Document:

<PAGE>

                                  LEASE BETWEEN

                      SCIENCE PARK DEVELOPMENT CORPORATION

                                       and

                        GENAISSANCE PHARMACEUTICALS, INC.

DATE:September 15, 1998

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
ARTICLE NO. DESCRIPTION                                                      PAGE
----------- -----------                                                      ----
<S>         <C>                                                              <C>
     1      LEASED PREMISES....................................................4
     2      TERM...............................................................7
     3      RENT..............................................................15
     4      TAXES.............................................................17
     5      TENANT'S USE OF LEASED PREMISES...................................20
     6      ALTERATIONS.......................................................20
     7      REPAIRS...........................................................23
     8      COMPLIANCE WITH LAWS; INCREASED INSURANCE RATES;
                 ENVIRONMENTAL LAWS...........................................24
     9      FLOOR LOAD; ENGINES, MACHINERY AND EQUIPMENT......................27
     10     TENANT'S OBLIGATIONS TO LANDLORD'S LENDERS........................28
     11     LIMITATIONS ON LANDLORD'S LIABILITY...............................29
     12     TENANT'S OBLIGATION TO PROTECT LANDLORD & LANDLORD'S LENDERS......32
     13     FIRE AND OTHER CASUALTY...........................................33
     14     TAKING BY GOVERNMENTAL AUTHORITY..................................36
     15     TENANT'S RIGHT TO ENCUMBER, ASSIGN, OR SUBLEASE...................36
     16     ACCESS TO LEASED PREMISES.........................................42
     17     DEFAULT AND TERMINATION...........................................42
     18     LANDLORD'S PERFORMANCE ON TENANT'S BEHALF.........................47
     19     TENANT'S QUIET ENJOYMENT OF THE LEASED PREMISES...................48
     20     NO WAIVER BY LANDLORD.............................................48
     21     INABILITY TO PERFORM..............................................48
     22     NOTICES AND OTHER COMMUNICATIONS..................................49
     23     RULES AND REGULATIONS.............................................50
     24     NO SECURITY DEPOSIT...............................................50
     25     INSURANCE.........................................................50
     26     SERVICES PROVIDED BY LANDLORD.....................................52
     27     TELEPHONE SERVICE.................................................53
     28     SIGNS.............................................................53
     29     BROKERAGE.........................................................53
     30     NOTICE OF LEASE...................................................53
     31     SURRENDERING OF LEASED PREMISES...................................54
     32     ADDITIONAL OBLIGATIONS OF TENANT..................................55
     33     TENANT'S WAIVER OF RIGHTS.........................................55
     34     EFFECT OF WRITTEN LEASE AGREEMENT.................................56
     35     INTERPRETATION OF LEASE...........................................57
     36     HVAC SERVICE......................................................57
</TABLE>

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EXHIBITS          DESCRIPTION
--------          -----------

A-1 and A-2       FLOOR PLAN OF THE LEASED PREMISES

A-3               MECHANICALS' SPACE

A-4               TENANT'S CURRENT SPACE

B-1               LANDLORD'S WORK

B-2               INTERIOR WORK

C                 UTILITIES RIDER

D                 CHEMICALS AND/OR HAZARDOUS MATERIALS

E                 ENGINES, MACHINERY AND EQUIPMENT

F                 RULES AND REGULATIONS

G                 LANDLORD'S CLEANING SPECIFICATIONS

H                 FORM OF NON-DISTURBANCE, SUBORDINATION AND ATTORNMENT
                  AGREEMENT

<PAGE>

         This Lease (this "LEASE") is made and entered into as of the 15th day
of September, 1998 by and between SCIENCE PARK DEVELOPMENT CORPORATION, a
Connecticut corporation having a principal place of business at Five Science
Park, New Haven, Connecticut 06511 (herein referred to as "LANDLORD") and
GENAISSANCE PHARMACEUTICALS, INC., a Delaware corporation having a principal
place of business at Five Science Park, New Haven, Connecticut 06511 (herein
referred to as "TENANT").

                            W I T N E S S E T H:

         Landlord warrants and represents to Tenant that it is a corporation
organized and in good standing under the laws of the State of Connecticut and
that it has full right, power and authority to enter into this Lease in the
manner hereinafter subscribed. Tenant warrants and represents to Landlord that
it is a corporation organized and in good standing under the laws of the State
of Delaware and that it has full right, power and authority to enter into this
Lease in the manner hereinafter subscribed. Based upon the foregoing, Landlord
hereby Leases to Tenant, and Tenant hereby hires from Landlord, the Leased
Premises as hereinafter defined, for the term, rentals, and upon other
conditions and covenants as follows:

              ARTICLE 1. LEASED PREMISES

         1.1      LEASED PREMISES.

          (a)  Landlord is the owner of the real property located at Science
               Park, New Haven, Connecticut (the "Property"). The Tenant shall
               lease from Landlord approximately 20,000 rentable square feet in
               Building 5 North located on the Property ("BUILDING 5 NORTH"),
               which leased premises is comprised of (A) the entire second floor
               of Building 5 North, which consists of approximately 16,000
               rentable square feet as shown on the floor plan attached hereto
               as EXHIBIT A-1, and (B) certain space located at the eastern end
               of the third floor of Building 5 North, which consists of
               approximately 4,000 rentable square feet as shown on the floor
               plan attached hereto as EXHIBIT A-2 (collectively, the "LEASED
               PREMISES"). Tenant shall have exclusive use of the Leased
               Premises.

          (b)  Tenant shall also have the right, in common with Landlord and
               other tenants of Building 5 North, to place and keep HVAC
               equipment used to serve the Leased Premises in the space

                                       4

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               located on the third (3rd) floor of Building 5 North as shown on
               the floor plan attached hereto as EXHIBIT A-3 (the "MECHANICALS'
               SPACE"), at no additional rent.

          (c)  Tenant's rights under this Lease shall include, in common with
               other tenants of the building or buildings within which the
               Leased Premises may be located from time to time, use of the land
               and the facilities, accesses, hallways, roadways, sidewalks, and
               like service and scenic improvements and grounds (with the
               exception of parking areas), which are intended for the common
               use of tenants of such building or buildings ("COMMON
               FACILITIES").

         1.2 PARKING. The rental of the Leased Premises will include the use of
up to 80 parking spaces ("TENANT'S PARKING SPACES"), which spaces shall be
designated by Landlord after consultation with Tenant and shall be in close
proximity to Building 5 North. The Tenant's Parking Spaces shall be made
available to Tenant upon the following schedule:

         Upon execution of this Lease              25 spaces
         On January 1, 1999                        35 spaces
         On July 1, 1999                           65 spaces
         On January 1, 2000                        80 spaces

If Tenant's employment levels dictate that the parking spaces need to be made
available at a slower or accelerated pace in variance with the schedule
described above, Tenant will meet with Landlord to discuss such changes and
Landlord will adjust the timing for the allocation of spaces to the extent
possible.

During the "Building 5 Renovation Period" (as defined in Section 2.6) Tenant
will be given exclusive use of 15 parking spaces on the upper level of Building
5 North adjacent to Tenant's front entrance. These spaces constitute part of the
total spaces to be made available to Tenant pursuant to the foregoing schedule.
If Landlord's redevelopment plans for the Property call for the area containing
the 15 parking spaces to remain as a parking area, then the 15 spaces shall
continue to be available for Tenant's exclusive use following completion of
construction. Notwithstanding the foregoing, both parties shall work together
and negotiate in good faith in an effort to retain the existing entranceway to
Building 5 North and Tenant's right to use these 15 parking spaces. In the event
that any of Tenant's 15 parking spaces become unavailable due to Landlord's
redevelopment plans, Landlord shall make available 15 alternative spaces in
proximity to Building 5 North or Building 5 South.

                                       5

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Tenant acknowledges that in addition to Landlord's Work (as used herein, the
term "Landlord's Work" shall mean the work described on Exhibit B-1 hereof) to
Building 5 North, Landlord will be performing additional demolition and
construction work at Science Park with the proceeds of the CHFA Loan (as defined
in Section 2.4). Tenant agrees that during the Building 5 Renovation Period and
during the period while other demolition work is occurring at Science Park, the
parking spaces designated for Tenant's use may from time to time be temporarily
relocated by Landlord. Landlord agrees that Tenant's Parking Spaces during any
such period of temporary relocation shall be within the confines of Science Park
and as close to Building 5 North as reasonably possible and Landlord further
agrees to use all reasonable efforts to minimize any inconvenience to Tenant
caused by any such temporary relocation.

If Tenant, on more than just an isolated basis, finds that the parking spaces
contemplated hereunder are not available for the use of Tenant, Landlord, at its
sole cost and expense, in consultation with Tenant, will implement a parking
management program for all parking serving the Property, which may include, at
Landlord's option, signage, stickers and/or security patrol, to ensure that
parking spaces are reserved for the use of Tenant pursuant to the terms and
conditions of this Lease.

Additional spaces, if requested by Tenant and available given the overall
parking requirements of the Property, will be billed to Tenant at Landlord's
prevailing rate. Tenant's use of the spaces shall be subject to the reasonable
rules and regulations of Landlord, as the same may be adopted or amended from
time to time. Except as otherwise provided herein, Tenant shall have no right to
use any other parking spaces. If Tenant exercises its option for the ROFR Space
(as defined in Section 1.3A hereof) or the Additional Space (as defined in
Section 1.3B hereof), Landlord shall provide Tenant additional parking at the
rate of four (4) parking spaces per one thousand (1,000) square feet of space
leased by Tenant at Landlord's then prevailing charge for parking. Parking on
the Property by Tenant, its employees, guests and invitees shall be at Tenant's
risk.

         1.3 OPTIONS TO LEASE ADDITIONAL SPACE.

         A. BUILDING 4. Tenant will have a one-time option to lease that certain
space in Building 4 of Science Park now leased by Landlord to Vion
Pharmaceuticals, Inc. ("ROFR SPACE") commencing on the expiration (May 30, 2001)
or earlier termination for any reason of the lease for such space between
Landlord and Vion Pharmaceuticals, Inc. (successor-in-interest to OncoRx, Inc.)
dated June 14, 1995, and amended October 31, 1996. If Tenant exercises said
option in a timely manner, the ROFR Space shall become a part of the Leased
Premises and be leased on all the same terms and conditions as the original
Leased Premises for the balance of the Term, or any extension thereof, except

                                       6

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that Base Rent (as hereinafter defined) for the ROFR Space shall be payable on
the number of rentable square feet in the ROFR Space at the rate per square foot
set forth in Section 3.1 as the Base Rent per square foot for the original
Leased Premises. In addition, Tenant shall pay to Landlord as Additional Rent
hereunder Tenant's Pro-Rata Share of Taxes assessed on Building 4 in accordance
with the provisions of Article 4 hereof. Landlord will notify Tenant of the
availability of the ROFR Space promptly after becoming aware that such ROFR
Space will be available for lease. In order to exercise its option to lease the
ROFR Space, Tenant must notify Landlord in writing within ten (10) business days
after Tenant's receipt of written notice from Landlord of the availability
thereof. If Tenant fails to so exercise said option in a timely manner, Landlord
shall be free to lease said space for a term or terms and for a rental or
rentals and upon such other terms as Landlord in its sole discretion determines.

         B. BUILDING 5 NORTH. Tenant will have the option to lease any available
space in Building 5 North that is either 2,000 square feet or larger or
contiguous to the Leased Premises, in either case, as such space becomes
available ("ADDITIONAL SPACE") on all the same terms and conditions as the
original Leased Premises for the balance of the Term, or any extension thereof,
except that Base Rent for the Additional Space shall be payable on the number of
rentable square feet in the Additional Space at the rate per square foot set
forth in Section 3.1 as the Base Rent per square foot for the original Leased
Premises, and Tenant's Pro-Rata Share of Taxes under Article 4 shall be adjusted
to reflect the increase in the square footage of the Leased Premises. Landlord
will notify Tenant in writing of the availability of each piece of Additional
Space promptly after becoming aware that such Additional Space will be available
for lease. In order to exercise said option to lease Additional Space, Tenant
must notify Landlord in writing within ten (10) business days after Tenant's
receipt of written notice from Landlord of the availability thereof. If Tenant
fails to so exercise said option in a timely manner, Landlord shall be free to
lease said space for a term or terms and for a rental or rentals and upon such
other terms as Landlord in its sole discretion determines.

                             ARTICLE 2. TERM

         2.1 TERM; COMMENCEMENT DATE. The term of this Lease (the "TERM") shall
commence in stages with respect to portions of the Leased Premises as Landlord
delivers to Tenant exclusive possession thereof. The Term shall commence with
respect to the space currently occupied by Tenant as shown on the floor plan
attached hereto as Exhibit A-4 ("TENANT'S CURRENT SPACE") and that portion of
the Leased Premises that is vacant as of the date of this Lease first written
above (the "LEASE EXECUTION DATE") and Landlord agrees to deliver to Tenant, and
Tenant agrees to accept, exclusive possession thereof on said date. Landlord
further

                                       7

<PAGE>

agrees to use its best efforts to remove as soon as possible all other
tenants from those portions of the Leased Premises that are occupied by tenants
as of the Lease Execution Date. As soon as a tenant is so removed and all of its
personal property has been removed, Landlord will deliver notice to Tenant and
exclusive possession of that portion of the Leased Premises previously occupied
by such tenant, Tenant shall accept the same and the Term of this Lease shall
commence with respect to such space (the date on which the Term commences with
respect to any portion of the Leased Premises is herein referred to as the
"LEASE COMMENCEMENT DATE"). Notwithstanding the foregoing, Landlord, at its
expense, shall promptly repair any damage caused by such other tenants in
vacating the Leased Premises. Unless sooner cancelled or terminated or extended
in accordance with the terms of this Lease, the Term will expire with respect to
the entire Leased Premises on the fifth anniversary of the "Rent Commencement
Date" (as such term is defined in Section 2.3A). The last day of the Term, as
the same may be extended pursuant to the terms of the Lease, is herein referred
to as the "EXPIRATION DATE"). For purposes of interpreting the expiration date
of the existing Lease dated 12/21/92 from Landlord to Bios Laboratories, Inc.,
as amended (the "BIOS LABS LEASE"), the expiration date shall be the Lease
Execution Date hereof. Notwithstanding anything to the contrary contained
herein, Tenant shall continue to pay to Landlord following the Lease Execution
Date and until the earlier of the Rent Commencement Date or the earlier
termination of this Lease pursuant to the terms hereof, an amount for use and
occupancy of Tenant's Current Space, which amount shall be equal to the rent and
additional rent payable under the terms of the Bios Labs Lease immediately prior
to the Lease Execution Date.

         2.2 OPTIONS TO EXTEND TERM. Subject to the terms and conditions
hereinafter provided, Tenant shall have the option to extend the Term
("EXTENSION OPTION"), exercisable as hereinafter provided, for two successive
extension terms of five years each, each such extension term ("EXTENSION TERM")
upon all of the terms, covenants and conditions set forth in this Lease, except
that after expiration of the second Extension Term, Tenant shall have no further
right to extend the Term. Tenant shall have the right to an extension option
only so long as this Lease shall be in full force and effect, and no default, or
event which but for the passage of time or the giving of notice, or both, would
constitute a default has occurred and is continuing and that in the case of the
second Extension Option, Tenant shall have exercised the first Extension Option.
The Base Rent for each Lease Year or portion thereof during any Extension Term
shall be that amount specified in Section 3.1C. Tenant shall exercise its right
to an Extension Term by giving Landlord notice of its election to do so not less
than six (6) months prior to the expiration of the Term in effect immediately
prior to such Extension Term and, upon the giving of such notice, this Lease
shall be deemed to be extended for the period of the relevant Extension Term
without the execution of any further lease or instrument.

                                       8

<PAGE>

         2.3   RENT COMMENCEMENT DATE AND LEASE YEAR.

          A.   Subject to Sections 2.3B. and 2.3C., as used herein, the term
               "RENT COMMENCEMENT DATE" shall mean 105 days after the last to
               occur of: (i) the closing and initial funding of the CII Loan (as
               defined in Section 2.5), (ii) the issuance of a building permit
               for Tenant's Work (as defined in Section 2.7(a)), and (iii) the
               occurrence of the Lease Commencement Date with respect to the
               entire Leased Premises. Occurrence of the Rent Commencement Date
               shall be subject to satisfaction of the contingencies set forth
               in Section 2.5 hereof.

          B.   In the event that the performance of, or a delay in the
               performance of, the Interior Work (as used herein, the term
               "INTERIOR WORK" shall mean that portion of the Landlord's Work
               described on Exhibit B-2) delays the progress of the Tenant's
               Work, the Rent Commencement Date shall be extended by one day for
               each such day of delay.

          C.   The Rent Commencement Date shall be extended by one day for each
               day that Tenant is delayed in completing Tenant's Work due to
               reasons beyond Tenant's reasonable control.

         2.4   CHFA LOAN; LANDLORD'S WORK

A.   Landlord represents to Tenant that as of the date hereof, Landlord and The
     Connecticut Housing Finance Authority ("CHFA") are negotiating the terms of
     a loan commitment letter, pursuant to which CHFA will agree to lend
     Landlord up to $14,000,000 upon and subject to the terms, covenants and
     conditions thereof ("CHFA LOAN"). Subject to closing and funding of that
     portion of the CHFA Loan that is intended to fund the demolition of
     Building 5 South, Landlord agrees to demolish Building 5 South. Subject to
     closing and funding of that portion of the CHFA Loan that is intended to
     fund Landlord's Work, Landlord agrees to use approximately $1,600,000 of
     the proceeds of the CHFA Loan to perform Landlord's Work. The final amount
     approved by CHFA for the funding of Landlord's Work and the demolition of
     Building 5 South is herein referred to as the "BUILDING 5 NORTH LOAN".

B.   Subject to closing and initial funding of the Building 5 North Loan
     occurring on or before September 30, 1998, Landlord shall use its best
     efforts to substantially complete Landlord's Work by December 31, 1999
     ("COMPLETION DATE"). Notwithstanding the foregoing, in the event that all
     of Landlord's Work (other than the Exterior Work, as such term is defined
     in Exhibit B-1) is not substantially complete by the Completion Date,
     Tenant shall be entitled, as its sole and exclusive remedy, to a pro rata
     reduction in Base Rent for any period

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<PAGE>

     after the Completion Date that all of the Landlord's Work (other than the
     Exterior Work) is not substantially complete, such rent reduction to be
     determined by a mutually-agreed upon commercial real estate broker with ten
     (10) years of experience in New Haven. If Landlord's Work is substantially
     completed after the Completion Date, Base Rent payable hereunder shall be
     reinstated to the level set forth in Section 3.1A effective as of the date
     of substantial completion of Landlord's Work is achieved. Substantial
     completion of the Landlord's Work (including the Interior Work but
     excluding the Exterior Work) shall be evidenced by issuance of a
     certificate of occupancy. Landlord and Tenant shall each use their best
     efforts to collectively cause Fusco Corporation and Svigals Associates to
     coordinate the Interior Work with the Tenant's Work (as defined in Section
     2.7 hereof) in order not to delay completion of the Tenant's Work.

C.   Subject to receiving funding to perform the same, Landlord shall use its
     best efforts to substantially complete all of the Interior Work by the Rent
     Commencement Date. In addition, Landlord represents that all electrical,
     mechanical, plumbing and other building systems serving the Leased Premises
     will be in working order on the Rent Commencement Date.

D.   (i) Provided that Landlord shall receive funding from CHFA or Tenant to
     complete the Interior Work, it shall be Landlord's obligation to perform
     the Interior Work. At any time prior to Landlord's closing on the CHFA
     Loan, Tenant may elect to fund the Interior Work by giving Landlord written
     notice. Upon receipt of such notice, Landlord shall release its contractor
     to proceed with the Interior Work, including, without limitation, obtaining
     all necessary building permits for the Interior Work. Landlord shall remain
     responsible for completion of the Interior Work and shall reimburse Tenant
     for interest on all sums advanced by Tenant at seven and one-half percent
     (7 1/2%) per annum from the date of advance until the date of
     reimbursement.

     (ii) Landlord shall cause Landlord's construction manager to price the
     Interior Work separately and deliver a schedule to Landlord and Tenant for
     its completion. Landlord shall cause the parties' architect (Svigals
     Associates) to clearly delineate the Interior Work on all plans and
     drawings.

     (iii) If Tenant elects to fund the Interior Work in accordance with the
     provisions of Section 2.4D(i) above, then if the Building 5 North Loan
     closes prior to Tenant's funding of the Interior Work, then the cost of the
     Interior Work shall be paid for out of the proceeds of the Building Five
     North Loan; if the Building 5 North Loan closes subsequent to Tenant's
     funding of the Interior Work but before the Rent Commencement Date, then
     Tenant shall be reimbursed from the first disbursement of proceeds from the
     Building 5 North Loan at the time of such disbursement for the monies plus
     interest as

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     aforesaid provided by Tenant to fund the Interior Work. If the Building 5
     North Loan has not been funded by the Rent Commencement Date for any
     reason, Tenant shall receive a credit against the first Base Rent due
     hereunder equal to the funds advanced by Tenant for completing the Interior
     Work, plus interest as aforesaid.

E.   If Landlord has performed and completed work to the exterior of Building 5
     North, but, in Tenant's opinion, the exterior of Building 5 North does not
     have a look comparable in quality to Building 4 after the Completion Date,
     then Tenant shall so notify Landlord in writing on or before January 31,
     2000 and, notwithstanding anything to the contrary contained in this Lease,
     Tenant's sole and exclusive remedy for such alleged breach by Landlord of
     its obligation to perform the Exterior Work shall be as set forth in this
     Subsection 2.4E and Subsection 2.4G. Within thirty (30) days after the
     giving of such notice, Landlord and Tenant shall engage an independent
     architect who is mutually acceptable to Landlord and Tenant and who has not
     previously been engaged by either of them. Within thirty (30) days after
     the Architect's selection, the architect shall render his opinion in
     writing to Landlord and Tenant as to whether the exterior of Building 5
     North has a look comparable in quality to Building 4, which opinion
     (subject to the provisions of Subsection 2.4H) shall be final and binding
     upon Landlord and Tenant. If it is the architect's opinion that the
     exterior of Building 5 North has a look comparable in quality to Building
     4, then Tenant shall be solely responsible for paying all fees and expenses
     of the architect, Tenant shall indemnify and hold harmless Landlord from
     and against any claim by the architect for fees and expenses, Landlord
     shall be deemed for all purposes to have met its obligations to perform the
     Exterior Work, and Tenant shall assert no further claim against Landlord
     with respect thereto. If it is the architect's opinion that the exterior of
     Building 5 North does not have a look comparable in quality to Building 4,
     then Landlord shall be solely responsible for paying all fees and expenses
     of the architect, Landlord shall indemnify and hold harmless Tenant from
     and against any claim by the architect for fees and expenses, and Landlord
     shall be deemed for all purposes not to have met its obligations to perform
     the Exterior Work,

F.   If Landlord has performed no work to the exterior of Building 5 North by
     the Completion Date, then, notwithstanding anything to the contrary
     contained in this Lease, Tenant's sole and exclusive remedy for such breach
     by Landlord of its obligation to perform the Exterior Work shall be as set
     forth in Subsection 2.4G.

G.   If it is the opinion of the architect selected under Subsection 2.4E that
     the exterior of Building 5 North does not have a look comparable in quality
     to Building 4, or if Landlord has performed no work to the exterior of
     Building

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     5 North by the Completion Date, then in either event Tenant shall be
     entitled, as its sole and exclusive remedy, to a pro rata reduction in the
     Base Rent applicable to Lease Years 3 through 10 for any period that the
     Exterior Work is not substantially complete. The amount of such rent
     reduction shall be the difference between the fair market rental value of
     the Leased Premises with the Exterior Work performed and the fair market
     rental value of the Leased Premises without the Exterior Work performed,
     which difference shall be determined by a commercial real estate broker
     with ten (10) years of experience in New Haven mutually selected by
     Landlord and Tenant; provided, however, that in no event, shall the Base
     Rent in Lease Year 3 be reduced to below $12.20/RSF nor shall the Base Rent
     in Lease Years 4 or 5 be reduced below $13.05/RSF. Subject to the
     limitation set forth in the immediately preceding sentence, the decision of
     the broker shall be final and binding upon Landlord and Tenant. Landlord
     shall be solely responsible for paying all fees and expenses of the broker
     for calculating the amount of the reduction in Base Rent and Landlord shall
     indemnify and hold harmless Tenant from and against any claim by the broker
     for such fees and expenses.

H.   If Landlord performs the Exterior Work after the broker has made his
     determination under Subsection 2.4G, Landlord may elect to have the
     architect selected by Landlord and Tenant under Subsection 2.4E render a
     second opinion in writing to Landlord and Tenant as to whether the exterior
     of Building 5 North, following such work, has a look comparable in quality
     to Building 4, which opinion shall be final and binding upon Landlord and
     Tenant. If the architect determines the exterior of Building 5 North,
     following such work, has a look comparable in quality to Building 4, then
     upon the rendition of such opinion by the architect the Base Rent payable
     hereunder shall be reinstated to the level set forth in Section 3.1
     effective as of the date in the opinion of the architect the exterior of
     Building 5 North attained a look comparable in quality to Building 4.
     Landlord shall be solely responsible for paying all fees and expenses of
     the architect for services performed under this Subsection 2.4H, and
     Landlord shall indemnify and hold harmless Tenant from and against any
     claim by the architect for such fees and expenses.

     2.5  CII LOAN; OBLIGATIONS CONTINGENT ON LOAN CLOSINGS.

     (a)  All of Tenant's obligations under this Lease shall be contingent upon
          the closing and initial funding of a loan from Connecticut
          Innovations, Inc. ("CII") to Tenant in the original principal amount
          of approximately $950,000 (the "CII LOAN") (the Building 5 North Loan
          and the CII Loan are herein referred to collectively as the "LOANS").
          If for any reason the CII Loan has not closed with initial funding on
          or

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<PAGE>

          before September 30, 1998, then provided that Tenant has not
          theretofor notified Landlord of its election to fund the Interior
          Work, Tenant may elect to terminate this Lease by giving written
          notice of termination to Landlord on or before October 10, 1998. Upon
          the giving of such notice, this Lease shall be deemed automatically
          terminated as of the date of the notice and neither party shall have
          any further rights or obligations hereunder.

     (b)  Landlord's obligation to perform Landlord's Work, other than the
          Interior Work, shall be contingent upon the closing and full funding
          of the Building 5 North Loan.

     (c)  Landlord agrees to promptly notify Tenant of the closing and initial
          funding of the Building 5 North Loan or the failure to close and fund
          the same on or before October 31, 1998. Tenant agrees to promptly
          notify Landlord of the closing and initial funding of the CII Loan or
          the failure to close and fund the same on or before September 30,
          1998.

     (d)  If neither of the Loans has closed by January 1, 1999 and Tenant has
          not theretofore notified Landlord of its election to fund the Interior
          Work, then either Landlord or Tenant may elect to terminate this Lease
          by giving written notice to the other on or before January 31, 1999,
          in which event this Lease shall terminate effective July 1, 1999 and
          Tenant shall vacate Science Park not later than July 1, 1999. In no
          event shall Landlord or Tenant be liable to the other party for
          damages if, for any reason either or both of the Loans do not close or
          are delayed in closing.

     (e)  Following the closing of the CII Loan and so long as the CII Loan
          remains outstanding, Tenant shall not exercise any right it may
          otherwise have pursuant to any provision of this Lease to cancel or
          terminate this Lease without first obtaining and delivering to
          Landlord the written consent of CII to such cancellation or
          termination. The preceding sentence shall not be interpreted to imply
          that Tenant has the right to terminate or cancel this Lease and Tenant
          shall only have such right if. and then only to the extent that, such
          right may be expressly granted in this Lease.

     2.6 During the performance of Landlord's Work and any other work by
Landlord in and around Building 5 North and Building 5 South (which period of
time is herein referred to as the "BUILDING 5 RENOVATION PERIOD"), Landlord
agrees to cause Landlord's contractors to take commercially reasonable steps to
avoid any material disruption to Tenant's use and occupancy of the Leased
Premises for its business and laboratory purposes caused by the performance of
either Landlord's

                                       13

<PAGE>

Work or any other work by Landlord in and around Building 5 North and Building 5
South (collectively, the "BUILDING 5 IMPROVEMENTS"). Tenant acknowledges and
agrees that the performance of Landlord's Work , and the activities and noise
associated therewith, will likely cause a certain degree of inconvenience to
Tenant. In order to avoid any material disruption to Tenant's use and occupancy
of the Leased Premises for its business and laboratory purposes, Landlord agrees
to consult with Tenant's architect (Svigals Associates) in the preparation of
all demolition, repair and remodeling specifications concerning Building 5 North
and Building 5 South. If Landlord elects to demolish Building 5 South, Landlord
hereby agrees, at its expense, to cause its contractors to take commercially
reasonable precautions to protect the Leased Premises from undue vibration and
dust. If during the Building Five Renovation Period, Tenant is denied reasonable
access to the Leased Premises or Tenant is unable to conduct its business on the
Leased Premises, in either case due to the activities of Landlord's contractors
performing Building 5 Improvements, for a period of THREE (3) consecutive
business days, then, in such event, Tenant shall receive, as Tenant's sole
remedy, an abatement in Base Rent of one day for each day beyond said THREE
(3)-DAY period that Tenant continues to be denied reasonable access to the
Premises or is unable to conduct its business on the Premises. Landlord also
covenants that to the extent practicable the bathrooms on the second floor of
Building 5 North will continue to be available to Tenant during the Building
Five Renovation Period and that the same will be available to Tenant during the
Term and any extension thereof following the Building Five Renovation Period.
Tenant acknowledges and agrees that if the bathrooms on the second floor of
Building Five North are temporarily unavailable during Building Five Renovation
Period, Tenant may from time to time be required to use the bathrooms on the
second floor of Building 5 South and Landlord agrees to supply the same.

     2.7 TENANT'S WORK.

     (A)  Tenant, at Tenant's expense, agrees to make improvements to the Leased
          Premises ("TENANT'S WORK") pursuant to plans and specifications
          ("TENANT'S PLANS") approved by Landlord. Tenant shall submit Tenant's
          Plans to Landlord for its approval, which approval shall not be
          unreasonably withheld. Landlord shall have 10 business days (for
          purposes of this Lease, a business day is defined as any day except a
          Saturday, Sunday, Federal or State of Connecticut holiday) to approve
          or reject with comments Tenant's Plans, or such Tenant's Plans shall
          be deemed approved. Landlord shall have 10 business days to approve or
          reject with comments revisions to Tenant's Plans, or such Tenant's
          Plans shall be deemed approved.

     (B)  Tenant shall apply for a building permit for Tenant's Work not later
          than 5 days after the last to occur of (A) the closing and initial
          funding of the CII Loan, and (B) the first to occur of either (i) the

                                       14

<PAGE>

          closing and initial funding of the Building 5 North Loan, or (ii)
          Tenant's election to fund the Interior Work. Upon and following the
          date hereof until the occurrence of the Lease Commencement Date,
          Tenant and its agents shall be allowed reasonable access to the Leased
          Premises to plan for Tenant's Work and for conducting pre-construction
          activities. Tenant shall proceed with due diligence to perform
          Tenant's Work upon and during the performance of the Interior Work and
          upon the issuance of a building permit for Tenant's Work.

     2.8  "AS IS" CONDITION; NO REPRESENTATIONS BY LANDLORD.

     (a)  Subject to the provisions of Section 2.1 hereof, Landlord shall tender
          Tenant possession of the Leased Premises in its then "as is" condition
          and Tenant agrees to accept possession of the Leased Premises in its
          then "as is" condition, subject to completion of the Landlord's Work
          or to Tenant's sole and exclusive remedy for Landlord's failure to
          complete Landlord's Work as set forth in Section 2.4B, 2.4E and 2.4G
          and subject also to Landlord's continuing obligation to make repairs
          pursuant to Article 7 hereof.

     (b)  Subject to receiving funding necessary to perform Landlord's Work,
          Landlord hereby agrees to complete the Landlord's Work in a good and
          workmanlike fashion, otherwise Tenant relies on no warranties or
          representations, express or implied, of Landlord or any agent or other
          party associated with Landlord as to its condition or repair, or as to
          taxes or any other matter relating to the Leased Premises, except as
          otherwise expressly provided in this Lease.

                                 ARTICLE 3. RENT

     3.1  BASE RENT.

     A. As used herein, the term "LEASE YEAR" shall mean the 12-month period
     commencing on the Rent Commencement Date and each succeeding 12-month
     period. During the initial 5-year Term, Tenant shall pay to Landlord a base
     rent ("BASE RENT") as follows:

<TABLE>
<CAPTION>
LEASE YEAR          BASE RENT/RSF(1)     MONTHLY RENT         ANNUAL RENT
----------------------------------------------------------------------------
<S>                 <C>                  <C>                  <C>
              1     $11.40               $19,000.00           $228,000
----------------------------------------------------------------------------
              2     $12.20               $20,333.00           $244,000
----------------------------------------------------------------------------
________________
(1) Base Rent/RSF means Base Rent Per Rentable Square Foot of the Leased
    Premises.

                                       15

<PAGE>

----------------------------------------------------------------------------
              3     $13.05               $21,750.00           $261,000
----------------------------------------------------------------------------
             4-5    $16.05               $26,750.00           $321,000
----------------------------------------------------------------------------
</TABLE>

B.   If the Rent Commencement Date or the Expiration Date shall be other than
     the first or last day of a calendar month, the Base Rent during the
     calendar month shall be adjusted to reflect the actual number of days in
     the Term, as the same may be extended, by multiplying the Base Rent (stated
     on a monthly basis) by a fraction, the denominator of which shall be the
     number of days in the calendar month and the numerator of which shall be
     the actual number of days in the Term that occur during the calendar month.

C.   During the first 5-year Extension Term (Lease Years 6 through 10), if any,
     Tenant shall pay to Landlord a Base Rent equal to the Base Rent payable
     during the last year of the initial 5-year Term (Lease Year 5) as set forth
     in Section 3.1A. During the second 5-year Extension Term (Lease Years 11
     through 15, if any, Tenant shall pay to Landlord a Base Rent equal to
     ninety percent (90%) of the then fair market value rent for the Leased
     Premises as determined by mutual agreement between the parties, or if the
     parties fail to agree, it shall be determined by arbitration in accordance
     with the Rules of Commercial Arbitration of the American Arbitration
     Association then in effect. In the event arbitration is necessary, Landlord
     and Tenant shall each select one arbitrator, each of whom shall be a
     commercial real estate broker with at least ten (10) years of experience in
     the New Haven commercial real estate market. If the two arbitrators are
     unable to agree on the fair market value rent within fifteen days of their
     selection, they shall appoint a third arbitrator and the determination of
     fair market value rent by the third arbitrator so selected shall be final.
     The decision of the arbitrators shall be binding on the parties. Each party
     shall pay the fees and expenses of the arbitrator it selects and the fees
     and expenses of the third arbitrator, if one is necessary, shall be shared
     equally by the parties.

