Document:

<PAGE>   1
                                                                    EXHIBIT 10.5

                           TRIPLE-NET BUILDING LEASE
                            BASIC LEASE INFORMATION

DATE OF LEASE:             December 1, 1999

LANDLORD:                  M. RICHARD GIFFRA, ARTHUR A. GIFFRA, RENA GIFFRA and
                           THELMA ANN CUNEO MELTZER as tenants in common, doing
                           business as GIFFRA RANCH

LANDLORD'S ADDRESS:        Giffra Ranch
                           240 Grand Avenue
                           South San Franciso, CA 94080-3707

TENANT:                    MOLECULAR DYNAMICS, a Delaware corporation, a
                           wholly owned subsidiary of Amersham Pharmacia
                           Biotech, Inc., a Delaware corporation

TENANT'S ADDRESS:          928 East Arques Avenue, Sunnyvale, California

PREMISES:                  The entire buildings located at 928-930 East Arques
                           Avenue, Sunnyvale, California, consisting of
                           approximately 82,602 square feet.

TERM
COMMENCEMENT DATE:         December 1, 1999

TERM
EXPIRATION DATE:           January 31, 2006

OPTION(S) TO RENEW:        Two (2) five (5) year options.

BASE RENT:                 December 1, 1999 to January 31, 2001:  $89,210.16
                                                                   per month

                           February 1, 2001 to January 31, 2002:  $140,423.40
                                                                   per month

                           February 1, 2002 to January 31, 2006:   Adjusted
                                                                   February 1,
                                                                   2002 and
                                                                   every year
                                                                   thereafter
                                                                   per Section
                                                                   3.4 herein
                                                                   (including
                                                                   any extended
                                                                   term).

SECURITY DEPOSIT:         $89,210.16 (subject to increase, see Section 5.14)

GUARANTOR:                Amersham Pharmacia Biotech, Inc., a Delaware
                          corporation

LANDLORD'S BROKER:        None.

TENANT'S BROKER:          None.

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                               TABLE OF CONTENTS
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ARTICLE 1. DEFINITIONS...........................................................     1
               1.1 Definitions...................................................     1

ARTICLE 2. Premises..............................................................     2
               2.1 Lease.........................................................     2
               2.2 Acceptance of Premises........................................     2
               2.3 Reservation of Rights.........................................     2

ARTICLE 3. TERM, USE AND RENT....................................................     2
               3.1 Term..........................................................     2
               3.2 Use...........................................................     2
               3.3 Base Rent.....................................................     2
               3.4 Adjustment of Base Rent.......................................     2
               3.5 Net Lease.....................................................     3
               3.6 Option to Extend..............................................     3

ARTICLE 4. LANDLORD'S COVENANTS..................................................     4
               4.1 Landlord's Services & Repair Obligations......................     4
               4.2 Peaceful Enjoyment............................................     4

ARTICLE 5. TENANT'S COVENANTS....................................................     4
               5.1 Utilities; Payments by Tenant.................................     4
               5.2 Real and Personal Property Taxes..............................     5
               5.3 Repairs by Tenant.............................................     6
               5.4 Assignment or Sublease........................................     6
               5.5 Fixtures and Equipment........................................     8
               5.6 Alterations, Additions and Improvements.......................     8
               5.7 Compliance With Laws and Insurance Standards..................     9
               5.8 No Nuisance; No Overloading...................................    10
               5.9 Furnishing of Financial Statements; Tenant's Representations..    10
               5.10 Entry by Landlord............................................    10
               5.11 Subordination, Nondisturbance and Attornment.................    10
               5.12 Estoppel Certificate.........................................    10
               5.13 Surrender....................................................    11
               5.14 Security Deposit.............................................    11
               5.15 Tenant's Remedies............................................    12
               5.16 Rules and Regulations........................................    12

ARTICLE 6. ENVIRONMENTAL MATTERS.................................................    12
               6.1 Hazardous Materials...........................................    12
               6.2 Right of Entry................................................    14
               6.3 Notice to Landlord............................................    14

ARTICLE 7. INSURANCE, INDEMNITY, CONDEMNATION, DAMAGE AND DEFAULT................    14
               7.1 Tenant's Liability Insurance..................................    14
               7.2 Tenant's Additional Insurance Requirements....................    15
               7.3 Indemnity and Exoneration.....................................    16
               7.4 Waiver of Subrogation.........................................    17
               7.5 Condemnation..................................................    17
               7.6 Damage or Destruction.........................................    18
               7.7 Default by Tenant.............................................    19
</TABLE>
<PAGE>   3
                               TABLE OF CONTENTS

ARTICLE 8.  MISCELLANEOUS MATTERS ...........................................23
                    8.1  Brokers ............................................23
                    8.2  No Waiver ..........................................23
                    8.3  Holding Over .......................................23
                    8.4  Transfers by Landlord ..............................23
                    8.5  Attorneys' Fees ....................................23
                    8.6  Termination; Merger ................................24
                    8.7  Amendments; Interpretation .........................24
                    8.8  Severability .......................................24
                    8.9  Notices ............................................24
                    8.10 Force Majeure ......................................24
                    8.11 Independent Covenants ..............................24
                    8.12 Successors and Assigns .............................24
                    8.13 Further Assurances .................................25
                    8.14 Incorporation of Prior Agreements ..................25
                    8.15 Applicable Law .....................................25
                    8.16 Time of the Essence ................................25
                    8.17 No Joint Venture ...................................25
                    8.18 Authority ..........................................25
                    8.19 Offer ..............................................25
                    8.20 Exhibits; Addenda ..................................25
                    8.21 Nondisclosure ......................................25
                    8.22 Arbitration ........................................25
                    8.23 Waiver of California Code Sections .................26
                    8.24 Waiver of Right to Jury Trial ......................26
<PAGE>   4
                                   LEASE

THIS LEASE is entered into as of the date hereof between Landlord and Tenant.

ARTICLE 1. DEFINITIONS.

1.1 Definitions. Terms used herein shall have the following meanings:

    (a) "ADDITIONAL RENT" shall mean any and all monetary obligations of
Tenant under this Lease other than the obligation for payment of Base Rent.

    (b) "BASE RENT" shall mean the sums due from time to time as rental for
the Premises as shown in the Basic Lease Information.

    (c) "BUILDINGS" shall mean the buildings and other improvements associated
therewith located upon Premises.

    (d) "EVENT OF DEFAULT" shall have the meaning set forth in Section 7.7
herein.

    (e) "LANDLORD" shall mean the then current owner of the Premises.

    (f) "LANDLORD'S BROKER" shall mean the individual or corporate broker,
if any, identified on the Basic Lease Information sheet as the broker for
Landlord.

    (g) "PREMISES" shall mean the Premises more particularly shown on the
attached Exhibit A, but shall exclude the use of the surface of the roof except
for access to perform HVAC maintenance pursuant to Section 5.3 herein. In the
event that the square footage of the Premises is modified in any way due to work
performed at the Premises, the parties will execute an amendment to this Lease
containing a revised Exhibit A depicting the modified square footage.

    (h) "PERMITTED USE" shall mean the development, manufacture, marketing and
sale of life science equipment and related components, general office use, and
other uses reasonably related thereto. In no event shall Permitted Use include
(a) offices or agencies of any foreign government or political subdivision
thereof; (b) offices of any agency or bureau of any state, county or city
government; (c) offices of any health care professionals; (d) schools  or other
training facilities; (e) communications firms such as radio and/or television
stations.

    (i) "RENT" shall mean Base Rent plus Additional Rent.

    (j) "SECURITY DEPOSIT" shall mean the amount, if any, to be paid by Tenant
to Landlord and held and applied pursuant to Section 5.14.

    (k) "TENANT'S BROKER" shall mean the individual or corporate broker, if
any, identified on the Basic Lease Information sheet as the broker for Tenant.

    (l) "TERM OR LEASE TERM" shall mean the period commencing with the Term
Commencement Date and ending at midnight on the Term Expiration Date.

    (m) "TERM COMMENCEMENT DATE" shall mean the date set forth in the Basic
Lease Information.

    (n) "TERM EXPIRATION DATE" shall mean the date set forth in the Basic Lease
Information.

    (o) OTHER TERMS. Other terms used in this Lease and on the Basic Lease
Information sheet shall have the meanings given to them herein and thereon.

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<PAGE>   5
ARTICLE 2. PREMISES.

2.1  Lease. Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord the Premises upon all of the terms, covenants and conditions set forth
in this Lease.

2.2  Acceptance of Premises. Tenant acknowledges that prior to the Term
Commencement Date, it was in possession of the Premises as an existing tenant.
As a result of such existing possession, Tenant accepts the Premises in its
"AS-IS" condition existing on the effective date of this Lease, subject to all
matters of record and applicable laws, ordinances, rules and regulations.
Tenant acknowledges that neither Landlord nor any of Landlord's agents or
representatives has agreed to undertake any alterations or additions or to
perform any maintenance or repair of the Premises except as provided herein.

2.3  Reservation of Rights. Landlord shall have access to the Premises during
the Term during normal business hours and upon reasonable notice to inspect the
Premises or to show the Premises to prospective buyers of Landlord's interest
in the Premises, and during the last year of the Term to prospective tenants.
Landlord's access hereunder shall not unreasonably interfere with Tenant's
business operations.

ARTICLE 3. TERM, USE AND RENT.

3.1  Term. The Term shall commence upon the Term Commencement Date, and shall
continue in full force for the Term.

3.2  Use. Tenant shall use the Premises solely for the Permitted Use and for no
other use or purpose without Landlord's prior written consent. Tenant's
Permitted Use is not prohibited by the Rules and Regulations.

3.3  Base Rent.

     (a)  Tenant shall pay the Base Rent to Landlord in accordance with the
schedule set forth on the Basic Lease Information sheet and in the manner
described below. Tenant shall pay the Base Rent in monthly installments on or
before the first day of each calendar month during the Term and any extensions
or renewals thereof, in advance without demand and without any reduction,
abatement, counterclaim or setoff, in lawful money of the United States, at
Landlord's address specified on the Basic Lease Information sheet or at such
other address as may be designated by Landlord in the manner provided for
giving notice under Section 8.9 hereof. In the event that the square footage of
the Premises is increased or decreased, the Base Rent shall be adjusted in
proportion to such increase or decrease.

     (b)  If the Term commences on other than the first day of a month, then
the Base Rent provided for such partial month shall be prorated based upon a
thirty (30) day month and the prorated installment shall be paid on the first
day of the calendar month next succeeding the Term Commencement Date together
with the other amounts payable on that day. If the Term terminates on other
than the last day of a calendar month, then the Base Rent provided for such
partial month shall be prorated based upon a thirty (30) day month and the
prorated installment shall be paid on the first day of the calendar month in
which the date of termination occurs.

3.4  Adjustment of Base Rent. The Base Rent shall be adjusted at the intervals
set forth in the Basic Lease Information, including any extended term pursuant
to Section 3.6 herein, in an amount equal to the percentage change in the
Consumer Price Index for All-Urban Consumers, San Francisco-Oakland Area as
published by United States Department of Labor (the "CPI"), provided that in no
event shall the Base Rent be adjusted by less than three percent (3%) per year,
or more than seven percent (7%) per year. The adjustment shall be calculated as
provided in this Section. The base index for the first adjustment to be made
hereunder shall be the CPI published nearest in time to the Term Commencement
Date. For all succeeding adjustments of Base Rent, the base index shall be the
"adjustment index", as defined herein, utilized for the immediately preceding
adjustment of rent. The "adjustment index" shall be the most recent CPI
available thirty (30) days prior to the adjustment date. Approximately thirty
(30) days prior to each

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<PAGE>   6
adjustment date, Landlord will send Tenant written notice of the adjustment of
rent, calculated by multiplying the then existing Base Rent by a fraction, the
numerator of which is the adjustment index, and denominator of which is the
base index. Failure by Landlord to provide Tenant with notice of an adjustment
of Base Rent shall not constitute a waiver of Landlord's right to require such
adjustment(s) as of the date(s) when such adjustments could have been made
hereunder. In the event that Landlord provides Tenant with a notice of increase
of Base Rent after an adjustment date, the full amount of all accumulated rent
which would have been paid if notice had been given prior to the adjustment
date shall be payable within thirty (30) days of Landlord's written request. In
the event that the United States Department of Labor ceases publishing the CPI,
then Landlord may replace the CPI with such other successor index as Landlord
may reasonably select.

3.5 Net Lease. The parties understand and agree that this is an absolute net
lease, and that Landlord shall receive the Rent without deduction therefrom on
any account whatsoever with respect to the Premises. Except as expressly
provided herein, there shall be no abatement, diminution or reduction of the
Rent herein reserved to Landlord on account of any inconvenience, interruption
or cessation of Tenant's use of the Premises except as caused by the gross
negligence or willful misconduct of Landlord.

3.6 Option to Extend. Tenant may extend this Lease for a two (2) five (5) year
extended terms by giving Landlord written notice of its intention to do so no
more than one (1) year and no less than nine (9) months prior to the expiration
of the preceding Lease Term; provided, however, that Tenant is not in default
beyond the applicable cure period under the Lease on the date of giving such
notice or on the date of commencement of the extended term. In the event that
Tenant is in material default (but not beyond the applicable cure period) at
the time of giving notice to Landlord of its intention to extend the term, at
Landlord's option such notice shall not be effective until the default has been
cured. For purposes of this Section, any monetary default shall be deemed
material. The extended term shall be upon all of the terms and conditions of
this Lease, except that the following rights of Tenant during the initial Lease
Term shall not apply during such option period:  (a) any right to rent-free
possession, (b) any right to further extend the term of the Lease beyond the
extended term set forth hereinabove, and (c) any right to continue to pay the
same Base Rent. Landlord and Tenant hereby acknowledge and agree that the Base
Rent during the extended term shall be equal to the "FAIR MARKET RENTAL" for
the Premises, as determined in accordance with this Section, except that in no
event shall the Base Rent for the extended term be less than the Base Rent
payable at the end of the initial Lease Term. The parties shall have until the
date that is five (5) months prior to the date that the original Term, will
expire in order to agree on Base Rent during the extended term. If the parties
agree on the Base Rent for the extended term during that period, they shall
immediately execute an amendment to this Lease stating the Base Rent. If the
parties are unable to agree on Base Rent for the extended term during that
period, then the Fair Market Rental shall be established by appraisal. Landlord
and Tenant shall each appoint one appraiser at least four (4) months prior to
the expiration of the original Term; provided, however, that if either party
fails to designate an appraiser within the time period specified, then the
appraiser who is designated shall conclusively determine the Fair Market
Rental. If two (2) appraisers are designated, then the two appraisers shall
mutually select and agree upon a third appraiser within fourteen (14) calendar
days. The third appraiser shall then prepare a written appraisal report that
shall conform with the standards of professional practice of the American
Institute of Real Estate Appraisers. The third appraiser shall be unrelated to,
and shall have never been employed by Landlord or Tenant or any entity related
to either party. If the two appraisers reasonably cannot agree upon a third
appraiser, then either party hereunder may request that the Presiding Judge of
the Santa Clara County Superior Court appoint such third appraiser. The Fair
Market Rental shall be equal to the amount designated by the third appraiser
and each of the parties shall be bound thereby. Each party shall bear the cost
of the appraiser appointed by it and the parties shall share equally in the
cost of the third appraiser. No person shall be appointed or designated an
appraiser unless he or she is (i) an independent appraiser who is a currently
certified member of the American Institute of Real Estate Appraisers (with MAI
designation) and unless he or she has at least five (5) years' experience as an
appraiser, including at least one year in Santa Clara County, or (ii) a real
estate broker with a minimum of at least ten (10) years' experience in leasing
of commercial space in the vicinity of the Premises. Landlord and Tenant intend
that the "Fair Market Rental" shall be deemed to be the rent per square foot of
rentable area of space that is then being charged for space located in buildings
that are comparable in quality and offer similar amenities

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to the Premises and for leases of a similar term. In the event that the Fair
Market Rental is not established before the commencement of the extended term,
Tenant shall for the first two (2) months of such extended term continue to pay
the Base Rent in effect as of the end of the original term; when the Fair
Market Rental has been established, the new Base Rent shall be retroactively
effective as of the beginning of the extended term, and Tenant shall pay
Landlord any deficiency within thirty (30) days after receipt of notice from
Landlord of the establishment of the new Base Rent.

ARTICLE 4.  LANDLORD'S COVENANTS.

4.1  Landlord's Services & Repair Obligations.  Landlord shall be responsible
for repairing and/or replacing at Landlord's sole cost and expense the roof,
roof membrane, structural supports and any latent defects of the Buildings,
unless damage thereto is caused by Tenant or Tenant's employees, agents, guests
or invitees, in which event any costs arising from such damage shall be
Tenant's sole responsibility. Except for the foregoing, Tenant is accepting the
Premises in its As-Is condition and assumes full and sole responsibility for
the condition, operation, maintenance, repair and replacement of the Premises.
Except as provided herein and in Section 7.6, Landlord shall have no obligation
whatsoever to maintain, repair or replace the Premises or provide services to
Tenant. Tenant acknowledges that Landlord will have no obligation to provide
any security for the Premises, which shall be Tenant's sole obligation. The
parties intend that the terms of this Lease shall govern their respective
maintenance and repair obligations. Tenant expressly waives the benefit of any
statute now or hereafter in effect to the extent it is inconsistent with the
terms of this Lease with respect to such obligations or which affords Tenant
the right to make repairs at the expense of Landlord or terminate this Lease by
reason of the condition of the Premises or any needed repairs. Notwithstanding
the foregoing, Landlord shall have the right, but not the obligation, to
undertake works of maintenance, repair or replacement which Tenant is required
to perform under this Lease and which Tenant fails or refuses to perform within
thirty (30) days of Landlord's notice to Tenant requesting Tenant to perform
such work, except for emergency repairs which Landlord may perform at Tenant's
expense upon 24 hours notice. Tenant shall reimburse Landlord upon demand, as
Additional Rent, for all costs incurred by Landlord in performing any such
repair for the account of Tenant, together with an amount equal to ten percent
(10%) of such costs to reimburse Landlord for its administration and managerial
effort. Any dispute between Landlord and Tenant with respect to either party's
repair obligations shall be resolved pursuant to the terms of Section 8.22
hereof.

4.2  Peaceful Enjoyment.  Landlord covenants with Tenant that upon Tenant
paying the Rent and all other charges required under this Lease and performing
all of Tenant's covenants and agreements herein contained, Tenant shall
peacefully have, hold and enjoy the Premises subject to all of the terms of
this Lease. This covenant and the other covenants of Landlord contained in this
Lease shall be binding upon Landlord and its successors only during its or
their respective ownership of the Premises and of the landlord's interest
hereunder.

ARTICLE 5.  TENANT'S COVENANTS.

5.1  Utilities; Payments by Tenant.  Tenant shall be solely responsible for
the payment of all charges for electricity, gas, water, telephone service,
refuse pick-up and all other utilities or services of any type or nature
supplied or furnished to the Premises, including security service, which shall
be Tenant's sole responsibility. All such charges shall be billed directly to
Tenant, and Tenant shall pay all such charges directly to the charging
authority. No failure or interruption of any such utilities or services shall
entitle Tenant to terminate this Lease or to withhold Rent, unless such
interruption is caused by Landlord's direct actions (and not omissions) on the
Premises. Tenant shall pay Rent at the times and in the manner provided in this
Lease. All obligations of Tenant hereunder to make payments to Landlord shall
constitute Rent and failure to pay the same when due shall give rise to the
rights and remedies provided for in Section 7.7.

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<PAGE>   8

5.2 Real and Personal Property Taxes.

     (a) Tenant shall be responsible for, and shall pay prior to delinquency,
all taxes or governmental service fees, possessory interest taxes, fees or
charges in lieu of any such taxes, capital levies, and any other charges imposed
upon, levied with respect to, or assessed against Tenant's personal property,
and on its interest pursuant to this Lease, and all Real Property Taxes which
shall be levied or assessed against all or any portion of the Premises. The
payment of such personal property taxes and Real Property Taxes shall be
Additional Rent hereunder. Tenant shall, upon Landlord's written request,
directly pay the amount of such Real Property Taxes to the tax collector at
least ten (10) days prior to delinquency and provide Landlord with evidence of
such payment; or shall reimburse Landlord for Landlord's payment of Real
Property Taxes within ten (10) days of Landlord's written request.

