TORREY RESERVE OFFICE LEASE BETWEEN

EXHIBIT 10.26

TORREY RESERVE

OFFICE LEASE

BETWEEN

PACIFIC TORREY RESERVE HOLDINGS, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP

(LANDLORD)

AND

COLLATERAL THERAPEUTICS, INC.,
A CALIFORNIA CORPORATION

(TENANT)

DATE: APRIL 7, 1998

TABLE OF CONTENTS

SUBJECT MATTER PAGE

Article 1 PROJECT, BUILDING AND PREMISES . . . . . . . . . . . . . .1
Article 2 LEASE TERM . . . . . . . . . . . . . . . . . . . . . . . .1
Article 3 BASE RENT. . . . . . . . . . . . . . . . . . . . . . . . .3
Article 4 ADDITIONAL RENT. . . . . . . . . . . . . . . . . . . . . .3
Article 5 SECURITY DEPOSIT . . . . . . . . . . . . . . . . . . . . .7
Article 6 USE. . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Article 7 COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . .7
Article 8 HAZARDOUS MATERIAL . . . . . . . . . . . . . . . . . . . .8
Article 9 UTILITIES AND SERVICES . . . . . . . . . . . . . . . . . .9
Article 10 REPAIRS AND MAINTENANCE. . . . . . . . . . . . . . . . . 10
Article 11 ALTERATIONS AND ADDITIONS. . . . . . . . . . . . . . . . 10
Article 12 COVENANT AGAINST LIENS . . . . . . . . . . . . . . . . . 11
Article 13 EXCULPATION, INDEMNIFICATION, AND
INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . 12
Article 14 DAMAGE AND DESTRUCTION . . . . . . . . . . . . . . . . . 14
Article 15 CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . 15
Article 16 ASSIGNMENT AND SUBLEASING. . . . . . . . . . . . . . . . 16
Article 17 SURRENDER OF PREMISES. . . . . . . . . . . . . . . . . . 18
Article 18 HOLDING OVER . . . . . . . . . . . . . . . . . . . . . . 19
Article 19 ESTOPPEL CERTIFICATES. . . . . . . . . . . . . . . . . . 19
Article 20 SUBORDINATION, NONDISTURBANCE, AND
ATTORNMENT . . . . . . . . . . . . . . . . . . . . . . . 19
Article 21 DEFAULTS AND REMEDIES. . . . . . . . . . . . . . . . . . 20
Article 22 LATE PAYMENTS. . . . . . . . . . . . . . . . . . . . . . 21
Article 23 NON-WAIVER . . . . . . . . . . . . . . . . . . . . . . . 21
Article 24 WAIVER OF RIGHT TO JURY TRIAL. . . . . . . . . . . . . . 22
Article 25 ATTORNEY FEES AND COSTS. . . . . . . . . . . . . . . . . 22
Article 26 LANDLORD'S ACCESS TO PREMISES. . . . . . . . . . . . . . 22
Article 27 SIGNS. . . . . . . . . . . . . . . . . . . . . . . . . . 22
Article 28 TENANT PARKING . . . . . . . . . . . . . . . . . . . . . 23
Article 29 SECURITY . . . . . . . . . . . . . . . . . . . . . . . . 23
Article 30 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . 24

EXHIBIT A SITE PLAN OF PROJECT
EXHIBIT B DIAGRAM OF PREMISES
EXHIBIT C TENANT IMPROVEMENT AGREEMENT
EXHIBIT D NOTICE OF BASIC LEASE INFORMATION
EXHIBIT E RULES AND REGULATIONS
EXHIBIT F ESTOPPEL CERTIFICATE
EXHIBIT G LETTER OF CREDIT

Part I

SUMMARY OF BASIC LEASE INFORMATION

The basic terms of this Lease are as follows. All terms in quotations are
defined terms used elsewhere in this Lease:

1. Date of Lease: 4/9/98
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2. "Landlord": Pacific Torrey Reserve Holdings, L.P., a California limited
partnership
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3. "Tenant": Collateral Therapeutics Inc., a California Corporation
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4. Description of Involved Property:

(a) "Project": That certain mixed-use project commonly referred to as
Torrey Reserve Unit No. 2, as more particularly described on attached
EXHIBIT A.

(b) "Building": Building Two - North Court, 11622 El Camino Real
-----------------------------------------------------------

(d) "Premises": That certain office space consisting of approximately
17,444 Rentable Square Feet of space and 15,512 Usable Square Feet of
space constituting the third floor of the Building, as more
particularly described on Exhibit B, known as Suite TBD.

5. "Lease Term":

(a) Duration: 6 years and 0 months subject to extension in accordance
with Section 2.5;

(b) "Lease Commencement Date": The earlier of (1) the date on which Tenant
occupies for the purpose of operating Tenant's business in all or part
of the Premises, or (2) the date on which the Tenant Improvements are
Substantially Complete (as defined below), subject to acceleration
due to Tenant Delays (as defined in EXHIBIT C);

The anticipated Lease Commencement Date is December 1, 1998.
----------------------

(c) "Lease Expiration Date": The last day of the Lease Term which, subject
to extension or earlier termination upon Tenant's default, will be the
last day of the month in which the SIXTH (6TH) anniversary of the
Lease Commencement Date occurs;

6. "Base Rent":

Lease Year Monthly Base Rent
---------- -----------------

1 $35,760.20 ($2.05 per Rentable Square Foot)
2 $36,632.40 ($2.10 per Rentable Square Foot)
3 $37,504.60 ($2.15 per Rentable Square Foot)
4 $38,376.80 ($2.20 per Rentable Square Foot)
5 $39,249.00 ($2.25 per Rentable Square Foot)
6 $40,121.20 ($2.30 per Rentable Square Foot)

7. Additional Expenses:

(a) "Base Year": The calendar year of 1999
-------------------------------------

(b) Tenant's Share of Direct Expenses: Approximately 31.54%
---------------------

8. Security Deposit: $35,760.20
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9. "Permitted Use": TENANT SHALL USE THE PREMISES ONLY FOR GENERAL OFFICE AND
ADMINISTRATIVE PURPOSES, AND RELATED USES IN COMPLIANCE WITH APPLICABLE
GOVERNMENTAL REGULATIONS AND PRIVATE RESTRICTIONS OF RECORD.

10. Parking: Tenant shall be entitled to the use, at no additional charge, of
62 parking spaces, of which 19 shall be under building reserved parking
spaces in the Building's subterranean parking structure and 43 shall be
unreserved parking spaces, subject to Tenant's pro rata share of Project
handicapped and visitor parking spaces.

11. Addresses for notices:

(a) Landlord's address: c/o American Assets, Inc.
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn.: Property Manager
(b) Tenant's address:

(1) Before Lease Commencement Date: Collateral Therapeutics, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇

(2) After Lease Commencement Date: At the Premises

12. Brokers: CB Commercial (▇▇▇▇ ▇▇▇▇▇▇▇▇) representing Landlord and
▇▇▇▇▇/▇▇▇▇▇▇▇▇▇ & Associates (▇▇▇▇▇ ▇▇▇▇▇) representing Tenant.

