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California-South San Francisco-Britannia Biotechnology Center Build-to-Suit Lease - Britannia Biotech Gateway LP and Tularik Inc.

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                              BUILD-TO-SUIT LEASE
                              -------------------


  THIS BUILD-TO-SUIT LEASE ("Lease") is made and entered into as of the ___ day
of ______, 1998, by and between BRITANNIA BIOTECH GATEWAY LIMITED PARTNERSHIP, a
Delaware limited partnership ("Landlord"), and TULARIK INC., a Delaware
corporation ("Tenant").


                         THE PARTIES AGREE AS FOLLOWS:


                                    1.  PROPERTY
                                        --------


  1.1   Lease of Property.
        -----------------

        (a) Landlord leases to Tenant and Tenant hires and leases from Landlord,
on the terms, covenants and conditions hereinafter set forth, the building (the
"Building") to be constructed pursuant to Article 5 hereof and Exhibit C
                                                               ---------
attached hereto on the real property described in Exhibit A attached hereto (the
                                                  ---------
"Site"), to consist of a two-story office and laboratory building containing
approximately 80,000 square feet (measured in accordance with the BOMA standard
most closely applicable to a two-story, single-tenant building of this nature).
The location of the Building on the Site is intended to be substantially as
shown for "Building A" on the site plan attached hereto as Exhibit B.  The
                                                           ---------
Building and the other improvements to be constructed, pursuant to Article 5
hereof and Exhibit C attached hereto, on the portion of the Site designated as
           ---------
"Phase II" on Exhibit B attached hereto (the "Phase II Site") are sometimes
              ---------
referred to collectively herein as the "Improvements," and the Improvements and
the Phase II Site are sometimes referred to collectively herein as the
"Property."  The parking areas, driveways, sidewalks, landscaped areas and other
portions of the Phase II Site that lie outside the exterior walls of the
Building, as depicted on the site plan attached hereto as Exhibit B, are
                                                          ---------
sometimes referred to herein as the "Common Areas."  The Site is part of The
Britannia Biotechnology Center in South San Francisco, California.


        (b) As an appurtenance to Tenant's leasing of the Building pursuant to
Section 1.1(a), Landlord hereby grants to Tenant, for the benefit of Tenant and
its employees, suppliers, shippers, customers and invitees, during the term of
this Lease, the non-exclusive right to use, in common with others entitled to
such use, (i) those portions of the Common Areas improved from time to time for
use as parking areas, driveways, sidewalks, landscaped areas, or for other
common purposes, and (ii) all easements, access rights and similar rights and
privileges relating to or appurtenant to the Property and created or existing
from time to time under any easement agreements, declarations of covenants,
conditions and restrictions, or other written agreements now of record with
respect to the Site, including (but not limited to) the portion of the Site
designated as "Phase I" on Exhibit B attached hereto (the "Phase I Site") which
                           ---------
Phase I Site is currently leased by Tenant from Landlord pursuant to that
certain Build-To-Suit Lease between Tenant and Britannia Developments, Inc.
dated April 20, 1995, as amended by that certain First Amendment to Build-To-
Suit Lease and Workletter dated June 15, 1995 (the "Phase I Lease"), subject
however to any
<PAGE>

limitations applicable to such rights and privileges under applicable law and/or
under the written agreements creating such rights and privileges.

  1.2   Landlord's Reserved Rights.  To the extent reasonably necessary to
        --------------------------
permit Landlord to exercise any rights of Landlord and discharge any obligations
of Landlord under this Lease, Landlord shall have, in addition to the right of
entry set forth in Section 16.1 hereof, the following rights:  (i) to make
changes to the Common Areas, including, without limitation, changes in the
location, size or shape of any portion of the Common Areas and to relocate (but
not materially decrease the number of) parking spaces on the Phase II Site; (ii)
to close temporarily any of the Common Areas for maintenance or other reasonable
purposes, provided that reasonable parking and reasonable access to the Building
remain available; (iii) to construct, alter or add to other buildings or
improvements on the Site (including, but not limited to, construction of a
building in the area designated as "Building B" on the site plan attached hereto
as Exhibit B, and construction of site improvements and common area improvements
   ---------
in the Phase I Site; (iv) to build adjoining to the Property and/or the Site;
(v) to use the Common Areas while engaged in making additional improvements,
repairs or alterations to the Property, or any portion thereof; and (vi) to do
and perform such other acts with respect to the Common Areas and the Property as
may be necessary or appropriate; provided, however, that notwithstanding
                                 --------
anything to the contrary in this Section 1.2, Landlord's exercise of its rights
hereunder (x) shall not cause any material diminution of Tenant's rights, nor
any material increase of Tenant's obligations, under this Lease or with respect
to the Improvements, (y) shall not authorize Landlord to make any material,
permanent alterations in the Improvements without the prior written consent of
Tenant, which consent shall not be unreasonably withheld or delayed, and (z)
shall be conducted in such a manner as to minimize, to the extent reasonably
possible, any adverse effect on Tenant's business operations on the Phase II
Site (including, but not limited to, reasonable prior notice to Tenant of any
pile-driving or other activities that will cause significant noise or vibration
on the Phase II Site).


                                    2.  TERM
                                        ----


  2.1   Term.  The term of this Lease shall commence on the date which is six
        ----
(6) months after the date Landlord delivers to Tenant a Structural Completion
Certificate pursuant to the Workletter attached hereto as Exhibit C, subject to
                                                          ---------
any adjustments authorized or required under the provisions of such Exhibit C
(the "Commencement Date") and shall end on the day immediately preceding the
date fifteen (15) years thereafter, unless sooner terminated or extended (if
applicable) as hereinafter provided.


  2.2   Early Possession.  Tenant shall have the nonexclusive right to occupy
        ----------------
and take possession of the Phase II Site from and after the date of Landlord's
delivery of the Structural Completion Certificate described in clause (i) of
Section 2.1, even though such date is prior to the Commencement Date determined
under Section 2.1 and even though Landlord will be continuing to construct the
balance of Landlord's Work as contemplated in Exhibit C, for the purpose of
                                              ---------
constructing Tenant's Work as contemplated in Exhibit C.  Such occupancy and
                                              ---------
possession, and any early access under the next sentence of this Section 2.2,
shall be subject to and upon all of the terms and conditions of this Lease and
of the Workletter attached hereto as Exhibit C (including, but not limited to,
                                     ---------
conditions relating to the maintenance of required insurance), except that
Tenant

                                      -2-
<PAGE>

shall have no obligation to pay minimum rental or Operating Expenses for any
period prior to the Commencement Date as determined under Section 2.1; such
early possession shall not advance or otherwise affect the Commencement Date or
termination date determined under Section 2.1. Tenant shall also be entitled to
have early access to the Phase II Site at all appropriate times prior to
Landlord's delivery of the Structural Completion Certificate, subject to the
approval of Landlord and its contractor (which approval shall not be
unreasonably withheld or delayed), solely for the purpose of installing fixtures
and equipment and other similar work preparatory to the construction of Tenant's
Work and the commencement of Tenant's business on the Property, and Tenant shall
not be required to pay minimum rental or Operating Expenses by reason of such
early access until the Commencement Date otherwise occurs. Tenant shall not
interfere with or delay Landlord's contractors by any such early access,
occupancy or possession under this Section 2.2 prior to Landlord's delivery of
the Structural Completion Certificate, shall coordinate and cooperate with
Landlord and its contractors (who shall similarly coordinate and cooperate with
Tenant and its contractors) to minimize any interference or delay by either
party with respect to the other party's work following Landlord's delivery of
the Structural Completion Certificate, and shall indemnify, defend and hold
harmless Landlord and its agents and employees from and against any and all
claims, demands, liabilities, actions, losses, costs and expenses, including
(but not limited to) reasonable attorneys' fees, arising out of or in connection
with Tenant's early entry upon the Phase II Site hereunder.


  2.3   Delay In Possession.  Landlord agrees to use its best reasonable efforts
        -------------------
to complete promptly its portion of the work described in Section 5.1 and
Exhibit C; provided, however, Landlord shall not be liable for any damages
---------
caused by any delay in the completion of such work, nor shall any such delay
affect the validity of this Lease or the obligations of Tenant hereunder.
Notwithstanding any other provision of this Section 2.3, however, if Landlord
fails to deliver the Structural Completion Certificate and tender possession of
the completed structural portions of the Building Shell (i.e., those portions
                                                         ----
required to be completed as a condition of delivery of the Structural Completion
Certificate) to Tenant by April 30, 1999 then Tenant shall have the right to
terminate this Lease without further liability hereunder by written notice
delivered to Landlord at any time prior to Landlord's delivery of the Structural
Completion Certificate and tender of possession of the completed structural
portions of the Building Shell to Tenant; provided, however, that the deadline
                                          --------
of April 30, 1999 set forth in this sentence shall be extended, day for day, for
a period equal to the length of any delay beyond February 28, 1998 in Tenant's
delivery to Landlord of all information reasonably necessary for Landlord to
complete the preparation of all drawings, designs and specifications for the
Building Shell.


  2.4   Acknowledgement Of Lease Commencement.  Upon commencement of the term of
        -------------------------------------
this Lease, Landlord and Tenant shall execute a written acknowledgement of the
Commencement Date, date of termination and related matters, substantially in the
form attached hereto as Exhibit E (with appropriate insertions), which
                        ---------
acknowledgement shall be deemed to be incorporated herein by this reference.
Notwithstanding the foregoing requirement, the failure of Tenant to execute such
a written acknowledgement shall not affect the determination of the Commencement
Date, date of termination and related matters in accordance with the provisions
of this Lease.


  2.5   Holding Over.  If Tenant holds possession of the Property or any portion
        ------------
thereof after

                                      -3-
<PAGE>

the term of this Lease with Landlord's written consent, then except as otherwise
specified in such consent, Tenant shall become a tenant from month to month at
one hundred twenty-five percent (125%) of the rental and otherwise upon the
terms herein specified for the period immediately prior to such holding over and
shall continue in such status until the tenancy is terminated by either party
upon not less than thirty (30) days prior written notice. If Tenant holds
possession of the Property or any portion thereof after the term of this Lease
without Landlord's written consent, then Landlord in its sole discretion may
elect (by written notice to Tenant) to have Tenant become a tenant either from
month to month or at will, at one hundred fifty percent (150%) of the rental
(prorated on a daily basis for an at-will tenancy, if applicable) and otherwise
upon the terms herein specified for the period immediately prior to such holding
over, or may elect to pursue any and all legal remedies available to Landlord
under applicable law with respect to such unconsented holding over by Tenant.
Tenant shall indemnify and hold Landlord harmless from any loss, damage, claim,
liability, cost or expense (including reasonable attorneys' fees) resulting from
any delay by Tenant in surrendering the Property (except with Landlord's prior
written consent), including but not limited to any claims made by a succeeding
tenant by reason of such delay. Acceptance of rent by Landlord following
expiration or termination of this Lease shall not constitute a renewal of this
Lease.


  2.6   Option To Extend Term.  Tenant shall have the option to extend the term
        ---------------------
of this Lease, at the minimum rental set forth in Section 3.1(b) and (c) and
otherwise upon all the terms and provisions set forth herein with respect to the
initial term of this Lease, for up to two (2) additional periods of five (5)
years each, the first commencing upon the expiration of the initial term hereof
and the second commencing upon the expiration of the first extended term, if
any.  Exercise of such option with respect to the first such extended term shall
be by written notice to Landlord at least nine (9) months prior to the
expiration of the initial term hereof; exercise of such option with respect to
the second extended term, if the first extension option has been duly exercised,
shall be by like written notice to Landlord at least nine (9) months prior to
the expiration of the first extended term hereof.  If Tenant is in default
hereunder on the date of such notice or on the date any extended term is to
commence, then the option shall be of no force or effect, the extended term
shall not commence and this Lease shall expire at the end of the then current
term hereof (or at such earlier time as Landlord may elect pursuant to the
default provisions of this Lease).  If Tenant properly exercises one or more
extension options under this Section, then all references in this Lease (other
than in this Section 2.6) to the "term" of this Lease shall be construed to
include the extension term(s) thus elected by Tenant.  Except as expressly set
forth in this Section 2.6, Tenant shall have no right to extend the term of that
Lease beyond its prescribed term.



                                   3.  RENTAL
                                       ------


  3.1   Minimum Rental.
        --------------

        (a) Tenant shall pay to Landlord as minimum rental for the Property, in
advance, without deduction, offset, notice or demand, on or before the
Commencement Date and on or before the first day of each subsequent calendar
month of the term of this Lease, the following amounts per month:

                                      -4-
<PAGE>

<TABLE>
<CAPTION>

                     Months       Minimum Rental
                     ------       --------------
<S>                               <C>

                     1 -  12            $159,200
                    13 -  24             188,800
                    25 -  36             200,800
                    37 -  48             206,400
                    49 -  60             215,200
                    61 -  72             217,600
                    73 -  84             188,800
                    85 -  96             195,200
                    97 - 108             200,800
                   109 - 120             207,200
                   121 - 132             189,600
                   133 - 144             196,800
                   145 - 156             203,200
                   157 - 168             211,200
                   169 - 180             219,200
</TABLE>

If the obligation to pay minimum rental hereunder commences on other than the
first day of a calendar month or if the term of this Lease terminates on other
than the last day of a calendar month, the minimum rental for such first or last
month of the term of this Lease, as the case may be, shall be prorated based on
the number of days the term of this Lease is in effect during such month.  If an
increase in minimum rental becomes effective on a day other than the first day
of a calendar month, the minimum rental for that month shall be the sum of the
two applicable rates, each prorated for the portion of the month during which
such rate is in effect.


        (b) If Tenant properly exercises its right to extend the term of this
Lease pursuant to Section 2.6 hereof, the minimum rental during the first
extended term shall be equal to ninety-five percent (95%) of the fair market
rental value of the Property (as defined below), including any rental increase
provisions then customary in the relevant market for comparable commercial
leases, determined as of the commencement of such extended term in accordance
with this paragraph.  Upon Landlord's receipt of a proper notice of Tenant's
exercise of its option to extend the term of this Lease, the parties shall have
sixty (60) days in which to agree on the fair market rental (including any
applicable rental increase provisions) for the Property at the commencement of
the first extended term for the uses permitted hereunder.  If the parties agree
on such fair market rental and rental increase provisions (if any), they shall
execute an amendment to this Lease stating the amount of the applicable minimum
monthly rental and any applicable rental increase provisions.  If the parties
are unable to agree on such rental (including any applicable rental increase
provisions) within such sixty (60) day period, then within fifteen (15) days
after the expiration of such period each party, at its cost and by giving notice
to the other party, shall appoint a real estate appraiser with at least five (5)
years experience appraising similar commercial properties in northeastern San
Mateo County to appraise and set the fair market rental and any applicable
rental increase provisions for the Property at the commencement of the first
extended term.  If either party fails to appoint an appraiser within the
allotted time, the single appraiser appointed by the other party shall

                                      -5-
<PAGE>

be the sole appraiser. If an appraiser is appointed by each party and the two
appraisers so appointed are unable to agree upon a fair market rental (and any
appropriate rental increase provisions) within thirty (30) days after the
appointment of the second, they shall appoint a third qualified appraiser within
ten (10) days after expiration of such 30-day period; if they are unable to
agree upon a third appraiser, either party may, upon not less than five (5) days
notice to the other party, apply to the Presiding Judge of the San Mateo County
Superior Court for the appointment of a third qualified appraiser. Each party
shall bear its own legal fees in connection with appointment of the third
appraiser and shall bear one-half of any other costs of appointment of the third
appraiser and of such third appraiser's fee. The third appraiser, however
selected, shall be a person who has not previously acted for either party in any
capacity. Within thirty (30) days after the appointment of the third appraiser,
a majority of the three appraisers shall set the fair market rental and any
applicable rental increase provisions for the first extended term and shall so
notify the parties. If a majority are unable to agree within the allotted time,
(i) the three appraised fair market rentals shall be added together and divided
by three and the resulting quotient shall be the fair market rental for the
first extended term, and (ii) the applicable rental increase provision shall be
equal to the mathematical average (or the nearest reasonable approximation
thereto) of the two rental increase provisions that are most closely comparable,
which determinations shall be binding on the parties and shall be enforceable in
any further proceedings relating to this Lease. For purposes of this Section
3.1(b), the "fair market rental" of the Property shall be determined with
reference to the then prevailing market rental rates for properties in
northeastern San Mateo County with shell and standard office, research and
development improvements and site (common area) improvements comparable to those
then existing in the Building and on the Property; no equipment or laboratory
improvements shall be taken into account in determining such fair market rental.


