Document:

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                                                                   EXHIBIT 10.1

                          ESPERION THERAPEUTICS, INC.

                            1998 STOCK OPTION PLAN
                            ----------------------

1.   PURPOSE.
     -------

          The purpose of the Esperion Therapeutics, Inc. 1998 Stock Option Plan
(the "Plan') is to further the growth and success of Esperion Therapeutics, Inc.
(the "Company") by attracting and retaining the services of directors, officers,
selected employees, consultants and advisors by enabling them to acquire shares
of the Company's Common Stock, par value $.001 per share (the "Common Stock").
Except where the context otherwise requires, the term "Company" shall include
the parent corporation and all subsidiary corporations, if any, of the Company
as defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1996,
as amended (the "Code").
                 ----

2.   TYPES OF OPTIONS.
     ----------------

          Options granted under the Plan may be either "incentive stock options"
("ISOs"), intended to qualify as such under the provisions of Section 422 of the
  ----
Code, or "non-qualified stock options" not intended to qualify as ISOs under
Section 422 of the Code.

3.   ADMINISTRATION:
     --------------

          (a)  Board of Directors/Committee.
               ----------------------------

          Options under the Plan shall be granted, and the Plan shall be
initially administered, by the Board of Directors of the Company (the "Board")
                                                                       -----
and, upon designation by the Board, by a committee (the "Committee") consisting
                                                         ---------
of two or more members of the Board. The members of the Committee shall be
appointed, and may be removed it any time with or without cause, by resolution
adopted by the Board. Any vacancy on the Committee, whether due to action of the
Board or any other cause, shall be filled by resolution adopted by the Board.
Any reference hereinafter to the "Committee" shall be deemed to be a reference
                                  ---------
to the Board until the Committee shall have been designated by the Board.

          (b)  Procedures.
               ----------

          The Committee shall select from among its members a Chairman and may
adopt such rules and regulations as it shall deem appropriate concerning the
holding of meetings and the administration of the Plan. A majority of the entire
Committee shall constitute a quorum and the action of a majority of the members
of the Committee present at a meeting at which a quorum is present, or an action
approved in writing by all of the members of the Committee, shall be the act of
the Committee.

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          (c)  Interpretation.
               --------------

          The Committee shall have full power and authority to interpret the
provisions of the Plan and any Option Agreement (as defined in Section 6(c)
below), to prescribe, amend and rescind rules and regulations relating to the
Plan and to resolve all questions arising under the Plan. All decisions of the
Committee shall be conclusive and binding on all participants in the Plan.

4.   SHARES OF STOCK SUBJECT TO THE PLAN.
     -----------------------------------

          (a)  Numbers of Shares.
               -----------------

          Subject to the provisions of Section 11 below (relating to adjustments
upon changes in capital structure), the number of shares of Common Stock
available for sale upon exercise of options granted under the Plan shall not
exceed 1,320,000 shares. If and to the extent that options granted under the
Plan terminate, expire or are cancelled without having been fully exercised, new
options may be granted under the Plan with respect to the shares of Common Stock
covered by the unexercised portion of such terminated, expired or cancelled
options, all of which may be granted as ISOS.

          (b)  Character of Shares.
               -------------------

The shares of Common Stock issuable upon exercise of an option granted under the
Plan may be (i) authorized but unissued shares of Common Stock, (ii) shares of
Common Stock held in the Company's treasury, or (iii) a combination of both.

          (c)  Reservation of Shares.
               ---------------------

          The number of shares of Common Stock reserved by the Company for
issuance under the Plan shall at no time be less than the maximum number of
shares which may be purchased at any time pursuant to outstanding options.

5.   ELIGIBILITY.
     -----------

Options may be granted under the Plan only to Persons Who are directors,
officers, employees or advisors to the Company at the time of grant options
granted to officers and employees of the Company shall be, in the discretion of
the Committee, either ISOs or NSOs, and options granted to directors who are not
employees of the Company and to consultants and advisors shall be NSOs.
Notwithstanding anything herein to the contrary, ISOs shall only be granted to
those persons who qualify as an employee under Section 3401(c) of the Code.

                                       2
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6.   GRANT OF OPTIONS.
     ----------------

          (a)  General.
               -------

          Options may be granted under the Plan at any time and from time to
time on or prior to the Expiration Date (as defined in Section 15 below).
Subject to the provisions of the Plan, the Committee may, in its discretion,
determine.

               (i)   the persons (from among the class of persons eligible under
               Section 5 above to receive options under the Plan) to whom
               options shall be granted (the "Optionees");
                                              ---------

               (ii)  the time or times at which options shall be granted;

               (iii) the number of shares subject to each option;

               (iv)  the Option Price (as defined in Section 7 below) of the
               shares subject to each option, which price, in the case of ISO's,
               shall be not less than the minimum specified in Section 7 below;

               (v)   the time or times when each option shall become exercisable
               and the duration of the exercise period; and

               (vi)  any restrictions on the sale of, and any repurchase rights
               with respect to, shares purchased upon exercise of an option, as
               contemplated by Section 13 below,

          (b)  Date of Grant.
               -------------

          The date of grant of an option under the Plan shall be the date on
which the Committee approves the grant.

          (c)  Option Agreements.
               -----------------

          Each option granted under the Plan shall be designated as an ISO or an
NSO and shall be subject to the and conditions applicable to ISOs or NSOs (as
the case may be) set forth in the Plan, and each option shall be evidenced by a
written agreement (an "Option Agreement"), containing such terms and conditions,
                       ----------------
not inconsistent with the Plan, as the Committee may, in its discretion,
determine. Each Option Agreement shall be executed by the Company and the
Optionee. Option Agreements may differ among Optionees.

          (d)  No Evidence of Employment.
               -------------------------

          Neither the grant of an option nor any provision of the Plan or any
Option Agreement shall confer upon any (Optionee any right with respect to the
continuation of

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his or her employment by, or his or her consulting or advisory relationship to,
the Company or interfere in any way with the right of the Company at any time to
terminate such employment or relationship or, in the case of employees
(including officers), to increase or decrease the compensation of the Optionee
from the rate in existence at the time of the grant of an option.

7.   OPTION PRICE.
     ------------

The price (the "Option Price") at which each share of Common Stock subject to an
                ------------
option granted under the Plan may be purchased shall be determined by the
Committee at the time the option is granted; provided, however, that in the case
of an ISO, such Option Price shall in no event be less than one hundred percent
(100%) of the fair market value of such share of Common Stock at the time of
grant, as determined by the Committee and, in the case of a ten percent (10%)
owner (see Section g(c) below, such Option Price shall be at least one hundred
ten percent (110%) of the fair market value of the stock subject to such
options.

8.   EXERCISE OF OPTIONS.
     -------------------

          (a)  General.
               -------

          Each option shall be exercisable, in whole or in part, at such time or
times, or within such period or periods, or upon the occurrence of such event or
events, as shall be determined by the Committee and set forth in the Option
Agreement evidencing such option. If an option is not at the time of grant
immediately exercisable full, the Committee may (i) in the Option Agreement
evidencing such option provide for the acceleration of the exercise date or
dates of such option, in whole or in part, upon the occurrence of specified
events, or (ii) at any time prior to the complete expiration of an option,
accelerate, in whole or in part, the exercise date or dates of such option.

          (b)  Restrictions on Exercise.
               ------------------------

               (i)   No option by its terms shall be exercisable after the
               expiration of ten years from the date such option is granted.

               (ii)  No option may be exercised at a time when the exercise
               thereof or the issuance or transfer of shares upon such exercise
               would, in the opinion of the Committee, constitute a violation of
               any law, federal, state, local or foreign, or any regulations
               thereunder, or the requirements of the New York Stock Exchange or
               any other national securities exchange or market.

