Document:

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AMENDED.

                                                                  EXHIBIT 10.29

                              AMENDED AND RESTATED

                         CONTRACT MANUFACTURE AGREEMENT

        THIS AGREEMENT (the "Restated Agreement") is made the June of 1999,
between MEDEVA PHARMA LIMITED ("Medeva"), with offices at Gaskill Road, Speke,
Liverpool L24 9GR, United Kingdom, and AVIRON ("Aviron") with offices at 297
North Bernardo Avenue, Mountain View, California 94043, United States of
America.

                                    RECITALS

A. Medeva carries on the business of, inter alia, manufacture, assembly and
packaging of pharmaceutical products, or components thereof.

B. Medeva and Aviron have collaborated on the development of the manufacturing
process for the Intermediate Product under the terms of that certain
Manufacturing and Development Agreement dated 7th November 1995 (the "1995
Development Agreement").

C. Aviron wishes Medeva to Manufacture the Intermediate Product (as hereinafter
defined), and Medeva is willing to Manufacture the Intermediate Product on the
terms and conditions hereinafter set out.

D. Aviron is the exclusive licensee of the University of Michigan to certain
live attenuated influenza Master Virus Seeds and the technology associated with
and required for the production of certain reassortants therefrom;

E. Aviron and Medeva have entered into that certain Contract Manufacture
Agreement dated April 16, 1997 (the "1997 Contract Manufacture Agreement"), and
wish to amend and restate said agreement as provided in this Restated Agreement.

                                    AGREEMENT

In consideration of the mutual covenants herein set forth, the adequacy of which
consideration is hereby acknowledged, the parties agree as follows:

1       AMENDMENT AND RESTATEMENT.

The parties hereby amend and restate the Contract Manufacture Agreement
    dated April 16, 1997, to read in full as set forth below.

2       DEFINITIONS

In this Restated Agreement, the terms below shall have the meanings as
   defined herein. Terms defined in the singular form shall include the
    plural meaning and vice versa.

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      2.1   "Agency" means any governmental body responsible for licensing of
            the Finished Product for commercial sale and the licensing of
            premises and facilities of the Manufacturer.

      2.2   "Associated Companies" means (i) in respect of Medeva, any company
            which at the relevant time is a subsidiary of that party's ultimate
            holding company or any subsidiary of such a subsidiary where the
            term subsidiary shall have the meaning as defined in Section 736 of
            the English Companies Act 1985 (as amended); and, (ii) in respect of
            Aviron, any entity that directly or indirectly owns, is owned by or
            is under common ownership with Aviron, where own or ownership means
            direct or indirect possession of at least fifty percent (50%) of the
            outstanding voting securities of a corporation or a comparable
            equity interest in any other type of entity.

      2.3   "Aviron Assets" means capital equipment purchased by Aviron for use
            in the Manufacture of the Intermediate Product as more particularly
            specified in Schedule 1.

      2.4   "Aviron Process Technology" means all technology (including
            improvements, modifications, or adaptations to the process or method
            of Manufacture) specific solely to the Manufacture of the
            Intermediate Product or the Vaccine and which was developed and/or
            disclosed by Medeva during the Term of this Restated Agreement, the
            1997 Contract Manufacture Agreement or the 1995 Development
            Agreement, and which is not in the public domain or otherwise
            generally available to the public.

      2.5   "Aviron Unit" or "AVU" means the manufacturing facility where the
            Intermediate Product is Manufactured, as further described and
            delineated in the map attached as Schedule 2, and as expanded from
            time to time by mutual agreement of the parties. For the avoidance
            of doubt, all plant and machinery save for the Aviron Assets and all
            buildings, fixtures and fittings comprising the Aviron Unit belong
            to and are owned and operated by Medeva.

      2.6   "Best Endeavours" shall mean that the relevant party shall take such
            action in complying with its obligations for which such endeavors
            are required that is, having regard to costs and degree of
            difficulty, commercially practicable, and that Medeva is not
            required to take any action pursuant to this clause which would
            undermine its commercial goodwill or standing or lead to its
            financial ruin.

      2.7   "BLA"shall have the meaning as defined in the Technical Agreement.

      2.8   "CAIV Product" means a live, attenuated, intranasally deliverable
            cold-adapted influenza vaccine which, when [ * ] produces an [ * ]
            that is not less than [ * ] of the [ * ] produced in [ * ].

      2.9   "Certificate of Analysis" means documentation provided by suppliers
            specifying the characteristics of materials being supplied as such
            term is understood in U.K. pharmaceutical manufacturing practice.

      2.10  "Consistency Lot" means batches of Intermediate Product Manufactured
            for the purposes of establishing that the process of Manufacture of
            the Intermediate Product can be consistently repeated, as required
            for obtaining Agency approval to market, distribute, and sell the
            Vaccine.

      2.11  "Development" means the development of a process for Manufacture of
            Intermediate Product.

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        2.12   "Direct Damages" means the [ * ] incurred for [ * ] Intermediate
               Product rejected by Aviron pursuant to Clause 6.4.2, and [ * ] of
               such Intermediate Product, [ * ].

        2.13   "Effective Date" means the date first written above.

        2.14   "Eggs" means the specific pathogen-free eggs supplied by Aviron
               or its supplier to Medeva for the Manufacture of the Intermediate
               Product.

        2.15   "ELA" means Medeva's Establishment License Application to be
               submitted to the FDA in order to receive the manufacturing
               license for the Manufacture of the Intermediate Product.

        2.16   "FDA" means Food and Drug Administration of the United States of
               America.

        2.17   "Finished Product" means the Vaccine in its final form packaged
               for sale to the consumer.

        2.18   "Flu Season" means, in respect of the northern hemisphere, the
               period of time during a calendar year anticipated to start
               approximately in the beginning of August and ending approximately
               in January in which it is anticipated that the Vaccine will be
               used to vaccinate patients.

        2.19   "Force Majeure" means, in relation to either party, any
               circumstances beyond the reasonable control of that party
               including, without limitation, any Act of God, fire, explosion,
               flood, war or hostilities, acts of Government appointed agents,
               embargoes or other export restrictions, or perils of the sea.

        2.20   "GSA" means the general service area as described in Schedule 4.

        2.21   "cGMP" means current FDA Good Manufacturing Practices as set
               forth in the United States 21 Code of Federal Regulations Parts
               210 and 211 as amended from time to time, and the corresponding
               regulations of PIC and the EU, [ * ] during the term of this
               Restated Agreement.

        2.22   "Harvest" shall have the meaning as defined in the Technical
               Agreement.

        2.23   "Improvement" means any improvements, modifications or
               adaptations to the process of Manufacture of the Intermediate
               Product;

        2.24   "Intermediate Product" means Monovalent Virus Harvest and/or NAF,
               Manufactured according to and conforming with the Specifications
               which is intended for use in the manufacture of the Vaccine.

        2.25   "Manufacture" means the production of the Intermediate Product
               from the Raw Materials and shall include production of [ * ],
               production of [ * ] and "Manufactured," "Manufacturing," and
               "Manufacturer" shall be interpreted accordingly.

        2.26   "Manufacturing Instructions" means the documentation of the
               Manufacturing process and applicable standard operating
               procedures which must be followed by Medeva in the

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
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AMENDED.

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               Manufacture of the Intermediate Product incorporated as part of
               Appendix 2 to the Technical Agreement.

        2.27   "Manufacturing Period" means a period of one year starting with
               [ * ] and ending [ * ] of the next calendar year during the term
               of this Restated Agreement.

        2.28   "Manufacturing Records" "Manufacturing Records" means
               manufacturing, facility/systems and environmental monitoring and
               cleaning, packaging and quality control and quality assurance
               records generated by Medeva in the course of the Manufacture,
               including, without limitation, the Manufacturing Instructions,
               production, packaging, quality control, and quality assurance
               records.

        2.29   "Manufacturing Working Virus Seeds" means the virus reassortants
               produced by Medeva, from time to time, from the Master Virus
               Seeds, and from which the Monovalent Virus Harvest is produced.

        2.30   "Master Donor Strains" shall mean the live attenuated influenza
               strains derived by Dr. Maassab and designated Type A/Ann
               Arbor/6/60-H2N2 and Type B/Ann Arbor/1/66, exclusively licensed
               from Michigan to Aviron, and which are modified at Aviron to
               produce Master Virus Seeds.

        2.31   "Master Virus Seeds" means certain reassortants produced by
               Aviron from the Master Donor Strain.

        2.32   "Medeva Process Technology" means all technology (including
               improvements, modifications, or adaptations to the process or
               method of Manufacture) developed, owned, controlled or licensed
               (with the right to sub-license) by Medeva pertaining to [ * ] or
               any other formulation of a product [ * ] which is not Aviron
               Process Technology including such process technology arising from
               the 1995 Development Agreement and the 1997 Contract Manufacture
               Agreement between the parties, and which is not in the public
               domain or otherwise generally available to the public.

        2.33   "Michigan" means the Regents of the University of Michigan, a
               constitutional corporation of the State of Michigan with offices
               located at Wolverine Tower, Room 2071,3003 South State Street,
               Ann Arbor, Michigan, 48109-1280, USA.

        2.34   "Michigan Agreement" means the Material Transfer and Intellectual
               Property Agreement dated February 24, 1995 between Michigan and
               Aviron, as amended annexed hereto as Schedule 5.

        2.35   "Monovalent Virus Harvest" means each of the three virus strains
               to be incorporated in the Vaccine for a given Flu Season in bulk
               form.

        2.36   "MPU" stands for Media Preparation Unit and means the facility
               where media for Manufacture is prepared, as further described in
               Schedule 6.

        2.37   "NAF" means "Normal Allentoic Fluid" used as a diluent in the
               Vaccine.

        2.38   "Named Executives" means a director of Medeva and a vice
               president of Aviron designated and replaced from time to time by
               the respective party. As of the Effective Date the Named
               Executive of Medeva shall be [ * ] and the Named
               Executive of Aviron shall be [ * ].

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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        2.39   "PAI" means pre-approval inspection.

        2.40   "PIC" means the Pharmaceutical Inspection Convention.

        2.41   "PPI" means the Producer Price Index produced by the UK
               Statistics Office.

        2.42   "Process Evaluation Team" shall have the meaning as set forth in
               the Technical Agreement.

        2.43   "Raw Materials" means the components defined in the Technical
               Agreement and required by Medeva in the Manufacture of the
               Intermediate Product.

        2.44   "Recruited" means the person concerned is on the payroll of
               Medeva or has formally accepted an offer of employment with
               Medeva and Recruitment shall be interpreted accordingly.

        2.45   "Restricted Information" means (i) Master Donor Strains, Master
               Virus Seeds and Working Seeds; (ii) all Technical Information
               relating to Master Donor Strains, the Master Virus Seeds and the
               Manufacture of the Intermediate Product; (iii) all information
               relating to the Discloser's business; and (iv) all information
               arising pursuant to this Restated Agreement, the 1995 Development
               Agreement and the 1997 Contract Manufacture Agreement between the
               parties, disclosed by one party to this Restated Agreement (the
               "Discloser") to the other (the "Recipient") in connection with
               this Restated Agreement, excluding any such information which:

               2.45.1 is or was already known to the Recipient at the time of
                      disclosure by the Discloser as evidenced by the written
                      records of the Recipient; or

               2.45.2 was at the time of such disclosure or communication by the
                      Discloser or thereafter becomes or became published,
                      accessible to the public or otherwise in the public domain
                      other than through any act or omission of the Recipient;
                      or

               2.45.3 must be disclosed to government inspectors in the
                      discharge of statutory obligations provided that before
                      disclosure the Recipient shall use reasonable endeavors as
                      it would in respect of its own Restricted Information to
                      obtain from such government inspectors any assurances as
                      regards confidentiality as may be afforded to such
                      information in the circumstances; or

               2.45.4 must be disclosed by the Recipient to the relevant Agency
                      in the course of applying for, obtaining or maintaining
                      regulatory approval; or

               2.45.5 is hereafter disclosed to the Recipient by a third party,
                      who to the knowledge of the Recipient does not have any
                      obligations of confidentiality to any third party or who
                      has not, to the actual knowledge of the Recipient, derived
                      it directly or indirectly from the Discloser or the
                      University of Michigan; or

               2.45.6 is required to be disclosed by law.

        2.46   "Specifications" means requirements and specifications for the
               Intermediate Product and its Manufacture, attached to the
               Technical Agreement, as may be amended from time to time in
               accordance with the terms of this Agreement.

        2.47   "Specifications Working Group" or "SWG" shall have the same
               meaning as set forth in the Technical Agreement.

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        2.48   "SPF Unit" means the facility where Eggs are [ * ], as further
               described in Schedule 7.

        2.49   "Technical Agreement" means the Technical Agreement, as amended
               from time to time, entered into between the parties on even date
               herewith and attached hereto and incorporated herein as Schedule
               8.

        2.50   "Technical Information" means all registration data, know-how,
               experience, instructions, standards, methods, test and trial
               results, manufacturing and formulation processes, hazard
               assessments, quality control standards, formulae, specifications,
               storage and data, samples, drawings, designs, description of
               packaging materials and all other relevant information relating
               to the Intermediate Product or its design, Manufacture,
               formulation, handling, storage and use.

        2.51   "Term of Agreement" means the period from April 16, 1997 until
               the expiration or termination of this Restated Agreement as
               provided in Clause 15.

        2.52   "Trained" means the employee of Medeva has undergone Medeva's
               induction process which covers the basic theory and principles of
               Health and Safety, cGMP, work in cleanrooms and basic
               microbiology and has started in depth job training.

        2.53   "Vaccine" means Aviron's live, attenuated, intranasally delivered
               cold adapted influenza vaccine in the frozen formulation made
               using the Master Donor Strains (i.e. which, during the dating
               period established by the FDA, maintains stability at
               temperatures of [ * ] and may maintain stability at temperatures
               of [ * ] but does not maintain stability at [ * ] or at [ * ] as
               further described in the FDA BLA.

        2.54   "W-A" means Wyeth-Ayerst Laboratories Division of America Home
               Products, Corp. or any entity that directly or indirectly owns,
               is owned by or is under common ownership with W-A, where own or
               ownership means direct or indirect possession of at least fifty
               percent (50%) of the outstanding voting securities of a
               corporation or a comparable equity interest in any other type of
               entity.

3       CONTRACT MANUFACTURE

        3.1    APPOINTMENT. Aviron hereby appoints Medeva and Medeva accepts the
               appointment as a contract Manufacturer of the Intermediate
               Product for the term of this Restated Agreement. During the term
               of this Restated Agreement, Medeva will Manufacture for Aviron
               the Intermediate Product in accordance with this Restated
               Agreement, the Technical Agreement and the Specifications.

        3.2    SUPPLY OF MASTER VIRUS SEEDS; EXPORT OF INTERMEDIATE PRODUCT.
               Aviron shall [ * ] and shall [ * ] the importation into the
               United Kingdom and [ * ] Medeva of [ * ] and [ * ] used for
               growing the Manufacturing Working Virus Seeds. Aviron shall [ * ]
               of the Intermediate Product from the United Kingdom and [ * ] in
               accordance with the [ * ] set forth in [ * ] Medeva shall assist,
               at Aviron's reasonable request [ * ] with the export of the
               Intermediate Product from the United Kingdom.

        3.3    COORDINATION. Technical staff of Aviron and Medeva shall
               cooperate and coordinate closely the points of intersection
               between tasks relating to the Manufacture, release and shipping
               of the Intermediate Product performed by Medeva and by Aviron.

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        3.4    SAMPLING. Samples of the Intermediate Product and the Raw
               Materials shall be retained, stored and provided to Aviron in the
               manner set forth in the Technical Agreement.

        3.5    RELEASE.  The release of the Product shall be carried out in the
               manner set forth in the Technical Agreement.

        3.6    RECORD MAINTENANCE.  All provisions pertaining to the
               maintenance and retention of  Manufacturing Records are set
               forth in the Technical Agreement;

        3.7    OTHER OBLIGATIONS OF MEDEVA.  Medeva covenants the following:

               3.7.1  MANUFACTURE.  It will carry out the Manufacture in
                      accordance with this Restated Agreement the Technical
                      Agreement and the Specifications;

               3.7.2  MAINTENANCE. It will maintain the GSA, the MPU, the SPF
                      Unit, the Aviron Unit and Medeva's equipment used in the
                      Manufacture pursuant to Medeva's standard procedure
                      pertaining to the maintenance of equipment of a similar
                      nature to the Aviron Unit and Medeva's equipment in
                      compliance with Clauses 3.7.1, 3.7.6 and 3.7.7;

               3.7.3  SUPPLY OF RAW MATERIALS.  All Raw Materials supplied by
                      Medeva and used in Manufacture will comply with the
                      Technical Agreement and the Specifications;

               3.7.4  STORAGE OF MATERIALS. It will keep the Master Virus Seed,
                      the Manufacturing Working Virus Seed, any other Raw
                      Materials and Intermediate Product under environmental
                      conditions as defined in the Technical Agreement and the
                      Specifications;

               3.7.5  COMPLIANCE WITH CGMP.  It will Manufacture all
                      Intermediate Product in compliance with cGMP; provided,
                      that if the [ * ] of the [ * ] and [ * ] the parties will
                      [ * ] and [ * ]

               3.7.6  COMPLIANCE WITH HEALTH AND SAFETY AND ENVIRONMENTAL
                      REGULATIONS. It will comply with applicable UK and EU
                      health and safety and environmental laws and regulations
                      in the Manufacture of the Intermediate Product.

               3.7.7  INSPECTIONS BY AVIRON

                      3.7.7.1 It will permit, [ * ] of this Agreement and during
                              normal business hours and upon reasonable notice,
                              representatives of Aviron and its Associated
                              Companies [ * ] including a representative of W-A
                              [ * ] any such [ * ] of any representatives of
                              Aviron, its Associated companies or W-A [ * ] to
                              have access to any relevant records in connection
                              with such Manufacture, and to inspect the relevant
                              parts of the premises where Manufacture of
                              Intermediate Product is carried out, and assess
                              its compliance with cGMP and any current practices
                              of any relevant Agency, and to discuss any related
                              issues with Medeva's management personnel.

                      3.7.7.2 Notwithstanding the foregoing, Medeva's
                              obligation to allow such visitors is on condition
                              that: (a) Aviron, Aviron's Associated Companies
                              and W-A, respectively, procure agreement from such
                              visitors in writing

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AMENDED.

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                              to observe the regulations of Medeva regarding
                              security, health and safety and any other
                              applicable regulations at the relevant premises,
                              and confidentiality obligations corresponding to
                              those contained in this Restated Agreement; (b)
                              any visit shall be under the specific supervision
                              of Medeva [ * ] and (c) Aviron, Aviron's
                              Associated Companies and W-A, respectively, [ * ]
                              and shall [ * ] to [ * ] or any [ * ] or [ * ] or
                              [ * ] on [ * ] and (d) Aviron, Aviron's
                              Associated Companies and W-A use their Best
                              Endeavours to ensure that the visit is of minimal
                              disruption to Medeva's day to day business.

               3.7.8  INSPECTIONS BY AGENCIES.

                      3.7.8.1 It will allow representatives of any Agency to
                              inspect the relevant parts of its premises where
                              the Manufacture of the Intermediate Product is
                              carried out and to inspect the Manufacturing
                              Records to ensure compliance with cGMP and other
                              practices or regulations. In the event that an
                              Agency inspects those areas of Medeva's premises
                              used in the Manufacture of the Intermediate
                              Product, Medeva shall provide as much notice as
                              practicable of such inspection to Aviron and shall
                              permit representatives of Aviron to [ * ] said
                              inspection. Aviron acknowledges that its
                              representatives [ * ] the [ * ] to [ * ] in [ * ]
                              except that [ * ] the [ * ] to [ * ] in the [ * ]
                              of [ * ] and [ * ] any wrap-up sessions conducted
                              by the Agency representative which relate solely
                              to the Manufacture of the Intermediate Product
                              and/or the Aviron Unit.

                      3.7.8.2 In connection with the PAI, Medeva will permit
                              [ * ] Aviron's [ * ] to be present and participate
                              [ * ] relating to the Vaccine; provided, however,
                              that Medeva shall have the right [ * ] where he
                              would become privy to confidential information not
                              related to the Vaccine. Furthermore, in
                              preparation of the PAI, Medeva shall [ * ] and
                              during the PAI shall make accessible to the Agency
                              [ * ] all documentation specifically associated
                              with the Manufacture of the Intermediate Product.

                      3.7.8.3 Medeva shall inform Aviron of any questions or
                              recommendations made by the Agency and shall
                              provide to Aviron copies of any written questions
                              or recommendations received from the Agency
                              insofar as they pertain to the Manufacture of the
                              Intermediate Product. Medeva and Aviron shall
                              [ * ] any written questions and recommendations of
                              the Agency and [ * ] any verbal questions or
                              recommendations of the Agency or regulatory body
                              that do not require an immediate response subject
                              always to [ * ] right to have [ * ] the contents
                              of any response to a question or recommendation of
                              an agency that pertains to [ * ] and save where
                              the response to the question or recommendation of
                              the agency pertains [ * ] in which case [ * ]
                              shall have [ * ]

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                              [ * ] as to the contents of such response. In the
                              case of a question or recommendation made by the
                              Agency requiring [ * ] Medeva's representatives
                              present during said inspection shall [ * ] and
                              shall [ * ] the response made. Further, Medeva
                              shall promptly send to Aviron a copy of any
                              reports, citations, or warning letters received by
                              Medeva in connection with an Agency Inspection to
                              the extent such documents relate to or affect the
                              Manufacture of the Intermediate Product.

            3.7.9 RECALL OF THE FINISHED PRODUCT. It will, [ * ] provide to
                  Aviron such assistance with any recall of the Finished Product
                  as reasonably necessary.

            3.7.10 MANUFACTURING LICENSE. It is in possession of, and during the
                  term of the Restated Agreement will [ * ] to maintain, a
                  current Manufacturing License No ML 0039/02 granted pursuant
                  to the Medicines Act 1968.

            3.7.11 RESOURCES. It will [ * ] from time to time and [ * ]
                  reasonably necessary to perform its obligations under this
                  Restated Agreement, in particular in the areas of:

                  o      training of employees who will be engaged in the
                         Manufacture
                  o      quality assurance
                  o      quality services
                  o      regulatory affairs
                  o      Manufacture
                  o      quality control
                  o      validation
                  o      documentation
                  o      facility maintenance
                  o      GSA, SPF Unit, and MPU operation
                  o      warehousing
                  o      calibration
                  o      release and shipping

                  Aviron and Medeva agree to discuss and review on an ongoing
                  basis such staffing and resources. Medeva shall be entitled to
                  amend staffing levels in accordance with clauses 9.2.6.4,
                  9.2.6.5. and 9.2.6.6.

           3.7.12 TECHNICAL SUPPORT. It shall provide its personnel for
                  technical support as set forth in Schedule 9, including,
                  without limitation, for:-

                  3.7.12.1 [ * ] the Specifications Working Group; and

                  3.7.12.2 [ * ] the Process Evaluation Team; and

                  3.7.12.3 assisting Aviron with its post-approval FDA BLA
                           maintenance, preparation, filing and post-approval
                           maintenance of BLAs in territories other than the
                           USA.

                  3.7.12.4 PAIs of Agencies other than the FDA.

           3.7.13 Any reasonable assistance to Aviron with obtaining FDA
                  approval of the BLA, preparation and attendance of FDA's PAI,
                  training of Medeva employees,

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                       continuing validation, engineering changes which are
                       [ * ] to the Manufacturing process, routine post-approval
                       inspections, PAIs, maintenance of documentation ([ * ]),
                       transfer of Medeva Process Technology to Aviron's
                       sublicensees [ * ] over the life of the Restated
                       Agreement (out-of-pocket expenses and travel as provided
                       in Medeva's company travel policy to be invoiced and
                       charged separately to Aviron), [ * ] in the [ * ] of the
                       [ * ] set forth in Schedule 9. Any additional [ * ] will
                       be provided pursuant to Clause 3.7.12

           3.7.14 The cost of any actions or assistance to be undertaken or
                  provided by Medeva relating only to the Vaccine required by an
                  Agency after BLA approval will be [ * ] based on [ * ].

           3.7.15 MANUFACTURE OF MANUFACTURING WORKING VIRUS SEEDS. During each
                  manufacturing period Medeva shall manufacture, [ * ] strains
                  of Manufacturing Working Virus Seeds for which Aviron has
                  supplied the Master Virus Seeds, in sufficient quantities to
                  undertake the Manufacture of Monovalent Virus Harvest. Should
                  Aviron require [ * ] Manufacturing Working Virus Seeds to be
                  manufactured by Medeva it shall notify Medeva of such and
                  shall [ * ] for each additional Manufacturing Working Virus
                  Seed manufactured by Medeva.

           3.7.16 Y2K Medeva confirms that it has reviewed its principal
                  systems for Y2K compliance and that a programme is in place
                  for the review of other areas of potential concern such as
                  embedded microchips.

           3.7.17 SPF UNIT. Medeva will reorganize its internal manufacturing
                  processes for products other than the Intermediate Product in
                  such a manner that within [ * ] from the Effective Date, any
                  eggs processed in the Aviron incubators in the SPF Unit will
                  be used only in the Manufacture of the Intermediate Product.

        3.8    OTHER OBLIGATIONS OF AVIRON.  Aviron covenants the following:

               3.8.1  SUPPLY OF TECHNICAL INFORMATION. It will supply to Medeva
                      and promptly update all Technical Information in its
                      possession which is necessary to enable Medeva to
                      Manufacture the Intermediate Product, including all
                      information regarding health, safety, environmental
                      issues, and FDA regulations, as it becomes known;

               3.8.2  TECHNICAL ASSISTANCE. It will provide such technical
                      assistance, [ * ] as may be required to enable the
                      effective transfer of the Technical Information under
                      3.8.1 such that Medeva should reasonably be expected to be
                      able to Manufacture the Intermediate Product on the basis
                      of such Technical Information;

               3.8.3  SUPPLY OF RAW MATERIALS. It shall provide the Raw
                      Materials set forth in Schedule 10 to Medeva in accordance
                      with the requirements for such agreed between the parties
                      pursuant to clause 6.2. Such Raw Materials shall comply
                      with the Technical Agreement and the Specifications, and
                      where appropriate shall be accompanied by a Certificate of
                      Analysis;

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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               3.8.4  INSTRUCTIONS REGARDING RECORD KEEPING. It shall notify
                      Medeva of, and Medeva shall comply with any special
                      requirements in respect of record keeping that may be
                      necessary to comply with Aviron's Product Tracking and/or
                      Recall Procedure or other Agency requirements. If such
                      requirements of Aviron [ * ] of [ * ] of Medeva , [ * ] on
                      [ * ] including, without limitation by [ * ] should the
                      compliance with such requirements [ * ] Medeva.

               3.8.5  RECALL OF THE FINISHED PRODUCT. Aviron shall notify Medeva
                      of any recall of the Finished Product and shall, in that
                      notice, provide as much detail as possible of the reason
                      for the recall.

               3.8.6  Y2K. Aviron confirms that it has reviewed its principal
                      systems and the systems of its suppliers of Raw Materials
                      for Y2K compliance and that a programme is in place for
                      the review of other areas of potential concern such as
                      embedded microchips.

        3.9    NOTIFICATION.

               3.9.1  Aviron shall notify Medeva of [ * ] in any [ * ] of the
                      [ * ] and any [ * ] of [ * ] the Finished Product for a
                      [ * ] for [ * ] and its [ * ] If any regulatory
                      requirements [ * ] with the then-current requirements
                      applicable to the Manufacture of the Intermediate Product
                      under this Restated Agreement (including without
                      limitation, cGMP, and applicable health, safety and
                      environmental regulations) or [ * ] of the Finished
                      Product [ * ] in relation to [ * ] or its [ * ] the
                      parties will discuss [ * ] on how to [ * ] and Aviron
                      shall [ * ] the Finished Product [ * ] or for the [ * ]
                      the [ * ] how to [ * ] or [ * ]. Medeva hereby
                      acknowledges that the Finished Product is anticipated to
                      be marketed in [ * ], and that there are no conflicts or
                      difficulties regarding product liability insurance
                      regarding those territories.

               3.9.2  Aviron shall notify Medeva promptly upon receiving any
                      request of Michigan for the transfer of Medeva Process
                      Technology or Manufacturing Instructions as provided under
                      the terms of the Michigan Agreement.

4       AVIRON UNIT.

        4.1    USE OF AVIRON UNIT. The Aviron Unit, in addition to other
               facilities as required, will be made available for the
               Manufacture of the Intermediate Product during the term of this
               Restated Agreement [ * ] and [ * ] in respect of [ * ]
               Furthermore and subject to Aviron's agreement, the Aviron Unit
               may be used by Medeva for the conduct of research and development
               towards the improvement of the Intermediate Product and the
               Manufacture, provided however, that any and all proprietary
               rights to such improvements shall be governed by Clause 7. Aviron
               shall pay to Medeva the sums set forth in Schedule 11 for use of
               the Aviron Unit. [ * ] pursuant to

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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                  [ * ] the Aviron Unit shall not be used by Medeva outside the
                  scope of this Restated Agreement without the consent of
                  Aviron.

        4.2    AVIRON ASSETS.

               4.2.1  PURCHASE. Medeva shall be entitled to purchase and install
                      equipment, all replacement tooling or parts or make
                      modifications to the buildings and services as may be
                      required for the Manufacture of the Intermediate Product,
                      [ * ] of which [ * ] to [ * ] upon [ * ] Notwithstanding
                      the above, Medeva shall not purchase and/or install any
                      such equipment, tooling or parts or make such
                      modifications [ * ] or where the [ * ] in relation to the
                      Restated Agreement without first obtaining the prior
                      written consent of Aviron. Such equipment, tooling or
                      parts form part of Aviron Assets and shall be deemed
                      included in Schedule 1. Where the [ * ] Medeva may at its
                      discretion [ * ] from Aviron such [ * ] up to [ * ] the
                      [ * ] prior to [ * ]. Medeva will ensure that such items
                      are in compliance with the requirements of the Agency and
                      with health and safety and environmental regulations. Any
                      equipment or tooling purchased by Medeva hereunder and
                      [ * ] shall [ * ] by Medeva for any purpose outside the
                      scope of this Restated Agreement without the consent of
                      Aviron.

               4.2.2  OWNERSHIP AND LIABILITY. All Aviron Assets are owned by
                      Aviron. [ * ] shall bear the risk of loss or damage to
                      Aviron Assets, except for loss or damage caused by [ * ]
                      in which circumstance [ * ] shall be liable to [ * ] for
                      such loss or damage. Aviron shall [ * ] and [ * ] that
                      Aviron Assets are [ * ] and that such [ * ] any [ * ] of
                      [ * ] to [ * ] as a consequence of [ * ] to or [ * ] or
                      [ * ] unless [ * ] to the [ * ].

               4.2.3  MAINTENANCE OF AVIRON ASSETS. Medeva shall maintain the
                      Aviron Assets in compliance with Clauses 3.7.1, 3.7.6 and
                      3.7.7 and in accordance with Medeva's operating procedure
                      pertaining to maintenance of equipment of a similar nature
                      to the Aviron Assets. [ * ] shall be responsible for the
                      reasonable cost of maintaining such equipment.

               4.2.4  EFFECT OF EXPIRY OR TERMINATION. Upon expiry or
                      termination of this Restated Agreement, Aviron shall,
                      [ * ] remove the Aviron Assets from Medeva's premises and
                      shall [ * ] to the [ * ] to the [ * ] (except for [ * ]
                      from the [ * ] of the Intermediate Product), any part of
                      [ * ] where such [ * ] at [ * ] unless [ * ] such
                      equipment [ * ]. At the point of Medeva purchasing such
                      equipment from Aviron, all of Aviron's obligations [ * ]
                      relating to such assets terminates. Should Aviron fail to
                      remove the Aviron Assets [ * ] as provided in this clause
                      4.2.4 within the [ * ] Medeva may arrange,

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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                      [ * ] of the [ * ] and [ * ].

5       TECHNICAL AGREEMENT AND REGULATORY MATTERS

        5.1    SCOPE. The respective responsibilities of Medeva and Aviron
               relating to the Manufacture of the Intermediate Product, the way
               in which each batch of the Intermediate Product has been
               Manufactured and checked for compliance with and adherence to the
               Technical Agreement, the responsibility for purchasing materials,
               testing and releasing materials and undertaking production and
               quality control including in-process controls as well as sampling
               and analysis shall be as specified in the Technical Agreement.

