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                               STANDARD FORM LEASE

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         This Lease dated October 25, 1996 (this "Lease") is entered into by and
between Scripps Jack, Ltd., a California  limited  partnership  ("Landlord") and
Agouron Pharmaceuticals, Inc., a California corporation ("Tenant").


                                   ARTICLE I.

                             BASIC LEASE PROVISIONS

         Each reference in this Lease to the "Basic Lease Provisions" shall mean
and refer to the following  terms, the application of which shall be governed by
the provisions in the remaining Articles of this Lease:

1.         Address of Landlord: Birtcher Property Services
                                27611 La Paz  Road,  Laguna  Niguel,  CA 92677  
                                with a copy to  Scripps Jack,  Ltd., P.O. 
                                Box 614, Bloomington,  Illinois,  61702,  
                                Attn: Real Estate Services

2.        Premises Address:    4245 Sorrento Valley Boulevard
                               San Diego, Ca  92121

3.        Address of Tenant:

                  (a)      Notices: 4245 Sorrento Valley Boulevard
                           San Diego, California, 92121

                  (b)      Billing: Agouron Pharmaceuticals, Inc.
                           10350 North Torrey Pines Road
                           La Jolla, California, 92037-1020

4.        Tenant's Trade Name:  Agouron Pharmaceuticals, Inc.

5.        Tenant's Contact:  Glenn Zinser    Telephone:  (619) 622-3005

6.        Premises Square Footage: Both the Premises and the Building consist of
          approximately  22,843 square feet of gross building area ("Square Feet
          of Gross  Building  Area").  The exact  number of Square Feet of Gross
          Building Area in the Premises and the Building  shall be determined as
          set forth in Section 2.1 below.

7.        Commencement Date:  See Section 3.2

8.        Term:    From the Commencement Date through December 31,2001

9.        Initial  Monthly Rent:  The initial  Monthly Rent payable by Tenant to
          Landlord shall be One and 45/100  Dollars  ($1.45) per square foot per
          month of Square  Feet of Gross  Building  Area  within  the  Premises,
          subject  to  adjustment   pursuant  to  Exhibit  E  attached   hereto.
          Accordingly,  the approximate  amount of the initial Monthly
          Rent shall be Thirty  Three-Thousand One Hundred Twenty Two and 35/100
          Dollars  ($33,122.35).  In the event the Square Feet of Gross Building
          Area in the  Premises as  determined  in  accordance  with Section 2.1
          differs from the  approximate  amount of Square Feet of Gross Building
          Area set forth in Item 6 of the Basic Lease  Provisions,  Landlord and
          Tenant  agree to  promptly  execute an  amendment  to this Lease which
          revises the amounts of Minimum Rent provided  herein and in Exhibit E.
         
          Additionally,  to the extent that Tenant has overpaid  Monthly Rent 
          for the period from the Commencement  Date until the end of the month 
          in which the  determination  of the  Rentable  Square Feet of Floor 
          Area of the Premises  pursuant to Section 2.1 is made,  Landlord shall
          immediately reimburse Tenant therefore.  Similarly,  to the extent 
          that Tenant has underpaid  Landlord  Monthly  Rent  for  such  period,
          Tenant  shall immediately pay Landlord such there shall be no 
          underpayment.

10.       Security Deposit: $35,000.00

11.       Permitted   Uses:   Biotech   research  and  development  and  related
          pharmaceutical  operations,  pursuant to  approvals  to be obtained by
          Tenant from all relevant City, County and other required  governmental
          agencies and authorities.

12.       Broker:  Landlord's Broker - C.B. Commercial Real Estate Group, Inc.
                  Tenant's Broker - Colliers Iliff Thorn

13.       Landlord's Architect:  Carrier Design Group, Inc.

14.       Guarantor:  None

15.       Vehicle Parking Spaces:  Seventy (70)

16.       Additional Insureds:  Birtcher Property Services and Scripps Jack, 
          Ltd.

17.       Tenant's Liability Insurance Limits: $10,000,000.00

18.       Tenant's Share: 100%

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Exhibits:

         A    Description of Premises
         B    Property Description
         C    Work Letter
         D    Commencement Date Memorandum
         E    Adjustments to Monthly Rent
         F    Rules and Regulations
         G    Environmental Questionnaire

Riders:

         Rider No.1 to Lease

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                                   ARTICLE II

                                   DEFINITIONS

         2.1 Certain Definitions.  The capitalized terms set forth below, unless
the context clearly  requires  otherwise,  shall have the following  meanings in
this Lease:

             "Additional   Rent"  means  any  and  all  sums   (whether  or  not
specifically  called  "Additional  Rent" in this Lease)  other than Monthly Rent
which Tenant is or becomes  obligated to pay to Landlord  under this Lease.  See
also Rent.

             "Alterations"  means any alterations,  decorations,  modifications,
additions  or  improvements  made in,  on,  about,  under or  contiguous  to the
Building or the Premises after the Commencement Date including,  but not limited
to,  lighting,  HVAC and  electrical  fixtures,  pipes and  conduits,  transfer,
storage and disposal facilities,  partitions,  drapery, wall coverings, shelves,
cabinetwork,  carpeting and other floor coverings,  ceiling tiles,  fixtures and
carpentry installations.

             "Applicable Laws" means the laws, rules,  regulations,  ordinances,
restrictions, and practices described in Section 5.2.

             "Applicable  Rate" means the greater of ten percent (10%) per annum
or five percent (5%) in excess of the discount rate of the Federal  Reserve Bank
of San Francisco in effect on the twenty-fifth  (25th) day of the calendar month
immediately  prior to the event giving rise to the Applicable  Rate  imposition;
provided,  however,  the  Applicable  Rate shall in no event  exceed the maximum
interest rate permitted to be charged by applicable law.

             "Broker"  means the person or entity  identified  in Item 12 of the
Basic Lease Provisions.

             "Building"  means that certain  building  within which the Premises
are located.

             "Casualty" is defined in Section 12.1.


             "City" means the city in which the Premises are located.

             "Commencement  Date"  means  the  commencement  date  of the  Term,
described in Section 3.2.

             "Common  Area"  means all areas and  facilities  within the Project
exclusive  of the Premises  and other  portions of the Project  leased (or to be
leased)  exclusively  to other  tenants.  The Common Area  includes,  but is not
limited to,  parking areas,  access and perimeter  roads,  sidewalk,  landscaped
areas and similar areas and facilities. Tenant's use of the Common Area, and its
rights and obligations with respect thereto, are more particularly  described in
Article X.

             "County" means the county in which the Premises are located.

             "Event  of  Default"  means  the  Tenant   defaults   described  in
Section15.1.

             "Guarantor"  means the person(s) or entity identified in Item 14 of
the Basic Lease Provisions, if any.

             "HVAC" means the heating,  ventilating and air conditioning  system
serving the Building.

             "Hazardous Materials" is defined in Section 6.1.

             "Landlord's    Agents"   means   Landlord's    authorized   agents,
representatives,   property   managers   (whether   as  agents  or   independent
contractors),  consultants,  contractors,  partners,  subsidiaries,  affiliates,
directors,  officers and employees,  including without limitation the Additional
Insureds named in Item 16 of the Basic Lease Provisions.

             "Landlord's  Architect" means the architect or  architectural  firm
from time to time  designated  by Landlord to perform the function of Landlord's
Architect set forth in this Lease.  Landlord's  Architect initially shall be the
architect  or  architectural  firm  designated  in  Item 13 of the  Basic  Lease
Provisions.

             "Lease"   means  this   instrument   together  with  all  exhibits,
amendments, addenda and riders attached hereto and made a part hereof.

             "Monthly  Rent" means the monthly  rental which Tenant is to pay to
Landlord  pursuant to Section 4.1, as the same may be adjusted from time to time
as set forth in this Lease. See also Rent.

             "Mortgage" means any mortgage, deed of trust, or similar lien on or
covering the Project or any part thereof.

             "Mortgagee"  means any  mortgagee of a mortgage,  beneficiary  of a
deed of trust or lender  having a lien on or  covering  the  Project or any part
thereof.

             "Notice"  means  each and  every  notice,  communication,  request,
demand,  reply or  advice,  or  duplicate  thereof,  in this Lease  provided  or
permitted  to be given,  made or  accepted by either  party to any other  party,
which shall be in writing and given in accordance with the provisions of Section
21.6.

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             "Operating  Expenses" means,  collectively,  Project Costs and Real
Property Taxes.

             "Plans" means the final working  drawings for the  construction  of
the Tenant  Improvements  to be prepared  and  approved as set forth in the Work
Letter.

             "Outside  Areas" means the areas outside the exterior  walls of the
Building.

             "Premises"  means the  premises  shown in  Exhibit A, and all areas
appurtenant  thereto,  if any,  for the  exclusive  use of  Tenant,  as shown in
ExhibitA.  The Premises are located  within and  constitute  the Building at the
address set forth in Item 2 of the Basic Lease Provisions.

             "Premises Square Footage" means the floor area of both the Premises
and the  Building.  Upon  substantial  completion  of the  Premises,  Landlord's
architect or another  appropriate  professional  shall  certify the total Square
Feet of Gross Building Area in the Premises and the Building based upon the BOMA
Gross Building Area standard of measurement.

                  "Project"   means  that   certain  real   property,   and  all
improvements  thereon,  including  the  Building  and other  buildings,  if any,
located  within the  boundaries  of such  property,  described  in the  Property
Description.

             "Project Costs" is defined in Section 7.3.

             "Property Description" means Exhibit B.

             "Real Property Taxes" is defined in Section 7.4.

             "Rent" means Monthly Rent and Additional Rent, collectively.

             "Rules and  Regulations"  means the rules and regulations  attached
hereto as Exhibit F and any  modifications  thereto  promulgated  by Landlord or
Landlord's Agents from time to time.

             "Security  Deposit"  means the  amount  set forth in Item 10 of the
Basic Lease  Provisions,  which shall be paid to Landlord by Tenant  pursuant to
Section4.6.

             "Substantial  Completion" and  "substantially  completed" means the
date on which the repair of the Premises  following a Casualty,  have been fully
completed  except for minor details of construction,  mechanical  adjustments or
decoration which do not materially  interfere with Tenant's use and enjoyment of
the Premises (items normally referred to as "punch list" items).

             "Tenant  Delays"  means any and all  delays due to the fault of the
Tenant,  but  only to the  extent  caused  by such  default,  including  without
limitation  Tenant's  failure to deliver to Landlord  prior to the  Commencement
Date,  executed  copies of  policies of  insurance  or  certificates  thereof as
required under Section 11.8.

             "Tenant Improvements" means those certain improvements,  if any, to
be constructed on the Premises as provided in Article XX and in the Work Letter.

             "Tenant's   Agents"   means   Tenant's   agents,   representatives,
consultants,   contractors,   affiliates,   subsidiaries,  officers,  directors,
employees, subtenants, guests and invitees.

             "Tenant's   Personal   Property"  means  Tenant's  removable  trade
fixtures, furniture,  equipment and other personal property located in or on the
Premises.

             "Term" means the term of this Lease, as provided in Section 3.2.

             "Unavoidable  Delay"  means any  delays  which are beyond a party's
reasonable  control  including,  but not  limited  to,  delays due to  inclement
weather, strikes, acts of God, inability to obtain labor or materials, inability
to secure governmental approvals or permits,  governmental  restrictions,  civil
commotion, fire, earthquake,  explosion,  flood, hurricane, the elements, or the
public enemy, action or interference of governmental  authorities or agents, war
invasion,  insurrection,  rebellion,  riots, lockouts or any other cause whether
similar or  dissimilar  to the  foregoing  which is beyond a party's  reasonable
control;  provided  however,  that in no event shall any of the  foregoing  ever
apply with respect to the payment of any monetary obligation.

             "Work  Letter"  means the work letter  between  Landlord and Tenant
regarding the  construction of the Tenant  Improvements,  if any, in the form of
Exhibit C.

         2.2 Other Definitions.  Terms defined elsewhere in this Lease,
unless the context clearly requires  otherwise,  shall have the meaning as there
given.

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                                   ARTICLE III

                                PREMISES AND TERM

         3.1 Lease of Premises. Subject to and upon the terms and conditions set
forth herein,  Landlord hereby leases the Premises to Tenant,  and Tenant hereby
leases the Premises from Landlord.

         3.2  Terms and  Commencement.  Unless  sooner  terminated  as  provided
herein,  the Term of this Lease shall be for that period of years and months set
forth in Item8 of the Basic  Lease  Provisions,  as the same may be  extended in
accordance  with any option or options to extend the Term  granted  herein,  and
shall  commence  (the  "Commencement  Date") on the  earlier of (i) the later to
occur of May  15,1997 or  two-hundred  ten (210) days  after  Landlord  delivers
possession  of the  Premises  to Tenant or (ii) the date that Tenant is issued a
certificate  of occupancy or temporary  certificate  of occupancy by the City of
San Diego. When the actual  Commencement Date has occurred,  Landlord and Tenant
shall execute a Commencement Date Memorandum in the form shown in Exhibit D.

         3.3  Early  Entry.  Tenant  and  its  authorized  agents,  contractors,
subcontractors  and  employees  shall be granted a license by  Landlord to enter
upon the Premises,  at Tenant's sole risk and expense,  during ordinary business
hours  prior to the  Commencement  Date,  for the  sole  purpose  of  installing
Tenant's trade fixtures and equipment in the Premises;  provided,  however, that
(i) the  provisions  of this  Lease,  other than with  respect to the payment of
Monthly Rent, shall apply during such early entry including, but not limited to,
the provisions of ArticleXI  relating to Tenant's  indemnification  of Landlord,
(ii)prior to any such entry,  Tenant  shall pay for and provide  evidence of the
insurance  to be provided by Tenant  pursuant to the  provisions  of  ArticleXI,
(iii)Tenant  shall pay all  utility,  service  and  maintenance  charges for the
Premises  attributable  to  Tenant's  early  entry  and use of the  Premises  as
reasonably determined by Landlord,  (iv)Tenant shall not unreasonably interfere,
delay or hinder  Landlord,  its agents,  contractors  or  subcontractors  in the
construction  of the Tenant  Improvements  in accordance  with the provisions of
this  Lease,  and  (v)Tenant  shall  not use the  Premises  for the  storage  of
inventory or otherwise  commence the operation of business  during the period of
such early  entry.  Upon  Tenant's  breach of any of the  foregoing  conditions,
Landlord may, in addition to exercising any of its other rights and remedies set
forth herein,  revoke such license upon notice to Tenant.  Early entry by Tenant
in  accordance  with this  Section3.3  shall  not  constitute  occupancy  of the
Premises for purposes of establishing the Commencement Date.

         3.4 Delay in  Possession.  If for any reason  Landlord  cannot  deliver
possession  of the  Premises  to  Tenant  on or before  the  Commencement  Date,
Landlord shall not be subject to any liability therefor,  and such failure shall
not affect the validity of this Lease or the  obligations  of Tenant  hereunder,
but in  such  case,  Tenant  shall  not be  obligated  to pay  Monthly  Rent  or
Additional  Rent other than as provided in Section3.3 and  Section3.5  until the
Commencement  Date as defined in Section 3.2 above,  has  occurred.  If Landlord
does not  deliver  possession  of the  Premises  to Tenant  within ten (10) days
following  the full  execution  of the Lease by Landlord and Tenant plus periods
attributable to Tenant Delays or Unavoidable  Delay,  Tenant may, at its option,
by Notice to Landlord within ten (10) days thereafter,  terminate this Lease, in
which  event  the  parties  shall be  discharged  from all  further  obligations
hereunder;  provided,  however,  if Tenant fails to give such notice to Landlord
within such ten-day  period,  Tenant shall no longer have the right to terminate
this Lease  under this  Section3.4.  Tenant  understands  that,  notwithstanding
anything to the contrary contained herein,  Landlord shall have no obligation to
deliver  possession  of the  Premises  to Tenant for so long as Tenant  fails to
deliver to Landlord  executed  copies of policies of insurance  or  certificates
thereof as required under Section11.8.

         3.5  Tenant  Delays.  The  Commencement  Date  shall not be  delayed or
postponed due to Tenant Delays, and the Term,  Tenant's  obligations to pay Rent
and all of Tenant's other  obligations  under this Lease shall commence upon the
date which would have been the Commencement Date but for Tenant Delays.

         3.6 Condition of Premises. Landlord's sole construction obligations, if
any,  regarding Tenant  Improvements for the Premises are set forth in ArticleXX
and the Work Letter.  The taking of  possession or use of the Premises by Tenant
for any  purpose  other  than  as  provided  in  Section3.3  shall  conclusively
establish  that Tenant has  inspected  the Premises and accepts them as being in
good and sanitary  order,  condition  and repair,  except for latent  structural
structural defects and Landlord's  maintenance  obligations set forth in Article
IX.

         3.7 No  Representations.  Tenant acknowledges that neither Landlord nor
any of Landlord's  Agents has made any  representations  or warranties as to the
suitability  or fitness of the  Premises  for the conduct of  Tenant's  business
including,  but not  limited to, any  representations  or  warranties  regarding
zoning or other land use  matters,  or for any other  purpose,  and that neither
Landlord nor any of Landlord's Agents has agreed to undertake any alterations or
additions  or  construct  any  Tenant  Improvements  to the  Premises  except as
expressly provided in this Lease. Landlord is not aware of any restrictions that
would adversely affect the Permitted Uses contemplated in this Lease.


                                   ARTICLE IV

                              RENT AND ADJUSTMENTS

         4.1 Monthly Rent. From and after the  Commencement  Date,  Tenant shall
pay to the Landlord,  for each calendar  month of the Term, the Monthly Rent set
forth in Item9 of the Basic Lease  Provisions,  as the same may be adjusted from

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time to time as provided in Section4.2. Monthly Rent shall be due and payable to
Landlord in lawful money of the United  States,  in advance,  on the first (1st)
day of each calendar month of the Term, without abatement,  deduction,  claim or
offset,  and without prior notice,  invoice or demand, at Landlord's address set
forth in Item1 of the Basic Lease  Provisions  or at such place as Landlord  may
from time to time  designate.  Tenant's  payment of  Monthly  Rent for the first
(1st)  month of the Term  shall  be  delivered  to  Landlord  concurrently  with
Tenant's execution of this Lease.

         4.2  Adjustments.  Monthly Rent shall be adjusted  from time to time as
provided in Exhibit E.

         4.3 Additional  Rent.  All Additional  Rent shall be due and payable to
Landlord in lawful money of the United States,  at Landlord's  address set forth
in Item1 of the Basic Lease  Provisions  or at such other place as Landlord  may
from time to time  designate,  without  abatement,  deduction,  claim or offset,
within ten (10) days of receipt of Landlord's  invoice or statement for same, or
if this  Lease  provides  another  time  for the  payment  of  certain  items of
Additional Rent, then at such other time.

         4.4 Prorations.  If the Commencement Date is not the first (1st) day of
a month, or if the expiration of the Term of this Lease is not the last day of a
month,  a prorated  installment of Monthly Rent based on a thirty (30) day month
shall be paid for the  fractional  month  during  which  the Term  commences  or
terminates.

         4.5 Late  Payment  Charges.  Tenant  acknowledges  that late payment by
Tenant to Landlord  of Rent under this Lease will cause  Landlord to incur costs
not contemplated by this Lease, the exact amount of which is extremely difficult
or  impracticable  to  determine.  Such costs  include,  but are not limited to,
processing and accounting charges,  late charges that may be imposed on Landlord
by the terms of any Mortgage, and late charges and penalties that may be imposed
due to late payment of Real Property  Taxes.  Therefore,  if any  installment of
Monthly Rent or any payment of  Additional  Rent due from Tenant is not received
by Landlord in good funds by the tenth (10) calendar day from the applicable due
date,  Tenant shall pay to Landlord an additional sum equal to the lesser of One
Thousand  Dollars  ($1,000.00)  or three percent (3%) of the amount overdue as a
late charge for every month or portion  thereof that such amount remains unpaid.
The parties  acknowledge  that this late charge  presents a fair and  reasonable
estimate of the costs that  Landlord will incur by reason of the late payment by
Tenant.  Acceptance of any late Rent and late charge  therefor shall not prevent
Landlord  from  exercising  any of the other  rights and  remedies  available to
Landlord for any other Event of Default  under this Lease.  Notwithstanding  the
foregoing  (i) should any  payment of Rent by  personal  check be  rejected  for
insufficient  funds,  Landlord shall have the right,  upon notice to Tenant,  to
require  that all future  payments  by Tenant  under this Lease be by  cashier's
check acceptable to Landlord, and (ii)upon the third (3rd) occurrence during the
Term of Tenant's failure to timely pay Rent when due,  Landlord may, upon notice
to Tenant,  require  that  Monthly  Rent for the  balance of the Term be made in
quarterly installments, in advance, in an amount equal to the sum of the Monthly
Rent amounts payable during such three (3) month period.