               (iii) The Committee, in its discretion, may require an Optionee
               to (A) represent in writing that the shares of Common Stock to be
               received upon exercise of an option are being acquired for his or
               her own account for investment and not with a view to
               distribution
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               thereof, nor with any present intention of distributing the same,
               and (B) make such other representations and warranties as are
               deemed necessary by counsel to the Company. Stock certificates
               representing shares of Common Stock not registered under the
               Securities Act of 1933, as amended (the "1933 Act"), acquired
                                                        --------
               upon the exercise of options shall bear the following legend:

"THESE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAW. THESE SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR ANY EXEMPTION THEREFROM UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW."

               (iv)  No option may be exercised for any fractional share.

          (c)  Limitation of Exercise of ISOs.
               ------------------------------

To the extent that the aggregate fair market value (as determined by the
Committee as of the time the options with respect to such stock were granted) of
stock with respect to which options intended to be ISOs are exercisable for the
first time by an Optionee during any calendar year (under all plans of the
Company) exceeds $100,000, such options shall be treated as NSOs. An ISO may not
be granted to an individual who at the time an option is granted, owns stock
that has more than ten percent (10%) of the voting power of all classes of stock
of the Company ("ten percent (10%) owner"). An individual is considered as
                 -----------------------
owning stock, for purposes of the previous sentence, owned directly or
indirectly by or for his brothers, sisters, spouse, ancestors and lineal
descendants. An individual is also deemed to own stock held by a foreign or
domestic corporation, partnership, trust or estate for which the individual is a
shareholder, partner or beneficiary proportionately to his interest in the
corporation, partnership, trust or estate as a shareholder, partner or
beneficiary. Notwithstanding the foregoing prohibition on a "ten percent (10%)
owner," an ISO may be granted to a "ten percent (10%) owner" if (i) the ISO so
granted is not exercisable after the expiration of five (5) years from the date
of grant and (ii) the Option Price of such ISO is at least one hundred ten
percent (110%) of the fair market value of the stock subject to the ISO (as
provided in Section 7 hereof).

9.   PROCEDURE FOR EXERCISE.
     ----------------------

          (a)  Payment.
               -------

          At the time an option is granted, the Committee shall, in its
discretion, specify one or more of the following forms of payment which may be
used by an Optionee upon exercise of his or her option:

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               (i)   cash or personal or certified check payable to the Company
               in an amount equal to the aggregate Option Price of the shares
               with respect to which the option is being exercised;

               (ii)  stock certificates (in negotiable form) representing shares
               of Common Stock having a fair market value (as determined by the
               Committee, which determination, if the Common Stock is publicly
               traded, shall be based upon market prices) equal to the aggregate
               Option Price of the shares with respect to which the option is
               being exercised; provided, however, that this method of payment
               may only be implemented if the Optionee has owned such shares of
               Common Stock, beneficially and of record, for a period of at
               least six (6) consecutive months immediately prior to exercise of
               his or her Option;

               (iii) cash proceeds equal to the aggregate Option Price of the
               shares with respect to which the option is being exercised
               derived from the simultaneous exercise of the option and sale of
               the underlying shares; or

               (iv)  a combination of any of such methods,

          (b)  Notice.
               ------

          An Optionee (or other person, as provided in Section 13(a) below) may
exercise an option, in whole or in part as provided in the Option Agreement
evidencing such option, by delivering a written notice (the "Notice") to the
Secretary of the Company. The Notice shall:

               (i)   state that the Optionee elects to exercise the option and
               whether the option being exercised is an ISO or an NSO;

               (ii)  state the number of shares with respect to which the option
               is being exercised (the "Optioned Shares");

               (iii) state the method of payment for the Optioned Shares (which
               method must be available to the Optionee under the terms of his
               or her Option Agreement) and, if applicable, that cash, a check
               and stock certificates (as the case may be) are enclosed
               representing all or part of the aggregate Option Price of such
               Optioned Shares;

               (iv)  state the date upon which the Optionee desires to
               consummate the purchase of the Optioned Shares (which date must
               be prior to termination of such option under Section 10 below);

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               (v)   include any representation of the Optionee required
               pursuant to Section 8(b)(iii) above,

               (vi)  in the event the option is exercised pursuant to Section
               13(a) below by any person other than the Optionee, include
               evidence to the satisfaction of the Committee of the right of
               such person to exercise the option; and

               (vii) include such further provisions consistent with the Plan as
               the Committee may from time to time require.

Within 30 days from the exercise date of any option, the Optionee shall deliver
to the Company a copy of any election filed by the Optionee with the Internal
Revenue Service under Section 83(b) of the Code.

          (c)  Issuance of Certificates.
               ------------------------

The Company shall issue a stock certificate in the name of the Optionee (or such
other person exercising the Option in accordance with the provisions of Section
13(a) below) for the Optioned Shares as soon as practicable after receipt of the
notice and payment of the aggregate Option Price for such shares. All such
certificates, if so provided in the Option Agreement of such Optionee, shall
bear a legend in substantially the form set forth in Section 13(b) below, and
all certificates representing shares of Common Stock not registered under the
1933 Act shall bear the legend set forth in Section 8(b)(iii) above. Neither the
Optionee nor any person exercising an option in accordance with the provisions
of Section 13(a) below shall have any privileges as a stockholder of the Company
with respect to any shares of stock subject to an option until such shares shall
be registered on the books of the Company in the name of such person.

10.  TERMINATION OF EMPLOYMENT; DISABILITY AND DEATH.
     -----------------------------------------------

          (a)  General.
               -------

          Subject to the provisions of Section 8(b) above, the Committee may
determine the period or periods of time during which an Optionee may exercise an
option following (i) the termination by the Company, with or without cause, of
the Optionee's employment or other relationship with the Company, (ii) the
termination by the Optionee of any such relationship with the Company, or (iii)
the death or permanent and total disability of the Optionee (within the meaning
of Section 22(e)(3) of the Code). Such period or periods shall be set forth in
the Option Agreement evidencing each such option.

          (b)  Incentive Stock Options
               -----------------------

          No ISO may be exercised unless, at the time of exercise, the Optionee
is, and has continuously since the date of the grant of such ISO been, employed
by the Company, and, subject to the provisions of Section 8(b) above, the right
to exercise the

                                       7
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unexercised portion of any ISO shall forthwith terminate upon the first to occur
of the following:

               (i)   the expiration of not more than three months from the date
               of termination of the Optionee's employment (other than a
               termination described in subparagraph (ii) or (iii) below);
               provided, however that if the Optionee shall die or become
               --------  -------
               permanently and totally disabled (within the meaning of Section
               22(e)(3) of the Code) during such three-month period, the time of
               termination of the unexercised portion of such option shall be
               determined in accordance with subparagraph (ii) below;

               (ii)  the expiration of not more than 12 months from the date of
               termination of the Optionee's employment if such termination is
               due to such Optionee's death or permanent and total disability
               (within the meaning of Section 22(e)(3) of the Code);

               (iii) immediately upon the termination by the Company of the
               Optionee's employment if such termination is for cause, as
               determined by the Committee, or is otherwise attributable to a
               breach, as determined by the Committee, by the Optionee of an
               employment agreement with the Company; or

               (iv)  the expiration of such period of time or the occurrence of
               such event as the Committee in its discretion may provide in the
               Option Agreement evidencing such option.

11.  ANTIDILUTION.
     ------------

          In the event the Common Stock is changed by reason of a stock split,
reverse stock split, stock dividend or recapitalization (exclusive of any future
public or private sales of Common Stock), or is converted into or exchanged for
other securities as a result of a merger, consolidation or reorganization in
which the Company is the surviving corporation, appropriate adjustments shall be
made, as determined by the Committee, in the terms of the outstanding options,
or additional options may be granted under the Plan as shall be equitable and
appropriate, in order to make such outstanding options, as nearly as may be
practicable, equivalent to such options immediately prior to such change. A
corresponding adjustment changing the number and class of shares allocated to,
and the Option Price of, each option or portion thereof outstanding at the time
shall likewise be made. In the case of ISOS, no such adjustment shall be made
which would constitute a modification, extension or renewal of such ISOs within
the meaning of Section 424 of the Code.

