Document:

<PAGE>

                                     LEASE

                                    BETWEEN

                METROPOLITAN LIFE INSURANCE COMPANY (LANDLORD)

                                      AND

                            MAXYGEN, INC. (TENANT)

                                SEAPORT CENTRE

                           Redwood City, California
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                   PAGE
<S>                                                                                   <C>
ARTICLE ONE - BASIC LEASE PROVISIONS................................................   1
     1.01 BASIC LEASE PROVISIONS....................................................   1
     1.02 ENUMERATION OF EXHIBITS & RIDER(S)........................................   2
     1.03 DEFINITIONS...............................................................   2

ARTICLE TWO - PREMISES, TERM, FAILURE TO GIVE POSSESSION, COMMON AREAS AND PARKING..   6
     2.01 LEASE OF PREMISES.........................................................   6
     2.02 TERM......................................................................   6
     2.03 FAILURE TO GIVE POSSESSION................................................   6
     2.04 AREA OF PREMISES..........................................................   6
     2.05 CONDITION OF PREMISES.....................................................   6
     2.06 COMMON AREAS & PARKING....................................................   6

ARTICLE THREE - RENT................................................................   7

ARTICLE FOUR - OPERATING EXPENSES RENT ADJUSTMENTS AND PAYMENTS.....................   7
     4.01 TENANT'S SHARE OF OPERATING EXPENSES......................................   7
     4.02 RENT ADJUSTMENTS..........................................................   8
     4.03 STATEMENT OF LANDLORD.....................................................   8
     4.04 BOOKS AND RECORDS.........................................................   8
     4.05 TENANT OR LEASE SPECIFIC TAXES............................................   9

ARTICLE FIVE - SECURITY DEPOSIT.....................................................   9

ARTICLE SIX -UTILITIES & SERVICES...................................................   9
     6.01 LANDLORD'S GENERAL SERVICES...............................................   9
     6.02 TENANT TO OBTAIN & PAY DIRECTLY...........................................   9
     6.03 TELEPHONE SERVICES........................................................   9
     6.04 FAILURE OR INTERRUPTION OF UTILITY OR SERVICE.............................  10
     6.05 CHOICE OF SERVICE PROVIDER................................................  10
     6.06 SIGNAGE...................................................................  10

ARTICLE SEVEN - POSSESSION, USE AND CONDITION OF PREMISES...........................  11
     7.01 POSSESSION AND USE OF PREMISES............................................  11
     7.02 HAZARDOUS MATERIAL........................................................  11
     7.03 LANDLORD ACCESS TO PREMISES; APPROVALS....................................  15
     7.04 QUIET ENJOYMENT...........................................................  16

ARTICLE EIGHT - MAINTENANCE.........................................................  16
     8.01 LANDLORD'S MAINTENANCE....................................................  16
     8.02 TENANT'S MAINTENANCE......................................................  16

ARTICLE NINE - ALTERATIONS AND IMPROVEMENTS.........................................  16
     9.01 TENANT ALTERATIONS........................................................  16
     9.02 LIENS.....................................................................  17

ARTICLE TEN - ASSIGNMENT AND SUBLETTING.............................................  17
     10.01 ASSIGNMENT AND SUBLETTING................................................  17
     10.02 [INTENTIONALLY DELETED]..................................................  18
     10.03 EXCESS RENT..............................................................  18
     10.04 TENANT LIABILITY.........................................................  19
     10.05 ASSUMPTION AND ATTORNMENT................................................  19
     10.06 TRANSFER TO TENANT AFFILIATE.............................................  19

ARTICLE ELEVEN - DEFAULT AND REMEDIES...............................................  19
     11.01 EVENTS OF DEFAULT........................................................  19
     11.02 LANDLORD'S REMEDIES......................................................  20
     11.03 ATTORNEY'S FEES..........................................................  21
     11.04 BANKRUPTCY...............................................................  21
     11.05 LANDLORD'S DEFAULT.......................................................  22

ARTICLE TWELVE - SURRENDER OF PREMISES..............................................  22
     12.01 IN GENERAL...............................................................  22
     12.02 LANDLORD'S RIGHTS........................................................  22

ARTICLE THIRTEEN - HOLDING OVER.....................................................  23
</TABLE>

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<TABLE>
<S>                                                                                   <C>
ARTICLE FOURTEEN - DAMAGE BY FIRE OR OTHER CASUALTY.................................  23
     14.01 SUBSTANTIAL UNTENANTABILITY..............................................  23
     14.02 INSUBSTANTIAL UNTENANTABILITY............................................  24
     14.03 RENT ABATEMENT...........................................................  24
     14.04 WAIVER OF STATUTORY REMEDIES.............................................  24

ARTICLE FIFTEEN - EMINENT DOMAIN....................................................  24
     15.01 TAKING OF WHOLE OR SUBSTANTIAL PART......................................  24
     15.02 TAKING OF PART...........................................................  24
     15.03 COMPENSATION.............................................................  24

ARTICLE SIXTEEN - INSURANCE.........................................................  25
     16.01 TENANT'S INSURANCE.......................................................  25
     16.02 FORM OF POLICIES.........................................................  25
     16.03 LANDLORD'S INSURANCE.....................................................  25
     16.04 WAIVER OF SUBROGATION....................................................  25
     16.05 NOTICE OF CASUALTY.......................................................  26

ARTICLE SEVENTEEN - WAIVER OF CLAIMS AND INDEMNITY..................................  26
     17.01 WAIVER OF CLAIMS.........................................................  26
     17.02 INDEMNITY BY TENANT......................................................  26

ARTICLE EIGHTEEN - RULES AND REGULATIONS............................................  27
     18.01 RULES....................................................................  27
     18.02 ENFORCEMENT..............................................................  27

ARTICLE NINETEEN - LANDLORD'S RESERVED RIGHTS.......................................  27

ARTICLE TWENTY - ESTOPPEL CERTIFICATE...............................................  27
     20.01 IN GENERAL...............................................................  27
     20.02 ENFORCEMENT..............................................................  28

ARTICLE TWENTY-ONE - RELOCATION OF TENANT...........................................  28

ARTICLE TWENTY-TWO - REAL ESTATE BROKERS............................................  28

ARTICLE TWENTY-THREE - MORTGAGEE PROTECTION.........................................  28
     23.01 SUBORDINATION AND ATTORNMENT.............................................  28
     23.02 MORTGAGEE PROTECTION.....................................................  29

ARTICLE TWENTY-FOUR - NOTICES.......................................................  29

ARTICLE TWENTY-FIVE - EXERCISE FACILITY.............................................  29

ARTICLE TWENTY-SIX - MISCELLANEOUS..................................................  30
     26.01 LATE CHARGES.............................................................  30
     26.02 NO JURY TRIAL; VENUE; JURISDICTION.......................................  30
     26.03 DEFAULT UNDER OTHER LEASE................................................  30
     26.04 OPTION...................................................................  30
     26.05 TENANT AUTHORITY.........................................................  30
     26.06 ENTIRE AGREEMENT.........................................................  31
     26.07 MODIFICATION OF LEASE FOR BENEFIT OF MORTGAGEE...........................  31
     26.08 EXCULPATION..............................................................  31
     26.09 ACCORD AND SATISFACTION..................................................  31
     26.10 LANDLORD'S OBLIGATIONS ON SALE OF BUILDING...............................  31
     26.11 BINDING EFFECT...........................................................  31
     26.12 CAPTIONS.................................................................  31
     26.13 TIME; APPLICABLE LAW; CONSTRUCTION.......................................  31
     26.14 ABANDONMENT..............................................................  31
     26.15 LANDLORD'S RIGHT TO PERFORM TENANT'S DUTIES..............................  32
     26.16 SECURITY SYSTEM..........................................................  32
     26.17 NO LIGHT, AIR OR VIEW EASEMENTS..........................................  32
     26.18 RECORDATION..............................................................  32
     26.19 SURVIVAL.................................................................  32
     26.20 RIDERS...................................................................  32
</TABLE>

                                      ii
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                                     LEASE

                                  ARTICLE ONE
                            BASIC LEASE PROVISIONS

1.01 BASIC LEASE PROVISIONS

In the event of any conflict between these Basic Lease Provisions and any other
Lease provision, such other Lease provision shall control.

(1)  BUILDING AND ADDRESS:

     Building with several street addresses, including 200 Saginaw Drive
     Redwood City, California  94063

     Building Number 27, located in Phase II ("Tenant's Phase") of Seaport
     Centre

(2)  LANDLORD AND ADDRESS:

     Metropolitan Life Insurance Company,
     a New York corporation

     Notices to Landlord shall be addressed:

          Metropolitan Life Insurance Company
          c/o Seaport Centre Manager
          701 Chesapeake Drive
          Redwood City, CA 94063

          with copies to the following:

               Metropolitan Life Insurance Company
               400 South El Camino Real, Suite 800
               San Mateo, CA  94402
               Attention:  EIM Manager

(3)  TENANT AND CURRENT ADDRESS:

     (a) Name:                    Maxygen, Inc.
     (b) State of incorporation:  Delaware

     Notices to Tenant shall be addressed:

          Maxygen, Inc.
          515 Galveston Drive
          Redwood City, California  94063
          Attention:  Russell Howard, CEO

(4)  DATE OF LEASE:  as of  April 21, 2000

(5)  LEASE TERM:  sixty months

(6)  PROJECTED COMMENCEMENT DATE:  May 1, 2000, subject to Rider 2

(7)  PROJECTED EXPIRATION DATE:  sixty months after the Commencement Date

(8)  MONTHLY BASE RENT (initial monthly installment due upon Tenant's
     execution):

<TABLE>
<CAPTION>

     Period from/to         Monthly     Monthly Rate/SF of Rentable Area
     --------------         -------     --------------------------------
     <S>                    <C>         <C>

     Month 01 - Month 12    $31,648.00                $4.000
     Month 13 - Month 24    $33,230.40                $4.200
     Month 25 - Month 36    $34,891.92                $4.410
     Month 37 - Month 48    $36,636.52                $4.631
     Month 49 - Month 60    $38,468.34                $4.862
</TABLE>

(9)  RENT ADJUSTMENT DEPOSIT (initial monthly rate, until further notice):
     $3,481.28 (initial monthly installment due upon Tenant's execution)

(10) RENTABLE AREA OF THE PREMISES:  7,912 square feet

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(11) RENTABLE AREA OF THE BUILDING   32,400 square feet

(12) RENTABLE AREA OF THE PHASE:     235,620 square feet

(13) RENTABLE AREA OF THE PROJECT:   537,444 square feet

(14) SECURITY DEPOSIT:  Two Hundred and Thirty Thousand Eight Hundred Ten
     Dollars ($230,810.00) due upon Tenant's execution, subject to the terms of
     Article Five

(15) SUITE NUMBER &/OR ADDRESS OF PREMISES:  200 Saginaw Drive
                                             Redwood City, California 94063

(16) TENANT'S SHARE:

          Tenant's Building Share:   24.42%
          Tenant's Phase Share:      03.36%
          Tenant's Project Share:    01.47%

(17) TENANT'S USE OF PREMISES:  General office use, biotechnology research and
     development.

(18) PARKING SPACES:  twenty-five (25)

(19) BROKERS:

     Landlord's Broker:  Cornish & Carey

     Tenant's Broker:    CRESA Partners

1.02 ENUMERATION OF EXHIBITS & RIDER(S)

The Exhibits and Rider(s) set forth below and attached to this Lease are
incorporated in this Lease by this reference:

EXHIBIT A  Plan of Premises
---------
EXHIBIT B  Workletter Agreement (intentionally omitted)
---------
EXHIBIT C  Site Plan of Project
---------
EXHIBIT D  Permitted Hazardous Materials
---------
EXHIBIT E  Hazardous Materials Plans
---------

RIDER 1     Commencement Date Agreement
-------
RIDER 2     Additional Provisions
-------

1.03 DEFINITIONS

For purposes hereof, the following terms shall have the following meanings:

ADJUSTMENT YEAR:  The applicable calendar year or any portion thereof after the
Commencement Date of this Lease for which a Rent Adjustment computation is being
made.

AFFILIATE:  Any Person (as defined below) which is currently owned or controlled
by, owns or controls, or is under common ownership or control with Tenant.  For
purposes of this definition, the word "control," as used above means, with
respect to a Person that is a corporation, the right to exercise, directly or
indirectly, more than sixty percent (60%) of the voting rights attributable to
the shares of the controlled corporation and, with respect to a Person that is
not a corporation, the possession, directly or indirectly, of the power at all
times to direct or cause the direction of the management and policies of the
controlled Person.  The word Person means an individual, partnership, trust,
corporation, firm or other entity.

BUILDING:  The building in which the Premises is located, at the address and
Building number specified in Section 1.01(1).

BUILDING OPERATING EXPENSES:  Those Operating Expenses described in Section
4.01.

COMMENCEMENT DATE:  The date specified in Section 1.01(6) as the Projected
Commencement Date, unless changed by operation of Article Two or Rider 2.

COMMON AREAS:  All areas of the Project made available by Landlord from time to
time for the general common use or benefit of the tenants of the Building or
Project, and their employees and invitees, or the public, as such areas
currently exist and as they may be changed from time to time.

DECORATION:  Tenant Alterations which do not require a building permit and which
do not affect the facade or roof of the Building, or involve any of the
structural elements of the Building, or involve any of the Building's

                                       2
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systems, including its electrical, mechanical, plumbing, security, heating,
ventilating, air-conditioning, communication, and fire and life safety systems.

DEFAULT RATE:  Two (2) percentage points above the rate then most recently
announced by Bank of America N.T.& S.A. at its San Francisco main office as its
corporate base lending rate, from time to time announced, but in no event higher
than the maximum rate permitted by Law.

ENVIRONMENTAL LAWS:  All Laws governing the use, storage, disposal or generation
of any Hazardous Material or pertaining to environmental conditions on, under or
about the Premises or any part of the Project, including the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended (42
U.S.C. Section 9601 et seq.), and the Resource Conservation and Recovery Act of
                    -- ---
1976, as amended (42 U.S.C. Section 6901 et seq.).
                                         -- ---

EXPIRATION DATE:  The date specified in Section 1.01(7) unless changed by
operation of Article Two.

FORCE MAJEURE:  Any accident, casualty, act of God, war or civil commotion,
strike or labor troubles, or any cause whatsoever beyond the reasonable control
of Landlord, including water shortages, energy shortages or governmental
preemption in connection with an act of God, a national emergency, or by reason
of Law, or by reason of the conditions of supply and demand which have been or
are affected by act of God, war or other emergency.

HAZARDOUS MATERIAL:  Such substances, material and wastes which are or become
regulated under any Environmental Law; or which are classified as hazardous or
toxic or medical waste or biohazardous waste under any Environmental Law; and
explosives, firearms and ammunition, flammable material, radioactive material,
asbestos, polychlorinated biphenyls and petroleum and its byproducts.

INDEMNITEES:  Collectively, Landlord, any Mortgagee or ground lessor of the
Property, the property manager and the leasing manager for the Property and
their respective directors, officers, agents and employees.

LAND:  The parcel(s) of real estate on which the Building and Project are
located.

LANDLORD WORK:  The construction or installation of improvements to be furnished
by Landlord, if any, specifically described in Rider 2 attached hereto.

LAWS OR LAW:  All laws, ordinances, rules, regulations, other requirements,
orders, rulings or decisions adopted or made by any governmental body, agency,
department or judicial authority having jurisdiction over the Property, the
Premises or Tenant's activities at the Premises and any covenants, conditions or
restrictions of record which affect the Property.

LEASE:  This instrument and all exhibits and riders attached hereto, as may be
amended from time to time.

LEASE YEAR:  The twelve month period beginning on the first day of the first
month following the Commencement Date (unless the Commencement Date is the first
day of a calendar month in which case beginning on the Commencement Date), and
each subsequent twelve month, or shorter, period until the Expiration Date.

MONTHLY BASE RENT:  The monthly rent specified in Section 1.01(8).

MORTGAGEE:  Any holder of a mortgage, deed of trust or other security instrument
encumbering the Property.

NATIONAL HOLIDAYS:  New Year's Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day and other holidays recognized by the Landlord
and the janitorial and other unions servicing the Building in accordance with
their contracts.

OPERATING EXPENSES:  All Taxes, costs, expenses and disbursements of every kind
and nature which Landlord shall pay or become obligated to pay in connection
with the ownership, management, operation, maintenance, replacement and repair
of the Property (including the amortized portion of any capital expenditure or
improvement, together with interest thereon, expenses of changing utility
service providers, and any dues, assessments and other expenses pursuant to any
covenants, conditions and restrictions, or any reciprocal easements, or any
owner's association now or hereafter affecting the Project).  Operating Expenses
shall be allocated among the categories of Project Operating Expenses, Building
Operating Expenses or Phase Operating Expenses as provided in Article Four.  If
any Operating Expense, though paid in one year, relates to more than one
calendar year, at the option of Landlord such expense may be proportionately
allocated among such related calendar years.  Operating Expenses shall include
the following, by way of illustration only and not limitation: (1) all Taxes;
(2) all insurance premiums and other costs (including deductibles), including
the cost of rental insurance; (3) all license, permit and inspection fees; (4)
all costs of utilities, fuels and related services, including water, sewer,
light, telephone, power and steam connection, service and related charges; (5)
all costs to repair, maintain and operate heating, ventilating and air
conditioning systems, including preventive maintenance; (6) all janitorial,
landscaping and security services; (7) all wages, salaries, payroll taxes,
fringe benefits and other labor costs, including the cost of

                                       3
<PAGE>

workers' compensation and disability insurance; (8) all costs of operation,
maintenance and repair of all parking facilities and other common areas; (9) all
supplies, materials, equipment and tools; (10) dues, assessments and other
expenses pursuant to any covenants, conditions and restrictions, or any
reciprocal easements, or any owner's association now or hereafter affecting the
Project; (11) modifications to the Building or the Project occasioned by Laws
now or hereafter in effect; (12) the total charges of any independent
contractors employed in the care, operation, maintenance, repair, leasing and
cleaning of the Project, including landscaping, roof maintenance, and repair,
maintenance and monitoring of life-safety systems, plumbing systems, electrical
wiring and Project signage; (13) the cost of accounting services necessary to
compute the rents and charges payable by tenants at the Project; (14) exterior
window and exterior wall cleaning and painting; (15) managerial and
administrative expenses; (16) all costs in connection with the exercise facility
at the Project; (17) all costs and expenses related to Landlord's retention of
consultants in connection with the routine review, inspection, testing,
monitoring, analysis and control of Hazardous Materials, and retention of
consultants in connection with the clean-up of Hazardous Materials (to the
extent not recoverable from a particular tenant of the Project), and all costs
and expenses related to the implementation of recommendations made by such
consultants concerning the use, generation, storage, manufacture, production,
storage, release, discharge, disposal or clean-up of Hazardous Materials on,
under or about the Premises or the Project (to the extent not recoverable from a
particular tenant of the Project); but Operating Costs shall not include the
costs and expenses, including those of retention of consultants and
implementation of such consultant's recommendations, to the extent incurred
specifically to clean-up or remove Hazardous Materials present on, under or
about the Premises or the Project prior to delivery to Tenant of possession of
the Premises; (18) all capital improvements made for the purpose of reducing or
controlling other Operating Expenses, and all other capital expenditures, but
only as amortized over the useful life of the applicable item(s), together with
interest thereon; (19) all property management costs and fees, including all
costs in connection with the Project property management office; and (20) all
fees or other charges incurred in conjunction with voluntary or involuntary
membership in any energy conservation, air quality, environmental, traffic
management or similar organizations. Operating Expenses shall not include: (a)
costs of alterations of space to be occupied by new or existing tenants of the
Project; (b) depreciation charges; (c) interest and principal payments on loans
(except for loans for capital improvements which Landlord is allowed to include
in Operating Expenses as provided above); (d) ground rental payments; (e) real
estate brokerage and leasing commissions; (f) advertising and marketing
expenses; (g) costs of Landlord reimbursed by insurance proceeds; (h) expenses
incurred in negotiating leases of other tenants in the Project or enforcing
lease obligations of other tenants in the Project; and (i) Landlord's or
Landlord's property manager's corporate general overhead or corporate general
administrative expenses.

PHASE:  Phase means any individual Phase of the Project, as more particularly
described in the definition of Project.

PHASE OPERATING EXPENSES:  Those Operating Expenses described in Section 4.01.

PREMISES:  The space located in the Building at the Suite Number listed in
Section 1.01(15) and depicted on Exhibit A attached hereto.
                                 ---------

PROJECT or PROPERTY:  As of the date hereof, the Project is known as Seaport
Centre and consists of those buildings (including the Building) whose general
location is shown on the Site Plan of the Project attached as Exhibit C, located
                                                              ---------
in Redwood City, California, associated vehicular and parking areas, landscaping
and improvements, together with the Land, any associated interests in real
property, and the personal property, fixtures, machinery, equipment, systems and
apparatus located in or used in conjunction with any of the foregoing.  The
Project may also be referred to as the Property.  As of the date hereof, the
Project is divided into Phase I and Phase II, which are generally designated on
Exhibit C, each of which may individually be referred to as a Phase.  Landlord
---------
reserves the right from time to time to add or remove buildings, areas and
improvements to or from a Phase or the Project, or to add or remove a Phase to
or from the Project.  In the event of any such addition or removal which affects
Rentable Area of the Project or a Phase, Landlord shall make a corresponding
recalculation and adjustment of any affected Rentable Area and Tenant's Share.

PROJECT OPERATING EXPENSES:  Those Operating Expenses described in Section 4.01.

REAL PROPERTY:  The Property excluding any personal property.

RENT:  Collectively, Monthly Base Rent, Rent Adjustments and Rent Adjustment
Deposits, and all other charges, payments, late fees or other amounts required
to be paid by Tenant under this Lease.

RENT ADJUSTMENT:  Any amounts owed by Tenant for payment of Operating Expenses.
The Rent Adjustments shall be determined and paid as provided in Article Four.

RENT ADJUSTMENT DEPOSIT:  An amount equal to Landlord's estimate of the Rent
Adjustment attributable to each month of the applicable Adjustment Year.  On or
before the Commencement Date and the beginning of each subsequent Adjustment
Year or with Landlord's Statement (defined in Article Four), Landlord may
estimate and notify Tenant in writing of its estimate of Operating Expenses,
including Project Operating Expenses, Building Operating Expenses and Phase
Operating Expenses, and Tenant's Share of each, for the applicable Adjustment
Year.  The Rent Adjustment Deposit applicable for the calendar year in which the
Commencement Date occurs shall be the amount, if any, specified in Section
1.01(9).  Nothing

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<PAGE>

contained herein shall be construed to limit the right of Landlord from time to
time during any calendar year to revise its estimates of Operating Expenses and
to notify Tenant in writing thereof and of revision by prospective adjustments
in Tenant's Rent Adjustment Deposit payable over the remainder of such year. The
last estimate by Landlord shall remain in effect as the applicable Rent
Adjustment Deposit unless and until Landlord notifies Tenant in writing of a
change.

RENTABLE AREA OF THE BUILDING:  The amount of square footage set forth in
Section 1.01(11)

RENTABLE AREA OF THE PHASE:  The amount of square footage set forth in Section
1.01(12)

RENTABLE AREA OF THE PREMISES:  The amount of square footage set forth in
Section 1.01(10).

RENTABLE AREA OF THE PROJECT:  The amount of square footage set forth in Section
1.01(13), which represents the sum of the rentable area of all space intended
for occupancy in the Project.

SECURITY DEPOSIT:  The funds specified in Section 1.01(14), if any, deposited by
Tenant with Landlord as security for Tenant's performance of its obligations
under this Lease.

SUBSTANTIALLY COMPLETE:  The completion of the Landlord Work or Tenant Work, as
the case may be, except for minor insubstantial details of construction,
decoration or mechanical adjustments which remain to be done.

TAXES:  All federal, state and local governmental taxes, assessments (including
assessment bonds) and charges  of every kind or nature, whether general,
special, ordinary or extraordinary, which Landlord shall pay or become obligated
to pay because of or in connection with the ownership, leasing, management,
control or operation of the Property or any of its components (including any
personal property used in connection therewith), which may also include any
rental or similar taxes levied in lieu of or in addition to general real and/or
personal property taxes.  For purposes hereof, Taxes for any year shall be Taxes
which are assessed for any period of such year, whether or not such Taxes are
billed and payable in a subsequent calendar year.  There shall be included in
Taxes for any year the amount of all fees, costs and expenses (including
reasonable attorneys' fees) paid by Landlord during such year in seeking or
obtaining any refund or reduction of Taxes.  Taxes for any year shall be reduced
by the net amount of any tax refund received by Landlord attributable to such
year.  If a special assessment payable in installments is levied against any
part of the Property, Taxes for any year shall include only the installment of
such assessment and any interest payable or paid during such year.  Taxes shall
not include any federal or state inheritance, general income, gift or estate
taxes, except that if a change occurs in the method of taxation resulting in
whole or in part in the substitution of any such taxes, or any other assessment,
for any Taxes as above defined, such substituted taxes or assessments shall be
included in the Taxes.

