Document:

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                                                                   EXHIBIT 10.44

                                                                  EXECUTION COPY

                 SUBSCRIPTION AND REGISTRATION RIGHTS AGREEMENT

                                 BY AND BETWEEN

                                    BAYER AG

                                      AND

                                  AVIGEN, INC.

                         DATED AS OF NOVEMBER 17, 2000

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                                TABLE OF CONTENTS

<TABLE>
<S>  <C>   <C>                                                                <C>
ARTICLE 1 ISSUANCE AND SALE OF COMMON STOCK; THE CLOSING.......................1

     1.1   ISSUANCE AND SALE OF COMMON STOCK...................................1
     1.2   THE CLOSING.........................................................1
     1.3   TIME AND PLACE OF CLOSING...........................................1
     1.4   TRANSACTIONS AT THE CLOSING.........................................1

ARTICLE 2 REPRESENTATION AND WARRANTIES........................................2

     2.1   REPRESENTATIONS AND WARRANTIES OF PURCHASER.........................2
     2.2   REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................3

ARTICLE 3 COVENANTS............................................................6

     3.1   ANTITRUST LAWS......................................................6
     3.2   LISTING OF ADDITIONAL SHARES........................................6
     3.3   LIMITATIONS ON TRANSFER.............................................6
     3.4   RULE 144(k) REQUIREMENTS............................................7
     3.5   ACCESS TO BOOKS AND RECORDS.........................................7
     3.6   AGREEMENT TO TAKE NECESSARY AND DESIRABLE ACTIONS...................7
     3.7   COMPLIANCE WITH CONDITIONS; COMMERCIALLY REASONABLE EFFORTS.........7
     3.8   LEGENDS.............................................................8

ARTICLE 4 CONDITIONS PRECEDENT.................................................8

     4.1   CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTIES......................8
     4.2   CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY..................8
     4.3   CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER............8
     4.4   WAIVER OF CONDITIONS................................................9

ARTICLE 5 REGISTRATION RIGHTS.................................................10

     5.1   DEMAND REGISTRATION................................................10
     5.2   REGISTRATION PROCEDURES............................................11
     5.3   REGISTRATION EXPENSES..............................................13
     5.4   MARKET STANDOFF....................................................14
     5.5   ASSIGNMENT OF REGISTRATION RIGHTS..................................14

ARTICLE 6 INDEMNIFICATION.....................................................15

     6.1   SURVIVAL OF REPRESENTATIONS, ETC...................................15
     6.2   INDEMNIFICATION BY COMPANY.........................................15
     6.3   INDEMNIFICATION BY PURCHASER.......................................15
     6.4   LIMITATIONS ON LIABILITY...........................................16
     6.5   CLAIMS FOR INDEMNIFICATION.........................................16
     6.6   DEFENSE BY INDEMNIFYING PARTY......................................16

ARTICLE 7 TERMINATION AND DEFAULT.............................................17

     7.1   GENERAL............................................................17
     7.2   PROCEDURE UPON TERMINATION.........................................17
     7.3   EFFECT OF TERMINATION..............................................17
</TABLE>

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<TABLE>
<S>  <C>   <C>                                                                <C>
ARTICLE 8 MISCELLANEOUS.......................................................17

     8.1   BROKERS............................................................17
     8.2   NOTICES............................................................18
     8.3   FEES AND EXPENSES..................................................19
     8.4   ASSIGNMENT.........................................................19
     8.5   COUNTERPARTS.......................................................19
     8.6   ENTIRE AGREEMENT...................................................19
     8.7   PUBLIC ANNOUNCEMENTS...............................................19
     8.8   GOVERNING LAW......................................................20
     8.9   HEADINGS...........................................................20
     8.10  SEVERABILITY.......................................................20
     8.11  MODIFICATION AND AMENDMENT.........................................20
     8.12  WAIVER.............................................................20
     8.13  PARTIES OBLIGATED AND BENEFITED....................................20
     8.14  ACTIONS............................................................20
     8.15  TERMS..............................................................20

EXHIBITS

EXHIBIT A  FORM OF LEGAL OPINION

SCHEDULES

SCHEDULE 2.2.4  CAPITALIZATION
</TABLE>

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                 SUBSCRIPTION AND REGISTRATION RIGHTS AGREEMENT

     THIS SUBSCRIPTION AND REGISTRATION RIGHTS AGREEMENT (this "Agreement"),
dated as of November 17, 2000, is entered into by and between BAYER AG, a German
corporation (the "Purchaser"), and AVIGEN, INC., a Delaware corporation (the
"Company").

                                    RECITALS

     The Purchaser desires to purchase, and the Company desires to issue and
sell, shares of common stock, $0.001 par value per share, of the Company (the
"Common Stock"), upon the terms and subject to the conditions set forth in this
Agreement.

     NOW, THEREFORE, in consideration of the foregoing and of the covenants,
agreements, representations and warranties hereinafter contained, and intending
to be legally bound, the Purchaser and the Company hereby agree as follows:

                                   ARTICLE 1

                 ISSUANCE AND SALE OF COMMON STOCK; THE CLOSING

     1.1  ISSUANCE AND SALE OF COMMON STOCK. The purchase price for each share
of Common Stock purchased hereunder (the "Share Price") shall equal 1.2
multiplied by the average closing price per share of the Common Stock on Nasdaq
for the trading days measured over the period beginning on October 2, 2000 and
ending on October 31, 2000. Upon the terms and subject to the conditions set
forth in this Agreement, the Purchaser agrees to purchase the number of shares
of Common Stock (the "Shares") obtained by dividing $15,000,000 (the "Purchase
Price") by the Share Price.

     1.2  THE CLOSING. Subject to the satisfaction or waiver of the conditions
set forth in Article 4, unless the parties otherwise agree, the closing (the
"Closing") shall occur on the fourth business day after the expiration of the
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"). The "Closing Date" shall be the date the
Closing occurs.

     1.3  TIME AND PLACE OF CLOSING. The Closing shall take place at the offices
of Wilmer, Cutler & Pickering, 2445 M Street, N.W., Washington, D.C. 20037 at
10:00 a.m., Washington, D.C. time, on the Closing Date or at such other place
agreed to by the parties.

     1.4  TRANSACTIONS AT THE CLOSING. At the Closing, subject to the terms and
conditions of this Agreement, the Company shall deliver to the Purchaser a
certificate representing the Shares being purchased thereby against payment of
the Purchase Price therefor by wire transfer to the Company's bank account.

<PAGE>   5

                                   ARTICLE 2

                          REPRESENTATION AND WARRANTIES

     2.1  REPRESENTATIONS AND WARRANTIES OF PURCHASER. The Purchaser represents
and warrants to the Company, as of the date hereof and as of the Closing Date
(unless another date or period of time is specifically stated herein for a
representation or warranty), as follows:

          2.1.1 Authorization and Validity of Agreement. The Purchaser has full
power and authority to enter into this Agreement and the other agreements
contemplated hereby or referred to herein (the "Other Transaction Documents").
This Agreement has been duly executed and delivered by the Purchaser and
constitutes the valid and legally binding obligation of the Purchaser,
enforceable in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and
any other laws of general application affecting enforcement of creditors' rights
generally, and as limited by laws relating to the availability of a specific
performance, injunctive relief, or other equitable remedies.

          2.1.2 Purchase Entirely for Own Account. The Shares to be acquired by
the Purchaser will be acquired for investment for the Purchaser's own account,
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, except in compliance with the Securities Act of 1933, as
amended (the "Securities Act") and the Purchaser has no present intention of
selling, granting any participation in, or otherwise distributing the same. The
Purchaser does not presently have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the Shares. The Purchaser
has not been formed for the specific purpose of acquiring the Shares.

          2.1.3 Restricted Securities. The Purchaser understands that the Shares
have not been and, subject to the provisions of Article V, will not be,
registered under the Securities Act, by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon, among other
things, the bona fide nature of the investment intent and the accuracy of the
Purchaser's representations as expressed herein. The Purchaser understands that
the Shares are "restricted securities" under applicable U.S. federal and state
securities laws and that, pursuant to these laws, the Purchaser must hold the
Shares indefinitely unless they are registered with the Securities and Exchange
Commission (the "SEC") pursuant to Article V or otherwise and qualified by state
authorities, or an exemption from such registration and qualification
requirements is available. Except as provided in Section 3.4 or Article V, the
Purchaser acknowledges that the Company has no obligation to register or qualify
the Shares for resale. The Purchaser further acknowledges that if an exemption
from registration or qualification is available, it may be conditioned on
various requirements including, but not limited to, the time and manner of sale,
the holding period for the Shares, and on requirements relating to the Company
which are outside of the Purchaser's control, and which the Company is under no
obligation and may not be able to satisfy.

          2.1.4 Legends. The Purchaser understands that the certificates
representing the Shares may bear one or all of the following legends:

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               (a)  "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933."

               (b)  Any legend required by the Blue Sky laws of any state to the
extent such laws are applicable to the shares represented by the certificate so
legended.

          2.1.5 Accredited Investor. The Purchaser is (i) an accredited investor
as defined in Rule 501(a) of Regulation D promulgated under the Securities Act
or (ii) is a sophisticated investor, experienced in investing in securities of
emerging biotechnology companies and acknowledges that the Purchaser is able to
fend for itself, can bear the economic risk of its investment and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in the Shares.

     2.2  REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to the Purchaser, as of the date hereof and as of the Closing Date
(unless another date or period of time is specifically stated herein for a
representation or warranty), as follows:

          2.2.1 Corporate Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has all requisite corporate power and authority to own and
operate its business as it is currently being conducted and to own and lease the
properties and assets owned or leased by it. The Company is licensed or
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the properties owned, leased or operated by it or the
nature of its business makes such qualification or licensing necessary, other
than in such jurisdictions where the failure to be so qualified or licensed has
not had and could not reasonably be expected to have a material adverse effect
on the business, results of operations, properties, financial condition, assets
and liabilities of the Company ("Material Adverse Effect"). The Company has all
requisite corporate power and authority to enter into this Agreement and the
Other Transaction Documents and perform its obligations hereunder and
thereunder.

          2.2.2 Authorization and Validity of Agreement. The execution, delivery
and performance by the Company of this Agreement, the Other Transaction
Documents and any other certificates, documents and instruments contemplated
hereby or referred to herein, and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
of the Company. The purchase and sale of the Shares as contemplated herein have
been approved by the Company's Board of Directors. This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution, and delivery hereof by the Purchaser, is a legal, valid and binding
obligation of the Company, enforceable against it in accordance with its terms,
except as limited by applicable

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bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and
any other laws of general application affecting enforcement of creditors' rights
generally, and as limited by laws relating to the availability of a specific
performance, injunctive relief, or other equitable remedies.

          2.2.3 No Conflicts. The execution, delivery and performance by the
Company of this Agreement, the consummation by the Company of the transactions
contemplated hereby, and the fulfillment by the Company of the terms hereof will
not:

               (a)  conflict with, or result in a breach or violation of, the
provisions of the certificate of incorporation or bylaws of the Company;

               (b)  conflict with, or result in a default (or would constitute a
default but for any requirement of notice or lapse of time or both) under, or
require notice under, any material document, material agreement or other
material instrument to which the Company is a party or by which the Company is
bound (the "Company Third Party Contracts") or, require any third party consent,
waiver or approval in order that any Company Third Party Contract remain in
effect without material modification after the Closing Date and without giving
rise to any right to termination, cancellation, acceleration or loss of any
material right or benefit;

               (c)  result in the creation or imposition of any charge, claim,
judgment, lease, liability, mortgage, lien, pledge, restriction, security
interest, tax lien, or encumbrance on the Company's assets or properties
pursuant to all laws, rules regulations, writs, injunctions, decrees, and orders
(including any award, decision, judgment, injunction, ruling, subpoena, or
verdict entered, issued, made or tendered by any court, administrative agency,
or other Governmental Authority (as defined in Section 2.2.9) or by an
arbitrator) applicable to the Company, as applicable, or to the ownership or
operation of its respective business, assets or property ("Applicable Law"); or

               (d)  violate any law, order, judgment, rule, regulation, decree
or ordinance to which the Company is subject or bound.

          2.2.4 Capital Stock of the Company. The authorized capital stock of
the Company consists solely of 30,000,000 shares of Common Stock and 5,000,000
shares of preferred stock, par value $0.001 per share ("Preferred Stock"). As of
October 31, 2000, 17,073,537 shares of Common Stock were issued and outstanding.
As of October 31, 2000, zero (0) shares of Preferred Stock were issued and
outstanding. All of the issued and outstanding shares of capital stock of the
Company have been duly and validly issued and are fully paid and nonassessable.
Except as set forth in Schedule 2.2.4, there are (i) no outstanding options,
warrants or other rights (whether or not contingent) to subscribe for or
purchase or otherwise acquire any issued or unissued shares of capital stock (or
securities directly or indirectly convertible into or exchangeable or
exercisable for shares of capital stock) of the Company, (ii) no restrictions
upon, or agreements or understandings of the Company, or, to the knowledge of
the Company, understandings of any other person with respect to the voting or
transfer of any shares of capital stock of the Company and (iii) no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company.

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          2.2.5 Financial Statements and Reports. Since June 30, 2000, the
Company has filed all reports, registration statements and other filings,
together with any amendments or supplements required to be made with respect
thereto (the "SEC Filings"), that it has been required to file with the SEC
under the Securities Act and the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). The SEC Filings were prepared and filed in accordance with
the rules and regulations of the SEC. As of their filing dates, each of the SEC
Filings complied as to form in all material respects with the applicable
requirements of the Exchange Act. As of their respective dates, the SEC Filings
did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company (including any related notes
or schedules) included in the SEC Filings were prepared in accordance with
generally accepted accounting principles in the United States, as in effect from
time to time applied on a consistent basis ("GAAP") (except as otherwise noted
in such financial statements) and present fairly in all material respects the
financial condition, results of operations and cash flows of the Company as of
the dates thereof and for the periods indicated, subject, in the case of interim
financial statements, to normal year end audit adjustments.

          2.2.6 Litigation. There is no claim, action, suit, proceeding or
investigation pending against the Company by or before any Governmental
Authority (as defined in Section 2.2.9) nor any outstanding order, writ,
injunction or decree to which the Company is subject. In addition, there is no
claim, action, suit, proceeding or investigation pending or, to the Company's
knowledge, currently threatened against or affecting the Company, its
properties, assets or business, that questions the validity of this Agreement or
the right of the Company to enter into it, or to consummate the transactions
contemplated hereby or thereby, or that could reasonably be expected, either
individually or in the aggregate, to have a Material Adverse Effect or that
seeks to materially alter or materially delay the transactions contemplated
hereby.

          2.2.7 Validity of Securities. At Closing, the Shares to be issued to
the Purchaser will be duly and validly authorized and issued, fully paid and
nonassessable, free and clear of any preemptive rights or Liens. Based in part
on the representations of the Purchaser in Section 2.1, the issuance and sale of
the Shares pursuant to this agreement are exempt from registration under the
Securities Act and do not otherwise violate Applicable Law.

          2.2.8 Absence of Material Adverse Change. Since September 27, 2000,
(i) there has not been any material adverse change in the financial condition or
results of operations ("Material Adverse Change") with respect to the Company,
and (ii) the Company does not have any liabilities or obligations of any nature
whatsoever (whether accrued, absolute, contingent, or otherwise) that
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

          2.2.9 Government Approvals. Except for (i) the filings by the Company
or the Purchaser, if any, required by the HSR Act; and (ii) applicable filings,
if any, required by applicable federal and state securities laws, in each case,
which shall be made (or are not required to be made) on or prior to the Closing
Date, no consent, authorization or order of, or filing or registration with, any
Governmental Authority (as defined below) or other individual, corporation,
partnership, trust, unincorporated organization, association or other entity
(together

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with Governmental Authorities, each a "Person") is required to be obtained or
made by the Company for the execution, delivery and performance of this
Agreement, or for the execution, delivery and performance by the Company of the
Other Transaction Documents, except where the failure to obtain such consents,
authorizations or orders, or make such filings or registrations, would not
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of the Company to consummate the transactions
contemplated hereby. "Governmental Authority" means (i) any foreign, federal,
state or local court or governmental or regulatory agency or authority, (ii) any
arbitration board, tribunal or mediator and (iii) any national stock exchange or
SEC recognized trading market on which securities issued by the Company are
listed or quoted.

          2.2.10 Disclosure. No representation or warranty by the Company
contained in this Agreement, and no statement contained in any document,
certificate or schedule delivered or to be delivered by or on behalf of the
Company pursuant to this Agreement or in connection with the consummation of the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state any material fact necessary,
in light of the circumstances under which it is or will be made, in order to
make the statements herein or therein not misleading or necessary in order to
fully and fairly provide the information required to be provided in any such
document, certificate or schedule.

                                    ARTICLE 3

                                    COVENANTS

     3.1  ANTITRUST LAWS. The Purchaser will, or will cause its "ultimate
parent" to file as soon as practicable all filings that are required under the
HSR Act, to respond as soon as practicable to all inquiries received from the
Federal Trade Commission or the Antitrust Division of the Department of Justice
for additional information or documentation and to respond as soon as
practicable to all inquiries received from any other government agency in
connection with antitrust matters.

     3.2  LISTING OF ADDITIONAL SHARES. The Company will file with the Nasdaq,
if required, a Notification Form for Listing of Additional Shares for an amount
of shares of Common Stock equal to at least the amount of the Shares.

     3.3  LIMITATIONS ON TRANSFER. Notwithstanding any other provision of this
Agreement, until the earlier of (i) the period ending twelve (12) months after
the Closing Date and (ii) the date, if any, that the Agreement between the
Company and Bayer Corporation dated as of the date hereof (the "Other
Agreement") is terminated by Bayer Corporation pursuant to Section 18.2(b), (d)
or (f)(ii) of the Other Agreement (the "Restricted Period"), the Purchaser will
not directly or indirectly sell, transfer or otherwise dispose of any of the
Shares, other than to an affiliate of the Purchaser or pursuant to a pledge to
an unaffiliated third-party lender in connection with a bona fide lending
transaction. Nothing in this section shall prevent the Purchaser from selling
any Shares pursuant to a tender offer, merger, sale of all or substantially all
the Company's assets or any similar transaction that offers each holder of
Common Stock (other than, if applicable, the person proposing such transaction)
the opportunity to dispose of

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Common Stock for the same consideration or otherwise contemplates the
acquisition of Common Stock beneficially owned by each such holder for the same
consideration.

     3.4  RULE 144(k) REQUIREMENTS. Until the Shares are eligible to be sold
pursuant to subparagraph (k) of Rule 144 promulgated under the Securities Act,
the Company shall (1) file with the SEC in a timely manner all reports and other
documents required of the Company under the Exchange Act and the rules and
regulations thereunder; and (2) furnish to any holder of the Shares, forthwith
upon request, (A) a written statement by the Company that it has complied with
its reporting requirements in order that Rule 144 is available to such holder,
(B) a copy of the most recent annual or quarterly report of the Company and such
other reports or documents so filed with the SEC by the Company, and (C) such
other information as the SEC requires to permit the selling of any such
securities without registration pursuant to Rule 144 or any successor rule to
Rule 144.

     3.5  ACCESS TO BOOKS AND RECORDS. The Company shall afford to the Purchaser
and the Purchaser's accountants, counsel and representatives access during
normal business hours throughout the period prior to the Closing Date (or the
earlier termination of this Agreement pursuant to Section 6.1) to its
properties, books, contracts, commitments and records (including, but not
limited to, tax returns) as Purchaser shall reasonably request with reasonable
advance notice and, during such period, shall, upon request, furnish promptly to
the Purchaser (i) a copy of each report, schedule and other document filed or
received by any of them pursuant to the requirements of federal or state
securities laws and (ii) all other information concerning its business,
properties and personnel as the Purchaser may reasonably request, provided that
no investigation or receipt of information pursuant to this Section 3.5 shall
affect any representation or warranty of the Company or the conditions to the
obligations of the Purchaser. Any information disclosed to Purchaser pursuant to
this Section 3.5 shall be subject to the same restrictions as on "Receiver's"
treatment of "Information" as set forth in (and as those terms are defined in)
the Confidential Disclosure Agreement between Bayer Corporation and the Company
dated April 30, 2000.

     3.6  AGREEMENT TO TAKE NECESSARY AND DESIRABLE ACTIONS. The Company and the
Purchaser shall (a) subject to the satisfaction of the conditions set forth in
Section 4.1, Section 4.2 and Section 4.3, execute and deliver such other
documents, certificates, agreements and other writings and (b) take such other
actions, in each case, as may be necessary or reasonably requested by the other
party in order to consummate or implement the issuance of the Shares in
accordance with the terms of this Agreement.

     3.7  COMPLIANCE WITH CONDITIONS; COMMERCIALLY REASONABLE EFFORTS. The
Company and the Purchaser shall use commercially best efforts to cause all
conditions precedent to the obligations of the Company and the Purchaser to be
satisfied. Upon the terms and subject to the conditions of this Agreement, the
Company and the Purchaser will use commercially best efforts to take, or cause
to be taken, all action, and to do, or cause to be done, all things necessary,
proper or advisable consistent with Applicable Law to consummate the
transactions governed by this Agreement and make effective in the most
expeditious manner practicable the issuance of the Shares in accordance with the
terms of this Agreement.

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     3.8  LEGENDS. After the requirement for the restrictive legend described in
Section 2.1.4 hereof is no longer applicable because the Shares are freely
transferable under the Securities Act, the Company shall promptly cause the
legend to be removed upon request from any holder of such Shares.

                                    ARTICLE 4

                              CONDITIONS PRECEDENT

     4.1  CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTIES. The respective
obligations of the Purchaser, on the one hand, and the Company, on the other, to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing Date, of each of the following
conditions:

          4.1.1 No Injunction, Etc. No preliminary or permanent injunction or
other order shall have been issued by any federal or state court of competent
jurisdiction in the United States or by any Governmental Authority, and no
statute, rule, regulation or executive order shall have been promulgated or
enacted by any Governmental Authority which restrains, enjoins or otherwise
prohibits in any material respects the transactions contemplated hereby.

          4.1.2 HSR Act. Any waiting period under the HSR Act applicable to the
consummation of the transactions contemplated hereby shall have expired.

     4.2  CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY. In addition to the
conditions set forth in Section 4.1, the obligations of the Company to
consummate the transactions to be consummated at the Closing are subject to the
satisfaction, at or prior to the Closing Date, of each of the additional
conditions set forth below:

          4.2.1 Accuracy of Representations and Warranties. The representations
and warranties of the Purchaser contained in this Agreement (i) shall have been
true and correct when made and (ii) shall be (A) in the case of representations
and warranties that are qualified as to materiality or material adverse effect,
true and correct and (B) in all other cases, true and correct in all material
respects as of the Closing Date with the same force and effect as though made on
and as of the Closing Date.

          4.2.2 Performance of Agreements. The Purchaser shall have performed in
all material respects all obligations and agreements, and complied in all
material respects with all covenants and conditions contained in this Agreement,
to be performed or complied with by it prior to or at the Closing Date.

          4.2.3 Certificates. The Company shall have received a certificate from
the Purchaser, dated the Closing Date, signed by the President or any authorized
Vice President of the Purchaser, in his or her capacity as an officer of the
Purchaser, to the effect that, to the best of his or her knowledge, information
and belief, the conditions specified in Section 4.2.1 and Section 4.2.2 have
been satisfied.

     4.3  CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER. In addition
to the conditions set forth in Section 4.1, the obligations of the Purchaser to
consummate the

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transactions to be consummated at the Closing are subject to the satisfaction,
at or prior to the Closing Date, of each of the additional conditions set forth
below:

          4.3.1 Accuracy of Representations and Warranties. The representations
and warranties of the Company contained in this Agreement (i) shall have been
true and correct when made and (ii) shall be (A) in the case of representations
and warranties that are qualified as to materiality or material adverse effect,
true and correct and (B) in all other cases, true and correct in all material
respects as of the Closing Date with the same force and effect as though made on
and as of the Closing Date.

          4.3.2 Performance of Agreements. The Company shall have performed in
all material respects all obligations and agreements, and complied in all
material respects with all covenants and conditions contained in this Agreement,
to be performed or complied with by it prior to or at the Closing Date.

          4.3.3 Certificates. The Purchaser shall have received a certificate
from the Company, dated the Closing Date, signed by the President or any
authorized Vice President of the Company, in his or her capacity as an officer
of the Company, to the effect that, to the best of his or her knowledge,
information and belief, the conditions specified in Section 4.3.1 and Section
4.3.2 have been satisfied.

          4.3.4 Opinion of Counsel for the Company. The Purchaser shall have
received an opinion of the Company's counsel dated the Closing Date
substantially in the form of Exhibit A hereto.

          4.3.5 Other Deliveries. The Company shall have delivered to the
Purchaser at the Closing the following:

               (a)  a certificate of incumbency for the officers executing the
documents on behalf of the Company;

               (b)  a certified copy of the resolutions duly adopted by the
directors of the Company and signed by the Secretary or Assistant Secretary
authorizing the transactions contemplated by this Agreement; and

               (c)  a certificate of the Secretary or Assistant Secretary
certifying that the resolutions referred to in Section 4.3.5(b) have not been
rescinded, modified or withdrawn and that such resolutions are in full force and
effect as of the Closing Date.

     4.4  WAIVER OF CONDITIONS. Each of the parties, in its discretion, may
waive, in whole or in part, at or prior to the Closing Date, the failure of
satisfaction of any of the conditions precedent to its obligations set forth
herein. No such waiver by either of the parties shall be effective unless made
in writing.

                                       9

<PAGE>   13

                                   ARTICLE 5
                               REGISTRATION RIGHTS

     5.1  DEMAND REGISTRATION.

          (a)  In the event that, following the expiration of the Restricted
Period, the Purchaser and/or its permitted successors and assigns (the
"Holders") are unable to dispose of all of the Registrable Securities (as
defined below) within a three-month period pursuant to Rule 144 under the
Securities Act, then for as long as the Holders are unable to sell all of the
Registrable Securities they hold within a three-month period, the Holders may
notify the Company in writing that they (i) intend to offer or cause to be
offered for public sale all or any portion of their Registrable Securities (such
request shall be in writing and shall state the number of shares of Registrable
Securities intended to be disposed of) and (ii) request that the Company cause
such Registrable Securities to be registered under the Securities Act. The
Company shall prepare and file with the Commission a registration statement (the
"Registration Statement") under the Securities Act with respect to the
Registrable Securities requested to be so registered and shall use its
reasonable best efforts to cause the Registration Statement to become effective
promptly after filing. The Registration Statement shall be filed with the
Commission within ninety (90) days after receipt of the Holders' notification
relating thereto. The Company shall be obligated to file only one registration
statement pursuant to this Article V.

          (b)  Except as provided in Section 5.1(c), the Company shall use its
reasonable best efforts to maintain the effectiveness of the registration
statement filed pursuant to this Section 5.1, including through new filings,
amendments or renewals, and do any and all other acts or things reasonably
necessary or advisable in connection with such registration, until the earlier
of such time as (i) all Registrable Securities registered pursuant to the
registration statement have been transferred pursuant to the registration
statement and (ii) all of the Registrable Securities may by sold pursuant to
Rule 144(k) under the Securities Act or any successor rule thereto.

          (c)  The obligations of the Company under this Section 5.1 are subject
to the condition that the Company shall be entitled to require the Holders to
suspend for up to ninety (90) days once in any twelve month period the sale of
Registrable Securities pursuant to the Registration Statement filed pursuant to
this Section 5.1 if and for as long as (i) the Board of Directors of the Company
determines, in its reasonable judgment, that the sale of Registrable Securities
pursuant thereto would materially interfere with any material financing,
acquisition, corporate reorganization or other material transaction by the
Company, (ii) the Company promptly gives the Holders written notice of such
determination, and (iii) all other similarly situated shareholders shall also be
subject to the same suspension. The Company shall have no obligation to maintain
the effectiveness of the Registration Statement during periods when the Holder
is required to suspend the sale of such Registrable Securities as provided in
this paragraph. As soon as possible after the expiration of such periods, the
Company shall amend the Registration Statement as necessary to permit the
Holders to sell Registrable Securities pursuant to the Registration Statement
and shall notify the Holders in writing that they may resume the sale of
Registrable Securities pursuant to the Registration Statement.

          (d)  "Registrable Securities" means the Shares received by the
Purchaser from the Company pursuant to this Agreement and any additional shares
of Common Stock issued by the

                                       10

<PAGE>   14

Company in respect thereof in connection with any stock dividend, stock split,
recapitalization or similar event; provided, however, that any Registrable
Security will cease to be a Registrable Security when (i) such Registrable
Security has been transferred pursuant to an effective registration statement
under the Securities Act covering such Registrable Security (but not including
any transfer exempt from registration under the Securities Act), (ii) such
Registrable Security is no longer held of record by a Holder, or (iii) the
Holder of such Registrable Security is then able to use Rule 144(k) under the
Securities Act (or any successor provision) to transfer such Registrable
Security.

