Document:

<PAGE>

                                                                 EXHIBIT 10.61

                       SECOND AMENDMENT TO FOURTH AMENDED
                           AND RESTATED LOAN AGREEMENT

     This Second Amendment to Fourth Amended and Restated Loan Agreement, dated
as of December 29, 2000, by and between Citizens Bank of Massachusetts (herein
"BANK"), and The J. Jill Group, Inc., a Delaware corporation, formerly DM
Management Company (herein "BORROWER").

                                   WITNESSETH:

     WHEREAS, BANK and BORROWER are parties to that certain Fourth Amended and
Restated Loan Agreement made as of August 7, 2000, as affected by First
Amendment to Fourth Amended and Restated Loan Agreement dated as of September
22, 2000 by and between BANK and BORROWER (collectively, the "Loan Agreement");
and

     WHEREAS, BORROWER and the BANK wish to amend the Loan Agreement as more
particularly hereafter set forth. Capitalized terms used herein without
definition shall have the meanings ascribed to them in the Loan Agreement.

     NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereby agree that the Loan Agreement is hereby amended as
follows:

     1. Section 11.15 of the Loan Agreement is hereby deleted in its entirety
        and the following is substituted therefor:

                    "11.15 Without obtaining the BANK'S prior written consent,
               the BORROWER shall not permit capital expenditures (net of tenant
               allowances) for the twelve (12) month period ending December 31,
               2000 to exceed Twenty Million Dollars ($20,000,000)."

        This Amendment shall take effect as of the date first above written.

        Except as hereby amended, the Loan Agreement is hereby ratified,
confirmed and republished.

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have set their hands and seals as of
the date first above written.

Witness:                               THE J. JILL GROUP, INC.

/s/ DAVID ANDREWS                      By: /s/ PETER J. TULP
-----------------------                    -------------------------------------
                                       Name: Peter J. Tulp
                                             -----------------------------------
                                       Title: CORPORATE CONTROLLER/VP FINANCE
                                              ----------------------------------

Witness:                               CITIZENS BANK OF MASSACHUSETTS

/s/ MARYALICE TROTTIER                 By: /s/ LORI B. LEETH SVP
----------------------                     -------------------------------------
                                           Lori B. Leeth, Senior Vice President<PAGE>

                                                                  Exhibit 10.31

                            BRISBANE TECHNOLOGY PARK

                                      LEASE

                                 by and between

              GAL-BRISBANE, L.P., a California limited partnership

                                  as Landlord,

                                       and

             INTERMUNE PHARMACEUTICALS, INC., a Delaware corporation

                                    as Tenant

<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
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                                                                             ----
<S>                                                                         <C>
1.       PREMISES.............................................................1

         (a)      Leased Premises ............................................1
         (b)      Project Common Areas .......................................2

2.       LEASE TERM...........................................................2

         (a)      Term .......................................................2
         (b)      Commencement Date; Delivery Dates...........................3
         (c)      Tenant's Access ............................................3
         (d)      Failure to Deliver Possession ..............................3

3.       RENT.................................................................3

         (a)      Base Rent...................................................4
         (b)      Additional Rent ............................................4
         (c)      Prorations.   ..............................................4

4.       CONDITION OF PREMISES................................................4

5.       USE..................................................................5

         (a)      Tenant's Use ...............................................5
         (b)      Compliance with Laws and Project Rules and Regulations......5
         (c)      Hazardous Materials.........................................6

6.       ASSIGNMENT AND SUBLETTING............................................7

         (a)      Landlord's Consent.   ......................................7
         (b)      Transferee Form.   .........................................8
         (c)      No Waiver.   ...............................................8
         (d)      Information to be Furnished.   .............................8
         (e)      Landlord's Alternatives ....................................8
         (f)      Permitted Transfer .........................................9
         (g)      Executed Counterpart.   ....................................9
         (h)      Definitions ...............................................10

7.       ALTERATIONS.........................................................10

         (a)      Consent to Alterations ....................................10
         (b)      General Conditions for Alterations ........................10
         (c)      Notice and Liens ..........................................11

</TABLE>

                                       i
<PAGE>

                              TABLE OF CONTENTS
                                  (continued)

<TABLE>
<CAPTION>
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         (d)      Removal of Alterations ....................................11
         (e)      Maintenance of Alterations ................................11

8.       REPAIR AND MAINTENANCE..............................................11

         (a)      Landlord ..................................................12
         (b)      Tenant ....................................................12
         (c)      Waiver ....................................................12

9.       UTILITIES AND SERVICES..............................................12

         (a)      Tenant's Obligations ......................................13
         (b)      Tenant to Pay Share of Expenses ...........................13

10.      REAL PROPERTY TAXES.................................................13

         (a)      Payment by Tenant .........................................13
         (b)      Real Property Taxes .......................................13
         (c)      Tax on Improvements .......................................14
         (d)      Proration .................................................14
         (e)      Personal Property Taxes ...................................14

11.      INSURANCE...........................................................14

         (a)      Indemnification............................................14
         (b)      Tenant's Insurance ........................................14
         (c)      Landlord's Insurance ......................................15
         (d)      Certificates ..............................................16
         (e)      Increased Coverage ........................................16
         (f)      Co-Insurer ................................................16
         (g)      Insurance Requirements ....................................16
         (h)      Landlord's Disclaimer .....................................16
         (i)      Waiver of Subrogation .....................................17

12.      ADDITIONAL RENT.....................................................17

         (a)      Payment ...................................................17
         (b)      Tenant's Project Percentage ...............................17
         (c)      Definition of Operating Expenses ..........................17
         (d)      Estimates .................................................18
         (e)      Annual Adjustment .........................................19
         (f)      Arbitration ...............................................19

</TABLE>

                                       ii
<PAGE>

                              TABLE OF CONTENTS
                                  (continued)

<TABLE>
<CAPTION>
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                                                                             ----
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13.      DAMAGE OR DESTRUCTION...............................................20

         (a)      Landlord's Obligation to Rebuild ..........................20
         (b)      Landlord's Right to Terminate .............................20
         (c)      Tenant's Right to Terminate ...............................20
         (d)      Limited Obligation to Repair ..............................21
         (e)      Abatement of Rent .........................................21
         (f)      Damage Near End of Lease Term .............................21
         (g)      Landlord's Determinations .................................21

14.      NOTICES.............................................................21

15.      DEFAULT.............................................................22

         (a)      Tenant's Default ..........................................22
         (b)      Remedies ..................................................23
         (c)      Late Charges ..............................................24
         (d)      Landlord's Default ........................................25

16.      SURRENDER OF THE PREMISES...........................................25

         (a)      Condition upon Surrender ..................................25
         (b)      Removal of Alterations ....................................25
         (c)      Indemnification of Landlord ...............................25

17.      ATTORNEYS' FEES.....................................................26

18.      LIENS...............................................................26

19.      SUBORDINATION.......................................................26

         (a)      Documentation .............................................27
         (b)      Attornment ................................................27

20.      MORTGAGEE PROTECTION................................................27

21.      CONDEMNATION........................................................27

         (a)      Total Taking - Termination ................................27
         (b)      Partial Taking ............................................28

</TABLE>

                                       iii
<PAGE>

                              TABLE OF CONTENTS
                                  (continued)

<TABLE>
<CAPTION>
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                                                                             ----
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         (c)      No Apportionment of Award .................................28
         (d)      Temporary Taking ..........................................28
         (e)      Sale Under Threat of Condemnation .........................28

22.      HOLDING OVER........................................................28

23.      ENTRY BY LANDLORD...................................................29

24.      ESTOPPEL CERTIFICATES; INFORMATION..................................29

         (a)      Estoppel Certificates .....................................29
         (b)      Financial Statements ......................................30

25.      TRANSFER OF THE PREMISES BY LANDLORD................................30

26.      LANDLORD'S RIGHT TO PERFORM TENANT'S COVENANTS......................30

27.      TENANT'S REMEDY.....................................................31

28.      SECURITY............................................................31

         (a)      Cash Security Deposit .....................................31
         (b)      Letter of Credit ..........................................31
         (c)      Reduction of Security Deposit .............................32

29.      FINANCIAL COVENANTS.................................................32

30.      PARKING.............................................................32

31.      QUIET ENJOYMENT.....................................................33

32.      SIGNS...............................................................33

33.      ACCEPTANCE..........................................................34

34.      RECORDING; QUITCLAIM................................................34

</TABLE>

                                       iv
<PAGE>

                              TABLE OF CONTENTS
                                  (continued)

<TABLE>
<CAPTION>
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35.      BROKERS.............................................................34

36.      GENERAL.............................................................34

         (a)      Captions ..................................................34
         (b)      Executed Copy; Counterparts ...............................35
         (c)      Severability ..............................................35
         (d)      Construction; Choice of Law ...............................35
         (e)      Gender; Singular, Plural ..................................35
         (f)      Binding Effect ............................................35
         (g)      Waiver ....................................................35
         (h)      Entire Agreement ..........................................35
         (i)      Authority .................................................35
         (j)      Exhibits ..................................................36
         (k)      Lease Summary .............................................36
         (l)      Survival ..................................................36
         (m)      Time ......................................................36
         (n)      No Jury Trial .............................................36
         (o)      Shuttle Program. ..........................................36
         (p)      Generator .................................................36

</TABLE>

                                        v
<PAGE>

                                LIST OF EXHIBITS

EXHIBIT A                  DIAGRAM OF BUILDING
EXHIBIT A-1                DESCRIPTION OF YARD AREA
EXHIBIT B                  PLAT AND LEGAL DESCRIPTION OF PROJECT
EXHIBIT C                  WORK LETTER AGREEMENT
EXHIBIT D                  COMMENCEMENT DATE MEMORANDUM
EXHIBIT E                  PROJECT RULES AND REGULATIONS
EXHIBIT F                  SIGNAGE
EXHIBIT G                  LETTER OF CREDIT
EXHIBIT H                  FORM OF SUBORDINATION, NON-DISTURBANCE AND
                           ATTORNMENT AGREEMENT
EXHIBIT I                  FORM OF TENANT ESTOPPEL
EXHIBIT J                  EXCLUSIVE USE PARKING SPACES

                                       i

<PAGE>

                                  LEASE SUMMARY

Lease Date:                         December 18, 2000

Landlord:                           GAL-BRISBANE, L.P., a California limited
                                    partnership

Landlord's Address:                 c/o Stuhlmuller Property Company
                                    4055 Bohannon Drive
                                    Menlo Park, CA  94025
                                    Attn:  Mr. Roger Stuhlmuller
                                    Telephone:  (650) 321-5900
                                    Fax No.:  (650) 321-5933

Tenant:                             INTERMUNE PHARMACEUTICALS, INC.,
                                    a Delaware corporation
Tenant's Address:

   Prior to the Commencement        1710 Gilbreth Road, Suite 301
   Date:                            Burlingame, CA  94010
                                    Attn:    Stephen Rosenfield, Esq.
                                    Telephone: (650) 409-2050
                                    Fax No: (650) 259-0774

   After the Commencement Date:     3280 Bayshore Boulevard
                                    Brisbane, CA 94005
                                    Attn:

Premises:                           The Premises shall consist of
                                    fifty-five thousand eight hundred
                                    ninety-eight (55,898) rentable
                                    square feet of space located in
                                    the building commonly known as
                                    Building A located at 3280
                                    Bayshore Boulevard (the
                                    "Building"). The Premises is
                                    located in the City of Brisbane,
                                    State of California.

Premises Address:                   3280 Bayshore Blvd., Brisbane, California
                                    94005

                                       ii
<PAGE>

Project:                            That certain office and research and
                                    development business parkcommonly known as
                                    Brisbane Technology Park, and more
                                    particularly described in Exhibit
                                    B attached hereto. The Project
                                    shall consist of the Building and
                                    two other buildings commonly known
                                    as Building B and Building C
                                    located at 3260 Bayshore Boulevard
                                    and 3240 Bayshore Boulevard,
                                    respectively, adjacent parking
                                    areas, landscaping and related
                                    improvements and will contain one
                                    hundred eighty-three thousand
                                    three hundred twenty-nine
                                    (183,329) rentable square feet of
                                    space.

Tenant's Project Percentage:        A percentage equal to the rentable square
                                    footage of the Premises divided by the
                                    rentable square footage of the Project.

Commencement Date:                  The earlier of (A) the date Tenant first
                                    occupies the Premises for the purpose of
                                    conducting business therein, or (B) May 1,
                                    2001.

Term:                               One hundred twenty (120) full calendar
                                    months and any partial calendar month at the
                                    commencement of the Term.

Initial Base Rent:                  Four Dollars and Twenty-Five Cents ($4.25)
                                    per square foot per month (subject to
                                    adjustment pursuant to Paragraph 3(a)(ii))

Security Deposit:                   One Million Four Hundred Twenty-Five
                                    Thousand Three Hundred Ninety-Nine Dollars
                                    ($1,425,399.00) (subject to adjustment
                                    pursuant to Paragraph 28)

Landlord's Broker:                  BT Commercial Real Estate (Mr. Mike Connor
                                    and Bob Baumann)

Tenant's Broker:                    CB Richard Ellis (Mr. Christopher R. Jacobs
                                    and Mr. Dino Perazzo)

                                      iii
<PAGE>

                            BRISBANE TECHNOLOGY PARK

                                      LEASE

         THIS LEASE (this "Lease"), dated as of December 18, 2000, is entered
into by and between GAL-BRISBANE, L.P., a California limited partnership
("Landlord"), and INTERMUNE PHARMACEUTICALS, INC., a Delaware corporation
("Tenant").

         1.       PREMISES

                  (a) LEASED PREMISES. Landlord hereby leases to Tenant, and
Tenant hereby leases from Landlord, those certain premises (the "Premises")
consisting of fifty-five thousand eight hundred ninety-eight (55,898) rentable
square feet of space, as shown on Exhibit A attached hereto and located within
the building commonly known as Building A located at 3280 Bayshore Boulevard,
Brisbane, California (the "Building"). The Building and the Premises are located
within that certain office and research and development business park commonly
known as Brisbane Technology Park (the "Project"), and more particularly
described in Exhibit B attached hereto. The Project consists of the Building and
two other office buildings, one located at 3260 Bayshore Boulevard ("Building
B") and the other located at 3240 Bayshore Boulevard ("Building C," and together
with Building B, collectively, the "Other Buildings"), adjacent parking areas,
landscaping and related improvements. The total rentable square footage of the
Project is one hundred eighty-three thousand three hundred twenty-nine (183,329)
rentable square feet.

         In addition to the Premises, during the term of this Lease, Tenant
shall have (i) the exclusive right to use the yard area adjacent to the Building
consisting of nine hundred (900) rentable square feet (the "Yard Area")
designated as "FMA" in Plan A1.2 attached hereto as EXHIBIT A-1, and (ii) the
non-exclusive right to use a portion of the roof of the Building (the "Roof
Area"), the location of which Roof Area shall be reasonably approved by
Landlord, to install the Generator described in PARAGRAPH 36(p) hereof. Tenant
covenants with respect to the Yard Area and Roof Area that: (1) Tenant's use of
the Yard Area and the Roof Area shall comply with the use restrictions described
in PARAGRAPH 5 hereof, and Tenant shall obtain all permits and/or other
approvals required by the City of Brisbane and other appropriate governmental
agencies necessary to use and operate in the Yard Area and the Roof Area, (2)
Tenant shall use the Yard Area and Roof Area in compliance with all applicable
laws and regulations, (3) if Tenant at any time occupies less than the entire
Building, Tenant's use of the Yard Area and the Roof Area shall not unreasonably
interfere with or cause a nuisance with respect to the use or occupancy of the
Building by other tenants, and (4) Tenant shall keep the Yard Area and Roof Area
in a neat, clean and safe condition and pay all costs and expenses incurred in
connection with or otherwise related to its use of the Yard Area and the Roof
Area. Tenant's use of the Yard Area and the Roof Area shall comply with all of
the terms and conditions of this Lease as though they were part of the Premises,
except that the Yard Area and Roof Area shall not be considered part of the
Premises for purposes of calculating Base Rent or Tenant's Project Percentage
under this Lease. Prior to the expiration or earlier termination of this Lease,
Tenant shall remove any Alterations (defined below) and Personal Property
(defined below) from the Yard Area and Roof Area in accordance with PARAGRAPH 16
hereof and repair all damage to the Yard Area and Roof Area resulting from
Tenant's use thereof during the term of

<PAGE>

this Lease, all at Tenant's sole cost and expense. Tenant agrees to indemnify,
defend (with attorneys acceptable to Landlord) and hold Landlord, its agents,
employees, successors and assigns, harmless from and against any and all claims,
losses, damages and liabilities arising out of or in any way relating to,
involving, or in dealing with, the use of the Yard Area and the Roof Area by
Tenant and its agents, employees and contractors during the term of the Lease
and any default or breach by Tenant in the performance in a timely manner of any
obligation on Tenant's part to be performed under this Lease with respect to its
use and/or occupancy of the Yard Area and the Roof Area.

                  (b) PROJECT COMMON AREAS. Tenant's right to use the Project
Common Areas (as hereinafter defined) is a right in common with other tenants of
the Project, if any. For purposes of this Lease, the term "Project Common Areas"
shall mean all areas and facilities within the Project except for the Building
and the Other Buildings, including, but not limited to, parking areas, access
and perimeter roads, sidewalks, landscaped areas, service areas, trash disposal
facilities and similar areas, subject to the reasonable rules and regulations
and changes therein from time to time made by Landlord governing the use of the
Project Common Areas. Landlord shall at all times have exclusive control of the
Project Common Areas and may at any time temporarily close any part thereof,
exclude and restrain anyone from any part thereof, and/or temporarily or
permanently change the size, configuration, composition and/or location of the
Project Common Areas. Specifically, Landlord shall have the right from time to
time during the Lease Term (as hereinafter defined) to (a) grant easements
within the boundaries of the Project, (b) modify the parking areas and ingress
and egress to and from the parking areas and the buildings located within the
Project, (c) modify the directional flow of traffic in the Project, (d) make
alterations or additions to the Building, the Other Buildings and any other
buildings located within the Project, and (e) install, maintain, use, repair and
replace pipes, ducts, conduits and wires, leading through, under or over the
Premises to locations serving other parts of the Project. Landlord also reserves
the right to expand or contract the area of the Project, to make alterations
thereof or additions thereto and to construct and install additional buildings
and other improvements within the Project; provided, however that in such case,
Tenant's Project Percentage (as hereinafter defined) shall be proportionately
adjusted. In exercising any of the foregoing rights, (i) Landlord shall make
commercially reasonable efforts to minimize any disruption of Tenant's business
in the Premises, and (ii) Landlord shall not materially and adversely restrict
or limit Tenant's access to, or use of, the Premises or the parking to which
Tenant is entitled hereunder.

         2.       LEASE TERM

                  (a) TERM. The term of this Lease shall be a period of
approximately ten (10) years, commencing on the Commencement Date (defined in
Paragraph 2(b)) and ending, unless earlier terminated pursuant to the terms of
this Lease, on the last day of the one hundred twentieth (120th) full calendar
month after the Commencement Date (the "Expiration Date"). Such period, as the
same may be extended pursuant to the terms hereof, shall be referred to
hereinafter as the "Lease Term."

                                       2
<PAGE>

                  (b)      COMMENCEMENT DATE; DELIVERY DATES.

                           (i) COMMENCEMENT DATE. For purposes of this Lease,
         the term "Commencement Date" shall be the earlier of (A) the date
         Tenant first occupies the Premises for the purpose of conducting
         business therein, or (B) May 1, 2001. The estimated completion date for
         Landlord's Work (as defined in the Work Letter attached hereto as
         EXHIBIT C) with respect to the Warm Building Shell described in the
         Work Letter (the "Estimated Shell Completion Date") is December 30,
         2000. The Warm Building Shell shall be deemed "substantially completed"
         as and when specified in the Work Letter.

                           (ii) COMMENCEMENT DATE MEMORANDUM. Within ten (10)
         days after the determination of the Commencement Date, Landlord and
         Tenant shall execute a Commencement Date Memorandum in the form shown
         in EXHIBIT D attached hereto.

                  (c) TENANT'S ACCESS. Upon full execution and delivery of this
Lease by the parties hereto, Tenant shall be allowed access to the Premises
prior to Landlord's completion of the Warm Building Shell improvements described
in the Work Letter for the purpose of constructing the Tenant Improvements,
provided that (i) Tenant's access and construction of the Tenant Improvements
(as defined in the Work Letter) in the Premises does not interfere with
Landlord's completion of the Warm Building Shell or occasion any labor dispute
as a result and (ii) Tenant provides Landlord and Landlord's architect with
twenty-four (24) hours' prior written notice of its intent to enter the Premises
or perform any work in the Premises. During any access by Tenant pursuant to
this Paragraph 2(c), Tenant assumes all risk of loss or damage to Tenant's
machinery, equipment, fixtures and other personal property and the Tenant
Improvements, and hereby agrees to indemnify, defend and hold harmless Landlord
from any loss or damage to such machinery, equipment, fixtures and personal
property and the Tenant Improvements, and all liability, loss or damage arising
from any injury to the property of Landlord, or its contractors, subcontractors
or materialmen, and any death or personal injury to any person or persons to the
extent arising out of Tenant's access or work, except for liability, loss or
damage caused by Landlord's gross negligence or willful misconduct.

                  (d) FAILURE TO DELIVER POSSESSION. If, for any reason,
Landlord cannot deliver possession of the Warm Building Shell to Tenant by the
Estimated Shell Completion Date, then this Lease shall remain in effect,
Landlord shall not be subject to any liability, and such failure shall neither
adjust the Commencement Date of the Lease nor extend the expiration date of this
Lease, provided, however, that the Commencement Date as defined in Paragraph
2(b)(i) above shall be extended, on a day for day basis, for each day that the
Premises are not delivered to Tenant in substantially completed condition
following the Estimated Shell Completion Date. Notwithstanding anything to the
contrary contained herein, if Landlord has not delivered the Premises in
substantially completed condition to Tenant prior to March 31, 2001, then Tenant
shall have the right thereafter to cancel this Lease by written notice to
Landlord within five (5) days thereafter, and upon such cancellation, Landlord
shall return all sums theretofore deposited by Tenant with Landlord, and neither
party shall have any further liability to the other.

         3.       RENT

                                       3
<PAGE>

                  (a)      BASE RENT

                           (i) INITIAL BASE RENT. Commencing on the Commencement
         Date, and continuing thereafter until the Expiration Date or earlier
         termination of this Lease, Tenant shall pay to Landlord base rent (the
         "Base Rent") for the Premises in the amount of Four Dollars and
         Twenty-Five Cents ($4.25) per month per rentable square foot of the
         Premises then subject to the Lease. Base Rent shall be paid in advance
         on the first day of each calendar month, in lawful money of the United
         States, without abatement, deduction, claim, offset, prior notice or
         demand except as otherwise specifically provided in this Lease. Tenant
         shall pay to Landlord the first month's Base Rent upon execution of
         this Lease.

                           (ii) ADJUSTMENTS. On the first (1st) day of the
         thirteenth (13th) month after the Commencement Date and on each
         anniversary of the Commencement Date thereafter the then current Base
         Rent shall be increased by four percent (4%) until the Expiration Date
         or the expiration of the extended term, if any, pursuant to the
         Addendum Paragraph 1 (each, an "Adjustment Date").

                  (b) ADDITIONAL RENT. All monies other than Base Rent that
Tenant is required to pay under this Lease, including, without limitation, a
portion of repair and maintenance charges pursuant to Paragraph 8, Real Property
Taxes pursuant to Paragraph 10, insurance premiums pursuant to Paragraph 11 and
Operating Expenses pursuant to Paragraph 12, shall be deemed "Additional Rent"
and shall be paid to Landlord as provided in this Lease. The term "Rent" as used
herein shall refer to Base Rent plus any Additional Rent. All Rent shall be paid
to Landlord at Landlord's address set forth in the Lease Summary or at such
other place designated by Landlord in a written notice to Tenant. No Additional
Rent shall accrue under the Lease until on and after the Commencement Date.

                  (c) PRORATIONS. If the Commencement Date is not the first
(1st) day of a calendar month, or if the expiration date of this Lease is not
the last day of a calendar month, Base Rent due for the fractional month during
which this Lease commences or expires shall be prorated on the basis of a thirty
(30) day month. If the rentable square footage of the Premises changes in
accordance with Paragraph 1(a) of this Lease on other than the first day of a
calendar month, then the Base Rent for such calendar month shall be equitably
allocated on a per diem basis, based on the number of days in such calendar
month.

         4.       CONDITION OF PREMISES

         Landlord shall deliver possession of the Warm Building Shell to Tenant
in the condition required pursuant to the Work Letter. Tenant acknowledges that,
except as expressly provided in this Lease, neither Landlord nor Landlord's
authorized agents, partners, members, subsidiaries, directors, officers and/or
employees (collectively, "Landlord's Agents") have made any representations or
warranties as to the suitability or fitness of the Premises for the conduct of
Tenant's business or for any other purpose, nor has Landlord or Landlord's
Agents agreed to undertake any Alterations (defined below in PARAGRAPH 7) or
construct any Tenant Improvements to the Premises. Notwithstanding anything to
the contrary in this Lease, Landlord warrants that, to the actual knowledge of
Landlord, on the commencement of the term hereof: (a) the Warm

                                       4
<PAGE>

Building Shell shall comply with all laws, codes, ordinances and other
governmental requirements then applicable to the Premises, the Building and/or
the Project, (b) the Warm Building Shell, including the improvements and
equipment therein, shall be in good working order, condition and repair, and (c)
Landlord knows of no material defects in the Warm Building Shell which would
unreasonably interfere with Tenant's use and enjoyment of the Premises.

