<PAGE>   1

                                                                   EXHIBIT 10.14

                                     LEASE

                                     BETWEEN

                      HIBBS/WOODINVILLE ASSOCIATES, L.L.C.

                                    LANDLORD,

                                       AND

                              XCYTE THERAPIES INC.

                                     TENANT

                                  FOR PREMISES

                                       AT


                               BOTHELL, WASHINGTON



                                                   DATED AS OF December 7, 2000



<PAGE>   2

                                      INDEX

<TABLE>
<CAPTION>
SECTION                                      TITLE                                        PAGE
<S>     <C>                                                                               <C>
1.      DEMISE AND TERM OF DEMISE............................................................3
2.      RENT, TAXES, ASSESSMENTS AND OTHER CHARGES...........................................5
3.      USE OF PREMISES: COMPLIANCE WITH LAWS...............................................14
4.      REPRESENTATIONS BY TENANT AND LANDLORD..............................................15
5.      INSURANCE...........................................................................16
6.      DAMAGE OR DESTRUCTION...............................................................18
7.      CONDEMNATION........................................................................19
8.      SUBORDINATION, ATTORNMENT, ESTOPPEL CERTIFICATE.....................................21
9.      REPAIRS, MAINTENANCE, ALTERATIONS, ETC..............................................23
10.     IMPROVEMENTS/TENANT'S WORK..........................................................25
11.     ASSIGNMENT, SUBLETTING AND MORTGAGING...............................................26
12.     INDEMNITY...........................................................................28
13.     DEFAULT PROVISIONS, LANDLORD'S REMEDIES.............................................30
14.     BANKRUPTCY AND INSOLVENCY...........................................................35
15.     ENTRY BY LANDLORD, ETC..............................................................37
16.     COVENANT OF QUIET ENJOYMENT.........................................................38
17.     EFFECT OF CONVEYANCE, LIMITS OF LIABILITY OF LANDLORD, DEFINITION OF "LANDLORD".....38
18.     SURRENDER, HOLDING OVER BY TENANT...................................................39
19.     CURING DEFAULTS; FEES AND EXPENSES..................................................40
20.     MECHANICS AND OTHER LIENS...........................................................40
21.     SIGNS, ADDRESS......................................................................41
22.     WAIVERS AND SURRENDERS TO BE IN WRITING, RIGHT TO TERMINATE.........................41
23.     COVENANTS BINDING ON SUCCESSORS AND ASSIGNS.........................................42
24.     RESOLUTION OF DISPUTES..............................................................42
25.     NOTICES.............................................................................43
26.     DEFINITIONS; HEADINGS; CONSTRUCTION OF LEASE........................................44
27.     FORCE MAJEURE.......................................................................45
28.     BROKERAGE...........................................................................46
29.     MISCELLANEOUS PROVISIONS............................................................46
30.     COMPLIANCE WITH ENVIRONMENTAL LAWS..................................................47
31.     SECURITY............................................................................51
32.     ACCESS..............................................................................51
33.     NET LEASE...........................................................................52
34.     RIGHT OF FIRST NEGOTIATION..........................................................52
35.     CAFETERIA SPACE.....................................................................53
36.     SECURITY DEPOSIT....................................................................55
</TABLE>



                                       i
<PAGE>   3

                                    EXHIBITS


EXHIBIT A -      THE PROPERTY, BUILDINGS, PARKING LOT AND COMMON AREA

EXHIBIT B -      DEMISED PREMISES

EXHIBIT C -      RENTAL SCHEDULE



                                       ii
<PAGE>   4

                                      LEASE


       THIS lease (the "Lease") is entered into this as of December 7, 2000
between HIBBS/WOODINVILLE ASSOCIATES, LLC, a Washington limited liability
company (the "Landlord"), and XCYTE THERAPIES, INC., a Delaware corporation (the
"Tenant").

                              W I T N E S S E T H:

       WHEREAS, Landlord is the owner of that certain land located in Bothell,
Washington and the improvements and buildings thereon (the "Property"), more
particularly described in Exhibit A attached hereto and made a part hereof, and

       WHEREAS, various buildings located on the land are known as the
Administrative Building consisting of approximately 91,290 square feet, the
Production Building consisting of approximately 171,816 square feet, the North
Barn consisting of approximately 13,576 square feet and the South Barn
consisting of approximately 6,763 square feet (the Administrative Building, the
Production Building, the North Barn and the South Barn are sometimes
collectively referred to as the "Buildings");

       WHEREAS, there is also located on the Property a paved and striped
parking area consisting of approximately 774 parking spaces (hereinafter
referred to as the "Parking Lot"), and

       WHEREAS, the Property, Buildings and the Parking Lot are depicted on
Exhibit A attached hereto.

       WHEREAS, Tenant is desirous of leasing space on the third floor of the
Production Building consisting of approximately 40,500 rentable square feet more
particularly described and outlined on the plan designated as Exhibit B attached
hereto ("Demised Premises") and Landlord is desirous of leasing the Demised
Premises to Tenant on the terms and conditions set forth herein.

       NOW, THEREFORE, in consideration of the above recitals and for other good
and valuable consideration, the receipt and sufficiency of which is acknowledged
by each of the parties hereto, Landlord and Tenant agree as follows:

       1. DEMISE AND TERM OF DEMISE

              1.1 (a) The commencement date of the Lease shall be earlier of a
date 30 days following notice to Tenant by Landlord that the Demised Premises
are available for occupancy or December 1, 2000 (the "Commencement Date").



                                       3
<PAGE>   5

                     (b) This Lease shall be and become effective as of the
Commencement Date. As of the Commencement Date, the terms and provisions of this
Lease shall govern and control the respective rights and obligations of Landlord
and Tenant with respect to the Demised Premises and the Property.

              1.2    (a) Landlord demises and leases unto Tenant, and Tenant
hires and takes from Landlord, in consideration of the rents to be paid and the
covenants, agreements and conditions to be performed, observed and fulfilled by
Tenant, the Demised Premises described on Exhibit B attached hereto and made a
part hereof (as same may be modified from time to time in accordance with this
Lease).

                     (b) Within sixty (60) days of the Commencement Date,
Landlord shall cause its architect or engineer to measure the rentable area of
the Demised Premises, such rentable area measurement to be performed and
calculated in accordance with the most recent standards for floor measurement of
office buildings adopted by the Building Owners and Managers Association (BOMA).
Landlord shall give written notice to Tenant of the rentable area of the Demised
Premises which measurement shall be deemed to be the exact rentable area of the
Demised Premises for purposes of this Lease. Until the rentable area is measured
as aforesaid, rent for the Demised Premises shall be paid by Tenant based on the
approximate square footage of the Demised Premises (40,500 square feet) and upon
submission by Landlord to Tenant of the actual measured area, the parties agree
the rent shall be paid based on the actual measured square footage of rentable
area of the Demised Premises.

              1.3 The common area of the Property (the "Common Area") shall mean
those interior and exterior portions of the Property designated on Exhibit A,
including the improvements and facilities used for parking areas, access and
perimeter roads, landscaped areas, exterior walks, and washrooms and common
hallways located in the Administrative Building, the access areas to the
Cafeteria, and the Parking Lot as of the date hereof as shown on Exhibit A.
Tenant shall have the non-exclusive right, during the term of this Lease, to use
the Common Area, in a reasonable manner, for itself, its employees, invitees,
guests, contractors and licensees for parking, ingress, egress and similar uses
and Tenant acknowledges that all other tenants or occupants of all or any
portion of the Property for themselves, and their employees, invitees, guests,
contractors, subtenants (if any) and licensees shall also have similar rights to
use the Common Area. Landlord shall have the right, at any time and from time to
time (a) to grant to any tenant or tenants which hereafter leases or lease all
or any of the Property the same rights which inure to Tenant and other tenants
as herein described, and/or (b) to (i) limit Tenant to the use of seventy (70)
parking spaces in the Parking Lot and to designate the location thereof and (ii)
alter, modify, increase or reduce the Common Area, provided that access to and
from the Demised Premises shall not be materially or adversely affected thereby.
All Common Areas shall be subject to the exclusive control and management of



                                       4
<PAGE>   6

Landlord, subject to the rights of Tenant and any other tenants of the Property
to use and have access to the Common Area, and subject to such rights as
Landlord shall have pursuant to this Lease or otherwise. The freight elevator
located on the northside of the Building and specifically noted on Exhibit B
shall be considered Common Area to which Tenant has unlimited access. Landlord
will provide Tenant with access to the Leased Premises through the loading dock
doors on the north side of the Building and adjacent Common Areas for delivery
of materials during reasonable business hours; provided, however, that Tenant
shall make every effort to insure that the doors are securely closed when not in
use.

              1.4 The term of the Lease (the "Term") shall commence on the
Commencement Date and shall terminate and expire midnight on December 1, 2010
(the "Expiration Date"). Tenant shall, within ten (10) days after request by
Landlord, execute, acknowledge and deliver to Landlord an instrument in form and
substance reasonably acceptable to Landlord confirming (i) the Commencement Date
and the Expiration Date, but no such instrument shall be required to make the
provisions of this Section 1.4 effective.

              1.5 Tenant shall have the option to renew this Lease for two
renewal term of Five (5) years each (herein referred to as the "Renewal
Term(s)") which shall commence on the day following the expiration of the
initial ten (10) year Term, or the first renewal term, as the case may be, and
end on the fifth anniversary of the commencement date of the Renewal Term unless
the Renewal Term shall sooner terminate pursuant to the terms of this Lease or
otherwise. The Renewal Term shall commence only if (i) Tenant shall have
notified Landlord of Tenant's exercise of such renewal option in writing at
least nine (9) months prior to the expiration of Term or the first renewal term
as the case may be, and (ii) immediately prior to the expiration of the initial
ten (10) year Term, or the first renewal term, as the case may be, this Lease
shall be in full force and effect and no Event of Default shall have occurred
and be continuing. Time is of the essence with respect to the giving of the
notice of Tenant's exercise of a renewal option. The Renewal Term shall be upon
all of the terms, covenants and conditions hereof binding upon Tenant and
Landlord, except that (a) the basic annual rent (as defined in Section 2.1)
shall be as provided in Exhibit C and (b) there shall be no further renewal
right after the expiration of the Second Renewal Term. Upon the commencement of
the Renewal Term, (x) any reference to "this Lease", to the "Term", the "term of
this Lease" or any similar expression shall be deemed to include the then
current Renewal Term, and (y) the Expiration Date shall become the expiration of
the then current Renewal Term.

       2. RENT, TAXES, ASSESSMENTS AND OTHER CHARGES

              2.1 Commencing as of the Commencement Date, Tenant shall pay to
Landlord basic annual rent as Shown on Exhibit C based on the rentable area of
the



                                       5
<PAGE>   7

Demised Premises, as adjusted from time to time in accordance with the terms and
conditions of this Lease (the "Basic Annual Rent").

              2.2 Such Basic Annual Rent shall be paid by Tenant to Landlord in
equal monthly installments, in advance, on the first day of each calendar month
during the Term without notice, demand, abatement, deduction, counterclaim or
set off of any kind. Tenant shall pay the rent in lawful money of the United
States. Any obligation of Tenant for payment of rent which shall have accrued
during the Term shall survive the expiration or termination of this Lease.

              2.3 The installments of Basic Annual Rent payable under Section
2.1 for the partial calendar months at the beginning and end of the Term shall
be pro-rated in the proportion of the number of days in the partial calendar
month to the number of days in the year.

              2.4 Whenever under the terms of this Lease any sum of money is
required to be paid by Tenant in addition to the Basic Annual Rent, and said
additional amount so to be paid shall be designated as "Additional Rent," and
collectible as such with any installment of rental thereafter falling due
hereunder, or, if no such installment thereunder shall fall due, on demand. Rent
or rental for purposes of this Lease shall mean Basic Annual Rent plus all
Additional Rent, including, but not limited to, Tenant's Proportionate Share of
Taxes and Operating Expenses.

              2.5 "Tenant's Taxes" shall mean all taxes, assessments, license
fees and other governmental charges or impositions levied or assessed against or
with respect to Tenant's personal property, furnishings, equipment, movable
partitions, business machines and other trade fixtures installed, located or
attached to the Property. Tenant shall pay all Tenant's Taxes before delinquency
and, at Landlord's request, shall furnish Landlord satisfactory evidence
thereof. If any lien shall at any time be filed against the Property or any part
thereof with respect to Tenant's Taxes not paid by Tenant when due, or any
judgment, attachment or levy is filed or recorded against the Property or any
part thereof with respect thereto, Tenant, within thirty (30) days after the
attachment thereof, shall cause the same to be discharged of record by payment,
deposit, bond, order of a court of competent jurisdiction or otherwise. If
Tenant shall fail to cause such lien, judgment, attachment or levy to be
discharged within the period aforesaid, then, in addition to any other right or
remedy, Landlord may, but shall not be obligated to, discharge the same by
bonding proceedings, if permitted by law (and if not so permitted, by deposit in
court). Any amount so incurred by Landlord, including all costs and expenses
paid by Landlord in connection therewith, together with interest thereon at the
rate of 15% per annum (or, if lower, the maximum rate permitted by law) from the
respective dates of Landlord's so incurring any such amount, cost or expenses,
shall constitute additional rent payable by Tenant under this Lease and shall be
paid by Tenant to Landlord on demand.



                                       6
<PAGE>   8

              2.6 For purposes of this Lease, the following terms shall be
defined as follows:

                     (a) "Tenant's Proportionate Share" shall mean the ratio,
expressed as a percentage, of the number of rentable square feet comprising the
Demised Premises from time to time (approximately 40,500 square feet as of the
Commencement Date) (which shall hereafter be adjusted upon any increase or
reduction based on the measurement of the Demised Premises under Section 1.2(c)
or otherwise in accordance with this Lease) to the agreed total number of
rentable square feet in the Buildings (283,445), that is to say 14.3% as of the
Commencement Date, subject to later adjustment in accordance herewith.

                     (b) "Fiscal Year" shall mean each fiscal year of Landlord
or part thereof during the Term, as such fiscal year may be changed at any time
and from time to time in the sole discretion of Landlord. The fiscal year of
Landlord as of the date hereof is January 1 through December 31.

                     (c) "Lease Year" shall mean a period of one (1) year
commencing on the Commencement Date and thereafter commencing upon each
anniversary thereof.

                     (d) "Operating Expenses" shall mean and include all
amounts, expenses and costs of whatever nature that Landlord incurs because of
or in connection with the operation, insuring, maintenance, equipping, securing,
policing, protection, repair, or management (the "Operating Expenses"),
Operating Expenses shall be determined on an accrual basis in accordance with
sound management accounting principles consistently applied and shall include,
but shall not be limited to, the following:

                            (1) Costs and expenses of maintenance, equipping,
       securing, policing, garbage disposal, and repair of the Property,
       including Common Areas.

                            (2) Costs of maintenance and replacement of
       landscaping.

                            (3) Costs of providing utilities and services to the
       Common Area.

                            (4) Premiums for property (including coverage for
       earthquake and flood if carried by Landlord), liability, worker's
       compensation, plate glass, rental income and other insurance and
       commercially reasonable deductible amounts under such insurance paid in
       connection with repair or restoration of the Property after any damage or
       destruction.



                                       7
<PAGE>   9

                            (5) Fees and charges for licenses, permits and
       inspections reasonably necessary for the operation of the Property.

                            (6) Costs of capital improvements required to meet
       changed governmental regulations or which are, reasonably and in good
       faith, intended to reduce Operating Expenses, such costs, together with
       interest on the unamortized balance at the rate paid by Landlord on funds
       borrowed for the purpose of constructing such capital improvements (or,
       if Landlord funds such costs itself in lieu of borrowing such amount,
       deemed interest equivalent to the interest at a commercially reasonable
       rate that would have been incurred had such amount been borrowed by
       Landlord), to be amortized over such reasonable periods as Landlord shall
       determine, consistent with generally accepted accounting principles.

                            (7) Costs associated with the construction, repair
       or maintenance of any on-site Property management offices or related
       facilities.

                            (8) Property management fees.

                            (9) Costs for accounting, legal and other
       professional services incurred in connection with the management and
       operation of the Property and the calculation of Operating Expenses and
       Taxes (as defined below).

                            (10) A reasonable allowance for depreciation on
       machinery and equipment used to maintain the Property and on other
       personal property used by Landlord on the Property in connection with the
       management and operation of the Property consistent with generally
       accepted accounting principles.

                            (11) The reasonable cost of contesting the validity
       or applicability of any governmental enactments that may affect the
       Property.

                            (12) Wages, salaries, fees, related taxes, insurance
       costs, benefits (including amounts payable under medical, pension and
       welfare plans and any amounts payable under collective bargaining
       agreements) and reimbursement of expenses of and relating to all
       personnel principally engaged in operating, repairing, managing,
       replacing and maintaining the Property.

                            (13) All supplies, tools, equipment and materials
       used in operating, equipping, repairing and maintaining the Property.

                            (14) Cost of security and security personnel,
       devices and systems (including, without limitation, any security office
       on the Property).



