Document:

Note Financing Agreement

                                                               Exhibit 10.3

NOTE PURCHASE AGREEMENT

THIS NOTE PURCHASE AGREEMENT (the "Agreement") is dated as of May 22,
2001 (the "Effective Date") by and between Exelixis, Inc., a Delaware
corporation having its principal place of business at 170 Harbor Way, P.O. Box
511, South San Francisco, California 94083-0511 (the "Company") and Protein
Design Labs, Inc., a Delaware corporation having its principal place of
business at 34801 Campus Drive, Fremont, California 94555-3606 (the "Holder").

Recitals

A.Pursuant to the terms of the Convertible Note (the "Note"), dated
as of even date herewith between the Company and the Holder, the Holder has
loaned to the Company the principal sum of Thirty Million Dollars ($30,000,000)
(the "Principal Amount").

B. The Company has agreed to issue the Note pursuant to the terms
set forth in this Agreement. 

Now, Therefore, in consideration of the premises and promises herein
contained and in order to induce the Holder to loan to the Company the Principal
Amount, the Company agrees with the Holder as follows:

1.AUTHORIZATION AND SALE OF NOTES 

1.1Authorization of Notes. On or before the date hereof the Company
shall authorize the issuance of the Note in the form attached to this Agreement
as Exhibit A in the Principal Amount.

1.2Sale of Note. Subject to the terms and conditions hereof, the
Company will issue and sell to the Holder, and the Holder will purchase from the
Company for the Principal Amount, the Note. The Note and the shares of common
stock of the Company (the "Shares") issued upon conversion of the Note are
sometimes collectively referred to herein as the "Securities."

2.CLOSING DATE; DELIVERY

2.2Closing Date. Subject to the terms and conditions of this
Agreement, the purchase and sale of the Note hereunder shall take place at 3:00
p.m. local time at the offices of the Company, on the date hereof or at such
other time and place as the Company and the Holder may agree (the "Closing").
The date of the Closing is hereinafter referred to as the "Closing Date."

2.3Delivery. At the Closing, the Company will deliver to the
Holder the Note against payment of the Principal Amount therefor by wire
transfer in immediately available funds:
Bank: Silicon Valley Bank, Santa Clara, CA

ABA Routing: 121-140-399

Acct Number: 33001-60643

3.REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Holder as follows:

3.1Organization and Standing. The Company:

(a)is a corporation duly organized, validly existing, authorized to
exercise all its corporate powers, rights, and privileges, and in good standing
under the laws of the State of Delaware; and

(b)has the corporate power and corporate authority to own and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted.

3.2Authorization and Validity. All corporate action on the part of
the Company, its officers, directors, and stockholders necessary for the
authorization, execution, delivery, and performance of all of the Company's
obligations under this Agreement, the Note and all documents, instruments and
agreements executed in connection therewith (the "Loan Documents") and for the
authorization, issuance, and delivery of the Note has been taken and the Loan
Documents constitute legally valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms.

3.3Corporate Power. The Company has all requisite legal and
corporate power and authority to execute and deliver the Loan Documents, to sell
and issue the Note hereunder, and to carry out and perform its obligations under
the Loan Documents.

3.4Validity of Securities. The Securities, when issued, sold, and
delivered in compliance with the terms and for the consideration expressed in
this Agreement, will be duly authorized and validly issued (including without
limitation, but subject to the accuracy of the representations of Holder herein,
issued in compliance with all applicable federal and state securities laws),
fully paid and nonassessable. The Securities will be free and clear of all liens
and encumbrances other than any liens or encumbrances created by or imposed
thereon by the Holder; provided, however, that the Securities shall be subject
to restrictions on transfer under state and/or federal securities laws. The
Securities are not subject to any preemptive rights or rights of first refusal.
The Shares have been duly authorized and reserved for issuance upon conversion
of the Note. The certificate evidencing the Shares will be in due and proper
form.

3.5Securities Law Compliance. Subject to the accuracy of the
representations and warranties of the Holder set forth in Section 4, the offer,
issue, and sale of the Securities are exempt from the registration requirements
of Section 5 of the Securities Act of 1933, as amended, (the "Securities Act")
and the qualification requirements, if any, of applicable state securities
laws.

3.6No Conflict. The execution, delivery, and performance of the
Loan Documents, the sale and issuance of the Note and the consummation of the
transactions contemplated hereby and thereby will not (a) result in any
violation of, be in conflict with, or constitute a default under, with or
without the passage of time or the giving of notice: (i) any provision of the
Company's Certificate of Incorporation or Bylaws; (ii) any provision of any
judgment, decree, or order to which the Company is a party or by which it is
bound; (iii) any material contract, obligation, or commitment to which the
Company is a party or by which it is bound; or (iv) any material statute, rule,
or governmental regulation applicable to the Company, (b) (i) require any
consent, approval, authorization or other order of, or qualification with, any
court or governmental body or agency (except such as may be required under
applicable securities laws), or (ii) result in the imposition or creation of (or
the obligation to create or impose) a lien under, any agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries or their respective property is bound.

3.7Properties. The Company and its subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them that is material to the business of
the Company and its subsidiaries, in each case free and clear of all liens and
defects, except as do not materially affect the value of such property and do
not interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries; and any real property and buildings held under
lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries.

3.8SEC Filings, Financial Statements. The Company has filed with
the Securities and Exchange Commission (the "SEC") all required quarterly
reports on Form 10-Q and annual reports on Form 10-K, registration statements,
documents, and reports required to be filed by it with the SEC or, if not
required to be filed, such other reports and documents as have otherwise been
filed by the Company (collectively, the "SEC Reports"). To the knowledge of the
Company, all of the SEC Reports complied as to form, when filed, in all material
respects with the applicable provisions of the Securities Act, and the
Securities Exchange Act of 1934, as amended. As of their respective dates, the
SEC Reports did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Each of the consolidated financial statements (including notes
thereto) contained in the SEC Reports (a) was prepared in accordance with
generally accepted accounting principals applied on a consistent basis
throughout the periods involved (except as indicated in the notes thereto) and
(b) fairly presented the financial position of the Company as at the respective
dates thereof.

3.9No Material Adverse Changes. Since the filing of the Company's
Registration Statement on Form S-4, other than as set forth in the Company's SEC
Reports, (a) there has not occurred any material adverse change: (i) in the
financial condition or operations of the Company and its subsidiaries, taken as
a whole, or (ii) in the capital stock or long-term debt of the Company or any of
its subsidiaries, taken as a whole, except as contemplated under this Agreement
or development, that would reasonably be expected to involve a material adverse
change in the financial condition or operations of the Company and its
subsidiaries, taken as a whole; (b) the Company and its subsidiaries, taken as a
whole, have not sustained any material loss or interference with its assets,
businesses or properties (whether owned or leased) from fire, explosion,
earthquake, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or any court or legislative or other governmental action,
order or decree; and (c) since the date of the latest consolidated balance sheet
included in the SEC Reports, except as reflected therein, the Company has not
(A) issued any securities other than the issuance of securities pursuant to the
grant of or the exercise of options granted under stock option plans or
agreements existing prior to the date of the latest consolidated balance sheet
included in the SEC Reports, or (B) declared or paid any dividend or made any
distribution on any shares of its capital stock or redeemed, purchased or
otherwise acquired or agreed to redeem, purchase or otherwise acquire any shares
of capital stock, except to the extent provided under any stock option plans or
agreements existing prior to the latest date of the consolidated balance sheet
included in the SEC Reports.

4.REPRESENTATIONS AND WARRANTIES OF THE HOLDER

Holder hereby represents and warrants to the Company as follows:

4.1Authorization. When executed and delivered by the Holder, and
assuming execution and delivery by the Company, the Agreement will constitute a
valid obligation of such Holder, enforceable in accordance with its terms.

4.2Brokers and Finders. Holder has not retained any investment
banker, broker, or finder in connection with the transactions contemplated by
this Agreement.

4.3Investment. This Agreement is made with the Holder in reliance
upon its representations to the Company, which by the Holder's execution of this
Agreement Holder hereby confirms, that the Securities to be received by the
Holder will be acquired for investment for the Holder's own account, not as a
nominee or agent, and not with a view to the sale or distribution of any part
thereof, and that the Holder has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this
Agreement, the Holder further represents that it has no contract, undertaking,
agreement, or arrangement with any person to sell, transfer, or grant
participation to such person or to any third person, with respect to any of the
Securities.

4.4No Registration. Holder understands and acknowledges that the
offering of the Securities pursuant to this Agreement will not be registered
under the Securities Act on the grounds that the offering and sale of securities
contemplated by this Agreement are exempt from registration pursuant to Section
4(2) of the Securities Act, and that the Company's reliance upon such exemption
is predicated upon Holder's representations set forth in this Agreement

4.5Limitations on Transferability. Holder covenants that in no
event will it dispose of any of the Securities (other than pursuant to Rule 144
promulgated by the SEC under the Securities Act ("Rule 144") or any similar or
analogous rule) unless and until (i) Holder shall have notified the Company of
the proposed disposition, and (ii) if requested by the Company, Holder shall
have furnished the Company with an opinion of counsel satisfactory in form and
substance to the Company and the Company's counsel, in the reasonable exercise
of their judgment, to the effect that (x) such disposition will not require
registration under the Securities Act and (y) appropriate action necessary for
compliance with the Securities Act and any applicable state, local, or foreign
law has been taken. Notwithstanding the limitations set forth in the foregoing
sentence, if Holder is a limited liability company or a partnership it may
transfer Securities to its members or constituent partners or a retired partner
of such partnership who retires after the date hereof, or to the estate of any
such member or partner or retired partner or transfer by gift, will, or
intestate succession to any such member's or partner's spouse or lineal
descendants or ancestors without the necessity of registration or opinion of
counsel if the transferee agrees in writing to be subject to the terms of this
Agreement to the same extent if such transferee were a Holder; provided,
however, that Holder hereby covenants not to effect such transfer if such
transfer either would invalidate the securities laws exemptions pursuant to
which the Securities were originally offered and sold or would itself require
registration under the Securities Act or applicable state securities laws. Each
certificate evidencing the Securities transferred as above provided shall bear
the appropriate restrictive legends set forth in Sections 7.6 and 7.7(a) below,
except that such certificate shall not bear such legend if the transfer was made
in compliance with Rule 144 or if the opinion of counsel referred to above is to
the further effect that such legend is not required in order to establish
compliance with any provisions of the Securities Act.

4.6Experience. Holder represents that: (i) it has such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of its prospective investment in the Securities; (ii) it
has received all the information it has requested from the Company and considers
necessary or appropriate for deciding whether to purchase the Securities; (iii)
it has had the opportunity to discuss the Company's business management, and
financial affairs with its management, (iv) it has the ability to bear the
economic risks of its prospective investment; and (v) it is able, without
materially impairing its financial condition, to hold the Securities for an
indefinite period of time and to suffer a complete loss on its investment.

4.7Accredited Holder. Holder presently qualifies, and will as of
the Closing Date qualify, as an "accredited investor" within the meaning of
Regulation D of the rules and regulations promulgated under the Securities Act.

5.CONDITIONS OF THE HOLDER'S OBLIGATIONS AT CLOSING

The obligations of the Holder under Section 1 of this Agreement are
subject to the fulfillment at or before the Closing of the following conditions,
any of which may be waived by the Holder:

5.1Representations and Warranties. The representations and
warranties of the Company contained in Section 3 shall be true on and as of the
Closing with the same effect as if made on and as of the Closing.

5.2Performance. The Company shall have performed or fulfilled all
agreements, obligations, and conditions contained in the Loan Documents and
required to be performed or fulfilled by the Company before the Closing.

6.CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING

The obligations of the Company under Section 1 of this Agreement are
subject to the fulfillment at or before the Closing of the following condition,
which may be waived in writing by the Company:

6.1Representations and Warranties. The representations and
warranties of the Holder contained in Section 4 shall be true on and as of the
Closing with the same effect as if made on and as of the Closing.

7.MISCELLANEOUS

7.1Governing Law. This Agreement shall be governed by, and be
construed in accordance with, the laws of the State of California, excluding
those laws that direct the application of the laws of another jurisdiction.

7.2Survival; Termination. The warranties and representations of
the parties contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing for until the earlier
of: (a) the payment in full of all outstanding principal and interest under the
Note, or (b) the conversion of the Note into Shares, provided, however, that
such representations and warranties need only be accurate as of the date of such
execution and delivery and as of the Closing. This Agreement shall be terminated
and of no further force and effect upon earlier of: (a) the payment in full of
all outstanding principal and interest under the Note, or (b) the conversion of
the Note into Shares.

7.3Successors and Assigns. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of and be binding upon the
successors, assigns, heirs, executors and administrators of the parties
hereto.

7.4Entire Agreement; Indemnity; Waiver.

(a)Entire Agreement. This Agreement and the exhibits hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof, and supersede any and all prior
and contemporaneous agreements, understandings, discussions and
correspondence.

(b)Waiver. Holder's failure, at any time or times hereafter, to
require strict performance by the Company of any provision of this Agreement
shall not waive, affect or diminish any right of the Holder thereafter to demand
strict compliance and performance therewith. Any suspension or waiver by the
Holder of a default under the Agreement or a default under any of the other Loan
Documents shall not suspend, waive or affect any other default under this
Agreement or any other default under any of the other Loan Documents, whether
the same is prior or subsequent thereto and whether of the same or of a
different kind or character. None of the undertakings, agreements, warranties,
covenants and representations of the Company contained in this Agreement or any
of the other Loan Documents and no default under this Agreement or default under
any of the other Loan Documents shall be deemed to have been suspended or waived
by the Holder unless such suspension or waiver is in writing signed by an
officer of the Company, and directed to the Holder.

7.5Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, sent by Federal Express or other national
overnight delivery service or otherwise delivered by hand or by messenger,
addressed (a) if to the Holder, at Holder's address set forth below or at such
other address as the Holder shall have furnished to the Company in writing or
(b) if to any other holder of any Note, at such address as such holder shall
have furnished the Company in writing or, until any such holder so furnishes an
address to the Company, then to and at the address of the last holder of such
Note who has so furnished an address to the Company, or (c) if to the Company,
at its address set forth below, or at such other address as the Company shall
have furnished to the Holder.

	
Holder:
	
Company:

	
Protein Design Labs, Inc.
	
Exelixis, Inc.

	
34801 Campus Drive
	
170 Harbor Way

	
Fremont, CA 94555-3606
	
P. O. Box 511

	
Attn: General Counsel
	
South San Francisco, CA 94083-0511

	 	
Attn: General Counsel

	 	 

7.6California Corporate Securities Law. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM THE QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE.

7.7Legends.

(a)All certificates for the Securities shall bear a legend
substantially similar to the following:
"The securities represented hereby have not been registered under the
Securities Act of 1933, as amended ("Securities Act"). Such securities may not
be transferred unless a Registration Statement under the Act is in effect as to
such transfer or, in the opinion of counsel for the Company, registration under
the Act is unnecessary in order for such transfer to comply with the Act or
unless sold pursuant to Rule 144 of the Act."

(b)The certificates evidencing the Securities shall also bear any
legend required pursuant to any state, local, or foreign law governing such
securities.

7.8Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and year
first above written.

	 	
COMPANY:

	

	
EXELIXIS, INC.,

a Delaware corporation

	 	
_________________________________

	 	
George A. Scangos

	 	
Chief Executive Officer

	
 
	 
	 	
HOLDER:

	 	
PROTEIN DESIGN LABS, INC.,

a Delaware corporation

	 	
___________________________

	 	
Laurence Jay Korn

	 	
Chairperson and Chief Executive OfficerST PAUL COMMERCIAL LEASE AGREEMENT

                                                               Exhibit 10.4

	
STANDARD COMMERCIAL LEASE AGREEMENT
	
Approximately 27,259 square
feet

	
(REV. - 6/85)
	
3850 Annapolis Lane

	 	
Plymouth, Minnesota 55447

 

LEASE AGREEMENT

THIS LEASE AGREEMENT is between ST. PAUL PROPERTIES,
INC., a Delaware corporation ("Landlord") and PROTEIN DESIGN LABS, INC., a
Delaware corporation ("Tenant"). 

