Document:

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                                                                   EXHIBIT 10.39

                                      LEASE
                   (SINGLE TENANT; STAND-ALONE; NET - "AS-IS")

                                     BETWEEN

                               THE IRVINE COMPANY

                                       AND

                          MOLECULAR DEVICES CORPORATION

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                                      LEASE

                   (SINGLE TENANT; STAND-ALONE; NET - "AS-IS")

      THIS LEASE is made as of the 28th day of May, 2002, by and between THE
IRVINE COMPANY, a Delaware corporation hereafter called "LANDLORD," and
MOLECULAR DEVICES CORPORATION, a Delaware corporation hereinafter called
"TENANT."

                       ARTICLE I. BASIC LEASE PROVISIONS

      Each reference in this Lease to the "BASIC LEASE PROVISIONS" shall mean
and refer to the following collective terms, the application of which shall be
governed by the provisions in the remaining Articles of this Lease.

1.    Premises: The Premises are more particularly described in Section 2.1.

2.    Address of Building: 1312 Crossman Avenue, Sunnyvale, CA 94089

3.    Use of Premises: General office or laboratory research and development
      facility, including wet chemistry, manufacturing and biology labs, clean
      rooms and instrument assembly, and other legal uses.

4.    Commencement Date: May 1,2003

5.    Term: The Term of this Lease shall expire at midnight on October 31, 2007.

6.    Basic Rent: Ninety-Two Thousand Seven Hundred Eighteen Dollars
      ($92,718.00) per month.

      Basic Rent is subject to adjustment as follows:

      Commencing May 1, 2004, the Basic Rent shall be Ninety-Five Thousand Five
      Hundred Dollars ($95,500.00) per month.

      Commencing May 1, 2005, the Basic Rent shall be Ninety-Eight Thousand
      Three Hundred Sixty-Five Dollars ($98,365.00) per month.

      Commencing May 1, 2006, the Basic Rent shall be One Hundred One Thousand
      Three Hundred Fifteen Dollars ($101,315.00) per month.

      Commencing May 1, 2007, the Basic rent shall be One Hundred Four Thousand
      Three Hundred Fifty-Five Dollars ($104,355.00) per month.

7.    Guarantor(s): N/A

8.    Floor Area: Approximately 54,540 rentable square feet

9.    Security Deposit: $114,791.00

10    Broker(s): CRESA Partners

11.   Additional Insureds: Insignia/ESG, Inc.

12.   Address for Payments and Notices:

      LANDLORD                                     TENANT

      THE IRVINE COMPANY                           MOLECULAR DEVICES CORPORATION
      c/o Insignia/ESG, Inc.                       1312 Crossman Avenue
      160 West Santa Clara Street                  Sunnyvale, CA 94089
      Suite 1350
      San Jose, CA 95113

      with a copy of notices to:

      THE IRVINE COMPANY
      dba Office Properties
      8105 Irvine Center Drive, Suite 300
      Irvine, CA 92618
      Attn: Senior Vice President, Operations
      Office Properties

13.   Tenant's Liability Insurance Requirement $2,000,000.00

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                              ARTICLE II. PREMISES

      SECTION 2.1. LEASED PREMISES. Landlord leases to Tenant and Tenant leases
from Landlord the premises shown in Exhibit A (the "PREMISES"), containing
approximately the rentable square footage set forth as the "FLOOR AREA" in Item
8 of the Basic Lease Provisions. The Premises consist of all of the rentable
square footage within the building identified in Item 2 of the Basic Lease
Provisions (the "BUILDING"). The Building and all attendant Common Areas shall
hereinafter be referred to as the "SITE"). All references to "FLOOR AREA" in
this Lease shall mean the rentable square footage set forth in Item 8 of the
Basic Lease Provisions. The rentable square footage set forth in Item 8 may
include or have been adjusted by various factors, including, without limitation,
a load factor for any vertical penetrations, stairwells or similar features or
areas of the Building. Tenant agrees that the Floor Area set forth in Item 8
shall be binding on Landlord and Tenant for purposes of this Lease regardless of
whether any future or differing measurements of the Premises or the Building are
consistent or inconsistent with the Floor, Area set forth in Item 8.

      SECTION 2.2. ACCEPTANCE OF PREMISES. Tenant acknowledges that neither
Landlord nor any representative of Landlord has made any representation or
warranty with respect to the Premises, the Building or the Site or their
respective suitability or fitness for any purpose, including without limitation
any representations or warranties regarding zoning or other land use matters,
and that neither Landlord nor any representative of Landlord has made any
representations or warranties regarding (i) what other tenants or uses may be
permitted or intended in the Building or the Site, or (ii) any exclusivity of
use by Tenant with respect to its permitted use of the Premises as set forth in
Item 3 of the Basic Lease Provisions. Tenant further acknowledges that neither
Landlord nor any representative of Landlord has agreed to undertake any
alterations or additions or construct any improvements to the Premises and that
Tenant's lease of the Premises shall be on an "as is" basis. As of the
Commencement Date, Tenant shall be conclusively deemed to have accepted the
Premises and those portions of the Building and Site in which Tenant has any
rights under this Lease, which acceptance shall mean that it is conclusively
established that the Premises and those portions of the Building and Site in
which Tenant has any rights under this Lease were in satisfactory condition and
in conformity with the provisions of this Lease. Nothing contained in this
Section shall affect the commencement of the Term or the obligation of Tenant to
pay rent.

      SECTION 2.3. BUILDING NAME AND ADDRESS. Tenant shall not utilize any name
selected by Landlord from time to time for the Building and/or the Site as any
part of Tenant's corporate or trade name. Landlord shall have the right to
change the name, address, number or designation of the Building or Site,
provided that Landlord shall reimburse Tenant for any actual costs incurred (but
not to exceed $1,500.00) as a result of such change.

                               ARTICLE III. TERM

      SECTION 3.1. GENERAL. Subject to the provisions of Section 3.2 below, the
term of this Lease ("TERM") shall commence on the date set forth in Item 4 of
the Basic Lease Provisions (the "COMMENCEMENT DATE"), and shall expire on the
date set forth in Item 5 of the Basic Lease Provisions (the "EXPIRATION DATE").

      SECTION 3.2. RIGHT TO EXTEND THIS LEASE. Provided that Tenant is not in
default under any provision of this Lease at the time of exercise of the
extension right granted herein, and provided further that Tenant will be
occupying the entire Premises at the commencement of the extension term, Tenant
may extend the Term of this Lease for one (1) period of sixty (60) months.
Tenant shall exercise its right to extend the Term by and only by delivering to
Landlord, not less than six (6) months or more than nine (9) months prior to the
expiration date of the Term, Tenant's written notice of its irrevocable
commitment to extend (the "Commitment Notice"). Should Tenant fail timely to
deliver the Commitment Notice, then this extension right shall thereupon lapse
and be of no further force or effect. The Basic Rent payable under the Lease
during the extension of the Term shall be at the prevailing "Fair Market Rent"
(including periodic adjustments) for comparable space as of the commencement of
the extension period. In no event shall the monthly Basic Rent payable for the
extension period be less than the Basic Rent payable during the month
immediately preceding the commencement of such extension period. For purposes
hereof, "Fair Market Rent" shall mean the effective base rental rates (including
periodic adjustments to such base rental rates) then being received for premises
of similar size and quality to the Premises, located in industrial parks in the
Sunnyvale area which are similar in size and quality to the Property, leased for
terms of approximately five years, and otherwise subject to leases containing
substantially similar terms as those contained in this Lease. Notwithstanding
the foregoing, "Fair Market Rent" shall not include any rental value
attributable to improvements, alterations, fixtures, equipment, and personal
property installed in the Premises at Tenant's expense.

      Not more than six months nor less than four months prior to the
commencement of the extension term, Landlord and Tenant shall meet and attempt
in good faith to determine and mutually agree upon the Basic Rent to be paid
during the extension term pursuant to the provisions above. If, 90 days prior to
the commencement of the extension term, the parties have not reached agreement,
each party shall appoint an Appraiser (hereinafter defined) and shall give
notice to the other party of the identity of the Appraiser no later than 75 days
prior to the commencement of the extension term. For purposes hereof,
"Appraiser" means a real estate broker or MAI designated appraiser, in either
case with not less than 5 years of full time commercial appraisal or commercial
brokerage experience in the Sunnyvale area.

      If either party fails to timely appoint an Appraiser, the sole Appraiser
appointed shall determine the Basic Rent to be charged during the extension
term, based on the criteria described above. If two Appraisers are appointed,
they shall immediately meet and attempt to agree upon such Basic Rent. If they
are unable to do so within 20 days after their first meeting, they shall jointly
appoint a third Appraiser and the third Appraiser shall make such determination
within 20 days of his/her appointment. The determination of Basic Rent as
provided herein shall be binding upon the parties hereto.

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      Promptly following determination of the Basic Rent as set forth herein,
Landlord shall prepare an appropriate amendment to the Lease memorializing the
extension of the Term in accordance with the foregoing, and Tenant shall duly
execute and return same to Landlord within fifteen (15) days. Any attempt to
assign or transfer any right or interest created by this paragraph, except in
connection with an authorized assignment of this Lease, shall be void from its
inception. Tenant shall have no other right to extend the Term beyond the single
sixty (60) month extension created by this paragraph. Unless agreed to in a
writing signed by Landlord and Tenant, any extension of the Term, whether
created by an amendment to this Lease or by a holdover of the Premises by
Tenant, or otherwise, shall be deemed a part of, and not in addition to, any
duly exercised extension period permitted by this paragraph. Time is
specifically made of the essence of this paragraph.

                    ARTICLE IV. RENT AND OPERATING EXPENSES

      SECTION 4.1. BASIC RENT. From and after the Commencement Date, Tenant
shall pay to Landlord without deduction or offset, the rental amount for the
Premises shown in Item 6 of the Basic Lease Provisions (the "BASIC RENT"),
including subsequent adjustments, if any. Any rental adjustment to Basic Rent
shown in Item 6 shall be deemed to occur on the specified monthly anniversary of
the Commencement Date, whether or not the Commencement Date occurs at the end
of a calendar month. The rent shall be due and payable in advance commencing on
the Commencement Date (as prorated for any partial month) and continuing
thereafter on the first day of each successive calendar month of the Term. No
demand, notice or invoice shall be required for the payment of Basic Rent. An
installment of rent in the amount of one (1) full month's Basic Rent at the
initial rate specified in Item 6 of the Basic Lease Provisions and one (1)
month's estimated Tenant's Share of Operating Expenses (as defined in Section
4.2) shall be delivered to Landlord concurrently with Tenant's execution of this
Lease and shall be applied against the Basic Rent and Operating Expenses first
due hereunder.

      SECTION 4.2. OPERATING EXPENSES.

      (a) Tenant shall pay to Landlord, as additional rent, Tenant's Share of
all Operating Expenses, as defined in Section 4.2(f), incurred by Landlord in
the operation of the Building and the Site. The term "TENANT'S SHARE" means one
hundred percent (100%) of any Operating Expenses determined by Landlord to
benefit or relate substantially to the Building and/or the Site. The full amount
of any management fee payable by Landlord for the management of Tenant's
Premises that is calculated as a percentage of the rent payable by Tenant shall
be paid in full by Tenant as additional rent.

      (b) Prior to the start of each full Expense Recovery Period (as defined in
this Section 4.2), Landlord shall give Tenant a written estimate of the amount
of Tenant's Share of Operating Expanses for the applicable Expense Recovery
Period. Failure to provide such estimate shall not relieve Tenant from its
obligation to pay Tenant's Share of Operating Expenses or estimated amounts
thereof, if and when Landlord provides such estimate or final payment amount.
Tenant shall pay the estimated amounts to Landlord in equal monthly
installments, in advance concurrently with payments of Basic Rent. If Landlord
has not furnished its written estimate for any Expense Recovery Period by the
time set forth above, Tenant shall continue to pay monthly the estimated
Tenant's Share of Operating Expenses in effect during the prior Expense Recovery
Period; provided that when the new estimate is delivered to Tenant, Tenant
shall, at the next monthly payment date which is at least thirty (30) days
following Landlord's written estimate, pay any accrued estimated Tenant's Share
of Operating Expenses based upon the new estimate. For purposes hereof, "EXPENSE
RECOVERY PERIOD" shall mean every twelve month period during the Term (or
portion thereof for the first and last lease years) commencing July 1 and ending
June 30, provided that Landlord shall have the right to change the date on which
an Expense Recovery Period commences in which event appropriate reasonable
adjustments shall be made to Tenant's Share of Operating Expenses so that the
amount payable by Tenant shall not materially vary as a result of such change.

      (c) Within one hundred twenty (120) days after the end of each Expense
Recovery Period, Landlord shall furnish to Tenant a statement showing in
reasonable detail the actual or prorated Tenant's Share of Operating Expenses
incurred by Landlord during the period, and the parties shall within thirty (30)
days thereafter make any payment or allowance necessary to adjust Tenant's
estimated payments of Tenant's Share of Operating Expenses, if any, to the
actual Tenant's Share of Operating Expenses as shown by the annual statement.
Any delay or failure by Landlord in delivering any statement hereunder shall not
constitute a waiver of Landlords right to require Tenant to pay Tenant's Share
of Operating Expenses pursuant hereto. Any amount due Tenant shall be credited
against installments next coming due under this Section 4.2, and any deficiency
shall be paid by Tenant together with the next installment. Should tenant fail
to object in writing to Landlord's determination of Tenant's Share of Operating
Expenses within ninety (90) days following delivery of Landlord's expense
statement, Landlord's determination of Tenant's Share of Operating Expenses for
the applicable Expense Recovery Period shall be conclusive and binding on the
parties for all purposes and any future claims to the contrary shall be barred.

      (d) Even though this Lease has terminated and the Tenant has vacated the
Premises, when the final determination is made of Tenant's Share of Operating
Expenses for the Expense Recovery Period in which this Lease terminates, Tenant
shall within thirty (30) days of written notice pay the entire increase over the
estimated Tenant's Share of Operating Expenses already paid. Conversely, any
overpayment by Tenant shall be rebated by Landlord to Tenant not later than
thirty (30) days after such final determination.

      (e) If at any time during any Expense Recovery Period, any one or more of
the Operating Expenses are increased to a rate(s) or amount(s) in excess of the
rate(s) or amount(s) used in calculating the estimated Tenant's Share of
Operating Expenses for the year, then the estimate of Tenant's Share of
Operating Expenses may be increased by written notice from Landlord for the
month in which such rate(s) or amount(s) becomes effective and for all
succeeding months by an amount equal to Tenant's Share of the increase. If
Landlord gives Tenant written notice of the amount or estimated amount of the
increase, the month in which the increase will or has become effective, then
Tenant shall pay the increase to Landlord as a part of Tenant's monthly payments
of the estimated

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Tenant's Share of Operating Expenses as provided in Section 4.2(b), commencing
with the month which is at least thirty (30) days following Tenant's receipt of
Landlord's notice. In addition, Tenant shall pay upon written request any such
increases which were incurred prior to the Tenant commencing to pay such monthly
increase.

      (f) The term "OPERATING EXPENSES" shall mean and include all Site Costs,
as defined in subsection (g), and Property Taxes, as defined in subsection (h).

      (g) The term "SITE COSTS" shall include all expenses of operation, repair
and maintenance of the Building and the Site, including without limitation all
appurtenant Common Areas (as defined in Section 6.2), and shall include the
following charges by way of illustration but not limitation: water and sewer
charges; insurance premiums and deductibles and/or reasonable premium and
deductible equivalents should Landlord elect to self-insure all or any portion
of any risk that Landlord is authorized to insure hereunder; license, permit,
and inspection fees; heat; light; power; air conditioning; supplies; materials;
equipment; tools; the cost of any environmental, insurance, tax or other
consultant utilized by Landlord in connection with the Building and/or Site;
establishment of reasonable reserves for replacements and/or repairs; costs
incurred in connection with compliance with any laws or changes in laws
applicable to the Building or the Site and not required due to the particular
use of any other tenant the cost of any capital investments or replacements
(other than tenant improvements for specific tenants) to the extent of the
amortized amount thereof over the useful life of such capital investments or
replacements calculated at a market cost of funds, all as determined by
Landlord, for each such year or useful life during the Term; costs associated
with the maintenance of an air conditioning, heating and ventilation service
agreement; reasonably allocated wages and salaries, fringe benefits, and payroll
taxes for administrative and other personnel directly applicable to the building
and/or Site, including both Landlord's personnel and outside personnel; any
expense incurred pursuant to Sections 6.1, 6.2, 6.4, 7.2, and 10.2; and a
reasonable overhead/management fee for the professional operation of the
Building and the Site. It is understood and agreed that Site Costs may include
competitive charges for direct services provided by any subsidiary, division or
affiliate of Landlord.

      (h) The term "PROPERTY TAXES" as used herein shall include any form of
federal, state, county or local government or municipal taxes, fees, charges or
other impositions of every kind (whether general, special, ordinary or
extraordinary) related to the ownership, leasing or operation of the Premises,
Building or Site, including without limitation, the following: (i) all real
estate taxes or personal property taxes, as such property taxes may be
reassessed from time to time; and (ii) other taxes, charges and assessments
which are levied with respect to this Lease or to the Building and/or the Site,
and any improvements, fixtures and equipment and other property of Landlord
located in the Building and/or the Site, (iii) all assessments and fees for
public improvements, services, and facilities and impacts thereon, including
without limitation arising out of any Community Facilities Districts, "Mello
Roos" districts, similar assessment districts, and any traffic impact mitigation
assessments or fees; (iv) any tax, surcharge or assessment which shall be levied
in addition to or in lieu of real estate or personal property taxes, other than
taxes covered by Article VIII; and (v) taxes based on the receipt of rent
(including gross receipts or sales taxes applicable to the receipt of rent), and
(vi) costs and expenses incurred in contesting the amount or validity of any
Property Tax by appropriate proceedings. Notwithstanding the foregoing, general
net income or franchise taxes imposed against Landlord shall be excluded.

      (i) Notwithstanding anything to the contrary contained in this Lease, the
following shall not be included within Operating Expenses:

            (i) Leasing commissions, attorneys' fees, costs, disbursements, and
other expenses incurred in connection with negotiations or disputes with
tenants, or in connection with leasing, renovating, or improving space for
tenants or other occupants or prospective tenants or other occupants of the
Project.

            (ii) The cost of any service sold to any tenant (including Tenant)
or other occupant for which Landlord is entitled to be reimbursed as an
additional charge or rental over and above the basic rent and escalations
payable under the lease with that tenant.

            (iii) Any depreciation on the Project.

            (iv) Except as authorized in subsection (g) above, costs of a
capital nature, including but not limited to capital improvements and
alterations, capital repairs, capital equipment, and capital tools as determined
in accordance with generally accepted accounting principles.

            (v) Expenses in connection with services or other benefits of a type
that are not available to Tenant without separate charge but which are provided
another tenant or occupant of the Project.

            (vi) Overhead profit increments paid to Landlord's subsidiaries or
affiliates for management or other services on or to the building or for
supplies or other materials to the extent that the cost of the services,
supplies, or materials exceeds the cost that would have been paid had the
services, supplies, or materials been provided by unaffiliated parties on a
competitive basis.

            (vii) All interest, loan fees, and other carrying costs related to
any mortgage or deed of trust or related to any capital item, and all rental and
other payable due under any ground or underlying lease, or any lease for any
equipment ordinarily considered to be a capital nature (except janitorial
equipment which is not affixed to the Project).

            (viii) Any compensation paid to clerks, attendants, or other persons
in commercial concessions operated by Landlord.

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            (ix) Advertising and promotional expenditures.

            (x) Costs of repairs and other work occasioned by fire, windstorm,
or other casualty to the extent such costs are either (A) covered by insurance
proceeds or (B) in excess of Fifty Thousand Dollars ($50,000.00) during any
Expense Recovery Period.

            (xi) Any costs, fines, or penalties incurred due to violations by
Landlord of any governmental rule or authority, this Lease or any other lease in
the Project, or due to Landlord's negligence or willful misconduct.

            (xii) The cost of correcting any building code or other violations
which were violations prior to the Commencement Date of this Lease.

            (xiii) The cost of containing, removing, or otherwise remediating
any contamination of the Project (including the underlying land and ground
water) by any toxic or hazardous materials (including, without limitation,
asbestos and "PCB's") where such contamination was not caused by Tenant.

            (xiv) Management costs to the extent they exceed management costs
charged for similar facilities in the area.

            (xv) Costs for sculpture, paintings, or other objects of art (and
insurance thereon or extraordinary security in connection therewith).

            (xvi) Wages, salaries, or other compensation paid to any employees
above the grade of portfolio manager, it being understood that management
personnel costs shall be equitably allocated based on portfolio responsibility.

