Document:

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                                                                  Exhibit 10.177

                    REAL ESTATE MORTGAGE, ASSIGNMENT OF RENTS
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                     SECURITY AGREEMENT AND FIXTURE FILING
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                     (SECURING VARIABLE RATE MORTGAGE NOTE)

         KNOW ALL MEN BY THESE PRESENTS: That Glimcher Properties Limited
Partnership, a Delaware limited partnership, with offices at 20 South Third
Street, Columbus, Ohio 43215 ("Mortgagor"), in consideration of the payments to
Mortgagor which BANK ONE, NA, a national banking association, having an office
and place of business at 100 East Broad Street, Columbus, Ohio 43271-0208
("Mortgagee"), has made contemporaneously herewith or may hereafter make, does
hereby does hereby MORTGAGE AND WARRANT unto Mortgagee, its successors and
assigns forever, certain real property situated in the State of Indiana, County
of Morgan and in the City of Martinsville and being more fully described on
Exhibit "A" attached hereto and made a part hereof ("Land").

         TOGETHER WITH the following, whether now owned or hereafter acquired by
Mortgagor: (a) all improvements now or hereafter attached to or placed, erected,
constructed or developed on the Land ("Improvements"); (b) all fixtures now or
hereafter attached to or used in or about the Improvements and all renewals of
or replacements or substitutions thereof; (c) all water and water rights,
timber, crops, and mineral interests pertaining to the Land; (d) all right,
title and interest of Mortgagor in and to all streets, roads, public places,
easements and rights-of-way, existing or proposed, public or private, adjacent
to or used in connection with, belonging or pertaining to the Land; (e) all
rights, hereditaments and appurtenances pertaining to the foregoing; (f) other
interests of every kind and character that Mortgagor now has or at any time
hereafter acquires in and to the Land, Improvements, and other property
described in items (b) through (e) hereinabove, including rights of ingress and
egress and all reversionary rights or interests of Mortgagor with respect to
such property; (g) all equipment, fixtures, furnishings, inventory, and articles
of personal property ("Personal Property") now or hereafter attached to or used
in or about the Improvements or that are owned by Mortgagor and are necessary or
useful for the complete and comfortable use and occupancy of the Improvements
for the purposes for which they were to be attached, placed, erected,
constructed or developed, or which Personal Property is or may be used in or
related to the planning, development, financing or operation of the
Improvements, and all renewals of or replacements or substitutions for any of
the foregoing, whether or not the same are or shall be attached to the Land or
Improvements; (h) all building materials and equipment now or hereafter
delivered to and intended to be installed in or on the Land or the Improvements;
(i) all plans and specifications for the Improvements; (j) all contracts
relating to the Land, the Improvements or the Personal Property; (k) all
deposits (including, without limitation, tenants' security deposits), bank
accounts, funds, documents, contract rights, accounts, accounts receivable,
commitments, construction contracts, architectural agreements, general
intangibles (including, without limitation, trademarks, trade names and
symbols), tax credits, instruments, Note and chattel paper arising from or by
virtue of any transactions related to the Land, the Improvements or the Personal
Property or relating directly or indirectly to the ownership, occupancy, use,
operation, and maintenance of the Land, Personal Property, and Improvements; (l)
all permits, licenses, franchises, certificates, and other rights and privileges

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obtained in connection with the Land, the Improvements or the Personal Property;
(m) all proceeds arising from or by virtue of the sale, lease or other
disposition of the Land, the Improvements, the Personal Property or any portion
thereof or interest therein; (n) all proceeds (including, without limitation,
premium refunds) of each policy of insurance relating to the Land, the
Improvements or the Personal Property; (o) all proceeds from the taking of any
of the Land, the Improvements, the Personal Property or any rights appurtenant
thereto by right of eminent domain or by private or other purchase in lieu
thereof (including, without limitation, change of grade of streets, curb cuts or
other rights of access), for any public or quasi public use under any law; (p)
all of the leases, rents, royalties, bonuses, income, receipts, issues, profits,
revenues or other benefits of the Land, the Improvements or the Personal
Property, including, without limitation, cash or securities deposited pursuant
to leases to secure performance by the lessees of their obligations thereunder;
(q) all consumer goods located in, on or about the Land or the Improvements or
used in connection with the use or operation thereof which are owned by
Mortgagor; and (r) other interests of every kind and character that Mortgagor
now has or at any time hereafter acquires in and to the Land, Improvements, and
Personal Property described herein and all property that is used or useful in
connection therewith, including rights of ingress and egress and all
reversionary rights or interests of Mortgagor with respect to such property. The
above described property is collectively referred to herein as the "Mortgaged
Property."

         TO HAVE AND TO HOLD the Mortgaged Property, together with the rights,
privileges and appurtenances thereto belonging, unto Mortgagee and its
successors and assigns forever, and Mortgagor hereby binds itself and its
representatives, successors and assigns to warrant and forever defend the
Mortgaged Property unto Mortgagee and its successors and assigns, against the
claim or claims of all persons claiming or to claim the same or any part
thereof, subject to the matters described in Schedule B of Mortgagee's title
insurance policy ("Permitted Matters").

         THIS MORTGAGE IS GIVEN TO SECURE: (a) Payment of all unpaid loan
indebtedness ("Indebtedness") heretofore and hereafter created and evidenced by
a certain promissory note, of even date herewith, made and delivered by
Mortgagor to Mortgagee, in the principal amount of Five Million Dollars
($5,000,000.00), payable not later than March 1, 2005, unless extended by its
terms to March 1, 2006, and any and all renewals, amendments, modifications,
increases, reductions and extensions thereof (hereinafter referred to
collectively as the "Note"); and (b) performance of each and every one of the
covenants, conditions and agreements contained in this Mortgage, the Note, and
any other loan agreement, instrument, affidavit, certificate, guaranty or
document heretofore, now or hereafter given in connection with the closing of
the loan evidenced by the Note (hereinafter collectively referred to as the
"Loan Documents").

         In addition to any other debt or obligation secured hereby, this
Mortgage shall also secure unpaid balances of advances heretofore and hereafter
made with respect to the Mortgaged Property, for the payment of taxes,
assessments, insurance premiums or costs incurred for the protection of the
Mortgaged Property.

         Mortgagor, for itself and its successors and assigns, hereby covenants
with Mortgagee, its successors and assigns, that:

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1. Warranties of Title. Mortgagor holds good and marketable title in fee simple
to the Land and Improvements, and the same are free and clear from all
conditions, restrictions, easements, liens and encumbrances whatsoever except
property taxes not yet due and payable and the Permitted Matters, and Mortgagor
will forever warrant and defend the same with the appurtenances above mentioned,
unto Mortgagee, its successors and assigns, against the lawful claims of all
persons whomsoever, except as noted above. The Mortgaged Property constitutes
the entirety of one or more complete tax parcels. Mortgagor has good and
marketable title to the Personal Property, free and clear of any liens, charges,
encumbrances, security interests and adverse claims whatsoever. If the interest
of Mortgagee in the Mortgaged Property or any part thereof shall be endangered
or shall be attacked, directly or indirectly, Mortgagor hereby authorizes
Mortgagee, at Mortgagor's expense, to take all necessary and proper steps for
the defense of such interest, including the employment of counsel, the
prosecution or defense of litigation, and the compromise or discharge of claims
made against such interest. Any sums so expended by Mortgagee shall be charged
against Mortgagor and collectible in accordance with the terms of Section 14
hereof.

2. Payments. Mortgagor will promptly pay the principal evidenced by the Note and
any other indebtedness that may accrue to Mortgagee under the terms of this
Mortgage, together with the interest and late charges on all of said
indebtedness as the same shall become due and payable. Mortgagee may apply and
allocate partial payments as to principal, interest, late charges and other
charges as Mortgagee, in its sole discretion, may elect.

3. Taxes and Assessments. Mortgagor will promptly pay before delinquency, all
taxes, assessments, charges, fines or impositions, general, local or special
(hereinafter collectively referred to as "Impositions"), levied upon the
Mortgaged Property, or any part thereof, or upon this Mortgage or the
Indebtedness, by any duly or legally constituted public authority, municipality,
township, county, state or the United States, and, upon Mortgagee's request,
exhibit the evidence of the payment thereof to Mortgagee within fifteen (15)
days thereafter; provided that Mortgagor, at Mortgagor's own cost and expense
may, if it shall in good faith so desire, contest the validity or amount of any
Impositions, in which event Mortgagor may defer the payment thereof for such
period as such contest shall be actively prosecuted and shall be pending
undetermined; provided further, however, that Mortgagor shall not allow any such
Impositions so contested to remain unpaid for such length of time as shall
permit all or any portion of the Mortgaged Property, or the lien thereon created
by such item to be contested, to be sold by federal, state, county or municipal
authority for the nonpayment thereof, and that pending any such contest
Mortgagor shall furnish to Mortgagee an indemnity bond secured by a deposit in
cash or other security acceptable to Mortgagee, in the amount of the tax or
assessment being contested by Mortgagor plus a reasonable additional sum to pay
all costs, interest and penalties which may be imposed or incurred in connection
therewith.

4. Repair. Mortgagor will keep all Improvements now or hereafter erected on the
Land in good condition and repair; all Improvements hereafter erected shall have
been erected substantially in accordance with the plans and specifications
therefor, which shall be subject to Mortgagee's prior approval, and Mortgagor
shall comply with the laws, ordinances, regulations

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and requirements of any governmental body applicable to the Mortgaged Property
the failure to comply with which would have a material adverse effect on the
Mortgaged Property both during the construction of any Improvements on the Land
and subsequent to the completion thereof.

5. Waste; Liens; Minerals. Mortgagor will neither commit nor permit any waste on
the Land, nor use nor permit the use thereof or the Improvements for any illegal
purpose, nor cause nor permit the same to become subject to any superior or
inferior lien or encumbrance, except as expressly permitted herein. Without the
prior written consent of Mortgagee, there shall be no drilling or exploring for,
or extraction, removal, or production of minerals from the surface or subsurface
of the Land. The term "minerals" as used herein shall include, without
limitation, oil, gas, casinghead gas, coal, lignite, hydrocarbons, methane,
carbon dioxide, helium, uranium and all other natural elements, compounds and
substances, including sand and gravel.

6. Alterations. Mortgagor shall not remove, demolish or alter any of the
Improvements now existing or hereafter constructed on the Land or any of the
Personal Property in or on the Land or Improvements except when incident to the
replacement of any of the items of Personal Property with items of like kind and
value.

7. Status Quo. Except as otherwise expressly permitted herein, Mortgagor will
not sell (by land contract or otherwise), assign, mortgage, lease or otherwise
convey the Mortgaged Property, or any part thereof or interest therein, legal or
equitable, or subdivide or resubdivide or submit to the condominium form of
ownership the same without the written consent of Mortgagee, which consent may
be withheld in Mortgagee's sole discretion. Unless Mortgagee otherwise agrees in
writing, Mortgagor shall not allow changes in the nature of the occupancy for
which the Land and Improvements were intended at the time this Mortgage was
executed, and Mortgagor shall not initiate nor acquiesce in any change in the
zoning classification of the Land or any part thereof without Mortgagee's prior
written consent, which consent may be withheld in Mortgagee's sole discretion.

8. Taxes on Mortgage. If, at any time, any law exists or shall be enacted
imposing or authorizing the imposition of any tax upon this Mortgage, or upon
any rights, titles, liens, or security interests created hereby, Mortgagor shall
immediately pay all such taxes, or, at Mortgagee's election and request,
reimburse Mortgagee for payment of same.

9. Security Agreement. This Mortgage is intended to be a security agreement
pursuant to the Uniform Commercial Code as enacted in the State of Indiana
("U.C.C.") for any of the property and fixtures described on pages 1 and 2
hereof which may be subject to a security interest pursuant to the U.C.C., and
Mortgagor hereby grants to Mortgagee a security interest in said property and
fixtures, whether said property is now existing or hereafter acquired, together
with replacements, replacement parts, additions, repairs and accessories
incorporated therein or affixed thereto and, if sold or otherwise disposed of,
the proceeds (including insurance proceeds) thereof. Mortgagor hereby authorizes
Mortgagee to prepare and file U.C.C. financing statements covering said property
and fixtures from time to time and in such form as Mortgagee may require to
perfect or maintain the priority of Mortgagee's security interest with respect
to said property and fixtures, and Mortgagor shall bear all costs thereof,
including all U.C.C. searches reasonably

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required by Mortgagee. Mortgagor will not create or suffer to be created any
other security interest in said property and fixtures, including replacements
thereof and additions thereto. Upon the occurrence of any Event of Default as
set forth in Section 18 hereof, Mortgagee shall have the remedies of a secured
party under the U.C.C. and, at Mortgagee's option, may also invoke the remedies
provided in Section 19 hereof with respect to such property. EXCEPT AS PROVIDED
IN SECTION 26(C), THE MAXIMUM AMOUNT OF PRINCIPAL DEBT OR PRINCIPAL OBLIGATION
(NOT INCLUDING PROTECTIVE ADVANCES OR INTEREST) WHICH IS SECURED BY THIS
MORTGAGE AT THE DATE OF EXECUTION HEREOF OR THEREAFTER IS $5,000,000.00.

10. Insurance and Indemnification. Mortgagor shall provide, maintain and keep in
force at all times the following policies of insurance:

         (a) Policies of insurance evidencing bodily injury, death or property
damage liability coverages in amounts not less than $2,000,000.00 (combined
single limit), and an excess/umbrella liability coverage in an amount not less
than $5,000,000.00 shall be in effect with respect to Mortgagor. Such policies
must be written on an occurrence basis so as to provide blanket contractual
liability, broad form property damage coverage, and coverage for products and
completed operations;

         (b) "Special Cause of Loss" insurance on the Improvements in an amount
not less than the full insurable value on a replacement cost basis of the
insured Improvements and Personal Property related thereto;

         (c) Worker's compensation insurance (including employer's liability
insurance, if available and requested by Mortgagee) for all employees of
Mortgagor engaged on or with respect to the Land and the Improvements in such
amounts as are satisfactory to Mortgagee, or, if such limits are established by
law, in such amounts;

         (d) Business income and/or business interruption insurance and/or loss
of "rental value" insurance in an amount not less than the appraised rentals for
the Mortgaged Property for a minimum of twelve (12) months;

         (e) If the Land, or any part thereof, lies within a "special flood
hazard area" as designated on maps prepared by the Department of Housing and
Urban Development, a National Flood Insurance Association standard flood
insurance policy, plus insurance from a private insurance carrier if necessary,
for the duration of the Loan in the amount of the full insurable value of the
Improvements and Personal Property; and

         (f) Such other insurance, including, without limitation, errors and
omissions insurance with respect to the contractors, architects and engineers,
and earthquake insurance, if necessary, and in such amounts, as may from time to
time be required by Mortgagee against the same or other hazards.

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         Each policy of insurance required by the terms of this Mortgage shall
contain an endorsement by the insurer that any loss shall be payable in
accordance with the terms of such policy notwithstanding any act or negligence
of Mortgagor which might otherwise result in forfeiture of said insurance and
the further agreement of the insurer waiving all rights of set-off, counterclaim
or deductions against Mortgagor. In addition, each policy shall contain an
agreement by the insurer that such policy shall not be cancelled or changed
except upon not less than thirty (30) days prior written notice delivered to
Mortgagee.

         All such insurance policies and renewals thereof shall be written by
companies acceptable to Mortgagee, shall be in a form acceptable to Mortgagee
and shall include a standard mortgage clause in favor of and in form acceptable
to Mortgagee. Mortgagor shall promptly furnish to Mortgagee a certificate of
said insurance on Accord forms 25 and 27, or other forms acceptable to
Mortgagee, together with copies of all renewal notices and all receipts of paid
premiums. At least thirty (30) days prior to the expiration date of any such
policy, Mortgagor shall deliver to Mortgagee a renewal certificate in form
satisfactory to Mortgagee.

         If Mortgagee is made a party defendant to any litigation concerning
this Mortgage or the Mortgaged Property or any part thereof or interest therein,
or the occupancy thereof by Mortgagor, then Mortgagor shall indemnify, defend
and hold Mortgagee harmless from all liability by reason of said litigation,
including reasonable attorneys' fees and expenses incurred by Mortgagee in any
such litigation, whether or not any such litigation is prosecuted to judgment.
Mortgagor waives any and all right to claim or recover against Mortgagee, its
officers, employees, agents and representatives, for loss of or damage to
Mortgagor, the Mortgaged Property, other property of Mortgagor or the property
of others under control of Mortgagor from any cause insured against or required
to be insured against by the provisions of this Mortgage.

         Mortgagor shall not take out separate insurance concurrent in form or
contributing in the event of loss with that required to be maintained under this
Section unless Mortgagee has approved the insurance company and the form and
content of the insurance policy, including, without limitation, the naming
thereon of Mortgagee as a named insured with loss payable to Mortgagee under a
standard mortgage clause of the character above described. Mortgagor shall
immediately notify Mortgagee whenever any such separate insurance is taken out
and shall promptly deliver to Mortgagee copies of the policies or binders
evidencing such insurance.

         Nothing contained in this Section shall prevent Mortgagor from keeping
the Mortgaged Property insured or causing the same to be insured against the
risks referred to in this Section under a policy or policies of blanket
insurance which may cover other property not subject to the lien of this
Mortgage; provided, however, that any such policy of blanket insurance (i) shall
specify therein the amount of the total insurance allocated to the Mortgaged
Property, which amount shall be not less than the amount otherwise required to
be carried under this Mortgage; (ii) shall not contain any clause which would
result in the insured thereunder being required to carry insurance with respect
to the property covered thereby in an amount not less than any specific
percentage of the full insurable value of such property in order to prevent the
insured named therein from becoming a co-insurer of any loss with the insurer
under such policy; and (iii) shall in all other respects comply with the
provisions of this Mortgage.

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         Notwithstanding anything to the contrary contained in this Section, in
the event that the proceeds (the "Proceeds") payable with respect to any
casualty shall be less than or equal to $250,000.00, then Mortgagor shall have
the right to settle the insurance claim, and the right to retain the Proceeds,
so long as Mortgagor shall restore the Mortgaged Property to its condition prior
to such casualty, in a good and workmanlike manner, in compliance with any
applicable legal requirements and the requirements of any lease, free and clear
of liens, and shall remit to Mortgagee promptly upon completion of such
restoration any remaining balance of such Proceeds not used in the restoration
of the Mortgaged Property for application to the principal of the Indebtedness.

         If all of the following apply: (i) the Proceeds have been deposited
with Mortgagee; (ii) in the case of insurance proceeds, the insurance carrier
has not denied liability to a named insured; (iii) Mortgagee shall have been
furnished with an estimate of the cost of restoration accompanied by an
architect's certificate as to such costs and appropriate final plans and
specifications for reconstruction of the Improvements, all of which shall be
approved by Mortgagee; (iv) the Improvements so restored or rebuilt shall be of
at least equal value and substantially the same character as prior to the damage
or destruction and appropriate for the purposes for which they were originally
erected; (v) Mortgagor shall have furnished Mortgagee with evidence satisfactory
to Mortgagee that all Improvements so restored and/or reconstructed and their
use fully comply with all zoning and building laws, ordinances and regulations,
and with all other applicable federal, state, and municipal laws and
requirements; (vi) to the extent that the estimated cost of restoration exceeds
the Proceeds available, Mortgagor shall have furnished a satisfactory bond of
completion or deposited with Mortgagee such sums as may be necessary to pay such
excess costs; (vii) Mortgagee shall have received notice within thirty (30) days
after the fire or other hazard or of the condemnation proceedings specifying the
date of such fire or other hazard or the date the notice of condemnation
proceedings was received and the request to Mortgagee to make said Proceeds
available to Mortgagor; (viii) the aggregate monthly net income under all
Leases, together with the proceeds of any business interruption insurance with
respect thereto, shall be sufficient to pay during the period of reconstruction
the monthly installments required to be paid upon the Indebtedness as well as
all impound payments which may be required for taxes and insurance, and
following reconstruction shall be sufficient to pay the aforesaid sums as well
as all other operating costs and charges of the Mortgaged Property; (ix)
Mortgagor shall not then be in default under the Loan Documents, and (x)
Mortgagee determines in its sole and absolute discretion that such restoration
can be completed at least three (3) months prior to the maturity date of the
Note; then the Proceeds, less the actual costs, fees and expenses, if any,
incurred in connection with adjustment of loss and Mortgagee's administrative
expenses relating to such loss and the disbursement of the Proceeds shall be
applied by Mortgagee to the payment of all the costs of the aforesaid
restoration, repairs, replacement, rebuilding or alterations, including the cost
of temporary repairs or for the protection of property pending the completion of
permanent restoration, repairs, replacements, rebuilding or alterations (all of
which temporary repairs, protection of property and permanent restoration,
repairs, replacement, rebuilding or alterations are hereinafter collective
referred to as the "Restoration"), and shall be paid out from time to time as
such Restoration progresses upon the written request of Mortgagor if the work
for which payment is requested has been done in a good and workmanlike manner
and substantially in

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accordance with the plans and specifications therefor. Each request shall be
accompanied by the following:

         (a) A certificate signed by Mortgagor, dated not more than thirty (30)
days prior to such request, setting forth the following:

                  (i) That the sum then requested either has been paid, or is
     justly due to contractors, subcontractors, materialmen, engineers,
     architects or other persons who have rendered services or furnished
     materials for the restoration therein specified or have paid for the same,
     the names and addresses of such persons, a brief description of such
     services and materials, the several amounts so paid or due to each of said
     persons in respect thereof (together with supporting statements and
     invoices for the same), that no part of such expenditures has been or is
     being made the basis of any previous or then pending request for the
     withdrawal of Proceeds or has been made out of any of the Proceeds received
     by Mortgagor, and that the sum then requested does not exceed the value of
     the services and materials described in the certificate.

                  (ii) That, except for the amount, if any, stated pursuant to
     the foregoing subclause (a)(i) in such certificate to be due for services
     or materials, there is no outstanding indebtedness known to the persons
     signing such certificate, after due inquiry, which is then due for labor,
     wages, materials, supplies or services in connection with such Restoration.

                  (iii) That the costs, as estimated by the persons signing such
     certificate, of the Restoration required to be done subsequent to the date
     of such certificate in order to complete and pay for the same, do not
     exceed the Proceeds, plus any amount or security approved by Mortgagee and
     deposited by Mortgagor to defray such costs and remaining in the hands of
     Mortgagee after payment of the sum requested in such certificate.

         (b) A title insurance report or other evidence satisfactory to
Mortgagee to the effect that there has not been filed with respect to the
Mortgaged Property, or any part thereof, any vendor's, contractor's, laborer's,
materialmen's, or other lien which has not been discharged of record or bonded.

         (c) A certificate signed by the architect and/or engineer in charge of
the Restoration, who shall be selected by Mortgagor and approved in writing by
Mortgagee, certifying to the facts set forth in subclause (i) above, and that
the Restoration is proceeding in accordance with the plans and specifications
approved by Mortgagee and in accordance with all zoning, subdivision and other
governmental laws, ordinances, rules and regulations. Upon compliance with the
foregoing provisions, Mortgagee shall, out of Proceeds (and the amount of
security approved by Mortgagee, if any, deposited by Mortgagor to defray the
costs of the Restoration), pay or cause to be paid to Mortgagor or the persons
named (pursuant to subclause (a)(i) above) in such certificate the respective
amounts stated therein to have been paid by Mortgagor or to be due to them, as
the case may be.

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         If the Proceeds at the time held by Mortgagee, less the actual costs,
fees and expenses, if any, incurred in connection with the adjustment of the
loss and Mortgagee's administrative expenses relating to such loss and the
disbursement of the Proceeds, shall be, in Mortgagee's sole and absolute
judgment, insufficient to pay the entire cost of the Restoration, Mortgagor
shall deposit with Mortgagee any such deficiency prior to disbursement of any
additional portion of the Proceeds.

         No payment made prior to the final completion of the Restoration shall
exceed ninety percent (90%) of the value of the work performed from time to
time, and at all times the undisbursed balance of said Proceeds remaining in the
hands of Mortgagee shall be at least sufficient to pay for the cost of
completion of the Restoration free and clear of liens.

         Final payment shall be made upon delivery of an architect's certificate
and a certification by one of Mortgagee's appraisers as to completion in
accordance with the final plans and specifications and compliance with all
zoning, building, subdivision and other governmental laws, ordinances, rules,
and regulations, and either the presentation of effective lien waivers from all
contractors, subcontractors and materialmen, or the expiration of the period
provided under applicable law for the filing of mechanic's and materialmen's'
liens. Mortgagee may at its option require an endorsement to Mortgagee's policy
of title insurance insuring the continued priority of the lien of this Mortgage
as to all sums advanced hereunder, such endorsement to be in form and substance
satisfactory to Mortgagee and paid for by Mortgagor.

         Upon completion of the Restoration in a good and workmanlike manner in
accordance herewith, and provided that Mortgagee has received satisfactory
evidence that the Restoration has been paid for in full and the Mortgaged
Property is free and clear of all liens, any balance of the Proceeds at the time
held by Mortgagee (after reimbursement to Mortgagee of all costs and expenses of
Mortgagee, including administrative expenses, in connection with recover of the
same and disbursement of such Proceeds for the Restoration), if any, shall be
applied as follows: (i) to the extent that such balance of the Proceeds is equal
to or less than the amount, if any, by which the value of the Mortgaged Property
prior to such damage or destruction exceeds the value of the Mortgaged Property
after such Restoration (for these purposes, the value of the Mortgaged Property
shall be determined by Mortgagee in its discretion), then the portion of the
balance of the Proceeds equal to such excess amount shall be applied to the
payment or prepayment (without any prepayment premium) of the principal balance
of the Indebtedness in such order as Mortgagee may determine, and any amounts so
applied shall reduce the Indebtedness pro tanto; and (ii) to the extent that the
balance of the Proceeds exceeds such excess amount, such portion of the balance
of the Proceeds shall be paid to Mortgagor.

         Mortgagee shall cause Proceeds held by it pursuant to this Section to
be maintained in one or more interest-bearing accounts in accordance with
Mortgagee's customary practices for the payment of interest on account balances,
including, without limitation, minimum balance requirements.

         If the insurance proceeds are applied to the payment of the sums
secured by this Mortgage, any such application of proceeds shall not extend or
postpone the due dates of the

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monthly installments referred to in the Note or change the amounts of such
installments. If Mortgagee acquires title to the Mortgaged Property through
remedial action or transfer in lieu thereof, Mortgagee shall have all of the
right, title and interest of Mortgagor in and to any insurance policies and
unearned premiums thereon and in and to the proceeds resulting from any damage
to the Mortgaged Property prior to such acquisition.

