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                                                                   EXHIBIT 10.11

               STANDARD INDUSTRIAL/COMMERCIAL SINGLE TENANT LEASE

1.    BASIC PROVISIONS ("BASIC PROVISIONS")

      1.1   PARTIES: This Lease ("Lease"), dated for reference purposes only
July 31, 1998, is made by and between Clint S. Carter and Esther Carter Family
Trust ("Lessor") and IntraBiotics Pharmaceuticals, Inc, a Delaware Corporation
("Lessee"), (collectively the "Parties," or individually a "Party").

      1.2   PREMISES: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, as such
improvements to be provided by Lessor are set forth in Paragraph 7.1(a) hereof
and Section 8 of Exhibit B hereto, and commonly known as 1255 Terra Bella
Avenue, Mountain View located in the County of Santa Clara, State of California,
and generally described as an approximately 18,000 square foot R&D/Office
Building ("Premises"). (See also Paragraph 2.)

      1.3   TERM: Five (5) years and ten and one-half (10.5) months ("Original
Term") commencing September 1, 1998 ("Commencement Date") and ending July 14,
2004 ("Expiration Date"). (See also Paragraph 3.)

      1.4   EARLY POSSESSION: N/A ("Early Possession Date"). (See also
Paragraphs 3.2 and 3.3).

      1.5   BASE RENT: $35,100.00 per month ("Base Rent"), payable on the first
(lst) day of each month commencing September 1, 1998. (See also Section 1 of the
Addendum hereto).

/X/   If this box is checked, there are provisions in this Lease for the Base
Rent to be adjusted.

      1.6   BASE RENT PAID UPON EXECUTION: $35,100.00 as Base Rent for the
period September 1, 1998 - August 31, 1999.

      1.7   SECURITY DEPOSIT: $41,040.00 in cash plus an additional $175,500
which shall be either in cash or an irrevocable letter of credit in the form of
Exhibit E attached hereto, at Lessee's sole option (collectively, "Security
Deposit"). (See also Paragraph 5.)

      1.8   AGREED USE: General office and R&D use and light manufacturing
subject to the limitations set forth in Paragraph No. 6. (See also Paragraph 6.)

      1.9   INSURING PARTY: Lessor is the "Insuring Party" unless otherwise
stated herein. (See also Paragraph 8.)

      1.10  REAL ESTATE BROKER: (See also Paragraph 15.)

            (a)    REPRESENTATION: The following real estate brokers
(collectively, the "Brokers") and brokerage relationships exist in this
transaction (check applicable boxes):

/X/   Colliers Parrish International, Inc. represents Lessor exclusively
("LESSOR'S BROKER");

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/X/   BT Commercial and Vertex Real Estate Group represent Lessee exclusively
("LESSEE'S BROKER"); or

/ /   _______________________________ represents both Lessor and Lessee ("DUAL
AGENCY").

            (b)    PAYMENT TO BROKERS: Upon execution and delivery of this Lease
by both Parties, Lessor shall pay to the Broker the fee agreed to in their
separate written agreement.

      1.11  ADDENDA AND EXHIBITS: Attached hereto is an Addendum or Addenda
consisting of Sections 1 through 8 Exhibits A (Site Plan); B (Interior
Improvements); C (Lessor's Remedies),-D (Final Plans and Specifications) and E
(Letter of Credit), all of which constitute a part of this Lease.

2.    PREMISES.

      2.1   LETTING. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of size set forth in this Lease, or that may have
been used in calculating rental, is an approximation which the Parties agree is
reasonable and the rental based thereon is not subject to revision whether or
not the actual size is more or less.

      2.2   CONDITION. Lessor shall deliver the Premises to Lessee broom clean
and free of debris on the Commencement Date or the Early Possession Date,
whichever first occurs ("Start Date"), and, so long as the required service
contracts described in Paragraph 7.1(b) below are obtained by Lessee within
thirty (30) days following the Start Date, represents to Lessee, to the best of
its knowledge, that the existing electrical, plumbing, fire sprinkler, lighting,
heating, ventilating and air conditioning systems ("HVAC"), loading doors,
windows and doors, if any, and all other such elements in the Premises, other
than those constructed by Lessee, shall be in good operating condition on said
date and that the structural elements of the roof and the roof membrane, bearing
walls and foundation of any buildings on the Premises (the "Building") shall be
free of material defects and in good condition and repair. If a non-compliance
with said representation exists as of the Start Date, Lessor shall, as Lessor's
sole obligation with respect to such matter, except as otherwise provided in
this Lease, promptly after receipt of written notice from Lessee setting forth
with specificity the nature and extent of such non-compliance, rectify same at
Lessor's expense. If, after Start Date, Lessee does not give Lessor written
notice of any non-compliance with this warranty within: a. one year as to the
surface of the roof and the structural portions of the roof, foundations and
bearing walls, b. six (6) months as to the HVAC systems, c. sixty (60) days as
to the remaining systems and other elements of the Building, correction of such
non-compliance shall be the obligation of Lessee at Lessee's sole cost and
expense.

      2.3   COMPLIANCE. Lessor represents that, to the best of its knowledge,
the improvements on the Premises comply with all applicable laws, covenants or
restrictions of record, building codes, regulations and ordinances ("Applicable
Requirements") in effect on the Start Date. If and to the extent the
improvements on the Premises are not in such compliance and

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Lessee so notifies Lessor prior to Lessee's taking occupancy of the Premises,
Lessor shall render them compliant at Lessor's sole cost and expense upon
completion of the initial tenant improvements. Said representation does not
apply to the use to which Lessee will put the Premises or to any Alterations or
Utility Installations (as defined in Paragraph 7.3(a)) made or to be made by
Lessee. If the Applicable Requirements are hereafter changed (as opposed to
being in existence at the Start Date, which is addressed in Paragraph 6.2(e)
below) so as to require during the teem of this Lease the construction of an
addition to or an alteration of the Building, the remediation of any Hazardous
Substance, or the reinforcement or other physical modification of the Building
("Capital Expenditure"), Lessor and Lessee shall allocate the costs of such work
as follows:

            (a)   Subject to Paragraph 2.3(c) below, if such Capital
Expenditures are required as a result of the specific and unique use of the
Premises by Lessee as compared with uses by tenants in general, Lessee shall be
fully responsible for the cost thereof, provided, however that if such Capital
Expenditure is required during the last year of this Lease and the cost thereof
exceeds six (6) months' Base Rent, Lessee may instead terminate this Lease. If
Lessee elects termination, Lessee shall immediately cease the use of the
Premises which requires such Capital Expenditure and deliver to Lessor written
notice specifying a termination date at least ninety (90) days thereafter. Such
termination date shall, however, in no event be earlier than the last day that
Lessee could legally utilize the Premises without commencing such Capital
Expenditure.

            (b)   If such Capital Expenditure is not the result of the specific
and unique use of the Premises by Lessee (such as, governmentally mandated
seismic modifications), then Lessor and Lessee shall allocate the obligation to
pay `for such costs pursuant to the provisions of Paragraph 7.1(c); provided,
however, that if such Capital Expenditure is required during the last year of
this Lease or if Lessor reasonably determines that it is not economically
feasible to pay its share thereof, Lessor shall have the option to terminate
this Lease upon one hundred twenty (120) days prior written notice to Lessee
unless Lessee notifies Lessor, in writing, within ten (10) days after receipt of
Lessor's termination notice that Lessee will pay for such Capital Expenditure.
If Lessor does not elect to terminate, and fails to tender its share of any such
Capital Expenditure, Lessee may advance such funds and deduct same, with
interest, from Rent until Lessor's share of such costs have been fully paid. If
Lessee is unable to finance Lessor's share, or if the balance of the Rent due
and payable for the remainder of this Lease is not sufficient to fully reimburse
Lessee on an offset basis, Lessee shall have the right to terminate this Lease
upon thirty (30) days written notice to Lessor.

            (c)   Notwithstanding the above, the provisions concerning Capital
Expenditures are intended to apply only to non-voluntary, unexpected, and new
Applicable Requirements. If the Capital Expenditures are instead triggered by
Lessee as a result of an actual or proposed change in use, change in intensity
of use, or modification to the Premises then, and in that event, Lessee shall be
fully responsible for the cost thereof, and Lessee shall not have any right to
terminate this Lease.

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      2.4   ACKNOWLEDGEMENTS. Lessee acknowledges that:

            (a)   it has been advised by Lessor and/or Brokers to satisfy itself
with respect to the condition of the Premises (including but not limited to the
electrical, HVAC and the fire sprinkler systems, security, environmental
aspects, and compliance with Applicable Requirements), and their suitability for
Lessee's intended use, (b) Lessee has made such investigation as it deems
necessary with reference to such matters and assumes all responsibility therefor
as the same relate to its occupancy of the Premises, and (c) neither Lessor,
Lessor's agents, nor any Broker has made any oral or written representations or
warranties with respect to said matters other than as set forth in this Lease.
In addition, Lessor acknowledges that: (a) Broker has made no representations,
promises or warranties concerning Lessee's ability to honor the Lease or
suitability to occupy the Premises, and (b) it is Lessor's sole responsibility
to investigate the financial capability and/or suitability of all proposed
tenants.

      2.5   LESSEE AS PRIOR OWNER/OCCUPANT. Intentionally deleted.

3.    TERM.

      3.1   TERM. The Commencement Date, Expiration Date and Original Term of
this Lease are as specified in Paragraph 1.3.

      3.2   EARLY POSSESSION. If Lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to pay Base Rent shall
be abated for the period of such early possession. All other terms of this Lease
(including but not limited to the obligation to pay Real Property Taxes and
insurance premiums and to maintain the Premises) shall, however, be in effect
during such period. Any such early possession shall not affect the Expiration
Date.

      3.3   DELAY IN POSSESSION. Lessor agrees to use its best commercially
reasonable efforts to deliver possession of the Premises to Lessee by the
Commencement Date. As used herein, the phrase "deliver possession" shall mean
and refer to the delivery of the building shell of the Premises as it exists as
of the date of execution hereof. If, despite said efforts, Lessor is unable to
deliver possession as agreed, Lessor shall not be subject to any liability
therefor, nor shall such failure affect the validity of this Lease. Lessee shall
not, however, be obligated to pay Rent or perform its other obligations until it
receives possession of the Premises. If possession is not delivered within
thirty (30) days after the Commencement Date, Lessee may, at its option, by
notice in writing within ten (10) days after the end of such thirty (30) day
period, cancel this Lease, in which event the Parties shall be discharged from
all further obligations hereunder, and Lessor shall refund Lessee's deposits
hereunder. If such written notice is not received by Lessor within said ten (10)
day period. Lessee's right to cancel shall terminate. Except as otherwise
provided, if possession is not tendered to Lessee by the Start Date and Lessee
does not terminate this Lease, as aforesaid, any period of rent abatement that
Lessee would otherwise have enjoyed shall run from the date of delivery of
possession and continue for a period equal to what Lessee would otherwise have
enjoyed under the terms hereof, but minus any days of delay caused by the acts
or omissions of Lessee. If possession of the Premises is not delivered within
four (4) months after the Commencement Date, this Lease shall terminate unless
other agreements are reached between Lessor and Lessee, in writing.

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      3.4   LESSEE COMPLIANCE. Lessor shall not be required to tender possession
of the Premises to Lessee until Lessee complies with its obligation to provide
evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee
shall be required to perform all of its obligations under this Lessee, from and
after the Start Date, including the payment of Rent, notwithstanding Lessor's
election to withhold possession pending receipt of such evidence of insurance.

4.    RENT.

      4.1   RENT DEFINED. All monetary obligations of Lessee payable to Lessor
under the terms of this Lease (except for the Security Deposit) are deemed to be
rent ("Rent").

      4.2   PAYMENT. Lessee shall cause payment of Rent to be received by Lessor
in lawful money of the United States, without offset or deduction (except as
specifically permitted in this Lease), on or before the day on which it is due.
Rent for any period during the term hereof which is for less than one (1) full
calendar month shall be prorated based upon the actual number of days of said
month. Payment of Rent shall be made to Lessor at its address stated herein or
to such other persons or place as Lessor may from time to time designate in
writing. Acceptance of a payment which is less than the amount then due shall
not be a waiver of Lessor's rights to the balance of such Rent, regardless of
Lessor's endorsement of any check so stating.

5.    SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof
the Security Deposit as security for Lessee's faithful performance of its
obligations under this Lease. If lessee fails to pay Rent, or otherwise Defaults
under this Lease, Lessor may use, apply or retain that portion of said Security
Deposit necessary for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of said Security Deposit, Lessee shall within ten (10) days after written
request therefor deposit monies with Lessor sufficient to restore said Security
Deposit to the full amount required by this Lease. Should the Agreed Use be
amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase the
Security Deposit to the extent necessary, in Lessor's reasonable judgment, to
account for any increased wear and tear that the Premises may suffer as a result
thereof. If a change in control of Lessee occurs during this Lease and following
such change the financial condition of Lessee is, in Lessor's reasonable
judgment, significantly reduced, Lessee shall deposit such additional monies
with Lessor as shall be sufficient to cause the Security Deposit to be at a
commercially reasonable level based on said change in financial condition.
Lessor shall not be required to keep the Security Deposit separate from its
general accounts. Within fourteen (14) days after the expiration or termination
of this Lease, if Lessor elects to apply the Security Deposit only to unpaid
Rent, and otherwise within thirty (30) days after the Premises have been vacated
pursuant to Paragraph 7.4(c) below, Lessor shall return that portion of the
Security Deposit not used or applied by Lessor. No part of the Security Deposit
shall be considered to be held in trust, to bear interest or to be prepayment
for any monies to be paid by Lessee under this Lease.

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6.    USE.

      6.1   USE. Lessee shall use and occupy the Premises only for the Agreed
Use, or any other legal use which is reasonably comparable thereto, and for no
other purpose. Lessee shall not use or permit the use of the Premises in a
manner that is unlawful, creates damage, waste, or a nuisance, or that disturbs
owners and/or occupants of, or causes damage to neighboring properties. Lessor
shall not unreasonably withhold or delay its consent to any written request for
a modification of the Agreed Use, so long as the same will not impair the
structural integrity of the improvements on the Premises or the mechanical or
electrical systems therein, is not significantly more burdensome to the
Premises. If Lessor elects to withhold consent, Lessor shall within five (5)
business days after such request give written notification of same, which notice
shall include an explanation of Lessor's objections to the change in use.

      6.2   HAZARDOUS SUBSTANCES. Intentionally omitted.

7.    MAINTENANCE; REPAIRS, UTILITY INSTALLATIONS; TRADE FIXTURES AND
ALTERATIONS.

      7.1   LESSEE'S OBLIGATIONS.

            (a)   IN GENERAL. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance), 6.3 (Lessor's Compliance with Applicable
Requirements), 7.2 (Lessor's Obligations), 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee's sole expense, keep the Premises,
Utility Installations, and Alterations in good order, condition and repair
excluding ordinary wear and tear (whether or not the portion of the Premises
requiring repairs, or the means of repairing the same, are reasonably or readily
accessible to Lessee, and whether or not the need for such repairs occurs as a
result of Lessee's use, any prior use, the elements or the age of such portion
of the Premises), including, but not limited to, all equipment or facilities,
such as plumbing, heating, ventilating, air-conditioning, electrical, lighting
facilities, boilers, pressure vessels, fire protection system, fixtures, walls
(interior and exterior), foundations, ceilings, roofs, floors, windows, doors,
plate glass, skylights, landscaping, driveways, parking lots, fences, retaining
walls, signs, sidewalks and parkways located in, on, or adjacent to the
Premises. Lessee, in keeping the Premises in good order, condition and repair,
shall exercise and perform good maintenance practices, specifically including
the procurement and maintenance of the service contracts required by Paragraph
7.1(b) below. Subject to the provisions of Paragraph 7.1(c), Lessee's
obligations shall include restorations, replacements or renewals when necessary
to keep the Premises and all improvements thereon or a part thereof in good
order, condition and state of repair. Lessee shall, during the term of this
Lease, keep the exterior appearance of the Building in a good condition
consistent with the exterior appearance of other similar facilities of
comparable age and size in the vicinity, including, when necessary the exterior
repairing of the Building. Notwithstanding the foregoing, Lessor shall, prior to
the Start Date, install a new roofing structure and membrane, and Lessor shall
be responsible for prompt and diligent enforcement of any warranty in connection
therewith, which warranty will cover the period stipulated by the roofing vendor
but in no event less than one (1) year. Notwithstanding any contrary provision
of this Lease, Lessee shall not be responsible for the performance or cost of
repair (i) to the extent Lessor has a right of reimbursement from others
(including insurers as provided for in Lessor's property insurance policies),
(ii) of damage caused by the gross negligence or intentional misconduct of
Lessor or Lessor's agents,

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employees, officers, directors or stockholders, or (iii) of the structural
portions of the Premises, which shall be limited to the foundation, floor slabs,
exterior walls (excluding glass, for which Lessee shall be responsible), and
roof structure (unless caused by acts or omissions of Lessee or its agents,
employees or contractors).

            (b)   SERVICE CONTRACTS. Lessee shall, at Lessee's sole expense,
procure and maintain contracts, with copies to Lessor, in customary form and
substance for, and with contractors specializing and experienced in the
maintenance of the following equipment and improvements, if any, if and when
installed on the Premises: (i) HVAC equipment, (ii) fire extinguishing systems,
including fire alarm and/or smoke detection, (iii) landscaping and irrigation
systems, (iv) roof covering and drains, and (v) driveways and parking lots.

            (c)   REPLACEMENT. Subject to Lessee's indemnification of Lessor as
set forth in Paragraph 8.7 below, and without relieving Lessee of liability
resulting from Lessee's failure to exercise and perform good maintenance
practices, if any improvements or equipment, the cost of which to make or
replace would constitute a capital cost under generally accepted accounting
principles (a "Capital Item") cannot be repaired other than at a cost which is
in excess of fifty percent (50%) of the cost of replacing such Capital Items,
then such Capital Items shall be replaced by Lessor, and the cost thereof shall
be prorated between the Parties and Lessee shall only be obligated to pay, each
month during the remainder of the term of this Lease, on the date on which Base
Rent is due, an amount equal to the product of multiplying the cost of such
replacement by a fraction, the numerator of which is one, and the denominator of
which is the number of months of the useful life of such replacement as such
useful life is specified pursuant to Federal Income tax regulations or
guidelines for depreciation thereof (including, interest on the unamortized
balance as is then. commercially reasonable in the judgment of Lessor's
accountants), with Lessee reserving the right to prepay its obligation at any
time.

      7.2   LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 7.1(a) (Lessor's Obligations in General), 9
(Damage or Destruction) and 14 (Condemnation), it is intended by the Parties
hereto that Lessor have no obligation, in any manner whatsoever, to repair and
maintain the Premises, or the equipment therein, all of which obligations are
intended to be that of the Lessee except as expressly set forth herein. It is
the intention of the Parties that the terms of this Lease govern the respective
obligations of the Parties as to maintenance and repair of the Premises, and
they expressly waive the benefit of any statute now or hereafter in effect to
the extent it is inconsistent with the terms of this lease.

      7.3   UTILITY INSTALLATIONS; TRADE FIXTURES; ALTERATIONS.

            (a)   DEFINITIONS; CONSENT REQUIRED. The term "Utility
Installations" refers to all floor and window coverings, air lines, power
panels, electrical distribution, fire protection systems, communication cabling,
lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises.
The term "Trade Fixtures" shall mean Lessee's machinery and equipment that can
be removed, without doing material damage to the Premises. The term
"Alterations" shall mean any modification of the improvements, other than
Utility Installations or Trade Fixtures, whether by addition or deletion.
"Lessee Owned Alterations and/or Utility Installations" are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make any Alterations or

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Utility Installations in, on or about the Premises without Lessor's prior
written consent. Lessee may, however, make non-structural Utility Installations
to the interior of the Premises (excluding the roof) without such consent but
upon notice to Lessor, as long as they are not visible from the outside, do not
involve puncturing, relocating or removing the roof or any existing structural
walls, and the cumulative cost thereof during this Lease as extended does not
exceed Twenty-Six Thousand Dollars ($26,000) for any one project.

            (b)   CONSENT. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. Consent shall be deemed
conditioned upon Lessee's: (i) acquiring all applicable governmental permits,
(ii) furnishing Lessor with copies of both the permits and the plans and
specifications prior to commencement of the work and (iii) compliance with all
conditions of said permits and other Applicable Requirements in a prompt and
expeditious manner. Any Alterations or Utility Installations shall be performed
in a workmanlike manner with good and sufficient materials. Lessee shall
promptly upon completion furnish Lessor with as-built plans and specifications
if such have been prepared in connection with the Alteration or Utility
Installation. For work which costs an amount equal to more than $50,000.00,
Lessor may condition its consent upon Lessee providing a lien and completion
bond in an amount equal to one and one-half times the estimated cost of such
Alteration or Utility Installation. Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for Lessee
at or for use in, on or about the Premises, which claims are or may be secured
by any mechanics' or materialmens' liens against the Premises or any interest
therein. If a mechanics' or materialmen's lien is filed against the Premises,
Lessee shall be required immediately to remove the lien from title. Failure so
to do shall be a material default under this Lease.

            (c)   INDEMNIFICATION. Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for Lessee
at or for use on the Premises, which claims are or may be secured by any
mechanic's or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than ten (10) days' notice prior to the
commencement of any material work in, on or about the Premises, and Lessor shall
have the right to post notices of non-responsibility. As used herein, the
reference to ,,material work" shall mean and refer to work that costs more than
Ten Thousand Dollars ($10,000.00). If Lessee shall contest the validity of any
such lien, claim or demand, then Lessee shall, at its sole expense defend and
protect itself, Lessor and the Premises against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof. If Lessor shall require, Lessee shall furnish a surety bond
in an amount equal to one and one-half times the amount of such contested lien,
claim or demand, indemnifying Lessor against liability for the same. If Lessor
elects to participate in any such action, Lessee shall pay Lessor's attorneys'
fees and costs.