     (b) "Real Property Taxes" shall include any and all taxes and assessments
imposed, levied or assessed against the Premises, or any portion thereof,
including any reassessment thereof at any subsequent time and including any
transaction privilege tax, whether such taxes are measured in whole or in part
by the value of the Premises or by the amount of any rent paid to Landlord under
this Lease for the use and occupancy thereof. Real Property Taxes shall include
the amount of any surtax or deferred tax which is imposed, levied or assessed
either at the time of any transfer or assignment of the Premises by Tenant, or
any interest therein, or upon the occurrence of any other event, which surtax or
deferred tax is imposed, levied or assessed for the purpose of recapturing any
Real Property Taxes, (i) the imposition, levy or assessment of which had been
previously deferred, and (ii) which would have, but for such deferral, been
previously imposed or levied upon or assessed against the Premises or any
portion thereof; provided, however, that Tenant's share of such deferred taxes
shall be prorated to cover only the period of time within the tax fiscal year
for such deferred taxes during which this Lease was in effect. Real Property
Taxes shall be liberally construed so that Tenant shall pay not only any and all
Real Property Taxes imposed or levied upon or assessed against the Premises
under the law existing as of the date of execution of this Lease, but any and
all other taxes (collectively "In Lieu Taxes") which may hereafter be imposed,
levied or assessed, in conjunction with, in lieu of, as an alternative to, as an
offset against or as the result of any deferral of any such Real Property Taxes
and any other special, unforeseen or extraordinary taxation, however described,
relating to the Premises. Tenant shall be responsible for the payment of any
Real Property Taxes applicable to the Term, regardless of whether such
assessment occurs during or after the Term. The foregoing notwithstanding, Real
Property Taxes shall not include (i) Landlord's federal, state or local income
taxes or inheritance, gift and estate, taxes, or (ii) any transfer fee or tax
arising from a sale or transfer of the Premises by Landlord.

     (c) Any Real Property Taxes for the first and last years of the Term
shall be prorated between the parties. With respect to any assessment which may
be levied upon the Premises and which under the laws then in force may be
evidenced by bonds payable in installments, the computation of the tax payable
by Tenant hereunder shall be limited to the installments payable during the
Term.

     (d) Notwithstanding any thing to the contrary herein contained, if the
impounding of tax payments is required by any lender of Landlord, or upon the
occurrence of any Event of Default, Landlord may elect to require Tenant to pay
Real Property Taxes in accordance with the provisions of this Section 5.2(d).
Beginning at the Commencement Date and prior to the commencement of each
calendar year thereafter, Landlord shall furnish to Tenant a statement setting
forth the estimated Real Property Taxes to be levied against the Premises for
the immediately succeeding calendar year or fraction thereof. Tenant shall pay
such estimated Real Property Taxes to Landlord in equal monthly installments
which shall be made concurrently with the payment of each installment of Base
Rent. Within 60 days after the end of each calendar year or fraction thereof, or
within 60 days of any reassessment, Landlord shall furnish to Tenant a statement
in writing, certified by Landlord to correct, showing the actual Real Property
Taxes assessed against the Premises during the immediately preceding calendar
year or fraction thereof or the applicable calendar year, if there has been a
reassessment. At that time an adjustment shall be made between Landlord and
Tenant, so that Tenant's payments of Real Property Taxes for the preceding year
or fraction thereof shall equal the actual amount of such Real Property Taxes
for the same period. Any overpayment by Tenant upon such adjustment shall be
credited by Landlord to the monthly installments of estimated

                                       5

<PAGE>   9
Real Property Taxes next falling due, and any underpayment by Tenant shall be
paid to Landlord with the next installment of estimated Real Property Taxes or
if the Term has ended, then promptly upon Tenant's receipt of Landlord's
statement.

     (e) Either party will have the right, at its cost and expense, to contest
the legality, validity or amount of any real property taxes or the assessments
upon which same are based by appropriate proceedings prosecuted in good faith.
Landlord will be notified of any such contest by Tenant and will cooperate with
Tenant and, if required, join Tenant in such proceedings at no cost or expense
to Landlord. Such contest may be made in the name of Landlord or Tenant, or
both, and if requested by Tenant, Landlord will actively participate in such
contest, at Tenant's sole cost and expense. If Landlord obtains a refund of any
real property taxes for which Tenant has paid a share, Tenant shall receive a
credit against Rent due hereunder in the amount of such refund and any interest
received thereon after deducting therefrom the reasonable costs and expenses
(including experts and attorney fees) of obtaining such refund. If Tenant
obtains a refund of any real property taxes, Tenant will be entitled to the
full amount of such refund, provided however that if such refund includes
amounts paid by Landlord without reimbursement from Tenant, Tenant will
promptly remit to Landlord its share of such refund and any interest received
thereon after deducting therefrom the reasonable costs and expenses (including
experts and attorney fees) of obtaining such refund.

5.3  Repairs by Tenant.  Tenant shall, at all times, at its sole cost and
expense, maintain, repair and replace the Premises, including, without
limitation, the maintenance, replacement and repair of: all plumbing, fire
sprinkler and sewage systems, all ducts, pipes, vents or other parts of the
heating, ventilation and air conditioning system ("HVAC"), all electrical and
lighting facilities, systems, appliances and equipment including all wiring
therein, all floors and ceilings, all exterior and interior walls, doors and
windows, all landscaping, pavement, parking areas and sidewalks, and all other
fixtures, equipment or other improvements on the Premises, excluding only the
roof, roof membrane, structural supports and latent defects of the Buildings
to the extent Landlord is required to repair and replace same under Section 4.1
of this Lease. Tenant's responsibility for maintenance and repair shall include
all facilities, systems or equipment that are located on or within the floors
or walls of the Premises. Tenant shall enter into a service contract, with a
contractor approved by Landlord, which provides for the periodic inspection and
maintenance of the HVAC equipment no less than every ninety (90) days. Tenant's
maintenance of the Premises outside the Buildings shall include, but not be
limited to, (a) cleaning and removing rubbish and dirt; (b) cleaning,
maintaining, repairing, remarking and replacing paved and unpaved surfaces and
curbs (including periodic sealing, re-striping and repaving of the parking area
in order to maintain same in the same condition existing as of the Term
Commencement Date), cleaning, maintaining and repairing directional and other
signs, landscaping, gardening, decorating (permanent or temporary, seasonal or
otherwise) maintaining and repairing lighting facilities, drainage systems, and
other similar items; (c) maintaining, repairing and replacing utility
installations underlying such areas if not maintained or replaced by utility
companies; (d) periodic painting and re-painting of the exterior walls of the
Buildings; and (e) providing any security services necessary or desirable for
the Premises. The facilities and fixtures shall be kept, repaired, maintained,
replaced, or supplemented at all times by Tenant in accordance with all
governmental requirements and insurance requirements as they may now or
hereafter exist, and in all events in a clean, sanitary and orderly condition.
Tenant shall be obligated to surrender the Premises upon expiration of the
Term in the same condition as on the Term Commencement Date, reasonable wear
and tear, taking by condemnation, and damage that is Landlord's responsibility
under Section 7.6 and not caused by Tenant, its agents, employees, contractors,
invitees and licensees excepted. Tenant shall not commit or allow any waste or
damage to be committed in any portion of the Premises. Any dispute between
Landlord and Tenant with respect to either party's repair obligations shall be
resolved pursuant to the terms of Section 8.22 hereof.

5.4  Assignment or Sublease.

     (a)  Tenant shall not voluntarily or by operation of law assign, sublet,
mortgage, pledge, encumber or transfer (collectively "TRANSFER") all or any
part of Tenant's interest in this Lease or in the Premises without Landlord's
prior written consent given under and subject to the terms of this Section.

                                       6-
<PAGE>   10
     (b)  If Tenant desires to Transfer this Lease or any interest herein or
sublet the Premises or any part thereof, Tenant shall give Landlord written
notice of such intent. Tenant's notice shall specify the effective date of the
proposed Transfer and be accompanied by the name, address, telephone number and
current financial statement of the proposed assignee or subtenant
("Transferee"), all financial details of the Transfer, the intended use
(including any modification) of the Premises, and exact copies of all of the
proposed agreement(s) between Tenant and the Transferee. Tenant shall promptly
provide Landlord with (i) such other or additional information or documents
reasonably requested by Landlord, and (ii) an opportunity to meet and interview
the Transferee, if requested by Landlord. Landlord shall have the option to
recapture the space which Tenant wishes to assign or sublet by terminating this
Lease for such space or by taking an assignment or a sublease from Tenant. If
Landlord does not elect to recapture the space, Landlord's consent to a
Transfer shall not be unreasonably withheld. If Landlord does recapture the
space, then the liability of Tenant and any guarantor shall cease with respect
to the recaptured space.

     (c)  Landlord shall have twenty (20) days from the date of Tenant's
original notice, or seven (7) days from the date of Landlord's interview with
the Transferee and/or receipt of additional information, if requested within the
initial twenty (20) day period, within which to notify Tenant in writing whether
or not Landlord will permit such Transfer. Landlord's consent to a Transfer
shall not be unreasonably withheld, conditioned or delayed. Reasonable grounds
for denying consent shall include (i) Transferee's character, reputation, credit
history, or business is not consistent with the character or quality of the
Premises; (ii) Transferee is either a government agency or an instrumentality of
one; (iii) Transferee's intended use of the Premises is inconsistent with the
Permitted Use or will materially and adversely affect Landlord's interest; (iv)
Transferee's financial condition is or may be inadequate to support the Lease
obligations of Transferee under the Transfer documents; (v) Transferee does not
intend to occupy the entire Premises and conduct business there for a
substantial portion of the term of the Transfer; (vi) the Transferee's
anticipated use of the Premises involves the generation, storage, use,
treatment, or disposal of Hazardous Material in greater amounts than that by
Tenant; or (vii) the Transferee has been required by any prior landlord, lender
or governmental authority to take remedial action in connection with Hazardous
Material contaminating a property if the contamination resulted from
Transferee's actions or use of the property in question. Landlord may impose any
reasonable condition upon its consent to a Transfer, including but not limited
to that the Transferee execute assumption documentation as Landlord shall
require. Notwithstanding any other provision in this Lease, Landlord may
withhold its consent, in its reasonable discretion, to any proposed Transfer of
Tenant's interest in the Premises by way of a mortgage, pledge or other
encumbrance.

     (d)  In the event Tenant shall request the consent of Landlord to a
Transfer hereunder, Tenant shall reimburse Landlord for Landlord's reasonable
expenses incurred in connection therewith, including but not limited to
reasonable attorneys' fees, regardless of whether Landlord approves such
request. Landlord may condition its approval upon the prior payment of such
fees and costs. If not otherwise paid, such fees and costs shall be deemed
Additional Rent under this Lease and shall be payable within ten (10) days of
written request.

     (e)  The consent of Landlord to any Transfer shall not constitute a
consent to any subsequent Transfer by Tenant or to any subsequent or successive
Transfer by the Transferee. Except as set forth herein, such action shall not
relieve Tenant or any such other party from liability under this Lease or a
sublease.

     (f)  Except as set forth herein, no Transfer by Tenant shall relieve
Tenant of any obligation under this Lease. In the Event of Default by a
Transferee of Tenant or any successor of Tenant in the performance of any of
the terms hereof, Landlord may proceed directly against Tenant without the
necessity of exhausting remedies against such Transferee or successor. Any
Transfer which conflicts with the provisions hereof shall be void and, at
Landlord's option, shall constitute a default under this Lease.

     (g)  In the event Tenant sublets the entire Premises or any part thereof,
Tenant shall deliver to Landlord fifty percent (50.00%) of any excess rent
within thirty (30) days of Tenant's receipt thereof pursuant to such
subletting. As used herein, "EXCESS RENT" shall mean any sums or economic
consideration

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<PAGE>   11
per square foot of the Premises received by Tenant pursuant to such subletting
in excess of the amount of the rent per square foot of the Premises payable by
Tenant under this Lease applicable to the part or parts of the Premises so
sublet; provided, however, that no such excess rent shall be payable until
Tenant shall have recovered therefrom Tenant's reasonable costs incurred in
conjunction with such subletting, including tenant improvement costs, brokerage
commissions and attorneys fees.

     (h)  In the event Tenant assigns this Lease, Tenant shall deliver to
Landlord fifty percent (50.00%) of any excess payment within thirty (30) days
of Tenant's receipt thereof pursuant to such assignment. As used herein,
"EXCESS PAYMENT" shall mean the amount of payment received for such assignment
of this Lease in excess of the rent payable by Tenant under this Lease;
provided, however, that no excess payment shall be payable until Tenant shall
have recovered therefrom Tenant's reasonable costs incurred in conjunction with
such assignment, including tenant improvement costs, brokerage commissions and
attorneys fees.

     (i)  Notwithstanding the other provisions of this Section, if Tenant is a
corporation whose stock is publicly traded on a national exchange, the transfer
of stock in Tenant on such exchange shall not be considered an assignment,
sublease or transfer under the Lease. Tenant shall be permitted to transfer its
interest under this Lease to any entity controlled by or under common control
with Tenant, provided that such transfer shall not relieve Tenant or any
guarantor of any liability hereunder.

5.5 Fixtures and Equipment. Tenant may install or furnish in and to the
Premises all furniture, furnishings, business equipment and trade fixtures
necessary or desirable for the conduct of its business, provided that Tenant
has first obtained any necessary governmental permits or approvals. All such
furniture, equipment or fixtures may be removed by Tenant during or upon
expiration of the Term, provided that Tenant repairs any damage caused by such
removal. Tenant shall not place a load upon any portion of the Buildings
exceeding the structural and load-bearing specifications for which the
Buildings was designed or which may be allowed by law. Landlord reserves the
right to prescribe the weight and position of all heavy equipment and to
prescribe the reinforcing necessary, if any, which in the opinion of a
professional retained by Landlord may be required under the circumstances, such
reinforcing to be at Tenant's expense.

5.6 Alterations, Additions and Improvements.

     (a)  Tenant shall not make or allow to be made any alterations, additions
or improvements ("ALTERATIONS") in or to the Premises other than the
installation of moveable furnishings and equipment without first obtaining
Landlord's approval. Tenant shall provide Landlord with written notice of the
proposed Alterations, including copies of the plans and specifications, copies
of all construction contracts or other agreements for the proposed Alterations,
the name and address of any contractor or subcontractor to be employed on the
Alterations, and the proposed time for performance of such work. Landlord's
consent shall be given for any proposed Alterations which: (i) comply with all
applicable laws, ordinances, rules and regulations; (ii) are compatible with
the Buildings' mechanical, electrical, HVAC and life safety systems; (iii) will
not adversely affect the structural portions of the Buildings; (iv) will not
trigger any additional costs to Landlord; (v) will not require roof
penetration; (vi) will not require the use of asbestos or other hazardous
materials (except for limited amounts in accordance with all applicable laws);
(vii) are approved by Landlord's lender, if required under the terms of any
mortgage or deed of trust encumbering the Premises; (viii) will not cause a
reduction in the value of Landlord's interest in the Premises; and (ix) will
not exceed Fifty Thousand and No/100ths Dollars ($50,000.00) in cost in the
aggregate in any calendar year. Landlord will not unreasonably withhold it
consent to Alterations which exceed $50,000.00 in cost in any calendar year
provided that the remaining conditions in the preceding sentence are satisfied.
Tenant shall supply to Landlord any additional documents and information
requested by Landlord related to Tenant's request for consent hereunder. Tenant
shall reimburse Landlord for any reasonable fees and costs incurred reviewing
proposed Alterations, including but not limited to architect's and engineer's
fees.

     (b)  Any consent given by Landlord under this Section shall be deemed
conditioned upon: (i) Tenant's acquiring all applicable permits required by
governmental authorities; (ii) Tenant's furnishing to Landlord copies of such
permits, together with copies of the approved final plans and specifications,
prior

                                       8-
<PAGE>   12
to commencement of the work thereon; (iii) Tenant's timely compliance with the
conditions of all applicable permits and approvals; (iv) Tenant's delivery of
proof of insurance for any injury to person or property arising from the
construction of the Alterations, in form reasonably satisfactory to Landlord.

     (c) Tenant shall provide Landlord with not less than ten (10) days prior
written notice of commencement of the work so as to enable Landlord to post and
record appropriate notices of non-responsibility. All Alterations permitted
hereunder shall be made and performed by Tenant without cost or expense to
Landlord. Tenant shall pay all amounts due to any contractors and suppliers on a
timely basis and keep the Premises free from any mechanic, materialmen or other
lien or claim arising out of any work performed, materials furnished or
obligations incurred by or for Tenant. In the event Tenant's proposed
Alterations exceed Fifty Thousand Dollars ($50,000.00) in cost, Landlord may
require, at its sole option, that Tenant provide to Landlord, at Tenant's
expense, a completion bond (or similar bond, letter of credit or insurance
acceptable to Landlord) in an amount equal to at least one and one half (1 1/2)
times the total estimated cost of any Alterations be made in or to the Premises,
to protect Landlord against any liability for any mechanic, materialmen or other
lien or claim, and to ensure timely completion of the work. If any lien attaches
to the Premises as a result of any act or omission by Tenant, Tenant shall cause
such lien to be immediately released and removed of record, or shall post a bond
adequate for the full payment of such lien, including any interest, attorneys
fees and costs recoverable in the event such lien claimant prevails. If the lien
is not released and removed, or bonded over, within thirty (30) days after
Landlord delivers notice of the lien to Tenant, Landlord may immediately take
all action necessary to release and remove the lien, without any duty to
investigate the validity of it. All expenses (including reasonable attorney
fees) incurred by Landlord in connection with the lien, plus an administrative
fee equal to ten percent (10%) of all such expenses, shall be considered
Additional Rent under this Lease and shall be due and payable by Tenant within
ten (10) days of Landlord's written request.

     (d) All Alterations permitted under this Section shall be constructed
diligently, in a good and workmanlike manner with new, good and sufficient
materials of at least the same quality as those used in the construction of the
existing improvements, and in compliance with all applicable laws, ordinances,
rules and regulations (including, without limitation, building codes and the
Americans With Disabilities Act). Tenant shall ensure that all work is performed
in a manner that does not obstruct access to or through the Premises or its
common areas or unreasonably interfere either with other tenants' use of their
premises or with any other work being undertaken in the Premises. Tenant shall,
promptly upon completion of the work, furnish Landlord with "as built" drawings
for the Alterations.

     (e) Any and all Alterations made to the Premises by Tenant shall become the
property of Landlord upon installation and shall be surrendered to Landlord
without compensation to Tenant upon the termination of this Lease by lapse of
time or otherwise unless Landlord conditioned its approval of such Alterations
on Tenant's agreement to remove them, or Tenant failed to notify Landlord of
such Alterations, and Landlord notifies Tenant prior to or within ninety (90)
days after the Term Expiration Date that the Alterations must be removed, in
which case Tenant shall, by the Term Expiration Date (or promptly thereafter),
remove such Alterations, repair any damage resulting from such removal and
restore the Premises to their condition existing prior to the date of
installation of such Alterations. Tenant shall repair at its sole cost and
expense all damage caused to the Premises by removal of Tenant's movable
equipment or furniture and such other Alterations as Tenant shall be required or
allowed by Landlord to remove from the Premises.

5.7 Compliance With Laws and Insurance Standards.

     (a) Tenant shall not cause or permit any portion of the Premises to be
occupied or used in a manner that violates any applicable law, ordinance, code,
rule, regulation or order of any governmental authority, including the Americans
with Disabilities Act, now or hereafter existing ("APPLICABLE LAWS"). Tenant
shall promptly make, at Tenant's sole expense, all repairs, replacements,
alterations or improvements needed to comply with all Applicable Laws.

     (b) Tenant shall not occupy or use, or permit any portion of the Premises
to be occupied or used in a manner that violates any covenant, easement or
restriction of record, or the reasonable recommendations

                                      9-

<PAGE>   13

of Landlord's engineers or consultants, relating in any manner to the Premises,
or for any business or purpose which is disreputable or productive of fire
hazard. Tenant shall not do or permit anything to be done which would result in
the cancellation, or in any way increase the cost, of any insurance coverage on
the Premises and/or its contents.

5.8  No Nuisance; No Overloading. Tenant shall use and occupy the Premises, and
control its agents, employees, contractors, invitees and visitors in such
manner so as not to create any nuisance, or interfere with, annoy or disturb
(whether by noise, odor, vibration or otherwise) any other party. Tenant shall
not place or permit to be placed any loads upon the floors, walls or ceilings
in excess of the maximum designed load specified by Landlord.

5.9  Furnishing of Financial Statements; Tenant's Representations. In order to
induce Landlord to enter into this Lease, Tenant agrees that it shall promptly
furnish Landlord with copies of its annual financial reports within ten (10)
business days of publication thereof, and with such additional financial
statements as Landlord may request from time to time in form and substance
reasonably satisfactory to Landlord reflecting Tenant's current financial
condition within ten (10) business days of Landlord's request. Tenant
represents and warrants that all financial statements, records and information
furnished by Tenant to Landlord in connection with this Lease are and/or will
be true, correct and complete in all respects.

5.10 Entry by Landlord. Landlord, its employees, agents and consultants, shall
have the right to enter the Premises at any time, in cases of an emergency, and
otherwise at reasonable times upon reasonable advance written notice to inspect
the same, to deal with emergencies, to post such notices as may be permitted or
required by law to prevent the perfection of liens against Landlord's interest
in the Premises or to show the Premises to prospective tenants, purchasers,
encumbrancers or others, or for any other purpose as Landlord may deem necessary
or desirable; provided, however, that Landlord shall not unreasonably interfere
with Tenant's business operations in the Premises. Tenant shall not be entitled
to any abatement of Rent or damages by reason of the exercise of any such right
of entry.