                                       8
<PAGE>   10

Notwithstanding any contrary provision of this Lease, Operating Expenses shall
not include: (i) capital improvements other than those specifically enumerated
above in clause (6) of the definition of Operating Expenses; (ii) costs of
special or additional services rendered to individual tenants (including Tenant)
for which a special charge is made; (iii) interest and principal payments on
loans or indebtedness secured by the Property or ground rent payments (if any);
(iv) costs of improvements for other tenants of the Property; (v) costs of
services or other benefits of a type which are not available to Tenant but which
are available to other tenants or occupants, and costs for which Landlord is
reimbursed by other tenants of the Property other than through payment of
tenants' shares of Operating Expenses and Taxes, (vi) leasing commissions,
attorneys' fees and other expenses incurred in connection with negotiations of
disputes with other tenants, prospective tenants or occupants of the Property,
or in connection with the enforcement or violation by Landlord or such tenant or
occupant of any lease; (vii) depreciation or amortization, other than as
specifically enumerated above in the definition of Operating Expenses, (viii)
costs, fines or penalties incurred due to Landlord's violation of any law or
governmental regulation, (ix) the excess of the cost of supplies and services
provided by subsidiaries and affiliates of Landlord, or Landlord itself, over
competitive costs by independent suppliers and contractors of comparable
buildings in the vicinity of the Property; and (x) Taxes.

       If Landlord does not furnish during any Fiscal Year any particular work
or service (the cost of which, if performed by Landlord, would constitute an
Operating Expense) to a tenant which has undertaken to perform such work or
service in lieu of the performance thereof by Landlord, then Operating Expenses
shall be deemed to be increased by an amount equal to the additional expense
which would reasonably have been incurred during such Fiscal Year by Landlord if
it had, at its cost, furnished such work or service to such tenant; provided,
however, Landlord shall not be entitled to be reimbursed for an amount in excess
of the actual Operating, Expenses. If during any Fiscal Year less than 95% of
the leasable square feet of the Property is leased and occupied by tenants, then
the Operating Expenses for such Lease Year shall be increased proportionately to
reflect the amount of the Operating Expenses which, in Landlord's reasonable
judgment, would have been incurred during such Lease Year if 95% of the leasable
square feet of the Property was leased and occupied by tenants.

                     (e) "Taxes" shall mean and include all real property taxes
and general, special or district assessments or other governmental impositions,
of whatever kind, nature or origin, imposed on or by reason of the ownership or
use of the Property; governmental charges, fees or assessments for transit
(including without limitation, area wide traffic improvement assessments and
transportation system management fees), housing, police, fire or other
governmental service or purported benefits to the Property; personal property
taxes assessed on the personal property of Landlord used in or related to the
operation of the Property service payments in lieu of taxes and taxes and



                                       9
<PAGE>   11

assessments of every kind and nature whatsoever levied or assessed in addition
to, in lieu of or in substitution for existing or additional real or personal
property taxes on the Property or the personal property described above, taxes
and assessments on the gross or net rental receipts of Landlord derived from the
Property (excluding, however, state and federal personal or corporate income
taxes measured by the net income of Landlord from all sources and inheritance,
franchise or estate taxes), and the reasonable cost of contesting by appropriate
proceedings the amount or validity of any taxes, assessments or charges
described above. Taxes shall also include any personal property taxes imposed
upon the furniture, fixtures, machinery, equipment, apparatus, systems and
appurtenances of Landlord used in connection with the Property for the operation
thereof. Taxes shall also include the amount of all fees, costs and expenses
(including, without limitation, attorneys' fees and court costs), if any, paid
or incurred by Landlord each Fiscal Year in seeking or obtaining any refund or
reduction of Taxes or for contesting or protesting any imposition of taxes,
whether or not successful and whether or not attributable to Taxes assessed,
paid or incurred in such Fiscal Year.

              2.7 (a) In addition to the Basic Annual Rent, Tenant shall pay,
with respect to each Fiscal Year, Tenant's Proportionate Share of all Operating
Expenses and Taxes. Tenant's Proportionate Share of Operating Expenses shall be
paid in monthly installments in advance on the first day of each calendar month
during such Fiscal Year in the Term in amounts sufficient to satisfy payment of
the Operating Expenses for such Fiscal Year as reasonably estimated by Landlord
from time to time prior to, or during, any Fiscal Year and communicated to
Tenant by written notice (the "Estimated Operating Expense Adjustment"). If
Landlord does not deliver such a notice (an "Estimate") prior to the
commencement of any Fiscal Year, Tenant shall continue to pay Estimated
Operating Expense Adjustment as provided in the most recently received Estimate
(or Updated Estimate, as defined below) until the Estimate for such Fiscal Year
is delivered to Tenant. If, from time to time during any Fiscal Year, Landlord
reasonably determines that Operating Expenses for such Fiscal Year have
increased or will increase, Landlord may deliver to Tenant an updated Estimate
("Updated Estimate") for such Fiscal Year, Monthly payments of Estimated
Operating Expense Adjustment paid subsequent to Tenant's receipt of the Estimate
or Updated Estimate for any Fiscal Year shall be in the amounts provided in such
Estimate or Updated Estimate, as the case may be. In addition, Tenant shall pay
to Landlord within thirty (30) days after receipt of such Estimate or Updated
Estimate, the amount, if any, by which the aggregate of the Estimated Operating
Expense Adjustment provided in such Estimate or Updated Estimate, as the case
may be, with respect to prior months in such Fiscal Year exceeds the aggregate
of the Estimated Operating Expense Adjustment paid by Tenant with respect to
such prior months.

       After the end of each Fiscal Year, Landlord shall send to Tenant a
statement (the "Final Operating Expense Adjustment Statement") showing (i) the
calculation of the Operating Expense Adjustment for such Fiscal Year, (ii) the
aggregate amount of the Estimated Operating Expense Adjustment previously paid
by Tenant for such Fiscal



                                       10
<PAGE>   12

Year, and (iii) the amount, if any, by which the aggregate amount of the
installments of Estimated Operating Expense Adjustment paid by Tenant with
respect to such Fiscal Year exceeds or is less than the Expense Adjustment for
such Fiscal Year. Tenant shall pay the amount of any deficiency to Landlord
within thirty (30) days of the sending of such statement. At Landlord's option,
any excess shall either be credited against payments past or next due hereunder
or refunded by Landlord, provided Tenant is not then in default hereunder.

       On reasonable advance written notice given by Tenant within thirty (30)
days following the receipt by Tenant of the Final Operating Expense Adjustment
Statement, Landlord shall make available to Tenant Landlord's books and records
maintained with respect to the Operating Expenses for such Fiscal Year. If
Tenant wishes to contest any item within any Final Operating Expense Adjustment
Statement, Tenant shall do so in a written notice (a "Contest Notice") received
by Landlord within thirty (30) days following Tenant's inspection of Landlord's
books and records, but in any event not later than sixty (60) days after
Landlord shall have made its books and records available to Tenant for
inspection. The Contest Notice shall specify in detail the item or items being
contested and the specific grounds therefor. However, the giving of such Contest
Notice shall not relieve Tenant from the obligation to pay any deficiency in
such statement or the Landlord from the obligation to pay (by refund or credit)
any excess in such statement in accordance with this Section. Notwithstanding
anything else in this Section to the contrary, if Tenant fails to give such
Contest Notice within said thirty (30) day period or fails to pay any deficiency
in such statement in accordance with this Section, whether or not contested,
Tenant shall have no further right to contest any item or items in such
statement and Tenant shall be deemed to accept such statement.

       For thirty (30) days after receipt of Tenant's Contest Notice, Landlord
and Tenant shall attempt to resolve such dispute. If such dispute shall not be
resolved within such thirty (30) day period (the resolution to be evidenced by a
writing signed by Landlord and Tenant), the dispute shall be resolved by
arbitration as follows: The party desiring arbitration (the "First Party") shall
give notice to that effect to the other party, and shall in such notice appoint
a person as arbitrator on its behalf. Within fifteen (15) days after its receipt
of such notice, the other party by notice to the First Party shall appoint an
arbitrator on its behalf, if the second arbitrator shall not be so appointed
within such fifteen (15) days, the First Party may give a second notice to the
other party demanding that the other party appoint an arbitrator within ten (10)
days of its receipt of such second notice and if the other party shall not do so
within such ten (10) day period, then the arbitrator appointed by the First
Party shall appoint the second arbitrator. The two arbitrators appointed
pursuant to the above shall try to appoint the third arbitrator. If, within
twenty (20) days after the appointment of the second arbitrator, they shall not
have agreed upon the appointment of the third arbitrator, either of the parties
upon notice to the other party may request such appointment by the Office of the
American Arbitration Association (the "AAA") closest to the Property, or in its
absence, refusal, failure or



                                       11
<PAGE>   13

inability to act, may apply to the presiding judge of the court of the State of
Washington with Jurisdiction over the matters covered by this Lease (the
"Court") for the appointment of such third arbitrator and the other party shall
not raise any question as to the Court's power and jurisdiction to entertain the
application and make the appointment. Each arbitrator shall be a qualified
person who shall have at least ten (10) years experience in a calling connected
with the matter of the dispute. The arbitration shall be conducted in accordance
with the then prevailing, rules of the AAA, under the auspices of the office of
the AAA closest to the Property, The arbitrators shall render their decision and
award in writing upon concurrence of at least two (2) of their members, within
thirty (30) days after the appointment of the third arbitrator. Such decision
and award shall be binding and conclusive on the parties, shall constitute an
"award" of the arbitrators within the meaning of the AAA rules and applicable
law, and counterpart copies thereof shall be delivered to each of the parties.
In rendering such decision and award, the arbitrators shall not add to, subtract
from, or otherwise modify the provisions of this Lease and shall apply
applicable federal and/or state law. Judgment may be had under the decision and
award of the arbitrators so rendered 'in any court of competent jurisdiction'.
Each party shall pay the fees and expenses of the arbitrator appointed by or for
it. The fees and expenses of the third arbitrator, and all other expenses of the
arbitration (other than the fees and disbursements of attorneys or witnesses for
each party), shall be borne by the parties equally.

                     (b) Tenant's Proportionate Share of Taxes with respect to
each Fiscal Year shall be paid in monthly installments in advance on the first
day of each calendar month during such Fiscal Year in the Term in amounts
sufficient to satisfy payment of Tenant's Proportionate Share of Taxes For such
Fiscal Year as reasonably estimated by Landlord from time to time prior to or
during any Fiscal Year and communicated to Tenant by written notice (the
"Estimated Tax Payment," and the actual, final amount due from Tenant on account
of Taxes, the "Tax Payment")). If Landlord does not deliver such a notice (an
"Estimate") prior to the commencement of any Fiscal Year, Tenant shall continue
to pay Estimated Tax Payment as provided in the most recently received Estimate
(or Updated Estimate, as defined below) until the Estimate for such Fiscal Year
is delivered to Tenant. If, from time to time during any Fiscal Year, Landlord
reasonably determines that Taxes for such Fiscal Year have increased or will
increase, Landlord may deliver to Tenant an updated Estimate ("Updated
Estimate") for such Fiscal Year. Monthly payments of Estimated Tax Payment paid
subsequent to Tenant's receipt of the Estimate or Updated Estimate for any
Fiscal Year shall be in the amounts provided in such Estimate or Updated
Estimate, as the case may be. In addition, Tenant shall pay to Landlord within
thirty (30) days after receipt of such Estimate or Updated Estimate, the amount,
if any, by which the aggregate of the Estimated Tax Payment provided in such
Estimate or Updated Estimate, as the case may be, with respect to prior months
in such Fiscal Year exceeds the aggregate of the Estimated Tax Payment paid by
Tenant with respect to such prior months.



                                       12
<PAGE>   14

                     (c) Within sixty (60) days after a final real estate tax
bill with respect to the Property is received by Landlord or any other
determination of Taxes with respect to a Fiscal Year occurs (whether due to the
receipt of a bill, the filing of a return, the settlement or adjudication of
disputed Taxes, or otherwise), or as soon thereafter as practicable, Landlord
shall send to Tenant a statement (the "Tax Adjustment Statement") showing (i)
the calculation (or recalculation) of the Tax Payment for such Fiscal Year, (ii)
the aggregate amount of the Estimated Tax Payment previously paid by Tenant for
such Fiscal Year, and (iii) the amount, if any, by which the aggregate amount of
the installments of Estimated Tax Payment paid by Tenant with respect to such
Fiscal Year exceeds or is less than the Tax Payment for such Fiscal Year. Tenant
shall pay the amount of any deficiency to Landlord within thirty (30) days after
the sending of such statement. At Landlord's option, any excess shall either be
credited against payments past or next due hereunder or refunded by Landlord,
provided Tenant is not then in default hereunder.

              2.8 Tenant shall (i) pay (at the rates charged by the utility
providers to Landlord) 100% of all charges for electric current (including,
without limitation, for lighting the Demised Premises and supplying HVAC to the
Demised Premises), water, gas (if any), telephone, and other utilities consumed
relative to the Demised Premises, and (ii) be responsible (at Tenant's expense)
of providing, installing, repairing, maintaining and operating all conduits,
risers, cables, pipes and other electrical, mechanical and other facilities and
installations which are required in connection with the consumption of such
utilities at the Demised Premises. Landlord shall be responsible for providing,
installing, repairing, maintaining and operating all conduits, risers, cables,
pipes and other electrical and mechanical facilities which are required to
deliver of such utilities from the property line to the Demised Premises at a
capacity of 707.5 kva, except that Tenant shall be solely responsible for any
costs associated with increasing the levels of such utilities beyond current
capacity of 707.5 kva.

              2.9 Landlord shall provide the following services for the
Property: (i) city water from regular building outlets for drinking, lavatory
and toilet purposes, (ii) janitorial and maintenance service for Common Areas
(it being understood that Tenant at its expense shall provide janitorial service
to the Demised Premises using contractors reasonably acceptable to Landlord
which shall provide insurance coverage reasonably acceptable to Landlord), (iii)
all utilities for the Common Area, and (iv) periodic inspections of the drain
valves, hydrants and fire pumps on the Property. The cost of the services to be
provided by Landlord described in this Section 2.9 shall constitute Operating
Expenses.

              2.10 If Tenant shall fail to pay, within ten (10) days of the date
when the same is due and payable, any rent or other charge pursuant to this
Lease (including, without limitation, basic annual rent, or additional rent),
Tenant shall upon demand pay Landlord a late charge of five (5%) percent of the
amount past due, or, if such late charge



                                       13
<PAGE>   15

shall exceed the maximum late charge permitted by law, the Tenant shall pay the
maximum late charge permitted by law. Additionally, such amounts not paid shall
accrue interest at the rate of one and one-half percent (1.5%) (or the highest
rate allowable by law if lower) per month until paid. Such interest shall be
cumulative.

              2.11 If requested by Landlord, Tenant promptly, shall install, at
Tenant's expense, such electrical meters and other installations and equipment
as shall be required so that the electrical current consumed in the Demised
Premises may be separately metered and paid by Tenant. In the event Landlord
separately meters the Common Areas, the cost of such current separately metered
and consumed in connection with the Common Areas shall be included in the
Operating Expenses. In the event the Demised Premises is separately metered,
Tenant shall not be obligated to pay any portion of the utilities consumed in
any portion of the Buildings which is leased or available for lease (other than
the Demised Premises and the Common Areas), but Tenant will in such event pay
its proportionate share of utilities consumed in connection with the Common
Areas.

       3. USE OF PREMISES: COMPLIANCE WITH LAWS

              3.1 Subject to Section 3.2, the Demised Premises may be used only
for office purposes and pharmaceutical development and related manufacturing,
subject to and in accordance with all Legal Requirements (hereafter defined) and
for no other purpose. Landlord shall not be deemed to have made any
representation, warranty or agreement that any such use by Tenant or all or any
of the Property shall be or remain lawful or otherwise permitted under any Legal
Requirements.

              3.2 Tenant shall not use or occupy or permit anything to be done
in or on the Demised Premises or the Property, in whole or in part, in a manner
which would in any way violate any certificate of occupancy affecting the
Demised Premises or the Property, make void or voidable any insurance then in
force with respect thereto, or which may make it more costly or impossible to
obtain fire or other insurance thereon, cause or be apt to cause structural or
other material injury to the Buildings or any part thereof, constitute a public
or private nuisance, or which may violate any present or future, ordinary or
extraordinary, foreseen or unforeseen Legal Requirements or Insurance
Requirements, (hereinafter defined). In addition, Tenant shall not allow any
animals to be kept on the Premises or use or allow the Demised Premises to be
used for residential or dwelling purposes.

                     3.2.1 Landlord acknowledges that Tenant requires a clean
environment to operate its business. Accordingly, Landlord agrees to amend the
Rules and Regulations for the Property to prohibit all tenants from bringing
live animals, dead animals, animal parts or animal refuse and waste into any
part of the Production Building, including the Common Areas and leased areas in
the Production Building; provided, however, that such prohibition shall not
include any food or clothing items whatsoever.



                                       14
<PAGE>   16

In the event Landlord discovers or learns that any Tenant, or guest of any
Tenant, has violated this provision, Landlord shall immediately notify Tenant
and take all reasonable steps to eliminate the violation; provided, however,
that in no event shall Landlord be liable for any damage caused by any tenant's
failure to comply with such Rules and Regulations and in no event shall Landlord
be obligated by this Section 3.2.1 to evict any other tenant.