         3.2 MONTHLY PAYMENTS. Commencing on the Rent Commencement Date, Tenant
shall pay Base Rent in equal monthly installments, in advance, on the first day
of each month during the Term and any extension thereof.

         3.3 PRO RATA. Base Rent payable for any period of less than a full
month shall be pro-rated in the manner provided in Section 3.1.B.

         3.4 UTILITIES. In addition to Base Rent, Tenant shall pay for
electricity and gas consumed on the Leased Premises in the manner set forth in
the Utilities Rider attached hereto as EXHIBIT C and made a part hereof.

                                       16

<PAGE>

         3.5. ADDITIONAL RENT. In addition to Base Rent, Tenant shall pay to
Landlord additional rent ("ADDITIONAL RENT") consisting of all other sums of
money as shall become due from and payable by Tenant to Landlord hereunder (for
default in payment of which Landlord shall have the same remedies as for a
default in payment of Base Rent). As used herein, the term "rent" shall mean and
refer to Base Rent and Additional Rent.

         3.6 ABSOLUTE OBLIGATION TO PAY; NO SET-OFF. Tenant's obligation to make
full and prompt payment of all rent when owed under the terms of this Lease is
absolute. Except as herein expressly provided to the contrary, rent shall be
paid without set-off, withdrawal or deduction of any nature.

         3.7 PARTIAL PAYMENTS. Any payment of rent which is less than the amount
then due and owing to Landlord will be considered a payment against the oldest
outstanding rental obligation and Landlord may accept such payment without
affecting its rights to collect the balance owed.

         3.8 INTEREST ON LATE PAYMENTS OF RENT OR OTHER AMOUNTS DUE. Any rent or
other amount which is owed by Tenant under this Lease and which is not paid
within ten (10) days after it is due shall carry interest at an annual rate (the
"DEFAULT RATE") equal to the highest rate allowed by law from the date such rent
or other amount was due until the date of payment. If there is no limit on the
rate of interest allowed by law, such interest shall run at a rate equal to
eighteen percent (18%) per annum.

                                ARTICLE 4. TAXES

Tenant further covenants and agrees to pay to Landlord, as Additional Rent, sums
computed in accordance with this Article 4:

         4.1. DEFINITIONS. For the purposes of this Article and all other
provisions of this Lease:

         (a) The term "BUILDING" shall mean the building containing the Leased
Premises. Initially, the Building shall mean Building 5 North. If Tenant
exercises its option to add the ROFR Space to the Leased Premises, then the term
Building shall also mean Building 4 of Science Park and a separate tax
calculation for the ROFR Space shall be computed under this Article 4.

         (b) The term "TAXES" shall mean all real estate taxes, assessments,
special assessments, water and sewer rents, governmental levies, county taxes or
any other governmental charge, general or special, ordinary or extraordinary,

                                       17

<PAGE>

unforeseen as well as foreseen, of any and every kind or nature whatsoever,
which are or may be assessed or imposed upon the Building for real estate tax
purposes. If, due to a future change in the method of taxation or in the taxing
authority, a franchise, income, transit, profit or other tax or governmental
imposition, however designated (including without limitation any tax, excise or
fee, measured by or payable with respect to any rents, licenses or other charges
received by Landlord and levied against Landlord and/or the Property and/or
Building) shall be levied against Landlord and/or the Property and/or the
Building in substitution, in whole or in part, or as an addition to or in lieu
of any Taxes, then such franchise, income, transit, profit or other tax or
governmental imposition shall be deemed to be included within the definition of
the term "TAXES" for the purposes hereof, excluding any income, corporate
franchise, estate, inheritance, succession, capital stock or transfer tax levied
on Landlord. Only Landlord shall be eligible to institute tax reduction or other
proceedings to reduce the assessed valuation of the Property or the Building.

         (c) The term "TAX YEAR" shall mean each twelve (12) month period
beginning on July 1 and ending on June 30, any portion of which period occurs
during the Term of this Lease or any extension thereof.

         (d) The term "TENANT'S PRO-RATA SHARE" shall mean a fraction, the
numerator of which is the total number of rentable square feet in that portion
of the Leased Premises contained in the Building from time to time, and the
denominator of which is the total number of rentable square feet in the Building
containing the Leased Premises. If Tenant exercises its option to add the ROFR
Space to the Leased Premises, then Tenant shall pay Tenant's Pro-Rate Share of
Taxes assessed or imposed upon Building 4 and Tenant's Pro-Rate Share of Taxes
assessed or imposed upon Building 5 North, each of which shall be separately
calculated

         4.2 TAX PAYMENT; ENTERPRISE ZONE. Commencing on the Rent Commencement
Date, Tenant shall pay to Landlord, as Additional Rent hereunder, an amount (the
"TAX PAYMENT") equal to Tenant's Pro-Rata Share of the Taxes for any Tax Year,
any part of which shall occur during the Term of this Lease or any extension
thereof. A copy of the tax bill of The City of New Haven or other taxing
authority imposing Taxes on the Building shall be sufficient evidence of the
amount of Taxes. Notwithstanding anything to the contrary contained herein,
Tenant shall be entitled to apply for enterprise zone tax treatment with respect
to the Tenant's Work and the Landlord's Work and Landlord shall cooperate with
Tenant in connection with any such application. All benefits that accrue to
Tenant pursuant to the enterprise zone program relating to Taxes together with
Tenant's Pro-Rata Share of any tax benefits that accrue to Landlord in
connection

                                       18

<PAGE>

with funds spent in connection with the performance of Landlord's Work shall
reduce the Tax Payments due from Tenant hereunder.

         4.3 ESTIMATED PAYMENTS; SETTLE-UP. Commencing on the Rent Commencement
Date, with respect to each Tax Year occurring in whole or in part during the
Term of this Lease or any extension thereof, Tenant shall pay to Landlord the
Tax Payment, in equal monthly installments during the calendar year in which
such Tax Year commences, in the manner hereinafter described. At any time during
the calendar year in which a Tax Year commences, Landlord may furnish to Tenant
a written estimate (a "TAX ESTIMATE") setting forth Landlord's estimate of the
Tax Payment for such Tax Year ("ESTIMATED TAX PAYMENT"). Such estimate shall be
determined by Landlord by applying to the most recently announced assessed value
of the Building (whether final or otherwise) such tax rate as Landlord shall
anticipate is the tax rate to be finally determined for such Tax Year, taking
into account the abatement due to accrue to Landlord's and Tenant's benefit on
account of the enterprise zone program.. Subject to adjustment as hereinafter
provided, Tenant shall pay Landlord on the first day of each month during each
calendar year occurring in whole or in part during the Term hereof or any
extension thereof, an amount equal to one-twelfth (1/12th) of the Estimated Tax
Payment for the Tax Year commencing during such calendar year. If Landlord
furnishes a Tax Estimate for the Tax Year subsequent to the commencement of the
calendar year in which such Tax Year begins, then (a) until the first day of the
month following the month in which the Tax Estimate is furnished to Tenant,
Tenant shall continue to pay to Landlord on the first day of each month an
amount equal to the monthly sum payable by Tenant to Landlord with respect to
the next previous Tax Year, (b) promptly after the Tax Estimate is furnished to
Tenant, Landlord shall give notice to Tenant stating whether the amount
previously paid by Tenant to Landlord during such calendar year was greater or
less than the installments of the Estimated Tax Payment to be paid during such
calendar year in accordance with the Tax Estimate, and (i) if there shall be a
deficiency, Tenant shall pay the amount thereof within ten (10) days after
demand therefor, or (ii) if there shall have been an overpayment, Landlord shall
credit the amount thereof against the next monthly installments of the
Additional Rent payable under this Lease (or refund the same to Tenant if this
Lease has terminated), and (c) on the first day of the month following the
furnishing to Tenant of the Tax Estimate, and monthly thereafter until the
rendering to Tenant of a Tax Statement (hereinafter defined) for such Tax Year,
Tenant shall pay to Landlord an amount equal to one-twelfth (1/12) of the amount
shown on such Tax Estimate. At any time during or after such Tax Year, (x)
Landlord shall furnish to Tenant a written statement (a "TAX STATEMENT") setting
forth the Tax Payment for such Tax Year, and stating whether the sum of the
installments previously paid by Tenant to Landlord pursuant to the Tax Estimate
or otherwise for such Tax Year was greater or less than the sum of the
installments of the Tax Payment to be paid

                                       19

<PAGE>

for such Tax Year in accordance with the Tax Statement, (y) any deficiency or
overpayment shall be disposed of in the manner of a deficiency or overpayment in
Estimated Tax Payment, and (z) on the first day of the month following the month
in which the Tax Statement is furnished to Tenant, and monthly thereafter until
a new Tax Estimate or Tax Statement is furnished to Tenant, Tenant shall pay to
Landlord an amount equal to one-twelfth (1/12th) of the Tax Payment shown on the
Tax Statement.

         4.4 TAX RELIEF. Tenant shall be entitled to Tenant's Pro-Rata Share of
any real estate tax relief or other forms of assistance or relief that may be
negotiated by Landlord with the City of New Haven as contemplated in connection
with the refurbishment of Building 5 North and the land that is part of the tax
parcel containing Building 5 North.

         4.5 PERSONAL PROPERTY TAXES. Tenant shall be solely responsible for and
pay within the time provided by law all taxes imposed on its inventory,
furniture, trade fixtures, apparatus, equipment and any other of Tenant's
personal or other property.

         4.6 OTHER TAXES AND LICENSE FEES. Tenant shall pay before delinquency
all license and permit fees and taxes that may be imposed upon the business of
Tenant on the Leased Premises.

                   ARTICLE 5. TENANT'S USE OF LEASED PREMISES

         5.1 USE OF LEASED PREMISES. The Leased Premises will be used by Tenant
solely for laboratory purposes and for office use, and such other ancillary uses
that are permitted by applicable law, subject to Tenant's strict compliance with
the requirements of Article 8 of this Lease.

                             ARTICLE 6. ALTERATIONS

         6.1 LANDLORD'S CONSENT REQUIRED. Tenant shall not make any alterations,
additions, installations or improvements in or to the Leased Premises except
with Landlord's prior written consent, which consent will not be unreasonably
withheld. Notwithstanding the foregoing, Tenant may make alterations, additions,
installations and improvements in or to the Leased Premises for which a building
permit is not required, provided the same do not affect any of the building
systems, without Landlord's consent.

                                       20

<PAGE>

         6.2 ALTERATIONS TO BECOME PROPERTY OF LANDLORD. All additions,
alterations, installations and other improvements made to the Leased Premises at
any time during the Term or any extension thereof, by or on behalf of Tenant,
including, without limitation, Tenant's Work (collectively, "ALTERATIONS") shall
become the property of Landlord and shall remain upon and be surrendered with
the Leased Premises upon the expiration or termination of this Lease unless
Landlord requires their removal in accordance with and subject to the terms of
this Section 6.2. Upon the expiration or earlier termination of this Lease on or
after the expiration of the first 5-year Extension Term, Tenant shall, at
Landlord's request (made at least ten (10) business days prior to the last day
of the Lease) and at Tenant's expense, remove from the Property such portion of
the Alterations, whether or not such Alterations were approved by Landlord, as
Landlord may require and restore the Leased Premises to their prior condition.
Tenant shall promptly, and at its own expense, repair and restore any damage to
the Leased Premises or the Building caused by such removal. Any such Alterations
not so removed by Tenant from the Property may, at Landlord's election, be
removed and disposed of by Landlord, at Tenant's expense, and Tenant shall
reimburse Landlord upon demand for all costs incurred by Landlord in so removing
and disposing thereof. The provisions of this Section shall survive the
expiration of the Term or earlier termination of this Lease.

         6.3 TENANT'S REMOVAL OF PERSONAL PROPERTY. Notwithstanding the
provisions of Section 6.2, Tenant's furniture, equipment, merchandise and other
personal property, other than that which is affixed to the Leased Premises or
the Building so that it cannot be removed without material damage to the Leased
Premises or the Building, shall remain the property of Tenant and shall be
removed by Tenant on the last day of the Term or earlier termination of this
Lease, but upon such removal, Tenant shall promptly, and at its own expense,
repair and restore any damage to the Leased Premises or the Building caused by
such removal.

         6.4 TENANT'S COMPLIANCE WITH CONDITIONS OF CONSTRUCTION. Any
Alterations that Tenant shall desire to make and which requires the consent of
Landlord shall be presented to Landlord in written form with proposed detailed
plans including, (i) detailed plans and specifications for the work, (ii) names
and addresses of Tenant's contractors and subcontractors, (iii) evidence of the
Contractor's Insurance (as defined below) carried by each of Tenant's
contractors, (iv) at Landlord's request, copies of contracts with each of
Tenant's Contractors which shall provide, among other things, that no changes,
amendments, extras or additional work are permitted without the consent of
Landlord, and (v) at Landlord's request, affidavits from engineers acceptable to
Landlord stating that the work will not in any way adversely affect any
mechanical system in the Building, such as, but not limited to, the heating,
ventilating, air conditioning or electrical system. If Landlord shall give its

                                       21

<PAGE>

consent, such consent shall be deemed conditioned upon Tenant acquiring all
permits, approvals and certificates required by any governmental or
quasi-governmental body or authority to perform such work, the furnishing of
copies thereof to Landlord prior to the commencement of such work, and (upon
completion) obtaining and furnishing to Landlord copies of a final certificate
of occupancy and such other certificates of final approval and/or completion
thereof as Landlord may reasonably request, and compliance by Tenant with all
conditions of said permits, approvals and certificates in a prompt and
expeditious manner. Tenant shall pay when due all claims for labor or materials
furnished or alleged to have been furnished to or for Tenant, which claims are
or may be secured by any mechanics' or materialmen's lien against the Building
or the Property or any interest therein. Tenant shall give to Landlord not less
than ten (10) days' written notice prior to the commencement of any work in or
about the Leased Premises and Landlord shall have the right to post notices of
non-responsibility in or on the Leased Premises as provided by law. Tenant
agrees to carry, and will cause its contractors and subcontractors to carry,
such worker's compensation, general liability, personal injury and property
damage insurance with respect to and during the course of any Alterations
permitted hereunder as Landlord may reasonably require ("CONTRACTOR'S
INSURANCE"). Each policy for Contractor's Insurance shall name Landlord and
Landlord's Lenders (as such term is defined in Section 10.1 hereof), as
additional insured(s) and shall provide that it cannot be cancelled or amended
without at least ten (10) days' prior written notice to Landlord and Landlord's
Lenders. Tenant agrees to obtain, at Landlord's request, and to deliver to
Landlord written and unconditional waivers of mechanics' liens upon the Property
and the Building for all work, labor and services to be performed and for
materials to be furnished in connection with such work, signed by all
contractors, subcontractors, material men and laborers to become involved in
such work. If Tenant is unable to obtain prospective lien waivers, Tenant may
supply Landlord with partial lien waivers as the work is completed and a final
waiver upon completion of the Alteration. Any such Alterations shall be at the
sole expense of Tenant using contractors reasonably acceptable to Landlord.

         6.5 MECHANIC'S LIEN. If any mechanic's lien is filed against the
Property or the Building for Tenant's Work or any other work claimed to have
been done or materials claimed to have been furnished to or for the benefit of
Tenant, whether related to work done pursuant to any provision of this Lease or
otherwise, the lien, within thirty (30) days of its filing, shall be discharged
by Tenant or a bond shall be substituted in lieu thereof at Tenant's expense. If
Tenant shall, in good faith, contest the validity of any lien, claim or demand
relating to Tenant's Work or any other work claimed to have been done or
materials claimed to have been furnished to or for the benefit of Tenant, Tenant
shall, at its sole cost and expense, defend itself, Landlord and Landlord's

                                       22

<PAGE>

Lenders against the same and shall pay and satisfy any adverse judgment that may
be rendered thereon before the enforcement thereof against Landlord, the
Building or the Property upon the condition that, if Landlord shall require,
Tenant shall furnish to Landlord a surety bond satisfactory to Landlord in an
amount equal to such contested lien claim or demand indemnifying Landlord and
Landlord's Lenders against liability for the same and holding the Building and
the Property free from the effect thereof. In addition, Landlord may require
Tenant to pay Landlord's reasonable attorneys' fees and costs in participating
in such action if Landlord shall decide that it is in Landlord's best interest
to do so.

                               ARTICLE 7. REPAIRS

         7.1 LANDLORD MAINTENANCE. Landlord shall maintain and repair the public
portions of the Building, exterior and interior, and shall make all structural
repairs to the Building, subject to Tenant's obligations under Section 7.3.
Landlord shall maintain and repair the equipment serving the Building generally,
and the utility systems serving the Building and up to the Leased Premises, but
not utility fixtures within the Leased Premises. Landlord shall, at its cost and
expense:

         (a) maintain and keep in good order and repair the air conditioning,
heating and ventilating systems installed by Landlord; and

         (b) furnish sufficient hot and cold water for lavatory and drinking and
office cleaning purposes.

         7.2 TENANT MAINTENANCE. Tenant shall take good care of and maintain the
Leased Premises, shall not waste the Leased Premises, and, at its sole cost and
expense, shall make all repairs to the Leased Premises and to the fixtures,
including without limitation, heating, ventilation and air conditioning (HVAC)
units located wholly within the Leased Premises and all utility fixtures, within
the Leased Premises as and when needed to preserve the Leased Premises and such
fixtures in good working order and condition, reasonable wear and tear excepted.
Any contractors retained by Tenant for these purposes must be reasonably
approved by Landlord.

         7.3 TENANT'S LIABILITY FOR DAMAGES. Tenant shall be liable for all
damage or injury to the Leased Premises or to any other part of the Property or
the Building, whether requiring structural or non-structural repairs, the cost
of which is not reimbursed to Landlord under Landlord's or Tenant's insurance,
caused by or resulting from any omission, intentional or unintentional act,
negligence or improper conduct on the part of Tenant, a subtenant of Tenant,

                                       23

<PAGE>

their respective servants, employees, agents, contractors, subcontractors,
licensees or invitees. Subject to the provisions of Articles 13 and 14 hereof,
all such damage or injury shall be repaired promptly by Tenant at its sole cost
and expense to the condition existing prior to such damage or as closely thereto
as possible.

         7.4 LANDLORD MAY MAKE REPAIRS AT TENANT'S EXPENSE. If Tenant fails
after fifteen (15) days' notice to proceed with due diligence to make any
repairs required to be made by it under the terms of this Lease, upon further
written notice to Tenant (except in an emergency, wherein Landlord may proceed
without notice to repair), repairs may be made by Landlord. The reasonable costs
and expenses so incurred by Landlord in making any such repairs shall be
collectible from Tenant upon demand as Additional Rent.

         7.5 TENANT TO NOTIFY LANDLORD OF DEFECTIVE CONDITIONS. Tenant shall
give Landlord prompt written notice of any defective condition in the Leased
Premises of which Tenant is aware, including but not limited to, any defective
condition in the plumbing, heating system or electrical lines located in,
servicing or passing through the Leased Premises. The preceding sentence shall
not be construed to create any additional obligation on the part of Landlord to
make repairs beyond Landlord's obligations under Section 7.1.

         7.6 QUALITY OF WORK. Any and all work required or permitted to be done
to or upon the Leased Premises by way of repairs, alterations, additions or
improvements by Landlord or Tenant, or the agents or employees of either, shall
be of a quality equal to the original construction and shall be done in
accordance with all applicable laws, regulations and ordinances. The provisions
of this Article 7 shall survive the expiration of the Term or the earlier
termination of this Lease.

 ARTICLE 8. COMPLIANCE WITH LAWS; INCREASED INSURANCE RATES; ENVIRONMENTAL LAWS

         8.1. TENANT TO COMPLY WITH LAWS AND REGULATIONS. Tenant, at its sole
cost and expense, shall comply with all present and future statutes, laws,
orders, ordinances, rules, regulations and requirements of all federal, state,
municipal and local governments, departments, commissions and boards, the
directions of any public officer, and all orders, rules and regulations of the
Connecticut Board of Fire Underwriters or any similar organization, relating or
pertaining to the conduct of Tenant's business or its use or occupancy of the
Leased Premises (collectively, "LAWS"). Landlord, at its expense shall be
responsible for compliance with all present and future statutes, laws, orders,
ordinances, rules, regulations and requirements of all federal, state, municipal
and local

                                       24

<PAGE>

governments, departments, commissions and boards, the directions of any public
officer, and all orders, rules and regulations of any governmental body
regulating insurance in the State of Connecticut with regard to the design and
construction of the Interior Work and Building 5 Improvements, not including the
Tenant's Work. In the event that the design or construction of the Interior Work
and Building 5 Improvements, not including the Tenant's Work, shall fail to
comply with any such present or future statutes, laws, orders, ordinances,
rules, regulations, requirements, directions, orders, rules or regulations, then
Tenant's sole and exclusive remedy in such event shall be to accept an
assignment from Landlord of Landlord's claims, if any, against Landlord's
construction manager and/or architect, for such non-compliance, provided that
CHFA shall grant its prior written consent to such assignment. If CHFA shall
fail or refuse to grant its prior written consent to such assignment, then
Tenant's sole and exclusive remedy shall be to exercise its right pursuant to
Section 11.3B to assert any claim it might have against Landlord directly or
indirectly arising as a result of such non-compliance provided that Tenant's
compensatory damages resulting from such non-compliance equals or exceeds the
$50,000.00 threshold set forth in Section 11.3B.

         8.2 NO VIOLATION OF INSURANCE POLICIES. Tenant shall not do or permit
any act to be done in or to the Leased Premises that will invalidate or be in
conflict with any policies of insurance at any time carried by or for the
benefit of Landlord with respect to the Leased Premises, Building or Property.
Tenant shall not do or permit any act, which might subject Landlord to any
liability or responsibility to any person or for property damage. Tenant shall
not use the Leased Premises in a manner that will increase the rate of any
insurance applicable to the Leased Premises, Building or Property in effect on
the Commencement Date.

         8.3 TENANT TO PAY COSTS, FINES AND PENALTIES. Upon receipt of notice
from Landlord, Tenant shall promptly pay all claims, costs, expenses, fines,
interest, penalties or damages that may be imposed upon or incurred by Landlord
solely by reason of Tenant's failure to comply with any of the provisions of
this Lease.

         8.4 HAZARDOUS MATERIALS. As used herein, the term "HAZARDOUS MATERIALS"
shall mean and include those elements, materials, compounds, mixtures, wastes or
substances (collectively "SUBSTANCES") which are designated as pollutant, toxic,
infectious, radioactive or hazardous (or contained in any list which is adopted)
by the United States Environmental Protection Agency (the "EPA"), the State of
Connecticut or any political subdivision thereof, including without limitation
the Connecticut Department of Environmental Protection ("DEP"), or is so
designated under any of the Environmental Laws, and, whether or not included in
any such list or designated as such, shall be deemed to include all Substances

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<PAGE>

containing petroleum, petroleum products and derivatives, chlorinated
hydrocarbons, asbestos, and polychlorinated biphenyls (PCB's).

         8.5 ENVIRONMENTAL LAWS. As used herein, the term "ENVIRONMENTAL LAWS"
shall mean and include any Federal, State, or local statute, law, ordinance,
code, rule, regulation, order, or decree regulating or relating to the
protection of human health or the environment, or regulating or imposing
liability or standards of conduct concerning the use, storage, discharge,
handling, treatment, removal, disposal or transportation of any Hazardous
Materials, as now or at any time hereafter in effect including, without
limitation, Title 22a ("Environmental Protection") of the Connecticut General
Statutes, including, but not limited to, Sections 22a-448 through 22a-457 of the
Connecticut General Statutes (the "Superlien Statute"), the Federal
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, 42 U.S.C. Sections 9601 ET. SEQ., The Superfund Amendments and
Reauthorization Act, 42 U.S.C. Sections 9601 ET. SEQ., the Federal Oil Pollution
Act of 1990, Sections 2701, ET. SEQ., the Federal Toxic Substances Control Act,
15 U.S.C. Sections 2601 ET. SEQ., the Federal Resource Conservation and Recovery
Act as amended, 42 U.S.C. Sections 6901 ET. SEQ., the Federal Hazardous
Materials Transportation Act, 49 U.S.C. Sections 1801 ET. SEQ., the Federal
Clean Air Act 42 U.S.C. Section 7401 ET. SEQ., the Federal Water Pollution
Control Act, 33 U.S.C. Section 1251 ET. SEQ., the Rivers and Harbors Act of
1899, 33 U.S.C. Sections 401 ET. SEQ., Title X of Pub.L. 102.550 (Oct. 28,
1992), and all laws, statutes, rules, ordinances, and all rules and regulations
of the EPA, the DEP or any other state or federal department, board, or agency,
or any other agency or governmental board or entity having jurisdiction over the
Property, as any of the foregoing have been, or are hereafter created, amended,
supplemented, re-authorized, superseded and replaced from time to time.

         8.6 HAZARDOUS MATERIALS. Tenant shall provide Landlord with a list of
Hazardous Materials Tenant intends to store or use in the Leased Premises. Such
list is attached hereto as Exhibit D. Tenant shall immediately notify Landlord
in writing whenever Tenant intends to store or use other Hazardous Materials
than appear on such list. Failure to so notify Landlord shall be an Event of
Default hereunder.

         8.7 COMPLIANCE WITH ENVIRONMENTAL LAWS. Tenant shall at its own expense
procure, maintain in effect and comply with all material conditions of any and
all permits, licenses and other government and regulatory approvals required for
Tenant's use of the Leased Premises, including, without limitation, the use,
transportation, storage and discharge of Hazardous Materials. Tenant shall
substantially comply at all times with all Environmental Laws applicable to
Tenant's activities or use of the Leased Premises. Except as so discharged in
accordance with all applicable Environmental Laws, Tenant shall cause any and
all

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<PAGE>

Hazardous Materials removed from the Leased Premises to be removed and
transported solely by duly licensed haulers to duly licensed facilities for
final disposal of such Hazardous Materials. Tenant shall in all material
respects handle, treat, deal with and manage any and all Hazardous Materials in,
on, under or about the Leased Premises in substantial conformity with all
applicable Environmental Laws and prudent industry practices regarding
management of such Hazardous Materials. Upon expiration or earlier termination
of the Term of the Lease or any extension thereof, Tenant shall cause all
Hazardous Materials (except those pre-existing Tenant's occupancy of the Leased
Premises or otherwise not brought to the Leased Premises by or through Tenant)
to be removed from the Leased Premises and to be transported for use, storage or
disposal in accordance and in substantial compliance with all applicable
Environmental Laws.

         8.8 TENANT TO INDEMNIFY LANDLORD AND LANDLORD'S LENDERS. Tenant shall
indemnify and hold harmless Landlord, Landlord's Lenders (as defined in Section
10.1), and their respective directors, officers, employees and agents (each an
"INDEMNIFIED PARTY") from and against any and all claims, actions, proceedings,
investigations, suits, penalties, fines, costs, expenses, sums paid in
settlement, judgments, losses and damages, to the extent the same arise as a
result of or are caused by Tenant's failure to substantially comply fully with
any applicable Laws or Environmental Laws or the terms of this Article 8. The
foregoing indemnification shall include without limitation all costs of
environmental cleanup, all fees and expenses of environmental consultants and
engineers hired by an Indemnified Party and reasonable attorney's fees incurred
by an Indemnified Party as a result of any claim for which indemnification is
provided herein. Tenant shall be responsible for the cost of any and all repairs
to the Property, the Building or the Leased Premises, structural and
nonstructural, required as a result of Tenant's violation of any such Laws or
Environmental Laws or the terms of this Article 8. The terms of this Article 8
shall survive the termination or expiration of this Lease for any reason.

             ARTICLE 9. FLOOR LOAD; ENGINES, MACHINERY AND EQUIPMENT

         9.1 FLOOR LOAD. Tenant shall not place a load upon any floor of the
Leased Premises exceeding a floor load of 100 pounds per square inch, uniformly
distributed. All equipment and material installation shall be placed and
maintained by Tenant at its expense, with equipment in settings sufficient to
absorb vibration and noise and prevent annoyance to other tenants in the
Building.

         9.2 ENGINES, MACHINERY AND EQUIPMENT. Tenant shall provide Landlord
with a list of all engines, machinery and equipment Tenant intends to store or
use in

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<PAGE>

the Leased Premises, excluding ordinary office equipment. Such list is
attached hereto as EXHIBIT E. Tenant shall immediately notify Landlord in
writing whenever Tenant intends to store or use engines, machinery or equipment
in the Leased Premises other than that listed on EXHIBIT E. In no event shall
Tenant store or use engines, machinery or equipment in the Leased Premises
without Landlord's prior written consent. Tenant's failure to comply strictly
with this section will constitute an Event of Default under this Lease.

             ARTICLE 10. TENANT'S OBLIGATIONS TO LANDLORD'S LENDERS

         10.1 SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT. As used herein, the
term "LANDLORD'S LENDER" shall mean and refer to CHFA, CDA and each future
lender who may from time to time extend credit to Landlord which extensions of
credit may be secured in whole or in part by a mortgage, deed of trust, ground
lease or other security interest affecting the real property of which the Leased
Premises is a part. Tenant's obligations under this Lease are subject to receipt
of non-disturbance agreements: (A) from CDA, simultaneously with the execution
and delivery of this Lease, and (B) from CHFA if and at the time the Building 5
North Loan closes, substantially similar in form and content to the form of
Non-Disturbance, Subordination and Attornment Agreement attached as EXHIBIT H
and made a part hereof. Provided CHFA and CDA execute and deliver said
non-disturbance agreements, this Lease shall be subject and subordinated to: (a)
all security interests in favor of CHFA and CDA affecting the Leased Premises or
the property of which the Leased Premises are a part, and (b) all present and
future mortgages, deeds of trust and other security interests, including
leasehold mortgages, granted by Landlord in favor of CHFA and CDA and affecting
the Leased Premises or the property of which the Leased Premises are a part.
Tenant agrees to execute, at no expense to Landlord, any instrument which may
reasonably be deemed necessary or desirable by Landlord, CHFA or CDA or to
further effect the subordination of this Lease to any such security interest.
With respect to any future Landlord's Lender, provided that such Landlord's
Lender shall execute and deliver to Tenant a non-disturbance agreement
substantially similar to that delivered by CHFA and CDA to Tenant pursuant to
this Section, Tenant shall execute and deliver to such Landlord's Lender within
ten (10) days' following a request therefor, a subordination and attornment
agreement pursuant to which this Lease shall be subject and subordinated to: (a)
all security interests in favor of such Landlord's Lender affecting the Leased
Premises or the property of which the Leased Premises are a part, and (b) all
present and future mortgages, deeds of trust, ground leases and other security
interests, including leasehold mortgages, granted by Landlord in favor of such
Landlord's Lender and affecting the Leased Premises or the property of which the
Leased Premises are a part. Tenant agrees to execute, at no expense to

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<PAGE>

Landlord, any instrument which may reasonably be deemed necessary or desirable
by Landlord or such Landlord's Lender or to further effect the subordination of
this Lease to any such security interest.

         10.2 ESTOPPEL CERTIFICATE. Landlord and Tenant each agrees to execute
and deliver to the other within ten (10) business days of receiving a written
request therefor, a certificate or statement reasonably required to confirm that
this Lease is in full force and effect, whether it has been modified, and if so,
how, and whether, to its knowledge, the other party to this Lease is in default
in the performance or observance of any covenants or conditions in this Lease on
such party's part to be performed or observed, or any condition exists that with
the passage of time would, if uncorrected, constitute a default (an "ESTOPPEL
CERTIFICATE"). Tenant's failure to strictly comply with this section will
constitute an Event of Default under this Lease.

         10.3 TITLE INSURANCE OWNER'S AFFIDAVIT. Landlord agrees to execute and
deliver simultaneously with the execution and delivery of this Lease, an
affidavit (a) verifying the nonexistence of any tenants' rights, other than the
rights of Bryce & Associates and Connecticut Technology Associates, Inc. for
CONN/STEP, (b) verifying the nonexistence of any security interests in personal
property and fixtures that form a part of the Leased Premises, other than the
rights therein, if any, of Connecticut Development Authority as Landlord's
Lender, and United States Department of Commerce, Economic Development
Administration and (c) that Landlord has no notice of any facts or circumstances
not of record which could give rise to the claim of any third party to rights of
adverse possession or use over the Leased Premises or any part thereof in
derogation of Landlord's title. Landlord further agrees to obtain and deliver
simultaneously with the execution and delivery of this Lease a subordination of
mechanic's liens, subordinated as to the lien in favor of CII, executed by any
contractor(s) who have furnished any labor, services or materials in connection
with construction or repair work to the Building on behalf of Landlord within
ninety days of the Lease Execution Date.

                 ARTICLE 11. LIMITATIONS ON LANDLORD'S LIABILITY

         11.1 PROPERTY. Except for the gross negligence or willful misconduct of
Landlord or Landlord's employees, Landlord shall not be liable for any damage to
property of Tenant, Tenant's employees, agents, contractors, subcontractors,
licensees, or invitees or of others, entrusted to agents or employees of

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<PAGE>

Landlord, nor for loss of or damage to any property of Tenant, its employees,
agents, contractors, subcontractors, licensees or invitees by theft or
otherwise.

         11.2 LANDLORD NOT LIABLE FOR OTHER TENANTS. Subject to the provisions
of Section 2.6, Landlord and its agents shall not be liable for any injury or
damage to persons or property caused by other tenants of the Building or the
Property or persons in, upon or about the Building or Property or caused by
operations in construction of any private, public or quasi-public work in or to
the Building or Property.

         11.3 LIMITATION ON LANDLORD'S LIABILITY.

          A.   Landlord shall not be liable to Tenant and, to the fullest extent
               allowed by applicable law, Tenant, for itself and its employees,
               contractors, subcontractors, agents, licensees and invitees,
               hereby waives all claims against and releases Landlord,
               Landlord's Lenders, and their respective directors, officers,
               employees and agents from and against any and all claims, actions
               and causes of action which they or any of them may have now or in
               the future, from any cause whatsoever, including without
               limitation, claims for damages resulting from any entry into the
               Leased Premises, loss of life, personal injury, loss of business,
               or damage to any property on or about the Property or the
               approaches, entrances, streets, sidewalks or corridors thereto,
               by or from any cause whatsoever (other than Landlord's gross
               negligence or intentional wrongful act), including without
               limitation, damage caused by Landlord's negligence or
               non-compliance with the terms of this Lease, by any defect in the
               Leased Premises or any other portion of the Building or Property,
               or by water leakage of any character from the roof, walls,
               basement or other portion of the Building or Leased Premises or
               caused by gas, fire, oil, electricity or any cause whatsoever in,
               on or about the Leased Premises or any other portion of the
               Building or the Property. Tenant shall immediately notify
               Landlord of any defective condition on or about the Building of
               which Tenant becomes aware.