     5.2  REGISTRATION PROCEDURES.

          5.2.1 Company Obligations. Whenever the Company is required under this
Article V to register any Registrable Securities, it agrees that it shall also
do the following:

               (a)  furnish to the Holders such number of copies of the
Registration Statement, each amendment and supplement thereto (including any
exhibits thereto), the prospectus included in the Registration Statement
(including each preliminary prospectus) and such other documents as any Holder
may reasonably request in writing in order to facilitate the disposition of the
shares registered pursuant to the Registration Statement; provided, however,
that the obligation of the Company to deliver copies of prospectuses or
preliminary prospectuses to the Holder shall be subject to the receipt by the
Company of reasonable assurances from such Holder that such Holder will comply
with the applicable provisions of the Securities Act and of such other
securities or blue sky laws as may be applicable in connection with any use of
such prospectuses or preliminary prospectuses;

               (b)  use its reasonable best efforts to register or qualify the
shares registered pursuant to the Registration Statement under such other
securities or blue sky laws of such jurisdictions as a Holder may reasonably
request and do any and all other acts and things that may be reasonably
necessary to enable such Holder to consummate the disposition in such
jurisdictions of such shares; provided, however, that the Company will not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this subsection, (ii) subject
itself to taxation in any such jurisdiction, or (iii) consent to general service
of process in any such jurisdiction;

               (c)  apply, prior to or concurrently with the filing of the
Registration Statement, to the Nasdaq National Market System or the Nasdaq
SmallCap Market System (or, if the Company is not listed on the Nasdaq National
Market System or the Nasdaq SmallCap Market System, any other exchange or
automated quotation system on which the Company's Common Stock is then listed)
for the listing of the shares of Registrable Securities and use its best effort
to obtain the listing of such shares;

               (d)  notify the Holders in writing at any time when a prospectus
relating to the shares registered pursuant to the Registration Statement is
required to be delivered under the Securities Act, of the occurrence of an event
requiring the preparation of a supplement or amendment to such prospectus or
filing of a report incorporated in the prospectus by reference so that, as
thereafter delivered to the purchasers of such shares, such prospectus
(including documents incorporated therein by reference) will not contain an
untrue statement of a material

                                       11

<PAGE>   15

fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and promptly prepare,
file with the SEC and make available to the Holders any such supplement,
amendment or report incorporated in the prospectus by reference;

               (e)  obtain consents from its independent public accountants in
customary form as required to obtain and maintain effectiveness of the
Registration Statement;

               (f)  make generally available to the Holders earnings statements,
which need not be audited, satisfying the provisions of Section 11(a) of the
Securities Act no later than forty-five (45) days after the end of the twelve
(12) month period beginning with the first month of the first fiscal quarter
commencing after the effective date of the Registration Statement, which
earnings statements shall cover said twelve (12) month period;

               (g)  promptly notify the Holders of the issuance or threatened
issuance of any stop order or other order suspending the effectiveness of the
Registration Statement or preventing or suspending the use of any preliminary
prospectus, prospectus or prospectus supplement, use reasonable best efforts to
prevent the issuance of any such threatened stop order or other order, and, if
any such order is issued, use all its reasonable best efforts to obtain the
lifting or withdrawal of such order at the earliest possible moment and promptly
notify the Holders of any such lifting or withdrawal;

               (h)  if requested by a Holder, the Company will promptly
incorporate in a prospectus supplement or post-effective amendment to the
Registration Statement such information concerning such Holder and such Holder's
intended method of distribution as such Holder reasonably requests to be
included therein (and which is not violative of an applicable law, rule or
regulation, in the reasonable judgment of the Company, after consultation with
its outside legal counsel), including, without limitation, with respect to any
change in the intended method of distribution or the amount of shares being
offered by such Holder, the offering price for such shares or any other terms of
the offering or distribution of the shares of Registrable Securities, and the
Company will make all required filings of such prospectus supplement or
post-effective amendment as soon as possible after being notified of the matters
to be incorporated in such prospectus supplement or post-effective amendment;

               (i)  as promptly as practicable after the filing with the SEC of
any document that is incorporated by reference into the Registration Statement,
notify the Holders of such filing;

               (j)  cooperate with the Holders to facilitate the timely
preparation and delivery of certificates, not bearing any restrictive legends,
unless otherwise required by a Holder, representing the shares to be sold under
the Registration Statement, and enable such shares to be in such denominations
and registered in such name as such Holders may request;

               (k)  cooperate with the Holders, their legal counsel and any
other interested party (including any interested broker-dealer) in making any
filings or submissions required to be made, and the furnishing of all
appropriate information in connection therewith, with the National Association
of Securities Dealers, Inc. (the "NASD");

                                       12

<PAGE>   16

               (l)  during the period when the prospectus is required to be
delivered under the Securities Act, promptly file all documents required to be
filed with the Commission pursuant to Sections 13(a), 13(c), 14, or 15(d) of the
Exchange Act;

               (m)  cause its subsidiaries, if any, to take all action
reasonably necessary to effect the registration of the shares of Registrable
Securities contemplated hereby, including preparing and filing any required
financial or other information; and

               (n)  make available to the transfer agent for each class or
series of shares of Registrable Securities a supply of certificates or other
instruments evidencing or constituting such shares which shall be in a form
complying with the requirements of such transfer agent, promptly after a
registration thereof.

          5.2.2 Information from Holders. As a condition precedent to the
obligation of the Company to register Registrable Securities held by a Holder,
the Company may require the Holders to promptly furnish in writing to the
Company such information regarding the distribution of the shares of Registrable
Securities as it may from time to time reasonably request and such other
information as may be legally required in connection with such registration;
provided that the Company shall furnish to the Holders, prior to the filing of
the Registration Statement or any prospectus, amendment or supplement thereto,
copies of the portions of the Registration Statement as proposed to be filed
which contain information regarding the distribution of the shares of
Registrable Securities or any other information regarding the Holders, which
such portions will be subject to the reasonable review and comments of the
Holders (and their legal counsel); and provided further that the Company will
not file any such Registration Statement, any prospectus or any amendment or
supplement thereto in the event that the Holders shall reasonably object in
writing, within five (5) business days of receipt (in accordance with Section
8.2) of such portions, to any portion of any such document that is subject to
review by the Holders pursuant to this Section 5.2.2 .

          5.2.3 Suspension of Sales. The Holders agrees that, upon receipt of
any notice from the Company of the happening of any event of the kind described
in subsection 5.2.1(d) hereof, they will immediately discontinue disposition of
shares pursuant to a Registration Statement until they receive copies of the
supplemented or amended prospectus contemplated by subsection 5.2.1(d) hereof,
and, if so directed by the Company, the Holders will deliver to the Company all
copies, other than permanent file copies then in their possession, of the most
recent prospectus (including any prospectus supplement) covering such shares at
the time of receipt of such notice or destroy all such copies.

     5.3  REGISTRATION EXPENSES.

          5.3.1 Except as provided in Section 5.3.2, all fees and expenses
incident to the Company's performance of or compliance with this Article V shall
be borne by the Company, including, without limitation, the following fees and
expenses: (a) all SEC, NASD, stock exchange, automated quotation system or other
registration and filing fees and listing fees; (b) the fees and expenses of the
Company's compliance with securities or blue sky laws (including reasonable fees
and disbursements of counsel in connection with blue sky qualifications of the
shares of Registrable Securities); (c) printing expenses; (d) the fees and

                                       13

<PAGE>   17

disbursements of counsel for the Company and the fees and expenses for
independent certified public accountants and other persons retained by the
Company in connection with such registration; (e) fees of transfer agents and
registrars; and (f) messenger and delivery expenses. In addition, the Company
shall pay its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expense of any annual audit or quarterly review, the expense of any
liability insurance obtained by the Company, and the expenses and fees for
listing or authorizing for quotation the securities to be registered on each
securities exchange or automated quotation system on which any shares of the
Common Stock are then listed or quoted.

          5.3.2 The Holders shall pay all their internal expenses incurred in
connection with the registration (including, without limitation, all salaries
and expenses of the Holders' officers and employees performing legal or
accounting duties and fees and expenses of legal counsel and other consultants
to the Holders), as well as any underwriting discounts and commissions with
respect to any Registrable Securities sold by the Holders.

     5.4  MARKET STANDOFF.The Purchaser hereby agrees, and each Holder, as a
condition to the transfer of the registration rights pursuant to Section 5.5,
that, during the period of duration specified by the Company and an underwriter
of common stock or other securities of the Company, following the effective date
of a registration statement of the Company filed under the Securities Act, it
shall not, to the extent requested by the Company and such underwriter, directly
or indirectly sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase or otherwise transfer
or dispose of (other than to donees who agree to be similarly bound) any
securities of the Company held by it at any time during such period except
common stock included in such registration; provided, however, that:

          (a)  such agreement shall be applicable only for as long as the
Holders shall hold Registrable Securities; and

          (b)  all officers and directors of the Company and all other Persons
with registration rights (whether or not pursuant to this Agreement) enter into
similar agreements; and

          (c)  such market stand-off time period shall not exceed 90 days.

In order to enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to the Registrable Securities of each Holder of
Registrable Securities (and the shares or securities of every other person
subject to the foregoing restriction) until the end of such period.

     5.5  ASSIGNMENT OF REGISTRATION RIGHTS.The rights to cause the Company to
register Registrable Securities pursuant to this Article V may be assigned (but
only with all related obligations) by the Purchaser or any Holder to an
affiliate of the Purchaser or such Holder, provided in each case that: (a) the
Company is, within a reasonable time after such transfer, furnished with written
notice of the name and address of such transferee or assignee and the securities
with respect to which such registration rights are being assigned; and (b) such
transferee or assignee agrees in writing to be bound by and subject to the terms
and conditions of this Agreement, including without limitation the provisions of
Section 5.4 above.

                                       14

<PAGE>   18

                                    ARTICLE 6
                                 INDEMNIFICATION

     6.1  SURVIVAL OF REPRESENTATIONS, ETC.All statements contained in any
schedule or in any certificate delivered by or on behalf of a party pursuant to
this Agreement or in connection with the transactions contemplated hereby shall
be deemed to be representations and warranties by such party hereunder. The
representations and warranties of the parties contained herein shall survive the
Closing Date for a period of one (1) year from the Closing Date. Each covenant
and agreement contained in this Agreement shall survive in accordance with the
specific terms thereof.

     6.2  INDEMNIFICATION BY COMPANY. Subject to Section 6.4, Company shall
indemnify the Purchaser and its affiliates and their respective officers,
directors, employees, financial advisors, attorneys, accountants, agents and
affiliates ("Representatives") (the Purchaser, its affiliates, and its
Representatives collectively, the "Purchaser Indemnified Parties") against, and
hold each Purchaser Indemnified Party harmless from, any damage, claim, loss,
cost, liability or expense, including interest, penalties, reasonable attorneys'
fees and said party's expenses of investigation, response action or remedial
action (collectively "Damages"), incident to, arising out of, in connection with
or related to, whether directly or indirectly, any of the following:

          6.2.1 The breach of any representation or warranty of Company that is
identified by the Purchaser with reasonable specificity in a written notice
provided to Company prior to termination of the representation and warranty
pursuant to Section 6.1.

          6.2.2 Any breach by Company of any of its covenants or agreements set
forth in this Agreement that is identified by the Purchaser with reasonable
specificity in written notice provided to Company (i) in the case of a covenant
or agreement required to be performed prior to the Closing, within six (6)
months after the Closing Date, and (ii) in the case of any other covenant or
agreement, within six (6) months following the time when such covenant or
agreement was required to be performed.

          6.2.3 Any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or prospectus contained therein or
in any amendment or supplement thereto or in any preliminary prospectus, or
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of any rule or
regulation promulgated under the Securities Act or any state securities laws
applicable to the Company and relating to action or inaction by the Company in
connection with any registration, qualification or compliance required
hereunder; provided, however, that the Company shall not be liable in any such
case to the extent any of such Damages arises out of, or is based upon, any such
untrue statement or omission or allegation thereof based upon information
furnished in writing to the Company by a Holder expressly for use therein.

     6.3  INDEMNIFICATION BY PURCHASER. Subject to Section 6.4, the Purchaser
shall indemnify the Company and its affiliates and their respective
Representatives (the "Company Indemnified Parties") against, and hold the
Company Indemnified Party harmless from, any

                                       15

<PAGE>   19

Damages incident to, arising out of, in connection with or related to, whether
directly or indirectly, any of the following:

          6.3.1 The breach of any representation or warranty of the Purchaser
that is identified by the Company with reasonable specificity in a written
notice provided to the Company prior to termination of the representation and
warranty pursuant to Section 6.1.

          6.3.2 Any breach by the Purchaser of any of its covenants or
agreements set forth in this Agreement that is identified by the Company with
reasonable specificity in a written notice provided to the Purchaser (i) in the
case of a covenant or agreement required to be performed prior to the Closing,
within six (6) months after the Closing Date, and (ii) in the case of any other
covenant or agreement, within six (6) months following the time when such
covenant or agreement was required to be performed.

     6.4  LIMITATIONS ON LIABILITY. The total amount of the Company's
indemnification liability to the Purchaser Indemnified Parties under Section 6.2
and the Purchaser's indemnification liability to the Company Indemnified Parties
under Section 6.3, respectively, for all breaches of a party's representations,
warranties, covenants and agreements contained in this Agreement shall in each
case be limited to an amount equal to the sum of (a) Purchase Price for the
Shares hereunder plus (b) the reasonable attorneys' fees and other expenses of
the prevailing party. The Purchaser and the Company agree that the sole recourse
and exclusive remedy of the Company Indemnified Parties and the Purchaser
Indemnified Parties with respect to any breach of any of the representations,
warranties and covenants contained in this Agreement shall be the right to
indemnification under this Article 6, including as limited by the first sentence
of this Section 6.4.

     6.5  CLAIMS FOR INDEMNIFICATION. Whenever any claim shall arise for
indemnification under Article 6, the party entitled to indemnification (the
"indemnified party") shall promptly notify the other party (the "indemnifying
party") of the claim and, when known, the facts constituting the basis for such
claim. In the event of any claim for indemnification hereunder resulting from or
in connection with any claim or legal proceedings by a third party, the notice
to the indemnifying party shall specify, if known, the amount of the liability
arising therefrom. The indemnified party shall not settle or compromise any
claim by a third party for which it is entitled to indemnification hereunder
without the prior written consent of the indemnifying party.

     6.6  DEFENSE BY INDEMNIFYING PARTY. In connection with any claim giving
rise to a right of indemnification under Article 6 resulting from or arising out
of any claim or legal proceeding by a person who is not a party to this
Agreement, the indemnifying party at its sole cost and expense may, upon written
notice to the indemnified party, assume the defense of any such claim or legal
proceeding. The indemnified party shall be entitled to participate in (but not
control) the defense of any such action, with its counsel and at its own
expense. If the indemnifying party does not timely assume the defense of any
such claim or litigation resulting therefrom, (a) the indemnified party may
defend against such claim or litigation, in such manner as it may deem
appropriate, including, but not limited to, settling such claim or litigation
with the written consent of the indemnifying party, and (b) the indemnifying
party shall be entitled to participate in (but not control) the defense of such
action, with its counsel and at its own expense.

                                       16

<PAGE>   20

                                   ARTICLE 7

                             TERMINATION AND DEFAULT

     7.1  GENERAL. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing Date, as
set forth below:

          7.1.1 Mutual Consent. This Agreement may be terminated by the mutual
consent of the parties.

          7.1.2 Order or Decree. This Agreement may be terminated by the
Purchaser or the Company if any court of competent jurisdiction in the United
States or other U.S. governmental body shall have issued an order, decree or
ruling or taken any other action restraining, enjoining or otherwise prohibiting
in any material respects the transactions contemplated hereby and such order,
decree, ruling or other action shall have become final and nonappealable.

          7.1.3 Outside Date. This Agreement may be terminated by either party
(a) if the Closing shall not have occurred by March 31, 2001 (the "Outside
Date") or (b) if one or more conditions to such party's obligation to consummate
the transactions contemplated hereby cannot be satisfied by the Outside Date;
provided, however, that no party may exercise its rights under this Section
7.1.3 if such party is in material breach or default under this Agreement.

          7.1.4 Breach. This Agreement may be terminated by either party if the
other party shall have breached any of its material representations or
warranties or obligations under this Agreement and shall have failed to cure
such breach within thirty (30) days after written notice of such breach from the
other party.

     7.2  PROCEDURE UPON TERMINATION. In the event of the termination of this
Agreement, written notice thereof shall promptly be given to the other party
hereto and this Agreement shall terminate, all further obligations of the
parties hereunder to satisfy the conditions precedent to the Closing shall
terminate, and the transactions contemplated hereby shall be abandoned without
further action by any of the parties hereto; provided, however, that the
provisions of Section 3.4 and Article V shall survive the termination of this
Agreement in accordance with their respective terms in the event that a Holder
holds any Registrable Securities at the time this Agreement is terminated.

     7.3  EFFECT OF TERMINATION. Nothing in this Article 6 shall relieve any
party hereto of any liability for intentional or willful breach of this
Agreement. The parties shall have no liability for termination of this Agreement
for any reason other than an intentional or willful breach of this Agreement.

                                    ARTICLE 8

                                  MISCELLANEOUS

     8.1  BROKERS. The transactions contemplated hereby have been and shall be
carried on by parties in such manner as not to give rise to any valid claims
against the parties for a brokerage

                                       17

<PAGE>   21

commission, finder's fee or other like payment. Each party agrees to indemnify
and hold the other harmless from and against any claims for brokerage
commissions or finder's fees insofar as such claims shall be alleged to be based
upon arrangements or agreements made by the indemnifying party or on its behalf.
Such indemnity shall include the cost of reasonable counsel fees in connection
with the defense of any such claims.

     8.2  NOTICES. Except as otherwise provided, all notices which are permitted
or required under this Agreement shall be in writing and shall be deemed given
(a) when delivered personally, (b) if by facsimile, upon transmission with
confirmation of receipt by the receiving party's facsimile terminal, (c) if sent
by documented overnight delivery service, on the date delivered, or (d) if sent
by mail, five (5) business days after being mailed by registered or certified
mail, postage prepaid, addressed as follows, or to such other person or address
as may be designated by notice to the other party:

          If to the Company, to:

          Avigen, Inc.
          1201 Harbor Bay Pkwy., #1000
          Alameda, CA 94502
          Attn: Thomas J. Paulson
          Facsimile: (510) 748-7155

          with a copy (which shall not constitute notice) to:

          Brett D. White
          Cooley Godward LLP
          Five Palo Alto Square
          3000 El Camino Real
          Palo Alto, CA 94306-2155
          Facsimile: (650) 849-7400

          If to the Purchaser, to:

          Bayer AG
          D-51368
          Leverkusen, Germany
          Attn: General Counsel
          Facsimile: +49(214) 30 55817

          with a copy (which shall not constitute notice) to:

          Bayer Corporation
          79 T.W. Alexander Drive
          4101 Research Commons
          P.O. Box 13887
          Research Triangle Park, North Carolina 27708
          Attn: General Manager

                                       18

<PAGE>   22

          Facsimile: (919) 316-6669

          and with a copy (which shall not constitute notice) to:

          Wilmer, Cutler & Pickering
          2445 M Street, N.W.
          Washington, D.C. 20037
          Attn: Richard W. Cass
          Facsimile: (202) 663-6363

     8.3  FEES AND EXPENSES. Each party shall pay the filing fee relating to any
filing required by it, if any, in accordance with the HSR Act. All other
expenses incurred in connection with the negotiation, preparation, execution and
performance of this Agreement shall be paid by the party incurring such
expenses.

     8.4  ASSIGNMENT. This Agreement and the transactions contemplated hereby
may not be assigned or otherwise transferred, in whole or in part, by operation
of law or otherwise, without the prior written consent of the other party;
provided, however, that notwithstanding the foregoing, (i) each party shall have
the right to pledge, assign or otherwise transfer this Agreement and its rights
hereunder, in whole or in part, as collateral security to any lender, and (ii)
each party shall have the right to assign or transfer this Agreement and any
other Transaction Document and its rights hereunder and thereunder, in whole or
in part, to its parent or any direct or indirect wholly-owned subsidiary of that
party or to any person into which that party may be merged or consolidated or
which purchases all or substantially all of the assets of that party; provided,
however, that (a) such parent, subsidiary or person agrees to be bound by the
terms of this Agreement or other Transaction Document (including, without
limitation, all provisions binding upon the assigning or transferring party),
and (b) any such assignment or transfer shall not relieve that party from any
liability or obligation under this Agreement or other Transaction Document.

     8.5  COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which when so executed and delivered, shall be an original
instrument, but such counterparts together shall constitute a single agreement.

     8.6  ENTIRE AGREEMENT. This Agreement, including all Exhibits hereto, and
all certificates and documents executed and delivered in connection with this
Agreement, when executed and delivered, shall constitute the entire agreement of
the parties with respect to the subject matter hereof, superseding and
extinguishing all prior agreements and understandings, representations and
warranties, relating to the subject matter hereof.

     8.7  PUBLIC ANNOUNCEMENTS. Each party shall have the right to review,
comment upon and approve any publicity materials, press releases or other public
statements by the other party that name or otherwise identify such party or any
of its affiliates or refer to, or describe any aspect of, this Agreement or
other Transaction Document or the transactions contemplated hereby and thereby;
provided, however, that with respect to disclosure documents to be filed by
either party under the Exchange Act or the Securities Act, subject to the last
sentence of this Section 8.7, each party shall only have the right to prior
review and to comment upon the other

                                       19

<PAGE>   23

party's documents. Each party agrees that it will not issue any such publicity
materials, press releases or public statements without the prior written
approval of the other party, which approval shall not be unreasonably withheld,
conditioned or delayed. The Company and the Purchaser shall request confidential
treatment of sensitive provisions of this Agreement, to the extent permitted by
law, in any filing with the SEC, any other governmental authority or any
securities exchange or stock market.

     8.8  GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereunder shall be governed by the substantive laws of the State of New
York applicable to contracts made and to be performed therein, without reference
to the principles of conflicts of laws.

     8.9  HEADINGS. The section and other headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.

     8.10 SEVERABILITY. Any provision of this Agreement which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability.

     8.11 MODIFICATION AND AMENDMENT. This Agreement may not be modified or
amended except by written agreement specifically referring to this Agreement and
signed by the parties hereto.

     8.12 WAIVER. No waiver of a breach or default hereunder shall be considered
valid unless in writing and signed by the party giving such waiver, and no such
waiver shall be deemed a waiver of any subsequent breach or default of the same
or similar nature.

     8.13 PARTIES OBLIGATED AND BENEFITED. Subject to the limitations set forth
below, this Agreement will be binding upon the parties hereto and their
respective assignees and successors in interest and will inure solely to the
benefit of such parties and their respective assigns and successors in interest,
and no other person will be entitled to any of the benefits conferred by this
Agreement.

     8.14 ACTIONS. Each party will execute and deliver to the other, from time
to time at or after the Closing, for no additional consideration and at no
additional cost to the requesting party, (without incurring any obligation to
pay money) such further assignments, certificates, instruments, records or other
documents, assurances or things as may be reasonably necessary to give full
effect to this Agreement and to allow each party fully to enjoy and exercise the
rights accorded and acquired by it under this Agreement.

     8.15 TERMS. Terms used with initial capital letters will have the meanings
specified, applicable to both singular and plural forms, for all purposes of
this Agreement. The words "include" and "exclude" and derivatives of those words
are used in this Agreement in an illustrative sense rather than limiting sense.

                           [Execution Page Following]

                                       20

<PAGE>   24

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized representatives, officers or agents on the
date first written above.

                                        BAYER AG

                                        By: /s/ Dr. Brandan
                                           -------------------------------------

                                        Its: Dr. Brandan, Senior Vice President
                                            ------------------------------------

                                        By: /s/ Dr. Buchmeier
                                           -------------------------------------

                                        Its: Dr. Buchmeier, Senior Counsel
                                            ------------------------------------

                                        AVIGEN, INC.

                                        By: /s/ John Monahan
                                           -------------------------------------

                                        Its: CEO
                                            ------------------------------------

                 [Signature Page to the Subscription Agreement
                   by and between Bayer AG and Avigen, Inc.]

<PAGE>   25

                                    EXHIBIT A

                              FORM OF LEGAL OPINION

[Cooley Godward Letterhead]

_______________, 2000

Bayer AG
[  address    ]

Ladies and Gentlemen:

We have acted as counsel for Avigen, Inc., a Delware corporation (the
"Company"), in connection with the issuance and sale of [312,500] shares of the
Company's Common Stock ("Shares"), to Bayer AG under the Subscription Agreement
dated as of November ___, 2000 (the "Subscription Agreement"). We are rendering
this opinion pursuant to Section [ ] of the Subscription Agreement. Except as
otherwise defined herein, capitalized terms used but not defined herein have the
respective meanings given to them in the Subscription Agreement.

In connection with this opinion, we have examined such matters of law and of
fact as we considered appropriate for purposes hereof and relied upon the
representations and warranties as to factual matters contained in and made
pursuant to the Subscription Agreement by the various parties and originals or
copies certified to our satisfaction, of such records, documents, certificates,
opinions, memoranda and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below. Where we render
an opinion "to the best of our knowledge" or concerning an item "known to us" or
our opinion otherwise refers to our knowledge, it is based solely upon (i) an
inquiry of attorneys within this firm who perform legal services for the
Company, (ii) receipt of a certificate executed by an officer of the Company
covering such matters, and (iii) such other investigation, if any, that we
specifically set forth herein.

In rendering this opinion, we have assumed: the genuineness and authenticity of
all signatures on original documents; the authenticity of all documents
submitted to us as originals; the conformity to originals of all documents
submitted to us as copies; the accuracy, completeness and authenticity of
certificates of public officials; and the due authorization, execution and
delivery of all documents (except the due authorization, execution and delivery
by the Company of the Subscription Agreement), where authorization, execution
and delivery are prerequisites to the effectiveness of such documents. We have
also assumed: that all individuals executing and delivering documents had the
legal capacity to so execute and deliver; that you have received all documents
you were to receive under the Subscription Agreement; that the Subscription
Agreement is an obligation binding upon you; that the information provided by
you to the Company in connection with this transaction is accurate and complete;
if you are a corporation or other entity, that you have filed any required
California franchise or income tax returns and have paid any required California
franchise or income taxes; and that there are no extrinsic

<PAGE>   26

agreements or understandings among the parties to the Subscription Agreement
that would modify or interpret the terms of the Subscription Agreement or the
respective rights or obligations of the parties thereunder.

Our opinion is expressed only with respect to the federal laws of the United
States of America, the General Corporation Law of the State of Delaware and the
laws of the State of California. We express no opinion as to whether the laws of
any particular jurisdiction apply, and no opinion to the extent that the laws of
any jurisdiction other than those identified above are applicable to the subject
matter hereof. We note that the parties have elected to have the Subscription
Agreement governed by the laws of the State of New York. In this regard, our
opinion in paragraph 3 below regarding the enforceability of the Subscription
Agreement is given solely on the basis of the result that would obtain if the
Subscription Agreement were interpreted by a California court applying the
substantive laws of the State of California (excluding choice of law
provisions). We express no opinion concerning the past, present or future fair
market value of any securities. We are not rendering any opinion as to the
applicability or effect of any law, rule or regulation relating to antitrust,
nor as to compliance with any antifraud law, rule or regulation relating to
securities, or to the sale or issuance thereof.

Our opinion in paragraph 1 below as to the existence and good standing of the
Company is based solely upon our review of certificates of public officials of
the States of Delaware and California. With respect to the Company's
qualification as a foreign corporation, our opinion is based solely upon
obtaining a certificate from officers of the Company to the effect that the
Company does not own or lease property or have employees authorized to bind it
by contract or conduct business outside of the State of California and that the
Company has not been requested by the authorities of any state to qualify as a
foreign corporation for the transaction of business in that state.

With regard to our opinion in paragraphs 5 and 6 below, with respect to federal
and state securities laws, rules and regulations, we have relied solely on our
review of such securities laws and on the Securities and Exchange Commission's
no-action letters Black Box Incorporated, June 26, 1990 and Squadron, Ellenoff,
Pleasant & Lehrer, February 28, 1992, and as to factual matters related thereto
have relied solely on representations and warranties of Bayer AG.

Our opinion expressed in paragraph 7 below is based upon inquiry which has been
limited to (i) obtaining a certificate from officers of the Company to the
effect that there are no legal proceedings pending or threatened of the type
described in paragraph 7, (ii) reviewing our files for the Company respecting
all pending litigation matters to determine that we are not acting as counsel of
record for the Company, and (iii) an inquiry of attorneys within this firm who
perform legal services for the Company in connection with the offering of Shares
as to whether they are aware of any such pending or threatened action; we have
made no further investigation.

<PAGE>   27

On the basis of the foregoing, in reliance thereon and with the foregoing
qualifications, we are of the opinion that as of the date hereof:

1.   The Company has been duly incorporated and is a validly existing
     corporation in good standing under the laws of the State of Delaware and,
     to our knowledge, is duly qualified and in good standing as a foreign
     corporation in all other states in which the property owned, leased or
     operated by it or the nature of its business makes such qualification
     necessary.

2.   The Company has the requisite corporate power to own or lease its property
     and assets and to conduct its business as it is currently being conducted
     and as presently proposed to be conducted, and to enter into and perform
     its obligations under the Subscription Agreement.

