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                                                                   EXHIBIT 10.41


                                 LEASE AGREEMENT

        THIS LEASE AGREEMENT is made this 29th day of February , 2000, between
ARE- 1201 HARBOR BAY, LLC, a Delaware limited liability company ("LANDLORD"),
and AVIGEN, INC., a Delaware corporation ("TENANT").

ADDRESS:       1201 Harbor Bay Parkway, Alameda, California

PREMISES:      That portion of the Project, containing approximately 45,348
               rentable square feet, as determined by Landlord, as shown on
               EXHIBIT A.

PROJECT:       The real property on which the building in which the Premises are
               located, together with all improvements thereon and appurtenances
               thereto as described on EXHIBIT B.

<TABLE>
<S>                                               <C>
BASE RENT:     $72,556.80, per month              RENTABLE AREA OF PREMISES: 45,348 sq. ft.

RENTABLE AREA OF PROJECT: 61,015 sq. ft.          TENANT'S SHARE OF OPERATING EXPENSES: 74.3%

SECURITY DEPOSIT: $217,670                        TARGET COMMENCEMENT DATE: July 1, 2003
</TABLE>

RENT ADJUSTMENT PERCENTAGE:  5.0%

BASE TERM:     Commencing on the Commencement Date and expiring on May 31, 2008

PERMITTED USE: Research and development laboratory, related office and other
               related uses consistent with the character of the Project

ADDRESS FOR RENT PAYMENT:                   LANDLORD'S NOTICE ADDRESS:
135 N. Los Robles Avenue, Suite 250         135 N. Los Robles Avenue, Suite 250
Pasadena, CA 91101                          Pasadena, CA 91101
Attention: Accounts Receivable              Attention: General Counsel

TENANT'S NOTICE ADDRESS:
Avigen, Inc.
1201 Harbor Bay Parkway
Alameda, California 94502
Attention: Dr. John Monahan

The following Exhibits and Addenda are attached hereto and incorporated herein
by this reference:

[X] EXHIBIT A - PREMISES DESCRIPTION
[X] EXHIBIT B - DESCRIPTION OF PROJECT
[ ] EXHIBIT C - INTENTIONALLY OMITTED
[X] EXHIBIT D - COMMENCEMENT DATE
[X] EXHIBIT E - RULES AND REGULATIONS
[X] EXHIBIT F - TENANT'S PERSONAL PROPERTY
[X] EXHIBIT G - ESTOPPEL CERTIFICATE
[X] EXHIBIT H - NONDISTURBANCE AGREEMENT

        1. LEASE OF PREMISES. Upon and subject to all of the terms and
conditions hereof, Landlord hereby leases the Premises to Tenant and Tenant
hereby leases the Premises from Landlord. The portions of the Project which are
for the non-exclusive use of tenants of the Project are collectively referred to
herein as the "COMMON AREAS." Landlord reserves the right to modify Common
Areas, provided that such modifications do not materially adversely affect
Tenant's use of the Premises for the Permitted Use.



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        2. DELIVERY; ACCEPTANCE OF PREMISES; COMMENCEMENT DATE. Tenant is as of
the date hereof occupying approximately 23,000 square feet of the Premises (the
"AVIGEN SPACE") and the balance (the "LUCENT SPACE") is leased by Lucent
Technologies, Inc. ("LUCENT") from Landlord pursuant to a Lease dated as of June
1, 1998, by and between Landlord and Ascend Communications, Inc., Lucent's
predecessor (the "LUCENT LEASE"). The Lucent Space is subleased to Tenant
pursuant to a Sublease dated as of February 1, 2000, by and between Lucent and
Tenant (the "SUBLEASE"). Landlord shall use reasonable efforts to deliver the
Lucent Space to Tenant on or before the Target Commencement Date ("DELIVERY" or
"DELIVER"). If Landlord fails to timely Deliver the Lucent Space, Landlord shall
not be liable to Tenant for any loss or damage resulting therefrom, and this
Lease shall not be void or voidable; provided, however, that Tenant shall not be
obligated to pay Rent with respect to the Lucent Space until Landlord Delivers
such space to Tenant.

        The "COMMENCEMENT DATE" of this Lease shall be the earlier of (i) the
Lucent Space Commencement Date (as defined below) and (ii) May 15, 2003. If the
Lucent Lease terminates before June 30, 2003, for any reason other than a
default by Tenant under the Sublease, then this Lease shall commence with
respect to the Lucent Space as of the date of termination of the Lucent Lease
and such date shall be the "LUCENT COMMENCEMENT DATE" hereunder. Upon request of
Landlord, Tenant shall execute and deliver a written acknowledgment of the
commencement of the Term hereof with respect to each of the Avigen Space and the
Lucent Space, as applicable, and the expiration date of the Term when such are
established in the form attached to this Lease as EXHIBIT D; provided, however,
Tenant's failure to execute and deliver such acknowledgment shall not affect
Landlord's rights hereunder. The "TERM" of this Lease shall be the Base Term and
any Extension Term which Tenant may elect pursuant to Section 39 hereof.
Notwithstanding anything set forth herein to the contrary, if Landlord
terminates the existing Lease by and between Landlord and Tenant with respect to
the Avigen Space (the "EXISTING LEASE") as a result of any breach or default by
Tenant thereunder, or if Lucent terminates the Sublease as a result of any
breach or default by Tenant as sublessee thereunder, then Landlord shall have
the right to terminate this Lease by written notice to Tenant at any time
following the termination of the Existing Lease or the Sublease.

        Tenant shall accept the Avigen Space and the Lucent Space in their
condition as of the date of delivery of each such space to Tenant, subject to
all applicable laws, ordinances, regulations, covenants and restrictions.
Landlord shall have no obligation for any defects in the Premises. Tenant's
taking possession of the Premises shall be conclusive evidence that Tenant
accepts the Premises and that the Premises were in good condition at the time
possession was taken. Any occupancy by Tenant of the Lucent Space hereunder
before May 15, 2003, shall be subject to all of the terms and conditions of this
Lease.

        Tenant agrees and acknowledges that neither Landlord nor any agent of
Landlord has made any representation or warranty with respect to the condition
of any or all of the Premises or the Project, and/or the suitability of the
Premises or the Project for the conduct of Tenant's business, and Tenant waives
any implied warranty that the Premises or the Project are suitable for the
Permitted Use. This Lease constitutes the complete agreement of Landlord and
Tenant with respect to the subject matter hereof and supersedes any and all
prior representations, inducements, promises, agreements, understandings and
negotiations which are not contained herein. Landlord in executing this Lease
does so in reliance upon Tenant's representations, warranties, acknowledgments
and agreements contained herein.

        3.     RENT.

        (a) BASE RENT. The first month's Base Rent and the Security Deposit
shall be due and payable not later than the earlier of (i) the Lucent
Commencement Date, and (ii) February 15, 2003. Tenant shall pay to Landlord in
advance, without demand, abatement, deduction or set-off, monthly installments
of Base Rent on or before the first day of each calendar month



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during the Term hereof, in lawful money of the United States of America, at the
office of Landlord for payment of Rent set forth above, or to such other person
or at such other place as Landlord may from time to time designate in writing.
Payments of Base Rent for any fractional calendar month shall be prorated. The
obligation of Tenant to pay Base Rent and other sums to Landlord and the
obligations of Landlord under this Lease are independent obligations. Tenant
shall have no right at any time to abate, reduce, or set-off any Rent (as
defined in Section 5) due hereunder except for any abatement as may be expressly
provided in this Lease.

        (b) ADDITIONAL RENT. In addition to Base Rent, Tenant agrees to pay to
Landlord as additional rent ("ADDITIONAL RENT"): (i) Tenant's Share of
"Operating Expenses" (as defined in Section 5), and (ii) any and all other
amounts Tenant assumes or agrees to pay under the provisions of this Lease,
including, without limitation, any and all other sums that may become due by
reason of any default of Tenant or failure to comply with the agreements, terms,
covenants and conditions of this Lease to be performed by Tenant, after any
applicable notice and cure period.

        4. BASE RENT ADJUSTMENTS. Base Rent shall be increased on each annual
anniversary of the first day of the first full month during the Term of this
Lease by multiplying the Base Rent payable immediately before such adjustment by
the Rent Adjustment Percentage and adding the resulting amount to the Base Rent
payable immediately before such adjustment. Base Rent, as so adjusted, shall
thereafter be due as provided herein. Base Rent adjustments for any fractional
calendar month shall be prorated.

        5. OPERATING EXPENSE PAYMENTS. Landlord shall deliver to Tenant a
written estimate of Operating Expenses for each calendar year during the Term
(the "ANNUAL Estimate"), which may be revised by Landlord from time to time
during such calendar year. During each month of the Term, on the same date that
Base Rent is due, Tenant shall pay Landlord an amount equal to 1/12 of Tenant's
Share of the Annual Estimate. Payments for any fractional calendar month shall
be prorated.

        The term "OPERATING EXPENSES" means all costs and expenses of any kind
or description whatsoever incurred or accrued each calendar year by Landlord
with respect to the Project (including, without duplication, Taxes (as defined
in Section 9), reasonable reserves consistent with good business practice for
future repairs and replacements, capital repairs and improvements amortized over
the lesser of 7 years and the useful life of such capital items, and the costs
of Landlord's third party property manager or, if there is no third party
property manager, administration rent in the amount of 5.0% of Base Rent),
excluding only:

        (a) the original construction costs of the Project and renovation prior
to the date of the Lease and costs of correcting defects in such original
construction or renovation;

        (b) capital expenditures for expansion of the Project;

        (c) costs incurred in connection with environmental clean up, response
action or remediation on, in or under or about the Project, to the extent
related to the emergency generator and the related underground storage tank
formerly located on the Project;

        (d) interest, principal payments of Mortgage (as defined in Section 27)
debts of Landlord, financing costs and amortization of funds borrowed by
Landlord, whether secured or unsecured and all payments of base rent (but not
taxes or operating expenses) under any ground lease or other underlying lease of
all or any portion of the Project;

        (e) depreciation of the Project (except for capital improvements, the
cost of which are includable in Operating Expenses);



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        (f) advertising, legal and space planning expenses and leasing
commissions and other costs and expenses incurred in procuring and leasing space
to tenants for the Project, including any leasing office maintained in the
Project, free rent and construction allowances for tenants;

        (g) legal and other expenses incurred in the negotiation or enforcement
of leases;

        (h) completing, fixturing, improving, renovating, painting, redecorating
or other work, which Landlord pays for or performs for specific tenants within
their premises, and costs of correcting defects in such work;

        (i) costs of utilities outside normal business hours sold to tenants of
the Project;

        (j) costs to be reimbursed by other tenants of the Project or Taxes to
be paid directly by Tenant or other tenants of the Project, whether or not
actually paid;

        (k) salaries, wages, benefits and other compensation paid to officers
and employees of Landlord who are not assigned in whole or in part to the
operation, management, maintenance or repair of the Project;

        (l) general organizational, administrative and overhead costs relating
to maintaining Landlord's existence, either as a corporation, partnership, or
other entity, including general corporate, legal and accounting expenses;

        (m) costs (including attorneys' fees and costs of settlement, judgments
and payments in lieu thereof) incurred in connection with disputes with tenants,
other occupants, or prospective tenants, and costs and expenses, including legal
fees, incurred in connection with negotiations or disputes with employees,
consultants, management agents, leasing agents, purchasers or mortgagees of the
Building;

        (n) costs incurred by Landlord due to the violation by Landlord, its
employees, agents or contractors or any tenant of the terms and conditions of
any lease of space in the Project or any Legal Requirement (as defined in
Section 7);

        (o) tax penalties, fines or interest incurred as a result of Landlord's
negligence, inability or unwillingness to make payment and/or to file any tax or
informational returns when due, or from Landlord's failure to make any payment
required to be made by Landlord hereunder before delinquency;

        (p) overhead and profit increment paid to the Landlord or to
subsidiaries or affiliates of Landlord for goods and/or services in or to the
Project to the extent the same exceeds the costs of such goods and/or services
rendered by unaffiliated third parties on a competitive basis;

        (q) costs arising from Landlord's charitable or political contributions
or fine art maintained at the Project;

        (r) costs in connection with services (including electricity), items or
other benefits of a type which are not standard for the Project and which are
not available to Tenant without specific charges therefor, but which are
provided to another tenant or occupant of the Project, whether or not such other
tenant or occupant is specifically charged therefore by Landlord;

        (s) costs incurred in the sale or refinancing of the Project;

        (t) net income taxes of Landlord or the owner of any interest in the
Project, franchise, capital stock, gift, estate or inheritance taxes or any
federal, state or local documentary taxes imposed against the Project or any
portion thereof or interest therein; and



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        (u) any expenses otherwise includable within Operating Expenses to the
extent actually reimbursed by persons other than tenants of the Project under
leases for space in the Project.

        Within 90 days after the end of each calendar year (or such longer
period as may be reasonably required), Landlord shall furnish to Tenant a
statement (an "ANNUAL STATEMENT") showing in reasonable detail: (a) the total
and Tenant's Share of actual Operating Expenses for the previous calendar year,
and (b) the total of Tenant's payments in respect of Operating Expenses for such
year. If Tenant's Share of actual Operating Expenses for such year exceeds
Tenant's payments of Operating Expenses for such year, the excess shall be due
and payable by Tenant as Rent within 30 days after delivery of such Annual
Statement to Tenant. If Tenant's payments of Operating Expenses for such year
exceed Tenant's Share of actual Operating Expenses for such year Landlord shall
pay the excess to Tenant within 30 days after delivery of such Annual Statement,
except that after expiration, or earlier termination of the Term, Landlord shall
pay the excess to Tenant after deducting all other amounts due Landlord.

        The Annual Statement shall be final and binding upon Tenant unless
Tenant, within 30 days after Tenant's receipt thereof, shall contest any item
therein by giving written notice to Landlord, specifying each item contested and
the reason therefor. If, during such 30 day period, Tenant reasonably and in
good faith questions or contests the correctness of Landlord's statement of
Tenant's Share of Operating Expenses, Landlord will provide Tenant with access
to Landlord's books and records relating to the operation of the Project and
such information as Landlord reasonably determines to be responsive to Tenant's
questions. If after Tenant's review of such information, Landlord and Tenant
cannot agree upon the amount of Tenant's Share of Operating Expenses, then
Tenant shall have the right to have an independent public accounting firm
selected by Tenant from among the 5 largest in the United States, working
pursuant to a fee arrangement other than a contingent fee (at Tenant's sole cost
and expense) and approved by Landlord (which approval shall not be unreasonably
withheld or delayed), audit and/or review Landlord's books and records relating
to the operation of the Project and such other information relating to the
operation of the Project for the year in question (the "INDEPENDENT REVIEW").
The results of any such Independent Review shall be binding on Landlord and
Tenant. If the Independent Review shows that Tenant's pro rata share of the
Operating Expenses actually paid by Tenant for the calendar year in question
exceeded Tenant's obligations for such calendar year, Landlord shall at
Landlord's option either (i) credit the excess amount to the next succeeding
installments of estimated Operating Expenses or (ii) pay the excess to Tenant
within 30 days after delivery of such statement, except that after expiration or
earlier termination of the Term, Landlord shall pay the excess to Tenant after
deducting all other amounts due Landlord. If the Independent Review shows that
Tenant's payments of Tenant's Share of Operating Expenses for such calendar year
were less than Tenant's obligation for the calendar year, Tenant shall pay the
deficiency to the Landlord within 30 days after delivery of such statement. If
the Independent Review shows that Tenant has overpaid Tenant's pro rata share of
Operating Expenses by more than 5% then Landlord shall reimburse Tenant for all
costs incurred by Tenant for the Independent Review. Operating Expenses for the
calendar years in which Tenant's obligation to share therein begins and ends
shall be prorated. Notwithstanding anything set forth herein to the contrary, if
the Project is not at least 95% occupied on average during any year of the Term,
Tenant's Share of Operating Expenses for such year shall be computed as though
the Project had been 95% occupied on average during such year.

        "TENANT'S SHARE" shall be the percentage set forth on the first page of
this Lease as Tenant's Share as reasonably adjusted by Landlord for changes in
the physical size of the Premises or the Project occurring thereafter. Landlord
may equitably increase Tenant's Share for any item of expense or cost
reimbursable by Tenant that relates to a repair, replacement, or service that
benefits only the Premises or only a portion of the Project that includes the
Premises or that varies with occupancy or use. Base Rent, Tenant's Share of
Operating Expenses and all other amounts payable by Tenant to Landlord hereunder
are collectively referred to herein as



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        "RENT."