TENANT ADDITIONS:  Collectively, Landlord Work, Tenant Work and Tenant
Alterations.

TENANT ALTERATIONS:  Any alterations, improvements, additions, installations or
construction in or to the Premises or any Real Property systems serving the
Premises done or caused to be done by Tenant after the date hereof, whether
prior to or after the Commencement Date (including Tenant Work, but excluding
Landlord Work).

TENANT DELAY:  Any event or occurrence which delays the completion of the
Landlord Work which is caused by or is described as follows:

     (i)   special work, changes, alterations or additions requested or made by
     Tenant in the design or finish in any part of the Premises after approval
     of the plans and specifications (as described in the Rider 2);

     (ii)  Tenant's delay in submitting plans, supplying information, approving
     plans, specifications or estimates, giving authorizations or otherwise;

     (iii) failure to approve and pay for such work as Landlord undertakes to
     complete at Tenant's expense;

     (iv)  the performance or completion by Tenant or any person engaged by
     Tenant of any work in or about the Premises; or

     (v)   failure to perform or comply with any obligation or condition binding
     upon Tenant pursuant to Rider 2, including the failure to approve and pay
     for such Landlord Work or other items if and to the extent Rider 2 provides
     they are to be approved or paid by Tenant.

TENANT WORK:  All work installed or furnished to the Premises by Tenant in
connection with Tenant's initial occupancy pursuant to Rider 2.

TENANT'S BUILDING SHARE:  The share as specified in Section 1.01(16) and Section
4.01.

TENANT'S PHASE:  The Phase in which the Premises is located, as indicated in
Section 1.01(1).

                                       5
<PAGE>

TENANT'S PHASE SHARE:  The share as specified in Section 1.01(16) and Section
4.01.

TENANT'S PROJECT SHARE:  The share as specified in Section 1.01(16) and Section
4.01.

TENANT'S SHARE:  Shall mean collectively, Tenant's respective shares of the
respective categories of Operating Expenses, as provided in Section 1.01(16) and
Section 4.01.

TERM:  The term of this Lease commencing on the Commencement Date and expiring
on the Expiration Date.

TERMINATION DATE:  The Expiration Date or such earlier date as this Lease
terminates or Tenant's right to possession of the Premises terminates.

WORKLETTER:  (intentionally omitted)

                                  ARTICLE TWO
     PREMISES, TERM, FAILURE TO GIVE POSSESSION, COMMON AREAS AND PARKING

2.01 LEASE OF PREMISES

Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the
Premises for the Term and upon the terms, covenants and conditions provided in
this Lease.

2.02 TERM

The Commencement Date shall be the date determined pursuant to Rider 2.

2.03 FAILURE TO GIVE POSSESSION

(intentionally omitted; see Rider 2)

2.04 AREA OF PREMISES

Landlord and Tenant agree that for all purposes of this Lease the Rentable Area
of the Premises, the Rentable Area of the Building, the Rentable Area of the
Phase and the Rentable Area of the Project as set forth in Article One are
controlling, and are not subject to revision after the date of this Lease,
except as otherwise provided herein.

2.05 CONDITION OF PREMISES

(intentionally omitted; see Rider 2)

2.06 COMMON AREAS & PARKING

     (a) Right to Use Common Areas.  Tenant shall have the non-exclusive right,
         -------------------------
in common with others, to the use of any common entrances, ramps, drives and
similar access and serviceways and other Common Areas in the Project.  The
rights of Tenant hereunder in and to the Common Areas shall at all times be
subject to the rights of Landlord and other tenants and owners in the Project
who use the same in common with Tenant, and it shall be the duty of Tenant to
keep all the Common Areas free and clear of any obstructions created or
permitted by Tenant or resulting from Tenant's operations.  Tenant shall not use
the Common Areas or common facilities of the Building or the Project, including
the Building's electrical room, parking lot or trash enclosures, for storage
purposes.  Nothing herein shall affect the right of Landlord at any time to
remove any persons not authorized to use the Common Areas or common facilities
from such areas or facilities or to prevent their use by unauthorized persons.

     (b) Changes in Common Areas.  Landlord reserves the right, at any time and
         -----------------------
from time to time to (i) make alterations in or additions to the Common Areas or
common facilities of the Project, including constructing new buildings or
changing the location, size, shape or number of the driveways, entrances,
parking spaces, parking areas, loading and unloading areas, landscape areas and
walkways, (ii) designate property to be included in or eliminate property from
the Common Areas or common facilities of the Project, (iii) close temporarily
any of the Common Areas or common facilities of the Project for maintenance
purposes, and (4) use the Common Areas and common facilities of the Project
while engaged in making alterations in or additions and repairs to the Project;
provided, however, that reasonable access to the Premises and parking at or near
the Project remains available.

     (c) Parking.  During the Term, Tenant shall have the right to use the
         -------
number of Parking Spaces specified in Section 1.01(18) for parking on an
unassigned basis on that portion of the Project designated by Landlord from time
to time for parking.  Tenant acknowledges and agrees that the parking spaces in
the Project's parking facility may include a mixture of spaces for compact
vehicles as well as full-size passenger automobiles, and that Tenant shall not
use parking spaces for vehicles larger than the striped size of the parking
spaces.  Tenant shall not park any vehicles at the Project overnight.  Tenant
shall comply with any

                                       6
<PAGE>

and all parking rules and regulations if and as from time to time established by
Landlord. Tenant shall not allow any vehicles using Tenant's parking privileges
to be parked, loaded or unloaded except in accordance with this Section,
including in the areas and in the manner designated by Landlord for such
activities. If any vehicle is using the parking or loading areas contrary to any
provision of this Section, Landlord shall have the right, in addition to all
other rights and remedies of Landlord under this Lease, to remove or tow away
the vehicle without prior notice to Tenant, and the cost thereof shall be paid
to Landlord within ten (10) days after notice from Landlord to Tenant.

                                 ARTICLE THREE
                                     RENT

Tenant agrees to pay to Landlord at the first office specified in Section
1.01(2), or to such other persons, or at such other places designated by
Landlord, without any prior demand therefor in immediately available funds and
without any deduction or offset whatsoever, Rent, including Monthly Base Rent
and Rent Adjustments in accordance with Article Four, during the Term. Monthly
Base Rent shall be paid monthly in advance on the first day of each month of the
Term, except that the first installment of Monthly Base Rent shall be paid by
Tenant to Landlord concurrently with execution of this Lease.  Monthly Base Rent
shall be prorated for partial months within the Term.  Unpaid Rent shall bear
interest at the Default Rate from the date due until paid.  Tenant's covenant to
pay Rent shall be independent of every other covenant in this Lease.

                                 ARTICLE FOUR
               OPERATING EXPENSES, RENT ADJUSTMENTS AND PAYMENTS

4.01 TENANT'S SHARE OF OPERATING EXPENSES

Tenant shall pay Tenant's Share of Operating Expenses in the respective shares
of the respective categories of Operating Expenses as set forth below.

          (a)  Tenant's Project Share of Project Operating Expenses, which is
     the percentage obtained by dividing the rentable square footage of the
     Premises for the building(s) in which the Premises is located by the
     rentable square footage of the Project and as of the date hereof equals the
     percentage set forth in Section 1.01(16);

          (b)  Tenant's Building Share of Building Operating Expenses, which is
     the percentage obtained by dividing the rentable square footage of the
     Premises respectively for each building in which the Premises is located by
     the total rentable square footage of such building and as of the date
     hereof equals the percentage set forth in Section 1.01(16);

          (c)  Tenant's Phase Share of Phase Operating Expenses, which is the
     percentage obtained by dividing the aggregate rentable square footage of
     the Premises located in Tenant's Phase by the total rentable square footage
     of Tenant's Phase and as of the date hereof equals the percentage set forth
     in Section 1.01(16);

          (d)  Project Operating Expenses shall mean all Operating Expenses that
     are not included as Phase Operating Expenses (defined below) and that are
     not either Building Operating Expenses or operating expenses directly and
     separately identifiable to the operation, maintenance or repair of any
     other building located in the Project, but Project Operating Expenses
     includes operating expenses allocable to any areas of the Building or any
     other building during such time as such areas are made available by
     Landlord for the general common use or benefit of all tenants of the
     Project, and their employees and invitees, or the public, as such areas
     currently exist and as they may be changed from time to time;

          (e)  Building Operating Expenses shall mean Operating Expenses that
     are directly and separately identifiable to each building and only such
     building(s) in which the Premises or part thereof is located.  Building(s)
     in which the Premises or any part thereof are not located shall not be
     included in determining Building Operating Expenses;

          (f)  Phase Operating Expenses shall mean Operating Expenses that
     Landlord may allocate to a Phase as directly and separately identifiable to
     all buildings located in the Phase (including but not limited to the
     Building) and may include Project Operating Expenses that are separately
     identifiable to a Phase;

          (g)  Landlord shall have the right to allocate a particular item or
     portion of Operating Expenses as any one of Project Operating Expenses,
     Building Operating Expenses or Phase Operating Expenses; however, in no
     event shall any portion of Building Operating Expenses, Project Operating
     Expenses or Phase Operating Expenses be assessed or counted against Tenant
     more than once; and.

          (h)  Notwithstanding anything to the contrary contained in this
     Section 4.01, as to each specific category of Operating Expense which one
     or more tenants of the Building either pays directly to third parties or
     specifically reimburses to Landlord (for example, separately contracted
     janitorial services or property taxes directly reimbursed to Landlord),
     then, on a category by category

                                       7
<PAGE>

     basis, the amount of Operating Expenses for the affected period shall be
     adjusted as follows: (1) all such tenant payments with respect to such
     category of expense and all of Landlord's costs reimbursed thereby shall be
     excluded from Operating Expenses and Tenant's Building Share, Tenant's
     Phase Share or Tenant's Project Share, as the case may be, for such
     category of Operating Expense shall be adjusted by excluding the square
     footage of all such tenants, and (2) if Tenant pays or directly reimburses
     Landlord for such category of Operating Expense, such category of Operating
     Expense shall be excluded from the determination of Operating Expenses for
     the purposes of this Lease.

4.02 RENT ADJUSTMENTS

Tenant shall pay to Landlord Rent Adjustments with respect to each Adjustment
Year as follows:

          (a)  The Rent Adjustment Deposit representing Tenant's Share of
     Landlord's estimate of Operating Expenses, as described in Section 4.01,
     for the applicable Adjustment Year (or portion thereof) monthly during the
     Term with the payment of Monthly Base Rent, except the first installment
     which shall be paid by Tenant to Landlord concurrently with execution of
     this Lease; and

          (b)  Any Rent Adjustments due in excess of the Rent Adjustment
     Deposits in accordance with Section 4.02.

4.03 STATEMENT OF LANDLORD

Within one hundred twenty (120) days after the end of each calendar year or as
soon thereafter as reasonably possible, Landlord will furnish Tenant a statement
("Landlord's Statement") showing the following:

          (a)  Operating Expenses for the last Adjustment Year showing in
     reasonable detail the actual Operating Expenses categorized among Project
     Operating Expenses, Building Operating Expenses and Phase Operating
     Expenses for such period and Tenant's Share of each as described in Section
     4.01 above;

          (b)  The amount of Rent Adjustments due Landlord for the last
     Adjustment Year, less credit for Rent Adjustment Deposits paid, if any; and

          (c)  Any change in the Rent Adjustment Deposit due monthly in the
     current Adjustment Year, including the amount or revised amount due for
     months preceding any such change pursuant to Landlord's Statement.

Tenant shall pay to Landlord within thirty (30) days after receipt of such
statement any amounts for Rent Adjustments then due in accordance with
Landlord's Statement.  Any amounts due from Landlord to Tenant pursuant to this
Section shall be credited to the Rent Adjustment Deposit next coming due, or
refunded to Tenant if the Term has already expired provided Tenant is not in
default hereunder.  No interest or penalties shall accrue on any amounts which
Landlord is obligated to credit or refund to Tenant by reason of this Section
4.02.  Landlord's failure to deliver Landlord's Statement or to compute the
amount of the Rent Adjustments shall not constitute a waiver by Landlord of its
right to deliver such items nor constitute a waiver or release of Tenant's
obligations to pay such amounts.  The Rent Adjustment Deposit shall be credited
against Rent Adjustments due for the applicable Adjustment Year.  During the
last complete calendar year or during any partial calendar year in which the
Lease terminates, Landlord may include in the Rent Adjustment Deposit its
estimate of Rent Adjustments which may not be finally determined until after the
termination of this Lease.  Tenant's obligation to pay Rent Adjustments survives
the expiration or termination of the Lease.  Notwithstanding the foregoing, in
no event shall the sum of Monthly Base Rent and the Rent Adjustments be less
than the Monthly Base Rent payable.

4.04 BOOKS AND RECORDS

Landlord shall maintain books and records showing Operating Expenses and Taxes
in accordance with sound accounting and management practices, consistently
applied.  The Tenant or its representative shall have the right, for a period of
ninety (90) days following the date upon which Landlord's Statement is delivered
to Tenant, to examine the Landlord's books and records with respect to the items
in the foregoing statement of Operating Expenses and Taxes during normal
business hours, upon written notice, delivered at least three (3) business days
in advance. If Tenant does not object in writing to Landlord's Statement within
ninety (90) days of Tenant's receipt thereof, specifying the nature of the item
in dispute and the reasons therefor, then Landlord's Statement shall be
considered final and accepted by Tenant.  Any amount due to the Landlord as
shown on Landlord's Statement, whether or not disputed by Tenant as provided
herein shall be paid by Tenant when due as provided above, without prejudice to
any such written exception.

4.05 TENANT OR LEASE SPECIFIC TAXES

In addition to Monthly Base Rent, Rent Adjustments, Rent Adjustment Deposits and
other charges to be paid by Tenant, Tenant shall pay to Landlord, upon demand,
any and all taxes payable by Landlord (other than federal or state inheritance,
general income, gift or estate taxes) whether or not now customary or within the
contemplation of the parties hereto:  (a) upon, allocable to, or measured by the
Rent payable hereunder,

                                       8
<PAGE>

including any gross receipts tax or excise tax levied by any governmental or
taxing body with respect to the receipt of such rent; or (b) upon or with
respect to the possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises or any portion
thereof; or (c) upon the measured value of Tenant's personal property or trade
fixtures located in the Premises or in any storeroom or any other place in the
Premises or the Property, or the areas used in connection with the operation of
the Property, it being the intention of Landlord and Tenant that, to the extent
possible, Tenant shall cause such taxes on personal property or trade fixtures
to be billed to and paid directly by Tenant; (d) resulting from Landlord Work,
Tenant Work or Tenant Alterations to the Premises, whether title thereto is in
Landlord or Tenant; or (e) upon this transaction. Taxes paid by Tenant pursuant
to this Section 4.05 shall not be included in any computation of Taxes as part
of Operating Expenses.

                                 ARTICLE FIVE
                               SECURITY DEPOSIT

Tenant concurrently with the execution of this Lease shall pay to Landlord in
immediately available funds the Security Deposit.  The Security Deposit may be
applied by Landlord to cure, in whole or part, any default of Tenant under this
Lease, and upon notice by Landlord of such application, Tenant shall replenish
the Security Deposit in full by paying to Landlord within ten (10) days of
demand the amount so applied.  Landlord's application of the Security Deposit
shall not constitute a waiver of Tenant's default to the extent that the
Security Deposit does not fully compensate Landlord for all losses, damages,
costs and expenses incurred by Landlord in connection with such default and
shall not prejudice any other rights or remedies available to Landlord under
this Lease or by Law.  Landlord shall not pay any interest on the Security
Deposit.  Landlord shall not be required to keep the Security Deposit separate
from its general accounts.  The Security Deposit shall not be deemed an advance
payment of Rent, nor a measure of damages for any default by Tenant under this
Lease, nor shall it be a bar or defense of any action which Landlord may at any
time commence against Tenant.  In the absence of evidence satisfactory to
Landlord of an assignment of the right to receive the Security Deposit or the
remaining balance thereof, Landlord may return the Security Deposit to the
original Tenant, regardless of one or more assignments of this Lease.  Upon the
transfer of Landlord's interest under this Lease, Landlord's obligation to
Tenant with respect to the Security Deposit shall terminate upon transfer to the
transferee of the Security Deposit, or any balance thereof and the assumption by
the transferee of Landlord's obligations with respect thereto.  If Tenant shall
fully and faithfully comply with all the terms, provisions, covenants, and
conditions of this Lease, the Security Deposit, or any balance thereof, shall be
returned to Tenant within thirty (30) days after Landlord recovers possession of
the Premises.  Tenant hereby waives any and all rights of Tenant under the
provisions of Section 1950.7 of the California Civil Code or other Law regarding
security deposits.

                                  ARTICLE SIX
                             UTILITIES & SERVICES

6.01 LANDLORD'S GENERAL SERVICES

Landlord shall provide maintenance and services as provided in Article Eight.

6.02 TENANT TO OBTAIN & PAY DIRECTLY

     (a) Tenant shall be responsible for and shall pay promptly all charges for
gas, electricity, sewer, heat, light, power, telephone, refuse pickup (to be
performed on a regularly scheduled basis so that accumulated refuse does not
exceed the capacity of Tenant's refuse bins), janitorial service and all other
utilities, materials and services furnished directly to or used by Tenant in, on
or about the Premises, together with all taxes thereon.  Tenant shall contract
directly with the providing companies for such utilities and services.

     (b) Notwithstanding any provision of the Lease to the contrary, without, in
each instance, the prior written consent of Landlord which response for such
consent shall not be unreasonably delayed, as more particularly provided in
Article Nine, Tenant shall not:  (i) make any alterations or additions to the
electric or gas equipment or systems or other Building systems.  If Landlord
does not consent to such request, Landlord shall indicate the reasons therefor.
Tenant's use of electric current shall at no time exceed the capacity of the
wiring, feeders and risers providing electric current to the Premises or the
Building.  The consent of Landlord to the installation of electric equipment
shall not relieve Tenant from the obligation to limit usage of electricity to no
more than such capacity.

6.03 TELEPHONE SERVICES

All telegraph, telephone, and communication connections which Tenant may desire
outside the Premises shall be subject to Landlord's prior written approval, in
Landlord's sole discretion, and the location of all wires and the work in
connection therewith shall be performed by contractors approved by Landlord and
shall be subject to the direction of Landlord, except that such approval is not
required as to Tenant's cabling from the Premises in a route designated by
Landlord to any telephone cabinet or panel provided for Tenant's connection to
the telephone cable serving the Building, so long as Tenant's equipment does not
require connections different than or additional to those to the telephone
cabinet or panel provided.  As to any such connections or work outside the
Premises requiring Landlord's approval, Landlord reserves the right to designate
and control the entity or entities providing telephone or other communication
cable installation,

                                       9
<PAGE>

removal, repair and maintenance outside the Premises and to restrict and control
access to telephone cabinets or panels. In the event Landlord designates a
particular vendor or vendors to provide such cable installation, removal, repair
and maintenance for the Building, Tenant agrees to abide by and participate in
such program. Tenant shall be responsible for and shall pay all costs incurred
in connection with the installation of telephone cables and communication wiring
in the Premises, including any hook-up, access and maintenance fees related to
the installation of such wires and cables in the Premises and the commencement
of service therein, and the maintenance thereafter of such wire and cables; and
there shall be included in Operating Expenses for the Building all installation,
removal, hook-up or maintenance costs incurred by Landlord in connection with
telephone cables and communication wiring serving the Building which are not
allocable to any individual users of such service but are allocable to the
Building generally. If Tenant fails to maintain all telephone cables and
communication wiring in the Premises and such failure affects or interferes with
the operation or maintenance of any other telephone cables or communication
wiring serving the Building, Landlord or any vendor hired by Landlord may enter
into and upon the Premises forthwith and perform such repairs, restorations or
alterations as Landlord deems necessary in order to eliminate any such
interference (and Landlord may recover from Tenant all of Landlord's costs in
connection therewith). No later than the Termination Date, Tenant agrees to
remove all telephone cables and communication wiring installed by Tenant for and
during Tenant's occupancy, which Landlord shall request Tenant to remove. Tenant
agrees that neither Landlord nor any of its agents or employees shall be liable
to Tenant, or any of Tenant's employees, agents, customers or invitees or anyone
claiming through, by or under Tenant, for any damages, injuries, losses,
expenses, claims or causes of action because of any interruption, diminution,
delay or discontinuance at any time for any reason in the furnishing of any
telephone or other communication service to the Premises and the Building.

6.04 FAILURE OR INTERRUPTION OF UTILITY OR SERVICE

To the extent that any equipment or machinery furnished or maintained by
Landlord outside the Premises is used in the delivery of utilities directly
obtained by Tenant pursuant to Section 6.02 and breaks down or ceases to
function properly, Landlord shall use reasonable diligence to repair same
promptly.  In the event of any failure, stoppage or interruption of, or change
in, any utilities or services supplied by Landlord which are not directly
obtained by Tenant, Landlord shall use reasonable diligence to have service
promptly resumed.  In either event covered by the preceding two sentences, if
the cause of any such failure, stoppage or interruption of, or change in,
utilities or services is within the control of a public utility, other public or
quasi-public entity, or utility provider outside Landlord's control,
notification to such utility or entity of such failure, stoppage or interruption
and request to remedy the same shall constitute "reasonable diligence" by
Landlord to have service promptly resumed.  Notwithstanding any other provision
of this Section to the contrary, in the event of any failure, stoppage or
interruption of, or change in, any utility or other service furnished to the
Premises or the Project resulting from any cause, including changes in service
provider or Landlord's compliance with any voluntary or similar governmental or
business guidelines now or hereafter published or any requirements now or
hereafter established by any governmental agency, board or bureau having
jurisdiction over the operation of the Property:  (a) Landlord shall not be
liable for, and Tenant shall not be entitled to, any abatement or reduction of
Rent; (b) no such failure, stoppage, or interruption of any such utility or
service shall constitute an eviction of Tenant or relieve Tenant of the
obligation to perform any covenant or agreement of this Lease to be performed by
Tenant; (c) Landlord shall not be in breach of this Lease nor be liable to
Tenant for damages or otherwise.

6.05  CHOICE OF SERVICE PROVIDER

Tenant acknowledges that Landlord may, at Landlord's sole option, to the extent
permitted by applicable law, elect to change, from time to time, the company or
companies which provide services (including electrical service, gas service,
water, telephone and technical services) to the Property, the Premises and/or
its occupants.  Notwithstanding anything to the contrary set forth in this
Lease, Tenant acknowledges that Landlord has not and does not make any
representations or warranties concerning the identity or identities of the
company or companies which provide services to the Property and the Premises or
its occupants and Tenant acknowledges that the choice of service providers and
matters concerning the engagement and termination thereof shall be solely that
of Landlord. The foregoing provision is not intended to modify, amend, change or
otherwise derogate any provision of this Lease concerning the nature or type of
service to be provided or any specific information concerning the amount thereof
to be provided. Tenant agrees to cooperate with Landlord and each of its service
providers in connection with any change in service or provider.

6.06 SIGNAGE

Tenant shall not install any signage within the Project, the Building or the
Premises without obtaining the prior written approval of Landlord, and Tenant
shall be responsible for the installation and maintenance of any such signage
installed by Tenant.  Any such signage shall comply with Landlord's current
Project signage criteria and all Laws.

                                       10
<PAGE>

                                 ARTICLE SEVEN
                   POSSESSION, USE AND CONDITION OF PREMISES

7.01 POSSESSION AND USE OF PREMISES

     (a) Tenant shall occupy and use the Premises only for the uses specified in
Section 1.01(17) to conduct Tenant's business.  Tenant shall not occupy or use
the Premises (or permit the use or occupancy of the Premises) for any purpose or
in any manner which: (1) is unlawful or in violation of any Law or Environmental
Law; (2) may be dangerous to persons or property or which may increase the cost
of, or invalidate, any policy of insurance carried on the Building or covering
its operations; (3) is contrary to or prohibited by the terms and conditions of
this Lease or the rules and regulations as provided in Article Eighteen; (4)
contrary to or prohibited by the articles, bylaws or rules of any owner's
association affecting the Project; (5) is improper, immoral, or objectionable;
(6) would obstruct or interfere with the rights of other tenants or occupants of
the Building or the Project, or injure or annoy them, or would tend to create or
continue a nuisance; or (7) would constitute any waste in or upon the Premises
or Project.

