Document:

<PAGE>

                                                                 Exhibit 10.8(i)

                                MARINA VILLAGE
                            NET OFFICE - TECH LEASE
                            BASIC LEASE INFORMATION
                            -----------------------

<TABLE>
<S>                              <C>                                                      <C>
Date:                            January 15, 1998

Landlord:                        ALAMEDA REAL ESTATE INVESTMENTS,
                                 a California limited partnership

Tenant:                          XENOGEN CORPORATION                                      Lease Reference
                                                                                          ---------------

Premises and Building:           860 Atlantic Avenue                                      Paragraph 1
                                 Alameda, CA  94501

Term Commencement:               February 1, 1998                                         Paragraph 2

Term Expiration:                 January 31, 2003                                         Paragraph 2

Base Rent:                       2/1/98 - 1/31/99:  $38,394                               Paragraph 3(a)
                                 2/1/99 - 1/31/00:  $39,546
                                 2/1/00 - 1/31/01:  $40,732
                                 2/1/01 - 1/31/02:  $41,954
                                 2/1/02 - 1/31/03:  $43,213

Tenant's Percentage Share:       100%                                                     Paragraph 4(a)

Use:                             Office, biotechnology/pharmaceutical research and        Paragraph 6
                                 development including small live animal storage,
                                 and related manufacturing and warehousing

Security Deposit:                $38,394.00                                               Paragraph 15

Tenant's Address for Notices:    Prior to Commencement Date:
                                 c/o Pamala Contag
                                 P.O. Box 9497
                                 Stanford, CA 94309

                                 Following Commencement Date:
                                 860 Atlantic Avenue                                      Paragraph 19
                                 Alameda, CA 94501
                                 Attn:  President

Landlord's Address for Notices:                                                           Paragraph 19

Alameda Real Estate Investments  With a Copy To:
                                 ---------------
c/o Vintage Properties           Marina Village
Attn:  Joseph R. Seiger          1150 Marina Village Pkwy, Suite 100
314 Lytton Avenue, Suite 200     Alameda, CA 94501
Palo Alto, CA 94301              Attn:  Property Manager

Exhibit(s) and Addendum(s):                                                               Paragraph 21
</TABLE>

Exhibit A:  Diagram of Premises
Exhibit B:  Tenant Improvements
Addendum
Form of Subordination, Non-Disturbance and Attornment Agreement

The provisions of the Lease identified above in the margin are those provisions
where references to particular Basic Lease Information appear. Each such
reference shall incorporate the applicable Basic Lease Information. In the event
of any conflict between any Basic Lease Information and the Lease, the latter
shall control.

TENANT:                                LANDLORD:

XENOGEN CORPORATION,                   ALAMEDA REAL ESTATE INVESTMENTS,
a California corporation               a California limited partnership

                                       By:  Vintage Alameda Investments, LP
                                            a California limited partnership,
                                            operating general partner
<TABLE>
By: /s/ Pamela Reilly Contag
   ---------------------------
<S>                                         <C>
                                            By:  Vintage Properties - Alameda Commercial,
Title: CEO & President                           a California corporation,
       -----------------------                   managing general partner

                                                 By: /s/ Joseph Seiger
                                                    -------------------------
                                                 Title: President
                                                       ----------------------
</TABLE>

                                       1
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                                AMENDMENT NO. 1
                                      TO
                                MARINA VILLAGE
                            NET OFFICE - TECH LEASE

THIS AMENDMENT NO. 1 TO MARINA VILLAGE NET OFFICE-TECH LEASE is made and entered
into as of July 16, 1998, by and between ALAMEDA REAL ESTATE INVESTMENTS, a
California limited partnership ("Landlord") and XENOGEN CORPORATION, a
California corporation, ("Tenant").

Landlord and Tenant have previously entered into that certain Marina Village Net
Office-Tech Lease dated January 15, 1998, (the "Lease") with respect to certain
premises located in 860 Atlantic Avenue, Alameda, California. Landlord and
Tenant now desire to amend the lease as hereinafter provided and, accordingly,
Landlord and Tenant hereby agree as follows (unless otherwise defined, all
capitalized terms used in this Amendment shall have the same meanings as set
forth in the Lease):

1.   Amendment of Paragraph 20 of Addendum.  Subparagraph 20(b)(iii) of the
     --------------------------------------
     Addendum to the Marina Village Net Office-Tech Lease is hereby deleted and
     restated in its entirety as follows:

     "20(c).  Pursuant to the terms of subparagraph 20(b)(i) above, Tenant has
              requested the Additional TI Allowance. Landlord shall pay such
              Additional TI Allowance on or before August 1, 1998 provided that
              (i) no portion of the Additional TI Allowance is applied to pay
              for the cost of millwork or cabinetry which may be removed by
              Tenant at the end of the term, furniture or trade equipment or
              trade fixtures and (ii) Tenant complies with the provisions of
              subparagraph 20(b)(ii) above."

2.   Amendment of Paragraph 3.  Rent subparagraph 3(c) of the Addendum to the
     -------------------------
     Marina Village Net Office-Tech Lease is revised to read as follows:

     "3(c).   If and to the extent Landlord advances the Additional TI Allowance
              under paragraph 20 of the Addendum to Lease, Base Rent shall be
              increased by the amount each month necessary to amortize the
              amount so advanced by Landlord as the Additional TI Allowance over
              the remaining term of the Lease together with interest at the rate
              of 10% per annum."

3.   Amendment of Basic Lease Information.
     -------------------------------------

     1.   In the event Landlord delivers the entire additional TI Allowance to
          Tenant allowance on or before August 1, 1998, the Basic Lease
          Information shall be amended to read as follows:

          "Base Rent:  2/1/98 - 7/31/98  $38,394.00/month
                       8/1/98 - 1/31/99  $40,165.68/month
                       2/1/99 - 1/31/00  $41,317.68/month
                       2/1/00 - 1/31/01  $42,732.68/month
                       2/1/01 - 1/31/02  $43,954.68/month
                       2/1/02 - 1/31/03  $44,213.68/month"

          "The payment of such Base Rent shall satisfy the provisions of
          paragraph 3(c) of the Addendum to the Marina Village Net Office-Tech
          Lease."

     b.   In the event Landlord does not deliver the entire Additional TI
          Allowance to Tenant on or before August 1, 1998, paragraph 3(a) of
          this Amendment shall be deleted in its entirety, and Base Rent shall
          be adjusted in compliance with the provisions of paragraph 3(c) of the
          Addendum to the Marina Village Net Office-Tech Lease.

4.   Ratification.  Landlord and Tenant hereby ratify and confirm all of the
     -------------
     terms of the Lease as modified by paragraphs 1 thru 3 above. Except as
     expressly set forth to the contrary in this Amendment, the Lease, as
     amended, remains unmodified and in full force and effect. To the extent of
     any conflict between the term of this Amendment and terms of the Lease, the
     terms of this Amendment shall control.

IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 1 as of
the date first set forth above.

TENANT:                            LANDLORD:

XENOGEN CORPORATION,               ALAMEDA REAL ESTATE INVESTMENTS,
a California corporation           a California limited partnership
<PAGE>

                              By:  Vintage Alameda Investments, LP
                                   a California limited partnership,
                                   operating general partner

                              By:  Vintage Properties - Alameda Commercial,
                                   a California corporation,
                                   managing general partner

By: /s/ Pamela Reilly contag       By: _______________________________
    ------------------------

Title: President
       ---------------------       Title:_____________________________

<PAGE>

                                MARINA VILLAGE
                             NET OFFICE-TECH LEASE

                             ---------------------

THIS LEASE, dated as of January 15, 1998, for purposes of reference only, is
made and entered into by and between ALAMEDA REAL ESTATE INVESTMENTS, a
California limited partnership ("Landlord"), and XENOGEN CORPORATION, a
California corporation ("Tenant").

     WITNESSETH

1.   Premises.  Landlord hereby leases to Tenant, and Tenant hereby leases from
     --------
     Landlord for the term of this Lease and at the rental and upon the
     conditions set forth below, the premises described in the Basic Lease
     Information and identified on the diagram attached hereto as Exhibit A.
     Landlord and Tenant agree that the amount of rentable square feet as set
     forth in the Basic Lease Information or, if such amount is an
     approximation, the final rentable square feet as determined upon completion
     of working drawings, shall be binding and conclusive for all purposes of
     this Lease. Subject to any obligations of Landlord as set forth in an
     exhibit to this Lease relating to initial improvement of the premises,
     Tenant shall accept the premises in its "as-is" condition at the
     commencement of the term. The premises are located within the building (the
     "Building") commonly known as described in the Basic Lease Information.

2.   Term.
     ----

     a. The term of this Lease shall commence and, unless sooner terminated as
     hereinafter provided, shall end on the dates respectively specified in the
     Basic Lease Information. If Landlord, tow any reason whatsoever, cannot
     deliver possession of the premises to Tenant at the commencement of the
     term, this Lease shall not be void or voidable, nor shall Landlord be
     liable to Tenant for any loss or damage resulting therefrom, but in that
     event, subject to any contrary provisions in any agreement with Landlord
     related to the initial improvement of the premises, rental shall be waived
     for the period between commencement of the term and the time when Landlord
     can deliver possession. If, for any reason beyond Landlord's reasonable
     control, Landlord is unable to obtain necessary governmental approvals to
     complete and deliver possession of the premises to Tenant, then Landlord
     may, upon notice to Tenant, terminate this Lease and both parties shall be
     relieved of any and all obligations hereunder.

     b. Prior to the commencement of the term, Landlord shall complete the
     Tenant Improvements to be constructed or installed in the premises pursuant
     to Exhibit B attached hereto. The Tenant Improvements shall be deemed
     completed and possession of the premises delivered when Landlord has
     substantially completed the Tenant Improvements, subject only to the
     completion of minor items which do not materially impair the usability of
     the Tenant Improvements by Tenant, and Tenant shall accept the premises
     upon notice from Landlord that the Tenant Improvements have been so
     completed.

3.   Rent.
     ----

     a. Tenant shall pay to Landlord as rental the amount specified in the Basic
     Lease Information as the Base Rent, payable in advance on the commencement
     of the term and on or before the first day of each and every successive
     calendar month during the term. If the term commences on other than the
     first day of a calendar month, the first payment of rent shall be
     appropriately prorated on the basis of a 30-day month. The anniversary date
     for rental increases as set forth in the Basic Lease Information shall be
     the first calendar day of the month in which the Lease term commenced. If
     the last day of the term falls on a date other than die last day of the
     month, then the term shall be extended so that the last day of the term
     shall be the last calendar day of the month in which the term would
     otherwise end.

     b. Tenant shall pay, as additional rent, all amounts of money required to
     be paid to Landlord by Tenant under this Lease in addition to monthly rent,
     whether or not the same be designated "additional n nt". If such amounts
     are not paid at the time provided in this Lease, they shall nevertheless be
     a collectable as additional rent with the next installment of monthly rent
     thereafter falling due, but nothing herein contained shall be deemed to
     suspend or delay the payment of any amount of money at the time the same
     becomes due and payable hereunder, or limit any other remedy of Landlord.

     c. Tenant hereby acknowledges that late payment by the Tenant to Landlord
     of rent and other amounts due hereunder will cause Landlord to incur costs
     not contemplated by this Lease, the exact amount of which will be extremely
     difficult to ascertain. Such costs include, but are not limited to,
     processing and accounting charges, and late charges which may be imposed on
     Landlord by the terms of any trust deed covering the premises. Accordingly,
     if any installments of rent or any other sums due from Tenant shall not be
     received by Landlord when due, then Tenant shall pay to Landlord a late
     charge equal to six percent (6%) of such overdue amount. The parties hereby
     agree that such late charges represent a fair and reasonable estimate of
     the costs Landlord will incur by reason of late payment by Tenant.
     Acceptance of such late charge by Landlord shall in no event constitute a
     waiver of Tenant's default with respect to such overdue amount, nor prevent
     Landlord from exercising any of the other rights and remedies granted
     hereunder

     d. Any amount due to Landlord, if not paid when due, shall bear interest
     from the date due until the date paid at the rate of ten percent (10%) per
     annum or, if a higher rate is legally permissible, at the highest rate
     legally permitted, provided that interest shall not be payable on late
     charges incurred by Tenant nor on any amounts upon which late charges are
     paid by Tenant to the extent such interest would cause the total interest
     to be in excess of that legally permitted. Payment of interest shall not
     excuse or cure any default hereunder by Tenant.

     e. All payments due from Tenant to Landlord hereunder shall be made to
     Landlord without deduction or offset in lawful money of the United States
     of America at Landlord's address for notices hereunder, or to such other
     person or at such other place as Landlord may from time to time designate
     in writing to Tenant.