        6. DEPOSITS.

        (a) SECURITY DEPOSIT. On or before January 1, 2003, Tenant shall deposit
with Landlord security (the "SECURITY DEPOSIT") for the performance of all of
its obligations in the amount set forth in the Basic Lease Provisions, which
security shall be in the form of either cash or an unconditional and irrevocable
letter of credit or a combination thereof. Any such letter of credit (a "LETTER
OF CREDIT") shall: (i) be in form and substance satisfactory to Landlord, (ii)
name Landlord as beneficiary, (iii) expressly allow Landlord to draw upon it at
any time from time to time by delivering to the issuer notice that Landlord is
entitled to draw thereunder, (iv) be drawable on an FDIC-insured financial
institution reasonably satisfactory to Landlord, and (v) be redeemable in the
state of Landlord's choice. If Tenant does not provide Landlord with a
substitute Letter of Credit complying with all of the requirements hereof at
least ten (10) days before the stated expiration date of the then current Letter
of Credit, Landlord shall have the right to draw upon the current Letter of
Credit and hold the funds drawn as the Security Deposit. The Security Deposit
shall be held by Landlord as security for the performance of Tenant's
obligations under this Lease. The Security Deposit is not an advance rental
deposit or a measure of Landlord's damages in case of Tenant's default. Upon
each occurrence of a Default (as defined in Section 20), Landlord may use all or
any part of the Security Deposit to pay delinquent payments due under this
Lease, and the cost of any damage, injury, expense or liability caused by such
Default, without prejudice to any other remedy provided herein or provided by
law. Upon any such use of all or any portion of the Security Deposit, Tenant
shall pay Landlord on demand the amount that will restore the Security Deposit
to its original amount. Tenant hereby waives the provisions of any law, now or
hereafter in force, which provide that Landlord may claim from a security
deposit only those sums reasonably necessary to remedy defaults in the payment
of Rent, to repair damage caused by Tenant or to clean the Premises, it being
agreed that Landlord may, in addition, claim those sums reasonably necessary to
compensate Landlord for any other loss or damage, foreseeable or unforeseeable,
caused by the act or omission of Tenant or any officer, employee, agent or
invitee of Tenant. Upon bankruptcy or other debtor-creditor proceedings against
Tenant, the Security Deposit shall be deemed to be applied first to the payment
of Rent and other charges due Landlord for periods prior to the filing of such
proceedings. Upon any such use of all or any portion of the Security Deposit,
Tenant shall, within five (5) days after demand from Landlord, reinstate the
Security Deposit to its original amount. If Tenant shall fully perform every
provision of this Lease to be performed by Tenant, the Security Deposit, or any
balance thereof, shall be returned to Tenant (or, at Landlord's option, to the
last assignee of Tenant's interest hereunder) within 360 days after the
expiration or earlier termination of this Lease.

        If Landlord transfers its interest in the Project or this Lease,
Landlord shall either (a) transfer any Security Deposit then held by Landlord to
a person or entity assuming Landlord's obligations under this Section 6, or (b)
return to Tenant any Security Deposit then held by Landlord and remaining after
the deductions permitted herein. Upon such transfer to such transferee or the
return of the Security Deposit to Tenant, Landlord shall have no further
obligation with respect to the Security Deposit, and Tenant's right to the
return of the Security Deposit shall apply solely against Landlord's transferee.
The Security Deposit is not an advance rental deposit or a measure of Landlord's
damages in case of Tenant's default. Landlord's obligation respecting the
Security Deposit is that of a debtor, not a trustee and; no interest shall
accrue thereon.

        (b) RESTORATION DEPOSIT. While Tenant occupied the Lucent Space under
the Sublease, and during the Term of this Lease pursuant to Section 12, Tenant
made and may make certain improvements to the Lucent Space (the "DISFAVORED
IMPROVEMENTS") which Landlord may, in its sole discretion, want removed,
reconfigured or otherwise altered in connection with any reletting of all or any
portion of the Lucent Space following the expiration or termination of this
Lease. To the extent such Disfavored Improvements are made by Tenant



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either during the term of the Sublease or this Lease, Landlord is to receive a
restoration deposit in the amount of $30 per rentable square foot of the
Disfavored Improvements (the "RESTORATION DEPOSIT"). Upon the Commencement Date
Tenant shall deposit with Landlord, or otherwise assure that Landlord holds, a
Restoration Deposit with respect to all Disfavored Improvements made during the
term of the Sublease.

        Tenant hereby acknowledges and agrees that notwithstanding anything to
the contrary contained in this Lease, the Lucent Lease or the Sublease, Landlord
shall have the right to elect either:

                (i) by written notice to Tenant delivered not less than 90 days
        before the expiration of the Term, to cause Tenant to remove all
        Disfavored Improvements and to fully restore the Lucent Space to the
        condition existing prior to the installation of such Disfavored
        Improvements, in which event upon full performance of all such
        obligations the Restoration Deposit shall be returned to Tenant, or

               (ii) by failing to give the notice described in clause (i) above,
        to elect to hold the Restoration Deposit and the Security Deposit for up
        to 12 months after the expiration or earlier termination of this Lease
        for the removal, reconfiguration or other alteration of all or any
        portion of the Disfavored Improvements; in which case Tenant shall have
        no liability for such removal or restoration of the Disfavored
        Improvements beyond the Restoration Deposit and the Security Deposit.

If Landlord exercises the right described in clause (ii) above, Landlord may use
all or any portion of the Restoration Deposit and the Security Deposit in
connection with any such removal, reconfiguration or other alteration at any
time up to 12 months after the expiration or earlier termination of this Lease.

        The Restoration Deposit shall be held by Landlord as security for the
foregoing purposes. The Restoration Deposit is not an advance rental deposit or
a measure of Landlord's damages in case of Tenant's default under clause (i)
above. Landlord's obligation respecting the Restoration Deposit is that of a
debtor, not a trustee; no interest shall accrue thereon. The Restoration Deposit
shall be the property of Landlord, but any unused balance shall be paid to
Tenant as provided below. Landlord shall be released from any obligation with
respect to the Restoration Deposit upon transfer of this Lease and the Premises
to a person or entity assuming Landlord's obligations under this Section 6.
Tenant hereby waives the provisions of any law, now or hereafter in force, which
provide that Landlord may claim from a security deposit only those sums
reasonably necessary to remedy defaults in the payment of Rent, to repair damage
caused by Tenant or to clean the Premises. Any balance of the Restoration
Deposit remaining after Landlord has completed its removal, reconfiguration or
other alteration of the Disfavored Improvements shall be returned to Tenant (or,
at Landlord's option, to the last assignee of Tenant's interest hereunder)
within 360 days after the expiration or earlier termination of this Lease.

        7. USE. The Premises shall be used solely for the Permitted Use set
forth in the Basic Lease Provisions, in compliance with all laws, orders,
judgments, ordinances, regulations, codes, directives, permits, licenses,
covenants and restrictions now or hereafter applicable to the Premises, and the
use and occupancy thereof (collectively, "LEGAL REQUIREMENTS"). Tenant shall,
upon 5 days' written notice from Landlord, discontinue any use of the Premises
which is declared by any Governmental Authority (as defined in Section 9) having
jurisdiction to be a violation of any Legal Requirement. Tenant will not use or
permit the Premises to be used for any purpose or in any manner that would void
Tenant's or Landlord's insurance, increase the insurance risk, or cause the
disallowance of any sprinkler or other credits. Tenant shall reimburse Landlord
promptly upon demand for any additional premium charged for any such insurance
policy by reason of Tenant's failure to comply with the provisions of this
Section or otherwise caused by Tenant's use and/or occupancy of the Premises.
Tenant will use the



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Premises in a careful, safe and proper manner and will not commit waste,
overload the floor or structure of the Premises, subject the Premises to use
that would damage the Premises or obstruct or interfere with the rights of
Landlord or other tenants or occupants of the Project, including conducting or
giving notice of any auction, liquidation, or going out of business sale on the
Premises, or using or allowing the Premises to be used for any unlawful purpose.
Tenant shall cause any equipment or machinery to be installed in the Premises so
as to reasonably prevent sounds or vibrations from the Premises from extending
into Common Areas, or other space in the Project. Tenant shall not place any
machinery or equipment weighing 500 pounds or more in or upon the Premises or
transport or move such items through the Common Areas of the Project or in the
Project elevators without the prior written consent of Landlord. Except as may
be provided under the Work Letter, Tenant shall not, without the prior written
consent of Landlord, use the Premises in any manner which will require
ventilation, air exchange, heating, gas, steam, electricity or water beyond the
existing capacity of the Project as proportionately allocated to the Premises
based upon Tenant's Share as usually furnished for the Permitted Use.

        Landlord has received no notices that THE PREMISES are not in compliance
with the applicable provisions of the Americans With Disabilities Act, 42 U.S.C.
Section 12101, et seq. (together with regulations promulgated pursuant thereto,
"ADA"). Landlord shall be responsible, as an Operating Expense, for any
alterations or modifications to the interior or the exterior of the Premises or
the Project that are required by Legal Requirements (other than compliance of
the Premises with the ADA) which are generally applicable without regard to the
specific use or occupancy of, activity occurring in or alteration of any portion
of the Project. Tenant, at its sole expense, shall make all other alterations or
modifications to the interior or the exterior of the Premises or the Project
that are required by Legal Requirements (including in all circumstances
compliance of the Premises with the ADA) related to Tenant's use or occupancy of
the Premises, any activity occurring in the Premises or any alteration of the
Premises. Notwithstanding any other provision herein to the contrary, Tenant
shall be responsible for any and all demands, claims, liabilities, losses,
costs, expenses, actions, causes of action, damages or judgments, and all
reasonable expenses incurred in investigating or resisting the same (including,
without limitation, reasonable attorneys' fees, charges and disbursements and
costs of suit) (collectively, "CLAIMS") arising out of or in connection with
Legal Requirements, and Tenant shall indemnify, defend, hold and save Landlord
harmless from and against any and all Claims arising out of or in connection
with any failure of the Premises to comply with any Legal Requirement.

        8 HOLDING OVER. If, with Landlord's express written consent, Tenant
retains possession of the Premises after the termination of the Term, (i) unless
otherwise agreed in such written consent, such possession shall be subject to
immediate termination by Landlord at any time, (ii) all of the other terms and
provisions of this Lease (including, without limitation, the adjustment of Base
Rent pursuant to Section 4 hereof) shall remain in full force and effect
(excluding any expansion or renewal option or other similar right or option)
during such holdover period, (iii) Tenant shall continue to pay Base Rent in the
amount payable upon the date of the expiration or earlier termination of this
Lease or such other amount as Landlord may indicate, in Landlord's sole and
absolute discretion, in such written consent (not to exceed 200% of the Rent in
effect during the last 30 days of the Term), and (iv) all other payments shall
continue under the terms of this Lease. If Tenant remains in possession of the
Premises after the expiration or earlier termination of the Term without the
express written consent of Landlord, (A) Tenant shall become a tenant at
sufferance upon the terms of this Lease except that the monthly rental shall be
equal to 200% of the Rent in effect during the last 30 days of the Term, and (B)
Tenant shall be responsible for all damages suffered by Landlord resulting from
or occasioned by Tenant's holding over, including consequential damages. No
holding over by Tenant, whether with or without consent of Landlord, shall
operate to extend this Lease except as otherwise expressly provided, and this
Section 8 shall not be construed as consent for Tenant to retain possession of
the Premises. Acceptance by Landlord of Rent after the expiration of the Term or
earlier termination of this Lease shall not result in a renewal or reinstatement
of this Lease.



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        9 TAXES. Landlord shall pay, as part of Operating Expenses, all taxes,
levies, assessments and governmental charges of any kind (collectively referred
to as "TAXES") imposed by any federal, state, regional, municipal, local or
other governmental authority or agency, including, without limitation,
quasi-public agencies (collectively, "GOVERNMENTAL AUTHORITY") during the Term,
including, without limitation, all Taxes: (i) imposed on or measured by or
based, in whole or in part, on rent payable to Landlord under this Lease and/or
from the rental by Landlord of the Project or any portion thereof, or (ii) based
on the square footage, assessed value or other measure or evaluation of any kind
of the Premises or the Project, or (iii) assessed or imposed by or on the
operation or maintenance of any portion of the Premises or the Project,
including parking, or (iv) assessed or imposed by, or at the direction of, or
resulting from statutes or regulations, or interpretations thereof, promulgated
by, any Governmental Authority, or (v) imposed as a license or other fee on
Landlord's business of leasing space in the Project. Landlord may contest by
appropriate legal proceedings the amount, validity, or application of any Taxes
or liens securing Taxes. Taxes shall not include any net income taxes imposed on
Landlord unless such net income taxes are in substitution for any Taxes payable
hereunder. If any such Tax is levied or assessed directly against Tenant, then
Tenant shall be responsible for and shall pay the same at such times and in such
manner as the taxing authority shall require. Tenant shall pay, prior to
delinquency, any and all Taxes levied or assessed against any personal property
or trade fixtures placed by Tenant in the Premises, whether levied or assessed
against Landlord or Tenant. If any Taxes on Tenant's personal property or trade
fixtures are levied against Landlord or Landlord's property, or if the assessed
valuation of the Project is increased by a value attributable to improvements in
or alterations to the Premises, whether owned by Landlord or Tenant and whether
or not affixed to the real property so as to become a part thereof, higher than
the base valuation on which Landlord from time-to-time allocates Taxes to all
tenants in the Project, Landlord shall have the right, but not the obligation,
to pay such Taxes. Landlord's determination of any excess assessed valuation
shall be binding and conclusive, absent manifest error. The amount of any such
payment by Landlord shall constitute Additional Rent due from Tenant to Landlord
immediately upon demand.

        10 PARKING. Tenant shall have the right, at no additional charge, to
park in common with other tenants of the Project pro rata in accordance with the
rentable area of the Premises and the rentable areas of the Project occupied by
such other tenants in those areas designated for non-reserved parking, subject
in each case to Landlord's rules and regulations. Landlord may allocate parking
spaces among Tenant and other tenants in the Project pro rata as described above
if Landlord determines that such parking facilities are becoming crowded.
Landlord shall not be responsible for enforcing Tenant's parking rights against
any third parties, including other tenants of the Project.

        11 UTILITIES, SERVICES.

        Landlord shall provide, subject to the terms of this Section 11, water,
electricity, heat, light, power, telephone, sewer, and other utilities
(including gas and fire sprinklers to the extent the Project is plumbed for such
services), refuse and trash collection and janitorial services (collectively,
"UTILITIES"). Landlord shall pay, as Operating Expenses or subject to Tenant's
reimbursement obligation, for all Utilities used on the Premises, all
maintenance charges for Utilities, and any storm sewer charges or other similar
charges for Utilities imposed by any Governmental Authority or Utility provider,
and any taxes, penalties, surcharges or similar charges thereon. Landlord may
cause, at Tenant's expense, any Utilities to be separately metered or charged
directly to Tenant by the provider. Tenant shall pay directly to the Utility
provider, prior to delinquency, any separately metered Utilities and services
which may be furnished to Tenant or the Premises during the Term. Tenant shall
pay, as part of Operating Expenses, its share of all charges for jointly metered
Utilities based upon consumption, as reasonably determined by Landlord. No
interruption or failure of Utilities, from any cause whatsoever other than
Landlord's willful misconduct, shall result in eviction or constructive



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eviction of Tenant, termination of this Lease or the abatement of Rent. Tenant
agrees to limit use of water and sewer with respect to Common Areas to normal
restroom use.

        12 ALTERATIONS AND TENANT'S PROPERTY. Any alterations, additions, or
improvements made to the Premises by or on behalf of Tenant, including
additional locks or bolts of any kind or nature upon any doors or windows in the
Premises, but excluding installation, removal or realignment of furniture
systems (other than removal of furniture systems owned or paid for by Landlord)
not involving any modifications to the structure or connections (other then by
ordinary plugs or jacks) to Building Systems (as defined in Section 13)
("ALTERATIONS") shall be subject to Landlord's prior written consent, which may
be given or withheld in Landlord's sole discretion if any such Alteration
affects the structure or Building Systems. Tenant may construct nonstructural
Alterations in the Premises without Landlord's prior approval if the aggregate
cost of all such work in any 12 month period does not exceed $50,000 (a
"NOTICE-ONLY ALTERATION"), provided Tenant notifies Landlord in writing of such
intended Notice-Only Alteration, and such notice shall be accompanied by plans,
specifications, work contracts and such other information concerning the nature
and cost of the Notice-Only Alteration as may be reasonably requested by
Landlord, which notice and accompanying materials shall be delivered to Landlord
not less than 15 business days in advance of any proposed construction. If
Landlord approves any Alterations, Landlord may impose such conditions on Tenant
in connection with the commencement, performance and completion of such
Alterations as Landlord may deem appropriate in Landlord's reasonable
discretion, including requiring a Restoration Deposit, to be held and used as
described in Section 6(b), in connection with any such Alterations made to the
Lucent Space which, in Landlord's reasonable opinion, substantially destroy the
office improvements existing in the Lucent Space as of the date hereof. Any
request for approval shall be in writing, delivered not less than 15 business
days in advance of any proposed construction, and accompanied by plans,
specifications, bid proposals, work contracts and such other information
concerning the nature and cost of the alterations as may be reasonably requested
by Landlord, including the identities and mailing addresses of all persons
performing work or supplying materials. Landlord's right to review plans and
specifications and to monitor construction shall be solely for its own benefit,
and Landlord shall have no duty to ensure that such plans and specifications or
construction comply with applicable Legal Requirements. Tenant shall cause, at
its sole cost and expense, all Alterations to comply with insurance requirements
and with Legal Requirements and shall implement at its sole cost and expense any
alteration or modification required by Legal Requirements as a result of any
Alterations. Tenant shall pay to Landlord, as Additional Rent, on demand an
amount equal to 3% of all charges incurred by Tenant or its contractors or
agents in connection with any Alteration to cover Landlord's overhead and
expenses for plan review, coordination, scheduling and supervision. Before
Tenant begins any Alteration, Landlord may post on and about the Premises
notices of non-responsibility pursuant to applicable law. Tenant shall reimburse
Landlord for, and indemnify and hold Landlord harmless from, any expense
incurred by Landlord by reason of faulty work done by Tenant or its contractors,
delays caused by such work, or inadequate cleanup.

