<PAGE>

                                                                    EXHIBIT 10.9

                    DATE OF LEASE EXECUTION: August 4th, 2005
                          (To be completed by Landlord)

                                    ARTICLE I
                                 REFERENCE DATA

1.1   SUBJECTS REFERRED TO:

      Each reference in this Lease to any of the following subjects shall be
construed to incorporate the data stated for that subject in this Section 1.1:

LANDLORD:           MCC3, LLC, a Delaware limited liability company

MANAGING AGENT:     Spaulding and Slye LLC

LANDLORD'S ADDRESS: c/o Spaulding and Slye LLC
                    255 State Street
                    Boston, MA 02109
                    Attn: Chief Financial Officer

                    with a copy of all notices to:

                    Spaulding and Slye LLC
                    1717 Pennsylvania Avenue, N.W.
                    Washington, DC 20006
                    Attn: Director of Property Management

                          and

                    New Boston Fund, Inc.
                    60 State Street
                    Suite 1500 Boston, MA 02109
                    Attn: Jerome L. Rappaport, Jr.

LANDLORD'S REPRESENTATIVE: Sue Kravitz

TENANT:             Vanda Pharmaceuticals, Inc., a Delaware Corporation

TENANT'S ADDRESS (FOR NOTICE AND BILLING):

                    Before Commencement Date:

                    Vanda Pharmaceuticals, Inc.
                    9620 Medical Center Drive, Suite 201
                    Rockville, MD 20850
                    Attn: Chip Clark

                    After Commencement Date:

                    Vanda Pharmaceuticals, Inc.
                    9605 Medical Center Drive
                    Rockville, MD 20850
                    Attn: Chip Clark

<PAGE>

                    with a copy of all notices to:

                    Looney, Cohen, Reagan & Aisenberg LLP
                    109 State Street, 2nd Floor
                    Boston, MA 02109
                    Attn: James H. Cohen, Esq.

TENANT'S REPRESENTATIVE: Chip Clark

BUILDING: The building located on the parcel of land described in Exhibit A
      hereto. References in the Lease to "Base Building" mean the Building shell
      including base Building mechanical, electrical and plumbing systems (other
      than the horizontal distribution lines, ducts or equipment); main lobby
      and elevator lobbies on the first floor, but excluding all leased or
      leasable areas within the Building. A more detailed description of the
      Building Standard Completed Shell is set forth in Part 1 of Exhibit C
      hereto.

BUILDING ADDRESS: 9605 Medical Center Drive, Rockville, MD 20850

RENTABLE FLOOR AREA OF TENANT'S SPACE: Approximately 17,002 square feet,
      measured in accordance with Section 10.24 hereof.

TOTAL RENTABLE FLOOR AREA OF THE BUILDING: Approximately 115,691 square feet,
      measured in accordance with Section 10.24 hereof.

TENANT'S DESIGN COMPLETION DATE: See Exhibit C - Part I

SCHEDULED TERM COMMENCEMENT DATE: January 1, 2006

TERM EXPIRATION DATE: June 30, 2016 or if the Commencement Date occurs other
      than January 1, 2006, then the Term Expiration Date shall be the last day
      of the 126th full calendar month of the Term.

APPROXIMATE TERM: Ten (10) years, six (6) months

ANNUAL RENT: $421,770.00 (triple net) for the first Lease Year (subject to an
      annual adjustment as provided in Section 4.1), computed as follows:

<TABLE>
<S>                                               <C>
  $23.00 p.r.s.f. X 17,002 rentable square feet   =     $391,046.00 (the "Base Annual Rent")
+ $ 1.81 p.r.s.f. X 17,002 rentable square feet   =     $ 30,773.62 (the "Additional Allowance Charge")
                                                        -----------
                                                  =     $421,819.62 Annual Rent
                                                        ===========
</TABLE>

ANNUAL ELECTRICAL COST: As provided in Section 4.4.

SECURITY DEPOSIT: $430,230.00

GUARANTOR: N/A

TENANT ALLOWANCE: In accordance with Section 3.5, Tenant shall receive an
      allowance for design and construction of improvements in accordance with
      Section 3.1 (a) in up to 2,578 square feet of the Premises to be used as a
      wet laboratory (the "Lab Space") not to exceed the sum of (i) $40.00
      p.r.s.f. of the Lab Space (the "Tenant Allowance"), plus (ii) at Tenant's
      option, up to an additional $70.00 p.r.s.f. of Lab Space (the "Additional
      Allowance"). Landlord shall complete improvements in the remainder of the
      Premises (the "Office Space") on a turnkey basis as provided in Section
      3.1(b). The costs incurred by Landlord in connection with the design and
      construction of improvements in the Office Space are herein sometimes
      referred to as the "Turnkey Costs." The Additional Allowance shall be
      amortized with interest thereon

                                       2
<PAGE>

      at twelve percent (12%) per annum over the first ten (10) Lease Years, and
      the amount amortized each Lease Year (herein referred to as the
      "Additional Allowance Charge") shall be added to Annual Rent payable by
      Tenant as herein provided. If Landlord does not provide the entire
      Additional Allowance to pay costs of completing laboratory space as herein
      provided, the amount of the Additional Allowance actually provided by
      Landlord shall be confirmed by Landlord and Tenant on the Lease
      Commencement Date Agreement and the Additional Allowance Charge p.r.s.f.
      shall be reduced to reflect the actual amount of Additional Allowance
      actually provided by Landlord, using the applicable interest rate and
      amortization period, and the Annual Rent shall be adjusted accordingly.
      Tenant shall have the option to prepay any or all of the Additional
      Allowance prior to the expiration or earlier termination of this Lease
      without penalty or additional finance charge on the amount so prepaid.

TENANT'S SHARE: Tenant's Share shall be equal to a fraction, the numerator of
          which shall be the Rentable Floor Area of Tenant's Space (as the same
          may be increased or decreased in accordance with this Lease) and the
          denominator of which shall be the Total Rentable Floor Area of the
          Building.

PERMITTED USES: Office and laboratory use (including development and testing,
          including genetic testing, of pharmaceutical drugs, but excluding
          human or animal testing) allowable per applicable law only and no
          other use.

PUBLIC LIABILITY INSURANCE: SINGLE OCCURRENCE: $5,000,000
                            AGGREGATE: $10,000,000

LEASE YEAR: For all purposes of this Lease, the term "Lease Year" shall mean any
          period of twelve consecutive calendar months during the Term of this
          Lease which begins on the Commencement Date or an anniversary thereof,
          provided, however, that if the Commencement Date does not occur on the
          first day of a month, then the term "Lease Year" shall mean any period
          of twelve consecutive calendar months during the Term of this Lease
          beginning on the first day of the next calendar month following the
          Commencement Date, and the first Lease Year shall also include the
          period between the Commencement Date and the first day of such
          succeeding calendar month and provided further that the last Lease
          Year shall terminate on the Term Expiration Date or such earlier date
          on which the Lease may be terminated.

SPECIAL PROVISIONS: Provided Tenant is not in default hereunder, one half of
          each monthly installment of Base Annual Rent due for the first twelve
          (12) months of the initial Term shall be abated. The Security Deposit,
          whether in cash or in substantially the form of the letter of credit
          attached hereto as Exhibit I (the "Letter of Credit"), shall be due
          upon the execution of this Lease by Tenant.

1.2   EXHIBITS.

      The exhibits and appendix listed below in this section are incorporated in
this Lease by reference and are to be construed as part of this Lease:

EXHIBIT A    Legal Description of Lot
EXHIBIT B    Part I - Plan Showing Tenant's Space
             Part II - First Offer Space
EXHIBIT C    Part I - Building Standard Completed Shell
             Part II - Office Space Plan
             Part III- Milestone Schedule
EXHIBIT D    Landlord's Services
EXHIBIT E    Rules and Regulations
EXHIBIT F    Intentionally Omitted
EXHIBIT G    Form of Estoppel Certificate


                                       3
<PAGE>

EXHIBIT H    Form of Lease Commencement Date Agreement
EXHIBIT I    Form of Acceptable Letter of Credit
EXHIBIT J    Form of Mortgagee Subordination and Nondisturbance Agreement
EXHIBIT K    Form of Ground Lessor Nondisturbance and Attornment Agreement
APPENDIX A   Method of Measurement




































                                       4
<PAGE>

1.3   TABLE OF CONTENTS

                                                                         PAGE
                                                                         ----
ARTICLE I       REFERENCE DATA .........................................   1

        1.1     SUBJECTS REFERRED TO: ..................................   1

        1.2     EXHIBITS ...............................................   3

        1.3     TABLE OF CONTENTS.......................................   5

ARTICLE II      PREMISES AND TERM ......................................   8

        2.1     PREMISES ...............................................   8

        2.2     TERM....................................................   8

        2.3     OPTION TO EXTEND .......................................   8

        2.4     RIGHT TO CANCEL ........................................   9

        2.5     RIGHT OF FIRST OFFER ...................................  10

        2.6     OPTION TO EXPAND .......................................  11

ARTICLE III     CONSTRUCTION ...........................................  12

        3.1     INITIAL CONSTRUCTION ...................................  12

        3.2     PREPARATION OF PREMISES FOR OCCUPANCY ..................  14

        3.3     GENERAL PROVISIONS APPLICABLE TO CONSTRUCTION ..........  16

        3.4     REPRESENTATIVES ........................................  16

        3.5     TENANT ALLOWANCE .......................................  16

        3.6     LEASE COSTS ............................................  17

ARTICLE IV      RENT ...................................................  17

        4.1     RENT....................................................  17

        4.2     OPERATING COSTS ........................................  18

        4.3     REAL ESTATE TAXES ......................................  22

        4.4     REFUNDS ................................................  24

        4.5     ELECTRICITY.............................................  24

        4.6     CHANGE OF FISCAL YEAR ..................................  25

        4.7     PAYMENTS ...............................................  25

ARTICLE V       LANDLORD'S COVENANTS ...................................  25

        5.1     LANDLORD'S COVENANTS DURING THE TERM....................  25

                5.1.1  Building Services ...............................  25

                5.1.2  Additional Building Services ....................  26

                5.1.3  Repairs .........................................  26

                5.1.4  Quiet Enjoyment .................................  26

                5.1.5  Access/Security..................................  26

                5.1.6  Intentionally Omitted ...........................  26

                5.1.7  Indemnity .......................................  26

                5.1.8  Tenant's Costs ..................................  26

                5.1.9  Lobby Directory..................................  26

                5.1.10 Compliance ......................................  27

                5.1.11 Insurance........................................  27

        5.2     INTERRUPTIONS ..........................................  27


                                       5

<PAGE>
ARTICLE VI      TENANT'S COVENANTS .........................................  28

        6.1     TENANT'S COVENANTS DURING THE TERM .........................  28

                6.1.1   Tenant's Payments ..................................  28

                6.1.2   Repairs and Yielding Up ............................  28

                6.1.3   Occupancy and Use ..................................  29

                6.1.4   Rules and Regulations ..............................  29

                6.1.5   Safety Appliances and Licenses .....................  29

                6.1.6   Assignment and Subletting ..........................  30

                6.1.7   Indemnity ..........................................  31

                6.1.8   Tenant's Insurance .................................  31

                6.1.9   Tenant's Worker's Compensation Insurance ...........  32

                6.1.10  Landlord's Right of Entry ..........................  32

                6.1.11  Loading ............................................  33

                6.1.12  Landlord's Costs ...................................  33

                6.1.13  Tenant's Property ..................................  33

                6.1.14  Laboror Materialmen's Liens ........................  33

                6.1.15  Changes or Additions ...............................  33

                6.1.16  Holdover ...........................................  34

                6.1.17  Financial Statements ...............................  34

                6.1.18  Compliance .........................................  34

                6.1.19  Laboratories/Janitorial ............................  34

        6.2     BANKRUPTCY .................................................  35

ARTICLE VII     CASUALTY AND TAKING ........................................  36

        7.1     CASUALTY AND TAKING.........................................  36

        7.2     TAKING .....................................................  37

        7.3     RESERVATION OF AWARD .......................................  38

ARTICLE VIII    RIGHTS OF MORTGAGEE ........................................  38

        8.1     PRIORITY OF LEASE ..........................................  38

        8.2     RIGHTS OF MORTGAGE HOLDERS: LIMITATION OF MORTGAGEE'S
                LIABILITY ..................................................  39

        8.3     INTENTIONALLY OMITTED ......................................  39

        8.4     NO PREPAYMENT OR MODIFICATION, ETC .........................  39

        8.5     NO RELEASE OR TERMINATION ..................................  39

        8.6     CONTINUING OFFER ...........................................  40

        8.7     MORTGAGEE'S APPROVAL .......................................  40

ARTICLE IX      DEFAULT ....................................................  40

        9.1     EVENTS OF DEFAULT ..........................................  40

        9.2     TENANT'S OBLIGATIONS AFTER TERMINATION .....................  41

ARTICLE X       MISCELLANEOUS ..............................................  41

       10.1     NOTICE OF LEASE ............................................  41

       10.2     INTENTIONALLY OMITTED ......................................  42

       10.3     NOTICES FROM ONE PARTY TO THE OTHER ........................  42

       10.4     BIND AND INURE .............................................  42

       10.5     NO SURRENDER ...............................................  42

       10.6     NO WAIVER, ETC..............................................  42

       10.7     NO ACCORD AND SATISFACTION .................................  42

       10.8     CUMULATIVE REMEDIES ........................................  43

       10.9     RIGHT TO CURE ..............................................  43

                                       6
<PAGE>

      10.10     ESTOPPEL CERTIFICATE ...................................   43

      10.11     WAIVER OF SUBROGATION ..................................   43

      10.12     INTENTIONALLY OMITTED ..................................   43

      10.13     FORCE MAJEURE ..........................................   44

      10.14     BROKERAGE ..............................................   44

      10.15     SUBMISSION NOT AN OFFER ................................   44

      10.16     REPRESENTATIONS OF LANDLORD ............................   44

      10.17     NO MERGER OF TITLE .....................................   44

      10.18     WAIVER OF TRIAL BY JURY ................................   45

      10.19     HAZARDOUS MATERIALS ....................................   45

      10.20     PARKING ................................................   47

      10.21     SURVIVAL ...............................................   48

      10.22     APPLICABLE LAW AND CONSTRUCTION ........................   48

      10.23     CONFIDENTIALITY ........................................   48

      10.24     METHOD OF MEASUREMENT ..................................   49

      10.25     APPROVALS ..............................................   49

      10.26     GROUND LEASE PROVISIONS ................................   49

ARTICLE XI      SECURITY DEPOSIT .......................................   50

ARTICLE XII     SATELLITE DISH ANTENNA AND SUPPLEMENTAL AIR UNITS ......   52

                                       7
<PAGE>

                                   ARTICLE II
                               PREMISES AND TERM

2.1   PREMISES.

      Subject to and with the benefit of the provisions of this Lease and the
Ground Lease (as hereinafter defined) relating to the parcel of land described
in Exhibit A attached hereto and made a part hereof (the "Lot"), Landlord hereby
leases to Tenant, and Tenant leases from Landlord, Tenant's Space shown in
Exhibit B attached hereto and made a part hereof, on the third (3rd) floor of
the Building on the Lot, excluding exterior faces of exterior walls, the common
facilities areas and building service fixtures and equipment serving exclusively
or in common other parts of the Building. Tenant's Space, with such exclusions,
is hereinafter referred to as the "Premises."

      Tenant shall have, as appurtenant to the Premises, the right to use in
common with others entitled thereto: (a) the common facilities included in the
Building or on the Lot to the extent and in the location from time to time
designated by Landlord and the common facilities, if any, on the Johns Hopkins
University Montgomery County Campus (the "Campus") of which the Building and Lot
are a part to the extent such facilities are available for use by tenants of the
Building, and (b) the building service fixtures and equipment serving the
Premises.

      Landlord reserves the right from time to time, without notice or liability
to Tenant, (a) to install, repair, replace, use, maintain and relocate for
service to the Premises and to other parts of the Building or either, building
service fixtures and .equipment wherever located in the Building and (b) to
alter or relocate any common facilities, provided, however, that the same do not
materially adversely affect Tenant's use of or access to the Premises except in
the case of temporary disruptions caused by such activities. Landlord shall use
reasonable efforts to minimize any disruption to Tenant's enjoyment of the
Premises from construction and repair activity within the Building. Tenant
acknowledges that Johns Hopkins University ("JHU") will conduct evening and
weekend classes in the Building and that to accommodate such users, the Building
common areas will be open from 7:00 a.m. to 11:00 p.m., Monday through Friday,
and from 8:00 a.m. to 6:00 p.m., Saturday, Sunday and Holidays (subject to
adjustment from time to time).

2.2   TERM.

      To have and to hold for a period (the "Term") commencing on the earliest
of (a) the later of (i) the Scheduled Term Commencement Date, or (ii) the date
on which the Premises are deemed ready for occupancy as provided in Section 3.2,
or (b) in any event, the date on which Tenant occupies ail or any part of the
Premises for the purpose of conducting its business operations (whichever of
said dates is appropriate being hereafter referred to as the "Commencement
Date"), and continuing until the Term Expiration Date, unless sooner terminated
as provided in this Lease. Promptly following Landlord's request, Landlord and
Tenant agree to execute a Lease Commencement Date Agreement in the form of
Exhibit H which shall establish the Commencement Date and become part of the
Lease.

2.3   OPTION TO EXTEND.

      Tenant shall have the right to renew the Lease in its entirety for one
consecutive additional term of five (5) years (the "Extension Term"), upon
written notice delivered to Landlord (the "Extension Notice") not less than 12
months nor more than 15 months prior to the Term Expiration Date; provided that
at the time Tenant gives the Extension Notice to Landlord and at the time of
expiration of the initial Term, (i) Tenant is not in default hereunder beyond
expiration of any applicable grace or cure periods, and (ii) except for a
Permitted Assignment (as defined in Section 6.1.6), Tenant has not assigned this
Lease and is not subleasing in the aggregate more than fifty percent (50%) of
the Premises. In no event shall any assignee (other than a Permitted Assignee,
as defined in Section 6.1.6) or subtenant be entitled to exercise the right to
renew set forth in this paragraph.

                                       8
<PAGE>

      If this right to renew is exercised by Tenant, all terms, covenants,
conditions and provisions of the Lease (including, without limitation, those
related to additional rent, Operating Cost Escalations, Real Estate Tax
Escalations, Tenant's Annual Electrical Cost and, if applicable, Tenant's Annual
Water or Gas Cost) shall apply during the Extension Term, and the Lease shall
continue in full force and effect except that: (a) Tenant shall occupy the
Premises in its then "as is" and "where is" condition; (b) the provisions of
this Lease as to Tenant Allowance, Turnkey Costs, Additional Allowance, and
rental abatement for the first Lease Year shall not apply to the Extension
Term; (c) the Annual Rent for the Premises shall be adjusted as hereinafter
provided; and (d) Tenant shall have no further right to renew or extend this
Lease unless otherwise agreed to in writing by the parties. Annual Rent for the
first year of the Extension Term will be equal to the then-projected market rate
of rent with market concessions for space of a similar quality and otherwise
comparable to the Premises in the Building and in the market area as of the
expiration of the initial Term and shall thereafter escalate, in accordance with
market terms as determined in accordance herewith provided, however, in no event
shall Annual Rent be less than the Base Annual Rent payable by Tenant hereunder
during the 12-month period prior to commencement of the Extension Term, plus any
remaining unpaid portion of the Additional Allowance Charge.

      If, by the date thirty (30) calendar days following timely and valid
delivery of Tenant's Extension Notice exercising its option to extend the Term,
Landlord and Tenant have not agreed in writing as to the Annual Rent to be paid
by Tenant, including annual escalations thereof, or the tenant allowance, if
any, to be paid by Landlord during the applicable Extension Term, either
Landlord or Tenant may elect that the fair market rent, escalations and tenant
allowance, if any, be determined in accordance with the following procedure
(which procedure is herein referred to as the "Three-Broker Method"). If neither
Landlord nor Tenant delivers notice to the other electing to use the
Three-Broker Method (the "Appraisal Notice") within seven (7) business days
following the aforesaid thirty (30) day period, then Tenant's exercise of its
right to extend the Term shall be void and Tenant's options to renew in
accordance herewith shall terminate and be null and void. If either Landlord or
Tenant timely delivers the Appraisal Notice, Landlord and Tenant shall each
appoint one commercial real estate broker, and the two so selected shall
mutually select a third. Said real estate brokers shall each be licensed in
Maryland, specializing in the field of commercial real estate leases (including
those with wet labs) in the Montgomery County, Maryland area, having no less
than ten (10) years' experience in such field, and recognized as ethical and
reputable within their field. Landlord and Tenant agree to make their
appointments promptly within seven (7) business days after delivery of the
Appraisal Notice. The two brokers selected by Landlord and Tenant shall promptly
select a third broker within seven (7) business days after they have both been
appointed. Within ten (10) business days after the third broker is selected,
each broker shall submit his or her determination of the then-projected
prevailing market rent, including annual escalations thereof and tenant
allowance and other market concessions, if any, for comparable space in
comparable buildings within the market area. For purposes hereof, the prevailing
market rent, escalations thereof and tenant allowance and other concessions, if
applicable, shall be deemed to equal the mean of the two closest rental rate,
escalation and allowance determinations. However, if either party fails to
appoint a broker within seven (7) business days as provided above, the one
broker who was timely appointed by the other party shall by himself make the
determination of the prevailing market rent, escalations and allowance, if any.
Landlord and Tenant shall each be bound by such determinations. Landlord and
Tenant shall each pay the fees of the broker that it appointed and shall each
pay one-half of the fees of the third broker, or the single broker as the case
may be.

2.4   RIGHT TO CANCEL.

      Notwithstanding anything to the contrary contained in this Lease, if
Tenant is not in default beyond applicable notice and cure periods as of the
date it delivers a Cancellation Notice (as defined below) and as of the Early
Expiration Date (as defined below), Tenant may terminate this Lease effective
upon the last day of the sixty-sixth (66th) calendar month of the Term (the
"Early Expiration Date"), by delivery of a written notice (the "Cancellation
Notice") and the applicable Termination Payment (as described below) to Landlord
no later than the last day of the fifty-fourth (54th) calendar month of the
Term. The Termination Payment due to Landlord should Tenant elect to terminate
this Lease shall be the unamortized value, determined as herein provided, of the
"Lease Transaction Costs" (as defined below). For purposes hereof, the Lease
Transaction Costs shall mean all the Tenant Allowance, Turnkey Costs,

                                       9
<PAGE>

Additional Allowance, and all other costs incurred by Landlord with respect to
all Leasehold Improvements to or for the Premises paid for by Landlord
(including interest thereon, if any, at the cost to Landlord to obtain funds to
pay for such obligations), the full amount of the Base Annual Rent abated in
accordance with Section 1.1, and all reasonable legal fees incurred by Landlord
in connection with the negotiation of this Lease as amended and all brokerage
commissions incurred by Landlord in connection with this Lease as it may be
amended, but excluding the Test Fit Allowance (as defined in Section 3.4) paid
by Landlord for the initial space plan for the Premises. For the purpose of
determining the Termination Payment, the Lease Transaction Costs shall be
amortized on a straight-line basis over the initial ten (10) Lease Years of the
Term, and the unamortized value shall be measured by Landlord as of the Early
Expiration Date. Upon the Commencement Date, Landlord and Tenant shall execute a
Lease Commencement Date Agreement (Exhibit H) that stipulates the amount of
unamortized costs as stated above that will be due upon delivery of a
Cancellation Notice.

      If Tenant validly terminates this Lease as herein provided, this Lease
shall terminate as of the Early Expiration Date as if such date were the
original Term Expiration Date set forth in this Lease and Tenant will vacate and
surrender the Premises on the Early Expiration Date in the condition required by
Subsection 6.1.2.

2.5   RIGHT OF FIRST OFFER.

      Subject to the conditions subsequently set forth in this Section 2.5,
Tenant shall, following the initial leasing of all of the space in the Building
(the "Initial Lease-Up") and during the remainder of the initial Term of this
Lease, have a right of first offer with respect to the lease of the space
identified as the "First Offer Space" shown on Exhibit B-2 hereto and contiguous
to the Premises (herein referred to as the "First Offer Space"), excepting any
portion thereof leased by Tenant pursuant to Section 2.6, when such rentable
space becomes Available for Leasing (as hereinafter defined). This right of
first offer shall be subject and subordinate to the rights granted to any tenant
or tenants under leases in the Building entered into prior to the Date of Lease
Execution set forth at the beginning of this Lease. As a result, Tenant's rights
hereunder in the First Offer Space shall arise only (i) upon the expiration of
early termination of the term of any lease of such space entered into prior to
the Date of Lease Execution or pursuant to an option, right of refusal, offer or
negotiation granted to a tenant under a lease executed prior to the Date of
Lease Execution, including all permitted extensions or expansions thereof, and
(ii) after Landlord first offers such space to other tenant(s) of the Building
holding options to expand or rights of first refusal, offer or negotiation as to
the First Offer Space pursuant to the terms of their respective leases (provided
such leases were executed prior to the Date of Lease Execution) and such
tenant(s) fail or refuse to lease the same in accordance with their respective
leases. For purposes hereof, First Offer Space shall be "Available for Leasing"
if such space is then or will within 12 months thereafter be vacant and
unencumbered by any lease, option or right in favor of another tenant or tenants
in the Building under leases executed prior the Date of Lease Execution.

      If and when the First Offer Space or any portion thereof (herein referred
to as the "Offered Space") becomes Available for Leasing in accordance with the
preceding paragraph, prior to entering into a lease of such area with another
person or entity, Landlord, by written notice to Tenant ("Landlord's Offer
Notice), shall first offer to lease to Tenant the Offered Space provided that no
other tenant has a prior claim to such space as described in the preceding
paragraph and provided further that the conditions set forth herein are
satisfied. Upon the receipt of Landlord's Offer Notice, Tenant shall have 10
days after receipt of Landlord's Offer Notice to advise Landlord in writing of
Tenant's election to lease the entire Offered Space (the 'Tenant's Election
Notice"), failing which Tenant's rights as to the Offered Space under this
Section 2.5 shall terminate and shall be null and void and Landlord shall be
free to lease the Offered Space in its sole discretion to another party or
parties or to otherwise encumber the same in favor of other new or existing
tenant(s) in the Building on such terms as Landlord may elect.

      Any space taken by Tenant pursuant to this Section 2.5 shall, except as
expressly provided in this Section 2.5, be taken by Tenant in its "as is" and
"where is" condition and added to the Premises under the terms of this Lease,
provided that Landlord shall have no obligation to incur Turnkey Costs or
provide Tenant with the Tenant Allowance, Additional Allowance, or rent
abatement for the first Lease Year

                                       10
<PAGE>

provided under this Lease and Annual Rent for the Offered Space shall be
determined as hereinafter provided. The Annual Rent payable by Tenant for
Offered Space leased by Tenant in accordance with this Section 2.5 shall be
equal to the then-prevailing market rate of rent with market concessions for
comparable space in the market area and shall escalate annually in accordance
with market terms, provided however, that in no event shall Annual Rent for the
Offered Space be less than the Base Annual Rent payable by Tenant hereunder. In
the event Landlord and Tenant are unable to reach agreement upon an amendment to
this Lease adding the Offered Space to the Premises, including the rate of rent
for such space, within thirty (30) days following the date Landlord received
Tenant's Election Notice, Tenant's rights under this Section 2.5 shall terminate
and shall be null and void with respect to the Offered Space designated in that
particular Offer Notice, and Landlord shall be free to lease such Offered Space
in its sole discretion to another party or parties or to otherwise encumber the
same in favor of other or new tenant(s) in the Building on such terms as
Landlord may elect.

      Tenant acknowledges and agrees that Landlord shall have no obligation to
lease First Offer Space to Tenant under this Section 2.5 unless at the time the
Offered Space is added to the Premises no less than three years remains of the
initial Term of the Lease.

      At the time Tenant seeks to exercise any right provided to Tenant under
this Section 2.5, (i) Tenant shall not be in default under the terms of this
Lease beyond applicable grace or cure period, and (ii) except for a Permitted
Assignment, Tenant may not have assigned this Lease or be subletting in the
aggregate more than twenty five percent (25%) of the Premises. In no event shall
any assignee (other than a Permitted Assignee) or subtenant have the right to
exercise Tenant's right under this Section 2.5.

2.6   OPTION TO EXPAND.

      Subject to the conditions subsequently set forth in this Section 2.6,
Tenant shall have an option to the lease of up to 10,000 rentable square feet of
the First Offer Space identified as the "Option Space" on Exhibit B-2 hereto,
and contiguous to the Premises (such portion of the First Offer Space, if any
leased by Tenant under this Section 2.6, is herein referred to as the "Option
Space").

      If Tenant elects to lease all or any portion of the Option Space, then not
later than sixty (60) days following the Date of Lease Execution Tenant shall
give Landlord written notice of such election (identifying the area of Option
Space, if less than all, that Tenant has elected to lease) (the 'Tenant's Option
Election Notice"), failing which (or if Tenant does not elect to lease all of
the Option Space in the Tenant's Option Election Notice) Tenant's rights under
this Section 2.6 as to the entire Option Space or as to portion thereof Tenant
has not timely elected to lease hereunder, as the case may be, shall terminate
and shall be null and void.

      Any space taken by Tenant pursuant to this Section 2.6 (the "Taken Option
Space") shall be taken by Tenant in its "as is" and "where is" condition and
added to the Premises under the terms of this Lease, including without
limitation the terms of this Lease as to the rate of Annual Rent and Tenant
Allowance per rentable square foot, provided however that Landlord shall have no
obligation to incur any Turnkey Costs for such Space and the Additional
Allowance, if any, shall apply only as to the Taken Option Space improved for
use as wet laboratory, but in no event more than 30% of the Taken Option Space.
If the Taken Option Space is less than all of the Option Space, the portion
leased by Tenant hereunder shall be contiguous with the Premises and
satisfactory to Landlord (in it sole but reasonable discretion) so that the
remaining unleased portion of the Option Space is of a size, configuration and
location on the floor that in Landlord's judgment is marketable for the full
rental value of the Taken Option Space. In the event Tenant timely elects to
lease any or all of the Option Space as herein provided, Landlord and Tenant
shall execute and deliver an appropriate amendment to this Lease prepared by
Landlord and adding the Taken Option Space to the Premises within thirty (30)
days following the date Landlord received Tenant's Option Election Notice. If
Tenant fails to execute any such amendment as and when herein provided, Tenant's
rights under this Section 2.6 shall terminate and shall be null and void.

                                       11
<PAGE>

      At the time Tenant seeks to exercise any right provided to Tenant under
this Section 2.6, (i) Tenant shall not be in default under the terms of this
Lease beyond applicable grace or cure period, and (ii) except for a Permitted
Assignee, Tenant may not have assigned this Lease or be subletting in the
aggregate more than twenty five percent (25%) of the Premises. In no event shall
any assignee (other than a Permitted Assignee) or subtenant have the right to
exercise Tenant's right under this Section 2.6.

                                   ARTICLE III
                                  CONSTRUCTION

3.1   INITIAL CONSTRUCTION.

      Tenant acknowledges that Tenant has had an opportunity to inspect the
Premises. Except as expressly herein provided as to the completion of Leasehold
Improvements, the Premises shall be delivered to Tenant "as is" and "where is"
with all faults and without representation, warranty or guaranty of any kind by
Landlord to Tenant.

      (a) Lab Space. Tenant shall provide to Landlord for approval on or before
Tenant's Design Completion Date, complete sets of drawings and specifications
for construction of leasehold improvements in the Lab Space (such complete sets,
once approved by Landlord, are referred to herein as the "Lab Space Complete
Plans") all of which shall be prepared at Tenant's expense by an architect
selected by Tenant and approved by Landlord (herein referred to as Tenant's
Architect") and Landlord's engineer, including but not limited to:

      a.    Furniture and Equipment Layout Plans

      b.    Dimensioned Partition Plans

      c.    Dimensioned Electrical and Telephone Outlet Plans

      d.    Reflected Ceiling Plans

      e.    Door and Hardware Schedules

      f.    Room Finish Schedules including wall, carpet and floor tile colors

      g.    Electrical, mechanical and structural engineering plans

      h.    All necessary construction details and specifications.

      Tenant shall deliver such complete construction drawings and
specifications to Landlord at Landlord's Address and Landlord shall have 5
business days (or 10 business days if the contemplated improvements will affect
the structure of the Building or mechanical, electrical or plumbing systems)
from the date it receives the same to review such drawings and specifications
and notify Tenant as to whether they are approved by Landlord, it being
understood that any such approvals are for the limited purposes set forth in
Section 10.25 of the Lease. If Tenant's drawings and specifications are not
approved by Landlord, Landlord shall inform Tenant of the reason and Tenant
shall have the opportunity to submit revised plans (the "Revised Plans") and the
Landlord shall have 5 business days from the date it receives the Revised Plans
to review the same and notify the Tenant as to whether the Revised Plans are
approved by Landlord.