W I T N E S S E T H:

	Premises and Term. In consideration of the
obligation of Tenant to pay rent as herein provided, and in consideration of the
other terms, provisions and covenants hereof, Landlord hereby leases to Tenant,
and Tenant hereby takes from Landlord certain premises situated within the
County of Hennepin, State of Minnesota, as shown outlined in red on the plan
attached hereto as EXHIBIT A (the "Premises"), which is located in a building or
buildings (collectively, the "Building") situated on the real property described
on EXHIBIT A-1 attached hereto (the "Property") and incorporated herein by
reference, together with all rights, privileges, easements, appurtenances, and
immunities belonging to or in any way pertaining to the leased
premises.

TO HAVE AND TO HOLD the same for a term commencing on the
"commencement date," as hereinafter defined, and ending February 28, 2009,
unless sooner terminated as hereinafter provided.

The commencement date shall be June 1, 2001. Taking of
possession by Tenant shall be deemed conclusively to establish that the Premises
have been completed and that the Premises are in good and satisfactory
condition, as of when possession was so taken. Tenant acknowledges that no
representations as to the condition of the Premises or the Building have been
made by Landlord, unless such are expressly set forth in this lease. On or
before such commencement date Tenant shall, upon demand, execute and deliver to
landlord a letter of acceptance of delivery of the Premises, on Landlord's
standard form. Landlord and Tenant acknowledge that all leasehold improvements
to be placed in the Premises shall be constructed and placed therein by Tenant
and/or Tenant's contractors, pursuant to EXHIBIT B attached hereto and made a
part hereof, and, notwithstanding anything in the Lease to the contrary,
Landlord's obligation to complete the Premises shall be satisfied by Landlord's
delivery to Tenant of the Building shell as currently constructed and in an "AS-
IS" condition. 

	Base Rent and Security Deposit.

	Tenant agrees to pay to Landlord base rent for the
Premises, in advance, without demand, deduction or set off, for the entire term
hereof at the rate of

$13,061.60 per month for the period beginning on the
commencement date and ending on the last day of the forty-eighth
(48th) full calendar month thereafter, 

$15,333.19 per month for the period beginning on the first
day of the forty-ninth (49th) full calendar month of the term and
ending on the last day of the eighty-fourth (84th) full calendar
month of the term; and

$16,468.98 per month for the period beginning on the first
day of the eighty-fifth (85th) full calendar month of the term and
ending on the last day of the ninety-third (93rd) full calendar month
of the term (such last day of the ninety-third (93rd) full calendar
month of the term or any earlier date as to which the term is terminated as
provided herein is hereinafter the "Expiration Date"),

except that the monthly installment which otherwise shall be
due on the commencement date shall be due and payable on the date hereof.
Thereafter, one such monthly installment shall be due and payable without demand
on or before the first day of each calendar month succeeding the commencement
date during the term hereof, except that the rental payment for any fractional
calendar month at the commencement or end of the lease period shall be
prorated.

	In addition, Tenant agrees to deposit with Landlord on
the date hereof the sum of Zero Dollars ($0.00), which sum shall be held by
Landlord, without interest, as security for the performance of Tenant's
covenants and obligations under this lease, it being expressly understood and
agreed that such deposit is not an advance rental deposit or a measure of
Landlord's damages in case of Tenant's default. Upon the occurrence of any event
of default by Tenant, Landlord may, from time to time, without prejudice to any
other remedy provided herein or provided by law, apply such fund to any arrears
of rent or other payments due Landlord hereunder, and any other damage, injury,
expense or liability caused by such event of default without waiving such
default; and Tenant shall pay to Landlord on demand the amount so applied in
order to restore the security deposit to its original amount. Although the
security deposit shall be deemed the property of Landlord, any remaining balance
of such deposit shall be returned by Landlord to Tenant at such time after
termination of this lease that all of Tenant's obligations under this lease have
been fulfilled. If the Property is conveyed by Landlord and Landlord delivers
said deposit to Landlord's grantee, Landlord shall have no further liability to
Tenant with respect to said deposit and its application or return.

	Use. The premises shall be used only for the
purpose of receiving, manufacturing, storing, shipping and selling (other than
retail) products, materials and merchandise made and/or distributed by Tenant
and for such other lawful purposes as may be incidental thereto; provided
however that Tenant agrees that if the City of Plymouth or any other entity
notifies Tenant that manufacturing is in violation of the zoning code of the
City of Plymouth, Tenant shall take such steps as necessary to cause the
operation of Tenant's business in the Premises to comply with said zoning code;
and provided further that Tenant further agrees that any such notification by
the City of Plymouth or other entity shall not work a constructive eviction or
entitle Tenant to terminate this Lease and there shall be no reduction in base
rent or Operating Costs (as hereinafter defined) as a result of such violation
and/or such corrective steps. Outside storage, including without limitation,
trucks and other vehicles, garbage containers and outdoor furniture are
prohibited without Landlord's prior written consent. Tenant shall at its own
cost and expense obtain any and all licenses and permits necessary for any such
use. Tenant shall comply with all governmental laws, ordinances and regulations
applicable to the use of the Premises, and shall promptly comply with all
governmental orders and directives for the correction, prevention and abatement
of nuisance in or upon, or connected with, the Premises, all at Tenant's sole
expense. Tenant shall not receive, store or otherwise handle on the Premises any
product, material or merchandise which is explosive or highly flammable. Tenant
will not permit the Premises to be used for any purpose or in any manner
(including without limitation any method of storage) which would render the
insurance on the Building or the Property void or the insurance risk more
hazardous or cause the State Board of Insurance or other insurance authority to
disallow any sprinkler credits. If any increase in the fire and extended
coverage insurance premiums paid by Landlord for the Building is caused by
Tenant's use and occupancy of the Premises, then Tenant shall pay to landlord as
additional rent the amount of such increase. Notwithstanding Tenant's obligation
to comply with laws, Tenant shall have no obligation to remedy any instances of
noncompliance as to the Building shell which Landlord is obligated to repair
pursuant to Paragraph 1 above, and in no event shall Tenant have any liability
for toxic or hazardous materials except to the extent caused by Tenant, its
agents, servants, contractors, licensees or invitees except, as to such invitees
Tenant shall only have liability if Tenant knew or reasonably should have known
that its invitee was bringing Hazardous Substances (as defined in Paragraph 26)
onto the Property.

	Operating Costs.

	Upon demand, Tenant shall pay to Landlord, as
additional rent during the term hereof, Tenant's proportionate share of
Operating Costs, as hereinafter defined, calculated on the basis of the ratio
set forth in Paragraph 4E.

As used in this lease, the term "Operating Costs" shall
mean any and all expenses, costs and disbursements of any kind and nature
whatsoever incurred by Landlord in connection with the ownership, management,
maintenance, operation and repair of the Property or the Building which landlord
shall pay or become obligated to pay in respect of a calendar year (regardless
of when such Operating Costs were incurred). Operating Costs shall include,
without limitation, the costs of maintenance, repairs, and replacements to the
Building including roof, walls, downspouts, gutters, painting, and sprinkler
systems; the costs of maintaining and repairing parking lots, parking structures
and easements; property management fees, salaries, fringe benefits and related
costs payable to employees of Landlord whose duties are connected with the
Property; insurance costs, all heating and air conditioning costs, electricity,
sewer and water and other utility costs not separately metered to tenants,
landscape maintenance, trash and snow removal, taxes, as defined in Paragraph
4F, and costs and expenses incurred by Landlord in protesting any assessments,
levies or the tax rate, provided, however, that Operating Costs shall not
include the following: (i) costs of alterations of any tenant's premises; (ii)
costs of curing construction defects; (iii) depreciation; (iv) interest and
principal payments on mortgages, and other debt costs; (v) real estate brokers'
leasing commissions or compensation; (vi) any cost or expenditure (or portion
thereof) for which landlord is reimbursed, whether by insurance proceeds or
otherwise; and (vii) cost of any service furnished to any other occupant of the
Building which landlord does not provide to Tenant hereunder. Notwithstanding
anything contained herein to the contrary, depreciation of any structural
repairs or replacements to the Building, or of any capital improvements made
after the date of this lease which are intended to reduce Operating Costs or of
any capital improvements which are required under any governmental laws,
regulations, or ordinances which were not applicable to the Building at the time
it was constructed, shall be included in Operating Costs. The useful life of any
such improvement, structural repair or replacement shall be reasonably
determined by Landlord. In addition, interest on the undepreciated cost of any
such improvement, structural repair or replacement (at the prevailing
construction loan rate available to Landlord on the date the cost of such
improvement was incurred) shall also be included in Operating Costs.
Notwithstanding anything to the contrary contained in the Lease, Operating Costs
shall, in no event, include the following:

	Repairs or other work occasioned by fire, windstorm or
other casualty except the amount of any "deductible" payable under insurance
policies and except glass breakage and/or earthquake damage if not insured
against, or by exercise of the right of eminent domain;

	Leasing commissions, attorney's fees, costs and
disbursements and other expenses incurred in connection with negotiations or
disputes with tenants, other occupants, or prospective tenants or other
occupants;

	Expenses of renovating or otherwise improving or
decorating, painting or redecorating space for tenants or other occupants or
vacant space;

	Landlord's costs of electricity and other services sold
to tenants of the building and for which Landlord is entitled to be reimbursed
by tenants as an additional charge or rental over and above the basic rent
payable under the lease with such tenant, other than that billed as rent
escalation;

	Depreciation;

	Costs of a capital nature, including, but not limited to,
capital improvements, capital repairs, capital equipment, and capital tools all
in accordance with generally accepted accounting principles, except for the
yearly amortized portion of said capital costs;

	Expenses in connection with services or other benefits of
a type which are not provided Tenant but which are provided to another tenant or
occupant of the Building;

	Costs incurred due to violation by Landlord or any other
tenant of the terms and conditions of this Lease;

	Overhead and profit increment paid to subsidiaries or
affiliates of Landlord for services on or the real property, to the extent only
that the costs of such services exceed competitive costs of such services were
they not so rendered by a subsidiary or affiliate;

	Interest on debt or amortization payments on any mortgage
or mortgages, and rental under any ground or underlying leases or lease; or
rental or lease payments for parking;

	Landlord's general corporate overhead and general
administrative expenses;

	Any compensation paid to clerks, attendants or other
persons in commercial concessions operated by Landlord;

	All items and services for which Tenant reimburses
Landlord or pays third persons; and

	Advertising and promotional expenditures.

	Promptly after the commencement of this lease and during
December of each year or as soon thereafter as practicable, Landlord shall give
Tenant written notice of its estimate of amounts payable under Paragraph 4A for
the ensuing calendar year. On or before the first day of each month thereafter,
Tenant shall pay to Landlord as additional rent one/twelfth (1/12th )
of such estimated amounts, provided that if such notice is not given in
December, Tenant shall continue to pay on the basis of the prior year's estimate
until the first day of the month after the month in which such notice is given.
If at any time it appears to Landlord that the amounts payable under Paragraph
4A for the then current calendar year will vary from its estimate by more than
five percent (5%). Landlord may, by written notice to Tenant, revise its
estimate for such year, and subsequent payments by Tenant for such year shall be
based upon such revised estimate.

Within ninety (90) days after the close of each calendar
year or as soon thereafter as practicable, Landlord shall deliver to Tenant a
summary of the total Operating Costs for the previous calendar year and Tenant's
proportionate share thereof. If such summary shows an amount due from Tenant
that is less than the estimated payments previously paid by Tenant, it shall be
accompanied by a refund of the excess to Tenant. If such summary shows an amount
due from Tenant that is more than the estimated payments previously paid by
Tenant, Tenant shall pay the deficiency to Landlord, as additional rent, within
thirty (30) days after delivery of the summary.

	Tenant or its representatives shall have the right to
examine Landlord's books and records of Operating Costs during normal business
hours within sixty (60) days following the furnishing of the summary to Tenant.
Unless Tenant takes written exception to any item within ninety (90) days
following the furnishing of the summary to Tenant (which item shall be paid in
any event), such summary shall be considered as final and accepted by Tenant. If
it is determined that Tenant paid Operating Costs in excess of one hundred and
five percent (105%) of actual Operating Costs, Landlord shall pay the reasonable
costs of Tenant's audit within thirty (30) days after receipt of copies of
invoices with proof of payment detailing such costs.

	If Landlord selects the accrual accounting method rather
than the cash accounting method for operating expense purposes, Operating Costs
shall be deemed to have been paid when such expenses have accrued.

	For purposes hereof the Premises total 27,259 square
feet. The Building totals 106,070 square feet. Tenant's "proportionate share" of
25.7% is arrived at by dividing 106,070 into 27,259.

	Landlord agrees to pay before they become delinquent all
taxes, installments of special assessments and governmental charges of any kind
and nature whatsoever (herein collectively referred to as "taxes") lawfully due
and payable with respect to the Building and the Property.

	If at any time during the term of this lease, the present
method of taxation shall be changed so that in lieu of the whole or any part of
any taxes, assessments or governmental charges levied, assessed or imposed on
real estate and the improvements thereon, there shall be levied, assessed or
imposed on Landlord a capital levy or other tax directly on the rents received
therefrom and/or a franchise tax, assessment, levy or charge measured by or
based, in whole or in part, upon such rents for the present or any future
building or buildings on the Property, then all such taxes, assessments, levies
or charges, or the part thereof so measured or based, shall be deemed to be
included within the term "taxes" for the purposes hereof.

	Landlord's Responsibilities. Landlord shall
maintain in good repair, reasonable wear and tear and any casualty covered by
the provisions of Paragraph 12A excepted, all parts of the Building, other than
tenants' premises, making all necessary repairs and replacements, whether
ordinary or extraordinary, structural or nonstructural, including roof,
foundation, walls, downspouts, gutters, sprinkler system; regularly mow any
grass, remove weeds and perform general landscape maintenance; and maintain and
repair the parking lot and driveway areas. Tenant shall immediately give
Landlord written notice of any defect or need for repairs after which Landlord
shall have a reasonable opportunity to repair the same or cure such defect.
Landlord's liability with respect to any defects, repairs or maintenance for
which Landlord is responsible under any of the provisions of this Lease shall be
limited to the cost of such repairs or maintenance or the curing of such defect.
The term "walls" as used herein shall not include windows, glass or plate glass,
doors, special store fronts or office entries.

	Tenant's Responsibilities.

	Tenant shall at its own cost and expense keep and
maintain all parts of the Premises (except as provided in Paragraph 5) in good
condition, promptly making all necessary repairs and replacements, including but
not limited to, windows, glass and plate glass, doors, any special entry,
interior walls and finish work, floors and floor covering, heating and air
conditioning systems, dock boards, truck doors, dock bumpers, plumbing work and
fixtures, termite and pest extermination, regular removal of trash and debris
and keeping the parking areas, driveways, alleys and the whole of the Premises
in a clean and sanitary condition. Tenant shall not be obligated to repair any
damage caused by fire, tornado or other casualty covered by the insurance to be
maintained by Landlord pursuant to Paragraph 12A, except that Tenant shall be
obligated to repair all wind damage to glass unless caused by a
tornado.

	Tenant shall not, without Landlord's prior written
approval, damage any demising wall or disturb the integrity and support provided
by any demising wall and shall, at its sole cost and expense, promptly repair
any damage or injury to any demising wall caused by Tenant or its employees,
agents or invitees.