         5.       USE

                  (a) TENANT'S USE. Tenant shall use the Premises solely for
office, administration, research and development, laboratory, marketing,
manufacturing and warehousing purposes and any other legal purpose permitted by
the City of Brisbane, California, and shall not use the Premises for any other
use or purpose.

                  (b) COMPLIANCE WITH LAWS AND PROJECT RULES AND REGULATIONS.

                           (i)      LAWS.

                                    (A) TENANT'S COMPLIANCE. Tenant shall not
                  use the Premises or suffer or permit anything to be done in or
                  about the Premises which shall in any way conflict with the
                  requirements of any covenants, conditions and/or restrictions
                  of record, or with any law, statute, zoning restriction,
                  ordinance, order, rule, regulation or requirement of any duly
                  constituted public authorities (including, without limitation,
                  state, municipal, county and federal governments and their
                  departments, bureaus, boards and officials), whether now in
                  force or which may hereafter be in force, applicable to the
                  condition, use or occupancy of the Premises whether or not any
                  condition or occupancy is related to Tenant's particular use
                  of the Premises (collectively, "Laws"), including, without
                  limitation, (i) the San Bruno Mountain Area Habitat
                  Conservation Plan, as amended (the "HCP") and (ii) that
                  certain Declaration of Covenants and Restrictions on Real
                  Property on San Bruno Mountain. Throughout the Lease Term,
                  Tenant shall, at its own cost and expense, promptly and
                  properly observe and comply with all Laws applicable to
                  Tenant's use or occupancy of the Premises, including, without
                  limitation, the making by Tenant of any Alteration (as defined
                  in PARAGRAPH 7) to the Premises or any change to the Tenant
                  Improvements as may be necessitated by such Laws, including,
                  without limitation, all applicable building codes, Title III
                  of the Americans with Disabilities Act and all state and local
                  accessibility requirements (collectively, the "Accessibility
                  Requirements") and Title 24 of the California Code of
                  Regulations, as such may be amended from time to time. Capital
                  improvements to the structure of the Building in which the
                  Premises are located necessitated by Laws not related to
                  Tenant's alteration, use or occupancy of the Premises shall be
                  the responsibility of Landlord and the costs thereof shall be
                  paid by Tenant to the extent applicable pursuant to PARAGRAPH
                  12(c) hereof.

                                    (B) LANDLORD'S COMPLIANCE. Landlord shall
                  construct the Warm Building Shell in compliance with all Laws.
                  In addition, Landlord shall maintain the Project Common Areas
                  and perform Landlord's maintenance and

                                       5
<PAGE>

                  repair obligations pursuant to PARAGRAPH 8(a) of this Lease in
                  compliance with all Laws, including, without limitation, all
                  applicable building codes, Accessibility Requirements and
                  Title 24 of the California Code of Regulations, as such may be
                  amended from time to time.

                           (ii) RULES AND REGULATIONS. Tenant shall comply with
         the Rules and Regulations of the Project which are attached hereto as
         EXHIBIT E, as the same may be modified and amended from time to time by
         Landlord in its reasonable discretion (the "Rules and Regulations"). In
         the event of any conflict between the Rules and Regulations and the
         Lease, this Lease shall control.

                  (c)      HAZARDOUS MATERIALS.

                           (i) DEFINITION. As used herein, the term "Hazardous
         Material" shall mean any substance: (i) the presence of which requires
         investigation or remediation under any federal, state or local statute,
         regulation, ordinance, order, action, policy or common law; (ii) which
         is or becomes defined as a "hazardous waste," "hazardous substance,"
         pollutant or contaminant under any federal, state or local statute,
         regulation, ordinance, rule, directive or order or any amendments
         thereto (hereinafter referred to as "Environmental Laws") including,
         without limitation, the Comprehensive Environmental Response,
         Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) and/or
         the Resource Conservation and Recovery Act (41 U.S.C. Section 6901 et
         seq.); (iii) which is toxic, explosive, corrosive, flammable,
         infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous
         and is or becomes regulated by any governmental authority, agency,
         department, commission, board, agency or instrumentality of the United
         States, the State of California or any political subdivision thereof;
         (iv) which contains gasoline, diesel fuel or other petroleum
         hydrocarbons; (v) which contains polychlorinated biphenyls (PCBs),
         asbestos or urea formaldehyde foam insulation; or (vi) radon gas.

                           (ii) EXISTING ENVIRONMENTAL CONDITION. Tenant
         acknowledges and agrees that Tenant has received and reviewed a copy of
         that certain report entitled "Updated Level One Environmental Site
         Assessment" dated January 7, 1999, prepared by Lumina Technologies.

                           (iii) INDEMNITY. Tenant shall not, without the prior
         written consent of Landlord, store, use, generate, transport, dispose
         or release any Hazardous Materials on, in, under or about the Premises
         or any portion of the Project; provided, however, that Tenant may,
         without obtaining such consent, use and store on the Premises limited
         quantities of commonly used standard office and janitorial supplies
         containing chemicals categorized as Hazardous Materials so long as
         Tenant uses, stores and disposes of all such Hazardous Materials in
         strict compliance with all Environmental Laws and prudent business
         practices. Notwithstanding the foregoing, Landlord shall not
         unreasonably withhold its consent to Tenant's use, handling, storage,
         generation, or transport of certain Hazardous Materials in, or about
         the Premises, which are reasonably necessary for the conduct of
         Tenant's business in the Premises, so long as, within a reasonable time
         period prior to the use, handling, storage, generation or transport of
         such Hazardous Materials in and about the Premises, Tenant submits to
         Landlord a Hazardous Materials Management

                                       6
<PAGE>

         Plan ("HMMP") for Landlord's review and approval, which approval shall
         not be unreasonably withheld. The HMMP shall describe: (aa) the
         quantities of each material to be used, (bb) the purpose for which each
         material is to be used, (cc) the method of storage of each material,
         (dd) the method of transporting each material to and from the Premises
         and within the Premises, (ee) the methods Tenant will employ to monitor
         the use, storage, handling and disposal of the material and to detect
         any leaks or potential hazards, and (ff) any other information any
         department of any governmental entity (city, state or federal) requires
         prior to the issuance of any required permit for the Premises or during
         Tenant's occupancy of the Premises. If Landlord determines in good
         faith by inspection of the Premises or review of the HMMP that the
         methods in use or described by Tenant are not adequate in Landlord's
         good faith judgment to prevent or eliminate the existence of
         environmental hazards, then Tenant shall not use, handle, generate,
         transport, or store such Hazardous Materials at or about the Premises
         unless and until such methods are approved by Landlord in good faith
         and added to an approved HMMP. Once approved by Landlord, Tenant shall
         strictly comply with the HMMP and shall not change its use, operations
         or procedures with respect to Hazardous Materials without submitting an
         amended HMMP for Landlord's review and approval as provided above.
         Tenant shall pay to Landlord Lanldord's out-of-pocket costs and
         expenses in connection with Landlord's review of the HMMP. In addition,
         Tenant shall comply with all guidelines contained in the HCP with
         respect to the use, storage and release of pesticides in or on the
         Project by Tenant. Tenant shall be solely responsible for and shall
         indemnify, defend and hold harmless Landlord and Landlord's Agents from
         and against all claims, demands, judgments, losses, expenses, costs and
         liabilities, including fees and costs of attorneys and consultants and
         engineers (collectively, "Liabilities"), arising out of or in any way
         relating to the storage, use, generation, transportation, disposal or
         release of any Hazardous Material by Tenant and/or Tenant's affiliates
         (defined as any entity which controls, is controlled by or under common
         control with Tenant), subsidiaries, divisions, officers, directors,
         partners, employees, agents, contractors, invitees, Tenants or
         assignees (collectively, "Tenant's Agents") in, on, under or about the
         Premises or any portion of the Project, including, without limitation,
         any Liabilities arising out of or in any way relating to any
         investigation, testing, removal, clean-up and/or restoration services,
         work, materials and equipment necessary to return the Project (or any
         part thereof) to full compliance with Environmental Laws and to
         otherwise satisfactorily investigate and remediate the contamination
         arising therefrom. If at any time during or after the Lease Term Tenant
         becomes aware of any inquiry, investigation, administrative proceeding
         or judicial proceeding by any governmental agency regarding the
         storage, use or disposition of any Hazardous Materials by Tenant or
         Tenant's Agents in, on, under or about the Premises or the Project,
         Tenant shall, within five (5) days after first learning of such
         inquiry, investigation or proceeding, give Landlord written notice
         advising Landlord of the same. Tenant's obligations under this
         PARAGRAPH 5(c)(iii) shall survive the expiration and/or earlier
         termination of this Lease.

         6.       ASSIGNMENT AND SUBLETTING

                  (a) LANDLORD'S CONSENT. Tenant shall not assign this Lease,
sublease all or any portion of the Premises or mortgage or hypothecate this
Lease or all or any portion of Tenant's interest in this Lease or the Premises
(each, a "Transfer") without Landlord's prior

                                       7
<PAGE>

written consent, which consent shall not be unreasonably withheld, conditioned
or delayed. Any attempted or purported Transfer without Landlord's prior written
consent shall be void and confer no rights upon any third party. If Tenant
attempts a Transfer without Landlord's prior written consent, Landlord may (i)
terminate this Lease, or (ii) accept rent from the purported Tenant or assignee
(each, a "Transferee") and apply such rent against Tenant's Base Rent and
Additional Rent obligations under this Lease. No such acceptance of rent shall
be deemed an express or implied waiver of Tenant's breach of this Paragraph
6(a). unless such waiver is in writing and signed by Landlord, and Landlord
reserves all rights and remedies arising with respect to such breach by Tenant,
including, without limitation, the right to terminate this Lease. Such
acceptance of rent from a purported Transferee shall not be construed to
constitute a consent to the purported Transfer or to give the purported
Transferee a right of possession with respect to the Premises.

                  (b) TRANSFEREE FORM. Each Transfer shall be by an instrument
in writing in a form reasonably satisfactory to Landlord, and shall be executed
by Tenant and Transferee. Tenant and the proposed Transferee shall agree in
writing, for the benefit of Landlord, to be jointly and severally liable for all
costs and expenses in connection with any obligation to install or construct any
Alterations to the Premises or improvements to other portions of the Project
that may be required by any Laws (including any Accessibility Requirements) as a
result of such proposed Transfer. Each Transferee shall agree in writing, for
the benefit of Landlord, to assume, to be bound by and to perform the terms,
conditions and covenants of this Lease to be performed by Tenant as applicable
to the transferred premises. Notwithstanding anything contained herein, Tenant
shall not be released from personal liability for the performance of each term,
condition and covenant of this Lease by reason of Landlord's consent to a
Transfer unless Landlord specifically grants such release in writing.

         (c) NO WAIVER. Consent by Landlord to one Transfer shall not be deemed
to be a consent to any subsequent Transfer.

         (d) INFORMATION TO BE FURNISHED. If Tenant desires at any time to
Transfer the Premises or any portion thereof, it shall first notify Landlord of
its desire to do so and shall submit in writing to Landlord: (i) the name of the
proposed Transferee; (ii) the nature of the proposed Transferee's business to be
carried on in the Premises; (iii) the terms and provisions of the proposed
Transfer and a copy of the proposed Transfer agreement and related agreements;
(iv) such financial information, including financial statements, as Landlord may
reasonably request concerning the proposed Transferee. Tenant shall reimburse
Landlord, as Additional Rent, for all reasonable legal and other expenses
incurred by Landlord in connection with any request by Tenant for consent to a
Transfer.

         (e) LANDLORD'S ALTERNATIVES. At any time within twenty (20) days after
Landlord's receipt of all of the information specified in Paragraph 6(d),
Landlord may, by written notice to Tenant, elect: (i) to terminate this Lease
and recapture the entire Premises, in the event of an assignment, or the portion
of the Premises that Tenant proposes to sublease, in the event of a sublease
which, when taken together with all other existing subleases, covers more than
fifty percent (50%) of the rentable area of the Premises and the term of the
proposed sublease is over thirty-six (36) months, in which event this Lease
shall terminate as to, and Tenant shall surrender to Landlord, the portion of
the Premises that Landlord has elected to

                                       8
<PAGE>

recapture as of the date specified in Landlord's election notice (which in no
event shall be less than fifteen (15) nor more than one hundred twenty (120)
days following the date of Landlord's election notice); (ii) to consent to the
Transfer by Tenant; or (iii) to reasonably refuse its consent to the Transfer,
in which case Landlord shall specify the reasons for its refusal in Landlord's
election notice. Landlord may withhold its consent to any Transfer pursuant to
clause (iii) above if Landlord determines that the Subrent is less than ninety
percent (90%) of fair market rent. If Landlord fails to elect any of the
alternatives set forth in Paragraph 6(e)(i) through Paragraph 6(e)(iii) above
within thirty (30) days following Landlord's receipt of all of the information
specified in Paragraph 6(d), it shall be deemed that Landlord has not consented
to the Transfer. If Landlord proceeds with Paragraph 6(e)(ii) and consents to
the Transfer, Tenant may thereafter enter into a valid Transfer of the Premises
or portion thereof, upon the terms and conditions and with the proposed
Transferee set forth in the information furnished by Tenant to Landlord pursuant
to Paragraph 6(d), subject, however, to the condition that Tenant shall pay to
Landlord fifty percent (50%) of any excess of the Subrent (defined below) over
the rent required to be paid by Tenant hereunder, less Tenant's reasonable
Transfer Costs. For the purposes of the foregoing, the term "Transfer Costs"
shall mean all actual costs and expenses paid by Tenant to effect the Transfer,
including, without limitation, the amortized cost of any alterations or
leasehold improvements made by Tenant at the request of the transferee that
would not have been constructed for Tenant's occupancy of the subject portion of
the Premises, amortized on a straight line basis, without interest, over the
term of this Lease, in the event of an assignment, and the term of the proposed
Transfer, in the event of a sublease, and (ii) any leasing commissions paid by
Tenant incidental to such Transfer, but not including vacancy costs or the cost
of any alterations or leasehold improvements made to the Premises other than
those performed to effect the Transfer. Any such Subrent to be paid to Landlord
pursuant hereto shall be payable to Landlord as and with the Base Rent payable
to Landlord hereunder pursuant to Paragraph 3(a).

         (f) PERMITTED TRANSFER. Notwithstanding anything to the contrary
contained in this Lease, but subject to the net-worth requirement for a
Permitted Transferee (defined below) described below, Tenant may assign this
Lease or sublet the Premises, or any portion thereof, without Landlord's
consent, to any of the following (each, a "Permitted Transferee"): (i) any
entity which controls, is controlled by, or is under common control with Tenant;
(ii) any entity which results from a merger of, reorganization of, or
consolidation with Tenant; (iii) any entity which acquires substantially all of
the stock or assets of Tenant, as a going concern, with respect to the business
that is being conducted in the Premises (hereinafter each a "Permitted
Transfer"). In addition, sale or transfer of the capital stock of Tenant other
than as described in subparagraph (iii) above shall be deemed a Permitted
Transfer. Notwithstanding anything to the contrary contained herein, a Permitted
Transferee shall have a minimum net worth (excluding intangible assets) of
$100,000,000. Landlord shall have no right to terminate this Lease in connection
with, and shall have no right to any sums or other economic consideration
resulting from any Permitted Transfer.

         (g) EXECUTED COUNTERPART. No Transfer shall be valid nor shall any
Transferee take possession of the Premises until an executed counterpart of the
Transfer agreement has been delivered to Landlord.

                                       9
<PAGE>

         (h) DEFINITIONS. The following terms as used herein shall have the
following meanings:

                  (i) SUBRENT. The term "Subrent" shall mean any consideration
         of any kind received, or to be received, by Tenant from a Transferee if
         such sums are related to Tenant's interest in this Lease or in the
         Premises.

                  (ii) TENANT. The term "Tenant" shall mean the person or entity
         with whom a Sublet agreement is proposed to be or is made.

         7.       ALTERATIONS

                  (a) CONSENT TO ALTERATIONS. Tenant shall not make or permit
any modifications, additions or improvements in, on or about the Premises,
including, but not limited to, lighting, heating, ventilating, air conditioning,
electrical, partitioning, fixtures, window and wall covering and carpentry
installations (collectively, "Alterations"), without the prior written consent
of Landlord. Notwithstanding the foregoing, Tenant shall have the right to make
nonstructural Alterations costing in the aggregate not more than Thirty Thousand
Dollars ($30,000) in any twelve (12) month period without Landlord's prior
consent, provided that such Alterations (i) are not visible from any point
outside of the Building, and (ii) will not affect the systems or structure of
the Building. Landlord shall not unreasonably withhold, condition or delay its
consent to any nonstructural Alterations provided that (i) the nonstructural
Alterations are not visible from any point outside of the Building, and (ii) do
not affect the building systems or structural components of the Building. In no
event may Tenant modify any building systems or structural components of the
Building without Landlord's consent, which consent may be withheld by Landlord
in its sole and absolute discretion; provided, however, that if Landlord's
architect and/or engineer, to the extent applicable, approve Alterations
proposed by Tenant to the building systems in the Building and Tenant uses
subcontractors approved by Landlord to perform such building systems
Alterations, Landlord agrees not to unreasonably withhold its consent to those
Alterations. Tenant shall request Landlord's consent in writing and shall
deliver Tenant's written request to Landlord with reasonably detailed plans and
specifications for the proposed Alterations prepared at Tenant's expense by a
licensed architect or engineer, together with a list of the contractors that
Tenant would like to use to install the subject Alteration(s). Landlord shall
consent to or disapprove the Alterations proposed by Tenant within ten (10)
business days after Landlord's receipt of Tenant's written request and a copy of
Tenant's proposed plans and specifications and list of proposed contractors. If
Landlord fails to respond to Tenant's written request for Landlord's consent to
Tenant's proposed Alterations made in strict compliance with Paragraph 14 hereof
within the above-referenced ten (10) business day period, Landlord shall be
deemed to have approved Tenant's request. Additionally, Landlord shall have the
right to pre-approve (not to be unreasonably withheld) all contractors selected
by Tenant to construct and install the Alterations. Tenant shall reimburse
Landlord for Landlord's reasonable out-of-pocket costs incurred in connection
with reviewing and approving or disapproving any request for an Alteration,
including the plans and specifications thereof proposed by Tenant.

                  (b) GENERAL CONDITIONS FOR ALTERATIONS. All Alterations shall
be installed at Tenant's sole expense, in compliance with all applicable Laws
and in accordance with the plans

                                       10
<PAGE>

and specifications delivered to and approved by Landlord; provided, however,
that neither Landlord's acceptance nor approval of any such plans and
specifications shall imply that Landlord in any way covenants or warrants that
the same are safe or that they comply with applicable Laws. All Alterations
shall be performed in a good and workmanlike manner conforming in quality and
design with the Premises existing as of the Commencement Date, and shall not
diminish the value of the Premises or the Project. The workmanship and materials
used in all Alterations shall be of a quality equal to or exceeding that used
generally throughout the Project. Tenant shall indemnify and hold harmless
Landlord and Landlord's Agents from any and all Liabilities incurred by Landlord
and/or Landlord's Agents as a result of any defects in the design, materials or
workmanship of the Alterations, and/or failure of Tenant or Tenant's Agents to
comply with applicable Laws, including, without limitation, all applicable
Accessibility Requirements.

                  (c) NOTICE AND LIENS. Tenant shall notify Landlord in writing
at least ten (10) business days prior to the commencement of any work on
Alterations approved by Landlord, and Landlord shall be entitled to post and
record Notices of Nonresponsibility or other notices deemed proper before the
commencement of such work. If Tenant fails to cause any lien filed against the
Premises in connection with any work performed or claimed to have been performed
by or at the direction of Tenant to be released of record by payment or posting
of a proper bond acceptable to Landlord within ten (10) days from the date of
such filing, then Landlord may do so at Tenant's expense and Tenant shall
reimburse Landlord for such amount as Additional Rent. Such reimbursement shall
include all sums disbursed, incurred or deposited by Landlord, including
Landlord's costs, expenses and reasonable attorneys' fees, with interest thereon
at an interest rate of ten percent (10%) per annum from the date of payment by
Landlord.

                  (d) REMOVAL OF ALTERATIONS. Landlord shall notify Tenant
within ten (10) days after Landlord receives the plans and specifications for
any proposed Alteration or, if Tenant is not required to obtain Landlord's
consent to the Alteration, within ten (10) days after Tenant notifies Landlord
in writing of its intent to make an Alteration, as to whether Tenant will be
required to remove the proposed Alteration upon the termination of Tenant's
lease of that portion of the Premises in which the Alteration is to be
constructed. If Landlord so notifies Tenant within said ten (10)-day period,
then Tenant shall remove the proposed Alteration and to repair or restore any
damage caused by the installation and removal of such Alteration at the
expiration or earlier termination of Tenant's lease of that portion of the
Premises in which the Alteration is constructed, all at Tenant's sole cost and
expense; provided, however, Tenant shall only be required to remove those
Alterations which are specified in Landlord's notice. Tenant shall fully and
promptly repair all damage caused by the removal of Alterations from the
Premises. In no event shall Tenant be required to remove any of the initial
Tenant Improvements, except where Landlord has given Tenant written notice that
such Tenant Improvements, or portion thereof, must be removed in accordance with
this Paragraph 7(d).

                  (e) MAINTENANCE OF ALTERATIONS. Notwithstanding any other
provision of this Lease, Tenant shall be solely responsible for the maintenance
and repair of any and all Alterations to the Premises made by Tenant, or by
Landlord at Tenant's expense.

         8.       REPAIR AND MAINTENANCE

                                       11
<PAGE>

                  (a) LANDLORD. Landlord, at its expense, shall keep in good
order, condition and repair the foundations of the Building, the structural
components of the Building, the exterior walls of the Building (excluding the
interior finish surface thereof), and the roof structures and membranes on the
Building; provided, however, that any damage thereto caused by the gross
negligence or willful acts or omissions of Tenant or Tenant's Agents, or by
reason of the failure of Tenant to perform or comply with any terms, conditions
or covenants in this Lease, or caused by any Alterations made by or for Tenant,
shall be at Tenant's sole expense. In addition, Landlord shall be responsible
for maintaining the outside landscaping of the Project in good condition and
repair, the cost of which shall constitute an Operating Expense under this
Lease. Landlord shall enter into regularly scheduled maintenance/service
contracts for servicing the elevators within the Building, unless Landlord
elects for Tenant to do so pursuant to Paragraph 8(b) below, the cost of which
shall constitute an Operating Expense under this Lease. Also, Landlord shall
enter into regularly scheduled preventive maintenance/service contracts with
maintenance contractors acceptable to Landlord for servicing all hot water and
heating and air conditioning (the "HVAC") systems and equipment in the Premises,
the cost of which shall constitute an Operating Expense under this Lease. It is
an express condition precedent to all obligations of Landlord to repair and
maintain the Building that Tenant shall have notified Landlord in writing of the
need for any such repairs or maintenance. There shall be no abatement of Rent
during the performance of Landlord's obligations under this Paragraph 8(a), nor
shall Landlord be liable to Tenant for any damage that may result from
interruption of Tenant's use of the Premises during the period that Landlord is
performing the maintenance and repairs required hereunder; provided, however
Landlord shall use commercially reasonable efforts in the performance of its
obligations pursuant to this Paragraph 8(a) to minimize any interference with
Tenant's normal business operations.

                  (b) TENANT. Except for the portions of the Premises expressly
required to be maintained by Landlord under Paragraph 8(a), Tenant, at Tenant's
sole cost and expense, shall maintain the Premises in good order, condition and
repair, including, without limitation, subfloors and floor coverings, walls and
wall coverings, mechanical, electrical and plumbing systems, doors and windows.
In addition, if Tenant leases all of the rentable space located within the
Building, Landlord may require Tenant to enter into regularly scheduled
preventive maintenance/service contracts with maintenance contractors acceptable
to Landlord for servicing the elevators in the Building and provide to Landlord
a copy of the maintenance/services contract and written service reports on the
elevators on an annual basis. If, in the reasonable judgment of Landlord, Tenant
fails to maintain the Premises in good order, condition and repair, Landlord
shall have the right to perform such maintenance, repairs or refurbishing at
Tenant's expense. In addition, Tenant shall, at its own expense, provide,
install and maintain in good condition all of its trade fixtures, furniture,
equipment and other personal property ("Tenant's Personal Property") required in
the conduct of its business in the Premises. If any condition arises in the
Premises or the Project which may be unsafe or dangerous to persons or property
in the Project, Tenant shall immediately notify Landlord of such condition.

                  (c) WAIVER. Tenant waives the provisions of Sections 1941 and
1942 of the California Civil Code and any similar or successor Laws regarding
Tenant's right to make repairs and deduct the expenses of such repairs from the
Rent due under this Lease.

