are necessary to
return the Premises to that condition required by applicable law, provided that
Landlord's approval of such action shall first be obtained, which approval shall
not be unreasonably withheld, except that Tenant shall not be required to obtain
Landlord's prior approval of any action of an emergency nature reasonably
required or any action mandated by a governmental authority, but Tenant shall
give Landlord prompt notice thereof.

             39.5 Landlord acknowledges that it is not the intent of this
Article 39 to prohibit Tenant from operating its business as described in
Article 10 or to unreasonably interfere with the operation of Tenant's business.
Tenant may operate its business according to the custom of the industry so long
as the use or presence of Hazardous Material is strictly and properly monitored
according to all applicable governmental requirements. As a material inducement
to Landlord to allow Tenant to use Hazardous Material in connection with its
business, Tenant agrees to make available to Landlord upon reasonable request a
list identifying each type of Hazardous Material to be present in or upon the
Premises and setting forth any and all governmental approvals or permits
required in connection with the presence of Hazardous Material on the Premises
("Hazardous Material Summary") and a copy of the Hazardous Material business
plan prepared pursuant to Health and Safety Code Section 25500 et seq. At
Landlord's request, and at reasonable times, Tenant shall make available to
Landlord the latest available Hazardous Materials Summary and true and correct
copies of the following documents (hereinafter referred to as the "Hazardous
Material Documents") relating to the handling, storage, disposal and emission of
Hazardous Material: permits; approvals; reports and correspondence; storage and
management plans; notice of violations of any laws; plans relating to the
installation of any storage tanks to be installed in or under the Premises
(provided said installation of tanks shall be permitted only after Landlord has
given Tenant its written consent to do so, which consent may not be unreasonably
withheld); and all closure plans or any other documents required by any and all
federal, state and local governmental agencies and authorities for any storage
tanks installed in, on or about the Premises for the closure of any such tanks.
Tenant shall not be required, however, to provide Landlord with that portion of
any document which contains information of a proprietary nature and which, in
and of itself, does not contain a reference to any Hazardous Material which are
not otherwise identified to Landlord in such documentation, unless any such
Hazardous Material Document names Landlord as an "owner" or "operator" of the



                                      -36-
<PAGE>   39


facility in which Tenant is conducting its business. It is not the intent of
this subsection to provide Landlord with information which could be detrimental
to Tenant's business should such information become possessed by Tenant's
competitors. Landlord shall treat all information furnished by Tenant to
Landlord pursuant to this Section 39.5 as confidential and shall not disclose
such information to any person or entity without Tenant's prior written consent,
which consent shall not be unreasonably withheld or delayed, except as required
by law.

             39.6 Notwithstanding other provisions of this Article 39, it shall
be a default under this Lease, and Landlord shall have the right to terminate
the Lease and/or pursue its other remedies under Article 24, in the event that
(i) Tenant's use of the Premises for the generation, storage, use, treatment or
disposal of Hazardous Material is in a manner or for a purpose prohibited by
applicable law unless Tenant is diligently pursuing compliance with such law,
(ii) Tenant has been required by any governmental authority to take remedial
action in connection with Hazardous Material contaminating the Premises if the
contamination resulted from Tenant's action or use of the Premises, unless
Tenant is diligently pursuing compliance with such requirement, or (iii) Tenant
is subject to an enforcement order issued by any governmental authority in
connection with Tenant's use, disposal or storage of a Hazardous Material on the
Premises, unless Tenant is diligently seeking compliance with such enforcement
order.

             39.7 Notwithstanding the provisions of Article 25, if (i) any
anticipated use of the Premises by a proposed assignee or subtenant involves the
generation or storage, use, treatment or disposal of Hazardous Material in any
manner or for a purpose prohibited by any applicable law, (ii) the proposed
assignee or sublessee has been required by any governmental authority to take
remedial action in connection with Hazardous Material contaminating a property
if the contamination resulted from such party's action or use of the property in
question and has failed to take such action, or (iii) the proposed assignee or
sublessee is subject to a final, unappealable enforcement order issued by any
governmental authority in connection with such party's use, disposal or storage
of Hazardous Material of a type such proposed assignee or sublessee intends to
use in the Premises and shall have failed to comply with such order, it shall
not be unreasonable for Landlord to withhold its consent to an assignment or
subletting to such proposed assignee or sublessee.

             39.8 Landlord represents that, to the best of its knowledge, as of
the date of this Lease, there is no Hazardous Material on the Premises. Landlord
shall provide Tenant with a Phase I Environmental Site Assessment, and any Phase
II Environmental Site Assessment recommended therein, as of the date Landlord
completes the Building Shell. Should the environmental site assessment(s)
disclose the presence of Hazardous Material beyond legally permissible levels,
Landlord shall correct the deficiencies to Tenant's reasonable satisfaction and
shall cause updates to the environmental site assessment(s) to be issued
reflecting the remedy. The environmental site assessment(s) and all updates
thereto are hereinafter referred to as the "Base Line Report," and shall be
deemed conclusive as to the condition of the Premises, unless, within ninety
(90) days of receipt, Tenant causes an inspection of its own to be conducted,
which inspection discloses the presence of Hazardous Material materially
different from that disclosed in the Base Line Report.



