View:

Download DOC

Download PDF

Download XLS

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

                                                                   EXHIBIT 10.20

                                      LEASE

                                     BETWEEN

                        HOLLIS R&D ASSOCIATES (LANDLORD)

                                       AND

                             BIOTIME, INC. (TENANT)

                                 HERITAGE SQUARE
                             Emeryville, California



                                      LEASE

                        ARTICLE 1--BASIC LEASE PROVISIONS

1.1   BASIC LEASE PROVISIONS

      In the event of any conflict between these Basic Lease Provisions and any
other Lease provision, such other Lease provision shall control.

      (1)   BUILDING AND ADDRESS:

            6121  Hollis Street
            Emeryville, California 94608

      (2)   LANDLORD AND ADDRESS:

            Hollis R&D Associates
            1120 Nye Street, Suite 400
            San Rafael, California 94901

      Notices to Landlord shall be addressed:

            Hollis R&D Associates
            c/o Wareham Development Corporation
            1120 Nye Street, Suite 400
            San Rafael, California 94901

      (3)   TENANT AND ADDRESS:

            BioTime, Inc., a California corporation

      Notices to Tenant shall be addressed:

            BioTime, Inc.
            6121 Hollis Street, Suite 05
            Emeryville, CA  94608
            Attn: President

      (4)   DATE OF LEASE: as of May 4, 2005

      (5)   LEASE TERM: 60 months

      (6)   COMMENCEMENT DATE: June 1, 2005

      (7)   EXPIRATION DATE: May 31, 2010

                                        1


      (8)   MONTHLY BASE RENT:



    Months           Base Rent
- --------------       ----------
                  
Months 1 - 12        $10,488.00
Months 13 - 24       $10,802.64
Months 25 - 36       $11,126.72
Months 37 - 48       $11,460.52
Months 49 - 60       $11,804.33


            Rent for the first month of the Term month in the amount of
$10,488.00 shall be paid on the date of execution of the Lease by Tenant

            Tenant shall pay Tenant's Share of Operating Expenses and Taxes
commencing on the Commencement Date

      (9)   RENTABLE AREA OF THE PREMISES: 5,244 rentable square feet.

      (10)  SECURITY DEPOSIT:

            $20,976.00

            The Security Deposit shall be paid concurrently with the execution
of this Lease by Tenant.

            If Tenant notifies Landlord that it elects to use the Improvement
Loan, concurrently with its notification to Landlord, Tenant shall increase the
Security Deposit by the amount of $10,488.00.

      (12)  TENANT'S USE OF PREMISES: General office and research and
            development use, including lab and related uses, subject in each
            case to receipt of all necessary approvals from the City of
            Emeryville and all other governmental authorities having
            jurisdiction over the Premises or over the use thereof, and subject
            to all of the provisions of this Lease. Tenant shall obtain, at its
            sole cost and expense, all permits and approvals required to comply
            with all applicable governmental regulations.

      (13)  IMPROVEMENT LOAN: Provided that a Default has not occurred with
            respect to Tenant, after the Commencement Date, Landlord will lend
            Tenant up to $52,444.00 solely for the purpose of paying for
            additional improvements to the Premises and for no other purposes,
            which amount shall be amortized and repaid during the remaining term
            in equal monthly installments together with interest at the rate of
            8% per annum, compounded monthly. ("Improvement Loan"). The
            Improvement Loan shall be funded to Tenant upon the completion of
            the Tenant Improvements and compliance by Tenant with the terms and
            conditions of the Workletter. Landlord shall provide Tenant with a
            schedule of repayment promptly following Tenant's utilization of the
            Improvement Loan.

      (14)  PARKING: Up to 16 unreserved parking spaces on the Heritage Square
            lot behind the Building or other lots owned or controlled by
            Landlord in the vicinity of the Building.

      (15)  BROKERS:

                                        2


             Landlord's Broker:       Cornish & Carey Commercial
                                      5980 Horton Street
                                      Emeryville, Ca 94608

             Tenant's Broker:         Aegis Realty
                                      130 Webster Street, Suite 200
                                      Oakland, CA 94607

            (16) TENANT'S SHARE: As of the date of this Lease, the Building is
            comprised of 78,110 rentable square feet and Tenant's Share thereof
            is 6.71% and Project is comprised of 94,480 rentable square feet and
            Tenant's Share thereof is 5.55%. The square footages are subject to
            change in the future per the terms of this Lease.

1.2   DEFINITIONS

      For purposes hereof, the following terms shall have the following
meanings:

      COMMON AREAS: Collectively, (A) all areas of the Project made available by
Landlord from time to time for the general common use or benefit of all tenants
of the Building, and their employees and invitees, or the public, as such areas
currently exist and as they may be changed from time to time, including
walkways, parking areas and garages, health club facilities and landscaping but
excluding interior space in other office buildings and (B) all common areas and
facilities of the Building, including without limitation the stairways,
corridors, lobbies, elevators, lavatories, risers, and conduits.

      ENVIRONMENTAL LAWS: All Laws governing the use, storage, disposal or
generation of any Hazardous Material, including, without limitation, the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended, and the Resource Conservation and Recovery Act of 1976, as amended.

      HAZARDOUS MATERIAL: Such substances, material and wastes which are or
become regulated under any Environmental Law; or which are classified as
hazardous or toxic under any Environmental Law; and explosives and firearms,
radioactive material, asbestos, polychlorinated biphenyls, and petroleum
products.

      INDEMNITEES: Collectively, Landlord, any Mortgagee or ground lessor of the
Property, the property manager and the leasing manager for the Property and
their respective partners, members, directors, officers, agents and employees.

      LAND: The parcel(s) of real estate on which the Building and Project are
located.

      LAWS OR LAW: All laws, ordinances, rules, regulations, other requirements,
orders, rulings or decisions adopted or made by any governmental body, agency,
department or judicial authority having jurisdiction over the Property, the
Premises or Tenant's activities at the Premises and any covenants, conditions or
restrictions of record which affect the Property.

      LEASE YEAR: The twelve month period beginning on the Commencement Date,
and each subsequent twelve month, or shorter, period until the Expiration Date.

      OPERATING EXPENSES: All costs, expenses and disbursements of every kind
and nature which Landlord shall pay or become obligated to pay in connection
with the ownership, management, operation, maintenance, replacement and repair
of the Building and the Project (including, without

                                        3


limitation, management fees (not to exceed 3.5% of gross revenues of the
Project), and property management costs and expenses, and the amortized portion
of any capital expenditure or improvement, together with interest thereon on
loans from third parties not affiliated with Landlord, and the costs of changing
utility service providers). Operating Expenses shall not include, (i) costs of
alterations of any premises of any tenants of the Project, (ii) depreciation
charges, (iii) interest and principal payments on loans (except for loans for
capital improvements which Landlord is allowed to include in Operating Expenses
as provided above), (iv) ground rental payments, (v) real estate brokerage and
leasing commissions, (vi) advertising and marketing expenses, (vii) costs of
Landlord reimbursed by insurance proceeds, (viii) expenses incurred in
negotiating leases of tenants in the Project or enforcing lease obligations of
tenants in the Project, (ix) expenses for any item or service which tenant pays
directly to a third party or separately reimburses Landlord and expenses
incurred by Landlord to the extent the same are reimbursed from any other
tenants, occupants of the property, or third parties. (x) costs of utilities
and/or special services rendered to individual tenants (including tenant) for
which a special charge is made, (xi) any expenses for repairs or maintenance
which are reimbursed from third parties through warranties or service contracts,
(xii) Landlord's general overhead and general administrative expenses, including
without limitation, the salaries of any officer of Landlord, (xiii) costs,
fines, interest or penalties incurred due to Landlord's violation of Laws, (xiv)
costs incurred in connection with the removal, encapsulation or other treatment
of any hazardous materials (classified as such on the date of this Lease)
existing in the Project on the date hereof or arising thereafter except as may
be the responsibility of Tenant hereunder, (xv) the cost of re-constructing any
building of the Project that was significantly or totally destroyed by an
uninsured casualty, (xvi) costs arising from the gross negligence or willful
misconduct of Landlord or Landlord's agents, or employees, (xvii) costs arising
from Landlord's charitable or political contributions, and (xviii) the cost of
tenant-specific exterior signage grants to any tenant of the Project. If any
Operating Expense, though paid in one year, relates to more than one calendar
year, such expense shall be proportionately allocated among such related
calendar years. Operating Expenses for the Building that are not, in Landlord's
reasonable discretion, allocable solely to either the lab, office or retail
portion of the Building shall be equitably allocated by Landlord between such
uses. Landlord may in its reasonable discretion allocate Operating Expenses
between tenants to reflect different uses, utility consumption and other
variables.

      PROJECT or PROPERTY: The Project consists of the three building complex
known as Heritage Square located in Emeryville, California, associated surface
and garage parking as designated by Landlord from time to time, on and off site
amenities, the health club facilities (if applicable), landscaping and
improvements, together with the Land, any associated interests in real property,
and the personal property, fixtures, machinery, equipment, systems and apparatus
located in or used in conjunction with any of the foregoing.

      REAL PROPERTY: The Property excluding any personal property or trade
fixtures.

      RENT: Collectively, Monthly Base Rent, Rent Adjustments and Rent
Adjustment Deposits, and all other charges, payments, late fees or other amounts
required to be paid by Tenant under this Lease.

      RENT ADJUSTMENT: Any amounts owed by Tenant for payment of Operating
Expenses or Taxes. The Rent Adjustments shall be determined and paid as provided
in Article Four.

      RENT ADJUSTMENT DEPOSIT: An amount equal to Landlord's estimate of the
Rent Adjustment attributable to each month of the applicable Lease Year. On or
before the beginning of each Lease Year or with Landlord's Statement (defined in
Article Four), Landlord may estimate and notify Tenant in writing of its
estimate of the Operating Expenses and of Taxes for such Lease Year. Prior to
the first determination by Landlord of the amount of Operating Expenses and of
Taxes for the first Lease Year, Landlord may estimate such amounts in the
foregoing calculation. The last estimate by Landlord

                                        4


shall remain in effect as the applicable Rent Adjustment Deposit unless and
until Landlord notifies Tenant in writing of a change, which notice may be given
by Landlord from time to time during a Lease Year.

      RENTABLE AREA OF THE PROJECT: The amount of square footage which
represents the sum of the rentable area of all space intended for occupancy in
the Project, as reasonably determined by Landlord from time to time per BOMA
standards; and Landlord shall notify Tenant of any adjustments in such rentable
area and any corresponding change in Tenant's Share.

      TAXES: All federal, state and local governmental taxes, assessments and
charges of every kind or nature, whether general, special, ordinary or
extraordinary, which Landlord shall pay or become obligated to pay because of or
in connection with the ownership, leasing, management, control or operation of
the Property or any of its components (including any personal property used in
connection therewith), which may also include any rental or similar taxes levied
in lieu of or in addition to general real and/or personal property taxes. For
purposes hereof, Taxes for any year shall be Taxes which are assessed for any
period of such year, whether or not such Taxes are billed and payable in a
subsequent calendar year. There shall be included in Taxes for any year the
amount of all fees, costs and expenses (including reasonable attorneys' fees)
paid by Landlord during such year in seeking or obtaining any refund or
reduction of Taxes. Taxes for any year shall be reduced by the amount of any tax
refund received by Landlord attributable to such year. If a special assessment
payable in installments is levied against any part of the Property, Taxes for
any year shall include only the installment of such assessment and any interest
payable or paid during such year. Notwithstanding the foregoing, Taxes shall not
include any federal or state inheritance, general income, documentary,
inheritance or gift or estate taxes, except that if a change occurs in the
method of taxation resulting in whole or in part in the substitution of any such
taxes, or any other assessment, for any Taxes as above defined, such substituted
taxes or assessments shall be included in the Taxes. Taxes shall not include
interest and penalties assessed by reason of Landlord's failure to pay such
Taxes when due.

      TENANT ALTERATIONS: Alterations and additions made by Tenant, or by
Landlord at Tenant's request, to prepare the leased premises for Tenant's
occupancy, or otherwise made during the Term.

      TENANT'S SHARE: The percentage that represents the ratio of the Rentable
Area of the Premises to the Rentable Area of the Project, as determined by
Landlord per BOMA Standards from time to time, and with respect to Operating
Expenses allocated solely to the Building (and not including Operating Expenses
allocable solely to the other buildings in the Project), the percentage that
represents the ratio of the Rentable Area of the Premises to the Rentable Area
of the Building, as determined by Landlord per BOMA Standards from time to time.
Tenant's Base Rent shall not change during the Term but Tenant's Share may
change based upon the Rentable Area of the Project from time to time.

      TERM: The term of this Lease commencing on the Commencement Date and
expiring on the Expiration Date.

   ARTICLE 2--PREMISES, TERM, FAILURE TO GIVE POSSESSION, PARKING, OPTION TO
                                     EXTEND

2.1   LEASE OF PREMISES

      Landlord hereby leases to Tenant and Tenant hereby leases from Landlord
the space located in the Building and depicted on Exhibit A attached hereto (the
"Premises") for the Term and upon the terms, covenants and conditions provided
in this Lease. The Premises shall include the right in common to use the Common
Areas, including the right to use the existing health club facility in
EmeryStation 1.

                                        5


Each person using the gym shall pay a one time charge of $50 and
sign a liability agreement to receive an access card to the gym

2.2   TERM

      The Commencement Date shall be June 1, 2005 and the Expiration Date shall
be May 31, 2010.

2.3   CONDITION OF PREMISES

      Landlord shall, at its cost and expense, perform the following work
("Landlord Work") prior to the Commencement Date: paint and recarpet the office
portion of the Premises and remove two lab benches in the lab space.

      Except for the Landlord Work, Tenant shall be conclusively deemed to have
accepted the Premises "AS IS" in the condition existing on the date Tenant first
takes possession, and to have waived all claims relating to the condition of the
Premises. No agreement of Landlord to alter, remodel, decorate, clean or improve
the Premises or the Real Property and no representation regarding the condition
of the Premises or the Real Property has been made by or on behalf of Landlord
to Tenant, except as specifically stated in this Lease.

      If Tenant constructs tenant improvements in the Premises, it shall
construct such improvements pursuant to the terms of the Work Letter attached
hereto as Exhibit B.

2.4   PARKING

      During the Term, Tenant shall have the right to use up to the number of
spaces specified in Section 1.1 for parking. Parking shall be available 24 hours
a day, 7 days per week, except for legal holidays. The charge for such spaces
shall be (i) $65.00 per space per month during months 1-30 of the term, (ii)
$75.00 per space per month during months 31-60 of the term, and (iii) at market
rates thereafter. The locations and type of parking shall be designated by
Landlord or Landlord's parking operator from time to time. Tenant acknowledges
and agrees that the parking spaces serving the Project may include a mixture of
spaces for compact vehicles as well as full-size passenger automobiles, and that
Tenant shall not use parking spaces for vehicles larger than the striped size of
the parking spaces. All vehicles utilizing Tenant's parking privileges shall
prominently display identification stickers or other markers, and/or have passes
or keycards for ingress and egress, as may be required and provided by Landlord
or its parking operator from time to time. Tenant shall comply with any and all
parking rules and regulations from time to time reasonably established by
Landlord or Landlord's parking operator, including a requirement that Tenant pay
to Landlord or Landlord's parking operator a charge for loss and replacement of
passes, keycards, identification stickers or markers, and for any and all loss
or other damage caused by persons or vehicles related to use of Tenant's parking
privileges. Tenant shall not allow any vehicles using Tenant's parking
privileges to be parked, loaded or unloaded except in accordance with such
rules, including in the areas and in the manner designated by Landlord or its
parking operator for such activities.

2.5   OPTION TO EXTEND

            (a) Landlord hereby grants Tenant an option to extend the term of
the Lease for one additional period of five (5) years, commencing immediately
after the expiration of the initial term, upon the same material terms and
conditions contained herein, except that (i) the Monthly Base Rent for the
Premises shall be equal to 95% of the fair market rent for the Premises
determined in the manner set forth in subparagraph (b) below and (ii) Tenant
shall accept the Premises in an "as is" condition without any obligation of
Landlord to remodel, repair, improve or alter the Premises. Tenant's election to
exercise the

                                        6


option granted herein must be given to Landlord in writing no less than nine (9)
months prior to expiration of the initial term. If Tenant properly exercises the
option granted herein, references in the Lease to the term shall be deemed to
mean the option term unless the context clearly provides otherwise.
Notwithstanding anything to the contrary contained, herein, all option rights of
Tenant pursuant to this Section shall automatically terminate without notice and
shall be of no further force and effect, whether or not Tenant has timely
exercised the option granted herein, if a Default exists at the time of exercise
of the option (which is not cured within 30 days after such notice of exercise
is given by Tenant) or at the time of commencement of the option term.

            (b) If Tenant properly exercises its option to extend the term of
the Lease, the Monthly Base Rent during the option term shall be determined in
the following manner. The Monthly Base Rent shall be increased to an amount
equal to 95% of the fair market rent for the Premises as of the commencement of
the option term for a term equal to the option term, as specified by Landlord by
notice to Tenant not less than thirty (30) days prior to commencement of the
option term, subject to Tenant's right of arbitration as set forth below. The
determination of the fair market rent shall take into account the then current
market rentals for similar office and lab space in the Emeryville area including
any free rent concessions. If Tenant believes that 95% of the fair market rent
specified by Landlord exceeds 95% of the fair market rent for the Premises as of
commencement of the option term, then Tenant shall so notify Landlord within
five (5) business days following receipt of Landlord's notice. If Tenant fails
to so notify Landlord within said five (5) business days, Landlord's
determination of 95% of the fair market rent for the Premises shall be final and
binding upon the parties. If the parties are unable to agree upon 95% of the
fair market rent for the Premises within ten (10) days after Landlord's receipt
of notice of Tenant's objection, the amount of Monthly Base Rent as of
commencement of the option term shall be determined as follows:

      (1) Within 20 days after receipt of Landlord's notice specifying fair
market rent, Tenant, at its sole expense, shall obtain and deliver in writing to
Landlord a determination of 95% of the fair market rent for the Premises for a
term equal to the option term from a broker ("Tenant's broker") licensed in the
State of California and engaged in the office brokerage business in the area of
Oakland, Emeryville and Berkeley, California, for at least the immediately
preceding five (5) years. If Landlord accepts such determination, the Monthly
Base Rent for the option term shall be increased to an amount equal to of the
amount determined by Tenant's broker.

