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                                                                    Exhibit 10.4

                        DYNAVAX TECHNOLOGIES CORPORATION
                            2004 STOCK INCENTIVE PLAN

      1.    Purposes of the Plan. The purposes of this Plan are to attract and
retain the best available personnel, to provide additional incentives to
Employees, Directors and Consultants and to promote the success of the Company's
business.

      2.    Definitions.  As used herein, the following definitions shall
apply:

            (a) "Administrator" means the Board or any of the Committees
appointed to administer the Plan.

            (b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.

            (c) "Applicable Laws" means the legal requirements relating to the
Plan and the Awards under applicable provisions of federal securities laws,
state corporate and securities laws, the Code, the rules of any applicable stock
exchange or national market system, and the rules of any non-U.S. jurisdiction
applicable to Awards granted to residents therein.

            (d) "Assumed" means that pursuant to a Corporate Transaction either
(i) the Award is expressly affirmed by the Company or (ii) the contractual
obligations represented by the Award are expressly assumed (and not simply by
operation of law) by the successor entity or its Parent in connection with the
Corporate Transaction with appropriate adjustments to the number and type of
securities of the successor entity or its Parent subject to the Award and the
exercise or purchase price thereof which preserves the compensation element of
the Award existing at the time of the Corporate Transaction as determined in
accordance with the instruments evidencing the agreement to assume the Award.

            (e) "Award" means the grant of an Option, SAR, Dividend Equivalent
Right, Restricted Stock, Performance Unit, Performance Share, or other right or
benefit under the Plan.

            (f) "Award Agreement" means the written agreement evidencing the
grant of an Award executed by the Company and the Grantee, including any
amendments thereto.

            (g) "Board" means the Board of Directors of the Company.

            (h) "Cause" means, with respect to the termination by the Company or
a Related Entity of the Grantee's Continuous Service, that such termination is
for "Cause" as such term is expressly defined in a then-effective written
agreement between the Grantee and the Company or such Related Entity, or in the
absence of such then-effective written agreement and definition, is based on, in
the determination of the Administrator, the Grantee's: (i) performance of any
act or failure to perform any act in bad faith and to the detriment of the
Company or a Related Entity; (ii) dishonesty, intentional misconduct or material
breach of any agreement with the Company or a Related Entity; or (iii)
commission of a crime involving dishonesty, breach of trust, or physical or
emotional harm to any person.

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            (i) "Change in Control" means a change in ownership or control of
the Company effected through either of the following transactions:

                  (i) the direct or indirect acquisition by any person or
related group of persons (other than an acquisition from or by the Company or by
a Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities pursuant to
a tender or exchange offer made directly to the Company's stockholders which a
majority of the Continuing Directors who are not Affiliates or Associates of the
offeror do not recommend such stockholders accept, or

                  (ii) a change in the composition of the Board over a period of
thirty-six (36) months or less such that a majority of the Board members
(rounded up to the next whole number) ceases, by reason of one or more contested
elections for Board membership, to be comprised of individuals who are
Continuing Directors.

            (j) "Code" means the Internal Revenue Code of 1986, as amended.

            (k) "Committee" means any committee composed of members of the Board
appointed by the Board to administer the Plan.

            (l) "Common Stock" means the common stock of the Company.

            (m) "Company" means Dynavax Technologies Corporation, a Delaware
corporation.

            (n) "Consultant" means any person (other than an Employee or a
Director, solely with respect to rendering services in such person's capacity as
a Director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company or such Related Entity.

            (o) "Continuing Directors" means members of the Board who either (i)
have been Board members continuously for a period of at least thirty-six (36)
months or (ii) have been Board members for less than thirty-six (36) months and
were elected or nominated for election as Board members by at least a majority
of the Board members described in clause (i) who were still in office at the
time such election or nomination was approved by the Board.

            (p) "Continuous Service" means that the provision of services to the
Company or a Related Entity in any capacity of Employee, Director or Consultant
is not interrupted or terminated. In jurisdictions requiring notice in advance
of an effective termination as an Employee, Director or Consultant, Continuous
Service shall be deemed terminated upon the actual cessation of providing
services to the Company or a Related Entity notwithstanding any required notice
period that must be fulfilled before a termination as an Employee, Director or
Consultant can be effective under Applicable Laws. Continuous Service shall not
be considered interrupted in the case of (i) any approved leave of absence, (ii)
transfers among the Company, any Related Entity, or any successor, in any
capacity of Employee, Director or Consultant, or

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(iii) any change in status as long as the individual remains in the service of
the Company or a Related Entity in any capacity of Employee, Director or
Consultant (except as otherwise provided in the Award Agreement). An approved
leave of absence shall include sick leave, military leave, or any other
authorized personal leave. For purposes of each Incentive Stock Option granted
under the Plan, if such leave exceeds ninety (90) days, and reemployment upon
expiration of such leave is not guaranteed by statute or contract, then the
Incentive Stock Option shall be treated as a Non-Qualified Stock Option on the
day three (3) months and one (1) day following the expiration of such ninety
(90) day period.

            (q) "Corporate Transaction" means any of the following transactions:

                  (i) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated;

                  (ii)  the sale, transfer or other disposition of all or
substantially all of the assets of the Company;

                  (iii) the complete liquidation or dissolution of the
Company;

                  (iv) any reverse merger or series of related transactions
culminating in a reverse merger (including, but not limited to, a tender offer
followed by a reverse merger) in which the Company is the surviving entity but
in which securities possessing more than forty percent (40%) of the total
combined voting power of the Company's outstanding securities are transferred to
a person or persons different from those who held such securities immediately
prior to such merger or the initial transaction culminating in such merger but
excluding any such transaction or series of related transactions that the
Administrator determines shall not be a Corporate Transaction; or

                  (v) acquisition in a single or series of related transactions
by any person or related group of persons (other than the Company or by a
Company-sponsored employee benefit plan) of beneficial ownership (within the
meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Company's
outstanding securities but excluding any such transaction or series of related
transactions that the Administrator determines shall not be a Corporate
Transaction.

            (r) "Covered Employee" means an Employee who is a "covered employee"
under Section 162(m)(3) of the Code.

            (s) "Director" means a member of the Board or the board of
directors of any Related Entity.

            (t) "Disability" means as defined under the long-term disability
policy of the Company or the Related Entity to which the Grantee provides
services regardless of whether the Grantee is covered by such policy. If the
Company or the Related Entity to which the Grantee provides service does not
have a long-term disability plan in place, "Disability" means that a Grantee is
unable to carry out the responsibilities and functions of the position held by
the

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Grantee by reason of any medically determinable physical or mental impairment
for a period of not less than ninety (90) consecutive days. A Grantee will not
be considered to have incurred a Disability unless he or she furnishes proof of
such impairment sufficient to satisfy the Administrator in its discretion.

            (u) "Dividend Equivalent Right" means a right entitling the Grantee
to compensation measured by dividends paid with respect to Common Stock.

            (v) "Employee" means any person, including an Officer or Director,
who is in the employ of the Company or any Related Entity, subject to the
control and direction of the Company or any Related Entity as to both the work
to be performed and the manner and method of performance. The payment of a
director's fee by the Company or a Related Entity shall not be sufficient to
constitute "employment" by the Company.

            (w) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

            (x) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:

                  (i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation The Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system on
the date of determination (or, if no closing sales price or closing bid was
reported on that date, as applicable, on the last trading date such closing
sales price or closing bid was reported), as reported in The Wall Street Journal
or such other source as the Administrator deems reliable;

                  (ii) If the Common Stock is regularly quoted on an automated
quotation system (including the OTC Bulletin Board) or by a recognized
securities dealer, its Fair Market Value shall be the closing sales price for
such stock as quoted on such system on the date of determination, but if selling
prices are not reported, the Fair Market Value of a share of Common Stock shall
be the mean between the high bid and low asked prices for the Common Stock on
the date of determination (or, if no such prices were reported on that date, on
the last date such prices were reported), as reported in The Wall Street Journal
or such other source as the Administrator deems reliable; or

                  (iii) In the absence of an established market for the Common
Stock of the type described in (i) and (ii), above, the Fair Market Value
thereof shall be determined by the Administrator in good faith.

            (y) "Good Reason" means the occurrence after a Corporate Transaction
or Change in Control of any of the following events or conditions unless
consented to by the Grantee (and the Grantee shall be deemed to have consented
to any such event or condition unless the Grantee provides written notice of the
Grantee's non-acquiescence within 30 days of the effective time of such event or
condition):

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                  (i) a change in the Grantee's responsibilities or duties which
represents a material and substantial diminution in the Grantee's
responsibilities or duties as in effect immediately preceding the consummation
of a Corporate Transaction or Change in Control;

                  (ii) a reduction in the Grantee's base salary to a level below
that in effect at any time within six (6) months preceding the consummation of a
Corporate Transaction or Change in Control or at any time thereafter; provided
that an across-the-board reduction in the salary level of substantially all
other individuals in positions similar to the Grantee's by the same percentage
amount shall not constitute such a salary reduction; or

                  (iii) requiring the Grantee to be based at any place outside a
50-mile radius from the Grantee's job location or residence prior to the
Corporate Transaction or Change in Control except for reasonably required travel
on business which is not materially greater than such travel requirements prior
to the Corporate Transaction or Change in Control.

            (z) "Grantee" means an Employee, Director or Consultant who receives
an Award under the Plan.

            (aa) "Immediate Family" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
Grantee's household (other than a tenant or employee), a trust in which these
persons (or the Grantee) have more than fifty percent (50%) of the beneficial
interest, a foundation in which these persons (or the Grantee) control the
management of assets, and any other entity in which these persons (or the
Grantee) own more than fifty percent (50%) of the voting interests.

            (bb) "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code

            (cc) "Non-Qualified Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.

            (dd) "Officer" means a person who is an officer of the Company or a
Related Entity within the meaning of Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder.

            (ee) "Option" means an option to purchase Shares pursuant to an
Award Agreement granted under the Plan.

            (ff) "Parent" means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.

            (gg) "Performance-Based Compensation" means compensation qualifying
as "performance-based compensation" under Section 162(m) of the Code.

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            (hh) "Performance Shares" means Shares or an Award denominated in
Shares which may be earned in whole or in part upon attainment of performance
criteria established by the Administrator.

            (ii) "Performance Units" means an Award which may be earned in whole
or in part upon attainment of performance criteria established by the
Administrator and which may be settled for cash, Shares or other securities or a
combination of cash, Shares or other securities as established by the
Administrator.

            (jj) "Plan" means this 2004 Stock Incentive Plan.

            (kk) "Related Entity" means any Parent or Subsidiary of the Company
and any business, corporation, partnership, limited liability company or other
entity in which the Company or a Parent or a Subsidiary of the Company holds a
substantial ownership interest, directly or indirectly.

            (ll) "Registration Date" means the first to occur of (i) the closing
of the first sale to the general public pursuant to a registration statement
filed with and declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended, of (A) the Common Stock or (B) the
same class of securities of a successor corporation (or its Parent) issued
pursuant to a Corporate Transaction in exchange for or in substitution of the
Common Stock; and (ii) in the event of a Corporate Transaction, the date of the
consummation of the Corporate Transaction if the same class of securities of the
successor corporation (or its Parent) issuable in such Corporate Transaction
shall have been sold to the general public pursuant to a registration statement
filed with and declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended, on or prior to the date of
consummation of such Corporate Transaction.

            (mm) "Replaced" means that pursuant to a Corporate Transaction the
Award is replaced with a comparable stock award or a cash incentive program of
the Company, the successor entity (if applicable) or Parent of either of them
which preserves the compensation element of such Award existing at the time of
the Corporate Transaction and provides for subsequent payout in accordance with
the same (or a more favorable) vesting schedule applicable to such Award. The
determination of Award comparability shall be made by the Administrator and its
determination shall be final, binding and conclusive.

            (nn) "Restricted Stock" means Shares issued under the Plan to the
Grantee for such consideration, if any, and subject to such restrictions on
transfer, rights of first refusal, repurchase provisions, forfeiture provisions,
and other terms and conditions as established by the Administrator.

            (oo) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange
Act or any successor thereto.

            (pp) "SAR" means a stock appreciation right entitling the Grantee to
Shares or cash compensation, as established by the Administrator, measured by
appreciation in the value of Common Stock.

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            (qq) "Share" means a share of the Common Stock.

            (rr) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.

      3.    Stock Subject to the Plan.

            (a) Subject to the provisions of Section 10, below, the maximum
aggregate number of Shares which may be issued pursuant to all Awards (including
Incentive Stock Options) is 3,500,000 Shares, plus an annual increase to be
added on the first business day of each calendar year beginning in 2005 equal to
the lesser of (x) 400,000 Shares, (y) two percent (2%) of the number of Shares
outstanding as of such date, or (z) a lesser number of Shares determined by the
Administrator.1 The Shares to be issued pursuant to Awards may be authorized,
but unissued, or reacquired Common Stock.

            (b) Any Shares covered by an Award (or portion of an Award) which is
forfeited, canceled or expires (whether voluntarily or involuntarily) shall be
deemed not to have been issued for purposes of determining the maximum aggregate
number of Shares which may be issued under the Plan. Shares that actually have
been issued under the Plan pursuant to an Award shall not be returned to the
Plan and shall not become available for future issuance under the Plan, except
that if unvested Shares are forfeited, or repurchased by the Company at the
lower of their original purchase price or their Fair Market Value at the time of
repurchase, such Shares shall become available for future grant under the Plan.

      4.    Administration of the Plan.

            (a) Plan Administrator.

                  (i) Administration with Respect to Directors and Officers.
With respect to grants of Awards to Directors or Employees who are also Officers
or Directors of the Company, the Plan shall be administered by (A) the Board or
(B) a Committee designated by the Board, which Committee shall be constituted in
such a manner as to satisfy the Applicable Laws and to permit such grants and
related transactions under the Plan to be exempt from Section 16(b) of the
Exchange Act in accordance with Rule 16b-3. Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by the
Board.

                  (ii) Administration With Respect to Consultants and Other
Employees. With respect to grants of Awards to Employees or Consultants who are
neither Directors nor Officers of the Company, the Plan shall be administered by
(A) the Board or (B) a Committee designated by the Board, which Committee shall
be constituted in such a manner as to satisfy the Applicable Laws. Once
appointed, such Committee shall continue to serve in its designated capacity
until otherwise directed by the Board. The Board may authorize one or more
Officers to grant such Awards and may limit such authority as the Board
determines from time to time.

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1 All Share numbers in the Plan reflect the one-for-three reverse stock split
which occurred on _________, 2004.

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                  (iii) Administration With Respect to Covered Employees.
Notwithstanding the foregoing, as of and after the date that the exemption for
the Plan under Section 162(m) of the Code expires, as set forth in Section 18
below, grants of Awards to any Covered Employee intended to qualify as
Performance-Based Compensation shall be made only by a Committee (or
subcommittee of a Committee) which is comprised solely of two or more Directors
eligible to serve on a committee making Awards qualifying as Performance-Based
Compensation. In the case of such Awards granted to Covered Employees,
references to the "Administrator" or to a "Committee" shall be deemed to be
references to such Committee or subcommittee.

                  (iv) Administration Errors. In the event an Award is granted
in a manner inconsistent with the provisions of this subsection (a), such Award
shall be presumptively valid as of its grant date to the extent permitted by the
Applicable Laws.

            (b) Powers of the Administrator. Subject to Applicable Laws and the
provisions of the Plan (including any other powers given to the Administrator
hereunder), and except as otherwise provided by the Board, the Administrator
shall have the authority, in its discretion:

                  (i) to select the Employees, Directors and Consultants
to whom Awards may be granted from time to time hereunder;

                  (ii) to determine whether and to what extent Awards are
granted hereunder;

                  (iii) to determine the number of Shares or the amount of
other consideration to be covered by each Award granted hereunder;

                  (iv) to approve forms of Award Agreements for use under
the Plan;

                  (v) to determine the terms and conditions of any Award
granted hereunder;

                  (vi) to amend the terms of any outstanding Award granted under
the Plan, provided that (A) any amendment that would adversely affect the
Grantee's rights under an outstanding Award shall not be made without the
Grantee's written consent, (B) the reduction of the exercise price of any Option
awarded under the Plan shall be subject to stockholder approval and (C)
canceling an Option at a time when its exercise price exceeds the Fair Market
Value of the underlying Shares, in exchange for another Option, Restricted
Stock, or other Award shall be subject to stockholder approval, unless the
cancellation and exchange occurs in connection with a Corporate Transaction;

                  (vii) to construe and interpret the terms of the Plan and
Awards, including without limitation, any notice of award or Award Agreement,
granted pursuant to the Plan;

                  (viii) to grant Awards to Employees, Directors and Consultants
employed outside the United States on such terms and conditions different from
those specified

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in the Plan as may, in the judgment of the Administrator, be necessary or
desirable to further the purpose of the Plan; and

                  (ix) to take such other action, not inconsistent with the
terms of the Plan, as the Administrator deems appropriate.

            (c) Indemnification. In addition to such other rights of
indemnification as they may have as members of the Board or as Officers or
Employees of the Company or a Related Entity, members of the Board and any
Officers or Employees of the Company or a Related Entity to whom authority to
act for the Board, the Administrator or the Company is delegated shall be
defended and indemnified by the Company to the extent permitted by law on an
after-tax basis against all reasonable expenses, including attorneys' fees,
actually and necessarily incurred in connection with the defense of any claim,
investigation, action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan, or any Award
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by the Company) or paid by them in
satisfaction of a judgment in any such claim, investigation, action, suit or
proceeding, except in relation to matters as to which it shall be adjudged in
such claim, investigation, action, suit or proceeding that such person is liable
for gross negligence, bad faith or intentional misconduct; provided, however,
that within thirty (30) days after the institution of such claim, investigation,
action, suit or proceeding, such person shall offer to the Company, in writing,
the opportunity at the Company's expense to defend the same.

      5.    Eligibility. Awards other than Incentive Stock Options may be
granted to Employees, Directors and Consultants.  Incentive Stock Options
may be granted only to Employees of the Company or a Parent or a
Subsidiary of the Company.  An Employee, Director or Consultant who has
been granted an Award may, if otherwise eligible, be granted additional
Awards.  Awards may be granted to such Employees, Directors or Consultants
who are residing in non-U.S. jurisdictions as the Administrator may
determine from time to time.

      6.    Terms and Conditions of Awards.

            (a) Types of Awards. The Administrator is authorized under the Plan
to award any type of arrangement to an Employee, Director or Consultant that is
not inconsistent with the provisions of the Plan and that by its terms involves
or might involve the issuance of (i) Shares, (ii) cash or (iii) an Option, a
SAR, or similar right with a fixed or variable price related to the Fair Market
Value of the Shares and with an exercise or conversion privilege related to the
passage of time, the occurrence of one or more events, or the satisfaction of
performance criteria or other conditions. Such awards include, without
limitation, Options, SARs, sales or bonuses of Restricted Stock, Dividend
Equivalent Rights, Performance Units or Performance Shares, and an Award may
consist of one such security or benefit, or two (2) or more of them in any
combination or alternative.

            (b) Designation of Award. Each Award shall be designated in the
Award Agreement. In the case of an Option, the Option shall be designated as
either an Incentive Stock Option or a Non-Qualified Stock Option. However,
notwithstanding such designation, to the

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extent that the aggregate Fair Market Value of Shares subject to Options
designated as Incentive Stock Options which become exercisable for the first
time by a Grantee during any calendar year (under all plans of the Company or
any Parent or Subsidiary of the Company) exceeds $100,000, such excess Options,
to the extent of the Shares covered thereby in excess of the foregoing
limitation, shall be treated as Non-Qualified Stock Options. For this purpose,
Incentive Stock Options shall be taken into account in the order in which they
were granted, and the Fair Market Value of the Shares shall be determined as of
the grant date of the relevant Option.