3.   The Subscription Agreement has been duly and validly authorized by all
     necessary corporate action on the part of the Company, and has been duly
     and validly executed and delivered by the Company. The Subscription
     Agreement constitutes a valid and binding agreement of the Company
     enforceable against the Company in accordance with its terms, except as
     rights to indemnity under Article 6 may be limited by applicable laws and
     except as enforcement may be limited by applicable bankruptcy, insolvency,
     reorganization, arrangement, moratorium or other similar laws affecting
     creditors' rights, and subject to general equity principles and to
     limitations on availability of equitable relief, including specific
     performance.

4.   The Shares have been duly authorized, and upon issuance and delivery
     against payment therefor in accordance with the terms of the Subscription
     Agreement, will be validly issued, fully paid and nonassessable.

5.   All consents, approvals, authorizations, or orders of, and filings,
     registrations, and qualifications with any regulatory authority or
     governmental body in the United States required for the consummation by the
     Company of the transactions contemplated by the Subscription Agreement,
     have been made or obtained, except for the filing of a Form D pursuant to
     Securities and Exchange Commission Regulation D and qualification (or such
     filings or the taking of such action as may be necessary to secure
     qualification or an exemption from qualification, if available) under
     applicable state blue sky laws.

6.   The offer and sale of the Shares is exempt from the registration
     requirements of the Securities Act of 1933, as amended (the "Act"), subject
     to the timely filing of a Form D pursuant to Regulation D under the Act.

7.   The execution and delivery of the Subscription Agreement by the Company
     does not, and the sale and issuance of the Shares will not (a) conflict
     with, or result in a breach or violation of, (i) the Company's certificate
     of incorporation or bylaws or any material agreement known to us to which
     the Company is a party or by which it is bound or (ii) any order, writ,
     judgment, injunction, decree or determination or award that has been
     entered against the Company and of which we are aware, the violation or
     contravention of which would materially adversely affect the Company, its
     assets, financial condition or

<PAGE>   28

     operations or (b) to the best of our knowledge, result in the violation of
     any governmental statute, rule or regulation applicable to the Company.

8.   To the best of our knowledge, there is no pending or overtly threatened
     action, suit or proceeding before any court or governmental agency
     involving the Company which would be required to be disclosed in a
     registration statement of the Company under the Securities Act if filed
     today or which would question the validity of the Subscription Agreement.

This opinion is intended solely for your benefit and is not to be made available
to or be relied upon by any other person, firm, or entity without our prior
written consent. We assume no obligation to inform you of any facts,
circumstances, events or changes in the law that may hereafter be brought to our
attention that may alter, affect or modify the opinion expressed herein.

Very truly yours,

COOLEY GODWARD LLP

Brett White

<PAGE>   29

                                 SCHEDULE 2.2.4

                                 CAPITALIZATION

                 OUTSTANDING OPTIONS, WARRANTS AND OTHER RIGHTS
                      TO ACQUIRE AVIGEN, INC. COMMON STOCK

At October 31, 2000, Avigen had outstanding options to purchase shares of common
stock under each of the company's stock option plans as follows:

<TABLE>
<CAPTION>
OPTION PLAN NAME                        NUMBER OF SHARES           WEIGHTED
                                          OUTSTANDING            AVERAGE PRICE
-------------------------------         ----------------         -------------
<S>                                        <C>                   <C>
1993 Stock Option Plan                        36,309             $0.64
1995 Chairman Stock Option Plan              515,248             $0.49
1996 Equity Incentive Plan                 1,279,188             $15.62
1996 Director Plan                            87,500             $8.76
2000 Equity Incentive Plan                   643,592             $38.80
                                           ---------
                                           2,561,837             $0.64 - $38.80
                                           ---------
</TABLE>

At October 31, 2000, the Company also had outstanding warrants to purchase
shares of common stock as follows:

<TABLE>
<CAPTION>
 NUMBER                                                     EXPIRATION
OF SHARES           EXERCISE PRICE        ISSUE DATE           DATE
---------           --------------        ----------        ----------
<S>                 <C>                      <C>               <C>
   13,324           $5.36                    1995              2005
   35,000           $6.40                    1996              2001
    8,414           $7.04                    1996              2001
    4,514           $7.09                    1995              2005
  180,627           $2.81 - $3.68            1998              2003
  220,107           $4.77 - $6.10            1998              2003
  593,334           $6.88 - $7.50            1999              2004
  289,711           $17.81 - $20.63          1999              2004
  119,889           $24.61 - $27.96          1999              2004
   18,561           $28.12 - $31.95          1999              2004
   40,000           $56.00                   2000              2005
   50,000           $82.00                   2000              2005
</TABLE>

<PAGE>   30

<TABLE>
<S>                 <C>                                  <C>
---------
1,573,481           $2.81 - $82.00                       2001 - 2005
---------
</TABLE>

At October 31, 2000, John Monahan, Ph.D., President and CEO of the Company,
controlled the voting rights for 115,652 shares of common stock held in the name
of his former spouse.<PAGE>   1

                                                                   EXHIBIT 10.45

                                  OFFICE LEASE

                                 PARKWAY CENTER
                               ALAMEDA, CALIFORNIA

                         LINCOLN-RECP EMPIRE OPCO, LLC,
                      A DELAWARE LIMITED LIABILITY COMPANY

                                  AS LANDLORD,

                                       AND

                                  AVIGEN, INC.,
                             A DELAWARE CORPORATION

                                    AS TENANT

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
ARTICLE                                                                                            PAGE
<S>                                                                                                <C>
Article 1 -- Real Property, Building, Premises and Complex........................................... 1

Article 2 -- Lease Term.............................................................................. 1

Article 3 -- Base Rent............................................................................... 2

Article 4 -- Additional Rent......................................................................... 2

Article 5 -- Use of Premises......................................................................... 6

Article 6 -- Services and Utilities.................................................................. 6

Article 7 -- Repairs................................................................................. 8

Article 8 -- Additions and Alterations............................................................... 8

Article 9 -- Covenant Against Liens.................................................................. 9

Article 10 -- Indemnification and Insurance.......................................................... 9

Article 11 -- Damage and Destruction.................................................................10

Article 12 -- Condemnation...........................................................................11

Article 13 -- Covenant of Quiet Enjoyment............................................................12

Article 14 -- Assignment and Subletting..............................................................12

Article 15 -- Surrender; Ownership and Removal of Trade Fixtures.....................................13

Article 16 -- Holding Over...........................................................................14

Article 17 -- Estoppel Certificates..................................................................14

Article 18 -- Subordination..........................................................................14

Article 19 -- Tenant's Defaults; Landlord's Remedies.................................................14

Article 20 -- Security Deposit.......................................................................16

Article 21 -- Compliance with Law....................................................................18

Article 22 -- Entry by Landlord......................................................................18

Article 23 -- Tenant Parking.........................................................................18

Article 24 -- Miscellaneous Provisions...............................................................18

Article 25 -- Mortgagee Protection...................................................................21

Article 26 -- Americans With Disabilities Act........................................................22

Article 27 -- Hazardous Materials....................................................................22

Article 28 -- Financial Statements...................................................................23
</TABLE>

                                    EXHIBITS

Exhibit A -- Outline of Floor Plan of Premises

Exhibit B -- [Intentionally omitted.]

Exhibit C -- Amendment to Lease

Exhibit D -- Rules and Regulations

Exhibit E -- Form of Tenant's Estoppel Certificate

                                       i

<PAGE>   3

                                 PARKWAY CENTER
                       SUMMARY OF BASIC LEASE INFORMATION

        This Summary of Basic Lease Information ("SUMMARY") is hereby
incorporated into and made a part of the attached Office Lease. Each reference
in the Office Lease to any term of this Summary shall have the meaning as set
forth in this Summary for such term. In the event of a conflict between the
terms of this Summary and the Office Lease, the terms of the Office Lease shall
prevail. Any capitalized terms used Summary and not otherwise defined herein
shall have the meaning as set forth in the Office Lease.

<TABLE>
<CAPTION>
TERMS OF LEASE                                     DESCRIPTION
(References are to the Office Lease)
<S>                                                <C>
1.      DATE:                                      November 2, 2000

2       LANDLORD:                                  LINCOLN-RECP EMPIRE OPCO, LLC,
                                                   a Delaware limited liability company

3.      ADDRESS OF LANDLORD'S AGENT                Legacy Partners Commercial, Inc.,
        (SECTION 24.19):                           101 Lincoln Centre Drive
                                                   Foster City, California  94404
                                                   Attn:  Mack Laney, Sr. Vice President Operations

                                                   with a copy to:
                                                   Legacy Partners Commercial, Inc.,
                                                   1411 Harbor Bay Parkway, Suite 1000
                                                   Alameda, California  94502
                                                   Attn:  Property Manager

4.      TENANT:                                    AVIGEN, INC.,
                                                   a Delaware corporation

5.      ADDRESS OF TENANT:                         1301 Harbor Bay Parkway
        (SECTION 24.19):                           Alameda, California  94502
                                                   Attention:  Thomas J. Paulson
                                                   (Prior to Lease Commencement Date)

                                                   and

                                                   1301 Harbor Bay Parkway
                                                   Alameda, California  94502
                                                   Attention:  Thomas J. Paulson
                                                   (After Lease Commencement Date)

6.      PREMISES, BUILDING AND COMPLEX
        (ARTICLE 1):

        6.1 PREMISES:                              Subject to Article 2, approximately 67,482
                                                   rentable square feet of space located on the
                                                   first and second floors of the Building, as set
                                                   forth in Exhibit A attached hereto.

        6.2 BUILDING:                              Approximately 67,482 rentable square feet.

        6.3 COMPLEX:                               Parkway Center; Approximately 463,860
                                                   rentable square feet.

        6.4 PREMISES ADDRESS:                      1301 Harbor Bay Parkway
                                                   Alameda, California  94502
                                                   Floor(s) upon which the Premises are
                                                   located: First and Second

7.      TERM:

        7.1 LEASE TERM:                            Ten (10) years and Zero (0) months.

        7.2 LEASE COMMENCEMENT DATE:               December 1, 2000

        7.3 LEASE EXPIRATION DATE:                 The last day of the Term of the Lease shall
                                                   be November 30, 2010, subject to the provisions
                                                   of Article 2.

        7.4 AMENDMENT TO LEASE:                    Landlord and Tenant shall confirm the Lease
                                                   Commencement Date and Lease Expiration Date in
                                                   an Amendment to Lease (Exhibit "C"), which may
                                                   be required to be executed pursuant to Article 2
                                                   of the Office Lease.
</TABLE>

                                       ii

<PAGE>   4

8.      BASE RENT (ARTICLE 3):

<TABLE>
<CAPTION>
                  ---------------------- ------------ --------------------- ----------------
                          TERM           SQUARE FEET   ANNUAL RENTAL RATE       MONTHLY
                                                      PER RENTABLE SQUARE   INSTALLMENT OF
                                                              FOOT             BASE RENT
                  ---------------------- ------------ --------------------- ----------------
<S>               <C>                    <C>          <C>                   <C>
                   12/1/00 -- 11/30/01      34,537            $24.00           $ 69,074.00
                  ---------------------- ------------ --------------------- ----------------
                   12/1/01 -- 11/30/02      34,537            $24.72           $ 71,146.22
                  ---------------------- ------------ --------------------- ----------------
                   12/1/02 -- 12/31/02      34,537            $25.44           $ 73,218.44
                  ---------------------- ------------ --------------------- ----------------
                    1/1/03 -- 11/30/03      67,482            $25.44           $143,061.84
                  ---------------------- ------------ --------------------- ----------------
                   12/1/03 -- 11/30/04      67,482            $26.28           $147,785.58
                  ---------------------- ------------ --------------------- ----------------
                   12/1/04 -- 11/30/05      67,482            $27.00           $151,834.50
                  ---------------------- ------------ --------------------- ----------------
                   12/1/05 -- 11/30/06      67,482            $27.84           $156,558.24
                  ---------------------- ------------ --------------------- ----------------
                   12/1/06 -- 11/30/07      67,482            $28.68           $161,281.98
                  ---------------------- ------------ --------------------- ----------------
                   12/1/07 -- 11/30/08      67,482            $29.52           $166,005.72
                  ---------------------- ------------ --------------------- ----------------
                   12/1/08 -- 11/30/09      67,482            $30.36           $170,729.46
                  ---------------------- ------------ --------------------- ----------------
                   12/1/09 -- 11/30/10      67,482            $31.32           $176,128.02
                  ---------------------- ------------ --------------------- ----------------
</TABLE>

       Base Rent for the "Remaining Premises" (as defined in Article 2 below)
shall be payable from the "RP Commencement Date" (as defined in Article 2 below)
through December 31, 2002, in accordance with the following schedule:

<TABLE>
<CAPTION>
                  ---------------------- ------------ --------------------- ----------------
                          TERM            REMAINING    REMAINING PREMISES       MONTHLY
                                          PREMISES     -- ANNUAL RENTAL     INSTALLMENT OF
                                         SQUARE FEET   RATE PER RENTABLE       BASE RENT
                                                          SQUARE FOOT
                  ---------------------- ------------ --------------------- ----------------
<S>                                      <C>          <C>                   <C>
                    10/1/01 -- 5/31/02      32,945            $18.24           $50,076.40
                  ---------------------- ------------ --------------------- ----------------
                    6/1/02 -- 12/31/02      32,945            $19.08           $52,382.55
                  ---------------------- ------------ --------------------- ----------------
</TABLE>

<TABLE>
<S>                                                <C>
        ADVANCE RENT (SECTION 3.1):                Sixty-nine Thousand Seventy-four Dollars
                                                   ($69,074.00)

9.      ADDITIONAL RENT (ARTICLE 4):

        9.1 BASE YEAR FOR TENANT'S SHARE OF        Calendar year 2001
            DIRECT EXPENSES:

        9.3 TENANT'S SHARE OF DIRECT EXPENSES      100% of the Building.
            FOR THE PREMISES:                      14.55% of the Complex.

10.     SECURITY DEPOSIT (ARTICLE 20):             One Hundred Fifty Thousand Dollars
                                                   ($150,000.00)

11.     PARKING (ARTICLE 23):                      One hundred fourteen (114) unreserved
                                                   parking spaces, subject to adjustment per
                                                   Article 23

12.     BROKERS (SECTION 24.35):                   Aegis Realty Partners for Tenant
                                                   Cushman Realty Corporation for Landlord

13.     EXHIBITS:                                  A through E, inclusive and attached hereto.
</TABLE>

                                      iii

<PAGE>   5

                                 PARKWAY CENTER

                                  OFFICE LEASE

        This Office Lease, which includes the preceding Summary attached hereto
and incorporated herein by this reference (the Office Lease and Summary to be
known sometimes collectively hereafter as the "Lease"), dated as of the date set
forth in Section 1 of the Summary, is made by and between LINCOLN-RECP EMPIRE
OPCO, LLC, a Delaware limited liability company ("Landlord"), and AVIGEN, INC.,
a Delaware corporation ("Tenant").

ARTICLE 1 - REAL PROPERTY, BUILDING, PREMISES AND COMPLEX

        1.1 REAL PROPERTY, BUILDING, PREMISES AND COMPLEX. Upon and subject to
the terms, covenants and conditions hereinafter set forth in this Lease,
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the
premises set forth in Section 6 of the Summary (the "Premises"), which Premises
are part of the building (the "Building") specified in Section 6 of the Summary,
and, as applicable, which Building is part of the Complex ("Complex") specified
in Section 6 of the Summary. The outline of the floor plan of the Premises is
set forth in Exhibit A attached hereto. The Building, the Building's parking
facility ("Building Parking Facility"), any outside plaza areas, land and other
improvements surrounding the Building which are designated from time to time by
Landlord as "Common Areas" appurtenant to or servicing the Building and/or the
Complex, and the land upon which any of the foregoing are situated, are herein
sometimes collectively referred to as the "Real Property." Landlord and Tenant
hereby agree that for purposes of this Lease, as of the Lease Date, the rentable
square footage area of the Premises, the Building, and the Complex shall be
deemed to be the number of rentable square feet specified in Section 6 of the
Summary which number of rentable square feet for the Premises includes an
apportionment made by Landlord of a pro rata share of the core of the Building,
corridors, lobbies and other portions of the "Common Areas" within the Building
attributable to the Premises being leased by Tenant hereunder. Tenant is hereby
granted the right to the non-exclusive use of the common corridors and hallways,
stairwells, elevators, restrooms and other public or common areas located on the
Real Property (the "Common Areas"); provided, however, that the manner in which
such public and Common Areas are maintained and operated shall be at the sole
discretion of Landlord (but in a good condition, comparable to the condition of
other comparable buildings in the vicinity of the Complex) and the use thereof
shall be subject to such reasonable rules, regulations and restrictions as
Landlord may make from time to time. Landlord reserves the right to make
alterations or additions to or to change the location of elements of the Real
Property and the Common Areas thereof, subject to the condition that exercise of
any of such rights shall not unreasonably interfere with Tenant's use of the
Premises, or decrease the number of Tenant's parking spaces below the minimum
number set forth herein. Tenant hereby acknowledges and agrees that Landlord has
informed Tenant that, as of the date hereof, Landlord presently owns five (5) of
the eight (8) buildings situated within the Complex.

        1.2 CONDITION OF PREMISES. No representations or warranties of any kind,
express or implied, respecting the condition of the Premises, Building, Complex
or Real Property have been made by Landlord or any agent of Landlord to Tenant,
except as expressly set forth herein. Tenant acknowledges that it has had an
opportunity to thoroughly inspect the condition of the Premises, and Tenant
accepts the Premises in the existing "AS IS" condition on the date hereof.
Tenant acknowledges and agrees that neither Landlord nor any of Landlord's
agents, representatives or employees has made any representations as to the
suitability, fitness or condition of the Premises for the conduct of Tenant's
business or for any other purpose. Any exception to the foregoing provisions
must be made by express written agreement by both parties. Notwithstanding
anything to the contrary in this Lease, Landlord warrants that on the
commencement of the term hereof, the Premises shall be "broom-clean" and the
Building and the Systems and Equipment, shall be in good working order,
condition, and repair, and free from material defects.

ARTICLE 2 - LEASE TERM

        The terms and provisions of this Lease shall be effective as of the date
of this Lease except for the provisions of this Lease relating to the payment of
Rent or any obligations to maintain, repair or comply with laws. The term of
this Lease (the "Lease Term") shall be as specified in Section 7.1 of the
Summary and shall commence on the date (the "Lease Commencement Date") specified
in Section 7.2 of the Summary, and shall terminate on the date (the "Lease
Expiration Date") set forth in Section 7.3 of the Summary, unless this Lease is
sooner terminated as hereinafter provided. Notwithstanding the foregoing, Tenant
hereby acknowledges that as of the Lease Date, the Premises are presently being
occupied by RESOURCE/PHOENIX, INC., a California corporation (the "Existing
Tenant") under a sublease from PEOPLESOFT USA, INC., a Delaware corporation
("PeopleSoft"). Landlord's delivery to Tenant of possession of the Premises by
the Lease Commencement Date is contingent upon (i) Landlord entering into lease
termination agreements with the Existing Tenant and with PeopleSoft satisfactory
to Landlord, and (ii) the Existing Tenant vacating the Premises and surrendering
possession thereof to Landlord by the Lease Commencement Date; provided that
Landlord shall use commercially reasonable efforts to enter into such lease
termination agreements and cause Existing Tenant to vacate the Premises and
surrender possession thereof to Landlord by the Lease Commencement Date.
Landlord anticipates that Landlord will be able to deliver approximately 34,537
rentable square feet of the Premises on the ground floor of the Building (the
"Initial Premises") to Tenant on or about the Lease Commencement Date; the
balance of the Premises on the second floor of the Building comprising
approximately 32,945 rentable square feet (the "Remaining Premises") is
anticipated to be delivered to Tenant on or about October 1, 2001 (the "RP
Commencement Date"). If Landlord, for any reason whatsoever, cannot deliver
possession of the Initial Premises to Tenant on the Lease Commencement Date,
Landlord shall not be subject to any liability nor shall the validity of the
Lease be affected; provided, the Term of this Lease and the obligation to pay
Rent or any obligations to maintain, repair or comply with laws shall commence
on the date possession is actually tendered to Tenant and the Lease Expiration
Date shall be extended commensurately. If Landlord, for any reason, cannot
deliver possession of the Remaining Premises to Tenant on the RP Commencement
Date (in the condition that exists on the day after the Existing Tenant vacates
the Remaining Premises) without any improvements, alterations, repairs,
refurbishment or other modifications being made thereto (except as may be
necessary to satisfy the requirements of Section 1.2 above), Landlord shall not
be subject to any liability nor shall the validity of this Lease be affected;
provided the RP Commencement Date shall be extended commensurately by the period
of time Landlord is delayed in so delivering possession of the Remaining
Premises to Tenant without any improvements,

                                       1
<PAGE>   6

alterations, repairs, refurbishment or other modifications being made thereto.
For purposes of this Lease, the term "Lease Year" shall mean each consecutive
twelve (12) month period during the Lease Term, provided that the last Lease
Year shall end on the Lease Expiration Date. If the Lease Commencement Date, the
RP Commencement Date and/or the Lease Expiration Date of this Lease is other
than the Lease Commencement Date, the RP Commencement Date and/or Lease
Expiration Date specified in Section 7 of the Summary, then at any time during
the Lease Term, Landlord may deliver to Tenant an Amendment to Lease in
substantially the form as set forth in Exhibit C, attached hereto, wherein the
parties shall specify the actual Lease Commencement Date, RP Commencement Date,
Lease Expiration Date and the dates on which Tenant is to commence paying Rent
for the Initial Premises and the Remaining Premises, respectively, and which
document Tenant shall execute and return to Landlord within five (5) days of
receipt thereof. The word "Lease Term" whenever used herein refers to the
initial term of this Lease and any valid extension(s) thereof. Notwithstanding
the definition of Premises set forth in Section 6.1 of the Summary, the Premises
as used herein shall only refer to that portion of the Building which has been
delivered to Tenant.

ARTICLE 3 - BASE RENT

        3.1 INITIAL PREMISES RENT COMMENCEMENT DATE. Tenant shall pay, without
notice or demand, to Landlord or Landlord's agent at the management office of
the Complex, or at such other place as Landlord may from time to time designate
in writing, in currency or a check for currency which, at the time of payment,
is legal tender for private or public debts in the United States of America,
base rent ("Base Rent") as set forth in Section 8 of the Summary, payable in
equal monthly installments as specified in Section 8 of the Summary as and when
required pursuant to the terms of this Article 3 and thereafter in advance on or
before the first day of each and every month during the Lease Term, without any
abatement, setoff or deduction whatsoever, except as expressly set forth herein.
Tenant's obligation to commence payment of Base Rent for the Initial Premises
shall commence on the Lease Commencement Date. The Base Rent for the first full
month of the Lease Term (the "Advance Rent"), as set forth in Section 8 of the
Summary, shall be paid at the time of Tenant's execution of this Lease. The Base
Rent for any fractional part of a calendar month at the commencement or
termination of the Lease Term shall be a prorated amount of the Base Rent for a
full calendar month based upon the number of days of such month. All other
payments or adjustments required to be made under the terms of this Lease that
require proration on a time basis shall be prorated on the same basis.

ARTICLE 4 - ADDITIONAL RENT

        4.1 ADDITIONAL RENT. For the period commencing on the Lease Commencement
Date and continuing through December 31, 2001 Tenant shall not be required to
pay "Direct Expenses", as defined in Section 4.3.3 of this Lease. Commencing
January 1, 2002, and continuing throughout the balance of the Lease Term, Tenant
shall pay as additional rent the "Tenant's Share", as defined in Section 4.3.8,
of Direct Expenses, which are in excess of the amount of Direct Expenses
incurred during the "Base Year," as that term is defined in Section 4.3.1 of
this Lease. Such additional rent, together with any and all other amounts
payable by Tenant to Landlord pursuant to the terms of this Lease (including,
without limitation, pursuant to Article 6), shall be hereinafter collectively
referred to as the "Additional Rent." The Base Rent and Additional Rent are
herein collectively referred to as the "Rent." All amounts due under this
Article 4 as Additional Rent shall be payable for the same periods and in the
same manner, time and place as the Base Rent. Without limitation on other
obligations of Tenant which shall survive the expiration of the Lease Term, the
obligations of Tenant to pay the Additional Rent provided for in this Article 4
which is properly attributable to the Lease Term shall survive the expiration or
earlier termination of the Lease Term.

        4.2 [INTENTIONALLY DELETED.]

        4.3 DEFINITIONS. As used in this Article 4, the following terms shall
have the meanings hereinafter set forth:

                4.3.1 "Base Year" shall mean the calendar year set forth in
Section 9.1 of the Summary.

                4.3.2 "Calendar Year" shall mean each calendar year in which any
portion of the Lease Term falls, through and including the calendar year in
which the Lease Term expires.

                4.3.3 "Direct Expenses" shall mean "Operating Expenses" and "Tax
Expenses."

                4.3.4 "Expense Year" shall mean each Calendar Year, provided
that Landlord, upon notice to Tenant, may change the Expense Year from time to
time to any other twelve (12) consecutive-month period, and, in the event of any
such change, Tenant's Share of Direct Expenses shall be equitably adjusted by
Landlord for any Expense Year involved in any such change; provided further that
any such change shall not increase in the aggregate the amount of Direct
Expenses payable by Tenant throughout the Lease Term.

                4.3.5 "Operating Expenses" shall mean all expenses, costs and
amounts of every kind and nature which Landlord shall pay during any Expense
Year in excess of the amount of said expenses for the Base Year because of or in
connection with the ownership, management, maintenance, repair, replacement,
restoration or operation of the Building, Complex and Real Property, including,
without limitation, any amounts paid for: (i) the cost of supplying all
utilities (subject to the provisions of Section 6.7), the cost of operating,
maintaining, repairing, renovating and managing the utility systems, mechanical
systems, sanitary and storm drainage systems, any elevator systems and all other
"Systems and Equipment" (as defined in Section 4.3.6 of this Lease), and the
cost of supplies and equipment and maintenance and service contracts in
connection therewith; (ii) the cost of licenses, certificates, permits and
inspections, and the cost of contesting the validity or applicability of any
governmental enactments which may affect Operating Expenses, and the costs
incurred in connection with implementation and operation of any transportation
system management program or similar program required by any governmental
authority; (iii) the cost of insurance carried by Landlord, in such amounts as
Landlord may reasonably determine or as may be required by any mortgagees or the
lessor of any underlying or ground lease affecting the Real Property, the
Complex and/or the Building, including any

                                       2
<PAGE>   7

commercially reasonable deductibles; (iv) the cost of landscaping, relamping,
supplies, tools, equipment and materials, and all fees, charges and other costs
(including consulting fees, legal fees and accounting fees) incurred in
connection with the management, operation, repair and maintenance of the
Building, the Complex and Real Property; (v) the cost of parking area repair,
restoration, and maintenance; (vi) any equipment rental agreements or management
agreements (including the cost of any management fee and the fair rental value
of any office space provided thereunder); (vii) wages, salaries and other
compensation and benefits of all persons directly engaged (whether or not 100%
of such person's efforts are devoted to this Building, Complex and Real
Property, provided that only the portion attributable to this Building, Complex
and Real Property shall be included in Operating Expenses) in the operation,
management, maintenance or security of the Building, the Complex and the Real
Property, and employer's Social Security taxes, unemployment taxes or insurance,
and any other taxes which may be levied on such wages, salaries, compensation
and benefits; (viii) payments under any easement, license, operating agreement,
declaration, restrictive covenant, underlying or ground lease (excluding rent),
or instrument pertaining to the sharing of costs by the Building, Complex or
Real Property; (ix) the cost of janitorial service, alarm and security service
(if any security service is provided by Landlord), window cleaning, trash
removal, replacement of wall and floor coverings, ceiling tiles and fixtures in
lobbies, corridors, restrooms and other common or public areas or facilities,
maintenance and replacement of curbs and walkways, repair to roofs and
re-roofing; (x) any and all levies, charges, fees and/or assessments payable to
any applicable owner's association and/or condominium association with respect
to the Complex; (xi) amortization (including interest on the unamortized cost)
of the cost of acquiring or the rental expense of personal property used in the
maintenance, operation and repair of the Building, Complex and Real Property;
and (xii) the cost of any capital improvements or other costs (I) which are
intended as a labor-saving device or to effect other economies in the operation
or maintenance of the Building, Complex and Real Property, to the extent that
the same result in savings, and (II) made to the Building, Complex or Real
Property after the Lease Commencement Date that are required under any
governmental law or regulation adopted subsequent to the Commencement Date, or
(III) which are reasonably determined by Landlord to be in the best interests of
the Building, the Complex and/or the Real Property; provided, however, that if
any such cost described in (I), (II) or (III) above, is a capital expenditure,
such cost shall be amortized (including interest on the unamortized cost) over
its estimated useful life as Landlord shall reasonably determine, which
estimated useful life shall be comparable to that used by landlords of
comparable buildings in the vicinity of the Complex. If Landlord is not
furnishing any particular work or service (the cost of which, if performed by
Landlord, would be included in Operating Expenses) to a tenant who has
undertaken to perform such work or service in lieu of the performance thereof by
Landlord, Operating Expenses shall be deemed to be increased by an amount equal
to the additional Operating Expenses which would reasonably have been incurred
during such period by Landlord if it had at its own expense furnished such work
or service to such tenant. If the Building or the Complex is not fully occupied
during all or a portion of any Expense Year (including the Base Year), Landlord
shall make an appropriate adjustment to the variable components of Operating
Expenses for such year or applicable portion thereof, employing sound accounting
and management principles, to determine the amount of Operating Expenses that
would have been paid had the Building and/or the Complex been fully occupied;
and the amount so determined shall be deemed to have been the amount of
Operating Expenses for such year, or applicable portion thereof. Landlord shall
have the right, from time to time, to equitably allocate some or all of the
Operating Expenses among different tenants of the Building and/or the Complex
(the "Cost Pools"). Such Cost Pools may include, without limitation, the office
space tenants and retail space tenants of the Building and/or the Complex.
Notwithstanding anything to the contrary set forth in this Lease, solely for the
purpose of calculating the amount of the Operating Expenses attributable to the
Base Year, the term Operating Expenses shall exclude any costs of any capital
improvements or expenditures (including all costs of a capital nature in any
manner arising from the deregulation of utilities)and any market-wide labor-rate
increases due to extraordinary circumstances, including, but not limited to,
boycotts and strikes, and utility rate increases due to extraordinary
circumstances including, but not limited to, conservation surcharges, boycotts,
embargoes or other shortages.