     (b) Landlord and Tenant acknowledge that the Americans With Disabilities
Act of 1990 (42 U.S.C. (S)12101 et seq.) and regulations and guidelines
promulgated thereunder, as all of the same may be amended and supplemented from
time to time (collectively referred to herein as the "ADA") establish
requirements for business operations, accessibility and barrier removal, and
that such requirements may or may not apply to the Premises, the Building and
the Project depending on, among other things: (1) whether Tenant's business is
deemed a "public accommodation" or "commercial facility", (2) whether such
requirements are "readily achievable", and (3) whether a given alteration
affects a "primary function area" or triggers "path of travel" requirements.
The parties hereby agree that: (a) Landlord shall be responsible for ADA Title
III compliance in the Common Areas, except as provided below, (b) Tenant shall
be responsible for ADA Title III compliance in the Premises, including any
leasehold improvements or other work to be performed in the Premises under or in
connection with this Lease, (c) Landlord may perform, or require that Tenant
perform, and Tenant shall be responsible for the cost of, ADA Title III "path of
travel" requirements triggered by Tenant Additions in the Premises, and (d)
Landlord may perform, or require Tenant to perform, and Tenant shall be
responsible for the cost of, ADA Title III compliance in the Common Areas
necessitated by the Building being deemed to be a "public accommodation" instead
of a "commercial facility" as a result of Tenant's use of the Premises.  Tenant
shall be solely responsible for requirements under Title I of the ADA relating
to Tenant's employees.

     (c) Landlord and Tenant agree to cooperate and use commercially reasonable
efforts to participate in traffic management programs generally applicable to
businesses located in or about the area and Tenant shall encourage and support
van and car pooling by, and staggered and flexible working hours for, its office
workers and service employees to the extent reasonably permitted by the
requirements of Tenant's business.  Neither this Section or any other provision
of this Lease is intended to or shall create any rights or benefits in any other
person, firm, company, governmental entity or the public.

     (d) Tenant agrees to cooperate with Landlord and to comply with any and all
guidelines or controls concerning energy management imposed upon Landlord by
federal or state governmental organizations or by any energy conservation
association to which Landlord is a party or which is applicable to the Building.

7.02 HAZARDOUS MATERIAL

     (a) Tenant shall not use, generate, manufacture, produce, store, release,
discharge, or dispose of, on, under or about the Premises or any part of the
Project, or transport to or from the Premises or any part of the Project, any
Hazardous Material or allow its employees, agents, contractors, licensees,
invitees or any other person or entity to do so.  Notwithstanding the foregoing,
Tenant shall be permitted to use and store in, and transport to and from, the
Premises the Hazardous Material identified on Exhibit D hereto and by this
                                              ---------
reference incorporated herein ("Permitted Hazardous Material") so long as: (a)
each item of the Permitted Hazardous Material is used or stored in, or
transported to and from, the Premises only to the extent necessary for Tenant's
operation of its business at the Premises; (b) at no time shall any Permitted
Hazardous Material be in use or storage at the Premises in excess of the
quantity specified therefor in Exhibit D; and (c) the conditions set forth in
                               ---------
this Section 7.02 are strictly complied with. The right to use and store in, and
transport to and from, the Premises the Permitted Hazardous Material is personal
to Maxygen, Inc.  and may not be assigned or otherwise transferred by Maxygen,
Inc., without the prior written consent of Landlord, which consent may be
withheld in Landlord's sole discretion. Any consent by Landlord pursuant to
Article Ten of this Lease to an assignment, transfer, subletting, mortgage,
pledge, hypothecation or encumbrance of this Lease, and any interest therein or
right or privilege appurtenant thereto, shall not constitute consent by Landlord
to the use or storage at, or transportation to, the Premises of any Hazardous
Material (including a Permitted Hazardous Material) by any such assignee,
sublessee or transferee unless Landlord expressly agrees otherwise in writing.
Any consent by Landlord to the use or storage at, or transportation to or from
the Premises, of any Hazardous Material (including a Permitted Hazardous
Material) by an assignee, sublessee or transferee of Tenant shall not constitute
a waiver of Landlord's right to refuse such consent as to any subsequent
assignee or transferee.

                                       11
<PAGE>

     (b)  Tenant shall comply with and shall cause Tenant's employees, agents,
contractors, licensees, invitees or any other person or entity for whom Tenant
is responsible (collectively, "Tenant's Agents") to comply with, and shall keep
and maintain the Premises and cause Tenant's Agents to keep and maintain the
Premises, in compliance with all Environmental Laws. Neither Tenant nor Tenant's
Agents shall violate, or cause or permit the Premises to be in violation of, any
Environmental Laws.

          Tenant shall, at its own expense prior to Tenant's use and occupancy,
procure, maintain in effect and comply with all conditions of any and all
permits, licenses and other governmental and regulatory approvals required for
Tenant's use of the Premises. Tenant shall cause any and all Hazardous Material
removed from the Premises to be removed and transported solely by duly licensed
handlers to duly licensed facilities for final disposal of such materials and
wastes. Tenant acknowledges that the sewer piping at the Project is made of ABS
plastic. Accordingly, without Landlord's prior written consent, which may be
given or withheld in Landlord's sole discretion, only ordinary domestic sewage
is permitted to be put into the drains at the Premises. UNDER NO CIRCUMSTANCES
SHALL TENANT EVER DEPOSIT ANY ESTERS OR KETONES (USUALLY FOUND IN SOLVENTS TO
CLEAN UP PETROLEUM PRODUCTS) IN THE DRAINS AT THE PREMISES. If Tenant desires to
put any substances other than ordinary domestic sewage into the drains, it shall
first submit to Landlord a complete description of each such substance,
including its chemical composition, and a sample of such substance suitable for
laboratory testing. Landlord shall promptly determine whether or not the
substance can be deposited into the drains and its determination shall be
absolutely binding on Tenant. Upon demand, Tenant shall reimburse Landlord for
expenses incurred by Landlord in making such determination. If any substances
not so approved hereunder are deposited in the drains in Tenant's Premises,
Tenant shall be liable to Landlord for all damages resulting therefrom,
including, but not limited to, all costs and expenses incurred by Landlord in
repairing or replacing the piping so damaged.

          Tenant agrees to provide Landlord with: (1) a copy of any hazardous
material management plan or similar document required by any federal, state or
local governmental or regulatory authority to be submitted by Tenant; (2) copies
of all permits, licenses and other governmental and regulatory approvals with
respect to the use of Hazardous Material; (3) copies of hazardous waste
manifests reflecting the legal and proper disposal of all Hazardous Material
removed from the Premises; and (4) copies of all reports, studies and written
results of tests or inspections concerning the Premises or any part of the
Project with respect to Hazardous Material, including the "Plans" hereinafter
defined (collectively "Documents"). Tenant shall deliver all Documents to
Landlord promptly following the earlier of (i) Tenant's submission of such
Documents to the requesting governmental agency, or (ii) Tenant's receipt of
such Documents (Tenant hereby agreeing that it shall exercise diligent efforts
to expeditiously obtain copies of any such Documents known by Tenant to exist).

     (c)  Upon commencing any activity involving Hazardous Material on the
Premises, and continuing thereafter throughout the term of this Lease, Tenant
shall initiate and maintain the systems set forth in the following
(collectively, "Plans") in order to ensure the routine monitoring of the levels
of Hazardous Material which may be present on, under or about the Premises or
any part of the Project or properties adjoining or in the vicinity of the
Project as the result of the activities of Tenant or Tenant's Agents and to
ensure continued compliance with the procedures and regulations concerning the
handling, storage, use and disposal of Hazardous Material:  (1) each permit,
license or other governmental or regulatory approval with respect to the use of
Hazardous Material, (2) each Hazardous Material management plan or similar
document required by any federal, state, or local governmental or regulatory
entity, (3) each plan for handling and disposing of Hazardous Material necessary
to comply with Environmental Laws prepared by or on behalf of Tenant or Tenant's
Agents (whether or not required to be submitted to a governmental agency).
Copies of the foregoing described Plans are listed on Exhibit E hereto and
                                                      ---------
attached to this Lease as Exhibits E-1 through E-____.
                          ------------

     (d)  Not less often than once each calendar year during the term of this
Lease, Tenant shall provide Landlord with a written report which shall set forth
the results of the monitoring of Hazardous Material during the previous calendar
year. Landlord may elect (but shall not be obligated) to retain an independent
consultant experienced in the use and management of Hazardous Material for the
purpose of reviewing any information received by Landlord in connection with
Hazardous Material. Pursuant to such review, Landlord's consultant may make
recommendations in connection with Tenant's control of Hazardous Material on the
Premises, and Tenant shall implement, at Tenant's sole cost, the recommendations
of Landlord's consultant.  Landlord's failure to appoint any consultant shall
not relieve Tenant of any of Tenant's obligations under this Lease relating to
Hazardous Material nor constitute a waiver of Landlord's rights under this
Lease.  In the event that Landlord's consultant discovers that Tenant's
procedures constitute or will result in a non-deminimis violation of the
provisions of this Section, Tenant shall promptly cure such violation and, as
necessary, modify its procedures, at its sole cost and expense, to the
reasonable satisfaction of Landlord's consultant.

     (e)  Landlord may install permanent or other testing wells or devices at or
about the Premises or any part of the Project, and may cause the ground water to
be tested to detect the presence of Hazardous Material at least once every
twelve (12) months during the term of this Lease by the use of such wells or
devices as are then customarily used for such purposes. If Tenant so requests in
writing, Landlord shall supply Tenant with a copy of any such test results. The
costs of any such tests, and the installation, maintenance, repair, removal,
closure and replacement of such wells or devices shall be included in Operating
Expenses pursuant to this Lease; provided, however, such costs shall be borne
solely by Tenant if

                                       12
<PAGE>

the same are incurred by Landlord based upon Landlord's reasonable belief, at
the time such testing is initiated, that Tenant is in breach of its obligations
under this Section 7.02 or if, following the initiation of such testing, the
presence of Hazardous Material is detected and Tenant or Tenant's Agents are
responsible therefor. Tenant's obligations under this Section 7.02(e)shall
survive the expiration or earlier termination of this Lease.

     (f)  Landlord and its representative shall have the right, at the following
times, to enter the Premises and to: (i) conduct any testing, monitoring and
analysis for Hazardous Material; (ii) review any documents, materials,
inventory, financial data or notices or correspondence to or from private
parties or governmental or regulatory authorities in connection therewith; and
(iii) review all storage, use, transportation and disposal facilities and
procedures associated with the storage, use, transportation and disposal of
Hazardous Material (collectively, "Inspection"):

          (1)  Once every six (6) months for the first twelve (12) months after
the later of the date Tenant introduces Hazardous Material to the Premises
pursuant to this Section 7.02 or notifies Landlord of such use, and once every
twelve (12) months thereafter throughout the term of this Lease. Tenant agrees
to notify Landlord at least five (5) business days prior to the use or storage
in, or transportation to, the Premises of Hazardous Material; and

          (2)  At any time during the term of this Lease if, in Landlord's
reasonable judgment, Tenant is breaching its obligation under this Section 7.02
or is not in compliance with any other provision of this Lease.

          All costs and expenses incurred by Landlord in connection with any
Inspection pursuant to this Section 7.02(f) shall, subject to Section 7.02(n)
below, become due and payable by Tenant as additional Rent, upon presentation by
Landlord of an invoice therefor.

     (g)  Tenant shall give prompt written notice to Landlord of:

          (1)  any proceeding or inquiry by, notice from, or order of any
governmental authority (including the California State Department of Health
Services) with respect to the presence of any Hazardous Material on, under or
about the Premises or any part of the Project or the migration thereof from or
to other property;

          (2)  all claims made or threatened by any third party against Tenant,
the Premises or any part of the Project relating to any loss or injury resulting
from any Hazardous Material; and

          (3)  any spill, release, discharge or nonroutine disposal of Hazardous
Material that occurs with respect to the Premises or operations at the Premises
by Tenant or Tenant's Agents;

          (4)  all matters of which Tenant is required to give notice pursuant
to Sections 25249.5 et seq. and 25359.7 of the California Health and Safety
                    -- ---
Code; and

          (5)  Tenant's discovery of any occurrence or condition on, under or
about the Premises or any part of the Project or any real property adjoining or
in the vicinity of the Premises or the Project that could cause the Premises or
any part of the Project to be subject to any restrictions on the ownership,
occupancy, transferability or use of the Premises or any part of the Project
under any Environmental Laws, including without limitation, Tenant's discovery
of any occurrence or condition on any real property adjoining or in the vicinity
of the Premises or the Project that could cause the Premises or any part of the
Project to be classified as "border zone property" under the provisions of
California Health and Safety Code Sections 25220 et seq. or any regulation
                                                 -- ---
adopted in accordance therewith, or to be otherwise subject to any restrictions
on the ownership, occupancy, transferability or use of the Premises or any part
of the Project under any Environmental Laws.

     (h)  Landlord shall have the right to join and participate in, as a party
if it so elects, any legal proceedings or actions affecting the Premises or any
part of the Project initiated in connection with any Environmental Laws and have
its attorneys' fees in connection therewith paid by Tenant. In addition, Tenant
shall not take any remedial action in response to the presence of any Hazardous
Material in, under, or about the Premises or the Project (except in the case
where loss of life or substantial property damage is imminent or immediate
action is required by any governmental entity, in which event Tenant shall take
immediate remedial action), nor enter into any settlement agreement, consent
decree or other compromise in respect to any claims relating to any Hazardous
Material in any way connected with the Premises or the Project, without first
notifying Landlord of Tenant's intention to do so and affording Landlord ample
opportunity to appear, intervene or otherwise appropriately assert and protect
Landlord's interest with respect thereto.

     (i)  To the extent permitted by law, Tenant hereby indemnifies and agrees
to protect, defend and hold the Indemnitees harmless against any actions,
claims, demands, liability, costs and expenses, including attorneys' fees and
costs, arising from the use, generation, manufacture, production, storage,
release, threatened release, discharge, disposal, transportation to or from, or
presence of any Hazardous Material on, under or about the Premises or any part
of the Project caused by Tenant or by Tenant's Agents (collectively a "Release")
including, without limitation: (1) all foreseeable consequential damages,
including loss of rental income and diminution in property value; (2) the costs
of any investigation, monitoring, removal, restoration, abatement, repair,
cleanup, detoxification or other ameliorative work of any kind or nature

                                       13
<PAGE>

(collectively "Remedial Work") and the preparation and implementation of any
closure, remedial or other required plans; (3) any injury to or death of persons
or damage to or destruction of property; and (4) any failure of Tenant or
Tenant's Agents to observe the covenants of this Section 7.02.  For purposes of
this Section 7.02(i), any acts or omissions of Tenant's Agents (whether or not
they are negligent, intentional, willful or unlawful) shall be strictly
attributable to Tenant.  In case of any action of proceeding brought against the
Indemnitees by reason of any such claim, upon notice from Landlord, Tenant
covenants to defend such action or proceeding by counsel chosen by Landlord, in
Landlord's sole discretion.  Landlord reserves the right to settle, compromise
or dispose of any and all actions, claims and demands related to the foregoing
indemnity.  Tenant's obligations under this Section 7.02(i) shall survive the
expiration or earlier termination of this Lease.  The foregoing indemnity shall
not operate to relieve Landlord of any liability Landlord has under
Environmental Laws to the extent Hazardous Materials are present on, under or
about the Premises or the Project prior to delivery to Tenant of possession of
the Premises.

          In no event shall Landlord be responsible to Tenant for the presence
of Hazardous Material in, on or about the Premises or the Project to the extent
caused or contributed to by any third party.

     (j)  Within forty-five (45) days following the end of Tenant's fiscal year,
Tenant shall provide Landlord with financial statements prepared in accordance
with generally accepted accounting principles consistently applied and certified
as true and correct by Tenant's independent certified public accountant setting
forth Tenant's performance for the applicable fiscal year.  So long as Tenant is
not a publically traded company, the preceding sentence shall not apply, but
Tenant shall make available to Landlord, at mutually convenient times, at
Landlord's request, from time to time, financial statements prepared in
accordance with generally accepted accounting principles consistently applied
and certified as true and correct by Tenant's independent certified public
accountant setting forth Tenant's performance for the applicable fiscal year,
for inspection and review by Landlord at the Premises.  As of the execution of
this Lease, Tenant's fiscal year ends December 31.  Tenant shall provide
Landlord with prompt written notice of any change in Tenant's fiscal year. If at
any time it reasonably appears to Landlord that Tenant is not maintaining
sufficient insurance or is not otherwise financially capable of fulfilling its
obligations under this Section 7.02, whether or not such obligations have
accrued, become liquidated, conditional or contingent, Tenant shall procure and
thereafter maintain in full force and effect such insurance or other form of
financial assurance, with or from companies or persons and in forms reasonably
acceptable to Landlord, as Landlord may from time to time request.

     (k)  Upon any Release, Tenant shall, subject to Section 7.02(h), promptly
notify Landlord of the Release and shall, at its sole expense and immediately
after demand by Landlord, commence to perform and thereafter diligently
prosecute to completion such Remedial Work as is necessary to restore the
Premises, Project or any other property affected by the Release to the condition
existing prior to the use of any Hazardous Material by Tenant and/or Tenant's
Agents. All such Remedial Work shall be performed:  (1) in conformance with the
requirements of all applicable Environmental Laws; (2) by one or more
contractors, approved in advance in writing by Landlord; and (3) under the
supervision of a consulting engineer approved in advance in writing by Landlord.
All costs and expenses of such Remedial Work shall be paid by Tenant including
the charges of such contractor(s) and/or the consulting engineer and Landlord's
reasonable attorneys' fees and costs incurred in connection with the monitoring
or review of such Remedial Work. In the event Tenant shall fail to timely
commence, or cause to be commenced, or fail to diligently prosecute to
completion, such Remedial Work, Landlord may, but shall not be required to,
cause such Remedial Work to be performed and all costs and expenses thereof, or
incurred in connection therewith, shall become immediately due and payable by
Tenant.  Tenant's obligations under this Section 7.02(k) shall survive the
expiration or sooner termination of this Lease.

     (l)  Hazardous Material shall include by way of illustration, and without
limiting the generality of the definition of Hazardous Material in Section 1.03,
the following:  (i) those substances included within the definitions of
"hazardous substances," "hazardous materials," "toxic substances" or "solid
waste" under all present and future federal, state and local laws (whether under
common law, statute, rule, regulation or otherwise) relating to the protection
of human health or the environment, including California Senate Bill 245
(Statutes of 1987, Chapter 1302), the Safe Drinking Water and Toxic Enforcement
Act of 1986 (commonly known as Proposition 65) and the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Section 9601 et seq., the Resource Conservation and Recovery Act of 1976,
                    -- ---
42 U.S.C. Section 6901 et seq., and the Hazardous Materials Transportation Act,
                       -- ---
49 U.S.C. Sections 1801, et seq., all as heretofore and hereafter amended, or in
                         -- ---
any regulations promulgated pursuant to said laws; (ii) those substances defined
as "hazardous wastes" in Section 25117 of the California Health & Safety Code or
as "hazardous substances" in Section 25316 of the California Health & Safety
Code, or in any regulations promulgated pursuant to said laws; (iii) those
substances listed in the United States Department of Transportation Table (49
CFR 172.101 and amendments thereto) or designated by the Environmental
Protection Agency (or any successor agency) as hazardous substances (see, e.g.,
                                                                     ---  ----
40 CFR Part 302 and amendments thereto); (iv) such other substances, materials
and wastes which are or become regulated under applicable local, state or
federal law or by the United States government or which are or become classified
as hazardous or toxic under federal, state or local laws or regulations,
including California Health & Safety Code, Division 20, and Title 26 of the
California Code of Regulations; and (v) any material, waste or substance which
contains petroleum, asbestos or polychlorinated biphenyls, is designated as a
"hazardous substance" pursuant to Section 311 of the Clean Water Act of 1977, 33
U.S.C. Sections 1251, et seq. (33 U.S.C. (S) 1321), is listed pursuant to
                      ------
Section 307 of the Clean Water Act of 1977 (33 U.S.C. (S) 1317), or contains any
flammable, explosive or radioactive material.

                                       14
<PAGE>

     (m) In addition to Tenant's obligations pursuant to Article Twelve of this
Lease, Tenant shall, on the expiration or sooner termination of this Lease,
surrender the Premises to Landlord free of Hazardous Material for which Tenant
is responsible hereunder. If Tenant fails to so surrender the Premises and the
Project, the provisions of Section 7.02(i) shall apply.  Landlord shall have the
right, but not the obligation, to appoint a consultant, at Tenant's expense, to
conduct an investigation to determine whether any Hazardous Material are located
in or about the Premises or the Project, and to determine the corrective
measures required to remove such Hazardous Material. Tenant, at its expense,
shall comply with all recommendations of the consultant. A failure by Landlord
to appoint such a consultant shall in no way relieve Tenant of any of Tenant's
obligations set forth in this Lease relating to Hazardous Material, nor
constitute a waiver of Landlord's rights under this Lease.  Tenant's obligations
under this Section 7.02(m) shall survive the expiration or earlier termination
of this Lease.

     (n) Except as otherwise provided in Section 7.02(d) (concerning the
implementation of consultant recommendations) and Section 7.02(k) (concerning
the monitoring and review of Remedial Work), all costs incurred by Landlord in
retaining a consultant for any purpose contained in this Section 7.02 shall be
included in Operating Expenses under this Lease unless Landlord retains a
consultant pursuant to this Section 7.02, and such consultant reasonably
determines after appropriate review of information and/or inspection that Tenant
is breaching its obligations under this Lease to comply with this Section 7.02,
in which event all costs and expenses incurred by Landlord in connection with
any such review, inspection, and/or implementation of recommendations pursuant
to this Section 7.02 shall become due and payable by Tenant as additional Rent,
upon presentation by Landlord of an invoice therefor.

     (o) Upon any violation of any of the foregoing covenants, Landlord shall be
entitled to exercise all remedies available to a landlord against a defaulting
tenant, including but not limited to those set forth in Article Eleven of this
Lease.  No action by Landlord hereunder shall impair the obligations of Tenant
pursuant to Section 7.02.

7.03 LANDLORD ACCESS TO PREMISES; APPROVALS

     (a) Tenant shall permit Landlord to erect, use and maintain pipes, ducts,
wiring and conduits in and through the Premises, so long as Tenant's use, layout
or design of the Premises is not materially affected or altered.  Landlord or
Landlord's agents shall have the right to enter upon the Premises in the event
of an emergency, or, upon twenty-four (24) hours prior notice to Tenant, to
inspect the Premises, to perform janitorial and other services (if any), to
conduct safety and other testing in the Premises and to make such repairs,
alterations, improvements or additions to the Premises or the Building or other
parts of the Property as Landlord may deem necessary or desirable (including all
alterations, improvements and additions in connection with a change in service
provider or providers).  Janitorial and cleaning services (if any) shall be
performed after normal business hours.  Any entry or work by Landlord may be
during normal business hours and Landlord may use reasonable efforts to ensure
that any entry or work shall not materially interfere with Tenant's occupancy of
the Premises.

     (b) If Tenant shall not be personally present to permit an entry into the
Premises when for any reason an entry therein shall be necessary or permissible,
Landlord (or Landlord's agents), after attempting to notify Tenant (unless
Landlord believes an emergency situation exists), may enter the Premises without
rendering Landlord or its agents liable therefor, and without relieving Tenant
of any obligations under this Lease.

     (c) Upon twenty-four (24) hours notice to Tenant (or such shorter notice as
may be reasonable in an emergency), Landlord may enter the Premises for the
purpose of conducting such inspections, tests and studies as Landlord may deem
desirable or necessary to confirm Tenant's compliance with all Laws and
Environmental Laws or for other purposes necessary in Landlord's reasonable
judgment to ensure the sound condition of the Property and the systems serving
the Property.  Landlord's rights under this Section 7.02(c) are for Landlord's
own protection only, and Landlord has not, and shall not be deemed to have
assumed, any responsibility to Tenant or any other party as a result of the
exercise or non-exercise of such rights, for compliance with Laws or
Environmental Laws or for the accuracy or sufficiency of any item or the quality
or suitability of any item for its intended use.

     (d) Landlord may do any of the foregoing, or undertake any of the
inspection or work described in the preceding paragraphs without such action
constituting an actual or constructive eviction of Tenant, in whole or in part,
or giving rise to an abatement of Rent by reason of loss or interruption of
business of the Tenant, or otherwise.

     (e) The review, approval or consent of Landlord with respect to any item
required or permitted under this Lease is for Landlord's own protection only,
and Landlord has not, and shall not be deemed to have assumed, any
responsibility to Tenant or any other party, as a result of the exercise or non-
exercise of such rights, for compliance with Laws or Environmental Laws or for
the accuracy or sufficiency of any item or the quality or suitability of any
item for its intended use.