            (c) Conditions of Award. Subject to the terms of the Plan, the
Administrator shall determine the provisions, terms, and conditions of each
Award including, but not limited to, the Award vesting schedule, repurchase
provisions, rights of first refusal, forfeiture provisions, form of payment
(cash, Shares, or other consideration) upon settlement of the Award, payment
contingencies, and satisfaction of any performance criteria. The performance
criteria established by the Administrator may be based on any one of, or
combination of, the following: (i) increase in share price, (ii) earnings per
share, (iii) total stockholder return, (iv) operating margin, (v) gross margin,
(vi) return on equity, (vii) return on assets, (viii) return on investment, (ix)
operating income, (x) net operating income, (xi) pre-tax profit, (xii) cash
flow, (xiii) revenue, (xiv) expenses, (xv) earnings before interest, taxes and
depreciation, (xvi) economic value added, (xvii) market share, (xviii) personal
management objectives, and (xix) other measures of performance selected by the
Administrator. Partial achievement of the specified criteria may result in a
payment or vesting corresponding to the degree of achievement as specified in
the Award Agreement.

            (d) Acquisitions and Other Transactions. The Administrator may issue
Awards under the Plan in settlement, assumption or substitution for, outstanding
awards or obligations to grant future awards in connection with the Company or a
Related Entity acquiring another entity, an interest in another entity or an
additional interest in a Related Entity whether by merger, stock purchase, asset
purchase or other form of transaction.

            (e) Deferral of Award Payment. The Administrator may establish one
or more programs under the Plan to permit selected Grantees the opportunity to
elect to defer receipt of consideration upon exercise of an Award, satisfaction
of performance criteria, or other event that absent the election would entitle
the Grantee to payment or receipt of Shares or other consideration under an
Award. The Administrator may establish the election procedures, the timing of
such elections, the mechanisms for payments of, and accrual of interest or other
earnings, if any, on amounts, Shares or other consideration so deferred, and
such other terms, conditions, rules and procedures that the Administrator deems
advisable for the administration of any such deferral program.

            (f) Separate Programs. The Administrator may establish one or more
separate programs under the Plan for the purpose of issuing particular forms of
Awards to one or more classes of Grantees on such terms and conditions as
determined by the Administrator from time to TIME.

            (g) Individual Limitations on Awards. Following the date that the
exemption from application of Section 162(m) of the Code described in Section 18
(or any exemption having similar effect) ceases to apply to Awards, the
following limitations shall apply.

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                  (i) Individual Limit for Awards. The maximum number of Shares
with respect to which Awards may be granted to any Grantee in any fiscal year of
the Company shall be 2,000,000 Shares. In connection with a Grantee's
commencement of Continuous Active Service, a Grantee may be granted Awards for
up to an additional 1,000,000 Shares which shall not count against the limit set
forth in the previous sentence. The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization
pursuant to Section 10, below.2 To the extent required by Section 162(m) of the
Code or the regulations thereunder, in applying the foregoing limitations with
respect to a Grantee, if any Awards are canceled, the canceled Awards shall
continue to count against the maximum number of Shares with respect to which
Awards may be granted to the Grantee. For this purpose, the repricing of an
Option (or in the case of a SAR, the base amount on which the stock appreciation
is calculated is reduced to reflect a reduction in the Fair Market Value of the
Common Stock) shall be treated as the cancellation of the existing Option or SAR
and the grant of a new Option or SAR. If the vesting or receipt of Shares under
the Award is deferred to a later date, any amount (whether denominated in Shares
or cash) paid in addition to the original number of Shares subject to the Award
will not be treated as an increase in the number of Shares subject to the Award
if the additional amount is based either on a reasonable rate of interest or on
one or more predetermined actual investments such that the amount payable by the
Company at the later date will be based on the actual rate of return of a
specific investment (including any decrease as well as any increase in the value
of an investment).

                  (ii) Individual Limit for Restricted Stock, Performance Shares
and Performance Units. Notwithstanding the limitations set forth in Section
6(g)(i), for awards of Restricted Stock, Performance Shares and Performance
Units that are intended to be Performance-Based Compensation, the maximum number
of Shares with respect to which such Awards may be granted to any Grantee in any
fiscal year of the Company shall be 1,500,000 Shares. The foregoing limitation
shall be adjusted proportionately in connection with any change in the Company's
capitalization pursuant to Section 10, below.

                  (iii) Individual Limit for Dividend Equivalent Rights and
Performance Units. For awards of Dividend Equivalent Rights and Performance
Units that are intended to be Performance-Based Compensation, no more than
$5,000,000 may be subject to such Awards granted to any one individual in any
fiscal year of the Company, calculated based upon the value of the Award
assuming the performance goal(s) was met on the grant date of the Award. If the
payment of the Award is deferred to a later date, any amount paid in excess of
the amount that was originally payable to the Grantee under the Award will not
be treated as an increase in the amount of the Award if the additional amount is
based either on a reasonable rate of interest or on one or more predetermined
actual investments such that the amount payable by the Company at the later date
will be based on the actual rate of return of a specific investment (including
any decrease as well as any increase in the value of an investment).

            (h) Early Exercise. The Award Agreement may, but need not, include a
provision whereby the Grantee may elect at any time while an Employee, Director
or Consultant to exercise any part or all of the Award prior to full vesting of
the Award. Any unvested Shares

-------------------------------
2 All Share numbers in the Plan reflect the one-for-three reverse stock split
which occurred on _________, 2004.

                                       11
<PAGE>
received pursuant to such exercise may be subject to a repurchase right in favor
of the Company or a Related Entity or to any other restriction the Administrator
determines to be appropriate.

            (i) Term of Award. The term of each Award shall be the term stated
in the Award Agreement, provided, however, that the term of an Incentive Stock
Option shall be no more than ten (10) years from the date of grant thereof.
However, in the case of an Incentive Stock Option granted to a Grantee who, at
the time the Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary of the Company, the term of the Incentive Stock Option shall be
five (5) years from the date of grant thereof or such shorter term as may be
provided in the Award Agreement.

            (j) Transferability of Awards. Incentive Stock Options may not be
sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Grantee, only by the Grantee. Other Awards
shall be transferable by will and by the laws of descent and distribution, and
during the lifetime of the Grantee, by gift or pursuant to a domestic relations
order to members of the Grantee's Immediate Family to the extent and in the
manner determined by the Administrator. Notwithstanding the foregoing, the
Grantee may designate a beneficiary of the Grantee's Award in the event of the
Grantee's death on a beneficiary designation form provided by the Administrator.

            (k) Time of Granting Awards. The date of grant of an Award shall for
all purposes be the date on which the Administrator makes the determination to
grant such Award, or such other date as is determined by the Administrator.

      7.    Award Exercise or Purchase Price, Consideration and Taxes.

            (a) Exercise or Purchase Price.  The exercise or purchase
price, if any, for an Award shall be as follows:

                  (i) In the case of an Incentive Stock Option:

                        (A)   granted to an Employee who, at the time of
the grant of such Incentive Stock Option owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary of the Company, the per Share exercise price shall be not
less than one hundred ten percent (110%) of the Fair Market Value per Share on
the date of grant; or

                        (B)   granted to any Employee other than an
Employee described in the preceding paragraph, the per Share exercise price
shall be not less than one hundred percent (100%) of the Fair Market Value per
Share on the date of grant.

                  (ii) In the case of Options or SARs intended to qualify as
Performance-Based Compensation, the exercise or base appreciation amount shall
be not less than one hundred percent (100%) of the Fair Market Value per Share
on the date of grant.

                                       12
<PAGE>
                  (iii) In the case of other Awards, such price as is
determined by the Administrator.

                  (iv) Notwithstanding the foregoing provisions of this Section
7(a), in the case of an Award issued pursuant to Section 6(d), above, the
exercise or purchase price for the Award shall be determined in accordance with
the provisions of the relevant instrument evidencing the agreement to issue such
Award.

            (b) Consideration. Subject to Applicable Laws, the consideration to
be paid for the Shares to be issued upon exercise or purchase of an Award
including the method of payment, shall be determined by the Administrator (and,
in the case of an Incentive Stock Option, shall be determined at the time of
grant). In addition to any other types of consideration the Administrator may
determine, the Administrator is authorized to accept as consideration for Shares
issued under the Plan the following, provided that the portion of the
consideration equal to the par value of the Shares must be paid in cash or other
legal consideration permitted by the Delaware General Corporation Law:

                  (i) cash;

                  (ii) check;

                  (iii) if the exercise or purchase occurs on or after the
Registration Date, surrender of Shares or delivery of a properly executed form
of attestation of ownership of Shares as the Administrator may require which
have a Fair Market Value on the date of surrender or attestation equal to the
aggregate exercise price of the Shares as to which said Award shall be
exercised, provided, however, that Shares acquired under the Plan or any other
equity compensation plan or agreement of the Company must have been held by the
Grantee for a period of more than six (6) months;

                  (iv) with respect to Options, if the exercise occurs on or
after the Registration Date, payment through a broker-dealer sale and remittance
procedure pursuant to which the Grantee (A) shall provide written instructions
to a Company designated brokerage firm to effect the immediate sale of some or
all of the purchased Shares and remit to the Company sufficient funds to cover
the aggregate exercise price payable for the purchased Shares and (B) shall
provide written directives to the Company to deliver the certificates for the
purchased Shares directly to such brokerage firm in order to complete the sale
transaction; or

                  (v) any combination of the foregoing methods of payment.

            (c) Taxes. No Shares shall be delivered under the Plan to any
Grantee or other person until such Grantee or other person has made arrangements
acceptable to the Administrator for the satisfaction of any non-U.S., federal,
state, or local income and employment tax withholding obligations, including,
without limitation, obligations incident to the receipt of Shares or the
disqualifying disposition of Shares received on exercise of an Incentive Stock
Option. Upon exercise of an Award the Company shall withhold or collect from
Grantee an amount sufficient to satisfy such tax obligations.

                                       13
<PAGE>
      8.    Exercise of Award.

            (a)   Procedure for Exercise; Rights as a Stockholder.

                  (i) Any Award granted hereunder shall be exercisable at such
times and under such conditions as determined by the Administrator under the
terms of the Plan and specified in the Award Agreement.

                  (ii) An Award shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Award by the person entitled to exercise the Award and full payment
for the Shares with respect to which the Award is exercised, including, to the
extent selected, use of the broker-dealer sale and remittance procedure to pay
the purchase price as provided in Section 7(b)(iv).

            (b)   Exercise of Award Following Termination of Continuous
Service.

                  (i) An Award may not be exercised after the termination date
of such Award set forth in the Award Agreement and may be exercised following
the termination of a Grantee's Continuous Service only to the extent provided in
the Award Agreement.

                  (ii) Where the Award Agreement permits a Grantee to exercise
an Award following the termination of the Grantee's Continuous Service for a
specified period, the Award shall terminate to the extent not exercised on the
last day of the specified period or the last day of the original term of the
Award, whichever occurs first.

                  (iii) Any Award designated as an Incentive Stock Option to the
extent not exercised within the time permitted by law for the exercise of
Incentive Stock Options following the termination of a Grantee's Continuous
Service shall convert automatically to a Non-Qualified Stock Option and
thereafter shall be exercisable as such to the extent exercisable by its terms
for the period specified in the Award Agreement.

      9.    Conditions Upon Issuance of Shares.

            (a) Shares shall not be issued pursuant to the exercise of an Award
unless the exercise of such Award and the issuance and delivery of such Shares
pursuant thereto shall comply with all Applicable Laws, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.

            (b) As a condition to the exercise of an Award, the Company may
require the person exercising such Award to represent and warrant at the time of
any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any
Applicable Laws.

      10.   Adjustments Upon Changes in Capitalization. Subject to any required
action by the stockholders of the Company, the number of Shares covered by each
outstanding Award, and the number of Shares which have been authorized for
issuance under the Plan but as to which no Awards have yet been granted or which
have been returned to the Plan, the exercise or purchase

                                       14
<PAGE>
price of each such outstanding Award, the maximum number of Shares with respect
to which Awards may be granted to any Grantee in any fiscal year of the Company,
as well as any other terms that the Administrator determines require adjustment
shall be proportionately adjusted for (i) any increase or decrease in the number
of issued Shares resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Shares, or similar transaction
affecting the Shares, (ii) any other increase or decrease in the number of
issued Shares effected without receipt of consideration by the Company, or (iii)
as the Administrator may determine in its discretion, any other transaction with
respect to Common Stock including a corporate merger, consolidation, acquisition
of property or stock, separation (including a spin-off or other distribution of
stock or property), reorganization, liquidation (whether partial or complete) or
any similar transaction; provided, however that conversion of any convertible
securities of the Company shall not be deemed to have been "effected without
receipt of consideration." Such adjustment shall be made by the Administrator
and its determination shall be final, binding and conclusive. Except as the
Administrator determines, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason hereof shall be made with respect to, the
number or price of Shares subject to an Award.

      11.   Corporate Transactions and Changes in Control.

            (a) Termination of Award to Extent Not Assumed in Corporate
Transaction. Effective upon the consummation of a Corporate Transaction, all
outstanding Awards under the Plan shall terminate. However, all such Awards
shall not terminate to the extent they are Assumed in connection with the
Corporate Transaction.

            (b) Acceleration of Award Upon Corporate Transaction or
Change in Control.

                  (i) Corporate Transaction.  Except as provided
otherwise in an individual Award Agreement, in the event of a Corporate
Transaction and:

                        (A)   for the portion of each Award that is
Assumed or Replaced, then such Award (if Assumed), the replacement Award (if
Replaced), or the cash incentive (if Replaced) program automatically shall
become fully vested, exercisable and payable and be released from any repurchase
or forfeiture rights (other than repurchase rights exercisable at fair market
value) for all of the Shares at the time represented by such Assumed or Replaced
portion of the Award, immediately upon termination of the Grantee's Continuous
Service if such Continuous Service is terminated by the successor company or the
Company without Cause or voluntarily by the Grantee with Good Reason within
twelve (12) months after the Corporate Transaction; and

                        (B)   for the portion of each Award that is
neither Assumed nor Replaced, such portion of the Award shall automatically
become fully vested and exercisable and be released from any repurchase or
forfeiture rights (other than repurchase rights exercisable at fair market
value) for all of the Shares at the time represented by such portion of the
Award, immediately prior to the specified effective date of such Corporate
Transaction.

                                       15
<PAGE>
                  (ii) Change in Control. Except as provided otherwise in an
individual Award Agreement, following a Change in Control (other than a Change
in Control which also is a Corporate Transaction) and upon the termination of
the Continuous Service of a Grantee if such Continuous Service is terminated by
the Company or Related Entity without Cause or voluntarily by the Grantee with
Good Reason within twelve (12) months after a Change in Control, each Award of
such Grantee which is at the time outstanding under the Plan automatically shall
become fully vested and exercisable and be released from any repurchase or
forfeiture rights (other than repurchase rights exercisable at fair market
value), immediately upon the termination of such Continuous Service.

            (c) Effect of Acceleration on Incentive Stock Options. Any Incentive
Stock Option accelerated under this Section 11 in connection with a Corporate
Transaction or Change in Control shall remain exercisable as an Incentive Stock
Option under the Code only to the extent the $100,000 dollar limitation of
Section 422(d) of the Code is not exceeded. To the extent such dollar limitation
is exceeded, the excess Options shall be treated as Non-Qualified Stock Options.

      12. Effective Date and Term of Plan. The Plan shall become effective upon
the earlier to occur of its adoption by the Board or its approval by the
stockholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated. Subject to Section 17, below, and Applicable
Laws, Awards may be granted under the Plan upon its becoming effective.

      13. Amendment, Suspension or Termination of the Plan.

            (a) The Board may at any time amend, suspend or terminate the Plan;
provided, however, that no such amendment shall be made without the approval of
the Company's stockholders to the extent such approval is required by Applicable
Laws, or if such amendment would change any of the provisions of Section
4(b)(vi) or this Section 13(a).

            (b) No Award may be granted during any suspension of the
Plan or after termination of the Plan.

            (c) No suspension or termination of the Plan (including termination
of the Plan under Section 12, above) shall adversely affect any rights under
Awards already granted to a Grantee.

      14. Reservation of Shares.

            (a) The Company, during the term of the Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.

            (b) The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.

                                       16
<PAGE>
      15. No Effect on Terms of Employment/Consulting Relationship. The Plan
shall not confer upon any Grantee any right with respect to the Grantee's
Continuous Service, nor shall it interfere in any way with his or her right or
the right of the Company or any Related Entity to terminate the Grantee's
Continuous Service at any time, with or without Cause, and with or without
notice. The ability of the Company or any Related Entity to terminate the
employment of a Grantee who is employed at will is in no way affected by its
determination that the Grantee's Continuous Service has been terminated for
Cause for the purposes of this Plan.

      16. No Effect on Retirement and Other Benefit Plans. Except as
specifically provided in a retirement or other benefit plan of the Company or a
Related Entity, Awards shall not be deemed compensation for purposes of
computing benefits or contributions under any retirement plan of the Company or
a Related Entity, and shall not affect any benefits under any other benefit plan
of any kind or any benefit plan subsequently instituted under which the
availability or amount of benefits is related to level of compensation. The Plan
is not a "Retirement Plan" or "Welfare Plan" under the Employee Retirement
Income Security Act of 1974, as amended.

      17. Stockholder Approval. The grant of Incentive Stock Options under the
Plan shall be subject to approval by the stockholders of the Company within
twelve (12) months before or after the date the Plan is adopted excluding
Incentive Stock Options issued in substitution for outstanding Incentive Stock
Options pursuant to Section 424(a) of the Code. Such stockholder approval shall
be obtained in the degree and manner required under Applicable Laws. The
Administrator may grant Incentive Stock Options under the Plan prior to approval
by the stockholders, but until such approval is obtained, no such Incentive
Stock Option shall be exercisable. In the event that stockholder approval is not
obtained within the twelve (12) month period provided above, all Incentive Stock
Options previously granted under the Plan shall be exercisable as Non-Qualified
Stock Options.

      18. Effect of Section 162(m) of the Code. Section 162(m) of the Code does
not apply to the Plan prior to the Registration Date. Following the Registration
Date, the Plan, and all Awards issued thereunder, are intended to be exempt from
the application of Section 162(m) of the Code, which restricts under certain
circumstances the Federal income tax deduction for compensation paid by a public
company to named executives in excess of $1 million per year. The exemption is
based on Treasury Regulation Section 1.162-27(f), in the form existing on the
effective date of the Plan, with the understanding that such regulation
generally exempts from the application of Section 162(m) of the Code
compensation paid pursuant to a plan that existed before a company becomes
publicly held. Under such Treasury Regulation, this exemption is available to
the Plan for the duration of the period that lasts until the earlier of (i) the
expiration of the Plan, (ii) the material modification of the Plan, (iii) the
exhaustion of the maximum number of shares of Common Stock available for Awards
under the Plan, as set forth in Section 3(a), (iv) the first meeting of
shareholders at which directors are to be elected that occurs after the close of
the third calendar year following the calendar year in which the Company first
becomes subject to the reporting obligations of Section 12 of the Exchange Act,
or (v) such other date required by Section 162(m) of the Code and the rules and
regulations promulgated thereunder. To the extent that the Administrator
determines as of the date of grant of an Award that (i) the Award is intended to
qualify as Performance-Based Compensation and (ii) the exemption described above
is no longer available with respect to such Award, such Award shall

                                       17
<PAGE>
not be effective until any stockholder approval required under Section 162(m) of
the Code has been obtained.