            (xvii) Any other expense that under generally accepted accounting
principles and practice consistently applied would not be considered a normal
maintenance or operating expense.

      (h) Provided Tenant is not then in default hereunder, Tenant shall have
the right to cause a certified public accountant, engaged on a non-contingency
fee basis, to audit Operating Expenses by inspecting Landlord's general ledger
of expenses not more than once during any Expense Recovery Period. However, to
the extent that insurance premiums or any other component of Operating Expenses
is determined by Landlord on the basis of an internal allocation of costs
utilizing information Landlord in good faith deems proprietary, such expense
component shall not be subject to audit so long as it does not exceed the amount
per square foot typically imposed by landlords of comparable projects in the
Sunnyvale, California area. Tenant shall give notice to Landlord of Tenant's
intent to audit within ninety (90) days after Tenant's receipt of Landlord's
expense statement which sets forth Landlord's actual Operating Expenses. Such
audit shall be conducted at a mutually agreeable time during normal business
hours at the office of Landlord or its management agent where such accounts are
maintained. If Tenant's audit determines that actual Operating Expenses have
been overstated by more than five percent (5%), then subject to Landlord's right
to review and/or contest the audit results, Landlord shall reimburse Tenant for
the reasonable out-of-pocket costs of such audit. Tenant's rent shall be
appropriately adjusted to reflect any overstatement in Operating Expenses. In
addition, if any component of Operating Expenses is determined to be either
inappropriate or excessive during an Expense Recovery Period, and if the
Building Cost Base or Property Tax Base also included such component, then the
appropriate Base shall concurrently be adjusted if and to the extent
appropriate. In the event of a dispute between Landlord and Tenant regarding
such audit, either party may elect to submit the matter for binding arbitration
pursuant to Section 14.7(b) below. All of the information obtained by Tenant
and/or its auditor in connection with such audit, as well as any compromise,
settlement, or adjustment reached between Landlord and Tenant as a result
thereof, shall be held in strict confidence and, except as may be required
pursuant to litigation, shall not be disclosed to any third party, directly or
indirectly, by Tenant or its auditor or any of their officers, agents or
employees. Landlord may require Tenant's auditor to execute a separate
confidentiality agreement affirming the foregoing as a condition precedent to
any audit. In the event of a violation of this confidentiality covenant in
connection with any audit, then in addition to any other legal or equitable
remedy available to Landlord, Tenant shall forfeit its right to any
reconciliation or cost reimbursement payment from Landlord due to said audit
(and any such payment theretofore made by Landlord shall be promptly returned by
Tenant), and Tenant shall have no further audit rights under this Lease.
Notwithstanding the foregoing, Tenant shall have no right of audit with respect
to any Expense Recovery Period unless the total Operating Expenses per square
foot for such Expense Recovery Period, as set forth in Landlords annual expense
reconciliation, exceed the total Operating Expenses per square foot during the
prior Expense Recovery Period, as increased by the percentage change in the
United States Department of Labor, Bureau of Labor Statistics, Consumer Price
Index for all Urban Consumers, San Francisco - Oakland - San Jose Area Average,
all items (1982-84 = 100) (the "Index"), which change in the Index shall be
measured by comparing the Index published for January of the applicable Expense
Recovery Period with the Index published for the prior January.

      SECTION 4.3. SECURITY DEPOSIT. Concurrently with Tenant's delivery of this
Lease, Tenant shall deposit with Landlord the sum, if any, stated in Item 9 of
the Basic Lease Provisions, to be held by Landlord as security for the full and
faithful performance of all of Tenants obligations under this Lease (the
"SECURITY DEPOSIT"). Landlord shall not be required to keep this Security
Deposit separate from its general funds, and Tenant shall not be entitled to
interest on the Security Deposit. Upon any Event of Default by Tenant (as
defined in Section 14.1), Landlord may, in its sole and absolute discretion,
retain, use or apply the whole or any part of the Security Deposit to pay any
sum which Tenant is obligated to pay under this Lease, sums that Landlord may
expend or be required to expend by reason of the Event of Default by Tenant or
any loss or damage that Landlord may suffer by reason of the Event of Default or
costs incurred by Landlord in connection with the repair or restoration of the
Premises pursuant to Section 15.3 of this Lease upon expiration or earlier
termination of this Lease. In no event shall Landlord be obligated to apply the
Security Deposit upon an Event of Default and Landlord's rights and

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remedies resulting from an Event of Default, including without limitation,
Tenant's failure to pay Basic Rent, Tenant's Share of Operating Expenses or any
other amount due to Landlord pursuant to this Lease, shall not be diminished or
altered in any respect due to the fact that Landlord is holding the Security
Deposit. If any portion of the Security Deposit is applied by Landlord as
permitted by this Section, Tenant shall within fifteen (15) days after written
demand by Landlord deposit cash with Landlord in an amount sufficient to restore
the Security Deposit to its original amount. If Tenant fully performs its
obligations under this Lease, the Security Deposit shall be returned to Tenant
(or, at Landlord's option, to the last assignee of Tenant's interest in this
Lease) within thirty (30) days after the expiration of the Term and Tenants
vacation of the Premises.

                                ARTICLE V. USES

      SECTION 5.1. USE. Tenant shall use the Premises only for the purposes
stated in Item 3 of the Basic Lease Provisions, all in accordance with
applicable laws and restrictions and pursuant to approvals to be obtained by
Tenant from all relevant and required governmental agencies and authorities. The
parties agree that any additional use without the prior written consent of
Landlord shall entitle Landlord to injunctive relief in addition to any other
available remedy. Tenant, at its expense, shall procure, maintain and make
available for Landlord's inspection throughout the Term, all governmental
approvals, licenses and permits required for the proper and lawful conduct of
Tenant's permitted use of the Premises. Tenant shall not use or allow the
Premises to be used for any unlawful purpose, nor shall Tenant permit any
nuisance or commit any waste in the Premises or the Site. Tenant shall not
perform any work or conduct any business whatsoever in the Site other than
inside the Premises. Tenant shall not do or permit to be done anything which
will invalidate or increase all applicable insurance policy(ies) covering the
Building, the Site and/or their contents, and shall comply with all applicable
insurance underwriters rules. Tenant shall comply at its expense with all
present and future laws, ordinances, restrictions, regulations, orders, rules
and requirements of all governmental authorities that pertain to Tenant or its
use of the Premises, including without limitation all federal and state
occupational health and safety requirements, whether or not Tenant's compliance
will necessitate expenditures or interfere with its use and enjoyment of the
Premises. Notwithstanding the foregoing or anything to the contrary contained in
this Lease, Tenant shall not be responsible for compliance with any applicable
requirements where such compliance is not related specifically to Tenant's use
and occupancy of the Premises. For example, if any governmental authority should
require the Building or the Premises to be structurally strengthened against
earthquake, or should require the removal of asbestos from the Premises, and
such measures are imposed as a general requirement applicable to all tenants
rather than as a condition to Tenant's specific use or occupancy of the
Premises, such work shall be performed by and at the sole cost of Landlord
(subject to inclusion in Site Costs if and to the extent permitted pursuant to
Section 4.2 above). Tenant shall promptly upon demand reimburse Landlord for any
additional insurance premium charged by reason of Tenants failure to comply with
the provisions of this Section, and shall indemnify Landlord from any liability
and/or expense resulting from Tenant's noncompliance.

      SECTION 5.2. SIGNS. Except as approved in writing by Landlord, in its sole
and absolute discretion, Tenant shall have no right to maintain signs in any
location in, on or about the Premises, the Building or the Site and shall not
place or erect any signs that are visible from the exterior of the Building;
provided that Tenant shall have the right to maintain its exterior monument
signage in place as of the date hereof. The size, design, graphics, material,
style, color and other physical aspects of any permitted sign shall be subject
to Landlord's written determination, as determined solely by Landlord, prior to
installation, that signage is in compliance with any covenants, conditions or
restrictions encumbering the Premises and Landlord's signage program for the
Site, as in effect front time to time and approved by the City in which the
Premises are located ("SIGNAGE CRITERIA"). Prior to placing or erecting any
such signs, Tenant shall obtain and deliver to Landlord a copy of any applicable
municipal or other governmental permits and approvals and comply with any
applicable insurance requirements for such signage. Tenant shall be responsible
for the cost of any permitted sign, including the fabrication, installation,
maintenance and removal thereof and the cost of any permits therefor. If Tenant
fails to maintain its sign in good condition after thirty (30) days written
notice from Landlord, or if Tenant fails to remove same upon termination of this
Lease and repair and restore any damage caused by the sign or its removal,
Landlord may do so at Tenant's expense. Landlord shall have the right to
temporarily remove any signs where necessitated by any repairs or maintenance in
or upon the Building. The term "sign" as used in this Section shall include all
signs, designs, monuments, displays, advertising materials, logos, banners,
projected images, pennants, decals, pictures, notices, lettering, numerals or
graphics.

      SECTION 5.3. HAZARDOUS MATERIALS.

      (a) For purposes of this Lease, the term "HAZARDOUS MATERIALS" includes
(i) any "hazardous material" as defined in Section 25501(o) of the California
Health and Safety Code, (ii) hydrocarbons, polychlorinated biphenyls or
asbestos, (iii) any toxic or hazardous materials, substances, wastes or
materials as defined pursuant to any other applicable state, federal or local
law or regulation, and (iv) any other substance or matter which may result in
liability to any person or entity as result of such person's possession, use,
release or distribution of such substance or matter under any statutory or
common law theory.

      (b) Tenant shall not cause or permit any Hazardous Materials to be brought
upon, stored, used, generated, released or disposed of on, under, from or about
the Premises (including without limitation the soil and groundwater thereunder)
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld so long as Tenant complies with the requirements of this
Section 5.3. Notwithstanding the foregoing, Tenant shall have the right, without
obtaining prior written consent of Landlord, to utilize within the Premises a
reasonable quantity of standard office products that may contain Hazardous
Materials (such as photocopy toner, "White Out", and the like), as well as such
other substances as are disclosed in the "Environmental Questionnaire" defined
below, provided, however, that (i) Tenant shall maintain such products in their
original retail packaging, shall follow all instructions on such packaging with
respect to the storage, use and disposal of such products, and shall otherwise
comply with all applicable laws with respect to such products, and (ii) all of
the other terms and provisions of this Section 5.3 shall apply with respect to
Tenant's storage, use and disposal of all such products. Landlord may require
that Tenant demonstrate that any such Hazardous Materials will be generated,
stored, used

                                       6
<PAGE>

and disposed of in a manner that complies with all applicable laws and
regulations pertaining thereto and with good business practices. Tenant
understands that Landlord may utilize an environmental consultant to assist in
determining conditions of approval in connection with the storage, generation,
release, disposal or use of Hazardous Materials by Tenant on or about the
Premises, and/or to conduct periodic inspections of the storage, generation,
use, release and/or disposal of such Hazardous Materials by Tenant on and from
the Premises, and Tenant agrees that any costs incurred by Landlord in
connection therewith shall be reimbursed by Tenant to Landlord in the event of a
violation by Tenant of its obligations under this Section.

      (c) Prior to the execution of this Lease, Tenant shall complete, execute
and deliver to Landlord an Environmental Questionnaire and Disclosure Statement
(the "ENVIRONMENTAL QUESTIONNAIRE") in the form of Exhibit B, attached hereto.
The completed Environmental Questionnaire shall be deemed incorporated into this
Lease for all purposes, and Landlord shall be entitled to rely fully on the
information contained therein. On each anniversary of the Commencement Date
until the expiration or sooner termination of this Lease, Tenant shall disclose
to Landlord in writing the names and amounts of all Hazardous Materials which
were stored, generated, used, released and/or disposed of on, under or about the
Premises for the twelve-month period prior thereto, and which Tenant desires to
store, generate, use, release and/or dispose of on, under or about the Premises
for the succeeding twelve-month period. In addition, to the extent Tenant is
permitted to utilize Hazardous Materials upon the Premises, Tenant shall
promptly provide Landlord with complete and legible copies of all the following
environmental documents relating thereto that are filed with any governmental
agency, which may include without limitation the following: reports filed
pursuant to any self-reporting requirements; permit applications, permits,
monitoring reports, emergency response or action plans, workplace exposure and
community exposure warnings or notices and all other report, disclosures, plans
or documents (even those which may be characterized as confidential) relating to
water discharges, air pollution, waste generation or disposal, and underground
storage tanks for Hazardous Materials; orders, report, notices, listings and
correspondence (even those which may be considered confidential) of or
concerning the release, investigation of, compliance, cleanup, remedial and
corrective actions, and abatement of Hazardous Materials. Tenant shall also
properly deliver to Landlord all complaints, pleadings and other legal documents
filed by or against Tenant related to Tenant's use, handling, storage, release
and/or disposal of Hazardous Materials.

      (d) If Landlord has a reasonable basis to believe Tenant has not complied
with its obligations under this Section 5.3, then Landlord and its agents shall
have the right, but not the obligation, to inspect, sample and/or monitor the
Premises and/or the soil or groundwater thereunder to determine whether Tenant
is complying with the terms of this Section 5.3, and in connection therewith
Tenant shall provide Landlord with full access to all facilities, records and
personnel related thereto, subject to the requirements of Section 7.5. Landlord,
at Tenant's expense, shall have the right, but not the obligation, to join and
participate in any legal proceedings or actions initiated in connection with
any claims arising out of the storage, generation, use, release and/or disposal
by Tenant or its agents, employees, contractors, licensees or invitees of
Hazardous Materials on, under, from or about the Premises.

      (e) If the presence of any Hazardous Materials on, under, from or about
the Premises or the Site caused or permitted by Tenant or its agents, employees,
contractors, licensees or invitees results in (i) injury to any person, (ii)
injury to or any contamination of the Premises or the Site, or (iii) injury to
or contamination of any real or personal property wherever situated, Tenant, at
its expense, shall promptly take all actions necessary to return the Premises
and the Site and any other affected real or personal property owned by Landlord
to the condition existing prior to the introduction of such Hazardous Materials
and to remedy or repair any such injury or contamination, including without
limitation, any cleanup, remediation, removal, disposal, neutralization or other
treatment of any such Hazardous Materials. Notwithstanding the foregoing, Tenant
shall not, without Landlord's prior written consent, which consent shall not be
unreasonably withheld, take any remedial action in response to the presence of
any Hazardous Materials on, from, under or about the Premises or the Site or
any other affected real or personal property owned by Landlord or enter into any
similar agreement, consent, decree or other compromise with any governmental
agency with respect to any Hazardous Materials claims; provided however,
Landlord's prior written consent shall not be necessary in the event that the
presence of Hazardous Materials on, under or about the Premises or the Site or
any other affected real or personal properly owned by Landlord (i) imposes an
immediate threat to the health, safety or welfare of any individual and (ii) is
of such a nature that an immediate remedial response is necessary and it is not
possible to obtain Landlord's consent before taking such action. To the fullest
extent permitted by law, Tenant shall indemnify, hold harmless, protect and
defend (with attorneys acceptable to Landlord) Landlord and any successors to
all or any portion of Landlord's interest in the Premises and the Site from and
against any and all liabilities, losses, damages, diminution in value,
judgments, fines, demands, claims, recoveries, deficiencies, costs and expenses
(including without limitation reasonable attorneys' fees, court costs and other
professional expenses), whether foreseeable or unforeseeable, arising directly
or indirectly out of the use, generation, storage, treatment, release, on- or
off-site disposal or transportation of Hazardous Materials (A) on, into, from,
under or about the Premises by Tenant, its agents, employees, contractors,
licensees or subtenants during the Term unless caused by Landlord. Such
indemnity obligation shall specifically include, without limitation, the cost of
any required or necessary repair, restoration, cleanup or detoxification of the
Premises, the Building and the Site, the preparation of any closure or other
required plans, whether or not such action is required or necessary during the
Term or after the expiration of this Lease and any Loss of rental due to the
inability to lease the Premises or any portion of the Building or Site as a
result of such Hazardous Material or remediation thereof. If it is at any time
discovered that Tenant or its agents, employees, contractors, licensees or
subtenants may have caused or permitted the release of a Hazardous Material on,
under, from or about the Premises, the Building or the Site, Tenant shall, at
Landlord's request, immediately prepare and submit to Landlord a comprehensive
plan, consistent with the requirements of applicable laws and subject to
Landlord's approval, specifying the actions to be taken, by Tenant to return the
Premises, the Building or the Site or any other real or personal property owned
by Landlord to the condition existing prior to the introduction of such
Hazardous Materials. Upon Landlord's approval of such cleanup plan, Tenant
shall, at its expense, and without limitation of any rights and remedies of
Landlord under this Lease or at law or in equity, immediately implement such
plan and proceed to cleanup such Hazardous Materials in

                                       7
<PAGE>

accordance with applicable laws and as required by such plan and this Lease. The
provisions of this Section 5.3(e) shall expressly survive the expiration or
sooner termination of this Lease.

      (f) Landlord hereby discloses to Tenant, and Tenant hereby acknowledges,
certain facts relating to Hazardous Materials at the Site known by Landlord to
exist as of the date of this Lease, as more particularly described in Exhibit C
attached hereto. Tenant shall have no liability or responsibility with respect
to the Hazardous Materials facts described in Exhibit C nor with respect to any
Hazardous Materials which Tenant proves were neither released on the Premises
during the Term nor caused or permitted by Tenant, its agents, employees,
contractors, licensees or invitees. Notwithstanding the preceding two sentences,
Tenant agrees to notify its agents, employees, contractors, licensees, and
Invitees of any exposure or potential exposure to Hazardous Materials at the
Premises that Landlord brings to Tenant's attention. Tenant hereby acknowledges
that this disclosure satisfies any obligation of Landlord to Tenant pursuant to
California Health & Safely Code Section 25359.7, or any amendment or substitute
thereto or any other disclosure obligations of Landlord.

                       ARTICLE VI. COMMON AREAS; SERVICES

      SECTION 6.1. UTILITIES AND SERVICES. Tenant shall be responsible for and
shall pay promptly, directly to the appropriate supplier, all charges for water,
gas, electricity, sewer, heat, light, power, telephone, telecommunications
service, refuse pickup, janitorial service, interior landscape maintenance and
all other utilities, materials and services furnished directly to Tenant or the
Premises, or used by Tenant in, on or about the Premises during the Term,
together with any taxes thereon. If any utilities or services are not separately
metered or assessed to Tenant, Landlord shall make a reasonable determination of
Tenant's proportionate share of the cost of such utilities and services,
including without limitation, after-hours HVAC usage, and Tenant shall pay such
amount to Landlord, as an item of additional rent, within thirty (30) days after
receipt of Landlord's statement or invoice therefor. Alternatively, Landlord may
elect to include such cost in the definition of Site Costs in which event Tenant
shall pay Tenant's proportionate share of such costs in the manner set forth in
Section 4.2. Landlord shall not be liable for damages or otherwise for any
failure or interruption of any utility or other service furnished to the
Premises, and no such failure or interruption shall be deemed an eviction or
entitle Tenant to terminate this Lease or withhold or abate any rent due
hereunder. Landlord shall at all reasonable times have free access to the
Building and Premises to install, maintain, repair, replace or remove all
electrical and mechanical installations of Landlord. Tenant acknowledges that
the costs incurred by Landlord related to providing above-standard utilities to
Tenant, including, without limitation, telephone lines, may be charged to
Tenant.

      SECTION 6.2. OPERATION AND MAINTENANCE OF COMMON AREAS. During the Term,
Landlord shall operate and maintain all Common Areas within the Site in a first
class manner. The term "COMMON AREAS" shall mean all areas of the Site which are
not held for exclusive use by persons entitled to occupy space including Tenant,
and their respective employees and invitees, including without limitation
parking areas and structures, driveways, sidewalks, landscaped and planted
areas, and electrical and utility rooms and roof access entries, if any, in the
Building.

      SECTION 6.3. USE OF COMMON AREAS. The occupancy by Tenant of the Premises
shall include the use of the Common Areas as provided in this Article VI,
subject, however, to compliance with all rules and regulations as are prescribed
from time to time by Landlord. Landlord shall operate and maintain the Common
Areas in a good and first-class manner. All costs incurred by Landlord for the
maintenance and operation of the Common Areas shall be included in Site Costs
except as set forth in Section 4.2. Landlord shall at all times during the Term
have exclusive control of the Common Areas, and may restrain or permit any use
or occupancy, except as authorized by Landlord's rules and regulations. Tenant
shall keep the Common Areas clear of any obstruction or unauthorized use related
to Tenants operations or use of Premises, including without limitation, planters
and furniture. Nothing in this Lease shall be deemed to impose liability upon
Landlord for any damage to or loss of the property of, or for any injury to,
Tenant, its invitees or employees. Landlord may temporarily close any portion of
the Common Areas for repairs, remodeling and/or alterations to prevent a public
dedication or the accrual of prescriptive rights, or for any other reason deemed
sufficient by Landlord, without liability to Landlord.

