Document:

<PAGE>

                                                                    EXHIBIT 10.1

                                   SUBLEASE

          This Sublease, made as of this 7th day of April, 1997, by and between
Quintiles, Inc. a North Carolina corporation, having an address at 1007 Slater
Road, Chelsea Place, Durham, North Carolina 27703, successor in interest to
Biometric Research Institute, Inc. ("Sublessor"), and POZEN Inc., a Delaware
corporation, with its principal place of business at 2605 Meridian Parkway,
Suite 200, Durham, North Carolina 27713 ("Sublessee"), and Property Reserve,
Inc., a Utah corporation ("Landlord").

                                   RECITALS:

          The background to this Sublease is as follows:

          NOW, THEREFORE R-l. Sublessor is the Tenant pursuant to a Lease dated
   December 14, 1995 between I40 Properties, a North Carolina partnership ("1-40
   Properties"), as Lessor, and Sublessor as Tenant (the "Principal Lease") for
   premises located at 6330 Quadrangle Drive, Suite 240, Durham County, North
   Carolina, known as the Quadrangle Office Park, and being more fully described
   in the Principal Lease (the "Premises"). A true and correct copy of the
   Principal Lease is attached hereto as Exhibit A and incorporated herein by
                                         ------- -
   reference.

          R-2. As of December 3, 1996, Landlord succeeded to 1-40 Properties'
   interest in the Lease as Landlord pursuant to an assignment and assumption of
   lease from 1-40 Properties to Property Reserve, Inc. (the "Assignment"); and

          R-3. Sublessor and Sublessee have negotiated for Sublessee to sublease
   (upon the terms and conditions set forth herein) certain space designated as
   Suite 240, comprising approximately 5,938. rentable square feet of office
   space of the Premises (the "Sublet Premises"), and being more particularly
   described on Exhibit B attached hereto and incorporated herein by reference.
                ------- -

          , the parties hereto, in consideration of the mutual promises
   contained herein and other good and, valuable consideration, the receipt of
   which are hereby acknowledged and intending to be legally bound, promise,
   covenant and agree follows:

          1.  Recitals. The Recitals set forth above are incorporated herein by
              --------
   reference.

          2.  Sublease. Sublessor hereby leases to Sublessee the Sublet
              --------
   Premises, upon the terms and conditions set forth in the Principal Lease, to
   the extent not expressly herein modified. With respect to the Sublet Premises
   and except as expressly modified by this Sublease, Sublessee (i) shall have
   all of the rights and privileges of the Sublessor, as Tenant, pursuant to the
   Principal Lease, and (ii) shall perform all of the duties and obligations of
   the Sublessor, as Tenant, pursuant to the Principal Lease. Notwithstanding
   the foregoing, it is understood and agreed that this is a Sublease and that
   Sublessor shall remain obligated to Landlord for the performance of
   - any and all remaining obligations of Sublessor under the Principal Lease.
   The Sublessor shall perform or shall cause the Landlord to perform, with
   respect to the Sublet Premises, all duties and obligations of the Landlord
   pursuant to the Principal Lease.
<PAGE>

                                   SUBLEASE

    3.   Term. The initial term of this Sublease shall be 68 months, beginning
         ----
on June 1, 1997 (the "Commencement Date") and ending on February 28, 2003.

     4.  Rent/Measurement of Sublet Premises. Subject to the rent abatement
         -----------------------------------
         provisions of Paragraph 15 of the Principal Lease, beginning with the
         Commencement Date, Sublessee shall pay to Sublessor at the office of
         Sublessor a rental payment due and payable as provided in the Principal
         Lease in the amount and according to the schedule listed below.

                         Term                     Rate Per Rentable Square Foot
                         ----                     -----------------------------
                                                     (full Service)
                                                     --------------

          June 1, 1997 through May 31, 1998                    $18.00

          June 1, l998 through May 3l, 1999                    $18.50

          June 1, l999 through May 3l, 2000                    $19.00

          June 1, 2000 through May 31, 2001                    $19.50

          June 1, 2001 through May 31, 2002                    $20.00

          June 1, 2002 through February 28, 2003.              $20.50

Sublessee shall have no liability to Sublessor or Landlord for the rental
payments provided in Paragraph 3 of the Principal Lease or for any of the
additional rent or operating expense passthroughs ("Base Rent Adjustments")
provided in Paragraph 5 of the Principal Lease, all such sums being included in
the gross rental payments provided in this Section 4.

     5.  Improvements by Sublessor. Sublessee shall be entitled to receive from
         -------------------------
Sublessor up to $15,000.00, to be used by Sublessee for improvements to the
Sublet Premises which shall be made in the Sublessee's reasonable discretion.
Any costs incurred by Sublessee for such improvements in excess of $15,000.00 or
incurred after September 30, 1997 shall be borne by Sublessee. Sublessee shall
provide to Sublessor written receipts or other statements itemizing any costs
incurred by Sublessee for such improvements on or before September 30, 1997.
Sublessor shall pay to Sublessee the amounts of all such receipts or statements
within twenty (20) days of Sublessor's receipt of same. Except as set forth
herein, Sublessee shall take possession and occupy the Premises in "as is"
condition, including all telecommunications and local area network wiring that
is currently in the Sublet Premises.

     6.  Parking. Subject to the terms of the Principal Lease, Sublessee shall
         -------
have free non-exclusive use of parking facilities at the Premises for its
employees, business invitees and agents.

     7.  Insurance. Sublessee presently maintains and will, during the term of
         ---------
this sublease maintain a master insurance policy which complies with all
requirements in Paragraph 16 of the Principal Lease. Sublessee shall add to the
master policy Sublessor and Landlord as

<PAGE>

   additional insureds with regard to the Sublet Premises and prior to the
   Commencement Date provide evidence of same to the reasonable satisfaction of
   Sublessor and Landlord.

          8.  Security Deposit. Sublessee shall deposit with Sublessor on the
              ----------------
signing of this Sublease the sum of $8,907.00 as security for performance of
Sublessee's obligations under this Sublease. Sublessee shall have no further
liability or obligation to Sublessor or Landlord under Paragraph 7 of the
Principal Lease.

          9.  Secretary's Certificate. Sublessee shall, following the execution
              -----------------------
and delivery of this Sublease, but prior to the Commencement Date, deliver to
Sublessor a certificate of Sublessee's corporate secretary that the corporate
officer signing this Sublease on behalf of the Sublessee is empowered and
authorized to execute this Sublease and bind Sublessee hereto.

          10.  Warranties of Sublessee. Sublessee represents and warrants to the
               -----------------------
Sublessor as follows:

             (a)    Sublessee is a corporation duly formed and validly existing
             under the laws of the State of Delaware;

             (b)    Upon execution and delivery by Sublessee, this Sublease
             shall be a valid and binding obligation of Sublessee, and the
             execution and delivery of this Sublease has been fully authorized
             by Sublessee.

     11.  Warranties of Sublessor. Sublessor represents and warrants to the
          ------------- ---------
Sublessee as follows:

             (a)    Sublessor is a corporation duly formed and validly existing
             under the laws of the State of North Carolina, and is qualified to
             do business in North Carolina.

             (b)    Upon execution and delivery by Sublessor, this Sublease
             shall be a valid and binding obligation upon Sublessor, and the
             execution and delivery of this Sublease has been fully authorized
             by Sublessor.

             (c)    The Principal Lease is in full force and effect and has not
             been modified, in writing, orally or by conduct of either Landlord
             or Sublessor.

             (d)    Sublessor has, to the best of its knowledge paid rent and
             all other charges due and payable to the Landlord pursuant to the
             Principal Lease through the date hereof; further, Sublessor has, to
             the best of its knowledge fully complied with all terms and
             conditions of the Principal Lease, and will, during the term of
             this Sublease, continue its full compliance with all terms and
             conditions of the Principal Lease; further, Sublessor has not, to
             the best of its knowledge committed a default under the Principal
             Lease and is not aware of any act by or omission of Sublessor which
             in and of itself, or with the passage of time, would become a
             default.
<PAGE>

             (e)    Sublessor has sought, and Landlord has given. (or, by
             execution of this Sublease, shall be deemed to have given), in
             accordance with Paragraph 10 of the Principal Lease, Landlord's
             written consent to sublet the Sublet Premises pursuant to the terms
             and conditions of this Sublease.

             (f)    Landlord has fully complied with all terms and conditions of
             the Principal Lease.

             (g)    Sublessor has not received any notice that the Landlord has
             assigned the Principal Lease, nor, to the best of Sublessor's
             knowledge, has the Landlord sold the Building.

             (h)    The Commencement Date of the Principal Lease is January 15,
             1996 and the Expiration Date is February 28, 2003.

     12.     Warranties of Landlord. Landlord represents and warrants to
             ----------------------
Sublessor and Sublessee as follows:

             (a)    Landlord has succeeded to all of 1-40 Properties' interest
             in the Lease, the Lease has been properly assigned to and assumed
             by Landlord, and Landlord has complete power and authority to enter
             into this Sublease.

             (b)    The Lease is in full force and effect and there are no
             defaults presently existing under the Principal Lease, and there
             are no presently existing circumstances known to Landlord which,
             with the giving of notice or passage of time or both, would
             constitute a default under the Principal Lease.

             (c)    The Assignment in no way adversely affects or impairs
             Sublessor's rights under the Principal Lease or Sublessor's right
             to enter into this Sublease.

             (d)    The Commencement Date of the Principal Lease is January 15,
             1996 and the Expiration Date is February 28. 2003.

     13.  Landlord's Consent. In the event of a default by Sublessor under the
          ------------------
Principal Lease, and provided that Sublessee shall not be in default in its
obligations under this Sublease, after written notice thereof from Landlord to
Sublessee, Sublessee shall make its rental payments directly to Landlord and
shall otherwise attorn to Landlord, and Sublessee shall not be disturbed from
its use and occupancy of the Sublet Premises; and Landlord shall not evict,
eject or otherwise remove Sublessee from the Sublet Premises; but rather, shall
recognize this Sublease and each of the terms and conditions hereof as valid,
binding and in full force and effect for the remainder of the term of this
Sublease and any renewals thereof.