      Landlord and Tenant shall initial the Lab Space Complete Plans after the
same have been submitted by Tenant and approved by Landlord. Tenant shall not
amend or supplement the Lab Space Complete Plans, including by change order,
without Landlord's approval.

                                       12
<PAGE>

      All of Tenant's construction, installation of furnishings, and later
changes or additions for the Lab Space shall be coordinated with any other work
being performed by Landlord in such manner as to maintain harmonious labor
relations and not to damage the Building or Lot or interfere with construction
of the Building or related improvements or Building operations. All work
described in the Lab Space Complete Plans (the "Lab Space Leasehold
Improvements") shall be performed by Spaulding and Slye Construction Company,
Limited Partnership (the "Landlord's Contractor").

      The subcontractors for building the Lab Space Leasehold Improvements shall
be selected according to the following process. Landlord's Contractor shall (i)
solicit bids from at least three subcontractors for each trade, if applicable,
and at the time of submission of final bid and pricing drawings pursuant to
Milestone #5 set forth in Part III of Exhibit C hereto, Tenant may designate the
name of at least one qualified subcontractor to be included in Landlord's
Contractor's list; (ii) allow Tenant to review the results of bids received for
the Lab Space Leasehold Improvements prior to awarding subcontracts for the
work, provided, that any delay occasioned by Tenant's review shall be deemed a
Tenant Delay (as hereinafter defined); and (iii) select the lowest qualified bid
timely received in accordance with the foregoing process, provided that in no
event shall Landlord's Contractor be required to accept any bid which Landlord's
Contractor believes to be in error, or any bid from a subcontractor to which
Landlord's Contractor may have reasonable objection. If Tenant elects that a
trade not go through the three-bid process described above, Landlord's
Contractor will obtain prices from a subcontractor in such trade and present the
same to Tenant. The Tenant shall then have the right to approve such
subcontractor and its prices or reject such subcontractor in which case the
Landlord's Contractor will choose a subcontractor pursuant to the three bid
process described above, and any delay occasioned by Tenant's rejection of any
subcontractor shall be deemed a Tenant Delay (as hereinafter defined).

      The Landlord's Contractor shall perform the Lab Space Leasehold
Improvements for a guaranteed cost (including a 5% contractor's fee and the
Landlord's Contractor's general conditions costs) established in accordance with
procedure set forth above. Landlord shall not charge Tenant any fee for
construction management. Landlord's Contractor shall obtain all necessary
building permits for constructing the Lab Space Leasehold Improvements and the
initial certificate of occupancy for the Lab Space.

      Landlord, in its sole discretion, may elect by written notice to Tenant at
the time it approves the Lab Space Complete Plans, not to approve any proposed
construction, alterations or additions requiring unusual expense to readapt the
Lab Space to normal laboratory use on lease termination or increasing the cost
of construction, insurance or taxes on the Building or of Landlord's services
called for by Section 5.1 unless Tenant first gives assurances acceptable to
Landlord that such readaptation will be made prior to such termination without
expense to Landlord and makes provisions acceptable to Landlord for payment of
such increased cost. Landlord will also disapprove any alterations or additions
requested by Tenant which will delay completion of the Premises or the Building.
All changes and additions shall be part of the Building except such items as by
writing at the time of approval the parties agree either shall be removed by
Tenant on termination of this Lease or shall be removed at Tenant's cost or left
at Tenant's election.

      Tenant shall also pay to Landlord as additional rent the Tenant
Improvement Reimbursement to Landlord (also herein referred to as "TIR") for the
Lab Space. Tenant Improvement Reimbursement to Landlord for the Lab Space shall
be the amount equal to the excess of (a) all costs incurred by Landlord on
account of the Lab Space Leasehold Improvements including in the costs so
incurred any fees and charges of Tenant's Architect or Landlord's engineer paid
by Landlord and the cost and fees charged to Landlord by Landlord's Contractor
over (b) the Tenant Allowance for the Lab Space set forth in Section 1.1 hereof
and, if applicable, the Additional Allowance. Tenant shall pay to Landlord the
TIR for the Lab Space parri passu with the disbursement by Landlord of the
Tenant Allowance and, if applicable, Additional Allowance for the Lab Space, and
the remainder upon substantial completion of Lab Space Leasehold Improvements,
in each case, on submission by Landlord to Tenant of a statement therefor. In
addition to paying TIR as provided above, Tenant shall pay an amount equal to
all costs incurred by Landlord as a result of any change orders signed by Tenant
and Landlord affecting the Lab Space Complete Plans, including the costs and
fees charged to Landlord by Landlord's Contractor with respect

                                       13
<PAGE>

to such change orders. Amounts due and payable on account of such change orders
shall be included in the statements relating to TIR provided for above, and
Tenant shall pay therefor in accordance with each such statement within thirty
(30) days, and in all events by the Commencement Date.

      (b) Office Space. Landlord will provide design development plans and
complete sets of construction drawings and specifications and engineering
drawings prepared by Landlord's architect or engineer at Landlord's expense
(such construction drawings and engineering drawings are referred to herein as
the "Construction Plans") to build out the Office Space according to the
approved space plan and other documents identified in Exhibit C - Part II
attached hereto. Landlord will submit the design development plans and the
Construction Plans for the Office Space to Tenant, it being understood that
Landlord will not agree to any changes to the design development plans or the
Construction Plans that will increase the cost or delay the completion of the
improvements described therein (the "Office Space Leasehold Improvements").
Notwithstanding the foregoing, Landlord may approve changes to the design
development plans or the Construction Plans that may increase the cost of the
Office Space Leasehold Improvements provided Tenant pays in advance all costs
associated with such changes in accordance with this Section 3.1 (b) and
executes a written change order signed by Tenant's Representative agreeing that
any such delay will be deemed a Tenant Delay. Landlord and Tenant shall initial
the Construction Plans for the Office Space after the same have been completed
by Landlord and delivered to Tenant. The completed Construction Plans so
initialed by Landlord and Tenant shall be deemed the "Office Space Complete
Plans." All work described in the Office Space Complete Plans shall be performed
by Landlord's Contractor.

      Landlord will not approve any construction, alterations or additions'
requiring unusual expense to readapt the Office Space to normal office use on
lease termination or increasing the cost of construction, insurance or taxes on
the Building or of Landlord's services called for by Section 5.1 unless Tenant
first gives assurances acceptable to Landlord that such readaptation will be
made prior to such termination without expense to Landlord and makes provisions
acceptable to Landlord for payment of such increased cost. Landlord will also
disapprove any alterations or additions requested by Tenant which will delay
completion of the Premises or the Building. All changes and additions shall be
part of the Building except such items as by writing at the time of approval the
parties agree either shall be removed by Tenant on termination of this Lease or
shall be removed at Tenant's costs or left at Tenant's election.

      Tenant shall pay to Landlord as additional rent the Tenant improvement
Reimbursement to Landlord for the Office Space. Tenant Improvement Reimbursement
to Landlord for the Office Space shall be the amount equal to all costs incurred
by Landlord on account of changes to the Office Space Complete Plans requested
by Tenant or resulting from act, omission, delay or default by Tenant ("Tenant
Delay") including in the costs so incurred the cost to Landlord of Landlord's
Contractor's overhead and profit equal to twenty percent (20%) of costs of work.
Tenant shall pay to Landlord the TIR for the Office Space parri passu, with the
expenditure of funds by Landlord to pay costs payable by Landlord for design
and construction of the Office Space Leasehold Improvements and the remainder
upon substantial completion of the Office Space Leasehold Improvements, in each
case upon submission by Landlord to Tenant of a statement therefor. In addition
to paying TIR as provided above, Tenant shall pay an amount equal to all costs
incurred by Landlord as a result of any change orders signed by Tenant and
Landlord affecting the Office Space Complete Plans, including the costs and fees
charged to Landlord by Landlord's Contractor with respect to such change orders.
Amounts due and payable on account of such change orders shall be included in
the statements relating to TIR provided for above, and Tenant shall pay therefor
in accordance with each such statement within thirty (30) days, and in all
events by the Commencement Date.

3.2   PREPARATION OF PREMISES FOR OCCUPANCY.

      Landlord agrees to use reasonable efforts to substantially complete the
Lab Space Leasehold Improvements and Office Space Leasehold Improvements
(collectively the "Leasehold Improvements") by the Scheduled Term Commencement
Date, which date shall, however, be extended for a period equal to that of any
delays incurred by Landlord due to Force Majeure (as defined in Section 10.13)
or Tenant Delay. The Premises shall be deemed ready for occupancy on the date on
which (i) the Leasehold

                                       14
<PAGE>

Improvements, to be constructed by Landlord's Contractor (collectively
"Landlord's Work"), are substantially complete as certified in writing to Tenant
by Landlord's architect with the exception of minor items which can be fully
completed within sixty (60) days without material interference with Tenant and
other items which because of the season or weather or the nature of the item are
not practicable to do at the time, provided that none of said items is necessary
to make the Premises tenantable for the Permitted Uses; and (ii) a temporary
certificate of occupancy is issued for the Premises; provided further, however,
that if Landlord is unable to obtain a temporary certificate of occupancy for
the Premises or any part thereof or complete construction of Landlord's Work due
to long lead items (as hereinafter defined) included in the Lab Space Complete
Plans or the Office Space Complete Plans (collectively, the "Complete Plans") or
any act or omission of Tenant or its agents, employees, contractors, invitees or
licensees or due to delay in Tenant's compliance with the provisions of Section
3.1 of this Lease or the Milestones set forth in Part III of Exhibit C hereof
(herein sometimes referred to as "Tenant Delays"), then the Premises shall be
deemed ready for occupancy no later than the date the Landlord's Work would have
been substantially completed and a temporary certificate of occupancy would have
been available but for such Tenant Delays. For purposes hereof, "long lead item"
shall mean any item(s) of work included in the Complete Plans, or in any change
order requested by Tenant, that cannot be completed in accordance with the
Landlord's construction schedule (without overtime or acceleration of the work),
provided that Landlord's Contractor advises Tenant that the item is a long lead
item before commencement of construction.

      Tenant shall select a specialties contractor ("Tenant's Contractor") to
install telephone, computer and data processing cables, and wiring on the
Premises at Tenant's direction and expense. All such work shall be coordinated
with work being performed by or for Landlord on the Premises and the Building.
Tenant covenants to pay for all work performed by Tenant or Tenant's Contractor,
and Tenant shall apply for all permits and licenses required in connection with
such work and shall pay all fees due in connection therewith. Tenant shall
provide to Landlord the originals of all such permits and licenses. All such
improvements, whether or not paid for by Landlord, and any other improvements
which are affixed to the Premises shall be and remain the property of Landlord.
During the performance of any work, Tenant must provide Landlord evidence that
Tenant or its contractor has in place (i) a policy insuring against "all risks
of physical loss" on a builder's risk non-reporting form, having replacement
cost and agreed amount endorsements, and (ii) commercial general liability with
underlying coverage totaling not less than Ten Million Dollars ($10,000,000),
each such policy to name Landlord and Landlord's lenders as an additional
insured (and as loss payee on policies other than public liability insurance)
and to be in a form reasonably acceptable to Landlord). Such contractor also
must provide evidence that it has in place workmen's compensation insurance in
amounts and in form statutorily required. Without in any manner limiting
Landlord's rights and Tenant's obligations under any other indemnity set forth
in this Lease, Tenant shall defend, with counsel reasonably acceptable to
Landlord, save harmless and indemnify Landlord from (a) claims or demands of
Tenant's Contractor or anyone claiming by, through or under Tenant's Contractor,
and (b) liability for injury, loss, accident, or damage to any person or
property, including, without limitation, bodily injury and/or death, and from
any claims, actions, proceedings and expenses and costs in connection therewith
(including, without limitation, reasonable counsel fees) arising from the acts
or omissions of Tenant, its agents, employees, contractor or subcontractors, in
performance of any construction, remodeling or redecoration.

      Landlord shall permit Tenant access for installing tele/data equipment and
systems furnishings in the Premises prior to the Term if it can be done without
material interference with completion of the Building or remaining portions of
the Leasehold Improvements.

      In the event of Tenant's failure to comply with the provisions of this
Article III or the Milestones set forth in Part III of Exhibit C hereof or to
submit information or to deliver final bidding and pricing documents or the
Complete Plans approved by Landlord as herein required and by the date set forth
in the Milestones set forth in Part III of Exhibit C hereto and if Tenant does
not cure such failure within thirty (30) days of written notice thereof from
Landlord, Landlord may, at Landlord's option, exercisable by notice to Tenant,
terminate this Lease on the date specified in said notice to Tenant, and upon
such termination Landlord shall have all the rights provided in Article IX of
this Lease in the event of Tenant's default.

                                       15
<PAGE>

      If for any reason, other than Force Majeure or Tenant Delay, Landlord
fails to achieve Landlord's Milestone set forth in item 9 of Part III of Exhibit
C hereto, Tenant may, as its sole and exclusive remedy at law or in equity, have
the remedy if any, provided to Tenant in item 9 of Part III of Exhibit C hereto.

3.3   GENERAL PROVISIONS APPLICABLE TO CONSTRUCTION.

      All construction work required or permitted by this Lease, shall be done
in a good and workmanlike manner and in compliance with all applicable laws and
all lawful ordinances, regulations, orders, permits and approvals of
governmental authority and insurers of the Building. Either party may inspect
the work of the other at reasonable times and promptly shall give notice of
observed defects. Landlord's obligations under Section 3.1 shall be deemed to
have been performed when Tenant commences to occupy any portion of the Premises
for the Permitted Uses except for (i) items relating to the Leasehold
Improvements which are incomplete or do not conform with the requirements of
Section 3.1 and as to which Tenant shall in either case have given written
notice to Landlord prior to such commencement, and (ii) latent defects relating
to the Leasehold Improvements not readily observable prior to the Commencement
Date, but as to which Tenant makes a claim in writing within one (1) year
following the date of substantial completion of such work by Landlord's
Contractor. If Tenant shall not have commenced to occupy the Premises for the
Permitted Uses within 30 days after they are deemed ready for occupancy as
provided in Section 3.2, a certificate of completion by a licensed architect or
registered engineer shall be conclusive evidence that Landlord has performed all
such obligations except for items stated in such certificate to be incomplete or
not in conformity with such requirements.

3.4   REPRESENTATIVES.

      Each party authorizes the other to rely in connection with their
respective rights and obligations under this Article III upon approval and other
actions on the party's behalf by Landlord's Representative in the case of
Landlord or Tenant's Representative in the case of Tenant or by any person
designated in substitution or addition by notice to the party relying.

3.5   TENANT ALLOWANCE.

      Provided Tenant is not in default hereunder (beyond the giving of notice
and expiration of any grace or cure period provided hereunder), Landlord shall
provide the Tenant Allowance and, if applicable, the Additional Allowance in the
amount specified in Section 1.1 to be applied not later than December 31, 2006,
against the costs incurred by Tenant for initial space planning by Tenant's
Architect, the cost of preparation and administration of the Lab Space Complete
Plans and the cost incurred by Landlord in construction of the Lab Space
Leasehold Improvements (including, without limitation, architects' and
engineers' fees, sprinklers, fire alarms, smoke detectors, exit lights, cabling
and costs of compliance with all applicable laws such as, without limitation,
the Americans with Disabilities Act), the cost of obtaining all permits,
licenses and fees related to Landlord's construction of the Lab Space Leasehold
Improvements in accordance with this Article III and as otherwise provided in
this Section.

      If all costs to be incurred by Tenant on account of Leasehold Improvements
(including Landlord's Contractor's fee) will exceed the Tenant Allowance and, if
applicable, the Additional Allowance, Landlord may require as a condition
precedent to the first disbursement of the Tenant Allowance, evidence reasonably
satisfactory to Landlord that Tenant has set aside funds sufficient to pay such
excess and may disburse the Tenant Allowance and Additional Allowance parri
passu with the disbursement of such funds by Tenant.

      No portion of the Tenant Allowance shall be used to reimburse Landlord for
the $0.11 per rentable square foot Landlord agreed to pay for Tenant's initial
test fit for the Premises (the "Test Fit Allowance").

                                       16
<PAGE>

3.6   LEASE COSTS.

      If Tenant (i) defaults under the Lease prior to Commencement Date and
fails to cure such default after any applicable notice and cure periods, (ii)
fails to occupy the Premises for the conduct of its business within sixty (60)
days after the Commencement Date, or (iii) fails to pay any Annual Rent or
Additional Rent due upon Commencement Date, if applicable, or upon the date that
the first monthly installment of Annual Rent and Additional Rent are not abated
pursuant to Article I hereto, then in any such event, in addition to and not in
lieu of any other rights and remedies Landlord may have pursuant to this Lease
or at law or in equity, Tenant shall forthwith repay to Landlord upon demand,
the Tenant Allowance, the Turnkey Costs and Additional Allowance, plus any other
costs incurred by Landlord associated with the design and construction of the
Leasehold Improvements including, but not limited to, design costs, engineering
costs and the cost of construction, together with interest thereon at the
Default Rate from the date of delivery of the Premises by Landlord in accordance
with this Lease until such amount is paid by Tenant (the "Pre-Term Costs").

                                   ARTICLE IV
                                      RENT

4.1   RENT.

      Commencing on the Commencement Date and continuing for the remainder of
the Term, Tenant agrees to pay rent to Landlord, without any offset or reduction
whatever (except as otherwise expressly set forth in this Lease), in an amount
equal to 1/12th of the Annual Rent in equal installments in advance on the first
day of each calendar month included in the Term; and for any portion of a
calendar month at the beginning or end of the Term, at the proportionate rate
payable for such portion, in advance, provided that the first installment of
Annual Rent shall be due and payable pursuant to the Special Provisions set
forth in Article I hereof. Notwithstanding the foregoing, provided that Tenant
is not in default hereunder, one-half (1/2) of each monthly installment of Base
Annual Rent payable by Tenant for the first twelve (12) months of the initial
Term shall be abated as provided in accordance with the Special Provisions of
Section 1.1 hereof.

      As used herein, "Annual Rent" shall mean the sum set forth in Section 1.1.
On the first day of the Second Lease Year and on the first day of each
subsequent Lease Year or portion thereof during the initial Term, the amount of
Annual Rent shall be increased as follows (as adjusted based upon the actual
amount of the Additional Allowance as provided in Section 1.1):

                                       17
<PAGE>

<TABLE>
<CAPTION>
                BASE
               ANNUAL           RENTABLE                               ADDITIONAL
 LEASE          RENT      X      SQUARE        =    BASE ANNUAL   +     ALLOWANCE     =
 YEAR          P.R.S.F.           FEET                 RENT              CHARGE              ANNUAL RENT
<S>            <C>        <C>   <C>            <C>  <C>           <C>  <C>            <C>   <C>
 Second        $23.69     X      17,002        =    $402,777.38   +     $30,773.62    =     $433,551.00
 Third         $24.40     X      17,002        =    $414,848.80   +     $30,773.62    =     $445,622.42
 Fourth        $25.13     X      17,002        =    $427,260.26   +     $30,773.62    =     $458,033.88
 Fifth         $25.89     X      17,002        =    $440,181.78   +     $30,773.62    =     $470,955.40
 Sixth         $26.66     X      17,002        =    $453,273.32   +     $30,773.62    =     $484,046.94
Seventh        $27.46     X      17,002        =    $466,874.92   +     $30,773.62    =     $497,648.54
 Eighth        $28.29     X      17,002        =    $480,986.58   +     $30,773.62    =     $511,760.20
 Ninth         $29.14     X      17,002        =    $495,438.28   +     $30,773.62    =     $526,211.90
 Tenth         $30.01     X      17,002        =    $510,230.02   +     $30,773.62    =     $541,003.64
Eleventh       $30.91     X      17,002        =    $525,531.82   +     $   -0-       =     $525,531.82
</TABLE>

      The term "additional rent" shall mean Tenant's Share of Operating Costs
(as defined below), Tenant's Share of Real Estate Taxes (as defined below),
Tenant's Annual Electrical Cost (as defined below), Tenant Improvement
Reimbursement to Landlord (whether for the Office Space or the Lab Space), and
all other costs, charges and impositions, in addition to Annual Rent, payable by
Tenant in accordance with the terms of this Lease.

4.2   OPERATING COSTS.

      Commencing on the Commencement Date and continuing for the remainder of
the Term, Tenant shall pay to Landlord, as additional rent, Tenant's Share of
Operating Costs (as defined below) in monthly installments on the first day of
each month during the Term and as otherwise provided in this Section 4.2. Within
one-hundred eighty (180) days after the end of each fiscal year ending during
the Term and within one hundred twenty (120) days after Lease termination,
Landlord shall render a statement ("Landlord's Operating Cost Statement") in
reasonable detail and according to usual accounting practices, certified by
Landlord, and showing for the preceding fiscal year or fraction thereof, as the
case may be, Landlord's operating costs ("Operating Costs") which shall:

      (a) EXCLUDE, notwithstanding any other, provisions in this Section 4.2 to
the contrary, the following:

            (i) Ground rent or other rental payments made under any ground lease
or underlying lease or payments of principal, interest, late charges, penalties
or other charges made on account of any loan;

            (ii) Costs of improvements or replacements to the Building which
under generally accepted accounting principles are capitalized except as
expressly included in Operating Costs under part (b) of this Section 4.2
("Capital Improvements");

            (iii) Costs of leasing commissions, legal, space planning,
construction and other expenses incurred in procuring tenants for the Building;

            (iv) Costs of painting, redecorating or other work performed solely
for the benefit of another tenant, prospective tenant or occupant;

                                       18
<PAGE>

            (v) Salaries, wages, or other compensation paid to officers or
executives of Landlord or its property manager at the level of senior vice
president and above;

            (vi) Salaries, wages, or other compensation or benefits paid to
employees of Landlord or its property manager who are not assigned to the
operation, management, maintenance, or repair of the Building or Campus; and in
the case of any offsite or other employees who are not assigned full time to the
operation, management, maintenance or repair of the Building or Campus, Landlord
shall reasonably allocate the compensation paid for the wages, salary, or other
compensation or benefits paid to such employees among the properties to which
such employees are assigned and Operating Costs shall exclude the portion of
such compensation not reasonably allocated to the Building or Campus;

            (vii) Any fines or penalties incurred due to the violation by
Landlord of any governmental rule or authority;

            (viii) Any costs for which Landlord actually receives reimbursement
from insurance, condemnation awards, or any other source, including other
tenants of the Building if charged to such tenants specially and not as an
Operating Cost, Real Estate Tax or Electrical Cost;

            (ix) Costs in excess of the deductible on applicable insurance
policies for repairs, restoration, replacements or other work occasioned by (a)
fire, windstorm or other casualty which Landlord is hereunder required to insure
against (whether such destruction be total or partial) and (b) the exercise by
governmental authorities of the right of eminent domain;

            (x) Attorneys' fees and expenses and costs of litigation in
connection with disputes with tenants, other occupants or prospective tenants,
or with consultants, management agents, leasing agents, purchasers or mortgagees
of the Building; and costs incurred by Landlord due to Landlord's violation of
the terms of this Lease which would not have been incurred by Landlord but for
such violation;

            (xi) Costs incurred in connection with the original construction of
the Building or other improvements constructed with the Building;

            (xii) Costs relating to another tenant's or occupant's space which
(A) were incurred in rendering any service or benefit to such tenant that
Landlord was not required to provide, or were for a service in excess of the
service that the Landlord was required to provide to Tenant hereunder or (B)
were otherwise in excess of the Building standard services then being provided
by Landlord to all tenants or other occupants in the Building, whether or not
such other tenant or occupant is actually charged therefor by Landlord;

            (xiii) Costs incurred in connection with the acquisition of the Lot
or sale, financing, refinancing, mortgaging, selling or change of ownership of
the Building and/or the Lot, including, but not limited to, attorneys' fees,
title insurance premiums, and recording costs;

            (xiv) Fines, interest, penalties, legal fees or costs of litigation
incurred due to the late payments of loan payments, taxes and utility bills;

            (xv) Landlord's or its property manager's general home office
overhead expenses;

            (xvi) Costs incurred for any items to the extent covered by a
manufacturer's, materialman's, vendor's or contractor's warranty;

            (xvii) Non-cash items, such as deductions for depreciation and
amortization of the Building and the Building equipment (except as expressly
included in Operating Costs under part (b) of this Section 4.2); interest on
capital invested; bad debt losses; rent losses and reserves for such losses;

                                       19
<PAGE>

            (xviii) Costs incurred in connection with the operation of any lobby
shop or cafeteria owned, operated or subsidized by Landlord (except the
non-capital costs of any cafeteria expressly included in Operating Costs under
part (b) of this Section 4.2);

            (xix) Costs incurred by Landlord which are associated with the
operation of the business of the legal entity which constitutes Landlord as the
same is separate and apart from the costs of the operation of the Building,
including legal entity formation and maintenance charges;

            (xx) All amounts which would otherwise be included in Operating
Costs which are paid to any affiliate or subsidiary of Landlord to the extent
the cost of such goods or services exceed the market rate for similar services
under arms length contracts in the Washington, D.C. metropolitan area;

            (xxi)   Rentals and other related expenses incurred in leasing
                    elevators or other equipment ordinarily considered to be of
                    a capital nature;

            (xxii)  Contingency or replacement reserves;

            (xxii)  Costs incurred in the remediation or removal of Hazardous
                    Materials (as defined in Section 10.18) released on or from
                    the Building or Lot in violation of Environmental Laws (as
                    defined in Section 10.18) provided, however, any such costs
                    arising from Tenant's use of the Premises shall be charged
                    directly to Tenant;

            (xxiii) Marketing and advertising expenses;

            (xxiv) Utility costs for which any tenant directly contracts and
pays the supplier thereof; and;

            (xxv) Costs of acquiring or renting works of art displayed in the
Common Area.

      (b) BUT INCLUDE, without limitation: costs of maintenance and repair of
any cafeteria or fitness room generally available to tenants of the Building;
expenses of any proceedings for abatement of Real Estate Taxes and assessments
with respect to any fiscal year or fraction of a fiscal year; premiums for
insurance; fees payable to third parties for audits of Operating Costs, provided
that such costs are not incurred due to Landlord's overcharging tenants for
Operating Costs; reasonable legal fees and costs payable.in seeking a reduction
of Real Estate Taxes and in connection with Building service contracts;
compensation and all fringe benefits, worker's compensation insurance premiums
and payroll taxes paid by Landlord to, for or with respect to all persons
engaged in the operating, maintaining or cleaning of the Building and Lot; all
utility charges other than electricity not billed directly to tenants by
Landlord or the utility; payments to Landlord's property manager and other
independent contractors (including, without limitation, affiliates of Landlord,
if applicable) under service contracts for cleaning, operating, managing,
maintaining, repairing or testing the Building and Lot; payments made to
consultants retained to advise Landlord regarding compliance by tenants of the
Building with applicable Laws (as defined in Section 6.1;18); rent paid by the
managing agent or imputed cost equal to the loss of market rent by Landlord for
making available to the managing agent space for an office in the Building (not
exceeding 1,000 rentable square feet) on the ground floor or above; and all
other costs and expenses incurred in connection with owning, administering,
cleaning, operating, managing, maintaining and repairing the Building and Lot,
or either, and the Building's pro-rata share of all such costs and expenses
applicable to owning, administering, cleaning, operating, managing, maintaining
and repairing common areas on the Campus, including, without limitation, common
area rent and other charges applicable to the Shady Grove Life Sciences Center.
If Landlord installs or constructs a new or replacement capital item for the
purpose of reducing Operating Costs or complying with requirements of law, the
cost thereof as reasonably amortized by Landlord in accordance with generally
accepted accounting principles, with interest at Landlord's cost of funds plus
one percent (1%) per annum (the "Prime Rate"), on the unamortized amount, shall
be included in Landlord's Operating Costs.

                                       20
<PAGE>

      "Tenant's Share of Operating Costs" shall be equal to the product of (a)
Operating Costs as indicated in Landlord's Operating Cost Statement, multiplied
by (b) "Tenant's Share."

      Landlord's Operating Cost Statement shall also show the average number of
square feet of the Building which were occupied for the preceding fiscal year or
fraction thereof. If less than ninety-five percent (95%) of the Net Rentable
Area of the Building is occupied during any full or fractional year of the Term
(including the Base Year), the actual Operating Costs for those costs that vary
with occupancy (such as, without limitation, cleaning and janitorial) shall be
adjusted for such year to an amount which Landlord estimates would have been
incurred in Landlord's reasonable judgment had ninety-five (95%) of the Net
Rentable Area of the Building been occupied, provided, however, that Operating
Costs as so adjusted shall not exceed the actual costs Landlord would have
incurred had the Building been ninety-five percent (95%) occupied.

      In case of special services which are provided to Tenant but are not
rendered to all areas on a comparable basis, the proportion allocable to the
Premises shall be the same proportion which the Rentable Floor Area of Tenant's
Space (as the same may be increased or decreased in accordance with this Lease)
bears to the total rentable floor area to which such service is so rendered
(such latter area to be determined in the same manner as the Total Rentable
Floor Area of the Building).

      Notwithstanding any other provision of this Section 4.2, if the Term
expires or is terminated as of a date other than the last day of a fiscal year,
then for such fraction of a fiscal year at the end of the Term, Tenant's last
payment to Landlord under this Section 4.2 shall be prorated and made on the
basis of Landlord's reasonable best estimate of the items otherwise includable
in Landlord's Operating Cost Statement which shall be delivered to Tenant within
one-hundred twenty (120) days following expiration or termination of the Term,
and shall be made on or before the date 10 days after Landlord delivers such
estimate to Tenant.

      Tenant shall pay, as additional rent, on the first day of each month of
such fiscal year and each ensuing fiscal year thereafter, "Estimated Monthly
Payments" equal to 1/12th of Tenant's Share of the estimated Operating Costs for
the respective fiscal year, with an appropriate additional payment or credit to
be made after Landlord's Operating Cost Statement is delivered to Tenant. If the
amount paid by Tenant for Tenant's Share of estimated Operating Costs is less
than Tenant's Share of the actual Operating Costs, Tenant agrees to pay, as
additional rent, to Landlord the amount of the differential. If the amount paid
by Tenant for Tenant's Share of estimated Operating Costs is more than Tenant's
Share of the actual Operating Costs, then Landlord shall credit such excess
against Tenant's subsequent monthly payments for Tenant's Share of Operating
Costs, as appropriate, until such excess is exhausted (or refund such excess to
Tenant if at the end of the Term). Landlord may adjust such Estimated Monthly
Payment from time to time and at any time during a fiscal year (but not more
often than twice per fiscal year), and Tenant shall pay, as additional rent, on
the first day of each month following receipt of Landlord's notice thereof, the
adjusted Estimated Monthly Payment. Each of Landlord's Operating Cost Statements
given by Landlord pursuant to the Lease shall be conclusive and binding upon
Tenant unless, within ninety (90) days after the receipt of the statement,
Tenant notifies Landlord that it wishes to audit Landlord's Operating Costs for
the preceding year. If Tenant gives such notice timely requesting the right to
review or audit Landlord's books and records pertaining to Operating Costs for
the preceding year, Landlord shall make available to Tenant for inspection or
auditing during normal business hours not more than six (6) months following
delivery to Tenant of the Operating Cost Statement to which such review related,
at the offices of Landlord's managing agent where such records are kept, the
books and records with respect to Landlord's Operating Costs for the fiscal year
in question. If such books and records are not kept in the Washington, D.C.
Greater Metropolitan Area, Landlord shall upon Tenant's written request, not
more often than once per year, make copies of such books and records available
to Tenant for inspection or audit as herein provided at an office of Landlord or
Landlord's managing agent in the Washington, D.C. Greater Metropolitan Area.
Pending the resolution of any such dispute as to Landlord's Operating Cost
Statement, Tenant shall pay the adjustments, including any underpayment of
Tenant's Share of Operating Costs, as specified in accordance with Landlord's
Operating Cost Statement, without prejudice to Tenant's position, as herein
provided. If the dispute shall be resolved in Tenant's favor, Landlord shall
credit or pay to Tenant (as hereinabove provided) the amount of Tenant's
overpayment. In

                                       21
<PAGE>

addition, if there has been an overcharge to Tenant of Operating Costs in excess
of five percent (5%) of Tenant's Share of the Operating Costs in such year,
Landlord shall reimburse Tenant for its reasonable costs incurred in connection
with Tenant's review of Landlord's books and records of Operating Costs.