      SECTION 6.4. PARKING. Tenant shall be entitled to use its allocated share
of the vehicle parking spaces on those portions of the Common Areas designated
by Landlord for parking on an unreserved and unassigned basis. For purposes of
this Section 6.4 Tenant's allocated share shall mean vehicle parking spaces
equal to the same portion of all vehicle parking spaces available for the Site
as the ratio of Floor Area to the total rentable square footage of the Site.
Tenant shall not use more than its allocated share of vehicle parking spaces.
All parking spaces shall be used only for parking of vehicles no larger than
full size passenger automobiles, sports utility vehicles or pickup trucks.
Tenant shall not permit or allow any vehicles that belong to or are controlled
by Tenant or Tenant's employees, suppliers, shippers, customers or invitees to
be loaded, unloaded or parked in areas other than those designated by Landlord
for such activities. If Tenant permits or allows any of the prohibited
activities described above, then Landlord shall have the right, with reasonable
telephonic notice, in addition to such other rights and remedies that Landlord
may have, to remove or tow away the vehicle involved and charge the costs to
Tenant. Parking within the Common Areas shall be limited to striped parking
stalls, and no parking shall be permitted in any driveways, access ways or in
any area which would prohibit or impede the free flow of traffic within the
Common Areas. There shall be no parking of any vehicles for longer than a five
(5) day period unless otherwise authorized by Landlord, and vehicles which have
been abandoned or parked in violation of the terms hereof may be towed away at
the owner's expense. Nothing contained in this Lease shall be deemed to create
liability upon Landlord for any damage to motor vehicles of visitors or
employees, for any loss of property from within those motor vehicles, or for any
injury to Tenant, its visitors or employees, unless ultimately determined to be
caused by the sole active negligence or willful misconduct of Landlord. Landlord
shall have the right to establish and from time to time amend, and to enforce
against all users all reasonable rules and regulations (including the
designation of areas for employee parking) that Landlord may deem necessary and
advisable for the proper and efficient operation and maintenance of parking
within the Common Areas. Landlord shall have the right to construct, maintain
and operate

                                       8
<PAGE>

lighting facilities within the parking areas; to change the area, level,
location and arrangement of the parking areas and improvements therein; to
restrict parking by tenants, their officers, agents and employees to employee
parking areas; to enforce parking charges (by operation of meters or otherwise);
and to do and perform such other acts in and to the parking areas and
improvements therein as, in the use of good business judgment, Landlord shall
determine to be advisable so long as the number of parking stalls is not
materially diminished thereby. Any person using the parking area shall observe
all directional signs and arrows and any posted speed limits. Parking areas hall
be used only for parking vehicles. Washing, waxing, cleaning or servicing of
vehicles, or the storage of vehicles for longer than five days, is prohibited
unless otherwise authorized by Landlord. Tenant shall be liable for any damage
to the parking areas caused by Tenant or Tenant's employees, suppliers,
shippers, customers or invitees, including without limitation damage from excess
oil leakage. Tenant shall have no right to install any fixtures, equipment or
personal property in the parking areas.

      SECTION 6.5. CHANGES AND ADDITIONS BY LANDLORD. Landlord reserves the
right to make alterations or additions to the Building or the Site, or to the
attendant fixtures, equipment and Common Areas. Landlord may at any time
relocate or remove any of the driveways, sidewalks, landscaped and planted areas
and parking areas of the Common Areas from time to time. No change shall
entitle Tenant to any abatement of rent or other claim against Landlord,
provided that the change does not deprive Tenant of reasonable access to or use
of the Premises.

                     ARTICLE VII. MAINTAINING THE PREMISES

      SECTION 7.1. TENANT'S MAINTENANCE AND REPAIR. Tenant at its sole expense
shall maintain and make all repairs and replacements necessary to keep the
Premises and the Building in the condition as existed on the Commencement Date
(or on any later date that the improvements may have been installed), excepting
ordinary wear and tear, including without limitation all interior and exterior
glass, windows, doors, door closures, hardware, fixtures, electrical, plumbing,
fire extinguisher equipment and other equipment. Any damage or deterioration of
the Premises shall not be deemed ordinary wear and tear if the same could have
been prevented by good maintenance practices by Tenant. As part of its
maintenance obligations hereunder, Tenant shall, at Landlord's request, provide
Landlord with copies of all maintenance schedules, reports and notices prepared
by, for or on behalf of Tenant. All repairs and replacements shall be at least
equal in quality to the original work, shall be made only by a licensed
contractor approved in writing in advance by Landlord and shall be made only at
the time or times approved by Landlord. Any contractor utilized by Tenant shall
be subject to Landlord's standard requirements for contractors, as modified from
time to time. Landlord may impose reasonable restrictions and requirements with
respect to repairs, as provided in Section 7.3, and the provisions of Section
7.4 shall apply to all repairs. Alternatively, unless Tenant has a service
contract with a Landlord-approved vendor, Landlord may elect to perform any
repair and maintenance of the electrical and mechanical systems and any air
conditioning, ventilating or heating equipment serving the Premises and include
the cost thereof as part of Tenants Share of Operating Expenses. If Tenant fails
to properly maintain and/or repair the Premises or the Building as herein
provided following Landlord's notice and the expiration of the applicable cure
period (or earlier if Landlord determines that such work must be performed prior
to such time in order to avoid damage to the Premises or Building or other
detriment), then Landlord may elect, but shall have no obligation, to perform
any repair or maintenance required hereunder on behalf of Tenant and at
Tenant's expense, and Tenant shall reimburse Landlord upon demand for all costs
incurred upon submission of an invoice.

      SECTION 7.2. LANDLORD'S MAINTENANCE AND REPAIR. Subject to Section 7.1 and
Article XI, Landlord shall provide service, maintenance and repair with respect
to any air conditioning, ventilating or heating equipment which serves the
Premises and shall maintain in good repair the roof, foundations, footings, the
exterior surfaces of the exterior walls of the Building (excluding exterior
glass), and the structural, electrical and mechanical systems, except that
Tenant at its expense shall make all repairs reasonably necessary as a result of
the act or negligence of Tenant, its agents, employees, invitees, subtenants or
contractors. Landlord shall have the right to employ or designate any reputable
person or firm, including any employee or agent of Landlord or any of Landlord's
affiliates or divisions, to perform any service, repair or maintenance function.
Landlord need not make any other improvements or repairs except as specifically
required under this Lease, and nothing contained in this Section shall limit
Landlord's right to reimbursement from Tenant for maintenance, repair costs and
replacement costs as provided elsewhere in this Lease. Tenant understands that
it shall not make repairs at Landlord's expense or by rental offset. Tenant
further understands that Landlord shall not be required to make any repairs to
the roof, foundations, footings, the exterior surfaces of the exterior walls of
the Building (excluding exterior glass), or structural, electrical or mechanical
systems unless and until Tenant has notified Landlord in writing of the need for
such repair and Landlord shall have a reasonable period of time thereafter to
commence and complete said repair, if warranted. All costs of any maintenance,
repairs and replacement on the part of Landlord provided hereunder shall be
considered part of Site Costs. Tenant further agrees that if Tenant fails to
report any such need for repair in writing within sixty (60) days of its
discovery by Tenant, Tenant shall be responsible for any costs and expenses and
other damages related to such repair which are in excess of those which would
have resulted had such need for repair been reported to Landlord within such
sixty (60) day period.

      SECTION 7.3. ALTERATIONS. Except as otherwise provided in this Section,
Tenant shall make no alterations, additions, fixtures or improvements
("ALTERATIONS") to the Premises or the Building without the prior written
consent of Landlord, which consent shall not be unreasonably withheld, delayed
or conditioned. In the event that any requested Alteration would result in a
change from Landlord's building standard materials and specifications ("STANDARD
IMPROVEMENTS"), Landlord may withhold consent to such Alteration in its sole
and absolute discretion. In the event landlord so consents to a change from the
Standard Improvements (such change being referred to as a "NON-STANDARD
IMPROVEMENT"), Tenant shall be responsible for the cost of replacing such
Non-Standard Improvement with the applicable Standard Improvement
("REPLACEMENTS") which Replacements shall be completed prior to the Expiration
Date or earlier termination of this Lease. Landlord's consent shall not be
required for any Alterations which cost less than One Dollar ($1.00) per square
foot of the improved portions of the

                                       9
<PAGE>

Premises (excluding warehouse square footage) and do not (i) affect the exterior
of the Building or outside areas (or be visible from adjoining sites), or (ii)
affect or penetrate any of the structural portions of the Building, including
but not limited to the roof, or (iii) require any change to the basic floor plan
of the Premises or any change to any structural or mechanical systems of the
Premises, or (iv) fail to comply with any applicable governmental requirements
or require any governmental permit as a prerequisite to the construction
thereof, or (v) result in the Premises requiring building services beyond the
level normally provided to other tenants, or (vi) interfere in any manner with
the proper functioning of, or Landlord's access to, any mechanical, electrical,
plumbing or HVAC systems, facilities or equipment located in or serving the
Building, or (vii) diminish the value of the Premises including, without
limitation, using lesser quality materials than those existing in the Premises,
or (viii) alter or replace Standard Improvements. Landlord may impose any
reasonable condition to its consent, including but not limited to a requirement
that the installation and/or removal of all Alterations and Replacements be
covered by a lien and completion bond satisfactory to Landlord in its sole and
absolute discretion and requirements as to the manner and time of performance of
such work. Landlord shall in all events, whether or not Landlord's consent is
required, have the right to approve the contractor performing the installation
and removal of Alterations and Replacements and Tenant shall not permit any
contractor not approved by Landlord to perform any work on the Premises or on
the Building. Tenant shall obtain all required permits for the installation and
removal of Alterations and Replacements and shall perform the installation and
removal of Alterations and Replacements in compliance with all applicable laws,
regulations and ordinances, including without limitation the Americans with
Disabilities Act, all covenants, conditions and restrictions affecting the Site,
and the Rules and Regulations as described in Article XVII. Tenant understands
and agrees that Landlord shall be entitled to a supervision fee in the amount of
five percent (5%) of the cost of the Alterations, provided that the supervision
fee shall not exceed either (i) Five Thousand Dollars ($5,000.00) if the
proposed Alterations would affect the structural components or exiting of the
Building or (ii) One Thousand Dollars ($1,000.00) otherwise. Notwithstanding the
foregoing, however, Landlord shall not charge a supervision fee for Alteration
projects costing less than Ten Thousand Dollars ($10,000.00) and not affecting
the structural components or exiting of the Building. Under no circumstances
shall Tenant make any Alterations or Replacements which incorporate any
Hazardous Materials, including without limitation asbestos-containing
construction materials into the Premises, the Building or the Common Area. If
any governmental entity requires, as a condition to any proposed Alterations by
Tenant, that improvements be made to the Common Areas, and if Landlord consents
to such improvements to the Common Areas (which consent may be withheld in the
sole and absolute discretion of Landlord), then Tenant shall, at Tenant's sole
expense, make such required improvements to the Common Areas in such manner,
utilizing such materials, and with such contractors, architects and engineers as
Landlord may require in its sole and absolute discretion. Any request for
Landlord's consent to any proposed Alterations shall be made in writing and
shall contain architectural plans describing the work in detail reasonably
satisfactory to Landlord. Unless Landlord otherwise agrees in writing, all
Alterations made or affixed to the Premises, the Building or to the Common Area
(excluding movable trade fixtures and furniture), including without limitation
all Tenant Improvements constructed pursuant to the Work Letter (except as
otherwise provided in the Work Letter), shall become the property of Landlord
and shall be surrendered with the Premises at the end of the Term; except that
Landlord may, by notice to Tenant given at the time of granting its consent to
the proposed Alteration, require Tenant to remove by the Expiration Date, or
sooner termination date of this Lease all or any of the Alterations installed
either by Tenant or by Landlord at Tenant's request, including without
limitation all Tenant Improvements constructed pursuant to the Work Letter
(except as otherwise provided in the Work Letter), and to repair any damage to
the Premises, the Building or the Common Area arising from that removal and
restore the Premises to their condition prior to making such Alterations.

      SECTION 7.4. MECHANIC'S LIENS. Tenant shall keep the Premises and the Site
free from any liens arising out of any work performed, materials furnished, or
obligations incurred by or for Tenant. Upon request by Landlord, Tenant shall
promptly (but in no event later than fifteen (15) business days following such
request) cause any such lien to be released by posting a bond in accordance with
California Civil Code Section 3143 or any successor statute. In the event that
Tenant shall not, within thirty (30) days following the imposition of any lien,
cause the lien to be released of record by payment or posting of a proper bond,
Landlord shall have, in addition to all other available remedies, the right to
cause the lien to be released by any means it deems proper, including payment of
or defense against the claim giving rise to the lien. All expenses so incurred
by Landlord, including Landlord's attorneys' fees, and any consequential or
other damages incurred by Landlord arising out of such lien, shall be reimbursed
by tenant upon demand, together with interest from the date of payment by
Landlord at the maximum rate permitted by law until paid. Tenant shall give
Landlord no less than ten (10) days' prior notice in writing before commencing
construction of any kind on the Premises or Common Area and shall again notify
Landlord that construction has commenced, such notice to be given on the actual
date on which construction commences, so that Landlord may post and maintain
notices of nonresponsibility on the Premises or Common Area, as applicable,
which notices Landlord shall have the right to post and which Tenant agrees it
shall not disturb. Tenant shall also provide Landlord notice in writing within
ten (10) days following the date on which such work is substantially completed.

      SECTION 7.5. ENTRY AND INSPECTION. Landlord shall at all reasonable times,
upon written or oral notice (except in emergencies, when no notice shall be
required) have the right to enter the Premises to inspect them, to supply
services in accordance with this Lease, to have access to install, repair,
maintain, replace or remove all electrical and mechanical installations of
Landlord and to protect the interests of Landlord in the Premises, and to submit
the Premises to prospective or actual purchasers or encumbrance holders (or,
during the last one hundred and eighty (180) days of the Term or when an uncured
Tenant Event of Default exists, to prospective tenants), all without being
deemed to have caused an eviction of Tenant and without abatement of rent except
as provided elsewhere in this Lease. Landlord shall have the tight, if desired,
to retain a key which unlocks all of the doors in the Premises, excluding
Tenant's vaults and safes, and Landlord shall have the right to use any and all
means which Landlord may deem proper to open the doors in an emergency in order
to obtain entry to the Premises, and any entry to the Premises obtained by
Landlord shall not under any circumstances be deemed to be a forcible or
unlawful entry into, or a detainer of, the Premises, or any eviction of Tenant
from the Premises. Tenant shall have the right to have

                                       10
<PAGE>

a representative present during any entry by Landlord. Any entries by Landlord
shall be subject to the reasonable security measures of Tenant.

            ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PROPERTY

      Tenant shall be liable for and shall pay, at least ten (10) days before
delinquency, all taxes and assessments levied against all personal property of
Tenant located in the Premises, and, if required by Landlord, against all Non
Standard Improvements to the Premises (as defined in Section 7.3) made by
Landlord or Tenant, and against any Alterations (as defined in Section 7.3) made
to the Premises or the Building by or on behalf of Tenant. If requested by
Landlord, Tenant shall cause its personal property, Non-Standard Improvements
and Alterations to be assessed and billed separately from the real property of
which the Premises form a part. If any taxes required to be paid by Tenant on
Tenant's personal property, Non-Standard Improvements and/or Alterations are
levied against Landlord or Landlord's property and if Landlord pays the same, or
if the assessed value of Landlord's property is increased by the inclusion of a
value placed upon the personal property, Non-Standard Improvements and/or
Alterations and if Landlord pays the taxes based upon the increased assessment,
Landlord shall have the right to require that Tenant pay to Landlord the taxes
so levied against Landlord or the proportion of the taxes resulting from the
increase in the assessment. In calculating what portion of any tax bill which is
assessed against Landlord separately, or Landlord and Tenant jointly, is
attributable to Tenant's Non-Standard Improvements, Alterations and personal
property, Landlords reasonable determination shall be conclusive.

                     ARTICLE IX. ASSIGNMENT AND SUBLETTING

      SECTION 9.1. RIGHTS OF PARTIES.

      (a) Notwithstanding any provision of this Lease to the contrary, and
except as to transfers expressly permitted without Landlord's consent pursuant
to Section 9.4, Tenant will not, either voluntarily or by operation of law,
assign, sublet, encumber, or otherwise transfer all or any part of Tenant's
interest in this Lease or the Premises, or permit the Premises to be occupied by
anyone other than Tenant, without Landlord's prior written consent, which
consent shall not unreasonably be withheld in accordance with the provisions of
Section 9.1(b). No assignment (whether voluntary, involuntary or by operation of
law) and no subletting shall be valid or effective without Landlord's prior
written consent and, at Landlord's election, any such assignment or subletting
shall be void and of no force and effect and any such attempted assignment or
subletting shall constitute an Event of Default of this Lease. Landlord shall
not be deemed to have given its consent to any assignment or subletting by any
course of action other than written consent. To the extent not prohibited by
provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq. (the
"BANKRUPTCY CODE"), including Section 365(f)(1), Tenant on behalf of itself and
its creditors, administrators and assigns waives the applicability of Section
365(e) of the Bankruptcy Code unless the proposed assignee of the Trustee for
the estate of the bankrupt meets Landlord's standard for consent as set forth in
Section 9.1(b) of this Lease. If this Lease is assigned to any person or entity
pursuant to the provisions of the Bankruptcy Code, any and all monies or other
considerations to be delivered in connection with the assignment shall be
delivered to Landlord, shall be and remain the exclusive property of Landlord
and shall not constitute property of Tenant or of the estate of Tenant within
the meaning of the Bankruptcy Code. Any person or entity to which this Lease is
assigned pursuant to the provisions of the Bankruptcy Code shall be deemed to
have assumed all of the obligations arising under this Lease on and after the
date of the assignment, and shall upon demand execute and deliver to Landlord an
instrument confirming that assumption.

      (b) If Tenant desires to transfer an interest in this Lease or the
Premises, it shall first notify Landlord of its desire and shall submit in
writing to Landlord: (i) the name and address of the proposed transferee; (ii)
the nature of any proposed transferee's business to be carried on in the
Premises; (iii) the terms and provisions of any proposed sublease, assignment or
other transfer, including a copy of the proposed assignment, sublease or
transfer form; (iv) evidence that the proposed assignee, subtenant or transferee
will comply with the requirements of Exhibit D hereto; (v) a completed
Environmental Questionnaire from the proposed assignee, subtenant or transferee;
(vi) any other information requested by Landlord and reasonably related to the
transfer and (vii) the fee described in Section 9.1(e). Except as provided in
Section 9.1 (c), Landlord shall not unreasonably withhold its consent, provided
that the parties agree that it shall be reasonable for Landlord to withhold its
consent if (1) the use of the Premises will not be consistent with the
provisions of this Lease; (2) the proposed assignee or subtenant has been
required by any prior landlord, lender or governmental authority to take
remedial action in connection with Hazardous Materials contaminating a property
arising out of the proposed assignee's or subtenant's actions or use of the
property in question or is subject to any enforcement order issued by any
governmental authority in connection with the use, disposal or storage of a
Hazardous Material; (3) insurance requirements of the proposed assignee or
subtenant may not be brought into conformity with Landlord's then current
leasing practice; (4) a proposed subtenant or assignee has not demonstrated to
the reasonable satisfaction of Landlord that it is financially responsible or
has failed to submit to Landlord all reasonable information as requested by
Landlord concerning the proposed subtenant or assignee, including, but not
limited to, a certified balance sheet of the proposed subtenant or assignee as
of a date within ninety (90) days of the request for Landlord's consent,
statements of income or profit and loss of the proposed subtenant or assignee
for the two-year period preceding the request for Landlord's consent and/or a
certification signed by the proposed subtenant or assignee that it has not been
evicted or been in arrears in rent at any other leased premises for the 3-year
period preceding the request for Landlord's consent; (5) the proposed assignee
or subtenant is a prospect with whom Landlord is negotiating to become a tenant
at the Site; or (6) the proposed transfer will impose additional burdens or
adverse tax effects on Landlord. If Tenant has any exterior sign rights under
this Lease, such rights are personal to Tenant and may not be assigned or
transferred to any assignee of this Lease or subtenant of the Premises without
Landlord's prior written consent, which may be withheld in Landlord's sole and
absolute discretion.