                Notwithstanding the foregoing, Operating Expenses shall not,
however, include: (A) costs of leasing commissions, attorneys' fees and other
costs and expenses incurred in connection with negotiations or disputes with
present or prospective tenants or other occupants of the Building or the
Complex; (B) costs (including permit, license and inspection costs) incurred in
renovating or otherwise improving, decorating or redecorating rentable space for
other tenants or vacant rentable space; (C) costs incurred due to the actual
violation by Landlord of the terms and conditions of any lease of space in the
Building or the Complex; (D) costs of overhead or profit increment paid to
Landlord or to subsidiaries or affiliates of Landlord for services in or in
connection with the Building or the Complex to the extent the same exceeds the
costs of overhead and profit increment included in the costs of such services
which could be obtained from third parties on a competitive basis; (E) except as
otherwise specifically provided in this Section 4.3.5, costs of interest on debt
or amortization on any mortgages, and rent payable under any ground lease of the
Complex and/or Real Property; (F) The cost of any service sold to any tenant
(including Tenant) or other occupant for which Landlord is entitled to be
reimbursed as an additional charge or rental over and above the basic rent and
escalations payable under the lease with that tenant; (G) Costs of a capital
nature, except as expressly provided in subsection (xii) above; (H) unless due
to any fault or breach by Tenant, any costs, fines, or penalties incurred due to
violations by Landlord of any governmental rule or authority, this Lease or any
other lease in the Property, or due to Landlord's gross negligence or willful
misconduct; (I) Management costs to the extent they exceed 5% of Rent; (J) The
cost of correcting any building code or other violations which were violations
prior to the Commencement Date; and (K) Costs associated with the investigation
and/or remediation of Hazardous Materials (hereafter defined) present in, on or
about any portion of the Project, unless such costs and expenses are the
responsibility of Tenant as provided in Section 27 hereof, in which event such
costs and expenses shall be paid solely by Tenant in accordance with the
provisions of Section 27 hereof. Additionally, in no event shall Operating
Expenses for any calendar year (or portion thereof) be less than the component
of Operating Expenses comprising a portion of the Base Year.

                4.3.6 "Systems and Equipment" shall mean any plant, machinery,
transformers, duct work, cable, wires, and other equipment, facilities, and
systems designed to supply heat, ventilation, air conditioning and humidity or
any other services or utilities, or comprising or serving as any component or
portion of the electrical, gas, steam, plumbing, sprinkler, communications,
alarm, security, or fire/life safety systems or equipment, or any other
mechanical, electrical, electronic, computer or other systems or equipment which
serve the Building in whole or in part.

                                       3
<PAGE>   8

                4.3.7 "Tax Expenses" shall mean all federal, state, county, or
local governmental or municipal taxes, fees, assessments, charges or other
impositions of every kind and nature, whether general, supplemental, special,
ordinary or extraordinary, (including, without limitation, real estate taxes,
general and special assessments, transit assessments, fees and taxes, child care
subsidies, fees and/or assessments, job training subsidies, fees and/or
assessments, open space fees and/or assessments, housing subsidies and/or
housing fund fees or assessments, public art fees and/or assessments, leasehold
taxes or taxes based upon the receipt of rent, including gross receipts or sales
taxes applicable to the receipt of rent, personal property taxes imposed upon
the fixtures, machinery, equipment, apparatus, systems and equipment,
appurtenances, furniture and other personal property used in connection with the
Real Property), which Landlord shall pay during any Expense Year because of or
in connection with the ownership, leasing and operation of the Complex and Real
Property or Landlord's interest therein.

                        4.3.7.1 Tax Expenses shall include, without limitation:

                                (i) Any tax on Landlord's rent, right to rent or
other income from the Complex and/or the Real Property or as against Landlord's
business of leasing any of the Complex or the Real Property;

                                (ii) Any assessment, tax, fee, levy or charge in
addition to, or in substitution, partially or totally, of any assessment, tax,
fee, levy or charge previously included within the definition of real property
tax, it being acknowledged by Tenant and Landlord that Proposition 13 was
adopted by the voters of the State of California in the June 1978 election
("Proposition 13") and that assessments, taxes, fees, levies and charges may be
imposed by governmental agencies for such services as fire protection, street,
sidewalk and road maintenance, refuse removal and for other governmental
services formerly provided without charge to property owners or occupants. It is
the intention of Tenant and Landlord that all such new and increased
assessments, taxes, fees, levies, and charges and all similar assessments,
taxes, fees, levies and charges be included within the definition of Tax
Expenses for purposes of this Lease;

                                (iii) Any assessment, tax, fee, levy, or charge
allocable to or measured by the area of the Premises or the rent payable
hereunder, including, without limitation, any gross income tax upon or with
respect to the possession, leasing, operating, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises, or any portion
thereof;

                                (iv) Any assessment, tax, fee, levy or charge,
upon this transaction or any document to which Tenant is a party, creating or
transferring an interest or an estate in the Premises; and

                                (v) Any reasonable expenses incurred by Landlord
in attempting to protest, reduce or minimize Tax Expenses.

                        4.3.7.2 In no event shall the Tax Expenses for any
Expense Year be less than the amount of Tax Expenses for the Base Year.

                        4.3.7.3 Notwithstanding anything to the contrary
contained in this Section 4.3.7, there shall be excluded from Tax Expenses (i)
all excess profits taxes, franchise taxes, gift taxes, capital stock taxes,
inheritance and succession taxes, estate taxes, federal and state net income
taxes, and other taxes to the extent applicable to Landlord's net income (as
opposed to rents, receipts or income attributable to operations at the Building,
Complex or Real Property), (ii) any items included as Operating Expenses, (iii)
any costs, fines or penalties payable by Landlord as a result of any delinquent
payment of a Tex Expense, unless due to a fault or breach by Tenant, and (iv)
any items paid by Tenant under Section 4.5 of this Lease.

                4.3.8 "Tenant's Share" shall mean the percentage(s) set forth in
Section 9.3 of the Summary. The Tenant's Share for the Building was calculated
by multiplying the number of rentable square feet of the Premises by 100 and
dividing the product by the total rentable square feet in the Building. In the
event either the rentable square feet of the Premises and/or the total rentable
square feet of the Building is changed, the Tenant's Share for the Building
shall be appropriately adjusted, and, as to the Expense Year in which such
change occurs, the Tenant's Share for the Building for such year shall be
determined on the basis of the number of days during such Expense Year that each
such Tenant's Share for the Building was in effect. The Tenant's Share for the
Complex was calculated by multiplying the number of rentable square feet of the
Premises by 100 and dividing the product by the total rentable square feet in
the Complex. In the event either the rentable square feet of the Building and/or
the total rentable square feet of the Complex is changed, the Tenant's Share for
the Complex shall be appropriately adjusted, and, as to the Expense Year in
which such change occurs, the Tenant's Share for the Complex for such year shall
be determined on the basis of the number of days during such Expense Year that
each such Tenant's Share for the Complex was in effect. Landlord represents that
the rentable square footage of the Premises, Building and Complex were all
measured by the same methodology.

        4.4 CALCULATION AND PAYMENT OF ADDITIONAL RENT.

                4.4.1 CALCULATION OF EXCESS. If for any Expense Year ending or
commencing within the Lease Term, Tenant's Share of Direct Expenses for such
Expense Year exceeds Tenant's Share of Direct Expenses for the Base Year, then
Tenant shall pay to Landlord, in the manner set forth in Section 4.4.2, below,
and as Additional Rent, an amount equal to the excess (the "Excess").

                4.4.2 STATEMENT OF ACTUAL DIRECT EXPENSES AND PAYMENT BY TENANT.

                        4.4.2.1 Landlord shall endeavor to give to Tenant on or
before the first day of the sixth month following the end of each Calendar Year,
a statement (the "Statement") which shall state the Direct Expenses incurred or
accrued for such preceding Expense Year, and which shall indicate the amount, if
any, of any Excess. Upon receipt of

                                       4
<PAGE>   9

the Statement for each Expense Year ending during the Lease Term, if an Excess
is present, Tenant shall pay, with its next installment of Base Rent due, the
full amount of the Excess for such Expense Year, less the amounts, if any, paid
during such Expense Year as "Estimated Excess," as that term is defined in
Section 4.4.3 of this Lease. In the event that the amount paid by Tenant during
such Expense Year as an Estimated Excess exceeds the actual Direct Expenses,
Landlord shall remit such difference to Tenant within thirty (30) days. The
failure of Landlord to timely furnish the Statement for any Expense Year shall
not prejudice or prevent Landlord from enforcing its rights under this Article
4. Even though the Lease Term has expired and Tenant has vacated the Premises,
when the final determination is made of Tenant's Share of the Direct Expenses
for the Expense Year in which this Lease terminates, if an Excess is present,
Tenant shall immediately pay to Landlord an amount as calculated pursuant to the
provisions of Section 4.4.1 of this Lease, and any overpayment by Tenant shall
be returned to Tenant within thirty (30) days.

                        4.4.2.2 After delivery to Landlord of at least thirty
(30) days' prior written notice, Tenant, at its sole cost and expense through
any accountant designated by it, shall have the right to examine and/or audit
the books and records evidencing such costs and expenses for the previous one
(1) calendar year, during Landlord's reasonable business hours but not more
frequently than once during any calendar year. Any such accounting firm
designated by Tenant may not be compensated on a contingency fee basis. The
results of any such audit (and any negotiations between the parties related
thereto) shall be maintained strictly confidential by Tenant and its accounting
firm and shall not be disclosed, published or otherwise disseminated to any
other party other than to Landlord and its authorized agents. Landlord and
Tenant each shall use its best efforts to cooperate in such negotiations and to
promptly resolve any discrepancies between Landlord and Tenant in the accounting
of such costs and expenses. If through such audit it is conclusively determined
that there is a discrepancy of more than seven percent (7%) of the total
expenses, then Landlord shall reimburse Tenant for Tenant's reasonable
out-of-pocket accounting costs and expenses incurred by Tenant in performing
such audit. However, if through such audit it is conclusively determined that
there is a discrepancy of seven percent (7%) or less, then Tenant shall
reimburse Landlord for the reasonable out-of-pocket costs and expenses incurred
by Landlord in connection with such audit.

                        4.4.2.3 The provisions of this Section 4.4.2 shall
survive the expiration or earlier termination of the Lease Term.

                4.4.3 STATEMENT OF ESTIMATED DIRECT EXPENSES. In addition,
Landlord shall endeavor to give Tenant a yearly expense estimate statement (the
"Estimate Statement") which shall set forth Landlord's reasonable estimate (the
"Estimate") of what the total amount of Direct Expenses for the then-current
Expense Year, beginning with calendar year 2002, shall be and the estimated
Excess (the "Estimated Excess") as calculated by comparing Tenant's Share of
Direct Expenses, which shall be based upon the Estimate, to Tenant's Share of
Direct Expenses for the Base Year. The failure of Landlord to timely furnish the
Estimate Statement for any Expense Year shall not preclude Landlord from
enforcing its rights to collect any Estimated Excess under this Article 4.
Commencing January 1, 2002, if pursuant to the Estimate Statement an Estimated
Excess is calculated for the then-current Expense Year, Tenant shall pay, with
its next installment of Base Rent due, a fraction of the Estimated Excess for
the then-current Expense Year (reduced by any amounts paid pursuant to the last
sentence of this Section 4.4.3). Such fraction shall have as its numerator the
number of months which have elapsed in such current Expense Year to the month of
such payment, both months inclusive, and shall have twelve (12) as its
denominator. Until a new Estimate Statement is furnished, Tenant shall pay
monthly, with the monthly Base Rent installments, an amount equal to one-twelfth
(1/12) of the total Estimated Excess set forth in the previous Estimate
Statement delivered by Landlord to Tenant.

        4.5 TAXES AND OTHER CHARGES FOR WHICH TENANT IS DIRECTLY RESPONSIBLE.
Tenant shall reimburse Landlord upon demand for any and all taxes or assessments
required to be paid by Landlord (except to the extent included in Tax Expenses
by Landlord), excluding state, local and federal personal or corporate income
taxes measured by the net income of Landlord from all sources, and estate and
inheritance taxes, whether or not now customary or within the contemplation of
the parties hereto, when:

                4.5.1 Said taxes are measured by or reasonably attributable to
the cost or value of Tenant's equipment, furniture, fixtures and other personal
property located in the Premises, or by the cost or value of any leasehold
improvements made in or to the Premises by or for Tenant, to the extent the cost
or value of such leasehold improvements exceeds the cost or value of a building
standard build-out as determined by Landlord regardless of whether title to such
improvements shall be vested in Tenant or Landlord;

                4.5.2 Said taxes are assessed upon or with respect to the
possession, leasing, operation, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises or any portion of the Complex and Real
Property (including the Building Parking Facility); or

                4.5.3 Said taxes are assessed upon this transaction or any
document to which Tenant is a party creating or transferring an interest or an
estate in the Premises.

        4.6 LATE CHARGES. If any installment of Rent or any other sum due from
Tenant shall not be received by Landlord or Landlord's designee by the due date
therefor, then Tenant shall pay to Landlord a late charge equal to five percent
(5%) of the amount due plus any attorneys' fees incurred by Landlord by reason
of Tenant's failure to pay Rent and/or other charges when due hereunder. The
late charge shall be deemed Additional Rent and the right to require it shall be
in addition to all of Landlord's other rights and remedies hereunder, at law
and/or in equity and shall not be construed as liquidated damages or as limiting
Landlord's remedies in any manner. In addition to the late charge described
above, any Rent or other amounts owing hereunder which are not paid by the date
that they are due shall thereafter bear interest until paid at a rate (the
"Interest Rate") equal to the lesser of (i) the "Prime Rate" or "Reference Rate"
announced from time to time by the Bank of America (or such reasonable
comparable national banking institution as selected by Landlord in the event
Bank of America ceases to exist or publish a Prime Rate or Reference Rate), plus
four percent (4%), or (ii) the highest rate permitted by applicable law. If a
late charge or other charge becomes payable for any three (3) installments of
Rent within any twelve (12) month period, then Landlord, at Landlord's sole
option, can either require the Rent be paid quarterly in advance, or be paid
monthly in advance by cashier's check or by electronic funds transfer.

                                       5
<PAGE>   10

ARTICLE 5 - USE OF PREMISES

        Tenant shall use the Premises solely for general office purposes
consistent with the character of the Building of a high quality nature and
approved biotechnology laboratory use, to the extent permitted by the City of
Alameda and all governmental authorities having jurisdiction thereof, and Tenant
shall not use or permit the Premises to be used for any other purpose or
purposes whatsoever. Tenant further covenants and agrees that it shall not use,
or suffer or permit any person or persons to use, the Premises or any part
thereof for any use or purpose contrary to the provisions of Exhibit D, attached
hereto, or in violation of the laws of the United States of America, the state
in which the Building is located, or the ordinances, regulations or requirements
of the local municipal or county governing body or other lawful authorities
having jurisdiction over the Building. Tenant shall not violate any provisions
of any ground or underlying leases, now or hereafter affecting the Building,
Complex and/or Real Property. Tenant shall also not violate any documents,
matters or instruments, including without limitation, any declarations of
covenants, conditions and restrictions, and any supplements thereto, each of
which has been or hereafter is recorded in any official or public records with
respect to the Premises, Building, Complex and/or Real Property, or any portion
thereof. Tenant agrees to, and does hereby, assume full and complete
responsibility to ensure that the Premises are adequate to fully meet the needs
and requirements of Tenant's intended operations of its business within the
Premises, and Tenant's use of the Premises and that same are in compliance with
all applicable Laws throughout the Lease Term. Additionally, Tenant shall be
solely responsible for the payment of all costs, fees and expenses associated
with any modifications, improvements or Alterations to the Premises, the
Building, the Common Areas, the Complex and/or the Real Property occasioned by
the enactment of, or changes to, any Laws arising from Tenant's particular use
of the Premises or Alterations, improvements or additions made to the Premises
regardless of when such Laws became effective. Tenant shall not do or permit
anything to be done in or about the Premises which will in any way obstruct or
interfere with the rights of Landlord, other tenants or occupants of the
Building, other buildings in the Complex, or other persons or businesses in the
area, or injure or annoy other tenants or use or allow the Premises to be used
for any unlawful or objectionable purpose, as determined by Landlord, in its
reasonable discretion. Tenant shall not cause, maintain or permit any private or
public nuisance in, on or about the Premises, Building, Common Areas, Complex
and/or Real Property, including, but not limited to, any offensive odors,
noises, fumes or vibrations. Tenant shall not damage or deface or otherwise
commit or suffer to be committed any waste in, upon or about the Premises.
Tenant shall not place or store, nor permit any other person or entity to place
or store, any property, equipment, materials, supplies, personal property or any
other items or goods outside of the Premises for any period of time. Tenant
shall not install any radio or television antenna, loudspeaker or other device
on the roof or exterior walls of the Building, without the prior written consent
of the Landlord, which consent shall not be unreasonably withheld, conditioned
or delayed. In all circumstances Tenant shall not interfere with radio or
television broadcasting or reception or other telecommunications broadcasting or
reception from or in the Building or elsewhere. Tenant shall place no loads upon
the floors, walls, or ceilings of the Premises in excess of the average pounds
of live load per square foot floor area specified for the Building by the
applicable Uniform Building Code or which may damage the Building or outside
areas, with the partitions to be considered a part of the live load. Landlord
reserves the right to prescribe the weight and position of all safes, files and
heavy equipment which Tenant desires to place in the Premises so as to
distribute properly the weight thereof. Tenant's business machines and
mechanical equipment which cause vibration or noise that may be transmitted to
the Building structure or to any other space in the Building shall be so
installed, maintained and used by Tenant as to eliminate such vibration or
noise. Tenant shall be responsible for all structural engineering required to
determine structural load. Landlord shall not be responsible for any damage or
liability for any of such events. Tenant hereby acknowledges and agrees that
Landlord has informed Tenant that noise produced by aircraft used at the
Metropolitan Oakland International Airport (the "Airport") which adjoins the
Complex may be heard at the Premises. Tenant further acknowledges and agrees
that Landlord has informed Tenant that the Premises are subject to a recorded
noise easement and release pursuant to which the owners of the Airport are
released from any claims or lawsuits for damages by any persons or entities
using the Complex (including without limitation, Tenant) with respect to airport
operations, including without limitation, aircraft related noise. Tenant shall,
and hereby agrees to, indemnify, defend, protect, and hold harmless the Landlord
Parties (hereafter defined in Article 10) from and against all liabilities,
damages, claims, losses, judgments, charges and expenses (including reasonable
attorneys' fees, costs of court and expenses necessary in the prosecution or
defense of any litigation including the enforcement of this provision) arising
from or in any way related to, directly or indirectly, any claims made by
Tenant, any employee, agent or invitee of Tenant, or any person claiming by or
through Tenant with respect to such airport operations, including without
limitation, aircraft related noise.

ARTICLE 6 - SERVICES AND UTILITIES

        6.1 STANDARD TENANT SERVICES. Landlord shall provide the following
services on all days during the Lease Term, unless otherwise stated below.

                6.1.1 Subject to reasonable changes implemented by Landlord and
to all governmental rules, regulations and guidelines applicable thereto,
Landlord shall provide heating and air conditioning when necessary for normal
comfort for normal office use in the Premises, from Monday through Friday,
during the period from 8:00 a.m. to 6:00 p.m., except for the date of
observation of New Year's Day, Presidents' Day, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, Christmas Day and other locally or nationally
recognized holidays (collectively, the "Holidays").

                6.1.2 Landlord shall provide adequate electrical wiring and
facilities and power for normal general office use as reasonably determined by
Landlord. Tenant shall bear the cost of replacement of lamps, starters and
ballasts for lighting fixtures within the Premises.

                6.1.3 Landlord shall provide city water from the regular
Building outlets for drinking, lavatory and toilet purposes, and for laboratory
use to the extent that such does not exceed the quantity that would be used for
normal office use.

                6.1.4 Landlord shall provide janitorial services five (5) days
per week, except the date of observation of the Holidays, in and about the
Premises and window washing services in a manner consistent with other
comparable buildings in the vicinity of the Building.

                                       6
<PAGE>   11

                6.1.5 Landlord shall provide non-exclusive automatic passenger
elevator service at all times.

                6.1.6 Landlord shall provide non-exclusive freight elevator
service subject to scheduling by Landlord.

        6.2 OVERSTANDARD TENANT USE. Tenant shall not, without Landlord's prior
written consent, use heat-generating machines, machines other than normal
fractional horsepower office machines, or equipment or lighting other than
building standard lights in the Premises, which may affect the temperature
otherwise maintained by the air conditioning system or increase the water
normally furnished for the Premises by Landlord pursuant to the terms of Section
6.1 of this Lease. If Tenant uses water or heat or air conditioning in excess of
that supplied by Landlord pursuant to Section 6.1 of this Lease, or if Tenant's
consumption of electricity shall exceed six (6) watts per usable square foot of
the Premises, calculated on an annualized basis for the hours described in
Section 6.1.1 above, Tenant shall pay to Landlord, within ten (10) days after
billing, the cost of such excess consumption, the cost of the installation,
operation, and maintenance of equipment which is installed in order to supply
such excess consumption, and the cost of the increased wear and tear on existing
equipment caused by such excess consumption; and Landlord may install devices to
separately meter any increased use and in such event Tenant shall pay the
increased cost directly to Landlord, within ten (10) days after demand,
including the cost of such additional metering devices. If Tenant desires to use
heat, ventilation or air conditioning during hours other than those for which
Landlord is obligated to supply such utilities pursuant to the terms of Section
6.1 of this Lease, (i) Tenant shall give Landlord such prior notice, as Landlord
shall from time to time establish as appropriate, of Tenant's desired use, (ii)
Landlord shall supply such utilities to Tenant at such hourly cost to Tenant as
Landlord shall from time to time reasonably establish, based on Landlord's
actual costs therefor, and (iii) Tenant shall pay such cost within ten (10) days
after billing.

        6.3 INTERRUPTION OF USE. Tenant agrees that Landlord shall not be liable
for damages, by abatement of Rent or otherwise, for failure to furnish or delay
in furnishing any service (including telephone and telecommunication services),
or for any diminution in the quality or quantity thereof, when such failure or
delay or diminution is occasioned, in whole or in part, by repairs,
replacements, or improvements, by any strike, lockout or other labor trouble, by
inability to secure electricity, gas, water, or other fuel at the Building after
reasonable effort to do so, by any accident or casualty whatsoever, by act or
default of Tenant or other parties, or by any other cause beyond Landlord's
reasonable control; and such failures or delays or diminution shall never be
deemed to constitute an eviction or disturbance of Tenant's use and possession
of the Premises or relieve Tenant from paying Rent or performing any of its
obligations under this Lease. Furthermore, Landlord shall not be liable under
any circumstances for a loss of, or injury to, property or for injury to, or
interference with, Tenant's business, including, without limitation, loss of
profits, however occurring, through or in connection with or incidental to a
failure to furnish any of the services or utilities as set forth in this Article
6. Notwithstanding the foregoing, if an interruption or cessation of utilities
results from the gross negligence or willful misconduct of Landlord, or its
employees, agents and contractors, and not due to any fault or breach by Tenant,
and the Premises are not usable by Tenant for the conduct of Tenant's business
as a result thereof, Base Rent and applicable Direct Expenses not actually
incurred up to that point by Tenant shall be abated for the period which
commences five (5) business days after the date Tenant gives to Landlord notice
of such interruption until such utilities are restored.

        6.4 ADDITIONAL SERVICES. Tenant shall provide Landlord the right of
first offer with respect to any additional services which may be required by
Tenant, including, without limitation, locksmithing, lamp replacement,
additional janitorial service, and additional repairs and maintenance, provided
that Tenant shall pay to Landlord upon billing, the sum of all costs to Landlord
of such additional services plus an administration fee not to exceed five
percent (5%) of such costs. Charges for any utilities or service for which
Tenant is required to pay from time to time hereunder, shall be deemed
Additional Rent hereunder and shall be billed on a monthly basis.

        6.5 ALTERNATE ELECTRIC SERVICE PROVIDER. Notwithstanding anything to the
contrary contained herein, if permitted by applicable Laws, Landlord shall have
the right at any time and from time to time during the Term of this Lease to
either contract for service from a different company or companies (each such
company shall be referred to herein as an "Alternate Service Provider") other
than the company or companies presently providing electricity service for the
Building, the Complex or the Real Property (the "Electric Service Provider") or
continue to contract for service from the Electric Service Provider, at
Landlord's sole discretion. Tenant hereby agrees to cooperate with Landlord, the
Electric Service Provider, and any Alternate Service Provider at all times and,
as reasonably necessary, shall allow Landlord, the Electric Service Provider,
and any Alternate Service Provider reasonable access to the Building's electric
lines, feeders, risers, wiring, and any other machinery within the Premises.

        6.6 OFFICE AND COMMUNICATIONS SERVICES.

                6.6.1 Landlord has advised Tenant that certain office and
communications services may be offered to tenants of the Building by a
concessionaire under contract to Landlord ("Provider"). Tenant shall be
permitted to contract with Provider for the provision of any or all of such
services on such terms and conditions as Tenant and Provider may agree. Tenant
shall also be permitted to obtain office and communications services from any
other reputable person or entity in the business of providing the same (herein
called an "Alternate Provider"), provided that Landlord shall not be required
thereby to make any alterations in or to any part of the Building or the use of
any facilities or equipment of the Building, and provided further that no such
services provided by an Alternate Provider, or any equipment or facilities used
or to be used in connection therewith shall be incompatible in any respect with,
or shall interfere with or otherwise impair or adversely affect, the operation,
reliability or quality of the Building systems or any services, equipment or
facilities used or operated by Provider or any other tenant in the Building.

                6.6.2 Tenant acknowledges and agrees that: (i) Landlord has made
no warranty or representation to Tenant with respect to the availability of any
such services, whether provided by Provider or any Alternate Provider, or the
quality, reliability or suitability thereof; (ii) neither Provider nor any
Alternate Provider is acting as the agent or representative of Landlord in the
provision of such services, and Landlord shall have no liability or
responsibility for any failure or inadequacy of such services or any equipment
or facilities used in the furnishing thereof, or any act or omission of Provider
or any Alternate Provider or their agents, employees, representatives, officers
or contractors; (iii) Landlord

                                       7
<PAGE>   12

shall have no responsibility or liability for the installation, alteration,
repair, maintenance, furnishing, operation adjustment or removal of any such
services, equipment or facilities; and (iv) any contract or other agreement
between Tenant and Provider or any Alternate Provider shall be independent of
this Lease, the obligations of Tenant hereunder, and the rights of Landlord
hereunder. Without limiting the generality of the foregoing, no default or
failure of Provider or any Alternate Provider with respect to any such services,
equipment, facilities, or under any contract or agreement relating thereto,
shall have any effect on this Lease or give to Tenant any offset or defense to
the full and timely performance of its obligations hereunder, or entitle Tenant
to any abatement of Rent or Additional Rent or any other payment required to be
made by Tenant hereunder, or constitute any actual or constructive eviction of
Tenant, or otherwise give rise to any other claim of any nature against
Landlord.

        6.7 UTILITIES FOR LABORATORY SPACE. In the event Tenant constructs a
laboratory within the Premises, Tenant shall cause such laboratory to be
separately metered and shall pay the utility companies directly for the cost of
any utilities. In the event Tenant pays the utility companies directly for the
cost of any utilities, costs for such utilities shall not be included in Direct
Expenses.

ARTICLE 7 - REPAIRS

        7.1 TENANT'S REPAIRS. Subject to Landlord's repair obligations set forth
in Sections 7.2, 11.1, and 12 below, Tenant shall, at Tenant's own expense, keep
and maintain the Premises, including all improvements, fixtures and furnishings
therein, in good and safe order, repair and condition at all times during the
Lease Term, which repair obligations shall include, without limitation, the
obligation to promptly and adequately repair all damage to the Premises and
replace or repair all damaged or broken fixtures and appurtenances; provided,
however, that, at Landlord's option if Tenant fails to make such repairs,
Landlord may, but need not, make such repairs and replacements, and Tenant shall
pay Landlord the cost thereof, including a percentage of the cost thereof (to be
uniformly established for the Building) sufficient to reimburse Landlord for all
overhead, general conditions, fees and other costs or expenses arising from
Landlord's involvement with such repairs and replacements forthwith upon being
billed for same, not to exceed five percent (5%) of the cost thereof.