      19. Unfunded Obligation. Grantees shall have the status of general
unsecured creditors of the Company. Any amounts payable to Grantees pursuant to
the Plan shall be unfunded and unsecured obligations for all purposes,
including, without limitation, Title I of the Employee Retirement Income
Security Act of 1974, as amended. Neither the Company nor any Related Entity
shall be required to segregate any monies from its general funds, or to create
any trusts, or establish any special accounts with respect to such obligations.
The Company shall retain at all times beneficial ownership of any investments,
including trust investments, which the Company may make to fulfill its payment
obligations hereunder. Any investments or the creation or maintenance of any
trust or any Grantee account shall not create or constitute a trust or fiduciary
relationship between the Administrator, the Company or any Related Entity and a
Grantee, or otherwise create any vested or beneficial interest in any Grantee or
the Grantee's creditors in any assets of the Company or a Related Entity. The
Grantees shall have no claim against the Company or any Related Entity for any
changes in the value of any assets that may be invested or reinvested by the
Company with respect to the Plan.

                                       18<PAGE>
                                                                    Exhibit 10.5

                          TRIPLE NET LABORATORY LEASE

This Lease is made and entered into as of January 30, 1998 between Fifth &
Potter Street Associates, LLC ("Landlord") and Dynavax Technologies Corporation
("Tenant").

         1. BASIC LEASE TERMS.

                  1.1. Commencement of Lease. The term of this Lease shall
commence the date Landlord notifies Tenant in writing that the construction to
be performed by Landlord pursuant to Paragraph 2.2 hereof has been substantially
completed or April 1, 1998 whichever is earlier. Completion shall have occurred
when the Premises are in such condition as to permit Landlord to file a Notice
of Completion with respect to its work, and all permits and approvals for
occupancy and use by Tenant have been issued by the City of Berkeley.

                  1.2. Lease Term. This Lease shall continue in force for a term
of five years.

                  1.3. Base Monthly Rent.

    Months 1 thru 30 -  $2.25/rentable sq.ft.(N,N,N)
    Months 31 thru 60 - $2.35/rentable sq.ft.(N,N,N)

                  1.4. Tenant's Pro Rata Share. All references in this Lease to
Tenant's pro rata share of any expense shall mean the total expense of any such
item multiplied by a fraction, the numerator of which shall be the total floor
area of the Premises (as adjusted pursuant to paragraph 2.1 of this Lease) and
the denominator of which shall be the total floor area of the property. The
"floor area" of the Premises shall be measured from the exterior surface of all
exterior walls and from the center of all walls separating the Premises from
adjacent Premises and/or common areas. The total floor area of the property
shall be measured from the exterior surface of all exterior walls and shall
include all common and core areas within the property. Tenant's pro rata share
shall be adjusted as necessary if the actual square footage of the Premises is
other than as set forth in paragraph 2.1 or the square footage of the property
changes. As used in this Lease, the term Premises refers to that portion of the
building leased to Tenant for Tenant's exclusive use. The term property refers
to the building in which the Premises are located.

                  1.5. Estimated Payments.

    Estimated monthly taxes          $0.146 per square foot
    Estimated monthly insurance      $0.023 per square foot
    Estimated monthly maintenance    $0.056 per square foot
    Estimated monthly management     5% base monthly rent
    Estimated monthly security
           and service               $0.052 per square foot

                  1.6. Security Deposit. The Tenant shall deposit with Landlord
$17,919 as a security deposit for the faithful performance of this Lease.

                  1.7. Use. The leased Promises will be used exclusively for
general research and development laboratories with associated administration,
including but not limited to research and administration of DNA-based vaccines
to develop treatments for allergic, infectious and oncological diseases, and for
no other purpose whatsoever, without Landlord's consent which shall not be
unreasonably withheld.

         2. Premises.

                  2.1. Description. Landlord hereby leases to Tenant for its
exclusive use and occupancy subject to the provisions of this Lease
approximately 7,240 usable square feet, as more particularly identified in
Exhibit A annexed (the "Premises"), which constitutes a portion of a larger
building owned by Landlord, commonly known as 717 Potter Street, Berkeley,
California 94710 (the "property"). In addition to the square

                                       1

<PAGE>

footage described above, Tenant shall be deemed to occupy an additional
undivided 10% of such square footage for purposes of the calculation of base
monthly rental and pro rata expense payments. Said 10% represents Tenant's share
of the rental charges for the common area. For all calculations required under
the terms of this Lease respecting proration of expenses, costs or charges,
Tenant's Premises shall be deemed to consist of the square footage of the
Premises augmented by the portion of the common area attributable to Tenant
pursuant to this paragraph. As to such common areas (those outside of the
Premises, but allocated to Tenant pursuant to this paragraph), Tenant shall have
an undivided interest for nonexclusive use in conjunction with all other tenants
of the building.

                  2.2. WORK OF IMPROVEMENT. The respective obligations of
Landlord and Tenant to perform the work and supply material and labor to prepare
the Premises for occupancy are set forth in Exhibit B annexed to and
incorporated in this Lease. Landlord and Tenant shall expend all funds and do
all acts required of them respectively in Exhibit B and shall have the work
performed promptly and diligently in a first class, workmanlike manner. Tenant
shall not commence any construction of improvements to be undertaken by Tenant
until Landlord has approved In writing the final drawings for said improvements.

                  2.3. POSSESSION. Landlord shall deliver occupancy of the
Premises to Tenant on the commencement date as set forth in Paragraph 1.1 of
this Lease. Notwithstanding herein to the contrary, Tenant shall have the right
to enter the Premises prior to the commencement of the term to take reasonable
preparatory measures for its occupancy of the Premises, including, without
limitation, the installation of its trade fixtures, furnishings, and telephone
and computer equipment. Such entry shall be subject to all of the terms and
conditions of this Lease, except that Tenant shall not be required to pay any
Base Rent or Additional Rent during such early occupancy period.

                  2.4 OPTION TO EXPAND. See addendum.

         3. TERM.

                  3.1. TERM. The Lease shall commence on the date specified in
Paragraph 1.1 (the "commencement date") and shall continue thereafter for the
term specified in Paragraph 1.2 (the "term"), unless sooner terminated or
extended pursuant to the provisions of this Lease.

                  3.2. DELAY IN COMMENCEMENT. If, for any reason, Landlord
cannot deliver possession of the Premises to Tenant on the commencement date,
such failure shall not affect the validity of this Lease nor shall it extend the
term or render Landlord liable to Tenant for any loss or damage resulting
therefrom; except that if possession is not delivered to Tenant on the
commencement date, Tenant shall not be obligated to pay rent until Landlord
tenders possession of the Premises to Tenant in compliance with Paragraph 1.1.
After 60 days following the projected commencement date have elapsed, if
Landlord still cannot deliver possession to Tenant, Tenant or Landlord shall
have the right to terminate this Lease upon written notice delivered to
Landlord, whereupon Landlord shall promptly refund any sums deposited by Tenant
with Landlord. In such event, Tenant shall have no further recourse against
Landlord with respect to the Lease or Landlord's inability to deliver the
Premises to Tenant and Landlord shall have no further recourse against Tenant
with respect to the Lease. Notwithstanding any other provision of this Lease,
Landlord shall have no obligation to pay any damages or adjustment to Tenant as
a result of delays caused by matters outside of Landlord's control, including,
without limitation, Tenant's conduct, acts of God, acts of war, inclement
weather and/or labor strikes (including strikes affecting the supply of labor
and/or materials).

                  3.3. OPTION TO EXTEND TERM. See addendum

         4. RENT.

                  4.1. BASE MONTHLY RENT. Beginning on the commencement date,
Tenant shall pay to Landlord as rent for the Premises in advance on the first
day of each calendar

                                        2

<PAGE>

month of the term, without deduction, offset, prior notice or demand, except as
provided herein, in lawful money of the United States of America, the per square
foot rental rate set forth in paragraph 1.3 multiplied by the square footage of
the Premises as adjusted pursuant to paragraph 2.1. If the actual square footage
of the Premises is determined to be other than the unadjusted amount set forth
in Paragraph 2.1, the monthly base rent shall be increased or decreased based
upon the actual floor area and the adjustment thereto set forth in Paragraph
2.1. If Tenant makes any alterations or additions that increase the square
footage of the Premises, the monthly rent shall be increased in proportion to
the resulting increase in floor area. If the date that the obligation to pay
monthly rent commences is not the first day of a calendar month, such
installment shall be applied on a per diem basis against payment of the rent
from the date rent commences until the first day of the next succeeding calendar
month. Any unused portion of said amount shall be applied against payment of the
rent for the following calendar month, and the balance of the rent for that
month shall be due on the first day thereof.

                  4.2. BASE RENT ADJUSTMENT. See Paragraph 1.3.

                  4.3. MODE OF PAYMENT. Tenant shall pay all rent due Landlord
at Landlord's address set forth on the signature page hereof, or any such other
place or places as Landlord may designate from time to time in writing.

                  4.4. ADDITIONAL RENT. Landlord shall receive the rent set
forth herein free and clear of any and all other impositions, taxes, charges,
assessments or expenses of any nature whatsoever associated with the operation,
maintenance, and management of the Premises, the property and the land on which
it is situated, including, without limitation, charges levied by any assessment
district now in existence or hereafter created which affects the property,
except as provided herein. The foregoing expenses and charges may hereinafter be
referred to singly and/or collectively as "Operating Expenses" (Operating
Expenses are defined as maintenance, taxes, insurance, management, security and
services as delineated in Section 1.5). Tenant's pro rata portion of all such
charges, costs and expenses, together with all other sums payable under this
Lease, shall be additional rental hereunder, and Tenant's failure to pay any
such charge, cost, expense or sum shall entitle Landlord to exercise the rights
and remedies as provided in this Lease for failure of Tenant to pay rent.
Notwithstanding anything herein to the contrary, Tenant shall not have any
obligation to pay Operating Expenses during the initial year of the Lease term
which exceed $38,227/year (40 cents per square foot/month), and for each
successive year, Tenant's pro-rata share of Operating Expenses shall not
increase by more than five percent per year. Tenant shall in no event be
entitled to any abatement or reduction of rent or other monetary sums payable
hereunder, except as expressly provided herein, notwithstanding any present or
future law to the contrary. Tenant expressly waives the provisions of any such
law.

                  4.5. ESTIMATED PAYMENTS. Estimated payments for taxes,
insurance maintenance of common areas, management of the property and common
area utilities and services are set forth in Paragraph 1.5. Tenant shall pay the
estimated payments together with the monthly rent in advance on the first day of
each calendar month of the term, without deduction, offset, prior notice or
demand, except as provided herein. Landlord may increase or decrease the
estimated payments upon 30 days' written notice to Tenant based upon statements
received or charges incurred by Landlord, information available to Landlord as
to the probable cost of expected charges and expenses, or Landlord's reasonable
estimate of the probable amount of expected charges or expenses. In the event
that any taxes payable in respect of the property are levied or assessed against
the property and other property, or in the event that any property insurance
carried by Landlord is carried under a policy or policies covering the property
and other properties, the amounts payable by Tenant hereunder in respect of such
taxes or such insurance shall be determined by reference to allocations or any
such taxes and any such insurance to the property reasonably made by Landlord.
Landlord shall be entitled to retain the monies received from such payments in a
fund pending payment of all such costs and charges. No more frequently than once
each calendar quarter, Landlord shall determine the actual costs of operation
and maintenance of the property. Tenant shall remit to Landlord on demand its
unpaid pro rata share of the actual expense. In the event Tenant paid more than
its pro rata share of the actual expenses for such period of time,

                                        3

<PAGE>

Landlord shall apply such overpayment towards the next estimated payments owing
by Tenant. At the termination of this Lease, an accounting for such charges and
expenses shall be made to the nearest practical accounting period, and Tenant
shall pay to Landlord any balance due or shall be entitled to a prompt refund of
any excess amount paid. Landlord shall furnish to Tenant, within sixty (60) days
after the end of each calendar year, a statement in reasonable detail, including
supportive documentation, setting forth (a) Landlord's actual costs of operation
and maintenance with respect to the property (including taxes and insurance) for
that year by category and amount; (b) the amount of Tenant's additional rent for
that year; and (c) the sum of Tenant's monthly estimated rent payments made
during that year.

Tenant shall have the right to audit Landlord's records respecting for each
calendar year during the term of this Lease by notifying Landlord within 120
days following the end of each such calendar year. If an audit (performed by a
certified public accountant on behalf of Tenant) reveals that Landlord has
overcharged Tenant for Operating Expenses, Landlord shall refund the amount
overcharged within ten days after such determination has been made. If Landlord
has overcharged Tenant by more than 5%, Landlord shall refund the overcharge
amount and, in addition, shall pay the reasonable costs of Tenant's audit.

                  4.6. SECURITY DEPOSIT.

                  4.7. LATE CHARGES. Tenant hereby acknowledges that late
payment by Tenant to Landlord of rent or other sums due hereunder will cause
Landlord to incur costs not contemplated by this Lease, the exact amount of
which is extremely difficult to ascertain. Such costs include, without
limitation, processing, accounting charges and late charges which may be imposed
on Landlord by the terms of any mortgage or trust deed covering the Property.
Accordingly, if any installment of Base Monthly Rent or any other sum due from
Tenant shall not be received by Landlord within five business Days after the
amount is due, Tenant shall pay to Landlord a late charge equal to 5% of the
overdue amount. The parties hereby agree that such late charge represents a fair
and reasonable estimate of the costs Landlord will incur by reason of Tenant's
late payment. Landlord's acceptance of a late charge shall not constitute a
waiver of Tenant's default respecting the overdue amount or prevent Landlord
from exercising any of the remedies available hereunder.

         5. TAXES.

                  5.1. TAXES ON THE PREMISES AND THE PROPERTY. Tenant agrees to
pay to Landlord in addition to the rent and other charges herein, its pro rata
share of all taxes pursuant to Paragraph 4.4. As used herein taxes shall
include, without limitation, the following: (a) all real estate and personal
property taxes, assessments, rates and charges, general and special, ordinary
and extraordinary, unforeseen as well as foreseen, of any kind and nature
whatsoever, including, but not limited to, assessment for public improvements or
benefits, which relate to any period falling in whole or in part within the term
and which are assessed, levied, confirmed, imposed or become a lien upon or
payable in respect to the Premises or the property or any building or other
improvements thereon and any taxes on personal property owned by Landlord and
used in conjunction with the operation of the property, and (b) any tax or
excise on rents or other tax howsoever described, unforeseen as well as
foreseen, at any time imposed under the laws of any governmental authority which
relates to any period falling in whole or in part within the term and which is
levied or assessed directly or indirectly against Landlord or on the rental and
charges payable under leases for portions of the property or on any arrangement
relating thereto, wholly or partly in the place of, or in lieu of an increase
in, or in addition to, taxes assessed or imposed by such authority on land and
improvements, including, without limiting the generality of the foregoing, any
gross receipts tax to the extent imposed upon a landlord by reason of the
receipt of rental, charges or other income from the Premises or the property.
Tenant's share of taxes shall be equitably prorated to cover only the period of
time within the fiscal tax year during which this Lease is in effect. With
respect to any assessments which may be levied against or upon the Premises, and
which may be paid in annual installments, only the amount of such annual
installments (with appropriate proration for any partial year) and interest due
thereon shall be included within the computation of the annual taxes.

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Notwithstanding anything herein to the contrary,

         (a) Landlord shall be solely responsible for any increases in "taxes"
and/or assessments that result from "new construction" or a "change of
ownership" of the Building or the property (and for purposes hereof, "new
construction" or a "change of ownership" shall have the same meaning as in part
0.5 of division 1 of the California Revenue and Taxation Code or any amendments
or successor statutes to those sections);

         (b) Tenant's obligation to pay any assessments included within "taxes"
shall be calculated on the basis of the amount due if Landlord had allowed
assessment to go to bond and the same were to be paid over the longest period
available; and

         (c) Tenant shall be required to pay any tax based on (1) gross or net
rents, (2) the square footage of the Premises or the property, (3) this
transaction (or any document relating thereto), (4) the occupancy of Tenant, or
(5) any other tax, fee, or excise, however described, including, without
limitation, a so called "value added tax" as a direct substitution in whole or
part for, or in addition to, any real property tax, only to the extent that any
such tax is in substitution of any real property tax it would otherwise be
obligated to pay.

                  5.2. Taxes on Tenant's Property. Tenant shall pay before
delinquency all taxes levied or assessed on Tenant's fixtures, improvements,
furnishings, merchandise, equipment and personal property in and on the
Premises, whether or not affixed to the real property. If at any time after any
tax or assessment has become due or payable, Tenant or its legal representative
neglects to pay such tax or assessment, and is not contesting such tax or
assessment, Landlord shall be entitled, but not obligated, to pay the same at
any time thereafter and such amount so paid by Landlord shall be repaid by
Tenant to Landlord with Tenant's next rent installment. Tenant shall timely pay
all taxes imposed by local, state, and federal law upon Tenant. Notwithstanding
the foregoing, Tenant shall have the right to contest personal property taxes
assessed against Tenant.

         6. INSURANCE.

                  6.1. Property/Rental Insurance-Property and Premises. During
the term Landlord shall keep the property insured against loss or damage by fire
and those risks normally included in the term "special perils" including (a)
flood coverage, (b) earthquake coverage at the election of Landlord if available
at commercially reasonable rates, (c) coverage for loss of rents including
Operating Expenses and (d) boiler and machinery coverage if Landlord deems
necessary. All such insurance shall be solely for Landlord's benefit and,Tenant
shall have no rights respecting any such policy or sums paid pursuant to the
terms of such policies. The amount of such insurance shall be not less than 100%
of the replacement value of the property. Any recovery received from said
insurance policy shall be paid to Landlord. Tenant, in addition to the rent and
other charges provided herein, agrees to pay to Landlord its pro rata share of
the premiums for all such insurance pursuant to Paragraph 4.4 of this Lease.
Tenant shall pay to Landlord Tenant's pro rata share of any deductible within 15
days after Landlord sends Tenant an invoice for the amount owing.

                  6.2. Property Insurance-Fixtures and Inventory. During the
term, Tenant shall, at its sole expense, maintain insurance with "special
perils" coverage on any and all fixtures, leasehold improvements installed
hereafter, furnishings, merchandise, equipment or personal property in or on the
Premises, whether in place as of the date hereof or installed hereafter, for the
full replacement value thereof, and Tenant shall also have sole responsibility
and cost for maintaining any other types of insurance deemed necessary,
appropriate or desirable by Tenant. Any and all deductibles shall be paid by
Tenant.

                  6.3. Landlord's Liability Insurance. During the term, as an
expense of the property, Landlord shall maintain a policy or policies of
commercial general liability insurance insuring Landlord and naming Tenant as
additional insured (and such others as designated by Landlord) against liability
for bodily injury, death and property damage on or about the property, with
combined single limit coverage of not less than $10 million.

                                       5

<PAGE>

Tenant shall pay its pro rata share of the premium for such insurance pursuant
to Paragraph 4.4.