4.   Taxes and Operating Expenses.
     ----------------------------

     a. Tenant shall pay its percentage share, as specified in the Basic Lease
     Information, of all Property Taxes assessed with respect to the Building
     during the Lease term and its percentage share of all Operating Expenses
     paid or incurred by Landlord during the Lease term. For the purposes
     hereof, "Property Taxes" shall mean all real property taxes and assessments
     or governmentally imposed fees or charges (and any tax levied wholly or
     partly in lieu thereof) levied, assessed, confirmed, imposed or which have
     become a lien against the Building (which for the purposes of defining
     "Property Taxes" shall include the land underlying the Building), and
     "Operating Expenses" shall mean: (I) all costs of

                                       2
<PAGE>

     management, operation, maintenance, and repair of the Building, (2) the
     cost of all insurance maintained by Landlord with respect to the Building
     and (3) the share allocable to the Building of dues and assessments payable
     under any reciprocal easement or common area maintenance agreements or
     declaration or by any owners' associations affecting the Building. Landlord
     shall credit against Taxes otherwise payable by Tenant during any tax
     fiscal year any tax increment reimbursements from the West End Community
     Improvement District received by Landlord for the same period from secured
     roll real property taxes attributable to the Building.

     b. In the event the Building is not separately assessed for tax purposes,
     then the Property Taxes to be paid by Tenant shall be Tenant's percentage
     share of the product obtained by multiplying the total of the real property
     taxes and assessments levied against the tax parcel of which the Building
     is a part, less the credit for tax increment reimbursements described
     above, by a fraction, the numerator of which is the rentable area of the
     Building and the denominator of which is total rentable area of all
     improvements located within the tax parcel of which the Building is a part.

     c. Tenant shall pay to Landlord each month at the same time and in the same
     manner as monthly Base Rent 1/12th of Landlord's estimate of Property Taxes
     and Operating Expenses for the then current calendar year. Within 90 days
     after the close of each calendar year, or as soon after such 90-day period
     as practicable, Landlord shall deliver to Tenant a statement of actual
     Property Taxes and Operating Expenses for such calendar year. If on the
     basis of such statement Tenant owes an amount that is less than the
     estimated payments for such calendar year previously made by Tenant,
     Landlord shall refund such excess to Tenant. If on the basis of such
     statement Tenant owes an amount that is more than the estimated payments
     for such calendar year previously made by Tenant, Tenant shall pay the
     deficiency to Landlord within 30 days after delivery of the statement. The
     obligations of Landlord and Tenant under this subparagraph with respect to
     the reconciliation between estimated payments and actual Property Taxes and
     Operating Expenses for the last year of the term shall survive the
     termination of the Lease.

5.   Other Taxes.  Tenant shall pay or reimburse Landlord for any taxes upon,
     -----------
     measured by or reasonably attributable to the cost or value of Tenant's
     equipment, furniture, fixtures, and other personal property located in the
     premises or leasehold improvements made in or to the premises at Tenant's
     expense; for any taxes, if any, measured by or reasonably attributable to
     Tenant Improvements paid for by Landlord or Tenant in excess of $30.00 per
     square foot; for any taxes, assessments, fees, or charges imposed by any
     public authority or private community maintenance association upon or by
     reason of the development, possession, use or occupancy of the premises or
     the parking facilities used by Tenant in connection with the premises; and
     for any gross receipts tax imposed with respect to the rental payable
     hereunder.

6.   Use.
     ---

     a. The premises shall be used and occupied by Tenant solely for the use set
     forth in the Basic Lease Information. Tenant shall, at Tenant's expense,
     comply promptly with all applicable statutes, ordinances, rules,
     regulations, orders, and requirements in effect during the term regulating
     Tenant's activities or the use by Tenant of the premises. Tenant shall not
     use or permit the use of the premises in any manner that will tend to
     create waste or a nuisance, or which shall tend unreasonably to disturb
     other tenants of the Building or adjacent buildings, nor shall Tenant place
     or maintain any signs on or visible from the exterior of the premises
     without Landlord's written consent, or use any corridors, sidewalks, or
     other areas outside of the premises for storage or any purpose other than
     access to the premises. Except as provided in paragraph 6(b) below, Tenant
     shall not use, keep, or permit to be used or kept on the premises any foul
     or noxious gas or substance, nor shall Tenant do or permit to be done
     anything in and about the premises, either in connection with activities
     hereunder expressly permitted or otherwise, which would cause a
     cancellation of any policy of insurance (including fire insurance)
     maintained by Landlord in connection with the premises or the Building or
     which would violate the terms of any covenants, conditions, or restrictions
     affecting the Building or the land on which it is located.

     b. Tenant shall strictly comply with all statutes, laws, ordinances, rules,
     regulations, and precautions now or hereafter mandated or advised by any
     federal, state, local or other governmental agency with respect to the use,
     generation, storage, or disposal of hazardous, toxic, or radioactive
     materials (collectively, "Hazardous Materials"). As herein used, Hazardous
     Materials shall include, but not be limited to, those materials identified
     in Sections 66680 through 66685 of Title 22 of the California Code of
     Regulations, Division 4, Chapter 30, as amended from time to time, and
     those substances defined as "hazardous substances," "hazardous materials,"
     "hazardous wastes," "chemicals known to cause cancer or reproductive
     toxicity," "radioactive materials," or other similar designations in the
     Comprehensive Environmental Response, Compensation and Liability Act of
     1980, as amended, 42 U.S.C. Section 9601 et seq., the Resource Conservation
     and Recovery Act, 42 U.S.C. Section 6901 et seq., the Hazardous Materials
     Transportation Act, 49 U.S.C. Section 1801 et seq., 33 U.S.C. Section 1251
     et seq., 42 U.S.C. Section 300(f) et seq., 42 U.S.C. 7401 et seq.,
     California Health and Safety code Section 25249.5 et seq., California Water
     Code Section 13000 et seq., California Health and Safety Code Section 39000
     et seq. and any other governmental statutes, ordinances, rules,
     regulations, and precautions adopted pursuant to the preceding laws or
     other similar laws, regulations and guidelines now or hereafter in effect.
     Tenant shall not cause, or allow anyone else to cause, any Hazardous
     Materials to be used, generated. stored, or disposed of on or about the
     premises or the Building other than reasonable quantities of office and
     cleaning supplies in their retail containers. Tenant shall defend (with
     counsel approved by Landlord), indemnify and hold Landlord, its trustees,
     employees and agents, any entity having a security interest in the premises
     or the Building, and its and their employees and agents (collectively,
     "Indemnities") harmless from and against, and reimburse the Indemnities
     for, all liabilities, claims, costs, damages, and depreciation of property
     value, including all foreseeable and unforeseeable consequential damages,
     directly or indirectly arising out of the use, generation, storage, or
     disposal of Hazardous Materials by Tenant or any person claiming under
     Tenant, including, without limitation, the cost of any required or
     necessary investigation, monitoring, repair, cleanup, or detoxification and
     the preparation of any closure or other required plans, whether such action
     is required or necessary prior to or following the termination of this
     Lease, as well as penalties, fines and claims for contribution to the full
     extent that such action is attributable, directly or indirectly, to the
     use, generation, storage, or disposal of Hazardous Materials by Tenant or
     any person claiming under Tenant. Neither the consent by Landlord to the
     use, generation, storage, or disposal of Hazardous Materials nor the strict
     compliance by Tenant with all statutes, laws, ordinances, rules,
     regulations, and precautions pertaining to Hazardous Materials shall excuse
     Tenant from Tenant's obligation of indemnification set forth above.
     Tenant's obligations under this paragraph 6 shall survive the expiration or
     termination of this Lease.

7.   Utilities.
     ---------

     a. Tenant shall pay for all water, sewer, gas, electricity, heat, cooling,
     energy, telephone, refuse collection, alarm monitoring services, and other
     utility-type services furnished to Tenant or the premises, together with
     all related installation or connection charges or deposits. Wherever it is
     practical to do so such services shall be separately metered or charged to
     Tenant by the provider thereof and paid for directly by Tenant. To the
     extent any of the foregoing services are provided by Landlord, Tenant shall
     reimburse Landlord for all actual out-of-pocket costs incurred by Landlord
     in connection with the provision of such services as billed by the provider
     thereof based on Landlord's reasonable estimate of the level of

                                       3
<PAGE>

     Tenant's use or consumption of such services. Landlord shall bill Tenant
     for such services as incurred and payment shall be made by Tenant within
     ten (10) days after submittal of Landlord's statement.

     b. Landlord shall not be in default hereunder or be liable for any damages
     directly or indirectly resulting therefrom, and there shall not be any rent
     abatement, by reason of any interruption or curtailment whatsoever in
     utility services which is due to fire, accident, strike, governmental
     authority, act of God or other causes beyond the reasonable control of
     Landlord or any temporary interruption in such service which is necessary
     to the making of alterations, repairs or improvements to the Buildings or
     any part of it.

8.   Maintenance, Repairs and Alterations.
     ------------------------------------

     a. Subject to the provisions of paragraph 10 below, and except for damages
     caused by Tenant, its agents or invitees, Landlord shall keep in good
     condition and repair the foundations and exterior walls and roof of the
     Building and all common areas within the Building not leased to tenants.
     Tenant expressly waives the benefits of any statute which would otherwise
     afford Tenant the right to make repairs at Landlord's expense or to
     terminate this Lease because of Landlord's failure to keep the premises or
     the Building in good order, condition, and repair.

     b. Tenant shall, at Tenant's expense, maintain the interior portion of the
     premises (including, but not limited to, all plumbing and electrical
     connections, outlets and lightbulbs) in good condition and repair. If
     Tenant fails to do so, Landlord may, but shall not be required to, enter
     the premises and put them in the same condition as upon the commencement of
     the Lease term, and Landlord's out-of-pocket costs thereof shall
     automatically become due and payable as additional rent. Tenant shall be
     responsible for the provision, at its own expense, of appropriate
     janitorial service for the premises. Tenant shall also cause to be
     maintained, at its expense and in good operating condition and repair, all
     heat, ventilating, and air conditioning equipment installed in the
     premises. If Landlord so elects, Tenant shall retain the services of
     Landlord or a maintenance company retained by it to perform maintenance of
     Tenant's heating, ventilating and air conditioning equipment and shall
     reimburse Landlord for the cost thereof upon demand. At the expiration of
     the term Tenant shall deliver up possession of the premises in good
     condition and repair, only ordinary wear and tear excepted.

     c. Tenant shall not, without Landlord's prior consent, make any
     alterations, improvements, or additions in or about the premises. In
     requesting Landlord's consent, Tenant shall submit to Landlord complete
     drawings and specifications describing such work and the identity of the
     proposed contractor. As a condition to giving such consent, Landlord may,
     among other things, require that Tenant remove any such alterations,
     improvements or additions at the expiration of the term, and restore the
     premises to their prior condition. Before commencing any work relating to
     alterations, additions, or improvements affecting the premises, Tenant
     shall notify Landlord of the expected date of commencement thereof and of
     the anticipated cost thereof, and shall furnish such information as shall
     reasonably be requested by Landlord substantiating Tenant's ability to pay
     for such work. Landlord shall then have the right at any time and from time
     to time to post and maintain on the premises such notices as Landlord
     reasonably deems necessary to protect the premises and Landlord from
     mechanics' liens or any other liens. In any event, Tenant shall pay when
     due all claims for labor or materials furnished to or for Tenant at or for
     use in the premises. Tenant shall not permit any mechanics' liens to be
     levied against the premises for any labor or materials furnished to Tenant
     or claimed to have been furnished to Tenant or to Tenant's agents or
     contractors in connection with work of any character performed or claimed
     to have been performed on the premises by or at the direction of Tenant.
     All alterations, improvements, or additions in or about the premises
     performed by or on behalf of Tenant shall be done in a first-class,
     workmanlike manner, shall not unreasonably lessen the value of the
     leasehold improvements in the premises, and shall be completed in
     compliance with all applicable laws, ordinances, regulations, and orders of
     any governmental authority having jurisdiction thereover, as well as the
     requirements of insurers of the premises and the Building. Upon Landlord's
     request, Tenant shall remove any contractor, subcontractor, or material
     supplier from the premises and the Building if the work or presence of such
     person or entity results in labor disputes in or about the Building or the
     Marina Village Project, or damage to the premises, Building or Project.
     Unless Landlord requires their removal as set forth above, all alterations,
     improvements or additions which may be made on the premises shall become
     the property of Landlord and remain upon and be surrendered with the
     premises at the expiration of the term; provided, however, that Tenant's
     machinery, equipment and trade fixtures, other than any which may be
     affixed to the premises so that they cannot be removed without material
     damage to the premises, shall remain the property of Tenant and may be
     removed by Tenant provided further Tenant shall be responsible for
     repairing all damage to the premises caused by such removal.

9.   Insurance and Indemnity.
     -----------------------

     a. Tenant shall obtain and maintain during the term of this Lease
     comprehensive general liability insurance with combined single limit for
     personal injury and property damage in a form and with carriers acceptable
     to Landlord in an amount not less than $1,000,000, and employer's liability
     and workers' compensation insurance as required by law. Tenant's
     comprehensive general liability insurance policy shall be endorsed to
     provide that (i) it may not be cancelled or altered in such a manner as
     adversely to affect the coverage afforded thereby without 30 days' prior
     written notice to Landlord, (ii) Landlord is named as additional insured,
     (iii) the insurer acknowledges acceptance of the mutual waiver of claims by
     Landlord and Tenant pursuant to subparagraph (b) below, and (iv) such
     insurance is primary with respect to Landlord and that any other insurance
     maintained by Landlord is excess and noncontributing with such insurance.
     If, in the opinion of Landlord's insurance adviser, based on a substantial
     increase in recovered liability claims generally, the specified amounts of
     coverage are no longer adequate, such coverage shall be appropriately
     increased. Prior to the commencement of the term, Tenant shall deliver to
     Landlord a duplicate of such policy or a certificate thereof to Landlord
     for retention by it, with endorsements, and at least 30 days prior to the
     expiration of such policy or any renewal thereof, Tenant shall deliver to
     Landlord a replacement or renewal binder, followed by duplicate policy or
     certificate within a reasonable time thereafter. If Tenant fails to obtain
     such insurance or to furnish Landlord any such duplicate policy or
     certificate as herein required, Landlord may, at its election, without
     notice to Tenant and without any obligation to do so, procure and maintain
     such coverage and Tenant shall reimburse Landlord on demand as additional
     rent for any premium so paid by Landlord.

     b. Landlord hereby waives all claims against Tenant, and Tenant's officers,
     directors, partners, employees, agents and representatives for loss or
     damage to the extent that such loss or damage is insured against under any
     valid and collectible insurance policy insuring Landlord or would have been
     insured against but for any deductible amount under any such policy, and
     Tenant waives all claims against Landlord including Landlord's officers,
     directors, partners, employees, agents, and representatives for loss or
     damage to the extent such loss or damage is insured against under any valid
     and collectible insurance policy insuring Tenant or required to be
     maintained by Tenant under this Lease, or would have been insured against
     but for any deductible amount under any such policy.

     c. As this Lease does not involve the public interest and insurance is
     available to Tenant which will protect it against such claims, damage,
     injury or death, Tenant hereby waives all claims against Landlord for
     damage to any property or injury to or death of any person in, upon or
     about the premises or the Building arising at any time and from any cause.
     Tenant

                                       4
<PAGE>

     shall hold Landlord harmless from and defend Landlord against all claims
     (except such as arises from the sole negligence or willful misconduct of
     Landlord, its agents, employees or contractors) (i) for damage to any
     property or injury to or death of any person arising from the use of the
     premises by Tenant, or (ii) arising from the negligence or willful
     misconduct of Tenant, its employees, agents, or contractors in, upon or
     about those portions of the Building, other than the premises. The
     foregoing indemnity obligation of Tenant shall include reasonable
     attorneys' fees, investigation costs, and all other reasonable costs and
     expenses incurred by Landlord from the first notice that any claim or
     demand is to be made or may be made. The provisions of this paragraph 9
     shall survive the termination of this Lease with respect to any damage,
     injury, or death occurring prior to such termination.