         4.6 Security  Deposit.  Tenant has deposited  with Landlord the sum set
forth in Item10 of the Basic Lease Provisions as a Security Deposit for the full
and  faithful  performance  of every  provision of this Lease to be performed by
Tenant.  Upon an  uncured  Event of  Default,  and  whether or not  Landlord  is
informed of or has  knowledged  of the event of Default,  the  Security  Deposit
shall be deemed  to be  automatically  applied,  without  waiver  of any  rights
Landlord  may have  under  this  Lease or at law or in  equity as a result of an
Event of Default,  to the  payment of any Rent not paid when due,  the repair of
damage to the  Premises or the payment of any other  amount  which  Landlord may
spend or become obligated to spend by reason of an Event of Default, to the full
extent  permitted by law. If any portion of the Security  Deposit is so applied,
Tenant shall,  within ten (10) days after written demand therefor,  deposit cash
with  Landlord in an amount  sufficient  to restore the Security  Deposit to its
original  amount.  Landlord  shall not be required to keep the Security  Deposit
separate from its general funds. The unused portion of the Security Deposit,  if
any,  shall be returned to Tenant within  thirty (30) days of the  expiration of
this  Lease or any  termination  of this  Lease not  resulting  from an Event of
Default,  so long as Tenant has vacated the  Premises in the manner  required by
this Lease and paid all sums  required  to be paid under  this  Lease,  provided
however,  that  Landlord may retain the Security  Deposit until such time as any
amounts of  Additional  Rent due from  Tenant have been  determined  and paid in
full. Tenant hereby waives the provisions of  Section1950.7(c) of the California
Civil Code and any present or future laws otherwise  governing the return of the
Security  Deposit to Tenant to the extent of reasonably  anticipated  Additional
Rent retained by Landlord pursuant to the previous sentence.

                                    ARTICLE V

                                       USE

         5.1 Tenant's Use. Tenant shall use the Premises solely for the purposes
set forth in Item11 of the Basic Lease Provisions and shall use the Premises for
no other  purpose.  Tenant's use of the Premises  shall be subject to all of the
terms and  conditions  of this  Lease  including,  but not  limited  to, all the
provisions of this ArticleV.  Tenant,  at Tenant's sole cost and expense,  shall
procure,  maintain and make available for Landlord's  inspection  throughout the
Term, all governmental  approvals,  licenses and permits required for the proper
and lawful  conduct of Tenant's  permitted  use of the  Premises.  At Landlord's
request, Tenant shall deliver copies of all such approvals, licenses and permits
to Landlord.

         5.2 Compliance With Applicable Laws.  Throughout the Term,  Tenant,  at
Tenant's  sole  cost and  expense,  shall  comply  with,  and  shall not use the
Premises, Building or Common Area, or suffer or permit anything to be done in or
about the same which will in any way conflict  with, (i) any and all present and

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future laws, statutes,  zoning restrictions,  ordinances,  orders,  regulations,
directions,  rules and requirements of all  governmental or private  authorities
having  jurisdiction  over all or any part o the  Premises  (including,  but not
limited  to,  state,  municipal,   county  and  federal  governments  and  their
departments,  bureaus,  boards and officials) pertaining to the use or occupancy
of, or applicable to, the Premises or privileges appurtenant to or in connection
with the enjoyment of the Premises,  (ii)any and all applicable  federal,  state
and local laws,  regulations or ordinances  pertaining to air and water quality,
Hazardous  Materials (as defined in Section6.1),  waste disposal,  air emissions
and other  environmental  or health and  safety  matters,  zoning,  land use and
utility availability,  which impose any duty upon Landlord or Tenant directly or
with  respect to the use or  occupation  of the Project or any portion  thereof,
(iii)the  requirements  of the Board of Fire  Underwriters or other similar body
now or hereafter  constituted  relating to or affecting  the  condition,  use or
occupancy of the Project or any portion thereof, (iv)any covenants,  conditions,
easements or restrictions now or hereafter  affecting or encumbering the Project
or any portion thereof,  regardless of when they become effective,  (v)the Rules
and Regulations, and (vi)good business practices (collectively, (i) through (vi)
above are hereinafter referred to as "Applicable Laws"). Tenant shall not commit
any waste of the  Premises,  Building  or  Project,  or any  public  or  private
nuisance  or any  other  act or thing  which  might or would  disturb  the quiet
enjoyment of any other  tenant of Landlord or any  occupant of nearby  property.
Tenant  shall not place or permit to be placed any loads upon the floors,  walls
or ceilings  in excess of the maximum  designed  load  specified  by Landlord or
which might damage the Premises or the Building, or place or permit to be placed
any  liquids  in  levels  in excess of  applicable  laws or  regulations  in the
drainage systems, and Tenant shall not dump or store, or permit to be dumped for
stored, any inventory,  waste materials,  refuse or other materials or allow any
such  materials to remain  outside the  Building  proper,  except in  designated
enclosed trash areas. Tenant shall not conduct or permit any auctions, sheriff's
sales or other like activities at the Project or any portion thereof.

         5.3 Restrictions.  Tenant agrees that it will subordinate this Lease to
any other covenants,  conditions and  restrictions  and any reciprocal  easement
agreements or any similar agreements which Landlord may hereafter record against
the  Premises  and to  any  amendment  or  modification  to any of the  existing
Restrictions,  provided that such subordination does not unreasonably  interfere
with  Tenant's use and  enjoyment of the  Premises,  adversely  affect  Tenant's
rights,  or increase  the  monetary or other  obligations  of Tenant  under this
Lease.

         5.4 Landlord's  Right of Entry.  Landlord and  Landlord's  Agents shall
have the right to enter the  Premises at all  reasonable  times upon  reasonable
notice to  Tenant,  except  for  emergencies  in which  case no notice  shall be
required,  to inspect the  Premises,  to take samples and conduct  environmental
investigations,  to post notices of  nonresponsibility  and similar  notices and
signs indicating the availability of the Premises for sale, to show the Premises
to  interested  parties  such as  prospective  lenders and  purchasers,  to make
necessary   Alterations  or  maintenance  and  repairs,   to  perform   Tenant's
obligations  as  permitted  herein  when  Tenant has failed to do so and, at any
reasonable  time after one hundred  eighty (180) days prior to the expiration of
the  Term,  to  place  upon  the  Premises   reasonable   signs  indicating  the
availability  of the Premises for lease and to show the Premises to  prospective
tenants,  all  without  being  deemed to have  caused an  eviction of Tenant and
without any  liability  to Tenant or  abatement  of Rent.  The above  rights are
subject to reasonable  security  regulations  of Tenant,  and in exercising  its
rights set forth herein,  Landlord  shall  endeavor to cause the least  possible
interference with Tenant's business.  Landlord shall at all times have the right
to  retain a key  which  unlocks  all of the  doors in the  Premises,  excluding
Tenant's  vaults and safes,  and Landlord and  Landlord's  Agents shall have the
right to use any and all means which  Landlord may deem proper to open the doors
in an emergency to obtain entry to the  Premises,  and any entry to the Premises
so  obtained  by  Landlord  or  Landlord's  Agents  shall  not be deemed to be a
forcible or unlawful entry into, or a detainer of, the Premises,  or an eviction
of Tenant from the Premises if conducted reasonably in accordance with the terms
of this Lease.


                                   ARTICLE VI

                               HAZARDOUS MATERIALS

         6.1 Definition of Hazardous Materials.  For purposes of this Lease, the
term "Hazardous  Materials" includes (i) any "hazardous materials" as defined in
Section25501(k)   of  the  California  Health  and  Safety  Code  unless  Tenant
establishes,  to the  satisfaction  of Landlord,  that because of the  quantity,
concentration, or physical or chemical characteristics, such substance or matter
does not pose a present or potential hazard to human health and safety or to the
environment, (ii)any other substance or matter which results in liability to any
person or entity from exposure to which  substance or matter under any statutory
or common law theory,  and  (iii)any  substance  or matter which is in excess of
relevant and appropriate  levels set forth in any applicable  federal,  state or

                                      -7-
<PAGE>

local law or regulation pertaining to any hazardous or toxic substance, material
or waste, or for which any applicable  federal,  state or local agency orders or
otherwise requires removal, treatment or remediation.

                                      -8-
<PAGE>

         6.2  Prohibition/Compliance.  Tenant  shall  not  cause or  permit  any
Hazardous Material (as hereinafter  defined) to be brought upon, kept or used in
or about the Premises or the Project in violation of  applicable  law by Tenant,
its  agents,  employees,   contractors  or  invitees.  If  Tenant  breaches  the
obligation  stated in the  preceding  sentence,  or if the presence of Hazardous
Materials results in unlawful  contamination of the Premises,  the Building, the
Project or any adjacent  property or if unlawful  contamination of the Premises,
the  Building,  the  Project 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 Tenant shall indemnify,  defend and hold
Landlord,  its  agents  and  contractors  harmless  from  any  and  all  claims,
judgments,  damages penalties,  fines,  costs,  liabilities or losses (including
without  limitation  diminution  in value of the  Premises or any portion of the
Project,  damages for the loss or restriction on use of rentable or usable space
or of any amenity of the Premises or Project,  damages  arising from any adverse
impact on marketing  of space in the  Premises or the Project,  and sums paid in
settlement of claims,  attorneys'  fees,  consultant fees and expert fees) which
arise during or after the 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 laws 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 Project.  This indemnification of Landlord by Tenant includes,  without
limitation,  costs  incurred  in  connection  with  any  investigation  of  site
conditions of 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,  the Building,  the Project or any adjacent  property,
caused or  permitted  by Tenant  results in any  unlawful  contamination  of the
Premises,  the  Building,  the Project or any  adjacent  property,  Tenant shall
promptly  take all actions at its sole  expense as are  necessary  to ensure the
Premises,  the  Building,  the  Project  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 imposed by any governmental order or court having
jurisdiction over the project,  provided that Landlord's approval of such action
shall first be obtained,  which approval shall not  unreasonably  be withheld so
long as such actions would not potentially have any material  adverse  long-term
or short-term effect on the Premises, the Building or the Project.

         6.3 Business.  Landlord  acknowledges that it is not the intent of this
Article 6 to prohibit Tenant from operating its business as described in Item 11
of the Basic Lease Provisions above.  Tenant may operate its business  according
to the  custom  of the  industry  so long as the use or  presence  of  Hazardous
Material  is  strictly  and  properly  monitored  according  to  all  applicable
governmental requirements.  As a material inducement to Landlord to allow Tenant
to use  Hazardous  Material in connection  with its  business,  Tenant agrees to
deliver to Landlord prior to the 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").  Tenant
shall  deliver to Landlord an updated  Hazardous  Material  List at least once a
year.  Tenant shall deliver to Landlord true and correct copies of the following
documents (hereinafter referred to as the "Documents") relating to the handling,
storage,  disposal and emission of Hazardous  Material prior to the Commencement
Date,  or if  unavailable  at the  time,  concurrent  with the  receipt  from or

                                      -9-
<PAGE>

submission  to  a  governmental   agency:   permits;   approvals;   reports  and
correspondence;  storage and management plans, notice of violations of any laws;
plans  relating to the  installation  of any storage tanks to be installed in or
under the Project (provided,  said installation of tanks shall only be permitted
after Landlord has given Tenant its written  consent to do so, which consent may
be withheld in Landlord's sole and absolute  discretion);  and all closure plans
or any  other  documents  required  by any  and all  federal,  state  and  local
governmental  agencies and authorities for any storage tanks installed in, on or
under the Project for the  closure of any such  tanks.  Tenant is not  required,
however,  to provide  Landlord with any  portion(s) of the 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 the
intent of this  Section to provide  Landlord  with  information  which  could be
detrimental to Tenant's  business should such  information  become  possessed by
Tenant's competitors.

         6.4 Termination of Lease. Notwithstanding the provisions of Section 6.2
above,  if Tenant  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,  Landlord shall
have the right to terminate the Lease in Landlord's sole and absolute discretion
(with  respect  to  any  such  matter  involving  Tenant)  and it  shall  not be
unreasonable for Landlord to withhold its consent to any proposed  assignment or
subletting  (with  respect to any such matter  involving a proposed  assignee or
sublessee).

         6.5 Testing.  At reasonable  times, and from time to time, prior to the
expiration  of the Term  Landlord  shall  have the right at its own  expense  to
conduct  appropriate  investigations  and tests of the  Premises,  Building  and
Project to demonstrate that unlawful  contamination  has occurred as a result of
Tenant's use of the Premises.  Tenant shall be  responsible  for the cost of any
investigations  and tests which  indicate that unlawful  contamination  resulted
from Tenant's use of the Premises.  Tenant shall be solely  responsible  for and
shall  defend,  indemnify  and hold the  Landlord,  its agents  and  contractors
harmless  from an against any and all claims,  costs and  liabilities  including
actual  attorneys'  fees and costs,  arising  out of or in  connection  with any
removal,  clean up,  restoration and materials  required hereunder to ensure the
Premises and any other property of whatever nature,  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 imposed by any governmental  order or court having  jurisdiction  over
the  project.  Tenant shall pay for the cost of a third party  prepared  Phase I
exit audit of the Premises at the termination of the Leases plus the cost of any
tests or remediations  reasonably  recommended in said audit to bring any Tenant
caused  contamination to meet 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 imposed by any
governmental order or court having jurisdiction over the Project.

         6.6 Tenant's  Responsibility at Conclusion of Lease.  Promptly upon the
expiration or sooner termination of this Lease, Tenant shall certify to Landlord
in writing that  (i)Tenant has made a diligent  effort to determine  whether any
Hazardous  Materials are on, under or about the Premises as a result of any acts
or omissions or Tenant or Tenant's  Agents and (ii)no such  Hazardous  Materials
exist on, under or about the Premises other than as  specifically  identified to
Landlord by Tenant in writing.  In addition,  Tenant shall provide Landlord with
independent verification (acceptable to Landlord) that (i) all permits, reports,
closure or  decertification  procedures,  if  applicable,  have been  secured or
satisfied by Tenant for its  discontinuance  of use of the  Premises  under this
Lease  and  (ii)  the  interior  of the  Premises  is free of  contamination  by
Hazardous  Materials.  If Tenant or its independent  verification  discloses the
existence of Hazardous Materials on, under or about the Premises, or if Landlord
at any time  discovers  that Tenant or Tenant's  Agents  caused or permitted the
release of a Hazardous  Material on, under,  from or about the Premises,  Tenant
shall, at Landlord's request,  immediately prepare and submit to Landlord within
thirty (30) days after such request a comprehensive  plan, subject to Landlord's
approval, specifying the actions to be taken by Tenant to return the Premises to
the condition  existing prior to the  introduction of such Hazardous  Materials.
Upon  Landlord's  approval of such cleanup plan,  Tenant shall, at Tenant's sole
cost and  expense,  without  limitation  on any rights and  remedies of Landlord
under  this Lease or at law or in equity,  immediately  implement  such plan and
proceed to clean up such Hazardous  Materials in accordance  with all Applicable
Laws and as required by such plan and this Lease.


                                   ARTICLE VII

                      OPERATING EXPENSES; TAXES; UTILITIES

         7 1. Payment of Maintenance  Expenses.  Prior to the Commencement  Date
and  thereafter  prior to the  commencement  of each of Landlord's  fiscal years
during  the  Term,  Landlord  shall  give  Tenant a  written  estimate  based on
generally  accepted  accounting  principles of Maintenance  Expenses  (hereafter
defined) for the ensuing  fiscal year or partial fiscal year as the case may be.
Tenant shall pay, as an item of Additional  Rent such estimated  amount in equal
monthly  installments,  in  advance,  on or before  the first  (1st) day of each
calendar month  concurrent with its payment of Monthly Rent. If Landlord has not
furnished  its written  estimate by the time set forth  above,  Tenant shall pay
monthly  installments  of Maintenance  Expenses at the rate  established for the
prior fiscal year,  if any;  provided that when the new estimate is delivered to
Tenant,  Tenant shall (provided it is given not less than thirty (30) days prior
written  notice) at the next  monthly  payment  date pay  Landlord  any  accrued
deficiency  based on the new  estimate,  or  Landlord  shall  credit any accrued
overpayment  based on such estimate  toward  Tenant's next  installment  payment
hereunder.  Within a reasonable period of time after the end of each fiscal year
(in no event more than one hundred  (120) days after the end of each fiscal year
unless sooner  completed by Landlord)  Landlord shall furnish Tenant a statement

                                      -10-
<PAGE>

showing in reasonable  detail the actual  Maintenance  Expenses incurred for the
period in  question.  If Tenant's  estimated  payments  are less than the actual
Maintenance Expenses as shown by the applicable statement,  Tenant shall pay the
difference to Landlord within thirty (30) days thereafter.  If Tenant shall have
overpaid  Landlord,  Landlord shall credit such overpayment toward Tenant's next
installment  payment  hereunder  or if in the last year of the Lease Term and at
Tenant's  option,  refund such overpayment  within 30 days thereafter.  When the
final  determination is made of the actual  Maintenance  Expenses for the fiscal
year in which  this  Lease  terminates,  Tenant  shall,  even if this  Lease has
terminated,  pay to Landlord  within thirty (30) days after notice the excess of
such actual Maintenance Expenses over the estimate of Maintenance Expenses paid.
Conversely,  any  overpayment  shall be rebated by Landlord to Tenant  within 30
days. If Landlord  shall  determine at any time that the estimate of Maintenance
Expenses for the current  fiscal year is or will become  inadequate  to meet all
such Maintenance Expenses for any reason,  Landlord shall immediately  determine
the  approximate  amount of such  inadequacy and issue a  supplemental  estimate
based  on  generally  accepted  accounting  principles  as to  such  Maintenance
Expenses and Tenant  shall pay any  increase as  reflected by such  supplemental
estimate,  provided  it is given not less  than 20 days  prior  written  notice.
Landlord  shall  keep or  cause  to be  kept  separate  and  complete  books  of
accounting  covering all Maintenance  Expenses,  and shall preserve for at least
twenty-four  (24)  months  after  the  close of each  fiscal  year all  material
documents  evidencing said Maintenance Expenses for that fiscal year. Tenant, at
its sole cost and expense, through any certified public accountant designated by
it, or by Tenant's or Tenant's parents financial analysis department, shall have
the right,  during reasonable  business hours and not more frequently than twice
during  any  fiscal  year,  to  examine  and/or  audit the  books and  documents
mentioned above evidencing such costs and expenses for the previous fiscal year.
Any delay or failure  by  Landlord  in  delivering  any  estimate  or  statement
pursuant  to this  Section  7.1  shall not  constitute  a waiver of its right to
require Tenant to pay all  Maintenance  Expenses  pursuant  hereto,  unless such
failure continues for a period in excess of twelve (12) months.

         7.2 Definition of Maintenance Expenses. The term "Maintenance Expenses"
means  all  reasonable  direct  costs  and  expenses  incurred  by  Landlord  or
Landlord's  Agents in connection  with the operation,  maintenance and repair of
the Outside Areas,  including,  but not limited to, the following:  actual costs
and expenses  incurred in connection  with labor and  materials  utilized in the
performance of Landlord's maintenance and repair obligations pursuant to Section
9.1;  any and all  assessments  levied  against the Premises or the Common Area,
water,  electrical and other utility services  supplied directly to the Building
and Common  Area,  removal of trash,  rubbish and other  refuse from the Outside
Areas and Common Area, cleaning of and replacement of signs of the Outside Areas
and Common Area,  including  revamping and repairs made as reasonably  required;
repair, operation and maintenance of the Common Area, including, but not limited
to,  removal of any  obstructions  not  reasonably  required for the Common Area
uses,  prohibition  and  removal of the sale or display  of  merchandise  or the
storing of materials  and/or  equipment  in the Common Area,  and payment of all
electrical,  water and other utility  charges or fees for services  furnished to
the Common Area and Outside Areas;  obtaining and maintaining  public liability,
property  damage and other forms of insurance  which Landlord may or is required
to maintain in connection  with the Building and the Common Area  (including the
payment of any  deductibles  thereunder);  costs  incurred  in  connection  with
Tenant's  compliance  of  any  laws  or  changes  in  laws  regarding  Hazardous
Materials;  equipment and supplies; employment of such personnel as Landlord may
deem reasonably necessary,  if any, to direct parking and police the Common Area
and  facilities;  the  cost  of any  capital  improvements  (other  than  tenant
improvements for specific tenants)  specifically  benefitting Tenant and made by
or on behalf of Landlord  to the  Outside  Areas or Common Area to the extent of
the amortized  amount thereof over the useful life of such capital  improvements
calculated at a market cost of funds,  all as reasonably  determined by Landlord
using generally  accepted  accounting  principles,  for each such year of useful
life  during the Term;  depreciation  amortized  over the  longest  useful  life
permitted  under the Internal  Revenue Code of machinery and  equipment  used in
connection with the maintenance and operation of the Outside Areas or the Common
Area for which a reasonable reserve has not been established as herein provided;
employment of personnel used in connection with any of the foregoing, including,
but not limited to, payment or provision for  unemployment  insurance,  workers'
compensation  insurance  and  other  employee  costs;  the  actual  cost  of any
Environmental  consultant or other services used in connection  with  Landlord's
monitoring of the Project with respect to Hazardous  Materials (such costs shall
not exceed $1,000.00 per calendar year); the cost of any tax, insurance or other
consultant  utilized  in  connection  with  the  Project;  and any  other  items
reasonably necessary from time to time to properly repair, replace, maintain and
operate the Outside Areas or the Common Area. If Landlord  elects to perform any
maintenance or repair herein described in conjunction with properties other than
the Project, and if a common maintenance  contractor is contracted with for such
purpose, the contract amount allocable to the Project, as reasonably  determined
by  Landlord,  shall  be  added to and  deemed  a part of  Maintenance  Expenses
hereunder.  Increases in  Maintenance  Expenses by reason of a  disproportionate
impact by Tenant thereon (for example,  and not by way of limitation,  increases
in costs of trash collection because of Tenant's  excessive  generation of trash
or increases  in costs of Outside  Areas or Common Area  maintenance  because of
Tenant's  unpermitted  storage of inventory or materials in the Outside Areas or
Common Area), in Landlord's  reasonable judgment,  may be billed by Landlord, as
an item of Additional Rent, directly to Tenant.