                  6.4. Tenant's Liability Insurance. Tenant shall, at its sole
expense, maintain for the mutual benefit of Landlord and Tenant, commercial
general liability and property damage insurance against claims for bodily
injury, death or property damage occurring in or about the Premises or arising
out of the use or occupancy of the Premises, with combined single limit coverage
of not less than $2 million. Such insurance shall include, so-called host liquor
liability coverage from liability arising from the consumption of alcoholic
beverages consumed at the Premises. Tenant shall furnish to landlord prior to
the Commencement Date, and at least 30 days prior to the expiration date of any
policy, certificates indicating that the liability insurance required of Tenant
is in full force and effect, that Landlord has been named as an additional
insured, and that no such policy will be canceled unless 30 days' prior written
notice of cancellation has been given to Landlord. Said policies shall provide
that Landlord, as an additional insured, may recover for any covered loss
suffered by Landlord by reason of Tenant's negligence, and shall include a broad
form liability endorsement. All insurance policies obtained by Tenant pursuant
to the requirement of this Lease shall be in a form and from a company
reasonably satisfactory to Landlord.

                  6.5. Waiver of Subrogation. Landlord hereby releases Tenant
and its officers, agents, employees, and servants, and Tenant hereby releases
Landlord and its officers, agents, employees and servants, from any and all
claims or demands of damages, loss, expense or injury to the Premises, or to the
furnishings and fixtures and equipment or inventory or other property of either
Landlord or Tenant in, about or upon the Premises, which is caused by, or
results from, or is incident to any perils, events or happenings which are the
subject of insurance which is carried or is required to be carried by the
respective parties and in force at the time of any such loss, whether due to the
negligence of Landlord or Tenant or their agents, employees, contractors or
invitees. Each party shall cause each insurance policy obtained by it to provide
that the insurance company waives all right of recovery by way of subrogation
against either party in connection with any damage covered by any policy.

                  6.6. Indemnification. Except in the case of intentional
misconduct by Landlord or Landlord's reckless disregard of its duties or the
negligence of Landlord, its employees, agents or contractors, Tenant will
indemnify Landlord and save it harmless from and against any and all claims,
actions, damages, liability and expense in connection with loss of life,
personal injury and/or damage to property arising from or out of any occurrence
in, upon or at the Premises, or the occupancy or use by Tenant of the Premises
or the property or any part thereof, or occasioned wholly or in part by any acts
or omissions of Tenant, its agents, contractors, employees, servants, licensees
or concessionaires in or about the Premises or by anyone permitted to be on the
Premises by Tenant. In case Landlord shall be made a party to any such
litigation commenced by or against Tenant, then Tenant shall protect and hold
Landlord harmless from all claims, liabilities, costs and expenses, and shall
pay all costs, expenses and reasonable legal fees incurred by Landlord in
connection with such litigation.

                  6.7. Plate Glass Replacement. If any glass in and about the
Premises is damaged or broken by or as a result of the acts of Tenant and its
agents, contractors and employees, Tenant shall pay Landlord's cost of
replacement, provided that such amount shall not exceed the deductible then in
effect on Landlord's insurance policy, if any, covering the damaged glass.
Nothing herein shall be construed to require Landlord or Tenant to carry plate
glass insurance.

                  6.8. Worker's Compensation Insurance. Tenant shall, at its
sole expense, maintain and keep in force during the term a policy or policies of
workman's compensation insurance and any other employee benefit insurance
sufficient to comply with all applicable laws, statutes, ordinances and
governmental rules, regulations or requirements.

7.0 PREMISES & PROPERTY MAINTENANCE & REPAIR

                                        6

<PAGE>

                  7.1. Premises. Throughout the term, Tenant agrees to keep and
maintain all improvements and appurtenances upon the Premises, including all
plumbing, heating and cooling appliances, wiring and glass, in good order and
repair including the replacement of such improvement and appurtenances when
necessary provided that Tenant's obligation respecting plumbing, electrical and
HVAC systems shall only require Tenant to keep and maintain the exposed portions
of such equipment and systems. Landlord shall keep and maintain the unexposed
portions of such systems, except to the extent such repair or maintenance arises
from Tenant's negligence or willful misconduct. Tenant hereby expressly waives
the provisions of any law permitting repairs by a tenant at the expense of a
landlord, including, without limitation, all rights of Tenant under California
Civil Code Sections 1941 through 1946, inclusive. Tenant agrees to keep the
Premises clean and in sanitary condition. Tenant further agrees to keep the
interior of the Premises, including, without limitation, the windows, floors,
walls, doors, showcases and fixtures clean and neat in appearance and to remove
all trash and debris which may be found in or around the Premises. If Landlord
reasonably deems any repairs and/or maintenance to be made by Tenant necessary
and Tenant refuses or neglects to commence such repairs and/or maintenance and
complete the same with reasonable dispatch upon demand, Landlord and its agents
may enter the Premises and cause such repairs and/or maintenance to be made and
shall not be responsible to Tenant for any loss or damage occasioned thereby.
Tenant agrees that, upon demand, it shall pay to Landlord the cost of any such
repairs, together with accrued interest from the date of Landlord's payment at
the highest rate allowable by law. Notwithstanding anything to the contrary
above, Landlord may elect to enter into commercially reasonable maintenance
contracts for the provision of all or a part of Tenant's maintenance obligations
as set forth in this paragraph. Upon such election, Tenant shall be relieved
from its obligations to perform only those maintenance obligations covered by
the maintenance contract and only for the duration of the maintenance contract,
Tenant shall bear the cost of such maintenance contract (allocate able to the
tenant), in accordance with paragraph 4.4 above, which shall be paid in advance
on a monthly basis with Tenant's monthly rent payments.

                  7.2. Common Areas. Subject to Tenant's obligations in
paragraph 7.1, Landlord shall keep and maintain the common areas of the property
(which shall include, without limitation, the foundation, roof, parking,
landscaping, HVAC, electrical, plumbing, exterior walls and structural
components of the improvements on the property) in reasonably good order and
condition, except that damage occasioned by the negligent acts of Tenant
(inclusive of Tenant's employees, agents, guests and invitees) shall be repaired
by Landlord at Tenant's sole expense. Tenant shall have the obligation to notify
Landlord, in writing, of any repairs or maintenance to the common areas which
may be necessary, and Landlord shall make necessary repairs within a reasonable
time. The manner and method of maintenance and repair of the common areas shall
be at Landlord's sole and absolute discretion. Except in the event that
replacement of HVAC components, structural components or the roof is due to the
negligent acts of Tenant (inclusive of Tenant's employees, agents, guests
and invitees), Tenant shall not be obligated to pay a pro rata portion of the
cost of replacement of any of said components and Tenant's obligation for
reimbursement shall be limited to maintenance expenses associated with such
components in place in the property. Tenant, in addition to the rent and other
charges provided herein, agrees to pay to Landlord its pro rata share of costs
of maintaining the common areas pursuant to Paragraph 4.4.

                  7.3. Alterations, Changes and Additions by Tenant. Tenant
shall make no changes, alteration, or additions ("Alterations") to any portion
of the Property without Landlord's prior written consent which shall not be
unreasonably withheld. As a condition to consent, Landlord may require that each
Alteration be under the supervision of a competent architect or competent
licensed structural engineer and made in accordance with plans and
specifications furnished to and approved by Landlord prior to the commencement
of work, that Tenant remove such Alterations at the expiration of the Term and
restore the Premises and Property to their condition prior to the Alteration. As
a further condition to consent, Landlord may require Tenant to provide Landlord,
at Tenant's sole expense, with a lien and completion bond in an amount equal to
125% of the estimated cost of the Alteration to insure Landlord against any
liability for mechanic's and materialman's liens and to ensure completion of the
Alteration. In the event that any Alteration increases the floor area of the
Premises, the Base Monthly Rent and

                                        7

<PAGE>

Tenant's Pro Rata Share shall be proportionately increased. Tenant shall provide
14 days' written notice to Landlord of the date on which construction of each
Alteration will commence in order to permit Landlord to post a notice of
nonresponsibility if appropriate, given the nature and scope of the Alteration.
Each Alteration shall be constructed in a good and workmanlike manner in
accordance with all Regulations relating to such construction. Every Alteration
shall remain for the benefit of and become the property of Landlord, unless
Landlord requires its removal by giving Tenant written notice at least 30 Days
before the date Tenant is to vacate the Premises, in which case, Tenant shall
remove the Alteration(s) and restore the Premises to their pre-Alteration
condition. Notwithstanding the above contents of paragraph 7.3, Tenant shall not
be obligated to obtain Landlord's consent to any Alterations the cost of which
is less than $25,000 in each instance, provided such Alteration does not affect
the structural integrity of the Building, or the functional integrity of the
utility systems, and is not visible from the exterior of the Premises.

                  7.4. USE OF PLUMBING, ELECTRICAL AND HVAC SYSTEMS. Tenant
shall not use the plumbing facilities for any purpose other than the use
specified in paragraph 1.7. The expense of repair of any breakage, stoppage or
other damage relating to the plumbing and resulting from the introduction by
Tenant, its agents, employees or invitees of foreign substances into the
plumbing facilities shall be borne by Tenant. Tenant shall not use the
electrical or heating and air-conditioning ("HVAC") systems for any purpose
other than the use specified in paragraph 1.7. The expense of repair of any
breakage or other damage resulting to the electrical and/or HVAC systems
resulting from the use by Tenant, its agents, employees or invitees of those
systems for any purpose other than that for which the uses specified in Section
1.7 shall be borne by Tenant.

                  7.5. LIENS. Tenant shall keep the Premises and the property
free from any liens arising out of work performed, materials furnished or
obligations incurred by Tenant and shall indemnify, hold harmless and defend
Landlord from any liens and encumbrances arising out of any work performed or
materials furnished by or at the direction of Tenant. In the event that Tenant
shall not, within 20 days following the imposition of any such lien, cause such
lien to be released of record by payment or posting of a proper bond, Landlord
shall have, in addition to all other remedies provided herein and by law, the
right, but not the obligation, to cause the same to be released by such means as
it shall deem proper, including payment of the claim giving rise to such lien.
All such sums paid by Landlord and all expenses by Landlord in connection
therewith, including attorney's fees and costs, shall be payable to Landlord by
Tenant on demand with interest from the date paid by Landlord to the date of
Tenant's reimbursement to Landlord at the highest rate allowable by law.
Landlord shall have the right at all times to post and keep posted on the
Premises any notices permitted or required by law, or which Landlord shall deem
proper, for the protection of Landlord and the property and any other party
having an interest therein, from mechanic's and materialmen's liens, and Tenant
shall give to Landlord at least 14 days prior written notice of the expected
date of commencement of any work relating to alterations or additions to the
Premises.

         8. MANAGEMENT. Tenant, as part of the Operating Expenses, will pay no
more than 5% of its Base Rent as the management fee. Tenant understands that
the Wareham Property Group, Inc., an affiliate of Landlord, or another
affiliated or unaffiliated third party will be responsible for the management of
the property.

         9. UTILITIES AND SERVICES.

                  9.1. PREMISES. Landlord shall make water, sewer, telephone and
utility service available to the property. Tenant shall pay prior to delinquency
throughout the term the cost of water, gas, heating, cooling, sewer, telephone,
electricity, garbage, air-conditioning and ventilating, janitorial services,
landscaping and all other materials and utilities supplied directly to the
Premises. If any such services are not separately metered to Tenant, Tenant
shall pay a reasonable proportion of all charges which are jointly metered, the
determination to be made by Landlord in good faith, and payment to be made by
Tenant within 30 days of receipt of the statement for such charges.

                  9.2. COMMON AREAS. Landlord shall provide utilities, first
class landscaping, janitorial, lighting for the common areas and, if Landlord
deems it necessary

                                        8
<PAGE>
or appropriate, security services for the common areas of the property. Tenant
shall bear its pro rata share of the costs to Landlord in providing such
services pursuant to Paragraph 4.4. Security services may, in the Landlord's
discretion, include hiring of guards during hours determined by Landlord or
requested by Tenant at Tenant's expense. Tenant shall have the right of access
to such portions of the property outside the Premises as are necessary to enable
Tenant to exercise its rights under this Lease.

                  9.3. LIMITATION OF LIABILITY. Landlord shall not be in default
under the provisions of this Lease or be liable for any damages directly or
indirectly resulting from the following conditions: (1) the interruption of use
of any equipment in connection with the furnishing of any of the foregoing
services; (2) failure to furnish or delay in furnishing any such services where
such failure or delay is caused by accident or any condition or event beyond
Landlord's reasonable control; (3) the limitation, curtailment or rationing of,
or restrictions on, use of water, electricity, gas or any other form of energy
serving the Premises, to the extent such interruption or failure or limitation
is beyond Landlord's reasonable control. Landlord shall not be liable under any
circumstances for a loss of or injury to Property or business, however
occurring, through or in connection with or incidental to failure to furnish any
such services, except as to any matters arising out of Landlord's negligence or
willful misconduct, or that of its employees, agents, contractors, or invitees.
Tenant shall not connect any apparatus with electric current except through
existing electrical outlets in the Premises.

         10. USE OF PREMISES.

                  10.1. USE. The Premises shall be used and occupied by Tenant
for only the purpose specified in Paragraph 1.7 and for no other purposes
whatsoever without Landlord's consent which shall not be unreasonably withheld.

                  10.2. SUITABILITY. This Lease shall be subject to all
applicable zoning ordinances and to all municipal, county and state laws and
regulations governing and regulating the use of the Premises. Tenant has not
entered into this Lease in reliance upon any representation or warranty of
Landlord or any of its agents or employees as to the suitability of the Premises
for the conduct of Tenant's business. Tenant has made its own analysis
respecting the suitability of the Premises for Tenant's intended use.

         10.3. USES PROHIBITED.

                  10.3.1. RATE OF INSURANCE. Tenant shall not do or permit
anything to be done in or about the Premises which will cause the existing rate
of insurance upon the Premises to increase or cause the cancellation of any
insurance policy covering said Premises or any building of which the Premises
may be a part, nor shall Tenant sell or permit to be kept, used or sold in or
about such Premises any articles which may be prohibited by a standard form
policy of fire insurance. Tenant shall pay to Landlord as additional rent
hereunder the full amount of any increased premium resulting from Tenant's use
of the Premises.

                  10.3.2. INTERFERENCE WITH OTHER TENANTS. Tenant shall not do
or permit anything to be done in or about the Premises which will in any way
materially obstruct or unreasonably interfere with the rights of other tenants
or occupants of the property or injure or unreasonably annoy them, neither shall
Tenant use or allow the Premises to be used for any unlawful or objectionable
purpose, nor shall Tenant cause, maintain or permit any nuisance in or about the
Premises. Tenant shall not commit or suffer to be committed any illegal waste in
or upon the Premises.

                  10.3.3. APPLICABLE LAWS. Tenant shall not use the Premises or
permit anything to be done in or about the Premises which will in any way
violate or conflict with any law, statute, zoning restriction, ordinance,
governmental rule, regulation or requirement of duly constituted public
authorities whether now in force or which may hereafter be enacted or
promulgated. Tenant shall, at its sole cost and expense, properly comply with
all laws, statutes, ordinances and governmental rules, regulations or
requirements now in force or which may hereafter be in force and with the
requirements of any board of fire underwriters or other similar body now or
hereafter constituted relating to Tenant's use or occupancy of the Premises. The
judgment of any court of

                                       9

<PAGE>
competent jurisdiction or the admission of Tenant in any action against Tenant,
whether Landlord be a party thereto or not, that Tenant has violated any law,
statute, ordinance or governmental rule, regulation or requirement, shall be
conclusive of that fact as between Landlord and Tenant. Landlord warrants to
Tenant that on the commencement of the term hereof, the Premises and any
improvements to be constructed by Landlord (a) shall be free from material
structural defects, (b) shall comply with all applicable covenants and
restrictions of records, statutes, ordinances, codes, rules, regulations,
orders, and requirements, including but not limited to the Americans with
Disabilities Act, and (c) the Building's elevators, doors, roof, plumbing,
electrical and HVAC systems are in good order and condition and operating
properly. In the event of a breach of the foregoing warranties, Landlord shall
promptly rectify such breach at its sole cost and expense. (Landlord also shall
protect, indemnify, defend, and hold harmless from and against any and all
liability, loss, suits, claims, actions, costs, and expense (including, without
limitation, reasonable attorney's fees) arising from any breach of the foregoing
warranties. The provisions of this paragraph shall survive the termination of
this Lease.)

                  10.3.4. SIGNS. Without Landlord's consent which shall not be
unreasonably withheld, Tenant shall not place any sign upon the Premises or the
property. Landlord shall, to the extent allowed by applicable law and
regulations, as an expense of the property, install and maintain directory and
entry door signs identifying Tenant and Tenant's space. The directory signs
shall be constructed to Landlord's specifications and shall comply with
applicable regulations. Landlord agrees to install a monument sign at the Potter
Street entrance to the Property which will include Tenant's name and logo.

                  10.3.5. AUCTIONS. Tenant shall not conduct or allow any
auction or similar sale upon the Premises.

         11. DEFAULTS AND REMEDIES.

                  11.1. DEFAULT OF TENANT. The occurrence of any one or more of
the following events shall constitute a default and breach of this Lease by
Tenant: (a) Tenant's failure to pay any rent or charges required to be paid by
Tenant under this Lease, except as otherwise provided herein, where such failure
continues for five (5) business days after notice from Landlord; (b) Tenant's
abandonment of the demised Premises; (c) Tenant's failure to promptly and fully
perform any other covenant, condition or agreement contained in this Lease where
such failure continues for 30 days after written notice from Landlord to Tenant
of such default provided that if the nature of the default is such that more
than 30 days are reasonably required to cure such default, Tenant shall not be
deemed to be in default if within such 30 day period it commences to cure and
diligently prosecutes such cure to completion; (d) the levy of a writ of
attachment or execution on this Lease or on any of Tenant's property located in
the Premises; (e) the making by Tenant of a general assignment for the benefit
of its creditors or of an arrangement, composition, extension or adjustment with
its creditors, the filing by or against Tenant of a petition for relief or other
proceeding under the federal bankruptcy laws or state or other insolvency laws,
or the assumption by any court or administrative agency, or by a receiver,
trustee or custodian appointed by either, of jurisdiction, custody or control of
the Premises or of Tenant or any substantial part of its assets or property; or
(f) if the interest of Tenant under this Lease is held by a partnership or by
more than one person or entity, the occurrence of any act or event described in
part (e) above in respect of any partner of the partnership or any person or
entity holding an interest in Tenant of 25% or more. In the event a nonmonetary
default occurs which cannot reasonably be cured within the time period specified
above and Tenant commences corrective action within said time period, Tenant
shall not be subject to penalty under this Lease so long as Tenant prosecutes
such corrective action diligently and continuously to completion.

                  11.2. REMEDIES OF LANDLORD. In the event of Tenant's default
hereunder, then in addition to any other rights or remedies Landlord may have
under this Lease or under law, Landlord may elect either of the remedies set
forth in Paragraphs 11.2.1 and 11.2.2. Notwithstanding any other provision of
this lease, the Lessor has the remedy

                                       10

<PAGE>

described in California Civil Code Section 1951.4 (lessor (Landlord) may
continue lease in effect after lessee's (Tenant's) breach and abandonment and
recover rent as it becomes due, if lessee (Tenant) has the right to sublet or
assign, subject only to reasonable limitations). For purposes of this Paragraph
11 (inclusive of all sub parts of said paragraph), the "worth at the time of
award" of the amounts referred to in parts 11.2.1(i) and 11.2.2(ii) shall be
computed by allowing interest at the highest rate allowable by law, and the
"worth at time of award" of the amount referred to in part 11.2.1(iii) shall be
computed by discounting such amount at the rate specified in California Civil
Code Section 1951.2(b) or any successor statute. In such computations, the rent
due hereunder shall include monthly rent plus the aggregate amount of all other
rentals, charges and other amounts payable by Tenant hereunder.