10.  Damage or Destruction.
     ---------------------

     a. If during the term the premises are totally or partially destroyed, or
     any other portion of the Building is damaged in such a way that Tenant's
     use of the premises is materially interfered with, from a risk which is
     wholly covered by insurance, subject to the availability of insurance
     proceeds, Landlord shall proceed with reasonable diligence to repair the
     damage or destruction and this Lease shall not be terminated; provided,
     however, that if in the opinion of Landlord's architect the work of repair
     cannot be completed in 90 days Landlord may at its election terminate the
     Lease by notice given to Tenant.

     b. If curing the term the premises are totally or partially destroyed, or
     any other portion of the Building is damaged in such away that Tenant's use
     of the premises is materially interfered with, from a risk which is not
     wholly covered by insurance, Landlord may at its election by notice given
     to Tenant restore the premises or terminate this Lease.

     c. In case of destruction or damage which materially interferes with
     Tenant's use of the premises, if this Lease is not terminated as above
     provided, rent shall be abated during the period required for the work of
     repair based upon the degree of interference with Tenant's use of the
     premises. Except for abatement of rent, Tenant shall have no claim against
     Landlord for any loss suffered by Tenant due to damage or destruction of
     the premises or any work of repair undertaken as herein provided. Tenant
     expressly waives the provisions of Sections 1932 and 1933(4) of the
     California Civil Code.

11.  Eminent Domain.  If all or any part of the premises shall be taken as a
     --------------
     result of the exercise of power of eminent domain, this Lease shall
     terminate as to the part so taken as of the date of taking, and in the case
     of a partial taking, either Landlord or Tenant shall have the right to
     terminate this Lease as to the balance of the premises by notice to the
     other within thirty (30) days after such date if the portion of the
     premises taken shall be of such extent and nature as substantially to
     handicap, impede or impair Tenant's use of the balance of the premises for
     Tenant's purposes. In the event of any taking, Landlord shall be entitled
     to any and all compensation, damages, income, rent, awards, or any interest
     therein whatsoever which may be paid or made in connection therewith, and
     Tenant shall have no claim against Landlord for the value of any unexpired
     term of this Lease or otherwise. In the event of a partial taking of the
     premises which does not result in a termination of this Lease, the monthly
     rental thereafter to be paid shall be equitably reduced on a square footage
     basis.

12.  Assignment and Subletting.
     -------------------------

     a. Tenant shall not assign this Lease or any interest herein or sublet the
     premises or any part thereof without the prior consent of Landlord, which
     consent shall not be unreasonably withheld; Tenant shall not hypothecate
     this Lease or any interest herein or permit the use of the premises by any
     party other than Tenant without the prior consent of Landlord, which
     consent may be withheld by Landlord in its absolute discretion. This Lease
     shall not, nor shall any interest herein, be assignable as to the interest
     of Tenant by operation of law without the consent of Landlord. Any of the
     foregoing acts without such consent shall be void and shall, at the option
     of Landlord, terminate this Lease. In connection with each consent
     requested by Tenant, Tenant shall submit to Landlord the terms of the
     proposed transaction, the identity of the parties to the transaction, the
     proposed documentation for the transaction, current financial statements of
     any proposed assignee or sublessee and all other information reasonably
     requested by Landlord concerning the proposed transaction and the parties
     involved therein.

     b. Without limiting the other instances in which it may be reasonable for:
     Landlord to withhold its consent to an assignment or subletting, Landlord
     and Tenant acknowledge that it shall be reasonable for Landlord to withhold
     its consent in the following instances:

     1. if the proposed assignee or sublessee is a governmental agency;

     2. if, in Landlord's reasonable judgment, the use of the premises by the
          proposed assignee or sublessee would entail any alterations which
          would lessen the value of the leasehold improvements in the premises,
          or would require increased services by Landlord:

     3. if, in Landlord's reasonable judgment, the financial worth of the
          proposed assignee or sublessee does not meet the credit standards
          applied by Landlord for other tenants under leases with comparable
          terms, or the character, reputation or business of the proposed
          assignee or sublessee is not consistent with the quality of the other
          tenancies in the Building;

     4. in the case of a subletting of less than the entire premises, if the
          subletting would result in the division of the premises into more than
          two subparcels, would create a subparcel of a configuration that is
          not suitable for normal leasing purposes, or would require access to
          be provided through space leased or held for lease to another tenant
          or improvements to be made outside of the premises; or

     5. if, at the time consent is requested or at any time prior to the
          granting of consent, Tenant is in default under the Lease or would be
          in default under the Lease but for the pendency of any grace or cure
          period under paragraph 13 below.

     c. If at any time or from time to time during the term of this Lease Tenant
          desires to sublet all or any part of the premises, Tenant shall give
          notice to Landlord setting forth the terms of the proposed subletting
          and the space so proposed to be sublet. Landlord shall have the
          option, exercisable by notice given to Tenant within 20 days after
          Tenant's notice is given, either to sublet from Tenant such space at
          the rental and other terms set forth in Tenant's notice, or, if the
          proposed subletting is for the entire premises for a sublet term
          ending within the last year of the term of this Lease, to terminate
          this Lease. If Landlord does not exercise such option, Tenant shall be
          free to sublet such space to any third party on the same terms set
          forth in the notice given to Landlord, subject to obtaining Landlord's
          prior consent as herein above provided.

                                       5
<PAGE>

     d. As used in this paragraph 12, the term, "assign" or "assignment" shall
          include, without limitation, any sale, transfer, or other disposition
          of all or any position of Tenant's estate under this Lease, whether
          voluntary or involuntary, and whether by operation of law or otherwise
          including, any of the following:

     1. If Tenant is a corporation: (i) any dissolution, merger, consolidation,
          or other reorganization of Tenant or (ii) a sale of more than 50% of
          the value of the assets of Tenant or (iii) if Tenant is a corporation
          with fewer than 500 shareholders, sale or other transfer of a
          controlling percentage of the capital stock of Tenant. The phrase
          "controlling percentage" means the ownership of, and the right to
          vote, stocks possessing at least 50% of the total combined voting
          power of all classes of Tenant's stock issues, outstanding and
          permitted to vote for the election of directors;

     2. If Tenant is a trust the transfer of more than 50% of the beneficial
          interest of Tenant, or the dissolution of the trust;

     3. If Tenant is a partnership or joint venture, the withdrawal, or the
          transfer of the interest of any general partner or joint venturer or
          the dissolution of the partnership or joint venture;

     4. If Tenant is composed of tenants-in-common, the transfer of interest of
          any cotenants or the partition or dissolution of the cotenancy.

     e. No sublessee (other than Landlord if it exercises its option pursuant to
          subparagraph (c) above) shall have a right further to sublet, and any
          assignment by a sublessee of its sublease shall be subject to
          Landlord's prior consent in the same manner as if Tenant were entering
          into a new sublease.

     f. In the case of an assignment, one half of all sums or other economic
          consideration received by Tenant as a result of such assignment shall
          be paid to Landlord. In the event such consideration is received by
          Tenant in installments, the portion of each installment to be paid to
          Landlord shall be determined by multiplying the installment by a
          fraction, the numerator of which is the total amount of the foregoing
          permitted deductions and the denominator of which is the total
          consideration receivable by Tenant as a result of such assignment.

     g. In the case of a subletting, one half of all sums or economic
          consideration received by Tenant as a result of such subletting shall
          be paid to Landlord after first deducting (i) the rental due
          hereunder, prorated to reflect only rental allocable to the sublet
          portion of the premises, (ii) the cost of leasehold improvements made
          to the sublet portion of the premises at Tenant's cost, amortized over
          the term of this Lease except for leasehold improvements made for the
          specific benefit of the sublessee, which shall be amortized over the
          term of the sublease, and (iii) the cost of any real estate
          commissions incurred in connection with such subletting, amortized
          over the term of the sublease.

     h. Regardless of Landlord's consent, no subletting or assignment shall
          release Tenant of Tenant's obligation or alter the primary liability
          of Tenant to pay the rental and to perform all other obligations to be
          performed by Tenant hereunder. The acceptance of rental by Landlord
          from any other person shall not be deemed to be a waiver by Landlord
          of any provision hereof Consent to one assignment or subletting shall
          not be deemed consent to any subsequent assignment or subletting. In
          the event of default by any assignee of Tenant or any successor of
          Tenant in the performance of any of the teems hereof, Landlord may
          proceed directly against Tenant without the necessity of exhausting
          remedies against such assignee or successor. Landlord may consent to
          subsequent assignments or subletting of this Lease or amendments or
          modifications to this Lease with assignees of Tenant, without
          notifying Tenant, or any successor of Tenant, and without obtaining
          its or their consent thereto and such action shall not relieve Tenant
          of liability under this Lease.

     i. In the event Tenant shall assign or sublet the premises or request the
          consent of Landlord to any assignment or subletting or if Tenant shall
          request the consent of Landlord for any act that Tenant proposes to
          do, then Tenant shall pay Landlord's reasonable attorneys" fees
          incurred in connection therewith.

13.  Default by Tenant.
     -----------------

     a. The following events shall constitute events of default under this
          Lease:

     1. a default by Tenant in the payment of any rent or other sum payable
          hereunder for a period of 3 days after the same is due;

     2. a default by Tenant in the performance of any of the other terms,
          covenants, agreements, or conditions contained herein and, if the
          default is curable, the continuation of such default for a period of
          10 days after notice by Landlord or beyond the time reasonably
          necessary for cure if the default is of the nature to require more
          than 10 days to remedy, provided that if Tenant has defaulted in the
          performance of the same obligation one or more times in any twelve-
          month period and notice of such default has been given by Landlord in
          each instance, no cure period shall thereafter be applicable
          hereunder;

     3. the bankruptcy or insolvency of Tenant, any transfer by Tenant in fraud
          of creditors, assignment by Tenant for the benefit of creditors, or
          the commencement of any proceedings of any kind by or against Tenant
          under any provision of the Federal Bankruptcy Act or under any other
          insolvency, bankruptcy or reorganization act unless, in the event any
          such proceedings are involuntary, Tenant is discharged from the same
          within 60 days thereafter; the appointment of a receiver for a
          substantial part of the assets of Tenant; or the levy upon this Lease
          or any estate of Tenant hereunder by any attachment or execution; and

     4. the abandonment of the premises

     b. Upon the occurrence of any event of default by Tenant hereunder,
          Landlord may, at its option and without any further notice or demand.
          in addition to any other rights and remedies given hereunder or by
          law, do any of the following:

     1. Landlord shall have the right, so long as such default continues, to
          give notice of termination to Tenant, and on the date specified in
          such notice this Lease shall terminate.

     2. In the event of any such termination of this Lease, Landlord may then or
          at any time thereafter, reenter the premises and remove therefrom all
          persons and property and again repossess and enjoy the premises,
          without prejudice to any other remedies that Landlord may have by
          reason of Tenant's default or of such termination.

     3. In the event of any such termination of this Lease, and in addition to
          any other rights and remedies Landlord may have, Landlord shall have
          all of the rights and remedies of a landlord provided by Section
          1951.2 of the California Civil

                                       6
<PAGE>

          Code. The amount of damages which Landlord may recover in event of
          such termination shall include, without limitation, (i) the worth at
          the time of award (computed by discounting such amount at the discount
          rate of the Federal Reserve Bank of San Francisco at the time of award
          plus one percent) of the amount by which the unpaid rent for balance
          of the term after the time of award exceeds the amount of rental loss
          that Tenant proves could be reasonably avoided, (ii) all reasonable
          legal expenses and other related costs incurred by Landlord following
          Tenant's default, (iii) all costs incurred by Landlord in restoring
          the premises to good order and condition, or in remodeling, renovating
          or otherwise preparing the premises for reletting, and (iv) all costs
          (including, without limitation, any brokerage commissions) incurred by
          Landlord in reletting the premises.

     4. For the purpose of determining the unpaid rent in the event of a
          termination of this Lease, or the rent due hereunder in the event of a
          reletting of the premises, the monthly rent reserved in this Lease
          shall be deemed to be the sum of the rental due under paragraph 3
          above and the amounts last payable by Tenant pursuant to paragraph 4
          above.

     5. After terminating this Lease, Landlord may remove any and all personal
          property located in the premises and place such property in a public
          or private warehouse or elsewhere at the sole cost and expense of
          Tenant.

     c. Even though Tenant has breached this Lease and abandoned the premises,
          this Lease shall continue in effect for so long as Landlord does not
          terminate Tenant's right to possession, and Landlord may enforce all
          its rights and remedies under this Lease, including the right to
          recover rental as it becomes due under this Lease. Acts of maintenance
          or preservation, efforts to relet the premises, or the appointment of
          a receiver upon initiative of Landlord to protect Landlord's interest
          under this Lease, shall not constitute a termination of Tenant's right
          to possession.

     d. The remedies provided for in this Lease are in addition to any other
          remedies available to Landlord at law or in equity, by statute or
          otherwise.