	Tenant and its employees, customers and licensees shall
have the nonexclusive right to use, in common with the other parties occupying
the Building, common parking areas, if any (exclusive of any parking or work
load areas designated or to be designated by Landlord for the exclusive use of
Tenant or other tenants occupying or to be occupying other portions of the
Building), driveways and alleys adjacent to the Building, subject to such
reasonable rules and regulations as Landlord may from time to time
prescribe.

	Intentionally Deleted.

	Tenant shall, at its own cost and expense, either (1)
enter into a regularly scheduled preventive maintenance/service contract with a
qualified maintenance contractor; or (2) undertake its own program, utilizing
its own employees, for servicing all hot water, heating and air conditioning
systems and equipment serving the Premises. If Tenant elects to proceed under
clause (1) above, the maintenance contractor and the contract must be approved
by Landlord, and must include all services suggested by the equipment
manufacturer in the operation/maintenance manual and must become effective (and
a copy thereof delivered to Landlord) within thirty (30) days after the date
Tenant enters into such maintenance/service contract. If Tenant elects to
proceed under clause (2) above, Tenant understands and agrees that:

(x)all costs of maintaining and replacing the Tenant HVAC
Equipment and the Existing HVAC Equipment (as those terms are defined in
Paragraph 28 hereof) shall be borne solely by Tenant.

(y)notwithstanding anything to the contrary in this
Lease, Tenant shall be liable to Landlord for all costs incurred by Landlord in
repairing or replacing the roof of the Building in excess of those costs which
would have been incurred by Landlord if Tenant had not placed the Tenant HVAC
Equipment on the roof of the Building; and

(z)On or before November 30 of each of 2004 and 2007, and
simultaneously with any request for (i) an assignment of this Lease; (ii) a
sublease of all or a portion of the Premises; or (iii) early termination of this
Lease, Tenant shall deliver to Landlord a written report on the condition of the
Tenant HVAC Equipment and the Existing HVAC Equipment, which report shall be
based on an inspection of the condition of the Tenant HVAC Equipment performed
by a qualified maintenance contractor and which report shall contain such
qualified maintenance contractor's estimate of the remaining useful life of the
Tenant HVAC Equipment and the Existing HVAC Equipment.

	Tenant shall upon demand by Landlord, pay, as additional
rent, the cost and expense of repairing any damage to the Premises resulting
from and/or caused in whole or in part by the negligence or misconduct of
Tenant, its agents, servants, employees, patrons, customers, or any other person
entering upon the property as a result of Tenant's business activities or caused
by Tenant's default hereunder to the extent the cost of repairing such damage is
not reimbursed by the insurance to be maintained by Landlord under Paragraph
12A.

	Alterations. Tenant shall not make any
alterations, additions or improvements to the Premises (including but not
limited to roof and wall penetrations) without the prior written consent of
Landlord, except that Tenant may make alterations which do not cost, in the
aggregate, more than Five Thousand Dollars ($5,000.00) each; provided such
alterations do not affect the Building structure or systems, including, but not
limited to, HVAC, plumbing, mechanical and electrical systems (collectively, the
"Building Systems"), in which case Landlord's prior written consent must be
obtained, which consent shall not be unreasonably withheld or delayed. Tenant
may, without the consent of Landlord, but at its own cost and expense and in a
good workmanlike manner erect such shelves, bins, machinery and trade fixtures
as it may deem advisable, without altering the basic character of the Building
and without overloading or damaging such Building, and in each case complying
with all applicable governmental laws, ordinances, regulations and other
requirements. Prior to commencing any such alterations, additions or
improvements Tenant shall provide such assurances to Landlord, including but not
limited to waivers of lien, surety company performance and payment bonds and
personal guaranties of persons of substance, as Landlord shall reasonably
require to assure payment of the costs thereof and to protect Landlord against
any loss from mechanics', laborers', materialmen's or other liens. All
alterations, additions, improvements and partitions, including, without
limitation, all telephone and data communications cabling erected by Tenant
shall be and remain the property of Tenant during the term of this lease and, at
Landlord's sole and absolute discretion, and by notice given to Tenant prior to
the end of the term, Tenant shall, as designated by Landlord, remove that
portion (which may be none, some or all) of the alterations, additions,
partitions and improvements, including, without limitation (a) the improvements
to be constructed pursuant to the Work Letter Agreement attached hereto as
EXHIBIT B; (b) all equipment, including, without limitation, all Tenant HVAC
Equipment, as contemplated by Paragraphs 6.E.; and (c) all telephone and data
communications cabling, including, without limitation, the fiberoptic cable
installed by Tenant pursuant to that certain License Agreement dated October 19,
1999, to the extent placed thereon by Tenant or at Tenant's request or
direction, and Tenant shall otherwise proceed in accordance with Paragraph 6.E.
hereof. Any alterations, additions, improvements and partitions not designated
by Landlord to be removed pursuant to this Paragraph shall become the property
of Landlord as of the Expiration Date or earlier termination of this Lease and
shall be delivered up to the Landlord with the Premises. All shelves, bins,
machinery and trade fixtures installed by Tenant shall be removed by Tenant by
the date of termination of this lease or upon earlier vacating of the Premises
if required by Landlord; upon any such removal Tenant shall restore the Premises
to their original condition. Any removals and restorations required by this
Paragraph 7 shall be accomplished in a good workmanlike manner and shall not
damage the primary structure qualities of the Building. All obligations of
Tenant to restore the Premises shall be subject to the rights and obligations of
the parties in the event of the occurrence of a casualty covered by Paragraph
12(b), condemnation pursuant to Paragraph 15.

	Signs/Window Coverings. Tenant shall not, without
the prior written consent of Landlord, install or affix any window coverings,
blinds, draperies, signs, window or door lettering or advertising media of any
type on the Property, the Building or in or on the Premises which are visible
from the exterior of the Building. Any permitted signs shall be subject to any
applicable governmental laws, ordinances, regulations and other requirements.
Tenant shall remove any permitted signs and window coverings upon the
termination of this lease. Any such installations and removals shall be made in
such manner as to avoid injury or defacement of the Building and other
improvements, and Tenant shall repair any injury or defacement, including
without limitation discoloration, caused by such installation and/or
removal.

	Inspection. Landlord and Landlord's agents and
representatives shall have the right to enter and inspect the Premises at any
reasonable time upon four hours prior notice on business days and upon twenty-
four hours prior notice on non-business days and, in accordance with Tenant's
standard security procedures, except in the event of an emergency when no notice
or compliance with Tenant's security procedures shall be required, for the
purpose of ascertaining the condition of the Premises or in order to make such
repairs as may be required or permitted to be made by Landlord under the terms
of this lease. During the period that is six (6) months prior to the end of the
term hereof, Landlord and Landlord's agents and representatives shall have the
right to enter the Premises at any reasonable time for the purpose of showing
the Premises and shall have the right to erect on the Premises a suitable sign
indicating the Premises are available. Tenant shall give written notice to
Landlord at least thirty (30) days prior to vacating the Premises and shall
arrange to meet with Landlord for a joint inspection of the Premises prior to
vacating. In the event of Tenant's failure to give such notice or arrange such
joint inspection, Landlord's inspection at or after Tenant's vacating the
Premises shall be conclusively deemed correct for purposes of determining
Tenant's responsibility for repairs and restoration.

	Utilities. Tenant shall pay for all water, gas,
heat, light, power, telephone, sewer and sprinkler charges and other utilities
and services separately metered for the Premises, together with any taxes,
penalties, surcharges or the like pertaining thereto and shall furnish and
install all replacement electric light bulbs and tubes. Landlord shall in no
event be liable for any interruption or failure of utility services on the
Premises.

	Assignment and Subletting.

	Tenant shall not have the right to assign or pledge
this lease or to sublet the whole or any part of the Premises, whether
voluntarily or by operation of law, or permit the use or occupancy of the
Premises by anyone other than Tenant, without the prior written consent of
Landlord, which consent shall not be unreasonably withheld or delayed, and such
restrictions shall be binding upon any assignee or subtenant to which Landlord
has consented. For the purpose of determining whether the withholding of
Landlord's consent is reasonable, the following are the criteria by which
Landlord will determine the acceptability of a proposed assignee or subtenant:
(1) the occupancy of any assignee or subtenant is not, in Landlord's reasonable
judgment, inconsistent with the character of the Building; (2) such assignee or
subtenant shall assume in writing the performance of the covenants and
obligations of Tenant hereunder; (3) a fully executed copy of any such
assignment or sublease shall be immediately delivered to Landlord, but the
making of such assignment or sublease shall not be deemed to release Tenant from
the payment and performance of any of its obligations under this Lease; (4) such
assignment or subletting is approved by any mortgagee holding a mortgage
covering the Premises which reserves such right under its mortgage; (5) Tenant
is not in default of this Lease on the date of the assignment or sublease; and
(6) at least fifteen (15) days prior to the execution of any assignment or
sublease (a) as to a proposed assignee or subtenant which is not an affiliate of
Tenant, Landlord is given financial statements of the proposed assignee or
subtenant, which financial statements shall show a financial condition equal to
the lesser of (i) the financial condition shown in Tenant's audited financial
statement dated as of December 31, 2000, a copy of which is attached hereto as
EXHIBIT D; or (ii) the financial condition necessary to meet Landlord's then-
current standards (including credit enhancements if then required by Landlord)
for leasing space similar to the Premises to new tenants in Plymouth Business
Center; or (b) as to a proposed assignee or subtenant which is an affiliate of
Tenant, Tenant provides to Landlord, in form and substance satisfactory to
Landlord, a guaranty of an affiliate of Tenant which has a net worth equal to or
greater than Tenant's net worth as of the date of this Lease. For the purposes
of this Lease, "affiliate" shall mean, with respect to a party, any person or
entity that controls, is controlled by or is under common control with such
party, with "control" and its derivatives meaning (x) as to a publicly held
company, ownership of 5 percent or more of the voting interests of the entity in
question; or (y) as to all other entities, 50 percent or more of the voting
interests in the entity in question. In the event Tenant desires to sublet the
Premises, or any portion thereof, or assign this lease, Tenant shall give
written notice thereof to Landlord with a reasonable time prior to the proposed
commencement date of such subletting or assignment, which notice shall set forth
the name of the proposed subtenant or assignee, the relevant terms of any
sublease and copies of financial reports and other relevant financial
information of the proposed subtenant or assignee. Notwithstanding any permitted
assignment or subletting, Tenant shall at all times remain directly, primarily
and fully responsible and liable for the payment of the rent herein specified
and for compliance with all of its other obligations under the terms, provisions
and covenants of this lease. Upon the occurrence of an "event of default" (as
hereinafter defined), if the Premises or any part thereof are then assigned or
sublet, Landlord, in addition to any other remedies herein provided or provided
by law, may, at its option, collect directly from such assignee or subtenant all
rents due and becoming due to Tenant under such assignment or sublease and apply
such rent against any sums due to landlord from Tenant hereunder, and no such
collection shall be construed to constitute a novation or release of Tenant from
the further performance of Tenant's obligations hereunder.

If Landlord grants its consent to any sublease or
assignment, Tenant shall pay Landlord, as additional rent, in addition to the
base rent payable hereunder (a) fifty percent (50%) of rent payable to Tenant by
the assignee or sublessee (the "Subrent") if such Subrent exceeds the base rent
payable hereunder, it being understood and agreed that Tenant shall pay all
costs associated with such sublease or assignment, including, without
limitation, leasehold improvement costs, brokerage commissions and its own legal
fees and costs; and (b) Landlord's attorneys' fees incurred with respect to such
assignment or sublease. In addition, if Tenant has any options to extend or
renew the Term, such options shall not be available to any subtenant or assignee
directly or indirectly. If Tenant assigns this Lease or sublets all or a portion
of the Premises without first obtaining Landlord's consent, as required by this
Paragraph 15.A, said assignment or sublease shall be null and void and of no
force or effect. Landlord's consent to an assignment, sublease or other transfer
of any interest of Tenant in this Lease or in the Premises shall not be deemed
to be a consent to any subsequent assignment, transfer, use or occupation. 

Tenant shall, at Tenant's own cost and expense, discharge
in full any outstanding commission obligation on the part of Landlord with
respect to this lease, and any commissions which may be due and owing as a
result of any proposed assignment or subletting, whether or not the Premises are
recaptured pursuant hereto and rented by Landlord to the proposed tenant or any
other tenant.

	In addition, but not in limitation of, Landlord's right
to approve of any subtenant or assignee, Landlord shall have the option, in its
sole discretion, in the event of any proposed subletting or assignment to a non-
affiliate of Tenant, to terminate this lease, or in the case of a proposed
subletting of less than the entire Premises, to recapture the portion of the
Premises to be sublet, as of the date the subletting or assignment is to be
effective. The option shall be exercised, if at all, by Landlord giving Tenant
written notice thereof within thirty (30) days following Landlord's receipt of
Tenant's written notice as required above; provided however that the recapture
and termination described in this paragraph shall be void and of no further
force and effect if, within ten days after receipt of Landlord's written notice,
Tenant withdraws its proposed assignment or sublease. If this lease shall be
terminated with respect to the entire Premises pursuant to this subparagraph,
the term of this lease shall end on the date stated in Tenant's notice as the
effective date of the sublease or assignment as if that date had been originally
fixed in this lease for the expiration of the term hereof. If Landlord
recaptures only a portion of the Premises under this subparagraph, the rent
during the unexpired term shall abate proportionately based on the rent
contained in this lease as of the date immediately prior to such
recapture.

	Fire and Casualty Damage.

	Landlord agrees to maintain standard fire and
extended coverage insurance covering the Building in an amount not less than
100% (or such greater percentage as may be necessary to comply with the
provisions of any co-insurance clauses of the policy) of the "replacement cost"
thereof as such term is defined in the Replacement Cost Endorsement to be
attached thereto, insuring against the perils of fire, lightning and extended
coverage, such coverages and endorsements to be as defined, provided and limited
in the standard bureau forms prescribed by the insurance regulatory authority
for the state in which the Building is situated for use by insurance companies
admitted in such state for the writing of such insurance on risks located within
such state. Subject to the provisions of Paragraphs 12C, 12D and 12E, such
insurance shall be for the sole benefit of Landlord and under its sole
control.

	If the Building should be damaged or destroyed by fire,
tornado or other casualty, Tenant shall give immediate written notice thereof to
Landlord.

	If the Building should be damaged or destroyed by fire,
tornado or other casualty, or if it should be so damaged thereby that rebuilding
or repairs cannot in Landlord's estimation be completed within two hundred (200)
days after the date upon which Landlord is notified by Tenant of such damage,
this Lease shall terminate and the rent shall be abated during the unexpired
portion of this lease, effective upon the date of the occurrence of such damage,
unless Landlord and Tenant mutually agree that the Building should be
reconstructed upon terms acceptable to both parties, in which case this Lease
shall continue and Tenant's Base Rent and Operating Cost obligations shall be
payable in accordance Paragraph 12.D. hereof.