      7.4   OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION.

            (a)   Lessee shall not, without Lessor's prior written consent, make
any roof penetrations. Lessor shall have the right and sole discretion to
approve the location and form of any roof penetrations. Lessor may require at
the time Lessor consents to the installation of an Alteration of Utility
Installation (if consent is required) or upon expiration or earlier termination
of this Lease (if consent is not required) that Lessee remove any or all of said
Alterations or

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Utility Installations (but not the Interior Improvements constructed in
accordance with Exhibit B) at the expiration of the Term, and restore the
Premises to their prior condition. Should Lessee make any Alterations or Utility
Installations without the prior written approval of Lessor, Lessor may required
that Lessee immediately remove all or any of the same and restore the Premises
to their prior condition. The immediately preceding two sentences shall survive
the expiration or earlier termination of this Lease.

            (b)   Intentionally Omitted.

            (c)   Intentionally Omitted.

            (d)   Unless Lessor requires their removal, as set forth in
Paragraph 7.3(a), all Alterations and Utility Installations (whether or not such
Utility Installations constitute trade fixtures of Lessee) that may be made or
placed on the Premises shall become the property of Lessor upon termination of
this Lease and remain upon and be surrendered with the Premises at the
expiration of the Term. Notwithstanding the provisions of this Paragraph 7.4(d),
Lessee's machinery and equipment, other than that which is affixed to the
Premises so that it cannot be removed without material damage to the Premises,
shall remain the property of Lessee and may be removed by Lessee subject to the
provisions of Paragraph 7.4(e).

            (e)   SURRENDER/RESTORATION. Lessee shall surrender the Premises by
the Expiration Date or any earlier termination date, with all of the
improvements, parts and surfaces thereof broom clean and free of debris, and in
good operating order, condition and state of repair, ordinary wear and tear
excepted. "Ordinary wear and tear" shall not include any damage or deterioration
that would have been prevented by good maintenance practice. Lessee shall repair
any damage occasioned by the installation, maintenance or removal of Trade
Fixtures, Lessee Owned Alterations and/or Utility Installations, furnishings,
and equipment as well as the removal of any storage tank installed by or for
Lessee, and the removal, replacement, or remediation of any soil, material or
groundwater contaminated by Lessee. Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee. The failure by Lessee to timely vacate
the Premises pursuant to this Paragraph 7.4(c) without the express written
consent of Lessor shall constitute a holdover under the provisions of Paragraph
26 below.

8.    INSURANCE; INDEMNITY.

      8.1   PAYMENT FOR INSURANCE. Lessee shall pay for all insurance required
under Paragraphs 8.2(a) and 8.2(b) except to the extent of the cost attributable
to liability insurance carried by Lessor under Paragraph 8.2(b) in excess of
$2,000,000 per occurrence. Premiums for policy periods commencing prior to or
extending beyond the Lease term shall be prorated to correspond to the Lease
term. Payment shall be made by Lessee to Lessor within ten (10) days following
receipt of an invoice.

      8.2   LIABILITY INSURANCE.

            (a)   CARRIED BY LESSEE. Lessee shall obtain and keep in force a
Commercial General Liability Policy of Insurance protecting Lessee and Lessor
against claims for bodily injury, personal injury and property damage based upon
or arising out of the ownership, use, occupancy or maintenance of the Premises
and all areas appurtenant thereto. Such insurance

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shall be on an claims made basis providing single limited coverage in an amount
not less than $2,000,000 per occurrence with an "Additional Insured-Managers or
Lessors of Premises Endorsement" and contain the "Amendment of the Pollution
Exclusion Endorsement" for damage caused by heat, smoke or fumes from a hostile
fire. The Policy shall not contain any intra-insured exclusions as between
insured persons or organizations, but shall include coverage for liability
assumed under this Lease as an "insured contract" for the performance of
Lessee's indemnity obligations under this Lease. The limits of said insurance
shall not, however, limit the liability of Lessee nor relieve Lessee of any
obligation hereunder. All insurance carried by Lessee shall be primary to and
not contributory with any similar insurance carried by Lessor, whose insurance
shall be considered excess insurance only.

            (b)   CARRIED BY LESSOR. Lessor shall maintain liability insurance
as described in Paragraph 8.2(a), in addition to, and not in lieu of, the
insurance required to be maintained by Lessee. Lessee shall not be named as an
additional insured therein.

      8.3   PROPERTY INSURANCE - BUILDING, IMPROVEMENTS AND RENTAL VALUE.

            (a)   BUILDING AND IMPROVEMENTS. The Insuring Party shall obtain and
keep in force a policy or policies in the name of Lessor, with loss payable to
Lessor, any ground lessor, and to any Lender(s) insuring loss or damage to the
Premises. The amount of such insurance shall be equal to the full replacement
cost of the Premises, as the same shall exist from time to time, or the amount
required by any Lenders, but in no event more than the commercially reasonable
and available insurable value thereof. If Lessor is the Insuring Party, however,
Lessee Owned Alterations and Utility Installations, Trade Fixtures, and Lessee's
personal property shall be insured by Lessee under Paragraph 8.4 rather than by
Lessor. If the coverage is available and commercially appropriate, such policy
or policies shall insure against all risks of direct physical loss or damage
(except the perils of flood and/or earthquake unless ), including coverage for
debris removal and the enforcement of any Applicable Requirements requiring the
upgrading, demolition, reconstruction or replacement of any portion of the
Premises as the result of a covered loss. Said policy or policies shall also
contain an agreed valuation provision in lieu of an coinsurance clause, waiver
of subrogation, and inflation guard protection causing an increase in the annual
property insurance coverage amount by a factor of not less than the adjusted
U.S. Department of Labor Consumer Price Index for All Urban Consumers for the
city nearest to where the Premises are located. If such insurance coverage has a
deductible clause, the deductible amount shall not exceed $1,000 per occurrence,
and Lessee shall be liable for such deductible amount in the event of an Insured
Loss. At Lessor's election, such insurance shall include earthquake insurance.
Any deductible payable in connection with any earthquake insurance shall be paid
for by Lessee.

            (b)   RENTAL VALUE. Intentionally omitted.

            (c)   ADJACENT PREMISES. Intentionally omitted.

      8.4   LESSEE'S PROPERTY/BUSINESS INTERRUPTION INSURANCE.

            (a)   PROPERTY DAMAGE. Lessee shall obtain and maintain insurance
coverage on all of Lessee's personal property, Trade Fixtures, and Lessee Owned
Alterations and Utility

                                    PAGE 10.
<PAGE>

Installations in the Premises. Such insurance shall be full replacement cost
coverage with a deductible of not to exceed Ten Thousand Dollars ($10,000.00)
per occurrence. The proceeds from any such insurance shall be used by Lessee for
the replacement of personal property, Trade Fixtures and Lessee Owned
Alterations and Utility Installations. Lessee shall provide Lessor with written
evidence that such insurance is in force.

            (b)   BUSINESS INTERRUPTION. Lessee shall obtain and maintain loss
of income and extra expense insurance in amounts as will reimburse Lessee for
direct or indirect loss of earnings attributable to all perils commonly insured
against by prudent lessees in the business of Lessee or attributable to
prevention of access to the Premises as a result of such perils.

            (c)   NO REPRESENTATION OF ADEQUATE COVERAGE. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business operations or
obligations under this Lease.

      8.5   INSURANCE POLICIES. Insurance required herein shall be by companies
duly licensed or admitted to transact business in the state where the Premises
are located, and maintaining during the policy term a "General Policyholders
Rating" of at least B+, V, as set forth in the most current issue of "Best's
Insurance Guide," or such other rating as may be or as otherwise approved by
Lessor in the exercise of its reasonable discretion. Lessee shall not do or
permit to be done anything which invalidates the required insurance policies.
Lessee shall, prior to the Start Date, deliver to Lessor certified copies of
policies of such insurance or certificates evidencing the existence and amounts
of the required insurance. No such policy shall be cancellable except after
thirty (30) days prior written notice to Lessor. Lessee shall, at least thirty
(30) days prior to the expiration of such policies, furnish Lessor with evidence
of renewals or "insurance binders" evidencing renewal thereof, or Lessor may
order such insurance and charge the cost thereof to Lessee, which amount shall
be payable by Lessee to Lessor upon demand. Such policies shall be for a term of
at least one year, or the length of the remaining term of this Lease, whichever
is less. If either Party shall fail to procure and maintain the insurance
required to be carried by it, the other Party may, but shall not be required to,
procure and maintain the same.

      8.6   WAIVER OF SUBROGATION. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and waive
their entire right to recover damages against the other, for loss of or damage
to its property arising out of or incident to the perils required to be insured
against herein. The effect of such releases and waivers is not limited by the
amount of insurance carried or required, or by any deductibles applicable
hereto. The Parties agree to have their respective property damage insurance
carriers waive any right to subrogation that such companies may have against
Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.

      8.7   INDEMNITY. Intentionally omitted.

      8.8   EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or

                                    PAGE 11.
<PAGE>

rain, or from the breakage, leakage, obstruction or other defects or pipes, fire
sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any
other cause, whether the said injury or damage results from conditions arising
upon the Premises or upon other portions of the Building of which the Premises
arc a part, or from other sources or places; provided, however, that this
provision shall in no event exempt Lessor from liability for its own gross
negligence, intentional misconduct or breach of this Lease. Lessor shall not be
liable for any damages arising from any act or neglect of any other tenant of
Lessor. Notwithstanding Lessor's negligence or breach of this Lease, Lessor
shall under no circumstances be liable for injury to Lessee's business or for
any loss of income or profit therefrom.

9.    DAMAGE OR DESTRUCTION.

      9.1   DEFINITIONS.

            (a)   "PREMISES PARTIAL DAMAGE" shall mean damage or destruction to
the improvements on the Premises, other than Lessee Owned Alterations and
Utility Installations, which can reasonably be repaired in six (6) months or
less from the date of the damage or destruction. Lessor shall notify Lessee in
writing within thirty (30) days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.

            (b)   "PREMISES TOTAL DESTRUCTION" shall mean damage or destruction
to the Premises, other than Lessee Owned Alterations and Utility installations
and Trade Fixtures, which cannot reasonably be repaired in six (6} months or
less from the date of the damage or destruction. Lessor shall notify Lessee in
writing within thirty {30) days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.

            (c)   "INSURED LOSS" shall mean damage or destruction to
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which was caused by an event required to be
covered by the insurance described in Paragraph 8.3(a), irrespective of any
deductible amounts or coverage limits involved.

            (d)   "REPLACEMENT COST" shall mean the cost to repair or rebuild
the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of Applicable Requirements, and
without deduction for depreciation.

            (e)   Intentionally omitted.

      9.2   PARTIAL DAMAGE - INSURED LOSS. If a Premises Partial Damage that is
an insured Loss occurs, then Lessor shall, at Lessor's expense, repair such
damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000 or less, and, in such event, Lessor shall make any
applicable Insurance proceeds available to Lessee on a reasonable basis for that
purpose. Notwithstanding the foregoing, if the required insurance was not in
force or the insurance proceeds are not sufficient to effect such repair, the
insuring Party shall promptly contribute the shortage in proceeds (except as to
the deductible which is Lessee's responsibility) as and when required to
complete said repairs. In the

                                    PAGE 12.
<PAGE>

event, however, such shortage was due to the fact that, by reason of the unique
nature of the improvements, full replacement cost insurance coverage was not
commercially reasonable and available, Lessor shall have no obligation to pay
for the shortage in insurance proceeds or to fully restore the unique aspects of
the Premises unless Lessee provides Lessor with the funds to cover same, or
adequate assurance thereof, within ten (10) days following receipt of written
notice of such shortage and request therefor. If Lessor receives said funds or
adequate assurance thereof within said ten (10) day period, the party
responsible for making the repairs shall complete them as soon as reasonably
possible and this Lease shall remain in full force and effect. If such funds or
assurance are not received, Lessor may nevertheless elect by written notice to
Lessee within ten (10) days thereafter to: a. make such restoration and repair
as is commercially reasonable with Lessor paying any shortage in proceeds, in
which case this Lease shall remain in full force and effect; or b. have this
Lease terminate thirty (30) days thereafter. Lessee shall not be entitled to
reimbursement of any funds contributed by Lessee to repair any such damage or
destruction. Premises Partial Damage due to flood or earthquake shall be subject
to Paragraph 9.3, notwithstanding that there may be some Insurance coverage, but
the net proceeds of any such Insurance shall be made available for the repairs
if made by either Party.

      9.3   PARTIAL DAMAGE - UNINSURED LOSS. If a Premises Partial Damage that
is not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense),
Lessor may either: a. repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or b. terminate this Lease by giving written notice to Lessee within
thirty (30) days after receipt by Lessor of knowledge of the occurrence of such
damage. Such termination shall be effective sixty (60) days following the date
of such notice. In the event Lessor elects to terminate this Lease, Lessee shall
have the right within ten (10) days after receipt of the termination notice to
give written notice to Lessor of Lessee's commitment to pay for the repair of
such damage without reimbursement from Lessor. Lessee shall provide Lessor with
said funds or satisfactory assurance thereof within thirty (30) days after
making such commitment. In such event this Lease shall continue in full force
and effect, and Lessor shall proceed to make such repairs as soon as reasonably
possible after the required funds are available. If Lessee does not make the
required commitment, this Lease shall terminate as of the date specified in the
termination notice.

      9.4   TOTAL DESTRUCTION. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs, this Lease shall terminate sixty (60) days
following such Destruction during which time rent shall be abated. If the damage
or destruction was caused by the gross negligence or willful misconduct of
Lessee, Lessor shall have the right to recover Lessor's damages from Lessee,
except as provided in Paragraph 8.6.

      9.5   DAMAGE NEAR END OF TERM. If any time during the last six (6) months
of this Lease there is damage for which the cost to repair exceeds one (1)
month's Base Rent, whether or not an Insured Loss, Lessor and Lessee may
terminate this Lease effective sixty (60) days following the date of occurrence
of such damage by giving a written termination notice to Lessee or Lessor within
thirty (30) days after the date of occurrence of such damage. Notwithstanding
the foregoing, if Lessee at that time has an exercisable option to extend this
Lease or to purchase the Premises, then Lessee may preserve this Lease by (a)
exercising such option and (b) providing Lessor with any shortage in insurance
proceeds (or adequate assurance thereof) needed

                                    PAGE 13.
<PAGE>

to make the repairs on or before the earlier of a. the date which is ten (10)
days after Lessee's receipt of Lessor's written notice purporting to terminate
this Lease, or b. the day prior to the date upon which such option expires. If
Lessee duly exercises such option during such period and provides Lessor with
funds (or adequate assurance thereof) to cover any shortage in insurance
proceeds, Lessor shall, at Lessor's commercially reasonable expense, repair such
damage as soon as reasonably possible and this Lease shall continue in full
force and effect. If Lessee fails to exercise such option and provide such funds
or assurance during such period, then this Lease shall terminate on the date
specified in the termination notice and Lessee's option shall be extinguished.

      9.6   ABATEMENT OF RENT; LESSEE'S REMEDIES.

            (a)   ABATEMENT. In the event of Premises Partial Damage or Premises
Total Destruction or a Hazardous Substance Condition for which Lessee is not
responsible under this Lease, the Rent payable by Lessee for the period required
for the repair, remediation or restoration of such damage shall be abated in
proportion to the degree to which Lessee's use of the Premises is impaired, but
not to exceed the proceeds received from the Rental Value Insurance. Lessor
shall have no liability for any such damage, destruction, remediation, repair or
restoration except as provided herein. If Lessor, solely through its gross
negligence or intentional misconduct, fails to repair or restore the Premises in
accordance with the terms of this Lease and such failure materially impairs
Lessee's use of the Premises, Lessee shall be entitled to rent abatement until
such repairs are made.

            (b)   REMEDIES. If Lessor shall be obligated to repair or restore
the Premises and does not commence, in a substantial and meaningful way, such
repair or restoration in a diligent good faith manner but in no event later than
ninety (90) days after such obligation shall accrue, Lessee may, at any time
prior to the commencement of such repair or restoration, give written notice to
Lessor and to any Lenders of which Lessee has actual notice, of Lessee's
election to terminate this Lease on a date not less than thirty (30) days
following the giving of such notice. If Lessee gives such notice and such repair
or restoration is not commenced within thirty (30) days thereafter, this Lease
shall terminate as of the date specified in said notice. If the repair or
restoration is commenced within said thirty (30) days, this Lease shall continue
in full force and effect. Additionally, either party shall have the right to
terminate this Lease by providing sixty (60) days written notice to the other
party following the date of such damage to the Premises if the repairs to the
Premises cannot be reasonably completed within one hundred twenty (120) days
after the date of such damage. "Commence" shall mean either the unconditional
authorization of the preparation of the required plans, or the beginning of the
actual work on the Premises, whichever first occurs.

      9.7   TERMINATION-ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be
made concerning advance Base Rent and any other advance payments made by Lessee
to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's
Security Deposit as has not been, or is not then required to be, used by Lessor.

      9.8   WAIVE STATUTES. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises with
respect to the termination of this

                                    PAGE 14.
<PAGE>

Lease and hereby waive the provisions of any present or future statute to the
extent inconsistent herewith.

10.   REAL PROPERTY TAXES.

      10.1  DEFINITION OF "REAL PROPERTY TAXES." As used herein, the term "Real
Property Taxes" shall include any form of assessment; real estate, general,
special, ordinary or extraordinary, or rental levy or tax (other than
inheritance, personal income or estate taxes); improvement bond; and/or license
fee imposed upon or levied against any legal or equitable interest of Lessor in
the Premises, Lessor's right to other income therefrom, and/or Lessor's business
of leasing, by any authority having the direct or indirect power to tax and
where the funds are generated with reference to the Building address and where
the proceeds so generated are to be applied by the city, county or other local
taxing authority of a jurisdiction within which the Premises are located. The
term "Real Property Taxes" shall also include any tax, fee, levy, assessment or
charge, or any increase therein, imposed by reason of events occurring during
the term of this Lease, including but not limited to, a change in the ownership
of the Premises. Notwithstanding the foregoing, "Reel Property Taxes" shall not
include any corporate, franchise or estate taxes or taxes on Lessor's income
from all sources.

      10.2

            (a)   PAYMENT OF TAXES. Lessee shall pay the Real Property Taxes
applicable to the Premises during the term of this Lease. Subject to Paragraph
10.2(b), all such payments shall be made at least ten (10) days prior to any
delinquency date. Lessee shall promptly furnish Lessor with satisfactory
evidence that such taxes have been paid. If any such taxes shall cover any
period of time prior to or after the expiration or termination of this Lease,
Lessee's share of such taxes shall be prorated to cover only that portion of the
tax bill applicable to the period that this Lease is in effect, and Lessor shall
reimburse Lessee for any overpayment or, alternatively, at the option of Lessee,
Lessee may deduct the amount of any such overpayment from the next installment
of Rent falling due. If Lessee shall fail to pay any required Real Property
Taxes, Lessor shall have the right to pay the same, and Lessee shall reimburse
Lessor therefor upon demand.

            (b)   ADVANCE PAYMENT. In the event Lessee incurs more than two (2)
late charges on Rent payments in any Lease year, Lessor may, at Lessor's option,
estimate the current Real Property Taxes, and require that such taxes be paid in
advance to Lessor by Lessee, either: a. in a lump sum amount equal to the
installment due, at least twenty (20) days prior to the applicable delinquency
date, or b. monthly in advance with the payment of the Base Rent. If Lessor
elects to require payment monthly in advance, the monthly payment shall be an
amount equal to the amount of the estimated installment of taxes divided by the
number of months remaining before the month in which said installment becomes
delinquent. When the actual amount of the applicable tax bill is known, the
amount of such equal monthly advance payments shall be adjusted as required to
provide the funds needed to pay the applicable taxes. If the amount collected by
Lessor is insufficient to pay such Real Property Taxes when due, Lessee shall
pay Lessor, upon demand, such additional sums as are 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
Breach by Lessee in the performance of its

                                    PAGE 15.
<PAGE>

obligations under this Lease, then any balance of funds paid to Lessor under the
provisions of this Paragraph may at the option of Lessor, be treated as an
additional Security Deposit.

            (c)   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 conclusively determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available.

      10.3  PERSONAL PROPERTY TAXES. Lessee shall pay, prior to delinquency, all
taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee. When possible, Lessee shall cause such property to be assessed and
billed separately from the real property of Lessor. 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's property at the time it pays Real
Property Taxes.

11.   UTILITIES. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied during the
Term to the Premises, together with any taxes thereon. If any such services are
not separately metered to Lessee, Lessee shall pay a reasonable proportion, to
be determined by Lessor, of all charges jointed metered.

12.   ASSIGNMENT AND SUBLETTING.

13.   DEFAULT; BREACH; REMEDIES.

      13.1  DEFAULT; BREACH. A "Default" is defined as a failure by the Lessee
to comply with or perform any of the terms, covenants, conditions or rules under
this Lease. A "Breach" is defined as the occurrence of one or more of the
following Defaults, and the failure of Lessee to cure such Default within any
applicable grace period:

            (a)   The abandonment of the Premises, or the vacating of the
Premises without providing a commercially reasonable level of security, or where
the coverage of the property insurance described in Paragraph 8.3 is jeopardized
as a result thereof, or without providing reasonable assurances to minimize
potential vandalism.

            (b)   The failure of Lessee to make any payment of Rent or any
Security Deposit required to be made by Lessee hereunder, whether to Lessor or
to a third party, when due, to provide reasonable evidence of insurance or
surety bond, or to fulfill any obligation under this Lease which endangers or
threatens life or property, where such failure continues for a period of three
(3) business days following written notice to Lessee.

            (c)   The failure by Lessee to provide (i) reasonable written
evidence of compliance with Applicable Requirements, (ii) the service contracts,
(iii) the rescission of an unauthorized assignment or subletting, (iv) an
Estoppel Certificate, (v) a requested subordination, (vi) evidence concerning
any guaranty and/or Guarantor, (vii) any document requested under Paragraph 42
(easements), or (viii) any other documentation or information which Lessor may
reasonably require of Lessee under the terms of this Lease, where any such
failure continues for a period of fifteen (15) days following written notice to
Lessee.