        5.2    MANUFACTURING HAZARDS. Medeva shall be responsible for ensuring
               the safe operation of the process of Manufacture of the
               Intermediate Product set forth in, inter alia, the Technical
               Information and the Technical Agreement. Aviron and Medeva shall
               continuously provide the other with any pertinent information of
               which they become aware relating to any hazardous aspect of the
               Manufacture, the Raw Materials or the Intermediate Product
               including but not limited to any information pertaining to the
               possibility of any cross contamination of any other products
               being manufactured or stored by Medeva. Should [ * ] that any
               [ * ] of the Manufacture of the Intermediate Product [ * ] then
               it shall so notify [ * ] of such in writing and both parties
               shall use their Best Endeavours, [ * ] (at [ * ] set forth in
               Schedule [ * ], to [ * ] prior to undertaking the Manufacture. If
               such [ * ] shall have the [ * ] with the Manufacture of the
               Intermediate Product. If [ * ] that such [ * ] either party may
               [ * ] on the provision of [ * ].

        5.3    AMENDMENTS TO THE TECHNICAL AGREEMENT AND THE SPECIFICATIONS.

        5.4    Any amendment to the Technical Agreement, including an amendment
               to the Specifications, shall be made by [ * ] as provided in the
               Technical Agreement. Aviron shall [ * ] in connection with the
               implementation of such amendments to the Technical Agreement or
               the Specifications. The parties shall discuss and agree in good
               faith on [ * ] including, without limitation, a [ * ] or an [ * ]
               and on [ * ] to [ * ] resulting from [ * ] or [ * ] resulting
               from such amendments.

        5.5    REGULATORY APPLICATIONS.

               5.5.1  BLA. Aviron will file the BLA in its own name and will own
                      all rights thereto. Medeva will submit to Aviron in a
                      timely fashion data and information relating to the
                      Manufacture of the Intermediate Product for inclusion by
                      Aviron in the BLA as requested by Aviron from time to
                      time, and will [ * ] in a [ * ] such data and information
                      once included.

               5.5.2  ELA. Medeva will file a supplement to the existing ELA for
                      Manufacture of Intermediate Product in the Aviron Unit at
                      Speke plant concurrently with filing of BLA by Aviron.
                      Subject to CBER consent, certain confidential information
                      regarding the Aviron Unit or any processes and equipment
                      which is filed with the ELA will be [ * ]. If

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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                      [ * ] such [ * ] will be [ * ] subject to the
                      confidentiality obligations of this Restated Agreement.

6       CAPACITY, FORECAST, AND SUPPLY

        6.1    CAPACITY.

               6.1.1  The parties acknowledge and agree that the [ * ] amount of
                      the Intermediate Product that Medeva can Manufacture in
                      any Manufacturing Period shall be determined, inter alia,
                      by the [ * ] of the respective Master Donor Strains and
                      therefore such Manufacturing capacity [ * ] until such
                      [ * ] are [ * ] The parties also acknowledge and agree
                      that such [ * ] of the respective Manufacturing Working
                      Virus Seeds will generally not [ * ] of any year. Hence,
                      the parties shall, once the [ * ] of the respective
                      Manufacturing Working Virus Seeds for the relevant year
                      are [ * ] the Manufacturing capacity for Medeva for [ * ]
                      and the [ * ] based on the factors set forth in Schedule
                      12. The parties agree that the Manufacturing capacity for
                      the first Manufacturing Period starting [ * ] and ending
                      [ * ] is [ * ] of Finished Product. For the second and any
                      subsequent Manufacturing Periods, the parties shall set a
                      [ * ] Manufacturing capacity by [ * ] prior to the
                      Manufacturing Period in question based on the capacity of
                      the then current Manufacturing Period and the factors set
                      forth in Schedule 12.

               6.1.2  During any Manufacturing Period the Manufacturing capacity
                      of Medeva determined in accordance with clause 6.1.1 above
                      shall be [ * ] in the event of:-

                      6.1.2.1 the [ * ] the Raw Materials as provided in clause
                              3.8.3, the [ * ] of the Raw Materials; and

                      6.1.2.2 any [ * ] to carry out [ * ] in relation to the
                              process of Manufacture which prevents Medeva from
                              Manufacturing the Intermediate Product for any
                              time; and

                      6.1.2.3 any specific requirement [ * ] of the
                              Intermediate Product which results in [ * ] the
                              Aviron Unit and the Raw Materials; and

                      6.1.2.4 any [ * ] the [ * ] of the Master Working Virus
                              Seed and the [ * ] of the Monovalent Virus
                              Harvest.

               6.1.3  The extent of any [ * ] in the Manufacturing capacity of
                      Medeva arising under clause 6.1.2 shall be [ * ] by the
                      [ * ] of the [ * ] within [ * ] after the end of each
                      Manufacturing Period.

               6.1.4  Medeva will [ * ] during each Manufacturing Period to the
                      capacity determined pursuant to Clauses 6.1.1 to 6.1.3
                      above.

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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        6.2    FORECASTING.

               6.2.1  On the [ * ] Aviron shall provide to Medeva its written
                      forecast of its requirements for technical support in man
                      days and AVU days as set forth in Schedule 9, NAF and
                      Monovalent Virus Harvest for [ * ]. On or before [ * ] of
                      each year of this Restated Agreement Aviron shall provide
                      to Medeva its written forecast of its requirements for
                      technical support [ * ] as set forth in Schedule 9, NAF
                      and Monovalent Virus Harvest for [ * ] of [ * ] to [ * ]
                      of the [ * ]. On or before [ * ] of each year of this
                      Restated Agreement Aviron shall provide to Medeva its
                      written forecast of its requirements for technical support
                      [ * ] as set forth in Schedule 9, NAF and Monovalent Virus
                      Harvest for [ * ] of the [ * ] to [ * ] of the [ * ]. On
                      or before [ * ] of the [ * ] of this Restated Agreement
                      and each year thereafter Aviron shall provide to Medeva
                      its written forecast of its requirements for technical
                      support [ * ] as set forth in Schedule 9, NAF and
                      Monovalent Virus Harvest for [ * ] of [ * ] to [ * ] of
                      the [ * ]. On or before [ * ] and each year thereafter
                      Aviron shall provide to Medeva a forecast of its
                      requirements for technical support [ * ] as set forth in
                      Schedule 9, NAF and Monovalent Virus Harvests until [ * ]
                      of the Manufacturing Period and for the period from [ * ]
                      of that [ * ] to [ * ] of the [ * ].

               6.2.2  Within [ * ] of receipt of any forecast from Aviron Medeva
                      shall [ * ] in writing any factors of which Medeva is
                      aware which [ * ] to be [ * ]. In the event that Medeva
                      has provided such a written indication, the parties shall,
                      [ * ] of receipt by Aviron of Medeva's notice regarding
                      such, [ * ] the issues raised by Medeva. If the parties
                      [ * ] then Aviron shall submit [ * ]. If it is [ * ] that
                      a [ * ] of the [ * ] is [ * ] then the [ * ] shall
                      continue to apply. If Medeva has provided a notification
                      pursuant to this clause and the parties have [ * ] and the
                      factors notified to Aviron [ * ] Intermediate Product in
                      the forecasted quantities, then, [ * ] is [ * ] or at the
                      end of any [ * ] shall [ * ] to [ * ] those [ * ] which
                      [ * ] to [ * ] provided that [ * ] to [ * ] any such [ * ]
                      or [ * ].

               6.2.3  Medeva shall use Best Endeavours to supply the
                      Intermediate Product in the [ * ] pursuant to clause 6.2.2
                      [ * ] shall [ * ] in respect of the quantities forecast by
                      Aviron in excess of the Manufacturing capacity [ * ]
                      pursuant to clause 6.1

          6.3  DELIVERY TERMS. Medeva will at the request of Aviron deliver
               the Intermediate Product packaged for shipment under [ * ]
               delivery terms (as defined in Incoterms 1990). [ * ] the [ * ] or
               [ * ] in the Intermediate Product, [ * ] the Intermediate Product
               [ * ] to  [ * ] until [ * ] of [ * ] of the Intermediate Product
               has been [ * ] and [ * ] by Medeva.

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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        6.4    ACCEPTANCE TESTING AND REJECTION.

               6.4.1  RELEASE OF THE PRODUCT. The Intermediate Product will be
                      released by Medeva in accordance with Clause 10 of the
                      Technical Agreement and the Intermediate Product shall be
                      released by Aviron in accordance with Clause 11of the
                      Technical Agreement.

                      6.4.2 NOTICE OF REJECTION. Aviron may, within [ * ] of
                      completion of testing of the Intermediate Product by
                      Aviron or its designee, in accordance with this Clause 6.4
                      reject (in whole or in part) any batch of Intermediate
                      Product which contains Intermediate Product that does not
                      conform with the Specifications. Any notice of
                      rejection shall be in writing and shall indicate, in
                      sufficient detail to allow Medeva to investigate, the
                      reasons for such rejection. If no such notice of rejection
                      is received, Aviron shall be deemed to have accepted such
                      delivery of the Intermediate Product, except for defects
                      which could not reasonably be detected with the acceptance
                      tests performed pursuant to Clause 10 of the Technical
                      Agreement.

               6.4.3  EVALUATION BY THE PROCESS EVALUATION TEAM The Process
                      Evaluation Team shall [ * ] the cause of any
                      non-conformance with Specifications detected by Medeva
                      upon testing pursuant to Clause 10.1 of the Technical
                      Agreement or by Aviron pursuant to Clause 11.1 of the
                      Technical Agreement. Both parties shall provide to the
                      Process Evaluation Team such samples (including the sample
                      retained by Medeva pursuant to Clause 6.4.1 for testing by
                      the independent laboratory as set forth in Clause 6.4.5)
                      and such information as the Process Evaluation Team
                      requests in order to [ * ] as to the defect and the cause
                      thereof.

               6.4.4  DISPUTE RESOLUTION If [ * ] the [ * ] of the Process
                      Evaluation Team or if the Process Evaluation Team [ * ]
                      regarding the defect or cause thereof within [ * ] after
                      receipt of the notice of rejection by Medeva, the matter
                      shall be referred to the [ * ] of Medeva and Aviron. If
                      such [ * ] are unable to find a mutually agreeable
                      solution, the dispute shall be referred to the [ * ] for
                      good faith discussion and resolution within thirty (30)
                      days of such referral.

               6.4.5  INDEPENDENT LABORATORY. At any time in the course of the
                      investigation by the PET or the dispute resolution
                      proceeding set forth in Clause 6.4.4, either party may
                      require that an independent laboratory mutually agreed
                      between the parties [ * ] the [ * ] in [ * ] shall be
                      asked to determine whether a further sample of the
                      Intermediate Product complies with the Specification or
                      not, and the determination of such independent laboratory
                      shall be [ * ] with respect to the issue of whether or not
                      the Intermediate Product complies with Specifications.

               6.4.6  REMEDIES. If Medeva accepts that the non-conformance of
                      the Intermediate Product was the result of the [ * ] then
                      Medeva shall either (i) Manufacture and deliver to Aviron
                      [ * ] a [ * ] of the Intermediate Product [ * ] the
                      non-conforming batch or batches [ * ] Medeva with such
                      [ * ]

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COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
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                      [ * ], and providing a [ * ] by Aviron, or (ii) [ * ] due
                      to [ * ] Aviron with an [ * ] to the [ * ] by Aviron [ * ]
                      for the rejected shipment, plus [ * ] incurred by Aviron.
                      The parties shall discuss the possibility of [ * ]
                      Intermediate Product and [ * ] before Aviron [ * ] of the
                      aforementioned methods of compensation it [ * ]. Any [ * ]
                      paid or credited [ * ] are subject to the [ * ] set forth
                      in [ * ].

               6.4.7  If Aviron accepts that the relevant batches of
                      Intermediate Product were Manufactured in accordance with
                      the Specifications and that any non-conformity of the
                      Intermediate Product with the Specifications was not the
                      result of the [ * ] or [ * ] and Aviron shall [ * ] of
                      such Intermediate Product and [ * ] as [ * ] to [ * ].

               6.4.8  If the Process Evaluation Team or the [ * ] of the
                      parties designated in [ * ] come to the conclusion that
                      [ * ] the cause of the defect which caused Medeva not to
                      release Intermediate Product as provided in Clause 10 of
                      the Technical Agreement, or Aviron to reject the
                      Intermediate Product as provided in Clause 6.4.2,
                      [ * ] relating to the Manufacture of such product, and
                      neither party [ * ] for [ * ] Intermediate Product not
                      released by Medeva or rejected by Aviron.

7       INTELLECTUAL PROPERTY AND IMPROVEMENTS

        7.1    OWNERSHIP. Except as expressly provided in this Restated
               Agreement, each party hereby acknowledges that it shall not
               acquire any rights in respect of any of the other party's
               intellectual property in relation to the Intermediate Product or
               the Manufacture thereof or of the goodwill associated therewith.

        7.2    NO LICENSES. Other than as is necessary for the proper
               performance of this Restated Agreement by the parties, or as is
               expressly provided in this Restated Agreement, no license,
               expressed or implied, is granted by this Restated Agreement by
               either party to the other under any of its intellectual property
               rights. The parties may grant further licenses if mutually
               agreeable.

        7.3    OWNERSHIP OF MANUFACTURING RECORDS. [ * ] all Manufacturing
               Records shall [ * ] shall be treated as [ * ] and shall not be
               [ * ] as provided in the Technical Agreement or for the purposes
               associated with manufacture of the Vaccine and where necessary
               for disclosing to the relevant Agency and to its licensees and
               distributors in order to comply with regulatory requirements and
               to prepare for regulatory filings or PAIs. Aviron may [ * ] of
               all Manufacturing Records, for the purposes of complying with the
               requirements of the relevant Agency. Aviron may [ * ] the
               Restricted Information to [ * ], having previously made
               reasonable efforts to obtain an obligation of confidentiality
               from the said [ * ] concerning the Restricted Information.
               Nothing in

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COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
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               this Clause 7.3 shall limit Aviron's right and ability to
               disclose Medeva Process Technology to third parties pursuant to
               the license granted under Clause 7.5.

        7.4    PROCESS TECHNOLOGY.

               7.4.1  Aviron Process Technology.  Medeva acknowledges and
                      agrees that Aviron Process Technology shall be the
                      property of Aviron.

               7.4.2  Medeva Process Technology.  All Medeva Process Technology
                      shall be the property of Medeva.

        7.5    LICENSE TO AVIRON.

               7.5.1  Medeva hereby grants to Aviron a worldwide, [ * ]
                      sublicenseable (as provided in Clause 7.5.2) [ * ] license
                      under Medeva Process Technology to make, have made, use,
                      import, offer for sale and sell CAIV Products. The term
                      [ * ] as used herein shall mean that Medeva shall have the
                      right to [ * ] CAIV Products which [ * ] the Master Donor
                      Strains or [ * ] but shall not [ * ] or [ * ] CAIV
                      Products during the term of this Restated Agreement other
                      than the Manufacture for Aviron or its designee or W-A
                      under this Restated Agreement. For the avoidance of
                      doubt:-

                      7.5.1.1 Medeva shall not, for the term of this Restated
                              Agreement, manufacture, in eggs, cell culture, or
                              by other means, for itself or a third party any
                              CAIV Product based on the Master Donor Strains,
                              the Master Virus Seeds or any reassortants or
                              derivatives thereof, and Medeva shall not conduct
                              any research or development activities using the
                              Master Donor Strains, Master Virus Seeds,
                              reassortants or derivatives thereof, which have
                              not been not authorized in writing by Aviron,
                              including but not limited to any replication of
                              said [ * ], but otherwise nothing in this Restated
                              Agreement shall prevent Medeva from manufacturing
                              for a third party a CAIV Product (other than any
                              CAIV Product based on the Master Donor Strains,
                              the Master Virus Seeds or any reassortants or
                              derivatives thereof) in circumstances where that
                              third party provides to Medeva complete technical
                              information pertaining to the process of
                              manufacture of the third party's CAIV Product and
                              Medeva is not required to utilize Medeva Process
                              Technology to help develop or enhance the third
                              party's process of manufacture of its CAIV
                              Product.; and

                       7.5.1.2 Aviron may utilize those [ * ] the Medeva
                              Process Technology [ * ] to make, have made, use,
                              import, offer for sale and sell products other
                              than CAIV Products. If Aviron is in [ * ] as to
                              [ * ] a [ * ] the Medeva Process Technology is
                              [ * ], it shall provide to Medeva a [ * ] setting
                              forth sufficient detail to allow Medeva to [ * ]
                              and Medeva shall, [ * ] of receipt of such [ * ],
                              provide to Aviron [ * ] provided, that if the
                              parties disagree whether or not a [ * ] of Medeva
                              Process Technology is [ * ], the matter shall be
                              submitted for expert opinion in accordance with
                              Schedule 14. Thereafter, if there is still a
                              dispute between the parties as to whether or not a
                              [ * ]

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                              [ * ] the matter shall be referred to the
                              respective Chief Executive Officers of the parties
                              and, thereafter, if the matter is still
                              unresolved, either party may issue proceeding to
                              have the matter determined by a court of law in
                              accordance with clause 21.5; and

                      7.5.1.3 Nothing in this Agreement shall in any way hinder
                              the right of Medeva to use the Medeva Process
                              Technology in relation to non-CAIV Products.

               7.5.2  Aviron shall have the right to grant sublicenses under the
                      license granted under Clause 7.5.1 above to its Associated
                      Companies, contract manufacturers and licensees of CAIV
                      Products. For the sake of clarity and in no way limiting
                      the generality of the rights provided to Aviron pursuant
                      to the licence, Aviron's Associated Companies, contract
                      manufacturers and licensees may [ * ] use the Medeva
                      Process Technology in relation to [ * ]. Aviron shall
                      ensure that any sub-licence contains appropriate
                      restrictions on the use of the Medeva Process Technology
                      to ensure it shall [ * ] be used for any purpose other
                      than in relation to [ * ]. Aviron shall, [ * ] to the [ *
                      ] a [ * ] showing the [ * ] to the [ * ] to the
                      sub-licensee and [ * ] provide to Aviron [ * ] on the [ *
                      ]. If, in the [ * ] the [ * ] on the [ * ] which would
                      result in a [ * ] shall notify both Aviron and
                      Medeva and [ * ] of the [ * ] so that it [ * ].

               7.5.3  The [ * ] of the Medeva Process Technology [ * ] by the
                      license granted to Aviron under Clause 7.5.1 shall [ * ]
                      this Agreement.

               7.5.4  Notwithstanding anything in this Clause 7.5, Medeva shall
                      [ * ] CAIV Products using Medeva Process Technology and
                      [ * ] for licensees of Aviron of the CAIV Product to the
                      extent that such licensees are permitted by the license
                      and supply agreements that the licensees have with Aviron
                      to have the licensed CAIV Product manufactured by a party
                      other than Aviron

        7.6    IMPROVEMENTS

               7.6.1  Any Improvement developed by Medeva [ * ] shall be the
                      property of Aviron and Aviron shall own all intellectual
                      property pertaining to that Improvement. Medeva shall
                      promptly disclose such Improvement to Aviron. Aviron shall
                      grant to Medeva a [ * ] license to utilise such
                      Improvements in the Manufacture of the Intermediate
                      Product. Medeva shall be entitled to utilise freely and
                      without limitation from Aviron any aspect of any such
                      Improvement that is [ * ] or otherwise [ * ].

               7.6.2  Should Medeva, in carrying out manufacture of any of its
                      [ * ] develop a manufacturing technique which may be able
                      to be utilised in the Manufacture of the Intermediate
                      Product, it shall [ * ]

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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                      [ * ] such to Aviron and Medeva shall
                      own the manufacturing technique and any intellectual
                      property rights pertaining thereto. If Medeva [ * ] such
                      manufacturing technique to Aviron, it shall do so under
                      strict obligations of confidentiality and the parties
                      [ * ] the aforesaid manufacturing technique.

               7.6.3  Should Medeva, in Manufacturing the Intermediate Product
                      [ * ] that [ * ] shall be part of [ * ] and the terms
                      pertaining to the use of [ * ] set forth in clause [ * ]
                      shall apply to that Improvement.

               7.6.4  Any Improvement developed by Aviron shall be owned by
                      Aviron and Aviron shall own all intellectual property
                      rights in the Improvement. Aviron shall have the [ * ]
                      such Improvement to Medeva. If Aviron [ * ] such
                      Improvement to Medeva, it shall do so under strict
                      obligations of confidentiality and the parties [ * ] the
                      aforesaid Improvement.

8       PRICES

        8.1    PRICE.

               8.1.1  PRICE FOR THE INTERMEDIATE PRODUCT. Aviron shall pay to
                      Medeva a price for Monovalent Virus Harvest and for NAF
                      conforming to Specifications as set forth in Schedule 15
                      (the "Supply Price").

               8.1.2  PRICE FOR USE OF [ * ]. Aviron shall pay Medeva for the
                      use of the [ * ] as set forth in Schedule 11. The price
                      payable by Aviron for the use of the [ * ] shall [ * ]
                      related to the [ * ]. If the [ * ] is unusable due to
                      [ * ], or as a consequence of [ * ] (unless such [ * ]),
                      the price payable by Aviron for the relevant year of this
                      Agreement for the use of [ * ] shall be [ * ] the [ * ] is
                      [ * ].

               8.1.3  PRICE FOR [ * ]. Aviron shall [ * ] Medeva for [ * ] by
                      Medeva as a result of having to have the Intermediate
                      Product or any of the Raw Materials [ * ].

        8.2    PAYMENT.

               8.2.1  Once the quantity for any forecast has been determined
                      pursuant to clause 6.2.2, Medeva shall render to Aviron a
                      [ * ] invoice for the price of [ * ] of the quantity of
                      the Intermediate Product pertaining to the then current
                      Manufacturing Period so determined, such price to be
                      determined pursuant to Schedule 15.

               8.2.2  If the forecast of quantities of [ * ] provided pursuant
                      to Clause 6.2.1 (or as revised pursuant to Clause 6.2.2)
                      differs from the immediately preceding forecast of such
                      quantities, the monthly invoice amount shall be

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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                      [ * ] as provided in Clause 8.2.1 above. Furthermore,
                      the [ * ] shall be [ * ], and Medeva shall [ * ] or [ * ]
                      as the case may be.

               8.2.3  Aviron will pay to Medeva the full invoice amount for the
                      Supply Price within [ * ] after receipt. Payment will be
                      made direct into Medeva's bank account by bank transfer.
                      Medeva will provide Aviron with the necessary details of
                      Medeva's bank account and will take whatever actions are
                      necessary to facilitate payment by bank transfer.

               8.2.4  As soon as practicable following the end of any
                      Manufacturing Period, the parties shall, by mutual
                      agreement, [ * ] by Aviron [ * ] and the
                      sum payable by Aviron to Medeva in respect of that
                      quantity of the Intermediate Product. If the sum payable
                      by Aviron so determined [ * ] pursuant to this clause 8.2,
                      Medeva shall render to Aviron an invoice for the balance
                      outstanding and Aviron shall pay such invoice in
                      accordance with the terms of this clause 8.2. If the sum
                      payable by Aviron so determined is [ * ] pursuant to this
                      clause 8.2, Aviron shall render to Medeva an invoice for
                      the amount of the over-payment and Medeva shall [ * ]
                      direct to the bank account of Aviron by bank transfer.
                      Aviron will provide Medeva with the necessary details of
                      Aviron's bank account and will take whatever actions are
                      necessary to facilitate payment by bank transfer.

        8.3    PAYMENT FOR OTHER CHARGES. Invoices will be submitted to Aviron
               [ * ] to cover the costs set forth in clauses [ * ] and [ * ]
               above. Invoices will be submitted to Aviron [ * ] to cover the
               costs set forth in clause 8.1.2 above. Aviron will pay to Medeva
               the [ * ] within [ * ] after the date of the invoice. Payment
               will be made direct into Medeva's bank account by bank transfer,
               and upon written request by Aviron, Medeva will provide Aviron
               with the necessary details of Medeva's bank account and will take
               whatever actions are necessary to facilitate payment by bank
               transfer.

        8.4    PRICE CHANGES. The Supply Price is fixed until [ * ]. The Supply
               Price supplied thereafter during the Manufacturing Period
               starting on [ * ] will be subject to a price adjustment according
               to the change in the [ * ] as determined by the [ * ] over the
               [ * ]. Thereafter, for the remainder of the term of the Restated
               Agreement, the parties shall meet each [ * ] to take effect in
               the following Manufacturing Period. If the parties [ * ] the
               Supply Price [ * ] according to [ * ] between the [ * ] of the
               Manufacturing Period [ * ] the Manufacturing Period for which the
               [ * ] is to take effect.

               8.4.1  If applicable, [ * ] on any of the amounts payable by
                      Aviron pursuant to clauses 8.1 and 8.3 and Aviron shall
                      [ * ].

9       SIGNING AND OTHER  PAYMENTS

               Upon [ * ] set forth below, Aviron will make to Medeva the
               corresponding payments, which shall be due, except where
               otherwise expressly stated, [ * ] after the date on which the
               event was achieved. For the sake of clarity,

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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               failure of Medeva to achieve any of the aforementioned
               deadlines shall [ * ] and shall [ * ] other than by [ * ] save
               where the event is the [ * ] other than [ * ] whereupon [ * ]
               available in the event of [ * ] as set forth in this
               Agreement.

        9.1    UPFRONT PAYMENT.  Aviron shall pay to Medeva [ * ] upon signing
               of this Restated Agreement [ * ] by [ * ].

        9.2    OTHER PAYMENTS.

               9.2.1  [ * ].

                     9.2.1.1 In the event that Medeva completes [ * ] and [ * ]
                             and [ * ] , for such [ * ] by [ * ] which [ * ]
                             confirm that [ * ] have been met, Aviron will pay
                             to Medeva [ * ].

                     9.2.1.2 Save as provided below, the payment made under
                             clause 9.2.1.1 shall be [ * ] in the event of a
                             [ * ] on [ * ] pursuant to this clause 9.2.1 or
                             [ * ]. Such [ * ] as contemplated by this clause
                             shall be made by [ * ] of the parties reviewing any
                             [ * ] and agreeing that its [ * ] on the reports or
                             information provided by Medeva pursuant to this
                             clause 9.2.1 or not provided despite Aviron's
                             request, or [ * ] on the reports or information
                             provided by Medeva pursuant to this clause 9.2.1 or
                             not provided despite Aviron's request. If the [ * ]
                             resulted from any report or information provided by
                             Medeva where that report or information was [ * ]
                             the payment shall [ * ] as otherwise provided in
                             this clause 9.2.1.2.

                     9.2.1.3 In the event that Medeva successfully completes
                             [ * ] for the [ * ] Aviron will pay to Medeva
                             [ * ].The [ * ] will be deemed successfully
                             completed if[ * ] performed by Aviron pursuant to
                             the Technical Agreement, and if the [ * ] have an
                             overall [ * ] of [ * ] and if no [ * ] has a [ * ]
                             of [ * ].

               9.2.2  [ * ].

                     9.2.2.1 If as of [ * ] Medeva [ * ] relating to the
                             Manufacture of the Vaccine within [ * ] of receipt
                             of [ * ] made

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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                        from time to time in writing and describing in as much
                        details as is practicable the [ * ] Aviron will pay to
                        Medeva [ * ]. The payment under this Section 9.2.2 will
                        be due and payable if Medeva [ * ] in accordance with
                        the previous sentence and [ * ] or, in the event of a
                        [ * ] if such [ * ] on the documents or information of
                        the [ * ] provided by Medeva (or not provided despite
                        Aviron's request). Aviron may inform Medeva of [ * ] if,
                        even with all reasonable , [ * ].

                9.2.2.2 For the purposes of this clause 9.2.2, Aviron's [ * ]
                        shall be [ * ], [ * ], and shall originate from [ * ]
                        (or any replacement of [ * ] notified by Aviron in
                        writing from time to time) of Aviron, and shall be sent
                        by fax addressed to [ * ] (or any replacement of [ * ]
                        notified by Medeva in writing from time to time) at the
                        fax numbers notified to Aviron in writing from time to
                        time. Such [ * ] is deemed received by Medeva the
                        working day after the date indicated on the transmission
                        report by Aviron.

      9.2.3 [ * ]. Upon confirmation by the FDA that [ * ] or if [ * ], if (a)
            any [ * ] will not [ * ] or (b) any [ * ] relate to the [ * ] and
            [ * ] Aviron will pay to Medeva [ * ]. For the avoidance of doubt,
            the payment under this Clause 9.2.3 will not be owed if [ * ] based
            [ * ] by Medeva and [ * ].

      9.2.4 [ * ]. Upon [ * ] Aviron will pay to Medeva [ * ].

      9.2.5 [ * ].

           9.2.5.1 Upon [ * ] of the lesser of either the [ * ] for the [ * ] or
                  [ * ] corresponding to [ * ] determined by the parties
                  pursuant to Clause 6.1 as calculated promptly after the end of
                  the Manufacturing Period, Aviron will pay to Medeva [ * ].
                  Notwithstanding anything in clause 6.1, the payment under this
                  clause 9.2.5.1 shall be due and payable only in the event that
                  Medeva has [ * ] for at least [ * ] of the Vaccine save where
                  Aviron has [ * ] in relation to the Manufacture of the
                  Intermediate Product which [ * ] of the Aviron Unit and the
                  Raw Materials in which

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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                              case the [ * ] accordingly.

                      9.2.5.2 [ * ] of the lesser of either the [ * ] for the
                              [ * ] or the [ * ] corresponding to [ * ]
                              determined by the parties pursuant to Clause 6.1
                              as calculated promptly after the end of the
                              Manufacturing Period, Aviron will pay to Medeva
                              [ * ].

                      9.2.5.3 [ * ] in the [ * ] and each [ * ] thereafter of
                              [ * ] or the [ * ] corresponding to [ * ]
                              determined by the parties pursuant to Clause 6.1
                              as calculated promptly after the end of the
                              Manufacturing Period, for the [ * ] Manufacturing
                              Period, Aviron will pay to Medeva [ * ] of the
                              Intermediate Product.

                      9.2.5.4 For the sake of clarity, the [ * ] that give rise
                              to payment under clauses 9.2.5.1 to 9.2.5.3 shall
                              not exceed [ * ] set forth in clause 6.1 as
                              calculated promptly after the end of the
                              Manufacturing Period.

              9.2.6  [ * ]. Upon attaining [ * ] Aviron agrees to pay Medeva
                     [ * ] as set forth below:

                     9.2.6.1 [ * ] and [ * ] as set forth in Schedule 17 by
                             [ * ], Aviron will pay Medeva [ * ], to be payable
                             [ * ].

                     9.2.6.2 [ * ] and [ * ] set forth in Schedule 17 for [ * ]
                             Aviron will pay Medeva [ * ]  on [ * ].

                     9.2.6.3 [ * ] that [ * ] at Medeva have been sufficient to
                             [ * ] at Medeva as determined in accordance with
                             clause 6.1, and that no [ * ] due from the
                             [ * ] but payable only after proof of [ * ] as
                             provided for in this clause 9.2.6.3 has been
                             provided to Aviron.

                     9.2.6.4 Medeva shall have the right to [ * ] under this
                             Clause 9.2.6 with properly [ * ] on a [ * ] if
                             necessary to make up for [ * ] and shall use Best
                             Endeavours to [ * ] with [ * ].

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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                    9.2.6.5  The aforementioned [ * ] apply, subject to clauses
                             9.2.6.6 and 9.2.6.7, to the [ * ] and thereafter
                             Medeva [ * ] subject to it being able to achieve in
                             each year, the Manufacturing capacity agreed
                             pursuant to clause 6.1, after prior consultation
                             with Aviron.

                    9.2.6.6  The parties may, by mutual agreement, reduce the
                             [ * ] set forth in this clause 9.2.6. Further,
                             Medeva shall be [ * ] except if Aviron [ * ] the
                             [ * ] of the [ * ] (as defined in Clause [ * ]).

                    9.2.6.7  Medeva shall [ * ], as a factor in [ * ] agreed
                             pursuant to clause 6.1, [ * ] if those levels have
                             been [ * ] or action, below the levels set forth
                             above in this clause 9.2.6, or if Medeva [ * ] the
                             [ * ] set forth above in this clause 9.2.6.

        9.3    [ * ]

               9.3.1  Save as provided below, within [ * ] from the end of each
                      calendar quarter, Aviron shall pay to Medeva an amount
                      corresponding to [ * ] of [ * ] licensed under Section
                      7.5, up to a total of [ * ] provided that any amount of
                      said [ * ] not paid on [ * ] shall be due and payable
                      within [ * ] days of such date.