      (2) If Landlord does not accept such determination, within 15 days after
receipt of the determination of Tenant's broker, Landlord shall designate a
broker ("Landlord's broker") licensed in the State of California and engaged in
the office brokerage business in the area of Oakland, Emeryville and Berkeley,
California, for at least the immediately preceding five (5) years.

      (3) Landlord's broker and Tenant's broker shall name a third broker,
similarly qualified, within five (5) days after the appointment of Landlord's
broker. Each of said three brokers shall determine 95% of the fair market rent
for the Premises as of the commencement of the option term for a term equal to
the option term of the Lease within 15 days after the appointment of the third
broker. The third broker shall choose the determination of the Landlord's broker
or the Tenant's broker which is closest to its own determination of 95% of the
fair market rent. The Base Rent payable by Tenant effective as of the
commencement of the renewal Term shall be the rent proposed by either Landlord's
broker or Tenant's broker which is closest to the determination of 95% of the
fair market rent by the third broker.

      (4) Landlord shall pay the costs and fees of Landlord's broker in
connection with any determination hereunder, and Tenant shall pay the costs and
fees of Tenant's broker in connection

                                        7


with such determination. The costs and fees of any third broker shall be paid
one-half by Landlord and one-half by Tenant.

            (c) If the amount of the fair market rent is not known as of the
commencement of the option term, then Tenant shall continue to pay the Monthly
Base Rent in effect at the expiration of the initial term until the amount of
the fair market basic rent is determined. When such determination is made,
Tenant shall pay any deficiency to Landlord upon demand. Notwithstanding any
provision of this Section 1, in no event shall the Monthly Base Rent payable
during the option term be less than the sum of (i) the Monthly Base Rent in
effect immediately prior to the expiration of the initial term, and (ii) the
Rent Adjustment payable by Tenant on a per square foot basis during the last
Lease Year of the initial term of the Lease.

                                ARTICLE 3--RENT

         Tenant agrees to pay to Landlord, without any prior demand therefor in
immediately available funds and without any deduction or offset whatsoever,
Rent, including Monthly Base Rent and Rent Adjustments in accordance with
Article Four, during the Term. Monthly Base Rent shall be paid monthly in
advance on the first day of each month of the Term, except that the installment
of Monthly Base Rent for the first month in which rent is payable shall be paid
by Tenant to Landlord concurrently with execution of this Lease. Monthly Base
Rent shall be prorated for partial months within the Term. Unpaid Rent shall
bear interest at the rate of two (2) percentage points above the rate then most
recently announced by Bank of America N.T.&S.A. at its San Francisco main office
as its base lending reference rate, from time to time announced, but in no event
higher than the maximum rate permitted by Law ("Default Rate") from the date due
until paid. Tenant's covenant to pay Rent shall be independent of every other
covenant in this Lease.

                    ARTICLE 4--RENT ADJUSTMENTS AND PAYMENTS

4.1   RENT ADJUSTMENTS

      Commencing on the Commencement Date, Tenant shall pay to Landlord Rent
Adjustments with respect to each Lease Year as follows:

                  (i) The Rent Adjustment Deposit representing Tenant's Share of
      Operating Expenses for the applicable Lease Year, monthly during the Term
      with the payment of Monthly Base Rent; and

                  (ii) The Rent Adjustment Deposit representing Tenant's Share
      of Taxes for the applicable Lease Year, monthly during the Term with the
      payment of Monthly Base Rent; and

                  (iii) Any Rent Adjustments due in excess of the Rent
      Adjustment Deposits in accordance with Section 4.2. Rent Adjustments due
      from Tenant to Landlord for any Lease Year shall be Tenant's Share of
      Operating Expenses for such year and Tenant's Share of Taxes for such
      year.

4.2   STATEMENT OF LANDLORD

      As soon as feasible after the expiration of each calendar year, Landlord
will furnish Tenant a statement ("Landlord's Statement") showing the following:

                                        8


                  (i) Operating Expenses and Taxes for the calendar year;

                  (ii) The amount of Rent Adjustments due Landlord for the last
      calendar year, less credit for Rent Adjustment Deposits paid, if any; and

                  (iii) Any change in the Rent Adjustment Deposit due monthly in
      the current calendar year, including the amount or revised amount due for
      months preceding any such change pursuant to Landlord's Statement.

      Tenant shall pay to Landlord within ten (10) days after receipt of such
statement any amounts for Rent Adjustments then due in accordance with
Landlord's Statement. Any amounts due from Landlord to Tenant pursuant to this
Section shall be credited to the Rent Adjustment Deposit next coming due, or
refunded to Tenant if the Term has already expired provided Tenant is not in
Default hereunder. No interest or penalties shall accrue on any amounts that
Landlord is obligated to credit or refund to Tenant by reason of this Section
4.2. Landlord's failure to deliver Landlord's Statement or to compute the amount
of the Rent Adjustments shall not constitute a waiver by Landlord of its right
to deliver such items nor constitute a waiver or release of Tenant's obligations
to pay such amounts. Landlord reserves the right to amend such statement if
additional or amended information is received with respect to Operating Expenses
and Taxes for such calendar year. The Rent Adjustment Deposit shall be credited
against Rent Adjustments due for the applicable Lease Year. During the last
complete Lease Year or during any partial Lease Year in which the Lease
terminates, Landlord may include in the Rent Adjustment Deposit its estimate of
Rent Adjustments which may not be finally determined until after the termination
of this Lease. Tenant's obligation to pay Rent Adjustments survives the
expiration or termination of the Lease. Notwithstanding the foregoing, in no
event shall the sum of Monthly Base Rent and the Rent Adjustments be less than
the Monthly Base Rent payable.

4.3   BOOKS AND RECORDS

      Landlord shall maintain books and records showing Operating Expenses and
Taxes in accordance with sound accounting and management practices, consistently
applied. Tenant shall have the right, for a period of sixty (60) days following
the date upon which Landlord's Statement is delivered to Tenant, to notify
Landlord that it is challenging such statement If Tenant provides such notice of
its election to challenge the statement, the Tenant or its representative (which
representative shall not be paid on a contingency basis) to examine the
Landlord's books and records with respect to the items in the foregoing
statement of Operating Expenses and Taxes during normal business hours, upon
written notice, delivered at least three (3) business days in advance. If Tenant
does not object in writing to Landlord's Statement within thirty (30) days of
Tenant's audit thereof, specifying the nature of the item in dispute and the
reasons therefor, then Landlord's Statement shall be considered final and
accepted by Tenant. If Tenant does dispute any Landlord's Statement, Tenant
shall deliver a copy of any such audit to Landlord at the time of notification
of the dispute. If Landlord and Tenant do not resolve such dispute within thirty
(30) days, Tenant shall have a period of sixty (60)days in which to file a legal
action protesting such statement. If Tenant does not file such proceeding on a
timely basis, Tenant shall have waived its right to contest such statement. If
such adjudication determines that Tenant was overcharged by greater than five
percent (5%), Landlord shall pay the cost of such audit. Any amount due to the
Landlord as shown on Landlord's Statement, whether or not disputed by Tenant as
provided herein shall be paid by Tenant when due as provided above, without
prejudice to any such written exception. In no event shall Tenant be permitted
to examine Landlord's records or to dispute any statement of Expenses unless
Tenant has paid and continues to pay all Rent when due. Upon resolution of any
dispute with respect to Operating Expenses and Taxes, Tenant shall either pay
Landlord any shortfall or Landlord shall credit Tenant with respect to any
overages paid by Tenant. The records obtained by Tenant shall be treated as
confidential and neither Tenant nor any of its representatives or agents shall
disclose or discuss the information set forth in the

                                        9


audit to or with any other person or entity except as required by Laws or in
connection with any lawsuit or other proceeding to which Landlord is a party
("Confidentiality Requirement"). Tenant shall indemnify and hold Landlord
harmless for any losses or damages arising out of the breach of the
Confidentiality Requirement.

4.4   PARTIAL OCCUPANCY

      For purposes of determining the Operating Expenses, if the Building and/or
Project is not fully leased during all or a portion of any year during the Term,
Landlord shall make appropriate adjustments to those Operating Expenses which
vary with occupancy for such year employing sound accounting and management
principles consistently applied, to determine the amount of Operating Expenses
that would have been paid or incurred by Landlord had the Building and/or
Project been fully occupied, and the amount so determined shall be deemed to
have been the amount of Operating Expenses for such year. In no event shall
Landlord collect from Tenant and the other tenants more than 100% of the
Operating Expenses for such year. Taxes and insurance shall be deemed not to
vary with occupancy.

4.5   TENANT OR LEASE SPECIFIC TAXES

      In addition to Monthly Base Rent, Rent Adjustments, Rent Adjustment
Deposits and other charges to be paid by Tenant, Tenant shall pay to Landlord,
upon demand, any and all taxes payable by Landlord whether or not now customary
or within the contemplation of the parties hereto: (a) upon or with respect to
the possession, leasing, operation, management, maintenance, alteration, repair,
use or occupancy by Tenant of the Premises or any portion thereof; or (b) upon
the measured value of Tenant's personal property located in the Premises or in
any storeroom or any other place in the Premises or the Property, or the areas
used in connection with the operation of the Property.

                          ARTICLE 5--SECURITY DEPOSIT

      Tenant shall provide Landlord with a cash Security Deposit on the date of
its execution of this Lease. The Security Deposit may be applied by Landlord to
cure, in whole or part, any Default of Tenant under this Lease, and upon notice
by Landlord of such application, Tenant shall replenish the Security Deposit in
full by paying to Landlord within thirty (30) days of demand the amount so
applied. Landlord's application of the Security Deposit shall not constitute a
waiver of Tenant's Default to the extent that the Security Deposit does not
fully compensate Landlord for all losses, damages, costs and expenses incurred
by Landlord in connection with such default and shall not prejudice any other
rights or remedies available to Landlord under this Lease or by Law. Landlord
shall not pay any interest on the Security Deposit. Landlord shall not be
required to keep the Security Deposit separate from its general accounts. The
Security Deposit shall not be deemed an advance payment of Rent or a measure of
damages for any default by Tenant under this Lease, nor shall it be a bar or
defense of any action that Landlord may at any time commence against Tenant. In
the absence of evidence satisfactory to Landlord of an assignment of the right
to receive the Security Deposit or the remaining balance thereof, Landlord may
return the Security Deposit to the original Tenant, regardless of one or more
assignments of this Lease. Upon the transfer of Landlord's interest under this
Lease, Landlord's obligation to Tenant with respect to the Security Deposit
shall terminate upon transfer to the transferee of the Security Deposit, or any
balance thereof. Except as otherwise expressly set forth herein, the Security
Deposit, or any balance thereof, shall be returned to Tenant within thirty (30)
days after Landlord recovers possession of the Premises. To the fullest extent
permitted by law, Landlord may hold and apply the Security Deposit to post
termination damages and, to the extent inconsistent, Tenant hereby waives any
and all rights of Tenant under the provisions of Section 1950.7 of the
California Civil Code or other Law regarding security deposits.

                                       10


                              ARTICLE 6--SERVICES

6.1   LANDLORD'S GENERAL SERVICES

            (a) Landlord shall furnish the following services the cost of which
services shall be included in Operating Expenses or shall be paid directly by
Tenant as provided herein:

      (1) As an Operating Expense, tempered and cold water for use in lavatories
in common with other tenants from the regular supply of the Building.

            (b) If Tenant uses heat generating machines or equipment in the
Premises (other than customary office equipment) to an extent which adversely
affects the temperature otherwise maintained by the air-cooling system or
whenever the occupancy or electrical load adversely affects the temperature
otherwise maintained by the air-cooling system as specified below, Landlord
reserves the right upon fifteen (15) days prior written notice to install or to
require Tenant to install supplementary air-conditioning units in the Premises.
Tenant shall bear all costs and expenses related to the installation,
maintenance and operation of such units.

6.2   ELECTRICAL SERVICES

            (a) Landlord shall furnish to the Premises at Tenant's expense,
electric current for general office and lab use. Such electric service shall be
payable by Tenant, at Landlord's election, either directly to the utility
provider or to Landlord.

            (b) Tenant's use of electric current shall at no time exceed the
capacity of the wiring, feeders and risers providing electric current to the
Premises or the Building. The consent of Landlord to the installation of
electric equipment shall not relieve Tenant from the obligation to limit usage
of electricity to no more than such capacity. Landlord represents that the
Building's electrical capacity is sufficient to accommodate customary office
uses, the data room and all existing back-up systems.

            (c) If the Premises are not separately metered, Landlord will
install one or more meters to measure electric current furnished to the
Premises.

            (d) The Premises are served by an emergency generator which Landlord
will maintain at Tenant's cost and expense. Notwithstanding the foregoing,
Tenant may, with Landlord's approval, maintain such generator and shall comply
with Landlord's maintenance guidelines therefor.

6.3   JANITORIAL SERVICES

      Landlord shall be responsible for providing janitorial service to the
Premises and the Common Areas. Tenant shall pay as an Operating Expense for all
janitorial services provided to the Premises as well as Tenant's Share of all
janitorial services provided to the Common Areas.

6.4   ADDITIONAL AND AFTER-HOUR SERVICES

      At Tenant's written request, Landlord shall furnish additional quantities
of any of the services or utilities specified in Section 6.1 during Standard
Operating Hours and during additional hours if Landlord can reasonably do so, on
the terms set forth herein. For HVAC service beyond Standard Operating Hours,
Landlord's prevailing rate as of the date of this Lease includes a one (1) hour
minimum per activation. If Tenant shall fail to make any such payment, Landlord
may, upon notice to Tenant and in

                                       11


addition to Landlord's other remedies under this Lease, discontinue any or all
of such additional services. The utilities and HVAC systems will be available 24
hours a day, 7 days a week.

6.5   TELEPHONE SERVICES

      All telegraph, telephone, and communication connections which Tenant may
desire shall be subject to Landlord's prior written approval, in Landlord's
reasonable discretion, and the location of all wires and the work in connection
therewith shall be performed by contractors approved by Landlord and shall be
subject to the direction of Landlord, except that such approval is not required
as to Tenant's telephone or computer equipment (including cabling) within the
Premises and from the Premises in a route designated by Landlord to any
telephone cabinet or panel provided on Tenant's floor or in the Building for
Tenant's connection to the telephone cable serving the Building so long as
Tenant's equipment does not require connections different than or additional to
those to the telephone cabinet or panel provided. If Tenant fails to maintain
all telephone cables and communication wiring in the Premises and such failure
affects or interferes with the operation or maintenance of any other telephone
cables or communication wiring serving the Building, Landlord or any vendor
hired by Landlord may upon not less than 48 hours notice except in the event of
an emergency, enter into and upon the Premises forthwith and perform such
repairs, restorations or alterations as Landlord deems necessary in its
commercially reasonable judgement in order to eliminate any such interference
(and Landlord may recover from Tenant all of Landlord's costs in connection
therewith). Tenant agrees that neither Landlord nor any of its agents or
employees shall be liable to Tenant, or any of Tenant's employees, agents,
customers or invitees or anyone claiming through, by or under Tenant, for any
damages, injuries, losses, expenses, claims or causes of action because of any
interruption, diminution, delay or discontinuance at any time for any reason in
the furnishing of any telephone or other communication service to the Premises
and the Building, except to the extent that Landlord or Landlord's agents
negligence or willful misconduct shall have caused said interruption,
diminution, delay or discontinuance.

6.6   DELAYS IN FURNISHING SERVICES

      Tenant agrees that Landlord shall not be in breach of this Lease nor be
liable to Tenant for damages or otherwise, for any failure to furnish, or a
delay in furnishing, or a change in the quantity or character of any service
when such failure, delay or change is occasioned, in whole or in material part,
by repairs, improvements or mechanical breakdowns by the act or default of
Tenant or other parties not agents of Landlord, or by an event of force majeure
(any accident, casualty, act of God, war or civil commotion, strike or labor
troubles, or any cause whatsoever beyond the reasonable control of Landlord,
including energy shortages or governmental preemption in connection with an act
of God, a national emergency, or by reason of Law). No such failure, delay or
change shall be deemed to be an eviction or disturbance of Tenant's use and
possession of the Premises, or relieve Tenant from paying Rent or from
performing any other obligations of Tenant under this Lease, without any
deduction or offset. Failure to any extent to make available, or any slowdown,
stoppage, or interruption of, the specified utility services resulting from any
cause (except Landlord's failure to pay, as the same comes due, any charges
payable by it to the service provider), including changes in service provider or
Landlord's compliance with any requirements now or hereafter established by any
governmental agency, board, or bureau having jurisdiction over the operation of
the Property shall not render Landlord liable in any respect for damages to
either persons, property, or business, nor be construed as an eviction of Tenant
or work an abatement of Rent, nor relieve Tenant of Tenant's obligations for
fulfillment of any covenant or agreement hereof.

                                       12


6.7   SIGNAGE

      Initial Building standard signage for Tenant will be installed by
Landlord, at its cost and expense, in the directory in the main lobby of the
Project. Tenant shall have the right, at its sole cost and expense, to one slot
on the monument sign at the entry to the parking lot.

              ARTICLE 7--POSSESSION, USE AND CONDITION OF PREMISES

      (a) Tenant shall occupy and use the Premises only for the uses specified
in Section 1.1 to conduct Tenant's business. Tenant shall not occupy or use the
Premises (or permit the use or occupancy of the Premises) for any purpose or in
any manner which: (1) is unlawful or in violation of any Law or Environmental
Law; (2) may be dangerous to persons or property or which may increase the cost
of, or invalidate, any policy of insurance carried on the Building or covering
its operations; (3) is contrary to or prohibited by the terms and conditions of
this Lease; or (4) would tend to create or continue a nuisance.

      (b) Landlord shall provide Tenant with keys to the Building, the cost of
which shall be paid by Tenant.