      If Landlord fails to furnish Tenant any statement of Landlord's estimate
of Tenant's Share of Operating Costs for any fiscal year or if Landlord shall
furnish such estimate for any fiscal year subsequent to the commencement
thereof, then until the first day of the month following the month in which such
estimate is furnished to Tenant, Tenant shall pay to Landlord on the first day
of each month an amount equal to the monthly sum payable by Tenant to Landlord
under this Section 4.2 .in respect of the last month of the preceding fiscal
year.

4.3   REAL ESTATE TAXES.

      Commencing on the Commencement Date and continuing for the remainder of
the Term, Tenant shall pay to Landlord, as additional rent, Tenant's Share of
Real Estate Taxes (as defined below), if any, in monthly installments on the
first day of each month during the Term and as otherwise provided in this
Section 4.3. Within one-hundred eighty (180) days after the end of each Fiscal
Year ending during the Term and after Lease termination, Landlord shall render a
statement ("Landlord's Real Estate Tax Statement") certified by Landlord, and
showing for the preceding fiscal year or fraction thereof, as the case may be,
Real Estate Taxes for the Building and Lot, accompanied by copies of the tax
bills relating thereto.

      Tenant's Share of Real Estate Taxes" shall be equal to the product of (a)
the Real Estate Taxes as indicated in Landlord's Real Estate Tax Statement,
multiplied by (b) Tenant's Share.

      The term "Real Estate Taxes" as used above shall mean all taxes of every
kind and nature assessed by any governmental authority on the Lot, the Building
and improvements, or both, or on any easement benefiting the same, on the income
derived from the Building, or on the rents payable by tenants of the Building
which the Landlord shall become obligated to pay because of or in connection
with the ownership, leasing and operation of the Lot, the Building and
improvements, or both; installments and interest on assessments for public
betterments or public improvements; special assessments, fees, charges, levies,
penalties, service payments, excises, assessments, charges, and costs for
transit, transit encouragement, traffic reduction programs, or any other
purpose; impositions or taxes of every kind or nature whatsoever assessed or
levied or imposed by any governmental entity, governmental authority or any
improvement or assessment district of any kind having the direct or indirect
power to tax, whether or not consented to or joined in by Landlord, against the
Building or Lot or any legal or equitable interest of Landlord therein, whether
now or hereafter imposed, and whether or not customary in the contemplation of
the parties on the date of this Lease; subject to the following: there shall be
excluded from Real Estate Taxes all federal state or local taxes based upon the
net income of Landlord, excess profits taxes, excise taxes, franchise taxes, and
estate, succession, inheritance and transfer taxes, provided, however, that if
at any time during the Term the present system of ad valorem taxation of real
property shall be changed so that in lieu of the whole or any part of the ad
valorem tax on real property, there shall be assessed on Landlord a capital levy
or other tax on the rents received with respect to the Lot, Building and
improvements, or both, or a federal, state, county, municipal, or other local
income, franchise, excise, sales, profit or similar tax, assessment, levy or
charge (distinct from any now in effect) measured by or based, in whole or in
part, upon any such rents, then any and all of such taxes, assessments, levies
or charges, to the extent so measured or based, shall be deemed to be included
within the term "Real Estate Taxes." Tenant acknowledges that in the event that
Real Estate Taxes are reduced because nonprofit entities occupy the Building,
the share of Real Estate Taxes paid by such tenants shall be structured so that
the tax-exempt tenant(s) for which such reduction is given receives(s) the full
benefit of the property tax exemption.

      Notwithstanding any other provision of this Section 4.3, if the Term
expires or is terminated as of a date other than the last day of a fiscal year,
then for such fraction of a fiscal year at the end of the Term, Tenant's last
payment to Landlord under this Section 4.3 shall be prorated and made on the
basis of Landlord's reasonable best estimate of the items otherwise includable
in Landlord's Real Estate Tax

                                       22
<PAGE>

Statement which shall be delivered to Tenant within one-hundred twenty (120)
days after the Term expires or is terminated and shall be made on or before 10
days after Landlord delivers such estimate to Tenant. Within thirty (30) days
following the date Real Estate Taxes are finally determined for the period for
which Tenant made estimated payments, Tenant or Landlord, as the case may be,
shall pay to the other the balance of any underpayment or overpayment,
respectively, of Tenant's Share of Real Estate Taxes. This paragraph shall
survive the expiration or earlier termination of this Lease.

      Tenant shall pay, as additional rent, on the first day of each month of
such fiscal year and each ensuing fiscal year thereafter, Estimated Monthly Real
Estate Taxes equal to 1/12th of Tenant's Share of the estimated Real Estate
Taxes for the respective fiscal year, with an appropriate additional payment or
credit to be made after Landlord's Real Estate Tax Statement is delivered to
Tenant. If the amount paid by Tenant for Tenant's Share of estimated Real Estate
Taxes is less than Tenant's Share of the actual Real Estate Taxes, Tenant agrees
to pay, as additional rent, to Landlord the amount of the differential. If the
amount paid by Tenant for Tenant's Share of estimated Real Estate Taxes is more
than Tenant's Share of the actual Real Estate Tax, then Landlord shall credit
such excess against Tenant's subsequent monthly payments for Tenant's Share of
Real Estate Taxes, as appropriate, until such excess is exhausted (or refund
such excess to Tenant if at the end of the Term). Landlord may adjust such
Estimated Monthly Real Estate Tax Payment from time to time and at any time
during a fiscal year (but not more often than twice per fiscal year), and Tenant
shall pay, as additional rent, on the first day of each month following receipt
of Landlord's notice thereof, the adjusted Estimated Monthly Real Estate Tax
Payment. Each of Landlord's Real Estate Tax Statements given by Landlord
pursuant to the Lease shall be conclusive and binding upon Tenant unless, within
ninety (90) days after the receipt of such statement, Tenant notifies Landlord
that it wishes to audit Landlord's books and records pertaining to Landlord's
Real Estate Taxes for the preceding year. If Tenant gives such notice timely
requesting the right to review or audit Landlord's books and records pertaining
to Landlord's Real Estate Taxes, Landlord shall make available to Tenant for
inspection or auditing during normal business hours, at the offices of
Landlord's managing agent where such records are kept, the books and records
with respect to Landlord's Real Estate Taxes for the fiscal year in question. If
such books and records are not kept in the Washington, D.C. Greater Metropolitan
Area, Landlord shall upon Tenant's written request, not more often than once per
year, make copies of such books and records available to Tenant for inspection
or audit as herein provided at an office of Landlord or Landlord's managing
agent in the Washington, D.C. Greater Metropolitan Area. Pending the resolution
of any such dispute as to Landlord's Real Estate Tax Statement, Tenant shall pay
the adjustments, including any underpayment of Tenant's Share of Real Estate
Taxes, as specified in accordance with Landlord's Real Estate Tax Statement,
without prejudice to Tenant's position, as herein provided. If the dispute shall
be resolved in Tenant's favor, Landlord shall credit or pay to Tenant (as
hereinabove provided) the amount of Tenant's overpayment. In addition, if there
has been an overcharge to Tenant of Real Estate Taxes in excess of five percent
(5%) of Tenant's Share of Landlord's Real Estate Taxes in such year, Landlord
shall reimburse Tenant for its reasonable costs incurred in connection with
Tenant's review of Landlord's books and records of Real Estate Taxes.

      In the event that the method currently used for the computation of the
assessed market value of the Building and/or the Lot is discontinued or revised
by the State of Maryland, the determination of the increase in Real Estate Taxes
under this Section 4.3 shall thereafter be determined by Landlord according to a
formula and procedure which, in Landlord's reasonable judgment, most nearly
approximates the method of determination hereinabove set forth. In the event
that any business, rent or other taxes which are now or hereafter levied upon
Tenant's use or occupancy of the Premises, on Tenant's leasehold improvements,
on Tenant's business at the Premises or on Landlord by virtue of Tenant's
occupancy of the Premises, are enacted, changed or altered so that any of such
taxes are levied against Landlord or in the event that the mode of collection of
such taxes is changed so that Landlord is responsible for collection or payment
of such taxes, any and all such taxes shall be deemed to be a part of the Real
Estate Taxes and Tenant shall pay to Landlord the full amount of all of such
taxes or if they relate to all tenants in the Building, then Tenant's Share
thereof.

      If Landlord fails to furnish Tenant any statement of Landlord's estimate
of Tenant's Share of Real Estate Taxes for any fiscal year or if Landlord shall
furnish such estimate for any fiscal year subsequent to the commencement hereof,
then until the first day of the month following the month in which such

                                       23
<PAGE>

estimate is furnished to Tenant, Tenant shall pay to Landlord on the first day
of each month an amount equal to the monthly sum payable by Tenant to Landlord
under this Section 4.3 in respect of the last month of the preceding fiscal
year.

4.4   REFUNDS.

      Tenant shall be entitled to its pro rata share of any refund of Real
Estate Taxes received by Landlord, net of reasonable costs incurred by Landlord
in obtaining such refund not to exceed Real Estate Taxes paid by Tenant with
respect to the tax year to which such refund relates (it being understood that
the Real Estate Taxes paid by Tenant for any tax year may fall into two separate
fiscal years so long as the tax year is not the same as the fiscal year).

4.5   ELECTRICITY.

      Commencing on the Commencement Date and continuing for the remainder of
the Term, Tenant shall pay, as additional rent in addition to Tenant's Share of
Operating Costs and Tenant's Share of Real Estate Taxes during the Term,
Tenant's Annual Electrical Cost in accordance with this Section 4.5. Tenant's
Annual Electrical Cost shall mean the cost to Landlord for Tenant's use of
electrical energy in the Premises as shown on the Meter (as hereinafter
defined). Landlord shall cause electricity for lighting and operation of
Tenant's equipment, facilities and fixtures in the Premises to be metered by a
separate utility meter or check meter (the "Meter"). If the Meter is a separate
meter directly from the utility, the Tenant's Annual Electrical Cost shall be
equal to the amount billed to Landlord on such meter. If the Meter is a check
meter measuring Tenant's consumption of electricity but not separately billed by
the utility, Tenant's Annual Electrical Cost shall mean the Landlord's "average
cost per kilowatt hour" (as hereinafter defined) of electrical energy used on
the Premises as shown on the Meter.

      For every fiscal year or portion thereof beginning on the Commencement
Date and during the Term hereof, as the same may be extended, Tenant shall pay,
as additional rent, Tenant's Annual Electrical Cost in monthly installments on
the first day of each month during the Term and as otherwise provided in this
Section 4.5. As soon as practicable after the end of each fiscal year during the
Term, and after Lease termination, Landlord shall render a statement (the
"Landlord's Electrical Statement") in reasonable detail and according to usual
accounting practices certified by Landlord and showing for the preceding
calendar year or fraction thereof Tenant's Annual Electrical Cost.

      Tenant shall pay, as additional rent, on the first day of each month of
such fiscal year and each ensuing fiscal year thereafter, Estimated Monthly
Electricity Cost Payments equal to 1/12th of Landlord's estimate of Tenant's
Annual Electrical Cost for the respective fiscal year, with an appropriate
additional payment or credit to be made after Landlord's Electrical Statement is
delivered to Tenant. If the amount paid by Tenant for estimated Annual
Electrical Cost is less than the actual Annual Electrical Cost, Tenant agrees to
pay, as additional rent, to Landlord the amount of the differential. If the
amount paid by Tenant for estimated Annual Electrical Cost is more than the
actual Annual Electrical Cost, then Landlord, shall credit such excess against
Tenant's subsequent monthly payments for Tenant's Annual Electrical Cost, as
appropriate, until such excess is exhausted (or refund such excess to Tenant if
at the end of the Term. Landlord may adjust such Estimated Monthly Electrical
Cost Payment from time to time and at any time during a fiscal year (but not
more often than twice per fiscal year), and Tenant shall pay, as additional
rent, on the first day of each month following receipt of Landlord's notice
thereof, the adjusted Estimated Monthly Electrical Cost Payment.

      If Landlord fails to furnish Tenant any statement of Landlord's estimate
of Tenant's Annual Electrical Cost for any fiscal year or if Landlord shall
furnish such estimate for any fiscal year subsequent to the commencement hereof,
then until the first day of the month following the month in which such estimate
is furnished to Tenant, Tenant shall pay to Landlord on the first day of each
month an amount equal to the monthly sum payable by Tenant to Landlord under
this Section 4.5 in respect of the last month of the preceding fiscal year.

                                       24
<PAGE>

      Tenant shall have the right from time to time during the Term to read the
Building electricity meter and the Meter serving the Premises. Each Landlord's
Electrical Statement delivered to Tenant hereunder shall be conclusive and
binding upon Tenant unless, within ninety (90) days after receipt of the
statement, Tenant notifies Landlord that it wishes to audit Landlord's books and
records with respect to Annual Electrical Cost for the.preceding fiscal year. If
Tenant gives such notice timely requesting the right to audit Landlord's books
and records, Tenant shall have the right, at a reasonable time and upon
reasonable notice, to examine Landlord's books and records respecting the
Building which relate to the determination and computation of Tenant's Annual
Electrical Cost for the fiscal year in question. If such books and records are
not kept in the Washington, D.C. Greater Metropolitan Area, Landlord shall upon
Tenant's written request, not more often than once per year, make copies of such
books and records available to Tenant for inspection or audit as herein provided
at an office of Landlord or Landlord's managing agent in the Washington, D.C.
Greater Metropolitan Area.

      For the purpose of this Lease, Landlord's "average cost per kilowatt hour"
for any year (or applicable portion thereof at the beginning or end of the term)
shall mean the cost calculated by dividing the sum of the costs charged Landlord
by the public utility for electricity consumed in the Building in the applicable
period by the sum of the number of kilowatt hours used by the Building during
such period as measured by the Building master meter.

4.6   CHANGE OF FISCAL YEAR.

      Landlord shall have the right from time to time to change the periods of
accounting under Sections 4.2, 4.3 and 4.5 to any annual period other than a
calendar year, and upon any such change all items referred to in Sections 4.2,
4.3 and 4.5 shall be appropriately apportioned. In all Landlord's Statements
(including Operating Cost Statements or Real Estate Tax Statements or Landlord's
Electrical Statement) rendered under Section 4.2, 4.3 or 4.5, amounts for
periods partially within and partially without the accounting periods shall be
appropriately apportioned, and any items which are not determinable at the time
of a Landlord's Statement shall be included therein on the basis of Landlord's
estimate, and with respect thereto Landlord shall render promptly after
determination a supplemental Landlord's Statement, and appropriate adjustment
shall be made according thereto. All Landlord's Statements shall be prepared on
an accrual basis of accounting.

4.7   PAYMENTS.

      All payments of Annual Rent and additional rent shall be made to Managing
Agent, or to such other person or place as Landlord may from time to time
designate. If any installment of Annual Rent or additional rent or on account of
TIR is not paid within five (5) days following the due date thereof, at
Landlord's election, (a) it shall bear interest at a rate equal to the average
prime commercial rate from time to time established by the three largest
national banks in Washington, D.C. plus 3% per annum (the "Default Rate") from
such due date, which interest shall be immediately due and payable as further
additional rent, and (b) Tenant shall also pay, as additional rent, a late fee
equal to five percent (5%) of the late installment.

                                    ARTICLE V
                              LANDLORD'S COVENANTS

5.1   LANDLORD'S COVENANTS DURING THE TERM.

      Landlord covenants during the Term:

      5.1.1 Building Services. Landlord shall furnish, through Landlord's
            employees or independent contractors, the services listed in Exhibit
            D.

                                       25
<PAGE>

      5.1.2 Additional Building Services. Landlord shall furnish, through
            Landlord's employees or independent contractors, reasonable
            additional Building operation services upon reasonable advance
            request of Tenant at equitable rates from time to time established
            by Landlord to be paid by Tenant.

      5.1.3 Repairs. Except as otherwise provided in Article VII, Landlord shall
            make such repairs to the Building's roof, exterior walls, floor
            slabs, mechanical (including HVAC), electrical, plumbing and
            fire/life safety systems serving the Building in general and the
            Premises (except for supplemental systems installed by and
            exclusively serving Tenant), other structural components and common
            facilities of the Building as may be necessary to keep them in good
            working condition.

      5.1.4 Quiet Enjoyment. Landlord covenants that Landlord has the right to
            make this Lease and that Tenant on paying the rent and performing
            its obligations hereunder shall peacefully and quietly have, hold
            and enjoy the Premises throughout the Term without any manner of
            hindrance or molestation from Landlord or anyone claiming under
            Landlord, subject however to all the terms and provisions hereof.

      5.1.5 Access/Security. Tenant shall have access to the Premises 24 hours
            per day, 7 days of the week; subject, however, to a key card access
            system in the Building at the main entry to the Building and at the
            secondary Building door (the Tenant shall receive 4 key cards for
            each 1,000 rentable square feet of floor area in the Premises at no
            cost), provided that the Building main entry door and secondary
            entry door may remain unlocked 7 a.m, to 11 p.m. Monday through
            Friday and 8 a.m. to 6 p.m. on Saturday); provided further, however,
            that no representation or warranty is made by Landlord as to the
            adequacy, completeness or integrity of said access control system
            and failure of such access control system shall not modify or affect
            the limitations on Landlord's liability under this Lease.

      5.1.6 Intentionally Omitted.

      5.1.7 Indemnity. Landlord shall indemnify, defend, protect and save
            harmless Tenant, any trustee, stockholder, officer, director or
            employee of Tenant ("Indemnified Tenant Parties"), to the extent
            permitted by law, from and against any and all liabilities, losses,
            damages, costs, expenses (including reasonable attorneys' fees and
            expenses), causes of action, suits, claims, demands or judgments of
            any nature arising from injury to or death of any person or damage
            to or loss of property on the Premises caused by the negligence or
            willful misconduct of Landlord or its agents or employees, except to
            the extent caused by the negligence or willful misconduct of Tenant
            or its agents, employees, contractors, licensees or sublessees.
            Tenant shall give Landlord prompt and timely notice of any claim
            made or suit against it or any other party of which it has
            knowledge, relating to any matter which in any way may result in
            indemnification pursuant to this Section 5.1.7. Subject to the prior
            rights, if any, of insurers, Landlord shall be entitled to control
            the defense and compromise of an such claim or suit to the extent of
            any actual or potential claim for indemnification made or reserved
            by Tenant (as well as any claim made against Landlord or any of
            those for whom it is legally responsible).

      5.1.8 Tenant's Costs. Landlord shall pay all costs including, without
            limitation, reasonable attorneys' fees incurred by Tenant in
            connection with the successful enforcement by Tenant of any
            obligations of Landlord or remedies of Tenant under this Lease.

      5.1.9 Lobby Directory. Landlord shall install, at Landlord's expense,
            Tenant's name on the Building directory in the Building lobby.
            Building standard suite signage (at the entrance to the Premises)
            shall be provided at Landlord's expense, but any changes to the
            signage may only be made in accordance with the terms of this Lease
            and such changes shall be at the expense of the Tenant. In the event
            that Landlord maintains a monument sign upon the Lot with the names
            of Building tenants, Landlord shall also install, at Tenant's
            expense, Tenant's name in Building standard signage on such monument
            sign.

                                       26
<PAGE>

     5.1.10 Compliance. Landlord shall be responsible for the Building's
            overall compliance with the Americans with Disabilities Act as it
            relates to the common areas of the Building (including, without
            limitation, core area bathrooms) except to the extent that any
            improvement or renovation is required due to Tenant's special use of
            the Premises (other than general office or laboratory use). As used
            in this Section, the Americans with Disabilities Act shall mean
            the Americans with Disabilities Act of 1991,42 U.S.C. Sections
            12.101, et seq. and all regulations applicable thereto promulgated
            as of the date hereof (collectively, "ADA"). Following the
            Commencement Date, Tenant shall have the responsibility to comply
            with the requirements of the ADA in the Premises.

     5.1.11 Insurance. Landlord shall procure and maintain throughout the Term
            of this Lease a policy or policies of insurance, at its sole cost
            and expense (but subject to Section 4.2), causing the Building and
            any other improvements on the Lot to be insured in the amounts (with
            full replacement cost endorsement) and coverages required under the
            Ground Lease, a policy of commercial general liability insurance
            satisfying the terms of the Ground Lease, and such other insurance
            or higher limits as may be required under the Ground Lease or by the
            holder of any mortgage on the Building. Any insurance provided for
            in this Section 5.1.11 may be maintained by means of a policy or
            policies of blanket insurance, covering additional items or
            locations or insureds, provided, however, that the coverage afforded
            Landlord and any such other parties in interest will not be reduced
            or diminished by reason of the use of such blanket policy of
            insurance.

5.2   INTERRUPTIONS.

      Landlord shall not be liable to Tenant for any compensation or reduction
of rent by reason of inconvenience or annoyance or for loss of business arising
from power losses or shortages or from the necessity of Landlord's entering the
Premises for any of the purposes in this Lease authorized, or for repairing the
Premises or any portion of the Building or Lot, or for interruption or
termination (by reason of any cause reasonably beyond Landlord's control,
including without limitation, loss of any applicable license or governmental
approval), of the services provided by Landlord pursuant to Section 5.1. In case
Landlord is prevented or delayed from making any repairs, alterations or
improvements, or furnishing any service or performing any other covenant or duty
to be performed on Landlord's part, by reason of any cause reasonably beyond
Landlord's control, Landlord shall not be liable to Tenant therefor, nor, except
as expressly otherwise provided in Article VII, shall Tenant be entitled to any
abatement or reduction of rent by reason thereof, nor shall the same give rise
to a claim in Tenant's favor that such failure constitutes actual or
constructive, total or partial, eviction from the Premises.

      Landlord reserves the right to stop any service or utility system when
necessary by reason of accident or emergency or until necessary repairs have
been completed. Except in case of emergency repairs, Landlord will give Tenant
reasonable advance notice of any contemplated stoppage and will use reasonable
efforts to avoid unnecessary inconvenience to Tenant by reason thereof.

      Landlord also reserves the right to institute such policies, programs and
measures as may be necessary, required or expedient for the conservation or
preservation of energy or energy services or as may be necessary or required to
comply with applicable codes, rules, regulations or standards.

      Notwithstanding the foregoing provisions of this Section 5.2 and any other
provision of this Lease to the contrary, in the event that any interruption of
service(s) results from a cause arising on the Building or Lot not reasonably
beyond Landlord's control or results from any negligent or willful act or
omission of Landlord or its agents or their employees and as a result of such
interruption the Premises or material portion thereof is made untenantable for
the conduct of Tenant's business for a period of five (5) consecutive business
days and during such period Tenant does not use or occupy the affected space,
the Annual Rent and the additional rent payable by Tenant hereunder for the
portion of the Premises which is so untenantable and unused by Tenant shall
abate for the period commencing on the day after such fifth (5th) consecutive
business day and ending on the day upon which the interrupted service(s) is(are)
restored.

                                       27
<PAGE>

                                   ARTICLE VI
                               TENANT'S COVENANTS

6.1   TENANT'S COVENANTS DURING THE TERM.

      Tenant covenants:

   6.1.1  Tenant's Payments. Tenant shall pay when due (a) all Annual Rent and
          additional rent, (b) all taxes which may be imposed on Tenant's
          personal property in the Premises (including, without limitation,
          Tenant's fixtures and equipment) regardless to whomever assessed, (c)
          all charges by public utilities for telephone and other utility
          services (including service inspections therefor) rendered to the
          Premises not otherwise required hereunder to be furnished by Landlord
          without charge and not consumed in connection with any services
          required to be furnished by Landlord without charge, and (d) as
          additional rent, all charges to Landlord for services rendered
          pursuant to Section 5.1.2 hereof.

   6.1.2  Repairs and Yielding Up. Except as otherwise provided in Article VII,
          Section 5.1.3 and Section 10.11, Tenant shall keep the Premises in
          good order, repair and condition, reasonable wear and tear and
          casualty damage required hereunder to be covered by Landlord's
          insurance and damage due to condemnation only excepted; and at the
          expiration or termination of this Lease peaceably to yield up the
          Premises and all changes and additions therein in such order, repair
          and condition and free of any and all Hazardous Materials (as
          hereinafter defined), first removing all goods and effects of Tenant
          and any items, the removal of which is required by agreement or
          specified herein to be removed at Tenant's election and which Tenant
          elects to remove, and repairing all damage caused by such removal and,
          if required hereunder, restoring the Premises as and to the extent
          required and leaving them clean and neat. Notwithstanding the
          foregoing, Tenant shall not be obligated to remove any of the initial
          alterations in the Premises performed by or for Tenant before the
          Commencement Date except to the extent that Landlord's approval of
          such alterations was expressly conditioned, in writing, upon Tenant's
          agreement to remove the same at the end of the Term, and provided
          further that Tenant shall be obligated to remove Tenant's cabling from
          the Building risers. At least three (3) months prior to the surrender
          of the Premises, Tenant shall deliver to Landlord a narrative
          description of the actions proposed (or required by any governmental
          authority) to be taken by Tenant in order to surrender the Premises
          (including any installations permitted by Landlord to remain in the
          Premises) at the expiration or earlier termination of the Term, free
          from any residual impact from the use, storage, generation, release or
          disposal of Hazardous Materials ("Tenant HazMat Operations") and
          otherwise released for unrestricted use and occupancy (the "Surrender
          Plan"). Such Surrender Plan shall be accompanied by a current listing
          of (i) all Hazardous Materials licenses and permits held by or on
          behalf of Tenant with respect to the Premises, and (ii) all Hazardous
          Materials used, stored, handled, treated, generated, released or
          disposed of from the Premises, and shall be subject to the review and
          approval of Landlord's environmental consultant. In connection with
          the review and approval of the Surrender Plan, upon the request of
          Landlord, Tenant shall deliver to Landlord or its consultant such
          additional information concerning Tenant HazMat Operations as Landlord
          shall reasonably request. On or before such surrender, Tenant shall
          deliver to Landlord evidence that the approved Surrender Plan shall
          have been satisfactorily completed and Landlord shall have the right,
          at Landlord's expense except as set forth below, to cause Landlord's
          environmental consultant to inspect the Premises and perform such
          additional procedures as may be deemed reasonably necessary to confirm
          that the Premises are, as of the effective date of such surrender or
          early termination of the Lease, free from any residual impact from
          Tenant HazMat Operations. Landlord shall have the unrestricted right
          to deliver such Surrender Plan and any report by Landlord's
          environmental consultant with respect to the surrender of the Premises
          to third parties. If Tenant shall fail to prepare or submit a
          Surrender Plan approved by Landlord in its reasonable discretion, or
          if Tenant shall fail to complete the approved

                                       28
<PAGE>

          Surrender Plan, or if such Surrender Plan, whether or not approved by
          Landlord, shall fail to adequately address any residual effect of
          Tenant HazMat Operations in, or about the Premises, Landlord shall
          have the right to take such actions as Landlord may deem reasonable or
          appropriate to assure that the Premises and the Project are
          surrendered free from any residual impact from Tenant HazMat
          Operations, the cost of which actions shall be reimbursed by Tenant as
          Additional Rent, without regard to the limitation set forth above in
          this Section 6.1.2.

   6.1.3  Occupancy and Use. Tenant shall use and occupy the Premises only for
          the Permitted Uses; Tenant shall not use or permit the Premises or any
          portion thereof to be used for any Prohibited Use (as hereinafter
          defined) or by any Prohibited Person (as defined in Section 14.4 of
          the Ground Lease as set forth in Section 10.26 hereof). Tenant shall
          not injure or deface the Premises, Building, or Lot or permit animal,
          laboratory or other odors, noises or emissions to emanate from the
          Premises; and shall not permit in the Premises any use thereof which
          is improper, offensive, contrary to law or ordinances, or liable to
          create a nuisance or to invalidate or increase the premiums for any
          insurance on the Building or its contents or liable to render
          necessary any alteration or addition to the Building. For purposes
          hereof: (a) "Prohibited Use" shall mean (i) the manufacture or sale of
          consumer products (such as, without limitation, alcoholic beverages,
          tobacco products, or weapons but not including drugs sold over the
          counter or by medical prescription) recognized as hazardous to human
          health by federal or Maryland state governmental authorities, (ii) the
          publication, manufacture, sale, distribution, promotion or purveyance
          of pornographic material, or (iii) gambling; (b) a "Controlled
          Affiliate" of any person shall mean any person controlling, controlled
          by or under common control with such person; and (c) for purposes of
          the definition of "Controlled Affiliate" the term "controlled"
          (including the terms, "controlled," "controlling," "controlled by,"
          and "under common control" with) means the possession, direct or
          indirect, of the power to: (y) vote ten percent (10%) or more of the
          outstanding voting securities of, or other ownership interests in,
          such person if the person is a company whose stock or other ownership
          interests are publicly traded and, if not, to vote more than fifty
          percent (50%) of the outstanding voting securities of, or other
          ownership interests in, such person, or (z) otherwise direct the
          management policies of such person by contract or otherwise. As used
          herein, a "person" shall mean any individual, partnership,
          corporation, limited liability company, unincorporated association,
          trust, estate, or other legal entity. Notwithstanding the foregoing,
          no federal, state, or local governmental entity, agency or authority
          (other than a college or university) shall be a "Prohibited Person"
          for the purposes of this Lease.

   6.1.4  Rules and Regulations. Tenant shall comply with the Rules and
          Regulations set forth in Exhibit E and all other reasonable Rules and
          Regulations hereafter made by Landlord (not inconsistent with the
          terms of this Lease), of which Tenant has been given notice, for the
          care and use of the Building and Lot and their facilities and
          approaches. Landlord shall take commercially reasonable steps to
          enforce said Rules and Regulations, it being understood however that
          Landlord shall not be liable to Tenant for the failure of other
          tenants of the Building to conform to such Rules and Regulations, and
          provided further, however, that Landlord shall not apply the Rules and
          Regulations more strictly against Tenant than against other tenants in
          the Building similarly situated.

   6.1.5  Safety Appliances and Licenses. Tenant shall keep the Premises
          equipped with all safety appliances required by law or ordinance or
          any other regulation of any public authority because of any particular
          use (including laboratory use) made by Tenant and shall procure all
          licenses and permits so required because of such use and, if requested
          by Landlord, Tenant shall do any work so required because of such
          particular use (including laboratory use), it being understood that
          the foregoing provisions shall not be construed to broaden in any way
          Tenant's Permitted Uses.

                                       29
<PAGE>

   6.1.6  Assignment and Subletting. Tenant shall not without the prior written
          consent of Landlord assign this Lease, make any sublease, or permit
          occupancy of the Premises or any part thereof by anyone other than
          Tenant, voluntarily or by operation of law. As additional rent, Tenant
          shall reimburse Landlord promptly for reasonable legal and other
          expenses incurred by Landlord in connection with any request by Tenant
          for consent to assignment or subletting (not to exceed $1,000 in the
          aggregate in connection with each such request). No assignment or
          subletting shall affect the continuing primary liability of Tenant
          (which, following assignment, shall be joint and several with the
          assignee). No consent to any of the foregoing in a specific instance
          shall operate as a waiver in any subsequent instance. Landlord's
          consent to any proposed assignment or subletting is required both as
          to the terms and conditions thereof, and as to the creditworthiness of
          the proposed assignee or subtenant and the consistency of the proposed
          assignee's or subtenant's business with other uses and tenants in the
          Building. Landlord's consent to assignment or subletting by Tenant
          shall not be unreasonably withheld or delayed, provided that Tenant is
          not then in default under this Lease (beyond any applicable grace or
          cure period). In the event that any assignee (other than a Permitted
          Assignee) or subtenant pays to Tenant any amounts which (after
          deducting therefrom costs to Tenant of reasonable legal fees,
          brokerage fees, improvements, allowances or rent concessions made by
          Tenant in connection with such sublease or assignment and further
          deducting any Additional Allowance Charges prepaid by Tenant) exceed
          the Annual Rent and additional rent then payable hereunder, or pro
          rata portion thereof on a square footage basis for any portion of the
          Premises, Tenant shall promptly pay fifty percent (50%) of said excess
          to Landlord as and when received by Tenant. If Tenant requests
          Landlord's consent to assign this Lease (other than an assignment to a
          Permitted Assignee) or sublet (other than a sublease to a Permitted
          Assignee) more than fifty percent (50%) of the Premises for
          substantially all of the remainder of the Term, Landlord shall have
          the option, exercisable by written notice to Tenant given within 20
          days after receipt of such request, to terminate this Lease (a)
          entirely in the case of an assignment or (b) with respect to the
          portion of the Premises desired to be sublet, as the case may be, as
          of a date specified in such notice which shall be not less than 30 or
          more than 60 days after the date of such notice.