      If Landlord consents to the proposed transfer, Tenant may within ninety
(90) days after the date of the consent effect the transfer upon the terms
described in the information furnished to Landlord; provided that any

                                       11
<PAGE>

material change in the terms shall be subject to Landlord's consent as set forth
in this Section 9.1. Landlord shall approve or disapprove any requested
transfer within fifteen (15) days following receipt of Tenant's written request,
the information set forth above, and the fee set forth below,

      (c) Notwithstanding the provisions of Section 9.1(b) above, but except for
any Permitted Transfer pursuant to Section 9.4, in lieu of consenting to a
proposed assignment of this Lease or a subletting of the entire Premises with a
sublease term that would extend beyond the date that is six (6) mouths prior to
the expiration date of this Lease, Landlord may elect, within the fifteen (15)
day period permitted for Landlord to approve or disapprove a requested transfer,
to terminate this Lease effective thirty (30) days' following written notice by
Landlord of its election to so terminate. Landlord may thereafter, at its
option, assign, sublet or re-let any space so obtained by termination to any
third party, including without limitation the proposed transferee of Tenant.

      (d) In the event that Landlord approves the requested assignment or
subletting, Tenant agrees that fifty percent (50%) of any amounts paid by the
assignee or subtenant, however described, in excess of (i) the Basic Rent
payable by Tenant hereunder, or in the cast of a sublease of a potion of the
Premises, in excess of the Basic Rent reasonably allocable to such portion, plus
(ii) Tenant's direct and customary out-of-pocket costs which Tenant certifies to
Landlord have been paid to provide occupancy related services to such assignee
or subtenant of a nature commonly provided by landlords of similar space, shall
be the property of Landlord and such amounts shall be payable directly to
Landlord by the assignee or subtenant or, at Landlord's option, by Tenant within
ten (10) days of Tenant's receipt thereof. At Landlord's request, a written
agreement shall be entered into by and among Tenant, Landlord and the proposed
assignee or subtenant confirming the requirements of this Section 9.1(d).

      (e) Tenant shall pay to Landlord a fee equal to the greater of (i)
Landlord's actual costs related to such assignment, subletting or other transfer
or (ii) Five Hundred Dollars ($500.00), to process any request by Tenant for an
assignment, subletting or other transfer under this Lease. Tenant shall pay
Landlord the sum of Five Hundred Dollars ($500.00) concurrently with Tenant's
request for consent to any assignment, subletting or other transfer, and
Landlord shall have no obligation to consider such request unless accompanied by
such payment. Tenant shall pay Landlord upon demand any costs in excess of such
payment to the extent Landlord's actual costs related to such request exceeds
$500.00. Such fee is hereby acknowledged as a reasonable amount to reimburse
Landlord for its costs of review and evaluation of a proposed transfer,

      SECTION 9.2. EFFECT OF TRANSFER. No subletting or assignment, even with
the consent of Landlord, shall relieve Tenant of its obligation to pay rent and
to perform all its other obligations under this Lease. Moreover, Tenant shall
indemnify and hold Landlord harmless, as provided in Section 10.3, for any act
or omission by an assignee or subtenant. Each assignee, other than Landlord,
shall assume all obligations of Tenant under this Lease and shall be liable
jointly and severally with Tenant for the payment of all rent, and for the due
performance of all of Tenant's obligations, under this Lease. No assignment or
subletting shall be effective or binding on Landlord unless documentation in
form and substance satisfactory to Landlord in its reasonable discretion
evidencing the transfer, and in the case of an assignment, the assignee's
assumption of the obligations of Tenant under this Lease, is delivered to
Landlord and both the assignee/subtenant and Tenant deliver to Landlord an
executed consent to transfer instrument prepared by Landlord and consistent with
the requirements of this Article. The acceptance by Landlord of any payment due
under this Lease from any other person shall not be deemed to be a waiver by
Landlord of any provision of this Lease or to be a consent to any transfer.
Consent by Landlord to one or more transfers shall not operate as a waiver or
estoppel to the future enforcement by Landlord of its rights under this Lease
or as a consent to any subsequent transfer.

      SECTION 9.3. SUBLEASE REQUIREMENTS. The following terms and conditions
shall apply to any subletting by Tenant of all or any part of the Premises and
shall be deemed included in each sublease:

      (a) Each and every provision contained in this Lease (other than with
respect to the payment of rent hereunder) is incorporated by reference into and
made a part of such sublease, with "LANDLORD" hereunder meaning the sublandlord
therein and "TENANT" hereunder meaning the subtenant therein, except as
otherwise set forth in the sublease.

      (b) Tenant hereby irrevocably assigns to Landlord all of Tenant's interest
in all rentals and income arising from any sublease of the Premises, and
Landlord may collect such rent and income and apply same toward Tenant's
obligations under this Lease; provided, however, that until there is an Event of
Default by Tenant, Tenant shall have the right to receive and collect the
sublease rentals. Landlord shall not, by reason of this assignment or the
collection of sublease rentals, be deemed liable to the subtenant for the
performance of any of Tenant's obligations under the sublease. Tenant hereby
irrevocably authorizes and directs any subtenant, upon receipt of a written
notice from Landlord stating that an uncured Event of Default exists in the
performance of Tenant's obligations under this Lease, to pay to Landlord all
sums then and thereafter due under the sublease. Tenant agrees that the
subtenant may rely on that notice without any duty of further inquiry and
notwithstanding any notice or claim by Tenant to the contrary. Tenant shall have
no right or claim against the subtenant or Landlord for any rentals so paid to
Landlord.

      (c) In the event of the termination of this Lease for any reason,
including without limitation as the result of an Event of Default by Tenant or
by the mutual agreement of Landlord and Tenant, Landlord may, at its sole
option, take over Tenant's entire interest in any sublease and, upon notice from
Landlord, the subtenant shall attorn to Landlord. In no event, however, shall
Landlord be liable for any previous act or omission by Tenant under the sublease
or for the return of any advance rental payments or deposits under the sublease
that have not been actually delivered to Landlord, nor shall Landlord be bound
by any sublease modification executed without Landlord's consent or for any
advance rental payment by the subtenant in excess of one month's rent. The
general provisions of this Lease, including without limitation those pertaining
to insurance and indemnification, shall be dented incorporated by reference into
the sublease despite the termination of this Lease. In the event Landlord does

                                       12
<PAGE>

not elect to take over Tenant's interest in a sublease in the event of any such
termination of this Lease, such sublease shall terminate concurrently with the
termination of this Lease and such subtenant shall have no further rights under
such sublease and Landlord shall have no obligations to such subtenant.

      SECTION 9.4. CERTAIN TRANSFERS. Notwithstanding any provision to the
contrary herein, Tenant may, without Landlord's consent but with prior notice to
Landlord and subject to the requirements of Sections 9.2 and 9.3, assign this
Lease or sublet the Premises to (a) any entity which results from a merger by
Tenant with or into another entity or a reorganization of Tenant, so long as the
net worth of the successor or reorganized entity after such merger is at least
equal to the greater of the net worth of Tenant as of the execution of this
Lease by Landlord or the net worth of Tenant immediately prior to the date of
such merger or reorganization, evidence of which, satisfactory to Landlord,
shall be presented to Landlord prior to such merger or reorganization; (b) any
entity which controls, is controlled by, or is under common control with Tenant;
or (c) any entity which acquires substantially all of the assets of Tenant, as a
going concern, with respect to the business that is being conducted in the
Premises (hereinafter each a "Permitted Transfer"). In addition, a sale or
transfer of the capital stock of Tenant shall be deemed a Permitted Transfer if
(l) such sale or transfer occurs in connection with any bona fide financing or
capitalization for the benefit of Tenant, or (2) Tenant becomes a publicly
traded corporation. Landlord shall have no tight to terminate the Lease in
connection with, and shall have no right to any sums or other economic
consideration resulting from, any Permitted Transfer.

                       ARTICLE X. INSURANCE AND INDEMNITY

      SECTION 10.1. TENANT'S INSURANCE. Tenant, at its sole cost and expense,
shall provide and maintain in effect the insurance described in Exhibit D.
Evidence of that insurance must be delivered to Landlord prior to the
Commencement Date.

      SECTION 10.2. LANDLORD'S INSURANCE. Landlord may, at its election, provide
any or all of the following types of insurance, with or without deductible and
in amounts and coverages as may be determined by Landlord in its sole and
absolute discretion: "all risk" or similar property insurance, subject to
standard exclusions, covering the Building and/or Site, and such other risks as
Landlord or its mortgagees may from time to time deem appropriate, including
Tenant Improvements made by Landlord pursuant to the Work Letter, and commercial
general liability coverage. Landlord shall not be required to carry insurance of
any kind on Tenant's Alterations or on Tenant's other property, including,
leasehold improvements, trade fixtures, furnishings, equipment, plate glass,
signs and all other items of personal property, and shall not be obligated to
repair or replace that property should damage occur. All proceeds of insurance
maintained by Landlord upon the Building and/or Site shall be the property of
Landlord, whether or not Landlord is obligated to or elects to make any repairs.
At Landlord's option, Landlord may self-insure all or any portion of the risks
for which Landlord elects to provide insurance hereunder.

      SECTION 10.3. TENANT'S INDEMNITY. To the fullest extent permitted by law,
Tenant shall defend, indemnify, protect, save and hold harmless Landlord, its
agents, and any and all affiliates of Landlord, including, without limitation,
any corporations or other entities controlling, controlled by or under common
control with Landlord, from and against any and all claims, liabilities, costs
or expenses arising either before or after the Commencement Date from Tenant's
use or occupancy of the Premises, the Building or the Common Areas, including,
without limitation, the use by Tenant, its agents, employees, invitees or
licensees of any recreational facilities within the Common Areas, or from the
conduct of its business, or from any activity, work, or thing done, permitted or
suffered by Tenant or its agents, employees, invitees or licensees in or about
the Premises, the Building or the Common Areas, or from any Event of Default in
the performance of any obligation on Tenant's part to be performed under this
Lease, or from any act or negligence of Tenant or its agents, employees,
visitors, patrons, guests, invitees or licensees. Landlord may, at its option,
require Tenant to assume Landlord's defense in any action covered by this
Section through counsel satisfactory to Landlord. The provisions of this Section
shall expressly survive the expiration or sooner termination of this Lease.
Tenant's obligations under this Section shall not apply in the event that the
claim, liability, cost or expense is caused by the gross negligence or willful
misconduct of Landlord,

      SECTION 10.4. LANDLORD'S NONLIABILITY. Landlord shall not be liable to
Tenant, its employees, agents and invitees, and Tenant hereby waives all claims
against Landlord and knowingly assumes the risk of for loss of or damage to any
property, or loss or interruption of business or income, or any other loss,
cost, damage, injury or liability whatsoever (including without limitation any
consequential damages and lost profit or opportunity costs) resulting from, but
not limited to, Acts of God, acts of civil disobedience or insurrection, acts or
omissions of third parties and/or of other tenants within the Site or their
agents, employees, contractors, guests or invitees, fire, explosion, falling
plaster, steam, gas, electricity, water or rain which may leak or flow from or
into any pan of the Premises or from the breakage, leakage, obstruction or other
defects of the pipes, sprinklers, wires, appliances, plumbing, air conditioning,
electrical works, roof, windows or other fixtures in the Building, whether the
damage or injury results from conditions arising in the Premises or in the
Building, except to the extent the injury or damage is caused by Landlord's
gross negligence and is not covered by the insurance carried (or otherwise
required herein to be carried) by Tenant. It is understood that any such
condition may require the temporary evacuation or closure of all or a portion of
the Building. Landlord shall have no liability (including without limitation
consequential damages and lost profit or opportunity costs) and, except as
provided in Sections 11.1 and 12.1 below, there shall be no abatement of rent,
by reason of any injury to or interference with Tenant's business arising from
the making of any repairs, alterations or improvements to any portion of the
Building, including repairs to the Premises, nor shall any related activity by
Landlord constitute an actual or constructive eviction; provided, however, that
in making repairs, alteration or improvements, Landlord shall interfere as
little as reasonably practicable with the conduct of Tenant's business in the
Premises. Neither Landlord nor its agents shall be liable for interference with
light or other similar intangible interests, Tenant shall immediately notify
Landlord in case of fire or accident in the Premises, the Building or the Site
and of defects in any improvements or equipment.

                                       13
<PAGE>

      SECTION 10.5. WAIVER OF SUBROGATION. Landlord and Tenant each hereby
waives all rights of recovery against the other and the other's agents on
account of loss and damage occasioned to the property of such waiving party to
the extent only that such loss or damage is required to be insured against, or,
if not required, is actually insured against, under any property insurance
policies contemplated by this Article X; provided however, that (i) the
foregoing waiver shall not apply to the extent of Tenant's obligations to pay
deductibles under any such policies and this Lease and (ii) to the extent Tenant
fails to maintain the insurance required to be maintained by Tenant pursuant to
this Lease, Landlord shall not be deemed to have waived any right of recovery
against Tenant. By this waiver it is the intent of the parties that neither
Landlord nor Tenant shall be liable to any insurance company (by way of
subrogation or otherwise) insuring the other party for any loss or damage
insured against under any property insurance policies contemplated by this
Lease, even though such loss or damage might be occasioned by the negligence of
such party, its agents, employees, contractors, guests or invitees.

                       ARTICLE XI. DAMAGE OR DESTRUCTION

      SECTION 11.1. RESTORATION.

      (a) If the Premises or the Building or a part thereof are materially
damaged by any fire, flood, earthquake or other casualty, Landlord shall have
the right to terminate this Lease upon written notice to Tenant if: (i) Landlord
reasonably determines either (A) that the cost of repair would exceed ten
percent (10%) of the replacement cost of the Building and the damage is not
covered by Landlord's insurance or (B) that the cost of repair would exceed
twenty-five percent (25%) of the Building's replacement cost; (ii) Landlord
reasonably determines that the Premises cannot, with reasonable diligence, be
fully repaired by Landlord (or cannot be safely repaired because of the presence
of hazardous factors, including without limitation Hazardous Materials,
earthquake faults and other similar dangers) within two hundred (200) days after
the date of the damage; (iii) an uncured Event of Default by Tenant has
occurred; or (iv) the material damage occurs during the final twelve (12) months
of the Term. Landlord shall notify Tenant in writing ("Landlord's Notice")
within thirty (30) days after the damage occurs as to (A) whether Landlord is
terminating this Lease as a result of such material damage and (B) if Landlord
is not terminating this Lease, the number of days within which Landlord has
estimated that the Premises, with reasonable diligence, are likely to be fully
repaired (the "Designated Repair Period"). In the event Landlord elects to
terminate this Lease, this Lease shall terminate as of the date specified for
termination by Landlord's Notice (which termination date shall in no event be
later than thirty (30) days following the date of the damage, or, if no such
date is specified, such termination shall be the date of Landlord's Notice).

      (b) If Landlord has the right to terminate this Lease pursuant to Section
11.1(a) and does not elect to so terminate this Lease, and provided that at the
time of Landlord's Notice neither an Event of Default exists nor has Landlord
delivered Tenant a notice of any failure by Tenant to fulfill an obligation
under this Lease which, unless cured by Tenant within the applicable grace
period, would constitute an Event of Default, then within twenty (20) days
following delivery of Landlord's Notice pursuant to Section 11.1(a), Tenant may
elect to terminate this Lease by written notice to Landlord, but only if (i)
Landlord's notice specifies that Landlord has determined that the Premises
cannot be repaired, with reasonable diligence, within two hundred (200) days
after the date of damage or (ii) the casualty has occurred within the final
twelve (12) months of the Term and such material damage has a materially adverse
impact on Tenant's continued use of the Premises. If Tenant fails to provide
such termination notice within such twenty (20) day period, Tenant shall be
deemed to have waived any termination right under this Section 11.1(b) or any
other applicable law.

      (c) In the event that neither Landlord nor Tenant terminates this Lease
pursuant to this Section 11.1 as a result of material damage to the Building or
Premises resulting from a casualty, Landlord shall repair all material damage to
the Premises or the Building as soon as reasonably possible and this Lease shall
continue in effect for the remainder of the Term. Subject to any provision to
the contrary in the Work Letter, such repair by Landlord shall include repair of
material damage to the Tenant Improvements constructed pursuant to the Work
Letter, so long as insurance proceeds from insurance required to be carried by
Tenant are made available to Landlord. Landlord shall, subject to Tenant's
consent, have the right, but not the obligation, to repair or replace any other
leasehold improvements made by Tenant or any Alterations (as defined in Section
7.3) constructed by Tenant. If Landlord elects to repair or replace such
leasehold improvements and/or Attentions, all insurance proceeds available for
such repair or replacement shall be made available to Landlord. Landlord shall
have no liability to Tenant in the event that the Premises or the Building has
not been fully repaired within the Designated Repair Period specified by
Landlord in Landlord's Notice to Tenant as described in Section 11.1(a),
provided that Landlord shall use commercially reasonable efforts to complete
construction by such date. If Landlord determines at any time that the actual
repair period will exceed the Designated Repair Period (or, if later, 200 days
from the date of the damage), then Landlord shall so notify Tenant and Tenant
may, within five (5) business days thereafter, elect to terminate this Lease;
otherwise, the Designated Repair Period shall be deemed extended to the revised
date set forth by Landlord. Should Landlord fail substantially to complete the
repairs within the Designated Repair Period (or, if later, by the date that is
200 days following the casualty event), as the Designated Repair Period may have
been extended as aforesaid, then Tenant may terminate this Lease by written
notice to Landlord within five (5) business days thereafter. Notwithstanding the
foregoing, the repair of damage to the Premises to the extent such damage is not
materiel shall be governed by Sections 7.1 and 7.2.

      (d) Commencing on the sixth business day following the date of such
material damage to the Building, and ending on the sooner of the date the damage
is repaired or the date this Lease is terminated, the rental to be paid under
this Lease shall be abated in the same proportion that the Floor Area of the
Premises that is rendered unusable by the damage from time to time bears to the
total Floor Area of the Premises.

      (e) Landlord shall not be required to repair or replace any improvements
or fixtures that tenant is obligated to repair or replace pursuant to Section
7.1 or any other provision of this Lease and Tenant shall continue to be
obligated to repair or replace any such improvements or fixtures,
notwithstanding any provisions to the

                                       14
<PAGE>

contrary in this Article XI. In addition, in the event the damage or destruction
to the Premises or Building are due in substantial part to the fault or neglect
of Tenant or its employees, subtenants, invitees or representatives,
notwithstanding the provisions of Section 10.5, the costs of such repairs or
replacement to the Premises or Building shall be borne by Tenant to the extent
that insurance proceeds sufficient to complete such repair or replacement are
not made available to Landlord and in addition, Tenant shall not be entitled to
terminate this Lease as a result, notwithstanding the provisions of Section
11.1(b).

      (f) Tenant shall fully cooperate with Landlord in removing Tenant's
personal property and any debris from the Premises to facilitate all inspections
of the Premises and the making of any repairs. Notwithstanding anything to the
contrary contained in this Lease, if Landlord in good faith believes there is a
risk of injury to persons or damage to property from entry into the Building or
Premises following any damage or destruction thereto, Landlord may restrict
entry into the Building or the Premises by Tenant, its employees, agents and
contractors in a non-discriminatory manner, without being deemed to have
violated Tenant's rights of quiet enjoyment to, or made an unlawful detainer of,
or evicted Tenant from, the Premises. Upon request, Landlord shall consult with
Tenant to determine if there are safe methods of entry into the Building or the
Premises solely in order to allow Tenant to retrieve files, data in computers,
and necessary inventory, subject however to all indemnities and waivers of
liability from Tenant to Landlord contained in this Lease and any additional
indemnities and waivers of liability which Landlord may require.

      SECTION 11.2. LEASE GOVERNS. Tenant agrees that the provisions of this
Lease, including without limitation Section 11.1, shall govern any damage or
destruction and shall accordingly supersede any contrary statute or rule of law.

                          ARTICLE XII. EMINENT DOMAIN

      SECTION 12.1. TOTAL OR PARTIAL TAKING. If all or a material portion of the
Premises is taken by any lawful authority by exercise of the right of eminent
domain, or sold to prevent a taking, either Tenant or Landlord may terminate
this Lease effective as of the date possession is required to be surrendered to
the authority. In the event neither party has elected to terminate this Lease as
provided above, then Landlord shall promptly, after receipt of a sufficient
condemnation award, proceed to restore the Premises to substantially their
condition prior to the taking, and a proportionate allowance shall be made to
Tenant for the rent corresponding to the time during which, and to the part of
the Premises of which, Tenant is deprived on account of the taking and
restoration. In the event of a taking, Landlord shall be entitled to the entire
amount of the condemnation award without deduction for any estate or interest of
Tenant provided that nothing in this Section shall be deemed to give Landlord
any interest in, or prevent Tenant from seeking any award against the taking
authority for, the taking of personal property and fixtures belonging to Tenant
or for relocation or business interruption expenses recoverable from the taking
authority.