                                    PAGE 16.
<PAGE>

            (d)   A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
other than those described in subparagraphs 13.1(a), (b) or (c), above, where
such Default continues for a period of thirty (30) days after written notice;
provided, however, that if the nature of Lessee's Default is such that more than
thirty (30) days are reasonably required for its cure, then it shall not be
deemed to be a Breach if Lessee commences such cure within said thirty (30) day
period and thereafter diligently prosecutes such cure to completion.

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

            (f)   The discovery that any financial statement of Lessee or of any
Guarantor given to Lessor was materially false.

      13.2  REMEDIES. Intentionally omitted.

      13.3  INDUCEMENT RECAPTURE. Intentionally omitted.

      13.4  LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee of Rent 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 upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within five (5) days after such amount shall be
due, then, upon notice to Lessee, Lessee shall pay to Lessor a one-time late
charge equal to six percent (6%) of each 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 such late payment. Acceptance of such late
charge by Lessor shall in no event constitute a waiver of Lessee's Default or
Breach with respect to such overdue amount, nor prevent the exercise of 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 Base Rent, then notwithstanding any provision of this Lease to
the contrary, Base Rent shall, at Lessor's option, become due and payable
quarterly in advance.

      13.5  INTEREST. Any monetary payment due Lessor hereunder, other than
late charges, not received by Lessor, when due as to scheduled payments (such as
Base Rent) or within thirty (30) days following the date on which it was due for
non-scheduled payment, shall bear interest from the date when due, as to
scheduled payments, or the thirty-first (31st) day after it was due as to
non-scheduled payments. The interest ("Interest") charged shall be equal to the
prime rate

                                    PAGE 17.
<PAGE>

reported in the Wall Street Journal as published closest prior to the date when
due plus four percent (4%) but shall not exceed the maximum rate allowed by law.
Interest is payable in addition to the potential late charge provided for in
Paragraph 13.4

      13.6  BREACH BY LESSOR.

            (a)   NOTICE OF BREACH. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph, a reasonable
time shall be thirty (30) days after receipt by Lessor, and any Lender whose
name and address shall have been furnished Lessee in writing for such purpose,
of written notice specifying wherein such obligation of Lessor has not been
performed; provided, however, that if the nature of Lessor's obligation is such
that more than thirty (30) days are reasonably required for its performance,
then Lessor shall not be in breach if performance is commenced within such
thirty (30) day period and thereafter diligently pursued to completion and
provided further, that if the nature of Lessor's obligation is such that more
immediate action is needed to avoid injury or expense to Lessee, then a
"reasonable period" for purposes of this paragraph shall be less than thirty
(30) days.

            (b)   Performance by Lessee on Behalf of Lessor. In the event that
neither Lessor nor Lender cures said breach within thirty (30) days after
receipt of said notice, or if having commenced said cure they do not diligently
pursue it to completion, then Lessee may elect to cure said breach at Lessee's
expense and offset from Rent an amount equal to such expense, so long as the
amount of such expense is commercially reasonable. Lessee shall document the
cost of said cure and supply said documentation to Lessor.

14.   CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(collectively "Condemnation"), this Lease shall terminate as to the part taken
as of the date the condemning authority takes title or possession,-whichever
first occurs. If more than ten percent (10%) of any building portion of the
premises, or more than twenty-five percent (25%) of the land area portion of the
premises not occupied by any building, is taken by Condemnation, Lessee may, at
Lessee's option, to be exercised in writing within ten (10) days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice, within ten (10) days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in proportion
to the reduction in utility of the Premises caused by such Condemnation.
Condemnation awards and/or payments shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold, the value of the part taken, or for severance damages; provided,
however, that Lessee shall be entitled to any compensation for Lessee's
relocation expenses, loss of business goodwill and/or Trade Fixtures, without
regard to whether or not this Lease is terminated pursuant to the provisions of
this Paragraph. All Alterations and Utility Installations made to the Premises
by Lessee, for purposes of Condemnation only, shall be considered the property
of the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefor. In the event that this Lease is not terminated by reason of
the Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.

                                    PAGE 18.
<PAGE>

15.   BROKER'S FEE. Intentionally omitted.

16.   ESTOPPEL CERTIFICATES.

            (a)   Each Party (as "Responding Party") shall within ten'(10)
business days after written notice from the other Party (the "Requesting Party")
execute, acknowledge and deliver to the Requesting Party a statement in writing
in form similar to the then most current "Estoppel Certificate" form published
by the American Industrial Real Estate Association, plus such additional
information, confirmation and/or statements as may be reasonably requested by
the Requesting Party.

            (b)   If the Responding Party shall fail to execute or deliver the
Estoppel Certificate within such ten (10) day period, the Requesting Party may
execute an Estoppel Certificate stating that: (i) the Lease is in full force and
effect without modification except as may be represented by the Requesting
Party, (ii) there are no uncured defaults in the Requesting Party's performance,
and (iii) if Lessor is the Requesting Party, not more than one (1) month's rent
has been paid in advance. Prospective purchasers and encumbrancers may rely upon
the Requesting Party's Estoppel Certificate, and the Responding Party shall be
estopped from denying the truth of the facts contained in said Certificate.

            (c)   If Lessor desires to finance, refinance, or sell the Premises,
or any part thereof, Lessee and all Guarantors shall deliver to any potential
lender or purchaser designated by Lessor such then currently existing financial
statements as may be reasonably required by such lender or purchaser, including
but not limited to Lessee's audited financial statements for the past three (3)
years. All such financial statements shall be received by Lessor and such lender
or purchaser in confidence and shall be used only for the purposes herein set
forth.

17.    DEFINITION OF LESSOR. The term "Lessor" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or, if
this is a sublease, of the Lessee's interest in the prior lease. In the event of
a transfer of Lessor's title or interest in the Premises or this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such
transfer or assignment and delivery of the Security Deposit, as aforesaid, the
prior Lessor shall be relieved of all liability with respect to the obligations
and/or covenants under this Lease thereafter to be performed by the Lessor.
Subject to the foregoing, the obligations and/or covenants in this Lease to be
performed by the Lessor shall be binding only upon the Lessor as hereinabove
defined. Notwithstanding the above, and subject to the provisions of Paragraph
20 below, the original Lessor under this Lease, and all subsequent holders of
the Lessor's interest in this Lease shall remain liable and responsible with
regard to the potential duties and liabilities of Lessor pertaining to Hazardous
Substances as outlined in Paragraph 5.3 or the Addendum hereto.

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

19.   DAYS. Unless otherwise specifically indicated to the contrary, the word
"Days" as used in this Lease shall mean and refer to calendar days.

                                    PAGE 19.
<PAGE>

20.   LIMITATION ON LIABILITY. Subject to the provisions of Paragraph 17 above,
the obligations of Lessor under this Lease shall not constitute personal
obligations of Lessor, the individual partners of Lessor or its or their
individual partners, directors, officers or shareholders, and Lessee shall look
to the Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse
against the individual partners of Lessor, or its or their individual partners,
directors, officers or shareholders, or any of their personal assists for such
satisfaction.

21.   TIME OF ESSENCE. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.

22.   NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and is relying solely upon its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party. The liability (including court costs and Attorneys'
fees), of any Broker with respect to negotiation, execution, delivery or
performance by either Lessor or Lessee under this Lease or any amendment or
modification hereto shall be limited to an amount up to the fee received by such
Broker pursuant to this Lease; provided, however, that the foregoing limitation
on each Broker's liability shall not be applicable to any gross negligence or
willful misconduct of such Broker.

23.   NOTICES.

      23.1  NOTICE REQUIREMENTS. All notices required or permitted by this Lease
shall be in writing and may be delivered in person (by hand or by courier) or
may be sent by regular, certified or registered mail or U.S. Postal Service
Express Mail, with postage prepaid, or by facsimile transmission, and shall be
deemed sufficiently given if served in a manner specified in this Paragraph 23.
The addresses noted adjacent to a Party's signature on this Lease shall be that
Party's address for delivery or mailing of notices. Either Party may be written
notice to the other specify a different address for notice. A copy of all
notices to Lessor shall be concurrently transmitted to such party or parties at
such addresses as Lessor may from time to time hereafter designate in writing
and to Lessee's general counsel.

      23.2  DATE OF NOTICE. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail the notice shall be deemed given forty-eight (48) hours after
the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that
guarantee next day delivery shall be deemed given twenty-four (24) hours after
delivery of the same to the Postal Service or courier. Notices transmitted by
facsimile transmission or similar means shall be deemed delivered upon telephone
confirmation of receipt, provided a copy is also delivered via delivery or mail.
If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed
received on the next business day.

                                    PAGE 20.
<PAGE>

24.   WAIVERS. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or of any other term, covenant or condition hereof. 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 or similar
act by Lessee, or be construed as the basis of an estoppel to enforce the
provision or provisions of this Lease requiring such consent. The acceptance of
Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any
payment by Lessee may be accepted by Lessor on account of moneys or damages due
Lessor, notwithstanding any qualifying statements or conditions made by Lessee
in connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor at
or before the time of deposit of such payment.

25.   RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees applicable thereto.

26.   NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee holds over, then the Base Rent shall be increased to
one hundred fifty percent (150%) of the Base Rent applicable during the month
immediately preceding the expiration or termination. Nothing contained herein
shall be construed as consent by Lessor to any holding over by Lessee.

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

28.   COVENANTS AND CONDITIONS; CONSTRUCTION OF AGREEMENT. All provisions of
this Lease to be observed or performed by Lessee and Lessor are both covenants
and conditions. In construing this Lease, all headings and titles are for the
convenience of the parties only and shall not be considered a part of this
Lease. Whenever required by the context, the singular shall include the plural
and vice versa. This Lease shall not be construed as if prepared by one of the
parties, but rather according to its fair meaning as a whole, as if both parties
had prepared it.

29.   BINDING EFFECT/CHOICE OF LAW. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.

30.   SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.

      30.1  SUBORDINATION. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed upon the Premises, to any and a11 advances made on the security
thereof, and to all renewals, modifications, and extensions thereof. Lessee
agrees that the holders of any such Security Devices (in this Lease together
referred to as "Lender") shall have no liability or obligation to perform any of
the obligations of

                                    PAGE 21.
<PAGE>

Lessor under this Lease. Any Lender may elect to have this Lease and/or any
Option granted hereby superior to the lien of its Security Device by giving
written notice thereof to Lessee, whereupon this Lease and such Options shall be
deemed prior to such Security Device, notwithstanding the relative dates of the
documentation or recordation thereof.

      30.2  ATTORNMENT. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership; (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor, or (iii) be bound by
prepayment of more than one (1) month's rent.

      30.3  NON-DISTURBANCE. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance
Agreement provides that Lessee's possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in Breach hereof and attorns to the record owner of the
Premises. Further, within sixty (60) days after the execution of this Lease,
Lessor shall use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder of any pre-existing Security Device which is secured
by the Premises. In the event that Lessor is unable to provide the
Non-Disturbance Agreement within said sixty (60) days, then Lessee may, at
Lessee's option, directly contact Lessor's lender and attempt to negotiate for
the execution and delivery of a Non-Disturbance Agreement.

      30.4  SELF-EXECUTING. The agreements contained in this Paragraph 30 shall
be effective without the execution of any further documents; provided, however,
that, upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of the Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance' Agreement provided for herein.

31.   ATTORNEYS' FEES. If any Party or Broker brings an action or proceeding
involving the Premises to enforce the terms hereof or to declare rights
hereunder, the Prevailing Party (as hereafter defined) in any such proceeding,
action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such
fees may be awarded in the same suit or recovered in a separate suit, whether or
not such action or proceeding is pursued to decision or judgment. The term,
"Prevailing Party" shall include, without limitation, a Party or Broker who
substantially obtains or defeats the relief sought, as the case may be, whether
by compromise, settlement, judgment, or the abandonment by the other Party or
Broker of its claim or defense. The attorneys'-fees award shall not be computed
in accordance with any court fee schedule, but shall be such as to fully
reimburse all attorneys' fees reasonably incurred. In addition, Lessor shall be
entitled to attorneys' fees, costs and expenses incurred in the preparation and
service of notices of Default and consultations in connection therewith, whether
or not a legal action is subsequently commenced in connection with such Default
or resulting Breach.

                                    PAGE 22.
<PAGE>

32.   LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise upon twenty-four (24) hours' notice for the purpose of
showing the same to prospective purchasers, lenders, or lessees, and making such
alterations, repairs, improvements or additions to the Premises as Lessor may
deem necessary, subject to Lessee's reasonable security requirements. All such
activities shall be without abatement of rent or liability to Lessee. Lessor may
at any time place on the Premises any ordinary "For Sale" signs and Lessor may
during the last six (6) months of the term hereof place on the Premises an
ordinary "For Lease" signs. Lessee may at any time place on or about the
Premises any ordinary "For Sublease" sign. Lessor shall perform all such
inspections, improvements, alterations and repairs in a manner reasonably
intended to cause minimal disruption to Lessee's business activities in and use
of the Premises.

33.   AUCTIONS. Lessee shall not conduct, nor permit to be conducted, any
auction upon the Premises without Lessor's prior written consent. Lessor shall
not be obligated to exercise any standard of reasonableness in determining
whether to permit an auction.

34.   SIGNS. Except for ordinary "For Sublease" signs, Lessee shall not place
any sign upon the Premises without Lessor's prior written consent. Lessor shall
give such consent so long as the signs are in compliance with applicable city
ordinances and standards. All signs must comply with all Applicable
Requirements.

35.   TERMINATION; MERGER. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenancies. Lessor's failure within ten (10) days following any such
event to elect to the contrary by written notice to the holder of any such
lesser interest, shall constitute Lessor's election to have such event
constitute the termination of such interest.

36.   CONSENTS. Except as otherwise provided herein, wherever in this Lease the
consent of a Party is required to an act by or for the other Party, such consent
shall not be unreasonably withheld or delayed. Lessor's actual reasonable costs
and expenses (including but not limited to architects', attorneys', engineers'
and other consultants' fees) incurred in the consideration of, or response to, a
request by Lessee for any Lessor consent, including but not limited to consents
to an assignment, a subletting or the presence or use of a Hazardous Substance,
shall be paid by Lessee upon receipt of an invoice and supporting documentation
therefor. Lessor's consent to any act, assignment or subletting shall not
constitute an acknowledgment that no Default or Breach by Lessee of this Lease
exists, nor shall such consent bye deemed a waiver of any then existing Default
or Breach, except as may be otherwise specifically stated in writing by Lessor
at the time of such consent. The failure to specify herein any particular
condition to Lessor's consent shall not preclude the imposition by Lessor at the
time of consent of such further or other conditions as are then reasonable with
reference to the particular matter for which consent is being given. In the
event that either party disagrees-with any determination made by the other
hereunder and reasonably requests the reasons for such determination, the
determining party shall furnish its reasons in writing and in reasonable detail
within ten (10) business days following such request.

                                    PAGE 23.
<PAGE>

37.   OPTIONS.

      37.1  DEFINITION. "Option" shall mean: (a) the right to extend the term of
or renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (b) the right of first refusal or first offer to lease
either the Premises or other property of Lessor; (c) the right to purchase or
the right of first refusal to purchase the Premises or other property of Lessor.

      37.2  Multiple Options. In the event that Lessee has any multiple Options
to extend or renew this Lease, a later Option cannot be exercised unless the
Prior Options have been validly exercised.

      37.3  Effect of Default on Options.

            (a)   Lessee shall have no right to exercise an Option: (i) during
the period commencing with the giving of any notice of Default and continuing
until said Default is cured, (ii) during the period of time any Rent is overdue
and unpaid (without regard to whether notice thereof is given Lessee), (iii)
during the time Lessee is in Breach of this Lease, or (iv) in the event that
Lessee has been given in good faith three (3) or more notices of separate
monetary Default, whether or not the Defaults are cured, during the twelve (12)
month period immediately preceding the exercise of the Option.

            (b)   The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a).

            (c)   An Option shall terminate and be of no further force or
effect, notwithstanding Lessee's due and timely exercise of the Option, if,
after such exercise and prior to the commencement of the extended term, (i)
Lessee fails to pay Rent for a period of thirty (30) days after such Rent
becomes due (without any necessity of Lessor to give notice thereof), (ii)
Lessor in good faith gives to Lessee three (3) or more notices of separate
monetary Default during any twelve (12) month period, whether or not the
Defaults are cured, or (iii) if Lessee commits a Breach of this Lease.

38.   MULTIPLE BUILDINGS. If the Premises are a part of a group of buildings
controlled by Lessor, Lessee agrees that it will observe all reasonable rules
and regulations which Lessor may make from time to time for the management,
safety, and care of said properties; including the care and cleanliness of the
grounds and including the parking, loading and unloading of vehicles, and that
Lessee will pay its fair share of common expenses incurred in connection
therewith.

39.   Security Measures. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.

40.   Reservations. Lessor reserves to itself the right, from time to time, to
grant, without the consent or joinder of Lessee, such assessments, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such

                                    PAGE 24.
<PAGE>

easements, rights, dedications, maps and restrictions do not unreasonably
interfere with the use of the Premises by Lessee. Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate any such easement rights,
dedication, map or restrictions.

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

42.   AUTHORITY. If either Party hereto is a corporation, trust, limited
liability company, partnership, or similar entity, each individual executing
this Lease on behalf of such entity represents and warrants that he or she is
duly authorized to execute and deliver this Lease on its behalf. Each party
shall, within thirty (30) days after request, deliver to the other party
satisfactory evidence of such authority.

43.   CONFLICT. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the typewritten
or handwritten provisions.

44.   OFFER. Preparation of this Lease by either Party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.

45.   AMENDMENTS. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably in
connection with the obtaining of normal financing or refinancing of the
Premises.

46.   MULTIPLE PARTIES. If more that one person or entity is named herein as
either Lessor or Lessee, such multiple Parties shall have joint and several
responsibility to comply with the terms of this Lease.

47.   MEDIATION AND ARBITRATION OF DISPUTES. An Addendum requiring the Mediation
and/or the Arbitration of all disputes between the Parties and/or Brokers
arising out of this Lease is (x) is not attached to this Lease.

      LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH
TERM AND PROVISION CONTAINED HEREIN, AND BY THE 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.

                                    PAGE 25.
<PAGE>

ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE BY ANY BROKER AS
TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE
TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO.

1.   SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

2.   RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF
THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO. THE
POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE
STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE
SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.

The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.

Executed at:  Menlo Park, CA               Executed at:  Mountain View, CA
            --------------------------                 -------------------------

On:  July 31, 1998                         On:  July 27, 1998
   -----------------------------------        ----------------------------------

By LESSOR:                                 By LESSEE:

Clint S. Cartier                           Intrabiotics Pharmaceuticals, Inc.
--------------------------------------     -------------------------------------

Esther Family Trust
--------------------------------------     -------------------------------------

By:  /s/ Clint S. Cartier                  By:  /s/ Kenneth J. Kelley
--------------------------------------     -------------------------------------

Name Printed:  Clint S. Cartier            Name Printed:  Kenneth J. Kelley
             -------------------------                  ------------------------

Title:  Trustee                            Title:  President and CEO
      --------------------------------           -------------------------------

By:  /s/ Esther Cartier                    By:  /s/ Janet I. Swearson
   -----------------------------------        ----------------------------------

Name Printed:  Esther Cartier              Name Printed:  Janet I. Swearson
             -------------------------                  ------------------------

Title:  Trustee                            Title:  Vice President & CFO
      --------------------------------           -------------------------------

Address:  1330 University Drive            Address:  1245 Terra Bella Ave.
        ------------------------------             -----------------------------

Menlo Park, CA 94025                       Mountain View CA
--------------------------------------     -------------------------------------

Telephone:  (650) 325-1604                 Telephone:  (650) 526-6800
          ----------------------------               ---------------------------

Facsimile:                                 Facsimile:  (650) 969-0663
          ----------------------------               ---------------------------

Federal ID No:  ###-##-####                Federal ID No:  94-3200380
              ------------------------                   -----------------------

                                    PAGE 26.
<PAGE>

                                   ADDENDUM TO

                         STANDARD INDUSTRIAL/COMMERCIAL

                           SINGLE-TENANT LEASE -- NET

      Addendum to the Standard Industrial Commercial Single-Lessee Lease dated
_________________, 1998, by and between Clint S. Carter and Esther Carter Family
Trust, as Lessor, and IntraBiotics Pharmaceuticals, Inc., a Delaware
corporation, as Lessee.

      1.    BASS RENT SCHEDULE: The following, monthly Base Rent Schedule shall
apply during the term of the Lease:

              Months 01-12:                      $35,100.00
              Months 13-24:                      $35,540.00
              Months 25-36:                      $37,980.00
              Months 37-48:                      $39,420.00
              Months 49-60:                      $41,040.00
              Months 60-end of term:             $37,346.40

      2.    TENANT IMPROVEMENT ALLOWANCE: Included in the Base Rent, Lessor
shall provide to Lessee an Initial Interior Improvement Allowance of $270,000.00
in accordance with Interior Improvement Agreement (Exhibit "B"). Lessee shall
install and construct the "Tenant Improvements" (as defined in Exhibit "B"
hereto) according to the terms, conditions, criteria and provisions set forth in
said Exhibit "B"." Lessor and Lessee hereby agree to and shall be bound by the
terms, conditions and provisions of Exhibit "B".

      3.    COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT: Lessor hereby
represents that the rest rooms that are part of the building shell as of the
date hereof are in compliance with the Americans with Disabilities Act. Lessor,
at Lessor's sole cost and expense, shall be responsible for compliance with ADA
regulations regarding the path of travel from parking area to the main entrance
of the Premises upon execution of the Lease. Except as aforesaid, Lessee, at
Lessee's sole cost and expense, shall be responsible for compliance with all ADA
regulations regarding the interior of the Premises occupied by Lessee.

      4.    ASSIGNMENT OR SUBLEASE:

            A.    Lessor's Consent Required: Lessee shall not voluntarily or by
operation of law assign, 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. Lessor shall not unreasonably withhold its
consent to an assignment or sublet, provided the proposed assignee or sublessee
is reasonably satisfactory to Lessor as to credit and will occupy and use the
Premises for the same purposes specified in Paragraph 1. Any attempted
assignment, transfer, mortgage, encumbrance or subletting without such consent
shall constitute a Default of this Lease and be voidable at Lessor's election.
Lessee shall pay to Lessor Five Hundred Dollars ($500) as compensation for
expenses in connection with any request by Lessee for Lessor's consent, but only
if Lessee proposes an assignment or sublease of the entire Premises.
Additionally, Lessee

                                    PAGE 1.
<PAGE>

shall have the right to withdraw its proposed assignment or' sublease if Lessor
notifies Less of its desire to recapture the Premises.