          If, at any time during the Term of this Lease, Tenant is: (i) a
          corporation or a trust (whether or not having shares of beneficial
          interest) and there shall occur any direct or indirect change in the
          identity of the persons or entities owning or controlling more than
          fifty percent (50%) of the voting rights or shares of stock or other
          ownership interests in Tenant or in the trustees or other persons
          exercising like functions and managing the affairs of Tenant; or (ii)
          a partnership or association or otherwise not a natural person (and is
          not a corporation or a trust), and there shall occur any direct or
          indirect change in the identity of any of the persons who then are
          members of such partnership or association or who comprise Tenant,
          Tenant shall so notify Landlord and Landlord may terminate this Lease
          by notice to Tenant given within 90 days thereafter if, in Landlord's
          reasonable judgment, the credit of Tenant is thereby impaired.

          If Tenant shall at any time or times during the term of this Lease
          desire to assign this Lease or sublet all or a portion of the
          Premises, Tenant shall give written notice thereof to Landlord, which
          notice shall be accompanied by: (a) a conformed or photostatic copy of
          the proposed assignment or sublease, the effective or commencement
          date of which shall be at least thirty (30) days after the giving of
          such notice; (b) a statement setting forth in reasonable detail the
          identity of the proposed assignee or subtenant, the nature of its
          business and its proposed use of the Premises; (c) current financial
          information with respect to the proposed assignee or subtenant,
          including, without limitation, its most recent financial report and
          any contract of sale if Tenant is selling its business, and (d) a
          written confirmation by such subtenant or assignee stating that it is
          not a "Prohibited Person" (as defined herein). Such notice shall be
          deemed an offer from Tenant to Landlord whereby Landlord (or
          Landlord's designee) may, at its option: (i) consent to such
          assignment or sublease; (ii) sublease such space from Tenant upon the
          same terms and conditions therein set forth; (iii) if for more than
          50% of

                                       30
<PAGE>

          the Premises for substantially all of the remainder of the Term,
          terminate this Lease and enter into a new lease directly with the
          proposed sublessee or assignee, without any liability to Tenant; or,
          (iv) deny consent. Said options may be exercised by Landlord by notice
          to Tenant at any time within 20 days after such notice has been given
          by Tenant to Landlord, and during such 20-day period Tenant shall not
          assign this Lease or sublet such space to any person.

          Landlord agrees that assignment of this Lease and subleases of all or
          a portion of the Premises to an Affiliate of Tenant whose financial
          condition is equal to or better than that of Tenant as of the date of
          such assignment will not require the prior approval of Landlord
          hereunder, provided Tenant provides Landlord written confirmation of
          the financial condition of such Affiliate of Tenant and complies with
          all terms and conditions of the immediately preceding paragraph, and
          provided further that any such assignee or subtenant uses the Premises
          for the Permitted Use and is not a Prohibited Person. Any such
          Affiliate of Tenant to whom or which this Lease is so assigned or to
          whom or which the Premises or any portion thereof is so sublet, is
          herein referred to as a "Permitted Assignee" and such sublease or
          assignment is herein referred to as a "Permitted Assignment." For
          purposes hereof, the term "Affiliate of Tenant' shall mean (i) any
          entity that is controlled by Tenant, is under common control with
          Tenant or controls Tenant, (ii) the successor to Tenant by
          consolidation or merger or sale of all or substantially all of
          Tenant's business and assets, provided the successor has a net worth
          not less than tenant's net worth as of the date of such merger,
          consolidation or sale. Except in the case of the term "Controlled
          Affiliate" (as used in Section 6.1.3), the term "Control" (including
          the terms "controlled," "controlling," "controlled by," and "under
          common control" with) as used in this Lease shall mean ownership of
          more than 50% of all partnership interests (including more than 50% of
          all general partnership interests) in a partnership or more than 50%
          of all classes of stock (including more than 50% of all voting stock)
          in a corporation or more than 50% of all voting equity interests in a
          mutual life insurance company. Any suite entry door signage for
          subtenant(s) and assignee(s) and any change in suite entry door,
          signage for subtenant(s) or assignee(s) of Tenant shall be at Tenant's
          sole expense and subject to Landlord's prior approval.

   6.1.7  Indemnity. Tenant shall defend, with counsel approved by Landlord
          (such approval not to be unreasonably withheld or delayed), all
          actions against Landlord, any partner, member, trustee, stockholder,
          officer, manager, director, employee or beneficiary of Landlord,
          holders of mortgages secured by the Premises or the Building and Lot
          and any other party having an interest in the Premises ("Indemnified
          Parties") with respect to, and pay, protect, indemnify and save
          harmless, to the extent permitted by law, all Indemnified Parties from
          and against, any and all liabilities, losses, damages, costs, expenses
          (including reasonable attorneys' fees and expenses), causes of action,
          suits, claims, demands or judgments of any nature arising from (i)
          injury to or death of any person, or damage to or loss of property, on
          the Premises or connected with the use, condition or occupancy thereof
          or the construction, alteration or repair of any improvements thereon
          (including without limitation the Leasehold Improvements) or connected
          with Tenant's access to or use of the roof of the Building or Tenant's
          installation, operation, maintenance or removal of an Antenna on the
          Building pursuant to Article XII unless caused by the negligence or
          willful misconduct of Landlord or its agents or employees, (ii)
          violation of this Lease by Tenant, or (iii) any act, omission, fault,
          negligence or misconduct of Tenant or its agents, employees,
          contractors, licensees, sublessees or invitees (sometimes herein
          referred to as "Tenant's Invitees").

   6.1.8  Tenant's Insurance. Tenant shall maintain commercial general liability
          insurance on the Premises, containing a broad form contractual
          liability endorsement, insuring Tenant and naming Landlord, its
          Mortgagee and property managing agent as an additional named insureds
          against all claims and demands for (i) injury to or death of any
          person or damage to or loss of property, on the Premises or adjoining
          walks, streets or ways, or connected with the use, condition or
          occupancy of any thereof by Tenant or Tenant's Invitees unless caused
          by the negligence of Landlord or its agents or employees, (ii)
          violation of this Lease by Tenant.

                                       31
<PAGE>

          (iii) any act, fault or omission, or other misconduct of Tenant or
          Tenant's Invitees, (iv) any and all indemnification obligations of
          Tenant under this Lease including, without limitation, Section 6.1.7
          and Section 18 hereof, in amounts which shall, at the beginning of the
          Term, be at least equal to the limits set forth in Section 1.1, and
          from time to time during the Term, shall be for such higher limits, if
          any, as are customarily carried in the area in which the Premises are
          located on property similar to the Premises and used for similar
          purposes, and shall be written on the "Occurrence Basis," and to
          furnish Landlord with certificates thereof. Tenant shall also maintain
          pollution legal liability insurance with a minimum limit of not less
          than $2,000,000 per occurrence and boiler and machinery insurance in
          adequate amounts on all fired objects and other fired pressure vessels
          and systems serving the Premises (if any). If fired objects and other
          pressure vessels and the damage that may be caused by them or result
          from them are not covered by Tenant's extended coverage insurance,
          then such insurance shall be in an amount not less than $250,000 and
          be issued on a replacement cost basis. Tenant shall also maintain
          insurance covering all of the items included in Tenant's Leasehold
          Improvements, heating, ventilating and air conditioning equipment
          maintained by Tenant, trade fixtures, merchandise and personal
          property from time to time in, on or upon the Premises, and
          alterations, additions or changes made by Tenant in an amount not less
          than one hundred percent (100%) of their full replacement value from
          time to time during the Term, providing protection against perils
          included within the standard form of "all risks" fire and casualty
          insurance policy, together with insurance against sprinkler damage,
          vandalism and malicious mischief. Any policy proceeds from such
          insurance shall be held in trust by Tenant's insurance company for the
          repair, construction, and restoration or replacement of the property
          damaged or destroyed unless this Lease shall cease and terminate under
          the provisions of this Lease. The insurance policies required to be
          obtained by Tenant under this Section shall be issued by an insurance
          company of recognized responsibility with a rating of "A-X" or better
          in the current "Best's Insurance Reports" and reasonably acceptable to
          Landlord, licensed to do business in the jurisdiction in which the
          Building is located, and shall be written as primary policy coverage
          and not contributing with or in excess of any coverage that Landlord
          or any Mortgagee or management agent may carry. All policies that
          Tenant is required to maintain under this Lease shall contain
          appropriate clauses or endorsements under which (i) such policies may
          not be materially changed, amended, cancelled or allowed to lapse
          without thirty (30) days' prior notice to Landlord, (ii) no act or
          omission of Tenant shall affect or limit the obligations of the
          insurer with respect to the Landlord, (iii) Tenant shall be solely
          responsible for the payment of all premiums notwithstanding the fact
          that Landlord is an additional insured under any such policy, and (iv)
          Landlord, its Mortgagee and property management agent are named an
          additional insureds under such policy. Any insurance provided for in
          this Section 6.1.8 may be maintained by means of a policy or policies
          of blanket insurance, covering additional items or locations or
          insureds, provided, however, that the coverage afforded Landlord and
          any such other parties in interest will not be reduced or diminished
          by reason of the use of such blanket policy of insurance. Neither the
          issuance of any insurance policy required under this Lease, nor the
          minimum limits specified herein with respect to Tenant's insurance
          coverage, shall be deemed to limit or restrict in any way Tenant's
          liability arising under or with respect to this Lease. On or before
          occupancy by Tenant of any portion of the Premises, for any reason,
          including the installation of cabling or systems furniture, and in all
          events prior to the Commencement Date, and at least thirty (30) days
          before the expiration of any policy or certificate furnished by Tenant
          under this Section, Tenant shall deliver to Landlord copies of all
          insurance policies required by Tenant to be maintained under the lease
          or appropriate certificates evidencing the issuance of such policies,
          together with evidence of payment of all applicable premiums.

   6.1.9  Tenant's Worker's Compensation Insurance. Tenant shall keep all of
          Tenant's employees working in the Premises covered by worker's
          compensation insurance in statutory amounts not less than $500,000,
          and to furnish Landlord with certificates thereof.

   6.1.10 Landlord's Right of Entry. Tenant shall permit Landlord and Landlord's
          agents entry: to examine the Premises at reasonable times and, except
          in emergencies, upon reasonable

                                       32
<PAGE>

          prior notice, and if Landlord shall so elect, to make repairs or
          replacements (it being understood, however, that Landlord shall use
          commercially reasonable efforts to minimize disruption of Tenant's
          business); to remove, at Tenant's expense, any changes, additions,
          signs, curtains, blinds, shades, awnings, aerials, flagpoles, or the
          like not consented to in writing by Landlord; and to show the Premises
          to prospective tenants during the 12 months preceding expiration of
          the Term and to prospective purchasers and mortgagees at all
          reasonable times. If Tenant so elects, an employee of Tenant may be
          present during any such entry by Landlord, provided however that
          Landlord need not postpone any entry if no employee of Tenant is then
          available in the case of emergencies or if Landlord has given Tenant
          the prior notice herein required.

   6.1.11 Loading. Tenant shall not place Tenant's Property, as defined in
          Section 6.1.13, upon the Premises so as to exceed a rate of 100 pounds
          of live load and 20 pounds of dead load per square foot and not to
          move any safe, vault or other heavy equipment in, about or out of the
          Premises except in such manner and at such times as Landlord shall in
          each instance approve; Tenant's business machines and mechanical
          equipment which cause vibration or noise that may be transmitted to
          the Building structure or to any other leased space in the Building
          shall be placed and maintained by Tenant in settings of cork, rubber,
          spring or other types of vibration eliminators sufficient to eliminate
          such vibration or noise.

   6.1.12 Landlord's Costs. In case Landlord shall be made party to any
          litigation commenced by or against Tenant or by or against any parties
          in possession of the Premises or any part thereof claiming under
          Tenant, Tenant shall pay, as additional rent, all costs including,
          without implied limitation, reasonable counsel fees incurred by or
          imposed upon Landlord in connection with such litigation and, as
          additional rent, also to pay all such costs and fees incurred by
          Landlord in connection with the successful enforcement by Landlord of
          any obligations of Tenant or remedies of Landlord under this Lease.

   6.1.13 Tenant's Property. All the furnishings, fixtures, equipment, effects
          and property of every kind, nature and description of Tenant and of
          all persons claiming by, through or under Tenant which, during the
          continuance of this Lease or any occupancy of the Premises by Tenant
          or anyone claiming under Tenant, may be on the Premises or elsewhere
          in the Building or on the Lot shall be at the sole risk and hazard of
          Tenant, and if the whole or any part thereof shall be destroyed or
          damaged by fire, water or otherwise, or by the leakage or bursting of
          water pipes, steam pipes, or other pipes, by theft, or from any other
          cause, no part of said loss or damage is to be charged to or to be
          borne by Landlord unless due to the gross negligence or willful
          misconduct of Landlord or its agents or employees.

   6.1.14 Labor or Materialmen's Liens. Tenant shall pay promptly when due the
          entire cost of any work done or materials installed in the Premises by
          Tenant, its agents, employees or contractors; and shall not cause or
          permit any liens for labor or materials performed or furnished in
          connection therewith to attach to the Premises; Building or the Lot;
          and shall bond over any such liens which may so attach or cause the
          same to be discharged within thirty (30) days.

   6.1.15 Changes or Additions. Tenant shall not make any changes or additions
          to the Premises without Landlord's prior written consent (which
          consent shall not be unreasonably withheld or delayed), provided that
          Tenant shall reimburse Landlord for all reasonable engineering fees
          and expenses incurred by Landlord in connection therewith if Landlord
          reasonably believes review of such changes or improvements by
          engineer(s) is appropriate, and provided further that, Tenant shall be
          solely responsible for assuring that all such changes or additions
          comply with applicable laws and regulations and in order to protect
          the functional integrity of the Building, all such changes and
          additions affecting the structure or mechanical, electrical or
          plumbing systems of the Building or visible from outside of the
          Premises shall be performed by contractors selected from a list of
          approved contractors prepared by Landlord and approved by Tenant, such
          approval not to be unreasonably withheld or delayed. Tenant may

                                       33
<PAGE>

          make alterations costing less than Ten Thousand Dollars ($10,000) in
          each instance without Landlord's prior approval provided such
          alterations do not affect the structure or mechanical, electrical or
          plumbing systems of the Building and are not visible from outside of
          the Premises.

   6.1.16 Holdover. Tenant shall pay to Landlord the sum of (a) the greater of
          150% of (i) the then fair market rent as conclusively determined by
          Landlord or (ii) the total of the Annual Rent payable by Tenant during
          the 12-month period prior to the termination of the Lease, as
          escalated in accordance with Section 4.1 hereof, plus (b) all
          additional rent payable by Tenant, for each month or portion thereof
          that Tenant shall retain possession of the Premises or any part
          thereof after the termination of this Lease, whether by lapse of time
          or otherwise, and shall also pay all direct damages sustained by
          Landlord on account thereof. The provisions of this subsection shall
          not operate as a waiver by Landlord of the right of reentry provided
          in this Lease.

   6.1.17 Financial Statements. Tenant shall deliver to Landlord within ninety
          (90) days following the close of each of Tenant's fiscal years during
          the Term, Tenant's then current financial statement audited by an
          independent certified public accountant, if such a current audited
          statement is available, and otherwise certified as true, correct and
          complete by Tenant's Chief Financial Officer.

   6.1.18 Compliance. Tenant shall, at Tenant's sole expense, (i) comply with
          all laws, orders, ordinances, and regulations of federal, state,
          county, and municipal authorities having jurisdiction over the
          Premises (collectively, "Laws") and with all licenses and permits
          applicable to Tenant's use thereof (collectively, "Permits"), provided
          that in no event shall Tenant be obligated under this Section 6.1.18
          to make any alterations, repairs, replacements or capital improvements
          in or to the Premises or any part thereof required by such Laws or
          Permits unless such requirements arises from a particular use or any
          laboratory use made of the Premises by Tenant, (ii) comply with the
          Declaration of Covenants, Restrictions and Easements dated July 18,
          2003 by JHU as Declarant (the "Campus CCRs"), the Estoppel Certificate
          Waiver and Consent Assignment dated July 18, 2003 between JHU and
          Montgomery County, Maryland (the "Estoppel"), and such other
          protective covenants, restrictions applicable to the Lot or the
          Building of which Tenant has prior written notice, and with all
          requirements of the Ground Lease, as they may be amended from time to
          time, after notice thereof to Tenant of any such amendment, provided
          that no such amendment increases or enlarges Tenant's obligations
          under this Lease, (iii) comply with any directive, order or citation
          made pursuant to law by any public officer requiring abatement of any
          nuisance or which imposes upon Landlord or Tenant any duty or
          obligation arising from Tenant's occupancy or use of the Premises or
          from conditions which have been created by or at the request or
          insistence of Tenant, or required by reason of a breach of any
          Tenant's obligations hereunder or by or through other fault of Tenant,
          (iv) comply with all insurance requirements applicable to the
          Premises, and (v) furnish all data and information to governmental
          authorities, with a copy to Landlord, required by Laws or Permits. If
          Tenant receives notice of any such directive, order, citation or of
          any violation of any law, order, ordinance, regulation or any
          insurance requirement or of any of the protective covenants or
          restrictions, Tenant shall promptly notify Landlord in writing of such
          alleged violation and furnish Landlord with a copy of such notice. If
          Landlord receives notice of any such directive, order, citation,
          violation of any law, ordinance, regulation, insurance requirement or
          protective covenants or restrictions pertaining to Tenant or the
          Premises, Landlord shall promptly notify Tenant in writing thereof and
          will furnish Tenant with a copy of such notice.

   6.1.19 Laboratories/Janitorial.

          Tenant shall be responsible, at its sole cost and expense, for routine
          janitorial and trash removal services for the entire Premises
          including laboratory areas and all biohazard disposal services for the
          laboratory areas, if any, in the Premises or other space within the

                                       34
<PAGE>

      Premises used in connection with the generation, use, storage, treatment,
      release or disposal of Hazardous Material as permitted in accordance with
      Section 10.18 or the housing, care, storage or handling of animals
      (collectively, "HazMat Facilities"). Such services shall be performed by
      contractors reasonably acceptable to Landlord and on a sufficient basis to
      ensure that the Premises including all laboratory and other HazMat
      Facilities of the Premises are at all times kept neat, clean, free of
      trash, Hazardous Material and biohazards except in appropriate, specially
      marked containers reasonably approved by Landlord and in compliance with
      applicable Laws. In addition, Tenant shall be responsible, at Tenant's
      sole cost and expense, for the care and safe storage of any animals housed
      within the Premises, including without limitation all animal husbandry and
      custodial services with respect thereto. Tenant shall not cause or permit
      animals, animal waste, food or supplies relating to animals to be used,
      housed or stored in the Premises or to be transported within the Building
      except as provided in this paragraph. All deliveries of animals or animal
      food or supplies to Tenant at the Building shall be made prior to 9:00
      a.m. No transportation of animals, animal waste, food or supplies within
      the Building shall occur between the hours of 9:00 a.m. and 5:00 p.m. At
      all times that animals are transported within the Building, they shall be
      transported in an appropriate cage or other container. At no time shall
      any animals, animal waste, good or supplies relating to the animals be
      brought into, transported through, or delivered to the lobby of the
      Building or be transported within the Building in elevators other than the
      freight elevator designated by Landlord therefor. Prior to the
      Commencement and from time to time during the Term upon written request by
      Landlord, Tenant, at its sole cost and expense, shall retain a qualified
      environmental engineer or consultant, reasonably acceptable to Landlord,
      to inspect all laboratory and other HazMat Facilities in the Premises and
      confirm in a written report to Landlord that all such laboratories and
      HazMat Facilities comply with applicable Laws. If such engineer or
      consultant cannot issue such report because the laboratories and HazMat
      Facilities do not comply with applicable Laws, Tenant shall forthwith, at
      its sole cost and expense, take any and all actions necessary to bring
      such laboratories and HazMat Facilities into compliance with such Laws.

6.2   BANKRUPTCY.

      Tenant acknowledges that this Lease is a lease of nonresidential real
property and, therefore agrees that Tenant, as the debtor in possession, or the
trustee for Tenant (collectively "the Trustee") in any proceeding under Title 11
of the United States Bankruptcy Code relating to Bankruptcy, as amended, or
under any other similar Federal or state statute (collectively, the "Bankruptcy
Code"), shall not seek or request any extension of time to assume or reject this
Lease or to perform any obligations of this Lease which arise from or after the
order of relief.

      If the Trustee proposes to assume or to assign this Lease or sublet the
Premises (or any portion thereof) to any person who shall have made a bona fide
offer to accept an assignment of this Lease or a subletting on terms acceptable
to the Trustee, the Trustee shall give Landlord and lessors and mortgagees, of
Landlord of which Tenant has notice, written notice setting forth the name and
address of such person and the terms and conditions of such offer, no later than
20 days after receipt of such offer, but in any event no later than 10 days
prior to the date on which the Trustee makes application to the Bankruptcy Court
for authority and approval to enter into such assumption and assignment or
subletting. Landlord shall have the prior right and option, to be exercised by
written notice to the Trustee given at any time prior to the effective date of
such proposed assignment or subletting, to accept an assignment of this Lease or
subletting of the Premises upon the same terms and conditions and for the same
consideration, if any, as the bona fide offer made by such person, less any
brokerage commissions which may be payable out of the consideration to be paid
by such person for the assignment or subletting of this Lease.

      The Trustee shall have the right to assume Tenant's rights and obligations
under this Lease only if the Trustee: (i) promptly cures, or provides adequate
assurance that the Trustee will promptly cure, any default under this Lease;
(ii) compensates, or provides adequate assurance that the Trustee will promptly
compensate, Landlord for any actual pecuniary loss incurred by Landlord as a
result of Tenant's default under this Lease; and (iii) provides adequate
assurance of future performance under this Lease.

                                       35
<PAGE>

Adequate assurance of future performance by the proposed assignee shall include,
as a minimum, that: (a) the Trustee or any proposed assignee of this Lease shall
deliver to Landlord a security deposit in an amount equal to at least 3 months'
Rent accruing under this Lease; (b) any proposed assignee of this Lease shall
provide to Landlord an audited financial statement, dated no later than 6 months
prior to the effective date to such proposed assignment or sublease with no
material change therein as of the effective date, which financial statement
shall show the proposed assignee to have a net worth equal to at least 12
months' Rent accruing under this Lease, or, in the alternative, the proposed
assignee shall provide a guarantor of such proposed assignee's obligations under
this Lease, which guarantor shall provide an audited financial statement meeting
the above requirements of this clause (b) and execute and deliver to Landlord a
guaranty agreement in form and substance acceptable to Landlord; and (c) any
proposed assignee shall grant to Landlord a security interest in favor of
Landlord in all furniture, fixtures, and other personal property to be used by
such proposed assignee in the Premises. All payments of Rent required of Tenant
under this Lease, whether or not expressly denominated as such in this Lease,
shall constitute rent for the purpose of Title 11 of the Bankruptcy Code.

      The parties agree that for the purposes of the Bankruptcy Code relating to
(i) the obligation of the Trustee to provide adequate assurance that Trustee
will "promptly cure defaults and compensate Landlord for actual pecuniary loss,
the word "promptly" shall mean that cure of defaults and compensation will occur
no later than 60 days following the filing of any motion or application to
assume this Lease; and (ii) the obligation of the Trustee to compensate or to
provide adequate assurance that the Trustee will promptly compensate Landlord
for "actual pecuniary loss," the term "actual pecuniary loss" shall mean, in
addition to any other provisions contained herein relating to Landlord's damages
upon default, payments of Rent, including interest at the rate of 4% per annum
in excess of the Prime Rate on all unpaid Rent, all attorneys' fees and related
costs of Landlord incurred in connection with any default of Tenant and in
connection with Tenant's bankruptcy proceedings.

      Any person or entity to which this Lease is assigned pursuant to the
provisions of the Bankruptcy Code shall be deemed, without further act or deed,
to have assumed all of the obligations arising under this Lease and each of the
conditions and provisions hereof on and after the date of such assignment. Any
such assignee shall, upon the request of Landlord, forthwith execute and deliver
to Landlord an instrument, in form and substance acceptable to Landlord,
confirming such assumption.

                                   ARTICLE VII
                               CASUALTY AND TAKING

7.1   CASUALTY AND TAKING.

      A. Repair of Damages. If the Building or Premises are damaged by fire,
casualty or other destruction thereby rendering the Building or Premises totally
or partially inaccessible or unusable, Landlord shall, within thirty (30) days
after the date of such damage, at its sole expense reasonably determine (taking
into account the time needed for effecting a satisfactory settlement with any
insurance company involved, removal of debris, preparation of plans and issuance
of all required government permits) how long it will take to restore the damaged
area to substantially its condition prior to the fire or other casualty (the
"Casualty Opinion"). If, in Landlord's Casualty Opinion, restoration of the
Building and Premises substantially to the condition of the Building and
Premises prior to the date of such casualty and in compliance with applicable
zoning and other applicable laws, permits, approvals and regulations within one
hundred eighty (180) days from the date of the damage is not reasonably
possible, this Lease shall terminate at Landlord's election by written notice to
Tenant within thirty (30) days after the delivery of Landlord's Casualty
Opinion, which notice shall state the effective date of termination which shall
not be more than sixty (60) days nor less than 30 days after the date of such
notice. If in any such case the Premises are rendered totally or partially
inaccessible or unusable, and Landlord does not so elect to terminate this
Lease, Landlord shall, at Landlord's expense to the extent permitted by the net
award of insurance available to Landlord, repair such damage; provided, however,
that Landlord shall have no obligation to repair any damage to, or to replace,
Tenant's personal property. Except as otherwise

                                       36
<PAGE>

provided herein, if all or a substantial part of the entire Premises is rendered
untenantable by reason of the insured fire, casualty or other destruction, then
installments of Base Annual Rent and additional rent shall abate for such period
in the proportion which the area of the Premises so rendered untenantable bears
to the total area of the Premises; and provided, further, if, prior to the date
when such repairs have been completed, any portion of the Premises as damaged
shall be rendered tenantable and shall be used or occupied by Tenant or any
person claiming through or under Tenant, then the amount by which the Base
Annual Rent and additional rent shall abate shall be equitably apportioned for
the period from the date of any such use or occupancy to the date when such
repairs are completed. In addition, if the Premises or the Building is damaged
or destroyed within the last year of the Term and either such damage renders at
least fifty percent (50%) of the Premises unusable or inaccessible or, in
Landlord's Casualty Opinion, the time necessary to substantially repair and
restore such damage exceeds one-sixth of the remaining Term (calculated from
date of the damage), then this Lease shall terminate as of the day Landlord's
Casualty Opinion is issued, and the then-applicable Base Annual Rent and
additional rent shall be apportioned as of such date, including any rent
abatement as provided above.

      B. Termination by Tenant. Notwithstanding the foregoing, if, prior to or
during the Term of this Lease the Premises is damaged by fire, casualty or other
destruction rendering the Premises totally or partially inaccessible or
unusable, and either (1) according to the Landlord's Casualty Opinion,
restoration to substantially its condition prior to the fire or other casualty
within 210 days from the date of damage is not reasonably possible, or (2) this
Lease is not terminated by either Landlord or Tenant, and restoration of the
Premises is not substantially completed within two (2) months following
expiration of the period of time within which Landlord estimated that such
restoration could be completed (as stated in Landlord's Casualty Opinion), as
such period is extended due to Force Majeure (in accordance with Section 10.12
hereof), then Tenant may give to Landlord (within thirty (30) days after receipt
of notice from Landlord that the restoration will require more than 210 days or
within sixty (60) days after the estimated completion date set forth in
Landlord's Casualty Opinion, as the case may be) thirty (30) days' notice of
termination of this Lease, and, in the event such notice is given, this Lease
shall terminate (whether or not the Term shall have commenced) upon the
expiration of such thirty (30) days (provided Landlord has not sooner
substantially completed restoration as herein required) and the then-applicable
Base Annual Rent and additional rent shall be apportioned as of such date,
including any rent abatement as provided above.

      In no event shall Tenant's obligation to pay the Additional Allowance
Charge be reduced or abated, whether or not this Lease is terminated in
accordance with this Section 7.1; and upon any termination of this Lease, the
unpaid balance of the Additional Allowance Charge shall be due and payable in
full.

7.2   TAKING.

      This Lease shall terminate on the date title thereto vests in a
governmental or quasigovernmental authority pursuant to a condemnation (as
hereinafter defined), and rent shall be apportioned as of such date (a) if the
entire Building or the entire Premises or the occupancy of either the entire
Building or the entire Premises shall be taken or condemned by any governmental
or quasi-governmental authority or sold to a governmental or quasigovernmental
authority under threat of such a taking or condemnation (collectively,
"condemned" or "condemnation"), (b) at Landlord's election, by written notice to
Tenant, if more than 30% of the Premises is rendered wholly unusable or
inaccessible or otherwise untenantable as a result of any condemnation, or (c)
at Landlord's election, by written notice to Tenant, if such condemnation
results in a taking of more than 20% of the Building or a reduction by more than
20% of the fair market value of the Building. In addition, on the date title
vests in a governmental or quasigovernmental authority pursuant to condemnation
described in clause (b) or (c) of this Section 7.2 or pursuant to a condemnation
which results in more than 30% of the floor area of the Premises being
condemned, this Lease may also be terminated, at Tenant's election by written
notice to Landlord within thirty (30) days following such taking, unless, within
such thirty (30) days, Landlord offers to relocate the affected portion of the
Premises to another location in the Building comparable to and substantially the
same size as the area condemned. Landlord or Tenant may exercise any option
given to it hereunder to terminate this Lease provided that Tenant or Landlord,
as the case may be, delivers written notice to

                                       37
<PAGE>

other no later than thirty (30) days prior to the date title vests in the
governmental or quasigovernmental authority. If a condemnation occurs which does
not automatically result in a termination of this Lease in accordance with this
Section 7.2 and neither Landlord nor Tenant has the option or timely exercises
its option to terminate this Lease as herein provided, then this Lease shall
continue in full force and effect as to the part of the Premises not condemned,
except that, as of the date title vests in such authority, Tenant shall not be
required to pay rent with respect to the part of the Premises condemned
(including, without limitation, any part of the Premises condemned temporarily,
in which case Tenant shall not be required to pay installments of Base Annual
Rent, additional rent or any other sums with respect to such part of the
Premises during such period of time.

      In no event shall Tenant's obligation to pay the Additional Allowance
Charge be reduced or abated, whether or not this Lease is terminated in
accordance with this Section 7.2; and upon any termination of this Lease, the
unpaid balance of the Additional Allowance Charge shall be due and payable in
full.

7.3   RESERVATION OF AWARD.

      Landlord reserves to itself any and all rights to receive awards made for
damages to the Premises, Building or Lot and the leasehold hereby created, or
any one or more of them, accruing by reason of exercise of eminent domain or by
reason of anything lawfully done in pursuance of public or other authority.
Tenant hereby releases and assigns to Landlord all Tenant's rights to such
awards, and covenants to deliver such further assignments and assurances thereof
as Landlord may from time to time request, and hereby irrevocably designates and
appoints Landlord its attorney-in-fact to execute and deliver in Tenant's name
and behalf all such further assignments thereof. It is agreed and understood,
however, that Landlord does not reserve to itself, and Tenant does not assign to
Landlord, any damages payable for (i) movable trade fixtures installed by Tenant
or anybody claiming under Tenant, (ii) other personal property of Tenant, (iii)
loss of customer good will, or (iv) moving and relocation expenses recoverable
by Tenant from such authority in a separate action.

                                  ARTICLE VIII
                               RIGHTS OF MORTGAGEE

8.1   PRIORITY OF LEASE.

      Subject to the provisions of the second paragraph of this Section 8.1,
this Lease is and shall continue to be subject and subordinate to any mortgage
now or hereafter of record covering the Lot or Building or both (the "mortgaged
premises") created by Landlord upon acquisition of title to the Lot or
thereafter and to any and all advances hereafter made thereunder and to the
interest of the holder or holders thereof in the Lot or the Building, or both of
them. This Lease shall also be subject and subordinate to the Ground Lease (and
all modifications and extensions thereof) under which Landlord acquires its
interest in the Lot. Any such mortgage or ground lease to which this Lease shall
be subordinated may contain such terms, provisions and conditions as the holder
or ground lessor deems usual or customary.