        (c) If Tenant properly exercises its right to a second extended term of
this Lease pursuant to Section 2.6 hereof, the minimum rental during such second
extended term shall be determined in the same manner provided in the preceding
paragraph for the first extended term, except that the determination shall be
made as of the commencement of the second extended term.


        (d) The minimum rental amounts specified in this Section 3.1 are based
upon an estimated area of 80,000 square feet for the Building.  If the actual
area of the Building, when completed, is greater or less than such estimated
area, then the minimum rentals specified in this Section 3.1 shall be adjusted
proportionately to the change in the area of the Building, measured in
accordance with the BOMA standard most closely applicable to a two-story,
single-tenant building of this nature.

                                      -6-
<PAGE>

  3.2   Late Charge.  If Tenant fails to pay when due rental or other amounts
        -----------
due Landlord hereunder, such unpaid amounts shall bear interest for the benefit
of Landlord at a rate equal to the lesser of fifteen percent (15%) per annum or
the maximum rate permitted by law, from the date due to the date of payment.  In
addition to such interest, Tenant shall pay to Landlord a late charge in an
amount equal to ten percent (10%) of any installment of minimum rental and any
other amounts due Landlord if not paid in full on or before the fifth (5th) day
after such rental or other amount is due.  Tenant acknowledges that late payment
by Tenant to Landlord of rental or other amounts due hereunder will cause
Landlord to incur costs not contemplated by this Lease, including, without
limitation, processing and accounting charges and late charges which may be
imposed on Landlord by the terms of any loan relating to the Property.  Tenant
further acknowledges that it is extremely difficult and impractical to fix the
exact amount of such costs and that the late charge set forth in this Section
3.2 represents a fair and reasonable estimate thereof.  Acceptance of any late
charge by Landlord shall not constitute a waiver of Tenant's default with
respect to overdue rental or other amounts, nor shall such acceptance prevent
Landlord from exercising any other rights and remedies available to it.
Acceptance of rent or other payments by Landlord shall not constitute a waiver
of late charges or interest accrued with respect to such rent or other payments
or any prior installments thereof, nor of any other defaults by Tenant, whether
monetary or non-monetary in nature, remaining uncured at the time of such
acceptance of rent or other payments.



                               4. STOCK WARRANTS
                                  --------------


  4.1   Stock Warrants.  Within fifteen (15) days after written request by
        --------------
Landlord at any time after execution hereof (but in all events no later than
four (4) months after execution hereof), as a condition to Landlord's
obligations hereunder, Tenant shall deliver to Landlord or Landlord's
designee(s)(which may include any partners, shareholders or affiliates of
Landlord and any affiliates of any such partners, shareholders or affiliates of
Landlord, subject to compliance by Tenant and Landlord with all applicable
securities laws, a warrant registered in Landlord's (or Landlord's designee's)
name to purchase One Hundred Thirty-Nine Thousand Five Hundred Seventy (139,570)
shares of Tenant's preferred stock.  The warrant shall have an exercise price of
Thirteen Dollars ($13) per share and shall be exercisable for a period beginning
on the date on which this Lease is entered and ending on the earlier of (a) the
five year anniversary of the closing of the initial public offering of Tenant's
common stock or (b) the ten (10) year anniversary of the date on which this
Lease is entered, and the warrant shall be on the terms and conditions as set
forth therein.

                                      -7-
<PAGE>

                                5.  CONSTRUCTION
                                    ------------


  5.1   Construction of Improvements.  Landlord shall, at Landlord's cost and
        ----------------------------
expense (except as otherwise provided herein and in Exhibit C), construct
                                                    ---------
Landlord's Work as defined in and in accordance with the terms and conditions of
the Workletter attached hereto as Exhibit C (the "Workletter").  Landlord shall
                                  ---------
use its best efforts to complete such construction in accordance with the
estimated construction schedule attached hereto as Exhibit D as the same may be
                                                   ---------
modified or revised from time to time in accordance with the Workletter.  Tenant
shall, at Tenant's cost and expense (except as otherwise provided herein and in
Exhibit C), construct Tenant's Work as defined in and in accordance with the
---------
terms and conditions of the Workletter.


  5.2   Condition of Property.  Landlord shall deliver the Building Shell and
        ---------------------
other Improvements constructed by Landlord to Tenant clean and free of debris,
promptly upon completion of construction thereof, and Landlord warrants to
Tenant that the Building Shell and other Improvements constructed by Landlord
(i) shall be free from material structural defects and (ii) shall be constructed
in compliance in all respects with any and all applicable specifications
mutually approved by Landlord and Tenant, subject to any changes implemented in
such specifications in accordance with the procedures set forth in the
Workletter.  If it is determined that this warranty has been violated in any
respect, then it shall be the obligation of Landlord, after receipt of written
notice from Tenant setting forth with specificity the nature of the violation,
to promptly, at Landlord's sole cost, correct the condition(s) constituting such
violation.  Tenant's failure to give such written notice to Landlord within one
hundred eighty (180) days after the Commencement Date shall give rise to a
conclusive presumption that Landlord has complied with all Landlord's
obligations hereunder, except with respect to latent defects.  Landlord shall
also assign to Tenant Landlord's rights under all contractor's and other
warranties relating to the Building Shell and other Improvements constructed by
Landlord (provided, however, that Landlord may reserve joint enforcement rights
          --------
under such warranties to the extent of Landlord's continuing obligations or
warranties hereunder), and shall cooperate with Tenant in all reasonable
respects in any enforcement of such assigned warranties.  TENANT ACKNOWLEDGES
THAT THE WARRANTY CONTAINED IN THIS SECTION IS IN LIEU OF ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, WITH RESPECT TO THE PHYSICAL CONDITION OF THE IMPROVEMENTS
TO BE CONSTRUCTED BY LANDLORD AND THAT LANDLORD MAKES NO OTHER WARRANTIES EXCEPT
AS EXPRESSLY SET FORTH IN THIS LEASE.


  5.3   Compliance with Law.  Landlord warrants to Tenant that the Building
        -------------------
Shell and other Improvements constructed by Landlord (when constructed), as they
exist on the Commencement Date, but without regard to the use for which Tenant
will occupy the Property, shall not violate any covenants or restrictions of
record or any applicable building code, regulation or ordinance in effect on the
Commencement Date.  Tenant warrants to Landlord that the Interior Improvements
and any other improvements constructed by Tenant from time to time shall not
violate any applicable building code, regulation or ordinance in effect on the
Commencement Date or at the time such improvements are placed in service.  If it
is determined that this warranty has been violated, then it shall be the
obligation of the warranting party, after written notice from the other party,
to correct the condition(s) constituting such violation promptly, at the
warranting party's sole cost and

                                      -8-
<PAGE>

expense. Tenant acknowledges that neither Landlord nor any agent of Landlord has
made any representation or warranty as to the present or future suitability of
the Property for the conduct of Tenant's business or proposed business thereon.



                            6.  EXPANSION BUILDINGS
                                -------------------



  6.1   First Refusal Right to Lease.
        ----------------------------


        (a) Landlord shall cause to be delivered to Tenant concurrently with the
execution of this Lease an agreement between Tenant and Britannia Gateway II
Limited Partnership ("Britannia Gateway") that provides to Tenant certain rights
of first refusal to lease all or any portion of either of the buildings
designated as the "Expansion Building" and the "FibroGen Building"
(collectively, the "Expansion Buildings") if Tenant is not then in default under
this Lease.  Tenant acknowledges that such rights shall be subordinate to the
rights of FibroGen, Inc. (and its successors in interest) pursuant to that
certain Lease dated December 20, 1996 between Britannia Gateway as Landlord and
FibroGen, Inc. as Tenant.


                      7.  FIRST REFUSAL RIGHT TO PURCHASE
                          -------------------------------


  7.1   Sale Restriction.  Landlord shall not sell the Building, the Site, the
        ----------------
building occupied by Tenant pursuant to the Phase I Lease, or both (for purposes
of this Article 7, the "First Refusal Buildings") at any time during the term of
                        -----------------------
this Lease, except in compliance with this Article 7; provided, however, that
the foregoing restriction shall not apply during any period in which Tenant is
in default under this Lease. The parties acknowledge that the sale of either or
both of the First Refusal Buildings independent of the remainder of the Site as
a separate legal parcel may require a subdivision of the Site.  For purposes of
this Article 7, the terms "purchase," "sell" and "sale" shall be construed to
include, without limitation, any exchange transaction in which Landlord
transfers or conveys its interest in the Site or the First Refusal Buildings (or
any applicable portion thereof) in exchange for other real property or other
non-cash consideration.  Notwithstanding any other provisions of this Article 7,
the provisions of this Article 7 shall not apply to any sale, transfer or other
conveyance of the Site, the First Refusal Buildings or any portion thereof by
Landlord to any person or entity which controls, is controlled by or is under
common control with Landlord, but the provisions of this Article 7 shall
continue to apply to the First Refusal Buildings in the hands of such affiliated
transferee.


  7.2   First Refusal Right.  If, at any time during the term of this Lease,
        -------------------
Landlord receives and wishes to accept a bona fide written offer from a person
                                         ---------
or entity other than Tenant (the "Offeror") to purchase the Site or either or
both of the First Refusal Buildings, and if Tenant is not then in default under
this Lease, Landlord shall give written notice of such offer to Tenant,
specifying the material terms on which the Offeror proposes to purchase such
building or specified portion thereof (the "Offered Property"), and shall offer
to Tenant the opportunity to purchase the Offered Property on the terms
specified in Landlord's notice, as modified by Section 7.3 (if applicable).  For
purposes of this Section 7.2, an offer shall be considered bona fide if it is
                                                           ---------
contained in a letter of intent or

                                      -9-
<PAGE>

other writing signed by the Offeror and specifies the material terms of such
proposed purchase. Tenant shall have twenty (20) days after the date of giving
of such notice by Landlord in which to accept such offer by written notice to
Landlord. Upon such acceptance by Tenant, the Offered Property shall be sold to
Tenant on the terms set forth in Landlord's notice, as modified by Section 7.3
hereof (if applicable), and the parties shall promptly execute an agreement
containing the terms of Landlord's said notice and such other reasonable and
customary terms as the parties shall agree. If Tenant does not accept Landlord's
offer within the allotted time, Landlord shall thereafter have the right to sell
the Offered Property to the Offeror, at any time within one hundred eighty (180)
days after Tenant's failure to accept Landlord's offer, at a price and on other
terms and conditions not more favorable to the Offeror than the price and other
terms of the original offer specified in Landlord's said notice. If Tenant does
not accept Landlord's offer and Landlord does not sell the Offered Property to
the Offeror within one hundred eighty (180) days, this First Refusal Right shall
reattach to the Offered Property.


  7.3   Discount on Purchase Price.  If, at the time Landlord is required to
        --------------------------
give Tenant a notice specified in Section 7.2, Tenant has at least one class of
equity securities listed on any national stock exchange, the NASDAQ National
Market System or the NASDAQ Small Cap Market, or registered for public trading
pursuant to the Securities Exchange Act of 1934, as amended, and Tenant has
received gross revenues of at least one hundred fifty million dollars
($150,000,000) during Tenant's most recently completed fiscal year, then the
price at which Tenant is entitled to purchase the Offered Property pursuant to
the notice specified in Section 7.2 shall be four percent (4%) lower than the
price specified in the bona fide offer.  For purposes of this Section 7.3,
                       ---------
"gross revenues" shall include equity investments, research and development
funding, milestone payments and royalty revenue.


  7.4   Expansion Buildings.  Landlord shall cause to be delivered to Tenant
        -------------------
concurrently with the execution of this Lease an agreement between Tenant and
Britannia Gateway that provides to Tenant certain rights of first refusal to
purchase either or both of the Expansion Buildings, if Tenant is not then in
default under this Lease.  Tenant acknowledges that such rights shall be
subordinate to the rights of FibroGen, Inc. (and its successors in interest)
pursuant to that certain Lease dated December 20, 1996 between Britannia Gateway
as Landlord and FibroGen, Inc. as Tenant.

                                      -10-
<PAGE>

                                   8.  TAXES
                                       -----


  8.1   Personal Property.  Tenant shall be responsible for and shall pay prior
        -----------------
to delinquency all taxes and assessments levied against or by reason of (a) any
and all alterations, additions and items installed or placed on the Property and
taxed as personal property rather than as real property, and/or (b) all personal
property, trade fixtures and other property placed by Tenant on or about the
Property.  Upon request by Landlord, Tenant shall furnish Landlord with
satisfactory evidence of Tenant's payment thereof.  If at any time during the
term of this Lease any of said alterations, additions or personal property,
whether or not belonging to Tenant, shall be taxed or assessed as part of the
Property, then such tax or assessment shall be paid by Tenant to Landlord
immediately upon presentation by Landlord of copies of the tax bills in which
such taxes and assessments are included and shall, for the purposes of this
Lease, be deemed to be personal property taxes or assessments under this Section
8.1.


  8.2   Real Property.  To the extent any real property taxes and assessments on
        -------------
the Property (including, but not limited to, the Improvements) are assessed
directly to Tenant, Tenant shall be responsible for and shall pay prior to
delinquency all such taxes and assessments levied against the Property.  Upon
request by Landlord, Tenant shall furnish Landlord with satisfactory evidence of
Tenant's payment thereof.  To the extent the Property and/or Improvements are
taxed or assessed to Landlord following the Commencement Date, such real
property taxes and assessments shall constitute Operating Expenses (as that term
is defined in Section 9.2 of this Lease) and shall be paid in accordance with
the provisions of Article 9 of this Lease.



                             9.  OPERATING EXPENSES
                                 ------------------


  9.1   Liability For Operating Expenses.
        --------------------------------


        Tenant shall pay to Landlord, at the time and in the manner hereinafter
set forth, as additional rental, an amount equal to one hundred percent (100%)
("Tenant's Operating Cost Share") of the Operating Expenses defined in Section
9.2.