      Whether or not Lessor consents to any assignment or subletting, no such
assignment or subletting shall (1) be effective without the express written
assumption by such assignee or sublessee of the obligations of Lessee under this
Lease, (2) release Lessee of any obligations hereunder, or (3) alter the primary
liability of Lessee for the payment of Rent and for the performance of any other
obligations to be performed by Lessee.

      Lessor may accept Rent or performance of Lessee's obligations from any
person other than Lessee pending approval or disapproval of such an assignment
or sublease. Neither a delay in the approval or disapproval of such assignment
or subleasin9 nor the acceptance of Rent or performance shall constitute a
waiver or estoppel of Lessor's right to exercise its remedies for Lessee's
default or breach.

      Lessor's consent to any assignment or subletting shall not constitute a
consent to any subsequent assignment or subletting.

      In the event of any default or breach by Lessee, any sublessee or any
assignee, Lessor may proceed directly against Lessee, any such sublessee or
assignee or anyone else responsible for the performance of Lessee's obligations
under this Lease without first exhaustin9 Lessor's remedy against any other
person or entity responsible therefor to Lessor, or any security held by Lessor.

      Any assignee of or sublessee under this Lease shall by reason of
accepting such assignment or entering into such sublease be deemed to have
assumed and agreed to conform and comply with each and every term, covenant and
condition and obligation herein to be observed or performed by Lessee during the
term of said assignment or sublease, other than such obligations as are contrary
to or inconsistent with the provisions of an assignment or sublease to which
Lessor has specifically consented in writin9.

      Notwithstanding the foregoing and subject to any proposed assignee's
demonstrating to Lessor's reasonable satisfaction either that (1) that said
proposed assignee's net worth at the time of such assignment is equal to or
greater than Lessee's then net worth or (2) in each of the three (3) years prior
to said proposed assignment, said proposed assignee's fund balance or retained
earnings were equal to or greater than three (31 times the then-current Rent
hereunder, Lessee may assign this Lease or sublease the Premises without
Lessor's consent, and the provisions of this Section 4 of this Addendum shall
not apply to any transfer or assignment of this Lease, the Premises or any part
thereof (i) to any parent or subsidiary of Lessee, to any parent or subsidiary
of a parent or subsidiary of Lessee or to any other affiliate of Lessee, (ii) to
any entity which merges or consolidates with or acquires Lessee, or (iii) to any
entity which acquires all or substantially all of the assets of Lessee. As used
herein, the term "affiliate of Lessee" shall mean and refer to any entity that
controls, is controlled by or is under common control with Lessee.

            B.    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

                                    PAGE 2.
<PAGE>

acceptance of Rent by Lessor from any other person shall not be deemed to be a
waiver by Lessor of any provision hereof. Consent to one assignment or
subletting shall not be deemed consent to any subsequent assignment or
subletting.

            C.    RECAPTURE OF PREMISES: In connection with any proposed
assignment or sublease, Lessee shall submit to Lessor in writing (i) the name of
the proposed assignee or sublessee, (ii) such information as to its financial
responsibility and standing as Lessor may reasonably require, and (iii) all of
the terms and conditions upon which the proposed assignment or subletting is to
be made. Lessor shall have an option to cancel and terminate this Lease with
respect to such portion of the Premises that is to be assigned or sublet. Lessor
may exercise said option in writing within twenty (20) days after its receipt
from Lessee of such request to assign or sublease the Premises. If Lessor shall
exercise its option, Lessee shall surrender possession of the entire Premises,
or the portion thereof which is the subject of the option. If this Lease is
cancelled as to a portion of the Premises only, the Rent after the date of
cancellation shall be reduced in the proportion that the floor area of the
cancelled portion bears to the total floor area of the Premises.

            D.    EXCESS SUBLEASE RENTAL: If, on account of or in connection
with any assignment or sublease, Lessee receives rent or other consideration in
excess of the Rent called for hereunder, or in the case of the sublease of a
portion of the Premises, in excess of the pro rata Rent based on the floor area
of such portion, after appropriate adjustments to assure all other payments
called for hereunder are appropriately taken into account, Lessee shall pay to
Lessor, after first deducting all costs associated with the Subleasing of the
Premises including but not limited to legal fees, leasing commissions, Lessee
improvements, etc., fifty percent (50%) of the excess of such payment of rent or
other consideration received by Lessee promptly after its receipt.

5.    HAZARDOUS MATERIALS:

            A.    NO HAZARDOUS MATERIALS ON LEASED PREMISES: In absence of prior
written consent therefor by Lessor, Lessee shall not use, generate, store or
dispose of, or allow others to use, generate, store or dispose of, on or about
the Premises any substance, material or waste that is or becomes designated,
classified or regulated as "toxic" or "hazardous" or a "pollutant" (including,
but not limited to, asbestos, lead-based paint, petroleum or petroleum products)
or that is or becomes similarly designated, classified or regulated under any
Hazardous Materials law. Notwithstanding the foregoing, however, Lessee shall be
entitled to store and use on or about the Premises reasonable quantities of
materials commonly used for cleaning purposes in business offices so long as
such use and storage complies with all Hazardous Materials Laws. For purposes of
this Lease, "Hazardous Materials Laws" means any law, statute, ordinance or
regulation pertaining to health, industrial hygiene or the environment
including, but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), Resources Conservation and
Recovery Act of 1976 ("RCRA"), or any other federal, state, county or municipal
law, ordinance or regulation. Lessee shall, at its sole cost and expense, comply
with all Hazardous Materials Laws during the term hereof. Notwithstanding the
foregoing, Lessee shall have no obligations with respect to Hazardous Materials
or other materials on, in or under the Premises (including the parking and
landscaped areas) as of the Commencement date ("Pre-existing Hazardous
Materials") except to the extent the acts or

                                    PAGE 3.
<PAGE>

omissions of Lessee, Lessee's employees, officers, directors, agents and
contractors exacerbate the nature or extent of such Pre-existing Hazardous
Materials. Except to the extent of such exacerbation, Pre-existing Hazardous
Materials shall be entirely the responsibility of Lessor and no costs or
expenses incurred in connection therewith shall be Rent or otherwise
reimbursable by Lessee.

            B.    LESSEE'S COMPLIANCE: In the event of any release by Lessee, or
Lessee's employees, officers, directors or agents, on or into the Premises or
into the soil or groundwater under the Premises. of any Hazardous Materials
during the term, Lessee agrees to comply, at its sole cost and expense, with all
laws, regulations, ordinances and orders of any federal, state or local agency
relating to the monitoring or remediation of such Hazardous Materials.

            C.    LESSEE LIABILITY FOR HAZARDOUS MATERIALS: Lessee shall be
liable to Lessor for any and all damages caused by Lessee's breach of the
foregoing covenants. Except as provided in Subsection 7.G, below, Lessor shall
not be liable for any claims, damages or losses due to the effects of Hazardous
Materials on the Premises. This provision shall survive the expiration or
earlier termination of the Lease.

            D.    NOTIFICATION OF COMMUNICATIONS: Lessor and Lessee each agree
promptly to notify the other party of, and provide copies of, any communication
received from any governmental entity concerning Hazardous Materials or the
violation or alleged violation of Hazardous Materials Laws that relate to the
Premises.

            E.    TESTING: If Lessor requires testing to ascertain whether there
has been any violation of Hazardous Materials Laws on the Premises, then, upon
prior written Notice to Lessee, Lessor may require any such testing that is then
customarily used for that purpose. Such testing shall be performed at Lessor's
expense if Lessee is not in violation of any Hazardous Materials Laws or in
breach of this Section 5 of this Addendum.

            F.    LESSEE INDEMNIFICATION OF LESSOR FOR HAZARDOUS MATERIALS:
Except as provided in Subsection 7.G, below, Lessee shall forever indemnify,
defend, hold and save Lessor free and harmless of, from and against any and all
liabilities, remediation costs, investigation costs, claims, damages, injuries,
losses, costs, fines, judgments, causes of action and expenses whatsoever
incurred in connection with or arising in any way out of the release, treatment,
storage, use or disposal of Hazardous Materials on the Premises (except
Pre-existing Hazardous Materials) by Lessee or Lessee's employees, officers,
directors and agents, except those arising solely by reason of the active
negligence or willful misconduct of Lessor, its agents or employees.

            G.    LESSOR'S INDEMNIFICATION OF LESSEE FOR PRE-EXISTING HAZARDOUS
MATERIALS: Except as provided in Subsection 7.F, above, Lessor shall forever
indemnify, defend, and hold Lessee harmless from and against any and all
liabilities, remediation costs, investigation costs, claims, damages, injuries,
losses, costs, fines, judgments, causes of action and expenses whatsoever
incurred in connection with or arising in any way out of the release, treatment,
storage, use or disposal of Pre-existing Hazardous Materials by Lessor, its
agents, employees, invitees or contractors. Except as specifically set forth
herein, Lessor does not indemnify Lessee in connection with Hazardous Materials
on or about the Premises or off-site.

                                    PAGE 4.
<PAGE>

            H.    NO RELEASE OF THIRD PARTIES: Nothing contained herein shall be
deemed to expand, limit, or otherwise modify or affect Lessee's or Lessor's
right to pursue any other person or entity for any claim or for any cause that
Lessee may have against any other person or entity, or under Hazardous Materials
Laws.

6.    INDEMNITY: As a material part of the consideration to be rendered to
Lessor, Lessee hereby waives all claims against Lessor for damages to foods,
wares and merchandise, and all other personal property in, upon or about said
Premises and for injuries to persons in or about said Premises, from any cause
arising at any time and to the fullest extent permitted by law. Provided Lessee
is timely notified of same, Lessee shall indemnify, protect, defend and hold
Lessor and Lessor's agents, partners and lenders, if any, exempt and harmless
from and against any and all claims, loss of rents and/or damages, liens,
judgments, penalties, attorneys' and consultants' fees, expenses and/or
liabilities or injury to any person, or to the goods, waters and merchandise and
all other personal property of any person, arising from, involving or in
connection with the use and/or occupancy of the Premises, Building, and/or
Project by Lessee, its employees, contractors, agents and invitees, except to
the extent the same are caused by the gross negligence or intentional misconduct
of Lessor or Lessor's agents, employees or contractors, or Lessor's breach of
this Lease. If any action or proceeding is brought against Lessor by reason of
any of the foregoing matters, Lessee shall upon notice defend the same at
Lessee's sole cost and expense by counsel reasonably satisfactory to Lessor, and
Lessor shall cooperate with Lessee in such defense. Lessor need not have first
paid any such claim in order to be so defended or indemnified.

7.    OPTION TO EXTEND THE LEASE TERM:

      A.    GRANT AND EXERCISE OF OPTION: Lessor grants to Lessee, upon and
subject to the terms and conditions set forth in this paragraph, one (1) option
(the "Option") to extend the Lease Term for an additional term (the "Option
Term"). The Option Term shall be for a period of three (3) years. Said Option
shall be exercised, if at all, by written notice to Lessor no earlier than the
date that is twelve (12) months prior to the Expiration Date but no later than
the date that is seven (7) months prior to the Expiration Date. If Lessee
exercises the Option, each of the terms, covenants and conditions of this Lease
except this paragraph shall apply during the Option Term as though the
expiration date of the Option Term was the date originally set forth herein as
the expiration date of the Option Term was the date originally set forth herein
as the Expiration Date, provided that the Base Monthly Rent to be paid by Lessee
during the Option Term shall be the greater of (i) the Base Monthly Rent
applicable to the period immediately prior to the commencement of the Option
Term or (ii) the Fair Market Rental, as hereinafter defined, for the Premises
for the Option Term. Anything contained herein to the contrary notwithstanding,
if Lessee is in monetary or material non-monetary default under any of the
terms, covenants or conditions of this Lease either at the time Lessee exercises
the Option or any time thereafter prior to the commencement date of the Option
Term, Lessor shall have, in addition to all of Lessor's other rights and
remedies provided in this Lease, the right to terminate the Option upon notice
to Lessee, in which event the expiration date of this Lease shall be and remain
the Expiration Date. As used herein, the term "Fair Market Rental" for the
Premises shall mean the rental and all other monetary payments, including any
escalations and adjustments thereto (including, without limitation, Consumer
Price Index) then being obtained for new leases of space comparable in age and
quality to the Premises in the locality of the Building that Lessor could obtain
during the

                                    PAGE 5.
<PAGE>

Option Term from a third party desiring to lease the Premises for the Option
Term based upon the current use and other potential uses of the Premises. Fair
Market Rental shall take into account that (A) that Lessee in occupancy of the
Premises and making functional use of the space in its then-existing condition,
and (B) that no brokerage commission is payable. Fair Market Rental shall not
include any value attributable to the Lessee Improvements in the Premises paid
for by Lessee.

            B.    DETERMINATION OF FAIR MARKET RENTAL: If Lessee exercises the
Option, Lessor shall send to Lessee a notice setting forth Lessor's good faith
determination of Fair Market Rental for the Premises for the Option Term, on or
before the date that is twelve (12) months prior to the Expiration Date. If
Lessee disputes Lessor's determination of the Fair Market Rental for the Option
Term, Lessee shall, within thirty (30) days after the date of Lessor's notice
setting forth the Fair Market Rental for the Option Term, send to Lessor a
notice stating that Lessee either (i) elects to terminate its exercise of the
Option, in which even the Option shall lapse and this Lease shall terminate oh
the Expiration Date, or (ii) disagrees with Lessor's determination of Fair
Market Rental for the Option Term and elects to resolve the disagreement as
provided in Subsection 7.C, below. If Lessee does not send to Lessor a notice as
provided in the previous sentence, Lessor's determination of the Fair Market
Rental shall be the basis for determining the Base Monthly Rent to be paid by
Lessee hereunder during the Option Term. If Lessee elects to resolve the
disagreement as provided in Subsection 7.C, below, and such procedures shall not
have been concluded prior to the commencement date of the Option Term, Lessee
shall pay as Base Monthly Rent to Lessor the Fair Market Rental as determined by
Lessor in the manner provided above. If the amount of Fair Market Rental as
finally determined pursuant to Subsection 7.C, below, is greater than Lessor's
determination, Lessee shall pay to Lessor the difference between the amount paid
by Lessee and the Fair Market Rental as so determined in Subsection 7.C, below,
within thirty (30) days after the determination. If the Fair Market Rental as
finally determined in Subsection 7.C, below, is less than Lessor's
determination, the difference between the amount paid by Lessee and the Fair
Market Rental as so determined in Subsection 7.C, below, shall be credited
against the next installments of rent due from Lessee to Lessor hereunder.

            C.    RESOLUTION OF A DISAGREEMENT OVER THE FAIR MARKET RENTAL: Any
disagreement regarding the Fair Market Rental shall be resolved as follows:

                     (i)    Within thirty (30) days after Lessee's response to
Lessor's notice to Lessee of the Fair Market Rental, Lessor and Lessee shall
meet no less than two (2) times, at mutually agreeable time and place, to
attempt to resolve any such disagreement.

                     (ii)   If within the thirty (30) day period referred to
Subsection 7.C.(i), above, Lessor and Lessee cannot reach agreement as to the
Fair Market Rental, they shall each select one appraiser to determine the Fair
Market Rental. Each such appraiser shall arrive at a determination of the Fair
Market Rental and submit their conclusions to Lessor and Lessee within thirty
(30) days after the expiration of the thirty (30) day consultation period
described Subsection 7.C.(i), above.

                     (iii)  If only one appraisal is submitted within the
requisite time period, it shall be deemed to be the Fair Market Rental. If both
appraisals are submitted within such time

                                    PAGE 6.
<PAGE>

period, and if the two appraisals so submitted differ by less than ten percent
(10%) of the higher of the two, the average of the two shall be the Fair Market
Rental. If the two appraisals differ by more than ten percent (10%) of the
higher of the two, then the two appraisers shall immediately select a third
appraiser who shall within thirty (30) days after his or her selection make a
determination of the Fair Market Rental and submit such determination to Lessor
and Lessee. This third appraisal will then be averaged with the closer of the
two previous appraisals and the result shall be the Fair Market Rental.

                     (iv)   All appraisers specified pursuant to this paragraph
shall be members of the American Institute of Real Estate Appraisers with not
less than ten (10) years experience appraising office and industrial properties
in the Santa Clara Valley. Each party shall pay the cost of the appraiser
selected by such party and one-half of the cost of the third appraiser.

      8.    SERVICE CONTRACT: In addition to Section 7.1 of the Lease, Lessee
shall also be responsible, at its sole cost and expense, for the preventative
maintenance of the membrane of the roof, which responsibility shall be deemed
properly discharged if (a) Lessee contracts with a licensed roof contractor who
is reasonably satisfactory to both Lessee and Lessor, at Lessor's sole cost, to
inspect the roof membrane at least every six (6) months, with the first
inspection due the sixty (6th) month after the Commencement Date, and (b) Lessee
performs, at Lessee's sole cost, all preventive maintenance recommendations made
by such contractor with in a reasonable time after such recommendations are
made. Such preventive maintenance might include acts such as clearing storm
gutters and drains, removing debris from the roof membrane, trimming trees
overhanging the roof membrane, applying coating materials to seal roof
penetrations, repairing blisters, and other routine measures. Lessee shall
provide to Lessor a copy of such preventive maintenance contract and paid
invoices for the recommended work. Lessee agrees, at its expense, to water,
preventive maintenance contract and paid invoices for the recommended work.
Lessee agrees, at its expense, to water, maintain and replace, when necessary,
any shrubbery and landscaping.

ACKNOWLEDGED AND APPROVED:                ACKNOWLEDGED AND APPROVED:

By Lessor:                                By Lessee:

Clint S. Carter and Esther                IntraBiotics Pharmaceuticals,
Carter Family Trust                       Inc., a Delaware corporation

By:  /s/ Clint S. Cartier                 By:  /s/ Kenneth J. Kelley
   -----------------------------------       -----------------------------------

Name:                                     Name:
Printed:  Clint S. Cartier                Printed:  Kenneth J. Kelley
        ------------------------------            ------------------------------

                                          By:  /s/ Janet I. Swearson
                                             -----------------------------------

                                          Name:
                                          Printed:  Janet I. Swearson
                                                  ------------------------------

                                    PAGE 7.
<PAGE>

                                    EXHIBIT B
                         INTERIOR IMPROVEMENT AGREEMENT

      THIS IMPROVEMENT AGREEMENT is made part of that Lease dated March 26,
1998, (the "Lease") by and between Clint S. Carter and Esther Carter Family
Trust, ("Lessor"), and IntraBiotics Pharmaceuticals, Inc. ("Lessee"). Lessor and
Lessee

      agree that the following terms are part of the Lease:

1.    PURPOSE OF IMPROVEMENT AGREEMENT: The purpose of this Improvement
      Agreement is to set forth the rights and obligations of Lessor and Lessee
      with respect to the construction of Interior Improvements within the
      Premises.

2.    DEFINITIONS: As used in this Interior Improvement Agreement, the following
      terms shall have the following meanings, and terms which are not defined
      below, but which are defined in the Lease and which are used in its
      Interior Improvement Agreement, shall have the meanings ascribed to them
      by the Lease:

      A.    APPROVED SPECIFICATIONS: The term "Approved Specifications" shall
            mean those specifications for the Interior Improvements to be
            constructed by Lessor which are described by Exhibit "D" to the
            Lease.

      B.    INTERIOR IMPROVEMENTS: The term "Interior Improvements" shall mean
            all interior improvements to be constructed by Lessor in accordance
            with the Approved Specifications (e.g., HVAC equipment and
            distribution, transformer and power distribution, partitions, floor,
            wall, and window covering, lighting fixtures).

      C.    INTERIOR IMPROVEMENT COSTS: The term "Interior Improvement Costs"
            shall mean the following: (i) the total amount due pursuant to the
            general construction contract entered into by Lessor to construct
            the Interior Improvements, including costs for any and all building
            code compliance; (ii) the cost of all governmental approvals
            required as a condition to the construction of the Interior
            Improvements (including all construction taxes imposed by the City
            of Mountain View ) in connection with issuance of a building permit
            for the Interior Improvements; (iii) all utility connection or use
            fees; (iv) fees or architects or engineers for services rendered in
            connection with the design and construction of the Interior
            Improvements; and (v) the cost of payment and performance bonds
            obtained by Lessor or Prime Contractor or assure completion of the
            Interior Improvement.

      D.    SUBSTANTIAL COMPLETION AND SUBSTANTIALLY COMPLETE: The terms
            "Substantial Completion" and "Substantially Complete" shall each
            mean the date when all of the following have occurred with respect
            to Interior Improvements in question: (i) the construction of the
            Interior Improvements in question has been substantially completed
            in accordance with the requirements of this Lease; (ii) the
            architect responsible for preparing the plans shall have executed a
            certificate or statement representing that the Interior Improvements
            in question have been substantially completed in accordance with the
            plans and specifications therefor;, and (iii) the Building
            Department of the City of Mountain View has completed its final

                                    PAGE 1.
<PAGE>

            inspection of such Improvements and has "signed off" the building
            inspection. card approving such work as complete.