          B.   Notwithstanding anything to the contrary contained in Section
               11.3A, Tenant shall have the right to bring a claim, action or
               cause of action against Landlord for Landlord's breach of the
               terms of this Lease provided that such noncompliance results in
               actual direct damages being suffered by Tenant in an amount equal
               to or greater than $50,000.00 for the particular event that is
               the subject matter of the claim, action or cause of action.

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<PAGE>

          C.   Notwithstanding anything to the contrary contained in Section
               11.3A, in the event Landlord shall fail to perform repairs
               required to be performed by Landlord under Section 7.1 or to
               provide Building Services (as defined in Section 26.1), and such
               failure is of such a nature that it constitutes a Constructive
               Eviction of Tenant (as the term Constructive Eviction is
               hereinafter defined) (a failure on the part of Landlord to
               perform such repairs or to provide such Building Services, which
               in either case constitutes a Constructive Eviction, is herein
               called a "Landlord Default"), then Tenant shall give Landlord
               written notice of such Landlord Default (the "First Notice").
               Landlord shall then have a period of time to cure the Landlord
               Default (the "First Cure Period"). The First Cure Period shall
               end thirty (30) days following Landlord's receipt of the First
               Notice or if the Landlord Default is of a nature that the same
               cannot be completely cured or remedied within said thirty (30)
               day period, then the First Cure Period shall be extended for such
               additional period as may reasonably be necessary to cure the same
               (but in no event shall the First Cure Period exceed sixty (60)
               days following Landlord's receipt of the First Notice) provided
               that Landlord begins such cure within thirty (30) days following
               its receipt of the First Notice and thereafter diligently
               prosecutes such cure to completion. If Landlord shall fail to
               cure the Landlord Default within the First Cure Period, Tenant
               may give Landlord a second written notice ("Second Notice")
               stating (i) that the Landlord Default has not been cured, and
               (ii) that Tenant intends to make such repairs or otherwise take
               self-help action to cure Landlord's Default if Landlord shall
               fail to cure the Landlord Default within thirty (30) days
               following its receipt of the Second Notice, The Second Notice
               shall state with reasonable specificity the nature of any repairs
               that the Tenant intends to make and the nature of any other
               self-help action which Tenant intends to take. If Landlord shall
               fail to cure the Landlord Default within thirty (30) days
               following its receipt of the Second Notice, then Tenant, as its
               sole and exclusive remedy, may make the repairs or take the
               self-help action specified in the Second Notice to cure
               Landlord's Default, and, provided Tenant has given the notices
               and otherwise complied with the terms of this Section 11.3C, any
               and all costs and expenses reasonably incurred by Tenant in
               making such repairs or taking such self-help action may be offset
               against future obligations to pay Rent. In the event Tenant shall
               exercise its right under this Section 11.3C to cure Landlord's
               Default as aforesaid, then Tenant shall be deemed to have
               irrevocably waived its right to bring a claim, action or cause of
               action against Landlord for Landlord's Default pursuant to
               Section 11.3B. For the purposes of this Section 11.3C, a failure
               on the part of Landlord to perform repairs as required under
               Section 7.1 or to

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<PAGE>

               provide Building Services shall constitute a Constructive
               Eviction if the Leased Premises are rendered unfit or unsuitable
               for the purposes for which they were leased to an extent that
               unless the same is remedied, Tenant would be compelled to vacate
               the Leased Premises.

         11.4 LANDLORD'S LIABILITY LIMITED TO EQUITY. Notwithstanding anything
to the contrary contained in this Lease, Tenant agrees to look solely to
Landlord's equity in Building 5 North (and Building 4 if Tenant takes the ROFR
Space), to satisfy any claim or judgment for monetary damages against Landlord
and in no event will Tenant or anyone claiming through Tenant seek to satisfy
any claim or judgment for monetary damages against any other portion of the
Property or Landlord's other assets.

    ARTICLE 12. TENANT'S OBLIGATION TO PROTECT LANDLORD & LANDLORD'S LENDERS

         12.1 TENANT TO PROTECT AND REIMBURSE LANDLORD. To the fullest extent
allowed by applicable law and to the extent that Landlord is not reimbursed
under Landlord's insurance policies, Tenant will defend with legal counsel
approved by Landlord in writing, which approval shall not be unreasonably
withheld, indemnify and hold harmless Landlord, Landlord's Lenders, and their
respective directors, officers, employees and agents (individually, an
"INDEMNIFIED PARTY"), from and against any and all claims, damages, liabilities,
penalties, fines, judgments, forfeitures, actions, causes of action, losses
(including, without limitation, diminution in the value of the Leased Premises
or the Property and damages for the loss or restriction on use of rentable or
usable space or of any amenity of the Leased Premises or the Property), costs
and expenses (including, without limitation, reasonable attorney's fees incurred
by any Indemnified Party in defending against any claim for which
indemnification is provided herein), to the extent such claim, etc. results from
or arises out of or in connection with any one or more of the following
(including claims resulting from the death of or injury to any person or damage
to any property whatsoever, to the extent arising from or caused in whole or in
part by):

         A. Any breach or violation by Tenant or a subtenant of Tenant or their
respective servants, employees, agents, contractors, subcontractors, licensees
or invitees of any provision of this Lease beyond any applicable notice and cure
period; or

         B. The negligence or willful act of Tenant or a subtenant of Tenant or
their respective servants, employees, agents, contractors, subcontractors,
licensees or invitees.

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<PAGE>

         C. The use and occupancy of the Leased Premises by Tenant or any other
party during the Term of this Lease or any extension thereof.

                       ARTICLE 13. FIRE AND OTHER CASUALTY

         13.1 NOTIFICATION TO LANDLORD; OBLIGATION TO PAY RENT. If the Leased
Premises or Building, or any part thereof, shall be destroyed or partially
damaged by fire or other casualty, Tenant shall promptly notify Landlord and
shall continue to pay rent during any period of repair unless otherwise
expressly provided in this Article.

         13.2 DESTRUCTION OR SUBSTANTIAL DAMAGE. In the event of the destruction
of the Leased Premises or the Building by fire, explosion, or other casualty
during the Term of this Lease or any extension thereof, or such partial damage
thereto as to render the Leased Premises wholly untenantable or unfit for
occupancy, then, at Landlord's sole option:

         A. this Lease shall terminate as of the date of such damage or
destruction, Tenant shall immediately surrender said Leased Premises and all
Tenant's interest therein to Landlord, and shall pay rent only to the time of
such destruction or partial damage, in which event Landlord may re-enter and
re-possess the Leased Premises thus discharged from this Lease and may remove
all parties therefrom; or

         B. Landlord may relocate Tenant to other rental space on the Property
which space is comparable in size, improvements and amenities to that of the
Leased Premises occupied by Tenant prior to the casualty and is reasonably
acceptable to Tenant ("TEMPORARY SPACE"), which relocation shall be at
Landlord's expense (unless such destruction or damage was caused by Tenant, a
subtenant of Tenant, or their respective employees, contractors, subcontractors,
agents, licensees or invitees, in which case such relocation shall be at
Tenant's expense). Upon such relocation, Landlord may re-enter and re-possess
the Leased Premises and shall promptly proceed to repair the damage and restore
and rebuild the Building and the Leased Premises with all due diligence. No such
re-entry or re-possession of the Leased Premises by Landlord shall be deemed to
terminate this Lease. While the repairs are being performed, Tenant's occupancy
of the Temporary Space shall be upon and subject to all of the terms, covenants
and conditions of this Lease, except that (i) the Leased Premises for the
purposes of this Lease shall be deemed to be the Temporary Space, and (ii) if
the square footage of the Temporary Space is less than the square footage of the
Leased Premises stated in Section 1.1 hereof and/or if (taking into account the
size of the Temporary Space and the size of the building containing the
Temporary Space)

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<PAGE>

Tenant's Pro-Rata Share is less, then the Base Rent and Additional Rent payable
during the period that Tenant occupies the Temporary Space shall be reduced on a
prorata basis to reflect the actual number of square feet in the Temporary
Space. Regardless of the size of the Temporary Space, in no event shall the Base
Rent or Tenant's Pro-Rata Share of Taxes be increased while Tenant occupies the
Temporary Space. Upon completion of the repairs, Landlord shall notify Tenant
that the Leased Premises are ready for Tenant's occupancy and Tenant shall
promptly resume occupancy of the Leased Premises upon and subject to all of the
terms, covenants and conditions of this Lease. Landlord shall pay for the
reasonable costs and expenses incurred by Tenant in moving back into the Leased
Premises following the completion of repairs (unless such destruction or damage
was caused by Tenant, a subtenant of Tenant, or their respective employees,
contractors, subcontractors, agents, licensees or invitees, in which case such
relocation shall be at Tenant's expense). Any controversy or claim arising out
of or relating to any of the provisions of this Section 13.2.B which Landlord
and Tenant cannot resolve within 15 days after the giving of written notice by
either of them to the other may be submitted by either party to final and
binding arbitration before the American Arbitration Association in accordance
with its Commercial Rules applicable to proceedings determined by three
arbitrators, one selected by each party and a third arbitrator selected by the
two arbitrators so selected. Judgment upon any arbitration award may be
confirmed and entered in any court of competent jurisdiction. Service of any
arbitration claim hereunder may be effected pursuant to the notice provisions of
this Lease. This arbitration provision shall be deemed self-executing, and an
award may be entered against a party who fails to appear at any duly noticed
hearing. This provision shall survive the expiration or termination of this
Lease. Any arbitration shall be conducted at Science Park or at another location
in New Haven, Connecticut mutually agreeable to the three arbitrators. Either
party shall have the right to seek and obtain from any court of competent
jurisdiction any equitable or provisional relief or remedy enforcing any right
or interest it may have in connection with this Lease, including without
limitation, a temporary restraining order, preliminary injunction or writ of
attachment. No judicial actions permitted by this paragraph shall waive or limit
the claiming party's rights to adjudicate the merits of the dispute by
arbitration.

         C. Within ninety (90) days following the occurrence of a casualty loss
covered by this Section 13.2, Landlord shall notify Tenant in writing of its
election to terminate this Lease pursuant to Section 13.2.A or to relocate
Tenant and repair the damage pursuant to Section 13.2.B. In the event Landlord
elects to repair the damage, Landlord shall complete such repairs within nine
(9) months after Landlord's or Landlord's lenders' receipt of the first proceeds
from the casualty insurance. Landlord will use all reasonable efforts to obtain
proceeds from its insurance company. In the event that Landlord has not
completed the

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<PAGE>

repairs and restoration pursuant to this Article within such nine-month period,
then Tenant may terminate this Lease by notice given to Landlord after the
expiration of such nine-month period.

         D. Notwithstanding anything to the contrary contained in this Lease, in
the event all or a portion of the Leased Premises shall be so damaged by fire or
other casualty as to be rendered untenantable or in the event the Building shall
be so damaged (irrespective of whether or not the Leased Premises are damaged)
that all or a portion of the Leased Premises shall be rendered untenantable,
then, and in any such event, Base Rent and Additional Rent shall be abated in
proportion to that portion of the Leased Premises that is rendered untenantable,
or if Tenant is denied reasonable access to the Leased Premises, then Base Rent
and Additional Rent shall be wholly abated, and Landlord shall be entitled to
receive all proceeds paid under the rental loss insurance required to be
maintained by Tenant under the terms of this Lease. Such abatement shall be for
the period from the date of such damage to the date such damage shall be
substantially repaired as evidenced by issuance of a certificate of occupancy
covering the Leased Premises and the Leased Premises are again tenantable or
access thereto is restored. The term "substantially repaired" as used herein
shall mean repaired except for such minor details or so-called "punch list"
items, the work involved to complete or the non-performance of which shall not
preclude Tenant from reoccupying the affected portion or all of the Leased
Premises, as the case may be, and conducting its business therein.

         13.3. PARTIAL DAMAGE. If the Building or the Leased Premises shall be
so slightly injured as not to be rendered untenantable and unfit for occupancy
and provided Tenant can reasonably conduct its business on the Leased Premises
and use the Leased Premises for the intended purposes, then Landlord agrees to
repair the same with reasonable promptness and in that case the rent accrued and
accruing shall not abate during the period of repair. Tenant shall notify
Landlord in case of fire or other damage by casualty to the Leased Premises.

         13.4 WHEN RENT NOT REDUCED. Notwithstanding any other provisions
hereof, if by reason of some act or omission on the part of Tenant, a subtenant
of Tenant, their respective servants, employees, agents, contractors,
subcontractors, licensees or invitees either (a) Landlord or any of Landlord's
Lenders shall be unable to collect all of the insurance proceeds (including,
without limitation, rent insurance proceeds) applicable to damage or destruction
of the Leased Premises or the Building by fire or other casualty, or (b) the
Leased Premises or the Building shall be damaged or destroyed or rendered
completely or partially untenantable on account of fire or other casualty, then
without prejudice to any other remedies which may be available against Tenant,
there shall be no abatement or reduction of rent.

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<PAGE>

         13.5 LANDLORD NEED NOT REPLACE TENANT'S PROPERTY. Tenant acknowledges
that Landlord is not required to repair or replace any of Tenant's personal
property or Tenant's Alterations to the Leased Premises and that Landlord will
not carry insurance on Tenant's furnishings, fixtures, equipment, Alterations or
other personal property.

         13.6 NO OBLIGATION TO PROVIDE ALTERNATE PARKING. In the event that
Tenant parking as provided for in this Lease is temporarily unavailable because
of fire, other casualty or any other reason outside of Landlord's control,
except as provided in Article 14, Landlord shall make reasonable efforts to
provide alternate parking but in no event shall Landlord be liable for its
failure to provide such alternate parking.

         13.7 RENTAL LOSS INSURANCE. Notwithstanding anything to the contrary
contained herein, to the extent Landlord receives benefits from any rental loss
insurance, the Rent due hereunder shall abate.

                  ARTICLE 14. TAKING BY GOVERNMENTAL AUTHORITY

         14.1 TERMINATION OF LEASE; WAIVER OF CLAIM BY TENANT. If the Building
or any portion of the Building which includes the Leased Premises shall be taken
by condemnation (also known as "eminent domain") by any authority having power
so to do or is conveyed to such authority in lieu of condemnation, this Lease
shall terminate from the date of title vesting in such authority. If any portion
of the Building, which does not include the Leased Premises, shall be so taken,
Landlord shall have the option, at its sole discretion, to cancel this Lease.
All proceeds from the taking will belong to Landlord other than proceeds payable
to Tenant for leasehold improvements. Tenant, however, may proceed with any
independent claim against the taking authority as to relocation expenses.

         14.2 TAKING NOT INVOLVING THE BUILDING. If a portion of the Property
shall be taken by condemnation as described in SECTION 14.1. or conveyed in lieu
of condemnation, which portion does not include any portion of the Building (or
excepting an inconsequential portion of the Building not affecting the Leased
Premises) and Tenant's access to the Leased Premises or its parking rights are
not materially impaired, the Term of this Lease shall not terminate but shall
continue in full force and effect according to its terms. Tenant shall not be
entitled to any award or damages from such taking.

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           ARTICLE 15. TENANT'S RIGHT TO ENCUMBER, ASSIGN, OR SUBLEASE

         15.1  TENANT'S RIGHT.

         A. Tenant shall be permitted to assign this Lease to a corporation or
other entity that purchases all, or substantially all, of Tenant's assets or
capital stock, or acquires Tenant as the result of a merger, or to a company
that controls, or is controlled by, affiliated with or is under common control
with Tenant, with Landlord's consent, which consent shall be granted provided
that: (A) such assignee has a net worth equal to or greater than the greater of:
(a) Tenant's net worth at the Lease Commencement Date, or (b) Tenant's net worth
immediately preceding the consummation of the transaction in connection with
which Tenant desires to assign this Lease, (B) the nature of the business to be
conducted on the Leased Premises and the use of the Leased Premises will not
change as a result of the assignment or, if it will change, such change is
approved in advance by Landlord, (C) at the date of the assignment, this Lease
shall be in full force and effect, without any breach or default thereunder on
the part of Tenant, (D) the assignee assumes, by an instrument in form and
content reasonably satisfactory to Landlord, the due performance of all Tenant's
obligations under this Lease, and (E) Tenant shall obtain and deliver to
Landlord the written consent thereto of CII (so long as any indebtedness or
obligations are owing to CII by Tenant), and any other third party whose consent
is required pursuant to any agreement to which Tenant is a party. Tenant shall
provide Landlord with written notice of any such assignment together with any
certificates, financial statements and documents as Landlord may reasonably
request in order to confirm the terms of any such assignment, the net worth of
Tenant and that of the proposed assignee, and the nature of the business to be
conducted on the Leased Premises and the contemplated use of the Leased Premises
following the assignment.

         B. In addition to the foregoing, upon notice to Landlord, (i) Tenant
shall be entitled to assign its right, title and interest in and to this Lease
without Landlord's consent to CII as collateral security for the CII Loan, or to
another lender (the term "TENANT'S LENDER" shall mean and refer to CII and such
other lender to Tenant from time to time) as collateral security for a loan to
Tenant, and (ii) Tenant's Lender shall be entitled to assign this Lease or
sublet the Leased Premises to any entity, provided that:

         (a) such entity has at least the same or higher net worth as Tenant on
the Lease Commencement Date;

         (b) the nature of the business to be conducted on the Leased Premises
and the use of the Leased Premises will not change as a result of the assignment
or subletting or, if it will change, such change is approved in advance by
Landlord;

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         (c) The subtenant or assignee assumes, by an instrument in form and
content satisfactory to Landlord, the due performance of all Tenant's
obligations under this Lease with respect to the subleased or assigned space;
and

         (d) A copy of the sublease or the original assumption agreement, fully
executed and acknowledged, is submitted to Landlord within ten (10) days of
execution of the sublease or assignment agreement.

         C. Notwithstanding anything to the contrary contained herein, Tenant
may allow an Affiliate (as hereinafter defined) to share space in the Leased
Premises with Tenant, upon and subject to the following terms and conditions:

          (a)  As used herein, the term "Affiliate" shall mean (i) any entity
               which owns twenty-five percent (25%) or more of the voting stock
               of Tenant, or (ii) any entity where twenty-five percent (25%) or
               more of the voting stock or interest is owned by Tenant;

          (b)  Tenant shall first obtain Landlord's prior written consent to
               such sharing arrangement, which consent shall not be unreasonably
               denied or delayed, provided that Tenant and such Affiliate shall
               execute and deliver to Landlord such instruments and agreements
               as Landlord may reasonably require;

          (c)  Tenant shall at all times be fully liable and responsible for and
               hereby agrees to indemnify and hold harmless Landlord, Landlord's
               directors, officers and employees from and against any and all
               liability, claims, costs, damages and losses of whatsoever kind
               or nature to the extent directly or indirectly arising as a
               result of the presence of such Affiliate on the Property,
               including without limitation, any such liability, claims, costs,
               damages or losses to the extent arising from any acts, actions,
               failure to act or negligence of Affiliate, its employees,
               independent contractors and agents;

          (d)  In no event shall any such Affiliate be deemed a subtenant or an
               assignee of Tenant's rights under this Lease nor shall any such
               Assignee acquire any rights under this Lease or otherwise in
               connection with the Leased Premises except that the Affiliate
               shall have the right to occupy the Leased Premises for the uses
               herein permitted, subject to the provisions of this Lease,
               including, without limitation, the provisions of this Section
               15.1C;

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<PAGE>

          (e)  In no event shall Tenant accept remuneration for allowing the
               Affiliate to share the Leased Premises which exceeds the Base
               Rent plus amounts due under Tenant's note to CII, in each case,
               prorated on the basis of the portion of the Leased Premises
               shared; and

          (f)  Tenant shall obtain and deliver to Landlord the written consent
               of CII to the sharing of the Leased Premises (so long as any
               indebtedness or obligations are owing to CII by Tenant), and any
               other third party whose consent is required pursuant to any
               agreement to which Tenant is a party.

         15.2 LANDLORD'S CONSENT REQUIRED. Except as otherwise provided in
Section 15.1, Landlord's prior written consent shall be required for a sublease
of all or any part of the Leased Premises or an assignment of Tenant's rights or
obligations under this Lease, which consent shall not be unreasonably withheld
provided that each of the following conditions are first satisfied:

         (a) At the time of the request for Landlord's consent and at the date
of the sublease or assignment, this Lease shall be in full force and effect,
without any breach or default thereunder on the part of Tenant.

         (b) The proposed subtenant or assignee shall possess a business
reputation and financial credit such as are then in keeping with the standards
of Landlord for the Property.

         (c) The subtenant or assignee assumes, by an instrument in form and
content satisfactory to Landlord, the due performance of all Tenant's
obligations under this Lease with respect to the subleased or assigned space.

         (d) A copy of the sublease or the original assumption agreement, fully
executed and acknowledged, is submitted to Landlord within ten (10) days of
execution of the sublease or assignment agreement.

         (e) Any such sublease or assignment provides that, in the event of any
further subleasing or assignment of any portion of the Leased Premises by the
subtenant or assignee or anyone claiming under or through it, the prior written
consent of Landlord must be obtained as provided in this Section and any profit
on such further subletting shall be paid over entirely to Landlord.

         (f) The nature of the business to be conducted on the Leased Premises
and the use of the Leased Premises will not change as a result of the assignment
or

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<PAGE>

subletting or, if it will change, such change has been approved in advance by
Landlord.

         (g) Tenant shall obtain and deliver to Landlord the written consent
thereto of CII (so long as any indebtedness or obligations are owing to CII by
Tenant), and any other third party whose consent is required pursuant to any
agreement to which Tenant is a party.

         15.3 ADDITIONAL CONDITIONS. If this Lease is assigned, whether or not
in violation of the provisions of this Lease, Landlord may collect rent from the
assignee. If the Leased Premises or any part thereof are sublet or used or
occupied by anybody other than Tenant, whether or not in violation of this
Lease, Landlord may, after default by Tenant and expiration of Tenant's time to
cure such default, collect rent from the subtenant or occupant. In either event,
Landlord may apply the net amount collected to the rents herein reserved, but no
such assignment, subletting, occupancy or collection shall be deemed a waiver of
any of the provisions of this Article, or the acceptance of the assignee,
subtenant or occupant as tenant, or a release of Tenant from the further
performance by Tenant of Tenant's obligations under this Lease. The consent by
Landlord to an assignment, mortgaging or subletting pursuant to any provision of
this Lease shall not in any way be considered to relieve Tenant or any party
claiming under or through Tenant from obtaining the express consent of Landlord
to any other or further assignment, mortgaging or subletting.

         15.4 PROFIT ON SUBLETTING OR ASSIGNMENT. With respect to any sublease
of all or any part of the Leased Premises or assignment by Tenant of its right,
title and interest in and to this Lease, other than an assignment or subletting
by Tenant's Lender pursuant to Section 15.1, the following provisions shall
apply. Landlord shall be entitled to and Tenant shall pay to Landlord one
hundred percent (100%) of any profit on such sublease or assignment. For
purposes of this Section, "PROFIT" shall refer to the excess, if any, of (1) all
payments made by a subtenant or assignee to Tenant as rent or otherwise under or
in connection with said sublease or assignment after deducting brokerage
commissions and leasing expenses, and after deducting any payments by the
subtenant or assignee that are expressly intended to pay, or to reimburse Tenant
for payments of, principal, interest or other sums due under the CII Loan to the
extent of payments required to be made under the terms of the CII Loan, over (2)
the annual Base Rent and Additional Rent payable hereunder with respect to the
space affected by such sublease or assignment. Tenant shall pay any such profit
to Landlord as the same is received by Tenant.

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<PAGE>

         15.5  ADDITIONAL PROVISIONS.

         (a) In case of subletting, a duly executed and acknowledged original of
the sublease shall be delivered to Landlord, the same to provide that (i) such
sublease is and shall be subject and subordinate to this Lease and any then
present or future modifications thereof; and (ii) in the event of termination,
re-entry or dispossession by Landlord under this Lease, Landlord may, at its
option, take over all of the right, title and interest of Tenant, as sublessor,
under such sublease, and such subtenant shall, at Landlord's option, attorn to
Landlord pursuant to the then executory provisions of such sublease, except that
Landlord shall not (A) be liable for any previous acts or omissions of Tenant,
as sublessor under such sublease; (B) be subject to any offsets or (C) be bound
by any previous modification of such sublease to which Landlord shall not have
consented in writing, or by any previous prepayments of more than one (1)
month's rent.

         (b) In the case of any assignment or subletting except for an
assignment under Section 15.2, Tenant, as assignor or sublessor, as the case may
be, shall remain liable for the performance or observance of all of the terms
and provisions on Tenant's part to be performed or observed under this Lease.

         (c) Any consent of Landlord to any such assignment or sublettingshall
not be construed as a waiver of any requirement for obtaining: (i) the consent
of Landlord to any subsequent assignment of this Lease or subletting of the
Leased Premises or (ii) the consent of Landlord to any assignment of any
sublease, the undersubletting of the whole or any portion of the Leased Premises
or the subletting of any portion of the Leased Premises. Tenant shall pay
Landlord's costs incurred in connection with consideration of such consent,
including reasonable counsel fees and payments to any mortgagee. Notwithstanding
anything to the contrary contained herein, except for an assignment or
subletting to or by Tenant's Lender pursuant to Section 15.1, if any of
Landlord's Lenders (as defined in Section 10.1) has the right to approve a
requested sublease or assignment and declines to do so, it shall be reasonable
for Landlord to withhold its consent.

         (d) Tenant acknowledges that it has received a copy of that certain
Consent and Intercreditor Agreement dated as of the date hereof among CII,
Landlord and CDA (the "INTERCREDITOR AGREEMENT"). Tenant agrees that in
accordance with Section 2.a.(vi) of the Intercreditor Agreement, Article 15 of
this Lease shall be construed in a manner consistent with the Intercreditor
Agreement, and to the extent that the provisions of said Article 15 are
inconsistent or otherwise conflict with the Intercreditor Agreement, the terms
of the Intercreditor Agreement shall be deemed to supercede said Article 15.

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<PAGE>

                      ARTICLE 16. ACCESS TO LEASED PREMISES

         16.1 LANDLORD TO HAVE ACCESS IN EMERGENCY. Landlord and Landlord's
agents shall have the right to enter the Leased Premises at any time without
notice if Landlord or Landlord's agent reasonably believes an emergency exists.

         16.2 LANDLORD'S RIGHT TO ENTER. Except as provided in ARTICLE 16.1.,
Landlord and Landlord's agents shall have the right to enter the Leased Premises
upon reasonable notice to Tenant for the following purposes:

         A.  Inspecting the Leased Premises;

         B.  Showing the Leased Premises to prospective tenants, purchasers and
lenders; and

         C. To make repairs and alterations as Landlord may deem necessary or
reasonably desirable to the Leased Premises or to any other portion of the
Building or which Landlord may elect to perform following Tenant's failure to
make repairs or perform any work which Tenant is obligated to perform under this
Lease, or for the purpose of complying with laws, regulations and other
directives of governmental authorities. Landlord shall use its best efforts not
to interfere with Tenant's use of the Leased Premises for its business purposes
in exercising its rights hereunder.

         16.3 LANDLORD MAY MAKE CHANGES TO BUILDING. Subject to the provisions
of Section 1.2 of this Lease, Landlord shall have the right at any time, without
incurring any liability to Tenant, to make any changes, deletions and additions
to the Building and to the entrances, exits, stairs, halls, elevators and common
spaces as Landlord believes necessary or desirable, provided Tenant's rights as
of the Commencement Date are not disturbed. No action taken by Landlord pursuant
to this section shall constitute an eviction or breach of this Lease.

                       ARTICLE 17. DEFAULT AND TERMINATION

         17.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an event of default by Tenant hereunder
("EVENT OF DEFAULT"):

         A. Failure to pay any Base Rent, Additional Rent or any other rent or
monetary obligation under this Lease within ten (10) days of receipt of written

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<PAGE>

notice that payment is past due; provided however that, with respect to a
failure to pay Base Rent or any payment due under Article 4 (Taxes), Landlord
shall only be required to give such written notice twice during any period of
twelve consecutive months. Tenant's failure on a third occasion within any
period of twelve consecutive months to pay an installment of Base Rent or any
payment due under Article 4 (Taxes) within ten (10) days of the due date shall
be an Event of Default without the necessity on Landlord's part to give notice
that such payment is past due.

         B. Voluntary recourse to any protection or procedure under the United
States Bankruptcy Code, as amended, or any similar law.

         C. There is filed against Tenant in any court pursuant to any statute,
either of the United States of America or of any state, a petition in bankruptcy
or insolvency, or for reorganization, the appointment of a receiver or trustee
of all or a portion of Tenant's property, or for other relief of debtors, and
within thirty (30) days thereof Tenant fails to secure a dismissal thereof.

         D. Failure to execute and deliver in a timely manner a Subordination
Agreement, Estoppel Certificate or other certificate regarding the status of
this Lease.

         E. Transfer of all or any part of Tenant's interest in this Lease to
another party by operation of law or otherwise without Landlord's prior written
consent, except as otherwise provided herein.

         F.  Abandonment of the Leased Premises.

         G.  The recordation of this Lease on the New Haven Land Records by
Tenant in violation of Article 30 hereof.

         H. Failure to perform or comply with any other non-monetary obligation
under this Lease within thirty (30) days of written notice of such failure,
provided that, if said failure is of a nature that the same cannot be completely
cured or remedied within said thirty (30) day period, then Tenant shall not be
in default if it begins such cure within the thirty (30) day period described
above and thereafter diligently prosecutes such cure to completion but in no
event beyond sixty (60) days after such thirty (30) day period.

         I. Any lien, attachment or other encumbrance is lodged against the
Leased Premises, the Building or the Property by a party claiming through or
under Tenant and such is not discharged or a bond substituted in lieu thereof
within thirty (30) days after Tenant receives notice of same.

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<PAGE>

         17.2 TERMINATION UPON OCCURRENCE OF EVENT OF DEFAULT. Upon the
occurrence of an Event of Default, this Lease and the Term thereof may, at the
option of Landlord and without further notice, terminate and expire and upon
such termination Tenant shall forthwith quit and surrender the Leased Premises
to Landlord but still shall remain liable to Landlord as herein provided.

         17.3 BANKRUPTCY. Subject to Tenant's cure rights set forth in Section
17.1C. hereof, in the event Tenant becomes the subject debtor in a case pending
under the Bankruptcy Code (11 U.S.C. Section 101 et. seq.), Landlord's right to
terminate this Lease shall be subject to the rights of the Trustee in bankruptcy
to assume or assign this Lease. To the extent permitted or allowed by law, the
Trustee shall not have the right to assume or assign this Lease, until the
Trustee (i) promptly cures all defaults under the Lease, (ii) promptly
compensates Landlord for monetary damages incurred as a result of such default,
and (iii) provides "ADEQUATE ASSURANCE OF FUTURE PERFORMANCE", which shall mean,
in addition to any other requirements of 11 U.S.C. Section 365(b)(3), that all
of the following have been satisfied: (a) in addition to rent payable under the
Lease, the Trustee has established with Landlord a security deposit equal to
three (3) months Base Rent; (b) Trustee has agreed that the security deposit
will be reestablished in said amount, whenever it is drawn upon by Landlord; (c)
Trustee has agreed that Tenant's business will continue to be conducted in a
first class manner; and (d) Trustee has agreed that the use of the Leased
Premises will not change. If all the foregoing are not satisfied, Tenant shall
be deemed not to have provided Landlord with adequate assurance of future
performance of this Lease.

         17.4 COMPENSATION FOR USE AND OCCUPANCY. Any monies received by
Landlord from or on behalf of Tenant during the pendency of any bankruptcy
proceeding involving Tenant as debtor shall be deemed paid as compensation for
the use and occupation of the Leased Premises, and the acceptance of any such
compensation by Landlord shall not be deemed an acceptance of rent or a waiver
on the part of Landlord of any rights under this Lease.

         17.5 LANDLORD'S RIGHT TO RE-ENTER AND RELET THE LEASED PREMISES. (a)
Landlord and Landlord's agents may immediately, or at any time after the
occurrence of an Event of Default or after the date upon which this Lease shall
terminate, re-enter the Leased Premises or any part thereof, either by summary
proceeding or by any other lawful means, and may repossess the Leased Premises
and remove any and all of Tenant's property and effects from the Leased
Premises, and in no event shall re-entry be deemed an acceptance of surrender of
this Lease unless Landlord shall have notified Tenant in writing of its election
to terminate this Lease; and

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<PAGE>

         (b) Landlord shall make commercially reasonable efforts to relet the
Leased Premises from time to time, either in the name of Landlord or otherwise,
to such tenant or tenants, for such term or terms ending before, on or after the
Expiration Date, at such rental or rentals and upon such other conditions, which
may include concessions and free rent periods, as Landlord, in its discretion,
reasonably exercised. may determine. Except as otherwise stated in the
immediately preceding sentence, Landlord shall have no obligation to relet the
Leased Premises or any part thereof and shall in no event be liable for failure
to relet the Leased Premises or any part thereof, or, in the event of any such
reletting, for failure to collect any rent due upon any such reletting, and no
failure shall operate to relieve Tenant of any liability under this Lease or
otherwise to affect any such liability. Landlord, at Landlord's option, may make
such repairs, replacements, alterations, additions, improvements, decorations
and other physical changes in and to the Leased Premises as Landlord, in its
sole discretion, considers advisable or necessary in connection with any such
reletting or proposed reletting, without relieving Tenant of any liability under
this Lease or otherwise affecting any such liability. Tenant shall be liable for
the amount of all expenses incurred by Landlord in connection with such repairs,
replacements, alterations, additions, improvements, decorations and other
physical changes made by Landlord and the costs of such reletting, including
without limitation, brokerage and reasonable legal expenses.

         17.6 LANDLORD'S RIGHT TO INJUNCTIVE RELIEF. In the event of any breach
by Tenant or any persons claiming through or under Tenant of any of the
agreements, terms, covenants or conditions contained in this Lease, Landlord
shall be entitled to enjoin such breach and shall have the right to invoke any
right and remedy allowed at law or in equity or by statute or otherwise as if
re-entry, summary proceedings or other specific remedies were not provided for
in this Lease.