      Notwithstanding the foregoing, Landlord agrees to obtain a non-disturbance
and attornment agreement from the holder of any mortgage (including the holder
of any existing mortgage on the Building as of the Date of Lease Execution)
substantially in the form attached hereto as Exhibit J which confirms the
subordination of this Lease as aforesaid and whereby such holder will agree, so
long as Tenant is not then in default hereunder, to recognize the rights of
Tenant under this Lease and to accept Tenant as tenant of the Premises under the
terms and conditions of this Lease in the event of acquisition of title by such
holder (or a third party) through foreclosure proceedings or otherwise and
Tenant will agree to recognize the holder of such mortgage or such purchaser as
Landlord in such event, which agreement shall be made to expressly bind and
inure to the benefit of the successors and assigns of Tenant and of the holder
and upon anyone purchasing Landlord's interest in the mortgaged premises at any
foreclosure

                                       38
<PAGE>

sale or otherwise. The holder of such mortgage shall have the election to
subordinate the same to the rights and interests of Tenant under this Lease
exercisable by filing with the appropriate recording office a notice of such
election, whereupon the Tenant's rights and interests hereunder shall have
priority over such mortgage or deed of trust. In addition, Landlord agrees to
obtain a non-disturbance and attornment agreement from the ground lessor under
the Ground Lease substantially in the form attached hereto as Exhibit K.

      The word "mortgage" as used in this Lease includes mortgages, deeds of
trust or other similar instruments evidencing other voluntary liens or
encumbrances, and modifications, consolidations, extensions, renewals,
replacements and substitutes thereof. The word "holder" shall mean a mortgagee,
and any subsequent holder or holders of a mortgage.

8.2   RIGHTS OF MORTGAGE HOLDERS: LIMITATION OF MORTGAGEE'S LIABILITY.

      Until the holder of a mortgage shall enter and take possession of the
Premises for the purpose of foreclosure and until a ground lessor shall enter
and take possession of the Premises upon termination of the Ground Lease, such
holder or ground lessor shall have only such rights of Landlord as are necessary
to preserve the integrity of this Lease as security. Upon entry and taking
possession of the Premises for the purpose of foreclosing or following
termination of the Ground Lease, such holder or ground lessor which takes
possession of the Premises, as the case may be, shall have all rights of
Landlord. Notwithstanding any other provision of this Lease to the contrary,
including without limitation Section 10.4, no such holder of a mortgage or
ground lessor shall be liable, either as mortgagee, ground lessor or as
assignee, to perform or be liable in damages for failure to perform, any of the
obligations of Landlord unless and until such holder or ground lessor shall
enter and take possession of the Premises upon termination of the Ground Lease
or for the purpose of foreclosure. Upon any such entry, the holder or ground
lessor shall be liable to perform all of the obligations of Landlord accruing
from and after such entry, subject to and with the benefit of the provisions of
Section 10.4, provided that a discontinuance of any foreclosure proceeding or
creation of a new or replacement ground lease shall be deemed a conveyance under
said provisions to the owner of the equity or ground lessee of the Premises. For
the purpose of this Lease, the word "foreclosure" shall include any trustee's
sale pursuant to the terms of a deed of trust and sale in execution of any other
voluntary lien or encumbrance.

8.3   INTENTIONALLY OMITTED.

8.4   NO PREPAYMENT OR MODIFICATION, ETC.

      Tenant shall not pay Annual Rent, Estimated Monthly Payments, Estimated
Monthly Real Estate Tax Payments, Tenant's Annual Electrical Cost, other
additional rent, or any other charge more than ten (10) days prior to the due
date thereof. No prepayment of Annual Rent, additional rent or other charge, no
assignment of this Lease and no agreement to modify so as to reduce the rent,
change the Term, or otherwise materially change the rights of Landlord under
this Lease, or to relieve Tenant of any obligations or liability under this
Lease shall be valid unless consented to in writing by Landlord's mortgagees of
record, if any.

8.5   NO RELEASE OR TERMINATION.

      No act or failure to act on the part of Landlord which would entitle
Tenant under the terms of this Lease, or by law, to be relieved of Tenant's
obligations hereunder or to terminate this Lease shall result in a release or
termination of such obligations or a termination of this Lease unless (i) Tenant
shall have first given written notice of Landlord's act or failure to act to
Landlord's mortgagees of record, if any, specifying the act or failure to act on
the part of Landlord which could or would give basis to Tenant's rights and (ii)
such mortgagees, after receipt of such notice, have failed or refused to correct
or cure the condition complained of within a reasonable time thereafter, but
nothing contained in this Section 8.5 shall be deemed to impose any obligation
on any such mortgagee to correct or cure any such condition. "Reasonable time"
as used above means and includes a reasonable time to obtain possession of the
mortgaged premises, if the mortgagee elects to do so, and a reasonable time to
correct or cure the

                                       39
<PAGE>

condition if such condition is determined to exist, not exceeding one hundred
twenty (120) days in the aggregate. If the condition complained of by Tenant in
accordance with this Section 8.5 can be cured with the payment of money and the
mortgagee elects not to obtain possession of the property, a "reasonable time"
as used above shall not exceed thirty (30) days.

8.6   CONTINUING OFFER.

      The covenants and agreements contained in this Lease with respect to the
rights, powers and benefits of a holder of a mortgage (particularly, without
limitation thereby, the covenants and agreements contained in this Article VIII)
constitute a continuing offer to any person, corporation or other entity, which
by accepting or requiring an assignment of this Lease or by entry or foreclosure
assumes the obligations herein set forth with respect to such holder; such
holder is hereby constituted a party to this Lease as an obligee hereunder to
the same extent as though its name were written hereon as such; and such holder
shall be entitled to enforce such provisions in its own name. Tenant agrees on
request of Landlord to execute and deliver from time to time any agreement which
may reasonably be deemed necessary to implement the provisions of this Article
VIII.

8.7   MORTGAGEE'S APPROVAL.

      If the holder of any mortgage created by Landlord as security for
financing of Landlord's acquisition of the Lot or construction of the Base
Building shall require a modification of the terms and provisions of this Lease
as a condition to providing its financing for the said acquisition or
construction or any lender shall require such modification as a condition to
granting a new mortgage loan for the Building, Landlord shall have the right to
cancel this Lease if Tenant refuses to execute and deliver to Landlord, within
30 days after Landlord's request therefor, a written agreement incorporating
such modifications into this Lease; provided, however, that the modifications
required do not result in an increase in the rent or additional rent payable by
Tenant hereunder or otherwise materially increase Tenant's obligations or
materially reduce. Tenant's rights hereunder.

                                   ARTICLE IX
                                     DEFAULT

9.1   EVENTS OF DEFAULT.

      If Tenant shall fail to pay Annual Rent or additional rent to Landlord, or
any installment thereof, or any other monetary obligation including but not
limited to the failure to deliver any amount or letter of credit due as a rent
or security deposit arising hereunder to Landlord as and when herein provided
and such failure continues after written notice thereof for more than 5 business
days; or if Tenant attempts or purports to transfer, assign or encumber this
Lease or to sublease or grant a right of use or occupancy in the Premises
without complying with Section 6.1.6 hereof; or if any other default by Tenant
shall occur and continue after notice thereof for more than 30 days and such
additional time, if any, (not exceeding 90 days in the aggregate) as is
reasonably necessary to cure the default if the default is of such a nature that
it cannot reasonably be cured in 30 days and Tenant diligently endeavors to cure
such default and does within 90 days following such notice; or if Tenant becomes
insolvent, fails to pay its debts as they fall due, files a petition under any
chapter of the U.S. Bankruptcy Code, 11 U.S.C. 101, et seq., as it may be
amended (or any similar petition under any insolvency law of any jurisdiction),
or if such petition is filed against Tenant and is not dismissed within ninety
(90) days; or if Tenant proposes any dissolution, liquidation, composition,
financial reorganization or recapitalization with creditors, makes an assignment
or trust mortgage for the benefit of creditors, or if a receiver, trustee,
custodian or similar agent is appointed or takes possession with respect to any
property of Tenant; or if the leasehold hereby created is taken on execution or
other process of law in any action against Tenant; then, and in any such case
(herein sometimes referred to as an "Event of Default"), Landlord and the agents
and servants of Landlord may, in addition to and not in derogation of any
remedies for any preceding breach of covenant, immediately or at any time
thereafter and without further notice exercise any and all remedies permitted

                                       40
<PAGE>

by state or federal law. In the event of any Event of Default, Landlord shall
also have the right to reenter and take possession of all or any portion of the
Premises and expel Tenant and those claiming through or under Tenant, either by
summary proceedings or by any other action at law, in equity, or otherwise, with
or without terminating this Lease, without being deemed guilty of trespass and
without prejudice to any other remedies of Landlord for breach of this Lease.
Tenant hereby waives all rights of redemption, if any, to the extent such rights
may be lawfully waived, and Landlord, without notice to Tenant, may store
Tenant's effects and those of any person claiming through or under Tenant at the
expense and risk of Tenant and, if Landlord so elects, may sell such effects at
public auction or private sale and apply the net proceeds to the payment of all
sums due to Landlord from Tenant, if any, and pay over the balance, if any, to
Tenant.

9.2   TENANT'S OBLIGATIONS AFTER TERMINATION.

      In the event that this Lease is terminated under any of the provisions
contained in Section 9.1 or shall be otherwise terminated for breach of any
obligation of Tenant, Tenant covenants to pay forthwith to Landlord, as
compensation, the excess of the total rent reserved for the residue of the Term
over the rental value of the Premises for said residue of the Term. In
calculating the rent reserved, there shall be included, in addition to the
Annual Rent and all additional rent, the value of all other consideration agreed
to be paid or performed by Tenant for said residue. Tenant further covenants as
an additional and cumulative obligation after any such termination to pay
punctually to Landlord all the sums and perform all the obligations which Tenant
covenants in this Lease to pay and to perform in the same manner and to the same
extent and at the same time as if this Lease had not been terminated. In
calculating the amounts to be paid by Tenant under the next foregoing covenant,
Tenant shall be credited with any amount paid to Landlord as compensation as
provided in the first sentence of this Section 9.2 and also with the net
proceeds of any rents obtained by Landlord by reletting the Premises, after
deducting all Landlord's expenses in connection with such reletting, including,
without implied limitation, all repossession costs, brokerage commissions, fees
for legal services and expenses of preparing the Premises for such reletting, it
being agreed by Tenant that Landlord may (i) relet the Premises or any part or
parts thereof for a term or terms which may at Landlord's option be equal to or
less than or exceed the period which would otherwise have constituted the
balance of the Term and may grant such concessions and free rent as Landlord in
its sole judgment considers advisable or necessary to relet the same, (ii) make
such alterations, repairs and decorations in the Premises as Landlord in its
sole judgment considers advisable or necessary to relet the same, and (iii) keep
the Premises vacant unless and until Landlord is able to rent the Premises to a
tenant which is at least as desirable and financially responsible as Tenant is
on the date of this Lease, on terms not less favorable to Landlord than those of
this Lease. Notwithstanding the foregoing, Landlord shall use commercially
reasonable efforts to mitigate its damages as a result of Tenant's Event of
Default hereunder, provided however that no action of Landlord in accordance
with the foregoing or failure to relet or to collect rent under reletting shall
operate or be construed to release or reduce Tenant's liability as aforesaid.

      Nothing contained in this Lease shall, however, limit or prejudice the
right of Landlord to prove and obtain in proceedings for bankruptcy or
insolvency by reason of the termination of this Lease an amount equal to the
maximum allowed by any statute or rule of law in effect at the time when, and
governing the proceedings in which, the damages are to be proved, whether or not
the amount be greater, equal to or less than the amount of the loss or damages
referred to above.

                                    ARTICLE X
                                  MISCELLANEOUS

10.1  NOTICE OF LEASE.

      Tenant agrees that it will not record this Lease. Upon request of either
party, both parties shall execute and deliver, after the Term begins, a short
form of this Lease in form appropriate for recording or registration, and if
this Lease is terminated before the Term expires, an instrument in such form

                                       41
<PAGE>

acknowledging the date of termination. All fees and recordation and transfer
taxes in connection with any such recording of a short form of this Lease shall
be paid by the party recording such instrument.

10.2  INTENTIONALLY OMITTED.

10.3  NOTICES FROM ONE PARTY TO THE OTHER.

      All notices, consents, approvals and other communications required or
permitted hereunder shall be in writing and addressed, if to the Tenant, at
Tenant's Address or such other address as Tenant shall have last designated by
notice in writing to Landlord and, if to Landlord, at Landlord's Address or such
other address as Landlord shall have last designated by notice in writing to
Tenant. Any notice shall have been deemed duly given when personally delivered
to such address by hand or when delivered overnight by a nationally recognized
air courier.

10.4  BIND AND INURE.

      The obligations of this Lease shall run with the land, and this Lease
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Landlord named herein and
each successive owner or ground lessee of the Building and Lot shall be liable
only for the obligations accruing during the period of its ownership of the
Building and Lot or a ground leasehold estate therein. The obligations of
Landlord shall be binding upon, and recourse shall be limited solely to
Landlord's leasehold interest in the Building and Lot. No individual partner,
member, trustee, stockholder, officer, director, employee or beneficiary of
Landlord shall be personally liable under this Lease, and Tenant shall look
solely to Landlord's interest in the Building and Lot as aforesaid in pursuit of
its remedies upon a default by Landlord hereunder, and the assets of the
individual partners, members, trustees, stockholders, officers, employees or
beneficiaries of Landlord shall not be subject to levy, execution or other
enforcement procedure for the satisfaction of the remedies of Tenant.

10.5  NO SURRENDER.

      The delivery of keys to any employee of Landlord or to Landlord's agent or
any employee thereof shall not operate as a termination of this Lease or a
surrender of the Premises.

10.6  NO WAIVER, ETC.

      The failure of Landlord or of Tenant to seek redress for violation of, or
to insist upon the strict performance of, any covenant or condition of this
Lease or, with respect to such failure of Landlord, any of the Rules and
Regulations referred to in Section 6.1.4., whether heretofore or hereafter
adopted by Landlord, shall not be deemed a waiver of such violation nor prevent
a subsequent act, which would have originally constituted a violation, from
having all the force and effect of an original violation, nor shall the failure
of Landlord to enforce any of said Rules and Regulations against any other
tenant in the Building be deemed a waiver of any such Rules or Regulations. The
receipt by Landlord of Annual Rent or additional rent with knowledge of the
breach of any covenant of this Lease shall not be deemed a waiver of such breach
by Landlord, unless such waiver be in writing and signed by Landlord. No consent
or Waiver, express or implied, by Landlord or Tenant to or of any breach of any
agreement or duty shall be construed as a waiver or consent to or of any other
breach of the same or any other agreement or duty.

10.7  NO ACCORD AND SATISFACTION.

      No acceptance by Landlord of a lesser sum than the Annual Rent and
additional rent then due shall be deemed to be other than on account of the
earliest installment of such rent due, nor shall any endorsement or statement on
any check or any letter accompanying any check or payment as rent be deemed as
accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such installment or
pursue any other remedy in this Lease provided.

                                       42
<PAGE>

10.8  CUMULATIVE REMEDIES.

      The specific remedies to which Landlord may resort under the terms of this
Lease are cumulative and are not intended to be exclusive of any other remedies
or means of redress to which it may be lawfully entitled in case of any breach
or threatened breach by Tenant of any provisions of this Lease. In addition to
the other remedies provided in this Lease, Landlord and Tenant shall each be
entitled to the restraint by injunction of the violation or attempted or
threatened violation of any of the covenants, conditions or provisions of this
Lease or to a decree compelling specific performance of any such covenants,
conditions or provisions.

10.9  RIGHT TO CURE.

      If Tenant shall at any time default beyond the applicable notice and cure
period in the performance of any obligation under this Lease, Landlord shall
have the right, but shall not be obligated, to enter upon the Premises and to
perform such obligation, notwithstanding the fact that no specific provision for
such substituted performance by Landlord is made in this Lease with respect to
such default. In performing such obligation, Landlord may make any payment of
money or perform any other act. All sums so paid by Landlord (together with
interest at the Default Rate, and all necessary incidental costs and expenses in
connection with the performance of any such act by Landlord) shall be deemed to
be additional rent under this Lease and shall be payable to Landlord immediately
on demand. Landlord may exercise the foregoing rights without waiving any other
of its rights or releasing Tenant from any of its obligations under this Lease.

10.10 ESTOPPEL CERTIFICATE.

      Tenant agrees, from time to time, upon not less than 15 days' prior
written request by Landlord, to execute, acknowledge and deliver to Landlord a
statement in writing certifying: that this Lease is unmodified and in full force
and effect; that, Tenant has no defenses, offsets or counterclaims against its
obligations to pay the Annual Rent and additional rent and no defenses against
Tenant's obligation to perform its other covenants under this Lease; that, there
are no uncured defaults of Landlord or Tenant under this Lease (or, if there
have been modifications, that this Lease is in full force and effect as modified
and stating the modifications, and, if there are any defenses, offsets,
counterclaims or defaults, setting them forth in reasonable detail); and the
dates to which the Annual Rent, additional rent and other charges have been paid
and such other matters or facts as reasonably requested by Landlord. Any such
statement delivered pursuant to this Section 10.10 shall be in the form attached
hereto as Exhibit G or such other form as may reasonably be requested by
Landlord or any prospective purchaser of Landlord's interests under this Lease
or holder of a mortgage upon the premises which include the Premises or any
prospective assignees of any such holder and may be relied upon by any such
prospective purchaser, holder of a mortgage or assignee thereof.

10.11 WAIVER OF SUBROGATION.

      Any insurance carried by either party with respect to the Premises and
property therein or occurrences thereon shall include a clause or endorsement
denying to the insurer rights of subrogation against the other party to the
extent rights have been waived by the insured prior to occurrences of injury or
loss. Each party, notwithstanding any provisions of this Lease to the contrary,
hereby waives any rights of recovery against the other for injury or loss due to
hazards covered by insurance containing such clause or endorsement to the extent
of the indemnification received thereunder or to the extent of the
indemnification such party would have received under such insurance if such
party had maintained all insurance that it is required to maintain hereunder.

10.12 INTENTIONALLY OMITTED.

                                       43
<PAGE>

10.13 FORCE MAJEURE.

      If either party shall be delayed in performing any obligation under this
Lease for any of the reasons set forth below, except any obligation to pay
Annual Rent or additional rent or any other sums of money payable hereunder, the
time for such performance shall be extended by a period of time equal to such
delay, and the party shall not be deemed to be in default where such delays or
defaults are due to any one or more of the following (herein referred to as
"Force Majeure"): war; insurrection; civil commotion; unusually severe weather;
terrorism; strikes; lock-outs; riots; floods; earthquakes; fires; casualties;
acts of God; epidemics; quarantine restrictions; freight embargoes; reasonably
unforeseeable labor, equipment or material shortages; acts or failure to act of
Montgomery County or any other public or governmental agencies or entity;
continued illegal occupancy of persons in possession of the Lot or Building or
any other reasonable cause relating to this Lease beyond the control or without
the fault of the party claiming an extension of time to perform.

10.14 BROKERAGE.

      Tenant represents and warrants that it has dealt with no broker in
connection with this transaction other than Spaulding and Slye LLC and Studley,
Inc. and agrees to defend, with counsel reasonably approved by Landlord,
indemnify and save Landlord harmless from and against any and all cost, expense
or liability for any compensation, commissions or charges claimed by a broker or
agent, other than Spaulding and Slye LLC and Studley, Inc., with respect to
Tenant's dealings in connection with this Lease.

10.15 SUBMISSION NOT AN OFFER.

      The submission of a draft of this Lease or a summary of some or all of its
provisions does not constitute an offer to lease or demise the Premises, it
being understood and agreed that neither Landlord nor Tenant shall be legally
bound with respect to the leasing of the Premises unless and until this Lease
has been executed by both Landlord and Tenant and a fully executed copy has been
delivered to each of them.

10.16 REPRESENTATIONS OF LANDLORD.

      Neither Landlord nor Landlord's agents or brokers have made any
representations or promises with respect to the Premises, the Building, the
parking facilities, the Lot, or any other portions of the project except as
herein expressly set forth. No representation is made regarding the suitability
of the premises for Tenant's particular use or the compliance of Tenant's use
with applicable Laws, regulations and restrictions set forth in the applicable
land records. All reliance with respect to any representations or promises is
based solely on those contained herein. No rights, easements, or licenses are
acquired by Tenant under this Lease by implication or otherwise except as, and
unless, expressly set forth in this Lease.

10.17 NO MERGER OF TITLE.

      There shall be no merger of the leasehold estate created by this Lease
with the fee estate in the Lot by reason of the fact that the same person or
entity may own or hold (i) the leasehold estate created by this Lease or any
interest in such leasehold estate and (ii) the fee estate in the Lot or any
interest in such fee estate; and no such merger shall occur unless and until all
persons, including Tenant, having any interest in (i) the leasehold estate
created by this Lease or (ii) the fee estate in the Lot, shall join in a written
instrument affecting such merger and shall duly record the same.

                                       44
<PAGE>

10.18 WAIVER OF TRIAL BY JURY.

      THE PARTIES HERETO SHALL, AND THEY HEREBY DO, WAIVE TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THEM AGAINST THE OTHER
INVOLVING ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH
THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE AND OCCUPANCY
OF THE PREMISES AND/OR ANY CLAIM OF INJURY OR DAMAGE. IN THE EVENT LANDLORD
COMMENCES ANY PROCEEDINGS FOR NONPAYMENT OF ANY AMOUNT DUE PURSUANT TO THIS
LEASE, TENANT AGREES NOT TO INTERPOSE ANY COUNTERCLAIM (OTHER THAN MANDATORY
COUNTERCLAIMS) OF WHATEVER NATURE OR DESCRIPTION IN ANY SUCH PROCEEDINGS. THIS
SHALL NOT, HOWEVER, BE CONSTRUED AS A WAIVER OF TENANT'S RIGHT TO ASSERT ANY
SUCH CLAIM IN ANY SEPARATE ACTION OR ACTIONS BROUGHT BY TENANT.

10.19 HAZARDOUS MATERIALS.

      As used in this Lease, the term "Hazardous Materials" means hazardous
wastes," as defined by the Resource Conservation and Recovery Act of 1976, 42
U.S.C. Sections 6901, et seq., as amended from time to time and the regulations
adopted and publications promulgated pursuant to said Act; (ii) "hazardous
substances," as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Sections 9061, et seq., as
amended from time to time and the regulations adopted and publications
promulgated pursuant to said Act; (iii) "toxic substances," as defined by the
Toxic Substances Control Act, 15 U.S.C. Sections 2601, et seq., as amended from
time to time and the regulations adopted and publications promulgated pursuant
to said Act; (iv) "Hazardous Materials," as defined by the Hazardous Materials
Transportation Act, 49 U.S.C. Sections 1802, et seq., as amended from time to
time and the regulations adopted and publications promulgated pursuant to said
Act; (v) oil or other petroleum products; (vi) any material, waste or substance
which is designated as a "hazardous substance" pursuant to Section 311 of the
Clean Water Act, 33 U.S.C. Sections 1251, et seq., or listed pursuant to Section
307 of the Clean Water Act, 33 U.S.C. Sections 1317, et seq.; (vii)
chlorofluorocarbons, radioactive materials, asbestos in any form that is or
could become friable, urea formaldehyde, polychlorinated biphenyls and radon
gas; (viii) any other chemicals, biological agents, microbes, viruses, bacteria,
materials or substances defined as or included in the definitions of "hazardous
substances," "hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," "bio-hazard," "biological waste," "medical
waste," or words of similar import, under any applicable federal, state, or
local law or regulation; or (ix) any other flammable, combustible, or explosive
liquid or material. "Hazardous Materials" does not include products normally
used in operating and maintaining office and classroom space, including cleaning
compounds and the like provided such products are sold and used for their
intended purpose in accordance with applicable Laws and regulations.

      Tenant shall not cause or permit any Hazardous Materials to be generated,
produced, brought upon, used, stored, treated, discharged, released, spilled, or
disposed of in, on, under or about the Premises, the Building or the Lot by
Tenant or Tenant's Invitees; provided, that Tenant may use and store in the
Premises reasonable quantities of standard office supply products and products
of the type and quantities identified on Exhibit I hereto used in the conduct of
the Permitted Uses provided that (i) Tenant conducts its business according to
prudent industry practices, (ii) the use and presence of Hazardous Materials is
strictly and properly monitored and reported according to all Laws then
applicable to the generation, use, storage, treatment, release, spill, discharge
or disposal of Hazardous Materials (sometimes herein referred to as
"Environmental Laws"), and (iii) Tenant complies with all applicable Laws
pertaining to the generation, use, storage, treatment, release, spill, discharge
or disposal thereof including, without limitation, all such Environmental Laws.
As a material inducement to Landlord to allow Tenant to use hazardous material
in connection with its business on the Premises, Tenant has delivered to
Landlord the list attached hereto as Exhibit I identifying each type and
quantities of hazardous material to be brought upon, kept, used, stored,
handled, treated, generated on, or released, discharged or disposed of from the
Premises and setting forth any and all governmental approvals or permits
required in connection with the use, storage, treatment, generation, release or
disposal of such Hazardous Materials on or from the Premises ("Hazardous
Materials List"). Tenant shall deliver to Landlord an

                                       45
<PAGE>

updated Hazardous Materials List at least once a year and shall also deliver an
updated list before any new hazardous material is brought onto, kept, used,
stored, treated, generated on, or released or disposed of from, the Premises.
Tenant shall deliver to Landlord true and correct copies of the following
documents (the "HazMat Documents") relating to the use, storage, treatment,
generation, release or disposal of Hazardous Materials prior to the Commencement
Date, or if unavailable at that time, concurrent with the receipt from or
submission to a governmental authority: permits; approvals; reports and
correspondence; storage and management plans, notice of violations of any Law;
plans relating to the installation of any storage tanks to be installed in the
Premises (provided, said installation of tanks shall only be permitted after
Landlord has given Tenant its written consent to do so, which consent may be
withheld in Landlord's sole and absolute discretion); all closure plans or any
other documents required by any and all federal, state and local governmental
authorities for any storage tanks installed in or on the Premises for the
closure of any such tanks; and a Surrender Plan (to the extent surrender in
accordance with Section 6.1.2 cannot be accomplished in 3 months). Tenant is not
required, however, to provide Landlord with any portion(s) of the HazMat
Documents containing information of a proprietary nature which, in and of
themselves, do not contain a reference to any Hazardous Materials or hazardous
activities. Without in any manner limiting Landlord's rights and Tenant's
obligations under any other indemnity set forth in this Lease, Tenant shall
indemnify, defend, with counsel reasonably approved by Landlord, and hold
Landlord harmless from and against any and all actions (including, without
limitation, remedial or enforcement actions of any kind, administrative or
judicial proceedings, and orders or judgments arising out of or resulting
therefrom), costs, claims, damages (including, without limitation, punitive
damages), expenses (including, without limitation, reasonable attorneys',
consultants' and experts' fees, court costs and amounts paid in settlement of
any claims or actions), fines, forfeitures or other civil, administrative or
criminal penalties, injunctive or other relief (whether or not based upon
personal injury, property damage, contamination of, or adverse effects upon, the
environment, water tables or natural resources), liabilities or losses arising
from (i) a breach of this Section 10.18 or Section 6.1.2 by Tenant or Tenant's
Invitees, or (ii) the generation, use, storage, treatment, discharge, release,
spill or disposal of Hazardous Materials by Tenant or Tenant's Invitees.

      Landlord shall have the right to conduct annual tests of the Premises to
determine whether any contamination of the Premises, Building or the Lot has
occurred as a result of Tenant's use. Tenant shall be required to pay the cost
of such annual test, provided that Landlord had a good faith belief (or the
tests confirm) that a release of Hazardous Materials on the Premises has
occurred or that Tenant has not operated its business and facilities on the
Premises in compliance with the requirements of this Lease; provided further,
however, that if Tenant conducts its own tests of the Building or the Lot using
third party contractors and test procedures acceptable to Landlord which tests
are certified to Landlord, Landlord shall accept such tests in lieu of the
annual tests to be paid for by Tenant. In addition, at any time, and from time
to time, prior to the expiration or earlier termination of the Term, Landlord
shall have the right to conduct appropriate tests of the Premises, the Building
and Lot to determine if contamination has occurred as a result of Tenant's use
of the Premises. In connection with such testing, upon the request of Landlord,
Tenant shall deliver to Landlord or its consultant such non-proprietary
information concerning the use of Hazardous Materials in or about the Premises
by Tenant or any Tenant Invitee. If contamination has occurred for which Tenant
is liable under this Section, Tenant shall pay all costs to conduct such tests.
If no such contamination is found, Landlord shall pay the costs of such tests,
subject to Section 4.2. Landlord shall provide Tenant with a copy of all third
party, non-confidential reports and tests of the Premises made by or on behalf
of Landlord during the Term without representation or warranty and subject to a
confidentiality agreement. Tenant shall, at its sole cost and expense, promptly
and satisfactorily remediate any environmental conditions identified by such
testing in accordance with all Environmental Laws. Landlord's receipt of or
satisfaction with any environmental assessment in no way waives any rights which
Landlord may have against Tenant.

      If tanks storing Hazardous Materials located on the Premises are used by
Tenant or are hereafter placed on the Premises by Tenant, Tenant shall install,
use, monitor, operate, maintain, upgrade and manage such storage tanks, maintain
appropriate records, obtain and maintain appropriate insurance, implement
reporting procedures, properly close any storage tanks, and take or cause to be
taken all other actions necessary or required under applicable Laws, as such now
exist or may hereafter be adopted or

                                       46
<PAGE>

amended in connection with the installation, use, maintenance, management,
operation, upgrading and closure of such storage tanks.

      During any period of time after the expiration or earlier termination of
this Lease required by Tenant or Landlord to complete the removal from the
Premises, Building or Lot of any Hazardous Materials (including, without
limitation, the release and termination of any licenses or permits restricting
the use of the Premises and the completion of the approved Surrender Plan),
Tenant shall continue to pay the full Annual Rent and Additional Rent in
accordance with this Lease for any portion of the Premises not relet by Landlord
in Landlord's sole discretion, which Annual Rent and Additional Rent shall be
prorated daily.

      In the event that Hazardous Materials are discovered upon, in, or under
the Premises, and any governmental agency or entity having jurisdiction over the
Premises requires the removal of such Hazardous Materials, Tenant shall be
responsible for removing those Hazardous Materials arising out of or related to
the use or occupancy of the Premises by Tenant or the actions or omissions of
Tenant or Tenant's Invitees. Notwithstanding the foregoing, Tenant shall not
take any remedial action in or about the Premises, the Building or the land on
which the Building is located without first notifying Landlord of Tenant's
intention to do so and affording Landlord the opportunity to protect Landlord's
interest with respect thereto. Tenant immediately shall notify Landlord in
writing upon learning of: (i) any spill, release, discharge or disposal of any
Hazardous Material in, on or under the Premises, the Building, or the Lot or any
portion thereof, (ii) any enforcement, cleanup, removal or other governmental or
regulatory action instituted, contemplated, or threatened (if Tenant has notice
thereof) pursuant to any applicable laws, rules or regulations relating to
Hazardous Materials; (iii) any claim made or threatened by any person against
Tenant, the Premises, the Building or the land on which the Building is located
relating to damage, contribution, cost, recovery, compensation, loss or injury
resulting from or claimed to result from any Hazardous Materials; and (iv) any
reports made to any governmental agency or entity arising out of or in
connection with any Hazardous Materials in, on, under, or about or removed from
the Premises, the Building or the land on which the Building is located
including any complaints, notices, warnings, reports or asserted violations in
connection therewith. Tenant also shall supply to Landlord as promptly as
possible, and in any event within 5 business days after Tenant first receives or
sends the same, copies of all claims, reports, complaints, notices, warnings or
asserted violations relating in any way to the Building, the Lot or the Premises
or Tenant's use or occupancy thereof.

10.20 PARKING.

      Tenant may under this Lease and the Campus CCRs and without charge (except
as hereinafter expressly provided) during the initial Term use no more than 3.5
parking spaces for each 1,000 rentable square feet of floor area in the Premises
in such location or locations upon the Campus as may be designated from time to
time by Landlord in accordance with the Ground Lease and Campus CCRs, which
shall be in common with other tenants and subject to the rights of other
tenants, on a first-come, first-serve basis; provided all such parking shall be
subject to the terms of the Ground Lease and Campus CCRs. Use of all such
parking spaces shall be in compliance with all rules, regulations, and
restrictions set forth by (a) Landlord, (b) all governmental authorities, and
(c) the Campus CCRs. Tenant shall reimburse Landlord for the expense of towing
any vehicle parked in violation of such rules, regulations, and restrictions
where the violation has resulted from the improper use of such space by an
employee, licensee, invitee or guest of Tenant; and shall pay to Landlord, upon
written demand therefor, a penalty equal to twice the penalty imposed in
accordance with the Campus CCRs (currently $25) per violation of such rules,
regulations, and restrictions by any identified employee, invitee, licensee or
guest of the Tenant. Landlord reserves the right, from time to time, without
notice or liability to Tenant to (i) install gates to control access to the
parking facility or (ii) to alter or relocate the parking facility, including
the right to relocate the parking facility on or off the Lot. Notwithstanding
the preceding sentence, but subject to the provisions of the remainder of this
Section 10.20 and Section 2.1 of this Lease, throughout the Term, as extended,
Tenant's parking spaces shall be located in a parking area or areas immediately
adjacent to the Building.