                                       8
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12.  CORPORATE TRANSACTIONS.
     ----------------------

          In the event the Common Stock is exchanged for securities, cash or
other property of any other corporation or entity as the result of a
reorganization, merger or consolidation in which the Company is not the
surviving corporation, the dissolution or liquidation of the Company, or the
sale of all or substantially all the assets of the Company, the Committee or
the, Board of Directors of the Company may, in its discretion, as to outstanding
options (a) accelerate the exercise date or dates of such options pursuant to
Section 8(a) above, (b) upon written notice to the holders thereof, provided the
options have been accelerated pursuant to clause (a) above, terminate all such
options prior to the consummation of the transaction unless exercised within a
prescribed period, (c) provide for payment of an amount equal to the excess of
the fair market value, as determined by the Committee or such board, over the
Option Price of such shares as of the date of the transaction, in exchange for
the surrender of the right to exercise such options, or (d) provide for the
assumption of such options, or the substitution therefor of new options, by the
successor corporation or entity; provided, however, that with respect to ISOs
                                 --------  -------
the requirements of Section 424 of the Code shall be met.

13.  RESTRICTIONS ON OPTIONS AND OPTIONED SHARES.
     -------------------------------------------

          (a)  Nonassignability of Option Rights.
               ---------------------------------

          No option granted under this Plan shall be assignable or otherwise
transferable by the Optionee otherwise than by will or the laws of descent and
distribution, and shall be exercisable during the lifetime of the Optionee only
by him or her. In the event of the death of an Optionee, any option held by such
Optionee may thereafter be exercised by his or her representatives, executors or
administrators to the full extent to which such option was exercisable by the
Optionee at the time of his or her death.

          (b)  Right of First Refusal; Right of First Offer.
               --------------------------------------------

          The Committee, in its discretion, may provide in any Option Agreement
that the Company or its designee shall have a right of first refusal or right of
first offer on the sale or transfer of any shares of Common Stock issued upon
exercise of the option subject to such Option Agreement, in the manner provided
therein, such right of first refusal or right of first offer to expire upon the
consummation of the initial Public offering of the Common Stock pursuant to the
1933 Act. Any certificate representing shares of Common Stock issued pursuant to
an Option Agreement containing a right of first refusal or right of first offer
shall bear a legend in substantially the following form:

"THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE TERMS AND CONDITIONS OF A
STOCK OPTION AGREEMENT DATED AS OF ______________ AMONG ESPIRION THERAPEUTICS,
INC., AND THE HOLDER OF RECORD OF THIS CERTIFICATE, AND NO SALE, ASSIGNMENT,

                                       9
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TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF SUCH SECURITIES SHALL BE
VALID OR EFFECTIVE EXCEPT IN ACCORDANCE WITH SUCH AGREEMENT AND UNTIL SUCH TERMS
AND CONDITIONS HAVE BEEN FULFILLED. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT
NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO
THE SECRETARY OF ESPERION THERAPEUTICS, INC."

14.  EFFECTIVE DATE.
     --------------

          The Plan shall become effective on the date (the "Effective Date") of
its adoption by the Board; provided, however, that no option intended to be an
                           --------  -------
ISO shall be exercisable by an Optionee unless and until the Plan shall have
been approved by the stockholders, of the Company with before or after the date
of adoption of the Plan by the Board.

15.  EXPIRATION AND TERMINATION.
     --------------------------

          Except with respect to options then outstanding, the Plan shall expire
on the earliest to occur of (a) the tenth anniversary of the date on which the
Plan was adopted by the Board, (b) the tenth anniversary of the date on which
the Plan is approved by the stockholders of the Company, or (c) the date as of
which the Board, in its sole discretion, determines to terminate the Plan (the
"Date"). Any options outstanding as of the Expiration Date shall remain in
effect until they have been exercised or have terminated or expired by their
respective terms.

16.  AMENDMENT.
     ---------

          The Board may at any time terminate, modify or amend the Plan;
provided, however, that if the approval of the stockholders of the Company shall
--------  -------
be required for any modification or amendment under Section 422 of the Code,
with respect to ISOS, or under Rule 16b-3 under the Securities Exchange Act of
1934, as amended with respect to shares of Common Stock registered under such
Act, such approval shall be obtained before such modification or amendment shall
become effective. No termination, modification or amendment of the Plan may,
without the consent of an Optionee adversely affect his or her rights under an
option previously granted to such Optionee.

17.  DISQUALIFYING DISPOSITIONS.
     --------------------------

          If stock acquired upon exercise of an ISO granted under the Plan is
disposed of by the Optionee within two years from the date of grant of the ISO
or within one year after the transfer of the Optioned Shares to such Optionee (a
"disqualifying disposition"), such Optionee shall, immediately prior to such
 -------------------------
disqualifying disposition, notify the Company in writing of the date and terms
of such disposition and provide such other information regarding the disposition
as the Company may reasonably require.

                                       10
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18.  TAXES.
     -----

The Company may deduct from any cash payments due to an Optionee upon exercise
of an option any federal, state or local withholding taxes and employment taxes
relating thereto or, as a condition of delivery of any Optioned Shares due upon
such exercise, require the Optionee to remit, or, in appropriate cases, agree to
remit when due, an amount sufficient to satisfy such taxes; provided, however,
                                                            --------  -------
that, subject to the prior approval of the Committee, the Optionee may, in whole
or in part, satisfy such obligations (a) by permitting the Company to withhold
some or all of such Optioned Shares, or (b) by delivering shares of Common Stock
already owned by him or her. Shares so withheld or delivered shall have a fair
market value, as determined by the Committee, equal to such obligations as of
the date or dates the amounts of such taxes are required to be determined. At
the time of any disqualifying disposition, the Optionee shall remit to the
Company in cash the amount of any such taxes relating to such disposition.

19.  CAPTIONS.
     --------

          The use of captions in the Plan or any Option Agreement is for the
convenience of reference only and shall not affect the meaning of any provision
of the Plan or such Option Agreement.

20.  GOVERNING LAW.
     -------------

The validity and construction of the Plan and the Option Agreements shall be
construed in accordance with and governed by the law of the State of Delaware.

                                       11<PAGE>

                                                                    EXHIBIT 10.7

                          ESPERION THERAPEUTICS, INC.

                                     LEASE

         This agreement is made and entered into this 30th day of November,
1998, by and between State-94 LIMITED PARTNERSHIP, a Michigan limited
partnership, whose address is 315 E. Eisenhower Parkway, Suite 220, Ann Arbor,
Michigan 48108, hereinafter referred to as "Lessor," and Esperion Therapeutics,
Inc., a Michigan corporation, whose address is 3621 S. State Street, Ann Arbor,
Michigan 48108, hereinafter referred to as "Lessee";

                                  WITNESSETH:

PREMISES

         Section 10.1. Lessor, for and in consideration of the rents herein
reserved and of the covenants and agreements herein contained on the part of the
Lessee, to be kept, observed and performed, does by these presents, demise and
lease to Lessee, and Lessee hereby hires and lets from Lessor the real estate
located at premises commonly known as Suite 69J, KMS comprising of approximately
12,400 square feet being a portion of 3621 S. State Street, Ann Arbor, Michigan,
as more particularly described on attached and incorporated in Exhibit A, and
improvements now located or to be erected thereon, subject to easements and
restrictions of record, which easements and restrictions do not interfere with
the use of the demised premises for the purposes described herein.

         Section 102. Said real estate and improvements are sometimes herein
referred to as "demised premises."

TERM

         Section 201. The term of this Lease shall be two (2) years from and
after the 1st day of January, 1999. Tenant shall have an option to extend the
term of this Lease for an additional period of two (2) years in accordance with
the provisions of Section 3501 of this Lease.

         Section 302. Lessee shall be solely responsible for the completion of
any improvements which it may require to be made to the premises.

                                       1
<PAGE>

         Section 303. Lessee agrees to accept the demised premises in their"
as-is" condition, except for any existing environmental contamination resulting
from the previous activities of KMS Industries and/or the United States
Department of Energy.