14.  Default by Landlord.  Landlord shall not be in default unless Landlord
     -------------------
     fails to perform obligations required of Landlord hereunder within a
     reasonable time, but in no event later than 30 days after notice by Tenant
     to Landlord specifying wherein Landlord has failed to perform such
     obligation; provided, however, that if the nature of Landlord's obligation
     is such that more than 30 days are required for performance, then Landlord
     shall not be in default if Landlord commences performance within such 30
     day period and thereafter diligently prosecutes the same to completion.

15.  Security Deposit.  On execution of this Lease Tenant shall deposit with
     ----------------
     Landlord the sum specified in the Basic Lease Information (the "Deposit").
     The Deposit shall be held by Landlord as security for the performance by
     Tenant of all of the provisions of this Lease. If Tenant fails to pay rent
     or other charges due hereunder, or otherwise defaults with respect to any
     provisions of this Lease, Landlord may use, apply, or retain all or any
     portion of the Deposit for the payment of any rent or other charge in
     default, or the payment of any other sum to which Landlord may become
     obligated by reason of Tenant's default, or to compensate Landlord for any
     loss or damage which Landlord may suffer thereby. If Landlord so uses or
     applies all or any portion of the Deposit, then within 10 days after demand
     therefor Tenant shall Deposit cash with Landlord in an amount sufficient to
     restore the Deposit to the full amount thereof, and Tenant's failure to do
     so shall be a material breach of this Lease. Landlord shall not be required
     to keep the Deposit separate from its general accounts. If Tenant performs
     all of Tenant's obligations hereunder, the Deposit, or so much thereof as
     has not theretofore been applied by Landlord, shall be returned, without
     payment of interest for its use, to Tenant (or, at Landlord's option, to
     the last assignee, if any, of Tenant's interest hereunder) at the
     expiration of the term hereof, and after Tenant has vacated the premises.
     No trust relationship is created herein between Landlord and Tenant with
     respect to the Deposit.

16.  Estoppel Certificate.
     --------------------

     a    Tenant shall at any time upon not more than 10 days' prior notice from
          Landlord execute, acknowledge and deliver to Landlord a statement
          certifying (i) that this Lease is unmodified and in full force and
          effect (or, if modified, stating the nature of such modification and
          certifying that this Lease, as so modified, is in full force and
          effect) (ii) the date to which the rent, security deposit, and other
          sums payable hereunder have been paid, (iii) acknowledging that there
          are not, to Tenant's knowledge, any uncured defaults on the part of
          Landlord hereunder, or specifying such defaults, if any, which are
          claimed, and (iv) such other matters as may reasonably be requested by
          Landlord. Any such statement may be conclusively relied upon by any
          prospective purchaser or encumbrancer of the Building.

     b    Tenant's failure to deliver such statement within such time shall be
          conclusive upon Tenant, (i) that this Lease is in full force and
          effect, without modification except as may be represented by Landlord,
          (ii) that there are no uncured defaults in Landlord's performance, and
          (iii) that not more than one month's rent has been paid in advance.

     c    If the Landlord desires to finance or refinance the Building, Tenant
          agrees to deliver to any lender designated by Landlord such financial
          statements of Tenant as may be reasonably required by such lender. All
          such financial statements shall be received by Landlord in confidence
          and shall be used for the purposes herein set forth.

17.  Subordination.  This Lease, at Landlord's option, shall subordinate to any
     -------------
     ground lease, first mortgage, deed of trust, or any other hypothecation for
     security now or hereafter placed upon the Building and to any and all
     advances made on the security thereof and to all renewals, modifications,
     consolidations, replacements and extensions thereof. Notwithstanding such
     subordination, Tenant's right to quiet possession of the premises shall not
     be disturbed if Tenant is not in default and so long as Tenant shall pay
     the rent and observe and perform all of the provisions of this Lease,
     unless this Lease is otherwise terminated pursuant to its terms. If any
     first mortgagee, trustee, or ground lessor shall elect to have this Lease
     prior to the lien of its first mortgage, deed of trust or ground lease, and
     shall give notice thereof to Tenant, this Lease shall be deemed prior to
     such first mortgage, deed of trust, or ground lease, whether this Lease is
     dated prior to or subsequent to the date of said first mortgage, deed of
     trust or ground lease or the date of recording thereof If any first
     mortgage or deed of trust to which this Lease is subordinate is foreclosed
     or a deed in lieu of foreclosure is given to the first mortgagee or
     beneficiary, Tenant shall attorn to the purchaser at the foreclosure sale
     or to the grantee under the deed in lieu of foreclosure; if any ground
     lease to which this Lease is subordinate is terminated, Tenant shall attorn
     to the ground lessor. Tenant agrees to execute any documents required to
     effectuate such subordination or to make this Lease prior to the lien of
     any first mortgage, deed of trust or ground lease, as the case may be, or
     to evidence such attornment.

18.  Attorneys' Fees.  If, as a result of any breach or default in the
     ---------------
     performance of any of the provisions of this Lease, Landlord uses the
     services of any attorney in order to secure compliance with such provisions
     or recovered damages therefor, or to terminate this Lease or evict Tenant,
     Tenant shall reimburse Landlord for any and all attorneys' fees and
     expenses in such amount as the court may adjudge reasonable, provided that
     if Tenant shall be the prevailing party in any legal action brought by
     Landlord against Tenant, Tenant will be entitled to recover any and all
     attorneys' fees and expenses in such amount as the court may adjudge
     reasonable.

                                       7
<PAGE>

19.  Non-Discrimination.  Tenant covenants for itself; its heirs, executors,
     ------------------
     administrators, and assigns, and all persons claiming under or through it,
     and this Lease is made and accepted upon it subject to the condition that
     there shall be no discrimination against or segregation of any person or
     group of persons, on account of race. color, creed. religion, sex, marital
     status, national origin, or ancestry in the leasing, subleasing,
     transferring, use, occupancy, tenure, or enjoyment of the premises herein
     leased nor shall the Tenant itself, or any person claiming under or through
     it, establish or permit any such practice or practices of discrimination or
     segregation with reference to the selection, location, number, use, or
     occupancy of tenants, subtenants, or vendees in the premises.

20.  Notices.  All notices, consents, demands, and other communications from one
     -------
     party to the other given pursuant to the terms of this Lease shall be in
     writing and shall be deemed to have been fully given when deposited in the
     United States mail, certified or registered, postage prepaid, and addressed
     as follows: to Tenant at the address specified in the Basic Lease
     Information or to such other place as Tenant may from time to time
     designate in a notice to Landlord: or, to Landlord at the address specified
     in the Basic Lease Information, or to such other place and with such other
     copies as Landlord may from time to time designate in a notice to Tenant.

21.  General Provisions.
     ------------------

     a.   This Lease shall be governed by and construed in accordance with the
          laws of the state of California.

     b.   The invalidity of any provision of this Lease, as determined by a
          court of competent jurisdiction, shall in no way affect the validity
          of any other provision hereof

     c.   This Lease contains all agreements of the parties with respect to any
          matter mentioned herein and only may be modified in writing signed by
          the parties.

     d.   No waiver by Landlord of any provision hereof shall be deemed a waiver
          of any other provision or of any subsequent breach by Tenant of the
          same or any other provision. Landlord's consent to or approval of any
          act shall not be deemed to render unnecessary the obtaining of
          Landlord's consent to or approval of any subsequent act by Tenant. The
          acceptance of rent hereunder by Landlord shall not be a waiver of any
          preceding breach by Tenant of any provision hereof, other than the
          failure of Tenant to pay the particular rent accepted, regardless of
          Landlord's knowledge of such preceding breach at the time of
          acceptance of such rent.

     e.   If Tenant remains in possession of the premises or any part thereof
          after the expiration of the term with the consent of Landlord, such
          occupancy shall be a tenancy from month to month at a rental in the
          amount of two times the last month's rental during the term, plus all
          other charges payable hereunder, and upon all of the terms hereof.

     f.   Subject to the provisions of this Lease restricting assignment or
          subletting by Tenant, this Lease shall bind the parties, their
          personal representatives, successors, and assigns.

     g.   Landlord and Landlord's agents shall have the right to enter the
          premises at reasonable times for the purpose of inspecting the same,
          showing the same to prospective purchasers, tenants, lenders and other
          interested parties, and making such alterations, repairs,
          improvements, or additions to the premises or to the Building as
          Landlord may deem necessary or desirable. Landlord may at any time
          during the last 120 days of the term place on or about the premises
          any ordinary "For Lease" sign.

     h.   Tenant shall not conduct any auction at the premises without
          Landlord's prior consent.

     i.   The voluntary or other surrender of this Lease by Tenant, the mutual
          cancellation thereof or the termination of this Lease by Landlord as a
          result of Tenant's default 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 of such
          subtenancies.

     j.   If Tenant is a corporation, each individual executing this Lease on
          behalf of Tenant represents and warrants that he is duly, authorized
          to execute and deliver this Lease on behalf of the corporation in
          accordance with a duly adopted resolution of the Board of Directors
          and that this Lease is binding upon the corporation in accordance with
          its terms.

     k.   The term "Landlord" as used herein means the then owner of the
          Building and in the event of a sale of the Building the selling owner
          shall be automatically relieved of all obligations of Landlord
          hereunder, except for acts or omissions of Landlord theretofore
          occurring.

     l.   The term "day" as used herein means a calendar day.

     m.   The obligations of Landlord under this Lease do not constitute
          personal obligations of the partners, directors, officers,
          shareholders, or trustees of Landlord, Tenant shall look solely to
          Landlord and its assets for the realization of any claims against
          Landlord and not to the assets of any of the partners of Landlord, and
          Tenant expressly waives any and all right to proceed against any of
          its partners or the officers, directors, trustees, shareholders,
          agents, or employees of any of such partners, except to the extent of
          their interest in Landlord.

     n.   On request by Landlord, Tenant shall furnish Landlord with
          satisfactory evidence of payment of Tenant's business personal
          property taxes pertaining to the premises and deliver copies of such
          business personal property tax bills to Landlord.

                                       8
<PAGE>

22.  Exhibits.  The exhibits and addendum, if any, specified in the Basic Lease
     --------
     Information are attached to this Lease and by this reference made a part
     hereof.

IN WITNESS WHEREOF, the parties have executed this Lease on the respective dates
indicated below.

<TABLE>
<CAPTION>
TENANT:                                                                   LANDLORD:
<S>                                                                       <C>
XENOGEN CORPORATION,                                                      ALAMEDA REAL ESTATE INVESTMENTS, a California limited
a California corporation                                                   partnership
                                                                                  By:  Vintage Alameda Investments, LP
                                                                                       a California limited partnership
                                                                                       operating general partner

By:________________________________________________________
                                                                                       By:  Vintage Properties - Alameda Commercial,
                                                                                              a California corporation,
Title:_____________________________________________________
                                                                                               managing general partner

Date of Execution
by Tenant:_________________________________________________                                    By:__

                                                                                               Title:_______________________________

                                                                                                  Date of Execution
                                                                                                  by Landlord:______________________
</TABLE>

                                       9
<PAGE>

                                  ADDENDUM TO
                                MARINA VILLAGE
                            NET OFFICE - TECH LEASE

THIS ADDENDUM TO MARINA VILLAGE NET OFFICE - TECH LEASE shall constitute part of
that certain Marina Village Net Office - Tech Lease dated as of January 15, 1998
("Lease") by and between ALAMEDA REAL ESTATE INVESTMENTS, a California limited
partnership ("Landlord") and XENOGEN CORPORATION, a California corporation
("Tenant"), for Premises identified as 860 Atlantic Avenue, Alameda, California,
and the terms hereof shall for all purposes be considered part of the Lease and
supersede any provisions of the Lease to the contrary.

1.   Amendment of Paragraph 1:  Premises.  The following language is hereby
     -----------------------------------
     added to Paragraph 1 of the Lease, to read as follows:

     During the term, Tenant shall have the right to use, on a non-exclusive
     basis and at no additional charge, automobile parking at the rate of a
     minimum of 3.4 spaces per 1,000 square feet of net rentable area of the
     premises.  In addition, Tenant may install at Tenants' expense exterior
     signage identifying Tenant on the Building and on the monument sign related
     to the Building in compliance with the Marina Village signage program.

2.   Amendment of Paragraph 2:  Term.  Paragraph 2b. of the Lease is hereby
     -------------------------------
     deleted and replaced with the following:

     b.   If Landlord does not deliver possession of the premises to Tenant on
     or before March 31,1998, as such date may be extended due to causes not
     under Landlord's reasonble control, including Tenant's acts, then by notice
     to Landlord given following such date but before Landlord does so deliver
     possession, Tenant may terminate this Lease.

3.   Amendment of Paragraph 3:  Rent.
     -------------------------------

     a.   The third sentence of paragraph 3c. of the Lease is hereby amended to
          read as follows:

          Accordingly, if any installments of rent or any other sums due from
          Tenant shall not be received by Landlord within five (5) days
          following the date due, then Tenant shall pay to Landlord a late
          charge equal to six percent (6%) of such overdue amount.

     b.   The first sentence of paragraph 3d. of the Lease is hereby amended to
          read as follows:

          d.   Any amount due to Landlord, if not paid when due, shall bear
          interest from the date due until the date paid at the rate of ten
          percent (10%) per annum.

     c.   The following language is hereby added to paragraph 3 of the Lease to
          read as follows:

          If and to the extent Landlord advances the Additional TI Allowance
          under paragraph 8 of the Addendum to Lease, Base Rent shall be
          increased by the amount each month necessary to amortize the amount so
          advanced by Landlord as the Additional TI Allowance over the remaining
          term of the Lease together with interest at the rate of 10.5% per
          annum.