      (c) Landlord and Tenant acknowledge that the Americans With Disabilities
Act of 1990 (42 U.S.C. Section 12101 et seq.) and regulations and guidelines
promulgated thereunder, as all of the same may be amended and supplemented from
time to time (collectively referred to herein as the "ADA") establish
requirements for business operations, accessibility and barrier removal. The
parties hereby agree that: (a) Landlord shall be responsible for ADA Title III
compliance in the Common Areas, except as provided below, (b) Tenant shall be
responsible for ADA Title III compliance in the Premises, including any
leasehold improvements or other work to be performed in the Premises under or in
connection with this Lease, save and except the demising of the Premises as set
forth above in Section 2.3, and (c) Landlord may perform, or require that Tenant
perform, and Tenant shall be responsible for the cost of, ADA Title III "path of
travel" requirements triggered by Tenant Alterations in the Premises. The
foregoing notwithstanding, Landlord, and not Tenant, shall be responsible for
making all government required improvements and alterations to the Premises and
the Building which are required to cause the same to comply with the ADA, unless
such improvements and alterations are required by virtue of alterations or
improvements made by Tenant to the Premises after the Commencement Date or due
to Tenant's particular manner of use of the Premises beyond usual and customary
office and laboratory use.

      (d) Hazardous Materials.

            (1) Definitions. The following terms shall have the following
meanings for purposes of this Lease:

                  (i) "Biohazardous Materials" means any and all substances and
      materials defined or referred to as a-medical waste," "biological waste,"
      "biohazardous waste," "biohazardous material" or any other term of similar
      import under any Hazardous Materials Laws, including (but not limited to)
      California Health & Safety Code Sections 25105 et seq., and any
      regulations promulgated thereunder, as amended from time to time.

                  (ii) "Environmental Condition" means the Release of any
      Hazardous Materials in, over, on, under, through, from or about the
      Project (including, but not limited to, the Premises).

                                       13


                  (iii) "Environmental Damages" means all claims, suits,
      judgments, damages, losses, penalties, fines, liabilities, encumbrances,
      liens, costs and expenses of whatever kind or nature, contingent or
      otherwise, matured or unmatured, foreseeable or unforeseeable, arising out
      of or in connection with any Environmental Condition, including, to the
      extent arising out of an Environmental Condition, without limitation: (A)
      damages for personal injury, or for injury to Project or natural resources
      occurring on or off the Project, including without limitation (1) any
      claims brought by or on behalf of any person, (2) any loss of, lost use
      of, damage to or diminution in value of any Project or natural resource,
      and (3) costs of any investigation, remediation, removal, abatement,
      containment, closure, restoration or monitoring work required by any
      federal, state or local governmental agency or political subdivision, or
      otherwise reasonably necessary to protect the public health or safety,
      whether on or off the Project; (B) reasonable fees incurred for the
      services of attorneys, consultants, contractors, experts and laboratories
      in connection with the preparation of any feasibility studies,
      investigations or reports or the performance of any work described above:
      (C) any liability to any third person or governmental agency to indemnify
      such person or agency for costs expended or liabilities incurred in
      connection with any items described in clause (A) or (B) above; (D) any
      fair market or fair market rental value of the Project; and (E) the amount
      of any penalties, damages or costs a party is required to pay or incur in
      excess of that which the party otherwise would reasonably have expected to
      pay or incur absent the existence of the applicable Environmental
      Condition.

                  (iv) "Handling," when used with reference to any substance or
      material, includes (but is not limited to) any receipt, storage, use,
      generation, Release, transportation, treatment or disposal of such
      substance or material.

                  (v) "Hazardous Materials" means any and all chemical,
      explosive, biohazardous, radioactive or otherwise toxic or hazardous
      materials or hazardous wastes, including without limitation any
      asbestos-containing materials, PCB's. CFCs, petroleum and derivatives
      thereof, Radioactive Materials, Biohazardous Materials, Hazardous Wastes,
      any other substances defined or listed as or meeting the characteristics
      of a hazardous substance, hazardous material, hazardous waste, extremely
      hazardous waste, restricted hazardous waste, toxic substance, toxic waste,
      biohazardous material, biohazardous waste, biological waste, medical
      waste, radiation, radioactive substance, radioactive waste, or other
      similar term, as applicable, under any law, statute, ordinance, code,
      rule, regulation, directive, order, condition or other written requirement
      enacted, promulgated or issued by any public officer or governmental or
      quasi-governmental authority, whether now in force or hereafter in force
      at any time or from time to time to protect the environment or human
      health, and/or any mixed materials, substances or wastes containing more
      than one of the foregoing categories of materials, substances or wastes.

                  (vi) "Hazardous Materials Laws" means, collectively, (A) the
      Comprehensive Environmental Response, Compensation and Liability Act of
      1980, 42 U.S.C. Sections 9601-9657, (B) the Hazardous Materials
      Transportation Act of 1975, 49 U.S.C. Sections 1801-1812, (C) the Resource
      Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901-6987
      (together with any amendments thereto, any regulations thereunder and any
      amendments to any such regulations as in effect from time to time,
      "RCRA"), (D) the California Carpenter-Presley-Tanner Hazardous Substance
      Account Act, California Health & Safety Code Sections 25300 et seq., (E)
      the Hazardous Materials Release Response Plans and Inventory Act,
      California Health & Safety Code

                                       14


      Sections 25500 et seq., (F) the California Hazardous Waste Control Law,
      California Health & Safety Code Sections 25100 et seq. (together with any
      amendments thereto, any regulations thereunder and any amendments to any
      such regulations as in effect from time to time, the "CHWCL"), (G)
      California Health & Safety Code Sections 25015-25027.8, (H) any amendments
      to or successor statutes to any of the foregoing, as adopted or enacted
      from time to time, (I) any regulations or amendments thereto promulgated
      pursuant to any of the foregoing from time to time, (J) any statutes,
      laws, ordinances, codes, regulations or other Legal Requirements relating
      to Biohazardous Materials, including (but not limited to) any regulations
      or requirements with respect to the shipping, use, decontamination and
      disposal thereof, and (K) any other Legal Requirement now or at any time
      hereafter in effect regulating, relating to or imposing liability or
      standards of conduct concerning any Hazardous Materials, including (but
      not limited to) any requirements or conditions imposed pursuant to the
      terms of any orders, permits, licenses, registrations or operating plans
      issued or approved by any governmental or quasi-governmental authority
      from time to time either on a Project-wide basis or in connection with any
      Handling of Hazardous Materials in, on or about the Premises or the
      Project.

                  (vii) "Hazardous Wastes" means (A) any waste listed as or
      meeting the identified characteristics of a "hazardous waste" or terms of
      similar import under RCRA, (B) any waste meeting the identified
      characteristics of a "hazardous waste," "extremely hazardous waste" or
      "restricted hazardous waste" under the CHWCL, and/or (C) any and all other
      substances and materials defined or referred to as a "hazardous waste" or
      other term of similar import under any Hazardous Materials Laws.

                  (viii) "Radioactive Materials" means (A) any and all
      substances and materials the Handling of which requires an approval,
      consent, permit or license from the Nuclear Regulatory Commission, (B) any
      and all substances and materials the Handling of which requires a
      Radioactive Material License or other similar approval, consent, permit or
      license from the State of California, and (C) any and all other substances
      and materials defined or referred to as "radiation," a "radioactive
      material" or "radioactive waste," or any other term of similar import
      under any Hazardous Materials Laws, including (but not limited to) Title
      26, California Code of Regulations Section 17-30100, and any statutes,
      regulations or other laws administered, enforced or promulgated by the
      Nuclear Regulatory Commission.

                  (ix) "Release" means any accidental or intentional spilling,
      leaking, pumping, pouring, emitting, discharging, injecting, escaping,
      leaching, migrating, dumping or disposing into the air, land, Surface
      water, groundwater or the environment (including without limitation the
      abandonment or discarding of receptacles containing any Hazardous
      Materials).

                  (x) "Tenant's Contamination" means any Hazardous Material
      Release on or about the Property by Tenant or /or any agents, employees,
      contractors, vendors, suppliers, licensees, subtenants, and invitees of
      Tenant (a "Tenant Party").

                  (xi) "Landlord's Contamination" means any hazardous materials
      which exist in, on, under or in the vicinity of the Project as of the date
      of this Lease or which migrate onto or beneath the Project from off-site
      sources during the term of the Lease or after termination of the Lease.
      Tenant shall not be required to pay any costs with respect to the
      remediation or abatement of Landlord's Contamination.

                                       15


            (2) Handling of Hazardous Materials. The parties acknowledge that
Tenant wishes and intends to use all or a portion of the Premises as a
radio/bio-pharmaceutical, research, development, preparation and dispensing
facility and otherwise for the conduct by Tenant of its business in accordance
with the Use, that such use, as conducted or proposed to be conducted by Tenant,
would customarily include the Handling of Hazardous Materials, and that Tenant
shall therefore be permitted to engage in the Handling in the Premises of
necessary and reasonable quantities of Hazardous Materials customarily used in
or incidental to the operation of a radio/bio pharmaceutical research,
preparation and dispensing facility and the other business operations of Tenant
in the manner conducted or proposed to be conducted by Tenant hereunder
("Permitted Hazardous Materials"), provided that the Handling of such Permitted
Hazardous Materials by all Tenant Parties shall at all times comply with and be
subject to all provisions of this Lease and all Legal Requirements, including
all Hazardous Materials Laws. Without limiting the generality of the foregoing,
Tenant shall comply at all times with all Hazardous Materials Laws applicable to
any aspect of Tenant's use of the Premises and the Project and of Tenant's
operations and activities in, on and about the Premises and the Project, and
shall ensure at all times that Tenant's Handling of Hazardous Materials on and
about the Premises does not violate (x) the terms of any governmental licenses
or permits applicable to the Building (including, but not limited to, the
Building Discharge Permit as defined below) or Premises or to Tenant's Handling
of any Hazardous Materials therein, or (y) any applicable requirements or
restrictions relating to the occupancy classification of the Building and the
Premises.

            (3) Disposition or Emission of Hazardous Materials. Tenant shall not
Release or dispose of any Hazardous Wastes or Hazardous Materials except to the
extent authorized by permit or in compliance with Hazardous Materials Laws at
the Premises or on the Project, but instead shall arrange for off-site disposal,
under Tenant's own name and EPA waste generator number (or other similar
identifying information issued or prescribed by any other governmental authority
with respect to Radioactive Materials, Biohazardous Materials or any other
Hazardous Materials) and at Tenant's sole expense, in compliance with all
applicable Hazardous Materials Laws, with Landlord's Rules and with all other
applicable legal and regulatory requirements.

            (4) Information Regarding Hazardous Materials. Tenant shall provide
the following information and/or documentation to Landlord in writing prior to
the Commencement Date, and thereafter shall update such information and/or
documentation (x) annually, in January of each calendar year, (y) upon any
material change in Tenant's Hazardous Materials inventory or in Tenant's
business operations involving Hazardous Materials, and (z) at such other times
as Landlord may reasonably request in writing from time to time, which updates
shall reflect any material changes in such information and/or documentation:

                  (i) An inventory of all Hazardous Materials that Tenant
      receives, uses, handles, generates, transports, stores, treats or disposes
      of from time to time, or at the time of preparation of such inventory
      proposes or expects to use, handle, generate, transport, store, treat or
      dispose of from time to time, in connection with its operations at the
      Premises. Such inventory shall include, but shall separately identify, any
      Hazardous Wastes, Biohazardous Materials and Radioactive Materials covered
      by the foregoing description. If such inventory includes any Biohazardous
      Materials, Tenant shall also disclose in writing to Landlord the Biosafety
      Level designation associated with the use of such materials.

                  (ii) Copies of all then existing permits, licenses,
      registrations and other similar documents issued by any governmental or
      quasi-governmental authority that authorize any Handling of Hazardous
      Materials in, on or about the Premises or the Project by any Tenant Party.

                                       16


                  (iii) All Material Safety Data Sheets ("MSDSs"), if any,
      required to be completed with respect to operations of Tenant at the
      Premises from time to time in accordance with Title 26, California Code of
      Regulations Section 8-5194 or 42 U.S.C. Section 11021, or any amendments
      thereto, and any Hazardous Materials Inventory Sheets that detail the
      MSDSs.

                  (iv) All hazardous waste manifests (as defined in Title 26,
      California Code of Regulations Section 22-66481), if any, that Tenant is
      required to complete from time to time in connection with its operations
      at the Premises.

                  (v) A copy of any Hazardous Materials Business Plan required
      from time to time with respect to Tenant's operations at the Premises
      pursuant to California Health & Safety Code Sections 25500 et seq., and
      any regulations promulgated thereunder, as amended from time to time, or
      in connection with Tenant's application for a business license from the
      City of Emeryville. If applicable law does not require Tenant to prepare a
      Hazardous Materials Business Plan, Tenant shall furnish to Landlord at the
      times and in the manner set forth above information regarding Tenant's
      Hazardous Materials inventories. The parties acknowledge that a Hazardous
      Materials Business Plan would ordinarily include an emergency response
      plan, and that regardless of whether applicable law requires Tenant or
      other tenants in the Building to prepare Hazardous Materials Business
      Plans, Landlord in its discretion may elect to prepare a coordinated
      emergency response plan for the entire Building and/or for multiple
      Buildings on the Project.

                  (vi) Any Contingency Plans and Emergency Procedures required
      of Tenant from time to time, in connection with its operations at the
      Premises, pursuant to applicable law, Title 26, California Code of
      Regulations Sections 22-67140 et seq., and any amendments thereto, and any
      Training Programs and Records required under Title 26, California Code of
      Regulations Section 22-66493, and any amendments thereto from time to
      time. Landlord in its discretion may elect to prepare a Contingency Plan
      and Emergency Procedures for the entire Building and/or for multiple
      Buildings on the Project, in which event, if applicable law does not
      require Tenant to prepare a Contingency Plan and Emergency Procedures for
      its operations at the Premises, Tenant shall furnish to Landlord at the
      times and in the manner set forth above the information that would
      customarily be contained in a Contingency Plan and Emergency Procedures.

                  (vii) Copies of any biennial or other periodic reports
      furnished or required to be furnished to the California Department of
      Health Services from time to time, under applicable law, pursuant to Title
      26, California Code of Regulations Section 22-66493 and any amendments
      thereto, relating to any Hazardous Materials.

                  (viii) Copies of any industrial wastewater discharge permits
      issued to or held by Tenant from time to time in connection with its
      operations at the Premises (the parties presently anticipate, however,
      that because of the existence of the Building Discharge Permit in
      Landlord's name as described above. Tenant will not be required to
      maintain a separate, individual discharge permit).

                  (ix) Copies of any other lists, reports, studies, or
      inventories of Hazardous Materials or of any subcategories of materials
      included in Hazardous Materials that Tenant is otherwise required to
      prepare and file from time to time with any governmental or
      quasi-governmental authority in connection with Tenant's operations at

                                       17


      the Premises, including (but not limited to) reports filed by Tenant with
      the federal Food & Drug Administration or any other regulatory authorities
      primarily in connection with the presence (or lack thereof) of any "select
      agents" or other Biohazardous Materials on the Premises, together with
      proof of filing thereof.

                  (x) Any other information reasonably requested by Landlord in
      writing from time to time in connection with (A) Landlord's monitoring (in
      Landlord's reasonable discretion) and enforcement of Tenant's obligations
      under this Section and of compliance with applicable Legal Requirements in
      connection with any Handling or Release of Hazardous Materials in the
      Premises or Building or on or about the Project by any Tenant Party, (B)
      any inspections or enforcement actions by any governmental authority
      pursuant to any Hazardous Materials Laws or any other Legal Requirements
      relating to the presence or Handling of Hazardous Materials in the
      Premises or Building or on or about the Project by any Tenant Party,
      and/or (C) Landlord's preparation (in Landlord's discretion) and
      enforcement of any reasonable rules and procedures relating to the
      presence or Handling by Tenant or any Tenant Party of Hazardous Materials
      in the Premises or Building or on or about the Project, including (but not
      limited to) any contingency plans or emergency response plans as described
      above. Except as otherwise required by Law, Landlord shall keep
      confidential any information supplied to Landlord by Tenant pursuant to
      the foregoing, provided, however, that the foregoing shall not apply to
      any information filed with any governmental authority or available to the
      public at large. Landlord may provide such information to its lenders,
      consultants or investors provided such entities agree to keep such
      information confidential.

            (5) Indemnification; Notice of Release. Tenant shall be responsible
for and shall indemnify, defend and hold Landlord harmless from and against all
Environmental Damages to the extent arising out of or in connection with, or
otherwise relating to, (i) any Handling of Hazardous Materials by any Tenant
Party in, on or about the Premises or the Project in violation of this Section,
(ii) any breach of Tenant's obligations under this Section or of any Hazardous
Materials Laws by any Tenant Party, or (iii) the existence of any Tenant
Contamination in, on or about the Premises or the Project to the extent caused
by any Tenant Party, including without limitation any removal, cleanup or
restoration work and materials necessary to return the Project or any
improvements of whatever nature located on the Project to the condition existing
prior to any Tenant Contamination. In the event of any Tenant Contamination in,
on or about the Premises or any other portion of the Project or any adjacent
lands, Tenant shall promptly remedy the problem in accordance with all
applicable Hazardous Materials Laws and Legal Requirements, shall give Landlord
oral notice of any such non-standard or non-customary Release promptly after
Tenant becomes aware of such Release, followed by written notice to Landlord
within five (5) days after Tenant becomes aware of such Release, and shall
furnish Landlord with concurrent copies of any and all notices, reports and
other written materials filed by any Tenant Party with any governmental
authority in connection with such Release. Landlord shall be responsible for and
shall indemnify and hold Tenant harmless from and against all costs of any
Environmental Damages which arise during or after the Term of this Lease, as a
result of the presence of, any Release of or the Handling of any Hazardous
Material in, on, about or under the Premises, Building or Property, except to
the extent provided for in this Section 7(d); provided that Tenant shall have
the burden of reasonably demonstrating that such Hazardous Materials were not of
the type used by Tenant in the Premises. Tenant shall be conclusively presumed
to have met its burden to the extent that any hazardous materials are identified
as being present in any environmental report or other data on the date of
commencement of this Lease and are not used by Tenant. Tenant shall have no
obligation to remedy any Hazardous Materials contamination which was not caused
or released by a Tenant Party.