RENTAL

         Section 401. In consideration of the leasing of the demised premises
from Lessor, Lessee agrees to pay Lessor fixed monthly rental payments in
advance in the amount of Fifteen thousand five hundred and 00/100 ($15,500)
Dollars commencing on the first day of the term and continuing on the first day
of each and every month thereafter for the next succeeding twenty-three (23)
months.

         Section 402. In the event any installment of rent is paid more than ten
(10) days after the due date thereof, and such amounts of delinquent rent shall
bear interest at the rate of twelve (12%) percent per annum until paid.

         Section 404. Additional Rent. In addition to the monthly rental as set
forth in Section 401, above, Lessee shall also pay Lessor as additional rent an
amount equal to Lessee's pro-rata portion of any increase in real estate taxes
on the entire premises of which the demised premises are a part, using real
estate taxes due in calendar year 1999 as the base year; said additional rental
to be paid semi-annually in the months of July and December of each year in
accordance with the statement provided by Lessor to Lessee such statement to be
accompanied by photocopies of the applicable real estate tax bills and a
computation of the method of proration of any tax increase. For purposes of this
computation, the Lessee's pro-rata share of taxes shall mean 9.876 percent
(9.876%), which is the quotient (expressed as a percentage) derived by dividing
the rentable area of the premises (12,400) by the rentable area of the building
(125,554).

         Section 405. Increased Operating Expenses. Commencing with the first
full calendar year after the commencement of the original term of this Lease,
and during each successive calendar year thereafter, the Lessee shall pay, as
additional rent, its proportionate share of the amount by which operating
expenses for such calendar year exceed the cost for such items during the base
year. Lessee shall be billed semi-annually on or about June 30 and December 31
for its proportionate share of increases in utilities and operating expenses
based upon a space factor of 9.876%. The semi annual billings provided by Lessor
shall be based upon Lessors reasonable estimate of such charges, and Lessor
shall provide Lessee with a reconciliation of the amounts billed for such
increases as compared to the charges actually incurred for such increases, such
reconciliation to be provided within ninety (90) days after the end of each
calendar year. Lessee shall pay all billings for increases in utilities and
operating expenses at the same time as Lessee pays its rent on the next regular
monthly due date for rent following receipt of Lessor's billing. Delinquency in
the payment of billings for increases in utilities and operating expenses shall
bear interest during any period when such sums are not paid in the same manner
as interest will accrue on delinquent installments of rent under the provisions
of paragraph 402.

                                       2
<PAGE>

         For the purposes of this paragraph: (a) The term utilities shall not
include the cost of gas, electric and water and sewer to be paid by Tenants
under Paragraph 601 of the lease.

         The term "operating expenses: shall include all charges incurred in the
normal operation of the building including repair and maintenance of mechanical
equipment halls, lobby and bathroom maintenance, window washing, trash
collection, supplies, property and liability insurance, management fees for
building management, minor repairs and replacement of consumable items and other
expenses of a similar nature as may be required in order that the building
maintain a first class professional appearance and use; provided, however, that
the term: "operating expenses" shall not include Lessors expenses for leasing
commissions, real property taxes and assessments as covered under paragraph 404
above, legal and accounting costs, Lessor's general administrative overhead in
the operation of its office or building, or the costs for replacement of any
equipment, portion of the building, or other capital items.

         The term base year shall be 1999.

TAXES AND ASSESSMENTS

         Section 501. Lessor shall be responsible for the payment of all real
estate taxes and special assessments on the premises.

UTILITIES

         Section 601. Lessee shall be solely responsible to pay all charges for
utility services provided to the premises during the term of the Lease. Normal
electrical service to provide electricity for uses other than overhead lighting
and HVAC shall be separately metered and charged directly to Lessee. Utility
services which are not separately metered, including electricity for overhead
lighting and HVAC, gas, water, sewer, will be prorated to Lessee by Lessor on a
reasonable basis to be agreed, then based upon the evaluation of an engineer
jointly by the parties for this purpose. Shared utility services shall be billed
quarterly by Lessor to Lessee, and Lessee shall pay such bills within thirty
(30) days.

USE

         Section 701. The demised premises shall be used for
research/office/light industrial and for other related or similar purposes which
are permitted by the zoning laws and record restrictions applicable to the
demised premises. Lessee shall not use or occupy the demised premises or permit
the demised premises to be used or occupied contrary to any statute, rule,

                                       3
<PAGE>

order, ordinance, requirement, or regulation applicable thereto or in any manner
which would violate any certificate of occupancy affecting the same, or which
would cause structural injury to the improvements or which would constitute a
public or private nuisance or waste, and Lessee agrees that it will promptly
upon discovery of any such use, take all necessary steps to compel the
discontinuance of such use.

         Lessor agrees that the demised premises may be used as Lessee has been
using same prior to this Lease.

MAINTENANCE OF PREMISES

         Section 801. Lessor shall make all necessary repairs and replacements
to the building in which the leased premises are located, to the heating, air
conditioning and electrical systems located therein, and to the common areas,
including parking areas, and removal of snow and ice and Lessor shall also make
all repairs to the leased premises which are structural in nature, provided,
however, that Lessee shall make all repairs and replacements arising from its
willful misconduct or default and that of its agents, servants and employees.

         Lessee shall be responsible to provide its own janitorial services and
light bulb maintenance.

INSURANCE AND INDEMNIFICATION:

         Section 901. Lessee shall indemnify the Lessor and save it harmless
from and against any and all claims liability and expense for damages to any
person or property in or on the leased premises from any cause whatsoever.
Lessee shall procure and keep in effect during the entire term hereof public
liability and property damage insurance protecting Lessor and Lessee from all
causes in which limits of public liability shall not be less than Five hundred
thousand ($500,000) Dollars for damages resulting to one person, One million
($1,000,000) Dollars for damages resulting from one casualty, and Fifty thousand
($50,000) Dollars property damage resulting from one occurrence. Lessee shall
deliver policies of such insurance or certificates thereof to Lessor and upon
renewals not less than thirty (30) days prior to the expiration of such
coverage, and in the event Lessee shall fail to procure such insurance, Lessor
may at its option procure the same for the account of Lessee, and the cost
thereof shall be paid to Lessor immediately upon receipt by the Lessee of bills
therefor.

                                       4
<PAGE>

FIRE INSURANCE

         Section 1001. Lessor shall, at all times during the term of this Lease,
at its expense, keep in effect insurance on all buildings and improvements
against loss by fire, the risks covered by what is commonly known as "extended
coverage," malicious mischief and vandalism, in an amount no less than the
replacement cost of the building and improvements.

         Section 1002. It is specifically understood and agreed that Lessor
shall maintain fire and extended coverage insurance on the building improvements
only, and that Lessor shall have no responsibility whatsoever for the loss of
Lessee's property on the leased premises; it being the Lessee's responsibility
to obtain such insurance on its own property as Lessee deems to be required.
Lessor and Lessee hereby waive and release any right of subrogation which either
of them might have against the opposite party for any loss or damage sustained
to their respective interest, to the extent that such loss or damage is covered
by an applicable insurance policy or policies.

Lessor and Lessee agree to carry policies with waivers of subrogation.

DAMAGE OR DESTRUCTION

         Section 1101. In the event the demised premises are damaged or
destroyed in whole or in part by fire or other casualty during the term hereof,
Lessor shall, at its own cost and expense, repair and restore the same to the
pre-casualty condition with reasonable dispatch, and the rent herein provided
for shall abate entirely in case the entire leased premises are untenantable,
and pro-rata for the portion rendered untenantable, in the event of a partial
untenantability, until such time as the leased premises are restored to the
pre-casualty condition. In the event the building in which the leased premises
are located is destroyed to the extent of more than one- half (1/24) of the then
value thereof, then the Lessor, or Lessee, in their sole discretion, shall have
the right to terminate this Lease upon written notice to the Lessee, and any
rent paid in advance of the date of such damage and destruction shall be
refunded to Lessee. If the leased premises are damaged due to fire or other
casualty, Lessee shall at its own cost and expense remove such of its furniture
and other belongings from the leased premises as the Lessor shall require in
order to repair and restore the leased premises. If the leased premises cannot
be restored within a period of ninety (90) days, then Lessee shall have the
right to terminate.