3.    SCHEDULE OF PERFORMANCE: Set forth in this paragraph is a schedule of
      certain critical dates relating to Lessor's and Lessee's respective
      obligations regarding the construction of the Interior Improvements (the
      "Schedule of Performance"). Lessor and Lessee shall each be obligated to
      use reasonable efforts to perform their respective obligations within the
      time periods set forth in the Schedule of Performance and elsewhere in
      this Interior Improvement Agreement. The Schedule of Performance is as
      follows:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
           ACTION ITEMS                       DUE DATE                      RESPONSIBLE PARTY
--------------------------------------------------------------------------------------------------
<S>                                   <C>                                <C>
A.   Delivery to Lessor of                                               Lessee
     Lessee's Interior
     Requirements
--------------------------------------------------------------------------------------------------
B.   Delivery to Lessee of                                               Lessor
     Preliminary Interior
     Improvement Plans
--------------------------------------------------------------------------------------------------
C.   Approval by Lessee of            Within two (2) business days       Lessee
     Preliminary Interior Plans       after Lessee receives
                                      Preliminary Interior Plans.
--------------------------------------------------------------------------------------------------
D.   Delivery to Lessee of final      Within three (3) weeks after       Lessor
     Interior Plans                   approval of the Preliminary
                                      Interior Plans
--------------------------------------------------------------------------------------------------
E.   Approval by Lessee of            Within two (2) business days       Lessee
     Final Interior Plans             after Lessee receives Final
                                      Interior Plans
--------------------------------------------------------------------------------------------------
F.   Commencement of                  Within five (5) days after         Lessor
     construction of Interior         issuance of all necessary
     Improvement                      governmental approvals
--------------------------------------------------------------------------------------------------
G.   Substantial Completion of        Within six (6) weeks after         Lessor
     Interior Improvements            issuance of building permit
                                      for the Interior Improvements
--------------------------------------------------------------------------------------------------
</TABLE>

      A.    Lessee shall either approve such plans or notify Lessor in writing
            of its specific objections to the Preliminary Interior Plans. If
            Lessee so objects, Lessor shall revise the Preliminary Interior
            Plans to address such objections in a manner consistent with the
            parameters for the Interior Improvements set forth in its
            Improvement Agreement and the Approved Specifications and shall
            resubmit such revised preliminary Interior Plans as soon as
            reasonably practicable to Lessee for its approval. When such revised
            Preliminary Interior Plans are resubmitted to Lessee, it shall
            either approve such plans or notify Lessor of any further objections
            in writing within two (2) business days after receipt thereof. If
            Lessee has further objections to the revised preliminary Interior
            Plans, the parties shall meet and confer to develop Preliminary
            Interior Plans that are acceptable to both Lessor and Lessee within
            five (5) business days after Lessee has notified Lessor of its
            second set of objections. In the event Lessee and Lessor d9 not

                                    PAGE 2.
<PAGE>

            resolve all of Lessee's objections within such five (5) business
            day period, Lessor and Lessee shall immediately cause Lessor's
            architect to meet and confer with Lessee's architect or construction
            consultant, who shall apply the standards set forth in this
            Improvement Agreement to resolve Lessee's objections and'
            incorporate such resolution into the Preliminary Interior Plans,
            which process Lessor and Lessee shall cause to be completed within
            five (5) business days after the conclusion of the five (5) business
            day period referred to in the immediately preceding sentence.

      B.    DEVELOPMENT AND APPROVAL OF FINAL INTERIOR PLANS: Once the
            Preliminary Interior Plans have been approved by Lessor and Lessee
            (including all changes made to resolve Lessee's objections approved
            by Lessor's architect and Lessee's architect or construction
            consultant pursuant to subparagraph 4A), Lessor shall complete and
            submit to Lessee for its approval final working drawings for the
            Interior Improvements by the due date specified in the Schedule of
            Performance. Lessee shall approve the final plans for the Interior
            Improvements or notify Lessor in writing of its specific objections
            by the due date specified in the Schedule of Performance. If Lessee
            so objects, the parties shall confer and reach agreement upon final
            working drawings for the Interior Improvements within five (5)
            business days after Lessee has notified Lessor of its objections. In
            the event Lessee and Lessor do not resolve all of Lessee's
            objections within such five (5) business day period, Lessor and
            Lessee shall immediately cause Lessor's architect to meet and confer
            with Lessee's architect or construction consultant, who shall apply
            the standards set forth in the Improvement Agreement to resolve
            Lessee's objections and incorporate such resolution into the Final
            Interior Plans, which process Lessor and Lessee shall cause to be
            completed within five (5) business days after the conclusion of the
            five (5) business day period referred to in the immediately
            preceding sentence. The final working drawings so approved by Lessor
            and Lessee (including all changes made to resolve Lessee's
            objections approved by Lessor's architect and Lessee's architect or
            construction consultant) are referred to herein as the "Final
            Interior Plans".

      C.    BUILDING PERMIT: As soon as the Final Interior Plans have been
            approved by "Lessor and Lessee, Lessor shall apply for a building
            permit for the Interior Improvements, and shall diligently prosecute
            to completion such approval process.

      D.    CONSTRUCTION CONTRACT: Lessor and Lessee shall cooperate to cause
            the Interior Improvements to be constructed by a general contractor
            who is engaged by Lessor in accordance with the procedures et forth
            in subparagraph 4D (1) hereof.

            1)    The job constructing the Interior Improvements shall be
                  offered for "competitive bid", on a fixed price basis, to two
                  (2) general contractors selected by Lessor and approved by
                  Tenant. The construction contact shall be awarded to the
                  bidder submitting the lowest bid for the job. Lessor shall
                  submit to Lessee a list of general contractors acceptable to
                  Lessor to whom the job may be bid, and Lessee shall notify
                  Lessor within three (3)

                                    PAGE 3.
<PAGE>

                  business days after receipt of such list of its objection to
                  any proposed contractor. Lessee's failure to object within
                  such period of time shall be deemed to be its approval of all
                  bidders on the list so submitted by Lessor. If the lowest bid
                  resulting from such competitive bidding process indicates that
                  the Interior Improvement Costs will exceed Two Hundred Seventy
                  Thousand Dollars and 00/100tbs ($270,000.00), Lessor shall
                  promptly notify Lessee, in writing, to that effect, and Lessee
                  shall have the right to propose modifications to the Final
                  Interior Plans within five (5) business days after Lessee's
                  receipt of Lessor's notice, subject to Lessors approval of
                  such changes, for the purpose of reducing the Interior
                  Improvement costs. Such revision of the final Interior Plans
                  shall be completed as expeditiously as possible; provided,
                  however, that the job shall nonetheless be awarded to the low
                  bidder whose price shall be adjusted based' upon the changes
                  requested by Lessee and approved by Lessor made to the Final
                  Interior Plans.

            2)    Lessor and Lessee shall use their best efforts to approve the
                  general contractor and all subcontractors so that the
                  construction contract may be executed as soon as possible.

      E.    COMMENCEMENT OF INTERIOR IMPROVEMENTS: On or before the due date
            specified in the Schedule of Performance, Lessor shall commence
            construction for the Inter/or Improvements and shall diligently
            prosecute such construction to completion, using all reasonable
            efforts to achieve Substantial Completion of the Interior
            Improvements by the due date specified in the Schedule of
            Performance.

4.    PAYMENT OF INTERIOR IMPROVEMENT COSTS: Lessor and Lessee shall have the
      following obligations with respect to the payment of Interior Improvement
      Costs:

      A.    Lessor shall be obligated to pay an amount equal to the Lessee
            Improvement Allowance as provided for in Paragraph 50 of the First
            Addendum to Lease for the Payment of Interior Improvement Costs. If
            the total of Interior Improvement Costs exceeds the amount of
            Lessor's required contribution, Lessee shall be obligated to pay the
            entire amount of such excess. If Lessee becomes obligated to
            contribute toward paying Interior Improvement Costs pursuant to this
            subparagraph 5A, then Lessor shall estimate the amount of such
            excess prior to commencing construction of the Interior Improvements
            and Lessee shall pay to Lessor, or at Lessor's option to the general
            contractor, a proportionate share of each progress payment due to
            the general contractor which bears the same relationship to the
            total amount of the progress payment in question as the amount
            Lessee is obligated to contribute to the payment of Interior
            Improvement Costs bears to the total estimated Interior Improvement
            Costs. Lessee shall pay Lessee's share of any progress payment to
            Lessor within five (5) business days after receipt of a statement
            therefor from Lessor. At the time the final accounting is rendered
            by Lessor pursuant to subparagraph 5C hereof, there shall be an
            adjustment between Lessor and Lessee such that each shall only be
            required to contribute to the payment of Interior Improvement Costs
            in accordance with the obligations set

                                    PAGE 4.
<PAGE>

            forth in this subparagraph 5A, which adjustment shall be made within
            five (5) days after Lessor notifies Lessee of the required
            adjustment. If Lessee is required to make a payment to Lessor,
            Lessee shall make such payment even if Lessee elects to audit the
            statement submitted by Lessor pursuant to subparagraph 5C. In the
            event Lessee's audit discloses that an overpayment or underpayment
            was made by Lessee, there shall be an adjustment between Lessor and
            Lessee as soon as reasonably practicable such that each shall only
            be required to contribute to the payment of costs in accordance with
            the obligations set forth in this subparagraph 5A.

      B.    If Lessee falls to pay any amount when due pursuant to this
            paragraph 5, then (i) Lessor may (but without the obligation to do
            so) advance such funds on Lessee's behalf, and Lessee .shall be
            obligated to reimburse Lessor for the amount of funds so advanced on
            its behalf, and (ii) Lessee shall be liable for the payment of a
            late charge and interest in the same manner as if Lessee had failed
            to pay Base Monthly Rent when due as described in paragraph 3.4 of
            the Lease. Any amounts paid to Lessor by Lessee pursuant to this
            subparagraph shall be held by Lessor as Lessee's agent, for
            disbursal to the general contractor in payment for work costing in
            excess of Lessor's required contribution.

      C.    When the Interior Improvements are Substantially Completed, Lessor
            shall submit to Lessee a final and detailed accounting of all
            Interior Improvement Costs paid by Lessor, certified as true and
            correct by Lessor's financial officers. Lessee shall have the right
            to audit the books, records, and supporting documents of Lessor to
            the extent necessary to determine the accuracy of such accounting
            during normal business hours after giving Lessor at least two (2)
            days prior written notice. Lessee shall bear the cost of such audit,
            unless such audit discloses that Lessor has overstated the total of
            such costs by more than two percent .(2%) of the actual amount of
            such costs, in which event Lessor shall pay the cost of Lessee's
            audit. Any such audit must be conducted, if at all, within ninety
            (90) days after Lessor delivers such accounting to Lessee.

5.    CHARGES TO APPROVED PLANS: Once the Final Interior Plans have been
      approved by Lessor and Lessee, neither shall have the right to order extra
      work or change orders with respect to the construction of the Interior
      Improvements without the prior written consent of the other. All extra
      work or change orders requested by either Lessor or Lessee shall he made
      in writing, shall specify any added or reduced cost and/or construction
      time resulting therefrom, and shall become effective and a part of the
      Final Interior Plans once approved in writing by both parties. If a change
      order requested by Lessee results in an increase in the cost of
      constructing the Interior Improvements, Lessee shall pay the amount of
      such increase caused by the change order requested by Lessee at the time
      the change order is approved by both Lessor and Lessee if and to the
      extent such change order causes the Interior Improvement Costs to exceed
      Lessor's required contribution thereto described in subparagraph SA.

6.    DELIVERY OF PUNCH LIST: As soon as the Interior Improvements are
      Substantially Completed, Lessor and Lessee shall together walk through the
      Premises and inspect all

                                    PAGE 5.
<PAGE>

      Interior Improvements so completed, using reasonable efforts to discover
      all uncompleted or defective construction in the Interior Improvements.
      After such inspection has been completed, each party shall sign a Punch
      List, which shall include a list of all "punch list" items which the
      parties agree are to be corrected by Lessor. Lessor shall use reasonable
      efforts to complete and/or repair such "punch list" items within thirty
      (30) days after executing the punch list. Lessee's taking possession of
      any part of the Premises shall be deemed to be an acceptance by Lessee of
      Lessor's work improvement in such part as complete and in accordance with
      the terms of the Lease except for the punch list items noted and latent
      defects that could not reasonably have been discovered by Lessee during
      its inspection of the Interior Improvements prior to completion of the
      punch list. Notwithstanding anything contained herein, Lessee's obligation
      to pay the Base Monthly Rent and Additional Rent shall commence as
      provided in the Lease, regardless of whether Lessee completes such
      inspection or executes such punch list.

7.    STANDARD OF CONSTRUCTION AND WARRANTY: Lessor hereby warrants that the
      Interior Improvements shall be constructed substantially in accordance
      with the Final Interior Plans (as modified by .change orders approved by
      Lessor and Lessee), All Private Restrictions and all Laws, in a good and
      workmanlike manner, and all materials and equipment furnished shall
      conform to such final plans and shall be new and otherwise of good
      quality. The foregoing warranty shall be subject to, and limited by the
      following:

      A.    Once Lessor is notified in writing of any breach of the
            above-described warranty, Lessor shall promptly commence the cure of
            such breach and complete such cure with diligence at Lessor's sole
            cost and expense.

      B.    Lessor's liability pursuant to such warranty shall be limited to the
            cost of' correcting the defect or other matter in question. In no
            event shall Lessor be liable to Lessee for any damages or liability
            incurred by Lessee as a result of such defect or other matter
            including without limitation damages resulting form any loss of
            business by Lessee or other consequential damages.

      C.    Notwithstanding anything contained herein, Lessor shall not be
            liable for any defect in design, construction, or equipment
            furnished which is discovered and of which Lessor receives written
            notice from Lessee after the first (1.st) anniversary of the
            recordation of a notice of completion for the work of improvement
            affected by the defect.

      D.    With respect to defects for which Lessor is not responsible pursuant
            to subparagraph 8C, Lessee shall have the benefit of any
            construction or equipment warranties existing in favor of Lessor
            that would assist Lessee in correcting such defect and in
            discharging its obligations regarding the repair and maintenance of
            the Premises. Upon request by Lessee, Lessor shall inform Lessee of
            all written construction and equipment warranties existing in favor
            of Lessor which affect the Interior Improvements. Lessor shall
            cooperate with Lessee in enforcing such warranties and in bringing
            any suit that may be necessary to enforce liability with regard to
            any defect for which Lessor is not responsible pursuant to this
            paragraph so long as Lessee pays all costs reasonably incurred by
            Lessor in so acting.

                                    PAGE 6.
<PAGE>

      E.    Lessor makes no other express or implied warranty with respect to
            the design, construction or operation of the Interior Improvement
            except as set forth in this paragraph.

8.    EFFECT OF AGREEMENT: In the event of any inconsistency between this
      Improvement Agreement and the Lease, the terms of this Improvement
      Agreement shall prevail.

LESSOR:                                    LESSEE:

Clint S. Carter and Esther Carter          IntraBiotics Pharmaceuticals, Inc.
Family Trust                               A Delaware corporation

By:  /s/ Clint S. Cartier                  By:  /s/ Kenneth J. Kelley
   -----------------------------------        ----------------------------------

By:  /s/ Esther Cartier                    Title:  President and CEO
   -----------------------------------           -------------------------------

Date:  July 31, 1998                       Date:  July 29, 1998
     ---------------------------------          --------------------------------

                                           By:
                                              ----------------------------------

                                           Title:
                                                 -------------------------------

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

                                    PAGE 7.
<PAGE>

                                    EXHIBIT C
                  LESSOR'S REMEDIES IN EVENT OF LESSEE DEFAULT
                              (STATE OF CALIFORNIA)

      (a)   TERMINATION. In the event of any Default by Lessee, then in addition
to any other remedies available to Lessor at law or in equity and under this
Lease, Lessor shall have the immediate option to terminate this Lease and all
fights of Lessee hereunder by giving written notice of such intention to
terminate. In the event that Lessor shall elect to so terminate this Lease then
Lessor may recover from Lessee:

            (1)   the worth at the time of award of any unpaid Rent and any
other sums due and payable which have been earned at the time of such
termination; plus

            (2)   the worth at the time of award of the amount by which the
unpaid Rent and any other sums due and payable which would have been earned
after termination until the time of award exceeds the amount of such rental loss
Lessee proves could have been reasonably avoided; plus

            (3)   the worth at the time of award of the amount by which the
unpaid Rent and any other sums due and payable for the balance of the term of
this Lease after the time of award exceeds the amount of such rental loss that
Lessee proves could be reasonably avoided; plus

            (4)   any other amount necessary to compensate Lessor for all
the detriment proximately caused by Lessee's failure to perform its obligations
under this Lease or which in the ordinary course would be likely to result
therefrom, including, without limitation, any costs or expenses incurred by
Lessor (i) in retaking possession of the Premises; (ii) in maintaining,
repairing, preserving, restoring, replacing, cleaning, altering or
rehabilitating the Premises or any portion thereof, including such acts for
reletting to a new lessee or lessees; (iii) for leasing commissions; or (iv) for
any other costs necessary or appropriate to relet the Premises; plus

            (5)   such reasonable attorneys' fees incurred by Lessor as a
result of a Default, and costs in the event suit is filed by Lessor to enforce
such remedy; and plus

            (6)   at Lessor'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 subparagraphs (1) and (2) above, the "worth at the time of
award" is computed by allowing interest at an annual rate equal to twelve
percent (12%) per annum or the maximum rate permitted by law, whichever is less.
As used in subparagraph (3) above, the "worth at the time of award" is computed
by discounting such amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of award, plus one percent (1%). Lessee waives
redemption or relief from forfeiture under California Code of Civil Procedure
Sections 1174 and 1179, or under any other present or future law, in the event
Lessee is evicted or Lessor takes possession of the Premises by reason of any
Default of Lessee hereunder.

      (b)   CONTINUATION OF LEASE. In the event of any Default by Lessee, then
in addition to any other remedies available to Lessor at law or in equity and
under this Lease, Lessor shall have

                                    PAGE 1.
<PAGE>

the remedy described in California Civil Code Section 1951.4 (Lessor may
continue this Lease in effect after Lessee's Default and abandonment and
recover Rent as it becomes due, provided Lessee has the right to sublet or
assign, subject only to reasonable limitations).

      (c)   RE-ENTRY. In the event of any Default by Lessee, Lessor shall also
have the right, with or without terminating this Lease, in compliance with
applicable law, to re-enter the Premises and remove all persons and property
from the Premises; such property may be removed and stored in a public warehouse
or elsewhere at the cost of and for the account of Lessee.

      (d)   RELETTING. In the event of the abandonment of the Premises by Lessee
or in the event that Lessor shall elect to re-enter or shall take possession of
the Premises pursuant to legal proceeding or pursuant to any notice provided by
law, then if Lessor does not elect to terminate this Lease as provided in
Paragraph a, Lessor may from time to time, without terminating this Lease, relet
the Premises or any port thereof for such term or terms and at such rental or
rentals and upon such other terms and conditions as Lessor in its sole
discretion may deem advisable with the fight to make alterations and repairs to
the Premises. In the event that Lessor shall elect to so relet, then rentals
received by Lessor from such reletting shall be applied in the following order:
(1) to reasonable attorneys' fees incurred by Lessor as a result of a Default
and costs in the event suit is filed by Lessor to enforce such remedies; (2) to
the payment of any indebtedness other than Rent due hereunder from Lessee to
Lessor; (3) to the payment of any costs of such reletting; (4) to the payment of
the costs of any alterations and repairs to the Premises; (5) to the payment of
Rent due and unpaid hereunder; and (6) the residue, if any, shall be held by
Lessor and applied in payment of future Rent and other sums payable by Lessee
hereunder as the same may become due and payable hereunder. Should that portion
of such rentals received from such reletting during any month, which is applied
to the payment of Rent hereunder, be less than the Rent payable during the month
by Lessee hereunder, then Lessee shall pay such deficiency to Lessor. Such
deficiency shall be calculated and paid monthly. Lessee shall also pay to
Lessor, as soon as ascertained, any costs and expenses incurred by Lessor in
such reletting or in making, such alterations and repairs not covered by the
rentals received from such reletting.

      (e)   Termination. No re-entry or taking of possession of the Premises by
LESSOR pursuant to this Addendum shall be construed as an election to terminate
this Lease unless a written notice of such intention is given to Lessee or
unless the termination thereof is decreed by a court of competent jurisdiction.
Notwithstanding any reletting without termination by Lessor because of any
Default by Lessee, Lessor may at any time after such reletting elect to
terminate this Lease for any such Default.

      (f)   Cumulative Remedies. The remedies herein provided are not exclusive
and Lessor shall have any and all other remedies provided herein or by law or in
equity.

      (g)   No Surrender. No act or conduct of Lessor, whether consisting of the
acceptance of the keys to the Premises, or otherwise, shall be deemed to be or
constitute an acceptance of the surrender of the Premises by Lessee prior to the
expiration of the Term, and such acceptance by Lessor of surrender by Lessee
shall only flow from and must be evidenced by a written acknowledgment of
acceptance of surrender signed by Lessor. The surrender of this Lease by Lessee,
voluntarily or otherwise, shall not work a merger unless Lessor elects in
writing that such merger take place, but shall operate as an assignment to
Lessor of any and all existing

                                    PAGE 2.
<PAGE>

subleases, or Lessor may, at its option, elect in writing to treat such
surrender as a merger terminating Lessee's estate under this Lease, and
thereupon Lessor may terminate any or all such subleases by notifying the
sublessee of its election so to do within five (5) days after such surrender.

      (h)   NOTICE PROVISIONS. Lessee agrees that any notice given by Lessor
pursuant to Paragraph 13.1 of the Lease shall satisfy the requirements for
notice under California Code of Civil Procedure Section 1161, and Lessor shall
not be required to give any additional notice in order to be entitled to
commence an unlawful detainer proceeding.

Lessee Initials                                      Lessor Initials

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

                                    PAGE 3.
<PAGE>

                                    EXHIBIT D

                         FINAL PLANS AND SPECIFICATIONS

                                (TO BE ATTACHED)

                                    PAGE 4.

<PAGE>

                               FIRST AMENDMENT TO
               STANDARD INDUSTRIAL/COMMERCIAL SINGLE TENANT LEASE
                              Dated August 3, 1998
           Clint S. Carter and Esther Carter Family Trust/IntraBiotics
                              Pharmaceuticals, Inc.