         7.3 Payment of Real  Property  Taxes.  Landlord  shall pay, at Tenant's
expense and subject to  reimbursement  by Tenant as hereinafter  set forth,  all
Real Property Taxes (as hereinafter  defined) levied against the Premises during
the Term and any Real  Property  Taxes which have accrued  during the Term.  The
amount of such  payments  by  Landlord  shall be based on tax bills and  notices
received by Landlord pertaining to the Premises (and if Tenant receives any such
tax bills or notices,  Tenant shall  immediately  forward same to Landlord)  and
such  payment  shall be made  before the last day such Real  Property  Taxes are
payable  without  penalty.  Tenant shall  reimburse  to Landlord,  as an item 

                                      -11-
<PAGE>

of Additional Rent, the full amount of such Real Property Taxes paid by Landlord
within thirty (30) days after Landlord's  statement or invoice  therefor,  which
statement or invoice shall be accompanied  by reasonable  evidence of the amount
of such Real  Property  Taxes.  Real  Property  Taxes shall not include any late
charges,  penalties or interest  attributable  to Landlord's late payment (other
than caused solely by Tenant) or any charges, assessments or levies attributable
to another tenant or another tenant's improvements.
         7.4 Definition of Real Property  Taxes.  The term "Real Property Taxes"
means any form of tax, assessment, charge, license, fee, rent tax, levy, penalty
(if a result of Tenant's  delinquency),  real  property or other tax (other than
Landlord's net income, estate, succession, inheritance, or franchise taxes), now
or hereafter imposed with respect to the Project or any part thereof  (including
any  alterations),  this  Lease  or any Rent  payable  under  this  Lease by any
authority  having the direct or indirect  power to tax, or by any city,  county,
state or federal  government or any  improvement  district or other  district or
division  thereof,  whether such tax or any portion thereof (i)is  determined by
the area of the Project or any part thereof or the Rent payable under this Lease
by Tenant  including,  but not limited to, any gross income or excise tax levied
by any of the  foregoing  authorities  with  respect  to receipt of the Rent due
under this Lease,  (ii)is levied or assessed in lieu of, in substitution for, or
in addition to, existing or additional  taxes with respect to the Project or any
part  thereof  whether  or not now  customary  or within  the  contemplation  of
Landlord or Tenant,  or (iii)is  based upon any legal or  equitable  interest of
Landlord in the Project or any part thereof.

         7.5  Apportionment  of Taxes.  If the  Project is assessed as part of a
larger parcel,  then Landlord shall equitably  apportion the Real Property Taxes
assessed  against the real  property,  which includes the Project and reasonably
determine  the amount of Real Property  Taxes  attributable  to the Project.  If
other  buildings  exist  on  the  assessed  parcel,   the  Real  Property  Taxes
apportioned  to the Project shall be based upon the ratio of the square  footage
of all  buildings  within the Project to the square  footage of all buildings on
the assessed parcel, and the amount of Real Property Taxes so apportioned to the
Project shall be included as part of Operating Expenses.  Landlord's  reasonable
determination of such apportionment shall be conclusive.

         7.6  Tax  on  Improvements;   Permitted  Contests.   Tenant  shall,  at
Landlord's  election,  be directly responsible for and shall pay the full amount
of any  increase  in Real  Property  Taxes  attributable  to any and all  Tenant
Improvements and any other  improvements of any kind whatsoever placed in, on or
about the Premises  for the benefit of, at the request of, or by Tenant.  Tenant
may contest the amount or validity  of any Real  Property  Taxes by  appropriate
proceedings,  provided  that  Tenant  gives  Landlord  prior  Notice of any such
contest and keeps Landlord advised as to all  proceedings,  and provided further
that Tenant shall continue to reimburse  Landlord for Landlord's payment of such
Real  Property  Taxes unless such  proceedings  shall operate to prevent or stay
such payment and the collection of the tax so contested.  Landlord shall join in
any such  proceedings  if any  Applicable  Laws shall so require,  provided that
Tenant shall hold  harmless,  indemnify,  protect and defend  Landlord  from and
against any liability,  claim,  demand, cost or expense in connection  therewith
including,  but not  limited to,  actual  attorneys'  fees and costs  reasonably
incurred.

         7.7 Utilities and Services.  Tenant shall be responsible  for and shall
pay promptly,  directly to the appropriate supplier, all charges for water, gas,
electricity,  heat, light, power, telephone,  refuse pickup, janitorial service,
interior landscape  maintenance and all other utilities,  materials and services
furnished  directly to Tenant or the  Premises or used by Tenant in, on or about
the Premises during the Term,  together with any taxes thereon. If any utilities
or services are not  separately  metered or assessed to Tenant,  Landlord  shall
make a reasonable  determination of Tenant's  proportionate share of the cost of
such utilities and services and Tenant shall pay such amount to Landlord,  as an
item of  Additional  Rent,  within  thirty (30) days after receipt of Landlord's
statement or invoice therefor. Alternatively, Landlord may elect to include such
cost in the  definition  of  Project  Costs,  in which  event  Tenant  shall pay
Tenant's share of such cost in the manner set forth in Section7.1.  Landlord may
also require Tenant to have any Specialized  HVAC system  separately  metered to
Tenant,  at  Tenant's  expense.  Landlord  shall  not be liable  in  damages  or
otherwise  for any  failure or  interruption  of any  utility  or other  service
furnished to the  Premises,  unless the direct  result of or directly  caused by
Landlord's gross negligence.  No such failure or interruption shall be deemed an
eviction or entitle Tenant to terminate this Lease or withhold or abate any Rent
due hereunder.


                                  ARTICLE VIII

                                   ALTERATIONS

         8.1 Permitted  Alterations.  After the Commencement  Date, Tenant shall
not make or permit any Alterations  in, or about the Premises  without the prior
written consent of Landlord (which consent shall not be unreasonably  withheld),
except for the Work defined in the  Workletter  attached  hereto as Exhibit "C",
and Alterations not exceeding Five Thousand Dollars  ($5,000.00) per occurrence.
Notwithstanding  the  foregoing,  without the prior written  consent of Landlord
(which  consent  shall  not be  unreasonably  withheld,  in no event  shall  any
Alterations  (i)affect  the exterior of the Building or the outside areas (or be
visible from  adjoining  sites),  (ii)affect or penetrate any of the  structural
portions of the Building including,  but not limited to, the roof,  (iii)require
any change to the basic floor plan of the Premises, any change to the structural
or mechanical components of the Premises, or any governmental approval or permit
as a prerequisite to the construction thereof, (iv) interfere in any manner with
the proper  functioning of or Landlord's  access to any mechanical,  electrical,
plumbing or HVAC  systems,  facilities  or  equipment  located in or serving the
Building,  or (v)diminish the value of the Premises.  All  Alterations  shall be
constructed  pursuant to plans and  specifications  previously  provided to and,
when  

                                      -12-
<PAGE>

applicable,  approved  in writing by  Landlord,  shall be  installed  by a
licensed  contractor at Tenant's sole expense in compliance  with all Applicable
Laws, and shall be accomplished in a good and workmanlike  manner  conforming in
quality and design with the Premises  existing as of the  Commencement  Date. No
Hazardous   Materials    including,    but   not   limited   to,   asbestos   or
asbestos-containing materials, shall be used by Tenant or Tenant's Agents in the
construction of any Alterations  permitted  hereunder.  All Alterations  made by
Tenant  shall be and become  the  property  of  Landlord  upon the  installation
thereof and shall not be deemed Tenant's Personal Property;  provided,  however,
that except for the Work defined in the  Workletter  attached  hereto as Exhibit
"C", Landlord may, at its option,  require that Tenant,  upon the termination of
this Lease, at Tenant's expense,  remove any or all  nonstructural  Alterations,
except  Alterations  required  by law,  installed  by or on behalf of Tenant and
return the Premises to its condition as of the Commencement  Date of this Lease,
normal wear and tear  excepted.  Notwithstanding  any other  provisions  of this
Lease,  Tenant  shall be solely  responsible  for the  maintenance,  repair  and
replacement of any and all Alterations made by or on behalf of Tenant (including
without limitation by Landlord on behalf of Tenant) to the Premises.

         8.2 Trade Fixtures.  Tenant shall, at its own expense, provide, install
and maintain in good condition all of Tenant's Personal Property required in the
conduct of its business in the Premises.

         8.3  Mechanic's  Liens.  Tenant shall give Landlord  Notice of Tenant's
intention to perform any work on the Premises which might result in any claim of
lien at least twenty (20) days prior to the  commencement of such work to enable
Landlord  to post and  record  a notice  of  nonresponsibility  or other  notice
Landlord deems proper prior to the  commencement of any such work.  Tenant shall
not permit any mechanic's,  materialmen's or other liens to be filed against the
property of which the Premises are a part or against Tenant's leasehold interest
in the  Premises.  If Tenant fails to cause the release of record of any lien(s)
filed against the Premises or its leasehold estate therein by payment or posting
of a proper bond within ten (10) days from the date of the lien filing(s),  then
Landlord  may, at  Tenant's  expense,  cause such  lien(s) to be released by any
means Landlord deems proper including, but not limited to, payment of or defense
against the claim giving rise to the  lien(s).  All sums  reasonably  disbursed,
deposited or incurred by Landlord in connection  with the release of the lien(s)
including,  but not limited to, all costs,  expenses and actual attorneys' fees,
shall be due and payable by Tenant to Landlord,  as an item of Additional  Rent,
on demand by Landlord,  together with interest  thereon at the  Applicable  Rate
from the date of such demand until paid by Tenant.


                                   ARTICLE IX

                             MAINTENANCE AND REPAIR

         9.1 Landlord's Maintenance of Outside Areas. Landlord shall, subject to
receiving Tenant's payment of Maintenance Expenses,  and subject to Section 9.2,
Article XII and Article XIII,  maintain in good condition and repair the Outside
Areas  and  every  part  thereof,  including  but not  limited  to,  landscaping
(including replacement thereof), sprinkler systems, walkways, parking areas, and
approved signage. Such maintenance shall include pest control, restriping of the
parking areas and painting of the exterior  walls of the  Building,  as and when
the same becomes  necessary in  Landlord's  sole  discretion  which shall not be
unreasonable,  maintenance and repair of the foundations, exterior walls and the
structural  condition of interior bearing walls. The cost of any maintenance and
repairs  on the part of  Landlord  provided  for in this  Section  9.1  shall be
amortized over the longest useful life permitted under the Internal Revenue Code
and shall be considered  part of Maintenance  Expenses and paid by Tenant in the
manner set forth in Section 7.1,  except that repairs which Landlord deems arise
out of any act or  omission of Tenant or  Tenant's  Agents  shall be made at the
expense of Tenant.  Landlord's obligation to repair and maintain hereunder shall
be limited to the cost of effecting such repair and  maintenance and in no event
shall  Landlord be liable for any costs or  expenses in excess of said  amounts,
including but not limited to any  consequential  damages,  opportunity  costs or
lost profits  incurred or suffered by Tenant.  Landlord  shall be responsible at
Landlord's  sole cost and expense to repair any damage to the Premises caused by
Landlord's  or  Landlord's  Agents'  negligence,  willful  acts or  omissions or
default.

         9.2. Tenant's  Maintenance and Repair Obligations.  Except as otherwise
provided,  Tenant shall at all times during the Term of this Lease,  at Tenant's
sole  cost and  expense,  clean,  keep,  maintain,  repair  and  make  necessary
improvements  to, the  Building  and every  part  thereof  and all  improvements
therein or thereto,  in good and sanitary  order and condition to the reasonable
satisfaction  of Landlord and in compliance with all Applicable  Laws.  Tenant's
repair and maintenance obligations herein shall include, but are not limited to,
all necessary  maintenance and repairs to all portions of the Building,  and all
exterior entrances, all glass, windows, window casements,  show window moldings,
partitions,  doors, doorjambs,  door closures,  hardware,  fixtures,  electrical
lighting and outlets,  plumbing  fixtures,  sewage  facilities,  interior walls,
floors,  ceilings,  skylights,  fans and exhaust  equipment,  fire  extinguisher
equipment and systems,  the roof of the Building,  all HVAC  equipment,  and all
repairs to Specialized HVAC (as hereinafter defined). As part of its maintenance
obligations  hereunder,  Tenant shall, at Landlord's  request,  provide Landlord
with  copies of all  maintenance  schedules  regarding  the  maintenance  of the
Building, reports and notices prepared by, for, or on behalf of Tenant. Landlord
may impose  reasonable  restrictions and requirements with respect to repairs by
Tenant,  which repairs shall be at least equal in quality to the original  work,
and the  provisions  of Section  8.3 shall apply to all such  repairs.  Tenant's
obligation  to  repair  includes  the  obligation  to  replace,   as  necessary,
regardless of whether 

                                      -13-
<PAGE>

the benefit of such  replacement  extends beyond the Term,
subject, however, to the following: So long as:

         1.       Tenant is not in default;

         2.       Tenant  submits  reasonably   satisfactory  evidence  of  
                  payment  and maintenance,  including  without  limitation  
                  copies of all  invoices, receipts, maintenance records and the
                  like; and 

         3.       All systems,  equipment and other items or things provided  
                  herein or contemplated  hereby are in good condition, working 
                  order and otherwise in compliance with the terms of this 
                  Lease;

as soon as reasonably  possible after the expiration of the Lease Term, Landlord
shall (partially) reimburse Tenant for the reasonable cost of a replacement item
pro rata based upon Landlord's  reasonable  determination of that portion of the
useful life of such item which will extend beyond the Term, provided that, prior
to making any expenditure for such replacement item:

         A.       Tenant notifies Landlord in writing of Tenant's desire to 
                  replace the item;

         B.       Tenant provides to Landlord  adequate  information  concerning
                  the reasonable  cost,  anticipated useful life, type of item 
                  to be used as a replacement (name,  model number,  etc.) and 
                  such other information as Landlord shall reasonably request; 
                  and

         C.       Landlord  consents  to  reimburse  a portion  of the cost of 
                  such  replacement  item as  provided herein.

Such consent  pursuant to provision C shall not to be  unreasonably  withheld or
delayed,  but shall only be required to be given after  Landlord  receives  from
Tenant the written notice and other information contemplated by provisions A and
B above,  which must actually be received by Landlord at least five (5) business
days  prior  to   Tenant's   proposed   purchase   of  the   replacement   item.
Notwithstanding  the fact  that  Landlord  shall  make its  determination  as to
whether  or not a  replacement  item is  eligible  for  (partial)  reimbursement
pursuant to the foregoing  provisions  within five(5) business days after actual
receipt of the written notice and other information contemplated by provisions A
and B above,  Landlord  need not make a  determination  as to or pay the  actual
amount  of such  (partial)  reimbursement  until  the  expiration  of the  Term,
Tenant's  qualification for the (partial)  reimbursement  pursuant to provisions
1,2 and 3 above and after Landlord's inspection of the then current condition of
the relevant replacement item to be conducted  immediately after the end of said
Term,  Landlord's  reasonable  determination of the remaining useful life of the
replacement  item. Any special or  above-standard  heating,  ventilating and air
conditioning   installed  by,  on  behalf  of,  or  at  the  request  of  Tenant
("Specialized  HVAC"),  shall be paid for and  maintained  by Tenant at Tenant's
sole cost and expense.  Notwithstanding  the foregoing,  Landlord shall have the
right,  upon Notice to Tenant, to undertake the  responsibility  for maintenance
and repair of automatic fire extinguisher  equipment,  such as sprinkler systems
and alarms,  Specialized  HVAC and other  obligations of Tenant  hereunder which
Landlord deems  appropriate to undertake,  in which event the cost thereof shall
be included as part of Maintenance Expenses and paid by Tenant in the manner set
forth in Section 7.1.

         9.3  Waiver.  Tenant  hereby  waives  all  rights  provided  for by the
provisions of Sections1941 and 1942 of the California Civil Code and any present
or future  laws  regarding  Tenant's  right to make  repairs  at the  expense of
Landlord or to terminate this Lease because of the condition of the Premises.

         9.4  Self-Help.  If Tenant  refuses or fails to repair and maintain the
Premises  as  required  hereunder  within  ten (10)  days from the date on which
Landlord makes a written demand on Tenant to effect such repair and maintenance,
Landlord  may enter upon the  Premises  and make such  repairs  or perform  such
maintenance  without  liability to Tenant for any loss or damage that may accrue
to Tenant or its merchandise, fixtures or other property or to Tenant's business
by reason  thereof,  unless  due to the  negligence  or  willful  misconduct  of
Landlord.  All sums reasonably  disbursed,  deposited or incurred by Landlord in
connection  with such repairs or  maintenance,  plus percent (5%) for  overhead,
shall be due and payable by Tenant to Landlord,  as an item of Additional  Rent,
on demand by Landlord,  together  with interest at the  Applicable  Rate on such
aggregate amount from the date of such demand until paid by Tenant.


                                    ARTICLE X

                             COMMON AREA AND PARKING

In the event that the  Building  becomes  multi-tenanted,  the  following  shall
apply.

         10.1 Grant of  Nonexclusive  Common Area  License  and Right.  Landlord
hereby  grants to Tenant and its permitted  subtenants,  in common with Landlord
and all persons,  firms and corporations  conducting business in the Project and
their respective customers,  guests, licenses, invitees,  subtenants,  employees
and agents, the nonexclusive license and right to use the Common Area within the
Project for vehicular parking, for pedestrian and vehicular ingress,  egress and
travel,  and for such other  purposes  and for doing such other things as may be
provided for, authorized and/or permitted by the Restrictions, such nonexclusive
license and right to be appurtenant to Tenant's leasehold estate created by this
Lease. The nonexclusive license and rights granted pursuant to the provisions of
this  ArticleX  shall be subject to the  provisions of the  Restrictions,  which
pertaining  any way to the Common  Area  covered by such  Restrictions,  and the
provisions of this Lease.

                                      -14-
<PAGE>

         10.2 Use of  Common  Area.  Notwithstanding  anything  to the  contrary
herein, Tenant and its successors, assigns, employees, agents and invitees shall
use  the  Common  Area  only  for  the  purposes  permitted  hereby  and  by the
Restrictions and the Rules and Regulations. All uses permitted within the Common
Area shall be  undertaken  with reason and judgment so as not to interfere  with
the primary use of the Common Area which is to provide parking and vehicular and
pedestrian  access throughout the Common Area within the Project and to adjacent
public streets for the Landlord,  Landlord's Agents, its tenants, subtenants and
all persons,  firms and corporations  conducting business within the Project and
their  respective  customers,  guests and  licensees.  In no event shall  Tenant
erect,  install,  or place,  or cause to be  erected,  installed,  or placed any
structure,  building,  trailer,  fence, wall, signs or other obstructions on the
Common Area except as otherwise  permitted herein and in the  Restrictions,  and
Tenant  shall not store or sell any  merchandise,  equipment or materials on the
Common Area.

         10.3 Control of Common Area. Subject to provisions of the Restrictions,
all Common Area and all improvements located from time to time within the Common
Area shall at all times be subject to the  exclusive  control and  management of
the Landlord.  Landlord shall have the right to construct,  maintain and operate
lighting  facilities within the Common Area; to police the Common Area from time
to time;  to change the area,  level,  location and  arrangement  of the parking
areas and other  improvements  within the Common  Area;  to restrict  parking by
tenants,  their  officers,  agents and employees to employee  parking areas;  to
enforce parking  charges (by operation of meters or otherwise);  to close all or
any portion of the Common Area or improvements therein to such extent as may, in
the  opinion  of  counsel  for  Landlord,  be  legally  sufficient  to prevent a
dedication  thereof or the  accrual of any rights to any person or to the public
therein;  to close  temporarily all or any portion of the Common Area and/or the
improvements  thereon; to discourage  noncustomer parking; and to do and perform
such other acts in and to said Common Area and  improvements  thereon as, in the
use of good business judgment, Landlord shall determine to be advisable.

