AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

            STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE - NET
               (DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

1.     Basic Provisions ("Basic Provisions")
     1.1 Parties: This Lease ("Lease"),  dated for reference purposes only, June
13,  1997,  is made by and between  LMC - Sorrento  Investment  Company,  LLC, a
California  limited  liability company  ("Lessor") and Agouron  Pharmaceuticals,
Inc., a California  corporation  ("Lessee"),  (collectively  the  "Parties,"  or
individually a "Party").
     1.2     Premises:  That certain real property, including all improvements 
therein or to be provided by Lessor under the terms of this Lease, and commonly 
known as 4215 Sorrento Valley Blvd., San Diego, California, located in the 
County of San Diego, State of California, and generally described as a Building 
which (when the improvements have been completed) shall consist of approximately
54,000 square feet (approximately 33,000 sq. ft. on first floor and 21,000 sq. 
ft. on second floor) on land having an area of approximately 150,718 sq. ft.
("Premises"). (See also Paragraph 2)
     1.3     Term:  See Addendum years and _____ months ("Original Term") 
commencing See Addendum ("Commencement Date") and ending See Addendum 
("Expiration Date").  (See also Paragraph 3) 
     1.4     Early Possession: N/A ("Early Possession Date").  
(See also Paragraphs 3.2 and 3.3)
     1.5     Base Rent:  $ See Addendum per month ("Base Rent"), payable on the
first day of each month commencing Rent Commencement Date (See Addendum) (See 
also Paragraph 4) 
/X/  If this box is checked, there are provisions in this Lease for the Base 
Rent to be adjusted.
     1.6     Base Rent Paid Upon Execution:  $ See Addendum as Base Rent for the
period See Addendum.
     1.7     Security Deposit:  $ See Addendum ("Security Deposit").  (See also 
Paragraph 5)
     1.8     Agreed Use:  Any use consistent with zoning of the Premises.  (See 
also Paragraph 6)
     1.9     Insuring Party.  Lessor is the "Insuring Party" unless otherwise 
stated herein.  (See also Paragraph 8)
     1.10     Real Estate Brokers:  (See also Paragraph 15)
          (a) Representation:  The following real estate brokers  (collectively,
the  "Brokers") and brokerage  relationships  exist in this  transaction  (check
applicable boxes):
/X/  CB  Commercial  represents  Lessor  exclusively  ("Lessor's  Broker");  /X/
Colliers/Illif/Thorn  represents Lessee exclusively  ("Lessee's Broker"); or / /
N/A represents both Lessor and Lessee ("Dual Agency").
          (b)     [No text]
     1.11     Guarantor.  The obligations of the Lessee under this Lease are to 
be guaranteed by N/A ("Guarantor").  (See also Paragraph 37)
     1.12  Addenda  and  Exhibits.  Attached  hereto is an  Addendum  or Addenda
consisting of Paragraphs 1.3 through 54 and Exhibits 1 (SNDA) and 2 (Site Plan),
all of which constitute a part of this Lease.
2.     Premises.
     2.1     Letting. Lessor hereby leases to Lessee, and Lessee hereby  leases 
from Lessor, the Premises, for the term, at the rental, and upon all of the 
terms, covenants and conditions set forth in this Lease and the Addendum. 
See Addendum, Sec. 1.5.3.
     2.2     Condition.  See Addendum, Sec. 51.
     2.3 Compliance.  Subject to the Addendum, Sec. 50. Lessor warrants that the
improvements  on the  Premises  comply with all  applicable  laws,  covenants or
restrictions of record, building codes,  regulations and ordinances ("Applicable
Requirements")  in effect on the Start Date. Said warranty does not apply to the
use to which  Lessee  will put the  Premises  or to any  Alterations  or Utility
Installations  (as defined in  Paragraph  7.3(a))  made or to be made by Lessee.
NOTE:  Lessee  is  responsible  for  determining  whether  or not the  zoning is
appropriate for Lessee's  intended use, and  acknowledges  that past uses of the
Premises  may no longer be  allowed.  If the  Premises  do not comply  with said
warranty, Lessor shall, except as otherwise provided,  promptly after receipt of
written notice from Lessee setting forth with  specificity the nature and extent
of such non-compliance, rectify the same at Lessor's expense. If Lessee does not
give Lessor written notice of a non-compliance with this warranty within six (6)
months following the Start Date, corrections of that non-compliance shall be the
obligation  of  Lessee at  Lessee's  sole cost and  expense.  If the  Applicable
Requirements  are  hereafter  changed (as opposed to being in  existence  at the
Start Date,  which is  addressed  in  Paragraph  6.2 (e) below) so as to require
during  the  term  of  this  Lease  the  construction  of an  addition  to or an
alteration of the Building,  the remediation of any Hazardous Substance,  or the
reinforcement  or  other  physical   modification  of  the  Building   ("Capital
Expenditure"),  Lessor  and  Lessee  shall  allocate  the  cost of such  work as
follows:

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          (a) Subject to Paragraph  2.3(c) below,  if such Capital  Expenditures
are  required  as a result of the  specific  and unique use of the  Premises  by
Lessee as  compared  with uses by  tenants  in  general,  Lessee  shall be fully
responsible  for the  cost  thereof,  provided,  however  that  if such  Capital
Expenditure is required during the last two (2) years of this Lease and the cost
thereof  exceeds six (6) months' Base Rent,  Lessee may instead  terminate  this
Lease unless  Lessor  notifies  Lessee,  in writing,  within ten (10) days after
receipt of  Lessee's  termination  notice  that  Lessor  has  elected to pay the
difference  between  the actual  cost  thereof  and the amount  equal to six (6)
months' Base Rent. If Lessee elects termination,  Lessee shall immediately cease
the use of the Premises which requires such Capital  Expenditure  and deliver to
Lessor  written notice  specifying a termination  date at least ninety (90) days
thereafter.  Such termination date shall,  however,  in no event be earlier than
the last day that Lessee could legally utilize the Premises  without  commencing
such Capital Expenditure.
          (b) If such Capital  Expenditure is not the result of the specific and
unique use of the Premises by Lessee (such as,  governmentally  mandated seismic
modifications),  then Lessor and Lessee shall allocate the obligation to pay for
such costs pursuant to the provisions of Paragraph  7.1(c);  provided,  however,
that if such Capital  Expenditure  is required  during the last two years of the
Lease or if Lessor reasonably determines that it is not economically feasible to
pay its share thereof, Lessor shall have the option to terminate this Lease upon
ninety (90) days prior written notice to Lessee unless Lessee  notifies  Lessor,
in writing,  within ten (10) days after receipt of Lessor's  termination  notice
that Lessee will pay for such Capital  Expenditure.  If Lessor does not elect to
terminate, and fails to tender its share of any such Capital Expenditure, Lessee
may advance such funds and deduct same, with Interest,  from Rent until Lessor's
share of such  costs  have been  fully  paid.  If  Lessee  is unable to  finance
Lessor's  share, or if the balance of the Rent due and payable for the remainder
of this Lease is not  sufficient to fully  reimburse  Lessee on an offset bases,
Lessee  shall  have the right to  terminate  this Lease  upon  thirty  (30) days
written notice to Lessor.
          (c)  Notwithstanding  the above,  the  provisions  concerning  Capital
Expenditures are intended to apply only to  non-voluntary,  unexpected,  and new
Applicable  Requirements.  If the Capital  Expenditures are instead triggered by
Lessee as a result of an actual or proposed  change in use,  change in intensity
of use, or modification to the Premises then, and in that event, Lessee shall be
fully  responsible for the cost thereof,  and Lessee shall not have any right to
terminate this Lease.
     2.4  Acknowledgments.  Lessee acknowledges that: (a) it has been advised by
Lessor  and/or  Brokers to satisfy  itself with respect to the  condition of the
Premises  (including but not limited to the electrical,  HVAC and fire sprinkler
systems,  security,   environmental  aspects,  and  compliance  with  Applicable
Requirements),  and their  suitability for Lessee's intended use, (b) Lessee has
made such investigation as it deems necessary with reference to such matters and
assumes all  responsibility  therefor as the same relate to its occupancy of the
Premises,  and (c) neither Lessor,  Lessor's agents, nor any Broker has made any
oral or written representations or warranties with respect to said matters other
than as set forth in this Lease.  In addition,  Lessor  acknowledges  that:  (a)
Broker has made no representations,  promises or warranties  concerning Lessee's
ability to honor the Lease or suitability to occupy the Premises,  and (b) it is
Lessor's   responsibility   to  investigate  the  financial   capability  and/or
suitability of all proposed tenants.
     2.5     Lessee as Prior Owner/Occupant.  [No text.]
3.     Term.
     3.1     Term.  The Commencement Date, Expiration Date and Original Term of
this Lease are as specified in Paragraph 1.3.
     3.2 Early Possession.  If Lessee totally or partially occupies the Premises
prior to the  Commencement  Date, the obligation to pay Rent shall be abated for
the period of such early possession.  Any such early possession shall not affect
the Expiration Date.
     3.3     Delay in Possession.  See Addendum, Sec. 50, 51.
     3.4 Lessee Compliance. Lessor shall not be required to tender possession of
the Premises to Lessee  until Lessee  complies  with its  obligation  to provide
evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee
shall be required to perform  all of its  obligations  under this Lease from and
after the Start Date,  including the payment of Rent,  notwithstanding  Lessor's
election to withhold  possession  pending receipt of such evidence of insurance.
Further,  if Lessee is  required  to perform  any other  conditions  prior to or
concurrent  with the Start Date, the Start Date shall occur but Lessor may elect
to withhold possession until such conditions are satisfied. 4. Rent.
     4.1     Rent Defined.  All monetary obligations of Lessee to Lessor under 
the terms of this Lease (except for the Security Deposit) are deemed to be rent 
("Rent").
     4.2 Payment. Lessee shall cause payment of Rent to be received by Lessor in
lawful money of the United States, without offset or deduction, on or before the
day on which it is due.  Rent for any period during the term hereof which is for
less than one (1) full  calendar  month shall be prorated  based upon the actual
number of days of said  month.  Payment  of Rent  shall be made to Lessor at its
address  stated herein or to such other persons or place as Lessor may from time
to time  designate in writing.  Acceptance  of a payment  which is less than the
amount then due shall not be a waiver of Lessor's  rights to the balance of such
Rent,  regardless of Lessor's  endorsement of any check so stating.  5. Security
Deposit.  Lessee shall  deposit with Lessor upon  execution  hereof the Security
Deposit as security for Lessee's  faithful  performance of its obligations under
this Lease. If Lessee fails to pay Rent, or otherwise Defaults under this Lease,
Lessor may use, apply or retain all or any portion of said Security  Deposit for
the payment of any amount due Lessor or to  reimburse or  compensate  Lessor for
any  liability,  expense,  loss or damage  which  Lessor  may suffer or incur by
reason  thereof.  If Lessor uses or applies all or any portion of said  Security
Deposit,  Lessee  shall  within ten (10) days  after  written  request  therefor
deposit  monies with Lessor  sufficient to restore said Security  Deposit to the
full amount  required by this  Lease.  Lessor  shall not be required to keep the
Security Deposit separate from its general  accounts.  Within fourteen (14) days
after the expiration or termination of this Lease, if Lessor elects to apply the
Security  Deposit only to unpaid Rent,  and  otherwise  within  thirty (30) days
after the Premises have been vacated pursuant to Paragraph 7.4(c) below,  Lessor
shall return that portion of the Security Deposit not used or applied by Lessor.
No part of the Security Deposit shall be considered to be held in trust, to bear
interest  or to be  prepayment  for any  monies to be paid by Lessee  under this
Lease. 6. Use.
     6.1 Use.  Lessee shall use and occupy the Premises only for the Agreed Use,
or any other legal use which is reasonably  comparable thereto, and for no other
purpose. Lessee shall not use or permit the use of the Premises in a manner that
is unlawful, creates damage, waste or a nuisance, or that disturbs owners and/or
occupants  of, or causes  damage to  neighboring  properties.  Lessor  shall not
unreasonably withhold

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or delay its consent to any written  request  for a  modification  of the Agreed
Use,  so long as the same  will  not  impair  the  structural  integrity  of the
improvements on the Premises or the mechanical or electrical systems therein, is
not significantly more burdensome to the Premises.  If Lessor elects to withhold
consent,  Lessor  shall  within ten (10)  business  days after such request give
written  notification  of same,  which notice shall  include an  explanation  of
Lessor's objections to the change in use.
     6.2     Hazardous Substances.  See Addendum, Sec. 6.2.
          (e) Lessor  Indemnification.  Lessor and its  successors  and  assigns
shall indemnify,  defend,  reimburse and hold Lessee, its employees and lenders,
harmless from and against any and all  environmental  damages which existed as a
result of Hazardous  Substances on the Premises prior to the Start Date or which
are caused by the gross negligence, or intentional acts of Lessor, its agents or
employees.  Lessor's  obligations,  as  and  when  required  by  the  Applicable
Requirements,  shall include,  but not be limited to, the cost of investigation,
removal,  remediation,  restoration  and/or  abatement,  and shall  survive  the
expiration or termination of this Lease.
          (f)   Investigations   and  Remediations.   Lessor  shall  retain  the
responsibility and pay for any  investigations or remediation  measures required
by governmental  entities having  jurisdiction  with respect to the existence of
Hazardous  Substances  on the  Premises  prior to the Start Date.  Lessee  shall
cooperate  fully in any such  activities  at the  request of  Lessor,  including
allowing Lessor and Lessor's agents to have reasonable access to the Premises at
reasonable  times in order to carry  out  Lessor's  investigative  and  remedial
responsibilities.
           (g)  [No text.]
     6.3 Lessee's Compliance with Applicable  Requirements.  Except as otherwise
provided  in this  Lease,  Lessee,  shall,  at  Lessee's  sole  expense,  fully,
diligently  and in a  timely  manner,  materially  comply  with  all  Applicable
Requirements,  the requirements of any applicable fire insurance  underwriter or
rating bureau, and the  recommendations of Lessor's engineers and/or consultants
which  relate in any manner to the  Premises,  without  regard to  whether  said
requirements are now in effect or become effective after the Start Date.  Lessee
shall,  within ten (10) days after receipt of Lessor's written request,  provide
Lessor with copies of all permits  and other  documents,  and other  information
evidencing  Lessee's  compliance with any Applicable  Requirements  specified by
Lessor,  and shall  immediately  upon  receipt,  notify  Lessor in writing (with
copies of any documents  involved) of any  threatened  or actual claim,  notice,
citation, warning, complaint or report pertaining to or involving the failure of
Lessee or the Premises to comply with any Applicable Requirements.
     6.4     Inspection; Compliance.  See Addendum, Sec. 6.4.
7.     Maintenance; Repairs, Utility Installations; Trade Fixtures and 
Alterations.
     7.1     Lessee's Obligations.
          (a)  In General.  Subject to the provisions of Paragraph 6.2 
(Hazardous Substances), 2.3 (Compliance), 6.3 (Lessee's Compliance with 
Applicable Requirements), 7.2 (Lessor's Obligations), 9 (Damage or Destruction),
and 14 (Condemnation), Lessee shall, at Lessee's sole expense, keep