  9.2   Definition Of Operating Expenses.  Subject to the exclusions and
        --------------------------------
provisions hereinafter contained, the term "Operating Expenses" shall mean the
total costs and expenses incurred by or allocable to Landlord for operation and
maintenance of the Improvements and the Property, including, without limitation,
costs and expenses of (i) operation, repair and maintenance of the roof
(structural portions only), exterior walls and other structural portions of the
Building; (ii) liability, casualty or other insurance (including, but not
limited to, earthquake insurance if Landlord in its discretion elects to carry
such insurance, which it is Landlord's present intention to do, so long as such
insurance is reasonably available in the commercial insurance markets) carried
by Landlord with respect to the Property, the Improvements or any portion
thereof; (iii) real and personal property taxes and assessments or substitutes
therefor levied or assessed against the Property or any part thereof, including
(but not limited to) any possessory interest, use, business, license or other
taxes or fees, any taxes imposed directly on rents or services, any assessments
or charges for police

                                      -11-
<PAGE>

or fire protection, housing, transit, open space, street or sidewalk
construction or maintenance or other similar services from time to time by any
governmental or quasi-governmental entity, and any other new taxes on landlords
in addition to taxes now in effect; (iv) supplies, equipment, utilities and
tools used in operation, repair and maintenance of the roof (structural portions
only), exterior walls and other structural portions of the Building; (v) capital
improvements to the Property or the Improvements, amortized over their
respective useful lives, (aa) which reduce or will cause future reduction of
other items of Operating Expenses for which Tenant is otherwise required to
contribute (but not in excess of the cost savings realized) or (bb) which are
required by law, ordinance, regulation or order of any governmental authority
enacted after the date of this Lease; and (vi) any other costs (including, but
not limited to, any parking or utilities fees or surcharges) allocable to or
paid by Landlord, as owner of the Property or Improvements, pursuant to any
applicable laws, ordinances, regulations or orders of any governmental or quasi-
governmental authority or pursuant to the terms of any declarations of
covenants, conditions and restrictions now or hereafter affecting either the
Property or any other property described in Section 9.1(b) or over which Tenant
has non-exclusive usage rights as contemplated in Section 1.1(b) hereof. The
distinction between items of ordinary operating maintenance and repair and items
of a capital nature shall be made in accordance with generally accepted
accounting principles applied on a consistent basis. Notwithstanding any other
provisions of this Section 9.2, Operating Expenses shall not include any costs
attributable to work for which Landlord is required to pay under Section 5.1 or
Exhibit C; any management fees; depreciation on buildings (other than
---------
depreciation on personal property); costs of tenants' improvements; interest;
capital items (other than as expressly provided above); payments on debt
(principal or interest); leasing commissions; costs of goods and services
(including utilities) for which Landlord is reimbursed by tenants or occupants
other than Tenant; costs incurred to perform or correct Landlord's Work
described in Section 5.1 and Exhibit C; costs of correcting defects in or
                             ---------
inadequacy of the initial design of the structure of the Building; legal fees;
amounts paid to affiliates of Landlord (i.e., persons or companies controlled
by, under common control with, or which control, Landlord) for services on or to
the Building, except to the extent that the costs of such services do not exceed
competitive costs of such services were they rendered by a non-affiliate of
Landlord; expenses in connection with services or other benefits provided to one
or more other tenants but not generally available to Tenant; space planning
fees, architectural fees, engineering fees (other than those relating to the
general operation of buildings or common areas), marketing, advertising or any
other expenses incurred in connection with the development or leasing of any
buildings or improvements; costs associated with the operation of the business
of the legal entity which constitutes Landlord as the same is separate and apart
from the costs and operation of the Building, including legal entity formation
and internal entity accounting; any late fees or penalties or similar fees
incurred by Landlord, except to the extent attributable to Tenant's late payment
or nonpayment of minimum rental or additional rent; any debt losses, rent losses
or reserves for bad debt; the cost of any repairs in accordance with the
provisions of this Lease relating to fire, casualty and/or condemnation;
Landlord's incremental costs incurred by reason of Landlord's breach of any
leases with other tenants, and any costs incurred by reason of the breach by
other tenants of such tenants' leases (to the extent recoverable from such
tenants); or any unrecovered expenses incurred as a consequence of the grossly
negligent operation and maintenance, by Landlord or its employees, of those
portions of the Building required to be maintained by Landlord.

                                      -12-
<PAGE>

  9.3   Determination and Payment Of Operating Expenses.
        -----------------------------------------------


        (a) Beginning on the Commencement Date and thereafter from time to time
during the term of this Lease, Landlord shall give Tenant written notice of
amounts paid or to be paid by Landlord for insurance premiums, taxes, structural
repair or maintenance costs or any other amount constituting an Operating
Expense under Section 9.2 hereof, accompanied by copies of premium notices, tax
statements, contractor's invoices or other documentation reasonably evidencing
the amount of the applicable Operating Expense payment, and Tenant shall pay to
Landlord Tenant's Operating Cost Share of each such item of Operating Expenses.
Such payment by Tenant shall be due on or before the later to occur of (i) ten
(10) days after delivery of Landlord's written notice to Tenant or (ii) fourteen
(14) days before the date on which the applicable Operating Expense payment by
Landlord is due (in the case of insurance premiums or other payments to private
parties) or would become delinquent (in the case of taxes or assessments).  In
the event of any subsequent rebate, refund, adjustment or surcharge with respect
to any item of Operating Expenses allocable to any portion of the term of this
Lease, the amount of such rebate, refund, adjustment or surcharge shall be for
Tenant's benefit or account, as the case may be, and shall be adjusted promptly
by a cash payment from Landlord to Tenant or from Tenant to Landlord, as the
case may be.


        (b) Tenant shall be entitled at any time and from time to time, upon
reasonable written notice to Landlord and during normal business hours at
Landlord's office or such other places as Landlord shall designate, to inspect
and examine those books and records of Landlord relating to the determination
and payment of Operating Expenses relating to this Lease, the Property and/or
any other properties described in Section 9.1(b).  If, after inspection and
examination of such books and records, Tenant disputes the amount of any such
Operating Expenses charged by Landlord and the parties are not able to resolve
such dispute by good faith negotiations within (30) days after Tenant notifies
Landlord in writing of the disputed items, then Tenant may, by written notice to
Landlord, request an independent audit of such books and records.  The
independent audit of the books and records shall be conducted by a certified
public accountant acceptable to both Landlord and Tenant or, if the parties are
unable to agree, by a "Big Six" accounting firm designated by Landlord and not
then employed by Landlord or Tenant.  The audit shall be limited to the
determination of the amount of Operating Expenses specified by Tenant in its
notice of objection.  If the audit discloses that the amount of Operating
Expenses billed to Tenant was incorrect, the appropriate party shall promptly
pay to the other party the deficiency or overpayment, as applicable.  All costs
and expenses of the audit shall be paid by Tenant unless the audit shows that
Landlord overstated Operating Expenses covered by the audit by more than five
percent (5%), in which case Landlord shall pay all costs and expenses of the
audit.

                                      -13-
<PAGE>

  9.4   Proration.  If the Commencement Date falls on a day other than the first
        ---------
day of an insurance coverage period, tax fiscal year or other period to which an
Operating Expense is allocable or attributable, or if this Lease terminates on a
day other than the last day of an insurance coverage period, tax fiscal year or
other period to which an Operating Expense is allocable or attributable, then
the amount of Operating Expenses payable by Tenant with respect to such first or
last partial insurance coverage period, tax fiscal year or other period shall be
prorated on the basis which the number of days during such insurance coverage
period, tax fiscal year or other period in which this Lease is in effect bears
to the total number of days in such insurance coverage period, tax fiscal year
or other period.



                                 10.  UTILITIES
                                      ---------


  10.1  Payment.  Commencing with the Commencement Date and thereafter
        -------
throughout the term of this Lease, Tenant shall pay, before delinquency, all
charges for water, gas, heat, light, electricity, power, sewer, telephone, alarm
system, janitorial and other services or utilities supplied to or consumed in or
upon the Property (including any separately metered costs for water, electricity
or other services or utilities furnished with respect to the Common Areas),
including any taxes on such services and utilities.


  10.2  Interruption.  There shall be no abatement of rent or other charges
        ------------
required to be paid hereunder and Landlord shall not be liable in damages or
otherwise for interruption or failure of any service or utility furnished to or
used in the Property because of accident, making of repairs, alterations or
improvements, severe weather, difficulty or inability in obtaining services or
supplies, labor difficulties or any other cause, except to the extent such
interruption or failure of a service or utility is caused by the negligence or
willful misconduct of Landlord or its agents or employees.

                                      -14-
<PAGE>

                            11.  ALTERATIONS; SIGNS
                                 ------------------


  11.1  Right To Make Alterations.  Tenant shall make no alterations, additions
        -------------------------
or improvements to the Property without the prior written consent of Landlord,
which consent shall not be unreasonably withheld or delayed, except that Tenant
shall not be required to obtain such consent for interior non-structural
alterations costing less than One Hundred Thousand Dollars ($100,000) in the
aggregate during any twelve (12) month period.  All such alterations, additions
and improvements shall be completed with due diligence in a workmanlike manner
similar to Landlord's manner of construction and in compliance with plans and
specifications approved in writing by Landlord and all applicable laws,
ordinances, rules and regulations, and to the extent Landlord's consent is not
otherwise required hereunder for such alterations, additions or improvements,
Tenant shall give prompt written notice thereof to Landlord for purposes of
Section 11.2 hereof.  Tenant shall cause any contractors engaged by Tenant for
work on the Property to maintain public liability and property damage insurance,
and other customary insurance, with such terms and in such amounts as Landlord
may reasonably require, naming Landlord and its partners, shareholders, agents
and employees as additional insureds, and shall furnish Landlord with
certificates of insurance or other evidence that such coverage is in effect.  In
addition, in connection with any future alterations, additions or improvements
to the Property (including, but not limited to, any construction or installation
of furnishings, fixtures or equipment), after completion of Tenant's work in the
Building pursuant to the Workletter attached hereto, costing in excess of
Seventy-Five Thousand Dollars ($75,000.00) in the aggregate during any twelve
(12) month period, Tenant shall use reasonable best efforts to engage only union
contractors where available for such work.  Notwithstanding any other provisions
of this Section 11.1, under no circumstances shall Tenant make any structural
alterations or improvements, or any substantial changes to the roof or
substantial equipment installations on the roof, or any substantial changes or
alterations to building systems, without Landlord's prior written consent.


  11.2  Title To Alterations.  All alterations, additions and improvements
        --------------------
installed in, on or about the Property shall be part of the Improvements and the
property of Landlord, unless Landlord elects to require Tenant to remove the
same upon the termination of this Lease, which election shall be made by
Landlord concurrently with its consent to such alterations, additions or
improvements or, if no such consent is required, then within fifteen (15) days
after Landlord is advised in writing of such alterations, additions or
improvements as contemplated in Section 11.1 hereof; provided, however, that the
                                                     --------
foregoing shall not apply (i) to Tenant's movable furniture and trade fixtures
to the Property, or (ii) to any of the Interior Improvements (as defined in
Exhibit C hereto), or any subsequent improvements installed by Tenant at its own
---------
expense, which are readily movable, are not an integral part of the Building's
structure or interior architectural improvements, and are not an integral part
of the Building's HVAC, plumbing or electrical systems or other standard
operating systems.  All of such items described in clause (i) or (ii) of the
preceding sentence (in all events including, but not limited to, lab benches,
fume hoods and cold rooms) may (and, if duly elected by Landlord hereunder,
shall) be removed by Tenant upon the termination of this Lease.  Tenant shall
promptly repair any damage caused by its removal of any such improvements.


  11.3  Tenant Fixtures.  Notwithstanding the provisions of Sections 11.1 and
        ---------------
11.2, Tenant may install, remove and reinstall trade fixtures without Landlord's
prior written consent, except that

                                      -15-
<PAGE>

any fixtures which are affixed to the Property or which affect the exterior or
structural portions of the Building or the building systems shall require
Landlord's written approval. The foregoing shall apply to Tenant's signs, logos
and insignia, all of which Tenant shall have the right to place and remove and
replace (a) only with Landlord's prior written consent as to location, size and
composition, which consent shall not be unreasonably withheld or delayed, and
(b) only in compliance with all restrictions and requirements of applicable law
and of any covenants, conditions and restrictions or other written agreements
now or hereafter applicable to the Property. Tenant shall immediately repair any
damage caused by installation and removal of fixtures under this Section 11.3.


  11.4  No Liens.  Tenant shall at all times keep the Property free from all
        --------
liens and claims of any contractors, subcontractors, materialmen, suppliers or
any other parties employed either directly or indirectly by Tenant in
construction work on the Property.  Tenant may contest any claim of lien, but
only if, prior to such contest, Tenant either (i) posts security in the amount
of the claim, plus estimated costs and interest, or (ii) records a bond of a
responsible corporate surety in such amount as may be required to release the
lien from the Property.  Tenant shall indemnify, defend and hold Landlord
harmless against any and all liability, loss, damage, cost and other expenses,
including, without limitation, reasonable attorneys' fees, arising out of claims
of any lien for work performed or materials or supplies furnished at the request
of Tenant or persons claiming under Tenant.


  11.5  Signs.  Without limiting the generality of the provisions of Section
        -----
11.3 hereof, Tenant shall have the right to display its corporate name and logo
on the Building and in front of the entrance to the Building, subject to
Landlord's prior approval as to location, size and composition (which approval
shall not be unreasonably withheld or delayed) and subject to all restrictions
and requirements of applicable law and of any covenants, conditions and
restrictions or other written agreements now or hereafter applicable to the
Property.  Landlord is hereby deemed to have approved, as to location, any
signage the location of which is expressly designated on the site plan attached
hereto as Exhibit B or on any Approved Plan developed pursuant to the Workletter
          ---------
executed concurrently herewith.

                                      -16-
<PAGE>

                          12.  MAINTENANCE AND REPAIRS
                               -----------------------


  12.1  Landlord's Work.
        ---------------


        (a) Landlord shall repair and maintain or cause to be repaired and
maintained the roof (structural portions only), exterior walls and other
structural portions of the Building.  The cost of all work performed by Landlord
under this Section 12.1 shall be an Operating Expense hereunder, except to the
extent such work (i) is required due to the negligence of Landlord, (ii) is a
capital expense not includible as an Operating Expense under Section 9.2 hereof,
or (iii) is required due to the negligence or willful misconduct of Tenant or
its agents, employees or invitees (in which event Tenant shall bear the full
cost of such work pursuant to the indemnification provided in Section 14.6
hereof).  Tenant knowingly and voluntarily waives the right to make repairs at
Landlord's expense, except to the extent expressly set forth in Section 12.1(b),
or to offset the cost thereof against rent, under any law, statute, regulation
or ordinance now or hereafter in effect.


        (b) If Landlord fails to perform any repairs or maintenance required to
be performed by Landlord under Section 12.1(a) and such failure continues for
thirty (30) days or more after Tenant gives Landlord written notice of such
failure (or, if such repairs or maintenance cannot reasonably be performed
within such 30-day period, then if Landlord fails to commence performance within
such 30-day period and thereafter to pursue such performance diligently to
completion), then Tenant shall have the right to perform such repairs or
maintenance and Landlord shall reimburse Tenant for the reasonable cost thereof
within fifteen (15) days after written notice from Tenant of the completion and
cost of such work, accompanied by copies of invoices or other reasonable
supporting documentation.  Under no circumstances, however, shall Tenant have
any right to offset the cost of any such work against rent or other charges
falling due from time to time under this Lease.


  12.2  Tenant's Obligation For Maintenance.
        -----------------------------------


        (a) Good Order, Condition And Repair.  Except as provided in Section
            --------------------------------
12.1 hereof, Tenant at its sole cost and expense shall keep and maintain in good
and sanitary order, condition and repair the Property and every part thereof,
wherever located, including but not limited to the Common Areas of the Phase II
Site, the roof (non-structural portions only), signs, interior, ceiling,
electrical system, plumbing system, telephone and communications systems of the
Building, the HVAC equipment and related mechanical systems serving the Building
(for which equipment and systems Tenant shall enter into a service contract with
a person or entity designated or approved by Landlord), all doors, door checks,
windows, plate glass, door fronts, exposed plumbing and sewage and other utility
facilities, fixtures, lighting, wall surfaces, floor surfaces and ceiling
surfaces of the Building and all other interior repairs, foreseen and
unforeseen, with respect to the Building, as required.


        (b) Landlord's Remedy.  If Tenant, after notice from Landlord, fails to
            -----------------
make or perform promptly any repairs or maintenance which are the obligation of
Tenant hereunder, Landlord shall have the right, but shall not be required, to
enter the Property and make the repairs or perform the maintenance necessary to
restore the Property to good and sanitary order, condition

                                      -17-
<PAGE>

and repair. Immediately on demand from Landlord, the cost of such repairs shall
be due and payable by Tenant to Landlord.


        (c) Condition Upon Surrender.  At the expiration or sooner termination
            ------------------------
of this Lease, Tenant shall surrender the Property, including any additions,
alterations and improvements thereto, broom clean, in good and sanitary order,
condition and repair, ordinary wear and tear excepted, first, however, removing
all goods and effects of Tenant and all and fixtures and items required to be
removed pursuant to this Lease (including, but not limited to, any such removal
required as a result of an election duly made by Landlord to require such
removal as contemplated in Section 11.2), and repairing any damage caused by
such removal.  Tenant shall not have the right to remove fixtures or equipment
if Tenant is in default hereunder unless Landlord specifically waives this
provision in writing.  Tenant expressly waives any and all interest in any
personal property and trade fixtures not removed from the Property by Tenant at
the expiration or termination of this Lease, agrees that any such personal
property and trade fixtures may, at Landlord's election, be deemed to have been
abandoned by Tenant, and authorizes Landlord (at its election and without
prejudice to any other remedies under this Lease or under applicable law) to
remove and either retain, store or dispose of such property at Tenant's cost and
expense, and Tenant waives all claims against Landlord for any damages resulting
from any such removal, storage, retention or disposal.