LIENS

         Section 1201. Lessee shall not do any act which shall in any way
encumber the title of Lessor in and to said demised premises, nor shall the
interest or estate of Lessor in said demised premises be in any way subject to
any claim by way of lien or encumbrance, whether by

                                       5
<PAGE>

operation of law or by virtue of any express or implied contract by Lessee, and
any claim to or lien upon said demised premises arising from any act or omission
of Lessee shall accrue only against the leasehold estate of Lessee and shall in
all respects be subject and subordinate to the paramount title and rights of
Lessor in and to said premises and the buildings and improvements thereon.
Lessee will not permit the demised premises to become subject to any mechanics',
laborers', or materialmen's lien on account of labor or material furnished to
Lessee in connection with work of any character performed or claimed to have
been performed on the demised premises by or at the direction of sufferance of
Lessee; provided, however, that Lessee shall have the right to contest in good
faith and with reasonable diligence, the validity of any such lien or claimed
lien if Lessee shall give to Lessor such security as may be reasonably demanded
by Lessor to insure payment thereof and to prevent any sale, foreclosure or
forfeiture of the demised premises by reason of nonpayment thereof, provided, on
final determination of the lien or claim for lien, Lessee will immediately pay
any Judgment rendered, with all proper costs and charges, and will, at its own
expense, have the lien released and any judgment satisfied.

         Section 1202. In case Lessee shall fail to contest the validity of any
lien or claimed lien and give security to Lessor to insure payment thereof, or
having commenced to contest the same and having given such security, shall fail
to prosecute such contest with diligence, or shall fail to have the same
released and satisfy any judgement rendered thereon, then Lessor may, at its
election (but shall not be required so to do), remove or discharge such lien or
claim for lien (with the right, in its discretion, to settle or compromise the
same), and any amounts advanced by Lessor for such purposes shall be so much
additional rental due from Lessee to Lessor at the next rent day after any such
payment, with interest at the rate of ten (10%) percent per annum from the date
of payment thereof.

CONDEMNATION

         Section 1301. In the event the whole of the demised premises, or so
much thereof shall be taken or condemned for a public or quasi-public use or
purpose by any competent authority, and as a result thereof the balance of said
premises cannot be used for the same purpose as before such taking or
condemnation, (which determination shall be made by Tenant) then and in either
of such events, the terms of this lease shall terminate when possession of the
demised premises shall be required for such use or purpose, and in any award,
compensation or damages (hereinafter sometimes called the "award") shall be paid
to and be the property of Lessor; except for the portion of any award
attributable to damages suffered by the Tenant.

         Section 1302. In the event only a part of the demised premises shall be
taken or condemned for a public or quasi-public use or purpose by any. competent
authority, and as a result thereof the balance of said premises can be used for
the same purpose as before such taking of condemnation, (which determination
shall be made by Tenant) this lease shall not terminate; and Lessor, at its sole
cost and expense, shall repair and restore the premises and all improvements
thereon. Any award paid as a consequence of such taking or condemnation shall

                                       6
<PAGE>

be paid to Lessor and be applied to the cost said repairing and restoration. Any
sums remaining after such application shall be paid to Lessor. In no event shall
Lessee have any obligation to expend more dm the condemnation award. There shall
be no abatement or reduction in the fixed rental because of such taking, unless
such taking shall reduce the area of the leased premises, in which case there
shall be a pro rata abatement, or reduction in the rental.

HAZARDOUS MATERIALS

         Section 1401. Lessor and Lessee acknowledge that Lessee is required to
handle or otherwise deal with small amounts of Hazardous Materials within the
demised premises in the course of its business. Lessee hereby specifically
agrees that it will abide by all Environmental Laws and Regulations in the
handling or otherwise dealing with such Hazardous Materials. In the event that
the Lessee's activities with respect to the handling or otherwise dealing with
such hazardous materials result in contamination of the demised premises, or the
contamination of any other property whatsoever, then Lessee shall indemnify,
defend and hold Lessor, harmless from (i) any and all claims or losses
including, without limitation, all cleanup costs and expenses associated
therewith and, (ii) diminution in value of the demised premises or any other
premises and the restriction of use of rentable space or usable space or any
amenity of the demised premises, and (iii) sums paid in settlement of claims,
reasonable attorney fees, reasonable consultant fees and reasonable expert fees
which arise during or after the Lease term as a result of such contamination
provided Lessee has been notified of such claims at the time they are made and
participated in the defense thereof. This indemnification by Lessee includes,
without limitation, costs incurred in connection with any investigation of site
conditions, or cleanup, remedial, removable or restoration work required by any
federal, state, or local governmental agency or political subdivision because of
hazardous material present in the soil or ground water or on or under the
demised premises which is attributable to Lessee under this paragraph. Without
limiting the foregoing, if the presence of any hazardous materials on the leased
premises caused or permitted by Lessee or its agents, employees contractors,
invitees, subtenants or assignees results in any contamination of the demised
premises or any other premises, Lessee shall promptly take all actions, at its
sole expense, as are necessary to return the demised premises or any other
premises to the condition existing prior to the introduction of any such
hazardous material; provided that Lessor's approval of such actions shall first
be obtained which approval shall not be unreasonably withheld so long as such
actions would not potentially have any material adverse long-term or short-term
effect on the demised premises or the other involved premises. The foregoing
indemnity shall survive the expiration or early termination of this Lease.

         Section 1402. The term "Hazardous Materials" as used in Section 1401
includes, without limitation, any materials or substances:

                                       7
<PAGE>

          .   Defined in the Comprehensive Environmental Response, Compensation
              and Liability Act of 1980 as amended (42 U.S.C. Sections 9601 et
              seg.) and amendments thereto and regulations promulgated
              thereunder;

          .   Defined in the Hazardous Materials Transportation Act, as amended
              (U.S.C. Sections 1801, et seg.) and amendments thereto and
              regulations promulgated thereunder;

          .   Defined in the Resource Conservation and Recovery Act, as amended
              (42 U.S.C. Sections 6901, et seg.) and amendments thereto and
              regulations promulgated thereunder;

          .   Containing gasoline, oil, diesel fuel, or other petroleum
              products;

          .   Containing polychlorinated biphenyl's (PCB's);

          .   Containing asbestos;

          .   Which are radioactive;

          .   Which are biological and which have been classified as hazardous
              by the United States Environmental Protection Agency or any other
              federal or state agency; or

          .   The presence of which require investigation or remediation under
              any federal, state or local statue, regulation, ordinance or
              policy, or under any rules, regulations or policies promulgated
              thereunder, or which is or becomes defined as a "hazardous waste"
              or "hazardous substance" under any federal, state, or local
              statute, regulation or ordinance, and any toxic, explosive,
              corrosive or otherwise hazardous substance, material or waste
              which is or becomes regulated by any federal, state or local
              governmental authority, or which cause a nuisance upon or waste to
              the premises.

          Section 1403. The term "Environmental Laws" as used in Section 1401
shall include any federal or state law or regulation dealing with Hazardous
Materials as defined in Section 1402.

          Section 1404. Lessor hereby represents and warrant to Lessee that it
has disclosed to Lessee all of the information in its possession concerning
existing tritium contamination of the premises as a result of the previous
activities of KMS. Any of the provisions of Sections 1401, 1402, or 1403 to the
contrary notwithstanding, Lessee shall not be responsible for environmental
contamination of the premises caused by the previous activities of KMS and/or
the United States Department of Energy. For the purpose of establishing a
benchmark for the level of contamination of the premises (if any) caused by the
previous activities of KMS and/or the United States Department of Energy, Lessor
and Lessee agree that on or before February 15, 1993, when the KMS/United States
Department of Energy cleanup activities had been completed

                                       8
<PAGE>

with respect to Rooms 333 and 334, the level of contamination in the premises
(if any) will be measured by a mutually agreed upon consultant, and tins
measurement shall constitute the benchmark by which to measure whether or not
Lessee has caused any contamination of the premises. Lessee shall not move any
radioactive materials onto the premises before February 15, 1993. If the
benchmark does not meet then applicable Nuclear Regulatory Commission Standards
for unrestricted use, then Lessee shall have the right to immediately terminate
this lease and recover its moving costs from Lessor as specified in Section 3401
hereof.

