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                                                                  Exhibit 10.6

                               STANDARD OFFICE LEASE
                    AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

1.  BASIC LEASE PROVISIONS ("Basic Lease Provisions").

    1.1  PARTIES: This Lease, dated, for reference purposes only,
November 9, 1999, is made by and between American Heart Association,
Western States Affiliate, a New York non-profit corporation, (herein called
"Lessor") and InterMune Pharmaceutical, Inc., a California corporation
business under the name of N/A, (herein called "Lessee").

    1.2   PREMISES: Suite Number(s) 301, ________________ floors, consisting
of approximately 6,767 feet, more or less, as defined in paragraph 2 and as
shown on Exhibit "A" hereto (the "Premises").

    1.3   BUILDING: Commonly described as being located at 1710 Gilbreth
Road, in the City of Burlingame, County of San Mateo, State of California,
and as defined in paragraph 2.

    1.4   USE: General office, sales and administrative use, subject to
paragraph 6.

    1.5   TERM: Sixty (60) months commencing December 13, 1999 ("Commencement
Date") and ending December 12, 2004, as defined in paragraph 3.

    1.6   BASE RENT: $18,609.25 per month, payable on the 1st day of each
month, per paragraph 4.1.

    1.7   BASE RENT INCREASE: On each anniversary of the Commencement Date
the monthly Base Rent payable under paragraph 1.6 above shall be adjusted as
provided in the Addendum.

    1.8   RENT PAID UPON EXECUTION: $18,609.25 for ________________________
___________________________________________________________________________.

    1.9   SECURITY DEPOSIT: see Addendum.

    1.10  LESSEE'S SHARE OF OPERATING EXPENSE INCREASE: 20.5% as defined in
paragraph 4.2.

2.  PREMISES, PARKING AND COMMON AREAS.

    2.1   PREMISES: The Premises are a portion of a building, herein
sometimes referred to as the "Building" identified in paragraph 1.3 of the
Basic Lease Provisions.  "Building" shall include adjacent parking structures
used in connection therewith.  The Premises, the Building, the Common Areas,
the land upon which the same are located, along with all other buildings and
improvements thereon or thereunder, are herein collectively referred to as
the "Office Building Project."  Lessor hereby leases to Lessee and Lessee
leases from Lessor for the term, at the rental, and upon all of the
conditions set forth herein, the real property referred to in the Basic Lease
Provisions, paragraph 1.2, as the "Premises," including rights to the Common
Areas as hereinafter specified.

    2.2   VEHICLE PARKING: Subject to the rules and regulations attached
hereto, and as established by Lessor from time to time, Lessee shall be
entitled to use a PRORATA SHARE OF parking spaces in the Office Building
Project four (4) of which shall be reserved parking spaces, and the balance
unassigned.

          2.2.1  If Lessee commits, permits or allows any of the prohibited
activities described in the Lease or the rules then in effect, then Lessor
shall have the right, without notice, in addition to such other rights and
remedies that it may have, to remove or tow away the vehicle involved and
charge the cost to Lessee, which cost shall be immediately payable upon
demand by Lessor.

          2.2.2  The monthly parking rate per parking space will be $N/A per
month at the commencement of the term of this Lease.

    2.3   COMMON AREAS-DEFINITION. The term "Common Areas" is defined as
all areas and facilities outside the Premises and within the exterior
boundary line of the Office Building Project that are provided and designated
by the Lessor from time to time for the general non-exclusive use of Lessor,
Lessee and of other lessees of the Office Building Project and their
respective employees, suppliers, shippers, customers and invitees, including
but not limited to common entrances, lobbies, corridors, stairways and
stairwells, public restrooms, elevators, escalators, parking areas to the
extent not otherwise prohibited by this Lease, loading and unloading areas,
trash areas, roadways, sidewalks, walkways, parkways, ramps, driveways,
landscaped areas and decorative walls.

    2.4   COMMON AREAS-RULES AND REGULATIONS. Lessee agrees to abide by and
conform to the rules and regulations attached hereto as Exhibit B with
respect to the Office Building Project and Common Areas, and to cause its
employees, suppliers, shippers, customers, and invitees to so abide and
conform.  Lessor or such other person(s) as Lessor may appoint shall have the
exclusive control and management of the Common Areas and shall have the
right, from time to time, to modify, amend and enforce said rules and
regulations.  Lessor shall not be responsible to Lessee for the
non-compliance with said rules and regulations by other lessees, their
agents, employees and invitees of the Office Building Project.

    2.5   COMMON AREAS-CHANGES. Lessor shall have the right, in Lessor's sole
discretion, from time to time:

          (a) To make changes to the Building interior and exterior and
Common Areas, including, without limitation, changes in the location, size,
shape, number, and appearance thereof, including but not limited to the
lobbies, windows, stairways, air shafts, elevators, escalators, restrooms,
driveways, entrances, parking spaces, parking areas, loading and unloading
areas, ingress, egress, direction of traffic, decorative walls, landscaped
areas and walkways; provided, however, Lessor shall at all times provide the
parking facilities required by applicable law;

          (b) To close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains available;

          (c) To designate other land and improvements outside the boundaries
of the Office Building Project to be a part of the Common Areas, provided
that such other land and improvements have a reasonable and functional
relationship to the Office Building Project;

          (d) To add additional buildings and improvements to the Common
Areas;

          (e) To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Office Building Project, or any
portion thereof;

          (f) To do and perform such other acts and make such other changes
in, to or with respect to the Common Areas and Office Building Project as
Lessor may, in the exercise of sound business judgment deem to be appropriate.

3.  TERM.

    3.1   TERM. The term and Commencement Date of this Lease shall be as
specified in paragraph 1.5 of the Basic Lease Provisions.

    3.2   DELAY IN POSSESSION. Notwithstanding said Commencement Date, if
for any reason Lessor cannot deliver possession of the Premises to Lessee on
said date and subject to paragraph 3.2.2, Lessor shall not be subject to any
liability therefor, nor shall such failure affect the validity of this Lease
or the obligations of Lessee hereunder or extend the term hereof; but, in
such case, Lessee shall not be obligated to pay rent or perform any other
obligation of Lessee under the terms of this Lease, except as may be
otherwise provided in this Lease, until possession of the Premises is
tendered to Lessee, as

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hereinafter defined; provided, however, that if Lessor shall not have
delivered possession of the Premises Lessee may, at Lessee's option, by
notice in writing to Lessor within ten (10) days thereafter, cancel this
Lease, in which event the parties shall be discharged from all obligations
hereunder; provided, however, that, as to Lessee's obligations, Lessee first
reimburses Lessor for all costs incurred for Non-Standard improvements and,
as to Lessor's obligations, Lessor shall return any money previously
deposited by Lessee (less any offsets due Lessor for Non-Standard
improvements); and provided further, that if such written notice by Lessee is
not received by Lessor within said ten (10) day period, Lessee's right to
cancel this Lease hereunder shall terminate and be of no further force or
effect.

          3.2.1  POSSESSION TENDERED-DEFINED. Possession of the Premises
shall be deemed tendered to Lessee ("Tender of Possession") when (1) the
improvements to be provided by Lessor under this Lease are substantially
completed, (2) the Building utilities are ready for use in the Premises,
(3) Lessee has reasonable access to the Premises, and (4) ten (10) days shall
have expired following advance written notice to Lessee of the occurrence of
the matters described in (1), (2) and (3), above of this paragraph 3.2.1.

          3.2.2  DELAYS CAUSED BY LESSEE. There shall be no abatement of
rent, and the sixty (60) day period following the Commencement Date before
which Lessee's right to cancel this Lease accrues under paragraph 3.2, shall
be deemed extended to the extent of any delays caused by acts or omissions of
Lessee, Lessee's agents, employees and contractors.

    3.3   EARLY POSSESSION. If Lessee occupies the Premises prior to said
Commencement Date, such occupancy shall be subject to all provisions of this
Lease, such occupancy shall not change the termination date, and Lessee shall
pay rent for such occupancy.

    3.4   UNCERTAIN COMMENCEMENT. In the event commencement of the Lease
term is defined as the completion of the improvements, Lessee and Lessor
shall execute an amendment to this Lease establishing the date of Tender of
Possession (as defined in paragraph 3.2.1) or the actual taking of possession
by Lessee, whichever first occurs, as the Commencement Date.

4.  RENT.

    4.1   BASE RENT. Subject to adjustment as hereinafter provided in
paragraph 4.3, and except as may be otherwise expressly provided in this
Lease, Lessee shall pay to Lessor the Base Rent for the Premises set forth in
paragraph 1.6 of the Basic Lease Provisions, without offset or deduction.
Lessee shall pay Lessor upon execution hereof the advance Base Rent described
in paragraph 1.8 of the Basic Lease Provisions.  Rent for any period during
the term hereof which is for less than one month shall be prorated based upon
the actual number of days of the calendar month involved.  Rent shall be
payable in lawful money of the United States to Lessor at the address stated
herein or to such other persons or at such other places as Lessor may
designate in writing.

    4.2   OPERATING EXPENSE INCREASE. Lessee shall pay to Lessor during the
term hereof, in addition to the Base Rent, Lessee's Share, as hereinafter
defined, of the amount by which all Operating Expenses, as hereinafter
defined, for each Comparison Year exceeds the amount of all Operating
Expenses for the Base Year, such excess being hereinafter referred to as the
"Operating Expense Increase," in accordance with the following provisions:

          (a) "Lessee's Share" is defined, for purposes of this Lease, as the
percentage set forth in paragraph 1.10 of the Basic Lease Provisions, which
percentage has been determined by dividing the approximate square footage of
the Premises by the total approximate square footage of the rentable space
contained in the Office Building Project.  It is understood and agreed that
the square footage figures set forth in the Basic Lease Provisions are
approximations which Lessor and Lessee agree are reasonable and Shall not be
subject to revision except in connection with an actual change in the size of
the Premises or a change in the space available for lease in the Office
Building Project.

          (b) "Base Year" is defined as the calendar year 2000.

          (c) "Comparison Year" is defined as each calendar year during the
term of this Lease subsequent to the Base Year; provided, however, Lessee
shall have no obligation to pay a share of the Operating Expense Increase
applicable to the first twelve (12) months of the Lease Term (other than such
as are mandated by a governmental authority, as to which government mandated
expenses Lessee shall pay Lessee's Share, notwithstanding they occur during
the first twelve (12) months).  Lessee's Share of the Operating Expense
Increase for the first and last Comparison Years of the Lease Term shall be
prorated according to that portion of such Comparison Year as to which Lessee
is responsible for a share of such increase.

          (d) "Operating Expenses" is defined, for purposes of this Lease, to
include all costs, if any, incurred by Lessor in the exercise of its
reasonable discretion, for:

              (i)    The operation, repair, maintenance, and replacement, in
neat, clean, safe, good order and condition, of the Office Building Project,
including but not limited to, the following:

                     (aa) The Common Areas, including their surfaces,
coverings, decorative items, carpets, drapes and window coverings, and
including parking areas, loading and unloading areas, trash areas, roadways,
sidewalks, walkways, stairways, parkways, driveways, landscaped areas,
striping, bumpers, irrigation systems, Common Area lighting facilities,
building exteriors and roofs, fences and gates;

                     (bb) All heating, air conditioning, plumbing, electrical
systems, life safety equipment, telecommunication and other equipment used in
common by, or for the benefit of, lessees or occupants of the Office Building
Project, including elevators and escalators, tenant directories, fire
detection systems including sprinkler system maintenance and repair.

              (ii)   Trash disposal, janitorial and security services;

              (iii)  Any other service to be provided by Lessor that is
elsewhere in this Lease stated to be an "Operating Expense";

              (iv)   The cost of the premiums for the liability and property
insurance policies to be maintained by Lessor under paragraph 8 hereof;

              (v)    The amount of the real property taxes to be paid by
Lessor under paragraph 10.1 hereof;

              (vi)   The cost of water, sewer, gas, electricity, and other
publicly mandated services to the Office Building Project;

              (vii)  Labor, salaries and applicable fringe benefits and
costs, materials, supplies and tools, used in maintaining and/or cleaning the
Office Building Project and accounting and a management fee attributable to
the operation of the Office Building Project;

              (viii) Replacing and/or adding improvements mandated by any
governmental agency and any repairs or removals necessitated thereby
amortized over its useful life according to Federal income tax regulations or
guidelines for depreciation thereof (including interest on the unamortized
balance as is then reasonable in the judgment of Lessor's accountants);

              (ix)   Replacements of equipment or improvements that have a
useful life for depreciation purposes according to Federal income tax
guidelines of five (5) years or less, as amortized over such life.

          (e) Operating Expenses shall not include the costs of replacements
of equipment or improvements that have a useful life for Federal income tax
purposes in excess of five (5) years unless it is of the type described in
paragraph 4.2(d)(viii), in which case their cost shall be included as above
provided.

          (f) Operating Expenses shall not include any expenses paid by any
lessee directly to third parties, or as to which Lessor is otherwise
reimbursed by any third party, other tenant, or by insurance proceeds.

          (g) Lessee's Share of Operating Expense Increase shall be payable
by Lessee within thirty (30) days after a reasonably detailed statement of
actual expenses is presented to Lessee by Lessor.  At Lessor's option,
however, an amount may be estimated by Lessor from time to time in advance of
Lessee's Share of the Operating Expense Increase for any Comparison Year, and
the same shall be payable monthly or quarterly, as Lessor shall designate,
during each Comparison Year of the Lease term, on the same day as the Base
Rent is due hereunder.  In the event that Lessee pays Lessor's estimate of
Lessee's Share of Operating Expense Increase as aforesaid, Lessor shall
deliver to Lessee within sixty (60) days after the expiration of each
Comparison Year a reasonably detailed statement showing Lessee's Share of the
actual Operating Expense Increase incurred during such year.  If Lessee's
payments under this paragraph 4.2(g) during said Comparison Year exceed
Lessee's Share as indicated on said statement, Lessee shall be entitled to
credit the amount of such overpayment against Lessee's Share of Operating
Expense Increase next falling due.  If Lessee's payments under this paragraph
during said Comparison Year were less than Lessee's Share as indicated on
said statement, Lessee shall pay to Lessor the amount of the deficiency
within thirty (30) days after delivery by Lessor to Lessee of said statement.
Lessor and Lessee shall forthwith adjust between them by cash payment any
balance determined to exist with respect to that portion of the last
Comparison Year for which Lessee is responsible as to Operating Expense
Increases, notwithstanding that the Lease term may have terminated before the
end of such Comparison Year.