        7.2 LANDLORD'S REPAIRS. Anything contained in Section 7.1 above to the
contrary notwithstanding, and subject to the provisions of Articles 11 and 12 of
this Lease, Landlord shall repair and maintain the structural portions of the
Building, roof (structure and membrane), foundation, and Systems and Equipment
including without limitation the basic plumbing, heating, ventilating, air
conditioning and electrical systems installed or furnished by Landlord (but not
including any non-base building facilities installed by or on behalf of Tenant);
provided, however, if such maintenance and repairs are caused in part or in
whole by the act, neglect, fault of or omission of any duty by Tenant or its
agents, servants, contractors, assignees, subtenants, employees or invitees,
Tenant shall pay to Landlord as additional rent, the reasonable cost of such
maintenance and repairs. Landlord shall not be liable for any failure to make
any such repairs, or to perform any maintenance unless such failure shall
persist for an unreasonable time after written notice of the need of such
repairs or maintenance is given to Landlord by Tenant. There shall be no
abatement of rent and no liability of Landlord by reason of any injury to or
interference with Tenant's business arising from the making of any repairs,
alterations or improvements in or to any portion of the Complex, the Building or
the Premises or in or to fixtures, appurtenances and equipment therein. Tenant
hereby waives and releases its right to make repairs at Landlord's expense under
Sections 1941 and 1942 of the California Civil Code; or under any similar law,
statute, or ordinance now or hereafter in effect.

ARTICLE 8 - ADDITIONS AND ALTERATIONS

        8.1 LANDLORD'S CONSENT TO ALTERATIONS. Tenant may not make any
improvements, alterations, additions or changes to the Premises (collectively,
the "Alterations") without first procuring the prior written consent of Landlord
to such Alterations, which consent shall be requested by Tenant not less than
thirty (30) days prior to the commencement thereof, and which consent shall not
be unreasonably withheld, conditioned, or delayed by Landlord; provided,
however, Landlord may withhold its consent in its sole and absolute discretion
with respect to any Alterations which may affect the structural components of
the Building. Subject to section 8.2 below, Landlord hereby expressly grants to
Tenant the right to make roof penetrations in connection with Tenant's
alterations or improvements, subject to obtaining the prior written consent of
Landlord as to the location and manner of installation of any such roof
penetration, which consent shall not be unreasonably withheld, conditioned or
delayed. Tenant shall pay for all overhead, general conditions, fees and other
costs and expenses of the Alterations, and shall pay to Landlord a Landlord
supervision fee of five percent (5%) of the cost of the Alterations.

        8.2 MANNER OF CONSTRUCTION.

                8.2.1 Landlord may impose, as a condition of its consent to all
Alterations or repairs of the Premises or about the Premises, such requirements
as Landlord in its reasonable discretion may deem desirable, including, but not
limited to, the requirement that Tenant utilize for such purposes only
contractors, materials, suppliers, mechanics and materialmen approved by
Landlord (which shall not be unreasonably withheld, conditioned, or delayed);
provided, however, Landlord may impose such requirements as Landlord may
determine, in its sole and absolute discretion, with respect to any work
affecting the structural components of the Building, Systems, Roof and/or
Equipment (including designating specific contractors to perform such work).
Tenant shall construct such Alterations and perform such repairs in conformance
with any and all applicable rules and regulations of any federal, state, county
or municipal code or ordinance and pursuant to a valid building permit,
mechanical permit, electrical permit and all other permits (as applicable),
issued by the city in which the Building is located, and in conformance with
Landlord's reasonable construction rules and regulations. Landlord's approval of
the plans, specifications and working drawings for Tenant's Alterations shall
create no responsibility or liability on the part of Landlord for their
completeness, design sufficiency, or compliance with all laws, rules and
regulations of governmental or quasi-governmental agencies or authorities. All
work with respect to any Alterations must be done in a good and workmanlike
manner and diligently prosecuted to completion to the end that the Premises
shall at all times be a complete unit except during the period of work. In
performing the work of any such Alterations, Tenant shall have the work
performed in such manner as not to obstruct or materially impair access to the
Building or the Common Areas for any other tenant of the Building, and as not to
obstruct the business of Landlord or other tenants in the Building, or interfere
with the labor force working in the Building. If Tenant

                                       8
<PAGE>   13

makes any Alterations, Tenant agrees to carry "Builder's All Risk" insurance in
an amount reasonably approved by Landlord covering the construction and
completion of such Alterations, and such other insurance as Landlord may
require, it being understood and agreed that all of such Alterations shall be
insured by Tenant pursuant to Article 10 of this Lease immediately upon
completion thereof. In addition, Landlord may, in its discretion, require Tenant
to obtain a lien and completion bond or some alternate form of security
satisfactory to Landlord in an amount sufficient to ensure the lien-free
completion of such Alterations the cost of which exceed $100,000 and naming
Landlord as a co-obligee. Upon completion of any Alterations, Tenant shall (i)
cause a Notice of Completion to be recorded in the office of the Recorder of the
county in which the Building is located in accordance with Section 3093 of the
Civil Code of the State of California or any successor statute, (ii) deliver to
the Building management office a reproducible copy of the "as built" drawings of
the Alterations, (iii) deliver to Landlord a true and complete copy of the
recorded Notice of Completion, and (iv) deliver to Landlord evidence of payment,
contractors' affidavits and full and final waivers of all liens for labor,
services or materials.

                8.2.2 Any Alterations that require any penetration of the Roof
shall only be permitted to the extent permitted by the City of Alameda and all
agencies and governmental authorities having jurisdiction thereof. The location
and size of any roof-top equipment shall be subject to Landlord's approval, not
to unreasonably withheld, and which best promotes the safety, aesthetics and
efficiency of any roof-top equipment; provided, all of the roof-top equipment
and any modifications thereto or placement thereof shall be (i) at Tenant's sole
cost and expense, (ii) contained visually within the roof screen, (iii)
installed and operated to Landlord's reasonable specifications, and (iv)
installed, maintained, operated and removed in accordance with all Development
Documents, Recorded Matters, Rules and Regulations, applicable Laws, and the
provisions of Section 10 of this Lease. For purposes hereof, any such equipment
shall be construed as part of the Tenant's Property and shall be removed by
Tenant at the expiration or earlier termination of this Lease in accordance with
the provisions of this Lease. All modifications to the Building, including the
Roof, if any, shall be reasonably approved by Landlord prior to commencement of
any work with respect to the Equipment. Tenant shall restore the Roof and any
other portion of the Building affected by any roof-top equipment to its original
condition, excepting ordinary wear and tear and/or damage or destruction due to
fire or other casualty not caused directly or indirectly by Tenant, its agents,
employees, contractors or the Equipment or any part thereof. Notwithstanding
anything to the contrary contained herein, Tenant may not assign, lease, rent,
sublet or otherwise transfer any of its interest in the Roof or any roof-top
equipment except together with the remainder of all of the Premises as more
particularly set forth in Section 14. Each of the other provisions of this Lease
shall be applicable to any roof-top equipment and the use of the Roof by Tenant,
including without limitation, Sections 11 and 12 of this Lease. Any roof-top
equipment shall comply with all rules and regulations of any agencies having
jurisdiction thereof. In addition, Tenant shall be solely responsible for
insuring any roof-top equipment, and Landlord shall have no responsibility
therefor. Tenant shall indemnify, defend (by counsel reasonably acceptable to
Landlord) and hold harmless Landlord and the other Indemnitees from and against
any and all claims, demands, liabilities, damages, judgments, losses, penalties,
costs and expenses (including reasonable attorneys' fees) Landlord may suffer or
incur arising out of or related to the installation, use, operation,
maintenance, replacement and/or removal of any roof-top equipment or any portion
thereof, including without limitation, the cost of repairs and replacements to
the roof of the Building occasioned by the installation, maintenance, repairs
and removal of any roof-top equipment.

        8.3 LANDLORD'S PROPERTY. All Alterations, improvements, fixtures (other
than Tenant's trade fixtures) and/or equipment which may be installed or placed
in or about the Premises, and all signs installed in, on or about the Premises,
from time to time, shall be at the sole cost of Tenant and shall, upon
expiration or earlier termination of this Lease, become the property of
Landlord. Furthermore, Landlord may require that Tenant remove any sign,
equipment, trade fixture, improvement or Alteration upon the expiration or early
termination of the Lease Term, and repair any damage to the Premises and
Building caused by such removal. If Tenant fails to complete such removal and/or
to repair any damage caused by the removal of any sign, equipment, trade
fixture, improvement or Alteration, Landlord may do so and may charge the cost
thereof to Tenant.

ARTICLE 9 - COVENANT AGAINST LIENS

        Tenant has no authority or power to cause or permit any lien or
encumbrance of any kind whatsoever, whether created by act of Tenant, operation
of law or otherwise, to attach to or be placed upon the Real Property, Complex,
Building or Premises, and any and all liens and encumbrances created by Tenant
shall attach to Tenant's interest only. Landlord shall have the right at all
times to post and keep posted on the Premises any notice which it deems
necessary for protection from such liens. Tenant covenants and agrees not to
suffer or permit any lien of suppliers, mechanics or materialmen or others to be
placed against the Real Property, the Complex, the Building or the Premises with
respect to work or services claimed to have been performed for or materials
claimed to have been furnished to Tenant or the Premises, and, in case of any
such lien attaching or notice of any lien, Tenant covenants and agrees to cause
it to be immediately released and removed of record. Notwithstanding anything to
the contrary set forth in this Lease, if any such lien is not released and
removed on or before fifteen (15) days following the date notice of such lien is
delivered by Landlord to Tenant, Landlord, at its sole option, may immediately
take all action necessary to release and remove such lien, without any duty to
investigate the validity thereof, and all sums, costs and expenses, including
reasonable attorneys' fees and costs, incurred by Landlord in connection with
such lien shall be deemed Additional Rent under this Lease and shall immediately
be due and payable by Tenant.

ARTICLE 10 - INDEMNIFICATION AND INSURANCE

        10.1 INDEMNIFICATION AND WAIVER. Tenant's obligations pursuant to this
Article 10 shall apply, throughout the Lease Term, to both the Initial Premises
and the Remaining Premises. Unless due to Landlord's gross negligence, willful
misconduct or a breach by Landlord hereunder, Tenant hereby assumes all risk of
damage to property and injury to persons, in, on, or about the Premises from any
cause whatsoever and agrees that Landlord, and its members, submembers, partners
and subpartners, and their respective officers, agents, property managers,
employees, and independent contractors (collectively, "Landlord Parties") shall
not be liable for, and are hereby released from any responsibility for, any
damage to property or injury to persons or resulting from the loss of use
thereof, which damage or injury is sustained by Tenant or by other persons
claiming through Tenant. Tenant shall, and hereby agrees to, indemnify, defend,
protect, and hold harmless the Landlord Parties from and against all
liabilities, damages, claims, losses, judgments, charges and expenses (including
reasonable attorneys' fees, costs of court and expenses necessary in

                                       9
<PAGE>   14

the prosecution or defense of any litigation including the enforcement of this
provision) arising from or in any way related to, directly or indirectly, (i)
the use of the Premises, Building, Complex and/or Real Property by Tenant or by
the contractors, agents, employees, licensees, invitees, subtenants, and assigns
of Tenant or any such person (collectively, the "Tenant's Representatives"),
(ii) the conduct of Tenant's business, (iii) from any activity, work or thing
done, permitted or suffered by Tenant in or about the Premises, (iv) in any way
connected with the Premises or with the installation, placement and removal of
Alterations, improvements, fixtures, personal property and/or equipment in, on
or about the Premises, including, but not limited to, any liability for injury
to person or property of Tenant, Tenant's Representatives, or third party
persons, and/or (v) Tenant's failure to perform any covenant or obligation of
Tenant under this Lease; provided, however, the terms of the foregoing indemnity
shall not apply to the gross negligence, willful misconduct, or breach of this
Lease of Landlord. The provisions of this Section 10.1 shall survive the
expiration or sooner termination of this Lease.

        10.2 TENANT'S COMPLIANCE WITH LANDLORD'S FIRE AND CASUALTY INSURANCE.
Tenant shall, at Tenant's expense, comply as to the Premises with all insurance
company requirements pertaining to the use of the Premises. If Tenant's conduct
or use of the Premises causes any increase in the premium for such insurance
policies, then Tenant shall reimburse Landlord for any such increase. Tenant, at
Tenant's expense, shall comply with all rules, orders, regulations or
requirements of the American Insurance Association (formerly the National Board
of Fire Underwriters) and with any similar body relating specifically to
Tenant's use or occupancy.

        10.3 TENANT'S INSURANCE. Tenant shall maintain the following coverages
in the following amounts.

                10.3.1 Commercial General Liability Insurance covering the
insured against claims of bodily injury, personal injury and property damage
arising out of Tenant's operations, assumed liabilities or use of the Premises,
including a Broad Form Commercial General Liability endorsement covering the
insuring provisions of this Lease and the performance by Tenant of the indemnity
agreements set forth in Section 10.1 of this Lease, for limits of liability not
less than:

<TABLE>
<S>                                          <C>
             ------------------------------- ----------------------------
             Bodily Injury and Property      $3,000,000 each occurrence;
             Damage Liability                $3,000,000 annual aggregate
             ------------------------------- ----------------------------
             Personal Injury Liability       $3,000,000 each occurrence;
                                             $3,000,000 annual aggregate
             ------------------------------- ----------------------------
</TABLE>

                10.3.2 Physical Damage Insurance covering (i) all office
furniture, trade fixtures, office equipment, merchandise and all other items of
Tenant's property on the Premises installed by, for, or at the expense of
Tenant, (ii) Tenant's Alterations, including any Alterations which Landlord
permits to be installed above the ceiling of the Premises or below the floor of
the Premises, and (iii) all other improvements, alterations and additions to the
Premises, including any improvements, alterations or additions installed at
Tenant's request above the ceiling of the Premises or below the floor of the
Premises. Such insurance shall be written on an "all risk" or "special form" of
physical loss or damage basis, for the full replacement cost value new without
deduction for depreciation of the covered items and in amounts that meet any
co-insurance clauses of the policies of insurance and shall include a vandalism
and malicious mischief endorsement, sprinkler leakage coverage and earthquake
sprinkler leakage coverage.

                10.3.3 FORM OF POLICIES. The minimum limits of policies of
insurance required of Tenant under this Lease shall in no event limit the
liability of Tenant under this Lease. Such insurance shall (i) name Landlord,
and any other party it so specifies, as an additional insured; (ii) specifically
cover the liability assumed by Tenant under this Lease, including, but not
limited to, Tenant's obligations under Section 10.1 of this Lease; (iii) be
issued by an insurance company having a rating of not less than A-:X in A.M.
Best's Rating Guide or which is otherwise acceptable to Landlord, licensed to do
business in the state in which the Building is located, and domiciled in the
United States; (iv) be primary insurance as to all claims thereunder and provide
that any insurance carried by Landlord is excess and is non-contributing with
any insurance required of Tenant; (v) provide that said insurance shall not be
canceled or coverage changed unless thirty (30) days' prior written notice shall
have been given to Landlord and any mortgagee or ground or underlying lessor of
Landlord; and (vi) contain a cross-liability endorsement or severability of
interest clause acceptable to Landlord. Tenant shall deliver said policy or
policies or certificates thereof to Landlord on or before the Lease Commencement
Date and at least thirty (30) days before the expiration dates thereof. If
Tenant shall fail to procure such insurance, or to deliver such policies or
certificate, within such time periods, Landlord may, at its option, in addition
to all of its other rights and remedies under this Lease, and without regard to
any notice and cure periods set forth in Section 19.1, procure such policies for
the account of Tenant, and the cost thereof shall be paid to Landlord as
Additional Rent within ten (10) days after delivery of bills therefor.

        10.4 SUBROGATION. Landlord and Tenant agree to have their respective
insurance companies issuing property damage insurance waive any rights of
subrogation that such companies may have against Landlord or Tenant, as the case
may be, so long as the insurance carried by Landlord and Tenant, respectively,
is not invalidated thereby. As long as such waivers of subrogation are contained
in their respective insurance policies, Landlord and Tenant hereby waive any
right that either may have against the other on account of any loss or damage to
their respective property to the extent such loss or damage is insured under
policies of insurance for fire and all risk coverage, theft, public liability,
or other similar insurance.

        10.5 ADDITIONAL INSURANCE OBLIGATIONS. Tenant shall carry and maintain
during the entire Lease Term, at Tenant's sole cost and expense, increased
amounts of the insurance required to be carried by Tenant pursuant to this
Article 10, and such other reasonable types of insurance coverage and in such
reasonable amounts covering the Premises and Tenant's operations therein, as may
be reasonably requested by Landlord from time to time.

ARTICLE 11 - DAMAGE AND DESTRUCTION

        11.1 REPAIR OF DAMAGE TO PREMISES BY LANDLORD. Tenant shall promptly
notify Landlord of any damage to the Premises resulting from fire or any other
casualty. If the Premises or any Common Areas of the Building serving or
providing access to the Premises shall be damaged by fire or other casualty,
Landlord shall promptly and diligently,

                                       10
<PAGE>   15

subject to reasonable delays for insurance adjustment or other matters beyond
Landlord's reasonable control, and subject to all other provisions of this
Article 11, restore the Base, Shell, and Core of the Premises and such Common
Areas. Such restoration shall be to substantially the same condition of the
Base, Shell, and Core of the Premises and Common Areas prior to the casualty,
except for modifications required by zoning and building codes and other laws or
by the holder of a mortgage on the Building, or the lessor of a ground or
underlying lease with respect to the Real Property, the Complex and/or the
Building, or any other modifications to the Common Areas deemed desirable by
Landlord, provided access to the Premises and any common restrooms serving the
Premises shall not be materially impaired. Notwithstanding any other provision
of this Lease, upon the occurrence of any damage to the Premises, Tenant shall
assign to Landlord (or to any party designated by Landlord) all insurance
proceeds payable to Tenant under Tenant's insurance required under Section 10.3
of this Lease, and Landlord shall repair any injury or damage to the alterations
installed in the Premises (to the extent of insurance proceeds therefor actually
collected by Landlord) and shall return such alterations to their original
condition; provided that if the cost of such repair by Landlord exceeds the
amount of insurance proceeds received by Landlord from Tenant's insurance
carrier, as assigned by Tenant, the cost of such repairs shall be paid by Tenant
to Landlord prior to Landlord's repair of the damage. In connection with such
repairs and replacements, Tenant shall, prior to the commencement of
construction, submit to Landlord, for Landlord's review and approval, all plans,
specifications and working drawings relating thereto, and Landlord shall select
the contractors to perform such improvement work. Landlord shall not be liable
for any inconvenience or annoyance to Tenant or its visitors, or injury to
Tenant's business resulting in any way from such damage or the repair thereof;
provided, however, if such fire or other casualty shall have damaged the
Premises or Common Areas necessary to Tenant's occupancy, and if such damage is
not the result of the negligence (active or passive) or willful misconduct of
Tenant or any of Tenant's Representatives, Landlord shall allow Tenant a
proportionate abatement of Base Rent and Tenant's Share of Direct Expenses to
the extent Landlord is reimbursed from the proceeds of rental interruption
insurance purchased by Landlord as part of Operating Expenses, during the time
and to the extent the Premises are unfit for occupancy for the purposes
permitted under this Lease, and not occupied by Tenant as a result thereof.

        11.2 LANDLORD'S OPTION TO REPAIR. Notwithstanding the provisions of
Section 11.1 of this Lease, Landlord may elect not to rebuild and/or restore the
Premises and/or Building and instead terminate this Lease by notifying Tenant in
writing of such termination within ninety (90) days after the date of damage,
such notice to include a termination date giving Tenant ninety (90) days to
vacate the Premises, but Landlord may so elect only if the Building shall be
damaged by fire or other casualty or cause, whether or not the Premises are
affected, and one or more of the following conditions is present: (i) repairs
cannot reasonably be completed within one hundred eighty (180) days of the date
of damage (when such repairs are made without the payment of overtime or other
premiums); (ii) the holder of any mortgage on the Building or ground or
underlying lessor with respect to the Real Property, the Complex and/or the
Building shall require that the insurance proceeds or any portion thereof be
used to retire the mortgage debt, or shall terminate the ground or underlying
lease, as the case may be; or (iii) the damage is not fully covered, except for
deductible amounts, by Landlord's insurance policies. In addition, if the
Premises or the Building is destroyed or damaged to any substantial extent
during the last twelve (12) months of the Lease Term, then notwithstanding
anything contained in this Article 11, Landlord shall have the option to
terminate this Lease by giving written notice to Tenant of the exercise of such
option within ninety (90) days after such damage or destruction, in which event
this Lease shall cease and terminate as of the date of such notice.
Notwithstanding anything to the contrary contained herein: (i) if Tenant's use
of the Premises is substantially impaired for a period of more than one hundred
eighty (180) days after the date of a casualty, or during the last six (6)
months of the Term, then Tenant shall have the right to terminate this Lease by
written notice to Landlord at any time thereafter up until the completion of the
restoration, and (ii) if this Lease is terminated by either Landlord or Tenant
due to a casualty, then Tenant shall not be required to pay for any insurance
deductibles as part of Landlord's insurance cost or otherwise. Upon any such
termination of this Lease pursuant to this Section 11.2, Tenant shall pay the
Base Rent and Additional Rent, properly apportioned up to such date of
termination, and both parties hereto shall thereafter be freed and discharged of
all further obligations hereunder, except as provided for in the provisions of
this Lease which by their terms survive the expiration or earlier termination of
the Lease Term.

        11.3 WAIVER OF STATUTORY PROVISIONS. The provisions of this Lease,
including this Article 11, constitute an express agreement between Landlord and
Tenant with respect to any and all damage to, or destruction of, all or any part
of the Premises, the Building, the Complex or any other portion of the Real
Property, and any statute or regulation of the state in which the Building is
located, including, without limitation, Sections 1932(2) and 1933(4) of the
California Civil Code (or under any similar law, statute, or ordinance now or
hereafter in effect), with respect to any rights or obligations concerning
damage or destruction in the absence of an express agreement between the
parties, and any other statute or regulation, now or hereafter in effect, shall
have no application to this Lease or any damage or destruction to all or any
part of the Premises, the Building, the Complex or any other portion of the Real
Property.

ARTICLE 12 - CONDEMNATION

        12.1 PERMANENT TAKING. If the whole or any part of the Premises or
Building shall be taken by power of eminent domain or condemned by any competent
authority for any public or quasi-public use or purpose, or if any adjacent
property or street shall be so taken or condemned, or reconfigured or vacated by
such authority in such manner as to require the use, reconstruction or
remodeling of any part of the Premises or Building, or if Landlord shall grant a
deed or other instrument in lieu of such taking by eminent domain or
condemnation, Landlord shall have the option to terminate this Lease upon ninety
(90) days' notice, provided such notice is given no later than one hundred
eighty (180) days after the date of such taking, condemnation, reconfiguration,
vacation, deed or other instrument. If more than twenty-five percent (25%) of
the rentable square feet of the Premises is taken, or if access to the Premises
is substantially impaired, Tenant shall have the option to terminate this Lease
upon ninety (90) days' notice, provided such notice is given no later than one
hundred eighty (180) days after the date of such taking. Landlord shall be
entitled to receive the entire award or payment in connection therewith, except
that Tenant shall have the right to file any separate claim available to Tenant
for any taking of Tenant's personal property and fixtures belonging to Tenant
and removable by Tenant upon expiration of the Lease Term pursuant to the terms
of this Lease, and for moving expenses or loss of business by reason of such
condemnation so long as such claim does not diminish the award available to
Landlord, its ground lessor with respect to the Real Property or its mortgagee,
and such claim is payable separately to Tenant. All Rent shall be apportioned as
of the date of such termination, or the date of such taking, whichever shall
first occur. If any part of the Premises shall be taken, and this Lease shall
not be so terminated, the Rent shall be proportionately abated. If neither party
elects to terminate this Lease, Landlord shall, if necessary, promptly proceed
to restore the Premises or the Building to substantially its same condition
prior to such partial condemnation, allowing for the reasonable effects of such
condemnation, and a proportionate allowance shall be made to Tenant, as solely
determined

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<PAGE>   16

by Landlord, for the Rent corresponding to the time during which, and to the
part of the Premises of which, Tenant is deprived on account of such partial
condemnation and restoration. Landlord shall not be required to spend funds for
restoration in excess of the amount received by Landlord as compensation
awarded. Tenant hereby waives any and all rights it might otherwise have
pursuant to Section 1265.130 of the California Code of Civil Procedure (or under
any similar law, statute, or ordinance now or hereafter in effect).

        12.2 TEMPORARY TAKING. Notwithstanding anything to the contrary
contained in this Article 12, in the event of a temporary taking of all or any
portion of the Premises for a period of one hundred and eighty (180) days or
less, then this Lease shall not terminate but the Base Rent and the Additional
Rent shall be abated for the period of such taking in proportion to the ratio
that the amount of rentable square feet of the Premises taken bears to the total
rentable square feet of the Premises. Landlord shall be entitled to receive the
entire award made in connection with any such temporary taking.

ARTICLE 13 - COVENANT OF QUIET ENJOYMENT

        Landlord covenants that Tenant, on paying the Rent, charges for services
and other payments herein reserved and on keeping, observing and performing all
the other terms, covenants, conditions, provisions and agreements herein
contained on the part of Tenant to be kept, observed and performed, shall,
during the Lease Term, peaceably and quietly have, hold and enjoy the Premises
subject to the terms, covenants, conditions, provisions and agreements hereof
without interference by Landlord or any successor or assign of Landlord. The
foregoing covenant is in lieu of any other covenant express or implied.

ARTICLE 14 - ASSIGNMENT AND SUBLETTING

        14.1 TRANSFERS. Tenant shall not, without the prior written consent of
Landlord, assign, mortgage, pledge, hypothecate, encumber, or permit any lien to
attach to, or otherwise transfer, this Lease or any interest hereunder, permit
any assignment or other such foregoing transfer of this Lease or any interest
hereunder by operation of law, sublet the Premises or any part thereof, or
permit the use of the Premises by any persons other than Tenant and its
employees (all of the foregoing are hereinafter sometimes referred to
collectively as "Transfers" and any person to whom any Transfer is made or
sought to be made is hereinafter sometimes referred to as a "Transferee"). If
Tenant shall desire Landlord's consent to any Transfer, Tenant shall notify
Landlord in writing, which notice (the "Transfer Notice") shall include (i) the
proposed effective date of the Transfer, which shall not be less than thirty
(30) days nor more than one hundred eighty (180) days after the date of delivery
of the Transfer Notice, (ii) a description of the portion of the Premises to be
transferred (the "Subject Space"), (iii) all of the terms of the proposed
Transfer, the name and address of the proposed Transferee, and a copy of all
existing and/or proposed documentation pertaining to the proposed Transfer,
including all existing operative documents to be executed to evidence such
Transfer or the agreements incidental or related to such Transfer, (iv) current
financial statements of the proposed Transferee certified by an officer, member,
partner or owner thereof, and (v) such other information as Landlord may
reasonably require. Any Transfer made without Landlord's prior written consent
shall, at Landlord's option, be null, void and of no effect, and if not cured
within ten (10) days following notice, shall, at Landlord's option, constitute a
default by Tenant under this Lease. Whether or not Landlord shall grant consent,
Tenant shall pay, as additional rent hereunder, a fee in the amount of Five
Hundred Dollars ($500.00) plus Landlord's reasonable legal fees incurred by
Landlord, within thirty (30) days after written request by Landlord.

        14.2 LANDLORD'S CONSENT. Landlord shall not unreasonably withhold its
consent to any proposed Transfer of the Subject Space to the Transferee on the
terms specified in the Transfer Notice. The parties hereby agree that it shall
be reasonable under this Lease and under any applicable law for Landlord to
withhold consent to any proposed Transfer where one or more of the following
apply, without limitation as to other reasonable grounds for withholding
consent:

                14.2.1 The Transferee is of a character or reputation or engaged
in a business which is not consistent with the quality of the Building;

                14.2.2 The Transferee intends to use the Subject Space for
purposes which are not permitted under this Lease;

                14.2.3 The Transferee is either a governmental agency or
instrumentality thereof;

                14.2.4 The Transfer will result in more than a reasonable and
safe number of occupants per floor within the Subject Space;

                14.2.5 The Transferee is not a party of reasonable financial
worth and/or financial stability in light of the responsibilities involved under
the Transfer on the date consent is requested;

                14.2.6 The proposed Transfer would cause Landlord to be in
violation of another lease or agreement to which Landlord is a party, or would
give an occupant of the Building a right to cancel its lease;

                14.2.7 The terms of the proposed Transfer will allow the
Transferee to exercise a right of renewal, right of expansion, right of first
offer, or other similar right held by Tenant;

                14.2.8 Either the proposed Transferee, or any person or entity
which directly or indirectly, controls, is controlled by, or is under common
control with, the proposed Transferee, (i) occupies space in the Building at the
time of the request for consent, (ii) is negotiating with Landlord to lease
space in the Building at such time, or (iii) has negotiated with Landlord during
the twelve (12)-month period immediately preceding the Transfer Notice; or

                14.2.9 The Transfer occurs during the period from the Lease
Commencement Date until the date of at least ninety-five percent (95%) of the
rentable square feet of the Building is leased, and the rent charged by Tenant
to such Transferee during the term of such Transfer, calculated using a present
value analysis, is less than ninety-five percent (95%) of the rent being quoted
by Landlord, at the time of such Transfer, for comparable space in the Building
for a comparable term, calculated using a present value system.