5.11 Subordination, Nondisturbance and Attornment. This Lease and the rights of
Tenant hereunder shall be subject and subordinate to the lien of any deed of
trust, mortgage or other hypothecation or security instrument (collectively, a
"SECURITY DEVICE") now or hereafter placed upon, affecting or encumbering the
Premises or any part thereof or interest therein. Tenant agrees to execute
within fifteen (15) days of Landlord's request any Subordination,
Nondisturbance and Attornment Agreement ("Subordination Agreement") in favor of
an existing or prospective lender so long as such Subordination Agreement
provides that Tenant's possession under the Lease shall not be disturbed so
long as Tenant faithfully performs all of its obligations under this Lease and
attorns to the record owner of the Premises. Failure by Tenant to execute and
deliver any such Subordination Agreement within the time requested shall
constitute a material default under this Lease. Notwithstanding anything
herein to the contrary, any holder of a Security Device may unilaterally and
without Tenant's consent subordinate the lien of its Security Device to this
Lease by written notice to Tenant or by recording a written subordination in
the Official Records of the County in which the Premises are located, in which
case this Lease shall be unaffected by the foreclosure of the subordinated
Security Device, notwithstanding the relative dates of the documentation or
recordation thereof. Tenant agrees to attorn to and recognize as the Landlord
under this Lease the holder or beneficiary under a Security Device or any other
party that acquires ownership of the Premises by reason of a foreclosure or
sale under any Security Device (or deed in lieu thereof). The new owner
following such foreclosure, sale or deed shall not be (i) liable for any act or
omission of any prior landlord or with respect to events occurring prior to
acquisition of ownership; (ii) subject to any offsets or defenses which Tenant
might have against any prior landlord; (iii) bound by prepayment of more than
one (1) month's Rent; or (iv) liable to Tenant for any security deposit not
actually received by such new owner. Each holder of a Security Device shall be
an express third party beneficiary of the provisions of this Section 5.11 and
any other provisions of this Lease that are for the benefit of such holder.

5.12 Estoppel Certificate. Within fifteen (15) days following Landlord's
request, Tenant shall execute, acknowledge and deliver written estoppel
certificates addressed to (i) any mortgagee or prospective mortgagee of
Landlord, or (ii) any purchaser or prospective purchaser of all or any portion
of, or interest in,

                                      10-
<PAGE>   14
the Premises, on a form specified by Landlord, certifying such facts and
agreeing to such notice provisions and other matters as such mortgagee(s) or
purchaser(s) may reasonably require, including, without limitation, the
following: (a) that this Lease is unmodified and in full force and effect (or in
full force and effect as modified, and stating the modifications); (b) the
amount of, and date to which Rent and other charges have been paid in advance;
(c) the amount of any Security Deposit; and (d) acknowledging that Landlord is
not in default under this Lease (or, if Landlord is claimed to be in default,
stating the nature of the alleged default). Any such estoppel certificate may be
relied upon by any such mortgagee or purchaser. Failure by Tenant to execute and
deliver any such estoppel certificate within the time requested shall constitute
a material default under this Lease. Landlord agrees that upon Tenant's request,
Landlord will execute an estoppel certificate and deliver same to Tenant
certifying such matters as Tenant may reasonably request, including without
limitation the following: (a) that this Lease is unmodified and in full force
and effect (or in full force and effect as modified, and stating the
modifications); (b) the amount of, and date to which Rent and other charges have
been paid in advance; (c) the amount of any Security Deposit; and (d)
acknowledging that Tenant is not in default under this Lease (or, if Tenant is
claimed to be in default, stating the nature of the alleged default). Tenant
shall not be required to provide an estoppel certificate more often than one
time in any six month period.

5.13 Surrender.  On the Term Expiration Date (or earlier termination of this
Lease), Tenant shall quit and surrender possession of the Premises to Landlord
in as good order and condition as they were in on the Term Commencement Date,
reasonable wear and tear, taking by condemnation and repairs which are
Landlord's responsibility under Section 7.6 herein excepted. Reasonable wear and
tear shall not include any damage or deterioration that would have been
prevented by good maintenance practice or by Tenant performing all of its
obligations under this Lease. Tenant shall also surrender to Landlord such
Alterations as Tenant is required or entitled to leave pursuant to Section 5.6
herein. Tenant shall remove all furniture, equipment, trade fixtures, debris and
articles of personal property owned by Tenant in the Premises, and shall repair
any damage to the Premises resulting from such removal and restore the Premises
to their original condition, with all interior walls cleaned, all interior
painted surfaces repainted in the original color, all holes in walls repaired,
all carpets shampooed and cleaned, all HVAC equipment in good condition and
repair reasonable wear and tear excepted, and all floors cleaned and waxed. Any
furniture, equipment, trade fixtures or other personal property not removed by
Tenant by the Term Expiration Date (or earlier termination of this Lease) shall
be considered abandoned, and Landlord may remove any or all of such items and
dispose of same in any lawful manner or store same in a public warehouse or
elsewhere for the account and at the expense and risk of Tenant. Tenant shall be
liable for the costs of removal and storage of any furniture, equipment, trade
fixtures or other personal property, the costs of removal of any alterations
which Tenant is required to remove hereunder, and any other reasonable loss,
cost, damage, liability or expense incurred by Landlord arising from Tenant's
failure to timely surrender the Premises in compliance with this Section. The
obligations of Tenant under this Section shall survive the expiration or sooner
termination of this Lease.

5.14 Security Deposit.  On or prior to the Term Commencement Date, Tenant shall
pay to Landlord the amount of the Security Deposit shown in the Basic Lease
Information as security for the full and faithful performance of Tenant's
obligations under this Lease. If at any time during the Term, Tenant shall be in
default in the payment of Rent or in default for any other reason beyond the
applicable notice period provided in Section 7.7, Landlord may use, apply or
retain all or part of the Security Deposit for payment of any amount due
Landlord or to cure such Event of Default or to reimburse or compensate Landlord
for any liability, loss, cost, expense or damage (including attorneys' fees)
which Landlord may suffer or incur by reason of any Event of Default by Tenant.
Tenant hereby waives the benefit of the provisions of any provision of law now
or hereafter in force to the extent such provisions limit Landlord's ability to
apply the Security Deposit to any liability, loss, cost, expense or damage
arising from a default by Tenant under this Lease. If Landlord uses or applies
all or any part of the Security Deposit, Tenant shall, within ten (10) days of
Landlord's written demand, pay to Landlord a sum sufficient to restore the
Security Deposit to the full amount required by this Lease. Any time the Base
Rent increases during the Term, Tenant shall (within ten (10) business days of
receipt of a request therefor from Landlord) deposit additional monies with
Landlord sufficient to maintain the same ratio between the Security Deposit and
Base Rent as that which was required as of the Term Commencement Date. Upon
expiration of the Term or earlier termination of this

                                      11-

<PAGE>   15
Lease and after Tenant has vacated the Premises, Landlord shall return the
Security Deposit to Tenant within thirty (30) days of Tenant's vacating the
Premises, reduced by such amounts as may be required by Landlord to remedy any
defaults by Tenant and/or to clean the Premises. The portion of the deposit not
so required shall be paid over to Tenant (or, at Landlord's option, to the last
assignee of Tenant's interest in this Lease) within thirty (30) days after
expiration of the Term or earlier termination hereof. Landlord shall have no
obligation to segregate the Security Deposit from its general funds or to pay
interest in respect thereof. No part of the Security Deposit shall be considered
to be held in trust, or to be prepayment of any monies to be paid by Tenant
under this Lease. Upon any sale or transfer by Landlord of its interest in the
Premises, Landlord shall deliver the Security Deposit to Landlord's successor in
interest and shall thereupon be relieved of any further liability to Tenant with
respect thereto as provided in Section 8.4 herein.

5.15 Tenant's Remedies. Landlord shall not be deemed in breach of this Lease
unless Landlord fails within a reasonable time to perform an obligation required
to be performed by Landlord. For purposes of this Section 5.15, a reasonable
time shall in no event be less than thirty (30) days after receipt by Landlord,
and by the holders of any ground lease, deed of trust or mortgage covering the
Premises whose name and address shall have been furnished Tenant in writing for
such purpose, of written notice specifying wherein such obligation of Landlord
has not been performed; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days after such notice are
reasonably required for its performance, then Landlord shall not be in breach of
this Lease if performance is commenced within said thirty (30) day period
thereafter diligently pursued to completion. If Landlord fails to cure such
default within the time provided for in this Lease, the holder of any such
ground lease, deed of trust or mortgage shall have an additional thirty (30)
days to cure such default; provided that if such default cannot reasonably be
cured within that thirty (30) day period, then such holder shall have such
additional time to cure the default as is reasonably necessary under the
circumstances, provided that performance is commenced within such thirty (30)
day period and is thereafter diligently prosecuted to completion. Tenant shall
look solely to the assets of Landlord for recovery of any judgment. No trustees,
directors, officers, agents, employees or representatives of Landlord (or, if
Landlord is a partnership, its partners, whether general or limited) shall ever
be personally liable for any such judgment. Any lien obtained to enforce any
such judgment and any levy of execution thereon shall be subject and
subordinate to any lien, deed of trust or mortgage to which Section 5.11 applies
or may apply. Tenant shall not have the right to withhold, reduce or offset any
amount against any payments of Rent due and payable under this Lease by reason
of a breach of this Lease by Landlord.

5.16 Rules and Regulations. Tenant shall comply with the rules and regulations
for the Premises attached as Exhibit B and, in the event that there is more than
one tenancy at the Premises, such reasonable amendments thereto as Landlord may
adopt from time to time with prior notice to Tenant.

ARTICLE 6. ENVIRONMENTAL MATTERS.

6.1 Hazardous Materials.

     (a)  Tenant shall be entitled to bring limited quantities of Hazardous
Material (as defined in Section 6.1(c) below) to be brought and kept on the
Premises, but strictly in accordance with all Environmental Laws (as defined
below) and prudent business practice, and only such quantities as are reasonably
necessary for Tenant's operations on the Premises. Tenant shall not cause or
permit any Hazardous Material to be released, discharged or disposed in, on,
under or about the Premises by any person or party whatsoever, except for the
delivery of such Hazardous Material to licensed contractors for off-site
disposal in strict accordance with all Environmental Laws. Tenant shall comply
at Tenant's sole expense with all Environmental Laws with respect to Hazardous
Material of any type whatsoever directly or indirectly placed by Tenant or its
agents, contractors, employees, invitees or guests in, on, about or under the
Premises.

     (b)  Tenant hereby agrees to indemnify, defend and hold Landlord harmless
from and against any and all claims, liability, losses, damages, costs and/or
expenses including, without limitation, diminution in value of the Premises,
damages for the loss or restriction on use of usable space or of any amenity of
the Premises, damages arising from any adverse impact on marketing the Premises,
loss of rental income, and

                                      12-
<PAGE>   16
sums paid in settlement of claims, fines, penalties, attorneys' fees,
consultants' fees and experts' fees, which arise during or after the Term as a
result of the presence of Hazardous Material on the Premises caused or permitted
by Tenant, or the storage, placement, or use of Hazardous Material by Tenant,
its agents, employees, invitees or contractors in, on or about the Premises, or
Tenant's breach of any obligation under this Section. This indemnification of
Landlord by Tenant includes, without limitation, death of or injury to person,
damage to any property or the environment and costs incurred in connection with
any investigation of site conditions or any cleanup, remedial, removal, or
restoration work required by any federal, state or local governmental agency or
political subdivision. Tenant shall promptly take all actions at its sole
expense as are necessary to comply with all Environmental Laws or orders of any
governmental agency and return the Premises to the condition existing prior to
the introduction of such Hazardous Material caused or permitted by Tenant;
provided that Landlord's approval of such actions, and the contractors to be
used by Tenant in connection therewith, shall first be obtained. Tenant agrees
to defend all claims described in this Section on behalf of Landlord with
counsel reasonably approved by Landlord, and to pay all reasonable fees, costs,
damages, or expenses relating to or arising out of any such claims including
attorneys' fees and costs. This indemnification of Landlord by Tenant shall
survive the expiration or sooner termination of this Lease.

     (c)     As used in this Lease, the term "HAZARDOUS MATERIAL" means any
hazardous, toxic or radioactive substance, material or waste which is or
becomes regulated by any local governmental authority, the State of California
or the United States Government. The term "Hazardous Material" includes,
without limitation, any substance, material or waste which is (i) defined as a
"hazardous waste" or similar term under the laws of the jurisdiction where the
Premises is located; (ii) designated as a "hazardous substance" pursuant to
Section 311 of the Federal Water Pollution Control Act (33 U.S.C. Section 1317);
(iii) defined as a "hazardous waste" pursuant to Section 1004 of the Federal
Resource, Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq. (42
U.S.C. Section 6903); (iv) defined as a "hazardous substance" pursuant to
Section 101 of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601 et seq. (42 U.S.C. Section 9601); (v)
hydrocarbons, petroleum, gasoline, crude oil or any products, by-products or
fractions thereof; or (vi) asbestos in any form or condition. As used in this
Article 6, the term "ENVIRONMENTAL LAWS" means any applicable federal, state or
local laws, ordinances, rules or regulations relating to any Hazardous Material
affecting the Premises, including, without limitation, the specific laws,
ordinances and regulations referred to above, and any demand or order of any
federal, state or local governmental agency or political subdivision. References
to specific Laws shall also be references to any amendments thereto and to any
applicable successor Laws.

     (d)     The groundwater under the Premises has been determined to contain
Hazardous Material, and is presently undergoing remediation at the expense of
NCH Corporation, dba Mohawk Laboratories ("Mohawk") pursuant to License
Agreement dated February 26, 1999. Tenant shall not be responsible for
remediating any Hazardous Material in the groundwater underneath the Premises
to the extend shown on the most recent tests of Mohawk as of the date of
execution of this Lease. For purposes of this Lease, Tenant shall be presumed
to have caused the presence of Hazardous Material in the groundwater under the
Premises if at any time during the term of this Lease, Hazardous Material is
found to exist in groundwater under the Premises which is not reflected in such
test, or at levels beyond those reflected in such test, unless and except to
the extent that Tenant bears the burden of proving that such presence was
caused by the activities outside the Premises by third parties who are not
under Tenant's direction or control.

     (e)     Neither party shall have any obligation or liability to the other
with respect to any Hazardous Material contamination of the Premises created
during the term of the Lease in the event and to the extent Tenant does prove
that such contamination was in fact caused by activities outside the Premises
by third parties who are not under the direction or control of the Tenant.

     (f)     In the event any governmental agency having power and authority
over Hazardous Material contamination on the Premises orders the removal,
neutralization or other treatment of any Hazardous Material discovered on the
Premises during the term of the Lease and to the extent Tenant proves that such
contamination is due to activities outside the Premises by third persons not
acting under the direction or control of Tenant, Landlord shall comply with
such order, at Landlord's expense, to the extent that such

                                      13-

<PAGE>   17
order creates an obligation for either Landlord or Tenant and to the extent
that the party responsible for deposit of the Hazardous Material cannot be made
to comply with such order.

     (g)  In the event Hazardous Material are determined to exist on the
Premises during the term of this Lease and Tenant proves that the Hazardous
Material resulted from activities outside the Premises by third parties not
under the direction or control of Tenant, the parties shall mutually cooperate
and use their best efforts to cause the responsible party to remedy the problem
promptly for the benefit of both Landlord and Tenant. The obligations of the
parties under this subparagraph shall not be deemed to negate or limit the
obligations of Landlord under subparagraph (f) above.

     (h)  The parties agree that in connection with Tenant's burden of proof
regarding questions of contamination of soils or ground water on, about or
under the Premises, Tenant shall be entitled to utilize, and Landlord shall
give due consideration to, the results of the ground water quality tests and to
Tenant's records regarding the use, storage and disposal of chemicals on the
Premises. The parties intend to implement the following in connection with such
evidentiary matters:

          (1)  As to ground water tests, Tenant shall conduct such tests or
inspections in a manner, in locations and with a frequency that evidences good
scientific practice in the conduct of such tests and all of the data, test
conditions and test results shall be duly recorded in writing and verified by
the independent party conducting such tests; and

          (2)  Tenant's procedures shall at all times require employees to
contemporaneously maintain regular and complete records of the storage, usage
and disposal on the Premises of any materials that are or contain "Hazardous
Material" as that term is herein defined, such records shall be kept for the
lesser of ten (10) years after the expiration of this Lease or the time
required by any Environmental Law, and all such records shall be subject to
independent verification by Landlord or its agents.

6.2  Right of Entry.  Landlord, its employees, agents and consultants, shall
have the right to enter the Premises at any time, in case of an emergency, and
otherwise during reasonable hours and upon reasonable written notice to Tenant,
in order to conduct periodic environmental inspections and tests to determine
whether any Hazardous Materials are present. The costs and expenses of such
inspections shall be paid by Landlord unless a default or breach of this Lease,
violation of Laws or contamination caused or permitted by Tenant is found to
exist. In such event, Tenant shall reimburse Landlord upon demand, as
Additional Rent, for the costs and expenses of such inspections plus a ten
percent (10%) administrative fee.

6.3  Notice to Landlord.  Tenant shall immediately notify Landlord in writing
of: (i) any enforcement, clean-up, removal or other governmental or regulatory
action instituted regarding the Premises pursuant to any Laws; (ii) any claim
made or threatened by any person against Tenant or the Premises relating to
damage, contribution, cost recovery, compensation, loss or injury resulting
from or claimed to result from any Hazardous Material; and (iii) any reports or
other writings of any kind made to or received from any governmental agency
arising out of or in connection with any Hazardous Material in or removed from
the Premises, including any complaints, notices, warnings or asserted violations
in connection therewith. Tenant shall also supply to Landlord as promptly as
possible, and in any event within three (3) business days after Tenant first
receives or sends the same, copies of all claims, reports, complaints, notices,
warnings, asserted violations or other communications relating in any way to
the condition of the Premises or any of the matters described in this Article 6.

ARTICLE 7.  INSURANCE, INDEMNITY, CONDEMNATION, DAMAGE AND DEFAULT.

7.1  Tenant's Insurance.

     (a)  Tenant shall, at Tenant's sole cost and expense, during the Term
maintain in effect "All Risks" insurance against damage by fire, vandalism,
malicious mischief and other perils contained within the classification of "All
Risks" for an amount of up to one hundred percent (100%) of the full replacement
cost the Premises and the Buildings, all improvements constructed thereon and
any additions thereto or

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<PAGE>   18
replacements thereof, together with rental interruption insurance on the
Premises against loss by perils covered by such insurance in amounts of up to
one year's full rental value, which rental insurance shall include all Real
Property Taxes, insurance premiums and other sums payable as Additional Rent
hereunder, the proceeds of which shall be payable to Landlord and any
Mortgagee, as their interests may appear. Tenant may maintain a deductible not
to exceed $25,000 on such policy, or such other deductible as agreed by
Landlord and Tenant, provided however, that in the event of any loss hereunder,
Tenant shall be obligated to pay to Landlord such deductible amount.

     (b)  Tenant shall secure and maintain, at its own expense, at all times
during the Term, a policy or policies of commercial general liability insurance
protecting Tenant and naming Landlord and the holders of any deeds of trust,
mortgages or ground leases on the Premises, as additional insureds against
claims based upon, involving or arising out of Tenant's operations, assumed
liabilities or Tenant's use, occupancy or maintenance of the Premises. Such
insurance shall provide for a minimum amount of Five Million Dollars
($5,000,000.00) for property damage or injury to or death of one or more than
one person in any one accident or occurrence. The coverage required to be
carried shall include personal injury liability (libel, slander, false arrest
and wrongful eviction), broad form property damage liability, products
liability, fire legal liability, advertising injury, completed operations
coverage (as well as owned, non-owned and hired automobile liability if an
exposure exists), and the broadest form of contractual liability coverage
available. It is the parties intention that Tenant's policy provide coverage of
Tenant's contractual obligations under this Lease, including the indemnification
obligations contained in Section 7.3, to the maximum extent possible. The
commercial general liability policy shall contain an exception to any pollution
exclusion which exception insures damage or injury arising out of heat, smoke or
fumes from a hostile fire. Such insurance shall be written on a claims made
basis and contain a separation of insureds provision or cross-liability
endorsement acceptable to Landlord.

     (c)  Tenant shall secure and maintain, at Tenant's expense, at all times
during the Term, a policy of physical damage insurance on all of Tenant's
fixtures, furnishings, equipment, machinery, merchandise and personal property
in the Premises and on any Alterations (as defined in Section 5.6) made by or
for Tenant upon the Premises, all for the full replacement cost thereof without
deduction for depreciation of the covered items and in amounts that meet any
co-insurance clauses of the policies of insurance. Such insurance shall insure
against those risks customarily covered in an "all risk" policy of insurance
covering physical loss or damage. Tenant shall use the proceeds from such
insurance for the replacement of fixtures, furnishings, equipment and personal
property and for the restoration of Alterations to the Premises. In addition,
Tenant shall secure and maintain, at all times during the Term, loss of income,
business interruption and extra expense insurance in such amounts as will
reimburse Tenant for direct or indirect loss of earnings and incurred costs
attributable to all perils commonly insured against by prudent tenants or
attributable to prevention of access to the Premises as a result of such perils.