         9.       UTILITIES AND SERVICES

                                       12
<PAGE>

                  (a) TENANT'S OBLIGATIONS. Tenant shall be responsible for and
promptly shall pay all charges for gas, electricity, water, telephone and
telephone cabling, HVAC, refuse pickup, janitorial service and all other
utilities, materials and services furnished directly to or used by Tenant in the
Premises during the Lease Term, together with any and all taxes thereon.
Landlord shall not be liable in damages or otherwise for any failure or
interruption of any utility service or other service furnished to the Premises,
except to the extent resulting from the gross negligence or willful misconduct
of Landlord. No such failure or interruption shall entitle Tenant to terminate
this Lease or withhold Rent due hereunder. Notwithstanding the foregoing, to the
extent that Landlord receives insurance proceeds under its insurance policy as a
result of the interruption in utilities to compensate Landlord for lost Rent
under this Lease, then the Rent due hereunder will be abated by such amount.

                  (b) TENANT TO PAY SHARE OF EXPENSES. If any utilities or
services described in Paragraph 9(a) above are not separately metered to Tenant
or are contracted for by Landlord, then Tenant shall pay, as Additional Rent, a
reasonable proration of the costs of such utilities and services, including the
cost of installing metering devices. Tenant shall pay such prorated amount of
such costs on the first day of the calendar month following receipt of
Landlord's itemized bill therefor.

         10.      REAL PROPERTY TAXES

                  (a) PAYMENT BY TENANT. Commencing with the Commencement Date,
Tenant shall pay to Landlord, as Additional Rent, Tenant's Project Percentage of
all Real Property Taxes (as hereinafter defined). Tenant shall pay Tenant's
Project Percentage of such Real Property Taxes in the manner provided in
Paragraph 12 below.

                  (b) REAL PROPERTY TAXES. For purposes of this Lease, "Real
Property Taxes" shall mean any form of assessment, license, fee, rent tax, levy,
penalty (if a result of Tenant's delinquency), or tax of any nature imposed upon
or with respect to the Premises or the Project or any part thereof (other than
net income, estate, gift, succession, inheritance, transfer or franchise taxes
of Landlord) (collectively, "tax"), imposed by any authority having the direct
or indirect power to tax, or by any city, county, state or federal government or
any improvement or other district or division thereof, whether such tax is: (i)
determined by the area of the Premises or Project or any part thereof or the
rent and other sums payable hereunder by Tenant or by other tenants, including,
but not limited to, any gross income or excise tax levied by any of the
foregoing authorities with respect to receipt of such rent or other sums due
under this Lease; (ii) levied or assessed upon any legal or equitable interest
of Landlord in the Project or the Premises or any part thereof; (iii) levied or
assessed upon this transaction or any document to which Tenant is a party
creating or transferring any interest in the Premises; (iv) levied or assessed
in lieu of, in substitution for, or in addition to, existing or additional taxes
imposed on or with respect to the Project or the Premises, whether or not now
customary or within the contemplation of the parties; or (v) surcharged against
the parking area. The reasonable cost and expenses of contesting the amount or
validity of any of the foregoing taxes shall be included in Real Property Taxes.
Real Property Taxes shall also include all new and increased assessments, taxes,
fees, levies and charges which may be imposed by governmental agencies for such
purposes as fire protection, street, sidewalk, road, utility construction and
maintenance, refuse removal, libraries,

                                       13
<PAGE>

street lighting, police services, and for other governmental services, or any
gross or net rental income tax. The term "Real Property Taxes" shall not include
any penalty or fee imposed as a result of Landlord's failure to pay such taxes
or other expenses prior to their delinquency.

                  (c) TAX ON IMPROVEMENTS. Without limiting the generality of
Paragraph 10(b), Tenant shall pay any increase in Real Property Taxes resulting
from any and all Alterations placed in, on or about the Premises for the benefit
of, at the request of, or by Tenant.

                  (d) PRORATION. Tenant's liability to pay Real Property Taxes
shall be prorated on the basis of a 365-day year to account for any fractional
portion of a fiscal tax year included at the commencement or expiration of the
Lease Term. With respect to any assessments which may be levied against or upon
the Premises, or which under the Laws then in force may be evidenced by
improvement bonds or other bonds or may be paid in annual installments, only the
amount of the annual installment due each year (with appropriate proration for
any partial year) and interest due thereon shall be included within the
computation of the annual Real Property Taxes levied against the Premises for
such year.

                  (e) PERSONAL PROPERTY TAXES. Tenant shall pay prior to
delinquency all taxes assessed or levied against Tenant's Personal Property.
When possible, Tenant shall cause Tenant's Personal Property to be assessed and
billed separately from the real and/or personal property of Landlord.

         11.      INSURANCE

                  (a) INDEMNIFICATION.

                           (i) TENANT'S INDEMNIFICATION OF LANDLORD. Tenant
         hereby agrees to indemnify, defend (with attorneys acceptable to
         Landlord) and hold harmless the Premises, Landlord, Landlord's Agents
         and Landlord's lenders, from and against any and all Liabilities
         arising out of or in any way relating to, involving, or in dealing
         with, the Premises during the term of the Lease, the conduct of
         Tenant's business, any default or breach by Tenant in the performance
         in a timely manner of any obligation on Tenant's part to be performed
         under this Lease, the use or occupancy of the Premises or any part of
         the Project by Tenant, or by the acts or omissions of Tenant or
         Tenant's Agents, except to the extent caused by the gross negligence or
         willful misconduct of Landlord, Landlord's Agents and Landlord's
         lenders, Tenant's indemnification obligations with respect to Hazardous
         Materials shall be pursuant to PARAGRAPH 5(c) of this Lease.

                           (ii) LANDLORD'S INDEMNIFICATION OF TENANT. Landlord
         hereby agrees to indemnify, defend and hold harmless Tenant from any
         and all Liabilities arising out of or in any way relating to,
         involving, or in dealing with, any part of the Project, to the extent
         such Liabilities are caused by the gross negligence or willful
         misconduct of Landlord or Landlord's Agents.

                  (b) TENANT'S INSURANCE. Tenant agrees to maintain in full
force and effect at all times during the Lease Term, at its own expense, for the
protection of Tenant and Landlord,

                                       14
<PAGE>

         as their interests may appear, policies of insurance issued by a
         responsible carrier or carriers acceptable to Landlord which afford the
         following coverages:

                           (i) WORKER'S COMPENSATION. Worker's compensation in
         an amount equal to the statutory requirements then in effect.

                           (ii) EMPLOYER'S LIABILITY. Employer's liability in an
         amount not less than One Million Dollars ($1,000,000.00) per accident
         for bodily injury or disease.

                           (iii) AUTOMOBILE LIABILITY. Automobile liability
         insurance (ISO form CA 0001 (Ed. 1/87), code 1) for each vehicle owned,
         leased or rented by Tenant in connection with its business, in an
         amount not less than Five Million Dollars ($5,000,000.00) per accident
         for bodily injury and property damage.

                           (iv) GENERAL LIABILITY. Commercial general liability
         insurance (ISO occurrence form CG 0001) in an amount not less than Five
         Million Dollars ($5,000,000.00), combined single limit for both bodily
         injury and property damage, naming Landlord as additional insured. If
         Commercial General Liability Insurance with a general aggregate limit
         is used, the general aggregate limit shall apply separately to the
         location of the Premises, using ISO form CG 25041185 or its equivalent.

                           (v) PROPERTY. Property insurance on Tenant's Personal
         Property located on or in the Premises. Such insurance shall be in an
         amount of one hundred percent (100%) of the replacement cost of the
         insured items, as the same may from time to time increase as a result
         of inflation or otherwise, and shall be in a form providing coverage
         against the perils covered in the ISO Special Form. Such policy shall
         be endorsed, as necessary, to provide coverage for boilers and
         machinery and sprinkler leakage. As long as this Lease is in effect,
         the proceeds of such policy shall be used for the repair or replacement
         of such items so insured. Landlord shall have no interest in the
         insurance upon Tenant's Personal Property.

                           (vi) BUSINESS INCOME. Business Income/Extra Expense
         Insurance at a minimum of 50% co-insurance, including coverage for loss
         of Business Income due to damage to Tenant's Personal Property and
         Alterations arising from the perils covered in the ISO Special Form.

                  (c) LANDLORD'S INSURANCE. During the Lease Term Landlord shall
maintain commercial general liability insurance, and "All Risk" or ISO Special
Form property insurance (the "Project Property Insurance") (including, at
Landlord's option, earthquake and flood coverage, inflation endorsement,
sprinkler leakage endorsement, and boiler and machinery coverage), covering (i)
the full replacement cost of the Premises, including the Tenant Improvements
and, provided that Tenant (1) delivers to Landlord a copy of Tenant's plans for
all of the Alterations made by Tenant and any other information reasonably
requested by Landlord, and (2) Tenant otherwise complies with the provisions
contained in Paragraph 7 with respect to the Alterations, (ii) the Alterations,
but excluding the foundations of the Building. The Project Property Insurance
shall also include insurance against loss of rents in an amount equal to the
Base Rent, Additional Rent, and any other sums payable to Landlord by the
tenants of the Project

                                       15
<PAGE>

under their respective leases for a period of at least twelve (12) months. The
Project Property Insurance shall name Landlord as named insured and include a
lender's loss payable endorsement in favor of Landlord's lender. Tenant shall
reimburse Landlord, as Additional Rent, for Tenant's Project Percentage of the
costs of such policy or policies. Tenant shall pay Tenant's Project Percentage
of the Project Property Insurance in the manner provided in Paragraph 12. Tenant
shall pay the entire amount of any increase in premium rates for the Project
Property Insurance that is caused by Tenant's particular use of the Premises or
any portion of the Project.

                  (d) CERTIFICATES. Tenant shall deliver to Landlord at least
thirty (30) days prior to the time such insurance is first required to be
carried by Tenant, and thereafter at least thirty (30) days prior to expiration
of each such policy, certificates of insurance and endorsements evidencing the
above coverage with limits not less than those specified above and naming
Landlord as additional insured thereunder. The certificates and endorsements
shall be on a form approved by Landlord and shall expressly provide that no less
than thirty (30) days' prior written notice shall be given Landlord in the event
of cancellation of or alteration to the coverages evidenced thereby.

                  (e) INCREASED COVERAGE. Landlord, by written notice to Tenant,
may require Tenant to increase the amount of insurance maintained by Tenant in
accordance with this Lease to such amounts as are generally required by
landlords of similar properties located in the Brisbane-San Francisco area.

                  (f) CO-INSURER. If, on account of the failure of Tenant to
comply with the foregoing provisions, Landlord is adjudged a co-insurer by the
insurance carrier, then any Liabilities sustained by Landlord as a result
thereof shall be borne by Tenant and shall be immediately paid by Tenant upon
receipt of a bill therefor and evidence of such loss.

                  (g) INSURANCE REQUIREMENTS. All of Tenant's insurance shall be
in a form satisfactory to Landlord and shall be carried with companies that have
a current A.M. Best's rating of no less than A:VII; shall provide that such
policies shall not be subject to alteration or cancellation except after at
least thirty (30) days' prior written notice to Landlord; and shall be primary
as to Landlord and Landlord's Agents. The policy or policies, or duly executed
certificates and endorsements for them, together with satisfactory evidence of
payment of the premium thereon, shall be deposited with Landlord prior to the
Commencement Date, and upon renewal of such policies, not less than thirty (30)
days prior to the expiration of the term of such coverage. If Tenant fails to
procure and maintain the insurance required hereunder, or fails to provide
Landlord with the policy, policies or duly executed certificates and
endorsements thereof required hereunder, Landlord may following notice to
Tenant, but shall not be required to, order such insurance at Tenant's expense
and Tenant shall reimburse Landlord for such amounts as Additional Rent. Such
reimbursement shall include all sums disbursed, incurred or deposited by
Landlord, including Landlord's costs, expenses and reasonable attorneys' fees,
with interest thereon at an interest rate of ten percent (10%) per annum from
the date of payment by Landlord.

                  (h) LANDLORD'S DISCLAIMER. Subject to Landlord's insurance
obligations under Paragraph 11(c) above, neither Landlord nor Landlord's Agents
shall be liable for any loss or damage to persons or property resulting from
fire, explosion, falling plaster, glass, tile or

                                       16
<PAGE>

sheetrock, steam, gas, electricity, water or rain which may leak from any part
of the Premises or the Project, or from the pipes, appliances or plumbing works
therein or from the roof, street or subsurface or whatsoever, unless caused by
the gross negligence or willful misconduct of Landlord.

                  (i) WAIVER OF SUBROGATION. Landlord and Tenant each hereby
waive all rights of recovery against the other on account of loss and damage
occasioned to such waiving party for its property or the property of others
under its control to the extent that such loss or damage is insured against
under any insurance policies which are required hereunder or which otherwise may
be in force at the time of such loss or damage. Tenant and Landlord shall, upon
obtaining policies of insurance required hereunder, give notice to the insurance
carrier that the foregoing mutual waiver of subrogation is contained in this
Lease and Tenant and Landlord shall cause each insurance policy obtained by such
party to provide that the insurance company waives all right of recovery by way
of subrogation against either Landlord or Tenant in connection with any damage
covered by such policy.

         12.      ADDITIONAL RENT

                  (a) PAYMENT. Tenant shall pay to Landlord, as Additional Rent
during each year commencing on the Commencement Date and ending on the
Expiration Date (prorated for any partial calendar year during the Lease Term),
(i) all Operating Expenses (defined herein) attributable to the ownership,
operation, repair and/or maintenance of the Building which accrue during the
Lease Term, (ii) Tenant's Project Percentage of all Operating Expenses
attributable to the ownership, operation, repair and/or maintenance of the
Project Common Areas and the Project, and (iii) Tenant's Project Percentage of
Real Property Taxes and Project Property Insurance, each as determined by
Landlord.

                  (b) TENANT'S PROJECT PERCENTAGE. Tenant's Project Percentage
is calculated by dividing the then applicable total rentable square footage of
the Premises by the total rentable square footage in the Project. Tenant's
Project Percentage as of the Commencement Date is set forth in the Lease
Summary. Any change in the total rentable square footage of the Project or the
Premises, including any increase or decrease in the size of the Premises
pursuant to Paragraph 1(a) of this Lease, shall increase or decrease Tenant's
Project Percentage.

                  (c) DEFINITION OF OPERATING EXPENSES. The term "Operating
Expenses" shall include, without limitation, the cost of labor, materials,
supplies and services used or consumed in maintaining, operating and repairing
the Building, the Project and all supporting facilities, including the
following: (a) the cost of maintaining and repairing all sidewalks, landscaping,
service areas, elevators, mechanical rooms, utility systems, building exteriors
(and the component parts thereof), signs, site lighting, walkways, driveways and
parking areas of the Project; (b) all charges for heat, water, gas, electricity,
sewer, air conditioning, trash removal and other utilities used or consumed in
the Building or the Project (not separately metered and billed to any individual
tenant of the Project); (c) Landlord's management fee each year, of which
Tenant's proportionate share shall be an amount equal to three and one-half
percent (3.5%) of the total annual Rent due under this Lease; (d) costs incurred
in constructing and installing any capital improvements and/or replacements
("Capital Improvements") on the Project that are required to comply with laws
enacted subsequent to the date of full execution of this Lease by

                                       17
<PAGE>

the parties, or that are acquired to reduce any other item of Operating Expenses
or otherwise benefit the Project, as reasonably determined by Landlord;
provided, however, the cost of such Capital Improvements shall be amortized on a
straight-line basis (without interest) over their useful life as reasonably
determined by Landlord taking into account, where applicable, generally accepted
accounting rules; (e) costs incurred for pest control, janitorial, exterior
window washing, sweeping services and security for the Building and the Project;
(f) costs incurred in maintaining and repairing intra-building network cabling
within the Project; (g) all business license, permit and inspection fees and (h)
fees, expenses, charges or other costs assessed Landlord under any covenants,
conditions and restrictions binding on the Building or the Project.
Notwithstanding the foregoing, the term "Operating Expenses" shall not include
(i) depreciation, (ii) reserves, (iii) overhead and profit paid to subsidiaries
or affiliates of Landlord for services rendered to the Project or the Building
or for supplies or other materials to the extent that the costs of the services,
supplies or materials exceed the competitive costs of the services, supplies or
materials if they were not provided by a subsidiary or an affiliate, (iv)
leasing commissions, attorneys' fees, costs, disbursements and other expenses
incurred in connection with negotiations or disputes with tenants or in
connection with leasing, renovating or improving space for tenants or other
occupants or prospective tenants or other occupants of the Project, (v) costs of
a capital nature, except as expressly allowed in subparagraph (d) above, (vi)
expenses in connection with services or other benefits of a type that are not
provided to Tenant but which are provided another tenant or occupant of the
Building or Project, (vii) costs incurred due to Landlord's violation of any
terms or conditions of this Lease or any other lease relating to the Building or
Project, (viii) all interest, loan fees, and other carrying costs related to any
mortgage or deed of trust or related to any capital item, and all rental and
other payable due under any ground or underlying lease, or any lease for any
equipment ordinarily considered to be of a capital nature (except janitorial
equipment which is not affixed to the Building.), (ix) advertising and
promotional expenditures, (x) any costs, fines, or penalties incurred due to
violations by Landlord of any governmental rule or authority, this Lease or any
other lease in the Project, or due to Landlord's gross negligence or willful
misconduct, (xi) the cost of correcting any building code or other violations
which were violations prior to the date of full execution of this Lease, or
(xii) the cost of containing, removing, or otherwise remediating any
contamination of the Project (including the underlying land and ground water) by
any toxic or Hazardous Materials (including, without limitation, asbestos and
"PCB's") where such contamination was not caused by Tenant and was caused by
some other tenant of the Project, as reasonably determined by Landlord.

                  (d) ESTIMATES. Landlord shall, as soon as practicable after
the Commencement Date and after the end of each calendar year during the Lease
Term, notify Tenant in writing of the amount which Landlord estimates will be
Tenant's Project Percentage of any Real Property Taxes and Project Property
Insurance and Tenant's share of any Operating Expenses for such calendar year,
and one-twelfth (1/12th) thereof shall be added to the Base Rent as Additional
Rent for each ensuing month. If, during any calendar year during the Lease Term,
it appears in the reasonable judgment of Landlord that Real Property Taxes,
Project Property Insurance and Operating Expenses payable under this Paragraph
will exceed Landlord's estimate, Landlord may, by written notice to Tenant,
revise its estimate for such year, and the Rent hereunder shall be adjusted
accordingly.

                                       18
<PAGE>

                  (e) ANNUAL ADJUSTMENT. If after any calendar year it proves
that the amount of Tenant's Project Percentage of Real Property Taxes and
Project Property Insurance or Tenant's share of Operating Expenses for such
calendar year is greater or less than the amount actually billed to and paid for
by Tenant, an adjustment shall be made as soon as practicable following the
commencement of the next calendar year, and Tenant shall forthwith pay Landlord
such amount or be credited accordingly upon Tenant's receipt of a year end
statement of such adjustment, whether or not this Lease is still then in effect.
Tenant shall have sixty (60) days after Tenant receives the year end statement
of the adjustment to the Operating Expenses for the prior calendar year to
notify Landlord in writing of Tenant's desire to conduct, at Tenant's sole cost
and expense, an audit of Landlord's books and records relating to the prior
calendar year. Any such audit must be conducted by Tenant or its agent during
regular business hours at the offices of Landlord or the offices of Landlord's
designated agent and must be completed within one hundred twenty (120) days
after Tenant receives the applicable year end statement. The person or entity
performing the audit or review of Landlord's books and records on Tenant's
behalf or at Tenant's request shall be an independent auditor and may not be
compensated for the audit or review on a contingency fee basis.

                  (f) ARBITRATION. If Landlord objects to the findings of
Tenant's audit, Landlord and Tenant shall attempt to resolve their disagreement
concerning the amount of Tenant's proportionate share of Operating Expenses
within the next thirty (30) days. If Landlord and Tenant are unable to agree
upon the amount of Tenant's proportionate share of Operating Expenses (after
Tenant has completed its audit), the parties shall submit the matter to binding
arbitration before a single neutral arbitrator having experience in real estate
valuation, property management or accounting or, alternatively, the arbitrator
may be a retired judge or justice of a California Superior Court or Court of
Appeal. The matter shall be decided by arbitration in accordance with the
applicable arbitration statutes and the then existing Commercial Arbitration
Rules of the American Arbitration Association. Any party may initiate the
arbitration procedure by delivering a written notice of demand for arbitration
to the other party. Within thirty (30) days after the other party's receipt of
the written notice of demand for arbitration, the parties shall attempt to
select a qualified arbitrator who is acceptable to all parties. If the parties
are unable to agree upon an arbitrator who is acceptable to all parties, either
party may request the American Arbitration Association to appoint the arbitrator
in accordance with its Commercial Arbitration Rules. The provisions of
California Code of Civil Procedure Section 1283.05 or its successor section(s)
are incorporated in and made a part of this Lease with respect to any
arbitration requested in accordance with the provisions contained in this
Paragraph. Depositions may be taken and discovery may be obtained in any
arbitration proceeding requested pursuant to this Paragraph in accordance with
the provisions of California Code of Civil Procedure Section 1283.05 or its
successor section(s). Arbitration hearing(s) shall be conducted in San Mateo
County California. Any relevant evidence, including hearsay, shall be admitted
by the arbitrator if it is the sort of evidence upon which responsible persons
are accustomed to rely in the conduct of serious affairs, regardless of the
admissibility of such evidence in a court of law; however, the arbitrator shall
apply California law relating to privileges and work product. In rendering his
or her award, the arbitrator shall set forth the reasons for his or her
decision. The fees and expenses of the arbitrator shall be paid in the manner
allocated by the arbitrator. This agreement to arbitrate any dispute concerning
the findings of Tenant's audit shall be specifically enforceable under the
prevailing arbitration law. Judgment on the award rendered by the award may be
entered in any court having jurisdiction thereof.

                                       19

<PAGE>

         13.      DAMAGE OR DESTRUCTION

                  (a) LANDLORD'S OBLIGATION TO REBUILD. If the Premises are
damaged or destroyed, Landlord shall promptly and diligently repair the
Premises, unless Landlord or Tenant elects to exercise any right to terminate
this Lease as hereinafter provided. For purposes of this Article 13, the term
"Premises" shall include Tenant Improvements and Alterations.

                  (b) LANDLORD'S RIGHT TO TERMINATE. Landlord shall have the
right to terminate this Lease with respect to the entire Premises or the damaged
Building in the event any of the following events occurs:

                           (i) Provided Landlord complies with its obligations
         under PARAGRAPH 11, net insurance proceeds (after deducting the cost of
         recovery of such proceeds) actually received by Landlord are
         insufficient to pay one hundred percent (100%) of the cost of such
         repair, excluding the deductible.

                           (ii) The entire Premises or the damaged Building
         cannot, with reasonable diligence, be substantially repaired or
         restored by Landlord within one hundred eighty (180) days after the
         date that the damage or destruction occurs; or

                           (iii) The entire Premises or the damaged Building
         cannot be safely repaired because of the presence of hazardous factors,
         including, but not limited to, earthquake faults, radiation, chemical
         waste and other similar dangers.

         If Landlord elects to terminate all or any portion of this Lease
pursuant to the provisions of this PARAGRAPH 13(b), Landlord shall give Tenant
written notice of its election within thirty (30) days after the date of such
damage or destruction, and this Lease (or applicable portion thereof) shall
terminate (x) fifteen (15) days after the date Tenant receives such notice, if
the Premises have been substantially damaged and Tenant is unable to operate in
the Premises, or (y) sixty (60) days after the date Tenant receives such notice,
if the Premises have been partially damaged. If Landlord does not elect to
terminate all of this Lease, Landlord shall notify Tenant in writing within
forty-five (45) days after the date of the damage or destruction of Landlord's
estimate of the time period required to substantially repair or restore the
Premises or Building, and Landlord shall diligently commence the process of
obtaining any necessary building permits and governmental approvals with respect
to the portion of the Lease that has not been terminated, and shall commence
repair of the Premises or the Building, as the case may be, as soon as
practicable and thereafter prosecute the same diligently to completion, in which
event this Lease shall continue in full force and effect.

                  (c) TENANT'S RIGHT TO TERMINATE. If Landlord reasonably
determines that Premises cannot be substantially repaired or restored within two
hundred seventy (270) days after the damage or destruction, Tenant shall have
the right to terminate this Lease by written notice to Landlord. Tenant shall
exercise such termination right, if at all, within thirty (30) days after
Landlord notifies Tenant in writing of the time estimated by Landlord to
substantially complete the repairs or restoration work. If Tenant does not elect
to terminate this Lease within the ten (10) day period, Tenant shall be deemed
to have waived its option to terminate this Lease pursuant to this Paragraph
13(c) in connection with the casualty.

                                       20
<PAGE>

                  (d) LIMITED OBLIGATION TO REPAIR. Notwithstanding anything to
the contrary contained in this Paragraph 13, in no event shall Landlord be
obligated to repair or replace Tenant's Personal Property. If Tenant desires to
repair and/or replace Tenant's Personal Property, the same shall be undertaken
and completed by Tenant, at Tenant's sole cost and expense, promptly following
the date of the damage or destruction.