         10.4  Maintenance  of Common Area.  Landlord shall operate and maintain
(or cause to be  operated  and  maintained)  the  Common  Area in a  first-class
condition,  in such manner as Landlord in its sole  discretion  shall  determine
from time to time. Without limiting the scope of such discretion, Landlord shall
have the full  right and  authority  to  employee  or cause to be  employed  all
personnel and to make or cause to be made all rules and  regulations  pertaining
to or necessary for the proper  operation and maintenance of the Common Area and
the  improvements  located  thereon.  The cost of such maintenance of the Common
Area shall be included as part of Project Costs.  No part of the Common Area may
be used for the storage of any items,  including without  limitation,  vehicles,
materials,  inventory and equipment.  All trash and other refuse shall be placed
in designated  receptacles.  No work of any kind including,  but not limited to,
painting,  drying,  cleaning,  repairing,  manufacturing,  assembling,  cutting,
merchandising or displaying shall be permitted upon the Common Area.

         10.5 Revocation of License.  All Common Area and  improvements  located
thereon which Tenant is permitted to use and occupy  pursuant to the  provisions
of this Lease are to be used and occupied  under a revocable  license and right,
and if any  such  license  be  revoked,  or if  the  amount  of  such  areas  be
diminished,  Landlord  shall not be subject to any liability nor shall Tenant be
entitled to compensation or diminution or abatement of Rent, and such revocation
or diminution of such areas shall not be deemed constructive or actual eviction.
It  is  understood  and  agreed  that  the   condemnation  or  other  taking  or
appropriation  by any  public  or  quasi-public  authority,  or  sale in lieu of
condemnation,  of all or any portion of the Common Area shall not  constitute  a
violation of Landlord's agreements  hereunder,  and Tenant shall not be entitled
to participate in or make any claim for any award or other condemnation proceeds
arising   from  any  such   taking  or   appropriation   of  the  Common   Area.
Notwithstanding  the foregoing,  so long as no Event of Default has occurred and
is continuing,  Landlord  shall provide to Tenant the number of vehicle  parking
spaces set forth in Item15 of the Basic  Lease  Provisions  throughout  the Term
(subject to the rights of Landlord under this ArticleX).

         10.6  Landlord's  Reserved  Rights.  Landlord  reserves  the  right  to
install,  use, maintain,  repair,  relocate and replace pipes, ducts,  conduits,
wires and appurtenant  meters and equipment  included in the Premises or outside
the  Premises,  change the  boundary  lines of the  Project  and  install,  use,
maintain,  repair,  alter or  relocate,  expand and  replace  any  Common  Area;
provided,  however,  Landlord shall not unreasonably interfere with Tenant's use
of the Premises.  Such rights of Landlord shall include, but are not limited to,
designating from time to time certain portions of the Common Area as exclusively
for the benefit of certain tenants in the Project.

         10.7 Parking. Tenant shall be entitled to the number of vehicle parking
spaces set forth in Item15 of the Basic Lease Provisions,  which spaces shall be
unreserved and  unassigned,  on those portions of the Common Area  designated by
Landlord for parking. Tenant shall not use more parking spaces than such number.
All  parking  spaces  shall be used only for  parking by vehicles no larger than
full-size passenger  automobiles pick-up trucks or delivery trucks. Tenant shall
not permit or allow any vehicles  that belong to or are  controlled by Tenant or
Tenant's employees,  suppliers,  shippers,  customers, or invitees to be loaded,
unloaded,  or parked in areas other than those  designated  by Landlord for such
activities.  If  Tenant  permits  or  allows  any of the  prohibited  activities
described above, then Landlord shall have the right, without notice, in addition
to such other rights and remedies  that Landlord may have, to remove or tow away
the  vehicle  involved  and  charge  the cost to  Tenant,  which  cost  shall be
immediately  payable  upon demand by  Landlord.  Parking  within the Common Area
shall be limited to striped parking stalls, and no parking shall be permitted in
any driveways, accessways or in any area which would prohibit or impede the free
flow of traffic  within the Common Area. If Tenant parks  vehicles  overnight at
the Project, Tenant shall indemnify,  defend and hold Landlord free and harmless
of,  from and  against  any and all claims,  demands,  suits,  damages,  losses,
liabilities,  costs,  and/or expenses  (including  reasonable  attorneys'  fees)
arising out of,  resulting  from or incurred in  connection  with the  overnight

                                      -15-
<PAGE>

parking of  vehicles  at the  project.  Vehicles  which have been  abandoned  or
parking  in  violation  of the terms  hereof  may be towed  away at the  owner's
expense.

                                   ARTICLE XI
                             INDEMNITY AND INSURANCE

         11.1  Indemnification.  To the fullest extent  permitted by law, Tenant
hereby  agrees to defend (with  attorneys  reasonably  acceptable  to Landlord),
indemnify,  protect and hold  harmless  Landlord and  Landlord's  Agents and any
successors  to all or any portion of  Landlord's  interest in the  Premises  and
their   directors,    officers,   partners,   employees,    authorized   agents,
representatives, affiliates and Mortgagees, from and against any and all damage,
loss,  claim,  liability  and expense  including,  but not  limited  to,  actual
attorneys'  fees and legal costs,  incurred  directly or indirectly by reason of
any claim,  suit or judgment brought by or on behalf of (i)any person or persons
for  damage,  loss or  expense  due to, but not  limited  to,  bodily  injury or
property  damage  sustained  by such  person or persons  which arise out of, are
occasioned  by, or are in any way  attributable  to the use or  occupancy of the
Premises or the acts or omissions  of the Tenant or Tenant's  Agents in or about
the Premises or the Project (including, but not limited to, any Event of Default
hereunder), or (ii)Tenant or Tenant's Agents for damage, loss or expense due to,
but not limited to,  bodily  injury or property  damage  which arise out of, are
occasioned  by, or are in any way  attributable  to the use of any of the Common
Area,  except to the  extent  caused by the sole  active  negligence  or willful
misconduct of Landlord.

         11.2.  Property  Insurance.  Landlord  shall  obtain  and keep in force
during  the Term,  (i) an "all  risk" or  "special  causes of  action"  property
policy,  including  earthquake and flood, in the amount of the full  replacement
cost  covering the  Premises,  the  Building  and objects  owned by Landlord and
normally covered under a "Boiler and Machinery"  policy and any Alterations made
by or at the  request of Tenant,  and (ii) an "all risk" or  "special  causes of
action" policy of business interruption and/or loss of income insurance covering
a period of one (1) year, with loss payable to Landlord to the extent of Monthly
Rent and Additional  Rent only.  Tenant shall within ten (10) days of receipt of
Landlord's invoice or statement for such insurance pay or reimburse Landlord the
cost of same such  insurance  in an amount  not to exceed Six  Thousand  Dollars
($6,000.00)  per year.  Tenant shall maintain and keep in force at its sole cost
and expense insurance covering its Personal Property.

         11.3  Liability/Miscellaneous  Insurance. Tenant shall maintain in full
force and  effect at all times  during the Term  (plus  such  earlier  and later
periods as Tenant may be in  occupancy  of the  Premises),  at its sole cost and
expense,  for the  protection  of Tenant,  Landlord  and  Landlord's  Agents and
Mortgagees,  policies of insurance issued by a carrier or carriers in accordance
with Section 11.8 which afford the following  coverages:  (i)statutory  workers'
compensation,  (ii)employer's  liability  with  minimum  limits of Five  Hundred
Thousand Dollars ($500,000), and (iii)comprehensive/commercial general liability
including,  but not limited to,  blanket  contractual  liability  (including the
indemnity set forth in Section11.1),  fire and water legal liability, broad form
property damage,  personal injury,  completed  operations,  products  liability,
independent contractors,  and, if alcoholic beverages are served, or sold in the
Premises,  comprehensive Host Liquor Liability Insurance,  and owned,  non-owned
and hired vehicles, of not less than the limits set forth in Item17 of the Basic
Lease  Provisions  (or current  limit  carried,  whichever is  greater),  naming
Landlord,  the  Mortgagees,  and the Additional  Insureds named in Item16 of the
Basic Lease Provisions as additional  insureds,  and including a cross-liability
or severability interests indorsement.

         11.4 Hazardous  Materials.  In the event Landlord  consents to Tenant's
use,  generation  or  storage  of  Hazardous  Materials  on,  under or about the
Premises  pursuant to Section6.2,  and if at any time Tenant's net worth is less
than Twenty-Five Million Dollars (25,000,000.00),  Landlord shall have the right
to require  Tenant,  at Tenant's  sole cost and expense,  to purchase  insurance
specified  and approved by Landlord,  with coverage of no less than Five Million
Dollars ($5,000,000),  insuring (i)any Hazardous Materials shall be removed from
the Premises,  (ii)the Premises shall be restored to a clean, neat,  attractive,
healthy, safe and sanitary condition, and (iii)any liability of Tenant, Landlord
and Landlord's Agents arising from such Hazardous Materials.

         11.5 Deductibles;  Blanket Coverage.  Any policy of Property  Insurance
required pursuant to this Lease containing a deductible  exceeding Five Thousand
Dollars ($5,000) per occurrence must be approved in writing by Landlord prior to
the issuance of such policy, which approval shall not be unreasonably  withheld.
Tenant  shall be solely  responsible  for the  payment  of any  deductible.  Any
Property  Insurance required of Tenant pursuant to this Lease may be provided by
means  of  a  so-called  "blanket  policy",  so  long  as  (i)the  Premises  are
specifically covered (by rider, endorsement or otherwise), (ii)the limits of the
policy are applicable on a "per location"  basis to the Premises and provide for
restoration of the aggregate limits, and (iii)the policy otherwise complies with
the provisions of this Lease.

         11.6 Increased Coverage.  In the event that Tenant exercises its Option
to Extend as defined in the Rider No. 1 to Lease attached  hereto,

                                      -16-
<PAGE>

Tenant shall provide Landlord,  at Tenant's expense,  with such increased amount
of existing  insurance,  and such other  insurance as Landlord or the Mortgagees
may reasonably require, in coverages and amounts comparable to similar users and
buildings in the general area.

         11.7  Sufficiency of Coverage.  Neither  Landlord nor any of Landlord's
Agents makes any representation that the types of insurance and limits specified
to be carried by Tenant  under this Lease are  adequate  to protect  Tenant.  If
Tenant believes that any such insurance  coverage is insufficient,  Tenant shall
provide, at its own expense, such additional insurance as Tenant deems adequate.
Nothing  contained  herein shall limit Tenant's  liability under this Lease, and
Tenant's  liability  under  any  provision  of  this  Lease,  including  without
limitation under any indemnity provisions, shall not be limited to the amount of
any insurance obtained.

         11.8  Insurance   Requirements.   Tenant's  insurance  (i)shall  be  in
accordance with the above  requirements and shall be carried with companies that
have a Best's policyholder's rating of not less than "A", (ii)shall provide that
such policies shall not be subject to cancellation  except after at least thirty
(30) days prior written notice to Landlord,  and (iii)shall be primary,  and any
insurance  carried by Landlord or  Landlord's  Agents shall be  noncontributing.
Tenant's  policy or policies,  or duly executed  certificates  for them shall be
deposited with Landlord prior to the Commencement Date. Prior to renewal of such
policies  a  binder  evidencing  continued  coverage  shall  be  deposited  with
Landlord,  which binder shall be replaced by a certificate  of insurance  within
sixty (60) days. If Tenant fails to procure and maintain the insurance  required
to be  procured  by Tenant  under this  Lease,  Landlord  may,  but shall not be
required  to,  order such  insurance at Tenant's  expense.  All sums  reasonably
disbursed,  deposited or incurred by Landlord in connection therewith including,
but not limited to, all costs, expenses and actual attorneys' fees, shall be due
and payable by Tenant to Landlord,  as an item of Additional  Rent, on demand by
Landlord, together with interest thereon at the Applicable Rate from the date of
such demand until paid by Tenant.  Notwithstanding  the  foregoing,  if Landlord
orders such insurance on Tenant's  behalf,  and Tenant did in fact maintain such
insurance  without  interruption as required in this Section 11.8, then Landlord
shall bear the cost of the insurance that Landlord ordered on Tenant's behalf.

         11.9 Landlord's  Disclaimer.  Notwithstanding  any other  provisions of
this Lease, and to the fullest extent permitted by law,  Landlord and Landlord's
Agents  shall  not be  liable  for any loss or damage  to  persons  or  property
resulting from theft, vandalism, fire, explosion, falling materials, glass, tile
or sheetrock,  steam,  gas,  electricity,  water or rain which may leak from any
part of the Premises, or from the pipes, appliances or plumbing works therein or
from the roof,  street or subsurface or  whatsoever,  unless caused by or due to
the sole active negligence or willful misconduct of Landlord.  Tenant shall give
prompt  Notice to Landlord in case of a casualty,  accident or repair  needed to
the Premises.

         11.10 Waiver of Subrogation.  Landlord and Tenant each hereby waive all
rights of recovery against the other and against the officers, employees, agents
and  representatives of the other, on account of loss by or damage to any person
or the waiving party's property or the property of others under its control,  to
the  extent  that  such loss or damage  is  

                                      -17-
<PAGE>

insured  against  under any fire and extended  coverage  insurance  policy which
either  may  have or is  required  to have in  force  at the time of the loss or
damage.  Landlord  and Tenant shall each obtain from their  respective  insurers
under all policies of fire, theft, public liability, worker's compensation,  and
other insurance  maintained during the Term of this Lease covering the Building,
or any portion of it, or operations in it, a waiver of all rights of subrogation
that the insurer of one party might have against the other  party.  Landlord and
Tenant shall each  indemnify  the other  against any loss or expense,  including
reasonable attorney's fees, resulting from the failure to obtain this waiver.

                                   ARTICLE XII

                              DAMAGE OR DESTRUCTION

         12.1 Landlord's  Obligation to Rebuild.  If the Premises are damaged or
destroyed by fire or other casualty (a  "Casualty"),  Tenant shall promptly give
notice thereof to Landlord, and Landlord shall thereafter repair the Premises as
set forth in  Sections12.4  and 12.5 unless  Landlord has the right to terminate
this Lease as provided in  Section12.2  and  Landlord  elects to so terminate or
Tenant has the right to  terminate  this Lease as  provided in  Section12.3  and
Tenant elects to so terminate.

         12.2  Landlord's  Right to Terminate.  Landlord shall have the right to
terminate  this Lease  following  a  Casualty  if any of the  following  occurs:
(i)insurance proceeds (together with any additional amounts Tenant elects, at is
option,  to contribute) are not available to Landlord to pay one hundred percent
(100%) of the cost to fully repair the Premises,  excluding the deductible  (for
which  Tenant  shall  pay  Tenant's  share  of such  deductible;  (ii)Landlord's
Architect  determines that the Premises cannot,  with reasonable  diligence,  be
fully repaired by Landlord (or cannot be safely repaired because of the presence
of  hazardous  factors  including,  but not  limited  to,  Hazardous  Materials,
earthquake faults,  radiation,  chemical waste and other similar dangers) within
one hundred eighty (180) days after the date of such Casualty; (iii)the Premises
are  destroyed  or damaged  during the last twelve  (12) months of the Term;  or
(iv)an  Event of Default  has  occurred  and is  continuing  at the time of such
Casualty and  continues  unabated for thirty (30) days  thereafter.  If Landlord
elects  to  terminate  this  Lease   following  a  Casualty   pursuant  to  this
Section12.2,  Landlord  shall give Tenant  Notice of its  election to  terminate
within thirty (30) days after Landlord has knowledge of such Casualty,  and this
Lease shall terminate fifteen (15) days after the date of such Notice.

         12.3 Tenant's  Right to Terminate.  Subject to the latter terms hereof,
Tenant shall have the right to terminate this Lease following the destruction of
the Premises (or damage to the  Premises so extensive as to  reasonably  prevent
Tenant's  substantial use and enjoyment of the Premises) if any of the following
occurs: (i)the Premises cannot, with reasonable diligence,  be fully repaired by
Landlord  within  two  hundred  (200)  days  after  the  date of the  damage  or
destruction,  as determined by Landlord's  Architect;  (ii)the  Premises  cannot
safely be repaired  because of the  presence  of  hazardous  factors,  including
Hazardous  Materials,  earthquake  faults,  radiation,  chemical waste and other
similar dangers; or (iii)the damage or destruction occurs during the last twelve
(12) months of the Term and cannot, with reasonable diligence, be fully repaired
by Landlord within ninety (90) days after the date of the destruction or damage,
as determined by Landlord's  Architect.  Notwithstanding  the foregoing,  Tenant
shall not have the right to terminate  under this  Section12.3 if (a)an Event of
Default has occurred and is continuing at the time of such damage or destruction
or at the time of  exercising  the  right to  terminate,  or  (b)the  damage  or
destruction was caused,  in whole or in part, by the act or omission of Tenant's
or Tenant's  Agents.  If Tenant elects to terminate  this Lease pursuant to this
Section12.3,  Tenant  shall give  Landlord  Notice of its  election to terminate
within thirty (30) days after the date of such damage or  destruction,  and this
Lease shall terminate fifteen (15) days after the date of such Notice.

         12.4 Effect of  Termination.  If this Lease is  terminated  following a
Casualty pursuant to Section12.2 or Section12.3,  Landlord shall, subject to the
rights of the  Mortgagees,  be entitled to receive and retain all the  insurance
proceeds  resulting  from or  attributable  to such  Casualty,  except for those
proceeds  payable under policies  obtained by Tenant which  specifically  insure
Tenant's  Personal  Property.  If  neither  party  exercises  any such  right to
terminate  this Lease,  this Lease will  continue in full force and effect,  and
Landlord shall,  promptly  following the tenth (10th) day after the date of such
Casualty  and receipt of the  amounts  set forth in clause (i) of Section  12.2,
commence the process of obtaining necessary permits and approvals for the repair
of the  Premises,  and  shall  commence  such  repair  and  prosecute  the  same
diligently  to completion as soon  thereafter  as is  practicable.  Tenant shall
fully  cooperate with Landlord in removing  Tenant's  Personal  Property and any
debris from the Premises to facilitate the making of such repairs.

         12.5 Limited  Obligation to Repair.  Landlord's  obligation,  should it
elect or be  obligated  to repair the  Premises  following a Casualty,  shall be
limited to the basic Building and Tenant  Improvements  and Tenant shall, at its
expense,  replace  or  fully  repair  all  Tenant's  Personal  Property  and any
Alterations  installed by Tenant  existing at the time of such Casualty.  If the
Premises are to be repaired in accordance with the foregoing,  Tenant shall make
available to Landlord any portion of  insurance  proceeds it receives  which are
allocable to the Tenant Improvements.

         12.6  Abatement  of Monthly  Rent.  During  any period  when a mutually
agreed  upon  third  party  architect   reasonably   determines  that  there  is
substantial  interference  with  Tenant's  use of the  Premises  by  reason of a
Casualty,  Monthly Rent shall be temporarily  abated in proportion to the degree
of such  substantial  interference,  but  only  to the  extent  of any  business
interruption  or loss of income  insurance  proceeds  received by Landlord  from
Tenant's insurance described in Section11.2.  Such abatement shall commence upon
the date  Tenant  notifies  Landlord  of such  Casualty  and  shall end upon the

                                      -18-
<PAGE>

Substantial  Completion of the repair of the Premises which Landlord  undertakes
or is  obligated  to  undertake  hereunder.  Tenant shall not be entitled to any
compensation  or  damages  from  Landlord  for loss of the use of the  Premises,
Tenant's Personal Property or other damage or any inconvenience  occasioned by a
Casualty or by the repair or restoration of the Premises thereafter,  including,
but not limited to, any consequential damages, opportunity costs or lost profits
incurred  or  suffered  by  Tenant.  Tenant  hereby  waives  the  provisions  of
Section1932(2)  and  Section1933(4)  of  the  California  Civil  Code,  and  the
provisions of any similar or successor statues.

         12.7 Landlord's  Determination.  The  determination  in good faith by a
mutually  agreed upon third party architect of or relating to the estimated cost
of repair of any damage,  replacement  cost, the time period required for repair
or the  interference  with or  suitability  of the  Premises for Tenant's use or
occupancy shall be conclusive for purposes of this ArticleXII and ArticleXIII.


                                  ARTICLE XIII

                                  CONDEMNATION

         13.1 Total  Taking--Termination.  If title to the  Premises  or so much
thereof  is taken for any  public or  quasi-public  use under any  statute or by
right of eminent domain so that  reconstruction  of the Premises will not result
in the Premises being reasonably  suitable for Tenant's continued  occupancy for
the uses and purposes  permitted by this Lease, this Lease shall terminate as of
the date possession of the Premises or part thereof is so taken.