         If Mortgagee is made a party defendant to any litigation concerning
this Mortgage or the Mortgaged Property or any part thereof or interest therein,
or the occupancy thereof, then Mortgagor shall indemnify, defend and hold
Mortgagee harmless from all liability by reason of said litigation, including
reasonable attorneys' fees and expenses incurred by Mortgagee in any such
litigation, whether or not any such litigation is prosecuted to judgment.
Mortgagor waives any and all right to claim or recover against Mortgagee, its
officers, employees, agents and representatives, for loss of or damage to
Mortgagor, the Mortgaged Property, other property of Mortgagor or the property
of others under control of Mortgagor from any cause insured against or required
to be insured against by the provisions of this Mortgage.

11. Escrow. Mortgagor, in order more fully to protect the security of this
Mortgage, does hereby covenant and agree that, after the occurrence of an Event
of Default that has not been waived in writing by Mortgagee, together with and
in addition to the payment of taxes, assessments and insurance premiums above
provided, it will, upon written request of Mortgagee pay to Mortgagee on the
first day of each month until the Indebtedness is fully paid, a sum equal to
one-twelfth (1/12) of the known or estimated yearly taxes, assessments and
premiums for such insurance as may be required by the terms hereof. Mortgagee
shall hold such monthly payments which may be mingled with its general funds,
without obligation to pay interest thereon, unless otherwise required by
applicable law, to pay such taxes, assessments and insurance premiums when due.
Mortgagor agrees that sufficient funds will be so accumulated for the payment of
said charges one month prior to the due date thereof and that it will furnish
Mortgagee with proper statements covering the same fifteen (15) days prior to
the due dates thereof. In the event of foreclosure of this Mortgage, or if
Mortgagee should take a deed in lieu of foreclosure, the amount so accumulated
will be credited on account of the unpaid principal or interest. If the total of
the monthly payments as made under this Section shall exceed the payments
actually made by Mortgagee, such excess shall be credited on subsequent monthly
payments of the same nature, but if the total of such monthly payments so made
under this Section shall be insufficient to pay such taxes, assessments and
insurance premiums then due, then said Mortgagor shall pay upon demand the
amount necessary to make up the deficiency, which payments shall be secured by
this Mortgage. To the extent that all the provisions of this Section for such
payments of taxes, assessments and insurance premiums to Mortgagee are complied
with, said Mortgagor shall be relieved of compliance with the covenants
contained in Sections 3 and 10 herein as to the amounts paid only, but nothing
contained in this Section shall be construed as in any way limiting the rights
of Mortgagee at its option to pay any and all of said items when due.

12. Further Assurances. Mortgagor shall furnish to Mortgagee evidence of the
title of Mortgagor to the Mortgaged Property at the execution and delivery
hereof and from time to time hereafter as may be deemed necessary by and
satisfactory to Mortgagee, and Mortgagor shall promptly pay the cost of said
title evidence when due and payable.

                                       10
<PAGE>

         Mortgagor, upon the request of Mortgagee, will execute, acknowledge,
deliver, file and record such further instruments and do such further acts as
may be necessary, desirable or proper to carry out the purposes of the Loan
Documents and to subject to the liens and security interests created thereby any
property intended by the terms thereof to be covered thereby, including
specifically, but without limitation, any renewals, additions, substitutions,
replacements, improvements or appurtenances to the Mortgaged Property.

13. Condemnation. If all or any part of the Land or Improvements are damaged,
taken or acquired, either temporarily or permanently, in any condemnation
proceeding, or by exercise of the right of eminent domain, or, with Mortgagee's
consent, by any conveyance in lieu thereof, the amount of any award or other
payment for such taking, or conveyance or damages made in consideration thereof,
to the extent of the full amount of the then remaining unpaid Indebtedness, is
hereby assigned to Mortgagee who is empowered to collect and receive the same
and to give proper receipts therefor in the name of Mortgagor, and the same
shall be paid forthwith to Mortgagee. The proceeds shall be settled, deposited
and held consistent with the terms and conditions of Section 10. If Mortgagor
receives notice, written or unwritten, of any actual, intended or threatened
condemnation or eminent domain proceeding, Mortgagor shall forthwith furnish a
copy of such notice to Mortgagee if such notice was written, or inform Mortgagee
in writing if such notice was unwritten.

14. Advances Secured by Mortgage. Upon an Event of Default which shall include
Mortgagor's failure to comply with any of these covenants and agreements as to
the payment of taxes, assessments, insurance premiums, repairs, protection of
the Mortgaged Property or Mortgagee's lien thereon, and other charges and the
costs of procurement of title evidence and insurance as aforesaid, Mortgagee
may, at its option, pay the same, and any sums so paid by Mortgagee, together
with the reasonable fees of counsel employed by Mortgagee in consultation and in
connection therewith (collectively "Protective Advances"), shall be charged
against Mortgagor, shall be immediately due and payable by Mortgagor, shall bear
interest at the Default Rate of Interest, as defined in the Note, and shall be a
lien upon the Mortgaged Property, and be secured by this Mortgage, and may be
collected in the same manner as the principal debt hereby secured.

15. Subrogation. Mortgagee shall be subrogated for its further security to the
lien, although released of record, of any and all encumbrances paid out of the
proceeds of the loan secured by this Mortgage; provided, however, that the terms
and provisions hereof shall govern the rights and remedies of Mortgagee and
shall supersede the terms, provisions, rights, and remedies under the lien or
liens to which Mortgagee is subrogated hereunder.

16. Assignment of Rents and Leases.

(a) Mortgagor hereby absolutely and unconditionally assigns, transfers and sets
over unto Mortgagee and Mortgagee's successors and assigns, all present and
future leases covering all or any part of the Mortgaged Property ("Leases"),
together with any extensions or renewals thereof and any guarantees of any
tenants' obligations thereunder, and all of the rents, royalties,

                                       11
<PAGE>

bonuses, income, receipts, revenues, issues and profits now due or which may
hereafter become due under the Leases or any extensions or renewals thereof, as
well as all moneys due and to become due to Mortgagor under the Leases for
services, materials or installations supplied whether or not the same were
supplied under the terms of the Leases, all liquidated damages following default
under the Leases and all proceeds payable under any policy of insurance covering
loss of rents resulting from untenantability caused by damage to any part of the
Mortgaged Property (such rents, income, receipts, revenues, issues, profits and
other moneys assigned hereby are hereinafter collectively called "Rents"),
together with any and all rights and remedies which Mortgagor may have against
any tenant under any of the Leases or others in possession of the Mortgaged
Property or any part thereof for the collection or recovery of Rents so
assigned. Mortgagor is hereby expressly permitted to enter into Leases of the
Mortgaged Property subject to the terms and conditions contained herein. Prior
to an Event of Default (as hereinafter defined) Mortgagor shall have a license
to collect and receive all Rents as trustee for the benefit of Mortgagee and
Mortgagor.

(b) Mortgagor hereby represents, warrants and agrees that:

(i) Mortgagor has good title to the Leases and Rents hereby assigned and has the
right, power and capacity to make this assignment and no person or entity other
than Mortgagor has or will have any right, title or interest in or to the Leases
or Rents.

(ii) Mortgagor will, at Mortgagor's sole cost and expense, perform and discharge
all of the obligations and undertakings of the landlord under the Leases and
give prompt notice to Mortgagee of any failure to do so. Mortgagor will use
commercially reasonable efforts to enforce or secure the performance of all
material obligations and undertakings of the tenants under the Leases and will
appear in and prosecute or defend any action or proceeding arising under, or in
any manner connected with, the Leases or the obligations and undertakings of the
tenants thereunder.

(iii) Without Mortgagee's prior consent, Mortgagor will not (1) pledge,
transfer, mortgage or otherwise encumber or assign the Leases or the Rents; (2)
waive, excuse, condone or in any manner release or discharge any tenant under
any of the Leases exceeding 5,000 square feet; (3) disaffirm, cancel, terminate
or consent to any surrender of any of the Leases exceeding 5,000 square feet;
(4) modify, extend or in any way alter the terms of any of the Leases exceeding
5,000 square feet so as to reduce or diminish or postpone the payments of Rents;
(5) permit any assignment of any of the Leases; or (6) collect Rents more than
thirty (30) days prior to accrual.

(iv) Mortgagor will give immediate notice to Mortgagee of any notice Mortgagor
receives from any tenant under the Leases, specifying any claimed material
default by any party under the Leases exceeding 5,000 square feet.

(v) Mortgagor hereby assigns any settlement payment for damages for termination
of any of the Leases with Anchor Tenants (as said term is defined in the Loan
Agreement) under the Federal Bankruptcy Code, or under any other federal, state,
or local statute, to Mortgagee, to be

                                       12
<PAGE>

applied to the Indebtedness as Mortgagee may elect, and agrees to endorse any
check for such payment to the order of Mortgagee.

(vi) All existing Leases are valid, unmodified and in full force and effect and
Mortgagor has not performed any act or executed any instrument which might
prevent Mortgagee from operating under any of the terms and provisions thereof
or which would limit Mortgagee in such operation.

(vii) Each of the Leases exceeding 5,000 square feet will be in form and content
satisfactory to Mortgagee. Mortgagor shall not enter any Leases at below market
rents without Mortgagee's consent. Mortgagor will deliver to Mortgagee certified
and correct copies of each of the Leases once fully executed. Upon request of
Mortgagee, Mortgagor shall deliver to Mortgagee a subordination and attornment
agreement from each Anchor Tenant and such estoppel certificates from the
tenants under the Leases as Mortgagee shall reasonably request.

(c) Mortgagee shall not be obligated to perform or discharge any obligation or
duty to be performed or discharged by Mortgagor under any of the Leases; and
Mortgagor hereby agrees to indemnify Mortgagee for, and to save Mortgagee
harmless from, any and all liability, damage or expense arising from any of the
Leases or from this assignment, including, without limitation, claims by tenants
for security deposits or for rental payments more than one (1) month in advance
and not delivered to Mortgagee. All amounts indemnified against hereunder,
including reasonable attorneys' fees, if paid by Mortgagee shall bear interest
at the Default Rate of Interest, as defined in the Note, and shall be payable by
Mortgagor immediately without demand and shall be secured hereby. This
assignment shall not place responsibility for the control, care, management, or
repair of the Premises upon Mortgagee, or make Mortgagee responsible or liable
for any negligence in the management, operation, upkeep, repair or control of
same resulting in loss or damage or injury or death to any party.

(d) Upon the occurrence of an Event of Default as hereinafter defined:

(i) All Rents assigned hereunder shall be paid directly to Mortgagee, and
Mortgagee may notify the tenants under the Leases (or any other parties in
possession of the Mortgaged Property) to pay all of the Rents directly to
Mortgagee at the address specified in Section 25 hereof, for which this
assignment shall be sufficient warrant;

(ii) Mortgagee shall have the right to forthwith enter and take possession of
the Mortgaged Property and to manage, operate, lease and develop the same; to
collect as hereunder provided all or any Rents payable under the Leases; to make
repairs as Mortgagee deems appropriate; and to perform such other acts in
connection with the management, operation, development, leasing and construction
of the Mortgaged Property as Mortgagee, in its sole discretion, may deem proper;
and

(iii) Mortgagee shall have the right to forthwith enter into and upon the
Mortgaged Property and take possession thereof, and to appoint an agent, or in
the event of the institution of foreclosure proceedings to have a receiver
appointed for the collection of the Rents.

                                       13
<PAGE>

In the event that Mortgagee shall pursue its remedies under subsection (ii) or
(iii) above, the net income, after allowing a reasonable fee for the collection
thereof and the management of the Mortgaged Property, may be applied toward the
payment of taxes, assessments, insurance premiums, repairs, protection of the
Mortgaged Property or Mortgagee's lien thereon, and other charges against the
Mortgaged Property and the costs of procurement of such insurance and of
evidence of title to the Mortgaged Property, or any of them, or in the reduction
of the Indebtedness and the payment of interest as Mortgagee may elect. If the
Rents are not sufficient to meet the costs, if any, of taking control of and
managing the Mortgaged Property and collecting the Rents, any funds expended by
Mortgagee for such purposes shall become indebtedness of Mortgagor to Mortgagee
secured by this Mortgage. Unless Mortgagee and Mortgagor agree in writing to
other terms of payment, such amounts shall be payable upon demand from Mortgagee
to Mortgagor and shall bear interest from the date of disbursement at the
Default Rate of Interest stated in the Note.

         The exercise or failure to exercise any of the above remedies shall not
in any way preclude or abridge the right of Mortgagee to foreclose this Mortgage
or to take any other legal or equitable action thereon. Mortgagee shall have
such rights or privileges as aforesaid regardless of the value of the Mortgaged
Property given as security hereunder, and regardless of the solvency or
insolvency of any party bound for the payment of the Indebtedness or the other
sums hereby secured.

(e) Mortgagor hereby authorizes and directs the tenants under the Leases to pay
Rents to Mortgagee upon written demand by Mortgagee, without further consent of
Mortgagor, and the tenants may rely upon any written statement delivered by
Mortgagee to the tenants. Any such payment to Mortgagee shall constitute payment
to Mortgagor under the Leases.

17. No Waiver. The failure of Mortgagee to exercise any option to declare
maturity of the principal debt or any other sums hereby secured under any
provision of any of the Loan Documents, or to forbear from exercising any right
or remedy available to Mortgagee under any provision of any of the Loan
Documents, shall not be taken or deemed a waiver of the right to exercise such
option, right or remedy, or declare such maturity as to such past, continuing or
subsequent violation of any of the covenants and agreements of any of the Loan
Documents. Acceptance by Mortgagee of partial payments shall not constitute a
waiver of any Event of Default, as hereinafter defined. From time to time,
Mortgagee may, at Mortgagee's option, without giving notice to or obtaining the
consent of Mortgagor, Mortgagor's successors or assigns, any junior lienholder
or any guarantor of any portion of the Indebtedness, without liability on
Mortgagee's part and notwithstanding Mortgagor's breach of any covenant or
agreement of Mortgagor in this Mortgage, extend the time for payment of the
Indebtedness, or any part thereof, reduce the payments thereon, release anyone
liable on any of said Indebtedness, accept a renewal note or notes therefor,
modify the terms and time of payment of said Indebtedness, release from the lien
of this Mortgage any part of the Mortgaged Property, take or release other or
additional security, reconvey any part of the Mortgaged Property, consent to any
map or plan of the Mortgaged Property, consent to the granting of any easement,
join in any extension or subordination agreement, agree in writing with
Mortgagor to modify the rate of

                                       14
<PAGE>

interest or period of amortization of the Note, or change the amount of the
monthly installments payable thereunder. Any actions taken by Mortgagee pursuant
to the terms of this Section shall not affect the obligation of Mortgagor or
Mortgagor's successors or assigns to pay the sums secured by this Mortgage and
to observe the covenants of Mortgagor contained herein, and shall not affect the
lien or priority of lien of this Mortgage on the Mortgaged Property. Mortgagor
shall pay Mortgagee a reasonable service charge, together with such title
insurance premiums and attorney's fees as may be incurred at Mortgagee's option
for any such action if taken at Mortgagor's request.

18. Default. The term "Event of Default" shall have the meaning as defined in
Section 5.1 of the Note.

19. Remedies. In case of an Event of Default, Mortgagee may, at any time
thereafter, at its option and without notice, exercise any or all of the
following remedies:

(a) Acceleration. Declare the entire Indebtedness due and payable, and it shall
thereupon be immediately due and payable;

(b) Foreclosure. Foreclose this Mortgage by instituting a foreclosure suit in
any court having jurisdiction. Mortgagor hereby waives all right to appraisal,
which appraisal may be obtained at the option of Mortgagee;

(c) Offset Rights. Apply in satisfaction of the Indebtedness or any amount at
any time to become due or payable in connection with the ownership, occupancy,
use, restoration or repair of the Mortgaged Property, any deposits or other sums
credited by or due from Mortgagee to Mortgagor;

(d) Cure of Default. Without releasing Mortgagor from any obligation hereunder
or under the Loan Documents, cure any Event of Default. In connection therewith,
Mortgagee may enter upon the Mortgaged Property and do such acts and things as
Mortgagee deems necessary or desirable to protect the Mortgaged Property,
including, without limitation: (i) paying, purchasing, contesting or
compromising any encumbrance, charge, lien, claim or property taxes, (ii) paying
any insurance premiums, and (iii) employing counsel, accountants, contractors
and other appropriate persons to assist Mortgagee in the foregoing. Should
Mortgagee make any such payments, the amount thereof shall be secured hereby and
Mortgagor shall reimburse Mortgagee therefor immediately upon demand, and said
amount shall bear interest at the Default Rate of Interest specified in the Note
until repaid;

(e) Possession of Mortgaged Property. Take physical possession of the Mortgaged
Property and of all books, records, documents and accounts relating thereto and
exercise, without interference from Mortgagor, any and all rights which
Mortgagor has with respect to the Mortgaged Property, including, without
limitation, the right at Mortgagor's expense to rent and lease the same, to hire
a professional property manager for the Mortgaged Property, and to apply any
rents, royalties, income or profits collected to the reduction of the
Indebtedness without in any way curing or waiving any default. If necessary to
obtain possession as provided for above,

                                       15
<PAGE>

Mortgagee may, without exposure to liability from Mortgagor or other persons,
invoke any and all legal remedies to dispossess Mortgagor, including, without
limitation, one or more actions for forcible entry and detainer, trespass and
restitution. In connection with any action taken by Mortgagee pursuant to this
subparagraph (e), Mortgagee shall not be liable for any loss sustained by
Mortgagor resulting from any failure to let the Mortgaged Property or from any
other act or omission of Mortgagee in managing the Mortgaged Property unless
caused by the willful misconduct or gross negligence of Mortgagee, nor shall
Mortgagee be obligated to perform or discharge any obligation, duty or liability
under any Lease or by reason of any Loan Document. Mortgagor hereby agrees to
indemnify, hold harmless and defend Mortgagee from and against any liability,
loss or damage incurred by Mortgagee under any lease or under the Loan Documents
as a result of Mortgagee's exercise of rights or remedies under any of the Loan
Documents. Should Mortgagee incur any such liability, the amount thereof shall
be secured hereby and Mortgagor shall reimburse Mortgagee therefor immediately
upon demand, and said amount shall bear interest at the Default Rate of Interest
specified in the Note until repaid. Mortgagee shall have full power to make from
time to time all alterations, renovations, repairs and replacements to the
Mortgaged Property as may seem proper to Mortgagee.

(f) Remedies under State Law. Mortgagee shall have the right to exercise all
rights under laws of the Indiana, whether or not herein specified, for the
protection of Mortgagee's interest in the Mortgaged Property.

(g) Receiver. Secure the appointment of a receiver or receivers, as a matter of
right for the Mortgaged Property whether such receivership be incident to a
proposed sale of such Mortgaged Property or otherwise, and without regard to the
value of the Mortgaged Property or the solvency of Mortgagor. Mortgagor hereby
consents to the appointment of such receiver or receivers, waives any and all
defenses to such appointment and agrees not to oppose any application therefor
by Mortgagee.

(h) Uniform Commercial Code Remedies. Exercise any and all rights of a secured
party with respect to any portion of the Mortgaged Property governed under the
UCC and in conjunction with, in addition to or in substitution for those rights
and remedies:

(i) take possession of, assemble and collect such Mortgaged Property or render
it unusable by Mortgagor; and

(ii) require Mortgagor to assemble such Mortgaged Property and make it available
at any place Mortgagee may designate so as to allow Mortgagee to take possession
or dispose of such Mortgaged Property.

         Written notice mailed to Mortgagor, as provided herein, fifteen (15)
days prior to the date of public sale of such Mortgaged Property or prior to the
date after which private sale of such Mortgaged Property will be made, shall be
deemed to have been a public sale conducted in a commercially reasonable manner,
if held contemporaneously with a sale of Mortgaged Property as provided in this
Mortgage. Public sale of such Mortgaged Property by auction conducted in any
county in which such Mortgaged Property was reposed or in which the Land is
located, after

                                       16
<PAGE>

advertisement of the time and place of the sale in a newspaper circulated in the
county, city or village in which the sale is to be held, shall be considered to
be a commercially reasonable disposition of such Mortgaged Property. In the
event of a foreclosure sale, whether made by Mortgagee under the terms hereof,
or under judgment of a court, such Mortgaged Property and the other parts of the
Mortgaged Property may, at the option of Mortgagee, be sold in parts or as a
whole. It shall not be necessary that Mortgagee take possession of such
Mortgaged Property prior to the time that any sale pursuant to the provisions of
this subparagraph is conducted and it shall not be necessary that such Mortgaged
Property be present at the location of such sale;

         A CARBON, PHOTOGRAPHIC OR OTHER REPRODUCTION OF THIS MORTGAGE OR ANY
FINANCING STATEMENT RELATING TO THIS INDENTURE SHALL BE SUFFICIENT AS A
FINANCING STATEMENT. THIS MORTGAGE IS EFFECTIVE AND SHALL BE EFFECTIVE AS A
FINANCING STATEMENT FILED AS A FIXTURE FILING WITH RESPECT TO ALL GOODS WHICH
ARE OR ARE TO BECOME FIXTURES INCLUDED WITHIN THE PROPERTY AND IS TO BE FILED
FOR RECORD IN THE REAL ESTATE RECORDS OF THE LOCATION IN THE STATE WHERE THE
PROPERTY IS SITUATED. THE MAILING ADDRESS OF MORTGAGEE, WHO IS THE SECURED
PARTY, AND THE ADDRESS OF MORTGAGOR, WHO IS THE DEBTOR, FROM WHICH INFORMATION
CONCERNING THE SECURITY INTEREST MAY BE OBTAINED ARE SET FORTH IN THE FIRST
PARAGRAPH OF THIS MORTGAGE;

(i) Sale. Sell the Mortgaged Property under applicable laws and requirements of
the State of Indiana;

(j) Judicial Actions. Commence and maintain an action or actions in any court of
competent jurisdiction to foreclose this Mortgage pursuant to the laws of
Indiana or to obtain specific enforcement of the covenants of Mortgagor
hereunder. Mortgagor agrees that such covenants shall be specifically
enforceable by injunction or any other appropriate equitable remedy;

(k) Subrogation. Have and exercise all rights and remedies of any person, entity
or body politic to whom Mortgagee renders payment or performance in connection
with the exercise of its rights and remedies under the Loan Documents,
including, without limitation, any rights or remedies under any mechanics' or
vendors' lien or liens, superior titles, mortgages, deeds of trust, liens,
encumbrances, rights, equities and charges of all kinds heretofore or hereafter
existing on the Mortgaged Property to the extent that the same are paid or
discharged from the proceeds of the Note whether or not released of record;

(l) Right to Purchase. At any sale or sales of the Mortgaged Property pursuant
to this Section, Mortgagee shall have the right to purchase the Mortgaged
Property being sold, and in such cases the right to credit against the amount of
the bid made therefor (to the extent necessary to satisfy such bid), the amount
of the Indebtedness then due; and

                                       17
<PAGE>

(m) Other. Take such other actions or commence such other proceedings as
Mortgagee deems necessary or advisable to protect its interest in the Mortgaged
Property and its ability to collect the Indebtedness as are available under the
laws of Indiana.

         Any sums advanced by Mortgagee under this Section 19 shall bear
interest at the Default Rate of Interest specified in the Note, shall be payable
by Mortgagor on demand and, together with such interest, shall constitute a part
of the Indebtedness.

         All sums realized by Mortgagee under this Section 19, less all costs
and expenses incurred by Mortgagee under this Section 19, including, without
limitation, attorneys' fees and disbursements, property management fees, costs
of alterations, renovations, repairs and replacements made or authorized by
Mortgagee and all expenses incident to Mortgagee taking possession of the
Mortgaged Property, and such sums as Mortgagee deems appropriate as a reserve to
meet future expenses of the Mortgaged Property to be incurred within six (6)
months of foreclosure, shall be applied to the Indebtedness in such order as
Mortgagee shall determine. Thereafter, any balance shall be paid to the person
or persons legally entitled thereto.

20. Holding Over. Should Mortgagor, after an Event of Default, continue in
possession of the Mortgaged Property, either lawfully or unlawfully, Mortgagor
shall be a tenant from day to day, terminable at the will of either Mortgagor or
Mortgagee, at a reasonable rental per diem, based upon the value of the
Mortgaged Property occupied computed by Mortgagee in its sole unfettered
discretion, such rental to be due and payable daily to Mortgagee.

21. Inspection. Any person authorized by Mortgagee shall have the right to enter
upon and inspect the Mortgaged Property at all reasonable times. Mortgagee
shall, however, have no duty to make such inspections. Any inspection of the
Mortgaged Property by Mortgagee shall be entirely for its benefit, and Mortgagor
shall in no way rely or claim reliance thereon.

22. Parcels; Waiver of Marshalling. In the event of foreclosure of the lien of
this Mortgage, the Mortgaged Property may be sold in one or more parcels or as
an entirety as Mortgagee may elect.

         Notwithstanding the existence of any other security interests in the
Mortgaged Property held by Mortgagee or by any other party, Mortgagee shall have
the right to determine the order in which any or all of the Mortgaged Property
shall be subjected to the remedies provided herein. Mortgagee shall have the
right to determine the order in which any or all portions of the Indebtedness
are satisfied from the proceeds realized upon the exercise of the remedies
provided herein. Mortgagor, any party who becomes liable for Mortgagor's
obligations and covenants under this Mortgage, and any party who now or
hereafter acquires a security interest in the Mortgaged Property, or any portion
thereof, hereby waives any and all right to require the marshalling of assets in
connection with the exercise of any of the remedies permitted by applicable law
or provided herein.

23. Costs of Collection. Mortgagor hereby agrees to pay to Mortgagee all costs
of foreclosing this Mortgage, and all costs of collecting and securing, and of
attempting to collect

                                       18
<PAGE>

and to secure, the Note, including, without limitation, reasonable attorneys'
fees, appraisers' fees, court costs, notice charges and title insurance charges,
whether such attempt be made by suit, in bankruptcy, or otherwise; and said
costs and any other sums due Mortgagee by virtue of this Mortgage or the Note
may be included in any judgment or decree rendered.

24. Financial Statements; Rent Roll. Mortgagor shall maintain full and correct
books and records open to Mortgagee's inspection showing in detail the income,
expenses and earnings of Mortgagor and of the Mortgaged Property, and shall
provide Mortgagee the following financial information.