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the Premises,  Utility  Installations,  and Alterations in good order, condition
and repair (whether or not the portion of the Premises requiring repairs, or the
means of repairing the same, are reasonably or readily accessible to Lessee, and
whether or not the need for such repairs occurs as a result of Lessee's use, any
prior use, the elements or the age of such portion of the Premises),  including,
but not  limited  to, all  equipment  or  facilities,  such as  plumbing,  HVAC,
electrical,  lighting  facilities,  boilers,  pressure vessels,  fire protection
system, fixtures, walls (interior and exterior),  foundations,  ceilings, roofs,
floors, windows, doors, plate glass, skylights, landscaping,  driveways, parking
lots,  fences,  retaining  walls,  signs,  sidewalks and parkways located in the
Premises.  Lessee, in keeping the Premises in good order,  condition and repair,
shall exercise and perform good maintenance  practices,  specifically  including
the procurement and maintenance of the service  contracts  required by Paragraph
7.1(b) below. Lessee's obligations shall include  restorations,  replacements or
renewals when necessary to keep the Premises and all  improvements  thereon or a
part thereof in good order,  condition and state of repair. Lessee shall, during
the term of this  Lease,  keep the  exterior  appearance  of the  Building  in a
first-class  condition  consistent with the exterior appearance of other similar
facilities  of  comparable  age  and  size  in  the  vicinity,  including,  when
necessary, the exterior repainting of the Building.
          (b) Service Contracts. Lessee shall, at Lessee's sole expense, procure
and maintain  contracts,  with copies to Lessor, in customary form and substance
for, and with contractors specializing and experienced in the maintenance of the
following equipment and improvements,  ("Basic  Elements"),  if any, as and when
installed on the Premises: (i) HVAC equipment, (ii) boiler and pressure vessels,
(iii) fire protection systems, (iv) landscaping and irrigation systems, (v) roof
covering  and  drains,  (vii)  clarifiers  and  (viii) any other  equipment,  if
reasonably required by Lessor.
          (c) Replacement.  Subject to Lessee's indemnification of Lessor as set
forth in  Paragraph  8.7  below,  and  without  relieving  Lessee  of  liability
resulting  from  Lessee's  failure to  exercise  and  perform  good  maintenance
practices,  if the  Basic  Elements  described  in  Paragraph  7.1(b)  cannot be
repaired  other  than  at a cost  which  is in  excess  of 50 % of the  cost  of
replacing  such Basic  Elements,  then such Basic  Elements shall be replaced by
Lessor,  and the cost thereof  shall be prorated  between the Parties and Lessee
shall only be obligated to pay,  each month during the  remainder of the term of
this  Lease,  on the date on which  Base  Rent is due,  an  amount  equal to the
product of multiplying the cost of such replacement by a fraction, the numerator
of which is one,  and the  denominator  of which is the  number of months of the
useful life of such  replacement  as such useful life is  specified  pursuant to
Federal income tax regulations or guidelines for depreciation thereof (including
interest on the unamortized  balance as is then  commercially  reasonable in the
judgment of Lessor's accountants), with Lessee reserving the right to prepay its
obligation at any time.
     7.2 Lessor's  Obligations.  Subject to the provisions of Paragraphs  7.1(c)
(Replacement),  6.2  (Hazardous  Substances),  2.3  (Compliance),  9 (Damage  or
Destruction)  and 14  (Condemnation),  it is intended by the Parties hereto that
Lessor have no obligation,  in any manner whatsoever, to repair and maintain the
Premises,  or the equipment therein, all of which obligations are intended to be
that of the Lessee.  It is the  intention  of the Parties that the terms of this
Lease govern the respective  obligations  of the Parties as to  maintenance  and
repair of the Premises,  and they expressly waive the benefit of any statute now
or hereafter in effect to the extent it is  inconsistent  with the terms of this
Lease.
     7.3     Utility Installations; Trade Fixtures; Alterations.
          (a) Definitions;  Consent Required.  The term "Utility  Installations"
refers to all floor and window coverings,  air lines,  power panels,  electrical
distribution,  security  and fire  protection  systems,  communication  systems,
lighting fixtures, HVAC equipment,  plumbing, and fencing in or on the Premises.
The term "Trade  Fixtures" shall mean Lessee's  machinery and equipment that can
be removed without doing material damage to the Premises. The term "Alterations"
shall  mean  any   modification   of  the   improvements,   other  than  Utility
Installations or Trade Fixtures,  whether by addition or deletion. "Lessee Owned
Alterations  and/or Utility  Installations"  are defined as  Alterations  and/or
Utility  Installations  made by Lessee that are not yet owned by Lessor pursuant
to  Paragraph  7.4(a).   Lessee  shall  not  make  any  Alterations  or  Utility
Installations to the Premises  without  Lessor's prior written  consent.  Lessee
may, however,  make non-structural  Utility Installations to the interior of the
Premises (excluding the roof) without such consent but upon notice to Lessor, as
long as they  are not  visible  from the  outside,  do not  involve  puncturing,
relocating  or  removing  the  roof  or any  existing  exterior  walls,  and the
cumulative   cost  thereof  during  this  Lease  as  extended  does  not  exceed
$100,000.00 in any one year.
          (b) Consent.  Any  Alterations  or Utility  Installations  that Lessee
shall  desire to make and which  require  the  consent  of the  Lessor  shall be
presented to Lessor in written form with detailed plans. Consent shall be deemed
conditioned upon Lessee's:  (i) acquiring all applicable  governmental  permits,
(ii)  furnishing  Lessor  with  copies  of both the  permits  and the  plans and
specifications  prior to commencement of the work, and (iii) compliance with all
conditions  of said permits and other  Applicable  Requirements  in a prompt and
expeditious manner. Any Alterations or Utility  Installations shall be performed
in a  workmanlike  manner  with  good and  sufficient  materials.  Lessee  shall
promptly upon completion furnish Lessor with as-built plans and  specifications.
For work which costs an amount equal to the greater of one month's Base Rent, or
$10,000,  Lessor may  condition  its consent  upon  Lessee  providing a lien and
completion  bond in an amount equal to one and one-half times the estimated cost
of such  Alteration  or Utility  Installation  and/or upon  Lessee's  posting an
additional Security Deposit with Lessor.
          (c) Indemnification.  Lessee shall pay, when due, all claims for labor
or materials  furnished or alleged to have been furnished to or for Lessee at or
for use on the Premises, which claims are or may be secured by any mechanic's or
materialmen's  lien against the Premises or any interest  therein.  Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of any
work in, on or about  the  Premises,  and  Lessor  shall  have the right to post
notices of non-responsibility.  If Lessee shall contest the validity of any such
lien, claim or demand, then Lessee shall, at its sole expense defend and protect
itself,  Lessor and the Premises  against the same and shall pay and satisfy any
such  adverse  judgment  that may be  rendered  thereon  before the  enforcement
thereof.  If Lessor  shall  require,  Lessee  shall  furnish a surety bond in an
amount equal to one and one-half times the amount of such contested lien,  claim
or demand,  indemnifying Lessor against liability for the same. If Lessor elects
to participate in any such action, Lessee shall pay Lessor's attorneys' fees and
costs.
     7.4     Ownership; Removal; Surrender; and Restoration.
          (a) Ownership.  Alterations and Utility  Installations  made by Lessee
shall be the property of Lessee,  but considered a part of the Premises.  Lessee
Owned  Alterations  and  Utility  Installations  shall,  at  the  expiration  or
termination  of this Lease,  become the property of Lessor and be surrendered by
Lessee with the Premises. See Addendum, Section 50.4.3.
          (b)  Removal.  [No text.]
          (c) Surrender/Restoration.  Lessee shall surrender the Premises by the
Expiration Date or any earlier  termination  date, with all of the improvements,
parts and surfaces thereof broom clean and free of debris, and in good operating
order, condition and state of repair, ordinary wear and tear excepted. "Ordinary
wear and tear"  shall not include  any damage or  deterioration  that would gave
been  prevented  by good  maintenance  practice.  Lessee shall repair any damage
occasioned  by the  installation,  maintenance  or  removal  of Trade  Fixtures,
furnishings,  and  equipment  installed  by or  for  Lessee,  and  the  removal,
replacement, or remediation of any soil, material or groundwater contaminated by
Lessee.  Trade Fixtures shall remain the property of Lessee and may, at Lessor's
election,  be removed by Lessee.  See Addendum,  Section 50.4.3.  The failure by
Lessee to timely vacate the Premises  pursuant to this Paragraph  7.4(c) without
the express  written  consent of Lessor shall  constitute  a holdover  under the
provisions of Paragraph 26 below. 8. Insurance; Indemnity.
     8.1 Payment For  Insurance.  Lessee  shall pay for all  insurance  required
under  Paragraph 8 except to the extent of the cost  attributable  to  liability
insurance  carried by Lessor under Paragraph  8.2(b) in excess of $2,000,000 per
occurrence.  Premiums for policy periods commencing prior to or extending beyond
the Lease term shall be prorated to correspond to the Lease term.  Payment shall
be made by Lessee to Lessor  within  thirty  (30) days  following  receipt of an
invoice.
     8.2     Liability Insurance.
          (a)  Carried by Lessee.  Lessee shall obtain and keep in force a 
Commercial General Liability Policy of Insurance protecting Lessee

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and Lessor against claims for bodily injury, personal injury and property damage
based upon or arising out of the ownership, use, occupancy or maintenance of the
Premises  and all  areas  appurtenant  thereto.  Such  insurance  shall be on an
occurrence  bases  providing  single  limit  coverage in an amount not less than
$2,000,000 per occurrence  with an  "Additional  Insured-Managers  or Lessors of
Premises  Endorsement"  and contain the  "Amendment of the  Pollution  Exclusion
Endorsement"  for damage caused by heat, smoke or fumes from a hostile fire. The
Policy shall not contain any intra-insured exclusions as between insured persons
or  organizations,  but shall include coverage for liability  assumed under this
Lease  as an  "insured  contract"  for the  performance  of  Lessee's  indemnity
obligations  under this Lease. The limits of said insurance shall not,  however,
limit the liability of Lessee nor relieve  Lessee of any  obligation  hereunder.
All insurance  carried by Lessee shall be primary to and not  contributory  with
any similar  insurance  carried by Lessor,  whose  insurance shall be considered
excess insurance only.
          (b) Carried by Lessor.  Lessor shall maintain  liability  insurance as
described in Paragraph 8.2(a), in addition to, and not in lieu of, the insurance
required to be maintained by Lessee.  Lessee shall not be named as an additional
insured therein.
     8.3     Property Insurance - Building, Improvements and Rental Value.
          (a) Building  and  Improvements.  The Insuring  Party shall obtain and
keep in force a policy or policies in the name of Lessor,  with loss  payable to
Lessor and to any Lender insuring loss or damage to the Premises.  The amount of
such insurance shall be equal to the full replacement  cost of the Premises,  as
the same shall exist from time to time,  or the amount  required by any Lenders,
but in no event more than the  commercially  reasonable and available  insurable
value  thereof.  If  Lessor  is  the  Insuring  Party,  however,   Lessee  Owned
Alterations and Utility  Installations,  Trade Fixtures,  and Lessee's  personal
property  shall be insured by Lessee under  Paragraph 8.4 rather than by Lessor.
If the  coverage  is  available  and  commercially  appropriate,  such policy or
policies  shall  insure  against  all  risks of direct  physical  loss or damage
(except  the perils of flood  and/or  earthquake  unless  required by a Lender),
including  coverage for debris  removal and the  enforcement  of any  Applicable
Requirements requiring the upgrading, demolition,  reconstruction or replacement
of any portion of the Premises as the result of a covered  loss.  Said policy or
policies  shall  also  contain  an  agreed  valuation  provision  in lieu of any
coinsurance  clause,  waiver of  subrogation,  and  inflation  guard  protection
causing an increase in the annual property insurance coverage amount by a factor
of not less than the adjusted U.S.  Department of Labor Consumer Price Index for
All Urban  Consumers for the city nearest to where the Premises are located.  If
such insurance coverage has a deductible clause, the deductible amount shall not
exceed $10,000.00 per occurrence, and Lessee shall be liable for such deductible
amount in the event of an Insured Loss. See Addendum, Sec. 8.3.
          (b) Rental Value.  The Insuring Party shall obtain and keep in force a
policy or  policies  in the name of Lessor  with loss  payable to Lessor and any
Lender,  insuring  the loss of the full  Rent for one (1) year.  Said  insurance
shall  provide that in the event the Lease is terminated by reason of an insured
loss,  the period of indemnity  for such coverage  shall be extended  beyond the
date of the completion of repairs or replacement of the Premises, to provide for
one full  year's  loss of Rent from the date of any such  loss.  Said  insurance
shall contain an agreed valuation  provision in lieu of any coinsurance  clause,
and the amount of coverage  shall be adjusted  annually to reflect the projected
Rent otherwise payable by Lessee, for the next twelve (12) month period.  Lessee
shall be liable for any deductible amount in the event of such loss.
          (c) Adjacent Premises.  If the Premises are part of a larger building,
or of a group of buildings  owned by Lessor which are adjacent to the  Premises,
the Lessee shall pay for any increase in the premiums for the property insurance
of such  building or  buildings  if said  increase  is caused by Lessee's  acts,
omissions, use or occupancy of the Premises.
     8.4     Lessee's Property/Business Interruption Insurance.
          (a)  Property  Damage.  Lessee  shall  obtain and  maintain  insurance
coverage on all of Lessee's personal property,  Trade Fixtures, and Lessee Owned
Alterations and Utility Installations.  Such Insurance shall be full replacement
cost coverage with a deductible of not to exceed $10,000.00 per occurrence.  The
proceeds from any such insurance  shall be used by Lessee for the replacement of
personal  property,  Trade  Fixtures  and Lessee Owned  Alterations  and Utility
Installations.  Lessee  shall  provide  Lessor with written  evidence  that such
insurance is in force.
          (b)  Business Interruption.  [No text.]
          (c)  No   Representation  of  Adequate   Coverage.   Lessor  makes  no
representation  that the  limits or forms of  coverage  of  insurance  specified
herein  are  adequate  to  cover  Lessee's  property,   business  operations  or
obligations under this Lease.
     8.5 Insurance  Policies.  Insurance  required  herein shall be by companies
duly  licensed or admitted to transact  business in the state where the Premises
are located,  and  maintaining  during the policy term a "General  Policyholders
Rating"  of at least B+, V, as set forth in the most  current  issue of  "Best's
Insurance  Guide",  or such other rating as may be required by a Lender.  Lessee
shall  not do or permit  to be done  anything  which  invalidates  the  required
insurance  policies.  Lessee shall,  prior to the Start Date,  deliver to Lessor
certified  copies of policies of such insurance or  certificates  evidencing the
existence  and  amounts  of the  required  insurance.  No such  policy  shall be
cancelable  or subject  to  modification  except  after  thirty  (30) days prior
written notice to Lessor.  Lessee shall,  at least thirty (30) days prior to the
expiration  of such  policies,  furnish  Lessor  with  evidence  of  renewals or
"insurance  binders"  evidencing  renewal  thereof,  or Lessor  may  order  such
insurance  and charge the cost thereof to Lessee,  which amount shall be payable
by Lessee to Lessor upon demand.  Such policies  shall be for a term of at least
one year, or the length of the remaining term of this Lease,  whichever is less.
If either Party shall fail to procure and maintain the insurance  required to be
carried by it, the other Party may,  but shall not be required  to,  procure and
maintain the same. See Addendum Sec. 8.5.
     8.6     Waiver of Subrogation.  See Addendum.
     8.7  Indemnity.  Except for Lessor's  negligence,  Lessee shall  indemnify,
protect, defend and hold harmless the Premises,  Lessor and its agents, Lessor's
master or ground  lessor,  partners  and  Lenders,  from and against any and all
claims, loss of rents and/or damages,  liens, judgments,  penalties,  attorneys'
and consultants' fees, expenses and/or liabilities arising out of, involving, or
in connection with, the use and/or  occupancy of the Premises by Lessee.  If any
action or proceeding is brought against Lessor by reason of any of the foregoing
matters, Lessee shall upon notice defend the same at Lessee's expense by counsel
reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such
defense.  Lessor need not have first paid any such claim in order to be defended
or indemnified.
     8.8     Exemption of Lessor from Liability.  [No text.]
9.     Damage or Destruction.
     9.1     Definitions.
          (a) "Premises  Partial Damage" shall mean damage or destruction to the
improvements  on the Premises,  other than Lessee Owned  Alterations and Utility
Installations,  which can  reasonably be repaired in six (6) months or less from
the date of the damage or  destruction.  Lessor shall  notify  Lessee in writing
within thirty (30) days from the date of the damage or destruction as to whether
or not the damage is Partial or Total.
          (b) "Premises Total  Destruction"  shall mean damage or destruction to
the Premises,  other than Lessee Owned  Alterations  and Utility  Installations,
which cannot  reasonably  be repaired in six (6) months or less from the date of
the damage or  destruction.  Lessor shall notify Lessee in writing within thirty
(30) days from the date of the  damage or  destruction  as to whether or not the
damage is Partial or Total.