     14.  Notice. Any notice required hereunder shall be hand delivered, sent by
          ------
certified United States mail, postage prepaid, or sent by overnight delivery
service requiring receipt (such Federal Express or UPS) to the parties, and
shall be deemed to have been given upon actual receipt or refusal of such
notice, at the addresses set forth below:
<PAGE>

    To Sublessee at:

          POZEN Inc.
          6330 Quadrangle Drive, Suite 240
          Chapel Hill, North Carolina 27514
          Attn:  John Barnhardt

          With a copy to Sublessee's Agent:
               Corporate Realty Advisors
               4000 Westchase Boulevard, Suite 390
               Raleigh, North Carolina 27607
               Attn: Paul Munana

    To Sublessor at:

          Quintiles Transnational Corp.
          P.O. Box 13979
          Research. Triangle Park, North Carolina 27709-3979
          Attn: Greg Porter, Chief Legal Officer

          With a copy to Sublessor's Agent:
               Corporate Realty Advisors
               4000 Westchase Boulevard, Suite 390
               Raleigh, North Carolina 27607
               Attn: Howard Sadkin

    To Landlord at:
          Property Reserve, Inc.
          10 East South Temple St., Suite 400
          Salt Lake City, Utah 84133
          Attn:  Mr. Alan Aubrey

          With a copy to Landlord's Agent:
               Goodman Segar Hogan Hoffler
               6320 Quadrangle Drive, Suite 360
               Chapel Hill, North Carolina 27514

    15.   Commission. Sublessor and Sublessee respectively represent and warrant
          ----------
to each other that neither of them has consulted or negotiated with any broker
or finder with regard to the Demised Premises except as identified below in this
Section 15. If none, indicate "none." Each such party shall indemnify the other
against and hold the other harmless from any claims for fees or commissions from
anyone with whom the indemnifying party has consulted or negotiated with regard
the Demised Premises not identified herein. Sublessor has agreed to pay all
commissions associates with this transaction to the party listed below:
Corporate Realty Advisors.
--------- ---------------

     16.  Records. Sublessor shall provide to Sublessee, upon the execution of
          -------
this Sublease or within a reasonable period of time thereafter, all documents
and other records
<PAGE>

pertaining to the Sublet Premises, including without limitation any
construction, drawings, wiring diagrams, documents or other records relating to
the telecommunications and local area network wiring in the Sublet Premises, to
the extent such documents and records are in Sublessor's possession or Sublessor
can reasonably obtain the same.

     17.  Miscellaneous.
          -------------

          (a)  The headings of the various articles of this Agreement are
          intended only for convenience and are not intended to limit, define or
          construe the scope of any article of this Agreement, nor offset the
          provisions thereof.

          (b)  Neither the method of computation of rent nor any other provision
          of this Agreement shall be deemed to create any relationship between
          the parties hereto other than that of Sublessor and Sublessee.

          (c)  In the event that there is any conflict between the provisions of
          this Sublease and the provisions of the Principal Lease, the parties
          agree that the provisions of the Sublease shall control.

          (d)  This Agreement shall be governed by and construed in accordance
          with the laws of North Carolina

          (e)  This Agreement may be modified or amended only by written
          agreement of the parties hereto.

          (f)  If any provision of this Agreement shall be deemed to be in
          contravention of any law, then the court rendering such determination
          shall have the authority to strike the contravening provision from
          this Agreement, with the remaining provisions of this Agreement
          remaining in full force and effect.

          (g)  This Agreement, and the covenants, conditions, warranties and
          agreements made and entered into by the parties hereto are declared
          binding on their respective heirs, successors, representatives and
          assigns.

           [The remainder of this page is intentionally left blank.]
<PAGE>

        IN WITNESS WHEREOF the parties hereto have executed and delivered this
   Sublease as of the day and year first above written.

                                       SUBLESSOR:

                                            Quintiles, Inc.
                                            ---------- ----

   ATTEST:                             By /s/ David C. Hood
                                          --------------------------
                                       Name: David C. Hood
                                       Title: VP Finance

   /s/ Bonnie Griffin
   -------------------
   Secretary

   (CORPORATE SEAL)
                                       SUBLESSEE:
                                       POZEN Inc.

   ATTEST:                             By: /s/ Peter J. Wise
                                          --------------------------
                                       Name:  Peter J. Wise
                                              ---------------
                                       Title: Senior   VP-Medical Affairs
                                              -----------------------------
/s/ Fred D. Hutchison
----------------------
Assistant Secretary

   (CORPORATE SEAL)

                                       LANDLORD:

                                       Property Reserve, Inc.

   ATTEST:                             By: /s/ Wayne G. Facer
                                          --------------------------
                                       Name: Wayne G. Facer
                                            ------------------------
                                       Title: Vice President
                                             -----------------------

/s/ C. Eugene Gronning
----------------------
Secretary
    C. Eugene Gronning Secretary

CORPORATE SEAL)

<PAGE>

                     Exhibit B
                     ------- -

       [Description of "Sublet Premises']
<PAGE>

                     Exhibit A
                     ------- -

                ["Principal Lease"]
<PAGE>

                                LEASE AGREEMENT

                                      for

                      BIOMETRIC RESEARCH INSTITUTE, INC.
                                  (as Tenant)

                                      and

                                1-40 PROPERTIES
                                 (as Landlord)
<PAGE>

                      BIOMETRIC RESEARCH INSTITUTE, INC.
                                LEASE AGREEMENT
                               TABLE OF CONTENTS

PARAGRAPH

1.  Use and Acceptance of Demised Premises
2.  Term of Lease
3.  Covenant to Pay Rent
4.  Landlord's and Tenant's Work
5.  Additional Rent - Operating Expense Pass Throughs
6.  Landlord's Services
7.  Security Deposit
8.  Repair, Preservation, and Maintenance
9.  Tenant's General Indemnity
10. Assignment
11. Stock In Trade and Fixtures
12. Alterations, Additions, and Signs
13. Unlawful Improper or Offensive Use
14. Common Areas and Parking
15. Damage to Premises by Fire or Casualty
16. Insurance
17. Waiver of Subrogation
18. Tenant's Obligation at the End of Term and Holding Over
19. Removal of Fixtures
20. Landlord's Entry
21. Rules and Regulations
22. Quiet Enjoyment
23. Subordination and Tenant's Estoppel
24. Curing Defaults and Late Charges
25. Events of Default
26. Landlord's Rights on Termination of Term or Possession
27. No Waiver
28. Notices
29. Relocation of Demised Premises
30. Legal Costs
31. Liability of Landlord
32. Entire Agreement
33. Amendments
34. Controlling Law
35. Successors and Assigns
36. No Agency
37. Severability
<PAGE>

Table of Contents continued
Biometric Research Institute, Inc.
Lease Agreement

PARAGRAPH

38. Force Majeure
39. Recordation and Lease Memorandum
40. Assignment by Landlord
41. Due Authorization
42. Brokers
43. ADA Compliance
44. Exhibits
45. Renewal Option
46. Right to Expand

             EXHIBIT A
             EXHIBIT A-1         Site Plan
             EXHIBIT B           Floor Plan
             EXHIBIT B-1         Space Plan
             EXHIBIT C           Tenant Improvements
             EXHIBIT D           Rules and Regulations
<PAGE>

NORTH CAROLINA

DURHAM COUNTY                                                    LEASE AGREEMENT

     This Lease Agreement is made and entered into as of  199_, the day the last
party executed this agreement as shown on the signature page of this lease, by
and between 1-40 Properties, a North Carolina Partnership (Landlord") and
            ---------------    --------------------------
Biometric Research Institute, Inc., a Virginia Corporation, ("Tenant").
                                      --------------------

                                  WITNESSETH:
                                  ----------

     WHEREAS, Landlord owns certain real property located at 6330 Quadrangle
Drive in Durham County, North Carolina ("Tract") and the building and other
improvements on the same ("Building") more fully described in Exhibit A, "Legal
Description", attached hereto and incorporated herein by reference; and

     WHEREAS, Tenant is desirous of leasing a portion of such Building as more
fully described below and Landlord is willing to lease said property to Tenant.

     NOW, THEREFORE in consideration of the foregoing and the mutual covenants,
conditions and agreements herein contained, the parties hereby agree as follows:

                               DEMISED PREMISES

     Landlord hereby demises and leases unto Tenant those premises located in
the Building and more fully described in Exhibit B- 1, "Space Plan", attached
hereto and incorporated herein by reference ("Demised Premises"). The parties
agree that the total building rentable square foot is 94,461 and that the
Demised Premises contain not less than 5,938 rentable square feet and that this
represents 6.29% of the Building.

                                      1.
                    USE AND ACCEPTANCE OF DEMISED PREMISES

     The Demised Premises shall be used by Tenant for general office purposes
and for no other purpose or use without Landlord's prior written consent, which
consent Landlord may grant or withhold in Landlord's sole discretion. Tenant
shall keep in permitted use one hundred percent (100%) of the Demised Premises
during each Standard Work Week (as defined in this Lease of the term, any
extended term or any holdover period. Tenant shall not vacate or abandon the
Demised Premises. By accepting possession of the Demised Premises, Tenant agrees
that the Demised Premises are in proper condition and are in all respects
suitable for Tenant's use.
<PAGE>

                                      2.
                                 TERM OF LEASE

     The term of this lease shall commence on the date Landlord delivers to
Tenant a certificate of occupancy for the space, ("Commencement Date")
approximately January 15, 1996, and shall end at Midnight on, the last day of
the 84th full calendar month after the commencement date ("Initial Termination
Date").

                                      3.
                             COVENANT TO PAY RENT

     (a) Throughout the term hereof and any extensions or any holdover periods,
Tenant shall pay, without demand and without counterclaim, deduction of set-off,
monthly minimum rent as follows, payable on or before the first day of each
calendar month:

<TABLE>
<CAPTION>
YEAR                   PRSF          MONTHLY MINIMUM RENT             YEARLY MINIMUM RENT
-----------------------------------------------------------------------------------------
<S>                  <C>             <C>                              <C>
 1                   $17.75              $ 8,783.29                       $105,399.50
 2                   $18.35              $ 9,080.19                       $108,962.30
 3                   $18.95              $ 9,377.09                       $112,525.10
 4                   $19.55              $ 9,673.99                       $116,087.90
 5                   $20.15              $ 9,970.89                       $119,650.70
 6                   $20.75              $10,267.79                       $123,213.50
 7                   $21.35              $10,564.69                       $126,776.30
*All rents calculated based on 5.938 RSF    Total Aggregate Minimum Rent: $8l2.615.30
</TABLE>

     (b) Tenant shall furthermore pay any additional rent required under this
lease when due without demand and without counterclaim, deduction or setoff.

                                      4.
                         LANDLORD'S AND TENANT'S WORK

     Landlord and Tenant shall, at their own respective expense, perform the
additional work described in Exhibit C, "Tenant Improvements", attached hereto
and incorporated herein by reference. It is expressly understood and agreed that
Landlord's obligation with respect to the construction and finishing of the
Demised Premises shall be limited to the scope of work described as Landlord's
Work in Exhibit C and shall in no event include any work not described in
Exhibit C. All Landlord's Work and Tenant's Work shall constitute improvements
to the Demised Premises which shall become sole property of Landlord and shall
remain at the Demised Premises upon expiration of this Lease Agreement or
termination of Tenant's right to possession of the Demised Premises unless
Landlord notifies Tenant otherwise in writing. Landlord and Tenant shall
complete their work on or before the Commencement Date, subject to extension for
all work delays resulting from causes beyond their reasonable control.
Possession of the Demised
<PAGE>

Premises shall be delivered to Tenant on or before the Commencement Date,
subject to extension for all delays resulting from causes beyond the reasonable
control of Landlord. All work by Tenant or Landlord shall be performed in a
lawful and workmanlike manner in accordance with all ordinances, building codes
or other governing law and in accordance with plans and specifications prepared
by Landlord, agreed to by Landlord and Tenant, and accepted and verified by
Tenant's initialing of drawings. Tenant shall take no action which may result in
a claim of lien against the Tract, Building or Demised Premises and Tenant shall
liquidate and discharge the same as provided in Section 13.