               9.3.2  Aviron's obligation to make any [ * ] to Medeva pursuant
                      to clause 9.3.1 shall not commence until such time as
                      [ * ] exceeds an amount equal to [ * ] up to the time of
                      [ * ] and thereafter [ * ] up to the date Medeva's [ * ]
                      such sum. For the avoidance of doubt, Medeva's total [ * ]
                      pursuant to clause 9.3.1 shall be reduced by the amount
                      equal to [ * ] calculated in accordance with this clause
                      9.3.2.

               9.3.3  As used herein, [ * ] means the [ * ] [ * ] by Aviron, its
                      Associated Companies [ * ] from person or entities
                      [ * ], less the following [ * ], but only to the extent
                      such [ * ], or are [ * ]

                      9.3.3.1[ * ];

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
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                      9.3.3.2[ * ]

                      9.3.3.3[ * ] other than those described above;

                      9.3.3.4[ * ] (to the extent that the foregoing [ * ] do
                             not exceed [ * ] of the sum of all amounts [ * ]
                             and all other consideration [ * ] (or, when in a
                             form other than cash or its equivalent, the fair
                             market value thereof when received));

                      9.3.3.5[ * ]; and

                      9.3.3.6[ * ]

                      [ * ] not intended for [ * ], and made [ * ] shall not be
                      [ * ] Under no circumstances shall the combined reductions
                      from [ * ] attributable to the factors listed in clauses
                      9.3.3.1 and 9.3.3.4 [ * ]

               9.3.4  Medeva shall be entitled, upon reasonable notice and
                      during normal business hours, to have an independent
                      auditor reasonably acceptable to Aviron inspect the
                      financial records of Aviron pertaining to sales of CAIV
                      Products to confirm the accuracy of any report or
                      information provided to Medeva concerning [ * ] and Medeva
                      and Aviron shall make available to said independent
                      auditor such records, in whatever form.

10    [ * ] PAYMENTS

      10.1  Medeva shall receive from Aviron payments [ * ] for the [ * ] and
            payments [ * ] for [ * ] (such payments to include payments under
            [ * ] but excluding payments under [ * ] above) during the Term of
            this Restated Agreement until the below mentioned [ * ] is reached.
            If Medeva has not received payments from Aviron under this Restated
            Agreement [ * ], Aviron shall [ * ] corresponding to [ * ] between
            the [ * ] as set forth in this clause and the [ * ]. Aviron shall
            [ * ] under this Clause 10 upon [ * ] Medeva within [ * ] from
            receipt of [ * ]. Such obligation shall expire at the time Medeva
            has [ * ] from Aviron [ * ] under [ * ].

      10.2  Payments made by Aviron under this Restated Agreement prior to [ * ]
            shall be counted towards the amount of [ * ] due for the [ * ].

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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      10.3  The amount of the [ * ] pursuant to Clause 10.1 shall be [ * ] of
            the time during which Medeva is unable to Manufacture Intermediate
            Product for reasons caused as a consequence of any inspections or
            actions of a U.S. or U.K. Agency; provided, however, that Medeva
            shall not [ * ] except if Aviron undertakes to make [ * ].

11    INDEMNITY

      11.1  Subject to clauses 11.2, 11.3, 11.8 and 11.9 Medeva indemnifies and
            shall keep Aviron indemnified against any third party claims for
            losses, damages and costs (including court costs and reasonable
            attorney's fees) to the extent they arise from

            11.1.1 Medeva's failure to Manufacture the Intermediate Product in
                  accordance with the Technical Agreement and the
                  Specifications; and

            11.1.2 Medeva's failure to store the Intermediate Product while it
                  is in Medeva's control in accordance with the Specifications;
                  and

            11.1.3 the [ * ] of Medeva, its employees or agents

      11.2  Medeva shall not be liable under the indemnity provided under clause
            11.1 above:-

            11.2.1 to the extent that any failure of the Intermediate Product to
                  comply with the Specifications results from the failure of the
                  Master Donor Strains and/or the Eggs supplied by Aviron or
                  Aviron's suppliers to comply with Specifications; and/or

            11.2.2 for any factor [ * ] the Intermediate Product [ * ].

      11.3  Medeva's liability for [ * ] in respect of Intermediate Product that
            does not comply with the Technical Agreement and the Specifications
            shall be determined in compliance with clause 6.4, Schedule 3 and
            clauses 11.8 and 11.9

      11.4  Aviron indemnifies Medeva against all third party claims for losses,
            damages and costs (including court costs and reasonable attorney's
            fees) arising in relation to the Intermediate Product, the Vaccine
            and the Finished Product except under the circumstances which give
            rise to an indemnity in favour of Aviron by Medeva as set forth in
            the Clauses 11.1 and 11.2 above.

      11.5  Medeva shall be liable for any loss of or damage to Aviron Assets
            (fair wear and tear excepted), Raw Materials, components or
            Intermediate Product [ * ] up to replacement value, provided,
            however, that any Aviron Assets [ * ] will be [ * ] expiration or
            termination of this Restated Agreement.

      11.6  Aviron hereby indemnifies and will keep Medeva indemnified against
            all costs, damages or liabilities up to a maximum of [ * ] in any
            [ * ] of this Agreement and [ * ] arising from any [ * ], any [ * ]
            or any [ * ] caused by the [ * ] save where

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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               such [ * ] is caused by the [ * ]

        11.7   Each party undertakes to ensure that it has in place product
               liability insurance with a reputable insurer in an amount
               appropriate for its business and products of the type the subject
               of this Restated Agreement. At either party's request, the other
               party shall provide the requesting party with evidence of the
               existence and maintenance of such coverage.

        11.8   Notwithstanding anything contained in this Restated Agreement,
               Medeva's liability in contract, tort (including breach of
               statutory duty) or otherwise arising by reason of or in
               connection with this Restated Agreement or any agreement or
               indemnity contemplated hereunder (except in relation to death or
               personal injury caused by the negligence of Medeva or its
               employees while acting in the course of their employment) shall
               be [ * ] in any [ * ] of this Restated Agreement. For the
               avoidance of doubt, [ * ] to be made [ * ] and Aviron shall not
               be permitted to make claims [ * ] pertaining to [ * ] for which a
               claim [ * ].

        11.9   In no event, and notwithstanding anything contained in this
               Restated Agreement, shall either party be liable in contract,
               tort (including breach of statutory duty) or otherwise howsoever,
               and whatever the cause thereof, for any [ * ] of any nature
               whatsoever.

        11.10  All indemnities under this Restated Agreement given by either
               party shall be subject to [ * ] duties and defenses including
               without limitation, the duty to mitigate, contributory
               negligence, and issues of causation and remoteness.

        11.11  If Medeva is subject to a change of control as described in
               Clause 14.4, and where the third party acquiring control is a
               competitor or potential competitor to Aviron , and, through its
               actions or inactions willfully or intentionally breaches or
               causes Medeva to breach its obligations under this Restated
               Agreement, the aforementioned [ * ] shall [ * ].

        11.12  Should [ * ] determine that [ * ] in respect of any aspect of
               this Restated Agreement or the 1995 Development Agreement or the
               1997 Contract Manufacture Agreement, Aviron [ * ] on any such
               aspects and [ * ]. In the event that [ * ] make such a ruling
               Medeva shall, [ * ], use all reasonable endeavours to reduce the
               exposure of both Medeva and Aviron to the [ * ] including, but
               not limited to, [ * ].

12      CONFIDENTIALITY

        12.1   The Recipient undertakes to keep confidential all Restricted
               Information received by it directly or indirectly from the
               Discloser or obtained by it pursuant to the performance of this
               Restated Agreement and not to use such Restricted Information
               except as provided in this Restated Agreement. The obligations
               set forth in this Clause 12.1 shall apply during the period of
               this Restated Agreement and for a period of the longer of (i)
               [ * ] after the termination or expiry of the Michigan
               Agreement or (ii) [ * ] after the termination of this Restated
               Agreement.

        12.2   Recipient shall allow access to the Discloser's Restricted
               Information exclusively to those of its employees who have
               reasonable need to see and use it for the purposes of this
               Restated Agreement and shall inform each of such employees of the
               confidential nature

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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               of the Restricted Information and of the obligations on the
               Recipient with respect to such Restricted Information and
               shall ensure that each of its employees having access to the
               Restricted Information is contractually bound by obligations
               of confidentiality and shall take such steps as may be
               necessary to enforce such obligations.

        12.3   On the expiry or termination of this Restated Agreement,
               Recipient will return to Discloser all Restricted Information of
               Discloser in its possession and the Recipient shall have the
               option to retain one (1) copy, but shall not make any further use
               of that information save for record keeping purposes.

        12.4   In this Clause 12 references to the Discloser or Recipient shall
               be deemed to include any Associated Companies of that party.

        12.5   Aviron's shall have the right to disclose Medeva Process
               Technology to permitted sublicensees only to the extent permitted
               by its licence under clause 7.5.1 and under obligations of
               confidentiality not less stringent than those contained herein.
               For the sake of clarity and in no way limiting the generality of
               the foregoing, Aviron shall not be entitled to disclose any
               Medeva Process Technology otherwise than in respect of the
               manufacture of CAIV Products.

13      LIAISON

               The parties will each identify in writing the person responsible
               for the day to day operation of this Restated Agreement including
               production planning relating to forecast requirements. The person
               responsible may be changed from time to time with written
               notification to the other party. From the date of signature of
               this Restated Agreement Aviron's designated person pursuant to
               this clause shall be [ * ] and Medeva's shall be [ * ]

14      ASSIGNMENT AND CHANGE OF CONTROL

        14.1   [ * ] party may assign any of its rights or delegate any of its
               obligations under this Restated Agreement (other than by Medeva
               to its Associated Companies or Aviron to its Associated Companies
               as the case may be, or in the event of a merger or consolidation
               of a party with or into any other entity, including a triangular
               merger involving such party or a sale of all or substantially all
               of the assets or business unit to which this Restated Agreement
               relates) [ * ] the prior written consent of the other party,
               except as expressly provided herein.

        14.2   This Restated Agreement shall be binding upon and shall inure to
               the benefit of Medeva and Aviron and their respective permitted
               successors and assignees (if any).

               14.3 The parties acknowledge and agree that any change of
               ownership or control of either Medeva or Aviron shall not affect,
               either at law, or as between the parties, that party's rights and
               obligations under this Restated Agreement, to the extent that the
               party undergoing such change of ownership or control survives
               such change of ownership or control.

        14.4   Each party (the Notifying Party) shall forthwith notify the other
               party (the Receiving Party) if there is an effective change of
               ownership or control of the Notifying Party; or if the Notifying
               Party sells all or substantially all of the assets or all or
               substantially all of the business to which this Restated
               Agreement relates. Within a period of [ * ] of receipt of such
               notice or actual sale, should the Receiving Party [ * ] that the
               party assuming effective ownership or control of, or purchasing
               the assets or business of the Notifying Party

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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<PAGE>   30

               [ * ] or a party [ * ] the Receiving Party [ * ] then:-

               14.4.1 in the event that the Receiving Party is [ * ] it may,
                      subject to clause 14.6 below, by a [ * ] written notice
                      terminate this Restated Agreement; and

               14.4.2 in the event that the Receiving party is [ * ] it may
                      terminate this Restated Agreement, [ * ], on provision of
                      [ * ] notice and, [ * ] on provision of [ * ] notice
                      subject to expiration or termination of this Restated
                      Agreement pursuant to other clauses of the Restated
                      Agreement.

        14.5   If Aviron terminates this Restated Agreement pursuant to clause
               14.4 above at a time [ * ] is, at that time, [ * ] Aviron shall
               pay to the party that acquires Medeva [ * ] pursuant to [ * ] at
               the date of such termination.

        14.6   Any purported assignment in violation of this section by either
               party shall be voidable by the other party.

15      TERM AND TERMINATION

        15.1   TERM OF AGREEMENT. Unless sooner terminated as provided under
               Clauses 14 or 15, this Restated Agreement shall come into force
               on the Effective Date hereof and shall continue in force until
               31 December, 2005.

        15.2   TERMINATION FOR BREACH OR BANKRUPTCY. Either party shall be
               entitled forthwith to terminate this Restated Agreement by
               written notice to the other if:

               15.2.1 that other party is in material breach of any of the
                      provisions of this Restated Agreement and, in the case of
                      a material breach capable of remedy, fails to remedy the
                      same within thirty (30) days of receipt of a written
                      notice specifying the material breach and requiring its
                      remedy; or

               15.2.2 an encumbrancer takes possession or a receiver is
                      appointed over any of the property or assets of that
                      other party; or

               15.2.3 the other party becomes subject to an administration
                      order; or

               15.2.4 that other party goes into liquidation except for the
                      purposes of amalgamation or reconstruction and in such
                      manner that the company resulting therefrom effectively
                      agrees to be bound by or assumes the obligations imposed
                      on that other party under this Restated Agreement;

               15.2.5 that other party is the subject of any proceeding or order
                      or other event in any applicable jurisdiction which would
                      have an effect analogous to any of the events mentioned in
                      Clauses 15.2.2 to 15.2.4 above.

        15.3   For the purpose of Clause 15.2.1 a material breach shall be
               considered capable of remedy if the party in breach can comply
               with the provisions in question in all respects other than as to
               time of performance provided that time of performance is not of
               the essence.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       30
<PAGE>   31

        15.4   This Restated Agreement shall terminate upon the termination of
               the Michigan Agreement. In such event, at Michigan's option as
               notified to Medeva by Aviron, Medeva shall, at Aviron's cost, (1)
               destroy or return to Aviron as required all Master Virus Seeds,
               Manufacturing Working Virus Seeds, derivatives thereof and all
               finished and unprocessed Vaccine, (2) provide to Michigan copies
               of all Manufacturing Instructions and Manufacturing Records and
               (3) grant to Michigan a royalty free license to use the
               Manufacturing Instructions and the Manufacturing Records. .

        15.5   NO WAIVERS. Any waiver by either party of a breach of any
               provision of this Restated Agreement shall not be considered as a
               waiver of any subsequent breach of the same or any other
               provision thereof.

        15.6   OTHER REMEDIES. The rights to terminate this Restated Agreement
               given by this Clause shall be without prejudice to any other
               right or remedy of either party in respect of the material breach
               concerned (if any).

        15.7   EFFECTS OF EXPIRATION OR TERMINATION.

               15.7.1 On expiration or termination of this Restated Agreement
                      for any reason:

                     15.7.1.1 Medeva shall, [ * ] immediately cease
                              Manufacture of the Intermediate Product or
                              complete the Manufacture of the Intermediate
                              Product then in the course of Manufacture,
                              provided, however, that if [ * ] is made [ * ]
                              whether Medeva shall cease Manufacture immediately
                              or complete Manufacture of the Intermediate
                              Product then in the course of Manufacture;

                     15.7.1.2 subject to 15.7.1.1 and 12.3, each party shall
                              deliver up to the other all materials, reports,
                              and other documents (including copies thereof) in
                              its possession or control containing Restricted
                              Information of the other party, and each will
                              cease to make use of the others Restricted
                              Information;

                     15.7.1.3 Aviron shall pay outstanding invoices or
                              invoices for accepted Intermediate Product due to
                              be raised according to terms specified in this
                              Restated Agreement. In the event Medeva shall
                              [ * ] not to complete the Manufacture of the
                              Materials, then such unfinished Intermediate
                              Product shall be [ * ] or [ * ] at the [ * ]
                              incurred up to the time Manufacture was
                              discontinued;

                     15.7.1.4 Aviron will be obliged to purchase and Medeva
                              will be obliged to supply all stocks of Raw
                              Materials purchased by Medeva in support of
                              purchase orders or forecasts submitted by Aviron
                              [ * ] within a reasonable time, [ * ]

                     15.7.1.5 Aviron will collect all Raw Materials supplied
                              to Medeva free of charge save for any Raw
                              Materials required to complete the Manufacture of
                              the Intermediate Product in the event of [ * ] In
                              the event that Aviron has not collected the Eggs
                              within [ * ] and all other Raw Materials within
                              [ * ] of the date of termination of this
                              Agreement, Medeva may, after [ * ]

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       31
<PAGE>   32

                              destroy such Eggs and, after [ * ] destroy such
                              other Raw Materials and [ * ] a [ * ] such Raw
                              Materials.

                     15.7.1.6 Termination of this Restated Agreement for any
                              reason shall not bring to an end any provisions of
                              this Restated Agreement which, in order to give
                              effect to their meaning, need to survive its
                              termination and such provisions shall remain in
                              full force and effect thereafter and in particular
                              but without limiting the scope of foregoing the
                              rights and obligations of the parties under
                              Clauses 3.6.6, 3.6.7, 3.6.10, 3.6.11, 3.9.2,
                              4.2.2, 4.2.4, 6, 7, 8, 9.1, 9.2.4, 9.2.5, 9.3, 10,
                              11, 12, 15, 17, 20.5, and 21 .

        15.8   Upon expiry or termination of this Restated Agreement Medeva
               shall return to Aviron or destroy all Master Donor Strains,
               Master Virus Seeds and related material as instructed by Aviron.

        15.9   - EMPLOYMENT CLAUSE

               15.9.1 For the purposes of this sub-clause 15.9:

               15.9.2 "Employee" shall mean any employee of Medeva working more
                      than [ * ] of his or her time specifically on the
                      Manufacture of the Intermediate Product for Aviron during
                      the period of [ * ] to termination of such employee, or
                      the term of employment, if shorter.

               15.9.3 [ * ] shall mean the [ * ] for each relevant Employee
                      during any part of the relevant [ * ] when the Employee is
                      [ * ].

               15.9.4 [ * ] shall mean the [ * ] each relevant Employee the
                      [ * ] to which he/she [ * ].

               15.9.5 [ * ] shall mean the [ * ] to all its employees of
                      comparable skill, experience, tenure and position at the
                      Speke plant.

               15.9.6 If at any time during the period of or on the termination
                      of the Restated Agreement, Aviron's requirements for
                      Employees reduce or cease, other than due to a breach of
                      this Agreement by or bankruptcy of Medeva, which results
                      in Medeva having to find suitable alternative employment
                      for, or to retrain, or terminate the employment of any
                      Employee the parties agree as follows:

               15.9.7 Aviron shall notify Medeva of any anticipated
                      reduction in the required staffing levels in sufficient
                      time for Medeva to comply with its statutory and
                      contractual obligations regarding redundancy notification
                      and consultation with the Employees and their
                      representatives before notices of termination of
                      employment are given to the Employees. Aviron may at any
                      time request from Medeva a summary of the current
                      applicable law and statutory obligations pertaining to
                      redundancy notification and consultation with Employees
                      and Medeva shall provide such summary [ * ]. If the timing
                      does not allow Medeva to comply with its statutory
                      obligations, [ * ] all claims, actions, proceedings,
                      Employment Tribunal awards and compensation, protective
                      awards, legal costs

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       32
<PAGE>   33

                      and expenses resulting from Medeva's failure to comply
                      with its statutory obligations.

               15.9.8 Medeva shall make a good faith effort to retrain or to
                      find suitable alternative employment for Employees before
                      terminating any Employee's employment.

               15.9.9 Medeva shall make a good faith effort to effect any
                      necessary dismissals fairly and in accordance with their
                      usual Human Resources procedures.

               15.9.10 [ * ] against the following costs and expenses:

                   15.9.10.1 All reasonable [ * ] resulting from Medeva's [ * ]
                             for the Employees [ * ] of the [ * ] and the [ * ]
                             for the relevant Employee

                   15.9.10.2 All [ * ] and [ * ] paid by [ * ] in connection
                             with the [ * ] of the Employees.

                   15.9.10.3 All claims, demands, actions, proceedings,
                             Employment Tribunal awards and compensation,
                             protective awards, interest, legal costs and
                             expenses in respect of the Employees arising from
                             [ * ] in the event that the [ * ] of the
                             Manufacture of the Intermediate Product or [ * ] of
                             the Restated Agreement is deemed to be a [ * ] for
                             the purposes of the [ * ] as may be amended from
                             time to time.

                   15.9.10.4 Any claims, demands or proceedings in [ * ] (other
                             than those referred to in clause 10.14.9.2 (iii)
                             above) arising from the [ * ] of any Employee shall
                             be [ * ] in accordance with the chart set out in
                             Schedule 18. For the purposes of the chart in
                             Schedule 18:

                             15.9.10.4.1 [ * ] shall mean [ * ] and the
                                    provision of sufficient information relating
                                    to a [ * ] as is reasonably required [ * ]
                                    to make an informed decision on the
                                    appropriate course of action to be taken
                                    with respect to an [ * ]

                             15.9.10.4.2 [ * ] shall mean all payments made
                                    [ * ] in order [ * ] any such [ * ] or
                                    [ * ], and interest and all reasonable legal
                                    fees and expenses. It shall not include the
                                    [ * ] and [ * ] incurred by [ * ].

                             15.9.10.4.3 "Notice" shall mean notice in writing
                                    to Aviron together with a copy of [ * ]
                                    received by [ * ], such notice to be given
                                    as soon as is reasonably practicable after
                                    Medeva receives [ * ]

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       33
<PAGE>   34

                        15.9.10.5 Medeva shall keep complete and accurate
                                  records relating to:

                        15.9.10.6 the allocation of the Employees;

                        15.9.10.7 Medeva's good faith efforts [ * ] and/or
                                  [ * ]; and

                        15.9.10.8 the accuracy of the [ * ] and the [ * ] of
                                  payments made to such Employees.

               Aviron shall have the right on reasonable notice to audit such
               records to confirm the accuracy of the allocation of Employees to
               the Manufacture, and the [ * ], and Medeva's efforts to [ * ] at
               Medeva or to [ * ].

16      EXCHANGE RATE

        16.1   Any sums payable in US$ pursuant to this Agreement are based on
               the $US/Pound Sterling exchange rate of [ * ]

        16.2   Should the [ * ] against the US$ compared to the exchange rate
               set forth in Clause 16.1, any payments denominated in US$ under
               this Restated Agreement shall [ * ] so that Medeva shall receive
               such payments in amounts calculated based on an exchange rate of
               [ * ]

        16.3   Should the [ * ] against the US$ compared to the exchange rate
               set forth in Clause 16.1, any payments denominated in US$ under
               this Restated Agreement shall [ * ] so that Aviron shall make
               such payments in amounts calculated based on an exchange rate of
               [ * ]

17      ASSOCIATED COMPANIES

               Medeva shall be entitled to perform any of the obligations
               undertaken by it and to exercise any of the rights granted to it
               under this Restated Agreement through any of its Associated
               Companies with Aviron's consent, such consent not to be
               unreasonably withheld, and any act or omission of any such
               company shall for the purposes of this Restated Agreement be
               deemed to be the act or omission of Medeva. For the purposes of
               such delegated performance Medeva shall be entitled to disclose
               only on a need to know basis Aviron's Restricted Information to
               employees of relevant Associated Companies.

18      FORCE MAJEURE

        18.1   If either party is affected by Force Majeure it shall forthwith
               notify the other party of the nature and extent thereof. The
               affected party shall additionally [ * ] take all reasonable steps
               as may be necessary to overcome the Force Majeure and to minimize
               its effects.

        18.2   Neither party shall be deemed to be in breach of this Restated
               Agreement, or otherwise be liable to the other by reason of any
               delay in performance, or non-performance, of any its obligations
               hereunder to the extent that such delay or non-performance is due
               to any Force Majeure of which it has notified the other party and
               the time for performance of that obligation shall be extended
               accordingly.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       34
<PAGE>   35

        18.3   All sums due and payable at the time of suspension due to Force
               Majeure [ * ] by Aviron.

        18.4   The party affected by Force Majeure shall give notice to the
               other party as soon as practical after the matter constituting
               Force Majeure has arisen or occurred giving the other party full
               particulars of the nature and extent of such matter.

        18.5   In the event of any Force Majeure occurrence the parties shall
               consult with a view to determining what steps they may agree to
               take, appropriate to the Force Majeure circumstances, in relation
               to this Restated Agreement.

19      NOTICES

        19.1   Any notices or other information required or authorized by this
               Restated Agreement to be given by either party to the other may
               be given in writing, by hand or sent to the other by first class
               airmail registered pre-paid post, telex, facsimile transmission
               or comparable means of communication. The same shall be sent or
               delivered to the other party at the address shown for that party
               at the beginning of this Restated Agreement or to such other
               address which may be notified in writing to the other party from
               time to time. Six (6)-working days should be allowed for delivery
               save that such six (6) working day period shall not apply to
               notice to be provided under clause 9.2.2

        19.2   Any notice or other information given by post pursuant to Clause
               19.1 which is not returned to the sender as undelivered shall be
               deemed to have been given on the sixth working day after the
               envelope containing the same was so posted. Proof that the
               envelope containing any such notice or information was properly
               addressed, pre-paid, registered and posted, and that it has not
               been so returned to the sender, shall be sufficient evidence that
               such notice or information has been duly given.

        19.3   Any notice or other information sent by telex, facsimile
               transmission or comparable means of communication shall be deemed
               to have been duly sent on the date of transmission, provided that
               a confirming copy thereof is sent by first class airmail
               registered pre-paid post to the other party at the address
               referred to in clause 19.1 within one working day after
               transmission.

20      MICHIGAN LICENSE

        20.1   Medeva accepts:

        20.2   The Master Virus Seeds or the Working Seeds may be used only for
               the Manufacture of Intermediate Product; and

        20.3   Medeva shall not provide any Master Virus Seeds, Manufacturing
               Working Virus Seeds or derivatives thereof to any third party
               save as is required by independent third party laboratories for
               testing as provided in Clause 6.4. Medeva shall limit access to
               the Master Virus Seed supplied by Aviron and Manufacturing
               Working Virus Seeds made by Medeva to those employees reasonably
               requiring such access for the purpose of Development and
               Manufacture of the Intermediate Product, which employees are
               governed by Medeva's customary confidentiality obligations.

        20.4   Aviron shall:

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       35
<PAGE>   36

               20.4.1 use every reasonable effort to honor and observe its
                      obligations under the Michigan Agreement and shall not act
                      or fail to act in any way which might jeopardize or cause
                      to be terminated the Michigan Agreement; and,

               20.4.2 promptly notify Medeva of any amendment to the Michigan
                      Agreement; and,

               20.4.3 make every reasonable effort to notify Medeva in writing
                      of the expiry or termination of the Michigan Agreement at
                      least [ * ] to either event.

        20.5   Medeva will use every reasonable effort to store the Master Virus
               Seeds and Manufacture Intermediate Product in accordance with all
               applicable government laws and regulatory agency requirements .

        20.6   Aviron, on Michigan's behalf, may request from Medeva at
               reasonable times and in reasonable quantities at a cost [ * ] of
               Intermediate Product as it may desire, provided that Medeva shall
               [ * ] under this sub-clause or otherwise to produce extra batches
               of Intermediate Product [ * ] Any requirements of Michigan shall
               be supplied from [ * ] with [ * ] such part thereof to Michigan [
               * ] Any Intermediate Product provided to Michigan pursuant to
               this clause shall [ * ] of the then relevant production payment
               set forth in clause 9.

        20.7   Medeva acknowledges Michigan's warranty disclaimer and limitation
               of liability contained in Section 13 of the Michigan Agreement [
               * ] Notwithstanding such, Medeva will not make any statements,
               representations or warranties or accept any liabilities or
               responsibilities whatsoever to or with regard to any person or
               entity which are inconsistent with any disclaimer or limitation
               of liability contained in said Section 13.

        20.8   Subject to those limitations of liability contained in Clauses
               11.8 and 11.9 hereof, Medeva will indemnify Michigan, its
               fellows, officers, employees and agents for and against any and
               all claims, damages, losses and expenses of any nature (including
               attorney's fees and other litigation expenses) resulting from,
               but not limited to, death, personal injury, illness or property
               damage, arising from or in connection with the following:

               20.8.1 any Manufacture, use, sale other disposition by Medeva of
                      the Master Virus Seeds or Intermediate Products; or

               20.8.2 the use, handling, storage or disposal of Master Virus
                      Seeds, any derivatives or Intermediate Products by
                      Medeva; or

               20.8.3 the use by Medeva of any know-how, or technical data
                      sub-licensed to Aviron from Michigan (and of which
                      know-how and technical data Aviron has expressly notified
                      Medeva as being sub-licensed to Aviron by Michigan) or
                      developed by Medeva pursuant to this Restated Agreement
                      that is necessary or useful to the manufacture or use of
                      the cold-adapted influenza vaccine product derived from
                      Master Donor Strains; or

               20.8.4 No approval, review, inspection nor receipt by Michigan of
                      any such know-how or technical data or samples or
                      otherwise or representations made with respect thereto
                      shall in any manner relieve Medeva of the responsibilities
                      under this Clause 20.8,

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       36
<PAGE>   37

               where but only where such claims damages losses or expenses [ *
               ]. Nothing in this indemnity shall in any way reduce or limit the
               extent of the indemnity provided by Aviron in favour of Medeva
               pursuant to clause 11.4.

        20.9   Medeva shall not use the name of Michigan in publicity or
               advertising concerning the Intermediate Product or the Master
               Virus Seed without the prior written consent of Michigan, such
               consent not to be unreasonably or arbitrarily withheld nor
               delayed. Reports in scientific literature and presentations of
               joint research and development work are not considered publicity
               for the purpose of this clause.

21      GENERAL

        21.1   Any reference in this Restated Agreement to "writing" or cognate
               expressions includes a reference to telex, cable, facsimile
               transmission or comparable means of communication.

        21.2   The headings in this Restated Agreement are for convenience only
               and shall not affect its interpretation.

        21.3   No variation or amendment of this Restated Agreement shall bind
               either party unless made in writing in the English language and
               agreed to in writing by duly authorized officers of both parties.

        21.4   If any provision of this Restated Agreement is agreed by the
               parties to be illegal void or unenforceable under any law that is
               applicable hereto or if any court of competent jurisdiction in a
               final decision so determines this Restated Agreement shall
               continue in force save that such provision shall be deemed to be
               excised here from with effect from the date of such agreement or
               decision or such earlier date as the parties may agree.

        21.5   This Restated Agreement shall be governed by and construed in all
               respects in accordance with the [ * ] and the parties hereby
               submit to the jurisdiction of the [ * ] for the determination of
               any dispute arising hereunder. Either party shall be entitled to
               enforce any order of the [ * ] in any other jurisdiction.

        21.6   Unless this Restated Agreement or any agreement or arrangement of
               which this Restated Agreement forms a part is a non-notifiable
               agreement for the purpose of section 27A of the Restrictive Trade
               Practices Act 1976, if there is a provision of this Restated
               Agreement or any such agreement or arrangement which causes or
               would cause this Restated Agreement or any such agreement or
               arrangement to be subject to registration under the Restrictive
               Trade Practices Act 1976, that provision shall not take effect
               until the date after particulars of this Restated Agreement (or
               of that agreement or arrangement as the case may be) have been
               furnished to the Director General of Fair Trading pursuant to
               section 24 of the Restrictive Trade Practices Act 1976.

22      PUBLIC DISCLOSURE

        No public announcement of any kind shall be made in respect of or in
        connection with this Restated Agreement except as specifically agreed in
        writing between the parties, or except to the extent that an
        announcement is required by law or by the US or UK stock exchange as the
        case may be but in such event any announcement by either party shall
        only be issued after prior consultation with the other, having taken
        reasonable account of any comment or reasonable requirement of the
        other.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       37
<PAGE>   38

23      ENTIRE AGREEMENT

        23.1   This Restated Agreement, the Technical Agreement (etc etc) are
               the entire agreements and understandings between the parties
               relating to the subject matter of this Restated Agreement and,
               save as provide in clause 24 below, supersedes and previous
               agreement between the parties.

        23.2   Each of the parties acknowledges and agrees that in entering into
               this Restated Agreement, and the documents referred to in it, it
               does not rely on and shall have no remedy in respect of, any
               statement, representation, warranty or understanding (whether
               negligently or innocently made and whether written or oral) of
               any person (whether party to this Restated Agreement or not)
               other than as expressly set out in this Restated Agreement.

        23.3   Nothing in this clause shall operate to limit or exclude any
               liability for fraud.

        23.4   The terms of this Restated Agreement shall supersede any
               conflicting standard terms and conditions, purchase orders,
               acceptance notices and other documents exchanged between the
               Parties in the course of ordering and supplying Intermediate
               Product under this Restated Agreement, and any such terms and
               conditions conflicting with or in addition to the terms of this
               Restated Agreement are hereby expressly rejected.

