Document:

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                                                                   EXHIBIT 10.10
                          ACTIVATED CELL THERAPY, INC.
                          ----------------------------

                      VANNI BUSINESS PARK INDUSTRIAL LEASE
                      ------------------------------------

                                   ARTICLE I
                                   ---------

                                    PARTIES
                                    -------

     This Lease, dated, for reference purposes only, October 27, 1992, is made
by and between the Vanni Business Park General Partnership ("Lessor") and
ACTIVATED CELL THERAPY, INC., a Delaware corporation ("Lessee").

                                  ARTICLE II
                                  ----------

                                   Premises
                                   --------

     Lessor hereby leases to Lessee and Lessee leases from Lessor for the term,
at the rental, and upon all of the conditions set forth herein, that certain
real property situated in the County of Santa Clara, State of California,
commonly known as 291 North Bernardo Avenue, Building "F", Mountain View,
California 94043, and more particularly described in the site plan prepared by
Dennis Kobza & Associates, A.I.A., marked Exhibit "A" which is attached hereto
and incorporated herein. Said real property, including the land and all
improvements therein, is called "the Premises".

                                  ARTICLE III
                                  -----------

                                     TERM
                                     ----

     Section 3.1    Term.  The term of this Lease shall be for eight (8)
     -----------    ----
years, commencing on the Commencement Date ("Commencement Date"). Lessor
understands that Lessee is in negotiations with the existing lessee on the
Premises, IDEC Pharmaceutical Corporation ("IDEC"), whereby Lessee would occupy
the Premises prior to the expiration of the term of IDEC's lease, and Lessor
shall attempt to accommodate Lessee to facilitate this early occupancy. In the
event that Lessee and IDEC reach an agreement, at Lessee's election it shall
either: (i) enter into a sublease with IDEC for the balance of the term of
IDEC's lease, in which event the Commencement Date of this Lease shall be
April 1, 1994; or (ii) request that Lessor terminate IDEC's lease and accelerate
the commencement of this Lease, in which event the Commencement Date shall be
the date on which Lessor delivers the Premises to Lessee in accordance with this
Lease.

     Section 3.2    Option to Extend.
     -----------    ----------------

          (a)       Lessee is given the option to extend the Lease term for one
(1) five year period following expiration of the initial Lease term, which
option may be exercised only by written notice ("Option Notice") from Lessee to
Lessor given not less than one hundred eighty (180) days prior to the end of the
initial Lease term; provided, however, if Lessee is in material

                                       1.
<PAGE>

default on the date of giving the Option Notice, the option Notice shall be
totally ineffective, or if Lessee is in material default on the date the
Extended Term is to commence, such Extended Term shall not commence and this
Lease shall expire at the end of the initial Lease term. In the event of an
Extended Term, the Extended Term shall be subject to all the terms and
conditions of this Lease excepting rent which shall be at 100% of the then fair
market rental value, as determined under subparagraph (b) below, but in no event
less than the monthly rent prevailing on the last month of the initial Lease
term.

          (b)  The parties shall agree on the fair market rental value of the
Premises for said Extended Term, including fair market periodic adjustments
thereto, during the first thirty (30) days of year five (5) of the Lease Term.
If the parties are able to agree on the fair market rental value for the
Extended Term, (including periodic adjustments thereto), then such agreed value
shall be the fair market-rental value for purposes of determining the rent for
the Extended Term.

     In the event the parties are unable to agree on the fair market rental
value for the Premises (including periodic adjustments) within that time, then
at Lessee's written request, within ten (10) days of the expiration of that
thirty (30) day period, each party shall separately designate an appraiser to
make this determination. Within five (5) business days of their appointment, the
two designated appraisers shall jointly designate a third appraiser. The failure
of either party to appoint an appraiser within the time allowed shall be deemed
equivalent to appointing the appraiser appointed by the other party. No person
shall be appointed or designated an appraiser unless he is then a member of MAI.
Appraisal shall be on the basis of the Premises "as is" except for improvements
and fixtures which are the sole property of Lessee. If, within ten (10) business
days after the appointment of all appraisers, a majority of the appraisers
concur on the value of the then current fair market rental value for the
Premises, including fair market periodic adjustments thereto, that appraisal
shall be the accepted fair market rental value. If a majority of the appraisers
do not concur within that period, the determination of the appraiser whose
appraisal is neither highest nor lowest shall be the accepted fair market rental
value. The parties shall share the appraisal expenses equally.

     Section 3.3    Delay in Possession.  The parties agree that if for any
     -----------    -------------------
reason Lessor cannot deliver possession of the Premises to Lessee on or before
April 1, 1994, such failure shall not constitute a breach of this agreement by
Lessor, and shall not entitle Lessee to terminate this Lease. Lessee shall not
be obligated to pay rent, nor shall the Lease Term commence until possession of
the Premises is tendered to Lessee.

     Section 3.4    Early Possession.  If Lessee occupies the Premises prior to
     -----------    ----------------
the Commencement Date other than as a Sublessee of IDEC, such occupancy shall be
subject to all provisions hereof, and Lessee shall pay rent for such period at
the initial monthly rates set forth below; provided, however, that Lessee may
enter the Premises prior to commencement solely for the purpose of installing
fixtures or equipment or improvements without being required to pay rent.

     Lessor agrees to attempt to locate three (3) offices in the Middlefield
Business Park for use by Lessee as office space by November l, 1992. In
addition, Lessor agrees to attempt to locate space in the Middlefield Business
Park for use by Lessee as one tissue culture lab by

                                       2.
<PAGE>

January l, 1993, additional space for use as a second tissue culture lab by
March l, 1993, and additional space for use as a main lab by June 1, 1993.
However, Lessor does not and cannot guarantee such space to Lessee, and this
Lease shall not be contingent on Lessee's occupancy of any such space prior to
the Lease Commencement Date.

                                   ARTICLE IV
                                   ----------

                            RENT: SPECIAL NET LEASE
                            -----------------------

     Section 4.1  Base Rent.  Upon the execution of this Lease, 'Lessee shall
     -----------  ---------
pay to Lessor the sum of $37,536.00 representing the first month's base rent.
Thereafter, beginning with the second month of the Lease, Lessee shall pay to
Lessor base rent for the Premises in advance, on the first day of each month
based on the following schedule of rents:

<TABLE>
<CAPTION>
                              Rent Per                  Square                   Monthly
Months                        Square Foot                Footage                 BaseRent
--------------------   ----------------------    -------------------------   ---------------------
<S>                    <C>                       <C>                         <C>
      02-24                    1.50 "NNN"                 25,024 sq. ft.            $37,536.00
      25-48                    1.60 "NNN"                 25,024 sq. ft.            $40,038.40
      49-72                    1.70 "NNN"                 25,024 sq. ft.            $42,540.80
      73-96                    1.80 "NNN"                 25,024 sq. ft.            $45,043.20
</TABLE>

     Rent for any period during the term hereof which is for less than one month
shall be a pro rata portion of the monthly installment. Rent shall be payable in
lawful money of the United States to Lessor at the address stated herein or to
such other persons or at such other places as Lessor may designate in writing.

     Section 4.2    Special Net Lease.  This Lease is what is commonly called a
     -----------    -----------------
"Net, Net, Net Lease", it being understood that, commencing with the first month
of the Lease Term, the Lessor shall receive the rent set forth in Section 4.1
free and clear of any and all other impositions, taxes, liens, charges or
expenses of any nature except as otherwise provided in this agreement. In
addition to the rent reserved by Section 4.1, Lessee shall pay to the parties
respectively entitled thereto all insurance premiums, taxes, assessments,
operating charges, management fees, maintenance charges, and any other charges,
costs and expenses which arise or may be contemplated under any provisions of
this Lease for the entire Premises during the term hereof. All of such charges,
costs and expenses shall constitute additional rent, and upon the failure of
Lessee to pay any of such costs, charges or expenses, Lessor shall have the same
rights and remedies as otherwise provided in this Lease for the failure of
Lessee to pay rent. It is the intention of the parties hereto that this Lease
shall not be terminable for any reason by the Lessee, and that Lessee shall in
no event be entitled to any abatement of or reduction in rent payable under this
Lease, except as herein expressly provided. Any present or future law to the
contrary shall not alter this agreement of the parties.

                                       3.
<PAGE>

                                   ARTICLE V
                                   ---------

                                SECURITY DEPOSIT
                                ----------------

     Lessee shall deposit with Lessor, upon execution of this Lease, $45,043.20
as security for Lessee's faithful performance of Lessee's obligations hereunder.
If Lessee fails to pay rent or other charges due hereunder, or otherwise
defaults with respect to any provision of this Lease, Lessor may, without
waiving or releasing Lessee from any obligation under this Lease, and without
waiving Lessor's right to treat such failure as a default hereof, use, apply, or
retain all or any portion of said deposit for the payment of any rent or other
charge in default or for the payment of any other sum to which Lessor may become
obligated by reason of Lessee's default, or to compensate Lessor for any loss or
damage which Lessor may suffer thereby. If Lessor so uses or applies all or any
portion of said deposit, Lessee shall within ten (10) days after written demand
therefor deposit cash with Lessor in an amount sufficient to restore said
deposit to the full amount hereinabove stated and Lessee's failure to do so
shall be a material breach of this Lease. If Lessee performs all of Lessee's
obligations hereunder, said deposit shall be returned to Lessee (or, at Lessee's
option, to the last assignee, if any, of Lessee's interest 'hereunder) at the
expiration of the term hereof, including extension, and after Lessee has vacated
the Premises.

     No trust relationship is created herein between Lessor and Lessee with
respect to said security deposit, and Lessor may commingle it, use it in
ordinary business, transfer or assign it, or use it in any combination of those
ways. In the event of termination of Lessor's interest in this Lease, Lessor
shall transfer said deposit to Lessor's successor in interest, whereupon if such
successor acknowledges receipt thereof and assumes all of Lessor's obligations
under this Lease, Lessee agrees to release Lessor from all liability for the
return of such deposit or the accounting therefor.

                                   ARTICLE VI
                                   ----------

                                      USE
                                      ---

     Section 6.1    Use.  The Premises shall be used and occupied for offices,
     -----------    ---
research and development, and any other legal use which is otherwise in
compliance with the reasonable rules and regulations that may be imposed by
Lessor from time to time on the Premises or on the business park. Lessee shall
not use nor permit the use of the Premises in any manner that will create waste
or a nuisance or unreasonably disturb any other tenants. Lessee's use of the
Premises is on a non-exclusive basis with respect to any other Lessees of the
business park.

     Section 6.2    Compliance with Law.
     -----------    -------------------

          (a)       Lessor warrants to Lessee that, to the best of Lessor's
knowledge, the Premises, in its state existing on the Commencement Date, does
not violate any laws, permits, licenses, or covenants or restrictions of record,
or any applicable building code, regulation or ordinance in effect on such
Commencement Date.

          (b)       Except as provided in paragraph 6.2(a) or elsewhere in this
Lease, Lessee shall, at Lessee's expense, comply promptly with all applicable
statutes, ordinances, rules,

                                       4.
<PAGE>

regulations, orders, covenants, and restrictions of record in effect during the
term or any part of the term hereof, regulating the use by Lessee of the
Premises.

     Section 6.3    Condition of Premises.
     -----------    ---------------------

          (a)       Lessor shall deliver the Premises to Lessee clean and free
of debris on the Lease Commencement Date with the shell building completed and
Lessor further warrants to Lessee that such building shall be in good operating
condition on the Lease Commencement Date, that it was built in accordance with
the approved plans therefor, and in a workmanlike manner. In all other respects,
the Premises shall be delivered to Lessee in an "as is" condition.
Notwithstanding the foregoing, it is understood that Lessee may occupy the
Premises as successor-in-interest to IDEC with respect to certain improvements
made and fixtures added by IDEC on and to the Premises. Lessee shall be entitled
to the use and benefit of all such improvements and fixtures remaining on the
Premises upon IDEC's termination of occupancy.

          (b)       Except as otherwise provided in this Lease, Lessee hereby
accepts the Premises "as is" in their condition existing as of the Lease
Commencement Date, subject to all laws governing and regulating the use of the
Premises, and accepts this Lease subject thereto. Lessee acknowledges that
neither Lessor nor Lessor's agent has made any representation or warranty as to
the present or future suitability of the Premises for the conduct of Lessee's
business.

          (c)       Within thirty (30) days following the date on which this
Lease is executed by Lessor and Lessee, Lessor shall cause an environmental
consultant reasonably acceptable to Lessee to make an inspection of the Premises
for purposes of determining whether there are any hazardous or toxic materials
(as defined in Article VII) being used or which have been used on the Premises
in violation of any applicable law or ordinances or which, if so used by Lessee,
would place Lessee in breach of Article VII of this Lease. Such consultant shall
provide a written report of his findings to Lessor and Lessee upon completion of
his inspection. It is understood that Lessee shall have no liability to Landlord
or otherwise for any such violations existing on the Premises as of the date of
such inspection, or thereafter caused by IDEC. The costs of such inspection and
report shall be shared equally by Lessor and Lessee; provided, however, that
they shall endeavor to get the agreement of IDEC to share in such costs, in
which event the costs will be divided equally between the three.

                                  ARTICLE VII
                                  -----------

                          HAZARDOUS OR TOXIC MATERIALS
                          ----------------------------

     Lessee shall not emit, dump, dispose, or release on the Premises any Toxic
Materials, and Lessee shall not allow or permit any agent, vendor, or other
entity acting on Lessee's behalf to emit, dump, dispose, or release on the
Premises, any Toxic Materials. Lessee shall not bring, use, or store on the
Premises, or emit, dump, dispose, or release from the Premises, any Toxic
Materials in violation of any laws, regulations, ordinances, or statutes which
are now in existence or which may be enacted in the future. Lessee shall remain
in full and complete compliance with all laws, regulations, ordinances, and
statutes with respect to Toxic Materials, and Lessee shall

                                       5.
<PAGE>

install and keep in good working order any monitoring devices that are necessary
to insure Lessee's full and complete compliance therewith.

     Lessee shall indemnify and hold Lessor harmless from any claims,
liabilities, costs, or expenses incurred or suffered by Lessor arising from
Lessee's bringing, using, emitting, dumping, disposing, or releasing upon the
Premises, or generating or creating at or emitting, dumping, disposing, or
releasing from the Premises, any Toxic Materials, or arising from the bringing,
using, emitting, dumping, disposing, or releasing upon the Premises, or
generating or creating at or emitting, dumping, disposing, or releasing from the
Premises, any Toxic Materials by any agent, vendor, or other entity acting on
Lessee's behalf. Lessee's indemnification and hold harmless obligations as set
forth in this Article VII above include, without limitation, all of the
following: (i) claims, liabilities, costs or expenses resulting from or based
upon administrative, judicial (civil or criminal), or other action, legal or
equitable, brought by any private or public person under common law or any
Federal, State, County or Municipal law, ordinance or regulation, (ii) claims,
liabilities, costs, or expenses pertaining to the cleanup or containment of
Toxic Materials, the identification of the pollutants in the Toxic Materials,
the identification of the scope of any environmental contamination, the removal
of pollutants from soils, the provision of an alternative public drinking water
source, or the long term monitoring of ground water and surface waters, and
(iii) all costs of defending such claims. Lessee shall comply, at its sole cost,
with all laws pertaining to such Toxic Materials. Lessee's hold harmless and
indemnity obligations hereunder shall survive the expiration or termination of
this Lease.

     For the purposes of this Article VII, "Toxic Materials" includes, without
limitation, any toxic or hazardous gaseous, liquid, or solid materials or waste,
or any material or substance having characteristics of ignitability,
corrosivity, reactivity, or extraction procedure toxicity or substances or
materials which are listed on any of the Environmental Protection Agency's lists
of hazardous wastes or which are identified in Sections 66680 through 66685 of
Title 22 of the California Code of Regulations as the same may be amended from
time to time.

     Except as may be disclosed in the hazardous materials report delivered to
Lessee by Lessor, to the best knowledge of Lessor, there are no Toxic Materials
present on or about the Premises and no action, proceeding, or claim is pending
or threatened concerning the Premises concerning any Toxic Material or pursuant
to any environmental law.

                                  ARTICLE VIII
                                  ------------

                      MAINTENANCE, REPAIRS AND ALTERATIONS
                      ------------------------------------

     Section 8.1    Maintenance - Premises.  Throughout the term, Lessee agrees
     -----------    ----------------------
to keep and maintain all improvements and appurtenances in or serving the
Premises, excluding all sewer connections, plumbing, heating and cooling
appliances, and wiring, in the same order, condition and repair as they are in
on the Commencement Date, or may be put in during the term, reasonable use and
wear excepted. Lessee hereby expressly waives the provisions of any law
permitting repairs by a tenant at the expense of a landlord, including, without
limitation, all rights of Lessee under Sections 1941 and 1942 of the California
Civil Code. Lessee agrees to keep the Premises clean and in sanitary condition
as required by the health, sanitary and police ordinances and regulations of any
political subdivision having jurisdiction. Lessee further agrees

                                       6.
<PAGE>

to keep the interior of the Premises, such as the windows, floors, walls, doors,
showcases and fixtures clean and neat in appearance and to remove all trash and
debris which may be found in or around the Premises. If Lessee refuses or
neglects to commence such repairs and/or maintenance required under this
agreement or does not diligently prosecute same to completion within thirty (30)
days of written notice thereof, then Lessor may enter the Premises and cause
such repairs and/or maintenance to be made. Lessee agrees that upon demand, it
shall pay to Lessor the cost of any such repairs, together with accrued interest
from the date of payment at the prime commercial lending rate then in effect at
Bank of America. Notwithstanding anything to the contrary above, Lessor may
elect to enter into a maintenance contract with a third party for the provision
of all or a part of Lessee's maintenance obligations as set forth in this
Paragraph. Upon such election, Lessee shall be relieved from its obligations to
perform only those maintenance obligations covered by the maintenance contract,
and Lessee shall bear its pro rata share, as set forth in Paragraph 8.2 below,
of the costs of such maintenance contract which shall be paid in advance on a
monthly basis with Lessee's rent payments.

     Section 8.2    Maintenance - Common Areas.  Lessor shall be responsible for
     -----------    --------------------------
maintaining in a safe, good, and clean condition, the common areas of the
Premises and the common areas of the business park as a whole.  Lessee shall
have the obligation to notify Lessor, in writing, of any repairs or maintenance
to the common areas which may be required, and Lessor shall have a reasonable
time to make such repairs.

     Lessee shall pay to Lessor, as additional rent, in the manner and at the
time provided below, Lessee's proportionate share, as defined below, of all
costs and expenses incurred by Lessor in the operation and maintenance of the
common areas of the business park during the term of this Lease. Such costs and
expenses shall include, without limiting the generality of the foregoing, all
maintenance, pest control, security, gardening, landscaping, cost of public
liability, property damage, vandalism and malicious mischief, earthquake, and
other insurance deemed necessary by the Landlord, real property taxes, property
management costs, including a management fee equal to three percent (3%) of the
monthly rent set forth in Section 4.1, painting, lighting, cleaning, trash
removal, depreciation of equipment, fire-protection, and similar items.

 Lessee's proportionate share of such common area expenses shall be 10.28%.

     Lessor shall bill Lessee monthly for Lessee's proportionate share of such
common area costs, which proportionate Share shall be based upon the previous
month's actual costs and expenses. Lessee shall pay such proportionate share
within 15 days of receipt of said billing statement from Lessor. Lessor agrees
to make its books and records pertaining to the common area costs available for
Lessee's inspection upon request.

     Section 8.3    Alterations and Additions.  No structural alterations or
     -----------    -------------------------
structural additions shall be made to the Premises by Lessee without the prior
written consent of Lessor which Lessor will not unreasonably withhold. Nothing
in this section shall restrict Lessee's right to make any non-structural
additions or alterations provided that Lessee complies with all applicable laws
and ordinances. Lessee shall be provided a building which shall include concrete
floor, walls, roof, electrical and plumbing stubs, and utility service
connections (hereinafter "shell improvements") plus tenant improvements as
provided in Section 8.4.

                                       7.
<PAGE>

     As a condition to giving its consent, Lessor may require that Lessee agree
to remove any such structural alterations or improvements at the expiration of
the term and to restore the Premises to their prior condition. As a further
condition to giving such consent, Lessor may require Lessee to provide Lessor,
at the Lessee's sole cost and expense, with a lien and completion bond in an
amount equal to one and one-half (1-1/2) times the estimated costs of such
improvements to insure Lessor against any liability for mechanics' and
materialmen's liens and to insure completion of the work. All changes,
alterations, or additions to be made to the Premises shall be under the
supervision of a competent architect or competent licensed structural engineer
and made in accordance with plans and specifications which have been furnished
to and approved by Lessor prior to commencement of work. If the written consent
of Lessor to any proposed alterations by Lessee shall be been obtained, Lessee
agrees to advise Lessor in writing of the date upon which such alterations will
commence in order to permit Lessor to post a notice of non-responsibility. All
such alterations, changes and additions shall be constructed in good and
workmanlike manner in accordance with all ordinances and laws relating thereto.
Any such structural changes, alterations or additions to or on the Premises
shall remain for the benefit of and become the property of Lessor, unless Lessor
requires the removal by giving Lessee written notice at least thirty (30) days
before the date the Lessee is to vacate the Premises.

     Section 8.4    Tenant Improvements.
     -----------    -------------------

          (a)       Lessor shall not provide Lessee with any Tenant Improvement
allowance, and Lessor cannot and does not warrant that any of the Tenant
Improvements currently on the Premises that are the property of the current
lessee shall remain on the Premises at the commencement of this Lease. However,
Lessor shall not remove from the Premises prior to Lessee' occupancy thereof any
of the Tenant Improvements placed in the Premises by IDEC Pharmaceutical
corporation at IDEC's own expense as the current lessee. Lessor shall not
prohibit Lessee from purchasing from and/or otherwise negotiating with IDEC for
any such improvements on the Premises that Lessee wishes to remain on the
Premises.

          (b)       All changes, alterations or additions to be made to the
Premises pursuant to this section, shall be under the supervision of a competent
architect or competent licensed structural engineer and made in accordance with
plans and specifications which have been approved by Lessor prior to
commencement of work. All such alterations, changes, and additions shall be
constructed according to the approved plans, in a good and workmanlike manner,
and in compliance with all ordinances and laws relating thereto. Any such
structural changes, alterations or additions to or on the Premises shall remain
for the benefit of and become the property of Lessor.

     Section 8.5    Plumbing.  Lessee shall not use the plumbing facilities for
     -----------    --------
any purpose other than that for which they were constructed. The expense of any
breakage, stoppage or other damage relating to the plumbing and resulting from
the introduction by Lessee, its agents, employees, or invitees of foreign
substances into the plumbing facilities shall be borne by Lessee.