              3.3 Tenant shall, at its expense, promptly comply or cause
compliance with, and not jeopardize or make more costly Landlord's compliance
with (but it being agreed that except as may otherwise be expressly set forth to
the contrary in this Lease, compliance with the following shall be the
obligation of Tenant at Tenant's expense):

                     3.3.1 the requirements of every statute, law, ordinance,
regulation, rule, requirement, order or directive, including but not limited to
the Americans with Disabilities Act of 1990, now or hereafter made by any
federal, state, city or county government or any department, political
subdivision, bureau, agency, office or officer thereof, or of any other
governmental authority having jurisdiction with respect to and applicable to (i)
the Demised Premises, (ii) the condition, equipment, maintenance, use or
occupation of the Demised Premises, including, without limitation, such of the
foregoing applicable to the making of any alteration or addition in or to any
structure appurtenant thereto and to pollution and environmental control, and
(iii) subtenants of Tenant (all of the foregoing being herein referred to as
"Legal Requirements"), and

                     3.3.2 the rules, regulations, orders and other requirements
of the National and any local Board of Fire Underwriters, or other body having
the same or similar functions and having jurisdiction of and which are
applicable to, the Demised Premises and of any liability, fire or other
insurance policy which Tenant or Landlord is required hereunder to maintain
(herein referred to as "Insurance Requirements"), whether or not such compliance
involves changes in the use of the Demised Premises or any part thereof, or be
required on account of any particular use to which the Demised Premises, or any
part thereof may be put, and whether or not any such Legal Requirements or
Insurance Requirements be of a kind not now within the contemplation of the
parties hereto.

       4. REPRESENTATIONS BY TENANT AND LANDLORD

              4.1 Tenant covenants and agrees that it will accept the Demised
Premises in its existing "as is" state or condition as of the Commencement Date
and without any representation or warranty, express or implied, in fact or by
law, by Landlord or its agents and without recourse to Landlord or its agents,
as to the nature, condition, or usability thereof, or the use or occupancy which
may be made thereof, except as may be otherwise specifically provided in this
Lease.



                                       15
<PAGE>   17

              4.2 Landlord agrees that it will not establish any new air vents
within twenty (20) feet of Tenant's air intakes on the roof without prior notice
to Tenant.

              4.3 Nothing, in this Lease shall limit or restrict the right of
the Landlord, from time to time, and in the Landlord's sole discretion, to
execute, enter into, amend, modify, terminate and/or cancel any leases or
occupancy agreements respecting the Property (or any parts thereof), other than
this Lease, nor shall any such acts or actions by Landlord give rise to any
right or remedy in favor of Tenant.

       5. INSURANCE

              5.1 During the Term, Tenant, at Tenant's sole cost and expense,
shall carry and maintain:

                     5.1.1 Commercial general public liability insurance,
including property damage liability coverage, protecting and indemnifying
Tenant, Landlord (and naming Landlord, its managing agent and the holder of any
mortgage encumbering the Property as additional insured thereon) and any
designee of Landlord against any and all claims for damages to person or
property, or for loss of life or of property occurring in or about the Demised
Premises or arising out of the ownership, maintenance, use or occupancy thereof
or from any of the matters indicated in Section 12 or elsewhere in this Lease
against which Tenant is required to indemnify Landlord. The coverage limits of
the policy shall be those amounts reasonably requested by Landlord but at least
$1,000,000 Combined Single Limit.

                     5.1.2 All policies of insurance carried by Tenant pursuant
to this Lease shall name as insureds Landlord, and if required, any fee
mortgagee or other designee of Landlord, as their respective interests may
appear; provided, however, that rent insurance, if any, shall be carried solely
in favor of Landlord. To the extent Landlord receives and applies proceeds of
rent insurance, if any, Tenant shall receive a credit against fixed rental
payable hereunder. Subject to the rights of any fee mortgagee, all losses made
under the policy or policies shall be adjusted by Landlord and the proceeds
thereof shall be payable to the Landlord. The originals or duplicate originals
of such policies or certificates shall be delivered to Landlord except when such
originals or duplicate originals are required to be held by any fee mortgagee,
in which case certificates of insurance shall be delivered to Landlord. Policies
or certificates with respect to renewal policies shall be delivered to Landlord
by Tenant (i) initially not later than the Commencement Date and (ii) thereafter
not less than 30 days prior to the expiration of the original policies, or
succeeding renewals, as the case may be, in each case together with receipts or
other evidence that the premiums thereon have been paid for at least six months.
In the event the Tenant is not able to deliver the insurance policies or
certificates prior to the renewal date as aforesaid, the Tenant may deliver
binders in lieu of such policies or certificates to the Landlord; provided,
however, that the insurance



                                       16
<PAGE>   18

policies or certificates shall be delivered within sixty (60) days after the
expiration of the original policies or succeeding renewals but in no event later
than fifteen (15) days prior to the expiration date of the binder. Premiums on
policies shall not be financed in any manner whereby the lender, on default or
otherwise, shall have the right or privilege of surrendering or canceling the
policies, provided, however, that Tenant may pay premiums in quarter or
semi-annual installments so long as such method of payment does not constitute a
default under any fee Mortgage. Each policy of insurance required under this
program shall have attached thereto an endorsement that such policy shall not be
canceled or modified without at least thirty (30) days prior written notice to
the Landlord, and, if required, to any fee mortgagee. Each such policy shall
contain a provision that no act or omission of Tenant shall affect or limit the
obligation of the insurance company to pay the amount of any loss sustained and
a provision waiving any right of the insured against the Landlord. All insurance
required to be carried by Tenant under this Lease shall be effected under valid
and enforceable policies issued by insurers which are licensed to do business in
the State of Washington and have been approved in writing by Landlord (which
approval Landlord agrees not to unreasonably withhold).

                     5.1.3 Fire and extended coverage insurance covering
Tenant's personal property, improvements and alterations, against loss or damage
by fire and other risks now or hereafter embraced by "all risk" coverage, with
vandalism and malicious mischief endorsements, to the extent of at least 90% of
then full replacement values. The proceeds from any such policy shall be used by
Tenant for the replacement of personal property or the restoration of Tenant's
improvements or alterations.

                     5.1.4 Worker's compensation insurance as required by Legal
Requirements.

              5.2 Landlord and Tenant hereby release each other and each other's
officers, directors, shareholders, principals, employees and agents, from
liability or responsibility for any loss or damage to property covered by valid
and collectible fire insurance with standard extended coverage endorsement,
whether such insurance is carried by Tenant or any other tenant or occupant of
the Property, or any part thereof. This release shall apply not only to
liability and responsibility of the parties to each other, but shall also extend
to liability and responsibility for anyone claiming through or under the parties
by way of subrogation or otherwise. This release shall apply even if the fire or
other casualty shall have been caused by the fault or negligence of a party or
anyone for whom a party may be responsible. However, this release shall apply
only with respect to loss or damage actually recovered from an insurance
company. This release shall not apply to loss or damage of property of a party
unless the loss or damage or personal injury occurs during the times the fire or
extended coverage insurance policies of a party contain a clause or endorsement
to the effect that any release shall not adversely affect or impair the policies
or prejudice the right of the party to recover thereunder. Landlord and Tenant
each agree that any fire and extended coverage insurance policies covering the



                                       17
<PAGE>   19

Property or contents shall include this clause or endorsement as long as the
same shall be obtainable without extra cost, or if extra cost shall be charged
therefor, so long as the other party pays the extra cost. If extra cost shall be
chargeable, the party whose policy is subject to the extra cost shall advise the
other thereof, and of the amount of the extra cost. Tenant shall also obtain the
agreement of its worker's compensation insurance carrier to waive all right of
subrogation against Landlord.

              5.3 No policy furnished by Tenant pursuant to Section 5.1 shall
have a deductible or self-insured retainage amount in excess of $10,000, except
that public liability insurance may have a deductible of up to $50,000, fire and
extended coverage may have a deductible of up to $50,000, and earthquake
coverage may have a deductible of up to $ 100,000.

       6. DAMAGE OR DESTRUCTION

              6.1 Tenant shall immediately give notice to Landlord of every case
of fire, explosion, destruction or damage by the elements or other casualty.

              6.2 If at any time during the Term, the Demised Premises shall be
damaged in whole or in material part, or wholly or partially destroyed, by fire
or other casualty (including any casualty for which insurance coverage was not
obtained) of any kind or nature, regardless of whether said damage or
destruction resulted from an act of God, the fault of the Tenant, the Landlord,
or from any cause whatsoever, then, in that event neither party shall be
required to replace, repair or rebuild the damaged or destroyed improvements
(except that Tenant shall be required to turn over to Landlord the insurance
proceeds payable in connection with such damage or destruction); provided,
however, that if the damage or destruction results from the sole or partial
fault of Tenant and is not fully covered by insurance or the insurance proceeds
received by the Landlord are insufficient therefor, the Tenant shall be required
to replace, repair or rebuild the damaged or destroyed improvements to
substantially their condition prior to the casualty event.

              6.3 Upon thirty (30) days written notice of the casualty event,
the Landlord shall have the option, to (i) replace, repair and rebuild any and
all damaged or destroyed improvements, or (ii) to terminate this Lease as of a
specified date, in which latter event all rent shall be apportioned as of the
date of such damage or destruction, and this Lease shall terminate as of the
specified date, but all insurance proceeds shall be paid to Landlord as
aforesaid, and Tenant shall remain obligated under Section 6.2 in the event the
insurance proceeds are insufficient to fully replace, repair or rebuild. In the
event Landlord proceeds to replace, repair and rebuild, this Lease shall not
terminate, Landlord shall cause the Demised Premises and the Common Areas to be
repaired or restored to the extent insurance proceeds are available to the
Landlord as speedily as its good faith efforts will allow, and there shall be a
proportional abatement of the basic and additional



                                       18
<PAGE>   20

rent reserved under this Lease during such period as the Demised Premises remain
untenantable based on the extent to which the Demised Premises are untenantable.
Tenant shall also have the option to terminate this Lease effective as of the
date of the damage or destruction, in the event: (a) a portion of the Demised
Premises which is material to Tenant's operations have been damaged or destroyed
and are untenantable, and Landlord shall not provide to Tenant within 120 days
after the date of damage or destruction substitute space of reasonably
equivalent size and functionality (either on a temporary or permanent basis),
and (b) (x) the damaged or destroyed portion of the Demised Premises cannot
reasonably be repaired within 120 days of such date as set forth in an opinion
to that effect of an architect or engineer retained by Tenant (at its expense)
and reasonably acceptable to Landlord, (y) Landlord shall not give written
notice of Landlord's election under clause (i) above within the specified thirty
(30) day period, or (z) Landlord, after having elected to repair, shall not
restore the Demised Premises substantially to its condition prior to the event
causing the damage or destruction. Tenant's options to terminate shall be
exercised by written notice to Landlord within 45 days of the casualty event,
with respect to clauses (x) and (y) and within 135 days after the date of such
damage or destruction with respect to clause (z).

              6.4 Tenant agrees that the foregoing provisions are in lieu of any
other rights or remedies that Tenant may have against Landlord pursuant to the
laws of the State of Washington in the event of any damage or destruction to all
or any part of the Demised Premises or any other portion of the Property.

       7. CONDEMNATION

              7.1 If the whole of the Demised Premises shall be taken under the
power of eminent domain by any public or private authority or in the event of
sale to such authority in lieu of formal proceedings of eminent domain, then
this Lease shall cease and terminate as of the date of such taking or sale,
which date is defined, for all purposes of this Section 7, as the date the
public or private authority has the right to possession of the property being
taken or sold.

              7.2 In the event of any taking or sale of all or any part of the
Demised Premises, the entire proceeds of the award or sale shall be paid to
Landlord, and Tenant shall have no right to any part thereof except to the
extent of any tenant improvements which are owned by Tenant and for which Tenant
makes a timely claim to the condemning authority, installed in accordance with
Section 10.2 as depreciated over the term of the Lease, provided, however, that
nothing contained herein shall be construed to prevent Tenant from recovering
any allowance for its personal property or for moving expenses which the law
permits to be made to tenants, so long as such allowance does not diminish the
award paid to Landlord.



                                       19
<PAGE>   21

              7.3 If any public or private authority shall, under the power of
eminent domain, make a taking, or should a sale in lieu thereof occur of less
than the whole of the Demised Premises, then Landlord may, at its election,
terminate this Lease by giving Tenant written notice of the exercise of its
election within twenty (20) days after the nature and extent of the taking or
sale have been finally determined. In the event of termination by Landlord under
the provisions of this Section 7.3, this Lease shall cease and terminate as of
the date of such taking or sale. If Landlord does not so terminate this Lease,
subject to Section 7.5, this Lease shall continue in full force and effect.

              7.4 In the event of a partial taking or sale not resulting in a
termination of this Lease pursuant to Section 7.3, Landlord shall, if Landlord's
fee mortgagee consents thereto, effectuate all such repairs and restoration as
are necessary to restore the Demised Premises for the operation of Tenant's
business, to the extent net proceeds of the award or sale are available, but
nothing contained herein shall be construed so as to require Landlord to pay any
cost of repair in excess of the net proceeds of the award or sale price received
from the condemning authority and allocable to the Demised Premises. In such
case, as of the date of the taking, the basic and additional rent reserved
hereunder shall be reduced, but only until such time as Landlord completes its
repair or restoration in accordance herewith, by an amount that is in the same
ratio to the rental then in effect as the value of the portion of the Demised
Premises taken or sold bears to the total value of the Demised Premises
immediately before the date of taking or sale. If the net proceeds of the award
or sale are not sufficient to repair or restore the Demised Premises, Tenant
may, at its own expense, complete such repairs or restoration, in accordance
with the terms of this Lease.

              7.5 Tenant shall have the option, to be exercised by written
notice to Landlord within fifteen (15) days after such taking or sale, to
terminate this Lease in the event (i) more than 20% of the square footage of the
Demised Premises is taken in condemnation, or (ii) the Lease continues
notwithstanding a partial condemnation of more than 20% of the square footage of
the Demised Premises and within 120 days after the condemnation, Landlord does
not restore the Demised Premises substantially to their condition prior to the
condemnation.

              7.6 The taking of the Demised Premises or any part thereof by
military or other public authority shall constitute a taking of the Demised
Premises under the power of eminent domain only when the use and occupancy by
the taking authority has continued for longer than 90 consecutive days. During
the 90-day period all the provisions of this Lease shall remain in full force
and effect, except that rental reserved (but not the additional rent) shall be
abated during such period of taking based on the extent to which the taking
interferes with Tenant's use of the Demised Premises. Landlord shall be entitled
to whatever award may be paid for the use and occupation of the Demised Premises
for the period involved.



                                       20
<PAGE>   22

       8. SUBORDINATION, ATTORNMENT, ESTOPPEL CERTIFICATE

              8.1 This Lease is and shall be subject and subordinate in all
respects to all bona fide mortgages which may now or hereafter affect the
Property, to each and every advance made or hereafter to be made under such
mortgages, and to all renewals, modifications, consolidations, replacements, and
extensions of such mortgages irrespective of the date of the execution and/or
recording thereof (provided, however, that Landlord shall use its good faith
efforts to obtain from such mortgagee a non-disturbance agreement as described
in the last sentence of this Section 8.1). This Section 8.1 shall be
self-operative and no further instrument of subordination shall be required. In
confirmation of such subordination, Tenant agrees, without payment to Tenant of
any consideration therefor, to execute and deliver any instrument that Landlord
or the holder of any such mortgage or any of their respective successors in
interest may request to evidence such subordination within ten (10) days of
request. Tenant hereby irrevocably appoints Landlord its attorney in fact to
execute such instrument on behalf of Tenant, should Tenant refuse or fail to do
so promptly after request. The mortgages to which this Lease is, at the time
referred to, subject and subordinate shall sometimes be collectively called
"superior mortgage." Landlord shall, upon the request of Tenant, use its good
faith efforts to obtain a non-disturbance agreement from the holder of any
superior mortgage, to the effect that in the event of the foreclosure of the
superior mortgage Tenant's possession of the Demised Premises shall not be
disturbed provided that Tenant shall not be in default under this Lease,
provided, however, (1) Landlord (i) shall not be required to incur any costs or
liabilities in connection therewith, and (ii) shall not have any liability to
Tenant if Landlord shall fail to procure such agreement, and (2) this Lease and
the obligations of Tenant shall not be affected should Landlord fail to procure
such agreement despite such good faith efforts.

              8.2 In the event of any act or omission of Landlord which would
give Tenant the right, immediately or after lapse of a period of time, to cancel
or terminate this Lease, or to claim a partial or total eviction, Tenant shall
not exercise such right: (i) until it has given written notice of such act or
omission to the holder of each superior mortgage whose name and address shall
previously have been furnished to Tenant in writing, and (ii) unless such act or
omission shall be one which is not capable of being remedied by Landlord or such
mortgage holder within thirty (30) days, until a thirty (30) day period for
remedying such act or omission shall have elapsed following the giving of such
notice, provided such holder shall with due diligence give Tenant written notice
of intention to, and commence and continue to, remedy such act or omission.