                                      -37-
<PAGE>   40


             39.9 At any time prior to the expiration or earlier termination of
the term of the Lease, Landlord shall have the right to enter upon the Premises
at all reasonable times and at reasonable intervals in order to conduct
appropriate tests regarding the presence, use and storage of Hazardous Material,
and to inspect Tenant's records with regard thereto. Tenant will pay the
reasonable costs of any such test which demonstrates that contamination in
excess of permissible levels has occurred and such contamination was caused by
Tenant's use of the Premises during the term of the Lease. Tenant shall correct
any deficiencies identified in any such tests in accordance with its obligations
under this Article 39 to the extent the result of Tenant's use of the Premises
during the term of this Lease.

             39.10 Tenant shall at its own expense cause an environmental site
assessment of the Premises to be conducted and a report thereof delivered to
Landlord upon the expiration or earlier termination of the Lease, such report to
be as complete and broad in scope as is necessary to identify any impact on the
Premises Tenant's operations might have had (hereinafter referred to as the
"Exit Report"). In order to facilitate the Exit Report, Tenant shall install, as
part of the Tenant Improvements, a sampling port on the sewer drain from the
Premises. Tenant shall correct any deficiencies identified in the Exit Report in
accordance with its obligations under this Article 39 prior to the expiration or
earlier termination of this Lease. This Article 39 is the exclusive provision in
this Lease regarding clean-up, repairs or maintenance arising from receiving,
handling, use, storage, accumulation, transportation, generation, spillage,
migration, discharge, release or disposal of Hazardous Material in, upon or
about the Premises, and the provisions of Articles 7, 10, 18, and 20 shall not
apply thereto.

             39.11 Tenant's obligations under this Article 39 shall survive the
termination of the Lease.

             39.12 As used herein, the term "Hazardous Material" means any
hazardous or toxic substance, material or waste which is or becomes regulated by
any local governmental authority, the State of California or the United States
Government. The term "Hazardous Material" includes, without limitation, any
material or substance which is (i) defined as a "hazardous waste," "extremely
hazardous waste" or "restricted hazardous waste" under Sections 25515, 25117 or
25122.7, or listed pursuant to Section 25140, of the California Health and
Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii)
defined as a "hazardous substance" under Section 25316 of the California Health
and Safety Code, Division 2, Chapter 6.8 (Carpenter-Presly-Tanner Hazardous
Substance Account Act), (iii) defined as a "hazardous material," hazardous
substance" or "hazardous waste" under Section 25501 of the California Health and
Safety Code, Division 20, Chapter 6.95 (Hazardous Substances), (v) petroleum,
(vi) asbestos, (vii) listed under Article 9 and defined as hazardous or
extremely hazardous pursuant to Article 11 of Title 22 of the California
Administrative Code, Division 4, Chapter 20, (viii) designated as a "hazardous
substance" pursuant to Section 311 of the Federal Water Pollution Control Act
(33 U.S.C. Section 1317), (ix) defined as a "hazardous waste" pursuant to
Section 1004 of the Federal Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901, et. seq. (42 U.S.C. Section 6903), or (x) defined as a "hazardous
substance" pursuant to Section 101 of the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. Section 9601 et. seq. (42 U.S.C.
Section 9601).



                                      -38-
<PAGE>   41


         40. RIGHT OF FIRST REFUSAL TO LEASE ADDITIONAL SPACE.

             40.1 If at any time during the term of this Lease Landlord
determines to lease all or any part of the balance of the space in Building One
(approximately 10,080 square feet of Rentable Area), Landlord shall give written
notice to Tenant ("Right of First Refusal Notice") of the economic terms and
conditions on which Landlord would be willing to lease all or any part of the
balance of the space. If Tenant, within fifteen (15) days after receipt of
Landlord's Right of First Refusal Notice, agrees in writing to lease all or any
part of the balance of the space in Building One on the terms and conditions
stated in the notice, Landlord shall lease the space to Tenant on the economic
terms and conditions stated in the notice.

             40.2 If Tenant does not agree in writing to lease all or any part
of the balance of the space in Building One within fifteen (15) days after
receipt of Landlord's Right of First Refusal Notice, or if Landlord and Tenant
have not entered into a lease agreement within thirty (30) days thereafter,
Landlord shall have the right to lease the space to a third party on economic
terms and conditions no more favorable than the economic terms and conditions
stated in the Right of First Refusal Notice. If Landlord does not lease such
space to the prospective tenant within one hundred eighty (180) days after the
Right of First Refusal Notice, any lease transaction thereafter shall be deemed
a new determination by Landlord to lease the space and the provisions of this
Section shall again be applicable.