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          (c) "Insured Loss" shall mean damage or destruction to improvements on
the Premises,  other than Lessee Owned Alterations and Utility Installations and
Trade  Fixtures,  which was  caused by an event  required  to be  covered by the
insurance described in Paragraph 8.3(a),  irrespective of any deductible amounts
of coverage limits involved.
          (d)  "Replacement  Cost"  shall mean the cost to repair or rebuild the
improvements  owned by Lessor at the time of the  occurrence to their  condition
existing  immediately prior thereto,  including  demolition,  debris removal and
upgrading  required by the  operation of  Applicable  Requirements,  and without
deduction for depreciation.
           (e)  "Hazardous  Substance  Condition"  shall mean the  occurrence or
discovery  of a  condition  involving  the  presence  of, or a  combination  by,
Hazardous  Substance  as  defined  in  Paragraph  6.2(a),  in,  on, or under the
Premises.
     9.2 Partial Damage - Insured Loss. If a Premises  Partial Damage that is an
Insured Loss occurs, then Lessor shall, at Lessor's expense,  repair such damage
(but not  Lessee's  Trade  Fixtures  or Lessee  Owned  Alterations  and  Utility
Installations)  as soon as reasonably  possible and this Lease shall continue in
full force and  effect;  provided,  however,  that  Lessee  shall,  at  Lessor's
election,  make the repair of any damage or destruction the total cost to repair
of  which  is  $10,000  or less,  and,  in such  event,  Lessor  shall  make any
applicable insurance proceeds available to Lessee on a reasonable bases for that
purpose.  Notwithstanding  the foregoing,  if the required  insurance was not in
force or the insurance  proceeds are not  sufficient to effect such repair,  the
Insuring Party shall promptly  contribute the shortage in proceeds (except as to
the  deductible  which  is  Lessee's  responsibility)  as and when  required  to
complete said repairs. In the event,  however, such shortage was due to the fact
that, by reason of the unique nature of the improvements,  full replacement cost
insurance coverage was not commercially  reasonable and available,  Lessor shall
have no  obligation  to pay for the shortage in  insurance  proceeds or to fully
restore the unique aspects of the Premises  unless Lessee  provides  Lessor with
the funds to cover same,  or adequate  assurance  thereof,  within ten (10) days
following  receipt of written notice of such shortage and request  therefor.  If
Lessor  receives said funds or adequate  assurance  thereof within said ten (10)
day period,  the party responsible for making the repairs shall complete them as
soon as  reasonably  possible  and this  Lease  shall  remain in full  force and
effect.  If such funds or assurance  are not received,  Lessor may  nevertheless
elect by written  notice to Lessee within ten (10) days  thereafter to: (i) make
such restoration and repair as is commercially reasonable with Lessor paying any
shortage in  proceeds,  in which case this Lease shall  remain in full force and
effect,  or have this Lease terminate thirty (30) days thereafter.  Lessee shall
not be entitled to  reimbursement  of any funds  contributed by Lessee to repair
any  such  damage  or  destruction.  Premises  Partial  Damage  due to  flood or
earthquake shall be subject to Paragraph 9.3,  notwithstanding that there may be
some insurance  coverage,  but the net proceeds of any such  insurance  shall be
made available for the repairs if made by either Party.
     9.3     Partial Damage - Uninsured Loss.  See Addendum, Section 9.3.
     9.4 Total  Destruction.  Notwithstanding  any other provision  hereof, if a
Premises Total  Destruction  occurs,  this Lease shall  terminate on the date of
such  Destruction.  If the  damage  or  destruction  was  caused  by  the  gross
negligence  or  willful  misconduct  of Lessee,  Lessor  shall have the right to
recover  Lessor's  damages from Lessee except as provided in the Addendum,  Sec.
8.6.
     9.5 Damage Near End of Term.  If at any time during the last six (6) months
of this  Lease  there is damage  for which  the cost to repair  exceeds  one (1)
month's Base Rent,  whether or not an Insured Loss,  Lessor may  terminate  this
Lease  effective sixty (60) days following the date of occurrence of such damage
by giving a written  termination  notice to Lessee within thirty (30) days after
the date of occurrence of such damage.  Notwithstanding the foregoing, if Lessee
at that time has an  exercisable  option to extend this Lease or to purchase the
Premises, then Lessee may preserve this Lease by, (a) exercising such option and
(b)  providing  Lessor with any  shortage in  insurance  proceeds  (or  adequate
assurance  thereof)  needed to make the  repairs on or before the earlier of (i)
the date which is ten days after  Lessee's  receipt of Lessor's  written  notice
purporting to terminate this Lease,  or (ii) the day prior to the date upon with
such option expires. If Lessee duly exercised such option during such period and
provides Lessor with funds (or adequate assurance thereof) to cover any shortage
in  insurance  proceeds,  Lessor  shall,  at  Lessor's  commercially  reasonable
expense,  repair such damage as soon as reasonably possible and this Lease shall
continue in full force and effect.  If Lessee fails to exercise  such option and
provide  such funds or  assurance  during  such  period,  then this Lease  shall
terminate on the date specified in the  termination  notice and Lessee's  option
shall be extinguished.
     9.6     Abatement of Rent; Lessee's Remedies.
          (a)  Abatement.  In the event of Premises  Partial  Damage or Premises
Total  Destruction  or a Hazardous  Substance  Condition for which Lessee is not
responsible under this Lease, the Rent payable by Lessee for the period required
for the repair,  remediation  or  restoration  of such damage shall be abated in
proportion to the degree to which Lessee's use of the Premises is impaired,  but
not to exceed the proceeds  received from the Rental Value insurance.  All other
obligations of Lessee  hereunder shall be performed by Lessee,  and Lessor shall
have no  liability  for any such  damage,  destruction,  remediation,  repair or
restoration except as provided herein.
          (b)  Remedies.  If Lessor  shall be obligated to repair or restore the
Premises and does not commence, in a substantial and meaningful way, such repair
or  restoration  within  ninety (90) days after such  obligation  shall  accrue,
Lessee may, at any time prior to the commencement of such repair or restoration,
give  written  notice to Lessor and to any  Lenders  of which  Lessee has actual
notice,  of Lessee's  election to  terminate  this Lease on a date not less than
sixty (60) days following the giving of such notice. If Lessee gives such notice
and such  repair  or  restoration  is not  commenced  within  thirty  (30)  days
thereafter,  this Lease shall terminate as of the date specified in said notice.
If the repair or  restoration  is commenced  within said thirty (30) days,  this
Lease shall continue in full force and effect.  "Commence" shall mean either the
unconditional  authorization  of the  preparation of the required  plans, or the
beginning of the actual work on the Premises, whichever first occurs.
     9.7  Termination-Advance  Payments. Upon termination of this Lease pursuant
to  Paragraph  6.2(g) or  Paragraph  9, an  equitable  adjustment  shall be made
concerning  advance Base Rent and any other  advance  payments made by Lessee to
Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's Security
Deposit as has not been, or is not then required to be, used by Lessor.
     9.8 Waive  Statutes.  Lessor and Lessee  agree that the terms of this Lease
shall govern the effect of any damage to or  destruction  of the  Premises  with
respect to the  termination of this Lease and hereby waive the provisions of any
present or future statute to the extent inconsistent herewith.
10.     Real Property Taxes.
     10.1  Definition of "Real Property  Taxes." As used herein,  the term "Real
Property  Taxes" shall  include any form of  assessment;  real estate,  general,
special,  ordinary  or  extraordinary,   or  rental  levy  or  tax  (other  than
inheritance,  personal income or estate taxes); improvement bond; and/or license
fee imposed upon or levied against any legal or equitable  interest of Lessor in
the Premises, Lessor's right to other income therefrom, and/or Lessor's business
of leasing,  by any  authority  having the direct or  indirect  power to tax and
where the funds are generated with  reference to the Building  address and where
the proceeds so generated  are to be applied by the city,  county or other local
taxing  authority of a jurisdiction  within which the Premises are located.  The
term "Real Property Taxes" shall also include any tax, fee, levy,  assessment or
charge,  or any increase  therein,  imposed by reason of events occurring during
the term of this Lease,  including but not limited to, a change in the ownership
of the Premises.
     10.2
          (a)  Payment  of  Taxes.  Lessee  shall  pay the Real  Property  Taxes
applicable  to  the  Premises  commencing  on the  Rent  Commencement  Date  and
continuing  through the term of this Lease.  Subject to Paragraph  10.2(b),  all
such  payments  shall be made at least  ten (10) days  prior to any  delinquency
date. Lessee shall promptly furnish Lessor with satisfactory  evidence that such
taxes have been paid.  If any such taxes shall cover any period of time prior to
or after the expiration or

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termination  of this  Lease,  Lessee's  share of such taxes shall be prorated to
cover only that portion of the tax bill  applicable  to the period  during which
rent is due and Lessor shall  reimburse  Lessee for any  overpayment.  If Lessee
shall fail to pay any required Real Property Taxes,  Lessor shall have the right
to pay the same, and Lessee shall reimburse Lessor therefor upon demand.
          (b) Advance  Payment.  In the event Lessee incurs a late charge on any
Rent payment, Lessor may, at Lessor's option, estimate the current Real Property
Taxes,  and  require  that such  taxes be paid in  advance  to Lessor by Lessee,
either:  (I) in a lump sum amount equal to the installment  due, at least twenty
(20) days prior to the applicable  delinquency  date, or (ii) monthly in advance
with the payment of the Base Rent. If Lessor elects to require  payment  monthly
in advance,  the monthly  payment  shall be an amount equal to the amount of the
estimated  installment of taxes divided by the number of months remaining before
the month in which said installment becomes  delinquent.  When the actual amount
of the  applicable tax bill is known,  the amount of such equal monthly  advance
payments  shall be adjusted  as required to provide the funds  needed to pay the
applicable  taxes. If the amount collected by Lessor is insufficient to pay such
Real  Property  Taxes when due,  Lessee  shall pay  Lessor,  upon  demand,  such
additional  sums as are  necessary to pay such  obligations.  All moneys paid to
Lessor under this Paragraph may be intermingled  with other moneys of Lessor and
shall not bear interest.  In the event of a Breach by Lessee in the  performance
of its  obligations  under this Lease,  then any balance of funds paid to Lessor
under the provisions of this  Paragraph may at the option of Lessor,  be treated
as an additional Security Deposit. See Addendum.
     10.3  Joint  Assessment.  If the  Premises  are  not  separately  assessed,
Lessee's  liability shall be an equitable  proportion of the Real Property Taxes
for all of the land and  improvements  included within the tax parcel  assessed,
such  proportion to be  conclusively  determined  by Lessor from the  respective
valuations  assigned in the assessor's work sheets or such other  information as
may be reasonably available.
     10.4 Personal Property Taxes.  Lessee shall pay, prior to delinquency,  all
taxes  assessed  against  and levied  upon  Lessee  Owned  Alterations,  Utility
Installations,  Trade Fixtures, furnishings, equipment and all personal property
of Lessee.  When  possible,  Lessee shall cause such property to be assessed and
billed  separately  from the real  property of Lessor.  If any of Lessee's  said
personal  property shall be assessed with Lessor's real  property,  Lessee shall
pay Lessor the taxes  attributable  to  Lessee's  property  within ten (10) days
after  receipt  of  a  written  statement.  11.  Utilities.  Commencing  on  the
Commencement  Date,  Lessee shall pay for all water,  gas, heat,  light,  power,
telephone,  trash  disposal and other  utilities  and  services  supplied to the
Premises,  together  with  any  taxes  thereon.  If any  such  services  are not
separately metered to Lessee,  Lessee shall pay a reasonable  proportion,  to be
determined  by Lessor,  of all  charges  jointly  metered.  12.  Assignment  and
Subletting.
     12.1     Lessor's Consent Required.
          (a)  Lessee  shall not  voluntarily  or by  operation  of law  assign,
transfer, mortgage or encumber (collectively,  "assign or assignment") or sublet
all or any part of Lessee's  interest in this Lease or in the  Premises  without
Lessor's prior written consent which shall not be unreasonably withheld.
          (b) A change in the control of Lessee shall  constitute  an assignment
requiring consent.  The transfer,  on a cumulative bases, of twenty-five percent
(25%) or more of the  voting  control  of Lessee  shall  constitute  a change in
control for this purpose.
          (c) The  involvement  of Lessee or its assets in any  transaction,  or
series  of  transactions  (by  way  of  merger,  sale,  acquisition,  financing,
transfer, leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation  of this Lease or Lessee's  assets  occurs,  which results or will
result in a  reduction  of the Net Worth of  Lessee  by an amount  greater  than
twenty-five percent (25%) of such Net Worth as it was represented at the time of
the  execution  of this Lease or at the time of the most  recent  assignment  to
which  Lessor  has  consented,  or  as  it  exists  immediately  prior  to  said
transaction or transactions  constituting  such  reduction,  whichever was or is
greater,  shall be  considered  an  assignment of this Lease to which Lessor may
withhold its consent.  "Net Worth of Lessee"  shall mean the net worth of Lessee
(excluding any  guarantors)  established  under  generally  accepted  accounting
principles.
          (d) An assignment or subletting  without  consent  shall,  at Lessor's
option, be a Default curable after notice per Paragraph 13.1(c), or a noncurable
Breach without the necessity of any notice and grace period. If Lessor elects to
treat such unapproved  assignment or subletting as a noncurable  Breach,  Lessor
may terminate this Lease.
          (e) Lessee's  remedy for any breach of Paragraph  12.1 by Lessor shall
be limited to compensatory damages and/or injunctive relief.
     12.2     Terms and Conditions Applicable to Assignment and Subletting.
          (a) Regardless of Lessor's consent, any assignment or subletting shall
not: (i) be effective without the express written assumption by such assignee or
sublessee of the obligations of Lessee under this Lease,  (ii) release Lessee of
any obligations  hereunder,  or (iii) alter the primary  liability of Lessee for
the  payment  of Rent or for the  performance  of any  other  obligations  to be
performed by Lessee.
          (b) Lessor may accept Rent or performance of Lessee's obligations from
any person other than Lessee  pending  approval or disapproval of an assignment.
Neither  a delay in the  approval  or  disapproval  of such  assignment  nor the
acceptance  of Rent or  performance  shall  constitute  a waiver or  estoppel of
Lessor's right to exercise its remedies for Lessee's Default or Breach.
          (c)  Lessor's  consent  to any  assignment  or  subletting  shall  not
constitute a consent to any subsequent assignment or subletting.
          (d) In the  event of any  Default  or  Breach by  Lessee,  Lessor  may
proceed directly  against Lessee,  any Guarantors or anyone else responsible for
the performance of Lessee's obligations under this Lease, including any assignee
or  sublessee,  without first  exhausting  Lessor's  remedies  against any other
person or entity  responsible  therefore  to  Lessor,  or any  security  held by
Lessor.
          (e) Each request for consent to an assignment  or subletting  shall be
in writing,  accompanied by information relevant to Lessor's determination as to
the financial and operational responsibility and appropriateness of the proposed
assignee or  sublessee,  including  but not limited to the  intended  use and/or
required  modification of the Premises,  if any, Lessee agrees to provide Lessor
with  such  other  or  additional  information  and/or  documentation  as may be
reasonably requested.
          (f) Any assignee of, or sublessee  under,  this Lease shall, by reason
of accepting such  assignment or entering into such sublease,  be deemed to have
assumed and agreed to conform  and comply  with each and every  term,  covenant,
condition and obligation herein to be observed or performed by Lessee during the
term of said assignment or sublease, other than such obligations as are contrary
to or inconsistent  with provisions of an assignment or sublease to which Lessor
has specifically consented to in writing.
     12.3     Additional Terms and Conditions Applicable to Subletting.  The 
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under 
this Lease whether or not expressly incorporated therein:
          (a) Lessee  hereby  assigns  and  transfers  to Lessor all of Lessee's
interest in all Rent payable on any  sublease,  and Lessor may collect such Rent
and apply same toward Lessee's obligations under this Lease; provided,  however,
that until a Breach  shall occur in the  performance  of  Lessee's  obligations,
Lessee may collect said Rent.  Lessor  shall not, by reason of the  foregoing or
any  assignment of such  sublease,  nor by reason of the  collection of Rent, be
deemed  liable to the  sublessee for any failure of Lessee to perform and comply
with any of Lessee's  obligations to such sublessee.  Lessee hereby  irrevocably
authorizes and directs any such sublessee, upon receipt of a written notice from
Lessor stating that a Breach exists in the  performance of Lessee's  obligations
under  this  Lease,  to pay to Lessor  all Rent due and to become  due under the
sublease.  Sublessee  shall rely upon any such  notice from Lessor and shall pay
all Rents to Lessor  without  any  obligation  or right to inquire as to whether
such Breach exists, notwithstanding any claim from Lessee to the contrary.
          (b) In the event of a Breach by Lessee,  Lessor  may,  at its  option,
require sublessee to attorn to Lessor, in which event Lessor shall undertake the
obligations  of the sublessor  under such sublease from the time of the exercise
of said option to the expiration of such  sublease;  provided,  however,  Lessor
shall not be liable  for any  prepaid  rents or  security  deposit  paid by such
sublessee  to such  sublessor  or for any prior  Defaults  or  Breaches  of such
sublessor.