          Section 1405. If, following the establishment of the benchmark as
discussed in Section 1404, immediately above, any tritium contamination is
discovered in the premises at levels higher than those then allowed by
applicable government standards for unrestricted public use, and further
presuming that such tritium contamination has not been caused by the activities
of the Lessee, then the Lessor shall immediately take such action at its expense
as may be necessary to lawfully remediate the tritium contamination. In the
event that the Lessor is unable to reduce the tritium contamination, to an
acceptable level for unrestricted public use within ninety (90) days following
the discovery and confirmation of the contamination, then Lessee shall have the
right to terminate this Lease and recover its moving costs and business
interruption cost from Lessor, such costs not to exceed Fifty Thousand ($50,000)
Dollars.

ASSIGNMENT BY LESSEE

          Section 1501. Lessee shall not assign this Lease without the written
consent of Lessor, which consent shall not be unreasonably withheld or delayed,
and no such assignment shall relieve Lessee of its obligations hereunder; and
Lessee shall continue to be liable as a principal and not as a guarantor or
surety, to the same extent as though no assignment had been made.

          Section 1502. Lessee may, without Lessor's consent, assign this Lease
to any entity which is affiliated with Lessee or to any corporation resulting
from a merger or consolidation of the Lessee, provided that the total assets and
net worth of such assignee after such consolidation or merger shall be more than
that of Lessee immediately prior to such consolidation or merger, and provided
that Lessee is not at such time in default hereunder beyond any notice and cure
period, pursuant to section 2001 hereof, and provided further that such
successor shall execute an instrument in writing fully assuming all of the
obligations and liabilities imposed upon Lessee hereunder and deliver the same
to Lessor, whereupon Lessee shall be discharged from any further liability
hereunder.

ANNUAL STATEMENTS

          Section 1601. Lessee, upon the written request of the Lessor, agrees
to furnish Lessor annually within ninety (90) days of the end of each fiscal
year, with a copy of its annual compiled

                                       9
<PAGE>

statement, and agrees that Lessor may deliver such statements to its mortgagee.
Such statements shall be held in strict confidence by Lessor and its mortgagee.

ATTORNEY FEES.

         Section 1701. Lessee further agrees to pay all costs and expenses,
including reasonable attorneys' fees, which may be incurred by or imposed on
Lessor either in enforcing this Lease (but only where Lessor shall prevail) or
in any litigation commenced in connection with this Lease or concerning the
demised premises to which Lessor, may be made a party solely by virtue of the
fact that Landlord is the owner of the building of which the demised premises is
a part; and if paid by Lessor, shall be so much additional rent due on the next
rent date after such payment, together with interest at ten (10%) percent per
annum from the date of payment.

ESTOPPEL CERTIFICATE BY LESSEE

         Section 1801. The parties further agree at any time and from time to
time, upon not less than (20) days' prior written request to execute,
acknowledge and deliver a statement in writing certifying that this Lease is
unmodified and in full force and effect (or specifying the modifications, if
any), and the date to which the rental and other charges have been paid in
advance, if any, it being intended that any such statement delivered pursuant to
this Section 1701 may be relied upon by any prospective purchaser of the fee of
any assignee or prospective assignee of this Lease, or mortgagee or assignee of
any mortgage upon the fee of the demised premises.

INSPECTION OF PREMISES

         Section 1901. Upon reasonable prior notice (except in the case of an
emergency), Lessee agrees to permit Lessor and the authorized representatives of
Lessor to enter the demised premises at all reasonable times during business
hours for the purpose of inspecting the same. The Lessee may designate a
representative to accompany Lessor during its inspections.

FIXTURES

         Section 2001. All buildings and improvements and all plumbing, heating,
lighting, electrical and air conditioning fixtures and equipment and other
articles of personal property used in the operation of such buildings as such
(as distinguished from operations incident to the business of Lessee) now or
hereafter located upon said land, together with all duct electrical

                                       10
<PAGE>

lines, whether or not attached or affixed to said land or any buildings thereon,
sometimes herein referred to as "building fixtures," shall be and remain a part
of the real estate and shall constitute the property of Lessor.

         Section 2002. All of Lessee's trade fixtures and all personal property,
fixtures, apparatus, machinery and equipment now or hereafter located upon said
land, other than building fixtures as defined in Section 2001 hereof, and owned
by Lessee or any other occupants of the demised premises and whether or not the
same are affixed thereto, shall be and remain the personal property of Lessee or
such other occupants, and the same are herein sometimes referred to as "Lessee's
equipment."

         Section 2003. Lessee's equipment may be removed from time to time by
Lessee or other occupants of the demised premises; provided, however, that if
such removal shall damage the premises, Lessee shall reasonably repair the
damage and place the premises in the same condition as it would have been if
such equipment had not been installed.

RE-ENTRY UPON DEFAULT

         Section 2101. Lessee further agrees that any one or more of the
following events shall be considered events of default as said term is used
herein, that is to say, if-

         Lessee shall be adjudged a bankrupt, or a decree or order approving, as
properly filed, a petition or answer asking reorganization of Lessee under the
federal bankruptcy laws as now or hereafter amended, or under the laws of any
such decree or judgement or order shall not have been vacated or stayed or set
aside within thirty (30) days from the date of the entry or granting thereof; or

         Lessee shall file or admit the jurisdiction of the court and the
material allegations contained in any petition in bankruptcy, or any petition
pursuant or purporting to be pursuant to the federal bankruptcy laws as now or
hereafter amended, or Lessee shall institute any proceedings or shall give its
consent to the institution of any proceedings for any relief of Lessee under any
bankruptcy or insolvency laws or any laws relating to the relief of debtors
readjustment of indebtedness, reorganization, arrangements, composition or
extension; or

         Lessee shall make any assignment for the benefit of creditors or shall
apply for or consent to the appointment of a receiver for Lessee or any of the
property of Lessee; or

         A decree or order appointing a receiver of the property of Lessee shall
be made, and such decree or order shall not have been vacated, stayed or set
aside within thirty (30) days from the date of entry of granting thereof, or

                                       11
<PAGE>

         Lessee shall make default in any monthly payments of basic rent
required to be made by Lessee hereunder when due as herein provided, and such
default shall continue for ten (10) days after notice thereof in writing to
Lessee; or

         Lessee shall make default in any of the other covenants and agreements
herein contained to be kept, observed and performed by Lessee, and such default
shall continue for thirty (30) days after notice thereof in writing to Lessee.

         Upon the occurrence of any one or more of such events of default, it
shall be lawful for Lessor, at its election, to declare the said term ended, and
r with process of law, to re-enter and to expel, remove and put out, Lessee and
all persons occupying said premises under Lessee, using such lawful force as may
be necessary in so doing, and the said premises, again to repossess and enjoy
as in their first and former estate, without such re-entry and repossession
working a forfeiture of the rents to be paid and the covenants to be performed
by Lessee during the full term of this Lease.

         If default should be made in any covenant, agreement, condition or
undertaking herein contained to be kept, observed and performed by Lessee, other
dm the payment of rent as herein provided, which cannot with due diligence be
cured within a period of thirty (30) days, and if notice thereof in writing
shall have been given to Lessee, and if Lessee, prior to the expiration of
thirty (30) days from and after the giving of such notice, commences to
eliminate the cause of such default and proceeds diligently and with reasonable
dispatch to take all steps and do all work required to cure such default and
does so cure such default, then Lessor shall not have the right to declare the
said term ended by reason of such default; provided, however, that the curing of
any default in such manner shall not be construed to limit or restrict the right
of Lessor to declare the said term ended and enforce all of its right and
remedies hereunder for any other default not so cured.