             40.3 The Right of First Refusal herein granted to Tenant is not
assignable separate and apart from this Lease.

             40.4 Tenant shall not have the right to exercise the Right of First
Refusal, notwithstanding anything set forth above to the contrary: (a) During
the time commencing from the date Landlord gives to Tenant a written notice that
Tenant is in default under any provision of this Lease and continuing until the
default alleged in said notice is cured; (b) During the period of time
commencing on the day after a monetary obligation to Landlord is due from Tenant
and unpaid without any necessity for notice thereof to Tenant and continuing
until the obligation is paid; or (c) After the expiration or earlier termination
of this Lease. The period of time within which the Right of First Refusal may be
exercised shall not be extended or enlarged by reason of the Tenant's inability
to exercise the Right of First Refusal because of the foregoing provisions. At
the election of Landlord, all rights of Tenant under the provisions of this
Article 40 shall terminate and be of no further force or effect even after
Tenant's due and timely exercise of the Right of First Refusal, if, after such
exercise, but prior to the execution of said lease, (1) Tenant fails to pay to
Landlord a monetary obligation of Tenant for a period of thirty (30) days after
such obligation becomes due (without necessity of Landlord to give notice to
Tenant), or (2) Tenant fails to commence to cure a default within thirty (30)
days after the date Landlord gives notice to Tenant of such default.

             40.5 The Right of First Refusal is continuing, in that if Tenant
fails to exercise the Right of First Refusal with regard to any particular
space, the Right of First Refusal shall nevertheless apply to that particular
space if Landlord determines to lease all or any part of such space at any later
time, and to any other space which Landlord determines to lease in the Building.



                                      -39-
<PAGE>   42


         41. MISCELLANEOUS.

             41.1 TERMS AND HEADINGS. Where applicable in this Lease, the
singular includes the plural and the masculine or neuter includes the masculine,
feminine and neuter. The section headings of this Lease are not a part of this
Lease and shall have no effect upon the construction or interpretation of any
part hereof.

             41.2 EXAMINATION OF LEASE. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of or
option for lease, and it is not effective as a lease or otherwise until
execution by and delivery to both Landlord and Tenant.

             41.3 TIME. Time is of the essence with respect to the performance
of every provision of this Lease in which time of performance is a factor.

             41.4 COVENANTS AND CONDITIONS. Each provision of this Lease
performable by Tenant shall be deemed both a covenant and a condition.

             41.5 CONSENTS. Whenever consent or approval of either party is
required, that party shall not unreasonably withhold or delay such consent or
approval, except as may be expressly set forth to the contrary.

             41.6 ENTIRE AGREEMENT. The terms of this Lease are intended by the
parties as a final expression of their agreement with respect to the terms as
are included herein, and may not be contradicted by evidence of any prior or
contemporaneous agreement.

             41.7 SEVERABILITY. Any provision of this Lease which shall prove to
be invalid, void, or illegal in no way affects, impairs or invalidates any other
provision hereof, and such other provisions shall remain in full force and
effect.

             41.8 RECORDING. Within ten (10) days from the execution of this
Lease, Landlord and Tenant shall record a short form memorandum hereof, which
includes references to the right of first refusal contained herein, subject to
the requirement to execute and deliver a quitclaim deed pursuant to the
provisions of Section 34.1 hereof.

             41.9 IMPARTIAL CONSTRUCTION. The language in all parts of this
Lease shall be in all cases construed as a whole according to its fair meaning
and not strictly for or against either Landlord or Tenant.

             41.10 INUREMENT. Each of the covenants, conditions, and agreements
herein contained shall inure to the benefit of and shall apply to and be binding
upon the parties hereto and their respective heirs, legatees, devisees,
executors, administrators, successors, assigns, sublessees, or any person who
may come into possession of said Premises or any part thereof in any manner
whatsoever. Nothing in this Section 41.10 contained shall in any way alter the
provisions against assignment or subletting in this Lease provided.



                                      -40-
<PAGE>   43


             41.11 FORCE MAJEURE. If either party cannot perform any of its
obligations (other than Tenant's obligation to pay Rent), or is delayed in such
performance (other than Tenant's obligation to pay Rent), due to events beyond
such party's control, the time provided for performing such obligations shall be
extended by a period of time equal to the delay attributable to such events.
Events beyond a party's control include, but are not limited to, acts of God
(including earthquake), war, civil commotion, labor disputes, strikes, fire,
flood or other casualty, shortage of labor or material, government regulation or
restriction and weather conditions, but do not include financial inability to
perform.