7.04 QUIET ENJOYMENT

Landlord covenants, in lieu of any implied covenant of quiet possession or quiet
enjoyment, that so long as Tenant is in compliance with the covenants and
conditions set forth in this Lease, Tenant shall have the right

                                       15
<PAGE>

to quiet enjoyment of the Premises without hindrance or interference from
Landlord or those claiming through Landlord, and subject to the covenants and
conditions set forth in the Lease and to the rights of any Mortgagee or ground
lessor.

                                 ARTICLE EIGHT
                                  MAINTENANCE

8.01 LANDLORD'S MAINTENANCE

Subject to Article Fourteen and Section 8.02, Landlord shall maintain the
structural portions of the Building, the roof, exterior walls and exterior
doors, foundation, and underslab standard sewer system of the Building in good,
clean and safe condition, and shall use reasonable efforts, through Landlord's
program of regularly scheduled preventive maintenance, to keep the Building's
standard heating, ventilation and air conditioning ("HVAC") equipment in
reasonably good order and condition.  Notwithstanding the foregoing, Landlord
shall have no responsibility to repair the Building's standard heating,
ventilation and air conditioning equipment, and all such repairs shall be
performed by Tenant pursuant to the terms of Section 8.02.  Landlord shall also
(a) maintain the landscaping, parking facilities and other Common Areas of the
Project, and (b) wash the outside of exterior windows at intervals reasonably
determined by Landlord.  Except as provided in Article Fourteen and Article
Fifteen, there shall be no abatement of rent, no allowance to Tenant for
diminution of rental value and no liability of Landlord by reason of
inconvenience, annoyance or any injury to or interference with Tenant's business
arising from the making of or the failure to make any repairs, alterations or
improvements in or to any portion of the Project or in or to any fixtures,
appurtenances or equipment therein.  Tenant waives the right to make repairs at
Landlord's expense under any law, statute or ordinance now or hereafter in
effect.

8.02 TENANT'S MAINTENANCE

Subject to the provisions of Article Fourteen, Tenant shall, at Tenant's sole
cost and expense, make all repairs to the Premises and fixtures therein which
Landlord is not required to make pursuant to Section 8.01, including repairs to
the interior walls, ceilings and windows of the Premises, the interior doors,
Tenant's signage, and the electrical, life-safety, plumbing and heating,
ventilation and air conditioning systems located within or serving the Premises
and shall maintain the Premises, the fixtures and utilities systems therein, and
the area immediately surrounding the Premises (including all garbage
enclosures), in a good, clean and safe condition.  Tenant shall deliver to
Landlord a copy of any maintenance contract entered into by Tenant with respect
to the Premises.  Tenant shall also, at Tenant's expense, keep any non-standard
heating, ventilating and air conditioning equipment and other non-standard
equipment in the Building in good condition and repair, using contractors
approved in advance, in writing, by Landlord.  Notwithstanding Section 8.01
above, but subject to the waivers set forth in Section 16.04, Tenant will pay
for any repairs to the Building or the Project which are caused by any
negligence or carelessness, or by any willful and wrongful act, of Tenant or its
assignees, subtenants or employees, or of the respective agents of any of the
foregoing persons, or of any other persons permitted in the Building or
elsewhere in the Project by Tenant or any of them.  Tenant will maintain the
Premises, and will leave the Premises upon termination of this Lease, in a safe,
clean, neat and sanitary condition.

                                 ARTICLE NINE
                         ALTERATIONS AND IMPROVEMENTS

9.01 TENANT ALTERATIONS

     (a)  The following provisions shall apply to the completion of any Tenant
Alterations:

          (1) Tenant shall not, except as provided herein, without the prior
     written consent of Landlord, which consent shall not be unreasonably
     withheld, make or cause to be made any Tenant Alterations in or to the
     Premises or any Property systems serving the Premises.  Prior to making any
     Tenant Alterations, Tenant shall give Landlord ten (10) days prior written
     notice (or such earlier notice as would be necessary pursuant to applicable
     Law) to permit Landlord sufficient time to post appropriate notices of non-
     responsibility. Subject to all other requirements of this Article Nine,
     Tenant may undertake Decoration work without Landlord's prior written
     consent.  Tenant shall furnish Landlord with the names and addresses of all
     contractors and subcontractors and copies of all contracts.  All Tenant
     Alterations shall be completed at such time and in such manner as Landlord
     may from time to time designate, and only by contractors or mechanics
     approved by Landlord, which approval shall not be unreasonably withheld,
     provided, however, that Landlord may, in its sole discretion, specify the
     engineers and contractors to perform all work relating to the Building's
     systems (including the mechanical, heating, plumbing, security,
     ventilating, air-conditioning, electrical, communication and the fire and
     life safety systems in the Building).  The contractors, mechanics and
     engineers who may be used are further limited to those whose work will not
     cause or threaten to cause disharmony or interference with Landlord or
     other tenants in the Building and their respective agents and contractors
     performing work in or about the Building.  Landlord may further condition
     its consent upon Tenant furnishing to Landlord and Landlord approving prior
     to the commencement of any work or delivery of materials to the Premises
     related to the Tenant Alterations such of the following as specified by
     Landlord:  architectural plans and specifications, opinions from Landlord's
     engineers stating that the Tenant Alterations will not in any way adversely
     affect the

                                       16
<PAGE>

     Building's systems, necessary permits and licenses, certificates of
     insurance, and such other documents in such form reasonably requested by
     Landlord. Upon completion of the Tenant Alterations, Tenant shall deliver
     to Landlord two (2) sets of as-built mylar and digitized plans and
     specifications for the Tenant Alterations.

          (2) Tenant shall pay the cost of all Tenant Alterations and the cost
     of decorating the Premises and any work to the Property occasioned thereby.
     In connection with completion of any Tenant Alterations, Tenant shall pay
     Landlord hoisting charges at Landlord's then standard rate.  Upon
     completion of Tenant Alterations, Tenant shall furnish Landlord with
     contractors' affidavits and full and final waivers of lien and receipted
     bills covering all labor and materials expended and used in connection
     therewith and such other documentation reasonably requested by Landlord or
     Mortgagee.

          (3) Tenant agrees to complete all Tenant Alterations (i) in accordance
     with all Laws, Environmental Laws, all requirements of applicable insurance
     companies and in accordance with Landlord's standard construction rules and
     regulations, and (ii) in a good and workmanlike manner with the use of good
     grades of materials.  Tenant shall notify Landlord immediately if Tenant
     receives any notice of violation of any Law in connection with completion
     of any Tenant Alterations and shall immediately take such steps as are
     necessary to remedy such violation.  In no event shall such supervision or
     right to supervise by Landlord nor shall any approvals given by Landlord
     under this Lease constitute any warranty by Landlord to Tenant of the
     adequacy of the design, workmanship or quality of such work or materials
     for Tenant's intended use or of compliance with the requirements of Section
     9.01(a)(3)(i) and (ii) above or impose any liability upon Landlord in
     connection with the performance of such work.

     (b)  All Tenant Additions to the Premises whether installed by Landlord or
Tenant, shall without compensation or credit to Tenant, become part of the
Premises and the property of Landlord at the time of their installation and
shall remain in the Premises, unless pursuant to Article Twelve, Tenant may
remove them or is required to remove them at Landlord's request.

9.02 LIENS

Tenant shall not permit any lien or claim for lien of any mechanic, laborer or
supplier or any other lien to be filed against the Building, the Land, the
Premises, or any other part of the Property arising out of work performed, or
alleged to have been performed by, or at the direction of, or on behalf of
Tenant.  If any such lien or claim for lien is filed, Tenant shall within ten
(10) days of receiving notice of such lien or claim (a) have such lien or claim
for lien released of record or (b) deliver to Landlord  a bond in form, content,
amount, and issued by surety, satisfactory to Landlord, indemnifying,
protecting, defending and holding harmless the Indemnitees against all costs and
liabilities resulting from such lien or claim for lien and the foreclosure or
attempted foreclosure thereof.  If Tenant fails to take any of the above
actions, Landlord, in addition to its rights and remedies under Article Eleven,
without investigating the validity of such lien or claim for lien, may pay or
discharge the same and Tenant shall, as payment of additional Rent hereunder,
reimburse Landlord upon demand for the amount so paid by Landlord, including
Landlord's expenses and attorneys' fees.

                                  ARTICLE TEN
                           ASSIGNMENT AND SUBLETTING

10.01 ASSIGNMENT AND SUBLETTING

      (a) Without the prior written consent of Landlord, which may be withheld
in Landlord's sole discretion, Tenant may not sublease, assign, mortgage,
pledge, hypothecate or otherwise transfer or permit the transfer of this Lease
or the encumbering of Tenant's interest therein in whole or in part, by
operation of Law or otherwise or permit the use or occupancy of the Premises, or
any part thereof, by anyone other than Tenant, provided, however, if Landlord
chooses not to recapture the space proposed to be subleased or assigned as
provided in Section 10.02, Landlord shall not unreasonably withhold its consent
to a subletting or assignment under this Section 10.01. Tenant agrees that the
provisions governing sublease and assignment set forth in this Article Ten shall
be deemed to be reasonable. If Tenant desires to enter into any sublease of the
Premises or assignment of this Lease, Tenant shall deliver written notice
thereof to Landlord ("Tenant's Notice"), together with the identity of the
proposed subtenant or assignee and the proposed principal terms thereof and
financial and other information sufficient for Landlord to make an informed
judgment with respect to such proposed subtenant or assignee at least thirty
(30) days prior to the commencement date of the term of the proposed sublease or
assignment. If Tenant proposes to sublease less than all of the Rentable Area of
the Premises, the space proposed to be sublet and the space retained by Tenant
must each be a marketable unit as reasonably determined by Landlord and
otherwise in compliance with all Laws. Landlord shall notify Tenant in writing
of its approval or disapproval of the proposed sublease or assignment or its
decision to exercise its rights under Section 10.02 within fifteen (15) days
after receipt of Tenant's Notice (and all required information). In no event may
Tenant sublease any portion of the Premises or assign the Lease to any other
tenant of the Project. Tenant shall submit for Landlord's approval (which
approval shall not be unreasonably withheld) any advertising which Tenant or its
agents intend to use with respect to the space proposed to be sublet.

                                       17
<PAGE>

     (b) With respect to Landlord's consent to an assignment or sublease,
Landlord may take into consideration any factors which Landlord may deem
relevant, and the reasons for which Landlord's denial shall be deemed to be
reasonable shall include, without limitation, the following:

     (i) the business reputation or creditworthiness of any proposed subtenant
     or assignee is not acceptable to Landlord; or

     (ii) in Landlord's reasonable judgment the proposed assignee or subtenant
     would diminish the value or reputation of the Building or Landlord; or

     (iii)  any proposed assignee's or subtenant's use of the Premises would
     violate Section 7.01 of the Lease or would violate the provisions of any
     other leases of tenants in the Project;

     (iv) the proposed assignee or subtenant is either a governmental agency, a
     school or similar operation, or a medical related practice; or

     (v) the proposed subtenant or assignee is a bona fide prospective tenant of
     Landlord in the Project as demonstrated by a written proposal dated within
     ninety (90) days prior to the date of Tenant's request; or

     (vi) the proposed subtenant or assignee would materially increase the
     estimated pedestrian and vehicular traffic to and from the Premises and the
     Building.

In no event shall Landlord be obligated to consider a consent to any proposed
assignment of the Lease which would assign less than the entire Premises.  In
the event Landlord wrongfully withholds its consent to any proposed sublease of
the Premises or assignment of the Lease, Tenant's sole and exclusive remedy
therefor shall be to seek specific performance of Landlord's obligations to
consent to such sublease or assignment.

     (c) Any sublease or assignment shall be expressly subject to the terms and
conditions of this Lease.  Any subtenant or assignee shall execute such
documents as Landlord may reasonably require to evidence such subtenant or
assignee's assumption of the obligations and liabilities of Tenant under this
Lease.  Tenant shall deliver to Landlord a copy of all agreements executed by
Tenant and the proposed subtenant and assignee with respect to the Premises.
Landlord's approval of a sublease, assignment, hypothecation, transfer or third
party use or occupancy shall not constitute a waiver of Tenant's obligation to
obtain Landlord's consent to further assignments or subleases, hypothecations,
transfers or third party use or occupancy.

     (d) For purposes of this Article Ten, an assignment shall be deemed to
include a change in the majority control of Tenant, resulting from any transfer,
sale or assignment of shares of stock of Tenant occurring by operation of Law or
otherwise if Tenant is a corporation whose shares of stock are not traded
publicly.  If Tenant is a partnership, any change in the partners of Tenant
shall be deemed to be an assignment.

10.02 RECAPTURE

Landlord shall have the option to exclude from the Premises covered by this
Lease ("recapture"), the space proposed to be sublet or subject to the
assignment, effective as of the proposed commencement date of such sublease or
assignment.  If Landlord elects to recapture, Tenant shall surrender possession
of the space proposed to be subleased or subject to the assignment to Landlord
on the effective date of recapture of such space from the Premises, such date
being the Termination Date for such space.  Effective as of the date of
recapture of any portion of the Premises pursuant to this section, the Monthly
Base Rent, Rentable Area of the Premises and Tenant's Share shall be adjusted
accordingly.

10.03 EXCESS RENT

Tenant shall pay Landlord on the first day of each month during the term of the
sublease or assignment, one hundred percent (100%) of the amount by which the
sum of all rent and other consideration (direct or indirect) due from the
subtenant or assignee for such month exceeds: (i) that portion of the Monthly
Base Rent and Rent Adjustments due under this Lease for said month which is
allocable to the space sublet or assigned; and (ii) the following costs and
expenses for the subletting or assignment of such space: (1) brokerage
commissions and attorneys' fees and expenses, (2) the actual costs paid in
making any improvements or substitutions in the Premises required by any
sublease or assignment; and (3) "free rent" periods, costs of any inducements or
concessions given to subtenant or assignee, moving costs, and other amounts in
respect of such subtenant's or assignee's other leases or occupancy
arrangements.  All such costs and expenses shall be amortized over the term of
the sublease or assignment pursuant to sound accounting principles.

10.04 TENANT LIABILITY

In the event of any sublease or assignment, whether or not with Landlord's
consent, Tenant shall not be released or discharged from any liability, whether
past, present or future, under this Lease, including any

                                       18
<PAGE>

liability arising from the exercise of any renewal or expansion option, to the
extent such exercise is expressly permitted by Landlord. Tenant's liability
shall remain primary, and in the event of default by any subtenant, assignee or
successor of Tenant in performance or observance of any of the covenants or
conditions of this Lease, Landlord may proceed directly against Tenant without
the necessity of exhausting remedies against said subtenant, assignee or
successor. After any assignment, Landlord may consent to subsequent assignments
or subletting of this Lease, or amendments or modifications of this Lease with
assignees of Tenant, without notifying Tenant, or any successor of Tenant, and
without obtaining its or their consent thereto, and such action shall not
relieve Tenant or any successor of Tenant of liability under this Lease. If
Landlord grants consent to such sublease or assignment, Tenant shall pay all
reasonable attorneys' fees and expenses incurred by Landlord with respect to
such assignment or sublease. In addition, if Tenant has any options to extend
the term of this Lease or to add other space to the Premises, such options shall
not be available to any subtenant or assignee, directly or indirectly without
Landlord's express written consent, which may be withheld in Landlord's sole
discretion.

10.05 ASSUMPTION AND ATTORNMENT

If Tenant shall assign this Lease as permitted herein, the assignee shall
expressly assume all of the obligations of Tenant hereunder in a written
instrument satisfactory to Landlord and furnished to Landlord not later than
fifteen (15) days prior to the effective date of the assignment.  If Tenant
shall sublease the Premises as permitted herein, Tenant shall, at Landlord's
option, within fifteen (15) days following any request by Landlord, obtain and
furnish to Landlord the written agreement of such subtenant to the effect that
the subtenant will attorn to Landlord and will pay all subrent directly to
Landlord.

10.06 TRANSFER TO TENANT AFFILIATE

Anything in this Section to the contrary notwithstanding, Tenant may assign this
Lease or sublet all or a portion of the Premises to any entity which controls,
is controlled by or is under common control with Maxygen, Inc. (each a "Tenant
Affiliate"), without the prior consent of Landlord, and Landlord shall have no
right to recapture the Premises subject to such sublease or assignment;
provided, however, that in order for any such assignment or sublease to be
effective, Landlord shall be given prior written notice of same and any such
assignment or sublease shall comply with the requirements set forth in Section
10.05, and shall be in effect only so long as such entity controls, is
controlled by or is under common control with Maxygen, Inc.  In addition, no
such assignment or sublease shall relieve Tenant of any obligation to be
performed by Tenant under this Lease, whether occurring before or after any such
assignment or sublease.  For purposes of this Section, the term "control" means
(i) the beneficial ownership, directly or indirectly, of not less than fifty-one
percent (51%) of the voting common stock or equity interests of the controlled
entity and (ii) the controlling entity manages, directly or indirectly, the
controlled entity.

                                ARTICLE ELEVEN
                             DEFAULT AND REMEDIES

11.01 EVENTS OF DEFAULT

The occurrence or existence of any one or more of the following shall constitute
a "Default" by Tenant under this Lease:

          (i)  Tenant fails to pay any installment or other payment of Rent
     including Rent Adjustment Deposits or Rent Adjustments within three (3)
     days after the date when due;

          (ii)  Tenant fails to observe or perform any of the other covenants,
     conditions or provisions of this Lease or the Workletter and fails to cure
     such default within fifteen (15) days after written notice thereof to
     Tenant, unless the default involves a hazardous condition, which shall be
     cured forthwith or unless the failure to perform is a Default for which
     this Lease specifies there is no cure or grace period;

          (iii)  the interest of Tenant in this Lease is levied upon under
     execution or other legal process;

          (iv)  a petition is filed by or against Tenant to declare Tenant
     bankrupt or seeking a plan of reorganization or arrangement under any
     Chapter of the Bankruptcy Act, or any amendment, replacement or
     substitution therefor, or to delay payment of, reduce or modify Tenant's
     debts, which in the case of an involuntary action is not discharged within
     thirty (30) days;

          (v)  Tenant is declared insolvent by Law or any assignment of Tenant's
     property is made for the benefit of creditors;

          (vi)  a receiver is appointed for Tenant or Tenant's property, which
     appointment is not discharged within thirty (30) days;

          (vii)  any action taken by or against Tenant to reorganize or modify
     Tenant's capital structure in a materially adverse way which in the case of
     an involuntary action is not discharged within thirty (30) days;

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<PAGE>

          (viii)  upon the dissolution of Tenant; or

          (ix)  upon the third occurrence within any Lease Year that Tenant
     fails to pay Rent when due or has breached a particular covenant of this
     Lease (whether or not such failure or breach is thereafter cured within any
     stated cure or grace period or statutory period).

11.02 LANDLORD'S REMEDIES

     (a) A Default shall constitute a breach of the Lease for which Landlord
shall have the rights and remedies set forth in this Section 11.02 and all other
rights and remedies set forth in this Lease or now or hereafter allowed by Law,
whether legal or equitable, and all rights and remedies of Landlord shall be
cumulative and none shall exclude any other right or remedy.

     (b) With respect to a Default, at any time Landlord may terminate Tenant's
right to possession by written notice to Tenant stating such election.  Any
written notice required pursuant to Section 11.01 shall constitute notice of
unlawful detainer pursuant to California Code of Civil Procedure Section 1161
if, at Landlord's sole discretion, it states Landlord's election that Tenant's
right to possession is terminated after expiration of any period required by Law
or any longer period required by Section 11.01.  Upon the expiration of the
period stated in Landlord's written notice of termination (and unless such
notice provides an option to cure within such period and Tenant cures the
Default within such period), Tenant's right to possession shall terminate and
this Lease shall terminate, and Tenant shall remain liable as hereinafter
provided.  Upon such termination in writing of Tenant's right to possession,
Landlord shall have the right, subject to applicable Law, to re-enter the
Premises and dispossess Tenant and the legal representatives of Tenant and all
other occupants of the Premises by unlawful detainer or other summary
proceedings, or otherwise as permitted by Law, regain possession of the Premises
and remove their property (including their trade fixtures, personal property and
those Tenant Additions which Tenant is required or permitted to remove under
Article Twelve), but Landlord shall not be obligated to effect such removal, and
such property may, at Landlord's option, be stored elsewhere, sold or otherwise
dealt with as permitted by Law, at the risk of, expense of and for the account
of Tenant, and the proceeds of any sale shall be applied pursuant to Law.
Landlord shall in no event be responsible for the value, preservation or
safekeeping of any such property.  Tenant hereby waives all claims for damages
that may be caused by Landlord's removing or storing Tenant's personal property
pursuant to this Section or Section 12.01, and Tenant hereby indemnifies, and
agrees to defend, protect and hold harmless, the Indemnitees from any and all
loss, claims, demands, actions, expenses, liability and cost (including
attorneys' fees and expenses) arising out of or in any way related to such
removal or storage.  Upon such written termination of Tenant's right to
possession and this Lease, Landlord shall have the right to recover damages for
Tenant's Default as provided herein or by Law, including the following damages
provided by California Civil Code Section 1951.2:

          (1) the worth at the time of award of the unpaid Rent which had been
     earned at the time of termination;

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

          (3) the worth at the time of award of the amount by which the unpaid
     Rent for the balance of the term of this Lease after the time of award
     exceeds the amount of such Rent loss that Tenant proves could be reasonably
     avoided; and

          (4) any other amount necessary to compensate Landlord for all the
     detriment proximately caused by Tenant's failure to perform its obligations
     under this Lease or which in the ordinary course of things would be likely
     to result therefrom.  The word "rent" as used in this Section 11.02 shall
     have the same meaning as the defined term Rent in this Lease.  The "worth
     at the time of award" of the amount referred to in clauses (1) and (2)
     above is computed by allowing interest at the Default Rate.  The worth at
     the time of award of the amount referred to in clause (3) above is computed
     by discounting such amount at the discount rate of the Federal Reserve Bank
     of San Francisco at the time of award plus one percent (1%).  For the
     purpose of determining unpaid Rent under clause (3) above, the monthly Rent
     reserved in this Lease shall be deemed to be the sum of the Monthly Base
     Rent, and monthly Storage Space Rent, if any, and the amounts last payable
     by Tenant as Rent Adjustments for the calendar year in which Landlord
     terminated this Lease as provided hereinabove.

     (c) Even if Tenant is in Default and/or has abandoned the Premises, this
Lease shall continue in effect for so long as Landlord does not terminate
Tenant's right to possession by written notice as provided in Section 11.02(b)
above, and Landlord may enforce all its rights and remedies under this Lease,
including the right to recover Rent as it becomes due under this Lease.  In such
event, Landlord shall have all of the rights and remedies of a landlord under
California Civil Code Section 1951.4 (lessor may continue Lease in effect after
Tenant's Default and abandonment and recover Rent as it becomes due, if Tenant
has the right to sublet or assign, subject only to reasonable limitations), or
any successor statute.  During such time as Tenant is in Default, if Landlord
has not terminated this Lease by written notice and if Tenant requests
Landlord's consent to an assignment of this Lease or a sublease of the Premises,
subject to Landlord's option to recapture pursuant to Section 10.02, Landlord
shall not unreasonably withhold its consent to such

                                       20
<PAGE>

assignment or sublease. Tenant acknowledges and agrees that the provisions of
Article Ten shall be deemed to constitute reasonable limitations of Tenant's
right to assign or sublet. Tenant acknowledges and agrees that in the absence of
written notice pursuant to Section 11.02(b) above terminating Tenant's right to
possession, no other act of Landlord shall constitute a termination of Tenant's
right to possession or an acceptance of Tenant's surrender of the Premises,
including acts of maintenance or preservation or efforts to relet the Premises
or the appointment of a receiver upon initiative of Landlord to protect
Landlord's interest under this Lease or the withholding of consent to a
subletting or assignment, or terminating a subletting or assignment, if in
accordance with other provisions of this Lease.

     (d) In the event that Landlord seeks an injunction with respect to a breach
or threatened breach by Tenant of any of the covenants, conditions or provisions
of this Lease, Tenant agrees to pay the premium for any bond required in
connection with such injunction.