                           11.2.1. To immediately terminate this Lease and
Tenant's right to possession of the Premises by giving written notice to Tenant
and to recover from Tenant an award of damages equal to the sum of (i) the
"worth at the time of award" of the unpaid rental which had been earned at the
time of termination, (ii) the worth at the time of award of the amount by which
the unpaid rental which would have been earned after termination until the time
of award exceeds the amount of such rental loss that Tenant proves could have
been reasonably avoided, (iii) the "worth at the time of award" of the amount by
which the unpaid rental for the balance of the term after the time of award
exceeds the amount of such rental loss that Tenant proves could be reasonably
avoided, (iv) any other amount necessary to compensate Landlord for all the
detriment either proximately caused by Tenant's failure to perform Tenant's
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, and (v) all such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time under applicable
law; or

                           11.2.2. To have this Lease continue in effect up to
its ending under Paragraph 1.2 for so long as Landlord does not terminate this
Lease and Tenant's right to possession of the Premises, in which event Landlord
shall have the right to enforce all of the rights and remedies provided by this
Lease and by law, including the right to recover the rental and other charges
payable by Tenant under this Lease as they become due.

                  11.3. DEFAULT BY LANDLORD. Landlord will be in default if
Landlord fails to perform any obligation required of Landlord within 30 days
after written notice by Tenant, specifying wherein Landlord has failed to
perform such obligation; provided 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. Tenant agrees that
any judgment against Landlord resulting from any default or other claim arising
under this Lease shall be satisfied only out of the rents, issues, profits and
other income actually received on account of Landlord's right, title and
interest in the property, and no other real, personal or mixed property of
Landlord or any partner of Landlord, wherever situated, shall be subject to levy
to satisfy such judgment. Tenant shall not have any right whatsoever to
terminate this Lease or to withhold, reduce or offset any amount against any
payments of rents or charges due and payable under this Lease, except as
provided herein.

         12. EXPIRATION OR TERMINATION.

                  12.1. SURRENDER OF POSSESSION. Tenant agrees to deliver up and
surrender to Landlord possession of the Premises and all improvements thereon,
subject to the terms of Paragraph 7.3 above, in as good order and condition as
when possession was taken by Tenant excepting only ordinary wear and tear and
damage due to casualty or condemnation. Upon termination of this Lease, Landlord
may reenter the Premises and remove all persons and property therefrom. If
Tenant fails to remove any effects that it is required or entitled to remove
from the Premises upon the termination of this Lease, for any cause whatsoever,
Landlord, at its option, may remove the same and store or dispose of them.
Tenant agrees to pay to Landlord on demand any and all expenses incurred in such
removal and in making the Premises free from all dirt, litter, debris and
obstruction, including all storage and insurance charges. If the Premises are
not surrendered at the end of the term, Tenant shall indemnify Landlord against
loss or

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liability of resulting from delay by Tenant in so surrendering the Premises,
including, without limitation, any claims made by any succeeding lessee founded
upon such delay.

                  12.2. HOLDING OVER. If Tenant, with Landlord's consent,
remains in possession of the Premises after expiration of the term and if
Landlord and Tenant have not executed an express written agreement as to such
holding over, then such occupancy shall be a tenancy from month to month at a
base monthly rental equivalent to 110% of the monthly rental in effect
immediately prior to such expiration, such payment to be made as herein
provided. In the event of such holding over, all of the terms of this Lease
including the obligation for payment of all charges owing hereunder shall remain
in force and effect on said month to month basis.

                  12.3. VOLUNTARY SURRENDER. The voluntary or other surrender of
this Lease by Tenant if accepted by Landlord, or a mutual cancellation thereof,
shall not work a merger, but shall, at the option of Landlord, terminate all or
any existing subleases or subtenancies, or operate as an assignment to Landlord
of any or all such subleases or subtenancies.

         13. CONDEMNATION OF PREMISES.

                  13.1. TOTAL CONDEMNATION. If the entire Premises, whether by
exercise of governmental power or the sale or transfer by Landlord to any
condemnor under threat of condemnation or while proceedings for condemnation are
pending, at any time during the term, shall be taken by condemnation such that
there does not remain a portion suitable for occupation, this Lease shall then
terminate as of the date transfer of possession is required. Upon such
condemnation, all rent shall be paid up to the date transfer of possession is
required, and Tenant shall have no claim against Landlord for the value of the
unexpired term of this Lease.

                  13.2. PARTIAL CONDEMNATION. If any portion of the Premises is
taken by condemnation during the term, whether by exercise of governmental power
or the sale or transfer by Landlord to any condemnor under threat of
condemnation or while proceedings for condemnation are pending, this Lease shall
remain in full force and effect; except that in the event a partial taking
leaves the Premises unsuitable for occupation, then Tenant shall have the right
to terminate this Lease effective upon the date transfer of possession is
required unless Landlord makes other comparable arrangements for Tenant's space.
Landlord shall have the right to terminate this Lease effective on the date
transfer of possession is required if more than 33% of the total square footage
of the Premises allocated to Tenant is taken by condemnation. Tenant and
Landlord may elect to exercise their respective rights to terminate this Lease
pursuant to this paragraph by serving written notice to the other within 30
calendar days of their receipt of notice of condemnation, except that Tenant's
notice shall be ineffective if Landlord serves notice upon Tenant of Landlord's
election to provide alternate space equivalent to that condemned within ten
calendar days of Tenant's delivery of notice to Landlord pursuant to this
paragraph. All rent and other obligations of Tenant under this Lease shall be
paid up to the date of termination, and Tenant shall have no claim against
Landlord for the value of any unexpired term of this Lease. If this Lease shall
not be canceled, the rent after such partial taking shall be that percentage of
the adjusted base rent provided for by this Lease, equal to the percentage which
the square footage of the untaken part of the Premises immediately after the
taking plus such replacement square footage as Landlord may make available to
Tenant bears to the square footage of the entire Premises immediately before the
taking. Any sums owing hereunder which are calculated on the basis of Tenant's
pro rata share (as set forth in paragraph 1.4) shall also be adjusted to reflect
any decrease in square footage of the Premises due to the condemnation. If
Tenant's continued use of the Premises requires alterations and repairs by
reason of a partial taking, all such alterations and repairs shall be made by
Tenant at Tenant's expense.

                  13.3. AWARD TO TENANT. In the event of any condemnation,
whether total or partial, Tenant shall have the right to claim and recover from
the condemning authority such compensation as may be separately awarded or
recoverable by Tenant for loss of business, fixtures or equipment belonging to
Tenant immediately prior to the condemnation. The balance of any condemnation
award shall belong to Landlord, and

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<PAGE>

Tenant shall have no further right to recover from Landlord or the condemning
authority for any additional claims arising out of such taking.

                  13.4. WAIVER OF PARTIAL TERMINATION RIGHTS. Tenant hereby
waives the provisions of California Code of Civil Procedure Section 1265.130.

        14. ENTRY BY LANDLORD. Tenant shall permit Landlord and its agents to
enter the Premises at all reasonable times for any of the following purposes: to
inspect the Premises; to maintain the Property; to make such repairs to the
Premises as Landlord is obligated or may elect to make; to make repairs,
alterations or additions to any other portion of the property; to show the
Premises and post "To Lease" signs for the purposes of reletting during the last
120 days of the term or any optional extension term; to show the Premises as
part of a prospective sale by Landlord and/or to post notices of
nonresponsibility. Landlord shall have such right of entry without any rebate of
rent to Tenant for any loss of occupancy or quiet enjoyment of the Premises
thereby occasioned. Notwithstanding the foregoing, Landlord shall provide 24
hours advance notice to Tenant of such intended entry except in the event of
circumstances which Landlord deems to constitute an emergency. when entering or
performing any repair or other work on the Premises, Landlord, its agents,
employees and/or contractors (a) shall identify themselves to Tenant's personnel
immediately upon entering the Premises, and (b) shall not, in any way,
materially or unreasonably affect, interrupt or interfere with Tenant's use,
business or operations on the Premises or obstruct the visibility of or access
to the Premises.

         15. LIABILITY LIMITATION AND INDEMNIFICATION.
The provisions of this section 15 supersede every other provision of this Lease
to the extent that they are inconsistent with such other provisions.

                  15.1. LIMITATION OF LANDLORD'S LIABILITY. TENANT SHALL NOT
HOLD LANDLORD LIABLE FOR ANY AMOUNT IN EXCESS OF INSURANCE COVERAGE MAINTAINED
BY LANDLORD PURSUANT TO PARAGRAPH 6.3 OF THIS LEASE ("EXISTING COVERAGE") WITH
RESPECT TO ANY INJURY OR DAMAGE, EITHER PROXIMATE OR REMOTE, OCCURRING THROUGH
OR CAUSED BY ANY REPAIRS OR ALTERATIONS TO THE PROPERTY, UNLESS SUCH INJURY OR
DAMAGE ARISES FROM LANDLORD'S NEGLIGENCE, WILLFUL MISCONDUCT, RECKLESS DISREGARD
OF LANDLORD'S DUTIES OR BREACH OF THIS LEASE. LANDLORD SHALL NOT BE LIABLE IN
EXCESS OF EXISTING COVERAGE FOR ANY INJURY OR DAMAGE OCCASIONED BY DEFECTIVE
ELECTRIC WIRING, OR THE BREAKING, BURSTING, STOPPAGE OR LEAKING OF ANY PART OF
THE PLUMBING, AIR-CONDITIONING, HEATING, FIRE CONTROL SPRINKLER SYSTEMS OR GAS,
SEWER OR STEAM PIPES, UNLESS SUCH INJURY OR DAMAGE ARISES FROM LANDLORD'S
NEGLIGENCE, WILLFUL MISCONDUCT OR RECKLESS DISREGARD OF LANDLORD'S DUTIES OR
BREACH OF THIS LEASE.

                  15.2. LIMITATION ON ENFORCEMENT OF JUDGMENTS. NOTWITHSTANDING
ANY OTHER PROVISION OF THIS LEASE, TENANT AND ITS AGENTS SHALL, UNDER ALL
CIRCUMSTANCES, BE ABSOLUTELY LIMITED TO LANDLORD'S ESTATE IN THE PROPERTY FOR
SATISFACTION OF TENANT AND ITS AGENTS' REMEDIES, AND/OR FOR THE COLLECTION OF A
JUDGMENT, COURT ORDER OR ARBITRATION AWARD REQUIRING THE PAYMENT OF MONEY BY
LANDLORD AS THE RESULT OF ANY AND ALL JUDGMENTS, ORDERS AND AWARDS RELATING TO
OR ARISING OUT OF TENANT AND ITS AGENTS' OCCUPANCY AND USE OF THE PROPERTY
AND/OR IN THE EVENT OF ANY DEFAULT BY LANDLORD HEREUNDER. NO OTHER PROPERTY OR
ASSETS OF LANDLORD OR ITS PARTNERS OR PRINCIPALS, DISCLOSED OR UNDISCLOSED,
SHALL BE SUBJECT TO LEVY, EXECUTION OR OTHER ENFORCEMENT PROCEDURE FOR THE
SATISFACTION OF TENANT AND ITS AGENTS' REMEDIES UNDER OR WITH RESPECT TO THIS
LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT HEREUNDER, OR THE USE AND
OCCUPANCY OF THE PROPERTY AND THE PREMISES BY TENANT AND ITS AGENTS. TENANT, ON
BEHALF OF ITSELF AND ITS AGENTS, EXPRESSLY WAIVES ANY AND ALL RIGHT TO COLLECT
OR ENFORCE ANY AND ALL ORDERS, AWARDS AND/OR JUDGMENTS AGAINST LANDLORD IN
EXCESS OF THE LIMITATIONS IMPOSED BY THIS PARAGRAPH. TENANT SHALL REQUIRE THAT
EACH SUBTENANT OF TENANT AND EACH ASSIGNEE OF TENANT AGREE TO BE BOUND BY THE
WAIVER SET FORTH IN THIS PARAGRAPH. THE LANDLORD'S MAXIMUM EXPOSURE AS SET FORTH
IN THIS PARAGRAPH IS CUMULATIVE (AS TO JUDGMENTS, AWARDS AND ORDERS AGAINST
LANDLORD IN CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT
HEREUNDER, OR THE USE AND OCCUPANCY OF THE PROPERTY BY TENANT AND ITS AGENTS).
THE LIMITS IMPOSED BY THIS PARAGRAPH ALSO APPLY TO ANY AND ALL DUTIES OF
INDEMNITY (EXPRESS AND/OR IMPLIED) OWED BY LANDLORD TO TENANT. AS USED IN THIS
PARAGRAPH, REFERENCES TO "LANDLORD" INCLUDE ALL PERSONS AND ENTITIES WHO NOW OR
HEREAFTER OWN OR MAY OWN AN INTEREST IN LANDLORD.

                                       13

<PAGE>

         16. ASSIGNMENT AND SUBLETTING.

                  16.1. GENERALLY. Tenant shall not directly or indirectly
assign this Lease in whole or in part, or sublet the Premises or any part
thereof, or license the use of all or any portion of the Premises or business
conducted thereon, or encumber or hypothecate this Lease, without first
obtaining Landlord's written consent, which consent Landlord will not
unreasonably withhold. The sale or other transfer of shares of stock,
partnership interests or other ownership interests in Tenant resulting in a
change in the effective control of Tenant, or any merger, consolidation or other
reorganization of Tenant shall be regarded as an indirect assignment of Tenant's
interest in this Lease. Tenant's request for consent to any assignment, sublease
or other transfer shall be in writing and shall include the following: (a) the
name and legal composition of the proposed transferee; (b) the nature of the
proposed transferee's business to be carried on in the Premises; (c) the terms
and provisions of the proposed assignment or sublease; and (d) such financial
and other reasonable information as Landlord may request concerning the proposed
transferee or concerning the proposed assignment or sublease and any transaction
contemplated to occur in connection therewith. Any assignment, subletting,
licensing, encumbering or hypothecating of this Lease without Landlord's prior
written consent shall constitute a breach of this Lease entitling Landlord to
exercise all its rights and remedies herein provided. Landlord's consent to any
assignment or sublease shall not constitute a waiver of the necessity for such
consent to any subsequent assignment or sublease. The prohibition against
assignment and subletting contained in this paragraph shall be construed to
include a prohibition against assignment or subletting by operation of law.
Notwithstanding any assignment or subletting with Landlord's consent, unless
agreed to in writing, Tenant shall remain fully liable on this Lease and shall
not be released from its obligations hereunder. Without limiting other reasons
or circumstances, Landlord and Tenant agree that it is reasonable for Landlord
to withhold consent to an assignment or sublease, if (i) the financial strength
of the proposed assignee is not, in Landlord's reasonable judgment, commensurate
with the obligations of the Lease; (ii) the proposed assignee's use would, in
Landlord's reasonable judgment, be incompatible with the then current tenants,
or use of the rest of the property.

Notwithstanding anything in the above Paragraph 16.1, Tenant may, without
Landlord's prior written consent sublet the Premises or assign the Lease to (i)
a subsidiary, affiliate, division or corporation or entity controlling,
controlled by or under common control with Tenant; (ii) a successor corporation
or entity resulting from or related to Tenant by merger, consolidation,
nonbankruptcy reorganization, or government action; or fill) a purchaser of
substantially all of Tenant's assets or stock located in the Premises. A sale or
transfer of Tenant's capital stock shall not be deemed an assignment, subletting
or any other transfer of the Lease or the Premises.

                  16.2. TENANT'S PAYMENTS. In the event Landlord shall consent
to a sublease or assignment under this paragraph 16, Tenant shall pay Landlord's
reasonable attorney's fees incurred in connection with giving such consent.
Tenant shall also pay to Landlord an amount equal to 50% of all excess rent
received by Tenant directly or indirectly in respect of an assignment of this
Lease or sublease of the Premises. For this purpose, "excess rent" shall mean,
in the case of an assignment, all monies so received and, in the case of a
sublease, all monies so received in excess of the rents and charges reserved
under this Lease, provided however, that Tenant shall first be entitled to
deduct therefrom all reasonable costs associated with effecting the assignment
or sublease, including without limitation, brokerage fees, tenant improvements
and rent concessions. The assignee or subleasee shall, upon assuming the
obligations of Tenant under this Lease, become jointly and severally liable to
Landlord for the payment of Landlord's share of excess rent.

         17. DAMAGE OR DESTRUCTION.

                  17.1. RIGHT TO TERMINATE ON DESTRUCTION OF PREMISES. Landlord
and Tenant shall each have the right to terminate this Lease if, during the
term, the Premises or the improvements on the property are damaged to an extent
exceeding 33% of the then reconstruction cost of the Premises as a whole, or
such improvements as a whole, as the case may be. Landlord or Tenant shall also
have the right to terminate this Lease if 33% of the Premises are damaged by an
uninsured peril. In either case, Landlord or Tenant

                                       14

<PAGE>

may elect to terminate by written notice delivered within 30 calendar days of
the happening of such damage. Such notice shall provide Tenant with a minimum of
60 days to vacate the Premises unless they are unsafe for occupancy, in which
case, Tenant shall immediately vacate the Premises.

                  17.2. REPAIRS BY LANDLORD. If Landlord shall not elect to
terminate this Lease pursuant to paragraph 17.1, Landlord shall immediately upon
receipt of insurance proceeds paid in connection with such casualty, but in no
event later than 180 calendar days after such damage has occurred, proceed to
repair or rebuild the Premises, on the same plan and design and of equal quality
and condition as existed immediately before such damage or destruction occurred,
subject to such delays as may be reasonably attributable to governmental
restrictions or failure to obtain materials or labor, or other causes beyond the
control of Landlord. Tenant shall be liable for the repair and replacement of
all fixtures, leasehold improvements installed hereafter, furnishings,
merchandise, equipment and personal property not covered by the property
insurance obtained pursuant to the provisions of this Lease.

                  17.3. REDUCTION OF RENT AND OPERATING EXPENSES DURING REPAIRS.
Except with respect to damage caused in whole or in part by Tenant, its agents,
servants, employees, invitees and guests, in the event Tenant is able to
continue to conduct its business during the making of repairs, the rent then
prevailing will be equitably reduced in the proportion that the unusable part of
the Premises bears to the whole thereof for the period that repairs are being
made. No rent or Operating Expenses shall be payable while the Premises are
wholly unusable due to casualty damage except for casualty damage caused In
whole or in part by Tenant, its employees, agents, servants, invitees and
guests, in which event Tenant shall remain liable for rental payments.

                  17.4. WAIVER. Tenant hereby waives the provisions of Sections
1932, subdivision 2, and 1933, subdivision 4, of the Civil Code of California.

         18. HAZARDOUS MATERIALS.

                  18.1. TENANT'S WARRANTIES. Tenant hereby represents, warrants
and covenants that Tenant will comply with each of the following requirements:

                           18.1.1. RESTRICTIONS ON BRINGING HAZARDOUS MATERIALS
ONTO THE PROPERTY. Except for normal quantities of office supplies and cleaning
products and those Hazardous materials and quantities noted in the Tenant's
Hazardous Material Management Plan filed with the city of Berkeley, for which no
prior consent shall be required, during the term of this Lease, Tenant shall not
cause or permit any Hazardous Material (as defined below) to be brought upon,
used, kept or stored in, on, about or under the Property by Tenant, its agents,
representatives, employees, contractors, invitees or subtenants, without the
prior written consent of Landlord (which Landlord shall not unreasonably
withhold). Tenant's use of any Hazardous Materials shall comply with all
Environmental Health and Safety Requirements (as defined below) regulating such
Hazardous Material and with the highest standards prevailing in the Tenant's
industry for the use, keeping and storage of such Hazardous Material).