                                       12
<PAGE>   17

        If Landlord consents to any Transfer pursuant to the terms of this
Section 14.2 (and does not exercise any recapture rights Landlord may have under
Section 14.4 of this Lease), Tenant may within three (3) months after Landlord's
consent, but not later than the expiration of said three-month period, enter
into such Transfer of the Premises or portion thereof, upon substantially the
same terms and conditions as are set forth in the Transfer Notice furnished by
Tenant to Landlord pursuant to Section 14.1 of this Lease, provided that if
there are any changes in the terms and conditions from those specified in the
Transfer Notice (i) such that Landlord would initially have been entitled to
refuse its consent to such Transfer under this Section 14.2, or (ii) which would
cause the proposed Transfer to be more favorable to the Transferee than the
terms set forth in Tenant's original Transfer Notice, Tenant shall again submit
the Transfer to Landlord for its approval and other action under this Article 14
(including Landlord's right of recapture, if any, under Section 14.4 of this
Lease).

        14.3 TRANSFER PREMIUM. If Landlord consents to a Transfer, as a
condition thereto which the parties hereby agree is reasonable, Tenant shall pay
to Landlord any "Transfer Premium," as that term is defined in this Section
14.3, received by Tenant from such Transferee. "Transfer Premium" shall mean
seventy-five percent (75%) of all rent, additional rent or other consideration
payable by such Transferee in excess of the Rent and Additional Rent payable by
Tenant under this Lease on a per rentable square foot basis if less than all of
the Premises is transferred, after deducting the reasonable expenses incurred by
Tenant in connection with the Transfer (the "Subleasing Costs"). "Transfer
Premium" shall also include, but not be limited to, key money and bonus money
paid by Transferee to Tenant in connection with such Transfer, and any payment
in excess of fair market value for services rendered by Tenant to Transferee or
for assets, fixtures, inventory, equipment, or furniture transferred by Tenant
to Transferee in connection with such Transfer.

        14.4 LANDLORD'S OPTION AS TO SUBJECT SPACE. Notwithstanding anything to
the contrary contained in this Article 14, if the Subject Space shall comprise
all or substantially all of a full floor of the Premises, or more, and if the
proposed Transfer would commence at any time on or after November 1, 2003,
Landlord shall have the option, by giving written notice to Tenant within thirty
(30) days after receipt of any Transfer Notice, to recapture the Subject Space.
Such recapture notice shall cancel and terminate this Lease with respect to the
Subject Space as of the date stated in the Transfer Notice as the effective date
of the proposed Transfer. If this Lease shall be canceled with respect to less
than the entire Premises, the Rent reserved herein shall be prorated on the
basis of the number of rentable square feet retained by Tenant in proportion to
the number of rentable square feet contained in the Premises, and this Lease as
so amended shall continue thereafter in full force and effect, and upon request
of either party, the parties shall execute written confirmation of the same. If
Landlord declines, or fails to elect in a timely manner to recapture the Subject
Space under this Section 14.4, then, provided Landlord has consented to the
proposed Transfer, Tenant shall be entitled to proceed to transfer the Subject
Space to the proposed Transferee, subject to the provisions of the last
paragraph of Section 14.2 of this Lease.

        14.5 EFFECT OF TRANSFER. If Landlord consents to a Transfer, (i) the
terms and conditions of this Lease shall in no way be deemed to have been waived
or modified, (ii) such consent shall not be deemed consent to any further
Transfer by either Tenant or a Transferee, (iii) Tenant shall deliver to
Landlord, promptly after execution, an original executed copy of all
documentation pertaining to the Transfer in form reasonably acceptable to
Landlord, and (iv) no Transfer relating to this Lease or agreement entered into
with respect thereto, whether with or without Landlord's consent, shall relieve
Tenant or any guarantor of the Lease from liability under this Lease. Landlord
or its authorized representatives shall have the right at all reasonable times
to audit the books, records and papers of Tenant relating to any Transfer, and
shall have the right to make copies thereof. If the Transfer Premium respecting
any Transfer shall be found understated, Tenant shall, within thirty (30) days
after demand, pay the deficiency and Landlord's costs of such audit. No
assignment or subletting shall affect the continuing primary liability of Tenant
(which, following assignment, shall be joint and several with the assignee), and
Tenant shall not be released from performing any of the terms, covenants and
conditions of this Lease. Any and all options, first rights of refusal, tenant
improvement allowances and other similar rights granted to Tenant in this Lease,
if any, shall only be assignable by Tenant as part of this Lease.

        14.6 ADDITIONAL TRANSFERS. For purposes of this Lease, the term
"Transfer" shall also include (i) if Tenant is a partnership or limited
liability company, the withdrawal or change, voluntary, involuntary or by
operation of law, of fifty percent (50%) or more of the partners or members, or
transfer of twenty-five percent (25%) or more of partnership or members
interests, within a twelve (12)-month period, or the dissolution of the
partnership or limited liability company without immediate reconstitution
thereof, and (ii) if Tenant is a closely held corporation (i.e., whose stock is
not publicly held and not traded through an exchange or over the counter), (A)
the dissolution, merger, consolidation or other reorganization of Tenant, (B)
the sale or other transfer of more than an aggregate of fifty percent (50%) of
the voting shares of Tenant (other than to immediate family members by reason of
gift or death), within a twelve (12)-month period, or (C) the sale, mortgage,
hypothecation or pledge of more than an aggregate of fifty percent (50%) of the
value of the unencumbered assets of Tenant within a twelve (12) month period.

        14.7 PERMITTED TRANSFERS. Notwithstanding anything to the contrary
contained in this Lease, Tenant may assign this Lease or sublet the Premises, or
any portion thereof, without Landlord's consent, to any entity which controls,
is controlled by, or is under common control with Tenant; to any entity which
results from a merger of, reorganization of, or consolidation with Tenant; to
any entity engaged in a joint venture with Tenant; or to any entity which
acquires substantially all of the stock or assets of Tenant, as a going concern,
with respect to the business that is being conducted in the Premises
(hereinafter each a "Permitted Transfer"). In addition, a sale or transfer of
the capital stock of Tenant shall be deemed a Permitted Transfer if (1) such
sale or transfer occurs in connection with any bona fide financing or
capitalization for the benefit of Tenant, or (2) Tenant is or becomes a publicly
traded corporation. Landlord shall have no right to terminate the Lease in
connection with, and shall have no right to any sums or other economic
consideration resulting from any Permitted Transfer. Additionally, any rights
that are personal to Tenant shall also accrue to any Permitted Transferee.

ARTICLE 15 - SURRENDER; OWNERSHIP AND REMOVAL OF TRADE FIXTURES

        15.1 SURRENDER OF PREMISES. No act or thing done by Landlord or any
agent or employee of Landlord during the Lease Term shall be deemed to
constitute an acceptance by Landlord of a surrender of the Premises unless such
intent is specifically acknowledged in a writing signed by Landlord. The
delivery of keys to the Premises to Landlord

                                       13
<PAGE>   18

or any agent or employee of Landlord shall not constitute a surrender of the
Premises or effect a termination of this Lease, whether or not the keys are
thereafter retained by Landlord, and notwithstanding such delivery Tenant shall
be entitled to the return of such keys at any reasonable time upon request until
this Lease shall have been properly terminated. The voluntary or other surrender
of this Lease by Tenant, whether accepted by Landlord or not, or a mutual
termination hereof, shall not work a merger, and at the option of Landlord shall
operate as an assignment to Landlord of all subleases or subtenancies affecting
the Premises.

        15.2 REMOVAL OF TENANT PROPERTY BY TENANT. Upon the expiration of the
Lease Term, or upon any earlier termination of this Lease, Tenant shall, subject
to the provisions of this Article 15, quit and surrender possession of the
Premises to Landlord in as good order and condition as when Tenant took
possession and as thereafter improved by Landlord and/or Tenant, reasonable wear
and tear and repairs which are specifically made the responsibility of Landlord
hereunder excepted. Upon such expiration or termination, Tenant shall, without
expense to Landlord, remove or cause to be removed from the Premises all debris
and rubbish, and such items of furniture, equipment, free-standing cabinet work,
and other articles of personal property owned by Tenant or installed or placed
by Tenant at its expense in the Premises, and such similar articles of any other
persons claiming under Tenant, as Landlord may, in its sole discretion, require
to be removed, and Tenant shall repair at its own expense all damage to the
Premises and Building resulting from such removal.

ARTICLE 16 - HOLDING OVER

        If Tenant holds over after the expiration of the Lease Term hereof, with
or without the express or implied consent of Landlord, such tenancy shall be
from month-to-month only, and shall not constitute a renewal hereof or an
extension for any further term, and in such case Base Rent shall be payable at a
monthly rate equal to (a) one hundred twenty-five percent (125%) for the first
two full months of any such holding over, and after that (b) two hundred percent
(200%), in each case of the (i) the greater of Base Rent applicable during the
last rental period of the Lease Term under this Lease (ii) the fair market
rental rate of the Premises as of the commencement of such holdover period. Such
month-to-month tenancy shall be subject to every other term, covenant and
agreement contained herein. Landlord hereby expressly reserves the right to
require Tenant to surrender possession of the Premises to Landlord as provided
in this Lease upon the expiration or other termination of this Lease. The
provisions of this Article 16 shall not be deemed to limit or constitute a
waiver of any other rights or remedies of Landlord provided herein or at law. If
Tenant fails to surrender the Premises upon the termination or expiration of
this Lease, in addition to any other liabilities to Landlord accruing therefrom,
Tenant shall protect, defend, indemnify and hold Landlord harmless from all
loss, costs (including reasonable attorneys' fees) and liability resulting from
such failure, including, without limiting the generality of the foregoing, any
claims made by any succeeding tenant founded upon such failure to surrender, and
any lost profits to Landlord resulting therefrom.

ARTICLE 17 - ESTOPPEL CERTIFICATES

        Within ten (10) days following a request in writing by Landlord, Tenant
shall execute and deliver to Landlord an estoppel certificate, which, as
submitted by Landlord, shall be substantially in the form of Exhibit E, attached
hereto (or such other form as may be required by any prospective mortgagee or
purchaser of the Building, Complex or Real Property, or any portion thereof),
indicating therein any exceptions thereto that may exist at that time, and shall
also contain any other information reasonably requested by Landlord, Landlord's
mortgagee or prospective mortgagee, or a prospective purchaser. Tenant shall
execute and deliver whatever other instruments may be reasonably required for
such purposes. Failure of Tenant to timely execute and deliver such estoppel
certificate or other instruments shall constitute an acceptance of the Premises
and an acknowledgment by Tenant that statements included in the estoppel
certificate are true and correct, without exception.

ARTICLE 18 - SUBORDINATION

        This Lease is subject and subordinate to all present and future ground
or underlying leases of the Real Property and to the lien of any mortgages or
trust deeds, now or hereafter in force against the Real Property, the Complex
and the Building, if any, and to all renewals, extensions, modifications,
consolidations and replacements thereof, and to all advances made or hereafter
to be made upon the security of such mortgages or trust deeds, unless the
holders of such mortgages or trust deeds, or the lessors under such ground lease
or underlying leases, require in writing that this Lease be superior thereto.
Tenant covenants and agrees in the event any proceedings are brought for the
foreclosure of any such mortgage, or if any ground or underlying lease is
terminated, to attorn, without any deductions or set-offs whatsoever, to the
purchaser upon any such foreclosure sale, or to the lessor of such ground or
underlying lease, as the case may be, if so requested to do so by such purchaser
or lessor, and to recognize such purchaser or lessor as the lessor under this
Lease. Tenant shall, within five (5) days of request by Landlord, execute such
further instruments or assurances as Landlord may reasonably deem necessary to
evidence or confirm the subordination or superiority of this Lease to any such
mortgages, trust deeds, ground leases or underlying leases; provided, such
mortgagee, ground lessor or similar parties agree therein not to disturb
Tenant's use, occupancy or quiet enjoyment of the Premises so long as Tenant is
not in default (beyond applicable notice and cure periods, if any) of the terms
and provisions of this Lease. Tenant hereby irrevocably authorizes Landlord to
execute and deliver in the name of Tenant any such instrument or instruments if
Tenant fails to do so, provided that such authorization shall in no way relieve
Tenant from the obligation of executing such instruments of subordination or
superiority. Tenant waives the provisions of any current or future statute, rule
or law which may give or purport to give Tenant any right or election to
terminate or otherwise adversely affect this Lease and the obligations of the
Tenant hereunder in the event of any foreclosure proceeding or sale.

ARTICLE 19 - TENANT'S DEFAULTS; LANDLORD'S REMEDIES

        19.1 EVENTS OF DEFAULT BY TENANT. All covenants and agreements to be
kept or performed by Tenant under this Lease shall be performed by Tenant at
Tenant's sole cost and expense and without any reduction of Rent. The occurrence
of any of the following shall constitute a material default of this Lease by
Tenant:

                                       14
<PAGE>   19

                19.1.1 Any failure by Tenant to pay any Rent or any other charge
required to be paid under this Lease, or any part thereof, provided, however,
that for only the first two instances in any 12-month period, any such failure
shall not be a default until such failure shall have continued for a period in
excess of two (2) business days; or

                19.1.2 Any failure by Tenant to observe or perform any other
provision, covenant or condition of this Lease to be observed or performed by
Tenant where such failure continues for fifteen (15) days after written notice
thereof from Landlord to Tenant; provided however, that any such notice shall be
in lieu of, and not in addition to, any notice required under California Code of
Civil Procedure Section 1161 or any similar or successor law; and provided
further that if the nature of such default is such that the same cannot
reasonably be cured within a fifteen (15)-day period, Tenant shall not be deemed
to be in default if it diligently commences such cure within such period and
thereafter diligently proceeds to rectify and completely cure said default as
soon as possible but in all events within ninety (90) days of Landlord's
delivery to Tenant of written notice of such default; or

                19.1.3 Abandonment of the Premises by Tenant. Abandonment is
herein defined to include, but is not limited to, any absence by Tenant from the
Premises for five (5) business days or longer while in default of any provision
of this Lease; or

                19.1.4 The making of a general assignment by Tenant for the
benefit of creditors, the filing of a voluntary petition by Tenant or the filing
of an involuntary petition by any of Tenant's creditors seeking the
rehabilitation, liquidation, or reorganization of Tenant under any law relating
to bankruptcy, insolvency or other relief of debtors and, in the case of an
involuntary action, the failure to remove or discharge the same within sixty
(60) days of such filing, the appointment of a receiver or other custodian to
take possession of substantially all of Tenant's assets or this leasehold,
Tenant's insolvency or inability to pay Tenant's debts or failure generally to
pay Tenant's debts when due, any court entering a decree or order directing the
winding up or liquidation of Tenant or of substantially all of Tenant's assets,
Tenant taking any action toward the dissolution or winding up of Tenant's
affairs, the cessation or suspension of Tenant's use of the Premises, or the
attachment, execution or other judicial seizure of substantially all of Tenant's
assets or this leasehold; or

                19.1.5 The making of any material misrepresentation or omission
by Tenant in any materials delivered by or on behalf of Tenant to Landlord
pursuant to this Lease.

        19.2 Landlord's Remedies Upon Default. Upon the occurrence of any such
default by Tenant, Landlord shall have, in addition to any other remedies
available to Landlord at law or in equity, the option to pursue any one or more
of the following remedies, each and all of which shall be cumulative and
nonexclusive, without any notice or demand whatsoever.

                19.2.1 Terminate this Lease, in which event Tenant shall
immediately surrender the Premises to Landlord, and if Tenant fails to do so,
Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession of the Premises
and expel or remove Tenant and any other person who may be occupying the
Premises or any part thereof, without being liable for prosecution or any claim
or damages therefor; and Landlord may recover from Tenant the following:

                        (i) The worth at the time of award of any unpaid rent
which has been earned at the time of such termination; plus

                        (ii) The worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that Tenant proves could
have been reasonably avoided; plus

                        (iii) The worth at the time of award of the amount by
which the unpaid rent for the balance of the Lease Term after the time of award
exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; plus

                        (iv) Any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, specifically including but not limited to, brokerage
commissions and advertising expenses incurred, expenses of remodeling the
Premises or any portion thereof for a new tenant, whether for the same or a
different use, and any special concessions made to obtain a new tenant; and

                        (v) At Landlord's election, such other amounts in
addition to or in lieu of the foregoing as may be permitted from time to time by
applicable law.

        The term "rent" as used in this Section 19.2 shall be deemed to be and
to mean all sums of every nature required to be paid by Tenant pursuant to the
terms of this Lease, whether to Landlord or to others. As used in Paragraphs
19.2.1(i) and (ii), above, the "worth at the time of award" shall be computed by
allowing interest at the Interest Rate set forth in Section 4.6 of this Lease.
As used in Paragraph 19.2.1(iii) above, the "worth at the time of award" shall
be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1%).

                19.2.2 Landlord shall have the remedy described in California
Civil Code Section 1951.4 (lessor may continue lease in effect after lessee's
breach and abandonment and recover rent as it becomes due, if lessee has the
right to sublet or assign, subject only to reasonable limitations). Accordingly,
if Landlord does not elect to terminate this Lease on account of any default by
Tenant, Landlord may, from time to time, without terminating this Lease, enforce
all of its rights and remedies under this Lease, including the right to recover
all rent as it becomes due.

                19.2.3 Landlord may, but shall not be obligated to, make any
such payment or perform or otherwise cure any such obligation, provision,
covenant or condition on Tenant's part to be observed or performed (and may
enter the Premises for such purposes). In the event of Tenant's failure to
perform any of its obligations or covenants under this Lease, and such failure
to perform poses a material risk of injury or harm to persons or damage to or
loss of

                                       15
<PAGE>   20

property, then Landlord shall have the right to cure or otherwise perform such
covenant or obligation at any time after such failure to perform by Tenant,
whether or not any such notice or cure period set forth in Section 19.1 above
has expired. Any such actions undertaken by Landlord pursuant to the foregoing
provisions of this Section 19.2.3 shall not be deemed a waiver of Landlord's
rights and remedies as a result of Tenant's failure to perform and shall not
release Tenant from any of its obligations under this Lease. Tenant waives
redemption or relief from forfeiture under California Code of Civil Procedure
Sections 1174 and 1179, or under any other present or future law, in the event
Tenant is evicted or Landlord takes possession of the Premises by reason of any
default of Tenant hereunder.

        19.3 PAYMENT BY TENANT. Tenant shall pay to Landlord, within fifteen
(15) days after delivery by Landlord to Tenant of statements therefor: (i) sums
equal to expenditures reasonably made and obligations incurred by Landlord in
connection with Landlord's performance or cure of any of Tenant's obligations
pursuant to the provisions of Section 19.2.3 above; and (ii) sums equal to all
expenditures made and obligations incurred by Landlord in collecting or
attempting to collect the Rent or in enforcing or attempting to enforce any
rights of Landlord under this Lease or pursuant to law, including, without
limitation, all legal fees and other amounts so expended. Tenant's obligations
under this Section 19.3 shall survive the expiration or sooner termination of
the Lease Term.

        19.4 SUBLESSEES OF TENANT. Whether or not Landlord elects to terminate
this Lease on account of any default by Tenant, as set forth in this Article 19,
Landlord shall have the right to terminate any and all subleases, licenses,
concessions or other consensual arrangements for possession entered into by
Tenant and affecting the Premises or may, in Landlord's sole discretion, succeed
to Tenant's interest in such subleases, licenses, concessions or arrangements.
In the event of Landlord's election to succeed to Tenant's interest in any such
subleases, licenses, concessions or arrangements, Tenant shall, as of the date
of notice by Landlord of such election, have no further right to or interest in
the rent or other consideration receivable thereunder.

        19.5 WAIVER OF DEFAULT. No waiver by Landlord of any violation or breach
by Tenant of any of the terms, provisions and covenants herein contained shall
be deemed or construed to constitute a waiver of any other or later violation or
breach by Tenant of the same or any other of the terms, provisions, and
covenants herein contained. Forbearance by Landlord in enforcement of one or
more of the remedies herein provided upon a default by Tenant shall not be
deemed or construed to constitute a waiver of such default. The acceptance of
any Rent hereunder by Landlord following the occurrence of any default, whether
or not known to Landlord, shall not be deemed a waiver of any such default,
except only a default in the payment of the Rent so accepted.

        19.6 EFFORTS TO RELET. For the purposes of this Article 19, Tenant's
right to possession shall not be deemed to have been terminated by efforts of
Landlord to relet the Premises, by its acts of maintenance or preservation with
respect to the Premises, or by appointment of a receiver to protect Landlord's
interests hereunder. The foregoing enumeration is not exhaustive, but merely
illustrative of acts which may be performed by Landlord without terminating
Tenant's right to possession.

ARTICLE 20 - SECURITY DEPOSIT AND LETTER OF CREDIT

        20.1 SECURITY DEPOSIT. Concurrent with Tenant's execution of this Lease,
Tenant shall deposit with Landlord a security deposit (the "Security Deposit")
in the amount set forth in Section 10 of the Summary. The Security Deposit shall
be held by Landlord as security for the faithful performance by Tenant of all
the terms, covenants, and conditions of this Lease to be kept and performed by
Tenant during the Lease Term. If Tenant defaults with respect to any provisions
of this Lease, including, but not limited to, the provisions relating to the
payment of Rent, Landlord may, but shall not be required to, use, apply or
retain all or any part of the Security Deposit for the payment of any Rent or
any other sum in default, or for the payment of any amount that Landlord may
spend or become obligated to spend by reason of Tenant's default, or to
compensate Landlord for any other loss or damage that Landlord may suffer by
reason of Tenant's default. If any portion of the Security Deposit is so used or
applied, Tenant shall, within five (5) days after written demand therefor,
deposit cash with Landlord in an amount sufficient to restore the Security
Deposit to its original amount, and Tenant's failure to do so shall be a default
under this Lease. If Tenant shall fully and faithfully perform every provision
of this Lease to be performed by it, the Security Deposit, or any balance
thereof, shall be returned to Tenant, or, at Landlord's option, to the last
assignee of Tenant's interest hereunder, as soon as practicable following the
expiration of the Lease Term. Landlord shall not be required to keep the
Security Deposit separate from other funds, and, unless otherwise required by
law, Tenant shall not be entitled to any interest on the Security Deposit. In no
event or circumstance shall Tenant have the right to any use of the Security
Deposit and, specifically, Tenant may not use the Security Deposit as a credit
or to otherwise offset any payments required hereunder, including, but not
limited to, Rent or any portion thereof.

        20.2 LETTER OF CREDIT. Simultaneously with Tenant's delivery to Landlord
of this Lease and the first month's Base Rent in accordance with the provisions
of Section 3 above, Tenant shall deliver to Landlord, as collateral for the full
and faithful performance by Tenant of all of its obligations under this Lease
and for all losses and damages Landlord may suffer as a result of any default by
Tenant under this Lease, an irrevocable and unconditional negotiable letter of
credit, in the form and containing the terms required herein, payable in the
City of Alameda, California running in favor of Landlord issued by a solvent
nationally recognized bank with a long term rating of BBB or higher, under the
supervision of the Superintendent of Banks of the State of California, or a
National Banking Association, in the amount of One Million Five Hundred Thousand
Dollars ($1,500,000.00) ("Initial Letter of Credit"). Upon the RP Commencement
Date, the face amount of the Letter of Credit shall be increased to be Two
Million Dollars ($2,000,000.00). The Letter of Credit shall be (a) at sight and
irrevocable and unconditional, (b) maintained in effect, whether through
replacement, renewal or extension, for the entire Lease Term (the "Letter of
Credit Expiration Date") and Tenant shall deliver a new Letter of Credit or
certificate of renewal or extension to Landlord at least thirty (30) days prior
to the expiration of the Letter of Credit, without any action whatsoever on the
part of Landlord, (c) subject to the International Standby Practices (1998-Rev)
International Chamber of Commerce Publication #590, (d) acceptable to Landlord
in its sole, but reasonable, discretion, and (e) fully assignable by Landlord
and permit partial draws. In addition to the foregoing, the form and terms of
the Letter of Credit (and the bank issuing the same) shall be acceptable to
Landlord, in Landlord's sole, but reasonable, discretion, and shall provide,
among other things, in effect that: (1) Landlord, or its then managing agent,
shall have the right to draw down an amount up to the face amount of the Letter
of Credit upon the presentation to the issuing bank of Landlord's (or Landlord's
then managing agent's) statement that such amount is due to Landlord under

                                       16
<PAGE>   21

the terms and conditions of this Lease, it being understood that if Landlord or
its managing agent be a limited liability company, corporation, partnership or
other entity, then such statement shall be signed by a managing member (if a
limited liability company) an officer (if a corporation), a general partner (if
a partnership), or any authorized party (if another entity); (2) the Letter of
Credit will be honored by the issuing bank without inquiry as to the accuracy
thereof and regardless of whether the Tenant disputes the content of such
statement; and (3) in the event of a transfer of Landlord's interest in the
Building, Landlord shall transfer the Letter of Credit, in whole or in part (or
cause a substitute letter of credit to be delivered, as applicable), to the
transferee and thereupon the Landlord shall, without any further agreement
between the parties, be released by Tenant from all liability therefor, and it
is agreed that the provisions hereof shall apply to every transfer or assignment
of the whole or any portion of said Letter of Credit to a new Landlord. Tenant
hereby acknowledges and agrees that Landlord is entering into this Lease in
material reliance upon the ability of Landlord to draw upon the Letter of Credit
upon the occurrence of any default on the part of Tenant hereunder which
continues beyond any applicable notice and cure periods. Tenant further
acknowledges and agrees that if Landlord cannot draw upon the Letter of Credit
within the times and in the manner as anticipated by Landlord herein, Landlord
shall suffer irreparable damage, harm and injury. From time to time during the
Term of this Lease it is anticipated by the parties that the Letter of Credit
will need to be amended, modified and, possibly reissued. Landlord and Tenant
hereby covenant and agree to cooperate with one another to promptly effectuate
any such amendments, modifications and new issuances, including without
limitation, executing and submitting to the Issuer any and all documents or
instruments as may be reasonably required to effectuate same. Each and every
time during the Term of this Lease there is a change in the identity or address
of the parties, including without limitation, any change in the identity of
Landlord due to the sale, transfer or other conveyance by Landlord of its rights
and interests in, to and under this Lease to any other party, person or entity,
the Letter of Credit shall immediately be amended or reissued to reflect such
changes and the parties hereby agree to execute and submit to the Issuer such
further applications, documents and instruments as may be necessary to
effectuate same. It is the intention of the parties that each and every
successor and assign of both Landlord and Tenant be bound by and subject to the
terms and provisions of this Section 20.2. Landlord may, at any time and without
notice to Tenant and without first obtaining Tenant's consent thereto, assign
all or any portion of its interest in and to the Letter of Credit to another
party, person or entity, regardless of whether or not such assignment is
separate from or as a part of the assignment by Landlord of its rights and
interests in and to this Lease. If, as a result of any such application of all
or any part of the Letter of Credit, the amount of the Letter of Credit shall be
less than One Million Five Hundred Thousand Dollars ($1,500,000.00) or Two
Million Dollars ($2,000,000.00), as applicable, Tenant shall within five (5)
days thereafter provide Landlord with additional letter(s) of credit in an
amount equal to the deficiency (or a replacement letter of credit in the total
amount of One Million Five Hundred Thousand Dollars ($1,500,000.00) or Two
Million Dollars ($2,000,000.00), as applicable, and each such additional (or
replacement) letter of credit shall comply with all of the provisions of this
Section 20.2, and if Tenant fails to do so, notwithstanding anything to the
contrary contained in Article 19 hereof, the same shall constitute an incurable
default by Tenant. Tenant further covenants and warrants that it will neither
assign nor encumber the Letter of Credit or any part thereof and that neither
Landlord nor its successors or assigns will be bound by any such assignment,
encumbrance, attempted assignment or attempted encumbrance. Without limiting the
generality of the foregoing, if the Letter of Credit expires earlier than the
Letter of Credit Expiration Date, Landlord will accept a renewal thereof or
substitute letter of credit (such renewal or substitute letter of credit to be
in effect not later than thirty (30) days prior to the expiration thereof),
which shall be irrevocable and automatically renewable as above provided through
the Letter of Credit Expiration Date upon the same terms as the expiring letter
of credit or such other terms as may be acceptable to Landlord in its sole, but
reasonable, discretion. However, if the Letter of Credit is not timely renewed
or a substitute letter of credit is not timely received, or if Tenant fails to
maintain the Letter of Credit in the amount and terms set forth in this Section
20.2, Landlord shall have the right to present such Letter of Credit to the bank
in accordance with the terms of this Section 20.2, and the entire sum evidenced
thereby shall be paid to and held by Landlord as collateral for performance of
all of Tenant's obligations under this Lease and for all losses and damages
Landlord may suffer as a result of any default by Tenant under this Lease. If
there shall occur a default under this Lease as set forth in Article 19 hereof,
Landlord may, but without obligation to do so, draw upon the Letter of Credit,
in part or in whole, in such amount as is reasonably necessary to cure any
default of Tenant and/or to compensate Landlord for any and all damages of any
kind or nature sustained or which may be sustained by Landlord resulting from
Tenant's default. Tenant agrees not to interfere in any way with payment to
Landlord of the proceeds of the Letter of Credit, either prior to or following a
"draw" by Landlord of any portion of the Letter of Credit, regardless of whether
any dispute exists between Tenant and Landlord as to Landlord's right to draw
from the Letter of Credit. No condition or term of this Lease shall be deemed to
render the Letter of Credit conditional to justify the issuer of the Letter of
Credit in failing to honor a drawing upon such Letter of Credit in a timely
manner. Landlord and Tenant acknowledge and agree that in no event or
circumstance shall the Letter of Credit or any renewal thereof or substitute
therefor be (i) deemed to be or treated as a "security deposit" within the
meaning of California Civil Code Section 1950.7 (as supplemented, amended,
replaced and substituted from time to time), (ii) subject to the terms of such
Section 1950.7 (as supplemented, amended, replaced and substituted from time to
time), or (iii) intended to serve as a "security deposit" within the meaning of
such Section 1950.7 (as supplemented, amended, replaced and substituted from
time to time). The parties hereto recite that with respect to the Letter of
Credit, (x) the Letter of Credit is not intended to serve as a security deposit
and such Section 1950.7 (as supplemented, amended, replaced and substituted from
time to time), and any and all other laws, rules and regulations applicable to
security deposits in the commercial context ("Security Deposit Laws") shall have
no applicability or relevancy to the Letter of Credit and (y) Tenant waives any
and all rights, duties and obligations it may now or, in the future, will have
relating to or arising from the Security Deposit Laws.