        Tenant shall furnish security or make other arrangements reasonably
satisfactory to Landlord to assure payment for the completion of all Alterations
work free and clear of liens, and shall provide certificates of insurance for
workers' compensation and other coverage in amounts and from an insurance
company satisfactory to Landlord protecting Landlord against liability for
personal injury or property damage during construction. Upon completion of any
Alterations, Tenant shall deliver to Landlord: (i) sworn statements setting
forth the names of all contractors and subcontractors who did the work and final
lien waivers from all such contractors and subcontractors; and (ii) "as built"
plans for any such Alteration.

        Other than (i) the items, if any, listed on EXHIBIT F attached hereto,
(ii) any items agreed by Landlord in writing to be included on EXHIBIT F in the
future, and (iii) any trade fixtures, machinery, equipment and other personal
property which may be removed without material



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<PAGE>   11

damage to the Premises, which damage shall be repaired (including capping or
terminating utility hook-ups behind walls) by Tenant during the Term
(collectively, "TENANT'S PROPERTY"), all property of any kind paid for with the
TI Fund, all Alterations, built-in casework and cabinets and other similar
additions and improvements built into the Premises so as to become an integral
part of the Premises such as built-in plumbing, electrical and mechanical
systems (collectively, "INSTALLATIONS") shall be and shall remain the property
of Landlord during the Term and following the expiration or earlier termination
of the Term, shall not be removed by Tenant at any time during the Term and
shall remain upon and be surrendered with the Premises as a part thereof
following the expiration or earlier termination of this Lease; provided,
however, that Landlord shall, at the time its approval of such Installation is
requested or at the time it receives notice of a Notice-Only Alteration notify
Tenant if it has elected to cause Tenant to remove such Installation upon the
expiration or earlier termination of this Lease. If Landlord so elects, Tenant
shall remove such Installation upon the expiration or earlier termination of
this Lease and restore any damage caused by or occasioned as a result of such
removal, including, when removing any of Tenant's Property which was plumbed,
wired or otherwise connected to any of the Building Systems, capping off all
such connections behind the walls of the Premises and repairing any holes.
During any such restoration period, Tenant shall pay Rent to Landlord as
provided herein as if said space were otherwise occupied by Tenant.

        13 LANDLORD'S REPAIRS. Landlord, as an Operating Expense, shall maintain
all of the structural, exterior, parking and other Common Areas of the Project,
including HVAC, plumbing, fire sprinklers, elevators and all other building
systems serving the Premises and other portions of the Project ("BUILDING
SYSTEMS"), in good repair, reasonable wear and tear and uninsured losses and
damages caused by Tenant, its agents, servants, employees, invitees and
contractors excluded. Losses and damages caused by Tenant, its agents, servants,
employees, invitees and contractors shall be repaired by Landlord, to the extent
not covered by insurance, at Tenant's sole cost and expense. Landlord reserves
the right to stop Building System services when necessary (i) by reason of
accident or emergency, or (ii) for planned repairs, alterations or improvements,
which are, in the reasonable judgment of Landlord, desirable or necessary to be
made, until said repairs, alterations or improvements shall have been completed.
Landlord shall have no responsibility or liability for failure to supply
Building System services during any such period of interruption; provided,
however, that Landlord shall give Tenant 24 hours advance notice of any planned
stoppage of Building System services for routine maintenance, repairs,
alterations or improvements. Tenant shall promptly give Landlord written notice
of any repair required by Landlord pursuant to this Section, after which
Landlord shall have a reasonable opportunity to effect such repair. Landlord
shall not be liable for any failure to make any repairs or to perform any
maintenance unless such failure shall persist for an unreasonable time after
Tenant's written notice of the need for such repairs or maintenance. Tenant
waives its rights under any state or local law to terminate this Lease or to
make such repairs at Landlord's expense and agrees that the parties' respective
rights with respect to such matters shall be solely as set forth herein. Repairs
required as the result of fire, earthquake, flood, vandalism, war, or similar
cause of damage or destruction shall be controlled by Section 18.

        14 TENANT'S REPAIRS. Subject to Section 13 hereof, Tenant, at its
expense, shall repair, replace and maintain in good condition all portions of
the Premises, including, without limitation, entries, doors, ceilings, interior
windows, interior walls, and the interior side of demising walls. Such repair
and replacements may include capital expenditures and repairs whose benefit may
extend beyond the Term. Should Tenant fail to make any such repair or
replacement or fail to maintain the Premises, Landlord shall give Tenant notice
of such failure. If Tenant fails to commence cure of such default within 10 days
of Landlord's notice, and thereafter diligently prosecute such cure to
completion, Landlord may perform such work and shall be reimbursed by Tenant
within 10 days after demand therefor; provided, however, that if such default by
Tenant creates or could create an emergency, Landlord may immediately commence
cure of such default and shall thereafter be entitled to recover the costs of
such cure from Tenant. Subject to Sections 17 and 18, Tenant shall bear the full
uninsured cost of any



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<PAGE>   12

repair or replacement to any part of the Project that results from damage caused
by Tenant, its agents, contractors, or invitees and any repair that benefits
only the Premises.

        15 MECHANIC'S LIENS. Tenant shall discharge, by bond or otherwise, any
mechanic's lien filed against the Premises or against the Project for work
claimed to have been done for, or materials claimed to have been furnished to,
Tenant within 10 days after the filing thereof, at Tenant's sole cost and shall
otherwise keep the Premises and the Project free from any liens arising out of
work performed, materials furnished or obligations incurred by Tenant. Should
Tenant fail to discharge any lien described herein, Landlord shall have the
right, but not the obligation, to pay such claim or post a bond or otherwise
provide security to eliminate the lien as a claim against title to the Project
and the cost thereof shall be immediately due from Tenant as Additional Rent. If
Tenant shall lease or finance the acquisition of office equipment, furnishings,
or other personal property of a removable nature utilized by Tenant in the
operation of Tenant's business, Tenant warrants that any Uniform Commercial Code
Financing Statement executed by Tenant will upon its face or by exhibit thereto
indicate that such Financing Statement is applicable only to removable personal
property of Tenant located within the Premises. In no event shall the address of
the Project be furnished on the statement without qualifying language as to
applicability of the lien only to removable personal property, located in an
identified suite held by Tenant.

        16 INDEMNIFICATION. Tenant hereby indemnifies and agrees to defend, save
and hold Landlord harmless from and against any and all Claims for injury or
death to persons or damage to property occurring within or about the Premises,
arising directly or indirectly out of use or occupancy of the Premises or a
breach or default by Tenant in the performance of any of its obligations
hereunder, unless caused solely by the willful misconduct or gross negligence of
Landlord. Landlord shall not be liable to Tenant for, and Tenant assumes all
risk of damage to, personal property (including, without limitation, loss of
records kept within the Premises). Tenant further waives any and all Claims for
injury to Tenant's business or loss of income relating to any such damage or
destruction of personal property (including, without limitation, any loss of
records). Landlord shall not be liable for any damages arising from any act,
omission or neglect of any tenant in the Project or of any other third party.

        17 INSURANCE. Landlord shall maintain all insurance against any peril
generally included within the classification "Fire and Extended Coverage,"
sprinkler damage (if applicable), vandalism and malicious mischief covering the
full replacement cost of the Project. Landlord shall further carry commercial
general liability insurance with a single loss limit of not less than $2,000,000
for death or bodily injury, or property damage with respect to the Project.
Landlord may, but is not obligated to, maintain such other insurance and
additional coverages as it may deem necessary, including, but not limited to,
flood, environmental hazard and earthquake, loss or failure of building
equipment, errors and omissions, rental loss during the period of repair or
rebuilding, workers' compensation insurance and fidelity bonds for employees
employed to perform services and insurance for any improvements installed by
Tenant or which are in addition to the standard improvements customarily
furnished by Landlord without regard to whether or not such are made a part of
the Project. All such insurance shall be included as part of the Operating
Expenses. The Project may be included in a blanket policy (in which case the
cost of such insurance allocable to the Project will be determined by Landlord
based upon the insurer's cost calculations). Tenant shall also reimburse
Landlord for any increased premiums or additional insurance which Landlord
reasonably deems necessary as a result of Tenant's use of the Premises.

        Tenant, at its sole cost and expense, shall maintain during the Term:
all risk property insurance covering the full replacement cost of all property
and improvements installed or placed in the Premises by Tenant at Tenant's
expense; workers' compensation insurance with no less than the minimum limits
required by law; employer's liability insurance with such limits as required by
law; and commercial general liability insurance, with a minimum limit of not
less than



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<PAGE>   13

$2,000,000 per occurrence for death or bodily injury and not less than
$1,000,000 for property damage with respect to the Premises. The commercial
general liability insurance policies shall name Landlord, its officers,
directors, employees, managers, agents, invitees and contractors (collectively,
"RELATED PARTIES"), as additional insureds; insure on an occurrence and not a
claims-made basis; be issued by insurance companies which have a rating of not
less than policyholder rating of A and financial category rating of at least
Class XII in "Best's Insurance Guide"; shall not be cancelable unless 30 days
prior written notice shall have been given to Landlord from the insurer; contain
a hostile fire endorsement and a contractual liability endorsement; and provide
primary coverage to Landlord (any policy issued to Landlord providing duplicate
or similar coverage shall be deemed excess over Tenant's policies). Such
policies or certificates thereof shall be delivered to Landlord by Tenant upon
commencement of the Term and upon each renewal of said insurance. Tenant's
policy may be a "blanket policy" which specifically provides that the amount of
insurance shall not be prejudiced by other losses covered by the policy. Tenant
shall, at least 20 days prior to the expiration of such policies, furnish
Landlord with renewals or binders. Tenant agrees that if Tenant does not take
out and maintain such insurance, Landlord may (but shall not be required to)
procure said insurance on Tenant's behalf and at its cost to be paid as
Additional Rent.

        In each instance where insurance is to name Landlord as an additional
insured, Tenant shall upon written request of Landlord also designate and
furnish certificates so evidencing Landlord as additional insured to: (i) any
lender of Landlord holding a security interest in the Project or any portion
thereof, (ii) the landlord under any lease wherein Landlord is tenant of the
real property on which the Project is located, if the interest of Landlord is or
shall become that of a tenant under a ground or other underlying lease rather
than that of a fee owner, and/or (iii) any management company retained by
Landlord to manage the Project.

        The property insurance obtained by Landlord and Tenant shall include a
waiver of subrogation by the insurers and all rights based upon an assignment
from its insured, against Landlord or Tenant, and their respective Related
Parties, in connection with any loss or damage thereby insured against. Neither
party nor its respective Related Parties shall be liable to the other for loss
or damage caused by any risk insured against under property insurance required
to be maintained hereunder, and each party waives any claims against the other
party, and its respective Related Parties, for such loss or damage. The failure
of a party to insure its property shall not void this waiver. Landlord and its
respective Related Parties shall not be liable for, and Tenant hereby waives all
claims against such parties for, business interruption and losses occasioned
thereby sustained by Tenant or any person claiming through Tenant resulting from
any accident or occurrence in or upon the Premises or the Project from any cause
whatsoever. If the foregoing waivers shall contravene any law with respect to
exculpatory agreements, the liability of Landlord or Tenant shall be deemed not
released but shall be secondary to the other's insurer.

        Landlord may require insurance policy limits to be raised to conform
with requirements of Landlord's lender and/or to bring coverage limits to levels
then being generally required of new tenants within the Project.

        18 RESTORATION. If at any time during the Term the Project or the
Premises are damaged by a fire or other insured casualty, Landlord shall notify
Tenant within 60 days after discovery of such damage as to the amount of time
Landlord reasonably estimates it will take to restore the Project or the
Premises, as applicable. If the restoration time is estimated to exceed 12
months, Landlord may, in such notice, elect to terminate this Lease as of the
date that is 75 days after the date of discovery of such damage or destruction;
provided, however, that notwithstanding Landlord's election to restore the
Premises, Tenant may elect to terminate this Lease by written notice to Landlord
delivered within 5 business days of receipt of Landlord's notice electing to
restore the Premises over a 12 month or longer period. Unless either Landlord or
Tenant elects to terminate this Lease, Landlord shall, subject to receipt of
sufficient insurance



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proceeds (with any deductible to be treated as a current Operating Expense),
promptly restore the Premises (excluding the improvements installed by Tenant or
by Landlord and paid for by Tenant, subject to delays arising from the
collection of insurance proceeds, from Force Majeure events or as needed to
obtain any license, clearance or other authorization of any kind required to
enter into and restore the Premises issued by any governmental or
quasi-governmental agency having jurisdiction over the use, storage, release or
removal of Hazardous Materials (as defined in Section 30) in, on or about the
Premises (collectively referred to herein as "HAZARDOUS MATERIALS CLEARANCES");
provided, however, that if repair or restoration of the Premises is not
substantially complete as of the end of 12 months from the date of damage or
destruction, Landlord may, in its sole and absolute discretion, elect not to
proceed with such repair and restoration, or Tenant may by written notice to
Landlord delivered within 5 business days of the expiration of such 12 month
period, elect to terminate this Lease, in which event Landlord shall be relieved
of its obligation to make such repairs or restoration and this Lease shall
terminate as of the date that is 75 days after the later of: (i) discovery of
such damage or destruction, or (ii) the date all required Hazardous Materials
Clearances are obtained.

        Tenant, at its expense, shall promptly perform, subject to delays
arising from the collection of insurance proceeds, from Force Majeure (as
defined in Section 34) events or to obtain Hazardous Material Clearances, all
repairs or restoration not required to be done by Landlord and shall promptly
re-enter the Premises and commence doing business in accordance with this Lease.
Notwithstanding the foregoing, Landlord may terminate this Lease if the Premises
are damaged during the last year of the Term and Landlord reasonably estimates
that it will take more than three months to repair such damage, or if insurance
proceeds are not available for such restoration. Rent shall be abated from the
date all required Hazardous Material Clearances are obtained until the Premises
are repaired and restored, in the proportion which the area of the Premises, if
any, which is not usable by Tenant bears to the total area of the Premises,
unless Landlord provides Tenant with other space during the period of repair
that is suitable for the temporary conduct of Tenant's business. Such abatement
shall be the sole remedy of Tenant, and except as provided herein, Tenant waives
any right to terminate the Lease by reason of damage or casualty loss.

        The provisions of this Lease, including this Section 18, constitute an
express agreement between Landlord and Tenant with respect to any and all damage
to, or destruction of, all or any part of the Premises, or any other portion of
the Project, and any statute or regulation which is now or may hereafter be in
effect shall have no application to this Lease or any damage or destruction to
all or any part of the Premises or any other portion of the Project, the parties
hereto expressly agreeing that this Section 18 sets forth their entire
understanding and agreement with respect to such matters.

        19 CONDEMNATION. If the whole or any material part of the Premises or
the Project is taken for any public or quasi-public use under governmental law,
ordinance, or regulation, or by right of eminent domain, or by private purchase
in lieu thereof (a "TAKING" or "Taken"), and the Taking would in Landlord's
reasonable judgment either (i) prevent or materially interfere with Tenant's use
of the Premises or (ii) materially interfere with or impair Landlord's ownership
or operation of the Project, then upon written notice by Landlord this Lease
shall terminate and Rent shall be apportioned as of said date. If part of the
Premises shall be Taken, and this Lease is not terminated as provided above,
Landlord shall promptly restore the Premises and the Project as nearly as is
commercially reasonable under the circumstances to their condition prior to such
partial Taking and the rentable square footage of the Building, the rentable
square footage of the Premises, Tenant's Share of Operating Expenses and the
Rent payable hereunder during the unexpired Term shall be reduced to such extent
as may be fair and reasonable under the circumstances. Upon any such Taking,
Landlord shall be entitled to receive the entire price or award from any such
Taking without any payment to Tenant, and Tenant hereby assigns to Landlord
Tenant's interest, if any, in such award. Tenant shall have the right, to the
extent that same shall not diminish Landlord's award, to make a separate claim



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against the condemning authority (but not Landlord) for such compensation as may
be separately awarded or recoverable by Tenant for moving expenses and damage to
Tenant's trade fixtures, if a separate award for such items is made to Tenant.
Tenant hereby waives any and all rights it might otherwise have pursuant to any
provision of state law to terminate this Lease upon a partial Taking of the
Premises or the Project.