	If the Building should be damaged by any peril covered by
the insurance to be provided by Landlord under Paragraph 12A, but only to such
extent that rebuilding or repairs can in Landlord's estimation be completed
within two hundred (200) days after the date upon which Landlord is notified by
Tenant of such damage (except that Landlord may elect not to rebuild if such
damage occurs during the last year of the lease term) and if the damage occurs
during the last year of the lease term, Landlord may only elect to rebuild if in
Landlord's estimation rebuilding or repairs can be completed within ninety (90)
days after Tenant's notification to Landlord, this lease shall not terminate,
and Landlord shall at its sole cost and expense thereupon proceed with
reasonable diligence to rebuild and repair the Building to substantially the
condition in which they existed prior to such damage, except that Landlord shall
not be required to rebuild, repair or replace any part of the partitions,
fixtures, additions and other improvements which may have been placed in, on or
about the Premises by Tenant. If the Premises are untenantable in whole or in
part following such damage, the rent payable hereunder during the period in
which they are untenantable shall be reduced to such extent as may be fair and
reasonable under all of the circumstances. In the event that Landlord should
fail to complete such repairs and rebuilding within two hundred (200) days after
the date upon which Landlord is notified by Tenant of such damage (unless any
such delay is due to changes, deletions or additions in construction requested
by Tenant, strikes, lockouts, casualties, acts of God, war, material or labor
shortages, governmental regulation or control or other causes beyond the
reasonable control of Landlord, in which event such period shall be extended for
the amount of time Landlord is so delayed), Tenant may at its option, upon
thirty (30) days prior written notice, terminate this lease as Tenant's
exclusive remedy, whereupon all rights and obligations hereunder shall cease and
terminate.

	Notwithstanding anything herein to the contrary, in the
event the holder of any indebtedness secured by a mortgage or deed of trust
covering the Premises or the Building requires that the insurance proceeds be
applied to such indebtedness, the Landlord shall have the right to terminate
this lease by delivering written notice of termination to Tenant within fifteen
(15) days after such requirement is made by any such holder, whereupon all
rights and obligations hereunder shall cease and terminate as of the date of the
casualty.

	Anything in this lease to the contrary notwithstanding,
Landlord and Tenant hereby waive and release each other of and from any and all
rights of recovery, claim, action or cause of action, against each other, their
agents, officers and employees, for any loss or damage that may occur to the
Premises, improvements to the Building or personal property (building contents)
within the Building, by reason of fire or the elements regardless of cause or
origin, including negligence of Landlord or Tenant and their agents, officers
and employees, but only to the extent of the insurance proceeds payable under
the policies of insurance covering the Property.

	Liability. Landlord shall not be liable for and
Tenant will indemnify and hold Landlord harmless from any loss, liability,
claims, suits, costs and expenses, including attorney's fees, arising out of any
claim of injury or damage on or about the Premises caused by the negligence or
misconduct or breach of this lease by Tenant, its employees, subtenants or
invitees or arising out of Tenant's use of the Premises or the Property or other
work done by Tenant in or on the Premises or the Property. Landlord shall not be
liable to Tenant or Tenant's agents, employees or invitees for any damage to
persons or property due to any condition, design, or defect in the Building or
its mechanical systems which may exist or occur, or due to any leakage or of
damages from gas, oil, water, steam, smoke or electricity or due to any other
cause whatsoever, except, subject to Paragraph 12. F hereof., Landlord's
negligence, willful misconduct or breach of this Lease, and Tenant assumes all
risks of damage to such persons or property, except, subject to Paragraph 12. F
hereof, Landlord's negligence, willful misconduct or breach of this Lease.
Landlord shall not be liable or responsible for any loss or damage to any
property or person occasioned by theft, fire, act of God, public enemy,
injunction, riot, strike, insurrection, war, court order, requisition or order
of governmental body or authority, or other matter beyond control of Landlord,
or for any injury or damage or inconvenience, which may arise through repair or
alteration of any part of the Building, or failure to make repairs, or from any
cause whatever except, subject to Paragraph 12.F. hereof, Landlord's willful
acts, negligence or breach of this Lease.

	Insurance. Tenant shall maintain throughout the
term of this lease a policy of insurance, in form and substance satisfactory to
Landlord, at Tenant's sole cost and expense, insuring both Landlord and Tenant
against all claims, demands or actions arising out of or in connection with: (i)
the Premises; (ii) the condition of the Premises; (iii) Tenant's operations in
and maintenance and use of the Premises; and (iv) Tenant's liability assumed
under this lease; with a combined single limit of not less than $2,000,000 per
occurrence in respect of injury to persons (including death) and in the amount
of not less than $500,000 per occurrence in respect of property damage or
destruction, including loss of use thereof. Such policy shall be procured by
Tenant from responsible insurance companies reasonably satisfactory to Landlord.
Evidence of such policy, together with a receipt evidencing payment of the
premium, shall be delivered to Landlord prior to the commencement date. Not less
than thirty (30) days prior to the expiration date of such policy, a certified
copy of a renewal thereof (bearing notations evidencing the payment of the
renewal premium) shall be delivered to Landlord. Such policy shall further
provide that not less than thirty (30) days' written notice shall be given to
Landlord before such policy may be canceled or changed to reduce the insurance
coverage provided thereby.

 

	Condemnation.

	If the whole or any substantial part of the Building
is taken for any public or quasi-public use under governmental law, ordinance or
regulation, or by right of eminent domain, or by private purchase in lieu
thereof and the taking would prevent or materially interfere with the use of the
Premises or the Building for the purpose of which they are being used, this
lease shall terminate and the rent shall be abated during the unexpired portion
of this lease effective when the physical taking of the Property shall
occur.

	If part of the Premises shall be taken for any public or
quasi-public use under any governmental law, ordinance or regulation, or by
right of eminent domain, or by private purchase in lieu thereof, and this lease
is not terminated as provided in the subparagraph above, this lease shall not
terminate but the rent payable hereunder during the unexpired portion of this
lease shall be reduced to such extent as may be fair and reasonable under all of
the circumstances.

	In the event of any such taking or private purchase in
lieu thereof, Landlord and Tenant shall each be entitled to receive and retain
such separate awards and/or portion of lump sum awards as may be allocated to
their respective interests in any condemnation proceedings, provided that Tenant
shall not be entitled to receive any award for Tenant's loss of its leasehold
interest or other property which would have become the property of Landlord upon
termination of this Lease; the right to such award being hereby assigned to
Landlord.

	Holding Over. Tenant will, at the termination of
this lease by lapse of time or otherwise, yield up immediate possession to
Landlord. If Tenant retains possession of the lease premises or any part thereof
after such termination, then such holding over shall constitute a month to month
tenancy, upon the terms and conditions set forth in this Lease; provided,
however, that the monthly rental shall, in addition to all other sums which are
to be paid by Tenant hereunder, whether or not as additional rent, be equal to
double the rental being paid monthly to Landlord under this Lease immediately
prior to such termination. Tenant shall also pay to Landlord all damages
sustained by Landlord resulting from retention of possession by Tenant,
including the loss of any proposed subsequent tenant for any portion of the
leased premises. The provisions of this paragraph shall not constitute a waiver
by Landlord of any right of re-entry as herein set forth; nor shall receipt of
any rent or any other act in apparent affirmance of the tenancy operate as a
waiver of the right to terminate this lease for a breach of any of the terms,
covenants, or obligations herein on Tenant's part to be performed.

	Quiet Enjoyment. Landlord covenants that it now
has, or will acquire before Tenant takes possession of the Premises, good title
to the Premises, free and clear of all liens and encumbrances, excepting only
the lien for current taxes not yet due, such mortgage or mortgages as are
permitted by the terms of this lease, zoning ordinances and other building and
fire ordinances and governmental regulations relating to the use of such
property, and easements, restrictions and other conditions of record. In the
event this lease is a sublease, then Tenant agrees to take the Premises subject
to the provisions of the prior leases. Landlord represents and warrants that it
has full right and authority to enter into this lease and that Tenant, upon
paying the rental herein set forth and performing its other covenants and
agreements herein set forth, shall peaceably and quietly have, hold and enjoy
the Premises for the term hereof without hindrance or molestation from Landlord,
subject to the terms and provisions of this lease.

	Events of Default. The following events shall be
deemed to be events of default by Tenant under this lease:

	Tenant shall fail to pay any installment of the base
rent, additional rent, Operating Costs, or any other payment or reimbursement to
Landlord required herein when due, and such failure shall continue for a period
of five (5) days from the date such payment was due; provided however that the
first three (3) times base rent is not received by the fifth day of the month,
Landlord agrees to give Tenant notice (which may be telephone notice) thereof,
and provided the then-due base rent and Operating Costs are paid within two (2)
business days after Tenant is in receipt of such notice, Tenant shall not be in
default of this Lease and the late fee described in the paragraph of Paragraph
19 shall be waived.

	Tenant shall become insolvent, or shall make a transfer
in fraud of creditors, or shall make an assignment for the benefit of
creditors.

	Tenant shall file a petition under any section or chapter
of the federal bankruptcy laws, or under any similar law or statute of the
United States or any State thereof, whether now or hereafter in effect; or an
order for relief shall be entered against Tenant in any such bankruptcy or
insolvency proceedings filed against Tenant thereunder or Tenant shall be
adjudged bankrupt or insolvent in proceedings filed against Tenant
thereunder.

	A receiver or trustee shall be appointed for all or
substantially all of the assets of Tenant.

	Tenant shall generally not pay its debts as such debts
become due.

	Tenant shall vacate all or a substantial portion of the
Premises, whether or not Tenant is in default of the payments due under this
lease.

	Tenant shall fail to discharge any lien placed upon the
Premises in violation of Paragraph 23 hereof within twenty (20) days after such
lien or encumbrance is filed against the Premises.

	Tenant shall fail to comply with any term, provision or
covenant of this lease (other than any other provision of this Paragraph 18),
and shall not cure such failure within twenty (20) days after written notice
thereof to Tenant; provided however that if the nature of such failure is such
that twenty (20) days is not sufficient to cure such failure, then Tenant shall
not be deemed to be in default so long as it commences such cure within the
twenty-day period and thereafter pursues such cure to completion, which
completion shall not exceed ninety (90) days except in the case of construction
in which case, if Tenant reasonably estimates the cure period will exceed ninety
(90) days, Landlord and Tenant shall, at the commencement of the cure, in good
faith, negotiate an extension of said ninety-day period.

	Tenant shall violate the provisions of Paragraph 28
hereof, and shall not cure such puncture, penetration or other violation of
Paragraph 28 hereof failure within twenty (20) days after written notice thereof
to Tenant; provided however that if the nature of such failure is such that
twenty (20) days is not sufficient to cure such failure, then Tenant shall not
be deemed to be in default so long as it commences such cure within the twenty-
day period and thereafter pursues such cure to completion, which completion
shall not exceed ninety (90) days. 

	Tenant shall default under any one or more of (i) that
certain Lease Agreement between Landlord and Tenant dated February 11, 1992, as
amended, for premises leased by Tenant pursuant thereto located at 3955
Annapolis Lane, Plymouth, Minnesota (the "3955 Lease"); or (ii) that certain
Supplemental Lease dated March 7, 1996, as amended, for premises at 3750
Annapolis Lane, Plymouth, Minnesota (to the extent not terminated by the mutual
agreement of Landlord and Tenant).

	Remedies. Upon the occurrence of any of such
events of default described in Paragraph 18 hereof, Landlord shall have the
option to pursue any one or more of the following remedies without any further
notice or demand whatsoever.

	Landlord may, at its election, terminate this Lease or
terminate Tenant's right to possession only, without terminating the Lease;
and/or Landlord may, at its election, terminate the 3955 Lease and/or the
Supplemental Lease, or terminate Tenant's right to possession of the spaces(s)
demised by the 3955 Lease and/or the Supplemental Lease only, without
terminating the 3955 Lease and/or the Supplemental Lease and exercise all rights
and remedies of Landlord under the 3955 Lease and/or the Supplemental
Lease;

	Upon any termination of this Lease, whether by lapse of
time or otherwise, or upon any termination of Tenant's right to possession
without termination of this Lease, Tenant shall surrender possession and vacate
the Premises immediately and deliver possession thereof to Landlord, and Tenant
hereby grants to Landlord full and free license to enter into and upon the
Premises in such event with or without process of law and to repossess Landlord
of the Premises as of Landlord's former estate and to expel or remove Tenant and
any others who may be occupying or within the Premises and to alter all locks
and other security devices at the Premises and to remove any and all property
therefrom, without being deemed in any manner guilty of trespass, eviction or
forcible entry or detainer, and without incurring any liability for any damage
resulting therefrom, Tenant hereby waiving any right to claim damage for such
re-entry and expulsion, and without relinquishing Landlord's right to rent or
any other right given to Landlord hereunder or by operation of law;

	Upon any termination of this lease, whether by lapse of
time or otherwise, Landlord shall be entitled to recover as damages, all rent,
including any amounts treated as additional rent hereunder, and other sums due
and payable by Tenant on the date of termination, plus the sum of (i) an amount
equal to the then present value of the rent, including any amounts treated as
additional rent hereunder, and other sums provided herein to be paid by Tenant
for the residue of the term hereof, less the fair rental value of the Premises
for such residue (taking into account the time and expense necessary to obtain a
replacement tenant or tenants, including expenses hereinafter described in
subparagraph (d) relating to recovery of the Premises, preparation for reletting
and for reletting itself) and (ii) the cost of performing any other covenants
which would have otherwise been performed by Tenant;

	(i)Upon any termination of Tenant's right to
possession only without termination of the lease, Landlord may, at Landlord's
option, enter into the Premises, remove Tenant's signs and other evidences of
tenancy, and take and hold possession thereof as provided in subparagraph (b)
above, without such entry and possession terminating the lease or releasing
Tenant, in whole or in part, from any obligation, including Tenant's obligation
to pay the rent, including any amounts treated as additional rent, hereunder for
the full term. In any such case Tenant shall pay forthwith to Landlord, if
Landlord so elects, a sum equal to the entire amount of the rent, including any
amounts treated as additional rent hereunder, for the residue of the stated term
hereof plus any other sums provided herein to be paid by Tenant for the
remainder of the lease term;

(ii)Landlord may, but need not relet the Premises or any
part thereof for such rent and upon such terms as Landlord in its sole
discretion shall determine (including the right to relet the Premises as part of
a larger area and the right to change the character or use made of the Premises)
and Landlord shall not be required to accept any tenant offered by Tenant or to
observe any instructions given by Tenant about such reletting. In any such case,
Landlord may make repairs, alterations and additions in or to the Premises, and
redecorate the same to the extent Landlord deems necessary or desirable, and
Tenant shall, upon demand, pay the cost thereof, together with landlord'
expenses of reletting including, without limitation, any broker's commission
incurred by landlord. If the consideration collected by Landlord upon any such
reletting plus any sums previously collected from Tenant are not sufficient to
pay the full amount of all rent, including any amounts treated as additional
rent hereunder and other sums reserved in this lease for the remaining term
hereof, together with the costs of repairs, alterations, additions,
redecorating, and Landlord's expenses of reletting and the collection of the
rent accruing therefrom (including attorney's fees and broker's commissions),
Tenant shall pay to Landlord the amount of such deficiency upon demand and
Tenant agrees that Landlord may file suit to recover any sums falling due under
this subparagraph from time to time;

	Landlord may, at Landlord's option, enter into and upon
the Premises, with or without process of law, if Landlord determines in its sole
discretion that Tenant is not acting within a commercially reasonable time to
maintain, repair or replace anything for which Tenant is responsible hereunder
and correct the same, without being deemed in any manner guilty of trespass,
eviction or forcible entry and detainer and without incurring any liability for
any damage resulting therefrom and Tenant agrees to reimburse Landlord, on
demand, as additional rent, for any expenses which Landlord may incur in thus
effecting compliance with Tenant's obligations under this lease;

	Any and all property which may be removed from the
Premises by Landlord pursuant to the authority of the lease or of law, to which
Tenant is or may be entitled, may be handled, removed and stored, as the case
may be, by or at the direction of Landlord at the risk, cost and expense of
Tenant, and Landlord shall in no event be responsible for the value,
preservation or safekeeping thereof; provided Landlord shall give Tenant five
(5) days prior written notice of such removal. Tenant shall pay to landlord,
upon demand, any and all expenses incurred in such removal and all storage
charges against such property so long as the same shall be in Landlord's
possession or under Landlord's control. Any such property of Tenant not retaken
by Tenant from storage within thirty (30) days after removal from the Premises
shall, at Landlord's option, be deemed conveyed by Tenant to Landlord under this
lease as by a bill of sale without further payment or credit by Landlord to
Tenant.