                                       18


            (6) Governmental Notices. Tenant shall promptly provide Landlord
with copies of all notices received by Tenant relating to any actual or alleged
presence or Handling by any Tenant Party of Hazardous Materials in, on or about
the Premises or any other portion of the Project, including, without limitation,
any notice of violation, notice of responsibility or demand for action from any
federal, state or local governmental authority or official in connection with
any actual or alleged presence or Handling by any Tenant Party of Hazardous
Materials in or about the Premises or any other portion of the Project.

            (7) Inspection by Landlord. In addition to, and not in limitation
of, Landlord's rights under this Lease, upon reasonable prior request by
Landlord, Tenant shall grant Landlord and its consultants, as well as any
governmental authorities having jurisdiction over the Premises or over any
aspect of Tenant's use thereof, reasonable access to the Premises at reasonable
times to inspect Tenant's Handling of Hazardous Materials in, on and about the
Premises, and Landlord shall not thereby incur any liability to Tenant or be
deemed guilty of any disturbance of Tenant's use or possession of the Premises
by reason of such entry; provided, however that Landlord shall use reasonable
efforts to minimize interference with Tenant's use of the Premises caused by
such entry. Landlord shall comply with any security precaution reasonably
imposed by Tenant during any entry onto the Premises and shall minimizes to the
extent reasonably possible any interference with Tenant's use of the Premises
caused by such entry. Notwithstanding Landlord's rights of inspection and review
of documents, materials and physical conditions under this Section with respect
to Tenant's Handling of Hazardous Materials, Landlord shall have no duty or
obligation to perform any such inspection or review or to monitor in any way any
documents, materials, physical conditions or compliance with Legal Requirements
in connection with Tenant's Handling of Hazardous Materials, and no third Party
shall be entitled to rely on Landlord to conduct any such inspection, review or
monitoring by reason of the provisions of this Section.

            (8) Monitoring by Landlord. Landlord reserves the absolute right to
monitor, in Landlord's reasonable discretion and at Landlord's cost (the
reasonable cost of which shall be recoverable as an Operating Expense hereunder
(except in the case of a breach of any of Tenant's obligations under this
Section, in which event such monitoring costs may be charged back entirely to
Tenant and shall be reimbursed by Tenant to Landlord within ten (10) days after
written demand by Landlord from time to time, accompanied by supporting
documentation reasonably evidencing the costs for which such reimbursement is
claimed)), at such times and from time to time as Landlord in its reasonable
discretion may determine, through consultants engaged by Landlord or otherwise
as Landlord in its reasonable discretion may determine, (x) all aqueous and
atmospheric discharges and emissions from the Premises during the Term by a
Tenant Party, (y) Tenant's compliance and the collective compliance of all
tenants in the Building with requirements and restrictions relating to the
occupancy classification of the Building (including, but not limited to,
Hazardous Materials inventory levels of Tenant and all other tenants in the
Building), and (z) Tenant's compliance with all other requirements of this
Section.

            (9) Discovery of Discharge. If Landlord, Tenant or any governmental
or quasi-governmental authority discovers any Release from the Premises during
the Term by a Tenant Party in violation of this Section that, in Landlord's
reasonable determination, jeopardizes the ability of the Building or the Project
to meet applicable Legal Requirements or otherwise adversely affects the
Building's or the Project's compliance with applicable discharge or emission
standards, or if Landlord discovers any other breach of Tenant's obligations
under this Section, then upon receipt of written notice from Landlord or at such
earlier time as Tenant obtains actual knowledge of the applicable discharge,
emission or breach, Tenant at its sole expense shall within a reasonable time
(x) in the case of a Release in violation of this Lease, cease the applicable
discharge or emission and remediate any continuing effects of the discharge or
emission until such time, if any, as Tenant demonstrates to Landlord's
reasonable satisfaction that the applicable discharge or emission is in
compliance with all applicable Legal Requirements and any other applicable
regulatory commitments and obligations to the satisfaction of the appropriate
governmental agency with jurisdiction over the release, and (y) in the case of
any other

                                       19


breach of Tenant's obligations under this Section, take such corrective measures
as Landlord may reasonably request in writing in order to cure or eliminate the
breach as promptly as practicable and to remediate any continuing effects of the
breach.

            (10) Pre-Occupancy Studies. Landlord shall provide Tenant with
copies of any environmental site assessments which were prepared on behalf of
Landlord or by other Tenants in the Building copies of which were provided to
Landlord.

            (11) Post-Occupancy Study. If Tenant or any Tenant Party Handles any
Hazardous Materials in, on or about the Premises or the Project during the Term
of this Lease (other than cleaning substances customarily used in offices and
laboratories), then no later than fifteen (15) days prior to the termination or
expiration of this Lease, Tenant at its sole cost and expense shall obtain and
deliver to Landlord an environmental study, performed by an expert reasonably
satisfactory to Landlord, evaluating, the presence or absence of any Tenant
Contamination in, on and about the Premises and the Property. Such study shall
be based on a reasonable and prudent level of tests and investigations of the
Premises and surrounding portions of the Project (if appropriate) which tests
shall be conducted no earlier than the date of termination or expiration of this
Lease. Liability for any remedial actions required or recommended on the basis
of such study shall be allocated in accordance with the applicable provisions of
this Lease. To the extent any such remedial actions are the responsibility of
Tenant, Tenant at its sole expense shall promptly commence and diligently pursue
to completion the required remedial actions.

            (12) Emergency Response Plans. If Landlord in its reasonable
discretion adopts any emergency response plan and/or any Contingency Plan and
Emergency Procedures for the Building or for multiple Buildings on the Project
as contemplated above, Landlord shall provide copies of any such plans and
procedures to Tenant and, so long as such plans and procedures are reasonable
and do not unreasonably interfere with Tenant's Use at or access to the Premises
or materially increase the cost incurred by Tenant with respect to the Premises,
Tenant shall comply with all of the requirements of such plans and procedures to
the extent applicable to Tenant and/or the Premises. If Landlord elects to adopt
or materially modify any such plans or procedures that apply to the Building
during the Term of this Lease, Landlord shall consult with Tenant in the course
of preparing such plans, procedures or modifications in order to try to ensure
that they will accurately reflect and be consistent with Tenant's operations in
the Premises, but Landlord alone shall determine, in its good faith reasonable
discretion, the appropriate scope of such consultation and nothing in this
paragraph shall be construed to give Tenant any right of approval or disapproval
over Landlord's adoption or modification of any such plans or procedures so long
as such plans and procedures are reasonable and do not unreasonably interfere
with Tenant's Use at or access to the Premises or materially increase the cost
incurred by Tenant with respect to the Premises.

            (13) Radioactive Materials. Without limiting any other applicable
provisions of this Section, if Tenant Handles or proposes to Handle any
Radioactive Materials in or about the Premises, Tenant shall provide Landlord
with copies of Tenant's licenses or permits for such Radioactive Materials and
with copies of all radiation protection programs and procedures required under
applicable Legal Requirements or otherwise adopted by Tenant from time to time
in connection with Tenant's Handling of such Radioactive Materials. In addition,
Tenant shall comply with any and all rules and procedures issued by Landlord in
its good faith discretion from time to time with respect to the Handling of
Radioactive Materials on the Project (such as, by way of example but not
limitation, rules implementing a label defacement program for decayed waste
destined for common trash and/or rules relating to transportation and storage of
Radioactive Materials on the Project), provided that such rules and procedures
shall be reasonable and not in conflict with any applicable Legal Requirements.

                                       20


            (14) Deemed Holdover Occupancy. Notwithstanding any other provisions
of this Lease, Tenant expressly agrees as follows:

                  (i) If Tenant Handles any Radioactive Materials in or about
      the Premises during the term of this Lease, then for so long as any
      license or permit relating to such Radioactive Materials remains open
      following any otherwise applicable termination or expiration of the Term
      of this Lease and another entity handling Radioactive Materials which is a
      prospective tenant of Landlord is legally prohibited from occupying a
      portion of the Premises for a use similar to the Use, then and in such
      event, Tenant shall be deemed to be occupying that portion of the Premises
      on a holdover basis without Landlord's consent (notwithstanding such
      otherwise applicable termination or expiration of the Term of this Lease)
      and shall be required to continue to pay Rent and other charges in
      accordance with the holdover provisions of this Lease solely for that
      portion of the premises which is covered by the radioactive materials
      license, until such time as all such Radioactive Materials licenses and
      permits have been fully closed out in accordance with the requirements of
      this Lease and with all applicable Hazardous Materials Laws and other
      Legal Requirements.

                  (ii) If Tenant Handles any Hazardous Materials in or about the
      Premises during the term of this Lease and, at the otherwise applicable
      termination or expiration of the Term of this Lease. Tenant has failed to
      remove from the Premises and the Building all known Hazardous Materials
      Handled by a Tenant Party or has failed to complete any remediation or
      removal of Tenant's Contamination and/or to have fully remediated, in
      compliance with the requirements of this Lease and with all applicable
      Hazardous Materials Laws and other Legal Requirements, the Tenant's
      Handling and/or Release (if applicable) of any such Hazardous Materials
      during the Term of this Lease, then for so long as such circumstances
      continue to exist, Tenant shall be deemed to be occupying the Premises on
      a holdover basis without Landlord's consent (notwithstanding such
      otherwise applicable termination or expiration of the Term of this Lease)
      and shall be required to continue pay Rent and other charges in accordance
      with the holdover provisions of this Lease until such time as all such
      circumstances have been fully resolved in accordance with the requirements
      of this Lease and with all applicable Hazardous Materials Laws and other
      Legal Requirements.

            (15) Survival of Obligations. Each party's obligations under this
Section shall survive the expiration or other termination of this Lease and
shall survive any conveyance by Landlord of its interest in the Premises. The
provisions of this Section and any exercise by either party of any of the rights
and remedies contained herein shall be without prejudice to any other rights and
remedies that such party may have under this Lease or under applicable law with
respect to any Environmental Conditions and/or any Hazardous Materials with
respect to any breach of the other party's obligations under this Section.
Either party's exercise or failure to exercise, at any time or from time to
time, any or all of the rights granted in this Section shall not in any way
impose any liability on such party or shift from the other party to such party
any responsibility or obligation imposed upon the other party under this Lease
or under applicable law with respect to Hazardous Materials, Environmental
Conditions and/or compliance with Legal Requirements.

            (16) Laboratory Rules and Regulations. Tenant agrees for itself and
for its subtenants, employees, agents, and invitees to comply with the
laboratory rules and regulations ("Laboratory Rules and Regulations") attached
hereto as Exhibit C and with all reasonable modifications and additions thereto
which Landlord may make from time to time.

                                       21


                            ARTICLE 8 -- MAINTENANCE

      (a) Landlord shall, as an Operating Expense, maintain in good order and
repair and make necessary repairs or replacements to the Common Areas and to
foundations, roofs, exterior walls, and the structural elements of the Building,
the electrical, plumbing, heating, ventilating, air-conditioning, mechanical,
communication, security and the fire and life safety systems of the Building
and, except as otherwise provided in this Lease or except as expressly excluded
from Operating Expenses, the cost of such maintenance and repairs shall be
included in Operating Expenses. Notwithstanding the foregoing, Landlord shall
not be responsible for: (i) the maintenance or repair of any floor or wall
coverings in the Premises or any of such systems which are located within the
Premises and are supplemental or special to the Building's standard systems; and
(ii) the cost of performing any of said maintenance or repairs whether to the
Premises or to the Building caused by the negligence of Tenant, its employees,
agents, servants, licensees, subtenants, contractors or invitees, shall be paid
by Tenant to the extent not covered by casualty insurance.

      (b) Subject to Landlord's obligations in (a) above, Tenant, at its
expense, shall keep and maintain the Premises in good order, condition and
repair and in accordance with all Laws and Environmental Laws. Tenant shall not
permit waste and shall promptly and adequately repair all damages to the
Premises and replace or repair all damaged or broken glass in the interior of
the Premises, fixtures or appurtenances. Any repairs or maintenance shall be
completed with materials of similar quality to the original materials, all such
work to be completed under the supervision of Landlord. If Tenant fails to
perform any of its obligations set forth in this Section, Landlord may, in its
sole discretion and upon 24 hours prior notice to Tenant (except without notice
in the case of emergencies), perform the same, and Tenant shall pay to Landlord
any costs or expenses incurred by Landlord upon demand.

                    ARTICLE 9 -- ALTERATIONS AND IMPROVEMENTS

      (a) The following provisions shall apply to the completion of any Tenant
Alterations: Tenant shall not, except as provided herein, without the prior
written consent of Landlord, which consent shall not be unreasonably withheld,
conditioned or delayed, make or cause to be made any Tenant Alterations in or to
the Premises or any Property systems serving the Premises. Subject to all other
requirements of this Article, Tenant may undertake decoration work or minor
non-structural work not requiring building permits such as installation of
cabinets in a conference room without Landlord's prior written consent. Tenant
shall furnish Landlord with the names and addresses of all contractors and
subcontractors and copies of all contracts. All Tenant Alterations shall be
completed at such time and in such manner as Landlord may from time to time
designate, and only by contractors or mechanics approved by Landlord, which
approval shall not be unreasonably withheld, provided, however, that Landlord
may, in its sole discretion, specify the engineers and contractors to perform
all work relating to the Building's systems (including the mechanical, heating,
plumbing, security, ventilating, air-conditioning, electrical, communication and
the fire and life safety systems in the Building). Landlord may further
condition its consent upon Tenant furnishing to Landlord and Landlord approving
prior to the commencement of any work or delivery of materials to the Premises
related to the Tenant Alterations such of the following as specified by
Landlord: architectural plans and specifications, opinions from Landlord's
engineers stating that the Tenant Alterations will not in any way adversely
affect the Building's systems, necessary permits and licenses, certificates of
insurance, and such other documents in such form reasonably requested by
Landlord. Landlord may, in the exercise of reasonable judgment, request that
Tenant provide Landlord with appropriate evidence of Tenant's ability to
complete and pay for the completion of the Tenant Alterations such as a
dedicated construction loan, performance bond or letter of credit. Upon
completion of the Tenant Alterations, Tenant shall deliver to Landlord an
as-built mylar and digitized (if available) set of plans and specifications for
the Tenant Alterations. Tenant shall pay the cost of all Tenant

                                       22


Alterations and the cost of decorating the Premises and any work to the Property
occasioned thereby. Upon completion of Tenant Alterations, Tenant shall furnish
Landlord with contractors' affidavits and full and final waivers of lien and
receipted bills covering all labor and materials expended and used in connection
therewith and such other documentation reasonably requested by Landlord or its
mortgagee. All Tenant Alterations whether installed by Landlord or Tenant, shall
without compensation or credit to Tenant, become part of the Premises and the
property of Landlord at the time of their installation and shall remain in the
Premises, unless pursuant to Article Twelve, Tenant may remove them or is
required to remove them at Landlord's request.

      (b) Tenant shall not permit any lien or claim for lien of any mechanic,
laborer or supplier or any other lien to be filed against the Building, the
Land, the Premises, or any other part of the Property arising out of work
performed, or alleged to have been performed by, or at the direction of, or on
behalf of Tenant. If any such lien or claim for lien is filed, Tenant shall
within ten (10) days of receiving notice of such lien or claim (a) have such
lien or claim for lien released of record or (b) secure a bond in a form
reasonably approved by Landlord, to indemnify Landlord for loss or damages
resulting from such lien.

      (c) Tenant may at Tenant's sole cost and expense install equipment and
trade fixtures into the Premises ("Equipment"). The Equipment shall be and
remain Tenant's personal property and Tenant shall remove the Equipment upon the
expiration or termination of the Lease whether or not identified in any written
inventory.

                     ARTICLE 10 -- ASSIGNMENT AND SUBLETTING

10.1 ASSIGNMENT AND SUBLETTING

            (a) Without the prior written consent of Landlord, which Landlord
shall not unreasonably withhold, Tenant may not sublease, assign, mortgage,
pledge, hypothecate or otherwise transfer or permit the transfer of this Lease
or the encumbering of Tenant's interest therein in whole or in part, by
operation of Law or otherwise or permit the use or occupancy of the Premises, or
any part thereof, by anyone other than Tenant or its employees and independent
contractors. Tenant agrees that the provisions governing sublease and assignment
set forth in this Article shall be deemed to be reasonable. If Tenant desires to
enter into any sublease of the Premises or assignment of this Lease, Tenant
shall deliver written notice thereof to Landlord ("Tenant's Notice"), together
with the identity of the proposed subtenant or assignee and the proposed
principal terms thereof and financial and other information sufficient for
Landlord to make an informed judgment with respect to such proposed subtenant or
assignee at least thirty (30) days prior to the commencement date of the term of
the proposed sublease or assignment. If Tenant proposes to sublease less than
all of the Rentable Area of the Premises, the space proposed to be sublet and
the space retained by Tenant must each be a marketable unit as reasonably
determined by Landlord and otherwise in compliance with all Laws. Landlord shall
notify Tenant in writing of its approval or disapproval of the proposed sublease
or assignment or its decision to exercise its rights within twenty-five (25)
days after receipt of Tenant's Notice (and all required information). Tenant
shall submit for Landlord's approval (which approval shall not be unreasonably
withheld) any advertising which Tenant or its agents intend to use with respect
to the space proposed to be sublet.

            (b) With respect to Landlord's consent to an assignment or sublease,
Landlord may take into consideration any factors that Landlord may deem
relevant, and the reasons for which Landlord's denial may be deemed to be
reasonable shall include, without limitation, the following: the
creditworthiness of any proposed subtenant or assignee is not acceptable to
Landlord in its reasonable business judgment; or any proposed assignee's or
sublessee's use of the Premises would violate Article Seven of the Lease or
would violate the provisions of any other leases of tenants in the Project; or
the

                                       23


proposed sublessee or assignee is a bona fide prospective tenant of Landlord in
the Project as demonstrated by a written proposal dated within ninety (90) days
prior to the date of Tenant's request; or the proposed sublessee or assignee
would materially increase the estimated pedestrian and vehicular traffic to and
from the Premises and the Building.