      SECTION 12.2. TEMPORARY TAKING. No temporary taking of the Premises shall
terminate this Lease or give Tenant any right to abatement of rent, and any
award specifically attributable to a temporary taking of the Premises shall
belong entirely to Tenant. A temporary taking shall be deemed to be a taking of
the use or occupancy of the Premises for a period of not to exceed ninety (90)
days.

      SECTION 12.3. TAKING OF PARKING AREA. In the event there shall be a taking
of the parking area of the Site such that more than ten percent (10%) of the
vehicle parking spaces are taken, Landlord may substitute reasonably equivalent
parking in a location reasonably close to the Building; provided that if
Landlord fails to make that substitution within ninety (90) days following the
taking and if the taking materially impairs Tenant's use and enjoyment of the
Premises, Tenant may, at its option, terminate this Lease by written notice to
Landlord. If this Lease is not so terminated by Tenant, there shall be no
abatement of rent and this Lease shall continue in effect.

         ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS

      SECTION 13.1. SUBORDINATION. At the option of Landlord or any lender of
Landlord's that obtains a security interest in the Building, this Lease shall be
either superior or subordinate to all ground or underlying leases, mortgages and
deeds of trust, if any, which may hereafter affect the Building, and to all
renewals, modifications, consolidations, replacements and extensions thereof;
provided, that so long as no Event of Default exists under this Lease, Tenant's
possession and quiet enjoyment of the Premises shall not be disturbed and this
Lease shall not terminate in the event of termination of any such ground or
underlying lease, or the foreclosure of any such mortgage or deed of trust, to
which this Lease has been subordinated pursuant to this Section. Tenant shall
execute and deliver within ten (10) business days of written request therefor
any documents or agreements requested by Landlord or such lessor or lender which
provide Tenant with the non-disturbance protections set forth in this Section.
In the event of a termination or foreclosure, Tenant shall become a tenant of
and attorn to the successor-in-interest to Landlord upon the same terms and
conditions as are contained in this Lease, and shall execute any instrument
reasonably required by Landlord's successor for that purpose. Tenant shall also,
upon written request of Landlord, execute and deliver all instruments as may be
required from time to time to subordinate the rights of Tenant under this Lease
to any ground or underlying lease or to the lien of any mortgage or deed of
trust (provided that such instruments include the nondisturbance and attornment
provisions set forth above), or, if requested by Landlord, to subordinate, in
whole or in part, any ground or underlying lease or the lien of any mortgage or
deed of trust to this Lease. Tenant agrees that any purchaser at a foreclosure
sale or lender taking title under a deed-in-lieu of foreclosure shall not be
responsible for any act or omission of a prior landlord, shall not be subject to
any offsets or defenses Tenant may have against a prior landlord, and shall not
be liable for the return of the security deposit to the extent it is not
actually received by such purchaser or bound by any rent paid for more than the
current month in which the foreclosure occurred.

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      SECTION 13.2. ESTOPPEL CERTIFICATE. Tenant shall, at any time upon not
less than ten (10) business days prior written notice from Landlord, execute,
acknowledge and deliver to Landlord, in any form that Landlord may reasonably
require, assent in writing (i) certifying that this Lease is unmodified and in
full force and effect (or, if modified, stating the nature of the modification
and certifying that this Lease, as modified, is in full force and effect) and
the dates to which the rental, additional rent and other charges have been paid
in advance, if any, and (ii) acknowledging that, to Tenant's knowledge, there
are no uncured defaults on the part of Landlord, or specifying each default if
any are claimed, and (iii) setting forth all further information that Landlord
or any purchaser or encumbrancer may reasonably require. Tenant's statement may
be relied upon by any prospective purchaser or encumbrancer of all or any
portion of the Building or Site.

      SECTION 13.3. FINANCIALS.

      (a) Tenant shall deliver to Landlord, prior to the execution of this Lease
and thereafter not more than once per year upon Landlord's request, Tenant's
current tax returns and financial statements, certified true, accurate and
complete by the chief financial officer of Tenant, including a balance sheet and
profit and loss statement for the most recent prior year, or, in the event
Tenant is a publicly traded corporation on a nationally recognized stock
exchange, Tenant's current financial reports filed with the Securities and
Exchange Commission (collectively, the "Statements"), which Statements shall
accurately and completely reflect the financial condition of Tenant. Landlord
agrees that it will keep the Statements confidential, except that Landlord shall
have the right to deliver the same to any proposed purchaser of the Building or
Site, and to any encumbrance of all or any portion of the Building or Site.

      (b) Tenant acknowledges that Landlord is relying on the Statements in its
determination to enter into this Lease, and Tenant represents to Landlord, which
representation shall be deemed made on the date of this Lease and again on the
Commencement Date, that no material change in the financial condition of Tenant,
as reflected in the Statements, has occurred since the date Tenant delivered the
Statements to Landlord. The Statements are represented and warranted by Tenant
to be correct and to accurately and fully reflect Tenant's true financial
condition as of the date of submission by any Statements to Landlord.

                  ARTICLE XIV. EVENTS OF DEFAULT AND REMEDIES

      SECTION 14.1. TENANT'S DEFAULTS. In addition to any other breaches of this
Lease which are defined as Events of Default in this Lease, the occurrence of
any one or more of the following events shall constitute an Event of Default by
Tenant:

      (a) The failure by Tenant to make any payment of Basic Rent or additional
rent required to be made by Tenant, as and when due, where the failure continues
for a period of three (3) days after written notice from Landlord to Tenant;
provided, however, that any such notice shall be in lieu of, and not in addition
to, any notice required under California Code of Civil Procedure Section 1161
and 1161(a) as amended. For purposes of these Events of Default and remedies
provisions, the term "additional rent" shall be deemed to include all amounts of
any type whatsoever other than Basic Rent to be paid by Tenant pursuant to the
terms of this Lease,

      (b) The assignment, sublease, encumbrance or other transfer of this Lease
by Tenant, either voluntarily or by operation of law, whether by judgment,
execution, transfer by intestacy or testacy, or other means, without the prior
written consent of Landlord when consent is required by this Lease.

      (c) The discovery by Landlord that any financial statement provided by
Tenant, or by any affiliate, successor or guarantor of Tenant, was materially
false.

      (d) The failure of Tenant to timely and fully provide any subordination
agreement, estoppel certificate or financial statements in accordance with the
requirements of Article XIII.

      (e) The abandonment of the Premises by Tenant.

      (f) The failure or inability by Tenant to observe or perform any of the
express or implied covenants or provisions of this Lease to be observed or
performed by Tenant, other than as specified in this Section 14.1, where the
failure continues for a period of thirty (30) days after written notice from
Landlord to Tenant or such shorter period as is specified in any other provision
of this Lease; provided, however, that any such notice shall be in lieu of, and
not in addition to, any notice required under California Code of Civil Procedure
Section 1161 and 1161(a) as amended. However, if the nature of the failure is
such that more than thirty (30) days are reasonably required for its cure, then
Tenant shall not be deemed to have committed an Event of Default if Tenant
commences the cure within thirty (30) days, and thereafter diligently pursues
the cure to completion.

      (g) (i) The making by Tenant of any general assignment for the benefit of
creditors; (ii) the filing by or against Tenant of a petition to have Tenant
adjudged a Chapter 7 debtor under the Bankruptcy Code or to have debts
discharged or a petition for reorganization or arrangement under any law
relating to bankruptcy (unless, in the case of a petition filed against Tenant,
the same is dismissed within thirty (30) days); (iii) the appointment of a
trustee or receiver to take possession of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, if possession is
not restored to Tenant within thirty (30) days; (iv) the attachment, execution
or other judicial seizure of substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this Lease, where the seizure is not
discharged within thirty (30) days; (v) Tenants convening of a meeting of its
creditors for the purpose of effecting a moratorium upon or composition of its
debts or (vi) the failure of Tenant to

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<PAGE>

pay its material obligations to creditors as and when they become due and
payable, other than as a result of a good faith dispute by Tenant as to the
amount due to such creditors. Landlord shall not be deemed to have knowledge of
any event described in this Section 14.1(g) unless notification in writing is
received by Landlord, nor shall there be any presumption attributable to
Landlord of Tenant's insolvency. In the event that any provision of this Section
l4.1(g) is contrary to applicable law, the provision shall be of no force or
effect.

      SECTION 14.2. LANDLORD'S REMEDIES.

      (a) If an Event of Default by Tenant occurs, then in addition to any other
remedies available to Landlord, Landlord may exercise the following remedies:

            (i) Landlord may terminate Tenant's right to possession of the
Premises by any lawful means, in which case this Lease shall terminate and
Tenant shall immediately surrender possession of the Premises to Landlord. Such
termination shall not affect any accrued obligations of Tenant under this Lease.
Upon termination, Landlord shall have the right to reenter the Premises and
remove all persons and property. Landlord shall also be entitled to recover from
Tenant:

                  (1) The worth at the time of award of the unpaid Basic Rent
and additional rent which had been earned at the time of termination;

                  (2) The worth at the time of award of the amount by which the
unpaid Basic Rent and additional rent which would have been earned after
termination until the time of award exceeds the amount of such loss that Tenant
proves could have been reasonably avoided;

                  (3) The worth at the time of award of the amount by which the
unpaid Basic Rent and additional rent for the balance of the Term after the time
of award exceeds the amount of such loss that Tenant proves could be reasonably
avoided;

                  (4) Any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its obligations
under this Lease or which in the ordinary course of things would be likely to
result from Tenant's Event of Default, including, but not limited to, the cost
of recovering possession of the Premises, refurbishment of the Premises,
marketing costs, commissions and other expenses of reletting, including
necessary repair, the unamortized portion of any tenant improvements and
brokerage commissions funded by Landlord in connection with this Lease,
reasonable attorney's fees, and any other reasonable costs; and

                  (5) At Landlord's election, all other amounts in addition to
or in lieu of the foregoing as may be permitted by law. Any sum, other than
Basic Rent, shall be computed on the basis of the average monthly amount
accruing during the twenty-four (24) month period immediately prior to the Event
of Default, except that if it becomes necessary to compute such rental before
the twenty-four (24) month period has occurred, then the computation shall be on
the basis of the average monthly amount during the shorter period. As used in
Sections 14.2(a)(i) and (2) above, the "worth at the time of award" shall be
computed by allowing interest at the rate of ten percent (10%) per annum. As
used in Section l4.2(a)(i)(3) above, the "worth at the time of award" shall be
computed by discounting the amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%).

            (ii) Landlord may elect not to terminate Tenant's right to
possession of the Premises, in which event Landlord may continue to enforce all
of its rights and remedies under this Lease, including the right to collect all
rent as it becomes due. Efforts by the Landlord to maintain, preserve or relet
the Premises, or the appointment of a receiver to protect the Landlord's
interests under this Lease, shall not constitute a termination of the Tenant's
right to possession of the Premises. In the event that Landlord elects to avail
itself of the remedy provided by this Section 14.2(a)(ii), Landlord shall not
unreasonably withhold its consent to an assignment or subletting of the Premises
subject to the reasonable standards for Landlord's consent as are contained in
this Lease.

      (b) Landlord shall be under no obligation to observe or perform any
covenant of this Lease on its part to be observed or performed which accrues
after the date of any Event of Default by Tenant unless and until the Event of
Default is cured by Tenant, it being understood and agreed that the performance
by Landlord of its obligations under this Lease are expressly conditioned upon
Tenant's full and timely performance of its obligations under this Lease. The
various rights and remedies reserved to Landlord in this Lease or otherwise
shall be cumulative and, except as otherwise provided by California law,
Landlord may pursue any or all of its rights and remedies at the same time.

      (c) No delay or omission of Landlord to exercise any right or remedy shall
be construed as a waiver of the right or remedy or of any breach or Event of
Default by Tenant. The acceptance by Landlord of rent shall not be a (i) waiver
of any preceding breach or Event of Default by Tenant of any provision of this
Lease, other than the failure of Tenant to pay the particular rent accepted,
regardless of Landlord's knowledge of the preceding breach or Event of Default
at the time of acceptance of rent, or (ii) a waiver of Landlord's right to
exercise any remedy available to Landlord by virtue of the breach or Event of
Default. The acceptance of any payment from a debtor in possession, a trustee, a
receiver or any other person acting on behalf of Tenant or Tenant's estate shall
not waive or cure a breach or Event of Default under Section 14.1 No payment by
Tenant or receipt by Landlord of a lesser amount than the rent required by this
Lease shall be deemed to be other than a partial payment on account of the
earliest due stipulated rent, nor shall any endorsement or statement on any
check or letter be deemed an accord and satisfaction and Landlord shall accept
the check or payment without prejudice to Landlord's right to recover the
balance of the rent or pursue any other remedy available to it. No act or thing
done by Landlord or Landlord's

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<PAGE>

agents during the Term shall be deemed an acceptance of, surrender of the
Premises, and no agreement to accept a surrender shall be valid unless in
writing and signed by Landlord. No employee of Landlord or of Landlord's agents
shall have any power to accept the keys to the Premises prior to the termination
of this Lease, and the delivery of the keys to any employee shall not operate as
a termination of this Lease or a surrender of the Premises.

      (d) Any agreement for free or abated rent or other charges, or for the
giving or paying by Landlord to or for Tenant of any cash or other bonus,
inducement or consideration for Tenant's entering into this Lease ("Inducement
Provisions") shall be deemed conditioned upon Tenant's full and faithful
performance of the terms, covenants and conditions of this Lease. Upon an Event
of Default under this Lease by Tenant, any such Inducement Provisions shall
automatically be deemed deleted from this Lease and of no further force or
effect and the amount of any rent reduction or abatement or other bonus or
consideration already given by Landlord or received by Tenant as an Inducement
shall be immediately due and payable by Tenant to Landlord, notwithstanding any
subsequent cure of said Event of Default by Tenant. The acceptance by Landlord
of rent or the cure of the Event of Default which initiated the operation of
this Section 14.1 shall not be deemed a waiver by Landlord of the provisions of
this Section 44.2(d).

      SECTION 14.3. LATE PAYMENTS.

      (a) Any payment due to Landlord under this Lease, including without
limitation Basic Rent, Tenant's Share of Operating Expenses or any other payment
due to Landlord under this Lease, that is not received by Landlord within five
(5) days following the date due shall bear interest at the maximum rate
permitted by law from the date due until fully paid. The payment of interest
shall not cure any breach or Event of Default by Tenant under this Lease. In
addition, Tenant acknowledges that the late payment by Tenant to Landlord of
Basic Rent and Tenant's Share of Operating Expenses will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult and impracticable to ascertain. Those costs may include,
but are not limited to, administrative, processing and accounting charges, and
late charges which may be imposed on Landlord by the terms of any pound lease,
mortgage or trust deed covering the Premises. Accordingly, if any Basic Rent or
Tenant's Share of Operating Expenses due from Tenant shall not be received by
Landlord or Landlord's designee within five (5) days following the date due,
then Tenant shall pay to Landlord, in addition to the interest provided above, a
late charge, which the Tenant agrees is reasonable, in a sum equal to three
percent (%) of the amount overdue for each delinquent payment. Acceptance of a
late charge by Landlord shall not constitute a waiver of Tenant's breech or
Event of Default with respect to the overdue amount, nor shall it prevent
Landlord from exercising any of its other rights and remedies.

      (b) Should Tenant deliver to Landlord, at any time during the Term, three
(3) or more insufficient checks, the Landlord may require that all monies then
and thereafter due from Tenant be paid to Landlord by cashiers check. If any
check for any payment to Landlord hereunder is returned by the bank for any
reason, such payment shall not be deemed to have been received by Landlord and
Tenant shall be responsible for any applicable late charge, internet payment and
the charge to Landlord by its bank for such returned check. Nothing in this
Section shall be construed to compel Landlord to accept Basic Rent, Tenant's
Share or Operating Expenses or any other payment from Tenant if there exists an
Event of Default unless such payment fully cures any and all such Event of
Default. Any acceptance of any such payment shall not be deemed to waive any
other right of Landlord under this Lease. Any payment by Tenant to Landlord may
be applied by Landlord, in its sole and absolute discretion, in any order
determined by landlord to any amounts then due to Landlord.

      SECTION 14.4. [INTENTIONALLY OMITTED)

      SECTION 14.5. DEFAULT BY LANDLORD. Landlord shall not be deemed to be in
default in the performance of any obligation under this Lease, and Tenant shall
have no rights to take any action against Landlord, unless and until Landlord
has failed to perform the obligation within thirty (30) days after written
notice by Tenant to Landlord specifying in reasonable detail the nature and
extent of the failure; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for its
performance, then landlord shall not be deemed to be in default if it commences
performance within the thirty (30) day period and thereafter diligently pursues
the cure to completion. In the event of Landlord's default under this Lease,
Tenant's sole remedies shall be to seek damages or specific performance from
Landlord, provided that any damages shall be limited to Tenant's actual
out-of-pocket expenses and shall in no event include any consequential damages,
lost profits or opportunity costs,

      SECTION 14.6. EXPENSES AND LEGAL FEES. All sums reasonably incurred by
Landlord in connection with any Event of Default by Tenant under this Lease or
holding over of possession by Tenant after the expiration or earlier termination
of this Lease, or any action related to a filing for bankruptcy or
reorganization by Tenant, including without limitation all costs, expenses and
actual accountants, appraisers, attorneys and other professional fees, and any
collection agency or other collection charges, shall be due and payable to
Landlord on demand, and shall bear interest at the rate of ten percent (10%) per
annum. Should either Landlord or Tenant bring any action in connection with this
Lease, the prevailing party shall be entitled to recover as a part of the action
its reasonable attorneys' fees, and all other cost. The prevailing party for the
purpose of this Section shall be determined by the trier of the facts.

      SECTION 14.7. WAIVER OF JURY TRIAL. LANDLORD AND TENANT EACH ACKNOWLEDGES
THAT IT IS AWARE OF AND HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT
TO ITS RIGHTS TO TRIAL BY JURY, AND EACH PARTY DOES HEREBY EXPRESSLY AND
KNOWINGLY WAIVE AND RELEASE ALL SUCH RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST THE OTHER
(AND/OR AGAINST ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, OR SUBSIDIARY OR
AFFILIATED ENTITIES) ON ANY MATTERS WHATSOEVER ARISING OUT

                                       18
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OF IN ANY WAY CONNECTED WITH THIS LEASE, TENANT'S USE OR OCCUPANCY OF THE
PREMISES, AND/OR ANY CLAIM OF INJURY OR DAMAGE, FURTHERMORE, THIS WAIVER AND
RELEASE OF ALL RIGHTS TO A JURY TRIAL IS DEEMED TO BE INDEPENDENT OF EACH AND
EVERY OTHER PROVISION, COVENANT, AND/OR CONDITION SET FORTH IN THIS LEASE.

      SECTION 14.8. SATISFACTION OF JUDGMENT. The obligations of Landlord do not
constitute the personal obligations of the individual partners, trustees,
directors, officers or shareholders of Landlord or its constituent partners.
Should Tenant recover a money judgment against Landlord, such judgment shall be
satisfied only from the interest of Landlord in the Site and out of the rent or
other income from such property receivable by Landlord or out of consideration
received by Landlord from the sale or other disposition of all or any part of
Landlord's right, title or interest in the Site and no action for any deficiency
may be sought or obtained by Tenant.

      SECTION 14.9. LIMITATION OF ACTIONS AGAINST LANDLORD. Any claim, demand or
right of any kind by Tenant which is based upon or arises in connection with
this Lease, including without limitation any arising under a tort or contact
cause of action, shall be barred unless Tenant commences an action thereon
within six (6) months after the date that the act, omission, event or default
upon which the claim, demand or right arises, has occurred.

                            ARTICLE XV. END OF TERM

      SECTION 15.1. HOLDING OVER. This Lease shall terminate without further
notice upon the expiration of the Term, and any holding over by Tenant after the
expiration shall not constitute a renewal or extension of this Lease, or give
Tenant any rights under this Lease, except when in writing signed by both
parties. Any period of time following the Expiration Date or earlier termination
of this Lease required for Tenant to remove its property or to place the
Premises in the condition required pursuant to Section 15.3 (or for Landlord to
do so if Tenant fails to do so) shall be deemed a holding over by Tenant. If
Tenant holds over for any period after the Expiration Date (or earlier
termination) of the Term without the prior written consent of Landlord, such
possession shall constitute a tenancy at sufferance only and an Event of Default
under this Lease; such holding over with the prior written consent of Landlord
shall constitute a month-to-month tenancy commencing on the first (1st) day
following the termination of this Lease and terminating thirty (30) days
following delivery of written notice of termination by either Landlord or Tenant
to the other. In either of such events, possession shall be subject to all of
the terms of this Lease, except that the monthly Basic Rent shall be one
hundred fifty percent (150%) of the greater of (a) the Basic Rent for the month
immediately preceding the date of termination or (b) the fair market rental for
the Premises. If Tenant fails to surrender the Premises upon the expiration of
this Lease despite demand to do so by Landlord, Tenant shall indemnify and hold
Landlord harmless from all loss or liability, including without limitation, any
claims made by any succeeding tenant relating to such failure to surrender.
Acceptance by Landlord of rent after the termination shall not constitute a
consent to a holdover or result in a renewal of this Lease. The foregoing
provisions of this Section are in addition to and do not affect Landlord's right
of re-entry or any other rights of Landlord under this Lease or at law.