                  (e) ABATEMENT OF RENT. Rent shall be temporarily abated
proportionately, but only to the extent of any net proceeds attributable to the
Premises received by Landlord from rental abatement insurance described in
Paragraph 11(c), during any period when, by reason of such damage or
destruction, Tenant is unable to use the Premises. Such abatement shall commence
upon such damage or destruction and end upon substantial completion by Landlord
of the repair or reconstruction work which Landlord is obligated or elects to
perform and Landlord's delivery to Tenant of the Premises, or at such earlier
time when Tenant is able to use the Premises without substantial interference.
Tenant shall not be entitled to any compensation or damages from Landlord for
loss of the use of the Premises, damage to Tenant's Personal Property or any
inconvenience occasioned by such damage, repair or restoration. Tenant hereby
waives all rights to terminate this Lease pursuant to the provisions of
California Civil Code Section 1932, Subdivision 2, and Section 1933, Subdivision
4, and the provisions of any similar Laws hereinafter enacted.

                  (f) DAMAGE NEAR END OF LEASE TERM. Anything herein to the
contrary notwithstanding, if the Premises are destroyed or substantially damaged
to the extent that Tenant is unable to use a substantial portion of the Premises
for a period of at least sixty (60) consecutive days during the last twelve (12)
months of the Lease Term, then either Tenant or Landlord may, at its option,
cancel and terminate this Lease as of the date of the occurrence of such damage.
If this Lease is not so terminated, then the repair of such damage shall be
governed by Paragraphs 13(a), 13(b) or 13(c), as the case may be. If this Lease
is so terminated, Landlord may keep all the insurance proceeds resulting from
such damage, except for those proceeds payable under policies obtained by Tenant
which specifically insure Tenant's Personal Property.

                  (g) LANDLORD'S DETERMINATIONS. Landlord's determination of the
estimated costs to repair and/or replace any damaged property and the time
period required for such repair and/or replacement shall be made and delivered
to Tenant within forty-five (45) days of such casualty and shall be reasonable,
made in good faith, and shall be conclusive for the purposes of this Paragraph
13.

         14.      NOTICES

         Any notice or demand required or desired to be given under this Lease
shall be in writing and shall be personally delivered to the address herein
provided for the addressee, or in lieu of personal delivery may be given by
facsimile transmission, by air courier or other commercial delivery service
which guarantees overnight delivery, or by United States certified or registered
mail service. Notice shall be effective on the day such notice is received or
rejected at the address herein provided for the addressee. For purposes hereof,
the addresses for Landlord and Tenant are as set forth in the Lease Summary;
provided, however, that after the Commencement

                                       21
<PAGE>

Date, the address of Tenant shall be the address of the Premises. Either party
may change its address by giving notice of same in accordance with this
Paragraph 14.

         Any written request for Landlord's consent to proposed alterations
under Paragraph 7 hereof shall state in twelve-point, capitalized and boldfaced
letters the following: BY FAILING TO RESPOND TO THIS REQUEST WITHIN TEN (10)
DAYS, YOU WILL BE DEEMED TO HAVE APPROVED TENANT'S INSTALLATION OF THE
ALTERATIONS DESCRIBED IN THIS REQUEST.

         15.      DEFAULT

                  (a) TENANT'S DEFAULT. A default under this Lease by Tenant
shall exist if any of the following events shall occur:

                           (i) If Tenant shall have failed to pay any amount of
         Rent within five (5) days after written notice that such payment is
         past due; or

                           (ii) If Tenant shall have failed to perform any term,
         covenant or condition of this Lease (including Tenant's obligations
         pursuant to EXHIBIT C attached hereto) other than the payment of Rent
         (and excluding the defaults described in clauses (iii) through (ix)
         below) and such failure continues for thirty (30) or more days after
         written notice from Landlord; provided, however, that where such
         failure could not reasonably be cured within the thirty (30) day
         period, Tenant shall not be in default if it has commenced such
         performance within said thirty (30) day period and thereafter
         diligently prosecutes the same to completion; or

                           (iii) If Tenant shall have assigned its assets for
         the benefit of its creditors; or

                           (iv) If the sequestration or attachment of or
         execution on any material part of Tenant's Personal Property essential
         to the conduct of Tenant's business shall have occurred, and Tenant
         shall have failed to obtain a return or release of such Personal
         Property within thirty (30) days thereafter, or prior to sale pursuant
         to such sequestration, attachment or levy, whichever is earlier; or

                          (v) If Tenant shall have abandoned the Premises; or

                          (vi) If a court shall have made or entered any decree
         or order other than under the bankruptcy Laws of the United States
         adjudging Tenant to be insolvent; or approving as properly filed a
         petition seeking reorganization of Tenant; or directing a winding up or
         liquidation of Tenant and such decree or order shall have continued for
         a period of thirty (30) days; or

                           (vii) If Tenant shall have failed to comply with the
         provisions of PARAGRAPHS 19 OR 24; or

                           (viii) If Tenant shall have Sublet the Premises or
         any portion thereof without Landlord's prior written consent; or

                                       22
<PAGE>

                           (ix) If Tenant fails to deliver to Landlord the
         Security Deposit within six (6) days after full execution of this
         Lease.

                  (b) REMEDIES. Upon a default, Landlord shall have the
following remedies, in addition to all other rights and remedies provided by Law
or otherwise provided in this Lease, to which Landlord may resort cumulatively
or in the alternative, and without notice to Tenant where no cure period is
provided for Tenant's breach:

                           (i) CONTINUE LEASE. Landlord may continue this Lease
         in full force and effect pursuant to California Civil Code Section
         1951.4, and this Lease shall continue in full force and effect as long
         as Landlord does not terminate this Lease, and Landlord shall have the
         right to collect Rent when due and enforce other obligations of Tenant
         hereunder.

                           (ii) TERMINATE RIGHT TO POSSESSION. Landlord may
         terminate Tenant's right to possession of the Premises at any time by
         giving written notice to that effect, and relet the Premises or any
         part thereof. Tenant shall be liable immediately to Landlord for all
         costs Landlord incurs in reletting the Premises or any part thereof,
         including, without limitation, the unamortized amount of any broker's
         commissions paid or payable by Landlord in connection with this Lease
         (amortized on a straight line basis over the initial term of this
         Lease) and expenses of cleaning and repairing the Premises. Reletting
         may be for a period shorter or longer than the remaining term of this
         Lease. No act by Landlord other than giving written notice to Tenant
         shall terminate this Lease. Acts of maintenance, efforts to relet the
         Premises or the appointment of a receiver on Landlord's initiative to
         protect Landlord's interest under this Lease shall not constitute a
         termination of Tenant's right to possession. On termination, Landlord
         has the right to remove all Tenant's Personal Property and store same
         at Tenant's cost and to recover from Tenant as damages:

                                    (A) The worth at the time of award of unpaid
                  Rent and other sums due and payable which had been earned at
                  the time of termination; plus

                                    (B) The worth at the time of award of the
                  amount by which the unpaid Rent and other sums due and payable
                  which would have been earned or payable after termination
                  until the time of award exceeds the amount of such Rent loss
                  that Tenant proves could have been reasonably avoided; plus

                                    (C) The worth at the time of award of the
                  amount by which the unpaid Rent and other sums due and payable
                  for the balance of the Lease Term after the time of award
                  exceeds the amount of such Rent loss that Tenant proves could
                  be reasonably avoided; plus

                                    (D) Any other amount necessary which is to
                  compensate Landlord for all the detriment 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, including, without limitation, any
                  costs or expenses incurred by Landlord: (i) in retaking
                  possession of the Premises; (ii) in

                                       23
<PAGE>

                  maintaining, repairing, preserving, restoring or cleaning the
                  Premises or any portion thereof; (iii) any unamortized leasing
                  commissions paid or payable by Landlord in connection with
                  this Lease (amortized on a straight line basis over the
                  initial term of this Lease); or (iv) for any other costs
                  necessary or appropriate to relet the Premises; plus

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

         The "worth at the time of award" of the amounts referred to in
PARAGRAPHS 15(b)(ii)(A) AND 15(b)(ii)(B) is computed by allowing interest at the
rate of ten percent (10%) per annum on the unpaid Rent and other sums due and
payable from the termination date through the date of award. The "worth at the
time of award" of the amount referred to in PARAGRAPH 15(b)(ii)(C) is computed
by discounting such amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of award plus one percent (1%). Tenant waives
redemption or relief from forfeiture under California Code of Civil Procedure
Sections 1174 and 1179, or under any other present or future Laws, in the event
Tenant is evicted or Landlord takes possession of the Premises by reason of any
default of Tenant hereunder.

                           (iii) RE-ENTRY. Landlord may, with or without
         terminating this Lease, re-enter the Premises and remove all persons
         and property from the Premises; such property may be removed and stored
         in a public warehouse or elsewhere at the cost of and for the account
         of Tenant. No re-entry or taking possession of the Premises by Landlord
         pursuant to this paragraph shall be construed as an election to
         terminate this Lease unless a written notice of such intention is given
         to Tenant.

                           (iv) REMEDY. So long as this Lease is not terminated,
         Landlord shall have the right to remedy any default of Tenant pursuant
         to the terms of PARAGRAPH 26.

                  (c) LATE CHARGES. Tenant acknowledges that late payment by
Tenant to Landlord of Rent and other charges provided for under this Lease shall
cause Landlord to incur costs not contemplated by this Lease, the exact amount
of such costs being extremely difficult or impracticable to fix. Such costs
include, but are not limited to, processing and accounting charges, and late
charges that may be imposed on Landlord by the terms of any encumbrance and
notes secured by any encumbrance covering the Premises, or late charges and
penalties due to late payment of Real Property Taxes due on the Premises.
Accordingly, commencing on the Commencement Date, the first time during a period
of twelve (12) consecutive months that any installment of rent or any other sum
due from Tenant shall not be received by Landlord within seven (7) days after
Landlord gives Tenant written notice of the unpaid amount, Tenant shall pay to
Landlord, as Additional Rent, a late charge equal to five percent (5%) of such
overdue amount (the "Late Charge"); thereafter, if any installment of rent or
any other sum due from Tenant shall not be received by Landlord within seven (7)
days after such amount shall be due, Tenant shall pay to Landlord the Late
Charge as additional Rent, whether or not Landlord has given Tenant written
notice of the non-receipt of the Rent or other charges or has exercised any
remedy herein provided for default by Tenant. The parties agree that this late
charge represents a fair and reasonable estimate of the costs that Landlord
shall incur by reason of the late payment by

                                       24
<PAGE>

Tenant. Acceptance of any late charge shall not constitute a waiver of Tenant's
default with respect to the overdue amount, nor prevent Landlord from exercising
any of the other rights and remedies available to Landlord on account thereof.

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

         16.      SURRENDER OF THE PREMISES

                  (a) CONDITION UPON SURRENDER. Upon the expiration or earlier
termination of the Lease Term, Tenant shall surrender the Premises to Landlord
broom clean and in its condition, subject to the provisions of Paragraph 7(d)
hereof, existing as of the Commencement Date, ordinary wear and tear excepted.
The phrase "ordinary wear and tear" means wear which manifests itself solely
through the passage of time. For the purpose of this Lease, items which are not
deemed "ordinary wear and tear" shall include, but not be limited to, the
following items, which items shall be Tenant's obligation to repair or correct:
(i) damage to or defacement of portions of any walls, partitions, woodwork,
plaster or surface finishes or any other portion of the Premises from any cause
(including, without limitation, from nails or screws); (ii) damage to the
flooring (including stains, marks or soiling); (iii) damage to the Premises from
any cause except for any casualty not caused by Tenant or Tenant's Agents; and
(iv) any other damaged or non-functioning improvements within the Premises, such
as light fixtures, electrical outlets, telephone jacks, door knobs and ceiling
panels. Items which are deemed "ordinary wear and tear" shall include the wear
and tear which is attributable to the use of the Premises pursuant to Paragraph
5(a) hereof.

                  (b) REMOVAL OF ALTERATIONS. Tenant shall remove from the
Premises prior to the termination or expiration of this Lease all of Tenant's
Alterations and/or Tenant Improvements required to be removed pursuant to
Paragraph 7(d) and all Tenant's Personal Property, and shall repair any damage
and perform any restoration work caused by such removal. If Tenant fails to
remove such Alterations and Tenant's Personal Property on or before Tenant's
vacation of the Premises and the termination of this Lease (or on any such
earlier date that Tenant abandons or surrenders the Premises), Landlord may
retain such property and, at Landlord's option, (i) apply it toward the
satisfaction of Tenant's obligations under this Lease, and all rights of Tenant
with respect to such property shall cease, or (ii) place all or any portion of
such property in public storage for Tenant's account. Tenant shall be liable to
Landlord for costs of removal of any such Alterations and Tenant's Personal
Property and storage and transportation costs of same, and the cost of repairing
and restoring the Premises, together with interest at the rate of ten percent
(10%) per annum from the date of expenditure by Landlord.

                  (c) INDEMNIFICATION OF LANDLORD. If the Premises are not
surrendered to Landlord in accordance with the terms of this Paragraph 16,
Tenant shall indemnify, defend and hold harmless Landlord and Landlord's Agents
against all Liabilities resulting from Tenant's

                                       25
<PAGE>

delay past such date in so surrendering the Premises, including, without
limitation, any claims made by any succeeding tenant, losses to Landlord due to
lost opportunities to lease to succeeding tenants, and attorneys' fees and
costs.

         17.      ATTORNEYS' FEES

         If either party brings any action or legal proceeding for damages for
an alleged breach of any provisions of this Lease, to recover Rent, to terminate
the tenancy of the Premises or to enforce, interpret, protect or establish any
term, condition or covenant of this Lease or right of either party, the
prevailing party shall be entitled to recover as a part of such action or
proceeding, or in a separate action brought for that purpose, its reasonable
attorneys' fees and costs.

         18.      LIENS

                  (a) Tenant shall keep the Premises and the Project free from
liens arising out of any work performed, materials furnished or obligations
incurred by or on behalf of Tenant. Tenant shall indemnify, defend and hold
harmless Landlord and Landlord's Agents from all Liabilities arising out of or
in any way relating to any such liens or claims of lien. Tenant shall cause any
such liens to be released of record, by payment or posting of a proper bond
acceptable to Landlord, within ten (10) days after the earlier of imposition of
the lien or written request by Landlord.

                  (b) Landlord hereby 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, (excluding tenant improvements) 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 has 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 ten (10)
business days any UCC filing statement or other documentation reasonably
acceptable to Landlord in connection with any such lease or financing
arrangement, and any real estate consent or waiver forms reasonably acceptable
to Landlord submitted by any vendors, equipment lessors, chattel mortgagees, or
holders or owners of the Collateral ("Third Parties") setting forth, inter-alia,
that Landlord waives, in favor of such party any superior lien, claim, interest
or other right therein; provided, however, such documents shall provide
assurance that Tenant and such Third Parties shall comply with the provisions of
this Lease. The Collateral shall not become the property of Landlord or a part
of the realty no matter how affixed to the Premises and may be removed by Tenant
or any equipment lessors at any time and from time to time during the entire
term of this Lease. Tenant shall promptly repair any damage caused by the
removal of such property, whether effected by Tenant or equipment lessors.

         19.      SUBORDINATION

                                       26
<PAGE>

                  (a) DOCUMENTATION. This Lease is subject and subordinate to
all ground and underlying leases, mortgages and deeds of trust which now affect
the Premises, as the same may hereafter be renewed, modified, consolidated,
replaced and/or extended (collectively "Encumbrances"); provided, however, if
the holder or holders of any such Encumbrance ("Holder") shall require that this
Lease be prior and superior thereto, then within ten (10) business days after
written request of Landlord to Tenant, Tenant shall execute, have acknowledged
and deliver any and all documents or instruments, in the form presented to
Tenant, which Landlord or Holder deems necessary or desirable for such purposes.
Landlord shall have the right to cause this Lease to be and become and remain
subject and subordinate to any and all future Encumbrances which might hereafter
affect the Premises; provided, however, that in such event, so long as Tenant is
not in default, Holder shall agree not to disturb Tenant's quiet enjoyment of
the Premises as long as Tenant shall pay the Rent timely and observe and perform
all other provisions of this Lease to be observed and performed by Tenant.
Within ten (10) business days after Landlord's written request, Tenant shall
execute any and all customary documents required by Landlord or Holder required
to effectuate such subordination to make this Lease subordinate to any lien of
the Encumbrance, including, without limitation, a subordination, non-disturbance
and attornment agreement in the form of Exhibit H attached hereto; provided that
the same does not materially increase Tenant's obligations, or materially
decrease its right under this Lease. If Tenant fails to do so, such failure
shall constitute an irrevocable appointment of Landlord as Tenant's
attorney-in-fact and to act in Tenant's name, place and stead.

                  (b) ATTORNMENT. Notwithstanding anything to the contrary set
forth in this Paragraph 19, Tenant hereby attorns and agrees to attorn to any
entity purchasing or otherwise acquiring the Premises at any sale or other
proceeding or pursuant to the exercise of any other rights, powers or remedies
under any Encumbrance.

         20.      MORTGAGEE PROTECTION

         In the event of any default on the part of Landlord, Tenant shall give
written notice to any beneficiary of a deed of trust covering the Premises of
which Tenant has received notice, and shall allow such beneficiary a reasonable
opportunity to cure the default, including time to obtain possession of the
Premises by power of sale or a judicial foreclosure, if such should prove
necessary to effect a cure.

         21.      CONDEMNATION

                  (a) TOTAL TAKING - TERMINATION. If (i) title to all of the
Premises or so much thereof is taken for any public or quasi-public use under
any statute or by right of eminent domain so that reconstruction of the Premises
will not result in the Premises being reasonably suitable for Tenant's continued
occupancy for the uses and purposes permitted by this Lease, or (ii) the parking
spaces available to Tenant pursuant to this Lease are taken for any public or
quasi-public use under any statute or by right of eminent domain such that the
ratio of parking spaces to rentable square feet of the Premises falls below that
mandated by law and Landlord is not able to provide alternative parking to
Tenant, then this Lease shall terminate as of the date that possession of the
Premises or part thereof is taken.

                                       27
<PAGE>

                  (b) PARTIAL TAKING. If any part of the Premises is taken and
the remaining part is reasonably suitable for Tenant's continued occupancy for
the purposes and uses permitted by this Lease, this Lease shall, as to the part
so taken, terminate as of the date that possession of such part of the Premises
is taken and the Rent payable hereunder shall be reduced in the same proportion
that the floor area of the portion of the Premises so taken (less any addition
thereto by reason of any reconstruction) bears to the original floor area of the
Premises. Landlord shall, at its own cost and expense, make all necessary
repairs or alterations to the Premises so as to make the portion of the Premises
not taken a complete architectural unit. Such work shall not, however, exceed
the scope of the work done by Landlord in originally constructing the Premises,
or require Landlord to expend sums in excess of the net proceeds awarded to
Landlord on account of such condemnation or taking. During the period of any
such repair or alteration, Rent shall be temporarily abated in proportion to the
degree that Tenant's use of the Premises is impaired. Each party hereby waives
the provisions of Section 1265.130 of the California Code of Civil Procedure and
any similar Laws allowing either party to petition the Superior Court to
terminate this Lease in the event of a partial taking of the Premises.

                  (c) NO APPORTIONMENT OF AWARD. No award for any partial or
entire taking shall be apportioned. Tenant assigns to Landlord its interest in
any award which may be made in such taking or condemnation, together with any
and all rights of Tenant arising in or to the same or any part thereof. Nothing
contained herein shall be deemed to give Landlord any interest in or require
Tenant to assign to Landlord any separate award made to Tenant for the taking of
Tenant's Personal Property or its moving costs.

                  (d) TEMPORARY TAKING. No temporary taking of the Premises
shall terminate this Lease or give Tenant any right to any abatement of Rent.
Any award made to Tenant by reason of such temporary taking shall belong
entirely to Tenant and Landlord shall not be entitled to share therein. Each
party agrees to execute and deliver to the other all instruments that may be
required to effectuate the provisions of this Paragraph 21.

                  (e) SALE UNDER THREAT OF CONDEMNATION. A sale by Landlord to
any authority having the power of eminent domain, either under threat of
condemnation or while condemnation proceedings are pending, shall be deemed a
taking under the power of eminent domain for all purposes of this Paragraph 21.

         22.      HOLDING OVER

         If Tenant holds possession of any portion of the Premises after
expiration or termination of the term of this Lease with respect to that portion
of the Premises without the written consent of Landlord, then absent express
agreement of Landlord such holding over shall be a tenancy at sufferance and not
for any periodic or fixed term. Tenant shall pay monthly rental hereunder equal
to one hundred fifty percent (150%) of the amount of Base Rent an Additional
Rent payable immediately prior to expiration of such term with respect to such
Premises during the first thirty (30) days of such holdover period, after which
time Tenant shall pay monthly rental equal to two hundred percent (200%) of the
amount of Base Rent and Additional Rent payable immediately prior to expiration
of such term with respect to such Premise, together with such other amounts as
may become due hereunder, and otherwise all of the terms and conditions of this
Lease shall continue to apply, excluding any options or rights of Tenant to
renew or extend

                                       28
<PAGE>

this Lease or expand the Premises hereunder. Nothing herein shall be construed
as a consent in advance by Landlord to any holding over by Tenant or to any
specific terms or conditions of any holding over, and Landlord expressly
reserves the right to require Tenant to surrender possession of the Premises to
Landlord when and as required hereunder. Any holding over with the written
consent of Landlord shall, except as otherwise specified in such consent,
thereafter constitute a lease from month to month but otherwise subject to all
of the terms and conditions of this Lease, excluding any options or rights of
Tenant to renew or extend this Lease or expand the Premises hereunder.

         23.      ENTRY BY LANDLORD

         Tenant shall permit Landlord and Landlord's Agents to enter the
Premises at all reasonable times following not less than 24 hours prior notice,
except for emergencies in which case no notice shall be required, to inspect the
same and to conduct tests thereon, to post Notices of Nonresponsibility and "For
Sale" signs, to show the Premises to interested parties such as prospective
lenders and purchasers, to make necessary Alterations or repairs, and to
discharge Tenant's obligations hereunder when Tenant has failed to do so within
a reasonable time after written notice from Landlord. Notwithstanding the
foregoing, Landlord and Landlord's Agents may enter the Premises at any
reasonable time following not less than 24 hours prior notice within nine (9)
months prior to the expiration of the Lease Term, or at any time during the
Lease Term hereof if Tenant is in default hereunder, to place upon the Premises
ordinary "For Lease" signs and to show the Premises to prospective tenants.
Tenant shall have the right to have a representative of Tenant to accompany
Landlord or Landlord's Agents on the Premises. Landlord shall be subject to
Tenant's reasonable security requirements and shall not access Tenant's safes or
enter into any areas maintained by Tenant for the safety and security of monies,
securities, negotiable instruments, confidential documents or files, or similar
items, without Tenant's prior consent, which consent shall not unreasonably be
withheld, delayed or conditioned, except for emergencies in which case Tenant's
consent shall not be required. Landlord shall use commercially reasonable
efforts not to interfere with the conduct of Tenant's business.

         24.      ESTOPPEL CERTIFICATES; INFORMATION

                  (a) ESTOPPEL CERTIFICATES. Tenant shall have ten (10) business
days following Landlord's written request to execute and deliver to Landlord any
documents, including estoppel certificates, in the form prepared by Landlord (i)
certifying that this Lease is unmodified and in full force and effect or, if
modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in full force and effect and the date to which the
Rent and other charges are paid in advance, if any, and (ii) acknowledging that
there are no uncured defaults on the part of Landlord, or, if there are uncured
defaults on the part of Landlord, stating the nature of such uncured defaults,
(iii) certifying that Tenant has no defenses or offsets then outstanding against
any of its obligations under this Lease, or stating those claimed by Tenant, and
(iv) certifying any other matters pertaining to the status of this Lease or
performance of obligations thereunder by Landlord or Tenant as to which Tenant
has actual knowledge and as may be reasonably required either by a purchaser of
the Premises or a lender making a loan to Landlord to be secured by the Premises
or Project. Without limiting the foregoing, Tenant agrees to execute and deliver
an estoppel certificate in the form of Exhibit I attached hereto, if requested

                                       29
<PAGE>

by Landlord or Landlord's lender. Tenant's failure to deliver an estoppel
certificate within ten (10) business days after delivery of Landlord's written
request therefor shall be conclusive upon Tenant that (aa) this Lease is in full
force and effect, without modification except as may be represented by Landlord,
(bb) there are no uncured defaults in Landlord's performance, (cc) Tenant has no
defenses or right of offset against its obligations hereunder, and (dd) no Rent
has been paid in advance.

                  (b) FINANCIAL STATEMENTS. Tenant shall have ten (10) business
days following Landlord's written request to deliver to Landlord the most
current financial statements of Tenant, including balance sheets and profit and
loss statements, all prepared in accordance with generally accepted accounting
principles consistently applied and certified by an officer of Tenant as true,
correct and complete. So long as Tenant is a publicly traded company required
under the Securities Act of 1934 to make its financial information publicly
available and Tenant does so, Tenant may satisfy the foregoing requirement by
providing the most current publicly disclosed financial statements of Tenant.
Tenant further agrees that if Tenant fails to perform any of its obligations
under this PARAGRAPH 24(b) and thereafter Landlord reasonably believes that
Tenant may not have sufficient financial resources to meet its obligations under
this Lease and/or its financial obligations generally, then Tenant shall, within
seven (7) days after receipt of a written request from Landlord, furnish
Landlord with any financial information within Tenant's possession or control
that is reasonably requested by Landlord. All financial information furnished to
Landlord pursuant to this Paragraph 24(b) shall be treated as confidential,
except where such information is publicly disclosed; provided, however, Landlord
may disclose Tenant's financial statements and information to Landlord's
lenders, partners, officers, directors, accountants, attorneys, potential
lenders and potential purchasers of all or any portion of the Project and any
other parties to the extent required by law.