13. Letter of Credit: Tenant shall cause Imperial Bank (or another federally
insured financial institution reasonably acceptable to Landlord) to issue an
unconditional irrevocable standby letter of credit ("Letter of Credit") on or
before the Lease Commencement Date in the form of attached EXHIBIT G, and in the
face amount of the sum of $693,018.76 plus the amount of the Additional Tenant
Improvement Allowance (as defined in EXHIBIT "C"), if any, used by Tenant
pursuant to the provisions of attached EXHIBIT "C" (subject to reduction as
provided below). The Letter of Credit must be issued for a term of twelve (12)
months and must be renewed annually by Tenant (in form and content identical to
attached EXHIBIT G, except as otherwise provided below) through to fifth year of
the Lease Term, no later than thirty (30) days prior to the date of the Letter
of Credit's annual expiration; provided, however, (i) the face amount of the
Letter of Credit will decrease by twenty percent (20%) of the original amount of
the Letter of Credit per year, and (ii) in the event the Tenant Improvement
Allowance (as defined in EXHIBIT "C") is less than $461,188.00, then Tenant may
decrease the face amount of the Letter of Credit by the difference between
$461,188.00 and the amount of the actual Tenant Improvement Allowance.
Notwithstanding the provisions of clause (i) of the preceding sentence, the face
amount of the Letter of Credit shall not be decreased upon a renewal if Tenant
is in default under any provision of this Lease at the time of the renewal;
provided, however, that if, at the time of renewal, Tenant is in default, but
the applicable cure period for such default has not expired, then upon timely
cure of such default the Letter of Credit may be decreased by Tenant in
accordance with this paragraph. Concurrent with each renewal, Tenant shall
provide Landlord with the renewal Letter of Credit or other evidence
satisfactory to Landlord that the Letter of Credit has been renewed. The Letter
of Credit will be canceled if Tenant raises at least $20,000,000.00 through an
initial public offering and Tenant is not then in default under any provision of
this Lease.

Each reference in this Lease to any provision in this Summary shall he construed
to incorporate all the terms provided under that provision of the Summary. In
the event of any conflict between a provision in this Summary and a provision in
the balance of the Lease, the latter shall control.

PART II

LEASE PROVISIONS

Article 1
PROJECT, BUILDING AND PREMISES

1.1. LEASE OF PREMISES. Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord the Premises. Tenant acknowledges that Landlord has made
no representation or warranty regarding the condition of the Premises, the
Building, and/or the Project except as specifically stated in this Lease.
Landlord does warrant that all structural components of the Building will be in
good working condition throughout the Lease Term and that the Building and
Premises will be in compliance with all current, applicable building codes and
other governmental regulations as well as the Americans With Disabilities Act
and any applicable Title 24 requirements as of the Lease Commencement Date.

1.2. APPURTENANT RIGHTS. Tenant is granted the right at all times during
the Lease Term (as defined below) to the nonexclusive use, in common with
others, of the main lobby, common corridors and hallways, stairwells, elevators,
restrooms, driveways, underground, unreserved parking areas, and other common
areas located within and below the Building. Landlord, however, has the right
in its sole, reasonable discretion to determine the manner in which all such
common areas are maintained and operated as a first-class office building, and
the use of those common areas shall be subject to the Rules and Regulations (as
defined below), and Landlord reserves the right to change all elements of the
Project, provided that such changes do not materially and adversely affect
Tenant's rights under this Lease.

1.3. PREPARATION OF PREMISES; ACCEPTANCE. The rights and obligations of
the parties regarding the construction of the Premises before the commencement
of the Lease Term are stated in the Tenant Improvement Agreement attached to
this Lease as Exhibit C. If this Lease conflicts with the Tenant Improvement
Agreement, the Tenant Improvement Agreement shall prevail.

1.4. RENTABLE AREA AND USABLE AREA.

1.4.1. STANDARD OF CALCULATION. For purposes of this Lease,
"Rentable Area", "Rentable Square Feet", "Rentable Square Footage", "Usable
Area", "Usable Square Feet", and "Usable Square Footage" will be calculated
under the American National Standard Method for Measuring Floor Area in Office
Buildings, ANSI Z65.1C1996 (revised and adopted June 7, 1996) or successor
standard(s), adopted by the Building Owners and Managers Association
International (BOMA).

1.4.2. VERIFICATION OF RENTABLE AREA OF PREMISES AND BUILDING. The
Rentable Area of the Premises and the Building shall be measured by Landlord's
space planner or architect and approved by Tenant's space planner, prior to the
Lease Commencement Date. That verification shall be made in accordance with the
above Section. If Landlord's space planner or architect certifies in writing
and Tenant's space planner approves in writing that the Rentable Area of the
Premises or the Building is different from that stated in this Lease, all Rent
that is based on that incorrect amount shall be modified in accordance with that
certification. If that certification is made, a copy of such certification
shall be delivered by Landlord to Tenant.

Article 2
LEASE TERM

2.1. LEASE TERM. The provisions of this Lease shall be effective as of the
date of this Lease. The Lease Term shall commence on the Lease Commencement
Date and shall expire on the Lease Expiration Date, unless this Lease is sooner
terminated as provided in this Lease.

2.2. EARLY POSSESSION. Subject to Landlord's determination of the
availability of the Premises, Tenant shall be permitted to move its furniture,
trade fixtures, equipment, machinery, goods and supplies into the Premises prior
to the Lease Commencement Date so long as such access does not, in Landlord's
reasonable judgment, interfere with the conduct of Landlord's contractor or
materially interfere with Landlord's ability to bring the Premises to
Substantial Completion (as defined in Exhibit C) in a timely manner. Landlord
shall use reasonable efforts to make the Premises available to Tenant for the
purposes set forth in the foregoing sentence at least thirty (30) days prior to
the Lease Commencement Date. Such entry upon the Premises shall be subject to
all the provisions of this Lease, except that Tenant shall not be required to
pay Base Rent or Additional Rent as long as Tenant is not operating its business
On the Premises during such early possession period; provided, however, that
Tenant shall have previously provided Landlord with proof of Tenant's insurance
as set forth in Section 13.5 of this Lease. All materials, work, installation,
equipment and decorations of any nature brought upon or installed by Tenant in
the Premises prior to the Lease Commencement Date shall be at Tenant's sole
risk.

2.3. CONFIRMATION OF LEASE INFORMATION. Within thirty (30) days following
the Lease Commencement Date and at any time during the Lease Term, Landlord may
deliver to Tenant a notice in the form set forth in Exhibit D, attached to this
Lease, which Tenant shall execute and return to Landlord within ten (10)
business days after receipt.

2.4. LEASE YEAR. The term "Lease Year" shall mean (i) as to the first
Lease Year, that twelve (12) month period commencing on the Commencement Date
(provided, however, if the Commencement Date falls on a day other than the first
day of a calendar month, then the first Lease Year will be extended through the
final day of the calendar month in which the first anniversary of the
Commencement Date occurs), (ii) as to every subsequent Lease Year other than the
final Lease Year of the Term, the twelve (12) month period following the prior
Lease Year, and (iii) as to the final Lease Year of the Term, the period
commencing on that day immediately following the final day of the penultimate
Lease Year of the Term and ending on the Expiration Date or earlier date of
termination. (As an example of the foregoing, a Commencement Date of April 20,
1951 would yield a first Lease Year of April 20, 1951 through April 30, 1952.
The following Lease Year would be May 1, 1952 through April 30, 1953. A "three
(3) year" Term would end on April 30, 1954.)

2.5. DELAY IN DELIVERY OF PREMISES. If Landlord is unable to deliver
possession of the Premises to Tenant on or before the Lease Commencement Date,
Landlord shall not be subject to any liability for its failure to do so. This
failure shall not affect the validity of this Lease or the obligations of Tenant
under it, but the Lease Term shall commence on the date on which Landlord
delivers possession of the Premises to Tenant; provided, however, if the
Premises are not delivered to Tenant within ninety (90) days of the scheduled
Lease Commencement Date, then Tenant shall have the right to terminate this
Lease at any time prior to delivery of the Premises with no liability to Tenant
or Landlord except for Landlord's obligation to refund to Tenant any security
deposit, Tenant Extra Cost (as defined in EXHIBIT C, and prepaid rents
previously received by Landlord. Landlord has no obligation, but shall make
reasonable efforts, to provide Tenant with thirty (30) days' notice of the
expected Commencement Date.