              8.3 If the holder of a superior mortgage shall succeed to the
rights of Landlord, then at the request of such party so succeeding to
Landlord's rights ("Successor Landlord") and upon such Successor Landlord's
written agreement to accept Tenant's attornment, Tenant shall attorn to and
recognize Successor Landlord as Tenant's landlord under this Lease and shall
promptly, without payment to Tenant of any consideration



                                       21
<PAGE>   23

therefor, execute and deliver any instrument that such Successor Landlord may
request to evidence such attornment. Tenant hereby irrevocably appoints Landlord
or Successor Landlord the attorney-in-fact of Tenant to execute and deliver such
instrument on behalf of Tenant, should Tenant refuse or fail to do so promptly
after request. Upon such attornment, this Lease shall continue in full force and
effect as, or as if it were, a direct lease between Successor Landlord and
Tenant upon all of the terms, conditions, and covenants as are set forth in this
Lease and shall be applicable after such attornment, except that Successor
Landlord shall not: (i) be obligated to repair, restore, replace, or rebuild the
Property, in case of total or substantially total damage or destruction, beyond
such repair, restoration or rebuilding as can reasonably be accomplished with
the net proceeds of insurance actually received by, or made available to,
Successor Landlord; (ii) be liable for any previous act or omission of Landlord;
(iii) be subject to any prior defenses or offsets; (iv) be bound by any
modification of this Lease not expressly provided for in this Lease or by any
previous prepayment of more than one month's rent, unless such modification or
prepayment shall have been expressly approved in writing by the holder of the
superior mortgage through or by reason of which Successor Landlord shall have
succeeded to the rights of Landlord; or (v) be liable for the performance of
Landlord's covenants and agreements contained in this Lease to any extent other
than to Successor Landlord's ownership in the Property, and no other property of
Successor Landlord shall be subject to levy, attachment, execution or other
enforcement procedure for the satisfaction of Tenant's remedies.

              8.4 In the event that a bona fide institutional lender shall
request reasonable modifications to this Lease, then Tenant shall not
unreasonably withhold, condition or delay its written consent to such
modifications provided that the same do not, in Tenant's reasonable judgment
(and Tenant shall not demand the payment to Tenant of any consideration for
consent thereto), increase the obligations of Tenant hereunder or materially
adversely affect Tenant's operations or leasehold interest hereby.

              8.5 Tenant agrees, at any time, (and without payment to Tenant of
any consideration therefor), upon not less than ten (10) days' prior notice by
Landlord, to execute, acknowledge and deliver to Landlord, (i) a current
certified income statement and balance sheet of Tenant and (ii) a statement in
writing addressed to Landlord (and/or Landlord's designee) certifying that this
Lease is unmodified and in full force and effect (or if there have been
modifications, that the same is in full force and effect as modified and stating
the modifications), stating the dates to which the rent has been paid, stating
such other information concerning this Lease and Tenant's tenancy as Landlord
reasonably shall request, and stating whether or not there exists any default in
the performance by Landlord of any term, covenant or condition contained in this
Lease and, if so, specifying each such default, it being intended that any
financial reports and such statement delivered pursuant to this Section 8.5 may
be relied upon by Landlord and by any mortgagee or prospective mortgagee of any
mortgage affecting the Property or any purchaser or prospective purchaser of the
Property. When so requested by Landlord, such



                                       22
<PAGE>   24

statement shall be submitted in writing under oath by a person or persons having
knowledge of the statements made therein.

       9. REPAIRS, MAINTENANCE, ALTERATIONS, ETC.

                     9.1.1 Except as otherwise expressly provided in this Lease,
Tenant at its cost shall maintain, repair and replace or improve as needed, all
portions of the Demised Premises (while Tenant is occupying same as permitted
hereunder), and the Landlord shall not be required to furnish any services or
facilities or to maintain or make any repairs, replacements, improvements or
alterations in or to the Demised Premises. Tenant shall be responsible for and
shall pay all costs for adding any additional power supply requirements to the
Property in excess of 707.5 kva, the current power supply available to the
Property.

                     9.1.2 Landlord shall (subject to reimbursement by Tenant of
Operating Expenses) be responsible for maintenance, repairs or replacement of
the roof, HVAC systems (except any HVAC equipment installed by or exclusively
for Tenant), and elevator systems, unless the same is occasioned by the acts or
omissions of Tenant, its agents, employees, guests, licensee, invitees, guests,
subtenants (if any), subtenants, assignees, successors or independent
contractors, in which event Tenant shall be responsible for such repairs,
maintenance or replacement.

              9.2 Landlord shall not be liable for any failure of water supply,
gas or electric current or of any utility or for any injury or damage to person
or property caused by or resulting from gasoline, oil, steam, gas, electricity,
or hurricane, tornado, flood, wind or similar storms or disturbances, or water,
rain or snow which may leak or flow from the street, sewers, gas mains or any
sub-surface area or from any part of the Property, or leakage of gasoline or oil
from pipes, appliances, sewer or plumbing works therein, or from any other
place, or for interference with light or other incorporeal hereditaments by
anyone, or caused by operations by or of any public or quasi-public work.

              9.3 Tenant shall have the right to make, at its sole cost and
expense, additions, alterations and changes (collectively, "Alterations") in or
to the Demised Premises, provided Tenant shall not then be in default in the
performance of any of the covenants in this Lease, subject to the following
conditions:

                     9.3.1 No Alterations shall be commenced except after
fifteen (15) days' prior written notice to Landlord, which shall include
reasonably detailed final plans and specifications and working drawings of the
proposed Alterations and the name of the contractor.



                                       23
<PAGE>   25

                     9.3.2 No Alterations costing in excess of $25,000 (and no
Alterations which, when aggregated with all other Alterations, proposed or
performed during the Term shall exceed $50,000) and no structural or Building
system or exterior Alterations, or Alterations affecting any Common Area,
regardless of cost, shall be made without the prior written consent of Landlord,
which shall not be unreasonably withheld as to interior, non-structural,
non-Building system Alterations.

                     9.3.3 No Alterations shall be undertaken until Tenant shall
have procured and paid for, so far as the same may be required from time to
time, all permits and authorizations of all governmental authorities having
jurisdiction, and shall have provided to Landlord evidence substantiating to
Landlord's reasonable satisfaction that such permits and authorizations have
issued.

                     9.3.4 All Alterations shall be made promptly (unavoidable
delays excepted), in a good and workmanlike manner and in compliance with all
applicable permits, authorizations and all Legal Requirements and all Insurance
Requirements.

                     9.3.5 Anything in this Lease to the contrary
notwithstanding, no Alterations shall be made by Tenant if they reduce the value
or serviceability of the Property, increase the risk of casualty or the cost of
insurance or increase the risk of environmental pollution.

                     9.3.6 Before commencing the Alterations and at all times
during construction, Tenant's contractor shall maintain builder's risk insurance
coverage satisfactory to Landlord.

                     9.3.7 During the initial build-out, any contract between
Tenant and a general contractor for such project shall include a provision that
Landlord may enforce the completion guaranties against the contractor if Tenant
fails to do so.

                     9.3.8 If the estimated cost of the Alterations exceeds
$100,000, Tenant at its cost shall furnish to Landlord a performance and
completion bond issued by an insurance company qualified to do business in
Washington and reasonably acceptable to Landlord, in a sum equal to the cost of
the Alterations (as determined by the construction contract between Tenant and
its contractor) guaranteeing the completion of the Alterations free and clear of
all liens and other charges, and in accordance with the plans and
specifications. Landlord will waive the requirement of a performance and
completion bond upon receipt of performance guarantees satisfactory to lender in
its reasonable discretion. Landlord shall waive the requirement of a bond if the
Tenant places cash or its equivalent equal to twenty percent (20%) of the
estimated costs of the Alterations in escrow. Upon proof of lien releases, the
escrowed funds shall be returned to Tenant with interest upon either (a)
substantial completion of the Alterations or (b) restoration of the Leased
Premises to the condition they were in prior to commencement



                                       24
<PAGE>   26

of such alterations. The requirements of this Section 9.3.8 shall not apply to
the initial build-out described in Section 9.3.7.

              9.4 All Alterations, whether temporary or permanent in character,
which may be made upon the Demised Premises either by Landlord or Tenant, except
furniture, trade fixtures or equipment (other than HVAC equipment) installed at
the expense of Tenant, shall be the property of Landlord and shall remain upon
and be surrendered with the Demised Premises as a part thereof at the expiration
or any termination of this Lease, without compensation to Tenant; provided,
however, Landlord may elect within thirty (30) days before the expiration of the
Term, or within five (5) days after termination of the Term, to require Tenant,
at Tenant's cost, to remove all or any portion of nonbuilding standards or
non-approved Alterations that Tenant has made to the Demised Premises at any
time before or during the Term. If Landlord so elects, Tenant at its cost shall
restore the Demised Premises to the condition designated by Landlord in its
election, and repair any damage caused by the removal of Alterations, before the
last day of the Term, or within thirty (30) days after notice of election is
given, whichever is later. This Section shall survive the expiration or
termination of this Lease.

              9.5 Notwithstanding Section 9.4, all fixtures and personal
property owned and installed by Tenant, except all HVAC equipment, casework
(including lab benches and sinks), all walls and items inside the walls, all
items above the grid, all plumbing conduit equipment, all electrical conduit
equipment and all air handling equipment, shall be and remain the property of
Tenant and may be removed by Tenant at the expiration of this Lease.

              9.6 If Tenant is not then in default of any provisions of this
Lease, Tenant shall have the right to remove from the Demised Premises
immediately before the expiration of the Term, or within twenty (20) days after
the sooner termination of the Term, any trade equipment and other equipment (not
including any building equipment) and furniture, which has been affixed to the
Demised Premises by Tenant, as long as Tenant at its cost promptly restores any
damage caused by the removal.

       10. IMPROVEMENTS/TENANT'S WORK

              10.1 Landlord shall have no obligation to perform, or contribute
to the payment for any construction, alterations or improvement, fitting or
fixturing to the Demised Premises to prepare same for use or occupancy by Tenant
or otherwise, except as expressly provided in Section 10.2 below.

              10.2 If Tenant desires to do any work ("Tenant's Work") with
respect to the Demised Premises, including any repairs, replacements or
improvements or alterations, such work shall be undertaken by Tenant, at
Tenant's sole cost and expense



                                       25
<PAGE>   27

and shall include structural reinforcement, enclosure and screening as required
by Landlord.

              10.3 Subject to review and approval by Landlord as set forth
herein, Tenant may install the following:

                     (a) A security system in the Premises, including a
restricted common access on both the passenger and freight elevators to the
third floor (Tenant shall work reasonably with Landlord to utilize the existing
security in the Buildings

                     (b) Three (3) 350 kva backup generators at a location
adjacent to or on the roof of the Building, mutually agreeable to Landlord and
Tenant.

                     (c) Additional air handling units on the roof above the
Demised Premises.

       11. ASSIGNMENT, SUBLETTING AND MORTGAGING

              11.1 Neither Tenant, nor Tenant's successors or assigns, shall
(unless expressly permitted to do so) assign, mortgage, pledge or encumber this
Lease, in whole or in part, or sublet the Demised Premises, in whole or in part,
or permit the same or any portion thereof to be used or occupied by others, or
enter into a management contract or other arrangement whereby the Demised
Premises shall be managed and operated by anyone other than the then owner of
Tenant's leasehold estate, nor shall this Lease be assigned or transferred by
operation of law, without the prior consent in writing of Landlord in each
instance. If this Lease be so assigned or transferred, or if all or any part of
the Demised Premises be sublet or occupied by anybody other than Tenant,
Landlord may collect rent from the assignee, transferee, subtenant or occupant,
and apply the net amount collected to the rent reserved herein, but no such
assignment, subletting, occupancy or collection shall be deemed a waiver of any
agreement, term, covenant or condition of this Lease, or the acceptance of the
assignee, transferee, subtenant or occupant as tenant, or a release of Tenant
from the performance or further performance by Tenant of the terms, covenants
and conditions of this Lease, and Tenant shall continue to be liable under this
Lease. The consent by Landlord to an assignment, mortgage, pledge, encumbrance,
transfer, management contract or subletting shall not be construed to relieve
Tenant from obtaining the express consent in writing of Landlord to any further
assignment, mortgage, pledge, encumbrance, transfer, management contract or
subletting. Landlord shall have the right to reasonably withhold its consent to
an assignment or subletting (except as provided in Section 11.5), mortgage,
pledge or other encumbrance. Notwithstanding anything to the contrary herein
contained, an assignment of this Lease shall include, without limitation the
following: (a) if Tenant shall be a corporation and fifty percent (50%) or more
of its voting stock or all or substantially all its assets shall be sold,
mortgaged, assigned, pledged, encumbered or otherwise transferred (other than as



                                       26
<PAGE>   28

collateral security for a bona fide loan to a bona fide lender or in a public
stock offering) (and whether in one (1) single transaction or in more than one
(1) successive transaction); or (b) if Tenant shall be a partnership, limited
liability company, joint venture, syndicate or other group and all or any
portion of the interest of any partner, member or other equity holder shall be
sold or otherwise transferred (however this provision shall not, as to a
corporation or other entity whose stock or other equity interests are publicly
traded on a recognized stock exchange, be applicable to sales of stock or other
equity interests on such stock exchange).

              11.2 If Tenant shall desire to assign this Lease or sublet all or
a portion of the Premises, Tenant shall submit to Landlord a written request for
Landlord's consent to such assignment or subletting, which request shall include
the following information: (a) the name and address of the proposed assignee or
subtenant; (b) in the case of a proposed subletting, a description identifying
the space to be sublet and the term of such subletting; (c) the nature and
character of the business of the proposed assignee or subtenant; (d) in the case
of a proposed assignment, a current financial statement of the proposed
subtenant or assignee; and (e) the proposed assignment or sublease.

              11.3 Tenant, within twenty (20) days of its receipt of Landlord's
request therefor, shall reimburse Landlord for all reasonable out-of-pocket
costs incurred by Landlord in considering whether or not to consent, including
reasonable attorney's fees and disbursements and the reasonable costs of making
investigations regarding the proposed subtenant or assignee. In the event
Landlord grants its consent, but before the subtenant or assignee shall take
possession, Tenant shall deliver to Landlord a fully-executed counterpart of the
sublease or instrument of assignment.

              11.4 If Tenant shall sublease any portion of the Premises or
assign this Lease, Tenant shall pay to Landlord one hundred percent (100%) of
any consideration received by Tenant (net of reasonable costs incurred by Tenant
to effect any such assignment or sublet, such as advertising, brokerage, legal
and construction expenses and the reasonable agreed then value of Tenant's
Improvements to the space amortized over the remaining Term (both initial and
renewal) of this Lease) from the subtenant or assignee, as the case may be, to
the extent such consideration exceeds the Basic Annual Rent and Additional Rent
payable hereunder.

              11.5 Notwithstanding the provisions of Section 11.1 to the
contrary:

                     (a) Tenant, with the prior consent of Landlord but subject
to all terms and provisions of this Lease (including, without limitation, the
permitted use of the Demised Premises under this Lease), may assign this Lease
to an Affiliate of Tenant, as hereafter defined, provided such assignee remains
an Affiliate of Tenant for the remainder of the term of this Lease, as same may
be renewed or extended. The term "Affiliate" shall mean any corporation which
controls, is controlled by, or is under



                                       27
<PAGE>   29

common control with Tenant ("control" means ownership of more than fifty percent
(50%) of the beneficial interest thereof).

                     (b) Any assignment pursuant to the provisions of this
Section 11.5 shall be conditioned upon: (i) not later than twenty (20) days
prior to the effective date of the assignment the delivery by Tenant to
Landlord, of (1) a notice to Landlord of such assignment, setting forth the name
and address of such assignee, and the facts which, pursuant to this Section
11.5, allow Tenant to assign this Lease without the consent of Landlord, and (2)
a fully executed counterpart of such assignment, which shall provide, among
other things, that the assignee fully assumes all liabilities and obligations of
Tenant in respect of the Lease from and after the effective date of such
assignment (without thereby releasing or relieving Tenant of or from any such
liabilities and obligations in any way), and which otherwise must be in form and
substance reasonably acceptable to Landlord, and (ii) the delivery by Tenant to
Landlord, not later than ten (10) days after request therefor by Landlord, and
in any event prior to the effective date of the assignment, of such other
documentation respecting the business and identity of the assignee as the
Landlord reasonably may request.

                     (c) Any subletting pursuant to the provisions of this
Section 11.5 shall be automatically subject to all of the terms and provisions
of this Lease (including, without limitation, the permitted use of the Demised
Premises under this Lease) and shall be conditioned upon, inter alia, (i) the
delivery by Tenant to Landlord, not later than twenty (20) days prior to the
effective date of the sublease, of a notice to Landlord requesting consent to
such sublease, setting forth the name and address of the subtenant, and the
nature of the business of the subtenant, and (ii) the delivery by Tenant to
Landlord, not later than ten (10) days after request therefor by Landlord, and
in any event prior to the effective date of the sublease, of such other
documentation respecting the business and identity of the subtenant as the
Landlord reasonably may request. No such subletting will in any way release or
relieve Tenant from any obligations or liabilities under this Lease.

              11.6 Notwithstanding any assignment of this Lease or subletting of
all or any part of the Demised Premises, whether made with or without Landlord's
consent, the Tenant originally named herein, and each successor Tenant, shall be
and remain jointly and severally liable for all obligations of Tenant hereunder.