         25.      TRANSFER OF THE PREMISES BY LANDLORD

         In the event of any conveyance of the Premises and assignment by
Landlord of its interest in this Lease, upon the assignee's assumption in
writing of this Lease, Landlord shall be and is hereby entirely released from
all liability under any and all of its covenants and obligations contained in or
derived from this Lease that occur after the date of such conveyance and
assignment.

         26.      LANDLORD'S RIGHT TO PERFORM TENANT'S COVENANTS

         If Tenant shall at any time fail to make any payment or perform any
other act on its part to be made or performed under this Lease, Landlord may,
following reasonable prior notice, but shall not be obligated to and without
waiving or releasing Tenant from any obligation of Tenant under this Lease, make
such payment or perform such other act to the extent Landlord may deem
desirable, and in connection therewith, pay expenses and employ counsel. Tenant
shall reimburse Landlord for all sums so paid by Landlord and all penalties,
interest, legal fees and collection costs incurred in connection therewith
within ten (10) days after Landlord's written request therefor. If Tenant fails
to so reimburse Landlord within such ten (10) day period, then (a) a late charge
shall be assessed in accordance with PARAGRAPH 15(c) above, (b) interest shall
accrue on such delinquent payment at the rate of ten percent (10%) per annum
from the date due

                                       30
<PAGE>

to the date of payment thereof by Tenant to Landlord, and (c) Landlord shall
have all other rights and remedies granted or reserved to Landlord hereunder for
the nonpayment of Rent.

         27.      TENANT'S REMEDY

         Except with regard to Landlord's obligation to pay to Tenant the Tenant
Improvement Allowance in accordance with the terms of this Lease, the
obligations of Landlord under this Lease are not personal obligations of the
individual members, partners, directors, officers, shareholders, agents or
employees of Landlord; and Tenant shall look solely to Landlord's interest in
the Project (and any insurance proceeds relating thereto) for satisfaction of
any liability of Landlord and shall not look to other assets of Landlord nor
seek recourse against the assets of the individual members, partners, directors,
officers, shareholders, agents or employees of Landlord; provided, however, that
under no circumstances shall Tenant be entitled to recovery of more than
$6,000,000 (not including any insurance proceeds due Tenant under this Lease)
from Landlord's interest in the Project.

         28.      SECURITY

                  (a) CASH SECURITY DEPOSIT. Within six (6) days after full
execution of this Lease, Tenant shall deliver to Landlord cash (the "Security
Deposit") in the amount specified as the Security Deposit in the Lease Summary.
The Security Deposit shall secure the performance of all of Tenant's obligations
under this Lease, including Tenant's obligation to pay Rent and other monetary
amounts, to maintain the Premises and repair damages thereto, and to surrender
the Premises to Landlord upon termination of this Lease in the condition
required hereunder. Landlord may use and commingle the Security Deposit with
other funds of Landlord. If Tenant fails to perform Tenant's obligations
hereunder, Landlord may, but without any obligation to do so, apply all or any
portion of the Security Deposit towards fulfillment of Tenant's unperformed
obligations. If Landlord does so apply all or any portion of the Security
Deposit, Tenant, upon written demand by Landlord, shall immediately pay to
Landlord a sufficient amount in cash to restore the Security Deposit to the full
original amount. Tenant's failure to pay to Landlord a sufficient amount in cash
to restore the Security Deposit to its original amount within five (5) business
days after receipt of such demand shall constitute a default under this Lease.
Tenant shall not be entitled to interest on the Security Deposit. Within thirty
(30) days after the expiration or earlier termination of this Lease, if Tenant
has then performed all of Tenant's obligations hereunder, Landlord shall return
the Security Deposit to Tenant. If Landlord sells or otherwise transfers
Landlord's rights or interest under this Lease, Landlord shall deliver the
Security Deposit to the transferee, whereupon Landlord shall be released from
any further liability to Tenant with respect to the Security Deposit.

                  (b) LETTER OF CREDIT. In lieu of providing Landlord with a
cash security deposit, Tenant may deliver to Landlord an irrevocable standby
letter of credit (the "Letter of Credit") in the form attached hereto as Exhibit
G naming Landlord as beneficiary, in the amount of the Security Deposit. The
Letter of Credit shall be issued by a major national bank located in San
Francisco or a regional bank located in the San Francisco Bay Area ("Bank")
reasonably satisfactory to Landlord and shall be upon such terms and conditions
as Landlord and Landlord's lender may reasonably require. The Letter of Credit
shall allow draws by Landlord upon sight draft accompanied by a statement from
Landlord that it is entitled to draw upon the Letter of

                                       31
<PAGE>

Credit and shall contain terms which allow Landlord to make partial and multiple
draws up to the face amount of the Letter of Credit. Landlord may draw on the
Letter of Credit for the purposes provided in Paragraph 28(a) above. If Tenant
has not delivered to Landlord at least thirty (30) days prior to the expiration
of the original Letter of Credit (or any renewal letter of credit) a renewal or
extension thereof, Landlord shall have the right to draw down the entire amount
of original Letter of credit (or renewal thereof) and retain the proceeds
thereof as the security deposit. If and when Tenant would be entitled to request
that Landlord return the Security Deposit to Tenant or apply the Security
Deposit towards Tenant's obligation to pay Rent, Landlord shall, at Tenant's
request, return to Tenant any Letter of Credit delivered to Landlord pursuant to
this Paragraph. Tenant shall cooperate with Landlord with respect to any
transfer of the Letter of Credit to Landlord's lender as the result of an
assignment of Landlord's interests in the Letter of Credit to such lender as
part of lender's security, including making any reasonable modification to the
Letter of Credit that may be required by Landlord's lender pursuant to such
transfer and paying any and all transfer fees (the "Transfer Fees") incurred in
connection with the transfer of the Letter of Credit imposed by the Bank;
provided, however, that Tenant shall not be obligated to pay Transfer Fees with
respect to any transfer of the Letter of Credit more than one (1) time in any
twelve (12) consecutive month period.

                  (c) REDUCTION OF SECURITY DEPOSIT. Notwithstanding the
foregoing, upon Tenant's written request, the Security Deposit shall be reduced
to Seven Hundred Twelve Thousand Six Hundred Ninety-Nine Dollars and Fifty Cents
($712,699.50) provided and on the condition that, at any time after the
thirty-sixth (36th) month of the Lease Term that all of the following conditions
are satisfied on the same date: (i) Tenant achieves, or has achieved,
Profitability (defined below) during a financial quarter in the minimum amount
of Five Million Dollars ($5,000,000.00) and maintains, or maintained, such
Profitability for three (3) consecutive financial quarters, and (ii) there
exists no Event of Default, or circumstance that with the giving of notice or
the passage of time, or both, would become an Event of Default under the Lease.
As used herein, "Profitability" shall be determined by dividing the net
accounting revenue by accounting expenses prepared in a manner subject to
general accepted accounting principles. Evidence that Tenant shall have achieved
Profitability shall be certified by an independent certified public accountant.
Tenant shall provide to Landlord such certified financial statements and other
financial information reasonably requested by Landlord in order for Landlord to
reasonably determine whether Tenant has achieved and maintained Profitability in
accordance with subparagraph (i) hereof.

         29.      FINANCIAL COVENANTS

         Tenant represents and warrants that all financial information provided
by Tenant to Landlord prior to execution of this Lease is true and complete and
fairly represents the actual financial condition of Tenant as of the date
indicated on the financial statement, and that no material adverse change in
such financial condition has occurred from such date to the date that Tenant
executes this Lease. Tenant agrees that any material misrepresentation to
Landlord as to Tenant's financial condition, or any failure to provide financial
information required to be provided by Tenant hereunder, shall constitute a
default under this Lease.

         30.      PARKING

                                       32
<PAGE>

         Tenant and Tenant's Agents shall be entitled to the non-exclusive use
of Tenant's Project Percentage of the Project's parking facilities, except that
Tenant shall have the exclusive use of the three (3) parking spaces designated
on EXHIBIT J attached hereto (the "Exclusive Use Parking Spaces"), as part of
Tenant's Project Percentage of parking, in order to provide Tenant with access
to the Yard Area. Tenant's Project Percentage of the Project's parking
facilities shall not be less than 3.39 parking spaces (including the Exclusive
Use Parking Spaces) per 1,000 rentable square feet of the Premises. Such parking
rights shall be free of charge and, except as otherwise provided in the
preceding sentence, available for Tenant's use on a non-exclusive basis with the
other tenants of the Project and their respective officers, employees, customers
and invitees; provided, however, that Tenant agrees not to overburden the
parking facilities and to cooperate with Landlord and other tenants of the
Project in the use of the parking facilities. Landlord reserves the right in its
absolute discretion to determine whether the parking facilities are becoming
crowded and to allocate and assign parking spaces among Tenant and the other
tenants of the Project, or to impose validated parking restrictions. Landlord
shall not be liable to Tenant, nor shall this Lease be affected, if any parking
privileges appurtenant to the Premises are impaired by reason of any Law or
Landlord's further modifications or development of the Project (including,
without limitation, the addition of new buildings or other improvements on
existing parking areas) or as a result of any other tenants parking in any
parking spaces designated for Tenant's exclusive use.

         31.      QUIET ENJOYMENT

         Landlord covenants that Tenant, upon performing the terms, conditions
and covenants of this Lease, shall have quiet and peaceful possession of the
Premises as against any person claiming the same by, through or under Landlord.

         32.      SIGNS

         Tenant shall not maintain a Tenant identification sign in any location
in, on or about the Premises and shall not display or erect any other signage or
advertising material that is visible from the exterior of the Building or
anywhere upon the Project, except in compliance with the then-current
multi-tenant signage program for the Project (a copy of the current version of
which is attached hereto as EXHIBIT F), which signage program may be modified by
Landlord at any time in its sole discretion, and any governmental restrictions
or conditional approvals. Based upon government regulations and Landlord's
approvals as of the date hereof, Tenant, at a minimum, shall be entitled to (i)
its designation with other tenants in a directory of the Project as reasonably
determined by Landlord on at least one (1) monument sign within the Project (the
"Monument Signage"), provided, that if Tenant at any time occupies less than
fifty percent (50%) of the Building, then Tenant's designation on the Monument
Signage may be deleted or modified by Landlord, in Landlord's discretion, and
(ii) parapet signage on the Building, to the extent approved by the City of
Brisbane and any other appropriate governmental entities and reasonably approved
by Landlord (the "Building Signage"), provided, however, that if Tenant at any
time occupies less than fifty percent (50%) of the Building, then Tenant's right
to Building Signage shall be shared on a proportionate basis with other tenants
in the Building, as determined by Landlord. The cost of Landlord's approval of
Building Signage or other advertising material (the "Approved Signage"),
including the cost of design, manufacture, installation, maintenance and
removal, shall be at Tenant's sole expense. If Tenant fails to maintain its
Approved Signage,

                                       33
<PAGE>

or if Tenant fails to remove its Approved Signage upon the termination of this
Lease, Landlord may do so at Tenant's expense and Tenant shall reimburse
Landlord for such amounts as Additional Rent. Such reimbursement shall include
all sums disbursed, incurred or deposited by Landlord, including Landlord's
costs, expenses and reasonable attorneys' fees, with interest thereon at an
interest rate of ten percent (10%) per annum from the date of payment by
Landlord. Landlord agrees to consent to the location of Building Signage by
Tenant on the east and west sides of the Building to the extent such signage is
approved by the City of Brisbane and any other appropriate governmental entity.

         33.      ACCEPTANCE

         Delivery of this Lease, duly executed by Tenant, together with payment
of the Base Rent for the first month of the Lease Term and the Security Deposit
required hereunder, constitutes an offer to lease the Premises, and under no
circumstances shall such delivery and payment be deemed to create an option or
reservation to lease the Premises for the benefit of Tenant. This Lease shall
only become effective and binding upon full execution hereof by Landlord and
delivery of a signed copy to Tenant. Upon acceptance of Tenant's offer to lease
under the terms hereof, Landlord shall be entitled to retain such Base Rent and
Security Deposit and apply same as partial payment toward damages, costs and
expenses incurred by Landlord if Tenant fails to occupy the Premises. If
Landlord declines said offer, any such payments shall be returned to Tenant.

         34.      RECORDING; QUITCLAIM

         Neither party shall record this Lease nor a short form memorandum
thereof. Upon any termination of this Lease, Tenant shall, at Landlord's
request, execute, have acknowledged and deliver to Landlord a quitclaim deed or
other documentation acceptable to Landlord evidencing the termination of
Tenant's interest in the Premises.

         35.      BROKERS

         Tenant represents and warrants to Landlord that it has no dealings with
any real estate broker or agent in connection with the negotiation of this Lease
and that it knows of no real estate broker or agent who is or might be entitled
to a commission or fee in connection with this Lease, except for the brokers
disclosed in the Lease Summary attached hereto (the "Brokers"). Tenant agrees to
indemnify and hold harmless Landlord and Landlord's Agents from and against any
and all Liabilities arising out of or in any way related to any claims for
compensation made by any party claiming to have acted on behalf or for the
benefit of Tenant in connection with this Lease, other than the Brokers.
Landlord shall pay, pursuant to separate agreement, the commissions and fees due
to the Brokers.

         36.      GENERAL

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

                                       34
<PAGE>

                  (b) EXECUTED COPY; COUNTERPARTS. Any fully executed copy of
this Lease shall be deemed an original for all purposes. This Lease may be
executed in several counterparts, each of which shall be an original, but all of
such counterparts shall constitute one such Lease.

                  (c) SEVERABILITY. In case any one or more of the provisions
contained herein, except for the payment of Rent, shall for any reason be held
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other provision of this
Lease, but this Lease shall be construed as if such invalid, illegal or
unenforceable provision had not been contained herein.

                  (d) CONSTRUCTION; CHOICE OF LAW. This Lease shall be construed
and enforced in accordance with the Laws of the State of California, without
giving effect to the conflict-of-law principles of said State. The language in
all parts of this Lease shall in all cases be construed as a whole according to
its fair meaning and not strictly for or against either Landlord or Tenant.

                  (e) GENDER; SINGULAR, PLURAL. When the context of this Lease
requires, the neuter gender includes the masculine, the feminine, a partnership
or corporation or joint venture, and the singular includes the plural.

                  (f) BINDING EFFECT. The covenants and agreements contained in
this Lease shall be binding on the parties hereto and on their respective
successors and assigns to the extent assignable.

                  (g) WAIVER. No covenant, term or condition of this Lease shall
be deemed to have been waived by Landlord unless such waiver is in writing and
signed by Landlord. The waiver by Landlord of any breach of any term, condition
or covenant of this Lease shall not be deemed to be a waiver of such provision
or any subsequent breach of the same or any other term, condition or covenant of
this Lease. Landlord shall have the right to accept Base Rent and other payments
due from Tenant hereunder with knowledge of a preceding breach of this Lease,
and no such acceptance shall be deemed an express or implied waiver of such
breach unless such waiver is in writing and signed by Landlord. No further
reservation of rights shall be required of Landlord under this Lease to reserve
all rights and remedies of Landlord arising with respect to such preceding
breach.

                  (h) ENTIRE AGREEMENT. This Lease is the entire agreement
between the parties, and this Lease expressly supersedes all prior negotiations,
representations and agreements of the parties respecting the Premises or the
Project. There are no agreements or representations between the parties except
as expressed herein. Except as otherwise provided herein, no subsequent change
or addition to this Lease shall be binding unless in writing and signed by each
of the parties hereto.

                  (i) AUTHORITY. If Tenant is a corporation or a partnership,
each individual executing this Lease on behalf of said corporation or
partnership, as the case may be, represents and warrants that he or she is duly
authorized to execute and deliver this Lease on behalf of said entity in
accordance with its corporate bylaws, statement of partnership or certificate of
limited partnership, as the case may be. Landlord, at its option, may require a
copy of such written authorization to enter into this Lease. The failure of
Tenant to deliver the same to Landlord

                                       35
<PAGE>

within seven (7) days after Landlord's request therefor shall be deemed a
default under this Lease.

                  (j) EXHIBITS. All exhibits, amendments, riders and addenda
attached hereto are hereby incorporated herein and made a part hereof.

                  (k) LEASE SUMMARY. The Lease Summary attached to this Lease is
intended to provide general information only. In the event of any inconsistency
between the Lease Summary and the specific provisions of this Lease, the
specific provisions of this Lease shall prevail.

                  (l) SURVIVAL. Tenant's covenants and indemnities shall survive
the termination of this Lease where reasonably appropriate to accomplish the
purpose thereof.

                  (m) TIME. Time is of the essence for the performance of each
term, condition and covenant of this Lease.

                  (n) NO JURY TRIAL. Landlord and Tenant hereby waive their
respective right to trial by jury of any cause of action, claim, counterclaim or
cross-complaint in any action, proceeding and/or hearing brought by either
Landlord against Tenant or Tenant against Landlord on any matter whatsoever
arising out of, or in any way connected with, this Lease, the relationship of
Landlord and Tenant, Tenant's use or occupancy of the Premises, or any claim of
injury or damage, or the enforcement of any remedy under any Laws now or
hereafter in effect.

                  (o) SHUTTLE PROGRAM. Tenant shall participate in the
Brisbane/Crocker Park Shuttle Program managed by the Multi-City TSM Agency for
the City of Brisbane at its own expense.

                  (p) GENERATOR. Tenant may install and maintain in the Roof
Area described in Paragraph 1(a) hereof a generator pad (the "Pad"), as
necessary, and a back-up generator (the "Generator," and together with the Pad,
collectively, the "Generator Components") for the use of Tenant and for the
benefit of the Premises during the term of this Lease. In addition to Tenant's
satisfaction of the covenants described in Paragraph 1(a), the following
conditions shall apply: (i) Landlord shall have reasonably approved Tenant's
plans for installation of the Generator Components; (ii) the Generator
Components shall be installed at Tenant's sole cost and expense and any damage
to the Roof Area or other portions of the Building or Premises resulting from
such installation shall be promptly repaired by Tenant, at Tenant's sole cost
and expense; and (iv) all connections of systems in the Premises to the
Generator Components shall be accomplished at Tenant's sole cost and expense and
in a manner reasonably acceptable to Landlord. Prior to the expiration or
earlier termination of this Lease, Tenant shall remove the Generator Components,
unless otherwise agreed to in writing by Landlord, and repair any damage to the
Roof Area, Building, or Premises resulting from such removal, all at Tenant's
sole cost and expense and in a manner reasonably satisfactory to Landlord.
Without limiting the indemnity described in Paragraph 1(a) hereof, Tenant hereby
agrees to indemnify, defend and hold Landlord harmless from and against any and
all claims made by any person or party and arising out of or in any way
connected with the installation, maintenance, removal or failure of the
Generator Components.

                                       36
<PAGE>

         THIS LEASE is effective as of the date first hereinabove written.

                          "Tenant"

                           INTERMUNE PHARMACEUTICALS, INC.
                           a Delaware corporation

                           By: /s/ Stephen N. Rosenfield
                               Name:  STEPHEN N. ROSENFIELD
                               Its: SR. VP OF LEGAL AFFAIRS

                           By: /s/ W. Scott Harkonen
                               Name:  W. SCOTT HARKONEN
                               Its: PRESIDENT/CEO

                           "Landlord"

                           GAL-BRISBANE, L.P., a California limited partnership

                           By:  Brisbane Tech LLC, a Delaware limited
                                liability company, its General Partner

                                 By:   Stuhlmuller Real Estate, LLC, a
                                       Delaware limited liability company

                                       By:  /s/ Roger C. Stuhlmuller
                                            Roger C. Stuhlmuller,
                                            Manager

<PAGE>

                                    EXHIBIT A

                               DIAGRAM OF BUILDING

(DRAWING OF FIRST FLOOR PLAN)

(DRAWING OF SECOND FLOOR PLAN)

<PAGE>

                                   EXHIBIT A-1

                            DESCRIPTION OF YARD AREA

Drawing of yard area

<PAGE>

                                    EXHIBIT B

                      PLAT AND LEGAL DESCRIPTION OF PROJECT

         All that certain real property located in the County of San Mateo,
State of California more particularly described as follows:

All that real property situate in the City of Brisbane, County of San Mateo,
State of California, being a portion of Parcel A as said parcel is shown on that
certain parcel map filed for record on October 2, 1979 in Book 48 of Parcel Maps
at Page 18 in the office of the Recorder of San Mateo County, and being more
particularly described as follows:

All that real property being all of said Parcel A.

EXCEPTING THEREFROM all that real property described in that certain Deed
recorded on November 13, 1996 as Document No. 96139899 in the Office of the
Recorder of San Mateo County, and being more particularly described as follows:

BEGINNING at the intersection of the Easterly line of said Parcel A with the
Northerly right-of-way line of Guadalupe Canyon Parkway (100 feet wide), as
shown on said parcel map; thence Westerly along said Northerly right-of-way line
North 89(degree) 05' 19" West, a distance of 70.00 feet; thence leaving said
line North 79(degree) 32' 22" East, a distance of 27.04 feet to the beginning of
a tangent curve to the left; thence along said curve having a radius of 50.00
feet, through a central angle of 46(degree) 45' 59", an arc length of 40.81 feet
to the Easterly line of said Parcel A; thence along said Easterly line South
20(degree) 21' 25" East, a distance of 30.00 feet to the point of beginning.

AND EXCEPTING THEREFROM all that real property in that certain Deed recorded
November 23, 1998 as Document No. 98193465 in the office of the Recorder of San
Mateo County, and being more particularly described as follows:

BEGINNING at the most Northwesterly corner of said Parcel A; thence along the
Northwesterly line of said parcel South 59(degree) 15' 24" East, distance of
171.52 feet; thence leaving said line South 23(degree) 35' 40" East, a distance
of 852.98 feet to the beginning of a tangent curve to the left; thence along
said curve having a radius of 450.00 feet, through a central angle of
65(degree)29' 40", an arc length of 514.39 feet; thence South 89(degree) 05' 19"
East, a distance of 170.23 feet to the Westerly right-of-way line of Bayshore
Boulevard as said boulevard is shown on said map; thence along said right-of-way
line South 20(degree) 21' 25" East, a distance of 107.32 feet to the most
Southerly line of said Parcel A; thence along said Southerly line North
89(degree) 05' 19" West, a distance of 209.15 feet to the beginning of a tangent
curve to the right; thence along said curve having a radius of 550.00 feet
through a central angle of 62(degree) 29' 40", an arc length of 628.70 feet;
thence continuing along said line North 23(degree) 35' 39" West, a distance of
992.34 feet to the point of beginning.

(Diagram of buildings)

<PAGE>

                                    EXHIBIT C

                              WORK LETTER AGREEMENT

<PAGE>

                                    EXHIBIT C

                              WORK LETTER AGREEMENT

         This Work Letter Agreement (this "Work Letter") sets forth Landlord's
and Tenant's responsibilities, respectively, for the construction of the
Premises.

1. DEFINED TERMS. Unless provided to the contrary herein, the defined terms
shall have the meanings set forth in the Lease.

2. LANDLORD'S WORK.

         (a) DESCRIPTION OF LANDLORD'S WORK. Landlord, at its sole cost and
expense, shall arrange for the construction by a contractor hired or approved by
Landlord ("Landlord's Contractor") of improvements to the existing cold Building
shell (the "Building Shell"), such that the cold Building Shell is converted
into a "warm shell" (the "Warm Building Shell"). The Warm Building Shell shall
be constructed in accordance with those plans and specifications described in
EXHIBIT C-1 attached hereto and incorporated herein by reference, and include
the improvements described in EXHIBIT C-2 attached hereto and incorporated
herein by reference (the foregoing is hereinafter referred to as "Landlord's
Work"). Except as provided in EXHIBITS C-1 AND C-2, Tenant shall be required to
construct all other improvements for the Building as part of the Tenant
Improvements. Landlord warrants that all Landlord's Work shall be completed with
due diligence, in a good and workman-like manner, and in full compliance with
all laws, codes and ordinances then applicable to the Building.

         (b) COSTS. Landlord shall pay for all fees incurred in connection with
Landlord's Work, including, without limitation, architectural, engineering,
consultant, utility, loan, development, transaction and building permit and
impact fees, if and as applicable.