(a) Within ninety (90) days from the end of each fiscal year of Mortgagor, or as
requested from time to time by Mortgagee, an annual financial statement
consisting of a balance sheet, together with a complete itemized statement of
annual income and operating expenses of Mortgagor and of the Mortgaged Property,
certified by the chief financial officer of Mortgagor and on forms prescribed
by, or satisfactory to, Mortgagee. Mortgagee reserves the right to require the
annual financial statements to be both duly audited and certified by an
independent certified public accountant satisfactory to Mortgagee; and

(b) Within thirty (30) days after the end of each calendar quarter, Mortgagor
shall provide to Mortgagee a certificate certified by the chief financial
officer of Mortgagor calculating for that preceding quarter DSCR, as defined in
the Loan Documents;

(c) Within forty-five (45) days from the end of each quarter, monthly operating
statements for the Mortgaged Property, certified by the chief financial officer
of Mortgagor and on forms prescribed by, or satisfactory to, Mortgagee, together
with a rent roll of the Mortgaged Property, certified by the chief financial
officer of Mortgagor. The rent roll shall contain the name of each tenant,
square footage of leased premises, annual rent, lease commencement date and
lease expiration date.

         Mortgagor consents to Mortgagee's disclosure of financial statements,
information or other material submitted to Mortgagee to other financial
institutions in connection with the sale of participating interests in the loan
secured hereby and to bank regulators and auditors in connection with review of
the loan secured hereby. Except as set forth hereinabove or pursuant to court
order or federal regulation and except to the extent necessary to enforce the
Loan Documents, Mortgagee agrees to maintain the confidentiality of such
financial statements. To the extent Mortgagee shares such financial information
with other financial institutions in connection with the sale of participating
interests in the loan secured hereby, Mortgagee shall require such other
financial institutions to enter into a confidentiality agreement similar to the
one stated herein.

25. Notice. Except as otherwise expressly provided in any of the Loan Documents,
any notice required or permitted to be given hereunder shall be in writing and
shall be considered properly given if mailed by first class United States mail,
postage prepaid, registered or certified with return receipt requested, or by
delivering such in person to the intended addressee or by prepaid telegram.
Notice so mailed shall be effective upon its deposit. Notice given in any other

                                       19
<PAGE>

manner shall be effective only if and when received by addressee. For purposes
of notice, the addresses of Mortgagor and Mortgagee shall be as set forth below;
provided however that either party shall have the right to change such party's
address for notice hereunder to any other location within the continental United
States by the giving of thirty (30) days' notice to the other party in the
manner set forth hereinabove:

If to Mortgagor:                    Glimcher Properties Limited Partnership
                                    20 South Third Street
                                    Columbus, OH 43215
                                    Attn:  General Counsel

If to Mortgagee:                    Bank One, NA
                                    100 East Broad Street
                                    Columbus, Ohio  43271-0208
                                    Attn:  David A. DeVictor,
                                         Vice President

26.      Special Indiana Provisions.

         (a) Inconsistencies. In the event of any inconsistencies between this
         Section 26 and the other Sections contained in this Mortgage, the terms
         and conditions of this Section 26 shall control and be binding.

         (b) Indiana Responsible Property Tax Law. Mortgagor represents and
         warrants that (a) either (1) none of the Mortgaged Property is within
         the definition of the term "property" as defined in Ind. Code
         ss.13-11-2-174 and no person is required as a result of the execution
         and delivery of this Mortgage to furnish to any other person the
         disclosure documents described in and provided for in the Indiana
         Responsible Property Transfer Law (Ind. Code ss.13-25-3 et seq.) or (2)
         all required disclosure documents have been timely delivered to all
         persons specified in the Indiana Responsible Property Transfer Law.

         (c) Future Advances. Notwithstanding anything contained in this
         Mortgage or the other Loan Documents to the contrary, this Mortgage
         shall secure: (i) two hundred percent (200%) of the face amount of the
         Note, exclusive of any items described in (ii) below, including any
         additional advances made from time to time after the date hereof
         pursuant to the Note and other Loan Documents whether made as part of
         the Indebtedness secured hereby, made at the option of Mortgagee, made
         after a reduction to a zero (0) or other balance, or made otherwise,
         (ii) all other amounts payable by Mortgagor, or advanced by Mortgagee
         for the account, or on behalf, of Mortgagor or the Mortgaged Property,
         pursuant to the Loan Documents, including amounts advanced with respect
         to the Mortgaged Property for the payment of taxes, assessments,
         insurance premiums and other costs and impositions incurred for the
         protection of the Mortgaged Property to the same extent as if the
         future obligations, and advances were made on the date of execution

                                       20
<PAGE>

         of this Mortgage; and (iii) future modifications, extensions, and
         renewals of any Indebtedness secured by this Mortgage. Pursuant to IND.
         CODE 32-29-1-10, the lien of the Mortgage with respect to any future
         advances, modifications, extensions, and renewals referred to herein
         and made from time to time shall have the same priority to which this
         Mortgage otherwise would be entitled as of the date this Mortgage is
         executed and recorded without regard to the fact that any such future
         advance, modification, extension, or renewal may occur after this
         Mortgage is executed.

         (d) Maturity Date. The maturity date of the Note is March 1, 2005,
         unless extended by its terms to March 1, 2006.

         (e) No Limitation on Remedies. Each of the remedies set forth herein,
         including, without limitation, the remedies involving the right of
         Mortgagee to exercise self-help in connection with the enforcement of
         the terms of this Mortgage, shall be exercisable if, and to the extent,
         permitted by the laws of the State of Indiana in force at the time of
         the exercise of such remedies without regard to the enforceability of
         such remedies at the time of the execution and delivery of this
         Mortgage.

         (f) Valuation and Appraisement. All payments due under the Loan
         Documents shall be made without relief from valuation and appraisement
         laws.

        (g) No Deficiency Waiver. Nothing herein is intended to constitute a
        waiver of Mortgagor's or Mortgagee's rights under Indiana Code Section
        32-29-7-5, it being agreed that the parties may mutually consent to such
        waiver as discussed therein in a separate written instrument.

27. Changes in Rate of Interest. The Note contains provisions allowing for
changes in the interest rate and the monthly payment. This Mortgage shall
continue to secure the Indebtedness, with the same priority of lien,
notwithstanding any change in the rate of interest on the Note. None of the
Indebtedness can be modified, altered, amended or waived orally.

28. NOTICE TO JUNIOR LIEN CLAIMANTS. ALL ACTUAL AND POTENTIAL JUNIOR LIEN
CLAIMANTS ARE HEREBY PLACED ON NOTICE THAT THE INDEBTEDNESS SECURED BY THIS
MORTGAGE IS SUBJECT TO CHANGE(S) AS SET FORTH IN SECTION 27. BY TAKING OR
ACCEPTING ITS INTEREST IN THE MORTGAGED PROPERTY SUBJECT TO THIS MORTGAGE, EVERY
JUNIOR LIEN CLAIMANT UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT THE PRIORITY AND
VALIDITY OF THE LIEN OF THIS MORTGAGE SHALL NOT BE IMPAIRED OR LIMITED IN ANY
WAY BY ANY CHANGE. NOTWITHSTANDING THE MAGNITUDE OR NATURE OF ANY OF THE
FOREGOING, THE SAME SHALL UNDER NO CIRCUMSTANCES BY DEEMED TO CONSTITUTE A
"NOVATION" WITH RESPECT TO ANY OBLIGATION SECURED BY THIS MORTGAGE, OR OTHERWISE
IMPAIR OR REDUCE THE PRIORITY OF THE LIEN OF THIS MORTGAGE.

                                       21
<PAGE>

29. Miscellaneous. The covenants herein contained shall bind, and the benefits
and advantages shall inure to, the respective successors and assigns of the
parties hereto. Whenever used, the singular number shall include the plural, the
plural the singular, and the use of any gender shall include all genders. If any
provision of this Mortgage is illegal, or hereafter rendered illegal, or is for
any other reason void, voidable or otherwise unenforceable, or hereafter
rendered void, voidable or otherwise unenforceable, the remainder of this
Mortgage shall not be affected thereby but shall be construed as if it does not
contain such provision. Each right and remedy provided in this Mortgage is
distinct and cumulative to all other rights or remedies under this Mortgage or
afforded by law or equity, and may be exercised concurrently, independently or
successively, in any order whatsoever. This Mortgage shall be governed by and
construed in accordance with, the internal laws of the State of Ohio applicable
to contracts made and performed in such state and any applicable laws of the
United States of America, except that with respect to the validity, priority and
enforceability of the lien of this Mortgage and the provisions hereof which
relate to realizing upon the Mortgaged Property, the applicable provisions of
this Mortgage shall be governed by, and interpreted in accordance with, the laws
of the State of Indiana (except for the right of recourse against Borrower to
the extent provided herein which shall be governed by Ohio law), it being
understood that, to the fullest extent permitted by the law of such state, the
law of the State of Ohio shall govern the validity and enforceability of the
obligations arising under this Mortgage, the Note, the Loan Documents, and the
Indebtedness.

         PROVIDED, HOWEVER, that these presents are upon the condition that if
Mortgagor shall well and truly pay to Mortgagee, its successors and assigns, the
indebtedness secured hereby (including, without limitation, all advances
heretofore and hereafter made pursuant to the Note, this Mortgage or the Loan
Documents), and shall fully keep and perform all of the conditions and
agreements to be by Mortgagor kept, done and performed, then this Mortgage shall
be void; otherwise it shall remain in full force and effect in law and equity
forever.

         IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be executed
by its duly authorized member as of the 21st day of February, 2003.

                                  MORTGAGOR:

                                  GLIMCHER PROPERTIES LIMITED
                                  PARTNERSHIP, a Delaware limited partnership

                                  By:  Glimcher Properties Corporation,
                                       its General Partner

                                         By:  /s/ George A. Schmidt
                                              ------------------------
                                              George A. Schmidt, Executive
                                              Vice President

                                       22
<PAGE>

STATE OF OHIO,
COUNTY OF FRANKLIN, SS:

         The foregoing instrument was acknowledged before me this 21st day of
February, 2003, by George A. Schmidt, the Executive Vice President of Glimcher
Properties Corporation, the General Partner of Glimcher Properties Limited
Partnership, a Delaware limited partnership, on behalf of the corporation and
limited partnership.

                                 /s/ Barbara B. Howison
                                 ----------------------
                                 Notary Public
                                 Printed Name: Barbara B. Howison
                                               ------------------
                                 Commission Expires:  7/2/05
                                                    --------------------------
                                 County of Residence: Franklin
                                                     ------------------------

         This instrument prepared by: Charles H. McCreary III, Bricker & Eckler
         LLP, 100 South Third Street, Columbus, Ohio 43215-4291.

                                       23
<PAGE>

                                   EXHIBIT "A"

Tax Parcel ID # _______________________<PAGE>

                                                                    EXHIBIT 10.1

                                      LEASE

         THIS LEASE is made and entered into as of January 30, 2003 (the
"EFFECTIVE DATE") by and between THE BOARD OF TRUSTEES OF THE LELAND STANFORD
JUNIOR UNIVERSITY, a body having corporate powers under the laws of the State of
California ("LANDLORD"), and GENENCOR INTERNATIONAL INC., a corporation
("TENANT").

1.       BASIC LEASE INFORMATION

         The following is a summary of basic lease information. Each term or
item in this Article 1 shall be deemed to incorporate all of the provisions set
forth below pertaining to such term or item and to the extent there is any
conflict between the provisions of this Article 1 and any more specific
provision of this Lease, the more specific provision shall control.

         Landlord:                          The Board of Trustees of the
                                            Leland Stanford Junior University

         Address of Landlord:               Stanford Management Company
                                            2770 Sand Hill Road
                                            Menlo Park, CA 94025 Section 3065
                                            Attention: Director, Stanford
                                            Research Park

         Tenant:                            Genencor International, Inc.
                                            a Delaware Corporation

         Address of Tenant:                 925 Page Mill Road
                                            Palo Alto, CA 94304
                                            Attention: Ken Herfert

         With copies to:                    Legal Department
                                            Genencor International, Inc.
                                            925 Page Mill Road
                                            Palo Alto, Ca 94304
                                            Attention: Stuart L. Melton

         Term (Article 6):                  Commencing on the Effective Date
                                            (the "COMMENCEMENT DATE")

                                            Expiring on March 31, 2017
                                            (the "EXPIRATION DATE")

         Renewal Options (Article 6):       2 options; 3 years each

         Base Rent (Article 7):

<PAGE>

         (a)      Months 1-12:       $53,566 per month

         (b)      Months 13-24       $73,653 per month

         (c)      Months 25-36       Prevailing Market Rent

         (d)      Month 36 - Expiration Date: the Base Rent for the immediately
preceding year, increased by an increase in the CPI over the previous Lease
Year; provided that if Genencor exercises a Renewal Term, then rent for the
initial lease year during a Renewal Term shall be the Prevailing Market Rent,
and the rent for each subsequent lease year shall be the rent for the
immediately preceding lease year increased by any increase in the CPI over the
previous lease year.

         Rent Commencement Date (Article 7):   Substantial Completion of the
                                               Initial improvements

         Use (Article 5): General office use, technological research and
development and related administrative uses, including, for example, internal
marketing, sales and in-house legal functions.

         Description of Initial Improvements:  See EXHIBIT A

2.       DEFINITIONS

         As used in this Lease, the following terms shall have the following
meanings, applicable, as appropriate, to both the singular and plural forms of
the terms herein defined:

         "ADDITIONAL RENT" IS as defined in Article 7.

         "ALTERATIONS" means any improvements, alterations, remodeling, or
reconstruction of or to the Premises by or for the benefit of Tenant, but not
including, in any event the Initial Improvements

         "APPLICABLE LAWS" means all applicable laws, codes, ordinances, orders,
rules, regulations and requirements, of all federal, state, county, municipal
and other governmental authorities and the departments, commissions, boards,
bureaus, instrumentalities, and officers thereof relating to or affecting the
Premises, the improvements now or hereafter located on the Premises or the use,
operation or occupancy of the Premises for the purposes permitted hereunder,
whether now existing or hereafter enacted, including Environmental Laws.

         "APPROPRIATION "means any taking by exercise of right of condemnation
(direct or inverse) or eminent domain, or requisitioning by military or other
public authority for any purpose arising out of a temporary emergency or other
temporary circumstance or sale under threat of condemnation. "Appropriated"
means having been subject to such taking and "Appropriating" means exercising
such taking authority.

                                       2

<PAGE>

         "AWARD" means the amount paid by the Appropriating authority as a
result of an Appropriation.

         "BASE RENT" means the amounts set forth in Article 1, payable in
accordance with Article 7.

         "BASIC LEASE INFORMATION" means the information contained in Article 1.

         "BUILDING" is as stated in Article 3 below.

         "BUILDING COMMON AREAS" is as defined in Article 8.

         "BUILDING STRUCTURE" means the structural portions of the Premises,
including, without limitation, the foundation, floor/ceiling slabs, roof,
curtain wall, exterior glass and mullions, columns, beams, shafts (including
elevator shafts), stairs and stairwells.

         "BUILDING SYSTEMS" means air conditioning, heating, ventilating,
mechanical, elevator, plumbing, electrical and all other mechanical systems of
the Building.

         "CITY" means the City of Palo Alto.

         "COMMENCEMENT DATE" is as stated in Article 1.

         "COMPLEX" is as defined in Article 3.

         "COMPLEX COMMON AREAS" is as defined in Article 8.

         "CPI" means the Consumer Price Index published by the U.S. Department
of Labor, Bureau of Labor Statistics (San Francisco-Oakland Bay Area, All Urban
Consumers, All Items), or if such index is no longer published, a successor or
substitute index designated by Landlord, published by a governmental agency and
reflecting changes in consumer prices in the San Francisco Bay Area.

         "ENVIRONMENTAL LAWS" means any cleanup and abatement orders, waste
discharge requirements or other administrative or judicial orders, agreements or
decrees issued to Landlord or any Tenant Indemnitee by the Regional Water
Quality Control Board, San Francisco Bay Region, the United States Environmental
Protection Agency, or the California Environmental Protection Agency or any
other governmental agency having jurisdiction with respect to the Complex, and
any and all laws, statutes, ordinances, rules, regulations, and requirements of
any governmental authority applicable to the use, storage, handling,
transportation, remediation, removal, production, disposal, discharge, release
or emission of any Hazardous Materials in, on, under or from the Complex.

         "EXCESS RENT" is as defined in Section 17.8.

         "EXPIRATION DATE" is as defined in Article 1.

                                       3

<PAGE>

         "EVENT OF DEFAULT" is as defined in Article 24.

         "FIRST CLASS" means having a standard of condition, maintenance, repair
and operation equal to or better than the average standards prevailing for
research and development and office buildings in the Stanford Research Park.

         "FULL INSURABLE REPLACEMENT VALUE" is as defined in Section 19.1.

         "HAZARDOUS MATERIALS" is as defined in Article 27.

         "HAZARDOUS MATERIALS OCCURRENCE" means any use, treatment, keeping,
storage, sale, release or discharge of any Hazardous Materials from, on, about,
under or into the Premises or the Complex that are or were attributable to the
activities of Tenant or any of Tenant's Agents.

         "INITIAL IMPROVEMENTS" means the initial improvements to the Premises,
as described in the attached EXHIBIT A.

         "INTEREST RATE" means the lesser of (i) the rate of interest charged by
Bank of America N.T. & S.A. at its offices in San Francisco (or, if the Bank of
America is no longer a national bank with offices in San Francisco, such other
national bank with offices in San Francisco as Landlord may designate) as its
prime or reference rate, plus 2%, or (ii) the highest rate permitted under
Applicable Laws, compounded monthly.

         "LANDLORD'S UNAVOIDABLE DELAY" means any actual delay in the
construction of the Initial Improvements caused by circumstances beyond
Landlord's reasonable control, including, without limitation, (i) Acts of God,
strikes, lock-outs, inability to obtain necessary equipment, supplies or
materials through ordinary sources by reason of regulation or order of any
government or order of any government or regulatory body, civil disturbance, act
of a public enemy, war, riot, sabotage, blockade; (ii) delay caused by the
actions or inactions of Tenant; (iii) delay attributable to lightning,
earthquake, fire, storm, hurricane, tornado, flood, washout, explosion; (iv)
delay caused by unanticipated environmental conditions encountered in demolition
or construction; or (v) any other similar industry-wide or area-wide cause
beyond the reasonable control of the Landlord, or any of its contractors or
other representatives; but specifically excluding any financial inability of
Landlord or Landlord's contractors. Any prevention, delay or stoppage due to a
Landlord's Unavoidable Delay shall excuse the performance of Landlord for a
period of time equal to any such prevention, delay or stoppage.

         "LEASE YEAR" shall mean each successive twelve month period commencing
on the Rent Commencement Date, provided that the last Lease Year shall end on
the Termination Date. Notwithstanding that for purposes of this definition the
first Lease Year commences on the Rent Commencement Date, this Lease shall
commence upon the Commencement Date.

         "LEASEHOLD MORTGAGE" is as defined in Article 22.

         "PERMITTED SUBLEASE" is as defined in Article 18.

                                       4

<PAGE>

         "PREMISES" is as defined in Article 3.

         "PREVAILING MARKET RENT" means the rental rate calculated in accordance
with the provisions of SCHEDULE 1.

         "PROJECTED COMPLETION DATE" is as defined in Section 4.2.

         "REAL PROPERTY TAXES" is as defined in Section 14.1.

         "RENEWAL OPTION "is as defined in Section 6.2.

         "RENEWAL TERM "is as defined in Section 6.2.

         "RENT COMMENCEMENT DATE" is as defined in Section 7.1.

         "RULES AND REGULATIONS" is as defined in Article 8.

         "SUBSTANTIAL COMPLETION" or "SUBSTANTIALLY COMPLETE" means final sign
off of the Initial Improvements by the City of Palo Alto Building Department.

         "TENANT INDEMNITIES" is as defined in Section 4.3(a).

         "TENANT'S AGENTS" means any subtenant of Tenant or any officer,
director, employee, licensee, invitee, agent or contractor (or their
subcontractors) of Tenant or any subtenant of Tenant.

         "TENANT'S HAZARDOUS MATERIALS" means any Hazardous Materials to the
extent attributable to a Hazardous Materials Occurrence.

         "TENANT'S PROPERTY" is as defined in Section 11.12.

         "TENANT'S BUILDING PROPORTIONATE SHARE" means the fraction, the
numerator of which is the square foot area of the Premises, and the denominator
of which is the square foot area of the Building. For purposes of this Lease,
the Building Proportionate Share is agreed to be 53.01%.

         "TENANT'S COMPLEX PROPORTIONATE SHARE" means that fraction, the
numerator of which is the square foot area of the Premises, and the denominator
of which is the sum of the square foot area of the Building and the adjacent
building located at 925 Page Mill Road. For purposes of this Lease, Tenant's
Complex Proportionate Share is agreed to be 15.35%.

         "TERM "is as defined in Article 6.

         "TERMINATION DATE" shall mean the Expiration Date or such earlier date
as this Lease is terminated pursuant to any provision hereof.

         "TRANSFER" is as defined in Section 17.1.

                                       5

<PAGE>

         "TRANSFER COSTS" is as defined in Section 17.8.

3.       LEASE OF PREMISES

         3.1      Lease of Premises. Landlord hereby leases to Tenant, and
Tenant hereby hires and takes from Landlord, those certain premises (the
"PREMISES") consisting of approximately 26,783 rentable square feet of space, as
shown on the attached EXHIBIT B and located at 975 Page Mill Road, Palo Alto,
California (the "BUILDING"). The Premises are part of a complex (the "COMPLEX")
consisting of the Building, the adjacent building located at 925 Page Mill Road,
and the surrounding parking lots, landscaping and other improvements. Said
letting and hiring is upon and subject to the terms, covenants and conditions
hereinafter set forth, and Tenant covenants as a material part of the
consideration for this Lease to perform and observe each and all of said terms,
covenants and conditions. This Lease is made upon the condition of such
performance and observance.

         3.2      Intentionally omitted.

4.       ACCEPTANCE OF PREMISES; LANDLORD'S INDEMNIFICATION

         4.1      Tenant's Due Diligence. Prior to entering into this Lease,
Tenant has made a thorough, independent examination of the Premises and matters
Tenant considers relevant to Tenant's decision to enter into this Lease. Without
in any way limiting the generality of the foregoing, Tenant's inspection and
review has included, to the extent that Tenant in its sole discretion has deemed
necessary or appropriate or possible:

         (a)      all municipal and other legal requirements such as taxes,
assessments, zoning, use permit requirements and building codes;

         (b)      Tenant's ability to obtain appropriate licenses and satisfy
all current licensing requirements under Applicable Laws in effect at the time
of execution of this Lease; and

         (c)      the economics of the business Tenant intends to conduct on the
Premises, including without limitation, market conditions and financial
viability.

         Nothing contained in this Section 4.1 shall in any way limit or
otherwise affect Landlord's obligations under this Lease, including, without
limitation, Sections 4.3 or 4.7 hereof.

         4.2      Acceptance of the Premises.

         (a)      Landlord shall, at its sole cost and expense, demise and
construct the Initial Improvements, as described in Exhibit A. Landlord shall
diligently prosecute the construction of the Initial Improvements and use
diligent efforts to achieve Substantial Completion of the Initial Improvements
by the date which is eight (8) weeks after the Effective Date (the "PROJECTED
COMPLETION DATE"), subject to Landlord's Unavoidable Delays. Preliminary plans
for the Initial Improvements have been approved by Tenant; Tenant shall have
three (3) business days after the Effective Date to review and approve the final
plans for the Initial Improvements, such approval not to be unreasonably
withheld, delayed or conditioned. Subject to the terms and provisions

                                       6

<PAGE>

contained herein, including with out limitation, Landlord's obligations to
complete the Initial Improvements, Tenant specifically agrees to take the
Premises in its existing condition and acknowledges that in entering into this
Lease, except for representations of Landlord specifically set forth in this
Lease, Tenant does not rely on, and Landlord does not make, any express or
implied representations or warranties as to any matters including, without
limitation, the suitability of the soil or subsoil; any characteristics of the
Premises or improvements thereon; the suitability of the Premises for the
intended use; the likelihood of deriving business from or other characteristics
of The Leland Stanford Junior University; the economic feasibility of the
business Tenant intends to conduct on the Premises; Hazardous Materials on,
under, or in the vicinity of the Premises; or any other matter. Tenant has
satisfied itself as to such suitability and other pertinent matters by Tenant's
own inquiries and tests into all matters relevant in determining whether to
enter into this Lease.

         (b)      Without limitation of the foregoing provisions of this Section
4.2, Tenant represents to Landlord that Tenant is aware that detectable amounts
of Hazardous Materials have come to be located on, beneath and/or in the
vicinity of the Premises. Tenant has made such investigations and inquiries as
it deems appropriate to ascertain the effects, if any, of such substances and
contaminants on its operations and persons using the Premises and the Complex.
Landlord makes no representation or warranty with regard to the environmental
condition of the Premises or the Complex.

         (c)      Notwithstanding the foregoing, Landlord represents and
warrants that (i) as of the date of completion of the Building, the Premises
complied with all laws, codes, ordinances and other governmental requirements
then applicable to the Premises and the Building, including, with out
limitation, the Americans with Disabilities Act (42 USC Section 1211 et seq.)
(the "ADA"); (ii) as of the Commencement Date, the Premises, including the
improvements and equipment therein, shall be in good working order, condition,
and repair and (iii) upon Substantial Completion, the Initial improvements will
be completed in accordance with all Applicable Laws, including, without
limitation, the ADA. If the Premises do not comply with said warranty, Landlord
shall, except as otherwise provided, promptly after receipt of written notice
from Tenant setting forth with specificity the nature and extent of such
non-compliance, rectify the same at its sole cost and expense. If Tenant does
not give Landlord written notice of noncompliance with the warranty under
subsection (ii) above within ninety (90) days after Substantial Completion of
the Initial Improvements, correction of such non-compliance shall be treated as
set forth in Section 12 hereof.

         (d)      Nothing contained in this Section 4.2 shall in any way limit
or otherwise affect Landlord's obligations under this Lease, including, without
limitation Sections 4.3 or 4.7 hereof.