                                      5.
               ADDITIONAL RENT- OPERATING EXPENSE PASS THROUGHS

Tenant agrees to pay to Landlord, as additional rent, each year after the first
complete twelve (12) month period of occupancy ("Base Year"), in a lump sum,
Tenant's proportionate share of any increase in direct expenses incurred on
account of the operation or maintenance of the building in which the Demised
Premises are situated, above such direct expense paid or incurred by Landlord
for the Base Year.

Commencing with the first month of the second lease year, and each lease year
thereafter, there shall be added to Tenant's monthly payments an amount to cover
Tenant's pro rata share of operational pass throughs as estimated by Landlord to
have increased during the previous year, which figure (so estimated by Landlord)
shall be paid by Tenant until such time as actual figures are available (after
the end of the second and successive years), when the monthly increment for pass
throughs shall be adjusted to reflect the prior year's experience. Landlord
shall send to Tenant, in writing, a statement of the amount of any additional
rent plus any applicable sales or use taxes payable by Tenant hereunder on or
before one hundred and twenty (120) days after the end of the lease year with
respect to which the rent adjustment is due, and within thirty (30) days
thereafter Tenant shall pay any additional rent shown to be due Landlord, or
Landlord shall adjust Tenant's payments if any credit is shown to be due Tenant.
Tenant shall remain liable after the end of the term for any amount of
operational pass throughs for the final year if such exceeded Tenant's payments
for the pass throughs and Tenant shall be entitled to a refund if such payments
exceeded Tenant's payments for the pass throughs and Tenant shall be entitled to
a refund if such payments exceeded the pass throughs.

Tenant's proportionate share shall be calculated by dividing the 5,938 rentable
square feet of the Demised Premises by the 94.461 rentable square feet of the
building, which equals 6.29%.

The term "direct expense" as used herein shall include direct costs of
operation, repair and maintenance as determined by standard accounting practices
and shall include by way of illustration, but is not limited to ad valorem real
and personal property taxes, hazard and liability insurance premiums. utilities,
heat, air conditioning, janitorial services, labor, materials, supplies,
equipment. and tools, permits, licenses, inspection fees, management fees, and
common area expenses. The term "direct expense" shall not
<PAGE>

include depreciation on the building in which the Demised Premises are situated
or equipment therein, interest, executive salaries, real estate brokers'
commissions marketing costs or principal and interest payments, or other
expenses that do not relate to the operation of the building. The annual
statement of said direct expense, accounted for and reported in accordance with
generally accepted accounting principles, shall be available to Tenant upon
written request.

For purposes of verifying Landlord's computation and proration of Direct
Expenses, including the computation of Controllable Expenses. and to verify
Landlord's compliance with this Lease with respect to which items of expense
appropriately constitute Direct Expenses. Tenant or its authorized agents. at
its sole cost and expense, except as set forth below, during normal business
hours. may inspect, audit and copy the books and records of Landlord and its
agents. If any such audit reveals an error by Landlord with respect to Direct
Expenses, Landlord shall promptly reimburse Tenant for the amount erroneously
overcharged to Tenant. In the event such error exceeds 6% of the total average
amount then Landlord shall reimburse Tenant for reasonable costs of the audit.

                                      6.
                              LANDLORD'S SERVICES

     (a) Landlord shall cause to be furnished to the Demised Premises in common
with other Tenants from 8:00 a.m. to 6:00 p.m. Monday through Friday and from
                        ----         ----
8:00 a.m. to 1:00 p.m. on Saturdays excluding national or state holidays (herein
----         ----
called the "Standard Work Week"), the following services: maintenance of
casualty insurance by Landlord on the Building in such form and amount as is
satisfactory to Landlord, water to the extent available, electricity to the
extent available for normal general office use, removal of trash from site
receptacles in accordance with city schedules, normal heating and air
conditioning for the reasonably comfortable use and occupancy of the Demised
Premises (provided heating and cooling to any governmental regulation
prescribing limitations thereon shall be deemed to comply with this service),
Building repair and maintenance as set forth in Section 8 below, and Common Area
Maintenance as set forth in Section 14 below. All costs resulting from Tenant's
extraordinary usage of water, heating, air conditioning, electricity, trash
removal, or other services provided by Landlord shall be paid by Tenant as
additional rent within thirty (30) days of billing by Landlord. Tenant shall not
install equipment with unusual demands for any of Landlord's services without
Landlord's prior written consent which Landlord may withhold if Landlord
reasonably determines that such equipment is not suitable for the Building or
may not safely be used therein. Notwithstanding anything herein to the contrary,
upon Tenant's request, Landlord shall provide after hours heating and air
conditioning to the Demised Premises at a current charge of $25.00 per hour as
                                                            ------
additional rent, which charge shall be subject to upward adjustment from time to
time as Landlord shall reasonably determine to cover its costs and expenses.
Landlord shall not be responsible for any failure of or interruption in utility
or other services to the Building or Demised Premises.
<PAGE>

     (b) Tenant shall pay or cause to be paid all charges for telephone or any
other communication or utility service used in or rendered or supplied to the
Demised Premises throughout the initial and any extended term of this Lease
Agreement or any holdover period which Landlord does not provide above and
Tenant shall indemnify the Landlord and hold Landlord harmless against any
liability or damages (including Landlord's reasonable attorneys' fees and
expenses) on such account.

                                      7.
                               SECURITY DEPOSIT

     Tenant shall deposit with Landlord on the signing of this Lease Agreement
the sum of Eight Thousand Seven Hundred Eighty Four ($ 8,784.00) as security for
the performance of Tenant's obligations under this Lease Agreement, including
without limitation, the surrender of possession of the Demised Premises to
Landlord as herein provided. If from time to time Landlord applies any part of
said deposit to cure any default of Tenant, Tenant shall upon demand immediately
deposit funds with the Landlord sufficient to restore the full initial balance
of the security deposit. This deposit shall bear interest at a pass book savings
rate which interest shall accrue to the Tenant, and unless the Landlord uses the
same to cure a default of Tenant including restoring the Demised Premises to the
condition that Tenant is required to leave them at the conclusion of the Term,
Landlord shall within thirty (30) days of the termination of the Lease Agreement
refund to Tenant so much of the deposit as Landlord continues to hold.

                                      8.
         REPAIR, PRESERVATION AND MAINTENANCE OF THE DEMISED PREMISES

     (a) Landlord at Landlord's sole cost and expense shall keep and maintain
the roof, foundation and the structural soundness of the exterior walls of the
Building and Demised Premises in good repair exclusive of matters due to
Tenant's willful misconduct or gross neglect, which Tenant shall promptly remedy
and repair. Tenant at Tenant's sole risk, cost and expense shall maintain the
remainder of the Demised Premises in good, clean and sanitary condition and
repair. Tenant furthermore shall not injure, deface, overload or waste the
Demised Premises or any part thereof or permit the same to occur, nor shall
Tenant engage in or permit any action which would threaten to injure, deface,
overload or waste the Demised Premises or any part thereof. Tenant shall not
permit the accumulation of waste or refuse matter in or on the Demised Premises
or adjacent thereto.

     (b) Tenant shall return the Demised Premises to Landlord at the end of the
initial or any extended term of any holdover period in such condition as they
were in as of the Commencement Date or the date of completion with respect to
any improvements made after the Commencement Date, ordinary wear and tear only
excepted. Tenant shall hold Landlord harmless from any loss, cost or damage
(including Landlord's reasonable attorneys' fees and expenses) caused by
Tenant's failure to comply with Tenant's maintenance obligations under this
Lease Agreement or caused by the maintenance or
<PAGE>

repairs made by Tenant or Tenant's agents, servants or employees,, or by persons
coming on the Demised Premises at the express or implied invitation of the
Tenant.

                                      9.
                          TENANT'S GENERAL INDEMNITY

     Landlord shall not be liable to Tenant, or to any other person or entity
whatsoever, for any injury, loss or damage to any person or property in or upon
the Demised Premises or otherwise resulting from Tenant's use of the Demised
Premises or of the Building, the Tract or any Common Areas designated from time
to time by Landlord as below provided. Tenant furthermore hereby covenants and
agrees to assume all liability for or on account of any injury, loss or damage
above described or resulting from any breach by Tenant or any of Tenant's
obligations under this Lease Agreement (including Landlord's reasonable
attorneys' fees and legal expenses), and Tenant shall save and hold Landlord
harmless therefrom except as otherwise provided in Section 18 of this Lease
Agreement.

                                      10.
                                  ASSIGNMENT

     Tenant shall neither assign, mortgage, pledge nor otherwise encumber this
Lease Agreement, nor sublet the whole or any part of the Demised Premises
without first obtaining the written consent of Landlord, which consent Landlord
shall not unreasonably withhold. Such consent by Landlord shall not relieve
Tenant of any of Tenant's obligations under this Lease Agreement.

                                      11.
               STOCK IN TRADE AND FIXTURES AND INSURANCE THEREON

     Tenant's stock in trade and fixtures and all other property of Tenant or
any third parties in or on the Demised Premises shall be at the sole risk of
Tenant or such third parties. Landlord shall not be liable to Tenant or any
third parties for any damage to personalty or fixtures at the Demised Premises
or Building or Tract for any reason, including but not limited to loss or theft
or damage due to leakage of water, gas, sewage or steam due to electrical or
other utility failure. At all times during the initial and extended term hereof
and any hold over period Tenant, for the benefit of both Landlord and Tenant as
their interest may appear, shall maintain insurance against loss or damage by
fire and such other risks and hazards as are insurable under present and future
standard forms of fire and extended coverage insurance policies, on the personal
property, furniture, furnishings and fixtures of Tenant or any other person or
entity located in the Demised Premises, which insurance shall be for the actual
replacement cost of the property insured. All such insurance policies shall
provide for not less than thirty (30) days written notice to Landlord prior to
the expiration of any such policy and shall furthermore contain provisions that
any such policies will not be canceled or the coverage changed without thirty
(30) days prior written notice to Landlord.
<PAGE>

                                      12.
                       ALTERATIONS, ADDITIONS AND SIGNS

     (a) Tenant shall not make any alterations or additions to the Demised
Premises without first obtaining the written consent of Landlord, which consent
Landlord shall not unreasonably withhold. All alterations, additions and
improvements to the Demised Premises (whether made by Landlord or Tenant) shall
become the property of the Landlord and shall remain upon and become a part of
the Demised Premises at the termination of this Lease Agreement or Tenant's
right to possession of the Demised Premises unless Landlord otherwise notifies
Tenant in writing. Any alterations performed by Tenant and approved by Landlord
shall be in accordance with all applicable statutes, ordinances, regulations and
applicable law and shall be performed in a workmanlike manner with materials and
contractors approved by Landlord. Tenant in the event of any construction work
shall procure and maintain in force until completion and acceptance of any
completed improvements all risks builder's risk insurance, including vandalism
and malicious mischief, in form and amount reasonably acceptable to Landlord
covering improvements in place and all material and equipment at the job site
and Tenant shall deliver to Landlord satisfactory proof that worker's
compensation insurance has been procured to cover all persons employed in
connection with the construction.