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          (c) Any matter requiring the consent of the sublessor under a sublease
shall also require the consent of Lessor.
          (d) No sublessee shall further assign or sublet all or any part of the
Premises without Lessor's prior written consent.
          (e)  Lessor shall deliver a copy of any notice of Default or Breach by
Lessee to the sublessee, who shall have the right to cure the Default of Lessee 
within the grace period, if any, specified in such notice. The sublessee shall 
have a right of reimbursement and offset from and against Lessee for any such 
Defaults cured by the sublessee.
13.     Default; Breach; Remedies.
     13.1 Default;  Breach. A "Default" is defined as a failure by the Lessee to
comply with or perform any of the terms,  covenants,  conditions  or rules under
this  Lease.  A  "Breach"  is defined  as the  occurrence  of one or more of the
following  Defaults,  and the failure of Lessee to cure such Default  within any
applicable grace period:
          (a) The  abandonment of the Premises;  or the vacating of the Premises
without  providing a  commercially  reasonable  level of security,  or where the
coverage of the property insurance  described in Paragraph 8.3 is jeopardized as
a result  thereof,  or  without  providing  reasonable  assurances  to  minimize
potential vandalism.
          (b) The  failure  of Lessee to make any  payment  of Rent or any other
monetary payment required to be made by Lessee  hereunder,  whether to Lessor or
to a third  party,  when due, to provide  reasonable  evidence of  insurance  or
surety bond, or to fulfill any  obligation  under this Lease which  endangers or
threatens life or property,  where such failure  continues for a period of three
(3) business days following written notice to Lessee.
          (c) The failure by Lessee to provide (i) reasonable  written  evidence
of compliance with Applicable  Requirements,  (ii) the service contracts,  (iii)
the  rescission  of an  unauthorized  assignment or  subletting,  (iv) a Tenancy
Statement, (v) a requested subordination,  (vi) evidence concerning any guaranty
and/or Guarantor,  (vii) any document  requested under Paragraph 42 (easements),
or (viii) any other  documentation  or  information  which Lessor may reasonably
require  of  Lessee  under  the  terms of this  Lease,  where  any such  failure
continues for a period of ten (10) days following written notice to Lessee.
          (d) A Default  by Lessee as to the  terms,  covenants,  conditions  or
provisions of this Lease,  or of the rules  adopted  under  Paragraph 40 hereof,
other than those described in subparagraphs  13.1(a),  (b) or (c), above,  where
such Default  continues for a period of thirty (30) days after  written  notice;
provided, however, that if the nature of Lessee's Default is such that more than
thirty  (30) days are  reasonably  required  for its cure,  then it shall not be
deemed to be a Breach if Lessee  commences such cure within said thirty (30) day
period and thereafter diligently prosecutes such cure to completion.
          (e) The occurrence of any of the following  events:  (i) the making of
any  general  arrangement  or  assignment  for the  benefit of  creditors;  (ii)
becoming a "debtor"  as defined in 11  U.S.C.ss.  101 or any  successor  statute
thereto  (unless,  in the case of a petition filed against  Lessee,  the same is
dismissed  within  sixty  (60)  days);  (iii) the  appointment  of a trustee  or
receiver to take possession of  substantially  all of Lessee's assets located at
the  Premises or of Lessee's  interest in this Lease,  where  possession  is not
restored to Lessee within thirty (30) days; or (iv) the attachment, execution or
other judicial  seizure of  substantially  all of Lessee's assets located at the
Premises  or of  Lessee's  interest  in this  Lease,  where such  seizure is not
discharged  within thirty (30) days;  provided,  however,  in the event that any
provision  of this  subparagraph  (e) is contrary to any  applicable  law,  such
provision  shall be of no force or effect,  and not affect the  validity  of the
remaining provisions.
          (f) The  discovery  that any  financial  statement of Lessee or of any
Guarantor given to Lessor was materially false.
          (g)  [No text.]
     13.2 Remedies.  If Lessee fails to perform any of its affirmative duties or
obligations,  within  ten  (10)  days  after  written  notice  (or in case of an
emergency,  without  notice),  Lessor may, at its option,  perform  such duty or
obligation  on Lessee's  behalf,  including  but not limited to the obtaining of
reasonably required bonds, insurance policies, or governmental licenses, permits
or approvals.  The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee upon receipt of invoice  therefor.  If any check given
to Lessor by Lessee  shall not be  honored  by the bank upon  which it is drawn,
Lessor,  at its option,  may require all future payments to be made by Lessee to
be by cashier's  check.  In the event of a Breach,  Lessor may,  with or without
further  notice or demand,  and without  limiting  Lessor in the exercise of any
right or remedy which Lessor may have by reason of such Breach:
          (a)  Terminate  Lessee's  right to  possession  of the Premises by any
lawful  means,  in which  case this  Lease  shall  terminate  and  Lessee  shall
immediately  surrender  possession  to  Lessor.  In such event  Lessor  shall be
entitled to recover  from  Lessee:  (i) the unpaid Rent which had been earned at
the time of  termination;  (ii) 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 the Lessee  proves
could have been reasonably avoided;  (iii) the worth at the time of award of the
amount by which the  unpaid  rent for the  balance of the term after the time of
award  exceeds the amount of such rental  loss that the Lessee  proves  could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the  detriment  proximately  caused by the  Lessee's  failure to perform its
obligations  under this Lease or which in the ordinary course of things would be
likely to result therefrom,  including but not limited to the cost of recovering
possession  of  the  Premises,   expenses  of  reletting,   including  necessary
renovation and alteration of the Premises,  reasonable attorneys' fees, and that
portion of any leasing  commission  paid by provision  (iii) of the  immediately
preceding  sentence shall be computed by discounting such amount at the discount
rate of the Federal  Reserve Bank of the District  within which the Premises are
located  at the time of award  plus one  percent  (1%).  Efforts  by  Lessor  to
mitigate  damages  caused  by  Lessee's  Breach  of this  Lease  shall not waive
Lessor's  right to recover  damages under  Paragraph 12. If  termination of this
Lease is obtained through the provisional  remedy of unlawful  detainer,  Lessor
shall have the right to recover in such  proceeding  any unpaid Rent and damages
as are  recoverable  therein,  or Lessor may reserve the right to recover all or
any part thereof in a separate suit. If a notice and grace period required under
Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and the
failure of Lessee to cure the  Default  within the greater of the two such grace
periods shall  constitute  both an unlawful  detainer and a Breach of this Lease
entitling  Lessor to the  remedies  provided  for in this  Lease  and/or by said
statue.
          (b) Continue the Lease and Lessee's  right to  possession  and recover
the Rent as it becomes due, in which event Lessee may sublet or assign,  subject
only to reasonable  limitations.  Acts of maintenance,  efforts to relet, and/or
the  appointment  of a receiver  to protect  the  Lessor's  interest,  shall not
constitute a  termination  of the Lessee's  right to  possession.  See Addendum,
Section 13.2.
          (c) Pursue any other remedy now or hereafter  available under the laws
or  judicial  decisions  of the state  wherein the  Premises  are  located.  The
expiration or termination of this Lease and/or the termination of Lessee's right
to  possession  shall not relieve  Lessee  from  liability  under any  indemnity
provisions  of this Lease as to matters  occurring  or accruing  during the term
hereof or by reason of Lessee's occupancy of the Premises.
     13.3 Inducement  Recapture.  Any agreement for free or abated rent or other
charges,  or for the  giving or paying by Lessor to or for Lessee of any cash or
other bonus,  inducement or consideration for Lessee's entering into this Lease,
all of which concessions are hereinafter referred to as "Inducement Provisions,"
shall be deemed  conditioned upon Lessee's full and faithful  performance of all
of the terms,  covenants and conditions of this Lease. Upon Breach of this Lease
by Lessee, any such Inducement  Provision shall  automatically be deemed deleted
from this Lease and of no further force or effect,  and any rent,  other charge,
bonus,  inducement or consideration  theretofore abated, given or paid by Lessor
under such an  Inducement  Provision  shall be  immediately  due and  payable by
Lessee to Lessor,  notwithstanding any subsequent cure of said Breach by Lessee.
The  acceptance by Lessor of rent or the cure of the Breach which  initiated the
operation of this paragraph shall not

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be  deemed a  waiver  by  Lessor  of the  provisions  of this  paragraph  unless
specifically so stated in writing by Lessor at the time of such acceptance.
     13.4     Late Charges.  See Addendum, Section 13.4.
     13.5 Interest.  Any monetary payment due Lessor hereunder,  other than late
charges,  not received by Lessor within  thirty (30) days  following the date on
which it was due, shall bear interest from the thirty-first  (31st) day after it
was due.  The  interest  ("interest")  charged  shall be equal to the prime rate
charged by the largest state  chartered  bank in the state in which the Premises
are  located  plus 4%,  but shall not exceed the  maximum  rate  allowed by law.
Interest is payable in addition to the  potential  late charge  provided  for in
Paragraph 13.4.
     13.6     Breach by Lessor.
          (a)  Notice of  Breach.  Lessor  shall not be deemed in breach of this
Lease unless  Lessor fails  within a  reasonable  time to perform an  obligation
required to be performed by Lessor. For purposes of this Paragraph, a reasonable
time shall in no event be less than  thirty  (30) days after  receipt by Lessor,
and any  Lender  whose name and  address  shall  have been  furnished  Lessee in
writing for such purpose,  of written notice specifying  wherein such obligation
of Lessor  has not been  performed;  provided,  however,  that if the  nature of
Lessor's  obligation  is such  that more than  thirty  (30) days are  reasonably
required for its performance,  then Lessor shall not be in breach if performance
is  commenced  within  such  thirty  (30) day period and  thereafter  diligently
pursued to completion.
          (b)  Performance  by Lessee on Behalf  of  Lessor.  In the event  that
neither  Lessor  nor Lender  cures said  breach  within  thirty  (30) days after
receipt of said notice,  or if having commenced said cure they do not diligently
pursue it to  completion,  then Lessee may elect to cure said breach at Lessee's
expense and offset from Rent an amount  equal to the greater of one month's Base
Rent  or the  Security  Deposit,  and to pay an  excess  of such  expense  under
protest,  reserving  Lessee's right to reimbursement  from Lessor.  Lessee shall
document  the cost of said cure and supply  said  documentation  to Lessor.  14.
Condemnation.  If the Premises or any portion  thereof are taken under the power
of  eminent  domain or sold  under  the  threat of the  exercise  of said  power
(collectively  "Condemnation"),  this Lease shall terminate as to the part taken
as of the date the condemning  authority  takes title or  possession,  whichever
first  occurs.  If more than ten  percent  (10%) of any  building,  or more than
twenty-five  percent  (25%) of the land area not  occupied by any  building,  is
taken by  Condemnation,  Lessee may,  at Lessee's  option,  to be  exercised  in
writing within ten (10) days after Lessor shall have given Lessee written notice
of such taking (or in the absence of such notice, within ten (10) days after the
condemning authority shall have taken possession) terminate this Lease as of the
date  the  condemning  authority  takes  such  possession.  If  Lessee  does not
terminate this Lease in accordance  with the foregoing,  this Lease shall remain
in full force and effect as to the  portion of the  Premises  remaining,  except
that the Base Rent shall be reduced in proportion to the reduction in utility of
the Premises caused by such  Condemnation.  Condemnation  awards and/or payments
shall  be  the  property  of  Lessor,  whether  such  award  shall  be  made  as
compensation  for  diminution in value of the  leasehold,  the value of the part
taken,  or for  severance  damages;  provided,  however,  that  Lessee  shall be
entitled to any compensation for Lessee's relocation expenses,  loss of business
goodwill and/or Trade  Fixtures,  without regard to whether or not this Lease is
terminated  pursuant to the provisions of this  Paragraph.  All  Alterations and
Utility   Installations  made  to  the  Premises  by  Lessee,  for  purposes  of
Condemnation  only,  shall be  considered  the property of the Lessee and Lessee
shall be entitled to any and all compensation which is payable therefor.  In the
event that this Lease is not  terminated by reason of the  Condemnation,  Lessor
shall  repair  any  damage  to the  Premises  caused by such  Condemnation.  15.
Broker's Fee.
     15.1     Additional Commission.  [No text.]
     15.2     Assumption of Obligations.  [No text.]
     15.3     Representations and Indemnities of Broker Relationships.  Lessee 
and Lessor each represent and warrant to the other that it has had no dealings 
with any person, firm, broker or finder (other than the Brokers, if any) in 
connection with this Lease, and that no one other than said named Brokers is 
entitled to any commission or finder's fee in connection herewith.  Lessee and 
Lessor do each hereby agree to indemnify, protect, defend and hold the other 
harmless from and against liability for compensation or charges which may be
claimed by any such unnamed broker, finder or other similar party by reason of 
any dealings or actions of the indemnifying Party, including any costs, 
expenses, attorneys' fees reasonably incurred with respect thereto.  See 
Addendum, Sec. 15.3.
16.     Tenancy Statement/Estoppel Certificate.
     16.1 Each Party (as  "Responding  Party")  shall within ten (10) days after
written  notice  from  the  other  Party  (the   "Requesting   Party")  execute,
acknowledge  and  deliver to the  Requesting  Party an estoppel  certificate  in
writing,  in form  similar to the then most  current  "Tenancy  Statement"  form
published  by  the  American  Industrial  Real  Estate  Association,  plus  such
additional  information,  confirmation  and/or  statements  as may be reasonably
requested by the Requesting Party.
     16.2 If Lessor desires to finance,  refinance, or sell the Premises, or any
part thereof, Lessee and all Guarantors shall deliver to any potential lender or
purchaser  designated by Lessor such  financial  statements as may be reasonably
required  by such  lender or  purchaser,  including  but not limited to Lessee's
financial statements for the past three (3) years. All such financial statements
shall be received by Lessor and such lender or purchaser in confidence and shall
be used only for the purposes herein set forth.  17.  Definition of Lessor.  The
term  "Lessor"  as used  herein  shall  mean the  owner or owners at the time in
question of the fee title to the  Premises,  or, if this is a  sublease,  of the
Lessee's  interest  in the prior  lease.  In the event of a transfer of Lessor's
title or interest in the  Premises or this Lease,  Lessor  shall  deliver to the
transferee or assignee (in cash or by credit) any unused  Security  Deposit held
by Lessor.  Except as provided in Paragraph 15, upon such transfer or assignment
and delivery of the Security  Deposit,  as aforesaid,  the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants under
this Lease  thereafter to be performed by the Lessor.  Subject to the foregoing,
the  obligations  and/or  covenants  in this Lease to be performed by the Lessor
shall be binding only upon the Lessor as  hereinabove  defined.  Notwithstanding
the above, the original Lessor under this Lease,  and all subsequent  holders of
the Lessor's  interest in this Lease shall remain  liable and  responsible  with
regard to the potential duties and liabilities of Lessor pertaining to Hazardous
Substances as outlined in Paragraph 6 above. 18. Severability. The invalidity of
any provision of this Lease, as determined by a court of competent jurisdiction,
shall in no way affect the validity of any other provision hereof.