24      PROVISIONS PERTAINING TO PREVIOUS AGREEMENTS

        24.1   All sums due and owing to Medeva as at [ * ] pursuant to the 1995
               Development Agreement and the 1997 Contract Manufacture Agreement
               in the amount of [ * ] shall be paid by Aviron to Medeva on the
               Effective Date. All sums due and owing to Medeva for work
               performed by Medeva under the 1997 Contract Manufacture Agreement
               or the 1995 Development Agreement between [ * ] and the [ * ]
               will be paid under the terms of the 1997 Contract Manufacture
               Agreement or the 1995 Development Agreement as is appropriate.

        24.2   Medeva shall notify Aviron should it be approached by any third
               party wishing to exploit the process technology developed by
               Medeva pursuant to the 1995 Development Agreement, the 1997
               Contract Manufacture Agreement, or this Restated Agreement in
               respect of [ * ] and, within [ * ] of receipt of such
               notification, Aviron may request that the parties enter
               negotiations for a licence in respect thereof. If Aviron does not
               so request the commencement of negotiations, or if the parties
               have not executed a license agreement after [ * ] of good faith
               negotiations, [ * ] such process technology relating to [ * ]
               to a [ * ].

        24.3   Clause 8.1 (other than the first two sentences) and clauses 8.3,
               8.4, 10.10, 14, 15 and 16 of the 1995 Development Agreement
               survive the termination of the 1995 Development Agreement.

        24.4   Notwithstanding anything in clause 20.3 of the 1995 Development
               Agreement, said section is hereby terminated.

        24.5   Any materials purchased by [ * ] pursuant to clause [ * ] of the
               1995 Development Agreement shall be deemed to be [ * ] and the
               terms concerning such set forth in this Restated Agreement shall
               apply.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       38
<PAGE>   39

        24.6   Any costs for plant and facilities to be recovered by Medeva
               pursuant to clause 7.5 of the 1995 Development Agreement shall be
               deemed to be and are included in the payment from Aviron to
               Medeva for use of the Aviron Unit.

        24.7   Any Virus Seeds, the Working Seed and the Vaccine referred to in
               clause 9.5 of the 1995 Development Agreement shall be used or
               disposed of as provided in this Restated Agreement.

        24.8   Sections 6.1 and 6.2 of the 1995 Development Agreement are hereby
               terminated. All process technology referred to in clauses 6.1 and
               6.2 of the 1995 Development Agreement shall be deemed to be
               Medeva Process Technology and Aviron Process Technology and the
               terms of this Restated Agreement shall apply to such accordingly.

        24.9   Subject to the above, the 1995 Development Agreement is hereby
               terminated. Neither party shall have any further rights,
               obligations or liabilities to the other party under the terms of
               the 1995 Development Agreement unless expressly stated herein and
               except for rights, obligations and liabilities under any
               surviving clauses set forth in Clause 24.3.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       39
<PAGE>   40

IN WITNESS WHEREOF, this Restated Agreement has been executed by the duly
authorized representatives of the parties the day and year first above written

MEDEVA PHARMA LIMITED                       AVIRON

By:     /s/ M. J. Harvey                    By:    /s/ Fred Kurland
     --------------------------------            --------------------------

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       40
<PAGE>   41

                                   SCHEDULE 1

                                  AVIRON ASSETS
                                      [ * ]   [ * ]

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       41
<PAGE>   42
                                   SCHEDULE 2

                                   AVIRON UNIT

                                      [ * ]

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       42
<PAGE>   43
                                   SCHEDULE 3

                                 DIRECT DAMAGES

  1. [ * ]

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       43
<PAGE>   44
                                   SCHEDULE 4

                                       GSA

                                      [ * ]

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       44
<PAGE>   45

                                   SCHEDULE 5

                               MICHIGAN AGREEMENT

The Michigan Agreement was filed with the SEC by Aviron as Exhibit 10.3 to
Aviron's Registration Statement on Form S-1, File No. 333-05209, filed June 5,
1996, as amended, which exhibit was titled "Materials Transfer and Intellectual
Property Agreement between Aviron and the Regents of the University of
Michigan, dated February 24, 1995," and is hereby incorporated by reference.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       45
<PAGE>   46
                                   SCHEDULE 6

                                       MPU

                                      [ * ]

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       46
<PAGE>   47

                                   SCHEDULE 7

                                    SPF UNIT

                                      [ * ]

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       47
<PAGE>   48
                                   SCHEDULE 8

                               TECHNICAL AGREEMENT

                                     [ * ]

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       48
<PAGE>   49

                                   SCHEDULE 9

                                TECHNICAL SUPPORT

[ * ]

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       49
<PAGE>   50

                                   SCHEDULE 10

                        RAW MATERIALS SUPPLIED BY AVIRON

1.  [ * ]

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       50
<PAGE>   51
                                   SCHEDULE 11

                                     [ * ]
[ * ]

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       51
<PAGE>   52
                                   SCHEDULE 12

                             MANUFACTURING CAPACITY

[ * ]

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       52
<PAGE>   53

                                   SCHEDULE 13

                               FORMAT OF FORECAST

-------------------------------------------------------------------------------
         [ * ]       [ * ]      [ * ]       [ * ]       [ * ]       [ * ]
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
EGG QUANTITY

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

-------------------------------------------------------------------------------
DELIVERY DATE OF EGGS

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

-------------------------------------------------------------------------------
INTENDED USE (NAF/MVH)

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

-------------------------------------------------------------------------------
DELIVERY DATE OF MVS

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

-------------------------------------------------------------------------------
SET DATE

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

-------------------------------------------------------------------------------
AVAIL DATE OF MWVS
FOR INOC.

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

-------------------------------------------------------------------------------
INOCULATION DATE

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

-------------------------------------------------------------------------------
HARVEST DATE

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

-------------------------------------------------------------------------------
PLANNED STRAIN

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

-------------------------------------------------------------------------------
Q.A RELEASE.

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

-------------------------------------------------------------------------------
SHIP DATE OF
INTERMEDIATE PRODUCT

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

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

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       53
<PAGE>   54
                                   SCHEDULE 14

                      EXPERT DISPUTE RESOLUTION PROCEDURES

[ * ]

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       54
<PAGE>   55

                                   SCHEDULE 15

                                  SUPPLY PRICE

[ * ]
[ * ]

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       55

<PAGE>   56

                                   SCHEDULE 16

                           LIST OF CRITICAL EQUIPMENT

[ * ]

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       56
<PAGE>   57

                                   SCHEDULE 17

                                EMPLOYMENT LEVELS

[ * ]

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       57
<PAGE>   58

                                  Schedule 18

                                     [ * ]

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       58
<PAGE>   59

                                                           Medeva Pharma Limited

                                             Vale of Bardsley, Ashton-under-Lyne

                                                              Lancashire OL7 9RR
                                                   Telephone +44 (0)161 330 4531
                                                         FAX +44 (0)161 343 5083

Our ref:  MJH/KAM

30 June 1999

Mr. Fred Kurland
Senior Vice President and CFO
Aviron
297 North Bernardo Avenue
Mountain View, California 94043                             BY FACSIMILE & POST

Dear Sirs:

Medeva Pharma Limited and Aviron hereby, in consideration for the mutual
covenants set forth herein, the adequacy of which is agreed by both parties,
agree to the following amendments of the Contract Manufacture Agreement entered
into between the parties in June 1999.

Clause 2.38 - shall be amended to read "Named Executives" means a director of
Medeva and Vice President of Aviron designated and replaced from time to time by
the respective party. As of the Effective Date the Named Executives of the
respective parties shall be those persons set forth in Schedule 19.

Clause 3.7.8.2 shall be amended to read "In connection with the PAI, Medeva will
permit Aviron's [ * ], currently the individual whose name is set forth in
Schedule 19, to be present and participate [ * ] relating to the Vaccine
provided, however, that Medeva shall have the right [ * ] where he would become
privy to confidential information not related to the Vaccine. Furthermore, in
preparation of the PAI, Medeva shall [ * ] and during the PAI shall make
accessible to the Agency [ * ], all documentation specifically associated with
the Manufacture of the Intermediate Product. Aviron may, in relation to this
clause 3.7.8.2, change the individual who is entitled to be present and
participate [ * ] from the individual names in Schedule 19 [ * ], such [ * ] not
to be [ * ].

A new clause 3.7.15 shall be inserted which shall read "Medeva shall make
available the GSA, AVU, MPU and SPF Unit to Aviron for purposes other than
Manufacture of Intermediate Product intended for use in Vaccines for commercial
sale, as requested from time to time by Aviron. Aviron shall pay to Medeva for
any such use the [ * ] as set forth in Schedule 9. For the avoidance of doubt,
Aviron shall not pay any [ * ] in connection with such use".

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

<PAGE>   60
 Clause 3.7.17 - shall be amended by the addition of the following words "The
specification of any other eggs processed by Medeva in the SPF Unit shall be the
same or higher than the specification of the Eggs. Medeva shall provide to
Aviron promptly after the Effective Date a draft SOP pertaining to the [ * ] of
the Eggs in the SPF Unit. Aviron may, by written request, [ * ] such SOP and
[ * ], the requested amendments are reasonable to ensure that the processing of
the Eggs for the Manufacture of the Intermediate Product is not compromised,
[ * ] make such alterations to the procedures and SOP's. Medeva shall provide to
Aviron a written [ * ] any amendment [ * ] has [ * ].

Clause 6.1.2 - shall be amended so that the word [ * ] in the second line shall
be replaced by the word [ * ].

Clause 6.1.3 - shall be amended so that the word [ * ] in the first line shall
be replaced by the word [ * ].

Clause 6.2.1 - there shall be two changes to this clause. In the last sentence,
the reference to [ * ] shall be replaced by [ * ]. Further, the following words
shall be added at the end of Clause 6.2.1.

"Any forecast provided by Aviron shall be in the format set forth in Schedule
13".

Clause 6.4.6 - the emboldened square bracket in the seventh line shall be
deleted.

Clause 7.2 - shall be amended by addition at the end of the following sentence
added "For the avoidance of doubt, Medeva does not have a license to use the
Aviron Process Technology except for the purpose of Manufacturing the
Intermediate Product pursuant to this Restated Agreement or for Aviron's
licensees as provided in Clause 7.5.4"

Clause 9.2.1.1 - shall be deleted and replaced with the following "In the event
that Medeva [ * ] and [ * ] and [ * ] which shall be [ * ], for such [ * ] which
[ * ], Aviron shall pay to Medeva [ * ].

Clause 9.2.2.1 - the word "endeavors" shall be inserted after the words "all
reasonable" in the penultimate line.

Clause 9.3.3 - the sentence reading "under no circumstances shall the combined
reductions from [ * ]" shall be deleted.

Clause 11.6 - shall be deleted and replaced with the following: "Aviron hereby
indemnifies and shall keep Medeva indemnified against all costs, damages or
liabilities up to a maximum of [ * ] of this Agreement arising from

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

<PAGE>   61

[ * ] save where such [ * ] is caused by the negligence, willful malfeasance or
default of Medeva or its employees in which case Aviron shall have no liability
to Medeva pursuant to the indemnity set forth in this clause 11.6. Aviron shall
not be liable under the indemnity set forth in this Clause 11.6 for any indirect
or consequential losses, costs, damages or liabilities suffered by Medeva as a
result of the contamination or interruption to the business of Medeva
contemplated by this Clause 11.6

Clause 16.1 - shall be amended by the deletion of [ * ] and replacing such with
[ * ].

Clause 16.2 - shall be amended by replacing [ * ] with [ * ].

Clause 16,3 - shall be amended by deletion of [ * ] and replacing such with [ *
].

By insertion of a new Clause 20.9 which shall read "Upon termination of the
Michigan Agreement, Medeva shall assist Aviron in complying with its obligations
under Clauses 15.5 and 15.6 of the Michigan Agreement".

Clause 23.1 - By deletion of"(etc etc)" from the first line of Clause 23.1.

Schedule 9 - In the section at the end of Schedule 9 under the heading
"Definitions" the following amendments shall be made: (a) the following words
shall be added to the sentence which reads [ * ]; "this figure includes costs
pertaining to the relevant part of the GSA, SPF and MPU utilised for that day".

(b) The following words shall be added to the sentence which reads [ * ],
"except in relation to [ * ] in which circumstances Aviron will pay to Medeva
[ * ]

 By insertion of a new Schedule 19 as attached.

Yours faithfully

/s/ M. J. Harvey
M J Harvey

New Business Development Director

Signed for and on behalf of Aviron

        /s/ Fred Kurland                                         Date   7/14/99
-----------------------------------------                            ----------

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

<PAGE>   62

                                   SCHEDULE 19

                              RELEVANT INDIVIDUALS

The individuals pursuant to Clause 2.38 are [ * ].

The individuals pursuant to Clause 3.7.8.2 are [ * ].

The individuals pursuant to Clause 13 are [ * ].

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

<PAGE>   63
                                                           Medeva Pharma Limited
                                                             Gaskill Road, Speke

                                                               Liverpool L24 9GR
                                                   Telephone +44 (0)151 486 1866
                                                        FAX: +44 (0)151 486 5033

2nd July 1999

Mr. Fred Kurland
Senior Vice President and CFO
Aviron
297 North Bernardo Avenue

Mountain View, California  94043                             BY FACSIMILE & POST

Dear Sirs:

Medeva Pharma Limited and Aviron hereby, in consideration for the mutual
covenants set forth herein, the adequacy of which is agreed by both parties,
agree to the following amendments of the Contract Manufacture Agreement entered
into between the parties in June 1999 as amended by the letter agreement dated
June 30, 1999.

Clause [ * ] shall be deleted and replaced with the following:

"SPF Unit. Medeva will [ * ] for products manufactured in the SPF Unit [ * ] in
such a manner that within [ * ] from the Effective Date, any [ * ] in the SPF
Unit [ * ] of the Manufacturing Working Virus Seed and the Intermediate Product.

Notwithstanding the foregoing, Aviron hereby [ * ], for the period of [ * ], at
[ * ], to use Aviron Assets in the SPF Unit for the processing of [ * ] for use
in products other than the Intermediate Product and the Working Virus Seed. The
[ * ] processed by Medeva in the SPF Unit shall be the [ * ] than the [ * ].
Medeva shall provide to Aviron promptly after the Effective Date draft SOPs and
procedures pertaining to the [ * ] in the SPF unit. Medeva shall ensure any SOPs
that pertain to [ * ] processed in the SPF unit are [ * ], such that any
procedure carried out or required by [ * ] with any [ * ] of [ * ] where the
meaning of [ * ] for the purposes of this provision shall include but not be
limited to [ * ] or the [ * ] carried out in the SPF Unit. If in the reasonable
opinion of an independent competent third party, appointed by agreement of
Medeva and Aviron (such third party having experience and expertise appropriate
to resolve such an issue) that [ * ] with the [ * ],

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
<PAGE>   64

Medeva [ * ] those SOPs [ * ] in the SPF Unit so that they [ * ] pertaining to
the [ * ]. Medeva is not obligated to provide Aviron with [ * ] of [ * ] after
they have [ * ] SPF Unit."

Clause 9.2.1.1 - shall be amended by the deletion of " , save for PQ014 which
shall be delivered by August 31, 1999,".

Clause 11.1 shall be amended by deleting the reference to Clause 11.9 so that
the first sentence shall commence:

"Subject to Clauses 11.2, 11.3 and 11.8 Medeva indemnifies ...."

Clause 11.9 shall be amended so that the first sentence shall commence:

"Subject to Clause 11.1...."

Yours faithfully

/s/ M. J. Harvey

M J Harvey

New Business Development Director

Signed for and on behalf of Aviron

   /s/ Fred Kurland                                       Date   7/2/99
--------------------------------------                         ---------

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.<PAGE>   1
                                                                  EXHIBIT 10.30

                                      LEASE

                                 BY AND BETWEEN

                                 MELP VII L.P.,
                        A CALIFORNIA LIMITED PARTNERSHIP
                                   AS LANDLORD
                                       AND
                         AVIRON, A DELAWARE CORPORATION

                                    AS TENANT

                                OCTOBER 20, 1999

<PAGE>   2

                                      LEASE

        THIS LEASE, dated October 20, 1999 for reference purposes only, is made
by and between MELP VII L.P., a California limited partnership ("Landlord") and
Aviron, a Delaware corporation, to be effective and binding upon the parties as
of the date the last of the designated signatories to this Lease shall have
executed this Lease (the "Effective Date of this Lease").

                              ARTICLE 1  REFERENCE

1.1 REFERENCES. All references in this Lease (subject to any further
clarifications contained in this Lease) to the following terms shall have the
following meaning or refer to the respective address, person, date, time period,
amount, percentage, calendar year or fiscal year as below set forth:

<TABLE>
<CAPTION>
<S>                                         <C>
        Tenant's Address for Notice:        Prior to Commencement Date:

                                            297 N. Bernardo
                                            Mountain View, CA  94043
                                            Attn:  Chief Financial Officer

                                            After Commencement Date:

                                            4575 Patrick Henry Drive
                                            Santa Clara, CA  95054

        Landlord's Address for Notices:     c/o Menlo Equities LLC
                                            525 University Avenue
                                            Suite 100
                                            Palo Alto, California 94301

        Landlord's Representative:          Henry Bullock/Richard Holmstrom
        Phone Number:                       (650) 326-9300

        Intended Commencement Date:         November 1, 1999

        Intended Term:                      Five years

        Lease                               Expiration Date: Five (5) Years from
                                            the Actual Lease Commencement Date,
                                            unless earlier terminated by
                                            Landlord in accordance with the
                                            terms of this Lease, or extended by
                                            Tenant pursuant to Article 15.

        Options to Renew:                   One option(s) to renew, for a term
                                            of five (5) years.
</TABLE>

<PAGE>   3

<TABLE>
<S>                                        <C>
        First Month's Prepaid Rent:         $39,375.00

        Tenant's Security Deposit:          $44,316.91

        Late Charge Amount:                 Five Percent (5%) of the Delinquent Amount

        Tenant's Required Liability
        Coverage:                           $3,000,000 Combined Single Limit

        Tenant's Broker(s):                 BT Commercial

        Property:                           That certain real property situated in the City
                                            of Santa Clara, County of Santa Clara, State of
                                            California, as presently improved with one
                                            building, which real property is shown on the
                                            Site Plan attached hereto as Exhibit "A" and is
                                            commonly known as or otherwise described as
                                            follows:  4575 Patrick Henry Drive, Suite
                                            ___, Santa Clara, California.

        Building:                           That certain building on the Property in which
                                            the Leased Premises are located commonly known as
                                            4575 Patrick Henry Drive (the "Building") located
                                            on Assessor's Parcel No. 104-04-131, which
                                            Building is shown outlined on Exhibit "A" hereto.

        Outside Areas:                      The "Outside Areas" shall mean all areas within
                                            Assessor's Parcel No. 104-04-131 which are
                                            located outside the Building, such as pedestrian
                                            walkways, parking areas, landscaped areas, open
                                            areas and enclosed trash disposal areas.

        Leased                              Premises: All the interior space within the Building,
                                            including stairwells, connecting walkways, and
                                            atriums, consisting of approximately 22,500 square
                                            feet and, for purposes of this Lease, agreed to
                                            contain said number of square feet.

        Tenant's Expense Share:             The term "Tenant's Expense Share" shall mean the
                                            percentage obtained by dividing the rentable
                                            square footage of the Leased Premises at the time
                                            of calculation by the rentable square footage of
                                            all buildings located on the Property at the time
                                            of calculation.  Such percentage is currently
                                            40.9%.  In the event that any portion of the
                                            Property is sold by Landlord, or the rentable
                                            square footage of the Leased Premises or the
                                            Property is otherwise changed, Tenant's Expense
                                            Share shall be recalculated to equal the
                                            percentage described in the first sentence of
                                            this paragraph, so that the aggregate Tenant's
                                            Expense Share of all tenants of the Property
                                            shall equal 100%.

        Base Monthly Rent:                  The term "Base Monthly Rent" shall mean the
                                            following:

                                            Months                      Rent
                                             1 - 12                     $39,375.00
                                            13 - 24                     $40,556.25
                                            25 - 36                     $41,772.94
                                            37 - 48                     $43,026.12
                                            49 - 60                     $44,316.91

        Permitted Use:                      Office, research and administration and related
                                            legal uses.
</TABLE>

<PAGE>   4

<TABLE>
<S>                                        <C>
        Exhibits:                           The term "Exhibits" shall mean the Exhibits of
                                            this Lease which are described as follows:
                                            Exhibit "A" - Site Plan showing the Property and
                                            delineating the Building in which the Leased
                                            Premises are located.
                                            Exhibit "B" - Work Letter
                                            Exhibit "C" - Form of Tenant Estoppel Certificate
</TABLE>

                 ARTICLE 2  LEASED PREMISES, TERM AND POSSESSION

2.1 DEMISE OF LEASED PREMISES. Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord for Tenant's own use in the conduct of Tenant's
business and not for purposes of speculating in real estate, for the Lease Term
and upon the terms and subject to the conditions of this Lease, that certain
interior space described in Article 1 as the Leased Premises, reserving and
excepting to Landlord the right to fifty percent (50%) of all assignment
consideration and excess rentals as provided in Article 7 below. Tenant's lease
of the Leased Premises, together with the appurtenant right to use the Outside
Areas as described in Paragraph 2.2 below, shall be conditioned upon and be
subject to the continuing compliance by Tenant with (i) all the terms and
conditions of this Lease, (ii) all Laws governing the use of the Leased Premises
and the Property, (iii) all Private Restrictions, easements and other matters
now of public record respecting the use of the Leased Premises and Property, and
(iv) all reasonable rules and regulations from time to time established by
Landlord. Notwithstanding any provision of this Lease to the contrary, Landlord
hereby reserves to itself and its designees all rights of access, use and
occupancy of the Building roof, and Tenant shall have no right of access, use or
occupancy of the Building roof except (if at all) to the extent required in
order to enable Tenant to perform Tenant's maintenance and repair obligations
pursuant to this Lease.

2.2 RIGHT TO USE OUTSIDE AREAS. As an appurtenant right to Tenant's right to
the use and occupancy of the Leased Premises, Tenant shall have the right to use
the Outside Areas in conjunction with its use of the Leased Premises solely for
the purposes for which they were designated and intended and for no other
purposes whatsoever. Tenant's right to so use the Outside Areas shall be subject
to the limitations on such use as set forth in Article 1 and shall terminate
concurrently with any termination of this Lease.

2.3 LEASE COMMENCEMENT DATE AND LEASE TERM. Subject to Paragraph 2.4 below, the
term of this Lease shall begin, and the Lease Commencement Date shall be deemed
to have occurred, on the Intended Commencement Date, as set forth in Article 1
(the "Lease Commencement Date"). The term of this Lease shall in all events end
at 11:59 p.m. on the day immediately preceding the five (5) year anniversary of
the Lease Commencement Date. The Lease Term shall be that period of time
commencing on the Lease Commencement Date and ending on the Lease Expiration
Date (the "Lease Term").

2.4 DELIVERY OF POSSESSION. Landlord shall deliver to Tenant possession of the
Leased Premises on November 1, 1999; if Landlord is unable to deliver possession
of the Leased Premises on such date to Tenant in no event shall Landlord be
liable in damages to Tenant for such delay.

2.5 PERFORMANCE OF IMPROVEMENT WORK; ACCEPTANCE OF POSSESSION. Landlord shall
have no obligation to make any improvements or alterations to the Leased
Premises before delivering the Leased Premises to Tenant. Tenant will be
responsible for performing improvement work pursuant to the Work Letter (such
work and installations hereinafter referred to as the "Improvement Work").
Without limiting the foregoing, Landlord agrees to deliver in good working order
the roof surface and all existing plumbing, lighting, heating, ventilating and
air conditioning systems within the Leased Premises.

<PAGE>   5

2.6 SURRENDER OF POSSESSION. Not later than the expiration or upon the sooner
termination of this Lease, Tenant shall remove all of Tenant's signs from the
exterior of the Building and shall remove all of Tenant's equipment, trade
fixtures, furniture, supplies, wall decorations, special improvements (as
defined in Exhibit B) and other personal property from within the Leased
Premises, the Building and the Outside Areas, and shall vacate and surrender the
Leased Premises, the Building, the Outside Areas and the Property to Landlord in
the same condition, broom clean, as existed at the Lease Commencement Date,
reasonable wear and tear, acts of God and condemnation excepted. Tenant shall
repair all damage to the Leased Premises, the exterior of the Building and the
Outside Areas caused by Tenant's removal of Tenant's property. Tenant shall
patch and refinish, to Landlord's reasonable satisfaction, all penetrations made
by Tenant or its employees to the floor, walls or ceiling of the Leased
Premises, whether such penetrations were made with Landlord's approval or not.
Tenant shall repair or replace all stained or damaged ceiling tiles, wall
coverings and floor coverings to the reasonable satisfaction of Landlord. Tenant
shall repair all damage caused by Tenant to the exterior surface of the Building
and the paved surfaces of the Outside Areas and, where necessary, replace or
resurface same. Additionally, to the extent that Landlord shall have notified or
is deemed to have notified Tenant in writing at the time the improvements were
completed that it desired to have certain improvements made by Tenant or at the
request of Tenant removed at the expiration or sooner termination of the Lease,
Tenant shall, upon the expiration or sooner termination of the Lease, remove any
such improvements constructed or installed by Landlord or Tenant and repair all
damage caused by such removal. If the Leased Premises, the Building, the Outside
Areas and the Property are not surrendered to Landlord in the condition required
by this paragraph at the expiration or sooner termination of this Lease,
Landlord may, at Tenant's expense, so remove Tenant's signs, property and/or
improvements not so removed and make such repairs and replacements not so made
or hire, at Tenant's expense, independent contractors to perform such work.
Tenant shall be liable to Landlord for all costs incurred by Landlord in
returning the Leased Premises, the Building and the Outside Areas to the
required condition, together with interest on all costs so incurred from the
date paid by Landlord at the then maximum rate of interest not prohibited or
made usurious by law until paid. Tenant shall pay to Landlord the amount of all
costs so incurred plus such interest thereon, within twenty (20) days of
Landlord's billing Tenant for same. Tenant shall indemnify Landlord against loss
or liability resulting from delay by Tenant in surrendering the Leased Premises,
including, without limitation, any claims made by any succeeding Tenant or any
losses to Landlord with respect to lost opportunities to lease to succeeding
tenants.

               ARTICLE 3  RENT, LATE CHARGES AND SECURITY DEPOSITS

3.1 BASE MONTHLY RENT. Commencing on the Lease Commencement Date (as determined
pursuant to Paragraph 2.3 above) and continuing throughout the Lease Term,
Tenant shall pay to Landlord, without prior demand therefor, in advance on the
first day of each calendar month, the amount set forth as "Base Monthly Rent" in
Article 1 (the "Base Monthly Rent").

3.2 ADDITIONAL RENT. Commencing on the Lease Commencement Date (as determined
pursuant to Paragraph 2.3 above) and continuing throughout the Lease Term, in
addition to the Base Monthly Rent and to the extent not required by Landlord to
be contracted for and paid directly by Tenant, Tenant shall pay to Landlord as
additional rent (the "Additional Rent") the following amounts:

        (a) An amount equal to all Property Operating Expenses (as defined in
Article 13) incurred by Landlord. Payment shall be made by the following method:

                Landlord shall deliver to Tenant Landlord's reasonable estimate
of any given expense (such as Landlord's Insurance Costs or Real Property
Taxes), or group of expenses, which it anticipates will be paid or incurred for
the ensuing calendar or fiscal year, as Landlord may determine, and Tenant shall
pay to Landlord an amount equal to the estimated amount of such expenses for
such year in equal monthly installments during such year with the installments
of Base Monthly Rent. The estimated amount may be changed over the course of the
year to reflect Landlord's reasonable understanding of a change in the amount.

Landlord reserves the right to change from time to time the methods of billing
Tenant for any given expense or group of expenses or the periodic basis on which
such expenses are billed.

        (b) Landlord's share of the consideration received by Tenant upon
certain assignments and sublettings as required by Article 7.

<PAGE>   6

        (c) Any legal fees and costs that Tenant is obligated to pay or
reimburse to Landlord pursuant to Article 13; and

        (d) Any other charges or reimbursements due Landlord from Tenant
pursuant to the terms of this Lease.

Notwithstanding the foregoing, Landlord may elect by written notice to Tenant to
have Tenant pay Real Property Taxes or any portion thereof directly to the
applicable taxing authority, in which case Tenant shall make such payments and
deliver satisfactory evidence of payment to Landlord no later than five (5) days
before such Real Property Taxes become delinquent.

3.3 YEAR-END ADJUSTMENTS. If Landlord shall have elected to bill Tenant for the
Property Operating Expenses (or any group of such expenses) on an estimated
basis in accordance with the provisions of Paragraph 3.2(a)(iii) above, Landlord
shall furnish to Tenant within three months following the end of the applicable
calendar or fiscal year, as the case may be, a statement setting forth (i) the
amount of such expenses paid or incurred during the just ended calendar or
fiscal year, as appropriate, and (ii) the amount that Tenant has paid to
Landlord for credit against such expenses for such period. If Tenant shall have
paid more than its obligation for such expenses for the stated period, Landlord
shall, at its election, either (i) credit the amount of such overpayment toward
the next ensuing payment or payments of Additional Rent that would otherwise be
due or (ii) refund in cash to Tenant the amount of such overpayment within
thirty (30) days after the date of such statement. If such year-end statement
shall show that Tenant did not pay its obligation for such expenses in full,
then Tenant shall pay to Landlord the amount of such underpayment within twenty
(20) days from receipt of Landlord's billing of same to Tenant. The provisions
of this Paragraph shall survive the expiration or sooner termination of this
Lease. Tenant may, at any time within sixty (60) days after Landlord delivers to
Tenant Landlord's final reconciliation of Property Operating Expenses, audit
Landlord's books and records with respect to the Property Operating Expenses.

3.4 LATE CHARGE, AND INTEREST ON RENT IN DEFAULT. Tenant acknowledges that the
late payment by Tenant of any monthly installment of Base Monthly Rent or any
Additional Rent will cause Landlord to incur certain costs and expenses not
contemplated under this Lease, the exact amounts of which are extremely
difficult or impractical to fix. Such costs and expenses will include without
limitation, administration and collection costs and processing and accounting
expenses. Therefore, if any installment of Base Monthly Rent is not received by
Landlord from Tenant within five (5) calendar days after the same becomes due,
Tenant shall immediately pay to Landlord a late charge in an amount equal to the
amount set forth in Article 1 as the "Late Charge Amount," and if any Additional
Rent is not received by Landlord when the same becomes due, Tenant shall
immediately pay to Landlord a late charge in an amount equal to 5% of the
Additional Rent not so paid. Landlord and Tenant agree that this late charge
represents a reasonable estimate of such costs and expenses and is fair
compensation to Landlord for the anticipated loss Landlord would suffer by
reason of Tenant's failure to make timely payment. In no event shall this
provision for a late charge be deemed to grant to Tenant a grace period or
extension of time within which to pay any rental installment or prevent Landlord
from exercising any right or remedy available to Landlord upon Tenant's failure
to pay each rental installment due under this Lease when due, including the
right to terminate this Lease. If any rent remains delinquent for a period in
excess of five (5) calendar days, then, in addition to such late charge, Tenant
shall pay to Landlord interest on any rent that is not so paid from said tenth
day at the lesser of (a) then maximum rate of interest not prohibited or made
usurious by Law or (b) the prime rate (as set forth in the money rates section
of The Wall Street Journal) plus 5% until paid.

3.5 PAYMENT OF RENT. Except as specifically provided otherwise in this Lease,
all rent shall be paid in lawful money of the United States, without any
abatement, reduction or offset for any reason whatsoever, to Landlord at such
address as Landlord may designate from time to time. Tenant's obligation to pay
Base Monthly Rent and all Additional Rent shall be appropriately prorated at the
commencement and expiration of the Lease Term. The failure by Tenant to pay any
Additional Rent as required pursuant to this Lease when due shall be treated the
same as a failure by Tenant to pay Base Monthly Rent when due, and Landlord
shall have the same rights and remedies against Tenant as Landlord would have
had Tenant failed to pay the Base Monthly Rent when due.

<PAGE>   7

3.6 PREPAID RENT. Tenant shall, upon execution of this Lease, pay to Landlord
the amount set forth in Article 1 as "First Month's Prepaid Rent" as prepayment
of rent for credit against the first payment of Base Monthly Rent due hereunder.