                              13.  USE OF PROPERTY
                                   ---------------


  13.1  Permitted Use.  Subject to Sections 13.3 and 13.4 hereof, Tenant shall
        -------------
use the Property solely as a laboratory research and development facility,
including (but not limited to) wet chemistry and biology labs, clean rooms,
pilot scale, clinical scale and GMP scale manufacturing, storage and use of
toxic and radioactive materials incidental to such research and development
activities (subject to the provisions of Section 13.6 hereof), storage and use
of laboratory animals, and other lawful purposes related to or incidental to
such research and development use, and as office space for sales and marketing
functions, and for no other purpose without Landlord's written consent (not to
be unreasonably withheld or delayed).


  13.2  [Omitted.]


  13.3  No Nuisance.  Tenant shall not use the Property for or carry on or
        -----------
permit upon the Property or any part thereof any offensive, noisy or dangerous
trade, business, manufacture, occupation, odor or fumes, or any nuisance or
anything against public policy, nor interfere with the rights or business of
Landlord in the Building or the Property, nor commit or allow to be committed
any waste in, on or about the Property.  Tenant shall not do or permit anything
to be done in or about the Property, nor bring nor keep anything therein, which
will in any way cause the Property to be uninsurable with respect to the
insurance required by this Lease or with respect to standard fire and extended
coverage insurance with vandalism, malicious mischief and riot endorsements.


  13.4  Compliance With Laws.  Tenant shall not use the Property or permit the
        --------------------
Property to be used in whole or in part for any purpose or use that is in
violation of any applicable laws,

                                      -18-
<PAGE>

ordinances, regulations or rules of any governmental agency or public authority.
Tenant shall keep the Property equipped with all safety appliances required by
law, ordinance or insurance on the Property, or any order or regulation of any
public authority, because of Tenant's particular use of the Property. Tenant
shall procure all licenses and permits required for use of the Property. Tenant
shall use the Property in strict accordance with all applicable ordinances,
rules, laws and regulations and shall comply with all requirements of all
governmental authorities now in force or which may hereafter be in force
pertaining to the use of the Property by Tenant, including, without limitation,
regulations applicable to noise, water, soil and air pollution, and making such
nonstructural alterations and additions thereto as may be required from time to
time by such laws, ordinances, rules, regulations and requirements of
governmental authorities or insurers of the Property (collectively,
"Requirements") because of Tenant's construction of improvements in or other
particular use of the Property. Any structural alterations or additions required
from time to time by applicable Requirements because of Tenant's construction of
improvements in or other particular use of the Property shall, at Landlord's
election, either (i) be made by Tenant, at Tenant's sole cost and expense, in
accordance with the procedures and standards set forth in Section 11.1 for
alterations by Tenant, or (ii) be made by Landlord at Tenant's sole cost and
expense, in which event Tenant shall pay to Landlord as additional rent, within
ten (10) days after demand by Landlord, an amount equal to all reasonable costs
incurred by Landlord in connection with such alterations or additions. The
judgment of any court, or the admission by Tenant in any proceeding against
Tenant, that Tenant has violated any law, statute, ordinance or governmental
rule, regulation or requirement shall be conclusive of such violation as between
Landlord and Tenant.


  13.5  Liquidation Sales.  Tenant shall not conduct or permit to be conducted
        -----------------
any auction, bankruptcy sale, liquidation sale, or going out of business sale,
in, upon or about the Property, whether said auction or sale be voluntary,
involuntary or pursuant to any assignment for the benefit of creditors, or
pursuant to any bankruptcy or other insolvency proceeding.

                                      -19-
<PAGE>

  13.6  Environmental Matters.
        ---------------------


        (a) For purposes of this Section, "hazardous substance" shall mean the
substances included within the definitions of the term "hazardous substance"
under (i) the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 U.S.C. (S)(S) 9601 et seq., and the regulations
                                               -- ---
promulgated thereunder, as amended, (ii) the California Carpenter-Presley-Tanner
Hazardous Substance Account Act, California Health & Safety Code (S)(S) 25300 et
                                                                              --
seq., and regulations promulgated thereunder, as amended, (iii) the Hazardous
---
Materials Release Response Plans and Inventory Act, California Heath & Safety
Code (S)(S) 25500 et seq., and regulations promulgated thereunder, as amended,
                  -- ---
and (iv) petroleum; "hazardous waste" shall mean (i) any waste listed as or
meeting the identified characteristics of a "hazardous waste" under the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. (S)(S) 6901 et seq., and
                                                             -- ---
regulations promulgated pursuant thereto, as amended (collectively, "RCRA"),
(ii) any waste meeting the identified characteristics of "hazardous waste,"
"extremely hazardous waste" or "restricted hazardous waste" under the California
Hazardous Waste Control Law, California Health & Safety Code (S)(S) 25100 et
                                                                          --
seq., and regulations promulgated pursuant thereto, as amended (collectively,
---
the "CHWCL"), and/or (iii) any waste meeting the identified characteristics of
"medical waste" under California Health & Safety Code (S)(S) 25015-25027.8, and
regulations promulgated thereunder, as amended; and "hazardous waste facility"
shall mean a hazardous waste facility as defined under the CHWCL.


        (b) Without limiting the generality of the obligations set forth in
Section 13.4 of this Lease:


            (i)   Tenant covenants not to cause or permit any hazardous
substance or hazardous waste to be brought upon, kept, stored or used in or
about the Property without the prior written consent of Landlord, which consent
shall not be unreasonably withheld or delayed, except that Tenant, in connection
with its permitted use of the Property as provided in Section 13.1, may keep,
store and use materials that constitute hazardous substances which are customary
for such permitted use, provided such hazardous substances are kept, stored and
used in quantities which are customary for such permitted use and are kept,
stored and used in full compliance with clauses (ii) and (iii) immediately
below.


            (ii)  Tenant covenants that it will comply with all applicable laws,
rules, regulations, orders, permits, licenses and operating plans of any
governmental authority with respect to the receipt, use, handling, generation,
transportation, storage, treatment and/or disposal of hazardous substances or
wastes by Tenant or its agents or employees, and Tenant will provide Landlord
with copies of all permits, licenses, registrations and other similar documents
that authorize Tenant to conduct any such activities in connection with its
authorized use of the Property from time to time.


            (iii) Tenant agrees that it shall not (A) operate on or about the
Property any facility required to be permitted or licensed as a hazardous waste
facility or for which interim status as such is required, nor (B) store any
hazardous wastes on or about the Property for ninety (90) days or more, nor (C)
conduct any other activities on or about the Property that could result in the

                                      -20-
<PAGE>

Property being deemed to be a "hazardous waste facility" (including, but not
limited to, any storage or treatment of hazardous substances or hazardous wastes
which could have such a result).


            (iv)  Tenant agrees to comply with all applicable laws, rules,
regulations, orders and permits relating to underground storage tanks installed
by Tenant or its agents or employees (including any installation, monitoring,
maintenance, closure and/or removal of such tanks) as such tanks are defined in
California Health & Safety Code (S) 25281(x), including, without limitation,
complying with California Health & Safety Code (S)(S) 25280-25299.7 and the
regulations promulgated thereunder, as amended.  Tenant shall furnish to
Landlord copies of all registrations and permits issued to or held by Tenant
from time to time for any and all underground storage tanks.


            (v)   If applicable, Tenant shall provide Landlord in writing the
following information and/or documentation at the commencement of this Lease and
within sixty (60) days of any change in or addition to the required information
and/or documentation (provided, however, that in the case of the materials
                      --------
described in subparagraphs (B), (C) and (E) below, Tenant shall not be required
to deliver copies of such materials to Landlord but shall maintain copies of
such materials to such extent and for such periods as may be required by
applicable law and shall permit Landlord or its representatives to inspect such
materials during normal business hours at any time and from time to time upon
reasonable notice to Tenant):

                  (A) A list of all hazardous substances and/or wastes that
Tenant receives, uses, handles, generates, transports, stores, treats or
disposes of from time to time in connection with its operations on the Property.

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

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

                  (D) A copy of any Hazardous Materials Management Plan required
from time to time with respect to Tenant's operations at the Property, pursuant
to California Health & Safety Code (S)(S) 25500 et seq., and any regulations
                                                -- ---
promulgated thereunder, as amended.

                  (E) Copies of any Contingency Plans and Emergency Procedures
required of Tenant from time to time due to its operations in accordance with
Title 26, California Code of Regulations (S)(S) 22-67140 et seq., and any
                                                         -------
amendments thereto, and copies of any Training Programs and Records required
under Title 26, California Code of Regulations, (S) 22-67105, and any amendments
thereto.

                  (F) Copies of any biennial reports required to be furnished to
the

                                      -21-
<PAGE>

California Department of Health Services from time to time relating to hazardous
substances or wastes, pursuant to Title 26, California Code of Regulations, (S)
22-66493, and any amendments thereto.

                  (G) Copies of all industrial wastewater discharge permits
issued to or held by Tenant from time to time in connection with its operations
on the Property.

                  (H) Copies of any other lists or inventories of hazardous
substances and/or wastes on or about the Property that Tenant is otherwise
required to prepare and file from time to time with any governmental or
regulatory authority.


            (vi)  Tenant shall secure Landlord's prior written approval for any
proposed receipt, storage, possession, use, transfer or disposal of "radioactive
materials" or "radiation," as such materials are defined in Title 26, California
Code of Regulations (S) 17-30100, and/or any other materials possessing the
characteristics of the materials so defined, which approval Landlord may
withhold in its sole and absolute discretion; provided, that such approval shall
                                              --------
not be required for any radioactive materials for which Tenant has secured prior
written approval of the Nuclear Regulatory Commission and delivered to Landlord
a copy of such approval.  Tenant, in connection with any such authorized
receipt, storage, possession, use, transfer or disposal of radioactive materials
or radiation, shall:

                  (A) Comply with all federal, state and local laws, rules,
regulations, orders, licenses and permits;

                  (B) Maintain, to such extent and for such periods as may be
required by applicable law, and permit Landlord or its representatives to
inspect during normal business hours at any time and from time to time upon
reasonable notice to Tenant, a list of all radioactive materials or radiation
received, stored, possessed, used, transferred or disposed of from time to time,
to the extent not already disclosed through delivery of a copy of a Nuclear
Regulatory Commission approval with respect thereto as contemplated above;
Landlord agrees to use its best efforts to be minimally disruptive to Tenant's
business and operations during such inspections; and

                  (C) Maintain, to such extent and for such periods as may be
required by applicable law, and permit Landlord or its representatives to
inspect during normal business hours at any time and from time to time upon
reasonable notice to Tenant, all licenses, registration materials, inspection
reports, governmental orders and permits in connection with the receipt,
storage, possession, use, transfer or disposal of radioactive materials or
radiation from time to time.

            (vii)  Tenant agrees to comply with any and all applicable laws,
rules, regulations and orders of any governmental authority with respect to the
release into the environment of any hazardous wastes or substances or radiation
or radioactive materials by Tenant or its agents or employees.  Tenant agrees to
give Landlord immediate verbal notice of any unauthorized release of any such
hazardous wastes or substances or radiation or radioactive materials into the
environment, and to follow such verbal notice with written notice to Landlord of

                                      -22-
<PAGE>

such release within twenty-four (24) hours of the time at which Tenant became
aware of such release.


            (viii) Tenant shall indemnify, defend and hold Landlord harmless
from and against any and all claims, losses (including, but not limited to, loss
of rental income and loss due to business interruption), damages, liabilities,
costs, legal fees and expenses of any sort arising out of or relating to (A) any
failure by Tenant to comply with any provisions of this paragraph (b), or (B)
any receipt, use handling, generation, transportation, storage, treatment,
release and/or disposal of any hazardous substance or waste or any radioactive
material or radiation on or about the Property in connection with Tenant's use
or occupancy of the Property or as a result of any intentional or negligent acts
or omissions of Tenant or of any agent or employee of Tenant.

            (ix)   Tenant agrees to cooperate with Landlord in furnishing
Landlord with complete information regarding Tenant's receipt, handling, use,
storage, transportation, generation, treatment and/or disposal of any hazardous
substances or wastes or radiation or radioactive materials. Upon request, Tenant
agrees to grant Landlord reasonable access at reasonable times to the Property
to inspect Tenant's receipt, handling, use, storage, transportation, generation,
treatment and/or disposal of hazardous substances or wastes or radiation or
radioactive materials, without being deemed guilty of any disturbance of
Tenant's use or possession and without being liable to Tenant in any manner.

            (x)    Notwithstanding Landlord's rights of inspection and review
under this paragraph (b), Landlord shall have no obligation or duty to so
inspect or review, and no third party shall be entitled to rely on Landlord to
conduct any sort of inspection or review by reason of the provisions of this
paragraph (b).

            (xi)   If Tenant receives, handles, uses, stores, transports,
generates, treats and/or disposes of any hazardous substances or wastes or
radiation or radioactive materials on or about the Property at any time during
the term of this Lease, then within thirty (30) days after 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 hazardous
substances and wastes, radiation and radioactive materials on and about the
Property. Such study shall be based on a reasonable and prudent level of tests
and investigations of the Property 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 Sections 13.4, 13.6, 14.6 and other applicable
provisions of this Lease.

        (c) Landlord shall indemnify, defend and hold Tenant harmless from and
against any and all claims, losses, damages, liabilities, costs, legal fees and
expenses of any sort arising out of or relating to (i) the presence on the
Property of any hazardous substances or wastes or radiation or radioactive
materials present on the Property as of the Commencement Date (other than as a
result of any intentional or negligent acts or omissions of Tenant or of any
agent or employee of Tenant), and/or (ii) any unauthorized release into the
environment (including, but not limited to, the Site) of any hazardous
substances or wastes or radiation or radioactive materials to the extent such

                                      -23-
<PAGE>

release results from the negligence of or willful misconduct or omission by
Landlord or its agents or employees.


        (d) In the event of any third-party claims, losses, damages,
liabilities, costs, legal fees and expenses of any sort (including, but not
limited to, costs incurred with respect to any government-mandated remediation),
against either Landlord or Tenant or both, arising out of or relating to (i) the
presence on the Property of any hazardous substances or wastes or radiation or
radioactive materials not present on the Property as of the Commencement Date
(except to the extent the presence thereof is already covered by an express
indemnification obligation under Section 13.6(b)(viii) or Section 13.6(c), as
applicable), and/or (ii) any unauthorized release into the environment
(including, but not limited to, the Site) of any hazardous substances or wastes
or radiation or radioactive materials (except to the extent such release is
already covered by an express indemnification obligation under Section
13.6(b)(viii) or Section 13.6(c), as applicable), then (x) Landlord and Tenant
shall cooperate reasonably and in good faith in the defense of such third-party
claims, liabilities and related matters and (y) Landlord and Tenant shall each
bear fifty percent (50%) of the total claims, losses, damages, liabilities,
costs, legal fees and expenses incurred by Landlord and/or Tenant in connection
with matters covered by this Section 13.6(d).  For purposes of the sharing of
expenses contemplated in clause (y) of the preceding sentence, the party
directly paying or incurring such costs or expenses shall be entitled to invoice
the other party from time to time (on a monthly basis or at other appropriate
intervals) for such other party's respective share thereof, which invoice shall
be accompanied by copies of third-party invoices or other reasonable
documentation supporting the invoiced amounts, and the party receiving such
invoice shall pay its share as reflected in the applicable invoice within
fifteen (15) days after receipt thereof, unless the parties agree otherwise.
Within three (3) months after receipt of any such invoice, the party receiving
the invoice shall be entitled, upon reasonable written notice and during normal
business hours, to inspect and examine the books and records of the party
submitting the invoice with respect to the invoiced amounts.  Any dispute with
respect thereto that the parties are unable to resolve by good faith
negotiations shall be resolved by an independent audit using the same procedure
set forth in Section 9.3(b).



                          14.  INSURANCE AND INDEMNITY
                               -----------------------


  14.1  Liability and Property Insurance.
        --------------------------------


        (a) Tenant shall procure and maintain in full force and effect at all
times during the term of this Lease, at Tenant's cost and expense, commercial
general liability insurance to protect against liability arising out of or
related to the use of or resulting from any accident occurring in, upon or about
the Property, with combined single limit of liability of not less than Five
Million Dollars ($5,000,000) per occurrence for bodily injury and property
damage.  Such insurance shall name Landlord and its partners, shareholders,
agents and employees as additional insureds thereunder.  The amount of such
insurance shall not be construed to limit any liability or obligation of Tenant
under this Lease.  Tenant shall also procure and maintain in full force and
effect at all times during the term of this Lease, at Tenant's cost and expense,
product liability insurance on terms and in amounts satisfactory to Landlord in
its reasonable discretion.