     (d)  Tenant shall secure and maintain at all times during the Term
workers' compensation insurance in such amounts as are required by law, and all
such other insurance as may be required by applicable law or as may be
reasonably required by Landlord. In the event Tenant makes any Alterations to
the Premises, prior to commencing any work in the Premises, Tenant shall secure
"builder's all risk" insurance which shall be maintained throughout the course
of construction, such policy being an all risk builder's risk completed value
form, in an amount approved by Landlord, but not less than the total contract
price for the construction of such Alterations and covering the construction
of such Alterations, and such other insurance as Landlord may require, it being
understood and agreed that all of such Alterations shall be insured by Tenant
pursuant to this Section 7.1 immediately upon completion thereof.

7.2  Additional Insurance Requirements.

     (a)  Tenant shall provide Landlord with an original certificate of
insurance, executed by an authorized agent of the insurer(s), confirming
compliance with all insurance requirements hereunder, and copies of such
policies if requested by Landlord. This certificate shall indicate that the
insurance provided specifically recognizes the liabilities assumed by Tenant
under this Lease (including without limitation Tenant's indemnification
obligations under Section 7.3) and that Tenant's insurance is primary to and not

                                      15-
<PAGE>   19
contributory with any other insurance maintained by Landlord, whose insurance
shall be considered excess insurance only. The certificate shall also confirm
that the waiver of subrogation required to be obtained pursuant to Section 7.4
is permitted by the insurer.

     (b)  Payment of premiums for all insurance policies required under this
Lease shall be deemed Additional Rent.  In the event that Tenant fails to cure
an Event of Default within the applicable notice period; Landlord may
thereafter require that all insurance policies required hereunder to be paid in
advance with a single, annual premium. All such policies shall be issued by and
binding upon a reputable insurance company of good financial standing licensed
to do business in the State of California with a rating of at least A-VII in
the most currently available issue of Best's Insurance Guide, or such other
rating as may be required by a lender having a lien on the Premises. Evidence
of insurance provided to Landlord shall include an endorsement showing that
Landlord and the holders of any deeds of trust, mortgages or ground leases on
the Premises are included as additional insureds on general liability
insurance, and as loss payees for property insurance, to the extent required
hereunder, and an endorsement whereby the insurer agrees not to cancel,
non-renew or materially alter the policy without at least thirty (30) days
prior written notice to Tenant, Landlord and any mortgagee of Landlord. Tenant
shall, at least thirty (30) days prior to the expiration of any policy of
insurance required to be maintained by Tenant under this Lease, furnish
Landlord with an "insurance binder" or other satisfactory evidence of renewal
thereof.

     (c)  It is the intention of the parties hereto to protect Landlord and the
Premises from any type or amount of risk for which insurance can be reasonably
obtained throughout the Term. If in the reasonable opinion of any mortgagee of
the Premises or an insurance broker retained by Landlord, the amount or type of
any insurance coverage then in effect is not adequate to protect the interests
of Landlord and Landlord's lenders, then Tenant shall increase or broaden its
insurance coverage in the manner requested within thirty (30) days of
Landlord's written notice, provided however, that Tenant shall not be required
to obtain earthquake insurance unless such coverage is required by Landlord's
lender and such requirement has become the common practice among lenders with
respect to properties similar to the Premises. Notwithstanding anything
contained herein, Tenant assumes full responsibility for adequately insuring
itself against all risks and obligations under this Lease and its use of the
Premises. Tenant's obligations shall not be limited or relieved in any manner
as a result of Tenant's satisfaction of the minimum insurance requirements
under this Lease.

     (d)  Tenant shall not do or permit anything to be done that would
invalidate the insurance policies referred to in this Article 7. Tenant shall,
at Tenant's sole expense, comply with (i) all requirements of Tenant's and
Landlord's insurers and (ii) all rules, orders, regulations or requirements of
the American Insurance Association and with any similar body that pertain to
Tenant's business operations or use of the Premises.

     (e)  In the event that Tenant fails to provide evidence of insurance
required to be provided by Tenant under this Lease, prior to commencement of
the Term, and thereafter during the Term, within seven (7) days following
Landlord's request therefor, and thirty (30) days prior to the expiration date
of any such policy of coverage, Landlord shall be authorized (but not required)
to procure such policy at Tenant's expense. The costs of such policy, plus a
ten percent (10%) administrative fee, shall be payable as Additional Rent
within ten (10) days of Landlord's written notice. Notwithstanding any
provision herein or the absence of a default by Tenant, Landlord may elect to
procure any or all of the policies required in Section 7.1, in which event
Tenant shall reimburse Landlord for the cost of same within fifteen (15) days
of Landlord's written request.

7.3  Indemnity and Exoneration.

     (a)  Except as it may be otherwise provided for in this Lease and to the
extent not prohibited by law, Landlord and Landlord's representatives (which
term, whenever used in this Lease, shall be deemed to include Landlord's
partners, trustees, ancillary trustees, officers, directors, shareholders,
beneficiaries, agents, employees and property manager) shall not be liable for
any loss, injury or damage to person or property of Tenant, Tenant's agents,
employees, contractors, customers, invitees or any other person, in or

                                      16-
<PAGE>   20
about the Premises, whether such damage or injury is caused by fire, steam,
electricity, gas, water or rain, or from the breakage, leakage or other defects
of sprinklers, wires, appliances, plumbing, air conditioning or lighting
fixtures, or by theft, acts of God, acts of the public enemy, riot, strike,
insurrection, war, court order, requisition or order of governmental body or
authority or from any other cause, whether said damage or injury results from
conditions arising upon the Premises or from other sources or places, and
regardless of whether the cause of such damage or injury or the means of
repairing the same is inaccessible to Tenant, or which may arise through repair,
alteration or maintenance of any part of the Premises or the failure to make any
such repair, from any condition or defect in, on or about the Premises, or from
any other condition or cause whatsoever, other than from Landlord's gross
negligence or willful misconduct. Landlord shall not be liable for any loss,
injury or damage arising from any act or omission of any other occupant of the
Premises or any other party, nor shall Landlord be liable under any
circumstances for damage or inconvenience to Tenant's business or for any loss
of income or profit therefrom, except in the event of Landlord's active gross
negligence or willful misconduct.

     (b) Except as it may be otherwise provided for in this Lease and to the
extent not prohibited by law, Tenant shall indemnify, protect, defend and hold
the Premises, Landlord and Landlord's representatives, harmless of and from any
and all claims, liability, costs, penalties, fines, damages, injury, judgments,
forfeiture, losses (including without limitation diminution in the value of the
Premises) or expenses (including without limitation reasonable attorneys' fees,
consultant fees, testing and investigation fees, expert fees and court costs)
arising out of or in any way related to or resulting directly or indirectly from
(i) Tenant's use or occupancy of the Premises, (ii) the activities of any person
or party in or about the Premises, including but not limited to work or labor
performed, materials or supplies furnished to or at the request of or for the
account of Tenant, (iii) Tenant's failure to comply with any applicable law, and
(iv) any default or breach by Tenant of any obligation under this Lease;
provided, however, that the foregoing indemnity shall not be applicable to
claims arising by reason of the active gross negligence or willful misconduct of
Landlord. The provisions of this Section 7.3 shall survive the expiration or
sooner termination of this Lease.

     (c) Landlord hereby indemnifies Tenant and holds Tenant harmless from and
against any and all claims, liability, costs, penalties, fines, damages, injury,
judgments, forfeiture, losses or expenses (including without limitation
reasonable attorneys' fees, consultant fees, testing and investigation fees,
expert fees and court costs) arising out of Landlord's (including Landlord's
contractors, agents or employees) willful misconduct or Landlord's gross
negligence on the Premises. The provisions of this Section 7.3 shall survive the
expiration or sooner termination of this Lease.

7.4 Waiver of Subrogation. Anything in this Lease to the contrary
notwithstanding, Landlord and Tenant each waives all rights of recovery, claim,
action or cause of action against the other, its agents (including partners,
both general and limited), trustees, officers, directors, and employees, for any
loss or damage that may occur to any person or to the Premises, or any
improvements thereto, or the Premises or any personal property of such party
therein, by reason of any cause required to be insured against under this Lease
to the extent of such coverage, regardless of cause or origin, including
negligence of the other party hereto, provided that such party's insurance is
not invalidated thereby; and each party covenants that, to the fullest extent
permitted by law, no insurer shall hold any right of subrogation against such
other party. Landlord and Tenant shall advise its insurers of the foregoing and
such waiver shall be a part of each policy required to be maintained by Landlord
and Tenant hereunder.

7.5 Condemnation.

     (a) If there is any taking of or damage to all or any part of the Premises
or any interest therein because of the exercise of the power of eminent domain
or inverse condemnation, whether by condemnation proceedings or otherwise, or
any transfer of any part of the Premises or any interest therein made in
avoidance thereof (all of the foregoing are hereinafter referred to as a
"Taking") before or during the Term, the rights and obligations of the parties
with respect to such Taking shall be as provided in this Section 7.5. For
purposes of this Section 7.5 the "date of Taking" means the date of entry into
possession by, or the vesting of title in, the condemning authority, whichever
is earlier.

                                      17-
<PAGE>   21
     (b) If there is a Taking of all of the Premises, this Lease shall terminate
automatically as of the date of Taking. If this Lease is terminated as to a
portion of the Premises, such partial termination shall be effective as of the
date of Taking.

     (c) If thirty-three percent (33%) or more, but less than one hundred
percent (100%), of the floor area of the Buildings shall be taken, either party
may terminate this Lease. The terminating party shall give the other party
notice of such election not later than thirty (30) days after the date of
Taking. If neither party gives such notice, this Lease shall remain in full
force and effect and Base Rent shall be adjusted as provided in Section 7.5(f).

     (d) If this Lease is not terminated pursuant to this Section 7.5, Landlord
shall restore with reasonable diligence the remainder of the Premises so far as
practicable to a complete unit of similar quality, character, and condition as
that which existed immediately prior to the Taking, provided that the scope of
work shall not exceed the original scope of work done by Landlord in
constructing the Premises, and further provided that Landlord shall not be
obligated to expand more than the amount which was awarded and received by
Landlord for such purpose in connection with the Taking.

     (e) If this Lease is not terminated as provided in this Section 7.5, the
Base Rent and Security Deposit shall be reduced in proportion to the ratio of
the floor area taken from the Buildings to the total floor area of the
Buildings immediately before the Taking.

     (f) The entire award of compensation in such proceedings, whether for a
total or partial Taking or for diminution in the value of the leasehold or for
the fee shall belong to and be the property of Landlord; provided that Tenant
shall be entitled to recover from the condemnor such compensation as may be
separately awarded by the condemnor to Tenant or recoverable from the condemnor
by Tenant in its own right for the Taking of trade fixtures and equipment owned
by Tenant (meaning personal property, whether or not attached to real property,
which may be removed without injury to the Premises), and for the expense of
removing and relocating Tenant's personal property. Tenant shall not be
compensated for the "bonus value" of its lease. If the Premises are restored in
accordance with Section 7.5(d), any awards received shall be made available for
such restoration.

     (g) In the event of a temporary Taking of all or a portion of the Premises,
there shall be no abatement of Rent and Tenant shall remain fully obligated for
performance of all of the covenants and obligations on its part to be performed
pursuant to the terms of this Lease. All proceeds awarded or paid with respect
thereto shall belong to Tenant.

7.6 Damage or Destruction. In the event of a fire or other casualty in the
Premises, Tenant shall immediately give notice thereof to Landlord. The
following provisions shall then apply:

     (a) If the damage to the Premises can, in Landlord's reasonable opinion, be
made tenantable with all damage repaired within nine (9) months from the date of
damage, then Landlord shall be obligated to rebuild the same to substantially
their former condition (subject to reasonable changes which Landlord shall deem
desirable and such changes may be required by applicable law) and shall proceed
with reasonable diligence to do so and this Lease shall remain in full force and
effect; provided, however, that Landlord shall have no obligation to repair or
restore any tenant improvements except to the extent that Landlord realizes
insurance proceeds, if any, sufficient for such purpose and for all other
restoration and repair purposes. Landlord shall provide written notice (the
"Repair Notice") to Tenant indicating the anticipated period for repairing the
damage, within thirty (30) days of the later of (i) the date that Landlord
determines the full extent of the damage, or (ii) the extent of
insurance proceeds available to effectuate repairs. Tenant shall deposit with
Landlord within ten (10) days of Landlord's sending the Repair Notice the
difference, if any, between the estimated costs of repair and the amount of
insurance proceeds payable to Landlord. Tenant shall have no obligation under
this Section to reimburse Landlord for any upgrading of the Premises from its
pre-casualty condition which is not required by law. Landlord may, at its
election, refrain from commencing any repair work until Tenant has deposited
such additional sums with Landlord. In such event, Landlord's time for
completing the repairs shall be extended for a time period equal to such delay
in payment by Tenant. The Repair Notice shall state, if applicable, Landlord's
election to either repair the Premises or terminate the Lease.

                                      18-
<PAGE>   22
     (b)  Notwithstanding anything to the contrary contained in Section 7.6(a),
Landlord shall not have any obligation whatsoever to repair, reconstruct or
restore the Premises when any substantial damage thereto occurs during the last
eighteen (18) months of the Term, and Tenant shall likewise have the right to
terminate the Lease if substantial damage occurs during the last eighteen (18)
months of the Term. For purposes herein, "substantial damage" shall mean damage
which can not be completely restored within thirty (30) days of commencing work
thereon. If Landlord elects to repair such damage in the Repair Notice, Tenant
may elect to terminate the Lease within ten (10) days of receipt of thereof,
otherwise the Lease shall remain in full force and effect. If Landlord elects
not to rebuild, Landlord shall notify Tenant of its decision not to rebuild in
the Repair Notice, whereupon the Lease shall terminate as of the later of the
date of such notice or Tenant's vacating and surrendering the Premises and
paying the difference, if any, between the estimated costs of repair and the
amount of insurance proceeds payable to Landlord.

     (c)  If the Premises can not be repaired within nine (9) months from the
date of damage, Landlord shall so notify Tenant within thirty (30) days of the
later of (i) the date that Landlord determines the full extent of the damage, or
(ii) the extent of insurance proceeds available to effectuate repairs. Tenant or
Landlord may terminate this Lease within thirty (30) days after the date of such
notice, such termination notice to be effective upon Tenant's vacating and
surrendering the Premises and paying the difference, if any, between the
estimated costs of repair and the amount of insurance proceeds payable to
Landlord. If neither party elects to terminate, Landlord shall proceed with
reasonable diligence to rebuild the Premises to substantially their former
condition (subject to reasonable changes which Landlord shall deem desirable and
such changes as may be required by applicable law).

     (d)  During any period when Tenant's use of the Premises is significantly
impaired by damage or destruction, Base Rent shall abate in proportion to the
degree to which Tenant's use of the Premises is impaired until such time as the
Premises are made tenantable as reasonably determined by Landlord; provided that
no such rental abatement shall be permitted if the casualty is the result of the
negligence or willful misconduct of Tenant or Tenant's employees, agents,
contractors or invitees, or if Tenant has failed to maintain the rental
interruption insurance required under Section 7.1(a).

     (e)  The proceeds from any insurance paid by reason of damage to or
destruction of the Premises or any part thereof insured by Landlord shall belong
to and be paid to Landlord, subject to the rights of any mortgagee of Landlord's
interest in the Premises or the beneficiary of any deed of trust which
constitutes an encumbrance thereon. Tenant shall be responsible at its sole cost
and expense for the repair, restoration and replacement of (i) its fixtures,
furnishings, equipment, machinery, merchandise and personal property in the
Premises, and (ii) its Alterations, unless Landlord realizes insurance proceeds
sufficient for such purpose and agrees to undertake such work. In the event of a
destruction of the Premises which results in a termination of the Lease, Tenant
shall be entitled to recover the portion of the insurance proceeds allocable to
Tenant's Improvements, subject to reasonable depreciation, and its trade
fixtures, equipment and personal property.

     (f)  Landlord and Tenant shall each in all events be required to act in an
expeditious manner to fulfill their obligations under this Section in order to
cause the Premises to be restored as promptly as possible. Landlord's repair and
restoration obligations under this Section 7.6 shall not impair or otherwise
affect the rights and obligations of the parties set forth elsewhere in this
Lease. Landlord shall not be liable for any inconvenience or annoyance to
Tenant, its employees, agents, contractors or invitees, or injury to Tenant's
business resulting in any way from such damage or the repair thereof; provided
that Landlord shall cause work to be performed at reasonable hours and in a
manner to minimize any disruption of Tenant's business. Landlord and Tenant
agree that the terms of this Lease shall govern the effect of any damage to or
destruction of the Premises with respect to the termination of this Lease and
hereby waive the provisions of any present or future statute or law to the
extent inconsistent therewith.

7.7  Default by Tenant.

    (a)  Events Of Default. The continuation of any of the following beyond the
applicable notice and cure period shall constitute an event of default ("Event
of Default") on the part of Tenant:

          (1)  Nonpayment Of Rent. Failure to pay any installment of Rent due
and payable hereunder on the date when payment is due, such failure continuing
for a period of five (5) days after written notice of

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<PAGE>   23
such failure. Tenant shall pay to Landlord, as Additional Rent hereunder and in
addition to a late charge, if applicable, and any reasonable attorneys fees
which Landlord may incur, a charge of One Hundred Fifty Dollars ($150.00) for
the preparation of a written demand for delinquent Rent to reimburse Landlord
for its administrative costs thereof.

     (2)  Other Obligations.  Failure to perform any obligation, agreement or
covenant under this Lease other than those matters specified in subsection
7.7(a)(1), including providing Landlord with financial statements, a
Subordination Agreement or an estoppel certificate as required under Sections
5.9, 5.11 and 5.12 respectively, such failure continuing for a period of fifteen
(15) business days after written notice of such failure (or such longer period,
as is reasonably necessary to remedy such default, provided that Tenant
commences the remedy within such fifteen (15) day period and continuously and
diligently pursues such remedy at all times thereafter).

     (3)  General Assignment.  Any general arrangement or assignment by Tenant
for the benefit of creditors.

     (4)  Bankruptcy.  The filing of any voluntary petition in bankruptcy by
Tenant, or the filing of an involuntary petition against Tenant, which
involuntary petition remains undischarged for a period of sixty (60) days. In
the event that under applicable law the trustee in bankruptcy or Tenant has the
right to affirm this Lease and continue to perform the obligations of Tenant
hereunder, such trustee or Tenant shall, within such time period as may be
permitted by the bankruptcy court having jurisdiction, cure all defaults of
Tenant hereunder outstanding as of the date of the affirmance of this Lease and
provide to Landlord such adequate assurances as may be necessary to ensure
Landlord of the continued performance of Tenant's obligations under this Lease.

     (5)  Receivership.  The appointment of a trustee or receiver to take
possession of all or substantially all of Tenant's assets or the Premises, where
possession is not restored to Tenant within thirty (30) days.

     (6)  Attachment.  The attachment, execution or other judicial seizure of
all or substantially all of Tenant's assets or the Premises, if such attachment
or other seizure remains undismissed or undischarged for a period of thirty (30)
days after the levy thereof.

     (7)  Insolvency.  The admission by Tenant in writing of its inability to
pay its debts as they become due; the filing by Tenant of a petition seeking any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future statute, law or regulation; the
filing by Tenant of an answer admitting or failing timely to contest a material
allegation of a petition filed against Tenant in any such proceeding; or, if
within sixty (60) days after the commencement of any proceeding against Tenant
seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, such proceeding shall not have been dismissed.

     (8)  Letter of Credit.  If the performance of Tenant's obligations under
this Lease is secured by a Letter of Credit: (i) the termination of the Letter
of Credit, (ii) the issuing bank's becoming insolvent or the subject of a
bankruptcy filing, or (iii) the issuing bank's refusal to honor the Letter of
Credit; combined with Tenant's failure, within fifteen (15) days following
written notice by or on behalf of Landlord to Tenant of any such event, to
provide Landlord with an alternative letter of credit or other substitute
security acceptable to Landlord in its sole discretion.

     (9)  Guarantor.  If the performance of Tenant's obligations under this
Lease is guaranteed: (i) the death of a guarantor; (ii) the termination of a
guarantor's liability with respect to this Lease other than in accordance with
the terms of such guaranty; (iii) a guarantor's becoming insolvent or the
subject of a bankruptcy filing; (iv) a guarantor's refusal to honor the
guaranty; or (v) a guarantor's breach of its guaranty obligation on an
anticipatory breach basis, and Tenant's failure, within thirty (30) days
following written notice by or on behalf of Landlord to Tenant of any such
event, to provide Landlord with written alternative assurance or security,
which, when coupled with the then existing resources of Tenant, equals or
exceeds the combined financial resources of Tenant and the guarantor(s) that
existed at the time of execution of this Lease.

                                      20-

<PAGE>   24
          (10) Misrepresentation. The discovery by Landlord that any
representation, warranty or financial statement given to Landlord by Tenant or
any guarantor of Tenant's obligations under this Lease was materially false or
misleading.