        20 EVENTS OF DEFAULT. Each of the following events shall be a default
("Default") by Tenant under this Lease:

        (a) PAYMENT DEFAULTS. Tenant shall fail to pay any installment of Rent
or any other payment hereunder when due; provided, however, that Landlord will
give Tenant notice and an opportunity to cure any failure to pay Rent within 3
days of any such notice not more than once in any 12 month period and Tenant
agrees that such notice shall be in lieu of and not in addition to, or shall be
deemed to be, any notice required by law.

        (b) INSURANCE. Any insurance required to be maintained by Tenant
pursuant to this Lease shall be canceled or terminated or shall expire or shall
be reduced or materially changed, or Landlord shall receive a notice of
nonrenewal of any such insurance and Tenant shall fail to obtain replacement
insurance at least 20 days before the expiration of the current coverage.

        (c) ABANDONMENT. Tenant shall abandon the Premises.

        (d) IMPROPER TRANSFER. Tenant shall assign, sublease or otherwise
transfer or attempt to transfer all or any portion of Tenant's interest in this
Lease or the Premises except as expressly permitted herein, or Tenant's interest
in this Lease shall be attached, executed upon, or otherwise judicially seized
and such action is not released within 90 days of the action.

        (e) LIENS. Tenant shall fail to discharge or otherwise obtain the
release of any lien placed upon the Premises in violation of this Lease within
20 days after any such lien is filed against the Premises.

        (f) INSOLVENCY EVENTS. Tenant or any guarantor or surety of Tenant's
obligations hereunder shall: (A) make a general assignment for the benefit of
creditors; (B) commence any case, proceeding or other action seeking to have an
order for relief entered on its behalf as a debtor or to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts or seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or of any substantial part of its property (collectively a
"PROCEEDING FOR RELIEF"); (C) become the subject of any Proceeding for Relief
which is not dismissed within 90 days of its filing or entry; or (D) die or
suffer a legal disability (if Tenant, guarantor, or surety is an individual) or
be dissolved or otherwise fail to maintain its legal existence (if Tenant,
guarantor or surety is a corporation, partnership or other entity).

        (g) ESTOPPEL CERTIFICATE OR SUBORDINATION AGREEMENT. Tenant fails to
execute any document required from Tenant under Sections 23 or 27 within 5 days
after a second notice requesting such document.

        (h) OTHER DEFAULTS. Tenant shall fail to comply with any provision of
this Lease other than those specifically referred to in this Section 20, and,
except as otherwise expressly provided herein, such failure shall continue for a
period of 10 days after written notice thereof from Landlord to Tenant.

Any notice given under Section 20 (h) hereof shall: (i) specify the alleged
default, (ii) demand that Tenant cure such default, (iii) be in lieu of, and not
in addition to, or shall be deemed to be, any notice required under any
provision of applicable law, and (iv) not be deemed a forfeiture or



                                       15
<PAGE>   16

a termination of this Lease unless Landlord elects otherwise in such notice;
provided that if the nature of Tenant's default pursuant to Section 20(h) is
such that it cannot be cured by the payment of money and reasonably requires
more than 10 days to cure, then Tenant shall not be deemed to be in default if
Tenant commences such cure within said 10 day period and thereafter diligently
prosecutes the same to completion; provided, however, that such cure shall be
completed no later than 150 days from the date of Landlord's notice.

        21 LANDLORD'S REMEDIES.

        (a) PAYMENT BY LANDLORD; INTEREST. Upon a Default by Tenant hereunder,
Landlord may, without waiving or releasing any obligation of Tenant hereunder,
make such payment or perform such act. All sums so paid or incurred by Landlord,
together with interest thereon, from the date such sums were paid or incurred,
at the annual rate equal to 12% per annum or the highest rate permitted by law
(the "DEFAULT RATE"), whichever is less, shall be payable to Landlord on demand
as Additional Rent. Nothing herein shall be construed to create or impose a duty
on Landlord to mitigate any damages resulting from Tenant's Default hereunder.

        (b) LATE PAYMENT RENT. Late payment by Tenant to Landlord of Rent and
other sums due will cause Landlord to incur costs not contemplated by this
Lease, the exact amount of which will be extremely difficult and impracticable
to ascertain. Such costs include, but are not limited to, processing and
accounting charges and late charges which may be imposed on Landlord under any
Mortgage covering the Premises. Therefore, if any installment of Rent due from
Tenant is not received by Landlord within 5 days after the date such payment is
due, Tenant shall pay to Landlord an additional sum equal to 6% of the overdue
Rent as a late charge. The parties agree that this late charge represents a fair
and reasonable estimate of the costs Landlord will incur by reason of late
payment by Tenant. In addition to the late charge, Rent not paid when due shall
bear interest at the Default Rate from the 5th day after the date due until
paid.

        (c) REMEDIES. Upon the occurrence of a Default, Landlord, at its option,
without further notice or demand to Tenant, shall have in addition to all other
rights and remedies provided in this Lease, at law or in equity, the option to
pursue any one or more of the following remedies, each and all of which shall be
cumulative and nonexclusive, without any notice or demand whatsoever.

               (i) Terminate this Lease, or at Landlord's option, Tenant's right
        to possession only, in which event Tenant shall immediately surrender
        the Premises to Landlord, and if Tenant fails to do so, Landlord may,
        without prejudice to any other remedy which it may have for possession
        or arrearages in rent, enter upon and take possession of the Premises
        and expel or remove Tenant and any other person who may be occupying the
        Premises or any part thereof, without being liable for prosecution or
        any claim or damages therefor;

               (ii) Upon any termination of this Lease, whether pursuant to the
        foregoing Section 21(c)(i) or otherwise, Landlord may recover from
        Tenant the following:

                      (A) The worth at the time of award of any unpaid rent
               which has been earned at the time of such termination; plus

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

                      (C) The worth at the time of award of the amount by which
               the unpaid



                                       16
<PAGE>   17

               rent for the balance of the Term after the time of award exceeds
               the amount of such rental loss that Tenant proves could have been
               reasonably avoided; plus

                      (D) Any other amount necessary to compensate Landlord for
               all the detriment proximately caused by Tenant's failure to
               perform its obligations under this Lease or which in the ordinary
               course of things would be likely to result therefrom,
               specifically including, but not limited to, brokerage commissions
               and advertising expenses incurred, expenses of remodeling the
               Premises or any portion thereof for a new tenant, whether for the
               same or a different use, and any special concessions made to
               obtain a new tenant; and

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

        The term "RENT" as used in this Section 21 shall be deemed to be and to
        mean all sums of every nature required to be paid by Tenant pursuant to
        the terms of this Lease, whether to Landlord or to others. As used in
        Sections 21(c)(ii) (A) and (B), above, the "WORTH AT THE TIME OF AWARD"
        shall be computed by allowing interest at the Default Rate. As used in
        Section 21(c)(ii)(C) above, the "WORTH AT THE TIME OF award" shall be
        computed by discounting such amount at the discount rate of the Federal
        Reserve Bank of San Francisco at the time of award plus 1%.

               (iii) Landlord may continue this Lease in effect after Tenant's
        Default and recover rent as it becomes due (Landlord and Tenant hereby
        agreeing that Tenant has the right to sublet or assign hereunder,
        subject only to reasonable limitations). Accordingly, if Landlord does
        not elect to terminate this Lease following a Default by Tenant,
        Landlord may, from time to time, without terminating this Lease, enforce
        all of its rights and remedies hereunder, including the right to recover
        all Rent as it becomes due.

               (iv) Whether or not Landlord elects to terminate this Lease
        following a Default by Tenant, Landlord shall have the right to
        terminate any and all subleases, licenses, concessions or other
        consensual arrangements for possession entered into by Tenant and
        affecting the Premises or may, in Landlord's sole discretion, succeed to
        Tenant's interest in such subleases, licenses, concessions or
        arrangements. Upon Landlord's election to succeed to Tenant's interest
        in any such subleases, licenses, concessions or arrangements, Tenant
        shall, as of the date of notice by Landlord of such election, have no
        further right to or interest in the rent or other consideration
        receivable thereunder.

               (v) Independent of the exercise of any other remedy of Landlord
        hereunder or under applicable law, Landlord may conduct an environmental
        test of the Premises as generally described in Section 30(d) hereof, at
        Tenant's expense.

        (d) EFFECT OF EXERCISE. Exercise by Landlord of any remedies hereunder
or otherwise available shall not be deemed to be an acceptance of surrender of
the Premises and/or a termination of this Lease by Landlord, it being understood
that such surrender and/or termination can be effected only by the express
written agreement of Landlord and Tenant. Any law, usage, or custom to the
contrary notwithstanding, Landlord shall have the right at all times to enforce
the provisions of this Lease in strict accordance with the terms hereof; and the
failure of Landlord at any time to enforce its rights under this Lease strictly
in accordance with same shall not be construed as having created a custom in any
way or manner contrary to the specific terms, provisions, and covenants of this
Lease or as having modified the same and shall not be deemed a waiver of
Landlord's right to enforce one or more of its rights in connection with any
subsequent default. A receipt by Landlord of Rent or other payment with
knowledge of the breach of any covenant hereof shall not be deemed a waiver of
such breach, and no waiver by Landlord of any provision of this Lease shall be
deemed to have been made unless expressed in



                                       17
<PAGE>   18

writing and signed by Landlord. To the greatest extent permitted by law, Tenant
waives the service of notice of Landlord's intention to re-enter, re-take or
otherwise obtain possession of the Premises as provided in any statute, or to
institute legal proceedings to that end, and also waives all right of redemption
in case Tenant shall be dispossessed by a judgment or by warrant of any court or
judge. Any reletting of the Premises or any portion thereof shall be on such
terms and conditions as Landlord in its sole discretion may determine. Landlord
shall not be liable for, nor shall Tenant's obligations hereunder be diminished
because of, Landlord's failure to relet the Premises or collect rent due in
respect of such reletting or otherwise to mitigate any damages arising by reason
of Tenant's Default.

        22 ASSIGNMENT AND SUBLETTING.

        (a) GENERAL PROHIBITION. Without Landlord's prior written consent
subject to and on the conditions described in this Section 22, Tenant shall not,
directly or indirectly, voluntarily or by operation of law, assign this Lease or
sublease the Premises or any part thereof or mortgage, pledge, or hypothecate
its leasehold interest or grant any concession or license within the Premises,
and any attempt to do any of the foregoing shall be void and of no effect.

        (b) PERMITTED TRANSFERS. If Tenant desires to assign, sublease,
hypothecate or otherwise transfer this Lease or sublet the Premises other than
pursuant to a Permitted Assignment (as defined below), then at least 15 business
days, but not more than 45 business days, before the date Tenant desires the
assignment or sublease to be effective (the "ASSIGNMENT DATE"), Tenant shall
give Landlord a notice (the "ASSIGNMENT NOTICE") containing such information
about the proposed assignee or sublessee, including the proposed use of the
Premises and any Hazardous Materials proposed to be used or stored in the
Premises, the Assignment Date, any relationship between Tenant and the proposed
assignee or sublessee, and all material terms and conditions of the proposed
assignment or sublease, including a copy of any proposed assignment or sublease
in its final form, and such other information as Landlord may deem reasonably
necessary or appropriate to its consideration whether to grant its consent.
Landlord may, by giving written notice to Tenant within 15 business days after
receipt of the Assignment Notice: (i) grant or refuse such consent, in its sole
discretion with respect to a proposed assignment, hypothecation or other
transfer or subletting of more than (together with all other then effective
subleases) 50% of the Premises, or grant or refuse such consent, in its
reasonable discretion with respect to a proposed subletting of up to (together
with all other then effective subleases) 50% of the Premises (provided that
Landlord shall further have the right to review and approve or disapprove the
proposed form of sublease prior to the effective date of any such subletting),
or (ii) terminate this Lease with respect to the space described in the
Assignment Notice as of the Assignment Date (an "ASSIGNMENT TERMINATION"). If
Landlord elects an Assignment Termination, Tenant shall have the right to
withdraw such Assignment Notice by written notice to Landlord of such election
within 5 days after Landlord's notice electing to exercise the Assignment
Termination. If Tenant withdraws such Assignment Notice, this Lease shall
continue in full force and effect. If Tenant does not withdraw such Assignment
Notice, this Lease, and the term and estate herein granted, shall terminate as
of the Assignment Date with respect to the space described in such Assignment
Notice. No failure of Landlord to exercise any such option to terminate this
Lease shall be deemed to be Landlord's consent to the proposed assignment,
sublease or other transfer. Tenant shall reimburse Landlord for all of
Landlord's reasonable out-of-pocket expenses in connection with its
consideration of any Assignment Notice.

        In addition, Tenant shall have the right to assign this Lease, upon
written notice to Landlord but without obtaining Landlord's prior written
consent, to a corporation or other entity which is a successor-in-interest to
Tenant, by way of merger, consolidation or corporate reorganization, or by the
purchase of all or substantially all of the assets or the ownership interests of
the Tenant provided that (i) such merger or consolidation, or such acquisition
or assumption, as the case may be, is for a good business purpose and not
principally for the



                                       18
<PAGE>   19

purpose of transferring the Lease, and (ii) the net worth (as determined in
accordance with generally accepted accounting principles ("GAAP")) of the
assignee is not less than the net worth (as determined in accordance with GAAP)
of Tenant as of the date of Tenant's most current quarterly or annual financial
statements, and (iii) such assignee shall agree in writing to assume all of the
terms, covenants and conditions of this Lease arising after the effective date
of the assignment (a "PERMITTED ASSIGNMENT").

        (c ADDITIONAL CONDITIONS. As a condition to any such assignment or
subletting, whether or not Landlord's consent is required, Landlord may require:

               (i that any assignee or subtenant agree, in writing at the time
        of such assignment or subletting, that if Landlord gives such party
        notice that Tenant is in default under this Lease, such party shall
        thereafter make all payments otherwise due Tenant directly to Landlord,
        which payments will be received by Landlord without any liability except
        to credit such payment against those due under the Lease, and any such
        third party shall agree to attorn to Landlord or its successors and
        assigns should this Lease be terminated for any reason; provided,
        however, in no event shall Landlord or its successors or assigns be
        obligated to accept such attornment; and

               (ii A list of Hazardous Materials, certified by the proposed
        assignee or sublessee to be true and correct, which the proposed
        assignee or sublessee intends to use or store in the Premises together
        with copies of all documents relating to the handling, storage, disposal
        and emission of Hazardous Materials by the proposed assignee or
        subtenant in the Premises or on the Project, prior to the proposed
        assignment or subletting, including, without limitation: permits;
        approvals; reports and correspondence; storage and management plans;
        plans relating to the installation of any storage tanks to be installed
        in or under the Project (provided, said installation of tanks shall only
        be permitted after Landlord has given its written consent to do so,
        which consent may be withheld in Landlord's sole and absolute
        discretion); and all closure plans or any other documents required by
        any and all federal, state and local governmental agencies and
        authorities for any storage tanks installed in, on or under the Project
        for the closure of any such tanks. Neither Tenant nor any such proposed
        assignee or subtenant is required, however, to provide Landlord with any
        portion(s) of the such documents containing information of a proprietary
        nature which, in and of themselves, do not contain a reference to any
        Hazardous Materials or hazardous activities.

        (d NO RELEASE OF TENANT, SHARING OF EXCESS RENTS. Notwithstanding any
assignment or subletting, Tenant and any guarantor or surety of Tenant's
obligations under this Lease shall at all times remain fully and primarily
responsible and liable for the payment of Rent and for compliance with all of
Tenant's other obligations under this Lease. If the Rent due and payable by a
sublessee or assignee (or a combination of the rental payable under such
sublease or assignment plus any bonus or other consideration therefor or
incident thereto) exceeds the rental payable under this Lease, (excluding
however, any Rent payable under this Section), then Tenant shall be bound and
obligated to pay Landlord as Additional Rent hereunder 50% (or 40% with respect
to any assignment or subletting of any portion of the Lucent Space as to which a
Restoration Deposit has been made) of such excess rental and other excess
consideration within 10 days following receipt thereof by Tenant. If Tenant
shall sublet the Premises or any part thereof, Tenant hereby immediately and
irrevocably assigns to Landlord, as security for Tenant's obligations under this
Lease, all rent from any such subletting, and Landlord as assignee and as
attorney-in-fact for Tenant, or a receiver for Tenant appointed on Landlord's
application, may collect such rent and apply it toward Tenant's obligations
under this Lease; except that, until the occurrence of a Default, Tenant shall
have the right to collect such rent.