3.7 SECURITY DEPOSIT. Tenant has deposited with Landlord the amount set forth
in Article 1 as the "Security Deposit" as security for the performance by Tenant
of the terms of this Lease to be performed by Tenant, and not as prepayment of
rent. Landlord may apply such portion or portions of the Security Deposit as are
reasonably necessary for the following purposes: (i) to remedy any default by
Tenant, beyond applicable notice and cure periods, in the payment of Base
Monthly Rent or Additional Rent or a late charge or interest on defaulted rent,
or any other monetary payment obligation of Tenant under this Lease; (ii) to
repair damage to the Leased Premises, the Building or the Outside Areas caused
or permitted to occur by Tenant; (iii) to clean and restore and repair the
Leased Premises, the Building or the Outside Areas following their surrender to
Landlord if not surrendered in the condition required pursuant to the provisions
of Article 2, and (iv) to remedy any other default of Tenant, beyond applicable
notice and cure periods, to the extent permitted by Law including, without
limitation, paying in full on Tenant's behalf any sums claimed by materialmen or
contractors of Tenant to be owing to them by Tenant for work done or
improvements made at Tenant's request to the Leased Premises. In this regard,
Tenant hereby waives any restriction on the uses to which the Security Deposit
may be applied as contained in Section 1950.7(c) of the California Civil Code
and/or any successor statute. In the event the Security Deposit or any portion
thereof is so used, Tenant shall pay to Landlord, within five (5) days of the
receipt of demand, an amount in cash sufficient to restore the Security Deposit
to the full original sum. If Tenant fails to promptly restore the Security
Deposit and if Tenant shall have paid to Landlord any sums as "Last Month's
Prepaid Rent," Landlord may, in addition to any other remedy Landlord may have
under this Lease, reduce the amount of Tenant's Last Month's Prepaid Rent, if
any, by transferring all or portions of such Last Month's Prepaid Rent to
Tenant's Security Deposit until such Security Deposit is restored to the amount
set forth in Article 1. Landlord shall not be deemed a trustee of the Security
Deposit. Landlord may use the Security Deposit in Landlord's ordinary business
and shall not be required to segregate it from Landlord's general accounts.
Tenant shall not be entitled to any interest on the Security Deposit. If
Landlord transfers the Building or the Property during the Lease Term, Landlord
shall pay the Security Deposit to any subsequent owner in conformity with the
provisions of Section 1950.7 of the California Civil Code and/or any successor
statute, in which event the transferring landlord shall be released from all
liability for the return of the Security Deposit. Tenant specifically grants to
Landlord (and Tenant hereby waives the provisions of California Civil Code
Section 1950.7 to the contrary) a period of forty-five (45) days following a
surrender of the Leased Premises by Tenant to Landlord within which to inspect
the Leased Premises, make required restorations and repairs, receive and verify
workmen's billings therefor, and prepare a final accounting with respect to the
Security Deposit. In no event shall the Security Deposit or any portion thereof,
be considered prepaid rent.

               ARTICLE 4  USE OF LEASED PREMISES AND OUTSIDE AREA

4.1 PERMITTED USE. Tenant shall be entitled to use the Leased Premises solely
for the "Permitted Use" as set forth in Article 1 and for no other purpose
whatsoever. Tenant shall continuously and without interruption use the Leased
Premises for such purpose for the entire Lease Term. Any discontinuance of such
use for a period of sixty consecutive calendar days shall be, at Landlord's
election, a default by Tenant under the terms of this Lease. Tenant shall have
the right to use the Outside Areas in conjunction with its Permitted Use of the
Leased Premises solely for the purposes for which they were designed and
intended and for no other purposes whatsoever.

4.2 GENERAL LIMITATIONS ON USE. Tenant shall not do or permit anything to be
done in or about the Leased Premises, the Building, the Outside Areas or the
Property which does or could (i) jeopardize the structural integrity of the
Building or (ii) cause damage to any part of the Leased Premises, the Building,
the Outside Areas or the Property. Tenant shall not operate any equipment within
the Leased Premises which does or could (i) injure, vibrate or shake the Leased
Premises or the Building, (ii) damage, overload or impair the efficient
operation of any electrical, plumbing, heating, ventilating or air conditioning
systems within or servicing the Leased Premises or the Building, or (iii) damage
or impair the efficient operation of the sprinkler system (if any) within or
servicing the Leased Premises or the Building. Tenant shall not install any
equipment or antennas on or make any penetrations of the exterior walls or roof
of the Building. Tenant shall not affix any equipment to or make any
penetrations or cuts in the floor, ceiling, walls or roof of the Leased Premises
without Landlord's consent, which will not be unreasonably

<PAGE>   8

withheld; if Landlord consents to any such installation, penetration or cut,
Tenant shall restore the affected area to its condition before such
installation, penetration or cut. Tenant shall not place any loads upon the
floors, walls, ceiling or roof systems which could endanger the structural
integrity of the Building or damage its floors, foundations or supporting
structural components. Tenant shall not place any explosive, flammable or
harmful fluids or other waste materials in the drainage systems of the Leased
Premises, the Building, the Outside Areas or the Property. Tenant shall not
drain or discharge any fluids in the landscaped areas or across the paved areas
of the Property. Tenant shall not use any of the Outside Areas for the storage
of its materials, supplies, inventory or equipment and all such materials,
supplies, inventory or equipment shall at all times be stored within the Leased
Premises. Tenant shall not commit nor permit to be committed any waste in or
about the Leased Premises, the Building, the Outside Areas or the Property.

4.3 NOISE AND EMISSIONS. All noise generated by Tenant in its use of the Leased
Premises shall be confined or muffled so that it does not interfere with the
businesses of or unreasonably annoy the occupants and/or users of adjacent
properties. All dust, fumes, odors and other emissions generated by Tenant's use
of the Leased Premises shall be sufficiently dissipated in accordance with sound
environmental practice and exhausted from the Leased Premises in such a manner
so as not to interfere with the businesses of or unreasonably annoy the
occupants and/or users of adjacent properties, or cause any damage to the Leased
Premises, the Building, the Outside Areas or the Property or any component part
thereof or the property of adjacent property owners.

4.4 TRASH DISPOSAL. Tenant shall provide trash bins or other adequate garbage
disposal facilities within the trash enclosure areas provided or permitted by
Landlord outside the Leased Premises sufficient for the interim disposal of all
of its trash, garbage and waste. All such trash, garbage and waste temporarily
stored in such areas shall be stored in such a manner so that it is not visible
from outside of such areas, and Tenant shall cause such trash, garbage and waste
to be regularly removed from the Property. Tenant shall keep the Leased Premises
and the Outside Areas in a clean, safe and neat condition free and clear of all
of Tenant's trash, garbage, waste and/or boxes, pallets and containers
containing same at all times.

4.5 PARKING. Tenant will have the right, on a non-exclusive basis, to use 83
parking spaces in the parking area designated on Exhibit A hereto. Tenant shall
not, at any time, park or permit to be parked any recreational vehicles,
inoperative vehicles or equipment in the Outside Areas or on any portion of the
Property. Tenant agrees to assume responsibility for compliance by its employees
and invitees with the parking provisions contained herein. If Tenant or its
employees park any vehicle within the Property in violation of these provisions,
then Landlord may, upon prior written notice to Tenant giving Tenant one (1) day
(or any applicable statutory notice period, if longer than one (1) day) to
remove such vehicle(s), in addition to any other remedies Landlord may have
under this Lease, charge Tenant, as Additional Rent, and Tenant agrees to pay,
as Additional Rent, One Hundred Dollars ($100) per day for each day or partial
day that each such vehicle is so parked within the Property. Landlord reserves
the right to grant easements and access rights to others for use of the parking
areas on the Property, provided that such grants do not materially interfere
with Tenant's use of the parking areas.

4.6 SIGNS. Tenant shall not place or install on or within any portion of the
Leased Premises, the exterior of the Building, the Outside Areas or the Property
any sign, advertisement, banner, placard, or picture which is visible from the
exterior of the Leased Premises. Tenant shall not place or install on or within
any portion of the Leased Premises, the exterior of the Building, the Outside
Areas or the Property any business identification sign which is visible from the
exterior of the Leased Premises until Landlord shall have approved in writing
and in its sole but reasonable discretion the location, size, content, design,
method of attachment and material to be used in the making of such sign;
provided, however, that so long as such signs are normal and customary business
directional or identification signs within the Building, Tenant shall not be
required to obtain Landlord's approval. Any sign, once approved by Landlord,
shall be installed at Tenant's sole cost and expense and only in strict
compliance with Landlord's approval, using a person reasonably approved by
Landlord to install same. Landlord may remove any signs (which have not been
approved in writing by Landlord), advertisements, banners, placards or pictures
so placed by Tenant on or within the Leased Premises, the exterior of the
Building, the Outside Areas or the Property and charge to Tenant the cost of
such removal, together with any costs incurred by Landlord to repair any damage
caused thereby, including any cost incurred to restore the surface (upon which
such sign was so affixed) to its original condition. Tenant shall remove all of
Tenant's signs, repair any damage caused thereby, and restore the surface upon
which the sign was affixed to its original condition, all to Landlord's
reasonable satisfaction,

<PAGE>   9

upon the expiration or earlier termination of this Lease.

4.7 COMPLIANCE WITH LAWS AND PRIVATE RESTRICTIONS. Subject to the provisions of
Section 6.3 below, Tenant shall abide by and shall promptly observe and comply
with, at its sole cost and expense, all Laws and Private Restrictions respecting
the use and occupancy of the Leased Premises, the Building, the Outside Areas or
the Property including, without limitation, all Laws governing the use and/or
disposal of hazardous materials, and shall defend with competent counsel,
indemnify and hold Landlord harmless from any claims, damages or liability
resulting from Tenant's failure to so abide, observe, or comply. Tenant's
obligations hereunder shall survive the expiration or sooner termination of this
Lease.

4.8 COMPLIANCE WITH INSURANCE REQUIREMENTS. With respect to any insurance
policies required or permitted to be carried by Landlord in accordance with the
provisions of this Lease, Tenant shall not conduct nor permit any other person
to conduct any activities nor keep, store or use (or allow any other person to
keep, store or use) any item or thing within the Leased Premises, the Building,
the Outside Areas or the Property which (i) is prohibited under the terms of any
such policies, (ii) could result in the termination of the coverage afforded
under any of such policies, (iii) could give to the insurance carrier the right
to cancel any of such policies, or (iv) could cause an increase in the rates
(over standard rates) charged for the coverage afforded under any of such
policies. Tenant shall comply with all requirements of any insurance company,
insurance underwriter, or Board of Fire Underwriters which are necessary to
maintain, at standard rates, the insurance coverages carried by either Landlord
or Tenant pursuant to this Lease.

4.9 LANDLORD'S RIGHT TO ENTER. Landlord and its agents shall have the right to
enter the Leased Premises during normal business hours after giving Tenant
reasonable notice and subject to Tenant's reasonable security measures for the
purpose of (i) inspecting the same; (ii) showing the Leased Premises to
prospective purchasers, mortgagees or tenants; (iii) making necessary
alterations, additions or repairs; and (iv) performing any of Tenant's
obligations when Tenant has failed to do so after any notice (if required) from
Landlord provided, that during any entry pursuant to clause (ii), Tenant may
accompany Landlord. Landlord shall have the right to enter the Leased premises
during normal business hours (or as otherwise agreed), subject to Tenant's
reasonable security measures, for purposes of supplying any maintenance or
services agreed to be supplied by Landlord. Landlord shall have the right to
enter the Outside Areas during normal business hours for purposes of (i)
inspecting the exterior of the Building and the Outside Areas; (ii) posting
notices of nonresponsibility (and for such purposes Tenant shall provide
Landlord at least ten (10) days' prior written notice of any work to be
performed on the Leased Premises); and (iii) supplying any services to be
provided by Landlord. Any entry into the Leased Premises or the Outside Areas
obtained by Landlord in accordance with this paragraph shall not under any
circumstances be construed or deemed to be a forcible or unlawful entry into, or
a detainer of, the Leased Premises, or an eviction, actual or constructive of
Tenant from the Leased Premises or any portion thereof. In exercising the
foregoing rights, Landlord will make reasonable efforts not to interfere with
Tenant's use of the Premises or with Tenant's parking rights.

4.10 USE OF OUTSIDE AREAS. Tenant, in its use of the Outside Areas, shall at
all times keep the Outside Areas in a safe condition free and clear of all
materials, equipment, debris, trash (except within existing enclosed trash
areas), inoperable vehicles, and other items which are not specifically
permitted by Landlord to be stored or located thereon by Tenant. If, in the
reasonable opinion of Landlord, unauthorized persons are using any of the
Outside Areas by reason of, or under claim of, the express or implied authority
or consent of Tenant, then Tenant, upon demand of Landlord, shall restrain, to
the fullest extent then allowed by Law, such unauthorized use, and shall
initiate such appropriate proceedings as may be required to so restrain such
use. Landlord reserves the right to grant easements and access rights to others
for use of the Outside Areas and shall not be liable to Tenant for any
diminution in Tenant's right to use the Outside Areas as a result. In exercising
the rights set forth in this Section 4.10, Landlord shall not materially
increase Tenant's obligations or diminish Tenant's rights under this Lease,
unless the rights are exercised to comply with a requirement of a utility
provider or governmental entity.

4.11 ENVIRONMENTAL PROTECTION. Tenant's obligations under this Section 4.11
shall survive the expiration or termination of this Lease.

<PAGE>   10

        (a) As used herein, the term "Hazardous Materials" shall mean any toxic
or hazardous substance, material or waste or any pollutant or infectious or
radioactive material, including but not limited to those substances, materials
or wastes regulated now or in the future under any of the following statutes or
regulations and any and all of those substances included within the definitions
of "hazardous substances," "hazardous materials," "hazardous waste," "hazardous
chemical substance or mixture," "imminently hazardous chemical substance or
mixture," "toxic substances," "hazardous air pollutant," "toxic pollutant," or
"solid waste" in the (a) Comprehensive Environmental Response, Compensation and
Liability Act of 1990 ("CERCLA" or "Superfund"), as amended by the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), 42 U.S.C. Section 9601 et
seq., (b) Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C.
Section 6901 et seq., (c) Federal Water Pollution Control Act ("FSPCA"), 33
U.S.C. Section 1251 et seq., (d) Clean Air Act ("CAA"), 42 U.S.C. Section 7401
et seq., (e) Toxic Substances Control Act ("TSCA"), 14 U.S.C. Section 2601 et
seq., (f) Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et
seq., (g) Carpenter-Presley-Tanner Hazardous Substance Account Act ("California
Superfund"), Cal. Health & Safety Code Section 25300 et seq., (h) California
Hazardous Waste Control Act, Cal. Health & Safety code Section 25100 et seq.,
(i) Porter-Cologne Water Quality Control Act ("Porter-Cologne Act"), Cal. Water
Code Section 13000 et seq., (j) Hazardous Waste Disposal Land Use Law, Cal.
Health & Safety codes Section 25220 et seq., (k) Safe Drinking Water and Toxic
Enforcement Act of 1986 ("Proposition 65"), Cal. Health & Safety code Section
25249.5 et seq., (l) Hazardous Substances Underground Storage Tank Law, Cal.
Health & Safety code Section 25280 et seq., (m) Air Resources Law, Cal. Health &
Safety Code Section 39000 et seq., and (n) regulations promulgated pursuant to
said laws or any replacement thereof, or as similar terms are defined in the
federal, state and local laws, statutes, regulations, orders or rules. Hazardous
Materials shall also mean any and all other biohazardous wastes and substances,
materials and wastes which are, or in the future become, regulated under
applicable Laws for the protection of health or the environment, or which are
classified as hazardous or toxic substances, materials or wastes, pollutants or
contaminants, as defined, listed or regulated by any federal, state or local
law, regulation or order or by common law decision, including, without
limitation, (i) trichloroethylene, tetrachloroethylene, perchloroethylene and
other chlorinated solvents, (ii) any petroleum products or fractions thereof,
(iii) asbestos, (iv) polychlorinated biphenyls, (v) flammable explosives, (vi)
urea formaldehyde, (vii) radioactive materials and waste, and (viii) materials
and wastes that are harmful to or may threaten human health, ecology or the
environment.

        (b) Notwithstanding anything to the contrary in this Lease, Tenant, at
its sole cost, shall comply with all Laws relating to the storage, use and
disposal of Hazardous Materials; provided, however, that Tenant shall not be
responsible for contamination of the Leased Premises by Hazardous Materials
existing as of the date the Leased Premises are delivered to Tenant (whether
before or after the Scheduled Delivery Date) unless caused by Tenant. Tenant
shall not store, use or dispose of any Hazardous Materials except for those
Hazardous Materials (i) listed in a Hazardous Materials management plan
("HMMP"), if any, which if applicable to Tenant, Tenant shall deliver to
Landlord upon execution of this Lease and update at least annually with Landlord
and (ii) that are ordinary and customary office cleaning products in amounts
reasonably necessary for Tenant's permitted use of the Leased Premises
("Permitted Materials") which may be used, stored and disposed of provided (i)
such Permitted Materials are used, stored, transported, and disposed of in
strict compliance with applicable laws, (ii) such Permitted Materials shall be
limited to the materials listed in clause (ii) above or on (and may be used only
in the quantities specified in) the HMMP, if any, and (iii) Tenant shall provide
Landlord with copies of all material safety data sheets and other documentation
required under applicable Laws in connection with Tenant's use of Permitted
Materials, if any, as and when such documentation is provided to any regulatory
authority having jurisdiction, in no event shall Tenant cause or permit to be
discharged into the plumbing or sewage system of the Building or onto the land
underlying or adjacent to the Building any Hazardous Materials. Tenant shall be
solely responsible for and shall defend, indemnify, and hold Landlord and its
agents harmless from and against all claims, costs and liabilities, including
reasonable attorneys' fees and costs, arising out of or in connection with
Tenant's storage, use and/or disposal of Hazardous Materials. If the presence of
Hazardous Materials on the Leased Premises caused or permitted by Tenant results
in contamination or deterioration of water or soil, then Tenant shall promptly
take any and all action necessary to clean up such contamination, but the
foregoing shall in no event be deemed to constitute permission by Landlord to
allow the presence of such Hazardous Materials. At any time prior to the
expiration of the Lease Term if Tenant has a reasonable basis to suspect that
there has been any release or the presence of Hazardous Materials in the ground
or ground water on the Leased Premises which did not exist upon commencement of
the Lease Term, Tenant

<PAGE>   11

shall promptly so notify Landlord and shall have the right, but not the
obligation, to conduct appropriate tests of water and soil and to deliver to
Landlord the results of such tests to demonstrate that no contamination in
excess of permitted levels has occurred as a result of Tenant's use of the
Leased Premises. Tenant shall further be solely responsible for, and shall
defend, indemnify, and hold Landlord and its agents harmless from and against
all claims, costs and liabilities, including reasonable attorneys' fees and
costs, arising out of or in connection with any removal, cleanup and restoration
work and materials required hereunder to return the Leased Premises and any
other property of whatever nature to their condition existing prior to the
appearance of the Hazardous Materials caused by Tenant.

        (c) Upon termination or expiration of the Lease, Tenant at its sole
expense shall cause all Hazardous Materials placed in or about the Leased
Premises, the Building and/or the Property by Tenant, its agents, contractors,
or invitees, and all installations (whether interior or exterior) made by or on
behalf of Tenant relating to the storage, use, disposal or transportation of
Hazardous Materials to be removed from the property and transported for use,
storage or disposal in accordance and compliance with all Laws and other
requirements respecting Hazardous Materials used or permitted to be used by
Tenant. If applicable to Tenant, Tenant shall apply for and shall obtain from
all appropriate regulatory authorities (including any applicable fire department
or regional water quality control board) all permits, approvals and clearances
necessary for the closure of the Property and shall take all other actions as
may be required to complete the closure of the Building and the Property. In
addition, prior to vacating the Leased Premises, Tenant shall undertake and
submit to Landlord an environmental site assessment from an environmental
consulting company reasonably acceptable to Landlord which site assessment shall
evidence Tenant's compliance with this Paragraph 4.11. Notwithstanding anything
to the contrary contained in the foregoing, if Tenant uses only ordinary office
cleaning products on the Leased Premises, and unless Tenant commences to use
other Hazardous Materials, Tenant shall not be obligated to perform the
environmental site assessment referenced in the preceding sentence.

        (d) At any time prior to expiration of the Lease term, subject to
reasonable prior notice (not less than forty-eight (48) hours) and Tenant's
reasonable security requirements and provided such activities do not
unreasonably interfere with the conduct of Tenant's business at the Leased
Premises, Landlord shall have the right to enter in and upon the Property,
Building and Leased Premises in order to conduct appropriate tests of water and
soil to determine whether levels of any Hazardous Materials in excess of legally
permissible levels has occurred as a result of Tenant's use thereof. Landlord
shall furnish copies of all such test results and reports to Tenant and, at
Tenant's option and cost, shall permit split sampling for testing and analysis
by Tenant. Such testing shall be at Tenant's expense if Landlord has a
reasonable basis for suspecting and confirms the presence of Hazardous Materials
in the soil or surface or ground water in, on, under, or about the Property, the
Building or the Leased Premises, which has been caused by or resulted from the
activities of Tenant, its agents, contractors, or invitees.

        (e) Landlord may voluntarily cooperate in a reasonable manner with the
efforts of all governmental agencies in reducing actual or potential
environmental damage. Tenant shall not be entitled to terminate this Lease or to
any reduction in or abatement of rent by reason of such compliance or
cooperation. Tenant agrees at all times to cooperate fully with the requirements
and recommendations of governmental agencies regulating, or otherwise involved
in, the protection of the environment.

4.12 RULES AND REGULATIONS. Landlord shall have the right from time to time to
establish reasonable rules and regulations and/or amendments or additions
thereto respecting the use of the Building, the Leased Premises and the Outside
Areas for the care and orderly management of the Property. Upon delivery to
Tenant of a copy of such rules and regulations or any amendments or additions
thereto, Tenant shall comply with such rules and regulations. A violation by
Tenant of any of such rules and regulations shall constitute a default by Tenant
under this Lease. If there is a conflict between the rules and regulations and
any of the provisions of this Lease, the provisions of this Lease shall prevail.
Landlord shall not be responsible or liable to Tenant for the violation of such
rules and regulations by any other tenant of the Property. Notwithstanding
anything to the contrary contained in this Section 4.12, Tenant shall not be
required to comply with any rule or regulation (unless required by governmental
authorities or requirements) that unreasonably interferes with Tenant's use of
the Premises or Tenant's parking rights.

4.13 RESERVATIONS. Landlord reserves the right from time to time to grant,
without the consent or joinder of Tenant, such easements, rights of way and
dedications that Landlord deems

<PAGE>   12

necessary, and to cause the recordation of parcel maps and restrictions, so long
as such easements, rights of way and dedications not unreasonably interfere with
the use of the Leased Premises by Tenant, materially increase Tenant's
obligations or diminish Tenant's rights under this Lease, unless required by
governmental authorities or requirements. Tenant agrees to execute any documents
reasonably requested by Landlord to effectuate any such easement rights,
dedications, maps or restrictions.

             ARTICLE 5  REPAIRS, MAINTENANCE, SERVICES AND UTILITIES

5.1 REPAIR AND MAINTENANCE. Except in the case of damage to or destruction of
the Leased Premises, the Building, the Outside Areas or the Property caused by
an act of God or other peril, in which case the provisions of Article 10 shall
control, the parties shall have the following obligations and responsibilities
with respect to the repair and maintenance of the Leased Premises, the Building,
the Outside Areas, and the Property.

        (a) TENANT'S OBLIGATIONS. Subject to the provisions of Section 5.1(b)
below, Tenant shall, at all times during the Lease Term and at its sole cost and
expense, regularly clean and continuously keep and maintain in good order,
condition and repair the Leased Premises and every part thereof including,
without limiting the generality of the foregoing, (i) all interior walls, floors
and ceilings, (ii) all windows, doors and skylights, (iii) all electrical
wiring, conduits, connectors and fixtures within the Leased Premises or
connected to outside services, (iv) all plumbing, pipes, sinks, toilets, faucets
and drains, (v) all lighting fixtures, bulbs and lamps and all heating,
ventilating and air conditioning equipment serving the Leased Premises, and (vi)
all entranceways to the Leased Premises. Tenant, if requested to do so by
Landlord, shall hire, at Tenant's sole cost and expense, a licensed heating,
ventilating and air conditioning contractor to regularly and periodically (not
less frequently than every three months) inspect and perform required
maintenance on the heating, ventilating and air conditioning equipment and
systems serving the Leased Premises, or alternatively, Landlord may, at its
election, contract in its own name for such regular and periodic inspections of
and maintenance on such heating, ventilating and air conditioning equipment and
systems and charge to Tenant, as Additional Rent, the cost thereof. Landlord
shall contract in its own name for regular and periodic inspections (not less
frequently than every six months) of and maintenance on the roof by a licensed
roofing contractor and charge to Tenant, as Additional Rent, Tenant's Expense
Share of the cost thereof. Tenant shall, at its sole cost and expense, repair
all damage to the Leased Premises, the Building, the Outside Areas or the
Property caused by the activities of Tenant, its employees, invitees or
contractors promptly following written notice from Landlord to so repair such
damages. If Tenant shall fail to perform the required maintenance or fail to
make repairs required of it pursuant to this paragraph within a reasonable
period of time following notice from Landlord to do so, then Landlord may, at
its election and without waiving any other remedy it may otherwise have under
this Lease or at law, perform such maintenance or make such repairs and charge
to Tenant, as Additional Rent, the costs so incurred by Landlord for same. All
glass within or a part of the Leased Premises, both interior and exterior, is at
the sole risk of Tenant and any broken glass shall promptly be replaced by
Tenant at Tenant's expense with glass of the same kind, size and quality.

        (b) LANDLORD'S OBLIGATION. Landlord shall, at all times during the
Lease Term, maintain in good condition and repair the foundation, roof
structure, load-bearing and exterior walls of the Building. Subject to Section
13.12(c), the provisions of this subparagraph (b) shall in no way limit the
right of Landlord to charge to Tenant, as Additional Rent pursuant to Article 3
(to the extent permitted pursuant to Article 3), the costs incurred by Landlord
in performing such maintenance and/or making such repairs.

5.2 UTILITIES. Tenant shall arrange at its sole cost and expense and in its own
name, for the supply of gas and electricity to the Leased Premises. In the event
that such services are not separately metered, Tenant shall, at its sole
expense, cause such meters to be installed. Landlord shall maintain the water
meter(s) in its own name; provided, however, that if at any time during the
Lease Term Landlord shall require Tenant to put the water service in Tenant's
name, Tenant shall do so at Tenant's sole cost. Tenant shall be responsible for
determining if the local supplier of water, gas and electricity can supply the
needs of Tenant and whether or not the existing water, gas and electrical
distribution systems within the Building and the Leased Premises are adequate
for Tenant's needs. Tenant shall be responsible for determining if the existing
sanitary and storm sewer systems now servicing the Leased Premises and the
Property are adequate for Tenant's needs. Tenant shall pay all charges for
water, gas, electricity and storm and sanitary sewer services as so supplied to
the Leased Premises, irrespective of whether or not the services are maintained
in Landlord's or Tenant's name.

<PAGE>   13

5.3 SECURITY. Tenant acknowledges that Landlord has not undertaken any duty
whatsoever to provide security for the Leased Premises, the Building, the
Outside Areas or the Property and, accordingly, Landlord is not responsible for
the security of same or, except to the extent caused by the sole active
negligence or willful misconduct of Landlord, its agents, employees or
contractors, the protection of Tenant's property or Tenant's employees, invitees
or contractors. To the extent Tenant determines that such security or protection
services are advisable or necessary, Tenant shall arrange for and pay the costs
of providing same.

5.4 ENERGY AND RESOURCE CONSUMPTION. Landlord may voluntarily cooperate in a
reasonable manner with the efforts of governmental agencies and/or utility
suppliers in reducing energy or other resource consumption within the Property.
Tenant shall not be entitled to terminate this Lease or to any reduction in or
abatement of rent by reason of such compliance or cooperation. Tenant agrees at
all times to cooperate fully with Landlord and to abide by all reasonable rules
established by Landlord (i) in order to maximize the efficient operation of the
electrical, heating, ventilating and air conditioning systems and all other
energy or other resource consumption systems with the Property and/or (ii) in
order to comply with the requirements and recommendations of utility suppliers
and governmental agencies regulating the consumption of energy and/or other
resources.

5.5 LIMITATION OF LANDLORD'S LIABILITY. Landlord shall not be liable to Tenant
for injury to Tenant, its employees, agents, invitees or contractors, damage to
Tenant's property, except to the extent caused by the gross negligence or
willful misconduct of Landlord, its agents, employees or contractors, or loss of
Tenant's business or profits, nor shall Tenant be entitled to terminate this
Lease or to any reduction in or abatement of rent by reason of (i) Landlord's
failure to provide security services or systems within the Property for the
protection of the Leased Premises, the Building or the Outside Areas, or the
protection of Tenant's property or Tenant's employees, invitees, agents or
contractors, or (ii) Landlord's failure to perform any maintenance or repairs to
the Leased Premises, the Building, the Outside Areas or the Property until
Tenant shall have first notified Landlord, in writing, of the need for such
maintenance or repairs, and then only after Landlord shall have had a reasonable
period of time following its receipt of such notice within which to perform such
maintenance or repairs, or (iii) any failure, interruption, rationing or other
curtailment in the supply of water, electric current, gas or other utility
service to the Leased Premises, the Building, the Outside Areas or the Property
from whatever cause (other than Landlord's sole active negligence or willful
misconduct or that of its agents, employees or contractors), or (iv) the
unauthorized intrusion or entry into the Leased Premises by third parties (other
than Landlord).

                     ARTICLE 6  ALTERATIONS AND IMPROVEMENTS

6.1 BY TENANT. Tenant shall not make any alterations to or modifications of the
Leased Premises or construct any improvements within the Leased Premises the
cost of which exceeds $10,000 until Landlord shall have first approved, in
writing, the plans and specifications therefor, which approval will not be
unreasonably withheld or delayed. Landlord's approval shall be deemed given if
not denied by Landlord in a written notice to Tenant delivered within fifteen
(15) days following receipt of Tenant's written request. Tenant's written
request shall also contain a request for Landlord to elect whether or not it
will require Tenant to remove the subject alterations, modifications or
improvements at the expiration or earlier termination of this Lease. If such
additional request is not included, Landlord may make such election at the
expiration or earlier termination of this Lease (and for purposes of Tenant's
removal obligations set forth in Section 2.6 above, Landlord shall be deemed to
have made the election at the time the alterations, modifications or
improvements were completed). All such modifications, alterations or
improvements, once so approved, shall be made, constructed or installed by
Tenant at Tenant's expense (including all permit fees and governmental charges
related thereto), using a licensed contractor first reasonably approved by
Landlord, in substantial compliance with the Landlord-approved plans and
specifications therefor. All work undertaken by Tenant shall be done in
accordance with all Laws and in a good and workmanlike manner using new
materials of good quality. Tenant shall not commence the making of any such
modifications or alterations or the construction of any such improvements until
(i) all required governmental approvals and permits shall have been obtained,
(ii) all requirements regarding insurance imposed by this Lease have been
satisfied, (iii) Tenant shall have given Landlord at least five (5) business
days prior written notice of its intention to commence such work so that
Landlord may post and file notices of non-responsibility, and (iv) if reasonably
requested by Landlord, Tenant shall have obtained contingent liability and broad
form builder's risk insurance in an amount satisfactory to Landlord in its
reasonable discretion to cover any perils relating to the proposed work not
covered by

<PAGE>   14

insurance carried by Tenant pursuant to Article 9. In no event shall Tenant make
any modification, alterations or improvements whatsoever to the Outside Areas or
the exterior or structural components of the Building including, without
limitation, any cuts or penetrations in the floor, roof or exterior walls of the
Leased Premises. As used in this Article, the term "modifications, alterations
and/or improvements" shall include, without limitation, the installation of
additional electrical outlets, overhead lighting fixtures, drains, sinks,
partitions, doorways, or the like.