       12. INDEMNITY

       Notwithstanding that joint or concurrent liability may be imposed upon
Landlord by statute, ordinance, rule, regulation, order, or court decision,
Tenant shall, notwithstanding any insurance furnished pursuant hereto or
otherwise, indemnify, protect, defend and hold harmless Landlord from and
against any and all liability, fines, suits, claims, obligations, damages,
losses, penalties, demands, actions and judgments,



                                       28
<PAGE>   30

and costs and reasonable expenses of any kind or nature (including reasonable
attorneys' fees), by anyone whomsoever, arising after or relating to or accruing
during the period after the date hereof and due to or arising out of:

              12.1 any work or thing done in, on or about the Demised Premises
or the Common Area or any part thereof by Tenant or anyone claiming through or
under Tenant or the respective employees, agents, licensees, contractors,
servants or subtenants of Tenant or any such person;

              12.2 any use, possession, occupation, operation, maintenance or
management of the Demised Premises or any part thereof, or the Common Area or
any part thereof by Tenant, including, without limitation, any air, land, water
or other pollution caused by Tenant;

              12.3 any negligence or wrongful act or omission on the part of
Tenant or any person claiming through or under Tenant or the respective
employees, agents, licensees, Invitees, guests, subtenants (if any),
contractors, servants or subtenants of Tenant or any such person;

              12.4 any accident or injury to any person (including death) or
damage to property (including loss of property) occurring in or on the Demised
Premises or any part thereof or the Common Area or any part thereof and arising
from actions or omissions of Tenant or the employees, agents, licensees,
invitees, guests, subtenants (if any) contractors, servants or subtenants of
Tenant;

              12.5 any failure on the part of Tenant to perform or comply with
any of the covenants, agreements, terms, provisions, conditions or limitations
contained in this Lease; and

              12.6 any failure on the part of Tenant to perform or comply with
Legal Requirements or Insurance Requirements.

       In case any claim, action or proceeding is raised or brought against
Landlord (and/or any of the other indemnified parties above described) by reason
of any of the foregoing, Landlord, shall promptly provide notice of such action
or proceeding to Tenant. No delay by Landlord in giving such notice to Tenant
shall in any way impair, waive or affect the obligations of Tenant to indemnify,
defend, and hold harmless Landlord except to the extent of actual prejudice to
Tenant arising solely and directly from such delay. Tenant, at Tenant's expense,
thereupon shall assume and, through competent counsel, diligently conduct the
defense of such claim, action or proceeding. Upon such assumption by Tenant,
Landlord, at the expense of Tenant, shall cooperate with Tenant in all
reasonable respects in the conduct of such defense. The duty of Landlord to
cooperate shall (to the extent reasonable) include, but not be limited to, at
the



                                       29
<PAGE>   31

expense of Tenant, making available then present employees of Landlord and/or
its Affiliates to act as witnesses and consult with counsel, and assist in the
location and production of documents. Landlord shall, to the extent reasonable,
subject to such reasonable confidentiality requirements as Landlord may impose,
and at the cost of Tenant (including without limitation reproduction costs),
make available to Tenant the books and records of Landlord relevant to the
proceedings. The obligations of Tenant shall include but not be limited to,
taking all steps necessary or appropriate to the defense or settlement of such
claim, action, proceeding or litigation. Provided that Tenant has performed and
is performing its obligations pursuant to this Section 12, Landlord may
participate, through counsel of Landlord's choice, at Landlord's expense, in the
defense of any such claim, action, proceeding or litigation, but Tenant shall
direct and control the defense thereof Tenant or its counsel shall keep Landlord
apprised at all times of the status of the action or proceeding. The
establishment of limits of coverage for the insurance required by Section 5
shall not serve in any way to limit Tenant's obligations pursuant to this
Section 12. Anything herein to the contrary notwithstanding, (i) Tenant shall
not enter into or consent or agree to the settlement of any claim, litigation,
action, or suit respecting which for Tenant is obligated to indemnify, or defend
Landlord pursuant hereto, without the express prior written consent of Landlord,
in Landlord's sole discretion, unless, in each such case (as demonstrated to the
reasonable satisfaction of Landlord): (1) Tenant has and does fully and
completely indemnify and hold Landlord harmless from and against all liability,
fines, suits, claims, obligations, damages, losses, penalties, demands, actions
and judgments, and costs and reasonable expenses of any kind or nature
(including reasonable attorneys' fees), by anyone whomsoever, resulting from or
arising, out of such settlement: and (2) Landlord is fully released from all
liability, fines, suits, claims, obligations, damages, losses, penalties,
demands, actions and judgments, and costs and reasonable expenses of any kind or
nature respecting such claim, litigation, action, or suit, and (3) such
settlement shall not in any manner adversely affect the Property, or the use,
development, maintenance, repair or occupancy thereof, and (ii) Tenant shall not
issue, disseminate, distribute or publish, or agree to, consent to, or approve,
any statement or press release in connection with such settlement, without the
prior written consent of Landlord, which shall not be unreasonably withheld. The
provisions of this Section 12 shall survive the expiration or termination of
this Lease.

       13. DEFAULT PROVISIONS, LANDLORD'S REMEDIES

              13.1 Any of the following events ("Events of Default") shall
constitute a default under this Lease:

                     13.1.1 Tenant's failure to pay any installment of Basic
Annual Rent or any Additional Rent within five (5) days of the date on which the
same was due and payable; or



                                       30
<PAGE>   32

                     13.1.2 Tenant's doing or permitting anything to be done,
whether by action or inaction, contrary to any of Tenant's obligations pursuant
to this Lease, or otherwise any breach of this Lease or failure by Tenant to
perform any of its obligations under this Lease (except as to the payment of
rent, additional rent and the matters set forth in Sections 13.1.3, 13.1.4 and
14), and such situation, breach or failure shall continue and shall not be
remedied by Tenant within thirty (30) days after Landlord shall have given to
Tenant notice specifying the same; or, if the default cannot with due diligence
be cured within a period of thirty (30) days and the continuance of which will
not subject Landlord (or any of its directors, officers, shareholders, partners,
agents or employees) to the risk of criminal or civil liability or foreclosure
of any superior mortgage or any other lien on the Property, Tenant shall not
promptly and diligently prosecute to completion all steps necessary to remedy
the same, or

                     13.1.3 The occurrence of any event whereby this Lease, any
interest in it, the estate thereby granted or, any portion thereof, or the
unexpired balance of the Term would by operation of law or otherwise pass to any
entity other than Tenant, except as expressly permitted by Section 11; or

                     13.1.4 Tenant vacates the Demised Premises (defined as an
absence for more than fifteen (15) consecutive days without prior notice to
Landlord), or Tenant abandons the Demised Premises (defined as an absence of
more than five (5) days or more while Tenant is in breach of some other term of
this Lease). The fact that Tenant is not in occupancy from the Commencement Date
to Tenant's actual occupancy of the Demised Premises following notice to Tenant
by Landlord that the Demised Premises are available for occupancy (but in no
event later than 30 days following such notice) shall not be considered vacation
or abandonment pursuant to this Section 3.1.4. Tenant's vacation or abandonment
of the Demised Premises shall not be subject to any notice or right to cure.

                     13.1.5 Tenant becomes insolvent, voluntarily or
involuntarily bankrupt or a received, assignee or other liquidating officer is
appointed for Tenant's business.

                     13.1.6 Tenant's interest in the Demised Premises, or any
part thereof, is taken by execution or other process of law directed against
Tenant, or is taken upon or subject to any attachment by any creditor of Tenant,
if such attachment is not discharged within fifteen (15) days after being
levied.

              13.2 Upon the occurrence of any Event of Default, the Landlord may
exercise any one or more of the following remedies, in addition to all other
remedies provided in this Lease and by law or in equity:



                                       31
<PAGE>   33

                     13.2.1 Landlord may recover from Tenant: (i) the worth at
the time of award of the unpaid Basic Annual Rent and additional rent which had
been earned at the time of termination (including interest at a default rate of
eighteen percent (18%) per annum); (ii) the worth at the time of award of the
amount by which the unpaid Basic Annual Rent and additional rent which would
have been earned after termination until the time of award exceeds the amount of
such Basic Annual Rent and additional rent loss that Tenant proves could have
been reasonably avoided (including interest at a default rate of eighteen
percent (18%) per annum); (iii) the worth at the time of award of the amount by
which the unpaid Basic Annual Rent and additional rent for the balance of the
Term after the time of award exceeds the amount of such Basic Annual Rent and
additional rent loss that Tenant proves could be reasonably avoided discounting
such amount by the discount rate of the Federal Reserve Bank of San Francisco at
the time of the award, plus one percent (1%), and (iv) any other amount
necessary to compensate Landlord for all the detriment caused by Tenant's
failure to perform its obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom.

       For purposes of computing unpaid Basic Annual Rent and additional rent
for the balance of the Term pursuant to clause (iii) above, unpaid Basic Annual
Rent and additional rent shall consist of the sum of (A) the total Basic Annual
Rent for the balance of the Term plus (B) Tenant's obligation to pay the
Operating Expenses and Taxes and such other items of additional rent specified
in this Lease to be paid in whole or in part by Tenant for the balance of the
Term. For purposes of computing Tenant's obligation to pay the Operating
Expenses and Taxes and such other items of additional rent for the Lease Year of
the Event of Default and each future Lease Year in the Term such amounts shall
be assumed to be equal to the amount of additional rent that was payable by
Tenant in respect of Operating Expenses and Taxes and such other items of
additional rent for the Lease Year prior to, the Lease Year in which the Event
of Default occurs compounded at a rate equal to the mean average rate of
inflation for the three (3) Lease Years preceding the Lease Year of the Event of
Default, as determined by using the United States Department of Labor, Bureau of
Labor Statistics Consumer Price Index (All Urban Consumers, all items, 1982-84
equals 100) (the "CPI") for the metropolitan area or region of which the
Property is a part. If such index is discontinued or revised during the Term,
such other government index or computation with which it is replaced shall be
used in order to obtain substantially the same result as would be obtained if
the index had not been discontinued or revised. if no replacement index exists
then Landlord shall select as a replacement index that index which, in
Landlord's opinion, is generally recognized as the successor index.

                     13.2.2 Landlord may sell at public or private sale all or
any part of the goods, chattels, fixtures and other personal property belonging
to Tenant which are or may be put into the Demised Premises during the Term,
except for Tenant's business records whether exempt or not from sale under
execution or attachment (it being agreed that said property shall at all times
be bound with a lien in favor of Landlord and shall be



                                       32
<PAGE>   34

chargeable for all rent and for the fulfillment of the other covenants and
agreements herein contained) and apply the proceeds of such sale, first, to the
payment of costs and expenses of conducting the sale or caring for or storing
said property (including all attorney's fees), second, toward the payment of any
indebtedness, including (without limitation) indebtedness for rental, which may
be or may become due from Tenant to Landlord, and third, to pay Tenant, on
demand in writing, any surplus remaining after all indebtedness of Tenant to
Landlord has been fully paid.

                     13.2.3 Landlord may perform, on behalf of Tenant, any
obligation of Tenant under this Lease which Tenant has failed to perform, the
cost of which performance by Landlord, together with interest thereon at the
Default Rate from the date of such expenditure, shall be deemed additional rent
and shall be payable by Tenant to Landlord upon demand.

                     13.2.4 The Landlord may give the Tenant a notice (the
"Termination Notice") of its intention to terminate this Lease specifying a day
not less than ten ( 10) days thereafter, and, upon the day specified in the
Termination Notice, this Lease and the term and estate hereby granted shall
expire and terminate and all rights of the Tenant under this Lease shall expire
and terminate, but the Tenant shall remain liable for damages as hereinafter set
forth. Notwithstanding the foregoing, the Landlord may institute dispossess
proceedings for non-payment of rent, distraint or other proceedings to enforce
the payment of rent without giving the Termination Notice. No act by Landlord
other than the giving of a Termination Notice shall terminate this Lease.

                     13.2.5 The Landlord may exercise any and all other legal
and/or equitable rights or remedies which it may have.

              13.3 Upon any such termination or expiration of this Lease, or
other termination of Tenant's possession under this Lease, the Tenant shall
peaceably quit and surrender the Demised Premises to the Landlord, and the
Landlord or Landlord's agents and employees may without further notice
immediately or at any time thereafter enter upon or re-enter the Demised
Premises or any part thereof, and possess or repossess itself or themselves
thereof either by summary dispossess proceedings, ejectment, any suitable action
or proceeding at law, agreement, force or otherwise (without thereby creating
any breach of the peace), and may dispossess and remove Tenant and all other
persons and property from the Demised Premises without being liable to
indictment, prosecution, or damages therefor, and may repossess the same, and
may remove any persons therefrom, to the end that Landlord may have, hold and
enjoy the Demised Premises again. The words "enter" or "reenter," "possess" or
"repossess" as used in this Lease are not restricted to their technical legal
meaning.

              13.4 In the event of any breach or threatened breach by Tenant of
any of the agreements, terms, covenants or conditions contained in this Lease,
Landlord shall be



                                       33
<PAGE>   35

entitled to enjoin such breach or threatened breach and shall have the right to
invoke any right and remedy allowed at law or in equity or provided in this
Lease.

              13.5 Each right and remedy of the Landlord provided for in this
Lease shall be cumulative and shall be in addition to every other right or
remedy provided for in this Lease or now or hereafter existing at law or in
equity or by statute or otherwise, and the exercise or beginning of the exercise
by the Landlord of any one or more of the rights or remedies provided for in
this Lease or now or hereafter existing at law or in equity or by statute or
otherwise shall not preclude the simultaneous or later exercise by Landlord of
any or all other rights or remedies provided for in this Lease or now or
hereafter existing at law or in equity or by statute or otherwise.

              13.6 Suit or suits for the recovery of damages, or any
installments thereof, may be brought by Landlord from time to time at its
election, and nothing contained in this Lease shall be deemed to require
Landlord to postpone suit until the date when the term of this Lease would have
expired if it had not been so terminated under the provisions of this Section 13
or under any provision of law, or had Landlord not re-entered the Demised
Premises. Nothing contained in this Lease shall be construed to limit or
preclude recovery by Landlord against Tenant of any sums or damages to which
Landlord may lawfully be entitled by reason of any default under this Lease or
otherwise on the part of Tenant. Nothing contained in this Lease shall be
construed to limit or prejudice the right of Landlord to prove and obtain as
liquidated damages by reason of the termination of this Lease or reentry on the
Demised Premises for the default of Tenant an amount equal to the maximum
allowed by any statute or rule of law in effect at the time when, and governing
the proceeding in which, such damages are to be proved.

              13.7 Upon the termination or expiration of this Lease, or other
termination of Tenant's possession under this Lease due to Tenant's default, the
Tenant hereby authorizes and empowers the Landlord, at the Landlord's option
(without imposing any duty upon the Landlord to do so), to re-enter the Demised
Premises as agent for the Tenant or any successor-occupant of the Demised
Premises under the Tenant, or for its own account or otherwise, and to relet the
same for any term expiring either prior to the original expiration date hereof,
or simultaneously therewith, or beyond such date, and to receive rent and apply
same to pay all fees and expenses incurred by the Landlord as a result of such
Event of Default, including without limitation any legal fees and expenses
arising therefrom, the cost of re-entry and re-letting and to the payment of the
rent and other charges due hereunder, and, at the expense of Tenant, make such
repairs or alterations and shall necessary or appropriate, in the reasonable
judgment of Landlord to facilitate such reletting. No entry, re-entry or
reletting by the Landlord, whether by summary proceedings, termination or
otherwise, shall discharge the Tenant from its liability to the Landlord as set
forth herein. If Landlord does relet the Demised Premises, Landlord may relet
the entirety thereof, or any part thereof, alone or together with other
premises, for such term(s) (which may be greater or less than the period which



                                       34
<PAGE>   36

otherwise would have constituted the balance of the Term) and on such terms and
conditions (which may include concessions or free rent and alterations of the
Demised Premises) as Landlord, in its sole discretion, may determine, but
Landlord shall not be liable for, nor shall Tenant's obligations hereunder be
diminished by reason of, any failure by Landlord to relet the Demised Premises
or any failure by Landlord to collect any rent due upon such reletting.

              13.8 The Tenant shall be liable for all costs, charges and
expenses, including reasonable attorney's fees and disbursements, incurred by
the Landlord by reason of the occurrence of any Event of Default.

              13.9 The Tenant, and on behalf of any and all persons claiming
through or under the Tenant, including creditors of all kinds, does hereby waive
and surrender all rights and privileges which they or any of them might have
under or by reason of any present or future law, to redeem the Demised Premises
or to have a continuance of this Lease for the Term after being dispossessed or
ejected therefrom by the valid order of a court of competent jurisdiction.

              13.10 The provisions of this Section 13 shall survive the
expiration or termination of this Lease.

       14. BANKRUPTCY AND INSOLVENCY

              14.1 Neither Tenant's interest in this Lease, nor any estate
hereby created in Tenant nor any interest herein, shall pass to any trustee or
receiver or assignee for the benefit of creditors or otherwise by operation of
law.

              14.2 In the event the interest or estate created in Tenant hereby
shall be taken in execution or by other process of law, or if Tenant is
adjudicated insolvent by a court of competent jurisdiction other than the United
States Bankruptcy Court, or if a receiver or trustee of the property of Tenant
shall be appointed by reason of the insolvency or inability of Tenant to pay its
debts, or if Tenant shall file a voluntary petition or proceeding under any
federal or state law dealing with bankruptcy, insolvency, reorganization or any
other adjustment of its debts, or if any assignment shall be made of the
property of Tenant for the benefit of creditors, then and in any such event,
this Lease and-all rights of Tenant hereunder shall automatically cease and
terminate with the same force and effect as though the date of such event were
the date originally set forth herein and fixed for the expiration of the Term,
and Tenant shall vacate and surrender the Premises but shall remain liable as
herein provided.