         (c) DELIVERY CONDITION. The Warm Building Shell shall be deemed
"substantially complete" when (i) Landlord's Contractor has substantially
completed the Warm Building Shell even though minor items may remain to be
installed, finished or corrected and notwithstanding Tenant's delivery to
Landlord of a "punchlist" of items that require correction, provided such minor
items do not have any material effect on the ability of Tenant to utilize the
Warm Building Shell for its intended purpose or to construct the Tenant
Improvements in the Warm Building Shell, and (ii) Landlord's architect
("Landlord's Architect") has delivered to Tenant a written statement declaring
(a) that the Warm Building Shell is "substantially complete" in accordance with
the terms of this Work Letter and (b) the date on which the Warm Building Shell
was substantially completed. In the event of any dispute as to substantial
completion of Landlord's Work performed or required to be performed by Landlord,
the statement of Landlord's Architect shall be conclusive. Tenant shall prepare
and deliver to Landlord within thirty (30) days after Landlord notifies Tenant
that the Warm Building Shell is substantially complete a punchlist of items that
materially and adversely affect Tenant's use of the Premises and require
correction. If Tenant fails to deliver to Landlord a punchlist within the thirty
(30) day period referenced above, Tenant shall be deemed to have approved the
Warm Building Shell, and Landlord's Work with respect to the Warm Building Shell
and the same shall be deemed to have been fully performed

<PAGE>

and delivered to Tenant in good condition and repair. Landlord shall cause
Landlord's Contractor to promptly undertake the correction of any items included
in Tenant's punchlist.

3.       TENANT'S WORK.

         (a) DESCRIPTION OF TENANT IMPROVEMENTS. Tenant shall construct or cause
Tenant's Contractor (defined below) to construct office and related improvements
(the "Tenant Improvements") in the Building. To the extent the Tenant
Improvements constitute general purposes office improvements as opposed to
specialty office and/or laboratory improvements, the Tenant Improvements shall
conform to the building standards (the "Building Standards") described in
EXHIBIT C-3 attached hereto and incorporated herein by reference. To the extent
the Tenant Improvements constitute specialty office and/or laboratory
improvements, the Tenant Improvements do not have to conform to the Building
Standards, but are subject to Landlord's review and approval, which approval
shall not be unreasonably withheld, conditioned or delayed. The construction of
the Tenant Improvements is hereinafter referred to as "Tenant's Work."

         (b)      TENANT'S ARCHITECT AND CONTRACTOR.

                  (i) TENANT'S ARCHITECT. Tenant shall notify Landlord in
         writing of the name of the architect that Tenant proposes to use to
         prepare the plans and specifications and working drawings for the
         Tenant Improvements and deliver to Landlord any information reasonably
         requested by Landlord concerning the proposed architect. Landlord shall
         have the right to approve the proposed architect, which approval may
         not be unreasonably withheld, conditioned or delayed. Landlord has
         pre-approved Dowler Gruman as a potential Tenant architect. In
         addition, the proposed architect must be licensed to do business in
         California. The architect selected by Tenant and approved by Landlord
         in connection with Tenant's Work is hereinafter referred to as
         "Tenant's Architect". Tenant shall reimburse Landlord for Landlord's
         reasonable actual costs in hiring an architect to oversee and supervise
         Tenant's Work.

                  (ii) TENANT'S CONTRACTOR. Tenant shall select a contractor,
         notify Landlord in writing of the name of the contractor that Tenant
         proposes to use to construct the Tenant Improvements and deliver to
         Landlord any information reasonably requested by Landlord concerning
         the proposed contractor. Landlord shall have the right to approve the
         proposed contractor, which approval may not be unreasonably withheld,
         conditioned or delayed. The contractor selected by Tenant and approved
         by Landlord to construct the Tenant Improvements is hereinafter
         referred to as "Tenant's Contractor". Landlord has pre-approved Webcor
         Builders Southbay Construction as a potential Tenant's Contractor.

                  (iii) INSURANCE. Within fifteen (15) days after the approval
         of Tenant's Contractor, Tenant shall furnish to Landlord certificates
         evidencing that Tenant's Contractor has obtained workers' compensation,
         public liability and property damage insurance in amounts and forms and
         with companies reasonably satisfactory to Landlord.

         (c)      PLANS.

<PAGE>

                  (i) PRELIMINARY PLANS. Tenant shall work with Tenant's
         Architect to prepare preliminary architectural drawings and engineering
         specifications (the "Preliminary Plans") for the construction of the
         Tenant Improvements in the Building and shall submit the Preliminary
         Plans to Landlord for Landlord's review and approval, which approval
         shall not be unreasonably withheld, conditioned or delayed. Landlord
         shall respond to Tenant's submission of the Preliminary Plans within
         ten (10) business days after Landlord's receipt thereof; provided that
         Landlord may have such additional time to respond to Tenant as needed
         for Landlord's architect and other consultants to review and approve or
         disapprove the Preliminary Plans. If Landlord rejects the Preliminary
         Plans, Tenant shall revise the Preliminary Plans to incorporate
         Landlord's comments and resubmit the Preliminary Plans to Landlord for
         Landlord's review and approval, which shall not be unreasonably
         withheld, conditioned or delayed and shall be provided within ten (10)
         business days following submission of such revised Preliminary Plans;
         provided, that Landlord may have such additional time to respond to
         Tenant as needed for Landlord's architect and other consultants to
         review and approve or disapprove the revised Preliminary Plans.

                  (ii) FINAL PLANS. Upon approval by Landlord of the Preliminary
         Plans, Tenant shall arrange for Tenant's Architect to prepare final
         plans and specifications (the "Final Plans") for the Tenant
         Improvements in the Building. The Final Plans shall consist of complete
         architectural plans and specifications necessary to allow Tenant's
         Contractor to obtain all necessary permits and build the Tenant
         Improvements in the Building. The Final Plans shall substantially
         conform with the Preliminary Plans, shall include working drawings for
         all mechanical, electrical and plumbing work, partitions and doors,
         complete fixturing information, and material selections and finishes,
         and shall conform in all respects to the Building Standards, except to
         the extent provided under PARAGRAPH 3(a) of this Work Letter. Tenant
         shall submit the Final Plans to Landlord for its review and approval as
         soon as reasonably possible, which approval shall not be unreasonably
         withheld, delayed or conditioned, and which approval shall be granted
         if such Final Plans substantially comply with the Preliminary Plans
         approved by Landlord. Within ten (10) business days after receipt of
         the Final Plans, Landlord shall approve or suggest modifications to the
         Final Plans and designate those Tenant Improvements proposed by Tenant
         which Tenant shall be required to remove at the expiration or earlier
         termination of the Lease in accordance with PARAGRAPH 7(d) of the
         Lease; provided that Landlord may have such additional time to respond
         to Tenant as needed for Landlord's architect and other consultants to
         review and approve or disapprove the Final Plans. Tenant shall
         incorporate Landlord's suggested modifications to the Final Plans (to
         the extent acceptable to Tenant) or otherwise revise the Final Plans
         and resubmit the Final Plans to Landlord for Landlord's review and
         approval, which shall be provided within ten (10) business days
         following submission of such revised Final Plans; provided, that
         Landlord may have such additional time to respond to Tenant as needed
         for Landlord's architect and other consultants to review and approve or
         disapprove the revised Final Plans.

                  (iii) CHANGES. Tenant may not make any material changes to the
         Final Plans without Landlord's prior written approval, which approval
         shall not be unreasonably withheld, conditioned or delayed. All
         material changes to the Final Plans must be in

<PAGE>

         writing and signed by both Landlord and Tenant prior to the change
         being made. Tenant shall be responsible for all additional costs
         attributable to any proposed change by Tenant to the Final Plans,
         including, without limitation, additional architectural fees, increases
         in construction costs of the Warm Building Shell or the Tenant
         Improvements, and additional costs incurred by Landlord in connection
         with Landlord's Architect review the proposed changes. Notwithstanding
         the foregoing, all changes to the Final Plans, and additional costs
         attributable thereto, shall qualify for funding through the Tenant
         Improvement Allowance (defined below), so long as the applicable dollar
         caps set forth in this Work Letter are not exceeded.

         (d) CONSTRUCTION. Tenant shall instruct Tenant's Contractor to build
the Tenant Improvements in the Building in accordance with the Final Plans, all
at Tenant's sole cost and expense, except for the Tenant Improvement Allowance
(defined below).

         (e) LANDLORD NOT RESPONSIBLE FOR TENANT'S PLANS. As between Landlord
and Tenant, Tenant shall be solely responsible for the adequacy in all respects
of the Preliminary Plans and the Final Plans (collectively, the "Tenant
Improvement Plans"), including, without limitation, compliance with all
governmental requirements, compatibility with the Warm Building Shell, and any
special requirements of Tenant's proposed equipment or machines with respect to
ambient temperatures, electrical use or current, or water availability. Tenant
acknowledges that in connection with obtaining Landlord's approval of the Tenant
Improvement Plans, Tenant may provide Landlord with certain information
regarding its specific needs relating to the Premises in developing plans and
specifications for the Tenant Improvements. Tenant further acknowledges that
Landlord's review is solely for the purpose of protecting Landlord's interests,
and that Landlord will not make an independent review of any such information.
Landlord does not warrant the adequacy or suitability of any of the Tenant
Improvement Plans or the fitness, adequacy or suitability of the Tenant
Improvements for Tenant's intended purpose.

         (f) NOTICE. Tenant shall provide Landlord with not less than ten (10)
days' written notice prior to the commencement of any Tenant's Work and permit
Landlord to post on the Premises such notices of non-responsibility as may be
required or otherwise available to Landlord.

         (g) COSTS. Tenant shall promptly pay any and all costs and expenses in
connection with or arising out of the construction of Tenant's Work and shall
furnish to Landlord evidence of such payment upon request. In addition, Tenant
shall reimburse Landlord for all reasonable, out-of-pocket, third party
consultant fees incurred or paid by Landlord in connection with Landlord's
review of the Tenant Improvement Plans and the Tenant Improvements. Upon
completion of Tenant's Work, Tenant shall deliver to Landlord a release and
waiver of lien executed by each contractor, subcontractor and materialman
concerned with Tenant's Work; provided, that Tenant shall not be required to
deliver a release and waiver of lien from minor subcontractors and materialmen
to the extent a Notice of Completion has been properly filed, the lien period
has expired and all lien claimants have been paid. In the event any lien is
filed against the Premises or any portion thereof or against Tenant's leasehold
interest therein (as a result of Tenant's Work), Tenant shall obtain the release
and/or discharge of the lien or record a release bond executed by an admitted
surety insurer authorized to issue surety bonds in the State

<PAGE>

of California within ten (10) business days after Tenant's notification of the
filing of the lien. In the event Tenant fails to do so, Landlord may obtain the
release and/or discharge of the lien and Tenant shall indemnify Landlord for the
costs thereof, including reasonable attorneys' fees, together with interest at
the Applicable Interest Rate from the date of demand.

         (h) INDEMNITY. Tenant shall indemnify, protect, defend (with counsel
satisfactory to Landlord) and hold harmless Landlord and Landlord's Agents from
and against any and all suits, claims, actions, loss, costs or expense
(including claims for workers' compensation, attorneys' fees and costs) based on
personal injury or property damage caused in, or contract claims (including,
claims for breach of warranty) arising from the performance of Tenant's Work;
provided, however, Tenant shall not be required to indemnify Landlord and
Landlord's Agents for their gross negligence or willful misconduct. Tenant shall
repair or replace any portion of the Building or item of Landlord's equipment or
any of Landlord's real or personal property damaged, lost or destroyed in the
performance of Tenant's Work.

         (i) DEFAULT BY TENANT. In the event that Tenant is in default under
this Work Letter and/or the Lease beyond any applicable grace or cure period,
and the Lease terminates by reason of such default, then, in addition to any
other remedies that Landlord may have on account thereof under the Lease,
subject to any third party rights thereto, Landlord shall be entitled to sole
possession and ownership of the Tenant Improvement Plans, and Tenant agrees to
deliver any such plans to Landlord promptly upon demand.

         (j)      TENANT IMPROVEMENT ALLOWANCE.

                  (i) TENANT IMPROVEMENT ALLOWANCE. Landlord shall pay to Tenant
         upon the terms and conditions set forth below a tenant improvement
         allowance (the "Tenant Improvement Allowance") in an amount equal to
         the remainder of the Tenant Improvement Allowance (as defined in the
         Snowball Lease (defined below)) applicable to the Building under that
         certain lease by and between Landlord and Snowball.com dated November
         29, 1999, as amended (the "Snowball Lease") (which originally covered
         the Building) that remains undisbursed with respect to the Building,
         toward the cost of designing, constructing and installing the Tenant
         Improvements in the Building; provided, however, that the Tenant
         Improvement Allowance shall not be less than Five Dollars ($5.00) per
         rentable square foot of the Premises (excluding the Yard Area and the
         Roof Area). The Tenant Improvement Allowance may be used by Tenant only
         to pay for the design and construction of general purpose and specialty
         office and laboratory improvements in the Building. The Tenant
         Improvement Allowance may not be used to pay for any trade fixtures,
         security or alarm systems, furniture, furnishings, equipment (except
         electrical, mechanical and plumbing systems, including HVAC systems),
         equipment which is leased or pledged as security, decorations, signs,
         inventory or other personal property, or interest or financing costs,
         utility and permit fees or administrative or overhead costs and
         expenses paid or incurred by Tenant in connection with the construction
         of the Tenant Improvements in the Building. Tenant may not use more
         than Two Dollars ($2.00) per rentable square foot of the Tenant
         Improvement Allowance to pay for architectural and structural design
         fees and more than One and 50/100 Dollars

<PAGE>

         ($1.50) per rentable square foot of the Tenant Improvement Allowance to
         pay for electrical, mechanical and plumbing design fees.

                  (ii) PAYMENT OF THE ALLOWANCE. Landlord shall pay the Tenant
         Improvement Allowance to Tenant within thirty (30) days after Tenant's
         written request therefor, provided that (i) Tenant has substantially
         completed all of the Tenant Improvements in the Building in accordance
         with the terms of this Work Letter, (ii) Tenant is not in default
         beyond applicable cure periods of any material terms of the Lease, and
         (iii) Tenant's written request is accompanied by the following: (1)
         copies of invoices paid by Tenant in connection with the construction
         of the Tenant Improvements in an amount equal to or greater than the
         amount requested by Tenant, (2) unconditional lien waivers from
         Tenant's Contractor and all subcontractors, materialmen and suppliers
         that have performed work or supplied materials for work performed and
         materials installed by or for Tenant in the Building prior to the date
         of Tenant's request, (3) a certificate from Tenant's Architect
         identifying the Tenant Improvements that have been substantially
         completed and certifying that those Tenant Improvements have been
         substantially completed, (4) a certificate from Tenant's construction
         manager certifying that the applicable Tenant Improvements have been
         substantially completed, and (5) a certificate of occupancy for the
         Building.

         (k) VALUE OF TENANT IMPROVEMENTS. Tenant covenants to Landlord that the
value of the Tenant Improvements to be constructed in the Premises by Tenant
shall be on average not less than $50/per rentable square foot (not including
the Tenant Improvement Allowance). The Tenant Improvements shall be spread
evenly throughout the Premises, such that such Tenant Improvements shall equal
at least $30 (not including the Tenant Improvement Allowance) per rentable
square foot in every portion of the Premises and shall include drop ceilings,
carpet and painting, or other standard office improvements reasonably agreed to
by Landlord.

         (l) COMPLETION OF TENANT'S WORK. Tenant shall complete the Tenant
Improvements in the Building within nine (9) months after Landlord substantially
completes Landlord's Work and delivers possession of the applicable Building to
Tenant.

4. TENANT DELAYS. As used herein, the term "Tenant Delays" shall mean any delays
in the completion of construction of the Warm Building Shell due to the fault of
Tenant or Tenant's Agents, including, without limitation, any delays caused by:
(i) any changes made to any the Warm Building Shell at Tenant's request, and
(ii) any interference by Tenant or Tenant's Agents in connection with the
performance by Landlord or Landlord's Contractor of Landlord's Work.

5. FORCE MAJEURE. Whenever a period of time or a specific date is prescribed in
this Work Letter for action to be taken by Landlord or Tenant, the party
required to take such action shall not be liable or responsible for, and there
shall be excluded from the computation for any such period of time (or the
specified date shall be deferred by the number of days of) any delays in the
obtaining of any permits for and in the construction of the work to be performed
by such party caused by any action, claim, inaction, order, ruling, moratorium,
regulation, statute, condition or other decision of any governmental agency
having jurisdiction over any portion of the Project, over the construction
anticipated to occur thereon or over any uses thereof or by fire, flood,

<PAGE>

inclement weather (including rain), strikes, lockouts or other labor or
industrial disturbance, civil disturbance, order of any government, court or
regulatory body claiming jurisdiction or otherwise, act of public enemy, war,
riot, sabotage, blockade, embargo, failure or inability to secure materials,
supplies or labor through ordinary sources by reason of shortages or priority or
similar regulation, order of any government or regulatory body, lightning,
earthquake, storm, hurricane, tornado, washout, explosion or any cause
whatsoever beyond the reasonable control of the party where performance is
required, or any of its contractors or other representatives, whether or not
similar to any of the causes hereinabove stated (each hereinafter referred to as
an event of "Force Majeure"). The foregoing provision shall not apply to either
party's obligation to pay to the other any amount due under this Work Letter or
the Lease.

<PAGE>

                                   EXHIBIT C-1

                            PLANS AND SPECIFICATIONS

    [Plans and Specifications for Warm Building Shell to be referenced here]

<PAGE>

                                   EXHIBIT C-1

                                 PROJECT MANUAL

                           ARCHITECT'S PROJECT NUMBER
                                    98030.00

                            BRISBANE TECHNOLOGY PARK

                    GUADALUPE CANYON PARKWAY & BAYSHORE BLVD.
                              BRISBANE, CALIFORNIA
                                  MAY 21, 1999

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

                                    Drawing

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

                                   ARCHITECT:
                                HPC ARCHITECTURE
                            STEVEN M. COX, ARCHITECT

<PAGE>

                                TABLE OF CONTENTS

00001             Cover Page
00002             Table of Contents
00003             Project Directory
00004             General Conditions of the Contract for Construction, AIA A201
00005             Geotechnical Investigation

DIVISION 1                    GENERAL REQUIREMENTS
-----------                   --------------------

01001                         Basic Requirements
01002                         Year 2000 Compliance
01500                         Temporary Facilities & Control

DIVISION 2                    SITE CONSTRUCTION
----------                    -----------------

02085                         Interceptors
02100                         Clearing, Grubbing and Stripping
02200-A                       Earthwork
02200-B                       Exterior Concrete Paving And Planter Curbs
02202                         Trenching and Backfilling
02510                         Asphalt Paving and Surfacing
02530                         Portland Cement Concrete
02600                         Irrigation
02660                         Water Systems
02700                         Preparation of Planting Areas
02710                         Planting
02720                         Storm Drainage
02730                         Sanitary Sewers

DIVISION 3                    CONCRETE
----------                    --------

03300                         Cast-In-Place Concrete

DIVISION 4                    UNIT MASONRY ASSEMBLIES
----------                    -----------------------

04200                         Unit Masonry

DIVISION 5                    METALS
----------                    ------

05120                         Structural Steel
05210                         Steel Joist
05310                         Steel Deck
05500                         Miscellaneous Steel
05510                         Metal Fabrications

<PAGE>

05511                         Metal Stairs
05530                         Gratings

DIVISION 6                    WOOD AND PLASTICS
----------                    -----------------

06100                         Rough Carpentry

DIVISION 7                    THERMAL AND MOISTURE PROTECTION
----------                    -------------------------------

07241                         Exterior Insulation And Finish System - Class PB
07242                         Exterior Insulation And Finish System - Class PM
07514                         Built-Up Bituminous Roofing
07620                         Sheet metal flashing and Trim
07720                         Roof Accessories
07810                         Plastic Unit Skylights
07920                         Joint Sealants

DIVISION 8                    DOORS AND WINDOWS
----------                    -----------------

08125                         Interior Aluminium Frames
08211                         Flush Wood Doors
08410                         Aluminium Entrances and Storefronts
08450                         All-Glass Entrances
08800                         Glazing

DIVISION 9                    FINISHES
----------                    ---------

09253                         Gypsum Sheathing
09255                         Gypsum Board Assemblies
09900                         Painting

DIVISION 10                   SPECIALTIES
-----------                   -----------

Not Used.

DIVISION 11                   EQUIPMENT
-----------                   ---------

Not Used.

DIVISION 12                   FURNISHINGS
-----------                   -----------

Not Used.

DIVISION 13                   SPECIAL CONSTRUCTION
-----------                   --------------------

Not Used.

<PAGE>

DIVISION 14                   CONVEYING SYSTEMS
-----------                   -----------------

Not Used.

DIVISION 15                   MECHANICAL
-----------                   ----------

Not Used.

DIVISION 16                   ELECTRICAL
-----------                   ----------

Not Used.

<PAGE>

                                   SHEET INDEX

ARCHITECTURAL

A0.1              TITLE SHEET
A0.2              GENERAL NOTES
A0.3              CITY OF BRISBANE: CONDITIONS OF APPROVAL
A1.1              RFERENCE SITE PLAN
A1.2              PARTIAL SITE PLAN - SOUTH - BLDGS. A & B
A1.3              PARTIAL SITE PLAN - NORTH - BLDG. C
A2.1              FLOOR PLANS - BLDG. A
A2.2              FLOOR PLANS - BLDG. B
A2.3              FLOOR PLANS - BLDG. C
A3.1              ROOF PLANS - BLDGS. A&B
A3.2              ROOF PLAN - BLDG. C / DOOR NOTES
A4.1              BUILDING ELEVATIONS - BLDG. A
A4.2              BUILDING ELEVATIONS - BLDG. B
A4.3              BUILDING ELEVATIONS - BLDG. C
A5.1              MAIN ENTRY/SOFFIT - ENLARGED PLANS
A5.2              STAIR PANS/SECTIONS/DETAILS
A5.3              HANDICAP ACCESSIBILITY DETAILS
A6.1              TYPICAL BUILDING SECTIONS
A6.2              WALL SECTIONS
A6.3              WALL SECTIONS
A6.4              WALL SECTIONS
A6.5              WALL SECTIONS/STUD TABLE
A7.1              SITE DETAILS
A7.2              SITE DETAILS
A7.3              ROOF DETAILS
A7.4              DETAILS
A7.5              DETAILS

CIVIL
C0.1              GENERAL NOTES / LEGEND / ABBREVIATIONS
C1.1              SITE TOPOGRAPHIC PLAN
C2.1              PLAN & PROFILE BAYSHORE BLVD.
C2.2              PLAN & PROFILE BAYSHORE BLVD.
C2.3              PUBLIC STREET DETAILS
C3.1              HORIZONTAL CONTROL & SIGNING PLAN

<PAGE>

C3.2              HORIZONTAL CONTROL & SIGNING PLAN
C3.3              GRADING PLAN
C3.4              GRADING PLAN
C3.5              UTILITIES
C3.6              GRADING & UTILITIES
C3.7              SITE DETAILS
C3.8              SITE DETAILS

STRUCTURAL
S1.1              GENERAL NOTES
S1.2              TYPICAL DETAILS
S1.3              TYPICAL DETAILS
S2.1              BLDG. A 1ST FLOOR FOUNDATION PLAN /
                  2ND FLOOR & ROOF FRAMING PLAN
S2.2              BLDG. B 1ST FLOOR FOUNDATION PLAN /
                  2ND FLOOR & ROOF FRAMING PLAN
S2.3              BLDG. C 1ST FLOOR FOUNDATION PLAN /
                  2ND FLOOR & ROOF FRAMING PLAN
S2.3A             BLDG. C ROOF FRAMING PLAN
S3.1              BRACED FRAME ELEVATIONS
S3.2              BRACED FRAME DETAILS
S4.1              FOUNDATION DETAILS
S4.2              FOUNDATION DETAILS
S5.1              STEEL DETAILS
S5.2              STEEL DETAILS
S5.3              STEEL DETAILS
S5.4              STEEL DETAILS
S5.5              STEEL DETAILS
S7.1              PRECASE CONNECTIONS

LANDSCAPING
L.1               LAYOUT & REFERENCE PLAN - AREA A
L.2               LAYOUT & REFERENCE PLAN - AREA B
L.3               SITE CONSTRUCTION & PLANTING DETAILS
L.4               IRRIGATION PLAN - AREAS A&B
L.5               PLANTING PLAN - AREA A
L.6               PLANTING PLAN - AREA B
L.7               GROUND COVER PLAN - AREA A
L.8               GROUND COVER PLAN - AREA B

<PAGE>

L.9               IRRIGATION DETAILS

ELECTRICAL
E-1               SINGLE LINE DIAGRAM
E-2               SITE ELECTRICAL PLAN

FIRE ACCESS
FA-1              CONST. SITE LAYOUT & STAGING

<PAGE>

                                   EXHIBIT C-2

                                 LANDLORD'S WORK

The following is discretion of the Owners warm shell build-out for Building A:

Architectural:
A        finished interior toilet cores are provided on both first and second
         floor. Exterior face of cores are fire taped only and to be finished by
         tenant.
B        Egress stairs, railings, and 1-hr. fire rated egress enclosures
         provided at each end of building, interior walls finished and painted.
         Exterior face of stair enclosure is fire taped only and to be finished
         by tenant. Flooring to be by tenant.
C        One floor penetration for future tenant stairs are provided adjacent to
         the building lobby area.
D        Elevator and machine room are provided. Floor finish to be provided by
         tenant.
E        Exterior wall insulation is provided per Ca. Title 24 energy
         requirements. Any wall furring, if required, is to be provided by
         tenant.
F        Roof insulation per Ca. Title 24 Requirements is to be installed by
         tenant per tenant's requirements.
G        Main building electrical rooms and satellite electrical closets are
         provided. Finishes to be provided by tenant.