                                       47
<PAGE>

10.21 SURVIVAL.

      Tenant's liability for amounts which become due under this Lease and the
terms and conditions of the covenants and indemnities set forth in Sections 3.1,
6.1.7,10.13 and 10.18 and the provisions of Landlord's covenants and indemnities
under Sections 5.1.7 shall remain effective after the expiration or sooner
termination of this Lease, for the period of any applicable statutes of
limitations.

10.22 APPLICABLE LAW AND CONSTRUCTION.

      This Lease shall be governed by and construed in accordance with the laws
of the State of Maryland (not including its choice of law rules). If any term,
covenant, condition or provision of this Lease or the application thereof to any
person or circumstances shall be declared invalid or unenforceable by the final
ruling of a court of competent jurisdiction having final review, the remaining
terms, covenants, conditions and provisions of this Lease and their application
to persons or circumstances shall not be affected thereby and shall continue to
be enforced and recognized as valid agreements of the parties, and in the place
of such invalid or unenforceable provision, there shall be substituted a like,
but valid and enforceable, provision which comports to the findings of the
aforesaid court and most nearly accomplishes the original intention of the
parties.

      This Lease, including the exhibits and riders hereto, contains the entire
agreement of the parties hereto. There are no oral or written agreements between
Landlord and Tenant affecting this Lease. This Lease may be amended, and the
provisions hereof may be waived or modified, only by instruments in writing
executed by Landlord and Tenant.

      The titles of the several Articles and Sections contained herein are for
convenience only and shall not be considered in construing this Lease.

      Unless repugnant to the context, the words "Landlord" and "Tenant"
appearing in this Lease shall be construed to mean those named above and their
respective heirs, executors, administrators, successors and assigns, and those
claiming through or under them respectively. If there be more than one tenant,
the obligations imposed by this Lease upon Tenant shall be joint and several.

      The term "Business Day" or "business day" shall mean any day other than a
Saturday, Sunday or a day on which the United States Government offices in the
State of Maryland are closed on account of holiday ("Legal Holiday"). Any
expression of a time period measured by days which does not expressly provide
that it refers to business days shall be deemed to be calendar days. Any time a
time period will expire on a day which is a Saturday, Sunday, or Legal Holiday,
or if such time period is measured by business days, not a business day, such
time period shall be deemed to extend to the next day which is not such a day.

10.23 CONFIDENTIALITY.

      The terms of this Lease are privileged and confidential, intended only for
the use of Landlord and Tenant. Both parties shall keep the terms of this Lease
and any negotiations or agreements related hereto and, in the case of Landlord,
any financial statements or financial reports concerning Tenant delivered to
Landlord inn accordance with Section 6.1.16 or Section 6.1.17 (except to the
extent such financial statements or financial reports are published or filed
with any governmental authority) strictly confidential and shall not disclose
the same to any other persons or entities excepting only (i) attorneys agents or
employees involved in this transaction who have agreed to keep all such
information confidential as herein provided (ii) as mutually and specifically
agreed otherwise, (iii) as required by order of any court or governmental
authority with jurisdiction, (iv) proposed subtenants and assignees and their
attorneys and agents, or (v) attorneys, agents or employees of the ground lessor
under the Ground Lease and all lenders, investors or purchasers involved in any
transaction relating to the sale or financing of the Land and Building or any
interest therein or any interest in Landlord.

                                       48
<PAGE>

10.24 METHOD OF MEASUREMENT.

      Rentable Floor Area of the Premises and Building shall be measured in
accordance with Appendix A attached hereto and made a part hereof. If Landlord
or Tenant so elects by written notice to the other (provided that such notice is
delivered not later than thirty (30) days following the Commencement Date),
Landlord's Architect shall prepare (at the expense of the party requesting such
measurement) a measurement of the Premises, and if the rentable square footage
of the Premises is determined to be more or less than the Rentable Floor Area of
Tenant's Space as set forth in Section 1.1 hereof, then in either such case this
Lease shall be amended in writing, adjusting for all purposes hereunder the
specified Rentable Floor Area of Tenant's Space, and the calculation of Annual
Rent, Tenant Allowance and Additional Allowance in accordance with Section 1.1
and Section 4.1 of this Lease. Notwithstanding anything herein to the contrary,
the measurement of the rentable square footage of the Building set forth in this
Lease and, unless remeasured in accordance with this Section 10.24, the
measurement of the rentable square footage of the Premises set forth in this
Lease, is and shall be binding upon Landlord and Tenant for all purposes under
this Lease. If the rentable square footage of the Premises is remeasured
following timely written notice in accordance with this Section 10.24, then such
remeasurement of the rentable square footage of the Premises shall thereafter be
binding upon Landlord and Tenant for all purposes under this Lease. In no case
except as expressly provided in this Section 10.24 shall (i) the Premises or the
Building be subject to remeasurement or (ii) the Annual Rent, Tenant Allowance
and Additional Allowance or other charges hereunder be recalculated based upon
any actual or asserted correction of the measurement of either or both of the
Building or Premises.

10.25 APPROVALS.

      If Landlord approves plans, specifications, contracts, contractors,
sublessees or assignees, subleases or assignments for any purpose under this
Lease, such approval shall be solely for the purpose of confirming that the
plans, specifications, contract, contractor, sublease, assignment, sublessee or
assignee complies or fails to comply with the terms and conditions of this Lease
and the Rules and Regulations of Landlord applicable thereto (and, in the case
of contractors, assignees or sublessees, that their business, reputation, credit
history and financial condition are or are not satisfactory to Landlord). In no
event shall such approval constitute approval of the plans, specifications,
contractors, contract, sublessees or assignees, subleases or assignments for any
other reason or purpose and in no event shall Landlord have any liability or
obligation for or under the same.

10.26 GROUND LEASE PROVISIONS.

      Tenant acknowledges that the Ground Lease contains the following
provisions which are incorporated herein by reference (as used in the following
three paragraphs only, "Landlord" shall mean JHU as ground landlord under the
Ground Lease, "Tenant" shall mean MCC3, LLC, as ground tenant under the Ground
Lease, "Subtenants" shall mean tenants of the Building, "this Lease" shall mean
the Ground Lease, "Sublease" shall mean a lease of space in the Building, "MCC
Land" shall mean the Montgomery County Campus of JHU, and the "Memorandum of
Lease" shall mean the memorandum of ground lease relating to the Ground Lease,
which is to be filed among the land records of Montgomery County, Maryland):

            "14.2 Permitted Subleases. Tenant shall give Landlord ten (10) days'
      advance written notice of the identify of any proposed Subtenant before
      entering into a Sublease with such Subtenant. Tenant shall have the right
      to sublease all or any portions of the Improvements without Landlord's
      prior approval to one or more Subtenants provided that (i) the Subtenant
      is not a Prohibited Person and (ii) the uses permitted under the Sublease
      to such Subtenant comply with the requirements of applicable zoning and
      land use ordinances and regulations, covenants, conditions, and
      restrictions of record, including, without limitation, the Estoppel and
      the Campus CCRs (collectively, "Land Use Restrictions") as such Land Use
      Restrictions are in effect as of the date hereof, unless subsequent land
      use ordinances and regulations are more restrictive, in which case the
      more restrictive land use ordinances and regulations shall become
      applicable to the uses permitted under this Lease, subject to permitted
      exemptions and grandfather provisions

                                       49
<PAGE>

      allowing the continuation of existing uses. If after the date hereof, land
      use ordinances and regulations become more permissive as to permitted
      uses, such more permissive land use ordinances and regulations shall not
      be applicable to the uses permitted under this Lease to the extent they
      are more permissive until Landlord and Tenant shall have specifically
      agreed in writing that the more permissive land use ordinances and
      regulations will be applicable. Tenant shall deliver a photocopy of each
      executed Sublease to Landlord within thirty (30) business days following
      execution of the same.

            14.3 Landlord Approval. If Tenant desires to determine whether
      Landlord would object to a Subtenant because Landlord believes that the
      Subtenant is a Prohibited Person, Tenant may, if it so elects, give
      Landlord prior written notice of the identity of the Person with which
      Tenant contemplates entering into a Sublease together with comprehensive
      information regarding such Person in reasonable detail sufficient to
      assess whether such Person is a Prohibited Person in accordance with this
      Article XIV. Tenant's notice to Landlord shall, on the face of the
      envelope and on the top of the first page of the notice, state the
      following in all capital letters: "PROHIBITED PERSON NOTICE UNDER SECTION
      14.3 OF THE PHASE III GROUND LEASE, MONTGOMERY COUNTY CAMPUS. APPROVAL
      DEEMED GIVEN IF OBJECTION IS NOT MADE IN WRITING WITHIN TEN (10) BUSINESS
      DAYS OF RECEIPT OF THIS NOTICE." Landlord will then advise Tenant in
      writing within ten (10) business days as to whether it objects to the
      proposed Subtenant in question, stating in reasonable detail the grounds
      for Landlord's objection. Each Subtenant under a proposed Sublease
      delivered to Landlord shall be deemed approved unless Landlord advises
      Tenant of Landlord's objection to the Subtenant under such Sublease within
      the aforesaid period following receipt of the same. If Landlord timely
      objects in writing to any proposed Subtenant as herein provided, and
      Tenant disagrees with Landlord's objection, then representatives of
      Landlord and Tenant shall meet to discuss the reasons for Landlord's
      objection and why Tenant believes such objection is not justified.

            14.4 Prohibited Persons. For purposes hereof, "Prohibited Person"
      shall mean a Person: (a) that is generally known to the public to engage
      directly in: (i) the manufacture or sale of consumer products (such as,
      without limitation, alcoholic beverages, tobacco products, or weapons, but
      not including drugs sold over the counter or by medical prescription)
      recognized as hazardous to human health by federal or Maryland state
      governmental authorities, (ii) the publication, manufacture, sale,
      distribution, promotion or purveyance of pornographic material, or (iii)
      gambling; or (b) who or which (including any member of an entity's
      executive management in the course of employment) has been convicted
      within the ten (10) year period preceding the date of this Lease of any
      violation of law that constitutes a felony; or (c) which is a university
      or college (or any Affiliate thereof) other than Landlord or a college or
      university which is an Affiliate of Landlord; or (d) engaging in a mission
      likely to involve activities on the MCC Land which are themselves
      disruptive or a direct risk to the physical security of people or property
      on the MCC Land. Notwithstanding the foregoing, no federal, state or local
      governmental entity, agency or authority (other than a college or
      university) shall be a "Prohibited Person" for the purposes of this Lease.
      Sections 14.1, 14.2, 14.3, and 14.4 shall constitute covenants that run
      with the Land and shall be included in the Memorandum of Lease. Sections
      14.2, 14,3 and 14.4 shall be incorporated into each and every Sublease and
      Nondisturbance and Attornment Agreement with respect to such Sublease.
      Each and every Sublease shall state that the use of the premises subject
      to such Sublease for any of the proscribed activities shall be a default
      under the Sublease and cause for eviction."

                                   ARTICLE XI
                                SECURITY DEPOSIT

      Tenant's Security Deposit in the amount set forth in Section 1.1 shall,
following receipt thereof by Landlord, be held by Landlord, as security, without
interest, for and during the Term, which deposit shall be returned to Tenant
following the termination of this Lease upon delivery of Landlord's Statement
for

                                       50
<PAGE>

the final fiscal year or portion thereof within the Term, provided that all
Annual Rent and additional rent due from Tenant has been paid and there exists
no breach of any undertaking of Tenant. If all or any part of the Security
Deposit is applied to an obligation of Tenant hereunder, Tenant shall
immediately upon request by Landlord restore the Security Deposit to its
original amount. Tenant shall not have the right to call upon Landlord to apply
all or any part of the Security Deposit to cure any default or fulfill any
obligation of Tenant, but such use shall be solely in the discretion of
Landlord. Upon any conveyance by Landlord of its interest under this Lease, the
Security Deposit may be delivered by Landlord to Landlord's grantee or
transferee. Upon any such delivery, Tenant hereby releases Landlord herein named
of any and all liability with respect to the Security Deposit, its application
and return, and Tenant agrees to look solely to such grantee or transferee for
the return of such security. It is further understood that this provision shall
also apply to subsequent grantees and transferees.

      Tenant shall have the right to deliver to Landlord an unconditional,
irrevocable letter of credit (the "Letter of Credit") in substitution for the
cash Security Deposit, subject to the following terms and conditions. Such
letter of credit shall be (a) in form and substance satisfactory to Landlord in
its reasonable discretion; (b) at all times in the amount of the Security
Deposit, and shall permit multiple draws; (c) issued by a commercial bank
reasonably acceptable to Landlord from time to time and located in the
Washington, D.C. metropolitan area; (d) made payable to, and expressly
transferable and assignable at no charge by, the owner from time to time of the
Building or, at Landlord's option, the holder of any mortgage (which
transfer/assignment shall be conditioned only upon the execution of a written
document in connection therewith); (e) payable at sight upon presentment to a
local branch of the issuer of a simple sight draft; (f) of a term not less than
one year; and (g) at least 60 days prior to the then-current expiration date of
such letter of credit either (1) renewed (or automatically and unconditionally
extended) from time to time through the ninetieth (90th) day after the
expiration of the Lease Term, or (2) replaced with cash in the amount of the
Security Deposit. Notwithstanding anything in this Lease to the contrary, any
cure or grace periods set forth in this Lease shall not apply to any of the
foregoing, and, specifically, if Tenant fails to timely comply with the
requirements of subsection (g) above, then Landlord shall have the right to
immediately draw upon the letter of credit without notice to Tenant. Landlord
may draw upon the whole or any part of the Letter of Credit in the event of any
Event of Default by Tenant under the Lease and if any part of the amount so
drawn is applied to an obligation of Tenant herein, Tenant shall forthwith
restore the Letter of Credit to its original amount. Each Letter of Credit shall
be issued by a commercial bank that has a credit rating with respect to
certificates of deposit, short term deposits or commercial paper of at least P-2
(or equivalent) by Moody's Investor Service, Inc., or at least A-2 (or
equivalent) by Standard & Poor's Corporation, and shall be otherwise acceptable
to Landlord in its sole and absolute discretion. If the issuer's credit rating
is reduced below P-2 (or equivalent) by Moody's Investor Service, Inc., or below
A-2 (or equivalent) by Standard & Poor's Corporation, or if the financial
condition of such issuer changes in any other materially adverse way, then
Landlord shall have the right the require that Tenant obtain from a different
issuer a substitute letter of credit that complies in all respects with the
requirements of this Section, and Tenant's failure to obtain such substitute
letter of credit within 10 days following Landlord's written demand therefor
(with no other notice or cure or grace period being applicable thereto,
notwithstanding anything in this Lease to the contrary) shall entitle Landlord
to immediately draw upon the then existing Letter of Credit in whole or in part,
without notice to Tenant. In the event the issuer of any Letter of Credit held
by Landlord is placed into receivership or conservatorship by the Federal
Deposit Insurance Corporation or any successor or similar entity, then,
effective as of the date such receivership or conservatorship occurs, said
Letter of Credit shall be deemed to not meet the requirements of this Section,
and, within 10 days thereof, Tenant shall replace such Letter of Credit with
other collateral acceptable to Landlord in its reasonable discretion (and
Tenant's failure to do so shall, notwithstanding anything in this Lease to the
contrary, constitute an Event of Default for which there shall be no notice or
grace or cure periods being applicable thereto other than the aforesaid ten (10)
day period). Any failure or refusal of the issuer to honor the Letter of Credit
shall be at Tenant's sole risk and shall not relieve Tenant of its obligations
hereunder with respect to the Security Deposit.

                                       51
<PAGE>

                                   ARTICLE XII
                             SATELLITE DISH ANTENNA
                                       AND
                             SUPPLEMENTAL AIR UNITS

      Subject to and without interfering with the rights or equipment of other
tenants of the Building and provided no Event of Default has occurred, Tenant
shall have the right to install, maintain, and repair a satellite dish antenna
(the "Antenna") and supplemental air conditioning units (the "Air Units") on the
roof of the Building under and subject to the following conditions:

      a. Tenant shall comply with Section 6.1.15 of the Lease, all Laws (as
defined in Section 6.1.18) and Requirements (as hereinafter defined) and shall
obtain, and deliver to Landlord written evidence of, any approval(s) required
under any Restrictions. For purposes hereof, "Restrictions" means and includes
the Campus CCRS, the Estoppel, Landlord's Rules and Regulations and any and all
other recorded restrictions or covenants applicable to the Building or the Lot.
The Antenna and Air Units shall also conform with the Building's structural and
load requirements and shall not be visible from street level.

      b. Tenant shall obtain Landlord's prior approval of (i) the number of Air
Units to be located on the roof, (ii) the location of the Antenna and Air Units
on the roof, and (iii) the specifications for the Antenna and Air Units. If
Landlord approves installation of the Antenna or Air Units, Tenant agrees to
consult with Landlord's engineer and roofing contractor prior to installation
and strictly to comply with their recommendations and requirements. Tenant shall
pay all costs incurred by Landlord in connection with the Antenna and Air Units,
including without limitation all architectural, engineering, contractors' and
legal fees.

      c. At least three (3) business days prior to installation, Tenant shall
notify Landlord of the date and time of the installation. Tenant shall install
the Antenna and Air Units only if a representative of Landlord is present with
Tenant at the installation.

      d. Tenant shall maintain the Antenna and Air Units in a safe, good, and
orderly condition and in compliance with all Laws and Restrictions. The
installation, maintenance, repair, and removal of the Antenna and Air Units
shall be performed at Tenant's sole expense in a manner which will not impair
the integrity of, damage, or adversely affect the warranty applicable to, the
roof or any other portion of the Building.

      e. No later than the expiration or sooner termination of the Term, at
Tenant's sole expense, Tenant shall remove the Antenna and Air Units and repair
any and all damage arising from the installation, operation or removal of the
Antenna or Air Units.

      f. Tenant's indemnification of Landlord pursuant to Section 6.1.7 of this
Lease also applies to the Antenna and Air Units and Tenant's use of any portion
of the Building therefor. Without limiting the foregoing, Tenant solely shall be
responsible for any and all damages, losses or injury caused by or in any way
relating to the Antenna or Air Units, including, but not limited to, damage or
injury caused by reason of the Antenna or Air Units collapsing or being blown
from the roof.

      g. Tenant's right to install and use the Antenna and Air Units shall be
limited to Tenant's primary business operation on the Premises. Tenant shall
have no right to permit the Antenna or Air Units to be used by other entities
for profit.

                                       52
<PAGE>

      EXECUTED as a sealed instrument in two or more counterparts on the day and
year first above written.

ATTEST:                               LANDLORD:

/s/ Kathleen Edu                      MCC3, LLC
---------------------

                                      By:   Spaulding and Slye MCC3 LLC, manager

                                            By: Spaulding and Slye LLC, manager

                                            By: /s/ M. Dunston
                                                --------------------------------
                                                Name:
                                                Title:

ATTEST:                               TENANT:

/s/ Cristina a Murphy                 VANDA PHARMACEUTICALS, INC.
---------------------

                                      By: /s/ Chip Clark/Mihael Polymeropoulos
                                          --------------------------------------
                                          Name: Chip Clark/Mihael Polymeropoulos
                                          Title: CBO/CEO

                                       53
<PAGE>

                                    EXHIBIT A

                            LEGAL DESCRIPTION OF LOT

                 DESCRIPTION OF LEASE AREA FOR PHASE 3 BUILDING
              ACROSS THE PROPERTY OF THE JOHNS HOPKINS UNIVERSITY
                        LIBER 7687 AT FOLIO 544 PARCEL M
                        MONTGOMERY COUNTY MEDICAL CENTER
                                 P.B.142 P.16292

      Being a piece or parcel of land, situate, lying and being in the
Gaithersburg (9th) Election District of Montgomery County, Maryland and running
in, through, over and across the property conveyed by Montgomery County,
Maryland to The Johns Hopkins University by a deed dated May 7, 1987 and
recorded among the Land Records of Montgomery County, Maryland in Liber 7687 at
Folio 544, said property also being Parcel M, as shown on a plat of subdivision
entitled "PLAT 7, PARCEL M, MONTGOMERY COUNTY MEDICAL CENTER", recorded among
said Land Records in Plat Book 142 as Plat 16292, and being more particularly
described as shown in the datum of said plat and as shown on an ALTA/ACSM LAND
TITLE SURVEY prepared by Loiederman Soltesz Associates, Inc. of Rockville,
Maryland dated June 26, 2003, and said piece or parcel of land being more
particularly described as follows

      Beginning for the same at a point within the limits of said Parcel M, said
point lying South 74(degrees)33'35" East, 79.26 feet from the beginning of the
North 27(degrees)45'39" West, 517.81 foot plat line of said plat and running
thence across said Parcel M, the following ten (10) courses and distances

   1. 178.37 feet along the arc of a curve deflecting to the left, having a
      radius of 1,010.00 feet and a chord of North 61(degrees)09'18" East,
      178.14 feet to a point; thence

   2. North 56(degrees)05'44" East, 96.30 feet to a point; thence

   3. South 33(degrees)54'16" East, 188.23 feet to a point; thence

   4. 145.02 feet along the arc of a curve deflecting to the right, having a
      radius of 1,215.75 feet and a chord of South 30(degrees)29'14" East,
      144.94 feet to a point; thence

   5. South 66(degrees)40'47" West, 70.18 feet to a point; thence

   6. 8.22 feet along the arc of a curve deflecting to the left, having a radius
      of 100.00 feet and a chord of South 64(degrees)19'27" West, 8.22 feet to a
      point; thence

   7. South 61(degrees)58'06" West, 122.59 feet to a point lying North
      41(degrees)19'42" West, 430.19 feet from the end of the North
      22(degrees)25'53" East, 94.89 foot plat line of said Plat 16292; thence

   8. North 28(degrees)01'54" West, 92.86 feet to a point; thence

   9. South 61(degrees)58'06" West, 119.11 feet to a point; thence

   10. North 22(degrees)43'55" West, 221.65 feet to the point of beginning;
       containing 84,782 square feet or 1.9463 acres of land.

                                     A - 1
<PAGE>

                                    EXHIBIT B

                           PLAN SHOWING TENANT'S SPACE

                                     B - 1
<PAGE>

Exhibit B-1

JOHNS HOPKINS UNIVERSITY
MONTGOMERY COUNTY CAMPUS
BUILDING 3

THIRD FLOOR

      Vanda Pharmaceuticals Inc.

[THIRD FLOOR MAP]

<PAGE>

Exhibit B-2

JOHNS HOPKINS UNIVERSITY
MONTGOMERY COUNTY CAMPUS
BUILDING 3

Third Floor

      Vanda Pharmaceuticals Inc.

      Vanda Right of First Offer Space, subject to the conditions set forth in
      section 2.5 of the Lease.

[THIRD FLOOR MAP]

<PAGE>

                                    EXHIBIT C

                                     PART I

                        BUILDING STANDARD COMPLETED SHELL

STRUCTURE:              Structural steel frame with composite concrete floor
                        slabs, 125 Ibs/square foot floor load capacity.

EXTERIOR:               Architectural precast concrete spandrel panels and
                        column covers, reflective insulated "punch" style
                        windows, and curtain wall atrium. Penthouse screen to be
                        light gauge profile metal panel.

COLUMN SPACING:         Perimeter bays to be 22' x 41'- 9".

ROOF:                   Roofing system consists of Carlisle (or equivalent) EPDM
                        roofing system with 15-year warranty. 2" x 18" x 18"
                        standard concrete pavers, or rubber walk mats, to be
                        provided for access to all mechanical equipment. No
                        pavers / mats will be provided at the roof perimeter.

FLOOR-TO-FIOOR HEIGHT:  Slab-to-slab distance of 14'-6" on all floors. Except
                        for the main lobby, bathrooms, egress corridors, and
                        other building core spaces as shown on the plans, no
                        ceiling systems will be provided in the base building.

HVAC SYSTEM:            The system will utilize a series of roof top units with
                        a total cooling capacity of approximately 405 tons. Each
                        RTU will supply between 19,000 cfm and 22,000 cfm
                        through a vertical shaft to a loop duct. Each RTU will
                        be provided with supply and relief exhaust fans, heating
                        coil, DX cooling coil, filtration and a condensing
                        section. Air will be supplied to all spaces through VAV
                        terminal units. Perimeter terminal units will be
                        provided at the rate of one (1) per every 2,000 square
                        feet. Duct risers and trunk lines will be installed with
                        the base building. Interior VAVs, diffusers, perimeter
                        slot diffusers, and flex duct to be provided by tenant
                        through the improvement allowance.

                        Heat to be provided by electric reheat coils within
                        fan-powered VAV terminal units and by electric preheat
                        coils within the packaged rooftop units. Supplemental
                        heat required for stairwells, vestibules, MEP rooms,
                        etc., will be provided by electrical wall or ceiling
                        mounted unit heaters.

                        Building HVAC design criteria shall be:
                        Summer - 75 degrees F. db, +/- 1
                        maximum relative humidity. degree F. 50%
                        Winter - 70 degrees F. db, +/-1 degree F.

                        Outside air for ventilation will be provided via a
                        rooftop Air Handling Unit at the rate of 20 CFM per
                        person consistent with current ASHRAE Guidelines for
                        acceptable office use indoor air quality.

                        The building will be designed to accept future HVAC
                        systems to support additional load requirements
                        anticipated with the addition of lab tenants.

ELECTRICAL SYSTEM:      5.0 watts/square feet general purpose on the tenant
                        floor and 2.0 watts/square feet available for lighting
                        on tenant floor. Single electrical service entrance with
                        single pad mounted transformer outside of building. 480V
                        plug-in bus riser with

                                  C Part I - 1

<PAGE>

                        step down dry type transformers with K factor for
                        120/208V for Tenant power distribution at each floor.

LIFE SAFETY:            Fire sprinkler and base building fire alarm system will
                        be installed per building code. Vertical sprinkler riser
                        distribution to each floor and sprinkler loop with
                        upturned heads at a ratio not exceeding one (1) head per
                        225 square feet will be installed with the base
                        building.

WET COLUMNS:            Four (4) wet columns per floor. Access to domestic water
                        taps and vent riser taps will be available at the toilet
                        rooms. Wet columns will contain domestic cold water,
                        plumbing vent, A/C condensate drain riser, sanitary
                        waste line, and rain leaders.

LAB COLUMNS:            Water at (4) locations at each wet column. Laboratory
                        waste stubs and vent risers will be provided at a
                        maximum of eight (8) locations with in the building.
                        Four (4) sets each will be stubbed into tenant areas on
                        either side of the atrium.

ENERGY MANAGEMENT:      The building will utilize all electric DDC control
                        system or equivalent. This will allow remote
                        troubleshooting and adjustment of set-points, as well as
                        programmed start, stop and system optimization.

ELEVATORS:              Two (2) hydraulic passenger elevators with a 3,500 Ib.
                        capacity with a standard size cab, and 1 hydraulic
                        freight elevator with a 4,500 Ib. capacity with standard
                        cab. Cab finishes for the passenger elevators shall
                        include carpeted floors and custom laminated or wood
                        veneer walls. The doors and frames shall be painted to
                        match interior decor. Entrance on the 1st level to be
                        stainless steel; entrances on the 2nd and 3rd levels to
                        be painted. Ceilings will be perforated metal. The cab
                        finish for the freight elevator will be selected from
                        the manufactures stock interiors. Entrance frames at all
                        levels will be painted. Each elevator will be equipped
                        with call buttons and indicator lights at all levels.

REST ROOMS:             2 sets of women's and men's rest rooms will be fully
                        finished on each floor with base building. (Total of 6
                        rest rooms)

                        Floors: The toilet room floors will receive a standard
                        12" x 12" domestic ceramic tile, such as keystones
                        mosaics unglazed Daltile or equal.

                        Walls/Base: All toilet room walls will be floor-to-floor
                        height dry wall partitions with acoustical batt
                        insulation. All wet walls to receive a minimum of 6'
                        high unglazed 6" x 6" domestic ceramic tile similar to
                        Daltile semi-gloss or matte wall tile. Ceramic tile
                        base, with a cove profile will be provided around the
                        full perimeter of each toilet room.

                        Ceilings: Suspended drywall taped, sanded and painted
                        with down lights and access panels as required.

                        Vanities: Cast resin vanity top with under counter
                        basin.

                        Toilet Partitions and Accessories: Ceiling hung painted
                        metal partitions in conjunction with standard toilet
                        room accessories including soap dispensers, towel
                        dispensers, trash receptacles, paper holders, etc.
                        Individual full height mirrors at each lavatory
                        location.

                                  C Part I - 2
<PAGE>

FIRST FLOOR MAIN LOBBY AND    The first floor base building main elevator lobby
ELEVATOR LOBBY:               shall include the finishes outlined below. It
                              shall be designed and constructed to optimize
                              appearance while allowing reasonable maintenance
                              of high traffic areas.

                              Floors: To be, or a combination of, natural stone,
                              terrazzo, ceramic tile or carpet. Manufactures
                              standard walk off mats at entries.

                              Walls/Base: Base material to be stainless steel
                              laminate on plywood substrate. Walls to be painted
                              gypsum board with "pitcon" reveals.

                              Ceilings: Drywall ceilings coffered and painted
                              with reveals. Access panels as required. Down
                              lighting and light cove fluorescent strip
                              lighting.

FIBER OPTICS:                 Vertical risers to accommodate fiber optic lines
                              for connection to the Internet are provided to
                              each floor of the building. Fiber optic
                              provider(s) to be determined. All communication
                              closets to be equipped with standard closet
                              function type locks.

PARKING:                      Initially, a surface lot will be constructed at
                              the rear of the building with approximately 308
                              parking spaces. The remaining spaces to be
                              provided elsewhere on the campus pursuant to the
                              terms of the CCRs.

WINDOWS:                      Windows will be manufactures standard color
                              lightly reflective, insulated glass set in
                              prefinished aluminum frames with a thermal break
                              design. Window units will be fixed, with no
                              operating sash.

BUILDING CORE FINISHES-
TYPICAL FLOORS:               Electrical, mechanical, telephone and janitor
                              closets located on each floor. Drinking fountains
                              will be installed at the core per code.

                              Floors: Elevator lobby floors to be carpet with
                              carpet border and carpet base.

                              Walls: Walls in elevator lobbies to be painted
                              gypsum board with "Pitcon" reveals. Walls in
                              corridors to be painted gypsum board. Core doors
                              for stairwells, electrical, telephone, and toilet
                              rooms all installed. Core doors 3'x8', solid core,
                              stain grade (paint grade @ utility rooms) complete
                              with frame, trim, hardware, locking devices and
                              closer where required.

                              Ceilings: Ceiling in elevator lobbies will be
                              painted gypsum board.

OFFICE AREA FINISHES:         Walls: Exterior walls to be clad with drywall,
                              taped and sanded. 1-inch slat Venetian blinds to
                              be installed on all exterior windows.

                              Ceilings: Ceilings will be open and ready to
                              receive tenant grid and tile.

STAIRS:                       Base building stairways as required by code for
                              standard office use.

                              Floors: Exposed sealed concrete with painted
                              stringers and risers.

                              Walls: All stair side gypsum board will be
                              provided with 2 coats semi-gloss latex paint.

                                  C Part I - 3

<PAGE>

                              Ceilings: The underside of the exposed stairway
                              will be painted. Stairwell ceiling to be exposed
                              and painted.

                              Metals: All handrails, stringers, etc. will be
                              painted.

                              Base: 4" covered vinyl base will be installed
                              around each floor level stairway landing.

ELECTRICAL, MECHANICAL AND
TELEPHONE ROOMS :             Floors: The floors will be sealed concrete with 4"
                              vinyl base.

                              Walls: They will be sheetrock, blocked, taped,
                              sanded and painted. Framing voids to receive sound
                              attenuating insulation.

                              Ceilings: Exposed structure will remain
                              unfinished.

JANITOR'S CLOSET:             Floors: The floors will be sealed concrete with
                              vinyl base.

                              Walls: Sheetrock walls will be painted.

                              Ceilings: Exposed structure will remain
                              unfinished.