            (c) Any sublease or assignment shall be expressly subject to the
terms and conditions of this Lease. Any subtenant or assignee shall execute such
documents as Landlord may reasonably require to evidence such subtenant's
assumption of the obligations and liabilities of Tenant applicable to it under
the Sublease or such assignee's assumption of the obligations and liabilities of
Tenant under this Lease. Tenant shall deliver to Landlord a copy of all
agreements executed by Tenant and the proposed subtenant and assignee with
respect to the Premises. Landlord's approval of a sublease, assignment,
hypothecation, transfer or third party use or occupancy shall not constitute a
waiver of Tenant's obligation to obtain Landlord's consent to further
assignments or subleases, hypothecations, transfers or third party use or
occupancy.

            (d) So long as Tenant is not entering into a transaction described
herein for the purpose of avoiding or otherwise circumventing the remaining
terms of this Article, Tenant may, subject to Section 10.5, assign its entire
interest under this Lease or Sublease all or a portion of the Premises, without
the consent of Landlord, to (i) an Affiliate, or (ii) a successor to Tenant by
purchase or other acquisition of Tenant's capital stock or substantially all of
Tenant's assets, merger, consolidation or reorganization, provided that all of
the following conditions are satisfied: (1) Tenant is not in Default under this
Lease (which Default has not been cured by Tenant); (2) Tenant shall give
Landlord written notice at least ten (10) business days prior to the effective
date of the proposed transfer together with the information required hereunder
and such entity shall expressly assume Tenant's obligations hereunder; (3) with
respect to an assignment to an Affiliate, Tenant continues to have a net worth
equal to or greater than Tenant's net worth at the date immediately prior to
such transfer; and (4) with respect to a purchase, merger, consolidation or
reorganization which results in Tenant ceasing to exist as a separate legal
entity, Tenant's successor shall have a net worth equal to Tenant's net worth at
the date immediately prior to such transfer.

10.2 RECAPTURE.

      Except with respect to an assignment or sublease inaccordance with Section
10.1(d) above, Landlord shall have the option to exclude from the Premises
covered by this Lease ("Recapture") the space proposed to be sublet or subject
to the assignment, effective as of the proposed commencement date of such
sublease or assignment. If Landlord elects to Recapture, Tenant shall surrender
possession of the space proposed to be subleased or subject to the assignment to
Landlord on the effective date of recapture of such space from the Premises,
such date being the Termination Date for such space. Effective as of the date of
Recapture of any portion of the Premises pursuant to this section, the Monthly
Base Rent, Rentable Area of the Premises and Tenant's Share shall be adjusted
accordingly based on the pro-rata area of the Premises affected by such
sublease.

10.3 EXCESS RENT.

      Except with Respect to an Assignment to an affiliate or subsidiary and/or
with respect to any merger, assignment, consolidation or reorganization by
Tenant, Tenant shall pay Landlord on the first day of each month during the term
of the sublease or assignment, fifty percent (50%) of the amount by which the
sum of all rent and other consideration (direct or indirect) due from the
subtenant or assignee for such month exceeds: (i) that portion of the Monthly
Base Rent and Rent Adjustments due under this Lease for said month which is
allocable to the space sublet or assigned; and (ii) the following costs and
expenses for the subletting or assignment of such space: (1) brokerage
commissions and attorneys' fees and expenses,

                                       24


(2) the actual costs paid in making any improvements or substitutions in the
Premises required by any sublease or assignment; and (3) costs of any
inducements or concessions given to subtenant or assignee, moving costs, and
other amounts in respect of such subtenant's or assignee's other leases or
occupancy arrangements. All such costs and expenses shall be recovered in a
manner as close as possible to the manner in which they were, or are to be paid.

10.4 TENANT LIABILITY.

      In the event of any sublease or assignment, whether or not with Landlord's
consent, Tenant shall not be released or discharged from any liability, whether
past, present or future, under this Lease, including any liability arising from
the exercise of any renewal or expansion option, to the extent such exercise is
expressly permitted by Landlord. Tenant's liability shall remain primary, and in
the event of default by any subtenant, assignee or successor of Tenant in
performance or observance of any of the covenants or conditions of this Lease,
Landlord may proceed directly against Tenant without the necessity of exhausting
remedies against said subtenant, assignee or successor. After any assignment,
Landlord may consent to subsequent assignments or subletting of this Lease, or
amendments or modifications of this Lease with assignees of Tenant, without
notifying Tenant, or any successor of Tenant, and without obtaining its or their
consent thereto, and such action shall not relieve Tenant or any successor of
Tenant of liability under this Lease. If Landlord grants consent to such
sublease or assignment, Tenant shall pay all reasonable attorneys' fees and
expenses incurred by Landlord with respect to such assignment or sublease, not
to exceed $1,250.00. In addition, if Tenant has any options to extend the term
of this Lease or to add other space to the Premises, such options shall not be
available to any subtenant or assignee, directly or indirectly except to an
entity described in 10.1 (d), without Landlord's express written consent which
may be withheld in Landlord's sole discretion.

10.5 ASSUMPTION AND ATTORNMENT.

      If Tenant shall assign this Lease as permitted herein, the assignee shall
expressly assume all of the obligations of Tenant hereunder in a written
instrument reasonably satisfactory to Landlord and furnished to Landlord not
later than fifteen (15) days prior to the effective date of the assignment. If
Tenant shall sublease the Premises as permitted herein, Tenant shall, at
Landlord's option, within fifteen (15) days following any request by Landlord,
obtain and furnish to Landlord the written agreement of such subtenant to the
effect that if requested by Landlord, the subtenant will attorn to Landlord and
will pay all subrent directly to Landlord upon a termination of the Lease.

                       ARTICLE 11 -- DEFAULT AND REMEDIES

11.1 DEFAULT

      The occurrence or existence of any one or more of the following shall
constitute a "Default" by Tenant under this Lease: (i) any installment or other
payment of Rent including Rent Adjustment Deposits or Rent Adjustments is not
paid on the date when due and remains unpaid for a period of; five (5) days
after written notice from Landlord (ii) Tenant fails to observe or perform any
of the other covenants, conditions or provisions of this Lease and fails to cure
such default within thirty (30) days after written notice thereof to Tenant
(provided that if such cure can not be cured within such thirty (30) day period
and Tenant commences such cure within such period and diligently proceeds to
cure such default, Tenant shall have ninety (90) days in which to complete such
cure) , unless the default involves a hazardous condition, which shall be cured
forthwith or unless the failure to perform is a Default for which this Lease
specifies there is no cure or grace period; or (iii) the interest of Tenant in
this Lease is levied upon under execution or other legal process; or a petition
is filed by or against Tenant to declare Tenant bankrupt or seeking a plan of
reorganization or arrangement under any Chapter of the Bankruptcy Act, or

                                       25


any amendment, replacement or substitution therefor, or to delay payment of,
reduce or modify Tenant's debts, which in the case of an involuntary action is
not discharged within ninety (90) days; or Tenant is declared insolvent by Law
or any assignment of Tenant's property is made for the benefit of creditors; or
a receiver is appointed for Tenant or Tenant's property, which appointment is
not discharged within ninety (90) days.

11.2 REMEDIES

      A Default shall constitute a breach of the Lease for which Landlord shall
have the rights and remedies set forth in this Section and all other rights and
remedies set forth in this Lease or now or hereafter allowed by Law, whether
legal or equitable, and all rights and remedies of Landlord shall be cumulative
and none shall exclude any other right or remedy. With respect to a Default, at
any time Landlord may terminate Tenant's right to possession by written notice
to Tenant stating such election. Any written notice required pursuant to this
Section shall constitute notice of unlawful detainer pursuant to California Code
of Civil Procedure Section 1161 if, at Landlord's sole discretion, it states
Landlord's election that Tenant's right to possession is terminated after
expiration of any period required by Law or any longer period required by this
Section. Upon the expiration of the period stated in Landlord's written notice
of termination (and unless such notice provides an option to cure within such
period and Tenant cures the Default within such period), Tenant's right to
possession shall terminate and this Lease shall terminate, and Tenant shall
remain liable as hereinafter provided. Upon such termination in writing of
Tenant's right to possession, Landlord shall have the right, subject to
applicable Law, to re-enter the Premises and dispossess Tenant by summary
proceedings. Upon such written termination of Tenant's right to possession and
this Lease, Landlord shall have the right to recover damages for Tenant's
Default as provided herein or by Law, including the following damages provided
by California Civil Code Section 1951.2: (1) the worth at the time of award of
the unpaid Rent which had been earned at the time of termination; (2) 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 reasonably have been avoided; (3) the worth
at the time of award of the amount by which the unpaid Rent for the balance of
the term of this Lease after the time of award exceeds the amount of such Rent
loss that Tenant proves could be reasonably avoided; and (4) any other amount
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. The word "rent"
as used in this Article Eleven shall have the same meaning as the defined term
Rent in this Lease. The "worth at the time of award" of the amount referred to
in clauses (1) and (2) above is computed by allowing interest at the Default
Rate. The worth at the time of award of the amount referred to in clause (3)
above is computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1%). For
the purpose of determining unpaid Rent under clause (3) above, the monthly Rent
reserved in this Lease shall be deemed to be the sum of the Monthly Base Rent,
monthly storage space rent, if any, and the amounts last payable by Tenant as
Rent Adjustments for the calendar year in which Landlord terminated this Lease
as provided hereinabove.

      Even if Tenant is in Default and/or has abandoned the Premises, this Lease
shall continue in effect for so long as Landlord does not terminate Tenant's
right to possession by written notice as provided above, and Landlord may
enforce all its rights and remedies under this Lease, including the right to
recover Rent as it becomes due under this Lease. In such event, Landlord shall
have all of the rights and remedies of a landlord under California Civil Code
Section 1951.4 (Landlord may continue Lease in effect after Tenant's Default and
abandonment and recover Rent as it becomes due, if Tenant has the right to
sublet or assign, subject only to reasonable limitations), or any successor
statute. During such time as Tenant is in Default, if Landlord has not
terminated this Lease by written notice and if Tenant requests Landlord's
consent to an assignment of this Lease or a sublease of the Premises, subject to
Landlord's

                                       26


option to recapture pursuant to Section 10, Landlord shall not unreasonably
withhold its consent to such assignment or sublease.

      Tenant hereby waives any and all rights to relief from forfeiture,
redemption or reinstatement granted by Law (including California Civil Code of
Procedure Sections 1174 and 1179) in the event of Tenant being evicted or
dispossessed for any cause or in the event of Landlord obtaining possession of
the Premises by reason of Tenant's Default or otherwise. No delay or omission in
the exercise of any right or remedy of Landlord upon any default by Tenant, and
no exercise by Landlord of its rights in accordance with the terms of this Lease
to perform any duty which Tenant fails timely to perform, shall impair any right
or remedy or be construed as a waiver. No provision of this Lease shall be
deemed waived by Landlord unless such waiver is in writing signed by Landlord.
The waiver by Landlord of any breach of any provision of this Lease shall not be
deemed a waiver of any subsequent breach of the same or any other provision of
this Lease.

11.3 ATTORNEYS FEES

      In the event any party brings any suit or other proceeding with respect to
the subject matter or enforcement of this Lease, the prevailing party (as
determined by the court, agency or other authority before which such suit or
proceeding is commenced) shall, in addition to such other relief as may be
awarded, be entitled to recover attorneys' fees, expenses and costs of
investigation as actually incurred, including court costs, expert witness fees,
costs and expenses of investigation, and all attorneys' fees, costs and expenses
in any such suit or proceeding (including in any action or participation in or
in connection with any case or proceeding under the Bankruptcy Code, 11 United
States Code Sections 101 et seq., or any successor statutes, in establishing or
enforcing the right to indemnification, in appellate proceedings, or in
connection with the enforcement or collection of any judgment obtained in any
such suit or proceeding).

11.4 BANKRUPTCY

      The following provisions shall apply in the event of the bankruptcy or
insolvency of Tenant: (a) In connection with any proceeding under Chapter 7 of
the Bankruptcy Code where the trustee of Tenant elects to assume this Lease for
the purposes of assigning it, such election or assignment, may only be made upon
compliance with the provisions of (b) and (c) below, which conditions Landlord
and Tenant acknowledge to be commercially reasonable. In the event the trustee
elects to reject this Lease then Landlord shall immediately be entitled to
possession of the Premises without further obligation to Tenant or the trustee.
(b) Any election to assume this Lease under Chapter 11 or 13 of the Bankruptcy
Code by Tenant as debtor-in-possession or by Tenant's trustee (the "Electing
Party") must provide for the Electing Party to cure or provide to Landlord
adequate assurance that it will cure all monetary defaults under this Lease
within fifteen (15) days from the date of assumption and it will cure all
non-monetary defaults under this Lease within thirty (30) days from the date of
assumption. Landlord and Tenant acknowledge such condition to be commercially
reasonable. (c) If the Electing Party has assumed this Lease or elects to assign
Tenant's interest under this Lease to any other person, such interest may be
assigned only if the intended assignee has provided adequate assurance of future
performance (as herein defined), of all of the obligations imposed on Tenant
under this Lease.

      For the purposes hereof, "adequate assurance of future performance" means
that Landlord has ascertained that each of the following conditions has been
satisfied: (i) The assignee has submitted a current financial statement,
certified by its chief financial officer, which shows a net worth and working
capital in amounts sufficient to assure the future performance by the assignee
of Tenant's obligations under this Lease; and (ii) Landlord has obtained
consents or waivers from any third parties that may be

                                       27


required under a lease, mortgage, financing arrangement, or other agreement by
which Landlord is bound, to enable Landlord to permit such assignment.

      Landlord's acceptance of rent or any other payment from any trustee,
receiver, assignee, person, or other entity will not be deemed to have waived,
or waive, the requirement of Landlord's consent, Landlord's right to terminate
this Lease for any transfer of Tenant's interest under this Lease without such
consent, or Landlord's claim for any amount of Rent due from Tenant.

                ARTICLE 12 -- SURRENDER OF PREMISES AND HOLDOVER

      Upon the Expiration Date, Tenant shall surrender and vacate the Premises
immediately and deliver possession thereof to Landlord in a clean, good and
tenantable condition, ordinary wear and tear, and damage caused by Landlord
excepted. Tenant shall remove from the Premises all movable personal property of
Tenant and Tenant's equipment and trade fixtures. Tenant shall be entitled to
remove such Tenant Alterations, which at the time of their installation Landlord
and Tenant agreed may be removed by Tenant. Tenant immediately shall repair all
damage resulting from removal of any of the foregoing. Tenant shall also
reimburse Landlord for all costs and expenses incurred by Landlord in removing
any of Tenant Alterations and in restoring the Premises to the condition
required by this Lease at the Expiration Date. (For the absence of doubt, Tenant
shall not be required to remove, and shall not have the right to remove, from
the Premises the improvements in the Premises as of the Date of Lease,
including, without limitation, the computer panels and backup diesel
generators.) Landlord shall notify Tenant of the need to remove Tenant
Alterations at the time of its approval of the same. In the event that Tenant
holds over in possession of the Premises after the Expiration Date, Tenant shall
pay Landlord one hundred twenty-five percent (125%) of the monthly Rent payable
for the month immediately preceding the holding over (including increases for
Rent Adjustments which Landlord may reasonably estimate). Tenant shall also pay
all damages sustained by Landlord by reason of such retention of possession. The
provisions of this Article shall not constitute a waiver by Landlord of any
re-entry rights of Landlord and Tenant's continued occupancy of the Premises
shall be as a tenancy in sufferance.

         ARTICLE 13 -- DAMAGE BY FIRE OR OTHER CASUALTY, EMINENT DOMAIN

      (a) If any fire or other casualty (whether insured or uninsured) renders
all or a substantial portion of the Premises or the Building untenantable,
Landlord shall, with reasonable promptness after the occurrence of such damage,
estimate the length of time that will be required to substantially complete the
repair and restoration and shall by notice advise Tenant in writing of such
estimate ("Landlord's Notice") to be provided within ninety (90) days of said
fire or casualty event. If Landlord estimates that the amount of time required
to substantially complete such repair and restoration will exceed nine (9)
months from the date such damage occurred, then Landlord or Tenant shall have
the right to terminate this Lease as of the date of such damage upon giving
written notice to the other at any time within twenty (20) days after delivery
of Landlord's Notice, provided that if Landlord so chooses, Landlord's Notice
may also constitute such notice of termination.

      (b) Unless this Lease is terminated as provided in the preceding
subparagraph, Landlord shall proceed with reasonable promptness to repair and
restore the Premises to its condition as existed prior to such casualty, subject
to reasonable delays for insurance adjustments and force majeure delays, and
also subject to zoning Laws and building codes then in effect. Landlord shall
have no liability to Tenant, and Tenant shall not be entitled to terminate this
Lease if such repairs and restoration are not in fact completed within the time
period estimated by Landlord so long as Landlord shall proceed with reasonable
diligence to complete such repairs and restoration.

                                       28


      (c) Tenant acknowledges that Landlord shall be entitled to the full
proceeds of any insurance coverage, whether carried by Landlord or Tenant, for
damages to the Premises, except for those proceeds of Tenant's insurance of its
own personal property, trade fixtures and equipment which would be removable by
Tenant at the Termination Date. All such insurance proceeds shall be payable to
Landlord whether or not the Premises are to be repaired and restored, provided,
however, if this Lease is not terminated and the parties proceed to repair and
restore Tenant Alterations at Tenant's cost, to the extent Landlord received
proceeds of Tenant's insurance covering Tenant Alterations, such proceeds shall
be applied to reimburse Tenant for its cost of repairing and restoring Tenant
Alterations.

      (d) Except as otherwise provided in Section 13(g) below, whether or not
the Lease is terminated pursuant to this Article Thirteen, in no event shall
Tenant be entitled to any compensation or damages for loss of the use of the
whole or any part of the Premises or for any inconvenience or annoyance
occasioned by any such damage, destruction, rebuilding or restoration of the
Premises or the Building or access thereto.

      (e) Any repair or restoration of the Premises performed by Tenant shall be
in accordance with the provisions of this Lease.