         Section 2102. The foregoing provisions for the termination of this
Lease for any default in any of its covenants shall not operate to exclude or
suspend any other remedy of Lessor for breach of any of said covenants or for
the recovery of said rent or any advance of Lessor made thereon, and in the
event of the termination of this Lease as aforesaid, Lessee agrees to indemnify
and save harmless Lessor from any loss arising from such termination and
re-entry in pursuance thereof, and to that end Lessee agrees to pay Lessor,
after such termination and re-entry and upon demand, all reasonable expenses of
re-letting, including, without limiting the generality of the foregoing, the
reasonable costs of decorating and restoring the premises, brokers' commissions
and Lessor's attorneys' fees, plus, at the end of each month of the demised
term, the difference between the net income actually received by Lessor from
said demised premises during such month and the rent agreed to be paid by the
terms of this Lease during such month. In the event Lessor re-enters the demised
premises after the vacating thereof by Lessee, the Lessor shall make reasonable
efforts to re-lease the demised premises.

                                       12
<PAGE>

LESSOR'S PERFORMANCE OF LESSEE'S COVENANTS

         Section 2201. Should Lessee at any time fail to do any of the things
required to be done by it under the provisions of this Lease, Lessor, at its
option and after giving notice to Lessee pursuant to the provisions relating to
notice contained in Section 2101, may (but shall not be required to) do the same
or cause the same to be done, and the amounts paid by Lessor in connection
therewith shall be so much additional rent due on the next rent date after such
payment, together with interest at twelve (12%) percent per annum from the date
of payment. Should Lessor at any time fail to do any of the things required to
be done by it under the provisions of this Lease, Lessee, at its option and
pursuant to the provisions relating to notice contained in Section 2101, may
(but shall not be required to) do the same or cause the same to be done, and the
amounts paid by Lessee in connection therewith shall immediately be payable by
the Lessor to the Lessee, together with interest at twelve (12%) percent per
annum from the date of payment.

SUBORDINATION-NON-DISTURBANCE

         Section 2301. This Lease shall be subject and subordinate to the
existing first mortgage on the demised premises held by NBD Bank, N.A., and any
substitute mortgage hereafter placed upon the demised premises provided that NBD
Bank N.A., and subsequent mortgagee agrees in writing with Lessee or adequate
provision is made in such mortgage, that, regardless of any default or breach
under such mortgage or of any possession or sale of the whole or any part of the
premises under or through such mortgage, that this Lease and Lessee's possession
shall not be disturbed by mortgagee or any other party claiming under or through
such mortgage; provided, however, that Lessee shall continue to observe and
perform Lessee's obligations under this Lease and pay rent to whomsoever may be
lawfully entitled to same from time to time. Lessee hereby agrees to execute, if
same is required, any and all instruments in writing which may be requested by
Lessor to subordinate Lessee's rights acquired by this Lease to the lien or any
such mortgage, all as aforesaid.

REMIEDIES TO BE CUMULATIVE

         Section 2401. No remedy herein or otherwise confer-red upon or reserved
to Lessor shall be considered exclusive of any other remedy, but the same shall
be cumulative and shall be m addition to every other remedy given hereunder now
or hereafter existing at law or in equity or by statute, and every power and
remedy given by this Lease to Lessor may be exercised from time to time and as
often as occasion may arise or as may be deemed expedient. No delay or omission
of Lessor to exercise any right or power arising from any default shall impair
any such right or power or shall be construed to be a waiver of any such default
or an acquiescence therein.

                                       13
<PAGE>

         Section 2402. No waiver of any breach of any of the covenants of this
Lease shall be construed, taken or held to be a waiver of any other breach or
waiver, acquiescence in or consent to any further or succeeding breach of the
same covenant.

         Section 2403. Neither the rights herein given to receive, collect, sue
for or distrain for any rent or rents, moneys or payments, or to enforce the
terms, provisions an conditions of this Lease, or to prevent the breach or
non-observance thereof, or the exercise of any such right or of any other right
or remedy hereunder or otherwise granted or arising, shall in any way affect or
impair or toll the right or power of Lessor to declare the term hereby granted
ended, and to terminate this Lease as provided for in this Lease, because of any
default in or breach of the covenants, provisions or conditions of this Lease.

SURRENDER OF POSSESSION

         Section 2501. Whenever the said term herein demised shall be
terminated, whether by lapse of time, forfeiture or in any other way, Lessee
agrees that it will at once surrender and deliver up said premises, including
the buildings and improvements thereon the fixtures and equipment belonging to
Lessor therein contained, peaceably to Lessor; and if Lessee shall thereafter
remain in possession thereof, it shall be deemed guilty of forcible detainer of
the premises under the statute and shall be subject to all the conditions and
provisions above named and to ejection and removal, forcibly and otherwise, with
or without process of law as above stated.

COVENANT OF QUIET ENJOYMENT

         Section 2601. Lessor further agrees that at all times when Lessee is
not in default under the terms of and during the term of this Lease, Lessee's
quiet and peaceable enjoyment of the demised premises shall not be disturbed or
interfered with by Lessor or any person or entity.

SHORT FORM LEASE

         Section 2701. This Lease shall not be recorded, but the parties agree,
at the request of either of them, to execute a Short Form Lease for recording,
containing the name of the parties, the legal description and the term of the
Lease.

                                       14
<PAGE>

NOTICE OF DEMANDS

         Section 2901. All notices to or demands upon Lessor or Lessee desired
or required to be given under any of the provisions hereof shall be in writing.
Any notices or demands from Lessor to Lessee shall be deemed to have been duly
and sufficiently given if a copy thereof has been personally served or mailed by
United States registered or certified mail in an envelope property stamped and
addressed to Lessee at 3621 S. South State Street, Ann Arbor, Michigan, Attn:
ROGER S. NEWTON or at such other address as Lessee may theretofore have
furnished by written notice to Lessor, and any notice or demands from Lessee to
Lessor shall be deemed to have been duly and sufficiently given if mailed by
United States registered mail or certified mail in an envelope properly stamped
and addressed to Lessor at 315 E. Eisenhower Parkway, Suite 220, Ann Arbor,
Michigan, or such other address as Lessor may theretofore have furnished by
written notice to Lessee. The effective date of such notice shall be three (3)
business days after delivery of the same to the United States Post Office for
mailing.

COVENANTS RUN WITH LAND

         Section 3001. All of the covenants, agreements, conditions, and
undertakings in this Lease contained shall extend and inure to and be binding
upon the heirs, personal representatives, successors and assigns of the
respective parties hereto, the same as if they were in every case specifically
named, and shall be construed as covenants running with the land, and wherever
in this lease reference is made to either of the parties hereto, it shall be
held to include and apply to wherever applicable, the heirs, personal
representatives, successors and assigns of such party. Nothing herein contained
shall be construed to grant or confer upon any person or persons, firm,
corporation or governmental authority, other than the parties hereto, their
heirs, personal representatives, successors and assigns, any right, claim or
privilege by virtue of any covenant, agreement, condition or undertaking in this
lease contained.

         Section 3002. The term "Lessor" as used in this Lease, so far as
covenants or obligations on the part of Lessor are concerned, shall be limited
to mean and include only the owner or owners at the time in question of the fee
of the demised premises, and in the event of any transfer or transfers of the
title to such fee, Lessor herein named (and in case of any subsequent transfers
or conveyances, the then grantor) shall be automatically freed and relieved,
from and after the date of such transfer or conveyance, of all personal
liability as respects the performance of any covenants or obligations on the
part of Lessor contained in this Lease thereafter to be performed ( provided
Lessor is not in default at the time of such transfer); and provided that any
funds in the hands of such Lessor or the then grantor at the time of such
transfer, in which Lessee has an interest, shall be turned over to the grantee,
and any amount then due and payable to Lessee by Lessor or the then grantor at
the time of such transfer, in which Lessee has an interest, shall be turned over
to grantee, and any amount then due and payable to Lessee by Lessor or the then
grantor under any provisions of this Lease shall be paid to Lessee.