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5.  SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof
the security deposit set forth in paragraph 1.9 of the Basic Lease Provisions
as security for Lessee's faithful performance of Lessee's obligations
hereunder. If Lessee fails to pay rent or other charges due hereunder, or
otherwise defaults with respect to any provision of this Lease, Lessor may
use, apply or retain all or any portion of said deposit for the payment of
any rent or other charge in default for the payment of any other sum to which
Lessor may become obligated by reason of Lessee's default, or to compensate
Lessor for any loss or damage which Lessor may suffer thereby. If Lessor so
uses or applies all or any portion of said deposit, Lessee shall within ten
(10) days after written demand therefor deposit cash with Lessor in an amount
sufficient to restore said deposit to the full amount then required of
Lessee. Lessor shall not be required to keep said security deposit separate
from its general accounts. If Lessee performs all of Lessee's obligations
hereunder, said deposit, or so much thereof as has not heretofore been
applied by Lessor, shall be returned, without payment of interest or other
increment for its use, to Lessee (or, at Lessor's option, to the last
assignee, if any, of Lessee's interest hereunder) at the expiration of the
term hereof, and after Lessee has vacated the Premises. No trust relationship
is created herein between Lessor and Lessee with respect to said Security
Deposit.

6.  USE.

    6.1   USE. The Premises shall be used and occupied only for the purpose
set forth in paragraph 1.4 of the Basic Lease Provisions or any other use
which is reasonably comparable to that use and for no other purpose.

    6.2   COMPLIANCE WITH LAW.

          (a) Lessor warrants to Lessee that the Premises, in the state
existing on the date that the Lease term commences, but without regard to
alterations or improvements made by Lessee or the use for which Lessee will
occupy the Premises, does not violate any covenants or restrictions of
record, or any applicable building code, regulation or ordinance in effect on
such Lease term Commencement Date. In the event it is determined that this
warranty has been violated, then it shall be the obligation of the Lessor,
after written notice from Lessee, to promptly, at Lessor's sole cost and
expense, rectify any such violation.

          (b) Except as provided in paragraph 6.2(a) Lessee shall, at
Lessee's expense, promptly comply with all applicable statutes, ordinances,
rules, regulations, orders, covenants and restrictions of record, and
requirements of any fire insurance underwriters or rating bureaus, now in
effect or which may hereafter come into effect, whether or not they reflect a
change in policy from that now existing, during the term or any part of the
term hereof, relating in any manner to the Premises and the occupation and
use by Lessee of the Premises. Lessee shall conduct its business in a lawful
manner and shall not use or permit the use of the Premises or the Common
Areas in any manner that will tend to create waste or a nuisance or shall
tend to disturb other occupants of the Office Building Project.

    6.3   CONDITION OF PREMISES.

          (a) Lessor shall deliver the Premises to Lessee in a clean
condition on the Lease Commencement Date (unless Lessee is already in
possession) and Lessor warrants to Lessee that the plumbing, lighting, air
conditioning, and heating system in the Premises shall be in good operating
condition. In the event that it is determined that this warranty has been
violated, then it shall be the obligation of Lessor, after receipt of written
notice from Lessee setting forth with specificity the nature of the
violation, to promptly, at Lessor's sole cost, rectify such violation.

          (b) Except as otherwise provided in this Lease, Lessee hereby
accepts the Premises and the Office Building Project in their condition
existing as of the Lease Commencement Date or the date that Lessee takes
possession of the Premises, whichever is earlier, subject to all applicable
zoning, municipal, county and state laws, ordinances and regulations
governing and regulating the use of the Premises, and any easements,
covenants or restrictions of record, and accepts this Lease subject thereto
and to all matters disclosed thereby and by any exhibits attached hereto.
Lessee acknowledges that it has satisfied itself by its own independent
investigation that the Premises are suitable for its intended use, and that
neither Lessor nor Lessor's agent or agents has made any representation or
warranty as to the present or future suitability of the Premises, Common
Areas, or Office Building Project for the conduct of Lessee's business.

See Addendum For Additional Section 6.4

7.  MAINTENANCE, REPAIRS, ALTERATIONS AND COMMON AREA SERVICES.

    7.1   LESSOR'S OBLIGATIONS. Lessor shall keep the Office Building
Project, including the Premises, interior and exterior walls, roof, and
common areas, and the equipment whether used exclusively for the Premises or
in common with other premises, in good condition and repair; provided,
however, Lessor shall not be obligated to paint, repair or replace wall
coverings, or to repair or replace any improvements that are not ordinarily a
part of the Building or are above then Building standards. Except as provided
in paragraph 9.5, there shall be no abatement of rent or liability of Lessee
on account of any injury or interference with Lessee's business with respect
to any improvements, alterations or repairs made by Lessor to the Office
Building Project or any part thereof. Lessee expressly waives the benefits of
any statute now or hereafter in effect which would otherwise afford Lessee
the right to make repairs at Lessor's expense or to terminate this Lease
because of Lessor's failure to keep the Premises in good order, condition and
repair.

    7.2   LESSEE'S OBLIGATIONS.

          (a) Notwithstanding Lessor's obligation to keep the Premises in
good condition and repair, Lessee shall be responsible for payment of the
cost thereof to Lessor as additional rent for that portion of the cost of any
maintenance and repair of the Premises, or any equipment (wherever located)
that serves only Lessee or the Premises, to the extent such cost is
attributable to causes beyond normal wear and tear. Lessee shall be
responsible for the cost of painting, repairing or replacing wall coverings,
and to repair or replace any Premises improvements that are not ordinarily a
part of the Building or that are above then Building standards. Lessor may,
at its option, upon reasonable notice, elect to have Lessee perform any
particular such maintenance or repairs the cost of which is otherwise
Lessee's responsibility hereunder.

          (b) On the last day of the term hereof, or on any sooner
termination, Lessee shall surrender the Premises to Lessor in the same
condition as received, ordinary wear and tear excepted, clean and free of
debris.  Any damage or deterioration of the Premises shall not be deemed
ordinary wear and tear if the same could have been prevented by good
maintenance practices by Lessee.  Lessee shall repair any damage to the
Premises occasioned by the installation or removal of Lessee's trade
fixtures, alterations, furnishings and equipment. Except as otherwise stated
in this Lease, Lessee shall leave the air lines, power panels, electrical
distribution systems, lighting fixtures, air conditioning, window coverings,
wall coverings, carpets, wall paneling, ceilings and plumbing on the
Premises and in good operating condition.

    7.3   ALTERATIONS AND ADDITIONS.

          (a) Lessee shall not, without Lessor's prior written consent make
any alterations, improvements, additions, Utility Installations or repairs
in, on or about the Premises, or the Office Building Project.  As used in
this paragraph 7.3 the term "Utility Installation" shall mean carpeting,
window and wall coverings, power panels, electrical distribution systems,
lighting fixtures, air conditioning, plumbing, and telephone and
telecommunication wiring and equipment.  At the expiration of the term,
Lessor may require the removal of any or all of said alterations,
improvements, additions or Utility Installations, and the restoration of the
Premises and the Office Building Project to their prior condition, at
Lessee's expense.  Should Lessor permit Lessee to make its own alterations,
improvements, additions or Utility Installations, Lessee shall use only such
contractor as has been expressly approved by Lessor, and Lessor may require
Lessee to provide Lessor, at Lessee's sole cost and expense, a lien and
completion bond in an amount equal to one and one-half times the estimated
cost of such improvements, to insure Lessor against any liability for
mechanic's and materialmen's liens and to insure completion of the work. The
alterations and improvements described in Exhibit C to this Lease shall be
deemed proved by Lessor and such alterations and improvements need not be
removed by Lessee. Should Lessee

     The alterations and improvements described in Exhibit C to this lease
shall be deemed approved by Lessor and such alterations and improvements need
not be removed by Lessee.

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make any alterations, improvements, additions or Utility Installations
without the prior approval of Lessor, or use a contractor not expressly
approved by Lessor, Lessor may, at any time during the term of this Lease,
require that Lessee remove any part or all of the same.

          (b) Any alterations, improvements, additions or Utility
Installations in or about the Premises or the Office Building Project that
Lessee shall desire to make shall be presented to Lessor in written form,
with proposed detailed plans.  If Lessor shall give its consent to Lessee's
making such alteration, improvement, addition or Utility Installation, the
consent shall, be deemed conditioned upon Lessee acquiring a permit to do so
from the applicable governmental agencies, furnishing a copy thereof to
Lessor prior to the commencement of the work, and compliance by Lessee with
all conditions of said permit in a prompt and expeditious manner.

          (c) Lessee shall pay, when due, all claims for labor or materials
furnished or alleged to have been furnished to or for Lessee at or for use in
the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises, the Building or the Office Building
Project, or any interest therein.

          (d) Lessee shall give Lessor not less than ten (10) days' notice
prior to the commencement of any work in the Premises by Lessee, and Lessor
shall have the right to post notices of non-responsibility in or on the
Premises or the Building as provided by law.  If Lessee shall, in good faith,
contest the validity of any such lien, claim or demand, then Lessee shall, at
its sole expense defend itself and Lessor against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof against the Lessor or the Premises, the Building or the
Office Building Project, upon the condition that if Lessor shall require,
Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in an
amount equal to such contested lien claim or demand indemnifying Lessor
against liability for the same and holding the Premises, the Building and the
Office Building Project free from the effect of such lien or claim.  In
addition, Lessor may require Lessee to pay Lessor's reasonable attorneys'
fees and costs in participating in such action if Lessor shall decide it is
to Lessor's best interest so to do.

          (e) All alterations, improvements, additions and Utility
Installations (whether or not such Utility Installations constitute trade
fixtures of Lessee), which may be made to the Premises by Lessee, including
but not limited to, floor coverings, panelings, doors, drapes, built-ins,
moldings, sound attenuation, and lighting and telephone or communication
systems, conduit, wiring and outlets, shall be made and done in a good and
workmanlike manner and of good and sufficient quality and materials and shall
be the property of Lessor and remain upon and be surrendered with the
Premises at the expiration of the Lease term, unless Lessor requires their
removal pursuant to paragraph 7.3(a).  Provided Lessee is not in default,
notwithstanding the provisions of this paragraph 7.3(e), Lessee's personal
property and equipment, other than that which is affixed to the Premises so
that it cannot be removed without material damage to the Premises or the
Building, and other than Utility Installations, shall remain the property of
Lessee and may be removed by Lessee subject to the provisions of paragraph
7.2.

          (f) Lessee shall provide Lessor with as-built plans and
specifications for any alterations, improvements, additions or Utility
Installations.

    7.4   UTILITY ADDITIONS. Lessor reserves the right to install new or
additional utility facilities throughout the Office Building Project for the
benefit of Lessor or Lessee, or any other lessee of the Office Building
Project, including, but not by way of limitation, such utilities as plumbing,
electrical systems, communication systems, and fire protection and detection
systems, so long as such installations do not unreasonably interfere with
Lessee's use of the Premises.

8.  INSURANCE; INDEMNITY.

    8.1   LIABILITY INSURANCE--LESSEE. Lessee shall at Lessee's expense,
obtain and keep in force during the term of this Lease a policy of Commercial
General Liability insurance utilizing an Insurance Service Office Standard
form with Broad Form General Liability Endorsement (GL0404), or equivalent,
in an amount of not less than $2,000,000.00 per occurrence of bodily injury
and property damage combined or in a greater amount as reasonably determined
by Lessor and shall insure Lessee with Lessor as an additional insured
against liability arising out of the use, occupancy or maintenance of the
Premises.  Compliance with the above requirement shall not, however, limit
the liability of Lessee hereunder.

    8.2   LIABILITY INSURANCE--LESSOR. Lessor shall obtain and keep in force
during the term of this Lease a policy of Combined Single Limit Bodily Injury
and Broad Form Property Damage Insurance, plus coverage against such other
risks Lessor deems advisable from time to time, insuring Lessor, but not
Lessee, against liability arising out of the ownership, use, occupancy or
maintenance of the Office Building Project in an amount not less than
$2,000,000.00 per occurrence.

    8.3   PROPERTY INSURANCE--LESSEE. Lessee shall, at Lessee's expense,
obtain and keep in force during the term of this Lease for the benefit of
Lessee, replacement cost fire and extended coverage insurance, with vandalism
and malicious mischief, sprinkler leakage and earthquake sprinkler leakage
endorsements, in an amount sufficient to cover not less than 100% of the full
replacement cost, as the same may exist from time to time, of all of Lessee's
personal property, fixtures, equipment and tenant improvements.

    8.4   PROPERTY INSURANCE--LESSOR. Lessor shall obtain and keep in force
during the term of this Lease a policy or policies of insurance covering loss
or damage to the Office Building Project improvements, but not Lessee's
personal property, fixtures, equipment or tenant improvements, in the amount
of the full replacement cost thereof, as the same may exist from time to
time, utilizing Insurance Services Office standard form, or equivalent,
providing protection against all perils included within the classification of
fire, extended coverage, vandalism, malicious mischief, plate glass, and such
other perils as Lessor deems advisable or may be required by a lender having
a lien on the Office Building Project. In addition, Lessor shall obtain and
keep in force, during the term of this Lease, a policy of rental value
insurance covering a period of one year, with loss payable to Lessor, which
insurance shall also cover all Operating Expenses for said period.  Lessee
will not be named in any such policies carried by Lessor and shall have no
right to any proceeds therefrom.  The policies required by these paragraphs
8.2 and 8.4 shall contain such deductibles as Lessor or the aforesaid lender
may determine.  In the event that the Premises shall suffer an insured loss
as defined in paragraph 9.1(f) hereof, the deductible amounts under the
applicable insurance policies shall be deemed an Operating Expense.  Lessee
shall not do or permit to be done anything which shall invalidate the
insurance policies carried by Lessor.  Lessee shall pay the entirety of any
increase in the property insurance premium for the Office Building Project
over what it was immediately prior to the commencement of the term of this
Lease if the increase is specified by Lessor's insurance carrier as being
caused by the nature of Lessee's occupancy or any act or omission of Lessee.