      (f) If the Premises or the Building is damaged by a casualty but neither
is rendered substantially untenantable and Landlord estimates (within the ninety
(90) day notice period) that the time to substantially complete the repair or
restoration will not exceed nine (9) months from the date such damage occurred,
then Landlord shall proceed to repair and restore the Building or the Premises
other than Tenant Alterations, with reasonable promptness, unless such damage is
to the Premises and occurs during the last six (6) months of the Term, in which
event either Tenant or Landlord shall have the right to terminate this Lease as
of the date of such casualty by giving written notice thereof to the other
within twenty (20) days after the date of such casualty. Notwithstanding the
aforesaid, Landlord's obligation to repair shall be limited in accordance with
the provisions of Section 13(d) above.

      (g) Except for the active negligence or willful act of Tenant or its
agents, employees, contractors or invitees, if all or any part of the Premises
are rendered untenantable by fire or other casualty and this Lease is not
terminated, Monthly Base Rent and Rent Adjustments shall abate for that part of
the Premises which is untenantable on a per diem basis from the date of the
casualty until Landlord has substantially completed the repair and restoration
work in the Premises which it is required to perform, provided, that as a result
of such casualty, Tenant does not occupy the portion of the Premises which is
untenantable during such period.

      (h) The provisions of this Lease constitute an express agreement between
Landlord and Tenant with respect to any and all damage to, or destruction of,
the Premises or the Property or any part of either, and any Law, including
Sections 1932(2), 1933(4), 1941 and 1942 of the California Civil Code, with
respect to any rights or obligations concerning damage or destruction shall have
no application to this Lease or to any damage to or destruction of all or any
part of the Premises or the Property or any part of either, and are hereby
waived.

                             ARTICLE 14 -- INSURANCE

14.1 TENANT'S INSURANCE

      Tenant, at Tenant's expense, agrees to maintain in force, with a company
or companies acceptable to Landlord, during the Term: (a) Commercial General
Liability Insurance on a primary basis and without any right of contribution
from any insurance carried by Landlord covering the Premises on an occurrence
basis against all claims for personal injury, bodily injury, death and property
damage,

                                       29


including contractual liability covering the indemnification provisions in this
Lease, and such insurance shall be for such limits that are reasonably required
by Landlord from time to time but not less than a combined single limit of Three
Million and No/100 Dollars ($3,000,000.00); (b) Workers' Compensation and
Employers' Liability Insurance to the extent required by and in accordance with
the Laws of the State of California; (c) "All Risks" property insurance in an
amount adequate to cover the full replacement cost of all Tenant Additions,
equipment, installations, fixtures and contents of the Premises in the event of
loss; (d) in the event a motor vehicle is to be used by Tenant in connection
with its business operation from the Premises, Comprehensive Automobile
Liability Insurance coverage with limits of not less than One Million and No/100
Dollars ($1,000,000.00) combined single limit coverage against bodily injury
liability and property damage liability arising out of the use by or on behalf
of Tenant, its agents and employees in connection with this Lease, of any owned,
non-owned or hired motor vehicles; and (e) such other insurance or coverages as
Landlord reasonably requires.

14.2 FORM OF POLICIES

      Each policy referred to in 16.1 shall satisfy the following requirements.
Each policy shall (i) name Landlord and the Indemnitees as additional insureds
(except Workers' Compensation and Employers' Liability Insurance), (ii) be
issued by one or more responsible insurance companies licensed to do business in
the State of California reasonably satisfactory to Landlord, (iii) where
applicable, provide for deductible amounts satisfactory to Landlord and not
permit co-insurance, (iv) shall provide that such insurance may not be canceled
or amended without thirty (30) days' prior written notice to the Landlord, and
(v) each policy of "All-Risks" property insurance shall provide that the policy
shall not be invalidated should the insured waive in writing prior to a loss,
any or all rights of recovery against any other party for losses covered by such
policies. Tenant shall deliver to Landlord, certificates of insurance and at
Landlord's request, copies of all policies and renewals thereof to be maintained
by Tenant hereunder, not less than ten (10) days prior to the Commencement Date
and not less than ten (10) days prior to the expiration date of each policy.

14.3 LANDLORD'S INSURANCE

      Landlord agrees to purchase and keep in full force and effect during the
Term hereof, including any extensions or renewals thereof, insurance under
policies issued by insurers of recognized responsibility, qualified to do
business in the State of California on the Building in amounts not less than the
greater of eighty (80%) percent of the then full replacement cost (without
depreciation) of the Building (above foundations and excluding Tenant Additions)
or an amount sufficient to prevent Landlord from becoming a co-insurer under the
terms of the applicable policies, against fire and such other risks as may be
included in standard forms of all risk coverage insurance reasonably available
from time to time. Landlord agrees to maintain in force during the Term,
Commercial General Liability Insurance covering the Building on an occurrence
basis against all claims for personal injury, bodily injury, death, and property
damage. Such insurance shall be for a combined single limit of not less than
Three Million and No/100 Dollars ($3,000,000.00). Neither Landlord's obligation
to carry such insurance nor the carrying of such insurance shall be deemed to be
an indemnity by Landlord with respect to any claim, liability, loss, cost or
expense due, in whole or in part, to Tenant's negligent acts or omissions or
willful misconduct. Without obligation to do so, Landlord may, in its sole
discretion from time to time, carry insurance in amounts greater and/or for
coverage additional to the coverage and amounts set forth above.

14.4 WAIVER OF SUBROGATION

            (a) Landlord agrees that, if obtainable at no, or minimal,
additional cost, and so long as the same is permitted under the laws of the
State of California, it will include in its "All Risks" policies

                                       30


appropriate clauses pursuant to which the insurance companies (i) waive all
right of subrogation against Tenant with respect to losses payable under such
policies and/or (ii) agree that such policies shall not be invalidated should
the insured waive in writing prior to a loss any or all right of recovery
against any party for losses covered by such policies.

            (b) Tenant agrees to include, if obtainable at no, or minimal,
additional cost, and so long as the same is permitted under the laws of the
State of California, in its "All Risks" insurance policy or policies on Tenant
Additions, whether or not removable, and on Tenant's furniture, furnishings,
fixtures and other property removable by Tenant under the provisions of this
Lease appropriate clauses pursuant to which the insurance company or companies
(i) waive the right of subrogation against Landlord and/or any tenant of space
in the Building with respect to losses payable under such policy or policies
and/or (ii) agree that such policy or policies shall not be invalidated should
the insured waive in writing prior to a loss any or all right of recovery
against any party for losses covered by such policy or policies. If Tenant is
unable to obtain in such policy or policies either of the clauses described in
the preceding sentence, Tenant shall, if legally possible and without
necessitating a change in insurance carriers, have Landlord named in such policy
or policies as an additional insured. If Landlord shall be named as an
additional insured in accordance with the foregoing, Landlord agrees to endorse
promptly to the order of Tenant, without recourse, any check, draft, or order
for the payment of money representing the proceeds of any such policy or
representing any other payment growing out of or connected with said policies,
and Landlord does hereby irrevocably waive any and all rights in and to such
proceeds and payments.

            (c) Provided that Landlord's right of full recovery under its policy
or policies aforesaid is not adversely affected or prejudiced thereby, Landlord
hereby waives any and all right of recovery which it might otherwise have
against Tenant, its servants, agents and employees, for loss or damage occurring
to the Real Property and the fixtures, appurtenances and equipment therein, to
the extent the same is covered by Landlord's insurance, notwithstanding that
such loss or damage may result from the negligence or fault of Tenant, its
servants, agents or employees. Provided that Tenant's right of full recovery
under its aforesaid policy or policies is not adversely affected or prejudiced
thereby, Tenant hereby waives any and all right of recovery which it might
otherwise have against Landlord, its servants, and employees and against every
other tenant of the Real Property who shall have executed a similar waiver as
set forth in this Section for loss or damage to Tenant Additions, whether or not
removable, and to Tenant's furniture, furnishings, fixtures and other property
removable by Tenant under the provisions hereof to the extent the same is
coverable by Tenant's insurance required under this Lease, notwithstanding that
such loss or damage may result from the negligence or fault of Landlord, its
servants, agents or employees, or such other tenant and the servants, agents or
employees thereof.

            (d) Landlord and Tenant hereby agree to advise the other promptly if
the clauses to be included in their respective insurance policies pursuant to
subparagraphs (a) and (b) above cannot be obtained on the terms hereinbefore
provided and thereafter to furnish the other with a certificate of insurance or
copy of such policies showing the naming of the other as an additional insured,
as aforesaid. Landlord and Tenant hereby also agree to notify the other promptly
of any cancellation or change of the terms of any such policy that would affect
such clauses or naming. All such policies which name both Landlord and Tenant as
additional insureds shall, to the extent obtainable, contain agreements by the
insurers to the effect that no act or omission of any additional insured will
invalidate the policy as to the other additional insureds.

14.5 NOTICE OF CASUALTY

      Tenant shall give Landlord notice in case of a fire or accident in the
Premises promptly after Tenant is aware of such event.

                                       31


                  ARTICLE 15 -- WAIVER OF CLAIMS AND INDEMNITY

      To the extent permitted by Law, (i) Tenant releases the Indemnitees from,
and waives all claims for, damage to person or property sustained by the Tenant
or any occupant of the Premises or the Property resulting directly or indirectly
from any defect or matter in and about the Premises or the Property or any
equipment therein, or resulting from any accident in or about the Premises or
the Property, or resulting from any act or neglect of any other person,
including Landlord's agents, except to the extent caused by the gross
negligence, willful misconduct or breach of this Lease of or by any of the
Indemnitees or their agents, (ii) Tenant hereby waives any consequential damages
and (iii) Tenant hereby indemnifies, and agrees to protect, defend and hold the
Indemnitees harmless, against any and all actions, claims, demands, liability,
costs and expenses, including attorneys' fees, arising from Tenant's occupancy
of the Premises, from the conduct of Tenant's business on the Premises, or from
any breach or default on the part of Tenant in the performance of any covenant
or agreement on the part of Tenant to be performed pursuant to the terms of this
Lease, or from any willful act or negligence of Tenant, its agents, contractors,
servants, employees, customers or invitees, in or about the Premises or the
Property (except to the extent excluded in (i) above). In case of any action or
proceeding brought against the Indemnitees by reason of any such claim, upon
notice from Landlord, Tenant covenants to defend such action or proceeding by
counsel approved by Landlord, in Landlord's reasonable discretion.

                       ARTICLE 16 -- RULES AND REGULATIONS

      Tenant agrees to comply with the existing rules and regulations for the
Property, a copy of which is attached hereto as Exhibit D and with all
reasonable modifications which Landlord may make from time to time provide that
no such modification shall materially adversely affect any of Tenant's rights
hereunder . Landlord shall not be liable to the Tenant for violation of the same
by any other tenant and shall use reasonable efforts to enforce the rules and
regulations in a uniform and non-discriminatory manner. Landlord shall have the
following rights exercisable without notice to Tenant and without being deemed
an eviction of Tenant's use of the Premises or giving rise to any claim for
offset or abatement of Rent: (1) to change the Building's name or street address
upon reasonable prior notice to Tenant provided that if Landlord voluntarily
changes such name or address it will reimburse Tenant for the cost of replacing
its stationery and marketing materials; (2) to install, all signs on the
exterior and/or interior of the Building, provided the same does not materially
impair the visibility of any Tenant signage previously installed; (3) to display
the Premises to prospective purchasers and tenants, subject to all notice
requirements hereunder; (4) to grant to any party the exclusive right to conduct
any business in the Building, provided the same does not preclude the Tenant
from operating the type of business being operated in the Premises on the
Commencement Date of this Lease; and (5) to change the arrangement and/or
location of entrances or doors and doorways, corridors, or public portions of
the Building.

                        ARTICLE 17 -- REAL ESTATE BROKERS

      Landlord and Tenant represents that, except for the broker(s) listed in
Section 1.1, it has not dealt with any real estate broker, sales person, or
finder in connection with this Lease, and no such person initiated or
participated in the negotiation of this Lease, or showed the Premises to Tenant.
Tenant hereby agrees to indemnify, protect, defend and hold Landlord, harmless
from and against any and all liabilities and claims for commissions and fees
arising out of a breach of the foregoing representation. Landlord agrees to pay
any commission to which the brokers listed in Section 1.1 are entitled in
connection with this Lease pursuant to Landlord's written agreement with such
brokers and agrees to indemnify, protect, defend and hold Tenant, harmless from
and against any and all liabilities and claims for commissions and fees arising
out of a breach of the foregoing representation.

                                       32


                ARTICLE 18 -- MORTGAGEE PROTECTION AND ESTOPPELS

      This Lease is and shall be expressly subject and subordinate at all times
to the lien of any mortgage or trust deed now or hereafter encumbering fee title
to the Real Property and/or the leasehold estate under any such lease, and all
amendments, extensions, renewals, replacements and modifications of such
mortgage or trust deed and/or the obligation secured thereby, unless such
mortgagee, expressly provides or elects that the Lease shall be superior to such
lease or mortgage or trust deed. Notwithstanding the foregoing, with respect to
any such mortgage after the date of this Lease, such subordination is
conditioned upon such mortgagee delivering to Tenant a nondisturbance agreement
in recordable form on such entity's standard form of nondisturbance. If any such
mortgage or trust deed is foreclosed (including any sale of the Real Property
pursuant to a power of sale), or if any such lease is terminated, upon request
of the mortgagee, Tenant shall attorn to the purchaser at the foreclosure sale,
provided, however, that such purchaser shall not be (i) bound by any payment of
Rent for more than one month in advance except payments in the nature of
security for the performance by Tenant of its obligations under this Lease; (ii)
subject to any offset, defense or damages arising out of a default of any
preceding Landlord; or (iii) bound by any amendment or modification of this
Lease made without the written consent of the mortgagee. In confirmation of such
subordination, Tenant shall execute promptly any reasonable certificate or
instrument that Landlord or mortgagee request. Within ten (10) days after
request therefor by Landlord or any prospective mortgagee or owner, Tenant
agrees as directed in such request to execute an Estoppel Certificate in
recordable form, binding upon Tenant with respect to any commercially reasonable
information reasonably requested by Landlord or such mortgagee.

                              ARTICLE 19 -- NOTICES

      All notices, demands or requests provided for or permitted to be given
pursuant to this Lease must be in writing and shall be personally delivered or
sent by Federal Express or other reputable next business day courier service.
All notices, demands or requests to be sent pursuant to this Lease shall be
deemed to have been properly given or served by delivering or sending the same
in accordance with this Section, addressed to the parties hereto at their
respective addresses listed in Sections 1.1. Notices, demands or requests shall
be effective upon personal delivery or if sent by next business day courier
service as described above shall be effective one business day after deposit
with such courier service. By giving to the other party written notice thereof,
either party shall have the right from time to time to change their respective
addresses.

                            ARTICLE 20 -- RELOCATION

      At any time after the date of this Lease, Landlord may substitute for the
Premises, other premises in the Project or in the buildings known as
EmeryStation I or EmeryStation II (the "New Premises"), in which event the New
Premises shall be deemed to be the Premises for all purposes under this Lease,
provided that (i) the New Premises shall be the same or larger as the Premises
in area and similar in configuration; (ii) if Tenant is then occupying the
Premises, Landlord shall pay the actual and reasonable expenses of physically
moving Tenant, its property and equipment to the New Premises, including costs
of new stationery; (iii) Landlord shall give Tenant not less than sixty (60)
days' prior written notice of such substitution; and (iv) Landlord, at its
expense, shall improve the New Premises with improvements substantially similar
to those in the Premises at the time of such substitution.

                                       33


                           ARTICLE 21 -- MISCELLANEOUS

21.1 LATE CHARGES.

      All payments required hereunder not paid when due shall bear interest from
the date due until the date paid at the Default Rate in effect on the date such
payment was due. In the event Tenant is more than five (5) days late in paying
any installment of rent due under this Lease, Tenant shall pay Landlord a late
charge equal to five percent (5%) of the delinquent installment of rent. The
parties agree that (i) such delinquency will cause Landlord to incur costs and
expenses not contemplated herein, the exact amount of which will be difficult to
calculate, including the cost and expense that will be incurred by Landlord in
processing each delinquent payment of rent by Tenant, (b) the amount of such
late charge represents a reasonable estimate of such costs and expenses and that
such late charge shall be paid to Landlord for each delinquent payment in
addition to all rent otherwise due hereunder. Payment of interest at the default
rate and/or of late charges shall not excuse or cure any different or future
default by Tenant under this Lease.

21.2 WAIVER OF JURY TRIAL.

      Each party hereto (which includes any assignee, successor, heir or
personal representative of a party) shall not seek a jury trial, hereby waives
trial by jury, and hereby further waives any objection to venue in the county in
which the Project is located, and agrees and consents to personal jurisdiction
of the courts of the state of California in the county in which the Project is
located, in any action or proceeding or counterclaim brought by any party hereto
against the other on any matter whatsoever arising out of or in any way
connected with this Lease, the relationship of Landlord and Tenant, Tenant's use
or occupancy of the Premises, or any claim of injury or damage, or the
enforcement of any remedy under any statute, emergency or otherwise, whether any
of the foregoing is based on this Lease or on tort law. The parties agree that
this provision may be filed by any party hereto with the clerk or judge before
whom any action is instituted, which filing shall constitute the written consent
to a waiver of jury trial pursuant to and in accordance with section 631 of the
California code of civil procedure. The provisions of this section shall survive
the expiration or earlier termination of this Lease.

21.3 ENTIRE AGREEMENT.

      This Lease contains the entire agreement between Landlord and Tenant
concerning the Premises and there are no other agreements, either oral or
written, and no other representations or statements, either oral or written, on
which Tenant has relied. This Lease shall not be modified except by a writing
executed by Landlord and Tenant. This Lease shall be binding upon and inure to
the benefit of Landlord and Tenant and their respective heirs, legal
representatives, successors and permitted assigns. Each party represents and
warrants to the other that it has full authority and power to enter into and
perform its obligations under this Lease, that the person executing this Lease
is fully empowered to do so, and that no consent or authorization is necessary
from any third party. Landlord may request that Tenant provide Landlord evidence
of Tenant's authority.