Electrical:
A        2000A. 480/277v Switchgear is provided.
B        200A house panel to service Toilet Cores is provided.
C        Main distribution panel to service roof top HVAC units and Elevator is
         provided.

Mechanical:
A        Two roof top HVAC units, 105 tons each, are installed on curbs with
         electrical connections. Duct distribution with floor and roof
         penetrations are to be provided by tenant.
B        Exhaust fan with distribution to the toilet cores are provided.
C        Roof top boiler with 2 pumps are provided.
D        Toilet cores are provided with supply air diffusers with ducting
         stubbed through wall for connection to tenant provided HVAC
         distribution ducting.
E        HVAC controls are to be provided by Tenant per their requirements.

<PAGE>

                                   EXHIBIT C-3

                               BUILDING STANDARDS

I.       FLOORING AND BASE:

         A.       Floor finishes shall be:

                  1.       Carpet. (Provided throughout unless otherwise noted)
                           30 oz. graphic loop pile or approved equal.

                  2.       Carpet upgrade at Lobby, Board Room
                           42 oz. cut pile or approved equal, with 18th border
                           of feature carpet.

                  3.       Sheet Vinyl
                           Armstrong, Classic Corlon or approved equal.

                  4.       Vinyl Composition Tile (VCT)
                           Armstrong, Premium Excelon or Asrock. Premium
                           Patterns or approved equal.

                  5.       Lobby Tile, 6" x  6" at entry door
                           Daltile, glazed payer, 12" x 12" Vitrestone or
                           approved equal.

                  6.       Base at carpet and VCT
                           Burke, Armstrong or approved equal.

                  7.       Base at sheet vinyl to be coved sheet vinyl.

         B.       Graphic Loop Carpet shall be direct glue down.

         C.       Cut Pile Carpet and Carpet at stairs shall be installed over
                  glue down pad.

         D.       Tile flooring at the toilet cores shall be installed per the
                  thin-set, dry-set method as recommended by the Ceramic
                  Institute of America.

         E.       Provide metal Schluter trim at floor transition between
                  ceramic tile and other floor finishes. Provide vinyl reducer
                  strips at all changes in floor material.

II.      WALL CONSTRUCTION AND FINISHES:

         A.       5/8" Gypsum Boared over 3-5/8" Metal Studs to underside of
                  ceiling/structure above except where otherwise required by
                  code. Gypsum Bd. shall extend a minimum of 2" above top track
                  at undergrid walls.

<PAGE>

         B.       Gypsum Board walls shall be skip troweled textured, 2 coats of
                  flat latex paint (unless otherwise noted).

         C.       Gypsum Board walls at lobbies and toilet cores shall be
                  finished smooth. Toilet Core walls shall receive 2 coats latex
                  enamel paint.

         D.       Exposed columns and ironwork at open ceiling areas shall be
                  cleaned, primed painted with semi-gloss enamel paint to cover.

         E.       Provide 4" high MARLITE wainscot behind all service sinks at
                  janitors' closet.

III.     DRAFTSTOPS:

         A.       Provide 1st Floor attic draftstops per code requirements;
                  enclosed attic area not to exceed 3,000 square feet and
                  greatest horizontal dimension not to exceed60 linear feet.

         B.       Provide 2nd Floor attic draftstops per code requirements,
                  enclosed attic area not to exceed 9,000 square feet and
                  greatest horizontal dimension not to exceed 60 linear feet.

IV.      ONE HOUR F.R. CORRIDOR AND LOBBY CONSTRUCTION (AS REQUIRED):

         A.       One Hour F.R. Corridors shall be constructed to tunnel
                  construction to +10'-0" A.F.F. with suspended 2' x 4'
                  suspended t-bar ceiling at +9'-0" A.F.F. Door and frame
                  openings shall be 20 minutes U.L. listed assemblies,
                  self-closing and smoke gasketed.

         B.       A full height (floor to structure) one hour F.R. gyp. Bd. Over
                  metal stud partition shall be provided/maintained around
                  perimeter of the Lobby. Mechanical, other penetrations and
                  door openings shall be 20 minute U.L. labeled assemblies.

V.       CEILING CONSTRUCTION AND FINISHES:

         A.       Suspended Ceiling shall be 2' x 4' T-bar at +10'-0" A.F.F.
                  with 24" x 48" Second Look III lay-in Panels.

         B.       Monolithic ceiling grid throughout office areas.

         C.       Toilet Core ceilings shall be 5/8" Gypsum Bo9ard over 20 Ga
                  Metal Studs at 9'-0" A.F.F., finished smooth, and latex enamel
                  painted.

         D.       Open ceiling areas shall be provided with a white cap sheet at
                  underside of roof insulation.

VI.      LIGHT FIXTURES:

         A.       2' x 4' 18-cell parabolic at office areas.

<PAGE>

         B.       2' x 4' prismatic fluorescent lay-in fixtures at labs.

         C.       Fluorescent light soffits above lavatories with eggcrate
                  grills and recessed downlights at Toilet Cores.

VII.     FIRE SPRINKLERS AND EXTINGUISHERS:

         A.       Fire sprinklers shall be semi-recessed type with either white
                  of chrome escutcheons.

         B.       Fire extinguishers shall be placed in semi-recessed painted
                  cabinets.

VIII.    DOOR, FRAMES, SIDELIGHTS AND HARDWARE:

         A.       Doors: 3'-0" by 9'-0" by 1-3/4" thick, solid core wood with
                  plastic laminate finish.

         B.       Frames: Clear anodized aluminium, brush finished.

         C.       Hardware: Mortise type (Schlage "L" series) with satin
                  chromium level style handles (Schlage `03"), 25% locksets.

         D.       Sidelights: All conference rooms, and labs will have 1'-6" x
                  9'-0" x1/4" clear tempered glass sidelight in frame integral
                  with door.

IX.      TOILET CORES:

         A.       Ceramic tile flooring with 6'-0" high ceramic tile wainscot
                  all around.

                  1.       Floor tile

                           Daltile, Designer, 2" x 2" glazed tile or approved
                           equal with not less than 15% nor more than 25%
                           patterned feature tile.

                  2.       Wainscot tile

                           Daltile, Semi-Gloss or Matte (price group 2 or 3), 4
                           1/4" x 41/4" or approved equal, with not less than
                           15% nor more than 25% patterned feature tile.

         B.       Water closets and urinals shall be (American Standard or
                  equal) wall-mounted with flushometer valves.

         C.       Toilet partitions shall be ceiling-hung with plastic laminate
                  finish.

         D.       Accessories shall be Bobrick semi-recessed, brushed stainless
                  steel finish.

         E.       Provide floor drain at each toilet room.

<PAGE>

         F.       Lavatory counters shall be finished with plastic laminate with
                  bullnosed edges and coved splash. Undercounter waste and hot
                  water plumbing shall be protected by a removable plastic
                  laminate skirt.

         G.       Lavatories shall be vitreous china (American Standard or
                  equal), counter-mounted.

         H.       Shower stalls will be fiberglass (florestone or approved
                  equal). Shower room will be full height ceramic tile on walls
                  and ceramic tile floors with not less than 15% nor more than
                  25% patterned feature tile with floor drains.

         I.       All ADA clearances, accessories and requirements shall be
                  maintained.

X.       WINDOW COVERINGS:

         A.       Provide horizontal mini-blinds as selected by Landlord's
                  architect.

XI.      MILLWORK:

         A.       All exposed surfaces shall be finished with plastic laminate.

         B.       All concealed spaces shall be finished with melamine.

         C.       Wet counters shall receive bullnosed edges and coved splashes.

XII.     ELECTRICAL REQUIREMENTS:

         A.       Electrical contractor shall provide design-build drawings and
                  requires Title 24 documentation for building permit submittal.

         B.       Provide all required panels, conduits and wiring for vcomplete
                  installation. Field verify existing conditions and capacities.

         C.       Electrical distribution

                  1.       Electrical distribution shall be per tenant
                           requirements.

                  2.       Provide electrical distribution to new HVAC systems.

XIII.    BASE BUILDING HVAC:

         A.       Description of HVAC System (Minimum Performance Criteria)

                  1.       Air and Cooling

                           a.       Self-contained, air-cooled rooftop package
                                    units, Trane or Carrier, with direct
                                    expansion cooling shall be utilized to
                                    supply cooling air to building on the basis
                                    of 1 ton per 350 square feet of leasable
                                    area. Units to serve the first and second
                                    floors independently.

<PAGE>

                                    Variable air volume system shall be sued for
                                    all areas with VAV modulation accomplished
                                    by variable speed drives. Units to be
                                    equipped with 100% of power exhaust
                                    economizers and dampers set for minimum
                                    outside air, 20 cfm per person, standard
                                    occupancy (200 square fee per person). Air
                                    filters to be minimum 35% efficiency,
                                    disposable type. Units to be equipped with
                                    microprocessor and energy efficiency
                                    exceeding California energy standards.

                  2.       Heating

                           a.       Heating to be provided through rooftop
                                    outdoor gas-fired boiler with hot water
                                    circulation pump. The hot water shall be
                                    distributed to hydronic HW heating coils in
                                    VAV terminals with hot water two-pipe loop
                                    mains on each floor.

                  3.       Zones

                           a.       Supply air shall be distributed through VAV
                                    terminal. All zones shall utilize single
                                    duct terminals with HW reheat coils.

                           b.       Zoning criteria as follows:

                                    -       Corner offices

                                    -       Perimeter areas per exposure

                                    -        Interior not to exceed 2,000 sq.
                                             ft. per zone

                                    -        Average number of zones provided
                                             1,000 sq. ft. per zone.

                  4.       Exhaust systems

                           a.       Core toilet rooms will have ducted exhaust
                                    system with fan on the roof providing 10 air
                                    changes an hour ventilation.

                           b.       The building main electrical room to have an
                                    exhaust system complete with exhaust fan on
                                    roof, exhaust duct riser and line voltage
                                    thermostat controls.

                  5.       Air Distribution and Ducts

                           a.       Air distribution devices will be sized for
                                    noise criteria, office, NC-35 and open space
                                    NC-40 and selected for proper operations as
                                    part of the ceiling construction.

                           b.       Ducts to be installed in the ceiling space
                                    below structural framing, per SMACNA
                                    industry standards. Downstream of

<PAGE>

                                    VAV terminal to be a low pressure duct
                                    system, and from the rooftop units to the
                                    VAV terminal will be a medium pressure duct
                                    system. Duct to be insulated per code.

                  6.       Controls

                           a.       Rooftop package units to operate through
                                    microprocessor within the units and time
                                    controller with bypass operation located in
                                    the control panel on the second floor close
                                    to the roof exit.

                           b.       Temperature control system for zones to be
                                    pneumatic including air compressors, air
                                    dryers, and all control tubing.

                           c.       Smoke detectors to be provided in rooftop
                                    units with automatic shut off fans upon
                                    detection.

                  7.       Operation

                           a.       HVAC system to be tested, balanced and ready
                                    for regular operation.

                           b.       Operating and maintenance manuals to be
                                    provided.

                           c.       Warranty on the system shall be one year
                                    from the date of the system acceptance.
                                    Rooftop package unit compressors shall have
                                    an extended five-year warranty.

         B.       Roof mounted mechanical units shall be supported by
                  structurally engineered steel frames spanning form column line
                  to column line with external vibration isolation including
                  two-inch deflection and seismic restraints per UBC.

XIV.     ROOF WORK:

         A.       All roof work shall be per SMACNA standards.

         B.       Provide roof screen of metal stud framing with Carlisle 12th
                  S/L flat metal panels (or approved equal), prefinished to
                  match building color. Screen shall match height of highest
                  mechanical unit and shall maintain 8' clearance from nearest
                  unit.

XV.      BUILDING INSULATION:

         A.       Building insulation shall be provided as follows:

                  1.       Provide R-19 Batt insulation at the roof throughout

                  2.       Provide R-11 Batt insulation at all furred exterior
                           walls.

<PAGE>

         B.       Provide sound attenuation batt insulation at all perimeter
                  walls of conference rooms and toilet cores.

XVI.     MISCELLANEOUS INTERIOR WORK:

         A.       Provide all required access panels for plumbing valves,
                  inspector test valves and any other required access into
                  concealed spaces. Access panels shall be finished to match
                  adjacent wall surface.

         B.       Elevator, if provided, shall be a Seville 35 Holeless
                  Oildraulic Passenger or equal; capacity 3500lbs.; speed
                  110fpm.

<PAGE>

                                    EXHIBIT D

                          COMMENCEMENT DATE MEMORANDUM

LANDLORD:         _______________________________

TENANT:           _______________________________

LEASE DATE:       _______________________________

PREMISES:         _______________________________

Pursuant to PARAGRAPH 2(b) of the above referenced Lease, Landlord and Tenant
hereby agree as follows:

         The Commencement Date is _____________, 20___;

LANDLORD:

GAL-BRISBANE, L.P., a California
limited partnership

By:      Brisbane Tech LLC, a Delaware
         limited liability company, its General
         Partner

         By:      Stuhlmuller Real Estate,
                  LLC, a Delaware limited
                  liability company

                  By:_______________________
                      Roger C. Stuhlmuller,
                      Manager

TENANT:

INTERMUNE PHARMACEUTICALS, INC.
a Delaware corporation

By:      _____________________________
         Name:________________________
         Its: ________________________

By:      _____________________________
         Name:________________________
         Its:_________________________

                                       1

<PAGE>

                                    EXHIBIT E

                          PROJECT RULES AND REGULATIONS

         1. The sidewalks, driveways, entrances, lobbies, stairways and public
corridors within the Project shall be used only as a means of ingress and egress
and shall remain unobstructed at all times. The entrance and exit doors of the
buildings are to be kept closed at all times except as required for orderly
passage. Obstruction of any means of ingress or egress, is not permitted.

         2. Plumbing fixtures shall not be used for any purposes other than
those for which they were constructed, and no rubbish, newspapers, trash or
other inappropriate substances of any kind shall be deposited therein. Tenant
shall not place any harmful liquids in the drainage systems servicing the
Buildings or the Project. Personal articles, equipment and clothing shall not be
left in bathrooms, showers or locker rooms except and unless stored properly
within a locker, and in no circumstances shall articles remain overnight.

         3. Walls, floors, windows, doors and ceilings shall not be defaced in
any way and no one shall be permitted to mark, drive nails, screws or drill
into, paint, or in any way mar the Buildings or the Project surface, except that
pictures, certificates, licenses and similar items normally used in Tenant's
business may be carefully attached to the walls by Tenant in a manner to be
prescribed by Landlord. Upon removal of such items by Tenant any damage to the
walls or other surfaces, shall be repaired by Tenant. Tenant is required to
protect all carpeting within its Premises from damage, which shall include the
use of chair mats at desks and work stations, and the use of moisture barriers
under all plants within the Premises.

         4. No awning, shade, sign, advertisement or notice shall be inscribed,
coated, painted, displayed or affixed on, in, or to any window, door or wall or
any other part of the outside or inside of the Premises without the prior
written consent of Landlord. No window display or other public display shall be
permitted without the prior written consent of Landlord. No lettering or signs
will be permitted on public corridor walls or doors excepting the name of
tenants, with the size, type and color of letters and the manner of attachment,
style of display and location thereon to be prescribed by Landlord. The
directory of the Building, if any, will be provided exclusively for the
identification and location of tenants only, and Landlord reserves the right to
exclude all other information therefrom. All requests for listing on the
Building directories shall be submitted to the office of Landlord in writing.
Landlord reserves the right to approve all listing requests. Any change
requested by Tenant of Landlord of the name or names posted on directory, after
initial posting, will be at the expense of Tenant.

         5. The weight, size and position of all safes and other densely
weighted or heavy objects used or placed in the Premises, the Buildings or other
portion of the Project shall be subject to approval by Landlord prior to
installation and shall, in all cases, be supported and braced as prescribed by
Landlord and as otherwise required by law. The repair of any damage caused by
the installation, removal or maintenance of such safes or other heavy objects
shall be paid for by Tenant. Tenant shall bear the cost of any consultant
services employed by Landlord in the evaluation of placement, location or
bracing of such heavy items.

                                       1
<PAGE>

         6. No improper or unusually loud noises, vibrations or odors are
permitted outside any building in the Project. No person shall be permitted to
interfere in any way with the tenants of the Project or the people having
business with them. No person will be permitted to bring or keep within any
building in the Project any animal, bicycle, motorcycle or other vehicle except
with the prior written consent of Landlord. Bicycles of Tenant and its
employees, agents and invitees shall be stored only in designated bicycle racks
outside of buildings and in no other location. No person shall dispose of trash,
refuse, cigarettes or other substances of any kind at any place inside or
outside of any building in the Project except in the appropriate refuse
containers provided therefor. Landlord reserves the right to exclude or expel
from the Buildings and the Project any person who, in the judgement of Landlord,
is intoxicated or under the influences of alcohol or drugs or who shall do any
act in violation of these rules and regulations. Tenant shall not commit, nor
shall Tenant allow its employees, agents, invitees, or licensees to commit, any
public or private nuisance or any other act or thing which might or would
disturb the quiet enjoyment of any other tenant of the Project or the occupancy
of nearby property.

         7. All keying of office doors, and all reprogramming of Security Access
Cards after the date that Tenant commences occupancy of the Premises will be at
the expense of Tenant. Tenant shall not re-key any door without making prior
arrangements with Landlord.

         8. After regular business hours or on non-business days, Tenant, its
agents, employees, invitees and licensees shall lock any entrance doors to the
Buildings used immediately after entering or leaving the Buildings. No device
may be employed to prop or hold open any entrance door to any building in the
Project. No door or passageway may be obstructed.

         9. The normal business hours of the Buildings are 8:30 a.m. to 5:30
p.m., Monday through Friday (holidays excepted).

         10. Neither Tenant nor Tenant's employees, agents, invitees or
licensees shall use more than Tenant's allocated share of the Project parking
areas. Automobile parking shall only be in designated areas and entirely within
painted parking spaces. Overnight parking and parking by Tenant or its employees
within areas marked "visitor" is prohibited. Landlord reserves the right to
designate exclusive parking for tenants and visitors, and to require
identification of the vehicles of tenants and their employees. Vehicles owned or
operated by Tenant, its employees, invitees and agents which are parked
improperly shall be subject to tow at Tenant's expense. The servicing or
repairing of vehicles within Project parking areas is prohibited. Tenant, its
employees, agents and invitees shall obey all traffic signs at the Project.
Vehicle speed limit within the Project parking areas is fifteen miles per hour.

         11. Neither Tenant nor Tenant's employees, agents, invitees or
licensees shall hang or display any items from the exterior of any building in
the Project, in any common area of the Project, or in any area outside of
Tenant's Premises.

         12. Neither Tenant nor any of Tenant's employees, agents, invitees or
licensees, shall at any time transport to or from, or keep upon the Premises any
foul or obnoxious, flammable, combustible, explosive, toxic or hazardous fluid,
chemical or substance, except as may be specifically approved in writing by
Landlord and as further required by law.

                                       2
<PAGE>

         13. All equipment of any electrical or mechanical nature shall be
placed and maintained by Tenant in the Premises in settings approved by
Landlord, to absorb or prevent any vibration, noise interference, or annoyance
to Landlord or others, and shall not overload any circuit, nor draw more power
than has been specifically allocated to Tenant.

         14. No air conditioning, heating unit, antenna, electrical panel,
alarm, phone system or other similar apparatus shall be installed or used by
Tenant without the prior written consent of Landlord. No modification of any
Building electrical, mechanical, plumbing or security system is permitted
without the prior written consent of Landlord. Each tenant of the Project is
responsible for the proper maintenance and servicing of hand-held fire
extinguishers (but not built-in fire protection equipment such as fire
sprinklers or alarms) within its demised premises.

         15. No storage, staging, display, or placing of any material, product
or equipment by Tenant outside of Tenant's Premises is permitted except as may
be expressly approved in writing by Landlord.

         16. Trash containers and trash enclosures for each Building are Project
common area facilities and Tenant, its employees, agents, invitees and licensees
may not dispose of any refuse or other waste material except within trash
containers for the Building of which Tenant's Premises are a part, and then only
in compliance with applicable law and regulations. Tenant may not place any
articles within a trash enclosure other than within a trash bin. Tenant may not
place any cardboard boxes within trash containers unless such boxes have been
flattened. The cost of storage, handling, hauling and dumping of Tenant's trash
in excess of quantities incidental to normal first-class office building
occupancies shall be borne by Tenant. Tenant shall be responsible for closing
and securing trash enclosures after use by Tenant. Tenant shall not dump or
store water material or refuse or allow such to remain outside the Premises or
the Buildings, except in designated trash containers and trash enclosures.

         17. There shall not be used in the Premises, or in the common areas of
the Project, either by Tenant or others, any hand trucks except those equipped
with rubber tires and rubber side guards. Tenants shall not employ any elevator
within any building in the Project for the moving of product, equipment or other
non-personal property without employing proper protective elevator pads.

         18. Tenant shall notify Landlord immediately of any leak or electrical
or equipment malfunction, fire or other damage to Tenant's Premises or the
Buildings.

         19. Landlord shall have the right, exercisable without notice and
without liability to Tenant, to change the name and address of the Buildings
and/or the Project and to modify these rules and regulations.

         20. Tenant shall protect dock areas and pavements servicing the
Premises from damage due to trucks and trailers. Tenant shall not store trucks
or trailers on the Project parking areas, nor park trucks or trailers in the
automobile parking areas, traffic aisles, walkways or any public street adjacent
to the Project parking areas.

                                       3
<PAGE>

         21. Tenant shall make carpool, vanpool and transit information
available to employees as may be required by Applicable Laws. Tenant shall
employ vanpool and carpool parking spaces for only the purposes indicated.

         22. Tenant shall be deemed to have read these Rules and Regulations and
agrees to inform its employees, agents, invitees and licensees thereof, and
agrees to abide by them as a covenant of its lease of the Premises.

                                       4
<PAGE>

                                    EXHIBIT F

                                     SIGNAGE

(Drawing of proposed entry monument sign at corner)

(Drawing of proposed tenant directory - 2 required)

(Drawing of proposed directional sign at driveway - 2 required)

                                       1
<PAGE>

                                    EXHIBIT G

                      IRREVOCABLE STANDBY LETTER OF CREDIT

                              [ISSUER'S LETTERHEAD]

                               ____________, 2000

Beneficiary:

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

           Re: Irrevocable Standby Letter of Credit No. ______________

Gentlemen:

         By order of our client, ___________________ ("Tenant"), 3280 Bayshore
Boulevard, Brisbane, California, we hereby open our IRREVOCABLE, TRANSFERABLE
STANDBY LETTER OF CREDIT No._____________________________ in your favor, for
an amount not to exceed in aggregate the sum of and 00/100 U.S. Dollars
($____________.00), effective immediately and expiring at our office located at
______________________________________________, ________________, California,
available by payment against your draft drawn on us at sight (herein, "our
Office") on or before ______________, 20__ (subject to the automatic extensions
as hereinafter provided). If the expiration date of this Letter of Credit is a
date when the Issuer is not open for business to the public for the entirety of
that business day, then the expiration date shall be automatically extended to
the first day thereafter that the issuer is open for business to the public for
the entirety of that day.

         Funds hereunder are available to you or your Transferee (as hereinafter
defined) against presentation of your Sight Draft(s), drawn on us, mentioning
thereon our Letter of Credit Number ______________________, accompanied by:

         1. Beneficiary's written statement purportedly signed by an authorized
representative of GAL-Brisbane, L.P., or any Transferee (hereinafter called
"Landlord") containing either of the two (2) following statements:

         (a) "I, the undersigned, an authorized representative of Landlord, do
hereby certify that Tenant is in default under that certain Office Lease (the
"Lease") dated _____________________, 2000, between GAL-Brisbane, L.P., as
Landlord, and Intermune Pharmaceuticals, Inc., as Tenant, covering approximately
fifty-five thousand eight hundred ninety-eight (55,898) square feet of space
located at 3280 Bayshore Boulevard, Brisbane,

                                       1
<PAGE>

California as such Lease may have been or may be amended, modified, extended or
renewed from time to time";

                           OR

         (b) "I, the undersigned, an authorized representative of Landlord do
hereby certify that Landlord has received notice that the letter of credit will
not be automatically extended as provided for in the letter of credit."

                           AND,

         2. This original Letter of Credit.

Special Conditions:

It is a condition of this Letter of Credit that it shall be deemed automatically
extended, without amendment, for an additional period of one year from the
present or any future expiration date unless at least forty-five (45) days prior
to such date, we notify you in writing by certified mail, return receipt
requested at your address specified above (or such other address that you
specify in writing to us) that we elect not to renew this Letter of Credit for
such additional period. Upon receipt by you of such notice, you may draw on us
at any time on or before the expiration date up to an amount not exceeding the
available amount of this Letter of Credit by means of your draft drawn on us at
sight accompanied by your written statement as specified in 1(b) above.

Partial drawings are allowed.

This Letter of Credit may be transferred by you in its entirety provided that
you deliver to us written notice thereof.

Any draft drawn under this credit must be marked "Drawn under Irrevocable
Standby Letter of Credit No. _________________ issued by
__________________________________, _________________, California".