    8.5   INSURANCE POLICIES. Lessee shall deliver to Lessor copies of
liability insurance policies required under paragraph 8.1 or certificates
evidencing the existence and amounts of such insurance within seven (7) days
after the Commencement Date of this Lease. No such policy shall be
cancellable or subject to reduction of coverage or other modification except
after thirty (30) days prior written notice to Lessor.  Lessee shall, at
least thirty (30) days prior to the expiration of such policies, furnish
Lessor with renewals thereof.

    8.6   WAIVER OF SUBROGATION. Lessee and Lessor each hereby release and
relieve the other, and waive their entire right of recovery against the
other, for direct or consequential loss or damage arising out of or incident
to the perils covered by property insurance carried by or required to be
carried by such party, whether due to the negligence of Lessor or Lessee or
their agents, employees, contractors and/or invitees.  If necessary all
property insurance policies required under this Lease shall be endorsed to so
provide.

    8.7   INDEMNITY. Lessee shall indemnify and hold harmless Lessor and its
agents, Lessor's master or ground lessor, partners and lenders, from and
against any and all claims for damage to the person or property of anyone or
any entity arising from Lessee's use of the Office Building Project, or from
the conduct of Lessee's business or from any activity, work or things done,
permitted or suffered by Lessee in or about the Premises or elsewhere and
shall further indemnify and hold harmless Lessor from and against any and all
claims, costs and expenses arising from any breach or default in the
performance of any obligation on Lessee's part to be performed under the
terms of this Lease, or arising from any act or omission of Lessee, or any of
Lessee's agents, contractors, employees or invitees, and from and against
all costs, attorney's fees, expenses and liabilities incurred by Lessor as
the result of any such use, conduct, activity, work, things done, permitted
or suffered, breach, default or negligence, and in dealing reasonably
therewith, including but not limited to the defense or pursuit of any claim
or any action or proceeding involved therein; and in case any action or
proceeding be brought against Lessor by reason of any such matter. Lessee
upon notice from Lessor shall defend the same at Lessee's expense by counsel
reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in
such defense.  Lessor need not have first paid any such claim in order to be
so indemnified.  Lessee, as a material part of the consideration to Lessor,
hereby assumes all risk of damage to property of Lessee or injury to persons,
in, upon or about the Office Building Project arising from any cause and
Lessee hereby waives all claims in respect thereof against Lessor.

    8.8   EXEMPTION OF LESSOR FROM LIABILITY. Lessee hereby agrees that
Lessor shall not be liable for injury to Lessee's business or any loss of
income therefrom or for loss of or damage to the goods, wares, merchandise or
other property of Lessee, Lessee's employees, invitees, customers, or any
other person in or about the Premises or the Office Building Project, nor
shall Lessor be liable for injury to the person of Lessee, Lessee's
employees, agents or contractors, whether such damage or injury is caused by
or results from theft, fire, steam, electricity, gas, water or rain, or from
the breakage, leakage, obstruction or other defects of pipes, sprinklers,
wires, appliances, plumbing, air conditioning or lighting fixtures, or from
any other cause, whether said damage or injury results from conditions
arising upon the Premises or upon other portions of the Office Building
Project, or from other sources or places, or from new construction or the
repair, alteration or improvement of any part of the Office Building Project,
or of the equipment, fixtures or appurtenances

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applicable thereto, and regardless of whether the cause of such damage or
injury or the means of repairing the same is inaccessible, Lessor shall not
be liable for any damages arising from any act or neglect of any other
lessee, occupant or user of the Office Building Project, nor from the failure
of Lessor to enforce the provisions of any other lease of any other lessee of
the Office Building Project.

    8.9   NO REPRESENTATION OF ADEQUATE COVERAGE. Lessor makes no
representation that the limits or forms of coverage of insurance specified in
this paragraph 8 are adequate to cover Lessee's property or obligations under
this Lease.

9.  DAMAGE OR DESTRUCTION.

    9.1   DEFINITIONS.

          (a) "Premises Damage" shall mean if the Premises are damaged or
destroyed to any extent.

          (b) "Premises Building Partial Damage" shall mean if the Building
of which the Premises are a part is damaged or destroyed to the extent that
the cost to repair is less than fifty percent (50%) of the then Replacement
Cost of the Building.

          (c) "Premises Building Total Destruction" shall mean if the
Building of which the Premises are a part is damaged or destroyed to the
extent that the cost to repair is fifty percent (50%) or more of the then
Replacement Cost of the Building.

          (d) "Office Building Project Buildings" shall mean all of the
buildings on the Office Building Project site.

          (e) "Office Building Project Buildings Total Destruction" shall
mean if the Office Building Project Buildings are damaged or destroyed to the
extent that the cost to repair is fifty percent (50%) or more of the then
Replacement Cost of the Office Building Project Buildings.

          (f) "Insured Loss" shall mean damage or destruction which was
caused by an event required to be covered by the insurance described in
paragraph 8.  The fact that an Insured Loss has a deductible amount shall not
make the loss an uninsured loss.

          (g) "Replacement Cost" shall mean the amount of money necessary to
be spent in order to repair or rebuild the damaged area to the condition that
existed immediately prior to the damage occurring, excluding all improvements
made by lessees, other than those installed by Lessor at Lessee's expense.

    9.2   PREMISES DAMAGE; PREMISES BUILDING PARTIAL DAMAGE.

          (a) Insured Loss: Subject to the provisions of paragraphs 9.4 and
9.5, if at any time during the term of this Lease there is damage which is an
Insured Loss and which falls into the classification of either Premises
Damage or Premises Building Partial Damage, then Lessor shall, as soon as
reasonably possible and to the extent the required materials and labor are
readily available through usual commercial channels, at Lessor's expense,
repair such damage (but not Lessee's fixtures, equipment or tenant
improvements originally paid for by Lessee) to its condition existing at the
time of the damage, and this Lease shall continue in full force and effect.

          (b) Uninsured Loss: Subject to the provisions of paragraphs 9.4 and
9.5, if at any time during the term of this Lease there is damage which is
not an Insured Loss and which falls within the classification of Premises
Damage or Premises Building Partial Damage, unless caused by a negligent or
willful act of Lessee (in which event Lessee shall make the repairs at
Lessee's expense), which damage prevents Lessee from making any substantial
use of the Premises, Lessor may at Lessor's option either (i) repair such
damage as soon as reasonably possible at Lessor's expense, in which event
this Lease shall continue in full force and effect, or (ii) give written
notice to Lessee within thirty (30) days after the date of the occurrence of
such damage of Lessor's intention to cancel and terminate this Lease as of
the date of the occurrence of such damage, in which event this Lease shall
terminate as of the date of the occurrence of such damage.

    9.3   PREMISES BUILDING TOTAL DESTRUCTION; OFFICE BUILDING PROJECT TOTAL
DESTRUCTION. Subject to the provisions of paragraphs 9.4 and 9.5, if at any
time during the term of this Lease there is damage, whether or not it is an
Insured Loss, which falls into the classifications of either (i) Premises
Building Total Destruction, or (ii) Office Building Project Total
Destruction, then Lessor may at Lessor's option either (i) repair such damage
or destruction as soon as reasonably possible at Lessor's expense (to the
extent the required materials are readily available through usual commercial
channels) to its condition existing at the time of the damage, but not
Lessee's fixtures, equipment or tenant improvements, and this Lease shall
continue in full force and effect, or (ii) give written notice to Lessee
within thirty (30) days after the date of occurrence of such damage of
Lessor's intention to cancel and terminate this Lease, in which case this
Lease shall terminate as of the date of the occurrence of such damage.

    9.4   DAMAGE NEAR END OF TERM.

          (a) Subject to paragraph 9.4(b), if at any time during the last
twelve (12) months of the term of this Lease there is substantial damage to
the Premises, Lessor may at Lessor's option cancel and terminate this Lease
as of the date of occurrence of such damage by giving written notice to
Lessee of Lessor's election to do so within 30 days after the date of
occurrence of such damage.

          (b) Notwithstanding paragraph 9.4(a), in the event that Lessee has
an option to extend or renew this Lease, and the time within which said
option may be exercised has not yet expired, Lessee shall exercise such
option, if it is to be exercised at all, no later than twenty (20) days after
the occurrence of an Insured Loss falling within the classification of
Premises Damage during the last twelve (12) months of the term of this Lease.
 If Lessee duly exercises such option during said twenty (20) day period,
Lessor shall, at Lessor's expense, repair such damage, but not Lessee's
fixtures, equipment or tenant improvements, as soon as reasonably possible
and this Lease shall continue in full force and effect.  If Lessee fails to
exercise such option during said twenty (20) day period, then Lessor may at
Lessor's option terminate and cancel this Lease as of the expiration of said
twenty (20) day period by giving written notice to Lessee of Lessor's
election to do so within ten (10) days after the expiration of said twenty
(20) day period, notwithstanding any term or provision in the grant of
option to the contrary.

    9.5   ABATEMENT OF RENT; LESSEE'S REMEDIES.

          (a) In the event Lessor repairs or restores the Building; or
Premises pursuant to the provisions of this paragraph 9, and any part of the
Premises are not usable (including loss of use due to loss of access or
essential services), the rent payable hereunder (including Lessee's Share of
Operating Expense Increase) for the period during which such damage, repair
or restoration continues shall be abated, provided (1) the damage was not the
result of the negligence of Lessee, and (2) such abatement shall only be to
the extent the operation and profitability of Lessee's business as operated
from the Premises is adversely affected.  Except for said abatement of rent,
if any, Lessee shall have no claim against Lessor for any damage suffered by
reason of any such damage, destruction, repair or restoration.

          (b) If Lessor shall be obligated to repair or restore the Premises
or the Building under the provisions of this Paragraph 9 and shall not
commence such repair or restoration within ninety (90) days after such
occurrence, or if Lessor shall not complete the restoration and repair within
six (6) months after such occurrence, Lessee may at Lessee's option cancel
and terminate this Lease by giving Lessor written notice of Lessee's election
to do so at any time prior to the commencement or completion, respectively,
of such repair or restoration. In such event this Lease shall terminate as of
the date of such notice.

          (c) Lessee agrees to cooperate with Lessor in connection with any
such restoration and repair, including but not limited to the approval and/or
execution of plans and specifications required.

    9.6   TERMINATION--ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to this paragraph 9, an equitable adjustment shall be made
concerning advance rent and any advance payments made by Lessee to Lessor.
Lessor shall, in addition, return to Lessee so much of Lessee's security
deposit as has not theretofore been applied by Lessor.

    9.7   WAIVER. Lessor and Lessee waive the provisions of any statute which
relate to termination of leases when leased property is destroyed and agree
that such event shall be governed by the terms of this Lease.

10. REAL PROPERTY TAXES.

    10.1  PAYMENT OF TAXES. Lessor shall pay the real property tax, as
defined in paragraph 10.3, applicable to the Office Building Project subject
to reimbursement by Lessee of Lessee's Share of such taxes in accordance with
the provisions of paragraph 4.2, except as otherwise provided in paragraph
10.2.

    10.2  ADDITIONAL IMPROVEMENTS. Lessee shall not be responsible for paying
any increase in real property tax specified in the tax assessor's records and
work sheets as being caused by additional improvements placed upon the Office
Building Project by other lessees or by Lessor for the exclusive enjoyment of
any other lessee.  Lessee shall, however, pay to Lessor at the time that
Operating Expenses are payable under paragraph 4.2(c) the entirety of any
increase in real property tax if assessed solely by reason of additional
improvements placed upon the Premises by Lessee or at Lessee's request.

    10.3  DEFINITION OF "REAL PROPERTY TAX". As used herein, the term "real
property tax" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed on the Office Building Project or
any portion thereof by any authority having the direct or indirect power to
tax, including any city, county, state or federal government, or any school,
agricultural, sanitary, fire, street, drainage or other improvement district
thereof, as against any legal or equitable interest of Lessor in the Office
Building Project or in any portion thereof, as against Lessor's right to rent
or other income therefrom, and as

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against Lessor's business of leasing the Office Building Project.  The term
"real property tax" shall also include any tax, fee, levy, assessment or
charge (i) in substitution of, partially or totally, any tax, fee, levy,
assessment or charge hereinabove included within the definition of "real
property tax", or (ii) the nature of which was hereinbefore included within
the definition of "real property tax," or (iii) which is imposed for a
service or right not charged prior to June 1, 1978 or, if previously
charged, has been increased since June 1, 1978, or (iv) which is imposed as a
result of a change in ownership, as defined by applicable local statutes for
property tax purposes, of the Office Building Project or which is added to a
tax or charge hereinbefore included within the definition of real property
tax by reason of such change of ownership, or (v) which is imposed by reason
of this transaction, any modifications or changes hereto, or any transfers
hereof.

    10.4  JOINT ASSESSMENT. If the improvements or property, the taxes for
which are to be paid separately by Lessee under paragraph 10.2 or 10.5 are
not separately assessed, Lessee's portion of that tax shall be equitably
determined by Lessor from the respective valuations assigned in the
assessor's work sheets or such other information (which may include the cost
of construction) as may be reasonably available.  Lessor's reasonable
determination thereof, in good faith, shall be conclusive.

    10.5  PERSONAL PROPERTY TAXES.

          (a) Lessee shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Lessee contained in the Premises or elsewhere.

          (b) If any of Lessee's said personal property shall be assessed
with Lessor's real property, Lessee shall pay to Lessor the taxes
attributable to Lessee within ten (10) days after receipt of a written
statement setting forth the taxes applicable to Lessee's property.

11. UTILITIES.

    11.1  SERVICES PROVIDED BY LESSOR. Lessor shall provide heating,
ventilation, air conditioning, and janitorial service as reasonably required,
reasonable amounts of electricity for normal lighting and office machines,
water for reasonable and normal drinking and lavatory use, and replacement
light bulbs and/or fluorescent tubes and ballasts for standard overhead
fixtures.

    11.2  SERVICES EXCLUSIVE TO LESSEE. Lessee shall pay for all water, gas,
heat, light, power, telephone and other utilities and services specially or
exclusively supplied and/or metered exclusively to the Premises or to Lessee,
together with any taxes thereon.  If any such services are not separately
metered to the Premises, Lessee shall pay at Lessor's option, either Lessee's
Share or a reasonable proportion to be determined by Lessor of all charges
jointly metered with other premises in the Building.