21.4 LANDLORD'S RIGHTS

      Tenant shall permit Landlord to erect, use and maintain pipes, ducts,
wiring and conduits in and through the Premises, so long as Tenant's use, layout
or design of the Premises is not materially affected or altered. Upon not less
than 24 hours prior notice, Landlord or Landlord's agents shall have the right
to enter upon the Premises under the supervision/accompaniment of an approved
Tenant employee (except in the event of an emergency when only such notice as
Landlord is able to provide under the circumstances shall be required), to
inspect the Premises, to perform janitorial and other services, to

                                       34


conduct safety and other testing in the Premises and to make such repairs,
alterations, improvements or additions to the Premises or the Building or other
parts of the Property as Landlord may deem necessary or desirable in its good
faith business judgment (including all alterations, improvements and additions
in connection with a change in service provider or providers). Janitorial and
cleaning services shall be performed after normal business hours. Any entry or
work by Landlord shall be during normal business hours (except otherwise
approved by Landlord and Tenant) and Landlord shall use reasonable efforts to
ensure that any entry or work shall not materially interfere with Tenant's use
or occupancy of the Premises.

      Upon not less than 24 hours prior notice, (except in the event of an
emergency when only such notice as Landlord is able to provide under the
circumstances shall be required), Landlord may enter the Premises for the
purpose of conducting such inspections, tests and studies as Landlord may deem
desirable or reasonably necessary to confirm Tenant's compliance with all Laws
and Environmental Laws or for other purposes necessary in Landlord's reasonable
judgment to ensure the sound condition of the Property and the systems serving
the Property. Landlord's rights under this Section are for Landlord's own
protection only, and Landlord has not, and shall not be deemed to have assumed,
any responsibility to Tenant or any other party as a result of the exercise or
non-exercise of such rights, for compliance with Laws or Environmental Laws or
for the accuracy or sufficiency of any item or the quality or suitability of any
item for its intended use.

21.5 JOINT AND SEVERAL.

      The liability of each party comprising Tenant shall be joint and several.

21.6 LANDLORD REVIEW OR APPROVAL.

      The review, approval or consent of Landlord with respect to any item
required or permitted under this Lease is for Landlord's own protection only,
and Landlord has not, and shall not be deemed to have assumed, any
responsibility to Tenant or any other party, as a result of the exercise or
non-exercise of such rights, for compliance with Laws or for the accuracy or
sufficiency of any item or the quality or suitability of any item for its
intended use

21.7 EXCULPATION.

      Tenant agrees, on its behalf and on behalf of its successors and assigns,
that any liability or obligation under this Lease shall only be enforced against
Landlord's equity interest in the Building and in no event against any other
assets of the Landlord, or Landlord's officers or directors or partners up to a
maximum liability of $3,000,000.00, and that any liability of Landlord with
respect to this Lease shall be so limited and Tenant shall not be entitled to
any judgment in excess of such amount. In the event of any sale or other
transfer of the building, Landlord shall be entirely freed and relieved of all
agreements and obligations of Landlord hereunder accruing or to be performed
after the date of such sale or transfer provided Tenant receives fully the
benefits of any prepaid rent, Security Deposit and/or the Improvement Loan.

21.8 ACCORD AND SATISFACTION.

      No payment by Tenant or receipt by Landlord of a lesser amount than any
installment or payment of Rent due shall be deemed to be other than on account
of the amount due, and no endorsement or statement on any check or any letter
accompanying any check or payment of Rent shall be an accord and satisfaction,
and Landlord may accept such check or payment without prejudice to Landlord's
right pursue any other remedies available to Landlord.

                                       35


21.9 QUIET ENJOYMENT.

      Landlord covenants, in lieu of any implied covenant of quiet possession or
quiet enjoyment, that so long as Tenant is in compliance with the covenants and
conditions set forth in this lease, tenant shall have the right to quiet
enjoyment of the Premises without hindrance or interference from Landlord or
those claiming through Landlord, and subject to the covenants and conditions set
forth in the Lease and to the rights of any mortgagee or ground lessor.

21.10 CONSTRUCTION.

      Time is of the essence of this Lease and each and all of its provisions.
This Lease shall be construed in accordance with the laws of the State of
California. If any term, covenant or condition 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, shall not be affected thereby and
each item, covenant or condition of this Lease shall be valid and be enforced to
the fullest extent permitted by law.

      IN WITNESS WHEREOF, this Lease has been executed as of the date set forth
in Section 1.1 hereof.

TENANT:                                     LANDLORD:

BIOTIME, INC, a California corporation      HOLLIS R&D ASSOCIATES,
                                            a general partnership
By: ___________________________________
Print Name: ___________________________     By: ________________________________
Title: ________________________________         Richard K. Robbins,
                                                Managing Partner

By: ___________________________________
Print Name: ___________________________
Title: ________________________________

                                       36


                                    EXHIBIT A

                                PLAN OF PREMISES

                                       A-1


                                    EXHIBIT B

                              WORKLETTER AGREEMENT
                                 (TENANT BUILD)

      1.    Defined Terms. Capitalized terms used in this Workletter shall have
the same meanings set forth in the Lease except as otherwise specified herein
and except for terms capitalized in the ordinary course of punctuation. For
purposes of this Workletter the following capitalized terms have the following
meanings:

            1.1. "Design Documents" means the layout plans and specifications
for the real property improvements to be constructed by Tenant in the Premises
which are the final product of the preliminary space planning and which include,
among other things, all partitions, doors, HVAC (heating, ventilating and air
conditioning systems) distribution, ceiling systems, light fixtures, plumbing
installations, electrical installations and outlets, telephone installations and
outlets, any other installations required by Tenant, fire and life-safety
systems, wall finishes and floor coverings, whether to be newly installed or
requiring changes from the as-is condition of the Premises as of the date of
execution of the Lease, all in sufficient detail for Landlord's review;

            1.2 "Construction Documents" means, collectively, (a) a copy of the
proposed construction contract for the Tenant Improvements, (b) a written
assignment of the construction contract, creating a prior perfected security
interest in all of Tenant's rights thereunder in favor of Landlord and
containing the written consent of Tenant's general contractor to the assignment,
(c) a copy of the architect's contract for the Tenant Improvements, (d) a
written assignment of the architect's contract, creating a prior perfected
security interest in all of Tenant's rights thereunder in favor of Landlord and
containing the written consent of Tenant's architect to the assignment, and (e)
a list of all subcontractors and materials suppliers proposed to be used by
Tenant in connection with the construction of the Tenant Improvements;

            1.3 "Construction Drawings" means the final architectural plans and
specifications, and engineering plans and specifications, for the real property
improvements to be constructed by Tenant in the Premises in sufficient detail to
be submitted for governmental approvals and building permits and to serve as the
detailed construction drawings and specifications for the contractor;

            1.4 "Tenant Improvements" means all real property improvements to be
constructed by Tenant as shown on the Construction Drawings, as they may be
modified as provided herein;

      2.    Development of Plans

            2.1 Approval of Architect and Contractor. Tenant's architect,
contractor, major suppliers and major subcontractors shall each be subject to
the reasonable approval of Landlord. Landlord may request information about
these entities, including financial statements and a summary of representative
projects. If Landlord does not approve the architect, contractor, any major
subcontractor or major supplier, the parties shall negotiate in good faith to
select another architect, contractor, subcontractor or materials supplier
mutually acceptable to the parties. Landlord shall be entitled to withhold its
approval of any entity or person, who, in Landlord's determination, is
financially or otherwise professionally unqualified to design or construct the
Tenant Improvements. Notwithstanding the foregoing, Landlord's approval of any
architect, contractor, subcontractor or materials supplier shall not constitute
Landlord's representation or warranty that any such architect, contractor,
subcontractor or supplier is in fact qualified to perform the Tenant
Improvements.

                                       B-1


            2.2 Design Documents. Prior to Tenant's commencement of the
construction of the Tenant Improvements, Tenant shall prepare the Design
Documents and deliver them to Landlord. Within five (5) business days following
delivery of the Design Documents, Landlord shall approve the Design Documents or
deliver to Tenant written notice of their disapproval which shall specify the
changes that must be made to the Design Documents as a condition of Landlord's
approval. Within five (5) business days following receipt of Landlord's notice
of disapproval, Tenant shall deliver a revised set of Design Documents to
Landlord which shall incorporate the changes specified in Landlord's notice of
disapproval.

            2.3 Construction Drawings. As soon as the Design Documents are
approved by Landlord, Tenant shall prepare the Construction Drawings that are
consistent with and logical evolutions of the Design Documents and the Schedule
of Values. The Construction Drawings and Schedule of Values shall be delivered
to Landlord for approval. If Landlord does not approve the Construction Drawings
and/or the Schedule of Values, Landlord shall deliver to Tenant, as soon as
reasonably possible but within five (5) business days following receipt thereof,
written notice of such disapproval. The notice shall specify the changes that
must be made to the Construction Drawings and/or the Schedule of Values as a
condition for obtaining Landlord's approval. Within five (5) business days
following receipt of Landlord's notice of disapproval, Tenant shall deliver a
revised set of Construction Drawings and/or Schedule of Values to Landlord,
which incorporate the changes specified in Landlord's notice of disapproval.
Landlord and Tenant shall each sign a copy of the approved Construction Drawings
and Schedule of Values.

            2.4 Landlord's Approval. If the Construction Drawings conform to the
Design Documents and this Workletter, Landlord's approval shall not be
unreasonably withheld. If the Construction Drawings show work requiring a
modification or change to the shell of the Building, Landlord shall not be
deemed unreasonable if Landlord disapproves such Construction Drawings or if
Landlord conditions its consent to such Construction Drawings upon Tenant's
paying to Landlord, prior to the commencement of construction, the full cost of
modifying or changing the shell of the Building. Landlord may, at Landlord's
option, have the Design Documents or the Construction Drawings reviewed by
Landlord's architect, engineer and/or construction manager; provided, however,
that any such review shall be performed within the time periods set forth above
for Landlord's review of the Design Documents and the Construction Drawings.
Tenant shall reimburse the cost of any such review to Landlord within ten (10)
days following demand therefor by Landlord. In no event shall the approval by
Landlord (or Landlord's architect, engineer or construction manager) of the
Design Documents or the Construction Drawings constitute a representation or
warranty by Landlord (or Landlord's architect, engineer or construction manager)
of: (i) their accuracy, sufficiency or completeness for their intended purpose;
(ii) the absence of design defects or construction flaws; or (iii) their
compliance with applicable laws. Tenant agrees that Landlord (and Landlord's
architect, engineer and construction manager) shall incur no liability by reason
of its approval or disapproval of any item.

            2.5 Compliance with Laws. Tenant covenants, agrees, represents and
warrants that the Design Documents and Construction Drawings (i) shall be in a
form satisfactory for filing with appropriate governmental authorities and (ii)
shall conform to all applicable codes, rules, regulations and ordinances of all
governing authorities, including all building codes and the ADA.

            2.6 Changes. No changes shall be made to the Design Documents or the
Construction Drawings without the prior written consent of Landlord. All change
orders requested by Tenant shall be made in writing and shall specify any added
or reduced cost resulting therefrom. Any change proposed by Tenant shall be
approved or disapproved by Landlord within five (5) business days following
Landlord's receipt of detailed information pertaining to the proposed change.
Landlord's failure

                                       B-2


to approve any proposed change within five (5) business days shall be deemed
Landlord's disapproval thereof.

      3.    Construction of Tenant Improvements

            3.1 Permits and Approvals. Tenant shall submit the Construction
Drawings to all appropriate governmental agencies for approval and shall not
commence construction or installation of the Tenant Improvements unless and
until Tenant has obtained all necessary permits and approvals and has delivered
copies of these documents to Landlord.

            3.2 Construction Documents. Prior to the commencement of
construction and installation of the Tenant Improvements, Tenant shall submit to
Landlord, for Landlord's approval, the Construction Documents. Within five (5)
business days following the delivery of all of the Construction Documents,
Landlord shall approve such information or deliver to Tenant written notice of
disapproval of all or any information contained therein. If Landlord does not
approve the proposed construction contract, proposed form of subcontractor
agreement or the proposed architect's contract for the Tenant Improvements,
Landlord's notice shall specify the changes that must be made to these
agreements as a condition of Landlord's approval. Within five (5) business days
following receipt of Landlord's notice of disapproval, Tenant shall deliver to
Landlord revised copies of the proposed architect's and/or contractor's
agreements and/or subcontractor's agreements which incorporate the specified
changes. Following approval of the Construction Documents by Landlord, Tenant
shall not materially amend, materially modify or terminate any of the
Construction Documents without Landlord's prior written approval.

            3.3 Commencement and Completion of Construction. Following Tenant's
satisfaction of all of the requirements of Section 2 above and this Section 3,
Tenant shall commence construction and installation of the Tenant Improvements
in accordance with the Construction Drawings and shall pursue the same
diligently to completion. Tenant covenants to give Landlord at least ten (10)
days' prior written notice of its commencement of construction or delivery of
materials to the Premises to enable Landlord to post a notice of
nonresponsibility respecting the Tenant Improvements.

            3.4 Building Systems. In no event shall Tenant interfere with the
provision of heating, plumbing, electrical or mechanical system services to the
Building, make any structural changes to the Building, make any changes to the
heating, plumbing, electrical or mechanical systems of the Building, or make any
changes to the Premises which would weaken or impair the structural integrity of
the Building, alter the aesthetic appearance of the Building exterior, or which
would affect any warranties applicable to the Building or any improvements
constructed or installed by Landlord therein, without Landlord's prior written
consent, which consent may be withheld in Landlord's sole discretion. If Tenant
performs works that pertains to the structure of the building or the building's
systems, Landlord may require Tenant to engage Landlord's structural engineer to
design, supervise and monitor any construction work affecting either the
Building systems or the structure of the Building.

            3.5 Inspections. Landlord and its officers, agents or employees
shall have the right at all reasonable times to enter upon the Premises and
inspect the Tenant Improvements and to determine that the same are in conformity
with the Construction Drawings and all of the requirements of this Workletter.
Tenant acknowledges, however, that Landlord is under no obligation to supervise,
inspect or inform Tenant of the progress of construction and Tenant agrees that
it shall not rely upon Landlord to perform any of these activities. Neither the
inspection rights granted to Landlord in this Workletter, nor the making of such
inspections by Landlord, shall operate as a waiver of any rights of Landlord to
require that the construction and installation of the Tenant Improvements
conform with this Workletter, the Construction Drawings and all requirements of
applicable law.

                                       B-3


            3.6 Walk-Through of Tenant Improvements. Within two (2) business
days following the completion of the Tenant Improvements, Tenant shall notify
Landlord and shall provide Landlord an opportunity to inspect the Tenant
Improvements. Within ten (10) business days following Tenant's notice, Landlord
(or its representative) shall walk-through and inspect Tenant's work on the
Tenant Improvements and shall either approve Tenant's work or advise Tenant in
writing of any defects or uncompleted items. Tenant shall promptly repair such
defects or uncompleted items to Landlord's reasonable satisfaction. Landlord's
approval of the Tenant Improvements, or Landlord's failure to advise Tenant of
any defects or uncompleted items in the Tenant Improvements, shall not relieve
Tenant of responsibility for constructing and installing the Tenant Improvements
in accordance with the Construction Drawings, this Workletter and all applicable
laws.

            3.7 Final Documents. Following completion of the Tenant
Improvements, Tenant shall (a) obtain and deliver to Landlord a copy of the
certificate of occupancy for the Tenant Improvements from the governmental
agency having jurisdiction thereof; (b) promptly cause a notice of completion to
be validly recorded for the Tenant Improvements; (c) furnish Landlord with
unconditional waivers of lien in statutory form from all parties performing
labor and/or supplying equipment and/or materials in connection with the Tenant
Improvements, including Tenant's architect(s); (d) deliver to Landlord a
certificate of Tenant's architect(s) certifying completion of the Tenant
Improvements in substantial accordance with the Construction Drawings; (e)
deliver to Landlord a certificate of Tenant's contractor(s) certifying
completion of the Tenant Improvements in substantial accordance with the
Construction Drawings; (f) deliver to Landlord a full set of reproducible
as-built drawings (signed and dated by the contractor and each responsible
subcontractor) for the Tenant Improvements; and (g) Tenant shall deliver to
Landlord copies of all written construction and equipment warranties and manuals
related to the Tenant Improvements.

      4.    Payment of Costs of Tenant Improvements.

            4.1 Tenant's Cost. Any cost incurred in the design or construction
of the Tenant Improvements shall be borne by Tenant in accordance with the terms
and conditions set forth below. The costs of the Tenant Improvements shall
include the following items:

                  (a) The costs of the architect, contractor, suppliers and
subcontractors and any other consultants retained by Tenant in connection with
the preparation of Design Documents and Constructions Drawings, including,
engineering costs associated with completion of the State of California energy
utilization calculations under Title 24 legislation;

                  (b) All costs of obtaining from the City of Emeryville and any
other governmental authority, approvals, building permits and occupancy permits,
if any;

                  (c) Except for the initial space plan which is prepared at
Landlord's expense, all costs of space planning, preliminary floor plans and
construction drawings, including as-built drawings;

                  (d) All costs of procuring, installing and constructing the
Tenant Improvements, including the cost of any services or utilities made
available by Landlord;

                  (e) All costs of designing, procuring, constructing and
installing Tenant Improvements in compliance with all applicable laws, including
with all building codes and the ADA; and,

                  (f) All fees payable to Landlord's architectural or
engineering firm if they are required to review, monitor or design any portion
of the Tenant Improvements; and

                                       B-4


                  (g) Cabling, furniture and signage costs, including design
installation and permits.

      5.    General Requirements for Construction.

            5.1 Tenant's Obligation to Construct. Tenant shall construct and
install the Tenant Improvements in a good and workmanlike manner in accordance
with the Construction Drawings, this Workletter and all applicable laws. Tenant
shall be solely responsible for the payment of all cost and expenses related to
the construction and installation of the Tenant Improvements, subject to
reimbursement by Landlord as provided for in this Workletter.

            5.2 Tenant's Access to the Premises. Tenant shall coordinate with
the Building's project manager for access to the Premises and the scheduling of
construction work. Tenant shall exercise due diligence and best efforts to
ensure that Tenant's construction and installation of the Tenant Improvements
does not unreasonably interfere with the use and enjoyment of other tenants of
the Building or the Project. Landlord shall use commercially reasonable efforts
to accommodate Tenant's scheduling of deliveries and construction activities.