4.   Amendment of Paragraph 4:  Taxes and Operating Expenses.
     -------------------------------------------------------

     a.   The following language is hereby added to paragraph 4a of the Lease to
          read as follows:

          Notwithstanding the foregoing, "Property Taxes" shall not include and
          Tenant shall not be required to pay any portion of any tax or
          assessment expense or any increase therein:  (a) in excess of any
          installment of an assessment which otherwise would be required to be
          paid at such time; (b) attributable to Landlord's net income,
          inheritance, gift, transfer, estate or estate income taxes; or (c) the
          improvement of any portion of the Building for the sole use of other
          occupants not claiming under Tenant.  "Operating Expenses" shall not
          include and Tenant shall not have any obligation to perform or to pay
          for any of the following:  (a) costs to operate, maintain or repair
          occasioned by the willful misconduct, gross negligence or action in
          violation of law by Landlord, its agents, employees or contractors;
          (b) costs of repair or replacement occasioned by casualty, other than
          deductibles for insured casualties other than earthquakes, or by the
          exercise of the power of eminent domain; (c) costs to correct any

                                       1
<PAGE>

          construction defect in the Building or law applicable to the Building
          as of the commencement of the term other than as occasioned by
          alterations or improvements made by or for Tenant; (d) costs incurred
          in connection with the presence of any Hazardous Materials as of the
          commencement of the term; (e) interest, charges and fees incurred on
          debts, other than assessments, or debt incurred in connection with the
          financing of Items which are permitted to be charged as Operating
          Expenses; and (f) costs which could properly be capitalized under
          generally-accepted accounting principles, except to the extent
          amortized over the useful life of the Item in question.  Operating
          Costs shall only include the deductible amount for the repair or
          reconstruction of casualties covered by earthquake insurance in an
          amount not to exceed $50,000 (the "Earthquake Limit"), if the casualty
          occurs during the first 12 months of the term or during the first 12
          months of an Option Period (as defined in paragraph 18 of the Addendum
          to this Lease), with the Earthquake Limit being reduced by $5,000
          during each 12-month period thereafter.  Operating Costs shall only
          include the deductible amount for the repair or reconstruction of
          casualties covered by earthquake insurance in an amount not to exceed
          $50,000 (the "Earthquake Limit"), if the casualty occurs during the
          first 12 months of the term or during the first 12 months of an Option
          Period (as defined in paragraph 18 of the Addendum to this Lease),
          with the Earthquake Limit being reduced by $5,000 during each 12-month
          period thereafter.  In addition, Operating Costs shall only include
          premiums for earthquake insurance in an amount not in excess of four
          (4) times the then-market rate premium for standard all-risk casualty
          insurance on the same property.  In addition, "Property Taxes" and
          "Operating Expenses" shall be pro rated for any partial year in which
          the term shall commence or end.  Any annual increase in property
          management fees which are included as Operating Expenses shall be
          limited to three percent (3%) of the amount incurred in the prior
          year.

     b.   The third sentence of paragraph 4c. of the Lease is hereby amended to
          read as follows:

          If on the basis of such statement, Tenant owes an amount that is less
          than the estimated payments for such calendar year previously made by
          Tenant, within thirty (30) days following delivery of such statement
          to Tenant Landlord shall refund such excess to Tenant.

5.   Amendment of Paragraph 6:  Use.
     ------------------------------

     a.   The second and third sentences of paragraph 6b. of the Lease are
hereby amended to read as follows:

          Tenant shall not cause, or allow anyone else to cause, any Hazardous
          Materials to be used, generated, stored or disposed of on or about the
          Premises or the Building in violation of any laws or regulations
          related to Hazardous Materials.  Tenant shall defend (with counsel
          approved by Landlord) indemnify and hold Landlord, its and their
          partners, employees and agents and any entity having a security
          interest in the premises or the Building and its and their employees
          and agents (collectively, "Indemnitees") harmless from and against,
          and reimburse the Indemnitees for, all liabilities, claims, costs,
          damages, and depreciation of property value, including foreseeable and
          unforeseeable consequential damages, directly or indirectly arising
          out of the use, generation, storage or disposal of Hazardous Materials
          by Tenant or any person employed by or under the control of Tenant,
          including without limitation, the cost of any required or necessary
          investigation, monitoring, repair, clean-up or detoxification and the
          preparation of any closure or other required plans, whether such
          action is required or necessary prior to or following termination or
          expiration of this Lease, as well as penalties, fines and claims for
          contribution to the full extent that such action is attributable,
          directly or indirectly, to the use, generation, storage or disposal of
          Hazardous Materials by Tenant or any person employed by or under the
          control of Tenant.  In no event shall Tenant be liable to any of the
          Indemnities for the use, generation, storage or disposal of Hazardous
          Materials not caused by or resulting from Tenant or any person
          employed by or under the control of Tenant.

     b.  A new subparagraph c. is hereby added to paragraph 6 of the Lease, to
read as follows:

          c.   i.   Notwithstanding anything in this paragraph 6 to the
               contrary, Landlord acknowledges that Tenant's permitted use under
               this Lease includes the handling, storage and disposal of
               Hazardous Materials. Tenant hereby acknowledges receipt from
               Landlord of a copy of that certain Exit Assessment prepared by

                                       2
<PAGE>

               ERM-West dated January, 1998 for Brobeck, Phleger & Harrison
               regarding the condition of the premises immediately prior to the
               commencement of the term. Landlord has also provided Tenant an
               opportunity to inspect and test the premises prior to the
               commencement of the term. Promptly following the commencement
               date and within fifteen (15) days following any change in the
               required information and/or documentation, Tenant shall deliver
               to Landlord the following information:

               A.   A list of all Hazardous Materials that Tenant uses, handles,
                    generates, transports, stores, treats or disposes in
                    connection with its operations at the premises;

               B.   Copies of all Material Safety Data Sheets required to be
                    maintained with respect to operations of Tenant at the
                    premises in accordance with Title 8, California Code of
                    Regulations, (S) 5194 or 42 U.S.C. (S) 11021, or any
                    amendments thereto.

               C.   Copies of all Hazardous Waste Manifests, as defined in
                    California Code of Regulations Title 22, Section 66481, that
                    Tenant is required to complete in connection with its
                    operations at premises; any Hazardous Materials Management
                    Plans; any Contingency Plans and Emergency Procedures
                    required under Title 22, Chapter 30, Article 20, California
                    Code of Regulations, as amended; any reports required to be
                    furnished periodically to the California Department of Toxic
                    Substances Control or any local agency relating to Hazardous
                    Materials at the premises; all industrial wastewater
                    discharge permits, if any; any reports, notices or other
                    communications made to or received by any governmental
                    agency arising out of or in connection with any Hazardous
                    Materials in, on, under or about the premises; any claim
                    made or threatened by any person against Tenant, Landlord or
                    the premises received by Tenant relating to damage,
                    contribution, clean-up, removal, cost recovery,
                    compensation, loss or injury resulting from or claimed to
                    result from any Hazardous Materials.

               D.   Tenant shall cooperate with Landlord and Landlord's agents
                    and contractors in providing full access at reasonable times
                    and subject to reasonable conditions to all the Tenant's
                    operations at the premises to review and observe Tenant's
                    receipt, handling, use, storage, transportation, generation,
                    treatment and/or disposal of Hazardous Materials or to
                    conduct tests and inspections including, without limitation,
                    sampling the soil and groundwater under the Building and
                    sampling and testing for contamination of the premises,
                    Tenant's furnishings, fixtures and equipment therein,
                    building, plumbing and mechanical systems and the soil,
                    surface and groundwater around the premises.  If, upon any
                    such reviews, tests or inspections, Landlord's contractor
                    determines that any Hazardous Materials are being handled in
                    violation of applicable law or permits, and the Alameda Fire
                    Department or the City of Alameda concur with such
                    determination, then in addition to immediately correcting
                    such violation, Tenant shall reimburse Landlord for its out-
                    of-pocket costs incurred in connection with such reviews,
                    tests and inspections within thirty (30) days of Landlord's
                    request therefor.

               E.   Upon the expiration or earlier termination of the term,
                    Tenant shall cause all Hazardous Materials handled by Tenant
                    within the premises properly to be removed from the
                    premises, including, as necessary, the de-contamination of
                    all plumbing, mechanical systems and any fixtures and
                    equipment then-existing in the premises.  Tenant shall also
                    cause a thorough program of testing and inspection to be
                    conducted by a reputable and experienced professional
                    consultant approved by

                                       3
<PAGE>

                    Landlord, which approval shall not unreasonably be withheld,
                    and a report prepared which confirms that all Hazardous
                    Materials have properly been removed and transported from
                    the premises as required above. The report shall be prepared
                    at Tenant's expense and delivered to Landlord within thirty
                    (30) days following the expiration or earlier termination of
                    the term.

     c.   A new subparagraph d. is hereby added to paragraph 6 of the Lease to
read as follows:

          d.   Notwithstanding anything in this Lease to the contrary, Tenant
          shall not be required to comply with or cause the premises to comply
          with any laws, rules or regulations regarding alterations or
          improvements unless compliance with any of the foregoing is
          necessitated solely due to the particular nature of Tenant's occupancy
          or Tenant's particular use of the Premises or in connection with any
          improvements or alterations to the Premises made by or for Tenant or
          those under its control.

6.   Amendment of Paragraph 8:  Maintenance, Repairs and Alterations.  The
     ---------------------------------------------------------------
following language is hereby added to subparagraph 8b of the Lease to read as
follows:

          Tenant's obligations with respect to the maintenance of all heat,
          ventilating and air conditioning equipment installed in the premises
          shall extend to all trade fixtures and equipment which exist in the
          premises as of the commencement of the term.  Tenant shall only pay
          for the costs of replacement of all or portions of the heating,
          ventilating and air conditioning system serving the premises or
          capital expenditures which are otherwise properly included as
          Operating Expenses and are amortized over the useful life of the Item
          in question, together with interest at the prime or reference rate
          announced from time-to-time in the Wall Street Journal for short-term
          commercial loans, plus two percent (2%) per annum.  Tenant's
          obligation to maintain trade fixtures and equipment in the premises as
          of the commencement of the term shall be limited to maintaining such
          trade fixtures and equipment in their condition and repair as of the
          commencement of the term.  Further, Tenant's obligations with respect
          to the surrender of the Premises shall be fulfilled if Tenant
          surrenders possession of the premises in the condition existing as of
          the commencement of the term, acts of God, casualties, condemnation,
          Hazardous Materials (other than those released, stored, emitted by
          Tenant), and alterations or other interior improvements which may be
          surrendered as of the end of the Lease, excepted.

7.   Amendment of Paragraph 9:  Insurance and Indemnity.
     --------------------------------------------------

     a.   The following language is hereby added to paragraph 9a. of the Lease
to read as follows:

          a.   Landlord shall maintain "all risk," property insurance insuring
          against risk of loss or damage to the Building for the full
          replacement cost thereof.

     b.   The first clause of the first sentence of paragraph 9b. of the Lease
is hereby amended to read as follows:

          b.   Notwithstanding anything in the Lease and without regard to the
          negligence or misconduct of the party to be released, Landlord hereby
          waives all claims against Tenant and Tenant's officers, directors,
          partners, employees, agents and representatives, for loss or damage to
          the extent that such loss or damage is insured against under any valid
          and collectible insurance policy insuring Landlord or required to be
          maintained by Landlord under this Lease, or would have been insured
          against but for any deductible amount under any such policy, and

     c.   The first phrase of the second sentence of paragraph 9c. of the Lease
is hereby amended to read as follows:

          c.   Tenant shall hold Landlord harmless from and defend Landlord
          against all claims (except such as arise from the negligence or
          willful misconduct of Landlord, its agents, employees or contractors)

8.   Amendment of Paragraph 10:  Damage or Destruction.
     -------------------------------------------------

     a.   The final clause of paragraph 10a. of the Lease is hereby amended to
read as follows:

          provided, however, that if in the opinion of Landlord's architect the
          work of

                                       4
<PAGE>

          repair cannot be completed within one hundred and twenty (120) days,
          Landlord may at its election, terminate the Lease by notice given to
          Tenant.

     b.   The following language is hereby added to paragraph 10b. of the Lease,
to read as follows:

          If the premises are totally or partially destroyed and Landlord does
          not elect to terminate the Lease or is not entitled to terminate the
          Lease pursuant to its terms, then Tenant shall have the option to
          terminate the Lease if the premises cannot be restored within three
          hundred and sixty (360) days after the damage, by notice to Landlord
          given within fifteen (15) days following Landlord's notice to Tenant
          regarding the estimated time of repair.  In addition, Tenant may
          terminate the Lease if such restoration or repair is not, in fact,
          substantially completed within three hundred and sixty (360) days
          following the event, by notice given to Landlord within fifteen (15)
          days after the end of such 360-day period but prior to such
          substantial completion.  Notwithstanding anything in this paragraph 10
          to the contrary, Landlord shall not have the right to terminate the
          Lease if the total cost of repair or restoration is estimated to cost
          less than five percent (5%) of the replacement cost of the Building,
          excluding trade fixtures installed by Tenant.

9.   Amendment of Paragraph 11:  Eminent Domain.  The following language is
     ------------------------------------------
hereby added at the end of paragraph 11 of the Lease, to read as follows:

          Notwithstanding the foregoing, Tenant shall be entitled to separately
          claim and prove, but not at the expense of the award otherwise payable
          to Landlord, for:  (a) the unamortized value, allocable to the
          remainder of the term, of any improvements installed at Tenant's
          expense which are not removable; (b) Tenant's moving costs; (c) loss
          to Tenant's goodwill as a consequence of the condemnation; and (d)
          Tenant's trade fixtures.