     (e) Tenant hereby waives any and all rights to relief from forfeiture,
redemption or reinstatement granted by Law (including California Civil Code of
Procedure Sections 1174 and 1179) in the event of Tenant being evicted or
dispossessed for any cause or in the event of Landlord obtaining possession of
the Premises by reason of Tenant's Default or otherwise;

     (f) Notwithstanding any other provision of this Lease, a notice to Tenant
given under this Article and Article Twenty-four of this Lease or given pursuant
to California Code of Civil Procedure Section 1161, and any notice served by
mail shall be deemed served, and the requisite waiting period deemed to begin
under said Code of Civil Procedure Section upon mailing, without any additional
waiting requirement under Code of Civil Procedure Section 1011 et seq. or by
other Law.  For purposes of Code of Civil Procedure Section 1162, Tenant's
"place of residence", "usual place of business", "the property" and "the place
where the property is situated" shall mean and be the Premises, whether or not
Tenant has vacated same at the time of service.

     (g) The voluntary or other surrender or termination of this Lease, or a
mutual termination or cancellation thereof, shall not work a merger and shall
terminate all or any existing assignments, subleases, subtenancies or
occupancies permitted by Tenant, except if and as otherwise specified in writing
by Landlord.

     (h) No delay or omission in the exercise of any right or remedy of Landlord
upon any default by Tenant, and no exercise by Landlord of its rights pursuant
to Section 26.15 to perform any duty which Tenant fails timely to perform, shall
impair any right or remedy or be construed as a waiver.  No provision of this
Lease shall be deemed waived by Landlord unless such waiver is in a writing
signed by Landlord.  The waiver by Landlord of any breach of any provision of
this Lease shall not be deemed a waiver of any subsequent breach of the same or
any other provision of this Lease.

11.03 ATTORNEY'S FEES

In the event any party brings any suit or other proceeding with respect to the
subject matter or enforcement of this Lease, the prevailing party (as determined
by the court, agency or other authority before which such suit or proceeding is
commenced) shall, in addition to such other relief as may be awarded, be
entitled to recover attorneys' fees, expenses and costs of investigation as
actually incurred, including court costs, expert witness fees, costs and
expenses of investigation, and all attorneys' fees, costs and expenses in any
such suit or proceeding (including in any action or participation in or in
connection with any case or proceeding under the Bankruptcy Code, 11 United
States Code Sections 101 et seq., or any successor statutes, in establishing or
                         ------
enforcing the right to indemnification, in appellate proceedings, or in
connection with the enforcement or collection of any judgment obtained in any
such suit or proceeding).

11.04 BANKRUPTCY

The following provisions shall apply in the event of the bankruptcy or
insolvency of Tenant:

     (a) In connection with any proceeding under Chapter 7 of the Bankruptcy
Code where the trustee of Tenant elects to assume this Lease for the purposes of
assigning it, such election or assignment, may only be made upon compliance with
the provisions of (b) and (c) below, which conditions Landlord and Tenant
acknowledge to be commercially reasonable.  In the event the trustee elects to
reject this Lease then Landlord shall immediately be entitled to possession of
the Premises without further obligation to Tenant or the trustee.

     (b) Any election to assume this Lease under Chapter 11 or 13 of the
Bankruptcy Code by Tenant as debtor-in-possession or by Tenant's trustee (the
"Electing Party") must provide for:

     The Electing Party to cure or provide to Landlord adequate assurance that
     it will cure all monetary defaults under this Lease within fifteen (15)
     days from the date of assumption and it will cure all nonmonetary defaults
     under this Lease within thirty (30) days from the date of assumption.
     Landlord and Tenant acknowledge such condition to be commercially
     reasonable.

     (c) If the Electing Party has assumed this Lease or elects to assign
Tenant's interest under this Lease to any other person, such interest may be
assigned only if the intended assignee has provided

                                       21
<PAGE>

adequate assurance of future performance (as herein defined), of all of the
obligations imposed on Tenant under this Lease.

     For the purposes hereof, "adequate assurance of future performance" means
     that Landlord has ascertained that each of the following conditions has
     been satisfied:

          (i)  The assignee has submitted a current financial statement,
     certified by its chief financial officer, which shows a net worth and
     working capital in amounts sufficient to assure the future performance by
     the assignee of Tenant's obligations under this Lease; and

          (ii)  Landlord has obtained consents or waivers from any third parties
     which may be required under a lease, mortgage, financing arrangement, or
     other agreement by which Landlord is bound, to enable Landlord to permit
     such assignment.

     (d) Landlord's acceptance of rent or any other payment from any trustee,
receiver, assignee, person, or other entity will not be deemed to have waived,
or waive, the requirement of Landlord's consent, Landlord's right to terminate
this Lease for any transfer of Tenant's interest under this Lease without such
consent, or Landlord's claim for any amount of Rent due from Tenant.

11.05 LANDLORD'S DEFAULT

Landlord shall be in default hereunder in the event Landlord has not begun and
pursued with reasonable diligence the cure of any failure of Landlord to meet
its obligations hereunder within thirty (30) days after the receipt by Landlord
of written notice from Tenant of the alleged failure to perform. In no event
shall Tenant have the right to terminate or rescind this Lease as a result of
Landlord's default as to any covenant or agreement contained in this Lease.
Tenant hereby waives such remedies of termination and rescission and hereby
agrees that Tenant's remedies for default hereunder and for breach of any
promise or inducement shall be limited to a suit for damages and/or injunction.
In addition, Tenant hereby covenants that, prior to the exercise of any such
remedies, it will give Mortgagee notice and a reasonable time to cure any
default by Landlord.

                                ARTICLE TWELVE
                             SURRENDER OF PREMISES

12.01 IN GENERAL

Upon the Termination Date, Tenant shall surrender and vacate the Premises
immediately and deliver possession thereof to Landlord in (i) a clean, good and
tenantable condition, ordinary wear and tear, and damage caused by casualty
(subject to the terms of Article 14) or by Landlord excepted, and (ii) full
compliance with law, including without limitation, Tenant's having delivered to
Landlord a Business Closure Report issued by the County of San Mateo Department
of Environmental Health, and a Radioactive Material License Termination issued
by the appropriate governmental authority.  Tenant shall deliver to Landlord all
keys to the Premises.  Tenant shall remove from the Premises all movable
personal property of Tenant and Tenant's trade fixtures (including without
limitation, any autoclaves, hoods, animal facility, cold rooms, and generators,
the costs of which were not paid for by any portion of Landlord's Maximum
Contribution), including, subject to Section 6.04, cabling for any of the
foregoing.  Tenant shall be entitled to remove such Tenant Additions which at
the time of their installation Landlord and Tenant agreed may be removed by
Tenant.  Tenant shall also remove such other Tenant Additions as required by
Landlord, including any Tenant Additions containing Hazardous Materials.  Tenant
immediately shall repair all damage resulting from removal of any of Tenant's
property, furnishings or Tenant Additions, shall close all floor, ceiling and
roof openings and shall restore the Premises to a tenantable condition as
reasonably determined by Landlord.  If any of the Tenant Additions which were
installed by Tenant involved the lowering of ceilings, raising of floors or the
installation of specialized wall or floor coverings or lights, then Tenant shall
also be obligated to return such surfaces to their condition prior to the
commencement of this Lease.  In the event possession of the Premises is not
delivered to Landlord when required hereunder, or if Tenant shall fail to remove
those items described above, Landlord may (but shall not be obligated to), at
Tenant's expense, remove any of such property and store, sell or otherwise deal
with such property as provided in Section 11.02(b), including the waiver and
indemnity obligations provided in that Section, and undertake, at Tenant's
expense, such restoration work as Landlord deems necessary or advisable.

12.02 LANDLORD'S RIGHTS

All property which may be removed from the Premises by Landlord shall be
conclusively presumed to have been abandoned by Tenant and Landlord may deal
with such property as provided in Section 11.02(b), including the waiver and
indemnity obligations provided in that Section.  Tenant shall also reimburse
Landlord for all costs and expenses incurred by Landlord in removing any of
Tenant Additions which Tenant was required to remove and in restoring the
Premises to the condition required by this Lease at the Termination Date.

                                       22
<PAGE>

                               ARTICLE THIRTEEN
                                 HOLDING OVER

Tenant shall pay Landlord the greater of (i) double the monthly Rent payable for
the month immediately preceding the holding over (including increases for Rent
Adjustments which Landlord may reasonably estimate) or, (ii) double the fair
market rental value of the Premises as reasonably determined by Landlord for
each month or portion thereof that Tenant retains possession of the Premises, or
any portion thereof, after the Termination Date (without reduction for any
partial month that Tenant retains possession).  Tenant shall also pay all
damages sustained by Landlord by reason of such retention of possession.  The
provisions of this Article shall not constitute a waiver by Landlord of any re-
entry rights of Landlord and Tenant's continued occupancy of the Premises shall
be as a tenancy in sufferance.

                               ARTICLE FOURTEEN
                       DAMAGE BY FIRE OR OTHER CASUALTY

14.01 SUBSTANTIAL UNTENANTABILITY

     (a) If any fire or other casualty (whether insured or uninsured) renders
all or a substantial portion of the Premises or the Building untenantable,
Landlord shall, with reasonable promptness after the occurrence of such damage,
estimate the length of time that will be required to substantially complete the
repair and restoration and shall by notice advise Tenant of such estimate
("Landlord's Notice").  If Landlord estimates that the amount of time required
to substantially complete such repair and restoration will exceed one hundred
eighty (180) days from the date such damage occurred, then Landlord, or Tenant
if all or a substantial portion of the Premises is rendered untenantable, shall
have the right to terminate this Lease as of the date of such damage upon giving
written notice to the other at any time within twenty (20) days after delivery
of Landlord's Notice, provided that if Landlord so chooses, Landlord's Notice
may also constitute such notice of termination.

     (b) In the event that the Building is damaged or destroyed to the extent of
more than twenty-five percent (25%) of its replacement cost or to any extent if
no insurance proceeds or insufficient insurance proceeds are receivable by
Landlord, or if the buildings at the Project shall be damaged to the extent of
fifty percent (50%) or more of the replacement value or to any extent if no
insurance proceeds or insufficient insurance proceeds are receivable by
Landlord, and regardless of whether or not the Premises be damaged, Landlord may
elect by written notice to Tenant given within thirty (30) days after the
occurrence of the casualty to terminate this Lease in lieu of so restoring the
Premises, in which event this Lease shall terminate as of the date specified in
Landlord's notice, which date shall be no later than sixty (60) days following
the date of Landlord's notice.

     (c) Unless this Lease is terminated as provided in the preceding
Subsections 14.01 (a) and (b), Landlord shall proceed with reasonable promptness
to repair and restore the Premises to its condition as existed prior to such
casualty, subject to reasonable delays for insurance adjustments and Force
Majeure delays, and also subject to zoning Laws and building codes then in
effect.  Landlord shall have no liability to Tenant, and Tenant shall not be
entitled to terminate this Lease if such repairs and restoration are not in fact
completed within the time period estimated by Landlord so long as Landlord shall
proceed with reasonable diligence to complete such repairs and restoration.

     (d) Tenant acknowledges that Landlord shall be entitled to the full
proceeds of any insurance coverage, whether carried by Landlord or Tenant, for
damages to the Premises, except for those proceeds of Tenant's insurance of its
own personal property and equipment which would be removable by Tenant at the
Termination Date.  All such insurance proceeds shall be payable to Landlord
whether or not the Premises are to be repaired and restored, provided, however,
if this Lease is not terminated and the parties proceed to repair and restore
Tenant Additions at Tenant's cost, to the extent Landlord received proceeds of
Tenant's insurance covering Tenant Additions, such proceeds shall be applied to
reimburse Tenant for its cost of repairing and restoring Tenant Additions.

     (e) Notwithstanding anything in this Article Fourteen to the contrary:  (i)
Landlord shall have no duty pursuant to this Section to repair or restore any
portion of any Tenant Additions or to expend for any repair or restoration of
the Premises or Building amounts in excess of insurance proceeds paid to
Landlord and available for repair or restoration; and (ii) Tenant shall not have
the right to terminate this Lease pursuant to this Section if any damage or
destruction was caused by the act or neglect of Tenant, its agent or employees.
Whether or not the Lease is terminated pursuant to this Article Fourteen, in no
event shall Tenant be entitled to any compensation or damages for loss of the
use of the whole or any part of the Premises or for any inconvenience or
annoyance occasioned by any such damage, destruction, rebuilding or restoration
of the Premises or the Building or access thereto.

     (f) Any repair or restoration of the Premises performed by Tenant shall be
in accordance with the provisions of Article Nine hereof.

14.02 INSUBSTANTIAL UNTENANTABILITY

Unless this Lease is terminated as provided in the preceding Subsections 14.01
(a) and (b), then Landlord shall proceed to repair and restore the Building or
the Premises other than Tenant Additions, with reasonable

                                       23
<PAGE>

promptness, unless such damage is to the Premises and occurs during the last six
(6) months of the Term, in which event either Tenant or Landlord shall have the
right to terminate this Lease as of the date of such casualty by giving written
notice thereof to the other within twenty (20) days after the date of such
casualty. Notwithstanding the foregoing, Landlord's obligation to repair shall
be limited in accordance with the provisions of Section 14.01 above.

14.03 RENT ABATEMENT

Except for the negligence or willful act of Tenant or its agents, employees,
contractors or invitees, if all or any part of the Premises are rendered
untenantable by fire or other casualty and this Lease is not terminated, Monthly
Base Rent and Rent Adjustments shall abate for that part of the Premises which
is untenantable on a per diem basis from the date of the casualty until Landlord
has Substantially Completed the repair and restoration work in the Premises
which it is required to perform, provided, that as a result of such casualty,
Tenant does not occupy the portion of the Premises which is untenantable during
such period.

14.04 WAIVER OF STATUTORY REMEDIES

The provisions of this Lease, including this Article Fourteen, constitute an
express agreement between Landlord and Tenant with respect to any and all damage
to, or destruction of, the Premises or the Property or any part of either, and
any Law, including Sections 1932(2), 1933(4), 1941 and 1942 of the California
Civil Code, with respect to any rights or obligations concerning damage or
destruction shall have no application to this Lease or to any damage to or
destruction of all or any part of the Premises or the Property or any part of
either, and are hereby waived.

                                ARTICLE FIFTEEN
                                EMINENT DOMAIN

15.01 TAKING OF WHOLE OR SUBSTANTIAL PART

In the event the whole or any substantial part of the Building or of the
Premises is taken or condemned by any competent authority for any public use or
purpose (including a deed given in lieu of condemnation) and is thereby rendered
untenantable, this Lease shall terminate as of the date title vests in such
authority or any earlier date on which possession is required to be surrendered
to such authority, and Monthly Base Rent and Rent Adjustments shall be
apportioned as of the Termination Date.  Further, if at least twenty-five
percent (25%) of the rentable area of the Project is taken or condemned by any
competent authority for any public use or purpose (including a deed given in
lieu of condemnation), and regardless of whether or not the Premises be so taken
or condemned, Landlord may elect by written notice to Tenant to terminate this
Lease as of the date title vests in such authority or any earlier date on which
possession is required to be surrendered to such authority, and Monthly Base
Rent and Rent Adjustments shall be apportioned as of the Termination Date.
Landlord may, without any obligation to Tenant, agree to sell or convey to the
taking authority the Premises, the Building, Tenant's Phase, the Project or any
portion thereof sought by the taking authority, free from this Lease and the
right of Tenant hereunder, without first requiring that any action or proceeding
be instituted or, if instituted, pursued to a judgment.  Notwithstanding
anything to the contrary herein set forth, in the event the taking of the
Building or Premises is temporary (for less than the remaining term of the
Lease), Landlord may elect either (i) to terminate this Lease or (ii) permit
Tenant to receive the entire award attributable to the Premises in which case
Tenant shall continue to pay Rent and this Lease shall not terminate.

15.02 TAKING OF PART

In the event a part of the Building or the Premises is taken or condemned by any
competent authority (or a deed is delivered in lieu of condemnation) and this
Lease is not terminated, the Lease shall be amended to reduce or increase, as
the case may be, the Monthly Base Rent and Tenant's Share to reflect the
Rentable Area of the Premises or Building, as the case may be, remaining after
any such taking or condemnation.  Landlord, upon receipt and to the extent of
the award in condemnation (or proceeds of sale) shall make necessary repairs and
restorations to the Premises (exclusive of Tenant Additions) and to the Building
to the extent necessary to constitute the portion of the Building not so taken
or condemned as a complete architectural and economically efficient unit.
Notwithstanding the foregoing, if as a result of any taking, or a governmental
order that the grade of any street or alley adjacent to the Building is to be
changed and such taking or change of grade makes it necessary or desirable to
substantially remodel or restore the Building or prevents the economical
operation of the Building, Landlord shall have the right to terminate this Lease
upon ninety (90) days prior written notice to Tenant.

15.03 COMPENSATION

Landlord shall be entitled to receive the entire award (or sale proceeds) from
any such taking, condemnation or sale without any payment to Tenant, and Tenant
hereby assigns to Landlord Tenant's interest, if any, in such award; provided,
however, Tenant shall have the right separately to pursue against the condemning
authority a separate award in respect of the loss, if any, to Tenant Additions
paid for by Tenant without any credit or allowance from Landlord, for fixtures
or personal property of Tenant, or for relocation or business interruption
expenses, so long as there is no diminution of Landlord's award as a result.

                                       24
<PAGE>

                                ARTICLE SIXTEEN
                                   INSURANCE

16.01 TENANT'S INSURANCE

Tenant, at Tenant's expense, agrees to maintain in force, with a company or
companies acceptable to Landlord, during the Term: (a) Commercial General
Liability Insurance on a primary basis and without any right of contribution
from any insurance carried by Landlord covering the Premises on an occurrence
basis against all claims for personal injury, bodily injury, death and property
damage, including contractual liability covering the indemnification provisions
in this Lease.  Such insurance shall be for such limits that are reasonably
required by Landlord from time to time but not less than a combined single limit
of Five Million and No/100 Dollars ($5,000,000.00); (b) Workers' Compensation
and Employers' Liability Insurance to the extent required by and in accordance
with the Laws of the State of California; (c) "All Risks" property insurance in
an amount adequate to cover the full replacement cost of all Tenant Additions to
the Premises, equipment, installations, fixtures and contents of the Premises in
the event of loss; (d) In the event a motor vehicle is to be used by Tenant in
connection with its business operation from the Premises, Comprehensive
Automobile Liability Insurance coverage with limits of not less than Three
Million and No/100 Dollars ($3,000,000.00) combined single limit coverage
against bodily injury liability and property damage liability arising out of the
use by or on behalf of Tenant, its agents and employees in connection with this
Lease, of any owned, non-owned or hired motor vehicles; and (e) such other
insurance or coverages as Landlord reasonably requires.

16.02 FORM OF POLICIES

Each policy referred to in 16.01 shall satisfy the following requirements.  Each
policy shall (i) name Landlord and the Indemnitees as additional insureds
(except Workers' Compensation and Employers' Liability Insurance), (ii) be
issued by one or more responsible insurance companies licensed to do business in
the State of California reasonably satisfactory to Landlord, (iii) where
applicable, provide for deductible amounts satisfactory to Landlord and not
permit co-insurance, (iv) shall provide that such insurance may not be canceled
or amended without thirty (30) days' prior written notice to the Landlord, and
(v) each policy of "All-Risks" property insurance shall provide that the policy
shall not be invalidated should the insured waive in writing prior to a loss,
any or all rights of recovery against any other party for losses covered by such
policies.  Tenant shall deliver to Landlord, certificates of insurance and at
Landlord's request, copies of all policies and renewals thereof to be maintained
by Tenant hereunder, not less than ten (10) days prior to the Commencement Date
and not less than ten (10) days prior to the expiration date of each policy.

16.03 LANDLORD'S INSURANCE

Landlord agrees to purchase and keep in full force and effect during the Term
hereof, including any extensions or renewals thereof, insurance under policies
issued by insurers of recognized responsibility, qualified to do business in the
State of California on the Building in amounts not less than the greater of
eighty (80%) percent of the then full replacement cost (without depreciation) of
the Building (above foundations and excluding Tenant Additions to the Premises)
or an amount sufficient to prevent Landlord from becoming a co-insurer under the
terms of the applicable policies, against fire and such other risks as may be
included in standard forms of all risk coverage insurance reasonably available
from time to time.  Landlord agrees to maintain in force during the Term,
Commercial General Liability Insurance covering the Building on an occurrence
basis against all claims for personal injury, bodily injury, death and property
damage.  Such insurance shall be for a combined single limit of Five Million and
No/100 Dollars ($5,000,000.00).  Neither Landlord's obligation to carry such
insurance nor the carrying of such insurance shall be deemed to be an indemnity
by Landlord with respect to any claim, liability, loss, cost or expense due, in
whole or in part, to Tenant's negligent acts or omissions or willful misconduct.
Without obligation to do so, Landlord may, in its sole discretion from time to
time, carry insurance in amounts greater and/or for coverage additional to the
coverage and amounts set forth above.

16.04 WAIVER OF SUBROGATION

     (a) Landlord agrees that, if obtainable at no, or minimal, additional cost,
and so long as the same is permitted under the laws of the State of California,
it will include in its "All Risks" policies appropriate clauses pursuant to
which the insurance companies (i) waive all right of subrogation against Tenant
with respect to losses payable under such policies and/or (ii) agree that such
policies shall not be invalidated should the insured waive in writing prior to a
loss any or all right of recovery against any party for losses covered by such
policies.

     (b) Tenant agrees to include, if obtainable at no, or minimal, additional
cost, and so long as the same is permitted under the laws of the State of
California, in its "All Risks" insurance policy or policies on Tenant Additions
to the Premises, whether or not removable, and on Tenant's furniture,
furnishings, fixtures and other property removable by Tenant under the
provisions of this Lease appropriate clauses pursuant to which the insurance
company or companies (i) waive the right of subrogation against Landlord and/or
any tenant of space in the Building with respect to losses payable under such
policy or policies and/or (ii) agree that such policy or policies shall not be
invalidated should the insured waive in writing prior to a loss any or all right
of recovery against any party for losses covered by such policy or policies.  If
Tenant is unable to obtain in such policy or policies either of the clauses
described in the preceding sentence, Tenant shall, if legally possible and
without necessitating a change in insurance carriers, have Landlord named in
such policy or

                                       25
<PAGE>

policies as an additional insured. If Landlord shall be named as an additional
insured in accordance with the foregoing, Landlord agrees to endorse promptly to
the order of Tenant, without recourse, any check, draft, or order for the
payment of money representing the proceeds of any such policy or representing
any other payment growing out of or connected with said policies, and Landlord
does hereby irrevocably waive any and all rights in and to such proceeds and
payments.

     (c) Provided that Landlord's right of full recovery under its policy or
policies aforesaid is not adversely affected or prejudiced thereby, Landlord
hereby waives any and all right of recovery which it might otherwise have
against Tenant, its servants, agents and employees, for loss or damage occurring
to the Real Property and the fixtures, appurtenances and equipment therein, to
the extent the same is covered by Landlord's insurance, notwithstanding that
such loss or damage may result from the negligence or fault of Tenant, its
servants, agents or employees.  Provided that Tenant's right of full recovery
under its aforesaid policy or policies is not adversely affected or prejudiced
thereby,  Tenant hereby waives any and all right of recovery which it might
otherwise have against Landlord, its servants, and employees and against every
other tenant in the Real Property who shall have executed a similar waiver as
set forth in this Section 16.04 (c) for loss or damage to Tenant Additions,
whether or not removable, and to Tenant's furniture, furnishings, fixtures and
other property removable by Tenant under the provisions hereof to the extent the
same is covered or coverable by Tenant's insurance required under this Lease,
notwithstanding that such loss or damage may result from the negligence or fault
of Landlord, its servants, agents or employees, or such other tenant and the
servants, agents or employees thereof.

     (d) Landlord and Tenant hereby agree to advise the other promptly if the
clauses to be included in their respective insurance policies pursuant to
subparagraphs (a) and (b) above cannot be obtained on the terms hereinbefore
provided and thereafter to furnish the other with a certificate of insurance or
copy of such policies showing the naming of the other as an additional insured,
as aforesaid.  Landlord and Tenant hereby also agree to notify the other
promptly of any cancellation or change of the terms of any such policy which
would affect such clauses or naming.  All such policies which name both Landlord
and Tenant as additional insureds shall, to the extent obtainable, contain
agreements by the insurers to the effect that no act or omission of any
additional insured will invalidate the policy as to the other additional
insureds.

16.05 NOTICE OF CASUALTY

Tenant shall give Landlord notice in case of a fire or accident in the Premises
promptly after Tenant is aware of such event.