             41.12 NOTICES. Any notice, consent, demand, bill, statement, or
other communication required or permitted to be given hereunder must be in
writing and may be given by personal delivery, by facsimile transmission, or by
mail, and if given by personal delivery or facsimile transmission shall be
deemed given on the date of delivery or transmission, and if given by mail shall
be deemed sufficiently given three (3) days after time when deposited in United
States Mail if sent by registered or certified mail, addressed to Tenant at the
Premises, or to Tenant or Landlord at the addresses shown in Section 2.1.10
hereof. Either party may, by notice to the other given pursuant to this Section,
specify additional or different addresses for notice purposes.

             41.13 AUTHORITY TO EXECUTE LEASE. Landlord and Tenant each
acknowledge that it has all necessary right, title and authority to enter into
and perform its obligations under this Lease, that this Lease is a binding
obligation of such party and has been authorized by all requisite action under
the party's governing instruments, that the individuals executing this Lease on
behalf of such party are duly authorized and designated to do so, and that no
other signatories are required to bind such party.

         42. DEFINITIONS. Capitalized terms not defined elsewhere in this Lease
shall have the meaning set forth below:

             42.1 "PREMISES" shall have the meaning ascribed to it in Section
1.1.

             42.2 "SITE IMPROVEMENTS". The exterior improvements, to include
surface parking areas, landscaping, drainage, irrigation, gutters, sidewalks,
exterior lighting, walkways, driveways and other improvements and appurtenances
relating to ingress and egress described in the plans and specifications of the
Building Shell and Site Improvements described on Exhibit "C".

             42.3 "SITE PLAN". The site plan attached hereto as Exhibit "A".

             42.4 "BUILDING". The Building Shell and the Tenant Improvements.

             42.5 "BUILDING SHELL". The shell of the Building, as described in
the plans and specifications of the Building Shell and Site Improvements
described on Exhibit "C", consisting of a two story concrete tilt-up structure,
footings, foundations, floors, exterior walls, and roof, with building
electrical service, natural gas, telephone, water, plumbing, and other utilities
necessary for the Tenant Improvements extended from the street and stubbed to
the Building.



                                      -41-
<PAGE>   44


             42.6 "TENANT IMPROVEMENTS". The initial improvements within the
Building Shell desired by Tenant for occupancy and use of the entire Premises by
Tenant, described on Exhibits "D" and "E".

             42.7 "BUILDING SHELL PLANS". The plans and specifications for the
Building Shell described on Exhibit "C".

             42.8 "TENANT IMPROVEMENT PLANS". The plans and specifications for
the Tenant Improvements described on Exhibits "D" and "E".

             42.9 "PROJECT". The Site Improvements, the Building Shell, and the
Tenant Improvements.

             42.10 "TENANT IMPROVEMENT ALLOWANCE" shall have the meaning
ascribed to it in Section 4.3.

             42.11 "TENANT'S REMOVABLE PROPERTY" shall have the meaning ascribed
to it in Section 30.3 and as described on Exhibit "G".


                                      -42-
<PAGE>   45


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


LANDLORD:

NEXUS EQUITY VIII LLC
A California limited liability company
By Nexus Properties, Inc.
A California corporation
Manager


By:      /s/ Michael J. Reidy
         -------------------------------
         Michael J. Reidy
         Chief Executive Officer



TENANT:

EPIMMUNE INC.
A Delaware corporation


By:      /s/ Peter C. Wulff
         -------------------------------
         Name: Peter C. Wulff
         Its: Vice President, Finance and Secretary



                                      -43-
<PAGE>   46


                                   EXHIBIT "A"

                            SITE PLAN OF THE PROJECT
                            ------------------------



<PAGE>   47


                                   EXHIBIT "B"

                             OUTLINE OF THE PREMISES
                             -----------------------



<PAGE>   48


                                   EXHIBIT "C"

             DESCRIPTION OF THE BUILDING SHELL AND SITE IMPROVEMENTS
             -------------------------------------------------------



<PAGE>   49


                                   EXHIBIT "D"

                        FLOOR PLAN OF TENANT IMPROVEMENTS
                        ---------------------------------



<PAGE>   50


                                   EXHIBIT "E"

                  DESCRIPTION AND BUDGET OF TENANT IMPROVEMENTS
                  ---------------------------------------------



<PAGE>   51


                                   EXHIBIT "F"

                              RULES AND REGULATIONS
                              ---------------------



<PAGE>   52


                                   EXHIBIT "G"

                           TENANT'S REMOVABLE PROPERTY
                           ---------------------------


                                 Security System
                                    Autoclave
                                   Cage Washer
                          Animal Caging/Holding System



<PAGE>   53


                                   EXHIBIT "H"

                            DISBURSEMENT INSTRUCTIONS
                            -------------------------