10.  Amendment of Paragraph 12:  Assignment and Subletting.
     -----------------------------------------------------

     a.   The second clause of paragraph 12a. of the Lease is hereby amended to
read as follows:

          Tenant shall not hypothecate this Lease or any interest herein or
          permit the use of the Premises by any party other than Tenant without
          the prior consent of Landlord, which consent may be withheld by
          Landlord in its reasonable discretion.

     b.   The following language is hereby added to the end of paragraph 12a. of
the Lease to read as follows:

          Notwithstanding the foregoing, Tenant may, upon prior notice to
          Landlord accompanied by an explicit assumption of the Tenant's
          obligations under this Lease for the benefit of Landlord, but without
          Landlord's prior consent, sublet the premises or assign its interest
          in this Lease to (i) a subsidiary affiliate, division, or corporation
          controlling, controlled by or under common control with Tenant, (ii) a
          successor corporation related to Tenant by merger, consolidation, non-
          bankruptcy reorganization or government action, or (iii) a purchaser
          of substantially all of Tenant's assets as a going concern.  A sale or
          transfer of Tenant's capital stock shall not be deemed an assignment,
          subletting or any other transfer of its interest in the Lease or in
          the premises; provided, however, that in the case of such purchase of
          Tenant's assets, the assignee has a tangible net worth at least equal
          to that of Tenant as of the commencement of the term.

     c.   Subparagraph 12b.4. of the Lease is hereby deleted.

     d.   Paragraph 12c. of the Lease is hereby deleted.

     e.   Subparagraph 12d.1. of the Lease is hereby deleted.

     f.   The first sentence of paragraph 12f. of the Lease is hereby amended to
read as follows:

          f.   In the case of an assignment, one-half (1/2) of all sums or other
          economic consideration received by Tenant for its leasehold interest
          in the premises as a result of such assignment shall be paid to
          Landlord.

     g.   Paragraph 12g. of the Lease is hereby amended to read as follows:

          g.   In the case of a subletting, one-half (1/2) of all sums or
          economic consideration received by Tenant as a result of such
          subletting shall be

                                       5
<PAGE>

          paid to Landlord after first deducting (i) the rental due hereunder
          (including, without limitation, amounts payable under paragraph 4 of
          the Lease), prorated to reflect only rental allocable to the sublet
          portion of the Premises, (ii) the cost of leasehold improvements made
          to the sublet portion of the premises at Tenant's expense, amortized
          over the term of this Lease except for Leasehold improvements made for
          the specific benefit of the sublessee, which shall be amortized over
          the term of the sublease, and (iii) the cost of any real estate
          commissions and other reasonable costs (including attorneys' fees)
          incurred in connection with such subletting, amortized over the term
          of the sublease.

11.  Amendment of Paragraph 13:  Default by Tenant.  Subparagraph 13a.2. of the
     ---------------------------------------------
Lease is hereby amended to read as follows:

          2.   A default by Tenant in the performance of any of the other terms,
          covenants, agreements or conditions contained herein and, if the
          default is curable, the continuation of such default for a period of
          10 days after notice by Landlord or beyond the time reasonably
          necessary for cure if the default is of the nature to require more
          than 10 days to remedy;

12.  Amendment of Paragraph 14:  Default by Landlord.  The following language is
     -----------------------------------------------
hereby added to paragraph 14 of the Lease, to read as follows:

          Following any such default by Landlord in its obligations to maintain
          the Building or the premises under this Lease, upon prior notice to
          Landlord, Tenant may perform such obligations and Landlord shall
          reimburse Tenant for Tenant's reasonable out-of-pocket costs incurred
          in connection with such performance.

13.  Amendment of Paragraph 15:  Security Deposit.  The sixth sentence of
     --------------------------------------------
paragraph 15 of the Lease is hereby amended to read as follows:

          The Deposit, or so much thereof as has not theretofore been applied by
          Landlord, shall be returned, without payment of interest for its use,
          to Tenant (or, at Landlord's option, to the last assignee, if any, of
          Tenant's interest hereunder) at the expiration of the term hereof, and
          after Tenant has vacated the premises.

14.  Amendment of Paragraph 16:  Estoppel Certificate.  The first clause of
     ------------------------------------------------
paragraph 16a. of the Lease is hereby amended to read as follows:

          a.   Tenant shall, at any time within twenty (20) days after receiving
          notice from Landlord, execute, acknowledge and deliver to Landlord a
          statement certifying

15.  Amendment of Paragraph 17:  Subordination.  The following language is
     -----------------------------------------
hereby added to paragraph 17 of the Lease, to read as follows:

          Notwithstanding the foregoing, within ninety (90) days following the
          date of this Lease, Landlord shall cause Connecticut General Life
          Insurance Corporation, or its successor, as beneficiary of the Deed of
          Trust presently encumbering the Building, to execute and deliver a
          counterpart of a Subordination, Non-disturbance and Attornment
          Agreement in the form attached to the Addendum to this Lease, with
          such revisions as Tenant reasonably may request, which Agreement shall
          promptly be executed and delivered by Tenant. Tenant shall reimburse
          Landlord within 30 days following Landlord's request for any out-of-
          pocket costs incurred by Landlord in connection with Tenant's
          negotiation of the form of such Subordination, Non-disturbance and
          Attornment Agreement.

16.  Amendment of Paragraph 20:  Notices.  The first phrase of paragraph 20 of
     -----------------------------------
the Lease is hereby amended to read as follows:

          20.  Notices.  All notices, consents, demands and other communications
               -------
          from one party to the other given pursuant to the terms of this Lease
          shall be in writing and shall be deemed

                                       6
<PAGE>

          to have been fully given two business days following deposit in the
          United States mail, certified or registered, postage prepaid and
          addressed as follows:

17.  Amendment of Paragraph 21:  General Provisions.
     ----------------------------------------------

     a.   Paragraph 21e. of the Lease is hereby amended to read as follows:

          e.   If Tenant remains in possession of the Premises or any part
               thereof after the expiration of the term with the consent of
               Landlord, such occupancy shall be at a tenancy from month to
               month at a rental in the amount of 150% of the last month's
               rental during the term, plus all other charges payable hereunder
               and upon all of the terms of the Lease.

     b.   The first sentence of paragraph 21g. of the Lease is hereby amended to
read as follows:

          g.   Landlord and Landlord's agents shall have the right to enter the
               premises at reasonable times upon at least 24 hours' prior
               notice, except in emergencies, for the purpose of inspecting the
               same, showing the same to prospective purchasers, tenants,
               lenders and other interested parties, and making such
               alterations, repairs, improvements or additions to the premises
               or to the Building as Landlord may deem necessary or desirable.

     c.   The following language is hereby added to the end of paragraph 21k. of
the Lease, to read as follows:

          and liabilities accruing prior to such sale.

     d.   A new subparagraph o. is hereby added to paragraph 21 of the Lease, to
read as follows:

          o.   Except as otherwise set forth, whenever this Lease requires an
               approval, consent, designation, determination, selection or
               judgment by either Landlord or Tenant, such approval, consent,
               designation, determination, selection or judgment and any
               conditions imposed thereby shall be reasonable and shall not be
               unreasonably withheld or delayed and, in exercising any right or
               remedy hereunder, each party shall at all times act reasonably
               and in good faith.

     e.   A new subparagraph p. is hereby added to paragraph 21 of the Lease, to
          read as follows:

          p.   Landlord and Tenant represent to each other that except for Rico
               Cheung of Vertex Real Estate Group ("Broker"), they have had no
               contacts in connection with this Lease with any broker, agent or
               finder.  Landlord shall be responsible for any compensation
               payable to Broker in connection with this Lease and Landlord and
               Tenant shall each indemnify, defend and hold harmless the other
               from commissions or other compensation claimed by any other
               broker, finder and/or agent in connection with this Lease based
               upon contacts with the indemnifying party.

18.  Options to Extend Term:
     ----------------------

     a.   Tenant shall have two options to extend the term of the Lease each for
          a three-year period (an "Option Period") with the first Option Period
          commencing upon the expiration of the initial term of the Lease;
          provided, however, such options shall be subject to the following
          conditions:

          i.   At the time each option is exercised, this Lease shall be in full
          force and effect, Tenant shall not be in default hereunder and, as to
          the second Option Period, Tenant shall have validly exercised its
          option with respect to the first Option Period.

          ii.  Each option must be exercised by notice given to Landlord not
          earlier than 12 months and not later than 6 months prior to the then-
          scheduled expiration of the term of this Lease.

     b.   In the event an option is timely and effectively exercised, the term
          shall be extended for three additional years, upon all of the terms
          and conditions of the Lease; provided, however, that the Base Rent
          shall be the then fair market rental value of the Premises.

          i.   For the purposes hereof, the fair market rental value of the
          Premises shall be the

                                       7
<PAGE>

          monthly rental rate per square foot of rentable area then prevailing
          for comparable improved space (without taking into account the value
          of improvements made by Tenant at its cost) in Northwestern Alameda
          County, multiplied by the rentable area of the Premises. If Tenant in
          good faith disputes Landlord's determination of fair market rental
          value, Tenant shall so notify Landlord and the parties shall negotiate
          in good faith to resolve the dispute. If such dispute is not resolved
          by negotiation between the parties within 30 days, then fair market
          rental value shall be determined by appraisal. Tenant shall pay Base
          Rent when due based upon Landlord's determination of fair market
          rental value, subject to retroactive adjustment between the parties if
          the determination by appraisal is different from Landlord's
          determination.

          ii.  When fair market rental value is to be determined by appraisal,
          within 10 days after the expiration of the 30-day negotiation period,
          Landlord and Tenant shall each appoint as an appraiser, a real estate
          appraiser with at least ten years of experience in appraising
          commercial real property in Alameda County, and give notice of such
          appointment to the other.  If either Landlord or Tenant shall fail to
          appoint an appraiser within 10 days after receiving notice of the
          identity of the other party's appointed appraiser, then the single
          appraiser appointed shall be the sole appraiser and determine the fair
          market rental value of the Premises.  In the event each party appoints
          an appraiser, such appraisers shall, within 30 days after the
          appointment of the last of them to be appointed, complete their
          determinations of fair market rental value and furnish the same to
          Landlord and Tenant.  If the low appraisal varies from the higher
          appraisal by 5% or less, the fair market rental value shall be the
          average of the two valuations.  If the low appraisal varies from the
          high appraisal by more than 5%, the two appraisers shall, within 10
          days after submission of the last appraisal report, appoint a third
          appraiser who shall meet the qualifications set forth in this
          paragraph.  If the two appraisers shall be unable to agree on the
          selection of a third appraiser in a timely manner then either Landlord
          or Tenant may request such appointment by the presiding judge of the
          Superior Court of Alameda County.  The third appraiser, however
          selected, shall be a person who has not previously acted in any
          capacity for or against either party.  Such third appraiser shall,
          within 30 days after appointment, make a determination of fair market
          rental value and submit an appraisal report to Landlord and Tenant.
          The fair market rental value of the Premises shall be as determined by
          the third appraiser, unless it is less than the valuation set forth in
          the lower appraisal previously obtained, in which case the valuation
          set forth in the lower prior appraisal shall be controlling, or unless
          it is greater than the valuation set forth in the higher appraisal
          previously obtained, in which case the valuation set forth in the
          higher prior appraisal shall be controlling.  All fees and costs
          incurred in connection with the determination of fair market rental
          value by appraisal shall be paid one-half by Landlord and one-half by
          Tenant.  Prior to the commencement of the option period, Tenant and
          Landlord shall execute an amendment to this Lease setting forth the
          option period and revised Base Rent.

          iii. Even though Tenant has exercised its option, Tenant may rescind
          its exercise at any time at least six (6) months prior to the then-
          scheduled expiration of the term provided that Tenant shall pay within
          30 days following Landlord's request for all expenses incurred by
          Landlord in connection with the appraisal process.

19.  Right of First Offer.  Tenant shall have a right of first offer to lease
     --------------------
     any space (the "Offered Space") which becomes available in the building
     commonly identified as 960 Atlantic Avenue if and when such space becomes
     available.  Tenant's rights under this paragraph shall be conditioned upon:
     (a) 960 Atlantic Avenue continuing to be owned by the same entity which is
     the Landlord under this Lease, (b) the absence of any prior rights in favor
     of the present and any future tenants in 960 Atlantic Avenue, as such
     rights may exist or be granted in the future; and (c) Tenant not being in
     default under this Lease.  Subject to the foregoing, if and when any space
     does become available for lease in 960 Atlantic Avenue, Landlord shall give
     notice to Tenant of the availability of the Offered Space and the terms on
     which Landlord would be willing to enter into a lease for such space with
     Tenant.  If Tenant, by notice to Landlord given within five (5) business
     days following the giving of Landlord's notice, so elects, the parties
     shall thereafter negotiate in good faith for ten (10) business days with
     respect to the potential of leasing the Offered Space to Tenant.  If by the
     end of such ten-day period, Landlord and Tenant have not entered into a
     binding agreement with respect to the lease of the Offered Space to Tenant,
     or if Tenant initially does not give Landlord notice of its desire to enter
     into such negotiations within the five-day business period set forth above,
     Landlord shall thereafter be free to deal with the Offered Space without
     further reference to Tenant, unless and until one (1) year or more
     thereafter the Offered Space again becomes available.

20.  Initial Improvement of the Premises.
     -----------------------------------

     a.   If, within sixty (60) days following the commencement of the term,
          Tenant discovers that any portion of the plumbing, heating,
          ventilating and air-conditioning system serving the Premises which
          plumbing and other systems are necessary for the occupancy of the
          Premises for normal office (as opposed to fume hoods, animal storage,
          manufacturing or other special purposes) are not in good working order
          and condition, it may so notify Landlord and Landlord shall thereafter
          promptly cause such plumbing and other systems to be placed in good
          operating condition and repair.