        (e NO WAIVER. The consent by Landlord to an assignment or subletting
shall not



                                       19
<PAGE>   20

relieve Tenant or any assignees of this Lease or any sublessees of the Premises
from obtaining the consent of Landlord to any further assignment or subletting
nor shall it release Tenant or any assignee or sublessee of Tenant from full and
primary liability under the Lease. The acceptance of Rent hereunder, or the
acceptance of performance of any other term, covenant, or condition thereof,
from any other person or entity shall not be deemed to be a waiver of any of the
provisions of this Lease or a consent to any subletting, assignment or other
transfer of the Premises.

        (f PRIOR CONDUCT OF PROPOSED TRANSFEREE. Notwithstanding any other
provision of this Section 22, if (i) the proposed assignee or sublessee of
Tenant has been required by any prior landlord, lender or Governmental Authority
to take remedial action in connection with Hazardous Materials contaminating a
property, where the contamination resulted from such party's action or use of
the property in question, or (ii) the proposed assignee or sublessee is subject
to an enforcement order issued by any governmental authority in connection with
the use, disposal or storage of Hazardous Materials, Landlord shall have the
absolute right to refuse to consent to any assignment or subletting to any such
party.

        23. ESTOPPEL CERTIFICATE. Tenant shall, within 10 business days of
written notice from Landlord, execute, acknowledge and deliver a statement in
writing substantially in the form attached to this Lease as EXHIBIT G with the
blanks filled in, or on any other form reasonably requested by a proposed lender
or purchaser, (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease as so modified is in full force and effect) and the dates to
which the rental and other charges are paid in advance, if any, (ii)
acknowledging that there are not any uncured defaults on the part of Landlord
hereunder, or specifying such defaults if any are claimed, and (iii) setting
forth such further information with respect to the status of this Lease or the
Premises as may be requested thereon. Any such statement may be relied upon by
any prospective purchaser or encumbrancer of all or any portion of the real
property of which the Premises are a part. Tenant's failure to deliver such
statement within such time shall, at the option of Landlord, constitute a
Default under this Lease, and, in any event, shall be conclusive upon Tenant
that the Lease is in full force and effect and without modification except as
may be represented by Landlord in any certificate prepared by Landlord and
delivered to Tenant for execution.

        24. QUIET ENJOYMENT. So long as Tenant shall perform all of the
covenants and agreements herein required to be performed by Tenant, Tenant
shall, subject to the terms of this Lease, at all times during the Term, have
peaceful and quiet enjoyment of the Premises against any person claiming by,
through or under Landlord.

        25. PRORATIONS. All prorations required or permitted to be made
hereunder shall be made on the basis of a 360 day year and 30 day months.

        26. RULES AND REGULATIONS. Tenant shall, at all times during the Term
and any extension thereof, comply with all reasonable rules and regulations at
any time or from time to time established by Landlord covering use of the
Premises and the Project. The current rules and regulations are attached hereto
as EXHIBIT E. If there is any conflict between said rules and regulations and
other provisions of this Lease, the terms and provisions of this Lease shall
control. Landlord shall not have any liability or obligation for the breach of
any rules or regulations by other tenants in the Project and shall not enforce
such rules and regulations in a discriminatory manner.

        27. SUBORDINATION. This Lease and Tenant's interest and rights hereunder
are and shall be subject and subordinate at all times to the lien of any
Mortgage now existing or hereafter created on or against the Project or the
Premises, and all amendments, restatements, renewals, modifications,
consolidations, refinancing, assignments and extensions thereof, without the
necessity of any further instrument or act on the part of Tenant; provided,
however that so long



                                       20
<PAGE>   21

as there is no Default hereunder, Tenant's right to possession of the Premises
shall not be disturbed by the Holder of any such Mortgage. Tenant agrees, at the
election of the Holder of any such Mortgage, to attorn to any such Holder.
Tenant agrees upon demand to execute, acknowledge and deliver a Subordination,
Non-disturbance and Attornment Agreement in substantially the form attached
hereto as EXHIBIT H, or such other instruments, confirming such subordination,
and such instruments of attornment as shall be requested by any such Holder,
provided any such instruments contain appropriate non-disturbance provisions
assuring Tenant's quiet enjoyment of the Premises as set forth in Section 24
hereof. Notwithstanding the foregoing, any such Holder may at any time
subordinate its Mortgage to this Lease, without Tenant's consent, by notice in
writing to Tenant, and thereupon this Lease shall be deemed prior to such
Mortgage without regard to their respective dates of execution, delivery or
recording and in that event such Holder shall have the same rights with respect
to this Lease as though this Lease had been executed prior to the execution,
delivery and recording of such Mortgage and had been assigned to such Holder.
The term "MORTGAGE" whenever used in this Lease shall be deemed to include deeds
of trust, security assignments and any other encumbrances, and any reference to
the "HOLDER" of a Mortgage shall be deemed to include the beneficiary under a
deed of trust.

        28. SURRENDER. Upon expiration of the Term or earlier termination of
Tenant's right of possession, Tenant shall surrender the Premises to Landlord in
the same condition as received, subject to any Alterations permitted by Landlord
to remain in the Premises, free of Hazardous Materials brought upon, kept or
used in or about the Premises by any person other than Landlord, its agents,
employees, contractors or invitees (or Hazardous Materials brought upon, kept or
used in or about the Project by Tenant or any of its agents, employees,
contractors or invitees) and released of all Hazardous Materials Clearances,
broom clean, ordinary wear and tear and casualty loss and condemnation covered
by Sections 18 and 19 excepted. Tenant shall immediately return to Landlord all
keys and/or access cards to parking, the Project, restrooms or all or any
portion of the Premises furnished to or otherwise procured by Tenant. If any
such access card or key is lost, Tenant shall pay to Landlord, at Landlord's
election, either the cost of replacing such lost access card or key or the cost
of reprogramming the access security system in which such access card was used
or changing the lock or locks opened by such lost key. Any Tenant's Property,
Alterations and property not so removed by Tenant as permitted or required
herein shall be deemed abandoned and may be stored, removed, and disposed of by
Landlord at Tenant's expense, and Tenant waives all claims against Landlord for
any damages resulting from Landlord's retention and/or disposition of such
property. All obligations of Tenant hereunder not fully performed as of the
termination of the Term, including the obligations of Tenant under Section 30
hereof, shall survive the expiration or earlier termination of the Term,
including, without limitation, indemnity obligations, payment obligations with
respect to Rent and obligations concerning the condition and repair of the
Premises.

        29. WAIVER OF JURY TRIAL. TENANT AND LANDLORD WAIVE ANY RIGHT TO TRIAL
BY JURY OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING OUT OF THIS
LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.

        30. ENVIRONMENTAL REQUIREMENTSENVIRONMENTAL REQUIREMENTSENVIRONMENTAL
REQUIREMENTS.

        (a PROHIBITION/COMPLIANCE/INDEMNITY. Tenant shall not cause or permit
any Hazardous Materials (as hereinafter defined) to be brought upon, kept or
used in or about the Premises or the Project in violation of applicable law by
Tenant, its agents, employees, contractors or invitees. If Tenant breaches the
obligation stated in the preceding sentence, or if the presence of Hazardous
Materials in the Premises during the Term or any holding over



                                       21
<PAGE>   22

results in contamination of the Premises, the Project or any adjacent property
or if contamination of the Premises, the Project or any adjacent property by
Hazardous Materials brought into the Premises by anyone other than Landlord and
Landlord's employees, agents and contractors otherwise occurs during the Term or
any holding over, Tenant hereby indemnifies and shall defend and hold Landlord,
its officers, directors, employees, agents and contractors harmless from any and
all claims, judgments, damages, penalties, fines, costs, liabilities, or losses
(including, without limitation, diminution in value of the Premises or any
portion of the Project, damages for the loss or restriction on use of rentable
or usable space or of any amenity of the Premises or the Project, damages
arising from any adverse impact on marketing of space in the Premises or the
Project, and sums paid in settlement of claims, attorneys' fees, consultant fees
and expert fees) which arise during or after the Term as a result of such
contamination. This indemnification of Landlord by Tenant includes, without
limitation, costs incurred in connection with any investigation of site
conditions or any cleanup, remedial, removal, or restoration work required by
any federal, state or local governmental agency or political subdivision because
of Hazardous Materials present in the air, soil or ground water above, on, or
under the Premises. Without limiting the foregoing, if the presence of any
Hazardous Materials on the Premises, the Project or any adjacent property caused
or permitted by Tenant results in any contamination of the Premises, the Project
or any adjacent property, Tenant shall promptly take all actions at its sole
expense and in accordance with applicable law as are necessary to return the
Premises, the Project or any adjacent property as nearly as economically
practicable to the condition existing prior to the time of such contamination,
but in no event leaving more residual contamination than permitted by law,
provided that Landlord's approval of such action shall first be obtained, which
approval shall not unreasonably be withheld so long as such actions would not
potentially have any material adverse long-term or short-term effect on the
Premises or the Project.

        (b BUSINESS. Landlord acknowledges that it is not the intent of this
Section 30 to prohibit Tenant from using the Premises for the Permitted Use.
Tenant may operate its business according to the custom of the industry so long
as the use or presence of Hazardous Materials is strictly and properly monitored
according to all then applicable governmental requirements. As a material
inducement to Landlord to allow Tenant to use Hazardous Materials in connection
with its business, Tenant agrees to deliver to Landlord prior to the
Commencement Date, a list identifying each type of Hazardous Materials to be
present on the Premises and setting forth any and all governmental approvals or
permits required in connection with the presence of such Hazardous Materials on
the Premises ("HAZARDOUS MATERIALS LIST"). Tenant shall deliver to Landlord an
updated Hazardous Materials List at least once a year and shall also deliver an
updated list before any new Hazardous Material is brought onto the Premises.
Tenant shall deliver to Landlord true and correct copies of the following
documents (the "HAZ MAT DOCUMENTS") relating to the handling, use, storage,
disposal and emission of Hazardous Materials prior to the Commencement Date, or
if unavailable at that time, concurrent with the receipt from or submission to a
governmental agency: permits; approvals; reports and correspondence; storage and
management plans, notice of violations of any laws; plans relating to the
installation of any storage tanks to be installed in or under the Project
(provided, said installation of tanks shall only be permitted after Landlord has
given Tenant its written consent to do so, which consent may be withheld in
Landlord's sole and absolute discretion); and all closure plans or any other
documents required by any and all federal, state and local governmental agencies
and authorities for any storage tanks installed in, on or under the Project for
the closure of any such tanks. Tenant is not required, however, to provide
Landlord with any portion(s) of the Haz Mat Documents containing information of
a proprietary nature which, in and of themselves, do not contain a reference to
any Hazardous Materials or hazardous activities. It is not the intent of this
Section to provide Landlord with information which could be detrimental to
Tenant's business should such information become possessed by Tenant's
competitors.

        (c TENANT REPRESENTATION AND WARRANTY. Tenant hereby represents and
warrants to Landlord that (i) neither Tenant nor any of its legal predecessors
has been required by any



                                       22
<PAGE>   23

prior landlord, lender or governmental authority at any time to take remedial
action in connection with Hazardous Materials contaminating a property which
contamination was permitted by Tenant of such predecessor or resulted from
Tenant's or such predecessor's action or use of the property in question, and
(ii) Tenant is not subject to any enforcement order issued by any governmental
authority in connection with the use, disposal or storage of a Hazardous
Materials. If Landlord determines that this representation and warranty was not
true as of the date of this lease, Landlord shall have the right to terminate
this Lease in Landlord's sole and absolute discretion.

        (d TESTING. Landlord shall have the right to conduct annual tests of the
Premises to determine whether any contamination has occurred as a result of
Tenant's use. Tenant shall be required to pay the cost of such annual test of
the Premises; provided, however, that if Tenant conducts its own tests of the
Premises using third party contractors and test procedures acceptable to
Landlord which tests are certified to Landlord, Landlord shall accept such tests
in lieu of the annual tests to be paid for by Tenant. In addition, at any time,
and from time to time pursuant to Section 32, prior to the expiration or earlier
termination of the Term, Landlord shall have the right to conduct appropriate
tests of the Premises and the Project to determine if contamination has occurred
as a result of Tenant's use of the Premises. If contamination has occurred for
which Tenant is liable under this Section 30, Tenant shall pay all costs to
conduct such tests. If no such contamination is found, Landlord shall pay the
costs of such tests (which shall not constitute an Operating Expense). Landlord
shall provide Tenant with a copy of all third party, non-confidential reports
and tests of the Premises made by or on behalf of Landlord during the Term
without representation or warranty and subject to a confidentiality agreement.
Landlord's receipt of or satisfaction with any environmental assessment in no
way waives any rights which Landlord may have against Tenant.

        (e UNDERGROUND TANKS. If underground or other storage tanks storing
Hazardous Materials located on the Premises or the Project are used by Tenant or
are hereafter placed on the Premises or the Project by Tenant, Tenant shall
monitor such storage tanks, maintain appropriate records, implement reporting
procedures, properly close any underground storage tanks, and take or cause to
be taken all other actions necessary or required under applicable state and
federal law, as such now exists or may hereafter be adopted or amended in
connection with the use, maintenance, operation and closure of such storage
tanks.

        (f TENANT'S OBLIGATIONS. Tenant's obligations under this Section 30
shall survive the expiration or earlier termination of the Lease. During any
period of time after the expiration or earlier termination of this Lease
required by Tenant or Landlord to complete the removal from the Premises of any
Hazardous Materials as required pursuant to Tenant's obligations hereunder and
the release and termination of any licenses or permits held by Tenant or any
person claiming by or through Tenant restricting the use of the Premises, Tenant
shall continue to pay the full Rent in accordance with this Lease for any
portion of the Premises not relet by Landlord in Landlord's sole discretion,
which Rent shall be prorated daily.

        (g DEFINITIONS. As used herein, the term "ENVIRONMENTAL REQUIREMENTS"
means all applicable present and future statutes, regulations, ordinances,
rules, codes, judgments, orders or other similar enactments of any governmental
authority or agency regulating or relating to health, safety, or environmental
conditions on, under, or about the Premises or the Project, or the environment,
including without limitation, the following: the Comprehensive Environmental
Response, Compensation and Liability Act; the Resource Conservation and Recovery
Act; and all state and local counterparts thereto, and any regulations or
policies promulgated or issued thereunder. As used herein, the term "HAZARDOUS
MATERIALS" means and includes any substance, material, waste, pollutant, or
contaminant listed or defined as hazardous or toxic, or regulated by reason of
its impact or potential impact on humans, animals and/or the environment under
any Environmental Requirements, asbestos and petroleum, including crude oil or
any fraction thereof, natural gas liquids, liquefied natural gas, or synthetic
gas usable for fuel (or



                                       23
<PAGE>   24

mixtures of natural gas and such synthetic gas). As defined in Environmental
Requirements, Tenant is and shall be deemed to be the "operator" of Tenant's
"facility" and the "owner" of all Hazardous Materials brought on the Premises by
Tenant, its agents, employees, contractors or invitees, and the wastes,
by-products, or residues generated, resulting, or produced therefrom.

        31. TENANT'S REMEDIES/LIMITATION OF LIABILITY. Landlord shall not be in
default hereunder unless Landlord fails to perform any of its obligations
hereunder within 30 days after written notice from Tenant specifying such
failure (unless such performance will, due to the nature of the obligation,
require a period of time in excess of 30 days, then after such period of time as
is reasonably necessary). Upon any default by Landlord, Tenant shall give notice
by registered or certified mail to any Holder of a Mortgage covering the
Premises and to any landlord of any lease of property in or on which the
Premises are located and Tenant shall offer such Holder and/or landlord a
reasonable opportunity to cure the default, including time to obtain possession
of the Project by power of sale or a judicial action if such should prove
necessary to effect a cure; provided Landlord shall have furnished to Tenant in
writing the names and addresses of all such persons who are to receive such
notices. All obligations of Landlord hereunder shall be construed as covenants,
not conditions; and, except as may be otherwise expressly provided in this
Lease, Tenant may not terminate this Lease for breach of Landlord's obligations
hereunder.