Subject to the provisions of Paragraph 18(a), in the
event Tenant fails to pay any installment of rent, including any amount treated
as additional rent hereunder, or other sums hereunder as and when such
installment or other charge is due, Tenant shall pay to Landlord on demand a
late charge in an amount equal to five percent (5%) of such installment or other
charge overdue in any month and five percent (5%) each month thereafter until
paid in full to help defray the additional cost to Landlord for processing such
late payments, and such late charge shall be additional rent hereunder and the
failure to pay such late charge within ten (10) days after demand therefor shall
be an additional event of default hereunder. The provision for such late charge
shall be in addition to all of Landlord's other rights and remedies hereunder or
at law and shall not be construed as liquidated damages or as limiting
Landlord's remedies in any manner.

Pursuit of any of the foregoing remedies shall not
preclude pursuit of any of the other remedies herein provided or any other
remedies provided by law, nor shall pursuit of any remedy herein provided
constitute a forfeiture or waiver of any rent due to Landlord hereunder or of
any damages accruing to Landlord by reason of the violation of any of the terms,
provisions and covenants herein contained. No act or thing done by the Landlord
or its agents during the term hereby granted shall be deemed a termination of
this lease or an acceptance of the surrender of the Premises, and no agreement
to terminate this lease or accept a surrender of said Premises shall be valid
unless in writing signed by Landlord. No waiver by Landlord of any violation or
breach of any of the terms, provisions and covenants herein contained shall be
deemed or construed to constitute a waiver of any other violation or breach of
any of the terms, provisions and covenants herein contained. Landlord's
acceptance of the payment of rental or other payments hereunder after the
occurrence of an event of default shall not be construed as a waiver of such
default, unless Landlord so notifies Tenant in writing. Forbearance by Landlord
to enforce one or more of the remedies herein provided upon an event of default
shall not be deemed or construed to constitute a waiver of such default or of
Landlord's right to enforce any such remedies with respect to such default or
any subsequent default. If, on account of any breach or default by Tenant in
Tenant's obligations under the terms and conditions of this lease, it shall
become necessary or appropriate for Landlord to employ or consult with an
attorney concerning or to enforce or defend any of Landlord's rights or remedies
hereunder, Tenant agrees to pay any reasonable attorney's fees so incurred.

	Landlord's Lien. Intentionally deleted.

	Mortgages. Tenant accepts this lease subject and
subordinate to any mortgage(s) now or at any time hereafter constituting a lien
or charge upon the Property or the Premises, provided, however, that if the
holder of any such mortgage elects to have Tenant's interest in this lease
superior to any such instrument, then by notice to Tenant from such holder, this
lease shall be deemed superior to such lien, whether this lease was executed
before or after said mortgage. Tenant shall at any time hereafter on demand
execute any instruments, releases or other documents which may be required by
any mortgagee for the purpose of subjecting and subordinating this lease to the
lien of any such mortgage, provided if such mortgagee provides in said document
that, if it succeeds to the interest of Landlord hereunder, and Tenant is not
then in default, Tenant's possession of the Premises shall not be
disturbed.

	Landlord's Default. In the event of any default by
Landlord, Tenant's exclusive remedy shall be an action for damages (Tenant
hereby waiving the benefit of any laws granting it a lien upon the property of
Landlord and/or upon rent due Landlord), but prior to any such action Tenant
will give Landlord written notice specifying such default with particularity,
and Landlord shall thereupon have thirty (30) days in which to cure any such
default. Unless and until Landlord fails to so cure any default after such
notice, Tenant shall not have any remedy or cause of action by reason thereof.
All obligations of Landlord hereunder will be construed as covenants, not
conditions; and all such obligations will be binding upon Landlord only during
the period of its ownership of the Premises and not thereafter.

	Mechanic's Liens and Personal Property Taxes.

	Tenant shall have no authority, express or implied,
to create or place any lien or encumbrance of any kind or nature whatsoever
upon, or in any manner to bind, the interest of Landlord or Tenant in the
Building or the Premises or to charge the rentals payable hereunder for any
claim in favor of any person dealing with Tenant, including those who may
furnish materials or perform labor for any construction or repairs. Tenant
covenants and agrees that it will pay or cause to be paid all sums legally due
and payable by it on account of any labor performed or materials furnished in
connection with any work performed on the Premises on which any lien is or can
be validly and legally asserted against its leasehold interest in the Premises
or the improvements thereon and that it will save and hold Landlord harmless
from any and all loss, cost or expense based on or arising out of asserted
claims or liens against the leasehold estate or against the right, title and
interest of the Landlord in the Building or the Premises or under the terms of
this lease. Tenant agrees to give Landlord immediate written notice of the
placing of any lien or encumbrance against the Building or the
Premises.

	Tenant shall be liable for all taxes levied or assessed
against personal property, furniture or fixtures placed by Tenant in the
Premises. If any such taxes for which Tenant is liable are levied or assessed
against Landlord or Landlord's property and if Landlord elects to pay the same
or if the assessed value of Landlord's property is increased by inclusion of
personal property, furniture or fixtures placed by Tenant in the Premises, and
Landlord elects to pay the taxes based on such increase, Tenant shall pay to
Landlord upon demand that part of such taxes.

	Notices. Each provision of this instrument or of
any applicable governmental laws, ordinances, regulations and other requirements
with reference to the sending, mailing or delivery of any notice or the making
of any payment by Landlord to Tenant or with reference to the sending, mailing
or delivery of any notice or the making of any payment by Tenant to Landlord
shall be deemed to be complied with when and if the following steps are
taken:

	All rent and other payments required to be made by Tenant
to Landlord hereunder shall be payable to Landlord at the address for Landlord
herein below set forth or at such other address as Landlord may specify from
time to time by written notice delivered in accordance herewith. Tenant's
obligation to pay rent and any other amounts to landlord under the terms of this
lease shall not be deemed satisfied until such rent and other amounts have been
actually received by Landlord.

	All payments required to be made by Landlord to Tenant
hereunder shall be payable to Tenant at the address herein below set forth, or
at such other address within the continental United States as Tenant may specify
from time to time by written notice delivered in accordance herewith.

	Any notice or document required or permitted to be
delivered hereunder shall be deemed to be delivered whether actually received or
not (i) ten (10) days after deposit in the United States Mail, postage prepaid,
Certified or Registered Mail, addressed to the parties hereto at the respective
addresses set out below, or at such other address as they have theretofore
specified by written notice delivered in accordance herewith; (ii) when
personally delivered; or (iii) one (1) business day after deposit, fees prepaid,
with a national overnight air carrier (it being understood and agreed that, for
the purposes of this Lease, a "business day" shall be a day which is not a
Saturday, a Sunday or a legal holiday of the State of Minnesota):

	
LANDLORD:
	
TENANT:

	
St. Paul Properties, Inc.
	
Protein Design Labs, Inc.

	
385 Washington
Street
	
38401 Campus Drive

	
St. Paul, Minnesota
55102
	
Fremont, California 94555

	
Attention: Vice-President, Asset
Management
	
Attention: General Counsel

	
 
	 
	
With a copy to:
	
With a copy to:

	
United Properties,
LLC
	
Vice President, Manufacturing

	
3500 West 80th Street, Suite
200
	
3955 Annapolis Lane

	
Bloomington, Minnesota
55431
	
Plymouth, Minnesota 55447

	
Attention: Vice-President, Property
Management
	 

If and when included within the term
"Landlord," as used in this instrument, there are more than one person, firm or
corporation, all shall jointly arrange among themselves for their joint
execution of such a notice specifying some individual at some specific address
for the receipt of notices and payments to Landlord; if and when included within
the term "Tenant," as used in this instrument, there are more than one person,
firm or corporation, all shall jointly arrange among themselves for their joint
execution of such a notice specifying some individual at some specific address
within the continental United States for the receipt of notices and payments to
Tenant. All parties included within the terms "Landlord" and "Tenant,"
respectively, shall be bound by notices given in accordance with the provisions
of this paragraph to the same effect as if each had received such notice.

	Miscellaneous.

	Words of any gender used in this lease shall be held
and construed to include any other gender, and words in the singular number
shall be held to include the plural, unless the context otherwise
requires.

	The terms, provisions and covenants and conditions
contained in this lease shall apply to, inure to the benefit of, and be binding
upon, the parties hereto and upon their respective heirs, legal representatives,
successors and permitted assigns, except as otherwise herein expressly provided.
Landlord shall have the right to assign any of its rights and obligations under
this lease. The term "Landlord" shall mean only the owner, at any time of the
Premises, and in the event of the transfer by such owner of its interest in the
Premises, Landlord's grantee or Landlord's successor shall upon such transfer,
become "Landlord" hereunder, thereby freeing and relieving the grantor or
assignor of all covenants and obligations of "Landlord" hereunder; but such
covenants and obligations shall be binding during the lease term upon each new
owner for the duration of such owner's ownership, provided, however, that no
successor Landlord shall be responsible for the return of any security deposit
provided for pursuant to Paragraph 2B unless such successor receives the
deposit. Tenant agrees to furnish promptly upon demand, a corporate resolution,
proof of due authorization by partners, or other appropriate documentation
evidencing the due authorization of Tenant to enter into this lease. Nothing
herein contained shall give any other tenant in the Building any enforceable
rights either against Landlord or Tenant as a result of the covenants and
obligations of either party set forth herein.

	The captions inserted in this lease are for convenience
only and in no way define, limit or otherwise describe the scope or intent of
this lease, or any provision hereof, or in any way affect the interpretation of
this lease.

	Tenant agrees from time to time within ten (10) days
after request of Landlord, to deliver to landlord, or Landlord's designee an
estoppel certificate in a form designated by Landlord. It is understood and
agreed that Tenant's obligation to furnish such estoppel certificates in a
timely fashion is a material inducement for Landlord's execution of this
lease.

	This lease may not be altered, changed or amended except
by an instrument in writing signed by both parties hereto.

	All obligations of Tenant hereunder not fully performed
as of the expiration or earlier termination of the term of this lease shall
survive the expiration or earlier termination of the term hereof, including
without limitation, all payment obligations with respect to Operating Costs and
all obligations concerning the condition of the Premises. Upon the expiration or
earlier termination of the term hereof, Tenant shall pay to Landlord the amount
as estimated by landlord, necessary (i) to repair and restore the Premises as
provided herein; and (ii) to discharge Tenant's obligation for Operating Costs
or other amounts due Landlord. All such amounts shall be used and held by
Landlord for payment of such obligations of Tenant, with Tenant being liable for
any additional costs upon demand by Landlord, or with any excess to be returned
to Tenant after all such obligations have been determined and satisfied. Any
security deposit held by Landlord shall be credited against the amount payable
by Tenant under this subparagraph.

	If there be more than one Tenant, the obligations
hereunder imposed upon Tenant shall be joint and several.

	Tenant represents and warrants that it has dealt with no
broker, agent or other person in connection with this transaction or that no
broker, agent or other person brought about this transaction, other than United
Properties LLC, acting as Landlord's broker, whose fees shall be paid by
Landlord, and Tenant agrees to indemnify and hold harmless from and against any
claims by any other broker, agent or other person claiming a commission or other
form of compensation by virtue of having dealt with Tenant with regard to this
leasing transaction.

	If any clause or provision of this lease is illegal,
invalid or unenforceable under present or future laws effective during the term
of this lease, then and in that event, it is the intention of the parties hereto
that the remainder of this lease shall not be affected thereby, and it is also
the intention of the parties to this lease that in lieu of each clause or
provision of this lease that is illegal, invalid or unenforceable, there be
added as a part of this lease contract a clause or provision as similar in terms
to such illegal, invalid or unenforceable clause or provision as may be possible
and be legal, valid and enforceable.

	Because the Premises are on the open market and are
presently being shown, this lease shall be treated as an offer and shall not be
valid or binding unless and until accepted by Landlord in writing.

	Hazardous Waste

	The term "Hazardous Substances," as used in this
lease shall mean pollutants, contaminants, toxic or hazardous wastes, or any
other substances, the removal of which is required or the use of which is
restricted, prohibited or penalized by any "Environmental Law," which term shall
mean any federal, state or local law or ordinance relating to pollution or
protection of the environment. Tenant hereby agrees that (i) no activity will be
conducted on the Premises that will produce any Hazardous Substance, except for
such activities that are part of the ordinary course of Tenant's activities (the
"Permitted Activities") provided said Permitted Activities are conducted in
accordance with all Environmental Laws and have been approved in advance in
writing by Landlord: (ii) the Premises will not be used in any manner for the
storage of any Hazardous Substances except for the temporary storage of such
materials that are used in the ordinary course of Tenant's business (the
"Permitted Material") provided such Permitted Materials are properly stored in a
manner and location meeting all Environmental Laws and approved in advance in
writing by Landlord; (iii) no portion of the Premises will be used as a landfill
or a dump; (iv) Tenant will not install any underground tanks of any type; (v)
Tenant will not cause any surface or subsurface conditions to exist or come into
existence that constitute, or with the passage of time may constitute, a public
or private nuisance; (vi) Tenant will not permit any Hazardous Substances to be
brought onto the Premises, except for the Permitted Materials described above,
and if so brought or found located thereon, the same shall be immediately
removed, with proper disposal, and all required cleanup procedures shall be
diligently undertaken pursuant to all Environmental Laws. If, at any time during
or after the term of the lease, the Premises is found to be so contaminated or
subject to said conditions, Tenant agrees to indemnify and hold Landlord
harmless from all claims, demands, actions, liabilities, costs, expenses,
including reasonable attorneys' fees, damages and obligations of any nature
arising from or as a result of the use of the premises by Tenant. The foregoing
indemnification shall survive the termination or expiration of this
Lease.

	Right of Termination. Tenant shall have a one-time
option to terminate this Lease effective on the last day of the forty-eighth
full calendar month of the lease term (the "Termination Date") by giving written
notice thereof (the "Termination Notice") to Landlord not later than the last
day of the thirty-ninth full calendar month of the Term; provided however, the
following shall be conditions precedent to the exercise of such option: (a)
Tenant shall not be in default under any of the terms and conditions of this
Lease as of the date of the Termination Notice or as of the Termination Date;
and (b) simultaneously with its delivery of the Termination Notice, Tenant
delivers to Landlord a termination fee in the amount of the sum of (i)
$66,000.00; plus (ii) the Unamortized Transaction Costs (as hereinafter
defined), payable by wire transfer or by cashier's check payable to Landlord's
order; and (c) Tenant delivers to Landlord evidence reasonably satisfactory to
Landlord that the reason for Tenant's termination is that Tenant then owns a
building not located in Plymouth Business Center and intends to move to such
building Tenant's operations conducted in the Premises. If Tenant satisfies the
foregoing conditions, base rent, additional rent and Operating Costs shall be
paid through and apportioned as of the Termination Date and neither Landlord nor
Tenant shall have any rights, estates, liabilities or obligations accruing under
the Lease after the Termination Date, except such rights and obligations which,
by the terms of this Lease, expressly survive the expiration or termination of
this Lease. The right to terminate granted herein shall be personal to Tenant
and shall not accrue to any assignee, sublessee or successor to the interest of
Tenant under the Lease. For the purposes of this Lease, Unamortized Transaction
Costs shall mean leasing commissions (together with interest thereon at the rate
of twelve percent (12%) per annum) and legal fees incurred by Landlord in
connection with this Lease, amortized on a straight-line basis over eighty-four
(84) months.