2.6. OPTION TO EXTEND. Tenant shall have the option to extend the Lease
Term (the "Option to Extend") for one additional term of five (5) years (the
"Extension Term"), provided Tenant is in occupancy of at least seventy-five
(75%) of the Premises at the time of exercise of the Option to Extend, and
Tenant gives Landlord written notice of its election to exercise the Option to
Extend no less than nine (9) months prior to the expiration of the Lease Term.
Time is of the essence of Tenant's notice obligation hereunder.

2.6.1. RESTRICTIONS IN TRANSFERABILITY OF OPTION. The Option to
Extend is personal to the Tenant originally named in this Lease and any of its
Affiliates (as defined in Section 16.6.3) and may not be exercised by any other
Transferee (as defined below).

2.6.2. CONDITIONS TERMINATING TENANT'S RIGHTS TO EXERCISE OPTION.
Tenant shall not have the right to exercise the Option to Extend,
notwithstanding anything set forth above to the contrary: (a) during any period
of time commencing from the date Landlord gives to Tenant a written notice that
Tenant is in default under any provision of this Lease, and continuing until the
default alleged in said notice is cured; (b) during the period of time
commencing on the day after a monetary obligation to Landlord is due from Tenant
and unpaid (without any necessity for notice thereof to Tenant other than as
provided in Section 21.1 below) and continuing until the obligation is paid;
(c) at any time after the occurrence of any default described in this Lease
other than those described in the preceding clauses provided that Tenant shall
have received notice thereof; or (d) in the event that Landlord has given to
Tenant two or more notices of default or a late charge has become payable under
this Lease during the twelve-month period prior to the time that Tenant intends
to exercise the Option. The period of time within which the Option to Extend
may be exercised shall not be extended or enlarged by reason of Tenant's
inability to exercise the Option to Extend because of the foregoing provisions
of this paragraph, even if the effect thereof is to eliminate Tenant's right to
exercise the Option to Extend.

2.6.3. CONDITIONS TERMINATING TENANT'S OPTION RIGHTS. All rights
with respect to the Option to Extend shill terminate and be of no further force
or effect even after Tenant's due and timely exercise of the Option to Extend,
if, after such exercise, but prior to the commencement of the Extension Term,
(a) Tenant fails to pay to Landlord a monetary obligation of Tenant for a period
of ten (10) days after such obligation become due (without any necessity of
Landlord to give notice thereof to Tenant); (b) Tenant fails to cure a
non-monetary default within thirty (30) days after the date the Landlord gives
notice to Tenant of such default; or (c) Landlord gives to Tenant two or more
notices of default or a late charge becomes payable for any such default,
whether or not such defaults are cured.

2.6.4. TERMS AND CONDITIONS OF EXTENSION TERM. If Tenant exercises
the Option for the Extension Term, then the terms and conditions of the renewal
shall be those of this Lease, and the Base Rent shall be the fair rental value
(as defined below in Section 2.4.5(c) of the Premises as determined under
Section 2.6.5 below. With respect to the Extension Term, Tenant shall not be
entitled to any tenant improvement allowance. Tenant's exercise of the Option
shall become irrevocable upon Tenant's provision of written notice to Landlord
of Tenant's election to exercise the Option.

2.6.5. DETERMINATION OF FAIR RENTAL VALUE.

(a) Not later than one hundred eighty (180) days prior to the
last day of the month in which the sixth (6th) anniversary of the Lease
Commencement Date occurs ("Valuation Date"), Landlord and Tenant shall meet in
an effort to negotiate, in good faith, the fair rental value of the Premises as
of the Valuation Date. If Landlord and Tenant have not agreed upon the fair
rental value of the Premises at least one hundred fifty (150) days prior to the
Valuation Date, the fair rental value shall be determined by appraisal as
described below.

(b) If Landlord and Tenant are not able to agree upon the fair
rental value of the Premises within the time period prescribed in Paragraph
2.4.4(a), then Landlord and Tenant shall attempt to agree in good faith upon a
single broker not later than one hundred thirty-five (135) days prior to the
Valuation Date. If Landlord and Tenant are unable to agree upon a single broker
within such time period, then Landlord and Tenant shall each appoint a broker
not later than one hundred twenty-five (125) days prior to the Valuation Date.
Within five (5) days thereafter, the two appointed brokers shall appoint a third
broker. If Landlord and Tenant agree upon a single broker, or if either
Landlord or Tenant fails to appoint its broker within the prescribed time
period, the single broker appointed shall determine the fair rental value of the
Premises. If both parties fail to appoint brokers within the prescribed time
periods, then the first broker thereafter selected by a party shall determine
the fair rental value of the Premises. Each party shall bear the cost of its
own broker and the parties shall share equally the cost of the single or third
broker if applicable. Each such broker must have at least five years experience
in commercial real property in the area in which the Project is located, shall
be licensed as brokers in the State of California and shall not have represented
Landlord or Tenant at any time during the two (2) years immediately prior to the
Valuation Date.

(c) The term "fair rental value" shall mean the then prevailing
rental rate and terms and conditions for comparable office space in the Project
at the time of Commencement of the Extension Term. If a single broker is
chosen, then such broker shall determine the fair rental value of the Premises.
Otherwise, the fair rental value of the Premises shall be the arithmetic average
of the two of the three determinations of value which are closest in amount, and
the third determination of value shall be disregarded. In no event, however,
shall the Base Rent for the Extension Term be less than that of the initial
Lease Term. If the fair rental value is determined to be less than the Base
Rent for the initial Lease Term, Tenant shall have the right to cancel its
election to exercise the Option by providing written notice of such cancellation
to Landlord within ten (10) days after the date of determination of the fair
rental value and in such event the Lease will terminate on the Lease Expiration
Date.

Landlord and Tenant shall instruct the broker(s) to complete their determination
of the fair rental value no later shall 30 days prior to the Valuation Date.
If, notwithstanding such instruction, the fair rental value is not determined
before the first day of the Extension Term, then Tenant shall continue to pay to
Landlord the Base Rental applicable to the Premises immediately prior to such
Extension Term, until the fair rental value of the Premises is determined. When
the fair rental value of the Premises is determined, Landlord shall deliver
notice thereof to Tenant, and Tenant shall pay to Landlord, within ten days
after receipt of such notice, the difference between the Base Rent actually paid
by Tenant to Landlord and the new Base Rent determined hereunder.

Article 3
BASE RENT

3.1. DEFINITION OF "BASE RENT"; NO SET OFF. Tenant shall pay the Base Rent
to Landlord in equal monthly installments as set forth in the Summary of Basic
Lease Information, in advance on or before the first day of every calendar month
during the Lease Term, without any notice, demand, set-off, or deduction.
Payment must be in United States dollars and shall he made at the management
office of the Building or at any other place that Landlord may from time to time
designate in writing.

3.2. INITIAL PAYMENT; PRORATION. The Base Rent for the first full calendar
month of the Lease Term shall be paid when Tenant executes this Lease. If any
payment date (including the Lease Commencement Date) falls on a day other than
the first day of that calendar month, or if any Base Rent payment is for a
period shorter than one calendar month, the Base Rent for that fractional
calendar month shall accrue on a daily basis for each day of that fractional
month at a daily rate equal to 1/365 of the total annual Base Rent. All other
payments or adjustments that are required to be made under the terms of this
Lease shall be prorated on the same basis.