Tenant furthermore shall not in any event do anything that may create or be the
foundation for any lien upon the Demised Premises or the Building or Tract, or
upon any of the improvements on the foregoing; and should any such lien be
created or filed, Tenant at Tenant's own cost and expense shall liquidate and
discharge the same in full within ten (10) days after the earlier of the notice
or filing thereof.

     (b) Signs - Tenant shall not place, paint or otherwise affix any signs
visible on any of the exterior portions of the Demised Premises or Building. All
signs must comply with all applicable municipal or other governmental rules and
regulations. Landlord will pay for one directory and one suite sign. Future
changes or modifications at Tenant's sole cost.

                                      13.
                      UNLAWFUL, IMPROPER OR OFFENSIVE USE

     Tenant shall not make nor allow to be made any use of the Demised Premises
or Common Areas designated from time to time by Landlord as below provided which
is unlawful or which in Landlord's judgment is improper, dangerous or offensive.
Tenant shall furthermore promptly comply with all ordinances, regulations, rules
or orders of any federal, state, county or municipal authority applicable to the
Demised Premises and Tenant shall not bring hazardous materials or waste upon
the Demised Premises or permit the same to occur without Landlord's prior
written consent which consent Landlord may
<PAGE>

grant or withhold in Landlord's sole discretion. Tenant shall use, store or
dispose of any hazardous materials to which Landlord consents in a safe and
reasonable mariner and in full compliance with all applicable federal, state,
municipal, county and other governmental laws, rules, and regulations. Tenant
shall be responsible for and shall pay all damages and charges to the state or
city government or any other persons or entities of any nuisance made or
suffered during the term of this Lease Agreement on or from the Demised Premises
or any such Common Areas resulting from the activities of Tenant or its agents,
licensees or invitees or otherwise.

                                      14.
                           COMMON AREAS AND PARKING

     Landlord hereby grants Tenant and Tenant's invitees, licensees and agents
the right, in common with other tenants of the Building, to use such areas of
the Tract, including parking areas, as Landlord may designate from time to time
to be common areas (the "Common Areas"). Tenant's use of available parking shall
not exceed the limit specified by Landlord for Tenant from time to time. Any
such usage by Tenant and Tenant's invitees, licensees and agents of the Common
Areas shall be incident to Tenant's business activities hereunder, shall be
lawful and reasonable, and shall be subject to Landlord's rule making authority
in Section 17. Landlord shall have exclusive control over the operation and
maintenance of any such Common Areas. Landlord and its agents' costs and
expenses incurred in operating and maintaining the Common Areas shall be
Operating Expense reimbursable to Landlord as provided in Section 6 above.

                                      15.
       DAMAGES TO PREMISES BY FIRE OR CASUALTY AND TAKING FOR PUBLIC USE

     (a) If the Demised Premises shall be damaged by fire or other casualty,
which damage can reasonably be corrected within one hundred and eighty (180)
days and for a sum not exceeding the insurance proceeds actually received
therefor by Landlord, Landlord shall be entitled to retain any excess insurance
proceeds. In the event the Demised Premises cannot reasonably be so repaired or
replaced, either Landlord or Tenant may terminate this Lease Agreement by
written notice to the other provided, however, that (i) Tenant may not terminate
this Lease Agreement after Landlord has begun to repair or reconstruct the
Demised Premises and (ii) any obligations of the parties existing under this
Lease Agreement at the time of such termination shall be unaffected by such
termination, provided however there shall be an equitable abatement of rent
proportionate to the demised premises damaged by fire or casualty and (iii) in
the event such casualty occurs during the last twelve (12) calendar months of
                                               ------
the term or any extended term, Landlord may elect not to rebuild and may retain
the insurance proceeds received.

     (b) In the event the whole of the Demised Premises shall be taken by any
public authority under the power of eminent domain or like power or by a deed in
lieu
<PAGE>

thereof, this Lease Agreement shall terminate as of the date that possession of
the Demised Premises shall be delivered to the appropriate authority. In the
event of only a partial such taking, this Lease Agreement shall not terminate
(unless either party, by written notice to the other party, chooses to terminate
the same) but there shall be an equitable abatement of rent proportionate to the
part of the Demised Premises taken. Any termination of the Lease Agreement shall
not affect the obligations of the parties existing under the Lease Agreement up
to the time of termination. Tenant shall not be eligible to receive any part of
any award or awards from any eminent domain proceeds or deed in lieu thereof,
and Tenant hereby assigns all of its right, title and interest in and to any
such award or awards to Landlord. However, Tenant may, to the extent permitted
by law, and at Tenant's own expense and cost, take independent or related
proceedings against the public authority exercising the power of eminent domain
to pursue and establish any damages Tenant may have incurred for the taking of
Tenant's property and for business interruption or relocation expenses resulting
from the exercise of power of eminent domain (including any deed in lieu
thereof) provided that any such action by Tenant shall not reduce or adversely
affect the amount of Landlord's award.

                                      16.
                                   INSURANCE

     (a) Throughout the term of this Lease Agreement and any extended term or
terms, Landlord shall provide fire and extended insurance coverage for the
Demised Premises and the Building for 100% of the replacement value (defined as
actual replacement cost excluding the costs of excavation, foundation and
footings) in a form and amount satisfactory to Landlord as provided in Section 6
above. The costs of such insurance (as well as the costs of any other insurance
of any nature that Landlord shall choose to obtain for the Building, Common
Areas, Tract or any part thereof) shall be one of Landlord's Operating Expenses
re-imbursable to Landlord in accordance with Section 6 above. Throughout the
term of this Lease Agreement and any extended term or hold over period, Tenant
shall provide, at Tenant's sole cost and expense, in addition to the fire and
extended insurance coverage for Tenant's property at the Demised Premises
required by Section 11 public liability insurance for the Demised Premises,
including property damage with no less than One Million Dollars $1,000,000.00
limit per occurrence and death and personal injury coverage with no less than
One Million Dollars $1,000,000.00 limit per person. Such policy shall name
Landlord as an additional insured. Tenant shall also maintain all worker's
compensation and similar insurance required by applicable law.

     (b) With respect to all policies of insurance required to be carried by
either party under this Lease Agreement, either party shall provide the other
party with copies of the certificates of such insurance at or prior to their
effective dates. All such policies of either party shall provide that the same
may not be modified or canceled without at least thirty (30) days prior written
notice to the other party and either party shall provide the other party with
copies of the certificates for all modified, renewed or new insurance policies
on or before their effective dates.
<PAGE>

     (c) To the extent possible without additional cost, each party shall
obtain, for each policy of insurance, provisions permitting waiver of any claim
against the other party for loss or damage within the scope of the insurance.
Such waiver coverage at an additional premium shall be obtained by either party
upon written notice from the other party seeking the same accompanied by
reimbursement by such other party for the additional expense.

     (d) Tenant shall not take any action or permit anything to be done which
will increase the rate of fire or other insurance coverage on the Demised
Premises or any part thereof or adjacent thereto or on the Building or the
Tract. However, in the event the Tenant shall take any such action then, in
addition to any other rights Landlord might have under this Lease Agreement or
otherwise, Landlord may require Tenant, upon demand, separately to pay or
reimburse Landlord as additional rent the amount of any increased insurance
premiums attributable to such action which are in excess of those charged at the
date of this Lease Agreement

                                      17.
                             WAIVER OF SUBROGATION

     (a) Landlord hereby releases Tenant, but only to the extent of Landlord's
insurance coverage and only to the extent payment is actually received under
such coverage by Landlord, from any liability for loss or damage covered by any
insurance policies which the Landlord carries with respect to the Demised
Premises, Building or Tract or any interest or property therein or thereon
whether or not such insurance is required by this Lease Agreement and even if
the insured peril shall be brought about by the default, negligence or other
action of the Tenant, Tenant's agents, employees or any of them; provided, this
release shall be in effect only with respect to an insured loss only so long as
Landlord's policy applicable to such loss contains a clause to the effect that
this release shall not affect the right of Landlord to recover under such
policy. Landlord does not waive and hereby reserves the right to secure
compensation from Tenant for any uninsured loss, any amounts not paid because of
deductibles and other amounts not paid for any reason whatsoever.

     (b) Tenant hereby releases Landlord, but only to the extent of Tenant's
insurance coverage and only to the extent payment is actually received under
such coverage, from any liability for loss or damage covered by any insurance
policies which the Tenant carries with respect to the Demised Premises, Building
or Tract or any interest or property therein or thereon whether or not such
insurance is required by this Lease Agreement and even if the insured peril
shall be brought about by the default, negligence or other action of the
Landlord, Landlord's agents, employees or any of them; provided, this release
shall be in effect only with respect to an insured loss and only so long as
Tenant's policy applicable to such loss contains a clause to the effect that
this release shall not affect the right of Tenant to recover under such policy.
Tenant does not waive and hereby reserves the right to secure compensation from
Landlord to which Tenant is otherwise entitled for an uninsured loss, any
amounts not paid because of deductibles and
<PAGE>

other amounts not paid for any reason whatsoever. This section does not modify
the limitations of Landlords liability to Tenant provided under any other
sections of this Lease Agreement.

                                      18.
           TENANT'S OBLIGATIONS AT THE END OF TERM AND HOLDING OVER

     (a) Tenant shall, at the expiration of the initial or any extended term of
this Lease Agreement or hold over period, peaceably surrender the Demised
Premises to Landlord in the condition required in Section 8 above. At such time,
in addition to any other obligations of Tenant under this Lease Agreement.
Tenant shall leave the Demised Premises room clean, shall fasten and lock all
doors and windows, shall return to Landlord all keys to the Demised Premises,
and shall notify Landlord of the address to which any balance of the Security
Deposit should be sent.

     (b) Any holding over by Tenant at the Demised Premises after the expiration
of the term of this Lease Agreement or any final extended term shall at most
result in a tenancy from month to month, terminable at will by Landlord. All of
the obligations of Tenant under this Lease Agreement shall apply to any such
hold over period, except that the monthly portion of the Base Rent shall be one
hundred fifty percent (150%).