    11.3  HOURS OF SERVICE. Said services and utilities shall be provided
during generally accepted business days and hours of Monday through Friday,
holidays excepted, from 8:00 am 6:00 pm.  Utilities and services required
at other times shall be subject to advance request and reimbursement by,
Lessee to Lessor of the cost thereof.

    11.4  EXCESS USAGE BY LESSEE. Lessee shall not make connection to the
utilities except by or through existing outlets and shall not install or use
machinery or equipment in or about the Premises that uses excess water,
lighting or power, or suffer or permit any act that causes extra burden upon
the utilities or services, including but not limited to security services,
over standard office usage for the Office Building Project.  Lessor shall
require Lessee to reimburse Lessor for any excess expenses or costs that may
arise out of a breach of this subparagraph by Lessee.  Lessor may, in its
sole discretion, install at Lessee's expense supplemental equipment and/or
separate metering applicable to Lessee's excess usage or loading.

    11.5  INTERRUPTIONS. There shall be no abatement of rent and Lessor shall
not be liable in any respect whatsoever for the inadequacy, stoppage,
interruption or discontinuance of any utility or service due to riot, strike,
labor dispute, breakdown, accident, repair or other cause beyond Lessor's
reasonable control or in cooperation with governmental request or directions.

12. ASSIGNMENT AND SUBLETTING.

    12.1  LESSOR'S CONSENT REQUIRED. Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of Lessee's interest in the Lease or in the
Premises, without Lessor's prior written consent, which Lessor shall not
unreasonably withhold. Lessor shall respond to Lessee's request for consent
hereunder in a timely manner and any attempted assignment, transfer,
mortgage, encumbrance or subletting without such consent shall be void, and
shall constitute a material default and breach of this Lease without the need
for notice to Lessee under paragraph 13.1. stock, including any public or
private offering or Lessee's capital stock, shall not be deemed an
assignment, subletting or other transfer of the Lease or Premises requiring
Lessor's consent.

    12.2  LESSEE AFFILIATE. Notwithstanding the provisions of paragraph 12.1
hereof, Lessee may assign or sublet the Premises, or any portion thereof,
without Lessor's consent, to any corporation which controls, is controlled by
or is under common control with Lessee, or to any corporation resulting from
the merger or consolidation with Lessee, or to any person or entity which
acquires all the stock or assets of Lessee as a going concern of the business
that is being conducted on the Premises, all of which are referred to as
"Lessee Affiliate"; provided that before such assignment shall be effective,
(a) said assignee shall assume, in full, the obligations of Lessee under this
Lease and (b) Lessor shall be given written notice of such assignment and
assumption.  Any such assignment shall not, in any way, affect or limit the
liability of Lessee under the terms of this Lease even if after such
assignment or subletting the terms of this Lease are materially changed or
altered without the consent of Lessee, the consent of whom shall not be
necessary.

    12.3  TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.

          (a) Regardless of Lessor's consent, no assignment or subletting
shall release Lessee of Lessee's obligation hereunder or alter the primary
liability of Lessee to pay the rent and other sums due Lessor hereunder
including Lessee's Share of Operating Expense Increase, and to perform all
other obligations to be performed by Lessee hereunder.

          (b) Lessor may accept rent from any person other than Lessee
pending approval or disapproval of such assignment.

          (c) Neither a delay in the approval or disapproval of such
assignment or subletting, nor the acceptance of rent, shall constitute a
waiver of estoppel of Lessor's right to exercise its remedies for the breach
of any of the terms or conditions of this paragraph 12 or this Lease.

          (d) If Lessee's obligation under this Lease have been guaranteed
by third parties, then an assignment or sublease, and Lessor's consent
thereto, shall not be effective unless said guarantors give their written
consent to such sublease and the terms thereof.

          (e) The consent by Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or
to any subsequent or successive assignment or subletting by the sublessee.
However, Lessor may consent to subsequent sublettings and assignments of the
sublease or any amendments or modifications thereto without notifying Lessee
or anyone else liable on the Lease or sublease and without obtaining their
consent and such action shall not relieve such persons from liability under
this Lease or said sublease; however, such persons shall not be responsible
to the extent any such amendment or modification enlarges or increases the
obligations of the Lessee or sublessee under this Lease or such sublease.

          (f) In the event of any default under this Lease, Lessor may
proceed directly against Lessee, any guarantors or anyone else responsible
for the performance of this Lease, including the sublessee, without first
exhausting Lessor's remedies against any other person or entity responsible
therefor to Lessor, or any security held by Lessor or Lessee.

          (g) Lessor's written consent to any assignment or subletting of the
Premises by Lessee shall not constitute an acknowledgment that no default
then exists under this Lease of the obligations to be performed by Lessee nor
shall such consent be deemed a waiver of any then existing default, except as
may be otherwise stated by Lessor at the time.

          (h) The discovery of the fact that any financial statement relied
upon by Lessor in giving its consent to an assignment or subletting was
materially false shall, at Lessor's election, render Lessor's said consent
null and void.  See Addendum For Additional Section 12.3 (1)

    12.4  ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING.
Regardless of Lessor's consent, the following terms and Conditions shall
apply to any subletting by Lessee of all or any part of the Premises and
shall be deemed included in all subleases under this Lease whether or not
expressly incorporated therein.

          (a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all rentals and income arising from any sublease heretofore or
hereafter made by Lessee, and Lessor may collect such rent and income and
apply same toward Lessee's obligations under this Lease; provided, however,
that until a default shall occur in the performance of Lessee's obligations
under this Lease, Lessee may receive, collect and enjoy the rents accruing
under such sublease.  Lessor shall not, by reason of this or any other
assignment of such sublease to Lessor nor by reason of the collection of the
rents from a sublessee, be deemed liable to the sublessee for any failure of
Lessee to perform and comply with any of Lessee's obligations to such
sublessee under such sublease.  Lessee hereby irrevocably authorizes and
directs any such sublessee, upon receipt of a written notice from Lessor
stating that a default exists in the performance of Lessee's obligations
under this Lease, to pay to Lessor the rents due and to become due under the
sublease.  Lessee agrees that such sublessee shall have the right to rely
upon any such statement and request from Lessor, and that such sublessee
shall pay such rents to Lessor without an

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obligation or right to inquire as to whether such default exists and
notwithstanding any notice from or claim from Lessee to the contrary Lessee
shall have no right or claim against said sublessee or Lessor for any such
rents so paid by said sublessee to Lessor, except to the extent such rents
exceed XXX

          (b) No sublease entered into by Lessee shall be effective unless
and until it has been approved in writing by Lessor.  In entering into any
sublease, Lessee shall use only such form of sublease as is satisfactory to
Lessor, and once approved by Lessor, such sublease shall not be changed or
modified without Lessor's prior written consent.  Any sublease shall, by
reason of entering into a sublease under this Lease, be deemed for the
benefit of Lessor, to have assumed and agreed to conform and comply with each
and every obligation herein to be performed by Lessee other than such
obligations as are contrary to or inconsistent with provisions contained in a
sublease to which Lessor has expressly consented in writing.

          (c) In the event Lessee shall default in the performance of its
obligations under this Lease, Lessor at its option and without any obligation
to do so, may require any sublessee to attorn to Lessor, in which event
Lessor shall undertake the obligations of Lessee under such sublease from the
time of the exercise of said option to the termination of such sublease
provided, however, Lessor shall not be liable for any prepaid rents or
security deposit paid by such sublessee to Lessee or for any other prior
defaults of Lessee under such sublease.

          (d) No sublessee shall further assign or sublet all or any part of
the Premises without Lessor's prior written consent.

          (e) With respect to any subletting to which Lessor has consented,
Lessor agrees to deliver a copy of any notice of default by Lessee to the
sublessee.

    12.5  LESSOR'S EXPENSES. In the event Lessee shall assign or Sublet the
Premises or request the consent of Lessor to any assignment or subletting or
if Lessee shall request the consent of Lessor for any act Lessee proposes to
do then Lessee shall pay Lessor's reasonable costs and expenses incurred in
connection therewith, including attorneys', architects', engineers' or other
consultants' fees.

    12.6  CONDITIONS TO CONSENT. Lessor reserves the right to condition any
approval to assign or sublet upon Lessor's determination that (a) the
proposed assignee or sublessee shall conduct a business on the Premises of a
quality substantially equal to that of Lessee and consistent with the general
character of the other occupants of the Office Building Project and not in
violation of any exclusives or rights then held by other tenants, and (b) the
proposed assignee or sublessee be financially responsible as determined by
Lessor.

13. DEFAULT; REMEDIES.

    13.1  DEFAULT. The occurrence of any one or more of the following events
shall constitute a material default of this Lease by Lessee:

          (a) The vacation or abandonment of the Premises by Lessee.

          (b) The breach by Lessee of any of the covenants, conditions or
provisions of paragraphs 7.3(a), (b) or (d) (alterations), 12.1 (assignment
or subletting), 13.1(a) (abandonment), 13.1(e) (insolvency), 13.1(f) (false
statement), 16(a) (estoppel certificate), 30(b) (subordination), 33
(auctions), or 41.1 (easements), all of which are hereby deemed to be
material, non-curable defaults without the necessity of any notice by Lessor
to Lessee thereof.

          (c) The failure by Lessee to make any payment of rent or any other
payment required to be made by Lessee hereunder, as and when due, where such
failure shall continue for a period of five (5) days after written notice
thereof from Lessor to Lessee.  In the event that Lessor serves Lessee with a
Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes
such Notice to Pay Rent or Quit shall also constitute the notice required by
this subparagraph.

          (d) The failure by Lessee to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or performed
by Lessee other than those referenced in subparagraphs (b) and (c), above,
where such failure shall continue for a period of thirty (30) days after
written notice thereof from Lessor to Lessee; provided, however, that if the
nature of Lessee's noncompliance is such that more than thirty (30) days are
reasonably required for its cure, then Lessee shall not be deemed to be in
default if Lessee commenced such cure within said thirty (30) day period and
thereafter diligently pursues such cure to completion. To the extent
permitted by law, such thirty (30) day notice shall constitute the sole and
exclusive notice required to be given to Lessee under applicable Unlawful
Detainer statutes.

          (e) (i) The making by Lessee of any general arrangement or general
assignment for the benefit of creditors; (ii) Lessee becoming a "debtor" as
defined in 11 U.S.C. Section 101 or any successor statute thereto (unless, in
the case of a petition filed against Lessee, the same is dismissed within
sixty (60) days; (iii) the appointment of a trustee or receiver to take
possession of substantially all of Lessee's assets located at the Premises or
of Lessee's interest in this Lease, where possession is not restored to
Lessee within thirty (30) days; or (iv) the attachment, execution or other
judicial seizure of substantially all of Lessee's assets located at the
Premises or of Lessee's interest in this Lease, where such seizure is not
discharged within thirty (30) days. In the event that any provision of this
paragraph 13.1(e) is contrary to any applicable law, such provision shall be
of no force or effect.

          (f) The discovery by Lessor that any financial statement given to
Lessor by Lessee, or its successor in interest or by any guarantor of
Lessee's obligation hereunder, was materially false.

    13.2  REMEDIES. In the event of any material default or breach of this
Lease by Lessee, Lessor may at any time thereafter, with or without notice or
demand and without limiting Lessor in the exercise of any right or remedy
which Lessor may have by reason of such default:

          (a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease and the term hereof shall terminate
and Lessee shall immediately surrender possession of the Premises to Lessor.
In such event Lessor shall be entitled to recover from Lessee all damages
incurred by Lessor by reason of Lessee's default including, but not limited
to, the cost of recovering possession of the Premises; expenses of reletting,
including necessary renovation and alteration of the Premises, reasonable
attorneys' fees, and any real estate commission actually paid; the worth at
the time of award by the court having Jurisdiction thereof of the amount by
which the unpaid rent for the balance of the term after the time of such
award exceeds the amount of such rental loss for the same period that Lessee
proves could be reasonably avoided; that portion of the leasing commission
paid by Lessor pursuant to paragraph 15 applicable to the unexpired term of
this Lease.

          (b) Maintain Lessee's right to possession in which case this Lease
shall continue in effect whether or not Lessee shall have vacated or
abandoned the Premises. In such event Lessor shall be entitled to enforce all
of Lessor's rights and remedies under this Lease, including the right to
recover the rent as it becomes due hereunder.

          (c) Pursue any other remedy now or hereafter available to Lessor
under the laws or judicial decisions of the state wherein the Premises are
located. Unpaid installments of rent and other unpaid monetary obligations of
Lessee under the terms of this Lease shall bear interest from the date due at
the maximum rate then allowable by law.

    13.3  DEFAULT BY LESSOR. Lessor shall not be in default unless Lessor
fails to perform obligations required of Lessor within a reasonable time, but
in no event later than thirty (30) days after written notice by Lessee to
Lessor and to the holder of any first mortgage or deed of trust covering the
Premises whose name and address shall have theretofore been furnished to
Lessee in writing, specifying wherein Lessor has failed to perform such
obligation; provided, however, that if the nature of Lessor's obligation is
such that more than thirty (30) days are required for performance then Lessor
shall not be in default if Lessor commences performance within such 30-day
period and thereafter diligently pursues the same to completion.

    13.4  LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee to Lessor of Base Rent, Lessee's Share of Operating Expense Increase
or other sums due hereunder will cause Lessor to incur costs not contemplated
by this Lease, the exact amount of which will be extremely difficult to
ascertain. Such costs include, but are not limited to, processing and
accounting charges, and late charges which may be imposed on Lessor by the
terms of any mortgage or trust deed covering the Office Building Project.
Accordingly, if any installment of Base Rent, Operating Expense Increase, or
any other sum due from Lessee shall not be received by Lessor or Lessor's
designee within ten (10) days after such amount shall be due, then, without
any requirement for notice to Lessee, Lessee shall pay to Lessor a late
charge equal to 6% of such overdue amount. The parties hereby agree that such
late charge represents a fair and reasonable estimate of the costs Lessor
will incur by reason of late payment by Lessee. Acceptance of such late
charge by Lessor shall in no event constitute a waiver of Lessee's default
with respect to such overdue amount, nor prevent Lessor from exercising any
of the other rights and remedies granted hereunder.