              14.3 Tenant shall not cause or give cause for the appointment of a
trustee or receiver of the assets of Tenant and shall not make any assignment
for the benefit of creditors or become or be adjudicated insolvent, or file any
voluntary petition or



                                       35
<PAGE>   37

commence any voluntary proceeding in respect thereto. The allowance of any
petition under any insolvency law except under the Bankruptcy Code or the
appointment of a trustee or receiver of Tenant or of its assets, shall be
conclusive evidence that Tenant caused, or gave cause therefor, unless such
allowance of the petition, or the appointment of a trustee or receiver, is
vacated within forty-five (45) days after such allowance or appointment. Any act
described in this Section 14.3 shall be deemed a material breach of Tenant's
obligations hereunder, and this Lease shall thereupon automatically terminate.
Landlord does, in addition, reserve any and all other remedies provided in this
Lease or by law or in equity.

              14.4 In the event Section 14.1 shall be deemed unenforceable by
the United States Bankruptcy Court this Section 14.4 shall apply; otherwise this
Section 14.4 shall have not force or effect. Upon the filing of a petition by or
against Tenant under the United States Bankruptcy Code:

                     14.4.1 Tenant, as debtor and as debtor in possession, and
any trustee who may be appointed agree as follows: (a) to perform each and every
obligation of Tenant under this Lease, until such time as this Lease is either
rejected or assumed by order of the United States Bankruptcy Court; and (b) to
pay monthly in advance on the first day of each month as reasonable compensation
for use and occupancy on the Premises an amount equal to all rent, additional
rent and other charges otherwise due pursuant to this Lease; and (c) to reject
or assume this Lease within sixty (60) days of the filing of such petition under
Chapter 7 of the Bankruptcy Code or within 120 days (or such shorter term as
Landlord, in its sole discretion, may deem reasonable so long as notice of such
period is given) of the filing of a petition under any other Chapter; and (d) to
give Landlord at least forty-five (45) days' prior written notice of any
proceeding relating to any assumption of this Lease; and (e) to give Landlord at
least thirty (30) days' prior written notice of any abandonment of the Premises;
any such abandonment to be deemed a rejection of this Lease; and (f) to do all
other things of benefit to Landlord otherwise required under the Bankruptcy
Code; and (g) to be deemed to have rejected this Lease in the event of the
failure to comply with any of the above, and (h) to have consented to the entry
of an order by an appropriate United States Bankruptcy Court providing all of
the above, waiving notice and hearing of the entry of same.

                     14.4.2 No Event of Default or default of this Lease by
Tenant either prior to or subsequent to the filing of such a petition, shall be
deemed to have been waived unless expressly done so in writing by Landlord.

                     14.4.3 Included within and in addition to any other
conditions or obligations imposed upon Tenant or its successor in the event of
assumption and/or assignment are the following: (a) the cure of any monetary
defaults and the reimbursement of pecuniary loss within not more than thirty
(30) days of assumption and/or assignment; and (b) the deposit of an additional
sum equal to three months' rent to



                                       36
<PAGE>   38

be held pursuant to the terms of Section 10 of this Lease; and (c) the use of
the Demised Premises as set forth in Section 3 of this Lease, and (d) the prior
written consent of any mortgagee to which this Lease has been assigned as
collateral security; and (e) the Demised Premises, at all times, remains a
single leasehold structure and no physical changes of any kind may be made to
the Demised Premises unless in compliance with the applicable provisions of this
Lease.

       15. ENTRY BY LANDLORD, ETC.

              15.1 Except in the case of an emergency and upon 24 hour notice,
Tenant shall permit Landlord and its authorized representatives to enter the
Demised Premises, or any part thereof, at all reasonable times for the purpose
of (a) performing work in the Demised Premises if and to the extent required to
be performed by Landlord (including, without limitation, to perform such work as
shall be required to be performed by Legal Requirements (to the extent not the
obligation of Tenant under this Lease) in the event that portions of the
Property (other than the Demised Premises) shall be leased to persons other than
Tenant), provided, however, that (except in the event of an emergency) Landlord
shall give Tenant reasonable prior notice of such entry and shall conduct such
work so as not to unreasonably interfere with the normal conduct of Tenant's
business in the Demised Premises, or (b) curing defaults of Tenant in accordance
with, and (except in the event of an emergency) after such notice (if any) as
may be required by, the provisions of Section 13. In addition, Tenant, after
reasonable prior notice, shall permit Landlord and fee mortgagees and their
respective authorized representatives, to enter the Demised Premises, or any
part thereof, at all reasonable times during usual business hours for the
purpose of inspecting the same.

              15.2 Landlord shall also have the right, after reasonable prior
notice, to enter the Demised Premises, or any part thereof, at all reasonable
times during usual business hours for the purpose of showing the same to
appraisers, prospective lenders and prospective purchasers or fee mortgagees
thereof and, at any time within six months prior to the expiration of this
Lease, for the purpose of showing the same to prospective tenants.

              15.3 If, at any time during which Landlord or any fee mortgagee
shall have the right to enter the Demised Premises, admission to the Demised
Premises, for the purposes aforesaid cannot be obtained, they, or their
respective agents, servants, employees, contractors and representatives, may (on
such notice, if any, as may be reasonable under the circumstances, which notice
need not be in writing if an emergency exists in respect of the protection of
the Demised Premises) enter the Demised Premises and accomplish such purpose.
Any entry on the Demised Premises by Landlord or a fee mortgagee shall be at
such times and by such methods (other than in the event of such an emergency) as
will cause as little inconvenience, annoyance, disturbance, loss of business or
other damage to Tenant as may be reasonably practicable in the circumstances.



                                       37
<PAGE>   39

       16. COVENANT OF QUIET ENJOYMENT

              16.1 Landlord covenants that Tenant, on paying the rents and
performing and observing all the covenants and conditions contained in this
Lease, shall and may peaceably and quietly have, hold and enjoy the Demised
Premises during the Term in accordance with the terms of this Lease, subject,
however, to the terms of this Lease.

       17. EFFECT OF CONVEYANCE, LIMITS OF LIABILITY OF LANDLORD, DEFINITION OF
"LANDLORD"

              17.1 The term "Landlord" as used in this Lease shall mean and
include only the owner or owners (and any mortgagee in possession) at the time
in question of the fee estate in the Property, so that in the event of any
transfer or transfers (by operation of law or otherwise) of the title to such
fee estate, Landlord herein named (and in case of any subsequent transfers or
conveyances, the then transferor) shall be and hereby is automatically freed and
relieved, from and after the date of such transfer or conveyance, of all
liability in respect of the performance of any covenants or obligations on the
part of Landlord contained in this Lease thereafter to be performed, provided
that (a) any funds in which Tenant has an interest, in the hands of such
Landlord or the then transferor at the time of such transfer, shall then be
turned over to the transferee, and (b) any amount then due and payable to Tenant
by Landlord or the then transferor under any provision of this Lease shall then
be paid to Tenant and (c) the transferee shall be deemed to have assumed and
agreed to perform, subject to the limitations of this Section 17 (and without
further agreement between or among the parties or their successors in interest,
and/or the transferee) and only during and in respect of the transferee's period
of ownership, all of the terms, covenants and conditions in this Lease contained
on the part of Landlord thereafter to be performed, which terms, covenants and
conditions shall be deemed to "run with the land," it being intended hereby that
the terms, covenants and conditions contained in this Lease on the part of
Landlord shall, subject as aforesaid, be binding on Landlord, its successors and
assigns, only during and in respect of their respective successive periods of
ownership.

              17.2 It is specifically understood and agreed that in the event of
a breach by Landlord of any of the terms, covenants or conditions of this Lease
to be performed by Landlord, the monetary liability of Landlord in relation to
any such breach shall be limited to the equity of Landlord in the Property,
including Landlord's interest in this Lease, the Property, moneys held by any
trustee for the benefit of Landlord and any sums at the time due or to become
due under this Lease. Tenant shall look only to Landlord's equity in the
Property for the performance and observance of the terms, covenants and
conditions of this Lease to be performed or observed by Landlord and for the
satisfaction of Tenant's remedies for the collection of any award, judgment or
other judicial process requiring the payment of money by Landlord in the event
of a default in the full and



                                       38
<PAGE>   40

prompt payment and performance of any of Landlord's obligations hereunder. No
property or assets of Landlord, other than Landlord's equity in the Property,
shall be subject to lien, levy, execution or other enforcement procedure for the
satisfaction of Tenant's remedies in any matter whatsoever arising out of or in
any way connected with this Lease or any of its provisions, any negotiations in
connection therewith, the relationship of Landlord and Tenant hereunder or the
use and occupancy of the Property; and in confirmation of the foregoing, if any
such lien, levy, execution or other enforcement procedure so arising shall be on
or in respect of any property or assets of Landlord, other than Landlord's
equity in the Property, Tenant shall promptly release any property or assets of
Landlord, other than Landlord's equity in the Property, from such lien, levy,
execution or other enforcement procedure by executing and delivering, at
Tenant's expense and without charge to Landlord, any instrument or instruments,
in recordable form, to that effect prepared by Landlord (but any such
'instrument of release shall not release any such lien, levy, execution or other
endorsement procedure on or in respect of Landlord's equity in the Property).
Tenant hereby appoints Landlord its attorney-in-fact for the purposes of
executing such instrument or instruments of release if Tenant fails or refuses
to do so promptly after request.

       18. SURRENDER, HOLDING OVER BY TENANT

              18.1 On the expiration or termination of this Lease, Tenant shall
peaceably and quietly leave, surrender and deliver to Landlord the Demised
Premises, together with all Alterations which may have been made upon the
Demised Premises (except to the extent that Landlord may require Tenant under
Section 9.4 hereof to remove such Alterations and restore the Demised Premises),
all of the foregoing to be surrendered in good, substantial and sufficient
repair, order and condition, reasonable use, wear and tear excepted and free of
occupants. If as a result of or in the course of the removal of Tenant's
property any damage occurs to the Demised Premises, Tenant shall pay to Landlord
the reasonable cost of repairing such damage. If Tenant fails to quit and
surrender the Demised Premises upon the expiration or termination of this Lease,
it shall be liable to Landlord for the damages caused to Landlord by reason of
such holdover and it is agreed that such damages shall be liquidated in an
amount equal to twice the rental rate provided for in this Lease. The acceptance
by Landlord of such damages or rental after termination of this Lease shall not
be construed as consent to continued occupancy, nor shall such holding over
constitute a renewal or extension of this Lease. Landlord may, at its option,
construe such holding over as a tenancy from month to month, subject to all the
terms, covenants and conditions of this Lease, except as to duration thereof,
and in that event the Tenant shall pay rent and additional rent in advance at
the rate of 150% of the rate provided in this Lease as effective during the last
month thereof. Tenant's obligation to observe or perform this covenant shall
survive the expiration or termination of this Lease. Notwithstanding the
foregoing, upon the expiration of the Lease for any reason whatsoever, Tenant
shall have the right and obligation to remove all of its fixtures,



                                       39
<PAGE>   41

furniture, machinery, and equipment from the Demised Premises, provided Tenant
promptly shall repair any damage caused by such removal.

       19. CURING DEFAULTS; FEES AND EXPENSES

              19.1 If Tenant shall fail to pay any Imposition or to make any
other payment required hereunder or shall otherwise default in the full and
prompt performance of any covenant contained herein and to be performed on
Tenant's part, Landlord, without being under any obligation to do so and without
thereby waiving such default, may, after fifteen (15) days' notice to Tenant, or
such notice (which may be oral) as may be reasonable in the circumstances if any
emergency exists in respect of the protection of the Demised Premises, make such
payment or perform such covenant "for the account and at the expense of Tenant
and may enter upon the Demised Premises for any such purpose and take all action
thereon as may be necessary therefor in the sole judgment of Landlord.

              19.2 All sums so paid by Landlord in connection with the payment
or performance by it of any of the obligations of Tenant hereunder and all
actual and reasonable costs, expenses and disbursements paid in connection
therewith or enforcing or endeavoring to enforce any right under or in
connection with this Lease, or pursuant to law, together with interest thereon
at the rate of 18% per annum (or, if lower, the maximum rate permitted by law)
from the respective dates of the making of each such payment shall constitute
additional rent payable by Tenant under this Lease and shall be paid by Tenant
to Landlord within fifteen (15) days after demand by Landlord. Landlord shall
not be limited, in the proof of any damages which Landlord may claim against
Tenant arising out of or by reason of Tenant's failure to provide and keep in
force insurance as required by Section 5 hereof, to the amount of the insurance
premium or premiums not paid or incurred by Tenant.

              19.3 The provisions of this Section 19 shall serve the expiration
or termination of this Lease.

       20. MECHANICS AND OTHER LIENS

              20.1 If any mechanic's, laborer's or materialman's lien shall at
any time be filed against the Property or any part thereof with respect to any
work done, or labor or materials furnished, or caused to be furnished, by Tenant
or anyone claiming through or under Tenant, or any judgment, attachment or levy
is filed or recorded against the Property or any part thereof by anyone claiming
through or under Tenant, Tenant, within thirty (30) days after notice of the
filing thereof, shall cause the same to be discharged of record by payment,
deposit, bond, order of a court of competent jurisdiction or otherwise. If
Tenant shall fail to cause such lien, judgment, attachment or levy to be
discharged within the period aforesaid, then, in addition to any other right or
remedy, Landlord may, but shall not be obligated to, discharge the same by
bonding proceedings, if permitted by



                                       40
<PAGE>   42

law (and if not so permitted, by deposit in court). Any amount so paid by
Landlord, including all costs and expenses paid by Landlord in connection
therewith, together with interest thereon at the rate of 18% per annum (or, if
lower, the maximum rate permitted by law) from the respective dates of
Landlord's so paying any such amount, cost or expense, shall constitute
additional rent payable by Tenant under this Lease and shall be paid by Tenant
to Landlord on demand.

              20.2 Nothing contained in this Lease shall be deemed or construed
in any way as constituting the consent or request of Landlord, express or
implied, by inference or otherwise, to any contractor, subcontractor, laborer or
materialman for the performance of any labor or the furnishing of any materials
for any specific improvement, alteration to or repair of the Demised Premises,
or any part thereof, or as giving Tenant any right, power or authority to
contract for or permit the rendering of any services or the furnishing of any
materials that would give rise to the filing of any mechanic's liens against
Landlord's interest in the Demised Premises. Notice is hereby given that
Landlord shall not be liable for any labor or materials furnished or to be
furnished to Tenant upon credit, and that no mechanic's or other lien for any
such labor or materials shall attach to or affect the reversion or estate or
interest of Landlord in and to the Demised Premises.

       21. SIGNS, ADDRESS

              21.1 Landlord shall have the right to change the name or street
address of the Property, to install, maintain, move, remove and reinstall signs
on and off the Property identifying the Property and advertising any or all of
the Property, including, the Demised Premises as for sale or for rent. Tenant
shall not place any signs (i) on the exterior of the Property, or (ii) in the
Common Areas, except that Tenant shall have the right, subject to Landlord's
approval rights set forth in this section, to use a portion of the monument
signage at the entry to the Property (entry to parking lot) and to place
signage/its logo within the Demised Premises and on the wall adjacent to its
third floor entrance. Landlord shall identify Tenant on the Administrative
Building directory. The size, design, construction and placement of all such
signs shall be subject to Landlord's prior written consent, which shall not be
unreasonably withheld, and shall be at Tenant's sole cost and expense.

       22. WAIVERS AND SURRENDERS TO BE IN WRITING, RIGHT TO TERMINATE

              22.1 The receipt, acceptance and/or deposit (including the
endorsement of any check) of full or partial rent by Landlord with knowledge of
any breach of this Lease by Tenant or of any default on the part of Tenant in
the observance or performance of any of the provisions or covenants of this
Lease shall not be deemed to be a waiver of any such provision, covenant or
breach of this Lease. No waiver or modification by Landlord,



                                       41
<PAGE>   43

unless in writing and signed by Landlord, shall discharge or invalidate any
provision or covenant or affect the right of Landlord to enforce the same in the
event of any subsequent breach or default. The failure on the part of Landlord
to insist in any one or more instances upon the strict performance of any of the
provisions or covenants of this Lease, or to enforce any covenant or provision
herein contained consequent upon a breach of any provision of this Lease shall
not affect or alter this Lease or be construed as a waiver or relinquishment of
such provisions or covenants or of the right to insist upon strict performance
or to exercise such right, remedy or election, but the same shall continue and
remain in full force and effect with respect to any then existing or subsequent
breach, act or omission whether of a similar nature or otherwise. The receipt,
acceptance and/or deposit (including the endorsement of any check) by Landlord
of any rent or any other sum of money or any other consideration hereunder paid
by Tenant after the termination, in any manner, of the Term, or after the giving
by Landlord of a termination notice, shall not reinstate, continue or extend the
Term, or destroy, or in any manner impair the efficacy of any such termination
notice as may have been given hereunder by Landlord to Tenant prior to the
receipt, acceptance and/or deposit (including the endorsement of any check) of
any such rent, or other sum of money or other consideration, unless so agreed to
in writing and signed by Landlord. Neither acceptance of the keys nor any other
act or thing done by Landlord or any agent or employee shall be deemed to be an
acceptance of a surrender of the Premises, or any part thereof, excepting only
an agreement in writing signed by Landlord. No payment by Tenant or receipt,
acceptance and/or deposit (including the endorsement of any check) by Landlord
of a lesser amount than the correct rent shall be deemed to be other than a
payment on account, nor shall any endorsement or statement on any check be
deemed to effect or evidence an accord and satisfaction, and Landlord may accept
such check or payment Without prejudice to Landlord's right to recover the
balance or pursue any other remedy in this Lease provided.