         17.7 ADDITIONAL RIGHTS OF LANDLORD. If this Lease and the Term shall
terminate as provided in Section 17.2 or by or under any summary proceeding or
any other action or proceeding, or if Landlord shall re-enter the Leased
Premises as provided in this Article or by or under any summary proceeding or
any other action or proceeding, then, in any of said events:

         (a) Tenant shall pay to Landlord all Base Rent and Additional Rent to
the date upon which this Lease and the Term shall have terminated or to the date
of re-entry upon the Leased Premises by Landlord, as the case may be;

         (b) Landlord shall be entitled to retain all monies, if any, paid by
Tenant to Landlord, whether as advance rent, security or otherwise, but such

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<PAGE>

monies shall be credited by Landlord against any Base Rent or Additional Rent
due at the time of such termination or re-entry, or at Landlord's option,
against any damages payable by Tenant;

         (c) Tenant shall be liable for and shall pay to Landlord, as damages,
any deficiency between (i) the Base Rent and Additional Rent payable hereunder
for the period which otherwise would have constituted the unexpired portion of
the Term (conclusively presuming the Taxes to be the same as was payable for the
year immediately preceding such termination or re-entry) and (ii) the net
amount, if any, of rents ("NET RENT") collected under any reletting effected
pursuant to the provisions of Section 17.5(b), for any part of such period
(first deducting from the rents collected under any such reletting all of
Landlord's reasonable expenses in connection with the termination of this Lease
or Landlord's re-entry upon the Leased Premises and in connection with such
reletting including but not limited to all repossession costs, brokerage
commissions, legal expenses, attorneys' fees, alteration costs and other
expenses of preparing the Leased Premises for such reletting);

         (d) Any such deficiency shall be paid in monthly installments by Tenant
on the days specified in this Lease for the payment of installments of Base
Rent. Landlord shall be entitled to recover from Tenant each monthly deficiency
as the same shall arise, and no suit to collect the amount of the deficiency for
any month shall prejudice Landlord's right to collect the deficiency for any
subsequent month by a similar proceeding. Alternatively, suit or suits for the
recovery of such deficiencies may be brought by Landlord from time to time, at
its election;

         (e) In addition, Landlord shall, at its sole option, be entitled to
recover from Tenant, and Tenant shall pay Landlord, on demand, as and for
liquidated and agreed final damages, a sum equal to the amount by which the Base
Rent and Additional Rent, payable hereunder (excluding sums collected by
Landlord in the form of monthly deficiencies as aforesaid) for the period which
otherwise would have constituted the unexpired portion of the Term (conclusively
presuming the Taxes to increase five percent (5%) per annum from the year
immediately preceding such termination or re-entry), exceeds the then fair and
reasonable rental value of the Leased Premises for the same period, both
discounted to present worth at the rate of eight percent (8%) per annum. If,
before presentation of proof of such liquidated damages to any court, commission
or tribunal, the Leased Premises, or any part thereof, shall have been relet by
Landlord for the period which otherwise would have constituted the unexpired
portion of the Term, or any part thereof, the amount of rent upon such reletting
shall be deemed, prima facie, to be the fair and reasonable rental value for the

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<PAGE>

part or the whole of the Leased Premises so relet during the term of the
reletting;

         (f) In no event (i) shall Tenant be entitled to receive any excess of
such Net Rent over the sums payable by Tenant to Landlord hereunder, or (ii)
shall Tenant be entitled in any suit by Landlord for the collection of damages
pursuant to this Section to a credit in respect of any Net Rent from a
reletting, except to the extent that such Net Rent is actually received by
Landlord prior to the commencement of such suit. If the Leased Premises or any
part thereof are relet in combination with other space, then proper
apportionment on a square foot area basis shall be made of the rent received
from such reletting and of the expenses of reletting.

         17.8 DEFAULT RATE. Any damages owed by Tenant to Landlord under this
Article, if not paid when due, shall be paid with interest at the Default Rate
from the due date to the date of payment.

         17.9 LANDLORD'S DAMAGES NOT LIMITED. Nothing herein contained shall be
construed as limiting or precluding the recovery by Landlord against Tenant of
any sums or damages to which, in addition to the damages particularly provided
above, Landlord may lawfully be entitled by reason of any default hereunder on
the part of Tenant.

         17.10 LANDLORD'S RIGHTS AND REMEDIES CUMULATIVE. Each right and remedy
of Landlord provided for in this Lease shall be cumulative and shall be in
addition to every other right and remedy provided for in this Lease, or now or
hereafter existing at law or in equity or by statute or otherwise, and the
exercise or beginning of the exercise by Landlord of any one or more of the
rights or remedies provided for in this Lease, or now or hereafter existing at
law or in equity or by statute or otherwise, shall not preclude the simultaneous
or later exercise by Landlord of any or all other rights or remedies provided
for in this Lease or now or hereafter existing at law or in equity by statute or
otherwise.

              ARTICLE 18. LANDLORD'S PERFORMANCE ON TENANT'S BEHALF

         18.1 LANDLORD MAY CURE DEFAULT. Without waiving any of Landlord's other
rights and remedies that are available upon the occurrence of an Event of
Default, if Landlord has provided Tenant with notice of an Event of Default and
an opportunity to cure and if such Event of Default remains uncured, Landlord,
at Landlord's option, may provide Tenant a second written notice and after the
giving of such second notice, Landlord may at any time thereafter, and without
further notice, correct the default on behalf of Tenant. Any reasonable costs or

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<PAGE>

expenses incurred by Landlord in curing such default including, but not limited
to, fines, penalties, interest, damages and reasonable attorney's fees in
instituting, prosecuting or defending any action or proceeding, which sums shall
carry interest at the highest rate permitted by law until paid in full, shall be
deemed to be Additional Rent. Tenant shall pay such sums promptly upon rendition
of any bill or statement to Tenant therefor.

         18.2 LANDLORD NOT OBLIGATED TO CURE DEFAULT. Nothing contained in this
Article shall be construed as to require Landlord to incur any expenses or
obligations on behalf of Tenant.

           ARTICLE 19. TENANT'S QUIET ENJOYMENT OF THE LEASED PREMISES

         Unless Tenant is in default hereunder beyond any applicable notice and
cure period, Tenant may peaceably and quietly have, hold and enjoy the Leased
Premises for the Term of this Lease including any extension thereof subject to
the provisions of this Lease.

                        ARTICLE 20. NO WAIVER BY LANDLORD

         20.1 NO WAIVER. If Landlord decides not to enforce any provision of
this Lease or any of the rules and regulations of Landlord set forth in this
Lease or hereafter adopted, on any occasion, it may nevertheless on another
occasion enforce such provision, rule or regulation. No act by Landlord or
Landlord's agents shall be deemed an acceptance of a surrender of the Leased
Premises or a waiver of any right under the Lease unless Landlord has so agreed
in writing.

         20.2 ACCEPTING MONEY NOT A WAIVER. Landlord will not waive any right to
enforce any provision of this Lease by accepting a payment of rent from Tenant
knowing that Tenant has failed to comply with the terms of the Lease. No
endorsement or statement on any check or any letter accompanying any check or
payment shall be deemed to effect an accord and satisfaction and Landlord may
accept any such check or payment without prejudice to Landlord's right to
recover the balance of such rent or payment due or pursue any other remedy in
this Lease provided.

                        ARTICLE 21. INABILITY TO PERFORM

         Except as herein specifically provided to the contrary, this Lease and
the obligation of Tenant to pay rent and other payments required hereunder and
comply

                                       48

<PAGE>

with all of the other provisions of this Lease shall in no way be affected,
impaired or excused because Landlord is delayed in supplying any service
expressly or implied to be supplied, or is unable to make or is delayed in
making any repair, additions, alterations or decorations, or is unable to supply
or is delayed in supplying any equipment or fixtures, or is unable to fulfill or
is delayed in fulfilling any other obligation hereunder, if Landlord is so
prevented or delayed by reason of riot, strike, labor troubles, war, act of God
or any other cause whatsoever beyond Landlord's reasonable control including,
but not limited to, government preemption in connection with a national
emergency or by reason of any rule, order or regulation of any department or
subdivision thereof of any government agency, or by reason of the conditions of
supply and demand which have been or are affected by war or other emergency.

         Each party to this Lease shall be excused from failing to perform or
from a delay in performing any obligation under this Lease if it is so prevented
or delayed by reason of riot, strike, war, act of God or government preemption
in connection with a national emergency or by reason of any rule, order or
regulation of any department or subdivision thereof of any government agency, or
by reason of the conditions of supply and demand which have been or are affected
by war or other emergency.

                  ARTICLE 22. NOTICES AND OTHER COMMUNICATIONS

         Any and all notices, demands or other communication permitted or
required by this Lease to be given to either party shall be deemed sufficiently
given if in writing and delivered personally (and for which delivery a signed
receipt is given) or sent by commercial overnight courier if to Landlord
addressed to Five Science Park, New Haven, CT 06511, and if to Tenant addressed
to the address of the Leased Premises. Any such notice, demand or other
communication that is delivered personally (and for which a signed receipt is
given) shall be deemed given and received as of the date of delivery. Any such
notice, demand or other communication that is sent by commercial overnight
courier shall be deemed given and received on the date of delivery or refusal
thereof. Either party may specify a different address by giving the other party
notice of such different address according to the terms of this Article.

         If at any time Tenant shall become aware, or have reasonable cause to
believe, that any Hazardous Material has come to be located in the Leased
Premises, Tenant shall immediately notify Landlord thereof. Tenant shall
promptly deliver to Landlord copies of hazardous waste manifests reflecting the
legal and proper disposal of all Hazardous Materials removed from the Leased
Premises.

                                       49

<PAGE>

                        ARTICLE 23. RULES AND REGULATIONS

         23.1 COMPLIANCE WITH RULES AND REGULATIONS. Tenant and Tenant's
servants, employees, agents, contractors, subcontractors, licensees and invitees
shall faithfully observe and comply strictly with the rules and regulations for
occupancy of the Leased Premises promulgated from time to time by Landlord
("RULES AND REGULATIONS"). The current Rules and Regulations in effect are
attached hereto and made a part hereof as EXHIBIT F. In the event of conflict
between the terms, covenants and conditions contained in this Lease and the
Rules and Regulations, the terms, covenants and conditions of this Lease shall
govern and control.

         23.2 NOTICE OF CHANGE. Changes to the Rules and Regulations and new
Rules and Regulations shall be effective thirty (30) days after the date
Landlord has given Tenant written notice thereof, which notice shall include a
copy of the revised or new Rules and Regulations.

         23.3 LANDLORD UNDER NO DUTY TO ENFORCE RULES AND REGULATIONS. Landlord
has no duty to enforce the rules and regulations or provisions of any other
Lease as against any other tenant, but Landlord shall not discriminate against
Tenant in the enforcement thereof and Landlord shall not be liable to Tenant for
the violation of such rules, regulations or Leases by any other tenant, its
servants, employees, agents, licensees or invitees.

                         ARTICLE 24. NO SECURITY DEPOSIT

         24.1 NO SECURITY DEPOSIT. No security deposit shall be required of
Tenant under this Lease.

                              ARTICLE 25. INSURANCE

         25.1 REQUIRED INSURANCE. A. During the Term of this Lease and any
extension thereof, Tenant, at Tenant's cost, will maintain in full force and
effect the following insurance:

         1. Public liability insurance in an amount of $1,000,000 combined
single limit death, bodily injury, personal injury and property damage;

                                       50

<PAGE>

         2. "All risk extended coverage insurance" insuring its personal
property and improvements to be located on the Leased Premises for full
replacement value against loss by fire, vandalism, malicious mischief and other
casualty;

         3. Worker's compensation insurance as required by law; and

         4. Rental interruption insurance insuring that Base Rent shall continue
to be paid for a period of twelve (12) months, with loss payable to Landlord,
which insurance shall also cover Tenant's obligations for the payment of
Tenant's Pro-Rata Share of Taxes for said period.

         B.  Landlord will maintain in full force and effect the following
insurance:

         1. Such insurance as may be required from time to time by Landlord's
Lenders; and

         2. Public liability insurance in an amount of $1,000,000 combined
single limit death, bodily injury, personal injury and property damage.

          25.2 LANDLORD AND LANDLORD'S LENDERS TO BE NAMED INSUREDS. Tenant's
               public liability and property damage insurance shall name
               Landlord and, if Landlord provides the appropriate names and
               addresses, Landlord's Lenders, as their respective interests may
               appear, as additional insured parties. Unless and until notified
               otherwise by Landlord in writing, Tenant agrees to name or cause
               to be named the following Landlord's Lenders as additional
               insured parties under said insurance policies and under the
               policies of Contractor's Insurance required under Section 6.4:

               Connecticut Housing Finance Authority
               999 West Street
               Rocky Hill, CT 06067-4005

                               and

               Connecticut Development Authority
               999 West Street
               Rocky Hill, CT 06067-4005

         25.3 WAIVER OF SUBROGATION. Each policy of property insurance
maintained by Landlord hereunder will contain an agreement by the insurance
company waiving its rights to recover against Tenant and CII for any claims, and
each policy of

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<PAGE>

property insurance maintained by Tenant hereunder will contain an
agreement by the insurance company waiving its rights to recover against
Landlord, CHFA, Connecticut Development Authority ("CDA") and each other
Landlord's Lender provided Landlord furnishes to Tenant the notice required by
Section 25.2, for any claims.

         25.4 NOTICE OF CANCELLATION. Each insurance policy required to be
maintained by Tenant hereunder must contain a provision that the policy may not
be canceled or modified without at least ten (10) days' notice to Landlord.

         25.5 INSURANCE COMPANIES. All insurance required to be maintained by
Tenant hereunder will be provided by companies that are licensed to do business
in Connecticut and have a Best's Insurance rating of A- or better and are
otherwise reasonably acceptable to Landlord.

         25.6 POLICIES TO BE DELIVERED TO LANDLORD. Tenant will give Landlord an
original certificate for each insurance policy before it occupies the Leased
Premises and an original certificate of each renewal at least twenty (20) days
before the expiration of the policy.

                    ARTICLE 26. SERVICES PROVIDED BY LANDLORD

         26.1 BUILDING SERVICES. Landlord shall provide the following services,
the cost of which is included in Base Rent: provision of utilities to the common
areas; maintenance and repair of common areas, Building systems and the
structural components of the Building; security at the Property; general
cleaning, refuse removal (excluding waste generated by laboratory activities
which requires special handling, the removal of which shall be Tenant's
responsibility) and general administration and management of the Building and
surrounding premises ("BUILDING SERVICES"). Services provided by Landlord at
Tenant's request from time to time that are not part of standard Building
Services will be provided at Tenant's cost. Janitorial and cleaning services
provided to the Building and the Leased Premises are set forth on Exhibit G
attached hereto ("LANDLORD'S CLEANING Specifications"). Landlord shall continue
to clean and maintain the bathrooms located on the second floor of Building 5
North (or the bathrooms on the second floor Building Five South if Tenant is
using same temporarily) throughout the Term, the cost of which is included in
Base Rent.

         26.2  ACCESS. Tenant shall have 24-hour access to the Leased Premises,
365 days per year.

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<PAGE>

                          ARTICLE 27. TELEPHONE SERVICE

         27.1 TENANT RESPONSIBLE FOR TELEPHONE SERVICE. Tenant shall be solely
responsible for supplying telephone service to the Leased Premises and for all
costs and expenses of the telephone system which will serve the Leased Premises,
including without limitation, all costs of purchasing, leasing, installing,
replacing and maintaining all system equipment, as well as all charges for
telephone calls to and from the Leased Premises. Tenant shall contract directly
with the telephone company for all equipment and services.

                                ARTICLE 28. SIGNS

         Tenant shall have the right to have a sign on the sign board in the
front of the Building, signage in the lobby, and signs on the outside of the
walls of the Leased Premises, subject to Landlord's reasonable approval of the
size, style and placement of such signs, which approval shall not be
unreasonably withheld. Except as expressly provided in the immediately preceding
sentence, Tenant shall not place any signs, lettering or advertisements anywhere
on or in the Property or Building or in the Leased Premises where such is
visible from outside the Leased Premises, except as permitted by Landlord in
writing.

                              ARTICLE 29. BROKERAGE

         Tenant represents to Landlord that there is no broker or agent who
acted on Tenant's behalf in connection with this Lease to whom any fee or
commission is due. Tenant agrees to indemnify and hold Landlord harmless from
and against the claims of any party claiming a fee or commission by, under or
through Tenant on account of this Lease.

         Landlord agrees to indemnify and hold Tenant harmless from and against
the claims of any party claiming a fee or commission by, under or through
Landlord on account of this Lease.

                           ARTICLE 30. NOTICE OF LEASE

         Tenant shall not record this Lease on the New Haven Land Records. Any
such recordation of this Lease shall be an Event of Default hereunder and such

                                       53

<PAGE>

recordation shall be null and void and of no force and effect. At the request of
either party, the parties shall cause to be recorded on the New Haven Land
Records a statutory Notice of Lease complying with the provisions of Connecticut
General Statutes Section 47-19. The expense of such notice shall be borne by the
party requesting the document.

                   ARTICLE 31. SURRENDERING OF LEASED PREMISES

         31.1 SURRENDER OF LEASED PREMISES. Tenant will immediately surrender
the Leased Premises upon the expiration or earlier termination of this Lease in
accordance with the terms hereto. Tenant shall indemnify Landlord against loss
or liability resulting from delay by Tenant in so surrendering the Leased
Premises, including, but not limited to, reasonable attorneys fees and any
claims made by any succeeding tenant founded on such delay.

         31.2 CONDITION OF LEASED PREMISES. Upon the expiration of the Term or
sooner termination of this Lease, except where the Lease has been terminated
because of fire or other casualty, Tenant shall leave the Leased Premises and
surrender it to Landlord broom clean and in good order, condition and repair,
ordinary wear and tear and casualty loss excepted.

         31.3 REMOVAL OF TENANT'S PROPERTY. When Tenant surrenders the Leased
Premises to Landlord, Tenant shall, at Tenant's expense, forthwith remove all
personal property and effects of Tenant and those of any other persons claiming
under Tenant, from the Leased Premises, the Building and the Property. Property
not removed by Tenant within forty-eight (48) hours after termination of this
Lease shall be deemed abandoned, and Landlord may, at Tenant's expense, remove
the same from the Property and/or at Landlord's option sell or otherwise dispose
of the same with no obligation to remit any portion of the proceeds of any such
sale to Tenant. Tenant shall reimburse Landlord upon demand for all costs
incurred by Landlord in so removing and disposing of such property. Tenant shall
not be obligated to remove Alterations except as otherwise required under the
terms of Section 6.2.

         31.4 HOLDING OVER SHALL NOT RENEW LEASE. Tenant's occupancy of the
Leased Premises beyond the Term of this Lease or after termination will not
constitute a renewal of the Lease by operation of law or otherwise for any
period whatsoever. If Tenant does so occupy the Leased Premises, it shall be
deemed to be a tenant at sufferance only and shall pay Landlord rent in an
amount equal to two hundred percent (200%) of the highest Base Rent and
Additional Rent payable hereunder and shall be subject to all other provisions
of this Lease. Regardless of any payment made by Tenant or any payment cycle, no
holding over shall under

                                       54

<PAGE>

any circumstances be deemed any more than a tenancy at sufferance. The
provisions of this Article 31 shall survive the expiration of the Term or
earlier termination of this Lease.

                  ARTICLE 32. ADDITIONAL OBLIGATIONS OF TENANT

         Tenant shall promptly reimburse Landlord, upon demand, for all costs of
Landlord, including reasonable attorney's fees, incurred in the enforcement of
this Lease and in providing any consent or review of any sublease, mortgage or
collateral assignment of Tenant's Leasehold interest, requested of Landlord
hereunder.

                      ARTICLE 33. TENANT'S WAIVER OF RIGHTS

         In connection with any disputes and legal proceedings arising from this
Lease, Tenant waives the following legal rights:

         33.1. WAIVER OF TRIAL BY JURY. Landlord and Tenant shall and hereby do
waive trial by jury in any action, proceeding or counterclaim brought by either
of the parties hereto against the other in any matter arising out of or in any
way connected with this Lease, the relationship of Landlord and Tenant, Tenant's
use or occupancy of the Leased Premises, any claim of injury or damage and any
emergency or any other statutory remedy. Tenant shall not interpose any
counterclaim or counterclaims (except compulsory) in a summary proceeding or in
any action based on non-payment of base rent or Additional Rent, unless Tenant
would otherwise lose such claim if not raised.

         33.2. WAIVER OF NOTICE TO QUIT. The right to a formal demand to leave
the premises upon expiration of this Lease by lapse of time, known as a "Notice
to Quit", or any other form of notice under Section 47a-25 of the Connecticut
General Statutes, should Landlord use summary process to evict Tenant or regain
possession of the Leased Premises.

         33.3. WAIVER OF RIGHT OF REINSTATEMENT. Any right, under existing or
future law, to gain back the Leased Premises once Tenant is legally removed
(known as "Right of Reinstatement").

         33.4. PREJUDGMENT REMEDY WAVIER. TENANT HEREBY REPRESENTS, COVENANTS
AND AGREES THAT THE TRANSACTION OF WHICH THIS LEASE IS A PART IS A "COMMERCIAL
TRANSACTION" AS DEFINED BY THE STATUTES OF THE STATE OF CONNECTICUT. TENANT

                                       55

<PAGE>

HEREBY WAIVES ALL RIGHTS TO NOTICE AND PRIOR COURT HEARING OR COURT ORDER UNDER
CONNECTICUT GENERAL STATUTES, SECTIONS 52-278a ET SEQ., AS AMENDED, OR UNDER ANY
OTHER STATE OR FEDERAL LAW WITH RESPECT TO ANY AND ALL PREJUDGMENT REMEDIES
LANDLORD MAY EMPLOY TO ENFORCE ITS RIGHTS AND REMEDIES HEREUNDER. MORE
SPECIFICALLY, TENANT ACKNOWLEDGES THAT LANDLORD'S ATTORNEY MAY, PURSUANT TO
CONNECTICUT GENERAL STATUTES SECTION 52-278f, ISSUE A WRIT FOR A PREJUDGMENT
REMEDY WITHOUT SECURING A COURT ORDER. TENANT ACKNOWLEDGES AND RESERVES ITS
RIGHT TO NOTICE AND A HEARING SUBSEQUENT TO THE ISSUANCE OF A WRIT FOR
PREJUDGMENT REMEDY BY LANDLORD'S ATTORNEY, AND LANDLORD ACKNOWLEDGES TENANT'S
RIGHT TO SAID HEARING SUBSEQUENT TO THE ISSUANCE OF SAID WRIT. TENANT FURTHER
HEREBY WAIVES ANY REQUIREMENT OR OBLIGATION OF LANDLORD TO POST A BOND OR OTHER
SECURITY IN CONNECTION WITH ANY PREJUDGMENT REMEDY OBTAINED BY LANDLORD AND
WAIVES ANY OBJECTIONS TO ANY PREJUDGMENT REMEDY OBTAINED BY LANDLORD BASED ON
ANY OFFSETS, CLAIMS, DEFENSES OR COUNTERCLAIMS OF TENANT OR ANY OTHER PARTY
PRIMARILY OR SECONDARILY LIABLE UNDER THE LEASE TO ANY ACTION BROUGHT BY
LANDLORD. TENANT ACKNOWLEDGES AND AGREES THAT ALL OF THE WAIVERS CONTAINED IN
THIS ARTICLE 33 HAVE BEEN MADE KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND
INTELLIGENTLY, AND WITH THE ADVISE OF ITS COUNSEL.

                  ARTICLE 34. EFFECT OF WRITTEN LEASE AGREEMENT

         34.1 WRITTEN LEASE SOLE EXPRESSION OF PARTIES' INTENT. All
understandings, letters of intent or agreements between Tenant and Landlord,
which predate this Lease, are merged in this Lease. No oral statements or
representations or prior written communications by or between the parties
dealing with this Lease shall be binding or effective. This Lease is the sole
and complete expression of the agreement between Landlord and Tenant as to the
subject matter of this Lease.

         34.2 AMENDMENT OF WRITTEN LEASE. This Lease can be modified, altered or
amended only by a written agreement signed by both Landlord and Tenant. No such
modification, alteration or amendment shall be effective unless and until
Landlord shall obtain and deliver to Tenant the written consent thereto of CDA
(so long as any indebtedness or obligations are owing to CDA by Landlord), CHFA
(so long as any indebtedness or obligations are owing to CHFA by Landlord), and
any other third party whose consent is required pursuant to any agreement to
which Landlord is a party, and unless and until Tenant shall obtain and deliver
to Landlord the written consent thereto of CII (so long as any indebtedness or
obligations are owing to CII by Tenant), and any other third party whose consent
is required pursuant to any agreement to which Tenant is a party.

                                       56

<PAGE>

                       ARTICLE 35. INTERPRETATION OF LEASE

         35.1 PARTIAL INVALIDITY. If any of the provisions of this Lease, or its
application, is held by any court or in arbitration to be invalid or
inapplicable, such decision shall not affect any other term, provision, covenant
or condition of this Lease. Notwithstanding the foregoing, if the invalid
provision has the effect of reducing the rent to be paid by Tenant, Landlord may
cancel this Lease.

         35.2 ARTICLE AND SECTION CAPTIONS. Article and section captions will
not be given any effect in determining the meaning of this Lease.

         35.3  GOVERNING LAW.  The laws of the State of Connecticut will govern
the interpretation of this Lease.

         35.4 SUCCESSORS AND ASSIGNS. This Lease shall be binding upon the
parties hereto and upon their heirs, administrators, executors, successors and
assigns.

         35.5 CONTINUING OBLIGATIONS. Notwithstanding anything to the contrary
contained herein, all of Tenant's obligations and liabilities arising under this
Lease shall survive the expiration of the Term of this Lease or the earlier
termination of this Lease for any reason.

         35.6 CONSTRUCTION. This Lease shall not be construed against the party
that drafted it.

                            ARTICLE 36. HVAC SERVICE

          A. Landlord, at Landlord's cost, shall operate the air conditioning,
heating and ventilating systems installed by Landlord 24 hours a day as required
to meet Tenant's laboratory needs. Tenant shall pay the submetered cost of
electricity to run the Tenant's dedicated heating and ventilating systems.

         B. The cost of supplying chilled water to and the electricity consumed
by the chiller serving Building 5 North twenty-four hours a day, seven days a
week, will be shared by Landlord and Tenant, sixty percent (60%) and forty
percent (40%), respectively, as calculated in accordance with the remaining
provisions of this Article 36. At such time as another tenant shall lease a
portion of Building Five North during the Term and require a supply of chilled
water twenty-four hours a day, seven days a week, Landlord and Tenant shall use
good faith

                                       57

<PAGE>

efforts to reapportion among Landlord, Tenant and any such additional
tenant the cost of chilled water and operation of the chiller in an equitable
manner.

         C. Landlord and Tenant shall cause an engineer to determine the
consumption in tons over a one hour period, which measurement shall be taken in
May and October of each calendar year during the Term of this Lease, unless
Landlord and Tenant shall mutually agree to measure the same on a more frequent
or less frequent basis. The most recent measurement taken by the engineer from
time to time during the Term is herein referred to as the "ESTIMATED TONS PER
HOUR". The engineer shall be selected by Landlord and must be reasonably
acceptable to Tenant. Tenant and Landlord shall each receive a copy of the
report of the engineer. The cost of the engineer to perform such measurement
shall be shared equally by Landlord and Tenant.

         D. The Estimated Tons Per Hour shall be multiplied by the cost per
kilowatt hour charged from time to time during the Term by the electric utility
company supplying electricity to the Building. The resulting product is herein
referred to as the "COST PER HOUR". The Cost Per Hour shall then be multiplied
by 24. The resulting product is herein referred to as the "COST PER DAY". The
Cost Per Day shall then be multiplied by the number of calendar days in the
month for which the calculation is being made. The resulting product is herein
referred to as the "CHILLER COST FOR THE MONTH". The Chiller Cost for the Month
shall be multiplied by forty percent (40%). The resulting product is herein
referred to as "TENANT'S SHARE OF THE CHILLER COST". Landlord shall endeavor to
bill Tenant monthly for Tenant's Share of the Chiller Cost. Landlord's failure
to send Tenant a bill shall not relieve Tenant of its liability and obligation
to pay Tenant's Share of the Chiller Cost. Tenant shall pay to Landlord monthly
as Additional Rent Tenant's Share of the Chiller Cost, which payment shall be
due and payable at the time Base Rent is due and payable hereunder.

                                       58

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
         and seals as of the day and year first above written.

SCIENCE PARK DEVELOPMENT CORPORATION

By:      /s/ Sheila Anastas
         ------------------------------
         Sheila Anastas
         Acting Executive Director
         Duly Authorized

GENAISSANCE PHARMACEUTICALS, INC.

By:      /s/ Kevin Rakin
         ------------------------------
         Kevin Rakin
         Executive Vice President
         Duly Authorized

                                       59

<PAGE>

                                   EXHIBIT A-1

                          FLOOR PLAN OF LEASED PREMISES

<PAGE>

                                   EXHIBIT A-2

                          FLOOR PLAN OF LEASED PREMISES

<PAGE>

                                   EXHIBIT A-3

                        FLOOR PLAN OF MECHANICALS' SPACE

<PAGE>

                                   EXHIBIT A-4

                             TENANT'S CURRENT SPACE

<PAGE>

                                   EXHIBIT B-1

                                 LANDLORD'S WORK

1.       New HVAC system will be installed up to the Tenant's Space.

2.       Building 5 North's entryway, including its exterior door, will be
         renovated to include painting, new carpeting, acoustical ceilings.

3.       All common bathrooms located in Building 5 North will be renovated.

4.       All non-double pane windows will be replaced to match new windows.

5.       The fire alarm system will be updated as required by code.

6.       The  roof will be repaired as required.

7.       The exterior of Building 5 North will be cleaned and upgraded with the
         intent of achieving a look comparable in quality to Building 4 (that
         portion of Landlord's Work described in this subparagraph 7 is referred
         to in the Lease as the "Exterior Work").

<PAGE>

                                   EXHIBIT B-2

                                  INTERIOR WORK

1.       Installation of chilled water supply and return.

2.       Modifications and/or upgrades to fire alarm system and sprinkler system
         if required by fire marshal.

3.       Installation of hot water supply and return.

4.       Installation of baseboard heating system.

5.       Window replacement work.

<PAGE>

                                    EXHIBIT C

                                 UTILITIES RIDER
                                    SUBMETER

         This Utilities Rider forms a part of that certain Lease dated as of
September 15, 1998 (the "LEASE") between SCIENCE PARK DEVELOPMENT CORPORATION
("LANDLORD"), a Connecticut corporation, and GENAISSANCE PHARMACEUTICALS, INC.,
a Delaware corporation ("TENANT"), for those certain leased premises described
in the Lease. Capitalized terms used herein that are not otherwise defined
herein shall have the meaning given to such terms in the main body of the Lease.

         Section 1.01. Landlord shall furnish electricity to the Leased Premises
by direct application to, and arrangement with, the public utility company
servicing the Building. Tenant shall, at its sole cost and expense, install and
maintain in good working order, a submeter ("Submeter") to measure the
electricity consumed by Tenant in the Leased Premises. Such electricity may be
furnished to Tenant by means of the then existing Building system feeders,
risers and wiring. Tenant agrees to pay for the electric current supplied to the
Leased Premises (including the heating and air-conditioning equipment located
therein) in accordance with Section 1.02 of this Exhibit C.

         Section 1.02. Tenant shall pay as additional rent within ten (10) days
after the delivery of a bill by Landlord, for electricity consumed in the Leased
Premises, as shown on the Submeter measuring electricity consumption in the
Leased Premises.

         Section 1.03. Landlord shall also furnish gas to the Leased Premises
solely for laboratory bench purposes by direct application to, and arrangement
with, the public utility company servicing the Building, without additional
charge to Tenant. If Tenant requires gas for other purposes, then (A) Tenant
shall, at its sole cost and expense, install and maintain in good working order,
a submeter serving the Leased Premises to distribute and measure the gas
consumed by Tenant in the Leased Premises, and (B) Tenant shall pay as
additional rent within ten (10) days after the delivery of a bill by Landlord,
for gas consumed in the Leased Premises for purposes other than laboratory bench
purposes, as shown on the submeter measuring gas consumption in the Leased
Premises.

         Section 1.04. Tenant covenants and agrees that at all times its use of
the electric current shall never exceed the capacity of the then existing
feeders to the Building or the risers or wiring installation servicing the
Leased Premises. Tenant agrees to indemnify and hold Landlord harmless from and
against any claims, liabilities, damages, losses and expenses arising out or in
connection with the use by Tenant of such feeders, risers and wiring serving the
Leased Premises in violation of the foregoing sentence.

         Section 1.05. Tenant shall furnish, install and replace, as required,
all lighting tubes, lamps, bulbs and ballasts required in the Leased Premises,
at Tenant's sole cost and expense.

         Section 1.06. If any tax is imposed upon Landlord with respect to
electrical energy furnished as a service to Tenant by any federal, state or
municipal authority, Tenant covenants and agrees that Tenant's prorata share of
such taxes shall be reimbursed by Tenant to Landlord as additional rent.

<PAGE>

                                    EXHIBIT D

                               HAZARDOUS MATERIALS

<PAGE>

                                    EXHIBIT E

                        ENGINES, MACHINERY AND EQUIPMENT

<PAGE>

                                    EXHIBIT F

                              RULES AND REGULATIONS

         1. No sign, signal, advertisement, notice or other lettering, except as
allowed in the Lease, shall be exhibited, inscribed, painted or affixed by any
tenant on any part of the outside of the Leased Premises or inside of the
Building without the prior written consent of Landlord. No signs, advertisements
or notices shall be painted or affixed on or to any windows or doors, or other
parts of the Building, except of color, size and style and in such places as
shall be first approved in writing by Landlord. Interior signs on doors and
directory tablet shall be inscribed, painted or affixed by each tenant at
Tenant's expense and shall be of a size, color and style acceptable to Landlord.
Tenant agrees that any door or directory signage shall be removed at the end of
the Lease Term or any extension thereof and all doors and walls will be restored
to their original conditions. All signs that are contracted for by Landlord will
be at the rate fixed by Landlord from time to time and Tenant will be billed and
will pay for such service accordingly.

         2. Tenant will refer to Landlord all contractors, contractors'
representatives and installation technicians rendering any service to Tenant for
Landlord's supervision, approval and control before performance of any
contractual service. Except for the hanging of pictures, no boring, cutting or
stringing of wires shall be permitted, except with the prior written consent of
Landlord and as Landlord may direct. This provision shall apply to all 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.