14. CONDEMNATION. If the Premises or any portion thereof or the Office
Building Project are taken under the power of eminent domain, or sold under
the threat of the exercise of said power (all of which are herein called
"condemnation"), this Lease shall terminate as to the part so taken as of the
date the condemning authority takes title or possession, whichever first
occurs; provided that is so much of the Premises or the Office Building
Project are taken by such condemnation as would substantially and adversely
affect the operation and profitability of Lessee's business conducted from
the Premises, Lessee shall have the option, to be exercised only in writing
within thirty (30) days after Lessor shall have given Lessee written notice
of such taking (or in the absence of such notice, within thirty (30) days
after the condemning authority shall have taken possession), to terminate
this Lease as of the date the

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condemning authority takes such possession. If Lessee does not terminate this
Lease in accordance with the foregoing, this Lease shall remain in full force
and effect as to the portion of the Premises remaining, except that the rent
and Lessee's Share of Operating Expense Increase shall be reduced in the
proportion that the floor area of the Premises taken bears to the total floor
area of the Premises. Common Areas taken shall be excluded from the Common
Areas usable by Lessee and no reduction of rent shall occur with respect
thereto or by reason thereof. Lessor shall have the option in its sole
discretion to terminate this Lease as of the taking of possession by the
condemning authority, by giving written notice to Lessee of such election
within thirty (30) days after receipt of notice of a taking by condemnation
of any part of the Premises or the Office Building Project. Any award for the
taking of all or any part of the Premises or the Office Building Project
under the power of eminent domain or any payment made under threat of the
exercise of such power shall be the property of Lessor, whether such award
shall be made as compensation for diminution in value of the leasehold or for
the taking of the fee, or as severance damages; provided, however, that
Lessee shall be entitled to any separate award for loss of or damage to
Lessee's trade fixtures, removable personal property and unamortized tenant
improvements that have been paid for by Lessee. For that purpose the cost of
such improvements shall be amortized over the original term of this Lease
excluding any options. In the event that this Lease is not terminated by
reason of such condemnation, Lessor shall to the extent of severance damages
received by Lessor in connection with such condemnation, repair any damage to
the Premises caused by such condemnation except to the extent that Lessee has
been reimbursed therefor by the condemning authority. Lessee shall pay any
amount in excess of such severance damages required to complete such repair.

15. BROKER'S FEE.

    (a) The brokers involved in this transaction are BT Commercial Real
Estate as "listing broker" and Cornish & Carey Commercial as "cooperating
broker," licensed real estate broker(s). A "cooperating broker" is defined as
any broker other than the listing broker entitled to a share of any
commission arising under this Lease. Upon execution of this Lease by both
parties, Lessor shall pay to said brokers jointly, or in such separate shares
as they may mutually designate in writing, a fee as set forth in a separate
agreement between Lessor and said broker(s), or in the event there is no
separate agreement between Lessor and said broker(s), the sum of
$__________________________, for brokerage services rendered by said
broker(s) to Lessor in this transaction.

    (b) Lessor further agrees that (i) if Lessee exercises any Option, as
defined in paragraph 39.1 of this Lease, which is granted to Lessee under
this Lease, or any subsequently granted option which is substantially Similar
to an Option granted to Lessee under this Lease, or (ii) if Lessee acquires
any rights to the Premises or other premises described in this Lease which
are substantially similar to what Lessee would have acquired had an Option
herein granted to Lessee been exercised, or (iii) if Lessee remains in
possession of the Premises after the expiration of the term of this Lease
after having failed to exercise an Option, or (iv) if said broker(s) are the
procuring cause of any other lease or sale entered into between the parties
pertaining to the Premises and/or any adjacent property in which Lessor has
an interest, or (v) if the Base Rent is increased, whether by agreement or
operation of an escalation clause contained herein, then as to any of said
transactions or rent increases, Lessor shall pay said broker(s) a fee in
accordance with the schedule of said broker(s) in effect at the time of
execution of this Lease. Said fee shall be paid at the time such increased
rental is determined.

    (c) Lessor agrees to pay said fee not only on behalf of Lessor but also
on behalf of any person, corporation, association, or other entity having an
ownership interest in said real property or any part thereof, when such fee
is due hereunder. Any transferee of Lessor's interest in this Lease, whether
Such transfer is by agreement or by operation of law, shall be deemed to have
assumed Lessor's obligation under this paragraph 15. Each listing and
cooperating broker shall be a third party beneficiary of the provisions of
this paragraph 15 to the extent of their Interest in any commission arising
under this Lease and may enforce that right directly against Lessor;,
provided, however, that all brokers having a right to any part of such total
commission shall be a necessary party to any suit with respect thereto.

    (d) Lessee and Lessor each represent and warrant to the other that
neither has had any dealings with any person, firm, broker or finder (other
than the person(s), If any, whose names are set forth in paragraph 15(a),
above) in connection with the negotiation of this Lease and/or the
consummation of the transaction contemplated hereby, and no other broker or
other person, firm or entity is entitled to any commission or finder's fee in
connection with said transaction and Lessee and Lessor do each hereby
Indemnify and hold the other harmless from and against any costs, expenses,
attorneys' fees or liability for compensation or charges which may be claimed
by any such unnamed broker, finder or other similar party by reason of any
dealings or actions of the indemnifying party.

16. ESTOPPEL CERTIFICATE.

    (a) Each party (as "responding party") shall at any time upon not less
than ten (10) days' prior written notice from the other party ("requesting
party") execute, acknowledge and deliver to the requesting party a statement
in writing (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 them are not, to the responding party's knowledge,
any uncured defaults on the part of the requesting party, or specifying such
defaults if any are claimed. Any such statement may be conclusively relied
upon by any prospective purchaser or encumbrancer of the Office Building
Project or of the business of Lessee.

    (b) At the requesting party's option, the failure to deliver such
statement within such time shall be a material default of this Lease by the
party who is to respond, without any further notice to such party, or it
shall be conclusive upon such party that (i) this Lease is in full force and
effect, without modification except as may be represented by the requesting
party, (ii) there are no uncured defaults in the requesting party's
performance, and (iii) if Lessor is the requesting party, not more than one
month's rent has been paid in advance.

    (c) If Lessor desires to finance, refinance, or sell the Office Building
Project, or any part thereof, Lessee hereby agrees to deliver to any lender
or purchaser designated by Lessor such financial statements of Lessee as may
be reasonably required by such lender or purchaser. Such statements shall
include the past three (3) years' financial statements of Lessee. All such
financial statements shall be received by Lessor and such lender or purchaser
in confidence and shall be used only for the purposes herein set forth.

17. LESSOR'S LIABILITY. The term "Lessor" as used herein shall mean only the
owner or owners, at the time in question, of the fee title or a lessee's
interest in a ground lease of the Office Building Project, and except as
expressly provided in paragraph 15, in the event of any transfer of such
title or interest, Lessor herein named (and in case of any subsequent
transfers then the grantor) shall be relieved from and after the date of such
transfer of all liability as respects Lessor's obligations thereafter to be
performed, provided that any funds in the hands of Lessor or the then grantor
at the time of such transfer, in which Lessee has an interest, shall be
delivered to the grantee. The obligations contained in this Lease to be
performed by Lessor shall, subject as aforesaid, be binding on Lessor's
successors and assigns, only during their respective periods of ownership.

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

19. INTEREST ON PAST-DUE OBLIGATIONS. Except as expressly herein provided,
any amount due to Lessor not paid when due shall bear interest at the maximum
rate then allowable by law or Judgments from the date due. Payment of such
interest shall not excuse or cure any default by Lessee under this Lease;
provided, however, that Interest shall not be payable on late charges
incurred by Lessee nor on any amounts upon which late charges are paid by
Lessee.

20. TIME OF ESSENCE. Time is of the essence with respect to the obligations
to be performed under this Lease.

21. ADDITIONAL RENT. All monetary obligations of Lessee to Lessor under the
terms of this Lease, including but not limited to Lessee's Share of Operating
Expense Increase and any other expenses payable by Lessee hereunder shall be
deemed to be rent.

22. INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS. This Lease contains all
agreements of the parties with respect to any matter mentioned herein. No
prior or contemporaneous agreement or understanding pertaining to any such
matter shall be effective. This Lease may be modified in writing only, signed
by the parties in Interest at the time of the modification. Except as
otherwise stated in this Lease, Lessee hereby acknowledges that neither real
estate broker listed in paragraph 15 hereof nor any cooperating broker on
this transaction nor the Lessor or any employee or agents of any said persons
has

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<PAGE>

made any oral or written warranties or representations to Lessee relative to
the condition or use by Lessee of the Premises or Office Building Project and
Lessee acknowledges that Lessee assumes all responsibility regarding the
Occupational Safety Health Act, the legal use and adaptability of the
Premises and the compliance thereof with all applicable laws and regulations
in effect during the term of this Lease.

23. NOTICES. Any notice required or permitted to be given hereunder shall be
in writing and may be given by personal delivery or by certified or
registered mail, and shall be deemed sufficiently given if delivered or
addressed to Lessee or to Lessor at the address noted below or adjacent to
the signature of the respective parties, as the case may be. Mailed notices
shall be deemed given upon actual receipt at the address required, or three
(3) days following deposit in the mail, postage prepaid, whichever first
occurs. Either party may by notice to the other specify a different address
for notice purposes except that upon Lessee's taking possession of the
Premises, the Premises shall constitute Lessee's address for notice purposes.
A copy of all notices required or permitted to be given to Lessor hereunder
shall be concurrently transmitted to such party or parties at such addresses
as Lessor may from time to time hereafter designate by notice to Lessee.

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

25. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a "short form" memorandum of
this Lease for recording purposes.

26. HOLDING OVER. If Lessee, with Lessor's consent, remains in possession of
the Premises or any part thereof after the expiration of the term hereof,
such occupancy shall be a tenancy from month to month upon all the provisions
of this Lease pertaining to the obligations of Lessee, except that the rent
payable shall be one hundred fifty percent (150%) of the Rent payable
immediately preceding the termination date of this Lease, and all Options, if
any, granted under the terms of this Lease shall be deemed terminated and be
of no further effect during said month to month tenancy.

27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies
at law or in equity.

28. COVENANTS AND CONDITIONS. Each provision of this Lease performable by
Lessee shall be deemed both a covenant and a condition.

29. BINDING EFFECT; CHOICE OF LAW. Subject to any provisions hereof
restricting assignment or subletting by Lessee and subject to the provision
of paragraph 17, this Lease shall bind the parties, their personal
representatives, successors and assign. This Lease shall be governed by the
laws of the State where the Office Building Project is located and any
litigation concerning this Lease between the parties hereto shall be
Initiated in the county in which the Office Building Project is located.

30. SUBORDINATION.

    (a) This Lease, and any Option or right of first refusal granted hereby,
at Lessor's option, shall be subordinate to any ground lease, mortgage, deed
of trust, or any other hypothecation or security now or hereafter placed upon
the Office Building Project and to any and all advances made on the security
thereof and to all renewals, modifications, consolidations, replacements and
extensions thereof. Notwithstanding such subordination, Lessee's right to
quiet possession of the Premises shall not be disturbed if Lessee is not in
default and so long as Lessee shall pay the rent and observe and perform all
of the provisions of this Lease, unless this Lease is otherwise terminated
pursuant to its terms. If any mortgagee, trustee or ground lessor shall elect
to have this Lease and any Options granted hereby prior to the lien of its
mortgage, deed of trust or ground lease, and shall give written notice
thereof to Lessee, this Lease and such Options shall be deemed prior to such
mortgage, deed of trust or ground lease, whether this Lease or such Options
are dated prior or subsequent to the date of said mortgage, deed of trust or
ground lease or the date of recording thereof.

    (b) Lessee agrees to execute any documents required to effectuate an
attornment, a subordination, or to make this Lease or any Option granted
herein prior to the lien of any mortgage, deed of trust or ground lease, as
the case may be. Lessee's failure to execute such documents within ten (10)
days after written demand shall constitute a material default by Lessee
hereunder without further notice to Lessee or, at Lessor's option, Lessor
shall execute such documents on behalf of Lessee as Lessees'
attorney-in-fact Lessee does hereby make, constitute and Irrevocably appoint
Lessor as Lessee's attorney-in-fact and in Lessee's name, place and stead, to
execute such documents in accordance with this paragraph 30(b).

31. ATTORNEYS' FEES.

    31.1  If either party or the broker(s) named herein bring an action to
enforce the terms hereof or declare rights hereunder, the prevailing party in
any such action, trial or appeal thereon, shall be entitled to his reasonable
attorney's fees to be paid by the losing party as fixed by the court in the
same or a separate suit, and whether or not such action is pursued to
decision or judgment. The provisions of this paragraph shall inure to the
benefit of the broker named herein who seeks to enforce a right hereunder.

    31.2  The attorneys' fee award shall not be computed in accordance with
any court fee schedule, but shall be such as to fully reimburse all
attorneys' fees reasonably incurred in good faith.

    31.3  Lessor shall be entitled to reasonable attorneys' fees and all
other costs and expenses incurred in the preparation and service of notice of
default and consultations in connection therewith, whether or not a legal
transaction is subsequently commenced in connection with such default.

32. LESSOR'S ACCESS.

    32.1  Lessor and Lessor's agents shall have the right to enter the
Premises at reasonable times for the purpose of inspecting the same,
performing any services required of Lessor, showing the same to prospective
purchasers, lenders, or lessees, taking such safety measures, erecting such
scaffolding or other necessary structures, making such alterations, repairs,
improvements or additions to the Premises or to the Office Building Project
as Lessor may reasonably deem necessary or desirable and the erecting, using
and maintaining of utilities, services, pipes and conduits through the
Premises and/or other premises as long as there is no material adverse effect
to Lessee's use of the Premises. Lessor may at any time place on or about the
Premises or the Building any ordinary "For Sale" signs and Lessor may at any
time during the last 120 days of the term hereof place on or about the
Premises any ordinary "For Lease" signs.

    32.2  All activities of Lessor pursuant to this paragraph shall be
without abatement of rent, nor shall Lessor have any liability to Lessee for
the same.