                           18.1.2. COMPLIANCE WITH APPLICABLE LAWS AND
REGULATIONS. If any Hazardous Material is brought upon, used, kept or stored in,
on, about or under the Property by Tenant, its agents, representatives,
employees, contractors, invitees or subtenants, then Tenant shall bear all
financial and other responsibility for ensuring that such material shall be
used, kept and stored in a manner which complies with all Environmental, Health
and Safety Requirements regulating such Hazardous Material and with the highest
standards prevailing in the Tenant's industry for the use, keeping and storage
of such Hazardous Material. Without limiting any of the other obligations of
Tenant set forth in this Lease, Tenant shall, at its own cost and expense,
procure, maintain in effect and comply with all conditions and requirements of
any and all permits, licenses and other governmental and regulatory approvals or
authorizations required under any Environmental, Health or Safety Requirement In
connection with the use, keeping and storage of such Hazardous Material in, on,
about or under the Property.

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<PAGE>

Tenant shall submit to Landlord copies of all such permits, licenses, or other
governmental or regulatory approvals or authorizations within five business days
of its receipt thereof.

                           18.1.3. TENANT'S OBLIGATION TO EFFECT RESTORATION.
If, as a result of actions caused or permitted by Tenant (and/or Tenant's
agents, representatives, employees, contractors, invitees or subtenants), the
presence of any Hazardous Material in, on, about or under the Property or any
adjoining property, existing during the term of this Lease results in any
contamination of the Property or the surrounding environment, Tenant shall
promptly take all actions at its sole cost and expense as are necessary to
return the Property and/or the surrounding environment to the condition required
by Environmental Health and Safety requirements and governmental authorities
("Restoration"); provided, however, that tenant shall not undertake any
Restoration without first providing Landlord with written notice thereof and
obtaining Landlord's approval therefor, which approval shall be granted or
denied in Landlord's sole and absolute discretion. Tenant shall carry out any
approved restoration in a manner which complies with all Environmental, Health
and Safety Requirements. Further, Tenant shall not undertake any Restoration,
nor enter into any settlement agreement, consent decree or other compromise with
respect to any claims, relating to any Hazardous Material in any way connected
with the Property without first notifying Landlord of Tenant's intention to do
so and affording Landlord ample opportunity to appear, intervene or otherwise
appropriately assert and protect Landlord's interest with respect thereto.

                           18.1.4. REMOVAL FROM PROPERTY. Upon the expiration or
early termination of the term of this Lease, Tenant shall cause to be removed
from the Property all Hazardous Materials existing in, on, about or under the
Property brought upon, used kept or stored by Tenant (and/or Tenant's agents,
representatives, employees, contractors, invitees or subtenants) as well as all
receptacles or containers therefor, and shall cause such Hazardous Materials and
such receptacles or containers to be stored, treated, transported and/or
disposed of in compliance with all applicable Environmental, Health and Safety
Requirements. Any Hazardous Materials, or receptacles or containers therefor,
which Tenant causes to be removed from the Property shall be removed solely by
duly licensed haulers and transported to and disposed of at duly licensed
facilities for the final disposal of such Hazardous Materials and receptacles or
containers therefor. Tenant shall deliver to Landlord copies of any and all
manifests and other documentation relating to the removal, storage, treatment,
transportation and/or disposal of any Hazardous Materials, or receptacles or
containers therefor, reflecting the legal and proper removal, storage,
treatment, transportation and/or disposal thereof. Tenant shall, at its sole
cost and expense, repair any damage to the Property resulting from Tenant's
removal of such Hazardous Materials and receptacles or containers therefor.
Tenant's obligation to pay rent shall continue until Tenant completes such
removal and effects such repairs.

                           18.1.6. TENANT'S WRITTEN CONFIRMATION. Tenant shall,
from time to time throughout the term of this Lease, execute such affidavits,
certificates or other documents as may be reasonably requested by Landlord
concerning Tenant's best knowledge and belief regarding the presence of
Hazardous Materials in, on, about or under the Property.

                           18.1.6. TENANT'S DUTY TO NOTIFY LANDLORD. Tenant
shall notify Landlord in writing immediately upon becoming aware of: (1) any
enforcement, cleanup, remediation or other action threatened, instituted or
completed by any governmental or regulatory agency or private person with
respect to the Property or any adjoining property relating to Hazardous
Materials; (2) any claim threatened or made by any person against Tenant, the
Landlord, the Property or any adjoining landowner, tenant or property for
personal injury, compensation or any other matter relating to Hazardous
Materials; and (3) any reports made by or to any governmental or regulatory
agency with respect to the Property or any adjoining property relating to
Hazardous Materials, including without limitation, any complaints, notices or
asserted violations in connection therewith. Further, Tenant shall also supply
to Landlord as promptly as possible, and in any event within five business days
after Tenant first receives or sends the same, copies of all claims, reports,
complaints, notices, warnings, asserted violations or other documents relating
in any way to the foregoing.

                                       16

<PAGE>
         18.2. LANDLORD'S RIGHTS. Landlord and its agents and representatives
shall have the right to communicate, verbally or in writing, with any
governmental or regulatory agency or any environmental consultant on any matter
with respect to the Property relating to Hazardous Materials. Landlord shall be
entitled to copies of any and all notices, inspection reports or other documents
issued by or to any such governmental or regulatory agency or consultant with
respect to the Property relating to Hazardous Materials, excluding information
and data that is proprietary or business confidential to Tenant.

         18.3. TENANT'S DUTY TO INDEMNIFY. If the presence of Hazardous
Materials on the Property is caused by the Tenant, then Tenant shall indemnify,
defend and hold Landlord any partner or other affiliate of Landlord, and any
director, officer, shareholder, employee, agent, attorney or partner of any of
the foregoing, harmless from and against any and all claims, damages, penalties,
fines, costs, liabilities and losses (including, without limitation, diminution
in value of the Property, damages for the loss or restriction on use of rental
or usable space or of any other amenity of the Property, damages arising from
any adverse impact on marketing of space in the Property, other consequential
damages and sums paid in settlement of claims, attorneys' fees, consultants'
fees and experts' fees) which arise during or after the term of this Lease as a
result of such contamination. This indemnification of Landlord by Tenant
includes, without limitation, costs incurred in connection with removal or
restoration work required by any governmental or regulatory agency or pursuant
to any settlement agreement or judgement because of the presence of Hazardous
Materials in the soil or groundwater in, on, about or under the Property or any
adjoining Property caused by Tenant and any and all legal fees and expenses
incurred by Landlord with respect to such claims, demands, investigation and
response.

Landlord shall defend, indemnify, and hold harmless from and against any and all
liability, loss, suits, claims, actions, costs and expense, including without
limitation, any attorney's fees, arising from any contamination of the Premises
or property (including the underlying land and ground water) by any Hazardous
Materials, where such contamination was not caused by Tenant. The provisions of
this paragraph shall survive the termination or expiration of this Lease.

         18.4. LANDLORD'S RIGHT OF ENTRY. If contamination of the Property by
Hazardous Materials occurs or if any lender or governmental agency requires an
investigation to determine whether there has been any contamination of the
Property or any adjoining property, then Landlord and its agents and
representatives shall have the right, at any reasonable time and from time to
time during the term of this Lease, with reasonable notice to enter upon the
Property to perform monitoring, testing or other analyses (provided Landlord
shall promptly restore the Premises), and to review any and all applicable
documents, notices, correspondence or other materials. All costs and expenses
reasonably incurred by Landlord in connection therewith shall become due and
payable by Tenant if such investigation conclusively determines that Tenant has
caused such contamination.

         18.5. DEFINITIONS. As used herein, the following terms shall have the
following meanings:

                18.5.1. "HAZARDOUS MATERIAL": shall mean, without limitation,
(1) petroleum or petroleum products; (2) hydrocarbon substances of any kind (3)
asbestos in any form; (4) formaldehyde; (5) radioactive substances; (6)
industrial solvents; (7) flammables; (8) explosives; (9) leakage from
underground storage tanks; (10) substances defined as "hazardous substances",
"hazardous materials", or "toxic substances" in (A) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 or as otherwise
amended, 42 U.S.C. Section 9601, et seg., (6) Hazardous Materials Transportation
Act, 49 U.S.C. Section 1801 et seg. and any amendments thereto, or (C) the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seg. and any
amendments thereto; (11) those substances defined as "hazardous wastes",
"extremely hazardous wastes" or "restricted hazardous wastes" in Sections 25115,
25117, and 25122.7 or listed pursuant to Section 25140 of the California Health
& Safety Code and any amendments thereto; (12) those substances defined as
"hazardous substances" in

                                       17

<PAGE>

Section 25316 of the California Health & Safety Code and any amendments thereto;
(13) those substances defined as "hazardous materials", "hazardous wastes" or
"hazardous substances" in Sections 25501 and 25501.1 of the California Health &
Safety Code and any amendments thereto; (14) those substances defined as
"hazardous substances" under Section 25281 of the California Health & Safety
Code and any amendments thereto; (15) those substances causing "pollution" or
"contamination" or constituting hazardous substances" within the meaning of (A)
the Clean Water Act, 33 U.S.C. 1251 et seg. and any amendments thereto, (B) the
Porter-Cologne Water Quality Control Act, Section 13050 of the California Water
Code and any amendments thereto, and (C) the Safe Drinking Water Act, 42 U.S.C.
Section 300f et seg.; (16) such chemicals as are identified on the list
published from time to time as provided in Chapter 6.6 of the California Health
and Safety Code, as amended, as causing cancer or reproductive toxicity; (17)
polychlorinated biphenyls (PCBs) set forth in the Federal Toxic Substance
Control Act, as amended, 15 U.S.C. Section 2601 et seg.; (18) "toxic air
contaminant" as defined in California Health and Safety Code Section 39655; and
(19) the wastes, substances, materials, contaminants and pollutants identified
pursuant to or set forth in the regulations adopted or judicial or
administrative orders, decisions or decrees promulgated pursuant to any of the
foregoing laws. The foregoing list of definitions and statutes is intended to be
Illustrative and not exhaustive and such list shall be deemed to include all
definitions, rules, regulations and laws applicable to the subject matter of
this paragraph as such rules, laws, regulations and definitions may be amended,
modified, or changes from time to time.

                18.5.2. "ENVIRONMENTAL HEALTH AND SAFETY REQUIREMENT" shall mean
any law, statute, ordinance, rule, regulation, order, judgment or decree
promulgated by any local, regional, state or federal governmental agency, court,
judicial or quasi-judicial body or legislative or quasi-legislative body which
relates to matters of the environment, health, industrial hygiene or safety.

         18.6. ALLOCATION OF RESPONSIBILITIES. ANY AND ALL LIABILITIES ARISING
FROM THE MANUFACTURING, GENERATION, HANDLING, USE STORAGE, TREATMENT,
TRANSPORTATION, DISPOSAL OR EXISTENCE OF HAZARDOUS MATERIALS IN, ON, UNDER OR
ABOUT THE PROPERTY OR ANY ADJOINING PROPERTY DURING THE TERM OF THIS LEASE BY
TENANT (INCLUSIVE OF ALL SUBTENANTS, ASSIGNEES, AGENTS, EMPLOYEES, INVITEES,
GUESTS, LICENSEES AND AFFILIATES OF TENANT), SHALL AT ALL TIMES REMAIN THE SOLE
RESPONSIBILITY OF TENANT AND TENANT SHALL RETAIN ANY AND ALL LIABILITIES ARISING
THEREFROM. NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THIS SECTION
18, ANY ACT BY LANDLORD OR ITS AGENTS OR REPRESENTATIVES HEREUNDER SHALL NOT
CONSTITUTE AN ASSUMPTION BY LANDLORD OF ANY OBLIGATIONS, DUTIES,
RESPONSIBILITIES OR LIABILITIES PERTAINING TO TENANT'S COMPLIANCE WITH ANY
ENVIRONMENTAL, HEALTH OR SAFETY REQUIREMENT, WHICH TENANT SHALL RETAIN UNDER ALL
CIRCUMSTANCES AND SHALL INDEMNIFY, DEFEND AND HOLD LANDLORD HARMLESS AS PROVIDED
HEREIN. FURTHER, NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THIS
SECTION 18 EVEN THOUGH HAZARDOUS MATERIALS REMOVED, TRANSPORTED AND DISPOSED OF
BY TENANT MAY ORIGINATE FROM THE PROPERTY, TENANT SHALL REMAIN FULLY LIABLE FOR
THEIR REMOVAL, TRANSPORTATION AND DISPOSAL AND SHALL INDEMNIFY, DEFEND AND HOLD
LANDLORD HARMLESS WITH RESPECT TO SUCH HAZARDOUS MATERIALS AS PROVIDED HEREIN.

         18.7. INSPECTIONS. Tenant warrants that all governmental inspections of
the Property as required under the laws referenced above will be permitted.
Tenant shall provide to Landlord a copy of the reports for each such inspection
within 15 days of Tenant's receipt of such reports. Except in instances when
governmental report of such inspection has been made within the last 12 month
period, but no more frequently than every 12 months, at Landlord's request,
Tenant shall obtain and deliver to Landlord an inspection by a private
engineering firm, resulting in a written report specifying Tenant's compliance,
or enumerating the reasons for Tenant's lack of compliance with such laws and
regulations. If Tenant is in violation as demonstrated by the report tenant
shall pay for the cost of the inspection and report. If Tenant is not in
violation as demonstrated by the report, Landlord will pay for the cost of the
inspection and report. Landlord may, from time to time, waive the requirements
of an inspection by a private engineering firm

                                       18

<PAGE>

if Tenant's use of the Property is limited solely to offices and administrative
uses.

           18.8. COOPERATION. Tenant shall comply with any reasonable procedures
or regulations promulgated by Landlord from time to time in connection with the
matters covered by such laws and regulations provided that such procedures and
regulations shall not unduly interfere with Tenant's business, and provided that
Landlord shall have no duty to establish any procedures or regulations or to
supervise in any way Tenant's activities on the Property.

           18.9. SURVIVAL. The covenants, agreements and indemnities of Landlord
and Tenant set forth in this section 18 shall survive the expiration or earlier
termination of this Lease and shall not be affected by any investigation, or
information obtained as a result of any investigation, by or on behalf of
Landlord or any prospective Tenant.

           18.10. STORAGE TANKS. Tenant further covenants and agrees that it
shall not install any storage tank (that being one requiring any agency's
permit), whether above or below the ground) on the Property without obtaining
the prior written consent of the Landlord, which consent may be conditioned upon
further requirements imposed by Landlord with respect to, among other things,
compliance by Tenant with any applicable laws, rules, regulations or ordinances
and safety measures or financial responsibility requirements.

           18.11. LIMITATION ON TENANT'S LIABILITY FOR HAZARDOUS MATERIALS.
Notwithstanding anything as may exist to the contrary in this paragraph 18 or
elsewhere in this lease, Tenant shall not be liable or otherwise responsible
for: (i) investigating, removing, remediating, cleaning up or otherwise
responding to any hazardous material or associated contamination (a) which was
present in, on, above, under or about the Premises, property or surrounding
environment prior to Tenant's occupancy of the Premises, or (b) which was not
brought onto the Premises, the property or surrounding environment by Tenant or
its agents, employees, representatives, contractors, invitees or subtenants; or
(ii) any claims, damages, penalties, fines, costs, liabilities, or losses
arising from any Hazardous Material or associated contamination (a) which was
present in, on, above, under or about the Premises, property or surrounding
environment prior to Tenant's occupancy of the Premises, or (b) which was not
brought onto the Premises, property or surrounding environment by Tenant or its
agents, employees, representatives, contractors, invitees or subtenants.

19. MISCELLANEOUS PROVISIONS.

         19.1. WAIVER. No waiver of any breach of any covenants or conditions of
this lease shall be construed to be a waiver of any other breach or to be a
consent to any further or succeeding breach of the same or other covenant or
condition. The acceptance of rent hereunder by Landlord after Tenant's breach
shall not be deemed to be a waiver of any preceding breach by Tenant of any
term, covenant or condition of this Lease, other than the failure of Tenant to
pay the particular rent so accepted, regardless of Landlord's knowledge of such
preceding breach at the time of acceptance of such rent.

         19.2. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall be binding upon and shall inure to the benefit of the
heirs, personal representatives, successors and assigns of the parties.

         19.3. NOTICES. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and either
personally delivered, sent by commercial delivery service that provides
confirmation of delivery, or sent by certified mail, return receipt requested,
postage prepaid, properly addressed to the other party at the address set forth
next to its signature below, or at such other address or addresses as may, from
time to time, be designated in like manner by one party to the other. Any such
notice shall be deemed given when personally delivered or on the date indicated
on the post office's certified mail receipt of delivery.

         19.4. PARTIAL INVALIDITY. If, for any reason, any provision of this
Lease shall

                                       19

<PAGE>

be determined to be invalid or inoperative, the validity and effect of the other
provisions of this lease shall not be affected.

         19.5. NUMBER AND GENDER. All terms of this lease shall be construed to
mean either the singular or the plural, masculine, feminine or neuter, as the
situation may demand.

         19.6. DESCRIPTIVE HEADINGS. The headings used herein and in any of the
documents annexed hereto as schedules, lists or exhibits are descriptive only
and for the convenience of identifying provisions, and are not determinative of
the meaning or effect of any such provision.

         19.7. TIME. In all matters, time is of the essence in the performance
of all obligations under this lease.

         19.8. ENTIRE AGREEMENT. This lease and the documents annexed hereto as
schedules, lists or exhibits, constitute the entire agreement and understanding
between the parties with respect to the subject matters addressed by this lease
and the said attachment, and supersede and replace any prior agreements and
understandings, whether oral or written, between and among them with respect to
the lease of the premises, rental therefor, use thereof and all other such
matters. The provisions of this lease may be waived, altered, amended or
repealed in whole or in part only upon the written consent of Landlord and
Tenant.

         19.9. MEMORANDUM OF LEASE. Landlord and Tenant mutually agree that they
will not file or record a copy of this lease, but that in the event either party
requests a recording, Landlord and Tenant shall execute and acknowledge a
memorandum of this lease in a form approved by the parties setting forth in said
memorandum the description of the premises, the date of the lease, the
commencement date and the date of termination. Said memorandum of lease may be
recorded in the recorder's office of the county in which the premises are
located.

         19.10. APPLICABLE LAW. This lease shall be construed and interpreted in
accordance with the laws of the State of California.

         19.11. AUTHORITY. Each individual executing this lease on behalf of a
corporation 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 of the corporation, and that this
lease is binding upon said corporation in accordance with its terms. Each
individual executing this lease on behalf of a partnership represents and
warrants that he is duly authorized to execute and deliver this lease on behalf
of the partnership and that this lease is binding upon said partnership in
accordance with its terms.

         19.12. LITIGATION EXPENSE. If any party shall bring an action or
arbitration proceeding against any other party hereto by reason of the breach of
any covenant, warranty, representation or condition hereof, or otherwise arising
out of this lease or any schedule, list or exhibit hereto, whether for
declaratory or other relief, the prevailing party in such suit shall be entitled
to such party's costs of suit and attorneys' fees, which shall be payable
whether or not such action is prosecuted to judgment.