	Roof Penetrations

	Without limiting the other provisions of this Lease,
Tenant, at any time, may request from Landlord permission to puncture or
penetrate the roof of the Building or make an alteration, improvement or
addition to the roof of the Building including, without limitation, affixing any
object of any type to the roof of the Building (any one or more of such actions
hereinafter a "Roof Activity"), it being understood and agreed that Tenant shall
not, without obtaining Landlord's prior written consent, make or suffer any Roof
Activity. Landlord may withhold its consent to the requested Roof Activity if
Landlord determines, in Landlord's sole and absolute discretion, that the Roof
Activity will have an adverse impact on the Building, including, without
limitation, the roof of the Building or any Building System. Notwithstanding the
foregoing, Landlord shall not withhold its consent if, together with its request
to perform a Roof Activity, or after Landlord's refusal to consent to a Roof
Activity, Tenant delivers to Landlord the plans for such Roof Activity, together
with a certification from a structural engineer licensed in the State of
Minnesota obtained at Tenant's sole cost and expense (a) stating that such
engineer has reviewed the as-built plans for the Building and the plans for the
Roof Activity and that such Roof Activity shall not have any impact on the
structure of the Building, including, without limitation, the roof, exterior
walls or foundation; and (b) attaching a copy of such engineer's policy of
professional liability insurance. Tenant's violation of the provisions of this
Paragraph 28 shall constitute an event of default under this Lease.

	Subject to the provisions of subparagraph (a) of this
Paragraph 28, Tenant may, at Tenant's option, and at Tenant's sole cost and
expense, either:

	remove the HVAC equipment located on the roof of the
Building, as of the date of this Lease (the "Existing HVAC Equipment"), using
Landlord's roofing contractor for all patching and/or repair work, from the roof
of the Building and replace it with an HVAC unit or units selected and installed
by Tenant (the "Tenant HVAC Equipment"), using Landlord's roofing contractor. In
such case, as a part of Tenant's obligations under Paragraph 7 hereof, on or
prior to the Expiration Date or as of the earlier date of termination of this
Lease, at Landlord's option, Tenant shall, at Tenant's sole cost and expense,
remove Tenant's HVAC Equipment from the roof, using Landlord's roofing
contractor for all patching and/or repair work; or

	leave the Existing HVAC Equipment on the roof of the
Building and, in addition, place Tenant HVAC Equipment on the roof of the
Building, using landlord's roofing contractor for all patching and/or repair
work, which selection and installation shall be subject to the provisions of
this Paragraph 28, and as of the Expiration Date or as of the earlier date of
termination of this Lease, as to the Tenant HVAC Equipment, the parties shall
proceed in accordance with subparagraph (i) above. Other than as set forth in
Paragraph 6.E. hereof, and subparagraphs (c) and (d) of this Paragraph 28,
Tenant shall have no responsibility for the Existing HVAC Equipment as of the
Expiration Date, or as of the earlier date of termination of this
Lease.

	Ownership of the Tenant HVAC Equipment shall pass to
Landlord as of the Expiration Date or the earlier termination of the term of
this Lease as if by bill of sale, in the then "as-is" condition of the Tenant
HVAC Equipment, and without the need for further written instruments; provided
however, that Tenant hereby warrants that, as of the date of such passage of
ownership, there shall be no liens or encumbrances against the Tenant HVAC
Equipment. In addition, Tenant shall not have created or suffered to exist any
lien or encumbrance against the Existing HVAC Equipment. 

	Notwithstanding any other provision of this Lease to the
contrary, including, without limitation, the provisions of Paragraph 13 hereof,
Tenant hereby agrees to defend and does hereby indemnify and hold Landlord
harmless from and against any and all claims, proceedings, actions, judgments,
costs and expenses, including attorneys' fees through all appellate levels,
arising from the removal of the Existing HVAC Equipment above, and the
placement, repair, maintenance, operation, replacement or removal of the Tenant
HVAC Equipment, it being understood and agreed that the defense, indemnification
and hold harmless obligations contemplated by this subparagraph (d) include,
without limitation, claims, actions, judgments, costs and expenses, including
attorneys' fees through all appellate levels incurred by Landlord as a result of
claims of personal or bodily injury or property damage made by third parties.
The indemnification obligations under this subparagraph (d) apply to Tenant's
decision to proceed in accordance with clause (2) of Paragraph 6.E.
hereof.

	Tenant understands and agrees that the placement of the
Tenant HVAC Equipment on the roof of the Building contemplated in this Paragraph
28 or any Roof Activity must be in accordance with all applicable laws, codes
and regulations, including, without limitation, laws, codes and regulations of
the City of Plymouth. Tenant further understands and agrees that Landlord makes
no warranty or representation that the City of Plymouth will provide the
necessary consents for the placement of the Tenant HVAC Equipment or any Roof
Activity, the risk of obtaining such consents being borne entirely by Tenant.
Tenant finally understands and agrees that Tenant's failure to obtain the
consent of the City of Plymouth to the placement of any or all of Tenant's HVAC
Equipment on the roof or any Roof Activity shall in no way constitute a
constructive eviction, work an abatement of rent or otherwise modify Tenant's
obligations under this Lease, including, without limitation, the obligation to
pay base rent and Operating Costs.

	All of Tenant's obligations contained in this Paragraph
28 shall survive the expiration or earlier termination of this
Lease.

	Chiller. Landlord and Tenant acknowledge and agree
that Tenant intends to place a chiller at the rear of the Premises for Tenant's
sole use. Landlord and Tenant further agree that Tenant shall provide plans for
the chiller and the placement thereof to Landlord not less than thirty (30) days
prior to the date Tenant intends to install the chiller, which plans shall be
subject to Landlord's reasonable approval. Landlord may withhold its approval
if, in Landlord's sole determination, the placement of the chiller or other
attributes of the chiller, will adversely affect Landlord's property or the use
and occupation of another Tenant of the Building. Landlord makes no
representation or warranty that the City of Plymouth will give its consent to
the placement of the chiller, and Tenant agrees that it shall bear full
responsibility for obtaining all necessary permits, licenses and approvals from
the City of Plymouth for the installation, operation, repair and maintenance of
the chiller. The chiller shall be considered an improvement pursuant to this
Lease and shall be removed or left at the end of the term of this Lease in
accordance with Paragraph 7 hereof. All costs of the chiller, including, without
limitation, all costs of obtaining the consent of the City of Plymouth to
install the chiller, all costs of the installation, operation, maintenance and
repair of the chiller and the removal thereof shall be borne in their entirety
by Tenant and no expense arising from the chiller shall be considered a part of
Operating Costs hereunder.

	Animals. Landlord and Tenant agree that Landlord
shall not lease the space in the Building to any person or entity who intends to
keep or have animals on its premises, and shall provide in the rules and
regulations applicable to such premises that the keeping of or having animals on
such tenant's premises will be a violation of such tenant's lease, allowing
Landlord to terminate such lease. Nothing in the preceding sentence shall be
deemed to preclude Landlord or the tenant of the adjacent space from allowing
employees, agents, contractors or invitees of the tenant of the adjacent
premises to bring into the adjacent premises any seeing-eye or hearing-ear dogs
or other animals required by such employees, agents, contractors or invitees to
perform their normal life activities. Should Landlord breach the obligations
contained in this Paragraph 30, Tenant's sole remedy shall be to seek equitable
relief, it being understood and agreed that in no case shall Landlord be liable
for damages of any kind or nature or for any costs or fees, including attorneys'
fees, incurred by Tenant in pursuing its remedies under this Paragraph 30.

	Renewal of Lease. Landlord hereby grants to Tenant
a one-time option to renew the lease as to the Premises upon the terms and
conditions of this Paragraph 31 if:

(a)Tenant is not in default under this lease beyond any
time to cure at the time such option is exercised or at the commencement of the
renewal term; and

(b)Tenant gives Landlord written notice of the exercise
of the renewal of this Lease nine (9) months prior to the end of the Term (the
"Renewal Notice of Exercise"), time being of the essence. Tenant's failure to
notify Landlord of its intent to exercise the option to renew the Term granted
herein on or before the dates specified in this subparagraph (b) for such
renewal shall be deemed a waiver of Tenant's right to exercise the option to
renew granted herein. 

If Tenant elects to renew this Lease under this Paragraph
31, the following terms and conditions shall apply:

(w)the renewal term in question shall commence upon the
expiration of the term and continue thereafter for a period of five (5)
years;

(x)base rent for the Premises for the renewal term shall
be Market Rent (as defined in Paragraph 32 of this lease); 

(y)Paragraph 6.E.(z) of this lease shall be amended to
require the reports described therein on November 30, 2010 and November 30,
2013; and

(z)all of the other terms and conditions contained in
this lease, as it may have been amended from time to time, shall be as set out
in this lease, it being understood that there shall be no rights of renewal or
extension except as provided in this Paragraph 31, and, upon the exercise of the
right of renewal granted by this Paragraph 31, this Paragraph 31 shall be of no
further force or effect and Tenant shall have no right to further renew or
extend the term at the expiration of the renewal term.

Within fifteen (15) days after request thereof from Landlord,
Tenant shall execute and deliver to Landlord those instruments which Landlord
may request to evidence the renewal described in this Paragraph 31. The rights
of Tenant under this Paragraph 31 shall not be severed from this Lease or
separately sold, assigned, or otherwise transferred, and shall expire on the
expiration or earlier termination of this Lease. Notwithstanding the foregoing,
the renewal option contemplated by this Paragraph 31 shall automatically
terminate and become null and void and of no further force and effect upon the
earliest to occur of (i) the expiration or termination of this Lease, (ii) the
termination of Tenant's right to possession of the Premises, or (iii) the
failure of Tenant to timely or properly exercise the rights granted by this
Paragraph 31. The right contemplated by this Paragraph shall not survive the
expiration or termination of this Lease, and shall not be available to any
assignee, sublessee, or successor to Tenant's interests hereunder.

	Market Rent. "Market Rent" means the amount of
base rent, which may or may not include concessions, improvements and other
matters (exclusive of Operating Costs) which Landlord would receive by then
renting similar space (including similar square footage) for premises in the
project in which the Building is located. Within forty-five (45) days after
Tenant exercises its right to renew the term pursuant to Paragraph 31, Landlord
shall give Tenant notice of Market Rent for the renewal term (the "Market Rent
Notice"). If Tenant does not agree with Landlord's determination of Market Rent
as set forth in the Market Rent Notice, Tenant shall so notify Landlord in
writing within ten (10) days after Tenant's receipt of the Market Rent Notice
("Tenant's Notice"). Landlord and Tenant shall, for ten (10) days after
Landlord's receipt of Tenant's Notice, negotiate in good faith to come to an
agreement as to Market Rent for the renewal term. If Landlord and Tenant are
unable to agree upon Market Rent within said ten day period, then,
notwithstanding the provisions of Paragraph 31, Tenant shall have the right to
rescind the Renewal Notice of Exercise by written notice (the "Rescission
Notice") to Landlord given not later than twenty (20) days after the date of
Tenant's Notice, it being understood and agreed that if the Rescission Notice is
not given within such time period, Tenant shall be deemed to have waived its
right to rescind the Renewal Notice of Exercise. In such case, to the extent
that the Renewal Notice of Exercise has been effectively exercised by Tenant
pursuant to Paragraph 31, Landlord and Tenant shall execute and deliver an
amendment to this Lease which amendment shall be executed and delivered within
ten (10) days following the determination of the Market Rent. Tenant's failure
to give Tenant's Notice within the time period provided above shall be deemed an
acceptance of Landlord's determination of Market Rent, the term shall be deemed
renewed pursuant to the Renewal Notice of Exercise, and base rent for the
renewal term shall be as set forth in the Market Rent Notice. Notwithstanding
anything in this Paragraph 32 to the contrary, in no event shall Market Rent be
less than the amount per annum payable during the last month of the term ending
February 28, 2009.

IN WITNESS WHEREOF, the parties have executed this Lease
Agreement as of May 31, 2001

	
LANDLORD:

	
ST. PAUL PROPERTIES,  INC.

	
 

	

	
By: __________________________

	
Its: ________________________ 

	
TENANT:

	
PROTEIN DESIGN LABS, INC.

	
 

	

	
By: __________________________

	
Its: ________________________ 

EXHIBIT A-1

Description of Premises

 

 

 

3850 Annapolis Lane North, Plymouth, MN

Lot 1, Block, Plymouth Business Center

PID#: 15-118-22-34-0003

Legal to Govern

EXHIBIT B

WORK LETTER AGREEMENT

[Tenant Performs Work]

This Work Letter Agreement ("Work Letter") is dated as of
May 31, 2001, and forms a part of that certain Lease Agreement (the "Lease")
dated as of May 31, 2001, between PROTEIN DESIGN LABS, INC., a Delaware
corporation ("Tenant") and ST. PAUL PROPERTIES, INC., a Delaware corporation
("Landlord") relating to certain premises ("Premises") as defined in the Lease.
Capitalized terms used herein, unless otherwise defined in this Work Letter,
shall have the respective meanings ascribed to them in the Lease.

For and in consideration of the agreement to lease the
Premises and the mutual covenants contained herein and in the Lease, Landlord
and Tenant hereby agree as follows:

1.Work. Tenant, at its sole cost and expense,
shall perform, or cause to be performed, the work (the "Work") in the Premises
provided for in the Approved Plans (as defined in Paragraph 2 hereof). 

2.Pre-Construction Activities. 

(a)On or before July 1, 2001, as to the demolition of
the improvements existing in the Premises as of the date of this Lease, and as
of August 1, 2001, as to the construction of the Premises in accordance with
this Work Letter, Tenant shall submit the following information and items to
Landlord for Landlord's review and approval:
(i)A construction schedule containing the major
components of the Work, including the scheduled commencement date of
construction of the Work and the estimated date of completion of
construction.

(ii)Evidence satisfactory to Landlord in all
respects of Tenant's ability to pay the cost of the Work as and when payments
become due, it being understood and agreed that, so long as Tenant engages
Westin Construction, Inc. ("Westin") as its general contractor, and The DLR
Group ("DLR") as its architect, Landlord shall not require payment and
performance bonds for all or any portion of the Work; provided however, that if
Tenant engages a general contractor other than Westin or an architect other than
DLR, Landlord reserves the right to require that Tenant or the general
contractor provide payment and performance bonds, with dual obligee riders, for
all or a portion of the Work.

(iii)A sworn total project cost statement
prepared by Tenant and signed and sworn to as accurate by Tenant and Westin or
other general contractor approved by Landlord ("General Contractor") (as to the
cost of the Work), setting forth an itemization of estimated construction costs,
including fees for permits and architectural and engineering fees, disclosing
the various subcontracts and contracts for materials to be entered into by
General Contractor (collectively, the "Subcontracts") and setting forth the
names of all architects, including DLR or other architect reasonably approved by
Landlord, engineers, consultants, designers, subcontractors and material
suppliers of all tiers (who, collectively with General Contractor, are referred
to herein as "Tenant's Contractors"), including subcontractors and material
suppliers, if any, with whom General Contractor has contracted to date, their
addresses, work and materials to be furnished, amounts of the Subcontracts, the
amounts, if any, paid to date and the balance due under each Subcontract and the
Construction Contract.

(iv)The construction contract (the "Construction
Contract") entered into by Tenant and the General Contractor for the Work.

(v)Delivery of the Construction Deposit (as more
fully described and defined in Paragraph 8(a) hereof).

(vi)Certified copies of insurance policies or
certificates of insurance as hereinafter described. Tenant shall not permit
Tenant's Contractors to commence work until the required insurance has been
obtained and certified copies of policies or certificates have been delivered to
Landlord.

(vii)At Landlord's election, but subject to
subparagraph (ii) above, payment and performance bonds issued by an insurance
company with an A.M. Best rating of at least A-X and qualified to conduct
business in the State of Minnesota, for all of Tenant's Contractors naming
Landlord (or an agent, designee or representative appointed by Landlord's
written notice to Tenant given prior to Tenant's procurement of paid bonds) as a
dual obligee.