                                      19.
              REMOVAL OF FIXTURES AND OTHER ITEMS AT END OF LEASE

     To the extent consistent with other terms of this Lease Agreement, Tenant
at the expiration of this Lease Agreement shall remove all furniture and other
personal property, including fixtures, trade or otherwise. which Tenant or any
other third parties have installed upon or placed within the Demised Premises
during the term of this Lease Agreement or any extended term or holdover period
and to which Landlord is not entitled if such items can be removed without
material injury to the Demised Premises; provided, however, all repairs to the
Demised Premises required by such removal must be properly and promptly made by
Tenant at Tenant's sole cost and expense incident to such removal. All property
of Tenant remaining at the Demised Premises after the last day of the term of
this Lease Agreement or any extended term or holdover period shall conclusively
be deemed abandoned and may be removed by Landlord at Tenant's expense or
retained by Landlord.

                                      20.
                               LANDLORD'S ENTRY

     Landlord at all reasonable times may enter to view or inspect the Demised
Premises and to make repairs which Landlord may see fit to make in accordance
with Section 8 or otherwise. During a reasonable period not less than six (6)
months preceding the expiration of the initial or any extended term and
throughout any holdover period Tenant will permit Landlord to place and keep
upon and about the Demised Premises a
<PAGE>

notice that the Demised Premises are for rent and during such period Landlord
may enter the Demised Premises to show them to prospective tenants.

                                      21.
                             RULES AND REGULATIONS

     Tenant shall comply with the rules and regulations attached as Exhibit D as
Landlord may prescribe from time to time for the use, safety, care and
cleanliness of the Demised Premises, the Building, the Tract, and any Common
Areas; provided the same are applicable equally to all occupants of the
Building.

                                      22.
                                QUIET ENJOYMENT

     Landlord agrees that if Tenant shall pay the rent as aforesaid and perform
the covenants and agreements herein contained on Tenant's part to be paid and
performed, Tenant shall peaceably hold and enjoy the Demised Premises without
hindrance or interruption by the Landlord or by any other person or persons
claiming through Landlord.

                                      23.
                      SUBORDINATION AND TENANT'S ESTOPPEL

     (a) This Lease Agreement shall be deemed subject and subordinate to any
mortgage or deed of trust which may heretofore or hereafter be executed by
Landlord covering the Demised Premises or any part thereof or the Building or
the Tract and to all renewals, modifications or extensions thereof. The
Landlord's interest in this Lease Agreement may be assigned as security for any
financing now or hereafter required by Landlord. In the event any proceedings
are brought or notice given for foreclosure of any mortgage or deed of trust on
the Demised Premises or the Building or for the exercise of any rights pursuant
to any mortgage, deed of trust or assignment Tenant will attorn to the holder of
the deed of trust, mortgagee, assignee or purchaser at a foreclosure sale, as
the case may be and will recognize such holder, assignee, mortgagee or purchaser
as Landlord, providing such holder, assignee, mortgagee or purchaser agrees not
to disturb Tenant's possession so long as Tenant is not in default under the
terms of this Lease Agreement.

     (b) Tenant shall execute and deliver to Landlord at Landlord's request from
time to time, and within seven (7) days thereof (i) instruments evidencing the
subordination position of this Lease Agreement and/or (ii) estoppel certificates
setting forth the date Tenant accepted possession of the Demised Premises, that
Tenant occupies the Demised Premises, the termination date of the Lease
Agreement. the date to which rent has been paid, and the amount of monthly rent
in effect as of such certification, whether or not Tenant has any defense to the
enforcement of Tenant's lease, any knowledge Tenant has of any default or breach
by Landlord, any other matters requested
<PAGE>

by Landlord and that the Lease Agreement is in full force and effect except as
to modifications, agreements or amendments thereto, copies of each of which
including the Lease Agreement shall be attached. Failure by Tenant to comply
with any such request within such seven (7) day period shall be deemed a
conclusive admission by Tenant that this Lease Agreement remains in full force
and effect, that Tenant has no defense thereto and that Landlord is not in
breach thereunder.

                                      24.
                       CURING DEFAULTS AND LATE CHARGES

     (a)  If Tenant is required to perform or comply with any agreement or
provision hereof and shall fail to do so within the time provided therefor (or
if no time is provided therefor then within ten (10) days after demand for
compliance shall have been provided to Tenant) then, in each such case, upon the
expiration of the time provided in this Lease Agreement (except in the case of
emergency situations in which event the time frame may be shortened as
appropriate) Landlord may perform and comply therewith for the account and at
the expense of Tenant: and Tenant upon receipt of an itemized invoice of the
cost and expense thereof, agrees to pay as additional rent within thirty (30)
days of billing by Landlord the cost and expense incurred by Landlord.

     (b)  Tenant shall pay a late charge of the lesser of four percent (4%) of
all sums past due more then fifteen (15) days or the maximum amount allowed by
law and interest at the lesser rate of eighteen percent (18%) per annum on all
past due sums from the due date to the date payment is received or the maximum
amount allowed by law.

                                      25.
                               EVENTS OF DEFAULT

     (a)  For purposes of this Lease Agreement, the occurrence of any one or
more of the following shall constitute an "Event of Default" hereunder:

     (i)  Tenant fails to pay any rent or additional rent as and when due and
          such failure continues for a period of seven (7) business days after
          written notice thereof is delivered to Tenant by Landlord.
          Notwithstanding the foregoing, Landlord shall only be obligated to
          give such written notice 3 times in any 12 month period and then upon
          the 4th failure of Tenant to make timely payment, such failure shall
          constitute an Event of Default.

     (ii) Tenant breaches any other agreement or obligation herein set forth and
          shall fail to cure such breach within thirty (30) days after written
          notice is sent by Landlord; provided that if such cure by its nature
          takes more than 30 days and Tenant is diligently pursuing such cure,
          then Tenant shall not be in breach of this Lease so long as Tenant
          promptly commences the cure thereof and diligently prosecutes such
          cure until completion.
<PAGE>

     (iii)  The commencement in any court or tribunal of any proceeding,
            voluntary or involuntary, to declare Tenant insolvent or unable to
            pay its debts as and when due:

     (iv)   The assignment by Tenant of all or any part of Tenant's property or
            assets for the benefit of creditors,

     (v)    The levy or execution, attachment, or taking of property, assets, or
            the leasehold interest of Tenant by process of law or otherwise in
            satisfaction of any judgment, debt, or claim;

     (vi)   Tenant files any petition or action for relief under any creditor's
            law (including bankruptcy, reorganization, or similar actions),
            either in state or federal court:

     (vii)  Any petition or action for relief under any creditor's law
            (including bankruptcy, reorganization, or similar actions), either
            in state or federal court is filed against Tenant;

     (viii) Tenant conveys away substantially all of Tenant's assets without
            adequate consideration; or

     (ix)   Tenant is dissolved, liquidated, ceases to exist or do business or
            becomes insolvent.

     (b)    Upon the occurrence of any Event of Default, Landlord shall be
entitled, by written notice to the Tenant, to accelerate all rents and other
sums due for the remainder of the Lease, and shall be further entitled to either
(i) to terminate the term hereof or (ii) to terminate Tenant's right to
possession or occupancy only, without terminating the term of this Lease
Agreement. Unless the term is specifically terminated by notice in writing, it
shall be assumed that the Landlord has elected to terminate possession only,
without terminating the term. Any termination of the term or of possession only
shall not affect Tenant's obligations to pay accelerated rent, unaccelerated
rent or any other sums due for the remainder of the Lease.

     (c)    The remedies of terminating the term, of terminating possession or
otherwise as provided in this Lease Agreement shall be cumulative and in
addition to and not in limitation of any rights and remedies otherwise available
to the Landlord and the exercise of any rights and remedies on default shall not
preclude the exercise of any other rights and remedies available to the Landlord
at law or in equity or otherwise.
<PAGE>

                                      26.
            LANDLORD'S RIGHTS ON TERMINATION OF TERM OR POSSESSION

     (a) Upon any termination of the initial or extended term hereof, whether by
lapse of time or otherwise, or upon any termination of Tenant's right to
possession or occupancy only, without terminating the term hereof, Tenant shall
surrender possession and vacate the Demised Premises and shall deliver
possession thereof to the Landlord; and Tenant hereby grants to Landlord full
and free license to enter into and upon the Demised Premises in such event to
repossess the Demised Premises as of Landlord's former estate and to expel or
remove Tenant and any others who may be occupying the Demised Premises and to
remove therefrom any and all property, without being guilty of or liable for
trespass, eviction or forcible entry or detainer and without relinquishing
Landlord's right to rent or any other right given to Landlord hereunder or by
operation of the laws of the State of North Carolina.

     (b) If Landlord elects to terminate Tenant's right to possession only as
above provided, without terminating the term hereof. Landlord at its option may
enter into the Demised Premises, remove Tenant's property and other evidences of
tenancy and take and hold possession thereof without such entry and possession
terminating the term hereof and without releasing Tenant from its obligation to
pay rents or accelerated rent and other monetary obligations herein reserved for
the full term hereof. Upon and after entry into possession without terminating
such obligations, Landlord shall use reasonable efforts to relet the Demised
Premises, or any part for the account of Tenant to any person, firm or
corporation other than Tenant for such reasonable rent, for such time, and upon
such reasonable terms as Landlord in its sole discretion shall determine. If any
rent is to be collected by Landlord upon any such reletting for Tenant's Account
is not sufficient to pay the full amount of accelerated rent or any other rent
herein reserved (including additional rents and other charges) and any other
monetary obligations hereunder, and not heretofore paid by Tenant, together with
the reasonable costs of retaking possession and any repairs, alterations, or
redecoration necessary for such reletting, Tenant shall pay to Landlord the
amount of the entire deficiency upon demand, and if the rent to be collected
from such reletting is more than enough to pay the full amount of accelerated
rent or the rents reserved hereunder and all of the aforementioned costs,
Landlord shall be entitled to retain such excess. Notwithstanding any
termination of the right to possession without termination of the term, the
Landlord expressly reserves the right, at any time after the termination of
possession, to terminate the term of this Lease Agreement by notice of such
termination to Tenant.

     (c) The foregoing rights and remedies of Landlord are in addition to any
other rights and remedies Landlord may have at law or in equity.
<PAGE>

                                      27.
                                   NO WAIVER

     The acceptance of rentals and other payments by Landlord for any period or
periods after a default under any of the terms, covenants, and conditions herein
contained to be performed, kept and observed by Tenant shall not be deemed a
waiver of any rights on the part of the Landlord to terminate this Lease
Agreement for any other failure or for the continued failure by Tenant to so
perform, keep or observe its covenants, terms and conditions to be kept,
performed and observed by it. No waiver by Landlord of any of the terms or
conditions of this Lease Agreement shall be construed as a waiver by Landlord of
any subsequent default on the part of Tenant.

                                      28.
                                    NOTICES

     All notices, demands and requests to be given hereunder by either party
shall be in writing and must be hand delivered or sent by registered mail or by
certified mail, return receipt requested, and shall be deemed properly given
when hand delivered or sent to the following addresses or at such other address
as either party shall designate by written notice to the other.