3.3. APPLICATION OF PAYMENTS. All payments received by Landlord from
Tenant shall be applied first to obligations other than Base Rent, and then to
Base Rent (and within any category of obligations, in the order incurred). No
designation by Tenant, either in a separate writing or on a check or money
order, shall modify this clause or have any force or effect.

3.4. CERTIFIED FUNDS. If any two non-cash payments made by Tenant are not
paid by the bank or other institution on which they are drawn because of
Tenant's failure to maintain sufficient funds, Landlord shall have the right,
exercisable by notice to Tenant, to require that Tenant make all future payments
by certified funds or cashier's check.

Article 4
ADDITIONAL RENT

4.1. ADDITIONAL RENT; RENT. In addition to paying the Base Rent specified
in Article 3, Tenant shall pay as additional rent Tenant's Share of the annual
Direct Expenses (as defined below) that are in excess of the amount of Direct
Expenses applicable to the Base Year (as defined below). That additional rent,
together with other amounts of any kind (other than Base Rent) payable by Tenant
to Landlord under the terms of this Lease, shall be collectively referred to in
this Lease as "Additional Rent." Base Rent and Additional Rent are collectively
referred to in this Lease as "Rent". All amounts due under this Article as
Additional Rent are payable for the same periods and in the same manner, time,
and place as the Base Rent. Without limitation on other obligations

of Tenant that survive the expiration of the Lease Term, Tenant's obligations to
pay the Additional Rent provided for in this Article will survive the expiration
of the Lease Term.

4.2. DEFINITIONS. The following definitions apply in this Article (and
elsewhere in this Lease):

4.2.1. BASE YEAR. "Base Year" means the period defined as such in
the Summary of Basic Lease Information.

4.2.2. BUILDING'S OPERATING COSTS. "Building's Operating Costs"
means all expenses, costs, and amounts of every kind or nature that Landlord
reasonably pays or incurs because of or in connection with the operation,
management, maintenance, or repair of the Building. Building Operating Costs
include, without limitation, the following amounts paid or incurred
(collectively, "Operating Costs") relative to the Building (a) the cost of
supplying any utilities to the common areas, (b) janitorial costs and the cost
of operating, managing, maintaining, and repairing the common areas and the
following building systems: utility, mechanical, sanitary, storm drainage, and
elevator, (c) the cost of supplies and tools and of equipment, maintenance, and
service contracts in connection with those systems, (d) the cost of licenses,
certificates, permits, and inspections, (e) the cost of contesting the validity
or applicability of any government enactments that may affect the Operating
Expenses (as defined below), (f) costs incurred in connection with the
implementation and operation of a parking or transportation management program
or similar program, (g) the cost of insurance carried by Landlord pursuant to
this Lease to the extent such insurance is carried in the Base Year, in amounts
reasonably detained by Landlord and any deductibles or coinsurance amounts,
(h) fees, charges, and other costs including management fees (or amounts in lieu
of such fees), consulting fees, legal fees, and accounting fees of all persons
engaged by Landlord or otherwise reasonably incurred by Landlord in connection
with the operation, management, maintenance, and repair of the Building and the
Project, provided that with regard to management fees only, such fees shall not
exceed the rate charged in the Base Year, (i) the cost of parking area
maintenance, repair, and restoration, including resurfacing, repainting,
restriping, and cleaning, (j) wages, salaries, and other reasonable compensation
and benefits of all persons engaged in the operation, maintenance or security of
the Building and the Project plus employer's Social Security taxes, unemployment
taxes, insurance, and any other taxes imposed on Landlord that may be levied on
those wages, salaries, and other reasonable compensation and benefits. If any
of Landlord's employees provide services for more than one project of Landlord,
only the prorated portion of those employees' wages, salaries, other reasonable
compensation and benefits, and taxes reflecting the percentage of their working
time devoted to the Project shall be included in Building Operating Costs,
(k) payments under any easement, license, operating agreement, declaration,
restrictive covenant, or instrument relating to the sharing of costs, (1)
amortization (including interest on the unamortized cost at a rate equal to the
floating commercial loan rate announced from time to time by Bank of America as
its reference rate plus two (2) percentage points per annum) of the cost of
acquiring or renting personal property used in the maintenance, repair, and
operation of the Building and/or the Project, (m) the cost of capital
improvements or other costs incurred that (1) are intended as a labor saving
device or to effect other economies in the maintenance or operation of all or
part of the Building and/or the Project, or (2) are required under any
government law or regulation but that were not required when permits for
construction were obtained. Landlord estimates that its management fees for the
Base year will consist of five percent (5%) of the total gross revenues of the
Building, and shall hold the percentage of the total gross revenues of the
Building charged as management fees constant over the Lease Term. All permitted
capital expenditures shall be amortized (including interest on the unamortized
cost at the rate stated in subparagraph (1)) over their useful life, as
reasonably determined by Landlord in accordance with generally accepted
accounting practices; but Building Operating Costs will exclude the following
("Excluded Costs ): (a) depreciation, interest, and amortization on mortgages or
ground lease payments, except as otherwise provided herein, (b) legal fees
incurred in negotiating and enforcing tenant leases, (c) real estate brokers'
leasing commissions, (d) initial improvements or alterations to tenant spaces,
(e) the cost of providing any service directly to and paid directly by any
tenant, (f) any costs expressly excluded from Operating Expenses elsewhere in
this Lease, (g) costs of any items for which Landlord receives reimbursement (or
could receive without filing a legal action) from insurance proceeds or a third
party (insurance proceeds shall be excluded from Operating Expenses in the year
in which they are received), but any deductible amount under any insurance
policy shall be included within Operating Expenses, (h) costs of capital
improvements, except as specifically provided above, (i) costs incurred for the
benefit of a single tenant (for example, tenant improvement costs to build-out a
particular suite) or the cost of damages caused by another tenant, (j) costs
incurred due to Landlord's breach of a lease, law, or ordinance, (k) repairs
necessitated by the gross negligence or willful misconduct of Landlord, and
(1) Landlord's general corporate overhead and administrative expenses not
incurred in the operation and maintenance of the Building. In the event that
any policy of insurance carried by Landlord pursuant to Section 13.9 is not
included in the Operating Expenses for the Base Year, and Landlord elects to
procure such insurance after the Base Year, the Base Year Operating Expenses
shall be adjusted to reflect the Operating Expenses Landlord would have paid had
Landlord carried such insurance in the Base Year. Additionally, in the event
that any maintenance, repair or replacement responsibilities of Landlord are
scheduled, pursuant to the manufacturer's specifications or any existing service
agreement, for performance in the Base Year and are deferred until after the
expiration of the Base Year, the Base Year Expenses shall be adjusted to reflect
the Operating Expenses associated with such deferred maintenance, repair or
replacement that Landlord would have paid had Landlord performed such
responsibility during the Base Year. Notwithstanding the specific itemization
elsewhere in this Lease as to certain components of Operating Expenses, Landlord
shall not be entitled to recover more than one hundred percent (100%) of the
Operating Expenses.

4.2.3. BUILDING'S PRO RATA SHARE. "Building's Pro Rata Share"
means a fraction, the numerator
of which is the total aggregate Rentable Square Feet in the Building, and the
denominator of which is the total aggregate Rentable Square Feet in all of the
buildings in the Project for which certificates of occupancy have been

issued. The Building's Pro Rata Share will be calculated as of January 1 of
each calendar year; which calculation will remain in effect (regardless of
changes to the Project) until the following January 1.