                                      -24-
<PAGE>

        (b) Landlord shall procure and maintain in full force and effect at all
times during the term of this Lease, at Landlord's cost and expense (but
reimbursable as an Operating Expense under Section 9.2 hereof), commercial
general liability insurance to protect against liability arising out of or
related to the use of or resulting from any accident occurring in, upon or about
the Property, with combined single limit of liability of not less than Five
Million Dollars ($5,000,000) per occurrence for bodily injury and property
damage.


        (c) Landlord shall procure and maintain in full force and effect at all
times during the term of this Lease, at Landlord's cost and expense (but
reimbursable as an Operating Expense under Section 9.2 hereof), fire and
extended coverage insurance for the Building Shell (as defined in Exhibit C) and
                                                                  ---------
for the improvements in the Common Areas of the Property on a full replacement
cost basis, and for the Interior Improvements in an amount not less than the
total amount contributed by Landlord toward the payment for the Interior
Improvements pursuant to Exhibit C.  Such insurance may include earthquake
                         ---------
coverage to the extent Landlord in its discretion elects to carry such coverage,
and shall have such deductibles and other terms as Landlord in its discretion
determines to be appropriate.  Except as expressly set forth in this paragraph
(c), Landlord shall have no obligation to insure the Interior Improvements and
shall, in all events, have no obligation to insure any other alterations,
additions or improvements installed by Tenant on or about the Property.


        (d) Tenant shall procure and maintain in full force and effect at all
times during the term of this Lease, at Tenant's cost and expense, fire and
extended coverage insurance for the Interior Improvements in an amount not less
than the full replacement cost thereof, less the amount of coverage required to
be carried on the Interior Improvements by Landlord pursuant to Section 14.1(c),
and shall have sole responsibility for insurance coverage of any other
alterations, additions or improvements installed by Tenant on the Property to
the extent Tenant deems such coverage appropriate.  Tenant's insurance under
this paragraph (d) may include earthquake coverage to the extent Tenant in its
discretion elects to carry such coverage, and shall have such deductibles and
other terms as Tenant in its discretion determines to be appropriate.


        (e) All policies of property insurance carried under paragraphs (c) and
(d) of this Section 14.1 shall provide protection against "all perils of direct
physical damage" (as defined by the Insurance Services Office) on all insured
property.  Each insuring party shall cause the other party to be named as an
additional insured on such policy to the extent of the coverage for the Interior
Improvements.  Replacement cost for purposes hereof shall be determined
periodically on such reasonable basis as Landlord and Tenant may determine.
Such insurance policies (i) shall be written by companies rated B+ or better,
with a financial rating of not less than Class VII, in "Best's Insurance Guide,"
and authorized to do business in California; (ii) shall be written to apply to
covered property damage and other covered loss occurring during the policy term,
or the onset of which occurred or arose during such policy term; (iii) shall be
endorsed, in the case of Tenant's property insurance, to name Landlord's lender
("Lender"), if any, holding the lien of a mortgage or deed of trust on the
Building and Interior Improvements from time to time as a loss payee, provided
that a condition of such endorsement shall be that at all times during the
effectiveness of the endorsement there shall be in full force and effect an
agreement among Landlord, Tenant and

                                      -25-
<PAGE>

Lender pursuant to which Lender agrees that, in the event of an insured
occurrence, Lender will make available to Tenant such part or all of the
proceeds of insurance on the Interior Improvements which are received by Lender
as are required for the repair or replacement of the Interior Improvements,
except as otherwise provided in Section 17.1 hereof in the event of a
termination of this Lease; (iv) shall provide that the respective coverages
shall be primary and not contributing with or in excess of any coverage that the
other party may carry; (v) shall be endorsed to provide the other party with not
less than thirty (30) days' notice of cancellation; and (vi) shall provide for a
deductible of not to exceed $10,000 (except in the case of earthquake coverage).
Each party shall deliver to the other party, on or before the Commencement Date,
and thereafter at least ten (10) days before the expiration dates of expiring
policies, certificates of insurance or other satisfactory evidence of the
continuation of such property insurance coverage for the period indicated
therein. If either party fails to procure property insurance or to deliver
certificates or other evidence thereof as required hereunder, the other party
may, at its option and in addition to the other party's other remedies in the
event of a default hereunder, procure the same for the benefit of such party.
If, pursuant to the foregoing sentence, Tenant secures such insurance on
Landlord's behalf, Tenant shall not be entitled to reimbursement of the cost
thereof; if Landlord secures such insurance on Tenant's behalf, Tenant shall
reimburse Landlord for the cost thereof within ten (10) business days after
receipt of Landlord's invoice therefor.


  14.2  Quality Of Policies And Certificates.  All policies of insurance
        ------------------------------------
required hereunder shall be issued by responsible insurers and, in the case of
policies carried or required to be carried by Tenant, shall be written as
primary policies not contributing with and not in excess of any coverage that
Landlord may carry.  Each party shall deliver to the other party certificates of
insurance showing that the insuring party's required policies are in effect.  If
either party fails to acquire, maintain or renew any insurance required to be
maintained by it under this Article 14 or to pay the premium therefor, then the
other party, at its option and in addition to its other remedies, but without
obligation so to do, may procure such insurance, and any sums expended by
Landlord to procure any such insurance on behalf of or in place of Tenant shall
be repaid upon demand, with interest as provided in Section 3.2 hereof.  Tenant
shall obtain written undertakings from each insurer under policies required to
be maintained by it to notify all insureds thereunder at least thirty (30) days
prior to cancellation.


  14.3  Workers' Compensation.  Tenant shall maintain in full force and effect
        ---------------------
during the term of this Lease workers' compensation insurance covering all of
Tenant's employees working on the Property, with a minimum limit of liability of
not less than Five Hundred Thousand Dollars ($500,000) per accident/disease.


  14.4  Waiver Of Subrogation.  To the extent permitted by law and without
        ---------------------
affecting the coverage provided by insurance required to be maintained
hereunder, Landlord and Tenant each waive any right to recover against the other
(i) damage to property, (ii) damage to the Property or any part thereof, or
(iii) claims arising by reason of any of the foregoing, but only to the extent
that any of the foregoing damages and claims under subparts (i)-(iii) hereof are
covered, and only to the extent of such coverage, by insurance actually carried
or required to be carried hereunder by either Landlord or Tenant.  This
provision is intended to waive fully, and for the benefit of each party, any
rights and claims which might give rise to a right of subrogation in any
insurance carrier.  Each

                                      -26-
<PAGE>

party shall procure a clause or endorsement on any property insurance policy
denying to the insurer rights of subrogation against the other party to the
extent rights have been waived by the insured prior to the occurrence of injury
or loss. Coverage provided by insurance maintained by Tenant shall not be
limited, reduced or diminished by virtue of the subrogation waiver herein
contained.


  14.5  Increase In Premiums.  Tenant shall do all acts and pay all expenses
        --------------------
necessary to insure that the Property is not used for purposes prohibited by any
applicable fire insurance, and that Tenant's use of the Property complies with
all requirements necessary to obtain any such insurance.  If Tenant uses or
permits the Property to be used in a manner which increases the existing rate of
any insurance on the Property carried by Landlord, Tenant shall pay the amount
of the increase in premium caused thereby, and Landlord's costs of obtaining
other replacement insurance policies, including any increase in premium, within
ten (10) days after demand therefor by Landlord.


  14.6  Indemnification.
        ---------------


        (a) Tenant shall indemnify, defend and hold Landlord, its partners,
shareholders, officers, directors, agents and employees harmless from any and
all liability for bodily injury to or death of any person, or loss of or damage
to the property of persons, and all actions, claims, demands, costs (including,
but not limited to, reasonable attorneys' fees), damages or expenses arising
therefrom which may be brought or made against Landlord or which Landlord may
pay or incur by reason of the use, occupancy and enjoyment of the Property by
Tenant or any invitees, sublessees, agents or employees of Tenant or holding
under Tenant from any cause whatsoever other than negligence or willful
misconduct or omission by Landlord, its agents or employees.  Landlord, its
partners, shareholders, officers, directors, agents and employees shall not be
liable for, and Tenant hereby waives all claims against such persons for,
damages to goods, wares and merchandise in or upon the Property, or for injuries
to Tenant, its agents or third persons in or upon the Property, from any cause
whatsoever other than negligence or willful misconduct or omission by Landlord,
its agents or employees.  Tenant shall give prompt notice to Landlord of any
casualty or accident in, on or about the Property.


        (b) Landlord shall indemnify, defend and hold Tenant, its shareholders,
officers, directors, agents and employees harmless from liability for bodily
injury to or death of any person, or loss of or damage to the property of
persons, and all actions, claims, demands, costs (including, but not limited to,
reasonable attorneys' fees), damages or expenses arising therefrom which may be
brought or made against Tenant or which Tenant may pay or incur, to the extent
such liabilities or other matters arise by reason of any negligence or willful
misconduct or omission by Landlord, its agents or employees.


  14.7  Blanket Policy.  Any policy required to be maintained hereunder may be
        --------------
maintained under a so-called "blanket policy" insuring other parties and other
locations so long as the amount of insurance required to be provided hereunder
is not thereby diminished.

                                      -27-
<PAGE>

                          15.  SUBLEASE AND ASSIGNMENT
                               -----------------------


  15.1  Assignment And Sublease Of Property.  Tenant shall not have the right or
        -----------------------------------
power to assign its interest in this Lease, or make any sublease of the Property
or any portion thereof, nor shall any interest of Tenant under this Lease be
assignable involuntarily or by operation of law, without on each occasion
obtaining the prior written consent of Landlord, which consent shall not be
unreasonably withheld or delayed.  Any purported sublease or assignment of
Tenant's interest in this Lease requiring but not having received Landlord's
consent thereto shall be void.  Without limiting the generality of the
foregoing, Landlord may withhold consent to any proposed subletting or
assignment solely on the ground, if applicable, that the use by the proposed
subtenant or assignee is reasonably likely to be incompatible with Landlord's
use of any adjacent property owned or operated by Landlord, unless the proposed
use is within the permitted uses specified in Section 13.1, in which event it
shall not be reasonable for Landlord to object to the proposed use.  Any
dissolution, consolidation, merger or other reorganization of Tenant, or any
sale or transfer of the stock of or other interest in Tenant, or any series of
one or more of such events, involving in the aggregate a change of fifty percent
(50%) or more in the beneficial ownership of Tenant or its assets shall be
deemed to be an assignment hereunder and shall be void without the prior written
consent of Landlord as required above.  Notwithstanding the foregoing, (i) an
initial public offering of the common stock of Tenant shall not be deemed to be
an assignment hereunder; and (ii) Tenant shall have the right to assign this
Lease or sublet the Premises, or any portion thereof, without Landlord's consent
(but with prior or concurrent written notice by Tenant to Landlord), to any
entity which controls, is controlled by, or is under common control with Tenant,
or to any entity which results from a merger or consolidation with Tenant, or to
any entity engaged in a joint venture with Tenant, or to any entity which
acquires substantially all of the stock or assets of Tenant, as a going concern,
with respect to the business that is being conducted on the Property
(hereinafter each a "Permitted Transfer").  In addition, a sale or transfer of
the capital stock of Tenant shall be deemed a Permitted Transfer if (x) such
sale or transfer occurs in connection with any bona fide financing or
                                               ---------
capitalization for the benefit of Tenant, or (y) Tenant becomes a publicly
traded corporation.  Landlord shall have no right to terminate this Lease in
connection with, and shall have no right to any sums or other economic
consideration resulting from, any Permitted Transfer.  Except as expressly set
forth in this Section 15.1, however, the provisions of Section 15.2 shall remain
applicable to any Permitted Transfer and the transferee under such Permitted
Transfer shall be and remain subject to all of the terms and provisions of this
Lease.


  15.2  Rights Of Landlord.  Consent by Landlord to one or more assignments of
        ------------------
this Lease, or to one or more sublettings of the Property or any portion
thereof, or collection of rent by Landlord from any assignee or sublessee, shall
not operate to exhaust Landlord's rights under this Article 15, nor constitute
consent to any subsequent assignment or subletting. No assignment of Tenant's
interest in this Lease and no sublease shall relieve Tenant of its obligations
hereunder, notwithstanding any waiver or extension of time granted by Landlord
to any assignee or sublessee, or the failure of Landlord to assert its rights
against any assignee or sublessee, and regardless of whether Landlord's consent
thereto is given or required to be given hereunder.  In the event of a default
by any assignee, sublessee or other

                                      -28-
<PAGE>

successor of Tenant in the performance of any of the terms or obligations of
Tenant under this Lease, Landlord may proceed directly against Tenant without
the necessity of exhausting remedies against any such assignee, sublessee or
other successor. In addition, Tenant immediately and irrevocably assigns to
Landlord, as security for Tenant's obligations under this Lease, all rent from
any subletting of all or a part of the Property as permitted under this Lease,
and Landlord, as Tenant's assignee and as attorney-in-fact for Tenant, or any
receiver for Tenant appointed on Landlord's application, may collect such rent
and apply it toward Tenant's obligations under this Lease; except that, until
the occurrence of an act of default by Tenant, Tenant shall have the right to
collect such rent and to retain all sublease profits.



                    16.  RIGHT OF ENTRY AND QUIET ENJOYMENT
                         ----------------------------------


  16.1  Right Of Entry.  Landlord and its authorized representatives shall have
        --------------
the right to enter the Property at any time during the term of this Lease during
normal business hours and upon not less than twenty-four (24) hours prior
notice, except in the case of emergency (in which event no notice shall be
required and entry may be made at any time), for the purpose of inspecting and
determining the condition of the Property or for any other proper purpose
including, without limitation, to make repairs, replacements or improvements
which Landlord may deem necessary, to show the Property to prospective
purchasers, to show the Property to prospective tenants (but only during the
final year of the term of this Lease), and to post notices of nonresponsibility.
Landlord shall not be liable for inconvenience, annoyance, disturbance, loss of
business, quiet enjoyment or other damage or loss to Tenant by reason of making
any repairs or performing any work upon the Building or the Property or by
reason of erecting or maintaining any protective barricades in connection with
any such work, and the obligations of Tenant under this Lease shall not thereby
be affected in any manner whatsoever, provided, however, Landlord shall use
reasonable efforts to minimize the inconvenience to Tenant's normal business
operations caused thereby.


  16.2  Quiet Enjoyment.  Landlord covenants that Tenant, upon paying the rent
        ---------------
and performing its obligations hereunder and subject to all the terms and
conditions of this Lease, shall peacefully and quietly have, hold and enjoy the
Property throughout the term of this Lease, or until this Lease is terminated as
provided by this Lease.

                                      -29-
<PAGE>

                            17.  CASUALTY AND TAKING
                                 -------------------


  17.1  Damage or Destruction.
        ---------------------


        (a) If the Building, or the Common Areas of the Property necessary for
Tenant's use and occupancy of the Building, are damaged or destroyed in whole or
in part under circumstances in which (i) repair and restoration is permitted
under applicable governmental laws, regulations and building codes then in
effect and (ii) repair and restoration reasonably can be completed within a
period of one (1) year following the date of the occurrence, then Landlord, as
to the Common Areas of the Property and the Building Shell, and Tenant, as to
the Interior Improvements, shall commence and complete, with all due diligence
and as promptly as is reasonably practicable under the conditions then existing,
all such repair and restoration as may be required to return the affected
portions of the Property to the condition existing immediately prior to the
occurrence.  In connection with any such reconstruction of the Interior
Improvements, Landlord shall use its best efforts (including, without
limitation, any necessary negotiation or intercession with Landlord's Lender, if
any) to promptly make any proceeds of Landlord's property insurance with respect
to the Interior Improvements (up to a maximum amount equal to the amounts
originally contributed by Landlord toward the construction of the Interior
Improvements) available to Tenant for such reconstruction, subject only to such
payment controls as Landlord and its Lender and insurer, or any of them, may
reasonably require in order to ensure the proper application of such proceeds
toward the reconstruction of the Interior Improvements pursuant to this Section
17.1.  In the event of damage or destruction the repair of which is not
permitted under applicable governmental laws, regulations and building codes
then in effect, if such damage or destruction (despite being corrected to the
extent then permitted under applicable governmental laws, regulations and
building codes) would still materially impair Tenant's ability to conduct its
business in the Building, then either party may terminate this Lease as of the
date of the occurrence by giving written notice to the other within thirty (30)
days after the date of the occurrence; if neither party timely elects such
termination, or if such damage or destruction does not materially impair
Tenant's ability to conduct its business in the Building, then this Lease shall
continue in full force and effect, except that there shall be an equitable
adjustment in monthly minimum rental and of Tenant's Operating Cost Share of
Operating Expenses, based upon the extent to which Tenant's ability to conduct
its business in the Building is impaired, and Landlord and Tenant respectively
shall restore the Building Shell and the Interior Improvements to a complete
architectural whole and to a functional condition.  In the event of damage or
destruction which cannot reasonably be repaired within one (1) year following
the date of the occurrence, then either Landlord or Tenant, at its election, may
terminate this Lease as of the date of the occurrence by giving written notice
to the other within thirty (30) days after the date of the occurrence; if
neither party timely elects such termination, then this Lease shall continue in
full force and effect and Landlord and Tenant shall each repair and restore
applicable portions of the Property in accordance with the first sentence of
this Section 17.1.