         19.13. SUBORDINATION OF LESSEHOLD. This lease is and shall be at all
times, subject and subordinate to the lien of any mortgage or other encumbrances
which Landlord may create against the Property, including all renewals,
replacements and extensions. Tenant shall execute all written instruments which
may be required by Landlord to subordinate Tenant's rights to the lien of such
mortgage which obligation by Tenant is conditioned upon the holder of such lien
providing to Tenant a written subordination, non disturbance, and attornment
agreement, in a form reasonably acceptable to Tenant, providing, in essence,
that as long as Tenant is not in default under the provisions of this lease
(after notice and the expiration of any grace period provided for in the lease),
the lender will, in the event of a foreclosure, recognize the interest of Tenant
to remain in possession of the premises under the lease for the duration of the
unexpired term (and any extensions provided for in this lease). Landlord shall
use its best efforts to have all lenders currently secured by the Property to
provide Tenant with a non disturbance agreement within 30 days of the date this
lease is executed by

                                       20
<PAGE>

Landlord and Tenant.

         19.14. TENANT'S CERTIFICATE. Within 15 days following Landlord's
request, Tenant shall complete, execute and deliver to Landlord a Tenant's
certificate or estoppel certificate, setting forth any information reasonably
requested by Landlord, including, but not limited to, (a) certification that
this Lease is unmodified and in full force and effect (or if modified, stating
the nature of such modification and certifying that this Lease as so modified is
in full force and effect) and the date to which the rental and other charges are
paid in advance, if any, (b) acknowledgment that there are not, to Tenant's
knowledge, any uncured defaults on the part of Landlord hereunder, or specifying
such defaults, if any are claimed, and (c) setting forth the date of
commencement and expiration of the term. Tenant's failure to deliver such
certificate within said 15 days shall be deemed, for all purposes, to be an
acknowledgement that Landlord is not in default under the Lease, and that the
terms of the Lease have not been modified or supplemented in any way. It is
intended that such certificate may be relied upon by any prospective purchaser,
lender or assignee of any lender of the Premises.

         19.15. ATTORNMENT. In the event of any sale of the Premises or if
proceedings are brought for the foreclosure of, or in the event of exercise of
the power of sale under, any mortgage, installment land contract or deed of
trust made by Landlord covering the Premises, Tenant shall attorn to the
mortgage or the purchaser upon any such foreclosure or sale and recognize such
mortgagee or purchaser as Landlord under this Lease provided such party has
assumed in writing Landlord's obligations hereunder.

         19.16. LANDLORD'S ESTATE. Tenant shall look only to Landlord's estate
in the property of which the Premises are a part and the land on which it is
located for the satisfaction of Tenant's remedies, or for the collection of a
judgment (or other judicial process) requiring the payment of money by Landlord
in the event of any default by Landlord hereunder, and no other property or
assets of Landlord or its partners or principals, disclosed or undisclosed,
shall be subject to levy, execution or other enforcement procedure for the
satisfaction of Tenant's remedies under or with respect to this Lease, the
relationship of Landlord and Tenant hereunder, or Tenant's use or occupancy of
the Premises.

         19.17. COMPLIANCE WITH LENDER'S REQUESTS. Tenant agrees to consent to
reasonable amendments to this Lease from time to time as may be requested by any
current or future mortgagee or holder of other encumbrance which Landlord may
create against the Premises from time to time, provided that such amendments do
not materially affect Tenant's financial obligations or its occupancy and use
under this Lease or Landlord's obligations hereunder. Tenant agrees to timely
supply financial information as reasonably requested by Landlord for lender's
analysis of Tenant's financial condition as a condition of any encumbrance of
the property. Tenant shall not be obligated to deliver financial statements of
Tenant pursuant to Paragraph 19.17 more frequently than once every 12 months
during the term hereof.

         19.18. RESERVED.

         19.19. LANDLORD'S LIEN. Notwithstanding anything to the contrary,
Landlord waives any and all rights, title and interest Landlord now has, or
hereafter may have, whether statutory or otherwise, to Tenant's inventory,
equipment, furnishings, trade fixtures, books and records, and personal property
paid for by Tenant located at the Premises (singly and/or collectively, the
"Collateral"). Landlord acknowledges that Landlord has no lien, right, claim,
interest or title in or to the Collateral. Landlord further agrees that Tenant
shall have the right, at its discretion, to mortgage, pledge, hypothecate or
grant a security interest in the Collateral as security for its obligations
under any equipment lease or other financing arrangement related to the conduct
of Tenant's business at the Premises. Landlord further agrees to execute and
deliver within three (3) business days any UCC filing statement or other
documentation required to be executed by Landlord In connection with any such
lease or financing arrangement.

Notwithstanding the foregoing, all trade fixtures, signs, equipment, furniture,
or other personal property of whatever kind and nature kept or installed on the
Premises by Tenant shall not become the Property of Landlord or a part of the
realty no matter how

                                       21
<PAGE>

affixed to the Premises and may be removed by Tenant at any time and from time
to time during the entire term of this Lease. Upon request of Tenant or its
assignees or any subtenant, Landlord shall execute and deliver any real estate
consent or waiver forms submitted by any vendors, equipment lessors, chattel
mortgagees, or holders or owners of any trade fixtures, signs, equipment,
furniture, or other personal property of any kind and description kept or
installed on the Premises setting forth that Landlord waives, in favor of the
vendor, equipment lessor, chattel mortgagee, or any holder or owner, any
superior lien, claim, interest or other right therein. Landlord shall further
acknowledge that property covered by the consent or waiver forms is personal
property and is not to become a part of the realty no matter how affixed
thereto, and that such property may be removed from the Premises by the vendor,
equipment lessor, chattel mortgagee, owner, or holder at any time upon default
in the terms of such chattel mortgage or other similar documents, free and clear
of any claim or lien of Landlord. Tenant shall promptly repair any damage and
restore the portion of the Premises caused by the removal of such property,
whether effected by Tenant or Tenant's vendors, chattel mortgagees, or equipment
lessors.

           19.20. SUBMISSION OF LEASE. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of or an
option for lease, and it is not effective as a lease nor does it create any
obligation on Landlord's part until execution and delivery by both Landlord and
Tenant.

           19.21. ARBITRATION OF DISPUTES. IF ANY CONTROVERSY OR CLAIM BETWEEN
THE PARTIES HERETO ARISES OUT OF THIS AGREEMENT, SUCH CONTROVERSY OR CLAIM SHALL
BE SUBMITTED TO BINDING ARBITRATION. SUCH ARBITRATION SHALL BE CONDUCTED IN
ACCORDANCE WITH THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION, AND JUDGMENT
UPON THE AWARD ENTERED BY THE ARBITRATOR(S) MAY BE ENTERED IN ANY COURT HAVING
JURISDICTION THEREOF. THE PROVISIONS OF CALIFORNIA CODE OF CIVIL PROCEDURE
SECTION 1283.05 SHALL APPLY TO SUCH ARBITRATION. PUNITIVE DAMAGES SHALL NOT BE
CLAIMED, CONSIDERED OR AWARDED.

           NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY
DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES"
PROVISIONS DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU
ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A
COURT OF JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR
JUDICIAL RIGHTS TO DISCOVERY AND APPEAL UNLESS THOSE RIGHTS ARE SPECIFICALLY
INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO
ARBITRATION AFTER AGREEING TO THIS PROVISION YOU MAY BE COMPELLED TO ARBITRATE
UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO
THIS ARBITRATION PROVISION IS VOLUNTARY.

WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING
OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION TO
NEUTRAL ARBITRATION.

                 [SIG]                      [MPB]
                Initial                    Initial

         19.22. VENUE. Any action or arbitration brought to enforce or interpret
the provisions of this Agreement shall be venued in Alameda County, California.

         19.23. BROKERAGE. Tenant and Landlord represent that both sides have
been represented by CB Commercial, whose commission shall be paid by Landlord.

         19.24. PARKING. Tenant shall have nonexclusive rights to the use of
three (3) parking spaces per thousand usable square feet of Tenant's Premises
(defined as that portion of the Premises allocated to Tenant's exclusive use and
exclusive of any common area allocated to Tenant), at no additional charge.

                                       22

<PAGE>

         19.25. USE OF AMENITIES. Tenant shall have the right to an undivided
use of, and access to, all common area amenities associated with the property on
the same basis as provided to all tenants of the property.

         19.26. DAYS. All references in this Lease to days shall refer to
calendar days.

         19.27. STRUCTURAL AND ADA COMPLIANCE. As of the commencement date, the
construction to be performed by Landlord pursuant to paragraph 2.2 hereof and
all structural parts of the Premises and the property including, without
limitation, the foundation, roof, exterior walls, plumbing, electrical and other
mechanical systems (a) will meet and comply with all federal, state, and local
laws, ordinances and regulations and all handicapped accessibility standards,
including, without limitation, those promulgated under the Americans With
Disabilities Act, and (b) will be in good, workable and sanitary order,
condition, and repair.

           IN WITNESS WHEREOF, the parties have executed this Lease on the date
and year first above written.

            LANDLORD:                                    TENANT:

By:   [ILLEGIBLE SIGNATURE]                By:     /s/ M. P. Becket
        ------------------                        -------------------------
        Authorized Officer                        Authorized Officer - CFO

                                                   /s/ Michael P. Becket
        ------------------                        -------------------------

     Address for Notices:                         Address for Notices:

     1120 Nye Street, Suite 400                   10835 Altman Row #500
     San Rafael, CA 94901                         San Diego, CA  92121

     Date:                                        Date:   1/30/98
          ----------------------                       --------------------

                                       23
<PAGE>

                                ADDENDUM TO LEASE
                             DATED JANUARY 30, 1998
                                    BETWEEN
                      FIFTH & POTTER STREET ASSOCIATES LLC
                                      AND
                        DYNAVAX TECHNOLOGIES CORPORATION
                             FOR PREMISES LOCATED AT
                    717 POTTER STREET, BERKELEY, CALIFORNIA

         This Addendum to lease is attached to and forms a part of that certain
Triple Net Laboratory Lease dated January 30, 1998 ("Lease"), by and between
Fifth & Potter Street Associates LLC ("Landlord") and Dynavax Technologies
Corporation ("Tenant") for premises on the first floor of the building located
at 717 Potter Street, Berkeley, California. Words and terms that are defined in
the Lease shall have the same meaning in this Addendum as the meaning provided
in the Lease. In the event of any inconsistency between the terms of this
Addendum and the Lease, the terms of this Addendum shall control.

Section 1. Option to Term

      (a) Landlord hereby grants Tenant an option (the "Extension Option") to
extend the term of the Lease for one additional period of five (5) years,
commencing immediately after the expiration of the initial term, upon the same
terms and conditions contained in the Lease, except that (i) the base monthly
rent for the Premises shall be equal to ninety-five percent (95 percent) of the
fair market rent for the Premises determined in the manner set forth in
subparagraph (b) below, (ii) Tenant shall accept the Premises in an "as is"
condition without any obligation of landlord to repaint, remodel, repair,
improve or alter the Premises; and (iii) there shall be no further options to
extend the term of the Lease. The Extension Option shall be exercised, if at
all, by notice from Tenant to Landlord in writing given no less than twelve (12)
months prior to expiration for the initial term of the Lease. If Tenant properly
exercises the Extension Option, references in the Lease to the term shall be
deemed to include the option term unless the context clearly provides otherwise.
Notwithstanding anything to the contrary contained herein, if Tenant is in
default under any of the material terms, covenants or conditions of the lease,
at the time Tenant exercises the Extension Option, Landlord shall have, in
addition to all of Landlord's other rights and remedies provided in the Lease,
the right to terminate the Extension Option upon notice to Tenant, in which
event the expiration date of the Lease shall be and remain the expiration date
of the initial term.

      (b) If Tenant properly exercises the Extension Option, the base monthly
rent during the option term shall be determined in the following manner. The
base monthly rent shall be increased to an amount equal to ninety-five percent
(95 percent) of the fair market rent for the Premises as of the commencement of
the option term for a term equal to the option term, as specified by Landlord by
notice to Tenant not less than ninety (90) days prior to commencement of the
option term, subject to Tenant's right of arbitration as set forth below. If
Tenant believes that the fair market rent specified by Landlord exceeds the
actual fair market rent for the Premises as of commencement of the option term,
then Tenant shall so notify Landlord within thirty (30) days following receipt
of Landlord's notice. If Tenant fails to so notify. Landlord within said thirty
(30) day period, Landlord's determination of the fair market rent for the
premises shall be final and binding upon the parties. If the parties are unable
to agree upon the fair market rent for the premises within thirty (30) days
after Landlord's receipt of notice of Tenant's objection, the amount of base
monthly rent as of commencement of the option term shall be determined as
follows:

         (1) Within thirty (30) days after receipt of the Landlord's notice

<PAGE>
specifying fair market rent, Tenant, at its sole expense, shall obtain and
deliver in writing to Landlord a determination of the fair market basic rent for
the Premises for a term equal to the option term from a broker ("Tenant's
broker") licensed in the State of California and currently active in the market
for research laboratory space in the Berkeley/Emeryville area. If Landlord
accepts such determination, the base monthly rent for the option term shall be
increased to an amount equal to ninety-five percent (95%) of the amount
determined by Tenant's broker.

                  (2) If Landlord does not accept such determination, within ten
(10) days after receipt of the determination of Tenant's broker, Landlord shall
designate a broker ("Landlord's broker") licensed in the State of California and
currently active in the market for research laboratory space in the
Berkeley/Emeryville area. Landlord's broker and Tenant's broker shall name a
third broker, similarly qualified, within five (5) days after the appointment of
Landlord's broker. Each of said three brokers shall determine the fair market
rent for the Premises as of the commencement of the option term for a term equal
to the option term within twenty (20) days after the appointment of the third
broker. The base rent payable by Tenant effective as of the commencement of the
option term shall be increased to an amount equal to ninety-five percent of the
arithmetic average of such three determinations; provided, however, that if any
such broker's determination deviates more than 10% from the median of such
determinations, the base monthly rent payable shall be an amount equal to
ninety-five percent (95%) of the average of the two closest determinations.

                  (3) Landlord shall pay the costs and fees of Landlord's broker
in connection with any determination hereunder, and Tenant shall pay the costs
and fees of Tenant's broker in connection with such determination. The costs and
fees of any third broker shall be paid one-half by landlord and one-half by
Tenant.

         (c) If the amount of the fair market rent is not known as of the
commencement of the option term, then Tenant shall continue to pay the base
monthly rent in effect at the expiration of the initial term until the amount of
the fair market basic rent is determined. When such determination is made,
Tenant shall pay any deficiency to Landlord upon demand.

Section 2. Option to Expand

         (a) Subject to Tenant's payment of the Expansion Space Holding Cost as
provided for hereinbelow, Landlord hereby grants to Tenant an option (the
"Expansion Option") to lease the expansion area containing approximately 3,036
rentable square feet (which includes the adjustment provided for in Paragraph
2.1 of the Lease) as shown on Exhibit A to the Lease (the "Expansion Space").
The expansion Option shall be exercised, if at all, by notice from Tenant to
Landlord in writing within six (6) months of the commencement date of the term
of the Lease; provided, however, that if Tenant is in default under any of the
material terms, conditions or covenants of the Lease, either at the time Tenant
exercises, the Expansion Option or when Landlord delivers the Expansion Space,
Landlord shall have, in addition to the rights and remedies provided in the
Lease, the right to terminate the Expansion Option.

         (b) If Tenant elects to exercise the Expansion Option, Landlord shall
provide Tenant with an improvement allowance equal to $70.00 per usable square
foot of space in the Expansion Space, and the Expansion Space shall be built out
by landlord in accordance with the terms of Exhibit B to the Lease (with
appropriate changes to reflect build-out of the Expansion Space, as opposed to
the initial Premises). Landlord shall deliver possession of the Expansion Space
to Tenant for occupancy upon completion of the build-out of the Expansion Space;
but in no event later than 2 Months from Tenant's exercise of the Expansion
Option and, upon such delivery, the Expansion Space shall be deemed to be a part
of the Premises and shall be leased upon and subject to all of the terms,
covenants and conditions of, and at the base monthly rental rate provided for
in, the Lease; and

<PAGE>

the square footage of the Premises (which includes the adjustment provided for
in Paragraph 2.1 of the Lease) and Tenant's Pro Rata Share shall be
appropriately adjusted.

         (c) Landlord's grant of the Expansion Option is subject to and
conditioned upon Tenant's payment to Landlord of a monthly amount to hold the
Expansion Space off the market, said monthly amount being equal to $.83 per
rentable square foot of the Expansion Space (which includes the adjustment
provided for in Paragraph 2.1 of the Lease) plus Tenant's Pro Rata Share
attributable to the Expansion Space (collectively, the "Expansion Space Holding
Costs"), for the period from the commencement date of the Lease to the date
Tenant exercises its option for the Expansion Space or the date Tenant notifies
Landlord that Tenant elects to terminate the Expansion Option. Expansion Space
Holding Costs shall be payable monthly, in advance, in accordance with the terms
of, and as additional rent owing under, the Lease.

Section 3. Temporary Office Space

         From February 1, 1998, through the commencement date of the Lease (the
"Pre-Occupancy Period"), Landlord (or an affiliate of Landlord) shall provide
Tenant with approximately 300 square feet of space on the first floor of the
building located at 800 Heinz Street, Berkeley, California, for use by three (3)
employees of Tenant (the "Temporary Space"). Tenant shall take the Temporary
Space on an "As-Is" basis. Monthly rent for the Temporary Space shall be $275
per month fully serviced from lease execution through occupancy of the finished
spaces, payable on the first day of each month during the Pre-Occupancy Period.
Tenant's occupancy of the Temporary Space shall be on all of the terms and
conditions as specified in the Lease for Tenant's Occupancy of the Premises; and
prior to Tenant's occupancy of the Temporary Space, Tenant shall deliver to
Landlord certificates of Tenant's liability insurance coverage for the Temporary
space showing Landlord (and the owner of the building, if other than Landlord)
as an additional insured thereunder.

Section 4. Accommodation of Tenant's Additional Space Requirement

         In the event that Tenant exercises the Expansion Option and occupies
the Expansion Space as provided in Section 2 above, Tenant shall thereafter have
the following additional expansion right:

         (a) On or before the second anniversary of the commencement date of the
Lease, Tenant may notify Landlord in writing (the "Additional Expansion Notice")
that Tenant desires to lease additional space for its business operations.
Tenant shall specify in said Additional Expansion Notice the amount of
additional space that Tenant needs (the "Additional Space Requirement");
provided, however, that Tenant must specify an Additional Space Requirement of
not less than 5,000 square feet.

         (b) If Tenant delivers the Additional Expansion Notice to Landlord,
during the six (6) month period from the 25th month to the 30th month of the
term of the Lease, Landlord shall attempt to make available to Tenant sufficient
space to satisfy the Additional Space Requirement either within the Building or
within another generally comparable building in the Emeryville/Berkeley area
that is owned or operated by Wareham Property Group, Inc. or an affiliate
thereof (collectively, "Wareham").

         (c) If the Additional Space Requirement can be satisfied within said
six (6) month period, Landlord or Wareham, as the case may be, shall offer such
space for lease to Tenant on such terms and conditions as are then currently
being quoted by Landlord or Wareham for such space, including, without
limitation, rental rates, term and tenant improvement allowance. Tenant shall
accept or reject any such offer within five (5) business days after receipt
thereof.