4.2.4. DIRECT EXPENSES. "Direct Expenses" means the sum of
Operating Expenses plus Tax Expenses (as such terms are defined below).

4.2.5. EXPENSE YEAR. "Expense Year" means each calendar year in
which any portion of the Lease Term falls, through and including the calendar
year in which the Lease Term expires

4.2.6. OPERATING EXPENSES. "Operating Expenses" means the sum of
(i) all Building Operating Costs, (ii) the Building's Pro Rate Share of the
Project Operating Costs, and (iii) any costs or expenses payable pursuant to the
provisions of any reciprocal easement and maintenance agreement (or similar
agreement) recorded against the Project either now or in the future including
any owner's association or similar fees, assessments or dues presently or
hereafter established for the Project.

4.2.7. PROJECT OPERATING COSTS. "Project Operating Costs" means
(i) all expenses, costs, and amounts of every kind or nature which are incurred
because of or in connection with the operation, management, maintenance, or
repair of the common areas of the Project, and (ii) all Taxes relating to or
assessed against the common areas of the Project. Project Operating Costs
including all Operating Costs paid or incurred in connection with the common
areas of the Project but excluding any Building Operating Costs and Excluded
Costs (relative to the Project).

4.2.8. TENANT'S SHARE. "Tenant's Share" means a percentage which
is calculated by multiplying the number of Rentable Square Feet of the Premises
by 100 and dividing the product by the total Rentable Square Feet in the
Building. If either the Premises or the Building are expanded or reduced
pursuant to Section 1.4.2, Tenant's Share shall be appropriately adjusted.
Tenant's Share for the Expense Year in which that change occurs shall be
determined on the basis of the number of days during the Expense Year in which
each such Tenant's Share was in effect.

4.3. ADJUSTMENT OF OPERATING EXPENSES. Operating Expenses shall be
adjusted as follows:

4.3.1. GROSS UP ADJUSTMENT WHEN BUILDING IS LESS THAN FULLY
OCCUPIED. If the occupancy of the Building during any part of any Expense Year
(including the Base Year) is less than 95%, Landlord shall make an appropriate
adjustment of the variable components of Operating Expenses for that Expense
Year, as reasonably determined by Landlord using sound accounting and management
principles, to determine the amount of Operating Expenses that would have been
incurred had the Building been 95% occupied. This amount shall be considered to
have been the amount of Operating Expenses for that Expense Year. For purposes
of this paragraph, "variable components" include only those component expenses
that are affected by variations in occupancy levels.

4.3.2. ADJUSTMENT WHEN LANDLORD DOES NOT FURNISH A SERVICE TO ALL
TENANTS. If, during any part of any Expense Year (including the Base Year),
Landlord is not furnishing a particular service or work (the cost of which, if
furnished by Landlord, would be included in Operating Expenses) to a tenant
(other than Tenant) that has undertaken to perform such service or work in lieu
of receiving it from Landlord, Operating Expenses for that Expense Year shall be
considered to be increased by an amount equal to the additional Operating
Expenses that Landlord would reasonably have incurred during such period if
Landlord had furnished such service or work to that tenant; provided that such
increase is applicable to both the Base Year and the subsequent Expense Year in
which such additional cost is attributable.

4.4. TAX EXPENSES.

4.4.1. DEFINITION OF TAX EXPENSES. "Tax Expenses" means the sum of
all federal, state, county, or local government or municipal taxes, fees,
charges, or other impositions of every kind or nature, whether general, special,
ordinary, or extraordinary ("Taxes") that are paid or incurred by Landlord
because of or in connection with the ownership, leasing, and operating of the
Building. Taxes include taxes, fees, and charges such as real property taxes,
general and special assessments, transit taxes, leasehold taxes, and taxes based
on the receipt of rent (including gross receipts or sales taxes applicable to
the receipt of rent, unless required to be paid by Tenant); personal property
taxes imposed on the fixtures, machinery, equipment, apparatus, systems, and
equipment; appurtenances; furniture; and other personal property used in
connection with the Building and the common areas of the Project.
Notwithstanding the foregoing, the following shall be excluded from Taxes: (a)
all excess profits taxes, franchise taxes, gift taxes, capital stock taxes,
inheritance and succession taxes, estate taxes, federal, state, and local income
taxes, and other taxes applied or measured by Landlord's general or net income
(as opposed to rents, receipts, or income attributable to operations at the
Building), (b) any items included as Operating Expenses, (c) personal property
taxes attributable to property owned or installed by or for other tenants of the
Building, (d) costs or fees payable to public authorities in connection with any
future construction, renovation and/or improvements to the Project, including
fees for transit, housing, schools, open space, child care, arts programs,
traffic mitigation measures, environmental impact reports, traffic studies, and
transportation system management plans, except to the extent arising from
Tenant's Alterations, (e) reserves for future taxes, or (f) any documentary
transfer taxes arising out of a voluntary transfer or sale by Landlord of all or
a portion of the Project. If a reduction in Tax Expenses is obtained for any
Expense Year during which Tenant paid Tenant's Share of such Tax Expenses, then
Tax Expenses for such year shall be retroactively adjusted and

Landlord shall provide Tenant with a credit against Tenant's next due
obligations for Additional Rent or, if none, refund such amount to Tenant within
thirty (30) days based on such adjustment.

4.4.2. ADJUSTMENT OF TAXES. For purposes of this Lease, Tax
Expenses (and Taxes included in the definition of Project Operating Costs, shall
be calculated as if the tenant improvements in the Building were fully
constructed and the Project, the Building, and all tenant improvements in the
Building were fully assessed for real estate tax purposes. Landlord
specifically agrees that the gross receipts component of Tax Expenses for the
Base Year and each subsequent year shall be calculated as if the Building were
one hundred percent (100%) occupied with rent paying tenants. Accordingly,
during the portion of any Expense Year occurring after the Base Year, Tax
Expenses shall be considered to be increased appropriately and shall not be
subject to gross up adjustment.

4.5. CALCULATION AND PAYMENT OF ADDITIONAL RENT. Tenant's Share of any
Direct Expenses for any Expense Year shall be calculated and paid as follows:

4.5.1. CALCULATION OF EXCESS. If Tenant's Share of Direct Expenses
for any Expense Year ending or beginning with the Lease Term exceeds Tenant's
Share of the amount of Direct Expenses applicable to the Base Year, Tenant shall
pay as Additional Rent to Landlord an amount equal to that excess (the
"Excess"), in the manner stated below.