         THIS FIRST AMENDMENT to Standard Industrial/Commercial Single Tenant
Lease is made effective as of August 2, 1998 to amend that certain Standard
Industrial/Commercial Single Tenant Lease dated for reference purposes only
July___, 1998 between Clint S. Carter and Esther Carter Family Trust, as
Lessor, and IntraBiotics Pharmaceuticals, Inc., as Lessee (the "Lease") as
follows:

         1. The reference to an Exhibit E in Paragraph 1.7 is hereby deleted.
The Lease will have no Exhibit E.

         2. Paragraph 5 is hereby renumbered and designated as "5.1 SECURITY
DEPOSIT" and the following is added as Paragraph 5.2:

                  "5.2 LETTER OF CREDIT.The non-cash portion of the Security
         Deposit shall consist of an irrevocable standby letter of credit (the
         "Letter of Credit") in the face amount specified in Paragraph 1.7
         above. Lessee shall obtain and maintain the Letter of Credit throughout
         the term of this Lease and any extension thereof, subject to the terms
         of this Paragraph 5.2. The Letter of Credit shall be issued by a major
         commercial bank reasonably acceptable to Landlord, with a San Francisco
         branch servicing as a service and claim point for the Letter of Credit;
         have a term of no less than one (1) year and be automatically renewable
         for an additional one (1) year period unless notice of non-renewal is
         given by the issuer to Landlord not later than sixty (60) days prior to
         the expiration thereof; provide for payment to Landlord upon the
         issuer's receipt of a sight draft from Landlord together with
         Landlord's certificate certifying that the requested sum is due and
         payable from Tenant and Landlord is entitled to draw on the Letter of
         Credit in accordance with this Paragraph 5, and with no other
         conditions; and otherwise be in form and content reasonably
         satisfactory to Landlord. If Landlord draws on the Letter of Credit
         pursuant to the terms hereof, Tenant shall immediately replenish the
         Letter of Credit or provide Landlord with an additional letter of
         credit conforming to the requirements of this Paragraph so that the
         amount available to Landlord from the Letter of Credit(s) provided
         hereunder is the amount specified herein. Tenant's failure to deliver
         any replacement, additional or extension of the Letter of Credit, or
         evidence of renewal of the Letter of Credit, within the time specified
         herein shall constitute a Default under this Lease and shall entitle
         Landlord to draw the full amount of the Letter of Credit then in
         effect. The provisions of Paragraph 31 (Attorneys Fees) shall apply to
         any action by Landlord to enforce or exercise its rights under this
         Paragraph 5."

         3. Except as so amended, the Lease shall remain unmodified and in full
force and effect.

                                       1.

<PAGE>

                  In witness whereof the parties have executed this First
Amendment to be effective as of the date written above.

     Dated: August 3, 1998                   Dated: August 3, 1998
          -----------------------------           -----------------------------
     LESSOR                                  LESSEE

     Clint S. Carter and Esther Carter       IntraBiotics Pharmaceuticals, Inc.
     Family Trust

     By    /s/Clint S. Carter                By    /s/Kenneth J. Kelley
       ----------------------------------      ---------------------------------
     Title Trustee                           Title President & CEO
          -------------------------------         ------------------------------
     By    /s/Esther Carter                  By    /s/Peter Garcia
       ----------------------------------      ---------------------------------
     Title                                   Title Vice President & CFO
          -------------------------------         ------------------------------

                                      2.<PAGE>

                                                                 EXHIBIT 10.12

      [LEASE MANAGEMENT SERVICES, INC. LOGO]

                          EQUIPMENT FINANCING AGREEMENT
                                 (Number 10782)

THIS EQUIPMENT FINANCING AGREEMENT NUMBER 10782 ("Agreement") is dated as of
the date set forth at the foot hereof and is between LEASE MANAGEMENT
SERVICES, INC., ("Secured Party') and INTRABIOTICS PHARMACEUTICALS, INC.,
("Debtor").

1.      EQUIPMENT; SECURITY INTEREST. The terms and conditions of this
Agreement cover each item of machinery, equipment and other property
(individually an "Item" or "Item of Equipment" and collectively the
"Equipment") described in a schedule now or hereafter executed by' the
parties hereto and made a part hereof (individually a "Schedule" and
collectively the "Schedules"). Debtor hereby grants Secured Party a security
interest in and to all Debtor's right, title and interest in and to the
Equipment under the Uniform Commercial Code, such gram with respect to an
Item of Equipment to be as of Debtor's execution of a related Equipment
Financing Commitment referencing this Agreement or, if Debtor then has no
interest in such Item, as of such subsequent time as Debtor acquires an
interest in the limn. Such security interest is granted by Debtor to secure
performance by Debtor of Debtor's obligations to Secured Party hereunder and
under any other agreements which Debtor has or may hereafter have obligations
to Secured Party. Debtor will ensure that such security interest will be and
remain a sole and valid first lien security interest subject only to the lien
of current taxes and assessment not in default but only if such taxes are
entitled to priority as a matter of law.

2.      DEBTOR'S OBLIGATIONS. The obligations of Debtor under this Agreement
respecting an Item of Equipment, except the obligation to pay installment
payment with respect thereto which will commence as set forth in Paragraph 3
below, commence upon the grant to Secured Party of a security interest in the
Item. Debtor's obligations hereunder with respect to an Item of Equipment and
Secured Party's security interest therein will continue until payment of all
Amounts due, and performance of all terms and conditions requited hereunder
provided, however, that if this Agreement is in default said obligations and
security interest will continue during the continuance of said default. Upon
termination of Secured Party's security interest in an Item of Equipment,
Secured Party will execute such release of interest with respect thereto as
Debtor reasonably requests.

3.      INSTALLMENT PAYMENTS AND OTHER PAYMENTS. Debtor will repay advances
Secured Party makes on account of the Equipment in installment payments in
the amounts and at the times set forth in the Schedules, whether or not
Secured Party has rendered an invoice therefor, at the office of Secured
Party set forth at the foot hereof, or to such person and/or at such other
place as Secured Party may from time to time designate by notice to Debtor.
Any other amounts required to be paid Secured Party by Debtor hereunder are
due upon Debtor's receipt of Secured Party's invoice therefor and will be
payable as directed in the invoice. Payments under this Agreement may be
applied to Debtor's then accrued obligations to Secured Party in such order
as Secured Party may choose.

                                       1

<PAGE>

4.      NET AGREEMENT; NO OFFSET, SURVIVAL. This Agreement is a net
agreement, and Debtor will not be entitled to any abatement of installment
payments or other payments due hereunder or any reduction thereof under any
circumstance or for any reason whatsoever. Debtor hereby waives any and all
existing and future claims, as offsets, against any installment payments or
other payments due hereunder and agrees to pay the installment payments and
other amounts due hereunder as and when due regardless of any offset or claim
which may be asserted by Debtor or on its behalf. The obligations and
liabilities of Debtor hereunder will survive the termination of the Agreement.

5.      FINANCING AGREEMENT. THIS AGREEMENT IS SOLELY A FINANCING AGREEMENT.
DEBTOR ACKNOWLEDGES THAT THE EQUIPMENT HAS OR WILL HAVE BEEN SELECTED AND
ACQUIRED SOLELY BY DEBTOR FOR DEBTOR'S PURPOSES, THAT SECURED PARTY IS NOT
AND WILL NOT BE THE VENDOR OF ANY EQUIPMENT AND THAT SECURED PARTY HAS NOT
MADE AND WILL NOT MAKE ANY AGREEMENT, REPRESENTATION OR WARRANTY WITH RESPECT
TO THE MERCHANTABILITY, CONDITION, QUALIFICATION OR FITNESS FOR A PARTICULAR
PURPOSE OR VALUE OF THE EQUIPMENT OR ANY OTHER MATTER WITH RESPECT THERETO IN
ANY RESPECT WHATSOEVER.

6.      NO AGENCY. DEBTOR ACKNOWLEDGES THAT NO AGENT OF THE MANUFACTURER OR
OTHER SUPPLIER OF AN ITEM OF EQUIPMENT OR OF ANY FINANCIAL INTERMEDIARY IN
CONNECTION WITH THIS AGREEMENT IS AN AGENT OF SECURED PARTY. SECURED PARTY IS
NOT BOUND BY A REPRESENTATION OF ANY SUCH PARTY AND, AS CONTEMPLATED IN
PARAGRAPH 27 BELOW, THE ENTIRE AGREEMENT OF SECURED PARTY AND DEBTOR
CONCERNING THE FINANCING OF THE EQUIPMENT IS CONTAINED IN THIS AGREEMENT AS
IT MAY BE AMENDED ONLY AS PROVIDED IN THAT PARAGRAPH.

7.      ACCEPTANCE. Execution by Debtor and Secured Party of a Schedule
covering, the Equipment or any Items thereof will conclusively establish that
such Equipment has been included under and will be subject to all the terms
and conditions of this Agreement. If Debtor has not furnished Secured Party
with an executed Schedule by the Earlier of fourteen (14) days after receipt
thereof or expiration of the commitment period set forth in the applicable
Equipment Financing Agreement, Secured Party may terminate its obligation to
advance funds as to the applicable Equipment.

8.      LOCATION; INSPECTION; USE. Debtor will keep, or in the case of motor
vehicles, permanently garage and not remove from the United States, as
appropriate, each Item of Equipment in Debtor's possession and control at the
Equipment Location designated in the applicable Schedule, or at such other
location to which such Item may have been moved with the prior written
consent of Secured Party. Whenever requested by Secured Party, Debtor will
advise Secured Party as to the exact location of an Item of Equipment.
Secured Party will have the right to inspect the Equipment and observe its
use during normal business hours, subject to Debtor's security procedures and
to enter into and upon the premises where the Equipment may be located for
such purpose. The Equipment will at all times be used solely for commercial
or business purposes and operated in a careful and proper manner and in
compliance with all

                                       2

<PAGE>

applicable laws, ordinances, roles and regulations, all conditions and
requirements of the policy or policies of insurance required to be carried by
Debtor under the terms of this Agreement and ail manufacturer's instructions
and warranty requirements. Any modifications or additions to the Equipment
required by any such governmental edict or insurance policy will be promptly
made by Debtor.

9.      ALTERATIONS; SECURITY INTEREST COVERAGE. Without the prior written
consent of Secured Party, Debtor will not make any alterations, additions or
improvements to any Item of Equipment which detract from its economic value
or functional utility, except as may be required pursuant to Paragraph 8
above. Secured Party's security interest in the Equipment will include all
modifications anti additions thereto and replacements and substitutions
therefor, in whole or in pan. Such reference to replacements and
substitutions will not grant Debtor greater rights to replace or substitute
than are provided in Paragraph 11 below or as may be allowed upon the prior
written consent of Secured Party.

10.     MAINTENANCE. Debtor will maintain the Equipment in good repair,
condition and working order. Debtor will also cause each Item of Equipment
for which a service contract is generally available to be covered by such a
contract which provides coverages typical to property of the type involved
and is issued by a competent servicing entity.

11.     LOSS AND DAMAGE; CASUALTY VALUE. In the event of the loss of, theft
of, requisition of, damage to or destruction of an Item of Equipment
("Casualty Occurrence"), Debtor will give Secured Party prompt notice thereof
and will thereafter place such Item in good repair, condition and working
order, provided, however, that if such Item is determined by Secured Party to
be lost, stolen, destroyed or damaged beyond repair, is requisitioned or
suffers a constructive total loss as deemed in any applicable insurance
policy carried by Debtor in accordance with Paragraph 14 below, Debtor, at
Secured Party's option, will (a) replace such Item with like Equipment in
good repair, condition and working order whereupon such replacement equipment
will be deemed such Item for all purposes hereof or (b) pay Secured Party the
"Casualty Value" of such Item which will equal the total of (i) all
installment payments and other amounts due from Debtor to Secured Party at
the time of such payment and (ii) future installment payments due with
respect to such Item with each such payment including any final uneven
payment discounted at a rate equal to the discount rate of the Federal
Reserve Bank of San Francisco from the date due to the date of such payment.

Upon such replacement or payment, as appropriate, this Agreement and Secured
Party's security interest will terminate with, and only with, respect to the
Item of Equipment so replaced or as to which such payment is made in
accordance with Paragraph 2 above.

12.     TITLING; REGISTRATION. Each item of Equipment subject to title
registration laws will at all times be titled and/or registered by Debtor as
Secured Party's agent and attorney-in-fact with full power and authority to
register (but without power to affect title to) the Equipment in such manner
and in such jurisdiction or jurisdictions as Secured Party directs. Debtor
will promptly notify Secured Party of any necessary or advisable retitling
and/or re-registration of an Item of Equipment in a jurisdiction other than
the one in which such Item is then titled and/or registered. Any and all
documents of title will be furnished or caused to be furnished Secured

                                       3

<PAGE>

Party by Debtor within sixty (60) days of the date any titling or registering
or restating or reregistering, as appropriate, is directed by Secured Party.

13.     TAXES. Debtor will make all filings as to and pay when due all
personal property and other ad valorem taxes and all other taxes, fees,
charges and assessments based on the ownership or use of the Equipment and
will pay as directed by Secured Party or reimburse Secured Party for all
other taxes, including, but not limited to, gross receipt taxes (exclusive of
federal and state taxes based on Secured Party's net income, unless such net
income taxes are in substitution for or relieve Debtor from any taxes which
Debtor would otherwise be obligated to pay under the terms of this Paragraph
13), fees, charges and assessments whatsoever, however designated, whether
based on the installment payments or other amounts due hereunder, levied,
assessed or imposed upon the Equipment or otherwise related hereto or to the
Equipment, now or hereafter levied; assessed or imposed under the authority
of a federal, state, or local taxing jurisdiction, regardless of when and by
whom payable. Filings with respect to such other amounts will, at Secured
Party's option, be made by Secured Party or by Debtor as directed by Secured
Party.

14.     INSURANCE. Debtor will procure and continuously maintain all risk
insurance against loss or damage to the Equipment from any cause whatsoever
for not less than the full replacement value thereof naming Secured Party as
Loss Payee. Such insurance must be in a form and with companies approved by
Secured Party, must provide at least thirty (30) days advance written notice
to Secured Party of cancellation, change or modification in any term,
condition, or amount of protection provided therein, must provide full breach
of warranty protection and must provide that the coverage is "primary
coverage" (does not require contribution from any other applicable
 .coverage), Debtor will provide Secured Party with an original policy or
certificate evidencing such insurance. In the event of an assignment of this
Agreement of which Debtor has notice, Debtor will cause such insurance to
provide the same protection to the assignee as its interests may appear. The
proceeds of such insurance, at the option of the Secured Party or such
assignee, as appropriate, will be applied toward (a) repair or replacement of
the appropriate Item or Items of Equipment, (b) payment of the Casualty Value
thereof and/or (c) payment of, or as provision for, satisfaction of any other
accrued obligations of Debtor hereunder. Debtor hereby appoints Secured Party
as Debtor's attorney-in-fact with full power and authority to do all things,
including, but not limited to, making claims, receiving payments and
endorsing documents, checks or drafts, necessary to secure payments due under
any policy contemplated hereby on account of a Casualty Occurrence. Debtor
and Secured Party contemplate that the jurisdictions where the Equipment will
be located will not impose any liability upon Secured Party for personal
injury and/or property damage resulting out of the possession, use, operation
or condition of the Equipment. In the event Secured Party determines that
such is not or may not be the case with respect to a given jurisdiction,
Debtor will provide Secured Party with public liability and property damage
coverage applicable to the Equipment in such amounts and in such form as
Secured Party requires.

15.     SECURED PARTY'S PAYMENT. If Debtor fails to pay any amounts due
hereunder or to perform any of its other obligations under this Agreement,
Secured Party may, at its option, but without any obligation to do so, pay
such amounts or perform such obligations, and Debtor will reimburse Secured
Party the amount of such payment or cost of such performance, plus interest
at 1.5 % per month.

                                       4

<PAGE>

16.     INDEMNITY. Debtor does hereby assume liability for and does agree to
indemnify, defend, protect, save and keep harmless Secured Party from and
against any and all liabilities, losses, damages, penalties, claims, actions,
suits, costs, expenses and disbursements, including court costs and legal
expenses, of whatever kind and nature, imposed on, intuited by or asserted
against Secured Party (whether or not also indemnified against by any other
person) in any way relating to or arising out of this Agreement or the
manufacture, financing, ownership, delivery, possession, use, operation,
condition or disposition of the Equipment by Secured Party or Debtor,
including, without limitation, any claim alleging latent and other defects,
whether or not discoverable by Secured Party or Debtor, and any other claim
arising out of strict liability in tort, whether or not in either instance
relating to an event occurring while Debtor remains obligated under this
Agreement, and any claim for patent, trademark or copyright infringement.
Debtor agrees to give Secured Party and Secured Party agrees to give Debtor
notice of any claim or liability hereby indemnified against promptly
following learning thereof.

17.     DEFAULT. Any of the following will constitute an event of default
hereunder: (a) Debtor's failure to pay when due any installment payment or
other amount due hereunder, which failure continues for ten (10) days after
the due date thereof; (b) Debtor's default in performing any other
obligation, term or condition of this Agreement or any other agreement
between Debtor and Secured Party or default under any further agreement
providing security for the performance by Debtor of its obligations hereunder
provided such default has continued for more than twenty (20) days, except as
provided in (c) and (d) hereinbelow, or, without limiting the generality of
subparagraph (1) hereinbelow, default under any lease or any mortgage or
other instrument contemplating the provision of financial accommodation
applicable to the real property where an Item of Equipment is located; (c)
any writ or order of attachment or execution or other legal process being
levied on or charged against any Item of Equipment and not being released or
satisfied within ten (10) days; (d) Debtor's failure to comply with its
obligations under Paragraph 14 above or any transfer by Debtor in violation
of Paragraph 21 below; (e) a non-appealable judgment for the payment of money
in excess of $100,000 being rendered by a court of record against Debtor
which Debtor does not discharge or make provision for discharge in accordance
with the terms thereof within ninety (90) days from the date of entry
thereof; (f) death or judicial declaration of incompetency of Debtor, if an
individual; (g) the filing by Debtor of a petition under the Bankruptcy Code
or any amendment thereto or under any other insolvency law or law providing
for the relief of debtors, including, without limitation, a petition for
reorganization, arrangement or extension, or the commission by Debtor of an
act of bankruptcy; (h) the filing against Debtor of any such petition not
dismissed or permanently stayed within thirty (30) days of the riling
thereof; (i) the voluntary or involuntary making of an assignment of
substantial portion of its assets by Debtor for the benefit of creditors,
appointment of a receiver or trustee for Debtor or for any of Debtor's
assets, institution by or against Debtor or any other type of insolvency
proceeding (under the Bankruptcy Code or otherwise) or of any formal or
informal proceeding for dissolution, liquidation, settlement of claims
against or winding up of the affairs of Debtor, Debtor's cessation of
business activities or the making by Debtor of a transfer of all or a
material portion of Debtor's assets or inventory not in the ordinary course
of business; (j) the occurrence of any event described in pans (e), (f), (g),
(h) or (i) hereinabove with respect to any guarantor or other party liable
for payment or performance of this Agreement; (k) any certificate, statement,
representation, warranty or audit heretofore or hereafter furnished with
respect hereto by or on behalf of Debtor or any guarantor or other party
liable for payment or performance of this Agreement proving to have been
false in any material

                                       5

<PAGE>

respect at the time as of which the facts therein set forth were stated or
certified or having omitted any substantial contingent or unliquidated
liability or claim against Debtor or any such guarantor or other party; (1)
breach by Debtor of any lease or other agreement providing financial
accommodation under which Debtor or its property is bound; or (m) a transfer
of effective control of Debtor, if an organization.

18.     REMEDIES. Upon the occurrence of an event of default, Secured Party
will have the rights, options, duties and remedies of a Secured Party, and
Debtor will have the rights and duties of a debtor, under the Uniform
Commercial Code (regardless of whether such Code or a law similar thereto has
been enacted in a jurisdiction wherein the rights or remedies are asserted)
and, without limiting the foregoing,' Secured Party may exercise any one or
more of the following remedies: (a) declare the Casualty Value or such lesser
amount as may be set by law immediately due and payable with respect to any
or all Items of Equipment without notice or demand to Debtor; (b) sue from
time to time for and recover all installment payments and other payments then
accrued and which accrue during the pendency of such action with respect to
any or all Items of Equipment; (c) take possession of and, if deemed
appropriate, render unusable any or all Items of Equipment, without demand or
notice, wherever same may be located, without any court order or other
process of law and without liability for any damages occasioned by such
taking of possession and remove, keep and store the same or use and operate
or lease the same until sold; (d) require Debtor to assemble any or all Items
of Equipment at the Equipment Location therefor, or at such location to which
such Equipment may have been moved with the written consent of Secured Party
or such other location in reasonable proximity to either of the foregoing as
Secured Party designates; (e) upon ten (10) days notice to Debtor or such
other notice as may be required by law, sell or otherwise dispose of any Item
of Equipment, whether or not in Secured Party's possession, in a commercially
reasonable manner at public or private sale at any place deemed appropriate
and apply the new proceeds of such sale, after deducting all costs of such
sale, including, but not limited to, costs of transportation, repossession,
storage, refurbishing, advertising and brokers' fees, to the obligations of
Debtor to Secured Party hereunder or otherwise, with Debtor remaining liable
for any deficiency and with any excess being returned to Debtor; (f) upon
thirty (30) days notice to Debtor, retain any repossessed or assembled Items
of Equipment as Secured Party's own property in full satisfaction of Debtor's
liability for the installment payments due hereunder with respect thereto,
provided that Debtor will have the right to redeem such Items by payment in
full of its obligations to Secured Party hereunder or otherwise or to require
Secured Party to sell or otherwise dispose of such Items in the manner set
forth in subparagraph (e) hereinabove upon notice to Secured Party within
such thirty (30) day period; or (g) utilize any other remedy available to
Secured Party under the Uniform Commercial Code or similar provision of law
or otherwise at law or in equity.

No right or remedy conferred herein is exclusive of any other right or remedy
conferred herein or by law; but all such remedies are cumulative of every
other right or remedy conferred hereunder or at law or in equity, by statute
or otherwise, and may he exercised concurrently or separately from time to
time. Any sale contemplated by subparagraph (e) of this Paragraph 18 may be
adjourned from time to time by announcement at the time and place appointed
for such sale, or for any such adjourned sale, without further published
notice, Secured Party may bid and become the purchaser at any such sale. Any
sale of an Item of Equipment, whether under said subparagraph or by virtue of
judicial proceedings, will operate to divest all right, rifle, interest,
claim and demand whatsoever; either at law or in equity, of Debtor in and to
said item and will

                                       6

<PAGE>

be a perpetual bar to any claim against such Item, both at law and in equity,
against Debtor and all persons claiming by, through or under Debtor.