     *Landlord:         1-40 Properties
                        P.O. Drawer 850
                        Burlington, NC 27216-0850
                        Attn: Mr. Milt Petty

     Tenant:            Biometric Research Institute, Inc.
                        1300 North 17th Street, Suite 300
                        Arlington, Virginia 22209-3801
                        Attn: Mr. James T. Ogle

     *With a copy to

     Landlord's Agent:  Vanguard . ONCOR International
                        6320 Quadrangle Drive
                        Suite 360
                        Chapel Hill, North Carolina 27514

                                      29.
                        RELOCATION OF DEMISED PREMISES.

     Landlord reserves the right to relocate the Demised Premises to comparable
space within the Park. This right may be exercised by the Landlord one time
during the initial
<PAGE>

lease term. Landlord shall give Tenant written notice of Landlords intention to
relocate the Demised Premises and Tenant shall complete such relocation within
sixty (60) days following giving of such notice by Landlord. Upon such
relocation by Tenant, then effective as of the date of such relocation, this
Lease will be amended by deleting the description of the original Demised
Premises and substituting therefor a description of such comparable space.
Landlord shall provide Tenant one month rent abatement and shall reimburse
Tenant for Tenant's actual reasonable moving costs, (including new stationery,
phone and computer relocation costs).

                                      30.
                                  LEGAL COSTS

     Should either party institute any legal proceedings against the other party
for breach of any provision herein contained, and prevail in such action, the
non-prevailing party shall be liable for the reasonable costs and expenses of
the other party, including the other party's reasonable attorney's fees and
expenses.

                                      31.
                             LIABILITY OF LANDLORD

     In the event Landlord shall fail to perform any covenant, term or condition
of this Lease Agreement upon Landlord's part required to be performed, or if
Tenant shall make any claim arising out of Tenant's occupancy or use of the
Demised Premises based upon any action or omission of Landlord, Tenant covenants
and agrees to look solely to Landlord's interest in the Building for any
recovery of money judgment from Landlord from and after the date of this Lease
Agreement. In no event shall the stockholders, partners, directors, officers,
agents or employees of Landlord (either individually or severally) be personally
liable for any such judgment. Furthermore, in no event shall Tenant be entitled
to an award of incidental or consequential damages arising out of any breach by
Landlord including but not limited to any award for damage or destruction of
Tenant's or any other person or entity's personalty or fixtures located in or
about the Demised Premises, moving expenses, storage expenses, alternative
leasing costs and expenses and costs and expenses of locating and procuring
alternative leased space.

                                      32.
                               ENTIRE AGREEMENT

     This Lease Agreement is executed with the express intent and understanding
that it shall supersede any and all prior discussions and/or agreements between
the parties hereto, it being understood and agreed that this Lease Agreement
contains the entire understanding and agreement concerning the Lease Agreement
of the Demised Premises.
<PAGE>

                                      33.
                                  AMENDMENTS

     Changes and amendments to this Lease Agreement shall be in writing and
signed by the parties affected by such change or amendment.

                                      34.
                                CONTROLLING LAW

     The Lease Agreement shall be governed by the laws of the State of North
Carolina.

                                      35.
                            SUCCESSORS AND ASSIGNS

     All of the covenants, agreements and conditions of this Lease Agreement
shall accrue to the benefit of and be binding upon the respective parties hereto
and their heirs, successors and assigns.

                                      36.
                                   NO AGENCY

     The execution of this Lease Agreement or the performance of any act
pursuant thereto shall not be deemed or construed to create between Landlord and
Tenant the relationship of principal or agent, or of a partnership or joint
venture.

                                      37.
                                 SEVERABILITY

     In the event any provision of this Lease Agreement shall be determined to
be invalid or unenforceable, the remaining provisions of this Lease Agreement
shall continue in full force and effect.

                                      38.
                                 FORCE MAJEURE

     In the event Landlord or Tenant is unable to perform any actions or
obligations required hereunder by virtue of acts of God or other events beyond
Landlord's or Tenant's control, Landlord or Tenant shall not be in breach
hereunder but shall use due diligence to perform such act or obligation when and
to the extent possible. Notwithstanding the foregoing, this shall not excuse
Tenant from the prompt payment of rent or other monies due under the Lease.
<PAGE>

                                      39.
                       RECORDATION AND LEASE MEMORANDUM

     This Lease Agreement may not be recorded without both parties' prior
written consent, but each party agrees on request of the other to execute a
memorandum hereof for recording purposes.

                                      40.
                            ASSIGNMENT BY LANDLORD

     Landlord may sell the Tract, Building or any portion thereof at any time
and this Lease Agreement may be assigned by Landlord. In the event of any such
assignment, the assignee shall be deemed the Landlord hereunder as of the
effective date of any such assignment, Tenant shall attorn to the same, and the
undersigned Landlord shall have no further liability hereunder for matters
arising after the effective date of any such assignment.

                                      41.
                               DUE AUTHORIZATION

     Tenant warrants that all necessary corporate and/or other action has been
taken by Tenant to authorize Tenant's execution of this Lease Agreement.

                                      42.
                                    BROKERS

     Landlord and Tenant respectively represent and warrant to each other that
neither of them has consulted or negotiated with any broker or finder with
regard to the Demised Premises except as identified below in this Section 42. If
none, indicate "none." Each such party shall indemnify the other against and
hold the other harmless from any claims for fees or commissions from anyone with
whom the indemnifying party has consulted or negotiated with regard to the
Demised Premises not identified herein.

     Vanguard . ONCOR International
     ------------------------------

                                      43.
                                ADA COMPLIANCE

Americans with Disabilities Act compliance is a responsibility of the landlord.
<PAGE>

                                      44.
                                   EXHIBITS

The contents and provisions set Out in any Exhibits attached hereto are
incorporated herein by reference and made a part hereof. If any provision or
provisions set out in said Exhibits are in conflict with any other provisions of
this Lease, the provision or provisions set forth in said Exhibit shall be
controlling.

                                      45.
                                RENEWAL OPTION

     If no uncured Event of Default has occurred, Tenant shall have the option
to renew the term of this Lease for one (1) period of five (5) years. To
exercise such option, Tenant shall give Landlord written notification of its
exercise not later than two hundred seventy (270) days prior to the expiration
of the Initial Lease Term. If Tenant exercises such option, it shall be under
the same terms and conditions as this Lease, and the rent shall be calculated
based on the total rentable square feet then occupied by Tenant and the rental
rate during the last year of the Initial Term Lease, including an extension of
the annual increases of Sixty Cents ($0.60) per rentable square foot per year
through and until the expiration of the extended Lease term.

                                      46.
                                RIGHT TO EXPAND

     If Tenant has not been in default of this lease, Tenant shall have the
Right to expand into Suite 260 (Expansion Space) as shown in Exhibit B, Floor
Plan. Tenant shall give Landlord written notice of Tenant's desire to expand
during the month of January, 1998, or this right will become null and void.

     If Tenant exercises this right, Landlord shall provide such space to Tenant
within 180 days of such notice. Landlord shall provide space on an "as is"
basis. Tenant to incur all costs of expansion. The rental rate psf shall be the
same as the current rent rate and schedule under this lease.
<PAGE>

     IN WITNESS WHEREOF. Landlord and Tenant have executed and sealed this Lease
Agreement in triplicate originals, all as of the day and year first above
written

                                      LANDLORD:
                                             1-40  PROPERTIES

                                           By: /s/ Maurice Koury
                                               ----------------------
                                               Authorized Signatory

ATTEST:                                    Date of Execution: 12/14/95
/s/ Milton Petty                                             ----------
--------------------------
(CORPORATE SEAL)
----------------

                                      TENANT:

                                      BIOMETRIC RESEARCH INSTITUTE, INC. (seal)

                                      By: /s/ John Stewart Marr
                                          ----------------------
ATTEST:                                   Authorized Signatory

/s/ Diane R. Dixon                    Date of Execution: 12/14/95
------------------                                      ----------
(CORPORATE SEAL)                      Tax ID#: 52-1021604
                                               ----------
<PAGE>

STATE OF VIRGINIA
COUNTY OF ARLINGTON

I, Beverly J. Smith              , a Notary Public for said County and State, do
   ----------------
hereby certify that John Stewart Marr personally appeared before me this day and
                    -----------------
acknowledged the due execution of the foregoing instrument.

     Witness my hand and official seal, this the 27th day of November, 1995
                                                 ----
/s/ Beverly J. Smith
--------------------
Notary Public
My commission expires: My Commission Expires June 30, 1998
                       ---------------------

STATE OF NORTH CAROLINA
COUNTY OF ALAMANCE

I, Susan B. Stout, a Notary Public for said County and State, do hereby
certify that Maurice Koury personally appeared before me this day and
acknowledged the due execution of the foregoing instrument.

     Witness my hand and official seal, this the 14th day of December, 1995
                                                 ----

/s/ Susan B. Stout
--------------------
Notary Public
My commission expires: 8-10-99
<PAGE>

                                   EXHIBIT A
                               LEGAL DESCRIPTION

                                Quadrangle Five

A certain tract or parcel of realty, lying and being in Triangle Township Durham
County, North Carolina being more fully described as follows:

     BEGINNING at an from pipe marking the common corner of Lot 1 and Lot 4 of
Flat Book 109 the centerpoint of Quadrangle Drive cul-de-sac and being located
on the right of way line of Quadrangle Drive; thence with the line of lands of
USA (Jordan Lake Project), a course of S 21 deg 00' 53" E for a distance of
903.70 feet to an existing iron pipe; thence continuing with the line of lands
of USA Jordan Lake Project), a course of E 76 deg 16' 11" W for a distance of
168.77 feet to existing iron pipe in the eastern right of way line of Interstate
Highway 40 (1-40); thence with the line of the eastern right of way of I-40, a
course of N 46 deg 47' 58" W for a distance of 457.59 feet to an existing iron
pipe; thence with the line of the eastern right of way of I-40, a course of N 39
deg 33' 43" W for a distance of 286.16 feet to an existing iron pipe; thence
with the line of the eastern right of way of I-40, a course of N 33 deg 48' 21"
W for a distance of 182.06 feet to an existing iron pipe marking the
southernmost corner of Lot 2 of Plat Book 109 page 188; thence with the line of
Lot 2 of Plat Book 109 page 151, a course of N 50 deg 41' 41" E for a distance
of 373.11 feet to an existing iron pipe in the right of way line of Quadrangle
Drive; thence with the right of way of Quadrangle Drive, along the arc of a
circular curve with a radius of 140.00 feet and a delta angle of 76 deg 03' 06"
for an arc length of 185.81 feet, a chord bearing of S 77 deg 19' 52" E and
chord length of 172.48 feet to an existing iron pipe, the point and place of
BEGINNING and containing 335,525 square feet or 7.703 acres, more or less.
<PAGE>

                                  EXHIBIT A-1

                                   SITE PLAN
<PAGE>

<PAGE>

                                   EXHIBIT B

                                 [FLOOR PLAN]

<PAGE>

                                  EXHIBIT B-1

                                 [SPACE PLAN]
<PAGE>

                                   EXHIBIT C
                              TENANT IMPROVEMENTS

LANDLORD'S WORK

     DESCRIPTION OF SHELL BUILDING
     -----------------------------

     Landlord, at Landlord's cost and before the application of Tenant
     improvement allowance, will complete the shell building with finished
     lobby, bathrooms core areas, and deliver Tenant space with a concrete slab,
     installed trunkline HVAC distribution system through medium pressure
     ductwork, including low pressure VAV boxes and thermostats, electrical
     capacity with sufficient power to support 1.5 watts of connected load per
     usable square foot for Tenant's convenience outlets and to support light
     fixtures at the ratio of 1 (4) tube fluorescent fixture per 85 usable
     square feet, window blinds installed, installed 2' x 2' ceiling splines
     only and sheet rock and insulation on the exterior of the corridor walls.
     Landlord will complete the parking areas serving the Building. Landlord's
     completion of shell building shall be evidenced by delivery to Tenant of
     copies of the certificate of occupancy for the building issued by the
     governmental authority with jurisdiction over such work.