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19.     Days.  Unless otherwise specifically indicated to the contrary, the word
"days" as used in this Lease shall mean and refer to calendar days.
20.     Limitation on Liability.  Except with respect to Lessor's fraud, gross 
negligence or willful misconduct, the obligations of Lessor under this lease 
shall not constitute personal obligations of Lessor, the individual partners of 
Lessor or its or their individual partners, directors, officers or shareholders,
and Lessee shall look to the Premises, and to no other assets of Lessor, for the
satisfaction of any liability of Lessor with respect to this Lease, and shall 
not seek recourse against the individual partners of Lessor, or its or their
individual partners, directors, officers or shareholders, or any of their 
personal assets for such satisfaction.
21.     Time of Essence.  Time is of the essence with respect to the performance
of all obligations to be performed or observed by the Parties under this Lease.
22.     No Prior or Other Agreements; Broker Disclaimer.  This Lease contains 
all agreements between the Parties with respect to any matter mentioned herein, 
and no other prior or contemporaneous agreement or understanding shall be 
effective.  Lessor and Lessee each represents and warrants to the Brokers that 
it has made, and is relying solely upon, its own investigation as to the nature,
quality, character and financial responsibility of the other Party to this Lease
and as to the nature, quality and character of the Premises.  Brokers have no
responsibility with respect to negotiation, execution, delivery or performance 
by either Lessor or Lessee under this Lease or any amendment or modification 
hereto shall be limited to an amount up to the fee received by such Broker 
pursuant to this Lease; provided, however, that the foregoing limitation on each
Broker's liability shall not be applicable to any gross negligence or willful 
misconduct of such Broker.
23.     Notices.
     23.1 Notice  Requirements.  All notices required or permitted by this Lease
shall be in writing  and may be  delivered  in person (by hand or by courier) or
may be sent by certified or registered mail or U.S. Postal Service Express Mail,
with  postage  prepaid,  and shall be deemed  sufficiently  given if served in a
manner specified in this Paragraph 23. The addresses noted adjacent to a Party's
signature on this Lease shall be that Party's address for delivery or mailing of
notices.  Either  Party may by written  notice to the other  specify a different
address for notice, except that upon Lessee's taking possession of the Premises,
the Premises shall constitute Lessee's address for notice. A copy of all notices
to Lessor  shall be  concurrently  transmitted  to such party or parties at such
addresses as Lessor may from time to time  hereafter  designate in writing.  See
Addendum.
     23.2 Date of Notice.  Any notice  sent by  registered  or  certified  mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. Notices
delivered by United States Express Mail or overnight courier that guarantee next
day delivery shall be deemed given  twenty-four (24) hours after delivery of the
same to the Postal  Service or  courier.  If notice is  received  on a Saturday,
Sunday or legal holiday,  it shall be deemed  received on the next business day.
24. Waivers.  No waiver by Lessor of the Default or Breach of any term, covenant
or  condition  hereof by  Lessee,  shall be  deemed a waiver of any other  term,
covenant or condition hereof,  or of any subsequent  Default or Breach by Lessee
of the same or of any other term, covenant or condition hereof. Lessor's consent
to, or  approval  of,  any act shall  not be  deemed to render  unnecessary  the
obtaining of Lessor's  consent to, or approval of, any subsequent or similar act
by Lessee,  or be construed as the bases of an estoppel to enforce the provision
or provisions of this Lease  requiring  such consent.  The acceptance of Rent by
Lessor shall not be a waiver of any Default or Breach by Lessee.  Any payment by
Lessee may be  accepted  by Lessor on account of moneys or damages  due  Lessor,
notwithstanding  any  qualifying  statements  or  conditions  made by  Lessee in
connection  therewith,  which such statements  and/or  conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor at
or before the time of deposit of such payment.  25. Recording.  Either Lessor or
Lessee shall, upon request of the other, execute, acknowledge and deliver to the
other a short form  memorandum of this Lease for recording  purposes.  The Party
requesting  recordation  shall be responsible for payment of any fees applicable
thereto.  26. No Right To Holdover.  Lessee has no right to retain possession of
the Premises or any part thereof  beyond the  expiration or  termination of this
Lease.  In the  event  that  Lessee  holds  over,  then the Base  Rent  shall be
increased  to one hundred  fifteen  percent  (115%) of the Base Rent  applicable
during the month  immediately  preceding the expiration or termination.  Nothing
contained  herein shall be construed as consent by Lessor to any holding over by
Lessee. 27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity. 28. Covenants and Conditions;  Construction of Agreement.  All
provisions  of this  Lease  to be  observed  or  performed  by  Lessee  are both
covenants and conditions.  In construing this Lease, all headings and titles are
for the  convenience  of the parties only and shall not be  considered a part of
this Lease.  Whenever  required by the context,  the singular  shall include the
plural and vice versa.  This Lease shall not be  construed as if prepared by one
of the parties,  but rather according to its fair meaning as a whole, as if both
parties had prepared it. 29. Binding Effect;  Choice of Law. This Lease shall be
binding upon the parties, their personal representatives, successors and assigns
and be governed by the laws of the State in which the Premises are located.  Any
litigation  between the Parties hereto  concerning this Lease shall be initiated
in the county in which the Premises are located. 30. Subordination;  Attornment;
Non-Disturbance.
     30.1  Subordination.  This Lease and any  Option  granted  hereby  shall be
subject and subordinate to any ground lease,  mortgage,  deed of trust, or other
hypothecation  or security  device  (collectively,  "Security  Device"),  now or
hereafter placed upon the Premises, to any and all advances made on the security
thereof,  and to all renewals,  modifications,  and extensions  thereof.  Lessee
agrees that the holders of any such Security  Devices shall have no liability or
obligation  to perform any of the  obligations  of Lessor under this Lease.  Any
Lender may elect to have this Lease and/or any Option granted hereby superior to
the lien of its Security Device by giving written notice thereof to Lessee, this
Lease  and  such  Options  shall  be  deemed  prior  to  such  Security  Device,
notwithstanding the relative dates of the documentation or recordation thereof.
     30.2  Attornment.  Subject to the  non-disturbance  provisions of Paragraph
30.3,  Lessee  agrees to attorn  to a Lender  or any  other  party who  acquires
ownership of the Premises by reason of a foreclosure of a Security  Device,  and
that in the event of such  foreclosure,  such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events  occurring
prior to  acquisition  of ownership;  (ii) be subject to any offsets or defenses
which  Lessee  might  have  against  any  prior  lessor,  or  (iii)  be bound by
prepayment of more than one (1) month's rent.
     30.3  Non-Disturbance.  With  respect to Security  Devices  entered into by
Lessor after the execution of this Lease,  Lessee's  subordination of this Lease
shall  be  subject  to  receiving  a  commercially  reasonable   non-disturbance
agreement (a "Non-Disturbance  Agreement") from the Lender which Non-Disturbance
Agreement  provides  that Lessee's  possession of the Premises,  and this Lease,
including  any options to extend the term hereof,  will not be disturbed so long
as  Lessee  is not in Breach  hereof  and  attorns  to the  record  owner of the
Premises.  Further,  within  sixty (60) days after the  execution of this Lease,
Lessor shall use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder of any  pre-existing  Security Device which is secured
by  the   Premises.   In  the  event  that  Lessor  is  unable  to  provide  the
Non-Disturbance  Agreement  within  said sixty (60) days,  then  Lessee  may, at
Lessee's  option,  directly contact Lessor's lender and attempt to negotiate for
the execution and delivery of a Non-Disturbance Agreement. See Addendum.
     30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be
effective  without the execution of any further  documents;  provided,  however,
that,  upon written  request from Lessor or a Lender in connection  with a sale,
financing or refinancing  of the Premises,  Lessee and Lessor shall execute such
further  writings as may be  reasonably  required  to  separately  document  any
subordination,  attornment and/or Non-Disturbance Agreement provided for herein.
31.  Attorneys' Fees. If any Party brings an action or proceeding to enforce the
terms  hereof or declare  rights  hereunder,  the  Prevailing  Party in any such
proceeding,   action,  or  appeal  thereon,  shall  be  entitled  to  reasonable
attorneys' fees.

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The attorneys' fees award shall not be computed in accordance with any court fee
schedule, but shall be such as to fully reimburse all attorneys' fees reasonably
incurred.  In addition,  Lessor shall be entitled to attorneys'  fees, costs and
expenses  incurred  in the  preparation  and  service of notices of Default  and
consultations  in  connection  therewith,  whether  or  not a  legal  action  is
subsequently  commenced in connection with such Default or resulting Breach. 32.
Lessor's Access;  Showing  Premises;  Repairs.  Lessor and Lessor's agents shall
have the right to enter the Premises at any time,  in the case of an  emergency,
and otherwise at reasonable  times  following  notice for the purpose of showing
the same to  prospective  purchasers,  lenders,  or  lessees,  and  making  such
alterations,  repairs,  improvements  or additions to the Premises as Lessor may
deem  necessary.  All such  activities  shall be  without  abatement  of rent or
liability  to Lessee.  Lessor may at any time place on the Premises any ordinary
"For  Sale"  signs and  Lessor  may  during  the last six (6) months of the term
hereof place on the Premises any ordinary "For Lease"  signs.  Lessee may at any
time place on or about the  Premises  any  ordinary  "For  Sublease"  sign.  33.
Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon
the  Premises  without  Lessor's  prior  written  consent.  Lessor  shall not be
obligated to exercise any standard or reasonableness  in determining  whether to
permit an auction.  34. Signs.  Except for ordinary "For Sublease" signs, Lessee
shall not place any sign upon the  exterior  of the  Premises  without  Lessor's
prior written consent.  All signs must comply with all Applicable  Requirements.
35.  Termination;  Merger.  Unless  specifically  stated otherwise in writing by
Lessor,  the  voluntary or other  surrender of this Lease by Lessee,  the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee,  shall  automatically  terminate any sublease or lesser estate in the
Premises;  provided,  however,  that Lessor may elect to continue any one or all
existing subtenancies.  Lessor's failure within ten (10) days following any such
event to elect to the  contrary  by  written  notice  to the  holder of any such
lesser  interest,   shall  constitute  Lessor's  election  to  have  such  event
constitute the termination of such interest.  36. Consents.  Except as otherwise
provided herein, wherever in this Lease the consent of a Party is required to an
act by or for the other Party,  such consent shall not be unreasonably  withheld
or delayed.  Lessor's actual  reasonable  costs and expenses  (including but not
limited to  architects',  attorneys',  engineers' and other  consultants'  fees)
incurred in the  consideration  of, or response  to, a request by Lessee for any
Lessor  consent,  including  but not  limited to consents  to an  assignment,  a
subletting  or the  presence or use of a Hazardous  Substance,  shall be paid by
Lessee  upon  receipt  of an  invoice  and  supporting  documentation  therefor.
Lessor's  consent to any act,  assignment or subletting  shall not constitute an
acknowledgment  that no Default or Breach by Lessee of this  Lease  exists,  nor
shall such  consent be deemed a waiver of any then  existing  Default or Breach,
except as may be otherwise  specifically stated in writing by Lessor at the time
of such  consent.  The failure to specify  herein any  particular  condition  to
Lessor's  consent  shall not  preclude the  imposition  by Lessor at the time of
consent  of such  further  or  other  conditions  as are  then  reasonable  with
reference to the  particular  matter for which  consent is being  given.  In the
event that  either  Party  disagrees  with any  determination  made by the other
hereunder  and  reasonably  requests  the  reasons for such  determination,  the
determining  party shall furnish its reasons in writing and in reasonable detail
within ten (10) business days following such request. 37. Guarantor.
     37.1     Execution.  [No text.]
     37.2     Default.  [No text.]
38.     Quiet Possession.  Subject to payment by Lessee of the Rent and 
performance of all of the covenants, conditions and provisions on Lessee's part 
to be observed and performed under this Lease, Lessee shall have quiet
possession and quiet enjoyment of the Premises during the term hereof.
39.     Options.
     39.1     Definition.  "Option" shall mean:  (a) the right to extend the 
term of or renew this Lease.
     39.2     Options Personal To Original Lessee.  [No text.]
     39.3     Multiple Options.  In the event that Lessee has any multiple 
Options to extend or renew this Lease, a later Option cannot be exercised unless
the prior Options have been validly exercised.
     39.4     Effect of Default on Options.
          (a) Lessee  shall have no right to exercise an Option:  (i) during the
period  commencing with the giving of any notice of Default and continuing until
said  Default  is  cured,  (ii)  during  the  period  of time any Rent is unpaid
(without  regard to whether notice  thereof is given  Lessee),  (iii) during the
time Lessee is in Breach of this Lease.
          (b) The period of time within which an Option may be  exercised  shall
not be  extended or  enlarged  by reason of  Lessee's  inability  to exercise an
Option because of the provisions of Paragraph 39.4(a).
          (c) An Option shall  terminate  and be of no further  force or effect,
notwithstanding  Lessee's due and timely exercise of the Options, if, after such
exercise and prior to the commencement of the extended term, (i) Lessee fails to
pay Rent for a period of thirty (30) days after such Rent  becomes due  (without
any  necessity  of Lessor to give notice  thereof),  (ii) Lessor gives to Lessee
three (3) or more  notices of  separate  Default  during  any twelve  (12) month
period,  whether or not the  Defaults  are cured,  or (iii) if Lessee  commits a
Breach of this Lease.  40. Multiple  Buildings.  If the Premises are a part of a
group of buildings controlled by Lessor,  Lessee agrees that it will observe all
reasonable rules and regulations which Lessor may make from time to time for the
management,  safety,  and  care of  said  properties,  including  the  care  and
cleanliness  of the grounds and including the parking,  loading and unloading of
vehicles, and that Lessee will pay its fair share of common expenses incurred in
connection therewith. 41. Security Measures. Lessee hereby acknowledges that the
rental payable to Lessor hereunder does not include the cost of guard service or
other security measures,  and that Lessor shall have no obligation whatsoever to
provide  same.  Lessee  assumes all  responsibility  for the  protection  of the
Premises,  Lessee,  its agents and invitees and their  property from the acts of
third parties. 42. Reservations.  Lessor reserves to itself the right, from time
to time,  to grant,  without the consent or joinder of Lessee,  such  easements,
rights and dedications that Lessor deems necessary, and to cause the recordation
of parcel maps and restrictions, so long as such easements, rights, dedications,
maps and restrictions do not unreasonably interfere with the use of the Premises
by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate  any such  easement  rights,  dedication,  map or  restrictions.  43.
Performance Under Protest. If at any time a dispute shall arise as to any amount
or sum of  money to be paid by one  Party  to the  other  under  the  provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment  "under  protest"  and such payment  shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to pay such sum or any part thereof,  said Party shall be entitled to
recover such sum or so much  thereof as it was not legally  required to pay. 44.
Authority.  If either Party hereto is a corporation,  trust,  limited  liability
company, partnership, or similar entity, each individual executing this Lease on
behalf of such entity  represents and warrants that he or she is duly authorized
to execute and deliver this Lease on its behalf. Each party shall, within thirty
(30) days after  request,  deliver to the other party  satisfactory  evidence of
such authority.

                              PAGE 11            Initials     /s/ GZ     /s/ LMC
                                                             --------   --------
<PAGE>

45.     Conflict.  Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the typewritten
or handwritten provisions.
46.     Offer.  Preparation of this Lease by either Party or their agent and 
submission of same to the other Party shall not be deemed an offer to lease to 
the other Party.  This Lease is not intended to be binding until executed and
delivered by all Parties hereto.
47.     Amendments.  This Lease may be modified only in writing, signed by the 
Parties in interest at the time of the modification.  As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make
such reasonable non-monetary modifications to this Lease as may be reasonably 
required by a Lender in connection with the obtaining of normal financing or 
refinancing of the Premises.
48.     Multiple Parties.  If more than one person or entity is named herein as 
either Lessor or Lessee, such multiple Parties shall have joint and several 
responsibility to comply with the terms of this Lease.
49.     Mediation and Arbitration of Disputes.  [No text.]

LESSOR AND LESSEE HAVE  CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION  CONTAINED  HEREIN,  AND BY THE  EXECUTION  OF THIS  LEASE  SHOW THEIR
INFORMED AND VOLUNTARY  CONSENT  THERETO.  THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND  EFFECTUATE  THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.

ATTENTION:  NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN 
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT 
RELATES.  THE PARTIES ARE URGED TO: 
1.     SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS 
LEASE.
2.     RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF
THE PREMISES.  SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO:  THE 
POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE 
STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE 
SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.

WARNING:  IF THE PREMISES IS LOCATED IN A STATE OTHER THAN  CALIFORNIA,  CERTAIN
PROVISIONS  OF THE LEASE MAY NEED TO BE REVISED  TO COMPLY  WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES IS LOCATED.

The  parties  hereto  have  executed  this  Lease at the  place and on the dates
specified above their respective signatures.

Executed at:  San Diego                      Executed at: San Diego
on:  June 17, 1997                           on:  June 13, 1997
By LESSOR:                                   By LESSEE:
LMC-Sorrento Investment Company,             Agouron Pharmaceuticals, Inc., 
LLC, a California limited                    a California corporation
liability company

By: /s/ Lee M. Chesnut                       By: /s/ Glenn Zinser
   ------------------------------                -------------------------------
Name Printed:  Lee M. Chesnut                Name Printed:  Glenn Zinser
Title:  Manager                              Title:  V.P., Operations
Address:  9627 Grossmont Summit Drive        Address:  10350 North Torrey Pines 
La Mesa, CA  91941                           Road, La Jolla, CA  92037
Telephone:  (619) 697-7777                   Telephone:  (619) 622-3000
Facsimile:  (619) 697-7846                   Facsimile:  (619) 622-3298


NOTE:  These forms are often modified to meet changing requirements of law and 
industry needs.  Always write or call to make sure you are utilizing the most 
current form:  AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700 So. Flower 
Street, Suite 600, Los Angeles, California  90017.  (213) 687-8777. Fax No. 
(213) 687-8616.