         13.2  Partial  Taking.  If any part of the  Premises  is taken  for any
public or  quasi-public  use under any statute or by right of eminent domain and
the remaining part is reasonably  suitable for Tenant's continued  occupancy for
the uses  permitted by this Lease,  this Lease  shall,  as to the part so taken,
terminate as of the date that  possession  of such part of the Premises is taken
and the Monthly Rent shall be reduced in the same proportion than the floor area
of the portion of the Premises so taken (less any addition  thereto by reason of
any  reconstruction)  bears  to the  original  floor  area of the  Premises,  as
reasonably  determined by Landlord or Landlord's  Architect.  Landlord shall, at
its own cost and  expense,  make all  necessary  repairs or  alterations  to the
Premises  so as to make  the  portion  of the  Premises  not  taken  a  complete
architectural  unit. Such work shall not, however,  exceed the scope of the work
done by Landlord in originally  constructing the Premises.  If severance damages
from the  condemning  authority  are not  available  to Landlord  in  sufficient
amounts to permit  such  restoration,  Landlord  may  terminate  this Lease upon
Notice to Tenant.  Monthly Rent due and payable  hereunder  shall be temporarily
abated during such restoration period in proportion to the degree to which there
is  substantial  interference  with Tenant's use of the Premises,  as reasonably
determined  by Landlord or  Landlord's  Architect.  Each party hereby waives the
provisions of  Section1265.130 of the California Code of Civil Procedure and any
present or future law allowing  either  party to petition the Superior  Court to
terminate  this  Lease in the  event of a  partial  taking  of the  Building  or
Premises.

         13.3 No  Apportionment  of Award.  Any award for any  partial  or total
taking shall be  apportioned  between the  respective  interests of Landlord and
Tenant in accordance with California law.

         13.4 Temporary  Taking.  No temporary taking of the Premises (which for
purposes  hereof  shall mean a taking of all or any part of the Premises for one
hundred eighty (180) days or less) shall terminate this Lease or give Tenant any
right to any  abatement  of Rent.  Any award  made to Tenant by reason  for such
temporary  taking  shall  belong  entirely to Tenant and  Landlord  shall not be
entitled to share therein. Each party agrees to execute and deliver to the other
all  instruments  that may be  required to  effectuate  the  provisions  of this
Section13.4.

         13.5 Sale Under  Threat of  Condemnation.  A sale made in good faith to
any  authority  having  the power of  eminent  domain,  either  under  threat of
condemnation or while  condemnation  proceedings are pending,  shall be deemed a
taking under the power of eminent domain for all purposes of this ArticleXIII.


                                   ARTICLE XIV

                            ASSIGNMENT AND SUBLETTING

         14.1 Prohibition. Tenant shall not directly or indirectly,  voluntarily
or by  operation  of  law,  assign  (which  term  shall  include  any  transfer,
assignment,  pledge,  mortgage or  hypothecation)  this  Lease,  or any right or
interest  hereunder,  or sublet the Premises or any part  thereof,  or allow any
other person or entity to occupy or use all or any part of the Premises  without
first obtaining the written consent of Landlord in each instance,  which consent
shall not be unreasonably withheld. No assignment,  encumbrance,  subletting, or
other transfer in violation of the terms of this Article XIV, whether  voluntary
or  involuntary,  by operation of law,  under legal process or  proceedings,  by
receivership,  in bankruptcy,  or otherwise  shall be valid or effective and, at
the option of Landlord,  shall  constitute an Event of Default under this Lease.
To the extent not  prohibited by provisions of the  Bankruptcy  Code of 1978, 11
U.S.C. 

                                      -19-
<PAGE>

Section  101 et seq.  (the  "Bankruptcy  Code"),  Tenant on  behalf  of  itself,
creditors,  administrators  and  assigns  waives the  applicability  of Sections
541(c) and 365(e) of the  Bankruptcy  Code unless the  proposed  assignee of the
trustee for the estate of the bankrupt meets Landlord's standards for consent as
set forth role.  Landlord  has  entered  into this Lease with Tenant in order to
obtain for the benefit of the project the unique attraction of Tenant's name and
business;  the  foregoing  prohibition  on assignment or subletting is expressly
agreed to by Tenant in  consideration of such fact. If this Lease is assigned to
any person or entity pursuant to the provisions of the Bankruptcy  Code, any and
all monies or other  considerations  payable or  otherwise  to be  delivered  in
connection with such assignment shall be paid or delivered to Landlord, shall be
and remain the exclusive property of Landlord and shall not constitute  property
of Tenant or the estate of Tenant within the meaning of the Bankruptcy Code. Any
and all monies or other  considerations  constituting  Landlord's property under
the proceeding sentence not paid or delivered to Landlord shall be held in trust
for the benefit of Landlord and be promptly  paid or delivered to Landlord.  Any
person or entity to which this Lease is assigned  pursuant to the  provisions of
the Bankruptcy  Code shall be deemed without further act or deed to have assumed
all of the  obligations  arising  under this Lease on and after the date of such
assignment.  Any such assignee shall upon demand execute and earlier to Landlord
an instrument confirming such assumption.

         14.2  Landlord's  Consent.  In  the  event  Landlord  consents  to  any
assignment or  subletting,  such consent shall not constitute a waiver of any of
the  restrictions of this ArticleXIV and the same shall apply to each successive
assignment or subletting hereunder, if any. In no event shall Landlord's consent
to an assignment or subletting affect the continuing primary liability of Tenant
(which, following assignment,  shall be joint and several with the assignee), or
relieve Tenant of any of its  obligations  hereunder  without an express written
release being given by Landlord.  In the event that Landlord shall consent to an
assignment or subletting  under this  ArticleXIV,  such assignment or subletting
shall not be effective  until the assignee or sublessee  shall assume all of the
obligations  of this Lease on the part of Tenant to be performed or observed and
whereby the assignee or sublessee  shall agree that the provisions  contained in
this Lease shall, notwithstanding such assignment or subletting,  continue to be
binding upon it with respect to all future  assignments  and  sublettings.  Such
assignment or sublease  agreement shall be duly executed and fully executed copy
thereof  shall be delivered to Landlord,  and Landlord may collect  Monthly Rent
and  Additional  Rent due  hereunder  directly  from the assignee or  sublessee.
Collection  of Monthly Rent and  Additional  Rent  directly  from an assignee or
sublessee  shall not  constitute a recognition  of such assignee or sublessee as
the Tenant  hereunder or a release of Tenant from the  performance of all of its
obligations hereunder.

         14.3 Information.  Regardless of whether Landlord's consent is required
under this  ArticleXIV,  Tenant  shall  notify  Landlord  in writing of Tenant's
intent to assign this Lease or any right or interest  hereunder,  or to sublease
the Premises or any part  thereof,  and of the name of the proposed  assignee or
sublessee,  the nature of the proposed assignee's or sublessee's  business to be
conducted on the Premises,  the terms and provisions of the proposed  assignment
or sublease,  a copy of the proposed assignment or sublease form, and such other
information as Landlord may reasonably  request concerning the proposed assignee
or sublessee  including,  but not limited to, net worth,  income  statements and
other financial  statements for a two-year period preceding Tenant's request for
consent,  evidence of insurance complying with the requirements of ArticleXI,  a
completed  Environmental  Questionnaire from the proposed assignee or sublessee,
and the fee described in Section14.7.

         14.4 Standard for Consent.  Landlord shall,  within thirty (30) days of
receipt of such Notice and all information  requested by Landlord concerning the
proposed assignee or sublessee, elect to take one of the following actions:

                  (a) consent to such proposed assignment or sublease;

                  (b) refuse to consent to such  proposed  assignment  or 
sublease,  which refusal shall be on reasonable grounds; or

                  (c) if Tenant proposes to sublease all or part of the Premises
for the entire  remaining Term,  Landlord may, at its option exercised by thirty
(30) days Notice to Tenant,  elect to recapture  such portion of the Premises as
Tenant proposes to sublease and as of the thirtieth (30th) day after Landlord so
notifies  Tenant of its election to recapture,  this Lease shall terminate as to
the portion of the premises  recaptured  and the Monthly Rent payable under this
Lease  shall be  reduced  in the same  proportion  that the  floor  area of that
portion of the  Premises so  recaptured  bears to the floor area of the Premises
prior to such recapture.

         Tenant agrees, by way of example and without limitation,  that it shall
not  be  unreasonable  for  Landlord  to  withhold  its  consent  to a  proposed
assignment or subletting if any of the following situations exist or may exist:

                        (i) Landlord  determines that the proposed assignee's or
sublessee's use of the Premises  conflicts with ArticleV or ArticleVI,  presents
an unacceptable  risk, as determined by Landlord,  under ArticleVI (and Landlord
may  require  such   assignee  or   sublessee  to  complete  the   Environmental
Questionnaire  in the  manner  described  in  Section6.5  prior to  making  such
determination), or conflicts with any other provision under this Lease;

                        (ii) Landlord  determines that the proposed  assignee or
sublessee is not as financially responsible as Tenant as of the date of Tenant's
request  for  consent  or as  of  the  effective  date  of  such  assignment  or
subletting;

                        (iii) Landlord  determines that the proposed assignee or
sublessee lacks sufficient  business  reputation or experience to conduct on the
Premises a business of a type and quality equal to that conducted by Tenant;

                                      -20-
<PAGE>


                        (iv) Landlord determines that the proposed assignment or
subletting  would  breach a covenant,  condition  or  restriction  in some other
lease,  financing  agreement or other  agreement  relating to the  Project,  the
Building, the Premises or this Lease;

                        (v) Landlord  determines  that the proposed  assignee or
sublessee (a) has been required by any prior  landlord,  lender or  governmental
authority  to take  remedial  action  in  connection  with  Hazardous  Materials
contaminating  a  property  if such  contamination  resulted  from the  proposed
assignee's or sublessee's actions or use of the property in questions, or (b) is
subject  to  any  enforcement  order  issued  by an  governmental  authority  in
connection with the use, disposal or storage of a Hazardous Material; or

                        (vi) An Event of Default has occurred and is  continuing
at the time of Tenant's request for Landlord's  consent,  or as of the effective
date of such assignment or subletting.

                  Tenant  acknowledges  that if  Tenant  has any  exterior  sign
rights  under this  Lease,  such  rights are  personal  to Tenant and may not be
assigned  or  transferred  to any  assignee  of this Lease or  sublessee  of the
Premises without Landlord's prior written consent, which consent may be withheld
in Landlord's sole and absolute discretion.

         14.5 Bonus Value. Tenant agrees that fifty percent (50%) of any amounts
paid by the  assignee  or  sublessee,  however  described,  in  excess of (i)the
monthly  Rent  payable by Tenant  hereunder  (or,  in the case of  sublease of a
portion of the Premises,  in excess of the Monthly Rent reasonably  allocable to
such  portion),  plus  (ii)Tenant's  direct  out-of-pocket  costs  which  Tenant
certifies to Landlord  have been paid to provide  occupancy-related  services to
such assignee or sublessee of a nature commonly provided by landlords of similar
space,  shall be the  property of  Landlord  and such  amounts  shall be payable
directly to Landlord by the assignee or  sublessee.  At  Landlord's  request,  a
written  agreement  shall be entered into by and among Tenant,  Landlord and the
proposed assignee or sublessee confirming the requirements of this Section14.5.

         14.6  Certain  Transfers.  The  sale  of  all or  substantially  all of
Tenant's assets (other than bulk sales in the ordinary course of business),  or,
if Tenant is a corporation, an unincorporated association, or a partnership, the
transfer,  assignment  or  hypothecation  of  any  stock  or  interest  in  such
corporation,  association  or  partnership  in the  aggregate in excess of fifty
percent  (50%)  (except  for  publicly  traded  shares of stock  constituting  a
transfer of fifty percent (50%) or more in the  aggregate,  so long as no change
in the  controlling  interests of Tenant  occurs as a result  thereof)  shall be
deemed an assignment within the meaning and provisions of this ArticleXIV.

         14.7 Landlord's Fee and Expenses. If Tenant requests Landlord's consent
to an assignment  or subletting by Tenant under this Lease,  Tenant shall pay to
Landlord  a  fee  of  Three  Hundred   Dollars  ($300)  and  all  of  Landlord's
out-of-pocket expenses including, but not limited to, attorneys' fees reasonably
incurred related to such assignment or subletting by Tenant,  whether or not the
assignment or subletting is approved.

         14.8 Transfer of the Premises by Landlord.  Upon any  conveyance of the
Premises and assignment by Landlord of this Lease,  Landlord shall and is hereby
entirely  released  from all  liability  under any and all of its  covenants and
obligations  contained in or derived from this Lease occurring after the date of
such  conveyance  and  assignment,  and  Tenant  agrees to attorn to any  entity
purchasing or otherwise acquiring the Premises.


                                   ARTICLE XV

                              DEFAULTS AND REMEDIES

         15.1 Tenant's Default. At the option of Landlord,  a default under this
Lease by Tenant shall exist if any of the following  events shall occur (each is
called an "Event of Default"):

                   (a) Tenant  fails to pay the Rent payable  hereunder,  as and
when due,  for a period of three (3) days after  Notice by  Landlord;  provided,
however, the Notice given hereunder shall be in lieu of, and not in addition to,
any notice required under Section1161,  et seq., of the California Code of Civil
Procedure;
                   (b)  Tenant  attempts  to make  or  suffers  to be  made  any
transfer, assignment or subletting, except as provided in ArticleXIV hereof;

                   (c) Any of  Tenant's  rights  under  this  Lease  are sold or
otherwise  transferred  by or under court order or legal process or otherwise or
if any of the actions described in Section15.2 are taken by or against Tenant or
any Guarantor;

                   (d) The  Premises  are used  for any  purpose  other  than as
permitted pursuant to Article V;

                   (e)  Tenant  vacates or  abandons  the  Premises  or fails to
continuously  and  uninterruptedly  conduct  its  business in the  Premises  and
thereafter fails to pay rent:

                   (f) Any  representation  or warranty given by Tenant under or
in connection with this Lease
proves to be materially false or misleading;

                   (g) Tenant  fails to timely  comply  with the  provisions  of
Article VI ("Hazardous Materials"), Article XIV ("Assignment and Subletting"),

                                      -21-
<PAGE>

Article XVI ("Subordination;  Estoppel Certificate;  Financials"),  Section 21.5
("Modifications for Mortgagees") or Section21.19 ("Authority"); or

                  (h) Tenant  fails to  observe,  keep,  perform or cure  within
thirty (30) days after  Notice by Landlord  any of the other  terms,  covenants,
agreements or conditions contained in this Lease or those set forth in any other
agreements  or rules or  regulations  which  Tenant is  obligated  to observe or
perform.  In the event such default  reasonably  could not be cured or corrected
within such thirty (30) day period,  but is  reasonably  susceptible  to cure or
correction,  then Tenant shall not be in default  hereunder if Tenant  commences
the  cure  or  correction  of such  default  within  such  default  within  such
thirty(30)  day period and diligently  prosecutes  the same to completion  after
commencing   such   cure   or   correction.   The   Notice   required   by   his
subparagraph15.1(h)  shall be in lieu of,  and not in  addition  to,  any notice
required under Section1161, et seq., of the California Code of Civil Procedure.

Notices given under this Section15.1 shall specify the alleged default and shall
demand that Tenant  perform the provisions of this Lease or pay the Rent that is
in arrears,  as the case may be, within the  applicable  period of time, or quit
the Premises.  No such Notice shall be deemed a forfeiture  or a termination  of
this Lease unless Landlord so elects in the Notice.

         15.2 Bankruptcy or Insolvency. In no event shall this Lease be assigned
or  assignable  by operation of law and in no event shall this Lease be an asset
of  Tenant  in  any  receivership,   bankruptcy,  insolvency  or  reorganization
proceeding. In the event:

                   (a) A court  makes or enters  any  decree or order  adjudging
Tenant to be insolvent,  or approving as properly  filed by or against  Tenant a
petition  seeking  reorganization  or other  arrangement  of  Tenant  under  any
provisions of the Bankruptcy Code or any applicable  state law, or directing the
winding  up or  liquidation  of  Tenant  and such  decree  or order  shall  have
continued for a period of thirty (30) days;

                   (b) Tenant makes or suffers any transfer which  constitutes a
fraudulent  or  otherwise   avoidable  transfer  under  any  provisions  of  the
Bankruptcy Code or any applicable state law;

                   (c) Tenant  generally  assigns  its assets for the benefit of
its creditors; or

                   (d)  The  material  part of the  property  of  Tenant  or any
property essential to Tenant's business or of Tenant's interest in this Lease is
sequestered,  attached or executed  upon, and Tenant fails to secure a return or
release of such property  within thirty (30) days  thereafter,  or prior to sale
pursuant to such sequestration, attachment or levy, whichever is earlier.

                   Then this Lease shall,  at Landlord's  election,  immediately
terminate and be of no further force or effect whatsoever, without the necessity
for any further action by Landlord,  except that Tenant shall not be relieved of
obligations which have accrued prior to the date of such termination.  Upon such
termination,  the  provisions  herein  relating  to the  expiration  or  earlier
termination of this Lease shall control and Tenant shall  immediately  surrender
the  Premises  in the  condition  required  by the  provisions  of  this  Lease.
Additionally,  Landlord shall be entitled to all relief,  including  recovery of
damages from Tenant,  which may from time to time be permitted,  or recoverable,
under the Bankruptcy Code or any other applicable state laws.

         15.3 Landlord's  Remedies.  Upon the occurrence of an Event of Default,
then, in addition to and without waiving any other rights and remedies available
to Landlord at law or in equity or  otherwise  provided in this Lease,  Landlord
may, at its option,  cumulatively or in the alternative,  exercise the following
remedies:

                  (a) Landlord may terminate Tenant's right to possession of the
Premises,  in which case this Lease shall terminate and Tenant shall immediately
surrender possession of the Premises to Landlord.  No act by Landlord other than
giving Notice to Tenant of Landlord's  election to terminate  Tenant's  right to
possession shall terminate this Lease. Acts of maintenance, efforts to relet the
Premises,  or the appointment of a receiver on Landlord's  initiative to protect
Landlord's  interest  under this Lease shall not  constitute  a  termination  of
Tenant's  right to possession.  Termination  shall  terminate  Tenant's right to
possession of the Premises, but shall not relieve Tenant of any obligation under
this Lease which has accrued  prior to the date of such  termination.  Upon such
termination,  Landlord shall have the right to re-enter the Premises, and remove
all persons and  property,  and Landlord  shall also be entitled to recover from
Tenant:

                        (i) The worth of the time of award of the unpaid Monthly
Rent and Additional 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 Monthly Rent and  Additional  Rent which would have been earned
after termination until the time of award exceeds the amount of such rental loss
that Tenant proves could have been reasonably avoided;

                        (iii)  The  worth at the time of award of the  amount by
which the unpaid  Monthly Rent and  Additional  Rent for the balance of the Term
after the time of award  exceeds  the  amount of such  rental  loss that  Tenant
proves could be reasonably avoided;

                        (iv) Any other amount  necessary to compensate  Landlord
for all the  detriment  proximately  caused by  Tenant's  failure to perform its
obligations  under this Lease or which in the ordinary course of things would be
likely to result from Tenant's default  including,  but not limited to, the cost
of  recovering  possession of the Premises,  commissions  and other  expenses of
reletting,  

                                      -22-
<PAGE>


the cost of  rectifying  any  damage to the  Premises  occasioned  by the act or
omission of Tenant,  reasonable attorneys' fees, and any other reasonable costs;
and
                        (v)  At  Landlord's  election,   all  other  amounts  in
addition to or in lieu of the foregoing as may be permitted by law.

                  As used in subsections  (1) and (ii) above,  the "worth at the
time of award" shall be computed by discounting  the amount at the discount rate
of the Federal  Reserve  Bank of San  Francisco  at the time of award plus three
percent (3%).

                  (b)  Landlord  may elect not to  terminate  Tenant's  right to
possession  of the  Premises,  in which  event this Lease will  continue in full
force and  effect  as long as  Landlord  does not  terminate  Tenant's  right to
possession,  and Landlord may continue to enforce all of its rights and remedies
under this Lease,  including the right to collect all Rent as it becomes due. In
the event that  Landlord  elects to avail itself of the remedy  provided by this
subparagraph 15.3(b), Landlord shall not unreasonably withhold its consent to an
assignment or subletting of the Premises subject to the reasonable standards for
Landlord's  consent as are  contained in this Lease.  In addition,  in the event
Tenant has entered into a sublease which is valid under the terms of this Lease,
Landlord  may also,  at its  option,  cause  Tenant to  assign to  Landlord  the
interest of Tenant under said sublease  including,  but not limited to, Tenant's
right to  payment  of Rent as it becomes  due.  Landlord  may elect to enter the
Premises  and relet them,  or any part of them,  to third  parties for  Tenant's
account.  Tenant shall be liable  immediately to Landlord for all costs Landlord
incurs in  reletting  the  Premises  including,  but not  limited  to,  broker's
commissions,  expenses of cleaning and remodeling  the Premises  required by the
reletting, attorneys' fees and like costs. Reletting can be for a period shorter
or longer than the remaining  Term of this Lease and for the entire  Premises or
any  portion  thereof.  Tenant  shall  pay to  Landlord  the  Monthly  Rent  and
Additional  Rent due under  this  Lease on the dates the  Monthly  Rent and such
Additional  Rent are due,  less the Rent  Landlord  actually  collects  from any
reletting.  Except as provided in the preceding sentence, if Landlord relets the
Premises or any portion thereof,  such reletting shall not relieve Tenant of any
obligation  hereunder.  Notwithstanding the above, no act by Landlord allowed by
this  subparagraph15.3(b)  shall terminate this Lease unless  Landlord  notifies
Tenant in writing that Landlord elects to terminate this Lease.