                                       15
<PAGE>

TIME OF ESSENCE

         Section 3101. Time is of the essence of this Lease, and all provisions
herein relating thereto shall be strictly construed.

MISCELLANEOUS

         Section 3201. The captions of this Lease are for convenience only and
are not to as defining or limiting in any way the scope or intent of the
provisions hereof.

         Section 3202. If any term or provision of this Lease shall to any
extent be held invalid or unenforceable, the remaining terms and provisions of
this Lease shall not be affected thereby, but each term and provision of this
Lease shall be valid and be enforced to the fullest extent permitted by law.

         Section 3203. This Lease shall be construed and enforced in accordance
with the laws of the state where the demised premises are located.

ALTERATIONS

         Section 3301. Lessee shall not make any structural alterations to the
demised premises, or any non-structural alteration project, the cost of which is
Twenty-five Thousand dollars ($25,000.00) or more per project, without the
advance written consent of the Lessor,(which consent, in the case of any non-
structural alterations, shall not be unreasonably withheld or delayed) and
provided further that no such alteration shall be undertaken if the result would
be to materially affect the Lessor's future use of the premises for purposes
other than those engaged in by Lessee. The cost of all such alterations and all
responsibilities therefor shall be the Lessee's.

OPTION TO RENEW

         Section 3401. Lessor hereby grants Lessee an option to renew this Lease
for one (1) additional term of two (2) years beginning on the day following the
conclusion of the original two (2) year term, on the following terms and
conditions:

         Lessee must deliver to Lessor its written notice of exercise of this
option to renew on or before June 30, 2000, thereby providing Lessor with not
less than six (6) months advance notice of the Lessor's exercise of the option
to renew. Lessee may not either (i) give notice of its exercise of the option to
renew, or (ii) begin the renewal term, if Lessee is then in material default of
the terms of this Lease. During said option term, the rent shall be increased to
market rent at the time of expiration, as mutually agreed to by the Lessor and
Lessee.

                                       16
<PAGE>

         Except for the change in monthly rental as set forth above, all other
terms and conditions of the Lease shall continue unchanged during the renewal
term.

         IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
executed on the day and year first above written by the duly authorized partners
of the Lessor, and by the duly authorized officers of the Lessee.

                                   STATE-94 LIMITED PARTNERSIHP,
                                          a Michigan limited partnership

______________________              By:/s/ Donald S. Chisholm
                                       --------------------------------------
                                       Donald S. Chisholm, General Partner

                                       Esperion Therapeutics, Inc. a Michigan
                                          corporation

______________________              By:/s/ Roger S. Newton
                                       -------------------------------------
                                       Roger S. Newton

                                  Its: PRES/CEO
                                      --------------------------------------

                                       17
<PAGE>

         NBD Bank, N.A., hereby approves this Lease and agrees to be bound by
the terms of Section 2301 entitled "Subordination-Non-Disturbance."

NBD BANK, N.A.

______________________              By: _______________________________
                                        Authorized Officer

                                       18
<PAGE>

                                   EXHIBIT A

                            A Map (of the Property)

                                       19
<PAGE>

                         Second Amendment to the Lease

The Lease dated November 30, 1998 (Lease) by and between State-94 Limited
Partnership (Landlord) and Esperion Therapeutics, Inc. (Tenant), is hereby
amended as follows effective March 28, 2000:

Expansion Space:
Landlord hereby demises and leases to Tenant and Tenant hereby hires and lets
from Landlord an additional 6,413 square feet of office/research space, being a
portion of Suite 695 at 3621 S. State Street, Ann Arbor, Michigan, as more
particularly described in Exhibit B attached hereto and incorporated herein, and
improvements now located or to be erected thereon, subject to easements and
restrictions of record, which easements and restrictions do not interfere with
the use of the demised premises for the purposes described in the Lease (the
"Expansion Space"). The total leased premises not consist of 18,813 square feet.
The Lease term for the Expansion Space shall be effective March 28, 2000 (the
"Expansion Effective Date") and shall terminate with the Lease term.

Tenant agrees to accept the Expansion Space in "as is" condition per Section 303
of the Lease.

Term: The Lease is scheduled to expire on December 31, 2000. Tenant and Landlord
shall negotiate a Lease extension, if any, on or before October 1, 2000 and
Section 3401 of the Lease is hereby amended to delete the requirement for Tenant
to provide written notice of exercise of the option to renew.

Rent:
Effective April 1, 2000 Tenant shall pay to Landlord base monthly rent for the
premises including the Expansion Space in equal installments of Twenty-two
thousand nine hundred eighty-two and 00/100 ($22,982) Dollars payable in advance
on the first day of the month and continuing for the term of the Lease, except
for the first full month's rent which shall be payable upon execution by both
parties of this Second Amendment to Lease.

The prorated portion for the rent on the Expansion Space for the period of March
28, 2000 to March 31, 2000 is Seven hundred twenty-four and 00/100 ($724)
Dollars, payable upon execution by both parties of this Second Amendment to
Lease.

Increased Real Property Taxes and Operating Expenses: For the period commencing
with the Expansion Effective Date and ending on the Lease termination date,
Tenant shall pay its pro-rata share of taxes, utilities and operating expenses
in accordance with the Lease. For the purpose of this computation, the Tenant's
pro-rata share shall earn 14.98%.

Tenant shall reimburse Landlord for its share of utility costs per Section 601
of the Lease.
<PAGE>

This Second Amendment to Lease, together with the Lease as amended to date, sets
forth the entire agreement between the parties with respect to the matters set
forth herein. There have been no additional oral or written representations or
agreements. Under no circumstances shall Tenant be entitled to any rent
abatement, improvement allowance, leasehold improvements, or other work to the
premises, or any similar economic incentives that may have been provided Tenant
in connection with entering into the Lease, unless specifically set forth in
this Second Amendment to Lease or the Lease. Otherwise, all terms and conditions
of the Lease apply to the total premises including the Expansion Space.

Except as herein modified or amended, the provisions, conditions and terms of
the Lease shall remain unchanged and in full force and effect.

In the case of any inconsistency between the provisions of the Lease and this
Second Amendment to Lease, the provisions of this Second Amendment to Lease
shall govern and control.

Submission of this Second Amendment to Lease by Landlord is not an offer to
enter into this Second Amendment to Lease but rather is a solicitation for such
an offer by Tenant. Landlord shall not be bound by this Second Amendment to
Lease until Landlord has executed and delivered the same to Tenant.

Tenant hereby represents to Landlord that Tenant has dealt with no broker in
connection with this Second Amendment to Lease. Tenant agrees to indemnify and
hold Landlord, its members, principals, beneficiaries, partners, officers,
directors, employees, mortgagee(s) and agents, and the respective principals and
members of any such agents (collectively, the "Landlord Related Parties")
harmless from all claims of any brokers claiming to have represented Tenant in
connection with this Second Amendment to Lease. Landlord hereby represents to
Tenant that Landlord has dealt with no broker in connection with this Second
Amendment to Lease. Landlord agrees to indemnify and hold Tenant, its members,
principals, beneficiaries, partners, officers, directors, employees, and agents,
and the respective principals and members of any such agents (collectively, the
"Tenant Related Parties") harmless from all claims of any brokers claiming to
have represented Landlord in connection with this Second Amendment to Lease.
<PAGE>

IN WITNESS WHEREOF, each party hereto executes this Second Amendment to Lease on
the date set forth below.

WITNESS/ATTEST:

                                     LANDLORD:
                                     State-94 Limited Partnership
                                     A Michigan Limited Partnership

                                     By: /s/ Donald S. Chisholm
----------------------------------       ---------------------------------------
                                          Donald S. Chisholm, General Partner

                                     Date:               4/6/00
                                          --------------------------------------

                                     Esperion Therapeutics, Inc.
----------------------------------   A Delaware Corporation

                                     By: /s/ [SIGNATURE ILLEGIBLE]
                                         ---------------------------------------

                                              Its   Vice President
                                                 -------------------------------

                                     Date:          4-6-00
--------------------------------------------------------------------------------

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