     (b)  Remedies Upon Default. If an Event of Default by Tenant occurs, then,
in addition to any other remedies available to Landlord at law or in equity,
all of which rights and remedies shall be cumulative, with the exercise of one
or more rights or remedies not to impair Landlord's rights to exercise any
other right or remedy, and all of which may be exercised pursuant to legal
process as then may be provided or permitted by the laws of the State of
California, Landlord shall have the following remedies:

          (1)  Termination. If an Event of Default occurs, Landlord shall have
the right, with or without notice or demand, immediately upon expiration of any
applicable grace period specified herein, to terminate this Lease, and at any
time thereafter recover possession of the Premises or any part thereof and
expel and remove therefrom Tenant and any other person occupying the same by
any lawful means, and repossess and enjoy the Premises without prejudice to any
of the remedies that Landlord may have under this Lease. If Landlord elects to
terminate the Lease, Landlord shall also have the right to reenter the Premises
and take possession of and remove all equipment and fixtures of Tenant in the
Premises. The termination of this Lease by Landlord shall not be to affect
Tenant's obligations under Sections 5.13, 6.1, or 7.3 of this Lease, which
obligations shall survive the termination or expiration of this Lease.

          (2)  Continuation After Default. Even though Tenant has breached this
Lease and/or abandoned the Premises, this Lease shall continue in effect for
so long as Landlord does not terminate Tenant's right to possession in writing,
and Landlord may enforce all of its rights and remedies under this Lease,
including (but without limitation) the right to recover Rent as it becomes due,
and Landlord, without terminating this Lease, may exercise all of the rights
and remedies of a landlord under California law. Acts of maintenance or
preservation, efforts to relet the Premises or the appointment of a receiver
upon application of Landlord to protect Landlord's interest under this Lease
shall not constitute an election to terminate Tenant's right to possession
unless expressly stated by Landlord. Notwithstanding any such reletting without
such termination, Landlord may at any time thereafter elect to terminate
Tenant's right to possession and this Lease. If Landlord elects to relet the
Premises for the account of Tenant, the rent received by Landlord from such
reletting shall be applied as follows: first, to the payment of any costs of
such reletting (including, without limitation, reasonable attorneys fees,
brokers' fees and tenant improvement costs); second, to the payment of any
indebtedness other than Rent due hereunder from Tenant to Landlord; third, to
the payment of Rent due and unpaid hereunder; and the balance, if any, shall be
held by Landlord and applied in payment of future Rent as it becomes due. If
that portion of rent received from the reletting which is applied against the
Rent due hereunder is less than the amount of the Rent due, Tenant shall pay
the deficiency to Landlord promptly upon demand by Landlord. Such deficiency
shall be calculated and paid monthly. Tenant shall also pay to Landlord, as
soon as determined, any costs and expenses incurred by Landlord in connection
with such reletting or in making alterations and repairs to the Premises, which
are not covered by the rent received from the reletting.

     (c)  Damages Upon Termination. Should Landlord terminate this Lease,
Landlord shall have all the rights and remedies of a landlord provided by
Section 1951.2 of the Civil Code of the State of California or any amended or
successor code section. Upon such termination, in addition to any other rights
and remedies to which Landlord may be entitled under applicable law, Landlord
shall be entitled to recover from Tenant: (i) the worth at the time of award of
the unpaid Rent and other amounts which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid Rent which would have been earned after termination until the time of
award exceeds the amount of such Rent loss that Tenant proves could have been
reasonably avoided; (iii) the worth at the time of award of the amount by
which the unpaid Rent for the balance of the Term after the time of award
exceeds the amount of such Rent loss that Tenant proves could be reasonably
avoided; (iv) any other amounts necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform its obligations
under this Lease or which, in the ordinary course of things, would be likely to
result therefrom, including but not limited to brokerage commissions,
advertising expenses and remodeling expenses, and (v) any other amounts, in
addition to or in lieu of those listed above, now or hereafter permitted by
applicable law. The "worth at the time of award" of the amounts referred to in
clauses (i) and (ii) shall be computed with interest at the lesser of eighteen
percent (18%) per annum or the maximum rate then allowed by law. The "worth at
the time of award" of the amount referred to in clause (iii) shall be computed
by discounting such

                                      21-
<PAGE>   25
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of the award plus one percent (1%).

     (d)  Waiver of Notice/Performance by Landlord. Notwithstanding any
provision of this Section 7.7, (a) if Tenant is required to comply with any
governmental requirement, Tenant shall not be entitled to notice of default from
Landlord and right to cure beyond the period within which such compliance may be
required by applicable law; or (b) if in Landlord's reasonable determination the
continuance of any default by Tenant for the full period of notice provided for
herein will constitute a threat of injury or harm to persons or property,
Landlord may, with or without notice, elect to perform those acts with respect
to which Tenant is in default for the account and at the expense of Tenant. If
by reason of such governmental requirement or default by Tenant, Landlord is
compelled or elects to pay any sum of money, (including without limitation
reasonable attorneys' fees, consultant fees, testing and investigation fees,
expert fees and court costs), such sums so paid by Landlord, plus an
administrative charge of ten percent (10%) of such sums, shall be due as
Additional Rent from Tenant within ten (10) days of written demand from
Landlord.

     (e)  Late Charge. If any payment required to be made by Tenant under this
Lease is not received by Landlord within seven (7) days of the date the same is
due, Tenant shall pay to Landlord an amount equal to five percent (5%) of the
delinquency as Additional Rent, provided that Landlord shall be only required to
send written  notice once in any calendar year, the late charge being
automatically due without notice for any payment received more than seven (7)
days after its due date in such calendar year. The parties agree that Landlord
would incur costs not contemplated by this Lease by virtue of such
delinquencies, including without limitation administrative, collection,
processing and accounting expenses, the amount of which would be extremely
difficult to compute, and that the foregoing sum represents a reasonable
estimate of Landlord's damages for late payment. Acceptance of such late charge
by Landlord shall in no event constitute a waiver of Tenant's breach or default
with respect to such delinquency, or prevent Landlord from exercising any of
Landlord's other rights and remedies.

     (f)  Interest. Tenant hereby acknowledges that late payment by Tenant to
Landlord of Base Rent and Additional Rent and other sums due hereunder will
cause Landlord to incur costs not contemplated by this Lease, the exact amount
of which will be extremely difficult to ascertain. Such costs include, but are
not limited to, processing and accounting charges and late charges which may be
imposed on Landlord by the terms of any mortgage or trust deed covering the
Premises. Accordingly, all sums accruing to Landlord under the terms and
provisions of this Lease which shall not be paid when due shall bear interest
at the lesser of twelve percent (12%) per annum or the maximum rate allowed
under California law, from the date the same becomes due and payable by the
terms and provisions of this Lease until paid, such interest constituting
Additional Rent hereunder. In the event that there are any sums payable by
Landlord to Tenant under the terms and provisions of this Lease which shall not
be paid when due after notice to Tenant, such sums shall also bear interest at
the lesser of twelve percent (12%) per annum or the maximum rate allowed under
California law, from the date the same becomes due and payable by the terms and
provisions of this Lease until paid.

     (g)  Tenant's Subleases. If Landlord elects to terminate this Lease on
account of any default by Tenant, Landlord may: (i) terminate any sublease,
license, concession, or other consensual arrangement for possession entered
into by Tenant and affecting the Premises; or (ii) choose to succeed to
Tenant's interest in such arrangement. If Landlord elects to succeed to
Tenant's interest in such arrangement, Tenant shall, as of the date of notice
by Landlord of that election, have no further right to, or interest in, any
rent or other consideration receivable under that arrangement.

     (h)  Acceptance of Rent Without Waiving Rights. No payment by Tenant shall
be deemed to be other than on account of the earliest sum due from Tenant
hereunder, nor shall any endorsement or statement on any check or any letter
accompanying such payment be deemed an accord and satisfaction. As further
provided in Section 8.2 herein, Landlord may accept Tenant's payments without
waiving any right or remedy under this Lease, including the right to commence
and pursue an action to enforce rights and remedies under a previously served
notice of default, without giving Tenant any further notice or demand.

                                      22-
<PAGE>   26
     (i)  Remedies Cumulative.  All rights, privileges and elections or
remedies of Landlord are cumulative and not alternative with all other rights
and remedies at law or in equity to the fullest extent permitted by law.

ARTICLE 8.  MISCELLANEOUS MATTERS.

8.1  Brokers.  Landlord and Tenant each represent to the other that neither
party has had any dealings with any broker in connection with the negotiation of
this Lease and the consummation of the transaction contemplated hereby, other
than the brokers named in the Basic Lease Information. Landlord shall be solely
responsible for the payment of Landlord's broker pursuant to a separate
agreement between such parties. Landlord's broker and Tenant's broker have
entered into a separate agreement wherein such parties will share the
compensation paid to Landlord's broker under such broker's agreement with
Landlord. Landlord and Tenant hereby agree to indemnify, defend and hold each
other free and harmless from and against liability for compensation or charges
which may be claimed by any other agent, broker, finder or other similar party
by reason of any dealings with or actions of the indemnifying party in
connection with the negotiation of this Lease and the consummation of this
transaction, including any costs, expenses and attorneys' fees incurred with
respect thereto.

8.2  No Waiver.  No waiver by either Landlord or Tenant of the default or breach
of any term, covenant or condition of this Lease shall be deemed a waiver of any
other term, covenant or condition hereof, or of any subsequent default or breach
of the same or of any other term, covenant or condition hereof. The consent to,
or approval of, any act by a party shall not be deemed to render unnecessary the
obtaining of such party's consent to, or approval of, any subsequent or similar
act, or be construed as the basis of an estoppel to enforce any provision of
this Lease requiring such consent. Landlord's knowledge of a default or breach
at the time of accepting any payment from Tenant shall not be a waiver of any
such default or breach by Tenant other than the failure of Tenant to pay the
particular obligation to which such payment is applied by Landlord. Any payment
made by Tenant may be accepted by Landlord on account of any monies or damages
due Landlord, notwithstanding any qualifying statements or conditions made by
Tenant in connection therewith, which statements and/or conditions shall be of
no force or effect whatsoever unless specifically agreed to in writing by
Landlord at or before the time of deposit of such payment.

8.3  Holding Over.  If Tenant holds over after expiration or termination of this
Lease without the written consent of Landlord, Tenant shall pay for each month
of hold-over tenancy one hundred fifty percent (150%) of the Base Rent which
Tenant was obligated to pay for the month immediately preceding the end of the
Term for each month or any part thereof of any such hold-over period, together
with all other amounts due hereunder. No holding over by Tenant after the Term
shall operate to extend the Term. In the event of any unauthorized holding over,
Tenant shall indemnify, defend and hold Landlord harmless from and against all
claims, demands, liabilities, losses, costs, expenses (including attorneys'
fees), injury and damages incurred by Landlord as a result of Tenant's delay in
vacating the Premises.

8.4  Transfers by Landlord.  If Landlord transfers, in whole or in part, its
rights and obligations under this Lease or in the Premises, upon its
transferee's assumption of Landlord's obligations hereunder and delivery to such
transferee of any unused Security Deposit then held by Landlord, Landlord shall
be automatically released from any liability or obligations accruing under the
Lease after the date of such transfer.

8.5  Attorneys' Fees.  If Landlord or Tenant (the "indemnified party") becomes a
party to any action or dispute concerning the Premises as a result of any act or
omission by the other party (the "indemnifying party"), the indemnifying party
shall be liable for all costs incurred by the indemnified party in connection
with such dispute (including without limitation reasonable attorneys' fees,
consultant fees, testing and investigation fees, expert fees and court costs),
whether or not litigation is commenced. In the event either party places the
enforcement of this Lease, or any part of it, or the collection of any Rent due
or to become due hereunder, or recovery of the possession of the Premises, in
the hands of an attorney, or files suit upon the same, the prevailing party
shall recover its reasonable attorneys' fees, costs and expenses, including
those which may be incurred in connection with any mediation, arbitration,
bankruptcy proceeding or upon appeal. Such fees may be awarded in the same suit
or recovered in a separate suit, whether or not suit is filed or any suit that
may be filed is pursued to decision or judgment. The term "prevailing party"
shall include, without limitation, a party who substantially obtains or defeats
the relief sought, as the case may be, whether by compromise, settlement,
judgment, or the abandonment by the other party of its claim or

                                      23-
<PAGE>   27
defense. The attorneys' fee award shall not be computed in accordance with any
court fee schedule, but shall be such as to fully reimburse all attorneys' fees
reasonably incurred.

8.6  Termination; Merger. No act or conduct of Landlord, including, without
limitation, the acceptance of keys to the Premises, shall constitute an
acceptance of the surrender of the Premises by Tenant before the scheduled Term
Expiration Date. Only a written notice from Landlord to Tenant expressly
accepting a surrender of the Premises and acknowledging a termination of this
Lease shall be effective. Unless specifically stated otherwise in writing by
Landlord, the termination of this Lease for any reason shall automatically
terminate any sublease or lesser estate in the Premises; provided, however,
that Landlord shall have the option to continue any or all existing
subtenancies.

8.7  Amendments; Interpretation. This Lease may not be altered, changed or
amended, except by an instrument in writing signed by the parties in interest
at the time of the modification. The captions of this Lease are for
convenience only and shall not be used to define or limit any of its provisions.

8.8  Severability. If any term or provision of this Lease, or the application
thereof to any person or circumstance, shall to any extent be invalid or
unenforceable, the remainder of this Lease (including the application of such
provision to any other person or circumstance) shall not be affected thereby.
This Lease shall in all events be construed and interpreted so as to remain
enforceable in accordance with the express terms contained herein to the
fullest extent permitted by law.

8.9  Notices. All notices, demands, consents and approvals which are required
or permitted by this Lease to be given by either party to the other shall be in
writing and shall be deemed to have been fully given by personal delivery or by
recognized overnight courier service or when deposited in the United States
mail, certified or registered, with postage prepaid, and addressed to the party
to be notified at the address for such party specified on the Basic Lease
Information sheet, or to such other place as the party to be notified may from
time to time designate by at least fifteen (15) days' notice to the notifying
party given in accordance with this Section, except that upon Tenant's taking
possession of the Premises, the Premises shall irrevocably constitute Tenant's
address for notice purposes until Landlord has accepted Tenant's surrender of
the Premises. A copy of all notices given to Landlord under this Lease shall be
concurrently transmitted to such party or parties at such addresses as Landlord
may from time to time hereafter designate by notice to Tenant in accordance
with the terms set forth above.

     Any notice sent by registered or certified mail, return receipt requested,
shall be deemed given on the date of delivery shown on the receipt card, or if
no delivery date is shown, the postmark thereon. Notices delivered by
recognized overnight courier shall be deemed given twenty-four (24) hours after
delivery of the same to the courier. If notice is received on a Saturday,
Sunday or legal holiday, it shall be deemed received on the next business day.

8.10 Force Majeure. Any prevention, delay or stoppage of work to be performed
by Landlord or Tenant which is due to strikes, labor disputes, inability to
obtain labor, materials, equipment or reasonable substitutes therefor, acts of
God, governmental restrictions or regulations or controls, judicial orders,
enemy or hostile government actions, civil commotion, or other causes beyond
the reasonable control of the party obligated to perform hereunder, shall
excuse performance of the work by that party for a period equal to the duration
of that prevention, delay or stoppage. Nothing in this Section shall excuse or
delay Tenant's obligation to pay Rent or other charges due under this Lease.

8.11 Independent Covenants. Each and every covenant, agreement or other
provision of this Lease on Tenant's part to be performed shall be deemed and
construed as a separate and independent covenant of Tenant, not dependent on
any other provision of this Lease or on any other covenant or agreement of
Landlord set forth herein.

8.12 Successors and Assigns. This Lease shall be binding upon and inure to the
benefit of Landlord, is successors and assigns (subject to Section 8.4 herein),
and shall be binding upon and inure to the benefit of Tenant, its successors,
and to the extent a Transfer may be approved by Landlord, Tenant's successors
and assigns.

                                      24-
<PAGE>   28
8.13  Further Assurances.  Landlord and Tenant each agree to promptly sign all
documents reasonably requested to give effect to the provisions of this Lease.

8.14  Incorporation of Prior Agreements.  This Lease, including the exhibits and
addenda attached to it, contains all agreements of Landlord and Tenant with
respect to any matter referred to herein. No prior agreement or understanding
pertaining to such matters shall be effective.

8.15  Applicable Law.  This Lease shall be governed by, construed and enforced
in accordance with the laws of the State of California.

8.16  Time of the Essence.  Time is of the essence of each and every covenant of
this Lease.

8.17  No Joint Venture.  This Lease shall not be deemed or construed to create
or establish any relationship of partnership or joint venture or similar
relationship between Landlord and Tenant hereunder.

8.18  Authority.  If Tenant is a corporation, trust, general or limited
partnership, limited liability company or other business entity, each individual
executing this Lease on behalf of Tenant represents and warrants that he or she
is duly authorized to execute and deliver this Lease on Tenant's behalf and that
this Lease is binding upon Tenant in accordance with its terms. If Tenant is a
corporation, trust, partnership, limited liability company or other business
entity, Tenant shall, within ten (10) business days after request by Landlord,
deliver to Landlord evidence satisfactory to Landlord of such authority.
Landlord shall within ten (10) business days after request by Tenant, deliver to
Tenant evidence of Landlord's authority to execute and deliver this Lease.

8.19  Offer.  Preparation of this Lease by Landlord or Landlord's agent and
submission of same to Tenant shall not be deemed an offer to lease to Tenant.
This Lease is not intended to be binding and shall not be effective until fully
executed by both Landlord and Tenant.

8.20  Exhibits; Addenda.  All the Exhibits and addenda which are referenced
herein or are to attached to this Lease are incorporated in and made a part of
this Lease.

8.21  Nondisclosure.  Landlord and Tenant acknowledge that the terms and
conditions of this Lease and any letters of intent or other correspondence
related thereto are confidential and proprietary information, and shall not be
disclosed by either party except to the extent that such disclosure is (i)
required by lenders of either party; (ii) required by any governmental agency;
(iii) necessary in order for any employee, agent or contractor of either party
to perform its obligations; or (iv) consented to in writing by the nondisclosing
party.

8.22  Arbitration.  Landlord and Tenant shall submit all disputes, claims or
demands related to the repair of the Premises, including any dispute as to
whether the repair or replacement of any portion of the improvements is
reasonably required, not resolved between the parties within thirty (30) days
after either party gives written notice to the other party of the existence of
such dispute, to a two-step dispute resolution process. The two-step process
shall (i) begin with nonbinding mediation under a mediator mutually agreed upon,
or (ii) if no such mediator can be mutually agreed upon, binding arbitration
under the Commercial Rules of the American Arbitration Association, initiated by
written demand of one party served on the other. If the mediator determines that
the controversy cannot be resolved by mediation, then the dispute shall be
submitted to binding arbitration. Any party seeking to commence an arbitration
hereunder shall send a written notice to the other party of the demand for
arbitration. Such demand may be made at any time after a dispute described in
the first sentence above has arisen up to the time that answers to a complaint
have been filed by all necessary parties.

     The parties shall attempt in good faith to select a single neutral
arbitrator for the resolution of the dispute between them within ten (10)
business days after the receipt of the notice demanding arbitration. In the
event that such a single arbitrator is not so selected within such five (5) day
period, either party may petition the American Arbitration Association ("AAA")
to commence an arbitration proceeding before a retired judge or an attorney with
at least fifteen (15) years experience. Judgment upon the arbitrator's award
may be entered as if after trial in accordance with California law and enforced
in any

                                      25-
<PAGE>   29
court having jurisdiction over the matter. The parties hereto each waive any
and all objections to personal jurisdiction in such case which they may
otherwise have, provided that service or process is made in the same manner
that a notice is given herein. Any arbitration conducted pursuant to this
Agreement shall be subject to the following provisions:

     The parties shall attempt in good faith to select a single neutral
arbitrator for the resolution of the dispute between them within ten (10)
business days after the receipt of the notice demanding arbitration. In the
event that such a single arbitrator is not so selected within such five (5) day
period, either party may petition the American Arbitration Association ("AAA")
to commence an arbitration proceeding before a retired judge or an attorney
with at least fifteen (15) years experience. Judgment upon the arbitrator's
award may be entered as if after trial in accordance with California law and
enforced in any court having jurisdiction over the matter. The parties hereto
each waive any and all objections to personal jurisdiction in such case which
they may otherwise have, provided that service or process is made in the same
manner that a notice is given herein. Any arbitration conducted pursuant to
this Agreement shall be subject to the following provisions:

          (a)  Except as hereinbelow set forth, the arbitration shall be
conducted under the rules and in accordance with the procedures customarily
utilized by AAA in commercial arbitration proceedings.

          (b)  The hearing shall be conducted by the arbitrator as
expeditiously as possible and in all events within ninety (90) days after the
arbitrator has been selected or assigned, unless extended by mutual agreement
of the parties. Unless the right to more extensive discovery is granted for
good cause by the arbitrator, each party shall only have the right to two
document production requests, shall serve but one set of interrogatories
containing no more than forty (40) questions, including subparts, and shall be
entitled to depose only those witnesses which the arbitrator expressly permits,
it being the parties intention to minimize discovery procedures and to hold the
arbitration hearing on an economical and expedited basis. The arbitrator shall
establish the discovery schedule promptly, which schedule shall be strictly
adhered to.