                                       8.
<PAGE>

                                   ARTICLE IX
                                   ----------

                                   INSURANCE
                                   ---------

     Section 9.1    Property/Rental Insurance - Premises.  During the term,
     -----------    ------------------------------------
Lessor shall keep the Premises insured against loss or damage by fire and those
risks normally included in the term "all risk" including (a) flood coverage, (b)
earthquake coverage at the election of Lessor, (c) coverage for loss of rents
(provided that notwithstanding anything set forth herein to the contrary rent
shall abate at least to the extent of any rent insurance received by Lessor) and
(d) boiler and machinery coverage if the Lessor reasonably deems such coverage
necessary. Any deductibles shall be paid by Lessor if the deductible arises from
damage solely to the Premises. The amount of such insurance shall be not less
than one hundred percent (100%) of the replacement value of the Premises. Any
recovery received from said insurance policy shall be paid to Lessor.

     Lessee, in addition to the rent and other charges provided herein, agrees
to pay to Lessor its pro rata share of the premiums for all such insurance,
which pro rata share is identical to that provided in Section 8.2, above. The
insurance premiums shall be paid in accordance with Article IV, within thirty
(30) days of Lessee's receipt of a copy of Lessor's statement therefor.

     Section 9.2    Property Insurance--Fixtures and Inventory.  During the
     -----------    ------------------------------------------
term, Lessee shall, at its sole expense, maintain insurance with "all risk"
coverage on any fixtures, leasehold improvements, furnishings, merchandise,
equipment, or personal property in or on the Premises, whether in place as of
the date hereof or installed hereafter, for the full replacement value thereof,
and Lessor shall not have any responsibility nor pay any costs for maintaining
any types of such insurance. Any deductibles shall be paid by Lessee.

     Section 9.3    Lessor's Liability Insurance.  During the term, Lessor may
     -----------    ----------------------------
maintain a policy or policies of comprehensive general liability insurance
insuring Lessor and Lessee (and such others as designated by Lessor) against
liability for bodily injury, death and property damage on or about the Premises,
with combined single limit coverage of not less than Two Million Dollars
($2,000,000).

     Lessee, in addition to the rent and other charges provided herein, agrees
to pay to Lessor its pro rata share of the premiums for all such insurance,
which pro rata share is identical to that provided in Section 8.2, above. The
insurance premiums shall be paid in accordance with Article IV, within thirty
(30) days of Lessee's receipt of a copy of Lessor's statement therefor.

     Section 9.4    Lessee's Liability Insurance.  During the term, Lessee
     -----------    ----------------------------
shall, at its sole expense, maintain for the mutual benefit of Lessor and
Lessee, comprehensive general liability and property damage insurance against
claims for bodily injury, death or property damage occurring in or about the
Premises or arising out of the use or occupancy of the Premises, with combined
single limit coverage of not less than Two Million Dollars ($2,000,000). The
limits of such insurance shall not limit the liability of Lessee. Lessee shall
furnish to Lessor prior to the Commencement Date, and at least thirty (30) days
prior to the expiration date of any policy, certificates indicating that the
liability insurance required by Lessee above is in full force and effect; that
Lessor has been named as an additional insured; and that all such policies will
not be cancelled unless thirty (30) days' prior written notice of the proposed
cancellation has been given

                                       9.
<PAGE>

to Lessor. The insurance shall be with insurers approved by Lessor and with
policies in form satisfactory to Lessor, provided however, that such approval
shall not be unreasonably withheld. Said policies shall provide that Lessor,
although an additional insured, may recover for any loss suffered by Lessor by
reason of Lessee's negligence and shall include a broad form liability
endorsement.

     Section 9.5    Waiver of Subrogation.  Lessor hereby releases Lessee, and
     -----------    ---------------------
Lessee hereby releases Lessor, and their respective officers, agents, employees
and servants, from any and all claims or demands of damages, loss, expense, or
injury to the Premises, or to the furnishings and fixtures and equipment, or
inventory or other property of either Lessor or Lessee in, or about or upon the
Premises, or claims for bodily injury or death which is caused by or results
from perils, events or happenings which are the subject of insurance and carried
by the respective parties and in force at the time of any such loss; provided,
however, that such waiver shall be effective only to the extent permitted by the
insurance covering such loss and to the extent such insurance is not prejudiced
thereby. Each party shall cause each insurance policy obtained by it to provide
that the insurance company waives all right of recovery by way of subrogation
against either party in connection with any damages covered by any policy.

     Section 9.6    Indemnification.  Except in the case of Lessor's own acts or
     -----------    ---------------
omission, Lessee will indemnify Lessor and save it harmless from and against any
and all claims, actions, damages, liability and expense in connection with loss
of life, personal injury and/or damage to property arising from or out of any
occurrence in, upon or at the Premises (other than those arising from the
construction of the Premises or Building or the Tenant Improvements), or the
occupancy or use by Lessee of the Premises or any part hereof, or caused wholly
or in part by acts or omissions of Lessee, its agents, contractors, employees,
servants, licensees, or concessionaires or by anyone permitted to be on the
Premises by Lessee. In case lessor shall be made a party to any such litigation
commenced by or against lessee, then lessee shall protect and hold Lessor
harmless from all claims, liabilities, costs and expenses, and shall pay all
costs, expenses and reasonable legal fees incurred by Lessor in connection with
such litigation.

     Section 9.7    Plate Glass Replacement.  Lessee shall replace at its sole
     -----------    -----------------------
expense, any and all plate glass and other glass in and about the Premises which
is damaged or broken by vandalism. If any plate glass or other glass in and
about the Premises is damaged or broken by causes other than vandalism, then
Lessor shall replace the same and Lessee shall reimburse Lessor an amount equal
to Lessor's cost of replacement, provided that such amount shall not exceed the
deductible then in effect o Lessor's insurance policy, if any, covering the
damaged glass. Nothing herein shall be construed to require Lessor to carry
plate glass insurance.

                                   ARTICLE X
                                   ---------

                             DAMAGE OR DESTRUCTION
                             ---------------------

     Section 10.1   Right to Terminate on Destruction of Premises.  Lessor and
     ------------   ---------------------------------------------
Lessee shall have the right to terminate this Lease if, during the term, the
Premises are damaged to an extent exceeding fifty percent (50%) of the then
reconstruction costs of the Premises as a whole. Lessor and Lessee shall also
have the right to terminate this Lease if any portion of the Premises is damaged
by a peril not required to be insured hereunder. In either case, Lessor and
Lessee

                                      10.
<PAGE>

may elect to terminate as provided above by that written notice to Lessee or
Lessor delivered within sixty (60) days of the happening of such damage.

     Section 10.2   Repairs by Lessor.  If Lessor and Lessee shall not elect to
     ------------   -----------------
terminate this Lease pursuant to Section 10.1, Lessor shall, immediately upon
receipt of insurance proceeds paid in connection with such casualty, but in no
event later than one hundred eighty (180) days after such damage has occurred,
proceed to repair or rebuild the Premises, on the same plan and design as
existed immediately before such damage or destruction occurred and will proceed
expeditiously to complete such restoration, subject to such delays as may be
reasonably attributable to governmental restrictions or failure to obtain
materials or labor, or other causes beyond the control of Lessor. Lessee shall
be liable for the repair and replacement of all fixtures, leasehold
improvements, furnishings, merchandise, equipment and personal property not
covered by the property insurance described in Section 9.2.

     Section 10.3   Reduction of Rent During Repairs.  In the event Lessee is
     ------------   --------------------------------
able to continue to conduct its business during the making of repairs, the rent
then prevailing will be equitably reduced in the proportion that the square
footage of the unusable part of the Premises bears to the square footage of the
whole thereof for the period that repairs are being made. No rent shall be
payable while the Premises are wholly unusable due to casualty damage.

     Section 10.4   Arbitration.  Any controversy or claim arising out of or
     ------------   -----------
relating to this Article shall be settled by arbitration in accordance with the
rules of the American Arbitration Association as then in effect, and judgment
upon the award rendered by the arbitration may be entered in any court having
jurisdiction. The expenses of arbitration shall be borne by the parties as
allocated by the arbitrators. The party desiring arbitration shall serve notice
upon the other party, together with designation of the first party's arbitrator.

     Section 10.5   Lessor's Overriding Right to Terminate.  Notwithstanding
     ------------   --------------------------------------
anything to the contrary herein, during the last twelve (12) months of the Lease
Term and during an Extended Term, if any, if the discounted present value of the
rent due hereunder for the balance of the term, using as the discount rate the
prime commercial lending rate in effect at the Bank of America as of the date
Lessor is to commence repairs pursuant to Section 10.2 hereof, is less than the
cost of repairing the damage to the Premises, Lessor may at its option terminate
this lease upon thirty (30) days' written notice.

                                   ARTICLE XI
                                   ----------

                              REAL PROPERTY TAXES
                              -------------------

     Section 11.1   Payment of Taxes.  Lessee shall pay the real property tax,
     ------------   ----------------
as defined in Section 11.2, applicable to the Premises during the term of this
Lease. All such payments shall be made at least twenty (20) days prior to the
delinquency date of such payment. If any such taxes paid by Lessee shall cover
any period of time prior to or after the expiration of the term hereof, Lessor
shall pay such taxes and Lessee shall reimburse Lessor therefor. Lessee's share
of such taxes shall be equitably prorated to cover only the period of time
within the tax fiscal year during which this Lease shall be in effect, and
Lessor shall reimburse Lessee to the extent required. If Lessee shall fail to
pay any such taxes, Lessor shall have the right to pay the same,

                                      11.
<PAGE>

in which case Lessee shall repay such amount to Lessor with Lessee's next rent
installment together with interest at the prime commercial lending rate then in
effect at the Bank of America.

     Section 11.2  Definition of "Real Property Tax".  As used herein, the term
     ------------  ---------------------------------
"real property tax" shall include any form of real estate tax or assessment,
general, special, supplemental, ordinary or extraordinary, and any license fee,
commercial rental tax, improvement bond or bonds, levy or tax (other than
inheritance, personal income, corporate, franchise or estate taxes) imposed on
the Premises by any authority having the direct or indirect power to tax,
including any improvement district thereof, as against any legal or equitable
interest of Lessor in the Premises or in the real property of which the Premises
are a part, as against Lessor's right to rent or other income therefrom, and as
against Lessor's business of leasing the Premises.

     Section 11.3  Joint Assessment.  If the Premises are not separately
     ------------  ----------------
assessed, Lessee's liability shall be an equitable proportion of the real
property taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be determined by Lessor in accordance with
Lessee's proportionate share of the total square footage of the business park.
Lessee shall reimburse Lessor said proportionate amount at least ten (10) days
prior to the delinquency date of the real property tax.

     Section 11.4  Personal Property Taxes.
     ------------  -----------------------

          (a) Lessee shall pay prior to delinquency all taxes assessed against
and levied upon trade fixtures, furnishings, equipment and all other personal
property of Lessee contained in the Premises or elsewhere.  When possible,
Lessee shall cause said trade fixtures, furnishings, equipment and all other
personal property to be assessed and billed separately from the real property of
Lessor.

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

          (c) If Lessee shall fail to pay any such taxes, Lessor shall have the
right to pay the same, in which case Lessee shall repay such amount to Lessor
with Lessee's next rent installment together with interest at the prime
commercial lending rate then charged by the Bank of America.

                                  ARTICLE XII
                                  -----------

                           UTILITIES AND JANITORIAL
                           ------------------------

     Lessee shall pay prior to delinquency throughout the term the cost of
water, gas, heating, cooling, sewer, telephone, electricity, garbage, air
conditioning and ventilation, janitorial service, and all other materials and
utilities supplied to the Premises. If any such services are not separately
metered to Lessee, Lessee shall pay a reasonable proportion of all charges which
are jointly metered, the determination to be made by Lessor in good faith, and
payment to be made by Lessee within fifteen (15) days of receipt of the
statement for such charges.

                                      12.
<PAGE>

                                 ARTICLE XIII
                                 ------------

                           ASSIGNMENT AND SUBLETTING
                           -------------------------

       Section 13.1  Lessor's Consent Required.  Lessee shall not voluntarily or
       ------------  -------------------------
by operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of Lessee's interest in this lease or in the Premises,
without Lessor's prior written consent which Lessor shall not unreasonably
withhold. Lessor shall respond to Lessee's request for consent hereunder within
ten (10) days after Lessee's request and any attempted assignment, transfer,
mortgage, encumbrance, or subletting without such consent shall be void, and
shall constitute a breach of this lease.

     Section 13.2  Lessee Affiliate.  Lessee may assign or sublet the premises,
     ------------  ----------------
or any portion thereof, to any corporation which controls, is controlled by, or
is under common control with Lessee, or to any corporation resulting from the
merger or consolidation with Lessee, or to any person or entity which acquires
all, or substantially all of the assets of Lessee as a going concern of the
business that is being conducted on the Premises, provided that said assignee
assumes, in full, the obligations of Lessee under this Lease.  Any such
assignment shall not, in any way, affect or limit the liability of Lessee under
the terms of this Lease.

     Section 13.3  No Release of Lessee.  Regardless of Lessor's consent, no
     ------------  --------------------
subletting or assignment shall release Lessee of Lessee's obligation or alter
the primary liability of Lessee to pay the rent and to perform all other
obligations to be performed by Lessee hereunder.  The acceptance of rent by
Lessor from any other person shall not be deemed consent to any subsequent
assignment or subletting.  In the event of default by any assignee of Lessee or
any successor of Lessee, in the performance of any of the terms hereof, Lessor
may proceed directly against Lessee without the necessity of exhausting remedies
against said assignee.

     Section 13.4  Attorneys' Fees.  In the event Lessee shall assign or sublet
     ------------  ---------------
the Premises or request the consent of Lessor to any assignment of subletting or
if Lessee shall request the consent of Lessor for any act Lessee proposes to do
then Lessee shall pay Lessor's reasonable attorneys' fees incurred in connection
therewith.

     Section 13.5  Excess Rent.  In the event Lessor shall consent to a sublease
     ------------  -----------
or an assignment under the lease, Lessee shall pay to Lessor with its regularly
scheduled rent payments fifty percent (50%) of all sums collected by Lessee from
a sublessee or assignee which are/in excess of the rent then owing pursuant to
Article IV above and after subtracting all leasing commissions, reasonable
attorneys' fees and other costs, reasonable expenses and liabilities incurred by
Lessee in connection with the sublet or assignment.  Lessor shall not share
compensation received by Lessee for its trade fixtures, goodwill, stock, or
property other than the Lease.

     Section 13.6  No Impairment of Security.  Lessee's written request to
     ------------  -------------------------
Lessor for consent to an assignment or subletting shall be accompanied by (a)
the name and legal composition of the proposed sublessee; (b) the nature of the
proposed sublessee's business to be carried on in the Premises; (c) the terms
and provisions of the proposed sublease; and (d) such financial and other
reasonable information as Lessor may request concerning the proposed sublessee.
Lessor's

                                      13.
<PAGE>

consent shall not be deemed unreasonably withheld if consent is denied because
the prospective sublessee or assignee will impair Lessor's security.

                                  ARTICLE XIV
                                  -----------

                              DEFAULTS; REMEDIES
                              ------------------

       Section 14.1  Defaults.  The occurrence of any one or more of the
       ------------  --------
following events shall constitute a material default and breach of this Lease by
Lessee:

          (a) The abandonment of the Premises by Lessee;

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

          (c) The failure by Lessee to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by Lessee,
other than described in paragraph (b) above, where such failure shall continue
for a period of thirty (30) days after written notice hereof from Lessor to
Lessee; provided, however, that if the nature of Lessee's default is such that
more than 30 days are reasonably required for its cure, then Lessee shall not be
deemed to be in default if Lessee commences such cure within said 30 day period
and thereafter diligently prosecutes such cure to completion;

          (d) (i) The making by Lessee of any general arrangement or assignment
for the benefit of creditors; (ii) Lessee becomes a "debtor" as defined in 11
U.S.C. Section 101 or any successor statute thereto; (iii) the taking or
suffering of any action by Lessee under any insolvency or bankruptcy act; (iv)
the appointment of a trustee or receiver to take possession of substantially all
of Lessee's assets located at the Premises or of Lessee's interest in this
Lease, or (v) the attachment, execution or other judicial seizure of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease.  Provided, however, in the event that any provisions of
this Section 14.1(d) is contrary to any applicable law, such provision shall be
of no force or effect;

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

     Section 14.2  Remedies.  In the event of any such material default or
     ------------  --------
breach by Lessee, Lessor may at any time thereafter, with or without notice or
demand and without limiting Lessor in the exercise of any right or remedy which
Lessor may have by reason of such default or breach:

          (a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession of the Premises to Lessor.  In such event
Lessor shall be entitled to recover from

                                      14.
<PAGE>

Lessee all damages incurred by Lessor by reason of Lessee's default including,
but not limited to, the cost of recovering possession of the Premises and
reasonable attorney's fees related thereto; the worth at the time of award
determined by the court having jurisdiction thereof of the amount by which the
unpaid rent for the balance of the term after the time of such award exceeds the
amount of such rental loss for the same period that Lessee proves could be
reasonably avoided.

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

          (c) Pursue any other remedy now or hereafter available to Lessor under
the laws or judicial decisions of the state of California.  Unpaid installments
of rent and other unpaid monetary obligations of Lessee under the terms of this
Lease shall bear interest from the date due at the prime rate then charged by
Bank of America.

     Section 14.3  Default by Lessor.  Lessor shall not be in default unless
     ------------  -----------------
Lessor fails to perform obligations required of Lessor within a reasonable time,
but in no event later than thirty (30) days after written notice by Lessee to
Lessor and to the holder of any first mortgage or deed of trust covering the
Premises whose name and address shall have theretofore been furnished to Lessee
in writing, specifying wherein Lessor has failed to perform such obligation;
provided, however, that if the nature of Lessor's obligation is such that more
than thirty (30) days are required for performance then Lessor shall not be in
default if Lessor commences performance within such 30-day period and thereafter
diligently prosecutes the same to completion.  In the event Lessor does not
commence performance within the thirty (30) day period provided herein, or does
not diligently prosecute the same to completion, Lessee may perform such
obligation and will be reimbursed for its expenses by Lessor together with
interest thereon at the prime commercial lending rate then charged by the Bank
of America, provided, however, that if the parties are in dispute as to what
constitutes Lessor's obligations under this agreement, any such dispute shall be
resolved by arbitration in a manner identical to that provided in Section 10.4
above.

     Nothing herein shall be deemed applicable in the event of Lessor's delay in
delivery of the Premises.  In that situation, all rights and remedies shall be
determined under Section 3.3 above.

     Section 14.4  Late Charges.  Lessee hereby acknowledges that late payment
     ------------  ------------
by Lessee to Lessor of rent and other sums due hereunder will cause Lessor to
incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain.  Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed on
Lessor by the terms of any mortgage or trust deed covering the Premises.
Accordingly, if any installment of rent or any other sum due from Lessee shall
not be received by Lessor or Lessor's designated agent within five (5) days
after such amount is due and owing, Lessee shall pay to Lessor a late charge
equal to 10% of such overdue amount.  The parties hereby agree that such late
charge represents a fair and reasonable estimate of the costs Lessor will incur
by reason of late payment by Lessee.  Acceptance of any such late charge by
Lessor

                                      15.
<PAGE>

shall in no event constitute a waiver of Lessee's default with respect to such
overdue amount, nor prevent Lessor from exercising any of the other rights and
remedies granted hereunder. In the event that a late charge is payable
hereunder, whether or not collected, for three (3) consecutive installments of
rent, then rent shall automatically become due and payable quarterly in advance,
rather than monthly, notwithstanding section 4.1 or any other provision of this
Lease to the contrary.

     Section 14.5  Impounds.  In the event that a late charge is payable
     ------------  --------
hereunder, whether or not collected, for three (3) installments of rent or any
other monetary obligation of Lessee under the terms of this Lease within a
twelve (12) month period, Lessee shall pay to Lessor, if Lessor shall so
request, in addition to any other payments required under this Lease, a monthly
advance installment, payable at the same time as the monthly rent, as estimated
by Lessor, for real property tax and insurance expenses on the Premises which
are payable by Lessee under the terms of this Lease.  Such fund shall be
established to insure payment when due, before delinquency, of any or all such
real property taxes and insurance premiums.  If the amounts paid to Lessor by
Lessee under the provisions of this paragraph are insufficient to discharge the
obligations of Lessee to pay such real property taxes and insurance premiums as
the same become due, Lessee shall pay to Lessor, within three (3) business days
after Lessor's demand, such additional sums necessary to pay such obligations.
All moneys paid to Lessor under this paragraph may be intermingled with other
moneys of Lessor and shall not bear interest.  In the event of a default in the
obligations of Lessee to perform under this Lease, then any balance remaining
from funds paid to Lessor under the provisions of this paragraph may, at the
option of Lessor, be applied to the payment of any monetary default of Lessee in
lieu of being applied to the payment of real property tax and insurance
premiums.

                                  ARTICLE XV
                                  ----------

                           CONDEMNATION OF PREMISES
                           ------------------------

     Section 15.1  Total Condemnation.  If the entire Premises, whether by
     ------------  ------------------
exercise of governmental power or the sale or transfer by Lessor to any
condemnor under threat of condemnation or while proceedings for condemnation are
pending, at any time during the term, shall be taken by condemnation such that
there does not remain a portion suitable for occupation, this Lease shall then
terminate as of the date transfer of possession is required.  Upon such
condemnation, all rent shall be paid up to the date transfer of possession is
required, and Lessee shall have no claim against Lessor for the value of the
unexpired term of this Lease.

     Section 15.2  Partial Condemnation.  If any portion of the Premises is
     ------------  --------------------
taken by condemnation during the term, whether by exercise of governmental power
or the sale or transfer by Lessor to a condemnor under threat of condemnation or
while proceedings for condemnation are pending, this Lease shall remain in full
force and effect except that in the event a partial taking leaves the Premises
unfit for normal and proper conduct of the business of Lessee, as reasonably
determined by Lessee, then Lessee shall have the right to terminate this Lease
effective upon the date transfer of possession is required.  Moreover, Lessor
and Lessee shall have the right to terminate this Lease effective on the date
transfer of possession is required if more than thirty-three percent (33%) of
the total square footage of the Premises is taken by condemnation.  Lessee and
Lessor may elect to exercise their respective rights to terminate this

                                      16.
<PAGE>

Lease pursuant to this Section by serving written notice to the other within one
hundred twenty (120) days of their receipt of notice of condemnation. All rent
shall be paid up to the date of termination, and Lessee shall have no claim
against Lessor for the Lease value of any unexpired term of this Lease. If this
Lease shall not be cancelled, the rent after such partial taking shall be that
percentage of the adjusted base rent specified herein, equal to the percentage
which the square footage of the untaken part of the Premises, immediately after
the taking, bears to the square footage of the entire Premises immediately
before the taking. Any sums owing hereunder which are calculated on the basis of
Lessee's pro rata share (as set forth in Section 8.2) shall also be adjusted to
reflect the decreased square footage of the Premises due to the condemnation.
During the last twelve (12) months of the Lease Term and during the Extended
Term, if any, if Lessee's continued use of the Premises requires alterations and
repair by reason of a partial taking, all such alterations and repair shall be
made by Lessee at Lessee's expense.