       23. COVENANTS BINDING ON SUCCESSORS AND ASSIGNS

              23.1 All of the terms, covenants and conditions of this Lease
shall apply to and inure to the benefit of and be binding upon the respective
heirs, executors, administrators, successors and assigns of the parties, except
as expressly otherwise herein provided. If there shall be more than one Tenant,
they shall all be bound jointly and severally by the terms, covenants and
agreements herein contained. No rights, however, shall inure to the benefit of
any assignee or subtenant of Tenant unless the assignment or subletting, as the
case may be, has been made in accordance with the provisions set forth in
Section 11.

       24. RESOLUTION OF DISPUTES

              24.1 THE PARTIES HERETO WAIVE A TRIAL BY JURY (TO THE EXTENT
PERMITTED BY LAW) ON ANY AND ALL ISSUES ARISING IN ANY



                                       42
<PAGE>   44

ACTION OR PROCEEDING BETWEEN THEM OR THEIR SUCCESSORS UNDER OR IN ANY WAY
CONNECTED WITH THIS LEASE OR ANY OF ITS PROVISIONS, ANY NEGOTIATIONS IN
CONNECTION THEREWITH, THE RELATIONSHIP OF LANDLORD AND TENANT, OR TENANT'S USE
OR OCCUPATION OF THE PREMISES, INCLUDING ANY CLAIM OF INJURY OR ANY EMERGENCY OR
OTHER STATUTORY REMEDY WITH RESPECT THERETO. THE PROVISIONS OF THIS SECTION
SHALL SURVIVE THE EXPIRATION OR TERMINATION OF THIS LEASE.

       25. NOTICES

              25.1 Any statement, demand, election, request, notice, approval,
consent or other communication, (collectively, "notice") authorized or required
by this Lease must be in writing and shall be deemed given when delivered by (a)
hand, against receipt, (b) one (1) business day after sending by reputable
overnight courier which provides for acknowledgment of receipt, or (c) three
(3)) business days after mailing by United States certified mail, return receipt
requested, addressed to the intended recipient at the following address as:

If to Landlord:       Hibbs/Woodinville Associates, LLC
                      999 Third Ave., Suite 3000
                      Seattle, WA 98104
                      Attention: Robert E. Hibbs

                      with a copy to:

                      Premier Advisors, LLC
                      Monte Villa Farms
                      3301 Monte Villa Parkway, Suite 101
                      Bothell, WA 98021

If to Tenant:         Xcyte Therapies, Inc.
                      3301 Monte Villa Parkway Suite 300
                      Bothell, WA  98021
                      Attention: President and Chief Executive Officer

                      with copy to:

                      Sanford Levy
                      One Union Square
                      600 University Street, Suite 3300
                      Seattle, WA 98101



                                       43
<PAGE>   45

and to:

                      Sonya F. Erickson
                      Venture Law Group
                      4750 Cavillon Point
                      Kirkland, WA 98033-7355

Payments due to Landlord under this Lease shall be made at the following
address:

                      Hibbs/Woodinville Associates, LLC
                      999 Third Ave., Suite 3000
                      Seattle, WA 98104
                      Attention: Robert E. Hibbs

Any notices by a party signed by counsel to such party shall be deemed a notice
signed by such party. Notice shall be deemed given on the date of delivery or
the date delivery is refused. Any party may change its address for notices, and
Landlord may change its address for payments, by providing to the other party
written notice in the manner required by this Section 25.

       26. DEFINITIONS; HEADINGS; CONSTRUCTION OF LEASE

              26.1 For the purposes of this Lease, unless the context otherwise
requires:

                     26.1.1 The term "Landlord's agents" shall be deemed to
include agents, servants, employees and contractors of landlord.

                     26.1.2 The term "person" shall be deemed to include
individuals, corporations, partnerships, firms, associations and any other legal
or business entities.

                     26.1.3 The term "unavoidable delays" shall mean any and all
delays beyond the reasonable control of the party otherwise responsible,
including delays caused by the other party, governmental restrictions,
governmental preemption, strikes, labor disputes, lockouts, shortage of labor or
materials, acts of God, enemy action, civil commotion, riot or insurrection,
fire, holdover tenancies or other unavoidable casualty or any other cause beyond
the responsible party's control, but shall not include delays occasioned by lack
of money.

                     26.1.4 The terms "include," "including" and "such as" shall
be construed as if followed by the phrase "without being limited to". The words
"herein." "hereto" "hereby," "hereunder" and words of similar import shall be
construed to refer to this Lease as a whole and not to any particular Section
hereof unless expressly so stated.



                                       44
<PAGE>   46

              26.2 The various terms which are defined in other Sections of this
Lease shall have the meanings specified in such other Sections for all purposes
of this Lease unless the context otherwise requires.

              26.3 The Section headings in this Lease and the Table of Contents
prefixed to this Lease are inserted only as a matter of convenience and
reference and are not to be given any effect whatsoever in construing this
Lease.

              26.4 All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine, neuter, singular or plural, as the identity of
the person or persons or entity or entities in question may require.

       27. FORCE MAJEURE

              27.1 Whenever the performance of any obligation of either party
hereunder shall be delayed, hindered or prevented due to unavoidable delays, the
time for performance of such obligation, unless other provision is expressly
made therefor in this Lease, shall be extended, subject to and limited by the
following conditions:

                     27.1.1 The extension shall be for no longer a period than
the delay actually so occasioned;

                     27.1.2 The party delayed shall promptly notify the other
party of the cessation of such unavoidable delay and of the extent of the delay
which the party delayed claims was occasioned thereby;

                     27.1.3 No statement of fact contained in any such notice
shall be binding on the party receiving such notice; and

                     27.1.4 In no event shall lack of funds be deemed a matter
beyond either party's control.

                     27.1.5 Interruptions of any service to be provided by
Landlord under this Lease or of any utility or other service to the Demised
Premises or the Property, in whole or in part caused by any unavoidable delay,
inability of Landlord to obtain electricity, fuel, water, other utilities or
supplies, or by the act or default of Tenant or any person other than Landlord,
or otherwise by any other cause or causes beyond the reasonable control of
Landlord, shall not be deemed an eviction or disturbance of Tenant's use and
possession of the Demised Premises, the Common Area, or any part thereof, or
render Landlord liable for damages, or give rise to any offset, set off,
abatement, or reduction in any rent, additional rent, or other amount payable by



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<PAGE>   47

Tenant under this Lease, or otherwise or relieve Tenant from performance of
Tenant's obligations under this Lease.

       28. BROKERAGE

              28.1 Landlord and Tenant each warrant and represent to the other
that no broker or like agent represented the warranting and representing party
in connection with the negotiation and execution of this Lease, except Tom
Erlandson of Alexander Commercial Real Estate ("Broker ") and such party is not
aware of any broker or like agent that could or may be entitled to make a claim
for a commission in connection with the negotiation and execution of this Lease,
except Broker. Landlord shall pay a commission and fee to Broker pursuant to a
separate agreement with Broker. Each party (the "breaching party"' hereto agrees
to indemnify, defend and hold the other party (the "nonbreaching party")
harmless with respect to any judgments, damages, legal fees, court costs and any
and all liabilities of any nature whatsoever incurred by the non-breaching party
arising from a breach of the applicable warranty and representation by the
breaching party and Landlord shall indemnify Tenant from any claim of Broker for
any fee or commission in connection with the execution and negotiation of this
Lease. The provisions of the foregoing representation and indemnity shall
survive the expiration or termination of this Lease.

       29. MISCELLANEOUS PROVISIONS

              29.1 This Lease sets forth all the covenants, promises,
agreements, conditions and understandings between Landlord and Tenant concerning
the Premises. There are no oral agreements or understandings between the parties
hereto affecting this Lease and this Lease supersedes and cancels any and all
previous negotiations, arrangements, agreements and understandings, if any,
between the parties hereto with respect to the subject matters hereof, and none
thereof shall be used to interpret or construe this Lease. Except as otherwise
herein expressly provided, no subsequent alteration, amendment, change, waiver
or addition to or of any provision of this Lease, nor any surrender of the Term,
shall be binding upon Landlord or Tenant unless reduced to writing and signed by
the party against whom the same is charged or such party's successors in
interest.

              29.2 This Lease shall not be recorded by either party without the
consent of the other.

              29.3 This Lease shall be governed in all respects by the laws of
the State of Washington.

              29.4 This Lease may be executed in several counterparts, each of
which shall be an original, but all of which shall constitute one and the same
instrument.



                                       46
<PAGE>   48

              29.5 All obligations of Tenant which shall not have been performed
prior to the end of the Term or which by their nature involve performance, in
any particular, after the end of the Term, or which cannot be ascertained to
have been fully performed until after the end of the Term, shall survive the
expiration or termination of the Term.

              29.6 If any term, covenant, condition, or provision of this Lease
or the application thereof to any person or circumstance shall, at any time or
to any extent, be invalid or unenforceable, the remainder of this Lease, or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each term, covenant, condition, and provision of this Lease shall
be valid and be enforced to the fullest extent permitted by law.

              29.7 Anything in this Lease to the contrary notwithstanding, in
the event that (a) any act or omission of Tenant shall require the consent or
approval of Landlord pursuant to this Lease, and (b) this Lease provides that
Landlord shall not unreasonably withhold such consent or approval, and (c)
Tenant shall claim that Landlord has unreasonably withheld such consent or
approval, then the sole recourse of Tenant upon the inability of the parties to
agree shall be to bring an appropriate action in a court of competent
Jurisdiction against Landlord solely to issue a determination of whether the
withholding of such consent or approval by Landlord is "reasonable" or
"unreasonable", and Tenant shall not be entitled to any damages or other remedy
other than specific performance for the issuance by Landlord of such consent or
approval if such court of competent jurisdiction shall determine that such
withholding of consent was unreasonable, provided, however, Tenant shall be
entitled to pursue all remedies at law or in equity if it shall be determined by
a court of competent jurisdiction (beyond all right of appeal) that in
withholding its consent Landlord acted maliciously and in bad faith (for which
Tenant shall have the burden of proof).

       30. COMPLIANCE WITH ENVIRONMENTAL LAWS

              30.1 Tenant shall, at its sole cost and expense, comply with the
requirements of every federal, state, county, municipal or other governmental
law, ordinance, rule, regulation, requirement and/or directive pertaining to the
environment (an "Environmental Law" or "Environmental Laws"), including, but not
limited to, the Resource Conservation and Recovery Act of 1976 (42 U.S.C.
Section 6901 et seq.), and the Comprehensive Environmental Response Compensation
and Liability Act of 1980 (42 U.S. Section 9601 et seq.) affecting, binding
upon, or respecting the Demised Premises and/or the use and occupancy thereof.
In this regard, Tenant shall, at its sole cost and expense, make all submissions
to, provide all information to, and comply with all requirements of any
governmental authority respecting the Demised Premises, or the use or occupancy
thereof. Should any governmental authority determine that action is necessary to
clean



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<PAGE>   49

up, remove and/or eliminate any spill or discharges by Tenant (or by any of
Tenant's agents, servants, employees, invitees, guests, subtenants (if any)
licensees, or contractors) of Hazardous Substances (hereinafter defined) in or
about the Demised Premises or the Common Area (except to the extent such
discharge or spill in the Common Area is caused by the particular act of any
third party tenant of any other space at the Property), or any other spill or
discharges for which Tenant is responsible pursuant to this Lease, and/or that a
cleanup plan must be prepared and submitted, then, in that event, Tenant shall,
at its sole cost and expense, take any and all action required and carry out any
and all approved plans and complete, at Tenant's sole cost and expense, all
cleanup, removal and remediation required. Landlord shall remove, remediate and
clean up all Hazardous Substances in the Demised Premises which were present
prior to the term of this Lease. As used herein, "Hazardous Substances" means
any substance that is toxic, ignitable, reactive, or corrosive, or that is
regulated by any local government, the State of Washington or the United States
Government, any and all material or substances that are defined as "hazardous
waste," "extremely hazardous waste," or a "hazardous substance" pursuant to
state, federal or local governmental law, any asbestos, polychlorobiphinyls
(PCBs) and petroleum products or by-products. Tenant's obligations pursuant to
this Section 30.1 shall arise whenever required by any appropriate governmental
agency. At the expiration or earlier termination of this Lease Tenant, at
Tenant's expense, immediately shall (i) remove or cause to be removed all
Hazardous Substances located at, in, on, under or about the Demised Premises
(and/or any other portions of the Property, except to the extent that such
Hazardous Substances have been discharged at, in, on, under or about portions of
the Property other than the Demised Premises by any other tenant, and (ii) clean
up and remediate all areas of the Demised Premises (and/or any other portions of
the Property, except to the extent that such Hazardous Substances have been
discharged at, in, on, under or about portions of the Property other than the
Demised Premises by any other tenant, as required under all Environmental Laws,
and (iii) remove, remediate and clean up all Hazardous Substances at, in, on,
under or about the Demised Premises (and/or at, in, on, under or about any other
portions of the Property, except to the extent that such Hazardous Substances
have been discharged at, in, on, under or about portions of the Property other
than the Demised Premises by any other tenant.

              30.2 For purposes of this provision, the term "Environmental
Documents" shall mean all environmental documentation concerning the Demised
Premises, the Property or its environs in the possession or under the control of
Tenant, Including, without limitation, all drafts and final versions of all
sampling plans, cleanup plans, preliminary assessment plans and reports, site
investigation plans and reports, remedial investigation plans and reports,
remedial action plans and reports or the equivalent, sampling results, sampling
reports, data, diagrams, charts, maps, analyses, conclusions, quality
assurance/quality control documentation, correspondence to or from the
Washington Department of Ecology ("WDOE") or any other municipal, county, state
or federal governmental authority, submissions to the WDOE or any municipal,
county,



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state or federal governmental authority and directives, orders, approvals and
disapprovals issued by the WDOE or any other municipal, county, state or federal
governmental authority, During the term of the Lease and subsequently promptly
upon receipt by Tenant or Tenant's representatives, Tenant shall deliver to
Landlord all Environmental Documents concerning the Property, or any portion
thereof, including the Demised Premises, or generated by or on behalf of Tenant
with respect to the Property or any portion thereof, whether currently or
hereafter existing.

              30.3 Tenant shall notify Landlord in advance of all meetings
scheduled between Tenant or Tenant's representatives and the WDOE or any other
authority, and Landlord and Landlord's representatives shall have the right,
without the obligation, to attend and participate in all such meetings, at
Landlord's sole expense.

              30.4 Tenant shall at all times indemnify, defend (with counsel
selected by Tenant and reasonably satisfactory to Landlord) and hold harmless
Landlord and Landlord's employees, officers, directors, shareholders,
affiliates, partners, agents, professionals and consultants (collectively, the
"Indemnitees") against and from any and all claims, suits, liabilities, actions,
debts, damages, costs, losses, obligations, judgments, charges and expenses,
including sums paid in settlement of claims, of any nature whatsoever suffered
or incurred by any of the Indemnitees whether based on Tenant's operation of the
Demised Premises, Tenant's negligence, Tenant's willful misconduct or on other
acts or omissions of Tenant after the Commencement Date, with respect to:

                     30.4.1 The actual or suspected presence or discharge by
Tenant (or by any of Tenant's agents, servants, employees, Invitees, guests,
subtenants (if any) licensees, or contractors), on or after the Commencement
Date, of Hazardous Substances or the threat, on or after the Commencement Date,
of a discharge by Tenant (or by any of Tenant's agents, servants, employees,
invitees, guests, subtenants (if any) licensees, or contractors) of any
Hazardous Substances in, on, under, about, or affecting the Property, whether or
not the same originates or emanates from the Demised Premises;

                     30.4.2 The cost of removal or remedial action incurred by
any governmental authority, any response cost incurred by any other person or
damages from injury to, destruction of, or loss of natural resources, including
reasonable cost of assessing such injury, destruction or loss, incurred pursuant
to Environmental Laws;

                     30.4.3 Liability for personal injury or property damage
arising under any statutory or common law tort theory, including, without
limitation, damages assessed with the maintenance of a public or private
nuisance or for the carrying on of an abnormally dangerous activity; and/or

                     30.4.4 Any other environmental matter, occurring on or
after the Commencement Date, or otherwise relating to the period commencing with
the



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<PAGE>   51

Commencement Date, and affecting (i) the Demised Premises or (ii) otherwise
affecting the Property (to the extent such environmental matter affecting the
Property other than the Demised Premises arises by the act or wrongful omission
of Tenant, or any of Tenant's agents, servants, employees, invitees, guests,
subtenants (if any) licensees, or contractors) within the jurisdiction of any
other federal agency, or any state or local agency or political subdivision or
any court, administrative panel or tribunal.

Tenant's obligations under this Section 30 shall arise upon the discovery of, or
the threat or suspected presence of, any Hazardous Substance, whether or not any
other federal agency or state or local or agency or political subdivision or any
court, administrative panel or tribunal has taken or contemplates taking action
in connection with the presence of any Hazardous Substances.