    32.3  Lessor shall have the right to retain keys to the Premises and to
unlock all doors in or upon the Premises other than to files, vaults and
safes, and in the case of emergency to enter the Premises by any reasonably
appropriate means, and any such entry shall not be deemed a forceable or
unlawful entry or detainer of the Premises or an eviction. Lessee waives any
charges for damages or Injuries or Interference with Lessee's property or
business in connection therewith.

33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises or the Common
Areas without first having obtained Lessor's prior written consent.
Notwithstanding anything to the contrary in this Lease, Lessor shall not be
obligated to exercise any standard of reasonableness in determining whether
to grant such consent. The holding of any auction on the Premises or Common
Areas in violation of this paragraph shall constitute a material default of
this Lease.

34. SIGNS. Lessee shall not place any sign upon the Premises or the Office
Building Project without Lessor's prior written consent. Under no
circumstances shall Lessee place a sign on any roof of the Office Building
Project. Lessee shall have the right to install Building standard signage on
the Building directory and Lessee's suite door, at Lessee's expense.

35. MERGER. The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to
Lessor of any or all

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of such Subtenancies.

36. CONSENTS. Except for paragraphs 33 (auctions) and 34 (signs) hereof,
wherever in this Lease the consent of one party is required to an act of the
other party such consent shall not be unreasonably withheld or delayed.

37. GUARANTOR. In the event that there is a guarantor of this Lease, said
guarantor shall have the same obligations as Lessee under this Lease.

38. QUIET PERMISSION. Upon Lessee paying the rent for the Premises and
observing and performing all of the covenants, conditions and provisions on
Lessee's part to be observed and performed hereunder, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease. The individuals executing this Lease on behalf of
Lessor represent and warrant to Lessee that they are fully authorized and
legally capable of executing this Lease on behalf of Lessor and that such
execution is binding upon all parties holding an ownership interest in the
Office Building Project.

40. SECURITY MEASURES, LESSOR'S RESERVATIONS.

    40.1  Lessee hereby acknowledges that Lessor shall have no obligation
whatsoever to provide guard service or other security measures for the
benefit of the Premises or the Office Building Project.  Lessee assumes all
responsibility for the protection of Lessee, its agents, and invitees and the
property of Lessee and of Lessee's agents and invitees from acts of third
parties.  Noting herein contained shall prevent Lessor, at Lessor's sole
option, from providing security protection for the Office Building Project or
any part thereof, in which event the cost thereof shall be included within
the definition of Operating Expenses, as set forth in paragraph 4.2(b).

    40.2  Lessor shall have the following rights:

          (a) To change the name, address or title of the Office Building
Project or building in which the Premises are located upon not less than 90
days prior written notice;

          (b) To, at Lessee's expense, provide and install Building standard
graphics on the door of the Premises and such portions of the Common Areas as
Lessor shall reasonably deem appropriate;

          (c) To permit any lessee the exclusive right to conduct any
business as long as such exclusive does not conflict with any rights
expressly given herein;

          (d) To place such signs, notices or displays as Lessor reasonably
deems necessary or advisable upon the roof, exterior of the buildings or the
Office Building Project or on pole signs in the Common Areas;

    40.3  Lessee shall not:

          (a) Use a representation (photographic or otherwise) Of the
Building or the Office Building Project or their name(s) in connection with
Lessee's business;

          (b) Suffer or permit anyone, except in emergency, to go upon the
roof of the Building.

41. EASEMENTS.

    41.1  Lessor reserves to itself the right, from time to time, to grant
such easements, rights and dedications that Lessor deems necessary or
desirable, and to cause the recordation of Parcel Maps and restrictions, so
long as such easements, rights, dedications, Maps and restrictions do not
unreasonably interfere with the use of the Premises by Lessee.  Lessee shall
sign any of the aforementioned documents upon request of Lessor and failure
to do so shall constitute a material default of this Lease by Lessee without
the need for further notice to Lessee.

    41.2  The obstruction of Lessee's view, air, or light by any structure
erected in the vicinity of the Building, whether by Lessor or third parties,
shall in no way affect this Lease or impose any liability upon Lessor.

42. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one party to the other under the
provisions hereof, the party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such
payment shall not be regarded as a voluntary payment, and there shall survive
the right on the part of said party to institute suit for recovery of such
sum.  If it shall be adjudged that there was no legal obligation on the part
of said party to pay such sum or any part thereof, said party shall be
entitled to recover such sum or so much thereof as it was not legally
required to pay under the provisions of the Lease.

43. AUTHORITY. If Lessee is a corporation, trust, or general or limited
partnership, Lessee, and each individual executing this Lease on behalf of
such entity represent and warrant that such individual is duly authorized to
execute and deliver this Lease on behalf of said entity.  If Lessee is a
corporation, trust or partnership, Lessee shall, within thirty (30) days
after execution of this Lease, deliver to Lessor evidence of such authority
satisfactory to Lessor.

44. CONFLICT. Any conflict between the printed provisions, Exhibits or
Addenda of this Lease and the typewritten or handwritten provisions, if any,
shall be

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<PAGE>

controlled by the typewritten or handwritten provisions.

45. NO OFFER. Preparation of this Lease by Lessor or Lessor's agent and
submission of same to Lessee shall not be deemed an offer to Lessee to lease.
This Lease shall become binding upon Lessor and Lessee only when fully
executed by both parties.

46. LENDER MODIFICATION. Lessee agrees to make such reasonable modifications
to this Lease as may be reasonably required by an Institutional lender in
connection with the obtaining of normal financing or refinancing of the
Office Building Project, so long as such modifications do not increase the
rent or other obligations of Lessee hereunder or materially adversely affect
Lessee's rights hereunder.

47. MULTIPLE PARTIES. If more than one person or entity is named as either
Lessor or Lessee herein, except as otherwise expressly provided herein, the
obligations of the Lessor or Lessee herein shall be the Joint and several
responsibility of all persons or entities named herein as such Lessor or
Lessee, respectively.

48. WORK LETTER. This Lease is supplemented by that certain Work Letter of
even date executed by Lessor and Lessee, attached hereto as Exhibit C, and
incorporated herein by this reference.

49. ATTACHMENTS. Attached hereto are the following documents which constitute
a part of this Lease:

    EXHIBIT A -- Floor Plan
    EXHIBIT B -- Rules and Regulations
    ADDENDUM

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

       IF THIS LEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR
       SUBMISSION TO YOUR ATTORNEY FOR HIS APPROVAL.  NO
       REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
       INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKER
       OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL
       EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION
       RELATING THERETO; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE
       OF THEIR OWN LEGAL COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES
       OF THIS LEASE.

<TABLE>
<CAPTION>
                    LESSOR                                                 LESSEE

<S>                                                    <C>
American Heart Association                             InterMune Pharmaceutical, Inc.
-------------------------------------------------      -------------------------------------------------
Western States Affiliate
-------------------------------------------------      -------------------------------------------------

By   /s/ Sunder D. Juin                                By   /s/ Timothy Lynch
   ----------------------------------------------         ----------------------------------------------

Its  Senior Vice President, Corporate Operations       Its  Chief Financial Officer
     --------------------------------------------           --------------------------------------------

By   /s/ Sara Robertsen                                By
   ----------------------------------------------         ----------------------------------------------

Its  Vice President, Trusts & Estates                  Its
   ----------------------------------------------         ----------------------------------------------

Executed at 1710 Gilbreth Rd. Burlingame CA            Executed at 3294 W. Bayshore Rd, Palo Alto, CA
           --------------------------------------                  -------------------------------------

on     12/22/99                                        on     12/8/99
   ----------------------------------------------         ----------------------------------------------

</TABLE>

NOTE:  These forms are often modifed to meet changing requirements of law and
       needs of the industry. Always write or call to make sure you are
       utilizing the most current form: AMERICAN INDUSTRIAL REAL ESTATE
       ASSOCIATION, 700 South Rower Street, Suite 600, Los Angeles, CA 90017.
       (213) 687-8777.

                            FULL SERVICE-GROSS

                               PAGE 11 OF 11

<PAGE>

 ADDENDUM TO STANDARD OFFICE LEASE GROSS BETWEEN AMERICAN HEART ASSOCIATION,
WESTERN STATES AFFILIATE (LESSOR) AND INTERMUNE PHARMACEUTICAL, INC. (LESSEE)
                          DATED NOVEMBER 9, 1999

1.7  Monthly Base Rent for the Premises shall be as follows:

     Months 1-12 (12/13/99 - 12/12/00)      $18,609.25
     Months 13-24 (12/13/00 - 12/12/01)     $19,285.95
     Months 25-36 (12/13/01 - 12/12/02)     $19,962.65
     Months 37-48 (12/13/02 - 12/12/03)     $20,639.35
     Months 49-60 (12/13/03 - 12/12/04)     $21,316.05

1.9  Lessee shall deliver to Lessor concurrent with Lessee's execution of
this Lease an unconditional, clean, irrevocable letter of credit (the "L-C")
in the initial amount of $250,000.00, which L-C shall be issued by a money
center bank (a bank which accepts deposits, maintains accounts, has a local
San Francisco Bay Area office which will negotiate a letter of credit, and
whose deposits are insured by the FDIC) reasonably acceptable to Lessor.
Lessee shall pay all expenses, points and/or fees incurred by Lessee in
obtaining the L-C. The L-C shall be held by Lessor as security for the
faithful performance by Lessee of all their terms, covenants, and conditions
of the Lease to be kept and performed by Lessee during the Lease Term. The
L-C shall not be mortgaged, assigned or encumbered in any manner whatsoever
by Lessee without the prior written consent of Lessor. If Lessee is in
default beyond the applicable notice and cure periods of the Lease,
including, but not limited to, the provisions relating to the payment of
Rent, Lessor may, but shall not be required to, draw upon all or any portion
of the L-C for payment of any Rent or any other sum in default, or for the
payment of any amount that Lessor may spend or may become obligated to spend
by reason of Lessee's default, in one or more separate draws against the L-C,
as may be required. The use, application or retention of the L-C, or any
portion thereof, by Lessor shall not prevent Lessor from exercising any other
right or remedy provided by the Lease or by law, it being intended that
Lessor shall not first be required to proceed against the L-C, and the L-C
shall not operate as a limitation on any recovery to which Lessor may
otherwise be entitled. If any portion of the L-C is drawn upon and applied by
Lessor, Lessee shall, within five (5) days after Lessee's receipt of Written
demand therefor, reinstate the L-C to the amount then required under the
Lease. Lessee acknowledges that Lessor has the right to transfer or mortgage
its interest in the Office Building Project and in the Lease the Lessee
agrees that in the event of any such transfer or mortgage, Lessor shall have
the right to transfer or assign the L-C to the transferee or mortgagee, and
in the event of such transfer, if the L-C has been assigned, Lessee shall
look solely to such transferee or mortgagee for the return of the L-C.
Provided that Lessee has not been in default under the terms of this Lease,
and provided that Lessee has a minimum net worth of $5,000,000.00 and cash or
cash equivalents of a minimum of $4,500,000.00, the amount of the L-C may be
reduced by Lessee at the second anniversary of the Commencement Date to
$200,000.00, and if these same conditions are met at the time, may be reduced
by Lessee to $150,000.00 at the third anniversary of the Commencement Date
and to $100,000 at the fourth anniversary of the Commencement Date.

         HAZARDOUS SUBSTANCES.

6.4 (a) Reportable Uses Require Consent. The term "Hazardous Substance" as
used in this Lease shall mean any product, substance, or waste whose
presence, use, manufacture, disposal, transportation, or release, either by
itself or in combination with other materials expected to be at the Office
Building Project, is either: (i) potentially injurious to the public health,
safety or welfare, or the environment of the Office Building Project, (ii)
regulated or monitored by any governmental authority, or (iii) a basis for
potential liability of Lessor to any governmental agency or third party under
any applicable statute or common law theory. Hazardous Substances shall
include, but not be limited to hydrocarbons, petroleum, gasoline, and/or
crude oil or any products, by-products or fractions thereof. Lessee shall not
engage in any activity at the Office Building Project which constitutes a
Reportable Use of Hazardous Substances without the express prior written
consent of Lessor and timely compliance (at Lessee's expense) with all
Applicable Requirements. "Reportable Use" shall mean (i) the installation or
use of any above or below ground storage tank, (ii) the generation,
possession, storage, use, transportation, or disposal of a Hazardous
Substance that requires a permit from, or with respect to which a report,
notice, registration or business plan is required to be filed with, any
governmental authority, and/or (iii) the presence at the Office Building
Project of a Hazardous Substance with respect to which any Applicable
Requirement requires that a notice be given to persons entering or occupying
the Office Building Project or neighboring properties. Notwithstanding the
foregoing, Lessee may use any ordinary and customary materials reasonably
required to be used in the normal course of the agreed Use, so long as such
use is in compliance with all Applicable Requirements, is not a Reportable
Use, and does not expose the Office Building Project or neighboring property
to any meaningful risk of contamination or damage or expose Lessor to any
liability therefor. In addition, Lessor may condition its consent to any
Reportable Use upon receiving such additional assurances as Lessor reasonably
deems necessary to protect itself, the public, the Office Building Project
and/or the environment against damage, contamination, injury and/or
liability, including, but not limited to, the installation (and removal on or
before Lease expiration or termination) of protective modifications (such as
concrete encasements) and/or increasing the Security Deposit.

         (b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause
to believe, that a Hazardous Substance has come to be located in, on, under
or about the Office Building Project, other than as previously consented to
by Lessor, Lessee shall immediately give written notice of such fact to
Lessor, and provide Lessor with a copy of any report, notice, claim or other
documentation which it has concerning the presence of such Hazardous
Substance.

         (c) Lessee Remediation. Lessee shall not cause or permit any
Hazardous Substance to be spilled or released in, on, under, or about the
Office Building Project (including through the plumbing or sanitary sewer
system) and shall promptly, at Lessee's expense, take all investigatory
and/or remedial action reasonably recommended, whether or not formally
ordered or required, for the cleanup of any contamination of, and for the
maintenance, security and/or monitoring of the Office Building Project or
neighboring properties, that was caused or materially contributed to by
Lessee, or pertaining to or involving any Hazardous Substance brought onto
the Office Building Project during the term of this Lease, by or for Lessee.