                               ARTICLE SEVENTEEN
                        WAIVER OF CLAIMS AND INDEMNITY

17.01 WAIVER OF CLAIMS

To the extent permitted by Law, Tenant releases the Indemnitees from, and waives
all claims for, damage to person or property sustained by the Tenant or any
occupant of the Premises or the Property resulting directly or indirectly from
any existing or future condition, defect, matter or thing in and about the
Premises or the Property or any part of either or any equipment or appurtenance
therein, or resulting from any accident in or about the Premises or the
Property, or resulting directly or indirectly from any act or neglect of any
tenant or occupant of the Property or of any other person, including Landlord's
agents and servants, except to the extent caused by the willful and wrongful act
of any of the Indemnitees.  To the extent permitted by Law, Tenant hereby waives
any consequential damages or claims for inconvenience or loss of business,
rents, or profits as a result of such injury or damage, whether or not caused by
the willful and wrongful act of any of the Indemnitees.  If any such damage,
whether to the Premises or the Property or any part of either, or whether to
Landlord or to other tenants in the Property, results from any act or neglect of
Tenant, its employees, servants, agents, contractors, invitees or customers,
Tenant shall be liable therefor and Landlord may, at Landlord's option, repair
such damage and Tenant shall, upon demand by Landlord, as payment of additional
Rent hereunder, reimburse Landlord within ten (10) days of demand for the total
cost of such repairs, in excess of amounts, if any, paid to Landlord under
insurance covering such damages.  Tenant shall not be liable for any such damage
caused by its acts or neglect if Landlord or a tenant has recovered the full
amount of the damage from proceeds of insurance policies and the insurance
company has waived its right of subrogation against Tenant.

17.02 INDEMNITY BY TENANT

To the extent permitted by Law, Tenant hereby indemnifies, and agrees to
protect, defend and hold the Indemnitees harmless, against any and all actions,
claims, demands, liability, costs and expenses, including attorneys' fees and
expenses for the defense thereof, arising from Tenant's occupancy of the
Premises, from the undertaking of any Tenant Additions or repairs to the
Premises, from the conduct of Tenant's business on the Premises, or from any
breach or default on the part of Tenant in the performance of any covenant or
agreement on the part of Tenant to be performed pursuant to the terms of this
Lease, or from any willful act or negligence of Tenant, its agents, contractors,
servants, employees, customers or invitees, in or about the Premises or the
Property or any part of either.  In case of any action or proceeding brought
against the Indemnitees by reason of any such claim, upon notice from Landlord,
Tenant covenants to defend such action or proceeding by counsel chosen by
Landlord, in Landlord's sole discretion.  Landlord reserves the right to settle,
compromise or dispose of any and all actions, claims and demands related to the
foregoing

                                       26
<PAGE>

indemnity. The foregoing indemnity shall not operate to relieve Indemnitees of
liability to the extent such liability is caused by the active negligence, and
willful and wrongful act of Indemnitees. Further, the foregoing indemnity is
subject to and shall not diminish any waivers in effect in accordance with
Section 16.04 by Landlord or its insurers to the extent of amounts, if any, paid
to Landlord under its "All-Risks" property insurance.

                               ARTICLE EIGHTEEN
                             RULES AND REGULATIONS

18.01 RULES

Tenant agrees for itself and for its subtenants, employees, agents, and invitees
to comply with all rules and regulations for use of the Premises, the Building,
the Phase and the Project imposed by Landlord, as the same may be revised from
time to time, including the following:  (a) Tenant shall comply with all of the
requirements of Landlord's emergency response plan, as the same may be amended
from time to time; and (b) Tenant shall not place any furniture, furnishings,
fixtures or equipment in the Premises in a manner so as to obstruct the windows
of the Premises to cause the Building, in Landlord's good faith determination,
to appear unsightly from the exterior.  Such rules and regulations are and shall
be imposed for the cleanliness, good appearance, proper maintenance, good order
and reasonable use of the Premises, the Building, the Phase and the Project and
as may be necessary for the enjoyment of the Building and the Project by all
tenants and their clients, customers, and employees.

18.02 ENFORCEMENT

Nothing in this Lease shall be construed to impose upon the Landlord any duty or
obligation to enforce the rules and regulations as set forth above or as
hereafter adopted, or the terms, covenants or conditions of any other lease as
against any other tenant, and the Landlord shall not be liable to the Tenant for
violation of the same by any other tenant, its servants, employees, agents,
visitors or licensees.  Landlord shall use reasonable efforts to enforce the
rules and regulations of the Building in a uniform and non-discriminatory
manner.

                               ARTICLE NINETEEN
                          LANDLORD'S RESERVED RIGHTS

Landlord shall have the following rights exercisable without notice to Tenant
and without liability to Tenant for damage or injury to persons, property or
business and without being deemed an eviction or disturbance of Tenant's use or
possession of the Premises or giving rise to any claim for offset or abatement
of Rent:  (1) to change the Building's name or street address upon thirty (30)
days' prior written notice to Tenant; (2) to install, affix and maintain all
signs on the exterior and/or interior of the Building; (3) to designate and/or
approve prior to installation, all types of signs, window shades, blinds,
drapes, awnings or other similar items, and all internal lighting that may be
visible from the exterior of the Premises; (4) upon twenty-four (24) hours
notice to Tenant, to display the Premises to prospective purchasers at
reasonable hours at any time during the Term and to prospective tenants at
reasonable hours during the last twelve (12) months of the Term; (5) to grant to
any party the exclusive right to conduct any business or render any service in
or to the Building, provided such exclusive right shall not operate to prohibit
Tenant from using the Premises for the purpose permitted hereunder; (6) to
change the arrangement and/or location of entrances or passageways, doors and
doorways, corridors, elevators, stairs, washrooms or public portions of the
Building, and to close entrances, doors, corridors, elevators or other
facilities, provided that such action shall not materially and adversely
interfere with Tenant's access to the Premises or the Building; (7) to have
access for Landlord and other tenants of the Building to any mail chutes and
boxes located in or on the Premises as required by any applicable rules of the
United States Post Office; and (8) to close the Building after Standard
Operating Hours, except that Tenant and its employees and invitees shall be
entitled to admission at all times, under such regulations as Landlord
prescribes for security purposes.

                                ARTICLE TWENTY
                             ESTOPPEL CERTIFICATE

20.01 IN GENERAL

Within fifteen (15) days after request therefor by Landlord, Mortgagee or any
prospective mortgagee or owner, Tenant agrees as directed in such request to
execute an Estoppel Certificate in recordable form, binding upon Tenant,
certifying (i) that this Lease is unmodified and in full force and effect (or if
there have been modifications, a description of such modifications and that this
Lease as modified is in full force and effect); (ii) the dates to which Rent has
been paid; (iii) that Tenant is in the possession of the Premises if that is the
case; (iv) that Landlord is not in default under this Lease, or, if Tenant
believes Landlord is in default, the nature thereof in detail; (v) that Tenant
has no offsets or defenses to the performance of its obligations under this
Lease (or if Tenant believes there are any offsets or defenses, a full and
complete explanation thereof); (vi) that the Premises have been completed in
accordance with the terms and provisions hereof, that Tenant has accepted the
Premises and the condition thereof and of all improvements thereto and has no
claims against Landlord or any other party with respect thereto; (vii) that if
an assignment of rents or leases has been served upon the Tenant by a Mortgagee,
Tenant will acknowledge receipt thereof and agree to be

                                       27
<PAGE>

bound by the provisions thereof; (viii) that Tenant will give to the Mortgagee
copies of all notices required or permitted to be given by Tenant to Landlord;
and (ix) to any other information reasonably requested.

20.02 ENFORCEMENT

In the event that Tenant fails to deliver an Estoppel Certificate, then such
failure shall be a Default for which there shall be no cure or grace period.  In
addition to any other remedy available to Landlord, Landlord may impose a charge
equal to $500.00 for each day that Tenant fails to deliver an Estoppel
Certificate.

                              ARTICLE TWENTY-ONE
                             RELOCATION OF TENANT

                             Intentionally Deleted

                              ARTICLE TWENTY-TWO
                              REAL ESTATE BROKERS

Tenant represents that, except for the broker(s) listed in Section 1.01(19),
Tenant has not dealt with any real estate broker, sales person, or finder in
connection with this Lease, and no such person initiated or participated in the
negotiation of this Lease, or showed the Premises to Tenant.  Tenant hereby
agrees to indemnify, protect, defend and hold Landlord and the Indemnitees,
harmless from and against any and all liabilities and claims for commissions and
fees arising out of a breach of the foregoing representation.   Landlord agrees
to pay any commission to which Landlord's Broker listed in Section 1.01(19) is
entitled in connection with this Lease pursuant to Landlord's written agreement
with such broker.  Landlord and Tenant agree that any commission payable to
Tenant's Broker shall be paid by Tenant except to the extent Tenant's Broker and
Landlord's Broker have entered into a separate agreement between themselves to
share the commission paid to Landlord's Broker by Landlord.

                             ARTICLE TWENTY-THREE
                             MORTGAGEE PROTECTION

23.01 SUBORDINATION AND ATTORNMENT

     (a)  This Lease is and shall be expressly subject and subordinate at all
times to (i) any ground or underlying lease of the Real Property, now or
hereafter existing, and all amendments, extensions, renewals and modifications
to any such lease, and (ii) the lien of any mortgage or trust deed now or
hereafter encumbering fee title to the Real Property and/or the leasehold estate
under any such lease, and all amendments, extensions, renewals, replacements and
modifications of such mortgage or trust deed and/or the obligation secured
thereby, unless such ground lease or ground lessor, or mortgage, trust deed or
Mortgagee, expressly provides or elects that the Lease shall be superior to such
lease or mortgage or trust deed.  If any such mortgage or trust deed is
foreclosed (including any sale of the Real Property pursuant to a power of
sale), or if any such lease is terminated, upon request of the Mortgagee or
ground lessor, as the case may be, Tenant shall attorn to the purchaser at the
foreclosure sale or to the ground lessor under such lease, as the case may be,
provided, however, that such purchaser or ground lessor shall not be (i) bound
by any payment of Rent for more than one month in advance except payments in the
nature of security for the performance by Tenant of its obligations under this
Lease; (ii) subject to any offset, defense or damages arising out of a default
of any obligations of any preceding Landlord; or (iii) bound by any amendment or
modification of this Lease made without the written consent of the Mortgagee or
ground lessor; or (iv) liable for any security deposits not actually received in
cash by such purchaser or ground lessor.  This subordination shall be self-
operative and no further certificate or instrument of subordination need be
required by any such Mortgagee or ground lessor.  In confirmation of such
subordination, however, Tenant shall execute promptly any reasonable certificate
or instrument that Landlord, Mortgagee or ground lessor may request.  Upon
request by such successor in interest, Tenant shall execute and deliver
reasonable instruments confirming the attornment provided for herein.

     (b) Notwithstanding any provision of the Lease to the contrary, provided
that: (i) Tenant has executed and delivered a subordination, non-disturbance and
attornment agreement substantially in the form of Exhibit F hereto, with such
                                                  ---------
changes thereto as any mortgagee, trustee, beneficiary or holder of other
security interest ("Mortgagee") may reasonably require ("Non-disturbance
Agreement") and complies with the provisions thereof, and (ii) Tenant is not in
default under this Lease, no foreclosure, sale pursuant to power of sale or
conveyance by deed in lieu of foreclosure shall affect Tenant's rights under
this Lease, except to the extent provided by such Non-Disturbance Agreement.  If
Tenant fails to execute and deliver any Non-disturbance Agreement within fifteen
(15) days of a request therefor from Landlord, Tenant hereby constitutes
Landlord as Tenant's attorney-in-fact to execute and deliver such instrument.
Landlord's inability to obtain the signature of any Mortgagee on any such Non-
disturbance Agreement shall not constitute a default by Landlord under this
Lease, but so long as default by Tenant under this Lease is not the reason for
Landlord's inability to obtain such signature, any such lessor or Mortgagee
shall be deemed to have elected that this Lease be superior to the lease,
mortgage or deed of trust in question, and Tenant shall, at the request of such
lessor, mortgagee or beneficiary (or purchaser at any sale pursuant to the
mortgage or deed of trust), attorn to any such party or enter into a new lease
with such party (as Landlord) for the balance of the Term then remaining
hereunder upon the same terms and conditions as those herein.

                                       28
<PAGE>

23.02 MORTGAGEE PROTECTION

Tenant agrees to give any Mortgagee or ground lessor, by registered or certified
mail, a copy of any notice of default served upon the Landlord by Tenant,
provided that prior to such notice Tenant has received notice (by way of service
on Tenant of a copy of an assignment of rents and leases, or otherwise) of the
address of such Mortgagee or ground lessor.  Tenant further agrees that if
Landlord shall have failed to cure such default within the time provided for in
this Lease, then the Mortgagee or ground lessor shall have an additional thirty
(30) days after receipt of notice thereof within which to cure such default or
if such default cannot be cured within that time, then such additional notice
time as may be necessary, if, within such thirty (30) days, any Mortgagee or
ground lessor has commenced and is diligently pursuing the remedies necessary to
cure such default (including commencement of foreclosure proceedings or other
proceedings to acquire possession of the Real Property, if necessary to effect
such cure).  Such period of time shall be extended by any period within which
such Mortgagee or ground lessor is prevented from commencing or pursuing such
foreclosure proceedings or other proceedings to acquire possession of the Real
Property by reason of Landlord's bankruptcy.  Until the time allowed as
aforesaid for Mortgagee or ground lessor to cure such defaults has expired
without cure, Tenant shall have no right to, and shall not, terminate this Lease
on account of default.  This Lease may not be modified or amended so as to
reduce the Rent or shorten the Term, or so as to adversely affect in any other
respect to any material extent the rights of the Landlord, nor shall this Lease
be canceled or surrendered, without the prior written consent, in each instance,
of the ground lessor or the Mortgagee.

                              ARTICLE TWENTY-FOUR
                                    NOTICES

     (a) All notices, demands or requests provided for or permitted to be given
pursuant to this Lease must be in writing and shall be personally delivered,
sent by Federal Express or other reputable overnight courier service, or mailed
by first class, registered or certified United States mail, return receipt
requested, postage prepaid.

     (b) All notices, demands or requests to be sent pursuant to this Lease
shall be deemed to have been properly given or served by delivering or sending
the same in accordance with this Section, addressed to the parties hereto at
their respective addresses listed in Sections 1.01(2) and (3).

     (c) Notices, demands or requests sent by mail or overnight courier service
as described above shall be effective upon deposit in the mail or with such
courier service.  However, the time period in which a response to any such
notice, demand or request must be given shall commence to run from (i) in the
case of delivery by mail, the date of receipt on the return receipt of the
notice, demand or request by the addressee thereof, or (ii) in the case of
delivery by Federal Express or other overnight courier service, the date of
acceptance of delivery by an employee, officer, director or partner of Landlord
or Tenant.  Rejection or other refusal to accept or the inability to deliver
because of changed address of which no notice was given, as indicated by advice
from Federal Express or other overnight courier service or by mail return
receipt, shall be deemed to be receipt of notice, demand or request sent.
Notices may also be served by personal service upon any officer, director or
partner of Landlord or Tenant, and shall be effective upon such service.

     (d) By giving to the other party at least thirty (30) days written notice
thereof, either party shall have the right from time to time during the term of
this Lease to change their respective addresses for notices, statements, demands
and requests, provided such new address shall be within the United States of
America.

                              ARTICLE TWENTY-FIVE
                               EXERCISE FACILITY

Tenant agrees to inform all employees of Tenant of the following:  (i) the
exercise facility is available for the use of the employees of tenants of the
Project only and for no other person; (ii) use of the facility is at the risk of
Tenant or Tenant's employees, and all users must sign a release; (iii) the
facility is unsupervised; and (iv) users of the facility must report any needed
equipment maintenance or any unsafe conditions to the Landlord immediately.
Landlord may discontinue providing such facility at Landlord's sole option at
any time without incurring any liability.  As a condition to the use of the
exercise facility, Tenant and each of Tenant's employees that uses the exercise
facility shall first sign a written release in form and substance acceptable to
Landlord.  Landlord may change the rules and/or hours of the exercise facility
at any time, and Landlord reserves the right to deny access to the exercise
facility to anyone due to misuse of the facility or noncompliance with rules and
regulations of the facility.  To the extent permitted by Law, Tenant hereby
indemnifies, and agrees to protect, defend and hold the Indemnitees harmless,
against any and all actions, claims, demands, liability, costs and expenses,
including attorneys' fees and expenses for the defense thereof, arising from use
of the exercise facility in the Project by Tenant, Tenant's employees or
invitees.  In case of any action or proceeding brought against the Indemnitees
by reason of any such claim, upon notice from Landlord, Tenant covenants to
defend such action or proceeding by counsel chosen by Landlord, in Landlord's
sole discretion.  Landlord reserves the right to settle, compromise or dispose
of any and all actions, claims and demands related to the foregoing indemnity.

                                       29
<PAGE>

                              ARTICLE TWENTY-SIX
                                 MISCELLANEOUS

26.01 LATE CHARGES

     (a) All payments required hereunder (other than the Monthly Base Rent, Rent
Adjustments, and Rent Adjustment Deposits, which shall be due as hereinbefore
provided) to Landlord shall be paid within ten (10) days after Landlord's demand
therefor.  All such amounts (including Monthly Base Rent, Rent Adjustments, and
Rent Adjustment Deposits) not paid when due shall bear interest from the date
due until the date paid at the Default Rate in effect on the date such payment
was due.

     (b) In the event Tenant is more than five (5) days late in paying any
installment of Rent due under this Lease, Tenant shall pay Landlord a late
charge equal to five percent (5%) of the delinquent installment of Rent.  The
parties agree that (i) such delinquency will cause Landlord to incur costs and
expenses not contemplated herein, the exact amount of which will be difficult to
calculate, including the cost and expense that will be incurred by Landlord in
processing each delinquent payment of rent by Tenant, and (ii) the amount of
such late charge represents a reasonable estimate of such costs and expenses and
that such late charge shall be paid to Landlord for each delinquent payment in
addition to all Rent otherwise due hereunder.  The parties further agree that
the payment of late charges and the payment of interest provided for in
subparagraph (a) above are distinct and separate from one another in that the
payment of interest is to compensate Landlord for its inability to use the money
improperly withheld by Tenant, while the payment of late charges is to
compensate Landlord for its additional administrative expenses in handling and
processing delinquent payments.

     (c) Payment of interest at the Default Rate and/or of late charges shall
not excuse or cure any default by Tenant under this Lease, nor shall the
foregoing provisions of this Article or any such payments prevent Landlord from
exercising any right or remedy available to Landlord upon Tenant's failure to
pay Rent when due, including the right to terminate this Lease.

26.02 NO JURY TRIAL; VENUE; JURISDICTION

Each party hereto (which includes any assignee, successor, heir or personal
representative of a party) shall not seek a jury trial, hereby waives trial by
jury, and hereby further waives any objection to venue in the County in which
the Project is located, and agrees and consents to personal jurisdiction of the
courts of the State of California, in any action or proceeding or counterclaim
brought by any party hereto against the other on any matter whatsoever arising
out of or in any way connected with this Lease, the relationship of Landlord and
Tenant, Tenant's use or occupancy of the Premises, or any claim of injury or
damage, or the enforcement of any remedy under any statute, emergency or
otherwise, whether any of the foregoing is based on this Lease or on tort law.
No party will seek to consolidate any such action in which a jury has been
waived with any other action in which a jury trial cannot or has not been
waived.  It is the intention of the parties that these provisions shall be
subject to no exceptions.  By execution of this Lease the parties agree that
this provision may be filed by any party hereto with the clerk or judge before
whom any action is instituted, which filing shall constitute the written consent
to a waiver of jury trial pursuant to and in accordance with Section 631 of the
California Code of Civil Procedure.  No party has in any way agreed with or
represented to any other party that the provisions of this Section will not be
fully enforced in all instances.  The provisions of this Section shall survive
the expiration or earlier termination of this Lease.

26.03 DEFAULT UNDER OTHER LEASE

It shall be a Default under this Lease if Tenant or any Affiliate holding any
other lease with Landlord for premises in the Building defaults under such lease
and as a result thereof such lease is terminated or terminable.

26.04 OPTION

This Lease shall not become effective as a lease or otherwise until executed and
delivered by both Landlord and Tenant. The submission of the Lease to Tenant
does not constitute a reservation of or option for the Premises, but when
executed by Tenant and delivered to Landlord, the Lease shall constitute an
irrevocable offer by Tenant in effect for fifteen (15) days to lease the
Premises on the terms and conditions herein contained.

26.05 TENANT AUTHORITY

Tenant represents and warrants to Landlord that it has full authority and power
to enter into and perform its obligations under this Lease, that the person
executing this Lease is fully empowered to do so, and that no consent or
authorization is necessary from any third party.  Landlord may request that
Tenant provide Landlord evidence of Tenant's authority.

26.06 ENTIRE AGREEMENT

This Lease, the Exhibits and Rider 2 attached hereto contain the entire
agreement between Landlord and Tenant concerning the Premises and there are no
other agreements, either oral or written, and no other

                                       30
<PAGE>

representations or statements, either oral or written, on which Tenant has
relied. This Lease shall not be modified except by a writing executed by
Landlord and Tenant.

26.07  MODIFICATION OF LEASE FOR BENEFIT OF MORTGAGEE

If Mortgagee of Landlord requires a modification of this Lease which shall not
result in any increased cost or expense to Tenant or in any other substantial
and adverse change in the rights and obligations of Tenant hereunder, then
Tenant agrees that the Lease may be so modified.

26.08  EXCULPATION

Tenant agrees, on its behalf and on behalf of its successors and assigns, that
any liability or obligation under this Lease shall only be enforced against
Landlord's equity interest in the Property up to a maximum of Five Million
Dollars ($5,000,000.00) and in no event against any other assets of the
Landlord, or Landlord's officers or directors or partners, and that any
liability of Landlord with respect to this Lease shall be so limited and Tenant
shall not be entitled to any judgment in excess of such amount.

26.09  ACCORD AND SATISFACTION

No payment by Tenant or receipt by Landlord of a lesser amount than any
installment or payment of Rent due shall be deemed to be other than on account
of the amount due, and no endorsement or statement on any check or any letter
accompanying any check or payment of Rent shall be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such installment or payment of Rent
or pursue any other remedies available to Landlord.  No receipt of money by
Landlord from Tenant after the termination of this Lease or Tenant's right of
possession of the Premises shall reinstate, continue or extend the Term.
Receipt or acceptance of payment from anyone other than Tenant, including an
assignee of Tenant, is not a waiver of any breach of Article Ten, and Landlord
may accept such payment on account of the amount due without prejudice to
Landlord's right to pursue any remedies available to Landlord.

26.10  LANDLORD'S OBLIGATIONS ON SALE OF BUILDING

In the event of any sale or other transfer of the Building, Landlord shall be
entirely freed and relieved of all agreements and obligations of Landlord
hereunder accruing or to be performed after the date of such sale or transfer,
and any remaining liability of Landlord with respect to this Lease shall be
limited to the dollar amount specified in Section 26.08 and Tenant shall not be
entitled to any judgment in excess of such amount.

26.11  BINDING EFFECT

Subject to the provisions of Article Ten, this Lease shall be binding upon and
inure to the benefit of Landlord and Tenant and their respective heirs, legal
representatives, successors and permitted assigns.

26.12  CAPTIONS

The Article and Section captions in this Lease are inserted only as a matter of
convenience and in no way define, limit, construe, or describe the scope or
intent of such Articles and Sections.

26.13  TIME; APPLICABLE LAW; CONSTRUCTION

Time is of the essence of this Lease and each and all of its provisions.  This
Lease shall be construed in accordance with the Laws of the State of California.
If more than one person signs this Lease as Tenant, the obligations hereunder
imposed shall be joint and several.  If any term, covenant or condition of this
Lease or the application thereof to any person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this Lease, or the
application of such term, covenant or condition to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby and each item, covenant or condition of this Lease shall be
valid and be enforced to the fullest extent permitted by Law.  Wherever the term
"including" or "includes" is used in this Lease, it shall have the same meaning
as if followed by the phrase "but not limited to".  The language in all parts of
this Lease shall be construed according to its normal and usual meaning and not
strictly for or against either Landlord or Tenant.

26.14  ABANDONMENT

In the event Tenant vacates or abandons the Premises but is otherwise in
compliance with all the terms, covenants and conditions of this Lease, Landlord
shall (i) have the right to enter into the Premises in order to show the space
to prospective tenants, (ii) have the right to reduce the services provided to
Tenant pursuant to the terms of this Lease to such levels as Landlord reasonably
determines to be adequate services for an unoccupied premises and (iii) during
the last six (6) months of the Term, have the right to prepare the Premises for
occupancy by another tenant upon the end of the Term.  Tenant expressly
acknowledges that in the absence of written notice pursuant to Section 11.02(b)
or pursuant to California Civil Code Section 1951.3 terminating Tenant's right
to possession, none of the foregoing acts of Landlord or any other act of
Landlord shall constitute a termination of Tenant's right to possession or an
acceptance of Tenant's surrender of the Premises, and the Lease shall continue
in effect.