      SECTION 15.2. MERGER ON TERMINATION. The voluntary or other surrender of
this Lease by Tenant, or a natural termination of this Lease, shall terminate
any or all existing subleases unless Landlord, at its option, elects in writing
to treat the surrender or termination as an assignment to it of any or all
subleases affecting the Premises.

      SECTION 15.3. SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Subject to the
provisions of 7.3 of this Lease, upon the Expiration Date or upon any earlier
termination of this Lease, Tenant shall quit and surrender possession of the
Premises to Landlord in as good order, condition and repair as when received or
as hereinafter may be improved by landlord or Tenant, reasonable wear and tear
and repairs which are Landlord's obligation excepted, and shall, without expense
to Landlord, remove or cause to be removed from the Premises all personal
property and debris, except for any items that Landlord may by written
authorization allow to remain. Tenant shall repair all damage to the Premises
resulting from the removal which repair shall include the patching and filling
of holes and repair of structural damage, provided that Landlord may instead
elect to repair any structural damage at Tenant's expense. If Tenant shall fail
to comply with the provisions of this Section, Landlord may effect the removal
and/or make any repair, and the cost to Landlord shall be additional rent
payable by Tenant upon demand. If Tenant fails to remove Tenant's personal
property from the Premises upon the expiration of the Term. Landlord may remove,
store, dispose of and/or retain such personal property, at Landlord's option, in
accordance with then applicable laws, all at the expense of Tenant. If requested
by Landlord, Tenant shall execute, acknowledge and deliver to Landlord an
instrument in writing releasing and quitclaiming to Landlord all right, title
and interest of Tenant in the Premises.

                       ARTICLE XVI. PAYMENTS AND NOTICES

      All sums payable by Tenant to Landlord shall be deemed to be rent under
this Lease and shall be paid, without deduction or offset, in lawful money of
the United Slates to Landlord at its address set forth in Item 12 of the Basic
Lease Provisions, or at any other place as Landlord may designate in writing.
Unless this Lease expressly provides otherwise, as for example in the payment of
Basic Rent and the Tenant's Share of Operating Costs pursuant to Sections 4.1
and 4.2, all payments shall be due and payable within five (5) days after
demand. All payments requiring proration shall be prorated on the basis of a
thirty (30) day month and a three hundred sixty (360) day year. Any notice,
election, demand, consent, approval or other communication to be given or other
document to be delivered by either party to the other may be delivered in person
or by courier or overnight delivery service to the other party, or may be
deposited in the United States mail, duly registered or certified, postage
prepaid, return receipt requested, and addressed to the other party at the
address set forth in Item 12 of the Basic Lease Provisions, or if to Tenant, at
that address or, from and after the Commencement Date, at the Premises (whether
or not Tenant has departed from, abandoned or vacated the Premises). Either
party may, by written notice to the other, served in

                                       19
<PAGE>

the manner provided in this Article, designate a different address. If any
notice or other document is sent by mail, it shall be deemed served or delivered
seventy-two (72) hours after mailing. If more than one person or entity is named
as Tenant under this Lease, service of any notice upon any one of them shall be
deemed as service upon all of them.

                      ARTICLE XVII. RULES AND REGULATIONS

      Tenant agrees to observe faithfully and comply strictly with the Rules and
Regulations, attached as Exhibit E and any reasonable and nondiscriminatory
amendments, modifications and/or additions as may be adopted and published by
written notice to tenants by Landlord for the safety, care, security, good
order, or cleanliness of the Premises, Building, Site and Common Areas. Landlord
shall not be liable to Tenant for any violation of the Rules and Regulations or
the breach of any covenant or condition in any lease by any other tenant or such
tenant's agents, employees, contractors, guests or invitees. One or more waivers
by Landlord of any breach of the Rules and Regulations by tenant or by any other
tenant(s) shall not be a waiver of any subsequent breach of that rule or any
other. Tenant's failure to keep and observe the Rules and Regulations shall
constitute a breach of this Lease. In the case of any conflict between the Rules
and Regulations and this Lease, this Lease shall be controlling.

                       ARTICLE XVIII. BROKER'S COMMISSION

      The parties recognize as the broker(s) who negotiated this Lease the
firm(s), if any, whose name(s) is (are) stated in Item 10 of the Basic Lease
Provisions; and agree that Landlord shall be responsible for the payment of
brokerage commissions to those broker(s) unless otherwise provided in this
Lease. Tenant warrants that it has had no dealings with any other real estate
broker or agent in connection with the negotiation of this Lease, and Tenant
agrees to indemnify and hold Landlord harmless from any cost, expense or
liability (including reasonable attorneys' fees) for any compensation,
commissions or charges claimed by any other real estate broker, or agent
employed or claiming to represent or to have been employed by Tenant in
connection with the negotiation of this Lease. The foregoing agreement shall
survive the termination of this Lease. If Tenant fails to take possession of the
Premises or if this Lease otherwise terminates prior to the Expiration Date as
the result of failure of performance by Tenant, Landlord shall be entitled to
recover from Tenant the unamortized portion of any brokerage commission funded
by Landlord in addition to any other damages to which Landlord may be entitled.

                  ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST

      In the event of any transfer of Landlord interest in the Premises, the
transferor shall be automatically relieved of all further obligations on the
part of Landlord, and the transferor shall be relieved of any obligation to pay
any funds in which Tenant has an interest to the extent that such funds have
been turned over, subject to that interest, to the transferee and Tenant is
notified of the transfer as required by law. No beneficiary of a deed of trust
to which this Lease is or may be subordinate, and no landlord under a so-called
sale-leaseback, shall be responsible in connection with the Security Deposit,
unless the mortgagee or beneficiary under the deed of trust or the landlord
actually receives the Security Deposit. It is intended that the covenants and
obligations contained in this Lease on the part of Landlord shall, subject to
the foregoing, be binding on Landlord, its successors and assigns, only during
and in respect to their respective successive periods of ownership.

                           ARTICLE XX. INTERPRETATION

      SECTION 20.1. GENDER AND NUMBER. Whenever the context of this Lease
requires the words "Landlord" and "Tenant" shall include the plural as well as
the singular, and words used in neuter, masculine or feminine genders shall
include the others.

      SECTION 20.2. HEADINGS. The captions and headings of the articles and
sections of this Lease are for convenience only, are not a part of this Lease
and shall have no effect upon its construction or interpretation.

      SECTION 20.3. JOINT AND SEVERAL LIABILITY. If more than one person or
entity is named as Truant, the obligations imposed upon each shall be joint and
several and the act of or notice front, or notice or refund to, or the signature
of, any one or more of them shall be binding on all of them with respect to the
tenancy of this Lease, including, but not limited to, any renewal, extension,
termination or modification of this Lease.

      SECTION 20.4. SUCCESSORS. Subject to Articles IX and XIX, all rights and
liabilities given to or imposed upon Landlord and Tenant shall extend to and
bind their respective heirs, executors, administrators, successors and assigns.
Nothing contained in this Section is intended, or shall be construed, to grant
to any person other than Landlord and Tenant and their successors and assigns
any rights or remedies under this Lease.

      SECTION 20.5. TIME OF ESSENCE. Time is of the essence with respect to the
performance of every provision of this Lease.

      SECTION 20.6. CONTROLLING LAW/VENUE. This Lease shall be governed by and
interpreted in accordance with the laws of the State of California. Any
litigation commenced concerning any matters whatsoever arising out of or in any
way connected to this Lease shall be initiated in the Superior Court of the
county in which the Site is located.

      SECTION 20.7. SEVERABILITY. If any term or provision of this Lease, the
deletion of which would not adversely affect the receipt of any material benefit
by either party or the deletion of which is consented to by the party adversely
affected, shall be held invalid or unenforceable to any extent, the remainder of
this Lease shall not

                                       20
<PAGE>

be affected and each term and provision of this Lease shall be valid and
enforceable to the fittest extent permitted by law.

      SECTION 20.8. WAIVER AND CUMULATIVE REMEDIES. One or more waivers by
Landlord or Tenant of any breach of any term, Covenant or condition contained in
this Lease shall not be a waiver of any subsequent breach of the same or any
other term, covenant or condition. Consent to any act by one of the parties
shall not be deemed to render unnecessary the obtaining of that party's consent
to any subsequent act. No breach by Tenant of this Lease shall be deemed to have
been waived by Landlord unless the waiver is in a writing signed by Landlord.
The right and remedies of Landlord under this Lease shall be cumulative and in
addition to any and all other rights and remedies which Landlord may have.

      SECTION 20.9. INABILITY TO PERFORM. In the event that either party stall
be delayed or hindered in or prevented from the performance of any work or in
performing any act required under this Lease by reason of any cause beyond the
reasonable control of that party, other than financial inability, then the
performance of the work or the doing of the act shall be excused for the period
of the delay and the time for performance shall be extended for a period
equivalent to the period of the delay. The provisions of this Section shall not
operate to excuse Tenant from the prompt payment of rent or from the timely
performance of any other obligation under this Lease within Tenant's reasonable
control.

      SECTION 20.10. ENTIRE AGREEMENT. This Lease and its exhibits and other
attachments cover in full each and every agreement of every kind between the
parties concerning the Premises, the Building and the Site, and all preliminary
negotiations, oral agreements, understandings and/or practices, except those
contained in this Lease, are superseded and of no further effect. Tenant waives
its rights to rely on any representations or promises made by Landlord or others
which are not contained in this Lease. No verbal agreement or implied covenant
shall be held to modify the provisions of this Lease, any statute, law, or
custom to the contrary notwithstanding.

      SECTION 20.11. QUIET ENJOYMENT. Upon the observance and performance of all
the covenants, terms and conditions on Tenant's part to be observed and
performed, and subject to the other provisions of this Lease, Tenant shall have
the right of quiet enjoyment and use of the Premises for the Term without
hindrance or interruption by Landlord or any other person claiming by or through
Landlord.

      SECTION 20.12. SURVIVAL. All covenants of Landlord or Tenant which
reasonably would be intended to survive the expiration or sooner termination of
this Lease, including without limitation any warranty or indemnity hereunder,
shall so survive and continue to be binding upon and inure to the benefit of the
respective parties and their successors and assigns.

      SECTION 20.13. INTERPRETATION. This Lease shall not be construed in favor
of or against either party, but shall be construed as if both parties prepared
this Lease.

                      ARTICLE XXI. EXECUTION AND RECORDING

      SECTION 21.1. COUNTERPARTS. This Lease may be executed in one or more
counterparts, each of which shall constitute an original and all of which shall
be one and the same agreement.

      SECTION 21.2. CORPORATE, LIMITED LIABILITY COMPANY AND PARTNERSHIP
AUTHORITY. If Tenant is a corporation, limited liability company or partnership,
each individual executing this Lease on behalf of the corporation, limited
liability company or partnership represents and warrants that he or she is duly
authorized to execute and deliver this Lease on behalf of the corporation,
limited liability company or partnership, and that this Lease is binding upon
the corporation, limited liability company or partnership in accordance with its
terms. Tenant shall, at Landlord's request, deliver a certified copy of its
board of directors' resolution, operating agreement or partnership agreement or
certificate authorizing or evidencing the execution of this Lease.

      SECTION 21.3. EXECUTION OF LEASE; NO OPTION OR OFFER. The submission of
this Lease to Tenant shall be for examination purposes only, and shall not
constitute an offer to or option for Tenant to lease the Premises. Execution of
this Lease by Tenant and its return to Landlord shall not be binding upon
Landlord, notwithstanding any time interval, until Landlord has in fact executed
and delivered this Lease to Tenant, it being intended that this Lease shall only
become effective upon execution by Landlord and delivery of a fully executed
counterpart to Tenant.

      SECTION 21.4. RECORDING. Tenant shall not record this Lease without the
prior written consent of Landlord. Tenant, upon the request of Landlord, shall
execute and acknowledge a "short form" memorandum of this Lease for recording
purposes.

      SECTION 21.5. AMENDMENTS. No amendment or termination of this Lease shall
be effective unless in writing signed by authorized signatories of Tenant and
Landlord, or by their respective successors in interest. No actions, policies,
oral or informal arrangements, business dealings or other course of conduct by
or between the parties shall be deemed to modify this Lease in any respect.

      SECTION 21.6. EXECUTED COPY. Any fully executed photocopy or similar
reproduction of this Lease shall be deemed an original for all purposes.

      SECTION 21.7. ATTACHMENTS. All exhibits, amendments, riders and addenda
attached to this Lease are hereby incorporated into and made a part of this
Lease.

                                       21
<PAGE>

                          ARTICLE XXII. MISCELLANEOUS

      SECTION 22.1. CHANGES REQUESTED BY LENDER. If, in connection with
obtaining financing for the Site, the lender shall request reasonable
modifications in this Lease as a condition to the financing, Tenant will not
unreasonably withhold or delay its consent, provided that the modifications do
not increase in any manner the obligations of Tenant or diminish Tenant's rights
hereunder or materially and adversely affect the leasehold interest created by
this Lease.

      SECTION 22.2. MORTGAGEE PROTECTION. No act or failure to act on the part
of Landlord which would otherwise entitle Tenant to be relieved of its
obligations hereunder shall result in such a release or termination unless (a)
Tenant has given notice by registered or certified mail to any beneficiary of a
deed of trust or mortgage covering the Building whose address has been furnished
to Tenant and (b) such beneficiary is afforded a reasonable opportunity to cure
the default by Landlord (which in no event shall be less than thirty (30) days),
including, if necessary to effect the cure, time to obtain possession of the
Building by power of sale or judicial foreclosure provided that such foreclosure
remedy is diligently pursued. Tenant agrees that each beneficiary of a deed of
trust or mortgage covering the Building is an express third party beneficiary
hereof, Tenant shall have no right or claim for the collection of any deposit
from such beneficiary or from any purchaser at a foreclosure sale unless such
beneficiary or purchaser shall have actually received and not refunded the
deposit, and Tenant shall comply with any written directions by any beneficiary
to pay rent due hereunder directly to such beneficiary without determining
whether a default exists under such beneficiary's deed of trust.

      SECTION 22.3. COVENANTS AND CONDITIONS. All of the provisions of this
Lease shall be construed to be conditions as well as covenants as though the
words specifically expressing or imparting covenants and conditions were used in
each separate provision.

      SECTION 22.4. SECURITY MEASURES. Tenant hereby acknowledges that Landlord
shall have no obligation whatsoever to provide guard service or other security
measures for the benefit of the Premises or the Site. Tenant assumes all
responsibility for the protection of Tenant, its employees, agents, invitees and
property from acts of third parties. Nothing herein contained shall prevent
Landlord, at its sole option, from providing security protection for the Site or
any part thereof, in which event the cost thereof shall be included within the
definition of Site Costs.

LANDLORD:                               TENANT:

THE IRVINE COMPANY                      MOLECULAR DEVICES CORPORATION

By:                                     By:
   -----------------------------------     -----------------------------------
   Donald S. McNutt                        Name (Print):
   Senior Vice President, Leasing          Title (Print):
   Office Properties

By:                                     By:
   -----------------------------------     -----------------------------------
   Chris Popma, Vice President             Name:
   Asset Management, Office Properties     Title:

                                       22
<PAGE>

                                   EXHIBIT A

                                   [GRAPHIC]

<PAGE>

                                   EXHIBIT B
                                   ---------

                THE IRVINE COMPANY - INVESTMENT PROPERTIES GROUP

                         HAZARDOUS MATERIAL SURVEY FORM

      The purpose of this form is to obtain information regarding the use of
hazardous substances on Investment Properties Group ("IPG") property.
Prospective tenants and contractors should answer the questions in light of
their proposed activities on the premises. Existing tenants and contractors
should answer the questions as they relate to ongoing activities on the premises
and should update any information previously submitted.

      If additional space is needed to answer the questions, you may attach
separate sheets of paper to this form. When completed, the form should be sent
to the following address:

                               INSIGNIA/ESG, INC.
                     160 West Santa Clara Street, Suite 1350
                               San Jose, CA 95113

      Your cooperation in this matter is appreciated. If you have any questions,
please call your property manager at (949) 753-4744 for assistance.

1.    GENERAL INFORMATION.

      Name of Responding Company:
                                 -----------------------------------------------
      Check all that apply:        Tenant       (  )          Contractor  (  )
                                   Prospective  (  )          Existing    (  )

      Mailing Address:
                      ----------------------------------------------------------
      Contact person & Title:
                             ---------------------------------------------------
      Telephone Number:   (     )
                                  ----------------------------------

      Current TIC Tenant(s):

      Address of Lease Premises:
                                ------------------------------------------------

      Length of Lease or Contract Term:
                                       -----------------------------------------

      Prospective TIC Tenant(s):

      Address of Leased Premises:
                                 -----------------------------------------------

      Address of Current Operations:
                                    --------------------------------------------

      Describe the proposed operations to take place on the property, including
      principal products manufactured or services to be conducted. Existing
      tenants and contractors should describe any proposed changes to ongoing
      operations.

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

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

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

                                     1 of 5
<PAGE>

2.    HAZARDOUS MATERIALS. For the purposes of this Survey Form, the term
      "hazardous material" means any raw material, product or agent considered
      hazardous under any state or federal law. The term does not include wastes
      which are intended to be discarded.

      2.1   Will any hazardous materials be used or stored on site?

             Chemical Products                     Yes (   )           No (   )
             Biological Hazards/                   Yes (   )           No (   )
                Infectious Wastes

             Radioactive Materials                 Yes (   )           No (   )
             Petroleum Products                    Yes (   )           No (   )

      2.2   List any hazardous materials to be used or stored, the quantities
            that will be onsite at any given time, and the location and method
            of storage (e.g., bottles in storage closet on the premises).

                                    Location and Method
            Hazardous Materials         of Storage                Quantity
            -------------------     -------------------      -------------------

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

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

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

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

      2.3   Is any underground storage of hazardous materials proposed or
            currently conducted on the premises? Yes ( ) No ( )

            If yes, describe the materials to be stored, and the size and
            construction of the tank. Attach copies of any permits obtained for
            the underground storage of such substances.

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

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

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

3.    HAZARDOUS WASTE. For the purposes of this Survey Form, the term "hazardous
      waste" means any waste (including biological, infectious or radioactive
      waste) considered hazardous under any state or federal law, and which is
      intended to be discarded.

      3.1   List any hazardous waste generated or to be generated on the
            premises, and indicate the quantity generated on a monthly basis.

                                    Location and Method
            Hazardous Materials         of Storage                Quantity
            -------------------     -------------------      -------------------

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

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

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

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

                                     2 of 5
<PAGE>

      3.2   Describe the method(s) of disposal (including recycling) for each
            waste. Indicate where and how often disposal will take place.

                                    Location and Method
            Hazardous Materials         of Storage             Disposal Method
            -------------------     -------------------      -------------------

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

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

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

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

      3.3   Is any treatment or processing of hazardous, infectious or
            radioactive wastes currently conducted or proposed to be conducted
            on the premise? Yes ( ) No ( )

            If yes, please describe any existing or proposed treatment methods.

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

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

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

      3.4   Attach copies of any hazardous waste permits or licenses issued to
            your company with respect to its operations on the premises.

4.    SPILLS

      4.1   During the past year, have any spills or releases of hazardous
            materials occurred on the premises? Yes ( ) No ( )

            If so, please describe the spill and attach the results of any
            testing conducted to determine the extent of such spills.

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

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

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

      4.2   Were any agencies notified in connection with such spills? Yes ( )
            No ( )

            If so, attach copies of any spill reports or other correspondence
            with regulatory agencies.

      4.3   Were any clean-up actions undertaken in connection with the spills?
            Yes ( ) No ( )

            If so, briefly describe the actions taken. Attach copies of any
            clearance letters obtained from any regulatory agencies involved
            and the results of any final soil or groundwater sampling done upon
            completion of the clean-up work.