         3. The Landlord shall designate appropriate entrances and in the case
of Building Twenty Five; a "Freight" elevator for deliveries or other movement,
to or from the Building, of equipment, materials, supplies, furniture or other
property, and Tenant shall not use any other entrances or elevators for such
purposes, except as designated by Landlord. Movement in or out of the Building
of furniture or office equipment or dispatch or receipt by Tenant of any
merchandise or materials which require use of elevators or stairways or movement
through Building entrances or lobby shall be restricted to hours designated by
Landlord. All such movement shall be under the supervision of Landlord and in
the manner agreed between Tenant and Landlord by arrangement before performance.
Such pre-arrangement initiated by Tenant will include determination by Landlord
and subject to its decision and control as to the time, method and routing of
movement and as to limitations imposed for safety or other concerns which may
prohibit any article, equipment or any other item from being brought into the

<PAGE>

Building. Tenant is to assume all risk as to damage to articles moved and injury
to persons or public engaged or not engaged in such movement, including
equipment, property and personnel of Landlord, if damaged or injured as a result
of acts in connection with carrying out this service for Tenant from the time of
entering the Property to completion of work. Landlord shall not be liable for
the acts of any person engaged in, or any damage or loss to, any of said
property or persons resulting from any act in connection with such service
performed for Tenant.

         4. Tenant shall not deface any part of the Leased Premises, Building or
Property.

         5. No portion of the Leased Premises or of any other part of the
Building shall at any time be used for cooking (except in designated areas), or
occupied for lodging or sleeping, or for any immoral or illegal purpose, or for
any purpose that will damage the Property or the reputation thereof or for any
purpose other than that specified in the Lease covering the Leased Premises.

         6. Tenant shall not place, install or operate on the Leased Premises or
in any other part of the Building or on the grounds any engine or machinery or
maintain, use or keep any inflammable, explosive or hazardous material without
the prior written consent of Landlord.

         7. Landlord will not be responsible for lost or stolen personal
property, equipment, money or jewelry from Tenant's area or public rooms
regardless of whether or not such loss occurs when the area is locked against
entry.

         8. No birds or animals shall be brought into or kept in or about the
Building.

         9. Tenants shall not hire or employ employees of Landlord without
Landlord's prior express written consent.

         10. Landlord will not permit entrance to the Leased Premises by use of
pass keys controlled by Landlord to any person at any time without written
permission by Tenant, except to employees, contractors or service personnel
directly supervised by Landlord.

         11. The entries, passages, doorways, elevators, elevator doors,
hallways and stairwells shall not be blocked or obstructed; no rubbish, litter,
trash or material of any nature shall be placed, emptied or thrown in these
areas; and such areas shall not be used at any time except for ingress or egress
by Tenant,

                                       2

<PAGE>

Tenant's agents, employees, invitees, Tenant's equipment, furnishings and
supplies to or from the Leased Premises.

         12. Tenant shall not do or permit anything to be done in or about the
Building or bring or keep anything therein that will in any way increase the
rate of fire or other insurance on the Building or on property kept therein, or
obstruct or interfere with the rights of, or otherwise injure or annoy other
tenants or do anything in conflict with the valid pertinent laws, rules or
regulations of any government authority.

         13. Landlord desires to maintain the highest standards of environmental
comfort and convenience for the tenancy. It will be appreciated if any
undesirable conditions or lacks of courtesy or attention are reported directly
to Landlord.

         14. The work of janitors or cleaning personnel shall not be hindered by
Tenant after 5:30 p.m. and such work may be done at any time when the Leased
Premises are vacant. Windows, doors and fixtures may be cleaned at any time.
Tenant shall provide adequate waste and rubbish receptacles, cabinets,
bookcases, map cases, etc. necessary to prevent unreasonable hardship to
Landlord in discharging its obligation regarding cleaning service.

         15. Landlord shall have the right to determine and prescribe the weight
and proper position of any unusually heavy equipment including safes, large
files, etc. that are to be placed in the Building, and only those which in the
opinion of Landlord do not exceed acceptable floor loading and might not with
reasonable probability do damage to the floors, structure and/or freight
elevator, may be moved into said Building. Landlord's permission will not be
unreasonably withheld. Any damage occasioned in connection with the moving or
installing of such aforementioned articles in said Building or the existence of
same in said Building shall be paid for by Tenant, unless otherwise covered by
insurance.

         16. Landlord shall have the right to prohibit the use of the Science
Park Development Corporation name, or of the name of the Science Park project or
of any Science Park building, or any other publicity by Tenant, which, in
Landlord's opinion, tends to impair Landlord's reputation or that of the
Building or its desirability for the executive offices of Landlord or of other
tenants; and, upon written notice from Landlord, Tenant will refrain from or
discontinue such use or publicity. Landlord's permission will not be
unreasonably withheld.

                                       3

<PAGE>

         17. No food or beverages may be stored in any areas other than in those
specifically designated for such purposes. Also, waste materials, including
trash from the packaging, preparation or serving of the above, must be disposed
of the same day in the proper receptacles. Tenant must bear the cost of
correcting any pest problem resulting from these activities.

         18. No weapons are allowed on the Property.

         19. Any device used for moving of furniture, freight, mail or paper
goods that will be used on a daily basis will be padded in such a way as to
protect from possible damage any surface with which it may come in contact. Any
device used on an occasional basis, which is not padded, will be operated in a
safe manner so as to prevent damage to any walls, doors, floors, ceilings or
other surfaces.

         20. All work done by service personnel, whether in-house or contracted,
shall be done in a first class manner to accepted standards of the trade and
shall conform to all codes imposed by any governmental authority.

         21. No awnings or other projections shall be attached to the outside
walls of the Building without the prior written consent of Landlord. No
curtains, shades or screens shall be attached to, or hung in or used in
connection with any window or door of the Leased Premises without the prior
written consent of Landlord. Such awnings, projections, curtains, blinds,
shades, screens or other fixtures so permitted by Landlord must be of a quality,
type, design and color and attached in the manner approved by Landlord.

         22. No show cases or other articles shall be placed in front of or
affixed to any part of the exterior of the Building, nor placed in the halls,
corridors or vestibules without the prior written consent of Landlord.

         23. Water and wash closets and other plumbing fixtures shall not be
used for any purpose other than those for which they were constructed and no
sweepings, rubbish, rags or other substances shall be thrown therein. All
damages resulting from any misuse of the fixtures shall be borne by any Tenant
who, or whose servants, employees, agents, contractors, subcontractors,
licensees or visitors, shall have caused the same.

         24. Landlord reserves the right to exclude from the Building between
the hours of 8:00 p.m. and 6:00 a.m. and at all hours on Saturdays, Sundays and
legal holidays all persons who do not present identification acceptable to
Landlord.

                                       4

<PAGE>

Landlord shall in no case be liable for damages for any error with regard to
admission or exclusion from the Building of any person. In the case of riot,
mob, invasion, public excitement or other circumstances rendering such actions
advisable in Landlord's opinion, Landlord reserves the right to prevent access
to the Building during the continuance of the same by such actions as the
Landlord may deem appropriate including closing doors.

         25. The requirements of Tenant will be attended to only upon
application at the office of Landlord's building manager. Landlord's employees
shall not perform any work or do anything outside of their regular duties unless
under special instructions from Landlord.

         26. Canvassing, soliciting and peddling in the Building is prohibited
and Tenant shall cooperate to prevent same.

         27.  ENTRANCE TO SCIENCE PARK

         Tenant's employees and Landlord's personnel will be issued photo
identification cards ("IDs") which must be shown upon request at all entrances
and anywhere on the Property if requested by Landlord's security officers. This
ID authorizes the bearer to be in or around all Science Park buildings but not
on or in property or buildings owned by U.S. Repeating Arms Company, Olin
Corporation or buildings or areas not open to the public. The ID authorizes no
one to enter uninvited into another company's office or work area. If an ID is
lost of stolen, it should be reported to Security immediately. There is a $10.00
charge for replacement.

         28.  HOURS OF OPERATION

         Science Park is open 24 hours a day, 7 days a week. The normal workdays
are Monday through Friday from 8:00 a.m. to 6:00 p.m. ("BUSINESS HOURS").
Tenants who are working beyond 6:00 p.m. are asked to call the main security
desk at 786-5008 and inform the officer of this fact. This is so Security knows
who is in the buildings in case of an emergency. When leaving, please call the
security desk and notify them.

         29.  KEYS TO OFFICES

         Two keys will be issued for each tenant's space. The principal of the
Tenant will sign for the keys upon issuance. The Tenant may make additional
copies of the keys as needed. It will be the responsibility of the Tenant's
principal to keep track of those persons to whom he has issued keys. All keys

                                       5

<PAGE>

and photo IDs must be returned to the Landlord upon termination of the Lease.
Replacement of locks because of lost or unreturned keys shall be undertaken at
the Tenant's expense.

         30.  PARKING AND SPEED LIMIT

         All Science Park companies and employees will be assigned to specific
parking lot areas. There are no assigned spaces other than for handicapped
parking. It is requested that individuals park between the painted lines. If for
business reasons you wish to leave your vehicle overnight or for the weekend,
the security office must be notified. No one is allowed to "deadhead" his or her
vehicle in the parking lots. Vehicles found improperly parked obstructing exits,
fire lanes, other spaces, etc. will be towed at the owner's expense. All
vehicles will be issued Science Park parking identification.

         THE SPEED LIMIT FOR THE PRIVATE DRIVES AND ROADWAYS WITHIN SCIENCE PARK
IS 15 M.P.H. Please obey this speed limit for the safety of everyone walking and
driving within the Park.

         31.  REPORTING EMERGENCIES OR INCIDENTS

         All emergencies (fire, injury, illness, etc.) should be reported to
security immediately at 786-5007. This telephone number must only be used in
cases of emergency. Incidents such as thefts, unwanted persons, vandalism or
damage to parked vehicles in Science Park should also be reported as soon as
possible.

         32.  TOURS AND MEETINGS

         Security should be notified in advance of any planned meetings or tours
in Science Park and should be provided with the following information:

         (a)  date and time;

         (b)  person in charge; and

         (c) number of persons expected.

         Tours accompanied by a host may go to the following areas:

         (a)  All outdoor areas under the supervision of Science Park
         Development Corporation; and

                                       6

<PAGE>

         (b) Lobby areas and the food service areas, which should be entered
         through the shortest possible route so as to avoid making noise in the
         hallways.

         33.  SPECIAL EVENTS HELD BY SCIENCE PARK COMPANIES

         Any event held by a Science Park company which may disturb or interfere
with the security, safety or operations of other companies or which involves
more than ten (10) people entering into the Park must be registered with the
Landlord and the Landlord's security site supervisor. The host company may be
required to hire additional security or maintenance personnel. For any such
special event, the following will be required:

         (a) Events will be held within the confines of the host company's
         Leased Premises and only within an SPDC common area when express
         permission has been granted.

         (b) Participants will be restricted to a pre-determined area within
         which bathroom facilities are available.

         (c) A guest list must be provided to Landlord's security site
         supervisor at least twenty-four (24) hours in advance of the special
         event.

         (d) Arrangements will be made for ample parking to be available with
         proper signs provided to guide and inform the guests. The host company
         should be prepared to provide the signs.

         (e) Alcohol consumption must be monitored by the host company for
         underage persons and for excessive consumption by guests.

         (f) The host company will be responsible for cleanup and for any damage
         and costs incurred in restoring any area involved to its original good
         condition.

         34. ROOF OFF LIMITS. No Tenant and no employee or invitee of any Tenant
or employee, shall go upon the roof of the Building without Landlord's
permission.

         35. CHANGES TO ENTRANCES. Landlord shall have the right at any time
without incurring any liability to Tenant to change the arrangement and/or

                                       7

<PAGE>

location of entrances or passageways, doors or doorways, corridors, elevators,
stairs, toilets or other common areas of the Building

         36. ADDITIONAL RULES AND REGULATIONS; TENANT INFORMATION & SERVICES.

         (a) Tenants are required to provide a 2-3 line description of their
         company's operation for the Science Park telephone/address directory.
         This description will include P.O. Box, telephone numbers (fax, voice,
         e-mail) and company principal(s). Each tenant will receive one copy of
         the directory when updated.

         (b) Tenants are required to comply from time to time with providing
         personnel and strategic data which identifies benchmarks for Science
         Park performance, including but not limited to the number of employees
         hired from New Haven, the neighborhoods and the State of Connecticut;
         education levels; company expansion plans and needs, etc. All data will
         be kept confidential.

         (c) Conference rooms are available on a first come basis free of charge
         to tenants. Notice 72 hours prior to intended usage is required.
         Tenants will be responsible for setting up and returning the room back
         to its previous condition prior to their usage. SPDC will continue to
         be responsible for scheduling of all rooms and reserves the right to
         intervene when, in SPDC's sole judgement, a tenant's excess usage
         impacts other tenants unfairly.

         (d) Upon proper authorization by tenant company management, tenant
         company employees are eligible to use certain Yale facilities and
         services for a fee. Yale Sterling Library cards can be issued without
         charge upon proper authorization. SPDC reserves the right to limit the
         number of Yale library and other cards issued to each company and
         reserves the right to terminate these services.

         (e) Tenants are required to pay all billed charges within 30 days from
         invoice date or they understand service is subject to cut-off until
         charges are paid in full.

         37. AMENDMENTS. Landlord reserves the right to alter and amend these
Rules and Regulations from time to time.

                                       8

<PAGE>

                                    EXHIBIT G

                       LANDLORD'S CLEANING SPECIFICATIONS

<PAGE>

                                    EXHIBIT H

         FORM OF NON-DISTURBANCE, SUBORDINATION AND ATTORNMENT AGREEMENT<PAGE>

                                                                    Exhibit 10.7

                        FIA SERVICE AND EXPENSE AGREEMENT

INTRODUCTION               Our Flexible Investment Annuity (FIA) contract offers
                           you a wide variety of services to make your
                           retirement program a success.

                           Our goal is to provide you with outstanding service.
                           We're so sure we can provide it promptly and
                           accurately, we guarantee it. If you're unhappy with a
                           specific service we provided, just tell us. We
                           promise to fix the problem to your satisfaction. If
                           we're unable to do so, we'll waive the fee paid for
                           that service.

                           This agreement is effective on the indicated date
                           provided we have received the agreement in our
                           corporate center. It replaces all prior service
                           agreements you may have with us for the plan funded
                           by this contract. However, it does not replace any
                           previously signed supplemental agreements. In this
                           agreement you and your means the contractholder. We,
                           us or our means Principal Life Insurance Company (The
                           Principal(R)).

                           If you want more information regarding any of the
                           services described in this agreement, you can:

                           -        Refer to your plan operations guide
                           -        Contact your regional representative
                           -        Contact your pension service associate

                           -----------------------------------------------------
SERVICE PARTNERSHIP        The success of your plan relies on a working
                           partnership between you and The Principal. The terms
                           of the partnership are determined by the services you
                           select. A steady flow of communication between us
                           increases its quality. The services you select fall
                           into three general categories:

                           -        Base services
                           -        Unanticipated events
                           -        Member services

                           -----------------------------------------------------
BASE SERVICES              These services are needed for the daily operation of
                           your plan. The fee for these services is called the
                           Base Fee. We determine the Base Fee each year
                           depending on the services we expect to provide you at
                           the time the annual calculation is performed. You
                           will receive advance notice of your annual Base Fee
                           for each upcoming deposit year. We guarantee the Base
                           Fee for each deposit year. It can only be modified in
                           the event of a Major Business Change.
                           -----------------------------------------------------

                                       1
<PAGE>

BASE SERVICES              Major Business Changes are events that have a
 (CONTINUED)               significant impact on your services. They change the
                           basic contractual agreement between us.

                           Major business changes include:

                           -        Change of plan type
                           -        Plan or contract termination
                           -        Spin-offs or mergers
                           -        A greater than 50% change in the value of
                                    the funds or number of members
                           -        Adding or removing non-proprietary funds

                           If you have a Major Business Change, other than a
                           full contract termination, we'll recalculate your
                           Base Fee for the remainder of the current deposit
                           year.

                           If you choose to terminate your contract, we'll:

                           -        Keep the same basis point for any netted
                                    fees
                           -        Prorate any billed fees based on any plan
                                    funds remaining with us until maturity

                           -----------------------------------------------------
UNANTICIPATED EVENTS       These are situations where you request us to perform
                           additional services unknown at the time of our Base
                           Fee calculation. Fees for Unanticipated Events will
                           be charged at the time they occur. Unanticipated
                           Events may include:

                           -    Supplemental services   -    Compliance services
                           -    Document changes        -    Outside our company
                                                             charges

MEMBER SERVICES            These are requested by the member. These services are
                           not included in the Base Fee and are typically
                           deducted (if applicable) from affected member
                           accounts.

                           Member services are:

                           -        Loan recordkeeping
                           -        Investment direction changes and transfers
                                    submitted non-electronically
                           -        Personal Retirement Account (PRA)

                           -----------------------------------------------------
NOTE                       The Base Fee is calculated using scales that are used
                           for all customers in your classification. A copy can
                           be obtained by contacting us. It will not be changed
                           without notification.

                           -----------------------------------------------------
TERMS OF AGREEMENT         We can modify or withdraw the services provided, the
                           associated expenses, and the service guarantee upon
                           60-days written notice to you.

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

                                       2
<PAGE>

                              BASE SERVICE ELECTION

We offer a wide range of flexible services to meet your retirement plan needs.
We rely on certain information from you in order to provide the services
outlined in this agreement and guarantee our performance. OPTIONS TO BASE
SERVICES MUST BE ELECTED.

CONTRACT ADMINISTRATION/RECORDKEEPING SERVICES

------------------------------------   -------------------------------------
SERVICE WE OFFER                       YOUR ROLE AND ELECTIONS

------------------------------------   -------------------------------------
PERSONAL CONTACTS help set up and      Work with our local and corporate
maintain your plan.                    center service experts.

------------------------------------   -------------------------------------
DIRECTIONS, A GUIDE TO RETIREMENT      Utilize the guide to help with the
PLAN OPERATIONS assists in the         day-to-day activities of your plan.
daily operation of your plan.

------------------------------------   -------------------------------------
EMPLOYER COMMUNICATIONS (such as       Use to stay informed on the latest
BENEFIT EDGE QUARTERLY & FIA           investment and retirement plan
BRIEFLY) help you make informed        issues.
decisions.

------------------------------------   -------------------------------------
MONITOR PLAN REQUIREMENTS such as      Complete data collection requests
minimum distributions, beneficiary     in a timely manner.
designations and vesting records.

------------------------------------   -------------------------------------
EMPLOYER AND MEMBER REPORTS            Report member contributions,
summarize plan activity for the        vesting, enrollment and benefit
period covered.                        event information to us accurately
                                       and timely.

------------------------------------   -------------------------------------
BASE SERVICE ASSUMES:                  OPTIONS TO BASE SERVICE*:

------------------------------------   -------------------------------------
-        Member reports are provided   Provide reports:
         semi-annually.                / /      Annually
                                       /X/      Quarterly
                                       / /      Monthly

------------------------------------   -------------------------------------
-        Member reports are sent to    Send reports to:
         you in bulk.                  / /      You in individual envelopes.
                                       / /      Members' homes (requires
                                                addresses be reported
                                                electronically)

-----------------
* These optional elections impact Base Fee.
                                       3
<PAGE>

------------------------------------   -------------------------------------
SERVICE WE OFFER                       YOUR ROLE AND ELECTIONS

------------------------------------   -------------------------------------
LOCATION RECORDKEEPING services for    Provide member location information
more than one employee group or        and changes.
location may be provided.

------------------------------------   -------------------------------------
BASE SERVICE ASSUMES all               OPTION TO BASE SERVICE*:
communication is handled through       / /      Communication will be handled
one location.                                   through more than one location.

------------------------------------   -------------------------------------
ELECTRONIC SERVICES use technology     Use electronic services provided to
to facilitate the fastest, most        report and obtain plan information.
accurate and cost effective means      Encourage members to transfer
of communication and access to         investments or change investment
information.                           elections electronically as allowed
                                       by the plan.

------------------------------------   -------------------------------------
We provide the following electronic    OPTIONS TO BASE SERVICE:
services:

-        TeleTouch (automated voice    Report via:
         response system)              / /      Tape or diskette*
-        The Principal Retirement      / /      Paper*
         Service Center                / /      EFT Will not be used
-        Internet transactions
-        Electronic data reporting
-        Electronic Funds Transfer
         (EFT)

BASE SERVICE ASSUMES you report via
modem.

------------------------------------   -------------------------------------
MEMBER LOAN RECORDKEEPING              OPTIONS TO BASE SERVICE:

BASE SERVICE ASSUMES we provide loan   / /      Do not provide loan
recordkeeping if your plan allows               recordkeeping services.
loans.
                                       Select loan initiation method:

                                       /X/      TeleTouch
                                       / /      Paper

------------------------------------   -------------------------------------
MEMBER DISTRIBUTIONS AND WITHDRAWALS   Provide complete and timely distribution
                                       information.

------------------------------------   -------------------------------------
PERIODIC PAYMENTS TO INACTIVE MEMBERS  Provide complete termination/retirement
                                       information.

------------------------------------   -------------------------------------
PERSONAL RETIREMENT ACCOUNT (PRA)      Inform us timely of member employment,
maintains funds for inactive           termination or retirement.
members under your contract. We
communicate directly with these
members.

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

-----------------
* These optional elections impact Base Fee.

                                       4
<PAGE>

------------------------------------   -------------------------------------
SERVICE WE OFFER                       YOUR ROLE AND ELECTIONS

--------------------------------------   ---------------------------------------
BASE SERVICE ASSUMES that PRA will be    OPTIONS TO BASE SERVICE:
utilized and benefits are paid without   / /  Your signature is required to
your further consent.                       pay anybenefit.

--------------------------------------   ---------------------------------------
AUTOMATIC PAYMENT of small amounts       Inform us timely of member employment,
based on plan provisions.                termination or retirement.

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

BASE SERVICES ASSUMES that small         OPTIONS TO BASE SERVICE:
amounts benefits will be paid            Your signature is required to pay any
without your further consent.            benefit.

--------------------------------------------------------------------------------
GOVERNMENT COMPLIANCE AND FILING SERVICES
--------------------------------------------------------------------------------

TOP HEAVY DETERMINATION test is          Provide information regarding key
prepared annually and the minimum        employees. Review top-heavy test and
top-heavy contribution is calculated,    notify us if changes are necessary.
if necessary.

--------------------------------------   ---------------------------------------
MINIMUM COVERAGE DETERMINATION          Complete and return census questionnaire
calculation is preformed by an annual   by the date requested.
ratio percentage test. Results will
be included on your Annual Form 5500.

--------------------------------------   ---------------------------------------
SECTION 401(k)/(m) NONDISCRIMINATION     Complete and return the
DETERMINATION test is prepared, if       nondiscrimination test data collection
applicable. We notify you of the         information by the date requested.
results, and calculate and process
refunds if necessary.

--------------------------------------   ---------------------------------------
BASE SERVICE ASSUMES two tests per       PERFORM TEST AT PLAN YEAR END AND
 year.                                   JUNE 30
                                         -------
                                         (insert date)

                                         OPTIONS TO BASE SERVICE*:
                                         / / Perform test at plan year end only.
                                         / / Test is not applicable or not test
                                             is desired.
                                         / / Also perform test on:

                                              ____________ and ____________.
------------------------------------   -----------------------------------------
SECTION 415 LIMIT DETERMINATION test   Complete and return the compensation
is prepared. If a member exceeds the   collection list by the date requested.
limit, we will work with you to
determine the appropriate correction
method.
------------------------------------   -----------------------------------------
-----------------
* These optional elections impact Base Fee.

                                       5
<PAGE>

------------------------------------   -------------------------------------
SERVICE WE OFFER                       YOUR ROLE AND ELECTIONS

--------------------------------------   ---------------------------------------
ANNUAL GOVERNMENT REPORT Form 5500       Complete and return a Form 5500
and attachments will be prepared and     questionnaire each year by the date
mailed to you.                           requested. File completed Form 5500 and
                                         attachments with the IRS.

--------------------------------------   ---------------------------------------
QUALIFICATION PACKAGE will be prepared   File the Application for Determination
for those customers using our prototype  Form with your IRS key district office.
or custom plan document.                 Notify us of any changes needed to your
                                         plan document.

--------------------------------------   ---------------------------------------
ERISA SECTION 404(c) COMPLIANCE          Educate member on their diversified
information is provided to help you      investment options. Give investment
reduce fiduciary liability.              control to plan members.
--------------------------------------------------------------------------------
CONSULTING SERVICES
--------------------------------------------------------------------------------
CONTROLLED GROUP CONSULTATIONS are       Provide us information about the
offered to work with you and your        structure of your company's ownership
legal counsel in determining             and any possible related companies.
controlled group status.

-------------------------------------    ---------------------------------------
REVIEW TRANSFER PLAN DOCUMENTS for       Provide copies of complete prior plan
compliance with current legislation      documents for review.
and regulations and make
recommendations for any amendments.

--------------------------------------  ---------------------------------------
PLAN DESIGN CONSULTATION is offered     Communicate the retirement goals and
providing proposals and                 objectives of you and your plan members.
recommendations to assist you in
meeting your retirement plan goals.

--------------------------------------   ---------------------------------------
EXECUTIVE SUMMARY REPORT highlights      Use to make decisions about future
current and historical data about your   needs of your plan.
retirement plan.

--------------------------------------   ---------------------------------------
DOCUMENTATION SERVICES                   Communicate the plan provisions that
                                         meet your employees' needs.

--------------------------------------   ---------------------------------------
BASE SERVICE ASSUMES we draft your        OPTIONS TO BASE SERVICE:
initial plan document and plan            / /  Do not prepare plan document.
booklets (Summary Plan Descriptions).     /X/  Prepare customized booklets.*
Subsequent requests for document          / /  Do not prepare plan booklets.
services may result in additional
charges.

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

-----------------
* These optional elections impact Base Fee.

                                       6
<PAGE>

------------------------------------   -------------------------------------
SERVICE WE OFFER                       YOUR ROLE AND ELECTIONS

--------------------------------------   ---------------------------------------
ASSET ALLOCATION ASSISTANCE to help      Provide information as requested such
prepare accurate allocations in          as pay, number of hours worked and
accordance with your plan design.        transfer balances.

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

                                       7
<PAGE>

--------------------------------------------------------------------------------
OPTIONAL SERVICES*
--------------------------------------------------------------------------------
SERVICE WE OFFER                          OPTIONAL ELECTIONS
---------------------------------------   -------------------------------------
SPECIAL COMPLIANCE TESTING for Internal   / /  Provide special compliance
Revenue Codes Sections 401(a)(4),              testing.
410(b) and 414(s). Your plan design
will dictate the need for this testing.

---------------------------------------   --------------------------------------
TRUST SERVICES are available through:     / /   Provide Delaware Charter
                                                Guarantee & Trust Company
-   Delaware Charter Guarantee & Trust          passive trust services.
    Company, a subsidiary of Principal
    Life Insurance Company.               / /   Provide Bankers Trust custodial
                                                services.
-   Bankers Trust (Des Moines, IA)
                                          / /   Provide Bankers Trust full trust
                                                services.
--------------------------------------    --------------------------------------
PC TIE-IN to our mainframe computer       / /   PC Tie-in will be used.
(access to limited employee
information).

--------------------------------------    --------------------------------------
ON-SITE ENROLLMENT SERVICES provided      / /   Provide Benefits Counseling
by our benefits counselors, for each            enrollment services.
location with 200 or more eligible
employees.

--------------------------------------    --------------------------------------
ON-SITE RETIREMENT PLANNING SEMINARS      / /   Provide retirement planning
to help employees plan to reach their           seminars.
retirement goals.

--------------------------------------    --------------------------------------
VIDEOTAPES are offered to promote and     / /   Provide enrollment videotapes
educate members on your plan.                   for plan members.

--------------------------------------    --------------------------------------
DEPOSIT DIRECTOR provides five suggested  /X/   Include the Deposit Director
investment mixes for new deposits               mixes on member enrollment form.
based on the member's risk profile.

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

-----------------
* Optional services may require a supplemental service agreement and may have
additional fees. For more information please contact your local representative
or pension service associate.

                                       8
<PAGE>

--------------------------------------   ---------------------------------------
NONPROPRIETARY FUND INVESTMENT           /X/  Recordkeep nonproprietary funds
SERVICES can be provided. We work with        with linkage mutual fund partners.
investment carriers for investments
held outside of The Principal. The       When using linkage mutual fund partners
funds will be recordkept and the         the following electronic services are
values reflected on employer and member  required:
level statements.
                                          -   Electronic data reporting

                                          -   EFT

                                          -   TeleTouch

--------------------------------------   ---------------------------------------
--------------------------------------   ---------------------------------------
LINKAGE MUTUAL FUND SERVICE FEE may be   /X/  Pay the Linkage Mutual Fund
paid to the agent/broker servicing            service fee.
your contract.
--------------------------------------   ---------------------------------------

                                       9
<PAGE>

------------------------------   -----------------------------------------------
COLLECTION METHOD (SELECT ONE)   EXPLANATION AND OPTIONAL PLAN FORFEITURES
                                 ELECTION
------------------------------   -----------------------------------------------
/ /      Billed                  You pay directly. BILLED FEES ARE PAYABLE
                                 WITHIN 30 DAYS, OR THEY WILL BE DEDUCTED FROM
                                 MEMBER ACCOUNTS.

                                 / /  Forfeitures will be used to offset plan
                                      fees.

------------------------------   -----------------------------------------------
/ /      Netted                  Fees are converted to basis points and netted
                                 from investment return (up to allowable
                                 maximum).

                                 / /  Forfeitures will be used to offset plan
                                      fees.

------------------------------   -----------------------------------------------
/ /      Deducted                Fees are deducted from member accounts and
                                 reflected on member reports.

                                 / /  Forfeitures will be used to offset plan
                                      fees.

------------------------------   -----------------------------------------------
/X/      Combination -           You pay a portion of fees directly and a
         Billed/Netted           portion will be netted.

                                 /X/  Amount to bill per deposit year:  $2800
                                 / /  Basis point to net per deposit year ______

                                 Forfeitures will be used to offset plan fees in
                                 the following order:
                                 /X/   Billed, then netted
                                 / /   Netted, then billed

------------------------------   -----------------------------------------------
/ /      Combination -           A specified portion of fees will be deducted
         Deducted/Billed         from member accounts, the rest will be billed.

                                 / /   Amount to deduct per deposit year: $_____
                                 / /   Amount to bill per deposit year: $_______
                                 / /   Amount to deduct per member per deposit
                                       year: $_______

                                 Use forfeitures to offset plan fees in the
following order:

                                 / /   Deducted, then billed
                                 / /   Billed, then deducted

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

                                       10
<PAGE>

--------------------------------------------------------------------------------
MEMBER LEVEL FEES (Deducted from member account unless optional election is
selected.)
--------------------------------------------------   ---------------------------
MEMBER FEE                                           OPTIONAL ELECTIONS

--------------------------------------------------   ---------------------------
Member Loan Recordkeeping                            / /     Billed to you

--------------------------------------------------   ---------------------------
Personal Retirement Account (PRA)                    / /     Billed to you
(unscheduled withdrawals will be collected same as
PRA)

--------------------------------------------------   ---------------------------
Non-Electronic Transactions                          / /     Billed to you

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

FIA SERVICE AND EXPENSE AGREEMENT                  CONTRACT NO. ___________
--------------------------------------------------------------------------------

This agreement is accompanied by FEXP Proposal No. 36-64126359
                                                   -----------
Effective Date of Agreement:  OCTOBER 1, 1999
                              ---------------

--------------------------------------------------------------------------------
BY SIGNING BELOW, I CERTIFY I HAVE RECEIVED, READ AND UNDERSTAND THE
CORRESPONDING MATERIALS THAT DESCRIBE THESE SERVICES AND EXPENSES.

--------------------------------------------------  ---------------------------
CONTRACT HOLDER                                     EMPLOYER

--------------------------------------------------  ---------------------------
LEGAL NAME:  (Pick one)                             LEGAL NAME:

/X/  Trustees of Genaissance Pharmaceuticals, Inc.  GENAISSANCE PHARMACEUTICALS,
                 401(k) RETIREMENT PLAN             INC.
                 --------------------------         ----------------------------
                        (Plan name)

/ /_________________________________________        By:  _______________________
         (employer name if nontrusteed Plan)

By:_________________________________________        Title:  ____________________

Title: /X/ Trustee / / _____________________        Date Signed:  ______________
                         (business title)

Date Signed:  _______________________

--------------------------------------------------  ----------------------------
*  Complete only if trusteed plan.

PRINCIPAL LIFE INSURANCE COMPANY

By: /S/ D.J. DRURY                      Title: CHAIRMAN AND CEO
-------------------------------                ---------------------------------

                                       11
<PAGE>

Additional fees may apply if any work must be redone due to incomplete or
incorrect information. The Principal(R) will only guarantee performance of
services in time to meet deadlines if a request is received at least 60 days
prior to the governmental deadline.

Services we provide are stated or elected in this agreement. If additional
services are requested they will be discussed and reviewed on an individual
basis. Applicable fees will be determined at that time.

You are ultimately responsible for plan fees. If for some reason fees cannot be
collected from other sources as elected by you, they will be billed to you.

                                       12
<PAGE>

                        GENAISSANCE PHARMACEUTICALS, INC.

                                BASE FEE SUMMARY

<TABLE>
<CAPTION>

                             QUARTERLY EMPLOYER
                                   EXPENSE                      EMPLOYEE EXPENSE
  EXPENSE PERIOD               (Dollars Billed)           (Netted From Investment Return)

-----------------------------------------------------------------------------------------
<S>                                 <C>                                <C>
10/01/1999-12/31/2000               $700                               0.94%
</TABLE>

The Employee Expense illustrated above is an annualized expense collected
monthly. Deposit years of less than 12 months will have 1/2th of the annualized
Employee Expense collected each month.

MEMBER FEES (TO BE DEDUCTED FROM MEMBER ACCOUNTS):

Nonelectronic Transactions - $15 per investment direction change and transfer
submitted nonelectronically

                                    --------------------------------------------
                                    This expense summary is for the period of
                                    10/01/1999-12/31/2000 and is based on the
                                    assumptions provided.

                                    We reserve the right to adjust these
                                    expenses if any of the assumptions are
                                    incorrect or should change.

                                    /s/ Kevin Rakin
                                    --------------------------------------------
                                                  (Contractholder)

                                    Executive Vice President
                                    --------------------------------------------
                                                      (Title)

                                    September 9, 1999
                                    --------------------------------------------
                                                       (Date)

                                       13
<PAGE>

                        GENAISSANCE PHARMACEUTICALS, INC.