        (b) The respective obligations of Landlord and Tenant pursuant to
Section 17.1(a) are subject to the following limitations:


            (i)   If the occurrence results from a peril which is required to be
insured

                                      -30-
<PAGE>

pursuant to Section 14.1(c) and (d) above, the obligations of either party shall
not exceed the amount of insurance proceeds received from insurers by reason of
such occurrence, plus the amount of the party's permitted deductible (provided
that each party shall be obligated to use its best efforts to recover any
available proceeds from the insurance which it is required to maintain pursuant
to the provisions of Section 14.1(c) or (d), as applicable), and, if such
proceeds are insufficient, either party may terminate the Lease unless the other
party promptly elects and agrees, in writing, to contribute the amount of the
shortfall; and

            (ii)  If the occurrence results from a peril which is not required
to be insured pursuant to Section 14.1(c) and (d) above, Landlord shall be
required to repair and restore the Building Shell and Common Areas to the extent
necessary for Tenant's continued use and occupancy of the Building, and Tenant
shall be required to repair and restore the Interior Improvements to the extent
necessary for Tenant's continued use and occupancy of the Building, provided
                                                                    --------
that each party's obligation to repair and restore shall not exceed an amount
equal to five percent (5%) of the replacement cost of the Building Shell and
Common Area improvements, as to Landlord, or five percent (5%) of the
replacement cost of the Interior Improvements, as to Tenant; if the replacement
cost as to either party exceeds such amount, then the party whose limit has been
exceeded may terminate this Lease unless the other party promptly elects and
agrees, in writing, to contribute the amount of the shortfall.


        (c) If this Lease is terminated pursuant to the foregoing provisions of
this Section 17.1 following an occurrence which is a peril required to be
insured against pursuant to Section 14.1(c) and (d), Landlord and Tenant agree
(and any Lender shall be asked to agree) that there shall be paid from such
insurance proceeds (i) to Landlord, the proceeds of Landlord's property
insurance on the Building Shell, (ii) to Landlord, a portion of the aggregate
proceeds of Landlord's and Tenant's property insurance on the Interior
Improvements equal to a fraction, the numerator of which is the insurable value,
immediately prior to the occurrence, of the Interior Improvements that would
have belonged to Landlord upon termination of this Lease in accordance with the
provisions of Section 11.2 and the denominator of which is the total insurable
value, immediately prior to the occurrence, of all of the Interior Improvements,
and (iii) to Tenant, a portion of the aggregate proceeds of Landlord's and
Tenant's property insurance on the Interior Improvements equal to a fraction,
the numerator of which is the insurable value, immediately prior to the
occurrence, of the Interior Improvements that would have belonged to Tenant upon
termination of this Lease in accordance with the provisions of Section 11.2 and
the denominator of which is the total insurable value, immediately prior to the
occurrence, of all of the Interior Improvements.


        (d) From and after the date of an occurrence resulting in damage to or
destruction of the Building or of the Common Areas necessary for Tenant's use
and occupancy of the Building, and continuing until repair and restoration
thereof are completed, there shall be an equitable abatement of minimum rental
and of Tenant's Operating Cost Share of Operating Expenses based upon the degree
to which Tenant's ability to conduct its business in the Building is impaired.

                                      -31-
<PAGE>

  17.2  Condemnation.
        ------------


        (a) If during the term of this Lease the Property or Improvements, or
any substantial part of either, is taken by eminent domain or by reason of any
public improvement or condemnation proceeding, or in any manner by exercise of
the right of eminent domain (including any transfer in avoidance of an exercise
of the power of eminent domain), or receives irreparable damage by reason of
anything lawfully done under color of public or other authority, then (i) this
Lease shall terminate as to the entire Property at Landlord's election by
written notice given to Tenant within sixty (60) days after the taking has
occurred, and (ii) this Lease shall terminate as to the entire Property at
Tenant's election, by written notice given to Landlord within thirty (30) days
after the nature and extent of the taking have been finally determined, if the
portion of the Property taken is of such extent and nature as substantially to
handicap, impede or permanently impair Tenant's use of the balance of the
Property.  If Tenant elects to terminate this Lease, Tenant shall also notify
Landlord of the date of termination, which date shall not be earlier than thirty
(30) days nor later than ninety (90) days after Tenant has notified Landlord of
Tenant's election to terminate, except that this Lease shall terminate on the
date of taking if such date falls on any date before the date of termination
designated by Tenant.  If neither party elects to terminate this Lease as
hereinabove provided, this Lease shall continue in full force and effect (except
that there shall be an equitable abatement of minimum rental and of Tenant's
Operating Cost Share of Operating Expenses based upon the degree to which
Tenant's ability to conduct its business in the Building is impaired), Landlord
shall restore the Building Shell and Common Area improvements to a complete
architectural whole and a functional condition and as nearly as reasonably
possible to the condition existing before the taking, and Tenant shall restore
the Interior Improvements and Tenant's other alterations, additions and
improvements to a complete architectural whole and a functional condition and as
nearly as reasonably possible to the condition existing before the taking.  In
connection with any such restoration, each party shall use its respective best
efforts (including, without limitation, any necessary negotiation or
intercession with its respective lender, if any) to ensure that any severance
damages or other condemnation awards intended to provide compensation for
rebuilding or restoration costs are promptly collected and made available to
Landlord and Tenant in portions reasonably corresponding to the cost and scope
of their respective restoration obligations, subject only to such payment
controls as either party or its lender may reasonably require in order to ensure
the proper application of such proceeds toward the restoration of the
Improvements.  Each party waives the provisions of Code of Civil Procedure
Section 1265.130, allowing either party to petition the Superior Court to
terminate this Lease in the event of a partial condemnation of the Property.


        (b) The respective obligations of Landlord and Tenant pursuant to
Section 17.2(a) are subject to the following limitations:


            (i)   Each party's obligation to repair and restore shall not
exceed, net of any condemnation awards or other proceeds available for and
allocable to such restoration as contemplated in Section 17.2(a), an amount
equal to five percent (5%) of the replacement cost of the Building Shell and
Common Area improvements, as to Landlord, or five percent (5%) of the
replacement cost of the Interior Improvements, as to Tenant; if the replacement
cost as to either party exceeds such amount, then the party whose limit has been
exceeded may terminate this Lease

                                      -32-
<PAGE>

unless the other party promptly elects and agrees, in writing, to contribute the
amount of the shortfall; and

            (ii)  If this Lease is terminated pursuant to the foregoing
provisions of this Section 17.2, or if this Lease remains in effect but any
condemnation awards or other proceeds become available as compensation for the
loss or destruction of any of the Improvements, then Landlord and Tenant agree
(and any Lender shall be asked to agree) that there shall be paid from such
award or proceeds (i) to Landlord, the award or proceeds attributable or
allocable to the Building Shell and/or Common Area improvements, and (ii) to
Landlord and Tenant, respectively, portions of the award or proceeds
attributable or allocable to the Interior Improvements, in the respective
proportions in which Landlord and Tenant would have shared, under Section
17.1(c), the proceeds of any insurance proceeds following loss or destruction of
such Interior Improvements by an insured casualty.


  17.3  Reservation Of Compensation.  Landlord reserves, and Tenant waives and
        ---------------------------
assigns to Landlord, all rights to any award or compensation for damage to the
Improvements, the Property and the leasehold estate created hereby, accruing by
reason of any taking in any public improvement, condemnation or eminent domain
proceeding or in any other manner by exercise of the right of eminent domain or
of anything lawfully done by public authority, except that (a) Tenant shall be
entitled to any and all compensation or damages paid for or on account of
Tenant's moving expenses, trade fixtures and equipment, and (b) any condemnation
awards or proceeds described in Section 17.2(b)(ii) shall be allocated and
disbursed in accordance with the provisions of Section 17.2(b)(ii),
notwithstanding any contrary provisions of this Section 17.3.


  17.4  Restoration Of Improvements.  In connection with any repair or
        ---------------------------
restoration of Improvements by either party following a casualty or taking as
hereinabove set forth, the party responsible for such repair or restoration
shall, to the extent possible, return such Improvements to a condition
substantially equal to that which existed immediately prior to the casualty or
taking.  To the extent such party wishes to make material modifications to such
Improvements, such modifications shall be subject to the prior written approval
of the other party (not to be unreasonably withheld or delayed), except that no
such approval shall be required for modifications that are required by
applicable governmental authorities as a condition of the repair or restoration,
unless such required modifications would impair or impede Tenant's conduct of
its business in the Building (in which case any such modifications in Landlord's
work shall require Tenant's consent, not unreasonably withheld or delayed) or
would materially and adversely affect the exterior appearance, the structural
integrity or the mechanical or other operating systems of the Building (in which
case any such modifications in Tenant's work shall require Landlord's consent,
not unreasonably withheld or delayed).



                                  18.  DEFAULT
                                       -------


  18.1  Events Of Default.  The occurrence of any of the following shall
        -----------------
constitute an event of default on the part of Tenant:

                                      -33-
<PAGE>

        (a) Abandonment.  Abandonment of the Property.  "Abandonment" is hereby
            -----------
defined to include, but is not limited to, any absence by Tenant from the
Property for fifteen (15) consecutive days or more while Tenant is in default
under any other provision of this Lease.  Tenant waives any right Tenant may
have to notice under Section 1951.3 of the California Civil Code, the terms of
this subsection (a) being deemed such notice to Tenant as required by said
Section 1951.3;


        (b) Nonpayment.  Failure to pay, when due, any amount payable to
            ----------
Landlord hereunder, such failure continuing for a period of five (5) days after
written notice of such failure;


        (c) Other Obligations.  Failure to perform any obligation, agreement or
            -----------------
covenant under this Lease other than those matters specified in subsection (b)
hereof, such failure continuing for fifteen (15) days after written notice of
such failure; provided, however, that if such failure is curable in nature but
              --------
cannot reasonably be cured within such 15-day period, then Tenant shall not be
in default if, and so long as, Tenant promptly (and in all events within such
15-day period) commences such cure and thereafter diligently pursues such cure
to completion;


        (d) General Assignment.  A general assignment by Tenant for the benefit
            ------------------
of creditors;


        (e) Bankruptcy.  The filing of any voluntary petition in bankruptcy by
            ----------
Tenant, or the filing of an involuntary petition by Tenant's creditors, which
involuntary petition remains undischarged for a period of thirty (30) days.  In
the event that under applicable law the trustee in bankruptcy or Tenant has the
right to affirm this Lease and continue to perform the obligations of Tenant
hereunder, such trustee or Tenant shall, in such time period as may be permitted
by the bankruptcy court having jurisdiction, cure all defaults of Tenant
hereunder outstanding as of the date of the affirmance of this Lease and provide
to Landlord such adequate assurances as may be necessary to ensure Landlord of
the continued performance of Tenant's obligations under this Lease.
Specifically, but without limiting the generality of the foregoing, such
adequate assurances must include assurances that the Property continues to be
operated only for the use permitted hereunder.  The provisions hereof are to
assure that the basic understandings between Landlord and Tenant with respect to
Tenant's use of the Property and the benefits to Landlord therefrom are
preserved, consistent with the purpose and intent of applicable bankruptcy laws;


        (f) Receivership.  The employment of a receiver appointed by court order
            ------------
to take possession of substantially all of Tenant's assets or the Property, if
such receivership remains undissolved for a period of thirty (30) days;


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


        (h) Insolvency.  The admission by Tenant in writing of its inability to
            ----------
pay its debts as they become due, the filing by Tenant of a petition seeking any
reorganization or arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future

                                      -34-
<PAGE>

statute, law or regulation, the filing by Tenant of an answer admitting or
failing timely to contest a material allegation of a petition filed against
Tenant in any such proceeding or, if within thirty (30) days after the
commencement of any proceeding against Tenant seeking any reorganization or
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such proceeding
shall not have been dismissed.


  18.2  Remedies Upon Tenant's Default.
        ------------------------------


        (a) Upon the occurrence of any event of default described in Section
18.1 hereof, Landlord, in addition to and without prejudice to any other rights
or remedies it may have, shall have the immediate right to re-enter the Property
or any part thereof and repossess the same, expelling and removing therefrom all
persons and property (which property may be stored in a public warehouse or
elsewhere at the cost and risk of and for the account of Tenant), using such
force as may be necessary to do so (as to which Tenant hereby waives any claim
for loss or damage that may thereby occur).  In addition to or in lieu of such
re-entry, and without prejudice to any other rights or remedies it may have,
Landlord shall have the right either (i) to terminate this Lease and recover
from Tenant all damages incurred by Landlord as a result of Tenant's default, as
hereinafter provided, or (ii) to continue this Lease in effect and recover rent
and other charges and amounts as they become due.


        (b) Even if Tenant has breached this Lease or abandoned the Property,
this Lease shall continue in effect for so long as Landlord does not terminate
Tenant's right to possession under subsection (a) hereof and Landlord may
enforce all of its rights and remedies under this Lease, including the right to
recover rent as it becomes due, and Landlord, without terminating this Lease,
may exercise all of the rights and remedies of a lessor under California Civil
Code Section 1951.4 (lessor may continue lease in effect after lessee's breach
and abandonment and recover rent as it becomes due, if lessee has right to
sublet or assign, subject only to reasonable limitations), or any successor Code
section.  Acts of maintenance, preservation or efforts to relet the Property or
the appointment of a receiver upon application of Landlord to protect Landlord's
interests under this Lease shall not constitute a termination of Tenant's right
to possession.


        (c) If Landlord terminates this Lease pursuant to this Section 18.2,
Landlord shall have all of the rights and remedies of a landlord provided by
Section 1951.2 of the Civil Code of the State of California, or any successor
Code section, which remedies include Landlord's right to recover from Tenant (i)
the worth at the time of award of the unpaid rent and additional rent which had
been earned at the time of termination, (ii) the worth at the time of award of
the amount by which the unpaid rent and additional rent which would have been
earned after termination until the time of award exceeds the amount of such
rental loss that Tenant proves could have been reasonably avoided, (iii) the
worth at the time of award of the amount by which the unpaid rent and additional
rent for the balance of the term after the time of award exceeds the amount of
such rental loss that Tenant proves could be reasonably avoided, and (iv) 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, including,
but not limited to, the cost of recovering possession of the Property, expenses
of reletting,  including necessary repair, renovation and alteration of the
Property, reasonable

                                      -35-
<PAGE>

attorneys' fees, and other reasonable costs. The "worth at the time of award" of
the amounts referred to in clauses (i) and (ii) above shall be computed by
allowing interest at ten percent (10%) per annum from the date such amounts
accrued to Landlord. The "worth at the time of award" of the amounts referred to
in clause (iii) above shall be computed by discounting such amount at one
percentage point above the discount rate of the Federal Reserve Bank of San
Francisco at the time of award.


  18.3  Remedies Cumulative.  All rights, privileges and elections or remedies
        -------------------
of Landlord contained in this Article 18 are cumulative and not alternative to
the extent permitted by law and except as otherwise provided herein.