FINISH HARDWARE:              All door hardware will be as manufactured by
                              Schlage, Russwin, Corbin or equal to meet ADA
                              requirements with function appropriate to intended
                              usage. Base building and tenant locksets will be
                              lever style hardware with US 26D satin chrome
                              finish. Hinges to be satin chrome finish. Also
                              included are kick plates for service area and all
                              toilet room doors.

INTERIOR SIGNAGE:             Core area rooms will be furnished with commercial
                              grade signage including rest rooms, mechanical and
                              electrical rooms, stairwells, etc. A building
                              directory, with the ability to have multiple
                              suites and names listed, will be installed in the
                              main lobby. All other exterior and interior
                              signage are will be provided by the Tenant.

MISCELLANEOUS POWER:          The base building shall include miscellaneous use
                              duplex 120 volt receptacles in equipment rooms,
                              bathrooms, mechanical rooms, lobbies, storage
                              areas and corridors. Exterior service outlets will
                              be provided near the roof mounted HVAC equipment.
                              Provide GFI protection per code.

EMERGENCY POWER & LIGHTING:   Emergency lighting will be accomplished with
                              battery ballasts in fluorescent lighting fixtures.
                              The fire alarm control panel will be provided with
                              battery backup. Elevators shall return to the
                              ground floor and open doors upon power loss. All
                              work support generator and/or UPS components shall
                              be installed by Tenants and/or included as part of
                              the Tenant Improvement Allowance. An empty conduit
                              "only" will be stubbed from the main electrical
                              room to a future pad location if a tenant should
                              require back up generation.

TELEPHONE SERVICE:            An underground telephone service conduit, as
                              required by the carrier, will be provided and
                              extended to the building telephone service room.
                              Telephone equipment and wiring to the individual
                              floors and tenant spaces will be provided by the
                              tenant.

                                  C Part I - 4
<PAGE>


SPECIAL SYSTEMS:              Fire alarm system - a complete UL approved fire
                              management alarm system will be provided to comply
                              with local fire department requirements for shell
                              building use and occupancy. All fire alarm
                              features required in the tenant area to complete
                              the system such as strobes, pull stations, etc.,
                              will be provided by the tenant.

SECURITY SYSTEMS:             A security system will be provided to allow after
                              hour electronic access at building entry locations
                              "only."

INTERIOR LIGHTING:            Elevator Lobbies
                              The lobbies, corridors, vestibules, elevator
                              lobbies, etc. will be lit with PL down light
                              fixtures, uplights or cove lighting to an average
                              of 35 foot candles.

                              Electrical Rooms, Mechanical Rooms, Janitor's
                              Closets, and Dock Areas Lighting in these areas
                              will be 4' or 8' wall or ceiling mounted
                              fluorescent strip fixtures to an average of
                              40 foot candles.


                              Toilet Rooms
                              Toilet rooms will be lit with PL down light
                              fixtures with light coves consisting of
                              fluorescent strip fixtures and drywall ledger
                              provided in each toilet room.

                              Stairs
                              Stairwell lighting will consist of ceiling mounted
                              or wall mounted fluorescent lighting fixtures,
                              included as part of base building cost.


                                  C Part I - 5
<PAGE>

                                   EXHIBIT C

                                    PART II

                               OFFICE SPACE PLAN

                                 See attached.

                                C Part II - 1479
<PAGE>

DATE:       9-Jun-05                                           SPAULDING & SYLE

PROJECT:    VANDA PHARMACEUTICALS, INC.                             CONSTRUCTION
SITE:       3rd Floor @ JHU@MCC#3
            Rockville, MD

JOB #:      NA                          REV DATE: 29-Jul-05
R.S.F.:      14,524   OFFICE "ONLY"
PLAN DATE:  05/04/05  FLOOR PLAN-OPTION 1-V.E. OPTION -PLUS
PREP'D BY:    JWM

                    CONCEPTUAL ESTIMATE - V.E. OPTION - PLUS

QUALIFICATIONS/ASSUMPTIONS

THIS ESTIMATE IS LIMITED TO WORK SHOWN IN THE OFFICE AREA'S "ONLY". WE HAVE NOT
INCLUDED ANY WORK IN THE LAB.

ALL WORK PERFORMED DURING NORMAL WORKING HOURS

WINDOW STOOLS ARE EXISTING.

ALL MECHANICAL, ELECTRICAL, AND SPRINKLER SYSTEMS AND/OR EQUIPMENT HAS
SUFFICIENT CAPACITY & IS WORKING PROPERLY

SPRINKLER MAIN LOOP IS EXISTING

SECURITY WORK IS EXCLUDED

TEL/DATA NOT INCLUDED, RING AND STRING ONLY

FURNITURE, FIXTURES AND FREE STANDING EQUIPMENT NOT INCLUDED IN PRICING

THIS PROPOSAL DOES NOT INCLUDE ANY BACK UP GENERATION OR UPS WORK.

WSSC FEE'S TO BE PAID BY OTHERS

ITEMIIZED QUANTITY/SCOPE SURVEY

<TABLE>
<CAPTION>
      DESCRIPTION OF WORK                                    QNTY UNIT    UNIT COST    SUBTOTAL    TOTAL
<S>                                                          <C>          <C>          <C>         <C>
A     DEMOLITION
      REMOVE WALLS                                                0 LF
      REPAIR CEILINGS                                             0 AL
      DUMPSTERS                                                   8 EA
      REMOVE TRASH                                                1 LS

B     DRYWALL/ACOUSTICAL
      CEILING HIGH PARTITIONS 9'-0" - Insulated/5/8" BD        1098 LF
      FULL HEIGHT PARTITIONS - 14-6" - Insulated/5/8" BD        441 LF
      2X4 ACT CEILING 9/16 GRID, "CORTEGA" TILE              14,524 SF
      2X2 ACOUSTICAL CEILING SYSTEM - VINYL @ LDG STORAGE         0 SF
      DRYWALL CEILINGS AT UPGRADE AREA'S                          0 SF
      SPRAY ON FIREPROOFING REPAIR                                1 LS

C     PROTECTION AND TRASH REMOVAL
      TEMP PROTECTION                                             1 LS
      DAILY LABOR AND DAILY CLEANING                              8 WK
      FINAL CLEANUP                                          14,524 SF
</TABLE>

                                                                      Chip clark
                                                                          8/1/05

                                                                          Page 1
<PAGE>

D     MILLWORK/CARPENTRY
      PLAM CABINETS (BASE, WALL AND TOP)                         47 LF
      RECEPTION DESK (N.l.C.)                                     0 AL
      CREDENZA AT MEETING ROOM                                    8 LF
      HALF MOON "BAR" @ PANTRY (PER ARCHITECT)                    1 AL
      MAPLE TRIM AT WALL TALKER                                  80 LF
      COAT SHELF AND ROD                                          4 LF
      IN WALL BLOCKING                                       14,524 SF

E     DOORS/FRAMES/HARDWARE
      NEW PAINT GRADE (Masonite) DOORS/HM FRM/HDW (STD)          49 LVS
      SUITE ENTRY DOORS PER NOTES                                 2 LVS
      STOREFRONT DOORS @ CONFERENCE / MEETING                     0 LVS
      REKEYING                                                    1 LS

F     GLASS/GLAZING
      SIDELIGHTS @ INTERIOR OFFICES (3/8" TEMP, NO SILICONE)      0 SF
      CLERESTORY GLASS AT WORK STATIONS (1/4" TEMP. NO SIL.)    400 SF
      SIDELIGHTS AT PERIMETER OFFICES (3/8" TEMP. NO SILICONE)  441 SF
      SIDELIGHTS AT CONF AND MTG ROOMS (3/8" TEMP.)             240 SF

G     FLOORING
      CARPET-ENCLOSED OFFICE AREAS                              650 SY
      CARPET UPGRADE AREAS                                    1,055 SY
      VCT @ PANTR, SERVER, AND COPY/FAX ROOMS                   620 SF
      VINYL BASE                                              3,580 LF
      MINOR FLOOR PREPERATION                                     1 AL

H     WALL FINISHES
      PRIME & PAINT NEW WALLS (EGGSHELL)                     32,220 SF
      PAINT NEW DOORS AND FRAMES                                 51 EA
      PAINT DRYWALL CEILINGS                                      0 SF
      WALL TALKER MARKER BOARDS                                 124 SF
      MISC TOUCH UP                                               1 LS

I     SPECIALTIES
      BUILDERS GRADE REFRIGERATOR @ PANTRY(s)                     2 EA
      BUILDERS GRADE DISHWASHER AT PANTRY(S)                      2 EA
      ELECTRONIC PROJECTION SCREENS AT LG CONFERENCE              1 EA
      ROOF PENETRATION AND BLOCKING                               1 AL
      MISC SUPPORT STEEL AT ROOFTOP CONDENSING UNIT               1 AL
      ROOF REPAIR ALLOWANCE                                       1 AL

      HVAC
      DIST. DUCT AND DIFFUSERS                               14,524 SF
      VAV'S AND TSTATS PER NOTES                                 10 EA
      AIR BALANCING                                          14,524 SF
      SUPPLEMENTAL HVAC AT SERVER ROOM                            5 TNS
      SUPPLEMENTAL UNIT TIE IN TO BASE BLDG BMS                   0 LS
      EXHAUST FANS                                                0 EA

      PLUMBING
      PANTRY SETS                                                 2 EA
      INSTANT HOTS                                                2 EA

      DESCRIPTION OF WORK


                                                                          Page 2
<PAGE>

<TABLE>
<CAPTION>
                                                             QNTY UNIT
<S>   <C>                                                    <C>                                   <C>
L     SPRINKLER ALLOWANCE
      ADD/RELOCATE HEADS AS REQUIRED                         14,524 SF

M     ELECTRICAL
      DUPLEX OUTLETS ( 4 per office ilo of 5)                   187 EA
      GFI OUTLETS                                                 4 EA
      DEDICATED CIRCUITS                                          8 EA
      TEL/DATA RING WITH STRING                                 142 EA
      NEW LIGHTS THROUGHOUT SPACE (8X10 GRID)                   182 EA
      DOWNLIGHTS / WALLWASHERS AT UPGRADE AREAS                  20 EA
      PENDANT LIGHTS PER NOTES                                    5 EA
      SINGLE POLE SWITCHES                                       50 EA
      THREE WAY SWITCHES                                         10 EA
      SYSTEMS FURNITURE CONNECTIONS                              12 EA
      FLOOR BOXES AT CONFERENCE ROOM(S)                           2 EA
      HVAC & PLUMBING WIRING                                      1 LS
      EXIT LIGHTS AS REQUIRED                                    12 EA
      PANELS AT SERVER ROOM                                       1 EA
      DEMO AND SAFING                                             0 AL
      FIRE ALARM WORK                                         14524 SF
      PERMIT                                                      1 LS
      ATS FOR BASE BUILDING GENERATOR                             0 EA

                                                             ---------------
                                                                    SUBTOTAL
N     GENERAL CONDITIONS
      GENERAL CONDITIONS ALLOWANCE                          $     - LS

                                                                   SUBTOTAL

                                                                   CONSTRUCTION FEE (5.0%)

                                                                   TOTAL HARD COSTS
</TABLE>










                                                                          Page 3
<PAGE>

                                  [FLOOR PLAN]

                           VANDA PHARMACEUTICALS, INC

                                                                      Chip Clark
                                                                          8/1/05
<PAGE>

VANDA PHARMACEUTICALS                                    DATE: JULY 29, 2005
9605 MEDICAL CENTER DRIVE - 3RD FLOOR
ROCKVILLE, MD 20850

PLAN NOTES FOR OFFICE SPACE "ONLY"

DIVISION - 1 GENERAL REQUIREMENTS

-     CONTRACTOR TO PROVIDE ALL NECESSARY DEMOLITION AS REQUIRED FOR NEW
      CONSTRUCTION SHOWN.

DIVISION - 2 SITE REQUIREMENTS - N/A

DIVISION - 3 CONCRETE 3 - N/A

DIVISION - 4 MASONRY - N/A

DIVISION - 5 METALS

-     CONTRACTOR TO FURNISH AND INSTALL AII MISCELLANEOUS METAL ASSOCIATED WITH
      NEW OUTDOOR UNIT OF SPLIT SYSTEM TO BE INSTALLED ON ROOF.

-     CONTRACTOR TO FURNISH AND INSTALL AT NEW PARTITIONS U.N.O WITH 3 5/8"
      METAL STUDS SPACED: 24" O.C. FOR WALLS.

DIVISION - 6 WOOD AND PLASTICS

-     CONTRACTOR TO FURNISH AND INSTALL PLASTIC LAMINATE CABINETS (BASE AND WALL
      AT TWO(2) PANTRY AREAS, AND CREDENZA BASE*** AT THE MEETING ROOM) AT AREAS
      INDICATED AS MILLWORK.

-     "HALF MOON" BAR AT PLAN WEST PANTRY NOT TO EXCEED $2,500.00 FURNISHED AND
      INSTALLED.

-     ALL INTERIOR MILLWORK SURFACES SHALL BE MELAMINE. PLASTIC LAMINATE TO BE
      STANDARD GRADE AND COLOR BY NEVAMAR OR EQUAL. RECEPTION DESK TO BE
      PROVIDED AND INSTALLED BY THE TENANT.

-     ONE PAINT GRADE ROD AND SHELF AT PANTRY.

***NOTE: 24" x 36" VISION KITS FOR THE FIFTEEN (15) INTERIOR OFFICE DOORS CAN BE
SUBSTITUTED FOR THE CREDENZA BASE DESCRIBED ABOVE.

DIVISION - 7 THERMAL AND MOSITURE PROTECTION

-     CONTRACTOR TO FURNISH AND INSTALL BATT INSULATION IN ALL NEW PARTITIONS.

DIVISION - 8 DOORS, WINDOWS AND GLAZING

-     CONTRACTOR TO FURNISH SOLID CORE PAINT GRADE, MASONITE, WOOD DOORS (3' -
      0" x 7' - 0" MINIMUM) U.N.O.

-     CONTRACTOR TO FURNISH AND INSTALL ALL DOOR FRAMES TO BE 2" PAINTED HOLLOW
      METAL, U.N.O.

-     CONTRACTOR TO FURNISH AND INSTALL 3/8" TEMPERED GLASS SIDELIGHTS WITH TOP
      AND BOTTOM EXPOSED ALUMINIUM GLAZING CHANNELS AT ALL PERIMETER OFFICES
      WHERE INDICATED. SIDELIGHTS NOT TO EXCEED 21 SQUARE FEET EACH. NO SILICONE
      BETWEEN GLASS AND ADJACENT DRYWALL JAMB.

-     CONTRACTOR TO FURNISH AND INSTALL SEGMENTED 3/8" TEMPERED GLASS WALL
      PANELS WITH TOP AND BOTTOM EXPOSED ALUMINIUM GLAZING CHANNELS AT MEETING
      ROOM AND CONFERENCE ROOMS #1 AND #2. WALL PANELS NOT TO EXCEED 240 SQUARE
      FEET IN TOTAL SILICONE SEALANT TO BE PROVIDED BETWEEN EACH GLASS PANEL AND
      THE ADJACENT DRYWALL JAMBS.

-     CONTRACTOR TO FURNISH AND INSTALL DOUBLE DOOR WHICH IS 8' -0" HIGH FULL
      HEIGHT TEMPERED VISION GLASS, PLAIN SLICED MAPLE STYLE AND RAIL AT SUITE
      ENTRY.

-     CONTRACTOR TO FURNISH AND INSTALL 1/4" TEMPERED GLASS CLERESTORY WITH TOP
      AND BOTTOM ALUMININIUM GLAZING CHANNEL GLASS TO START AT 4' - 8" AFF TO 7'
      - 2" AFF ABOVE WORKSTATIONS AT INTERIOR OFFICES. CLERESTORY NOT TO EXCEED
      400 SF IN TOTAL. NO SILICONE BETWEEN GLASS PANELS OR ADJACENT DRYWALL
      JAMB.

                                                                      Chip Clark
                                                                          8/1/05
<PAGE>

DIVISION - 9 FINISHES

-     CONTRACTOR TO FURNISH AND INSTALL GYPSUM BOARD AT NEW INTERIOR PARTITIONS
      AND AT ALL SHELL CONDITIONS IF REQUIRED. CONTRACTOR TO FURNISH AND INSTALL
      5/8" GYPSUM BOARD AT ALL INTERIOR PARTITIONS.

-     CONTRACTOR TO FURNISH AND INSTALL INTERIOR PARTITIONS TO UNDERSIDE OF DECK
      AS INDICATED ON THE ATTACHED PLAN. TOTAL LINEAR FEET NOT TO EXCEED 441
      FEET. ALL OTHER PARTITIONS TO BE FROM FLOOR TO UNDERSIDE OF FINISHED
      CEILING.

-     CONTRACTOR TO FURNISH AND INSTALL ACOUSTICAL CEILING SYSTEM, WHICH SHALL
      BE 9/16" FLATGRID. CEILING PANELS TO BE 2'x2' OR 2'x4' ARMSTRONG
      "CORTEGA".

-     CONTRACTOR TO PAINT ALL WALLS (EGGSHELL) U.N.O. FINISHES WILL BE NEUTRAL
      WITH 5 TO 6 ACCENT WALLS.

-     CONTRACTOR TO PAINT ALL PAINT GRADE DOORS AND FRAMES SEMI-GLOSS.

-     CONTRACTOR TO FURNISH AND INSTALL CONTINUOUS VINYL WALL COVE BASE BY
      JOHNSONITE OR EQUAL.

-     CONTRACTOR TO FURNISH AND INSTALL CARPET TYPE 1, PROVIDE ALLOWANCE OF
      $20/SY INSTALLED IN ALL AREAS U.N.O.

-     CONTRACTOR TO FURNISH AND INSTALL BROADLOOM CARPET TYPE 2, PROVIDE
      ALLOWANCE OF $18/SY INSTALLED IN ALL ENCLOSED OFFICES.

-     CONTRACTOR TO FURNISH AND INSTALL RESILIENT FLOORING, PROVIDE ALLOWANCE OF
      $2.00/ SF INSTALLED IN ALL COPY/FAX AREAS, MAIL ROOMS, STORAGE ROOMS,
      SERVER ROOMS, AND BREAK ROOMS W/PANTRIES.

DIVISION - 10 SPECIALTIES

-     CONTRACTOR TO FURNISH AND INSTALL ONE (1) RECESSED ELECTRIC PROJECTION
      SCREEN IN CONFERENCE ROOM #1.

DIVISION - 11 EQUIPMENT

-     CONTRACTOR TO FURNISH AND INSTALL BUILDERS GRADE REFRIGERATOR WITH
      ICEMAKER AND DISHWASHER AT TWO (2) PANTRY'S. REFRIGERATORS NOT TO EXCEED
      $800.00 EACH AND DISHWASHERS NOT TO EXCEED $300.00 EACH.

DIVISION - 12 FURNISHINGS

-     CONTRACTOR TO FURNISH AND INSTALL "WALL TALKER" (30' -6" LINEAR FEET X 4'
      - 0" H TOTAL FOR TWO AREAS) AS SHOWN ON PLAN. MOUNTED ON GYPSUM BOARD
      PARTITION WITH MAPLE FRAME.

DIVISION - 13 SPECIAL CONSTRUCTION

-     CONTRACTOR TO FURNISH AND INSTALL WET PIPE SPRINKLER SYSTEM AS REQUIRED BY
      LOCAL AND NATIONAL CODES THROUGHOUT SPACE.

-     CONTRACTOR TO FURNISH AND INSTALL CODE COMPLIANT FIRE ALARM SYSTEM
      THROUGHOUT SPACE.

DIVISION - 14 CONVEYING SYSTEM

DIVISION - 15 MECHANICAL

-     CONTRACTOR TO FURNISH AND INSTALL CODE COMPLAINT MECHANICAL ZONING AS
      REQUIRED BY SQUARE FOOTAGE TAKEN. SEE DIVISION 16 FOR ELECTRICAL
      REQUIREMENT. CONTRACTOR TO FURNISH AND INSTALL SEPARATE ZONE CONTROL AT
      ALL CONFERENCE ROOMS, OFFICES WITH (2) EXPOSURES AND PANTRY'S.

-     CONTRACTOR TO FURNISH AND INSTALL (1) 5 TON, MAXIMUM, DEDICATED 24 HOUR
      SPLIT SYSTEM AIR CONDITIONING UNIT TO FEED SERVER ROOM SIMILAR TO LIEBERT
      MINI MATE WITH CONDENSING UNIT ON ROOF.

-     CONTRACTOR TO FURNISH AND INSTALL STAINLESS STEEL SINK WITH GOOSENECK
      FAUCET AND WATER LINE FOR COFFEE MAKER AT TWO (2) PANTRY LOCATIONS. COLD
      WATER SHALL BE EXTENDED FROM EXISTING TOILET ROOMS, AND HOT WATER FROM NEW
      HEATER, DRAIN PIPING SHALL BE EXTENDED TO NEAREST BASE BUILDING WET STACK.

-     CONTRACTOR SHALL FURNISH & INSTALL SERIES FAN-POWERED VAV BOXES (WITH
      ELECTRIC HEATING COILS WHEN SERVING EXTERIOR PERIMETER AREAS) TO MEET
      SPECIFIC SPACE REQUIREMENTS. EXISTING UNITS SHALL BE USED IN PLACE, OR
      RELOCATED, AS APPROPRIATE. PERIMETER BOXES SHALL BE LIMITED TO
      APPROXIMATELY 600 SQUARE FEET, OR FOUR OFFICES. INTERIOR ZONES SHALL BE
      LIMITED TO 1200 SQUARE FEET.

-     EXISTING SYSTEM IS PACKAGED ROOFTOP UNITS WITH MAIN SUPPLY LOOP DUCT AND
      SOME OF THE FAN-POWERED BOXES, AND PLENUM RETURN

<PAGE>

-     CONTRACTOR SHALL FURNISH AND INSTALL AN ELECTRIC, POINT OF USE,
      INSTANTANEOUS WATER HEATER TO SERVE THE PANTRY SINKS.

DIVISION - 16 ELECTRICAL

-     CONTRACTOR TO FURNISH AND INSTALL ELECTRICAL POWER AS REQUIRED IN ALL
      AREAS BY CODE.

-     CONTRACTOR TO FURNISH AND INSTALL POWER TO ALL WORKSTATION (PRE-WIRED
      FURNITURE) AND OFFICES TO SUPPORT 1 CPU, 1 MONITOR, 1 TASK LIGHT, AND 2
      CONVENIENCE OUTLETS FOR EACH WORKSTATION OR OFFICE.

-     CONTRACTOR TO FURNISH AND INSTALL RING AND PULL STRING AND OR CONDUIT (AS
      REQUIRED BY CODE) TO SUPPORT 3 CATEGORY 5 CABLES PER WORKSTATION AND
      OFFICE. CONTRACTOR SHALL MAKE FULL PROVISIONS FOR SUPPORT AREAS AND OTHER
      ENCLOSED SPACES. (NOTE: 2 LOCATIONS AT OFFICES GREATER THAN 120 SF) DATA
      CABLING TO BE SUPPLIED AND INSATLLED BY TENANT.

-     CONTRACTOR TO FURNISH AND INSTALL ONE (1) 100 AMP ELECTRICAL PANEL AT
      SERVER ROOM THAT SHALL BE CONNECTED TO A TENANT PROVIDED UPS.

-     CONTRACTOR TO FURNISH AND INSTALL LIGHTING IN ALL SPACES U.N.O. TO BE
      2'X2' 12-18 CELL PARABOLIC FLUORESCENT FIXTURE BY LIGHTOLIER OR EQUAL
      FIXTURE TO BE PLACED IN A 8'X10' GRID.

TYPICAL LIGHTING DIAGRAM

-     CONTRACTOR TO FURNISH AND INSTALL SPECIAL LIGHTING TO BE 10 DOWN LIGHTS,
      10 WALL WASHERS. ALL OF THE FIXTURE TO BE LIGHTOLIER, CALCULITE SERIES
      WITH LENS OR EQUAL.

-     CONTRACTOR TO FURNISH AND INSTALL 5 DECORATIVE PENDANT FIXTURES THROUGHOUT
      THE PROJECT BUT INSTALLED PRIMARILY IN PANTRY AREAS. ALLOW $250 PURCHASE
      PRICE ALLOWANCE PER FIXTURE.

-     CONTRACTOR TO FURNISH AND INSTALL POWER FOR CARD READERS AT ALL EXTERIOR
      DOORS.

-     CONTRACTOR TO FURNISH AND INSTALL POWER FOR ELECTRIC STRIKES OR MAG LOCK
      AS DIRECTED BY EXTERIOR DOOR SPECIFICATIONS.

-     CONTRACTOR TO FURNISH AND INSTALL POWER FOR CARD READERS AT 3 INTERIOR
      DOORS.

-     CONTRACTOR TO FURNISH AND INSTALL ONE (1) FLUSH MOUNTED FLOOR BOX FOR
      MINIMUM OF 4 POWER DEVICES AND 4 TELEPHONE AND DATA PORTS IN EACH
      CONFERENCE ROOM.

GENERAL

-     QUANTITIES FOR ALL MATERIALS, PRODUCTS, SYSTEMS ETC. TO BE PER THE
      QUANTITIES SHOWN ON THE ATTACHED CONCEPTUAL ESTIMATE - V.E. OPTION - PLUS,
      REVISION DATE 29-JULY-05.

-     SEE QUALIFICATIONS AND ASSUMPTIONS ON THE ATTACHED CONCEPTUAL ESTIMATE.

-     ALL WORK ASSOCIATED WITH THE WET LAB TO BE PERFORMED UNDER A SEPARATE
      AGREEMENT.

<PAGE>

                                    EXHIBIT C

                                    PART III

                               MILESTONE SCHEDULE

<TABLE>
<CAPTION>
                                                                              EXCLUSIVE REMEDY
                        MILESTONE                         DATE          PER SECTION 3.2 OF THE LEASE
                        ---------                         ----          ----------------------------
<S>  <C>                                              <C>          <C>

1.   Intentionally omitted.

2.   Tenant shall have submitted to Landlord design     08-10-05   If the Tenant does not meet its
     development drawings for Tenant's Lab Space                   obligation in this milestone, one day
     Leasehold Improvements which Landlord shall                   of Tenant Delay shall occur for each
     review and return comments on to Tenant within                day the Tenant is delayed in meeting
     then (10) business days following receipt of                  such obligation, and Landlord shall
     the same.                                                     have the rights and remedies set
                                                                   forth in Section 3.2 hereof.

3.   Tenant shall have submitted to Landlord           08-31 -05   If the Tenant does not meet its
     Tenant's construction drawings and                            obligation in this milestone, one day
     specifications for Tenant's Lab Space Leasehold               of Tenant Delay shall occur for each
     Improvements which Landlord shall review and                  day the Tenant is delayed in meeting
     return comments on to Tenant within ten (10)                  such obligation and Landlord shall
     business days following receipt of the same.                  have the rights  and remedies set
                                                                   forth in Section 3.2 hereof.

4.   Tenant shall attend all scheduled design          Weekly, or  If the Tenant does not meet its
     progress meetings as requested by Landlord or    as required  obligation in this milestone, one day
     Landlord's Architect as required for completion               of Tenant Delay shall occur for each
     of Construction Plans for the Office Space.                   day the Tenant is delayed in meeting
                                                                   such obligation and Landlord shall
                                                                   have the rights and remedies set
                                                                   forth in Section 3.2 hereof.

5.   Tenant shall have submitted final bid and          09-19-05   If the Tenant does not meet its
     pricing documents for Tenants Lab Space                       obligation in this milestone, one day
     Leasehold Improvements to Landlord's                          of Tenant Delay shall occur for each
     Contractor; and Landlord's Contractor shall                   day the Tenant is delayed in meeting
     provide Tenant with final pricing for review                  such obligation and Landlord shall
     and approval within forty-five (45) days                      have the rights and remedies set
     following receipt of such final bid and pricing               forth in Section 3.2 hereof.
     documents.
</TABLE>

                                 C Part III - 1

<PAGE>

<TABLE>
<CAPTION>
                                                                              EXCLUSIVE REMEDY
                        MILESTONE                         DATE          PER SECTION 3.2 OF THE LEASE
                        ---------                         ----          ----------------------------
<S>  <C>                                                <C>        <C>
6.   Tenant (i) delivers to Landlord written            09-26-05   If the Tenant does not meet its
     approval of the 100% Complete Construction                    obligation in this milestone, one day
     plans for the Office Space and subject to                     of Tenant Delay shall occur for each
     Tenant's written comments with respect thereto,               day the Tenant is delayed in meeting
     provided such comments do not increase the cost               such obligation and Landlord shall
     of the Work or cause a delay in meeting any                   have the rights and remedies set
     subsequent Milestone Dates, and (ii) authorizes               forth in Section 3.2 hereof.
     Landlord's Contractor to order for Tenant all
     required long lead time items.

7.   Tenant shall submit to Landlord the Lab Space      09-30-05   If the Tenant does not meet its
     Complete Plans (as defined in the Lease).                     obligation in this milestone, one day
                                                                   of Tenant Delay shall occur for each
                                                                   day the Tenant is delayed in meeting
                                                                   such obligation and Landlord shall
                                                                   have the rights and remedies set
                                                                   forth in Section 3.2 hereof.

8.   Tenant shall review and approve final pricing      10-03-05   If the Tenant does not meet its
     for Lab Space Leasehold Improvements within 5                 obligation in this milestone, one day
     business days following receipt of the same.                  of Tenant Delay shall occur for each
                                                                   day the Tenant is delayed in meeting
                                                                   such obligation and Landlord shall
                                                                   have the rights and remedies set
                                                                   forth in Section 3.2 hereof.

9.   Landlord is to have substantially completed the    January    If for any reason this milestone is
     Leasehold Improvements.                             1, 2006   not reached, Landlord shall have
                                                                   until March 1, 2006, to reach the
                                                                   milestone. If milestone as so
                                                                   extended (as so extended, the
                                                                   "Outside Date") is not reached for
                                                                   any reason other than Tenant Delay or
                                                                   Force Majeure, the Commencement Date
                                                                   shall be postponed one day for each
                                                                   day of said delay by Landlord, and
                                                                   Tenant will be entitled, as its sole
                                                                   remedy, to a credit against Base
                                                                   Annual Rent due hereunder in an
                                                                   amount equal to the product of (i)
                                                                   the rate of Base Annual Rent due per
                                                                   day during the first Lease Year
                                                                   multiplied by the number of days
                                                                   following the Outside Date until
                                                                   Landlord achieves this milestone.
</TABLE>

                                 C Part III - 2

<PAGE>

                                    EXHIBIT D

                               LANDLORD'S SERVICES
                                       IN
                                  COMMON AREAS

I.    CLEANING

      A.    General

            1.    All cleaning work will be performed generally between 5 p.m.
                  and 12 midnight, Monday through Friday, unless otherwise
                  necessary for stripping, waxing, etc.

            2.    Abnormal waste removal (e.g., computer installation paper,
                  bulk packaging, wood or cardboard crates, refuse from
                  cafeteria operation, etc.) shall be Tenant's responsibility.

      B.    Daily Operations (5 times per week)

            1.    Lavatories

                  a.    Sweep and wash floors with disinfectant.

                  b.    Wash both sides of toilet seats with disinfectant.

                  c.    Wash mirrors, basins, bowls, and urinals.

                  d.    Spot clean toilet partitions.

                  e.    Empty and disinfect sanitary napkin disposal
                        receptacles.

                  f.    Refill toilet tissue, towel, soap, and sanitary napkin
                        dispensers.

            2.    Public Areas

                  a.    Wipe down entrance doors and clean glass (interior and
                        exterior) and adjacent glass.

                  b.    Vacuum elevator carpets and wipe down doors and walls.

                  c.    Clean water coolers.

                  d.    Vacuum all carpets daily and mop all floors daily, as
                        needed.

                  e.    Sweep stairways daily, as needed.

      C.    Operations As Needed (but not less than every other day)

            1.    Public Areas

                  a.    Buff resilient floor areas.

                                     D - 1

<PAGE>

      D.    Weekly Operations

            1.    Common Area, Lavatories, Public Areas

                  a.    Hand-dust and wipe clean horizontal surfaces with
                        treated cloths to include furniture, office equipment,
                        window-sills, door ledges, chair rails, baseboards,
                        convector tops, etc., within normal reach.

                  b.    Remove finger marks from private entrance doors, light
                        switches, and doorways.

      E.    Monthly Operations

            1.    Public Areas

                  a.    Thoroughly vacuum seat cushions on chairs, sofas, etc.

                  b.    Vacuum and dust grillwork.

            2.    Common Area Lavatories

                  a.    Wash down interior walls and toilet partitions.