6.2 OWNERSHIP OF IMPROVEMENTS. All modifications, alterations and improvements
made or added to the Leased Premises by Tenant (other than Tenant's inventory,
equipment, movable furniture, wall decorations and trade fixtures) shall be
deemed real property and a part of the Leased Premises, but shall remain the
property of Tenant during the Lease. Any such modifications, alterations or
improvements, once completed, shall not be altered or removed from the Leased
Premises during the Lease Term without Landlord's written approval first
obtained in accordance with the provisions of Paragraph 6.1 above. At the
expiration or sooner termination of this Lease, all such modifications,
alterations and improvements other than Tenant's inventory, equipment, movable
furniture, wall decorations and trade fixtures, shall automatically become the
property of Landlord and shall be surrendered to Landlord as part of the Leased
Premises as required pursuant to Article 2, unless Landlord shall require Tenant
to remove any of such modifications, alterations or improvements in accordance
with the provisions of Article 2, in which case Tenant shall so remove same.
Landlord shall have no obligations to reimburse Tenant for all or any portion of
the cost or value of any such modifications, alterations or improvements so
surrendered to Landlord. All modifications, alterations or improvements which
are installed or constructed on or attached to the Leased Premises by Landlord
and/or at Landlord's expense shall be deemed real property and a part of the
Leased Premises and shall be property of Landlord. All lighting, plumbing,
electrical, heating, ventilating and air conditioning fixtures, partitioning,
window coverings, wall coverings and floor coverings installed by Tenant shall
be deemed improvements to the Leased Premises and not trade fixtures of Tenant.

6.3 ALTERATIONS REQUIRED BY LAW. Tenant shall make all modifications,
alterations and improvements to the Leased Premises, at its sole cost, that are
required by any Law because of (i) Tenant's use or occupancy of the Leased
Premises, the Building, the Outside Areas or the Property, (ii) Tenant's
application for any permit or governmental approval, or (iii) Tenant's making of
any modifications, alterations or improvements to or within the Leased Premises.
If Landlord shall, at any time during the Lease Term, be required by any
governmental authority to make any modifications, alterations or improvements to
the Building or the Property, the cost incurred by Landlord in making such
modifications, alterations or improvements, including interest at a rate equal
to the greater of (a) 12%, or (b) the sum of that rate quoted by Wells Fargo
Bank, N.T. & S.A. from time to time as its prime rate, plus two percent (2%)
("Wells Prime Plus Two") (but in no event more than the maximum rate of interest
not prohibited or made usurious), shall be amortized by Landlord over the useful
life of such modifications, alterations or improvements, as determined in
accordance with generally accepted accounting principles, and the monthly
amortized cost of such modifications, alterations and improvements as so
amortized shall be considered a Property Maintenance Cost.

6.4 LIENS. Tenant shall keep the Property and every part thereof free from any
lien, and shall pay when due all bills arising out of any work performed,
materials furnished, or obligations incurred by Tenant, its agents, employees or
contractors relating to the Property. If any such claim of lien is recorded
against Tenant's interest in this Lease, the Property or any part thereof,
Tenant shall bond against, discharge or otherwise cause such lien to be entirely
released within twenty (20) days after the same has been recorded. Tenant's
failure to do so shall be conclusively deemed a material default under the terms
of this Lease.

<PAGE>   15

                 ARTICLE 7  ASSIGNMENT AND SUBLETTING BY TENANT

7.1 BY TENANT. Tenant shall not sublet the Leased Premises or any portion
thereof or assign its interest in this Lease, whether voluntarily or by
operation of Law, without Landlord's prior written consent which shall not be
unreasonably withheld or delayed. Any attempted subletting or assignment without
Landlord's prior written consent, at Landlord's election, shall constitute a
default by Tenant under the terms of this Lease. The acceptance of rent by
Landlord from any person or entity other than Tenant, or the acceptance of rent
by Landlord from Tenant with knowledge of a violation of the provisions of this
paragraph, shall not be deemed to be a waiver by Landlord of any provision of
this Article or this Lease or to be a consent to any subletting by Tenant or any
assignment of Tenant's interest in this Lease. Without limiting the
circumstances in which it may be reasonable for Landlord to withhold its consent
to an assignment or subletting, Landlord and Tenant acknowledge that it shall be
reasonable for Landlord to withhold its consent in the following instances:

        (a) the proposed assignee or sublessee is a governmental agency;

        (b) in Landlord's reasonable judgment, the use of the Leased Premises by
the proposed assignee or sublessee would involve occupancy by other than for a
Permitted Use, would entail any alterations which would lessen the value of the
leasehold improvements in the Leased Premises, or would require increased
services by Landlord;

        (c) in Landlord's reasonable judgment, the financial worth of the
proposed assignee is less than that of Tenant or does not meet the credit
standards applied by Landlord;

        (d) the proposed assignee or sublessee (or any of its affiliates) has
been in material default under a lease, has been in litigation with a previous
landlord, or in the ten years prior to the assignment or sublease has filed for
bankruptcy protection, has been the subject of an involuntary bankruptcy, or has
been adjudged insolvent;

        (e) Landlord has experienced a previous default by or is in litigation
with the proposed assignee or sublessee;

        (f) in Landlord's reasonable judgment, the Leased Premises, or the
relevant part thereof, will be used in a manner that will violate any negative
covenant as to use contained in this Lease;

        (g) the use of the Leased Premises by the proposed assignee or sublessee
will violate any applicable law, ordinance or regulation;

        (h) the proposed assignee or sublessee is, as of the date of this Lease,
a tenant in the Building;

        (i) the proposed assignment or sublease fails to include all of the
terms and provisions required to be included therein pursuant to this Article 7;

        (j) Tenant is in default of any obligation of Tenant under this Lease,
or Tenant has defaulted under this Lease on three or more occasions during the
12 months preceding the date that Tenant shall request consent; or

        (k) in the case of a subletting of less than the entire Leased Premises,
if the subletting would result in the division of the Leased Premises into more
than two subparcels or would require improvements to be made outside of the
Leased Premises.

Tenant may, without obtaining Landlord's consent, assign this Lease or sublet
the Leased Premises (a) to an affiliate or subsidiary of Tenant, provided that
(i) such affiliate or subsidiary is wholly owned by Tenant and (ii) such
affiliate or subsidiary will use the Leased Premises in the same manner as
Tenant used the Leased Premises; and (b) to an entity that acquires
substantially all the assets of Tenant (by merger, reorganization or sale),
provided that such entity (i) has net worth that exceeds the net worth of Tenant
immediately before the acquisition and (ii) conducts operations in the Leased
Premises substantially identical to the operations of Tenant before the
acquisition.

7.2 MERGER, REORGANIZATION, OR SALE OF ASSETS. Subject to the provisions of
Section 7.1 above, any dissolution, merger, consolidation or other
reorganization of Tenant, or the sale or other transfer in the aggregate over
the Lease Term of a controlling percentage of the capital stock of

<PAGE>   16

Tenant, or the sale or transfer of all or a substantial portion of the assets of
Tenant, shall be deemed a voluntary assignment of Tenant's interest in this
Lease. The phrase "controlling percentage" means the ownership of and the right
to vote stock possessing more than fifty percent of the total combined voting
power of all classes of Tenant's capital stock issued, outstanding and entitled
to vote for the election of directors. If Tenant is a partnership, a withdrawal
or change, voluntary, involuntary or by operation of Law, of any general
partner, or the dissolution of the partnership, shall be deemed a voluntary
assignment of Tenant's interest in this Lease.

7.3 LANDLORD'S ELECTION. If Tenant shall desire to assign its interest under
the Lease or to sublet the Leased Premises, Tenant must first notify Landlord,
in writing, of its intent to so assign or sublet, at least twenty (20) days in
advance of the date it intends to so assign its interest in this Lease or sublet
the Leased Premises but not sooner than one hundred eighty days in advance of
such date, specifying in detail the terms of such proposed assignment or
subletting, including the name of the proposed assignee or sublessee, the
property assignee's or sublessee's intended use of the Leased Premises, current
financial statements (including a balance sheet, income statement and statement
of cash flow, all prepared in accordance with generally accepted accounting
principles) of such proposed assignee or sublessee, the form of documents to be
used in effectuating such assignment or subletting and such other information as
Landlord may reasonably request. Landlord shall have a period of ten (10)
business days following receipt of such notice and the required information
within which to do one of the following: (i) consent to such requested
assignment or subletting subject to Tenant's compliance with the conditions set
forth in Paragraph 7.4 below, or (ii) refuse to so consent to such requested
assignment or subletting, provided that such consent shall not be unreasonably
refused or delayed, or (iii) terminate this Lease as to the portion (including
all) of the Leased Premises that is the subject of the proposed assignment or
subletting. Notwithstanding anything to the contrary contained in this Section,
if Landlord elects to exercise its right of recapture as set forth in this
Section, Tenant shall have the right, within five (5) days after receipt of
Landlord's election, to notify Landlord in writing that Tenant rescinds its
request for Landlord's consent to the assignment or sublet, in which case this
Lease shall continue in full force and effect. During such ten (10) business day
period, Tenant covenants and agrees to supply to Landlord, upon request, all
necessary or relevant information which Landlord may reasonably request
respecting such proposed assignment or subletting and/or the proposed assignee
or sublessee.

7.4 CONDITIONS TO LANDLORD'S CONSENT. If Landlord elects to consent, or shall
have been ordered to so consent by a court of competent jurisdiction, to such
requested assignment or subletting, such consent shall be expressly conditioned
upon the occurrence of each of the conditions below set forth, and any purported
assignment or subletting made or ordered prior to the full and complete
satisfaction of each of the following conditions shall be void and, at the
election of Landlord, which election may be exercised at any time following such
a purported assignment or subletting but prior to the satisfaction of each of
the stated conditions, shall constitute a material default by Tenant under this
Lease until cured by satisfying in full each such condition by the assignee or
sublessee. The conditions are as follows:

        (a) Landlord having approved in form and substance the assignment or
sublease agreement and any ancillary documents, which approval shall not be
unreasonably withheld by Landlord if the requirements of this Article 7 are
otherwise complied with.

        (b) Each such sublessee or assignee having agreed, in writing
satisfactory to Landlord and its counsel and for the benefit of Landlord, to
assume, to be bound by, and to perform the obligations of this Lease to be
performed by Tenant which relate to space being subleased.

        (c) Tenant having fully and completely performed all of its obligations
under the terms of this Lease through and including the date of such assignment
or subletting.

        (d) Tenant having reimbursed to Landlord all reasonable costs and
reasonable attorneys' fees incurred by Landlord in conjunction with the
processing and documentation of any such requested subletting or assignment.

        (e) Tenant having delivered to Landlord a complete and fully-executed
duplicate original of such sublease agreement or assignment agreement (as
applicable) and all related agreements.

        (f) Tenant having paid, or having agreed in writing to pay as to future
payments, to

<PAGE>   17

Landlord fifty percent (50%) of all assignment consideration or excess rentals
to be paid to Tenant or to any other on Tenant's behalf or for Tenant's benefit
for such assignment or subletting as follows:

                (i) If Tenant assigns its interest under this Lease and if all
or a portion of the consideration for such assignment is to be paid by the
assignee at the time of the assignment, that Tenant shall have paid to Landlord
and Landlord shall have received an amount equal to fifty percent (50%) of the
assignment consideration so paid or to be paid (whichever is the greater) at the
time of the assignment by the assignee; or

                (ii) If Tenant assigns its interest under this Lease and if
Tenant is to receive all or a portion of the consideration for such assignment
in future installments, that Tenant and Tenant's assignee shall have entered
into a written agreement with and for the benefit of Landlord satisfactory to
Landlord and its counsel whereby Tenant and Tenant's assignee jointly agree to
pay to Landlord an amount equal to fifty percent (50%) of all such future
assignment consideration installments to be paid by such assignee as and when
such assignment consideration is so paid.

                (iii) If Tenant subleases the Leased Premises, that Tenant and
Tenant's sublessee shall have entered into a written agreement with and for the
benefit of Landlord satisfactory to Landlord and its counsel whereby Tenant and
Tenant's sublessee jointly agree to pay to Landlord fifty percent (50%) of all
excess rentals to be paid by such sublessee as and when such excess rentals are
so paid.

7.5 ASSIGNMENT CONSIDERATION AND EXCESS RENTALS DEFINED. For purposes of this
Article, including any amendment to this Article by way of addendum or other
writing, the term "assignment consideration" shall mean all consideration to be
paid by the assignee to Tenant or to any other party on Tenant's behalf or for
Tenant's benefit as consideration for such assignment, deducting any commissions
paid by Tenant or any other costs or expenses (including, without limitation,
tenant improvements, capital improvements, building upgrades, permit fees,
attorneys' fees, and other consultants' fees) incurred by Tenant in connection
with such assignment, and the term "excess rentals" shall mean all consideration
to be paid by the sublessee to Tenant or to any other party on Tenant's behalf
or for Tenant's benefit for the sublease of all or any portion of the Leased
Premises in excess of the rent due to Landlord under the terms of this Lease for
the portion so subleased for the same period, deducting any commissions paid by
Tenant or any other costs or expenses (including, without limitation, tenant
improvements, capital improvements, building upgrades, permit fees, attorneys'
fees, and other consultants' fees) incurred by Tenant in connection with such
sublease. Tenant agrees that the portion of any assignment consideration and/or
excess rentals arising from any assignment or subletting by Tenant which is to
be paid to Landlord pursuant to this Article now is and shall then be the
property of Landlord and not the property of Tenant.

7.6 PAYMENTS. All payments required by this Article to be made to Landlord
shall be made in cash or check in full as and when they become due. At the time
Tenant, Tenant's assignee or sublessee makes each such payment to Landlord,
Tenant or Tenant's assignee or sublessee, as the case may be, shall deliver to
Landlord an itemized statement in reasonable detail showing the method by which
the amount due Landlord was calculated and certified by the party making such
payment as true and correct.

7.7 GOOD FAITH. The rights granted to Tenant by this Article are granted in
consideration of Tenant's express covenant that all pertinent allocations which
are made by Tenant between the rental value of the Leased Premises and the value
of any of Tenant's personal property which may be conveyed or leased generally
concurrently with and which may reasonably be considered a part of the same
transaction as the permitted assignment or subletting shall be made fairly,
honestly and in good faith. If Tenant shall breach this covenant, Landlord may
immediately declare Tenant to be in default under the terms of this Lease and
terminate this Lease and/or exercise any other rights and remedies Landlord
would have under the terms of this Lease in the case of a material default by
Tenant under this Lease.

7.8 EFFECT OF LANDLORD'S CONSENT. No subletting or assignment, even with the
consent of Landlord, shall relieve Tenant of its personal and primary obligation
to pay rent and to perform all of the other obligations to be performed by
Tenant hereunder. Consent by Landlord to one or more assignments of Tenant's
interest in this Lease or to one or more sublettings of the Leased Premises
shall not be deemed to be a consent to any subsequent assignment or subletting.
If

<PAGE>   18

Landlord shall have been ordered by a court of competent jurisdiction to consent
to a requested assignment or subletting, or such an assignment or subletting
shall have been ordered by a court of competent jurisdiction over the objection
of Landlord, such assignment or subletting shall not be binding between the
assignee (or sublessee) and Landlord until such time as all conditions set forth
in Paragraph 7.4 above have been fully satisfied (to the extent not then
satisfied) by the assignee or sublessee, including, without limitation, the
payment to Landlord of all agreed assignment considerations and/or excess
rentals then due Landlord.

          ARTICLE 8  LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY

8.1 LIMITATION ON LANDLORD'S LIABILITY AND RELEASE. Landlord shall not be
liable to Tenant for, and Tenant hereby releases Landlord and its partners,
principals, members, officers, agents, employees, lenders, attorneys, and
consultants from, any and all liability, whether in contract, tort or on any
other basis, for any injury to or any damage sustained by Tenant, Tenant's
agents, employees, contractors or invitees, any damage to Tenant's property, or
any loss to Tenant's business, loss of Tenant's profits or other financial loss
of Tenant resulting from or attributable to the condition of, the management of,
the repair or maintenance of, the protection of, the supply of services or
utilities to, the damage in or destruction of the Leased Premises, the Building,
the Property or the Outside Areas, including without limitation (i) the failure,
interruption, rationing or other curtailment or cessation in the supply of
electricity, water, gas or other utility service to the Property, the Building
or the Leased Premises; (ii) the vandalism or forcible entry into the Building
or the Leased Premises; (iii) the penetration of water into or onto any portion
of the Leased Premises; (iv) the failure to provide security and/or adequate
lighting in or about the Property, the Building or the Leased Premises, (v) the
existence of any design or construction defects within the Property, the
Building or the Leased Premises; (vi) the failure of any mechanical systems to
function properly (such as the HVAC systems); (vii) the blockage of access to
any portion of the Property, the Building or the Leased Premises, except that
Tenant does not so release Landlord from such liability to the extent such
damage was proximately caused by Landlord's or Landlord's agents', employees' or
contractors' active negligence or willful misconduct, or Landlord's failure to
perform an obligation expressly undertaken pursuant to this Lease after a
reasonable period of time shall have lapsed following receipt of written notice
from Tenant to so perform such obligation. In this regard, Tenant acknowledges
that it is fully apprised of the provisions of Law relating to releases, and
particularly to those provisions contained in Section 1542 of the California
Civil Code which reads as follows:

          "A general release does not extend to claims which the
          creditor does not know or suspect to exist in his favor at
          the time of executing the release, which if known by him
          must have materially affected his settlement with the
          debtor."

Notwithstanding such statutory provision, and for the purpose of implementing a
full and complete release and discharge, Tenant hereby (i) waives the benefit of
such statutory provision and (ii) acknowledges that, subject to the exceptions
specifically set forth herein, the release and discharge set forth in this
paragraph is a full and complete settlement and release and discharge of all
claims and is intended to include in its effect, without limitation, all claims
which Tenant, as of the date hereof, does not know of or suspect to exist in its
favor.

8.2 TENANT'S INDEMNIFICATION OF LANDLORD. Tenant shall defend with competent
counsel reasonably satisfactory to Landlord any claims made or legal actions
filed or threatened against Landlord with respect to the violation of any Law,
or the death, bodily injury, personal injury, property damage, or interference
with contractual or property rights suffered by any third party occurring within
the Leased Premises or resulting from Tenant's use or occupancy of the Leased
Premises, the Building or the Outside Areas, or resulting from Tenant's
activities in or about the Leased Premises, the Building, the Outside Areas or
the Property, and Tenant shall indemnify and hold Landlord, Landlord's partners,
principals, members, employees, agents and contractors harmless from any loss
liability, penalties, or expense whatsoever (including any loss attributable to
vacant space which otherwise would have been leased, but for such activities)
resulting therefrom, except to the extent proximately caused by the active
negligence or willful misconduct of Landlord, its agents, employees or
contractors. This indemnity agreement shall survive the expiration or sooner
termination of this Lease.

                              ARTICLE 9  INSURANCE

9.1 TENANT'S INSURANCE. Tenant shall maintain insurance complying with all of
the following:

        (a) Tenant shall procure, pay for and keep in full force and effect, at
all times during the Lease Term, the following:

<PAGE>   19

                (i) Commercial general liability insurance insuring Tenant
against liability for personal injury, bodily injury, death and damage to
property occurring within the Leased Premises, or resulting from Tenant's use or
occupancy of the Leased Premises, the Building, the Outside Areas or the
Property, or resulting from Tenant's activities in or about the Leased Premises
or the Property, with coverage in an amount equal to Tenant's Required Liability
Coverage (as set forth in Article 1), which insurance shall contain "blanket
contractual liability" and "broad form property damage" endorsements insuring
Tenant's performance of Tenant's obligations to indemnify Landlord as contained
in this Lease.

                (ii) Fire and property damage insurance in so-called "fire and
extended coverage" form insuring Tenant against loss from physical damage to
Tenant's personal property, inventory, trade fixtures and improvements within
the Leased Premises with coverage for the full actual replacement cost thereof;

                (iii) Business income/extra expense insurance sufficient to pay
Base Monthly Rent and Additional Rent for a period of not less than twelve (12)
months;

                (iv) Plate glass insurance, at actual replacement cost;

                (v) Boiler and machinery insurance, if applicable, to limits
sufficient to restore the Building;

                (vi) If applicable, product liability insurance (including,
without limitation, if food and/or beverages are distributed, sold and/or
consumed within the Leased Premises, to the extent obtainable, coverage for
liability arising out of the distribution, sale, use or consumption of food
and/or beverages (including alcoholic beverages, if applicable) at the Leased
Premises for not less than Tenant's Required Liability Coverage (as set forth in
Article 1);

                (vii) Workers' compensation insurance (statutory coverage) with
employer's liability in amounts not less than $1,000,000 insurance sufficient to
comply with all laws; and

                (viii) With respect to making of any alterations or
modifications or the construction of improvements or the like undertaken by
Tenant, course of construction, commercial general liability, automobile
liability and workers' compensation (to be carried by Tenant's contractor), in
an amount and with coverage reasonably satisfactory to Landlord.

<PAGE>   20

        (b) Each policy of liability insurance required to be carried by Tenant
pursuant to this paragraph or actually carried by Tenant with respect to the
Leased Premises or the Property: (i) shall, except with respect to insurance
required by subparagraph (a)(vii) above, name Landlord, Landlord's property
manager and Lender(s), if any, and such others as are designated by Landlord, as
additional insureds; (ii) shall be primary insurance providing that the insurer
shall be liable for the full amount of the loss, up to and including the total
amount of liability set forth in the declaration of coverage, without the right
of contribution from or prior payment by any other insurance coverage of
Landlord; (iii) shall be in a form reasonably satisfactory to Landlord; (iv)
shall be carried with companies reasonably acceptable to Landlord with Best's
ratings of at least A and XI; (v) shall provide that such policy shall not be
subject to cancellation, lapse or change except after at least thirty (30) days
prior written notice to Landlord, and (vi) shall contain a so-called
"severability" or "cross liability" endorsement. Each policy of property
insurance maintained by Tenant with respect to the Leased Premises or the
Property or any property therein (i) shall provide that such policy shall not be
subject to cancellation, lapse or change except after at least thirty (30) days
prior written notice to Landlord and (ii) shall contain a waiver and/or a
permission to waive by the insurer of any right of subrogation against Landlord,
its partners, principals, members, officers, employees, agents and contractors,
which might arise by reason of any payment under such policy or by reason of any
act or omission of Landlord, its partners, principals, members, officers,
employees, agents and contractors.

        (c) Prior to the time Tenant or any of its contractors enters the Leased
Premises, Tenant shall deliver to Landlord, with respect to each policy of
insurance required to be carried by Tenant pursuant to this Article, a copy of
such policy (appropriately authenticated by the insurer as having been issued,
premium paid) or a certificate of the insurer certifying in form reasonably
satisfactory to Landlord that a policy has been issued, premium paid, providing
the coverage required by this Paragraph and containing the provisions specified
herein. With respect to each renewal or replacement of any such insurance, the
requirements of this Paragraph must be complied with not less than thirty days
prior to the expiration or cancellation of the policies being renewed or
replaced. Landlord may, at any time and from time to time, inspect and/or copy
any and all insurance policies required to be carried by Tenant pursuant to this
Article. If Landlord's Lender, insurance broker, advisor or counsel reasonably
determines at any time that the amount of coverage set forth in Paragraph 9.1(a)
for any policy of insurance Tenant is required to carry pursuant to this Article
is not adequate, then Tenant shall increase the amount of coverage for such
insurance to such greater amount as Landlord's Lender, insurance broker, advisor
or counsel reasonably deems adequate.

9.2 LANDLORD'S INSURANCE. With respect to insurance maintained by Landlord:

        (a) Landlord shall maintain, as the minimum coverage required of it by
this Lease, fire and property damage insurance in so-called "fire and extended
coverage" form insuring Landlord (and such others as Landlord may designate)
against loss from physical damage to the Building with coverage of not less than
one hundred percent (100%) of the full actual replacement cost thereof and
against loss of rents for a period of not less than six months. Such fire and
property damage insurance, at Landlord's election but without any requirements
on Landlord's behalf to do so, (i) may be written in so-called "all risk" form,
excluding only those perils commonly excluded from such coverage by Landlord's
then property damage insurer; (ii) may provide coverage for physical damage to
the improvements so insured for up to the entire full actual replacement cost
thereof; (iii) may be endorsed to cover loss or damage caused by any additional
perils against which Landlord may elect to insure, including earthquake and/or
flood; and/or (iv) may provide coverage for loss of rents for a period of up to
twelve months. Landlord shall not be required to cause such insurance to cover
any of Tenant's personal property, inventory, and trade fixtures, or any
modifications, alterations or improvements made or constructed by Tenant to or
within the Leased Premises, except permanently affixed Tenant Improvements
constructed pursuant to the Work Letter. Landlord shall use commercially
reasonable efforts to obtain such insurance at competitive rates.

        (b) Landlord shall maintain commercial general liability insurance
insuring Landlord (and such others as are designated by Landlord) against
liability for personal injury, bodily injury, death, and damage to property
occurring in, on or about, or resulting from the use or occupancy of the
Property, or any portion thereof, with combined single limit coverage of at
least Ten Million Dollars ($10,000,000). Landlord may carry such greater
coverage as Landlord or Landlord's Lender, insurance broker, advisor or counsel
may from time to time determine is reasonably necessary for the adequate
protection of Landlord and the Property.

<PAGE>   21

        (c) Landlord may maintain any other insurance which in the opinion of
its insurance broker, advisor or legal counsel is prudent in carry under the
given circumstances, provided such insurance is commonly carried by owners of
property similarly situated and operating under similar circumstances.

9.3 MUTUAL WAIVER OF SUBROGATION. Landlord hereby releases Tenant, and Tenant
hereby releases Landlord and its respective partners, principals, members,
officers, agents, employees and servants, from any and all liability for loss,
damage or injury to the property of the other in or about the Leased Premises or
the Property which is caused by or results from a peril or event or happening
which is covered by insurance actually carried and in force at the time of the
loss by the party sustaining such loss; provided, however, that such waiver
shall be effective only to the extent permitted by the insurance covering such
loss and to the extent such insurance is not prejudiced thereby. Landlord and
Tenant will use reasonable efforts to cause their property insurance to contain
a waiver and/or a permission to waive by the insurer of any right of subrogation
against Tenant or Landlord (as applicable), their partners, principals, members,
officers, employees, agents and contractors.

                      ARTICLE 10  DAMAGE TO LEASED PREMISES

10.1 LANDLORD'S DUTY TO RESTORE. If the Leased Premises, the Building or the
Outside Area are damaged by any peril after the Effective Date of this Lease,
Landlord shall restore the same, as and when required by this paragraph, unless
this Lease is terminated by Landlord pursuant to Paragraph 10.3 or by Tenant
pursuant to Paragraph 10.4. If this Lease is not so terminated, then upon the
issuance of all necessary governmental permits, Landlord shall commence and
diligently prosecute to completion the restoration of the Leased Premises, the
Building or the Outside Area, as the case may be, to the extent then allowed by
law, to substantially the same condition in which it existed as of the Lease
Commencement Date. Landlord's obligation to restore shall be limited to the
improvements constructed by Landlord. Landlord shall have no obligation to
restore any alterations, modifications or improvements made by Tenant to the
Leased Premises or any of Tenant's personal property, inventory or trade
fixtures. Upon completion of the restoration by Landlord, Tenant shall forthwith
replace or fully repair all of Tenant's personal property, inventory, trade
fixtures and other improvements constructed by Tenant to like or similar
conditions as existed at the time immediately prior to such damage or
destruction.

10.2 INSURANCE PROCEEDS. All insurance proceeds available from the fire and
property damage insurance carried by Landlord shall be paid to and become the
property of Landlord. If this Lease is terminated pursuant to either Paragraph
10.3 or 10.4, all insurance proceeds available from insurance carried by Tenant
which cover loss of property that is Landlord's property or would become
Landlord's property on termination of this Lease shall be paid to and become the
property of Landlord, and the remainder of such proceeds shall be paid to and
become the property of Tenant. If this Lease is not terminated pursuant to
either Paragraph 10.3 or 10.4, all insurance proceeds available from insurance
carried by Tenant which cover loss to property that is Landlord's property shall
be paid to and become the property of Landlord, and all proceeds available from
such insurance which cover loss to property which would only become the property
of Landlord upon the termination of this Lease shall be paid to and remain the
property of Tenant. The determination of Landlord's property and Tenant's
property shall be made pursuant to Paragraph 6.2.

10.3 LANDLORD'S RIGHT TO TERMINATE. Landlord shall have the option to terminate
this Lease in the event any of the following occurs, which option may be
exercised only by delivery to Tenant of a written notice of election to
terminate within thirty days after the date of such damage or destruction:

        (a) The Building is damaged by any peril covered by valid and
collectible insurance actually carried by Landlord and in force at the time of
such damage or destruction (an "insured peril") to such an extent that the
estimated cost to restore the Building exceeds the lesser of (i) the insurance
proceeds available from insurance actually carried by Landlord, or (ii) fifty
percent of the then actual replacement cost thereof;

        (b) The Building is damaged by an uninsured peril, which peril Landlord
was not required to insure against pursuant to the provisions of Article 9 of
this Lease.

        (c) The Building is damaged by any peril and, because of the laws then
in force, the Building (i) cannot be restored at reasonable cost or (ii) if
restored, cannot be used for the same

<PAGE>   22

use being made thereof before such damage.

10.4 TENANT'S RIGHT TO TERMINATE. If the Leased Premises, the Building or the
Outside Area are damaged by any peril and Landlord does not elect to terminate
this Lease or is not entitled to terminate this Lease pursuant to this Article,
then as soon as reasonably practicable, Landlord shall furnish Tenant with the
written opinion of Landlord's architect or construction consultant as to when
the restoration work required of Landlord may be complete. Tenant shall have the
option to terminate this Lease in the event any of the following occurs, which
option may be exercised only by delivery to Landlord of a written notice of
election to terminate within ten (10) business days after Tenant receives from
Landlord the estimate of the time needed to complete such restoration:

        (a) If the time estimated to substantially complete the restoration
exceeds twelve months from and after the date the architect's or construction
consultant's written opinion is delivered; or

        (b) If the damage occurred within twelve months of the last day of the
Lease Term and the time estimated to substantially complete the restoration
exceeds one hundred eighty days from and after the date such restoration is
commenced.

        (c) If the time estimated for completion of the restoration is less than
two hundred seventy (270) days but Landlord fails to complete the restoration
within two hundred seventy (270) days after commencement of the restoration.

10.5 TENANT'S WAIVER. Landlord and Tenant agree that the provisions of
Paragraph 10.4 above, captioned "Tenant's Right To Terminate", are intended to
supersede and replace the provisions contained in California Civil Code, Section
1932, Subdivision 2, and California Civil Code, Section 1934, and accordingly,
Tenant hereby waives the provisions of such Civil Code Sections and the
provisions of any successor Civil Code Sections or similar laws hereinafter
enacted.

10.6 ABATEMENT OF RENT. In the event of damage to the Leased Premises which
does not result in the termination of this Lease, the Base Monthly Rent (and any
Additional Rent) shall be temporarily abated during the period of restoration in
proportion in the degree to which Tenant's use of the Leased Premises is
impaired by such damage.

                            ARTICLE 11  CONDEMNATION

11.1 TENANT'S RIGHT TO TERMINATE. Except as otherwise provided in Paragraph
11.4 below regarding temporary takings, Tenant shall have the option to
terminate this Lease if, as a result of any taking, (i) all of the Leased
Premises is taken, or (ii) twenty-five percent (25%) or more of the Leased
Premises is taken and the part of the Leased Premises that remains cannot,
within a reasonable period of time, be made reasonably suitable for the
continued operation of Tenant's business. Tenant must exercise such option
within a reasonable period of time, to be effective on the later to occur of (i)
the date that possession of that portion of the Leased Premises that is
condemned is taken by the condemnor or (ii) the date Tenant vacated the Leased
Premises.

11.2 LANDLORD'S RIGHT TO TERMINATE. Except as otherwise provided in Paragraph
11.4 below regarding temporary takings, Landlord shall have the option to
terminate this Lease if, as a result of any taking, (i) all of the Leased
Premises or the Building is taken, (ii) twenty-five percent (25%) or more of the
Building is taken and the part of the Leased Premises that remains cannot,
within a reasonable period of time, be made reasonably suitable for the
continued operation of Tenant's business, or (iii) because of the laws then in
force, the Leased Premises may not be used for the same use being made before
such taking, whether or not restored as required by Paragraph 11.3 below. Any
such option to terminate by Landlord must be exercised within a reasonable
period of time, to be effective as of the date possession is taken by the
condemnor.

11.3 RESTORATION. If any part of the Leased Premises or the Building is taken
and this Lease is not terminated, then Landlord shall, to the extent not
prohibited by laws then in force, repair any damage occasioned thereby to the
remainder thereof to a condition reasonably suitable for Tenant's continued
operations and otherwise, to the extent practicable, in the manner and to the
extent provided in Paragraph 10.1.