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

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

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

5.    WASTEWATER TREATMENT/DISCHARGE

      5.1   Do you discharge industrial wastewater to:

            ________ storm drain?             ________ sewer?
            ________ surface water?           ________ no industrial discharge

                                     3 of 5
<PAGE>

      5.2   Is your industrial wastewater treated before discharge?  Yes ( )
            No ( )

            If yes, describe the type of treatment conducted.

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

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

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

      5.3   Attach copies of any wastewater discharge permits issued to your
            company with respect to its operations on the premises.

6.    AIR DISCHARGES.

      6.1   Do you have any air filtration systems or stacks that discharge into
            the air? Yes ( ) No ( )

      6.2   Do you operate any equipment that require air emissions permits?
            Yes ( ) No ( )

      6.3   Attach copies of any air discharge permits pertaining to these
            operations.

7.    HAZARDOUS MATERIALS DISCLOSURES.

      7.1   Does your company handle an aggregate of at least 500 pounds, 55
            gallons or 200 cubic feet of hazardous material at any given time?
            Yes ( ) No ( )

      7.2   Has your company prepared a Hazardous Materials Disclosure -
            Chemical Inventory and Business Emergency Plan or similar disclosure
            document pursuant to state or county requirements? Yes ( ) No ( )

            If so, attach a copy.

      7.3   Are any of the chemicals used in your operations regulated under
            Proposition 65?

            If so, describe the procedures followed to comply with these
            requirements.

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

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

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

      7.4   Is your company subject to OSHA Hazard Communication Standard
            Requirements? Yes ( ) No ( )

            If so, describe the procedures followed to comply with these
            requirements.

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

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

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

8.    ANIMAL TESTING.
      --------------

      8.1   Does your company bring or intend to bring live animals onto the
            premises for research or development purposes? Yes ( ) No ( )

            If so, describe the activity.

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

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

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

                                     4 of 5
<PAGE>

      8.2   Does your company bring or intend to bring animal body parts or
            bodily fluids onto the premises for research or development
            purposes? Yes ( ) No ( )

            If so, describe the activity.

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

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

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

9.    ENFORCEMENT ACTIONS, COMPLAINTS.

      9.1   Has your company ever been subject to any agency enforcement
            actions, administrative orders, lawsuits, or consent orders/decrees
            regarding environmental compliance or health and safety?

            Yes ( ) No ( )

            If so, describe the actions and any continuing obligations imposed
            as a result of these actions.

      9.2   Has your company ever received any request for information, notice
            of violation or demand letter, complaint, or inquiry regarding
            environmental compliance or health and safety? Yes ( ) No ( )

      9.3   Has an environmental audit ever been conducted which concerned
            operations or activities on premises occupied by you? Yes ( ) No ( )

      9.4   If you answered "yes" to any questions in this section, describe the
            environmental action or complaint and any continuing compliance
            obligation imposed as a result of the same.

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

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

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

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

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

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

                                     5 of 5
<PAGE>

                                                                JANUARY 14, 1997

                                SUNNYVALE LEASES

                                   EXHIBIT C

                         HAZARDOUS MATERIALS DISCLOSURE

Tenant acknowledges the following disclosure, by Landlord with respect to
Hazardous Materials at the Premises. Tenant agrees to comply with the
precautionary requirements and other provisions, set forth below, that arc
associated with these Hazardous Materials.

      (1)   Portions of the structures on the Premises may contain
            asbestos-containing materials. Accordingly, Tenant agrees that it
            will not make any repairs or alterations to the structures on the
            Premises: (a) without inquiring from Landlord whether Tenant's
            planned repairs or alterations are likely to disturb
            asbestos-containing materials in the structure, and (b) if, in
            Landlords judgment, the planned repairs or alterations will disturb
            the asbestos-containing materials, without securing Landlord's prior
            consent to the repairs or alterations.

      (2)   Portions of the groundwater in the City of Sunnyvale contain
            volatile organic compounds and/or solvents. These substances may be
            present in the groundwater beneath the Premises.

            Landlord is unaware of any practical impediment to the use or
            occupancy of the Premises as a result of the presence of these
            substances in the groundwater.

      (3)   Tenant agrees that its exemption in Section 5.3(f) of the Lease from
            liability or responsibility with respect to the Hazardous Materials
            described in this Exhibit C shall not extend to any such Hazardous
            Materials whose presence was caused or permitted by Tenant, its
            agents, employees, contractors, contractors, licensees, or invitees.

<PAGE>

                                   EXHIBIT D
                                   ---------

                               TENANT'S INSURANCE

      The following standards for Tenants insurance shall be in effect at the
Building. Landlord reserves the right to adopt reasonable nondiscriminatory
modifications and additions to those standards. Tenant agrees to obtain and
present evidence to Landlord that it has fully complied with the insurance
requirements.

      1. Tenant shall, at Its sole cost and expense, commencing on the date
Tenant Is given access to the Premises for any purpose and during the entire
Term, procure, pay for and keep in full force and effect: (i) commercial general
liability insurance with respect to the Premises and the operations of or on
behalf of Tenant in, on or about the Premises, including but not limited to
personal injury, owned and nonowned automobile, blanket contractual, independent
contractors, broad form property damage (with an exception to any pollution
exclusion `with respect to damage arising out of heat, smoke or fumes from a
hostile fire), fire and water legal liability, products liability (if a product
is sold from the Premises), liquor law liability (if alcoholic beverages are
sold, sewed or consumed within the Premises), and severability of interest,
which policy(ies) shall be written on an "occurrence" basis and for not less
than the amount set forth in Item 13 of the Basic Lease Provisions, with a
combined single limit (with a $50,000 minimum limit on fire legal liability) per
occurrence for bodily injury, death, and property damage liability, or the
current limit of liability carried by Tenant, whichever is greater, and subject
to such increases in amounts as Landlord may determine from time to time; (ii)
workers' compensation insurance coverage as required by law, together with
employers' liability insurance; (iii) with respect to improvements, alterations,
and the like required or permitted to be made by Tenant under this Lease,
builder's all-risk insurance, in an amount equal to the replacement cost of the
work (provided that such coverage shall not be required until any such
improvements or alterations are made); (iv) insurance against fire, vandalism,
malicious mischief and such other additional perils as may be included in a
standard "all risk" form in general use in the county in which the Premises are
situated, insuring Tenant's leasehold improvements, trade fixtures, furnishings,
equipment and items of personal property of Tenant located in the Premises, in
an amount equal to not less than ninety percent (90%) of their actual
replacement cost (with replacement cost endorsement); and (v) business
interruption Insurance in amounts satisfactory to cover one (1) year of loss. In
no event shall the limits of any policy be considered as limiting the liability
of Tenant under this Lease.

      2. In the event Landlord consents to Tenant's use, generation or storage
of Hazardous Materials on, under or about the Premises pursuant to Section 5.3
of this Lease, then Tenant shall notify Landlord in writing before it brings
such Hazardous Materials to the Premises and Landlord shall thereafter have the
continuing right to require Tenant, at Tenant's sole cost and expense (provided
the same is available for purchase upon commercially reasonable terms), to
purchase insurance specified and approved by Landlord, with coverage not less
than Five Million Dollars ($5,000,000.00), insuring (i) any Hazardous Materials
shall be removed from the Premises, (ii) the Premises shall be restored to a
clean, healthy, safe and sanitary condition, and (iii) any liability of Tenant,
Landlord and Landlord's officers, directors, shareholders, agents, employees,
and representatives, arising from such Hazardous Materials.

      3. All policies of insurance required to be carried by Tenant pursuant to
this Exhibit D containing a deductible exceeding Ten Thousand Dollars
($10,000.00) per occurrence must be approved in writing by Landlord prior to the
issuance of such policy. Tenant shall be solely responsible for the payment of
all deductibles.

      4. All policies of insurance required to be carried by Tenant pursuant to
this Exhibit D shall be written by responsible insurance companies authorized to
do business in the State of California and with a Best's rating of not less than
"A" subject to final acceptance and approval by Landlord. Any insurance required
of Tenant may be furnished by Tenant under any blanket policy carried by it or
under a separate policy, so long as (i) the Premises are specifically covered
(by rider, endorsement or otherwise) and (ii) the policy otherwise complies with
the provisions of this Exhibit D. A true and exact copy of each paid up policy
evidencing the insurance (appropriately authenticated by the Insurer) or a
certificate of insurance, certifying that the policy has been issued, provides
the coverage required by this Exhibit D and contains the required provisions,
shall be delivered to Landlord prior to the date Tenant is given the right of
possession of the Premises. Proper evidence of the renewal of any insurance
coverage shall also be delivered to Landlord not less than thirty (30) days
prior to the expiration of the coverage. Landlord may at anytime, and from time
to time, inspect and/or copy any and all insurance policies required by this
Lease.

      5. Each policy evidencing insurance required to be carried by Tenant
pursuant to this Exhibit D shall contain the following provisions and/or clauses
satisfactory to Landlord: (i) a provision that the policy and the coverage
provided shall be primary and that any coverage carried by Landlord shall be
noncontributory with respect to any policies carried by Tenant except as to
workers' compensation insurance; (ii) a provision including Landlord, the
Additional Insureds identified in Item 11 of the Basic Lease Provisions, and any
other parties in interest designated by Landlord as an additional insured,
except as to workers' compensation insurance; (iii) a waiver by the insurer of
any right to subrogation against Landlord, its agent, employees, contractors and
representatives which arises or might arise by reason of any payment under the
policy or by reason of any act or omission of Landlord, its agents, employees,
contractors or representatives; and (iv) a provision that the insurer will not
cancel or change the coverage provided by the policy without first giving
Landlord thirty (30) days prior written notice.

      6. In the event that Tenant fails to procure, maintain and/or pay for, at
the times and for the durations specified in this Exhibit D, any insurance
required by this Exhibit D, or fails to carry insurance required by any
governmental authority, Landlord may at its election procure that insurance and
pay the premiums, in which event Tenant shall repay Landlord all sums paid by
Landlord, together with interest at the maximum rate permitted by law and any
related costs or expenses incurred by Landlord, within ten (10) days following
Landlord's written demand to Tenant.

                                      -1-
<PAGE>

                                   EXHIBIT E
                                   ---------

                             RULES AND REGULATIONS

      This Exhibit sets forth the rules and regulations governing Tenant's use
of the Premises leased to Tenant pursuant to the terms, covenants and conditions
of the Lease to which this Exhibit is attached and therein made part thereof. In
the event of any conflict or inconsistency between this Exhibit and the Lease,
the Lease shall control.

      1. Tenant shall not place anything or allow anything to be placed near the
glass of any window, door, partition or wall which may appear unsightly from
outside the Premises.

      2. The walls, walkways, sidewalks, entrance passages, courts and
vestibules shall not be obstructed or used for any purpose other than ingress
and egress of pedestrian travel to and from the Premises, and shall not be used
for loitering or gathering, or to display, store or place any merchandise,
equipment or devices, or for any other purpose. The walkways, entrance
passageways, courts, vestibules and roof are not for the use of the general
public and Landlord shall in all cases retain the right to control and prevent
access thereto by all persons whose presence in the judgment of the Landlord
shall be prejudicial to the safety, character, reputation and interests of the
Building and its tenants, provided that nothing herein contained shall be
construed to prevent such access to persons with whom Tenant normally deals in
the ordinary course of Tenant's business unless such persons are engaged in
illegal activities. No tenant or employee or invitee of any tenant shall be
permitted upon the roof of the Building.

      3. No awnings or other projection shall be attached to the outside walls
of the Building. No security bars or gates, curtains, blinds, shades or screens
shall be attached to or hung in, or used in connection with, any window or door
of the Premises without the prior written consent of Landlord. Neither the
interior nor exterior of any windows shall be coated or otherwise sunscreened
without the express written consent of Landlord.

      4. Tenant shall not mark, nail, paint, drill into, or in any way deface
any part of the Premises or the Building, Tenant shall not lay linoleum, tile,
carpet or other similar floor covering so that the same shall be affixed to the
floor of the Premises in any manner except as approved by Landlord in writing.
The expense of repairing any damage resulting from a violation of this rule or
removal of any floor covering shall be borne by Tenant.

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

      6. Landlord shall direct electricians as to the manner and location of any
future telephone wiring. No boring or cutting for wires will be allowed without
the prior consent of Landlord. The locations of the telephones, call boxes and
other office equipment affixed to the Premises shall be subject to the prior
written approval of Landlord.

      7. The Premises shall not be used for manufacturing or for the storage of
merchandise except as such storage may be incidental to the permitted use of the
Premises. No exterior storage shall be allowed at any time without the prior
written approval of Landlord. The Premises shall not be used for cooking or
washing clothes without the prior written consent of Landlord, or for lodging or
sleeping or for any immoral or illegal purposes.

      8. Tenant shall not make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere with occupants of this or neighboring buildings
or premises or those having business with them, whether by the use of any
musical instrument, radio, phonograph, noise, or otherwise. Tenant shall not
use, keep or permit to be used, or kept, any foul or obnoxious gas or substance
in the Premises or permit or suffer the Premises to be used or occupied in any
manner offensive or objectionable to Landlord or other occupants of this or
neighboring buildings or premises by reason of any odors, fumes or gases.

      9. No animals shall be permitted at any time within the Premises.

      10. Tenant shall not use the name of the Building or the Project in
connection with or in promoting or advertising the business of Tenant, except as
Tenant's address, without the written consent of Landlord. Landlord shall have
the right to prohibit any advertising by any Tenant which, in Landlord's
reasonable opinion, tends to impair the reputation of the Project or its
desirability for its intended uses, and upon written notice from Landlord any
Tenant shall refrain from or discontinue such advertising.

      11. Canvassing, soliciting, peddling, parading, picketing, demonstrating
or otherwise engaging in any conduct that unreasonably impairs the value or use
of the Premises or the Project are prohibited and each Tenant shall cooperate to
prevent the same.

      12. No equipment of any type shall be placed on the Premises which in
Landlord's opinion exceeds the load limits of the floor or otherwise threatens
the soundness of the structure or improvements of the Building.

                                     1 of 2
<PAGE>

      13. No air conditioning unit or other similar apparatus shall be installed
or used by any Tenant without the prior written consent of Landlord.

      14. The entire Premises, including vestibules entrances, doors, fixtures,
windows and plate glass, shall at all times be maintained in a safe, neat and
clean condition by Tenant. All trash, refuse and waste materials shall be
regularly removed from the Premises by Tenant and placed in the containers at
the locations designated by Landlord for refuse collection. All cardboard boxes
must be "broken down" prior to being placed in the trash container. All
styrofoam chips must be bagged or otherwise contained prior to placement in the
trash container, so as not to constitute a nuisance. Pallets may not be disposed
of in the trash container or enclosures. The burning of trash, refuse or waste
materials is prohibited.

      15. Tenant shall use at Tenant's cost such pest extermination contractor
as Landlord may direct and at such intervals as Landlord may require.

      16. All keys for the Premises shall be provided to Tenant by Landlord and
Tenant shall return to Landlord any of such keys so provided upon the
termination of the Lease. Tenant shall not change locks or install other locks
on doors of the Premises, without the prior written consent of Landlord. In the
event of loss of any keys furnished by Landlord for Tenant, Tenant shall pay to
Landlord the costs thereof.

      17. No person shall enter or remain within the Project while intoxicated
or under the influence of liquor or drugs. Landlord shall have the right to
exclude or expel from the Project any person who, in the absolute discretion of
Landlord, is under the influence of liquor or drugs.

      Landlord reserves the right to amend or supplement the foregoing Rules
and Regulations and to adopt and promulgate additional rules and regulations
applicable to the Premises. Notice of such rules and regulations and amendments
and supplements thereto, if any, shall be given to the Tenant.

                                     2 of 2<PAGE>
                                                                   EXHIBIT 10.40

                   [Molecular Devices Corporation letterhead]

April 11, 2002

Joseph D. Keegan, Ph.D.
c/o Molecular Devices Corporation
1311 Orleans Drive
Sunnyvale, CA  94089

Dear Joe:

This will serve to confirm the agreement of Molecular Devices Corporation
(the "Company") that, in consideration of your election to forgo the
change-in-control severance benefits under your Employment Agreement dated
March 11, 1998 (the "Employment Agreement"), you will be entitled to benefits
under the Company's 2001 Change In Control Severance Plan (the "Plan").  In
addition, the Company hereby agrees that it will not terminate the Plan or
implement any amendment of the Plan that would result in lesser benefits to you
under the Plan than you currently have under the Employment Agreement without
(a) your written consent or (b) restoring to you your rights under the
Employment Agreement.

Very truly yours,

Molecular Devices Corporation

By: /s/ Tim Harkness
    ----------------------------
    Tim Harkness, CFO/VP Finance

AGREED:

    /s/ Joseph D. Keegan, Ph.D.
--------------------------------
    Joseph D. Keegan, Ph.D.
<PAGE>
                          MOLECULAR DEVICES CORPORATION

                  CHANGE IN CONTROL SEVERANCE BENEFIT PLAN FOR

                                JOSEPH D. KEEGAN

                      PRESIDENT AND CHIEF EXECUTIVE OFFICER

SECTION 1.  INTRODUCTION.

            The Molecular Devices Corporation Change in Control Severance
Benefit Plan (the "Plan") was established effective February 15, 2001. The
purpose of the Plan is to provide for the payment of severance benefits to
certain eligible employees of Molecular Devices Corporation (the "Company")
whose employment with the Company is terminated following a Change in Control.
This Plan shall supersede any severance benefit plan, policy or practice
previously maintained by the Company. This Plan document also is the Summary
Plan Description for the Plan.

SECTION 2.  DEFINITIONS.

      For purposes of the Plan, the following terms are defined as follows:

            (a) "BASE SALARY" means the Eligible Employee's annual base salary
as in effect during the last regularly scheduled payroll period immediately
preceding the Change in Control or as increased thereafter.

            (b) "BOARD" means the Board of Directors of the Company.

            (c) "CHANGE IN CONTROL" is defined as one or more of the following
events:

                  (i) there is consummated a sale or other disposition of all or
substantially all of the assets of the Company (other than a sale to an entity
where at least fifty percent (50%) of the combined voting power of the voting
securities of such entity are owned by the stockholders of the Company in
substantially the same proportions as their ownership of the Company immediately
prior to such sale);

                  (ii) any person, entity or group (other than the Company, a
subsidiary or affiliate of the Company, or a Company employee benefit plan,
including any trustee of such plan acting as trustee) becomes the beneficial
owner, directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company's then
outstanding securities other than by virtue of a merger, consolidation or
similar transaction; or

                  (iii) there is consummated a merger, consolidation or similar
transaction involving (directly or indirectly) the Company and, immediately
after the consummation of such transaction, the stockholders immediately prior
to the consummation of

<PAGE>
such transaction do not own, directly or indirectly, outstanding voting
securities representing more than fifty percent (50%) of the combined
outstanding voting power of the surviving entity in such transaction or more
than fifty percent (50%) of the combined outstanding voting power of the parent
of the surviving entity in such transaction.

            (d) "COMPANY" means Molecular Devices Corporation or, following a
Change in Control, the surviving entity resulting from such transaction.

            (e) "CONSTRUCTIVE TERMINATION" means a voluntary termination of
employment by an Eligible Employee after one of the following is undertaken
without the Eligible Employee's express written consent:

                  (i) the assignment to the Eligible Employee of duties or
responsibilities that results in a material diminution in the Eligible
Employee's authority, duties or responsibilities as in effect immediately prior
to the Change in Control; provided, however, that a mere change in the Eligible
Employee's title or reporting relationships shall not provide the basis for a
Constructive Termination;

                  (ii) a reduction in the Eligible Employee's base salary, as in
effect immediately prior to the Change in Control (or as increased thereafter),
unless such reduction is made pursuant to an across-the-board reduction of the
base salaries of all similarly situated employees of the Company of no more than
ten percent (10%);

                  (iii) a change in the Eligible Employee's business location of
more than 35 miles from the business location immediately prior to the Change in
Control;

                  (iv) a material breach by the Company of any provisions of the
Plan or any enforceable written agreement between the Company and the Eligible
Employee; or

                  (v) any failure by the Company to obtain assumption of the
Plan by any successor or assign of the Company.

            (f) "CONTINUATION PERIOD" means the period for which an Eligible
Employee is entitled to receive the benefits described in Section 4(c). The
Continuation Period is eighteen (18) months.

            (g) "COVERED TERMINATION" means an Involuntary Termination Without
Cause or a Constructive Termination, either of which occurs within thirteen (13)
months following the effective date of a Change in Control.