        Notwithstanding the foregoing, if, after the first five (5) years of the
Lease Term have elapsed, Tenant is not in default in the terms of this Lease and
Tenant has completed four (4) consecutive quarters of positive "EBITDA"
(earnings before interest expense, income taxes, depreciation and amortization
expense, as certified to Landlord by Tenant's independent certified public
accounting firm), Tenant may then, and at six month intervals thereafter reduce
the amount of the Letter of Credit by equal amounts such that at the expiration
of the Term, the Letter of Credit would be reduced to zero. Notwithstanding the
foregoing, if at any time after the Letter of Credit has been reduced pursuant
to the foregoing, Tenant has two consecutive quarters in which EBITDA is
negative, then the Letter of Credit shall remain as is then in effect and shall
not be further reduced until such time as Tenant has four (4) consecutive
quarters of positive EBITDA, at which time the reductions shall resume in the
semi-annual amounts previously calculated. In the event that Tenant is entitled
to have the Letter of Credit reduced, Landlord shall cooperate with Tenant by
exchanging with Tenant the existing Letter of Credit for the new Letter of
Credit in the reduced amount.

                                       17
<PAGE>   22

ARTICLE 21 - COMPLIANCE WITH LAW

        Tenant shall not do anything or suffer anything to be done in or about
the Premises which will in any way conflict with any law, statute, ordinance or
other governmental or quasi-governmental rule, regulation or requirement now in
force or which may hereafter be enacted or promulgated. At its sole cost and
expense, Tenant shall promptly comply with all such governmental measures, other
than the making of structural changes or changes to the Building's life safety
system or are required to correct violations of law that existed as of the
Commencement Date (collectively the "Excluded Changes") except to the extent
such Excluded Changes are required due to Tenant's alterations, improvements,
modifications or additions to or Tenant's specific manner of use of the
Premises. In addition, Tenant shall fully comply with all present or future
programs intended to manage parking, transportation or traffic in and around the
Building, and in connection therewith, Tenant shall take responsible action for
the transportation planning and management of all employees located at the
Premises by working directly with Landlord, any governmental transportation
management organization or any other transportation-related committees or
entities. The judgment of any court of competent jurisdiction or the admission
of Tenant in any judicial action, regardless of whether Landlord is a party
thereto, that Tenant has violated any of said governmental measures, shall be
conclusive of that fact as between Landlord and Tenant.

ARTICLE 22 - ENTRY BY LANDLORD

        Landlord reserves the right at all reasonable times and upon 24 hours'
prior notice (except in the case of emergency) to Tenant to enter the Premises
to (i) inspect them; (ii) show the Premises to prospective purchasers,
mortgagees or tenants, or to the ground or underlying lessors; (iii) to post
notices of non-responsibility; (iv) alter, improve or repair the Premises or the
Building if necessary to comply with current building codes or other applicable
laws, any recorded covenants, conditions and restrictions ("CC&Rs"), or for
structural alterations, repairs or improvements to the Building, or as Landlord
may otherwise reasonably desire or deem necessary; or (v) perform and take
actions necessary to comply with the requirements and/or restrictions set forth
in any CC&Rs. Notwithstanding anything to the contrary contained in this Article
22, Landlord may enter the Premises at any time, without notice to Tenant, to
perform janitorial or other services required of Landlord pursuant to this
Lease. Any such entries shall be subject to Tenant's reasonable security
requirements and shall be without the abatement of Rent and shall include the
right to take such reasonable steps as required to accomplish the stated
purposes, provided that Landlord shall use its best efforts to minimize any
disruption to the business being carried on in the Premises during any such
entry. Tenant hereby waives any claims for damages or for any injuries or
inconvenience to or interference with Tenant's business, lost profits, any loss
of occupancy or quiet enjoyment of the Premises, and any other loss occasioned
thereby, unless due to Landlord's gross negligence, willful misconduct or a
breach of this Lease. For each of the above purposes, Landlord shall at all
times have a key with which to unlock all the doors in the Premises, excluding
Tenant's vaults, safes and special security areas designated in advance by
Tenant. In an emergency, Landlord shall have the right to use any means that
Landlord may deem proper to open the doors in and to the Premises. Any entry
into the Premises in the manner hereinbefore described shall not be deemed to be
a forcible or unlawful entry into, or a detainer of, the Premises, or an actual
or constructive eviction of Tenant from any portion of the Premises.

ARTICLE 23 - TENANT PARKING

        Tenant shall have the right to use, free from charge, up to the number
of undesignated, unreserved parking spaces set forth in Section 11 of the
Summary for parking in the Building Parking Facility. From and after the earlier
to occur of the RP Commencement Date, the number of undesignated, unreserved
parking spaces available to Tenant shall be increased to 223. Landlord shall not
be required to enforce Tenant's right to use such parking spaces. Tenant shall
abide, and cause its employees, representatives and visitors who utilize the
Building Parking Facility to abide, by all parking rules and regulations for
parking in the Building Parking Facility, as may be adopted and/or modified by
Landlord and/or Landlord's parking operator from time to time.

ARTICLE 24 - MISCELLANEOUS PROVISIONS

        24.1 TERMS; CAPTIONS. The necessary grammatical changes required to make
the provisions hereof apply either to corporations or partnerships or
individuals, men or women, as the case may require, shall in all cases be
assumed as though in each case fully expressed. The captions of Articles and
Sections are for convenience only and shall not be deemed to limit, construe,
affect or alter the meaning of such Articles and Sections.

        24.2 BINDING EFFECT. Each of the provisions of this Lease shall extend
to and shall, as the case may require, bind or inure to the benefit not only of
Landlord and of Tenant, but also of their respective successors or assigns,
provided this clause shall not permit any assignment by Tenant contrary to the
provisions of Article 14 of this Lease.

        24.3 NO WAIVER. No waiver of any provision of this Lease shall be
implied by any failure of a party to enforce any remedy on account of the
violation of such provision, even if such violation shall continue or be
repeated subsequently, any waiver by a party of any provision of this Lease may
only be in writing, and no express waiver shall affect any provision other than
the one specified in such waiver and that one only for the time and in the
manner specifically stated. No receipt of monies by Landlord from Tenant after
the termination of this Lease shall in any way alter the length of the Lease
Term or of Tenant's right of possession hereunder or after the giving of any
notice shall reinstate, continue or extend the Lease Term or affect any notice
given Tenant prior to the receipt of such monies, it being agreed that after the
service of notice or the commencement of a suit or after final judgment for
possession of the Premises, Landlord may receive and collect any Rent due, and
the payment of said Rent shall not waive or affect said notice, suit or
judgment.

        24.4 MODIFICATION OF LEASE. Should any current or prospective mortgagee
or ground lessor for the Building require a modification or modifications of
this Lease, which modification or modifications will not cause an increased cost
or expense to Tenant or in any other way materially and adversely change the
rights or obligations of Tenant hereunder, then and in such event, Tenant agrees
that this Lease may be so modified and agrees to execute whatever documents are
required therefor and deliver the same to Landlord within ten (10) days
following the request therefor. Should Landlord or any such current or
prospective mortgagee or ground lessor require execution of a short form of
Lease for

                                       18
<PAGE>   23

recording, containing, among other customary provisions, the names of the
parties, a description of the Premises and the Lease Term, Tenant agrees to
execute such short form of Lease and to deliver the same to Landlord within ten
(10) days following the request therefor.

        24.5 TRANSFER OF LANDLORD'S INTEREST. Tenant acknowledges that Landlord
has the right to transfer all or any portion of its interest in the Real
Property and Building and in this Lease, and Tenant agrees that in the event of
any such transfer, Landlord shall automatically be released from all further
liability under this Lease and Tenant agrees to look solely to such transferee
for the performance of Landlord's obligations hereunder after the date of
transfer. The liability of Landlord under this Lease is limited to its actual
period of ownership of title to the Building. The liability of any transferee of
Landlord shall be limited to the interest of such transferee in the Real
Property, Complex and Building and such transferee shall be without personal
liability under this Lease, and Tenant hereby expressly waives and releases such
personal liability on behalf of itself and all persons claiming by, through or
under Tenant. Tenant further acknowledges that Landlord may assign its interest
in this Lease to a mortgage lender as additional security and agrees that such
an assignment shall not release Landlord from its obligations hereunder and that
Tenant shall continue to look to Landlord for the performance of its obligations
hereunder.

        24.6 PROHIBITION AGAINST RECORDING. Except as provided in Section 24.4
of this Lease, neither this Lease, nor any memorandum, affidavit or other
writing with respect thereto, shall be recorded by Tenant or by anyone acting
through, under or on behalf of Tenant, and the recording thereof in violation of
this provision shall make this Lease null and void at Landlord's election.

        24.7 LANDLORD'S TITLE; AIR RIGHTS. Landlord's title is and always shall
be paramount to the title of Tenant. Nothing herein contained shall empower
Tenant to do any act which can, shall or may encumber the title of Landlord. No
rights to any view or to light or air over any property, whether belonging to
Landlord or any other person, are granted to Tenant by this Lease.

        24.8 TENANT'S SIGNS. Tenant shall be entitled, at its sole cost and
expense, to one (1) identification sign outside of the Premises on the floor on
which the Premises are located. The location, quality, design, style, lighting
and size of such sign shall be consistent with the Landlord's Building standard
signage program and shall be subject to Landlord's prior written approval, in
its reasonable discretion. Subject to final agreement with the Existing Tenant,
Tenant shall have rights to one-half (1/2) of the monument sign currently used
by the Existing Tenant. Upon the earlier to occur of the RP Commencement Date,
Tenant shall have exclusive rights to the entire monument sign. Upon the
expiration or earlier termination of this Lease, Tenant shall be responsible, at
its sole cost and expense, for the removal of such signage and the repair of all
damage to the Building caused by such removal. Except for such identification
sign, Tenant may not install any signs on the exterior or roof of the Building
or the Common Areas of the Building, the Complex or the Real Property. Any
signs, window coverings, or blinds (even if the same are located behind the
Landlord approved window coverings for the Building), or other items visible
from the exterior of the Premises or Building are subject to the prior approval
of Landlord, in its sole and absolute discretion.

        24.9 RELATIONSHIP OF PARTIES. Nothing contained in this Lease shall be
deemed or construed by the parties hereto or by any third party to create the
relationship of principal and agent, partnership, joint venturer or any
association between Landlord and Tenant, it being expressly understood and
agreed that neither the method of computation of Rent nor any act of the parties
hereto shall be deemed to create any relationship between Landlord and Tenant
other than the relationship of landlord and tenant.

        24.10 APPLICATION OF PAYMENTS. Landlord shall have the right to apply
payments received from Tenant pursuant to this Lease, regardless of Tenant's
designation of such payments, to satisfy any obligations of Tenant hereunder, in
such order and amounts as Landlord, in its sole discretion, may elect.

        24.11 TIME OF ESSENCE. Time is of the essence of this Lease and each of
its provisions.

        24.12 PARTIAL INVALIDITY. If any term, provision or condition contained
in this Lease shall, to any extent, be invalid or unenforceable, the remainder
of this Lease, or the application of such term, provision or condition to
persons or circumstances other than those with respect to which it is invalid or
unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.

        24.13 NO WARRANTY. In executing and delivering this Lease, Tenant has
not relied on any representation, including, but not limited to, any
representation whatsoever as to the amount of any item comprising Additional
Rent or the amount of the Additional Rent in the aggregate or that Landlord is
furnishing the same services to other tenants, at all, on the same level or on
the same basis, or any warranty or any statement of Landlord which is not set
forth herein or in one or more of the Exhibits attached hereto.

        24.14 LANDLORD EXCULPATION. It is expressly understood and agreed that
notwithstanding anything in this Lease to the contrary, and notwithstanding any
applicable law to the contrary, the liability of Landlord and the Landlord
Parties hereunder (including any successor landlord) and any recourse by Tenant
against Landlord or the Landlord Parties shall be limited solely and exclusively
to an amount which is equal to the interest of Landlord in the Building, and
neither Landlord, nor any of the Landlord Parties shall have any personal
liability therefor, and Tenant hereby expressly waives and releases such
personal liability on behalf of itself and all persons claiming by, through or
under Tenant.

        24.15 ENTIRE AGREEMENT. It is understood and acknowledged that there are
no oral agreements between the parties hereto affecting this Lease and this
Lease supersedes and cancels any and all previous negotiations, arrangements,
brochures, agreements and understandings, if any, between the parties hereto or
displayed by Landlord to Tenant with respect to the subject matter thereof, and
none thereof shall be used to interpret or construe this Lease. This Lease and
any side letter or separate agreement executed by Landlord and Tenant in
connection with this Lease and dated of even date herewith contain all of the
terms, covenants, conditions, warranties and agreements of the parties relating
in any manner to the rental, use and occupancy of the Premises, shall be
considered to be the only agreement between the parties hereto and their
representatives and agents, and none of the terms, covenants, conditions or

                                       19
<PAGE>   24

provisions of this Lease can be modified, deleted or added to except in writing
signed by the parties hereto. All negotiations and oral agreements acceptable to
both parties have been merged into and are included herein. There are no other
representations or warranties between the parties, and all reliance with respect
to representations is based totally upon the representations and agreements
contained in this Lease.

        24.16 RIGHT TO LEASE. Landlord reserves the absolute right to effect
such other tenancies in the Building as Landlord in the exercise of its sole
business judgment shall determine to best promote the interests of the Building.
Tenant does not rely on the fact, nor does Landlord represent, that any specific
tenant or type or number of tenants shall, during the Lease Term, occupy any
space in the Building.

        24.17 FORCE MAJEURE. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, inability to obtain services, labor, or
materials or reasonable substitutes therefor, governmental actions, civil
commotions, fire or other casualty, and other causes beyond the reasonable
control of the party obligated to perform, except with respect to the
obligations imposed with regard to Rent and other charges to be paid by Tenant
pursuant to this Lease (collectively, the "Force Majeure"), notwithstanding
anything to the contrary contained in this Lease, shall excuse the performance
of such party for a period equal to any such prevention, delay or stoppage and,
therefore, if this Lease specifies a time period for performance of an
obligation of either party, that time period shall be extended by the period of
any delay in such party's performance caused by a Force Majeure.

        24.18 WAIVER OF REDEMPTION BY TENANT. Tenant hereby waives for Tenant
and for all those claiming under Tenant all right now or hereafter existing to
redeem by order or judgment of any court or by any legal process or writ,
Tenant's right of occupancy of the Premises after any termination of this Lease.

        24.19 NOTICES. All notices, demands, statements or communications
(collectively, "Notices") given or required to be given by either party to the
other hereunder shall be in writing, shall be sent by United States certified or
registered mail, postage prepaid, return receipt requested, or delivered
personally (i) to Tenant at the appropriate address set forth in Section 5 of
the Summary, or to such other place as Tenant may from time to time designate in
a Notice to Landlord; or (ii) to Landlord at the addresses of Landlord's agent
set forth in Section 3 of the Summary, or to such other firm or to such other
place as Landlord may from time to time designate in a Notice to Tenant. Any
Notice will be deemed given on the date it is mailed as provided in this Section
24.19 or upon the date personal delivery is made. If Tenant is notified of the
identity and address of Landlord's mortgagee or ground or underlying lessor,
Tenant shall give to such mortgagee or ground or underlying lessor written
notice of any default by Landlord under the terms of this Lease by registered or
certified mail, and such mortgagee or ground or underlying lessor shall be given
a reasonable opportunity to cure such default prior to Tenant's exercising any
remedy available to Tenant.

        24.20 JOINT AND SEVERAL. If there is more than one Tenant, the
obligations imposed upon Tenant under this Lease shall be joint and several.

        24.21 AUTHORITY. If Tenant is a corporation, limited liability company
or partnership, each individual executing this Lease on behalf of Tenant hereby
represents and warrants that Tenant is a duly formed and existing entity
qualified to do business in the state in which the Building is located and that
Tenant has full right and authority to execute and deliver this Lease and that
each person signing on behalf of Tenant is authorized to do so and to bind
Tenant hereunder.

        24.22 JURY TRIAL; ATTORNEYS' FEES. IF EITHER PARTY COMMENCES LITIGATION
AGAINST THE OTHER FOR THE SPECIFIC PERFORMANCE OF THIS LEASE, FOR DAMAGES FOR
THE BREACH HEREOF OR OTHERWISE FOR ENFORCEMENT, PROTECTION OR ESTABLISHMENT OF
ANY RIGHT OR REMEDY HEREUNDER, THE PARTIES HERETO AGREE TO AND HEREBY DO WAIVE
ANY RIGHT TO A TRIAL BY JURY. In the event of any such commencement of
litigation, the prevailing party shall be entitled to recover from the other
party such costs and reasonable attorneys' fees as may have been incurred,
including any and all costs incurred in enforcing, perfecting and executing such
judgment.

        24.23 GOVERNING LAW. This Lease shall be construed and enforced in
accordance with the laws of the state in which the Building is located.

        24.24 SUBMISSION OF LEASE. Submission of this instrument for examination
or signature by Tenant does not constitute a reservation of or an option for
lease, and it is not effective as a lease or otherwise until execution and
delivery by both Landlord and Tenant.

        24.25 BROKERS. Landlord and Tenant hereby warrant to each other that
they have had no dealings with any real estate broker or agent in connection
with the negotiation of this Lease, excepting only the real estate brokers or
agents specified in Section 12 of the Summary (the "Brokers"), and that they
know of no other real estate broker or agent who is entitled to a commission in
connection with this Lease. Each party shall indemnify and hold harmless the
other from and against any and all liabilities or expenses arising out of claims
made for a fee or commission by any real estate broker, agent or finder in
connection with the Premises and this Lease other than Brokers, if any, and the
payment of the Brokers by Landlord (which payment is Landlord's sole
responsibility) resulting from the actions of the indemnifying party. Any real
estate brokerage commission or finder's fee payable to the Brokers in connection
with this Lease shall only be payable and applicable to the extent of the
initial term of the Lease, be paid by Landlord and shall be payable 50% upon
mutual lease execution and delivery, 25% upon occupancy of the Initial Premises,
and 25% upon occupancy of the Remaining Premises. Unless expressly agreed to in
writing by Landlord and Brokers, no real estate brokerage commission or finder's
fee shall be owed to, or otherwise payable to, the Brokers for any renewals or
other extensions of the initial term of this Lease or for any additional space
leased by Tenant other than the Premises as same exists as of the date on which
Tenant executes this Lease. Tenant further represents and warrants to Landlord
that Tenant will not receive (i) any portion of any brokerage commission or
finder's fee payable to the Broker(s) in connection with this Lease or (ii) any
other form of compensation or incentive from the Broker(s) with respect to this
Lease.

        24.26 INDEPENDENT COVENANTS. This Lease shall be construed as though the
covenants herein between Landlord and Tenant are independent and not dependent
and Tenant hereby expressly waives the benefit of any statute to the contrary
and agrees that if Landlord fails to perform its obligations set forth herein,
Tenant shall not be entitled to make any repairs or perform any acts hereunder
at Landlord's expense or to any setoff of the Rent or other amounts

                                       20
<PAGE>   25

owing hereunder against Landlord; provided, however, that the foregoing shall in
no way impair the right of Tenant to commence a separate action against Landlord
for any violation by Landlord of the provisions hereof so long as notice is
first given to Landlord and any holder of a mortgage or deed of trust covering
the Building, Complex, Real Property or any portion thereof, of whose address
Tenant has theretofore been notified, and an opportunity is granted to Landlord
and such holder to correct such violations as provided above. Each provision to
be performed by Tenant hereunder shall be deemed to be both a covenant and a
condition.

        24.27 BUILDING NAME AND SIGNAGE. Landlord shall have the right at any
time to change the name of the Building and to install, affix and maintain any
and all signs on the exterior and on the interior of the Building as Landlord
may, in Landlord's sole discretion, desire. Tenant shall not use the name of the
Building or use pictures or illustrations of the Building in advertising or
other publicity, without the prior written consent of Landlord. Landlord shall
not use the name of the Tenant in advertising or other publicity, without the
prior written consent of Tenant, except in connection with the proposed sale,
financing, joint venture or other investment in the Building, Complex or Real
Property.

        24.28 BUILDING DIRECTORY. As of the Commencement Date Tenant shall be
entitled to one (1) line on the Building directory to display Tenant's name and
location in the Building. Tenant shall be entitled to the entire Building
directory as of the RP Commencement Date.

        24.29 CONFIDENTIALITY. Tenant acknowledges that the content of this
Lease and any related documents are confidential information. Tenant shall keep
such confidential information strictly confidential and shall not disclose such
confidential information to any person or entity other than Tenant's financial,
legal, and space planning consultants, or as may be required by law.

        24.30 LANDLORD RENOVATIONS. It is specifically understood and agreed
that Landlord has no obligation and has made no promises to alter, remodel,
improve, renovate, repair or decorate the Premises, Building, Complex, Real
Property, or any part thereof and that no representations or warranties
respecting the condition of the Premises, the Building, the Complex or the Real
Property have been made by Landlord to Tenant, except as specifically set forth
in this Lease.

However, Tenant acknowledges that Landlord may from time to time, at Landlord's
sole option, renovate, improve, alter, or modify (collectively, the
"Renovations") the Building, Premises, Complex and/or Real Property, including
without limitation the Building Parking Facility, Common Areas, systems and
equipment, roof, and structural portions of the same, which Renovations may
include, without limitation, (i) modifying the Common Areas and tenant spaces to
comply with applicable laws and regulations, including regulations relating to
the physically disabled, seismic conditions, and building safety and security,
and (ii) installing new carpeting, lighting, and wall coverings in the Building
Common Areas, and in connection with such Renovations, Landlord may, among other
things, erect scaffolding or other necessary structures in the Building, limit
or eliminate access to portions of the Complex and/or Real Property, including
portions of the Common Areas, or perform work in the Building, which work may
create noise, dust or leave debris in the Building. Tenant hereby agrees that
such Renovations and Landlord's actions in connection with such Renovations
shall in no way constitute a constructive eviction of Tenant nor entitle Tenant
to any abatement of Rent. Landlord shall have no responsibility or for any
reason be liable to Tenant for any direct or indirect injury to or interference
with Tenant's business arising from the Renovations, nor shall Tenant be
entitled to any compensation or damages from Landlord for loss of the use of the
whole or any part of the Premises or of Tenant's personal property or
improvements resulting from the Renovations or Landlord's actions in connection
with such Renovations, or for any inconvenience or annoyance occasioned by such
Renovations or Landlord's actions in connection with such Renovations.
Landlord's right pursuant to this paragraph 24.30 shall be subject to the
condition that exercise of any of such rights shall not unreasonably interfere
with Tenant's use of the Premises, or decrease the number of Tenant's parking
spaces below the number required to be provided hereunder.

        24.31 [OMITTED]

        24.32 MERGER. The voluntary or other surrender of this Lease by Tenant,
the mutual termination or cancellation hereof by Landlord and Tenant, or a
termination of this Lease by Landlord for a material default by Tenant
hereunder, shall not work a merger, and, at the sole option of Landlord, (i)
shall terminate all or any existing subleases or subtenancies, or (ii) may
operate as an assignment to Landlord of any or all of such subleases or
subtenancies. Landlord's election of either or both of the foregoing options
shall be exercised by delivery by Landlord of written notice thereof to Tenant
and all known subtenants under any sublease.

ARTICLE 25 - MORTGAGEE PROTECTION

        Upon any default on the part of Landlord, Tenant will give written
notice by registered or certified mail to any beneficiary of a deed of trust or
mortgagee of a mortgage covering the Premises who has provided Tenant with
notice of their interest together with an address for receiving notice, and
shall offer such beneficiary or mortgagee a reasonable opportunity to cure the
default (which, in no event shall be less than ninety (90) days), including time
to obtain possession of the Premises by power of sale or a judicial foreclosure,
if such should prove necessary to effect a cure. If such default cannot be cured
within such time period, then such additional time as may be necessary will be
given to such beneficiary or mortgagee to effect such cure so long as such
beneficiary or mortgagee has commenced the cure within the original time period
and thereafter diligently pursues such cure to completion, in which event this
Lease shall not be terminated while such cure is being diligently pursued.
Tenant agrees that each lender to whom this Lease has been assigned by Landlord
is an express third party beneficiary hereof. Tenant shall not make any
prepayment of Rent more than one (1) month in advance without the prior written
consent of each such lender, except if Tenant is required to make quarterly
payments of Rent in advance pursuant to the provisions of this Lease. Tenant
waives the collection of any deposit from such lender(s) or any purchaser at a
foreclosure sale of such lender(s)' deed of trust unless the lender(s) or such
purchaser shall have actually received and not refunded the deposit. Tenant
agrees to make all payments under this Lease to the lender with the most senior
encumbrance upon receiving a direction, in writing, to pay said amounts to such
lender. Tenant shall comply with such written direction to pay without
determining whether an event of default exists under such lender's loan to
Landlord.

                                       21
<PAGE>   26

ARTICLE 26 - AMERICANS WITH DISABILITIES ACT

        Landlord and Tenant hereby agree and acknowledge that the Premises, the
Building, the Complex and/or the Real Property may be subject to the
requirements of the Americans with Disabilities Act, a federal law codified at
42 U.S.C. 12101 et seq., including, but not limited to Title III thereof, all
regulations and guidelines related thereto, together with any and all laws,
rules, regulations, ordinances, codes and statutes now or hereafter enacted by
local or state agencies having jurisdiction thereof, including all requirements
of Title 24 of the State of California, as the same may be in effect on the date
of this Lease and may be hereafter modified, amended or supplemented
(collectively, the "ADA"). Any Alterations to be constructed hereunder shall be
in compliance with the requirements of the ADA, and all costs incurred for
purposes of compliance therewith shall be a part of and included in the costs of
the Alterations. Tenant shall be solely responsible for conducting its own
independent investigation of this matter and for ensuring that the design of all
Alterations strictly comply with all requirements of the ADA. Subject to
reimbursement as part of Operating Expenses, if any barrier removal work or
other work is required to the Building, the Common Areas, or the Complex under
the ADA, then such work shall be the responsibility of Landlord; provided, if
such work is required under the ADA as a result of Tenant's particular use of
the Premises or any work or alteration made to the Premises by or on behalf of
Tenant, then such work shall be performed by Landlord at the sole cost and
expense of Tenant. Except as otherwise expressly provided in this Article 26,
Tenant shall be responsible at its sole cost and expense for fully and
faithfully complying with all applicable requirements of the ADA, including
without limitation, not discriminating against any disabled persons in the
operation of Tenant's business in or about the Premises, and offering or
otherwise providing auxiliary aids and services as, and when, required by the
ADA. Within ten (10) days after receipt, Landlord and Tenant shall advise the
other party in writing, and provide the other with copies of (as applicable),
any notices alleging violation of the ADA relating to any portion of the
Premises or the Building; any claims made or threatened in writing regarding
noncompliance with the ADA and relating to any portion of the Premises or the
Building; or any governmental or regulatory actions or investigations instituted
or threatened regarding noncompliance with the ADA and relating to any portion
of the Premises or the Building. Tenant shall and hereby agrees to protect,
defend (with counsel acceptable to Landlord) and hold Landlord and the other
Indemnitees harmless and indemnify the Indemnitees from and against all
liabilities, damages, claims, losses, penalties, judgments, charges and expenses
(including reasonable attorneys' fees, costs of court and expenses necessary in
the prosecution or defense of any litigation including the enforcement of this
provision) arising from or in any way related to, directly or indirectly,
Tenant's or Tenant's Representatives' violation or alleged violation of the ADA.
Tenant agrees that the indemnity obligations of Tenant herein accruing during
the Term hereof shall survive the expiration or earlier termination of this
Lease.