     UPFIT ALLOWANCE
     ---------------

     Landlord shall provide an upfit "allowance" of $90,653 for improvements to
     the Premises. In addition, Landlord will also, at Landlord's expense,
     provide for 24 hour HVAC through building standard systems in computer
     room. In the event the costs for improvements to the premises do not exceed
     $90,653, Tenant may use the actual cost differential between the allowance
     and the actual costs as a rental credit in the first month of the lease
     term.

TENANT'S WORK

     Tenant responsible for all costs of Tenant improvements above allowance
     provided by Landlord. Tenant responsible for all phones, computer systems
     and furniture shown on Exhibit B-I Space Plan.
<PAGE>

                                   EXHIBIT D
                             RULES AND REGULATIONS

1.  The sidewalks, entrances, passages, courts, corridors, or halls shall not be
encumbered by any Tenant or used for any purpose other than ingress and egress
to and from Demised Premises.

2.  No awnings or other projections shall be attached to the outside walls of
buildings without the prior written consent of the Landlord. No curtains,
blinds, shades or screens other than Landlord's standard shall be attached to,
hung in, or used in connection with any window or door of the Demised Premises.
No bottles, parcels, or other articles may be placed on window ledges.

3.  No sign, advertisement, notice, or other lettering shall be exhibited,
inscribed, painted or affixed by any Tenant on any part of the outside of the
Premises. In the event of the violation of the foregoing by any Tenant, Landlord
may remove the same without any liability, and may charge removal expense to
Tenant. Landlord reserves the right to install and maintain a sign or signs on
the exterior of the Premises.

4.  The water, wash closets, and other plumbing fixtures shall not be used for
any other purpose other than those for which they were constructed, and no
sweeping, rubbish, rags, or other substances shall be thrown therein.

5.  No Tenant shall mark, paint drill into, or in any way deface any part of the
Demised Premises or Premises without Landlord's written consent. No boring,
cutting, or stringing of wires shall be permitted without prior written consent
of Landlord. No Tenant shall lay linoleum, or other similar floor covering, so
that the same shall come into contact with the floor of the Demised Premises,
and if linoleum or other similar floor covering is desired to be used, consent
in writing by Landlord is required. The use of cement or other similar adhesive
material being expressly prohibited.

6.  No bicycles, vehicles, birds, or animals or any kind shall be brought into
or kept in or about the Premises. No cooking shall be done or permitted by any
Tenant on said Premises without prior written consent of Landlord. However, this
does not prevent Tenant from using a microwave, or having coffee, soft drinks,
and other items for use of Tenant's employees, agents, or visitors. Tenant shall
not cause or permit any unusual or objectionable odors to be produced upon or
permeate from the Demised Premises.

7.  No space in Premises shall be used for the sale of property of any kind at
auction.

8.  No Tenant shall make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere with occupants of the Premises or neighboring
buildings or those having business with them. No Tenant shall throw anything out
of the doors or down the passageways.
<PAGE>

9.   No additional locks or bolts or any kind shall be placed upon door or
windows by any Tenant, nor shall any changes be made in existing locks or the
mechanisms thereof, without the prior written consent of Landlord. Tenant will
be supplied at move-in a reasonable number of keys to the exterior door of the
Demised Premises. Additional keys may be supplied solely and exclusively by
Landlord at a reasonable charge to Tenant. Each Tenant must upon termination of
Lease, return to Landlord all keys of offices, toilet rooms, either furnished to
or otherwise procured by Tenant.

10.  All removals or the carrying in or out of any safes, freight, furniture, or
bulky matter of any description must take place during such hours, on such
elevators and in such a manner as designated by Landlord. Business machines and
mechanical equipment shall be placed and maintained by Tenant in settings
sufficient, in Landlord's judgment, to absorb and prevent vibration, noise and
annoyance. Tenant agrees not place a load upon any floor of the Premises
exceeding, the floor load capacity which such floor was (and is) designed to
carry.

11.  No Tenant shall open, or permit windows in the Demised Premises to be
opened at any time.

12.  No part of the Premises or Demised Premises shall be used for lodging or
sleeping, or any illegal purpose.

13.  The requirements of Tenant will be attended to only upon application at the
office of the Landlord. Landlord's employees shall not perform any work on the
Demised Premises or do anything outside of their regular duties unless prior
written approval is given by Landlord.

14.  Canvassing, soliciting, and peddling on Premises is prohibited and each
Tenant shall cooperate to prevent same.

15.  All Tenants shall cooperate to prevent excessive use or abuse of parking
privileges. Parking is permitted only during time of typical office use or at
time of emergency or with prior written consent of Landlord.

16.  Any extraordinary use of HVAC, water, or electricity shall be charged to
Tenant at reasonable rates. Tenant shall not install equipment with unusual
demands for any of the foregoing without prior written consent of Landlord.

17.  No Tenant shall employ any person or persons other than the janitor of
Landlord for the purpose of cleaning the Premises unless otherwise agreed to by
Landlord in writing. Except with the written consent of Landlord, no person or
persons, other than those approved by Landlord, shall be permitted to enter the
Building for the purpose of cleaning same. No Tenant shall cause any unnecessary
labor by reason of such Tenant's
<PAGE>

carelessness or indifference in the preservation of good order and cleanliness
of the Premises.

18.  Tenant shall not waste electricity, water, or air-conditioning and agrees
to cooperate fully with Landlord to assure the most effective operation of the
Building's heating and air-conditioning and observe energy conservation
recommendations.

19.  No Tenant shall use or keep in its Demised Premises or the Building any
kerosene, gasoline, or inflammable or combustible fluid or material other than
limited quantities necessary for the operation or maintenance of office
equipment. No Tenant shall use any method of heating or air-conditioning other
than that supplied by Landlord.

20.  Each Tenant shall store all its trash and garbage within the interior of
its premises.

No materials shall be placed in the trash boxes or receptacles if such material
is of such nature that it may not be disposed of in the ordinary and customary
manner of removing and disposing of trash and garbage in this area without
violation of any law or ordinance governing such disposal All trash, garbage and
refuse disposal shall be made only through entryways and elevators provided for
such purposes and at such times as Lessor may designate. All bulk trash other
than that contained in normal office trash containers (moving boxes, etc...) are
Tenant's responsibility to remove.

21.  Landscaping: No Tenant or guest will walk through flower or other plant
beds, cut or break off flowers, twigs or other foliage, or in any way destroy
landscaping.

22.  Smoking is not permitted in any interior common areas of the Building.
Interior common areas are defined by way of illustration but not limitation as
lobbies, entrances, hallways, corridors, stairs and stairwells, elevators,
mailrooms, restrooms and other such facilities used in common with and/or for
the benefit of all Tenants. The term "Tenants" shall be deemed to include the
individual/company of record in the Lease together with it's agents, licensees,
contractors, guests, customers, clients, invitees, and assignees. Smoking in the
Building is permitted only within individual Tenant suites (as determined by
Tenant's policy).

23.  These Rules and Regulations are in addition to, and shall not be construed
or in any way modify, alter or amend, in whole or in part, the terms, covenants
agreements and conditions or any lease of premises in the Building.<PAGE>

                                                                    EXHIBIT 10.2

                  STRATEGIC PHARMACEUTICAL DEVELOPMENT, INC.
                               STOCK OPTION PLAN

1.   Purpose.  The Strategic Pharmaceutical Development, Inc. Stock Option Plan
     -------
     (the "Plan") is established to create an additional incentive for key
     employees, directors and consultants or advisors of Strategic
     Pharmaceutical Development, Inc. and any successor corporations thereto
     (collectively referred to as the "Company"), and any present or future
     parent and/or subsidiary corporations of such corporation (all of whom
     along with the Company being individually referred to as a "Participating
     Company" and collectively referred to as the "Participating Company
     Group"), to promote the financial success and progress of the Participation
     Company Group.  For purposes of the Plan, a parent corporation and a
     subsidiary corporation shall be as defined in Sections 424(e) and 424(f) of
     the Internal Revenue Code of 1986, as amended (the "Code").

2.   Administration.  The Plan shall be administered by the Board of Directors
     --------------
     of the Company (the "Board") and/or by a duly appointed committee of the
     Board having such powers as shall be specified by the Board.  Any
     subsequent references herein to the Board shall also mean the committee if
     such committee has been appointed and, unless the powers of the committee
     have been specifically limited, the committee shall have all of the powers
     of the Board granted herein, other than power to terminate or amend the
     Plan as provided in section 12 hereof, subject to the terms of the Plan and
     any applicable limitations imposed by law.  All questions of interpretation
     of the Plan or of any option granted under the Plan (an "Option") shall be
     determined by the Board, and such determinations shall be final and binding
     upon all persons having an interest in the Plan and/or any Option.  Options
     may be either incentive stock options as defined in Section 422 of the Code
     ("Incentive Stock Options") or nonqualified stock options.  Any officer of
     a Participating Company shall have the authority to act on behalf of the
     Company with respect to any matter, right, obligation, or election which is
     the responsibility of or which is allocated to the Company herein, provided
     the officer has apparent authority with respect to such matter, right,
     obligation, or election.

3.   Eligibility.  The Options may be granted only to employees (including
     -----------
     officers) and directors of the Participating Company Group or to
     individuals who are rendering services as consultants, advisors or other
     independent contractors to the Participating Company Group.  The Board, in
     its sole discretion, shall determine which persons shall be granted Options
     (an "Optionee").  A director of the Company shall be eligible to be granted
     only a nonqualified stock option unless the director is also an employee of
     the Company.  An individual who is rendering services as a consultant,
     advisor, or other independent contractor shall be eligible to be granted
     only a nonqualified stock option.  An Optionee may, if otherwise eligible,
     be granted additional Options.