     Section 15.3  Award to Lessee.  In the event of any condemnation, whether
     ------------  ---------------
total or partial, Lessee shall have the right to claim and recover from the
condemning authority such compensation as may be separately awarded or
recoverable by Lessee for loss of its business fixtures, or equipment belonging
to Lessee immediately prior to the condemnation or for the interruption of
Lessee's business, or its moving costs.  The balance of any 15 condemnation
award shall belong to Lessor and Lessee shall have no further right to recover
from Lessor or the condemning authority for any additional claims arising out of
such taking.

                                  ARTICLE XVI
                                  -----------

                                ENTRY BY LESSOR
                                ---------------

     Lessee shall permit Lessor and its agent to enter the Premises at all
reasonable times for any of the following purposes: to inspect the Premises; to
maintain the building in which the Premises are located; to make such repairs,
alterations; and additions to the Premises as Lessor is obligated or may elect
to make; to show the Premises and post "To Lease" signs for the purposes of
reletting during the last ninety (90) days of the term; to show the Premises as
part of a prospective sale by Lessor or to post notices of non-responsibility.
Lessor shall have such right of entry without any rebate of rent to Lessee for
any loss of occupancy or quiet enjoyment of the Premises thereby occasioned.

                                 ARTICLE XVII
                                 ------------

                             ESTOPPEL CERTIFICATE
                             --------------------

          (a) Lessee shall at any time upon not less than fifteen (15) days'
prior written notice from Lessor execute, acknowledge and deliver to Lessor a
statement in writing (i) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect) and the
date to which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to Lessee's knowledge, any uncured defaults on
the part of Lessor hereunder, or specifying such defaults if any are claimed.
Any such statement may be conclusively relied upon by any prospective purchaser
or encumbrancer of the Premises.

                                      17.
<PAGE>

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

                                 ARTICLE XVIII
                                 -------------

                              LESSOR'S LIABILITY
                              ------------------

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

                                  ARTICLE XIX
                                  -----------

                           EXPIRATION ON TERMINATION
                           -------------------------

       Section 19.1  Surrender of Possession.  Lessee agrees to deliver up and
       ------------  -----------------------
surrender to Lessor possession of the Premises and all improvements thereon, in
as good order and condition as when possession was taken by Lessee, excepting
only ordinary wear and tear or any permitted alterations.  Upon termination of
this Lease, Lessor may reenter the Premises and remove all persons and property
therefrom.  If Lessee shall fail to remove any effects which it is entitled to
remove from the Premises upon the termination of this Lease, for any cause
whatsoever, Lessor, at its option, may remove the same and store or dispose of
them, and Lessee agrees to pay to Lessor on demand any and all reasonable
expenses incurred in such removal and in making the Premises free from all dirt,
litter, and debris, including all storage and insurance charges.  If the
Premises are not surrendered at the end of the Term, Lessee shall indemnify
Lessor against loss or liability resulting from delay by Lessee in so
surrendering the Premises, including, without limitation, actual damages for
lost rents.

     Section 19.2  Holding Over.  If Lessee, with or without Lessor's consent,
     ------------  ------------
remains in possession of the Premises after expiration of the term and if Lessor
and Lessee have not executed an express written agreement as to such holding
over, then such occupancy shall be a tenancy from month to month, at a monthly
rental equivalent to 200% of the monthly rental in effect immediately prior to
such expiration if the remainder in possession is without Lessor's consent, and
at a monthly rental equivalent to 125% of the monthly rental in effect
immediately prior to such expiration if the remainder in possession is with
Lessor's consent, such payments to be made as herein provided.  In the event of
such holding over all of the terms of this Lease

                                      18.
<PAGE>

including the payment of all charges owing hereunder other than rent shall
remain in force and effect on said month to month basis.

                                  ARTICLE XX
                                  ----------

                           MISCELLANEOUS PROVISIONS
                           ------------------------

     Section 20.1  Severability.  The invalidity of any provision of this
     ------------  ------------
Lease as determined by a court of competent jurisdiction, shall in no way affect
the validity of any other provision hereof.

     Section 20.2  Interest on Past-due Obligations.  Except as expressly herein
     ------------  --------------------------------
provided, any amount due to Lessor not paid when due shall bear interest at the
prime commercial lending rate then in effect at Bank of America.  Payment of
such interest shall not excuse or cure any default by Lessee under this Lease.

     Section 20.3  Time of Essence.  Time is of the essence in the performance
     ------------  ---------------
of all obligations under this Lease.

     Section 20.4  Additional Rent.  Any monetary obligations of Lessee to
     ------------  ---------------
Lessor under the terms of this Lease shall be deemed to be rent.

     Section 20.5  Incorporation of Prior Agreements; Amendments.  This Lease
     ------------  ---------------------------------------------
contains all agreements of the parties with respect to any matter mentioned
herein.  No prior agreement or understanding pertaining to any such matter shall
be effective.  This Lease may be modified in writing only, signed by the parties
in interest at the time of the modification.  Except as otherwise stated in this
Lease, Lessee hereby acknowledges that neither the Lessor nor any employees or
agents of the Lessor has made any oral or written warranties or representations
to Lessee relative to the condition or use by Lessee of said Premises and Lessee
acknowledges that Lessee assumes all responsibility regarding the Occupational
Safety Health Act, the legal use and adaptability of the Premises and the
compliance thereof with all applicable laws and regulations in effect during the
term of this Lease except as otherwise specifically stated in this Lease.

     Section 20.6  Notices.  Any notice required or permitted to be given
     ------------  -------
hereunder shall be in writing and may be given by personal delivery or by
facsimile, Federal Express, or certified mail, and if given personally or by
mail, shall be deemed sufficiently given if addressed to Lessee or to Lessor at
the address noted below the signature of the respective parties, as the case may
be.  Either party may by notice to the other specify a different address for
notice purposes.  A copy of all notices required or permitted to be given to
Lessor hereunder shall be concurrently transmitted to such party or parties at
such addresses as Lessor may from time to time hereafter designate by notice to
Lessee.  Notice shall be considered effective either 72 hours after mailing or
upon actual receipt, whichever is earlier.

     Section 20.7  Waivers.  No waiver by Lessor of any provision hereof shall
     ------------  -------
be deemed a waiver of any other provision hereof or of any subsequent breach by
Lessee of the same or any other provisions.  Lessor's consent to, or approval
of, any act shall not be deemed to render unnecessary the obtaining of Lessor's
consent to or approval of any subsequent act by Lessee.  The acceptance of rent
hereunder by Lessor shall not be a waiver of any preceding breach by

                                      19.
<PAGE>

Lessee of any provision hereof, other than the failure of Lessee to pay the
particular rent so accepted, regardless of Lessor's knowledge of such preceding
breach at the time of acceptance of such rent.

     Section 20.8  Recording.  Either Lessor or Lessee shall, upon request of
     ------------  ---------
the other, execute, acknowledge and deliver to the other a "short form"
memorandum of this Lease for recording purposes.

     Section 20.9  Cumulative Remedies.  No remedy or election hereunder shall
     ------------  -------------------
be deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.

     Section 20.10  Covenants and Conditions.  Each provision of this Lease
     -------------  ------------------------
performable by Lessee or Lessor shall be deemed both a covenant and a condition.

     Section 20.11  Binding Effect; Choice of Law; Venue.  Subject to any
     -------------  ------------------------------------
provisions hereof restricting assignment or subletting by Lessee and subject to
the provisions of Article XVIII, this Lease shall bind the parties, their
personal representatives, successors and assigns. This Lease shall be governed
by the laws of the State of California. Venue for any action or proceeding
brought to enforce or defend this agreement, and for any other purpose
hereunder, shall be Santa Clara County.

     Section 20.12  Subordination of Leasehold.  Lessee agrees that this Lease
     -------------  --------------------------
is and shall be, at all times, subject and subordinate to the lien of any
mortgage or other encumbrances which Lessor may create against the Premises
including all renewals, replacements and extensions thereof; provided, however,
that regardless of any default under any such mortgage or encumbrance or any
sale of the Premises under such mortgage, so long as Lessee performs all
covenants and conditions of this Lease and continues to make all payments
hereunder, this Lease and Lessee's possession and rights hereunder shall not be
disturbed by the mortgagee or anyone claiming under or through such mortgagee.

     Section 20.13  Attorneys' Fees.  If either party herein brings an action to
     -------------  ---------------
enforce the terms hereof or declare rights 'hereunder, the prevailing party in
any such action, on trial or appeal, shall be entitled to reasonable attorneys'
fees to be paid by the losing party as fixed by the Court.

     Section 20.14  Auctions.  Lessee shall not conduct, nor permit to be
     -------------  --------
conducted, either voluntarily or involuntarily, any auction upon the Premises
without first having obtained Lessor's prior written consent.  Notwithstanding
anything to the contrary in this Lease, Lessor shall not be obligated to
exercise any standard of reasonableness in determining whether to grant such
consent.

     Section 20.15  Signs.  Lessee shall not place any sign upon the Premises
     -------------  -----
without Lessor's prior written consent, which consent shall not be unreasonably
withheld; provided, however, that Lessee shall have the right to display its
name on the building "tombstone" in accordance with applicable law.

     Section 20.16  Voluntary Surrender or Merger.  The voluntary or other
     -------------  -----------------------------
surrender of this Lease by Lessee, or a mutual cancellation thereof, or a
termination by Lessor, shall not work a

                                      20.
<PAGE>

merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to Lessor
of any or all of such subtenancies.

     Section 20.17  Guarantor.  In the event that there is a guarantor of this
     -------------  ---------
Lease, said guarantor shall have the same obligations as Lessee under this
Lease.

     Section 20.18  Quiet Possession.  Upon Lessee paying the rent for the
     -------------  ----------------
Premises and observing and performing all of the covenants, conditions and
provisions on Lessee's part to be observed and performed hereunder, Lessee shall
have quiet possession of the Premises for the entire term hereof subject to all
of the provisions of this Lease.  The individuals executing this Lease on behalf
of Lessor represent and warrant to Lessee that they are fully authorized and
legally capable of executing this Lease on behalf of Lessor and that such
execution is binding upon all parties holding an ownership interest in the
Premises.

     Section 20.19  Rules and Regulations.  Lessee agrees that it will abide by,
     -------------  ---------------------
keep and observe all reasonable rules and regulations which Lessor may make from
time to time for the management, safety, care and cleanliness of the building
and grounds, the parking of vehicles and the preservation of good order therein
as well as for the convenience of other occupants and tenants of the building.
The continued violations of any such rules and regulations shall be deemed a
material breach of this Lease.  Lessee, however, shall not be bound by any
future rules or regulations, unless it shall approve same, which approval shall
not be unreasonably withheld.

     Section 20.20  Easements.  Lessor reserves to itself the right, from time
     -------------  ---------
to time, to grant such easements, rights and dedications that Lessor deems
necessary or desirable, and to cause the recordation of Parcel Maps and
restrictions, so long as such easements, rights, dedications, Maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee.  Lessee shall sign any of the aforementioned documents upon three (3)
days written notice of Lessor and failure to do so shall constitute a material
breach of this Lease.

     Section 20.21  Corporate Authority.  Each individual executing this Lease
     -------------  -------------------
on behalf of a corporation represents and warrants that he is duly authorized to
execute and deliver this Lease on behalf of the corporation in accordance with a
duly adopted resolution of the Board of Directors of the corporation, and that
this Lease is binding upon said corporation in accordance with its terms.

     Section 20.22  Delays for Cause.  In any case where either party hereto is
     -------------  ----------------
required to do any act, delays caused by or resulting from Acts of God, war,
civil commotion, fire, flood or other casualty, labor difficulties, shortages of
labor, materials or equipment, government regulations, unusually severe weather,
or other causes beyond such party's reasonable control shall not be counted in
determining the time during which work shall be completed, whether such time be
designated by a fixed date, a fixed time or "a reasonable time", and such time
shall be deemed to be extended by the period of such delay.

     Section 20.23  Square Footage.  The parties agree that the leased Premise
     -------------  --------------
is approximately 25,024 square feet, said square footage being measured from the
face of the outside (concrete) walls and includes the covered docks and entry
ways.

                                      21.
<PAGE>

     Section 20.24  Brokers.  Cornish and Carey Commercial represents both the
     -------------  -------
Lessor and the Lessee in this Lease, and both Parties agree thereto.  Cornish
and Carey Commercial broker's commission shall be paid as agreed among itself
and the Lessor.

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

The Parties hereto have executed this Lease at the place on the dates specified
immediately adjacent to their respective signatures.

     Executed at Menlo Park, California, on October 27, 1992.

Lessor:                                      Address:

VANNI BUSINESS PARK GENERAL                  c/o Jay Paul Company
PARTNERSHIP                                  5619 Scotts Valley Dr.
                                             Suite 280
                                             Scotts Valley, CA 95066
By:   /s/ Jay Paul
   -----------------------------------
          Jay Paul, General Partner

Lessee:

ACTIVATED CELL THERAPY, INC.,                 ________________________________
a Delaware corporation .
                                              ________________________________

By:  /s/ Illegible
     ---------------------------------

                                      22.<PAGE>

                                                                   EXHIBIT 10.11

                                     LEASE
                                     -----

          THIS LEASE is made as of July 31, 1998 ("Effective Date"), by and
                                                   --------------
between ARE-3005 First Avenue, LLC, a Delaware limited liability company
("Landlord") and Dendreon Corporation, a Delaware corporation ("Tenant").
  --------                                                      ------

1.   Lease of Premises
     -----------------

     Landlord hereby leases to Tenant and Tenant hereby leases from Landlord
upon the terms and conditions hereof, those certain premises (the "Demised
                                                                   -------
Premises") within the building located at the address set forth below (the
--------
"Building"), the site plan and legal description for which is attached hereto as
 --------
Exhibit "A", together with certain rights appurtenant thereto as expressly given
----------
to Tenant herein.  The real property upon which the Building is located and all
landscaping, parking facilities and other improvements and appurtenances related
thereto, are hereinafter collectively referred to as the "Project".  All
                                                          -------
portions of the Project which are for the non-exclusive use of tenants of the
Building, including, without limitation, driveways, sidewalks, parking areas,
landscaped areas, service corridors, stairways, elevators, public restrooms and
Building lobbies, are hereinafter referred to as the "Project Common Areas".
                                                      --------------------

2.   Basic Lease Provisions
     ---------------------------

     2.1  For convenience of the parties, certain basic provisions of this Lease
are set forth herein. The provisions set forth herein are subject to the
remaining terms and conditions of this Lease and are to be interpreted in light
of such remaining terms and conditions.

          2.1.1  Address of the Building:

                 3005 1st Avenue
                 Seattle, Washington 98121

          2.1.2  (a)   Rentable Area of Demised Premises: 70,647 sq. ft.

                 (b)   Rentable Area of Building: 70,647 sq. ft.

                 (c)   Rentable Area of Project: 111,622 sq. ft.

          2.1.3  Basic Annual Rent:

                 January 1, 1999 through December 31, 2001    $1,695,528.00
                 January 1, 2002 through December 31, 2004    $1,872,145.50
                 January 1, 2005 through December 31, 2008    $2,119,410.00
          2.1.4  Base Monthly Rental Installments of Basic Annual Rent:

                 January 1, 1999 through December 31, 2001    $141,294.00
                 January 1, 2002 through December 31, 2004    $156,012.12
                 January 1, 2005 through December 31, 2008    $176,617.50
<PAGE>

          2.1.5  (a)  Tenant's Pro Rata Share of Building Operating Expenses:
                      100%
                 (b)  Tenant's Pro Rata Share of Project Operating Expenses:
                      63.29%

          2.1.6  (a)  Rent Commencement Date: As defined in Section 5.1 hereof.

                 (b)  Term Commencement Date: As defined in Section 4.2 hereof.

                 (c)  Term Expiration Date: 10 years from the Rent Commencement
Date (as defined in Section 5.1 hereof), subject to extension or earlier
termination as provided herein.

          2.1.7  Security Deposit: $423,882.00 (three (3) months initial Base
Monthly Rental).

          2.1.8  Permitted Use: Scientific research laboratories and related
office uses consistent with Article 10 hereof.

          2.1.9  Address for Rent Payment:

                 135 N. Los Robles Avenue, Suite 250
                 Pasadena, CA 91101
                 Attention: Accounts Receivables

                 Address for Notices to Landlord:

                 135 N. Los Robles Avenue, Suite 250
                 Pasadena, CA 91101
                 Attention: General Counsel

                 With a copy to:

                 11440 West Bemardo Court, Suite 170
                 San Diego, CA 92127
                 Attention: Asset Management

          2.1.10 Address for Notices to Tenant Prior to Term Commencement Date:

                 291 North Bemardo
                 Mountain view, California 94043

                 Address for Notices to Tenant after Term Commencement Date:

                 3005 1st Avenue
                 Seattle, Washington 98121

          2.1.11 The following Exhibits are attached hereto and incorporated
                 herein: A, B, C, D, E, F, G and H.
<PAGE>

3.   Term
     ----

     3.1   This Lease shall take effect upon the Effective Date and, except as
specifically otherwise provide within this Lease, each of the provisions hereof
shall be binding upon and inure to the benefit of Landlord and Tenant, and each
of their respective successors and permitted assigns, from the Effective Date.

     3.2   The term of this Lease (the "Term") will be that period from the Term
                                        ----
Commencement Date as defined in Section 4.2 below through the Term Expiration
Date, as such may be terminated or extended as provided herein.

4.   Possession And Commencement Date
     --------------------------------

     4.1   Landlord shall use commercially reasonable efforts to tender
possession of the Demised Premises to Tenant on October 1, 1998 (the "Target
                                                                      ------
Term Commencement Date").  Tenant agrees that in the event Landlord fails to
----------------------
tender possession of the Demised Premises on or before the Target Term
Commencement Date despite Landlord's use of commercially reasonable efforts to
do so (and not as a subterfuge for avoiding this Lease), Landlord shall not be
liable to Tenant for any loss or damage resulting therefrom, and this Lease
shall not be void or voidable except in the event that Landlord is unable, after
taking commercially reasonable efforts, to tender possession of the Demised
Premises to Tenant on or before the date which is one hundred twenty (120) days
after the Target Term Commencement Date, in which case either Landlord or Tenant
may elect in writing to terminate this Lease. Tenant shall promptly construct or
cause to be constructed the Tenant Improvements (as hereinafter defined) in
accordance with the terms and conditions of this Lease and the exhibits hereto,
including, without limitation, Exhibit "B" attached hereto (the "Work Letter").
                                                                 -----------
Subject to such terms and conditions, Tenant shall be allowed to construct a
Class 10,000 clean room on the fourth floor of the Demised Premises.
Notwithstanding anything to the contrary set forth herein, Tenant shall have
access to and the right to occupy the Demised Premises free of Basic Annual Rent
or Additional Rent from the Term Commencement Date until the Rent Commencement
Date, hereinafter defined.

     4.2   The "Term Commencement Date" shall be October 1, 1998.
                ----------------------

     4.3   Access to and possession of areas necessary for utilities, services,
safety and operation of the Building and the Project are reserved to Landlord,
except to the extent otherwise expressly provided herein. When Landlord or
Landlord's representatives are accessing such areas, Landlord shall use
reasonable efforts to minimize any interference with Tenant's business, a
representative of Tenant may accompany Landlord, and Landlord shall comply with
the reasonable security requirements of Tenant.

     4.4   Tenant shall cause to be constructed the tenant improvements in the
Demised Premises (the "Tenant Improvements") pursuant to the Work Letter at a
                       -------------------
cost to Landlord not to exceed Three Million Five Hundred Thirty-two Thousand
Three Hundred Fifty Dollars ($3,532,350.00) (based upon fifty dollars ($50.00)
per square foot of Rentable Area) (the "Tenant Improvement Allowance") which
                                        ----------------------------
shall include the cost of construction, project management by Landlord (for
which Additional Rent in amount not to exceed three percent (3%) of the Tenant
Improvement Allowance may be charged), cost of space planning, architect,
<PAGE>

engineering and other related services, building permits and other planning and
inspection fees. If Landlord reasonably determines that the total cost of the
Tenant Improvements will exceed the Tenant Improvement Allowance, then Tenant
shall immediately, and as a condition to Landlord's obligation to expend or
disburse any portion of the Tenant Improvement Allowance, provide evidence to
Landlord of the availability of funds sufficient to pay such excess costs.
Tenant shall have until July 1, 2000 to expend the Tenant Improvement Allowance,
after which date Landlord's obligation to fund the Tenant Improvement Allowance
shall expire.  Landlord shall make reasonable progress payments from the Tenant
Improvement Allowance; provided, however, that Landlord receives full and
complete lien releases as Landlord makes such payments from all general
contractors and major subcontractors and major suppliers to the fullest extent
available at law.  Tenant shall be responsible in any event for ensuring that
the Tenant Improvements, when completed, are lien free.

     4.5   Intentionally Omitted.

     4.6   Landlord shall deliver the Demised Premises to Tenant on the Term
Commencement Date clean and free of debris. Landlord warrants to Tenant that the
Demised Premises delivered to Tenant on the Term Commencement Date shall be in
good operating condition on the date of such delivery.

5.   Rent

     5.1   Basic Annual Rent.  Tenant agrees, commencing on January 1, 1999 (the
           ------------------
"Rent Commencement Date") to pay Landlord as Basic Annual Rent for the Demised
 ----------------------
Premises the sum set forth in Section 2.1.3. Basic Annual Rent shall be paid in
the equal monthly installments set forth in Section 2.1.4, each in advance on
the first day of each and every calendar month during the Term. Notwithstanding
anything to the contrary set forth herein, Tenant shall have no obligation to
pay Basic Annual Rent for any period prior to the Rent Commencement Date.

     5.2   Additional Rent.  In addition to Basic Annual Rent, Tenant agrees to
           ---------------
pay to Landlord as additional rent ("Additional Rent") at times hereinafter
                                     ---------------
specified in this Lease (i) Tenant's pro rata share, as set forth it Section
2.1.6 ("Tenant's Pro Rata Share"), of each of Building Operating Expenses and of
        -----------------------
Project Operating Expenses, as provided in Article 7 and (ii) any other amounts
that Tenant assumes or agrees to pay under the provisions of this Lease that are
owed to Landlord, including, without limitation, any and all other sums that may
become due by reason of any default of Tenant or failure on Tenant's part to
comply with the agreements, terms, covenants and conditions of this Lease to be
performed by Tenant, after notice and lapse of applicable cure period.
Notwithstanding anything to the contrary set forth herein, Tenant shall have no
obligation to pay Additional Rent for any period prior to the Rent-Commencement
Date.