                                ASSUMPTION REPORT

-        Projection illustrated for an existing Principal customer, Contract
         Number: 4-23112
-        Total annual deposit amount:  $120,000
-        Principal annual deposit amount:  $78,000 (65.00% of total deposits)
-        Annual Linked outside investment deposit recordkept: $42,000 (35.00% of
         total deposits)
-        Total existing assets:  $400,00
-        Principal existing assets:  $260,000 (65.00% of existing assets)
-        Existing Linked outside investment fund recordkept: $140,000 (35.00% of
         transfer assets)
-        Service Begin\Contract Effective Date:  10/01/1999
-        Deposit Year End\Plan Year End Date:  12/31/1999
-        Number of Days left in Deposit Year:  92
-        Rate of Return:  8.50%
-        Expense collection method:  Bill - $2,800, Net remainder
-        Billed expenses will be collected quarterly. Netted expenses will be
         collected monthly.
-        Compensation scale:  ASSET 60
-        Plan and booklet document:  Prate Plus
-        Number of active participants:  24
-        Employee Turnover Rate:  5.00%
-        This is a 401(k) salary deferral plan
-        ADP/ACP tests performed each year:  2
-        Ongoing reporting is sent via Electronic Data Reporting
-        Reports provided quarterly
-        Reports sent to plan sponsor
-        Number of Linked Mutual Funds that Principal recordkeeps:  5
-        Assets invested in Linked Mutual Funds are divided equally between each
         fund
-        Linked Mutual Fund Expense Credit:
<TABLE>

<S>                                               <C>
                  American Century Select         0.25%
                  INVESCO Dynamics                0.25%
</TABLE>

-        Linked Mutual Funds without Expense Credit: T. Rowe Price New Asia
         Vanguard Growth & Income Fund Fidelity Advisor Equity Growth
-        This expense illustration does not include investment management fees
-        This illustration assumes no life policies. Premium paying life
         policies are not allowed. If there are paid-up policies in the plan, an
         additional annual contract charge of $300 applies.
-        Internal Revenue Service (IRS) qualification rules require that a
         401(k) plan be adopted before any salary deferrals are withheld. The
         best way to show timely adoption is to sign the plan document.

                                       14
<PAGE>

The Base Fee for this fund and expense projection calculation is based on the
assumptions listed above, current expense scales and standard contract
implementation procedures. The Base Fee can only be modified in the event of a
Major Business Change. Major Business Changes are events that have a significant
impact on your services. They change the basic contractual agreement between us.
In the event of a Major Business Change, the Base Fee is recalculated for the
remainder of the deposit year. Major Business Changes include:

                  -        Change of plan type
                  -        Partial plan/contract termination
                  -        Spin-offs/mergers
                  -        Greater than 50% changes in assets or number of
                           members
                  -        Adding or removing non-proprietary funds

Unanticipated Events are situations where you request us to perform additional
services unknown at the time of our Base Fee calculation. Fees for Unanticipated
Events will be charged at the time they occur. Unanticipated Events may include:

                  -        Supplemental services
                  -        Compliance services
                  -        Document charges
                  -        Outside our company expenses

                                    --------------------------------------------
                                    This expense summary is for the period of
                                    10/01/1999-12/31/2000 and is based on the
                                    assumptions provided.

                                    We reserve the right to adjust these
                                    expenses if any of the assumptions are
                                    incorrect or should change.

                                    /s/ Kevin Rakin
                                    --------------------------------------------
                                                  (Contractholder)

                                    Executive Vice President
                                    --------------------------------------------
                                                      (Title)

                                    September 9, 1999
                                    --------------------------------------------
                                                       (Date)

                                       15
<PAGE>

REMOVAL OF DIVIDEND SECTION RIDER

This rider is made part of the group annuity contract to which it is attached.
Such group annuity contract is issued by us to you. All terms defined in this
contract have the same meaning where used in this rider.

The effective date of this rider is the latest of (i) July 1, 1998 or (ii) the
date the rider was approved for use in the state of issue of this contract.

This rider modifies the contract by striking SECTION 3--DIVIDENDS from the
General Provisions article of the contract and by renumbering all of the
sections thereafter to reflect the change.

                                            PRINCIPAL LIFE INSURANCE COMPANY

                                            /s/ David J. Drury

                                            CHAIRMAN AND
                                            CHIEF EXECUTIVE OFFICER

<PAGE>

TRANSFER RIDER

This rider IS made part of the group annuity contract to which it is attached.
Such group annuity contract is issued by us to you. All terms defined in the
contract have the same meaning where used in this rider.

The purpose of this rider is (i) to allow for the transfer to this contract of
certain Member account values from another group annuity contract issued by us,
(ii) to preserve the interest guarantees made under such contract and (iii) for
transfers from certain types of contracts, to transfer the withdrawal charge to
which the accounts were subject under the prior contract.

The effective date of this rider is the latest of (i) the Contract Date, (ii)
the date the rider was approved for use in the state of issue of this contract
or (iii) as stated in the amendment adding it to the contract.

This rider modifies the contract as follows:

A.       By adding the following sentence to the end of the definition of
         Composite Guaranteed Rate in Article I, Section 2:

         The Composite Guaranteed Rate in effect for such Guaranteed Interest
         Investments from the date received under this contract until the last
         day of the Guarantee Period (date of payment or application, if
         earlier) will be the rate of interest such accounts would have received
         under the prior contract if the transfer to this contract had not
         occurred.

B.       By adding the following to the end of the definition of Guaranteed
         Interest Investment in Article I, Section 2:

         Transfer Contributions which consist of general account investments
         under the Prior Contract will be held in Guaranteed Interest
         Investments established under this contract for such transfer amounts.

         If the Prior Contract had a benefit floor and we agree to transfer the
         greater of (i) the value of the Member's total account under the Prior
         Contract or (ii) the benefit floor, the amount establishing the
         Guaranteed Interest Investment will be such greater amount.

C.       By adding the following to the definition of Guarantee Period in
         Article I, Section 2:

         The initial Guarantee Period for a Guaranteed Interest Investment
         established by a Transfer Contribution will end on the last day of the
         Deposit Year under this contract closest to the date the guarantee
         period would have ended under the Prior Contract had the transfer to
         this contract not occurred. In the event there is a difference of
         exactly six months between the last day of the Deposit Year under this
         contract and the last day of the deposit year under the Prior Contract,
         the initial Guarantee Period will end on the last day of the Deposit
         Year under this contract which ends just before the date the guarantee
         period would have ended under the Prior Contract.

                                       1
<PAGE>

D.       By adding the following definitions to Article I, Section 2:

         PRIOR CONTRACT means another group annuity contract issued by us to
         you.

         TRANSFER CONTRIBUTION means a Contribution under Article H, Section 1,
         which is a transfer from a Prior Contract and is directed to establish
         a Guaranteed Interest Investment or Separate Account Investment on a
         Member's behalf.

E.       By adding the following as the last paragraph of Article II, Section 4:

         Transfer Contributions which consist of a Member's separate account
         investments under the Prior Contract will be held in the corresponding
         Member's Separate Account Investments established under this contract.

F.       By adding the following as the last paragraph of Article III, Section
         1:

         Any expense charges remaining unpaid under the Prior Contract on the
         date of transfer will become an expense charge under this contract.

G.       By adding the following as Section 5 of Article VI:

         SECTION 5--SPECIAL WITHDRAWAL CHARGE.

         If the Prior Contract was an accumulation group annuity contract, any
         single sum payment made to or on behalf of a Member due to termination
         of the Plan or due to a transfer to another Funding Agent under Article
         VI, Section 1, will be subject to a charge in an amount as follows:

<TABLE>
<CAPTION>

                  ------------------------------------------------------------------------
                            Number of Years                   Percentage of Single
                        This Contract in Effect*                  Sum Payment

                  ------------------------------------------------------------------------
<S>                                                    <C>
                  Less than 1                          7.0
                  ------------------------------------------------------------------------
                  1 but less than 2                    6.3
                  ------------------------------------------------------------------------
                  2 but less than 3                    5.6
                  ------------------------------------------------------------------------
                  3 but less than 4                    4.9
                  ------------------------------------------------------------------------
                  4 but less than 5                    4.2
                  ------------------------------------------------------------------------
                  5 but less than 6                    3.5
                  ------------------------------------------------------------------------
                  6 but less than 7                    2.8
                  ------------------------------------------------------------------------
                  7 but less than 8                    2.1
                  ------------------------------------------------------------------------
                  8 but less than 9                    1.4
                  ------------------------------------------------------------------------
                  9 but less than 10                   0.7
                  ------------------------------------------------------------------------

                                       2
<PAGE>

                  ------------------------------------------------------------------------
                  10 or more                           0.0
                  ------------------------------------------------------------------------
</TABLE>

                  * Includes number of years Prior Contract was in effect

                                      PRINCIPAL LIFE INSURANCE COMPANY

                                      /s/ David J. Drury

                                      Chairman and
                                      Chief Executive Officer

                                       3
<PAGE>

SCHEDULE OF SPECIFICATIONS                                            GA 4-40734

This schedule is a part of the contract to which it is attached. Terms defined
in the contract have the same meaning where used in this schedule.

This is Schedule number 1 , effective OCTOBER 1, 1999. It replaces all previous
Schedules.

PLAN NAME: Genaissance Pharmaceuticals, Inc. 401(K) Retirement Plan

DEPOSIT YEAR: The initial Deposit Year begins on the Contract Date and ends on
DECEMBER 31, 1999. Subsequent Deposit Years begin on JANUARY 1 and the same day
of each following year.

INVESTMENT OPTIONS AVAILABLE:

         GUARANTEED INTEREST INVESTMENTS

         SEPARATE ACCOUNT INVESTMENTS (ELECTED BY YOU)
<TABLE>

<S>                                                           <C>
         Bond and Mortgage Separate Account                   Medium Company Growth Separate Account
         Bond Emphasis Balanced Separate Account              Medium Company Value Separate Account
         Government Securities Separate Account               Money Market Separate Account
         International Emerging Markets Separate Account      Real Estate Separate Account
         International Small Company Separate Account         Small Company Blend Separate Account
         International Stock Separate Account                 Small Company Growth Separate Account
         Large Company Blend Separate Account                 Small Company Value Separate Account
         Large Company Growth Separate Account                Stock Emphasis Balanced Separate Account
         Large Company Value Separate Account                 Stock Index 500 Separate Account
         Medium Company Blend Separate Account                U.S. Stock Separate Account
</TABLE>

         RIDERS AND SPECIAL ATTACHMENTS:

         Separate Account Investment Rider
         Transfer Rider
         Removal of Dividend Rider
         Flexible Investment Annuity Endorsement Rider

NOTATIONS:

--------------------------------------------------------------------------------
(Signatures are not required for the original Schedule 1 issued with the
Contract)

----------------------------------------      ----------------------------------
Contractholder Name                           Registrar

----------------------------------------      ----------------------------------
Title                                         Date

----------------------------------------      ----------------------------------
Date

<PAGE>

FLEXIBLE INVESTMENT ANNUITY ENDORSEMENT RIDER

This rider is made a part of the Group Annuity Contract to which it is
attached. This contract is issued to you, the Contractholder, by us. All
terms defined in the contract have the same meaning where used in this rider.

The purpose of this rider is to clarify certain terms and language in this
contract.

The effective date of this rider will be the latest of the Contract Date, the
date of the amendment adding this rider to the contract, or the date this
rider is approved for use by the state of issue.

1.       This rider adds the following definition in ARTICLE I, SECTION 2--OTHER
         DEFINED TERMS:

         APPLICABLE U.S. TREASURY RATE means the yield associated with the
         average of accepted bids for the U.S. bonds, notes, or bills which will
         mature on the date the Guaranteed Interest Investment would have
         matured. This yield will be those provided by the WALL STREET JOURNAL,
         or a similar publication, or by an agency that provides similar
         information.

         Rates for terms of less than twelve months will not be used. The twelve
         month Treasury rate will be used for any such transaction.

         If the publication or agency does not provide a rate for the date of
         payment or application, this rate will be determined using linear
         interpolation between the rates for the maturities closest to the date
         the Investment would have matured.

2.       This rider deletes the definitions of Guaranteed Interest Rate and
         Guarantee Period found in ARTICLE I, SECTION 2--OTHER DEFINED TERMS,
         and replaces them with the following:

         GUARANTEED INTEREST RATE means the annual rates of interest determined
         and made available by us in advance for Guaranteed Interest Investments
         under contracts of this class from time to time, which, when credited
         and compounded daily, produce the effective annual interest rates. Each
         Guaranteed Interest Investment will be credited with the effective
         annual Guaranteed Interest Rate in effect for it.

         GUARANTEE PERIOD means, for each Guaranteed Interest Investment, the
         period or periods which we make available under contracts of this class
         issued under the same or similar circumstances. We reserve the right,
         in our sole discretion, to change at any time the Guarantee Periods
         available for new Guaranteed Interest Investments; provided, however,
         we will always offer at least one Guarantee Period of at least two
         years. You must provide us with Notification selecting the Guarantee
         Period for each Guaranteed Interest Investment established under this
         contract.

         Once established, the Guarantee Period for a Guaranteed Interest
         Investment will not be changed by us. If a certain Guarantee Period
         will become unavailable for future Contributions, we will notify you at
         least 60 days before the date the use of such Guarantee Period will no
         longer be available.

                                       1
<PAGE>

3.       This rider deletes the first paragraph of ARTICLE II, SECTION
         1--CONTRIBUTIONS, and replaces it with the following:

         Contributions may be accepted under this contract on any Business Day
         on or after the Contract Date, subject to the limitations of the last
         paragraph of this Section and Article VII, Section 13. Contributions
         may be any amount determined or allowed by the Plan and accepted on
         behalf of a Member. Contributions in excess of those determined or
         allowed by the Plan for the current Plan year may be paid to us only
         with our consent We will maintain separate accounting records for each
         type of Contribution, to the extent possible under our procedures.

4.       This rider deletes ARTICLE II, SECTION 6--TRANSFERS BETWEEN
         INVESTMENTS, and replaces it with the following:

         In general, all or a portion of a Member's Investments may be
         transferred to another Investment as of any date requested subject to
         the following:

         a)   All  requests  to transfer  must be received by us at least
              7 Business  Days before the date such transfer is to occur.

              We must receive Notification to transfer from you or the
              Member, as permitted by the Plan. The Notification must specify
              the amount or percentage to be transferred and may specify the
              Investments involved. If a requested transfer from a Member's
              Investments does not specify the Investments to be transferred,
              the Order of Application will determine the Investments to be
              transferred.

         b)   A transfer from a Member's Guaranteed Interest Investment to a
              Separate Account Investment may occur only on a Valuation Date
              of such Separate Account Investment.

         c)   Except as provided in Section 7 of this Article, all transfers
              from a Guaranteed Interest Investment are subject to the charge
              contained in Article VI, Section 3. All transfers are subject
              to the limitations contained in Article VI, Section 4 and the
              Separate Account Investment Rider.

         d)   All Separate Account Investment transfers are subject to the
              provisions of the Separate Account Investment Rider.

         Any transfer under this Section will be an application from the
         Investment as of the date of transfer.

5.       This rider deletes ARTICLE II, SECTION 8--INVESTMENT MANAGER, and
         replaces it with the following:

         As set out in Sections 2 and 6 of this Article, the right to direct the
         split of Contributions between Guaranteed Interest Investments and
         Separate Account Investments and to direct any transfer between these
         Investments is reserved to you and/or the Member, all in accordance
         with provisions of the Plan.

                                       2
<PAGE>
         Application for and issuance of this contract constitutes appointment
         of and acceptance and affirmation by us that (i) we are an "investment
         manager" as described under the Employee Retirement Income Security Act
         of 1974 (ERISA) solely with respect to Plan assets held in Separate
         Accounts under this contract, except for the right reserved in the
         preceding paragraph and (ii) we are qualified to accept such
         appointment and acknowledge that by virtue of such appointment we are a
         fiduciary of the plan for this purpose, within the meaning of ERISA
         with respect to our responsibilities as investment manager.

         The Guaranteed Interest Investments are guaranteed benefit policies, as
         defined in ERISA. We are not an investment manager nor are we any kind
         of ERISA fiduciary with regard to any amounts held under the Guaranteed
         Interest Investments.

6.       This rider deletes ARTICLE V. SECTION 1--WITHDRAWAL BENEFITS,
         Subsection (d), and the first sentence of the next paragraph
         thereafter, and replaces them with the following:

         d)   We reserve the right to limit the number of withdrawals and the
              right to charge for processing such withdrawals; provided,
              however, that two (2) withdrawals will always be available each
              Deposit Year and provided further that any increase in such
              processing charge will not apply to total withdrawals made
              during or at the end of the Guarantee Periods for the
              applicable Guaranteed Interest Investments.

         The amount available will be determined as of the date we receive the
         Notification at our Corporate Center, or at some later date specified
         in the Notification.

7.       This rider deletes the portion of ARTICLE VI, SECTION 3--CHARGES FOR
         EARLY SURRENDER OF A GUARANTEED INTEREST INVESTMENT, which follows
         Subsection (d), and replaces it with the following:

         If all or a portion of a Guaranteed Interest Investment is surrendered
         early, such amount or amounts will be in accordance with the following:

         e)   The interest rate to be used for comparison in f) and g) below
              will be the Applicable U.S. Treasury Rate on the date of
              surrender plus .50%.

         f)   If the interest rate determined in accordance with e) above is
              equal to or less than the Guaranteed Interest Rate for the
              Guaranteed Interest Investment, there is no charge.

         g)   If the interest rate determined in accordance with e) above is
              greater than the Guaranteed Interest Rate for the Guaranteed
              Interest Investment, such charge is equal to:

              1)   the difference between such interest rate on the date of
                   surrender and the Guaranteed Interest Rate multiplied by

                                       3
<PAGE>

              2)   the number of years (including fractional parts of a
                   year) remaining in the Guarantee Period for such Guaranteed
                   Interest Investment multiplied by

              3)   the amount being surrendered.

         If the payment or transfer under this Subsection results in the
         application of all of the Investment, the amount paid or transferred
         will be equal to such Investment reduced by the amount determined under
         g) above.

         If the entire Guaranteed Interest Investment is surrendered, the
         Guaranteed Interest Investment will be reduced on the date of surrender
         and the remainder will be paid or transferred.

         If a portion of the Guaranteed Interest Investment is surrendered, the
         Guaranteed Interest Investment will be reduced by the amount being
         surrendered plus the surrender charge, if any.

8.       This rider deletes ARTICLE VII, SECTION 6- -CONTRACT AMENDMENTS,
         Subsection (c), and replaces it with the following:

         c)   As of any date after the Contract Date, we may amend or change
              the length of the Guarantee Period; the Order of Application;
              the provisions for transferring values between accounts; the
              percentage in Item (a) of Article IV, Section 4; the percentage
              contained in Article VI, Section 3; and the items included in
              the Operating Expenses for Separate Accounts under the Separate
              Account Investment Rider (if such rider is attached to this
              contract). We will give you 60 days written notice of any such
              change.

9.       By adding the following Section 6A to ARTICLE VII--GENERAL PROVISIONS:

         SECTION 6A--EXPENSE GUARANTEES.

         We charge expenses in accordance with Article Ill, but subject to
         Section 6(g)(iii) of this Article. If you choose not to accept an
         expense change, as provided in Section 6(g)(iii), the following will
         occur:

         a)   Cessation of Contributions will occur on the date specified in
              your Notification; provided, however, such date must be before
              or within the 90 day period following the date we receive such
              Notification.

         b)   Separate Account Investments will be transferred to you, if you
              are a trustee, or to the Funding Agent you tell us to, when you
              request such transfer, but in no event more than 90 days after
              the date the new expenses would otherwise take effect for this
              contract.

              If you have not designated the Funding Agent to whom funds are
              to be transferred within the 90 days after the date expenses
              changed, we will pay these funds to you, if you are a trustee
              of the Plan. If you are not Plan trustee, you must

                                       4
<PAGE>

              designate the Funding Agent to whom these amounts are to be
              transferred. Failure to designate an alternate Funding Agent
              within the time allowed by this Section will be deemed to be
              acceptance of the changed expenses for this contract.

         c)   You are not required to transfer any Guaranteed Interest
              Investments during their respective Guarantee Periods. You may
              choose to have Guaranteed Interest Investments mature under
              this contract before transferring any of such amount to another
              Funding Agent. All such amounts must be transferred to another
              Funding Agent or used to purchase annuities hereunder at the
              end of the Guarantee Period of each. The expense rate used to
              calculate expenses on each Guaranteed Interest Investment will
              remain the same as before Notification.

10.      This rider deletes the paragraph under ARTICLE VII, SECTION 14--TERM
         AND TERMINATIONS.. and replaces it with the following:

         Except as provided in Section 13 of this Article, or by any amendment
         to this contract, this contract will continue in force as long as we
         hold Investments under the contract or we are making annuity payments.
         If you transfer all of the Investments under this contract not
         associated with any annuity payments to a Funding Agent, our
         obligations under this contract will cease, except to the extent that
         we are making annuity payments. However, if we discover that we
         underpaid the Funding Agent, we will have the obligation to pay the
         appropriate amount to the Funding Agent.

11.      This rider deletes the second paragraph under ARTICLE VII, SECTION
         15--QUALIFICATION OF PLANS., and replaces it with the following:

         Notwithstanding any other provision in this contract or in any other
         agreement between you and us, if the Internal Revenue Service or a
         court makes a final determination that the Plan no longer qualifies as
         a Qualified Plan, we may require that you transfer all Investments
         invested under this contract to another Funding Agent If we decide that
         you must transfer Investments from this contract, we will send you a
         written notice describing your options. If we do not receive an
         acceptable response Notice from you within five Business Days, we will
         return the Investments held under this contract to you, or if
         appropriate, to a Plan trustee. We will not accept any Notice under
         this Section unless the Notice clearly specifies the Funding Agent to
         receive the Investments.

                                           PRINCIPAL LIFE INSURANCE COMPANY

                                           /s/ David J. Drury
                                           ---------------------------------
                                           CHAIRMAN AND
                                           CHIEF EXECUTIVE OFFICER

                                       5
<PAGE>

SEPARATE ACCOUNT INVESTMENT RIDER

This rider is added to the Group Annuity Contract issued by us of which it is a
part. All terms defined in the contract have the same meaning where used in this
rider. The effective date of this rider is the latest of (i) the Contract Date,
(ii) the date this rider has been approved for use in the state of issue, or
(iii) the date stated in the amendment adding this rider to the contract.

The purpose of this rider is to allow the contract to participate in our
Separate Accounts. We reserve the right to limit both the number of Separate
Accounts available under the contract and the number available to each Member~
The following Separate Accounts may be available under this contract:

         Bond and Mortgage Separate Account
         Bond Emphasis Balanced Separate Account
         Government Securities Separate Account
         International Emerging Markets Separate Account
         International Small Company Separate Account
         International Stock Separate Account
         Large Company Blend Separate Account
         Large Company Growth Separate Account
         Large Company Value Separate Account
         Medium Company Blend Separate Account
         Medium Company Growth Separate Account
         Medium Company Value Separate Account
         Money Market Separate Account
         Real Estate Separate Account
         Small Company Blend Separate Account
         Small Company Growth Separate Account
         Small Company Value Separate Account
         Stock Emphasis Balanced Separate Account
         Stock Index 500 Separate Account
         U.S. Stock Separate Account

Although all Separate Accounts listed above may be available under this
contract, you may send us Notification indicating you want the contract
administered so that assets held under this contract will not participate in one
or more of these Separate Accounts. You may revoke your Notification by sending
us a new Notification.

1.       DESCRIPTIONS OF THE SEPARATE ACCOUNTS. Each Separate Account is a
         pooled Separate Account for use by our retirement plan customers. The
         funds held in each Separate Account will be invested and reinvested by
         us in accordance with applicable law, without regard to any investment
         requirements of our general account assets or of any of our other
         Separate Accounts.

         A Separate Account consists of funds we receive under group annuity
         contracts or policies which permit deposit in such Separate Account and
         under which amounts are directed to such Separate Account. All income
         gains and losses (whether or not realized),

                                       1
<PAGE>

         and expenses from the assets allocated to a Separate Account will be
         credited to or charged against that Separate Account without regard
         to any other income, gains or losses, or expenses we might have for
         our general account or any other Separate Account. The assets of a
         Separate Account will not be charged with any liabilities arising
         out of the investment experience of our general account or any other
         Separate Accounts outside that Separate Account. We may occasionally
         invest the assets of any Separate Account in short term money market
         instruments, cash or cash equivalents.

         BOND AND MORTGAGE SEPARATE ACCOUNT. Bond and Mortgage Separate Account
         is invested primarily in bond and mortgage-type investments similar to
         our general account, including bonds and mortgages from both United
         States and non-United States corporations.

         BOND EMPHASIS BALANCED SEPARATE ACCOUNT. Bond Emphasis Balanced
         Separate Account is invested in other Separate Accounts established and
         maintained by us. The majority of the assets will be invested in other
         Separate Accounts which are invested primarily in bonds, mortgages,
         commercial paper and other fixed income type investments. The remainder
         of the assets of this Separate Account will be invested in one or more
         of our Separate Accounts invested primarily in common stocks and other
         equity investments.

         GOVERNMENT SECURITIES SEPARATE ACCOUNT. Government Securities Separate
         Account is invested primarily in obligations issued or guaranteed by
         United States governmental agencies and instrumentalities, including,
         but not limited to, the Government National Mortgage Association, the
         Federal National Mortgage Association, the Federal Home Loan Mortgage
         Association and the Student Loan Marketing Association.

         INTERNATIONAL EMERGING MARKETS SEPARATE ACCOUNT. International Emerging
         Markets Separate Account is invested primarily in common stocks of
         corporations located in countries outside the United States where
         structural changes are causing rapid economic growth and improved
         standards of living. These investments may be made in either United
         States or foreign currency or equivalencies.

         INTERNATIONAL SMALL COMPANY SEPARATE ACCOUNT. International Small
         Company Separate Account is invested primarily in stocks or other
         securities of small corporations located outside the United States.
         These investments may be made in either United States or foreign
         currency or equivalencies.

         INTERNATIONAL STOCK SEPARATE ACCOUNT. International Stock Separate
         Account is invested primarily in a broad base of stocks or other
         securities of corporations located outside the United States, but
         especially in Europe, North America, and the Pacific rim. These
         investments may be made in either United States or foreign currency or
         equivalencies.

         LARGE COMPANY BLEND SEPARATE ACCOUNT. Large Company Blend Separate
         Account is invested primarily in common stocks from large, established
         companies whose stock exhibits a combination of substantial value and
         good earnings growth potential. The investments may also include
         derivative instruments such as options and futures, other equity
         securities, or other convertible securities that may be converted to
         common stocks.

                                       2
<PAGE>

         LARGE COMPANY GROWTH SEPARATE ACCOUNT. Large Company Growth Separate
         Account is invested primarily in common stocks from large, established
         companies whose earnings are expected to grow at above average rates.
         The investments may also include derivative instruments such as options
         and futures, other equity securities, or other convertible securities
         that may be converted to common stocks.

         LARGE COMPANY VALUE SEPARATE ACCOUNT. Large Company Value Separate
         Account is invested primarily in common stocks from large, established
         companies with below-average price/earnings ratios and above-average
         dividend yields which we view as undervalued by the market. The
         investments may also include derivative instruments such as options and
         futures, other equity securities or other convertible securities that
         may be converted to common stocks. If the market as a whole is
         overvalued, we may hold assets of this account in fixed income
         securities instead of stocks.

         MEDIUM COMPANY BLEND SEPARATE ACCOUNT. Medium Company Blend Separate
         Account is invested primarily in common stocks from medium-sized,
         established companies whose stock exhibits a combination of substantial
         value and good earnings growth potential. The investments may also
         include derivative instruments such as options and futures, other
         equity securities, or other convertible securities that may be
         converted to common stocks.

         MEDIUM COMPANY GROWTH SEPARATE ACCOUNT, Medium Company Growth Separate
         Account is invested primarily in common stocks from medium-sized,
         developing companies whose earnings are expected to grow at above
         average rates. The investments may also include derivative instruments
         such as options and futures, other equity securities, or other
         convertible securities that may be converted to common stocks.

         MEDIUM COMPANY VALUE SEPARATE ACCOUNT. Medium Company Value Separate
         Account is invested primarily in common stocks from medium-sized,
         financially stable companies with below-average price/earnings ratios
         and above-average dividend yields which we view as undervalued by the
         market. The investments may also include derivative instruments such as
         options and futures, other equity securities or other convertible
         securities that may be converted to common stocks. If the market as a
         whole is overvalued, we may hold assets of this account in fixed income
         securities instead of stocks.

         MONEY MARKET SEPARATE ACCOUNT. Money Market Separate Account is
         invested primarily in money market instruments such as the obligations
         of the United States government and its agencies, commercial paper,
         bank certificates of deposit and similar instruments.

         REAL ESTATE SEPARATE ACCOUNT. Real Estate Separate Account is invested
         primarily in real estate such as office buildings, industrial
         buildings, shopping centers, retail stores and similar property.

         SMALL COMPANY BLEND SEPARATE ACCOUNT. Small Company Blend Separate
         Account is invested primarily in common stocks from smaller,
         established companies whose stock exhibits a combination of substantial
         value and good earnings growth potential. The

                                       3
<PAGE>

         investments may also include derivative instruments such as options
         and futures, other equity securities, or other convertible
         securities that may be converted to common stocks.

         SMALL COMPANY GROWTH SEPARATE ACCOUNT. Small Company Growth Separate
         Account is invested primarily in common stocks from smaller, developing
         companies whose earnings are expected to grow at above average rates.
         The investments may also include derivative instruments such as options
         and futures, other equity securities, or other convertible securities
         that may be converted to common stocks.

         SMALL COMPANY VALUE SEPARATE ACCOUNT. Small Company Value Separate
         Account is invested primarily in common stocks from smaller,
         financially stable companies with below-average price/earnings ratios
         and above-average dividend yields which we view as undervalued by the
         market. The investments may also include derivative instruments such as
         options and futures, other equity securities or other convertible
         securities that may be converted to common stocks. If the market as a
         whole is overvalued, we may hold assets of this account in fixed income
         securities instead of stocks.

         STOCK EMPHASIS BALANCED SEPARATE ACCOUNT. Stock Emphasis Balanced
         Separate Account is invested in other Separate Accounts established and
         maintained by us. The majority of the assets will be invested in other
         Separate Accounts which are invested primarily in common stocks and
         other equity investments. The remainder of the assets of this Separate
         Account will be invested in one or more of our Separate Accounts
         invested primarily in bonds, mortgages, commercial paper and other
         fixed income type investments.

         STOCK INDEX 500 SEPARATE ACCOUNT. Stock Index 500 Separate Account is
         invested primarily in stocks and securities of companies whose stocks
         are used to calculate the Standard and Poor's 500 Stock Index (or a
         similar stock index if the Standard and Poor's 500 Stock Index is no
         longer calculated). The investments may also include a reasonable
         amount of stock index futures, commercial paper, derivative securities
         and other types of investments. In addition, some funds may be invested
         in stock index accounts operated by other investment managers. Stock
         Index 500 Separate Account attempts to earn a return that mirrors the
         Standard & Poor's 500 Stock Index.

         U.S. STOCK SEPARATE ACCOUNT. U.S. Stock Separate Account is
         primarily invested in common stocks of United States companies.
         The investments may also include derivative instruments such as
         options and futures, other equity securities or other
         convertible securities that may be converted to common STOCKS.
         The U.S. Stock Separate Account is managed by looking for shifts in
         the economy, industries that stand to benefit from those shifts,
         and companies in those industries that are undervalued by the market.

2.       DETERMINING SEPARATE ACCOUNT VALUES; OPERATING EXPENSES. The value of a
         Separate Account is its market value (appraised market value for Real
         Estate Separate Account) less Operating Expenses, if any. If there is
         no readily available market, its value is the fair market value of the
         assets held in such Separate Account as determined by us using
         generally accepted accounting practices and applicable law. The

                                       4
<PAGE>

         value of all Separate Accounts will always be expressed in U.S.
         dollars. We will determine the value of a Separate Account on each
         Valuation Date.

         OPERATING EXPENSES are those charges which must be paid in order to
         operate a Separate Account or obtain investments for a Separate
         Account. Operating Expenses include, but are not limited to, custodial
         fees, transfer taxes, brokerage fees, processing fees, and other taxes
         and fees associated with the operation of a Separate Account. Operating
         Expenses will be deducted from the Separate Account associated with a
         particular charge on the next Valuation Date after the Operating
         Expenses have been paid or are immediately payable. In accordance with
         our then-current procedures, various Separate Accounts may share in the
         payment of certain Operating Expenses and, in some cases, we may use
         certain fees paid to us by third parties to offset Operating Expenses
         incurred by a Separate Account which would otherwise be payable from
         that Separate Account.

         VALUATION DATE means the date we determine the value of a Separate
         Account Valuation Dates will occur on dates we determine, but at
         least on the last Business Day of a calendar month. Valuation will
         occur at the end of each such day, according to our then-current
         procedures. For purposes of the International Stock Separate
         Account, International Small Company Separate Account, and
         International Emerging Markets Separate Account, only those days on
         which both the value of the underlying investments is determined and
         we are open for business will be Valuation Dates.

3.       MANAGEMENT CHARGES. The Management Charge under each Separate Account
         will be a percentage of the value of assets in such Separate Account,
         subject to the equivalent of a maximum annual percentage listed in the
         Table of Separate Account Features. We reserve the right to change the
         Management Charge to any charge up to the maximum limit at any time by
         giving you written notice at least 30 days before the date the change
         is to take effect.

         MANAGEMENT CHARGE means the charge consisting of the investment
         management charge and the contract expense charge applicable to this
         class of contracts for each Separate Account.

         The assets of Bond Emphasis Balanced Separate Account and Stock
         Emphasis Balanced Separate Account will pay Management Charges under
         our other Separate Accounts in which they are invested. An additional
         Management Charge will be charged under these Separate Accounts only
         for management services actually performed exclusively for assets held
         in these Separate Accounts.

         A prorata charge will be deducted from each Separate Account on each
         Valuation Date for the number of calendar days within the Valuation
         Period ending on such Valuation Date.

         VALUATION PERIOD means the period from the end of a Valuation Date to
         the end of the next following Valuation Date.

                                       5
<PAGE>

4.       SEPARATE ACCOUNT INVESTMENT. A Separate Account Investment is
         established for each Member for a Separate Account for each type of
         Contribution a Member directs to a Separate Account.