                                      -36-
<PAGE>

                    19.  SUBORDINATION, ATTORNMENT AND SALE
                         ----------------------------------


  19.1  Subordination To Mortgage.  This Lease, and any sublease entered into by
        -------------------------
Tenant under the provisions of this Lease, shall be subject and subordinate to
any ground lease, mortgage, deed of trust, sale/leaseback transaction or any
other hypothecation for security now or hereafter placed upon the Building, the
Property, or both, and the rights of any assignee of Landlord or of any ground
lessor, mortgagee, trustee, beneficiary or leaseback lessor under any of the
foregoing, and to any and all advances made on the security thereof and to all
renewals, modifications, consolidations, replacements and extensions thereof;
provided, however, that such subordination in the case of any future ground
lease, mortgage, deed of trust, sale/leaseback transaction or any other
hypothecation for security placed upon the Building, the Property, or both shall
be conditioned on Tenant's receipt from the ground lessor, mortgagee, trustee,
beneficiary or leaseback lessor of a Non-Disturbance Agreement in a form
reasonably acceptable to Tenant confirming that so long as Tenant is not in
default hereunder, Tenant's rights hereunder shall not be disturbed by such
person or entity.  Moreover, Tenant's obligations under this Lease shall be
conditioned on Tenant's receipt within thirty (30) days after mutual execution
of this Lease, from any ground lessor, mortgagee, trustee, beneficiary or
leaseback lessor currently owning or holding a security interest in the
Property, of a Non-Disturbance Agreement in a form reasonably acceptable to
Tenant confirming that so long as Tenant is not in default hereunder, Tenant's
rights hereunder shall not be disturbed by such person or entity.  If any
mortgagee, trustee, beneficiary, ground lessor, sale/leaseback lessor or
assignee elects to have this Lease be an encumbrance upon the Property prior to
the lien of its mortgage, deed of trust, ground lease or leaseback lease or
other security arrangement and gives notice thereof to Tenant, this Lease shall
be deemed prior thereto, whether this Lease is dated prior or subsequent to the
date thereof or the date of recording thereof.  Tenant, and any sublessee, shall
execute such documents as may reasonably be requested by any mortgagee, trustee,
beneficiary, ground lessor, sale/leaseback lessor or assignee to evidence the
subordination herein set forth, subject to the conditions set forth above, or to
make this Lease prior to the lien of any mortgage, deed of trust, ground lease,
leaseback lease or other security arrangement, as the case may be, and if Tenant
fails to do so within ten (10) days after demand from Landlord, Tenant
constitutes and appoints Landlord as Tenant's attorney-in-fact and in Tenant's
name, place and stead to do so. Upon any default by Landlord in the performance
of its obligations under any mortgage, deed of trust, ground lease, leaseback
lease or assignment, Tenant (and any sublessee) shall, notwithstanding any
subordination hereunder, attorn to the mortgagee, trustee, beneficiary, ground
lessor, leaseback lessor or assignee thereunder upon demand and become the
tenant of the successor in interest to Landlord, at the option of such successor
in interest, and shall execute and deliver any instrument or instruments
confirming the attornment herein provided for.


  19.2  Sale Of Landlord's Interest.  Upon sale, transfer or assignment of
        ---------------------------
Landlord's entire interest in the Improvements and Property, Landlord shall be
relieved of its obligations hereunder with respect to liabilities accruing from
and after the date of such sale, transfer or assignment, except as otherwise
expressly provided in Section 21.2 hereof.


  19.3  Estoppel Certificates.  Either Tenant or Landlord (the "certifying
        ---------------------
party") shall at any time and from time to time, within ten (10) days after
written request by the other party (the "requesting party"), execute,
acknowledge and deliver to the requesting party a certificate in writing

                                      -37-
<PAGE>

stating: (i) that this Lease is unmodified and in full force and effect, or if
there have been any modifications, that this Lease is in full force and effect
as modified and stating the date and the nature of each modification; (ii) the
date to which rental and all other sums payable hereunder have been paid; (iii)
that the requesting party is not in default in the performance of any of its
obligations under this Lease, that the certifying party has given no notice of
default to the requesting party and that no event has occurred which, but for
the expiration of the applicable time period, would constitute an event of
default hereunder, or if the certifying party alleges that any such default,
notice or event has occurred, specifying the same in reasonable detail; and (iv)
such other matters as may reasonably be requested by the requesting party or by
any institutional lender, mortgagee, trustee, beneficiary, ground lessor,
sale/leaseback lessor or prospective purchaser of the Property or of Tenant's
leasehold interest therein.  Any such certificate provided under this Section
19.3 may be relied upon by any lender, mortgagee, trustee, beneficiary, assignee
or successor in interest to the requesting party, by any prospective purchaser,
by any purchaser on foreclosure or sale, by any grantee under a deed in lieu of
foreclosure of any mortgage or deed of trust on the Property, or by any other
third party.  Failure to execute and return within the required time any
estoppel certificate requested hereunder shall be deemed to be an admission of
the truth of the matters set forth in the form of certificate submitted to the
certifying party for execution.


  19.4  Subordination to CC&R's.  This Lease, and any permitted sublease entered
        -----------------------
into by Tenant under the provisions of this Lease, shall be subject and
subordinate to any declarations of covenants, conditions and restrictions
affecting the Property from time to time, which may include easements, access
rights and similar non-exclusive use rights and privileges in favor of
appropriate third parties; provided, however, that following the execution of
                           --------
this Lease, Landlord shall not record or agree to any such declarations
affecting the Property without the prior written consent of Tenant, which
consent shall not be unreasonably withheld or delayed.  It shall be deemed
reasonable for Tenant to withhold consent to any declaration or provision
thereof which impairs Tenant's rights under this Lease in any material respect.
Tenant agrees to execute, upon request by Landlord, any documents reasonably
required from time to time to evidence such subordination.


  19.5  Mortgagee Protection.
        --------------------


        (a) If, in connection with any future ground lease, mortgage, deed of
trust, sale/leaseback transaction or any other hypothecation for security placed
upon the Building, the Property, or both, the ground lessor, mortgagee, trustee,
beneficiary or leaseback lessor requests any changes in this Lease as a
condition to its willingness to enter into or accept the ground lease, mortgage,
deed of trust, sale/leaseback transaction or other hypothecation for security,
then Tenant shall not unreasonably withhold or delay its consent to any such
requested changes and shall execute, at the request of Landlord, an amendment to
this Lease incorporating the changes thus reasonably consented to by Tenant.  It
shall be deemed reasonable for Tenant to withhold consent to any requested
change which imposes a substantial new monetary obligation on Tenant or which
otherwise substantially impairs Tenant's rights under this Lease.  Tenant's
obligations under this Section 19.5(a) shall be conditioned on Tenant's
concurrent receipt, from the ground lessor, mortgagee, trustee, beneficiary or
leaseback lessor, of a Non-Disturbance Agreement in a form reasonably acceptable
to Tenant confirming that so long as Tenant is not in default hereunder,
Tenant's rights hereunder shall not be disturbed by such person or entity.

                                      -38-
<PAGE>

        (b) If, following a default by Landlord under any mortgage, deed of
trust, ground lease, leaseback lease or other security arrangement covering the
Property, the Property is acquired by the mortgagee, beneficiary, master lessor
or other secured party, or by any other successor owner, pursuant to a
foreclosure, trustee's sale, sheriff's sale, lease termination or other similar
procedure (or deed in lieu thereof), then any such person or entity so acquiring
the Property shall not be:


            (i)   liable for any act or omission of a prior landlord or owner of
the Property (including, but not limited to, Landlord);


            (ii)  subject to any offsets or defenses that Tenant may have
against any prior landlord or owner of the Property (including, but not limited
to, Landlord);


            (iii) bound by any rent or additional rent that Tenant may have paid
in advance to any prior landlord or owner of the Property (including, but not
limited to, Landlord) for a period in excess of one month, or by any security
deposit, cleaning deposit or other prepaid charge that Tenant may have paid in
advance to any prior landlord or owner (including, but not limited to,
Landlord);


            (iv)  liable for any warranties or representations of any nature
whatsoever, whether pursuant to this Lease or otherwise, by any prior landlord
or owner of the Property (including, but not limited to, Landlord) with respect
to the use, construction, zoning, compliance with laws, title, habitability,
fitness for purpose or possession, or physical condition (including, without
limitation, environmental matters) of the Property or Improvements; or


            (v)   liable to Tenant in any amount beyond the interest of such
mortgagee, beneficiary, master lessor or other secured party or successor owner
in the Property as it exists from time to time, it being the intent of this
provision that Tenant shall look solely to the interest of any such mortgagee,
beneficiary, master lessor or other secured party or successor owner in the
Property for the payment and discharge of the landlord's obligations under this
Lease and that such mortgagee, beneficiary, master lessor or other secured party
or successor owner shall have no separate personal liability for any such
obligations.

                                      -39-
<PAGE>

                                 20.  SECURITY
                                      --------


  20.1  Deposit.  Concurrently with Tenant's execution of this Lease, Tenant
        -------
shall deposit with Landlord the sum of One Hundred Fifty-Nine Thousand Two
Hundred and No/100 Dollars ($159,200.00), which sum (the "Security Deposit")
shall be held by Landlord as security for the faithful performance of all of the
terms, covenants, and conditions of this Lease to be kept and performed by
Tenant during the term hereof.  If Tenant defaults with respect to any provision
of this Lease, including, without limitation, the provisions relating to the
payment of rental and other sums due hereunder, Landlord shall have the right,
but shall not be required, to use, apply or retain all or any part of the
Security Deposit for the payment of rental or any other amount which Landlord
may spend or become obligated to spend by reason of Tenant's default or to
compensate Landlord for any other loss or damage which Landlord may suffer by
reason of Tenant's default.  If any portion of the Security Deposit is so used
or applied, Tenant shall, within ten (10) days after written demand therefor,
deposit cash with Landlord in an amount sufficient to restore the Security
Deposit to its original amount and Tenant's failure to do so shall be a material
breach of this Lease.  Landlord shall not be required to keep any deposit under
this Section separate from Landlord's general funds, and Tenant shall not be
entitled to interest thereon.  If Tenant fully and faithfully performs every
provision of this Lease to be performed by it, the Security Deposit, or any
balance thereof, shall be returned to Tenant or, at Landlord's option, to the
last assignee of Tenant's interest hereunder, at the expiration of the term of
this Lease and after Tenant has vacated the Property.  In the event of
termination of Landlord's interest in this Lease, Landlord shall transfer all
deposits then held by Landlord under this Section to Landlord's successor in
interest, whereupon Tenant agrees to release Landlord from all liability for the
return of such deposit or the accounting thereof.



                               21.  MISCELLANEOUS
                                    -------------


  21.1  Notices.  All notices, consents, waivers and other communications which
        -------
this Lease requires or permits either party to give to the other shall be in
writing and shall be deemed given when delivered personally (including delivery
by private courier or express delivery service) or four (4) days after deposit
in the United States mail, registered or certified mail, postage prepaid,
addressed to the parties at their respective addresses as follows:


  To Tenant:       (until Commencement Date)
                   Tularik Inc.
                   270 E. Grand Avenue
                   South San Francisco, CA  94080
                   Attn: David V. Goedel, Chief Executive Officer


  with copy to:    Cooley Godward Castro Huddleson & Tatum
                   Five Palo Alto Square, 4th Floor
                   Palo Alto, CA  94306-2155
                   Attn: Brian Cunningham

                                      -40-
<PAGE>

  To Landlord:     Britannia Biotech Gateway Limited Partnership
                   1939 Harrison Street, Suite 610
                   Park Plaza Building
                   Oakland, CA  94612
                   Attn: T. J. Bristow


  with copy to:    Folger Levin & Kahn LLP
                   Embarcadero Center West
                   275 Battery Street, 23rd Floor
                   San Francisco, CA 94111
                   Attn: Donald E. Kelley, Jr.


  and copy to:     Slough Parks Incorporated
                   33 West Monroe Street
                   Chicago, IL  60603
                   Attn: Marshall Lees


or to such other address as may be contained in a notice at least fifteen (15)
days prior to the address change from either party to the other given pursuant
to this Section.  Rental payments and other sums required by this Lease to be
paid by Tenant shall be delivered to Landlord at Landlord's address provided in
this Section, or to such other address as Landlord may from time to time specify
in writing to Tenant, and shall be deemed to be paid only upon actual receipt.


  21.2  Successors And Assigns.  The obligations of this Lease shall run with
        ----------------------
the land, and this Lease shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that the
original Landlord named herein and each successive Landlord under this Lease
shall be liable only for obligations accruing during the period of its ownership
of the Property, said liability terminating upon termination of such ownership
and passing to the successor lessor, except as otherwise expressly provided in
the following sentence.  Tenant acknowledges that it has been advised by
Landlord that following execution of this Lease, Landlord intends to assign its
rights and obligations hereunder (a) to a limited liability company or other
entity having substantially the same ownership and management as Landlord,
and/or (b) to an entity of which Landlord or an affiliate of Landlord is a
general partner or has management responsibilities and equity participation
comparable to those of a general partner; provided, that any assignee shall
                                          --------
assume any of Landlord's obligations under this Lease.


  21.3  No Waiver.  The failure of Landlord to seek redress for violation, or to
        ---------
insist upon the strict performance, of any covenant or condition of this Lease
shall not be deemed a waiver of such violation, or prevent a subsequent act
which would originally have constituted a violation from having all the force
and effect of an original violation.


  21.4  Severability.  If any provision of this Lease or the application thereof
        ------------
is held to be invalid or unenforceable, the remainder of this Lease or the
application of such provision to persons or circumstances other than those as to
which it is invalid or unenforceable shall not be affected thereby, and each of
the provisions of this Lease shall be valid and enforceable, unless enforcement

                                      -41-
<PAGE>

of this Lease as so invalidated would be unreasonable or grossly inequitable
under all the circumstances or would materially frustrate the purposes of this
Lease.


  21.5  Litigation Between Parties.  In the event of any litigation or other
        --------------------------
dispute resolution proceedings between the parties hereto arising out of or in
connection with this Lease, the prevailing party shall be reimbursed for all
reasonable costs, including, but not limited to, reasonable accountants' fees
and attorneys' fees, incurred in connection with such proceedings (including,
but not limited to, any appellate proceedings relating thereto) or in connection
with the enforcement of any judgment or award rendered in such proceedings.
"Prevailing party" within the meaning of this Section shall include, without
limitation, a party who dismisses an action for recovery hereunder in exchange
for payment of the sums allegedly due, performance of covenants allegedly
breached or consideration substantially equal to the relief sought in the
action.


  21.6  Surrender.  A voluntary or other surrender of this Lease by Tenant, or a
        ---------
mutual termination thereof between Landlord and Tenant, shall not result in a
merger but shall, at the option of Landlord, operate either as an assignment to
Landlord of any and all existing subleases and subtenancies, or a termination of
all or any existing subleases and subtenancies.  This provision shall be
contained in any and all assignments or subleases made pursuant to this Lease.


  21.7  Interpretation.  The provisions of this Lease shall be construed as a
        --------------
whole, according to their common meaning, and not strictly for or against
Landlord or Tenant.  The captions preceding the text of each Section and
subsection hereof are included only for convenience of reference and shall be
disregarded in the construction or interpretation of this Lease.


  21.8  Entire Agreement.  This written Lease, together with the exhibits
        ----------------
hereto, contains all the representations and the entire understanding between
the parties hereto with respect to the subject matter hereof.  Any prior
correspondence, memoranda or agreements are replaced in total by this Lease and
the exhibits hereto.  This Lease may be modified only by an agreement in writing
signed by each of the parties.


  21.9  Governing Law.  This Lease and all exhibits hereto shall be construed
        -------------
and interpreted in accordance with and be governed by all the provisions of the
laws of the State of California.


  21.10 No Partnership.  The relationship between Landlord and Tenant is solely
        --------------
that of a lessor and lessee.  Nothing contained in this Lease shall be construed
as creating any type or manner of partnership, joint venture or joint enterprise
with or between Landlord and Tenant.