4.5.2. STATEMENT/PAYMENT OF DIRECT EXPENSES. Tenant shall pay to
Landlord, on the first day of each calendar month during the Lease Term,
commencing with January 1, 2000, as Additional Rent, an amount ("Tenant's
Monthly Payment") equal to one-twelfth of Tenant's Share of the amount by which
the Direct Expenses for such calendar year exceed the Base Year Direct Expenses
("Increased Direct Expenses"), as estimated by Landlord in the most recently
delivered Estimated Statement (as defined below). Landlord intends to deliver
to Tenant, prior to the commencement of each calendar year during the Lease
Term, a written statement ("Estimated Statement") setting forth Landlord's
estimate of the Direct Expenses and Increased Direct Expenses allocable to the
ensuing calendar year, and Tenant's Share of such Increased Direct Expenses.
Landlord may, at its option, during any calendar year, deliver to Tenant a
revised Estimated Statement, revising Landlord's estimate of the Direct Expenses
and Increased Direct Expenses, in accordance with Landlord's most current
estimate. Within approximately ninety (90)-days after the end of each calendar
year during the Lease Term, Landlord shall deliver to Tenant a written statement
("Actual Statement") setting forth the actual Direct Expenses allocable to the
preceding calendar year or, in the case of the calendar year in which the
Commencement Date occurs, such Actual Statement will set forth the Base Year
Direct Expenses. Tenant's failure to object to Landlord regarding the contents
of an Actual Statement, in writing, within 90-days after delivery to Tenant of
such Actual Statement, shall constitute Tenant's absolute and final acceptance
and approval of the Actual Statement. If the sum of Tenant's Monthly Payments
actually paid by Tenant during any calendar year exceeds Tenant's Share of the
actual Increased Direct Expenses allocable to such calendar year, then such
excess will be credited against future Tenant's Monthly Payments, unless such
calendar year was the calendar year during which the Lease Expiration Date
occurs (the "Last Calendar Year"), in which event either (i)-such excess shall
be credited against any monetary default of Tenant under this Lease, or (ii)-if
Tenant is not in default under this Lease, then Landlord shall pay to Tenant
such excess within thirty (30) days following the Lease Expiration Date. If the
sum of Tenant's Monthly Payments actually paid by Tenant during any calendar
year is less than Tenant's Share of the actual Increased Direct Expenses
allocable to such calendar year, then Tenant shall, within thirty (30) days of
delivery of the Actual Statement, pay to Landlord the amount of such deficiency.
Landlord's delay in delivering any Estimated Statement or Actual Statement will
not release Tenant of its obligation to pay any Tenant's Monthly Payment or any
such excess upon receipt of the Estimated Statement or the Actual Statement, as
the case may be. The references in this paragraph to the actual Increased
Direct Expenses allocable to a calendar year, shall include, if such calendar
year is the last calendar year of the Lease Term, the actual Increased Direct
Expenses allocable to the portion of such year prior to the Lease Expiration
Date.

4.6. LANDLORD'S BOOKS AND RECORDS. If Tenant disputes the amount of
Additional Rent stated in an Actual Statement, Tenant may designate, within
ninety (90) days after receipt of that Actual Statement, an independent
certified public accountant to inspect Landlord's records which inspection shall
be at Tenant's sole cost and expense unless such inspection correctly discloses
a discrepancy (in Tenant's favor) of greater than three (3) percent of the total
Direct Expenses, in which case Landlord shall pay the reasonable costs of such
inspection. Tenant is not entitled to request the inspection, however, if
Tenant is then in default under this Lease. The accountant must be a member of
a nationally or locally recognized accounting firm and must not charge a fee
based on the amount of Additional Rent that the accountant is able to save
Tenant by the inspection. Tenant must give reasonable notice to Landlord of the
request for inspection, and the inspection must be conducted in Landlord's
offices at a reasonable time or times. If, after that inspection, Tenant still
disputes the Additional Rent, such dispute will be resolved by arbitration in
accordance with the commercial rules and regulations of the American Arbitration
Association; however, Tenant shall pay such disputed amount (under protest)
until such arbitration is completed. Any failure by Tenant to dispute the
information set forth on any Actual Statement from Landlord within ninety (90)
days of the date such Actual Statement is delivered to Tenant will constitute
Tenant's conclusive acceptance of such Statement. If Landlord learns from the
result of another tenant's audit of Direct Expenses that Tenant has overpaid or
underpaid Direct Expenses, Tenant shall receive a credit or reimbursement for
its overpayment or shall pay Landlord upon demand the amount of any
underpayment, as the case may be, in accordance with Section 4.5.2.

Article 5
LETTER OF CREDIT AND SECURITY DEPOSIT

5.1. SECURITY DEPOSIT. Concurrently with Tenant's execution of this Lease,
Tenant shall deposit with Landlord a cash sum in the amount of the Security
Deposit stated in the Summary of Basic Lease Information. Landlord shall hold
the Security Deposit as security for the performance of Tenant's obligations
under this Lease. If Tenant defaults on any provision of this Lease, Landlord
may, without prejudice to any other remedy it has, apply all or part of the
Security Deposit to: (a) any Rent or other sum in default; (b) any amount that
Landlord may spend or become obligated to spend in exercising Landlord's rights
following a default by Tenant (as provided below); or (c) any expense, loss, or
damage that Landlord may suffer because of Tenant's default. Tenant waives the
provisions of California Civil Code Section 1950.7, and all other provisions of
law now in force or that become in force after the date of execution of this
Lease, that provide that Landlord may claim from a security deposit only those
sums reasonably necessary to remedy defaults in the payment of Rent, to repair
damage caused by Tenant, or to clean the Premises. Landlord and Tenant agree
that Landlord may, in addition, claim those sums reasonably necessary to
compensate Landlord for any other foreseeable or unforeseeable loss or damage
caused by the act or omission of Tenant or Tenant's officers, agents, employees,
independent contractors, or invitees. If Landlord disposes of its interest in
the Premises, Landlord shall deliver or credit the Security Deposit to
Landlord's successor in interest in the Premises and thereupon be relieved of
further responsibility with respect to the Security Deposit. If Landlord
applies any portion of the Security Deposit, Tenant shall, within thirty (30)
days after demand by Landlord, deposit with Landlord an amount sufficient to
restore the Security Deposit to its original amount. Tenant is not entitled to
any interest on the Security Deposit and may commingle the Security Deposit with
other funds of Landlord. The unused portion of the Security Deposit, if any,
shall be returned to the last known address of Tenant or the last assignee of
Tenant's interest under this Lease, within thirty (30) days following the
expiration or termination of the Lease Term.

5.2. LETTER OF CREDIT. On or before the Lease Commencement Date, Tenant
shall cause to be issued to Landlord as beneficiary, a Letter of Credit in the
amount stated in Paragraph 13 of the Summary of Basic Lease Information. This
Letter of Credit, together with the Security Deposit, shall serve as security
for the performance of Tenant's obligations under this Lease. If Tenant
defaults on any provision of this Lease, Landlord may, at its election, without
prejudice to any other remedy it has, either apply all or part of the Security
Deposit in accordance with Section 5.1 above, or draw on the Letter of Credit in
accordance with this Section. If Tenant defaults on any provision of this
Lease, Landlord may, following the expiration of any applicable cure period,
draw down the entire amount of the Letter of Credit. All funds resulting from
the drawdown on the Letter of Credit will constitute an addition to the Security
Deposit and may be applied in accordance with Section 5.1 above. Tenant's
failure to timely reissue the Letter of Credit as provided for in Paragraph 13
of the Summary of Basic Lease Information will constitute Tenant's default under
this Lease and Landlord shall then have the right to draw down the entire amount
of the Letter of Credit as provided in this Section 5.2.

Article 6
USE

6.1. PERMITTED USE. Tenant shall use the Premises solely for the Permitted
Use. Tenant shall not use or permit the Premises to be used for any other
purpose without Landlord's prior written consent, which consent will not
unreasonably be withheld. Tenant shall comply with the rules attached to this
Lease as Exhibit E and any reasonable, non-discriminatory amendments or
additions promulgated by Landlord from time to time for the safety, care, and
cleanliness of the Premises, the Building, and the Project or for the
preservation of good order (the "Rules and Regulations"). Landlord shall not be
responsible to Tenant for the failure of any other tenants or occupants of the
Building to comply with the Rules and Regulations provided, however, that
Landlord agrees to act reasonably to enforce such Rules and Regulations. In
addition to complying with other provisions of this Lease concerning the use of
the Premises: (a) Tenant shall not use or allow any person to use the Premises
for any purpose that is contrary to the Rules and Regulations, that violates any
Laws and Orders (as defined below), that constitutes waste or nuisance, or that
would unreasonably annoy other occupants of the Building or the owners or
occupants of other buildings; and (b) Tenant shall comply with all recorded
covenants, conditions, and restrictions, easement agreements, and like recorded
instruments that now or later affect the Project.