11.4 TEMPORARY TAKING. If a portion of the Leased Premises is temporarily taken
for a

<PAGE>   23

period of one year or less and such period does not extend beyond the Lease
Expiration Date, this Lease shall remain in effect. If any portion of the Leased
Premises is temporarily taken for a period which exceeds one year or which
extends beyond the Lease Expiration Date, then the rights of Landlord and Tenant
shall be determined in accordance with Paragraphs 11.1 and 11.2 above.

11.5 DIVISION OF CONDEMNATION AWARD. Any award made for any taking of the
Property, the Building, or the Leased Premises, or any portion thereof, shall
belong to and be paid to Landlord, and Tenant hereby assigns to Landlord all of
its right, title and interest in any such award; provided, however, that Tenant
shall be entitled to receive any portion of the award that is made specifically
(i) for the taking of personal property, inventory or trade fixtures belonging
to Tenant, (ii) for the interruption of Tenant's business or its moving costs,
or (iii) for the value of any leasehold improvements installed and paid for by
Tenant. The rights of Landlord and Tenant regarding any condemnation shall be
determined as provided in this Article, and each party hereby waives the
provisions of Section 1265.130 of the California Code of Civil Procedure, and
the provisions of any similar law hereinafter enacted, allowing either party to
petition the Supreme Court to terminate this Lease and/or otherwise allocate
condemnation awards between Landlord and Tenant in the event of a taking of the
Leased Premises.

11.6 ABATEMENT OF RENT. In the event of a taking of the Leased Premises which
does not result in a termination of this Lease (other than a temporary taking),
then, as of the date possession is taken by the condemning authority, the Base
Monthly Rent shall be reduced in the same proportion that the area of that part
of the Leased Premises so taken (less any addition to the area of the Leased
Premises by reason of any reconstruction) bears to the area of the Leased
Premises immediately prior to such taking.

11.7 TAKING DEFINED. The term "taking" or "taken" as used in this Article 11
shall mean any transfer or conveyance of all or any portion of the Property to a
public or quasi-public agency or other entity having the power of eminent domain
pursuant to or as a result of the exercise of such power by such an agency,
including any inverse condemnation and/or any sale or transfer by Landlord of
all or any portion of the Property to such an agency under threat of
condemnation or the exercise of such power.

                        ARTICLE 12  DEFAULT AND REMEDIES

12.1 EVENTS OF TENANT'S DEFAULT. Tenant shall be in default of its obligations
under this Lease if any of the following events occur:

        (a) Tenant shall have failed to pay Base Monthly Rent or any Additional
Rent when due; or

        (b) Tenant shall have done or permitted to be done any act, use or thing
in its use, occupancy or possession of the Leased Premises or the Building or
the Outside Areas which is prohibited by the terms of this Lease; or

        (c) Tenant shall have failed to perform any term, covenant or condition
of this Lease (except those requiring the payment of Base Monthly Rent or
Additional Rent, which failures shall be governed by subparagraph (a) above)
within thirty (30) days after receipt of written notice from Landlord to Tenant
specifying the nature of such failure and requesting Tenant to perform same; or

        (d) Tenant shall have sublet the Leased Premises or assigned or
encumbered its interest in this Lease in violation of the provisions contained
in Article 7, whether voluntarily or by operation of law; or

        (e) Tenant shall have abandoned the Leased Premises and failed to
maintain the Leased Premises in its condition as required when the Leased
Premises was occupied; or

        (f) Tenant or any Guarantor of this Lease shall have permitted or
suffered the sequestration or attachment of, or execution on, or the appointment
of a custodian or receiver with respect to, all or any substantial part of the
property or assets of Tenant (or such Guarantor) or any property or asset
essential to the conduct of Tenant's (or such Guarantor's) business, and Tenant
(or such Guarantor) shall have failed to obtain a return or release of the same
within sixty (60) days thereafter, or prior to sale pursuant to such
sequestration, attachment or levy, whichever is earlier; or

<PAGE>   24

        (g) Tenant or any Guarantor of this Lease shall have made a general
assignment of all or a substantial part of its assets for the benefit of its
creditors; or

        (h) Tenant or any Guarantor of this Lease shall have allowed (or sought)
to have entered against it a decree or order which: (i) grants or constitutes an
order for relief, appointment of a trustee, or condemnation or a reorganization
plan under the bankruptcy laws of the United States; (ii) approves as properly
filed a petition seeking liquidation or reorganization under said bankruptcy
laws or any other debtor's relief law or similar statute of the United States or
any state thereof; or (iii) otherwise directs the winding up or liquidation of
Tenant; provided, however, if any decree or order was entered without Tenant's
consent or over Tenant's objection, Landlord may not terminate this Lease
pursuant to this Subparagraph if such decree or order is rescinded or reversed
within sixty (60) days after its original entry; or

        (i) Tenant or any Guarantor of this Lease shall have availed itself of
the protection of any debtor's relief law, moratorium law or other similar law
which does not require the prior entry of a decree or order.

12.2 LANDLORD'S REMEDIES. In the event of any default by Tenant, and without
limiting Landlord's right to indemnification as provided in Article 8.2,
Landlord shall have the following remedies, in addition to all other rights and
remedies provided by law or otherwise provided in this Lease, to which Landlord
may resort cumulatively, or in the alternative:

        (a) Landlord may, at Landlord's election, keep this Lease in effect and
enforce, by an action at law or in equity, all of its rights and remedies under
this Lease including, without limitation, (i) the right to recover the rent and
other sums as they become due by appropriate legal action, (ii) the right to
make payments required by Tenant, or perform Tenant's obligations and be
reimbursed by Tenant for the cost thereof with interest at the then maximum rate
of interest not prohibited by law from the date the sum is paid by Landlord
until Landlord is reimbursed by Tenant, and (iii) the remedies of injunctive
relief and specific performance to prevent Tenant from violating the terms of
this Lease and/or to compel Tenant to perform its obligations under this Lease,
as the case may be.

        (b) Landlord may, at Landlord's election, terminate this Lease by giving
Tenant written notice of termination, in which event this Lease shall terminate
on the date set forth for termination in such notice, in which event Tenant
shall immediately surrender the Leased Premises to Landlord, and if Tenant fails
to do so, Landlord may, without prejudice to any other remedy which it may have
for possession or arrearages in rent, enter upon and take possession of the
Leased Premises and expel or remove Tenant and any other person who may be
occupying the Leased Premises or any part thereof, without being liable for
prosecution or any claim or damages therefor. Any termination under this
subparagraph shall not relieve Tenant from its obligation to pay to Landlord all
Base Monthly Rent and Additional Rent then or thereafter due, or any other sums
due or thereafter accruing to Landlord, or from any claim against Tenant for
damages previously accrued or then or thereafter accruing. In no event shall any
one or more of the following actions by Landlord, in the absence of a written
election by Landlord to terminate this Lease constitute a termination of this
Lease:

                (i) Appointment of a receiver or keeper in order to protect
Landlord's interest hereunder;

                (ii) Consent to any subletting of the Leased Premises or
assignment of this Lease by Tenant, whether pursuant to the provisions hereof or
otherwise; or

                (iii) Any action taken by Landlord or its partners, principals,
members, officers, agents, employees, or servants, which is intended to mitigate
the adverse effects of any breach of this Lease by Tenant, including, without
limitation, any action taken to maintain and preserve the Leased Premises on any
action taken to relet the Leased Premises or any portion thereof for the account
at Tenant and in the name of Tenant.

        (c) In the event Tenant breaches this Lease and abandons the Leased
Premises, Landlord may terminate this Lease, but this Lease shall not terminate
unless Landlord gives Tenant written notice of termination. If Landlord does not
terminate this Lease by giving written notice of termination, Landlord may
enforce all its rights and remedies under this Lease, including the right and
remedies provided by California Civil Code Section 1951.4 ("lessor may continue
lease in effect after lessee's breach and abandonment and recover rent as it
becomes

<PAGE>   25

due, if lessee has right to sublet or assign, subject only to reasonable
limitations"), as in effect on the Effective Date of this Lease.

        (d) In the event Landlord terminates this Lease, Landlord shall be
entitled, at Landlord's election, to the rights and remedies provided in
California Civil Code Section 1951.2, as in effect on the Effective Date of this
Lease. For purposes of computing damages pursuant to Section 1951.2, an interest
rate equal to the maximum rate of interest then not prohibited by law shall be
used where permitted. Such damages shall include, without limitation:

                (i) The worth at the time of the award of the unpaid rent which
had been earned at the time of termination;

                (ii) The worth at the time of award of the amount by which the
unpaid rent for the balance of the term after the time of award exceeds the
amount of such rental loss that Tenant proves could be reasonably avoided,
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco, at the time of award plus one percent; and

                (iii) Any other amount necessary to compensate Landlord for all
detriment proximately caused by Tenant's failure to perform Tenant's obligations
under this Lease, or which in the ordinary course of things would be likely to
result therefrom, including without limitation, the following: (i) expenses for
cleaning, repairing or restoring the Leased Premises, (ii) expenses for
altering, remodeling or otherwise improving the Leased Premises for the purpose
of reletting, including removal of existing leasehold improvements and/or
installation of additional leasehold improvements (regardless of how the same is
funded, including reduction of rent, a direct payment or allowance to a new
tenant, or otherwise), (iii) broker's fees allocable to the remainder of the
term of this Lease, advertising costs and other expenses of reletting the Leased
Premises; (iv) costs of carrying and maintaining the Leased Premises, such as
taxes, insurance premiums, utility charges and security precautions, (v)
expenses incurred in removing, disposing of and/or storing any of Tenant's
personal property, inventory or trade fixtures remaining therein; (vi)
reasonable attorney's fees, expert witness fees, court costs and other
reasonable expenses incurred by Landlord (but not limited to taxable costs) in
retaking possession of the Leased Premises, establishing damages hereunder, and
releasing the Leased Premises; and (vii) any other expenses, costs or damages
otherwise incurred or suffered as a result of Tenant's default.

12.3 LANDLORD'S DEFAULT AND TENANT'S REMEDIES. In the event Landlord fails to
perform its obligations under this Lease, Landlord shall nevertheless not be in
default under the terms of this Lease until such time as Tenant shall have first
given Landlord written notice specifying the nature of such failure to perform
its obligations, and then only after Landlord shall have had thirty (30) days
following its receipt of such notice (except in the case of emergency, in which
case Landlord will have a reasonable period of time to perform in light of all
the circumstances) within which to perform such obligations; provided that, if
longer than thirty (30) days is reasonably required in order to perform such
obligations, Landlord shall have such longer period. In the event of Landlord's
default as above set forth, then, and only then, Tenant may then proceed in
equity or at law to compel Landlord to perform its obligations and/or to recover
damages proximately caused by such failure to perform (except as and to the
extent Tenant has waived its right to damages as provided in this Lease).

12.4 LIMITATION OF TENANT'S RECOURSE. If Landlord is a corporation, trust,
partnership, joint venture, limited liability company, unincorporated
association, or other form of business entity, Tenant agrees that (i) the
obligations of Landlord under this Lease shall not constitute personal
obligations of the officers, directors, trustees, partners, joint venturers,
members, owners, stockholders, or other principals of such business entity, and
(ii) Tenant shall have recourse only to the property of such corporation, trust,
partnership, joint venture, limited liability company, unincorporated
association, or other form of business entity for the satisfaction of such
obligations and not against the assets of such officers, directors, trustees,
partners, joint venturers, members, owners, stockholders or principals.
Additionally, if Landlord is a partnership or limited liability company, then
Tenant covenants and agrees:

        (a) No partner or member of Landlord shall be sued or named as a party
in any suit or action brought by Tenant with respect to any alleged breach of
this Lease (except to the extent necessary to secure jurisdiction over the
partnership and then only for that sole purpose);

<PAGE>   26

        (b) No service of process shall be made against any partner or member of
Landlord except for the sole purpose of securing jurisdiction over the
partnership; and

        (c) No writ of execution will ever be levied against the assets of any
partner or member of Landlord other than to the extent of his or her interest in
the assets of the partnership or limited liability company constituting
Landlord.

Tenant further agrees that each of the foregoing covenants and agreements shall
be enforceable by Landlord and by any partner or member of Landlord and shall be
applicable to any actual or alleged misrepresentation or nondisclosure made
regarding this Lease or the Leased Premises or any actual or alleged failure,
default or breach of any covenant or agreement either expressly or implicitly
contained in this Lease or imposed by statute or at common law.

12.5 TENANT'S WAIVER. Landlord and Tenant agree that the provisions of
Paragraph 12.3 above are intended to supersede and replace the provisions of
California Civil Code Sections 1932(1), 1941 and 1942, and accordingly, Tenant
hereby waives the provisions of California Civil Code Sections 1932(1), 1941 and
1942 and/or any similar or successor law regarding Tenant's right to terminate
this Lease or to make repairs and deduct the expenses of such repairs from the
rent due under this Lease.

                         ARTICLE 13  GENERAL PROVISIONS

13.1 TAXES ON TENANT'S PROPERTY. Tenant shall pay before delinquency any and
all taxes, assessments, license fees, use fees, permit fees and public charges
of whatever nature or description levied, assessed or imposed against Tenant or
Landlord by a governmental agency arising out of, caused by reason of or based
upon Tenant's estate in this Lease, Tenant's ownership of property, improvements
made by Tenant to the Leased Premises or the Outside Areas, improvements made by
Landlord for Tenant's use within the Leased Premises or the Outside Areas,
Tenant's use (or estimated use) of public facilities or services or Tenant's
consumption (or estimated consumption) of public utilities, energy, water or
other resources (collectively, "Tenant's Interest"). Upon demand by Landlord,
Tenant shall furnish Landlord with satisfactory evidence of these payments. If
any such taxes, assessments, fees or public charges are levied against Landlord,
Landlord's property, the Building or the Property, or if the assessed value of
the Building or the Property is increased by the inclusion therein of a value
placed upon Tenant's Interest, regardless of the validity thereof, Landlord
shall have the right to require Tenant to pay such taxes, and if not paid and
satisfactory evidence of payment delivered to Landlord at least ten days prior
to delinquency, then Landlord shall have the right to pay such taxes on Tenant's
behalf and to invoice Tenant for the same. Tenant shall, within the earlier to
occur of (a) thirty (30) days of the date it receives an invoice from Landlord
setting forth the amount of such taxes, assessments, fees, or public charge so
levied, or (b) the due date of such invoice, pay to Landlord, as Additional
Rent, the amount set forth in such invoice. Failure by Tenant to pay the amount
so invoiced within such time period shall be conclusively deemed a default by
Tenant under this Lease. Tenant shall have the right to bring suit in any court
of competent jurisdiction to recover from the taxing authority the amount of any
such taxes, assessments, fees or public charges so paid.

13.2 HOLDING OVER. This Lease shall terminate without further notice on the
Lease Expiration Date (as set forth in Article 1). Any holding over by Tenant
after expiration of the Lease Term shall neither constitute a renewal nor
extension of this Lease nor give Tenant any rights in or to the Leased Premises
except as expressly provided in this Paragraph. Any such holding over to which
Landlord has consented shall be construed to be a tenancy from month to month,
on the same terms and conditions herein specified insofar as applicable, except
that the Base Monthly Rent shall be increased to an amount equal to one hundred
fifty percent (150%) of the Base Monthly Rent payable during the last full month
immediately preceding such holding over. Tenant acknowledges that if Tenant
holds over without Landlord's consent, such holding over may compromise or
otherwise affect Landlord's ability to enter into new leases with prospective
tenants regarding the Leased Premises. Therefore, if Tenant fails to surrender
the Leased Premises upon the expiration or termination of this Lease, in
addition to any other liabilities to Landlord accruing therefrom, Tenant shall
protect, defend, indemnify and hold Landlord harmless from and against all
claims resulting from such failure, including, without limiting the foregoing,
any claims made by any succeeding tenant founded upon such failure to surrender,
and any losses suffered by Landlord, including lost profits, resulting from such
failure to surrender.

13.3 SUBORDINATION TO MORTGAGES. This Lease is subject to and subordinate to
all ground

<PAGE>   27

leases, mortgages and deeds of trust which affect the Building or the Property
and which are of public record as of the Effective Date of this Lease, and to
all renewals, modifications, consolidations, replacements and extensions
thereof. However, if the lessor under any such ground lease or any lender
holding any such mortgage or deed of trust shall advise Landlord that it desires
or requires this Lease to be made prior and superior thereto, then, upon written
request of Landlord to Tenant, Tenant shall, within ten (10) business days after
Landlord's request, execute, acknowledge and deliver any and all customary or
reasonable documents or instruments which Landlord and such lessor or lender
deems necessary or desirable to make this Lease prior thereto. Tenant hereby
consents to Landlord's ground leasing the land underlying the Building or the
Property and/or encumbering the Building or the Property as security for future
loans on such terms as Landlord shall desire, all of which future ground leases,
mortgages or deeds of trust shall be subject to and subordinate to this Lease.
However, if any lessor under any such future ground lease or any lender holding
such future mortgage or deed of trust shall desire or require that this Lease be
made subject to and subordinate to such future ground lease, mortgage or deed of
trust, then Tenant agrees, within ten days after Landlord's written request
therefor, to execute, acknowledge and deliver to Landlord any and all documents
or instruments reasonably requested by Landlord or by such lessor or lender as
may be necessary or proper to assure the subordination of this Lease to such
future ground lease, mortgage or deed of trust, but only if such lessor or
lender agrees to recognize Tenant's rights under this Lease and agrees not to
disturb Tenant's quiet possession of the Leased Premises so long as Tenant is
not in default under this Lease. Landlord will use its best efforts to provide
Tenant with non-disturbance agreements reasonably acceptable to Tenant from any
ground lessors, mortgage holders or lien holders of Landlord. If Landlord
assigns the Lease as security for a loan, Tenant agrees to execute such
documents as are reasonably requested by the lender and to provide reasonable
provisions in the Lease protecting such lender's security interest which are
customarily required by institutional lenders making loans secured by a deed of
trust.

13.4 TENANT'S ATTORNMENT UPON FORECLOSURE. Tenant shall, upon request, attorn
(i) to any purchaser of the Building or the Property at any foreclosure sale or
private sale conducted pursuant to any security instruments encumbering the
Building or the Property, (ii) to any grantee or transferee designated in any
deed given in lieu of foreclosure of any security interest encumbering the
Building or the Property, or (iii) to the lessor under an underlying ground
lease of the land underlying the Building or the Property, should such ground
lease be terminated; provided that such purchaser, grantee or lessor recognizes
Tenant's rights under this Lease.

13.5 MORTGAGEE PROTECTION. In the event of any default on the part of Landlord,
Tenant will give notice by registered mail to any Lender or lessor under any
underlying ground lease who shall have requested, in writing, to Tenant that it
be provided with such notice, and Tenant shall offer such Lender or lessor a
reasonable opportunity to cure the default, including time to obtain possession
of the Leased Premises by power of sale or judicial foreclosure or other
appropriate legal proceedings if reasonably necessary to effect a cure.

13.6 ESTOPPEL CERTIFICATE. Tenant will, following any request by Landlord,
promptly execute and deliver to Landlord an estoppel certificate substantially
in form attached as Exhibit C, (i) certifying that this Lease is unmodified and
in full force and effect, or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full force
and effect, (ii) stating the date to which the rent and other charges are paid
in advance, if any, (iii) acknowledging that there are not, to Tenant's
knowledge, any uncured defaults on the part of Landlord hereunder, or specifying
such defaults if any are claimed, and (iv) certifying such other information
about this Lease as may be reasonably requested by Landlord, its Lender or
prospective lenders, investors or purchasers of the Building or the Property.
Tenant's failure to execute and deliver such estoppel certificate within ten
(10) business days after Landlord's request therefor shall be a material default
by Tenant under this Lease without any notice that might otherwise be required
pursuant to Section 12.1, and Landlord shall have all of the rights and remedies
available to Landlord as Landlord would otherwise have in the case of any other
material default by Tenant, including the right to terminate this Lease and sue
for damages proximately caused thereby, it being agreed and understood by Tenant
that Tenant's failure to so deliver such estoppel certificate in a timely manner
could result in Landlord being unable to perform committed obligations to other
third parties which were made by Landlord in reliance upon this covenant of
Tenant; notwithstanding anything to the contrary in Section 12.1, such a default
is deemed non-curable, and Landlord has no obligation to permit Tenant to cure
such default. Landlord and Tenant intend that any statement delivered pursuant
to this paragraph may be relied upon by any Lender or purchaser or prospective
Lender or purchaser of the Building,

<PAGE>   28

the Property, or any interest in them.

13.7 TENANT'S FINANCIAL INFORMATION. Tenant shall, within ten business days
after Landlord's request therefor, deliver to Landlord a copy of Tenant's (and
any guarantor's) current financial statements (including a balance sheet, income
statement and statement of cash flow, all prepared in accordance with generally
accepted accounting principles) and any such other information reasonably
requested by Landlord regarding Tenant's financial condition. Landlord shall be
entitled to disclose such financial statements or other information to its
Lender, to any present or prospective principal of or investor in Landlord, or
to any prospective Lender or purchaser of the Building, the Property, or any
portion thereof or interest therein. Any such financial statement or other
information which is marked "confidential" or "company secrets" (or is otherwise
similarly marked by Tenant) shall be confidential and shall not be disclosed by
Landlord to any third party except as specifically provided in this paragraph,
unless the same becomes a part of the public domain without the fault of
Landlord.

13.8 TRANSFER BY LANDLORD. Landlord and its successors in interest shall have
the right to transfer their interest in the Building, the Property, or any
portion thereof at any time and to any person or entity. In the event of any
such transfer, the Landlord originally named herein (and in the case of any
subsequent transfer, the transferor), from the date of such transfer, (i) shall
be automatically relieved, without any further act by any person or entity, of
all liability for the performance of the obligations of the Landlord hereunder
which may accrue after the date of such transfer and (ii) shall be relieved of
all liability for the performance of the obligations of the Landlord hereunder
which have accrued before the date of transfer if its transferee agrees to
assume and perform all such prior obligations of the Landlord hereunder. Tenant
shall attorn to any such transferee. After the date of any such transfer, the
term "Landlord" as used herein shall mean the transferee of such interest in the
Building or the Property.

13.9 FORCE MAJEURE. The obligations of each of the parties under this Lease
(other than the obligations to pay money) shall be temporarily excused if such
party is prevented or delayed in performing such obligations by reason of any
strikes, lockouts or labor disputes; government restrictions, regulations,
controls, action or inaction; civil commotion; or extraordinary weather, fire or
other acts of God.

13.10 NOTICES. Any notice required or permitted to be given under this Lease
shall be in writing and (i) personally delivered, (ii) sent by United States
mail, registered or certified mail, postage prepaid, return receipt requested,
(iii) sent by Federal Express or similar nationally recognized overnight courier
service, or (iv) transmitted by facsimile with a hard copy sent within one (1)
business day by any of the foregoing means, and in all cases addressed as
follows, and such notice shall be deemed to have been given upon the date of
actual receipt or delivery (or refusal to accept delivery) at the address
specified below (or such other addresses as may be specified by notice in the
foregoing manner) as indicated on the return receipt or air bill:

        IF TO LANDLORD:      MELP VII, L.P.
                             c/o Menlo Equities LLC
                             525 University Avenue
                             Suite 100
                             Palo Alto, California  94301
                             Attention: Henry Bullock/Richard Holmstrom
                             Facsimile:  (650) 326-9300

        with a copy to:      Folger Levin & Kahn LLP
                             275 Battery Street, 23rd Floor
                             San Francisco, CA  94111
                             Attention:  Adam Sachs
                             Facsimile:  (415) 986-2827

        IF TO TENANT:        Aviron
                             4575 Patrick Henry Drive
                             Santa Clara, CA  95054
                             Attention: Chief Financial Officer

<PAGE>   29

Any notice given in accordance with the foregoing shall be deemed received upon
actual receipt or refusal to accept delivery.

13.11 ATTORNEYS' FEES. In the event any party shall bring any action,
arbitration proceeding or legal proceeding alleging a breach of any provision of
this Lease, to recover rent, to terminate this Lease, or to enforce, protect,
determine or establish any term or covenant of this Lease or rights or duties
hereunder of either party, the prevailing party shall be entitled to recover
from the non-prevailing party as a part of such action or proceeding, or in a
separate action for that purpose brought within one year from the determination
of such proceeding, reasonable attorneys' fees, expert witness fees, court costs
and other reasonable expenses incurred by the prevailing party.

13.12 DEFINITIONS. Any term that is given a special meaning by any provision in
this Lease shall, unless otherwise specifically stated, have such meaning
wherever used in this Lease or in any Addenda or amendment hereto. In addition
to the terms defined in Article 1, the following terms shall have the following
meanings:

        (a) REAL PROPERTY TAXES. The term "Real Property Tax" or "Real Property
Taxes" shall each mean Tenant's Expense Share of (i) all taxes, assessments,
levies and other charges of any kind or nature whatsoever, general and special,
foreseen and unforeseen (including all instruments of principal and interest
required to pay any general or special assessments for public improvements and
any increases resulting from reassessments caused by any change in ownership or
new construction), now or hereafter imposed by any governmental or
quasi-governmental authority or special district having the direct or indirect
power to tax or levy assessments, which are levied or assessed for whatever
reason against the Property or any portion thereof, or Landlord's interest
herein, or the fixtures, equipment and other property of Landlord that is an
integral part of the Property and located thereon, or Landlord's business of
owning, leasing or managing the Property or the gross receipts, income or
rentals from the Property, (ii) all charges, levies or fees imposed by any
governmental authority against Landlord by reason of or based upon the use of or
number of parking spaces within the Property, the amount of public services or
public utilities used or consumed (e.g. water, gas, electricity, sewage or waste
water disposal) at the Property, the number of person employed by tenants of the
Property, the size (whether measured in area, volume, number of tenants or
whatever) or the value of the Property, or the type of use or uses conducted
within the Property, and all costs and fees (including attorneys' fees)
reasonably incurred by Landlord in contesting any Real Property Tax and in
negotiating with public authorities as to any Real Property Tax. If, at any time
during the Lease Term, the taxation or assessment of the Property prevailing as
of the Effective Date of this Lease shall be altered so that in lieu of or in
addition to any the Real Property Tax described above there shall be levied,
awarded or imposed (whether by reason of a change in the method of taxation or
assessment, creation of a new tax or charge, or any other cause) an alternate,
substitute, or additional use or charge (i) on the value, size, use or occupancy
of the Property or Landlord's interest therein or (ii) on or measured by the
gross receipts, income or rentals from the Property, or on Landlord's business
of owning, leasing or managing the Property or (iii) computed in any manner with
respect to the operation of the Property, then any such tax or charge, however
designated, shall be included within the meaning of the terms "Real Property
Tax" or "Real Property Taxes" for purposes of this Lease. If any Real Property
Tax is partly based upon property or rents unrelated to the Property, then only
that part of such Real Property Tax that is fairly allocable to the Property
shall be included within the meaning of the terms "Real Property Tax" or "Real
Property Taxes." Notwithstanding the foregoing, the terms "Real Property Tax" or
"Real Property Taxes" shall not include estate, inheritance, transfer, gift or
franchise taxes of Landlord or the federal or state income tax imposed on
Landlord's income from all sources. Tenant also shall not be required to pay any
portion of any tax or assessment expense (i) levied on Landlord's rental income,
unless such tax or assessment expense is imposed in lieu of real property taxes;
or (ii) imposed on land and improvements other than the Property (including the
Building and the Leased Premises).

        (b) LANDLORD'S INSURANCE COSTS. The term "Landlord's Insurance Costs"
shall mean Tenant's Expense Share of the costs to Landlord to carry and maintain
the policies of fire and property damage insurance for the Building and the
Property and general liability and any other insurance required or permitted to
be carried by Landlord pursuant to Article 9, together with any deductible
amounts paid by Landlord upon the occurrence of any insured casualty or loss.

<PAGE>   30

        (c) PROPERTY MAINTENANCE COSTS. The term "Property Maintenance Costs"
shall mean Tenant's Expense Share of all costs and expenses (except Landlord's
Insurance Costs and Real Property Taxes) paid or incurred by Landlord in
protecting, operating, maintaining, repairing and preserving the Property and
all parts thereof, including without limitation, (i) market rate professional
management fees, (ii) any costs incurred by Landlord in the making of any
modifications, alterations or improvements required by any governmental
authority as set forth in Article 6, which are so amortized during the Lease
Term, and (iii) such other costs as may be paid or incurred with respect to
operating, maintaining, and preserving the Property, such as repairing and
resurfacing the exterior surfaces of the Building (including roofs), repairing
and resurfacing paved areas, repairing and replacing structural parts of the
Building, and repairing and replacing, when necessary, electrical, plumbing,
heating, ventilating and air conditioning systems serving the Building; with
respect to any items that are capital in nature, the cost of such items will be
amortized over the useful life of such items. Notwithstanding anything in this
paragraph to the contrary, Tenant will not be responsible for capital costs
associated with the foundation , structural exterior walls or structural roof
elements of the Building (excepting capital costs associated with the
non-structural roof elements, heating, ventilation, air conditioning, the
parking lot and landscaping) unless the cost was incurred as a result of
Tenant's activities or alterations. Notwithstanding anything to the contrary
contained in this Lease, in no event shall Tenant have any obligation to
perform, to pay directly, or to reimburse Landlord for, all or any portion of
the following repairs, maintenance, improvements, replacements, premiums,
claims, losses, fees, commissions, charges, disbursements, attorneys' fees,
experts' fees, costs and expenses (collectively, "Costs"): (i) Costs occasioned
by the act, omission or violation of law by Landlord, any other occupant of the
Building, or their respective agents, employees or contractors, or Costs to
correct any construction defect in the Leased Premises or the Building; (ii)
Costs occasioned by fire, acts of God or other casualties (but only to the
extent that Landlord receives insurance proceeds to cover such losses provided
that, to the extent that Landlord seeks to recover the deductible portion of an
insured loss as a portion of Property Maintenance Costs, Landlord may only
recover an amortized portion of such amount, as amortized at 12% over the useful
life of the restored, replaced or rebuilt item) or by the exercise of the power
of eminent domain; (iii) Costs which would properly be capitalized under
generally accepted accounting principles and which relate to repairs,
alterations, improvements, replacements, equipment and tools except to the
extent that Tenant's share of such Costs is amortized at 12% over the useful
life of the capital improvement in question in accordance with generally
accepted accounting principles; (iv) Costs which Tenant pays directly to a third
person; (v) Costs (A) arising from the mutually disproportionate use of any
utility or service supplied by Landlord to any other occupant of the Building;
or (B) associated with utilities and services of a type not provided to Tenant;
(vi) Costs incurred in connection with negotiations or disputes with other
occupant(s) of the Building or their agents, employees, contractors or invitees,
and Costs arising from the violation by Landlord or any occupant of the Building
(other than Tenant) of the terms and conditions of any lease or other agreement;
(vii) depreciation, amortization or other expense reserves (except as otherwise
permitted under this Lease), or (viii) Costs related to Hazardous Materials,
except to the extent the Cost is caused by the storage, use or disposal of the
Hazardous Material in question by Tenant, its agents, contractors or invitees.

        (d) PROPERTY OPERATING EXPENSES. The term "Property Operating Expenses"
shall mean and include all Real Property Taxes, plus all Landlord's Insurance
Costs, plus all Property Maintenance Costs.

        (e) LAW. The term "Law" shall mean any judicial decisions and any
statute, constitution, ordinance, resolution, regulation, rule, administrative
order, or other requirements of any municipal, county, state, federal, or other
governmental agency or authority having jurisdiction over the parties to this
Lease, the Leased Premises, the Building or the Property, or any of them, in
effect either at the Effective Date of this Lease or at any time during the
Lease Term, including, without limitation, any regulation, order, or policy of
any quasi-official entity or body (e.g. a board of fire examiners or a public
utility or special district).

        (f) LENDER. The term "Lender" shall mean the holder of any promissory
note or other evidence of indebtedness secured by the Property or any portion
thereof.

        (g) PRIVATE RESTRICTIONS. The term "Private Restrictions" shall mean
(as they may exist from time to time) any and all covenants, conditions and
restrictions, private agreements, easements, and any other recorded documents or
instruments affecting the use of the Property, the Building, the Leased
Premises, or the Outside Areas.

<PAGE>   31

        (h) RENT. The term "Rent" shall mean collectively Base Monthly Rent and
all Additional Rent.