<PAGE>

         (d) If such an offer for the Additional Space Requirement is made to
Tenant within said six (6) month period and Tenant does not accept such offer,
Tenant's rights under this Section 4 shall terminate, Tenant shall have no
further right with respect to the Additional Space Requirement, and the Lease
shall remain in full force and effect.

         (e) If such an offer for the Additional Space Requirement is not made
to Tenant within said six (6) month period, Tenant shall have the right to
terminate this Lease upon the following conditions:

                  (i) Tenant must notify Landlord of such termination within
ninety (90) days after the expiration of such six (6) month period.

                  (ii) In the event Tenant so notifies Landlord of such
termination, the Lease shall terminate within ninety (90) days after Landlord's
receipt of such notice.

                  (iii) In the event Tenant fails to so notify Landlord of such
termination, Tenant's right to terminate the Lease shall expire and the Lease
shall remain in full force and effect.

         (f) Notwithstanding anything set forth hereinabove, if Tenant is in
default of any of the material terms, conditions or covenants of the Lease at
the time Tenant delivers the Additional Expansion Notice, Landlord shall have,
in addition to the rights and remedies provided in the Lease, the right to
terminate all of Tenants rights under this Section 4 with respect to the
Additional Space Requirement, including, without limitation, any right to
terminate the lease pursuant to subparagraph (e) above.

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

TENANT:                              LANDLORD:

Dynavax Technologies Corporation,    Fifth & Potter Street Associates LLC,
a California Corporation             a California Limited Liability Company

By  /s/ M.P. Becket                   By  [ILLEGIBLE]
   ------------------------------         -----------------------------------

Its:    CFO                           Its:
     ----------------------------          ----------------------------------

<PAGE>

                                   EXHIBIT A

                                  [FLOOR PLAN]

<PAGE>

                                    Exhibit B

                                   Work Letter
                        Initial Improvement of Premises

1. Tenant Improvements

         Prior to the Commencement Date, at its sole cost and expense, Landlord,
through Its General Contractor, shall furnish and install within the Premises
those items of general construction (the "Tenant Improvements") shown on the
plans and specifications finally approved by Landlord and Tenant in writing
pursuant to Paragraph 5 below. Such construction shall be performed in a good
and workmanlike manner and in compliance with all applicable codes and
regulations ("Code Requirements").

2. Cost of the Improvements

         (a) Based upon a Tenant Improvement build out that is approximately
50% office and 50% laboratory, and substantially the same in function and
finish as the Bayer Laboratories build-out on the second floor of the Building,
Landlord will construct the Tenant Improvements on a turnkey basis.

         (b) If there is a material change to the functions or finish of the
Tenant Improvements to be constructed in the Premises from that described in
subparagraph (a), based upon the Final Plans and Specifications approved by
Tenant, or if Tenant requests any changes after approval of the Final Plans and
Specifications, the cost thereof shall be the responsibility of Tenant to the
extent the cost exceeds the cost of the initial plans and specs.

3. Plans and Specifications

         (a) Landlord, at its cost, through its architects, shall furnish all
architectural and engineering plans and specifications (the "Plans and
Specifications") required for the construction of the Tenant Improvements.
Tenant shall provide instruction to Landlord's architects sufficient to enable
landlord's architects to complete Plans and Specifications in accordance with
Paragraph 5 below. All Plans and Specifications are subject to Landlord's
approval, which Landlord agrees shall not be unreasonably withheld. Tenant
reserves the right to review and approve final plans.

         (b) Any architectural or engineering services for Tenant's Work
referred to in Paragraph 4 below or interior design services in excess of
Building standards, such as selection for colors, furnishings or floor coverings
shall be at Tenant's sole cost.

4. Tenant's Work

         Any items or work not shown in the Final Plans and Specifications
approved as provided in Paragraph 5, including, for example, telephone or
telecommunications service or furnishings, for which Tenant contracts separately
(hereinafter) "Tenant Work"), shall be subject to Landlord's reasonable policies
and schedules and shall be conducted in such a way as not to hinder, cause any
disharmony with or unreasonable or substantial. delay work of improvement in the
Building. Tenant's major suppliers, contractors, workmen and mechanics shall be
subject to approval by Landlord not to be unreasonably withheld prior to the
commencement of their work and shall be subject to Landlord's administrative
control while performing their work. Tenant shall cause its suppliers and

<PAGE>

contractors to engage only labor that is harmonious and compatible with other
labor working in the Building. In the event of any labor disturbance caused by
persons employed by Tenant or Tenant's contractor, Tenant shall immediately take
all actions necessary to eliminate such disturbance. At any time any supplier,
contractor, workmen or mechanic performing Tenant's work hinders or delays any
other work of improvement in the Building or performs any work which may or does
substantially impair the quality, integrity or performance or any portion of the
Building, Tenant shall cause such supplier, contractor, workman or mechanic to
leave the Building and remove all his tools, equipment and materials immediately
upon written notice delivered to Tenant and Tenant shall reimburse Landlord for
any repairs or corrections of the Tenant Improvements or Tenant's work or of any
portion of the Building caused by or resulting from the work of any supplier,
contractor, workman or mechanic with whom Tenant contracts.

5. Approval of Plans and Specifications

         Landlord's architect, in consultation with Tenant, shall prepare a
space plan for the build-out of the Premises consistent with the standard of
improvement described in Paragraph 2 (a) above. Such space plan must be
finalized and approved by Landlord and Tenant no later than January 30, 1998.
Tenant will have at least five (5) business days to approve plans and any
subsequent revision. Thereafter, Landlord's architect will prepare working
drawings for the Tenant Improvements based upon the approved space plan, and the
same shall be submitted to Tenant. Tenant shall approve such Plans and
Specifications within five (5) business days of receipt or designate by written
notice to Landlord the specific changes required to be made to the Plans and
Specifications, which changes, if approved by landlord, shall be made by
Landlord as soon as reasonably possible. This procedure shall be repeated until
the Plans and Specifications are finally approved by Tenant (the "Final Plans
and Specifications");

6. Completion and Commencement Date

         The term of the Lease and Tenant's obligation for the payment of rent
under the Lease shall commence in accordance with Paragraph 1.1 of the Lease.
The parties acknowledge and agree that the anticipated commencement date is
March 30, 1998. If Landlord shall be delayed in substantially completing the
Tenant Improvements as a result of:

         (a) Tenant's failure to timely furnish complete instructions or
approvals in accordance with the procedures set forth in Paragraph 5, or

         (b) Tenant's changes to Final Plans and Specifications after final
approval thereof, or

         (c) Tenant's request for materials, finishes, or installations other
than as described in Paragraph 2 (a) above, or

         (d) Hindrance or disruption of work of Landlord's contractor resulting
from Tenant's Work.

then the commencement date of the Lease and Tenant's obligation for the payment
of rent shall be advanced by the number of days of such delay offset by the
number of days attributable to Landlord Delays.

<PAGE>

7. Payment

         Tenant shall pay to landlord as additional rent all amounts due under
the terms of this Exhibit B within twenty (20) days following delivery of
Landlord's invoice, therefore, which invoices shall be rendered monthly or at
such other intervals as Landlord shall determine.

8. Tenant's Representative

         Mike Becket shall act as Tenant's representative in all matters to be
covered by this Work Letter. Such representative shall act on behalf of Tenant
in connection with the issuance of any approvals or disapproval$ to be made or
given by Tenant under the terms of this Work Letter and the making of any other
communications required or permitted under the terms of this Work Letter.
Landlord shall be entitled to rely upon any approval or disapproval issued, or
other communication made, by Tenant's representative.

<PAGE>

                       SECOND AMENDMENT TO LEASE AGREEMENT

         THIS SECOND AMENDMENT TO LEASE AGREEMENT (the "Amendment") is made and
entered into as of the 7th day of January 2004, by and between Fifth and Potter
Street Associates, LLC, a California limited liability company ("Landlord"), and
Dynavax Technologies Corporation, a Delaware corporation ("Tenant").

                                    RECITALS

A.       Landlord and Tenant are parties to that certain triple net laboratory
         lease dated January 30, 1998, as amended by instruments dated October
         26, 1998, and July 1, 1999 (collectively, the "Lease"). Pursuant to the
         Lease, Landlord has leased to Tenant premises consisting of
         approximately 11,539 rentable square feet as more particularly
         described in the Lease in the building located at 717 Potter Street,
         Berkeley, California (the "Premises").

B.       Tenant and Landlord mutually desire that the Lease be amended on and
         subject to the following terms and conditions.

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant agree as
follows:

1.       Scope of Amendment and Defined Terms. Except as expressly provided in
this Amendment, the Lease shall remain in full force and effect. Except as
expressly provided in this Amendment, the term "Lease" shall mean the Lease as
modified by this Amendment. Capitalized terms used in this Amendment and not
otherwise defined herein shall have the respective meanings set forth in the
Lease

2.       Option to Terminate Lease Liability. An option to terminate Tenant's
liability under the Lease is hereby added to the Lease as follows:

         (a)      Tenant shall have the option to terminate its liability under
the Lease prior to the expiration of the term ("Termination Option"), if
Landlord receives notice of termination ("Termination Notice") specifying the
accelerated liability termination date of the Lease (the "Accelerated Liability
Termination Date") within 15 days of the date Tenant enters into an agreement
with 2929 Seventh Street, L.L.C., to lease Suite 100 within the building located
at 2929 Seventh Street, Berkeley, California (the "Suite 100 Lease").

         (b)      If Tenant exercises its Termination Option, Tenant,
simultaneously with delivery of the executed version of the Termination Document
(as hereinafter defined) shall pay to Landlord the sum of $300,000.00 (the
"Termination Fee") as a fee in connection with the Termination Option and not as
a penalty. Tenant shall remain liable for all Base Monthly Rent, Additional Rent
and other sums due under the Lease up to and including the Accelerated Liability
Termination Date even though billings for such may occur subsequent to the
Accelerated Liability Termination Date.

<PAGE>

         (c)      Landlord and Tenant shall execute a commercially reasonable
document (the "Termination Document") to effect the termination of Tenant's
liability under the Lease within 15 days of Tenant receiving such document from
Landlord. Tenant acknowledges and agrees that the termination of Tenant's
liability shall not be effective until Tenant has executed the Termination
Document. At Landlord's option, the Termination Document shall be either in the
form of an agreement terminating the Lease as of the Accelerated Liability
Termination Date or in the form of an assignment agreement assigning Tenant's
interest in the Lease to an entity designated by Landlord as of the Accelerated
Liability Termination Date. If Landlord chooses the form of an assignment
agreement, the term of the Lease shall continue beyond the Accelerated Liability
Termination Date; however, Tenant shall be released from all Rent obligations
under the Lease (whether such obligations arise before or after the Accelerated
Liability Termination Date) and from all liability accruing under the Lease on
and after the Accelerated Liability Termination Date. Tenant acknowledges that,
in the event Landlord chooses to use an assignment agreement, all Rent due under
the Lease shall be abated after the Accelerated Liability Termination Date.

         (d)      Notwithstanding anything to the contrary herein, the
Termination Option shall automatically terminate without notice and shall be of
no further force and effect, whether or not Tenant has timely exercised such
option, if Tenant is in default under the Lease (beyond applicable notice and
cure periods) at the time of exercise of the Termination Option or on the
Accelerated Liability Termination Date.

         (e)      As of the date Tenant provides Landlord with a Termination
Notice, any unexercised rights or options of Tenant to renew the term of the
Lease or to expand the Premises (whether expansion options, rights of first or
second refusal, rights of first or second offer, or other similar rights), shall
immediately be deemed terminated and no longer available or of any further force
or effect.

         (f)      If Landlord enters into an agreement with a third-party tenant
to lease the Premises, and such tenant commences paying rent under such
agreement (the "New Tenant Rent") prior to the date that is 6 months after the
Accelerated Liability Termination Date (the "Rent Reimbursement Date"), Landlord
shall reimburse Tenant a portion of the Termination Fee equal to the amount of
New Tenant Rent Landlord receives prior to the Rent Reimbursement Date. Landlord
shall submit such reimbursement to Tenant within 30 days of the Rent
Reimbursement Date.

3.       Option to Extend Term. Section 3.3 of the Lease, Option to Extend Term,
is hereby deleted and replaced with the following:

         (a)      If, on or before May 31, 2004, Tenant has not entered into the
Suite 100 Lease, then Tenant shall have an option to extend the term of the
Lease for one additional period of five (5) years (the "Option Term"),
commencing June 1, 2008, upon the same material terms and conditions contained
herein, except that (i) the Base Monthly Rent during the then-remaining initial
term (as of the date the option is exercised) and the Option Term shall be
$2.875 per rentable square foot of the Premises (i.e., $33,174.63 per month),
(ii) Tenant shall accept the Premises in an "as is" condition without any
obligation of Landlord to repaint, remodel, repair, improve or alter the
Premises, (iii) Tenant shall have an option to terminate the term of the Lease

<PAGE>

as set forth below, and (iv) there shall be no further options to extend the
term of the Lease. Tenant's election to exercise the option granted herein must
be given to Landlord in writing on or before December 31, 2004. If Tenant
properly exercises the option granted herein, references in the Lease to the
term shall be deemed to mean the then-remaining initial term plus the Option
Term unless the context clearly provides otherwise. Notwithstanding anything to
the contrary contained, herein, all option rights of Tenant pursuant to this
Section 3 shall automatically terminate without notice and shall be of no
further force and effect, whether or not Tenant has timely exercised the option
granted herein, if (i) a default (beyond applicable notice and cure periods)
exists at the time of exercise of the option or at the time of commencement of
the Option Term, or (ii) Landlord has given Tenant two or more notices
respecting a default during the initial term of the Lease, whether or not the
default is subsequently cured.

         (b)      Tenant shall have the option to terminate the Lease during the
Option Term on the following terms and conditions:

                  (i)      Tenant shall have the option to terminate the Lease
("Termination Option") as of December 1, 2010 (the "Accelerated Expiration
Date"), if:

                           A.       Tenant is not in default (beyond applicable
notice and cure periods) under the Lease at the date Tenant provides Landlord
with an Acceleration Notice (hereinafter defined); and

                           B.       Landlord receives notice of acceleration
("Acceleration Notice") on or before December 1, 2009.

                  (ii)     Tenant shall remain liable for all Monthly Base Rent,
Additional Rent and other sums due under the Lease up to and including the
Accelerated Expiration Date even though billings for such may occur subsequent
to the Accelerated Expiration Date.

                  (iii)    Notwithstanding anything to the contrary herein, the
Termination Option shall automatically terminate without notice and shall be of
no further force and effect, whether or not Tenant has timely exercised such
option, if a default (beyond applicable notice and cure periods) exists at the
time of exercise of the Termination Option or on the Accelerated Expiration
Date.

                  (iv)     As of the date Tenant provides Landlord with an
Acceleration Notice, any unexercised rights or options of Tenant to renew the
Term of the Lease or to expand the Premises (whether expansion options, rights
of first or second refusal, rights of first or second offer, or other similar
rights), shall immediately be deemed terminated and no longer available or of
any further force or effect.

4.       Option to Expand. Section 2.4 of the Lease, Option to Expand, is hereby
deleted and shall be of no further force or effect.

5.       Brokers. Tenant hereby represents to Landlord that Tenant has dealt
with no broker in connection with this Amendment. Tenant agrees to indemnify and
hold Landlord, its trustees, members, principals, beneficiaries, partners,
officers, directors, employees, mortgagee(s) and agents, and the respective
principals and members of any such agents (collectively, the

<PAGE>

"Landlord Related Parties") harmless from all claims of any brokers claiming to
have represented Tenant in connection with this Amendment. Landlord hereby
represents to Tenant that Landlord has dealt with no broker in connection with
this Amendment. Landlord agrees to indemnify and hold Tenant, its trustees,
members, principals, beneficiaries, partners, officers, directors, employees,
and agents, and the respective principals and members of any such agents
(collectively, the "Tenant Related Parties") harmless from all claims of any
brokers, claiming to have represented Landlord in connection with this
Amendment.

6.       Waiver. No failure or delay by a party to insist upon the strict
performance of any term, condition or covenant of this Amendment, or to exercise
any right, power or remedy hereunder shall constitute a waiver of the same or
any other term of this Amendment or preclude such party from enforcing or
exercising the same or any such other term, conditions, covenant, right, power
or remedy at any later time.

7.       Full Force and Effect. Except as herein modified or amended, the
provisions, conditions and terms of the Lease shall remain unchanged and in full
force and effect. In the case of any inconsistency between the provisions of the
Lease and this Amendment, the provisions of this Amendment shall govern and
control.

8.       California Law. This Amendment shall be construed and governed by the
laws of the State of California.

9.       Authority. This Amendment shall be binding upon and inure to the
benefit of the parties, their respective heirs, legal representatives,
successors and assigns. Each party hereto and the persons signing below warrant
that the person signing below on such party's behalf is authorized to do so and
to bind such party to the terms of this Amendment.

10.      Attorneys' Fees and Costs. In the event of any action at law or in
equity between the parties to enforce any of the provisions hereof, any
unsuccessful party to such litigation shall pay to the successful party all
costs and expenses, including reasonable attorneys' fees (including costs and
expenses incurred in connection with all appeals) incurred by the successful
party, and these costs, expenses and attorneys' fees may be included in and as
part of the judgment. A successful party shall be any party who is entitled to
recover its costs of suit, whether or not the suit proceeds to final judgment.

11.      Entire Agreement; No Amendment. This Amendment constitutes the entire
agreement and understanding between the parties with respect to the subject of
this amendment and shall supersede all prior written and oral agreements
concerning this subject matter. This Amendment may not be amended, modified or
otherwise changed in any respect whatsoever except by a writing duly executed by
authorized representatives of Landlord and Tenant. Each party acknowledges that
it has read this Amendment, fully understands all of this Amendment's terms and
conditions, and executes this Amendment freely, voluntarily and with full
knowledge of its significance. This Amendment is entered into by the parties
with and upon advice of counsel.

12.      Severability. If any provision of this Amendment or the application
thereof to any person or circumstances shall be invalid or unenforceable to any
extent, the remainder of this Amendment and the application of such provision to
other persons or circumstances, other than

<PAGE>

those to which it is held invalid, shall not be affected and shall be enforced
to the furthest extent permitted by law.

13.      Counterparts. This Amendment may be executed in counterparts, and such
counterparts together shall constitute but one original of the Amendment. Each
counterpart shall be equally admissible in evidence, and each original shall
fully bind each party who has executed it.

14.      Agreement to Perform Necessary Acts. Each party agrees that upon
demand, it shall promptly perform all further acts and execute, acknowledge, and
deliver all further instructions, instruments and documents which may be
reasonably necessary or useful to carry out the provisions of this Amendment.

15.      Captions and Headings. The titles or headings of the various paragraphs
hereof are intended solely for convenience of reference and are not intended and
shall not be deemed to modify, explain or place any construction upon any of the
provisions of this Amendment.

                      [SIGNATURES APPEAR ON FOLLOWING PAGE]

<PAGE>

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

                             LANDLORD:   FIFTH AND POTTER STREET ASSOCIATION,
                                         a California limited liability company

                                         By:     /s/ Richard K. Robins
                                                _______________________________
                                                Richard K. Robbins
                                                Managing Member

                             TENANT:     DYNAVAX TECHNOLOGIES CORPORATION,
                                         a Delaware corporation

                                         By:     /s/ Dino Dina
                                                _______________________________
                                                 Dino Dina, M.D.
                                                 President and Chief
                                                 Executive Officer

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