                                       8
<PAGE>

     b.   i.   Landlord shall reimburse Tenant for up to $93,350 (the "TI
          Allowance") for its out-of-pocket costs incurred in replacing existing
          carpeting in the Premises, painting the interior of the Premises and
          for making other alterations and improvements within the Premises (the
          "Tenant Improvements").  In addition, at Tenant's request Landlord
          shall reimburse Tenant for up to an additional $76,788 (the
          "Additional TI Allowance") for out-of-pocket costs incurred by Tenant
          in connection with additional alterations to and improvements within
          the Premises.  No portion of the TI Allowance may be applied to pay
          for the costs of millwork or cabinetry which may be removed by Tenant
          at the end of the term, furniture or trade equipment or trade
          fixtures.  All alterations and improvements within the Premises shall
          be subject to the requirements of subparagraph 8c. of Lease.  Landlord
          shall also reimburse Tenant, and not as part of the TI Allowance for
          costs incurred by Tenant in connection with the Tenant Improvements to
          remove Hazardous Materials from the premises existing as of the
          commencement of the term.

          ii.  Landlord shall reimburse Tenant for its out-of-pocket costs
          incurred in connection with Tenant Improvements within thirty (30)
          days of Tenant's request provided that at the time of such payment:

          A.   Tenant has delivered to Landlord copies of building permits
               issued in connection with the Tenant Improvements indicating
               final inspection has been approved;

          B.   Tenant has delivered to Landlord unconditional waivers and
               releases of lien from all parties have established a right to
               lien, or evidence that all applicable limitation periods for the
               filing of mechanics liens have expired without any such liens
               having been filed;

          C.   Tenant not then being in default under the Lease; and

          D.   Tenant delivering copies of invoices and other evidence,
               reasonably acceptable to Landlord of costs incurred by Tenant.

          iii. Any amounts paid to Tenant as the Additional TI Allowance shall
          be re-paid by Tenant to Landlord as an increase in Base Rent as
          described in paragraph 2 of this Addendum.

21.  Commencement of the lease shall be contingent upon full funding of $(6) six
     million dollars to Xenogen by investors no later than February 6, 1998.

IN WITNESS WHEREOF, Landlord and Tenant have executed this Addendum as of the
date of the Lease.

LANDLORD:                                          TENANT:

ALAMEDA REAL ESTATE INVESTMENTS,                   XENOGEN CORPORATION,
a California limited partnership                   a California corporation

By:  Vintage Alameda Investments, LP
     a California limited partnership
     general partner                               By: /s/ Pamela Reilly Contog
                                                       ------------------------

     By:  Vintage Properties - Alameda             Title: CEO & President
          Commercial, a California                        ---------------------
          corporation, general partner

          By: /s/ Joseph Seiger
             ----------------------
          Title: President
                -------------------

                                       9<PAGE>

         [CONFIDENTIAL TREATMENT REQUESTED. CERTAIN PORTIONS OF THIS
    AGREEMENT HAVE BEEN REDACTED AND SEPARATELY FILED WITH THE COMMISSION]

                                                                   EXHIBIT 10.15

                         COMMERCIAL LICENSE AGREEMENT

     This Agreement (the "Agreement") effective as of July 12, 2000 (the
"Effective Date") is made by and between Xenogen Corporation, having a principal
place of business at 860 Atlantic Avenue, Alameda, California 94501 ("Xenogen")
and IRM, LLC, a Delaware Corporation, ("IRM"), having a principal place of
business at Sofia House, 48 Church Street, Hamilton, Bermuda.

                                  BACKGROUND

     A.   Xenogen has expertise in the development and detection of living
cells, organisms and transgenic animals that have the property of
bioluminescence, and owns or has rights to intellectual property relating
thereto.

     B.   IRM wishes to obtain a non-exclusive commercial license to the Xenogen
Technology for use in the Field at the Authorized Sites (capitalized terms
defined below).

     NOW, therefore, the parties agree as follows:

1.   Definitions.
     -----------

     "Xenogen Monitoring Technology" means (i) U.S. Patent No. 5,650,135; (ii)
all divisions, substitutions, continuations, and continuation-in-part
applications of (i); (iii) all foreign counterparts of any of the preceding; and
(iv) all patents issuing on any of the preceding, including reissues,
reexaminations and extensions; which patents and applications have been licensed
to Xenogen pursuant to that certain exclusive license agreement between Xenogen
and The Board of Trustees of the Leland Stanford Junior University ("Stanford")
effective July 1, 1997.

     "Xenogen Technology" means (i) all patents and patent applications owned or
controlled by Xenogen that relate to the practice of in vivo imaging; (ii) all
divisions, substitutions, continuations, and continuation-in-part applications
of (i); (iii) all foreign counterparts of any of the preceding; (iv) all patents
issuing on any of the preceding, including reissues, reexaminations and
extensions; and (v) all future patents and patent applications relating to the
practice of in vivo imaging, Xenogen Technology includes the Xenogen Monitoring
Technology.

     "Field" means the activities specified in Exhibit A attached hereto.

     "Authorized Site(s)" means the physical location(s) specified in Exhibit B
attached hereto.

     "Affiliate" means Novartis Pharmaceuticals Corporation ("Novartis") or any
corporation, firm, partnership or other legal entity which, directly or
indirectly, controls, is controlled by or is under common control by or with
Novartis. For the purposes of this definition, "control" shall mean the direct
or indirect ownership of more than 50% of the outstanding voting securities or
capital stock of such entity or any other comparable equity or ownership
interest.

     "System" means an imaging system as specified in Exhibit C attached hereto.
<PAGE>

     "Permitted Users" shall mean IRM, Novartis, Novartis Research Foundation,
the Novartis Institute for Functional Genomics Inc., the Friedrich Miescher
Institute and all Novartis Affiliates.

     "Commercial Use License" means a license by Xenogen granting rights to any
for-profit entity to use the Xenogen Monitoring Technology for commercial drug-
development (e.g., compound screening and/or target validation) purposes. It is
agreed that the following types of licenses do not constitute a Commercial Use
License: (i) an evaluation license granted for the purpose of evaluating
Xenogen's technology and/or Bioware(TM) organisms, such as the September 1998
agreement between the parties executed by Novartis Pharmaceuticals Corporation
on September 18, 1998, and by Xenogen on September 25, 1998; (ii) a strain
development or modification agreement, whereby a third party is licensed to use
the Xenogen Monitoring Technology to develop new Bioware(TM) organisms or
improve existing Bioware(TM) organisms, without rights to use such Bioware(TM)
organisms for its own or contract research drug development purposes; and (iii)
a distribution agreement, whereby a third party is granted rights to use the
Xenogen Monitoring Technology in connection with the distribution certain
Xenogen Bioware(TM) organisms or animals to third parties, without rights to use
such Bioware(TM) organisms or animals for its own or contract research drug
development purposes.

2.   License Grant.
     -------------

     2.1    License. Xenogen hereby grants to IRM and Permitted Users, a
            -------
non-exclusive, non-transferable license, without right to grant or authorize any
sublicenses, to use the Xenogen Technology solely in the Field solely at the
Authorized Sites.

     2.2    No Implied Rights; Retained Rights. Only the License granted
            ----------------------------------
pursuant to the express terms of this Agreement shall be of any legal force or
effect. No other license rights shall be granted or created by implication,
estoppel or otherwise. Xenogen reserves the right to license the Xenogen
Technology to others, and to use the Xenogen Technology for its own purposes.

     2.3    No Warranty. IRM ACKNOWLEDGES THAT NEITHER XENOGEN NOR STANFORD MAKE
            -----------
ANY REPRESENTATIONS OR EXTEND ANY WARRANTIES OF ANY KIND, WHETHER EXPRESS OR
IMPLIED, WITH RESPECT TO THE XENOGEN TECHNOLOGY, INCLUDING WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF THE
XENOGEN TECHNOLOGY WILL NOT INFRINGE THE INTELLECTUAL PROPERTY RIGHTS OF THIRD
PARTIES.

3.   Light-Emitting Organisms.
     ------------------------

     3.1    Source. IRM and Permitted Users may develop or otherwise acquire
            ------
from any source, light-emitting organisms for use in the practice of the
License.

     3.2   Existing Xenogen Bioware(TM) Organisms. IRM and Permitted Users may
           ------------------------------------
license or purchase from Xenogen any Bioware(TM) organisms that Xenogen has
available for third party licensing or purchase, respectively, at the then
current list price for such Bioware(TM) organisms; ***

*** CONFIDENTIAL TREATMENT REQUESTED

                                       2
<PAGE>

     3.3   Custom Xenogen Bioware(TM) Organisms. The parties may agree to have
           ----------------------------------
Xenogen develop custom Bioware(TM) organisms for IRM or Permitted Users on terms
and conditions to be negotiated in good faith.

4.   CCD Imaging System
     ------------------

     4.1   Available Systems. Xenogen shall offer for sale or lease to IRM and
           -----------------
Permitted Users the Systems specified in Exhibit C, on terms and conditions to
be agreed upon by the parties.

     4.2   Lease. IRM and Permitted Users may lease either of the Systems
           -----
specified in Exhibit C at a cost of * * * per month per System. The lease price
includes on-site installation and the cost of service reasonably necessary to
maintain the leased System in proper operating condition.

     4.3   Purchase. IRM and permitted Users may purchase either of the Systems
           --------
specified in Exhibit C at a per-System cost of * * * (Hamamatsu) or * * *
(IVIS(TM)). The purchase cost of each System includes on-site installation and
one year of service and maintenance at no additional charge.

     4.4   Hardware Upgrades. Xenogen shall notify IRM or Permitted Users if
           -----------------
additional hardware with enhanced functionality for in vivo imaging ("Hardware
Upgrade") becomes available from Xenogen. At IRM's or Permitted Users' option,
the parties shall then negotiate in good faith the terms on which such a
Hardware Upgrade could be made available to IRM or Permitted Users. * * *

     4.5   Service Agreement. Xenogen will make available to IRM and Permitted
           -----------------
Users a service agreement on terms consistent with industry norms (including
standard FTE labor and parts charges and travel expenses) to provide for the
service and maintenance of any System(s) purchased by IRM or Permitted Users
after expiration of the one year free service. Service will be initiated at
IRM's or Permitted Users' request, on terms and conditions to be agreed upon by
the parties.

     4.6   Software License. Contingent upon the lease or purchase of at least
           ----------------
one System by IRM or Permitted Users, Xenogen shall grant to IRM and Permitted
Users a nonexclusive, nontransferable license to use and display the Software
with the Equipment and with up to five (5) additional desktop computers (per
System leased or purchased) used for analysis of data obtained using the System
at the Authorized Sites for the duration of this Agreement.

     4.7   Software Upgrades. Xenogen will provide to IRM and Permitted Users,
           -----------------
without charge, any upgrades to the Software ("Software Upgrades") that Xenogen
makes available to third parties.

     4.8   New Software. If Xenogen makes available to third parties any new
           ------------
software suitable for use with in vivo imaging ("New Software"), Xenogen shall
make the New Software available to IRM and Permitted Users on terms and
conditions at least as favorable as the terms and conditions agreed to by any
commercial entity that has in place a Commercial Use License to the

* * *  CONFIDENTIAL TREATMENT REQUESTED

                                       3
<PAGE>

Xenogen Monitoring Technology, for similar quantities of New Software within six
(6) months of when the New Software becomes available to IRM and Permitted
Users.

     4.9   Acknowledgment. The copyright of the Software is and shall remain
           --------------
owned by Xenogen, and IRM and Permitted Users agree that they will not, without
Xenogen's prior written consent, directly or indirectly, modify, make derivative
works of, or make any copies of the Software, except those copies necessary to
run the software pursuant to Section 4.6 herein. IRM and Permitted Users further
agree that they shall not, directly or indirectly, attempt to reverse engineer
or decompile the Software or otherwise derive source code from the Software.

     4.10  Limited Warranty. Xenogen warrants that any System leased or
           ----------------
purchased from Xenogen by Novartis will include all components necessary for
conducting in vivo imaging experiments.

     4.11  Disclaimer of All Other Warranties. XENOGEN'S LIMITED WARRANTY SET
           ----------------------------------
FORTH IN SECTION 4.10 IS THE EXCLUSIVE WARRANTY, AND XENOGEN MAKES NO OTHER
WARRANTIES (EXPRESS, IMPLIED, STATUTORY OR OTHERWISE) WITH RESPECT TO THE SYSTEM
TRANSFERRED HEREUNDER, AND SPECIFICALLY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES
OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ALL WARRANTIES OF
NONINFRINGEMENT OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS.

5.   Consideration. In consideration for the License provided to IRM herein, IRM
     -------------
shall pay to Xenogen by wire transfer to an account designated by Xenogen a fee
("Fee") of *** per year for each of three (3) years. Such payments will be due
within fifteen (15) business days of each yearly anniversary of the Effective
Date. The first payment shall be due within fifteen (15) business days of the
Effective Date.

6.   Ownership of Intellectual Property. IRM and Permitted Users agree that all
     ----------------------------------
intellectual property rights relating to the Xenogen Monitoring Technology, the
System(s) and their uses are and shall be owned or controlled exclusively by
Xenogen. Xenogen agrees that all invention(s) made by IRM or the Permitted Users
in connection with the License granted hereunder that relate to subject matter
other than the Xenogen Monitoring Technology, the System, or their uses shall be
owned exclusively by IRM or Novartis.

7.   Confidentiality.
     ---------------

     7.1   Confidential Information. Except as expressly provided herein, the
           ------------------------
parties agree that, for the term of this Agreement and for three (3) years
thereafter, the receiving party shall protect from disclosure and shall not use
for any purpose except for the purposes contemplated by this Agreement, any
information identified as confidential ("Confidential Information") furnished to
it by the disclosing party hereto. The receiving party shall use the same
standard of care in safeguarding the disclosing party's information as the
receiving party uses for its own similarly sensitive information. Confidential
Information shall not include information which the receiving party shows:

           (a)   was already known to the receiving party, other than under an
obligation of confidentiality, at the time of disclosure;

*** CONFIDENTIAL TREATMENT REQUESTED

                                       4
<PAGE>

           (b)   was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving party;

           (c)   became generally available to the public or otherwise part of
the public domain after its disclosure and other than through any act or
omission of the receiving party in breach of this Agreement;

           (d)   was subsequently lawfully disclosed to the receiving party by a
person other than a party hereto; or

           (e)   was approved for release by written authorization of the
disclosing party.