     5.3   Improvement Rent.  In addition to Annual Base Rent and Additional
           ----------------
Rent, Tenant further agrees to pay to Landlord the amount necessary
("Improvement Rent") to fully amortize the Outstanding Tenant Improvement
  ----------------
Allowance (as hereinafter defined) at a rate of twelve and one-half percent
(12.5%) over the period from the date such Tenant Improvements are substantially
completed to the Term Expiration Date (without extension for any exercise of the
Extension Right, as hereinafter defined).  Improvement Rent shall be paid
monthly on the first of
<PAGE>

each calendar month during the Term. As used herein, "Outstanding Tenant
                                                      ------------------
Improvement Allowance" shall mean the amount of the Tenant Improvement
---------------------
Allowance actually disbursed or incurred by Landlord from time to time, less any
portion thereof which has previously been amortized and repaid by Tenant
pursuant to this Section 5.3. Notwithstanding anything to the contrary set forth
herein, Tenant shall have no obligation to pay Improvement Rent prior to the
Term Commencement Date unless Tenant breaches this Lease or commits a Default
(as such term is hereinafter defined) hereunder and this Lease is terminated as
a result thereof, in which case the entire remaining unamortized Outstanding
Tenant Improvement Allowance shall immediately become due and payable and Tenant
shall pay the same.

     5.4   Basic Annual Rent, Additional Rent and Improvement Rent shall
together be denominated "Rent". Rent shall be paid to Landlord, without
                         ----
abatement, deduction, or offset, in lawful money of the United States of
America, at the office of Landlord as set forth in Section 2.1.9 or to such
other person or at such other place as Landlord may from time designate in
writing. In the event the Term commences or ends on a day other than the first
day of a calendar month, then the Rent for such fraction of a month shall be
prorated for such period on the basis of a thirty (30) day month and shall be
paid at the then current rate for such fractional month.

6.   Intentionally Omitted.

7.   Operating Expenses
     ------------------

     7.1   As used herein, (i) the term "Building Operating Expenses" shall mean
                                         ---------------------------
those Operating Expenses related to the Building and any other area of the
Project with respect to which Tenant has exclusive use, and (ii) the term
"Project Operating Expenses" shall mean those Operating Expenses related to the
 --------------------------
Project Common Areas.  As used herein, "Operating Expenses", with respect to
                                        ------------------
Project Operating Expenses or Building Operating Expenses, as applicable, shall
include the following to the extent actually incurred by Landlord:

           7.1.1   Government impositions, other than those set forth in Section
7.1.3 or expressly excluded in Section 7.1.2, not paid directly by Tenant,
including, without limitation, property tax costs consisting of real and
personal property taxes and assessments (including amounts due under any
improvement bond upon the Building or the Project, including the parcel or
parcels of real property upon which the Building or the Project are located or
assessments levied in lieu thereof) imposed by any governmental authority or
agency; any tax on or measured by gross rentals received from the rental of
space in the Building, or tax based on the square footage of the Demised
Premises, the Building or the Project as well as any utilities surcharges, or,
except as otherwise specifically set forth herein, any other costs levied,
assessed or imposed by, or at the direction of, or resulting from statutes or
regulations, or interpretations thereof, promulgated by any federal, state,
regional, municipal or local government authority in connection with the use or
occupancy by Tenant or its employees, agents, contractors or permitted
subtenants of the Building or the parking facilities serving the Building or the
Project; any tax on this transaction or any document to which Tenant is a party
creating or transferring an interest in the Demised Premises; any fee for a
business license required to be held by Landlord to operate the Building for the
purposes contemplated by this Lease; any expenses, including the reasonable cost
of attorneys or experts, reasonably incurred by Landlord in seeking a reduction
by the taxing authority of the applicable taxes.
<PAGE>

           7.1.2   All other costs of any kind paid or incurred by Landlord in
connection with the operation and maintenance of the Building and the Project
including, by way of examples and not as a limitation upon the generality of the
foregoing, costs of repairs and replacements to the Building or the other
improvements within the Project as appropriate to maintain the Building or the
Project as required hereunder, including cost of funding such reasonable
reserves as Landlord, consistent with good business practice, may establish to
provide for future repairs and replacements, costs of utilities furnished to the
Project Common Areas; sewer fees; cable T.V.; trash collection; cleaning,
including windows; heating; ventilation; air-conditioning; maintenance of
landscape and grounds; maintenance of drives and parking areas; security
services and devices; building supplies; maintenance for and replacement of
equipment utilized for operation and maintenance of the Project: license, permit
and inspection fees; sales, use and excise taxes on goods and services purchased
by Landlord in connection with the operation, maintenance or repair of the
Project and Building systems and equipment; telephone, postage, stationary
supplies and other expenses incurred in connection with the operation,
maintenance, or repair of the Project; accounting, legal and other professional
fees and expenses incurred in connection with the Project; the cost of
furniture, draperies, carpeting, landscaping and other customary and ordinary
items of personal property provided by Landlord for use in Common Areas; the
costs of any capital repairs or improvements ("Capital Repairs") to the Building
                                               ---------------
or the Project Common Areas which can be amortized over a useful life in excess
of one year pursuant to the Internal Revenue Code and the regulations
promulgated therein (the "Code"), the cost of which Capital Repairs shall be
                          ----
amortized over the useful life of the item in question (such useful life to be
the same as set forth in the Code but in no event greater than ten (10) years),
and only the annual amortized amount shall be included as part of Operating
Expenses; costs of complying with any applicable laws and regulations concerning
the generation, handling, storage or transportation of Hazardous Materials (as
hereinafter defined), except to the extent such costs are caused by the actions
of other tenants of the Project or by the actions of Landlord, and not including
the cost of the actual work of remediation or investigation; insurance premiums,
including premiums for public liability, property casualty, earthquake and
environmental coverages; portions of insured losses paid by Landlord as part of
the deductible portion of such losses by reason of insurance policy terms;
service contracts; costs of services of independent contractors retained to do
work of nature or type herein referenced; and costs of compensation (including
employment taxes and fringe benefits) of all persons who perform regular and
recurring duties connected with the day-to-day operation and maintenance of the
Project, its equipment, the adjacent walks, landscaped areas, drives, and
parking areas, including without limitation, janitors, floor waxers, window-
washers, watchmen, gardeners, sweepers, and handymen and costs of management
services (exclusive of Landlord's overhead and salaries and benefits of
Landlord's personnel, officers and executives), which costs of management
services shall be three percent (3%) of the Basic Annual Rent due from Tenant
(the "Management Fee").
      --------------

           7.1.3   Notwithstanding the foregoing, Operating Expenses shall not
include:

                   (a)  any net income, franchise, capital stock, estate or
inheritance taxes or taxes which are the personal obligation of Landlord, Tenant
or of another tenant of the Project;
<PAGE>

                   (b)  any leasing commissions or expenses which relate to
preparation of rental space for a tenant;

                   (c)  expenses of initial development and construction,
including but not limited to, grading, paving, landscaping, and decorating (as
distinguished from maintenance repair and replacement of the foregoing);

                   (d)  legal expenses relating to other tenants;

                   (e)  costs or expenditures to the extent reimbursed by
payments received by Landlord;

                   (f)  principal, interest or other amounts paid (but excluding
any amount paid as a result of any act or omission of Tenant) on loans to
Landlord or secured by mortgages or deeds of trust or pursuant to any ground
lease covering the Project or a portion thereof (provided interest upon a
government assessment or improvement bond payable in installments is an
Operating Expense under Section 7.1.1 above);

                   (g)  fines, penalties and late charges unless incurred as a
result of any act or omission of Tenant;

                   (h)  promotional and advertising expenses attributable to
marketing of other leaseable space in the Building other than Building signage;

                   (i)  salaries of executive officers of Landlord and employees
of Landlord;

                   (j)  depreciation claimed by Landlord for tax purposes
(provided this exclusion of "depreciation" is not intended to delete from
Operating Expenses actual costs of repairs and replacements and reasonable
reserves in regard thereto which are provided for in Section 7.1.2 above);

                   (k)  any ground lease rental;

                   (l)  costs, including permit, license and inspection costs,
incurred with respect to the installation of other tenants' or other occupants'
improvements in the Building or incurred in otherwise renovating or otherwise
improving, decorating, painting or redecorating vacant space for other tenants
or other occupants of the Building;

                   (m)  depreciation, amortization and interest payments, except
as provided herein and except on materials, tools, supplies and other vendor-
type equipment purchased by Landlord to enable Landlord to supply services
Landlord might otherwise contract for with a third party where such
depreciation, amortization and interest payments would otherwise have been
included in the charge for such third party's services, all as determined in
accordance with generally accepted accounting principles, consistently applied,
and when depreciation or amortization is permitted or required, the item shall
be amortized over its reasonably anticipated useful life;
<PAGE>

                   (n)  marketing costs, including, without limitation, leasing
commissions, attorneys' fees, space planning costs, and other costs and expenses
incurred in connection with lease, sublease and/or assignment negotiations and
transactions with present or prospective tenants or other occupants of the
Building or Project;

                   (o)  expenses in connection with services or other benefits
which are not offered to Tenant or for which Tenant is charged for directly but
which are provided to another tenant or occupant of the Building;

                   (p)  costs incurred by Landlord due to the violation by
Landlord or any tenant of the terms and conditions of any lease of space in the
Building, except to the extent contributed to by Tenant;

                   (q)  overhead and profit increment paid to Landlord or to
subsidiaries or affiliates of Landlord for goods and/or services in or to the
Building or Project to the extent the same exceeds the costs of such goods
and/or services rendered by unaffiliated third parties on a competitive basis,
except for the Management Fee;

                   (r)  interest, principal, points and fees on debts or
amortization on any mortgage or mortgages or any other debt instrument
encumbering the Building or the Project (except as otherwise permitted herein);

                   (s)  Landlord's general corporate overhead and general and
administrative expenses, except for the Management Fee;

                   (t)  tax penalties incurred as a result of Landlord's
negligence, inability or unwillingness to make payments and/or to file any tax
or informational returns when due, except to the extent contributed to by
Tenant;

                   (u)  costs arising from the gross negligence or willful
misconduct or fault of other tenants or Landlord or its agents, representatives,
invitees or guests;

                   (v)  costs for sculpture, paintings or other objects of art;

                   (w)  costs (including in connection therewith all attorneys'
fees and costs of settlement judgments and payments in lieu thereof) arising
from claims, disputes or potential disputes in connection with potential or
actual claims, litigation or arbitrations pertaining to Landlord or the Building
or the Project, except to the extent relating to or regarding the Tenant or its
agents; and

                   (x)  costs associated with the operation of the business of
the partnership or entity which constitutes Landlord as the same are
distinguished from the costs of operation of the Building, including partnership
accounting and legal matters, costs of defending any lawsuits with any mortgagee
(except as the actions of Tenant may be in issue), costs of selling,
syndicating, financing, mortgaging or hypothecating any of Landlord's interest
in the Building, costs of any disputes between Landlord and its employees (if
any) not engaged in Building operation, disputes of Landlord with Building
management, or outside fees paid in connection with disputes with other tenants.
<PAGE>

     7.2   Tenant shall pay to Landlord on the first day of each calendar month
of the Term, as Additional Rent, Landlord's estimate of Tenant's Pro Rata Share
of Building Operating Expenses and Tenant's Pro Rata Share of Project Operating
Expenses for such month.

           7.2.1   Within ninety (90) days after the conclusion of each calendar
year, (or such longer period as may be reasonably required) Landlord shall
furnish to Tenant a statement showing in reasonable detail the actual Operating
Expenses and Tenant's Pro Rata Share of Building Operating Expenses and Tenant's
Pro Rata Share of Project Operating Expenses for the previous calendar year.
Any additional sum due from Tenant to Landlord shall be immediately due and
payable within ten (10) days after any written request therefor.  If the amounts
paid by Tenant pursuant to Section 7.2 exceed Tenant's Pro Rata Share of
Building Operating Expenses or Tenant's Pro Rata Share of Project Operating
Expenses for the previous calendar year, Landlord shall, at Landlord's option,
either (i) credit the excess amount to the next succeeding installments of
estimated Additional Rent, or (ii) pay the excess to Tenant within thirty (30)
days after delivery of such statements.

           7.2.2   Any amount due under Section 7.2 for any period which is less
than a full month shall be prorated (based on a thirty (30) day month) for such
fractional month.

     7.3   Landlord's annual statement shall be final and binding upon Tenant
unless Tenant, within sixty (60) days after Tenant's receipt thereof, shall
contest any item therein by giving written notice to Landlord, specifying each
item contested and the reason therefor. If, during such sixty (60) day period,
Tenant reasonably and in good faith questions or contests the correctness of
Landlord's statement of Tenant's Pro Rata Share of Building Operating Expenses
or Tenant's Pro Rata Share of Project Operating Expenses, Landlord will provide
Tenant with access to Landlord's books and records and such information as
Landlord reasonably determines to be responsive to Tenant's questions.  In the
event that after Tenant's review of such information, Landlord and Tenant cannot
agree upon the amount of Tenant's Pro Rata Share of Building Operating Expenses
or Tenant's Pro Rata Share of Project Operating Expenses, then Tenant shall have
the right to have an independent public accounting firm selected from among the
ten (10) largest in the United States hired by Tenant (at Tenant's sole cost and
expense) and approved by Landlord (which approval shall not be unreasonably
withheld or delayed) audit and/or review such Landlord's books and records for
the year in question (the "Independent Review").  The results of any such
                           ------------------
Independent Review shall be binding on Landlord and Tenant.  If the Independent
Review shows that Tenant's Pro Rata Share of Building Operating Expenses or
Tenant's Pro Rata Share of Project Operating Expenses actually paid for the
calendar year in question exceeded Tenant's obligations for such calendar year,
Landlord shall at Landlord's option either (1) credit the excess amount to the
next succeeding installments of estimated Additional Rent or (2) pay the excess
to Tenant within thirty (30) days after delivery of such statement.  If the
Independent Review shows that Tenant's payments of Tenant's Pro Rata Share of
Building Operating Expenses or Tenant's Pro Rata Share of Project Operating
Expenses for such calendar year were less than Tenant's obligation for the
calendar year, Tenant shall pay the deficiency to the Landlord within thirty
(30) days after delivery of such statement.  If the Independent Review
determines that the total charged to Tenant in the annual statement exceeds the
correct total by more than seven and one-half percent (7.5%), then the costs
and expenses of the independent public accounting firm conducting the
Independent Review shall be paid by Landlord.
<PAGE>

     7.4   Tenant shall not be responsible for Building Operating Expenses or
Project Operating Expenses attributable to the time period prior to the Rent
Commencement Date. The responsibility of Tenant for Tenant's Pro Rata Share of
Building Operating Expenses and Tenant's Pro Rata Share of Project Operating
Expenses shall continue to the latest of (i) the date of termination of the
Lease, (ii) the date Tenant has fully vacated the Demised Premises (including,
without limitation, the removal of all items required hereby to be removed and
the completion of all procedures necessary to fully release and terminate any
permits or licenses restricting the use of the Demised Premises in any manner),
or (iii) if Tenant's right to possession of the Demised Premises is terminated
due to the default of Tenant, the date of rental commencement of a replacement
tenant.

     7.5   Building Operating Expenses and Project Operating Expenses for the
calendar year in which Tenant's obligation to share therein commences and in the
calendar year in which such obligation ceases, shall be prorated on a basis
reasonably determined by Landlord. Expenses such as taxes, assessments and
insurance premiums which are incurred for an extended time period shall be
prorated based upon time periods to which applicable so that the amounts
attributed to the Demised Premises relate in a reasonable manner to the time
period wherein Tenant has an obligation to share in Building Operating Expenses
and Project Operating Expenses. Notwithstanding anything set forth herein to the
contrary, if the Rent Commencement Date falls on a day other than the first day
of an insurance coverage period, tax fiscal year or other period to which an
Operating Expense is allocable or attributable, or if this Lease terminates on a
day other than the last day of an insurance coverage period, tax fiscal year or
other period to which an Operating Expense is allocable or attributable, then
the amount of the Operating Expenses payable by Tenant with respect to such
first or last partial insurance coverage period, tax fiscal year or other period
shall be prorated based on the ratio of the number of days during such insurance
coverage period, tax fiscal year or other period in which this Lease is in
effect to the total number of days in such insurance coverage period, tax fiscal
year or other period.

     7.6   Notwithstanding anything set forth herein to the contrary, in the
event the Project is not one hundred percent (100%) occupied during any entire
year of the Term, an adjustment shall be made by Landlord in computing Tenant's
Pro Rata Share of Project Operating Expenses for such year so that Tenant's Pro
Rata Share of Project Operating Expenses shall be computed for such year as
though the Project had been one hundred percent (100%) occupied during such
entire year.  Landlord further agrees that since one of the purposes of
Operating Expenses and the gross up provision is to require Tenant to pay for
the costs attributable to the Demised Premises, (i) Landlord will not collect or
be entitled to collect Operating Expenses from all of its tenants in an amount
which is in excess of one hundred percent (100%) of the Operating Expenses
actually paid by Landlord in connection with the operation of the Building and
the Project, and (ii) Landlord shall make no profit from Landlord's collections
of Operating Expenses. All assessments and premiums which are not specifically
charged to Tenant because of what Tenant has done, which can be paid by Landlord
in installments, shall be paid by Landlord in the maximum number of installments
permitted by law and not included as Operating Expenses except in the year in
which the assessment or premium installment is actually paid; provided, however,
that if the prevailing practice in comparable buildings is to pay such
assessments or premiums on an earlier basis, and Landlord pays on such basis,
such assessments or premiums shall be included in Operating Expenses as paid by
Landlord.
<PAGE>

     7.7  The parties agree that statements in this Lease to the effect that
Landlord is to perform certain of its obligations hereunder at its own cost and
expense shall not be interpreted as excluding any cost from Building Operating
Expenses or Project Operating Expenses if such cost is an Operating Expense
pursuant to the terms of this Lease.

8.   Rentable Area
     -------------

     8.1  As used herein, the terms "Rentable Area" shall be calculated in
                                     -------------
accordance with the 1996 Standard Method for Measuring Floor Area in Office
Buildings as adopted by the Building Owners and Managers Association.

     8.2  The Rentable Area of the Building is generally determined by making
separate calculations of Rentable Area applicable to each floor within the
Building and totaling the Rentable Area of all floors within the Building.  The
Rentable Area of a floor is computed by measuring to the outside finished
surface of the permanent outer Building walls.  The full area calculated as
before set forth is included as Rentable Area without deduction for columns and
projections or vertical penetrations which are defined as stairs, elevator
shafts, flues, pipe shafts, vertical ducts, and the like and their enclosing
walls.

     8.3  The Rentable Area of the Project is the total of Rentable Area of all
buildings within the Project.

     8.4  Review of allocations of Rentable Areas as between tenants of the
Project may be made as frequently as in Landlord's opinion appears appropriate
in order to facilitate an equitable apportionment of Project Operating Expenses.
Such review shall be performed by a licensed architect and the allocations
certified as true and correct by such licensed architect and Tenant shall be
bound by such certifications.

9.   Security Deposit
     ----------------

     9.1  Tenant has deposited with Landlord the sum set forth in Section 2.1.7
(the "Security Deposit") which Security Deposit shall be held by Landlord as
      ----------------
security for the performance by Tenant of all of the terms, covenants, and
conditions of this Lease to be kept and performed by Tenant during the Term.  If
Tenant defaults with respect to any provision of this Lease, including, but not
limited to, any provision 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 to
compensate Landlord for any other loss or damage which 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) business days after Landlord's 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 material breach of this Lease.  Landlord shall not be required to keep the
Security Deposit separate from its general fund, and Tenant shall not be
entitled to any interest on the Security Deposit.

     9.2  Intentionally Omitted.
<PAGE>

     9.3  In the event of bankruptcy or other debtor-creditor proceedings
against Tenant, the Security Deposit shall be deemed to be applied first to the
payment of Rent and other charges due Landlord for all periods prior to the
filing of such proceedings.

     9.4  Landlord may deliver the Security Deposit to any purchaser of
Landlord's interest in the Demised Premises, provided such purchaser assumes in
full in writing Landlord's obligations hereunder, and thereupon Landlord shall
be discharged from any further liability with respect to the Security Deposit.
This provision shall also apply to any subsequent transfers.

     9.5  If Tenant shall fully perform every provision of this Lease to be
performed by Tenant, 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) within ninety (90) days after the expiration or earlier
termination of this Lease.

10.  Use
     ---

     10.1 Tenant shall use the Demised Premises for the purpose set forth in
Section 2.1.8 and shall not use the Demised Premises, or permit or suffer the
Demised Premises to be used, for any other purpose without the prior written
consent of Landlord which may be withheld in Landlord's reasonable discretion;
provided, however, that if Tenant desires to reduce the laboratory space at the
Demised Premises from that initially approved by Landlord pursuant to this Lease
and the Work Letter, then Tenant must first provide Landlord with reasonable
financial assurances (such as an increased security deposit or acceptable letter
of credit) that Tenant will restore the Demised Premises and Tenant Improvements
at the end of the Term to the same condition as Landlord initially approved
pursuant to this Lease and the Work Letter, and Tenant must, in fact, perform
such restoration prior to the end of the Term.

     10.2 Tenant shall not use or occupy the Demised Premises in violation of
any federal, state and local laws and regulations, zoning ordinances, or the
certificate of occupancy issued for the Building, and shall, upon five (5) days'
written notice from Landlord, discontinue any use of the Demised Premises which
is declared or claimed by any governmental authority having jurisdiction to be a
violation of law, regulation or zoning ordinance or of such certificate of
occupancy, or which violates a law, regulation or zoning ordinance or the
certificate of occupancy.  Tenant shall comply with any order or directive of
any governmental authority having jurisdiction which shall, by reason of the
nature of Tenant's particular use or occupancy of the Demised Premises, impose
any duty upon Tenant or Landlord with respect to the Demised Premises or with
respect to Tenant's particular use or occupation thereof.  Subject to Tenant's
obligations elsewhere under this Lease, Tenant shall not be responsible for
compliance with any laws, codes, rules, regulations, ordinances or other
governmental directives where such compliance is not related to Tenant's
particular use and occupancy of the Demised Premises, and Tenant shall be
obligated to make only those alterations in the Demised Premises that are
required by reason of Tenant's particular use of the Demised Premises which are
not generally applicable to the Project or other tenants in the Project.

     10.3 Tenant shall not do or permit to be done anything which will
invalidate or increase the cost of any fire, environmental, extended coverage or
any other insurance policy covering the Building and Project and shall comply
with all rules, orders, regulations, and
<PAGE>

requirements of the insurers of the Building and Project and Tenant shall
promptly upon demand reimburse Landlord for any additional premium charged for
such policy to the extent caused by reason of Tenant's failure to comply with
the provisions of this Section 10.3.

     10.4 No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by Tenant nor shall any changes be made in existing locks
or the mechanism thereof without the prior written consent of Landlord, which
consent shall not be unreasonably withheld.  Tenant must, upon termination of
this Lease return to Landlord all keys to offices and restrooms, either
furnished to, or otherwise procured by Tenant.  In the event any key so
furnished is lost, Tenant shall pay to Landlord the cost of replacing the same
or of changing the lock or locks opened by such lost key if Landlord shall deem
it necessary to make such change.