19.     DISCONTINUANCE OF REMEDIES. If Secured Party proceeds to enforce any
right under this Agreement and such proceedings are discontinued or abandoned
for any reason or are determined adversely, then and in every such case
Debtor and Secured Party will be restored to their former positions and
rights hereunder.

20.     SECURED PARTY'S EXPENSES. Debtor will pay Secured Party all costs and
expenses, including attorney's fees and court costs and sales costs not
offset against sales proceeds under Paragraph 18 above, incurred by Secured
Party in exercising any of its rights or remedies hereunder or enforcing any
of the terms, conditions or provisions hereof. This obligation includes the
payment or reimbursement of all such amounts whether an action is ultimately
filed and whether an action is ultimately dismissed.

21.     ASSIGNMENT. Without the prior written consent of Secured Party,
Debtor will not sell, lease, pledge or hypothecate, except as provided in
this Agreement, any Item of Equipment or any interest therein or assign,
transfer, pledge, or hypothecate this Agreement or any interest in this
Agreement or permit the Equipment to be subject to any lien, charge or
encumbrance of any nature except the security interest of Secured Party
contemplated hereby. Debtor's interest herein is not assignable and will not
be assigned or transferred by operation of law. Consent to any of the
foregoing prohibited acts applies only in the given instance and is not a
consent to any subsequent like act by Debtor or any other person.

All rights of Secured Party hereunder may he assigned, pledged, mortgaged,
transferred or otherwise disposed of, either in whole or in part, without
notice to Debtor but always, however, subject to the rights of Debtor under
this Agreement. If Debtor is given notice of any such assignment, Debtor will
acknowledge receipt thereof in writing. In the event Secured Party assigns
this Agreement or the installment payments due or to become due hereunder or
any other interest herein, whether as security for any of its indebtedness or
otherwise, no breach or default by Secured Party hereunder or pursuant to any
other agreement between Secured Party and Debtor, should there be one, will
excuse performance by Debtor of any provision hereof, it being understood,
that in the event of such default or breach by Secured Party that Debtor will
pursue any rights on account thereof solely against Secured Party. No such
assignee, unless such assignee agrees in writing, will be obligated to
perform any duty, covenant or condition required to be performed by Secured
Party in connection with this Agreement.

Subject always to the foregoing, this Agreement inures to the benefit of, and
is binding upon, the heirs, legatees, personal representative, successors and
assigns of the parties hereto.

22.     MARKINGS; PERSONAL PROPERTY. If Secured Party supplies Debtor with
labels, plates, decals or other markings stating that Secured Party has an
interest in the Equipment, Debtor will affix and keep the same prominently
displayed on the Equipment or will otherwise mark the Equipment or its then
location or locations, as appropriate, at Secured Party's request to indicate
Secured Party's security interest in the Equipment. The Equipment is, and at
aH times will remain, personal property notwithstanding that the Equipment or
any Item thereof may now be, or hereafter become, in any manner affixed or
attached to, or embedded in, or

                                       7

<PAGE>

permanently resting upon real property or any improvement thereof or attached
in any manner to what is permanent as by means of cement, plaster, nails,
bolts, screws or otherwise. If requested by Secured Party, Debtor will obtain
and deliver to Secured Party waivers of interest or liens in recordable form
satisfactory to Secured Party from all persons claiming any interest in the
real property on which an Item of Equipment is or is to be installed or
located.

23.     LATE CHARGES. Time is of the essence in this Agreement and if any
Installment Payment is not paid within ten (10) days after the due date
thereof, Secured Party shall have the right to add and collect, and Debtor
agrees to pay: (a) a late charge on and in addition to, such Installment
Payment equal to five percent (5%) of such Installment Payment or a lesser
amount if established by any state or federal statute applicable thereto, and
(b) interest on such Installment Payment from thirty (30) days after the due
date until paid at the highest contract rate enforceable against Debtor under
applicable law but never to exceed eighteen percent (18%) per annum.

24.     NON-WAIVER. No covenant or condition of this Agreement can be waived
except by the written consent of Secured Party. Forbearance or indulgence by
Secured Party in regard to any breach hereunder will not constitute a waiver
of the related covenant or condition to be performed by Debtor.

25.     ADDITIONAL DOCUMENTS. In connection with and in order to perfect and
evidence the security interest in the Equipment granted Secured Party
hereunder Debtor will execute and deliver to Secured Party such financing
statements and similar documents as Secured Party requests. Debtor authorizes
Secured Party where permitted by law to make filings of such financing
statements without Debtor's signature. Debtor further will finish Secured
Party (a) on a timely basis, Debtor's future financial statements, including
Debtor's most recent annual report, balance sheet and income statement,
prepared in accordance with generally accepted accounting principles, which
reports, Debtor warrants, shall fully and fairly represent the true financial
condition of Debtor (b) any other information normally provided by Debtor to
the public and (c) such other financial data or information relative to this
Agreement and the Equipment, including, without limitation, copies of vendor
proposals and purchase orders and agreements, listings of serial numbers or
other identification data and confirmations of such information, as Secured
Party may from time to time reasonably request. Debtor will procure and/or
execute, have executed, acknowledge, have acknowledged, deliver to Secured
Party, record and file such other documents and showings as Secured Party
deems necessary or desirable to protect its interest in and rights under this
Agreement and interest in the Equipment. Debtor will pay as directed by
Secured Party or reimburse Secured Party for all filing, search, title
report, legal and other fees incurred by Secured Party in connection with any
documents to be provided by Debtor pursuant to this Paragraph or Paragraph 22
and any further similar documents Secured Party may procure.

26.     DEBTOR'S WARRANTIES. Debtor certifies and warrants that the financial
data and other information which Debtor has submitted, or will submit, to
Secured Party in connection with this Agreement is, or will be at time of
delivery, as appropriate, a true and complete statement of the matters
therein contained. Debtor further certifies and warrants: (a) this Agreement
has been duly authorized by Debtor and when executed and delivered by the
person signing on behalf of Debtor below will constitute the legal, valid and
binding obligation, contract

                                       8

<PAGE>

and agreement of Debtor enforceable against Debtor in accordance with its
respective terms; (b) this Agreement and each and every showing provided by
or on behalf of Debtor in connection herewith may he relied upon by Secured
Party in accordance with the terms thereof notwithstanding the failure of
Debtor or other applicable party to ensure proper attestation thereto,
whether by absence of a seal or acknowledgment or otherwise; (c) Debtor has
the right, power and authority to grant a security interest in the Equipment
to Secured Party for the uses and purposes herein set forth and (d) each Item
of Equipment will, at the time such Item becomes subject hereto, he in good
repair, condition and working order.

27.     ENTIRE AGREEMENT. This instrument with exhibits and related
documentation constitutes the entire agreement between Secured Party and
Debtor and will not be amended, altered or changed except by a written
agreement signed by the parties.

28.     NOTICES. Notices under this Agreement must be in writing and must be
mailed by United States mail, certified mail with return receipt requested,
duly addressed, with postage prepaid, to the party involved at its respective
address set forth at the foot hereof or at such other address as each party
may provide on notice to the other from time to time. Notices will be
effective when deposited. Each party will promptly notify the other of any
change in that party's address.

29.     GENDER, NUMBER: JOINT AND SEVERAL LIABILITY. Whenever the context of
this Agreement requires, the neuter gender includes the feminine or masculine
and the singular number includes the plural; and whenever the words "Secured
Party" are used herein, they include all assignees of Secured Party, it being
understood that specific reference to "assignee" in Paragraph 14 above is for
further emphasis. If there is more than one Debtor named in this Agreement,
the liability of each will be joint and several.

30.     TITLES. The tides to the Paragraphs of thin Agreement are solely for
the convenience of the parties and are not an aid in the interpretation of
the instrument.

31.     GOVERNING LAW; VENUE. This Agreement will be governed by and
construed in accordance with the laws of the State of California. Venue for
any action related to the Agreement will be in an appropriate court in San
Mateo County, California, to which Debtor consents, or in another court
selected by Secured Party which has jurisdiction over the parties. In the
event any provision hereof is declared invalid, such provision will be deemed
severable from the remaining provisions of this Agreement, which will remain
in full force and effect.

32.     TIME. Time is of the essence of this Agreement and for each and all
of its provisions.

                                       9

<PAGE>

         IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of July 20, 1995.

DEBTOR:

INTRABIOTICS PHARMACEUTICALS, INC.
816 Kifer Road
Sunnyvale, CA 94086

By: /s/ Kenneth J. Kelley
   --------------------------------------------------

Title:       PRESIDENT AND CEO
      -----------------------------------------------

SECURED PARTY:

LEASE MANAGEMENT SERVICES, INC.
2500 Sand Hill Road, Suite 101
Menlo Park, CA 94025

By: /s/ Barbara B. Kaiser
   --------------------------------------------------

Title:       EVP/GENERAL MANAGER
      -----------------------------------------------

                                      10

<PAGE>

[LEASE MANAGEMENT SERVICES, INC. LOGO]

                    ADDENDUM TO EQUIPMENT FINANCING AGREEMENT
                                  NUMBER 10782
              BETWEEN INTRABIOTICS PHARMACEUTICALS, INC. ("DEBTOR")
              AND LEASE MANAGEMENT SERVICES, INC. ("SECURED PARTY")

The printed form of Equipment Financing Agreement #10782 between the parties
dated July 20,1995 is amended as follows:

1.      At the end of the introductory paragraph insert "The terms and
conditions in the attached confirmation letter dated June 15, 1995 (the
"Confirmation Letter Agreement"), are specifically included as pan of this
Equipment Financing Agreement, including a commitment for a $750,000 line of
credit; PROVIDED, HOWEVER, that the "Loan Structure" shall be utilized
exclusively. In the event of a conflict between the terms of this Agreement
and the Confirmation Letter Agreement, the terms of the agreement and the
related loan documents shall govern."

2.      In Section 1, line 11, after the word "agreements", insert "executed
by Debtor in connection with this Agreement", and in line 12 after the word
"Party" insert "PROVIDED, HOWEVER, that the security interest of Secured
Party in the Equipment described in any Schedule will be released by Secured
Party promptly upon payment in full of Debtor's obligations under such
schedule and will not continue to secure performance under any other Schedule
still outstanding at that time."

3.      In Section 8, line 5, after the first appearance of the words
"Secured Party", insert "which consent shall not be unreasonably withheld".

4.      In Section 10, line 3, after the word "contract", insert "or
equivalent servicing plan".

5.      In Section 11, line 7, immediately following the phrase "at Secured
Party's option", insert "after consultation with Debtor". In clause (b)(ii)
of Section 11, delete the phrase "the discount rate of the Federal Reserve
Bank of San Francisco" and replace it with" the most current 90 day U.S.
Treasury Bill rate as quoted in The Wall Street Journal".

6.      In Section 12, line 4, after the words "Secured Party", insert
"reasonably".

7.      In Section 14, line 2, delete the phrase "from any cause whatsoever".
In line 5, delete the words "change or modification in any term, condition,
or amount of protection provided therein, must provide full breach of
warranty protection". To the last sentence of Section 14, add "PROVIDED,
HOWEVER, that public liability insurance (commercial general liability) with
primary limits of $1,000,000 with an excess policy of $1,000,000 shall be
deemed to satisfy this requirement."

8.      In Section 16, line 4, after the words "whatever kind and nature",
insert "except such as relate to or arise out of Secured Party's gross
negligence or willful misconduct".

9.      In Section 17, subsections (a) and (c), change each reference to
"days" to "business days"; in subsection (h), change "thirty (36) days" to
"sixty (60) days"; delete subsection (1) and

                                      1.

<PAGE>

replace it with "breach by Debtor of any lease or other agreement providing
financial accommodation in excess of $100,000 under which Debtor or its
property is bound, which breach is not cured or with respect to which no
provision has been made to cure within twenty (20) days"; and change
subsection (m) to read `subject to Paragraph 21, a transfer of effective
control of Debtor, if an organization.'.

10.     In Section 18, line 1, after the word "occurrence", insert "and
continuation".

11.     In Section 20, line 1, insert `reasonable' to precede "costs".

12.     To the end of the first paragraph of Section 21, add the following:

"In the event of a proposed statutory merger of the Debtor into another
corporation or a proposed sale or transfer by the Debtor of all or
substantially all of its assets to a third party business entity, then,
provided that (i) the Debtor is not in default under tiffs Agreement or under
any other agreement or Equipment Financing Agreement between the Debtor and
the Secured Party and (ii) the Secured Party or its assignee has been given
sufficient advance notice of the proposed merger, sale, or transfer together
with the necessary back/round as to the legal status, financial and credit
worthiness of the proposed surviving corporation, purchaser or transferee
(collectively, a "Transferee") and the Secured Party or its assignee has
approved such financial and credit worthiness of the Transferee in accordance
with its then existing credit criteria, the Secured Party agrees that it will
not unreasonably withhold it Consent to any such transfer or assignment of
this Agreement (and the transfer of the Equipment to such Transferee)
provided, further, that (a) the said Transferee assumes all of the Debtor's
obligations under this Agreement in form satisfactory to Secured Party or its
assignee (without releasing the Debtor), (b) the Secured Party is assured
that its first perfected security interest in the Equipment will continue in
full force and effect and the Transferee executes such UCC Financing
Statements as may be necessary to accomplish the same and (c) the Secured
Party is assured that the Equipment will be adequately covered by insurance
during any move thereof."

13.     In section 25, insert `reasonably" to precede "requests" in line 4
and "filing' in line 17.

14.     In section 25, line $, after "Secured Party", insert "upon Secured
Party's reasonable request or as set forth `m the Confirmation Letter
Agreement'.

15.     In Section 27, line 1, after the word "instrument" insert ", The
Addendum to Equipment Financing Agreement between the parties of even date
herewith,".

                                      2.

<PAGE>

     IN WITNESS WHEREOF, the undersigned have executed this Addendum this 20
day of July, 1995.

DEBTOR:

INTRABIOTICS PHARMACEUTICALS, INC.

By: /s/ Kenneth J. Kelley
   --------------------------------------------------

Title:     PRESIDENT AND CEO
      -----------------------------------------------

SECURED PARTY:

LEASE MANAGEMENT SERVICES, INC.

By: /s/ Barbara B. Kaiser
   --------------------------------------------------

Title:     EVP/GENERAL MANAGER
      -----------------------------------------------

                                      3.

<PAGE>

      [LEASE MANAGEMENT SERVICES, INC. LOGO]

                                   ADDENDUM TO

                          EQUIPMENT FINANCING AGREEMENT

                                  NUMBER 10782

                                 BY AND BETWEEN

                 INTRABIOTICS PHARMACEUTICALS, INC., AS DEBTOR,

                                       AND

                LEASE MANAGEMENT SERVICES, INC., AS SECURED PARTY

INTRABIOTICS PHARMACEUTICALS, INC., as Debar, hereby acknowledges its
responsibility to pay, and agrees to pay any taxes which may be due to the
State of California or where applicable, for the collateral covered under the
above referenced agreement.

DEBTOR:

INTRABIOTICS PHARMACEUTICALS, INC.

By: /s/ Kenneth J. Kelley
   --------------------------------------------------

Title:     PRESIDENT AND CEO
      -----------------------------------------------

                                      1.

<PAGE>

                 [LEASE MANAGEMENT SERVICES, INC. LETTERHEAD]

June 15, 1995

Mr. Michael P. Becket
Chief Financial Officer
IntraBiotics Pharmaceuticals, Inc.
490 San Antonio Road
Palo Alto, CA 94306

Dear Michael:

We are pleased to confirm credit approval of the equipment lease line for
IntraBiotics Pharmaceuticals, Inc.:

LESSEE:             IntraBiotics Pharmaceuticals, Inc.

LESSOR:             Lease Management Services, Inc.

EQUIPMENT:          A master lease line of $750,000 to finance new and
                    previously purchased equipment as per the attached lists.
                    All equipment is subject to Lessor's final approval.

LEASE TERM &
RENTAL FACTOR &
END-OF-TERM:        Forty-eight (48) months Rental factor. 2.719% $1.00 buyout
                    at the end of term.

                    The rental factors, above, are a per cent of equipment cost
                    payable monthly in advance for each lease or loan schedule.

<PAGE>

Mr. Michael P. Becket
June 15, 1995
Page 2

YIELD:              The rental factors above are based on the average of the
                    Federal Reserve's 3-year and 5-year treasuries as reported
                    in The Wall Street Journal for the week ending March 3,
                    1995.

                    The yield in this transaction will remain the same for
                    the first 60 days from credit approval. Thereafter, if
                    the average of the treasury indices above increases or
                    decreases by more than 35 basis points, the yield will be
                    adjusted basis-point for basis-point over the 35 point
                    change. The rental factor for each schedule will be set
                    at the time it is documented and will be fixed for the
                    term.

LEASE TYPE;         Net lease - insurance, personal property taxes and
                    maintenance paid by Lessee.

LOAN STRUCTURE:     Where appropriate, for sales tax, paperwork, or other
                    considerations, and with Lender's approval, schedules may
                    be documented as loans rather than leases. Invoices paid
                    by Borrower must be submitted to Lender within 60 days of
                    payment date or funded within 60 days of credit approval.
                    Copies of invoices and canceled checks will be adequate
                    proof of purchase. (With Lender's consent, a copy of the
                    check front, followed by the bank statement, when
                    available, may be substituted for copies of canceled
                    checks.) Term, rental factor, end-of-term balloon,
                    collateral provisions, and contingencies will be the
                    same. Borrower will grant Lender a first security
                    interest in the equipment.

WARRANT:            In consideration for this financing, Lessee shall grant
                    to Lessor a warrant to purchase 54,000 shares of Lessee's
                    Series "B" preferred stock. The exercise price of the
                    warrant will be $1.00 / share. The warrant must be
                    exercised within 72 months from the date of issuance.

<PAGE>

Mr. Michael P. Becket
June 15, 1995
Page 3

CONTINGENCIES:      1)   Standard documentation satisfactory to Lessee and
                         Lessor.

                    2)   Releases against this lease credit line are contingent
                         upon Lessee providing evidence of reasonable
                         performance against the most. current Board approved
                         operating plan. This credit line, unless extended in
                         writing, expires 6/30/96.

                    3)   Throughout the lease term, Lessee shall provide
                         monthly financials within 30 days of each month-end,
                         and annually, an audited statement. All such
                         financial statements to be prepared using generally
                         accepted accounting principles.

                    4)   Complete equipment specifications to be provided to
                         Lessor before each takedown.

                         All equipment to be located at Lessee's Sunnyvale,
                         California, headquarters.

                         Custom equipment; software; upgrades to equipment to
                         which Lessor does not have clear title or first
                         security interest; disposables; "soft costs' such as
                         plumbing, wiring, labor or installation; sales tax
                         and freight in excess of 15% per invoice, and
                         leasehold or tenant improvements in excess of
                         $100,000 are excluded from this line.

                    5)   This is a statement of mutual intent and not an
                         agreement to Lease. The terms set forth above are not
                         therefore binding until a lease agreement is executed
                         between Lessor and Lessor.

COMMITMENT FEE:     You have paid a $7,500.00 commitment fee which shall be
                    fully credit pro-rata to deposits or rentals due. All or a
                    portion of said , fee will be forfeited if this transaction
                    is approved by Lessor and not executed be Lessee as called
                    for in this proposal.

<PAGE>

Mr. Michael P. Becket
June 15, 1995
Page 4

We're delighted that you've chosen LMSI to help with your equipment financing
needs and promise to continue our efforts to give you the best service in the
business.

Best regards,

Stephanie K. Wagner               ACCEPTED: INTRABIOTICS PHARMACEUTICALS, INC.
Vice President Marketing          By:
                                     ----------------------------------------
                                  Title:            PRESIDENT & CEO
                                        -------------------------------------
                                  DATE:             JULY 20, 1995
                                       --------------------------------------

<PAGE>

                 [LEASE MANAGEMENT SERVICES, INC. LETTERHEAD]

July 22, 1997

Kenneth J. Kelley
President and Chief Executive Officer
IntraBiotics Pharmaceuticals, Inc.
816 Kifer Road
Sunnyvale, CA 94086

Dear Ken:

We are pleased to present our proposal to IntraBiotics Pharmaceuticals, Inc.:

BORROWER:           IntraBiotics Pharmaceuticals, Inc.

LENDER:             Lease Management Services, Inc.

EQUIPMENT:          A $1,750,000 extension to your equipment financing line of
                    credit for equipment as per the attached list, including
                    freight and sales tax up to 15% per invoice. Equipment to
                    consist of the following:

                    Group "A" Tenant improvements                      $850,000

                    Group "B" Lab equipment, computers & furniture     $900,000

                    All equipment is subject to Lender's final approval. To
                    minimize paperwork, the buildout and tenant improvement
                    will be financed on a single loan schedule within 30 days
                    of credit approval. Lender will provide best efforts to
                    obtain credit approval and commence documentation of the
                    first loan schedule by 8/29/97. Borrower to provide
                    Lender with back-up invoices for this schedule by
                    10/31/97.

TERM, RENTAL
FACTOR AND
BALLOON:            Forty eight (48) months at 2.47% of the loan amount,
                    payable monthly in advance for each schedule, plus a 5%
                    balloon at the end of term.

<PAGE>

Kenneth J. Kelley
July 22, 1997
Page 2

INDEXING:           The yield in this transaction will remain the same for
                    the 30 days past credit approval; after that, it will be
                    adjusted relative to any increase in comparable term US
                    Treasury maturities based on the average of the Federal
                    Reserve's 3-year and 5-year treasuries (6.08%) for the
                    week ending 7/18/97. The payment factor for each schedule
                    will be set at the time it is documented and will be
                    fixed for the term.

STRUCTURE:          Secured loan. Borrower will grant Lender a first security
                    interest in the equipment.