         15.4 No Surrender. Tenant waives any right of redemption or relief from
forfeiture under  California Code of Civil Procedure,  Sections1174 and 1179, or
under any other present or future law in the event Tenant is evicted or Landlord
or  Landlord's  Agents  during  the Term  shall be  deemed  an  acceptance  of a
surrender of the Premises, and no agreement to accept a surrender shall be valid
unless in  writing  and  signed by  Landlord.  No  employee  of  Landlord  or of
Landlord's  Agent shall have any power to accept the keys to the Premises  prior
to the  termination of this Lease,  and the delivery of the keys to any employee
shall not operate as a termination of this Lease or a surrender of the Premises.

         15.5 Interest on Late  Payments.  Any Rent due under this Lease that is
not paid to Landlord within five (5) days of the date when due shall commence to
bear interest at the Applicable  Rate until fully paid.  Neither the accrual nor
the payment of interest shall cure any default by Tenant under this Lease.

         15.6  Attorneys'  and  Other  Fees.  All sums  reasonably  incurred  by
Landlord in connection with an Event of Default or holding over of possession by
Tenant after the  expiration or  termination  of this Lease  including,  but not
limited  to,  all  reasonably  costs,  expenses  and  reasonable   accountants',
appraisers',  attorneys' and other  professional fees, and any collection agency
or other collection  charges,  shall be due and payable by Tenant to Landlord on
demand,  and shall bear  interest at the  Applicable  Rate from the date of such
demand until paid by Tenant. In addition,  in the event that any action shall be
instituted  by either of the parties  hereto for the  enforcement  of any of its
rights in and under  this  Lease,  the party in whose  favor  judgment  shall be
rendered  shall be  entitled  to  recover  from the  other  party  all  expenses
reasonably  incurred by the prevailing  party in such action,  including  actual
costs and reasonable attorneys' fees.

         15.7 Landlord's Default.  Landlord shall not be deemed to be in default
in the  performance of any  obligation  required to be performed by it hereunder
unless and until it has failed to perform  such  obligation  within  thirty (30)
days after receipt of Notice by Tenant to Landlord (and the  Mortgagees who have
provided  Tenant with notice)  specifying the nature of such default;  provided,
however,  that if the  nature of  Landlord's  obligation  is such that more than
thirty (30) days are required for its  performance,  then Landlord  shall not be
deemed to be in default if it shall commence such performance within such thirty
(30) day period and thereafter diligently prosecutes the same to completion.

         15.8 Limitation of Landlord's Liability. The obligations of Landlord do
not constitute the personal  obligations of the individual limited partners if a
partnership  or  if  a  corporation  the,  trustees,   directors,   officers  or
shareholders of Landlord or its constituent  partners. If Landlord shall fail to
perform any covenant,  term, or condition of this Lease upon  Landlord's part to
be  performed,  Tenant  shall be required  to deliver to Landlord  Notice of the
same.  If,  as a  consequence  of such  default,  Tenant  shall  recover a money
judgment  against  Landlord,  such judgment  shall be satisfied  only out of the
proceeds of sale  received upon  execution of such  judgment and levied  thereon
against the right,  title and  interest of Landlord in the  Building  and out of
rent or other  income  from  such  property  receivable  by  Landlord  or out of
consideration  received by Landlord from the sale or other disposition of all or
any part of Landlord's right,  title or interest in the Building,  and no action
for any deficiency may be sought or obtained by Tenant.

                                      -23-
<PAGE>

         15.9  Mortgagee  Protection.  Upon any default on the part of Landlord,
Tenant will give notice by registered or certified mail to any Mortgagee who has
provided  Tenant  with  notice of its  interest  together  with an  address  for
receiving  notice,  and shall offer such  Mortgagee a reasonable  opportunity to
cure  the  default  (which  in no event  shall be less  than  sixty  (60)  days,
including  time to  obtain  possession  of the  Premises  by  power of sale or a
judicial foreclosure,  if such should prove necessary,  to effect a cure. Tenant
agrees  that each of the  Mortgagees  to whom this  Lease has been  assigned  by
Landlord is an express third-party beneficiary hereof. Tenant shall not make any
prepayment of Monthly Rent more than one (1) month in advance  without the prior
written  consent of such  Mortgagee.  Tenant  waives any right under  California
Civil Code, Section 1950.7, or any other present or future law to the collection
of any deposit from such  Mortgagee or any  purchaser at a  foreclosure  sale of
such  Mortgagee's  interest  unless such Mortgagee or such purchaser  shall have
actually  received  and not  refunded  the  deposit.  Tenant  agrees to make all
payments under this Lease to the Mortgagee with the most senior encumbrance upon
receiving a direction, in writing, to pay said amounts to such Mortgagee. Tenant
shall comply with such written direction to pay without  determining  whether an
event of default exists under such Mortgagee's loan to Landlord.

         15.10 Landlord's Right to Perform.  If Tenant shall at any time fail to
make any  payment or perform  any other act on its part to be made or  performed
under this  Lease,  Landlord  may subject to  Tenant's  right to cure  following
notice  under this Lease (but shall not be obligated  to), at Tenant's  expense,
and without waiving or releasing Tenant from any obligation of Tenant under this
Lease,  make such payment or perform  such other act to the extent  Landlord may
deem desirable,  and in connection  therewith,  pay expenses and employ counsel.
All sums paid by Landlord and all penalties,  interest and costs including,  but
not limited to,  collection  costs and attorneys'  fees  reasonably  incurred in
connection therewith, shall be due and payable by Tenant to Landlord, as an item
of Additional Rent, on demand by Landlord, together with interest thereon at the
Applicable Rate from the date of such demand until paid by Tenant.

         15.11  Limitation of Actions  Against  Landlord.  Any claim,  demand or
right of any kind by Tenant  which is based  upon or arises in  connection  with
this Lease shall be barred unless Tenant  commences an action thereon within one
(1) year of the date of  discovery  by  Tenant  of the act,  omission,  event or
default upon which the claim, demand or right arises, has occurred.

         15.12  Waiver of Jury Trial.  To the full extent  permitted by law, the
parties  hereby  waives the right to trial by jury in any action,  proceeding or
counterclaim  brought by either party on any matter whatsoever arising out of or
in any way connected with this Lease,  the  relationship of Landlord and Tenant,
Tenant's use or occupancy of the Premises and/or any claim of injury or damage.


                                   ARTICLE XVI

                 SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS

         16.1  Subordination,   Attornment  and  Non-Disturbance.   Without  the
necessity of any additional document being executed by Tenant for the purpose of
effecting a  subordination,  and at the election of Landlord or any Mortgagee or
any ground  lessor with  respect to the land of which the  Premises  are a part,
this Lease shall be subject and subordinate at all times to (1)all ground leases
or underlying  leases which may now exist or hereafter be executed in any amount
for which the Project,  the Building,  ground leases or  underlying  leases,  or
Landlord's  interest or estate in any of said items is  specified  as  security.
Landlord or any such  Mortgagee or ground  lessor  shall have the right,  at its
election,  to subordinate or cause to be subordinated  any such ground leases or
underlying leases or any such liens to this Lease. No subordination shall permit
material  interference with Tenant's rights hereunder,  and any ground lessor or
Mortgagee shall recognize Tenant and its permitted successors and assigns as the
tenant of the Premises and shall not disturb  Tenant's right to quiet possession
of the Premises  during the Term so long as no Event of Default has occurred and
is  continuing  under this Lease.  If  Landlord's  interest  in the  Premises is
acquired by any ground  lessor or  Mortgagee,  or in the event  proceedings  are
brought for the foreclosure of, or in the event of exercise of the power of sale
under, any Mortgage made by Landlord  covering the Premises or any part thereof,
or in the event a  conveyance  in lieu of  foreclosure  is made for any  reason,
Tenant shall,  notwithstanding  any  subordination  and upon the request of such
successor  in  interest  to  Landlord,  attorn to and  become  the Tenant of the
successor in interest to Landlord and  recognize  such  successor in interest as
the Landlord  under this Lease.  Although this  Section16.1  is  self-executing,
Tenant covenants and agrees to execute and deliver,  upon demand by Landlord and
in a commercially  reasonable formor requested by Landlord,  or any Mortgagee or
ground lessor, any additional documents evidencing the priority or subordination
of this Lease with respect to any such ground leases or underlying leases or the
lien of any such  Mortgage,  or  evidencing  the  attornment  of  Tenant  to any
successor in interest to Landlord as herein provided. Tenant's failure to timely
execute and deliver such  additional  documents  shall,  at  Landlord's  option,
constitute an event of Default hereunder.

         16.2  Estoppel  Certificate.  Tenant  shall,  within  twenty  (20) days
following  written  request by  Landlord,  execute and  deliver to Landlord  any
documents,  including estoppel  certificates,  in a form reasonably  required by
Landlord  (i)certifying  that this  Lease is  unmodified  and in full  force and
effect or, if modified,  attaching a copy of such  modification  and  certifying
that this  Lease,  as so  modified,  is in full force and effect and the date to
which the Rent and other charges are paid in advance, if any,  (ii)acknowledging
that there are not, to Tenant's  knowledge,  any uncured defaults on the part of
the Landlord or stating the nature of any uncured defaults,  (iii)evidencing the
status of this Lease as may be  required by a  Mortgagee  or a purchaser  of the
Premises,  (iv)certifying the current Monthly Rent among and the amount and form
of Security  Deposit on deposit with Landlord,  and  (v)certifying to such other
information  as  Landlord,   Landlord's   Agents,   Mortgagees  and  prospective
purchasers 

                                      -24-
<PAGE>

may reasonably request including,  but not limited to, any requested information
within the  requirements of this Lease including  Article 6 regarding  Hazardous
Materials.  Tenant's  failure to deliver an estoppel  certificate  within twenty
(20) days after delivery of Landlord's written request therefor shall constitute
an Event of Default hereunder.

         16.3 Financial Information.  Tenant shall deliver to Landlord, prior to
the execution of this Lease, and within ten (10) days following  written request
therefor by Landlord at any time  during the Term,  Tenant's  current  financial
statements, and Tenant's financial statements for the two (2) years prior to the
current fiscal financial  statement's year,  certified to be true,  accurate and
complete by the chief financial officer of Tenant, including a balance sheet and
profit and loss  statement  for the most recent  prior year  (collectively,  the
"Statements"),  which  Statement  shall  accurately and  completely  reflect the
financial condition of Tenant.  Landlord agrees that it will keep the Statements
confidential,  except that Landlord  shall have the right to deliver the same to
any proposed purchaser of the Premises,  the Project or any portion thereof, and
to the  Mortgagees  of  Landlord or such  purchaser.  Tenant  acknowledges  that
Landlord is relying on the  Statements in its  determination  to enter into this
Lease, and Tenant represents to Landlord,  which  representation shall be deemed
made on the date of this Lease, that no material adverse change in the financial
condition of Tenant, as reflected in the Statements, has occurred since the date
Tenant delivered the Statements to Landlord.  If any material change in Tenant's
financial condition, as reflected in the Statements, occurs prior to the date of
this Lease, or if Tenant fails to inform  Landlord of any such material  change,
Landlord  shall have the right,  in addition to any other rights and remedies of
Landlord,  to terminate this Lease by notice to Tenant given within fifteen (15)
thirty (30) days after Landlord learns of such material change.


                                  ARTICLE XVII

                               SIGNS AND GRAPHICS

         Landlord  shall  designate  the  location on the  Premises  for one (1)
exterior  identification sign for Tenant. Tenant shall have no right to maintain
identification signs in any other location in, or about the Premises (other than
a sign on the  entrance  door) and shall not  display or erect any other  signs,
displays or other  advertising  materials  that are visible from the exterior of
the  Building.  The  size,  design,  color  and other  physical  aspects  of the
permitted  sign  shall  be  subject  to  Landlord's  written  approval  prior to
installation, which approval shall not be unreasonably withheld. The cost of all
signs and graphics, including the installation, maintenance and removal thereof,
shall be at  Tenant's  sole cost and  expense.  Landlord  shall  ensure that the
existing  monument  sign is blank and is in good  condition  and repair prior to
Tenant's occupancy of the Premises. If Tenant fails to maintain its signs, or if
Tenant fails to remove its name placard from the monument sign, upon termination
of this Lease and repair any damage caused by such removal  (including,  but not
limited to, repainting the affected area, if required by Landlord), Landlord may
do so at Tenant's expense. All sums reasonably disbursed,  deposited or incurred
by Landlord in connection with such removal  including,  but not limited to, all
costs,  expenses and actual  attorneys' fees, shall be due and payable by Tenant
by  Landlord  on deemed by  Landlord,  together  with  interest  thereon  at the
Applicable Rate from the date of such demand until paid by Tenant.


                                  ARTICLE XVIII

                                 QUIET ENJOYMENT

         Landlord  for itself and its  successors  in interest,  covenants  that
Tenant, upon performing the terms, conditions and covenants of this Lease, shall
have  quiet and  peaceful  possession  of the  Premises  as  against  nay person
claiming the same by, through or under Landlord.

                                   ARTICLE XIX

                             SURRENDER; HOLDING OVER

                        19.1  Surrender of the Premises.  Upon the expiration or
earlier  termination  of this Lease,  Tenant  shall  surrender  the  Premises to
Landlord in its condition  existing as of the  completion of the Work defined in
the Workletter  attached hereto as Exhibit "C", normal wear and tear and acts of
God excepted,  in a clean and broom swept  condition  with all interior walls in
good repair,,  the HVAC  equipment,  plumbing,  electrical and other  mechanical
installations  in good operating  order,  all to the reasonable  satisfaction of
Landlord.  Tenant shall  remove from the  Premises  all of Tenant's  Alterations
which  Landlord  requires  Tenant  to remove  pursuant  to  Section  8.1 and all
Tenant's  Personal  Property,  and shall  repair  any  damage  and  perform  any
restoration  work  caused  by such  removal.  If  Tenant  fails to  remove  such
Alterations  and  Tenant's  Personal  Property  which Tenant is  authorized  and
obligated to remove pursuant to the above, and such failure  continues after the
termination  of this Lease,  Landlord any retain such property and all rights of
Tenant with respect to it shall cease,  or Landlord may place all or any portion
of such  property in public  storage for Tenant's  account.  Tenant shall pay to
Landlord, upon demand, the costs of removal of any such Alterations and Tenant's
Personal Property and storage and transportation  costs of same, and the cost of
repairing and restoring the Premises, together with attorneys' fees and interest
on said amounts at the Applicable Rate from the date of expenditure by Landlord.
If the Premises are not so surrendered at the termination of this Lease,  Tenant
hereby agrees to indemnify  Landlord and  Landlord's  Agents against all loss or
liability resulting from any delay by Tenant in so surrendering the Premises.

                                      -25-
<PAGE>

         19.2 Holding Over.  If Tenant  remains in possession of all or any part
of the Premises after the expiration of the Term with the prior written  consent
of Landlord,  such possession shall constitute a month-to-month tenancy only and
shall not  constitute a renewal or  extension  for any further  term.  If Tenant
remains in possession of all or any part of the Premises after the expiration of
the Term without the prior written consent of Landlord,  such  possession  shall
constitute a tenancy at sufferance. In either of such events, Monthly Rent shall
be increased to an amount equal to one hundred twenty-five percent (125%) of the
Monthly Rent payable  during the last month of the Term,  and any other sums due
hereunder  shall be payable in the  amounts and at the times  specified  in this
Lease.  Any such tenancy  shall be subject to every other term,  condition,  and
covenant contained in this Lease.


                                   ARTICLE XX

                       CONSTRUCTION OF TENANT IMPROVEMENTS

         The  obligations  of Landlord and Tenant,  if any,  with respect to the
Tenant Improvements,  are set forth in the Work Letter attached as ExhibitC.  It
is acknowledged and agreed that all Tenant Improvements under this Lease are and
shall be the property of Landlord  from and after their  installation,  Tenant's
Personal Property excepted.

                                   ARTICLE XXI

                    MISCELLANEOUS AND INTERPRETIVE PROVISIONS

         21.1  Broker.  Landlord  and Tenant each  warrant and  represent to the
other that neither has had any dealings  with any real estate  broker,  agent or
finder in connection with the  negotiation of this Lease or the  introduction of
the parties to this  transaction,  except for the Broker (whose commission shall
be paid by Landlord), and that it knows of no other real estate broker, agent or
finder who is or might be entitled to a  commission  or fee in  connection  with
this Lease. In the event of any additional  claims for brokers' or finders' fees
with respect to this Lease, Tenant shall indemnify,  hold harmless,  protect and
defend  Landlord  from and  against  such claims if they shall be based upon any
statement or  representation  or agreement  made by Tenant,  and Landlord  shall
indemnify, hold harmless, protect and defend Tenant from and against such claims
if they shall be based upon any statement,  representation  or agreement made by
Landlord.


         21.2 Examination of Lease.  Submission of this Lease for examination or
signature by Tenant does not create a  reservation  of or option to lease.  This
Lease shall become  effective and binding only upon full execution of this Lease
by both Landlord and Tenant.

         21.3 No Recording. Tenant shall not record this Lease or any memorandum
of this Lease  without  Landlord's  prior  written  consent,  but if Landlord so
requests,  Tenant agrees to execute,  have acknowledged and deliver a memorandum
of this Lease in recordable form which Landlord thereafter may file for record.

         21.4  Quitclaim.  Upon any  termination of this Lease Tenant shall,  at
Landlord's  request,  execute,  have  acknowledged  and  deliver to  Landlord an
instrument in writing  releasing and  quitclaiming to Landlord all right,  title
and  interest  of Tenant  in and to the  Premises  by  reason  of this  Lease or
otherwise.

         21.5  Modifications  for  Mortgagees.  If in connection  with obtaining
financing for the Premises or any portion thereof,  Landlord's  Mortgagees shall
request reasonable modifications to this Lease as a condition to such financing,
Tenant  shall not  unreasonably  withhold,  delay or defer its consent  thereto,
provided  such   modifications   do  not  adversely   affect  Tenant's   rights,
unreasonably  interfere  with  Tenant's  use or enjoyment  of the  Premises,  or
increase the monetary  obligations of Tenant  hereunder.  Tenant's failure to so
consent shall constitute an Event of Default under this Lease.

         21.6  Notice.  Any Notice  required  or desired to be given  under this
Lease shall be in writing and shall be  addressed to the address of the party to
be served.  The  addresses of Landlord and Tenant are as set forth in Items1 and
3,  respectively,  of the Basic Lease  Provisions,  except that  (a)prior to the
Commencement  Date,  the  address  for  Notices to Tenant  shall be as set forth
opposite   Tenant's   signature  on  this  Lease,  and  (b)from  and  after  the
Commencement Date,  notwithstanding  the addresses for Tenant set forth in Item3
of  the  Basic  Lease  Provisions,  all  Notices  regarding  the  operation  and
maintenance  of the Project shall be delivered to Tenant at the  Premises.  Each
such Notice shall be deemed effective and given (i)upon  receipt,  if personally
delivered  (which  shall  include  delivery  by  courier or  overnight  delivery
service),  (ii)upon being  telephonically  confirmed as transmitted,  if sent by
telegram,  telex or telecopy,  (iii)two (2) business  days after  deposit in the
United  States mail in orange  County or in the count in which the  Premises are
located,  certified and postage prepaid,  properly  addressed to the party to be
served,  or (iv)upon receipt if sent in any other way. Any party hereto may from
time to time,  by  Notice  to the other in  accordance  with  this  Section21.6,
designate a  different  address  than that set forth  above for the  purposes of
Notice.

         21.7 Captions. The captions and headings used in this Lease are for the
purpose of  convenience  only and shall not be  construed to limit or extend the
meaning of any part of this Lease.

         21.8  Executed  Copy.  Any fully  executed  copy of this Lease shall be
deemed an original for all purposes.

         21.9 Time.  Time is of the  essence for the  performance  of each term,
condition and covenant of this Lease.

                                      -26-
<PAGE>

         21.10  Severability.  If any one or more  of the  provisions  contained
herein shall for any reason be held to be invalid,  illegal or  unenforceable in
any respect, such invalidity,  illegality,  or unenforceability shall not affect
any other provision of this Lease,  but this Lease shall be construed as if such
invalid, illegal or unenforceable provision had not been contained herein.