            5.3 Coordination of Construction Activities. If any shutdown of
plumbing, electrical or air conditioning equipment of the Building becomes
necessary during the course of construction of the Tenant Improvements, Tenant
shall notify Landlord and Landlord and Tenant shall agree upon when, and upon
what conditions, such shutdown may be made in order to cause the least
disruption to other tenants in the Building. Any damage to the Building or the
Project caused by Tenant or its contractor or subcontractors in connection with
the construction of the Tenant Improvements shall be immediately repaired at
Tenant's sole cost and expense.

            5.4 Protection against Lien Claims. Tenant agrees to fully pay and
discharge all claims for labor done and materials and services furnished in
connection with the construction of the Tenant Improvements, to diligently file
or procure the filing of a valid notice of completion within ten (10) days
following completion of construction of the Tenant Improvements, to diligently
file or procure the filing of a notice of cessation upon any cessation of labor
on the Tenant Improvements for a continuous period of thirty (30) days or more,
and to take all reasonable steps to forestall the assertion of claims of lien
against the Premises, the Building or the Project. Upon the request of Landlord,
Tenant shall provide Landlord with satisfactory evidence of the release or
removal (including removal by appropriate surety bond) of all liens recorded
against the Premises, the Project, or any portion thereof, and all stop notices
received by Tenant.

            5.5 Indemnification. Tenant shall, at Tenant's sole cost and
expense, defend, indemnify, save and hold Landlord harmless from and against any
and all claims, liabilities, demands, losses, expenses, damages or causes of
actions (whether legal or equitable in nature) asserted by any person, firm,
corporation, governmental body or agency or entity arising out of the
construction of the Tenant Improvements. Tenant shall pay to Landlord upon
demand all claims, judgments, damages, losses or expenses (including attorneys'
fees) incurred by Landlord as a result of any legal action arising out of the
construction of the Tenant Improvements. This indemnification shall be in
addition to the insurance requirements set forth in the Lease and this
Workletter and the obligations hereunder shall survive the expiration or
termination of the Lease.

      6.    Insurance.

            6.1 Tenant's Required Insurance Coverage. At least five (5) days
prior to the date Tenant commences construction of the Tenant Improvements,
Tenant shall submit to Landlord evidence

                                       B-5


of (i) the insurance coverage required under Article 16 of the Lease; and (ii)
broad form "Builder's Risk" property damage insurance with limits of not less
than one hundred percent (100%) of the estimated value of the Tenant
Improvements. All such policies shall provide that thirty (30) days' written
notice must be given to Landlord prior to termination or cancellation. The
insurance policies shall name Landlord and Landlord's property manager as
additional insureds and shall provide that Landlord, although an additional
insured, may recover for any loss suffered by Landlord or Landlord's agents by
reason of the negligence of Tenant or Tenant's contractors, subcontractors
and/or employees.

            6.2 Other Insurance Coverage. At least five (5) business days prior
to the date Tenant commences construction of the Tenant Improvements, Tenant
shall deliver to Landlord certificates of insurance from the carrier(s)
providing insurance to Tenant's contractor and Tenant's architect evidencing the
following types of coverage in such amounts as are reasonably determined by
Landlord to be necessary for the construction of the Tenant Improvements: (i)
professional liability insurance; (ii) commercial general liability insurance;
(iii) business automobile liability insurance; (iv) workers' compensation
insurance; and (v) umbrella liability insurance. The insurance specified in (i),
(ii), (iii) and (v) above shall name Landlord and Landlord's property manager as
additional insureds, and all such policies shall provide that thirty (30) days'
written notice must be given to Landlord prior to termination or cancellation.

            6.3 Waivers of Claims against Landlord.Tenant waives, and Tenant
shall use best efforts to cause each of its architects, contractors, suppliers
and subcontractors to waive, all rights to recover against Landlord and its
agents, contractors and employees for any loss or damage arising from a cause
covered by insurance required to be carried by Tenant hereunder and shall cause
each respective insurer to waive all rights of subrogation against Landlord and
its agents, contractors and employees in connection therewith to the same
extent.

      7.    Default and Remedies.

            7.1 Defaults. Each of the following events shall constitute an event
of default ("Default") under this Workletter:

                  (a) Failure by Tenant to commence and/or complete construction
and installation of the Tenant Improvements in accordance with the terms and
conditions set forth in this Workletter or the failure by Tenant to comply with
any of the covenants, provisions or conditions of this Workletter;

                  (b) Deviations in construction from the Construction Drawings
(as determined by Landlord or its representative) without the approval of
Landlord, the appearance of defective workmanship or materials in the
construction of the Tenant Improvements which are not corrected by Tenant within
thirty (30) days after notice from Landlord (or if the defect is such that it
cannot reasonably be corrected within said thirty (30) day period, the
correction of such defect is not initiated by Tenant within said thirty (30) day
period and thereafter prosecuted diligently to completion).

            7.2 Remedies. A Default by Tenant under this Workletter shall be a
default under the Lease and shall entitle Landlord to exercise all remedies set
forth in the Lease. Where substantial deviations from the Construction Drawings
have occurred which have not been approved by Landlord, or defective or
unworkmanlike labor or materials are being used in construction of the Tenant
Improvements, Landlord shall have the right to demand that such labor or
materials be corrected, and if the same are not so corrected, shall have the
right to immediately order the stoppage of all construction until such condition
is corrected, until the defective work is corrected to Landlord's satisfaction.

                                       B-6


      8.    Force and Effect. The terms and conditions of this Workletter
supplement the Lease and shall be construed to be a part of the Lease and are
incorporated in the Lease. Without limiting the generality of the foregoing, any
default by any party hereunder shall have the same force and effect as a default
under the Lease. Should any inconsistency arise between this Workletter and the
Lease as to the specific matters that are the subject of this Workletter, the
terms and conditions of this Workletter shall control.

                                       B-7


                                    EXHIBIT C

                       ENVIRONMENTAL RULES AND REGULATIONS

                   BUILDING RULES & REGULATIONS - LAB TENANTS

1.    Any laboratory equipment (glass and cage washers, sterilizers,
      centrifuges, etc.) being used during normal business hours must be
      properly insulated for noise to prevent interruption of other tenants'
      business. Landlord reserves the right to request all equipment be
      insulated prior to occupancy. Should other tenants complain of noise, lab
      tenant will be responsible for abating any noise issues, at their sole
      cost.

2.    Any damages to property due to leaks from lab equipment will be the sole
      responsibility of the Tenant. Should damage occur in other Tenant spaces,
      any and all damages and clean up will be the responsibility of equipment
      owner (lab tenant).

3.    Animal activities are a recognized and necessary process in the biotech
      industry. It can only be conducted by lab tenants pursuant to all the
      requirements of their respective lease (including the "Use" clause) and
      requires specific, written approval by Landlord in advance. We also expect
      any animal operations to be conducted pursuant to all regulations,
      standards and best industry practices relating to them.

4.    EmeryStation Campus is a mixed-use facility and lab tenants share space
      with office tenants. To reduce the potential interaction with office
      tenants and their employees and visitors with any biotech animal
      operations; animal testing performed; deliveries of animals and any
      equipment, foods, cleaners, etc. associated with animal activities must be
      coordinated through the Loading Dock after hours and with the cooperation
      of the building management and security personnel. Tenant should make
      every effort to handle any deliveries relating to animal activities
      outside of Building Standard Hours. The freight elevator must be used at
      all times, and delivery trucks should not be visible to the other tenants
      in the campus area. No cartons, containers or cardboard boxes bearing the
      nature of contents may be stored or left in common area spaces, to include
      any garage/freight areas. Feed bags, animal carriers, and any and all
      containers must be disposed of properly and with discretion.

5.    All exterior signage relating to laboratory operations (i.e. visible to
      common areas including corridors) must be kept to the minimum required by
      law. All signs must have Landlord's approval prior to installation.

                                       C-1


                                    EXHIBIT D

                              RULES AND REGULATIONS

      1. No sidewalks, entrance, passages, courts, elevators, vestibules,
stairways, corridors or halls shall be obstructed or encumbered by Tenant or
used for any purpose other than ingress and egress to and from the Premises and
if the Premises are situated on the ground floor of the Project, Tenant shall
further, at Tenant's own expense, keep the sidewalks and curb directly in front
of the Premises clean and free from rubbish.

      2. No awning or other projection shall be attached to the outside walls or
windows of the Project without the prior written consent of Landlord. No
curtains, blinds, shades, drapes or screens shall be attached to or hung in, or
used in connection with any window or door of the Premises, without the prior
written consent of Landlord. Such awnings, projections, curtains, blinds,
shades, drapes, screens and other fixtures must be of a quality, type, design,
color, material and general appearance approved by Landlord, and shall be
attached in the manner approved by Landlord. All lighting fixtures hung in
offices or spaces along the perimeter of the Premises must be of a quality,
type, design, bulb color, size and general appearance approved by Landlord.

      3. No sign, advertisement, notice, lettering, decoration or other thing
shall be exhibited, inscribed, painted or affixed by Tenant on any part of the
outside or inside of the Premises or of the Project, without the prior written
consent of Landlord. In the event of the violation of the foregoing by Tenant,
Landlord may remove same without any liability, and may charge the expense
incurred by such removal to Tenant.

      4. The sashes, sash doors, skylights, windows and doors that reflect or
admit light or air into the halls, passageways or other public places in the
Project shall not be covered or obstructed by Tenant, nor shall any bottles,
parcels or other articles be placed on the window sills or in the public
portions of the Project.

      5. No showcases or other articles shall be put in front of or affixed to
any part of the exterior of the Project, nor placed in public portions thereof
without the prior written consent of Landlord.

      6. The water and wash closets and other plumbing fixtures shall not be
used for any purposes other than those for which they were constructed, and no
sweepings, rubbish, rags or other substances shall be thrown therein. All
damages resulting from any misuse of the fixtures shall be borne by Tenant to
the extent that Tenant or Tenant's agents, servants, employees, contractors,
visitors or licensees shall have caused the same.

      7. Tenant shall not mark, paint, drill into or in any way deface any part
of the Premises or the Project. No boring, cutting or stringing of wires shall
be permitted, except with the prior written consent of Landlord, and as Landlord
may direct.

      8. No animal or bird of any kind shall be brought into or kept in or about
the Premises or the Project, except seeing-eye dogs or other seeing-eye animals
and laboratory animals used by Tenant which are approved by Landlord.

      9. Prior to leaving the Premises for the day, Tenant shall draw or lower
window coverings and extinguish all lights.

                                       D-1


      10. Tenant shall not make, or permit to be made, any unseemly or
disturbing noises or disturb or interfere with occupants of the Project, or
neighboring buildings or premises, or those having business with them. Tenant
shall not throw anything out of the doors, windows or skylights or down the
passageways.

      11. Neither Tenant nor any of Tenant's agents, servants, employees,
contractors, visitors or licensees shall at any time bring or keep upon the
Premises any flammable, combustible or explosive fluid, chemical or substance
without Landlord's prior written consent, which consent Landlord shall not
unreasonably withhold; provided that Landlord's consent shall not be required
for the use or handling of solvents, alcohol, paints, and similar materials.

      12. No additional locks, bolts or mail slots of any kind shall be placed
upon any of the doors or windows by Tenant, nor shall any change be made in
existing locks or the mechanism thereof. Tenant must, upon the termination of
the tenancy, restore to Landlord all keys of stores, offices and toilet rooms,
either furnished to, or otherwise procured by Tenant, and in the event of the
loss of any keys so furnished, Tenant shall pay to Landlord the cost thereof.

      13. All removals, or the carrying in or out of any safes, freight,
furniture, construction material, bulky matter or heavy equipment of any
description must take place during the hours which Landlord or its agent may
determine from time to time. Landlord reserves the right to prescribe the weight
and position of all safes, which must be placed upon two-inch thick plank strips
to distribute the weight. The moving of safes, freight, furniture, fixtures,
bulky matter or heavy equipment of any kind must be made upon previous notice to
the Building Manager and in a manner and at times prescribed by him, and the
persons employed by Tenant for such work are subject to Landlord's prior
approval. Landlord reserves the right to inspect all safes, freight or other
bulky articles to be brought into the Project and to exclude from the Project
all safes, freight or other bulky articles which violate any of these Rules and
Regulations or the Lease of which these Rules and Regulations are a part.

      14. Tenant shall not purchase spring water, towels, janitorial or
maintenance or other like service from any company or persons not approved by
Landlord. Landlord shall approve a sufficient number of sources of such services
to provide Tenant with a reasonable selection, but only in such instances and to
such extent as Landlord in its judgment shall consider consistent with security
and proper operation of the Project.

      15. Landlord shall have the right to prohibit any advertising or business
conducted by Tenant referring to the Project which, in Landlord's opinion, tends
to impair the reputation of the Project or its desirability as a first class
building for offices and/or commercial services and upon notice from Landlord,
Tenant shall refrain from or discontinue such advertising.

      16. Landlord reserves the right to exclude from the Project between the
hours of 6:00 p.m. and 8:00 a.m. Monday through Friday, after 1:00 p.m. on
Saturdays and at all hours Sundays and legal holidays, all persons who do not
present a pass to the Project issued by Landlord. Landlord may furnish passes to
Tenant so that Tenant may validate and issue same. Tenant shall safeguard said
passes and shall be responsible for all acts of persons in or about the Project
who possess a pass issued to Tenant.

      17. Tenant's contractors shall, while in the Premises or elsewhere in the
Project, be subject to and under the control and direction of the Building
Manager (but not as agent or servant of said Building Manager or of Landlord).

      18. If the Premises is or becomes infested with vermin as a result of the
use or any misuse or neglect of the Premises by Tenant, its agents, servants,
employees, contractors, visitors or licensees,

                                       D-2


Tenant shall forthwith at Tenant's expense cause the same to be exterminated
from time to time to the satisfaction of Landlord and shall employ such licensed
exterminators as shall be approved in writing in advance by Landlord.

      19. The requirements of Tenant will be attended to only upon application
at the office of the Project. Project personnel shall not perform any work or do
anything outside of their regular duties unless under special instructions from
the office of the Landlord.

      20. Canvassing, soliciting and peddling in the Project are prohibited and
Tenant shall cooperate to prevent the same.

      21. No water cooler or air conditioning unit or system shall be installed
or used by Tenant without the written consent of Landlord.

      22. There shall not be used in any premises, or in the public halls, plaza
areas, lobbies, or elsewhere in the Project, either by Tenant or by jobbers or
others, in the delivery or receipt of merchandise, any hand trucks or dollies,
except those equipped with rubber tires and sideguards.

      23. Tenant, Tenant's agents, servants, employees, contractors, licensees,
or visitors shall not park any vehicles in any driveways, service entrances, or
areas posted "No Parking" and shall comply with any other parking restrictions
imposed by Landlord from time to time.

      24. Tenant shall keep its window coverings closed during any period of the
day when the sun is shining directly on the windows of the Premises.

      25. Tenant shall not use the name of the Project for any purpose other
than as the address of the business to be conducted by Tenant in the Premises,
nor shall Tenant use any picture of the Project in its advertising, stationery
or in any other manner without the prior written permission of Landlord.
Landlord expressly reserves the right at any time to change said name without in
any manner being liable to Tenant therefor.

      26. Tenant shall not prepare any food nor do any cooking, operate or
conduct any restaurant, luncheonette or cafeteria for the sale or service of
food or beverages to its employees or to others, except that food and beverage
preparation by Tenant's employees using microwave ovens or coffee makers shall
be permitted provided no odors of cooking or other processes emanate from the
Premises. Tenant shall not install or permit the installation or use of any
vending machine or permit the delivery of any food or beverage to the Premises
except by such persons and in such manner as are approved in advance in writing
by Landlord.

      27. The Premises shall not be used as an employment agency, a public
stenographer or typist, a labor union office, a physician's or dentist's office,
a dance or music studio, a school, a beauty salon, or barber shop, the business
of photographic, multilith or multigraph reproductions or offset printing (not
precluding using any part of the Premises for photographic, multilith or
multigraph reproductions solely in connection with Tenant's own business and/or
activities), a restaurant or bar, an establishment for the sale of
confectionery, soda, beverages, sandwiches, ice cream or baked goods, an
establishment for preparing, dispensing or consumption of food or beverages of
any kind in any manner whatsoever, or news or cigar stand, or a radio,
television or recording studio, theatre or exhibition hall, or manufacturing, or
the storage or sale of merchandise, goods, services or property of any kind at
wholesale, retail or auction, or for lodging, sleeping or for any immoral
purposes.

                                       D-3


      28. Business machines and mechanical equipment shall be placed and
maintained by Tenant at Tenant's expense in settings sufficient in Landlord's
judgment to absorb and prevent vibration, noise and annoyance. Tenant shall not
install any machine or equipment which causes noise, heat, cold or vibration to
be transmitted to the structure of the building in which the Premises are
located without Landlord's prior written consent, which consent may be
conditioned on such terms as Landlord may require. Tenant shall not place a load
upon any floor of the Premises exceeding the floor load per square foot that
such floor was designed to carry and which is allowed by Law.

      29. Tenant shall not bring any Hazardous Materials onto the Premises
except for those that are in general commercial use and are incidental to
Tenant's business office operations and only in quantities suitable for
immediate use without Landlord's prior written consent, which consent Landlord
shall not unreasonably withhold.

      30. Tenant shall not store any vehicle within the parking area. Tenant's
parking rights are limited to the use of parking spaces for short-term parking,
of up to twenty-four (24) hours, of vehicles utilized in the normal and regular
daily travel to and from the Project. Tenants who wish to park a vehicle for
longer than a 24-hour period shall notify the Building Manager for the Project
and consent to such long-term parking may be granted for periods up to two (2)
weeks. Any motor vehicles parked without the prior written consent of the
Building Manager for the Project for longer than a 24-hour period shall be
deemed stored in violation of this rule and regulation and shall be towed away
and stored at the owner's expense or disposed of as provided by Law.

      31. Smoking is prohibited in the Premises, the Building and all enclosed
Common Areas of the Project, including all lobbies, all hallways, all elevators
and all lavatories.

                                       D-4