     10.5 No awnings or other projection shall be attached to any outside wall
of the Building.  No curtains, blinds, shades or screens shall be attached to or
hung in, or used in connection with, any window or door of the Demised Premises
without Landlord's consent, not to be unreasonably withheld or delayed.  Neither
the interior nor exterior of any windows shall be coated or otherwise
sunscreened without the express written consent of Landlord, nor shall any
bottles, parcels, or other articles be placed on the windowsills.  No equipment,
furniture or other items of personal property shall be placed on any exterior
balcony without the express written consent of Landlord.

     10.6 Tenant shall have the right to affix signage displaying Tenant's
corporate name and/or logo (the "Building Signage") on the Building as permitted
                                 ----------------
by code at Tenant's sole cost and expense with the prior written consent of
Landlord, which consent is not to be unreasonably withheld or delayed.  No sign,
advertisement, or notice other than the Building Signage shall be exhibited,
painted or affixed by Tenant on any exterior part of the Demised Premises or the
Building without the prior written consent of Landlord, which consent shall not
be unreasonably withheld.

     10.7 Tenant shall cause any office equipment or machinery to be installed
in the Demised Premises so as to reasonably prevent sounds or vibrations
therefrom from extending into the Project Common Areas.  Further, no equipment
weighing five hundred (500) pounds, or greater, shall be placed upon the Demised
Premises without advance notice to and approval by Landlord.  Placement of such
equipment, if approved by Landlord, shall be only at a location designed to
carry the weight of such equipment.

     10.8 Tenant shall not do or permit anything to be done in or about the
Demised Premises which shall in any way obstruct or interfere with the rights of
other tenants or occupants of the Project, or injure or annoy them, or use or
allow the Demised Premises to be used for immoral, unlawful or objectionable
purpose, nor shall Tenant knowingly cause, maintain or permit any nuisance or
waste in, on, or about the Demised Premises, Building or Project.

     10.9 Notwithstanding any other provision herein to the contrary, Tenant
shall be responsible for all liabilities, costs and expense arising out of or in
connection with the compliance of the Demised Premises with the Americans With
Disabilities Act, 42 U.S.C. (S) 12101, et seq.  (together with regulations
promulgated pursuant thereto, "ADA") and Tenant
                               ---
<PAGE>

shall indemnify, defend and hold harmless from and against any loss, cost,
liability or expense (including reasonable attorneys fees and disbursements)
arising out of any failure of the Demised Premises to comply with the ADA;
provided, however, that Landlord shall be responsible for the costs, if any, as
of the Term Commencement Date, of bringing into compliance with the ADA: (i) the
restrooms on the fourth floor of the Demised Premises; and (ii) only those other
items identified in the Mahlum & Nordfors McKinley Gordon Architectural Report
attached hereto as Exhibit "H" (the "Architectural Report") as possibly not
                                     --------------------
being in compliance with the ADA, and then only to the extent required by
governmental authority.

11.  Brokers
     -------

     11.1 Landlord and Tenant each represent and warrant to the other party that
it has had no dealings with any real estate broker or agent in connection with
the negotiation of this Lease other than Kidder, Mathews & Segner Inc.
("Kidder") and CB Commercial Real Estate Group ("CB", and together with Kidder,
  ------                                         --
"Brokers"), as has been disclosed in writing to Landlord and Tenant and that
 -------
neither Landlord nor Tenant knows of any other real estate broker or agent who
is or might be entitled to a commission in connection with this Lease.  Each of
the parties acknowledges that Kidder represents only Landlord and CB represents
only Tenant in connection with this transaction.

     11.2 Landlord and Tenant each hereby indemnifies the other party and shall
defend, hold and save such party harmless from and against any and all claims
for any commissions or fees in connection with this Lease made by any broker or
finder having worked, or claiming to have worked, on behalf of the indemnifying
party, other than Brokers.

     11.3 Landlord and Tenant each represent and warrant to the other that no
broker or agent has made any representation or warranty relied upon by it in its
decision to enter into this Lease other than as contained in this Lease.

     11.4 Tenant acknowledges and agrees that the employment of brokers by
Landlord is for the purpose of solicitation of offers of lease from prospective
tenants and no authority is granted to any broker to furnish any representation
(written or oral) or warranty from Landlord unless expressly contained within
this Lease.  Landlord in executing this Lease does so in reliance upon Tenant's
representations and warranties contained within this Article 11 hereof.

12.  Holding Over
     ------------

     12.1 If, with Landlord's express written consent, Tenant holds possession
of all or any part of the Demised Premises after the expiration or earlier
termination of the Term, Tenant shall become a tenant from month-to-month upon
the date of such expiration or earlier termination, and in such case Tenant
shall continue to pay Basic Annual Rent in the amount payable upon the date of
the expiration or earlier termination of this Lease, and all other provisions,
representations, covenants and agreements contained herein, other than with
respect to the Term and any extensions thereof shall remain in full force and
effect.

     12.2 Notwithstanding the foregoing, if Tenant remains in possession of the
Demised Premises after the expiration or earlier termination of the Term without
the express written consent of Landlord, Tenant shall become a tenant at
sufferance upon the terms of this Lease
<PAGE>

except that the monthly rental shall be equal to one hundred fifty percent
(150%) of the Basic Annual Rent and Additional Rent in effect during the last
thirty (30) days of the Term. Tenant shall be responsible for all damages
suffered by Landlord resulting from or occasioned by Tenant's holding over.

     12.3 Acceptance by Landlord of Rent after such expiration or earlier
termination shall not result in a renewal or reinstatement of this Lease.

     12.4 The foregoing provisions of this Article 12 are in addition to and do
not affect Landlord's right to re-entry or any other rights of Landlord
hereunder or as otherwise provided by law.

13.  Taxes On Tenant's Property
     --------------------------

     13.1 Tenant shall pay, prior to delinquency, any and all taxes levied
against any personal property or trade fixtures placed by Tenant in or about the
Demised Premises.

     13.2 If any such taxes on Tenant's personal property or trade fixtures are
levied against Landlord or Landlord's property or, if the assessed valuation of
the Building is increased by the inclusion therein of a value attributable to
Tenant's personal property or trade fixtures, and if Landlord, after written
notice to Tenant, pays the taxes based upon such increase in the assessed
valued, then Tenant shall upon demand repay to Landlord the taxes so levied
against Landlord.

14.  Condition Of Demised Premises
     -----------------------------

     Tenant acknowledges that neither Landlord nor any agent of Landlord has
made any representation or warranty with respect to the condition of the Demised
Premises or the Building or Project, or with respect to the suitability for the
conduct of Tenant's business.  The taking of possession of the Demised Premises
by Tenant shall, except as otherwise agreed in writing by Landlord and Tenant
and subject to any representations and warranties of Landlord or Tenant
contained herein, conclusively establish that the Demised Premises and Building
were at such time in good, sanitary and satisfactory condition and repair and in
substantially the same condition as described in the environmental report
attached hereto as Exhibit "C" as such report may be updated pursuant to the
                   -----------
next two sentences (the "Environmental Report").  The Environmental Report shall
                         --------------------
be updated with respect to the fourth floor of the Building at Landlord's sole
cost and expense within sixty (60) days of the current tenant's vacation of such
space, and may be updated prior to the Term Commencement Date with respect to
such other portions of the Building to be  occupied by Tenant as Tenant in its
sole election and at its sole cost and expense may determine.  Landlord and
Tenant shall, in a reasonably prompt manner, mutually select a qualified
environmental consultant to perform such update(s).

15.  Common Areas And Parking Facilities
     -----------------------------------

     15.1 Tenant shall have the non-exclusive right, in common with others, to
use the Project Common Areas, subject to such reasonable and nondiscriminatory
rules and regulations as are hereafter promulgated by Landlord in its
discretion.  Landlord agrees that the rules and regulations shall not be
changed, revised or enforced in any unreasonable way by Landlord, nor modified
or added to by Landlord in such a way as to unreasonably interfere with Tenant's
<PAGE>

permitted use of the Demised Premises set forth in this Lease.  Landlord shall
not enforce the rules and regulations in a manner which shall unreasonably
interfere with the Permitted Use of the Demised Premises as set forth in Section
2.1.8 herein.

     15.2 As an appurtenance to the Demised Premises, fifty (50) of the covered
parking stalls located on the Project shall be reserved to Tenant, such stalls
to be selected by Landlord.  Tenant shall pay Landlord a monthly rate of ninety
dollars ($90) per stall (the "Parking Rate"). The Parking Rate may be adjusted
                              ------------
as determined by Landlord at any time after the first year of the Term, not to
exceed an increase of five percent (5%) in any calendar year.  Tenant
acknowledges that Landlord has previously assigned certain parking stalls to
another tenant of the Project, and that Tenant has the right to use only its
assigned parking stalls.

     15.3 Tenant agrees not to unreasonably overburden the parking facilities
and agrees to cooperate with Landlord and other tenants in the use of parking
facilities.  Landlord reserves the right to determine that parking facilities
are becoming overcrowded and to limit Tenant's use thereof.  Upon such
determination, Landlord may reasonably allocate parking spaces among Tenant and
other tenants.  In the alternative, if Landlord determines that Tenant's
customers, clients, or invitees appear to be using more than the number of
parking spaces that would otherwise be attributable to a reasonable number of
parking spaces for Tenant's use, Landlord may require Tenant and its employees
to obtain parking outside the Project for such unreasonable excess uses.
However, nothing in this Section 15.3 is intended to create an affirmative duty
on Landlord's part to monitor parking.

     15.4 Landlord reserves the right to modify the Project Common Areas
including the right to add or remove exterior and interior landscaping. Landlord
agrees that the Project Common Areas shall not include any excess unimproved
land development, but shall only include improved areas available to serve a
completed building, where the area of the completed building is used to
determine Tenant's Pro Rata Share of Project Operating Expenses.

16.  Utilities And Services
     ----------------------

     16.1 Tenant shall pay for all water (including the cost to service, repair
and replace reverse osmosis, deionized and other treated water), gas, heat,
light, power, telephone and other utilities supplied to the Demised Premises,
together with any fees, surcharges and taxes thereon.  All such utilities shall
be separately metered to Tenant as of the Term Commencement Date.

     16.2 Landlord shall not be liable for, nor shall any eviction of Tenant
result from, the failure to furnish any such utility or service whether or not
such failure is caused by accident, breakage, repairs, strikes, lockouts or
other labor disturbances or labor disputes of any character, governmental
regulation, moratorium or other governmental action, inability despite the
exercise of reasonable diligence or by any other cause except the willful
misconduct or the gross negligence of Landlord.  In the event of such failure,
Tenant shall not be entitled to any abatement or reduction of Rent, nor be
relieved from the operation of any covenant or agreement of this Lease.
<PAGE>

     16.3 Tenant shall pay directly to the applicable utility or service
provider, prior to delinquency, for any separately metered utilities and
services which may be furnished to Tenant or the Demised Premises during the
Term.

     16.4 Tenant shall not, without the prior written consent of Landlord, which
shall not be unreasonably withheld, use any device in the Demised Premises,
including, but without limitation, data processing machines, which will in any
way increase the amount of ventilation, air exchange, gas, steam, electricity or
water beyond that for which the Demised Premises are reasonably designed as of
the Term Commencement Date.

     16.5 Provided that Landlord shall furnish Tenant with notice whenever
reasonably possible, Landlord reserves the right to stop service of the
elevator, plumbing, ventilation, air conditioning and electric systems, when
necessary, by reason of accident or emergency or for repairs, alterations or
improvements, in the good faith judgment of Landlord desirable or necessary to
be made, until said repairs, alterations or improvements shall have been
completed, and Landlord shall further have no responsibility or liability for
failure to supply elevator facilities, plumbing, ventilation, air conditioning
or electric service, when prevented from doing so by strike or accident, or by
laws, rules, order, ordinances, directions, regulations or requirements of any
federal, state, country or municipal authority or failure to deliver gas, oil or
other suitable fuel supply or inability by exercise of reasonable diligence to
obtain gas, oil or other suitable fuel.  It is expressly understood and agreed
that any covenants on Landlord's part to furnish any service pursuant to any of
the terms, covenants, conditions, provisions or agreements of this Lease, or to
perform any act or thing for the benefit of Tenant, shall not be deemed breached
if Landlord is unable to furnish or perform the same by virtue of a strike or
labor trouble or any other cause whatsoever.  Notwithstanding the foregoing,
Landlord, in exercising its rights hereunder, shall use commercially reasonable
efforts to minimize any disruption to or interference with the conduct of
Tenant's business.

17.  Alterations
     -----------

     17.1 Other than the Tenant Improvements, Tenant shall make no alterations,
additions or improvements in or to the Demised Premises without Landlord's prior
written consent, which approval shall not be unreasonably withheld (provided,
                                                                    --------
however, that in the event any proposed alteration, addition or improvement
-------
affects (i) any structural portions of the Building including exterior walls,
roof, foundation and core of the Building, (ii) the exterior of the Building or
(iii) any Building systems, including elevator, plumbing, air conditioning,
heating electrical, security, life safety and power, then Landlord may withhold
its consent with respect thereto in its sole and absolute discretion), and then
only by architects, contractors, suppliers or mechanics approved by Landlord in
Landlord's reasonable discretion.  In seeking Landlord's approval, Tenant shall
provide Landlord, at least fourteen (14) days in advance of any proposed
construction, with plans, specifications, bid proposals, work contracts and such
other information concerning the nature and cost of the alterations as may be
reasonably requested by Landlord.  Notwithstanding the foregoing or anything to
the contrary in this Lease: (i) Tenant shall not be required to obtain
Landlord's consent to any non-structural alteration, addition or improvement
which costs less than $20,000 per project, each project to include on-going and
related work; (ii) if Landlord's consent is required and Landlord does not
notify Tenant in writing of its approval or disapproval within fifteen (15) days
following Tenant's request for approval, then Landlord shall be deemed
<PAGE>

to have disapproved the proposed alteration in question; (iii) all personal
property of Tenant installed in the Demised Premises at Tenant's expense shall
at all times remain Tenant's personal property, and Tenant shall be entitled to
all insurance and condemnation proceeds expressly awarded for Tenant's personal
property. Tenant shall not be required to remove any Tenant Improvements at the
expiration or earlier termination of this Lease nor any other alterations,
additions or improvements unless at the time that Landlord consented thereto,
Landlord notified Tenant that such removal would be required.

     17.2 Tenant agrees that there shall be no construction of partitions or
other obstructions which might interfere with free access to mechanical
installation or service facilities of the Building or interfere with the moving
of Landlord's equipment to or from the enclosures containing said installations
or facilities.

     17.3 Landlord and Tenant each agree that all work by either Landlord or
Tenant shall be accomplished in such a manner as to permit any fire sprinkler
system and fire water supply lines to remain fully operable at all times.

     17.4 All such work shall be done at such times and in such manner as
Landlord may from time to time reasonably designate.  Tenant covenants and
agrees that all work done by Tenant shall be performed in compliance with all
laws, rules, orders, ordinances, directions, regulations, and requirements of
all governmental agencies, offices, departments, bureaus and boards having
jurisdiction, and in full compliance with the rules, orders, directions,
regulations, and requirements of any applicable fire rating bureau.  Tenant
shall provide Landlord with "as-built" plans showing any change in the Demised
Premises.

     17.5 Before commencing any work, Tenant shall give Landlord at least
fifteen (15) days prior written notice of the proposed commencement of such work
and shall, if the cost of such alteration exceeds $50,000 and Landlord so
requests, secure at Tenant's own cost and expense a completion and lien
indemnity bond reasonably satisfactory to Landlord for said work.

     17.6 All alterations, attached equipment, decorations, fixtures, trade
fixtures, additions and improvements, subject to Section 17.8, attached to or
built into the Demised Premises and paid for by Landlord by virtue of Landlord
providing the Tenant Improvement Allowance or otherwise, including (without
limiting the generality of the foregoing) all floor and wallcovering, built-in
cabinet work and paneling, sinks and related plumbing fixtures, exterior venting
fume hoods and walk-in freezers and refrigerators, clean rooms, climatized
rooms, ductwork, conduits, electrical panels and circuits, shall become the
property of Landlord upon the expiration or earlier termination of the term of
this Lease (the "Landlord Personal Property"), and shall remain upon and be
                 --------------------------
surrendered with the Demised Premises as a part thereof, and if paid for by
Tenant, such items may be removed by Tenant if agreed to by Landlord prior to
installation of such items; provided, however, that Tenant must restore any
damage caused by or occasioned as a result of such removal.  Landlord may at any
time elect to cause Tenant to remove any of the aforementioned items from the
Demised Premises upon the expiration or earlier termination of this Lease, and,
if Landlord so elects, Tenant shall remove such alterations, attached equipment,
decorations, fixtures, trade fixtures, additions and improvements upon the
expiration or earlier termination of this Lease and restore any damage caused by
or occasioned as a result of such removal; provided, however, that prior to the
construction or attachment of any such property,
<PAGE>

Landlord shall advise Tenant in writing if such removal will be necessary upon
the expiration or earlier termination of the Lease if Tenant timely seeks such
advice from Landlord. Any property left at the Demised Premises upon the end of
the Term shall become the property of the Landlord. Tenant further agrees and
acknowledges that the Landlord Personal Property (as further described in
Exhibit "E" attached hereto and incorporated herein) is being provided to Tenant
-----------
for Tenant's use during the Term of this Lease at no charge, without obligation
on the part of Landlord to maintain, repair or replace the same, and as an
accommodation to Tenant without representations or warranties of any kind and
that no portion of Rent is attributable to the use of the Landlord Personal
Property. Tenant shall return the Landlord Personal Property to Landlord at the
end of the Term of this Lease in the working condition in which it was received,
subject to reasonable wear and tear and casualty.

     17.7  Tenant shall repair any damage to the Demised Premises caused by
Tenant's  removal of any property from the Demised Premises.  During any such
restoration period, Tenant shall pay Rent to Landlord as provided herein as if
said space were otherwise occupied by Tenant.

     17.8  Except as to those items for which Tenant obtained Landlord's written
consent to remove, all business and trade fixtures, built-in machinery,
equipment, furniture and cabinets, together with all additions and accessories
thereto, installed in and upon the Demised Premises shall be and remain the
property of Landlord and shall not be moved by Tenant at any time during the
Term.  If Tenant shall fail to remove all of its effects from the Demised
Premises prior to expiration or earlier termination of this Lease, then Landlord
may, at its option and with notice to Tenant, remove the same in any manner that
Landlord shall choose, and store said effects without liability to Tenant for
loss thereof or damage thereto, and Tenant agrees to pay Landlord upon demand
any expenses incurred to such removal and storage or Landlord may, at its
option, without notice, sell said property or any of the same, at private sale
and without legal process, for such price as Landlord may obtain and apply the
proceeds of such sale against any amounts due under this Lease from Tenant to
Landlord and against any expenses incident to the removal, storage and sale of
said personal property.

     17.9  Notwithstanding any other provision of this Article 17 to the
contrary, in no event may Tenant remove any improvement from the Demised
Premises for which Landlord contributed payment, including, without limitation,
the Tenant Improvements made pursuant to the Work Letter without Landlord's
prior written consent, which may be withheld in Landlord's sole discretion.

     17.10 Tenant shall pay to Landlord as Additional Rent an amount equal to
two percent (2%) of the cost to Tenant of all charges incurred by Tenant or its
contractors or agents in connection with any alterations, additions or
improvements to the Demised Premises, which Additional Rent shall not exceed
$10,000 per project. For purposes of payment of such sum, Tenant shall submit to
Landlord copies of all bills, invoices, and statements covering the costs of
such charges, which will be accompanied by payment to Landlord of the percentage
fee set forth above. Tenant shall reimburse Landlord for any extra expense
incurred by Landlord by reason of faulty work done by Tenant or its contractors,
or by reason of delays caused by such work, or by reason of inadequate cleanup.
<PAGE>

18.  Repairs And Maintenance
     -----------------------

     18.1 Landlord shall perform Capital Repairs and shall repair and maintain
the Project Common Areas, including, without limitation, repair and maintenance
of landscaping, parking facilities, driveways, walkways, lighting, utilities,
snow removal, irrigation and storm water management systems (and the full or
amortized cost thereof allocated in accordance with the other terms and
conditions of this Lease, as applicable, shall be included as a part of
Operating Expenses), unless such Capital Repairs or maintenance or repairs are
required in whole or in part because of any act, neglect, fault of or omissions
of any duty by Tenant, its agents, servants, employees, contractors, guests or
invitees, in which case Tenant shall pay to Landlord the cost of such Capital
Repairs or maintenance and repairs to the extent such costs are incurred as a
result of any act, neglect, fault of or omission of any duty by Tenant, its
agents, servants, employees, contractors, guests or invitees and are not
reimbursed by insurance.  For Capital Repairs with an estimated cost of greater
than one hundred thousand dollars ($100,000), Landlord shall obtain three bids
for the repair and provide copies thereof to Tenant.  Tenant shall have the
right to approve or disapprove, in its reasonable discretion, Landlord's
selection of a contractor to perform the Capital Repairs.

     18.2 Except for services of Landlord, if any, required by Section 18.1,
Tenant shall at Tenant's sole cost and expense keep the Demised Premises and
every part thereof in good condition and repair, damage thereto from ordinary
wear and tear and loss due to condemnation or casualty not occasioned by Tenant
or Tenant's agents, representatives or guests excepted.  Tenant shall, upon the
expiration or earlier termination of this Lease, surrender the Demised Premises
to Landlord in as good as condition as when received, ordinary wear and tear
excepted.  Other than as specifically set forth in the Work Letter, Landlord
shall have no obligation to alter, remodel, improve, repair, decorate or paint
the Demised Premises or any part thereof.

     18.3 Landlord shall not be liable for any failure to make any repairs or to
perform any maintenance which is an obligation of Landlord 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.  Tenant waives the rights
under any applicable law, statute or ordinance now or hereafter in effect to
make repairs at Landlord's expense.  Notwithstanding anything herein to the
contrary, if Landlord fails to timely perform its maintenance and repair
obligations hereunder, and as a consequence, Tenant's use of the Demised
Premises is substantially impaired, Tenant shall have the right, upon twenty
(20) days advance written notice to Landlord, to cause such repair or
maintenance to be performed at Tenant's expense.

     18.4 Repairs under this Article 18 which are obligations of Landlord are
subject to allocation among Tenant and other tenants as Operating Expenses.

     18.5 This Article 18 relates to repairs and maintenance arising in ordinary
course of operation of the Building, the Project and any related facilities.  In
the event of fire, earthquake, flood, vandalism, war, or similar cause of damage
or destruction, this Article 18 shall not be applicable and the provisions of
Article 22 shall apply and control.
<PAGE>

19.  Liens
     -----

     19.1  Subject to the immediately succeeding sentence, Tenant shall keep the
Demised Premises, the Building, the Project and the real property upon which the
Building and the Project are situated free from any liens arising out of work
performed, materials furnished or obligations incurred by Tenant. Tenant further
covenants and agrees that any mechanic's lien filed against the Demised Premises
or against the Building or the Project for work claimed to have been done for,
or materials claimed to have been furnished to Tenant, will be discharged by
Tenant, by bond or otherwise, within ten (10) days after the filing thereof, at
the sole cost and expense of Tenant.