         21.11  Survival.  All covenants and  indemnities set forth herein which
contemplate  the payment of sums, or the performance by Tenant after the Term or
following  an Event of  Default,  including  specifically,  not  limited to, the
covenants  and  indemnities  set  forth in  Section5.3,  ArticleVI,  ArticleVII,
Section8.1, Section9.2, Section11.1, Section11.9, ArticleXV, and ArticleXIX, and
all  representations  and warranties of Tenant,  shall survive the expiration or
sooner termination of this Lease.

         21.12  Choice of Law.  This Lease shall be  construed  and  enforced in
accordance  with the laws of the State of California.  The language in all parts
of this Lease shall in all cases be construed  as a whole  according to its fair
meaning and not strictly for or against either Landlord or Tenant.

         21.13  Gender;  Singular,  Plural.  When  the  context  of  this  Lease
requires, the neuter gender includes the masculine,  the feminine, a partnership
or corporation or joint venture, the singular includes the plural and the plural
includes the singular.

         21.14  Non-Agency.  It is not the  intention  of  Landlord or Tenant to
create hereby a relationship of master-servant or principal-agent,  and under no
circumstance  shall tenant herein be considered the agent of Landlord,  it being
the sole purpose and intent of the parties  hereto to create a  relationship  of
landlord and tenant.

         21.15  Successors.  The terms,  covenants,  conditions  and  agreements
contained  in this Lease  shall,  subject to the  provisions  as to  assignment,
subletting, and bankruptcy contained herein and any other provisions restricting
successors  or  assigns,  apply  to  and  bind  the  heirs,  successors,   legal
representatives and assigns of the parties hereto.

         21.16 Waiver;  Remedies  Cumulative.  The waiver by either party of any
term,  covenant,  agreement or condition herein contained shall not be deemed to
be a waiver of any  subsequent  breach of the same or any other term,  covenant,
agreement or condition herein contained,  nor shall any custom or practice which
may grow up between the parties in the administration of this Lease be construed
to waive or to lessen the right of Landlord to insist  upon the  performance  by
Tenant  in strict  accordance  with all of the  provisions  of this  Lease.  The
subsequent  acceptance of Rent hereunder by Landlord shall not be deemed to be a
waiver of any proceeding breach by Tenant of any provisions, covenant, agreement
or  condition  of this  Lease,  other  than the  failure  of  Tenant  to pay the
particular Rent payment so accepted,  regardless of Landlord's knowledge of such
preceding  breach at the time of  acceptance  of such Rent  payment.  Landlord's
acceptance of any check, letter of payment shall in no event be deemed an accord
and satisfaction, and Landlord shall accept the check, letter or payment without
prejudice to  Landlord's  right to recover the balance of the Rent or pursue any
other remedy available to it. The rights and remedies of either party under this
Lease  shall be  cumulative  and in  addition  to any and all other  rights  and
remedies which either party has or may have.

         21.17 Unavoidable Delay. Except for the monetary  obligations of Tenant
under this  Lease,  neither  party  shall be  chargeable  with,  liable  for, or
responsible to the other for anything or in any amount for any Unavoidable Delay
and any  Unavoidable  Delay  shall not be deemed a breach of or  default  in the
performance  of this  Lease,  it being  specifically  agreed that any time limit
provision  contained in this Lease (other than the  scheduled  expiration of the
Term) shall be extended for the same period of time lost by Unavoidable Delay.

         21.18 Entire Agreement.  This Lease is the entire agreement between the
parties, and supersedes any prior agreements,  representations,  negotiations or
correspondence  between  the  parties,  except as  expressed  herein.  Except as
otherwise  provided herein, no subsequent change or addition to this Lease shall
be binding unless in writing and signed by the parties hereto.

         21.19  Authority.  If Tenant is a corporation  or a  partnership,  each
individual executing this Lease on behalf of the corporation or partnership,  as
the case may be,  represents and warrants that he is duly  authorized to execute
and deliver this Lease on behalf of said entity in accordance with its corporate
bylaws,  statement of partnership or certificate of limited partnership,  as the
case may be, and that this Lease is binding upon said entity in accordance  with
its terms.  If Tenant is a corporation,  Tenant shall, if requested by Landlord,
within thirty (30) days after execution of this Lease and prior to entering into
possession of the Premises, deliver to Landlord a certified copy of a resolution
of the Board of Directors of the  corporation or certificate of the Secretary of
the  corporation,  authorizing,  ratifying or  confirming  the execution of this
Lease.  If Tenant is a  partnership,  Tenant  shall,  if  requested by Landlord,
within  thirty (30) days after the execution of this Lease and prior to entering
into  possession of the Premises,  deliver to Landlord a certified  copy of this
partnership agreement authorizing such execution.

         21.20 Guaranty. All exhibits,  amendments,  riders and addenda attached
to this Lease are hereby incorporated into and made a part of this Lease. In the
event of variation or  discrepancy,  the duplicate  original  hereof  (including
exhibits,  amendments,  riders and  addenda,  if any,  specified  above) held by
Landlord  shall  control.  All  references in this Lease to Articles,  Sections,
Exhibits,  Riders and clauses are made,  respectively,  to  Articles,  Sections,
Exhibits, Riders and clauses of this Lease, unless otherwise specified.

         21.22  Basic  Lease  Provisions.  The  Basic  Lease  Provisions  at the
beginning of this Lease are intended to provide general information only. In the
event of any  inconsistency  between the Basic Lease Provisions and the specific
provisions of this Lease, the specific provisions of this Lease shall prevail.

                                      -27-
<PAGE>

         21.23 No Merger.  The  voluntary  or other  surrender  of this Lease by
Tenant, or a mutual cancellation  thereof,  or a termination by Landlord,  shall
not work a merger,  and shall,  at the option of Landlord,  terminate all or any
existing  subtenancies  or  may,  at  the  option  of  Landlord,  operate  as an
assignment to Landlord of any or all such subtenancies.

         21.24 Joint and Several Obligations.  If more than one person or entity
is Tenant, the obligations  imposed on each such person or entity shall be joint
and several.

         21.25 No Light or Air Easement. Any diminution or shutting off of light
or air by any structure  which may be erected on lands  adjacent to the Building
shall in no way affect this Lease,  abate Rent or otherwise impose any liability
on Landlord.  This Lease does not confer any right with regard to the subsurface
below the ground level of the Building.

         21.26 Security Measures. Tenant hereby acknowledges that Landlord shall
have no  obligation  whatsoever  to  provide  guard  service  or other  security
measures  for the benefit of the  Premises or the  Project.  Tenant  assumes all
responsibility for the protection of Tenant, Tenant's Agents and the property of
Tenant  and of  Tenant's  Agents  from  acts of third  parties.  Nothing  herein
contained  shall prevent  Landlord,  at Landlord's  sole option,  from providing
security protection for the Project or any part thereof, in which event the cost
thereof  shall be included  within the  definition  of Project Costs and paid by
Tenant in the manner set forth in Section7.1.

         THIS LEASE is effective as of the date the last signatory  necessary to
execute this Lease shall have executed this Lease.

                                 "LANDLORD"

                                 Birtcher Property Services as Manager for
                                 Scripps Jack, Ltd., a California corporation

                                 By:    /s/ Michael S. Buzar
                                        ----------------------------------------
                                 Name:  Michael S. Buzar

                                 Title: Senior Vice President

                                 Date:  November 13, 1996


                                 By:     /s/ Linda L. Bettini
                                         ---------------------------------------
                                 Name:   Linda L. Bettini, CPM

                                 Title:  Vice President

                                 Date:   November 13, 1996


                                 "TENANT"

                                  Agouron Pharmaceuticals, Inc., a California
                                  corporation

                                  By:    /s/ Glenn Zinser
                                         ---------------------------------------
                                  Name:  Glenn Zinser

                                  Title: Vice President, Operations

                                  Date:       November 8, 1996


                                  By:    /s/ Gary Friedman
                                         ---------------------------------------
                                  Name:  Gary E. Friedman, Esq.

                                  Title: Vice President and General Counsel

                                  Date:  November 8, 1996


<PAGE>


                                   EXHIBIT "A"
                           DESCRIPTION OF THE PREMISES

                            (DIAGRAM LAYOUT OMITTED)



<PAGE>


                                   EXHIBIT "B"

                              PROPERTY DESCRIPTION



The  "Property"  is that real  property  development  known as  Scripps-Sorrento
Building, located at 4245 Sorrento Valley Blvd., San Diego, California.

The Property is further  described as that certain  improved  real  property,  a
diagram of which is attached  as part of this  exhibit,  and which is  described
more  particularly  as:  Parcel 1 of Parcel Map #12377 in the City of San Diego,
County of San  Diego,  State of  California,  filed in the  office of The County
Recorder of San Diego County on October 18, 1982.






<PAGE>


                                   EXHIBIT "C"

                                   WORK LETTER


THIS WORK LETTER AGREEMENT  ("Workletter") is executed  simultaneously with that
certain  Lease dated October 17, 1996 between  Scripps Jack,  Ltd., a California
limited partnership,  as Landlord, and Agouron Pharmaceuticals,  Inc., as Tenant
relating  to  demised  premises  ("Premises"),  which  Premises  are more  fully
identified in the Lease. Capitalized terms used herein, unless otherwise defined
in this Workletter,  shall have the respective  meanings assigned to them in the
Lease.

For and in  consideration  of the agreement to lease the Premises and the mutual
covenants contained herein and in the Lease, Landlord and Tenant hereby agree as
follows:

1. Delivery of Premises. Landlord delivered the Premises to Tenant pursuant to 
the Lease and Tenant accepted the Premises in its "as is" condition, except for 
latent structural defects and Landlord's Construction  Obligations as defined 
herein.

2. Work.  Tenant,  at its sole cost and  expense,  shall  perform or cause to be
performed  the work (the "Work") in the  Premises  provided for in the Plans (as
defined in Paragraph 3 hereof) submitted to and approved by Landlord,  provided,
however,  that Tenant's work shall not include Tenant's furniture,  furnishings,
equipment or other interior decor.  Tenant's Work shall be constructed in a good
and workmanlike  fashion,  in accordance with the  requirements set forth herein
and in  compliance  with  all  applicable  laws,  ordinances,  rules  and  other
governmental  requirements.  Tenant shall commence the  construction of the Work
promptly following completion of the preconstruction  activities provided for in
Paragraph  3 below  and shall  diligently  proceed  with all such  construction.
Tenant shall coordinate its work so as to avoid interference with any work being
performed by or on behalf of Landlord and other tenants in the Project.

3.       Preconstruction Activities.

         (a) As soon as reasonably possible, but in no event later than November
30, 1996, Tenant shall submit the following information and items to Landlord:

                        (i) a  detailed  construction  schedule  containing  the
major  components  of the Work and the time  required  for each,  including  the
scheduled commencement date of construction of the Work, milestone dates and the
estimated date of completion of construction;

                        (ii) an itemized statement of the estimated construction
cost, including permit, architectural and engineering fees;

                        (iii) the names and  addresses  of  Tenant's  contractor
(and the  contractors'  subcontractors)  to be  engaged  by Tenant  for the Work
(collectively "Tenant's Contractors"). Landlord has approved David Begent & Co.,
Inc. as the contractor engaged by Tenant for the Work.

                        (iv) certificates of insurance as hereinafter described.
Tenant shall not permit Tenant's Contractors to commence work until the required
insurance  has been obtained and  certified  copies of policies or  certificates
have been delivered to Landlord;

                        (v) the Plans for the Work, which Plans shall be subject
to Landlord's approval in accordance with Paragraph 3(b) below.


Tenant  will  update  such  information  and items by notice to  Landlord of any
changes.

         (b) As used herein,  the term "Plans"  shall mean the full and detailed
final  architectural and engineering plans and specifications  covering the Work
(including, without limitation, architectural, mechanical and electrical working
drawings for the Work).  The Plans shall be subject to the approval of all local
governmental  authorities  requiring  approval,  if any.  Landlord has given its
approval of preliminary  architectural  drawings dated October 10, 1996 (SL-001;
K-01a,  -01b, -01c, -0d; K-02, 02a, -02b, -02c,  -02d;  K-03a,  -03b, -03c, 03d;
k-04a) and the basis of design dated October 29,1996  (collectively  the "Design
Plan").  It is the  intention  of the  parties  that the Plans will  reflect the
design  set  forth in the  Design  Plan,  and that  completed  Plans  which  are
consistent  with the Design Plan shall be deemed  approved by the  Landlord.  If
changes are required to the Plans  submitted  by Tenant,  (for  example,  if 

<PAGE>

the Plans  differ from the Design  Plan)  Tenant  shall,  within  three (3) days
thereafter,  submit to Landlord for its approval the proposed  revised  Plans as
amended in  accordance  with the  changes so  required.  The Plans shall also be
revised, and the Work shall be changed, to incorporated any work required in the
Premises by and local governmental field inspector.  Landlord's  approval of the
Plans  shall in no way be deemed to be  acceptance  or  approval  of any element
therein  contained  which is in violation  of any  applicable  laws,  ordinance,
regulations or other  governmental  requirements or a representation or warranty
that the Plans are  adequate  for any  purpose.  Landlord  agrees  that  changes
mandated  solely by governmental  authorities  shall be acceptable and shall not
require any further  Landlord  approval so long as such changes are  implemented
without adversely  altering the Building's  structure and in a manner reasonably
acceptable to Landlord.

                   (c) No Work shall be undertaken or commenced by Tenant in the
Premises until:

                        (i) the Plans have been  submitted  to and  approved  by
Landlord, except that Tenant can begin demolition prior to final Plan approval;

                        (ii) all required insurance coverages have been obtained
by  Tenant.  (Failureof  Landlord  to receive  evidence  of such  coverage  upon
commencement  of the Work shall not waive  Tenant's  obligations  to obtain such
coverages.);

                        (iii) items  required to be submitted to Landlord  prior
to commencement of construction of the Work have been so submitted and have been
approved, where required;

                        (iv) Landlord has given written notice that the Work can
proceed. 

4. Delay.  In the event  Tenant  fails to deliver or deliver in  sufficient  and
accurate  detail the  information  required  under  Paragraph 3 on or before the
respective  dates specified in said Paragraph,  or in the event Tenant,  for any
reason, fails to complete the Work on or before the scheduled  Commencement Date
of the term of the Lease,  Tenant  shall be  responsible  for rent and all other
obligations  as set  forth in the Lease  from the  Commencement  Date  under the
Lease,  regardless of the degree of completion of the Work on such date,  and no
such  delay  in  completion  of the  Work  shall  relieve  Tenant  of any of its
obligations under said Lease.

6.  Change  Orders.  All  delays  caused  by  Tenant-initiated   change  orders,
including,  without  limitation,  any  stoppage of work during the change  order
review process, are solely the responsibility of Tenant and shall cause no delay
in the commencement of the Lease or the rental and other obligations therein set
forth.

7. Standards of Design and Construction and Conditions of Tenant's  Performance.
All work done in or upon the Premises by Tenant  shall be done  according to the
standards  set forth in this  Paragraph 7, except as the same may be modified in
the Plans approved by or on behalf of Landlord and Tenant.

         (a) Tenant's  Plans and all design and  construction  of the Work shall
comply with all applicable statutes,  ordinances,  regulations,  laws, codes and
industry  standards.  Approval by Landlord of the Plans shall not  constitute  a
waiver of this  requirement  or  assumption  by Landlord of  responsibility  for
compliance.  Where several sets of the foregoing laws,  codes and standards must
be met, the strictest  shall apply where not  prohibited by another law, code or
standard.

         (b) Tenant  shall  obtain,  at its own cost and  expense,  all required
building permits and, when construction has been completed, shall obtain, at its
own cost and expense,  an  occupancy  permit for the  Premises,  a copy of which
permit shall be delivered to Landlord.

         (c) Tenant's Contractors shall be licensed contractors, possessing good
labor  relations,  capable of  performing  quality  workmanship  and  working in
harmony  with  Landlord's   contractors  and   subcontractors   and  with  other
contractors and  subcontractors  in the Building.  All work shall be coordinated
with any other  construction  or other work in the  Building or Project in order
not to affect adversely construction work being performed by or for Landlord, it
being  understood  that,  in  the  event  of  any  conflict,  Landlord  and  its
contractors  and  subcontractors  shall have  priority  over Tenant and Tenant's
Contractors.

         (d) Landlord shall have the right,  but not the obligation,  to perform
on behalf of and for the account of Tenant,  subject to reimbursement by Tenant,
any work (i) which  Landlord deems to be necessary on an emergency  basis,  (ii)
which pertains to structural components, building systems or the general utility
systems for the Building,  or(iii)  which  pertains to the erection of temporary
safety barricades or signs during construction.

         (e)  Tenant  shall use only  new,  first-class  materials  in the Work,
except where  explicitly  shown  otherwise in the Plans approved by Landlord and
Tenant.  Tenant shall obtain warranties of at least one (1) year's duration from
the completion of the Work against  defects in workmanship  and materials on all
work performed and equipment installed in the Premises as part of the Work.

         (f) Tenant and Tenant's  Contractors  shall comply with all  reasonable
rules and  regulations  existing from time to time at the Project.  Construction
equipment and  materials  are to be kept within the  Premises,  and delivery and
loading of equipment and materials  shall be done at such  locations and at such
time as Landlord shall direct.

         (g)  Landlord  shall have the right to order  Tenant or any of Tenant's
Contractors  who  violate  the  requirements   imposed  on  Tenant  or  Tenant's
Contractors  in  performing  work to cease  work and remove  its  equipment  and
employees  from the Building or Project.  No such action by Landlord shall delay
the  commencement of the Lease or the rental and other  obligations  therein set
forth.

         (h) Tenant shall arrange and pay for removal of construction debris and
shall not place debris in the Building's or Project's waste containers.

         (i) Tenant shall permit access to the  Premises,  and the Work shall be
subject  to  inspection,  by  Landlord  and  Landlord's  architects,  engineers,
contractors  and other  

<PAGE>

representatives  at all  times  during  the  period  in which  the Work is being
constructed and installed and following completion of the Work.

         (j) Tenant shall proceed with its work expeditiously,  continuously and
efficiently,  and shall use its best  efforts  to  complete  the same as soon as
reasonably  possible.  Tenant shall notify  Landlord upon completion of the Work
and shall furnish  Landlord with such further  documentation as may be necessary
under Paragraphs 9 below.

         (k) Tenant shall  furnish to Landlord  "as-built"  drawings of the Work
within thirty (30) days after completion of the Work.

         (l) Tenant  shall  impose on and enforce all  applicable  terms of this
Workletter against Tenant's architect and Tenant's Contractors.

8.       Insurance and Indemnification.

         (a) In addition to any insurance which may be required under the Lease,
Tenant shall  secure,  pay for and  maintain or cause  Tenant's  Contractors  to
secure,  pay for  and  maintain  during  the  continuance  of  construction  and
fixturing  work within the  Building or  Premises,  insurance  in the  following
minimum coverages and limits of liability:

                  (i) workers'  compensation and employers'  liability insurance
with  limits of not less than  $500,000.00,  or such  higher  amounts  as may be
required  from  time to time by any  employee  benefit  acts or  other  statutes
applicable  where the work is to be  performed,  and in any event  sufficient to
protect Tenant's Contractors from liability under the aforementioned acts;

                  (ii) comprehensive or commercial  general liability  insurance
(including  contractors'  protective  liability)  in an  amount  not  less  than
$2,000,000.00  per occurrence,  whether  involving  bodily injury  liability (or
death resulting therefrom) or property damage liability or a combination thereof
with a minimum aggregate limit of not less than  $10,000,000.00.  Such insurance
shall  provide for explosion and  collapse,  completed  operations  coverage and
broad form blanket  contractual  liability  coverage  and shall insure  Tenant's
Contractors  against  any and all  claims  for bodily  injury,  including  death
resulting  therefrom,  and damage to the property of others and arising from its
operations under the contracts whether such operations are performed by Tenant's
Contractors or by anyone directly or indirectly employed by any of them;

                  (iii) comprehensive automobile liability insurance,  including
the ownership,  maintenance  and operation of any automotive  equipment,  owned,
hired or nonowned, in an amount not less than $500,000.00 for each person in one
accident and $1,000,000.00 for injuries  sustained by two or more persons in any
one  accident,  and  property  damage  liability  in an  amount  not  less  than
$1,000,000.00   for  each  accident.   Such  insurance   shall  insure  Tenant's
Contractors  against  any and all  claims  for bodily  injury,  including  death
resulting  therefrom,  and damage to the  property  of others  arising  from its
operations  under the  contracts,  whether  such  operations  are  performed  by
Tenant's  Contractors  or by anyone  directly or  indirectly  employed by any of
them;

                  (iv) "all risk"  builder's risk insurance upon the entire Work
to the full insurable value thereof.  This insurance shall include the interests
of Landlord and Tenant (and their respective  contractors and  subcontractors of
any tier to the extent of any insurable  interest therein) in the Work and shall
insure  against the perils of fire and extended  coverage and shall include "all
risk"  builder's risk insurance for physical loss or damage  including,  without
duplication of coverage, theft, vandalism and malicious mischief. If portions of
the Work are stored off the site of the  Building or in transit to said site are
not covered under said "all risk"  builder's risk  insurance,  then Tenant shall
effect and maintain similar property insurance on such portions of the Work. Any
loss insured under said "all risk"  builder's  risk  insurance is to be adjusted
with  Landlord  and  Tenant  and made  payable to  Landlord  as trustee  for the
insureds, as their interests may appear.