         4.3      Landlord's Environmental Indemnification.

         (a)      Landlord shall indemnify, defend and hold harmless Tenant, any
leasehold mortgagee of Tenant, any purchaser in foreclosure from any leasehold
mortgagee of Tenant, any person to whom Tenant assigns its interest in this
Lease in compliance with Article 17 hereof, and any person to whom Tenant
sublets all or any portion of the Premises in compliance with Article 18 hereof,
and their respective successors, shareholders, officers, directors, employees

                                       7

<PAGE>

and agents (Tenant and all such others being herein collectively referred to as
"TENANT INDEMNITEES") from and against any and all claims, demands, actions,
suits, orders, proceedings, judgments or injunctions threatened, made, brought,
or entered against any Tenant Indemnitee by any federal, state, or local
environmental governmental agency, or by any person (including, without
limitation, attorneys' fees and expenses resulting therefrom) including, without
limitation, those for bodily injury (including death), damage to real or
personal property of such person, or costs of response as defined by Section
101(25) of CERCLA, 42 U.S.C. 9601 (25) or any other costs to investigate, abate,
remove or remediate as required by an appropriate governmental agency under
federal or state law, incurred by such person (collectively referred to herein
as "CLAIMS") to the extent such Claims arise out of or in connection with any
(i) Hazardous Materials in, on, under or from the Complex other than Tenants'
Hazardous Materials, (ii) any violation by Landlord of an Environmental Law, or
(iii) acts of any third party present on the Complex pursuant to an agreement
entered into by Landlord permitting such party access to the Complex for
purposes of testing, monitoring or remediation of Hazardous Materials other than
Tenant's Hazardous Materials (collectively referred to herein as "LANDLORD'S
ENVIRONMENTAL INDEMNITY OBLIGATIONS"). Notwithstanding anything to the contrary
herein, Landlord's Environmental Indemnity Obligations shall not include any of
the following: (a) any Claims to the extent such Claims arise out of or are
proximately caused by a breach of any provision of this Lease by Tenant or any
other Tenant Indenmitee, (b) any Claims to the extent such Claims arise out of
any Tenant's Hazardous Materials, (c) any Claims brought by any employee of
Tenant or of any other Tenant Indemnitee where such Claim is covered by worker's
compensation insurance maintained by Tenant or such Tenant Indemnitee, and (d)
any Claims based on loss of use or occupancy of the Premises or any part thereof
by any Tenant Indemnitee, or injury to or inconvenience or interference with
Tenant's or any Tenant Indemnitee's business, and any Claims for lost profits or
lost revenues of any type or kind resulting therefrom. In no event shall
Landlord's Environmental Indemnity Obligations include remediation to standards
more stringent that those required by the appropriate governmental agencies in
order to comply with Environmental Laws.

         In case any Claim that is covered by Landlord's Environmental Indemnity
Obligations be initiated against any Tenant Indemnitee, then Landlord, upon
notice from such Tenant Indemnitee, shall at its sole cost and expense, resist
or defend such Claim by attorneys reasonably approved by such Tenant Indemnitee.
Notwithstanding the foregoing, a Tenant Indemnitee may retain its own attorneys,
and Landlord shall pay the reasonable fees and disbursements of such attorneys
(except for fees and expenses for defense of any Claim brought by a Tenant
Indemnitee against another Tenant Indemnitee, which shall not be paid by
Landlord), to defend or assist in defending any claim, action or proceeding (i)
involving potential liability of Five Million Dollars ($5,000,000) or more, (ii)
if the Tenant Indemnitee shall have reasonably concluded that there may be a
conflict of interest between Landlord and such Tenant Indemnitee in the conduct
of the defense of such action (in which case Landlord shall not have the right
to direct the defense of such Claim, on behalf of such Tenant Indemnitee), or
(iii) the Claim is for equitable relief against the Tenant Indemnitee and no
monetary damages are being sought against the Tenant Indemnitee. Landlord shall
not settle any Claim against a Tenant Indemnitee without such Tenant
Indemnitee's consent if such settlement involves relief other that the payment
of money. No Tenant Indemnitee shall settle

                                       8

<PAGE>

any Claim without Landlord's written consent. Any settlement not consented to by
Landlord shall not be covered by Landlord's Environmental Indemnity Obligations.

         4.4      Limited Release of Landlord. Tenant, on behalf of itself and
the other Tenant Indemnitees, hereby releases Landlord and Landlord's officers,
directors, trustees, agents and employees, from any and all of the following:
(a) any Claims to the extent such Claims arise out of or are proximately caused
by a breach of any provision of this Lease by Tenant or any other Tenant
Indemnitee, (b) any Claims to the extent such Claims arise out of or in
connection with any Tenant's Hazardous Materials, (c) any Claims brought by any
employee of Tenant or of any other Tenant Indemnitee where such Claim is covered
by worker's compensation insurance maintained by Tenant or such Tenant
Indemnitee to the extent such Claim is excluded from Landlord's Indemnity
Obligations, and (d) any Claims by any Tenant Indemnitee based on loss of use or
occupancy of the Premises or any part thereof, or injury to or inconvenience or
interference with Tenant's or any Tenant Indemnitee's business, and any Claims
for lost profits or lost revenues of any type or kind resulting therefrom.

         In connection with the above release, Lessee hereby waives any and all
rights conferred upon it by the provisions of Section 1542 of the California
Civil Code, which reads as follows:

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

or by the provisions of any similar statute.

         4.5      Rental Abatement. If the discovery, investigation or
remediation of Hazardous Materials, other than Tenant's Hazardous Materials, in,
on or under the Complex unreasonably interferes with Tenant's use and occupancy
of the Premises, then Tenant shall be entitled to a reduction in Base Rent and
Additional Rent during the period of such interference in proportion to the
degree that Tenant's use and occupancy of the Premises is impaired. If such
reduction continues for a period in excess of sixteen (16) months, then either
Landlord or Tenant shall have the right, upon not less than thirty (30) days
notice, to terminate this Lease, provided, however, that this Lease shall not be
terminated by Landlord if Tenant gives Landlord written notice, not later than
ten (10) business days after receipt of Landlord's notice of termination, that
Tenant elects to resume full payment of Base Rent and Additional Rent effective
as of the date of termination specified in Landlord's notice and that Tenant
irrevocably waives any further rental abatement or right to terminate the Lease
based on such impairment. Nothing contained in this Section 4.5 shall limit or
otherwise affect Landlord's obligations under this Lease including, without
limitation, Section 4.3 or 4.7 hereof.

         4.6      Intentionally omitted.

         4.7      Landlord's Indemnification. Landlord shall indemnify and hold
harmless Tenant and any other Tenant Indemnitee for and from any and all claims,
demands, losses, damages, costs and liabilities, including, without limitation,
reasonable attorneys fees and costs, resulting

                                       9

<PAGE>

from the negligent act or willful misconduct of Landlord or Landlord's agents or
employees with respect to the Complex or the Premises or any default by Landlord
in the observance or performance of any of Landlord's obligations hereunder.
Landlord shall have no obligation under this Section 4.7 or under Section 4.3
above, for any claim, action or proceeding to the extent covered by Tenant's
indemnification obligations under this Lease. Landlord's indemnification
obligations under Section 4.3 and this Section 4.7 shall survive any termination
of this Lease.

         In case any claim, action or proceeding be brought, made or initiated
against any Tenant Indemnitee that is covered by Landlord's indemnification
under this Section 4.7, Landlord, upon notice from Tenant, shall at its sole
cost and expense, resist, or defend such claim, action or proceeding by
attorneys reasonably approved by Tenant. Notwithstanding the foregoing, the
Tenant Indemnitee may retain its own attorneys, and Landlord shall pay the
reasonable fees and disbursements of such attorneys (except for fees and
expenses for defense of any such claim, action or proceeding brought by a Tenant
Indemnitee against another Tenant Indemnitee, which shall not be paid by
Landlord), to defend or assist in defending any claim, action or proceeding (i)
involving potential liability of Five Million Dollars ($5,000,000) or more, (ii)
if the Tenant Indemnitee shall have reasonably concluded that there may be a
conflict of interest between Landlord and such Tenant Indemnitee in the conduct
of the defense of such action (in which case Landlord shall not have the right
to direct the defense of such claim, on behalf of such Tenant Indemnitee), or
(iii) the claim is for equitable relief against the Tenant Indemnitee and no
monetary damages are being sought against the Tenant Indemnitee. Landlord shall
not settle any claims, actions or proceedings against a Tenant Indemnitee
without such Tenant Indemnitee's consent if such settlement involves relief
other than the payment of money. No Tenant Indemnitee shall settle any such
claims, actions or proceedings without Landlord's written consent. Any
settlement not consented to by Landlord shall not be covered by Landlord's
indemnification.

5.       USE

         Tenant shall use and occupy the Premises in conformance with Applicable
Laws, and only the use set forth in Section 1, and for no other purpose. Neither
Tenant nor any other person shall use the Premises for any other purposes.
Tenant shall not do or permit to be done in the Premises, or do anything in or
about the Complex, or bring or keep or permit to be brought or kept in the
Premises, or bring or keep in or about the Complex anything that is prohibited
by or will in any way increase the existing rate of (unless any such increase is
fully paid for by Tenant), or will cause a cancellation of, any insurance
covering the Complex or any part thereof, or any of its contents. Tenant shall
not do or permit to be done anything in the Premises, or do anything in or about
the Complex that will materially obstruct or interfere with the rights of other
tenants or occupants of the Complex or use or allow the Premises to be used for
any unlawful purpose. Tenant shall not place any loads upon the floors, walls,
or ceiling, which endanger the structure, or place any fluids or materials that
would cause damage in the drainage system of the building. No waste materials or
refuse shall be dumped on the Complex or permitted to remain on the outside of
the Premises except in trash containers placed inside exterior enclosures
designated by Landlord for the purpose. No materials, supplies, equipment,
finished products or semi finished products, raw materials or articles of any
nature shall be

                                       10

<PAGE>

stored upon or permitted to remain outside the Premises or on any portion of
Building or Complex Common Areas unless otherwise approved by Landlord in its
sole discretion. No loudspeaker or other device, system or apparatus which can
be heard outside the Premises (except those used for life safety or security
purposes) shall be used in or at the Premises without the prior written consent
of Landlord. Tenant shall not commit or suffer to be committed any waste in or
upon the Premises. The provisions of this Section are for the benefit of
Landlord only and shall not be construed to be for the benefit of any tenant or
occupant of the Complex.

6.       TERM

         6.1      Term. The term of this Lease (the "TERM") shall commence on
the Commencement Date stated in Article 1 and (unless sooner terminated as
hereinafter provided), shall expire on the Expiration Date stated in Article 1.

         6.2      Renewal Options. Tenant shall have two separate options (the
"RENEWAL OPTIONS") to extend the term of this Lease for a period of three (3)
years (each, a "RENEWAL TERM"). No Renewal Option shall be effective if Tenant
is in default under any of the terms or conditions of this Lease either at the
time of exercise of the Renewal Option or the time of commencement of the
applicable Renewal Term, unless such default is cured prior to the expiration of
any applicable cure period. The first Renewal Option must be exercised, if at
all, by written notice from Tenant to Landlord given not more than fifteen (15)
months nor less than twelve (12) months prior to the expiration of the initial
term of this Lease and the second Renewal Option must be exercised, if at all,
by written notice from Tenant to Landlord given not more than fifteen (15) nor
less than twelve (12) months prior to the expiration of the first Renewal Term.
Such notice given by Tenant to Landlord shall be irrevocable. The Renewal Term
shall be upon the same terms and conditions as the original term, except that
the annual Base Rent applicable beginning upon the commencement of the Renewal
Term shall be equal to the Prevailing Market Rent, which in any event shall not
be less than the annual Base Rent payable (without consideration of any rental
abatement in connection with damage or destruction) as of the lease year
immediately preceding the applicable Renewal Term (provided that, to the extent
applicable, any rental abatement then in effect shall continue, as applicable,
during the Renewal Term).

         6.3      Termination Option. Tenant shall have the option (the "EARLY
TERMINATION OPTION") to terminate this Lease effective as of April 1, 2012 (the
"EARLY TERMINATION DATE") by giving Landlord written notice of Tenant's election
to terminate not later than June 30, 2011. Tenant's exercise of the Early
Termination Option shall be irrevocable. If Tenant exercises the Early
Termination Option, this Lease shall terminate on April 1, 2012. If Tenant fails
to exercise the Early Termination Option on or before June 30, 2011, the Early
Termination Option shall expire and be of no further force or effect.

7.       RENT; ADDITIONAL RENT

         7.1      Base Rent. Tenant agrees to pay to Landlord, in lawful money
of the United States of America and Landlord agrees to accept as annual Base
Rent for the Premises during the Term

                                       11

<PAGE>

the amounts specified in Article 1. Notwithstanding that the Term of this Lease
shall commence on the Commencement Date, Tenant's obligation to pay Base Rent
and Additional Rent shall not commence until the Rent Commencement Date. As used
herein, the term "RENT COMMENCEMENT DATE" has the meaning set forth in Article
l.

         7.2      Time for Payment. The Base Rent shall be payable in monthly
installments on or before the first day of each month, in advance, commencing on
the Rent Commencement Date, without any prior demand and without deductions or
setoff.

         7.3      Additional Rent. Commencing upon the Rent Commencement Date,
Tenant shall pay to Landlord all charges and other amounts required to be paid
by Tenant under this Lease as additional rent ("ADDITIONAL RENT") including,
without limitation, the amounts specified below. Landlord shall have the same
remedies for a default in the payment of Additional Rent as for a default in the
payment of Base Rent. Commencing upon the Rent Commencement Date, Tenant shall
pay to Landlord (or pay directly as specified in the applicable Article of this
Lease) as Additional Rent the following:

         (a)      Tenant's Building Proportionate Share of Building Operating
Expenses, as set forth in Section 10.1;

         (b)      Tenant's Complex Proportionate Share of Complex Operating
Expenses, as set forth in Section 10.2;

         (c)      Tenant's Building Proportionate Share of all utilities
provided by Landlord to the Building and Tenant's Complex Proportionate Share of
all utilities provided by Landlord to the Complex Common Areas, as set forth in
Article 13;

         (d)      Tenant's Building Proportionate Share of all Real Property
Taxes relating to the Building (which include the Building's proportionate share
of the Real Property Taxes relating to the Complex Common Areas), as set forth
in Article 14;

         (e)      Tenant's Building Proportionate Share of all insurance
premiums paid by Landlord and covering the Building, and Tenant's Complex
Proportionate Share of all insurance premiums paid by Landlord and covering the
Complex Common Areas, as set forth in Article 19;

         (f)      A management fee equal to either two percent (2%) of the Base
Rent or, if the Building is managed by a third-party management company,
Tenant's Building Proportionate Share of the actual cost incurred by Landlord,
not to exceed two percent (2%) of the Base Rent; and

         (g)      All charges, costs and expenses, which Tenant is required to
pay hereunder, together with all interest and penalties, costs and expenses
including, without limitation, attorneys' fees and legal expenses, that may
accrue thereto in the event of Tenant's failure to pay such amounts and all
damages and reasonable costs and expenses which Landlord may incur by reason of
an Event of Default by Tenant.

                                       12

<PAGE>

         7.4      Payment of Additional Rent. Except as otherwise provided in
the last sentence of this Section 7.4, Tenant shall pay to Landlord monthly, in
advance, Tenant's Building or Complex Proportionate Share, as applicable, of an
amount estimated by Landlord to be Landlord's approximate average monthly
expenditure for such Additional Rent items, which estimated amount shall be
reconciled at the end of each calendar year as compared to Landlord's actual
expenditure for said Additional Rent items. Within ninety (90) days after the
end of each calendar year, Landlord shall provide to Tenant a statement of the
actual Additional Rent due for the preceding calendar year. Tenant shall pay to
Landlord, upon demand, any amount expended by Landlord for said Additional Rent
items in excess of said estimated amount, or Landlord shall credit (or refund to
Tenant if no further installments of Base Rent or Additional Rent are due
hereunder) any amount of estimated payments made by Tenant in excess of
Landlord's actual expenditures for said Additional Rent items against the next
installments of Base Rent and Additional Rent due hereunder. Landlord shall use
reasonable efforts to notify Tenant at least sixty days prior to the
commencement of each year of the amount estimated by Landlord to be Tenant's
Building or Complex Proportionate Share, as applicable, of Additional Rent items
for such calendar year. Such estimates may be revised by Landlord from time to
time upon thirty (30) days' prior written notice to Tenant. Tenant shall be
entitled during normal business hours and upon reasonable advance notice to
audit the books and records of Landlord relating to the Additional Rent expenses
within eighteen (18) months after the end of the year to which such expenses
relate.

         7.5      Survival of Obligations. The obligations of Tenant and
Landlord under this Article 7 shall survive the expiration or other termination
of this Lease, and, if the term hereof shall expire or shall otherwise terminate
on a day other than the last day of a calendar year, the actual Additional Rent
incurred for the calendar year in which the term hereof expires or otherwise
terminates shall be determined and settled on the basis of the statement of
actual Additional Rent for such calendar year and shall be prorated in the
proportion which the number of days in such calendar year preceding such
expiration or termination bears to 365.

         7.6      Place of Payment of Base Rent and Additional Rent. All Base
Rent and all payments for Additional Rent shall be paid to Landlord at the
address specified in the Basic Lease Information or to such other person or to
such other place as Landlord may from time to time designate in writing.

         7.7      Late Charge. If Tenant fails to pay any Base Rent or
Additional Rent within five (5) days after the date the same is due and payable,
such unpaid amounts will be subject to a late payment charge equal to four
percent (4%) of the unpaid amounts in each instance; provided however that not
more than one time in any twelve (12) month period Tenant shall be entitled to
five (5) days prior written notice prior to such late charge applying. The late
payment charge has been agreed upon by Landlord and Tenant, after negotiation,
as a reasonable estimate of the additional administrative costs and detriment
that will be incurred by Landlord as a result of any such failure by Tenant, the
actual costs thereof being extremely difficult if not impossible to determine.
The late payment charge constitutes liquidated damages to compensate Landlord
for its damages resulting from such late payment and shall be paid to Landlord
together with such

                                       13

<PAGE>

unpaid amounts. Any unpaid Base Rent and Additional Rent (but not the late
charge) shall bear interest at the Interest Rate from the date ten (10) days
after the date due until paid.

         7.8      Exception. Notwithstanding anything to the contrary contained
in this Lease, Tenant shall not be obligated under this Lease to pay any tax,
charge or fee to the extent such tax, charge or fee is imposed by any
governmental authority or agency and is designated by such authority or agency
as for remediation of or other costs or expenses related to Hazardous Materials
(other than Tenant's Hazardous Materials) in the Complex or the Stanford
Research Park or any portion thereof and is not imposed generally on businesses
in the City of Palo Alto or County of Santa Clara or State of California.

8.       RULES AND REGULATIONS AND COMMON AREAS

         Subject to the terms and conditions of this Lease and the Rules and
Regulations, Tenant and Tenant's employees, invitees and customers shall, in
common with other occupants of the Building (with respect to the Building Common
Areas) and the Complex (with respect to the Complex Common Areas), and their
respective employees, invitees and customers (except to the extent of any areas
designated for the exclusive use of Tenant) and others entitled to the use
thereof, have the non-exclusive right to use the interior lobbies, hallways,
elevators and other common areas of the Building (the "BUILDING COMMON AREAS"),
and the access roads, parking areas, and facilities designated for the general
use and convenience of the occupants of the Complex (the "COMPLEX COMMON
AREAS"). This right shall terminate upon the termination of this Lease. No
change to the shape, size, location, amount and extent of Building or Complex
Common Areas shall be made without the prior written approval of Tenant, which
approval shall not be unreasonably withheld or delayed. Tenant shall faithfully
observe and comply with the rules and regulations attached to this Lease as
EXHIBIT C ("RULES AND REGULATIONS" relating to the use of the Building and
Complex Common Areas, and any part or parts thereof. The Rules and Regulations
may be amended from time to time as Landlord may deem appropriate for the best
interests of the occupants of the Complex provided that any such Rules and
Regulations that affect access to the Premises or the parking area for the use
of the Premises, shall be subject to the prior written approval of Tenant, which
approval shall not be unreasonably withheld or delayed. The Rules and
Regulations shall apply uniformly to all tenants of the Complex provided that
Landlord shall not be responsible to Tenant for the non-compliance by any other
tenant or occupant of the Complex with any of said Rules and Regulations
provided that Landlord shall use reasonable efforts to cause such non-complying
tenant to comply.

9.       PARKING

         9.1      General Provisions. Tenant shall have the non-exclusive right
in common with other tenants of the Building to use up to 106 parking spaces in
the parking areas of the Complex as designated on the site plan attached hereto
as EXHIBIT D. Landlord shall be responsible for the control, maintenance and
repair of the parking areas of the Complex. Tenant shall not park nor permit
Tenant's Agents to park, any inoperative vehicles or equipment on any portion of
the common parking area or other Complex Common Areas. Landlord shall not impose
any charge or fee for parking except for Complex Common Areas charges and except
as may be required by any governmental law or regulation; provided that the Base
Rent shall be reduced by the net

                                       14

<PAGE>

amount, if any, of any such governmental charge or fee that is retained by
Landlord in compliance with such law or regulation. Landlord shall not authorize
use of the parking areas of the Complex by persons other than licensees, tenants
and occupants of the Complex and their respective employees, invitees,
licensees, agents and contractors, and Landlord's employees, agents and
contractors in connection with the ownership, operation, maintenance, repair and
replacement of the Complex.

         9.2      Special Provisions. Tenant shall not, at any time, park, or
permit the parking of Tenant's or Tenant's Agents' trucks or other vehicles, in
any portion of the Complex Common Areas not designated by Landlord for such use
by Tenant. Tenant agrees to assume responsibility for compliance by its
employees with the parking provision contained herein. Tenant hereby authorizes
Landlord at Tenant's sole expense to tow away from the Complex any vehicle
belonging to Tenant or Tenant's employees parking in violation of these
provisions, or to attach violation stickers or notices to such vehicles. Tenant
shall use the parking areas for vehicle parking only, and shall not use the
parking areas for storage.

10.      OPERATING EXPENSES

         10.1     Building Operating Expenses. As Additional Rent and in
accordance with Article 7 of this Lease, Tenant shall pay to Landlord Tenant's
Building Proportionate Share of all reasonable out-of-pocket expenses of
operation, management, maintenance and repair and, to the extent specifically
hereinafter provided with respect to capital items, improvement and replacement
of the Building Common Areas (collectively, "BUILDING OPERATING EXPENSES"),
including, but not limited to, license, building and sewer permit and inspection
fees; security; water and electricity use charges associated with Building
Common Area lighting; all charges incurred in the maintenance of Building Common
Areas; maintenance and repair of all Building Systems; salaries and employee
benefits of unrelated third-party personnel and payroll taxes applicable thereto
(which such sum shall not be included within the management fee set forth in
Section 7.3(f)); supplies, materials, equipment and tools; and the cost of the
following capital items: (i) capital improvements to the Building intended to
reduce Building Operating Expenses (to the extent of the cost of such
improvements, amortized over the life of such improvements), provided that any
such project the cost of which would exceed $25,000 shall be reasonably agreed
upon by Landlord and Tenant, subject to arbitration as hereafter provided to
determine if such capital improvements will so reduce operating costs if the
parties are unable to agree, and (ii) capital improvements that are required
under any governmental law or regulation, provided, however, that with respect
to the costs of such capital improvements, Landlord shall amortize its
investment in said improvements (together with interest at the rate of ten (10%)
percent per annum on the unamortized balance) in accordance with standard
accounting practices. Notwithstanding any of the foregoing, Building Operating
Expenses shall not include any Complex Operating Expenses.

         10.2     Complex Operating Expenses. As Additional Rent and in
accordance with Article 7 of this Lease, Tenant shall pay to Landlord Tenant's
Complex Proportionate Share of all reasonable out-of-pocket expenses of
operation, management, maintenance and repair and, to the extent specifically
hereinafter provided with respect to capital items, improvement and

                                       15

<PAGE>

replacement of the Complex Common Areas (collectively, "COMPLEX OPERATING
EXPENSES"), including, but not limited to, license, building and sewer permit
and inspection fees; security; water and electricity use charges associated with
exterior landscaping and lighting, including sewer charges; all charges incurred
in the maintenance of landscaped areas, parking lots, sidewalks, driveways;
salaries and employee benefits of unrelated third-party personnel and payroll
taxes applicable thereto; supplies, materials, equipment and tools; charges or
surcharges imposed by any governmental agencies on or with respect to transit or
automobile or parking facilities; and the cost of the following capital items:
(i) paving of parking areas and driveways, (ii) capital improvements to the
Complex intended to reduce Complex Operating Expenses (at least to the extent of
the cost of such improvements, amortized over the life of such improvements),
provided that any such project the cost of which would exceed $25,000 shall be
reasonably agreed upon by Landlord and Tenant, subject to arbitration as
hereafter provided to determine if such capital improvements will so reduce
operating costs if the parties are unable to agree, and (iii) capital
improvements that are required under any governmental law or regulation,
provided, however, that with respect to the costs of such capital improvements,
Landlord shall amortize its investment in said improvements (together with
interest at the rate of ten (10%) percent per annum on the unamortized balance)
in accordance with standard accounting practices. Notwithstanding any of the
foregoing, Complex Operating Expenses shall not include any Building Operating
Expenses.

         10.3     Exclusions. Building and Complex Operating Expenses payable by
Tenant pursuant hereto as Additional Rent shall not include Landlord's debt
repayments; interest on charges; expenses directly or indirectly incurred by
Landlord for the benefit of any other tenant; cost for the installation of
partitioning or any other tenant improvements; cost of attracting tenants or
legal fees or costs associated with negotiating tenant leases or tenant
disputes; depreciation; interest; any amounts payable by Landlord under Sections
4.3 or 4.7; any costs associated with construction of the Initial Improvements;
expenses in connection with services, redecorating, special cleaning or other
benefits of a type which are not provided to Tenant, but which are provided to
any other tenant or occupant of the Building; any items to the extent such items
are required to be reimbursed to Landlord by other tenants or occupants of the
Building or by third parties; the cost of constructing tenant improvements or
installations for any tenant in the Building (including any relocation costs);
penalties, fines, or late payment interest incurred by Landlord due to violation
by Landlord, or Landlord's agents, contractors or employees, of either the
payment terms and conditions of any lease or service contract covering space in
the Building or Landlord's obligations as owner of the Building (such as late
payment penalties and interest on real estate taxes, late payment of utility
bills); costs incurred by Landlord for repair or restoration to the extent that
Landlord is reimbursed by insurance or condemnation proceeds or that the same is
covered by warranty; costs incurred in correcting latent defects or remediating
Hazardous Materials Contamination (other than Tenant's Hazardous Materials) in
the Building; management fee expenses set forth in Section 7.3(f).