(viii)The Plans (as hereinafter defined) for the
Work, which Plans shall be subject to Landlord's approval in accordance with
Paragraph 2(b) below.

Tenant will update such information and items by notice to
Landlord of any changes, which changes shall be subject to the provisions of
this Work Letter.

(b)As used herein the term "Approved Plans" shall
mean the Plans (as hereinafter defined), as and when approved in writing by
Landlord. As used herein, the term "Plans" shall mean the full and detailed
architectural and engineering plans and specifications covering the Work
(including, without limitation, architectural, mechanical and electrical working
drawings for the Work), which Plans shall include "tie-ins" to existing utility
service at the Building, it being understood and agreed that Landlord shall not
be obligated to provide additional utility capacity or tie-ins at other than the
location of such utility service in the Building. The Plans shall be subject to
Landlord's approval and the approval of all local governmental authorities
requiring approval of the work and/or the Plans. Landlord shall give its
approval or disapproval (giving specific reasons for disapproval if the Plans
are disapproved) of the Plans within ten (10) business days after their delivery
to Landlord. Landlord agrees not to unreasonably withhold its approval of said
Plans; provided, however, that Landlord shall not be deemed to have acted
unreasonably if it withholds its approval of the Plans because, in Landlord's
reasonable opinion: the Work as shown in the Plans is likely to adversely affect
Building Systems, the structure of the Building or the safety of the Building
and/or its occupants; the Work as shown on the Plans might impair Landlord's
ability to furnish services to Tenant or other tenants; the Work would increase
the cost of operating the Building; the Work would violate any governmental
laws, rules or ordinances (or interpretations thereof); the Work contains or
uses hazardous or toxic materials or substances that are not otherwise permitted
under applicable law, rule or regulation, assuming Tenant's strict compliance
with all such laws, rules and regulations; the Work would adversely affect the
appearance of the Building; the Work would adversely affect another tenant's
premises; or the Work is prohibited by any mortgage or trust deed encumbering
the Building. The foregoing reasons, however, shall not be exclusive of the
reasons for which Landlord may withhold consent, whether or not such other
reasons are similar or dissimilar to the foregoing. Notwithstanding the
foregoing, when approved, the Approved Plans shall be considered binding on both
Landlord and Tenant. If Landlord notifies Tenant that changes are required to
the final Plans submitted by Tenant, Tenant shall, within three (3) business
days thereafter, submit to Landlord, for its approval, the Plans amended in
accordance with the changes so required. The Plans shall also be revised, and
the Work shall be changed, all at Tenant's cost and expense, to incorporate any
work required in the Premises by any local governmental field inspector.
Landlord's approval of the Plans shall in no way be deemed to be (i) an
acceptance or approval of any element therein contained which is in violation of
any applicable laws, ordinances, regulations or other governmental requirements,
or (ii) an assurance that work done pursuant to the Approved Plans will comply
with all applicable laws (or with the interpretations thereof) or satisfy
Tenant's objectives and needs.

(c)No Work shall be undertaken or commenced by Tenant
in the Premises as to the demolition or construction portions of the Work until
(i) Tenant has delivered, and Landlord has approved, all items shown in
Paragraph 2(a) above, (ii) all necessary building permits and other consents and
approvals have been applied for and obtained by Tenant, and (iii) Tenant has
complied with Landlord's requirements pursuant to subparagraph 2(a)(ii) above.
Nothing in this subparagraph (c) shall be deemed to preclude Tenant from
commencing the demolition portion of the Work at such time as, as to the
demolition portion of the Work, Tenant has delivered and Landlord has approved
all of the items set forth in Paragraph 2(a) above. 

3.Delays. In the event Tenant fails to deliver
in sufficient and accurate detail the information required under Paragraph 2
above on or before the respective dates specified in said Paragraph 2, or in the
event Tenant, for any reason, fails to complete the Work on or before the
Commencement Date, Tenant shall be responsible for Rent and all other
obligations under the Lease from and after the Commencement Date regardless of
the degree of completion of the Work on such date, and no such delay in
completion of the Work shall relieve Tenant of any of its obligations under the
Lease.

4.Supervisory Fees. Tenant shall pay Landlord
a supervisory fee for actual expenses incurred in an amount not to exceed
$2,500.00 to defray Landlord's administrative and overhead expense incurred to
review the Plans and coordinate with Tenant's on-site project manager the
staging and progress of the Work. Landlord shall invoice Tenant for and provide
reasonable documentation of such expenses at the end of the month in which such
expenses are incurred and Tenant shall pay the same within ten (10) days after
the receipt of Landlord's invoice therefor.

5.Change Orders. All changes to the Approved
Plans requested by Tenant must be approved by Landlord in advance of the
implementation of such changes as part of the Work. All delays caused by Tenant-
initiated change orders, including, without limitation, any stoppage of work
during the change order review process, are solely the responsibility of Tenant.
All increases in the cost of the Work resulting from such change orders shall be
borne by Tenant. Change orders which materially modify the scope of the Work
will increase the supervisory fee based on the time and effort required of
Landlord's construction project manager identified in Paragraph 9 hereof.

6.Standards And Conditions of Tenant's
Performance. All work done in or upon the Premises by Tenant shall be done
according to the standards stated in this Paragraph 6, except as the same may be
modified in the Approved Plans approved by or on behalf of Landlord and
Tenant.

(a)Tenant's Approved Plans and all design and
construction of the Work shall comply with all applicable statutes, ordinances,
regulations, laws, codes and industry standards, including, but not limited to,
requirements of Landlord's fire insurance underwriters. Within the time period
provided in Paragraph 2(b) hereof for the review of the Plans, Landlord shall
provide to Tenant any requirements from such fire insurance underwriters.

(b)Tenant shall, at its own cost and expense, obtain
all required building permits, occupancy permits and other consents and
approvals which may be required by the City of Plymouth, the State of Minnesota,
the United States of America or any other governmental entity or agency with
jurisdiction. Tenant's failure to obtain such permits shall not cause a delay in
the commencement of the Term or the obligation to pay Rent or any other
obligations under the Lease.

(c)Tenant's Contractors shall be licensed
contractors, possessing good labor relations, capable of performing quality
workmanship and working in harmony with Landlord's supervisory and management
agents and personnel. All work shall be coordinated with any other construction
or other work in the Building in order not to adversely affect construction work
being performed by or for Landlord or its tenants. Subject to the requirements
of this Work Letter, both parties agree to cooperate in connection with all of
their respective obligations contemplated by this Work Letter. 

(d)To the extent Tenant does not perform or does not
cause to be performed any work which pertains to patching of the Work and other
work in the Building within five (5) days after notice from Landlord, which
notice need not be in writing, but shall be confirmed in writing by Landlord
within one (1) business day after oral notice is given, except in the event of
an emergency when no notice shall be required, Landlord shall have the right,
but not the obligation, to perform, on behalf of and for the account of Tenant,
subject to reimbursement by Tenant, the work which pertains to patching of the
Work and other work in the Building.

(e)Tenant shall use only new, first-class materials
in the Work, except where explicitly shown in the Approved Plans. All Work shall
be done in a good and workmanlike manner. With respect to that portion of the
Work which is or will become a fixture, Tenant shall obtain contractors'
warranties in favor of both Landlord and Tenant of at least one (1) year's
duration and manufacturer's warranties in favor of both Landlord and Tenant for
the duration customarily granted by the manufacturer from the completion of that
portion of the Work against defects in workmanship and materials.

(f)Tenant and Tenant's Contractors shall make all
efforts and take all steps appropriate to assure that all construction
activities undertaken comport with the reasonable expectations of all tenants
and other occupants of a fully-occupied (or substantially fully occupied)
building of the same class as the Building and do not unreasonably interfere
with the operation of the Building or with other tenants and occupants of the
Building. In any event, Tenant shall comply with all reasonable rules and
regulations existing from time to time at the Building. Tenant and Tenant's
Contractors shall take all precautionary steps to minimize dust, noise, odors,
and construction traffic, and to protect their facilities and the facilities of
others affected by the Work and to properly police same. Construction equipment
and materials are to be kept within the Premises and delivery and loading of
equipment and materials shall be done at such locations and at such time as
Landlord shall direct so as not to burden the construction or operation of the
Building. If and as required by Landlord, the Premises shall be sealed off from
the balance of the Building so as to minimize the disbursement of dirt, debris
and noise.

(g)Within five (5) days after notice from Landlord,
which notice need not be in writing, but shall be confirmed in writing by
Landlord within one (1) business day after oral notice is given, except in the
event of an emergency when no notice shall be required, Landlord shall have the
right to order Tenant or any of Tenant's Contractors who violate the
requirements imposed on Tenant or Tenant's Contractors in performing work to
cease work and remove its equipment and employees from the Building. No such
action by Landlord shall delay the commencement of the Lease or the obligation
to pay Rent or any other obligations therein set forth.

(h)Utility costs or charges for any service to the
Premises shall be the responsibility of Tenant from the date Tenant is obligated
to commence or commences the Work and shall be paid for by Tenant at Landlord's
standard rates then in effect. Tenant shall pay for all support services
provided by Landlord's contractors at Tenant's request or at Landlord's
discretion resulting from breaches or defaults by Tenant under this Work Letter.
Tenant shall arrange and pay for removal of construction debris and shall not
place debris in the Building's waste containers. If required by Landlord, Tenant
shall sort and separate its waste and debris for recycling and/or environmental
law compliance purposes.

(i)Tenant shall permit access to the Premises, and
the Work shall be subject to inspection by Landlord and Landlord's architects,
engineers, contractors and other representatives, at all times during the period
in which the Work is being constructed and installed, and following completion
of the Work. Landlord shall use reasonable efforts to schedule such inspections
so as to not interfere with the Work; provided however, that Landlord shall have
no obligation to schedule inspections or other site visits to be made by
Landlord's construction project manager identified in Paragraph 9 hereof. 

(j)Tenant shall proceed with its work expeditiously,
continuously and efficiently, and shall use commercially reasonable efforts to
complete the same in accordance with the construction schedule. Tenant shall
notify Landlord upon completion of the Work and shall furnish Landlord (and
Landlord's title insurance company, if any) with such further documentation as
may be necessary under Paragraph 8 below, including, without limitation, a copy
of the final as-built plans for the Work.

(k)Tenant shall have no authority to deviate from the
Approved Plans in performance of the Work, except as authorized by Landlord and
its designated representative in writing. Tenant shall within thirty (30) days
after completion of the Work furnish to Landlord "as-built" drawings of the Work
prepared by a certified architect. 

(l)Landlord shall have the right to run utility
lines, pipes, conduits, duct work and component parts of all mechanical and
electrical systems where necessary or desirable as a result of the Work through
the Premises, to repair, alter, replace or remove the same, and to require
Tenant to install and maintain proper access panels thereto.

(m)Tenant shall impose on and enforce all applicable
terms of this Work Letter against Tenant's architect and Tenant's
Contractors.

7.Insurance and Indemnification.

(a)In addition to any insurance which may be required
under the Lease, Tenant shall secure or cause to be secured, pay for or cause to
be paid for and maintain or cause Tenant's Contractors to secure, pay for and
maintain during the continuance of construction and fixturing work within the
Building or Premises, insurance in the following minimum coverages and the
following minimum limits of liability:
(i)Worker's Compensation and Employer's Liability
Insurance with limits of not less than such amounts as may be required from time
to time by law.

(ii)Comprehensive General Liability Insurance
(including Contractors' Protective Liability) in an amount not less than
$2,000,000.00 (combined single limit). Such insurance shall provide for
explosion and collapse, completed operations coverage and broad form blanket
contractual liability coverage and shall insure Tenant's Contractors against any
and all claims for bodily injury, including death resulting therefrom, and
damage to the property of others and arising from its operations under the
contracts whether such operations are performed by Tenant's Contractors or by
anyone directly or indirectly employed by any of them.

(iii)Comprehensive Automobile Liability
Insurance, including the ownership, maintenance and operation of any automotive
equipment, owned, hired, or non-owned in an amount not less than $500,000.00 for
each person in one accident, and $1,000,000.00 for injuries sustained by two or
more persons in any one accident and property damage liability in an amount not
less than $1,000,000.00 for each accident. Such insurance shall insure Tenant's
Contractors against any and all claims for bodily injury, including death
resulting therefrom, and damage to the property of others arising from its
operations under the contracts, whether such operations are performed by
Tenant's Contractors, or by anyone directly or indirectly employed by any of
them.

(iv)"All-risk" builder's risk insurance upon the
entire Work to the full insurable value thereof. This insurance shall include
the interests of Landlord and Tenant (and their respective contractors and
subcontractors of any tier to the extent of any insurable interest therein) in
the Work and shall insure against the perils of fire and extended coverage and
shall include "all-risk" builder's risk insurance for physical loss or damage
including, without duplication of coverage, theft, vandalism and malicious
mischief. If portions of the Work stored off the site of the Building or in
transit to said site are not covered under said "all-risk" builder's risk
insurance, then Tenant shall effect and maintain similar property insurance on
such portions of the Work. Any loss insured under said "all-risk" builder's risk
insurance shall be adjusted between Landlord and Tenant and made payable to
Landlord, as trustee for the insureds, as their interests may appear.

All policies (except the worker's compensation policy) shall
be endorsed to include as additional insured parties the parties listed on, or
required by, the Lease, Landlord's contractors, Landlord's architects, and their
respective beneficiaries, partners, directors, officers, employees and agents,
and such additional persons as Landlord may designate. The waiver of subrogation
provisions contained in the Lease shall apply to all insurance policies (except
the worker's compensation policy) to be obtained by Tenant pursuant to this
paragraph. The insurance policy endorsements shall also provide that all
additional insured parties shall be given thirty (30) days' prior written notice
of any reduction, cancellation or non-renewal of coverage and shall provide that
the insurance coverage afforded to the additional insured parties thereunder
shall be primary to any insurance carried independently by said additional
insured parties. Additionally, where applicable, each policy shall contain a
cross-liability and severability of interest clause.

(b)Without limitation of the indemnification
provisions contained in the Lease, to the fullest extent permitted by law Tenant
agrees to indemnify, protect, defend and hold harmless Landlord, the parties
listed, or required by, the Lease to be named as additional insureds, Landlord's
contractors, Landlord's architects, and their respective beneficiaries,
partners, directors, trustees, officers, employees and agents, from and against
all claims, liabilities, losses, damages and expenses of whatever nature arising
out of or in connection with the Work or the entry of Tenant or Tenant's
Contractors into the Building and the Premises, without limitation, mechanic's
liens, the cost of any repairs to the Premises or Building necessitated by
activities of Tenant or Tenant's Contractors, bodily injury to persons or damage
to the property of Tenant, its employees, agents, invitees, licensees or others.
It is understood and agreed that the foregoing indemnity shall be in addition to
the insurance requirements described above and shall not be in discharge of or
in substitution for same or any other indemnity or insurance provision of the
Lease.

8.Completion of Work. Upon completion of the
Work, Tenant shall furnish Landlord with full and final waivers of liens and
contractors' and architects' affidavits and statements, in such form as may be
required by Landlord, Landlord's title insurance company and Landlord's
construction or permanent lender, if any, from all parties performing labor or
supplying materials or services in connection with the Work showing that all of
said parties have been compensated in full and waiving all liens in connection
with the Premises and Building. Tenant shall submit to Landlord a detailed
breakdown of Tenant's total construction costs, together with such evidence of
payment as is satisfactory to Landlord.