        Notwithstanding the foregoing, if any claimed Landlord default hereunder
will immediately, materially and adversely affect Tenant's ability to conduct
its business in the Premises (a "MATERIAL LANDLORD DEFAULT"), Tenant shall, as
soon as reasonably possible, but in any event within 2 business days of
obtaining knowledge of such claimed Material Landlord Default, give Landlord
written notice of such claim and telephonic notice to Tenant's principal contact
with Landlord. Landlord shall then have 2 business days to commence cure of such
claimed Material Landlord Default and shall diligently prosecute such cure to
completion. If such claimed Material Landlord Default is not a default by
Landlord hereunder, or if Tenant failed to give Landlord the notice required
hereunder within 2 business days of learning of the conditions giving rise to
the claimed Material Landlord Default, Landlord shall be entitled to recover
from Tenant, as Additional Rent, any costs incurred by Landlord in connection
with such cure in excess of the costs, if any, that Landlord would otherwise
have been liable to pay hereunder. If Landlord fails to commence cure of any
claimed Material Landlord Default as provided above, Tenant may commence and
prosecute such cure to completion, and shall be entitled to recover the costs of
such cure (but not any consequential or other damages) from Landlord, to the
extent of Landlord's obligation to cure such claimed Material Landlord Default
hereunder, subject to the limitations set forth in the immediately preceding
sentence of this paragraph and the other provisions of this Lease.

        All obligations of Landlord under this Lease will be binding upon
Landlord only during the period of its ownership of the Premises and not
thereafter. The term "LANDLORD" in this Lease shall mean only the owner for the
time being of the Premises. Upon the transfer by such owner of its interest in
the Premises, such owner shall thereupon be released and discharged from all
obligations of Landlord thereafter accruing, but such obligations shall be
binding during the Term upon each new owner for the duration of such owner's
ownership.

        32. INSPECTION AND ACCESS. Landlord and its agents, representatives, and
contractors may enter the Premises at any reasonable time on not less than 48
hours advance written notice (except in the case of emergencies in which case no
such notice shall be required and such entry may be at any time) (i) to inspect
the Premises, (ii) to make such repairs as may be required or permitted pursuant
to this Lease and (iii) for any other business purpose. Landlord and Landlord's
representatives may enter the Premises during business hours for the purpose of
effecting any such repairs, inspecting the Premises, showing the Premises to
prospective purchasers and, during the last year of the Term, to prospective
tenants or for any other business purpose. Landlord may erect a suitable sign on
the Premises stating the



                                       24
<PAGE>   25

Premises are available to let or that the Project is available for sale.
Landlord may grant easements, make public dedications, designate Common Areas
and create restrictions on or about the Premises, provided that no such
easement, dedication, designation or restriction materially, adversely affects
Tenant's use or occupancy of the Premises for the Permitted use. At Landlord's
request, Tenant shall execute such instruments as may be necessary for such
easements, dedications or restrictions. Tenant shall at all times, except in the
case of emergencies, have the right to escort Landlord or its agents,
representatives, contractors or guests while the same are in the Premises,
provided such escort does not materially and adversely affect Landlord's access
rights hereunder.

        33. SECURITY. Tenant acknowledges and agrees that security devices and
services, if any, while intended to deter crime may not in given instances
prevent theft or other criminal acts and that Landlord is not providing any
security services with respect to the Premises. Tenant agrees that Landlord
shall not be liable to Tenant for, and Tenant waives any claim against Landlord
with respect to, any loss by theft or any other damage suffered or incurred by
Tenant in connection with any unauthorized entry into the Premises or any other
breach of security with respect to the Premises. Tenant shall be solely
responsible for the personal safety of Tenant's officers, employees, agents,
contractors, guests and invitees while any such person is in, on or about the
Premises and/or the Project. Tenant shall at Tenant's cost obtain insurance
coverage to the extent Tenant desires protection against such criminal acts.

        34. FORCE MAJEURE. Neither Landlord nor Tenant shall be held responsible
for delays in the performance of its obligations hereunder (other than
obligations which may be performed by the payment of any sum) when caused by
strikes, lockouts, labor disputes, weather, natural disasters, inability to
obtain labor or materials or reasonable substitutes therefor, governmental
restrictions, governmental regulations, governmental controls, delay in issuance
of permits, enemy or hostile governmental action, civil commotion, fire or other
casualty, and other causes beyond the reasonable control of such party ("FORCE
MAJEURE").

        35. BROKERS, ENTIRE AGREEMENT, AMENDMENT. Landlord and Tenant each
represents and warrants that it has not dealt with any broker, agent or other
person (collectively, "BROKER) in connection with this transaction and that no
Broker brought about this transaction, other than COLLIERS INTERNATIONAL.
Landlord and Tenant each hereby agree to indemnify and hold the other harmless
from and against any claims by any Broker, other than the broker, if any named
in this Section 35, claiming a commission or other form of compensation by
virtue of having dealt with Tenant or Landlord, as applicable, with regard to
this leasing transaction. This Lease may not be amended except by an instrument
in writing signed by both parties hereto.



                                       25
<PAGE>   26

        36. LIMITATION ON LANDLORD'S LIABILITY. NOTWITHSTANDING ANYTHING SET
FORTH HEREIN OR IN ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT TO THE
CONTRARY: (A) LANDLORD SHALL NOT BE LIABLE TO TENANT OR ANY OTHER PERSON FOR
(AND TENANT AND EACH SUCH OTHER PERSON ASSUME ALL RISK OF) LOSS, DAMAGE OR
INJURY, WHETHER ACTUAL OR CONSEQUENTIAL TO: TENANT'S PERSONAL PROPERTY OF EVERY
KIND AND DESCRIPTION, INCLUDING, WITHOUT LIMITATION TRADE FIXTURES, EQUIPMENT,
INVENTORY, SCIENTIFIC RESEARCH, SCIENTIFIC EXPERIMENTS, LABORATORY ANIMALS,
PRODUCT, SPECIMENS, SAMPLES, AND/OR SCIENTIFIC, BUSINESS, ACCOUNTING AND OTHER
RECORDS OF EVERY KIND AND DESCRIPTION KEPT AT THE PREMISES AND ANY AND ALL
INCOME DERIVED OR DERIVABLE THEREFROM; (B) THERE SHALL BE NO PERSONAL RECOURSE
TO LANDLORD FOR ANY ACT OR OCCURRENCE IN, ON OR ABOUT THE PREMISES OR ARISING IN
ANY WAY UNDER THIS LEASE OR ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND ANY LIABILITY OF LANDLORD HEREUNDER
SHALL BE STRICTLY LIMITED SOLELY TO LANDLORD'S INTEREST IN THE PROJECT; AND (C)
IN NO EVENT SHALL ANY PERSONAL LIABILITY BE ASSERTED AGAINST LANDLORD IN
CONNECTION WITH THIS LEASE NOR SHALL ANY RECOURSE BE HAD TO ANY OTHER PROPERTY
OR ASSETS OF LANDLORD OR ANY OF LANDLORD'S OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS OR CONTRACTORS. UNDER NO CIRCUMSTANCES SHALL LANDLORD OR ANY OF
LANDLORD'S OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR CONTRACTORS BE LIABLE FOR
INJURY TO TENANT'S BUSINESS OR FOR ANY LOSS OF INCOME OR PROFIT THEREFROM.

        37. SEVERABILITY. If any clause or provision of this Lease is illegal,
invalid or unenforceable under present or future laws, then and in that event,
it is the intention of the parties hereto that the remainder of this Lease shall
not be affected thereby. It is also the intention of the parties to this Lease
that in lieu of each clause or provision of this Lease that is illegal, invalid
or unenforceable, there be added, as a part of this Lease, a clause or provision
as similar in effect to such illegal, invalid or unenforceable clause or
provision as shall be legal, valid and enforceable.

        38. SIGNS; EXTERIOR APPEARANCESIGNS; EXTERIOR APPEARANCESIGNS; EXTERIOR
Appearance. Tenant shall not, without the prior written consent of Landlord,
which may be granted or withheld in Landlord's sole discretion: (i) attach any
awnings, exterior lights, decorations, balloons, flags, pennants, banners,
painting or other projection to any outside wall of the Project, (ii) use any
curtains, blinds, shades or screens other than Landlord's standard window
coverings, (iii) coat or otherwise sunscreen the interior or exterior of any
windows, (iv) place any bottles, parcels, or other articles on the window sills,
(v) place any equipment, furniture or other items of personal property on any
exterior balcony, or (vi) paint, affix or exhibit on any part of the Premises or
the Project any signs, notices, window or door lettering, placards, decorations,
or advertising media of any type which can be viewed from the exterior of the
Premises. Interior signs on doors and the directory tablet shall be inscribed,
painted or affixed for Tenant by Landlord at the sole cost and expense of
Tenant, and shall be of a size, color and type acceptable to Landlord. Nothing
may be placed on the exterior of corridor walls or corridor doors other than
Landlord's standard lettering. The directory tablet shall be provided
exclusively for the display of the name and location of tenants.

        39. RIGHT TO EXTEND TERM. Tenant shall have the right to extend the Term
of the Lease upon the following terms and conditions:

        (a EXTENSION RIGHTS. Tenant shall have the right (the "EXTENSION RIGHT")
to extend the term of this Lease for five years (the "EXTENSION TERM") on the
same terms and conditions as this Lease (other than Base Rent) by giving
Landlord written notice of its election to exercise each Extension Right at
least 6 months prior to the expiration of the Base Term of the Lease or



                                       26
<PAGE>   27

the expiration of any prior Extension Term. Upon the commencement of any
Extension Term, Base Rent shall be payable at the Market Rate (as defined
below). Base Rent shall thereafter be adjusted on each annual anniversary of the
commencement of such Extension Term by a percentage as determined by Landlord
and agreed to by Tenant at the time the Market Rate is determined. As used
herein, "MARKET RATE" shall mean the then market rental rate as determined by
Landlord and agreed to by Tenant, which shall in no event be less than the Base
Rent payable as of the date immediately preceding the commencement of such
Extension Term increased by the Rent Adjustment Percentage multiplied by such
Base Rent.

        If, on or before the date which is 120 days prior to the expiration of
the Base Term of this Lease, or the expiration of any prior Extension Term,
Tenant has not agreed with Landlord's determination of the Market Rate and the
rent escalations during such subsequent Extension Term after negotiating in good
faith, Tenant may by written notice to Landlord not later than 120 days prior to
the expiration of the Base Term of this Lease, or the expiration of any then
effective Extension Term, elect arbitration as described in Section 39(b) below.
If Tenant does not elect such arbitration, Tenant shall be deemed to have waived
any right to extend, or further extend, the Term of the Lease and all of the
remaining Extension Rights shall terminate.]

        (b ARBITRATION

               (i Within 10 days of Tenant's notice to Landlord of its election
        to arbitrate Market Rate and escalations, each party shall deliver to
        the other a proposal containing the Market Rate and escalations that the
        submitting party believes to be correct ("EXTENSION PROPOSAL"). If
        either party fails to timely submit an Extension Proposal, the other
        party's submitted proposal shall determine the Base Rent and escalations
        for the Extension Term. If both parties submit Extension Proposals, then
        Landlord and Tenant shall meet within 7 days after delivery of the last
        Extension Proposal and make a good faith attempt to mutually appoint a
        single Arbitrator (and defined below) to determine the Market Rate and
        escalations. If Landlord and Tenant are unable to agree upon a single
        Arbitrator, then each shall, by written notice delivered to the other
        within 10 days after the meeting, select an Arbitrator. If either party
        fails to timely give notice of its selection for an Arbitrator, the
        other party's submitted proposal shall determine the Base Rent for the
        Extension Term. The 2 Arbitrators so appointed shall, within 5 business
        days after their appointment, appoint a third Arbitrator. If the 2
        Arbitrators so selected cannot agree on the selection of the third
        Arbitrator within the time above specified, then either party, on behalf
        of both parties, may request such appointment of such third Arbitrator
        by application to any state court of general jurisdiction in the
        jurisdiction in which the Premises are located, upon 10 days prior
        written notice to the other party of such intent.

               (ii The decision of the Arbitrator(s) shall be made within 30
        days after the appointment of a single Arbitrator or the third
        Arbitrator, as applicable. The decision of the single Arbitrator shall
        be final and binding upon the parties. The average of the two closest
        Arbitrators in a three Arbitrator panel shall be final and binding upon
        the parties. Each party shall pay the fees and expenses of the
        Arbitrator appointed by or on behalf of such party and the fees and
        expenses of the third Arbitrator shall be borne equally by both parties.
        If the Market Rate and escalations are not determined by the first day
        of the Extension Term, then Tenant shall pay Landlord Base Rent in an
        amount equal to the Base Rent in effect immediately prior to the
        Extension Term and increased by the Rent Adjustment Percentage until
        such determination is made. After the determination of the Market Rate
        and escalations, the parties shall make any necessary adjustments to
        such payments made by Tenant. Landlord and Tenant shall then execute an
        amendment recognizing the Market Rate and escalations for the Extension
        Term.

               (iii An "ARBITRATOR" shall be any person appointed by or on
        behalf of either party or appointed pursuant to the provisions hereof
        and: (i) shall be (A) a member of the



                                       27
<PAGE>   28

        American Institute of Real Estate Appraisers with not less than 10 years
        of experience in the appraisal of improved office and high tech
        industrial real estate in the greater Alameda, California metropolitan
        area, or (B) a licensed commercial real estate broker with not less than
        15 years experience representing landlords and/or tenants in the leasing
        of high tech or life sciences space in the greater Alameda, California
        metropolitan area, (ii) devoting substantially all of their time to
        professional appraisal or brokerage work, as applicable, at the time of
        appointment and (iii) be in all respects impartial and disinterested.

        (c RIGHTS PERSONAL. Extension Rights are personal to Tenant and are not
assignable without Landlord's consent, which may be granted or withheld in
Landlord's sole discretion separate and apart from any consent by Landlord to an
assignment of Tenant's interest in the Lease, except that they may be assigned
in connection with any Permitted Assignment of this Lease.

        (d EXCEPTIONS. Notwithstanding anything set forth above to the contrary,
Extension Rights shall not be in effect and Tenant may not exercise any of the
Extension Rights:

               (i during any period of time that Tenant is in Default under any
        provision of this Lease; or

               (ii if Tenant has been in Default under any provision of this
        Lease 3 or more times, whether or not the Defaults are cured, during the
        12 month period immediately prior to the date that Tenant intends to
        exercise an Extension Right, whether or not the Defaults are cured.

        (e NO EXTENSIONS. The period of time within which any Extension Rights
may be exercised shall not be extended or enlarged by reason of the Tenant's
inability to exercise the Extension Rights.

        (f TERMINATION. The Extension Rights shall terminate and be of no
further force or effect even after Tenant's due and timely exercise of an
Extension Right, if, after such exercise, but prior to the commencement date of
an Extension Term, (i) Tenant fails to timely cure any default by Tenant under
this Lease; or (ii) Tenant has Defaulted 3 or more times during the period from
the date of the exercise of an Extension Right to the date of the commencement
of the Extension Term, whether or not such Defaults are cured.

        40.    MISCELLANEOUS.

        (a NOTICES. All notices or other communications between the parties
shall be in writing and shall be deemed duly given upon delivery or refusal to
accept delivery by the addressee thereof if delivered in person, or upon actual
receipt if delivered by reputable overnight guaranty courier, addressed and sent
to the parties at their addresses set forth above. Landlord and Tenant may from
time to time by written notice to the other designate another address for
receipt of future notices.

        (b JOINT AND SEVERAL LIABILITY. If and when included within the term
"TENANT," as used in this instrument, there is more than one person or entity,
each shall be jointly and severally liable for the obligations of Tenant.

        (c RECORDATION. Neither this Lease nor a memorandum of lease shall be
filed by or on behalf of Tenant in any public record. Landlord may prepare and
file, and upon request by Landlord Tenant will execute, a memorandum of lease.

        (d INTERPRETATION. The normal rule of construction to the effect that
any ambiguities



                                       28
<PAGE>   29

are to be resolved against the drafting party shall not be employed in the
interpretation of this Lease or any exhibits or amendments hereto. Words of any
gender used in this Lease shall be held and construed to include any other
gender, and words in the singular number shall be held to include the plural,
unless the context otherwise requires. The captions inserted in this Lease are
for convenience only and in no way define, limit or otherwise describe the scope
or intent of this Lease, or any provision hereof, or in any way affect the
interpretation of this Lease.

        (e NOT BINDING UNTIL EXECUTED. The submission by Landlord to Tenant of
this Lease shall have no binding force or effect, shall not constitute an option
for the leasing of the Premises, nor confer any right or impose any obligations
upon either party until execution of this Lease by both parties.

        (f LIMITATIONS ON INTEREST. It is expressly the intent of Landlord and
Tenant at all times to comply with applicable law governing the maximum rate or
amount of any interest payable on or in connection with this Lease. If
applicable law is ever judicially interpreted so as to render usurious any
interest called for under this Lease, or contracted for, charged, taken,
reserved, or received with respect to this Lease, then it is Landlord's and
Tenant's express intent that all excess amounts theretofore collected by
Landlord be credited on the applicable obligation (or, if the obligation has
been or would thereby be paid in full, refunded to Tenant), and the provisions
of this Lease immediately shall be deemed reformed and the amounts thereafter
collectible hereunder reduced, without the necessity of the execution of any new
document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder.