          (c)  The arbitrator shall have authority equivalent to that of a
California Superior Court judge having jurisdiction of the subject matter,
including the right to grant equitable relief, to the same extent as such
relief would be available in an action pending in a court having appropriate
jurisdiction, and the right to award the prevailing party such party's
reasonable attorneys fees and costs.

8.23  Waiver of California Code Sections.  Notwithstanding any other provision
of this Lease and in addition to any waivers which may be contained in this
Lease, Tenant waives the provisions of Civil Code Section 1932(2) and 1933(4)
with respect to the destruction of the Premises; Civil Code Sections 1932(1),
1941 and 1942 with respect to Landlord's repair duties and Tenant's right of
repair; and Code of Civil Procedure Section 1265.130 allowing either party to
petition the Superior Court to terminate this Lease in the event of a partial
taking of the Premises for public or quasi-public use by statute, by right of
eminent domain, or by purchase in lieu of eminent domain; and any right of
redemption or reinstatement of Tenant under any present or future case law or
statutory provision (including Code of Civil Procedure Section 473, 1174(c) and
1179 and Civil Code Section 3275) in the event Tenant is dispossessed from the
premises for any reason. This waiver applies to future statutes enacted in
addition or in substitution to the statutes specified herein, and this waiver
shall apply even though Tenant may be the subject of a voluntary or involuntary
petition in bankruptcy.

8.24  Waiver of Right to Jury Trial.  Landlord and Tenant waive their
respective rights to trial by jury of any contract or tort claim, counterclaim,
cross-complaint, or cause of action in any action, proceeding, or hearing
brought by either party against the other on any matter arising out of or in
any way connected with this Lease, the relationship of Landlord and Tenant, or
Tenant's use or occupancy of the Premises, including any claim of injury or
damage or the enforcement of any remedy under any current or future law,
statute, regulation, code, or ordinance.

                                      26-

<PAGE>   30
     IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
day and year first written above.

LANDLORD:                               TENANT:
GIFFRA RANCH                            MOLECULAR DYNAMICS,
                                        a Delaware corporation

/s/ M. Richard Giffra                   /s/ illegible
------------------------                ------------------------
M. Richard Giffra                       By:
                                            Its: Vice President, Operations

/s/ Arthur Giffra
------------------------
Arthur Giffra

/s/ Rena Giffra
------------------------
Rena Giffra

/s/ Thelma Cuneo Meltzer
------------------------
Thelma Cuneo Meltzer

                                       27-
<PAGE>   31

                                   EXHIBIT A

                              MAP OF THE PREMISES
<PAGE>   32

                                   EXHIBIT B

                             RULES AND REGULATIONS

     1.   Plumbing fixtures shall be used only for their designated purpose,
and no foreign substances of any kind shall be deposited therein. Damage to any
plumbing equipment, including outside lines, resulting from misuse by Tenant or
any employee or invitee of Tenant shall be repaired at the expense of Tenant.

     2.   Tenant shall not mar or deface the Premises in any way.

     3.   All contractors and technicians rendering any installation service to
Tenant shall be subject to Landlord's reasonable approval prior to performing
services. This applies to all work performed in the Premises, including, but
not limited to, installation of telephones, telegraph equipment, wiring of any
kind, and electrical devices, as well as all installations affecting floors,
walls, woodwork, windows, ceilings and any other physical portion of the
Premises.

     4.   Landlord shall have the right to limit the weight and size of, and to
designate the location of, all safes and other heavy property brought into the
Premises.

     5.   Tenant shall not install or operate on the Premises any electric
heater, stove or similar equipment without Landlord's prior written consent.
Tenant shall not use or keep on the Premises any kerosene, gasoline, or
inflammable or combustible fluid or material other than limited quantities
reasonably necessary for the operation and maintenance of office equipment
utilized at the Premises. No explosives shall be brought onto the Premises at
any time.

     6.   Tenant shall be solely responsible for security of the Premises, and
Landlord shall not be liable to Tenant for losses due to theft or burglary, or
for damage by unauthorized persons in, on or about the Premises, and Tenant
assumes full responsibility for protecting the Premises from theft, robbery and
pilferage, which includes keeping doors locked and other means of entry closed.

     7.   Tenant will provide Landlord with keys for any new or additional
locks placed on the Premises simultaneously with the installation of such
locks. Upon termination of this Lease, Tenant shall surrender to Landlord all
keys to the Premises, and give to Landlord the combination of all locks for
safes and vault doors, if any, in the Premises.

     8.   Tenant shall not bring into (or permit to be brought into) the
Buildings any type of motor vehicle.

     9.   Landlord reserves the right to rescind any of these rules and
regulations and to make future reasonable rules and regulations required for the
safety, protection and maintenance of the Premises, the operation and
preservation of the good order thereof. Such rules and regulations, when made
and written notice thereof given to Tenant, shall be binding as if originally
included herein.

<PAGE>   33
                               GUARANTY OF LEASE

1.   In order to induce M. RICHARD GIFFRA, ARTHUR A. GIFFRA, RENA GIFFRA and
THELMA ANN CUNEO MELTZER as tenants in common, doing business as GIFFRA RANCH
("Landlord"), to enter into a Triple Net Building Lease (the "Lease") with
MOLECULAR DYNAMICS, a Delaware corporation ("Tenant"), Landlord being unwilling
to enter such Lease without this further assurance of payment, and in
consideration of Landlord's execution of the Lease, the undersigned
("Guarantor") hereby unconditionally and irrevocably guarantees and promises to
pay, when due, whether at maturity, by acceleration, or otherwise, the
indebtedness represented by the Lease (or as the same may be renewed, modified,
or extended from time to time) whether for principal, interest or otherwise, and
to perform all of the covenants on the part of Tenant to be performed under the
Lease, and to pay any and all expenses which may be incurred by Landlord in
collecting said indebtedness or enforcing said performance.

2.   The obligations of Guarantor hereunder are independent of the obligations
of Tenant. Guarantor expressly and specifically agrees that a separate action or
actions may be brought and prosecuted against Guarantor whether or not action is
brought against Tenant and whether or not Tenant is joined in any action against
Guarantor. If this Guaranty is signed by more than one Guarantor, each Guarantor
shall be jointly and severally liable for the obligations set forth hereunder. A
release of any one or more Guarantors or any limitation of this Guaranty in
favor of or for the benefit of one or more Guarantors shall not in any way be
deemed a release of or a limitation in favor of or for the benefit of any other
Guarantor.

3.   Guarantor authorizes Landlord, without notice or demand to Guarantor and
without affecting its liability hereunder, (but subject to the terms of the
Lease and/or with Tenant's consent) to: (i) change or extend the time, or
manner, of payment of rent under the Lease; (ii) change any of the terms,
covenants, conditions or provisions of the Lease; (iii) transfer or assign the
Lease; and/or (iv) take and hold security for the payment or performance of the
Lease, and exchange, enforce, waive and release any such security.

4.   Guarantor hereby waives: (a) presentment, demand, protest, notice of
protest, notice of dishonor and notice of non-payment and notice of acceptance
of this Guaranty; (b) the right, if any, to the benefit of, or to direct the
application of any security held by Landlord, until all the indebtedness,
payment of which is hereby guaranteed, has been paid in full, any right to
enforce any remedy which Guarantor now has or hereafter may have against Tenant,
and any right to participate in any security now or hereafter held by Landlord;
(c) the right to require Landlord to proceed against Tenant or to proceed
against any security now or hereafter held by Landlord or to pursue any other
remedy in Landlord's power; (d) any right of subrogation which Guarantor may
have under California law to seek reimbursement from Tenant of any sums paid by
Guarantor to Landlord pursuant to this Guaranty until Tenant has cured any
monetary default to Landlord; (e) any right of Guarantor to claim as a defense,
in an action brought by Landlord under the Guaranty, that Landlord's conduct has
destroyed Guarantor's subrogation rights against Tenant; (f) any defense arising
out of the absence, impairment or loss of any right or remedy of Guarantor
against Tenant or against any security resulting from the exercise or election
of any remedies by Landlord, and any defense arising by reason of any disability
or other defense of Tenant or by reason of the cessation, from any cause, of the
liability of Tenant; (g) the benefit of or right to assert any statute of
limitations affecting their liability hereunder or the enforcement thereof to
the extent permitted by law (any part payment by Tenant or other circumstances
which operate to toll any statute of limitations as to Tenant shall also operate
to toll the statute of limitations as to Guarantor); and (h) any rights which
Guarantor may have under California Civil Code Sections 2810, 2819, 2845, 2849,
2850, 2899 and 3433.

5.   Any indebtedness of Tenant now or hereafter held by Guarantor is hereby
subordinated to the indebtedness of Tenant to Landlord; and any indebtedness of
Tenant to Guarantor, if Landlord so requests, shall be collected, enforced and
received by Guarantor as trustee for Landlord on account of the indebtedness of
Tenant to Landlord without affecting the liability of Guarantor under this
Guaranty.
<PAGE>   34
6.   It is not necessary for Landlord to inquire into the powers of Tenant or of
the officers, directors, partners or agents acting on its behalf, and any
indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.

7.   Guarantor agrees to pay Landlord's reasonable attorneys' fees and costs and
expenses incurred in the enforcement of this Guaranty.

8.   This Guaranty is irrevocable and shall bind the successors and assigns of
Guarantor and inure to the benefit of the successors and assigns of Landlord.
This Guaranty shall follow the Lease and, in the event that the Lease is sold,
transferred, assigned or conveyed by Landlord, this Guaranty may be likewise
sold, transferred, assigned or conveyed by Landlord to the holder of the Lease,
and, in such event, the holder of this Guaranty may enforce this Guaranty just
as if said holder had been originally named as Landlord hereunder.

9.   This Guaranty shall be interpreted and enforced under the laws of the
State of California.

                                        Amersham Pharmacia Biotech,
                                        a Delaware corporation

Dated:  December 6, 1999                /s/ Phil Douglas
                                        --------------------------------
                                        By:  Phil Douglas
                                        Its: President<PAGE>   1
                                                                    EXHIBIT 10.7

THE SYMBOL "[*]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

Amersham. 535

                              LICENSE TO AMERSHAM

     THIS AGREEMENT is entered into as of April 1, 1996 (the "Effective Date")
by and between THE PERKIN-ELMER CORPORATION, a corporation of New York, having
its PE Applied Biosystems Division place of business at 850 Lincoln Centre
Drive, Foster City, California 94404 (collectively "ABD") and AMERSHAM
INTERNATIONAL PLC, a corporation of England and Wales, having a place of
business at Amersham Place, Little Chalfont, Buckinghamshire, England HP7 9NA
("AMERSHAM").

                                  WITNESSETH:

     WHEREAS, California Institute of Technology ("Cal Tech"), a California
institution owns, and ABD has the exclusive right to sublicense United States
Patents Nos. 4,849,513; 5,015,733; 5,118,800; 5,118,802; and 5,171,534 and
corresponding foreign patents and patent applications ("Caltech Patents");

     WHEREAS, E.I. du Pont de Nemours and Company ("du Pont"), a Delaware
corporation owns, and ABD has the exclusive right to sublicense rights under
United States Patent applications 07/057,566 and 07/057,564 relating to dye
terminators, and patent issuing therefrom ("Dupont Patents");

     WHEREAS, ABD owns United States Patent No. 4,855,225 and United States
Patent applications 07/827,348 and 07/415,050 relating to fluorescent dyes, and
United States Patent application 07/590,218;

     WHEREAS, ABD and AMERSHAM previously entered into licensing and supply
agreements relative to sequencing kits, instruments, enzymes, and the parties
wish to expand upon the rights and obligations of those agreements; and

     WHEREAS, AMERSHAM and its affiliates desire a further sublicense to permit
them to make, use and sell instruments, enzymes and kits for genetic analysis
under these rights held by ABD; and

     WHEREAS, ABD and its affiliates desire a sublicense to permit them to
make, use and sell enzymes and kits for genetic analysis under rights held by
AMERSHAM, and the parties have entered into a license agreement to ABD
simultaneously with the execution of this Agreement;

                                       1
<PAGE>   2
     NOW, THEREFORE, in consideration of the foregoing and of the covenants,
agreements and conditions hereinafter set forth the parties hereto agree as
follows:

                            ARTICLE 1 - DEFINITIONS

The following terms used in this Agreement shall have the meanings set forth in
this Article:

     1.1 "Affiliate" means any entity which controls, is controlled by, or is
under common control with a party. An entity is deemed to be in control of
another entity (the "controlled entity") if it (i) owns, directly or indirectly,
not less than fifty percent (50%) of the controlled entity's assets or
outstanding voting securities; or (ii) effectively controls the controlled
entity and owns, directly or indirectly the maximum percentage of the controlled
entity's assets or outstanding voting securities allowed under the law in the
country in which the controlled entity is organized.

     1.2 "Roche" means collectively (i) Roche Molecular Systems, Inc., a
Delaware corporation having an office at 1080 U.S. Highway 202, Branchburg, New
Jersey 08876-1760 and (ii) F. Hoffmann-La Roche Ltd, a Swiss corporation with
offices at Grenzacherstrasse 124, CH-4002 Basel, Switzerland.

     1.3 "Roche Agreement" means the Patent License Agreement entered into by
and between Roche and AMERSHAM on April 1, 1996.

     1.4 Roche PCR Agreement means the Patent License Agreement entered into by
and between Roche and USB on November 19, 1993.

     1.5 "License to ABD Agreement" means the agreement entitled "License to
ABD" entered into by and between ABD and AMERSHAM on April 1, 1996.

     1.6 "Subject Patents" means the Caltech and ABD patents and applications
relating to DNA sequencing (namely U.S. Patent Nos. 4,849,513; 5,171,534;
5,015,733; 5,118,800; 5,151,507; 5,118,802; 4,855,225 and 5,366,860 and US
Application Numbers 565,010; 570,973; 07/827,348; 07/415,050; 07/590,218 and the
Dupont patents relating to dye terminators (namely U.S. patent applications
07/057,566 and 07/057,565) and their continuations, divisions and
continuations-in-part as well as corresponding foreign patents and foreign
patent applications.

     1.7 "Valid Claim" means the claim of a patent or pending patent application
which has not been held invalid or otherwise unenforceable by a court from which
no appeal has or can be taken, or has not otherwise finally been held
unpatentable by the appropriate administrative agency.

                                       2
<PAGE>   3
     1.8  "Sequencing Field" shall mean the determination of the sequence of
nucleotides of a nucleic acid using, as a pre-electrophoretic process, Sanger
chain extension methodology or Maxam Gilbert methodology to generate sequencing
ladder, followed by electrophoresis as part of the method of detection and/or
analysis of the nucleic acid strictly for the purpose of determining the
sequence of nucleotides of the nucleic acid. This expressly excludes any
applications for PCR.

     1.9  "Fragment Analysis Field" means the separation of a nucleic acid by
electrophoresis either as part of the method of detection and/or analysis of the
nucleic acid for the purpose of analyzing the length of the nucleic acid, i.e.
fragment length analysis. This expressly excludes any license for carrying out
PCR steps for fragment length analysis.

     1.10 "Licensed Fields" means the Sequencing Field and the Fragment Analysis
Field.

     1.11 "Research Use" means the internal use by an end user of a product
solely in applications of the end user (or in applications of the end user's
customer, if the end user is performing contract research) in scientific
research and development in the Research Field, as that term is defined in the
Roche PCR Agreement.

     1.12 "Commercial Use" means any use of a product that is not Research Use.

     1.13 "Amersham Apparatus" means any electrophoresis instrumentation (i.e.,
instruments and components thereof) for use in the Licensed Fields which (i)
except for the license granted hereunder, would infringe at least one Valid
Claim of the Subject Patents, (ii) bears an AMERSHAM logo, and (iii) legally
entitles AMERSHAM or its Affiliates to not less than one hundred percent (100%)
of the net pre-tax profits from its sale thereof; or is the instrument presently
sold by Amersham as part of its Vistra program with Hitachi; or is an instrument
made by Molecular Dynamics and Amersham is legally entitled to at least fifty
percent (50%) of the net pre-tax profits from its sale thereof.

     1.14 "Licensed Compounds" means any dye primer, labeled terminator, or
other chemical component of a sequencing or fragment analysis reaction other
than a polymerase, or combinations of such components for which, except for the
license granted hereunder, manufacture, use or sale thereof would infringe at
least one Valid Claim of the Subject Patents, but specifically excludes dyes
themselves, i.e. excluding patent claims covering the chemical composition of
the dyes.

     1.15 "Licensed Polymerase" means any polymerase for use in the Licensed
Fields for performing the Sanger or Maxam Gilbert sequencing reactions for
which, except for the license granted herein or by Roche in the Roche Agreement,
manufacture, use or sale thereof would infringe at least one valid claim of the
Subject Patents or the Roche Patent

                                       3
<PAGE>   4
Rights.

     1.16      "Sequencing Kit" means a reagent kit for use in the Sequencing
Field and which is designed or sold for performing the pre-electrophoretic
processes required for nucleic acid sequence analysis, and which contains,
among other components, (i) reagents for performing nucleic acid sequencing
reactions, including a Licensed Polymerase, a terminator, dNTPs, buffers, and
with or without a primer; (ii) a label license as shown in Exhibit C; and (iii)
a protocol for performing pre-electrophoretic processes required for nucleic
acid sequence analysis.

     1.17      "Licensed Methods" means any methods, procedures or processes
for use in the Licensed Field that are covered by at least one Valid Claim under
the Subject Patents.

     1.18      "DNA Sequencer" means any electrophoresis apparatus which
together with analysis software performs an automated separation and analysis
of fragments associated with a nucleic acid to enable one to arrive at a base
sequence for said nucleic acid.

     1.19      "Wholesaler" means an agent who takes orders from end-user
customers for Amersham Apparatus, Licensed Compounds, Licensed Polymerase, or
Licensed Kits, purchases said products from AMERSHAM or its Affiliates, delivers
the products to said customers and collects payment from the end-user customers.
The Wholesaler does not perform other functions of a distributor, such as by way
of example but not by way of exclusion, marketing activities such as
participating in trade shows, creating product advertising, and presenting
technical seminars, or pre- and post-sale technical support of the products, ABD
and AMERSHAM agree that this definition is applicable only to the Japanese
market.

     1.20      "Half Year" means the six (6) month periods ending on the last
day of each March and September.

     1.21      "Royalty Year" means the two consecutive Half Year periods
ending on the last day of March each year.

     1.22      "Enzyme Unit" shall have the same meaning as "Unit" in the Roche
Agreement.

     1.23      "Net Sales" means the following:

               (i)  With respect to sales by AMERSHAM, or an Affiliate of
AMERSHAM, or a distributor of AMERSHAM to any non-affiliated end-user customer,
Net Sales means the actual amount of gross sales of AMERSHAM Apparatus,
Licensed Compounds, Licensed Polymerase, and Licensed Kits to said customer,
less: trade, cash and quantity discounts, if any, actually allowed, amounts
refunded for faulty or defective product,

                                       4
<PAGE>   5
returns, rejections, freight, insurance and other transportation costs (except
income taxes), tariffs, duties and similar governmental charges paid. In the
event that AMERSHAM  is unable to account for sales by any distributor, the Net
Sales shall be calculated as the price to the distributor multiplied by 1.43,
which factor represents a 30% margin for the distributor. If in Japan, AMERSHAM
does not use a distributor, but instead makes sales to end users through a
Wholesaler, and AMERSHAM is unable to account for sales to third-party end
users by said Wholesalers in Japan, Net Sales shall be calculated as the sales
price to such Wholesalers multiplied by 1.2, which factor represents a 17%
margin allowed to the Wholesaler in Japan.

          (ii)      With respect to sales by AMERSHAM made to any Affiliate or
to any person, firm or corporation enjoying a special course of dealing with
AMERSHAM, the Net Sales shall be determined based on the resale of the AMERSHAM
Apparatus, Licensed Compound(s) and Licensed Polymerase and/or Licensed Kit(s)
by such Affiliate, person, firm or corporation to an end user.

          (iii)     With respect to Amersham Apparatus, Licensed Polymerase
and/or Licensed Kits which are used by AMERSHAM or any Affiliate to supply
sequencing services or sequencing information to a third party for commercial
purposes, or are given away free for promotional purposes (excluding costs of
shipment) by AMERSHAM or any Affiliate, the Net Sales shall be determined as if
such AMERSHAM Apparatus, Licensed Polymerase and/or Licensed Kits had been
sold, rather than used internally or given away, at the average Net Sales for
such AMERSHAM Apparatus, Licensed Polymerase and/or Licensed Kits realized by
AMERSHAM in the applicable Half Year. Notwithstanding the above statement, up
to two hundred (200) standard Licensed Kits (i.e. kits having reagents and
materials sufficient for up to 150 reactions) may be used by AMERSHAM or its
Affiliates or given away free each Half Year and will not be included in
calculating the value of Net Sales.

     1.24 "Roche Enzyme Patent Rights" shall mean the Roche Enzyme Patent
Rights and Roche Pyrophosphatase Patents defined in the Roche Agreement.

     1.25 "Fragment Analysis Kit" shall mean a reagent kit which is
designed and sold for performing analysis of nucleic acid fragment length and
for which the manufacture or use of such kit would infringe at least one Valid
Claim of the Subject Patents.