9.On-Site Project Manager; Authorities for
Action. Landlord hereby appoints Tom Smith, whose address is United
Properties LLC, 3500 West 80th Street, Bloomington, Minnesota, 55431
and whose telephone number is 952-893-8873 as Landlord's agent with respect to
the matters set forth in this Work Letter and Tenant hereby appoints Phil
Gerlach, whose address is 3955 Annapolis Lane North, Plymouth, Minnesota,
55447,and whose telephone number is 763-551-6791, as Tenant's agent and on-site
project manager with respect to the matters set forth in this Work Letter. Each
of such persons shall be the sole person who will receive and communicate all
questions, decisions and other matters as to the party such person represents.
Each of such parties will make such communications as is required of him within
the times specified therefor in this Work Letter or in the Lease, time being of
the essence. Landlord or Tenant may change the person constituting the authority
for action by written notice to the other party given in accordance with the
Lease. Any person other than Tom Smith or Phil Gerlach appointed by Landlord or
Tenant as agent under this Paragraph 9 shall be reasonably acceptable to the
other party and shall be qualified, in accordance with this Paragraph 9 to
perform his or her duties hereunder. 

Tenant's on-site manager shall be familiar with all rules
and regulations and procedures of the Building and all personnel of the Building
engaged directly or indirectly in the management, operation and construction of
the Building. The entire cost and expense of Tenant's on-site project manager
shall be borne and paid for by Tenant.

10.Miscellaneous.

(a)Time is of the essence of this Work Letter
Agreement.

(b)If Tenant fails to make any payment relating to
the Work as required hereunder, Landlord, at its option, may complete the Work
pursuant to the Approved Plans and continue to hold Tenant liable for the costs
thereof and all other costs due to Landlord. Tenant's failure to pay any amounts
owed by Tenant hereunder when due or Tenant's failure to perform its obligations
hereunder shall also constitute a default under the Lease and Landlord shall
have all the rights and remedies granted to Landlord under the Lease for
nonpayment of any amounts owed thereunder or failure by Tenant to perform its
obligations thereunder. Notwithstanding the foregoing, Tenant may contest any
lien filed against the Premises or the Building for work performed or material
supplied if, within thirty (30) days after the filing of any lien arising from
work performed, materials furnished or other obligation incurred by Tenant,
Tenant shall provide security for such lien upon such terms and conditions,
including, without limitation, conditions for the release of said security to
Landlord, as Landlord, in Landlord's sole discretion, may require. If, within
said thirty (30) day period, Tenant fails to either (a) cause such lien to be
discharged; or (b) provide the security on the terms and conditions required by
the preceding sentence, then, the same shall constitute an event of default
hereunder; provided however, that, in addition to any other right or remedy of
Landlord, Landlord may, but shall not be obligated to, discharge the same by
paying the amount claimed to be due, and the amount so paid by Landlord and all
costs and expenses, including reasonable attorney's fees incurred by Landlord in
procuring the discharge of such lien, shall be due and payable in full by Tenant
to Landlord on demand. Tenant hereby agrees to defend and indemnify Landlord and
to hold Landlord harmless from and against any such lien or claim or action
thereon, and shall reimburse Landlord, as additional rent for Landlord's costs
of suit and all attorneys' fees and costs incurred in connection with the
removal of any such lien, claim or action. Landlord hereby reserves the right,
at any time and from time to time during the construction of the Premises or any
subsequent alteration to enter onto the Premises and post and review notices in
accordance with Minn. Stat.  514.06, as the same may be amended. 

(c)Notices under this Work Letter shall be given in
the same manner as under the Lease.

(d)The headings in this Work Letter are for
convenience only.

(e)This Work Letter sets forth the entire agreement
of Tenant and Landlord regarding the Work. This Work Letter may only be amended
if in writing, duly executed by both Landlord and Tenant.

(f)All amounts due from Tenant hereunder, if any,
shall be deemed to be Rent due under the Lease.

11.Limitation of Landlord's Liability. If
Landlord is ever adjudged by any court to be liable to Tenant, Tenant
specifically agrees to look solely to Landlord's interest in the Building for
the recovery of any judgment from Landlord, it being agreed that none of
Landlord, its directors, officers, shareholders, managing agents, employees or
agents shall be personally liable for any such judgment. In no event shall
Landlord ever be liable to Tenant, Tenant's agents, servants or employees, or to
any person or entity claiming by or through Tenant, for any consequential,
indirect, special or similar types of damages.

12.Lease Provisions. The terms and provisions
of the Lease are hereby amended and supplemented. In the event of any conflict
between the provisions of the Lease and the provisions of this Work Letter, the
provisions of this Work Letter shall control. All amounts payable by Tenant to
Landlord under this Work Letter, if any, shall be deemed to be Additional Rent
under the Lease and, upon any default in the payment of same, Landlord shall
have all of the rights and remedies provided for in the Lease. The pursuit of
any remedies by Tenant in connection with any breach by Landlord of its
obligations under this Work Letter shall be subject to the provisions of
Paragraph 11 hereof and subject to any other limitations stated in the
Lease.

IN WITNESS WHEREOF, this Work Letter Agreement is
executed as of the date first written above.

	
ST. PAUL PROPERTIES,
INC.
	
 PROTEIN DESIGN LABS, INC.

	
By: ____________________________
	
By: ____________________________

	
Its: ___________________________
	
Its: ___________________________

 

 

EXHIBIT C

RULES AND REGULATIONS FOR

PLYMOUTH BUSINESS CENTER

1.The sidewalks, passages and stairways, if any,
shall not be obstructed by Tenant or used for any purpose other than for ingress
to and egress from the Premises. The passages, entrances, stairways, if any,
balconies, if any, and roof are not for the use of the general public, and
Landlord shall in all cases retain the right to control and prevent access
thereto of all persons whose presence in the judgment of Landlord shall be
prejudicial to the safety, character, reputation and interests to the Building
and its tenants; provided that nothing herein contained shall be construed to
prevent such access to person with whom Tenant normally deals in the ordinary
course of its business unless such persons are engaged in illegal activities.
Tenant and its employees shall not go upon the roof of the Building without the
written consent of the Landlord.

2.The sashes, sash doors, windows, glass lights and
any lights or skylights that reflect or admit light into halls, from the
building exterior or other places into the building shall not be covered or
obstructed. Any curtains, blinds, shades, or screens attached or hung to any of
the prior mentioned areas must have prior approval of Landlord. Landlord will
provide standard window coverings on exterior windows and other glass if
appropriate and Landlord reserves the right to regulate position of such
coverings.

3.In case of invasion, riot, public excitement or
other commotion, Landlord reserves the right to prevent access to the Building
during the continuance of same. Landlord shall in no case be liable for damages
for the admission or exclusion of any person to or from the Building. Landlord
has the right to evacuate the Building in the event of an emergency or
catastrophe.

4.Two door keys for doors to leased premises shall be
furnished at the commencement of a lease by Landlord. All duplicate keys shall
be purchased only from the Landlord. One security card per each of Tenant's
employees so authorized by Tenant will be issued for all approved personnel to
permit after-hour access. Tenant shall not alter any lock, or install new or
additional locks or bolts, on any door without the prior written approval of
Landlord. In the event such alteration or installation is approved by Landlord,
Tenant shall supply Landlord with a key for any such lock or bolt. Tenant, upon
the termination of the tenancy, shall deliver to Landlord all the keys, locks,
bolts, cabinets, safes or vaults, or the means of opening any lockable device
and security cards of offices, rooms and toilet rooms which shall have been
furnished Tenant or which Tenant shall have had made, and in the event of loss
of any keys or security cards so furnished shall pay the Landlord therefor.

5.All deliveries, including intra-company deliveries,
must be made via service entrances. Tenant agrees to adhere to floor loading
maximum levels as stated by Landlord. All damage done to the Building by the
delivery or removal of such items, or by reason of their presence in the
Building, shall be paid to Landlord upon demand by Tenant and shall constitute
Additional Rent under the Lease. 

6.Parking area and parking policies will be
established by Landlord, and Tenant agrees to adhere to said policies. UPON A
COMPLAINT BY TENANT AND OTHER TENANTS OF THE BUILDING AND AT ANY OTHER TIME,
Landlord reserves the right to IMPLEMENT AND institute new parking policies as
they are determined to benefit overall Building operations. Tenant agrees to
leave no cars, vans or other vehicles overnight or over any weekend in any
parking area. Tenant further agrees that its employees will not park in the
visitor parking areas at any time.

7.If Tenant desires signal, communication, alarm or
other utility or service connection installed or changed, the same shall be made
at the expense of Tenant, with approval and under direction of Landlord, it
being understood and agreed that (a) no audible alarm shall be installed unless
specifically approved in writing by Landlord prior to installation; and (b) only
Tenant shall be obligated to respond to such signal, communication, alarm or
other utility or service connection, and none of Landlord, Landlord's Managing
Agent or other employee, agent or contractor of Landlord shall, under any
circumstances have any obligation to Tenant or others to respond to such alarm
or be liable to Tenant or any party claiming by or through Tenant for any
failure to do so. Any installations, and the boring or cutting for wires, shall
be made at the sole cost and expense of Tenant and under control and direction
of Landlord. Landlord retains in all cases the right to require (x) the
installation and use of such electrical-protecting devices that prevents the
transmission of excessive current or electricity into or transmission of
excessive current or electricity into or through the Building (y) the
changing of wires and of their installation and arrangement underground or
otherwise as Landlord may direct, and (z) compliance on the part of all
using or seeking access to such wires with such rules as Landlord may establish
relating thereto. All such wires used by Tenant must be clearly tagged at the
distribution boards and junction box and elsewhere in the Building, with
(h) the number of the Premises to which said wires lead, (i) the
purpose for which said wires are used and (j) the name of the company
operating same.

Tenant agrees to instruct all approved communication, and
computer and other cabling installers to attach cable in wire hangers from the
deck or in any designated building floor or ceiling system cable location.
Tenant will not allow installers to lay any cabling on top of the suspended
layer ceiling system.

8.Tenant shall give Landlord prompt notice of all
accidents to or defects in air conditioning equipment, plumbing, electrical
facilities or any part of appurtenances of the Premises.

9.Tenant assumes full responsibility for protecting
its space from theft, robbery, and pilferage, which includes keeping doors
locked and other means of entry to the space closed and secured. Landlord shall
be in no way responsible to Tenant, its agents, employees, licensees,
contractors or invitees for any loss of property from the Premises or public
areas or for any damages to any property thereon from any cause whatsoever.

10.Tenant shall not install or operate machinery or
any mechanical devices of a nature not directly related to Tenant's ordinary use
of the Premises without the prior written permission of the Landlord. Tenant
shall not place in or move about the Premises any safe or other heavy article
which, in Landlord's reasonable opinion may damage the Premises (including the
slab) or overload the floor of the Premises, shall not mark on or drive nails,
screw or drill into the partitions, woodwork or plaster (except as may be
incidental to the hanging of wall decorations) and shall not in any way deface
the Premises or any part thereof.

11.No person or contractor not employed by Landlord
shall be used to perform window washing, decorating, repair or other work in the
leased Premises without the express written consent of Landlord.

12.The directories of the Building shall be used
exclusively for the display of the name and location only of the tenants of the
Building, including Tenant, and will be provided at the expense of Landlord. Any
additional names requested by Tenant to be displayed in the directories must be
approved by Landlord and, if approved, will be provided at the sole expense of
Tenant.

13.Tenant shall not and shall ensure that its agents,
servants, employees, licensees, contractors or invitees shall not:

(a)enter into or upon the roof of the Building or any
storage, electrical or telephone closet, or heating, ventilation, air-
conditioning, mechanical or elevator machinery housing areas;

(b)sweep or throw any dirt or other substance into
ANY passageway, sidewalk or parking area;

(c)bring in or keep in the Premises any firearms,
vehicles, bicycles, motorcycles or animals of any kind, except seeing-eye or
hearing-ear dogs or other animals required by Tenant's employees, agents,
contractors or invitees to perform their normal life activities;

(d)deposit any trash, refuse or other substance of
any kind within or out of the Building, except in the refuse containers provided
therefor;

(e)permit the operation any device that may produce
an odor, cause music, vibrations of air waves to be heard or felt outside the
Premises, or which may emit electrical waves that shall impair radio, television
or any other form of communication system; or 

(f)permit the carrying of a lighted cigar, cigarette,
pipe or any other lighted smoking equipment or permit smoking of cigarettes,
cigars or pipes (i) in the common areas of the Building, including, without
limitation, restrooms, except common areas which have been designated by
Landlord in writing as smoking areas; or (ii) within ten (10) yards of any door
leading into the Building or any building comprising a part thereof.

14.Tenant will not install any radio or television
antennas or receptor dish or any device on the roof or grounds without the prior
written approval of Landlord. Tenant understands that rentals are charged for
roof space in the event any roof installation is approved in writing by
Landlord. Landlord reserves the right to require removal of any approved
installed device in the event it is necessary to do so in Landlord's
opinion.

15.No sign, light, name placard, poster advertisement
or notice visible from the exterior of any demised premises, shall be placed,
inscribed, painted or affixed by Tenant on any part of the Building without the
prior written approval of Landlord. All signs or letterings on doors, or
otherwise, approved by Landlord shall be inscribed, painted or affixed at the
sole cost and expense of Tenant, by a person approved by Landlord.

16.The toilet-rooms, toilet, urinals, wash bowls and
water apparatus shall not be used for any purpose other than those for which
they were constructed or installed, and no sweeping, rubbish, chemicals or other
unsuitable substances shall be thrown or placed therein. Tenant shall bear the
expense of repairing and cleaning up any breakage, stoppage or damage resulting
from violation(s) of this rule by Tenant or its agents, servants, employees,
invitees, licensees or visitors. 

17.Tenant must have Landlord's prior written consent
before using the name of the Building and/or pictures of the Building in
advertising or other publicity.

18.Tenant shall not make any room-to-room canvass to
solicit business from other tenants in the Building, and shall not exhibit, sell
or offer to sell, use, rent or exchange in or from the Premises unless
ordinarily embraced within Tenant's use of the Premises specified herein.

19.Tenant shall not do any cooking in the Premises,
except that Tenant may install a microwave oven and coffee makers for the use of
its employees in the Premises. Under no circumstances shall Tenant install or
use any hot plates.

20.No portion of Tenant's area or any other part of
the Building shall at any time be used or occupied as sleeping or lodging
quarters.

21.Landlord has the right to enact trash removal and
trash recycling rules and regulations as necessary to control trash removal
costs or as required by the laws of the State of Minnesota and/or the United
States of America. Tenant agrees to adhere to such trash removal regulations and
to any and all modifications thereof issued by Landlord from time to time.

22.Tenant will refer all contractors, contractors'
representatives and installation technicians rendering any service to Tenant to
Landlord for Landlord's supervision, approval and control before performance of
any contractual service. This provision shall apply to any work performed in the
Building including installations of telephones, telegraph equipment, electrical
devices and attachments and installations of any nature affecting floors, walls,
woodwork, trim, windows, ceilings, equipment or any other physical portion of
the Building.

23.Tenant shall not permit picketing or other union
activity involving its employees in the Building except in those locations and
subject to time and other limitations as to which Landlord may give prior
written consent.

24.Tenant shall not conduct, or permit to be
conducted on or from the Premises, any auction of Tenant's personal property,
any liquidation sale, any going-out-of-business sale or other similar
activity.

25.Landlord reserves the right to rescind, make
reasonable amendments, modifications and additions to the rules and regulations
heretofore set forth, and to make additional reasonable rules and regulations,
as in Landlord's sole judgment may from time-to-time be needed for the safety,
care, cleanliness and preservation of good order of the Building, and Landlord
agrees that it shall notify Tenant, in writing of any such amendments,
modifications and additional or additional rules and regulations. Landlord shall
not be responsible for any violation of the foregoing rules and regulations by
other tenants of the Building and shall have no obligation to enforce the same
against other tenants.

 

 

EXHIBIT D

TENANT'S DECEMBER 31, 2000, AUDITED FINANCIAL STATEMENTS

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