         10.4     Audit Right. Tenant shall have the right upon reasonable
notice and during working hours to audit Landlord's records with respect to
Building Operating Expenses and Complex Operating Expenses and any dispute
between Landlord and Tenant with respect to such

                                       16

<PAGE>

Building Operating Expenses and Complex Operating Expenses shall be resolved by
arbitration in accordance with Article 39 hereof.

11.      ALTERATIONS

         11.1     Intentionally omitted.

         11.2     Alterations. Tenant shall have the right to make Alterations;
provided, however, that any proposed Alteration project involving total
expenditures in excess of Twenty-Five Thousand Dollars ($25,000), or affecting
in any material way, the structural, exterior or roof elements of the Premises
or the elevator, mechanical, electrical (other than relocation, addition, or
elimination of electrical outlets), plumbing or life safety systems of the
Premises, or requiring any health, safety or environmental approval or any
application to a political jurisdiction for rezoning, general plan amendment,
variance or a conditional use permit or that, pursuant to any other provision of
this Lease, requires Landlord's approval, shall be subject to Landlord's prior
written approval (see Section 11.5 below). Any Alterations shall be at Tenant's
sole cost and expense, and shall be subject to the terms of this Article 11.
Alterations shall be at least equal in quality to the Premises as originally
constructed.

         11.3     Permits and Approvals. Tenant shall be solely responsible for
obtaining, at its sole cost and expense, the approval of the City (and any other
governmental agencies with jurisdiction) for any general plan amendment,
rezoning, variance, conditional use permit, building, electrical and plumbing
permits, environmental impact analysis and mitigations imposed thereby, or other
governmental action necessary to permit the development, construction and
operation of any Alterations in accordance with this Lease. Notwithstanding the
foregoing, Tenant shall apply for and prosecute any required governmental review
processes for a general plan amendment, rezoning, variance or use permit only
through and in the name of Landlord, and Tenant shall not submit to any
Environmental Impact Report consultant or other consultant or any public agency
information regarding Landlord, Landlord's lands or Landlord's tenants without
Landlord's prior written approval except as may be mandated by law or a court of
competent jurisdiction. Landlord's approval shall be deemed given if Landlord
does not otherwise respond within three (3) business days after receipt of
Tenant's written request, or such longer period of time as Landlord and Tenant
may agree in writing. Landlord, at no out-of-pocket cost or expense to itself,
shall cooperate with Tenant to the extent reasonably required to obtain the
approval of the City for any proposed Alterations approved by Landlord
hereunder. Tenant shall reimburse Landlord for any out-of-pocket expenses
incurred by Landlord in connection with such cooperation. As used herein the
term "out-of-pocket expenses" does not include costs of Landlord's in-house
personnel. Landlord shall obtain Tenant's prior written approval for any
reimbursable expenses, provided that Landlord shall have no obligation to take
any action under this Section 11.3 requiring expenditure of out-of-pocket costs
if Tenant fails to approve such expenses. Nothing contained herein, however,
shall permit or be deemed to permit Tenant to use the Premises for any purpose
not expressly permitted under Article 5 hereof.

         11.4     Design.

                                       17

<PAGE>

         (a)      Plans and specifications for any Alterations affecting the
structure of the Building, shall be subject to Landlord's approval.

         (b)      For any Alterations requiring Landlord's prior approval, prior
to submittal to the City, Tenant shall submit to Landlord, for Landlord's
review, the number required by Landlord (but not more than four) of duplicate
sets of design drawings for the proposed Alterations, whether or not they are
required by the City to commence the application for governmental design
approval.

         (c)      Prior to finalizing any construction documents that differ
materially from any design or other construction documents previously approved
by Landlord for any Alterations which require Landlord's prior approval, Tenant
shall submit to Landlord for Landlord's written approval in accordance with
Section 11.4(a) above, the number of duplicate sets of such documents required
by Landlord (but not more than four), upon which any changes shall be indicated.
Landlord's approval shall be deemed given if Landlord does not otherwise respond
within seven (7) business days after receipt of Tenant's request for approval.

         11.5     Landlord's Approval. Except where Landlord's approval is
expressly stated as being in Landlord's sole discretion, Landlord's approval
under this Article 11 of any matter requiring Landlord's approval hereunder
shall not be unreasonably withheld or delayed. Landlord agrees to respond to any
request for approval under this Article 11 within thirty (30) days (or such
shorter time as may be specifically provided herein) after receipt of Tenant's
written request for approval, which response may be approval, disapproval, or a
request for additional information or discussion. If Landlord fails to make any
response to a written request for approval under this Article 11 within thirty
(30) days after the date of Landlord's receipt of such request, then Landlord's
approval shall be deemed given if Landlord has continued to fail to respond
after ten (10) days after receipt of a second written notice from Tenant stating
the request and stating that Landlord has failed to respond for thirty (30) days
and further that Landlord's approval will be deemed given if Landlord continues
to fail to make any response within ten (10) days after receipt of said second
notice. Landlord further agrees to use diligent efforts to respond within such
earlier time period as Tenant may reasonably request given Tenant's particular
constraints at the time and Tenant agrees to afford Landlord additional time to
respond if reasonably requested by Landlord and not detrimental to Tenant's
plans. Any disapproval of any matter that is not subject to Landlord's sole
discretion, shall specify Landlord's reasons for disapproving. If Landlord
expresses its disapproval of any matter requiring Landlord's prior approval
pursuant to this Article 11, Tenant shall not proceed with the item disapproved
or any item substantially and directly affected by such disapproved item until
such dispute is resolved. Landlord and Tenant shall meet and attempt in good
faith to resolve the dispute. If, after meeting, Landlord and Tenant are unable
to resolve such dispute, such dispute shall be resolved by mediation, if both
parties agree, or by arbitration pursuant to Article 39.

         11.6     Contracts. Prior to entering into a contract for any
Alteration which required Landlord's prior approval, Tenant shall obtain
Landlord's written approval of the identity of the architect and the general
contractor, which approval shall be deemed given if Landlord does not otherwise
respond within ten (10) business days after receipt of Tenant's request for
approval.

                                       18

<PAGE>

Each such contract shall contain provisions reasonably acceptable to Landlord
that permit such contracts to be assumed by Landlord or its designee, at
Landlord's sole discretion, following a termination of this Lease. Any such
assumption shall be on the same terms and conditions (including fees and prices)
as set forth in such contracts.

         11.7     Prerequisites to Commencement of Construction. In addition to
all other requirements set forth herein, before commencing the construction of
any Alterations for which Landlord's prior approval is required, and before any
building materials have been delivered to the Premises by Tenant or under
Tenant's authority, Tenant shall:

         (a)      Furnish Landlord with a true copy of Tenant's contract with
the general contractor.

         (b)      Deliver to Landlord true copies of all documents to evidence
the commitment of construction financing for any new construction or other
arrangements to provide for payment for work undertaken by Tenant. Such evidence
shall be in a form and substance reasonably satisfactory to Landlord.

         (c)      Procure or cause to be procured the insurance coverage
described below in the limits hereinafter provided, if available, and provide
Landlord with certified copies of all such insurance or, with the written
approval of Landlord, certificates of such insurance in form satisfactory to
Landlord. All such insurance shall comply with the requirements of Articles 11
and 19.

                  (i)      During the course of construction, to the extent not
covered by property insurance maintained by Tenant pursuant to Article 19,
comprehensive "all risk" builder's risk insurance, including vandalism and
malicious mischief, covering all improvements in place on the Premises, all
materials and equipment stored at the Premises and furnished under contract, and
all materials and equipment that are in the process of fabrication at the
premises of any third party or that have been placed in due course of transit to
the Premises when such fabrication or transit is at the risk of, or when title
to or an insurable interest in such materials or equipment, has passed to Tenant
or its construction manager, contractors or subcontractors (excluding any
contractors', subcontractors' and construction managers' tools and equipment,
and property owned by the employees of the construction manager, any contractor
or any subcontractor), such insurance to be written on a completed value basis
in an amount not less than the full estimated replacement value of such
Alterations.

                  (ii)     Comprehensive liability insurance covering Tenant,
Landlord and each construction manager, contractor and subcontractor engaged in
any work on the Premises, which insurance may be effected by endorsement, if
obtainable, on the policy required to be carried pursuant to Article 19,
including insurance for completed operations, elevators, owner's, construction
manager's and contractor's protective liability, products completed operations
for three (3) years after the date of acceptance of the work by Tenant, broad
form blanket contractual liability, broad form property damage and full form
personal injury (including but not limited to bodily injury), covering the
performance of all work at or from the Premises by Tenant, its construction
manager, contractors and subcontractors, and in a liability amount not less than
the

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<PAGE>

amount at the time carried by prudent owners of comparable construction projects
in the Santa Clara valley, but in any event not less than Five Million Dollars
($5,000,000) combined single limit, which policy shall contain a cross-liability
clause or separation of insureds provision, an endorsement deleting the property
damage exclusion as to explosion, underground, and collapse hazards, and an
endorsement providing incidental malpractice coverage, and shall include
thereunder for the mutual benefit of Landlord and Tenant, bodily injury
liability and property damage liability automobile insurance on any non-owned,
hired or leased automotive equipment used in the construction of any work.

                  (iii)    Worker's Compensation Insurance in the amounts and
coverages required under workers' compensation, disability and similar employee
benefit laws applicable to the Premises, and Employer's Liability Insurance with
limits not less than One Million Dollars ($1,000,000) or such higher amounts as
may be required by law.

         11.8     General Construction Requirements.

         (a)      All construction and other work (other than the Initial
Improvements) shall be done at Tenant's sole cost and expense and in a prudent
and first class manner and with first class materials. Tenant shall construct
all Alterations in strict accordance with all Applicable Laws, and substantially
in accordance with plans and specifications that are in accordance with the
provisions of this Article 11 (if required) and all other provisions of this
Lease.

         (b)      Tenant shall construct all Alterations within setbacks
required by Applicable Laws.

         (c)      Prior to the commencement of any construction, alteration,
addition, improvements, repair or landscaping in excess of Twenty-Five Thousand
Dollars ($25,000), Landlord shall have the right to post in a conspicuous
location on the Premises as well as to record with the County of Santa Clara, a
Notice of Landlord's Nonresponsibility. Tenant covenants and agrees to give
Landlord at least ten (10) days prior written notice of the commencement of any
such construction, alteration, addition, improvement, repair or landscaping in
order that Landlord shall have sufficient time to post such notice.

         (d)      The provisions of Section 11.4(a) shall apply to any change in
design elements that are subject to Landlord's approval and have been approved
by Landlord and any material deviations in the actual construction of any
Alterations from such approved design elements (any deviation affecting the
exterior appearance of the Premises shall be deemed material); provided that
during the course of construction, Landlord's response to any request for
approval of any change order requiring Landlord's approval hereunder shall be
given within five (5) business days and shall be deemed approved if Landlord
does not approve or disapprove the same within five (5) business days after
receipt of notice from Tenant that the aforesaid five (5) business day period
has expired without response from Landlord. Landlord's review, comments,
recommendations or approvals of the plans and specifications of any other design
documents or any subsequent alterations or modifications are not, and shall not
be deemed to be, a statement of compliance with the terms of this Lease other
than the specific terms requiring such approvals.

                                       20

<PAGE>

         (e)      Tenant shall take all necessary safety precautions during any
construction by Tenant; provided, however, that Landlord shall bear the cost of
any safety precautions that are necessary solely due to the presence of
Hazardous Materials other than Tenant's Hazardous Materials and which would not
otherwise be necessary. Any disagreement as to Landlord's obligations under this
Section 11.8(e) shall be resolved by arbitration pursuant to Article 39.

         (f)      Tenant shall prepare and maintain appropriate engineering
documentation relating to any Alterations. Such documentation shall be made
available for copying and inspection by Landlord at all reasonable times and
upon reasonable notice. The cost of any copying for Landlord shall be borne by
Landlord.

         11.9     Construction Completion Procedures.

         (a)      On completion, as determined by Tenant's architect, of the
construction of any Alterations during the Term, Tenant shall file for
recordation or cause to be filed for recordation a notice of completion.

         (b)      On completion, as determined by Tenant's architect, of
construction of any Alterations, Tenant shall deliver to Landlord evidence,
satisfactory to Landlord of payment of all costs, expenses, liabilities and
liens connected with such construction (except for liens that are contested in
the manner provided herein). Final unconditional lien waivers shall be
acceptable evidence.

         11.10    Intentionally omitted.

         11.11    Ownership. Except as provided in Section 11.12, all
appurtenances, fixtures, improvements, equipment, additions and other property
attached to or installed in the Premises at the commencement of or during the
Term, whether temporary or permanent in nature (collectively, "FIXTURES" shall
at the end of the Term or earlier termination of this Lease become the property
of Landlord and all Fixtures shall remain on the Premises without compensation
to Tenant, except as otherwise agreed to in writing by Landlord and Tenant.

         11.12    Tenant's Property. All property that is listed on attached
EXHIBIT E and other items of property that are installed in the Premises by or
for the account of Tenant, without expense to Landlord (all of which are herein
called "TENANT'S PROPERTY") shall be and remain the property of Tenant and may
be removed by it at any time during the Term provided that Tenant can and does
promptly repair any damage to the Premises caused by such removal; provided,
however, that any equipment or other property for which Landlord has granted any
allowance or credit to Tenant and which is a replacement for items originally
provided by Landlord at Landlord's expense shall not be considered Tenant's
Property. Upon the Termination Date of this Lease, Tenant shall remove from the
Premises all of Tenant's Property except such items as the parties shall have
agreed are to remain and to become the property of Landlord and, upon the
request of Landlord made within thirty (30) days following the expiration or
termination of this Lease, Tenant, at its sole cost and expense, shall also
remove any Alterations designated by Landlord at the time of installation (or in
the case of Alterations not required to be approved by Landlord, designated
within thirty (30) days of the Expiration Date) to be removed. Tenant

                                       21

<PAGE>

shall repair or pay the cost of repairing any damage to the Premises or to the
Building resulting from such removal. At Tenant's request Landlord shall specify
prior to installation or construction of any Alterations whether or not Landlord
will require removal of such Alterations. Tenant's obligations under this
Section 11.12 shall survive the termination of this Lease. Any items of Tenant's
Property which shall remain in the Premises after the Expiration Date of this
Lease may, at the option of Landlord, be deemed abandoned and in such case may
either be retained by Landlord as its property or be disposed of, without
accountability, at Tenant's expense in such manner as Landlord may see fit. Any
disagreement between Landlord and Tenant as to what constitutes Tenant's
Property and what constitutes fixtures and other property constituting part of
the Premises shall be resolved by arbitration pursuant to Article 39.

         11.13    Intentionally omitted.

12.      MAINTENANCE AND REPAIRS; NO WASTE

         12.1     Landlord's Obligation. Landlord shall maintain and repair the
Building Systems, the Building Structure, the Building Common Areas and the
Complex Common Areas, and keep such areas and elements in First Class order and
condition. Any damage in or to any such areas or elements caused by Tenant or
any of Tenant's Agents shall be repaired by Tenant, or, if applicable, by
Landlord at Tenant's expense and Tenant shall pay to Landlord, upon billing by
Landlord, as Additional Rent, the cost of such repairs incurred by Landlord that
are not covered by proceeds of insurance obtained by Landlord or required to be
obtained by Landlord pursuant to the terms of this Lease.

         12.2     Tenant's Obligation. During the Term, Tenant shall, at its own
cost and expense and without any cost or expense to Landlord, keep and maintain
the Premises (other than the Building Structure and Building Systems) and every
part thereof, the equipment, fixtures and improvements therein in a First Class
condition and repair, subject to ordinary wear and tear, casualty and
condemnation and any acts of Landlord. Tenant shall promptly make all repairs,
replacements and alterations (whether foreseen or unforeseen, or ordinary or
extraordinary) necessary to maintain the Premises in compliance with all
Applicable Laws. Except as otherwise expressly provided in this Lease, Landlord
shall not be obligated to make to the Premises any repairs, replacements or
renewals of any kind, nature or description whatsoever and Tenant hereby
expressly waives any right to terminate this Lease and any right to make repairs
at Landlord's expense under Sections 1932(1), 1941 and 1942 of the California
Civil Code, or any amendments thereof or any similar law, statute or ordinance
now or hereafter in effect. Notwithstanding the foregoing or anything to the
contrary contained in this Lease, Tenant shall not be responsible for compliance
with any laws, codes, ordinances or other governmental directives where such
compliance is not related specifically to Tenant's use and occupancy of or
Alterations to the Premises. For example, if any governmental authority should
require any portion of the Complex or the Premises to be structurally
strengthened against earthquake, or should require the removal of Hazardous
Materials (other than Tenant's Hazardous Materials) from the Premises and such
measures are imposed as a general requirement applicable to all tenants rather
than as a condition to or as a result of Tenant's specific use or occupancy of
or Alterations to the Premises, such work shall not be the responsibility of
Tenant.

                                       22

<PAGE>

13.      UTILITIES AND SERVICES

         Tenant shall be solely responsible for and shall make all arrangements
for and shall pay for all utilities and services exclusively furnished to or
used at the Premises, including without limitation, telephone and other
communication services. Landlord shall supply all other utilities and services
not exclusively furnished to or used at the Premises and the Building Common
Areas, specifically water, gas, electricity, sewer, garbage and janitorial
services, as well as electricity for the Building's proportionate share of the
Complex Common Areas, the cost of which shall be included within Building
Operating Expenses. Notwithstanding the foregoing, Tenant may elect to provide
its own janitorial service for the Premises. Landlord shall also supply
irrigation water for the Complex Common Areas, the cost of which shall be
included within Complex Operating Expenses. Landlord shall not be liable for,
and Tenant shall not be entitled to any abatement or reduction of rent by reason
of, any interruption or failure of utility services to the Premises, except
where such interruption or failure of utility services is caused by acts of
Landlord or Landlord's agents or employees in the Complex and continues for a
period of three or more business days, in which case Tenant shall be entitled to
an abatement of Base Rent, which abatement shall be based upon the extent to
which such inability to obtain utility services impairs Tenant's ability to
carry on its business in the Premises. Such abatement shall continue until the
utility services that were interrupted have been restored so that the lack of
any remaining services no longer impairs Tenant's ability to carry on its
business in the Premises. Landlord shall use its best efforts to restore any
utility services the interruption or failure of which was directly caused by
acts of Landlord or Landlord's agents or employees.

14.      TAXES

         14.1     Real Property Taxes.

         (a)      As Additional Rent and in accordance with Article 7 of this
Lease, Tenant shall pay to Landlord Tenant's Building Proportionate Share of all
Real Property Taxes associated with the tax parcel on which the Building is
located (which include the Building's proportionate share of the Real Property
Taxes relating to the Complex Common Areas). The term "REAL PROPERTY TAXES", as
used herein, shall mean (i) all taxes, assessments, levies and other charges of
any kind or nature whatsoever, general and special, foreseen and unforeseen
(including all installments of principal and interest required to pay any
general or special assessments for public improvements and any increases
resulting from reassessments caused by any change in ownership) now or
hereinafter imposed by any governmental or quasi-governmental authority or
special district having the direct or indirect power to tax or levy assessments,
which are levied or assessed against, or with respect to the value, occupancy or
use of, all or any portion of the Building or the Complex Common Areas (as now
constructed or as may at any time hereafter be constructed, altered, or
otherwise changed) or Landlord's interest therein; any improvements located
within the Building or the Complex Common Areas (regardless of ownership, but
without duplication of Tenant's obligations with respect to Tenant's Property,
and excluding improvements owned by a tenant other than Tenant); the fixtures,
equipment and other property of Landlord, real or personal, that are an integral
part of and located in the Building; or parking areas, public utilities, or
energy within the Complex Common Areas; and (ii) all charges, levies or fees
imposed by reason of environmental regulation or other

                                       23

<PAGE>

governmental control of the Building or the Complex Common Areas other than any
such charges, levies or fees that are excluded under Section 7.8 hereof. If at
any time during the term of this Lease the taxation or assessment of the
Building or the Complex Common Areas prevailing as of the Commencement Date
shall be altered so that in lieu of or in addition to any Real Property Tax
described above there shall be levied, assessed or imposed (whether by reason of
a change in the method of taxation or assessment, creation of a new tax or
charge, or any other cause) an alternate or additional tax or charge (x) on the
value, use or occupancy of the Building or the Complex Common Areas or (y) on or
measured by the gross receipts, income or rentals from the Building or the
Complex Common Areas, on Landlord's business of leasing the Building or the
Complex Common Areas, or computed in any manner directly related to the
operation of the Building or the Complex Common Areas, then any such tax or
change, however, designated, shall be included within the meaning of the term
"Real Property Taxes" for purposes of this Lease. If any Real Property Tax is
based upon property or rents unrelated to the Building or the Complex, then only
that part of such Real Property Tax that is fairly allocable to the Building or
the Complex Common Areas shall be included within the meaning of the term "Real
Property Taxes." Notwithstanding the foregoing, the term "Real Property Taxes"
shall not include estate, inheritance, gift or franchise taxes of Landlord or
any federal or state net income tax imposed on Landlord's income from all
sources.

         (b)      Tenant shall have the right to contest the amount or validity,
in whole or in part, of any Real Property Taxes by appropriate proceedings,
provided that Tenant shall not postpone or defer payment of such Real Property
Taxes but shall pay such Real Property Taxes notwithstanding such contest.
Landlord shall execute any such document as may be required by the imposing
authority as a condition to Tenant's right to undertake such contest permitted
hereunder, provided that Landlord shall have no obligation to take any action
other than to execute the minimum documentation required by the imposing
authority in order for Tenant to exercise its rights under this Section 14.1(b)
Tenant shall indemnify and defend Landlord against and save Landlord harmless,
in accordance with Article 20 hereof, from and against claims, demands, costs,
liabilities, damages, penalties and expenses, including, without limitation,
reasonable attorneys' fees and expenses, specifically and directly arising from
any such tax contest proceedings.

         14.2     Taxes on Tenant's Property. Tenant shall be liable for and
shall pay before delinquency, taxes levied against any personal property or
trade fixtures placed by Tenant or any of Tenant's Agents in or about the
Premises. If any such taxes on Tenant's personal property or trade fixtures are
levied against Landlord or Landlord's property or if the assessed value of the
Premises is increased by the inclusion therein of a value placed upon such
personal property or trade fixtures of Tenant and if Landlord, after written
notice to Tenant, pays the taxes based on such increased assessment, which
Landlord shall have the right to do regardless of the validity thereof, but only
under proper protest if requested by Tenant, Tenant shall upon demand, as the
case may be, repay to Landlord the taxes so levied against Landlord, or the
proportion of such taxes resulting from such increase in the assessment;
provided that in any such event Tenant shall have the right, in the name of
Landlord and with Landlord's full cooperation, to bring suit in any

                                       24

<PAGE>

court of competent jurisdiction to recover the amount of any such taxes so paid
under protest, and any amount so recovered shall belong to Tenant.

15.      LIENS

         15.1     No Liens. Tenant shall keep the Premises and Complex free from
any liens arising out of any work performed, materials furnished or obligation
incurred by or for Tenant. In the event that Tenant shall not, within thirty
(30) days following Tenant's receipt, of notice of the imposition of such lien,
cause the same to be released of record, Landlord shall have, in addition to all
other remedies provided herein and by law, the right, but no obligation, to
cause the same to be released by such means as it shall deem proper, including
payment of the claim giving rise to such lien. All sums paid by Landlord for
such purpose, and all expenses incurred by it in connection therewith, including
without limitation, reasonable attorneys' fees and costs, shall be payable to
Landlord by Tenant on demand with interest at the Interest Rate. Landlord shall
have the right to post and keep posted on the Premises any notices permitted or
required by law or that Landlord shall deem proper for the protection of
Landlord, the Premises and the Complex from mechanics' and materialmen's liens.
Tenant shall have no responsibility for liens arising out of work performed,
materials furnished or obligations incurred by or for Landlord, or any other
tenant in the Complex.

         15.2     Contest. Tenant shall have the right to contest, in good
faith, the amount or validity of any lien of the nature described in Section
15.1 above or Section 27.2 below, provided that Tenant shall give Landlord
written notice of Tenant's intention to do so within thirty (30) days after
Tenant's receipt of notice of the recording of such lien, and provided further,
that Tenant shall, at its expense, defend itself and Landlord against the claim
of lien and shall pay and satisfy any adverse judgment that may be rendered
thereon before the enforcement thereof against the Premises. In addition, at the
request of Landlord, Tenant shall procure and record the bond provided for in
Section 3143 of the California Civil Code or any comparable statute hereafter
enacted providing for a bond freeing the Premises from the effect of such lien
or claim or action thereof.

16.      COMPLIANCE WITH LAWS; INSURANCE REQUIREMENTS

         16.1     Compliance with Laws. Except as otherwise set forth in this
Lease, Tenant, at Tenant's cost and expense, shall comply with all Applicable
Laws. Any work or installations made or performed by or on behalf of Tenant or
any of Tenant's Agents in order to conform the Premises to Applicable Laws shall
be subject to and performed in compliance with the provisions of Article 11.
Tenant shall give Landlord immediate written notice of any written notice of
violation of Applicable Laws received by Tenant. In addition, Tenant shall
notify Landlord promptly after Tenant receives any written notice of any other
violation of Applicable Laws relating to the Premises or the Complex, unless
such violation is Tenant's responsibility hereunder and is curable by Tenant
within a reasonable time at a cost of less than fifty thousand dollars ($50,000)
and Tenant is proceeding with such cure. Tenant, at its sole cost and expense,
shall promptly rectify any violation of Applicable Laws relating to the Tenant's
specific use or occupancy of or Alterations to the Premises. Notwithstanding the
foregoing or anything to the contrary contained in this Lease, Tenant shall not
be responsible for compliance with any laws,

                                       25

<PAGE>

codes, ordinances or other governmental directives where such compliance is not
related specifically to Tenant's use and occupancy of or Alterations to the
Premises. For example, if any governmental authority should require any portion
of the Project or the Premises to be structurally strengthened against
earthquake, or should require the removal of Hazardous Materials (other than
Tenant's Hazardous Materials) from the Premises and such measures are imposed as
a general requirement applicable to all tenants rather than as a condition to or
as a result of Tenant's specific use or occupancy of or Alterations to the
Premises, such work shall be the responsibility of Landlord.