     1.26 "Licensed Kit" means a Sequencing Kit and/or Fragment Analysis Kit.

     1.27 "Authorized Instrument" shall mean AMERSHAM Apparatus, any ABD
machine or other DNA Sequencer licensed under the Caltech Patents and
authorized under the Dupont Patents.

     1.28 "Involved Patents" under the SUPPLY AGREEMENT TO USB effective 6
April 1994, shall mean Subject Patents under this Agreement.

                                       5
<PAGE>   6
                                ARTICLE 2-GRANT

     2.1  Subject to the terms and conditions herein, ABD hereby grants to
AMERSHAM and its Affiliates a  nontransferable, nonexclusive, worldwide right
and license or sublicense, as the case my be, with no right to further
sublicense, under the Subject Patents, as expressly set forth below:

          (i)       to make, have made, use and sell to actual end users, either
directly or using distributors, dealers or Wholesalers, but not for resale,
AMERSHAM Apparatus for use in the Licensed Field;

          (ii)      to make, have made, use and sell to actual end users, either
directly or using distributors, dealers or Wholesalers, Licensed Compounds, for
use in the Licensed Fields, and solely in conjunction with an Authorized
Instrument. Except as provided below, Licensed Compounds may not be sold for
resale. Under that exception, labeled terminators covered by the Subject Patents
may be sold to resellers, provided always that AMERSHAM shall not sell such
terminators to a reseller unless the reseller is licensed under the Subject
Patents and has undertaken to resell the same only in a Sequencing Kit. If
AMERSHAM has reason to believe that the reseller will not or intends not or does
not resell the same in a Sequencing Kit, then AMERSHAM shall immediately cease
all further sales to that reseller. Except for sales to resellers as provided
above, labeled terminators licensed hereunder may not be sold alone but only as
part of Licensed Kits, so long as labeled terminators covered by the Subject
Patents are not sold alone to end users in the Licensed Field by ABD or by a
third party licensed by ABD under the Subject Patents for DNA sequencing.
Furthermore, labeled terminators purchased by AMERSHAM from ABD may not be sold
alone even to resellers, and may only be sold in Licensed Kits.

          (iii)     to the extent necessary in order to avoid infringement of
Subject Patents, to sell to actual end users and to resellers as provided
below, either directly or using distributors, Wholesalers or resellers Licensed
Polymerase either alone or in combination with other components, in the
Licensed Field; (i) for use without a DNA Sequencer or (ii) for use with a DNA
Sequencer but only where such DNA Sequencer is an Authorized Instrument;
provided always that AMERSHAM shall not sell Licensed Polymerase to a reseller
unless the reseller has undertaken to resell the same only in a Sequencing Kit.
If AMERSHAM has reason to believe that the reseller will not or intends not or
does not resell the same in a Sequencing Kit, then AMERSHAM shall immediately
cease all further sales to that reseller.

          (iv)      to practice the Licensed Methods in the Licensed Fields or
as otherwise necessary to make Licensed Compounds pursuant to subsection
2.1(ii) above.

          (v)       It is understood and agreed that no other rights are hereby
granted

                                       6
<PAGE>   7
or intended to be granted to AMERSHAM either expressly, impliedly, or by
estoppel under subject patents or any other patents not specifically identified
in this Agreement.

     2.2  ABD hereby gives to AMERSHAM and its Affiliates an immunity from suit
under the Subject Patents for sales in the Licensed Fields of Licensed
Compounds, Licensed Polymerase and Licensed Kits to end users who use such
Licensed Compounds, Licensed Polymerase or Licensed Kits, on any DNA Sequencer
that has not been authorized by ABD for use in nucleic acid sequencing. This
immunity from suit is expressly conditioned on AMERSHAM having provided such
end user with the appropriate label license as specified in Exhibit B or
Exhibit C. Nothing in this Article 2.2 shall be construed to confer an implied
license on end users of unauthorized DNA Sequencers.

     2.3  ABD hereby gives to AMERSHAM and its Affiliates an immunity from suit
under the Subject Patents for any and all past use and sales of AMERSHAM
Apparatus, Licensed Compounds, Licensed Polymerase and Licensed Kits in the
Licensed Fields by AMERSHAM or its Affiliates prior to the Effective Date of
this Agreement.

     2.4  Nothing contained in this Agreement shall be construed as granting to
AMERSHAM or its Affiliates any right or license under any intellectual
property rights of ABD to sublicense the rights granted in this Agreement
except to resellers permitted under Article 2.1 above and end users of Licensed
Compounds, Licensed Polymerase, and Licensed Kits, as specified in the label
licenses in Exhibit A, Exhibit B, or Exhibit C respectively.

     2.5  AMERSHAM and any Affiliate of AMERSHAM exercising rights under this
Agreement shall place a notice in its annual catalogues or comparable
compilations in the form specified in Exhibit A, Exhibit B and Exhibit C, or as
modified, if such modification is necessary in the reasonable judgment of ABD's
counsel to protect the rights of ABD and to reflect the extent and nature of
the sublicense granted herein. AMERSHAM and its Affiliates shall also place a
label in the form of the notice specified in Exhibit A on or within all
Licensed Apparatus, a label in the form of the notice specified in Exhibit B on
or within all Licensed Compounds, and a label in the form of the notice
specified in Exhibit C on or within all Licensed Kits and Licensed Polymerase.
AMERSHAM and its Affiliates shall also place such sublicense and label license
notifications which are required to conform to all applicable patent marking
statutes.

     2.6  In the event that an entity which is an Affiliate of AMERSHAM at any
time ceases to be an Affiliate of AMERSHAM, the grant with regard to that
entity shall be deemed terminated.

                          ARTICLE 3 - ROYALTY PAYMENTS

                                       7
<PAGE>   8
THE SYMBOL "[*]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

     3.1 Within thirty (30) days after the close of each Half Year during this
Agreement and for so long as unpaid royalties to ABD remain, AMERSHAM shall
remit to ABD the following amounts:

          (i) for all Amersham Apparatus sold, or used internally to supply
sequencing services of information derived from sequencing to a third party for
commercial purposes, during the preceding Half Year by AMERSHAM or its
Affiliates - [*] percent ([*]%) of Net Sales [*].

          (ii) for all Licensed Polymerases and Licensed Kits sold, and for all
Licensed Polymerases and Licensed Kits used internally to supply sequencing
services or information derived from sequencing to a third party for commercial
purposes, during the preceding Half Year by AMERSHAM or its Affiliates in the
Sequencing Field for Licensed Polymerase - [*] cents per Enzyme Unit and for
Licensed Kits - [*] cents per Enzyme Unit so sold or so used (which at the
Effective Date represents a [*]% royalty on Licensed Kits and [*]% on Licensed
Polymerase, and which royalty will be adjusted from time to time as per section
3.2; and

          (iii) for all Licensed Compounds and Licensed Kits sold, and for all
Licensed Compounds and Licensed Kits used internally to supply fragment analysis
services or fragment analysis information to a third party for commercial
purposes, during the preceding Half Year by AMERSHAM or its Affiliates, in the
Fragment Analysis Field;

               (a) for those of such Licensed Compounds or Licensed Kits sold
for Commercial use, and for those of such Licensed Compounds or Licensed Kits
used for Commercial Use, the sale or use of which does not give rise to a
royalty payment obligation from AMERSHAM to Roche pursuant to the Roche PCR
Agreement - [*] percent ([*]%) of Net Sales;

               (b) for those of such Licensed Compounds or Licensed Kits sold
for Commercial Use, and for those of such Licensed Compounds or Licensed Kits
used for Commercial Use, the sale or use of which also gives rise to a royalty
payment obligation from AMERSHAM to Roche pursuant to the Roche PCR Agreement -
[*] percent ([*]%) of Net Sales;

               (c) for those of such Licensed Compounds or Licensed Kits sold
for Research Use, and for those of such Licensed Compounds or Licensed Kits used
for Research Use, the sale or use of which does not give rise to a royalty
payment obligation from AMERSHAM to Roche pursuant to the Roche PCR Agreement -
[*] percent ([*]%) of Net Sales of the Licensed Compound or Licensed Kit; and

               (d) for those of such Licensed Compounds or Licensed Kits sold
for Research Use, and for those of such Licensed Compounds or Licensed Kits used
for Research Use, the sale or use of which also gives rise to a royalty payment
obligation from

                                       8
<PAGE>   9
THE SYMBOL "[*]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

AMERSHAM to Roche pursuant to the Roche PCR Agreement, there shall be no
royalty due to ABD.

     3.2  The royalty rate per unit set out in article 3.1 (ii) above shall be
adjusted in the event the current Enzyme Unit consumption per sequencing
reaction changes within any AMERSHAM Licensed Enzyme or Roche Licensed Enzyme
(sold in a Licensed AMERSHAM Product or Licensed ROCHE Product) (as those terms
are defined in the Roche Agreement and referred to in this Article as an
"Enzyme") as set out in Appendix C of the Roche Agreement. If at any time either
party (i) makes a change in the number of Enzyme Units per sequencing reaction
set out in the Enzyme product protocol; or (ii) introduces a new Enzyme with a
different enzyme consumption efficiency; or (iii) makes a change in enzyme
consumption efficiency as a result of a different reagent combination or product
format, then such party shall notify the other and an adjustment as referred to
above shall be made with effect from the next 31 March or 30 September in each
year whichever occurs first. The adjustment in the royalty rate per unit shall
be such as to ensure that such rate will equate as of the date of adjustment to
a royalty of [*]% on Net Sales of Licensed Kits and [*]% on Net Sales of
Licensed Polymerase.
     3.3  AMERSHAM Apparatus, Licensed Compounds, Licensed Polymerase and
Licensed Kits shall be considered sold when shipped to a customer. Such items
shall be considered used by AMERSHAM when such item is used by AMERSHAM or its
Affiliates and may no longer be sold as new in its original form. If any
royalties due ABD under this Agreement are lawfully subject to taxation, ABD
agrees to bear all such taxes.

     3.4  Notwithstanding Article 3.1, no royalties shall be due from AMERSHAM
to ABD for the sale or use of any AMERSHAM Apparatus, Licensed Compounds,
Licensed Polymerase or Licensed Kits which are not covered by at least one
granted Valid Claim of a Subject Patent during at least one day of the Half Year
in which such sale or use by AMERSHAM took place. For purposes of this Article
3.4, a Valid Claim shall be also deemed a granted Valid Claim during each of the
following periods: (i) the five year period commencing on the earliest priority
date claimed in any patent application containing such Valid Claim, or (ii) the
period to April 1, 1998, whichever is longer.

     3.5  AMERSHAM agrees to pay to ABD a minimum annual royalty of [*] U.S.
dollars ($[*]) per Royalty Year. If the total royalties otherwise owed by
AMERSHAM to ABD, pursuant to Articles 3.1 through 3.4, for AMERSHAM Apparatus,
Licensed Compounds, Licensed Polymerase and Licensed Kits sold or used during
any Royalty Year fall below this minimum annual royalty amount, AMERSHAM will
pay to ABD the difference within thirty (30) days after the close of that
Royalty Year. This minimum annual royalty obligation shall be excused during the
first Royalty Year in which the royalties otherwise owed by AMERSHAM to ABD
hereunder pursuant to Articles 3.1 through 3.4 exceed fifty percent (50%) of the
royalties otherwise owed by ABD to AMERSHAM for the same period pursuant to
Articles 3.1 through 3.4 of the "License to ABD Agreement". If the minimum
annual royalty obligation is once excused pursuant to

                                       9

<PAGE>   10
this Article 3.5, it shall never revive and shall forever cease to exist as an
obligation under this Agreement, regardless of any fluctuations in the amount of
royalties owed by  AMERSHAM to ABD thereafter.

     3.6 All payments due hereunder shall be made in United States dollars in
the United States at the address set forth in Article 11.5 hereof. For
converting royalties due on sales made in currencies other than United States
dollars into United States dollars, AMERSHAM shall convert its worldwide sales
of AMERSHAM Apparatus, Licensed Compounds, Licensed Polymerase, and Licensed
Kits subject to such royalties at the end of each Half Year from the currency in
which such sales occurred into United States dollars at the closing commercial
sell rate of exchange for United States dollars and each currency involved as
quoted by Citibank, N.A., or any successor thereto, in New York on the last
business day of each Half Year.

     3.7 If after the Effective Date, ABD grants to any unrelated third party a
license of substantially the same scope as granted to AMERSHAM herein but under
more favorable financial terms than those given to AMERSHAM under this
Agreement, ABD shall promptly notify AMERSHAM of said more favorable financial
terms, and AMERSHAM shall have the right and option to substitute such more
favorable financial terms for the financial terms contained herein. AMERSHAM's
right to elect the more favorable financial terms shall be conditioned on
AMERSHAM's acceptance of all the same conditions, favorable or unfavorable,
whether financial or otherwise, under which such more favorable financial terms
shall be available to such other third party. Upon AMERSHAM's acceptance of all
such terms of said third-party agreement, the more favorable financial
conditions shall be effective as to AMERSHAM on the effective date of such other
third party license agreement. Notwithstanding the foregoing, in the event that
ABD shall receive substantial other non-monetary consideration, for example,
such as substantial intellectual property rights, as a part of the consideration
for its granting of such license to a third party, then this Article 3.7 shall
not apply.

                        ARTICLE 4 - RECORDS AND REPORTS

     4.1 AMERSHAM agrees to keep accurate and complete records showing the
quantity of all AMERSHAM Apparatus, Licensed Compounds (which for the purpose of
this Article 4 refers only to Licensed Compounds used in the Fragment Analysis
Field), and Enzyme Units in Licensed Polymerase, and Sequencing Kits (and in
relation to AMERSHAM Apparatus, Licensed Compounds used in the Fragment Analysis
Field, and Fragment Analysis Kits, quantity and price) sold or given away free
or Used Internally by AMERSHAM or its Affiliates in each country worldwide. Such
records shall include all information necessary to verify the total amount and
computation of royalties due hereunder, and shall be open to inspection by ABD,
upon a thirty (30) day prior written notice, during reasonable business hours to
the extent necessary to verify the amount thereof. Such inspection shall be made
at the expense of ABD and not more often than

                                       10

<PAGE>   11
once each calendar year by a firm of certified public accountants. AMERSHAM
shall not be required to retain any of said records for more than three years
after the close of any Half Year for which such records pertain. Such records
shall be retained and available for inspection at the offices of AMERSHAM or
the relevant AMERSHAM Affiliate. Should ABD's firm of certified public
accountants desire to inspect the source documents or data on which the
foregoing records are based, they shall have the right to inspect and copy such
documents or data at the offices of AMERSHAM or the relevant AMERSHAM Affiliate.

     4.2  Within thirty (30) days after the last day of each Half Year during
the Agreement and thereafter so long as unpaid royalties to ABD remain,
AMERSHAM shall furnish ABD with a written report signed by an authorized
officer of AMERSHAM showing (i) the total amount, in quantity of the Enzyme
Units in Licensed Polymerase and Licensed Kits, sold and the total amount used
internally of same, by AMERSHAM and its Affiliates during the preceding Half
Year and the amount of earned royalties due therefrom, and (ii) in relation to
AMERSHAM Apparatus, Licensed Compounds used in the Fragment Analysis Field, and
Fragment Analysis Kits, which are sold or Used Internally, by AMERSHAM and its
Affiliates during the preceding Half Year the amount of earned royalties due
computed pursuant to the provisions of Article 3 above. In the event that any
inspection conducted pursuant to Article 4.1 shows an under reporting and
underpayment of five percent (5%) or more for the reporting period inspected,
then AMERSHAM shall pay the cost of such examination for such period.

For the purposes of this Article 4, "Used Internally" shall mean used to supply
services or information to a third party for commercial purposes.

                  ARTICLE 5 - FUTURE SEQUENCING PATENT RIGHTS

     5.1  With respect to process claims within the Licensed Fields which are
filed by ABD in patent applications filed after the Effective Date, ABD hereby
grants an option to AMERSHAM to include in Subject Patents any or all of such
process claims, provided such process claims do not cover:  (i) methods of
operating an electrophoresis apparatus; (ii) software methods; (iii) methods
for preparation of sequencing templates; or (iv) except for process claims that
specifically refer to use of a polymerase or a Licensed Compound or that can be
related directly to use of a specific Licensed Polymerase or a specific
Licensed Compound, methods for performing electrophoresis. In relation to
patent applications filed before April 1, 1999, the terms shall be as per the
Agreement and for patent applications filed thereafter shall be on reasonable
terms to be agreed.

     5.2  With respect to instrument manufacturers not included within the
definition of AMERSHAM Apparatus, ABD hereby grants to AMERSHAM an option to
negotiate a license under the Caltech patents to sell instruments provided by
such manufacturers.

                                       11
<PAGE>   12
THE SYMBOL "[*]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

The up-front fee for such license shall not exceed $[*] and the royalty
under such patents shall not exceed [*]%.
                      ARTICLE 6 - OPTION TO FUTURE ENZYMES

     6.1  To the extent that ABD may acquire patent rights covering polymerases
or other enzymes for use in the Licensed Fields, except if such patent rights
are acquired from Roche, and (with regard to a sublicense) to the extent that
such rights are sublicensable by ABD, and to the extent such rights are
acquired by ABD by April 1, 1999, or that ABD has filed patent applications
regarding said polymerases or enzymes by April 1, 1999, ABD hereby grants to
AMERSHAM an option to negotiate a license to such patent rights or supply of
such polymerases or enzymes from ABD on the same terms as for other polymerases
or enzymes licensed under this Agreement.

     6.2  For enzymes for which a patent application is filed after April 1,
1999, the terms of the license and supply agreement shall be on terms to be
agreed.

     6.3  This license Agreement replaces the license agreement entitled
LICENSE TO USB, dated April 6, 1994, and as such, said LICENSE TO USB is
terminated as of the Effective Date hereof, except that the SUPPLY AGREEMENT TO
USB of the same date shall continue in force and effect and references therein
to the previous license agreements shall hereafter be to this Agreement.
However, all references in said supply agreement obligating USB to purchase its
requirements of Products from ABD are hereby abrogated, and AMERSHAM may make,
have made, use, and sell the Products identified in EXHIBIT A of said supply
agreement in accordance with the terms of this Agreement.

                        ARTICLE 7 - TERM AND TERMINATION

     7.1  Unless sooner terminated as provided herein, this Agreement shall
commence on the Effective Date and shall continue until the expiration of the
last of the Subject Patents.

     7.2  This Agreement and the rights granted in Articles 2.1, 2.2 and 2.3
may be terminated by ABD:

          (i) upon material breach of this Agreement by AMERSHAM, including a
failure to pay ABD any sum under this Agreement within forty-five (45) days
after it is due, subject to ABD providing AMERSHAM with sixty (60) days advance
written notice of such breach and an opportunity to cure. At the end of the
sixty (60) day notice period, ABD may terminate this License forthwith if
AMERSHAM has not cured its breach of the provision(s)

                                       12
<PAGE>   13
identified in the notice.

          (ii)  immediately with notice, upon (a) an adjudication of AMERSHAM as
bankrupt or insolvent; (b) AMERSHAM's admission in writing, of its inability to
pay its obligations as they mature; (c) an assignment by AMERSHAM for the
benefit of creditors; (d) the appointment, with or without the consent of
AMERSHAM, of a receiver, trustee or similar officer for any substantial part of
its property; and/or (e) the initiation (by petition, application or otherwise)
of any bankruptcy or insolvency arrangement or similar proceeding relating to
AMERSHAM under the laws of any jurisdiction.

     7.3  This Agreement may be terminated by AMERSHAM;

          (i)  upon material breach of this Agreement by ABD, subject to
AMERSHAM providing ABD with sixty (60) days advanced written notice of
termination and an opportunity to cure its breach. At the end of the sixty (60)
day notice period, AMERSHAM may terminate this License forthwith if ABD has not
cured its breach of the provisions(s) identified in the notice; and

          (ii)  immediately with notice, upon (a) an adjudication of ABD as
bankrupt or insolvent; (b) ABD's admission in writing, of its inability to pay
its obligations as they mature; (c) an assignment by ABD for the benefit of
creditors; (d) the appointment, with or without the consent of ABD, of a
receiver, trustee or similar officer for any substantial part of its property;
and/or (e) the initiation (by petition, application or otherwise) of any
bankruptcy or insolvency arrangement or similar proceeding relating to ABD
under the laws of any jurisdiction; and

          (iii) at its option, upon one (1) year's prior written notice.

     7.4  Termination of this Agreement for any reason shall be without
          prejudice to:

          (i)  ABD's right to receive all royalties accrued and unpaid and then
due to be paid to ABD by AMERSHAM pursuant to the terms of this Agreement on
the Effective Date of such termination;

          (ii)  The rights and obligations of each party provided in Article 4
hereof; and

          (iii)  any other remedies which a party may then or thereafter have
hereunder or otherwise.

                   ARTICLE 8 - WARRANTIES AND REPRESENTATIONS

     8.1  ABD MAKES NO EXPRESS OR IMPLIED WARRANTY, INCLUDING

                                       13
<PAGE>   14
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH
RESPECT TO LICENSED COMPOUNDS THAT AMERSHAM MAY PURCHASE FOR USE IN SEQUENCING
OR FOR RESALE, OR THE USE THEREOF OTHER THAN THE EXPRESS WARRANTIES WHICH MAY
BE SPECIFICALLY GIVEN BY ABD AS CONTAINED IN THE PRODUCT MANUAL OR IN THE
SUPPLY AGREEMENT to USB, dated April 6, 1994.