                                       31
<PAGE>

26.15  LANDLORD'S RIGHT TO PERFORM TENANT'S DUTIES

If Tenant fails timely to perform any of its duties under this Lease, Landlord
shall have the right (but not the obligation), to perform such duty on behalf
and at the expense of Tenant without prior notice to Tenant, and all sums
expended or expenses incurred by Landlord in performing such duty shall be
deemed to be additional Rent under this Lease and shall be due and payable upon
demand by Landlord.

26.16  SECURITY SYSTEM

Landlord shall not be obligated to provide or maintain any security patrol or
security system.  Landlord shall not be responsible for the quality of any such
patrol or system which may be provided hereunder or for damage or injury to
Tenant, its employees, invitees or others due to the failure, action or inaction
of such patrol or system.

26.17  NO LIGHT, AIR OR VIEW EASEMENTS

Any diminution or shutting off of light, air or view by any structure which may
be erected on lands of or adjacent to the Project shall in no way affect this
Lease or impose any liability on Landlord.

26.18  RECORDATION

Neither this Lease, nor any notice nor memorandum regarding the terms hereof,
shall be recorded by Tenant.  Any such unauthorized recording shall be a Default
for which there shall be no cure or grace period.  Tenant agrees to execute and
acknowledge, at the request of Landlord, a memorandum of this Lease, in
recordable form.

26.19  SURVIVAL

The waivers of the right of jury trial, the other waivers of claims or rights,
the releases and the obligations of Tenant under this Lease to indemnify,
protect, defend and hold harmless Landlord and/or Indemnitees shall survive the
expiration or termination of this Lease, and so shall all other obligations or
agreements which by their terms survive expiration or termination of the Lease.

26.20  RIDERS

All Riders attached hereto and executed both by Landlord and Tenant shall be
deemed to be a part hereof and hereby incorporated herein.

IN WITNESS WHEREOF, this Lease has been executed as of the date set forth in
Section 1.01(4) hereof.

TENANT:                             LANDLORD:
------                              --------

Maxygen, Inc.                       Metropolitan Life Insurance Company,
a Delaware corporation              a New York corporation

By /s/ B.S. Gill                    By /s/ Donald Devine
  -------------------------           ----------------------------

          B.S. Gill                        Donald Devine
  --------------------------           ---------------------------
       Print name                         Print name

Its Senior Vice President          Its  Vice President
    -------------------------          ----------------------------
(Chairman of Board, President
 or Vice President)

By  /s/ Michael Rabson
   --------------------------

    Michael Rabson
   --------------------------
       Print name

Its Assistant Secretary
   --------------------------
(Secretary, Assistant Secretary,
CFO or Assistant Treasurer)

                                       32
<PAGE>

                                   EXHIBIT A
                                PLAN OF PREMISES

[graphic representation of the floor plan of the building, showing two square
boxes (one larger and one smaller) abutting each other as the general footprint
of the floor.  The larger box is cross-hatched to show that it is not part of
the area being rented.  One-half of the smaller box is also cross-hatched to
show that it is not part of the area being rented.  The remaining one-half box
is subdivided to show the locations of walls and doors within the area to be
rented.]

                                       33
<PAGE>

                                   EXHIBIT B
                              WORKLETTER AGREEMENT
                            (intentionally omitted)

                                       34
<PAGE>

                                   EXHIBIT C
                              SITE PLAN OF PROJECT

[graphic representation of the area in which the rented premises is located.
The graphic shows a square area subdivided by named streets and rectangular
boxes representing the buildings located in the area. Each building is labeled
and identified by address and total square footage in a graphic chart in the
upper left corner of the map. Parking spaces are also graphically represented
around each building.]

                                       35
<PAGE>

                                   EXHIBIT D
                          PERMITTED HAZARDOUS MATERIAL

Permitted Hazardous Material includes insignificant amounts of substances
typically found or used in general office applications so long as (i) such
substances are maintained only in such quantities as are reasonably necessary
for Tenant's operations in the Premises, (ii) such substances are used strictly
in accordance with the manufacturers' instructions therefor and all applicable
laws, (iii) such substances are not disposed of in or about the Building or the
Project in a manner which would constitute a release or discharge thereof, and
(iv) all such substances are removed from the Building and the Project by Tenant
upon the expiration or earlier termination of this Lease.

                                       36
<PAGE>

                                   EXHIBIT E
                            HAZARDOUS MATERIAL PLANS

TO BE LISTED AND ATTACHED BY TENANT PURSUANT TO SECTION 7.02(c) OF THIS LEASE.
<PAGE>

                                   EXHIBIT F
          FORM OF SUBORDINATION, NONDISTURBANCE & ATTORNMENT AGREEMENT

RECORDING REQUESTED
BY AND WHEN
RECORDED RETURN TO:

____________________, Esq.
____________________
____________________
____________________

                                 SUBORDINATION,
                                 NONDISTURBANCE
                            AND ATTORNMENT AGREEMENT

NOTICE:        THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT
               RESULTS IN YOUR LEASEHOLD ESTATE IN THE PROPERTY BECOMING SUBJECT
               TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER
               SECURITY INSTRUMENT.

                                 DEFINED TERMS
================================================================================
Execution Date:
--------------------------------------------------------------------------------
Beneficiary & Address:

Attn.:
with a copy to:

--------------------------------------------------------------------------------
Tenant & Address:

--------------------------------------------------------------------------------
Landlord & Address:

--------------------------------------------------------------------------------
Loan: A first mortgage loan in the original principal amount of $
from Beneficiary to Landlord.

--------------------------------------------------------------------------------
Note: A Promissory Note executed by Landlord in favor of Beneficiary in the
amount of the Loan dated as of

--------------------------------------------------------------------------------
Deed of Trust: A Deed of Trust, Security Agreement and Fixture Filing dated as
of executed by Landlord, to        as Trustee, for the benefit of Beneficiary
securing repayment of the Note to be recorded in the records of the County in
which the Property is located.

--------------------------------------------------------------------------------
Lease and Lease Date: The lease entered into by Landlord and Tenant dated as of
               covering the Premises.
[Add amendments]
--------------------------------------------------------------------------------
Property:  [Property Name]
           [Street Address 1]
           [City, State, Zip]

           The Property is more particularly described on Exhibit A.
                                                          ---------
================================================================================

                              Exhibit F - Page 1
<PAGE>

          THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT (the
"Agreement") is made by and among Tenant, Landlord, and Beneficiary and affects
the Property described in Exhibit A.  Certain terms used in this Agreement are
                          ---------
defined in the Defined Terms. This Agreement is entered into as of the Execution
Date with reference to the following facts:

          A.   Landlord and Tenant have entered into the Lease covering certain
space in the improvements located in and upon the Property (the "Premises").

          B.   Beneficiary has made or is making the Loan to Landlord evidenced
by the Note. The Note is secured, among other documents, by the Deed of Trust.

          C.   Landlord, Tenant and Beneficiary all wish to subordinate the
Lease to the lien of the Deed of Trust.

          D.   Tenant has requested that Beneficiary agree not to disturb
Tenant's rights in the Premises pursuant to the Lease in the event Beneficiary
forecloses the Deed of Trust, or acquires the Property pursuant to the trustee's
power of sale contained in the Deed of Trust or receives a transfer of the
Property by a conveyance in lieu of foreclosure of the Property (collectively, a
"Foreclosure Sale") but only if Tenant is not then in default under the Lease
and Tenant attorns to Beneficiary or a third party purchaser at the Foreclosure
Sale (a "Foreclosure Purchaser").

          NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows:

          1.   Subordination.  The Lease and the leasehold estate created by the
               -------------
Lease and all of Tenant's rights under the Lease are and shall remain
subordinate to the Deed of Trust and the lien of the Deed of Trust, to all
rights of Beneficiary under the Deed of Trust and to all renewals, amendments,
modifications and extensions of the Deed of Trust.

          2.   Acknowledgments by Tenant.  Tenant agrees that: (a) Tenant has
               -------------------------
notice that the Lease and the rent and all other sums due under the Lease have
been or are to be assigned to Beneficiary as security for the Loan. In the event
that Beneficiary notifies Tenant of a default under the Deed of Trust and
requests Tenant to pay its rent and all other sums due under the Lease to
Beneficiary, Tenant shall pay such sums directly to Beneficiary or as
Beneficiary may otherwise request. (b) Tenant shall send a copy of any notice or
statement under the Lease to Beneficiary at the same time Tenant sends such
notice or statement to Landlord. (c) This Agreement satisfies any condition or
requirement in the Lease relating to the granting of a nondisturbance agreement.

          3.   Foreclosure and Sale.  In the event of a Foreclosure Sale,
               --------------------

               (a) So long as Tenant complies with this Agreement and is not in
     default under any of the provisions of the Lease, the Lease shall continue
     in full force and effect as a direct lease between Beneficiary and Tenant,
     and Beneficiary will not disturb the possession of Tenant, subject to this
     Agreement. Tenant agrees to attorn to and accept Beneficiary as landlord
     under the Lease and to be bound by and perform all of the obligations
     imposed by the Lease.  Upon Beneficiary's acquisition of title to the
     Property, Beneficiary will perform all of the obligations imposed on the
     Landlord by the Lease except as set forth in this Agreement; provided,
     however, that Beneficiary shall not be: (i) liable for any act or omission
     of a prior landlord (including Landlord); or (ii) subject to any offsets or
     defenses that Tenant might have against any prior landlord (including
     Landlord); or (iii) bound by any rent or additional rent which Tenant might
     have paid in advance to any prior landlord (including Landlord) for a
     period in excess of one month or by any security deposit, cleaning deposit
     or other sum that Tenant may have paid in advance to any prior landlord
     (including Landlord); or (iv) bound by any amendment, modification,
     assignment or termination of the Lease made without the written consent of
     Beneficiary; (v) obligated or liable with respect to any representations,
     warranties or indemnities contained in the Lease; or (vi) liable to Tenant
     or any other party for any conflict between the provisions of the Lease and
     the provisions of any other lease affecting the Property which is not
     entered into by Beneficiary.

               (b) Upon the written request of Beneficiary after a Foreclosure
     Sale, the parties shall execute a lease of the Premises upon the same
     provisions as contained in the Lease between Landlord and Tenant, except as
     set forth in this Agreement, for the unexpired term of the Lease.

          4.   Subordination and Release of Purchase Options.  Tenant represents
               ---------------------------------------------
that it has no right or option of any nature to purchase the Property or any
portion of the Property or any interest in the Borrower.  To the extent Tenant
has or acquires any such right or option, these rights or options are
acknowledged to be subject and subordinate to the Mortgage and are waived and
released as to Beneficiary and any Foreclosure Purchaser.

          5.   Acknowledgment by Landlord.  In the event of a default under the
               --------------------------
Deed of Trust, at the election of Beneficiary, Tenant shall and is directed to
pay all rent and all other sums due under the Lease to Beneficiary.

                              Exhibit F - Page 2
<PAGE>

          6.   Construction of Improvements.  Beneficiary shall not have any
               ----------------------------
obligation or incur any liability with respect to the completion of the
improvements in which the Premises are located at the commencement of the term
of the Lease.

          7.   Notice.  All notices under this Agreement shall be deemed to have
               ------
been properly given if delivered by overnight courier service or mailed by
United States certified mail, with return receipt requested, postage prepaid to
the party receiving the notice at its address set forth in the Defined Terms (or
at such other address as shall be given in writing by such party to the other
parties) and shall be deemed complete upon receipt or refusal of delivery.

          8.   Miscellaneous.  Beneficiary shall not be subject to any provision
               -------------
of the Lease that is inconsistent with this Agreement. Nothing contained in this
Agreement shall be construed to derogate from or in any way impair or affect the
lien or the provisions of the Deed of Trust. This Agreement shall be governed by
and construed in accordance with the laws of the State of in which the Property
is located.

          9.  Liability and Successors and Assigns.  In the event that
              ------------------------------------
Beneficiary acquires title to the Premises or the Property, Beneficiary shall
have no obligation nor incur any liability beyond Beneficiary's then equity
interest in the building in which the Premises is located up to a maximum of
Five Million Dollars ($5,000,000), and Tenant shall look solely to such equity
interest (as limited) for the payment and performance of any obligations imposed
upon Beneficiary under this Agreement or under the Lease.  This Agreement shall
run with the land and shall inure to the benefit of the parties and, their
respective successors and permitted assigns including a Foreclosure Purchaser.
If a Foreclosure Purchaser acquires the Property or if Beneficiary assigns or
transfers its interest in the Note and Deed of Trust or the Property, all
obligations and liabilities of Beneficiary under this Agreement shall terminate
and be the responsibility of the Foreclosure Purchaser or other party to whom
Beneficiary's interest is assigned or transferred.  The interest of Tenant under
this Agreement may not be assigned or transferred except in connection with an
assignment of its interest in the Lease which has been consented to by
Beneficiary.

          IN WITNESS WHEREOF, the parties have executed this Subordination,
Nondisturbance and Attornment Agreement as of the Execution Date.

NOTICE:   THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT CONTAINS
          PROVISIONS WHICH ALLOW THE PERSON OBLIGATED ON THE LEASE TO OBTAIN A
          LOAN, A PORTION OF WHICH MAY BE EXPENDED FOR OTHER PURPOSES THAN
          IMPROVEMENT OF THE PROPERTY.

IT IS RECOMMENDED THAT THE PARTIES CONSULT WITH THEIR ATTORNEYS PRIOR TO THE
EXECUTION OF THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT.

BENEFICIARY:             __________________________________,
                         a _________________________________

                         By ________________________________
                         Its _______________________________

TENANT:                  __________________________________,
                         a _________________________________

                         By ________________________________
                         Its _______________________________

LANDLORD:                __________________________________,
                         a _________________________________

                         By ________________________________
                         Its _______________________________

                              Exhibit F - Page 3
<PAGE>

     EXHIBIT A OF SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT

                              PROPERTY DESCRIPTION

                              Exhibit F - Page 4
<PAGE>

State of _____________

County of ____________

On ______________, 199_ before me, ____________________, personally appeared
___________________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and official seal.

Signature ________________________________    (Seal)

              ***************************************************

State of _____________

County of ____________

On ______________, 199_ before me, ____________________, personally appeared
___________________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and official seal.

Signature ________________________________    (Seal)

              ***************************************************

State of _____________

County of ____________

On ______________, 199_ before me, ____________________, personally appeared
___________________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and official seal.

Signature ________________________________    (Seal)

                              Exhibit F - Page 5
<PAGE>

                                    RIDER 1
                          COMMENCEMENT DATE AGREEMENT

Metropolitan Life Insurance Company, a New York corporation ("Landlord"), and
Maxygen, Inc., a Delaware corporation ("Tenant"), have entered into a certain
Lease dated as of April 21, 2000 (the "Lease").

WHEREAS, Landlord and Tenant wish to confirm and memorialize the Commencement
Date and Expiration Date of the Lease as provided for in  Rider 2 of the Lease;

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained herein and in the Lease, Landlord and Tenant agree as follows:

     1.   Unless otherwise defined herein, all capitalized terms shall have the
same meaning ascribed to them in the Lease.

     2.   The Commencement Date (as defined in the Lease) of the Lease is
________________________.

     3.   The Expiration Date (as defined in the Lease) of the Lease is
__________________________.

     4.   Tenant hereby confirms the following:

          (a)  That it has accepted possession of the premises pursuant to the
               terms of the Lease;

          (b)  That the Landlord Work, if any, is Substantially Complete; and

          (c)  That the Lease is in full force and effect.

     5.   Except as expressly modified hereby, all terms and provisions of the
Lease are hereby ratified and confirmed and shall remain in full force and
effect and binding on the parties hereto.

     6.   The Lease and this Commencement Date Agreement contain all of the
terms, covenants, conditions and agreements between the Landlord and the Tenant
relating to the subject matter herein.  No prior other agreements or
understandings pertaining to such matters are valid or of any force and effect.

     IN WITNESS WHEREOF, Landlord and Tenant have executed this Commencement
Date Agreement and such execution and delivery have been duly authorized.

TENANT:                                  LANDLORD:
------                                   --------

Maxygen, Inc.,                           Metropolitan Life Insurance Company,
a Delaware corporation                   a New York corporation

By  ________________________________     By  ________________________________

    ________________________________       __________________________________
       Print name                                 Print name
Its _________________________________    Its _________________________________
(Chairman of Board, President or
Vice President)

By  ________________________________

    _________________________________
       Print name
Its __________________________________
(Secretary, Assistant Secretary, CFO
 or Assistant Treasurer)

                              Exhibit F - Page 6
<PAGE>

                                    RIDER 2
                             ADDITIONAL PROVISIONS

     This Rider 2 ("Rider") is attached to and a part of a certain Lease dated
as of April 21, 2000 executed concurrently herewith by Metropolitan Life
Insurance Company, a New York corporation, as Landlord, and Maxygen, Inc., a
Delaware corporation (for purposes of this Rider, "Maxygen" or "Tenant"), as
Tenant, for the Premises as described therein (the "Lease").

SECTION 1.  DEFINED TERMS; FORCE AND EFFECT

Capitalized terms used in this Rider shall have the same meanings set forth in
the Lease except as otherwise specified herein and except for terms capitalized
in the ordinary course of punctuation.  This Rider forms a part of the Lease.
Without limiting the generality of the foregoing, any default by any party
hereunder shall have the same force and effect as a default under the Lease.
Should any inconsistency arise between this Rider and any other provision of the
Lease as to the specific matters which are the subject of this Rider, the terms
and conditions of this Rider shall control.

SECTION 2.  PREMISES LEASED "AS-IS"; DELIVERY; COMMENCEMENT DATE; AND
            CONSTRUCTION

     2.1. AS-IS; Delivery; Commencement Date.  Notwithstanding any provision of
          ----------------------------------
the Lease to the contrary:

          (a) AS-IS.  Tenant acknowledges and agrees that (i) Tenant has been
              -----
afforded ample opportunity to inspect the Premises, the Building and the
Project, and has investigated their condition to the extent Tenant desires to do
so; (ii) Tenant hereby agrees that this Lease is of the Premises in its "AS IS"
condition; (iii) no representation regarding the condition of the Premises or
the Building or the Project has been made by or on behalf of Landlord; (iv)
Landlord has no obligation to remodel or to make any repairs, alterations or
improvements to the Premises, Building or the Project in connection with
Tenant's initial occupancy or provide Tenant any allowance for any work by
Tenant; and (v) there is no Workletter for this Lease.

          (b) Delivery & Commencement Date. Possession will be adequately
              ----------------------------
tendered to Tenant by Landlord either delivering the keys (or other means of
access) to Tenant or Tenant's Broker, or by Landlord giving written notice that
the keys (or other means of access) to the Premises are available for Tenant or
its representative to pick up at the office of Landlord or of the Seaport Centre
Property Manager.  In the event Landlord determines that Landlord may be able to
tender possession of the Premises to Tenant prior to the Projected Commencement
Date, Landlord may, but shall not be obligated to, offer to tender possession to
Tenant prior to the Projected Commencement Date.  If such early tender is
offered by Landlord, Tenant shall have the option to accept the early tender
(and Tenant shall notify Landlord in writing of Tenant's exercise of such option
no later than two (2) business days after Landlord offers such early tender),
and in such event shall take possession of the Premises no later than two (2)
business days after such tender is offered and in no event later than the
Projected Commencement Date.  The Commencement Date shall be the earlier of (i)
the date of Tenant's acceptance of early tender as described above, or (ii) the
Projected Commencement Date, and thereupon Tenant's possession of the space
shall be subject to all of the terms, covenants and conditions of this Lease,
including the payment of Rent (including Monthly Base Rent and all other rent
payable under the Lease).

          (c) Delay in Delivery.  If Landlord does not obtain and tender
              -----------------
possession of the Premises by the Projected Commencement Date by reason of the
following: (i) the holding over or retention of possession of any tenant,
tenants or occupants or (ii) for any other reason, then Landlord shall not be
subject to any liability for the failure to give possession on said date.  Under
such circumstances the Commencement Date shall be delayed by a number of days
equal to the days of delay in Landlord's delivery of possession to Tenant.  No
such failure to give possession shall affect the validity of this Lease or the
obligations of the Tenant hereunder.  Within thirty (30) days following the
occurrence of the Commencement Date, Landlord and Tenant shall enter into an
agreement (which is attached to this Lease as Rider 1) confirming the
                                              -------
Commencement Date and the Expiration Date.  If Tenant fails to enter into such
agreement, then the Commencement Date and the Expiration Date shall be the dates
designated by Landlord in such agreement.

     2.2. Tenant Work Generally.  Landlord and Tenant acknowledge and agree that
          ---------------------
notwithstanding any provisions of the Lease to the contrary:  (a) Tenant may
desire to do certain remodeling, repair, improvement or alteration in connection
with its initial occupancy, which for purposes of this Lease is referred to as
the Tenant Work; (b) all Tenant Work, if any, shall be done as Tenant
Alterations within the meaning of Article Nine of the Lease, subject to and in
compliance with all conditions and provisions of the Lease applicable to Tenant
Alterations, except as otherwise expressly provided in this Rider; (c) without
limiting the generality of any provisions of Article Nine, Tenant's selection of
Tenant's space planner and/or architect and Tenant's selection of contractor(s)
shall be subject to Landlord's prior written approval, which shall not
unreasonably be withheld; (d) Tenant shall not be required to obtain a
completion and lien indemnity bond for it; (e) such work, including all design,
plan review, obtaining all approvals and permits, and construction shall be at
Tenant's sole cost and expense, including delivery to Landlord of plans and
specifications of such

                           Rider 2 - Page 1 of 1
<PAGE>

Tenant Work (including 3 sets of as-built plans and specifications upon
completion) to the extent such work is more than recarpeting and/or repainting,
and (f) Tenant shall pay Landlord a fee for monitoring such design, construction
and work by Tenant which shall not exceed two percent of all "hard costs" of the
Tenant Work.

     2.3. Design & Construction Responsibility for any Tenant Work.  Tenant
          --------------------------------------------------------
shall be responsible for the suitability for the Tenant's needs and business of
the design and function of all Tenant Work and for its construction in
compliance with all Law as applicable and as interpreted at the time of
construction of the Tenant Work, including all building codes and the ADA (as
defined in the Lease).  Tenant, through its architects and/or space planners
("Tenant's Architect"), shall prepare all architectural plans and
specifications, and engineering plans and specifications, for the real property
improvements to be constructed by Tenant in the Premises in sufficient detail to
be submitted for approval by Landlord to the extent required pursuant to Article
Nine of the Lease and to be submitted by Tenant for governmental approvals and
building permits and to serve as the detailed construction drawings and
specifications for the contractor, and shall include, among other things, all
partitions, doors, heating, ventilating and air conditioning installation and
distribution, ceiling systems, light fixtures, plumbing installations,
electrical installations and outlets, telephone installations and outlets, any
other installations required by Tenant, fire and life-safety systems, wall
finishes and floor coverings, whether to be newly installed or requiring changes
from the as-is condition of the Premises as of the date of execution of the
Lease.  Tenant shall be responsible for the oversight, supervision and
construction of all Tenant Work in compliance with this Lease, including
compliance with all Law as applicable and as interpreted at the time of
construction, including all building codes and the ADA.

SECTION 3   MONUMENT SIGNAGE

     3.1  Grant of Right.  Notwithstanding any provision of Section 6.06 of the
          --------------
Lease to the contrary, so long as Tenant is in continuous operation at and
occupancy of at least fifty percent (50%) of the entire Premises, Tenant shall
have the right, to place Tenant identification on one line of the existing,
exterior monument sign for the Building, subject to the terms and conditions of
this Section ("Exterior Sign Right").

     3.2  General Conditions & Requirements.  The size, type, style, materials,
          ---------------------------------
color, method of installation and exact location of the sign, and the contractor
for and all work in connection with the sign, contemplated by this Section shall
(i) be subject to Tenant's compliance with all applicable laws, regulations and
ordinances and with any covenants, conditions and restrictions of record which
affect the Property; (ii) be subject to Tenant's compliance with all
requirements of Landlord's current Project signage criteria at the time of
installation; (iii) be consistent with the design of the Building and the
Project; (iv) be further subject to Landlord's prior written consent.  Tenant
shall, at its sole cost and expense, procure, install, maintain and remove such
sign.

     3.3  Removal & Restoration.  Upon the expiration or termination of the
          ---------------------
Exterior Sign Right, but in no event later than the expiration of the Term or
earlier termination of the Lease, Tenant shall, at its sole cost and expense,
remove such sign and shall repair and restore the area in which the sign was
located to its condition prior to installation of such sign.