            (h) "INVOLUNTARY TERMINATION WITHOUT CAUSE" means an involuntary
termination of employment by the Company other than for one of the following
reasons:

                  (i) refusal or failure to follow the lawful and reasonable
directions of the Board of Directors or individual to whom the Eligible Employee
reports, which refusal or failure is not cured within 30 days following delivery
of written notice of such conduct to the Eligible Employee;

<PAGE>
                  (ii) a material failure by the Eligible Employee to perform
his or her duties in a manner reasonably satisfactory to the Board of Directors
that is not cured within 30 days following delivery of written notice of such
failure to the Eligible Employee; or

                  (iii) conviction of a felony involving moral turpitude that is
likely to inflict or has inflicted material injury on the business of the
Company.

SECTION 3.  ELIGIBILITY FOR BENEFITS.

            (a) GENERAL RULES. Subject to the requirements set forth in this
Section, the Company will provide the severance benefits described in Section 4
of the Plan to Eligible Employees. For purposes of this Plan, "Eligible
Employees" are designated executive employees of the Company who have not
entered into individual severance benefit or change in control agreements with
the Company and whose employment with the Company terminates due to a Covered
Termination.

                  (i) In order to be eligible to receive benefits under the
Plan, an Eligible Employee must remain on the job until his or her date of
termination, as scheduled by the Company.

                  (ii) In order to be eligible to receive benefits under the
Plan, an Eligible Employee also must execute a general waiver and release in
substantially the form attached hereto as Exhibit A, Exhibit B or Exhibit C, as
appropriate, and such release must become effective in accordance with its
terms. The Company, in its sole discretion, may modify the form of the required
release to comply with applicable state law. Subject to the foregoing, the
Company, in its sole discretion, shall determine the form of the required
release.

                (b) EXCEPTIONS TO BENEFIT ENTITLEMENT. An employee who otherwise
is an Eligible Employee will not receive benefits under the Plan in any of the
following circumstances, as determined by the Company in its sole discretion:

                  (i) The employee has executed an individually negotiated
employment contract or agreement with the Company relating to severance benefits
or change in control benefits that is in effect on his or her termination date.

                  (ii) The employee's employment with the Company is
involuntarily terminated by the Company other than as an Involuntary Termination
without Cause.

                  (iii) The employee voluntarily terminates employment with the
Company and such termination does not constitute a Constructive Termination.
Voluntary terminations include, but are not limited to, resignation, retirement
or failure to return from a leave of absence on the scheduled date.

                  (iv) The employee voluntarily terminates employment with the
Company in order to accept employment with another entity that is wholly or
partly owned (directly or indirectly) by the Company or an affiliate of the
Company.

<PAGE>
SECTION 4.  AMOUNT OF BENEFIT.

            (a) BASE SALARY. Each Eligible Employee shall receive twelve (12)
months of Base Salary. Such amount shall be paid in a lump sum and shall be
subject to all required tax withholding.

            (b) BONUS PAYMENT. Each Eligible Employee shall receive a bonus
payment equal to what would have been earned at one hundred percent (100%) of
target for the year of termination.

            (c) CONTINUED INSURANCE BENEFITS. Provided that the Eligible
Employee elects continued coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA"), the Company shall pay the portion of
premiums of each Eligible Employee's group medical, dental and vision coverage,
including coverage for the Eligible Employee's eligible dependents, that the
Company paid prior to the Covered Termination, for eighteen (18) months;
provided, however, that no such premium payments shall be made following the
effective date of the Eligible Employee's coverage by a medical, dental or
vision insurance plan of a subsequent employer. Each Eligible Employee shall be
required to notify the Company immediately if the Eligible Employee becomes
covered by a medical, dental or vision insurance plan of a subsequent employer.
No provision of this Plan will affect the continuation coverage rules under
COBRA, except that the Company's payment of any applicable insurance premiums
during the Continuation Period will be credited as payment by the Eligible
Employee for purposes of the Eligible Employee's payment required under COBRA.
Therefore, the period during which an Eligible Employee must elect whether or
not to continue the Company's group medical, dental or vision coverage under
COBRA, the length of time during which COBRA continuation coverage will be made
available to the Eligible Employee, and all other rights and obligations of the
Eligible Employee under COBRA will be applied in the same manner that such rules
would apply in the absence of this Plan. At the conclusion of the Continuation
Period, the Eligible Employee will be responsible for the entire payment of
premiums required under COBRA for the duration of the COBRA continuation period.
For purposes of this Section 4(c), applicable premiums that will be paid by the
Company during the Continuation Period shall not include any amounts payable by
the Eligible Employee under a Section 125 health care reimbursement plan, which
amounts, if any, are the sole responsibility of the Eligible Employee.

            (d) ACCELERATION OF VESTING. Effective as of the date of the Covered
Termination, each Eligible Employee shall be credited with full acceleration of
vesting for all options outstanding that the Eligible Employee holds on such
date that have not yet vested. Notwithstanding the foregoing, if the acquiring
entity in the transaction which constitutes a Change in Control under the Plan
intends to utilize the "pooling of interests" accounting method in connection
with such transaction, and such transaction would be eligible for the "pooling
of interests" accounting method but for the additional vesting credit provided
for in this Section 4(d), then Eligible Employees shall not be entitled to
receive such additional vesting credit.

            (e) OUTPLACEMENT SERVICES. On behalf of the Eligible Employee, the
Company shall pay for an executive assistance program for a period not to exceed
three (3) months and at a cost not to exceed $7,500, provided that the Eligible
Employee enrolls in the program within six (6) months following the Covered
Termination.

<PAGE>
SECTION 5.  LIMITATIONS ON BENEFITS.

            (a) RELEASE. To receive benefits under this Plan, an Eligible
Employee must execute a release of claims in favor of the Company, in the form
attached to this Plan as Exhibit A, Exhibit B or Exhibit C, as appropriate, and
such release must become effective in accordance with its terms.

            (b) CERTAIN REDUCTIONS AND OFFSETS. Notwithstanding any other
provision of the Plan to the contrary, any benefits payable to an Eligible
Employee under this Plan shall be reduced by any severance benefits payable by
the Company to such individual under any other policy, plan, program or
arrangement, including, without limitation, a contract between the Eligible
Employee and any entity, covering such individual. Furthermore, to the extent
that any federal, state or local laws, including, without limitation, so-called
"plant closing" laws, require the Company to give advance notice or make a
payment of any kind to an Eligible Employee because of that Eligible Employee's
involuntary termination due to a layoff, reduction in force, plant or facility
closing, sale of business, change of control, or any other similar event or
reason, the benefits payable under this Plan shall either be reduced or
eliminated. The benefits provided under this Plan are intended to satisfy any
and all statutory obligations that may arise out of an Eligible Employee's
involuntary termination of employment for the foregoing reasons, and the Plan
Administrator shall so construe and implement the terms of the Plan.

            (c) MITIGATION. Except as otherwise specifically provided herein,
Eligible Employees shall not be required to mitigate damages or the amount of
any payment provided under this Plan by seeking other employment or otherwise,
nor shall the amount of any payment provided for under this Plan be reduced by
any compensation earned by any Eligible Employee as a result of employment by
another employer or any retirement benefits received by such Eligible Employee
after the date of the Covered Termination.

            (d) TERMINATION OF BENEFITS. Benefits under this Plan shall
terminate immediately if the Eligible Employee, at any time, violates any
proprietary information or confidentiality obligation to the Company.

            (e) NON-DUPLICATION OF BENEFITS. No Eligible Employee is eligible to
receive benefits under this Plan more than one time.

            (f) INDEBTEDNESS OF ELIGIBLE EMPLOYEES. If a terminating employee is
indebted to the Company or an affiliate of the Company at his or her termination
date, the Company reserves the right to offset any severance payments under the
Plan by the amount of such indebtedness.

            (g) PARACHUTE PAYMENTS. If any payment or benefit the Eligible
Employee would receive in connection with a Change in Control from the Company
or otherwise ("Payment") would (i) constitute a "parachute payment" within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), and (ii) but for this sentence, be subject to the excise tax imposed by
Section 4999 of the Code (the "Excise Tax"), then such Payment shall be reduced
to the Reduced Amount. The "Reduced Amount" shall be either (x) the largest
portion of the Payment that would result in no portion of the Payment being
subject to

<PAGE>
the Excise Tax or (y) the largest portion, up to and including the total, of the
Payment, whichever amount, after taking into account all applicable federal,
state and local employment taxes, income taxes, and the Excise Tax (all computed
at the highest applicable marginal rate), results in the Eligible Employee's
receipt, on an after-tax basis, of the greater amount of the Payment
notwithstanding that all or some portion of the Payment may be subject to the
Excise Tax. If a reduction in payments or benefits constituting "parachute
payments" is necessary so that the Payment equals the Reduced Amount, reduction
shall occur in the following order unless the Eligible Employee elects in
writing a different order (provided, however, that such election shall be
subject to Company approval if made on or after the date on which the event that
triggers the Payment occurs): reduction of cash payments; cancellation of
accelerated vesting of stock awards; reduction of employee benefits. In the
event that acceleration of vesting of stock award compensation is to be reduced,
such acceleration of vesting shall be cancelled in the reverse order of the date
of grant of the Eligible Employee's stock awards unless the Eligible Employee
elects in writing a different order for cancellation.

      The accounting firm engaged by the Company for general audit purposes as
of the day prior to the effective date of the Change in Control shall perform
the foregoing calculations. If the accounting firm so engaged by the Company is
serving as accountant or auditor for the individual, entity or group effecting
the Change in Control, the Company shall appoint a nationally recognized
accounting firm to make the determinations required hereunder. The Company shall
bear all expenses with respect to the determinations by such accounting firm
required to be made hereunder.

      The accounting firm engaged to make the determinations hereunder shall
provide its calculations, together with detailed supporting documentation, to
the Company and the Eligible Employee within fifteen (15) calendar days after
the date on which the Eligible Employee's right to a Payment is triggered (if
requested at that time by the Company or the Eligible Employee) or such other
time as requested by the Company or the Eligible Employee. If the accounting
firm determines that no Excise Tax is payable with respect to a Payment, either
before or after the application of the Reduced Amount, it shall furnish the
Company and the Eligible Employee with an opinion reasonably acceptable to
Executive that no Excise Tax will be imposed with respect to such Payment. Any
good faith determinations of the accounting firm made hereunder shall be final,
binding and conclusive upon the Company and the Eligible Employee.

SECTION 6.  RIGHT TO INTERPRET PLAN; AMENDMENT AND TERMINATION.

            (a) EXCLUSIVE DISCRETION. The Plan Administrator shall have the
exclusive discretion and authority to establish rules, forms, and procedures for
the administration of the Plan and to construe and interpret the Plan and to
decide any and all questions of fact, interpretation, definition, computation or
administration arising in connection with the operation of the Plan, including,
but not limited to, the eligibility to participate in the Plan and amount of
benefits paid under the Plan. The rules, interpretations, computations and other
actions of the Plan Administrator shall be binding and conclusive on all
persons.

            (b) AMENDMENT OR TERMINATION. The Company reserves the right to
amend or terminate this Plan or the benefits provided hereunder at any time;
provided, however, that no such amendment or termination shall occur following a
Change in Control if such amendment or

<PAGE>
termination would affect the rights of any persons who were employed by the
Company prior to the Change in Control. Any action amending or terminating the
Plan shall be in writing and executed by the chairman of the Compensation
Committee of the Board of Directors of the Company.

SECTION 7.  TERMINATION OF CERTAIN EMPLOYEE BENEFITS.

            All non-health benefits (such as life insurance, disability and
401(k) plan coverage) terminate as of the employee's termination date (except to
the extent that a conversion privilege may be available thereunder).

SECTION 8.  NO IMPLIED EMPLOYMENT CONTRACT.

            The Plan shall not be deemed (i) to give any employee or other
person any right to be retained in the employ of the Company or (ii) to
interfere with the right of the Company to discharge any employee or other
person at any time and for any reason, which right is hereby reserved.

SECTION 9.  LEGAL CONSTRUCTION.

            This Plan is intended to be governed by and shall be construed in
accordance with the Employee Retirement Income Security Act of 1974 ("ERISA")
and, to the extent not preempted by ERISA, the laws of the State of California.

SECTION 10. CLAIMS, INQUIRIES AND APPEALS.

            (a)   APPLICATIONS FOR BENEFITS AND INQUIRIES.  Any application
for benefits, inquiries about the Plan or inquiries about present or future
rights under the Plan must be submitted to the Plan Administrator in
writing.  The Plan Administrator is:

                          Molecular Devices Corporation
                      Attn: Vice President, Human Resources
                               1311 Orleans Drive
                               Sunnyvale, CA 94089

            (b) DENIAL OF CLAIMS. In the event that any application for benefits
is denied in whole or in part, the Plan Administrator must notify the applicant,
in writing, of the denial of the application, and of the applicant's right to
review the denial. The written notice of denial will be set forth in a manner
designed to be understood by the employee and will include specific reasons for
the denial, specific references to the Plan provision upon which the denial is
based, a description of any information or material that the Plan Administrator
needs to complete the review and an explanation of the Plan's review procedure.

            This written notice will be given to the employee within ninety (90)
days after the Plan Administrator receives the application, unless special
circumstances require an extension of time, in which case, the Plan
Administrator has up to an additional ninety (90) days for processing the
application. If an extension of time for processing is required, written notice
of

<PAGE>
the extension will be furnished to the applicant before the end of the initial
ninety (90) day period.

            This notice of extension will describe the special circumstances
necessitating the additional time and the date by which the Plan Administrator
is to render its decision on the application. If written notice of denial of the
application for benefits is not furnished within the specified time, the
application shall be deemed to be denied. The applicant will then be permitted
to appeal the denial in accordance with the Review Procedure described below.

            (c) REQUEST FOR A REVIEW. Any person (or that person's authorized
representative) for whom an application for benefits is denied (or deemed
denied), in whole or in part, may appeal the denial by submitting a request for
a review to the Plan Administrator within sixty (60) days after the application
is denied (or deemed denied). The Plan Administrator will give the applicant (or
his or her representative) an opportunity to review pertinent documents in
preparing a request for a review. A request for a review shall be in writing and
shall be addressed to:

                          Molecular Devices Corporation
                      Attn: Vice President, Human Resources
                               1311 Orleans Drive
                               Sunnyvale, CA 94089

A request for review must set forth all of the grounds on which it is based, all
facts in support of the request and any other matters that the applicant feels
are pertinent. The Plan Administrator may require the applicant to submit
additional facts, documents or other material as it may find necessary or
appropriate in making its review.

            (d) DECISION ON REVIEW. The Plan Administrator will act on each
request for review within sixty (60) days after receipt of the request, unless
special circumstances require an extension of time (not to exceed an additional
sixty (60) days), for processing the request for a review. If an extension for
review is required, written notice of the extension will be furnished to the
applicant within the initial sixty (60) day period. The Plan Administrator will
give prompt, written notice of its decision to the applicant. In the event that
the Plan Administrator confirms the denial of the application for benefits in
whole or in part, the notice will outline, in a manner calculated to be
understood by the applicant, the specific Plan provisions upon which the
decision is based. If written notice of the Plan Administrator's decision is not
given to the applicant within the time prescribed in this Subsection (d), the
application will be deemed denied on review.

            (e) RULES AND PROCEDURES. The Plan Administrator will establish
rules and procedures, consistent with the Plan and with ERISA, as necessary and
appropriate in carrying out its responsibilities in reviewing benefit claims.
The Plan Administrator may require an applicant who wishes to submit additional
information in connection with an appeal from the denial (or deemed denial) of
benefits to do so at the applicant's own expense.

<PAGE>
            (f) EXHAUSTION OF REMEDIES. No legal action for benefits under the
Plan may be brought until the claimant (i) has submitted a written application
for benefits in accordance with the procedures described by Section 10(a) above,
(ii) has been notified by the Plan Administrator that the application is denied
(or the application is deemed denied due to the Plan Administrator's failure to
act on it within the established time period), (iii) has filed a written request
for a review of the application in accordance with the appeal procedure
described in Section 10(c) above and (iv) has been notified in writing that the
Plan Administrator has denied the appeal (or the appeal is deemed to be denied
due to the Plan Administrator's failure to take any action on the claim within
the time prescribed by Section 10(d) above).

SECTION 11. BASIS OF PAYMENTS TO AND FROM PLAN.

            All benefits under the Plan shall be paid by the Company. The Plan
shall be unfunded, and benefits hereunder shall be paid only from the general
assets of the Company.

SECTION 12. OTHER PLAN INFORMATION.

            (a) EMPLOYER AND PLAN IDENTIFICATION NUMBERS. The Employer
Identification Number assigned to the Company (which is the "Plan Sponsor" as
that term is used in ERISA) by the Internal Revenue Service is 94-2914362. The
Plan Number assigned to the Plan by the Plan Sponsor pursuant to the
instructions of the Internal Revenue Service is [510].

            (b)   ENDING DATE FOR PLAN'S FISCAL YEAR.  The date of the end of
the fiscal year for the purpose of maintaining the Plan's records is December
31.

            (c) AGENT FOR THE SERVICE OF LEGAL PROCESS. The agent for the
service of legal process with respect to the Plan is Molecular Devices
Corporation, Attn: Vice President, Human Resources, 1311 Orleans Drive,
Sunnyvale, CA 94089.

            (d)   PLAN SPONSOR AND ADMINISTRATOR.  The "Plan Sponsor" and the
"Plan Administrator" of the Plan is Molecular Devices Corporation,  Attn:
Vice President, Human Resources, 1311 Orleans Drive, Sunnyvale, CA 94089.
The Plan Sponsor's and Plan Administrator's telephone number is (408)
747-1700.  The Plan Administrator is the named fiduciary charged with the
responsibility for administering the Plan.

SECTION 13. STATEMENT OF ERISA RIGHTS.

      Participants in this Plan (which is a welfare benefit plan sponsored by
Molecular Devices Corporation) are entitled to certain rights and protections
under ERISA. An Eligible Employee is considered a participant in the Plan and,
under ERISA, is entitled to:

            (a) Examine, without charge, at the Plan Administrator's office and
at other specified locations, such as work sites, all Plan documents and copies
of all documents filed by the Plan with the U.S. Department of Labor, such as
detailed annual reports;

<PAGE>
            (b) Obtain copies of all Plan documents and Plan information upon
written request to the Plan Administrator. The Administrator may make a
reasonable charge for the copies; and

            (c) Receive a summary of the Plan's annual financial report, in the
case of a plan that is required to file an annual financial report with the
Department of Labor. (Generally, all pension plans and welfare plans with one
hundred (100) or more participants must file these annual reports.)

      In addition to creating rights for Plan participants, ERISA imposes duties
upon the people responsible for the operation of the employee benefit plan. The
people who operate the Plan, called "fiduciaries" of the Plan, have a duty to do
so prudently and in the interest of the Eligible Employees and other Plan
participants and beneficiaries.

      No one, including the employer of the participants or any other person,
may fire a participant or otherwise discriminate against participants in any way
to prevent a participant from obtaining a Plan benefit or exercising his or her
rights under ERISA. If a participant's claim for a Plan benefit is denied in
whole or in part, he or she must receive a written explanation of the reason for
the denial. A participant has the right to have the Plan Administrator review
and reconsider his or her claim.

      Under ERISA, there are steps a participant can take to enforce the above
rights. For instance, if a participant requests materials from the Plan
Administrator and does not receive them within thirty (30) days, he or she may
file suit in a federal court. In such a case, the court may require the Plan
Administrator to provide the materials and pay the participant up to $110 a day
until he or she receives the materials, unless the materials were not sent
because of reasons beyond the control of the Plan Administrator. If a
participant has a claim for benefits that is denied or ignored, in whole or in
part, he or she may file suit in a state or federal court. If it should happen
that the Plan fiduciaries misuse the Plan's money, or if a participant is
discriminated against for asserting his or her rights, the participant may seek
assistance from the U.S. Department of Labor, or he or she may file suit in a
federal court. The court will decide who should pay court costs and legal fees.
If the participant is successful, the court may order the person the participant
has sued to pay these costs and fees. If the participant loses, the court may
order the participant to pay these costs and fees, for example, if it finds his
or her claim is frivolous.

      If a participant has any questions about the Plan, the participant should
contact the Plan Administrator. If a participant has any questions about this
statement or about his or her rights under ERISA, the participant should contact
the nearest office of the Pension and Welfare Benefits Administration, U.S.
Department of Labor, listed in the telephone directory or the Division of
Technical Assistance and Inquiries, Pension and Welfare Benefits Administration,
U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210.

<PAGE>

SECTION 14. EXECUTION.

            To record the adoption of the Plan as set forth herein, effective as
of February 15, 2001, Molecular Devices Corporation has caused its duly
authorized officer to execute the same this 15th day of August, 2001.

                                          MOLECULAR DEVICES CORPORATION

                                          By:    /s/ JOSEPH D. KEEGAN
                                                 -------------------------------
                                          Title: PRESIDENT AND
                                                 CHIEF EXECUTIVE OFFICER

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