         16.2     Landlord Obligations. Notwithstanding the provisions of
Section 16.1, if as a result of any change in Applicable Laws, capital
improvements are required under Applicable Laws to be made to the Building
during the last five (5) years of the Term, and such requirement is not a result
of any action taken by Tenant, such capital improvements shall be undertaken by
Landlord and the costs thereof, together with interest at the lower of the
Interest Rate or the rate actually paid by Landlord to an outside lender
financing such capital improvements, shall be amortized over the useful life of
the capital item in accordance with generally accepted accounting standards and
the prorated amount shall be payable by Tenant as Additional Rent in equal
monthly payments during the remainder of the Term (as the Term may be extended
pursuant to Section 6.2).

17.      ASSIGNMENT

         17.1     No Assignment. Landlord is entering into this Lease in
reliance on the particular and unique business and reputation of Tenant and
Landlord would not enter into this Lease except for such particular and unique
business and reputation. The parties expressly agree that except as otherwise
expressly provided in this Lease, including, without limitation, the provisions
of Article 22, Tenant shall not directly or indirectly, voluntarily or by
operation of law, sell, assign, sublet, encumber, pledge or otherwise transfer
or hypothecate its interest in or rights with respect to the Premises or
Tenant's leasehold estate therein (any of the foregoing being herein referred to
as a "TRANSFER").

         17.2     Transfer to an Affiliate. Notwithstanding the provisions of
this Article 17, or Article 18 below, Landlord's consent shall not be required
for, and the term "Transfer" shall not include, any sale or other transfer,
including by consolidation, merger or reorganization, of stock of Tenant, if
Tenant is a corporation, or, if Tenant is a partnership or limited liability
company, any sale or other transfer of any partnership or membership interest in
Tenant, or for any transfer to an entity that controls, is controlled by, or is
under common control with Tenant, or that purchases all or substantially all of
Tenant's assets, provided that no such Transfer or merger, acquisition, or other
transfer of any controlling interest in Tenant shall relieve Tenant of any of
its obligations under the Lease.

         17.3     Conditions to Transfer of Entire Interest. Notwithstanding the
provisions of Section 17.1, but subject to the remaining provisions of this
Article 17, Tenant may assign all, but not less than all, of Tenant's interest
under this Lease, provided that (i) no Event of Default has occurred and is
continuing, (ii) Tenant has complied with all provisions of this Article 17,
including Section 17.7, (iii) the use of the Premises by the transferee shall
comply with the

                                       26

<PAGE>

provisions of this Lease, and (iv) Tenant obtains the prior written consent of
Landlord, which consent, subject to the foregoing conditions, shall not be
unreasonably withheld. Landlord's consent shall be withheld and shall be deemed
by the parties hereto to be reasonably withheld unless, prior to a proposed
Transfer, Tenant furnishes Landlord with evidence satisfactory to Landlord in
its reasonable judgment that the proposed transferee has the financial
capability to fulfill its obligations under this Lease.

         17.4     Notice of Proposed Transfer. If Tenant desires to enter into a
Transfer of this Lease, it shall give written notice (herein called a "NOTICE OF
PROPOSED TRANSFER") to Landlord of its intention to do so, which notice shall
include such information regarding the proposed assignee or subtenant (either
being sometimes hereinafter referred to as the "TRANSFEREE") as Landlord shall
reasonably require in order to determine the intended use of the Premises to be
made by the proposed Transferee, and, in the case of a proposed assignment, the
creditworthiness and financial capability of the proposed assignee. Landlord
shall notify Tenant of Landlord's decision with respect to the proposed Transfer
within fifteen (15) days after Landlord's receipt of the complete Notice of
Proposed Transfer and Landlord's consent shall be deemed given if Landlord does
not give Tenant notice of Landlord's decision within thirty (30) days after
receipt by Landlord of the complete Notice of Proposed Transfer. If Landlord
withholds its consent to a proposed Transfer, Landlord's notice shall indicate
the reasons for such withholding.

         17.5     Assumption in Writing. Except in the case of a subletting
permitted under Article 18, below, any consent of Landlord to a proposed
Transfer shall be conditioned upon the execution and delivery by the Transferee
to Landlord of an instrument, in form and substance satisfactory to Landlord, in
which the proposed Transferee unconditionally assumes and agrees to perform and
observe all covenants and conditions to be performed and observed by Tenant
under this Lease. The consent by Landlord to any Transfer shall not relieve
Tenant from the obligation to obtain Landlord's express consent to any other
Transfer. No Transfer by Tenant nor any consent by Landlord thereto, shall
relieve Tenant of any obligation to be performed by Tenant under this Lease. Any
Transfer that fails to comply with this Article 17 or Article 18, as applicable,
shall be void and, at the option of Landlord, shall constitute an Event of
Default. The acceptance of any Base Rent or other payments by Landlord from a
proposed Transferee shall not constitute consent to such Transfer by Landlord or
a recognition of any Transferee, or a waiver by Landlord of any failure of
Tenant or other Transferee to comply with this Article 17.

         17.6     Entire Interest. Tenant shall not be entitled to Transfer less
than all of its interest under this Lease except as provided in Article 18
below.

         17.7     Landlord's Right of First Offer. If at any time during the
Term, Tenant desires to Transfer Tenant's interest in the Premises under this
Lease (other than a Transfer for security purposes pursuant to a Leasehold
Mortgage or a foreclosure or deed in lieu of foreclosure with respect to a
Leasehold Mortgage, or a subletting in accordance with Article 18 or any
transfer permitted under Section 17.2), Tenant shall first deliver to Landlord a
written offer (the "OFFER") setting forth the terms and conditions upon which
Tenant proposes to Transfer its interest and offering to Transfer Tenant's
interest in the Premises to Landlord on such terms and conditions,

                                       27

<PAGE>

provided that if such terms and conditions do not require cash payment, Landlord
shall have the option of purchasing the interest for all cash. Landlord shall
have ten (10) calendar days from Landlord's receipt of the Offer to accept the
Offer by written notice to Tenant. If Landlord does not give Tenant written
notice accepting the Offer within said ten (10) day period, Tenant may at any
time, thereafter, subject to all of the conditions, restrictions and terms of
this Article 17, Transfer its interest to a third party on any terms, regardless
of whether more or less favorable than those stated in the Offer, without
reoffering the interest to Landlord; provided that the provisions of this
Section 17.7 shall apply to any subsequent Transfer.

         If Landlord accepts the Offer, Landlord and Tenant shall consummate the
Transfer within thirty (30) days after Landlord's written notice of acceptance.
The Transfer shall be consummated by Tenant's delivery to Landlord of (i) a good
and sufficient assignment of lease, in recordable form, assigning to Landlord,
free and clear of any and all liens, subleases, and encumbrances except those
caused by Landlord or those that, by accepting the Offer, Landlord has agreed to
take subject to, all of Tenant's right, title and interest in, to and under the
Lease and in any and all Permitted Subleases that, by accepting the Offer,
Landlord has agreed to accept, and (ii) a good and sufficient (warranty as to
title, or as otherwise specified in the Offer) bill of sale of any personal
property included in the leasehold estate being acquired by Landlord. Landlord
shall pay the consideration agreed upon in cash at the closing of the Transfer
or otherwise in the manner specified in the Offer.

         17.8     Excess Rent. For any Transfer (other than a Transfer under
Section 17.2), fifty percent (50%) of the Excess Rent received by Tenant shall
be paid to Landlord as and when received by Tenant. "EXCESS RENT" means the
gross revenue received from the Transferee, less (a) the gross revenue paid to
Landlord by Tenant concurrently with or after the Assignment; (b) any reasonably
documented tenant improvement allowance or other economic concession (planning
allowance, moving expenses, tenant improvement work, etc.), paid by Tenant to or
on behalf of the Transferee; (d) customary and reasonable external brokers'
commissions to the extent paid and documented; (e) reasonable attorneys' fees;
(f) reasonable costs of advertising the space; and (g) the unamortized cost of
any tenant improvements made to the Premises by Tenant (collectively, "TRANSFER
COSTS"). Tenant shall not have to pay to Landlord any Excess Rent until Tenant
has recovered its Transfer Costs.

18.      SUBLETTING

         18.1     Conditions to Subletting. Notwithstanding the provisions of
Article 17 regarding Transfer, but subject to the provisions of Section 17.4,
Tenant may enter into subleases for portions of the Premises subject to the
following conditions:

         (a)      Tenant shall obtain the prior written consent of Landlord,
which consent shall not be unreasonably withheld provided that all other
conditions of this Article 18 are satisfied;

         (b)      no sublease shall relieve Tenant from the performance of any
of its obligations under this Lease;

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<PAGE>

         (c)      no sublease shall extend beyond the Term of this Lease;

         (d)      each sublease shall be subject and subordinate to the terms,
covenants and conditions of this Lease and the rights of Landlord hereunder; and

         (e)      each sublease shall contain a provision that upon any
termination or surrender of this Lease, such sublease shall terminate.

         18.2     Permitted Sublease. Any sublease entered into by Tenant in
accordance with the provisions of this Article 18 is herein referred to as a
"PERMITTED SUBLEASE". Tenant shall provide Landlord with a copy of each executed
Permitted Sublease within five days after entering into such Permitted Sublease.
In addition, within thirty (30) days after written demand by Landlord, Tenant
shall furnish Landlord a schedule, certified by Tenant as true and correct,
setting forth all Permitted Subleases then in effect, including in each case the
name of the subtenant, a description of the space leased, the annual rental
payable by such subtenant, a list of the Permitted Subleases, if any, that have
been assigned to any Leasehold Mortgagee as additional security, and any other
information reasonably requested by Landlord with respect to the Permitted
Subleases.

         18.3     Excess Rent. For any sublease, fifty percent (50%) of the
Excess Rent received by Tenant shall be paid to Landlord as and when received by
Tenant. Tenant shall not have to pay to Landlord any Excess Rent until Tenant
has recovered its Transfer Costs relating to the sublease.

19.      INSURANCE

         19.1     Required Insurance. At all times during the Term and at its
sole cost and expense, Tenant shall obtain and keep in force the following
insurance:

         (a)      Intentionally omitted

         (b)      Worker's Compensation Insurance in the amounts and coverages
required under worker's compensation, disability and similar employee benefit
laws applicable to the Premises, with all elective employment covered on a
voluntary basis where permissible, and Employer's Liability Insurance with
limits not less than $1,000,000 or such higher amounts as may be required by
law.

         (c)      Commercial general liability through one or more primary and
umbrella liability policies against claims, including but not limited to, bodily
injury and property damage occurring on the Premises or the streets, curbs or
sidewalks adjoining the Premises that are not part of the leased premises, with
such limits as may be reasonably required by Landlord from time to time, but in
any event not less than Ten Million Dollars ($10,000,000), combined single limit
and annual aggregate for the Premises. Such insurance shall insure the
performance by Tenant of the indemnity agreements contained in this Lease. If
any governmental agency or department requires insurance or bonds with respect
to any proposed or actual use, storage, treatment or disposal of Tenant's
Hazardous Materials, Tenant shall be responsible for such insurance and bonds
and shall pay all premiums and charges connected therewith; provided, however,
that this

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<PAGE>

provision shall not and shall not be deemed to modify the provisions of Article
27 hereof. Tenant shall have no responsibility with respect to Hazardous
Materials other than Tenant's Hazardous Materials.

         Such insurance shall (i) delete any employee exclusion on personal
injury coverage; (ii) include employees as additional insureds; (iii) provide
for blanket contractual coverage, including liability assumed by and the
obligations of Tenant under Article 20 for bodily injury, death and/or property
damage; (iv) provide Products and Completed Operations and Independent
Contractors coverage and Broad Form Property Damage liability coverage without
exclusions for collapse, explosion, demolition, underground coverage and
excavating, including blasting; (v) provide automobile liability coverage for
owned, non-owned and hired vehicles; (vi) provide liability coverage on all
mobile equipment used by Tenant; and (vii) include a cross liability endorsement
(or provision) permitting recovery with respect to claims of one insured against
another. Such insurance shall insure against any and all claims for bodily
injury, including death resulting therefrom, and damage to or destruction of
property of any kind whatsoever and to whomever belonging and arising from
Tenant's operations hereunder and whether such operations are performed by
Tenant or any of its contractors, subcontractors, or by any other person.

         (d)      Insurance against loss from business interruption in an amount
not less than one year's Base Rent and projected Additional Rent.

         (e)      All other insurance that Tenant is required to maintain under
Applicable Laws

         19.2     Policy Form and General.

         (a)      All of the insurance policies required under this Lease,
including without limitation, under the provisions of Article 11 and this
Article 19, and all renewals thereof shall be issued by one or more companies of
recognized responsibility, authorized to do business in California with a rating
of at least a Class B + --X (or its equivalent successor) status, as rated in
the most recent edition throughout the Term of Best's Insurance reports (or its
successor, or, if there is no equivalent successor rating, otherwise reasonably
acceptable to Landlord). The proceeds of all property and builder's risk
policies of insurance provided for in this Article 19 shall be payable to
Landlord for application in accordance with this Lease. All property insurance
hereunder shall name Landlord as a Loss Payee and the Commercial General
Liability insurance shall name as additional insureds Landlord, and its
directors, trustees, officers, agents, and employees, and such other parties as
Landlord reasonably may request. Any deductibles or self insurance retention for
any of the foregoing insurance must be agreed to in advance in writing by
Landlord, in its reasonable discretion. All deductibles and self insurance
retention shall be paid by Tenant. The Commercial General Liability insurance of
Tenant shall be primary coverage.

         (b)      Each policy of property insurance and all other policies of
insurance on the Premises and/or in, upon or about the lands of The Leland
Stanford Junior University, which shall be obtained by Tenant, whether required
by the provisions of this Lease or not, shall be made expressly subject to the
provisions of this Article 19 and, shall provide that Tenant's insurers shall
waive any right of subrogation against Landlord. All policies provided for
herein

                                       30

<PAGE>

expressly shall provide that such policies shall not be canceled, terminated or
reduced without thirty (30) days' prior written notice to Landlord. Each policy,
or a certificate of the policy executed by the insurance company evidencing that
the required insurance coverage is in full force and effect, shall be deposited
with Landlord on or before the date of this Lease, shall be maintained
throughout the Term, and shall be renewed, not less than thirty (30) days before
the expiration of the term of the policy. Except for specific provisions
described herein, no policy shall contain any provisions for exclusions from
liability and no exclusion shall be permitted in any event if it conflicts with
any coverage required hereby, and, in addition, no policy shall contain any
exclusion from liability for personal injury or sickness, disease or death or
which in any way impairs coverage under the contractual liability coverage
described above.

         (c)      If either party shall at any time deem the limits of any of
the insurance described in this Lease then carried or required to be carried to
be either excessive or insufficient, the parties shall endeavor to agree upon
the proper and reasonable limits for such insurance then to be carried and such
insurance shall thereafter be carried with the limits thus agreed upon until
further change pursuant to the provisions of this subsection. If the parties
shall be unable to agree on the proper and reasonable limits for such insurance,
then such limits shall be determined pursuant to the provisions of Article 39.
The decision of the arbitrator as to such limits for such insurance then to be
carried shall be binding upon the parties and such insurance shall be carried
with the limits as thus determined until such limits shall again be changed
pursuant to the provisions of this subsection. The expenses of such
determination shall be borne equally between Landlord and Tenant.

         (d)      No approval by Landlord of any insurer, or the terms or
conditions of any policy, or any coverage or amount of insurance, or any
deductible amount shall be construed as a representation by Landlord of the
solvency of the insurer or the sufficiency of any policy or any coverage or
amount of insurance or deductible and Tenant assumes full risk and
responsibility for any inadequacy of insurance coverage or any failure of
insurers.

         19.3     Landlord's Insurance. Landlord shall purchase and keep in
force and, as Additional Rent and in accordance with Article 7 hereof, the
following:

         (a)      Tenant shall pay to Landlord Tenant's Building Proportionate
Share of the cost of, policy or policies of insurance or a program of
self-insurance covering (i) loss or damage to the Building in the amount of the
full replacement value thereof, providing protection against those perils
included within the classification of "all risks" insurance and but not
including flood and earthquake insurance, unless the premiums for such flood and
earthquake coverage are commercially reasonable in amount; and (ii) commercial
general liability insurance, including but not limited to, bodily injury and
property damage occurring in the Building, with limits of not less than Ten
Million Dollars ($10,000,000).

         (b)      Tenant shall pay to Landlord Tenant's Complex Proportionate
Share of the cost of, policy or policies of insurance or a program of
self-insurance covering (i) loss or damage to the Complex Common Areas in the
amount of the full replacement value thereof, providing protection against those
perils included within the classification of "all risks" insurance but not
including flood and earthquake insurance; and (ii) commercial general liability
insurance,

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<PAGE>

including but not limited to, bodily injury and property damage occurring in the
Complex Common Areas, with limits of not less than Ten Million Dollars
($10,000,000).

         (c)      Such policy or policies shall provide that Landlord's insurers
waive any right of subrogation against Tenant. If such insurance cost is
increased due to Tenant's particular use of the Premises, Tenant shall pay the
full cost of such increase. Tenant shall have no interest in nor any right to
the proceeds of any insurance procured by Landlord for the Complex.

20.      INDEMNITY AND RELEASE

         20.1     Tenant Indemnity. Tenant shall indemnify, protect, defend and
save and hold Landlord and Landlord's trustees, directors, officers, employees,
and agents (collectively "LANDLORD INDEMNITEES") and the Premises harmless from
and against, and reimburse Landlord and any Landlord Indemnitee for, any and all
claims, demands, losses, damages, costs, liabilities, causes of action and
expenses, including, without limitation, reasonable attorneys' fees and
expenses, to the extent incurred in connection with or arising in any way out of
(i) any default by Tenant in the observance or performance of any of the terms,
covenants or conditions of this Lease on Tenant's part to be observed or
performed, (ii) the use, occupancy or manner of use or occupancy of the Premises
or the Complex by Tenant or any of Tenant's Agents, (iii) the conduct or
management of any work or thing done in or on the Premises, (iv) the design,
construction, maintenance, or condition of the Premises, (v) any acts,
omissions, or negligence of Tenant or of Tenant's Agents, in, on or about the
Premises or the Complex, (vi) any accident or other occurrence on the Premises
from any cause whatsoever, except to the extent caused by the negligent act or
willful misconduct of Landlord or any Landlord Indemnitee, and (vii) any
Hazardous Materials Occurrence, including, without limitation, any costs of
monitoring or removal to achieve standards as required to Comply with
Environmental Laws, any reduction in the fair market value or fair rental value
of the Premises or the Complex resulting from a Hazardous Materials Occurrence
required to be remediated in order to comply with Environmental Laws, and any
loss, claim or demand by any third person or entity relating to bodily injury or
damage or loss of value of real or personal property. Tenant shall have no
obligation under this Section 20.1 for any claim, action or proceeding to the
extent covered by Landlord's indemnification obligations under Section 4.3 or
Section 4.7.

         In case any claim, action or proceeding be brought, made or initiated
against Landlord or any Landlord Indemnitee relating to any of the above
described events, acts, omissions, occurrences, or conditions, Tenant, upon
notice from Landlord, shall at its sole cost and expense, resist, or defend such
claim, action or proceeding by attorneys reasonably approved by Landlord.
Notwithstanding the foregoing, Landlord or the Landlord Indemnitee may retain
its own attorneys, and Tenant shall pay the reasonable fees and disbursements of
such attorneys (except for fees and expenses for defense of any claim, action or
proceeding brought by a Landlord Indemnitee against another Landlord Indemnitee,
which shall not be paid by Tenant) to defend or assist in defending any claim,
action or proceeding (i) involving potential liability of Five Million Dollars
($5,000,000) or more, (ii) if Landlord shall have reasonably concluded that
there may be a conflict of interest between Landlord or such Landlord Indemnitee
and Tenant in the conduct of the defense of such action, or (iii) such claim,
action or proceeding is for equitable relief against

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<PAGE>

Landlord or such Landlord Indemnitee and Tenant in the conduct of the defense of
such action, or (iii) such claim, action or proceeding is for equitable relief
against Landlord or such Landlord Indemnitee and no monetary damages are being
sought against Landlord or such Landlord Indemnitee. Tenant shall not settle any
such claim, action or proceeding against Landlord or such Landlord Indemnitee
without the consent of Landlord if such settlement involves relief other than
the payment of money. Neither Landlord nor any Landlord Indemnitee shall settle
any such claim, action or proceeding without Tenant's written consent. Any such
settlement not consented to by Tenant shall not be covered by Tenant's
indemnification hereunder.

         20.2     Limitation on Landlord's Liability. Subject to any contrary
provisions contained in this Lease, Landlord shall not be responsible for or
liable to Tenant, and Tenant hereby waives any and all claims against Landlord
and any Landlord Indemnitee for, any injury, loss, damage or liability to any
person or property in or about the Premises or in any way connected with the
Premises or this Lease, from any cause whatsoever (other than caused solely by
the negligent act or willful misconduct of Landlord or any Landlord Indemnitee)
including, without limitation, acts or omissions of persons occupying adjoining
premises or any part of the Complex adjacent to or connected with the Premises;
theft; burst, stopped or leaking water, gas, sewer or steam pipes; or gas, fire,
oil or electricity in, on or about the Premises or the Complex.

         20.3     Survival. The provisions of this Article 20 shall survive any
termination of this Lease. The provisions of Article 19 (Insurance) shall not
limit in any way Tenant's obligations under this Article 20.

21.      DAMAGE OR DESTRUCTION; APPROPRIATION

         21.1     Damage or Destruction. If the Building or any portion thereof
are damaged by fire or other casualty, Landlord shall repair the same (but not
any Alterations, trade fixtures or personal property installed in the Premises
by Tenant); provided that (a) such repairs can be made under the laws and
regulations of the federal, state and local governmental authorities having
jurisdiction within nine (9) months after the date of such damage (or in the
case of damage occurring during the last twelve (12) months of the Term,
provided that such repairs can be made within ninety (90) days after the date of
such damage), (b) such repairs are fully covered (except for any deductible) by
the proceeds of insurance or self insurance maintained by Landlord, and (c) the
damage does not affect more than fifty percent (50%) of the assessed value of
the Building.

         21.2     Notice. Landlord shall notify Tenant within sixty (60) days
after the date of damage whether or not the requirements for reconstruction and
repair described in Section 21.1 are met. If such requirements are not met,
Landlord shall have the option, exercisable within sixty (60) days after the
date of such damage either to: (a) notify Tenant of Landlord's intention to
repair such damage, in which event this Lease shall continue in full force and
effect (unless terminated by Tenant pursuant to Section 21.3 below), or (b)
notify Tenant of Landlord's election to terminate this Lease as of the date of
the damage. If such notice to terminate is given by Landlord, this Lease shall
terminate as of the date of such damage.

         21.3     Termination by Tenant. If Landlord elects to repair or is
required to repair the damage and any such repair (a) is not commenced by
Landlord within ninety (90) days after the

                                       33

<PAGE>

occurrence of such damage or destruction (or in the case of damage occurring in
the last twelve (12) months of the Term, within thirty (30) days), or (b) is not
or cannot practicably be substantially completed by Landlord within nine (9)
months after the occurrence of such damage or destruction (or in the case of
damage occurring in the last twelve (12) months of the Term, within ninety (90)
days), then in either such event Tenant may, at its option, upon written notice
to Landlord to be delivered within fifteen (15) days after receipt of Landlord's
notice or the expiration of the 90-day or 30-day, as applicable, commencement
period, elect to terminate this Lease as of the date of the occurrence of such
damage or destruction.

         21.4     Rent Adjustment. In case of termination pursuant to Sections
21.2 or 21.3 above, the Base Rent, Building Operating Expenses and Complex
Operating Expenses shall be reduced by a proportionate amount based upon the
extent to which such damage interfered with the business carried on by Tenant in
the Premises, and Tenant shall pay such reduced Base Rent, Building Operating
Expenses and Complex Operating Expenses up to the date of vacation of the
Premises. If Landlord is required or elects to make repairs, and Tenant does not
terminate this Lease pursuant to Section 21.3, this Lease shall remain in full
force and effect except that Tenant shall be entitled to a proportionate
reduction of Base Rent, Building Operating Expenses and Complex Operating
Expenses from the date of such casualty and during the period such repairs are
being made by a proportionate amount based upon the extent of interference with
Tenant's operations in the Premises. The full amount of Base Rent, Building
Operating Expenses and Complex Operating Expenses shall again become payable
upon the earlier to occur of (a) ninety (90) days after completion of such work
of repair, reconstruction or restoration, or (b) Tenant's resumption of the
conduct of business in the entire Premises. The repairs to be made by Landlord
under this Article shall not include, and Landlord shall not be required to
repair, any casualty damage to Tenant's Personal Property or any Alterations.

         21.5     Tenant Obligations. If Landlord elects or is required to
repair, reconstruct or restore the Premises after any damage or destruction,
Tenant shall be responsible at its own expense for the repair and replacement of
Tenant's Personal Property and any Alterations which Tenant elects to replace.

         21.6     No Claim. Tenant shall have no interest in or claim to any
portion of the proceeds of any property insurance or self-insurance maintained
by Landlord in connection with the damage.

         21.7     No Damages. If Landlord is required or elects to make any
repairs, reconstruction or restoration of any damage or destruction to the
Premises under any of the provisions of this Article 21, Tenant shall not be
entitled to any damages by reason of any inconvenience or loss sustained by
Tenant as a result thereof (other than the rent abatement provided in this
Article). Except as expressly provided in Section 21.4, there shall be no
reduction, change or abatement of any rental or other charge payable by Tenant
to Landlord hereunder, or in the method of computing, accounting for or paying
the same. Tenant hereby waives the provisions of Section 1932(2) and Section
1933(4) of the California Civil Code, or any other statute or law that may be in
effect at the time of a casualty under which a lease is automatically terminated
or a tenant is given the right to terminate a lease due to a casualty.

                                       34

<PAGE>

         21.8     Appropriation. If all or any part of the Premises shall be
Appropriated as a result of the exercise of the power of eminent domain or any
transfer in lieu thereof, this Lease shall terminate as to the part so taken as
of the date of taking or as of the date of final judgment, whichever is earlier,
and, in the case of a partial taking of at least twenty-five percent (25%) of
the rentable area of the Premises, either Landlord or Tenant shall have the
right to terminate this Lease as to the balance of the Premises by written
notice to the other within thirty (30) days after such date. If any material
part of the Building or Complex Common Areas shall be Appropriated as a result
of the exercise of the power of eminent domain or any transfer in lieu thereof,
such that Tenant's parking or access to or use of the Premises is materially
adversely affected, Tenant shall have the right to terminate this Lease by
written notice to Landlord within thirty (30) days of the date of taking.