        (g CHOICE OF LAW. Construction and interpretation of this Lease shall be
governed by the internal laws of the state in which the Premises are located,
excluding any principles of conflicts of laws.

        (h TIME. Time is of the essence as to the performance of Tenant's
obligations under this Lease.

        (i INCORPORATION BY REFERENCE. All exhibits and addenda attached hereto
are hereby incorporated into this Lease and made a part hereof. If there is any
conflict between such exhibits or addenda and the terms of this Lease, such
exhibits or addenda shall control.

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

                                        TENANT:

                                        AVIGEN, INC.,
                                        a Delaware corporation
                                        By: /s/ John Monahan
                                            ------------------------------------
                                        Its: CEO / President
                                            ------------------------------------


                                        LANDLORD:

                                        ARE- 1201 HARBOR BAY, LLC,
                                        a Delaware limited liability company

                                        BY:     ARE-QRS CORP.,
                                                a Maryland corporation



                                       29
<PAGE>   30

                                        By:   /s/ Laurie A. Allen
                                            ------------------------------------
                                        Its: Senior Vice President, Business
                                               Development & Legal Affairs
                                            ------------------------------------


[NOTARY SEAL]



                                        1
<PAGE>   31

                               EXHIBIT A TO LEASE

                             DESCRIPTION OF PREMISES


[A graphic depicting the floor plan of the building located at 1201 Harbor Way,
depicting proposed tenant occupation.]



                                        1
<PAGE>   32

                               EXHIBIT B TO LEASE

                             DESCRIPTION OF PROJECT


PARCEL ONE:

PARCEL ONE, PARCEL MAP 4124, FILED SEPTEMBER 13, 1983, MAP BOOK 141, PAGE 8,
ALAMEDA COUNTY RECORDS.

PARCEL TWO:

RIGHTS RESERVED IN THE GRANT OF EASEMENT TO THE CITY OF ALAMEDA, RECORDED MARCH
19, 1982. SERIES 82-039799, OFFICIAL RECORDS.

RESERVING THEREFROM:

RESERVING TO THE GRANTOR AND ITS SUCCESSORS AND ASSIGNS, ALL OVERLYING AND OTHER
WATER RIGHTS, INCLUDING, WITHOUT LIMITATION, THE RIGHT TO APPROPRIATE WATER AND
DISTRIBUTE IT TO OTHER PROPERTIES WITHOUT ANY RIGHT TO THE USE OF OR RIGHTS IN
OR TO ANY PORTION OF THE SURFACE OF SAID LAND. THE OWNER OF THE RESERVED WATER
RIGHTS, HOWEVER, COVENANTS THAT IT WILL NOT EXERCISE THE RIGHTS RESERVED OVER
THE SURFACE OF THE PROPERTY DESCRIBED ABOVE OR WITHIN THE SUBSURFACE OF SUCH
PROPERTY ABOVE A DEPTH OF 100 FEET BELOW THE SURFACE OF SAID PROPERTY. BREACH OF
THE FOREGOING COVENANT SHALL NOT, HOWEVER, TERMINATE OR FORFEIT THE RIGHTS SO
RESERVED, BUT INJUNCTIVE RELIEF MAY BE SOUGHT AND OBTAINED TO PREVENT OR REMEDY
ANY SUCH BREACH:

AND, RESERVING FURTHER, TO THE GRANTOR AND ITS SUCCESSORS AND ASSIGNS, ALL OIL,
GAS, MINERAL, GEOTHERMAL AND HYDROCARBON SUBSTANCES IN AND UNDER OR THAT MAY BE
PRODUCED BELOW A DEPTH OF 500 FEET BELOW THE SURFACE OF SAID PROPERTY WITHOUT
ANY RIGHT OF ENTRY UPON THE SURFACE OF SAID LAND FOR THE PURPOSE OF MINING,
DRILLING, EXPLORING OR EXTRACTING SUCH OIL, GAS, MINERAL, GEOTHERMAL, OR
HYDROCARBON SUBSTANCES AND, EXCEPT AS PROVIDED ABOVE WITH RESPECT TO WATER
RIGHTS, WITHOUT ANY RIGHT TO THE USE OF OR RIGHTS IN OR TO ANY PORTION OF THE
SURFACE OF SAID LAND TO A DEPTH OF 500 FEET BELOW THE SURFACE THEREOF, AS
RESERVED IN THE DEED FROM HARBOR BAY ISLE ASSOCIATES, A PARTNERSHIP, RECORDED
FEBRUARY 5, 1985, SERIES NO. 85-027883, OFFICIAL RECORDS.

ASSESSOR'S PARCEL NO.  074-1339-025



                                        1
<PAGE>   33

                               EXHIBIT D TO LEASE

                       ACKNOWLEDGMENT OF COMMENCEMENT DATE

               This  ACKNOWLEDGMENT OF COMMENCEMENT DATE is made this _____ day
of ______________, ______________, between ARE- 1201 HARBOR BAY, LLC, a Delaware
limited liability company ("LANDLORD"), and AVIGEN, INC., a Delaware corporation
("TENANT"), and is attached to and made a part of the Lease dated s of February
, 2000 (the "Lease"), by and between Landlord and Tenant. Any initially
capitalized terms used but not defined herein shall have the meanings given them
in the Lease.

        Landlord and Tenant hereby acknowledge and agree, for all purposes of
the Lease, that the Commencement Date of the Base Term of the Lease is
_______________, _______________ and the termination date of the Base Term of
the Lease shall be midnight on _______________,_______________ .

        IN WITNESS WHEREOF, Landlord and Tenant have executed this
ACKNOWLEDGMENT OF COMMENCEMENT DATE to be effective on the date first above
written.



                                    TENANT:

                                    AVIGEN, INC.,
                                    a Delaware corporation ("TENANT")



                                    By:
                                        ----------------------------------------
                                    Its:
                                        ----------------------------------



                                    LANDLORD:

                                    ARE- 1201 HARBOR BAY, LLC,
                                    a Delaware limited liability company

                                    BY:     ARE-QRS CORP.,
                                            a Maryland corporation


                                            By:
                                                --------------------------------
                                            Its:
                                                --------------------------------



                                        1
<PAGE>   34

                               EXHIBIT E TO LEASE

                              RULES AND REGULATIONS


        1. The sidewalk, entries, and driveways of the Project shall not be
obstructed by Tenant, or its agents, or used by them for any purpose other than
ingress and egress to and from the Premises.

        2. Tenant shall not place any objects, including antennas, outdoor
furniture, etc., in the parking areas, landscaped areas or other areas outside
of its Premises, or on the roof of the Project.

        3. Except for seeing-eye dogs, no animals shall be allowed in the
offices, halls, or corridors in the Project.

        4. Tenant shall not disturb the occupants of the Project or adjoining
buildings by the use of any radio or musical instrument or by the making of loud
or improper noises.

        5. If Tenant desires telegraphic, telephonic or other electric
connections in the Premises, Landlord or its agent will direct the electrician
as to where and how the wires may be introduced; and, without such direction, no
boring or cutting of wires will be permitted. Any such installation or
connection shall be made at Tenant's expense.

        6. Tenant shall not install or operate any steam or gas engine or
boiler, or other mechanical apparatus in the Premises, except as specifically
approved in the Lease. The use of oil, gas or inflammable liquids for heating,
lighting or any other purpose is expressly prohibited. Explosives or other
articles deemed extra hazardous shall not be brought into the Project.

        7. Parking any type of recreational vehicles is specifically prohibited
on or about the Project. Except for the overnight parking of operative vehicles,
no vehicle of any type shall be stored in the parking areas at any time. In the
event that a vehicle is disabled, it shall be removed within 48 hours. There
shall be no "For Sale" or other advertising signs on or about any parked
vehicle. All vehicles shall be parked in the designated parking areas in
conformity with all signs and other markings. All parking will be open parking,
and no reserved parking, numbering or lettering of individual spaces will be
permitted except as specified by Landlord.

        8. Tenant shall maintain the Premises free from rodents, insects and
other pests.

        9. Landlord reserves the right to exclude or expel from the Project any
person who, in the judgment of Landlord, is intoxicated or under the influence
of liquor or drugs or who shall in any manner do any act in violation of the
Rules and Regulations of the Project.

        10. Tenant shall not cause any unnecessary labor by reason of Tenant's
carelessness or indifference in the preservation of good order and cleanliness.
Landlord shall not be responsible to Tenant for any loss of property on the
Premises, however occurring, or for any damage done to the effects of Tenant by
the janitors or any other employee or person.

        11. Tenant shall give Landlord prompt notice of any defects in the
water, lawn sprinkler, sewage, gas pipes, electrical lights and fixtures,
heating apparatus, or any other service equipment affecting the Premises.

        12. Tenant shall not permit storage outside the Premises, including
without limitation, outside storage of trucks and other vehicles, or dumping of
waste or refuse or permit any



                                       1
<PAGE>   35

harmful materials to be placed in any drainage system or sanitary system in or
about the Premises.

        13. All moveable trash receptacles provided by the trash disposal firm
for the Premises must be kept in the trash enclosure areas, if any, provided for
that purpose.

        14. No auction, public or private, will be permitted on the Premises or
the Project.

        15. No awnings shall be placed over the windows in the Premises except
with the prior written consent of Landlord.

        16. The Premises shall not be used for lodging, sleeping or cooking or
for any immoral or illegal purposes or for any purpose other than that specified
in the Lease. No gaming devices shall be operated in the Premises.

        17. Tenant shall ascertain from Landlord the maximum amount of
electrical current which can safely be used in the Premises, taking into account
the capacity of the electrical wiring in the Project and the Premises and the
needs of other tenants, and shall not use more than such safe capacity.
Landlord's consent to the installation of electric equipment shall not relieve
Tenant from the obligation not to use more electricity than such safe capacity.

        18. Tenant assumes full responsibility for protecting the Premises from
theft, robbery and pilferage.

        19. Tenant shall not install or operate on the Premises any machinery or
mechanical devices of a nature not directly related to Tenant's ordinary use of
the Premises and shall keep all such machinery free of vibration, noise and air
waves which may be transmitted beyond the Premises.



                                       2
<PAGE>   36

                               EXHIBIT F TO LEASE

                           TENANT'S PERSONAL PROPERTY


                               [TENANT TO PROVIDE]



                                       1
<PAGE>   37

                               EXHIBIT G TO LEASE

                              ESTOPPEL CERTIFICATE

        THIS TENANT ESTOPPEL CERTIFICATE ("CERTIFICATE"), dated as of ________,
______, is executed by ______________________ ("TENANT") in favor of [BUYER], a
___________________________ , together with its nominees, designees and assigns
(collectively, "BUYER"), and in favor of _____________, together with its
nominees, designees and assigns (collectively, "LENDER").

                                    RECITALS

        A. Buyer and ____________ ("LANDLORD") have entered into that certain
Purchase and Sale Agreement and Joint Escrow Instructions, dated as of
_________, 20__ (the "PURCHASE AGREEMENT"), whereby Buyer has agreed to
purchase, among other things, the improved real property located in the City of
_________, County of _________, State of _________, more particularly described
on Exhibit A attached to the Purchase Agreement (the "PROPERTY").

        B. Tenant and Landlord have entered into that certain Lease Agreement,
dated as of ___________ (together with all amendments, modifications,
supplements, guarantees and restatements thereof, the "LEASE"), for a portion of
the Property.

        C. Pursuant to the Lease, Tenant has agreed that upon the request of
Landlord, Tenant would execute and deliver an estoppel certificate certifying
the status of the Lease.

        D. In connection with the Purchase Agreement, Landlord has requested
that Tenant execute this Certificate with an understanding that Lender will rely
on the representations and agreements below in granting to Buyer a loan.

        NOW, THEREFORE, Tenant certifies, warrants, and represents to Buyer and
Lender as follows:

1. LEASE. Attached hereto as Exhibit B is a true, correct and complete copy of
the Lease, including the following amendments, modifications, supplements,
guarantees and restatements thereof, which together represent all of the
amendments, modifications, supplements, guarantees and restatements thereof:
________________________________________________ (If none, please state "None.")

2. PREMISES. Pursuant to the Lease, Tenant leases those certain premises (the
"Premises") consisting of approximately _______________ rentable square feet
within the Property, as more particularly described in the Lease. In addition,
pursuant to the terms of the Lease, Tenant has the [non-exclusive] right to use
[_____ parking spaces/the parking area] located on the Property during the term
of the Lease. [Cross-out the preceding sentence or portions thereof if
inapplicable.]

3. FULL FORCE OF LEASE. The Lease has been duly authorized, executed and
delivered by Tenant, is in full force and effect, has not been terminated, and
constitutes a legally valid instrument, binding and enforceable against Tenant
in accordance with its terms, subject only to applicable limitations imposed by
laws relating to bankruptcy and creditor's rights.

4. COMPLETE AGREEMENT. The Lease constitutes the complete agreement between
Landlord and Tenant for the Premises and the Property, and except as modified by
the Lease amendments noted above (if any), has not been modified, altered or
amended.



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<PAGE>   38

5. ACCEPTANCE OF PREMISES. Tenant has accepted possession of and is currently
occupying the Premises.

6. LEASE TERM. The term of the Lease commenced on ______________ and ends on
_______________, subject to the following options to extend: ___________________
_________________________________.
(If none, please state "None.")

7. PURCHASE RIGHTS. Tenant has no option, right of first refusal, right of first
offer, or other right to acquire or purchase all or any portion of the Premises
or all or any portion of, or interest in, the Property, except as follows:
________________________________________________________________________________
_________________________________.
(If none, please state "None.")

8. RIGHTS OF TENANT. Except as expressly stated in this Certificate, Tenant:

               (a) has no right to renew or extend the term of the Lease;

               (b) has no option or other right to purchase all or any part of
        the Premises or all or any part of the Property; and

               (c) has no right, title, or interest in the Premises, other than
        as Tenant under the Lease.

9. RENT.

               (a) The obligation to pay rent under the Lease commenced on
        ___________. The rent under the Lease is current, and Tenant is not in
        default in the performance of any of its obligations under the Lease.

               (b) Tenant is currently paying base rent under the Lease in the
        amount of $__________ per month. Tenant has not received and is not
        presently entitled to any abatement, refunds, rebates, concessions or
        forgiveness of rent or other charges, free rent, partial rent, or
        credits, offsets or reductions in rent, except as follows: _____________
        ________________________________________________________________________
        _________________________________. (If none, please state "None.")

               (c) Tenant's estimated share of operating expenses, common area
        charges, insurance, real estate taxes and administrative and overhead
        expenses is ________% and is currently being paid at the rate of
        $__________ per month, payable to:_____________________________________.

               (d) There are no existing defenses or offsets against rent due or
        to become due under the terms of the Lease, and there presently is no
        default or other wrongful act or omission by Landlord under the Lease or
        otherwise in connection with Tenant's occupancy of the Premises, nor is
        there a state of facts which with the passage of time or the giving of
        notice or both could ripen into a default on the part of Tenant, or, to
        the best knowledge of Tenant, could ripen into a default on the part of
        Landlord under the Lease, except as follows:____________________________
        ________________________________________________________________________
        _________________________________. (If none, please state "None.")


10. SECURITY DEPOSIT. The amount of Tenant's security deposit held by Landlord
under the



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<PAGE>   39

Lease is $ __________.

11. PREPAID RENT. The amount of prepaid rent, separate from the security
deposit, is $___________, covering the period from ________ to  ________.

12. INSURANCE. All insurance, if any, required to be maintained by Tenant under
the Lease is presently in effect.

13. PENDING ACTIONS. There is not pending or, to the knowledge of Tenant,
threatened against or contemplated by the Tenant, any petition in bankruptcy,
whether voluntary or otherwise, any assignment for the benefit of creditors, or
any petition seeking reorganization or arrangement under the federal bankruptcy
laws or those of any state, except as follows:__________________________________
_______________________________________________________________________________.
(If none, please state "None.")

14. TENANT IMPROVEMENTS. As of the date of this Certificate, to the best of
Tenant's knowledge, Landlord has performed all obligations required of Landlord
pursuant to the Lease; no offsets, counterclaims, or defenses of Tenant under
the Lease exist against Landlord; and no events have occurred that, with the
passage of time or the giving of notice or both, would constitute a basis for
offsets, counterclaims, or defenses against Landlord, except as follows:________
_______________________________________________________________________________.
(If none, please state "None.")