<PAGE>

         (d) Lessee Indemnification. Lessee shall indemnity, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, harmless
from and against any and all loss of rents and/or damages, liabilities,
judgments, claims, expenses, penalties, and attorneys' and consultants' fees
arising out of or involving any Hazardous Substance brought onto the Office
Building Project by or for Lessee (provided, however, that Lessee shall have
no liability under this Lease with respect to underground migration of any
Hazardous Substance under the Office Building Project from areas outside of
the Office Building Project). Lessee's obligations shall include, but not be
limited to, the effects of any contamination or injury to person, property or
the environment created or suffered by Lessee, and the cost of investigation,
removal, remediation, restoration and/or abatement, and shall survive the
expiration or termination of this Lease. No termination, cancellation or
release agreement entered into by Lessor and Lessee shall release Lessee from
its obligations under this Lease with respect to Hazardous Substances, unless
specifically so agreed by Lessor in writing at the time of such agreement.

12.3(i) Notwithstanding anything to the contrary contained in this Lease, in
the event that Lessee makes a written request to Lessor to approve a sublease
of any portion of the Premises for a term ending within one year of the
expiration of the Lease Term, or to approve a sublease of the entire
Premises, Lessor shall have the right to terminate the Lease with respect to
the affected portion by giving written notice of such election to Lessee
within twenty (20) days after Lessor's receipt of Lessee's request for
approval. In no event shall Lessee sublet to more than one sublessee while
Lessee is in occupancy, or more than two sublessees if Lessee vacates. Any
profits generated by subleasing shall be divided 25% to Lessee and 75% to
Lessor, after Lessee recovers reasonable subletting costs, limited to
reasonable brokerage commissions and tenant improvement costs.

50. Alterations and Additions. All improvements and alterations are at
Lessee's sole cost and expense and are subject to the provisions of Paragraph
7.3 Contractor to be approved by Lessor.

Lessor: AMERICAN HEART ASSOCIATION,     Lessee: INTERMUNE PHARMANCEUTICAL, INC.
        WESTERN STATES AFFILIATE

By:  /s/ Sunder D. Juin                 By:  /s/ Timothy Lynch
   ---------------------------------       -----------------------------------

        Senior Vice President
Title:   Corporate Operations           Title: Chief Financial Officer
      ------------------------------          --------------------------------

Date:   12/22/99                        Date:  12/8/99
     -------------------------------         ---------------------------------

By:  /s/ Sara Robertsen
   ------------------------------------

Title: Vice President, Trusts & Estates
      ---------------------------------

Date:  12/22/99
     ----------------------------------

<PAGE>

                             RULES AND REGULATIONS FOR
                               STANDARD OFFICE LEASE

Dated: November 9, 1999
      ----------------------------

By and Between  American Heart Association, Western States Affiliate, Inc.
                and InterMune Pharmaceutical, Inc.
                --------------------------------------------------------------

                                   GENERAL RULES

     1.   Lessee shall not suffer or permit the obstruction of any Common
Areas, including driveways, walkways and stairways.
     2.   Lessor reserves the right to refuse access to any persons Lessor in
good faith judges to be a threat to the safety, reputation, or property of
the Office Building Project and its occupants.
     3.   Lessee shall not make or permit any noise or odors that annoy or
interfere with other lessees or persons having business within the Office
Building Project.
     4.   Lessee shall not keep animals or birds within the Office Building
Project, and shall not bring bicycles, motorcycles or other vehicles into areas
not designated as authorized for same.
     5.   Lessee shall not make, suffer or permit litter except in
appropriate receptacles for that purpose.
     6.   Lessee shall not alter any lock or Install new or additional locks
or bolts.
     7.   Lessee shall be responsible for the Inappropriate use of any toilet
rooms, plumbing or other utilities. No foreign substances of any kind are to
be inserted therein.
     8.   Lessee shall not deface the walls, partitions or other surfaces of
the Premises or Office Building Project.
     9.   Lessee shall not suffer or permit anything in or around the
Premises or Building that causes excessive vibration or floor loading in any
part of the Office Building Project.
     10.  Furniture, significant freight and equipment shall be moved into or
out of the building only with the Lessor's knowledge and consent, and subject
to such reasonable limitations, techniques and timing, as may be designated
by Lessor. Lessee shall be responsible for any damage to the Office Building
Project arising from any such activity.
     11.  Lessee shall not employ any service or contractor for services or
work to be performed in the Building, except as approved by Lessor.
     12.  Lessor reserves the right to close and lock the Building on
Saturdays, Sundays and legal holidays, and on other days between the hours of
5:00 P.M. and 8:30 A.M. of the following day. If Lessee uses the
Premises during such periods. Lessee shall be responsible for securely
locking any doors it may have opened for entry.
     13.  Lessee shall return all keys at the termination of its tenancy and
shall be responsible for the cost of replacing any keys that are lost.
     14.  No window coverings, shades or awnings shall be installed or used
by Lessee.
     15.  No Lessee, employee or invitee shall go upon the roof of the
Building.
     16.  Lessee shall not suffer or permit smoking or carrying of lighted
cigars or cigarettes or tobacco in, on or at the Office Building Project.
     17.  Lessee shall not use any method of heating or air conditioning
other than as provided by Lessor.
     18.  Lessee shall not install, maintain or operate any vending machines
upon the Premises without Lessor's written consent.
     19.  The Premises shall not be used for lodging or manufacturing,
cooking or food preparation.
     20.  Lessee shall comply with all safety, fire protection and evacuation
regulations established by Lessor or any applicable governmental agency.
     21.  Lessor reserves the right to waive any one of these rules or
regulations, and/or as to any particular Lessee, and any such waiver shall
not constitute a waiver of any other rule or regulation or any subsequent
application thereof to such Lessee.
     22.  Lessee assumes all risks from theft or vandalism and agrees to keep
its Premises locked as may be required.
     23.  Lessor reserves the right to make such other reasonable rules and
regulations as it may from time to time deem necessary for the appropriate
operation and safety of the Office Building Project and its occupants. Lessee
agrees to abide by these and such rules and regulations.

                                PARKING RULES

     1.   Parking areas shall be used only for parking by vehicles no longer
than full size, passenger automobiles herein called "Permitted Size
Vehicles." Vehicles other than Permitted Size Vehicles are herein referred
to as "Oversized Vehicles."
     2.   Lessee shall not permit or allow any vehicles that belong to or are
controlled by Lessee or Lessee's employees, suppliers, shippers, customers,
or invitees to be loaded, unloaded, or parked in areas other than those
designated by Lessor for such activities.
     3.   Parking stickers or identification devices shall be the property of
Lessor and be returned to Lessor by the holder thereof upon termination of
the holder's parking privileges. Lessee will pay such replacement charge as
is reasonably established by Lessor for the loss of such devices.
     4.   Lessor reserves the right to refuse the sale of monthly
identification devices to any person or entity that willfully refuses to
comply with the applicable rules, regulations, laws and/or agreements.
     5.   Lessor reserves the right to relocate all or a part of parking
spaces from floor to floor, within one floor, and/or to reasonably adjacent
offsite location(s), and to reasonably allocate them between compact and
standard size spaces, as long as the same complies with applicable laws,
ordinances and regulations.
     6.   Users of the parking area will obey all posted signs and park only
in the areas designated for vehicle parking.
     7.   Unless otherwise instructed, every person using the parking area is
required to park and lock his own vehicle. Lessor will not be responsible for
any damage to vehicles, injury to persons or loss of property, all of which
risks are assumed by the party using the parking area.
     8.   Validation, if established, will be permissible only by such method
or methods as Lessor and/or its licensee may establish at rates generally
applicable to visitor parking.
     9.   The maintenance, washing, waxing or cleaning of vehicles in the
parking structure or Common Areas is prohibited.
     10.  Lessee shall be responsible for seeing that all of its employees,
agents and invitees comply with the applicable parking rules, regulations,
laws and agreements.
     11.  Lessor reserves the right to modify these rules and/or adopt such
other reasonable and non-discriminatory rules and regulations as it may deem
necessary for the proper operation of the parking area.
     12.  Such parking use as is herein provided is intended merely as a
license only and no bailment is intended or shall be created hereby.

                                 Page 1 of 1
<PAGE>

                           STANDARD OFFICE LEASE
                                FLOOR PLAN

                                EXHIBIT A

                                 [IMAGE]

<PAGE>

                           STANDARD OFFICE LEASE
                                FLOOR PLAN

                                EXHIBIT C

                                 [IMAGE]<PAGE>

                                                                   Exhibit 10.7
                              EMPLOYMENT AGREEMENT

         It is understood and agreed that the employment by INTERMUNE
PHARMACEUTICALS, INC., a Delaware corporation (the "Company" or "InterMune"), of
W. SCOTT HARKONEN ("Executive") shall be subject to the terms and conditions of
this Employment Agreement ("Agreement") effective as of the closing date of the
Company's Series A Preferred Stock financing ("Effective Date").

1. DUTIES/AUTHORITY. Subject to the provisions of Section 4 below, Executive
shall serve as the President and Chief Executive Officer of the Company
reporting to the Company's Board of Directors and shall be granted the authority
to perform and shall perform such customary, appropriate and reasonable
executive duties as are usually performed by a President and Chief Executive
Officer in reputable companies engaged in a line of business similar to that of
the Company, or such reasonable duties as may be delegated to him from time to
time by the Board of Directors of the Company (the "Board") or the Chief
Executive Officer. Executive's position with the Company is exempt. Executive
agrees that as a condition of Executive's employment by the Company that
Executive will be bound and subject to the terms and conditions of the Employee
Handbook applicable to all employees. The Employee Handbook may be revised from
time to time in the sole discretion of the Company.

2.       CASH COMPENSATION AND BENEFITS.

         2.1  BASE COMPENSATION. Executive shall be paid an annual base salary
              of Two Hundred Twenty-Five Thousand Dollars ($225,000.00) ("Base
              Compensation"), payable in accordance with the Company's general
              payroll practices commencing on the Effective Date. A bonus for
              calendar year 1999 of up to Twenty-Five Thousands Dollars
              ($25,000) shall be paid to Executive, based upon achievement of
              the first tier milestones ("First Tier Milestones") set forth in
              Exhibit A, attached hereto and by this reference made a part
              hereof, and up to an additional Twenty-Five Thousand Dollars
              ($25,000) based upon achievement of the second tier of milestones
              set forth in Exhibit A ("Second Tier Milestones"). After calendar
              year 1999, Executive's bonuses shall be based upon milestones
              determined by the Board of Directors and Executive on an annual
              basis (collectively, with the 1999 bonuses, the "Bonuses").
              Bonuses, if any, shall be paid within the first quarter of the
              following calendar year.

         2.2  EXECUTIVE BENEFITS. In addition to the Base Compensation,
              Executive shall further be entitled to participate in any employee
              benefits programs offer generally from time to time to senior
              management employees of the Company. The Company shall reimburse
              Executive up to One Thousand Five Hundred Dollars ($1,500) per
              year rewards Executive's purchase of an excess long-term
              disability policy and UP to Four Hundred Dollars ($400) per year
              towards purchase of a term life insurance policy.

                                       1
<PAGE>

         2.3  VACATION; HOLIDAYS; ETC. Executive shall be entitled to fully-paid
              vacation time of fifteen (15) business days per calendar year. In
              addition, Executive shall be entitled to all holidays provided
              under the Company's regular holiday schedule and any other
              benefits specified in the Employee Handbook.

         2.4  STOCK PURCHASE. As additional compensation, Executive shall be
              entitled to purchase six hundred ninety thousand (690,000) shares
              of the Company's common stock in accordance with the terms and
              conditions of the Common Stock Purchase Agreement between the
              parties of even date herewith ("Stock Agreement"), which is
              incorporated herein by reference.

         2.5  EXPENSE REIMBURSEMENTS. Executive's expenses in performing his
              duties will be reimbursed by the Company in accordance with the
              policies established by the Board from time to time.

         2.6  TRANSFER OF CONNETICS LOAN. The Company shall assume
              responsibility from Connetics for the loan to Executive (the
              "Loan") made by Connetics (i.e. the Company shall assume full
              responsibility for satisfying Connetics). Comparable terms and
              conditions of the Loan shall be reinstituted between the Company
              and Executive, with the Company as obligee and Executive as
              obligor. Executive shall secure the new loan with Company stock,
              substituting said stock for the prior security consisting of
              Connetics' stock.

3.       TERMINATIONS AND SEVERANCE COMPENSATION

         3.1  DEFINITIONS. For purposes of this Agreement the following terms,
              when capitalized and used herein, shall have the following
              meanings:

                  3.1.1.  "INVOLUNTARY TERMINATION" SHALL MEAN (I) WITHOUT
                          EXECUTIVE'S EXPRESS WRITTEN CONSENT, A MATERIAL
                          REDUCTION OF EXECUTIVE'S DUTIES, POSITIONS OR
                          RESPONSIBILITIES RELATIVE TO EXECUTIVE'S DUTIES,
                          POSITIONS, OR RESPONSIBILITIES IN EFFECT IMMEDIATELY
                          PRIOR TO SUCH MATERIAL REDUCTION ("MATERIAL REDUCTION
                          OF DUTIES"), (II) WITHOUT EXECUTIVE'S EXPRESS WRITTEN
                          CONSENT OR OTHER THAN IN CONNECTION WITH A PERCENTAGE
                          SALARY DECREASE GENERALLY APPLICABLE TO SUBSTANTIALLY
                          ALL EMPLOYEES OF THE COMPANY, A MATERIAL REDUCTION OF
                          EXECUTIVE'S COMPENSATION PACKAGE, AS ADJUSTED, IN
                          EFFECT IMMEDIATELY PRIOR TO SUCH REDUCTION, (II)
                          WITHOUT EXECUTIVE'S EXPRESS WRITTEN CONSENT, THE
                          RELOCATION OF EXECUTIVE TO A FACILITY OR LOCATION
                          OUTSIDE OF THE GREATER SILICON VALLEY AREA, I.E. FIFTY
                          MILES OR MORE FROM SAN FRANCISCO, OR (IV) ANY
                          TERMINATION OF THE EXECUTIVE BY THE COMPANY WHICH IS
                          NOT EFFECTED FOR CAUSE, AS DEFINED BELOW.
                          NOTWITHSTANDING THE FOREGOING, EXECUTIVE'S
                          INVOLUNTARY REMOVAL AS EITHER PRESIDENT OR CHIEF
                          EXECUTIVE OFFICER (BUT NOT

                                       2
<PAGE>

                          BOTH) SHALL BE DEEMED NOT TO BE A MATERIAL REDUCTION
                          OF DUTIES IN THE EVENT OF EITHER A CORPORATE
                          TRANSACTION OR IF SUCH REMOVAL AS EITHER PRESIDENT OR
                          CHIEF EXECUTIVE OFFICER (BUT NOT BOTH) OCCURS AFTER
                          DECEMBER 31, 2000.