     7.2   Permitted Use and Disclosures. Each party hereto may use or disclose
           -----------------------------
information disclosed to it by the other party to the extent such use or
disclosure is reasonably necessary in complying with applicable law, legal
process or governmental regulations, or exercising its rights hereunder,
provided that if a party is required to make any such disclosure of another
party's Confidential Information, it will give reasonable advance notice to the
latter party of such disclosure and will use its best efforts to secure
confidential treatment of such information prior to its disclosure (whether
through protective order or otherwise).

     7.3   Confidential Terms. Except as expressly provided herein, each party
           ------------------
agrees not to disclose any terms of this Agreement to any third party without
the consent of the other party; provided, disclosures may be made to actual or
prospective corporate partners or investors, or to a party's accountants,
attorneys and other professional advisors. Any disclosures made to actual or
prospective corporate partners or investors, or to a party's accountants,
attorneys and other professional advisors, shall be limited to statements of
fact and shall not imply endorsement of the other party's products or services.

8.   Press Release. Xenogen may make a press release in the form attached as
     -------------
Exhibit D to announce the execution of this Agreement; thereafter, Xenogen and
IRM may each disclose to third parties the information contained in such press
release without the need for further approval by the other party. Other press
releases of any kind by either party will be released only after both parties
have agreed in writing to the contents of the press releases.

9.   Warranties and Indemnification
     ------------------------------

     9.1   Warranty of Right to Grant License. Xenogen warrants that as of the
           ----------------------------------
Effective Date, (a) it has the legal right to grant the License herein, and (b)
the grant of the License does not conflict with, violate, or constitute a breach
or default under any contract or other obligation of Xenogen.

     9.2   Warranty of Full Disclosure. Xenogen warrants that as of the
           ---------------------------
Effective Date, all non-cumulative material, prior art references and
information that Xenogen is aware of and that could adversely affect Xenogen's
pending patent applications and issued patents relating to the Xenogen
Monitoring Technology are presently before the United States Patent and
Trademark Office (USPTO).

     9.3   Indemnification. (a) IRM agrees to indemnify, defend and hold Xenogen
           ---------------
and its directors, officers, employees and agents and The Trustees of the Leland
Stanford Junior

                                       5
<PAGE>

University, Stanford Health Services and their respective trustees, officers,
employees, students and agents (the "Xenogen Indemnitee(s)") harmless from and
against any and all liabilities, claims, demands, expenses (including, without
limitation, reasonable attorneys and professional fees and other costs of
litigation), losses or causes of action (each, a "Xenogen Liability") that may
be brought against the Xenogen Indemnitee(s) by reason or arising out of or
relating in any way to (i) IRM's or Permitted Users' possession and use of the
System, whether based on negligence, product liability or otherwise, (ii) the
exercise of any right granted to IRM or Permitted Users pursuant to this
Agreement, or (iii) any material breach of this Agreement by IRM or Permitted
Users, except to the extent, in each case, that such Xenogen Liability is caused
by the negligence or willful misconduct by Xenogen as determined by a court of
competent jurisdiction. Notwithstanding the above, neither IRM nor any Permitted
User shall enter into any settlement or other agreement which makes any
admission of negligence or wrongdoing on the part of any Xenogen Indemnitee or
that relates to the validity or enforceability of any patents owned by Xenogen
without the prior written consent of Xenogen, which consent shall not be
unreasonably withheld. (b) Xenogen agrees to defend, indemnify and hold IRM, the
Permitted Users and its directors, officers, employees, agents and assigns (the
"IRM Indemnitee(s)") harmless against any and all liabilities, claims, demands,
expenses (including, without limitation, reasonable attorney's and professional
fees and other costs of litigation), losses or causes of action (each, an " IRM
Liability") that may be brought against the IRM Indemnitee(s) by reason or
arising out of or relating in any way to any negligent act or willful misconduct
on the part of Xenogen, except to the extent that such IRM Liability is caused
by the negligence or willful misconduct by IRM or Permitted Users as determined
by a court of competent jurisdiction. Notwithstanding the above, Xenogen shall
not enter into any settlement or other agreement which makes any admission of
negligence or wrongdoing on the part of any IRM Indemnitee(s). The party seeking
indemnification under this Section shall immediately notify the other party, in
writing, of any claim or proceeding brought against it for which it seeks
indemnification hereunder.

10.  Term and Termination
     --------------------

     10.1   Term. This Agreement will commence on the Effective Date and unless
            ----
terminated earlier as provided in this Article 10, will terminate three (3)
years after the Effective Date.

     10.2   Term Extension. Prior to the *** anniversary of the Effective Date,
            --------------
unless earlier terminated, IRM, Permitted Users or an assignee under Section
11.2 herein may extend the Term for up to *** additional years by paying to
Xenogen a fee of *** U.S. dollars (U.S. ***) per year of extension.

     10.3   Permissive Termination. IRM may terminate this Agreement upon thirty
            ----------------------
(30) days written notice to Xenogen for (i) failure of the Xenogen Monitoring
Technology, as confirmed by at least one peer-reviewed publication by a
disinterested party, (ii) a final judgment of invalidity of all Relevant Patent
Claims (as defined below) under the Xenogen Monitoring Technology, (iii) a final
adverse resolution of infringement of third party intellectual property rights,
or (iv) an assignment by Xenogen to a major pharmaceutical company pursuant to
Section 11.2 herein. A Relevant Patent Claim is a claim under the Xenogen
Monitoring Technology that would be infringed by IRM or Permitted Users but for
the License granted herein. IRM may also terminate this Agreement after two
years, and annually thereafter, for any reason with 60 days written notice prior
to the annual anniversary date of this Agreement.

*** CONFIDENTIAL TREATMENT REQUESTED

                                       6
<PAGE>

     10.4  Termination for Cause. Either party may terminate this Agreement in
           ---------------------
the event the other party has materially breached or defaulted in the
performance of any of its obligations hereunder, and such default has continued
for thirty (30) days after written notice thereof was provided to the breaching
party by the nonbreaching party. Any termination shall become effective at the
end of such thirty (30) day period unless the breaching party has cured any such
breach or default prior to the expiration of such period. Notwithstanding the
above, in the case of a failure to pay any amount due hereunder the period for
cure of any such default following notice thereof shall be ten (10) days and,
unless payment is made within such period, the termination shall become
effective at the end of such period.

     10.5  Automatic Termination. This Agreement shall terminate automatically
           ---------------------
and without further notice to the other party in the event that either party
shall make any unauthorized assignment for the benefit of creditors, file any
petition under the bankruptcy or insolvency laws of any jurisdiction, have or
suffer a receiver or trustee to be appointed for its business or property, or be
adjudicated a bankrupt or an insolvent.

     10.6  Effect of Termination.
           ---------------------

           (a) Accrued Rights and Obligations. Termination of this Agreement for
               ------------------------------
any reason shall not release any party hereto from any liability which, at the
time of such termination, has already accrued to the other party or which is
attributable to a period prior to such termination nor preclude either party
from pursuing any rights and remedies it may have hereunder or at law or in
equity with respect to any breach of this Agreement.

           (b) Return of Confidential Information and Leased Systems. Upon any
               -----------------------------------------------------
termination or expiration of this Agreement, IRM and Permitted Users and Xenogen
shall promptly return to the other party all Confidential Information received
from the other party (except one copy which may be retained for legal archival
purposes), IRM and Permitted Users shall return to Xenogen all leased Systems,
including all Equipment and Software leased to IRM and Permitted Users under any
lease agreement within thirty (30) days of the termination of this Agreement.
The System(s) shall be shipped to Xenogen's facility at the address set forth in
Section 11.5. IRM or Permitted Users shall pay all shipping and freight charges,
and shall assume the risk of loss during shipment. Xenogen agrees that in the
event of any loss or damage to the leased System(s), IRM's or Permitted Users'
liability for such loss or damage shall not exceed the lower of the amortized or
market values of the leased System(s) at the time of damage or loss.

           (c) Licenses. The licenses granted hereunder shall terminate upon the
               --------
termination of this Agreement,

     10.7  Survival. Sections 2.3, 4.11, 10.6 and 10.7; and Articles 6,7, 9 and
           --------
11 of this Agreement shall survive the expiration or termination of this
Agreement for any reason,

11.  Miscellaneous
     -------------

     11.l  Governing Law; Venue. This Agreement and any dispute, including
           --------------------
without limitation any arbitration, arising from the performance or breach
hereof shall be governed by and construed and enforced in accordance with the
laws of the state of California, without reference to conflicts of laws
principles. The exclusive venue of any dispute arising out of or in connection
with
<PAGE>

the performance or breach of this Agreement shall be the California state courts
or U.S. district court located in Alameda County, California.

     11.2   Assignment. IRM may not transfer or assign this Agreement or any of
            ----------
IRM's rights hereunder without the written consent of Xenogen, which consent
shall not be unreasonably withheld; the foregoing notwithstanding, IRM may
assign this Agreement to Novartis or any Novartis Affiliate. Xenogen may assign
this Agreement or its rights hereunder. This Agreement shall be binding upon and
inure to the benefit of the parties and their permitted successors and assigns.

     11.3   Waiver. No waiver of any rights, shall be effective unless consented
            ------
to in writing by the party to be charged and the waiver of any breach or default
shall not constitute a waiver of any other right hereunder or any subsequent
breach or default.

     11.4   Severability. In the event that any provision of this Agreement is
            ------------
determined to be invalid or unenforceable by a court of competent jurisdiction,
the remainder of the Agreement shall remain in full force and effect without
said provision.

     11.5   Notices. All notices, requests and other communications hereunder
            -------
shall be in writing and shall be personally delivered or sent by telecopy or
other electronic facsimile transmission or by registered or certified mail,
return receipt requested, postage prepaid, in each case to the respective
address specified below, or such other address as may be specified in writing to
the other parties hereto:

     IRM:      IRM, LLC
               P.O. Box HM 2899
               Hamilton HMLX, Bermuda

     Xenogen:  Xenogen Corporation
               860 Atlantic Avenue
               Alameda, CA 94501
               Attn: President

     11.6   Independent Contractors. Both parties are independent contractors
            -----------------------
under this Agreement. Nothing contained in this Agreement is intended nor is to
be construed so as to constitute Xenogen or Novartis as partners or joint
venturers with respect to this Agreement. Neither party shall have any express
or implied right or authority to assume or create any obligations on behalf of
or in the name of the other party or to bind the other party to any other
contract, agreement, or undertaking with any third party.

     11.7   Use of Name. Neither IRM nor Permitted Users shall use the name or
            -----------
trademarks of Xenogen or Stanford without the prior written consent of Xenogen
or Stanford, respectively. Xenogen shall not use the name or trademarks of IRM
or the Permitted Users without prior written consent, respectively.

     11.8   Compliance with Laws. In exercising their rights under this license,
            --------------------
the parties shall fully comply in all material respects with the requirements of
any and all applicable laws, regulations, rules and orders of any governmental
body having jurisdiction over the exercise of rights under this Agreement.
<PAGE>

     11.9   LIMITATION OF LIABILITY. NEITHER PARTY SHALL BE LIABLE TO THE OTHER
            -----------------------
FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES, INCLUDING,
WITHOUT LIMITATION, ANY LOSS OF USE, REVENUE OR PROFIT, ARISING OUT OF THIS
AGREEMENT, THE EXECUTION OF THE LICENSE, OR ANY BREACH OR DEFAULT UNDER THIS
AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY.

     11.10  * * *

     11.11  Entire Agreement: Amendment. This Agreement, together with its
            ---------------------------
Exhibits, constitutes the entire and exclusive Agreement between the parties
with respect to the subject matter hereof and supersedes and cancels all
previous discussions, agreements, commitments and writings in respect thereof.
No amendment or addition to this Agreement shall be effective unless reduced to
writing and executed by the authorized representatives of the parties.

<TABLE>
<S>                                                 <C>
IRM, LLC                                            XENOGEN CORPORATION

Signature:  /s/ J. Reinhardt                        Signature: /s/ David W. Carter
           -------------------------------------    -------------------------------
Printed Name: Dr. J. Reinhardt  Dr. B. Aebischer    Printed Name: David W. Carter
              -----------------------------------                 -----------------
Title:        President         Secretary           Title:        Chairman
        -----------------------------------------          ------------------------
Date:         7/25/2000                             Date:    7/10/00
      -------------------------------------------          ------------------------
</TABLE>

Exhibit A: Field
Exhibit B: Authorized Site
Exhibit C: CCD Imaging System
Exhibit D: Press Release

* * *  CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

                                    EXHIBIT A

                                      Field
                                      -----

Drug discovery, lead compound development, pre-clinical evaluation & development
(including efficacy and safety assessment, such as toxicology), and clinical
research & development for all targets, diseases and indications.
<PAGE>

                                    EXHIBIT B

                                Authorized Sites
                                ----------------

All Novartis sites:
The sites of all Novartis Affiliates
The Novartis Research Foundation entities including, but not limited to:
        The Novartis Institute for Functional Genomics, and
        The Friedrich Miescher Institute.
<PAGE>

                                    EXHIBIT C

    CCD Imaging Systems Available for Sale or Lease to IRM or Permitted Users
    -------------------------------------------------------------------------

Hardware
--------

     Hamamatsu 2400 Imagine System
     -----------------------------

        .   Hamamatsu intensified CCD camera
        .   Hamamatsu (Argus) Image Processor
        .   Nikkor(R) 50 mm f 1.2 lens
        .   Hamamatsu specimen chamber
        .   Macintosh(R) control computer with high-resolution monitor

     Xenogen IVIS(TM) Imaging System
     -------------------------------

        .   Roper LN- 1300EB cooled CCD camera (or equivalent)
        .   Navitar 50 mm f 0.95 lens (or equivalent)
        .   Xenogen specimen chamber
        .   Windows 98(R) control computer with high-resolution monitor

     Software
     --------
        LivingImage(TM) Image processing and data analysis software

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