                                     PAGE 12

<PAGE>

                            Addendum to Office Lease

         This  Addendum,  dated June 13, 1997,  constitutes  an addendum to that
certain Standard  Commercial/Industrial  Single-Tenant  ("the Lease") dated June
13, 1997, by and between (1) LMC-Sorrento  Investment Company, LLC, a California
limited liability company,  ("Lessor") and (2) Agouron Pharmaceuticals,  Inc., a
California corporation ("Lessee"). Lessor and Lessee hereby supplement and amend
the Lease, as follows:

                  1.3      Term.

                           1.3.1  Original Term.  The Original Term of the Lease
shall commence and Lessee shall be entitled to possession of the Premises for 
the purpose of accomplishing Lessee's Work  (defined  below)  on the  
Commencement  Date.  As used  herein,  the  term "Commencement  Date"  shall 
mean the date on which  Lessor and Lessee  have each approved,  in writing, the 
working plans and specifications for Lessee's Work as hereinbelow  provided.  As
soon as practicable following the written approval by Lessor and Lessee of the 
working  plans and  specifications  for Lessee's  Work, Lessor and Lessee shall
execute and deliver to each other a written  memorandum confirming  the  
Commencement  Date.  Subject to  Lessee's  option to extend and unless sooner 
terminated as herein provided,  the term of the Lease shall expire at 11:59 p.m.
on the last day of the sixth Lease Year (defined below) which date is the 
expiration of the Original Term.  References in the Lease to "Start Date" shall 
mean the Commencement Date.

                           1.3.2  Option to Renew.  Lessee shall have the right 
and option to renew the term of the Lease for a further  term of five  years  
commencing  on the  expiration  of the Original  Term.  If  Lessee  exercises  
the  option  provided  in the  preceding sentence,  then  Lessee  shall have a 
further  option to extend the Lease for an additional period of five years 
commencing on the expiration of the first option period. The options to extend 
the term of the Lease may be exercised only by the delivery by Lessee to Lessor,
not less than six months prior to the  expiration of the term,  of  written  
notice of such  exercise.  Lessee's  exercise  of the option(s) shall be 
irrevocable.  Lessee's  occupancy during the option period(s) shall be subject 
to all terms and  conditions of the Lease;  provided,  however, the Base Rent 
payable during the option period(s) shall be subject to adjustment as provided 
in Sections 1.5.4, 1.5.5 and 1.5.6, below.

                  1.5      Base Rent.

                           1.5.1  Rent Commencement and Adjustment.  As used 
herein, the term "Rent Commencement Date" shall mean the earlier of (1) the date
of the issuance of a certificate of occupancy  following  completion of Lessee's
Work ("Substantial  Completion") or (2) April 1, 1998,  which date shall be 
extended to the extent Lessor's  actions or inaction  result in delaying  the  
issuance of the  certificate  of occupancy (e.g.  if  Lessor's  failure  timely 
to respond to a request  for  approval of a change order on the critical  path 
of Lessee's  Work resulted in a two-day delay in the issuance of the certificate
of occupancy,  then the outside date for the Rent Commencement Date would be 
extended to January 3, 1998).  Commencing on the Rent Commencement Date, Lessee 
shall pay to Lessor Base Rent, in advance without deduction, offset, notice or 
demand. Subject to adjustment as provided, below, a schedule of the Base Rent to
be paid during the Original Term is as follows:

                                    Amount/
Applicable Period              Square Foot-Month                   Amount/Month*
----------------               -----------------                   -------------
Lease Year 1                   $1.67                               $ 90,180.00
Lease Year 2                   $1.73                               $ 93,420.00
Lease Year 3                   $1.79                               $ 96,660.00
Lease Year 4                   $1.85                               $ 99,900.00
Lease Year 5                   $1.92                               $103,680.00
Lease Year 6                   $1.98                               $106,920.00

*Based upon the Building having  estimated  54,000 rentable square feet of floor
area.
                                       
<PAGE>

If the Rent  Commencement  Date occurs on other than the first day of a calendar
month,  then the Base Rent for such partial month of the term of the Lease shall
be (1)  prorated  in the  proportion  that the number of days of the Lease is in
effect  during such period bears to 30 and (2) be paid on the Rent  Commencement
Date.  Concurrently with the execution of the Lease,  Lessee shall pay to Lessor
$90,180.00  which  shall be  credited  against  the Base Rent for the first full
calendar month following the Rent Commencement Date.

                           1.5.2  "Lease Year" Defined.  As used herein, the 
term  "Lease  Year"  shall  mean each  12-month  period  commencing  on the Rent
Commencement  Date if the Rent  Commencement Date is the first day of a calendar
month,  but otherwise on the first day of the calendar  month  immediately  next
following the calendar  month in which the Rent  Commencement  Date occurs,  and
ending on the last day of the twelfth month thereafter.  For example, (i) if the
Rent  Commencement  Date were  September  15,  1997,  (ii) the floor area of the
Building is determined to be 54,000  rentable square feet, then (1) on September
15, 1997,  Lessee would owe and pay to Lessor  $48,096.00 for prorated Base Rent
for  September,  1997,  (2) each Lease  Year would  begin on October 1 and would
expire on the  following  September  30 and (3) the  Original  Term of the Lease
would expire on September 30, 2003.

                           1.5.3  Adjustment to Base Rent During Original Term. 
Promptly  following  Substantial  Completion,  Lessor and Lessee shall cause the
Building to be measured  and the rentable  floor area  thereof to be  determined
according to BOMA standards for a single-tenant  free-standing  building. If the
rentable  floor are is  determined  to be more or less than 54,000  square feet,
then the Base Rent "Amount/Month" shown above in Section 1.5.1 shall be adjusted
based upon  multiplying the rentable floor area of the Building as determined by
Lessor and Lessee by the "Amount/Square Foot-Month" for each Lease Year as shown
in Section  1.5.1 above (e.g.  if the rentable  floor area of the Building  were
determined  to be 54,300  square feet,  then the monthly Base Rent for the first
Lease Year would be $90,681.00 and the Base Rent for each subsequent  Lease Year
would be similarly  adjusted).  If, as of the Rent Commencement Date, Lessor and
Lessee  have not agreed  upon the  rentable  floor area of the  Building,  then,
pending  determination of the rentable floor area of the Building,  Lessee shall
pay Base Rent based upon an assumed  rentable  floor area of 54,000 square feet.
If the actual  rentable  floor area is  subsequently  determined to be more than
54,000 square feet, then,  within 30 days following such  determination,  Lessee
shall pay to Lessor the  difference  between (1) the Base Rent which should have
been paid based upon the actual  rentable floor area of the Building and (2) the
actual amount of Base Rent paid by Lessee prior to such determination.  If it is
determined  that the actual  rentable  floor area of the  Building  is less than
54,000  square feet,  then Lessee  shall be entitled to credit  against the Base
Rent next coming due in an amount  equal to the excess Base Rent paid by Lessee.
In the event of a dispute regarding  determination of the rentable floor area of
the Building, then either Lessor or Lessee may submit the issue to determination
by arbitration under the auspices of the American Arbitration  Association which
shall be  conducted  pursuant  to the  commercial  rules.  Except  as  otherwise
provided in this Lease,  the venue for the  arbitration  shall be in the City of
San Diego. With respect to the conduct of the arbitration, the following shall
apply:

         (a)  Not  less  than  three  weeks  in  advance  of the  date  for  the
commencement of the arbitration  hearing,  Lessor and Lessee shall each exchange
(1) the name,  address and  qualifications  of any engineer,  architect or other
expert intended to be called at the time of the arbitration  (each, an "Expert")
and reports,  measurements  and/or data relied upon by the Expert in  connection
with forming an opinion as to the rentable floor area of the Building.

         (b) Not less than five days  prior to the date set for the  hearing  on
the arbitration,  each party shall (i) make available for an oral deposition any
Expert whose  testimony  is expected to be 

                                       2
<PAGE>

given at the time of the  arbitration and (ii)  deliver  to the other  party all
exhibits  which are  intended  to be entered into evidence at the time of the 
arbitration.

         (c) Each party shall bear their own  attorney's  fees and Expert's fees
incurred in connection with the  arbitration.  Each party shall share equally in
the  administrative  fees owed to the American  Arbitration  Association and the
reasonable hourly fees owed to the arbitrator.

         (d) Following  rendition of the  arbitrator's  award,  either party may
petition the  Superior  Court of the State of  California  for the County of San
Diego to have the award confirmed and entered as a judgment.

                           1.5.4  Determination of Base Rent for First Lease 
Year of First Option Period.  The Base Rent to be paid by Lessee to Lessor  
during  the first  Lease  Year of the first option period shall be the Market 
Rental Rate (defined below),  but, in no event shall the Base Rent for the first
Lease Year of the first option  period be less than the Base  Rent for the sixth
Lease  Year of the  Original  Term.  As used herein,  the term "Market  Rental 
Rate" shall mean that rate which is prevailing as of the  commencement  of the 
first Lease Year of the first option  period for comparable space in a 
comparable office building in the Sorrento Valley area of San Diego, California,
taking  into  consideration  the size and age of,  and improvements  in, the 
Premises,  the five-year  term of the option  period,  the contribution  made by
Lessee  to the  improvements  to the  Premises  and other relevant factors, and 
which Market Rental Rate shall be determined as follows:

         (a)      By mutual agreement between Lessor and Lessee evidenced in a 
writing signed by each and mutually delivered; or

         (b) If Lessor and Lessee  have not agreed  upon the Market  Rental Rate
prior to the  commencement  of the first Lease Year of the option  period,  then
either  Lessor  or  Lessee  may  submit  the  issue  of  Market  Rental  Rate to
determination  by  arbitration  under the auspices of the  American  Arbitration
Association which shall be conducted  pursuant to the commercial rules except as
otherwise  provided in this Lease. The venue for the arbitration shall be in the
City of San Diego. With respect to the conduct of the arbitration, the following
shall apply:

                  (i) Not less than  three  weeks in advance of the date for the
commencement of the arbitration  hearing,  Lessor and Lessee shall each exchange
(1) the name,  address  and  qualifications  of any  appraiser,  broker or other
expert intended to be called at the time of the arbitration (each, an "Expert"),
(2) any reports and/or data relied upon by the Expert in connection with forming
an opinion  as to Market  Rental  Rate and (3) a  statement  as to each  party's
determination of the Market Rental Rate ("MRR  Statement")  (i.e.,  Lessor shall
give to Lessee Lessor's determination of the Market Rental Rate and vice-versa).

             (ii) For a period of ten days  following  the  exchange  of the MRR
Statements,  either party may accept the Market  Rental Rate stated in the other
party's MRR Statement  and, in such event,  the accepted  amount will become the
Base  Rent for the  first  Lease  Year of the  option  period  (e.g.,  if Lessor
delivered  to  Lessee   timely   written   notice  of   acceptance  of  Lessee's
determination of Market Rental Rate as provided in Lessee's MRR Statement,  then
the amount  shown on Lessee's MRR  Statement  would become the Base Rent for the
first Lease Year of the option period).

            (iii) If neither party accepts the other  party's  determination  of
Market  Rental Rate,  then the  arbitration  shall be conducted  before a single
arbitrator who shall be selected pursuant to the commercial rules. Not less than
five days prior to the date set for the hearing for the arbitration,  each party
shall (1) make available for an oral  deposition  any Expert whose  testimony is
expected to be given at the time of the arbitration and (2) deliver 

                                       3
<PAGE>

to the other party all exhibits which are intended to be entered into evidence 
at the time of the arbitration.

             (iv)  Except as  provided  below,  each party  shall bear their own
attorney's fees and Expert's fees.  Except as provided  below,  each party shall
share  equally  any  administrative  fees  owed  to  the  American   Arbitration
Association   and  the   reasonable   hourly   fees  owed  to  the   arbitrator.
Notwithstanding the foregoing, if the amount of the Market Rental Rate stated in
Lessee's  MRR  Statement  is less than 95  percent  of the  Market  Rental  Rate
determined  by the  arbitrator,  then the  arbitrator  may, in the  arbitrator's
discretion,  assess against  Lessee costs incurred by Lessor in connection  with
the arbitration  including,  without  limitation,  reasonable  attorney's  fees,
Expert's fees,  arbitrator's fees and administration  fees. If the amount of the
Market  Rental Rate stated in Lessor's MRR Statement is greater than 105 percent
of the Market Rental Rate determined by the arbitrator, then the arbitrator may,
in the  arbitrator's  discretion,  assess  against the Lessor costs  incurred by
Lessee  in  connection  with  the  arbitration  including,  without  limitation,
reasonable attorney's fees, Expert's fees,  arbitrator's fees and administration
fees.

                  (v)  Following  rendition of the  arbitrator's  award,  either
party may petition the Superior  Court of the State of California for the County
of San Diego to have the award confirmed and entered as a judgment.

Pending  determination  of the Market  Rental Rate for the first option  period,
Lessee  shall pay to Lessor  Base Rent in an amount  equal to 105 percent of the
Base Rent in effect  during the sixth Lease Year.  If the Market  Rental Rate is
greater than 105 percent of the Base Rent  payable  during the sixth Lease Year,
then, within 30 days following the arbitrator's  decision determining the amount
of the Market Rental Rate, Lessee shall pay to Lessor the difference between (1)
the Base Rent which  should  have been paid  during the first  Lease Year of the
first option  period based upon the Market Renal Rate and (2) the actual  amount
of the Base Rent paid by Lessee  during the first Lease Year of the first option
period. If it is determined that the Market Rental Rate is less than one hundred
five percent of the Base Rent payable  during the sixth Lease Year,  then Lessee
shall be entitled to credit against Base Rent next coming due in an amount equal
to the excess paid by Lessee.

                           1.5.5  Determination of Base Rent for First Lease 
Year of Second Option Period.  The Base Rent to be paid by Lessee to Lessor  
during  the first  Lease Year of the second option  period  shall be the Market
Rental Rate which is  prevailing  as of the commencement  of the first Lease 
Year of the second  option  period and shall be determined  in the same manner 
as  determining  Market Rental Rate for the first Lease  Year of the first  
option  period as  provided  above in  Section  1.6.3; provided,  however,  in 
no event shall the Base Rent for the first Lease Year of the second  option 
period be less than the Base Rent for the fifth Lease Year of the first option
period. Pending determination of the Market Rental Rate for the second option 
period, Lessee shall pay to Lessor Base Rent in an amount equal to 105 percent 
of the Base Rent in effect  during the fifth Lease Year of the first 
option period. If the Market Rental Rate is greater than 105 percent of the Base
Rent  payable  during the fifth  Lease Year of the first  option  period,  then,
within 30 days following the arbitrator's decision determining the amount of the
Market Rental Rate,  Lessee shall pay to Lessor the  difference  between (1) the
Base Rent which  should have been paid during the first Lease Year of the second
option period based upon the Market Rental Rate and (2) the actual amount of the
Base Rent paid by  Lessee  during  the first  Lease  Year of the  second  option
period.  If it is determined  the Market Rental Rate is less than 105 percent of
the Base Rent payable  during the fifth Lease Year of the first  option  period,
then Lessee shall be entitled to credit against the Base Rent next coming due in
an amount equal to the excess paid by Lessee.

                                       4
<PAGE>

                           1.5.6  Determination of Base Rent for Subsequent 
Lease Years of Option Period(s).  The Base Rent for each subsequent  Lease Year 
of the option periods will be equal to the amount derived by multiplying  the 
Base Rent for the first Lease Year of the option period by a fraction, the 
numerator of which is the Index (defined below) amount  for the last  period  
for which the Index is  published  and which  ends before the  commencement  
of the Lease Year for which the  calculation  is being made and the  denominator
of which is the Index  amount  for the same  calendar  period immediately  
preceding the commencement of the option period. The "Index" is that which is 
published by the United States Department of Labor, Bureau of Labor Statistics, 
in the Consumer Price Index for all urban  consumers for the Los Angeles area, 
all items,  1982-84 base. By way of example,  if the Base Rent for the second 
Lease Year of the first option period were to be determined based upon the 
assumptions that (1) the first option period commenced October 1, 2003, 
(2) the Base Rent for the first Lease Year of the option period is  $108,000.00,
(3) the Index is published  monthly,  (4) the Index amount for September 2003 is
225.0 and (5) the Index amount for September  2004 is 234.0,  then the Base Rent
for the second Lease Year of the first option  period would be  $112,320.00.  If
the Bureau of Labor  Statistics  discontinues  the  publication  of the Index or
publishes the Index less  frequently,  or alters the Index in some other manner,
then Lessor and Lessee will adopt a  substitute  index or  substitute  procedure
which reasonably  reflects and monitors changes in consumer prices.  In no event
will the Base Rent  during the  subsequent  Lease  Years of an option  period be
reduced  below the Base  Rent for the first  Lease  Year of the  option  period.
Lessor's  failure,  by reason of oversight,  mistake or  otherwise,  to make the
calculation  or advise  Lessee  thereof prior to the end of any Lease Year or to
collect any increased Base Rent determined as set forth in this paragraph,  will
not  release  Lessee of Lessee's  obligation  to pay to Lessor,  forthwith  upon
discovery  of such  oversight  or  mistake,  an amount  equal to the  difference
between the Base Rent actually paid and the increased Base Rent that should have
been paid during the period in which such mistake or oversight continued.