  21.11 Financial Information.  From time to time Tenant shall promptly provide
        ---------------------
directly to prospective lenders and purchasers of the Property designated by
Landlord such financial information pertaining to the financial status of Tenant
as Landlord may reasonably request; provided, Tenant shall be permitted to
provide such financial information in a manner which Tenant deems reasonably
necessary to protect the confidentiality of such information.  In addition, from
time to time, Tenant shall provide Landlord with such financial information
pertaining to the financial status of Tenant as Landlord may reasonably request.
Landlord agrees that all financial information supplied to Landlord by Tenant
shall be treated as confidential material, and shall not

                                      -42-
<PAGE>

be disseminated to any party or entity (including any entity affiliated with
Landlord) without Tenant's prior written consent. For purposes of this Section,
without limiting the generality of the obligations provided herein, it shall be
deemed reasonable for Landlord to request copies of Tenant's most recent audited
annual financial statements, or, if audited statements have not been prepared,
unaudited financial statements for Tenant's most recent fiscal year, accompanied
by a certificate of Tenant's chief financial officer that such financial
statements fairly present Tenant's financial condition as of the date(s)
indicated.


        Landlord and Tenant recognize the need of Tenant to maintain the
confidentiality of information regarding its financial status and the need of
Landlord to be informed of, and to provide to prospective lenders and purchasers
of the Property financial information pertaining to, Tenant's financial status.
Landlord and Tenant agree to cooperate with each other in achieving these needs
within the context of the obligations set forth in this Section.  Landlord also
acknowledges and agrees that Tenant's obligations to furnish information to
Landlord under this Section are in all events subject to Tenant's compliance
with, and may therefore be limited by, applicable securities laws.


  21.12 Costs.  If Tenant requests the consent of Landlord under any provision
        -----
of this Lease for any act that Tenant proposes to do hereunder, including,
without limitation, assignment or subletting of the Property, Tenant shall, as a
condition to doing any such act and the receipt of such consent, reimburse
Landlord promptly for any and all reasonable costs and expenses incurred by
Landlord in connection therewith, including, without limitation, reasonable
attorneys' fees.


  21.13 Time.  Time is of the essence of this Lease, and of every term and
        ----
condition hereof.


  21.14 Rules And Regulations.  Tenant shall observe, comply with and obey, and
        ---------------------
shall cause its employees, agents and, to the best of Tenant's ability, invitees
to observe, comply with and obey such rules and regulations as Landlord may
promulgate from time to time for the safety, care, cleanliness, order and use of
the Improvements and the Property.


  21.15 Brokers.  Landlord agrees to pay a brokerage commission to Catalyst Real
        -------
Estate Group, Tenant's broker, in connection with the consummation of this Lease
in accordance with a separate agreement.  Each party represents and warrants
that no other broker participated in the consummation of this Lease and agrees
to indemnify, defend and hold the other party harmless against any liability,
cost or expense, including, without limitation, reasonable attorneys' fees,
arising out of any claims for brokerage commissions or other similar
compensation in connection with any conversations, prior negotiations or other
dealings by the indemnifying party with any other broker.


  21.16 Memorandum Of Lease.  At any time during the term of this Lease, either
        -------------------
party, at its sole expense, shall be entitled to record a memorandum of this
Lease and, if either party so elects, both parties agree to cooperate in the
preparation, execution, acknowledgement and recordation of such document in
reasonable form.


  21.17 Corporate Authority.  The person(s) signing this Lease on behalf of
        -------------------
Tenant warrants

                                      -43-
<PAGE>

that he or she is fully authorized to do so and, by so doing, to bind Tenant. As
evidence of such authority, Tenant shall deliver to Landlord, upon or prior to
execution of this Lease, a certified copy of Tenant's board of directors
authorizing the execution of this Lease and naming the officers that are
authorized to execute this Lease on behalf of Tenant.


  21.18 Execution and Delivery.  This Lease may be executed in one or more
        ----------------------
counterparts and by separate parties on separate counterparts, but each such
counterpart shall constitute an original and all such counterparts together
shall constitute one and the same instrument.


  21.19 Survival.  Without limiting survival provisions which would otherwise be
        --------
implied or construed under applicable law, the provisions of Sections 2.6, 9.4,
11.2, 11.3, 11.4, 13.6, 14.6 and 21.5 hereof shall survive the termination of
this Lease with respect to matters occurring prior to the expiration of this
Lease.


  21.20 Tenant Compensation.  Within five (5) business days after the mutual
        -------------------
execution of this Lease, Landlord shall pay to Tenant Three Hundred Thousand and
No/100 Dollars ($300,000.00).  In addition, if Tenant has paid Carrying Costs
(as that term is defined in Section 6.3 of the Phase I Lease) with respect to
any period of time after the date of mutual execution of this Lease, then,
within five (5) business days after the mutual execution of this Lease, Landlord
will refund to Tenant the amount of such Carrying Costs attributable to the
period following the mutual execution of this Lease.


        IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the day and year first set forth above.



"Landlord"                             Tenant"


BRITANNIA BIOTECH GATEWAY LIMITED        TULARIK INC., a Delaware
PARTNERSHIP,                             corporation
a Delaware limited partnership


By:  BRITANNIA GATEWAY, LLC.,
         By:_____________________________
  a California limited liability       Its:_____________________________
  company
  General Partner                      By: /s/ Luis Bayol
                                           ----------------------------

                                       Its:____________________________


  By: ___________________________

  Name: _________________________

  Title: __________________________


By:  SLOUGH BIOTECH GATEWAY
  INCORPORATED, a Delaware

                                      -44-
<PAGE>

  corporation
  General Partner


  By: ___________________________

  Name: _________________________

  Title: __________________________

                                      -45-
<PAGE>

                                    EXHIBITS
                                    --------



               EXHIBIT A        Real Property Description (Site)


               EXHIBIT B        Site Plan


               EXHIBIT C        Workletter


               EXHIBIT D        Estimated Construction Schedule


               EXHIBIT E        Acknowledgement of Lease Commencement
<PAGE>

                                   EXHIBIT A
                                   ---------


                        REAL PROPERTY DESCRIPTION (SITE)
                        --------------------------------


All that certain real property in the City of South San Francisco, County of San
Mateo, State of California, more particularly described as follows:


Parcel One:


Parcel C as designated on the Map entitled "PARCEL MAP NO. 89-268", being a
resubdivision of Lots 4, 5, 6 and 7 of that certain Map entitled "FINAL MAP
GATEWAY CENTER" (SA-81-74) filed in the office of the Recorder of the County of
San Mateo in Book 107 of Maps at Pages 27, 28, 29 and 30, which Map was filed in
the Office of the Recorder of the County of San Mateo, State of California on
December 12, 1989 in Book 63 of Parcel Maps at Pages 32 and 33.



Parcel Two:


A portion of that certain 0.572 acre parcel of land described in Resolution No.
900 by the City of South San Francisco, recorded August 6, 1943, in Book 1079 of
Official Records of San Mateo County at Page 77, further described as follows:


A portion of Industrial Way, as shown on that certain Map entitled "Final Map
Gateway Center" filed October 1, 1982, in Book 107 of Maps at Pages 27-30, San
Mateo County Records, further described as follows:


Beginning at a point on the southeasterly line of said 0.572 acre parcel, also
being the northwesterly line of Lot 4 as shown on said Map (104 Maps 27-30),
distant thereon North 38 degrees 42 minutes 41 seconds East, 29.29 feet from the
southwest corner of said Lot 4; thence along the aforementioned southeasterly
line, North 38 degrees 42 minutes 41 seconds East, 356.97 feet; then
northeasterly along the arc of a tangent, 980.56 foot radius curve to the left,
through a central angle of 7 degrees 19 minutes 26 seconds, an arc distance of
125.34 feet to a point of reverse curvature; thence northeasterly along the arc
of a tangent, 980.56 foot radius curve to the right, through a central angle of
7 degrees 19 minutes 26 seconds, an arc distance of 125.34 feet to a point of
cusp, being the most northerly point of the aforementioned 0.572 acre parcel;
thence along the northwesterly line of said 0.572 acre parcel, South 38 degrees
42 minutes 41 seconds West, 606.97 feet to a line which bears North 51 degrees
17 minutes 19 seconds West from the point of beginning; thence South 51 degrees
17 minutes 19 seconds East, 16.00 feet to the point of beginning.
<PAGE>

                                   EXHIBIT B
                                   ---------


                                   SITE PLAN
                                   ---------



<PAGE>

                                   EXHIBIT D
                                   ---------


                        ESTIMATED CONSTRUCTION SCHEDULE
                        -------------------------------



<PAGE>

                                   EXHIBIT E
                                   ---------


                     ACKNOWLEDGEMENT OF LEASE COMMENCEMENT
                     -------------------------------------



  This Acknowledgement is executed as of _________________, 199__, by BRITANNIA
BIOTECH GATEWAY LIMITED PARTNERSHIP, a Delaware limited partnership
("Landlord"), and TULARIK INC., a Delaware corporation ("Tenant"), pursuant to
Section 2.4 of the Build-to-Suit Lease dated _____________, 1998 between
Landlord and Tenant (the "Lease") covering premises located at
_________________________________________________________, South San Francisco,
CA 94080 (the "Property").


  Landlord and Tenant hereby acknowledge and agree as follows:


  1.  The Commencement Date under the Lease is __________________, 199__.


  2.  The termination date under the Lease shall be _________________, _____,
subject to any applicable provisions of the Lease for extension or early
termination thereof.


  3.  Based on the final cost of the Improvements and on any change orders,
delays and other factors reflected in that cost, the applicable payment (if any)
required under Paragraph 4 of the Workletter attached to the Lease is as follows
(if none, so state): _________________________________________________________

______________________________________________________________________________.


  4.  Tenant accepts the Property and acknowledges the satisfactory completion
of all Improvements thereon required to be made by Landlord, subject only to any
applicable "punch list" or similar procedures specifically provided under the
Lease or under the Workletter governing such work.


  EXECUTED as of the date first set forth above.



"Landlord"                             Tenant"


BRITANNIA BIOTECH GATEWAY LIMITED        TULARIK INC., a Delaware
PARTNERSHIP,                             corporation
a Delaware limited partnership


By:  BRITANNIA GATEWAY, LLC.,

      By:_______________________

  a California limited liability       Its:_____________________________
  company
  General Partner


  By: ___________________________

  Name: _________________________
<PAGE>

  Title: __________________________


By:  SLOUGH BIOTECH GATEWAY
  INCORPORATED, a Delaware
  corporation
  General Partner



  By:  /s/ T. J. Bristow
      -----------------------------

  Name:   T. J. Bristow
        ---------------------------

  Title:  President
         --------------------------
<PAGE>

BUILD-TO-SUIT LEASE


                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                              Page
<S>                                                                           <C>

1.  PROPERTY.................................................................    1
        1.1   Lease of Property..............................................    1
        1.2   Landlord's Reserved Rights.....................................    1

2.  TERM.....................................................................    2
        2.1   Term...........................................................    2
        2.2   Early Possession...............................................    2
        2.3   Delay In Possession............................................    2
        2.4   Acknowledgement Of Lease Commencement..........................    3
        2.5   Holding Over...................................................    3
        2.6   Option To Extend Term..........................................    3

3.  RENTAL...................................................................    4
        3.1   Minimum Rental.................................................    4
        3.2   Late Charge....................................................    5

4. STOCK WARRANTS............................................................    5
        4.1   Stock Warrants.................................................    5

5.  CONSTRUCTION.............................................................    6
        5.1   Construction of Improvements...................................    6
        5.2   Condition of Property..........................................    6
        5.3   Compliance with Law............................................    6

6.  EXPANSION BUILDINGS......................................................    7
        6.1   First Refusal Right to Lease...................................    7

7.  FIRST REFUSAL RIGHT TO PURCHASE..........................................    7
        7.1   Sale Restriction...............................................    7
        7.2   First Refusal Right............................................    7
        7.3   Discount on Purchase Price.....................................    7
8.  TAXES....................................................................    8
        8.1    Personal Property.............................................    8
        8.2    Real Property.................................................    8

9.  OPERATING EXPENSES.......................................................    8
        9.1    Liability For Operating Expenses..............................    8
        9.2    Definition Of Operating Expenses..............................    8
        9.3    Determination and Payment Of Operating Expenses...............    9
        9.4    Proration.....................................................   10
</TABLE>
<PAGE>

<TABLE>
<S>                                                                             <C>
10.  UTILITIES...............................................................   10
        10.1   Payment.......................................................   10
        10.2   Interruption..................................................   10

11.  ALTERATIONS; SIGNS......................................................   10
        11.1   Right To Make Alterations.....................................   10
        11.2   Title To Alterations..........................................   11
        11.3   Tenant Fixtures...............................................   11
        11.4   No Liens......................................................   11
        11.5   Signs.........................................................   12

12.  MAINTENANCE AND REPAIRS.................................................   12
        12.1   Landlord's Work...............................................   12
        12.2   Tenant's Obligation For Maintenance...........................   12

13.  USE OF PROPERTY.........................................................   13
        13.1   Permitted Use.................................................   13
        13.2   [Omitted.]....................................................   13
        13.3   No Nuisance...................................................   13
        13.4   Compliance With Laws..........................................   13
        13.5   Liquidation Sales.............................................   14
        13.6   Environmental Matters.........................................   14

14.  INSURANCE AND INDEMNITY.................................................   17
        14.1   Liability and Property Insurance..............................   17
        14.2   Quality Of Policies And Certificates..........................   19
        14.3   Workers' Compensation.........................................   19
        14.4   Waiver Of Subrogation.........................................   19
        14.5   Increase In Premiums..........................................   19
        14.6   Indemnification...............................................   19
        14.7   Blanket Policy................................................   20

15.  SUBLEASE AND ASSIGNMENT.................................................   20
        15.1   Assignment And Sublease Of Property...........................   20
        15.2   Rights Of Landlord............................................   21

16.  RIGHT OF ENTRY AND QUIET ENJOYMENT......................................   21
        16.1   Right Of Entry................................................   21
        16.2   Quiet Enjoyment...............................................   21

17.  CASUALTY AND TAKING.....................................................   21
        17.1   Damage or Destruction.........................................   21
        17.2   Condemnation..................................................   23
        17.3   Reservation Of Compensation...................................   24
        17.4   Restoration Of Improvements...................................   24
</TABLE>
                                     -ii-
<PAGE>

<TABLE>
<S>                                                                           <C>
18.  DEFAULT.................................................................   24
        18.1   Events Of Default.............................................   24
                    (a)   Abandonment........................................   25
                    (b)   Nonpayment.........................................   25
                    (c)   Other Obligations..................................   25
                    (d)   General Assignment.................................   25
                    (e)   Bankruptcy.........................................   25
                    (f)   Receivership.......................................   25
                    (g)   Attachment.........................................   25
                    (h)   Insolvency.........................................   25
        18.2   Remedies Upon Tenant's Default................................   25
        18.3   Remedies Cumulative...........................................   26

19.  SUBORDINATION, ATTORNMENT AND SALE......................................   26
        19.1   Subordination To Mortgage.....................................   26
        19.2   Sale Of Landlord's Interest...................................   27
        19.3   Estoppel Certificates.........................................   27
        19.4   Subordination to CC&R's.......................................   27
        19.5   Mortgagee Protection..........................................   28

20.  SECURITY................................................................   29
        20.1   Deposit.......................................................   29

21.  MISCELLANEOUS...........................................................   29
        21.1   Notices.......................................................   29
        21.2   Successors And Assigns........................................   30
        21.3   No Waiver.....................................................   30
        21.4   Severability..................................................   30
        21.5   Litigation Between Parties....................................   30
        21.6   Surrender.....................................................   30
        21.7   Interpretation................................................   31
        21.8   Entire Agreement..............................................   31
        21.9   Governing Law.................................................   31
        21.10  No Partnership................................................   31
        21.11  Financial Information.........................................   31
        21.12  Costs.........................................................   31
        21.13  Time..........................................................   31
        21.14  Rules And Regulations.........................................   31
        21.15  Brokers.......................................................   32
        21.16  Memorandum Of Lease...........................................   32
        21.17  Corporate Authority...........................................   32
        21.18  Execution and Delivery........................................   32
        21.19  Survival......................................................   32
        21.20  Tenant Compensation...........................................   32
</TABLE>

                                     -iii-
<PAGE>

EXHIBITS



EXHIBIT A      Real Property Description (Site)

EXHIBIT B      Site Plan

EXHIBIT C      Workletter

EXHIBIT D      Estimated Construction Schedule

EXHIBIT E      Acknowledgement of Lease Commencement

                                     -iv-