COLLATERAL:         Borrower may select from one of the three collateral
                    options, below:

                    OPTION 1: In consideration for this financing, Borrower
                    shall grant to Lender a warrant to purchase Borrower's
                    Series D Preferred Stock. The warrant shares will be for
                    5% of equipment cost (calculated at $1.75 / share =
                    50,000 shares). The warrant may be exercised by cash or
                    net issue at $2.50 / share and will include standard
                    antidilution provisions. However, there shall be no price
                    protection and no Registration Rights associated with the
                    warrant or shares of stock. The exercise period shall end
                    at the earlier of Borrower's IPO or 72 months from the
                    date of issue.

                    OPTION 2: The warrant will be for 2.5% of equipment cost
                    (i.e., 25,000 shares) plus a 15% deposit on tenant
                    improvements. All deposits and accrued interest will be
                    returned to Borrower at achievement of the earlier of:

                    A)   Such time as Borrower's net unrestricted cash is at
                         least $25,000,000 and equivalent to at least 36 months
                         cash needs, according to the most-current
                         Board-approved operating budget; OR,

                    B)   In the event of an acquisition, if a credit-worthy
                         acquirer executes an assignment or guarantee
                         acceptable to Lessor.

                    OPTION 3: No cash collateral will be required except in
                    the event Lessee's unrestricted cash, excluding debt,
                    falls below the greater of $5,000,000 or 9 months' cash
                    needs. ["9 months' cash needs" will be defined as Lessee's
                    cash burn for the quarter just completed multiplied by a
                    factor of 3.3].

<PAGE>

Kenneth J. Kelley
July 22, 1997
Page 3

COLLATERAL:         In that event, Lessee will provide to Lessor a cash
                    security deposit equivalent to 40% of original equipment
                    cost on all Group "A" equipment and 20% on all Group "B"
                    equipment. In no event will deposits held exceed the
                    remaining gross lease receivable.

                    This cash will be released when Lessee's unrestricted cash
                    position, excluding debt, recovers and is greater than the
                    above benchmark for at least one quarter and continues to
                    remain greater.

                    Interest on any deposits held shall be credited to Lessee
                    at the rate of 5.0% annually. Interest will be accrued
                    and paid with the return of the security deposit.

CONTINGENCIES:      1)   Standard documentation satisfactory to Borrower and
                         Lender.

                    2)   Releases against this financing line are contingent
                         upon Borrower providing evidence of reasonable
                         performance against the most current operating plan or
                         subsequent Board-approved plan acceptable to Lender.
                         This credit line, unless extended in writing, expires
                         6/30/98.

                    3)   Verification of achievement of benchmarks is to be
                         acceptable to Lessor. Reduction or return of
                         deposits prior to end of term is contingent upon
                         receipt of all payments and financials to date as
                         agreed, no default under any financial obligation,
                         and no material adverse change in Lessee's financial
                         condition or management.

                    4)   Throughout the lease term, Borrower shall provide
                         monthly financials within 30 days of each month-end,
                         and annually, an audited statement. All such financial
                         statements to be prepared using generally accepted
                         accounting principles.

                    5)   Complete equipment specifications to be provided to
                         Lender before each takedown. All equipment to be
                         located at Borrower's Bay Area, California,
                         headquarters.

<PAGE>

Kenneth J. Kelley
July 22, 1997
Page 4

CONTINGENCIES:      Custom equipment; software; upgrades to equipment to
                    which Lessor does not have clear title or first security
                    interest; disposables; "soft costs" such as sales tax and
                    freight IN EXCESS OF 15% PER invoice; plumbing, wiring,
                    labor, installation and leasehold or tenant improvements
                    IN EXCESS of $850,000 are excluded from this line.

                    6)   Subject to final approval by Lender's Credit
                         Committee.

                    7)   This is a statement of mutual intent and not a
                         financing agreement. The terms set forth above are not
                         therefore binding until an equipment financing
                         agreement is executed between Borrower and Lender for
                         specific items of equipment.

COMMITMENT FEE:     $7,500.00 commitment fee. This fee will be fully
                    credited, pro-rata, to schedules as financed. It will be
                    forfeited if this transaction is approved by Lender and
                    not executed by Borrower as called for in this proposal.
                    It will be returned to Borrower promptly in the event
                    Lender fails to approve this transaction.

If the terms of this proposal meet with your approval, please sign and return
with your commitment fee, and we will proceed. Unless previously accepted,
this proposal will expire 8/8/97.

We're very pleased to help finance your equipment needs and promise to bring
give you the best service in the industry.

Sincerely,                       Collateral option selected:
                                          Option 1   X
                                                  -------
                                          Option 2
                                                  -------
                                          Option 3
                                                  -------

Stephanie K. Wagner              ACCEPTED:  INTRABIOTICS PHARMACEUTICALS, INC.
Vice President Marketing         BY:
                                    ---------------------------------------
                                 TITLE:       PRESIDENT & CEO
                                       ------------------------------------
                                 DATE:        8-5-97
                                      -------------------------------------

<PAGE>

                    [LEASE MANAGEMENT SERVICES, INC. LOGO]

                                  1ST AMENDMENT

                        TO EQUIPMENT FINANCING AGREEMENT
                                  NUMBER 10782

                                 BY AND BETWEEN

                     INTRABIOTICS PHARMACEUTICALS, AS DEBTOR

                                       AND

                LEASE MANAGEMENT SERVICES, INC., AS SECURED PARTY

Debtor and Secured Party hereby agree to amend Equipment Financing Agreement
Number 10782 and all schedules thereunder, and all other related documents
(herein collectively referred to as the "Agreements") to reflect Debtor's
change in address from 816 Kifer Road, Sunnyvale, CA 94086 to 1245 Terra
Bella Avenue, Mountain View, CA 94043.

All other terms and conditions remain the same.

IN WITNESS WHEREOF, Secured Party and Debtor have each caused this Amendment
to be duly executed in their respective names.

DEBTOR:                                SECURED PARTY:

INTRABIOTICS PHARMACEUTICALS, INC.     LEASE MANAGEMENT SERVICES, INC.

BY: /s/ [illegible]                    BY: /s/ Barbara B. Kaiser
   -------------------------------        ------------------------------------

TITLE:   VP FINANCE & CFO              TITLE: General Manager
      ----------------------------           ---------------------------------

DATE:    29 SEPTEMBER 97               DATE: 29 September 1997
     -----------------------------         -----------------------------------

<PAGE>

                 [LEASE MANAGEMENT SERVICES, INC. LETTERHEAD]

December 14, 1998

Ms. Janet I. Swearson
VP/ Chief Financial Officer
IntraBiotics Pharmaceuticals, Inc.
1245 Terra Bella Avenue
Mountain View, CA 94043

Dear Janet:

We are pleased to present the following equipment financing proposal to
IntraBiotics Pharmaceuticals, Inc.:

BORROWER:           INTRABIOTICS PHARMACEUTICALS, INC.;

LENDER:             Lease Management Services, Inc.

EQUIPMENT:          A master line of credit of $3,000,000 to finance equipment
                    per the attached list, including: i

                    > $1,000,000 - lab & scientific equipment About Equals
                    500,000 - computers, lab & Office furniture, hoods,
                    network, phone, & similar = 1,500,000 - soft costs
                    (leaseholds, software, tax, & $3,000,000 similar)

                    Previously-purchased equipment as well as new and used
                    equipment may be financed under this line. All equipment is
                    subject to Lender's final approval.

TERM &
PAYMENT:            OPTION 1: Forty-two (42) months at 2.453% of equipment cost,
                    plus a 15% balloon at end of term. [Subject to satisfactory
                    credit review, the balloon may be paid over 9 months at
                    1.728% per month.]

                    OPTION 2: Forty-eight (48) months al 2.469% of equipment
                    cost, plus a $1.00 payment at end of term.

<PAGE>

Ms. Janet I. Swearson
December 14, 1998
Page 2

                    Payment factors are quoted as a percent of equipment cost,
                    payable monthly in advance for each loan schedule,

                    There are no interim rents. Amortization begins at each
                    schedule start date.

                    The yield in this transaction will be adjusted relative
                    to any increase in comparable term U.S. Treasury
                    maturities. The payment factor for each schedule will be
                    set at the time it is documented and will be FIXED for
                    the term, The payment factors above are based on the
                    average of the Federal Reserve 3- and 5-year treasuries
                    (4,41%) for the week ending 12/4198.

STRUCTURE:          Secured loan. Borrower retains title and keeps
                    depreciation. Borrower will grant Lender a first security
                    interest in the equipment to be financed.

                    Because this is a loan rather than a sale/leaseback, there
                    is no additional tax on previously purchased equipment and
                    no sales tax at end of term.

COVENANT:
(SOFT COSTS ONLY)   No additional collateral will be required except in the
                    event Borrower's unrestricted cash, excluding long-term
                    debt, falls below the appropriate benchmark below. In that
                    event, Borrower will provide to Lender a cash, security
                    deposit equivalent to 20% of aggregate SOFT COST financed,
                    but in no event to exceed the remaining gross receivable.

                    PRE-IPO BENCHMARK: unrestricted cash, excluding long-term
                    debt, must be equal to the greater of $6,000,000 or 6
                    months' cash needs. ["6 months' cash needs" will be
                    defined as the cash burn for the 3 months just completed,
                    multiplied by a factor of 2.3.]

                    POST-IPO BENCHMARK: unrestricted cash, excluding
                    long-term debt, must be equal to the greater of
                    $15,000,000 or 9 months' cash needs. ["9 months' cash
                    needs" will be defined as the cash burn for the 3 months
                    just completed, multiplied by a factor of 3.2.]

<PAGE>

Ms. Janet I. Swearson
December 14, 1998
Page 3

                    Interest will be accrued at 3.0% annually and will be paid
                    with the return of the deposit.

                    This deposit will be released when Borrower's unrestricted
                    cash, excluding debt, recovers and is greater than the
                    appropriate benchmark above for at least one quarter and
                    continues to remain greater.

                    Alternatively, in the event of an acquisition, if a
                    credit-worthy acquiror executes an assignment or
                    guarantee acceptable to Lender, any deposits and interest
                    held will be returned to Borrower.

CONTINGENCIES:

                    1)   Standard documentation satisfactory to Borrower and
                         Lender. (Most of the master documents for this line
                         are already in place.)

                    2)   Releases against this credit line are contingent upon
                         no material adverse change or threatened material
                         adverse change in Borrower's financial condition,
                         management, partnerships, or Clinical progress. This
                         credit line, unless extended in writing, expires
                         12/31/99.

                    3)   Borrower will grant Lender a continuing first
                         security interest in all equipment (other than
                         computer equipment) financed under Equipment
                         Financing Agreement #10782. This lien Will stay in
                         effect until all of Borrower's obligations under
                         this new financing are fulfilled.

                    4)   Throughout the loan term, Borrower will provide
                         monthly financials within 30 days of each month end,
                         and annually, an audited statement within 90 days of
                         fiscal year end or at such time as Borrower's Board
                         receives the audit. All such financial statements
                         are to be prepared using generall accepted
                         accounting principles.

<PAGE>

Ms. Janet I, Swearson
December 14, 1998
Page 4

                    5)   All equipment is to be located at Borrower's San
                         Francisco Peninsula facilities un less Lender gives
                         prior approval to do otherwise.

                    Upgrades to equipment to which Lender does not have a first
                    security interest and disposables are excluded from this
                    line.

                    6)   Subject to final approval by Lender's Credit
                         Committee,

                    7)   This is a statement of mutual intent and not an
                         agreement to finance. The terms set forth above are
                         not therefore binding until a loan agreement is
                         executed between Borrower and Lender for specific
                         items of equipment.

COMMITMENT FEE:     $20,952.00 commitment fee. [The remaining commitment fee
                    from Borrower's prior line (About Equals $952, after
                    Schedule #12) will be applied to this line leaving a
                    balance of $20,000 to be paid.] This fee will be fully
                    credited pro-rata to schedules as financed. All or a
                    portion of said fee Will be forfeited if this transaction
                    is approved by Lender and not executed by Borrower as
                    called for in this proposal. The entire fee will be
                    returned to Borrower promptly in the event Lender fails
                    to approve this transaction.

If the terms of this proposal meet with your approval, please sign and return
with your commitment fee and we will proceed. Unless previously accepted,
this proposal will expire 12/23/98.

We look forward to meeting your equipment financing needs and continuing a
mutually rewarding relationship.

Sincerely,                        ACCEPTED: INTRABIOTICS PHARMACEUTICALS, INC.

                                  BY: /s/ Kenneth J. Kelley
                                     -----------------------------------------
Barbara B. Kaiser                 TITLE: President and CEO
EVP/General Manager                     --------------------------------------
                                  DATE:
                                       ---------------------------------------

PRICING: Option 1:                Option 2:
                  ------                   ------

<PAGE>

[LMSI VENTURE FINANCE LOGO]

                       NEGATIVE COVENANT PLEDGE AGREEMENT

Agreement made and catered into as of this 1st day of April 1999, by and
between INTRABIOTICS PHARMACEUTICALS, Inc., a Delaware Corporation, with its
principal place of business at 1245 Terra Bella Avenue, Mountain View, CA
94043, ("Pledgor") and LMSI VENTURE FINANCE, a division of Phoenixcor, Inc.,
a Delaware Corporation, with its principal place of business at 2500 Sand
Hill Road, Suite 101, Menlo Park, CA 94025 ("Pledgee").

In consideration of, and as an inducement for Pledgee to enter into Equipment
Financing Agreement No. 10782, and all Schedules thereunder, (referred to
hereinafter as the "Agreements") with Pledgor, and to secure the payment and
performance of all Pledgor's obligations under the Agreements, Pledgor and
Pledgee agree as follows:

1)       If at any point in time from the date of this Agreement, Pledgor's
         Unrestricted Cash (as defined below) falls below the financial
         requirements specified in A) or B), or Pledgor is in default of the
         Agreements, Pledgor agrees to provide to Pledgee within 10 days of
         such occurrence a cash security deposit in an amount equal to 20% of
         original, aggregate soft costs (i.e., leaseholds, software, tax, and
         similar) financed under the Agreements ("Collateral pledge"), but in
         no event to exceed the remaining amounts owed by Pleedgor to Pledgee.

         A)       PRE-IPO: In the event Unrestricted Cash falls below the
                  greater of $6,000,000 or 6 months' cash needs (defined as
                  the cash burn for the 3 months just completed, multiplied
                  by a factor of 2.3).

         B)       POST-IPO: In the event Unrestricted Cash falls below the
                  greater of $15,000,000 or 9 months' cash needs (defined as
                  the cash burn for the 3 months just completed, multiplied
                  by a factor of 3.2).

         Pledgor shall be deemed to have granted to Pledgee a security interest
         in such cash security deposit upon its delivery to Pledgee.

         Unrestricted Cash shall be defined as cash on hand, including
         investments in marketable securities with maturities of less than
         fourteen (14) months, less all long-term debt which is not
         subordinated to Pledgee.

         The failure to timely provide the Collateral Pledge to Pledgee shall
         constitute an event of default under the Agreements.

2)       If Pledgor is a private company, then Pledgor agrees to provide
         monthly financial statements, including a balance sheet, statement
         of operations, and cash flow statement, to Pledgee within 30 days of
         each month end, and an audited annual statement to Pledgee at such
         time as Pledgor's Board receives the audit, but in no event latter
         than 120 days from Pledgor's fiscal year end. If Pledgor is a public
         company, then Pledgor agrees to provide quarterly and annual audited
         financial statements to Pledgee within 10 days after

<PAGE>

         the statements are provided to the Securities and Exchange
         Commission ("SEC"). All such statements are to be prepared using
         generally accepted accounting principles and are to be in compliance
         with applicable SEC requirements. Failure to provide these
         statements as specified herein will constitute an event of default
         under the Agreements.

         Additionally, at any time that Pledgor's Unrestricted Cash would
         fall below the appropriate benchmark above if not augmented within 3
         months, Pledgor's Chief Financial Officer or other senior officer
         will, at Pledgee's request, provide Pledgee with the monthly closing
         cash balance by not later than the 10th business day following each
         month-end.

3)       Pledgor agrees to keep all Unrestricted Cash within the following
         financial institutions:

                  Financial Institution:        ______________________________
                  Account Number:               ______________________________
                  Officer Contact:              ______________________________
                  Phone Number:                 ______________________________

                  Financial Institution:        ______________________________
                  Account Number:               ______________________________
                  Officer Contact:              ______________________________
                  Phone Number:                 ______________________________

                  Financial Institution:        ______________________________
                  Account Number:               ______________________________
                  Officer Contact:              ______________________________
                  Phone Number:                 ______________________________

         Any change in the above information shall be provided in writing by
         Pledgor to Pledgee within five (5) days of such change.

         Pledgor hereby authorizes these financial institutions to give
         specific account balance information to Pledgee and agrees to
         execute any other documents or take any other action required to
         provide verification of Unrestricted Cash balances.

4)       Pledgee agrees to pay interest on the Collateral Pledge at a simple
         interest rate equal to 3.0% per annum, which interest will accrue
         from the date the Collateral Pledge is received until the date the
         Collateral Pledge and interest are returned to the Pledgor.

5)       Pledgor agrees to recognize the Collateral Pledge as a contingent
         liability and to establish the appropriate reserves.

6)       Upon any default by Pledgor under the Agreements and while the same
         is continuing, interest accrual on the Collateral Pledge shall cease
         and Pledgee may, at its option, apply the Collateral Pledge and any
         interest accrued to that date toward the satisfaction of Pledgor's
         obligations under the Agreements and the payment of all reasonable
         costs and expenses incurred by Pledgee as a result of such default,
         including reasonable attorney's fees. Pledgee is liable to Pledgor
         only for any surplus remaining from said Collateral Pledge after the
         full satisfaction of the foregoing obligations, costs and expenses.

<PAGE>

7)       Pledgee shall have no duty to first commence an action against or
         seek recourse from Pledgor, if an event of default occurs and is
         continuing under the Agreements, before enforcing the provisions of,
         and proceeding under the provisions of, this Negative Covenant
         Pledge Agreement. The obligations of Pledgor under this Negative
         Covenant Pledge Agreement shall be absolute and unconditional and
         shall remain in full force and effect without regard to, and shall
         not be released or discharged or in any way affected by:

         A)       any amendment or modification of or supplement to the
                  Agreements;

         B)       any exercise or non-exercise of any right, remedy or
                  privilege under or in respect to this Negative Covenant
                  Pledge Agreement, the Agreements, or any other instrument
                  provided for in the Agreement(s), or any waiver, consent,
                  explanation, indulgency or actions or inaction with respect
                  to any such instrument; or

         C)       any bankruptcy, insolvency, reorganization, arrangement,
                  readjustment, composition, liquidation or similar
                  proceeding of Pledgor.

8)       The entire Collateral Pledge and any accrued interest will be
         returned to Pledgor when Pledgor's Unrestricted Cash exceeds the
         applicable benchmark above for a period of at least one fiscal
         quarter and continues to remain greater than the applicable
         benchmark and Pledgor is not in default under the Agreements or
         under any material financial obligation. (Alternatively, the entire
         Collateral Pledge and any accrued interest will be returned
         immediately in the event Pledgor's new equity or other
         non-refundable cash is great enough, in Pledgee's reasonable
         judgment, to keep Pledgor's Unrestricted Cash above the applicable
         benchmark for at least three fiscal quarters and Pledgor is not in
         default under the Agreements or under any material financial
         obligation).

         Alternatively, in the event of an acquisition, if a credit-worthy
         acquiror executes an assignment or guarantee acceptable to Pledgee,
         any deposits and accrued interest held will be returned to Pledgor.

         Return of any required Collateral Pledge prior to the Termination of
         the Agreements (as defined below) is contingent upon the following
         additional conditions: (a) verification of all benchmarks is to be
         acceptable to Pledgee; (b) Pledgor is not in default under the
         Agreements; and (c) Pledgor has not suffered any material adverse
         change within the past 12 months and is not aware of any prospective
         material adverse change.

         The "Termination of the Agreements" shall be defined as the
         satisfaction of all Pledgor's obligations under the Agreements.

         If the Collateral Pledge is returned prior to the Termination of the
         Agreements, this Negative Covenant Pledge Agreement shall remain in
         full force and effect.

9)       If the Collateral Pledge has not been previously returned, upon
         Termination of the Agreements Pledgee shall deliver the Collateral
         Pledge (less any portion of same chased, sold, assigned or delivered
         pursuant to, and under the circumstances specified in, Paragraph 6
         hereof) promptly to Pledgor, and this Negative Covenant Pledge
         Agreement shall thereupon be without further effect.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Negative Covenant
Pledge to be executed as of the date first written above.

PLEDGOR:                               PLEDGEE:

INTERABIOTICS PHARMACEUTICALS, INC.    LMSI VENTURE FINANCE

By: /s/ Janet I. Swearson              By: /s/ Barbara B. Kaiser
   --------------------------------       ------------------------------------
                                                   Barbara B. Kaiser

Title:   CHIEF FINANCIAL OFFICER       Title:       EVP/GENERAL MANAGER
      -----------------------------          ---------------------------------

<PAGE>

                     [LMSI VENTURE FINANCE LETTERHEAD]

March 15, 1999

Mr. Peter S. Garcia
Vice President/CFO
IntraBiotics Pharmaceuticals, Inc.
1245 Terra Bella Ave.
Mountain View, CA 94043

Dear Peter:

This will confirm approval of a new $3,000,000 equipment financing facility
for IntraBiotics. The terms will be as specified in the 12/14198 proposal.

Most of your master documents are already in place, so we are ready to go
when you are. Cynthia Murayama, Contract Manager, will be calling shortly to
update information regarding authorized signers, insurance, landlord, etc.

The first financing, expected 4/1, may include all equipment purchased since
the prior line expired (8/31/98) as well as all of the leaseholds for
IntraBiotics' new facility. If you prefer, we can do these on separate
schedules - one for equipment and one for leaseholds. For the equipment, we
will need copies of invoices and payment checks (front and back) for ail
previously-purchased equipment and original invoices for newly-acquired
equipment for which the vendor has not yet been paid. However, for leasehold
financing, you may follow with invoices over the next 120 days.

Please call with any questions.

Congratulations on IntraBiotics' impressive performance this year. We are
looking forward to working with you and are delighted to be able to continue
to work with IntaBiotics.

Best regards,

/s/ Barbara B. Kaiser

Barbara B. Kaiser
EVP/ General Manager

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