Unless otherwise expressly stated herein, this Letter of Credit is subject to
the "Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500."

We hereby agree to honor each draft drawn under and in compliance with the terms
and conditions of this Letter of Credit, if presented, as specified, at our
Office on or before the expiration date as specified above.

                                       2
<PAGE>

Should you have occasion to communicate with us regarding this Letter of Credit,
please direct your correspondence to us at _______________________________,
making specific mention of the Letter of Credit Number mentioned above.

                                   By: ______________________________
                                   Name:  ___________________________
                                   Title:  _____________________________

                                       3

<PAGE>

                                    EXHIBIT H

         FORM OF SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

                                       1
<PAGE>

                         SUBORDINATION, NON-DISTURBANCE
                            AND ATTORNMENT AGREEMENT

                  This Subordination, Non-Disturbance and Attornment Agreement
(this "AGREEMENT") is as of the _____ day of ____________, 2000-, between Credit
Suisse First Boston Mortgage Capital LLC ("LENDER") and ___________________
("TENANT").

                                    RECITALS

                  A. Tenant is the tenant under a certain lease (the "LEASE"),
dated as of _______________________, 2000, with ____________________________
("LANDLORD"), of premises described in the Lease (the "PREMISES") as more
particularly described in EXHIBIT A hereto.

                  B. This Agreement is being entered into in connection with a
certain loan (the "LOAN") which Lender has made to Landlord, and secured, in
part, by a [Mortgage/Deed of Trust], Assignment of Leases and Rents and Security
Agreement on the Premises (the "MORTGAGE/DEED OF TRUST") dated as of
____________________, 2000 and an Assignment of Leases and Rents dated as of
________________________, 2000 (the "ASSIGNMENT"; the [Mortgage/Deed of Trust],
the Assignment and the other documents executed and delivered in connection with
the Loan are hereinafter collectively referred to as the "LOAN DOCUMENTS").

                                    AGREEMENT

                  For mutual consideration, including the mutual covenants and
agreements set forth below, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

          1. Tenant agrees that the Lease and all terms and conditions contained
therein and all rights, options, liens and charges created thereby is and shall
be subject and subordinate in all respects to the Loan Documents and to all
present or future advances under the obligations secured thereby and all
renewals, amendments, modifications, consolidations, replacements and extensions
of secured obligations and the Loan Documents, to the full extent of all amounts
secured by the Loan Documents from time to time.

          2. Lender agrees that, if Lender exercises any of its rights under the
Loan Documents such that it becomes the owner of the Premises, including but not
limited to an entry by Lender pursuant to the [Mortgage/Deed of Trust], a
foreclosure of the [Mortgage/Deed of Trust], a power of sale under the
[Mortgage/Deed of Trust] or otherwise: (a) the Lease shall continue in full
force and effect as a direct lease between Lender and Tenant, and subject to all
the terms, covenants and conditions of the Lease, and (b) Lender shall not
disturb Tenant's right of quiet possession of the Premises under the terms of
the Lease so long as Tenant is not in default beyond any applicable grace period
of any term, covenant or condition of the Lease.

          3. Tenant agrees that, in the event of a exercise of the power of sale
or foreclosure of the [Mortgage/Deed of Trust] by Lender or the acceptance of a
deed in lieu of foreclosure by Lender or any other succession of Lender to
ownership of the Premises, Tenant will attorn to and

                                       2
<PAGE>

recognize Lender as its landlord under the Lease for the remainder of the term
of the Lease (including all extension periods which have been or are hereafter
exercised) upon the same terms and conditions as are set forth in the Lease, and
Tenant hereby agrees to pay and perform all of the obligations of Tenant
pursuant to the Lease.

          4. Tenant agrees that, in the event Lender succeeds to the interest of
Landlord under the Lease, Lender shall not be:

                  (a) liable in any way for any act, omission, neglect or
default of any prior Landlord (including, without limitation, the then
defaulting Landlord), or

                  (b) subject to any claim, defense, counterclaim or offsets
which Tenant may have against any prior Landlord (including, without limitation,
the then defaulting Landlord), or

                  (c) bound by any payment of rent or additional rent which
Tenant might have paid for more than one month in advance of the due date under
the Lease to any prior Landlord (including, without limitation, the then
defaulting Landlord), or

                  (d) bound by any obligation to make any payment to Tenant
which was required to be made prior to the time Lender succeeded to any prior
Landlord's interest, or

                  (e) accountable for any monies deposited with any prior
Landlord (including security deposits), except to the extent such monies are
actually received by Lender, or

                  (f) bound by any material amendment or modification of the
Lease made without the written consent of Lender.

                  Nothing contained herein shall prevent Lender from naming
Tenant in any foreclosure or other action or proceeding initiated in order for
Lender to avail itself of and complete any such foreclosure or other remedy.

          5. Tenant hereby agrees to give to Lender copies of all notices of
Landlord default(s) under the Lease in the same manner as, and whenever, Tenant
shall give any such notice of default to Landlord and no such notice of default
shall be deemed given to Landlord unless and until a copy of such notice shall
have been so delivered to Lender. Lender shall have the right but no obligation
to remedy any landlord default under the Lease, or to cause any default of
Landlord under the Lease to be remedied, and for such purpose Tenant hereby
grants Lender, in addition the period given to Landlord for remedying defaults,
an additional 30 days to remedy, or cause to be remedied, any such default.
Tenant shall accept performance by Lender of any term, covenant, condition or
agreement to be performed by Landlord under the Lease with the same force and
effect as though performed by Landlord. No Landlord default under the Lease
shall exist or shall be deemed to exist (i) as long as Lender, in good faith,
shall have commenced to cure such default within the above reference time period
and shall be prosecuting the same to completion with reasonable diligence,
subject to force majeure, or (ii) if possession of the Premises is required in
order to cure such default, or if such default is not susceptible of being cured
by Lender, as long as Lender, in good faith, shall have notified Tenant that
Lender intends to institute proceedings under the Loan Documents, and,
thereafter, as long as such proceedings

                                       3
<PAGE>

shall have been instituted and shall be prosecuted with reasonable diligence. In
the event of the termination of the Lease by reason of any default thereunder by
Landlord, upon Lender's written request, given within thirty (30) days after any
such termination and provided that Lender shall have undertaken to cure the
default that resulted in such termination, Tenant, within fifteen (15) days
after receipt of such request, shall execute and deliver to Lender or its
designee or nominee a new lease of the Premises for the remainder of the term of
the Lease upon all of the terms, covenants and conditions of the Lease. Neither
Lender nor its designee or nominee shall become liable under the Lease unless
and until Lender or its designee or nominee becomes, and then only with respect
to periods in which Lender or its designee or nominee remains, the owner of the
Premises. In no event shall Lender have any personal liability as successor to
Landlord and Tenant shall look only to the estate and property of Lender in the
Premises for the satisfaction of Tenant's remedies for the collection of a
judgment (or other judicial process) requiring the payment of money in the event
of any default by Lender as Landlord under the Lease, and no other property or
assets of Lender shall be subject to levy, execution or other enforcement
procedure for the satisfaction of Tenant's remedies under or with respect to the
Lease. Lender shall have the right, without Tenant's consent, to foreclose the
[Mortgage/Deed of Trust] or to accept a deed in lieu of foreclosure of the
[Mortgage/Deed of Trust] or to exercise any other remedies under the Loan
Documents.

          6. Tenant has no knowledge of any prior assignment or pledge of the
rents accruing under the Lease by Landlord. Tenant hereby acknowledges the
making of the Assignment from Landlord to Lender in connection with the Loan.
Tenant acknowledges that the interest of the Landlord under the Lease is to be
assigned to Lender solely as security for the purposes specified in the
Assignment, and Lender shall have no duty, liability or obligation whatsoever
under the Lease or any extension or renewal thereof, either by virtue of the
Assignment or by any subsequent receipt or collection of rents thereunder,
unless Lender shall specifically undertake such liability in writing.

          7. If Tenant is a corporation, each individual executing this
Agreement on behalf of said corporation represents and warrants that s/he is
duly authorized to execute and deliver this Agreement on behalf of said
corporation, in accordance with a duly adopted resolution of the Board of
Directors of said corporation or in accordance with the by-laws of said
corporation, and that this Agreement is binding upon said corporation in
accordance with its terms (except as limited by applicable law). If Landlord is
a partnership or limited liability company, each individual executing this
Agreement on behalf of said partnership or limited liability company represents
and warrants the s/he is duly authorized to execute and deliver this Agreement
on behalf of said partnership or limited liability company in accordance with
the partnership agreement for the partnership or operating agreement for the
limited liability company.

          8. Any notice, election, communication, request or other document or
demand required or permitted under this Agreement shall be in writing and shall
be deemed delivered on the earlier to occur of (a) receipt or (b) the date of
delivery, refusal or nondelivery indicated on the return receipt, if deposited
in a United States Postal Service Depository, postage prepaid, sent certified or
registered mail, return receipt requested, or if sent via recognized commercial
courier service providing for a receipt, addressed to Tenant or Lender, as the
case may be at the following addresses:

                                       4
<PAGE>

        If to Tenant:          ___________________________

                               ___________________________

                               ___________________________

                               ___________________________

        with a copy to:        ___________________________

                               ___________________________

                               ___________________________

                               ___________________________

        If to Lender:          Credit Suisse First Boston Mortgage Capital LLC
                               Real Estate Products Group
                               11 Madison Avenue
                               New York, New York 10010
                               Attention:  Asset Management
                               Re:  [NAME OF DEAL/NAME OF BANKER]
                               Telecopier:  (212) 325-8164

        with copies to:        Credit Suisse First Boston Mortgage Capital LLC
                               Legal and Compliance Department
                               11 Madison Avenue
                               New York, New York 10010
                               Attention:  Colleen Graham, Esq.
                               Re:  [NAME OF DEAL/NAME OF BANKER]
                               Telecopier:  (212) 325-8220

                               [SERVICER]
                               or any successor servicer appointed by Lender

          9. The term "Lender" as used herein includes any successor or assign
of the named Lender herein, including without limitation, any co-lender at the
time of making the Loan, any purchaser at a foreclosure sale and any transferee
pursuant to a deed in lieu of foreclosure, and their successors and assigns, and
the term "Tenant" as used herein includes any successor and assign of the named
Tenant herein.

         10. If any provision of this Agreement is held to be invalid or
unenforceable by a court of competent jurisdiction, such provision shall be
deemed modified to the extent necessary to be enforceable, or if such
modification is not practicable such provision shall be deemed

                                       5
<PAGE>

deleted from this Agreement, and the other provisions of this Agreement shall
remain in full force and effect.

         11. Neither this Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified orally, but only by an
instrument in writing executed by the party against which enforcement of the
termination, amendment, supplement, waiver or modification is sought.

         12. This Agreement shall be construed in accordance with the laws of
the State where the Premises is located.

             Witness the execution hereof as of the date first above written.

                          CREDIT SUISSE FIRST BOSTON
                          MORTGAGE CAPITAL LLC

                          By: _________________________________
                              Name: ___________________________
                              Title: ____________________________

                          [TENANT]

                          By: _________________________________
                              Name: ___________________________
                              Title: ____________________________

                  The undersigned Landlord hereby consents to the foregoing
Agreement and confirms the facts stated in the foregoing Agreement.

                           [LANDLORD]

                           By: _________________________________
                               Name: ___________________________
                               Title: ____________________________

                                       6
<PAGE>

                                    EXHIBIT I

                                FORM OF ESTOPPEL

<PAGE>

                  FORM OF ESTOPPEL CERTIFICATE [OFFICE TENANT]

                             (LETTERHEAD OF TENANT)

                                 _________, 2000

________________________

________________________

________________________

Ladies and Gentlemen:

         The undersigned certifies to ______________________________ as of the
date hereof as follows:

      1.  It is the tenant under a lease dated _________________, 2000 (the
"Lease") between ____________________________, as landlord (together with its
successors and assigns, "Landlord"), and the undersigned, as tenant ("Tenant"),
for premises on the ________ floor (the "Leased Premises") in the building
located at ___________________, _____________ (the "Building"). All capitalized
terms not otherwise defined herein shall have the meanings provided in the
Lease.

      2.  The Lease is in full force and effect. The Lease has not been amended,
modified or supplemented except as follows: ___________________________________
________________________________________. There are no other agreements or
understandings, whether written or oral, between Tenant and Landlord with
respect to the Lease, the Leased Premises or the Building.

                                       2
<PAGE>

      3.  Tenant has accepted possession of and occupies the entire Leased
Premises under the Lease. The term of the Lease commenced on _________________,
2000, and expires on ______________, ____, subject to the following renewal
options:
_____________________________________________________________________________.

      4.  The monthly fixed, minimum or basic rent under the Lease is $________
and has been paid through the month of _____________. All additional rent,
percentage rent, Tenant's proportionate share of real estate taxes, insurance
and operating expenses and all other sums or charges due and payable under the
Lease by Tenant have been paid in full and no such additional rents, percentage
rents or other sums or charges have been paid for more than one (1) month in
advance of the due date thereof.

      5.  The amount of the security deposit is $_____________.

      6.  To the best of Tenant's knowledge, both Tenant and Landlord have
performed all of their respective obligations under the Lease and Tenant has no
knowledge of any event which with the giving of notice, the passage of time or
both would constitute a default by Landlord under the Lease, except as follows:
___________________________________________

      7.  Tenant has no claim against Landlord and no offset or defense to
enforcement of any of the terms of the Lease, and Tenant has not advanced any
funds for or on behalf of Landlord for which Tenant has a right to deduct from
or offset against future rent payments, except as follows:
________________________________________________

      8.  All improvements required to be completed by Landlord have been
completed and there are no sums due to Tenant from Landlord. Landlord has not
agreed to grant Tenant any free rent or rent rebate or to make any contribution
to tenant improvements, and Landlord has not agreed to reimburse Tenant for or
to pay Tenant's rent obligation under any other lease, except as follows:
________________________________________________

      9.  Tenant has not assigned the Lease and has not subleased the Leased
Premises or any part thereof, except as follows:
_____________________________________

     10.  Tenant has no right or option pursuant to the Lease or otherwise to
purchase all or any part of the Leased Premises or the Building. Tenant does not
have any right or option for additional space in the Building.

     11.  No voluntary actions or, to Tenant's best knowledge, involuntary
actions are pending against Tenant under the bankruptcy laws of the United
States or any state thereof.

     12.  Attached hereto as Exhibit A is a true copy of the Lease and all
amendments, modifications and supplements thereto.

         The undersigned individual hereby certifies that he or she is duly
authorized to sign, acknowledge and deliver this letter on behalf of Tenant.

                                       3
<PAGE>

         Tenant acknowledges that you will rely on this letter in making a loan
or otherwise extending credit to Landlord. The information contained in this
letter shall be for your benefit and for the benefit of your successors and
assigns.

                            Very truly yours,

                            ________________________________

                            By:_____________________________
                                Name:
                                Title:

                                       4
<PAGE>

                                    EXHIBIT A

                          COPY OF LEASE AND AMENDMENTS

                                       1
<PAGE>

                                    EXHIBIT J

                            EXCLUSIVE PARKING SPACES

                                    (Diagram)

                                       1
<PAGE>

                                    ADDENDUM

                                (TO BE ATTACHED)

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                                    ADDENDUM

         THIS ADDENDUM (this "Addendum") is entered into by and between
Gal-Brisbane, L.P., a California limited partnership ("Landlord"), and Intermune
Pharmaceuticals, Inc., a Delaware corporation ("Tenant"), concurrently with that
certain Lease (the "Lease") entered into between Landlord and Tenant for those
certain premises located at 3280 Bayshore Blvd., Brisbane, California, as more
particularly described in the Lease.

         This Addendum modifies the terms and conditions contained in the Lease
and is made a part thereof. Capitalized terms used herein and not defined herein
shall have the meanings set forth in the Lease.

         NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Landlord and Tenant hereby agree as
follows:

         1.       EXTENSION OPTION

         (a) OPTION TO EXTEND. Tenant shall have two (2) options to extend the
Lease Term for a period of five (5) years each (hereinafter referred to as the
"First Extension Term" and the "Second Extension Term," respectively, and each,
an "Extension Term"). Tenant may exercise its option to extend the Lease Term
provided that at the time Tenant's Extension Notice (defined below) is given and
at the time each Extension Term is to commence (i) Tenant is not in default
under this Lease and (ii) Tenant has not assigned this Lease or sublet (in the
aggregate) more than fifty percent (50%) of the Premises other than to a
Permitted Transferee. Tenant shall exercise each such option, if at all, by
written notice ("Tenant's Extension Notice") to Landlord not later than nine (9)
months, nor earlier than twelve (12) months, prior to the expiration of the
original Lease Term or the First Extension Term, as the case may be. If Tenant
fails to deliver Tenant's Extension Notice to Landlord in a timely manner,
Tenant shall be deemed to have waived Tenant's option to extend the Lease Term
and any future extension option with respect to the Premises shall lapse and be
of no force or effect.

         (b)      EXERCISE OF OPTION.

                  (i) FIRST EXTENSION TERM. If Tenant exercises its extension
         option for the First Extension Term, the Lease Term shall be extended
         for an additional period of five (5) years on all of the terms and
         conditions of this Lease, except (i) Tenant's options to further extend
         the Lease Term shall be reduced in number by one, (ii) Landlord shall
         not be required to pay to Tenant any tenant improvement allowance, and
         (iii) the monthly Base Rent applicable to the Building at the
         commencement of the First Extension Term shall be the greater of (A)
         one hundred percent (100%) of the "Fair Market Rent" applicable to the
         Building prevailing at the commencement of the First Extension Term or
         (B) the monthly Base Rent applicable to the Building in effect at the
         end of the original Lease Term.

                  (ii) SECOND EXTENSION TERM. If Tenant exercises its extension
         option for the Second Extension Term, the Lease Term shall be extended
         for an additional period of five (5) years on all of the terms and
         conditions of this Lease, except (i) Tenant shall have

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         no further options to extend the term of this Lease, (ii) Landlord
         shall not be required to pay to Tenant any tenant improvement
         allowance, and (iii) the monthly Base Rent applicable to the Building
         at the commencement of the Second Extension Term shall be the greater
         of (A) one hundred percent (100%) of the "Fair Market Rent" applicable
         to the Building prevailing at the commencement of the Second Extension
         Term or (B) the monthly Base Rent applicable to the Building in effect
         at the end of the First Extension Term.

         (c)      DETERMINATION OF FAIR MARKET RENT.

                  (i) AGREEMENT ON RENT. For the purposes of this PARAGRAPH 1,
         "Fair Market Rent" means the fair market monthly Base Rent expected to
         prevail as of the commencement of the Extension Term with respect to
         leases of general office/research and development space within
         buildings located in Brisbane, California, of a quality and age and
         with interior improvements (excluding only those interior improvements
         that were paid for by Tenant out of funds other than the Tenant
         Improvement Allowance), tenant improvement allowances and other
         concessions, parking, site amenities, building systems, location,
         identity and access all comparable to that of the Building, for a term
         of approximately five (5) years. Within thirty (30) days after
         Landlord's receipt of Tenant's Extension Notice, by written notice to
         Tenant ("Landlord's Rent Notice"), Landlord shall advise Tenant as to
         Landlord's determination of the Fair Market Rent. If Tenant disagrees
         with Landlord's determination, Tenant shall advise Landlord as to
         Tenant's determination of the Fair Market Rent by written notice to
         Landlord ("Tenant's Rent Notice") within thirty (30) days after
         Tenant's receipt of Landlord's Rent Notice. If Tenant shall fail to
         timely send Tenant's Rent Notice, Tenant shall be bound by Landlord's
         determination as set forth in Landlord's Rent Notice. If Tenant timely
         sends to Landlord Tenant's Rent Notice, Landlord and Tenant shall
         attempt to agree upon the Fair Market Rent within fifteen (15) days of
         Landlord's receipt of Tenant's Rent Notice.

                  (iii) SELECTION OF APPRAISERS. If Landlord and Tenant are
         unable to agree upon the Fair Market Rent within the aforementioned
         fifteen (15) day period (as evidenced by a written amendment to this
         Lease), then, within ten (10) days after the expiration of the fifteen
         (15) day period, Landlord and Tenant each, at its cost and by giving
         notice to the other party, shall appoint a competent and disinterested
         real estate broker licensed in California with at least five (5) years'
         full-time commercial experience in the San Francisco/Brisbane area to
         determine the monthly Base Rent during the Extension Term. If either
         Landlord or Tenant does not appoint a broker meeting the qualifications
         set forth above within ten (10) days after the other party has given
         notice of the name of its broker, the single broker appointed shall be
         the sole broker and shall determine the monthly Base Rent during the
         Extension Term. If two (2) brokers are appointed by Landlord and Tenant
         as stated in this Paragraph, they shall attempt to select a third
         broker meeting the qualifications stated in this Paragraph within ten
         (10) days. If they are unable to agree on the third broker, either
         Landlord or Tenant, by giving ten (10) days' notice to the other party,
         can apply to the then president of the real estate board of the county
         in which the Building is located, or to the Presiding Judge of the
         Superior Court of the county in which the Building is located, for the
         selection of a third broker who meets the

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         qualifications stated in this Paragraph. Landlord and Tenant each
         shall bear one-half (1/2) of the cost of appointing the third broker
         and of paying the third broker's fee. The third broker, however
         selected, shall be a person who has not previously acted in any
         capacity for either Landlord or Tenant.

         (iv) VALUE DETERMINED BY THREE (3) BROKERS. The brokers shall determine
the Fair Market Rent by using the "Market Comparison Approach" with the relevant
market being buildings located in Brisbane, California, of a quality and age and
with interior improvements (other than those constructed and paid for by
Tenant), parking, site amenities, building systems, location, identity and
access all comparable to that of the Building and shall select as the Fair
Market Rent the fair market monthly Base Rent set forth in either Landlord's
Rent Notice or Tenant's Rent Notice that is closest to the brokers' own
determination of the fair market monthly Base Rent for the Premises during the
Extension Term. The Fair Market Rent selected by a majority of the brokers shall
be the Fair Market Rent for purposes of determining the fair market monthly Base
Rent for the Premises during the Extension Term.

         (v) NOTICE TO LANDLORD AND TENANT. After the monthly Base Rent for the
Extension Term has been set, the brokers immediately shall notify Landlord and
Tenant, and Landlord and Tenant immediately shall execute an amendment to this
Lease stating the monthly Base Rent applicable to the Premises.

         2.       EXCLUSIVE OPPORTUNITY TO NEGOTIATE

         (a) Tenant shall be entitled to the exclusive opportunity to negotiate
for the right to lease additional space within the Project on the terms and
conditions of this PARAGRAPH 2. In the event that Landlord proposes to execute a
lease or agreement to lease or commence the marketing for lease (collectively
"market" or "marketing") of any space within Buildings B or C, Landlord shall
give written notice to Tenant thereof describing the space that has or will
become available, the estimated schedule for availability and any other
information Landlord chooses to include therein ("Landlord's Notice"). Tenant
shall have five (5) business days from the receipt of Landlord's Notice to
provide Landlord written notice of Tenant's desire to discuss the possibility of
Tenant's entering into a lease for such space ("Tenant's Notice"). If Tenant
fails to provide Landlord with Tenant's Notice within the applicable period,
Landlord shall have no further obligations to Tenant hereunder with respect to
the applicable space unless and until Landlord again proposes to market such
space three (3) years or more after the date of Landlord's Notice. If Tenant
delivers Tenant's Notice to Landlord, then for a period of thirty (30) days
following the date of Landlord's Notice, Landlord shall not make or accept any
offer to lease the applicable space to or from any party other than Tenant,
however, neither Tenant nor Landlord shall have any obligation to agree to any
particular terms (or any terms at all) in connection with any discussions or
negotiations between Landlord and Tenant concerning the applicable space. Upon
the expiration of such thirty (30) day period, Landlord shall have no further
obligations to Tenant hereunder with respect to the applicable space unless and
until Landlord again proposes to market such space three (3) years or more after
the date of Landlord's Notice.

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         (b) The provisions of this PARAGRAPH 2 shall not be applicable to (i)
any space in Building B until such space has been initially leased, (ii) any
space in Building B or C that is subject to an option to expand held by a tenant
of Building B, except where such Building B tenant does not exercise its option
under the provisions of its lease, (iii) any space within Buildings B or C which
has been the subject of any prior Landlord's Notice to Tenant and which is
offered to any other tenant of Buildings B or C or (iv) any proposal to or from
a tenant which is an affiliate of the owner of the Project or any portion
thereof at the time of such lease.

         (c) The provisions of this Paragraph 2 are separate and severable from
all the other terms and provisions of the Lease.

                    "Tenant"

                    INTERMUNE PHARMACEUTICALS, INC.
                    a Delaware corporation

                    By:________________________
                        Name:__________________
                        Its:___________________

                    By:________________________
                        Name:__________________
                        Its:___________________

                    "Landlord"

                    GAL-BRISBANE, L.P., a California limited partnership

                    By:   Brisbane Tech LLC, a Delaware limited
                          liability company, its General Partner

                          By:   Stuhlmuller Real Estate, LLC, a
                                Delaware limited liability company

                                By: _____________________________
                                    Roger C. Stuhlmuller, Manager

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