All policies  (except the  workers'  compensation  policy)  shall be endorsed to
include  as  additional  insured  parties  Landlord,  the  Mortgagees,  and  the
Additional Insureds named in Item 16 of the Basic Lease Provisions The waiver of
subrogation  provisions  contained  in the Lease  shall  apply to all  insurance
policies  (except  the  workers'  compensation  policy) to be obtained by Tenant
pursuant to this Paragraph. The insurance policy endorsements shall also provide
that all  additional  insured  parties  shall be given  thirty  (30) days' prior
written notice of any  cancellation  or nonrenewal of coverage  (except that ten
(10) days' notice shall be sufficient in the case of cancellation for nonpayment
of  premium)  and shall  provide  that the  insurance  coverage  afforded to the
additional  insured parties thereunder shall be primary to any insurance carried
independently   by  said  additional   insured  parties.   Additionally,   where
applicable,  each policy shall contain a  cross-liability  and  severability  of
interest clause.

         (b) Without limitation of the indemnification  provisions  contained in
the Lease,  to the fullest  extent  permitted by law Tenant agrees to indemnify,
protect,   defend  and  hold  harmless  Landlord,   Landlord's  contractors  and
Landlord's  architects and their partners,  directors,  officers,  employees and
agents, from and against all claims,  liabilities,  losses, damages and expenses
of whatever nature arising out of or in connection with the Work or the entry of
Tenant or Tenant's  Contractors into the Project, the Building and the Premises,
including,  without  limitation,  mechanics' liens or the cost of any repairs to
the  Premises,  Building  or Project  necessitated  by  activities  of Tenant or
Tenant's  Contractors  and bodily injury to persons or damage to the property of
Tenant, its employees, agents, invitees or licensees or others. It is understood
and agreed that the  foregoing  indemnity  shall be in addition to the insurance
requirements set forth above and shall not be in discharge of or in substitution
for same or any other indemnity or insurance provision of the Lease.

<PAGE>

9.       Landlord's Contribution; Excess Amounts.

         (a) Upon  completion of the work,  Tenant shall  furnish  Landlord with
final  waivers  of liens  and  contractors'  affidavits,  in such form as may be
required by Landlord,  from all parties performing labor or supplying  materials
or services in  connection  with the Work  showing that all of said parties have
been  compensated in full and waiving all liens in connection  with the Premises
and Building.  Tenant shall submit to Landlord a detailed  breakdown of Tenant's
total  construction  costs,  together  with  such  evidence  of  payment  as  is
reasonably satisfactory to Landlord.

         (b)  Upon  completion  of the  Work and  Tenant's  satisfaction  of all
requirements set forth herein,  Landlord shall make a dollar contribution in the
amount of Three Hundred Ninety Five Thousand  Dollars  ($395,000.00)("Landlord's
Contribution")  for  application  to the extent thereof to the cost of the Plans
and the Work.  If such  costs of the Plans and the Work and  exceeds  Landlord's
Contribution,  Tenant solely shall have  responsibility  for the payment of such
excess  cost.  If the cost of the  Plans,  and the Work is less than  Landlord's
Contribution,   Landlord  shall  be  entitled  to  retain  such  excess  amount.
Notwithstanding  anything  herein to the  contrary,  Landlord  may  deduct  from
Landlord's  Contribution  any  amounts  due to  Landlord  or its  architects  or
engineers under this Workletter.

         10. Miscellaneous.

         (a) Except as expressly set forth herein or in the Lease,  Landlord has
no agreement  with Tenant and has no  obligation  to do any work with respect to
the Premises.

         (b) If the Plans for the Work require the construction and installation
of more fire hose  cabinets  or  telephone/electrical  closets  than the  number
provided in the core of the Building in which the  Premises  are  located,  then
Tenant agrees to pay all costs and expenses  arising from the  construction  and
installation  of such  additional  fire hose  cabinets  or  telephone/electrical
closets.

         (c) Time is of the essence under this Workletter.

         (d) Any person  signing this  Workletter  on behalf of Landlord  and/or
Tenant warrants and represents he has authority to do so.

         (e) If  Tenant  fails  to make  any  payment  relating  to the  Work as
required hereunder,  Landlord,  at its option, may complete the work pursuant to
the approved  Plans and continue to hold Tenant liable for the costs thereof and
all other costs due to  Landlord.  Tenant's  failure to pay any amounts  owed by
Tenant  hereunder  when due or  Tenant's  failure  to  perform  its  obligations
hereunder  shall also  constitute a default under the Lease,  and Landlord shall
have all the  rights  and  remedies  granted  to  Landlord  under  the Lease for
nonpayment  of any amounts owed  thereunder  or failure by Tenant to perform its
obligations thereunder.

         (f) Notices under this Workletter  shall be given in the same manner as
under the Lease.

         (g) The liability of Landlord  hereunder or under any amendment  hereto
or any  instrument  or document  executed  in  connection  herewith  (including,
without  limitation,  the  Lease)  shall be limited  to and  enforceable  solely
against Landlord's interest in the Building.

         (h) The headings set forth herein are for convenience only.

         (i) This  Workletter  sets  forth the  entire  agreement  of Tenant and
Landlord  regarding the Work.  This Workletter may only be amended if in writing
and duly executed by both Landlord and Tenant.

<PAGE>


  IN WITNESS WHEREOF,  this Workletter is executed as of the date and year first
written above.


                                 "LANDLORD"

                                 Birtcher Property Services as Manager for
                                 Scripps Jack, Ltd., a California corporation

                                 By:    /s/ Michael S. Buzar
                                        ----------------------------------------
                                 Name:  Michael S. Buzar

                                 Title: Senior Vice President

                                 Date:  November 13, 1996


                                 By:     /s/ Linda L. Bettini
                                         ---------------------------------------
                                 Name:   Linda L. Bettini, CPM

                                 Title:  Vice President

                                 Date:   November 13, 1996


                                 "TENANT"

                                  Agouron Pharmaceuticals, Inc., a California
                                  corporation

                                  By:    /s/ Glenn Zinser
                                         ---------------------------------------
                                  Name:  Glenn Zinser

                                  Title: Vice President, Operations

                                  Date:       November 8, 1996


                                  By:    /s/ Gary Friedman
                                         ---------------------------------------
                                  Name:  Gary E. Friedman, Esq.

                                  Title: Vice President and General Counsel

                                  Date:  November 8, 1996



<PAGE>


                                   EXHIBIT "D"
                          COMMENCEMENT DATE MEMORANDUM



TO:                                                           DATED:___________


     "Tenant"

Re:  Office Lease dated ________________________, 19___, by and between _______
_______________________________________, as Landlord, and _____________________,
as Tenant (the "Lease").

     Please acknowledge that the Commencement Date of the Lease is _________,
19___ and that the Expiration Date of the Lease is _______________, 19__.
  
Very truly yours,



By:  ________________________

Its: ________________________

              "Landlord"


     Tenant  hereby  confirms  the  information  set forth  above,  and  further
acknowledges that Landlord has fulfilled its obligations,  if any, regarding the
construction   of   Tenant's   initial   leasehold    improvements   under   the
above-referenced Lease.


By:  ________________________

Its: ________________________


Dated:______________________, 19__

             "Tenant"



<PAGE>


                                   EXHIBIT "E"
                           ADJUSTMENT TO MONTHLY RENT



<TABLE>
<CAPTION>

                                                               Monthly Rent
                                                            per Square Foot
                                                                Of Gross
                  Period                                      Building Area
                  ------                                    -----------------
<S>                                                              <C>

May 15,1997 through and including December 31, 1997               $1.45

January 1, 1998 through and including December 31, 1998           $1.49

January 1, 1999 through and including December 31, 1999           $1.54

January 1, 2000 through and including December 31, 2000           $1.58

January 1, 2001 through and including December 31, 2001           $1.63


</TABLE>
<PAGE>


                                    EXHIBIT F
                              RULES AND REGULATIONS


                  This  Exhibit sets forth the rules and  regulations  governing
Tenant's use of the Premises leased to Tenant  pursuant to the terms,  covenants
and  conditions  of the Lease to which this Exhibit is attached and therein made
part thereof. Unless otherwise defined, capitalized terms used herein shall have
the same  meaning as set forth in the  Lease.  In the event of any  conflict  or
inconsistency between this Exhibit and the Lease, the Lease shall control.

                  1. Tenant  shall not place  anything  or allow  anything to be
placed near the glass of any window,  door,  partition  or wall which may appear
unsightly from outside the Premises.

                  2. The walls, walkways,  sidewalks,  entrance passages, courts
and  vestibules  shall not be  obstructed  or used for any  purpose  other  than
ingress and egress of pedestrian travel to and from the Premises,  and shall not
be  used  for  loitering  or  gathering,  or to  display,  store  or  place  any
merchandise,  equipment  or devices,  or for any other  purpose.  The  walkways,
entrance  passageways,  courts,  vestibules  and roof are not for the use of the
general public and Landlord shall retain the right to control and prevent access
thereto by all  persons  whose  presence in the  judgment  of Landlord  shall be
prejudicial to the safety,  character,  reputation and interests of the Building
and its tenants,  provided that nothing therein  contained shall be construed to
prevent such access to persons with whom Tenant  normally  deals in the ordinary
course  of  Tenant's  business  unless  such  persons  are  engaged  in  illegal
activities.

                  3. No  awning or other  projection  shall be  attached  to the
outside  walls of the  Building.  No security  bars or gates shall be  installed
without  the prior  written  consent of  Landlord,  which  consent  shall not be
unreasonably withheld. Neither the interior nor exterior of any windows shall be
coated or otherwise sunscreened without the express written consent of Landlord,
which consent shall not be unreasonably withheld.

                  4.  Tenant  shall  not in any  way  deface  any  part  of the
Premises or the Building.  The expense of repairing any damage  resulting from a
violation of this rule shall be borne by the Tenant.

                  5. The toilet rooms,  urinals,  wash bowls and other  plumbing
apparatus  shall not be used for any purpose other than that for which they were
constructed  and no foreign  substance  or any kind  whatsoever  shall be thrown
therein.  The expense for any breakage,  stoppage or damage  resulting  from the
violation of this rule shall be borne by the Tenant.

                  6. The Premises shall not be used for  manufacturing,  offices
or the  storage  of  merchandise  except  as the  same me be  incidental  to the
permitted use of the Premises.  No exterior storage shall be allowed at any time
without prior written  approval of Landlord.  The Premises shall not be used for
cooking or washing clothes without the prior written consent of Landlord, or for
lodging or sleeping or for any illegal purposes.

                  7. Tenant shall not make,  or permit to be made,  any unseemly
or disturbing  noises or disturb or interfere with the  neighboring  building or
premises or those having  business with them,  whether by the use of any musical
instrument, radio, phonograph, machinery, or otherwise.

                  8.  Tenant  shall  not use the  name  of the  Building  or the
Project in  connection  with or in  promoting  or  advertising  the  business of
Tenant,  except as  Tenant's  address,  without  the prior  written  consent  of
Landlord.  Landlord shall have the right to prohibit any advertisement by Tenant
which, in Landlord's  reasonable opinion,  tends to impair the reputation of the
Project or its  desirability  for its intended use, and upon written notice from
Landlord Tenant shall refrain from or discontinue such advertising.

                  9.  Canvassing,  soliciting,  peddling,  parading,  picketing,
demonstrating or otherwise engaging in any conduct that unreasonably impairs the
value or use of the  Premises  or the Project are  prohibited  and Tenant  shall
cooperate to prevent the same.

                  10. All equipment of any electrical or mechanical nature shall
be placed by Tenant  on the  Premises,  in  settings  approved  by  Landlord  in
writing,  in such a way as to best  minimize,  absorb and prevent any vibration,
noise or  annoyance.  No  Equipment of any type shall be [placed on the Premises
which in  Landlord's  opinion  exceeds the load limits of the floor or otherwise
threatens the soundness of the structure or improvements of the Building.

                  11. No aerial antenna shall be erected on the roof or exterior
of the  Premises,  or on the rounds,  without in each instance the prior written
consent of Landlord.  Any aerial  antenna so installed by or on behalf of Tenant
without such written consent shall be subject to removal by Landlord at any time
without prior notice at the expense of Tenant,  and Tenant shall upon Landlord's
demand pay a removal fee to Landlord of not less than $200.00.

                  12.  The entire  Premises,  including  vestibules,  entrances,
doors, fixtures,  windows and plate glass, shall at all times be maintained in a
safe, neat and clean condition by Tenant. All trash, refuse and wastes materials
shall be  regularly  removed  from the  Premises  by  Tenant  and  placed in the
containers at the locations  designated by Landlord for refuse  collection.  All
cardboard  boxes  must be  "broken  down"  prior to being  placed  in the  trash
containers.  All Styrofoam chips must be bagged or otherwise  contained prior to
placement in the trash containers,  so as not to constitute a nuisance.  Pallets
may not be disposed of in the trash  containers  or  enclosures.  The burning of
trash, refuse or waste materials is prohibited.

                  13. Tenant shall use at Tenant's cost such pest  extermination
contractor  as Landlord may direct and at such  intervals as Landlord and Tenant
determine necessary.

                  14.  Tenant shall not change  locks or install  other locks on
doors of the  Premises,  without the prior written  consent of Landlord.  In the
event of loss of any keys furnished by Landlord for Tenant,  Tenant shall pay to
Landlord the cost thereof.

<PAGE>

                  15. No person shall enter or remain  within the Project  while
intoxicated  or under the influence of liquor or drugs.  Landlord shall have the
right to exclude or expel from the  Project  any  person  who,  in the  absolute
discretion of Landlord, is under the influence of liquor or drugs.

                  Tenant  agrees to comply with all such Rules and  Regulations.
Should  Tenant not abide by these Rules and  Regulations,  Landlord  may serve a
three (3) day notice to correct the  deficiencies.  If Tenant has not  corrected
the  deficiencies by the end of the notice period,  Tenant will be in default of
the Lease,  and  Landlord  and/or  its  designee  shall have the right,  without
further notice, to cure the violation at Tenant's expense.

                  Neither Landlord nor Landlord's  Agents or any other person or
entity shall be  responsible  to Tenant or to any other person for the ignorance
or violation of these Rules and Regulations by any other tenant or other person.
Tenant  shall be deemed to have read  these  Rules and  Regulations  and to have
agreed to abide by them as a condition precedent,  waivable only by Landlord, to
Tenant's occupancy of the Premises.



<PAGE>


                               RIDER NO.1 TO LEASE
                             DATED October 25, 1996
                                 BY AND BETWEEN
              Scripps Jack, Ltd., a California limited partnership,
             AS LANDLORD Agouron Pharmaceuticals, Inc., a California
                             corporation, AS TENANT

This Rider,  dated as of October 17, 1996, is attached to and made a part of the
above-described lease (the "Lease") between the above-named Landlord and Tenant.
Except as otherwise set forth in this Rider,  all terms used in this Rider shall
have the same meaning as when used in the foregoing portion of the Lease. To the
extent of any inconsistencies  between the foregoing provisions of the Lease and
the provisions of this Rider, the former are hereby amended.

OPTION TO EXTEND

         (a) Option. Tenant shall have the right to extend the Term of the Lease
for a period of sixty (60) months (the "Extension Period"), provided that Tenant
(i) is not in actual default under any provision of the Lease, (ii) is occupying
substantially  all of the Premises,  and (iii) has not assigned or subleased any
portion of the  Premises,  unless  otherwise  approved by Landlord in other such
assignment or sublease agreements.

         (b) Exercise of Option.  Tenant shall  exercise its right to extend the
Lease Term only by delivering  written notice to Landlord or Tenant's  desire to
so extend the Lease  Term no greater  than 270 days nor less than 180 days prior
to the commencement of each Extension Period (the "Extension Notice").

         (c) New Lease Or Extension  Amendment.  Upon  receipt of the  Extension
Notice,  Landlord shall prepare and deliver to Tenant an amendment to this Lease
(the  "Extension  Amendment")  or, if Landlord is then utilizing a form of lease
different  from this Lease,  Landlord  shall  deliver to Tenant a new lease (the
"New Lease").  The Extension  Amendment or New Lease shall provide for a Monthly
Rental equal to the fair market  rental for the Premises  determined by Landlord
according  to the rental then being  charges  for  comparable  space  within the
Sorrento Mesa area.  Fair market  rental as used above shall  include  increases
from the initial option rental which are typically included in leases negotiated
at that time.

         (d) Objection to Landlord's  Determination  of Fair Market  Rental.  If
Tenant  objects to  Landlord's  determination  of the fair market rental for the
Premises,  Landlord shall appoint a qualified  Commercial Real Estate profession
with at least  ten (10)  years of  experience  to  appraise  the  Premises  (the
"Landlord's  Appraisal")  for the purpose of determining the fair market rental.
The  Landlord's  Appraisal  shall be the fair  market  rental for the purpose of
determining  the Monthly  Rental during the Extension  Period.  Tenant shall (i)
within  five (5) days  after the  receipt of  written  notice of the  Landlord's
Appraisal  employ and pay an MAI  appraiser to determine  the fair market rental
for the Premises (the  "Tenant's  Appraisal"),  and (ii) within twenty (20) days
thereafter,  submit to  Landlord,  Tenant's  Appraisal  together  with a written
summary of the methods used and data  collected to make such  determination.  If
Landlord's  Appraisal and Tenant's Appraisal differ by (i) less than ten percent
(10%),  the greater of the two shall be the fair market  rental for the Premises
or (ii) more than ten percent (10%), Landlord and Tenant shall promptly instruct
its  appraiser to jointly  appoint a third MAI  appraiser to determine  the fair
market  rental for the  Premises  (the "Third  Appraisal").  Landlord and Tenant
shall  each pay  one-half  (1/2) of the  expenses  of the Third  Appraisal.  The
appraisal  among the three (3) that is  furthest  from the  median of all of the
appraisals  shall be  disregarded  and the average of the other two shall be the
fair market rental for the Premises and binding upon Landlord and Tenant.  Until
appraisal  procedures  are  final,  Landlord  and  Tenant  shall  abide  by  the
provisions of the Extension Amendment or New Lease.  Notwithstanding anything to
the contrary  herein,  by giving written notice to Landlord within five (5) days
of  determination  of the fair  market  rental by the  appraiser(s),  Tenant may
withdraw  the exercise of its option and pay the  Landlord's  share of appraisal
fees, in which case the Lease Term shall terminate upon the Expiration Date.

         (e) Time is of the Essence.  Time shall be of the essence regarding all
the  periods set forth above for the  exercise of the option,  execution  of the
Extension  Amendment or New Lease and the objection to the  determination of the
fair market  rental for the Premises.  The failure of Tenant to timely  exercise
the option as provided in  paragraphs  (b) and (c) above shall cause this option
to  automatically  cease and  terminate,  and, in such  event,  this Lease shall
terminate  without  extension.  If Tenant or Landlord fail to timely comply with
the provisions of paragraph (d), the Non-Complying Party shall be deemed to have
accepted the fair market rental as determined by the Complying Party.

         (f) It is understood  and agreed that this option to extend is personal
to  Agouron  Pharmaceuticals,   Inc.,  a  California  corporation,  and  is  not
transferable;  in the event of any assignment or subleasing of any or all of the
Premises, this option to extend shall be null and void.

<PAGE>

                             SIGNTURE PAGE FOLLOWS

                                 "LANDLORD"

                                 Birtcher Property Services as Manager for
                                 Scripps Jack, Ltd., a California corporation

                                 By:    /s/ Michael S. Buzar
                                        ----------------------------------------
                                 Name:  Michael S. Buzar

                                 Title: Senior Vice President

                                 Date:  November 13, 1996


                                 By:     /s/ Linda L. Bettini
                                         ---------------------------------------
                                 Name:   Linda L. Bettini, CPM

                                 Title:  Vice President

                                 Date:   November 13, 1996


                                 "TENANT"

                                  Agouron Pharmaceuticals, Inc., a California
                                  corporation

                                  By:    /s/ Glenn Zinser
                                         ---------------------------------------
                                  Name:  Glenn Zinser

                                  Title: Vice President, Operations

                                  Date:       November 8, 1996


                                  By:    /s/ Gary Friedman
                                         ---------------------------------------
                                  Name:  Gary E. Friedman, Esq.

                                  Title: Vice President and General Counsel

                                  Date:  November 8, 1996