         Where Money Market Separate Account is available and we receive
         Notification from you to do so, an Unallocated Separate Investment
         Account will be established for Contributions for which either i) we do
         not have all the necessary information needed to allocate such
         Contributions to individual Members, or ii) you have notified us that
         such Contributions are to be unallocated. If Money Market Separate
         Account is not available, an Unallocated Contribution Investment will
         be established, using a Guaranteed Interest Investment with the
         shortest Guaranteed Period available.

         UNALLOCATED SEPARATE ACCOUNT INVESTMENT means the Investment
         established to hold unallocated Contributions, invested in Money Market
         Separate Account, if available, and operates as if it were a Member's
         Investment.

5.       RETURNS CREDITED TO SEPARATE INVESTMENT ACCOUNTS. Each Separate Account
         Investment established under this contract will be credited with its
         portion of the return associated with the appropriate Separate Account.
         The return for a Separate Account will be based on the change in value
         of that Separate Account less any Management Charge.

         In order to track the returns for the Separate Account Investments
         established under this contract, we will use a unit value system of
         recordkeeping, unless we determine that another recordkeeping system
         would be more appropriate.

6.       UNIT VALUE SYSTEM OF RECORDKEEPING. Under a unit value system of
         recordkeeping, we will calculate the value of a Separate Account
         Investment for each Valuation Date by multiplying the number of
         Separate Account units held in the Separate Account Investment by the
         applicable Unit Value. A Unit Value is the dollar value for one unit.

         Contributions or transfers to a Separate Account Investment increase
         the number of Separate Account units credited to it. Transfers and
         payments from a Separate Account Investment reduce the number of
         Separate Account units. The increase or decrease in the number of
         Separate Account units is calculated by dividing the dollar amount of
         the contribution, transfer, or payment by the applicable Unit Value.

         We will calculate the Unit Value applicable to each Separate Account
         Investment on each Valuation Date. The Unit Value will be based upon
         the total value of the Separate Account and the number of existing
         Separate Account units.

         When crediting Contributions and transfers added to a Separate Account
         Investment we will use the Unit Value applicable to the Separate
         Account Investment for the Valuation Date on which we accept the
         Contribution or transfer. If we accept the Contribution or transfer on
         a date other than a Valuation Date, we will use the Unit Value for the
         next following Valuation Date.

                                       6
<PAGE>

7.       DEPOSITS TO SEPARATE ACCOUNTS; RESTRICTIONS AND ORDER OF ENTRY. We
         reserve the right to defer or stop your ability to direct Contributions
         and transfers to a Separate Account, and we may require you to transfer
         existing account balances out of a Separate Account. We may exercise
         these rights if we

         a)   need to comply with regulation, statute, or decisional law to
              which we are subject,

         b)   believe it would be imprudent not to do so in fulfilling our
              fiduciary role as an investment advisor under ERISA,

         c)   believe the investment approach of the Separate Account no
              longer makes sense, is excessively expensive, or does not
              currently have any favorable investment opportunities
              available, or

         d)   if, in our opinion, continued operation of the Separate Account
              is inappropriate.

         Contributions or transfers directed to a Separate Account that we have
         closed on a temporary or permanent basis will be directed to Money
         Market Separate Account, if available, or to the Guaranteed Interest
         Investment with the shortest Guarantee Period available under the
         contract. If the Separate Account has been closed on a temporary basis,
         we will treat a Contribution or transfer request as a Notification that
         money should be transferred to the closed Separate Account as soon as
         permitted under the terms of the contract.

         PROVISIONS FOR A TEMPORARILY CLOSED SEPARATE ACCOUNT. We have
         established the following order of entry into a Separate Account that
         was temporarily closed, then reopened:

         a)   All amounts held in Money Market Separate Account waiting for
              transfer to the Separate Account.

         b)   Any amounts held in any other Separate Account or in our
              general account which are to be transferred to the Separate
              Account.

         Within each of the above 2 categories, funds will be transferred one
         customer at a time, in order from the oldest waiting Notification to
         the newest Notification.

         Normally, if the amount of the intended transfer is greater than the
         amount open for acceptance by a previously closed Separate Account, the
         entire amount of the transfer will continue to be held in the account
         it was at the time of the request until the Valuation Date when
         complete transfer may be made. However, we and you (the Member, if
         permitted by the Plan) may mutually agree to transfer only a portion of
         the intended amount to the Separate Account.

         We will notify you in writing when amounts have been transferred to
         a reopened Separate Account.

                                       7
<PAGE>

         You or a Member, as permitted by the Plan, may revoke a request for
         transfer of funds to a Separate Account by giving us Notification
         before the date transfer is made. The Notification must also include
         new investment directions for the intended transfer.

         PROVISIONS FOR A PERMANENTLY CLOSED SEPARATE ACCOUNT. We will notify
         you in writing of our intent to permanently close a Separate Account
         You will have 60 days to request transfer as described in 8. BELOW. If
         after 60 days we have not received Notification of where to transfer a
         closed Separate Account balance, we will treat the account as a
         Contribution for which we do not have investment direction.

8.       TRANSFERS AND PAYMENTS FROM A SEPARATE ACCOUNT INVESTMENT. We will,
         upon Notification from you (the Member if permitted by the Plan), and
         subject to our right to defer a transfer or payment as described in
         Section 9,

         a)   transfer to the Member's Guaranteed Interest Investment or
              another Separate Account Investment all or any portion of the
              Separate Account Investment specified, or

         b)   transfer to another Funding Agent all or any portion of the
              Member's Separate Account Investment, or

         c)   pay the Member an amount equal to all or any portion of the
              Member's Separate Account Investment.

         The amount to be paid or transferred will be determined and paid or
         transferred within seven Business Days after (i) the Valuation Date on
         which we receive the Notification, or (ii) a later Valuation Date
         specified in the Notification. Payments and transfers will be made in
         accordance with our then-current procedures. We will notify you in
         writing of these procedures. The amount transferred or paid will be
         deducted from the Separate Account Investment from which such transfer
         or payment was requested on the date of such transfer or payment. Each
         transfer to another Separate Account Investment may occur only on a
         Valuation Date of that Separate Account.

         We are not responsible for the application of amounts transferred to
         another Funding Agent.

9.       LIMITATIONS ON TRANSFERS AND PAYMENTS FROM A SEPARATE ACCOUNT
         INVESTMENT. In general, transfers and payments from a Separate
         Account Investment will be made within seven Business Days after the
         first Valuation Date following the request specified in Section 8 of
         this rider. We reserve the right, however, to defer such transfers
         or payments up to the maximum number of days shown in the Table of
         Separate Account Features for each Separate Account. If we defer any
         transfer or payment under this Section, we will determine the amount
         to be transferred or paid on the date transfer or payment occurs. We
         will notify you in the event of any deferment of more than 30 days
         under the provisions of this Section.

                                       8
<PAGE>

         These limitations will not apply to the payments to the beneficiary of
         a Member due to the Member's death, payments to a Member due to
         disability or retirement under the Plan and to purchases of annuity
         under Article IV, Section 2 of the contract.

         SPECIAL REAL ESTATE LIMITATIONS. Because of the illiquid nature of the
         assets in which Real Estate Separate Account is invested, we reserve
         the right to defer transfers or payments from a Real Estate Separate
         Account Investment if a transfer or payment would exceed the amount of
         cash and other liquid assets held in Real Estate Separate Account,
         reduced by amounts committed to purchase properties or needed for
         Operating Expenses.

         Real Estate Separate Account may be illiquid for indefinite periods of
         time. We will not manage Real Estate Separate Account to provide a
         liquidity pool for requests for transfer or payment. If requests for
         transfer or payment from Real Estate Separate Account are deferred,
         then the deferred transfers or payments, when made, will be made in the
         following order:

         a)   Any death benefits payable under a defined contribution plan.

         b)   All or a portion of each of the other requests for payment,
              determined as follows:

              i)   the amount of the request, divided by

              ii)  the amount of all waiting requests, multiplied by

              iii) amount we determine to be available to pay requests;
                   provided, however, that no more than the amount of
                   the request shall be paid out.

         Deferred transfers or payments, when paid, will be made as of a
         Valuation Date and will be based on the Real Estate Separate Account
         Unit Value as of the date paid. In determining the amount available to
         pay requests, we will subtract amounts payable under any other group
         annuity contract which requires that we make payments from the Real
         Estate Separate Account using a method other than the one described in
         this Section.

         We reserve the right to make payments in a different manner than
         described in this Section if we (i) are required to do so under
         applicable statutes, regulations, or decisional law to which we are
         subject, (ii) must do so to comply with our fiduciary responsibilities
         as an ERISA investment manager as described in Article II, Section 8,
         or (iii) deem it necessary to make a change to maintain an equitable
         distribution of assets under all of our group annuity contracts. We
         will not implement a change under item (iii) before the notice to all
         affected contractholders is provided and the appropriate time period
         after the notice has elapsed.

         SPECIAL LIMITATION FOR CERTAIN SEPARATE ACCOUNTS. We reserve the right
         to make the portion of a requested transfer in excess of the specified
         dollar limit in substantially equal monthly installments over a period
         not to exceed the specified period, if, in the specified period which
         ends on the requested date of transfer, all transfers and payments from
         the total of all Separate Account Investments invested in a particular
         Separate Account which is subject to the dollar limit total the
         specified dollar limit or more. For purposes of this

                                       9
<PAGE>

         limitation, transfers and payments from any other Separate Account
         investments or funds included in the Separate Account from any other
         contracts or policies issued in connection with the Plan or with any
         other retirement plan of the Employer will be included as a transfer
         or payment from a Separate Account Investment. If this limitation is
         imposed by us, the first installment will be made one month after
         the date of request, or on such later date that you specify. The
         specified dollar limit and period are:

         a)   $1,000,000 and twelve months, respectively, for International
              Stock Separate Account, International Small Company Separate
              Account, International Emerging Markets Separate Account, and
              Stock Index 500 Separate Account.

         b)   $20,000,000 and 36 months, respectively, for Bond Emphasis
              Balanced Separate Account, Government Securities Separate
              Account, Large Company Blend Separate Account, Large Company
              Growth Separate Account, Large Company Value Separate Account,
              Medium Company Blend Separate Account, Medium Company Growth
              Separate Account, Medium Company Value Separate Account, Small
              Company Blend Separate Account, Small Company Growth Separate
              Account, Small Company Value Separate Account, Stock Emphasis
              Balanced Separate Account, and U.S. Stock Separate Account.

10.      PLANS WHICH MAY INVEST IN THE SEPARATE ACCOUNTS. The Separate
         Accounts are not registered with the federal Securities and Exchange
         Commission and therefore only Plans which meet certain requirements
         under the Code may invest in the Separate Accounts. If the Internal
         Revenue Service or a court makes a final determination that the Plan
         no longer qualifies as a Qualified Plan, we will require that you
         transfer any assets invested in the Separate Accounts. If we decide
         that you must transfer assets from the Separate Accounts, we will
         send you a notice describing your options. Your Notification must
         clearly specify the Guaranteed Interest Investment(s) or the Funding
         Agent to which you want the assets transferred. If we do not receive
         an acceptable Notification from you within 5 Business Days, we will
         transfer the assets to the Guaranteed Interest Investment with the
         shortest duration.

11.      FUNDS. We are the sole owner of all assets held in the Separate
         Accounts.

                                           PRINCIPAL LIFE INSURANCE COMPANY

                                           /s/ David J. Drury
                                           --------------------------------
                                           CHAIRMAN AND
                                           CHIEF EXECUTIVE OFFICER

                                       10
<PAGE>

                       TABLE OF SEPARATE ACCOUNT FEATURES
<TABLE>
<CAPTION>
                                 CURRENT ANNUAL MANAGEMENT    MAXIMUM ANNUAL MANAGEMENT     MAXIMUM NUMBER OF DAYS
                                     CHARGE PERCENTAGE            CHARGE PERCENTAGE       ALLOWED TO DEFER TRANSFERS
                                                                                                  OR PAYMENTS
                                 -------------------------    -------------------------   --------------------------
<S>                               <C>                          <C>                         <C>
Bond Emphasis Balanced                     None                         2.00*                         270
Separate Account
Bond and Mortgage                          0.45                         2.00                          270
Separate Account
Government Securities                      0.45                         2.00                          90
Separate Account
International Emerging                     0.69                         2.00                          270
Markets Separate Account
International Small                        0.69                         2.00                          270
Company Separate Account
International Stock                        0.69                         2.00                          270
Separate Account
Large Company Blend                        0.45                         2.00                          270
Separate Account
Large Company Growth                       0.45                         2.00                          270
Separate Account
Medium Company Blend                       0.45                         2.00                          270
Separate Account
Medium Company Growth                      0.45                         2.00                          270
Separate Account
Medium Company Value                       0.45                         2.00                          270
Separate Account
Money Market Separate                      0.45                         2.00                          90
Account
Real Estate Separate                       1.05                         None                      Indefinite
Account
Small Company Blend                        0.45                         2.00                          270
Separate Account
Small Company Growth                       0.45                         2.00                          270
Separate Account
Small Company Value                        0.45                         2.00                          270
Separate Account
Stock Emphasis Balanced                    None                         2.00*                         270
Separate Account
Stock Index 500 Separate                   0.35                         2.00                          270
Account
U.S. Stock Separate                        0.45                         2.00                          270
Account
</TABLE>

* The maximum annual Management Charge percentage includes Management Charges
paid under this Separate Account (currently none) and the Separate Accounts in
which this Separate Account is invested.

                                       11

<PAGE>

SCHEDULE OF SPECIFICATIONS

RIDERS TO THE CONTRACT

TABLE OF CONTENTS

<TABLE>
<CAPTION>
ARTICLE 1                           DEFINITIONS

<S>                                 <C>
Section 1                           Parties to this Contract
Section 2                           Other Defined Terms

ARTICLE II                          CONTRIBUTIONS, INVESTMENTS AND ACCOUNTS

Section 1                           Contributions
Section 2                           Investment Direction
Section 3                           Guaranteed Interest Investments
Section 4                           Separate Account Investments
Section 5                           Nonvested Funds Accounts
Section 6                           Transfers Between Investments
Section 7                           Maturing Guaranteed Interest Investments
Section 8                           Investment Manager
Section 9                           Funds

ARTICLE III                         EXPENSES

Section 1                           Expenses
Section 2                           Billed Expenses
Section 3                           Deducted Expenses
Section 4                           Alternative Expense Deductions
Section 5                           Expenses for Certain Members and Beneficiaries
Section 6                           Associated Contracts

ARTICLE IV                          BENEFIT EVENTS AND OPTIONS

Section 1                           Benefit Events
Section 2                           Annuity Benefits
Section 3                           Single Sum Payments
Section 4                           Full Flexibility Option
Section 5                           Modification in Mode of Payment of Income
Section 6                           Facility of Payment
Section 7                           Assignment

ARTICLE V                           OTHER BENEFITS

Section 1                           Withdrawal Benefits

ARTICLE VI                          TRANSFER TO ANOTHER FUNDING AGENT; CESSATION;
                                    CHARGES AND LIMITATIONS
</TABLE>

                                       1

<PAGE>

<TABLE>
<CAPTION>
<S>                                 <C>
Section 1                           Transfer to Another Funding Agent
Section 2                           Cessation of Contributions
Section 3                           Charges for Early Surrender of a Guaranteed Interest Investment
Section 4                           Limitations on Transfers and Payments from Guaranteed Interest
                                    Investments

ARTICLE VII                         GENERAL PROVISIONS

Section 1                           Certificates
Section 2                           Beneficiary
Section 3                           Dividends
Section 4                           Plan and Plan Amendments
Section 5                           Contract
Section 6                           Contract Amendments
Section 7                           Waiver and Modification
Section 8                           Information, Proofs and Determination of Facts
Section 9                           Reliance on Instructions
Section 10                          Single Payment
Section 11                          Overpayment
Section 12                          Ownership
Section 13                          Termination and Cash Out of Contract
Section 14                          Term and Termination
Section 15                          Qualification of Plans
Section 16                          Our Relationship to the Plan
</TABLE>

                                       2

<PAGE>

ARTICLE 1--DEFINITIONS

SECTION 1--PARTIES TO THIS CONTRACT.

This contract is between the Contractholder and Principal Life Insurance
Company.

CONTRACTHOLDER means the holder of this contract named on the face page and will
be referred to in this contract as you or your.

Principal Life Insurance Company will be referred to in this contract as we, us,
or our.

SECTION 2--OTHER DEFINED TERMS.

ACCOUNT means the total of a Member's Guaranteed Interest Investments and
Separate Account Investments.

ANNUITY PREMIUM means the amount applied to purchase an annuity for a Member.

ANNUITY PURCHASE DATE means the date on which the Account of a Member is applied
to purchase an annuity benefit for the Member.

ANNUITY START DATE means the beginning date for annuity benefits to a Member.

ASSOCIATED CONTRACT(S) means this contract and any other group annuity
contract(s) issued by us which we have agreed in writing to treat as Associated
Contracts.

BENEFIT EVENT means, depending upon Plan provisions, termination of employment,
Retirement Date, disability (as defined in the Plan) or death. We may require
any proof of a Benefit Event we deem necessary.

BUSINESS DAY means a day on which both we and the New York Stock Exchange are
open for business, or any other day which we agree will be a Business Day. If
you request a list of our Business Days for any calendar year, we will provide
you with the list.

CODE means the Internal Revenue Code of 1986. as amended, and the regulations
thereunder. Reference to the Code means such Internal Revenue Code or the
corresponding provisions of any subsequent revenue code and any regulations
thereunder.

COMPOSITE GUARANTEED RATE means, on any date, the rate determined for each of
the Member's Guaranteed Interest Investments which is based on the Guaranteed
Interest Rate in effect on the date we accept the Contribution or transfer. If
more than one Contribution or transfer is accepted during a Deposit Year, the
Composite Guaranteed Rate for such Investment will be determined based on the
amount and timing of Contributions or transfers and the amount of any payment or
application on or before the end of the Deposit Year in which the Contributions
or transfers were accepted. At the end of Deposit Year, that year's Guaranteed
Interest Investments close. Each Guaranteed Interest Investment then earns the
Composite Guaranteed Rate determined for it, compounded annually, until the end
of the Guaranteed Period.

                                       1
<PAGE>

CONTRACT DATE means the date this contract is effective, as shown on the face
page.

CONTRIBUTIONS means funds we receive and accept under Article, II, Section 1.
The types of Contributions are those allowed by the Plan.

CORPORATE CENTER means our offices at 711 High Street, Des Moines, Iowa, 50392,
or any other office or address to which we direct you to send Contributions.

DEPOSIT YEAR means the period (not to exceed 12 months) selected for the
crediting of interest to Guaranteed Interest Investments established under this
contract, as shown on the Schedule.

EMPLOYER means the corporation(s) or firm(s) named as employer in the Plan and
any successor by change of name, merger, purchase of stock, or purchase of
assets.

ERISA means the Employee Retirement Income Security Act of 1974, as amended, and
the regulations issued by the U.S. Department of Labor.

FUNDING AGENT means an insurance company, trustee or custodian designated by you
and authorized to transfer or receive any amount(s) transferred to or from this
contract and to apply such amount(s) for the exclusive benefit of Plan Members,
without any obligation on our part as to such application. Funding Agent will
also mean Principal Life Insurance Company when you direct us to transfer such
amounts from this contract to another group annuity contract issued by us.

GUARANTEED INTEREST INVESTMENT means the investment established for a Member for
each Deposit Year for each Contribution type as described in Article II, Section
3.

GUARANTEED INTEREST RATE means the annual rate of interest we declare from time
to time for contracts of this class for each Contribution to a Guaranteed
Interest Investment.

GUARANTEE PERIOD means the period for which a Guaranteed Interest Investment
exists. The period or periods available may be any that we offer to contracts of
this class under the same or similar circumstances. Currently, Guarantee Periods
of two through seven years are available. We reserve the right to change, at any
time, the Guarantee Periods available for new Contributions and transfers,
including transfers from existing Guaranteed Interest Investments. We reserve
the right to limit both the number of Guarantee Periods available under this
contract and the number available to each Member.

You must give us Notification of the Guarantee Periods you select from those
available under the contract. Your selection will remain in effect until
modified by (b) and (c) below.

Our rights to change and to limit the Guarantee Periods available are subject to
the following:

         a)       Once established by us, the Guarantee Period for a particular
                  Guaranteed Interest Investment may not be changed by us.
                  However, a different Guarantee Period may apply to amounts
                  maturing from such account.

                                       2
<PAGE>

         b)       If a particular  Guarantee  Period is no longer  offered,  we
                  will notify you at least 60 days in advance.

         c)       For each Deposit Year, you have the right to select Guarantee
                  Periods or to change the selection of Guarantee Periods
                  available to Members by giving us Notification before the
                  beginning of the Deposit Year for which the selection applies.
                  The selections for a Deposit Year cannot be changed after its
                  start.

INACTIVE MEMBER ACCOUNT means the Account of an Inactive Member.

INVESTMENTS means the Guaranteed Interest Investments and/or Separate Account
Investments of the Member.

MEMBER means a person entitled to benefits under the Plan for whom an Account
exists under this contract. A Member will be considered either active or
inactive, as follows:

         a)       Active Member-a person who is actively participating in the
                  Plan or an alternate payee of a person who is actively
                  participating in the Plan pursuant to a Qualified Domestic
                  Relations Order.

         b)       Inactive Member-a Member who is not an Active Member

MEMBER ACCOUNT means the Account of a Member.

NONVESTED FUNDS ACCOUNT means the accounts established to hold certain Plan
funds as described in Article II, Section 5. These accounts will operate in the
same manner as a Member Account for the purpose of transfers.

NORMAL RETIREMENT DATE means the date, determined by the Plan, on which the
Member's normal retirement benefit will begin. If the Plan does not specify, it
will be the first day of the month on or after the later of (I) the Member's
65th birthday or (ii) the fifth anniversary of the time a Member began
participation in the Plan.

NOTIFICATION means a form of notice approved by us, including written forms,
electronic transmissions, facsimiles or photocopies. We will notify you
regarding the acceptable forms of notice we will allow. At our discretion, we
may require that a specific form of notice be used in a particular case or that
a particular notice be confirmed. Notification will also include the terms
Notice, Notify and Notified.

ORDER OF APPLICATION means the order in which we will apply the Investments of a
Member when a partial transfer or withdrawal of a portion of the Member's
Account has been requested and no other order of application has been reported
to us. The amount withdrawn or transferred from the Member's Guaranteed Interest
Investments, if any, and Separate Account Investments, if any, will be based on
the relative value of each such Investment to the Member's Account. The amount
withdrawn or transferred from Guaranteed Interest Investments will be from the
current Guaranteed Interest Investment first, then from each preceding
Guaranteed Interest Investment, with the oldest Guaranteed Interest Investment
being last applied. The amount

                                       3
<PAGE>

withdrawn or transferred from Separate Account Investments will be based on the
relative values of each Separate Account Investment.

PLAN means the Employer's retirement plan in effect on the date this contract is
executed and as amended from time to time, which the Employer has designated to
us in writing as the plan funded by this contract The name of the Plan is shown
in the Schedule.

QUALIFIED DOMESTIC RELATIONS ORDER means a Qualified Domestic Relations Order as
defined in Internal Revenue Code Section 414(p)(1)(A).

QUALIFIED PLAN means a pension plan qualified under Section 401 of the Code, a
governmental plan meeting the requirements of Section 457 of the Code, and any
other plans which we determine may appropriately invest money in this contract.

RETIREMENT DATE means the Member's early, normal or late retirement date under
the Plan.

SCHEDULE OF SPECIFICATIONS means the schedule attached to and made part of this
contract. The Schedule of Specifications lists pertinent information and will be
referred to as the Schedule in this contract.

SEPARATE ACCOUNT means one or more Separate Accounts described in the Separate
Account Investment Rider and listed on the Schedule. If no Separate Account
Rider is attached to this contract and no Separate Accounts are listed on the
Schedule, this contract may not participate in any Separate Accounts.

SEPARATE ACCOUNT INVESTMENT means the investment or investments established for
a Member as described in Article II, Section 4.

UNALLOCATED CONTRIBUTION INVESTMENT means the investment established to hold
Contributions which cannot be allocated to individual Members on the date we
accept them pursuant to Article II, Section 1 or Section 5. Unless we give you
written notice to the contrary, the Unallocated Contribution Investment will be
invested in Money Market Separate Account, if available, otherwise in a
Guaranteed Interest Investment with the shortest Guarantee Period available.

                                       4
<PAGE>

ARTICLE II--CONTRIBUTIONS, IN VESTMENTS AND ACCOUNTS

SECTION 1--CONTRIBUTIONS.

Contributions may be accepted by us under this contract on any Business Day on
or after the Contract Date, subject to the limitations of the last paragraph of
this Section and Article VII, Section 13. Contributions may be any amount
determined or allowed by the Plan and accepted by us on behalf of a Member.
Contributions in excess of those determined or allowed by the Plan for the
current Plan year may be paid to us only with our consent. To the extent
Permitted by our then-established procedures we will maintain separate
accounting records for each type of Contribution.

All Contributions are payable directly to us at our Corporate Center.
Contributions will be credited to Member Investments or the Unallocated
Contribution Account as of the Business Day on which we accept the Contribution,
in accordance with our then-current procedure for crediting Contributions under
all contracts of this class. We will inform you in writing of our current
procedures for crediting Contributions.

We reserve the right to limit or refuse further Contributions under this
contract. We will give you written notice at least 60 days before the date after
which further Contributions will be limited or refused by us.

SECTION 2--INVESTMENT DIRECTION.

Each type of Contribution made on behalf of a Member may be directed to the
Guaranteed Interest Investments described in Section 3 of this Article, to any
number of the Separate Account Investments described in Section 4 of this
Article, or to any combination of such investments. We must have Notification of
investment direction from you or, if the Plan permits, from the Member, for the
portion of each type of Contribution to be held in each Investment. You do not
need to approve each Member investment transfer or change of investment
direction unless you have reserved the right to do so under the Plan.
Contributions will be added to each Investment in the amount or percentage
specified in the investment direction on file with us. Future Contributions may
be directed to different Investments or the amount directed to an Investment may
be changed by filing a new Notification or investment direction with us. If a
Contribution is received for a Member for whom no Notification of investment
direction is on file with us, we will direct that Contribution to the Member's
Money Market Separate Account Investment, if available, otherwise to the
Member's Guaranteed Interest Investment with the shortest Guarantee Period then
available under the contract.

SECTION 3--GUARANTEED INTEREST INVESTMENTS.

A Guaranteed Interest Investment will be established for a Member for each type
of Contribution and transfer directed to that investment for each Deposit Year.
A separate Guaranteed Interest Investment will be established for each, Deposit
Year for each Guarantee Period used to hold each type of Contribution directed
to these investments. No further Contributions or transfers will be credited to
a Guaranteed Interest Investment after the close of the Deposit Year in which it
was established.

                                       5
<PAGE>

The value of a Guaranteed Interest Investment of a Member at any time during its
Guarantee Period will be equal to the sum of all Contributions and transfers to
it plus interest less any payments or transfers. Interest will be credited to
the investment daily and compounded annually on the last day of each Deposit
Year. The rate of interest credited will be the Composite Guaranteed Rate
determined for such Investment.

A Guaranteed Interest Investment will be paid or applied in full at the end of
its Guarantee Period as described in Section 7 of this Article.

SECTION 4--SEPARATE ACCOUNT INVESTMENTS.

The Separate Account Investment Rider attached to this contract describes each
Separate Account The Schedule lists the Separate Accounts available under this
contract. Unless you direct us otherwise, Members will be allowed to participate
in all listed investments. A Separate Account Investment will be established for
each Member for each type of Contribution directed to each Separate Account in
which this contract participates.

If no Separate Account Investment Rider is attached to the contract and no
Separate Accounts are listed on the Schedule, no Separate Account Investments
are available.

SECTION 5--NON VESTED FUNDS ACCOUNTS.

Nonvested Funds Accounts will be established to hold the nonvested portion of
Inactive Member Accounts and other Plan funds which we mutually agree to include
in Nonvested Funds Accounts. Nonvested Funds which are reserves of an annuity
cancelled under Subsection (3) of Article IV, Section 2, will be invested
according to our then-current procedures. Other Nonvested Funds will be invested
as they were prior to their transfer to Nonvested Funds Accounts. However, by
giving Notice to us, you may change the investment direction of Nonvested Funds
which are not reserves.

Nonvested portions of Inactive Member's Accounts will be held in the Nonvested
Funds Accounts until a forfeiture occurs under the Plan. Nonvested Funds will be
applied according to Plan provisions on the earliest possible date. Any amounts
reallocated to a Member because of this Section will be considered a
Contribution under Section 1 of this Article, and the provisions of Sections 1
and 2 will apply.

SECTION 6--TRANSFERS BETWEEN INVESTMENTS.

In general, all or a portion of a Member's Investments may be transferred to
another Investment as of any date requested subject to the following:

         a)       We must receive Notification to transfer from you or the
                  Member, as permitted by the Plan. The Notification must
                  specify the amount or percentage to be transferred and may
                  specify the Investments involved. If a requested transfer from
                  a Member's Investments does not specify the Investments to be
                  transferred, the Order of Application will determine the
                  Investments to be transferred.

                                       6
<PAGE>

         b)       A transfer from a Member's Guaranteed Interest Investment to a
                  Separate Account Investment may occur only on a Valuation Date
                  of such Separate Account Investment.

         c)       Except as provided in Section 7 of this Article, all transfers
                  from a Guaranteed Interest Investment are subject to charge
                  contained in Article VI, Section 3. All transfers are subject
                  to the limitations contained in Article VI, Section 4 and the
                  Separate Account Investment Rider.

         d)       All Separate Account Investment transfers are subject to the
                  provisions of the Separate Account Investment Rider.

Transfers will be made in accordance with our then-current procedures. Any
transfer under this Section will be an application from the Investment as of the
date of transfer.

SECTION 7--MATURING GUARANTEED INTEREST INVESTMENTS

On the day after the last day of its Guarantee Period, each Guaranteed Interest
Investment of a Member which has not been paid or transferred in full before the
end of its Guarantee Period will be transferred to a current Guaranteed Interest
Investment for that Guarantee Period, if available. If that Guarantee Period is
no longer available, then, unless otherwise directed by Notification, we will
transfer to a current Guaranteed Interest Investment with the shortest Guarantee
Period then available under the contract.

In lieu of the transfer described above, we will pay or transfer all or a part
of the Investment in accordance with any Notification received before the end of
such Guarantee Period.

SECTION 8--INVESTMENT MANAGER

As set out in Sections 2 and 6 of this Article, the right to direct the split of
Contributions between Guaranteed Interest Investments and Separate Account
Investments and to direct any transfer between these Investments is reserved to
you and/or the Member, all in accordance with provisions of the Plan.

Your application for and our issuance of this contract constitutes your
appointment of and our acceptance and affirmation that:

         a)       in discharging  our duties under this contract we will act at
                  times as an "investment manager", except for the rights
                  described in the preceding paragraph, and

         b)       we meet the qualifications needed to accept that appointment
                  and we acknowledge that by virtue of that appointment we will
                  exercise fiduciary duties with respect to the Plan.

For purposes of this section, the term "investment manager" has the same meaning
as that term has under ERISA. Our role as investment manager and the acceptance
of the accompanying fiduciary duties extends only to our management of assets
which fall within the term "plan

                                       7
<PAGE>

assets" as used in ERISA, and we undertake no other fiduciary responsibilities
required to administer or maintain the Plan.

SECTION 9--FUNDS

We are sole owner of all funds received under this contract. All Guaranteed
Interest Investments we received under this contract are and remain a part of
our general account without any duty or requirement of segregation or separate
investment on our part. Separate Account Investments will be held as stated in
the rider describing such Separate Account Investments.

                                       8
<PAGE>

ARTICLE III--EXPENSES

SECTION 1--EXPENSES.

Expense charges will be determined by us periodically, but at least annually, in
accordance with the written service agreement we have with you. The amount of
such charges will be made up of the following:

         a)       Compensation paid or payable by us to the soliciting agent
                  named by you.

         b)       A general administration expense charge.

         c)       A recordkeeping expense charge.

         d)       Document charges.

         e)       Other charges may be made for services you ask us to do that
                  are not covered by (a) through (d). For example, there will be
                  a charge for preparing unusual material or additional
                  services. We will inform you of the charges for such services
                  before we perform them.

SECTION 2--BILLED EXPENSES.

Expenses will be paid to us directly at our Corporate Center, unless deducted
under Section 3 of this Article. We will send you a statement of these charges
periodically in accordance with our written service agreement with you. Such
charges must be paid within 31 days from the date of the statement. If the
expense charges are not paid within 31 days after the statement date, we may
deduct all outstanding expenses from the appropriate Accounts under this
contract. If this automatic deduction of expenses occurs twice in any
twenty-four month period, we may deduct expenses from the accounts as described
in Section 3 of this Article thereafter until a new written service agreement is
completed with us.

SECTION 3--DEDUCTED EXPENSES.

In your written service agreement with us (or as provided in Section 2 of this
Article), an election may be made to have some or all of the expense charges
(described in Section 1 above) deducted from Member Accounts instead of having
these charges paid separately.

SECTION 4--ALTERNATIVE EXPENSE DEDUCTIONS.

As an alternative to direct deduction of expenses from Member Accounts, you may
choose in the service agreement we have with you to have some or, within our
then-current guidelines, all expenses paid by an investment return reduction to
Member Accounts. Periodically we will determine the expense charges incurred and
reduce them by the amount recovered through the investment return reduction. Any
remaining expenses will be billed or deducted in accordance with Section 2 or 3
of this Article.

                                       9
<PAGE>

SECTION 5--EXPENSES FOR CERTAIN MEMBERS AND BENEFICIARIES.

Additional expenses for services provided to (i) Members and beneficiaries who
have elected the Full Flexibility Option and (ii) Inactive Members may be
recovered by an investment reduction to the Accounts of such Members and
beneficiaries covered under contracts of this class. Periodically we will
determine the amount of the reduction necessary to recover the charges incurred.
Any remaining expenses will be billed or deducted in accordance with Section 2
or 3 of this Article.

SECTION 6--ASSOCIATED CONTRACTS.

We may agree to take into account any Associated Contracts for the purpose of
determining the expenses charged under such contracts. The charges under an
Associated Contract will not be greater than if it were not an Associated
Contract.

ARTICLE IV---BENEFIT EVENTS AND OPTIONS

SECTION 1--BENEFIT EVENTS.

Benefits may be payable to a Member for whom a Benefit Event has occurred under
the Plan. You must give us Notification of the Benefit Event. A Member may elect
any one or more of the following options, as permitted by the Plan:

         a)       Annuity benefits.

         b)       Single sum payment.

         c)       Full Flexibility Option.