4.   Shares Subject to Option.  Options shall be options for the purchase of the
     ------------------------
     authorized but unissued common stock of the Company (the "Stock"), subject
     to adjustment as provided in paragraph 10 below.  The maximum number of
     shares of Stock which may be issued
<PAGE>

     under the Plan shall be One Million, One Hundred Ninety Thousand
     (1,190,000) shares. In the event that any outstanding Option for any reason
     expires or is terminated or cancelled and/or shares of Stock subject to
     repurchase are repurchased by the Company, the shares allocable to the
     unexercised portion of such Option, or such repurchased shares, may again
     be subject to an Option grant. It is intended that the Plan shall
     constitute a written compensatory benefit plan within the meaning of Rule
     701 promulgated under the Securities Act of 1933, as amended ("Rule 701"),
     and that the Plan shall otherwise be administered in compliance with the
     requirements of Rule 701. To ensure such compliance, the Board shall
     maintain a record of shares subject to outstanding Options under the Plan
     and the exercise price of such Options, plus a record of all shares of
     Common Stock issued upon the exercise of such Options and the exercise
     price of such Options.

5.   Time for Granting Options.  All Options shall be granted, if at all, within
     -------------------------
     ten (10) years from the earlier of the date the Plan is adopted by the
     Board or the date the Plan is duly approved by the shareholders of the
     Company.

6.   Terms, Conditions and Form of Options.  Subject to the provisions of the
     -------------------------------------
     Plan, the Board shall determine for each Option (which need not be
     identical) the number of shares of Stock for which the Option is granted,
     whether the Option is to be treated as an Incentive Stock Option or as a
     nonqualified stock option and all other terms and conditions of the Option
     not inconsistent with the Plan.  Options granted pursuant to the Plan shall
     comply with and be subject to the following terms and conditions:

     (a)  Option Price.  The option price for each Option shall be established
          ------------
          in the sole discretion of the Board; provided, however, that (i) the
          option price per share for an Incentive Stock Option shall be not less
          than the fair market value of a share of Stock on the date of the
          granting of the Incentive Stock Option and (ii) the option price per
          share of an Incentive Stock Option granted to an Optionee who at the
          time the Incentive Stock Option is granted owns stock possessing more
          than ten percent (10%) of the total combined voting power of all
          classes of stock of a Participating Company within the meaning of
          section 422(b)(6) of the Code (a "Ten Percent Owner Optionee") shall
          be not less than one hundred ten percent (110%) of the fair market
          value of a share of Stock on the date the Option is granted.  For this
          purpose, "fair market value" means the value assigned to the stock for
          a given day by the Board, as determined pursuant to a reasonable
          method established by the Board that is consistent with the
          requirements of sections 422 and 424 of the Code and the regulations
          thereunder (which method may be changed from time to time).
          Notwithstanding the foregoing, an Option (whether an Incentive Stock
          Option or a nonqualified stock option) may be granted by the Board in
          its discretion with an exercise price lower than the minimum exercise
          price set forth above if such Option is granted pursuant to an
          assumption or substitution for another option in a manner qualifying
          with the

                                       2
<PAGE>

          provisions of section 424(a) of the Code. Nothing hereinabove shall
          require that any such assumption or modification will result in the
          Option having the same characteristics, attributes or tax treatment as
          the Option for which it is substituted.

     (b)  Exercise Period of Options.  The Board shall have the power to set the
          --------------------------
          time or times within which each Option shall be exercisable or the
          event or events upon the occurrence of which all or a portion of each
          Option shall be exercisable and the term of each Option; provided,
          however, that (i) no Incentive Stock Option shall be exercisable after
          the expiration of ten (10) years after the date such Incentive Stock
          Option is granted, (ii) no Incentive Stock Option granted to a Ten
          Percent Owner Optionee shall be exercisable after the expiration of
          five (5) years after the date such Incentive Stock Option is granted
          and (iii) no Incentive Stock Option shall be exercisable after the
          date the Optionee's employment with the Participating Company Group is
          terminated for cause (as determined in the sole discretion of the
          Board); and provided, further, an Option shall terminate and cease to
          be exercisable no later than three (3) months after the date on which
          the Optionee terminates employment with the Participating Company
          Group, unless the Optionee's employment with the Participating Company
          Group shall have terminated as a result of the Optionee's death or
          disability (within the meaning of Section 22(e)(3) of the Code), in
          which event the Option shall terminate and cease to be exercisable no
          later than twelve (12) months from the date on which the Optionee's
          employment terminated.  For this purpose, an Optionee's employment
          shall be deemed to have terminated on account of death if the Optionee
          dies within three (3) months following the Optionee's termination of
          employment.

     (c)  Payment of Option Price.  Payment of the option price for the number
          -----------------------
          of shares of Stock being purchased pursuant to any Option shall be
          made in cash, by check or cash equivalent.

     (d)  $100,000 Limitation.  The aggregate fair market value, determined as
          -------------------
          of the date on which an Incentive Stock Option is granted, of the
          shares of Stock with respect to which incentive stock options
          (determined without regard to this subsection) are first exercisable
          during any calendar year (under this Plan or under any other plan of
          the Participating Company Group) by any Optionee shall not exceed
          $100,000.  If such limitation would be exceeded with respect to an
          Optionee for a calendar year, the Incentive Stock Option shall be
          deemed a nonqualified stock option to the extent of such excess.

7.   Standard Form of Stock Option Agreement.  All Options shall be evidenced by
     ---------------------------------------
     a written award agreement in the form of the nonqualified stock option
     agreement attached hereto as Exhibit A or the incentive stock option award
                                  ---------
     agreement attached hereto as Exhibit B, as applicable, both of which are
                                  ---------
     incorporated herein by reference (the "Standard Option Agreements").

                                       3
<PAGE>

8.   Transfer of  Control. Upon a merger, consolidation, corporate
     --------------------
     reorganization, or any transaction in which all or substantially all of the
     assets of the Company are sold, leased, transferred or otherwise disposed
     of (other than a mere reincorporation transaction or one in which the
     holders of capital stock of the Company immediately prior to such merger or
     consolidations continue to hold at least a majority of the voting power of
     the surviving corporation) (a "Transfer of Control"), then any
     unexercisable portion of an outstanding Option shall become immediately
     exercisable as of a date prior to the Transfer of Control, which date shall
     be determined by the Board.  The exercise of any Option that was
     permissible solely by reason of this paragraph 8 shall be conditioned upon
     the consummation of the Transfer of Control.  The Board may further elect,
     in its sole discretion to provide that any Options which became exercisable
     solely by reason of this paragraph 8 and which are not exercised as of the
     date of the Transfer of Control shall terminate effective as of the date of
     the Transfer of Control.

9.   Authority to Vary Terms.  The Board shall have the authority from time to
     -----------------------
     time to vary the terms of the Standard Option Agreements either in
     connection with the grant of an individual Option or in connection with the
     authorization of a new standard form or forms; provided, however, that the
     terms and conditions of such revised or amended standard form or forms of
     stock option agreement shall be in accordance with the terms of the Plan.
     Such authority shall include, but not by way of limitation, the authority
     to grant Options which are not immediately exercisable.

10.  Effect of Change in Stock Subject to Plan.  The Board shall make
     -----------------------------------------
     appropriate adjustments in the number and class of shares of Stock subject
     to the Plan and to any outstanding Options and in the option price of any
     outstanding Options in the event of a stock dividend, stock split, reverse
     stock split, combination, reclassification or like change in the capital
     structure of the Company.

11.  Options Non-Transferable.  During the lifetime of the Optionee, the Option
     ------------------------
     shall be exercisable only by the Optionee.  No Option shall be assignable
     or transferable by the Optionee, except by will or by the laws of descent
     and distribution.

12.  Termination or Amendment of Plan.  The Board may terminate or amend the
     --------------------------------
     Plan at any time; provided however, that without the approval of the
     Company's shareholders, there shall be (a) no increase in the total number
     of shares of Stock covered by the Plan (except by operation of the
     provisions of paragraph 10 above), (b) no change in the class of persons
     eligible to receive Incentive Stock Options, and (c) no extension of the
     period during which Incentive Stock Options may be granted beyond the date
     which is ten (10) years following the date the Plan is adopted by the
     Company or the date the Plan is approved by the shareholders of the
     Company.  In any event, no amendment may adversely affect any then
     outstanding Option or any unexercised portion thereof, without the consent
     of the Optionee, unless such amendment is required to enable an Option

                                       4
<PAGE>

     designated as an Incentive Stock Option to qualify as an Incentive Stock
     Option.

13.  Miscellaneous
     -------------

     (a)  Nothing in this Plan or any Option granted hereunder shall confer upon
          any Optionee any right to continue in the employ of the Participating
          Company Group, or to serve as a director thereof, or interfere in any
          way with the right of a Participating Company to terminate his or her
          employment at any time.  Unless specifically provided otherwise, no
          grant of an Option shall be deemed salary or compensation for the
          purpose of computing benefits under any employee benefit plan or other
          arrangement of a Participating Company for the benefit of its
          employees unless the Participating Company shall determine otherwise.
          No Optionee shall have any claim to an Option until it is actually
          granted under the Plan.  To the extent that any person acquires a
          right to receive payments from the Company under the Plan, such right
          shall, except as otherwise provided by the Board, be no greater than
          the right of an unsecured general creditor of the Company.  All
          payments to be made hereunder shall be paid from the general funds of
          the Company, and no special or separate fund shall be established and
          no segregation of assets shall be made to assure payment of such
          amounts, except as otherwise provided by the Committee.

     (b)  The Plan and the grant of Options hereunder shall be subject to all
          applicable federal and state laws, rules, and regulations and to such
          approvals by any United States government or regulatory agency as may
          be required.

     (c)  The terms of the Plan shall be binding upon the Company, and its
          successors and assigns.

     (d)  This Plan and all actions taken hereunder shall be governed by the
          laws of the State of North Carolina.

     (e)  With respect to any payments not yet made to a Optionee by the
          Company,  nothing contained herein shall give any such Optionee any
          rights that are greater than  those of a general creditor of the
          Company.

     (f)  If any provision of this Plan or a Standard Option Agreement is or
          becomes or is deemed invalid, illegal or unenforceable in any
          jurisdiction, or would disqualify the Plan or any Standard Option
          Agreement under any law deemed applicable by the Board, such provision
          shall be construed or deemed amended to conform to applicable laws or
          if it cannot be construed or deemed amended without, in the
          determination of the Board, materially altering the intent of the Plan
          or the Standard Option  Agreement, it shall be stricken and the
          remainder of the Plan or the Standard Option Agreement shall remain in
          full force and effect.

                                       5
<PAGE>

  IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that
the foregoing Plan was duly adopted by the Board of Directors of the Company on
the 20th day of November, 1996.

                                                  STRATEGIC PHARMACEUTICAL
                                                  DEVELOPMENT, INC.

                                                  By: /s/  Peter J. Wise
                                                      ------------------------
                                                  Peter J. Wise, Secretary

                                       6

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