                  1.7 Security  Deposit.  Upon  execution  of the Lease,  Lessee
shall pay to Lessor  $90,180.00  which shall  constitute  the Security  Deposit.
Commencing on the  Commencement  Date, the Security  Deposit shall bear interest
for the  benefit  of  Lessee at the rate of four  percent  per  annum.  Interest
accrued on the Security  Deposit  shall be paid by Lessor to Lessee on the first
day of each Lease Year commencing on the first day of the second Lease Year.

                  6.2   Hazardous   Substances.   Other  than  (1)  two  percent
crystalline  asbestos  found in floor  tile  mastic  (which  shall be removed by
Lessee's contractor at Lessor's expense during the course of completing Lessee's
Work) and (2) any matters  which may be disclosed  in the Phase I  Environmental
Assessment prepared by Natec Environmental Reporting dated April 1, 1996 (a copy
of which has been  delivered to Lessee),  Lessor  represents  and warrants  that
Lessor has no actual  knowledge of the presence on the Premises of any Hazardous
Substances (defined below).

                           6.2.1  Definition of "Hazardous Material".  As used 
herein, the term "Hazardous Material" means any  hazardous or toxic  substance,
material or waste which is or becomes regulated by any local  governmental  
authority,  the State of California or the United  States  government.  The term
"Hazardous  Material"  includes,  without limitation,  any  material or  
substance  which is (i)  defined as a  "hazardous waste,"  "extremely  hazardous
waste" or  "restricted  hazardous  waste"  under Section 25515 or 25117,  or 
listed  pursuant to Section 25140, of the California Health and Safety Code,  
Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a 
"hazardous  substance"  under Section 25316 of the  California Health  and  
Safety  Code,  Division  2,  Chapter  6.8  (Carpenter-Presly-Tanner Hazardous  
Substance  Account  Act),  (iii)  Defined as a "hazardous  material," 
"hazardous substance" or "hazardous waste" under Section 25501 of the California
Health and 

                                       5
<PAGE>

Safety Code, Division 20, Chapter 6.95 (Hazardous  Substances),  (iv) 
petroleum, (v) asbestos, (vi) listed under Article 9 and defined as hazardous or
extremely  hazardous  pursuant  to  Article  11 of  Title  22 of the  California
Administrative  Code,  Division 4, Chapter 20, (vii)  designated as a "hazardous
substance"  pursuant to Section 311 of the Federal Water  Pollution  Control Act
(33 U.S.C.  Section  1317),  (viii) defined as a "hazardous  waste"  pursuant to
Section 1004 of the Federal  Resource  Conversation  and Recovery Act, 42 U.S.C.
Section 6901,  et. seq. (42 U.S.C Section  6903),  or (ix) defined as "hazardous
substance" pursuant to Section 101 of the Comprehensive  Environmental  Response
Compensation  and  Liability  Act, 42 U.S.C.  Section  9601 et. seq.  (42 U.S.C.
Section 9601).

                           6.2.2  Prohibition/Compliance.  Lessee shall not 
cause or permit any Hazardous Material (as defined  above) to be brought upon, 
kept or used in or about the Premiss or the Project in violation of  applicable 
law by Lessee,  its agents,  employees, contractors  or  invitees.  If  Lessee  
breaches  the  obligation  stated in the preceding sentence, or if the presence
of Hazardous Material results in unlawful contamination of the Premises,  or any
adjacent  property by Hazardous  Material otherwise  occurs  during  the term of
this  Lease or any  extension  or renewal hereof or holding over hereunder, then
Lessee shall indemnify,  defend and hold Lessor, its agents and contractors 
harmless from any and all claims,  judgment,s
damages,  penalties,  fines,  costs,  liabilities,  or losses (including without
limitation  diminution  in  value  of the  Premises,  damages  for  the  loss or
restriction  on use of  rentable  or  usable  space  or of  any  amenity  of the
Premises,  damages  arising from any adverse impact on marketing of space in the
Premises and sums paid in settlement of claims, attorneys' fees, consultant fees
and expert  fees) which arise  during or after he Lease term as a result of such
contamination.  For the purpose of this Section 6.2,  unlawful  contamination is
Hazardous  Material which violates any applicable local, state or federal las or
any regulations or standards promulgated  thereunder,  including requirements or
standards imposed by any governmental  agency or by governmental  order or court
having jurisdiction over the Premises.  This indemnification of Lessor by Lessee
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 material present in the air, soil or
ground water above on or under the Premises.  Without limiting the foregoing, if
the presence of any Hazardous Material on the Premises or any adjacent property,
caused or  permitted  by Lessee  results in any  unlawful  contamination  of the
Premises,  or any adjacent  property,  Lessee shall promptly take all actions at
its sole  expense as are  necessary  to ensure  the  Premises,  or any  adjacent
property meets all applicable local,  state and federal laws and any regulations
or standards promulgated thereunder,  in effect now or in the future,  including
requirements by any governmental  agency or impose by any governmental  order or
court having jurisdiction over the Premises,  provided that Lessor'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.

                           6.2.3  Business.  Lessor acknowledges that it is not 
the intent of this Section 6.2 to prohibit  Lessee from  operating its business 
as described in Section 1.8 above. Lessee may operate its business  according to
the custom of the industry so long as the use or presence of Hazardous  Material
is strictly and properly monitored according to all applicable governmental 
requirements.  As a material inducement to Lessor to allow  Lessee to use  
Hazardous  Material  in  connection  with its business, Lessee agrees to deliver
to Lessor prior to the Rent Commencement Date a list identifying each type of 
Hazardous Material 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  Material  on the  Premises ("Hazardous Material List"). 
Lessee shall deliver to Lessor an updated Hazardous Material  List at least once
a year.  Lessee  shall  deliver to Lessor  true and correct  copies  of the  

                                       6
<PAGE>

following  documents  (hereinafter  referred  to as the "Documents")  relating  
to the  handling,  storage,  disposal  and  emission  of Hazardous  Material  
prior to the Rent  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 Lessor has given Lessee its
written  consent to do so,  which  consent may be withheld in Lessor'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.  Lessee  is not  required,  however,  to  provide  Lessor  with any
portion(s)  of the Documents  containing  information  of a  proprietary  nature
which,  in and of  themselves,  do not  contain  a  reference  to any  Hazardous
Material  or  hazardous  activities.  It is not he  intent  of this  Section  to
provided Lessor with information which could be detrimental to Lessee's business
should such information become possessed by Lessee's competitors.

                           6.2.4  Termination of Lease.  Notwithstanding the
provisions of Section 6.2.2 above, if Lessee or 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 a Hazardous  
Material at the Project,  Lessor shall have the right to terminate  the Lease in
Lessor's sole and absolute  discretion  (with respect to any such matter 
involving Lessee) and it shall not be unreasonable for Lessor to withhold its 
consent to any proposed  assignment or subletting  (with respect to any such 
matter involving a proposed assignee or sublessee).

                           6.2.5  Hazardous Substances.  References in the Lease
to the term "Hazardous Substances" shall have the same meaning as Hazardous 
materials as defined in this Addendum.

                  6.4  Inspection/Compliance.  Lessor  and  Lessor's  Lender and
consultants  shall have the right to enter into the  Premises at any time in the
case of an emergency and otherwise at reasonable  times with  reasonable  notice
for the purpose of  inspecting  the  condition of the Premises and for verifying
compliance by Lessee with the Lease. The cost of any such  inspections  shall be
paid  by  Lessor,   unless  a  material   violation  by  Lessee  of   Applicable
Requirements,  or a contamination by Lessee is found to exist or be imminent, or
the  inspection is requested or ordered by a  governmental  authority and Lessee
has failed to  adequately  respond.  In such  case,  Lessee  shall upon  request
reimburse Lessor for the cost of such inspections, so long as such inspection is
directly related to the violation or contamination.

                  8.3 Earthquake Insurance.  As part of the insurance pertaining
to the Building  and  improvements  on the  Premises,  the Insuring  Party shall
obtain  and keep in force a policy in the name of Lessor  with loss  payable  to
Lessor  and any  Lender  insuring  loss or  damage  to the  Premises  caused  by
earthquake.

                  8.5 Insurance Policies.  The requirement for 30 days notice to
Lessor  of a  modification  to an  insurance  policy  shall  only  apply  to any
modification  which results in the policy no longer being in compliance with the
requirements of the Lease.

                  8.6 Waiver of Subrogation.  To the extent permitted by law and
without affecting the coverage  provided by any policy of insurance  required to
be maintained under the Lease, Lessor and Lessee each waive the right to recover
against  the other (1) damage for injury to or death of  persons,  (2) damage to
property,  (3)  damage to the  Premises  or any part  thereof  and/or (4) claims
arising by reason of any of the  foregoing,  but only to the extent  that any of
the foregoing  damages  and/or claims under  subparts (1) through (4) hereof are
covered,  and only to the extent of such  coverage,  by  policies  of  insurance
actually  carried or  required  to 

                                       7
<PAGE>

be carried  under the Lease by either  Lessor and/or Lessee. This provision is 
intended to waive fully, and for the benefit of each  party,  any  rights  and 
claims  which  might  give  rise to a  right  of subrogation  in any  insurance
carrier.  Each party  shall  procure a clause or endorsement on any policy 
required under the Lease denying to the insurer rights of subrogation  against 
the other party to the extent rights have been waived by the insured prior to 
the occurrence of injury or loss. 

                  9.3  Partial  Damage--Uninsured  Loss.  If a Premises  Partial
Damage that is not an Insured Loss  occurs,  unless  caused by the  negligent or
willful act of Lessee (in which event, Lessee shall make the repairs at Lessee's
expense),  Lessor  shall  repair such damage as soon as  reasonably  possible at
Lessor's  expense  and this  Lease  shall  continue  in full  force and  effect;
provided,  however,  if the reasonably  estimated cost of repairing the Premises
Partial  Damage  that is not an  Insured  Loss  exceeds  $600,000.00,  then  the
following shall apply:

                           9.3.1  Lessor may deliver to Lessee written notice of
Lessor's intention to terminate the Lease.  In  order  to be  effective,  
Lessor's  notice  of  termination  must be delivered to Lessee within 30-days  
following  receipt by Lessor of knowledge of the occurrence of the Premises 
Partial Damage that is not an Insured Loss.

                           9.3.2  If, within 30 days following receipt by Lessee
of Lessor's notice of intention to terminate,  Lessee  delivers to Lessor 
written notice of Lessee's  commitment to pay the cost of the repair in excess 
of $600,000.00, then the Lease shall remain in full force and effect and Lessor
shall  cause the repair to be  accomplished and Lessor shall pay the first
$600,000.00 of the cost of such repair and Lessee shall pay for all costs of 
repair in excess of $600,000.00.

                           9.3.3  If, within the 30-day period following 
delivery to Lessee of Lessor's notice of termination,  Lessee fails to deliver  
written notice of Lessee's  commitment to pay for repair costs in excess of 
$600,000.00,  then, upon the expiration of the 30-day period, the Lease shall 
terminate.

                  10.2  Impounding  of  Real  Property  Taxes.   Notwithstanding
Section  10.2(b) of the Lease,  if Lessor's lender which has a first mortgage or
deed of trust on the Premises  requires  impounding of Real Property Taxes, then
Lessee shall pay to Lessor (and Lessor shall pay to Lessor's  lender) the amount
of such real property tax impounds.

                  12.3  Lessee's  Affiliates/Rent   Recapture.   Notwithstanding
anything contained in Section 12 of the Lease to the contrary, Lessee shall have
the right to assign the Lease  and/or  sublet all or any portion of the Premises
to a Lessee's Affiliate.  As used herein "Lessee's  Affiliate" shall mean either
(1) any subsidiary corporation as to which Lessee owns 75 percent or more of the
outstanding shares and/or (2) a parent corporation which owns 75 percent or more
of the  outstanding  shares of Lessee.  With the exception of any  assignment or
subleasing  to Lessee's  Affiliate,  Lessee shall pay to Lessor,  as  additional
rent,  if and when  received  by Lessee,  50 percent of any excess rent or other
premium  on  the  assignment,   subleasing  or  other  transfer  (e.g.,  if  the
assignment,  sublease or other  transfer  document  provides  that the assignee,
subtenant or other  transferee  thereunder is to pay any amount in excess of the
rent and other charges due under this Lease, whether such premium be in the form
of an increased  monthly or annual rental,  lump sum payment in consideration of
the assignment,  sublease or other transfer or  consideration of any other form,
including  a sale of  goodwill  and/or a covenant  not to compete or payment for
furniture,  fixtures or inventory in an amount in excess of the reasonable value
thereof)  after  first  deducting  the  reasonable  costs  incurred by Lessee in
obtaining the assignment,  sublease or transfer,  including, without limitation,
reasonable brokerage commissions and reasonable costs of leasehold

                                       8
<PAGE>

improvements made by Lessee,  which costs shall be  amortized  over the shorter 
of the useful life  of such  improvements  or the  remaining  term  of  this  
Lease  as of the installation of such leasehold improvements.

                  13.2 Lessor's  Remedies.  In the event of any Default or other
Breach by Lessee, Lessor may, at any time thereafter,  with or without notice or
demand and without  limiting Lessor in the exercise of any right or remedy which
Lessor may have by reason of such Default or Breach,  maintain Lessee's right to
possession  in which  case the Lease  shall  continue  in effect  whether or not
Lessee  shall have  abandoned  the  Premises.  In such  event,  Lessor  shall be
entitled  to  enforce  all of  Lessor's  rights  and  remedies  under the Lease,
including the right to recover the rent as it becomes due hereunder. The parties
acknowledge and agree that Lessor shall have the remedy under Civil Code section
1951.4 which provides in part:

                  The lessor has the remedy  described in California  Civil Code
         section  1951.4  (lessor may continue  lease in effect  after  lessee's
         breach and  abandonment  and recover  rent as it becomes due, if lessee
         has right to sublet or assign, subject only to reasonable limitations).

                  13.4 Late Charge.  If any Rent shall not be received by Lessor
within five days after such amount shall be due, then,  without any  requirement
for notice to Lessee, Lessee shall pay to Lessor a one-time late charge equal to
the lesser of $500.00 or five percent of such overdue amount.  If any Rent shall
not be received by Lessor  within 10 days after such amount shall be due,  then,
without  any  requirement  for  notice to Lessee,  Lessee  shall pay to Lessor a
one-time  late  charge  equal to five  percent of such  overdue  amount less the
amount of the late charge owed under the preceding sentence.  By way of example,
assume that Lessee failed to pay Base Rent in the amount of $90,180.00 which was
due on February 1, 1997,  then, under those assumed facts, (1) if Lessee had not
paid the Base Rent by February  6, 1997,  a late charge in the amount of $500.00
would be due and (2) if the Base Rent  remained  unpaid as of February 11, 1997,
then the total amount of late  charges  owed by Lessee for the default  would be
$4,509.00.

                  15.3  Brokers'  Commissions.  To the  extent  any real  estate
commissions are owed by Lessor pursuant to separate written  agreements,  Lessor
shall be solely  responsible  for  payment of such  commissions.  Lessor  hereby
discloses Lee M. Chesnut (a principal of Lessor) is a licensed  California  real
estate broker.

         23. Notices.  The provisions of Section 23 of the Lease shall not apply
to any  notices  which are  required  to be  served  by  Lessor  as a  condition
precedent to the initiation of a special proceeding for unlawful  detainer.  Any
notices  required to be served as a condition  precedent to the  initiation of a
special  proceeding for unlawful  detainer  (including any notices under Section
13.1 of the Lease) shall be served in  accordance  with Code of Civil  Procedure
section 1162 as such section may be subsequently amended,  repealed or replaced.
With respect to all other notices,  the parties  acknowledge  and agree that, in
addition to the manner of delivery provided in Section 23 of the Lease,  notices
may be delivered by Federal Express or other similar overnight  delivery service
which provides evidence of receipt. If notice is delivered by Federal Express or
such other overnight  delivery service,  the notice shall be deemed delivered as
of the date shown by the evidence of receipt.