If the Member does not elect a complete distribution of the Member's Account,
the remainder of the Member's Account will remain under the contract until the
earlier of the date the Member elects to receive benefits under one or more of
the options above or the date the contract terminates. The Member's Guaranteed
Interest Investments and Separate Account Investments will continue to operate
in the same manner.

SECTION 2--ANNUITY BENEFITS.

If permitted by the Plan, a Member may elect to have an annuity benefit
purchased as long as the annuity benefit complies with Plan provisions and all
of the following:

         a)       All or a portion of the Member's Account may be used to
                  provide an annuity.

         b)       The Member must give us Notification to provide the annuity.

         c)       We will not issue an annuity unless the amount applied to
                  establish the annuity equals or exceeds $3,500. When
                  determining the $3,500 amount we will include the current
                  amount used to establish the annuity plus all previous amounts
                  applied to establish an annuity under this contract or any
                  other group annuity contract

                                       10
<PAGE>

                  issued to you. Upon 60 days written notice to you, we may
                  increase the $3,500 amount. We will not increase the amount
                  above the maximum amount which a Qualified Plan I may
                  distribute to a Member or beneficiary without his or her
                  prior consent.

         d)       All annuities will be fixed dollar annuities.

         e)       The form of benefit and the contingent annuitant named (if
                  any) cannot be changed after the Annuity Purchase Date.

         f)       By written agreement with you, we may provide any options
                  permitted by the Plan.

SUBSECTION (1)--AMOUNT OF ANNUITY BENEFIT. The amount of annuity purchased under
this Article and payable to a Member will be determined by us based on:

         a)       I the Annuity Premium,

         b)       the annuity form chosen,

         c)       the age of the Member,

         d)       the Annuity Start Date,

         e)       the age of the contingent annuitant (if any),

         f)       the frequency of payments, and

         g)       the annuity purchase rates applicable, as described in
                  Subsection 2 of this Section.

SUBSECTION (2)--ANNUITY PURCHASE RATES. Annuities will be purchased using our
then-current purchase rates for contracts of this class. Such rates will not be
less favorable to the annuitant than the minimum amounts of annuity which may be
purchased using rates based on an interest rate of 2 1/2%, a load of 5% and
mortality according to the 1983 Female Table a for Individual Annuity Valuation,
projected to 1999 by Scale G.

An example of the minimum amount of annuity income that could be provided by
$10,000.00 of Annuity Premium for an immediate, life annuity with installment
refund is shown in the following table:

<TABLE>
<CAPTION>
   ------------------------------------------ ---------------------------------------
                 ATTAINED AGE                               AMOUNT OF
              (YEARS AND MONTHS)                          MONTHLY INCOME

   ------------------------------------------ ---------------------------------------
   ------------------------------------------ ---------------------------------------
   <S>                                        <C>
                      45                                      $28.39
   ------------------------------------------ ---------------------------------------
   ------------------------------------------ ---------------------------------------
                      50                                      30.22
   ------------------------------------------ ---------------------------------------
   ------------------------------------------ ---------------------------------------
                      55                                      32.51
   ------------------------------------------ ---------------------------------------
   ------------------------------------------ ---------------------------------------
                      60                                      35.39
   ------------------------------------------ ---------------------------------------
   ------------------------------------------ ---------------------------------------
                      65                                      39.07
   ------------------------------------------ ---------------------------------------
   ------------------------------------------ ---------------------------------------
                      70                                      43.82
   ------------------------------------------ ---------------------------------------
</TABLE>

                                       11
<PAGE>

Minimum incomes for purchases made within the five- year period beginning
January 1, 2000, will be 97% of the incomes purchased under the above basis.
Minimum incomes for purchases made within any subsequent five-year period will
be 97% of the incomes for the preceding five-year period. The minimum amounts of
annuity available at other ages and for other forms of income will be determined
by us based on the same basis as the above. We will make these available to you
on request.

SUBSECTION (3)--CANCELLATION OF ANNUITY. If, under the provisions of the Plan in
effect on the Member's Annuity Start Date, you determine and report to us that
the annuity purchased for a Member is to be reduced, then the fraction you
report will be cancelled and the amount of annuity payments paid to the member,
the beneficiary or contingent annuitant will be reduced accordingly.

The reserve for any annuity cancelled under this Section will be applied in
accordance with Article II, Section 5.

SUBSECTION (4)--MISSTATEMENTS. If the age or any other relevant fact of any
Member or contingent annuitant is found to have been misstated, the amount of
annuity payable by us will be that provided by the amount applied to provide
such annuity, determined as of the date established by the misstated information
and on the basis of the correct information. Any overpayment by us resulting
from any misstated information will be deducted from amounts thereafter payable
to a Member, the contingent annuitant or the beneficiary. Any underpayment by us
resulting from any misstatements will be paid in full with the next payment due
the Member, the contingent annuitant or beneficiary.

SUBSECTION (5)--COMMUTATION OF PAYMENTS. If any annuity payments are to be
commuted, the commuted value of the payments will be determined by us, using the
interest rate which was used as a basis for calculating the amount of the
payments at the time the annuity was purchased.

Neither the Member, the contingent annuitant nor any beneficiary who is a
natural person taking in his or her own right has the right to commute any
annuity payments under this contract

SECTION 3--SINGLE SUM PAYMENTS.

If permitted by the Plan, a Member who has reached a Benefit Event may elect a
single sum payment equal to all or a portion of the Member's Account. Any single
sum payment made under this Section will be an application of the Member's
Account on the date paid.

Any single sum payment to a Member is subject to the delay of payment and
limitation provisions of Article VI, Section 4 and the Separate Account
Investment Rider, if any. Such amount may also be subject to the charge in
Article VI, Section 3, unless such payment is made within:

         a)       60 days after we send notification to the Member of the
                  options available under the contract upon reaching the first
                  Benefit Event under the Plan, other than death, or

                                       12
<PAGE>

         b)       60 days after a Member's Normal Retirement Date, if such date
                  is later than the date in (a) above, or

         c)       120 days after we send notification to the beneficiary of the
                  options available under the contract, in the event of the
                  death of the Member.

SECTION 4--FULL FLEXIBILITY OPTION.

This option provides scheduled installment payments, starting within twelve
months of the date of the Notification and continuing until the date the Account
is exhausted. Payments to the Member or beneficiary are subject to the
distribution rules contained in the Code and the regulations thereunder.

We will pay a portion of such Account on the date or dates requested each
calendar year and continuing until the entire Account has been paid. This amount
is the scheduled amount. The unpaid portion of the Account will continue to be
credited with separate account performance under the terms of the Separate
Account Investment Rider or the interest rate otherwise available and as may be
reduced as provided in Article III, Section 5.

The Order of Application will determine from which Investments payments will be
made. However, a Member or beneficiary may give us Notification of a different
order if a different order is desired. If we receive such Notification, payments
from Guaranteed Interest Investments will be subject to the charge in Article
VI, Section 3, and the delay of payment and limitation provisions of Article VI,
Section 4 and the Separate Account Investment Rider.

If scheduled payments in any calendar year exceed the maximum amount, the excess
amount will be subject to the charge in Article VI, Section 3, and the delay of
payment and limitation provisions of Article VI, Section 4 and the Separate
Account Investment Rider. For any calendar year, the maximum amount is the
greatest of:

         a)       13% of the Account balance at the beginning of the current
                  calendar year.

         b)       the Account balance at the beginning of the current calendar
                  year divided by the number of years of the Member's or
                  beneficiary's life expectancy.

         c)       the amount withdrawn in the preceding calendar year which was
                  not subject to the charge in Article VI, Section 3.

In addition to the scheduled payments, nonscheduled payments may be requested.
We may establish a minimum dollar amount for nonscheduled payments. Nonscheduled
payments may be subject to a transaction fee. Nonscheduled payments will be
subject to the charge in Article VI, Section 3, and the delay of payment and
limitation provisions of Article VI, Section 4 and the Separate Account
Investment Rider.

The Member or beneficiary may request termination of the Full Flexibility Option
by one or more of the following methods: (i) requesting an excess payment equal
to the remaining balance of the Account, (ii) requesting the remaining balance
be used to purchase an annuity for such Member or beneficiary in accordance with
one of the other options of this Section, or (iii)

                                       13
<PAGE>

requesting that the Full Flexibility Option be cancelled and leaving the
remaining balance under this contract.

SECTION 5--MODIFICATION IN MODE OF PAYMENT OF INCOME.

If, at any time after a Member's Annuity Start Date or the date benefits begin
under the Full Flexibility Option, the monthly amount of income payable under
this contract to such Member or to the beneficiary or contingent annuitant would
be less than $20, we may, at our option, pay such amount less frequently, but
not less frequently than annually.

SECTION 6--FACILITY OF PAYMENT.

If any Member, alternate payee, contingent annuitant or beneficiary becomes
physically, mentally or legally incapable of accepting any payment and the
person has no legal representative or guardian who can accept the payment on the
person's behalf, we may, in the absence of Notification from you, at our option,
make such payment to the person or persons as have, in our opinion, assumed the
care and principal support of the Member, contingent annuitant or beneficiary.
However, any payment due a minor will be paid at a rate not exceeding the
greater of (i) $100.00 per month or (ii) the maximum amount permitted by the
laws of the state of issue of this contract In no event will any such payment
exceed the maximum amount allowed under applicable law of the state of issue of
this contract. In no event will any such payment exceed the maximum amount
allowed under applicable law of the state in which this contract is delivered.
Any such payment made by us will fully discharge us to the extent of the
payment.

SECTION 7--ASSIGNMENT.

Except for an assignment to an alternate payee required by a Qualified Domestic
Relations Order, no benefits payable under this contract to any Member,
beneficiary or contingent annuitant are assignable, and all such benefits are
exempt from the claims of creditors to the maximum extent permitted by law.

                                       14
<PAGE>

ARTICLE V--OTHER BENEFITS

SECTION 1--WITHDRAWAL BENEFITS.

Upon appropriate Notification, we will pay to a Member any portion of that
Member's Account, subject to the following:

         a)       The Plan must allow the Member to receive the withdrawal.

         b)       The Notification must be on a form we either furnish or
                  approve and will be accompanied (at our I request) by the
                  Member's certificate, if any, issued as described in Article
                  VII, Section 1.

         c)       Any amount withdrawn under this Section will be subject to
                  both the delay of payment and limitation provisions of Article
                  VI, Section 4 and the Separate Account Investment Rider, if
                  any, and the charge of Article VI, Section 3.

         d)       We reserve the right to limit the number of withdrawals and
                  the right to charge for processing such withdrawals.

We will determine the amount available as of the date we receive the
Notification at our Corporate Center, or at some later date specified in the
Notification. The amount available will be that portion of the Member's Account
in which the Member is vested under the Plan. If the withdrawal is for the
purposes of a loan under the Plan, the amount of the loan will be determined by
the provisions of the Plan.

If a portion of a Member's Account is to be withdrawn, the Notification may
specify which Investments are to be applied. If no order is specified, the Order
of Application will apply.

Any payment under this Section will be an application of the Member's Account on
the date paid.

                                       15
<PAGE>

ARTICLE VI--TRANSFER TO ANOTHER FUNDING AGENT; CESSATION; CHARGES

SECTION 1--TRANSFER TO ANOTHER FUNDING AGENT.

Upon Notification to us at our Corporate Center, payment of the aggregate of all
of the Guaranteed Interest Investments and Separate Account Investments will be
transferred to another Funding Agent. Subject to the charge provided for in
Section 3 of this Article, and the limitations provided in Section 4 of this
Article and the Separate Account Investment Rider, if any, the amount of any
Guaranteed Interest Investments and Separate Account Investments will be
determined and transferred within seven Business Days after the date we receive
your Notification. If you request payment as of some later date, the amounts to
be paid out will be determined and paid as Of that date.

SECTION 2--CESSATION OF CONTRIBUTIONS.

Cessation of Contributions will be effective as of any of the following dates:

         a)       On the date you give us written Notification that
                  Contributions will cease.

         b)       On the date the Plan terminates.

         c)       On or after the date on which the Internal Revenue Service or
                  a court makes a final determination that the Plan no longer
                  meets the requirements to remain a Qualified Plan, if we have
                  given you written notice that cessation will occur on that
                  date or at some later date.

         d)       On the date no Accounts remain under this contract.

Upon cessation of Contributions, no employees will become Members and no further
Contributions will be accepted.

All provisions of this contract will remain effective as to any Accounts which
have not been paid or applied in full.

Once all Accounts have been paid or applied in full, we will have no further
obligation under this Contract as to those Accounts.

SECTION 3--CHARGES FOR EARLY SURRENDER OF A GUARANTEED INTEREST INVESTMENT.

If a Member transfers or withdraws all or a part of a Guaranteed Interest
Investment before the end of its Guarantee Period, the transfer or withdrawal is
a surrender of that amount. Transfer or withdrawal of an Investment refers to
transactions from Guaranteed Interest Investments under any of the following
contract provisions:

         a)       1 Transfer between Investments, Article II, Section 6.

                                       16
<PAGE>

         b)       A single sum payment under Article IV, Section 3, after the
                  periods specified in such Section.

         c)       A withdrawal under Article V, Section 1.

         d)       A transfer to another Funding Agent under Article VI,
                  Section 1.

         We reserve the right to waive this charge for certain withdrawals. Any
         such waiver will be applied in a uniform manner to all such withdrawals
         from contracts of this class.

         If all or a portion of a Guaranteed Interest Investment is surrendered
         early and the Guaranteed Interest Rate in effect for contracts of this
         class for the date of surrender is greater than the Composite
         Guaranteed Rate for the Investment, the amount available will be
         reduced by a surrender charge equal to the following:

         e)       The difference between such Guaranteed Interest Rate in effect
                  for new Contributions for the date of surrender and the
                  Composite Guaranteed Rate of the Investment being surrendered,
                  multiplied by

         f)       The number of years (including fractional parts of a year)
                  remaining in the Guarantee Period for the Guaranteed Interest
                  Investment, multiplied by

         g)       The amount being surrendered.

If the entire Guaranteed Interest Investment is surrendered, the Guaranteed
Interest Investment will be reduced on the date of surrender and the remainder
will be paid or transferred.

If a portion of the Guaranteed Interest Investment is surrendered, the
Guaranteed Interest Investment will be reduced by the amount being surrendered
plus the surrender charge, if any.

If the Guaranteed Interest Rate in effect for contracts of this class for the
date of surrender is equal to or less than the Composite Guaranteed Rate for
such account, there is no surrender charge.

SECTION 4--LIMITATIONS ON TRANSFERS AND PAYMENTS FROM GUARANTEED INTEREST
INVESTMENTS.

         a)       In general, payments and transfers from the Guaranteed
                  Interest Investments will be made in full within seven
                  Business Days after the requested date of payment. However, we
                  reserve the right to defer any payment or transfer under this
                  contract up to 270 days. These delay rights will not apply to
                  payments to the beneficiary named by the Member, payments to a
                  Member due to disability or retirement under the Plan or to
                  purchases of annuity under Article IV, Section 2.

                  Such deferment will be based on unstable or disorderly market
                  or investment conditions which, in our opinion, do not allow
                  for an orderly investment transfer. This deferment may
                  include, but not be I limited to, situations where regular
                  banking has been suspended or when an emergency or other
                  circumstances

                                       17
<PAGE>

beyond our control do not allow for the orderly
                  disposal and liquidation of securities or other assets.

         b)       We reserve the right to make the portion of the requested
                  payment or transfer in excess of the greater of

                  i)       25% of the aggregate  Guaranteed Interest
                           Investments under the contract on the date 12
                           months prior to such determination date, or

                  ii)      $25,000,000  in the 12 month  period  which  ends on
                           the date of requested payment or transfer,

                  in substantially equal monthly installments over a period not
                  to exceed 36 months. For purposes of this limitation, payments
                  and transfers at investment value from our general account
                  from any other contracts or polices we issued in connection
                  with the Plan will be included as a payment or transfer from
                  the Guaranteed Interest Investments under this contract

                  If this limitation is imposed by us, we will make the first
                  installment one month after the date of request, or on the
                  date specified in your Notification.

                  These delay rights will not apply to payments to the
                  beneficiary named by the Member, payments to a Member due to
                  disability or retirement under the Plan or to purchases of
                  annuity under Article IV, Section 2.

If we defer any payment or transfer under this Section, we will determine the
amount to be paid or transferred on the actual date of payment or transfer. We
will notify you if the deferment will be more than 30 days. During any
deferment, requested funds will continue to earn interest at the same rate.

                                       18
<PAGE>

ARTICLE VII--GENERAL PROVISIONS

SECTION 1--CERTIFICATES.

If a Member contributes under the Plan and the state of issue so requires, we
will prepare, for delivery to each such Member, an individual certificate
setting out a statement of the benefits to which that Member is entitled and to
whom death benefits are payable. If benefits become payable to a Member under
one of the options of Article IV, we will issue an individual certificate
setting forth the amount, form and period of payment of the annuity benefits.

SECTION 2--BENEFICIARY.

The beneficiary is the person or persons named by the Member to whom benefits
(other than any annuity payable to a contingent annuitant under the provisions
of Article IV, Section 2) are payable under this contract upon the death of the
Member, subject to the provisions of Article IV, Section 7. A Member will name
or change a beneficiary by filing a written beneficiary designation to that
effect with us in a form acceptable to us. Any beneficiary designation will not
have any effect until we receive it. When we receive the designation, it will be
effective as of the date it is executed by the Member, but any payments we made
before receipt of the designation will discharge us to the extent of such
payments. We reserve the right to require the Member's certificate for
endorsement of any change of beneficiary. Unless prohibited by the Plan or by a
prior beneficiary designation, any person receiving benefits or payments which
might continue beyond that person's life time may designate a beneficiary to
receive any remaining payments.

Unless otherwise specified by the Member with our consent,

         a)       if any beneficiary dies before the Member, any payment which
                  would have become payable to such beneficiary, if living, will
                  be payable when due to the beneficiary or beneficiaries
                  surviving the Member in the order provided.

         b)       if any beneficiary survives the Member but dies before
                  receiving all of the payments which would have been payable to
                  such beneficiary, if living, payment will be paid when due to
                  the surviving beneficiary or beneficiaries in the order
                  provided.

         c)       if the last survivor of all named beneficiaries dies after the
                  death of the Member (and the contingent annuitant, if any) and
                  before all payments due the beneficiary have been made, the
                  remaining payments will be commuted and the commuted value
                  paid to the executor or administrator of the estate of such
                  last survivor.

If no named beneficiary survives the Member (and the contingent annuitant, if
any), or no beneficiary has been named, any amount which would have become
payable to a beneficiary will be commuted and the commuted value paid to the
executor or administrator of the estate of the Member (the executor or
administrator of the estate of any contingent annuitant, if he survives the
Member). If no formal estate is created, we may pay out any benefits In
accordance with any state or federal law which permits us to make payments to
specific persons without the creation

                                       19
<PAGE>

of a formal estate. If state or federal law requires that we make any payments
only to a formally established estate, we will make payments in accordance with
that law.

If required by the facts surrounding a particular death or deaths, we may use
the appropriate state statute dealing with simultaneous or nearly simultaneous
deaths to determine who will be treated as a survivor entitled to receive
benefits. If no state law applies, then we may rely upon the most current
version of the uniform Simultaneous Death Act to make that determination.

If the beneficiary is not a natural person taking in his or her own right (that
is, a trust or an estate), any monthly or other periodic payments will be
commuted and the commuted value paid to the beneficiary in a single sum.
However, if the beneficiary is a trust established for the benefit of a natural
person and if the payment period is at least 24 months and not more than 60
months, monthly or other periodic payments may be continued to such beneficiary
for any period which is not prohibited by the Code.

SECTION 3--DIVIDENDS.

Because of the direct crediting of investment return to both Guaranteed Interest
Investments and Separate Account Investments, it is not anticipated that there
will be any surplus accruing on this contract from which dividends may be
apportioned to this contract. However, if a dividend is declared, any portion of
the divisible surplus that we determine to accrue on this contract will be
determined annually by us and will be credited to this contract on the first day
of each Deposit Year after the Contract Date. Any dividend will be applied as
directed by you in accordance with Plan provisions.

SECTION 4--PLAN AND PLAN AMENDMENTS.

You agree to furnish us with a copy of the Plan in effect on the Contract Date
and any subsequent amendments to it. No amendment to the Plan or interpretation
of the Plan language which affects our duties and obligations will have any
effect on the terms of this contract, unless: (i) we have received timely notice
of the amendment or interpretation, and (ii) we have not sent you a written
notice that we do not accept the amendment or interpretation within 60 days of
our receipt of the amendment or interpretation.

SECTION 5--CONTRACT.

This contract and your application are the entire contract between the parties.
A copy of your application is attached to this contract We are obligated only as
provided in this contract and are not a party to nor bound by any trust or plan.

SECTION 6--CONTRACT AMENDMENTS.

We reserve the right to amend or change this contract as follows, subject to the
limitations of item (g):

         a)       Any or all of the contract provisions may be changed at any
                  time, including retroactive changes, to the extent necessary
                  to meet the requirements of any law

                                       20
<PAGE>

                  or regulation issued by any governmental agency to which we
                  are subject We will give you written notice of any such
                  change.

         b)       Any or all of the contract provisions may be changed at any
                  time, including retroactive changes, to the extent necessary
                  to keep the Plan in compliance with the Code or ERISA. We will
                  give you written notice of any such change.

         c)       As of any date after the Contract Date, we may amend or change
                  the length of the Guarantee Period; the Order of Application;
                  the provisions for transferring values between accounts; the
                  percentage in item (a) of Article IV, Section 4; the charge
                  contained in Article VI, Section 3; and the items included in
                  the Operating Expenses for Separate Accounts under the
                  Separate Account Investment Rider (if such a rider is attached
                  to this contract). We will give you 60 days written notice of
                  any such change.

         d)       We may amend or change the annuity purchase basis shown in
                  Article IV, Section 2, as follows:

                  i)       For Account values accumulated during the five year
                           period beginning on the Contract Date, no change will
                           be made in such purchase rate basis.

                  ii)      For Account values accumulated after the date which
                           is five years after the Contract Date, we may amend
                           or change such basis on any date which is later than
                           (I) five years after the Contract Date or (ii) five
                           years after the latest date of amendment or change.

                  We will give you 60 days written notice of any such change.

         e)       By agreement between you and us, this contract may be amended
                  or changed at any time as to any of its provisions, including
                  those in regard to coverage, benefits and the participation
                  privileges, without the consent of any Member, beneficiary or
                  contingent annuitant We will propose amendments to the
                  contract to you by written notification which will also
                  indicate how you may agree to the proposed amendment.
                  Generally, we will indicate that you use one or more of the
                  following methods to agree to our proposed amendments:

                  i)       By signing the amendment and returning a copy to us.

                  ii)      By making  Contributions  after 60 days have elapsed
                           from the date of our written notice to you.

                  iii)     By not declining the amendment in a written Notice to
                           us. We will usually propose the use of this method
                           for procedural amendments or amendments which
                           increase your rights rather than changes which limit
                           your rights under this contract.

                  iv)      By any other method allowed by law.

                                       21
<PAGE>

         f)       After 60 days notice to you, we may amend or change any term
                  of the contract if such amendment or change increases the
                  options available to you or a Member. Any amendment or change
                  will not become effective if you give us written Notification
                  that you do not accept the amendment.

         g)       Any amendment or change under this Section 6 is binding and
                  conclusive on each Member, beneficiary, or contingent
                  annuitant, but is limited by the following:

         i)       No amendment or change will apply to annuities purchased under
                  Article IV before the effective date of the amendment or
                  change except to the extent necessary in making changes in
                  accordance with item (a) or (b) above.

         ii)      No amendment or change under (c) above will affect Guaranteed
                  Interest Investments established prior to the date of the
                  amendment or change.

         iii)     Any change in the general administration expense charge
                  referred to in (b) of Section 1, Article III, will not take
                  effect as to any Guaranteed Interest Investments and Separate
                  Account Investments to be transferred to another Funding
                  Agent, if, prior to the date the amendment or change is to
                  take effect, we receive Notification from you for payment of
                  all such Guaranteed Interest Investments and Separate Account
                  Investments to the other Funding Agent in accordance with
                  Article VI, Section 1, and such Notification is not revoked.

SECTION 7--WAIVER AND MODIFICATION.

Only our Officers may agree to (i) change any of our obligations or duties under
this contract, or (ii) waive any of your obligations or duties under this
contract.

SECTION 8--INFORMATION, PROOFS AND DETERMINATION OF FACTS.

You agree to furnish to us evidence of the age of each Member and his contingent
annuitant, if any, on or before his earliest Annuity Purchase Date and other
records, data, proofs or additional information which, in our opinion, is
necessary for the administration of this contract.

For the purposes of this contract, the determination by you as to any facts
(except age) relating to any employee is conclusive, except for fraud or willful
misstatement of fact

SECTION 9--RELIANCE ON INSTRUCTIONS.

We are not obligated to question or refuse to follow any apparently valid
instructions which we in good faith believe are valid, if we receive such
instructions from you, a Plan trustee, a Plan administrator, a Plan fiduciary,
or, if the Plan permits, a Member, alternate payee, contingent annuitant or
beneficiary. If we follow such instructions, we will have no further obligations
with respect to the amounts paid out or the actions taken. If we believe in good
faith that the law requires us not to follow an apparently valid instruction, we
are not required to act on any instruction.

                                       22
<PAGE>

SECTION 10--SINGLE PAYMENT.

We will make any payment to a Member, contingent annuitant, alternate payee or
beneficiary in accordance with any withdrawal or payment option available under
the contract only once. Any payment we make in accordance with any withdrawal or
payment option will be in lieu of any other benefit or withdrawal option and
will extinguish any claim by any Member, contingent annuitant, alternate payee
or beneficiary to receive the amount paid out.

SECTION 11--OVERPAYMENT.

In the event that we make an overpayment of any amount payable to a Funding
Agent, Member, contingent annuitant, alternate payee or beneficiary, we will
have the option to seek reimbursement of that overpayment from the individual
receiving the overpayment. If the overpayment resulted from any action by you
and we suffered a loss as a result of our good faith reliance upon your action,
you will pay us an amount equal to the overpayment

SECTION 12--OWNERSHIP.

You are the owner of this contract. However, if the Plan is trusteed and this
contract is issued to the trustee(s), the trustee(s) of the Plan is sole owner
of all the payments, rights, options, and privileges herein granted or made
payable to any Member, beneficiary, or contingent annuitant under this contract.
This includes, without limitation, the right to distribute all or a portion of
the Member's Account, or ownership of these rights in respect of such Account,:
on or after the Member's termination of employment. However, this does not
include the right to designate a Member's beneficiary unless such right has been
granted to the trustee by the Plan or trust. The trustee(s) of the Plan is
entitled to exercise all such rights, options, and privileges and to receive all
such payments at the time or times specified in this contract that such
payments, rights, options, and privileges are available to a Member. Such
exercise by the trustee(s) may be made without the consent or participation of
any Member, beneficiary or contingent annuitant.

SECTION 13--TERMINATION AND CASH OUT OF CONTRACT.

We may begin cash out proceedings with regards to the funds held under this
contract on or after the date we have announced we will refuse all further
contributions under contracts of this class, subject to the following:

         a)       We have announced our intention to refuse further
                  Contributions and that we will no longer write or accept
                  applications for contracts of this class.

         b)       Once we determine we wish to cash out contracts of this class,
                  we will cash out all contracts of this class without
                  exception.

         c)       Amounts held in any of our Separate Accounts will be available
                  for payment or transfer in accordance with the contract
                  provisions or riders making such Separate Accounts available
                  hereunder.

         d)       For funds held in our general account, the following will
                  apply:

                                       23
<PAGE>

                  i)       You may choose to transfer such funds to another
                           Funding Agent. No charge will be made under Article
                           VI, Section 3, for any funds so transferred.

                  ii)      If no other Notification is received by us, at the
                           end of any Guarantee Period, we will treat the funds
                           held in our general account as if they are being held
                           under the group annuity contract then offered by us
                           which, in our opinion, most closely parallels the
                           provisions of this contract Thereafter, the
                           provisions of this contract will no longer apply.

                  iii)     There will be no charge made for payment from this
                           contract of single sum amounts at recognized benefit
                           events, even if the group annuity contract described
                           in item (d) (ii) above would not permit such pay out
                           without charge.

         e)       The annuity purchase rate guarantees in effect under this
                  contract on the day before the provisions of item (d) (ii) of
                  this Section are instituted will remain the purchase rate
                  guarantees for any general account funds handled in accordance
                  with item (d) (ii).

                  Such purchase rate guarantees will also remain in effect for
                  any Separate Account funds held hereunder until paid or
                  transferred.

         f)       We will not change any Composite Guaranteed Rate for amounts
                  held in our general account before the end of the Guarantee
                  Period for such amounts.

         g)       Your right to transfer funds held hereunder to another Funding
                  Agent will not be changed.

         h)       If we choose to make another group annuity contract available
                  to other contractholders of this type of contract, we will
                  make such a group annuity contract available to you.

         i)       We will give you 60 days advance  written  notice  before we
                  will enforce the  provisions of this Section.

SECTION 14--TERM AND TERMINATION.

Except as provided in Section 13 of this Article, or by any amendment to this
contract, this contract will continue in force as long as we hold assets for you
or are making annuity payments. If you transfer all of the assets under this
contract not associated with any annuity payments to a Funding Agent, our
obligations under this contract will cease, except to the extent that we are
making annuity payments. However, if we discover that we underpaid the Funding
Agent, we will have the obligation to pay the appropriate amount to the Funding
Agent.

                                       24
<PAGE>

SECTION 15--QUALIFICATION OF PLANS.

We assume no responsibility for ensuring that the Plan remains a Qualified Plan
or meets any of the requirements of the Code or ERISA. While we will undertake
those duties described in this contract or in the service agreement in a manner
which should help you to meet the requirements of the Code and ERISA, you agree
and acknowledge that we do not have final responsibility for making sure that
you take all appropriate steps needed to keep the Plan in compliance with the
Code and ERISA.

Notwithstanding any other provision in this contract or in any other agreement
between you and us, if the Internal Revenue Service or a court makes a final
determination that the Plan no longer qualifies as a Qualified Plan, we may
require that you transfer all assets invested in this contract to another
Funding Agent. If we decide that you must transfer assets from this contract, we
will send you a written notice describing you options. If we do not receive an
acceptable response Notice from you within five Business Days, we will return
the money held under this contract to you, or if appropriate, to a Plan trustee.
We will not accept any Notice under this Section unless the Notice dearly
specifies the Funding Agent to receive the assets.

SECTION 16-OUR RELATIONSHIP TO THE PLAN.

Notwithstanding any other provision in this contract or in any other agreement
between you and us, with respect to the Plan (i) except as described in Article
II, Section 8, we act only as a service provider, and (ii) we do not act as a
Plan trustee, Plan fiduciary, or Plan administrator under ERISA or any state
law. In addition, we do not practice law and do not give any individual legal
advice to you or your Plan.

Nothing in this contract shall amend any provision of the Plan nor shall any
provision of the Plan act as an amendment to this contract. Moreover, no
provision or option available under this contract shall be available unless that
provision or option is permissible under the Plan.

                                       25
<PAGE>

APPLICATION FOR GROUP ANNUITY CONTRACT

 Application is made to:            PRINCIPAL LIFE INSURANCE COMPANY
                                    711 High Street
                                    Des Moines, Iowa 50392-0001
                                    (515) 247-5111

IF VARIABLE ANNUITY IS AVAILABLE UNDER THE CONTRACT, IT IS UNDERSTOOD THAT ANY
SUCH ANNUITY WILL PROVIDE CHANGING DOLLAR AMOUNTS OF PAYMENTS, WITH THE AMOUNT
OF CHANGE DEPENDENT UPON THE INVESTMENT PERFORMANCE OF THE FUNDS PROVIDING SUCH
VARIABLE ANNUITY; THAT SUCH FUNDS ARE HELD IN A SEPARATE ACCOUNT; AND THAT
PRINCIPAL LIFE INSURANCE COMPANY MAKES NO GUARANTEE AS TO THE INVESTMENT
PERFORMANCE THEREOF.

It is agreed that acceptance of any contract issued shall constitute approval by
the applicant of the provisions in such contract as being in accord with this
application.

FOR RESIDENTS OF ALL STATES EXCEPT FL, NE, NJ, NY, OK, OR, PA, AND VA:

Any person who knowingly and with intent to defraud any insurance company or
other person, submits a statement or claim or any application form containing
any materially false information or conceals for the purpose of misleading,
information concerning any fact material thereto commits a fraudulent insurance
act which is a crime. Such actions may be considered felonies and subject to
criminal and civil penalties, including imprisonment and fines.

                                       26
<PAGE>

Application is made to:             PRINCIPAL LIFE INSURANCE COMPANY

INSTRUCTIONS:                       Fill in the appropriate information in the
                                    blanks and boxes below.

TRUSTEES OF GENAISSANCE PHARMACEUTICALS, INC. 401(k) RETIREMENT PLAN
--------------------------------------------------------------------
NEW HAVEN, CT
-------------

Select the contract type below:

/X/      Flexible Investment Annuity (FIA-Full)

/ /      Flexible Investment Annuity - 1 (FIA-1)

/ /      Flexible Investment Annuity with Set Crediting Rate (FIA-SCR)

/ /      Accumulation Group Annuity Group Contract (PRO)

State of delivery of this contract is  CT
                                      ----

Advance payment of $0 is submitted with this application to be applied under
                   --
this contract.

The effective date of this contract shall be OCTOBER 1, 1999
                                             ---------------

Does the applicant intend that the plan covered by this contract (including any
pending changes) will operate in a manner consistent with qualification under
Section 401(a) of the Internal Revenue Code, as amended? (Principal Life
Insurance Company reserves the right to request a copy of the plan's IRS
determination letter.)

/ X /    Yes      / /      No

The state of issue may require countersignature by a licensed resident agent. If
no agent, enter N/A. The designated agent(s) for this group contract is (are):

ABRAHAMS LIFE SERVICES / KEVIN KUBALA
--------------------------------------------------------------------------------
Agent's Name  (Please Print or Type)  (If more than one Agent, list all)
(If FL, include State License Number)

/S/ KEVIN KUBALA
--------------------------------------------------------------------------------
Agent's Signature (Please Print or Type) (If more than one, all must sign)

Signed at NEW HAVEN, CT  this  9TH  day of  SEPTEMBER, 1999
          -------------       -----         ---------------
          (City, State)

/s/ Kevin Rakin                       Trustee:  Executive Vice President
-------------------------------                 ------------------------------
Applicant's Signature                           Title (Trustee, if applicable)

Kevin Rakin                           Contract #:
-------------------------------                 ------------------------------
Print or Type Applicant's Name

                                       27

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