     19.2  Should Tenant fail to discharge any lien of the nature described in
Section 19.1, Landlord may at Landlord's election, after notice to Tenant, pay
such claim or post a bond or otherwise provide security to eliminate the lien as
a claim against title and the cost thereof shall be immediately due from Tenant
as Additional Rent.

     19.3  In the event Tenant shall lease or finance the acquisition of office
equipment, furnishings, or other personal property of a removable nature
utilized by Tenant in the operation of Tenant's business, Tenant warrants that
any Uniform Commercial Code Financing Statement executed by Tenant will upon its
face or by exhibit thereto indicate that such Financing Statement is applicable
only to removable personal property of Tenant located within the Demised
Premises. In no event shall the address of the Building be furnished on the
statement without qualifying language as to applicability of the lien only to
removable personal property, located in an identified suite held by Tenant.
Should any holder of a Financing Statement executed by Tenant record or place of
record a Financing Statement which appears to constitute a lien against any
interest of Landlord or against equipment which may be located other than within
the Demised Premises, Tenant shall within ten (10) days after filing such
Financing Statement (i) cause a copy of the Security Agreement or other
documents to which Financing Statement pertains to be furnished to Landlord to
facilitate Landlord's being in a position to show such lien is not applicable to
Landlord's interest, and (ii) cause Tenant's lender to amend any documents of
record so as to clarify that such lien is not applicable to any interest of
Landlord in the Building or the Project.

           19.3.1  Notwithstanding anything herein to the contrary, Landlord
waives any and all right, title and interest Landlord now has, or hereafter may
have, whether statutory or otherwise, to Tenant's books and records and personal
property not attached or affixed to the Demised Premises (the "Collateral").
                                                               ----------
Tenant acknowledges that the Collateral shall not include any of Landlord's
personal property and Landlord acknowledges that Landlord has no lien, right,
claim, interest or title in or to the Collateral. Landlord further agrees that
Tenant shall have the right, at its discretion, to mortgage, pledge, hypothecate
or grant a security interest in the Collateral as security for its obligations
under any equipment lease or other financing arrangement related to the conduct
of Tenant's business at the Demised Premises. The Collateral shall not become
the property of Landlord or a part of the realty and may be removed by Tenant at
any time and from time to time during the entire term of this Lease. Upon
request of Tenant or its assignees or any subtenant, Landlord shall execute and
deliver any reasonable real estate consent or waiver forms submitted by any
vendors, equipment lessors, chattel mortgagees or lenders of Tenant setting
forth that Landlord waives, in favor of the vendor, equipment lessor,
<PAGE>

chattel mortgagee or lender any superior lien, claim, interest or other right in
the specified Collateral. Such Collateral may be removed at any reasonable time
upon default under the terms of such chattel mortgage or other similar
documents, free and clear of any claim or lien of Landlord. Tenant shall
promptly repair any damage caused by the removal of such property, whether
effected by Tenant or Tenant's vendors, chattel mortgagees or equipment lessors.

20.  Indemnification And Exculpation
     -------------------------------

     20.1  Tenant hereby indemnifies and agrees to defend and save Landlord
harmless from and against any and all demands, claims, liabilities, losses,
costs, expenses, actions, causes of action, damages or judgments, and all
reasonable expenses incurred in investigating or resisting the same (including,
without limitation, reasonable attorneys' fees, charges and disbursements), for
injury or death to person or injury to property occurring within or about the
Demised Premises or the Project, arising directly or indirectly out of Tenant's,
its employees, agents or guests use or occupancy of the Demised Premises or the
Project or a breach or default by Tenant in the performance of any of its
obligations hereunder, unless caused solely by the willful act or gross
negligence of the Landlord.

     20.2  Landlord hereby indemnifies and agrees to defend and save Tenant
harmless from and against any and all demands, claims, liabilities, losses,
costs, expenses, actions, causes of action, damages or judgments, and all
reasonable expenses incurred in investigating or resisting the same (including,
without limitation, reasonable attorneys' fees, charges and disbursements), for
injury or death to person or injury to property occurring within or about the
Demised Premises or the Project, arising directly or indirectly out of breach by
Landlord in the performance of any of its obligations hereunder, unless caused
solely by the willful act or negligence of Tenant.

     20.3  Landlord shall not be liable to Tenant and Tenant assumes all risk of
damage to personal property or scientific research, including loss of records
kept within the Demised Premises if the cause of such damage is of a nature
which, if Tenant had elected to maintain fire and theft insurance with extended
coverage and business records endorsement available on a commercially reasonable
basis, would be a loss subject to settlement by the insurance carrier,
including, but not limited to, damage or losses caused by fire, electrical
malfunctions, gas explosion, and water damage of any type, including, but not
limited to, broken water lines, malfunction of fire sprinkler system, roof
leakage or stoppages of lines unless and except if such loss is due to the
willful misconduct of Landlord after an unreasonable period of time following
the written notice by Tenant of need for a repair which Landlord is responsible
to make. Tenant further waives any claim for injury to Tenant's business or loss
of income relating to any such damage or destruction of personal property
including any loss of records.

     20.4  Landlord shall not be liable for any damages arising from any act,
omission or neglect of any other tenant in the Building or the Project or of any
other third party.

     20.5  Security devices and services, if any, while intended to deter crime
may not in given instances prevent theft or other criminal acts. Tenant
acknowledges and agrees that Landlord shall not be liable for injuries or losses
caused by criminal acts of third parties and the risk that any security device
or service may malfunction or otherwise be circumvented by a
<PAGE>

criminal is assumed by Tenant. Tenant shall at Tenant's cost obtain insurance
coverage to the extent Tenant desires protection against such criminal acts.

21.  Insurance - Waiver Of Subrogation
     ---------------------------------

     21.1  Landlord, as part of Operating Expenses, shall carry insurance upon
the Building, in an amount equal to full replacement cost (exclusive of the
costs of excavation, foundations, and footings, and without reference to
depreciation taken by Landlord upon its books or tax returns) or such greater
amount of insurance as Landlord's mortgage lender requires Landlord to maintain,
providing protection against any peril generally included within the
classification "Fire and Extended Coverage" together with insurance against
sprinkler damage (if applicable), vandalism and malicious mischief. Landlord,
subject to availability thereof and, as part of Operating Expenses, shall
further insure as Landlord deems appropriate coverage against flood,
environmental hazard and earthquake, loss or failure of building equipment,
rental loss during the period of repair or rebuild, workmen's compensation
insurance and fidelity bonds for employees employed to perform services.
Notwithstanding the foregoing, Landlord may, but shall not be deemed required
to, provide insurance as to any improvements installed by Tenant or which are in
addition to the standard improvements customarily furnished by Landlord without
regard to whether or not such are made a part of the Building.

     21.2  Landlord, as part of Operating Expenses, shall further carry
commercial general insurance with a single loss limit of not less than Five
Million Dollars ($5,000,000.00) for death or bodily injury, or property damage
with respect to the Project.

     21.3  Tenant at its own cost shall procure and continue in effect from the
Rent Commencement Date and continuing throughout the Term (and occupancy by
Tenant, if any, after the expiration or earlier termination of this Lease)
comprehensive commercial general insurance with limits of not less than Five
Million Dollars ($5,000,000.00) per occurrence for death or bodily injury and
not less than Five Million Dollars ($5,000,000.00) for property damage with
respect to the Demised Property.

     21.4  The aforesaid insurance required of Tenant shall name Landlord, its
officers, employees and agents, as an additional insured. Said insurance shall
be with companies having a policyholder rating of not less than A+ and financial
category rating of at least Class IX in "Best's Insurance Guide." Tenant shall
obtain for Landlord from the insurance companies or cause the insurance
companies to furnish certificates of coverage to Landlord. No such policy shall
be cancelable or subject to reduction of coverage or other modification or
cancellation except after thirty (30) days prior written notice to Landlord from
the insurer. All such policies shall be written as primary policies, not
contributing with and not in excess of the coverage which Landlord may carry.
Tenant's policy may be a "blanket policy" which specifically provides that the
amount of insurance shall not be prejudiced by other losses covered by the
policy. Tenant shall, at least twenty (20) days prior to the expiration of such
policies, furnish Landlord with renewals or binders. Tenant agrees that if
Tenant does not take out and maintain such insurance, Landlord may (but shall
not be required to) after notice to Tenant procure said insurance on Tenant's
behalf and at its cost to be paid as Additional Rent.
<PAGE>

     21.5  Tenant assumes the risk of damage to any fixtures, goods, inventory,
merchandise, equipment, and leasehold improvements, and Landlord shall not be
liable for injury to Tenant's business or any loss of income therefrom relative
to such damage all as more particularly heretofore set forth within this Lease,
except to the extent arising from or in connection with Landlord's willful
misconduct. Tenant at Tenant's cost shall carry such insurance as Tenant desires
for Tenant's protection with respect to personal property of Tenant or business
interruption.

     21.6  In each instance where insurance is to name Landlord as additional
insured, Tenant shall upon written request of Landlord also designate and
furnish certificates so evidencing Landlord as additional insured to (i) any
lender of Landlord holding a security interest in the Building or real property
upon which the Building is situated, and (ii) any management company retained by
Landlord to manage the Building or the Project.

     21.7  Landlord and Tenant each hereby release, relieve and waive any and
all rights of recovery against the other or against the officers, directors,
employees, agents, and representatives of the other, on account of loss or
damage arising out of, incident to or occasioned to such waiving party or its
property or the property of others under its control to the extent that such
loss or damage is insured against under any fire and extended coverage insurance
policy which either party may have in force at the time of such loss or damage
and whether due to the negligence of Landlord or Tenant or their respective
agents, employees, contractors and/or invitees; provided, however, that such
releases, relief and waivers shall be limited to the extent of the net insurance
proceeds actually paid to Landlord by the relevant insurance carriers. Such
waivers shall continue as long as their respective insurers so permit. Any
termination of such a waiver shall be by written notice of circumstances as
hereinafter set forth. Landlord and Tenant upon obtaining the policies of
insurance required or permitted under this Lease shall give notice to the
insurance carrier or carriers that the foregoing mutual waiver of subrogation is
contained in this Lease. If such policies shall not be obtainable with such
waiver or shall be so obtainable only at a premium over that chargeable without
such waiver, the party seeking such policy shall notify the other thereof, and
the latter shall have ten (10) days thereafter to either (i) procure such
insurance with companies reasonably satisfactory to the other party or (ii)
agree to pay such additional premium (in the Tenant's case, in the proportion
which the area of the Demised Premises bears to the insured area). If neither
(i) nor (ii) are done, this Section 21.7 shall have no effect during such time
as such policies shall not be obtainable or the party in whose favor a waiver of
subrogation is desired refuses to pay the additional premium. If such policies
shall at any time be unobtainable, but shall be subsequently obtainable, neither
party shall be subsequently liable for a failure to obtain such insurance until
a reasonable time after notification thereof by the other party. If the release
of either Landlord or Tenant, as set forth in the first sentence of this Section
21.7 shall contravene any law with respect to exculpatory agreements, the
liability of the party in question shall be deemed not released but shall be
secondary to the other's insurer.

     21.8  Landlord may require insurance policy limits to be raised to conform
with requirements of Landlord's lender and/or to bring coverage limits to levels
then being required of new tenants within the Project.
<PAGE>

22.  Damage Or Destruction
     ---------------------

     22.1  In the event of a partial destruction of the Building by fire or
other perils covered by extended coverage insurance but not exceeding thirty-
three percent (33%) of the full insurable value thereof, where the damage
thereto is such that the Building may be repaired, reconstructed or restored
within a period of twelve (12) months from the date of the happening of such
casualty and Landlord will receive insurance proceeds sufficient to cover the
cost of such repairs (except for any deductible amount provided by Landlord's
policy, which deductible amount if paid by Landlord shall be an Operating
Expense), Landlord shall, at its expense, commence and proceed diligently with
the work of repair, reconstruction and restoration and this Lease shall continue
in full force and effect.

     22.2  In the event of any damage to or destruction of the Building other
than as provided in Section 22.1, either Landlord or Tenant may elect to
terminate this Lease as of the date of destruction

     22.3  If either Landlord or Tenant desire to terminate this Lease pursuant
to Section 22.1, it shall give written notice to the other of its election to
terminate this Lease within the sixty (60) day period following the date of
damage or destruction. Failure to give such notice shall be deemed an election
to continue this Lease in full force and effect.

     22.4  Upon any termination of this Lease under any of the provisions of
this Article 22, the parties shall be released thereby without further
obligation to the other from the date possession of the Demised Premises is
surrendered to the Landlord except for items which have theretofore occurred.

     22.5  In the event of repair, reconstruction and restoration as herein
provided, the rental provided to be paid under this Lease shall be abated
proportionately based on the extent to which Tenant's use of the Demised
Premises is impaired during the period from the date of destruction until
repair, reconstruction or restoration is substantially complete, unless Landlord
provides Tenant with other comparable space during the period of repair, which
in Tenant's reasonable opinion is suitable for the temporary conduct of Tenant's
business.

     22.6  Notwithstanding anything to the contrary contained in this Article
22, should Landlord be delayed or prevented from completing the repair or
restoration of the damage to the Demised Premises after the occurrence of such
damage or destruction by reason of acts of God or war, governmental
restrictions, inability to procure the necessary labor or materials, strikes, or
other uses beyond the reasonable control of Landlord, the time for Landlord to
commence or complete repairs shall be extended, provided, at the election of
Landlord or Tenant, Landlord shall be relieved of its obligation to make such
repairs or restoration and Tenant shall be released from its obligations under
this Lease and each shall have the right to terminate this Lease as of the end
of sixteen (16) months from date of destruction, if repairs required to provide
Tenant use of the Demised Premises are not then substantially complete.

     22.7  If Landlord is obligated to or elects to repair or restore as herein
provided, Landlord shall be obligated to make repairs or restoration only of
those portions of the Building and the Demised Premises which were originally
provided at Landlord's expense; the repair and
<PAGE>

restoration of items not provided at Landlord's expense shall be the obligation
of Tenant. In the event Tenant elected to upgrade certain improvements from the
standard normally provided by Landlord, Landlord shall, upon the need for
replacement due to an insured loss, provide only the standard Landlord
improvements unless Tenant shall elect to again upgrade and pay any additional
cost of such upgrades, except to the extent insurance proceeds, if received, are
adequate to provide such upgrades, in addition to providing for basic
reconstruction and standard improvements.

     22.8  Notwithstanding anything to the contrary contained in this Article
22, Landlord shall not have any obligation whatsoever to repair, reconstruct or
restore the Demised Premises if insurance proceeds are not available or
sufficient therefor, or when the damage resulting from any casualty covered
under this Article 22 occurs during the last thirty-six (36) months of the Term,
unless Landlord provides Tenant with written notice of its intention not to
repair, reconstruct or restore the Demised Premises and within thirty (30) days
thereafter, Tenant irrevocably and unconditionally its Extension Right (as
hereinafter defined) pursuant to Article 42.

23.  Eminent Domain
     --------------

     23.1  In the event the whole of the Demised Premises, or such part thereof
as shall substantially interfere with the Tenant's use and occupancy thereof,
shall be taken for any public or quasi-public purpose by any lawful power or
authority by exercise of the right of appropriation, condemnation or eminent
domain, or sold to prevent such taking, Tenant or Landlord may terminate this
Lease effective as of the date possession is required to be surrendered to said
authority.

     23.2  In the event of a partial taking of the Building, the Project or of
drives, walkways, and parking areas serving the Building or the Project for any
public or quasi-public purpose by any lawful power or authority by exercise of
right of appropriation, condemnation, or eminent domain, or sold to prevent such
taking, then without regard as to whether any portion of the Demised Premises
occupied by Tenant was so taken, Landlord may elect to terminate this Lease as
of such taking if such taking is, in the sole opinion of Landlord, of a material
nature such as to make it uneconomical to continue use of the unappropriated
portion for purposes of office rentals or laboratory space.

     23.3  Tenant shall be entitled to any award which is specifically awarded
as compensation for the taking of Tenant's personal property, which was
installed at Tenant's expense and for costs of Tenant moving to a new location.
Except as before set forth, any award for such taking shall belong to Landlord.
Nothing herein shall be deemed or construed to prevent Tenant from prosecuting
in any condemnation proceedings a separate claim for the value of any personal
property in the Demised Premises belonging to Tenant or for loss of Tenant's
business by reason of such condemnation.

     23.4  If, upon any taking of the nature described in this Article 23, this
Lease continues in effect, the Landlord shall promptly proceed to restore the
Demised Premises, Building and the Project to substantially their same condition
prior to such partial taking. To the extent such restoration is not feasible, as
determined by Landlord in its reasonable discretion, the Rent shall
<PAGE>

be abated proportionately based upon the extent to which Tenant's use of the
Demised Premises has decreased on the basis of the percentage of the rental
value of the Demised Premises after such taking and the rental value of the
Demised Premises prior to such taking.

24.  Defaults And Remedies
     ---------------------

     24.1  Late payment by Tenant to Landlord of Rent and other sums due will
cause Landlord to incur costs not contemplated by this Lease, the exact amount
of which will be extremely difficult and impracticable to ascertain. Such costs
include, but are not limited to, processing and accounting charges and late
charges which may be imposed on Landlord by the terms of any mortgage or trust
deed covering the Demised Premises. Therefore, if any installment of Rent due
from Tenant is not received by Landlord within five (5) days after the date such
payment is due, Tenant shall pay to Landlord an additional sum of six percent
(6%) of the overdue Rent as a late charge. The parties agree that this late
charge represents a fair and reasonable estimate of the costs that Landlord will
incur by reason of late payment by Tenant. In addition to the late charge, Rent
not paid when due shall bear interest from the 5/th/ day after date due until
paid at the lesser of (i) twelve percent (12%) per annum or (ii) the maximum
rate permitted by law.

     24.2  No payment by Tenant or receipt by Landlord of a lesser amount than
the Rent payment herein stipulated shall be deemed to be other than on account
of the Rent, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment as Rent be deemed an accord and satisfaction,
and Landlord may accept such check or payment without prejudice to Landlord's
right to recover the balance of such Rent or pursue any other remedy provided.
If at any time a dispute shall arise as to any amount or sum of money to be paid
by Tenant to Landlord, Tenant shall have the right to make payment "under
protest" and such payment shall not be regarded as a voluntary payment, and
there shall survive the right on the part of Tenant to institute suit for
recovery of the payment paid under protest.

     24.3  If Tenant fails to pay any sum of money required to be paid by it
hereunder, or shall fail to perform any other act on its part to be performed
hereunder, Landlord may (but with notice to Tenant), without waiving or
releasing Tenant from any obligations of Tenant, but shall not be obligated to,
make such payment or perform such act. All sums so paid or incurred by Landlord,
together with interest thereon, from the date such sums were paid or incurred,
at the annual rate equal to twelve percent (12%) per annum or highest rate
permitted by law, whichever is less, shall be payable to Landlord on demand as
Additional Rent.

     24.4  The occurrence of any one or more of the following events shall
constitute a "Default" hereunder by Tenant:
              -------

           24.4.1  The abandonment or vacation of the Demised Premises by
Tenant;

           24.4.2  The failure by Tenant to timely make any payment of Rent or
cure any other monetary default, where such failure continues for five (5)
business days after notice from Landlord of such delinquency;

           24.4.3  The failure by Tenant to observe or perform any obligation or
covenant contained herein (other than described in Section 24.4.1 and 24.4.2) to
be performed by Tenant,
<PAGE>

where such failure shall continue for a period of ten (10) business days after
written notice thereof from Landlord to Tenant. Such notice shall be in lieu of,
and not in addition to, any notice required under any applicable law, code or
statute; provided that if the nature of Tenant's default is such that it
reasonably requires more than ten (10) business days to cure, then Tenant shall
not be deemed to be in default if Tenant shall commence such cure within said
ten (10) business day period and thereafter diligently prosecute the same to
completion, provided, however, that such cure must in any event be completed
            --------  -------
within one hundred twenty (120) days from the date of written notice or it shall
be a default hereunder;

           24.4.4  Tenant makes an assignment for the benefit of creditors;

           24.4.5  A receiver, trustee or custodian is appointed to, or does,
take title, possession or control of all, or substantially all, of Tenant's
assets;

           24.4.6  Tenant files a voluntary petition under the Bankruptcy Code
(or any similar law) or an order for relief is entered against Tenant pursuant
to a voluntary or involuntary proceeding commenced under any chapter of the
Bankruptcy Code;

           24.4.7  Any involuntary petition if filed against the Tenant under
any chapter of the Bankruptcy Code and is not dismissed within ninety (90) days;
or

           24.4.8  Tenant's interest in this Lease is attached, executed upon,
or otherwise judicially seized and such action is not released within ninety
(90) days of the action.

Notices given under this Section 24.4 shall specify the alleged default and
shall demand that Tenant perform the provisions of this Lease or pay the Rent
that is in arrears, as the case may be, within the applicable period of time, or
quit the Demised Premises. No such notice shall be deemed a forfeiture or a
termination of this Lease unless Landlord elects otherwise in such notice.

     24.5  In the event of a Default by Tenant, and at any time thereafter, with
or without notice or demand and without limiting Landlord in the exercise of any
right or remedy which Landlord may have, Landlord shall be entitled to terminate
Tenant's right to possession of the Demised Premises by any lawful means, in
which Tenant shall immediately surrender possession of the Demised Premises to
Landlord. In such event, Landlord shall have the right, after notice to Tenant,
to re-enter and remove all persons and property, and such property may be
removed and stored in a public warehouse or elsewhere at the cost of, and for
the account of Tenant, all without service of notice or resort to legal process
and without being deemed guilty of trespass, or becoming liable for any loss or
damage which may be occasioned thereby. In the event that Landlord shall elect
to so terminate Tenant's right to possession of the Demised Premises, then
Landlord shall be entitled to recover from Tenant all damages incurred by
Landlord by reason of Tenant's default, including:

           24.5.1  The worth at the time of award of any unpaid Rent which had
been earned at the time of such termination; plus
<PAGE>

           24.5.2  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 that portion of such rental loss which Tenant proves could have
been reasonably avoided; plus

           24.5.3  The worth at the time of award of the amount by which the
unpaid Rent for the balance of the term after the time of award exceeds the
amount of such rental loss which Tenant proves could have been reasonably
avoided; plus

           24.5.4  any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform its obligation under
this Lease or which in the ordinary course of things would be likely to result
therefrom, including, but not limited to, the cost of restoring the Demised
Premises to the condition required under the terms of this Lease; plus

           24.5.5  At the 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.

As used in Sections 24.5.1 and 24.5.2 above, "worth at the time of award" shall
be computed by allowing interest at the rate specified in Section 24.1. As used
in Section 24.5.3 above, the "worth at the time of the award" shall be computed
by taking the present value of such amount, by using the discount rate of the
Federal Reserve Bank of San Francisco at the time of the award plus two (2)
percentage points.