     3.4  Right Personal.  The Exterior Sign Right under this Section is
          --------------
personal to Maxygen and may not be used by, and shall not be transferable or
assignable (voluntarily or involuntarily) to any person or entity other than an
assignee of the Lease which has satisfied the requirements of Article Ten of the
Lease.

     IN WITNESS WHEREOF, the parties hereto have executed this Rider 2 as of the
date first set forth in the Lease.

TENANT:                             LANDLORD:
------                              --------

Maxygen, Inc.,                      Metropolitan Life Insurance Company,
a Delaware corporation              a New York corporation

By /s/ B.S. Gill                    By /s/ Donald K. Devine
  -------------------------           ------------------------------

       B.S. Gill                           Donald K. Devine
  -------------------------           ------------------------------
       Print name                                 Print name

Its Senior Vice President           Its Vice-President
   -------------------------            ----------------------------
(Chairman of Board, President
 or Vice President)

By /s/ Michael Rabson
  --------------------------

       Michael Rabson
  --------------------------
       Print name

Its Assistant Secretary
    -------------------------
(Secretary, Assistant Secretary,
CFO or Assistant Treasurer)

                             Rider 2 - Page 2 of 2<PAGE>
                                                                     EXHIBIT 4.1

      FROM OF NOTE FOR REGISTRANT'S 4.75% CONVERTIBLE SUBORDINATED NOTE,
                               DUE JULY 1, 2007.
                                [FORM OF FACE]

     [THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH RESTRICTED SECURITY:

     THIS SECURITY AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS
SECURITY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE  SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.  EACH
PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

     THIS SECURITY AND ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)
(I) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT
ACQUIRING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) PURSUANT TO THE
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (III) TO AN INSTITUTION THAT IS AN "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT (IF AVAILABLE) [TOGETHER WITH A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE
SECURITIES (THE FORM OF SUCH LETTER CAN BE OBTAINED FROM THE TRUSTEE OF THE
SECURITIES) AND, IF SUCH TRANSFER IS FOR LESS THAN AN AGGREGATE PRINCIPAL AMOUNT
OF $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY] OR (IV) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (B) IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED
STATES AND OTHER JURISDICTIONS.

     THIS SECURITY, ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS CONVERSION AND
ANY RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO
MODIFY THE RESTRICTIONS ON RESALES AND OTHER TRANSFERS OF THIS SECURITY AND ANY
SUCH SHARES TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE
INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF
RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS SECURITY AND ANY SUCH SHARES
SHALL BE DEEMED BY THE ACCEPTANCE OF

<PAGE>

THIS SECURITY AND ANY SUCH SHARES TO HAVE AGREED TO ANY SUCH AMENDMENT OR
SUPPLEMENT.]

     [THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL SECURITY:

     THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A
NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE AND
ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS SECURITY FOR ALL PURPOSES.

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

     UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE REGISTERED FORM IN THE LIMITED CIRCUMSTANCES REFERRED TO IN THE
INDENTURE, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY.]

<PAGE>

                        MERCURY INTERACTIVE CORPORATION

              4.75% CONVERTIBLE SUBORDINATED NOTE DUE JULY 1, 2007

No._________________                                   $________________

CUSIP NO. 589405AA7

     MERCURY INTERACTIVE CORPORATION, a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company", which term
includes any successor Person under the Indenture referred to on the reverse
hereof), for value received, hereby promises to pay to _________________, or
registered assigns, the principal sum of ________ United States Dollars
(U.S.$______ ) [if this Security is a Global Security, then insert (which
principal amount may from time to time be increased or decreased to such other
principal amounts (which, taken together with the principal amounts of all other
Outstanding Securities, shall not exceed $400,000,000 (or $500,000,000 if the
Over-allotment Option is exercised in full) by adjustments made on the records
of the Trustee hereinafter referred to in accordance with the Indenture) on July
1, 2007 and to pay interest thereon, from July 3, 2000, or from the most recent
Interest Payment Date (as defined below) to which interest has been paid or duly
provided for, semi-annually in arrears on July 1 and January 1 in each year
(each, an "Interest Payment Date"), commencing January 1, 2001, at the rate of
4.75% per annum, until the principal hereof is due, and at the rate of 4.75% per
annum on any overdue principal and premium, if any, and, to the extent permitted
by law, on any overdue interest. The interest so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the June 15 or December 15
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date.  Except as otherwise provided in the Indenture, any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Company, notice whereof shall be
given to Holders of Securities not less than 10 days prior to the Special Record
Date, or be paid at any time in any other lawful manner not inconsistent with
the requirements of any automated quotation system or securities exchange on
which the Securities may be quoted or listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture. Payments
of principal shall be made upon the surrender of  this Security at the option of
the Holder at the Corporate Trust Office of  the Trustee, or at such other
office or agency of the Company as may be designated by it for such purpose in
the Borough of Manhattan, The City of  New York, in such lawful monies of the
United States of America as at the time of payment shall be legal tender for the
payment of public and private debts, or at such other offices or agencies as the
Company may designate, by United States Dollar check drawn on, or wire transfer
to, a United States Dollar account (such a transfer to be made only to a Holder
of an aggregate principal amount of Securities in excess of U.S.$2,000,000 and
only if such

<PAGE>

Holder shall have furnished wire instructions in writing to the Trustee no later
than 15 days prior to the relevant payment date). Payment of interest on this
Security may be made by United States Dollar check mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register,
or, upon written application by the Holder to the Security Registrar setting
forth wire instructions not later than the relevant Record Date, by transfer to
a United States Dollar account (such a transfer to be made only to a Holder of
an aggregate principal amount of Securities in excess of U.S. $2,000,000 and
only if such Holder shall have furnished wire instructions in writing to the
Trustee no later than 15 days prior to the relevant payment date).

     Except as specifically provided herein and in the Indenture, the Company
shall not be required to make any payment with respect to any tax, assessment or
other governmental charge imposed by any government or any political subdivision
or taxing authority thereof or therein.

     Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

     Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof or an Authenticating Agent by the
manual signature of one of their respective authorized signatories, this
Security shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

<PAGE>

IN WITNESS WHEREOF, the Company has caused this Security to be duly executed.

                                    MERCURY INTERACTIVE CORPORATION

                                    By:_______________________
                                    Name:
                                    Title:

Attest:

By:______________________
Name:
Title:

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Securities referred to in the within-mentioned Indenture.

Dated:

STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.,
as Trustee

By:  ____________________
Authorized Signatory
<PAGE>

                               [FORM OF REVERSE]

     This Security is one of a duly authorized issue of securities of the
Company designated as its "4.75% Convertible Subordinated Notes due July 1,
2007" (herein called the "Securities"), limited in aggregate principal amount to
U.S. $400,000,000 (or $500,000,000 if the Over-allotment Option is exercised in
full), issued and to be issued under an Indenture, dated as of July 3, 2000
(herein called the "Indenture"), between the Company and State Street Bank and
Trust Company of California, N.A., as Trustee (herein called the "Trustee",
which term includes any successor trustee under the Indenture), and to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee, the holders of Senior Debt and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered. As provided in the Indenture and subject
to certain limitations therein set forth, Securities are exchangeable for a like
aggregate principal amount of Securities of any authorized denominations as
requested by the Holder surrendering the same upon surrender of the Security or
Securities to be exchanged, at the Corporate Trust Office of the Trustee. The
Trustee upon such surrender by the Holder will issue the new Securities in the
requested denominations.

     No sinking fund is provided for the Securities.  The Securities will not be
subject to redemption prior to July 1, 2003 and will be redeemable on and after
that date at the option of the Company, in whole or in part, upon not less than
30 nor more than 60 days notice to the Holders prior to the Redemption Date at
the Redemption Prices (expressed as percentages of the principal amount) set
forth below.

     The following table sets forth the Redemption Prices (expressed as
percentages of the principal amount) if such Security is redeemed during the 12-
month period beginning July 1:

                      YEAR                REDEMPTION PRICE
                      ----                ----------------
                      2003                    102.714%
                      2004                    102.036
                      2005                    101.357
                      2006                    100.679

and thereafter at a Redemption Price equal to 100% of the principal amount,
together, in each case, with accrued interest to the Redemption Date; provided,
however, that interest installments on Securities whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.

     In the event of a redemption of the Securities, the Company will not be
required (a) to register the transfer or exchange of Securities for a period of
15 days immediately preceding the date notice is given identifying the serial
numbers of the Securities called for such redemption or (b) to register the
transfer or exchange of any Security, or portion thereof, called for redemption.

<PAGE>

     In any case where the due date for the payment of the principal of,
premium, if any, interest, or Liquidated Damages on any Security or the last day
on which a Holder of a Security has a right to convert his Security shall be, at
any Place of Payment or Place of Conversion as the case may be, a day on which
banking institutions at such Place of Payment or Place of Conversion are
authorized or obligated by law or executive order to close, then payment of
principal, premium, if any, interest, or Liquidated Damages, or delivery for
conversion of such Security need not be made on or by such date at such place
but may be made on or by the next succeeding day at such place which is not a
day on which banking institutions are authorized or obligated by law or
executive order to close, with the same force and effect as if made on the date
for such payment or the date fixed for redemption or repurchase, or by such last
day for conversion, and no interest shall accrue on the amount so payable for
the period after such date.

     Subject to and upon compliance with the provisions of the Indenture, the
Holder of this Security is entitled, at his option, at any time on or before the
close of business on the date of Maturity, or in case this Security or a portion
hereof is called for redemption or the Holder hereof has exercised his right to
require the Company to repurchase this Security or such portion hereof, then in
respect of this Security until and including, but (unless the Company defaults
in making the payment due upon redemption or repurchase, as the case may be) not
after, the close of business on the Redemption Date or the Repurchase Date, as
the case may be, to convert this Security (or any portion of the principal
amount hereof that is an integral multiple of U.S.$1,000, provided that the
unconverted portion of such principal amount is U.S.$1,000 or any integral
multiple of U.S.$1,000 in excess thereof) into fully paid and nonassessable
shares of Common Stock of the Company at an initial Conversion Rate of 8.9888
shares of Common Stock for each U.S.$1,000 principal amount of Securities (or at
the current adjusted Conversion Rate if an adjustment has been made as provided
in the Indenture) by surrender of this Security, duly endorsed or assigned to
the Company or in blank and, in case such surrender shall be made during the
period from the close of business on any Regular Record Date next preceding any
Interest Payment Date to the opening of business on such Interest Payment Date
(except if this Security or portion thereof has been called for redemption on a
Redemption Date or is repurchasable on a Repurchase Date occurring, in either
case, during such period and, as a result, the right to convert would terminate
in such period), also accompanied by payment in New York Clearing House or other
funds acceptable to the Company of an amount equal to the interest payable on
such Interest Payment Date on the principal amount of this Security then being
converted, and also the conversion notice hereon duly executed, to the Company
at the Corporate Trust Office of the Trustee, or at such other office or agency
of the Company, subject to any laws or regulations applicable thereto and
subject to the right of the Company to terminate the appointment of any
Conversion Agent (as defined below) as may be designated by it for such purpose
in the Borough of  Manhattan, The City of New York, or at such other offices or
agencies as the Company may designate (each a "Conversion Agent"), provided,
further, that if this Security or portion hereof has been called for redemption
on a Redemption Date or is repurchasable on a Repurchase Date occurring, in
either case, during the period from the close of business on any Regular Record
Date next preceding any Interest Payment Date to the opening of business on such
succeeding Interest Payment Date, and is surrendered for conversion during such
period, then the Holder of this Security on such Regular Record Date will be
entitled to receive the interest accruing hereon from the Interest Payment Date
next preceding the date of such conversion to such

<PAGE>

succeeding Interest Payment Date and the Holder of this Security who converts
this Security or a portion hereof during such period shall not be required to
pay such interest upon surrender of this Security for conversion. Subject to the
provisions of the preceding sentence and, in the case of a conversion after the
close of business on the Regular Record Date next preceding any Interest Payment
Date and on or before the close of business on such Interest Payment Date, to
the right of the Holder of this Security (or any Predecessor Security of record
as of such Regular Record Date) to receive the related installment of interest
to the extent and under the circumstances provided in the Indenture, no cash
payment or adjustment is to be made on conversion for interest accrued hereon
from the Interest Payment Date next preceding the day of conversion, or for
dividends on the Common Stock issued on conversion hereof. The Company shall
thereafter deliver to the Holder the fixed number of shares of Common Stock
(together with any cash adjustment, as provided in the Indenture) into which
this Security is convertible and such delivery will be deemed to satisfy the
Company's obligation to pay the principal amount of this Security. No fractions
of shares or scrip representing fractions of shares will be issued on
conversion, but instead of any fractional interest (calculated to the nearest
1/100th of a share) the Company shall pay a cash adjustment as provided in the
Indenture. The Conversion Rate is subject to adjustment as provided in the
Indenture. In addition, the Indenture provides that in case of certain
consolidations or mergers to which the Company is a party (other than a
consolidation or merger that does not result in any reclassification,
conversion, exchange or cancellation of the Common Stock) or the conveyance,
transfer, sale or lease of all or substantially all of the property and assets
of the Company, the Indenture shall be amended, without the consent of any
Holders of Securities, so that this Security, if then Outstanding, will be
convertible thereafter, during the period this Security shall be convertible as
specified above, only into the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance, transfer, sale
or lease by a holder of the number of shares of Common Stock of the Company into
which this Security could have been converted immediately prior to such
consolidation, merger, conveyance, transfer, sale or lease (assuming such holder
of Common Stock is not a Constituent Person or an Affiliate of a Constituent
Person, failed to exercise any rights of election and received per share the
kind and amount received per share by a plurality of Non-electing Shares). No
adjustment in the Conversion Rate will be made until such adjustment would
require an increase or decrease of at least one percent of such rate, provided
that any adjustment that would otherwise be made will be carried forward and
taken into account in the computation of any subsequent adjustment.

     If this Security is a Registrable Security (as defined in this Indenture),
then the Holder of this Security [if this security is a global security, then
insert -- (including any Person that has a beneficial interest in this
Security)] and the Common Stock of the Company issuable upon conversion hereof
is entitled to the benefits of a Registration Rights Agreement, dated as of July
3, 2000, executed by the Company (the "Registration Rights Agreement"). Pursuant
to the Registration Rights Agreement, the Company has agreed for the benefit of
the Holders from time to time of the Registrable Securities that it will, at its
expense, (a) within 90 days after the Issue Date file a shelf registration
statement (the "Shelf Registration Statement") with the Commission with respect
to resales of the Registrable Securities, (b) use all reasonable efforts to
cause such Shelf Registration Statement to be declared effective by the
Commission within 180 days after the Issue Date of the Securities, provided,
however, that the Company may, upon written notice to all the Holders,

<PAGE>

postpone having the Shelf Registration Statement declared effective for a
reasonable period not to exceed 90 days if the Company possesses material non-
public information, the disclosure of which would have a material adverse effect
on the Company and its subsidiaries taken as a whole, and (c) use all reasonable
efforts to maintain such Shelf Registration Statement effective under the
Securities Act of 1933, as amended, until the second annual anniversary of the
date it is declared effective or such earlier date as is provided in the
Registration Rights Agreement (the "Effectiveness Period"). The Company will be
permitted to suspend the use of the prospectus which is part of the Shelf
Registration Statement during certain periods of time as provided in the
Registration Rights Agreement.

     If (i) on or prior to 90 days following the Issue Date, a Shelf
Registration Statement has not been filed with the Commission, or (ii) on or
prior to the 180th day following the Issue Date, such Shelf Registration
Statement is not declared effective (each, a "Registration Default"), additional
interest ("Liquidated Damages") will accrue on this Restricted Security from and
including the day following such Registration Default to but excluding the day
on which such Registration Default has been cured. Liquidated Damages will be
paid semi-annually in arrears, with the first semi-annual payment due on the
first Interest Payment Date, as applicable, in respect of the Restricted
Securities following the date on which such Liquidated Damages begin to accrue,
and will accrue at a rate per annum equal to an additional one-quarter of one
percent (0.25%) of the principal amount of the Restricted Securities to and
including the 90th day following such Registration Default and at a rate per
annum equal to one-half of one percent (0.50%) thereof from and after the 91st
day following such Registration Default. Pursuant to the Registration Rights
Agreement, in the event that the Shelf Registration Statement ceases to be
effective (or the Holders of Registrable Securities are otherwise prevented or
restricted by the Company from effecting sales pursuant thereto) (an "Effective
Failure") during the Effectiveness Period for more than 45 days, whether or not
consecutive, during any 90-day period or for more than 90 days, whether or not
consecutive, during any 12-month period, then the interest rate borne by the
Restricted Securities shall increase by an additional one-half of one percent
(0.50%) per annum from the 46th day of the applicable 90-day period or the 91st
day of the applicable 12-month period until the earlier of (A) such time as the
Effective Failure is cured or (B) the Effectiveness Period expires.

     Whenever in this Security there is a reference, in any context, to the
payment of the principal of, premium, if any, or interest on, or in respect of,
any Security, such mention shall be deemed to include mention of the payment of
Liquidated Damages payable as described in the preceding paragraph to the extent
that, in such context, Liquidated Damages are, were or would be payable in
respect of such Security and express mention of the payment of Liquidated
Damages (if applicable) in any provisions of this Security shall not be
construed as excluding Liquidated Damages in those provisions of this Security
where such express mention is not made.

     [If this Security is a Registrable Security and the Holder of this Security
[if this security is a global security, then insert -- (including any Person
that has a beneficial interest in this Security)] elects to sell this Security
pursuant to the Shelf Registration Statement then, by its acceptance hereof,
such Holder of this Security agrees to be bound by the terms of the Registration
Rights Agreement relating to the Registrable Securities which are the subject of
such election.]

<PAGE>

     If a Change in Control occurs, the Holder of this Security, at the Holder's
option, shall have the right, in accordance with the provisions of the
Indenture, to require the Company to repurchase this Security (or any portion of
the principal amount hereof that is at least $1,000 or an integral multiple of
$1,000 in excess thereof, provided that the portion of the principal amount of
this Security to be Outstanding after such repurchase is at least equal to
U.S.$1,000) for cash at a Repurchase Price equal to 100% of the principal amount
thereof plus interest accrued to the Repurchase Date. At the option of the
Company, the Repurchase Price may be paid in cash or, subject to the conditions
provided in the Indenture, by delivery of shares of Common Stock having a fair
market value equal to the Repurchase Price. For purposes of this paragraph, the
fair market value of shares of Common Stock shall be determined by the Company
and shall be equal to 95% of the average of the Closing Prices Per Share for the
five consecutive Trading Days immediately preceding and including the third
Trading Day prior to the Repurchase Date. Whenever in this Security there is a
reference, in any context, to the principal of any Security as of any time, such
reference shall be deemed to include reference to the Repurchase Price payable
in respect of such Security to the extent that such Repurchase Price is, was or
would be so payable at such time, and express mention of the Repurchase Price in
any provision of this Security shall not be construed as excluding the
Repurchase Price so payable in those provisions of this Security when such
express mention is not made; provided, however, that, for the purposes of the
second succeeding paragraph, such reference shall be deemed to include reference
to the Repurchase Price only to the extent the Repurchase Price is payable in
cash.

     [The following paragraph shall appear in each Global Security:

     In the event of a deposit or withdrawal of an interest in this Security,
including an exchange, transfer, redemption, repurchase or conversion of this
Security in part only, the Trustee, as custodian of the Depositary, shall make
an adjustment on its records to reflect such deposit or withdrawal in accordance
with the Applicable Procedures.]

     [The following paragraph shall appear in each Security that is not a Global
Security:

     In the event of redemption, repurchase or conversion of this Security in
part only, a new Security or Securities for the unredeemed, unrepurchased or
unconverted portion hereof will be issued in the name of the Holder hereof.]

     The indebtedness evidenced by this Security is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of  payment
to the prior payment in full of all Senior Debt of the Company, and this
Security is issued subject to such provisions of the Indenture with respect
thereto. Each Holder of this Security, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact for
any and all such purposes.

     If an Event of Default shall occur and be continuing, the principal of all
the Securities, together with accrued interest to the date of declaration, may
be declared due and payable in the manner and with the effect provided in the
Indenture. Upon payment (i) of the amount of principal

<PAGE>

so declared due and payable, together with accrued interest to the date of
declaration, and (ii) of interest on any overdue principal and, to the extent
permitted by applicable law, overdue interest, all of the Company's obligations
in respect of the payment of the principal of and interest on the Securities
shall terminate.

     The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with either (a) the written consent of
the Holders of not less than a majority in principal amount of the Securities at
the time Outstanding, or (b) by the adoption of a resolution, at a meeting of
Holders of the Outstanding Securities at which a quorum is present, by the
Holders of at least 66-2/3% in aggregate principal amount of the Outstanding
Securities represented and entitled to vote at such meeting. The Indenture also
contains provisions permitting the Holders of specified percentages in principal
amount of the Securities at the time Outstanding, on behalf of the Holders of
all the Securities, to waive compliance by the Company with certain provisions
of the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued in exchange therefore or in lieu hereof
whether or not notation of such consent or waiver is made upon this Security or
such other Security.

     As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default, the Holders of not less
than 25% in principal amount of the Outstanding Securities shall have made
written request to the Trustee to institute proceedings in respect of such Event
of Default as Trustee and offered the Trustee reasonable indemnity and the
Trustee shall not have received from the Holders of a majority in principal
amount of the Securities Outstanding a direction inconsistent with such request,
and shall have failed to institute any such proceeding, for 60 days after
receipt of such notice, request and offer of indemnity. The foregoing shall not
apply to any suit instituted by the Holder of this Security for the enforcement
of any payment of principal hereof, premiums if any, or interest (including
Liquidated Damages) hereon on or after the respective due dates expressed herein
or for the enforcement of the right to convert this Security as provided in the
Indenture.

     No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest (including Liquidated Damages) on this Security at the times, places
and rate, and in the coin or currency, herein prescribed or to convert this
Security as provided in the Indenture.

     As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable on the Security Register
upon surrender of this Security for registration of  transfer at the Corporate
Trust Office of the Trustee or at such other office or agency of the Company as
may be designated by it for such purpose in the Borough of Manhattan, The City
of

                                     -26-
<PAGE>

New York (which shall initially be an office or agency of the Trustee), or at
such other offices or agencies as the Company may designate, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder thereof or his
attorney duly authorized in writing, and thereupon one or more new Securities,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees by the Registrar. No service
charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to recover any tax or other
governmental charge payable in connection therewith.

     Prior to due presentation of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered, as the owner thereof for all
purposes, whether or not such Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

     No recourse for the payment of the principal (and premium, if any) or
interest on this Security and no recourse under or upon any obligation, covenant
or agreement of the Company in the Indenture or any indenture supplemental
thereto or in any Security, or because of the creation of any indebtedness
represented thereby, shall be had against any incorporator, stockholder,
employee, agent, officer or director or subsidiary, as such, past, present or
future, of the Company or of any successor corporation, either directly or
through the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance hereof and as
part of consideration for the issue hereof, expressly waived and released.

     THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.

     All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.

<PAGE>

                                 ABBREVIATIONS

  The following abbreviations, when used in the inscription of the face of this
Security, shall be construed as though they were written out in full according
to applicable laws or regulations:

<TABLE>
<S>          <C>                                        <C>                            <C>
TEN COM      as tenant in common                        UNIF GIFT MIN ACT              ____ Custodian ____
TEN ENT      as tenants by the entireties (Cust)                                          (Cust)        (Minor)
JT TEN       as joint tenants with right of                                            under Uniform Gifts to
             survivorship and not as tenants in common                                 Minors Act _____
                                                                                                  (State)
</TABLE>

    Additional abbreviations may also be used though not in the above list.

<PAGE>

                    ELECTION OF HOLDER TO REQUIRE REPURCHASE

     (1)  Pursuant to Section 14.1 of the Indenture, the undersigned hereby
elects to have this Security repurchased by the Company.

     (2)  The undersigned hereby directs the Trustee or the Company to pay it or
______________ an amount in cash or, at the Company's election, Common Stock
valued as set forth in the Indenture, equal to 100% of the principal amount to
be repurchased (as set forth below), plus interest accrued to the Repurchase
Date, as provided in the Indenture.

Dated:

________________________

________________________
Signature(s)

Signature(s) must be guaranteed by an Eligible
Guarantor Institution with membership in an
approved signature guarantee program pursuant
to Rule 17Ad-15 under the Securities Exchange
Act of 1934.

________________________
Signature Guaranteed

Principal amount to be repurchased (at least
U.S. $1,000 or an integral multiple of $1,000
in excess thereof):  ___________________

Remaining principal amount following such
repurchase (not less than U.S. $1,000):
______________

NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.

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