      F.    As Required and Weather Permitting (at least once per year)

            1.    Clean inside of all windows in Building.

            2.    Clean outside of all windows in Building.

      G.    Yearly

            1.    Public Areas

                  a.    Strip and wax all resilient tile floor areas.

II.   HEATING, VENTILATING, AND AIR CONDITIONING

      A.    Heating, ventilating, and air conditioning as required to provide
            reasonably comfortable temperatures for normal business day
            occupancy (excepting Sundays and holidays); Monday through Friday,
            HVAC shall operate from 7:00 a.m. to 6:00 p.m. and Saturday from
            9:00 a.m. to 1:00 p.m. or, at Tenant's expense, at such other hours
            as requested by Tenant.

      B.    Maintenance of any additional or special air conditioning equipment
            and the associated operating cost will be at Tenant's expense.

III.  WATER

      Hot water for lavatory purposes and cold water for drinking, lavatory and
      toilet purposes.

IV.   ELEVATORS

      Elevators for the use of all tenants and the general public for access to
      and from all floors of the Building Programming of elevators (including,
      but not limited to, service elevators) shall be as Landlord from time to
      time determines best for the Building as a whole. At least one elevator
      shall be in service at all times.

                                     D - 2

<PAGE>

V.    RELAMPING OF LIGHT FIXTURES

      Tenant will reimburse Landlord for the cost of non-building standard
      lamps, ballasts and starters and the cost of replacing same within the
      Premises.

VI.   INTENTIONALLY OMITTED

VII.  ELECTRICITY

      A.    Landlord, at Tenant's expense in accordance herewith, shall furnish
            electrical energy required for lighting, electrical facilities,
            equipment, machinery, fixtures, and appliances used in or for the
            benefit of the Premises, in accordance with the provisions of the
            Lease of which this Exhibit is a part. Landlord will install Meters
            for all electricity provided to the Premises (other than Building
            heating, ventilating and air conditioning). The cost of installation
            of the Meters shall be borne by the Tenant.

      B.    Tenant shall not, without prior written notice to Landlord in each
            instance, connect to the Building electric distribution system any
            fixtures, appliances or equipment other than normal office machines
            such as personal computers, printers, facsimile machines, or any
            fixtures, appliances or equipment which Tenant on a regular basis
            operates beyond normal buildings operating hours.

      C.    Tenant's use of electrical energy in Premises shall not at any time
            exceed the capacity of any of the electrical conductors or equipment
            in or otherwise serving the Premises. In order to insure that such
            capacity is not exceeded and to avert possible adverse effect upon
            the Building electrical service, Tenant shall not, without prior
            written notice to Landlord in each instance, connect to the Building
            electrical distribution system any fixtures, appliances or equipment
            which operate on a voltage in excess of 120 volts nominal or make
            any alteration or addition to the electric system of the Premises.
            Unless Landlord shall reasonably object to the connection of any
            such fixtures, appliances or equipment, all additional risers or
            other equipment required therefor shall be provided by Landlord, and
            the cost thereof shall be paid by Tenant upon Landlord's demand.

      D.    Landlord may, at any time, elect to discontinue the furnishing of
            electrical energy, provided that Landlord is required to do so by
            law, regulation or order of any governmental body having
            jurisdiction, or by the utility company providing such electrical
            service. In the event of any such election by Landlord: (1) Landlord
            agrees to permit Tenant to receive electrical service directly from
            the public utility supplying service to the Building and to permit
            the existing feeders, risers, wiring and other electrical facilities
            serving the Premises to be used by Tenant and/or such public utility
            for such purpose to the extent they are suitable and safely capable;
            (2) Landlord agrees to pay such charges and costs, if any, as such
            public utility may impose in connection with the installation of
            Tenant's meters and to make or, at such public utility's election,
            to pay for such other installations as such public utility may
            require, as a condition of providing comparable electrical service
            to Tenant which costs as reasonably amortized by Landlord, with
            legal interest paid by Landlord on the unamortized amount, shall be
            added to Landlord's Operating Costs; and (3) Tenant shall thereafter
            pay, as additional rent but directly to the utility furnishing the
            same, all charges for electrical services to the Premises.

VIII. WATER AND GAS

      If Tenant or any other tenant in the Building shall operate a wet
      laboratory in its demised premises, Landlord may cause the water and gas
      lines serving such wet laboratories to be metered by a separate check
      meter (the "Water and Gas Check Meters") installed at the Tenant's or such
      other tenant's cost. In the event Tenant operates such a separately
      metered wet laboratory, Tenant shall pay, as additional rent in addition
      to Tenant's Share of Operating Costs,

                                     D - 3

<PAGE>

      Tenant's Share of Real Estate Taxes and Tenant's Annual Electrical Cost in
      accordance with Article IV of the Lease, Tenant's Annual Water and Gas
      Costs and the cost to the Landlord for consumption of water and gas in wet
      laboratories in the Building shall be excluded from Landlord's Operating
      Costs.

      Tenant's Annual Water and Gas Costs shall mean the cost to Landlord at the
      "average unit cost" for water or gas, as the case may be, for Tenant's use
      of water or gas in Tenant's wet laboratory as shown on the Water and Gas
      Check Meters. For purposes hereof, the average unit cost of gas and/or
      water for any year or applicable portion thereof shall mean the cost
      calculated by dividing the sum of the costs charged Landlord by the public
      utility for gas or water consumed in the Building in the applicable period
      by the sum of the applicable units (i.e., gallons or other applicable unit
      of measure) of water or gas used by the Building during such period as
      measured by the Building Master Gas or Master Water Meter as the case may
      be.

      For every fiscal year or portion thereof during the Term hereof, as the
      same may be extended, Tenant shall pay, as additional rent, Tenant's
      Annual Water and Gas Cost in monthly installments on the first day of each
      month during its Term and as otherwise provided in this Part VIII of
      Exhibit D. As soon as practicable after the end of each fiscal year during
      the Term, and after Lease termination, Landlord shall render a statement
      (the "Landlord's Utility Statement") in reasonable detail and according to
      usual accounting practices certified by Landlord and showing for the
      preceding calendar year or fraction thereof Tenant's Annual Water and Gas
      Cost.

      Tenant shall pay, as additional rent, on the first day of each month of
      such fiscal year and each ensuing fiscal year thereafter, Estimated
      Monthly Utility Cost Payments equal to 1/12th of Landlord's estimate of
      Tenant's Annual Water and Gas Cost for the respective fiscal year, with an
      appropriate additional payment or credit to be made after Landlord's
      Utility Statement is delivered to Tenant. If the amount paid by Tenant for
      Estimated Monthly Utility Cost Payments is less than the actual Annual
      Water and Gas Cost, Tenant agrees to pay, as additional rent, to Landlord
      the amount of the differential. If the amount paid by Tenant for Estimated
      Monthly Utility Cost Payments is more than the actual Annual Water and Gas
      Cost, then Landlord, shall credit such excess against Tenant's subsequent
      monthly payments of Estimated Monthly Utility Cost Payments, as
      appropriate, until such excess is exhausted (or refund such excess to
      Tenant if at the end of the Term). Landlord may adjust such Estimated
      Monthly Utility Cost Payment from time to time and at any time during a
      fiscal year (but not more often than twice per fiscal year), and Tenant
      shall pay, as additional rent, on the first day of each month following
      receipt of Landlord's notice thereof, the adjusted Estimated Monthly
      Utility Cost Payment.

      If Landlord fails to furnish Tenant any statement of Landlord's estimate
      of Tenant's Annual Water and Gas Cost for any fiscal year or if Landlord
      shall furnish such estimate for any fiscal year subsequent to the
      commencement hereof, then until the first day of the month following the
      month in which such estimate is furnished to Tenant, Tenant shall pay to
      Landlord on the first day of each month an amount equal to the monthly sum
      payable by Tenant to Landlord under this Section in respect of the last
      month of the preceding fiscal year.

      Tenant shall have the right from time to time during the Term to read the
      Building Master Gas Meter and Master Water Meter and the Gas and Water
      Check Meters serving the Premises. Each Landlord's Utility Statement
      delivered to Tenant hereunder shall be conclusive and binding upon Tenant
      unless, within ninety (90) days after receipt of the statement, Tenant
      notifies Landlord that it wishes to audit Landlord's books and records
      with respect to Annual Water and Gas Cost for the preceding fiscal year.
      If Tenant gives such notice timely requesting the right to audit
      Landlord's books and records, Tenant shall have the right, at a reasonable
      time and upon reasonable notice, to examine Landlord's books and records
      respecting the Building which relate to the determination and computation
      of Tenant's Annual Water and Gas Cost for the fiscal year in question.

                                     D - 4

<PAGE>

                                    EXHIBIT E

                             RULES AND REGULATIONS

      A.    Roads, parking, sidewalks, doorways, vestibules, halls, stairways
and similar areas shall not be obstructed by tenants or their agents, employees,
sublessees, contractors, licensees or invitees, or used for any purpose other
than ingress and egress to and from the Premises and for going from one part of
the Building to another part of the Building or from one part of the campus to
another part of the campus.

      B.    Plumbing fixtures and appliances shall be used only for the purpose
for which constructed, and no sweepings, rubbish, rags, or other unsuitable
material shall be thrown or placed therein. The cost of repairing any stoppage
or damage resulting to any such fixtures or appliances from misuse on the part
of a tenant or such tenant's officers, agents, servants, and employees shall be
paid by such tenant.

      C.    No signs, posters, advertisements, or notices shall be painted or
affixed on any of the windows or doors, or other part of the Building, except of
such color, size, and style, and in such places, as shall be first approved in
writing by the building manager. No nails, hooks, or screws shall be driven into
or inserted in any part of the Building, except by Building maintenance
personnel.

      D.    No awning or other projections shall be attached to the outside
walls or windows. No curtains, blinds, shades, screens or signs other than those
furnished by Landlord shall be attached to, hung in, or used in connection with
any window or door of the Premises without prior written consent of Landlord.

      E.    Directories will be placed by Landlord, at Landlord's own expense,
in conspicuous places in the Building. No other directories shall be permitted.

      F.    Tenant may request heating and/or air conditioning during other
periods in addition to normal working hours by submitting its request in writing
to the office of the Managing Agent of the Building during normal business
hours, Monday through Friday, no later than 24 hours prior to the time such
service is required. All such requests for service shall be delivered on forms
available from the office of the Managing Agent. The request shall clearly state
the start and stop hours of the "off-hour" service. Tenant shall submit to the
Building Manager a list of personnel authorized to make such request. The Tenant
shall be charged for such operation in the form of additional rent; such charges
are to be determined by the Managing Agent and shall be fair and reasonable and
reflect the additional operating costs involved.

      G.    The Premises shall not be used (i) by any Prohibited Person (as
defined in Section 6.1.3 of the Lease), or (ii) for conducting any barter,
trade, or exchange of goods or sale through promotional give-away gimmicks or
any business involving the sale of secondhand goods, insurance salvage stock, or
fire sale stock, and shall not be used for any auction or pawnshop business, any
fire sale, bankruptcy sale, going-out-of-business sale, moving sale, bulk sale,
or any other business which, because of merchandising methods or otherwise,
would tend to lower the first-class character of the Building.

      H.    Tenants shall not do anything, or permit anything to be done, in or
about the Building, or bring or keep anything therein, that will in any way
increase the possibility of fire or other casualty or obstruct or interfere with
the rights of, or otherwise injure or annoy, other tenants, or do anything in
conflict with the valid pertinent Laws, rules, or regulations of any
governmental authority.

      I.    Tenant shall not place a load upon any floor of the premises which
exceeds the floor load per square foot which such floor was designed to carry or
which is allowed by applicable building code. Landlord may prescribe the weight
and position of all safes and heavy installations which Tenant desires to place
in the Premises so as properly to distribute the weight thereof. Landlord shall
have the authority

                                     E - 1

<PAGE>

to prescribe the weight and position of safes or other heavy equipment which may
overstress any portion of the floor. All damage done to the Building by the
improper placing of heavy items which overstress the floor will be repaired at
the sole expense of the Tenant. Landlord reserves the right to have Landlord's
structural engineer review Tenant's floor loads on the Premises at Tenant's
expense.

      J.    A tenant shall notify the building manager when safes or other heavy
equipment are to be taken into or out of the Building. Moving of such items
shall be done during the hours that Landlord may determine under the supervision
of the building manager, after receiving written permission from him.

      K.    Suite entry doors and doors to public corridors, when not in use,
shall be kept closed.

      L.    All deliveries must be made via the service entrance and service
elevators during normal business hours or as otherwise directed or scheduled by
Landlord. Prior approval must be obtained from Landlord for any deliveries that
must be received after normal business hours.

      M.    Each tenant shall cooperate with Building employees in keeping the
Premises neat and clean. Nothing shall be swept or thrown into the corridors,
halls, elevator shafts, or stairways. No birds, animals, or reptiles, or any
other creatures, shall be brought into or kept in or about the Building.

      N.    Building employees shall not be required to perform, and shall not
be requested by any tenant or occupant to perform, any work outside of their
regular duties, unless under specific instructions from the office of the
Managing Agent of the Building.

      O.    Business machines and mechanical equipment belonging to Tenant which
cause noise and/or vibration that may be transmitted to the structure of the
building or to any leased space so as to be objectionable to Landlord or any
tenants in the Building shall be placed and maintained by Tenant, at Tenant's
expense, in setting of cork, rubber, or spring type noise and/or vibration
eliminators sufficient to eliminate vibration and/or noise. Tenants shall not
make or permit any improper noises in the Building, or otherwise interfere in
any way with other tenants or persons having business with them.

      P.    Tenants shall not use or keep in the Building any flammable or
explosive fluid or substance, or any illuminating material, unless it is battery
powered, UL-approved except as expressly permitted in the Lease.

      Q.    Tenants' employees or agents, or anyone else who desires to enter
the Building, may be required to provide appropriate identification and sign in
upon entry, and sign out upon leaving, giving the location during such person's
stay and such person's time of arrival and departure, and shall otherwise comply
with any reasonable access control procedures as Landlord may from time to time
institute.

      R.    Landlord has the right to evacuate the Building in event of
emergency or catastrophe or for the purpose of holding a reasonable number of
fire or emergency drills.

      S.    If any governmental license or permit shall be required for the
proper and lawful conduct of tenant's business, tenant, before occupying the
Premises, shall procure and maintain such license or permit and submit it for
Landlord's inspection. Tenant shall at all times comply with the terms of any
such license or permit.

      T.    Tenant covenants and agrees that its use of the Premises shall not
cause a discharge of more than its pro rata share on a square foot basis of the
design flow gallonage per day of sanitary (nonindustrial) sewage allowed under
the sewage discharge permit(s) for the Building. Discharges in excess of that
amount, and any discharge of industrial sewage, shall only be permitted if
Tenant, at its sole expense, shall have obtained all necessary permits and
licenses therefor, including without limitation permits from state and local
authorities having jurisdiction thereof. Tenant shall submit to Landlord on
December 1 of each year of the Term of this Lease a statement, certified by an
authorized officer of Tenant, which contains the following information: name of
all chemicals, gases, and Hazardous Materials,

                                     E - 2

<PAGE>

used, generated, or stored on the Premises; type of substance (liquid, gas or
granular); quantity used, stored or generated per year; method of disposal;
permit number, if any, attributable to each substance, together with copies of
all permits for such substance; and permit expiration date for each substance.

      U.    Garbage, trash, rubbish, and refuse shall be kept in sanitary closed
containers approved by Landlord so as not to be visible to the public within the
demised area. The following rules and regulations shall apply to "dry" trash:
(1) all "dry trash shall be properly bagged in plastic bags and sealed; and (2)
all "dry" trash shall be delivered at such times and in such areas of the
Project as, from time to time, may be designated by Landlord. The following
rules and regulations apply to "semi-wet", and "wet garbage": (1) Tenant shall
be solely responsible for the cost of purchasing such equipment as is necessary
to convert "wet garbage" into a sanitary condition satisfactory to Landlord for
disposal by Landlord after delivery by Tenant to the designated area; and (2)
if, at Landlord's sole discretion, a refrigerated trash handling room becomes
necessary, it will be Tenant's sole responsibility to pay all reasonable costs
incurred to install such improvements in any area designated by Landlord.

      V.    Tenant will not display, paint, or place, or cause to be displayed,
painted or placed, any handbills, bumper stickers, or other advertising or
promotional materials or devices on any part of the Building or on any vehicles
parked in the parking areas of the Building whether belonging to Tenant or to
Tenant's employees or agents or to any other person except individuals may have
decals or bumper stickers on own cars.

      W.    Tenant shall use the Common Areas for ingress and egress only, and
shall not use any portion of the Common Areas for business or promotional
purposes, nor shall Tenant place any obstruction (including, without limitation,
vending machines) thereon. Tenant shall not use, suffer, or permit to be used
any part or portion of the Common Areas for any "quick-type service" of, among
other things, cigarettes, food, beverages, ice cream, popcorn, candy, gum, or
any other edibles, whether or not such "quick-type service" is effected through
machines or other dispensing devices.

      X.    Tenant shall not use or operate any electric or electrical devices
or other devices that emit sound waves or are dangerous to other tenants and
occupants of the Building or that would interfere with the operation of any
device or equipment or telephone, radio or television broadcasting or reception
from or within the Building or elsewhere, or with the operation of roads or
highways in the vicinity of the Building, and shall not place or install any
projections, antennae, aerials, or similar devices inside or outside of the
Premises, without the prior written approval of Landlord which approval shall
not be granted if such device could be seen or heard by any tenant or visitor to
the campus.

      Y.    Door keys for doors in the Premises will be furnished at the
Commencement of the Lease by Landlord. Tenant shall not affix additional locks
on doors and shall purchase duplicate keys only from Landlord and will provide
to Landlord the means of opening safes, cabinets, or vaults left on the Premises
following expiration or sooner termination of the Term. In the event of the loss
of any keys so furnished by Landlord, Tenant shall pay to Landlord the cost
thereof.

      Z.    Tenant (without Landlord's approval therefor, which approval will be
signified on Tenant's Plans submitted pursuant to the Lease) may not and Tenant
shall not permit or suffer anyone to: (a) cook in the Premises; (b) place
vending or dispensing machines of any kind in or about the Premises; (c) at any
time sell, purchase or give away, or permit the sale, purchase, or gift of food
in any form.

      AA.   Tenant shall not use the name of the Building or use pictures or
illustrations of the Building in advertising or other publicity without prior
written consent of Landlord. Landlord shall have the right to prohibit any
advertising by Tenant which, in Landlord's opinion, tends to impair the
reputation of the Building or its desirability for offices, and upon written
notice from Landlord, Tenant will refrain from or discontinue such advertising.

      BB.   Tenant assumes full responsibility for protecting its space from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed and secured.

                                     E - 3

<PAGE>

      CC.   Landlord reserves the right to rescind any of these Rules and
Regulations and make such other and further rules and regulations not
inconsistent with the express terms of the lease as in the reasonable judgment
of Landlord shall from time to time be needed for the safety, protection, care,
and cleanliness of the Building, the operation thereof, the preservation of good
order therein, and the protection and comfort of its tenants, their agents,
employees, and invitees, which Rules and Regulations when made and notice
thereof given to a tenant shall be binding upon him in like manner as if
originally herein prescribed. In the event of any conflict, inconsistency, or
other difference between the terms and provisions of these Rules and
Regulations, as now or hereafter in effect and the terms and provisions of the
Lease to which these Rules and Regulations are attached, Landlord shall have the
right to rely on the term or provision in either such Lease or such Rules and
Regulations which is most restrictive on Tenant and most favorable to Landlord.

                                     E - 4

<PAGE>

                                    EXHIBIT F

                             INTENTIONALLY OMITTED

                                     F - 1

<PAGE>

                                    EXHIBIT G

                              ESTOPPEL CERTIFICATE

      The undersigned ("Tenant") hereby certifies to____________________________
__________________________("___________"), as follows:

      1.    Lease. Tenant is the current tenant under that certain Lease dated
__________________, 20___ (the "Original Lease") by and between
_______________________________ ("Landlord") and Tenant, pursuant to which
Tenant leases approximately_____________square feet (the "Premises") in the
building located at___________________________________(the "Building").

      2.    No Modifications. The Original Lease has not been modified, changed,
altered, supplemented, amended or terminated in any respect, except as indicated
below (if none, please state "none"; the Original Lease, as modified, changed,
altered, supplemented or amended as indicated below, is referred to collectively
as the "Lease"):

             ______________________________________________________
             ______________________________________________________
             ______________________________________________________
             ______________________________________________________

      3.    Copy. A true, correct and complete copy of the Lease is attached
hereto.

      4.    Validity. The Lease represents the valid and binding obligation of
Tenant in accordance with its terms and is in full force and effect on the date
hereof. The Lease represents the entire agreement and understanding between
Landlord and Tenant with respect to the Premises, the Building and the land on
which the Building is situated. Tenant has not exercised any right or option to
terminate the Lease, and no such rights or options remain, except_____________.

      5.    No Concessions. Except as set forth in the Lease, Tenant is not
entitled to, and has made no agreement with Landlord or its agents or employees
concerning, free rent, partial rent, rebate of rent payments, credit or offset
or reduction in rent, or any other type of rental concession including, without
limitation, lease support payments, lease buy-outs, or assumption of any leasing
or occupancy agreements of Tenant.

      6.    Term. Except for ______________________________________________, all
conditions precedent to the commencement of the initial term of the Lease have
been fully satisfied or waived. The initial term of the Lease began on________,
20____. The termination date of the present term of the Lease, excluding
unexercised renewal terms, is__________________, 20___, or, if the commencement
date has not yet been set,_____months after the commencement date. [IF TRUE: The
commencement date has occurred and Tenant has accepted possession of and
currently occupies the entire Premises.] Tenant has not sublet all or any
portion of the Premises to any sublessee, has not assigned, transferred,
mortgaged, hypothecated or otherwise encumbered any of its rights or interests
under the Lease and has not entered into any license or concession agreements
with respect thereto, except for the following in accordance with the Lease: ___
_____________.

      7.    Options. Except as set forth in the Lease, Tenant has no outstanding
options or rights to renew or extend the term of the Lease, or expansion
options, or cancellation options, rights of first refusal, or rights of first
offer to lease other space within the Building. Tenant has no outstanding
options, rights of first refusal or rights of first offer to purchase the
Premises or any part thereof or all or any part of the Building and/or the land
on which the Building is situated.

                                     G - 1

<PAGE>


      8.    Rents. The obligation to pay rent began (or begins) on
__________________, 20___. The current monthly base rent payable under the Lease
is $.___________________. The monthly base rental payment (excluding pass
through charges) has been paid through the month of___________________,_____.
Tenant is also obligated to pay its proportionate share of ad valorem taxes,
insurance and operating expenses on the Building, to the extent provided in the
Lease. Tenant's estimated share of ad valorem taxes, insurance and operating
expenses on the Building has been paid by Tenant through ________________,_____.
Except for payments of its estimated share of ad valorem taxes, insurance and
operating expenses being paid in accordance with the Lease, no rent (excluding
security deposits described in Paragraph 9 below) has been paid more than one
(1) month in advance of its due date.

      9.    Security Deposits. Tenant's security deposit, if any, which has been
previously deposited with Landlord is $_________________(if none, please state
"none"). The security deposit___is, or_____ is not, represented by a letter of
credit.

      10.   No Default. To the best knowledge of Tenant, no event has occurred
and no condition exists that constitutes, or that with the giving of notice or
the lapse of time or both, would constitute, a default by Landlord or, to
Tenant's knowledge, Tenant under the Lease. As of the date set forth below, to
the best knowledge of Tenant, Tenant has no existing claims against Landlord or
defenses to the enforcement of the Lease by Landlord and Tenant is not currently
entitled to any rent abatements or offsets against the rents owing under the
Lease. Without limiting the foregoing, there are no development- and
construction-related deadlines related to obligations of, or items to be
accomplished by, Landlord under the Lease that have not been satisfied. To
Tenant's knowledge, Tenant's current use and operation of the Premises complies
with all covenants and operating requirements in the Lease.

      11.   Allowances. All required allowances, contributions or payments
(whether or not currently due and payable) by Landlord to Tenant on account of
Tenant's tenant improvements have been received by Tenant and all of Tenant's
tenant improvements have been completed in accordance with the terms of the
Lease, except as indicated below (if none, please state "none"):

             ______________________________________________________
             ______________________________________________________
             ______________________________________________________

      12.   No Bankruptcy Proceedings. No voluntary actions or, to Tenant's best
knowledge, involuntary actions are pending against Tenant under the bankruptcy,
insolvency, or reorganization laws of the United States or any state thereof.

      13.   Address. The current address for notices to be sent to Tenant under
the Lease is set forth below.

      14.   Reliance. Tenant acknowledges that______________________has or will
hereafter acquire [INSERT ADDRESSEE'S INTEREST AS MORTGAGEE OR INVESTOR AS THE
CASE MAY BE] and thus indirectly an interest in the Lease, the Premises, the
Building and the land on which the Building is located and that____________is
relying upon this Tenant's Estoppel Certificate in connection therewith. Tenant
further acknowledges that this Tenant's Estoppel Certificate may be relied upon
by, and inures to the benefit of, ___________ and each of its partners and any
current or future lender with a lien or mortgage upon the Building and each of
their respective successors and assigns.

      16.   Authority. The undersigned is duly authorized to execute this
Tenant's Estoppel Certificate on behalf of Tenant.

                                     G - 2

<PAGE>

Executed as of the______day of____________________, 20___.

                                     TENANT:

                                     VANDA PHARMACEUTICALS, INC.

                                     By: _______________________________________
                                         Name:
                                         Title:

Tenant's Current Address for Notices:

_____________________________________
_____________________________________
_____________________________________

                                     G - 3
<PAGE>

                                    EXHIBIT H

                        LEASE COMMENCEMENT DATE AGREEMENT

      This Lease Commencement Date Agreement is entered into this ______ day of
___, 20______, by MCC3, LLC ("Landlord"), a Delaware limited liability company,
and _____________________ ("Tenant"), a ___________________________________,
pursuant to the provisions of that certain Lease (the "Lease") dated
_________________, 20___, by and between Landlord and Tenant covering certain
space in the office building located at ________________________
______________________ (the "Building"). All terms used herein with their
initial letter capitalized shall have the meaning assigned to such terms in the
Lease.

                                   WITNESSETH:

1.    The Premises have been delivered to, and accepted by, the Tenant.

2.    The Commencement Date is the ______ day of ________________, 20__, and the
      Term Expiration Date is the day of _________, 20___.

3.    The number of square feet of rentable area in the Premises is __________
      rentable square feet.

4.    The amount of additional allowance expended by Landlord is _______________
      Dollars ($___________).

5.    The Annual Rent with respect to the Premises for the first Lease Year is
      an amount equal to the product of ____________________________Dollars
      ($_____________) multiplied by the total number of square feet of rentable
      area in the Premises. The amount of Annual Rent shall be increased as
      follows:

<TABLE>
<CAPTION>
               BASE
              ANNUAL            RENTABLE                                ADDITIONAL
  LEASE        RENT              SQUARE            BASE ANNUAL          ALLOWANCE
  YEAR       P.R.S.F.    X        FEET      =         RENT       +        CHARGE      =     ANNUAL RENT
<S>          <C>         <C>    <C>         <C>    <C>           <C>    <C>           <C>   <C>
 SECOND      $  23.69    X       17,002     =      $402,777.38   +      $30,773.62    =     $433,551.00
  THIRD      $  24.40    X       17,002     =      $414,848.80   +      $30,773.62    =     $445,622.42
 FOURTH      $  25.13    X       17,002     =      $427,260.26   +      $30,773.62    =     $458,033.88
  FIFTH      $  25.89    X       17,002     =      $440,181.78   +      $30,773.62    =     $470,955.40
  SIXTH      $  26.66    X       17,002     =      $453,273.32   +      $30,773.62    =     $484,046.94
 SEVENTH     $  27.46    X       17,002     =      $466,874.92   +      $30,773.62    =     $497,648.54
 EIGHTH      $  28.29    X       17,002     =      $480,986.58   +      $30,773.62    =     $511,760.20
  NINTH      $  29.14    X       17,002     =      $495,438.28   +      $30,773.62    =     $526,211.90
  TENTH      $  30.01    X       17,002     =      $510,230.02   +      $30,773.62    =     $541,003.64
ELEVENTH     $  30.91    X       17,002     =      $525,531.82   +      $      -0-    =     $525,531.82
</TABLE>

6.    As of the date hereof the Lease has not been modified and is in full force
      and effect and there are no defaults thereunder.

7.    The Base Year is the 12-month period beginning on _________, 20 ____ and
      ending on ____________, 20___.

                                      H-1

<PAGE>

8.    The Tenant's Share is ___% based on the Rentable Floor Area of Tenant's
      Space divided by the Total Rentable Floor Area of the Building
      (i.e., _______ rentable square feet).

9.    The Building Address is _________________________________________________.

10.   The amount of the unamortized costs per Section 2.4 of the Lease to be
      paid by Tenant in the event Tenant exercises its early termination option
      under Section 2.4 is $_______.

      IN WITNESS WHEREOF, Landlord and Tenant have set their hands and seals
hereunto and have caused this Lease Commencement Date Agreement to be executed
by duly authorized officials thereof, the day and year respectively set forth
hereinabove.

                                 LANDLORD:

                                 MCC3, LLC

                                 By: Spaulding and Slye MCC3 LLC, manager

                                     By: Spaulding and Slye LLC, manager

                                          By: _____________________________
                                              Name:
                                              Title:

                                 TENANT:

                                 VANDA PHARMACEUTICALS, INC.

                                 By: ______________________________________
                                     Name:
                                     Title:

                                      H-2

<PAGE>

                                    EXHIBIT I

                       ACCEPTABLE FORM OF LETTER OF CREDIT

Irrevocable Letter of Credit No.:___________________

_______________________________, 20___

____________

____________

_____________________

Account Party: __________________________________________

Beneficiary: ____________________________________________

    Amount:            $_____________________________________ U.S. Dollars

    Expiration Date:   _______________________,____

Ladies and Gentlemen:

We hereby issue this irrevocable, unconditional letter of credit number ________
(the "CREDIT") in your favor, payable in immediately available funds in one or
more draws of any sum or sums not exceeding in the aggregate ___________________
__________________________________/100 dollars ($_______________), by your
draft(s) at sight in the form attached hereto as Exhibit A presented at
_______________________.

This Credit shall be automatically renewed from year to year commencing on the
first anniversary of the date hereof unless we shall give 60 days prior written
notice to Beneficiary, by certified mail, return receipt requested, at the
address set forth above, of our intent not to renew this Credit at the
expiration of such 60 day period. During such thirty (60) day period, this
Letter of Credit shall remain in full force and effect and Beneficiary may draw
up to the full amount hereof when accompanied by the statement described in this
Credit.

We will accept any and all such representatives as authorized and any and all
statements delivered hereunder as conclusive, binding and correct without having
to investigate or having to be responsible for the accuracy, truthfulness,
correctness, or validity thereof, and notwithstanding the claim of any person to
the contrary.

Drafts presented under this Credit shall specify the number of this Credit as
set forth above and shall be presented on or before the Expiration Date hereof.

This Credit is assignable and transferable and may be transferred one or more
times, without charge, upon our receipt of your written notice that an agreement
has been executed to transfer or assign this Credit.

We hereby engage with you that drafts drawn under and in compliance with the
terms of this Credit will be duly honored upon presentation to us.

This Credit sets forth in full the terms of our undertaking and such undertaking
shall not in any way be modified, amended, amplified or limited by reference to
any document, instrument or agreement referred

                                      I-1

<PAGE>

to herein, or by any document, instrument, or agreement in which this Credit is
referred to, or to which this Credit relates, and any such reference shall not
be deemed to incorporate herein by reference any such document, instrument or
agreement.

Except as otherwise expressly stated herein, this Credit is subject to the
Uniform Customs and Practice for Documentary Credits (1993 Revision)
International Chamber of Commerce Publication No. 500, and to the extent not
inconsistent therewith, the laws of the Commonwealth of Virginia, including
without limitation, the Uniform Commercial Code in effect therein.

                                                    [BANK]

                                                    By: ________________________
                                                        Authorized Officer

                                      I-2

<PAGE>

                          EXHIBIT A TO LETTER OF CREDIT

                Acceptable Form of Sight Draft in Connection with
                      Irrevocable Standby Letter of Credit

To: Bank of America, N.A.

From: MCC3, LLC

Re: Irrevocable Standby Letter of Credit Number: __________________ (the "Letter
of Credit")

Upon receipt of this sight draft and the original Letter of Credit:

Pay to the order of: MCC3, LLC

the amount of _______________Dollars and _____________________cents.

                                      I-3