Article 7
COMPLIANCE WITH LAWS

7.1. DEFINITION OF "LAWS AND ORDERS". For purposes of this Lease, the term
"Laws and Orders" includes all laws, statutes, ordinances, standards, rules,
requirements, or orders now in force or hereafter enacted, promulgated, or
issued by any federal, state, county, city, or governmental agency. Such term
also includes government measures regulating or enforcing public access,
occupational, health, or safety standards for employers, employees, landlords,
or tenants.

7.2. REPAIRS, REPLACEMENTS, ALTERATIONS, AND IMPROVEMENTS. Landlord shall
(as part of the Building's Operating Costs) promptly make all repairs,
replacements, alterations, or improvements, needed to comply with all Laws and
Orders (including, without limitation, the provisions of the Americans With
Disabilities Act). Notwithstanding the foregoing, to the extent such repairs,
replacements, alterations, or improvements relate to or are triggered by (a)
Tenant's particular use of the Premises, or (b) any Alterations, Tenant shall
bear all

expenses of such work. After receipt of an invoice from Landlord, Tenant shall
pay Landlord Landlord's actual costs reasonably incurred in connection with such
repairs, replacements, alterations, or improvements triggered by Tenant's
particular use of the Premises or any Alterations, plus a reasonable percentage
of such costs, to be uniformly established for the Building, sufficient to
reimburse Landlord for all overhead, general conditions, fees, and other costs
and expenses arising from Landlord's involvement with such repairs,
replacements, alterations, or improvements.

Article 8
HAZARDOUS MATERIAL

8.1. USE OF HAZARDOUS MATERIALS. Tenant shall not cause or permit any
Hazardous Material (as defined below) to be generated, brought onto, used,
stored, or disposed of in or about the Premises, the Building, or the Project by
Tenant or its agents, employees, contractors, subtenants, or invitees, except
for limited quantities of standard office and janitorial supplies. Tenant shall
(a) use, store, and dispose of all such permitted Hazardous Material in strict
compliance with all applicable statues, ordinances, and regulations in effect
during the Lease Term that govern and/or relate to Hazardous Material, public
health and safety and protection of the environment ("Environmental Laws"), and
(b) comply at all times during the Lease Term with all Environmental Laws.
Notwithstanding the foregoing, Tenant shall have the right to use and dispose of
DE MINIMIS amounts of cleaning materials, toner fluids and other office and
janitorial supplies, provided that the same are used in the normal course of
Tenant's business in the Premises and are used and disposed of at all times in
accordance with applicable Laws and Orders.

8.2. NOTICE OF RELEASE OR INVESTIGATION. If, during the Lease Term, Tenant
becomes aware of (a) any actual or threatened release of any Hazardous Material
on, under, or about the Premises, the Building, or the Project, or (b) any
inquiry, investigation, proceeding, or claim by any governmental agency or other
person regarding the presence of Hazardous Material on, under, or about the
Premises, the Building, or the Project, Tenant shall give Landlord written
notice of the release or investigation within five (5) days after learning of it
and shall simultaneously furnish to Landlord copies of any claims, notices of
violation, reports, or other writings received by Tenant that concern the
release or investigation.

8.3. INDEMNIFICATION BY TENANT. Tenant shall, at Tenant's sole expense,
and with counsel reasonably acceptable to Landlord, indemnify, defend, and hold
harmless Landlord and Landlord's shareholders, directors, officers, employees,
partners, affiliates, and agents with respect to all losses, of every kind and
nature, to the extent arising out of or resulting from, directly or indirectly,
the release of any Hazardous Material in or about the Premises, the Building, or
the Project, or the violation of any Environmental Law, by Tenant or Tenant's
agents, employees, contractors, or invitees. This indemnification shall survive
the expiration or termination of this Lease.

8.4. INDEMNIFICATION BY LANDLORD. Landlord shall, at Landlord's sole
expense and with counsel reasonably acceptable to Tenant, indemnify, defend, and
hold harmless Tenant and Tenant's shareholders, directors, officers, employees,
partners, affiliates, and agents with respect to all losses arising out of or
resulting from the release of any Hazardous Material in or about the Building or
the Project, or the violation of any Environmental Law by Landlord or Landlord's
agents, employees, contractors, or invitees (but excluding any other tenant of
the Project or their agents, contractors, or invitees). This indemnification
shall survive the expiration or termination of this Lease.

8.5. REMEDIATION OBLIGATIONS. If the presence of any Hazardous Material
brought onto the Premises, the Building, or the Project by Tenant or Tenant's
agents, employees, contractors, or invitees results in contamination of the
Building or the Project, Tenant shall promptly take all necessary actions, at
Tenant's sole expense, to return the Premises, the Building, and/or the Project
to the condition that existed before the introduction of such Hazardous
Material. Tenant shall first obtain Landlord's approval of the proposed
remedial action. This provision does not limit the indemnification obligation
set forth in the preceding paragraph.

8.6. DEFINITION OF "HAZARDOUS MATERIAL". As used in this Lease, the term
"Hazardous Material" shall mean any hazardous or toxic substance, material, or
waste that is or becomes regulated by the United States, the State of
California, or any local government authority having jurisdiction over the
Building. Hazardous Material includes, without limitation: (a) any "hazardous
substance", as that term is defined in the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (CERCLA) (42 United States Code Sections
9601-9675); (b) "Hazardous waste", as that term is defined in the Resource
Conservation and Recovery Act of 1976 (RCRA) (42 United States Code Sections
6901-6992k); (c) any pollutant, contaminant, or hazardous, dangerous, or toxic
chemical, material, or substance, within the meaning of any other applicable
federal, state or local law, regulation, ordinance, or requirement (including
consent decrees and administrative orders imposing liability or standards of
conduct concerning any hazardous, dangerous, or toxic waste, substance, or
material, now or hereafter in effect); (d) petroleum products; (e) radioactive
material, including any source, special nuclear, or byproduct material as
defined in ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code Sections 2011-2297gB4; (f) Asbestos in any form
or condition; and (g) polychlorinated biphenyls (PCBs) and substances or
compounds containing PCBs.

8.7. EXISTENCE OF HAZARDOUS MATERIALS. To the best of Landlord's actual
knowledge, no Hazardous Materials exist in, on, or about the Premises, the
Building, or the Project except in legally permissible amounts; provided,
however, Landlord knows or has reason to believe that tenants in the Building
(and elsewhere in the Project) utilize standard office and janitorial supplies
constituting Hazardous Materials in connection with their tenancy at the
Project.

Article 9
UTILITIES AND SERVICES

9.1. STANDARD TENANT UTILITIES AND SERVICES. Subject to applicable
government rules, regulations, and guidelines and the rules or actions of the
public utility furnishing the service, Landlord shall provide (as a Direct
Expense) the following utilities and services:

9.1.1. HEATING AND AIR CONDITIONING. Landlord shall provide
heating and air conditioning when necessary for normal comfort for normal office
use in the Premises, as reasonably determined by Landlord, on Mondays through
Fridays from 7 a.m. through 7 p.m. and on Saturdays from 9 a.m. through 1 p.m.
except for the dates of observation of New Year's Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, Christmas Day, and other locally
or nationally recognized holidays ("Normal Business Hours").