                  3.1.2.  "CAUSE FOR TERMINATION" SHALL MEAN: (I) EXECUTIVE'S
                          CONVICTION BY, OR ENTRY OF A PLEA OF GUILTY OR NOLO
                          CONTENDERE IN, A COURT OF COMPETENT JURISDICTION FOR
                          ANY CRIME WHICH CONSTITUTES A FELONY IN THE
                          JURISDICTION INVOLVED (OTHER THAN A FELONY TRAFFIC
                          OFFENSE), (II) EXECUTIVE'S MISAPPROPRIATION OF FUNDS
                          OR COMMISSION OF ACT OF FRAUD UPON THE COMPANY, (III)
                          GROSS NEGLIGENCE BY EXECUTIVE IN THE SCOPE OF
                          EXECUTIVE'S SERVICES TO THE COMPANY, WHICH GROSS
                          NEGLIGENCE EXECUTIVE HAS NOT CURED WITHIN THIRTY (30)
                          DAYS OF WRITTEN NOTICE THEREOF, (IV) A WILLFUL
                          MATERIAL BREACH BY EXECUTIVE OF A MATERIAL PROVISION
                          OF THIS AGREEMENT OF THE PROPRIETARY INFORMATION AND
                          INVENTIONS AGREEMENT, WHICH WILLFUL MATERIAL BREACH
                          EXECUTIVE HAS NOT CURED WITHIN (30) DAYS OF WRITTEN
                          NOTICE THEREOF, OR (V) A WILLFUL MATERIAL FAILURE OF
                          EXECUTIVE TO SUBSTANTIALLY PERFORM HIS DUTIES AS
                          PRESIDENT OR CHIEF EXECUTIVE OFFICER WHICH WILLFUL
                          MATERIAL FAILURE EXECUTIVE HAS NOT CURED WITHIN (30)
                          DAYS OF WRITTEN NOTICE THEROF.

         3.2  CAUSE AND VOLUNTARY TERMINATION. The Company shall have the right
              to terminate Executive's employment hereunder for Cause upon
              written notice to Executive, but effective no earlier than June 2,
              1999. The Executive shall have the right voluntarily to terminate
              this Agreement at any time upon thirty (30) days' prior written
              notice to the Company. If Executive voluntarily terminates his
              employment hereunder or the Company terminates Executive's
              employment for Cause, the Executive's sole and exclusive right and
              remedy hereunder shall be the right to receive his accrued Base
              Compensation, accrued Bonus, if any, outstanding expense
              reimbursements and accrued Company stock pursuant to the Stock
              Agreement, through the date of such termination only and the
              Company shall have no responsibility for the payment of any other
              compensation or benefits to the Employee for any time period
              subsequent to such termination except as may be expressly requited
              by law or the respective terms of benefit arrangements to be paid
              even upon termination for cause or voluntary termination.

         3.3  TERMINATION WITHOUT CAUSE: CORPORATE TRANSACTION. The Company
              shall have the right to terminate Executive's employment hereunder
              without Cause upon written notice to Executive (but such notice
              shall in no event be issued earlier than June 2, 1999). Should
              Executive be terminated, without Cause or should there be a
              CORPORATE TRANSACTION as defined in the Stock Agreement, the
              Company shall give to Executive: any accrued and unpaid Base
              Compensation and Bonuses; any accrued pension benefits, insurance
              benefits and stock options; any stock and related stock purchase
              rights (per the Stock Agreement, E.G., Sections 2(b)-(f)) and any
              other rights and benefits to the extent, if at all, Executive is
              entitled to them through the effective date

                                       3
<PAGE>

              of the termination under their respective terms or the terms
              herein. Executive shall also be entitled to continue to receive
              from the Company his then-current Base Compensation for a period
              of six (6) months; provided, that, if requested to do so by the
              Company, Executive shall continue to serve in his capacity(s)
              averaging not more than two (2) days per week during the initial
              forty-five (45) calendar day period following notice of
              termination, and subject to modification by mutual agreement of
              the Parties including, without limitation, extension of his
              employment for an additional ninety (90) days to facilitate
              transition of duties. All such amounts shall be payable in
              accordance with the Company's general payroll practices.

4.       ATTENTION TO DUTIES; CONFLICT OF INTEREST. While employed by the
         Company, Executive shall devote Executive's full business time, energy
         and abilities exclusively to the business and interests of InterMune,
         and shall perform all duties and services in a faithful and diligent
         manner and to the best of Executive's abilities. Executive shall not,
         without the Company's prior written consent, render to others, services
         of any kind for compensation or engage in any other business activity
         that would materially interfere with the performance of Executive's
         duties under this Agreement. Executive represents that Executive has no
         other outstanding commitments inconsistent with any of the terms of
         this Agreement or the services to be rendered to InterMune. While
         employed by the Company, Executive shall not no directly or indirectly,
         whether as a partner, employee, creditor, shareholder, or otherwise,
         promote, participate or engage in any activity or other business
         competitive with the Company's business. Executive shall not invest in
         any company or business which competes in any manner with the Company,
         except those companies whose securities are listed on national
         securities exchanges or quoted daily in the Nasdaq National Market
         listing of THE WALL STREET JOURNAL. Notwithstanding the foregoing, the
         Company agrees that Executive may devote an average of 20% of each work
         week to financial consulting services to Connetics Corporation;
         provided, that Executive's Base Compensation shall be reduced by 20%
         during such period as he performs such consulting services.

5.       PROPRIETARY INFORMATION. Executive agrees to be bound by the terms of
         the Proprietary Information Agreement and exhibits thereto, which are
         attached as Exhibit A and incorporated by this reference ("Proprietary
         Agreement"), and, by the rules of confidentiality promulgated by
         InterMune from time to time.

                                       4
<PAGE>

6.   DEATH; DISABILITY

         6.1  DEATH. This Agreement shall terminate automatically upon
              Executive's death. If Executive's employment hereunder is
              terminated on account of his death, the Company shall pay To
              Executive's estate, as its sole right and remedy under this
              Agreement, all accrued and unpaid Base Compensation, accrued
              Bonus, if any, and expense reimbursements through the date of
              Executive's death and the Executive's estate shall also be
              entitled to receive any then accrued Company stock pursuant to the
              Stock Agreement, insurance and other rights and benefits, to the
              extent, if at all, the Executive was entitled to them under their
              respective terms.

         6.2  DISABILITY. In the event that Executive, because of accident,
              disability or physical or mental fitness, is incapable of
              performing his usual duties hereunder, the Company shall have the
              right to terminate Executives employment hereunder, upon thirty
              (30) days prior written notice to Executive. For purposes of this
              Section 4.2, Executive shall be deemed to have become incapable of
              performing his usual duties hereunder if the Board shall
              reasonably determine that Executive is, by reason of any
              medically determinable physical or mental impairment expected to
              result in death or to be of a duration of not less than six (6)
              months, unable to perform consistently and materially his usual
              duties for the Company with or without reasonable accommodation.
              If Executive's employment hereunder is terminated pursuant to this
              Section 6.2, the Company shall pay to Executive, as his sole and
              exclusive right and remedy under this Agreement all accrued and
              unpaid Base Compensation, Bonuses and reimbursements through the
              date of Executive's termination and the Executive shall also be
              entitled to receive any then accrued stock pursuant to the Stock
              Agreement, insurance and other rights and benefits to the extent,
              if at all, the Executive was entitled to them under their
              respective terms.

7.   BINDING ARBITRATION.

         7.1  Any dispute, claim or controversy with respect to Executive's
              termination of employment with the Company (whether the
              termination of employment is voluntary or involuntary), and any
              dispute, claim or controversy with respect to incidents or events
              leading to such termination or the method or manner of such
              termination, and any question of arbitrability hereunder, shall be
              settled exclusively by arbitration.

                                       5
<PAGE>

         7.2  Executive and InterMune each waive their constitutional rights to
              have such matters determined by a jury. Instead of a jury trial,
              an arbitrator shall be chosen by InterMune and Executive.
              Arbitration is preferred because, among other reasons, it is
              quicker, less expensive and less formal than litigation in court.
              The provisions governing arbitration are described in detail in
              InterMune's Employee Handbook.

         7.3  The arbitrator shall not have the authority to alter, amend,
              modify, add to or eliminate any condition or provision of this
              Agreement, including, but not limited to, the "at-will" nature of
              the employment relationship. The arbitration shall be held in San
              Mateo County, California. The award of the arbitration shall be
              final and binding on the parties. Judgment upon the arbitrator's
              award may be entered in any court, state or federal, having
              jurisdiction over the parties. If a written request for
              arbitration is not made within one (1) year of the date of the
              alleged wrong or violation, all remedies regarding such alleged
              wrong or violation shall be waived.

         7.4  Should any court determine any provision(s) of this Agreement to
              arbitrate is void or invalid, the parties specifically intend
              every other provision of this Agreement to arbitrate to remain
              enforceable and intact. The parties explicitly and definitely
              prefer arbitration to recourse to the courts, for the reasons
              described above, and have prescribed arbitration as the sole and
              exclusive method of dispute resolution.

         7.5  NO INCONSISTENT OBLIGATIONS. Executive represents that Executive
              is not aware of any obligations, legal or otherwise, inconsistent
              with the terms of this Agreement or Executive's undertakings under
              this Agreement.

8.   MISCELLANEOUS.

         8.1  SUCCESSORS AND ASSIGNS. This Agreement shall be binding on and
              inure to the benefit of the parties hereto, and their heirs,
              executors, legal representatives, successors and assigns. Neither
              party shall have the right to assign its obligations, or all or
              any portion of their rights or interests under Agreement without
              the prior written consent of the other party hereto, and any
              attempt to do so will be null and void; provided, that the Company
              shall have the right to assign this Agreement in connection with
              (A) any merger or consolidation of the Company with another
              entity, whether or not the Company is the continuing or surviving
              entity, in which fifty percent (50%) or more of the Company's
              voting capital is transferred to holders different from persons or
              their affiliates who held the immediately prior to such merger or
              consolidation or (B) any sale of all or substantially all of the
              Company's assets to another entity or person of which fifty
              percent (50%) or more of the capital stock is held by holders
              different from persons or their affiliates who hold voting capital
              stock of the Company.

                                       6
<PAGE>

         8.2  WITHHOLDING. Executive hereby agrees to make appropriate
              arrangements with the Company for the satisfaction of all Federal,
              State or local income tax withholding requirements and Federal
              social security employee tax requirements applicable to this
              Agreement.

         8.3  AMENDMENT. No promises or changes in Executive's status as an
              employee of the Company or any of the terms and conditions of this
              Agreement; can be made unless they are made in writing and signed
              by the Chief Executive Officer of InterMune. This Agreement and
              the terms and conditions described in it cannot be changed orally
              or by any conduct of either Executive or InterMune or any course
              of dealings between Employee, or another person and InterMune.

         8.4  GOVERNING LAW. This Agreement and performance under it, and any
              suits or special proceedings brought under it, shall be construed
              in accordance with the laws of the United States of America and
              the State of California and any arbitration, mediation or other
              proceeding arising hereunder shall be filed and adjudicated in San
              Mateo County, California.

                                       7
<PAGE>

         8.5  SEVERABILITY. If any term or condition, or any part of a term or
              condition, of this Agreement shall prove to be invalid, void or
              illegal, it shall in no way affect, impair or invalidate any of
              the other terms or conditions of this Agreement, which shall
              remain in full force and effect.

         8.6  WAIVER. The failure of either party at any time to require
              performance by the other party of any provision hereof shall not
              affect in any way the full right to require such performance at
              any time thereafter, nor shall a waiver by either party of a
              breach of any provision hereof be taken or held to be a continuing
              waiver of such provision, or waiver of any other breach under any
              other provision of this Agreement.

         8.7  RELIANCE: CONSTRUCTION. The parties to this Agreement represent
              and acknowledge that in executing this Agreement they do not rely
              and have not relied upon any representation or statement made by
              the other party or the other party's agents, attorneys or
              representatives regarding the subject matter, basis, or effect of
              this Agreement or otherwise, other than those specifically stated
              in this written Agreement. This Agreement shall be interpreted in
              accordance with the plain meaning of its terms and not strictly
              for or against any party. This Agreement shall be construed as if
              each party was its author and each party hereby adopts the
              language of this Agreement as if it were his, her or its own. The
              captions in this Agreement and its sections, subsections, tables
              and exhibits are inserted only for convenience and shall not be
              construed as part of this Agreement or as a limitation on or
              broadening of the scope of this Agreement or any section,
              subsection, table or exhibit.

         8.8  COUNTERPARTS. This Agreement may be executed by facsimile
              signature (which will be as valid as an original signature) and in
              any number of counterparts, each of which shall be deemed to be an
              original, and all of which together will constitute one and the
              same Agreement.

         8.9  NO CONFLICT. Executive covenants and represents that he is not a
              party in any agreement or understanding which impairs or prohibits
              his ability to enter into and perform services under this
              Agreement.

Employee and InterMune have executed this Agreement and agree to enter into and
be bound by the provisions hereof as of the date first set forth above.

                           INTERMUNE PHARMACEUTICALS INC.

By:               /s/James T. Healy                  /s/Edward Engleman
         ------------------------------     ----------------------------------
         James T. Healy                     Edward Engleman
         Director                           Director

                             [SIGNATURES CONTINUED]

                                       8
<PAGE>

By:               /s/John L. Higgins
         -----------------------------------
         John L. Higgins
         Director

Sign:             /s/W. Scott Harkonen
         -----------------------------------
         W. Scott Harkonen

                                        9

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