15. ASSIGNMENTS BY LANDLORD. Tenant has received no notice of any assignment,
hypothecation or pledge of the Lease or rentals under the Lease by Landlord.
Tenant hereby consents to an assignment of the Lease and rents to be executed by
Landlord to Buyer or Lender in connection with the Loan and acknowledges that
said assignment does not violate the provisions of the Lease. Tenant
acknowledges that the interest of the Landlord under the Lease is to be assigned
to Buyer or Lender solely as security for the purposes specified in said
assignment and Buyer or Lender shall have no duty, liability or obligation
whatsoever under the Lease or any extension or renewal thereof, either by virtue
of said assignment or by any subsequent receipt or collection of rents
thereunder, unless Buyer or Lender shall specifically undertake such liability
in writing. Tenant agrees that upon receipt of a written notice from Buyer or
Lender of a default by Landlord under the Loan, Tenant will thereafter pay rent
to Buyer or Lender in accordance with the terms of the Lease.

16. ASSIGNMENTS BY TENANT. Tenant has not sublet or assigned the Premises or the
Lease or any portion thereof to any sublessee or assignee. No one except Tenant
and its employees will occupy the Premises. The address for notices to be sent
to Tenant is as set forth in the Lease, except as follows:______________________
_______________________________________________________________________________.
(If none, please state "None.")

17. ENVIRONMENTAL MATTERS. The operation and use of the Premises does not
involve the generation, treatment, storage, disposal or release into the
environment of any hazardous materials, regulated materials and/or solid waste,
except those used in the ordinary course of operating for the Permitted Use, as
defined in the Lease, or otherwise used in accordance with all applicable laws.

18. SUCCESSION OF INTEREST. Tenant agrees that, in the event Buyer or Lender
succeeds to the interest of Landlord under the Lease:

               (a) Buyer or Lender shall not be liable for any act or omission
        of any prior landlord (including Landlord);

               (b) Buyer or Lender shall not be liable for the return of any
        security deposit



                                        3
<PAGE>   40

        unless delivered or credited to such Buyer or delivered to such Lender;

               (c) Buyer or Lender shall not be bound by any rent or additional
        rent which Tenant might have prepaid under the Lease for more than the
        current month;

               (d) Buyer or Lender shall not be bound by any amendments or
        modifications of the Lease made without the prior consent of Buyer or
        Lender;

               (e) Buyer or Lender shall not be subject to any offsets or
        defenses which Tenant might have against any prior landlord (including
        Landlord); and

               (f) Buyer or Lender shall not be liable under the Lease to Tenant
        for the performance of Landlord's obligations under the Lease beyond
        Buyer or Lender's interest in the Property.

19. NOTICE OF DEFAULT. Tenant agrees to give Buyer and Lender a copy of any
notice of default under the Lease served upon Landlord at the same time as such
notice is given to Landlord. Tenant further agrees that if Landlord shall fail
to cure such default within the applicable grace period, if any, provided in the
Lease, then Buyer or Lender shall have an additional 60 days within which to
cure such default, or if such default cannot be cured within such 60-day period,
such 60-day period shall be extended so long as Buyer or Lender has commenced
and is diligently pursuing the remedies necessary to cure such default,
including, but not limited to, commencement of foreclosure proceedings, if
necessary to effect such cure, in which event the Lease shall not be terminated
while such remedies are being pursued.

20. NOTIFICATION BY TENANT. From the date of this Certificate and continuing
until ____________, Tenant agrees to immediately notify Buyer and Lender, in
writing by registered or certified mail, return receipt requested, at the
following addresses, on the occurrence of any event or the discovery of any fact
that would make any representation contained in this Certificate inaccurate:

        If To Buyer:              _________________________________
                                  _________________________________
                                  _________________________________
                                  _________________________________
                                  _________________________________

        With A Copy To:           _________________________________
                                  _________________________________
                                  _________________________________
                                  _________________________________
                                  _________________________________

        If To Lender:             _________________________________
                                  _________________________________
                                  _________________________________
                                  _________________________________
                                  _________________________________


        Tenant makes this Certificate with the knowledge that it will be relied
upon by Buyer and Lender in agreeing to purchase the Property.

        Tenant has executed this Certificate as of the date first written above
by the person named below, who is duly authorized to do so.



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<PAGE>   41

TENANT:               [INSERT APPROPRIATE SIGNATURE BLOCK]



                                       5
<PAGE>   42

                        EXHIBIT A TO ESTOPPEL CERTIFICATE

                                LEGAL DESCRIPTION



                                       6
<PAGE>   43

                        EXHIBIT B TO ESTOPPEL CERTIFICATE

                                  COPY OF LEASE



                                       1
<PAGE>   44

                               EXHIBIT H TO LEASE

                       SUBORDINATION, NON-DISTURBANCE AND
                              ATTORNMENT AGREEMENT


        THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT is made and
entered into as of __________ ____, _____ ("AGREEMENT"), by and between ARE- , a
together with its nominees, designees and assigns (collectively, "LANDLORD"), ,
a _______________ ("TENANT"), and ____________________, a
_______________("MORTGAGEE").

        WHEREAS, Mortgagee is making a loan to Landlord and others evidenced by
a certain promissory note ("NOTE"), and secured by, among other things, a deed
of trust/mortgage to be recorded prior hereto in the public records of the City
of _________, County of ________, State of ________ ("MORTGAGE") constituting a
lien upon the real property described in Exhibit A hereto (the "REAL PROPERTY");
and

        WHEREAS, ______________________________ and Tenant have entered into a
Lease Agreement dated as of____________________, _____ ("LEASE"), for certain
leased premises encompassing _______________________________________ located in
_____________, containing approximately __________________________ net square
feet (hereinafter collectively referred to as "PREMISES"); and

        WHEREAS, the Lease is subordinate to the Mortgage and to the right,
title, and interests of Mortgagee thereto and thereunder; and

        WHEREAS, Mortgagee wishes to obtain from Tenant certain assurances that
Tenant will attorn to Mortgagee in the event of a foreclosure by Mortgagee or
the exercise of other rights under the Mortgage; and

        WHEREAS, Tenant wishes to obtain from Mortgagee certain assurances that
Tenant's possession of the Premises will not, subject to the terms and
conditions of this Agreement, be disturbed by reason of a foreclosure of the
lien of the Mortgage on the Real Property; and

        WHEREAS, Tenant and Mortgagee are both willing to provide such
assurances to each other upon and subject to the terms and conditions of this
Agreement.

        NOW, THEREFORE, in consideration of the above, the mutual promises
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto mutually
agree as follows:

        1. AFFIRMATION. Tenant hereby agrees that the Lease now is and shall be
subject and subordinate in all respects to the Mortgage and to all renewals,
modifications and extensions thereof until such time that the Mortgage is
released, satisfied or otherwise discharged, subject to the terms and conditions
of this Agreement. Landlord and Tenant hereby affirm that the Lease is in full
force and effect and that the Lease has not been modified or amended. Mortgagee
hereby confirms that it is the holder of the Note and the beneficiary of the
Mortgage and has full power and authority to enter into this Agreement.



                                       1
<PAGE>   45

        2. ATTORNMENT AND NON-DISTURBANCE.

        (a) So long as Tenant is not in default under the Lease (beyond Tenant's
receipt of notice from Landlord and any grace period granted Tenant under the
Lease to cure such default) as would entitle the Landlord to terminate the Lease
or would cause, without any further action of the Landlord, the termination of
the Lease or would entitle the Landlord to dispossess Tenant thereunder then
Mortgagee agrees with Tenant that in the event the interest of Landlord shall be
acquired by Mortgagee or in the event Mortgagee comes into possession of or
acquires title to the Real Property by reason of foreclosure or foreclosure sale
or the enforcement of the Mortgage or the Note or other obligation secured
thereby or by a conveyance in lieu thereof, or as a result of any other means
then:

               (i) Subject to the provisions of this Agreement, Tenant's
        occupancy and possession of the Premises and Tenant's rights and
        privileges under the Lease or any extensions, modifications or renewals
        thereof or substitutions therefor (in accordance with the Lease and the
        Mortgage) shall not be disturbed, diminished or interfered with by
        Mortgagee during the term of the Lease (or any extensions or renewals
        thereof provided for in the Lease);

               (ii) Mortgagee will not join Tenant as a party defendant in any
        action or proceeding for the purpose of terminating Tenant's interest
        and estate under the Lease because of any default under the Mortgage;
        and

               (iii) The Lease shall continue in full force and effect and shall
        not be terminated except in accordance with the terms of the Lease.

        (b) Tenant shall be bound to Mortgagee under all of the terms, covenants
and conditions of the Lease for the balance of the term thereof remaining (and
any extensions or renewals thereof which may be effected in accordance with any
option contained in the Lease) with the same force and effect as if Mortgagee
were the landlord under the Lease, and Tenant does hereby agree to attorn to
Mortgagee as its landlord, said attornment to be effective and self-operative
without the execution of any other instruments on the part of either party
hereto immediately upon Mortgagee's succeeding to the interest of Landlord under
the Lease. Upon request of Lender, Tenant shall execute and deliver to Lender an
agreement reaffirming such attornment.

        (c) If the Mortgage is foreclosed and any party ("PURCHASER") other than
Mortgagee purchases the Premises and succeeds to the interest of Landlord under
the Lease, Tenant shall likewise be bound to Purchaser and Tenant hereby
covenants and agrees to attorn to Purchaser in accordance with all of the
provisions of this Agreement; provided, however, that Purchaser shall have
transmitted to Tenant a written document in recordable form, whereby Purchaser
agrees to recognize Tenant as its lessee under the Lease and agrees to be
directly bound to Tenant for the performance and observance of all the terms and
conditions of the Lease required to be performed or observed by Landlord
thereunder, subject to and in accordance with the terms of this Agreement.

        (d) Mortgagee agrees that if Mortgagee shall succeed to the interest of
Landlord under the Lease as above provided, Mortgagee shall be bound to Tenant
under all of the terms, covenants, and conditions of the Lease, and Tenant
shall, from and after Mortgagee's succession to the interest of Landlord under
the Lease, have the same remedies against Mortgagee that Tenant might have had
under the Lease against Landlord if Mortgagee had not succeeded to the interest
of Landlord; provided, however, that Mortgagee (and Purchaser, as the case may
be) shall not be:

               (i) liable for any act or omission of any prior lessor (including
        Landlord)



                                       2
<PAGE>   46

        occurring prior to the date that Mortgagee or Purchaser acquired title
        to the Premises;

               (ii) subject to any offsets, counterclaims or defenses which
        Tenant might have against any prior lessor (including Landlord);

               (iii) bound by any previous payment of rent or additional rent
        for a period greater than 1 month unless such prepayment shall have been
        consented to in writing by Mortgagee;

               (iv) bound by any amendment or modification of the Lease made
        prior to the date Mortgagee or Purchaser succeeds to the interest of
        Landlord without Mortgagee's written consent;

               (v) liable to Tenant for any loss of business or any other
        indirect or consequential damages from whatever cause; provided,
        however, no inference shall be drawn from this clause (v) that Tenant
        would otherwise be entitled (or not entitled) to recover for loss of
        business or any other indirect or consequential damages; or

               (vi) liable for the return of any security deposit unless such
        deposit has been paid over to the Mortgagee.

        The foregoing shall not be construed to modify or limit any right Tenant
        may have at law or in equity against Landlord or any other prior owner
        of the Real Property.

        3. NOTICES. All notices required or permitted to be given pursuant to
this Agreement shall be in writing and shall be sent postage prepaid, by
certified mail, return receipt requested, or other nationally utilized overnight
delivery service. All notices shall be deemed delivered when received or
refused. Rejection or other refusal to accept or inability to deliver because of
changed address of which no notice has been given shall constitute receipt of
the notice, demand or request sent. Any such notice if given to Tenant shall be
addressed as follows:

                             _________________________________
                             _________________________________
                             _________________________________
                             _________________________________
                             _________________________________

        if given to Landlord shall be addressed as follows:

                             c/o Alexandria Real Estate Equities, Inc.
                             135 N. Los Robles Avenue
                             Suite 250
                             Pasadena, California  91101
                             Attention:  General Counsel

        if given to Mortgagee shall be addressed as follows:

                             _________________________________
                             _________________________________
                             _________________________________
                             _________________________________

        4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. The words "foreclosure" and "foreclosure sale" as used herein shall be
deemed to also include the acquisition of Landlord's estate in the Real Property
by voluntary deed, assignment or other



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<PAGE>   47

conveyance or transfer in lieu of foreclosure.

        5. MODIFICATIONS TO LEASE. Tenant shall not modify or amend the Lease or
terminate the same without Mortgagee's prior written consent. If Mortgagee fails
to provide Tenant with a written approval of the proposed modification,
amendment or termination within 10 business days after notice to Mortgagee of
such proposal, then Mortgagee shall be deemed to have rejected such proposal.

        6. ADDITIONAL AGREEMENTS. Tenant agrees that:

        (a) it shall give Mortgagee copies of all notices of default and
requests for approval or consent by Landlord that Tenant gives to Landlord
pursuant to the Lease in the same manner as they are given to Landlord and no
such notice or other communication shall be deemed to be effective until a copy
is given to Mortgagee;

        (b) whenever any consent or approval by Landlord is required to be
obtained by Tenant or is requested by Tenant such consent or approval shall not
be effective until it is also confirmed by or obtained from Mortgagee, provided
that Mortgagee shall respond within 30 days after Mortgagee's receipt of
Tenant's request and failure of Mortgagee to respond in such time period shall
be deemed to be a denial of such consent or approval;

        (c) in all provisions of the Lease where Landlord is indemnified, the
reference to Landlord as an indemnitee shall be deemed to include Mortgagee and
any Purchaser and such agreement of indemnification shall survive the repayment
of the loan secured by the Mortgage and, to the extent provided in the Lease,
the expiration or termination of the Lease;

        (d) Tenant shall name Mortgagee and any Purchaser as additional insureds
and loss payees, as applicable and appropriate, on all insurance policies
required by the Lease;

        (e) this Agreement satisfies any condition or requirement in the Lease
relating to the granting of a non-disturbance agreement by Mortgagee, and if
there are inconsistencies between the terms and provisions of this Agreement and
the terms and provisions of the Lease dealing with non-disturbance by Mortgagee,
the terms and provisions hereof shall be controlling; and

        (f) Mortgagee shall have no liability under the Lease until Mortgagee
succeeds to the rights of the Landlord under the Lease, and then only during
such period as Mortgagee is the landlord. At all times during which Mortgagee is
liable under the Lease, Mortgagee's liability shall be limited to Mortgagee's
interest in the Real Property.

        7. MORTGAGEE CURE RIGHTS. If Landlord shall have failed to cure any
default within the time period provided for in the Lease (including any
applicable notice and grace periods) and Tenant exercises any right to terminate
the Lease, Mortgagee shall have an additional 30 days within which to cure such
default, or if such default cannot by the exercise of reasonable efforts by
Mortgagee be cured within such period, then such additional time as may be
reasonable necessary to effect such a cure (including, if necessary, sufficient
time to complete foreclosure proceedings) provided that Mortgagee shall commence
and thereafter diligently pursue remedies to cure such default. The Lease shall
not be terminated (i) while such remedies are being diligently pursued or (ii)
based upon a default which is personal to Landlord and therefore not susceptible
to cure by Mortgagee or which requires possession of the Premises to cure.
Mortgagee shall in no event be obligated to cure any such default by Landlord
unless it forecloses. Nothing in this Section 7 shall affect any of Tenant's
termination rights under the Lease due to casualty or condemnation.

        8. DIRECTION TO PAY. Landlord hereby directs Tenant and Tenant agrees to
make all



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<PAGE>   48

payments of amounts owed by Tenant under the Lease directly to Mortgagee from
and after receipt by Tenant of notice from Mortgagee directing Tenant to make
such payments to Mortgagee. (As between Landlord and Mortgagee, the foregoing
provision shall not be construed to modify any rights of Landlord under any
provisions of the Mortgage or any other instrument securing the Note).

        9. CONDITIONAL ASSIGNMENT. With reference to any assignment by Landlord
of Landlord's interest in the Lease, or the rents payable thereunder,
conditional in nature or otherwise, which assignment is made to Mortgagee,
Tenant agrees that the execution thereof by Landlord, and the acceptance thereof
by Mortgagee, shall never be treated as an assumption by Mortgagee of any of the
obligations of Landlord under the Lease unless and until Mortgagee shall have
succeeded to the interest of Landlord. The foregoing sentence shall not affect
any of Tenant's rights against Landlord under the Lease.

                           [ SIGNATURES ON NEXT PAGE ]



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<PAGE>   49

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
properly executed by their duly authorized representatives as of the date first
above written.

TENANT:                       [INSERT APPROPRIATE SIGNATURE BLOCK]


LANDLORD:                     [INSERT APPROPRIATE SIGNATURE BLOCK]


MORTGAGEE:                    [INSERT APPROPRIATE SIGNATURE BLOCK]



                                       6