ARTICLE 27 - HAZARDOUS MATERIALS

        27.1 DEFINITION OF HAZARDOUS MATERIALS. As used in this Lease, the term
Hazardous Materials shall mean and include (a) any hazardous or toxic wastes,
materials or substances, and other pollutants or contaminants, which are or
become regulated by any Environmental Laws; (b) petroleum, petroleum by
products, gasoline, diesel fuel, crude oil or any fraction thereof; (c) asbestos
and asbestos containing material, in any form, whether friable or non-friable;
(d) polychlorinated biphenyls; (e) radioactive materials; (f) lead and
lead-containing materials; (g) any other material, waste or substance displaying
toxic, reactive, ignitable or corrosive characteristics, as all such terms are
used in their broadest sense, and are defined or become defined by any
Environmental Law (defined below); or (h) any materials which cause or threatens
to cause a nuisance upon or waste to any portion of the Premises, the Building,
the Real Property, the Complex or any surrounding property; or poses or
threatens to pose a hazard to the health and safety of persons on the Premises
or any surrounding property.

        27.2 PROHIBITION; ENVIRONMENTAL LAWS. Except for nominal amounts of
ordinary household cleaners, office supplies and janitorial supplies which are
not regulated by any Environmental Laws, Tenant shall not use nor store any
Hazardous Materials on, in, or about any portion of the Premises, the Building,
the Complex, the Real Property without, in each instance, obtaining Landlord's
prior written consent thereto. In all events any usage or storage of any
Hazardous Materials by Tenant shall be in full compliance with any and all
local, state and federal environmental, health and/or safety-related laws,
statutes, orders, standards, courts' decisions, ordinances, rules and
regulations (as interpreted by judicial and administrative decisions), decrees,
directives, guidelines, permits or permit conditions, currently existing and as
amended, enacted, issued or adopted in the future which are or become applicable
to Tenant or all or any portion of the Premises (collectively, the
"Environmental Laws"). Landlord shall have the right at all times during the
Lease Term following no less than 24 hours' notice (except in case of
emergency), and subject to Tenant's reasonable security requirements to (i)
inspect the Premises, (ii) conduct tests and investigations to determine whether
Tenant is in compliance with the provisions of this Article 27, and (iii)
request lists of all Hazardous Materials used, stored or otherwise located in,
on or about any portion of the Premises. The cost of all such inspections, tests
and investigations shall be borne solely by Tenant, if Landlord reasonably
determines that Tenant or any of Tenant's Representatives are directly or
indirectly responsible in any manner for any contamination revealed by such
inspections, tests and investigations. The aforementioned rights granted herein
to Landlord and its representatives shall not create (a) a duty on Landlord's
part to inspect, test, investigate, monitor or otherwise observe the Premises or
the activities of Tenant and Tenant's Representatives with respect to Hazardous
Materials, including without limitation, Tenant's operation, use and any
remediation related thereto, or (b) liability on the part of Landlord and its
representatives for Tenant's use, storage, disposal or remediation of Hazardous
Materials, it being understood that Tenant shall be solely responsible for all
liability in connection therewith.

        27.3 TENANT'S ENVIRONMENTAL OBLIGATIONS. Tenant, at its sole cost and
expense, covenants and warrants to promptly investigate, clean up, remove,
restore and otherwise remediate (including, without limitation, preparation of
any feasibility studies or reports and the performance of any and all closures)
any spill, release, discharge, disposal, emission, migration or transportation
of Hazardous Materials arising from or related to the intentional or negligent
acts or omissions of Tenant or any of Tenant's Representatives such that the
affected portions of the Premises, Building, Complex, Real Property and any
adjacent property are returned to the condition existing prior to the appearance
of such Hazardous Materials. Any such investigation, clean up, removal,
restoration and other remediation shall only be performed after Tenant has
obtained Landlord's prior written consent, which consent shall not be
unreasonably withheld so long as such actions would not potentially have a
material adverse long-term or short-term effect on any portion of the Premises,
the Building, the Real Property or the Complex. Notwithstanding the foregoing,
Tenant shall be entitled to respond immediately to an emergency without first
obtaining Landlord's prior written consent. Tenant, at its sole cost

                                       22
<PAGE>   27

and expense, shall conduct and perform, or cause to be conducted and performed,
all closures as required by any Environmental Laws or any agencies or other
governmental authorities having jurisdiction thereof. If Tenant fails to so
promptly investigate, clean up, remove, restore, provide closure or otherwise so
remediate, Landlord may, but without obligation to do so, take any and all steps
necessary to rectify the same and Tenant shall promptly reimburse Landlord, upon
demand, for all costs and expenses to Landlord of performing investigation,
clean up, removal, restoration, closure and remediation work. All such work
undertaken by Tenant, as required herein, shall be performed in such a manner so
as to enable Landlord to make full economic use of the Premises, the Building,
the Real Property and the Complex after the satisfactory completion of such
work.

        27.4 ENVIRONMENTAL INDEMNITY. In addition to Tenant's obligations as set
forth hereinabove, Tenant shall, protect, indemnify, defend (with counsel
reasonably acceptable to Landlord) and hold Landlord and the other Indemnitees
harmless from and against any and all claims, judgments, damages, penalties,
fines, liabilities, losses (including, without limitation, diminution in value
of any portion of the Premises, the Building, the Real Property or the Complex,
damages for the loss of or restriction on the use of rentable or usable space,
and from any adverse impact of Landlord's marketing of any space within the
Building and/or Complex), suits, administrative proceedings and costs
(including, but not limited to, attorneys' and consultant fees and court costs)
arising at any time during or after the Lease Term in connection with or related
to, directly or indirectly, the use, presence, transportation, storage,
disposal, migration, removal, spill, release or discharge of Hazardous Materials
on, in or about any portion of the Premises, the Common Areas, the Building, the
Real Property or the Complex as a result (directly or indirectly) of the
intentional or negligent acts or omissions of Tenant or any of Tenant's
Representatives. Neither the written consent of Landlord to the presence, use or
storage of Hazardous Materials in, on, under or about any portion of the
Premises, the Building, the Real Property and/or the Complex, nor the strict
compliance by Tenant with all Environmental Laws shall excuse Tenant from its
obligations of indemnification pursuant hereto. Tenant shall not be relieved of
its indemnification obligations under the provisions of this Section 27.4 due to
Landlord's status as either an "owner" or "operator" under any Environmental
Laws.

        27.5 SURVIVAL. Tenant's obligations and liabilities pursuant to the
provisions of this Article 27 shall survive the expiration or earlier
termination of this Lease. If it is determined by Landlord's consultants that
the condition of all or any portion of the Premises, the Building, the Real
Property and/or the Complex is not in compliance with the provisions of this
Lease with respect to Hazardous Materials, including without limitation, all
Environmental Laws at the expiration or earlier termination of this Lease, then
in Landlord's sole discretion, Landlord may require Tenant to hold over
possession of the Premises until Tenant can surrender the Premises to Landlord
in the condition in which the Premises existed as of the Lease Commencement Date
and prior to the appearance of such Hazardous Materials except for reasonable
wear and tear, including without limitation, the conduct or performance of any
closures as required by any Environmental Laws. The burden of proof hereunder
shall be upon Tenant. For purposes hereof, the term "reasonable wear and tear"
shall not include any deterioration in the condition or diminution of the value
of any portion of the Premises, the Building, the Real Property and/or the
Complex in any manner whatsoever related to directly, or indirectly, Hazardous
Materials. Any such holdover by Tenant will be with Landlord's consent and will
not be terminable by Tenant in any event or circumstance.

        27.6 EXCULPATION OF TENANT: Tenant shall not be liable to Landlord for
or otherwise obligated to Landlord under any provision of the Lease with respect
to the following: (i) any claim, remediation, obligation, investigation,
obligation, liability, cause of action, attorney's fees, consultants' cost,
expense or damage resulting from any Hazardous Materials present in, on or about
the Premises, the Building, the Real Property or the Complex to the extent not
caused nor otherwise permitted, directly or indirectly, by Tenant or Tenant's
Representatives; or (ii) the removal, investigation, monitoring or remediation
of any Hazardous Material present in, on or about the Premises, the Building,
the Real Property or the Complex directly caused by any source, including third
parties, other than Tenant or Tenant's Representatives; provided, however,
Tenant shall be fully liable for and otherwise obligated to Landlord under the
provisions of this Lease for all liabilities, costs, damages, penalties, claims,
judgments, expenses (including without limitation, attorneys' and experts' fees
and costs) and losses to the extent (a) Tenant or any of Tenant's
Representatives contributes to the presence of such Hazardous Materials, or
Tenant and/or any of Tenant's Representatives exacerbates the conditions caused
by such Hazardous Materials, or (b) Tenant and/or Tenant's Representatives
allows or permits persons over which Tenant or any of Tenant's Representatives
has control, and/or for which Tenant or any of Tenant's Representatives are
legally responsible for, to cause such Hazardous Materials to be present in, on,
under, through or about any portion of the Premises, the Common Areas, the
Building, the Real Property or the Complex, or (c) Tenant and/or any of Tenant's
Representatives does not take all reasonably appropriate actions to prevent such
persons over which Tenant or any of Tenant's Representatives has control and/or
for which Tenant or any of Tenant's Representatives are legally responsible from
causing the presence of Hazardous Materials in, on, under, through or about any
portion of the Premises, the Common Areas, the Building, the Real Property or
the Complex.

ARTICLE 28 - FINANCIAL STATEMENTS

        Tenant, for the reliance of Landlord, any lender holding or anticipated
to acquire a lien upon the Premises, the Building, the Real Property or the
Complex or any portion thereof, or any prospective purchaser of the Building,
the Real Property or the Complex or any portion thereof, within ten (10) days
after Landlord's request therefor, but not more often than once annually so long
as Tenant is not in default of this Lease, shall deliver to Landlord the then
current audited financial statements of Tenant (including interim periods
following the end of the last fiscal year for which annual statements are
available) which statements shall be prepared or compiled by a certified public
accountant and shall present fairly the financial condition of Tenant at such
dates and the result of its operations and changes in its financial positions
for the periods ended on such dates. If an audited financial statement has not
been prepared, Tenant shall provide Landlord with an unaudited financial
statement and/or such other information, the type and form of which are
acceptable to Landlord in Landlord's reasonable discretion, which reflects the
financial condition of Tenant. If Landlord so requests, Tenant shall deliver to
Landlord an opinion of a certified public accountant, including a balance sheet
and profit and loss statement for the most recent prior year, all prepared in
accordance with generally accepted accounting principles consistently applied.

        IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
executed the day and date first above written.

                                       23
<PAGE>   28

TENANT:

AVIGEN, INC.,
a Delaware corporation

By: /s/ JOHN MONAHAN
   --------------------------------
Name:   John Monahan
     ------------------------------
Title:  President & CEO
      -----------------------------

By: /s/ THOMAS J. PAULSON
   --------------------------------
Name:   Thomas J. Paulson
     ------------------------------
Title:  VP-Finance, CFO
      -----------------------------

Date:   11/3/00
     ------------------------------

LANDLORD:

LINCOLN-RECP EMPIRE OPCO, LLC,
a Delaware limited liability company

By:     LEGACY PARTNERS COMMERCIAL, INC.,
        as manager and agent for Lincoln-RECP Empire OPCO, LLC

        By: /s/ ROBERT F. PHIPPS
           ------------------------------
                Senior Vice President

Date:
     ------------------------------

                                       24

<PAGE>   29

                                    EXHIBIT A
                        OUTLINE OF FLOOR PLAN OF PREMISES

                                      A-1

<PAGE>   30

                                    EXHIBIT B
                             [INTENTIONALLY OMITTED]

                                       B-1

<PAGE>   31

                                    EXHIBIT C
                               AMENDMENT TO LEASE

        This AMENDMENT TO LEASE ("Amendment") is made and entered into effective
as of November 2, 2000, by and between LINCOLN-RECP EMPIRE OPCO, LLC, a Delaware
limited liability company ("Landlord"), and AVIGEN, INC., a Delaware corporation
("Tenant"), with reference to the following facts.

                                    RECITALS:

        A. Landlord and Tenant entered into that certain Office Lease dated as
of _____________________ (the "Lease") pursuant to which Landlord leased to
Tenant and Tenant leased from Landlord certain "Premises", as described in the
Lease, known as Suite ____ of the Building located at 1301 Harbor Bay Parkway,
Alameda, California 94502.

        B. Except as otherwise set forth herein, all capitalized terms used in
this Amendment shall have the same meaning given such terms in the Lease.

        C. Landlord and Tenant desire to amend the Lease to confirm the
commencement and expiration dates of the term, as hereinafter provided.

        NOW, THEREFORE, in consideration of the foregoing Recitals and the
mutual covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

        1. CONFIRMATION OF DATES. The parties hereby confirm that (a) the
Premises are Substantially Complete, (b) the term of the Lease commenced as of
____________________ (the "Lease Commencement Date") for a term of
_________________________ ending on _______________________ (the "Lease
Expiration Date") (unless sooner terminated as provided in the Lease and (c) in
accordance with the Lease, Rent commenced to accrue on
_______________________________.

        2. NO FURTHER MODIFICATION. Except as set forth in this Amendment, all
of the terms and provisions of the Lease shall remain unmodified and in full
force and effect.

        IN WITNESS WHEREOF, this Amendment to Lease has been executed as of the
day and year first above written.

TENANT:

AVIGEN, INC.,
a Delaware corporation

By:
   --------------------------------
Name:
     ------------------------------
Title:
      -----------------------------

By:
   --------------------------------
Name:
     ------------------------------
Title:
      -----------------------------

Date:
    -------------------------------

LANDLORD:

LINCOLN-RECP EMPIRE OPCO, LLC,
a Delaware limited liability company

By:     LEGACY PARTNERS COMMERCIAL, INC.,
        as manager and agent for Lincoln-RECP Empire OPCO, LLC

        By:
           ----------------------------------
           Senior Vice President

Date:
     ------------------------------

                                      C-1

<PAGE>   32

                                    EXHIBIT D
                              RULES AND REGULATIONS

        Tenant shall faithfully observe and comply with the following Rules and
Regulations. Landlord shall not be responsible to Tenant for the nonperformance
of any of said Rules and Regulations by or otherwise with respect to the acts or
omissions of any other tenants or occupants of the Building. Notwithstanding
anything to the contrary contained in this section, if any rule or regulation is
in conflict with any term, covenant or condition of this Lease, this Lease shall
prevail. In addition, no such rule or regulation, or any subsequent amendment
thereto adopted by Landlord, shall in any way materially alter, reduce or
adversely affect any of Tenant's rights or enlarge Tenant's obligations under
this Lease.

        1. Tenant shall not alter any lock or install any new or additional
locks or bolts on any doors or windows of the Premises without obtaining
Landlord's prior written consent. Tenant shall bear the cost of any lock changes
or repairs required by Tenant. Two keys will be furnished by Landlord for the
Premises, and any additional keys required by Tenant must be obtained from
Landlord at a reasonable cost to be established by Landlord.

        2. All doors opening to public corridors shall be kept closed at all
times except for normal ingress and egress to the Premises, unless electrical
hold backs have been installed.

        3. Landlord reserves the right to close and keep locked all entrance and
exit doors of the Building during such hours as are customary for comparable
buildings in the vicinity of the Building. Tenant, its employees and agents must
be sure that the doors to the Building are securely closed and locked when
leaving the Premises if it is after the normal hours of business for the
Building. Any tenant, its employees, agents or any other persons entering or
leaving the Building at any time when it is so locked, or any time when it is
considered to be after normal business hours for the Building, may be required
to sign the Building register when so doing. Access to the Building may be
refused unless the person seeking access has proper identification or has a
previously arranged pass for access to the Building. The Landlord and his agents
shall in no case be liable for damages for any error with regard to the
admission to or exclusion from the Building of any person. In case of invasion,
mob, riot, public excitement, or other commotion, Landlord reserves the right to
prevent access to the Building during the continuance of same by any means it
deems appropriate for the safety and protection of life and property.

        4. Landlord shall have the right to prescribe the weight, size and
position of all safes and other heavy property brought into the Building. Safes
and other heavy objects shall, if considered necessary by Landlord, stand on
supports of such thickness as is necessary to properly distribute the weight.
Landlord will not be responsible for loss of or damage to any such safe or
property in any case. All damage done to any part of the Building, its contents,
occupants or visitors by moving or maintaining any such safe or other property
shall be the sole responsibility of Tenant and any expense of said damage or
injury shall be borne by Tenant.

        5. No oversize or overweight furniture, freight, packages, supplies,
equipment or merchandise will be brought into or removed from the Building or
carried up or down in the elevators, except upon prior notice to Landlord, and
in such manner, in such specific elevator, and between such hours as shall be
designated by Landlord. Tenant shall provide Landlord with not less than 24
hours prior notice of the need to utilize an elevator for any such purpose, so
as to provide Landlord with a reasonable period to schedule such use and to
install such padding or take such other actions or prescribe such procedures as
are appropriate to protect against damage to the elevators or other parts of the
Building.

        6. Landlord shall have the right to control and operate the public
portions of the Building, the public facilities, the heating and air
conditioning, and any other facilities furnished for the common use of tenants,
in such manner as is customary for comparable buildings in the vicinity of the
Building.

        7. The requirements of Tenant will be attended to only upon application
at the management office of the Building or at such office location designated
by Landlord. Employees of Landlord shall not perform any work or do anything
outside their regular duties unless under special instructions from Landlord.

        8. Tenant shall not disturb, solicit, or canvass any occupant of the
Building and shall cooperate with Landlord or Landlord's agents to prevent same.

        9. The toilet rooms, urinals, wash bowls and other apparatus shall not
be used for any purpose other than that for which they were constructed, and no
foreign substance of any kind whatsoever shall be thrown therein. The expense of
any breakage, stoppage or damage resulting from the violation of this rule shall
be borne by the tenant who, or whose employees or agents, shall have caused it.

        10. Tenant shall not overload the floor of the Premises, nor mark, drive
nails or screws, or drill into the partitions, woodwork or plaster or in any way
deface the Premises or any part thereof without Landlord's consent first had and
obtained. Notwithstanding the foregoing, a tenant may decorate the interior of
such tenant's premises at such tenant's sole discretion provided such
decorations do not impact the structural integrity of the Building and cannot be
seen from the exterior of the Building or from any Common Areas of the Building.

        11. Except for vending machines intended for the sole use of Tenant's
employees and invitees, no vending machine or machines of any description other
than fractional horsepower office machines shall be installed, maintained or
operated upon the Premises without the written consent of Landlord.

        12. Tenant shall not use any method of heating or air conditioning other
than that which may be supplied by Landlord, without the prior written consent
of Landlord.

        13. Tenant shall not use or keep in or on the Premises or the Building
any kerosene, gasoline or other inflammable or combustible fluid or material.
Tenant shall not use, keep or permit to be used or kept, any foul or noxious gas
or substance in or on the Premises, or permit or allow the Premises to be
occupied or used in a manner offensive or objectionable to Landlord or other
occupants of the Building by reason of noise, odors, or vibrations, or interfere
in any way with other Tenants or those having business therein.

        14. Tenant shall not bring into or keep within the Building or the
Premises any animals, birds, bicycles or other vehicles.

                                      D-1
<PAGE>   33

        15. No cooking shall be done or permitted by any tenant on the Premises,
nor shall the Premises be used for the storage of merchandise, for lodging or
for any improper, objectionable or immoral purposes. Notwithstanding the
foregoing, Underwriters' laboratory-approved equipment and microwave ovens may
be used in the Premises for heating food and brewing coffee, tea, hot chocolate
and similar beverages, provided that such use is in accordance with all
applicable federal, state and city laws, codes, ordinances, rules and
regulations, and does not cause odors which are objectionable to Landlord and
other Tenants.

        16. Landlord will approve where and how telephone and telegraph wires
are to be introduced to the Premises. No boring or cutting for wires shall be
allowed without the consent of Landlord. The location of telephone, call boxes
and other office equipment affixed to the Premises shall be subject to the
approval of Landlord.

        17. Landlord reserves the right to exclude or expel from the Building
any person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in violation
of any of these Rules and Regulations.

        18. Tenant, its employees and agents shall not loiter in the entrances
or corridors, nor in any way obstruct the sidewalks, lobby, halls, stairways or
elevators, and shall use the same only as a means of ingress and egress for the
Premises.

        19. Tenant shall not waste electricity, water or air conditioning and
agrees to cooperate fully with Landlord to ensure the most effective operation
of the Building's heating and air conditioning system, and shall refrain from
attempting to adjust any controls.

        20. Tenant shall store all its trash and garbage within the interior of
the Premises. No material shall be placed in the trash boxes or receptacles if
such material is of such nature that it may not be disposed of in the ordinary
and customary manner of removing and disposing of trash and garbage in the city
in which the Building is located without violation of any law or ordinance
governing such disposal. All trash, garbage and refuse disposal shall be made
only through entry-ways and elevators provided for such purposes at such times
as Landlord shall designate.

        21. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.

        22. Tenant shall assume any and all responsibility for protecting the
Premises from theft, robbery and pilferage, which includes keeping doors locked
and other means of entry to the Premises closed, when the Premises are not
occupied.

        23. No awnings or other projection shall be attached to the outside
walls of the Building without the prior written consent of Landlord. No
curtains, blinds, shades or screens shall be attached to or hung in, or used in
connection with, any window or door of the Premises without the prior written
consent of Landlord. The sashes, sash doors, skylights, windows, and doors that
reflect or admit light and air into the halls, passageways or other public
places in the Building shall not be covered or obstructed by Tenant, nor shall
any bottles, parcels or other articles be placed on the windowsills. All
electrical ceiling fixtures hung in offices or spaces along the perimeter of the
Building must be fluorescent and/or of a quality, type, design and bulb color
approved by Landlord.

        24. The washing and/or detailing of or, the installation of windshields,
radios, telephones in or general work on, automobiles shall not be allowed on
the Real Property.

        25. Food vendors shall be allowed in the Building upon receipt of a
written request from the Tenant. The food vendor shall service only the tenants
that have a written request on file in the Building's management office. Under
no circumstance shall the food vendor display their products in a public or
common area including corridors and elevator lobbies. Any failure to comply with
this rule shall result in immediate permanent withdrawal of the vendor from the
Building.

        26. Tenant must comply with requests by the Landlord concerning the
informing of their employees of items of importance to the Landlord.

        27. Tenant shall comply with any non-smoking ordinance adopted by any
applicable governmental authority.

        28. Landlord may waive any one or more of these Rules and Regulations
for the benefit of any particular tenant or tenants, but no such waiver by
Landlord shall be construed as a waiver of such Rules and Regulations in favor
of any other tenant or tenants, nor prevent Landlord from thereafter enforcing
any such Rules or Regulations against any or all tenants of the Building.
Landlord reserves the right at any time to change or rescind any one or more of
these Rules and Regulations, or to make such other and further reasonable Rules
and Regulations as in Landlord's judgment may from time to time be necessary for
the management, safety, care and cleanliness of the Premises and Building, and
for the preservation of good order therein, as well as for the convenience of
other occupants and tenants therein. Landlord shall not be responsible to Tenant
or to any other person for the nonobservance of the Rules and Regulations by
another tenant or other person. Tenant shall be deemed to have read these Rules
and Regulations and to have agreed to abide by them as a condition of its
occupancy of the Premises.

                          PARKING RULES AND REGULATIONS

        1. Tenant and employees of Tenant (hereinafter referred to as "Tenant")
shall not park vehicles in any parking areas designated by Landlord as areas for
parking by visitors to the Building. Tenant shall not leave vehicles in the
Building parking areas overnight nor park any vehicles in the Building parking
areas other than automobiles, motorcycles, motor driven or non-motor drive
bicycles or four-wheeled trucks. Landlord may, in its sole discretion, designate
separate areas for bicycles and motorcycles.

        2. Cars must be parked entirely within the stall lines painted on the
floor of the parking areas.

        3. All directional signs and arrows must be observed.

                                      D-2
<PAGE>   34

        4. The speed limit shall be 5 miles per hour.

        5. Parking is prohibited, unless a floor parking attendant approved by
Landlord directs otherwise:

                a. In areas not striped for parking;

                b. In aisles;

                c. Where "No Parking" or "Handicap" signs are posted;

                d. On ramps;

                e. In crosshatched areas; or

                f. In such other areas as may be designated by Landlord or its
authorized agents.

        6. Parking stickers or any other device or form of identification which
may be supplied by Landlord shall remain the property of Landlord. Such parking
identification device must be displayed as requested and may not be mutilated in
any manner.

        7. Every Tenant is requested to park and lock his/her own car. All
responsibility for damage to cars to be repaired is hereby assumed by Tenant.
Tenant shall repair or cause to be repaired at its sole cost and expense any and
all damage to the Building Parking Facility or any part thereof caused by Tenant
or any of Tenant's Representatives or resulting from vehicles of Tenant or any
of Tenant's Representatives.

        8. Loss or theft of parking identification devices from automobiles must
be reported to Landlord immediately. Any parking identification devices found on
any unauthorized car will be confiscated and the illegal holder will be subject
to prosecution. Lost or stolen devices previously reported and then found must
be reported found to the Landlord immediately.

        9. Spaces are for the express purpose of one automobile per space unless
approved by Landlord or Landlord directs otherwise. Washing, waxing, cleaning or
servicing of any vehicle by Tenant and/or any of Tenant's Representatives is
prohibited. Storage of vehicles for periods exceeding one week is prohibited and
said vehicles shall be subject to towing.

        10. The Landlord reserves the right to refuse the issuance of monthly
stickers or other parking identification devices to any Tenant or person and/or
his agents or representatives who willfully refuse to comply with the above
Rules and Regulations or any city, state or federal ordinance, rule, regulation,
law or agreement. Tenant shall not load or unload in areas other than those
designated by Landlord for such activities.

        11. Tenants and any of Tenant's Representatives parked in prohibited
areas are subject to towing at their own expense.

                                      D-3
<PAGE>   35

                                    EXHIBIT E
                      FORM OF TENANT'S ESTOPPEL CERTIFICATE

        The undersigned, as Tenant under that certain Office Lease (the "Lease")
made and entered into as of November 2, 2000 and between LINCOLN-RECP EMPIRE
OPCO, LLC, a Delaware limited liability company, as Landlord, and the
undersigned as Tenant, for Premises on the first (1st) and second (2nd) floor(s)
of the Building located at 1301 Harbor Bay Parkway, Alameda, California hereby
certifies as follows:

        1. Attached hereto as Exhibit A is a true and correct copy of the Lease
and all amendments and modifications thereto. The documents contained in Exhibit
A represent the entire agreement between the parties as to the Premises.

        2. The undersigned has commenced occupancy of the Premises described in
the Lease, currently occupies the Premises, and the Lease Term commenced on
_________.

        3. The Lease is in full force and effect and has not been modified,
supplemented or amended in any way except as provided in Exhibit A.

        4. Tenant has not transferred, assigned, or sublet any portion of the
Premises nor entered into any license or concession agreements with respect
thereto except as follows:

        5. Tenant shall not modify the documents contained in Exhibit A or
prepay any amounts owing under the Lease to Landlord in excess of thirty (30)
days without the prior written consent of Landlord's mortgagee.

        6. Base Rent became payable on _______________.

        7. The Lease Term expires on _________________.

        8. All conditions of the Lease to be performed by Landlord necessary to
the enforceability of the Lease have been satisfied and Landlord is not in
default thereunder.

        9. No rental has been paid in advance and no security has been deposited
with Landlord except as provided in the Lease. Tenant has no options to renew or
otherwise extend the term of the Lease nor any right or option to purchase all
or any portion of the Premises, except as follows:

        10. As of the date hereof, there are no existing defenses or offsets
that the undersigned has, which preclude enforcement of the Lease by Landlord.

        11. All monthly installments of Base Rent, all Additional Rent and all
monthly installments of estimated Additional Rent have been paid when due
through _________________. The current monthly installment of Base Rent is
$__________.

        12. The undersigned acknowledges that this Estoppel certificate may be
delivered to Landlord's prospective mortgagee, or a prospective purchaser, and
acknowledges that it recognizes that if same is done, said mortgagee,
prospective mortgagee, or prospective purchaser will be relying upon the
statements contained herein in making the loan or acquiring the property of
which the Premises are a part, and in accepting an assignment of the Lease as
collateral security, and that receipt by it of this certificate is a condition
of making of the loan or acquisition of such property.

        13. If Tenant is a corporation, limited liability company or
partnership, each individual executing this Estoppel Certificate on behalf of
Tenant hereby represents and warrants that Tenant is a duly formed and existing
entity qualified to do business in the state in which the Building is located
and that Tenant has full right and authority to execute and deliver this
Estoppel Certificate and that each person signing on behalf of Tenant is
authorized to do so.

        Executed at __________________ on the _____ day of ______________,
20___.

TENANT:

AVIGEN, INC.,
a Delaware corporation

By:
   --------------------------------
Its:
    -------------------------------
Date:
     ------------------------------

By:
   --------------------------------
Its:
    -------------------------------
Date:
     ------------------------------

                                      E-1

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