     24.6  If Landlord does not elect to terminate Tenant's right to possession
of the Demised Premises as provided in this Article 24, then Landlord may, from
time to time, recover all Rent as it becomes due under this Lease. At any time
thereafter, Landlord may elect to terminate Tenant's right to possession of the
Demised Premises and to recover damage to which Landlord is entitled.

     24.7  In the event Landlord elects to terminate Tenant's right to
possession of the Demised Premises and relet the Demised Premises, it may
execute any new lease in its own name. Tenant hereunder shall have no right or
authority whatsoever to collect any Rent from such tenant. The proceeds of any
such reletting shall be applied as follows:

           First, to the payment of any indebtedness other than Rent due
           -----
     hereunder from Tenant to Landlord, including, but not limited to, storage
     charges or brokerage commissions owing from Tenant to Landlord as the
     result of such reletting;

           Second, to the payment of the costs and expenses of reletting the
           ------
     Demised Premises, including alterations and repairs which Landlord deems
     reasonably necessary and advisable and reasonable attorneys' fees, charges
     and other third-party disbursements incurred by Landlord in connection with
     the retaking of the Demised Premises and any reletting;

           Third, to the payment of Rent and other charges due and unpaid
           -----
     hereunder; and

           Fourth, to the payment of future Rent and other damages payable by
           ------
     Tenant under this Lease.
<PAGE>

     24.8  All rights, options, and remedies of Landlord contained in this Lease
shall be construed and held to be nonexclusive and cumulative. Landlord shall
have the right to pursue any one or all of such remedies or any other remedy or
relief which may be provided by law, whether or not stated in this Lease. No
waiver of any default of Tenant hereunder shall be implied from any acceptance
by Landlord of any Rent or other payments due hereunder or any omission by
Landlord to take any action on account of such default if such default persists
or is repeated, and no express waiver shall affect defaults other than as
specified in said waiver.

     24.9  Termination of this Lease or Landlord's re-entry and termination of
Tenant's right to possession of the Demised Premises by Landlord shall not
relieve Tenant from any liability to Landlord which has theretofore accrued or
shall arise based upon events which occurred prior to the last to occur of (i)
the date of termination of Tenant's right to possession or (ii) the date
possession of Demised Premises is surrendered.

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

     24.11 In the event of any default on the part of Landlord, Tenant will give
notice by registered or certified mail to any beneficiary of a deed of trust or
mortgagee of a mortgage covering the Demised Premises and to any landlord of any
lease of any building in which the Demised Premises is located whose address
shall have been furnished, and Tenant shall offer such beneficiary, mortgagee
and/or landlord a reasonable opportunity to cure the default, including time to
obtain possession of the Building by power of sale or a judicial action if such
should prove necessary to effect a cure, provided the Landlord shall have
furnished to Tenant in writing the names and addresses of all such persons who
are to receive such notices.

25.  Assignment Or Subletting
     ------------------------

     25.1  Except as hereinafter provided, Tenant shall not, either voluntarily
or by operation of law, directly or indirectly, sell, hypothecate, assign,
pledge, encumber or otherwise transfer this Lease or the Demised Premises or any
part thereof, or permit or suffer the Demised Premises or any part thereof to be
used or occupied as work space, storage space, mailing privileges, concession or
otherwise by anyone other than Tenant or Tenant's employees, without the prior
written consent of Landlord in each instance, which consent may be withheld in
Landlord's reasonable discretion.

     25.2  Intentionally Omitted.

     25.3  Intentionally Omitted.

     25.4  Intentionally Omitted.
<PAGE>

     25.5    Tenant shall have the right to sublease any portion of the Demised
Premises with Landlord's prior written consent, not to be unreasonably withheld
or delayed.  In the event Tenant desires to assign, hypothecate or otherwise
transfer this Lease or sublet the Demised Premises, then at least thirty (30)
days, but not more than ninety (90) days, prior to the date when Tenant desires
the assignment or sublease to be effective (the "Assignment Date"), Tenant shall
                                                 ---------------
give Landlord a notice (the "Assignment Notice") containing information
                             -----------------
(including references) concerning the character of the proposed assignee or
sublessee, the Assignment Date, any ownership or commercial relationship between
Tenant and the proposed assignee or sublessee, and the consideration and all
other material terms and conditions of the proposed assignment or sublease along
with such other information as Landlord may reasonably require, all in such
detail as Landlord shall reasonably require.  Tenant shall also reimburse
Landlord for reasonable attorneys fees and other costs or overhead expenses
incurred by Landlord in reviewing Tenants request for such assignment.

     25.6    Landlord in making its determination as to whether consent should
be given to a proposed assignment or sublease, may give consideration to the
financial strength of such successor (notwithstanding the assignor remaining
liable for Tenant's performance) and any change in use which such successor
proposes to make in use of Demised Premises. In no event shall Landlord be
deemed to be unreasonable for declining to consent to transfer to a successor of
poor reputation, lacking financial qualifications, or seeking change in use.

     25.7    As conditions precedent to Landlord approving a request by Tenant
to Tenant's transfer of rights or subletting of the Demises Premises, Landlord
may require any or all of the following:

             25.7.1  Tenant shall remain fully liable under this Lease during
the unexpired Term;

             25.7.2  Tenant shall provide Landlord with evidence reasonably
satisfactory to Landlord that the value of Landlord's interest under this Lease
will not thereby be diminished or reduced. Such evidence shall include, but need
not be limited to, evidence respecting the relevant business experience and
financial responsibility and status of the third party concerned;

             25.7.3  Tenant shall reimburse Landlord for Landlord's actual costs
and expenses, including, without limitation, reasonable attorneys' fees, charges
and disbursements incurred in connection with the review, processing and
documentation of such request;

             25.7.4  If Tenant's transfer of rights or subletting of the Demised
Premises provides for the receipt by, on behalf or on account of Tenant of any
consideration of any kind whatsoever (including, but not by way of limitation, a
premium rental for a sublease or lump sum payment for an assignment) in excess
of the rental and other charges due Landlord under this Lease, Tenant shall pay
one-half of all of said excess to Landlord, provided that Tenant shall be
entitled to deduct therefrom the following costs incurred by Tenant to effect
such transfer or sublease: brokerage fees, advertising costs, cost of tenant
improvements completed within ninety (90) days after the commencement of the
transfer or sublease, reasonable attorneys' fees and rent concessions and
inducements. If said consideration consists of cash paid to Tenant, said payment
to Landlord shall be made upon receipt by Tenant of said cash payment;
<PAGE>

           25.7.5  Written agreement from any third party concerned that in the
event Landlord gives such third party notice that Tenant is in default, or in
breach of any terms or conditions under this Lease, such third party shall
thereafter make all payments otherwise due Tenant directly to Landlord, which
payments will be received by Landlord without any liability on Landlord except
to credit such payment against those due under this Lease, and any such third
party shall agree to attorn to Landlord or its successors and assigns should
this Lease be terminated for any reason; provided, however, that in no event
                                         --------  -------
shall Landlord or its successors or assigns be obligated to accept such
attornment;

           25.7.6  Any such transfer and consent shall be effected on forms
reasonably approved by Landlord as to form and substance;

           25.7.7  Tenant shall not then be in default hereunder in any respect
(except for payment of Rent or other sums due to Landlord);

           25.7.8  Such third party's proposed use of the Demised Premises shall
be the same as Tenant's permitted use;

           25.7.9  Except to the extent agreed to in writing by Landlord in its
sole and absolute discretion, Landlord shall not be bound by any provision of
any agreement pertaining to Tenant's transfer of rights or subletting of the
Demised Premises;

           25.7.10 Any agreement pertaining to Tenant's transfer of this Lease
or subletting of any portion of the Demised Premises shall be in a form
acceptable to Landlord in Landlord's reasonable discretion, and any such
agreement shall not be modified or amended without Landlord's prior written
consent, which may be withheld in Landlord's reasonable discretion;

           25.7.11 Tenant shall deliver to Landlord one original executed copy
of any and all written instruments evidencing or relating to Tenant's transfer
of rights or subletting of the Demised Premises; and

           25.7.12 A list of Hazardous Materials, certified by the proposed
sublessee to be true and correct, which the proposed sublessee intends to use or
store in the Demised Premises. Additionally, Tenant shall deliver to Landlord,
on or before the date any proposed sublessee takes occupancy of the Demised
Premises, all of the items relating to Hazardous Materials of such proposed
sublessee.

     25.8  Any sale, assignment, hypothecation or transfer of this Lease or
subletting of the Demised Premises that is not in compliance with the provisions
of this Article 25 shall be void and shall, at the option of Landlord, terminate
this Lease.

     25.9  The consent by Landlord to an assignment or subletting shall not
relieve Tenant or any assignees of this Lease or sublessee of the Demised
Premises from obtaining the consent of Landlord to any further assignment or
subletting nor shall it release Tenant or any assignee or sublessee of Tenant
from full and primary liability under this Lease.

     25.10 Notwithstanding any subletting or assignment, Tenant shall remain
fully and primarily liable for the payment of all Rent and other sums due, or to
become due hereunder, and
<PAGE>

for the full performance of all other terms, conditions, and covenants to be
kept and performed by Tenant, including during any extension of the Term hereof
pursuant to Article 42 hereof or the Extension Right. The acceptance of Rent or
any other sum due hereunder, or the acceptance of performance of any other term,
covenant, or condition thereof, from any other person or entity shall not be
deemed to be a waiver of any of the provisions of this Lease or a consent to any
subletting, assignment or other transfer of the Demised Premises.

     25.11 If Tenant shall sublet the Demised Premises or any part, Tenant
hereby immediately and irrevocably assigns to Landlord, as security for Tenant's
obligations under this Lease, all rent from any subletting of all or a part of
the Demised Premises and Landlord as assignee and as attorney-in-fact for Tenant
solely for such limited purpose, or a receiver for Tenant appointed on
Landlord's application, may collect such rent and apply it toward Tenant's
obligations under this Lease; except that, until the occurrence of an act of
Default by Tenant, Tenant shall have the right to collect such rent.

     25.12 Notwithstanding anything to the contrary contained in Article 25:

           25.12.1 Tenant may, upon thirty (30) days' advance written notice to
Landlord, assign this Lease or sublet the Demised Premises, or any portion
thereof, without Landlord's consent, to any entity which controls, is controlled
by, or is in common control with Tenant; to any entity which results from a
reincorporation or a merger or consolidation 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 Demised Premises
(hereinafter each a "Permitted Transfer"); provided, however, that with respect
                     ------------------
to each of the Permitted Transfers, Tenant shall continue to remain liable for
all obligations under this Lease, and provided that the assignee or sublessee
first executes, acknowledges and delivers to Landlord an agreement whereby the
assignee, or to the extent of the Demised Premises subleased, the sublessee, for
the term of the sublease, agrees to be bound by all of the covenants and
agreements in this Lease.  In addition, a sale or transfer of the capital stock
of Tenant shall be deemed a Permitted Transfer if (i) such sale or transfer
occurs in connection with any bona fide financing or capitalization for the
benefit of Tenant, or (ii) Tenant 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 considerations resulting from
any Permitted Transfer except for reasonable attorneys fees and costs in
connection with reviewing the documentation of such Permitted Transfer, which
documentation Tenant agrees to timely provide to Landlord.

           25.12.2 Tenant may allow any person or company which is a client or
customer of Tenant or which is providing service to Tenant or one of Tenant's
clients to occupy certain portions of the Demised Premises without such
occupancy being deemed an assignment or subleasing as long as no new demising
walls are constructed to accomplish such occupancy and as long as such
relationship was not created as a subterfuge to avoid the obligations set forth
in Article 25.
<PAGE>

26.  Attorneys' Fees And Costs
     -------------------------

     26.1  Tenant shall be responsible for (i) all of Tenant's legal and related
costs and fees in connection with this Lease, and (ii) all of Landlord's legal
and related costs and fees if Landlord is required to consult and attorney
regarding the enforcement of this Lease.

     26.2  If either party commences an action against the other party arising
out of or in connection with this Lease, the prevailing party shall be entitled
to have and recover from the non-prevailing party reasonable attorneys' fees,
charges and disbursements and costs of suit.

27.  Bankruptcy
     ----------

     27.1  In the event a debtor, trustee, or debtor in possession under the
Bankruptcy Code, or other person with similar rights, duties and powers under
any other law, proposes to cure any default under this Lease or to assume or
assign this Lease, and is obliged to provide adequate assurance to Landlord that
(i) a default will be cured, (ii) Landlord will be compensated for its damages
arising from any breach of this Lease, or (iii) future performance under this
Lease will occur, then adequate assurance shall include any or all of the
following, as designated by Landlord:

           27.1.1  Those acts specified in the Bankruptcy Code or other law as
included within the meaning of adequate assurance, even if this Lease does not
concern a shopping center or other facility described in such laws;

           27.1.2  A prompt cash payment to compensate Landlord for any monetary
defaults or actual damages arising directly from a breach of this Lease;

           27.1.3  A cash deposit in an amount at least equal to the Security
Deposit as referenced in 2.1.8 originally required at time of execution of this
Lease.

           27.1.4  The assumption or assignment of all of Tenant's interest and
obligations under this Lease.

28.  Estoppel Certificate
     --------------------

     28.1  Tenant shall within ten (10) days of written notice from Landlord,
execute, acknowledge and deliver a statement in writing substantially in the
form attached to this Lease as Exhibit "F" with the blanks filled in and with
                               -----------
such other provisions as a lender or purchaser may reasonably request, and on
any other form reasonably requested by a proposed lender or purchaser, (i)
certifying that this Lease is unmodified and in full force and effect (or, if
modified, stating the nature of such modification and certifying that this Lease
as so modified is in full force and effect) and the dates to which the rental
and other charges are paid in advanced, if any, (ii) acknowledging that there
are not, to Tenant's knowledge, any uncured defaults on the part of Landlord
hereunder, or specifying such defaults if any are claimed and (iii) setting
forth such further information with respect to this Lease or the Demised
Premises as may be requested thereon.  Any such statement may be relied upon by
any prospective purchaser or encumbrancer of all or any portion of the real
property of which the Demised Premises are a part.  Tenant's
<PAGE>

failure to deliver such statement within such time shall, at the option of
Landlord, constitute a Default under this Lease.

     28.2  Landlord shall within ten (10) days of written notice from Tenant,
execute, acknowledge and deliver a statement in writing on a form reasonably
requested by a proposed assignee or sublessee (i) certifying that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
such modification and certifying that this Lease as so modified is in full force
and effect) and the dates to which the rental and other charges are paid in
advanced, if any, (ii) acknowledging that there are not, to Landlord's
knowledge, any uncured defaults on the part of Tenant hereunder, or specifying
such defaults if any are claimed and (iii) setting forth such further
information with respect to this Lease or the Demised Premises as may be
requested thereon.  Any such statement may be relied upon by any permitted
assignee or permitted sublessee of all or any portion of the real property of
which the Demised Premises are a part.

29.  Joint And Several Obligations
     -----------------------------

     29.1  If more than one person or entity executes this Lease as Tenant,

           29.1.1  Each of them is jointly and severally liable for the keeping,
observing and performing of all of the terms, covenants, conditions, provisions
and agreements of this Lease to be kept, observed and performed by Tenant, and

           29.1.2  The term "Tenant" as used in this Lease shall mean and
                             ------
include each of them jointly and severally. The act of, notice from, notice to,
refund to, or the signature of, any one or more of them, with respect to the
tenancy of this Lease, including, but not limited to, any renewal, extension,
expiration, termination or modification of this Lease, shall be binding upon
each and all of the persons executing this Lease as Tenant with the same force
and effect as if each and all of them had so acted, so given or received such
notice or refund or so signed.

30.  Definition Of Landlord; Limitation Of Landlord's Liability
     ----------------------------------------------------------

     30.1  The term "Landlord" as used in this Lease, so far as covenants or
                     --------
obligations on the part of Landlord are concerned, shall be limited to mean and
include only Landlord or the successor-in-interest of Landlord under this Lease
at the time in question.  In the event of any transfer, assignment or the
conveyance of Landlord's fee title or leasehold interest, the landlord herein
named (and in case of any subsequent transfers or conveyances, the then grantor)
shall be automatically freed and relieved from, and after the date of such
transfer, assignment or conveyance, of all liability for the performance of any
covenants or obligations contained in this Lease thereafter to be performed by
Landlord, provided such transferee assumes in full in writing Landlord's
obligations hereunder, and, without further agreement, the transferee of such
title or leasehold shall be deemed to have assumed and agreed to observe and
perform any and all obligations of Landlord hereunder during its ownership or
ground lease of the Demised Premises.  Landlord may transfer its interest in the
Demised Premises or this Lease without the consent of Tenant and such transfer
or subsequent transfer shall not be deemed a violation on the part of Landlord
or the then grantor of any of the terms or conditions of this Lease.
<PAGE>

     30.2  If Landlord is in default of this Lease, and as a consequence, Tenant
recovers a money judgment against Landlord, the judgment shall be satisfied only
out of the proceeds of sale received on execution of the judgment and levy
against the right, title and interest of Landlord in the Building and Project,
and out of rent or other income from such real property receivable by Landlord
or out of the consideration received by Landlord from the sale, financing,
refinancing, or other disposition of all or any part of Landlord's right, title,
and interest in the Building and Project.

     30.3  Landlord shall not be personally liable for any deficiency.  If
Landlord is a partnership, limited liability company or joint venture, the
members of such limited liability company or the partners of such partnership
shall not be personally liable and no member or partner of Landlord shall be
sued or named as a party in any suit or action or service of process be made
against any partner of Landlord except as may be necessary to secure
jurisdiction of the partnership, limited liability company or joint venture.  If
Landlord is a corporation, the shareholders, directors, officers, employees,
and/or agents of such corporation shall not be personally liable and no
shareholder, director, officer, employee or agent of Landlord shall be sued or
named as a party in any suit or action or service of process made against any
shareholder, director, officer, employee or agent of Landlord.  No partner,
member shareholder, director, employee, or agent of Landlord shall be required
to answer or otherwise plead to any service of process and no judgment will be
taken or writ of execution levied against any partner, member, shareholder,
director, employee or agent of Landlord.

     30.4  Each of the covenants and agreements of this Article 30 shall be
applicable to any covenant or agreement either expressly contained in this Lease
or imposed by statute or by common law and shall survive the termination of this
Lease.

31.  Project Control By Landlord
     ---------------------------

     31.1  Landlord reserves full control over the Building and the Project to
the extent not inconsistent with or injurious to Tenant's enjoyment of the
Demised Premises.  This reservation includes but is not limited to right of
Landlord to expand the Project, subdivide the Project, convert the Building and
or other buildings within the Project to condominium units, the right to grant
easements and licenses to others and the right to maintain or establish
ownership of the Building separate from fee title to the land on which the
Building is located.

     31.2  Landlord further reserves the right to combine the Project with any
other project in the area of the Project and owned by Landlord or its
affiliates.

     31.3  Tenant shall, should Landlord so request, promptly join with Landlord
in execution of such documents as may be reasonably appropriate to assist
Landlord to implement any such action, provided that Tenant need not execute any
document which is of nature wherein liability is created in Tenant or, if by
reason of the terms of such document, Tenant will be deprived of the quiet
enjoyment and use of the Demised Premises as granted by this Lease or its rights
or duties hereunder will be adversely and materially affected.

     31.4  Landlord may, at any and all reasonable times during non-business
hours (or during business hours if Tenant so requests), and upon reasonable
advance notice (provided that
<PAGE>

no time restrictions shall apply or advance notice need be given if an emergency
necessitates an immediate entry), enter the Demised Premises to (a) inspect the
same and to determine whether Tenant is in compliance with its obligations
hereunder, (b) supply any service Landlord is required to provide hereunder, (c)
show the Demised Premises to prospective lenders, insurers, investors,
purchasers or, during the last year of the Term, tenants, (d) post notices of
nonresponsibility, (e) access the telephone equipment, electrical substation and
fire risers, and (f) alter, improve or repair any portion of the Building other
than the Demised Premises, but for which access to the Demised Premises is
necessary. In connection with any such alteration, improvement or repair,
Landlord may erect in the Demised Premises or elsewhere in the Building or the
Project scaffolding and other structures reasonably required for the work to be
performed. In no event shall Tenant's Rent abate as a result of any such entry
or work; provided, however, that all such work shall be done in such a manner
         --------  -------
as to cause as little interference to Tenant as reasonably possible. Landlord
shall at all times retain a key with which to unlock all of the doors in the
Demised Premises. If an emergency necessitates immediate access to the Demised
Premises, Landlord may use whatever force is necessary to enter the Demised
Premises and any such entry to the Demised Premises shall not constitute a
forcible or unlawful entry to the Demised Premises, an unlawful detainer of the
Demised Premises, or an eviction of Tenant from the Demised Premises, or any
portion thereof.

32.  Quiet Enjoyment
     ---------------

     Landlord covenants and agrees that Tenant may peaceably and quietly enjoy
the Demised Premises without hindrance or disturbance, subject, nevertheless, to
the terms, conditions and covenants of this Lease.

33.  Quitclaim Deed
     --------------

     Tenant shall execute and deliver to Landlord on the expiration or
termination of this Lease, immediately on Landlord's request, in recordable
form, a quitclaim deed to the Demised Premises or such other documentation
reasonably requested by Landlord evidencing termination of this Lease.

34.  Intentionally Omitted.

35.  Subordination And Attornment
     ----------------------------

     35.1  Provided that Tenant receives a non-disturbance agreement from any
applicable mortgagee, beneficiary or landlord in substantially the same form as

Exhibit "G" attached hereto and with such other provisions as may be reasonably
-----------
requested by a proposed lender (the "Nondisturbance Agreement"), Tenant shall,
                                     ------------------------
within ten (10) days of written notice from Landlord, execute, acknowledge and
deliver the Nondisturbance Agreement with the blanks filled in, and this Lease
shall be subject and subordinate to the lien of any mortgage, deed of trust, or
lease in which Landlord is tenant now or hereafter in force against the Project
or the Building and to all advances made or hereafter to be made upon the
security thereof without the necessity of the execution and delivery of any
further instruments on the part of Tenant to effectuate such subordination.
<PAGE>

     35.2  Notwithstanding the foregoing, but subject to receipt of a
Nondisturbance Agreement, Tenant shall execute and deliver upon demand such
further instrument or instruments evidencing such subordination of this Lease to
the lien of any such mortgage or mortgages or deeds of trust or lease in which
Landlord is tenant as may be required by Landlord.  However, if any such
mortgagee, beneficiary or Landlord under lease wherein Landlord is tenant so
elects, this Lease shall be deemed prior in lien to any such lease, mortgage, or
deed of trust upon or including the Demised Premises regardless of date and
Tenant will execute a statement in writing to such effect at Landlord's request.
If Tenant fails to execute any document required from Tenant under this Article
35 within ten (10) days after written request therefor, such failure shall be a
breach of and Default under this Lease.