13.13 GENERAL WAIVERS. One party's consent to or approval of any act by the
other party requiring the first party's consent or approval shall not be deemed
to waive or render unnecessary the first party's consent to or approval of any
subsequent similar act by the other party. No waiver of any provision hereof, or
any waiver of any breach of any provision hereof, shall be effective unless in
writing and signed by the waiving party. The receipt by Landlord of any rent or
payment with or without knowledge of the breach of any other provision hereof
shall not be deemed a waiver of any such breach. No waiver of any provision of
this Lease shall be deemed a continuing waiver unless such waiver specifically
states so in writing and is signed by both Landlord and Tenant. No delay or
omission in the exercise of any right or remedy accruing to either party upon
any breach by the other party under this Lease shall impair such right or remedy
or be construed as a waiver of any such breach theretofore or thereafter
occurring. The waiver by either party of any breach of any provision of this
Lease shall not be deemed to be a waiver of any subsequent breach of the same or
any other provisions herein contained.

13.14 MISCELLANEOUS. Should any provisions of this Lease prove to be invalid or
illegal, such invalidity or illegality shall in no way affect, impair or
invalidate any other provisions hereof, and such remaining provisions shall
remain in full force and effect. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor. Any copy of this Lease which is executed by the parties shall be deemed
an original for all purposes. This Lease shall, subject to the provisions
regarding assignment, apply to and bind the respective heirs, successors,
executors, administrators and assigns of Landlord and Tenant. The term "party"
shall mean Landlord or Tenant as the context implies. If Tenant consists of more
than one person or entity, then all members of Tenant shall be jointly and
severally liable hereunder. This Lease shall be construed and enforced in
accordance with the Laws of the State in which the Leased Premises are located.
The captions in this Lease are for convenience only and shall not be construed
in the construction or interpretation of any provision hereof. When the context
of this Lease requires, the neuter gender includes the masculine, the feminine,
a partnership, corporation, limited liability company, joint venture, or other
form of business entity, and the singular includes the plural. The terms "must,"
"shall," "will," and "agree" are mandatory. The term "may" is permissive. When a
party is required to do something by this Lease, it shall do so at its sole cost
and expense without right of reimbursement from the other party unless specific
provision is made therefor. Where Landlord's consent is required hereunder, the
consent of any Lender shall also be required. Landlord and Tenant shall both be
deemed to have drafted this Lease, and the rule of construction that a document
is to be construed against the drafting party shall not be employed in the
construction or interpretation of this Lease. Where Tenant is obligated not to
perform any act or is not permitted to perform any act, Tenant is also obligated
to restrain any others reasonably within its control, including agents,
invitees, contractors, subcontractors and employees, from performing such act.
Landlord shall not become or be deemed a partner or a joint venturer with Tenant
by reason of any of the provisions of this Lease.

13.15 QUIET ENJOYMENT. Landlord covenants to Tenant that on Tenant's paying
rental and performing the covenants required to be performed under this Lease by
Tenant, Tenant shall and may quietly enjoy the Leased Premises without
interference by Landlord or any person claiming by through or under Landlord.

           ARTICLE 14  CORPORATE AUTHORITY BROKERS AND ENTIRE AGREEMENT

14.1 CORPORATE AUTHORITY. If Tenant is a corporation, each individual executing
this Lease on behalf of such corporation represents and warrants that Tenant is
validly formed and duly authorized and existing, that Tenant is qualified to do
business in the State in which the Leased Premises are located, that Tenant has
the full right and legal authority to enter into this Lease, and that he or she
is duly authorized to execute and deliver this Lease on behalf of Tenant in
accordance with its terms. Tenant shall, within thirty days after receipt of
Landlords' request, deliver to Landlord a certified copy of the resolution of
its board of directors authorizing or ratifying the execution of this Lease and
if Tenant fails to do so, Landlord at its sole election may elect to terminate
this Lease.

14.2 BROKERAGE COMMISSIONS. Tenant represents, warrants and agrees that it has
not had any dealings with any real estate broker(s), leasing agent(s), finder(s)
or salesmen, other than the Brokers (as named in Article 1) with respect to the
lease of the Leased Premises pursuant to this Lease. Landlord and Tenant will
indemnify, defend with competent counsel, and hold the other

<PAGE>   32

harmless from any liability for the payment of any real estate brokerage
commissions, leasing commissions or finder's fees claimed by any other real
estate broker(s), leasing agent(s), finder(s), or salesmen to be earned or due
and payable by reason of the indemnifying party's agreement or promise (implied
or otherwise) to pay (or to have the other pay) such a commission or finder's
fee by reason of its leasing the Leased Premises pursuant to this Lease.

14.3 ENTIRE AGREEMENT. This Lease and the Exhibits (as described in Article 1),
which Exhibits are by this reference incorporated herein, constitute the entire
agreement between the parties, and there are no other agreements, understandings
or representations between the parties relating to the lease by Landlord of the
Leased Premises to Tenant, except as expressed herein. No subsequent changes,
modifications or additions to this Lease shall be binding upon the parties
unless in writing and signed by both Landlord and Tenant.

14.4 LANDLORD'S REPRESENTATIONS. Tenant acknowledges that neither Landlord nor
any of its agents made any representations or warranties respecting the
Property, the Building or the Leased Premises, upon which Tenant relied in
entering into the Lease, which are not expressly set forth in this Lease. Tenant
further acknowledges that neither Landlord nor any of its agents made any
representations as to (i) whether the Leased Premises may be used for Tenant's
intended use under existing Law, or (ii) the suitability of the Leased Premises
for the conduct of Tenant's business, or (iii) the exact square footage of the
Leased Premises, and that Tenant relies solely upon its own investigations with
respect to such matters. Tenant expressly waives any and all claims for damage
by reason of any statement, representation, warranty, promise or other agreement
of Landlord or Landlord's agent(s), if any, not contained in this Lease or in
any Exhibit attached hereto.

                          ARTICLE 15  OPTION TO EXTEND

15.1 OPTION. So long as Aviron or a permitted assignee (but not subtenant)
pursuant to Article 7 is the Tenant hereunder and occupies the entirety of the
Leased Premises, and subject to the condition set forth in clause (b) below,
Tenant shall have one option to extend the term of this Lease with respect to
the entirety of the Leased Premises, for a period of five (5) years from the
expiration of the Lease Term (the "Extension Period"), subject to the following
conditions:

        (a) The option to extend shall be exercised, if at all, by notice of
exercise given to Landlord by Tenant not more than twelve months nor less than
nine months prior to the expiration of the Lease Term;

        (b) Anything herein to the contrary notwithstanding, if Tenant is in
default, beyond the applicable cure period, under any of the terms, covenants or
conditions of this Lease, either at the time Tenant exercises the extension
option or on the commencement date of the Extension Period, Landlord shall have,
in addition to all of Landlord's other rights and remedies provided in this
Lease, the right to terminate such option to extend upon notice to Tenant.

15.2 TERMS. In the event the option is exercised in a timely fashion, the Lease
shall be extended for the term of the Extension Period upon all of the terms and
conditions of this Lease, provided that the Base Monthly Rent for the Extension
Period shall be the "Fair Market Rent" for the Leased Premises, increased as set
forth below. For purposes hereof, "Fair Market Rent" shall mean the Base Monthly
Rent determined pursuant to the process described below. In no event, however,
shall any adjustment of Base Monthly Rent pursuant to this paragraph result in a
decrease of the Base Monthly Rent for the Leased Premises below the amount due
from Tenant for the preceding portion of the initial Lease Term for which Base
Monthly Rent had been fixed.

15.3 NOTIFICATION. Within thirty (30) days after receipt of Tenant's notice of
exercise, Landlord shall notify Tenant in writing of Landlord's estimate of the
Base Monthly Rent (with applicable rental increase provisions) for the Extension
Period, based on the provisions of Paragraph 15.2 above. Within thirty (30) days
after receipt of such notice from Landlord, Tenant shall have the right either
to (i) accept Landlord's statement of Base Monthly Rent as the Base Monthly Rent
for the applicable extension period; or (ii) elect to arbitrate Landlord's
estimate of Fair Market Rent, such arbitration to be conducted pursuant to the
provisions hereof. Failure on the part of Tenant to require arbitration of Fair
Market Rent within such 30-day period shall constitute acceptance of the Base
Monthly Rent (with applicable rental increase provisions) for the Extension
Period as calculated by Landlord. If Tenant elects arbitration, the arbitration
shall be concluded within 90 days after the date of Tenant's election, subject
to extension for an additional 30-day period if a third arbitrator is required
and does not act in a timely manner. To the extent that arbitration has not been
completed prior to the expiration of any preceding period

<PAGE>   33

for which Base Monthly Rent has been determined, Tenant shall pay Base Monthly
Rent (with applicable rental increase provisions) at the rate calculated by
Landlord, with the potential for an adjustment to be made once Fair Market Rent
is ultimately determined by arbitration.

15.4 ARBITRATION. In the event of arbitration, the judgment or the award
rendered in any such arbitration may be entered in any court having jurisdiction
and shall be final and binding between the parties. The arbitration shall be
conducted and determined in the City and County of Santa Clara in accordance
with the then prevailing rules of the American Arbitration Association or its
successor for arbitration of commercial disputes except to the extent that the
procedures mandated by such rules shall be modified as follows:

        (a) Tenant shall make demand for arbitration in writing within thirty
(30) days after service of Landlord's determination of Fair Market Rent given
under Paragraph 15.3 above, specifying therein the name and address of the
person to act as the arbitrator on its behalf. The arbitrator shall be qualified
as a real estate appraiser familiar with the fair market rent of similar
industrial, research and development, or office space in the Silicon Valley area
who would qualify as an expert witness over objection to give opinion testimony
addressed to the issue in a court of competent jurisdiction. Failure on the part
of Tenant to make a proper demand in a timely manner for such arbitration shall
constitute a waiver of the right thereto. Within fifteen (15) days after the
service of the demand for arbitration, Landlord shall give notice to Tenant,
specifying the name and address of the person designated by Landlord to act as
arbitrator on its behalf who shall be similarly qualified. If Landlord fails to
notify Tenant of the appointment of its arbitrator, within or by the time above
specified, then the arbitrator appointed by Tenant shall be the arbitrator to
determine the issue.

        (b) In the event that two arbitrators are chosen pursuant to Paragraph
15.4(a) above, the arbitrators so chosen shall, within fifteen (15) days after
the second arbitrator is appointed determine the Fair Market Rent (with
applicable rental increase provisions; such Fair Market Rent will be based on
the fair market value for facilities comparable to the Leased Premises in
comparable locations within what is commonly referred to as the "Marriott
Business Park" in Santa Clara, California. If the two arbitrators shall be
unable to agree upon a determination of Fair Market Rent within such 15-day
period, they, themselves, shall appoint a third arbitrator, who shall be a
competent and impartial person with qualifications similar to those required of
the first two arbitrators pursuant to Paragraph 15.4(a). In the event they are
unable to agree upon such appointment within seven days after expiration of such
15-day period, the third arbitrator shall be selected by the parties themselves,
if they can agree thereon, within a further period of fifteen (15) days. If the
parties do not so agree, then either party, on behalf of both, may request
appointment of such a qualified person by the then Chief Judge of the United
States District Court having jurisdiction over the County of Santa Clara, acting
in his private and not in his official capacity, and the other party shall not
raise any question as to such Judge's full power and jurisdiction to entertain
the application for and make the appointment. The three arbitrators shall decide
the dispute if it has not previously been resolved by following the procedure
set forth below.

        (c) Where an issue cannot be resolved by agreement between the two
arbitrators selected by Landlord and Tenant or settlement between the parties
during the course of arbitration, the issue shall be resolved by the three
arbitrators within 15 days of the appointment of the third arbitrator in
accordance with the following procedure. The arbitrator selected by each of the
parties shall state in writing his determination of the Fair Market Rent
supported by the reasons therefor with counterpart copies to each party. The
arbitrators shall arrange for a simultaneous exchange of such proposed
resolutions. The role of the third arbitrator shall be to select which of the
two proposed resolutions most closely approximates his determination of Fair
Market Rent. The third arbitrator shall have no right to propose a middle ground
or any modification of either of the two proposed resolutions. The resolution he
chooses as most closely approximating his determination shall constitute the
decision of the arbitrators and be final and binding upon the parties.

        (d) In the event of a failure, refusal or inability of any arbitrator to
act, his successor shall be appointed by him, but in the case of the third
arbitrator, his successor shall be appointed in the same manner as provided for
appointment of the third arbitrator. The arbitrators shall decide the issue
within fifteen (15) days after the appointment of the third arbitrator. Any
decision in which the arbitrator appointed by Landlord and the arbitrator
appointed by Tenant concur shall be binding and conclusive upon the parties.
Each party shall pay the fee and expenses of its respective arbitrator and both
shall share the fees and expenses of the third

<PAGE>   34

arbitrator, if any, and the attorneys' fees and expenses of counsel for the
respective parties and of witnesses shall be paid by the respective party
engaging such counsel or calling such witnesses.

        (e) The arbitrators shall have the right to consult experts and
competent authorities to obtain factual information or evidence pertaining to a
determination of Fair Market Rent, but any such consultation shall be made in
the presence of both parties with full right on their part to cross-examine. The
arbitrators shall render their decision and award in writing with counterpart
copies to each party. The arbitrators shall have no power to modify the
provisions of this Lease.

                          ARTICLE 16  FIRST OFFER RIGHT

16.1 FIRST OFFER RIGHT. Landlord agrees to give Tenant a First Offer Right on
the adjacent space in the Building of approximately 32,500 square feet in the
Building, which is currently leased by DRS Precision Echo, Inc. and which is
designated on Exhibit A hereto (the "Offered Space").

        If Landlord intends during the term of this Lease to lease all or any
portion of the Offered Space, and if Tenant is not then in default (beyond the
applicable cure period, but in no event more than thirty (30) days) under this
Lease, Landlord shall give written notice of such intention to Tenant,
specifying the material terms on which Landlord is willing to lease the Option
Space to Tenant, and shall offer to Tenant the opportunity to lease the Offered
Space on the terms specified in Landlord's notice. Tenant shall have five (5)
days after the date of giving of such notice by Landlord in which to accept such
offer by written notice to Landlord. Upon such acceptance by Tenant, the Offered
Space shall be leased to Tenant on the terms set forth in Landlord's notice and
on the additional terms and provisions set forth herein (except to the extent
inconsistent with the terms set forth in Landlord's notice) and the parties
shall promptly execute an amendment to this Lease adding the Offered Space to
the Leased Premises and making any appropriate amendments to provisions of this
Lease to reflect different rent and other obligations applicable to the Offered
Space under the terms of the Landlord's notice. If Tenant does not accept
Landlord's offer within the allotted time, Landlord shall thereafter have the
right to lease the Offered Space to a third party, at any time after Tenant's
failure to accept Landlord's offer, at a minimum rental and on other terms and
conditions determined by Landlord (which may be more or less favorable to the
tenant than the minimum rental and other terms offered to Tenant in Landlord's
notice).

        Tenant's First Refusal Rights shall be subordinate to any rights of DRS
Precision Echo, Inc. with respect to the Offered Space.

                          ARTICLE 17  TELEPHONE SERVICE

        Notwithstanding any other provision of this Lease to the contrary:

                (a) So long as the entirety of the Leased Premises is leased to
Tenant:

                        (i) Landlord shall have no responsibility for providing
to Tenant any telephone equipment, including wiring, within the Leased Premises
or for providing telephone service or connections from the utility to the Leased
Premises; and

                        (ii) Landlord makes no warranty as to the quality,
continuity or availability of the telecommunications services in the Building,
and Tenant hereby waives any claim against Landlord for any actual or
consequential damages (including damages for loss of business) in the event
Tenant's telecommunications services in any way are interrupted, damaged or
rendered less effective, except to the extent caused by the sole active
negligent or willful act or omission by Landlord, its agents, contractors or
employees. Tenant accepts the telephone equipment (including, without
limitation, the INC, as defined below) in its "AS-IS" condition, and Tenant
shall be solely responsible for contracting with a reliable third party vendor
to assume responsibility for the maintenance and repair thereof (which contract
shall contain provisions requiring such vendor to inspect the INC periodically
(the frequency of such inspections to be determined by such vendor based on its
experience and professional judgment), and requiring such vendor to meet local
and federal requirements for telecommunications material and workmanship).
Landlord shall not be liable to Tenant and Tenant waives all claims against
Landlord whatsoever, whether for personal injury, property damage, loss of use
of the Leased Premises, or otherwise, due to the interruption or failure of
telephone services to the Leased Premises except to the extent caused by the
sole active negligence or willful misconduct of Landlord, its agents, employees
or contractors. Tenant hereby holds Landlord harmless and

<PAGE>   35

agrees to indemnify, protect and defend Landlord from and against any liability
for any damage, loss or expense due to any failure or interruption of telephone
service to the Leased Premises for any reason except to the extent caused by the
sole active negligence or willful misconduct of Landlord, its agents, employees
or contractors. Tenant agrees to obtain loss of rental insurance adequate to
cover any damage, loss or expense occasioned by the interruption of telephone
service.

                (b) At such time as the entirety of the Leased Premise is no
longer leased to Tenant, Landlord shall in its sole discretion have the right,
by written notice to Tenant, to elect to assume limited responsibility for INC,
as provided below, and upon such assumption of responsibility by Landlord, this
subparagraph (b) shall apply prospectively.

                        (i) Landlord shall provide Tenant access to such
quantity of pairs in the Building intra-building network cable ("INC") as is
determined to be available by Landlord in its reasonable discretion. Tenant's
access to the INC shall be solely by arrangements made by Tenant, as Tenant may
elect, directly with Pacific Bell or Landlord (or such vendor as Landlord may
designate), and Tenant shall pay all reasonable charges as may be imposed in
connection therewith. Pacific Bell's charges shall be deemed to be reasonable.
Subject to the foregoing, Landlord shall have no responsibility for providing to
Tenant any telephone equipment, including wiring, within the Leased Premises or
for providing telephone service or connections from the utility to the Leased
Premises, except as required by law.

                        (ii) Tenant shall not alter, modify, add to or disturb
any telephone wiring in the Leased Premises or elsewhere in the Building without
the Landlord's prior written consent, which shall not be unreasonably withheld.
Tenant shall be liable to Landlord for any damage to the telephone wiring in the
Building due to the act, negligent or otherwise, of Tenant or any employee,
contractor or other agent of Tenant. Tenant shall have no access to the
telephone closets within the Building except for the telephone closet located
within the Leased Premises, except in the manner and under procedures
established by Landlord. Tenant shall promptly notify Landlord of any actual or
suspected failure of telephone service to the Leased Premises.

                        (iii) All costs incurred by Landlord for the
installation, maintenance, repair and replacement of telephone wiring in the
Building shall be a Property Maintenance Cost.

                        (iv) Landlord makes no warranty as to the quality,
continuity or availability of the telecommunications services in the Building,
and Tenant hereby waives any claim against Landlord for any actual or
consequential damages (including damages for loss of business) in the event
Tenant's telecommunications services in any way are interrupted, damaged or
rendered less effective, except to the extent caused by the grossly negligent or
willful act or omission by Landlord, its agents, contractors or employees.
Tenant acknowledges that Landlord meets its duty of care to Tenant with respect
to the Building INC by contracting with a reliable third party vendor to assume
responsibility for the maintenance and repair thereof (which contract shall
contain provisions requiring such vendor to inspect the INC periodically (the
frequency of such inspections to be determined by such vendor based on its
experience and professional judgment), and requiring such vendor to meet local
and federal requirements for telecommunications material and workmanship).
Subject to the foregoing, Landlord shall not be liable to Tenant and Tenant
waives all claims against Landlord whatsoever, whether for personal injury,
property damage, loss of use of the Leased Premises, or otherwise, due to the
interruption or failure of telephone services to the Leased Premises except to
the extent caused by the gross negligence or willful misconduct of Landlord, its
agents, employees or contractors. Tenant hereby holds Landlord harmless and
agrees to indemnify, protect and defend Landlord from and against any liability
for any damage, loss or expense due to any failure or interruption of telephone
service to the Leased Premises for any reason except to the extent caused by the
gross negligence or willful misconduct of Landlord, its agents, employees or
contractors. Tenant agrees to obtain loss of rental insurance adequate to cover
any damage, loss or expense occasioned by the interruption of telephone service.

<PAGE>   36

        IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the respective dates below set forth with the intent to be legally bound thereby
as of the Effective Date of this Lease first above set forth.

                                           TENANT:
                                           Aviron, a
                                           Delaware corporation

Dated:   October 20, 1999                  By:      /s/ Fred Kurland
                                              ---------------------------------
                                           Title: Senior Vice-President and
                                                  Chief Financial Officer

                                           LANDLORD:

                                           MELP VII, L.P. a California limited
                                              partnership

                                           By: Menlo Equities Associates VII LLC
                                              ----------------------------------
                                           Its: General Partner

Dated:   October 20, 1999                      By: Menlo Equities LLC
                                                  ------------------------------
                                               Title: Managing Member

                                                   By: Menlo Equities, Inc.
                                                      --------------------------
                                                   Title: Managing Member

                                                   By: /s/ Henry D. Bullock
                                                      --------------------------
                                                           Henry D. Bullock
                                                   Its: President

<PAGE>   37

                                    EXHIBIT A

                                    SITE PLAN

<PAGE>   38

                                    EXHIBIT B

                                   WORK LETTER

<PAGE>   39

                                    EXHIBIT C

                          FORM OF ESTOPPEL CERTIFICATE

__________________, 19____

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

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

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

Re
  ---------------------------

                 , California
  ---------------

Ladies and Gentlemen:

Reference is made to that certain Lease, dated as of October 20, 1999, between
MELP VII, L.P., a California limited partnership ("Landlord"), and the
undersigned (herein referred to as the "Lease"). A copy of the Lease [and all
amendment thereto] is [are] attached hereto as EXHIBIT A. At the request of
Landlord in connection with [ State reasons for request for estoppel certificate
], the undersigned hereby certifies to Landlord and to [ State names of other
parties requiring certification ] and each of your respective successors and
assigns as follows:

        1. The undersigned is the tenant under the Lease.

        2. The Lease is in full force and effect and has not been amended,
modified, supplemented or superseded except as indicated in Exhibit A.

        3. There is no defense, offset, claim or counterclaim by or in favor of
the undersigned against Landlord under the Lease or against the obligations of
the undersigned under the Lease. The undersigned has no renewal, extension or
expansion option, no right of first offer or right of first refusal and no other
similar right to renew or extend the term of the Lease or expand the property
demised thereunder except as may be expressly set forth in the Lease.

        4. The undersigned is not aware of any default now existing of the
undersigned or of Landlord under the Lease, nor of any event which with notice
or the passage of time or both would constitute a default of the undersigned or
of Landlord under the Lease.

        5. The undersigned has not received notice of a prior transfer,
assignment, hypothecation or pledge by Landlord of any of Landlord's interest in
the Lease.

        6. The monthly rent due under the Lease is $____________ and has been
paid through __________________, and all additional rent due and payable under
the Lease has been paid through _________________.

        7. The term of the Lease commenced on __________________, and expires on
___________________, unless sooner terminated pursuant to the provisions of the
Lease. Landlord has performed all work required by the Lease for the
undersigned's initial occupancy of the demised property.

        8. The undersigned has deposited the sum of $____________ with Landlord
as security for the performance of its obligations as tenant under the Lease,
and no portion of such deposit has been applied by Landlord to any obligation
under the Lease.

        9. There is no free rent period pending, nor is Tenant entitled to any
Landlord's contribution.

The above certifications are made to Landlord and Lender knowing that Landlord
and Lender will rely thereon in accepting an assignment of the Lease.

Very truly yours,

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

<PAGE>   40

                                                                       Exhibit B

                                   WORK LETTER

        THIS WORK LETTER, dated October __, 1999, is entered into by and between
MELP VII, L.P., a California limited partnership ("Landlord"), and Aviron, a
Delaware corporation ("Tenant"). On or about the date hereof, Landlord and
Tenant entered into that certain Lease (the "Lease") for certain premises (the
"Leased Premises") commonly known as 4575 Patrick Henry Drive, Santa Clara,
California. This Work Letter sets forth the agreement of Landlord and Tenant
with respect to the improvements to be constructed in the Leased Premises. All
defined terms used in this Work Letter shall have the meaning set forth in the
Lease, unless otherwise defined in this Work Letter.

1. CONSTRUCTION OF TENANT IMPROVEMENTS. Tenant shall, through its general
contractor (the "Contractor"), furnish and install within the Leased Premises,
substantially in accordance with the plans and specifications to be approved by
Landlord and Tenant pursuant to paragraph 2 below, certain items of general
construction (the "Tenant Improvements"). The quantities, character and manner
of installation of all of the Tenant Improvements shall be subject to the
limitations imposed by any applicable governmental regulations relating to
conservation of energy and by applicable building codes and regulations. In
addition, Tenant agrees that the Tenant Improvements will not require work which
would (i) require changes to structural components of the Building or the
exterior design of the Building; (ii) require any material modification to the
Building's mechanical or electrical systems; or (iii) be incompatible with the
Building plans filed with the City of Santa Clara.

2. SPACE PLANNING.

(a) Tenant will prepare for Landlord's approval no later than fourteen days
prior to the date Tenant intends to submit its permit application, comprehensive
space planning documents (once approved by Landlord, the "Space Planning
Documents").

(b) All planning and interior design services relating to furniture and
equipment, such as selection of colors, finishes, fixtures, furnishings or floor
coverings, will be included in the cost of the Tenant Improvements, shall be
subject to prior written approval of Landlord, which shall not be unreasonably
withheld or delayed and shall be delivered within five (5) business days after
the request is received by Landlord. In connection with Landlord's approval of
the Space Plans and the Working Drawings, Landlord will notify Tenant of those
improvements it considers to be specialized improvements ("Special
Improvements") for Tenant's particular use of the Leased Premises, and will
notify Tenant which Special Improvements must be removed at the termination of
the Lease; not later than the termination of the Lease, Tenant shall remove all
such designated Special Improvements and restore the Leased Premises before the
termination of the Lease, in accordance with Section 2.6 of the Lease.

<PAGE>   41

3. APPROVAL OF WORKING DRAWINGS.

(a) Landlord and Tenant acknowledge that Tenant shall retain an architect and
engineers to prepare all architectural and engineering plans and specifications
required for the construction of the Tenant Improvements in conformance with the
base building and tenant improvement standard specifications of the Building
(the "Working Drawings"), and to prepare drawings and specifications for Changes
(as defined below), if any, pursuant to paragraph 5 below.

(b) Tenant shall submit the completed Working Drawings to Landlord for
Landlord's approval. Landlord will provide written approval of the Working
Drawings within five (5) business days after receipt of such submission. If
Landlord disapproves any part of the submission, the disapproval shall include
written instructions adequate for Tenant's architect and engineers to revise the
Working Drawings. Such revisions shall be subject to Landlord's approval, which
shall not be unreasonably withheld or delayed. Landlord will finally approve the
revised Working Drawings within five (5) business days after submission thereof
to Landlord.

(c) Upon Landlord's approval of the Working Drawings, Tenant shall be authorized
to cause the Contractor to proceed with the construction of the Tenant
Improvements in accordance with the Working Drawings.

4. COST OF TENANT IMPROVEMENTS. Unless specified otherwise herein, Landlord
shall bear and pay for the cost of the Tenant Improvements (which cost shall
include, without limitation, the costs of construction, the cost of permits and
permit expediting, and all architectural and engineering services obtained by
Landlord in connection with the Tenant Improvements, the Contractor's fees,
Landlord's fee for construction administration in an amount equal to 2.5% of
construction hard costs) up to a maximum of $180,000.00 (the "Tenant Improvement
Allowance"). While the Tenant Improvements are being constructed, Tenant may
submit to Landlord monthly invoices for the cost of the Tenant Improvements
completed in the preceding month together with lien waivers with respect to such
work; within thirty (30) days after such submission, Landlord will reimburse
Tenant for its costs for Tenant Improvements, less 2.5% in payment of Landlord's
construction administration fee, all subject to the $180,000 cap. The Tenant
Improvement Allowance shall be utilized only for building improvements to the
Building, and not for signage, furniture costs, any third party consulting or
contracting fees (except for Tenant's architect's fees), any telecom/cabling
costs, or any other purpose. Tenant shall bear and pay the cost of the Tenant
Improvements (including but not limited to all of the foregoing fees and costs)
in excess of the Tenant Improvement Allowance, if any. The cost of the Tenant
Improvements shall exclude the cost of furniture, fixtures and inventory and
other items of Tenant's Work (as defined below).

        Notwithstanding anything to the contrary contained in this Lease, the
cost of the Tenant Improvements ("Tenant Improvements Cost") to be provided at
Landlord's sole expense shall not include (and Tenant shall have no
responsibility for) the following:

        (i) Costs attributable to (A) building shell construction; (B)
improvements installed outside the demising walls of the Leased Premises unless
(1) necessitated by Tenant Improvements made inside the demising walls of the
Leased Premises; or (2) requested by Tenant or as shown in the approved working
drawings; and (C) improvements installed "off-site"

<PAGE>   42

(such as streets, curbs, gutters, traffic lights for parking and street
lighting);

        (ii) Costs for improvements which are not shown on or described in the
approved working drawings unless otherwise approved by Tenant;

        (iii) Costs incurred to remove Hazardous Materials from the Leased
Premises or the surrounding area unless the presence of such materials was
caused by Tenant or its contractors, employees or agents (including, without
limitation, Tenant's invitees and visitors), contractors, employees or invitees
in violation of Hazardous Materials laws; and

        (iv) Landlord's loan fees, mortgage brokerage fees, interest and other
costs of financing construction costs.

5. CHANGES. Any request by Tenant for a change in the Tenant Improvements after
approval of the Working Drawings (a "Change") shall be accompanied by all
information necessary to clearly identify and explain the proposed Change.
Within five (5) business days after Landlord's receipt of such request, Landlord
shall notify Tenant whether it approves such Change, which approval will not be
unreasonably withheld or delayed.

6. PROCEDURES.

        (a) The construction of Tenant Improvements shall not proceed until
Landlord has approved in writing: (i) Tenant's contractors, (ii) proof of the
amount and coverage of public liability and property damage insurance carried by
Tenant's contractors in the form of an endorsed insurance certificate naming
Landlord, the Contractor, and the agents of Landlord and the Contractor as
additional insureds, in an amount not less than two million dollars, and (iii)
complete and detailed plans and specifications for Tenant's Work.

        (b) The construction of Tenant Improvements shall be performed in
conformity with a valid permit when required, a copy of which shall be furnished
to Landlord before such work is commenced. In any event, all work shall comply
with all applicable laws, codes and ordinances of any governmental entity having
jurisdiction over the Building. Landlord shall have no responsibility for
Tenant's failure to comply with such applicable laws.

        (c) In connection with the construction of Tenant Improvements, (e.g.,
delivering or installing furniture or equipment to the second floor of the
Leased Premises), Tenant or its contractors shall arrange for any necessary
hoisting or elevator service with Landlord and shall pay such reasonable costs
for such services as may be charged by Landlord.

        (d) Tenant shall promptly pay Landlord within twenty (20) days after
receipt of demand for any extra expense incurred by Landlord by reason of faulty
work done by Tenant or its contractors, by reason of damage to existing work
caused by Tenant or its contractors, or by reason of inadequate cleanup by
Tenant or its contractors.

7. TENANT IMPROVEMENT WORK.

        Notwithstanding anything to the contrary contained in the Lease or this
Work Letter, the Tenant Improvements shall be constructed in substantial
conformity with the Working Drawings

<PAGE>   43

and all applicable rules, regulations, statutes, ordinances, laws and building
codes in a good and workmanlike manner, free of defects and using new materials
and equipment of good quality.

        IN WITNESS WHEREOF, Landlord and Tenant have executed this Work Letter
as of the respective dates set forth below.

                                          LANDLORD:

                                          MELP VII, L.P, a California limited
                                          partnership

                                          By:  Menlo Equities Associates VII LLC
                                          Its: General Partner

                                          By:  Menlo Equities LLC
                                          Its: Managing Member

                                          By:  Menlo Equities, Inc.
                                          Its: Managing Member

                                          By:  /s/ HENRY D. BULLOCK
                                              --------------------------------
                                          Its: President
                                               -------------------------------

                                           TENANT:

                                           Aviron, a Delaware corporation

                                           By: /s/ FRED KURLAND
                                               ---------------------------------

                                           Its: Senior Vice President and
                                                Chief Financial Officer
                                               ---------------------------------

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