         21.9     Award. In the event of any Appropriation, Landlord shall be
entitled to any and all compensation, damages, income, rent, awards, or any
interest therein whatsoever which may be paid or made in connection therewith,
and Tenant shall assign to Landlord any right to compensation or damages for the
condemnation of its leasehold interest; provided that Tenant may file a claim
for (a) Tenant's relocation expenses, and (b) the Appropriation of Tenant's
Personal Property.

         21.10    Partial Taking. In the event of a partial Appropriation of the
Premises which does not result in a termination of this Lease, the Base Rent,
Building Operating Expenses and Complex Operating Expenses shall be adjusted as
follows:

         (a)      In the event of a partial Appropriation, if this Lease is not
terminated pursuant to this Article 21, Landlord shall repair, restore or
reconstruct the Premises to a useable state; provided that Landlord shall not be
required to expend any sums other than those received pursuant to Section 21.9.

         (b)      During the period between the date of the partial
Appropriation and the completion of any necessary repairs, reconstruction or
restoration, Tenant shall be entitled to a reduction of Base Rent, Building
Operating Expenses and Complex Operating Expenses by a proportionate amount
based upon the extent of interference with Tenant's operations in the Premises;
and

         (c)      Upon completion of said repairs, reconstruction or
restoration, and thereafter throughout the remainder of the Term, the Base Rent,
Building Operating Expenses and Complex Operating Expenses shall be recalculated
based on the remaining total number of square feet of rentable area of the
Premises.

         21.11    Temporary Taking. Notwithstanding any other provision of this
Article, if an Appropriation occurs with respect to all or any portion of the
Premises for a period of twelve (12) months or less, this Lease shall remain
unaffected thereby and Tenant shall continue to pay Base Rent and Additional
Rent and to perform all of the terms, conditions and covenants of this Lease,
provided that Tenant shall have the right to terminate this Lease if the taking
continues beyond twelve (12) months. In the event of any such temporary
Appropriation, and if this Lease is not terminated, Tenant shall be entitled to
receive that portion of any award which represents

                                       35

<PAGE>

compensation for the use or occupancy of the Premises during the Term up to the
total Base Rent and Additional Rent owing by Tenant for the period of the
Appropriation, and Landlord shall be entitled to receive the balance of any
award. In the event the award is not sufficient to reimburse Tenant for the Base
Rent paid during the period of the taking, any unreimbursed Base Rent shall be
abated during the period of the taking.

         21.12    Waiver. Except as provided in this Article, Tenant hereby
waives and releases any right it may have under any Applicable Law to terminate
this Lease as a result of a taking, including without limitation Sections
1265.120 and 1265.130 of the California Code of Civil Procedure, or any similar
law, statute or ordinance now or hereafter in effect.

22.      LEASEHOLD MORTGAGES

         22.1     Leasehold Mortgage. Notwithstanding the provisions of Article
17 regarding Transfer of this Lease, but subject to the provisions of this
Article 22, Tenant shall have the right at any time and from time to time to
encumber (i) the entire (but not less than the entire) leasehold estate created
by this Lease, or (ii) any or all of Tenant's Property by one or more mortgages,
deeds of trust or other security instruments (any such mortgage, deed of trust,
or other security instrument that satisfies the requirements of this Article 22
being herein referred to as a "LEASEHOLD MORTGAGE") to secure repayment of a
loan (and associated obligations) made to Tenant for the purpose of financing
the construction of any Alterations made pursuant to the terms of this Lease or
the acquisition or leasing of any of Tenant's Property or for the long-term
financing thereof, provided that in no event shall any interest of Landlord in
the Premises, be subject or subordinate to any lien or encumbrance of any
mortgage, deed of trust or other security instrument.

         22.2     Terms of Leasehold Mortgage. Any Leasehold Mortgage shall by
its terms provide that all proceeds of any property insurance covering the
Premises and all Awards shall be payable to Landlord for application in
accordance with the provisions of this Lease and that the holder of such
Leasehold Mortgage shall give Landlord written notice of any default of Tenant
under such Leasehold Mortgage contemporaneously with the giving of such notice
to Tenant. Tenant shall deliver to Landlord promptly after execution by Tenant a
true and verified copy of any Leasehold Mortgage, and any amendment,
modification or extension thereof, together with the name and address of the
owners and holder thereof. At Tenant's request, Landlord will enter into an
agreement with Tenant and the holder of a Leasehold Mortgage, in the form of
attached EXHIBIT F, in which case such agreement will supersede any inconsistent
provisions of this Lease.

23.      LANDLORD'S RIGHT OF INSPECTION

         Landlord reserves, and shall at all reasonable times have, subject to
reasonable safety and security requirements, the right to enter the Premises to
inspect them, to perform any services to be provided by Landlord hereunder, to
submit the Premises to prospective purchasers or mortgagees, or, during the last
twelve (12) months of the Term, to prospective tenants; and to post notices of
non responsibility; all without abatement of rent; provided, however, that the
business of Tenant shall be interfered with to the least extent that is
reasonably practical and,

                                       36

<PAGE>

except in cases of emergency. Landlord shall give Tenant at least forty eight
(48) hours prior notice. Tenant may reasonably designate areas of the Premises
as confidential areas and Landlord shall not enter such areas except as
necessary in cases of emergency. Landlord shall not conduct any Hazardous
Materials remediation inside of the Building without the written approval of
Tenant, which approval shall not be unreasonably withheld.

24.      EVENT OF DEFAULT AND LANDLORD'S REMEDIES

         24.1     Events of Default. The occurrence of any of the following
shall be an "EVENT OF DEFAULT" on the part of Tenant hereunder:

         (a)      Failure to pay any part of the Base Rent or Additional Rent
herein reserved, or any other sums of money that Tenant is required to pay
hereunder at the times or in the manner herein provided, when such failure shall
continue for a period of ten (10) days after written notice thereof from
Landlord to Tenant; any such notice shall be deemed to be the notice required
under California Code of Civil Procedure Section 1161. No such notice shall be
deemed a forfeiture or a termination of this Lease unless Landlord expressly so
elects in such notice.

         (b)      Failure to perform any nonmonetary provision of this Lease
when such failure shall continue for a period of thirty (30) days, or such other
period as is expressly set forth herein, after written notice thereof from
Landlord to Tenant; any such notice shall be deemed to be the notice required
under California Code of Civil Procedure Section 1161; provided that if the
nature of the default is such that more than thirty (30) days are reasonably
required for its cure, then an Event of Default shall not be deemed to have
occurred if Tenant shall commence such cure within said thirty (30) day period
and thereafter diligently and continuously prosecute such cure to completion. No
such notice shall be deemed a forfeiture or a termination of this Lease unless
Landlord expressly so elects in such notice.

         (c)      Tenant shall specifically admit in writing its inability to
pay its debts generally as they become due, file a petition in bankruptcy,
insolvency, reorganization, dissolution or liquidation under any law or statute
of any government or any subdivision thereof either now or hereafter in effect,
make an assignment for the benefit of its creditors, consent to or acquiesce in
the appointment of a receiver of itself or of the whole or any substantial part
of the Premises.

         (d)      A court of competent jurisdiction shall enter an order,
judgment or decree appointing a receiver of Tenant or of the whole or any
substantial part of the Premises and such order, judgment or decree shall not be
vacated, set aside or stayed within sixty (60) days after the date of entry of
such order, judgment, or decree, or a stay thereof shall be thereafter set
aside.

         (e)      A court of competent jurisdiction shall enter an order,
judgment or decree approving a petition filed against Tenant under any
bankruptcy, insolvency, reorganization, dissolution or liquidation law or
statute of the Federal government or any state government or any subdivision of
either now or hereafter in effect, and such order, judgment or decree shall not
be vacated, set aside or stayed within sixty (60) days from the date of entry of
such order, judgment or decree, or a stay thereof shall be thereafter set aside.

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<PAGE>

         24.2     Landlord's Remedies. Upon the occurrence of an Event of
Default, Landlord shall have the following rights and remedies:

         (a)      The right to terminate this Lease, in which event Tenant shall
immediately surrender possession of the Premises in accordance with Article 26,
and pay to Landlord all Base Rent, Additional Rent and other charges and amounts
due from Tenant hereunder to the date of termination.

         (b)      The rights and remedies described in California Civil Code
Section 1951.2, including without limitation, the right to recover the worth at
the time of award of the amount by which the Base Rent, Additional Rent and
other charges payable hereunder for the balance of the Term after the time of
award exceed the amount of such rental loss for the same period that Tenant
proves could be reasonably avoided, as computed pursuant to subdivision (b) of
said Section 1951.2, and the right to recover any 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 which, without limiting the generality of the
foregoing, includes unpaid taxes and assessments, any direct costs or expenses
incurred by Landlord in recovering possession of the Premises, maintaining or
preserving the Premises after such default, preparing the Premises for reletting
to a new Tenant, any repairs or alterations to the Premises for such reletting,
leasing commissions, architect's fees and any other costs necessary or
appropriate either to relet the Premises or, if reasonably necessary in order to
relet the Premises, to adapt them to another beneficial use by Landlord and such
amounts in addition to or in lieu of the foregoing as may be permitted from time
to time by applicable California law.

         (c)      The rights and remedies described in California Civil Code
Section 1951.4 that allow Landlord to continue this Lease in effect and to
enforce all of its rights and remedies under this Lease, including the right to
recover Base Rent, Additional Rent and other charges payable hereunder as they
become due, for so long as Landlord does not terminate Tenant's right to
possession. Acts of maintenance or preservation, efforts to relet the Premises
or the appointment of a receiver upon Landlord's initiative to protect its
interest under this Lease shall not constitute a termination of Tenant's right
to possession.

         (d)      The right and power, as attorney in fact for Tenant, to enter
and to sublet the Premises, to collect rents from all subtenants and to provide
or arrange for the provision of all services and fulfill all obligations of
Tenant under the Permitted Subleases and Landlord is hereby authorized on behalf
of Tenant, but shall have absolutely no obligation, to provide such services and
fulfill such obligations and to incur all such expenses and costs as Landlord
deems necessary in connection therewith. Tenant shall be liable immediately to
Landlord for all direct costs and expenses Landlord reasonably incurs in
collecting such rents and arranging for or providing such services or fulfilling
such obligations. Landlord is hereby authorized, but not obligated, to relet the
Premises or any part thereof on behalf of Tenant, to incur such expenses as may
be necessary to effect a relet and make said relet for such term or terms, upon
such conditions and at such rental as Landlord in its sole discretion may deem
proper. Tenant shall be liable immediately to Landlord for all reasonable costs
Landlord incurs in reletting the

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<PAGE>

Premises including, without limitation, brokers' commissions, expenses of
remodeling the Premises required by the reletting. If Landlord relets the
Premises or any portion thereof, such reletting shall not relieve Tenant of any
obligation hereunder, except that Landlord shall apply the rent or other
proceeds actually collected by it as a result of such reletting against any
amounts due from Tenant hereunder to the extent that such rent or other proceeds
compensate Landlord for the nonperformance of any obligation of Tenant
hereunder. Such payments by Tenant shall be due at such times as are provided
elsewhere in this Lease, and Landlord need not wait until the termination of
this Lease, by expiration of the Term hereof or otherwise, to recover them by
legal action or in any other manner. Landlord may execute any lease made
pursuant hereto in its own name, and the Tenant thereunder shall be under no
obligation to see to the application by Landlord of any rent or other proceeds,
nor shall Tenant have any right to collect any such rent or other proceeds.
Landlord shall not by any reentry or other act be deemed to have accepted any
surrender by Tenant of the Premises or Tenant's interest therein, or be deemed
to have otherwise terminated this Lease, or to have relieved Tenant of any
obligation hereunder, unless Landlord shall have given Tenant express written
notice of Landlord's election to do so as set forth herein.

         (e)      The right to have a receiver appointed upon application by
Landlord to take possession of the Premises and to collect the rents or profits
therefrom and to exercise all other rights and remedies pursuant to Section
24.2(d).

         (f)      The right to enjoin, and any other remedy or right now or
hereafter available to a Landlord against a defaulting Tenant under the laws of
the State of California or the equitable powers of its courts, and not otherwise
specifically reserved herein.

         24.3     Waiver of Notice and Redemption. Except as otherwise expressly
provided in this Article 24, Tenant hereby expressly waives, so far as permitted
by law, the service of any notice of intention to enter or re-enter provided for
in any statute, or of the institution of legal proceedings to that end, and
Tenant, for and on behalf of itself and all persons claiming through or under
Tenant, also waives any right of redemption or relief from forfeiture under
California Code of Civil Procedure Sections 1174 or 1179, or under any other
present or future law, if Tenant is evicted or Landlord takes possession of the
Premises by reason of any Event of Default.

         24.4     Rights Cumulative. The various rights and remedies reserved to
Landlord herein, including those not specifically described herein, shall be
cumulative and shall be in addition to every other right or remedy provided for
in this Lease or now or hereafter existing at law or in equity and the exercise
of the rights or remedies provided for in this Lease or now or hereafter
existing at law or in equity shall not preclude the simultaneous or later
exercise by Landlord of any or all other rights and remedies.

25.      LANDLORD'S RIGHT TO CURE DEFAULTS

         If Tenant shall fail or neglect to do or perform any act or thing
herein provided by it to be done or performed and such failure shall not be
cured within any applicable grace period provided in Article 24, then Landlord
shall have the right, but shall have no obligation, to pay any Real Property
Taxes payable by Tenant hereunder, discharge any lien, take out, pay for and

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maintain any insurance required under Article 19, or do or perform or cause to
be done or performed any such other act or thing (entering upon the Premises for
such purposes, if Landlord shall so elect), and Landlord shall not be or be held
liable or in any way responsible for any loss, disturbance, inconvenience,
annoyance or damage resulting to Tenant on account thereof, and Tenant shall
repay to Landlord upon demand the entire reasonable cost and expense thereof,
including, without limitation, compensation to the agents, consultants and
contractors of Landlord and reasonable attorneys' fees and expenses. Landlord
may act upon shorter notice or no notice at all if necessary in Landlord's
judgment to meet an emergency situation or governmental or municipal time
limitation; provided that Landlord shall provide Tenant with notice of any such
act taken promptly thereafter. Landlord shall not be required to inquire into
the correctness of the amount or validity of any Imposition or lien that may be
paid by Landlord pursuant to this Article 25, and Landlord shall be duly
protected in paying the amount of any such Imposition or lien claimed, and, in
such event, Landlord shall also have the full authority, in Landlord's sole
judgment and discretion and without prior notice to or approval by Tenant, to
settle or compromise any such lien or Imposition. Any act or thing done by
Landlord pursuant to the provisions of this Article 25 shall not be or be
construed as a waiver of any default by Tenant, or as a waiver of any term,
covenant, agreement or condition herein contained or of the performance thereof.
If Tenant disputes the reasonableness of any costs and expenses incurred by
Landlord in connection with any actions under this Article 25, such dispute
shall be subject to arbitration pursuant to Article 39 hereof; provided however
that the party not prevailing in such arbitration proceedings shall pay 100% of
the costs and expenses thereof.

26.      SURRENDER OF THE PREMISES

         Upon the termination of this Lease, whether at the expiration of the
Term or prior thereto pursuant to any provision hereof, Tenant shall
decommission the facilities and remove all containers of Tenant's Hazardous
Materials from the Complex and remediate, to the extent required to comply with
Environmental Laws, any Tenant's Hazardous Materials on, from, or under the
Premises and surrender to Landlord the Premises in good order and repair,
reasonable wear and tear and damage resulting from Landlord's acts excepted and
subject to the effects of any damage, destruction or Appropriation, as to which
the provisions of Article 21 shall govern, and free and clear of all letting and
occupancies and free and clear of all liens and encumbrances caused by Tenant or
not approved in writing by Landlord. Upon any termination of this Lease, all
Alterations (other than Tenant's Property) shall automatically and without
further act by Landlord or Tenant, become the property of Landlord, free and
clear of any claim or interest therein on the part of Tenant or anyone claiming
under Tenant, and without payment therefor by Landlord. Any of Tenant's Property
that remains on the Premises later than thirty (30) days (or ninety (90) days if
the termination is a result of casualty or Appropriation) after the Termination
Date may, at the option of Landlord, be deemed to have been abandoned by Tenant
and may either be retained by Landlord as its property or disposed of, without
accountability, in such manner as Landlord may determine in its sole discretion.
At the expiration or earlier termination of this Lease, Tenant shall execute,
acknowledge and deliver to Landlord, within ten (10) days after written demand
from Landlord to Tenant, any quitclaim deed or other document required by any
reputable title company, licensed to operate

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<PAGE>

in the State of California, to remove the cloud or encumbrance created by this
Lease from the Building.

27.      HAZARDOUS MATERIALS

         27.1     Hazardous Materials Defined. As used herein the term
"HAZARDOUS MATERIALS" shall mean any agent, waste, substance or material which
has been or is hereafter determined by any state, federal or local governmental
authority to be capable of posing a risk of injury to health, safety or property
including, without limitation, all of those materials and substances designated
or defined as "infectious," "radioactive," "hazardous," "dangerous," or "toxic"
by (a) the Environmental Protection Agency, the California Water Quality Control
Board, the Department of Labor, the California Department of Industrial
Relations, the Department of Transportation, the Department of Agriculture, the
Consumer Product Safety Commission, the Department of Health and Human Services,
the Food and Drug Agency, or any other governmental agency now or hereafter
authorized to regulate materials and substances in the environment, or by (b)
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. 9601 et seq., as amended; the Hazardous Materials Transportation
Act, 49 U.S.C. 1801 et seq., as amended, the Resource Conservation and Recovery
Act, 42 U.S.C. 6901 et seq., as amended, the Hazardous Waste Control Law,
California Health & Safety Code 25100 et seq., as amended, Section 66680
through 666686 of Title 22 of the California Administrative Code, Division 4,
Chapter 30, as amended; and in the regulations adopted and publications
promulgated pursuant to said laws.

         27.2     Tenant's Use of Hazardous Materials. Tenant shall not cause or
permit in, on, from or under the Premises, or cause or permit Tenant's Agents to
cause in, on, from, under, or about the Complex, any Hazardous Materials to be
used, stored, discharged, or released except in strict compliance with the terms
of this Lease. Without limiting the generality of the foregoing, Tenant, at its
sole cost, shall comply with all Environmental Laws relating to Tenant's
Hazardous Materials. If any Hazardous Materials Occurrence results in
contamination of the Premises or the Complex or any soil or ground water in,
under or about the Premises or the Complex, Tenant shall notify Landlord as soon
as possible, but in any event within seven (7) calendar days after Tenant
becomes aware of such Hazardous Materials Occurrence, and Tenant, at its
expense, shall promptly take all actions necessary to remove such Hazardous
Materials to the extent required to comply with Environmental Laws. The
termination of this Lease shall not terminate or reduce the liability or
obligations of Tenant under this Article 27, or as may be required by law, to
clean up, monitor or remove any Tenant's Hazardous Materials from the Premises,
or the Complex or any other property.

         Tenant shall not suffer any lien to be recorded against the Premises or
the Complex as a consequence of any Hazardous Materials Occurrence, including
any so called state, federal or local "super fund" lien related to the "clean
up" of any Tenant's Hazardous Materials; provided, however, that Tenant shall
have the right to contest any such lien in accordance with the provisions of
Section 15.2 above.

         27.3     Landlord's Investigation. In the event Hazardous Materials are
discovered to have been released, disposed, discharged or stored in or about the
Premises or the Complex not in

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<PAGE>

compliance with Environmental Laws, and Landlord has reasonable cause to believe
that such Hazardous Materials are Tenant's Hazardous Materials, then Landlord
shall have the right to appoint a consultant reasonably acceptable to Tenant; to
conduct, at Tenant's expense, an investigation to determine whether an- Tenant's
Hazardous Materials have been released, disposed, discharged or stored in or
about the Premises or the Complex not in compliance with Environmental Laws and
to determine the corrective measures, if any, required to be taken with respect
to such Hazardous Materials so as to comply with Environmental Laws. Tenant, at
its expense, shall comply with all recommendations of the consultant. If it is
determined that such Hazardous Materials are not Tenant's Hazardous Materials,
or that such Hazardous Materials are in compliance with Environmental Laws, then
Landlord shall reimburse Tenant for any costs incurred by Landlord and paid by
Tenant under the terms of this Article 27. If it is determined that such
Hazardous Materials are Tenant's Hazardous Materials and are not in compliance
with Environmental Laws, and Landlord has incurred costs for such investigation
or remediation that have not been reimbursed by Tenant, Tenant shall promptly
reimburse Landlord for such costs and comply with Section 27.2; provided that if
Tenant disputes such determination such payment shall not be due unless and
until the dispute resolution affirms the results.

         27.4     Tenant's Investigation. If Tenant discovers Hazardous
Materials on or about the Complex that are not in compliance with Environmental
Laws, and (a) such Hazardous Materials materially impair Tenant's use of the
Premises, (b) Tenant has reasonable cause to believe that such Hazardous
Materials are not Tenant's Hazardous Materials, and (c) Landlord does not within
thirty (30) days after receipt of notice from Tenant commence conducting an
investigation to determine whether such Hazardous Materials are Tenant's
Hazardous Materials (in which case Section 27.3 shall apply) and whether or not
such Hazardous Materials are in compliance with Environmental Laws; and if they
are not Tenant's Hazardous Materials and are not in compliance with
Environmental Laws, take (or cause to be taken) corrective measures as required
to comply with Environmental Laws to the extent necessary such that the material
impairment of Tenant's use is eliminated or reduced to the extent reasonably
possible (provided that in no event shall Landlord by required to remediate to
standards more stringent than those required to comply with Environmental Laws),
then, in such case Tenant shall have the following rights: Tenant may appoint a
reputable consultant reasonably acceptable to Landlord to conduct an
investigation to determine whether or not such Hazardous Materials are Tenant's
Hazardous Materials and are in compliance with Environmental Laws, and if such
investigation determines that such Hazardous Materials are not Tenant's
Hazardous Materials and are not in compliance with Environmental Laws, the
measures necessary to eliminate or reduce to the extent reasonably possible the
material impairment of Tenant's use of the Premises, but not in excess of those
required in order to comply with Environmental Laws. If the Hazardous Materials
are not Tenant's Hazardous Materials and are not in compliance with
Environmental Laws, and if in fact Tenant's use of the Premises is materially
impaired, then the costs of such investigation shall be promptly reimbursed by
Landlord, provided that, if Landlord disputes the results of such investigation,
such payment shall not be due unless and until the dispute resolution affirms
the results. If within thirty (30) days after receipt of the results of such
investigation Landlord does not cause such corrective measures to be commenced
and thereafter diligently prosecuted, Tenant shall be entitled to undertake such
measures and the reasonable out-of-pocket costs and expenses of such measures
shall be

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<PAGE>

promptly reimbursed by Landlord provided, that if Landlord disputes the results
of such investigation, such payment shall not be due unless and until the
dispute resolution affirms the results.

         27.5     Dispute Resolution. Any dispute between Landlord and Tenant as
to whether or not Hazardous Materials are Tenant's Hazardous Materials or as to
the necessity or extent of corrective measures required to be taken pursuant to
Section 27.3 or Section 27.4 that cannot be resolved by good faith negotiations
between Landlord and Tenant shall be resolved by arbitration pursuant to Article
39. In the event of arbitration under this Section 27.5, the party not
prevailing in such arbitration shall pay 100% of the expenses of such
arbitration.

         27.6     Notices. Each of Landlord and Tenant shall immediately notify
the other party of any inquiry, test, investigation or enforcement proceeding
relating to the Complex by or against Landlord or Tenant or the Premises or the
Complex that becomes known to such party concerning any Hazardous Materials.

         27.7     Inventory. Upon or prior to the Commencement Date, Tenant
shall provide to Landlord a complete list of all Hazardous Materials expected to
be employed by Tenant within the Premises. Throughout the term of the Lease,
Tenant shall continue to update this list of Hazardous Materials.

         27.8     Limitation of Tenant's Liability. Tenant shall have no
responsibility whatsoever for the remediation of any Hazardous Materials that
are not Tenant's Hazardous Materials (see Section 4.3 above).

28.      SUBORDINATION

         Without the necessity of any additional document, this Lease shall be
subject and subordinate at all times to: (a) all reciprocal easement agreements
and all ground leases or underlying leases which may now exist or hereafter be
executed affecting the Premises or the Complex or both, and (b) the lien of any
mortgage or deed of trust which may now exist or hereafter be executed,
(provided that such subsequent ground lease, mortgage or deed of trust shall
provide that the rights of Tenant under this Lease shall not be disturbed so
long as Tenant is not in default hereunder beyond any applicable cure period) in
any amount for which the Premises, the Complex, ground leases or underlying
leases, or Landlord's interest or estate in any of said items, is specified as
security. Notwithstanding the foregoing, Landlord shall have the right to
subordinate or cause to be subordinated to this Lease any of the items referred
to in clause (a) or (b) above. In the event that any ground lease or underlying
lease terminates for any reason or any mortgage or deed of trust is foreclosed
or a conveyance in lieu of foreclosure is made for any reason, Tenant shall,
notwithstanding any subordination, attorn to and become the tenant of the
successor in interest to Landlord, provided that the rights and possession of
Tenant hereunder shall not be disturbed so long as Tenant is not in default
hereunder beyond any applicable cure period. The provisions of this Article 28
shall be self-operative and no further instrument shall be required. Tenant
covenants and agrees, however, to execute and deliver, upon demand by Landlord
and in the form requested by Landlord, any additional documents evidencing the
priority or subordination of this Lease with respect to any such ground leases,

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<PAGE>

underlying leases, reciprocal easement agreements or similar documents or
instruments, or with respect to the lien of any such mortgage or deed of trust.
Tenant agrees to send to any mortgagees, or deed of trust holders, by registered
mail, a copy of any notice of default served by Tenant upon the Landlord,
provided that prior to such notice, Tenant has been notified, in writing (by way
of notice of assignment of rents or otherwise) of the addresses of such
mortgagees, deed of trust holders and/or ground lessors shall have an additional
thirty (30) days within which to cure such default, or if such default is other
than a breach of the covenant of quiet enjoyment and is not reasonably
susceptible of cure within that time, then such additional time as may be
reasonably necessary up to one hundred eighty (180) days, if within such thirty
(30) days, any mortgagee, deed of trust holder and/or ground lessor has
commenced and is diligently pursuing the remedies necessary to cure such default
(including but not limited to commencement of foreclosure proceedings).