         30.  Attornment  and  Nondisturbance.   Lessee  acknowledges  that  the
Subordination,  Non-Disturbance  and  Attornment  Agreement  attached  hereto as
Exhibit  1 is in form  and  content  acceptable  to  Lessee  and  constitutes  a
"commercially  reasonable  Non-Disturbance  Agreement"  within  the  meaning  of
Section 30.3 of the Lease.

                                       9
<PAGE>

         31.  Attorneys'  Fees;  Jury  Trial  Waiver.  Lessor  shall  further be
entitled to recover  reasonable  attorney's fees incurred in connection with any
hearing or motion for assumption or rejection of the Lease under Title 11 of the
United  States  Code.  Lessee  shall be further  entitled to recover  reasonable
attorney's fees in connection with any hearing or adversary  proceedings related
to this Lease in any  bankruptcy  case filed by or  against  Lessor.  Lessor and
Lessee  hereby  waive  their  respective  right to trial by jury of any cause of
action, claim, counter-claim or cross-complaint in any action, proceeding and/or
hearing  brought by either Lessor against Lessee or Lessee against Lessor on any
matter whatsoever  arising out of, or in any way connected with, this Lease, the
relationship of Lessor and Lessee,  Lessee's use or occupancy of the Premises or
any  claim of  injury or damage or the  enforcement  of any  remedy  under  law,
statute or regulation, emergency or otherwise, now or hereafter in effect.

         34. Signage. Lessee shall be entitled to install a monument sign in the
location depicted in the site plan attached hereto as Exhibit 2. All other signs
placed in the exterior of the Premises and/or upon the Building shall be subject
to Lessor's prior written  approval which shall not be unreasonably  withheld or
delayed.

         50.      Lessee's Work.

                  50.1   Approval  of   Lessee's   Plans,   Specifications   and
Contractor.  Within 45 days following execution of the Lease, Lessee shall cause
to be prepared and delivered to Lessor (1)  preliminary  space plan drawings and
(2) preliminary  specifications for the improvements,  fixtures and equipment to
be installed  into the  Premises.  Within two business days  following  Lessor's
receipt of the  preliminary  plans and  specifications,  Lessor shall provide to
Lessee approval of such preliminary plans and specifications unless Lessor has a
reasonable and material  objection  thereto.  Within 45 days following  Lessor's
approval of the preliminary plans and  specifications,  Lessee shall cause to be
prepared  and  delivered  to Lessor (1)  working  plans  which are  sufficiently
detailed  in order to apply for and  obtain a building  permit for the  interior
improvements  to the Premises  which shall be based upon the  preliminary  plans
previously approved by Lessor and (2) final specifications for the improvements,
fixtures and  equipment to be installed  into the Premises  which shall be based
upon the preliminary  specifications  previously approved by Lessor.  Within two
business   days   following   Lessor's   receipt  of  the   working   plans  and
specifications, Lessor shall approve such plans and specifications unless Lessor
has a reasonable and material objection thereto.  Following Lessor's approval of
the working plans and specifications,  Lessee shall submit the working plans and
specifications  to the Building  Inspection  Department of the City of San Diego
for the purpose of obtaining a building permit for the  construction of the work
described in the working plans and specifications (hereinafter "Lessee's Work").
If, during the course of construction of Lessee's Work,  Lessee  determines that
it is necessary or desirable to make a material  change to the working plans and
specifications, then such proposed change shall be first submitted to Lessor for
Lessor's  review and  approval,  which  shall not be  unreasonably  withheld  or
delayed.  Prior to commencement of Lessee's Work,  Lessee shall submit to Lessor
the name,  telephone number,  license number and contact  representative for the
general  contractor  whom Lessee  intends to use to  accomplish  Lessee's  Work.
Within  two  business  days  following  Lessor's  receipt  of  such  information
concerning  the  proposed  general  contractor,  Lessor shall  approve  Lessee's
selection of the general  contractor unless Lessor has a reasonable and material
objection thereto.  If Lessor's lender who is furnishing all or a portion of the
funds for Lessor's  Allowance  requires similar rights of approval of the plans,
specifications and/or contractor,  Lessee shall cooperate with Lessor to satisfy
such lender's reasonable requests for information and requirements for approval.

                                       10
<PAGE>

                  50.2 Completion of Lessee's Work.  Following Lessor's approval
of the  working  plans and  specifications  and the  issuance by the City of San
Diego  of a  building  permit  for  Lessee's  Work,  Lessee  shall,  thereafter,
diligently,  competently  and  expeditiously  complete  Lessee's Work.  With the
exception of Lessor's  obligations with respect to payment of Lessor's Allowance
(defined  below),  Lessee  shall  indemnify  and hold Lessor  harmless  from and
against any and all claims,  liabilities,  damages,  penalties,  fines and costs
arising out of or relating to the completion of Lessee's Work including, without
limitation,   any  claims  of  lien  for  payment  by  any  general  contractor,
subcontractor  and/or material  supplier and/or any claim for death or injury to
persons and/or damage to property.

                  50.3  Lessor's  Allowance.  Concurrently  with the approval by
Lessor of the working  plans and  specifications  and subject to  adjustment  as
provided  below,  Lessor shall  deliver to Lessee  evidence of  availability  of
$2,430,000.00  ("Lessor's  Allowance")  to be used to pay the  cost of  Lessee's
Work.  Lessor's Allowance shall be used to pay the fees, costs and expenses owed
to  the  architects,   engineers,  general  contractor,   subcontractors  and/or
materials suppliers  furnishing labor and materials to accomplish Lessee's Work.
Lessor's  Allowance  shall  also  be used to pay for  liability  and  course  of
construction  insurance maintained by Lessor and/or Lessee during the completion
of  Lessee's  Work and  Lessor's  Expansion  Work.  Lessor  shall  pay to Lessee
Lessor's Allowance within ten days following delivery by Lessee to Lessor of (1)
a copy of the  certificate of occupancy and (2) lien releases upon final payment
showing  "$0.00" as the disputed  amount from Lessee's  contractor and all other
subcontractors  and material  suppliers who furnished labor and materials to the
Premises for Lessee's Work;  provided,  however,  if there exists a dispute with
respect to the amount owed to Lessee's contractor or a subcontractor or material
supplier,  Lessor  shall only  withhold  an amount  equal to 150  percent of the
disputed amount and shall disburse to Lessee the balance of Lessor's  Allowance.
Lessor and Lessee agree that the amount of Lessor's  Allowance as provided above
has been calculated  based upon an estimated  completed  rentable floor area for
the Premises of 54,000  rentable square feet. If the approved plans for Lessor's
Expansion  Work (defined  below) result in the estimated  rentable floor area of
the  Premises  being more or less than 54,000  square  feet,  then the amount of
Lessor's  Allowance  shall be calculated by  multiplying  what Lessee and Lessor
estimate  to be  the  final  rentable  floor  area  of  the  Building  following
completion  of  Lessor's  Expansion  Work by $45.00  (e.g.,  if,  based upon the
approved plans for Lessor's Expansion Work, the estimated rentable floor area of
the  Building  will be, upon  completion,  54,300  square  feet,  then  Lessor's
Allowance  would be  $2,443,500.00).  In  addition  to the  amount  of  Lessor's
Allowance,  Lessor shall pay for Lessee's  contractor to install in the Building
an elevator.

                  50.4      Special Provisions Re Lessee's Work.  With respect 
to Lessee's Work, Lessor and Lessee further agree:

                            50.4.1  Interior Accessibility Requirements.  In the
context of performing Lessee's Work,  Lessee  shall be  responsible  for  
installing  into the  interior of the Building all  improvements  which may be 
required to comply with  Americans with Disabilities Act and/or any other
similar laws concerning accessibility.  Lessor shall, at Lessor's sole cost and 
expense, be responsible for compliance with any such laws as they pertain to the
exterior parking areas,  walkways and driveways of the Premises and entrances to
the Building.

                            50.4.2  Roof.  In the course of performing Lessee's 
Work, Lessee shall be responsible to replace  the  roof  covering  of  the  
Building  such  that,  upon   Substantial Completion, the roof shall be in new 
condition.  Without limiting the generality of the foregoing,  Lessee shall 
assure that all mechanical  systems installed on the roof are properly  
installed  over sheet metal pad with proper  flashing and sealing.  
Notwithstanding Sections 2.3 and 7.1(c) of the Lease, Lessor shall not be 
responsible for any 

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<PAGE>

maintenance, repair and/or replacement of the roof during the  term  of the  
Lease.  In  addition  to  Lessor's  Allowance,  Lessor  shall contribute 
$25,000.00 to the cost of replacing the roof covering.

                            50.4.3  Improvements to be Surrendered Upon 
Expiration/Termination of Lease.  All of Lessee's Work shall, upon expiration or
termination of the Lease, be surrendered to Lessor and shall become Lessor's  
property.  Lessee  acknowledges  and agrees that the fume hoods, laboratory 
benches,  laboratory sinks and mechanical system shall not constitute  Lessee's 
fixtures which Lessee is entitled to remove upon the expiration or termination 
of the Lease. In connection  with  preparation and approval of the plans and  
specifications  for Lessee's Work,  Lessor and Lessee shall prepare and agree 
upon a list of Trade  Fixtures  which Lessee is entitled to remove at the  
expiration  or  termination  of the Lease  (collectively  "the Removable 
Fixtures"). If, prior to approval of the working drawings for Lessee's Work,  
Lessor and Lessee are unable to agree upon the  fixtures  to be  included
within the Removable  Fixtures,  then either party ("the  Notifying  Party") may
submit to the other party ("the  Receiving  Party") a list of the fixtures which
the  Notifying  Party  is  willing  to agree to as  constituting  the  Removable
Fixtures.  Within five business days  following  receipt of the list of proposed
Removable  Fixtures from the Notifying  Party,  the Receiving Party shall either
(1) accept the list of the Removable Fixtures (in which case, the list submitted
by the  Notifying  Party shall  become the list of  Removable  Fixtures)  or (2)
deliver to the Notifying  Party a list of fixtures which the Receiving  Party is
willing to agree to as constituting the Removable Fixtures. Within five business
days following  receipt by the Notifying Party of the Receiving  Party's list of
proposed  Removable  Fixtures,  the Notifying  Party shall either (1) accept the
Receiving Party's list of proposed  Removable  Fixtures (in which case, the list
prepared by the Receiving Party shall constitute the list of Removable Fixtures)
or (2) deliver notice to the Receiving  Party that the Notifying Party elects to
terminate  the Lease (in which case,  the Lease shall  terminate,  Lessor  shall
refund to Lessee the  Security  Deposit and any advance  payment of Rent and the
parties shall have no further  obligations  to each other under the terms of the
Lease).

                  50.5  Payment  of  Excess   Costs/Refund  of  Unused  Lessor's
Allowance. As soon as practicable following Substantial  Completion,  Lessee and
Lessee's  contractor  shall perform an accounting of the total costs incurred to
accomplish Lessee's Work (including all costs for design, permitting, inspection
and  utilities).  If the total  cost for  Lessee's  Work  exceeds  the amount of
Lessor's  Allowance,  then Lessee  shall pay such  excess.  If the total cost of
Lessee's Work is less than the amount of Lessor's  Allowance  then the following
shall apply:

                            50.5.1  Subject to Lessor's prior approval, which 
shall not be unreasonably withheld or delayed,  Lessee may, during the first 
Lease Year, utilize the remaining balance of Lessor's  Allowance  for the  
installation  into the  Premises of  additional permanent fixtures and 
improvements (collectively "Additional Work").

                            50.5.2  If, by the expiration of the first Lease 
Year, the total amount of Lessor's Allowance  has not been  expended  for the  
completion  of Lessee's  Work and/or Additional Work and  improvements as 
provided in the preceding  sentence,  then, within 30 days  following the  
expiration of the first Lease Year,  Lessor shall refund to Lessee the amount of
the difference between Lessor's Allowance and the total amount expended for 
Lessee's Work Additional Work.

                  51.1   Approval  of  Expansion   Plans,   Specifications   and
Contractor.  Within 45 days following execution of the Lease, Lessee shall cause
to be prepared and delivered to Lessor (1)  preliminary  drawings  pertaining to
(i) the proposed  expansion of the second floor mezzanine of the Building by the
addition of approximately 10,000 square feet and (ii) installation of windows 

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<PAGE>

in the exterior walls and other improvements to cause the new second story space
to be  similar  in  appearance  to the  existing  second  story  space  and  (2)
preliminary  specifications for the components of the expansion work. Within two
business  days  following  Lessor's  receipt  of the  preliminary  drawings  and
specifications,  Lessor  shall  provide to Lessee  approval of such  preliminary
drawings  and  specifications  unless  Lessor  has  a  reasonable  and  material
objection thereto. Within 45 days following Lessor's approval of the preliminary
drawings and specifications,  Lessee shall cause to be prepared and delivered to
Lessor (1) working plans which are  sufficiently  detailed in order to apply for
and obtain a building  permit for the  expansion  work which shall be based upon
the  preliminary   drawings   previously   approved  by  Lessor  and  (2)  final
specifications  for the  components  to be  installed  in  connection  with  the
expansion  work  which  shall  be  based  upon  the  preliminary  specifications
previously  approved by Lessor.  Within two  business  days  following  Lessor's
receipt of the working plans and specifications, Lessor shall approve such plans
and  specifications  unless  Lessor  has a  material  and  reasonable  objection
thereto.  Following  Lessor's approval of the working plans and  specifications,
Lessee  shall  submit  the  working  plans and  specifications  to the  Building
Inspection  Department  of the City of San Diego for the purpose of  obtaining a
building permit for the  construction of the work described in the working plans
and  specifications  (hereinafter  "Lessor's  Expansion  Work").  If, during the
course of construction of Lessor's  Expansion Work, either party determines that
it is necessary or desirable to make a material  change to the working plans and
specifications, then such change shall first be submitted to the other party for
other party's review and approval,  which shall not be unreasonably  withheld or
delayed.  Lessor's  Expansion  Work shall be  accomplished  by the same  general
contractor hired by Lessee to
accomplish  Lessee's Work,  subject to the approval of Lessor's  lender.  Lessor
shall be  responsible  for payment of all expenses  incurred in connection  with
performing Lessor's Expansion Work including, but not limited to, preparation of
working  plans and  specifications.  In the event  that,  for any reason  beyond
Lessor's  reasonable  control,  Lessor  shall not be able to  obtain a  building
permit to accomplish  Lessor's Expansion Work and/or a building permit is issued
but for less than the full amount of the  proposed  expansion,  Lessee shall not
have any right to terminate  this Lease and the only  consequence to the parties
shall be that the Base Rent shall be adjusted as provided in Section 1.5.3 above
based  upon  the  actual  rentable  floor  area of the  Building  at the time of
Substantial  Completion.  Lessor has agreed to hire Lessee's general  contractor
for the purpose of having a single contractor  coordinate the  accomplishment of
Lessee's Work and Lessor's  Expansion Work.  Lessor shall not be responsible for
any delays  attributable to Lessee's  contractor's  failure properly to schedule
and coordinate the work; provided,  however, delays caused by Lessor, including,
but not limited to,  Lessor's  failure timely to cooperate with the  application
for a building permit, shall extend the Rent Commencement Date.

         53. Delivery of Financial Statements. Within 30 days following Lessor's
request  therefor,  Lessee  shall  deliver  to  Lessor a copy of  Lessee's  most
recently prepared audited financial statement. Within 20 days following Lessor's
written request therefor,  Lessee shall deliver to Lessor Lessee's most recently
prepared  unaudited  financial  statement as maintained by Lessee for the period
commencing at the beginning of the then-current fiscal year. As used herein, the
term  "financial  statement"  shall mean a detailed  balance  sheet and detailed
statement of income and expenses prepared in accordance with generally  accepted
accounting  principals and otherwise in the manner Lessee  customarily  prepares
such documents.

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<PAGE>

         54.  Interpretation.  Except as the  context  may  otherwise,  require,
references  to "the  Lease" or "this  Lease"  shall  mean  collectively  (1) the
Standard Commercial/Industrial Single-Tenant Lease - Net dated June 13, 1997, by
and between  Lessee and Lessor and all  Exhibits  attached  thereto and (2) this
Addendum.

Lessor:                                           Lessee:
LMC-Sorrento Investment Company,                  Agouron Pharmaceuticals, Inc.,
LLC, a California Limited                         a California Corporation
Liability Company



By /s/ Lee M. Chesnut                             By /s/ Glenn Zinser
   -----------------------------                  ------------------------------
   Lee M. Chesnut, Manager                        Print Name Glenn Zinser
                                                  Title VP, Operations


                              Schedule of Exhibits

                  1 - Subordination, Non-Disturbance and Attornment Agreement

                  2 - Site Plan

 
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