              30.5 Tenant shall not, directly or indirectly, make any use of the
Demised Premises, or the Property which may be prohibited by any Environmental
Laws, which may be dangerous to a person or property, or which may constitute or
create a nuisance, or which may fail or comply with or violate the provisions or
conditions of any permit held by Landlord or Tenant with respect to the Demised
Premises or the Property, including, without limitation, any such permit
governing the use, contamination, pollution or conservation of air, water or
land or the protection of the environment or of the use, storage, treatment or
disposal of toxic or hazardous substances ("Environmental Permits"), or which
may jeopardize the continuation or renewal of any such Environmental Permit, or
which may be deemed extra-hazardous in any respect, or which may jeopardize any
insurance coverage or require additional insurance coverage for Landlord or any
other tenant of the Property.

              30.6 Tenant shall regularly monitor its compliance with all
applicable Environmental Laws, Environmental Permits and Environmental Plans;
such monitoring shall be in accordance with all applicable Environmental Laws,
Environmental Permits and Environmental Plans and with Tenant's established
policies for such monitoring. Tenant shall, when requested by Landlord at
reasonable intervals, provide to Landlord copies of the reports showing such
monitoring and compliance and such other information and documentation
respecting such monitoring and compliance as Landlord reasonably may request
from time to time.

              30.7 Tenant shall promptly provide Landlord, as soon as received
by Tenant, with copies of all of Tenant's Environmental Permits and of any
official warnings, citations or charges that Tenant, the Demised Premises or the
Property has or may have failed to comply with or has or may have violated any
Environmental Law or any Environmental Permit. Tenant shall promptly supply
Landlord with any notices, correspondence and submissions made by Tenant to
WDOE, the United States Environmental Protection Agency, OSHA, or any other
local, state or federal authority which requires submission of any information
concerning Environmental Laws or



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<PAGE>   52

Environmental Permits, or Hazardous Substances or other environmental matters.
Tenant shall also promptly supply Landlord with all documentation, notices and
correspondence delivered to Tenant by any such authority with respect to
Environmental Laws, Environmental Permits, environmental matters or Hazardous
Substances or other environmental matters.

              30.8 This Section 30 shall survive the expiration or earlier
termination of this Lease. Tenant's failure to abide by the terms of this
Section 30 shall be restrainable by injunction, and shall constitute an Event of
Default under the Lease.

       31. SECURITY

              31.1 Tenant, at Tenant's cost and expense, shall be obligated to
provide adequate and proper security to the Demised Premises, and to properly
regulate access to same without thereby adversely affecting the use and
enjoyment of the Property by Landlord or by other tenants or occupants.

       32. ACCESS

              32.1 Tenant agrees that every other tenant or occupant of the
Buildings (as same may change from time to time), and their respective
employees, invitees, guests, contractors, subtenants (if any) and licensees, at
all times shall have reasonable, non-discriminatory access to and use of Common
Area, and in, upon, over, across and through the Common Area, in common with
Tenant, and to the same extent enjoyed by Tenant, for ingress to and egress from
the Buildings, and access to the premises demised by such tenant or occupant and
to the Common Area, and for use of the Common Area.

              32.2 Tenant agrees that Landlord, from time to time, may
promulgate and/or amend reasonable, non-discriminatory rules and regulations for
the use of Common Areas, and/or for access as provided in Section 32. 1, and
that upon receiving copies of such rules and regulations (from time to time)
Tenant shall abide by same and cause its employees, invitees, guests,
contractors, subtenants (if any) and licensees to abide by same.

              32.3 For so long as the existing cafeteria ("Cafeteria ") located
in the North Barn is operated (there being no obligation on the part of Landlord
or any other person to continue or cause the continued operation of the
Cafeteria), Tenant and its employees, invitees, and agents shall have access to
and the right to use the Cafeteria. Tenant acknowledges that Landlord and/or the
operator of the Cafeteria shall have the right to set or cause to be set all
prices for goods at the Cafeteria in its sole discretion and that Landlord or
the operator of the Cafeteria shall have the sole discretion to reduce services
or terminate operation of the Cafeteria at any time without liability to Tenant.
Landlord assumes no responsibility for and Tenant, on behalf of its employees,
guests,



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invitees or otherwise, waives any claim it may have now or in the future for the
action of the operator of the Cafeteria or its agents, employees, invitees,
guests or suppliers.

       33. NET LEASE

              33.1 Landlord and Tenant agree that except as otherwise expressly
provided in this Lease, (i) this is a triple net Lease, (ii) Landlord shall not
be required to provide any services or take any action in connection with the
Demised Premises or the Property, and (iii) if, for any reason whatsoever,
Tenant's use or occupancy of enjoyment of the Demised Premises shall be
disturbed, prevented or interfered with for any reason whatsoever (other than
Landlord's willful and intentional violation of the terms and provisions of this
Lease) Tenant shall continue to pay the rent and additional rent without
abatement, suspension or reduction.

       34. RIGHT OF FIRST NEGOTIATION

              34.1 Following Tenant's occupancy of the Initial Premises, and
subject to the rights of existing tenants within specific suites, Tenant shall
have a right of first opportunity to negotiate for a lease of any space on the
first and second floor "East" space of the Production Building, which has
previously been leased to another Tenant and becomes available (the "Opportunity
Space"), prior to the Opportunity Space being offered to any person or entity
other than Tenant. The terms, conditions and rental rate under which the
Opportunity Space is to be leased to Tenant, if at all, are subject to the
mutual agreement of Landlord and Tenant at such time as the Opportunity Space
becomes available and Tenant desires to lease it from Landlord. Space occupied
by a tenant that wishes to remain after the expiration of the term of its lease
(whether or not it has an extension option) will not be deemed "available."

              34.2 Prior to offering any of the Opportunity Space (excluding any
Opportunity Space previously offered to Tenant under this Section) to any person
or entity other than Tenant, Landlord shall notify Tenant that Landlord expects
Opportunity Space to become available to lease, advising Tenant of the date such
Opportunity Space is expected to be available. Tenant shall then have ten (10)
calendar days in which to notify Landlord in writing exercising Tenant's right
to negotiate a lease of the Opportunity Space and twenty (20) days after
notification to reach written mutual agreement with Landlord regarding the
terms, conditions and rental rate for such lease. If Landlord and Tenant do not
execute a lease amendment incorporating all material terms with respect to the
Opportunity Space within such 20 day period, Tenant's right with respect to that
particular Opportunity Space shall forever terminate.

              34.3 The foregoing negotiation right shall apply only with respect
to Opportunity Space, as an entire, discrete and identifiable amount of floor
space, as the same is now or in the future will be leased to some other tenant,
and may not be exercised



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with respect to only a portion thereof, unless only a portion shall first become
available (in which case, the foregoing negotiation right shall apply to such
portions, as the same become available), or unless otherwise agreed in writing
by Landlord. If Tenant shall fail to exercise such negotiation right, after the
notice by the Landlord of the availability of the Opportunity Space, as provided
herein, such right shall be deemed to have lapsed and expired, and shall be of
no further force or effect as to that notification by Landlord. Landlord may
thereafter freely lease all or a portion of the Opportunity Space to any other
party, at any time, on any terms, in Landlord's sole discretion. The foregoing
negotiation right shall be subject to the right of existing tenants or occupants
of the Opportunity Space to renew their existing leases whether pursuant to
options to extend or renew or expand previously granted, and in all events is
subject and subordinate to any existing rights of any other persons or entities
to lease the Opportunity Space.

              34.4 Landlord does not guarantee that the Opportunity Space will
be available on the commencement date for the lease thereof, if the then
existing occupants of the Opportunity Space shall hold-over or for any other
reason the space shall not be available for reasons beyond Landlord's reasonable
control. In such event, rent with respect to the Opportunity Space shall be
abated until Landlord legally delivers the same to Tenant, as Tenant's sole
recourse. Tenant's exercise of such negotiation right shall not operate to cure
any default by Tenant of any of the terms or provisions in the Lease, nor to
extinguish or impair any rights or remedies of Landlord arising by virtue of
such default. The negotiation right shall, at Landlord's election, be null and
void, if there is any uncured Event of Default under the Lease on the date
Tenant exercises its rights hereunder or at any time thereafter and prior to
commencement of the Lease for the Opportunity Space.

       35. CAFETERIA SPACE

              35.1 Landlord shall make available the Cafeteria Space to Tenant's
employees on a nonexclusive basis for cafeteria style eating as provided in this
First Amendment.

              35.2 Landlord shall have contracted with a food service provider
to provide food services for breakfast and lunch between the hours of 7:00 a.m.
and 2:00 p.m. on Monday through Friday, excluding holidays.

              35.3 The Annual Basic Rental as set forth on Exhibit C of the
Lease shall be increased by the "Cafeteria Additional Rent" which is Tenant's
Proportionate Share (as defined in Section 2.6(a)) of the "Cost of Cafeteria
Space." The "Cost of Cafeteria Space" equals the agreed rentable square footage
of the Cafeteria Space (6,774 s.f.) multiplied by the sum of (i) the fair market
rent of space in the Administrative Building (currently agreed to be $16.50 psf)
(ii) the proportion of Operating Expenses and Taxes equal to the number of
square feet compromising the Cafeteria Space divided by the total



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<PAGE>   55

number of leasable square feet in the Buildings, (currently estimated to be
$6.15 psf) and (iii) any costs and expenses incurred by Landlord in contracting
with the food service provider.

       Such amounts shall be increased at the beginning of each Fiscal Year
during the term of the Lease to reflect any increases in Fair Market Rent,
Operating Expenses or costs or expenses incurred by Landlord in dealing with the
food service provider.

              35.4 The Cost of Cafeteria Space for each Fiscal Year as
reasonably estimated by Landlord from time to time prior to or during any Fiscal
Year shall be communicated to Tenant by written notice (the "Estimated Cost of
Cafeteria Space"). If Landlord does not deliver such a notice (an "Estimate")
prior to the commencement of any Fiscal Year, Tenant shall continue to pay
Estimated Cost of Cafeteria Space as provided in the most recently received
Estimate (or Updated Estimate, as defined below) until the Estimate for such
Fiscal Year is delivered to Tenant. If, from time to time during any Fiscal
Year, Landlord reasonably determines that Cost of Cafeteria Space for such
Fiscal Year have increased or will increase, Landlord may deliver to Tenant an
updated Estimate ("Updated Estimate") for such Fiscal Year.

       After the end of each Fiscal Year, Landlord shall send to Tenant a
statement (the "Final Cost of Cafeteria Space Statement") showing (i) the
calculation of the Cost of Cafeteria Space for such Fiscal Year, (ii) the
aggregate amount of the Estimated Cost of Cafeteria Space previously paid by
Tenant for such Fiscal Year, and (iii) the amount, if any, by which the
aggregate amount of the installments of Estimated Cost of Cafeteria Space paid
by Tenant with respect to such Fiscal Year exceeds or is less than the Final
Cost of Cafeteria Space for such Fiscal Year. Tenant shall pay the amount of any
deficiency to Landlord within thirty (30) days of the sending of such statement.
At Landlord's option, any excess shall either be credited against payments past
or next due hereunder or refunded by Landlord, provided Tenant is not then in
default hereunder.

       On reasonable advance written notice given by Tenant within thirty (30)
days following the receipt by Tenant of the Final Cost of Cafeteria Space
Statement, Landlord shall make available to Tenant Landlord's books and records
maintained with respect to the Cost of Cafeteria Space for such Fiscal Year. If
Tenant wishes to contest any item within any Final Cost of Cafeteria Space
Statement, Tenant shall do so in a written notice (a "Contest Notice") received
by Landlord within thirty (30) days following Tenant's inspection of Landlord's
books and records, but in any event not later than sixty (60) days after
Landlord shall have made its books and records available to Tenant for
inspection, which Contest Notice shall specify in detail the item or items being
contested and the specific grounds therefor. However, the giving of such Contest
Notice shall not relieve Tenant from the obligation to pay any deficiency in
such statement or the Landlord from the obligation to pay (by refund or credit)
any excess in such statement in accordance with this Section. Notwithstanding
anything else in this Section to the contrary, if Tenant



                                       54
<PAGE>   56

fails to give such Contest Notice within said thirty (30) day period or fails to
pay any deficiency in such statement in accordance with this Section, whether or
not contested, Tenant shall have no further right to contest any item or items
in such statement and Tenant shall be deemed to accept such statement.

       Resolution of a Tenant's Contest notice shall be handled in the same
manner as said notice regarding Operating Expenses in Section 2.9(a) of the
Lease.

       36. SECURITY DEPOSIT

       Concurrently with execution of this Lease, Tenant will deposit with
Landlord $434,500 as a security deposit as security for Tenant's performance of
every provision in this Lease. If Tenant defaults under any provision of this
Lease, Landlord may apply all or any part of the Security Deposit to the payment
of sums due, including damages suffered by Landlord due to such default in
addition to any other remedy which Landlord may possess. In such event, Tenant
shall, within five days after written demand by Landlord, deposit with Landlord
the amount so applied so that Landlord shall have the full Security Deposit on
hand at all times during the term of this Lease. Any application of the Security
Deposit to cure Defaults shall not be construed as a payment of liquidated
damages for the Default. If Tenant fully complies with all of the provisions of
this Lease, the Security Deposit will be repaid to Tenant without interest
within 30 days after the Expiration Date. Landlord is not required to place
these funds in escrow and is entitled to any interest thereon should they be
invested. In addition to securing Tenant's performance under the Lease, $232,500
of the Security Deposit shall be retained by Landlord should Tenant fail to
execute that first five (5) year option to renew the Lease.

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

                                        LANDLORD
ATTEST:                                 HIBBS/WOODINVILLE ASSOCIATES,
                                        LLC, a Washington limited liability
                                        company


/s/ TOM ERLAUDSON                       By: /s/ ROBERT E. HIBBS
-------------------------------            -------------------------------------

Name: Tom Erlaudson                      Name: Robert E. Hibbs
     --------------------------              -----------------------------------

                                        Title: Manager
                                              ----------------------------------














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<PAGE>   57


ATTEST:                                TENANT
                                       XCYTE THERAPIES, INC.,
                                       A Delaware corporation
/s/ TOM ERLAUDSON
-------------------------------
                                       By: /s/ RONALD JAY BERENSON
Name: Tom Erlaudson                        -------------------------------------
     --------------------------
                                       Name: Ronald Jay Berenson
                                             -----------------------------------










                                       56

<PAGE>   58
STATE OF WASHINGTON                 )
                                    )ss:
COUNTY OF KING                      )

       I certify that I know or have satisfactory evidence that Robert E. Hibbs
is the person who appeared before me, and said person acknowledged that he
signed this instrument, on oath stated that he/she was authorized to execute
this instrument and acknowledged it as the Manager of HIBBS/WOODINVILLE
ASSOCIATES, LLC, a Washington limited liability company, to be the free and
voluntary act of such party for the uses and purposes mentioned in this
instrument.

       DATED: December 7, 2000.


                                           /s/ JOSEPHINA I. WHITEHEAD
                                           -------------------------------------
                                           Print Name: Josephina I. Whitehead
                                                      --------------------------
                                           NOTARY PUBLIC in and for the State of
                                           Washington, residing at Seattle
                                                                  --------------
                                           My Appointment expires: 3-28-02
                                                                  --------------

(Use this space for notarial stamp/seal)



                                       57
<PAGE>   59

STATE OF WASHINGTON                 )
                                    )ss:
COUNTY OF                           )

       I certify that I know or have satisfactory evidence that
Ronald Berenson is the person who appeared before me, and said person
acknowledged that he signed this instrument, on oath stated that he/she was
authorized to execute this instrument and acknowledged it as the President of
XCYTE THERAPIES, INC., a Delaware corporation, to be the free and voluntary act
of such party for the uses and purposes mentioned in this instrument.

       DATED: December 7, 2000.



                                           /s/ SAMANTHA GOLDING
                                           -------------------------------------
                                           Print Name: Samantha Golding

                                           NOTARY PUBLIC in and for the State of
                                           Washington, residing at Seattle

                                           My Appointment expires: 1/08/02

(Use this space for notarial stamp/seal)



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                                    EXHIBIT A

              THE PROPERTY, BUILDINGS, PARKING LOT AND COMMON AREAS

       Lots 12, 13, 14, 15 and 16 of Quadrant Monte Villa Center, according to
       the plat thereof, recorded in Volume 54 of Plats, pages 165 through 169,
       inclusive, records of Snohomish County, Washington.

       Situate in the City of Bothell, County of Snohomish, State of Washington



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                                    EXHIBIT B

                                DEMISED PREMISES



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                                    EXHIBIT C

                                BASIC ANNUAL RENT


       The Initial Basic Annual Rent shall be $20.00 per rental square foot per
year. Basis Annual Rent shall be increased annual during the term by four and
five-tenths percent (4.5%) per annum. In the event Tenant occupies the Premises
prior to December 1, 2000, Basic Annual Rent through December 1, 2000 shall be
charged at the rate of $10.00 per rentable square feet per year.

       Basic Annual Rent for both the first and second five year renewal terms
shall be equal to the greater of the then existing Basic Annual Rent due under
the Lease at the end of the then expiring initial lease term or renewal lease
term or market rent for similar space in the Bothell, Washington submarket.



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