     35.3  In the event any proceedings are brought for foreclosure, or in the
event of the exercise of the power of sale under any mortgage or deed of trust
made by the Landlord covering the Demised Premises, the Tenant shall at the
election of the purchaser at such foreclosure or sale attorn to the purchaser
upon any such foreclosure or sale and recognize such purchaser as the Landlord
under this Lease, provided such party has assumed in full in writing Landlord's
obligations under this Lease.

36.  Surrender
     ---------

     36.1  No surrender of possession of any part of the Demised Premises shall
release Tenant from any of its obligations hereunder unless accepted by
Landlord.

     36.2  The voluntary or other surrender of this Lease by Tenant shall not
work a merger, unless Landlord consents and shall, at the option of Landlord,
operate as an assignment to it of any or all subleases or subtenancies.

     36.3  The voluntary or other surrender of any ground or underlying lease
that now exists or may hereafter be executed affecting the Building or the
Project, or a mutual cancellation, thereof, or of Landlord's interest therein,
shall not work a merger and shall, at the option of the successor of Landlord's
interest in the Building or Project, operate as an assignment of this Lease.

     36.4  Upon the expiration or earlier termination of this Lease, Tenant
shall surrender the Demised Premises to Landlord broom clean and free of debris;
with all of Tenant's personal property and effects removed therefrom; with all
alterations, improvements and fixtures required by Landlord to be removed from
the Demised Premises actually removed and all damage as a result of or caused by
such removal repaired; and with all licenses, permits and similar items which
restrict or affect the used of the Demised Premises released and fully
terminated.

37.  Waiver And Modification
     -----------------------

     No provision of this Lease may be modified, amended or added to except by
an agreement in writing.  The waiver by Landlord or Tenant of any breach of any
term, covenant or condition herein contained shall not be deemed to be a waiver
of any subsequent breach of the same or any other term, covenant or condition
herein contained.
<PAGE>

38.  Waiver of Jury Trial And Counterclaims
     --------------------------------------

     THE PARTIES HERETO SHALL AND THEY HEREBY DO WAIVE TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO
AGAINST THE OTHER ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE
OR OCCUPANCY OF THE DEMISED PREMISES, AND OR ANY CLAIM OF INJURY OR DAMAGE.

39.  Intentionally Omitted.

40.  Right To Expand
     ---------------

     Tenant shall have the right, but not the obligation, to expand the Demised
Premises (the "Expansion Right") to include all the rentable premises at the
               ---------------
buildings located at 3000, 3010 and 3018 Western Avenue (collectively, the
"Expansion Space") leased to the University of Washington as of the Effective
----------------
Date pursuant to the terms of that certain Lease dated February, 13, 1998, by
and between the Board of Regents of the University of Washington and Landlord
(the "UW Lease"), upon the following terms and conditions:
      --------

     40.1 If, after the expiration or earlier termination of the term of the UW
Lease (and exercise or expiration of any applicable extension options in the UW
Lease), Landlord desires to lease all or any portion of the Expansion Space,
Landlord shall deliver to Tenant written notice (the "Expansion Notice") of the
                                                      ----------------
availability of such portion of the Expansion Space, together with the terms and
conditions, including rent, on which Landlord is prepared to lease to Tenant
such portion of the Expansion Space.  Tenant shall have thirty (30) days
following delivery of the Expansion Notice to deliver to Landlord written
notification of Tenant's exercise of the Expansion Right and agreement to lease
such portion of the Expansion Space upon the terms and conditions of the
Expansion Notice.  In the event Tenant fails to timely deliver such notice, or
if Landlord and Tenant are unable to agree upon any of the terms of the lease
agreement for such portion of the Expansion Space after negotiating in good
faith for a period of thirty (30) days, Tenant shall be deemed to have waived
any right to lease such portion of the Expansion Space unless and until such
portion of the Expansion Space again becomes vacant following a tenancy, or, if
such portion of the Expansion Space is not thereafter leased by Landlord,
following the date which is one hundred eighty (180) days following the date of
delivery of the Expansion Notice for such Expansion Space.

     40.2 Within ten (10) days after the proper exercise of the Expansion Right
and Landlord and Tenant agreeing upon the terms and conditions including rent
for the lease of the Expansion Space, Tenant and Landlord shall enter into a
written amendment to this Lease (the "Expansion Amendment") which shall provide,
                                      -------------------
unless otherwise agreed in writing, (a) the commencement date of the Expansion
Space; (b) that the Demised Premises under this Lease shall be increased to
include the rentable square feet of the Expansion Space; (c) the new Basic
Annual Rent; (d) Tenant's new Pro Rata Share based upon the addition of the
Expansion Space to the Demised Premises; and (e) the proportionate increase to
the Security Deposit (which shall be payable upon execution of the Expansion
Amendment).  In all other respects, this Lease shall remain in full force and
effect, and shall apply to the Expansion Space.
<PAGE>

     40.3 Notwithstanding the above, the Expansion Right shall not be in effect
and may not be exercised by Tenant:

          40.3.1 during any period of time that Tenant is in default under any
provision of this Lease; or

          40.3.2 if Tenant has been in default under any provision of this Lease
three (3) or more times, whether or not the defaults are cured, during the five
(5) month period prior to the date on which Tenant seeks to exercise the
Expansion Right.

     40.4 Tenant's rights in connection with the Expansion Right are and shall
be subject to and subordinate to any expansion or extension rights granted to
the tenant under the UW Lease.

     40.5 Expansion Rights are personal to Dendreon and are not assignable
separate and apart from this Lease, except in the case of a Permitted Transfer,
provided that Dendreon shall be and remain liable for any lease of the Expansion
Space.

     40.6 The Expansion Right shall terminate and be of no further force or
effect even after Tenant's due and timely exercise of the Expansion Right, if,
after such exercise, but prior to the commencement date of the Expansion Space,
Tenant fails to timely cure any default by Tenant under this Lease of which
Tenant is given written notice; or Tenant has defaulted three (3) or more times
during the period from the date of the exercise of the Expansion Right to the
date of the commencement of the Expansion Space, whether or not such defaults
are cured.

41.  Hazardous Materials
     -------------------

     41.1 Prohibition/Compliance.  Tenant shall not cause or permit any
          ----------------------
Hazardous Materials (as hereinafter defined) to be brought upon, kept or used in
or about the Demised Premises, the Building or the Project in violation of
applicable law by Tenant, its agents, employees, contractors or invitees.  If
(i) Tenant breaches the obligation stated in the preceding sentence; (ii) the
presence of Hazardous Materials in, on, at, under, above or about the Demised
Premises, the Building or the land under the Building (except for Hazardous
Materials specifically described in the Environmental Report which shall be the
responsibility of Landlord) at any time results in contamination of the Demised
Premises, the Building, the Project or any adjacent property; (iii)
contamination of the Demised Premises, the Building, the Project or any adjacent
property by Hazardous Materials is otherwise caused by Tenant or its agents,
representatives or invitees during the term of this Lease or any extension or
renewal hereof or holding over hereunder, then Tenant hereby indemnifies and
shall defend and hold Landlord, its officers, directors, employees, agents and
contractors harmless from any and all claims, judgments, damages, penalties,
fines, costs, liabilities, or losses (including, without limitation, diminution
in value of the Demised Premises or any portion of the Building or the Project,
damages for the loss or restriction on use of rentable or usable space or of any
amenity of the Demised Premises, the Building or the Project, damages arising
from any adverse impact on marketing of space in the Demised Premises, the
Building or the Project, and sums paid in settlement of claims, attorneys' fees,
consultant fees and expert fees) which arise during or after the Lease term as a
result of such contamination.  This indemnification of Landlord by Tenant
includes, without limitation, costs incurred in connection with any
investigation of site
<PAGE>

conditions or any cleanup, remedial, removal, or restoration work required by
any federal, state or local governmental agency or political subdivision because
of Hazardous Materials present in the air, soil or ground water above, on or
under the Demised Premises. Without limiting the foregoing, if the presence of
any Hazardous Materials on the Demised Premises, the Building, the Project or
any adjacent property, caused or permitted by Tenant or its agents,
representatives or invitees results in any contamination of the Demised
Premises, the Building, the Project or any adjacent property, Tenant shall
promptly take all actions at its sole expense as are necessary to return the
Demised Premises, the Building, the Project or any adjacent property, to the
condition existing prior to the time of such contamination, provided that
Landlord's approval of such action shall first be obtained, which approval shall
not unreasonably be withheld so long as such actions would not potentially have
any material adverse long-term or short-term effect on the Demised Premises, the
Building or the Project.

     41.2 Business.  Landlord acknowledges that it is not the intent of this
          --------
Article 41 to prohibit Tenant from operating its business as described in
Section 2.1.8 above.  Tenant may operate its business according to the custom of
the industry so long as the use or presence of Hazardous Materials is strictly
and properly monitored according to all applicable governmental requirements.
As a material inducement to Landlord to allow Tenant to use Hazardous Materials
in connection with its business, Tenant agrees to deliver to Landlord prior to
the Term Commencement Date a list identifying each type of Hazardous Materials
to be present on the Demised Premises and setting forth any and all governmental
approvals or permits required in connection with the presence of such Hazardous
Materials on the Demised Premises ("Hazardous Materials List").  Tenant shall
                                    ------------------------
deliver to Landlord an updated Hazardous Materials List at least once a year and
shall also deliver an updated list before any new Hazardous Materials is brought
onto the Demised Premises.  Tenant shall deliver to Landlord true and correct
copies of the following documents (the "Documents") relating to the handling,
                                        ---------
storage, disposal and emission of Hazardous Materials prior to the Term
Commencement Date, or if unavailable at that time, concurrent with the receipt
from or submission to a governmental agency: permits; approvals; reports and
correspondence; storage and management plans, notice of violations of any laws;
plans relating to the installation of any storage tanks to be installed in or
under Building or the Project (provided, said installation of tanks shall only
be permitted after Landlord has given Tenant its written consent to do so, which
consent may be withheld in Landlord's sole and absolute discretion); and all
closure plans or any other documents required by any and all federal, state and
local governmental agencies and authorities for any storage tanks installed in,
on or under the Building or the Project for the closure of any such tanks.
Tenant is not required, however, to provide Landlord with any portion(s) of the
Documents containing information of a proprietary nature which, in and of
themselves, do not contain a reference to any Hazardous Materials or hazardous
activities.  It is not the intent of this Section 41.2 to provide Landlord with
information which could be detrimental to Tenant's business should such
information become possessed by Tenant's competitors.

     41.3 Termination of Lease/Withholding Approval of Assignment or Sublease.
          -------------------------------------------------------------------
Notwithstanding the provisions of Section 41.1 above, if Tenant or any then
existing sublessee of Tenant, with respect to the Demised Premises or the
Project, or any proposed assignee or sublessee, with respect to any property, is
subject to an uncured enforcement order issued by any governmental authority in
connection with the use, disposal or storage of Hazardous Materials, Landlord
shall have the right, with respect to any such matter involving Tenant or an
existing
<PAGE>

sublessee of Tenant, to terminate this Lease in Landlord's sole and absolute
discretion, and, with respect to any such matter involving a proposed assignee
or sublessee, it shall not be unreasonable for Landlord to withhold its consent
to any proposed assignment or subletting.

     41.4 Testing.  At any time, and from time to time, prior to the expiration
          -------
or earlier termination of the Term, Landlord shall have the right to conduct
appropriate tests of the Demised Premises, the Building and the Project to
demonstrate that contamination has occurred as a result of Tenant's use of the
Demised Premises; provided, however, if that no contamination or Hazardous
Materials are discovered through such tests, such testing shall be limited to
once per year.  Tenant shall be solely responsible for and shall defend,
indemnify and hold the Landlord, its agents and contractors harmless from and
against any and all claims, costs and liabilities including actual attorneys'
fees, charges and disbursements, arising out of or in connection with any
removal, clean up, restoration and materials required hereunder to return the
Demised Premises and any other property of whatever nature to their condition
existing prior to the time of any such contamination.  Tenant shall pay for the
cost of the tests of the Demised Premises.

     41.5 Underground Tanks.
          -----------------

          41.5.1 Subject to Subsection 41.5.2 below, Landlord shall monitor the
underground or other storage tanks described in the Environmental Report (the
"Existing Tanks"), and maintain appropriate records, implement reporting
--------- -----
procedures, properly close any underground storage tanks that it determines to
close, and take or cause to be taken all other steps (including, without
limitation, repairs) necessary or required under the Washington State
Underground Storage Tank Act, Chapter 90.76 R.C.W. and the regulations
promulgated thereunder at WAC Section 173-180-080 and all other laws, as they
now exist or may hereafter be adopted or amended.

          41.5.2 If underground or other storage tanks storing Hazardous
Materials are placed on, under or about the Demised Premises or Project by
Tenant (the New Tanks") or if Tenant uses the Existing Tanks, then Tenant shall
            ----------
monitor such New Tanks and the Existing Tanks, and maintain appropriate records,
implement reporting procedures, properly close such underground storage tanks at
the end of the Term unless instructed otherwise by Landlord in writing, and take
or cause to be taken all other steps (including, without limitation, repairs)
necessary or required under the Washington State Underground Storage Tank Act,
Chapter 90.76 R.C.W. and the regulations promulgated thereunder at WAC Section
173-180-080, as they now exist or may hereafter be adopted or amended; provided,
however, that the cost of Tenant's obligations with respect to any Existing
Tanks it uses shall be shared equitably with other users of such Existing Tanks.

     41.6 Tenant's Obligations.  Tenant's obligations under this Article 41
          --------------------
shall survive the expiration or earlier termination of the Lease.  During any
period of time employed by Tenant or Landlord after the termination of this
Lease to complete the removal from the Demised Premises of any such Hazardous
Materials and the release and termination of any licenses or permits restricting
the use of the Demised Premises, Tenant shall continue to pay the full Rent in
accordance with this Lease, which Rent shall be prorated daily.
<PAGE>

     41.7 Definition of "Hazardous Materials." As used herein, the term
          ----------------------------------
"Hazardous Materials" shall mean any substance, chemical, compound, product,
--------------------
solid, gas, liquid, waste, byproduct, pollutant, contaminant, or material which
is hazardous or toxic, and includes, without limitation, (a) asbestos,
polychlorinated biphenyls, lead-based paints and petroleum (including crude oil
or any fraction thereof) and (b) any material classified or regulated as
"hazardous," "toxic" or "dangerous" pursuant to any Environmental Law.  As used
herein, the term "Environmental Law" shall include, without limitation, the
                  -----------------
following: 42 U.S.C. Section 9601 et.  seq., (the Comprehensive Environmental
Response Compensation and Liability Act), 42 U.S.C. Section 6901, et.  seq.
(the Federal Resource Conservation and Recovery Act), 33 U.S.C. Section 1317
(the Federal Water Pollution Control Act), 15 U.S.C. Section 2601 et.  seq.
(the Toxic Substances Control Act), the Washington Model Toxics Control Act, the
Washington Hazardous Waste Management Act, and any similar, implementing or
successor law, any amendment, rule, regulation, order, or directive issued
thereunder, and any comparable or analogous federal, state or local law or
ordinance with their respective implementing regulations.

42.  Right To Extend Term.
     --------------------

     Tenant shall have the right to extend the Term of this Lease upon the
following terms and conditions:

     42.1 Tenant shall have two (2) consecutive rights (each, an "Extension
                                                                  ---------
Right") to extend the term of this Lease for five (5) years each (each, an
-----
"Extension Term") on the same terms and conditions as this Lease.  During any
 --------------
Extension Term, Basic Annual Rent shall be payable at the Market Rate (as
defined below), but in no event less than the Basic Annual Rent payable on the
date immediately preceding the commencement of such Extension Term.  Basic
Annual Rent shall be adjusted on the commencement of each Extension Term and on
each one (1) year anniversary of the commencement of such Extension Term as
agreed by Landlord and Tenant.  As used herein, "Market Rate" shall mean the
                                                 -----------
then market rental rate (and any adjustment schedule during the Extension Term)
as determined by Landlord and agreed to by Tenant, and shall include all
provisions for Additional Rent made in this Lease.  If, on or before the date
which is one hundred twenty (120) days prior to the expiration of the initial
Term of this Lease, or the expiration of any Extension Term, Tenant has not
agreed with Landlord's determination of the Market Rate or if Landlord and
Tenant have not agreed upon any of the other terms of such subsequent Extension
Term after negotiating in good faith, Tenant shall be deemed to have waived any
right to extend, or further extend, the Term of this Lease and all of the
remaining Extension Rights shall terminate.

     42.2 Extension Rights are personal to Dendreon and may not be assigned to
any transferee, assignee, or sublessee of or under this Lease except to a
corporate successor of Dendreon pursuant to a plan of merger, reorganization or
similar transaction, and such rights are not assignable separate and apart from
this Lease.

     42.3 Extension Rights are conditional upon Tenant giving Landlord written
notice of its election to exercise each Extension Right at least nine (9) months
prior to the end of the expiration of the initial term of this Lease or the
expiration of any Extension Term.
<PAGE>

     42.4 Notwithstanding anything set forth above to the contrary, Extension
Rights shall not be in effect and Tenant may not exercise any of the Extension
Rights:

          42.4.1 during any period of time that Tenant is in default under any
provision of this Lease; or

          42.4.2 if Tenant has been in default under any provision of this Lease
three (3) or more times, whether or not the defaults are cured, during the
twelve (12) month period immediately prior to the date that Tenant intends to
exercise an Extension Rights, whether or not the defaults are cured.

     42.5 The period of time within which any Extension Rights may be exercised
shall not be extended or enlarged by reason of the Tenant's inability to
exercise the Expansion Rights because of the provisions of Section 42.4 above.

     42.6 The Extension Rights shall terminate and be of no further force or
effect even after Tenant's due and timely exercise of an Extension Right, if,
after such exercise, but prior to the commencement date of an Extension Term,
(1) Tenant fails to timely cure any default by Tenant under this Lease; or (2)
Tenant has defaulted three (3) or more times during the period from the date of
the exercise of an Extension Right to the date of the commencement of the
Extension Term, whether or not such defaults are cured.

43.  Intentionally Omitted.
     ---------------------

44.  Intentionally Omitted.
     ---------------------

45.  Architectural And Design Fees
     -----------------------------

     45.1 Within one (1) year from the Term Commencement Date, Landlord shall
pay or reimburse Tenant for Tenant's actual out-of-pocket expenses in connection
with architectural and design programming for the Demised Premises, up to a
maximum of $35,323.50.  Landlord shall pay or reimburse any such amounts
requested by Tenant within thirty (30) days after a written request therefor.

46.  Miscellaneous
     -------------

     46.1 Terms and Headings.  Where applicable in this Lease, the singular
          ------------------
includes the plural and the masculine or neuter includes the masculine, feminine
and neuter.  The article and section headings of this Lease are not a part of
this Lease and shall have no effect upon the construction or interpretation of
any part hereof.

     46.2 Examination of Lease.  Submission of this instrument for examination
          --------------------
or signature by Tenant does not constitute a reservation of or option for lease,
and it is not effective as a lease or otherwise until execution by and delivery
to both Landlord and Tenant.

     46.3 Time.  Time is of the essence with respect to the performance of every
          ----
provision of this Lease in which time of performance is a factor.
<PAGE>

     46.4  Covenants and Conditions. Each provision of this Lease performable by
           ------------------------
Tenant shall be deemed both a covenant and a condition.

     46.5  Consents.  Whenever consent or approval of either party is required,
           --------
that party shall not unreasonably withhold such consent or approval, except as
may be expressly set forth to the contrary.

     46.6  Entire Agreement. The terms of this Lease are intended by the parties
           ----------------
as a final expression of their agreement with respect to the terms as are
included herein, and may not be contradicted by evidence of any prior or
contemporaneous agreement. The Basic Lease Provisions, general provisions and
Exhibits all constitute a single document and are incorporated herein.

     46.7  Severability.  Any provision of this Lease which shall prove to be
           ------------
invalid, void, or illegal in no way affects, impairs or invalidates any other
provision hereof, and such other provisions shall remain in full force and
effect.

     46.8  Recording.  Landlord may, but shall not be obligated to, record a
           ---------
short form memorandum hereof without the consent of Tenant. Neither party shall
record this Lease. Tenant shall be responsible for the cost of recording any
Memorandum of Lease, including any transfer or other taxes incurred in
connection with said recordation.

     46.9  Impartial Construction. The language in all parts of this Lease shall
           ----------------------
be in all cases construed as a whole according to its fair meaning and not
strictly for or against either Landlord or Tenant.

     46.10 Inurement.  Each of the covenants, conditions and agreements herein
           ---------
contained shall inure to the benefit of and shall apply to and be binding upon
the parties hereto and their respective heirs, legatees, devisees, executors,
administrators, successors, assigns, sublessees, or any person who may come into
possession of said Demised Premises or any part thereof in any manner
whatsoever.  Nothing in this Section 46.10 contained shall in any way alter the
provisions against assignment or subletting in this Lease provided.

     46.11 Notices.  Any notice, consent, demand, bill, statement, or other
           -------
communication required or permitted to be given hereunder must be in writing and
may be given by (i) personal delivery which shall be deemed given when received,
(ii) reputable overnight courier which shall be deemed given the business day
following the date on the courier's receipt of pick-up, subject to Force Majeure
Delays, addressed to Tenant at the Demised Premises, or to Tenant or Landlord at
the addresses shown in Sections 2.1.9 and 2.1.10 of the Basic Lease Provisions.
Either party may, by notice to the other given pursuant to this Section 46.11,
specify additional or different addresses for notice purposes.

     46.12 Jurisdiction. This Lease shall be governed by, construed and enforced
           ------------
in accordance with the laws of the State of Washington.

     46.13 Authority.  That individual or those individuals signing this Lease
           ---------
guarantee, warrant and represent that said individual or individuals have the
power, authority and legal capacity to sign this Lease on behalf of and to bind
all entities, corporations, partnerships, joint
<PAGE>

venturers or other organizations and/or entities on whose behalf said individual
or individuals have signed.

     In Witness Whereof, the parties hereto have executed this Lease as of the
date first above written.

                                   LANDLORD:

                                   ARE-3005 FIRST AVENUE, LLC, a
                                   Delaware limited liability company

                                   By:  Alexandria Real Estate Equities, L.P., a
                                        Delaware limited partnership, its sole
                                        member

                                        By:  ARE-QRS Corp., a Maryland
                                             Corporation, its general partner

                                             By: /s/ Lynn Ann Shapiro
                                                 -------------------------------
                                                 Name: Lynn Anne Shapiro
                                                 Its: General Counsel

                                        TENANT:

                                        DENDREON CORPORATION, a Delaware
                                        Corporation

                                        By: /s/ Peter S. Garcia
                                           -------------------------------------
                                        Name: Peter S. Garcia
                                             -----------------------------------
                                        Its: Chief Financial Officer
                                            ------------------------------------

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