29.      USE OF NAME

         Tenant acknowledges and agrees that the names "The Leland Stanford
Junior University," "Stanford" and "Stanford University," and all variations
thereof, are proprietary to Landlord. Tenant shall not use any such name or any
variation thereof or identify Landlord in any promotional advertising or other
promotional materials to be disseminated to the public or any portion thereof or
use any trademark, service mark, trade name or symbol of Landlord or that is
associated with it, without Landlord's prior written consent, which may be given
or withheld in Landlord's sole discretion. Notwithstanding the foregoing, Tenant
may use the term "Stanford Research Park" only to identify the location of the
Premises. Landlord acknowledges and agrees that the names "Genencor" and
"Genencor International, Inc." are proprietary to Tenant. Landlord shall not use
such name or any variation thereof or identify Tenant in promotional materials
without Tenant's prior written consent. Notwithstanding the foregoing, Landlord
may identify Tenant as a tenant of the Stanford Research Park.

30.      SIGNS

         No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed, printed or affixed on or to any part of the outside of the
Premises or any exterior windows of the Premises without the written consent of
Landlord first had and obtained, which consent shall not be unreasonably
withheld or delayed, and if Tenant does not remove any such sign, placard,
picture, advertisement, name or notice that has not been consented to by
Landlord within five (5) business days after notice from Landlord, Landlord
shall have the right to remove the same at the expense of Tenant.
Notwithstanding the foregoing, subject to Landlord's reasonable approval of such
signs, Tenant shall have the right to modify the existing Complex monument sign
to identify Tenant's location at the Premises, place a sign on the glass entry
to the Premises and place directional signs in the Complex Common Areas. If
Tenant is allowed to print or affix or in any way place a sign in, on, or about
the Premises, then upon expiration or other sooner termination of this Lease,
Tenant at Tenant's sole cost and expense shall both remove such sign and repair
all damage in such a manner as to restore all aspects of the appearance of the
Premises to the condition prior to the placement of said sign. All approved
signs or lettering on outside doors shall be printed, painted, affixed or
inscribed at the expense of Tenant by a person approved by Landlord, such
approval not to be unreasonably withheld or delayed. Tenant shall

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<PAGE>

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

31.      REPRESENTATIONS AND WARRANTIES

         31.1     Tenant Representations. Tenant hereby represents and warrants
to Landlord as follows:

         (a)      Tenant is a corporation duly formed and validly existing under
the laws of the state of identified in the Basic Lease Information and is
qualified to do business under the laws of the State of California. Tenant has
full corporate power and authority to enter into and perform its obligations
under this Lease and to develop, construct and operate the Premises as
contemplated by this Lease.

         (b)      Tenant has taken all necessary action to authorize the
execution, delivery and performance of this Lease and this Lease constitutes the
legal, valid, and binding obligation of Tenant.

         (c)      Tenant has the right, power, legal capacity and authority to
enter into and perform its obligations under this Lease and no approvals or
consents of any person are required in connection with the execution and
performance of this Lease except any approvals or consents that have been
obtained. The execution and performance of this Lease will not result in or
constitute any default or event that with notice or the lapse of time or both,
would be a default, breach or violation of the organizational instruments
governing Tenant or any agreement or any order or decree of any court or other
governmental authority to which Tenant is a party or to which it is subject.

         31.2     Landlord Representations. Landlord hereby represents and
warrants to Tenant as follows:

         (a)      Landlord is a body having corporate powers under the laws of
the State of California. Landlord has full corporate power and authority to
enter into and perform its obligations under this Lease.

         (b)      Landlord has taken all necessary action to authorize the
execution, delivery and performance of this Lease and this Lease constitutes the
legal, valid, and binding obligation of Landlord.

         (c)      Landlord has the right, power, legal capacity and authority to
enter into and perform its obligations under this Lease and no approvals or
consents of any person are required in connection with the execution and
performance, of this Lease except any approvals or consents that have been
obtained. The execution and performance of this Lease will not result in or
constitute any default or event that with notice or the lapse of time or both,
would be a default, breach or violation of the organizational instruments
governing Landlord or any material

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<PAGE>

agreement or any order or decree of any court or other governmental authority to
which Landlord is a party or to which it is subject.

         (d)      As of the date hereof there are no existing underlying ground
leases on, or mortgages or deeds of trust encumbering, the Complex.

32.      NO WAIVER BY LANDLORD

         No failure by Landlord to insist upon the strict performance of any
term, covenant, agreement, provision, condition or limitation of this Lease or
to exercise any right or remedy upon a breach thereof, and no acceptance by
Landlord of full or partial rent during the continuance of any such breach,
shall constitute a waiver of any such breach or of such term, covenant,
agreement, provision, condition or limitation. No term, covenant, agreement,
provision, condition or limitation of this Lease and no breach thereof may be
waived, altered or modified except by a written instrument executed by Landlord.
No waiver of any breach shall affect or alter this Lease but each and every
term, covenant, agreement, provision, condition and limitation of this Lease
shall continue in full force and effect with respect to any other then existing
or subsequent breach.

33.      CERTIFICATES OF ESTOPPEL

         33.1     Tenant, at any time and from time to time upon not less than
ten (10) days' prior written notice from Landlord, will execute, acknowledge and
deliver to Landlord or to any party designated by Landlord, a certificate of
Tenant stating: that Tenant has accepted the Premises (or, if Tenant has not
done so, that Tenant has not accepted the Premises and specifying the reasons
therefor), (b) the Commencement Date and Expiration Date of this Lease, (c) that
this Lease is unmodified and in full force and effect (or, if there have been
modifications, that same is in full force and effect as modified and stating the
modifications), (d) whether or not there are then existing any defenses against
the enforcement of any of the obligations of Tenant under this Lease (and, if
so, specifying same), (e) to the best of Tenant's knowledge, whether or not
there are then existing any defaults by Landlord in the performance of its
obligations under this Lease (and, if so, specifying same), (f) the dates, if
any, to which the Base Rent and Additional Rent and other charges under this
Lease have been paid, and (g) any other information that may reasonably be
required by any of such persons, subject to reasonable restrictions on
confidentiality.

         33.2     Landlord shall at any time upon not less than ten (10) days'
prior written notice from Tenant execute and deliver to Tenant, or to such other
party as may be specified by Tenant, a statement in writing (i) certifying that
thus Lease is unmodified and in full force and effect (or, if modified, stating
the nature of such modification and certifying that this Lease, as so modified,
is in full force and effect) and the date to which the rent and other charges
are paid in advance, if any, (ii) specifying the Commencement Date and
Expiration Date of this Lease, and (iii) acknowledging that there are not, to
Landlord's knowledge, any uncured defaults on the part of Tenant hereunder, or
specifying such defaults, if any, are claimed.

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<PAGE>

34.      NO PARTNERSHIP

         It is expressly understood that neither Tenant nor Landlord is or
becomes, in any way or for any purpose, a partner of the other in the conduct of
its business, or otherwise, or joint venturer or a member of a joint enterprise
with the other, or agent of the other by reason of this Lease or otherwise.
Tenant is and shall be an independent contractor with respect to the Lease and
Premises.

35.      NO DEDICATION

         This Lease shall not be, nor be deemed or construed to be, a dedication
to the public of the Premises, the Building, or any other portion of the
Complex.

36.      NO THIRD PARTY BENEFICIARIES

         This Lease shall not confer nor be deemed nor construed to confer upon
any person or entity, other than the parties hereto any right or interest,
including, without limiting the generality of the foregoing, any third party
beneficiary status or any right to enforce any provision of this Lease.

37.      NOTICES

         Any notice, consent or other communication required or permitted under
this Lease shall be in writing and shall be delivered by hand, sent by air
courier, sent by prepaid registered or certified mail with return receipt
requested, or sent by facsimile with a copy sent by overnight delivery, and
shall be deemed to have been given upon receipt. All notices shall be addressed
as appropriate to the addresses set forth in the Basic Lease Information (or to
such other or further addresses as the parties may designate by notice given in
accordance with this section). Any notice requesting Landlord's approval of any
matter that, pursuant to the terms of this Lease is subject to a deadline for
Landlord's reply, shall state the deadline and cite the applicable provision of
this Lease. If Tenant fails to so specify the deadline and the applicable Lease
provision, such deadline shall not apply.

38.      FINANCIAL STATEMENTS

         In the event Tenant tenders to Landlord any information on the
financial stability, credit worthiness or ability of Tenant to pay the rent due
and owing under the Lease, then Landlord shall be entitled to rely upon the
information provided in determining whether or not to enter into this Lease with
Tenant and Tenant hereby represents and warrants to Landlord the following: (i)
that all documents provided by Tenant to Landlord are true and correct copies in
all material respects of the originals; (ii) Tenant has not withheld any
information from Landlord that is material to Tenant's credit worthiness,
financial condition or ability to pay the rent; (iii) all written information
supplied by Tenant to Landlord is true, correct and accurate in all materials
respects (to Tenant's knowledge in the case of information supplied by a third
party); and (iv) no part of the information supplied by Tenant to Landlord
contains any materially misleading or

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<PAGE>

fraudulent statements (to Tenant's knowledge in the case of information supplied
by a third party).

39.      ARBITRATION OF DISPUTES

         No dispute relating to this Lease shall be subject to arbitration
unless a specific provision of this Lease expressly states that such dispute is
subject to arbitration (which provisions are: Sections 10.4, 11.5, 11.8(e),
11.12, 19.2, and 27.5 and Article 25) or the parties subsequently agree in
writing to submit the dispute to arbitration. Any dispute, controversy or claim
that this Lease expressly requires to be submitted to arbitration shall be
settled by arbitration in Santa Clara County, California. To, the extent not
inconsistent with the provisions of this Article 39, said arbitration shall be
conducted in accordance with the Rules of Commercial Arbitration of the American
Arbitration Association or its successor, and the provisions of California Code
of Civil Procedure Section 1283.05, or any successor or amended statute or law
containing similar provisions. Arbitration required to be conducted pursuant
hereto may be initiated by either party by notice to the other party of the
dispute to be arbitrated and of a list of acceptable arbitrators. If the parties
cannot agree on a single arbitrator within ten (10) business days after the date
either party sends such written notice and list of acceptable arbitrators to the
other party, the arbitrator shall be appointed by the Superior Court of Santa
Clara County pursuant to the provisions of California Code of Civil Procedure
Section 1281.6, or any successor or amended statute or law containing similar
provisions. The parties jointly or separately may provide the court with a list
of names of acceptable arbitrators. Promptly after the arbitrator's appointment,
the arbitrator shall meet with the parties, jointly or separately and shall
attempt to resolve the dispute, controversy or claim submitted to arbitration
hereunder, and failing such resolution, the arbitrator shall promptly decide the
matter in accordance with applicable law and deliver a written decision to each
of the parties. The arbitrator shall have no power to modify the provisions of
this Lease and the arbitrator's jurisdiction is limited accordingly. Except as
otherwise expressly stated herein, the expenses of such arbitration shall be
borne equally by Landlord and Tenant. The provisions of this Lease relating to
arbitration shall be specifically enforceable and shall be subject to the
discretion of the court as provided in Part 3, Title 9 (beginning with Section
1280) of the California Code of Civil Procedure. All actions brought under said
Title 9 and all actions pertaining to these arbitration provisions shall be
brought in the Superior Court of Santa Clara County or the U.S. District Court
for the Northern District of California. Subject to the provisions of this
Lease, an award of the arbitrator selected by the parties or by the court shall
be final and binding upon the parties hereto and judgment may be entered upon it
in a court having jurisdiction pursuant to Section 42.9 hereof.

         NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY
DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE ABOVE `ARBITRATION OF
DISPUTES' PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW
AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED
IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP
YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS SUCH RIGHTS ARE
SPECIFICALLY INCLUDED IN THE `ARBITRATION OF DISPUTES' PROVISION. IF YOU REFUSE
TO

                                       48

<PAGE>

SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO
ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR
AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. WE HAVE READ AND
UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS
INCLUDED IN THE `ARBITRATION OF DISPUTES' PROVISION TO NEUTRAL ARBITRATION.

         Consent to neutral arbitration by JGS (Landlord); by SLM (Tenant).

40.      HOLDING OVER

         Any holding over after the expiration of the Term with the consent of
Landlord shall be on a month-to-month basis at a Base Rent equal to (200%) of
the latest Base Rent payable by Tenant hereunder prior to such expiration if the
prior Lease Year was during the initial Term; or if such prior Lease Year was
during a Renewal Term, one hundred twenty-five percent (125%) of the latest Base
Rent payable wider this Lease, in any case excluding any abatements resulting
from any event of damage, or destruction, together with an amount estimated by
Landlord for the monthly Additional Rent payable under this Lease, and shall
otherwise be on the terms and conditions herein specified so far as applicable.
Any holding over without Landlord's consent shall constitute a default by Tenant
and entitle Landlord to exercise any or all of its remedies as provided in
Article 24 hereof, notwithstanding that Landlord may elect to accept one or more
payments of Base Rent and Additional Rent from Tenant.

41.      NONDISCRIMINATION

         In performing the obligations set forth herein, Tenant shall not
discriminate against any person on the basis of race, gender, age, creed,
cohabitation, sexual preference, color, ancestry, national origin, heritage,
religion or physical or mental disability.

42.      GENERAL PROVISIONS

         42.1     Memorandum. This Lease shall not be recorded. However, at the
request of either party, the parties hereto shall execute and acknowledge a
memorandum hereof in recordable form that Landlord shall file for recording in
the Official Records of Santa Clara County.

         42.2     Broker's Commissions. Each of Landlord and Tenant warrants to
the other party that it has had dealings with no brokers or agents in connection
with the negotiation of this Lease and that it knows of no broker or agent who
is entitled to a commission in connection with this Lease. Each party agrees to
indemnify the other party, and hold it harmless, from and against any real
estate brokerage commissions or other such obligations incurred by the
indemnifying party in connection with the negotiation or execution of this
Lease.

         42.3     Severability. In case any one or more of the provisions of
this Lease shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Lease, and this Lease shall be construed as if such
invalid, illegal or unenforceable provisions had riot been contained herein.

                                       49

<PAGE>

         42.4     Time of the Essence. Time is hereby expressly declared to be
of the essence of this Lease and of each and every term, covenant, agreement,
condition and provision hereof.

         42.5     Headings. Article, Section and subsection headings in this
Lease are for convenience only and are not to be construed as a part of this
Lease or in any way limiting or amplifying the provisions hereof.

         42.6     Lease Construed as a Whole. The language in all parts of this
Lease shall in all cases be construed as a whole according to its fair meaning
and not strictly for or against either Landlord or Tenant. The parties
acknowledge that each party and its counsel have reviewed this Lease and
participated in its drafting and therefore that the rule of construction that
any ambiguities are to be resolved against the drafting party shall not be
employed nor applied in the interpretation of this Lease.

         42.7     Meaning of Terms. The term "Premises" includes the space
leased hereby and any improvements now or hereafter installed therein or
attached thereto. The term "Landlord" or any pronoun used in place thereof
includes the plural as well as the singular and the successors and assigns of
Landlord. The term "Tenant" or any pronoun used in place thereof includes the
plural as well as the singular and individuals, firms, association, partnerships
and corporations, and their and each of their respective heirs, executors,
administrators, successors and permitted assigns, according to the context
hereof. The term "person" includes the plural as well as the singular and
individuals, firms, associations, partnerships and corporations. Words used in
any gender include other genders. If there be more than one Tenant the
obligations of Tenant hereunder are joint and several.

         42.8     Attorneys' Fees. In the event of any action or proceeding at
law or in equity between Landlord and Tenant to enforce or interpret any
provision of this Lease or to protect or establish any right or remedy of either
party hereunder, the party not prevailing in such action or proceeding shall pay
to the prevailing party all costs and expenses, including without limitation,
reasonable attorneys' fees and expenses (including attorneys' fees and expenses
of in-house attorneys), incurred therein by such prevailing party and if such
prevailing party shall recover judgment in any such action or proceeding, such
costs, expenses and attorneys' fees shall be included in and as a part of such
judgment.

         42.9     California Law; Forum. The laws of the State of California,
other than those laws denominated choice of law rules which would require the
application of the laws of another forum, shall govern the validity,
construction and effect of this Lease. This Lease is made and all obligations
hereunder arise and are to be performed in the County of Santa Clara, State of
California. Any action which in any way involves the rights, duties and
obligations of the parties hereto may (and if against Landlord, shall) be
brought in the courts of the State of California located in Santa Clara County
or in the United States District Court for the Northern District of California,
and the parties hereto hereby submit to the personal jurisdiction of said
courts.

                                       50

<PAGE>

         42.10    Binding Agreement. Subject to the restrictions on assignment
and subletting contained herein, the terms, covenants and agreements contained
in this Lease shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns.

         42.11    Entire Agreement. This instrument, together with the exhibits
and attachments hereto, all of which are incorporated herein by reference,
constitutes the entire agreement between Landlord and Tenant with respect to the
subject matter hereof and supersedes all prior offers, negotiations, oral and
written. This Lease may not be amended or modified in any respect whatsoever
except by an instrument in writing signed by Landlord and Tenant.

         42.12    Finances. Tenant further agrees to execute any amendments
required by a lender to enable Landlord to obtain financing, so long as Tenant's
rights hereunder are not materially affected.

         42.13    Quiet Enjoyment. Tenant, upon paying the Base Rent and
Additional Rent due hereunder and performing all of its obligations under this
Lease, shall peaceably and quietly enjoy the Premises, in accordance with the
terms and provisions of this Lease.

         42.14    Termination Not Merger. The voluntary sale or other surrender
of this Lease by Tenant to Landlord, or a mutual cancellation thereof, or the
termination thereof by Landlord pursuant to any provision contained herein,
shall not work a merger, but at the option of Landlord shall either terminate
any or all existing subleases or sub tenancies hereunder, or operate as an
assignment to Landlord of any or all of such subleases or sub tenancies.

         42.15    Landlord's Review. The review, approval, inspection or
examination by Landlord of any item to be reviewed, approved, inspected or
examined by Landlord under the terms of this Lease or the exhibits attached
hereto shall not constitute the assumption of any responsibility by Landlord for
either the accuracy or sufficiency of any such item or the quality of
suitability of such item for its intended use. Any such review, approval,
inspection or examination by Landlord is for the sole purpose of protecting
Landlord's interests in the Complex, in the Building and under this Lease, and
no third parties, including, without limitation, Tenant or any person or entity
claiming through or under Tenant, or the contractors, agents, servants,
employees, visitors or licensees of Tenant or any such person or entity, shall
have any rights hereunder with respect to such review, approval, inspection or
examination by Landlord.

         42.16    Tenant's Property. Landlord, within ten (10) days after
receipt of written request from Tenant, shall execute and deliver any document
reasonably required by any supplier, lessor, or lender in connection with the
installation in the Premises of Tenant's Property in which Landlord waives any
rights it may have or acquire with respect to such property, if the supplier,
lessor, or lender, as the case may be, agrees in writing that: (i) it will
remove such property from the Premises before the expiration of the Term or
within 30 days after termination of the Term (or 90 days if the termination is a
result of casualty or Appropriation), but if it does not remove such property
within such period it shall have waived any rights it may have had to such
property, and (ii) it will make whatever restoration to the Premises that is
necessitated by the removal.

                                       51

<PAGE>

         42.17    Landlord Default. In the event of the occurrence of any
default by Landlord with respect to any term, covenant or condition of this
Lease on the part of Landlord to be performed, which default shall continue for
thirty (30) days after written notice thereof by Tenant to Landlord (or such
longer period as is reasonably necessary to remedy such default, provided that
Landlord shall commence to remedy such default within said thirty (30) day
period and shall continuously and diligently pursue such remedy until such
default is cured), Tenant may perform any such term, covenant and condition for
the account and on behalf of Landlord and further shall have all rights
available to tenants in law and equity to (1) procure Landlord's performance
hereunder, (ii) bring an action for damages, and (iii) seek declaratory relief
as to the parties' respective rights and obligations under this Lease. In the
event that Tenant performs any term, covenant or condition on account and on
behalf of Landlord, Landlord shall promptly reimburse Tenant for all costs
thereby incurred, including reasonable costs of administration and management,
together with interest on any unpaid amount at the Interest Rate from the date
which is ten (10) days after the date Landlord receives Tenant's demand therefor
until paid.

         IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease by
proper persons thereunto duly authorized as of the date first above written.

                                 THE BOARD OF TRUSTEES OF THE LELAND
                                 STANFORD JUNIOR UNIVERSITY

                                 By: Stanford Management Company

                                 By:  /s/ Jean G. Snider
                                      ------------------------------------------

                                 Its: Director, SRP
                                      ------------------------------------------

                                 GENENCOR INTERNATIONAL, INC.

                                 By:  /s/ Jean-Jacques Bienaime
                                      ------------------------------------------
                                      Jean-Jacques Bienaime
                                      CEO and President

                                 By:  /s/ Stuart L. Melton
                                      ------------------------------------------
                                      Stuart L. Melton
                                      Senior Vice President, General Counsel and
                                      Secretary

                                       52

<PAGE>

                                   SCHEDULE 1
                             PREVAILING MARKET RENT

The term "PREVAILING MARKET RENT" means the base monthly rent per rentable
square foot (net of all expenses) for space of comparable size and location to
the Premises and in buildings similar in age and quality to the Premises, taking
into account any additional rent and all other payments or escalations then
being charged and allowances and economic concessions being given in the
Stanford Research Park for such comparable space over a comparable term. The
Prevailing Market Rent shall be determined by Landlord and Landlord shall give
Tenant written notice of such determination at least 90 but not earlier than 120
days prior to the commencement of the lease year to which such rental rate will
apply. If Tenant disputes Landlord's determination of the Prevailing Market
Rent, Tenant shall so notify Landlord within ten (10) business days following
Landlord's notice to Tenant of Landlord's determination and, in such case, the
Prevailing Market Rent shall be determined as follows:

         (a)      Within thirty (30) days following Tenant's notice to Landlord
that it disputes Landlord's determination of the Prevailing Market Rent,
Landlord and Tenant shall meet no less than two (2) times, at a mutually
agreeable time and place, to attempt to agree upon the Prevailing Market Rent.

         (b)      If within this 30-day period Landlord and Tenant cannot reach
agreement as to the Prevailing Market Rent, they shall each select one appraiser
to determine the Prevailing Market Rent. Each such appraiser shall arrive at a
determination of the Prevailing Market Rent and submit his or her conclusions to
Landlord and Tenant within thirty (30) days after the expiration of the 30-day
consultation period described in (a) above.

         (c)      If only one appraisal is submitted within the requisite time
period, it shall be deemed to be the Prevailing Market Rent. If both appraisals
are submitted within such time period, and if the two appraisals so submitted
differ by less than ten (10) percent of the higher of the two, the average of
the two shall be the Prevailing Market Rent. If the two appraisals differ by
more than ten (10) percent of the higher of the two, then the two appraisers
shall immediately select a third appraiser who will within thirty (30) days of
his or her selection make a determination of the Prevailing Market Rent and
submit such determination to Landlord and Tenant. This third appraisal will then
be averaged with the closer of the two previous appraisals and the result shall
be the Prevailing Market Rent.

         (d)      All appraisers specified pursuant hereto shall be members of
the American Institute of Real Estate Appraisers with not less than five (5)
years experience appraising office, research and development and industrial
properties in California. Each party shall pay the cost of the appraiser
selected by such party and one-half of the cost of the third appraiser plus
one-half of any other costs incurred in the determination.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                Page
                                                                                ----
<S>                                                                             <C>
1.      BASIC LEASE INFORMATION..............................................     1

2.      DEFINITIONS..........................................................     2

3.      LEASE OF PREMISES....................................................     6

4.      ACCEPTANCE OF PREMISES; LANDLORD'S INDEMNIFICATION...................     6

5.      USE..................................................................    10

6.      TERM.................................................................    11

7.      RENT; ADDITIONAL RENT................................................    11

8.      RULES AND REGULATIONS AND COMMON AREAS...............................    14

9.      PARKING..............................................................    14

10.     OPERATING EXPENSES...................................................    15

11.     ALTERATIONS..........................................................    17

12.     MAINTENANCE AND REPAIRS; NO WASTE....................................    22

13.     UTILITIES AND SERVICES...............................................    23

14.     TAXES................................................................    23

15.     LIENS................................................................    25

16.     COMPLIANCE WITH LAWS; INSURANCE REQUIREMENTS.........................    25

17.     ASSIGNMENT...........................................................    26

18.     SUBLETTING...........................................................    28

19.     INSURANCE............................................................    29

20.     INDEMNITY AND RELEASE................................................    32

21.     DAMAGE OR DESTRUCTION; APPROPRIATION.................................    33

22.     LEASEHOLD MORTGAGES..................................................    36

23.     LANDLORD'S RIGHT OF INSPECTION.......................................    36
</TABLE>

                                        i

<PAGE>

<TABLE>
<S>                                                                             <C>
24.     EVENT OF DEFAULT AND LANDLORD'S REMEDIES.............................    37

25.     LANDLORD'S RIGHT TO CURE DEFAULTS....................................    39

26.     SURRENDER OF THE PREMISES............................................    40

27.     HAZARDOUS MATERIALS..................................................    41

28.     SUBORDINATION........................................................    43

29.     USE OF NAME..........................................................    44

30.     SIGNS................................................................    44

31.     REPRESENTATIONS AND WARRANTIES.......................................    45

32.     NO WAIVER BY LANDLORD................................................    46

33.     CERTIFICATES OF ESTOPPEL.............................................    46

34.     NO PARTNERSHIP.......................................................    47

35.     NO DEDICATION........................................................    47

36.     NO THIRD PARTY BENEFICIARIES.........................................    47

37.     NOTICES..............................................................    47

38.     FINANCIAL STATEMENTS.................................................    47

39.     ARBITRATION OF DISPUTES..............................................    48

40.     HOLDING OVER.........................................................    49

41.     NONDISCRIMINATION....................................................    49

42.     GENERAL PROVISIONS...................................................    49

SCHEDULE 1 - PREVAILING MARKET RENT

Omitted Exhibits
----------------

Exhibit A: Initial Improvements

Exhibit B: Premises

Exhibit C: Rules and Regulations

Exhibit D: Site Plan

Exhibit E: Tenant's Property

Exhibit F: Form of Tri-Party Agreement

</TABLE>

                                       ii

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