     8.2  ABD does not assume any responsibility for the use and/or sale of
AMERSHAM Apparatus, Licensed Compounds, Licensed Polymerase or Licensed Kits by
AMERSHAM or AMERSHAM's end users/customers.

     8.3  Nothing, in this Agreement shall be construed as:  (i) a warranty or
representation by ABD of the validity or scope of the Subject Patents; or (ii)
a warranty or representation that anything, manufactured, used or sold by
AMERSHAM under the license/sublicense rights granted herein is or shall be free
from infringement of patent or proprietary rights of third parties.

     8.4  Nothing in this Agreement shall be construed as conferring upon
AMERSHAM any license or right to use in packaging, advertising, publicity or
promotion activities any name, trade name, trademark or other designation of
ABD except for the limited use set out in Article 2.5.

     8.5  ABD represents and warrants that it has the lawful right to grant the
license/sublicense set forth herein and that, as of the Effective Date of this
Agreement, it has no patents or patent applications which it owns or has a
license thereunder which block the exercise of the rights granted hereunder.

     8.6  The parties hereto represent and warrant that they have all necessary
corporate power to enter into and perform their respective obligations under
this Agreement and have taken all necessary corporate action under the laws of
their respective jurisdictions and their certificates of incorporation and
by-laws to authorize the execution and consummation of this Agreement.

     8.7  Intellectual Property Right Indemnity

     (i) Indemnity. Subject to the restrictions set forth in this Paragraph
8.7, ABD agrees to defend and indemnify AMERSHAM from and against all action or
proceedings (including reasonable attorney's fees, and judgments, if any)
brought against AMERSHAM arising out of any actual or alleged infringement by
the materials supplied to AMERSHAM under the SUPPLY AGREEMENT TO USB, having an
effective date of 6 April 1994, of any United States or foreign patent.

     (ii) AMERSHAM's Obligations. AMERSHAM shall promptly notify ABD of any
claim hereunder upon becoming aware of same and shall cooperate with and
provide all

                                       14
<PAGE>   15
reasonable assistance to ABD, at ABD's expense, in the defense or settlement of
such claim. ABD shall have sole authority to defend and/or settle any claim
under this Paragraph, provided, however, that AMERSHAM may, at its own cost,
retain separate representation.

     (iii) Remedy for Infringement.  If any material supplied, or any portion
thereof, is finally adjudged to infringe a United States or foreign patent, or
if in ABD's opinion is likely to become subject of such a claim, ABD shall, at
its option, either: (a) procure for AMERSHAM the right to continue using the
material; or (b) replace or modify the material so that it becomes
non-infringing; or (c) upon return of all infringing material, refund to
AMERSHAM the price actually paid by AMERSHAM for the Infringing material, less a
reasonable amount for use, damage or obsolescence; or (d) substitute for the
infringing material other suitable, non-infringing products.

     (iv)  Exceptions.  ABD shall have no liability or obligation hereunder for
any infringement based upon: (a) the use of the material in combination with
other hardware, software, consumable or reagents not provided by ABD, or based
upon a modification to the material made by AMERSHAM, if such claim would not
have occurred but for such combination or modification; or (b) any
modification to the material at the request of AMERSHAM.

     (v)  Limitation of Liability.  THE FOREGOING STATES THE ENTIRE LIABILITY
OF ABD, AND THE EXCLUSIVE REMEDY FOR AMERSHAM, FOR ANY INFRINGEMENT OF PATENT,
COPYRIGHT, TRADE SECRET OR OTHER INTELLECTUAL PROPERTY RIGHT BY THE MATERIAL OR
ANY PART THEREOF PURCHASED BY AMERSHAM UNDER SAID 1994 AGREEMENT WITH USB.

                            ARTICLE 9 - ASSIGNMENTS

     9.1  This Agreement is assignable, in whole or in part, by ABD and shall
be enforceable by it or its successors and assigns.

     9.2  This Agreement and the rights and obligations contained herein are
not assignable by AMERSHAM, in whole or in part, by operation of law, for the
benefit of creditors, or otherwise, without the prior written consent of ABD,
except that upon written notice to ABD, AMERSHAM may assign all, but not part,
of AMERSHAM's rights and obligations under this Agreement to the following:

          (i)  one of its Affiliates, provided AMERSHAM remains secondarily
liable for the performance of all the duties and obligations imposed on that
party under this Agreement; or

          (ii)  any successor in ownership of all or substantially all of the
business assets of AMERSHAM that relate to the subject matter of the Subject
Patents, provided

                                       15

<PAGE>   16
that such successor assumes liability for the performance of all the duties and
obligations imposed on AMERSHAM under this Agreement and pays to ABD an
assignment fee of $100,000.00.

     9.3 For purposes of this Agreement, an assignment by AMERSHAM shall be
deemed to have occurred upon the acquisition of majority control of AMERSHAM by
any person through the purchase of stock or by way of a merger transaction or
otherwise as well as through the purchase of all or substantially all of the
business assets of AMERSHAM that relate to the subject matter of the Subject
Patents.

                        ARTICLE 10 - PATENT ENFORCEMENT

     10.1 AMERSHAM shall advise ABD promptly, upon its becoming aware of
substantial infringement by a third-party or parties of a granted patent right
within Subject Patents. Upon receipt of said written information, ABD shall act
upon such information with reasonable business judgment at ABD's sole
discretion.

     10.2 AMERSHAM agrees not to enter into any supply agreements after the
Effective Date in respect of Licensed Polymerase (either alone or in Licensed
Kits) if the purchaser is a supplier of a DNA Sequencer which is not an
Authorized Instrument.

                         ARTICLE 11 - ADDITIONAL TERMS

     11.1 Governing Law. This Agreement shall be deemed to have been entered
into in the State of California, U.S.A., and, notwithstanding anything to the
contrary in the law relating to conflicts of law of the State of California,
U.S.A., shall be governed by, construed, interpreted and enforced in accordance
with the laws of said State and the laws of the United States of America.

     11.2 Entire Agreement. Subject to Article 6.3 above, the terms and
provisions contained in this Agreement, constitute the entire agreement between
the parties with respect to the subject matter hereof and shall supersede all
previous communications, representations, agreements or understandings, either
oral or written, regarding such subject matter.

     11.3 Amendment Waiver. No modification of any term or provision, or waiver
of any right or obligation, shall be binding upon any party, unless made in
writing and signed by duly authorized officers of all of the parties. The waiver
by any party of any breach of any provision hereof by any other party shall not
be construed to be a waiver of any succeeding breach of such provision or a
waiver of the provision itself.

     11.4 Severability. If any provision of this Agreement is held by a court of

                                       16
<PAGE>   17
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions of this Agreement shall continue in full force without being
impaired or invalidated in any way, to the maximum extent possible consistent
with the intent of the parties.

     11.5   Notices.  All notices, requests, demands or other communications
made hereunder shall be in writing, and shall be deemed duly given when
personally delivered or sent by telecopy or telex (receipt confirmed) or
registered or certified mail, postage prepaid, as follows, or to such other
address or person as any party may designate by notice to the other party;

            To ABD:

               The Perkin-Elmer Corporation
               PE Applied Biosystems Division
               850 Lincoln Centre Drive
               Foster City, California 94404
               Attention: Legal Department

            To AMERSHAM:

               Amersham International plc
               Amersham Place
               Little Chalfont, Buckinghamshire
               England HP7 9NA
               Attention: Company Secretary

These individuals and addresses can be changed at any time by any party by a
notice in writing to the other party complying with this Article 11.5.

     11.6  Document.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument. All headings in this
Agreement are inserted for convenience of reference only and shall not affect
the meaning or interpretation of the terms or provisions. The Exhibits are a
part of this Agreement as if fully set forth herein.

     11.7  Bind and Inure.  This Agreement shall be binding on, inure to the
benefit of, the parties and their respective, permitted successors and assigns.

     11.8  Dispute Resolution.  The parties recognize that a bona fide dispute
as to certain matters may from time to time arise during the term of this
Agreement which relates to either party's or their Affiliates' rights and/or
obligations hereunder, such as, for example, a dispute as to whether a
particular product properly falls within the license. In the event of the
occurrence of such a dispute, either party may, by notice to the other party,
have such dispute referred to their respective designees, listed below, or their

                                       17
<PAGE>   18
successors, for attempted resolution by good faith negotiations within sixty
(60) days after such notice received. Said designees are as follows:

For AMERSHAM:  Managing Director, Amersham Life Science,
               Amersham International plc

For ABD:       Divisional Executive Vice President, PE Applied Biosystems
               Division, The Perkin-Elmer Corporation.

In the event designees are not able to resolve such dispute within such sixty
(60) day period, or any agreed extension thereof, the parties will escalate the
discussions to a higher level of authority, namely the Chief Executive,
Amersham International plc, and the President of The Perkin-Elmer Corporation.
If this second level of discussion does not result in a resolution of the issue
within sixty (60) days, or any agreed extension thereof, either party may
invoke the provisions for binding Alternative Dispute Resolution (ADR) set
forth in Exhibit D.

THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK

                                       18
<PAGE>   19
         IN WITNESS WHEREOF, ABD and AMERSHAM have executed this Agreement on
behalf of themselves and their Affiliates.

PERKIN-ELMER CORPORATION                AMERSHAM INTERNATIONAL PLC
PE APPLIED BIOSYSTEMS

By:    /s/ Joseph H. Smith              By:    /s/ Ron Long
       ------------------------------          ------------------------------

Print: Joseph H. Smith                  Print: Ron Long
       ------------------------------          ------------------------------

Title: Vice President, IP               Title: Managing Director Life Science
       ------------------------------          ------------------------------

Date:  11/3/96                          Date:  6-11-96
       ------------------------------          ------------------------------

                                       19
<PAGE>   20
                          Exhibit A: Instrument Label

                      NOTICE TO PURCHASER: LIMITED LICENSE

This instrument, Serial No.__________, is an Authorized DNA Sequencer. It is
Authorized by PE Applied Biosystems under one or more U.S. Patent Nos.________,
and corresponding foreign patents and patent applications. The purchase of this
instrument includes limited non-exclusive rights under the subject patents to
use this instrument for sequencing and fragment length analysis when used with
Authorized Reagents. The use of this Instrument with Authorized Reagents
provides a limited license to perform DNA sequencing and fragment length
analysis in accordance with the label rights accompanying such reagents.
Purchase of this instrument does not itself convey to the purchaser a complete
license or right to perform DNA sequencing and fragment analysis under the
subject patents. Authorized Reagents may be obtained from Licensed Vendors, or
reagents may be Authorized under separate license arrangements from PE Applied
Biosystems. The above patent rights are granted solely for research and other
uses that are not unlawful. No other licenses are granted expressly, impliedly,
or by estoppel.

Further information on purchasing licenses to perform DNA sequencing and
fragment length analysis may be obtained by contacting the Director of
Licensing at PE Applied Biosystems, 850 Lincoln Centre Drive, Foster City,
California 94404.

PE Applied Biosystems does not guarantee the performance of this instrument.

AMERSHAM IS LICENSED AS A VENDOR FOR AUTHORIZED REAGENTS.

                                       20
<PAGE>   21
                      Exhibit B: Licensed Compounds Label
                      ____________________________________

                      NOTICE TO PURCHASER: LIMITED LICENSE

This reagent is sold pursuant to Authorization from PE Applied Biosystems under
one or more of the following U.S. Patents: (compound patents only)_____________,
and corresponding foreign patents and patent applications. The purchase of this
reagent includes limited non-transferrable rights (without the right to resell,
repackage, or further sublicense) under such patent rights to use this volume of
reagent for DNA sequencing or fragment analysis when used with an authorized
polymerase in conjunction with an automated instrument for DNA sequencing or
fragment analysis which has been authorized for such use by PE Applied
Biosystems, or for manual sequencing when used with an authorized polymerase.
Purchase of this product does not itself convey to the purchaser a complete
license or right to perform automated DNA sequence and fragment analysis under
the subject patents. No other license is hereby granted for use of this reagent
in any other automated sequence analysis instrument. The rights granted
hereunder are solely for research and other uses that are not unlawful. No other
rights are granted expressly, impliedly, or by estoppel. In particular, no
rights are granted under any instrument patents, enzyme patents, or process
patents related to DNA sequencing or fragment analysis.

Further information on purchasing licenses to perform DNA sequence and fragment
analysis may be obtained by contacting the Director of Licensing at PE Applied
Biosystems, 850 Lincoln Centre Drive, Foster City, California 94404.

AMERSHAM IS LICENSED AS A VENDOR FOR AUTHORIZED SEQUENCING AND FRAGMENT
ANALYSIS INSTRUMENTS AND FOR AUTHORIZED POLYMERASE.

                                       21
<PAGE>   22
                         Exhibit C: Licensed Kits Label
                         ------------------------------

                      NOTICE TO PURCHASER: LIMITED LICENSE

This kit is sold pursuant to Authorization from PE Applied Biosystems under one
or more of the following U.S. Patents:_(all compound and process rights
needed)____________, and corresponding foreign patents and patent applications.
The purchase of this kit includes limited non-transferrable rights (without the
right to resell, repackage, or further sublicense) under such patent rights to
use this kit for DNA sequencing or fragment analysis, solely when used in
conjunction with an automated instrument for DNA sequencing or fragment analysis
which has been authorized for such use by PE Applied Biosystems, or for manual
sequencing. Purchase of this product does not itself convey to the purchaser a
complete license or right to perform automated DNA sequence and fragment
analysis under the subject patents. No other license is hereby granted for use
of this kit in any other automated sequence analysis instrument. The rights
granted hereunder are solely for research and other uses that are not unlawful.
No other license is granted expressly, impliedly, or by estoppel.

Further information on purchasing licenses to perform DNA sequence and fragment
analysis may be obtained by contacting the Director of Licensing at PE Applied
Biosystems, 850 Lincoln Centre Drive, Foster City, California 94404.

AMERSHAM IS LICENSED AS A VENDOR FOR AUTHORIZED SEQUENCING AND FRAGMENT ANALYSIS
INSTRUMENTS.

                           Exhibit C: Licensed Enzyme
                           --------------------------

                      NOTICE TO PURCHASER: LIMITED LICENSE

This reagent is sold pursuant to Authorization from PE Applied Biosystems under
one or more of the following U.S. Patents:_(enzyme patents and process patents
only)____________, and corresponding foreign patents and patent applications.
The purchase of this reagent includes limited non-transferrable rights (without
the right to resell, repackage, or further sublicense) under such patent rights
to use this volume of reagent for DNA sequencing or fragment analysis, solely
when used in conjunction with an automated instrument for DNA sequencing or
fragment analysis which has been authorized for such use by PE Applied
Biosystems, or for manual sequencing. Purchase of this product does not itself
convey to the purchaser a complete license or

                                       22
<PAGE>   23
right to perform automated DNA sequence and fragment analysis under the subject
patents. No other license is hereby granted for use of this reagent in any
other automated sequence analysis instrument. The rights granted hereunder are
solely for research and other uses that are not unlawful. No other license is
granted expressly, impliedly, or by estoppel.

Further information on purchasing licenses to perform DNA sequence and fragment
analysis may be obtained by contacting the Director of Licensing at PE Applied
Biosystems, 850 Lincoln Centre Drive, Foster City, California 94404.

AMERSHAM IS LICENSED AS A VENDOR FOR AUTHORIZED SEQUENCING AND FRAGMENT
ANALYSIS INSTRUMENTS.

                                       23
<PAGE>   24
                                                                    EXHIBIT 10.7
                                   EXHIBIT D

                         ALTERNATIVE DISPUTE RESOLUTION

In the event of any dispute, difference or question arising between the parties
in connection with this agreement, the construction thereof, or the rights,
duties or liabilities of either party excluding any dispute or controversy for
which arbitration is prohibited by any applicable law or treaty, and which
dispute is not amicably resolved by the good faith efforts of the parties under
Article 11, then such dispute shall be resolved by binding Alternative Dispute
Resolution ("ADR") in the manner described below:

(a)  If any party intends to begin an ADR to resolve a dispute, such party
shall provide written notice to counsel for the other party informing the other
party of such intention and the issues to be resolved. Within ten (10) business
days after the receipt of such notice, the other party may by written notice to
the counsel for the party initiating ADR, add additional issues to be resolved.
From the date of the ADR notice and until such time as any matter has been
finally settled by ADR, the running of the time periods in which a party must
cure a breach of this Agreement shall be suspended as to the subject matter of
the dispute.

(b)  Within five (5) business days following the receipt of the original ADR
notice ("Notice Date") a neutral shall be selected by the then President of the
Center for Public Resources ("CPR"), 14th floor, 366 Madison Avenue, New York,
New York 10017. The neutral shall be an individual who shall preside in
resolution of any disputes between the parties. The neutral selected shall be a
member of the Judicial Panel of the CPR and shall not be an employee, director
or shareholder of either a party or of an Affiliate of either party.

(c)  Each Party shall have ten (10) business days from the date the neutral is
selected to object in good faith to the selection of that person. If either
party makes such and objection, the then president of the CPR shall as soon as
possible thereafter, select another neutral under the same conditions set forth
above. This second selection shall be final.

(d)  No later than ninety (90) business days after selection, the neutral shall
hold a hearing to resolve each of the issues identified by the parties.

(i)  Each party shall have the right to be represented by counsel at the
hearing.
(ii) The hearing shall be held at such place as agreed upon by the parties or
if they are unable to agree at a place designated by the neutral.

(e)  The ADR proceeding shall be confidential and the neutral shall issue

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<PAGE>   25
appropriate protective orders to safeguard each parties' Confidential
Information. Except as required by law, no party shall make (or instruct the
neutral to make) any public announcement with respect to the proceedings or
decision of the neutral without the prior written consent of each other party.
The existence of any dispute submitted to ADR, and the award of the neutral,
shall be kept in confidence by the parties and the neutral, except as required
in connection with the enforcement of such award or as otherwise required by
applicable law.

(f)  It is the intention of the parties that discovery, although permitted as
described herein, will be extremely limited except in exceptional circumstances.
The neutral shall permit such limited discovery necessary for an understanding
of any legitimate issue raised in the ADR, including the production of
documents. Each party shall be permitted but not required to take the deposition
of not more than five (5) persons, each such deposition not to exceed six (6)
hours in length. If the neutral believes that exceptional circumstances exist,
and additional discovery is necessary for a full and fair resolution of the
issue, the neutral may order such additional discovery as the neutral deems
necessary. At the hearing the parties may present testimony (either by live
witness or deposition) and documentary evidence. The neutral shall have sole
discretion with regard to the admissibility of any evidence and all other
materials relating to the conduct of the hearing.

(g)  Each party shall be entitled to no more than four (4) hours of hearing to
present testimony or documentary evidence. The testimony of both parties shall
be presented during the same calendar day. Such time limitation shall include
any direct, cross or rebuttal testimony, but such time limitation shall only be
charged against the party conducting such direct, cross or rebuttal testimony.
It shall be the responsibility of the neutral to determine whether the parties
have had the four (4) hours to which they are entitled. If the neutral believes
that exceptional circumstances exist, and additional hearing time is necessary
for a full and fair resolution of the issue, the neutral may order such
additional hearing time as the neutral deems necessary.

(h)  At least fifteen (15) business days prior to the date set for the hearing,
each party shall submit to each other party and the neutral a list of all
documents on which such party intends to rely in any oral or written
presentation to the neutral and a list of all witnesses, if any, such party
intends to call at such hearing and a brief summary of each witnesses testimony.

(i)  At least five (5) business days prior to the hearing, each party must
submit to the neutral and serve on each other party a proposed ruling on each
issue to be resolved. Such writing shall be limited to presenting the proposed
ruling, shall contain no argument or analysis of the facts or issues, and shall
be limited to not more than ten (10) pages.

(j)  not more than five (5) business days following the close of hearings, the
parties

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<PAGE>   26
may each submit post hearing briefs to the neutral addressing the evidence and
issues to be resolved. Such post hearing briefs shall not be more than fifty
(50) pages.
(k) The neutral shall rule on each disputed issue after the hearing as
expeditiously as possible, but in no event more than thirty (30) days after the
close of the hearings. The neutral shall, in rendering his decision, apply the
substantive law of the state of New York, U.S.A., and without giving effect to
its principles of conflicts of law, and without giving effect to any rules or
laws relating to arbitration. The neutral is not empowered with the remedy of
termination of the license(s) granted by the accompanying Agreement.

(l) Any judgment upon the award rendered by the neutral may be entered in
any court having jurisdiction thereof. The decision rendered in any such ADR
shall be final and not appealable, except in cases of fraud or bad faith on the
part of the neutral or any party to the ADR proceeding in connection with the
conduct of such proceedings, and shall be enforceable in any court of competent
jurisdiction.

(m) The neutral shall have the option to assess costs and expenses to the
non-prevailing party, otherwise the parties shall pay their own costs
(including, without limitation, attorneys fees) and expenses in connection with
such ADR.

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