9.1.2. ELECTRICITY. Landlord shall provide wiring, outlets, and
systems sufficient to provide electrical current to the Premises for ordinary
and customary office uses. In addition to the foregoing, Landlord shall replace
lamps, starters, and ballasts for Building-standard lighting fixtures within the
Premises upon Tenant's request and at Landlord's expense. Tenant shall replace
lamps, starters, and ballasts for non-Building-standard lighting fixtures within
the Premises at Tenant's sole expense. All electricity used by Tenant in the
Premises (including the portion of the electricity utilized in connection with
the HVAC system exclusively serving the Premises) shall be separately metered
and shall be paid by Tenant directly to the utility provider.

9.1.3. WATER. Landlord shall provide city water from the regular
Building outlets for ordinary and customary drinking, lavatory, and toilet
purposes.

9.1.4. JANITORIAL SERVICES. Landlord shall provide five (5) day
per week ordinary and customary, basic janitorial services in and about the
Premises consistent with other first class office buildings in the vicinity of
the Building. Landlord shall not be required to provide janitorial services to
above-standard improvements installed in the Premises including but not limited
to metallic trim, wood floor covering, glass panels, interior windows, kitchens,
executive washrooms, or shower facilities. Any janitorial services required by
Tenant and provided by Landlord in excess of such ordinary and customary, basic
janitorial services shall be separately paid for by Tenant.

9.1.5. TELEPHONE ROOM. Upon request by Tenant to Landlord, Tenant
shall have access to the telephone room of the Building when required for Tenant
to install or maintain its telecommunications equipment.

9.2. OVER-STANDARD TENANT USE. Tenant shall not over-tax the Building
electrical and other utility systems. In the event of any damage to any
Building systems caused by Tenant's use thereof in excess of ordinary and
customary usage for an office, Tenant shall be responsible for all costs and
expenses incurred by Landlord as a result of such over-use. In addition, if
Tenant requires any utilities or services described in this Article in excess of
the standard levels being provided by Landlord, or during hours other than
Normal Business Hours, Landlord shall have the right to impose reasonable
restrictions on such usage and/or commercially reasonable charges therefor. The
per hour charge for use of the Building's HVAC system during hours other than
Normal Business Hours is estimated to be $25.00 per hour (or portion thereof).
Such rate shall be subject to increase during the Lease Term, based upon the
then prevailing market rate for after hours heating and air conditioning for
buildings similar to the Project in the San Diego north county coastal area.

9.3. INTERRUPTION OF UTILITIES. Tenant agrees that Landlord shall not be
liable for damages, by abatement of Rent or otherwise, for failure to furnish or
delay in furnishing any service (including telephone and telecommunications
services) or for diminution in the quality or quantity of any service when the
failure, delay, or diminution is entirely or partially caused by: (a) breakage,
repairs, replacements, or improvements which is corrected within two (2)
business days; (b) strike, lockout, or other labor trouble; (c) inability to
secure electricity, gas, water, or other fuel at the Building despite reasonable
efforts to do so; (d) accident or casualty; (e) act or default of Tenant or
other parties other than Landlord, or (f) any other cause beyond Landlord's
reasonable control. Such failure, delay, or diminution shall not be considered
to constitute an eviction or a disturbance of Tenant's use and possession of the
Premises or relieve Tenant from paying Rent or performing any of its obligations
under this Lease, except that Tenant shall be entitled to an equitable abatement
of Rent for the period of such failure, delay, or diminution to the extent such
failure, delay, or diminution is directly attributable to Landlord's negligence
or intentional misconduct and continues for more than two (2) business days.
Landlord shall not be liable under any circumstances for a loss of or injury to
property or for injury to or interference with Tenant's business, including loss
of profits through, in connection with, or incidental to a failure to furnish
any of the utilities or services under this Article. Notwithstanding the
foregoing, Landlord agrees to use reasonable efforts to promptly correct any
such interruption of utilities or services. Landlord may also comply with
mandatory or voluntary controls or guidelines promulgated by any government
entity relating to the use or conservation of energy, water, gas, light, or
electricity or the reduction of automobile or other emissions without creating
any liability of Landlord to Tenant under this Lease as long as compliance with
voluntary controls or guidelines does not materially and unreasonably interfere
with Tenant's use of the Premises.

Article 10
REPAIRS AND MAINTENANCE

10.1. TENANT'S REPAIR AND MAINTENANCE OBLIGATIONS. Tenant shall not
take any action (or neglect to take any action within the Premises) which will
cause any damage to any portion of the Premises or the Base Building Systems (as
defined below) or otherwise increase Landlord's obligations or expenses under
Paragraph 10.2, below beyond normal wear and tear. In addition, Tenant shall
maintain all of Tenant's furniture, trade fixtures, and equipment within the
Premises, as well as all Alterations, in good condition and repair and in a
manner which will not damage or overburden the Building or the Base Building
Systems. Further, Tenant shall promptly notify Landlord of any damage to (or
need for repair in connection with) any portion of the Building located within
the interior of the Premises including, without limitation, any damaged or
broken Base Building Systems, fixtures, and/or appurtenances.

10.2. LANDLORD'S REPAIR AND MAINTENANCE OBLIGATIONS. Subject to
Articles 15 and 16 (regarding damage, destruction and condemnation), Landlord
shall, as part of the Building Operating Costs (but subject to all exclusions
set forth in Article 4), repair and maintain in good order and condition
(reasonable wear and tear excepted), consistent with first class office
buildings in the vicinity of the Building: (a) the structural portions,
fixtures, and appurtenances of the Premises, and all Tenant Improvements
constructed by Landlord; (b) the structural portions and common area of the
Building; (c) the Base Building Systems, including those located within the
Premises; (d) the exterior portions of the Building and Project; and (e) all
other common areas located in the Building, or in or on the Project, including
the parking facilities serving the Building. Repairs shall be made promptly
when appropriate to keep the applicable portion of the Building, the Project,
and other items in the condition described in this paragraph. To the extent
that the need for repair and maintenance is due to Tenant's or Tenant's agents,
employees, contractors, or invitees' negligence, misuse, or use of the Building
or the Base Building Systems in a manner which exceeds what is normal and
customary for office space, such repair and maintenance shall be at Tenant's
sold expense. After receipt of an invoice from Landlord, Tenant shall pay
Landlord, Landlord's actual costs incurred in connection with such repair sand
replacements plus a reasonable percentage of such costs, to be uniformly
established for the Building, sufficient to reimburse Landlord for all
reasonable overhead, general conditions, fees, and other reasonable costs and
expenses arising from Landlord's involvement with such repairs and replacements.
Landlord shall not be in default of its repair and maintenance obligations under
this paragraph if Landlord performs the repairs and maintenance within three (3)
days after written notice by Tenant to Landlord of the need for such repairs and
maintenance. Furthermore, if due to the nature of the particular repair or
maintenance obligation or to causes beyond Landlord's reasonable control, more
than three (3) days are reasonably required to complete it, Landlord shall not
be in default under this paragraph if Landlord begins its efforts to repair
within such three (3) day period and diligently prosecutes the required work to
completion. No abatement of Rent and, except as otherwise specifically provided
herein, no liability of Landlord shall result from any injury to or interference
with Tenant's business arising from the making of or failure to make any
repairs, replacements, alterations, or improvements in or to any portion of the
Premises, the Building, or the Project. As part of the consideration to
Landlord hereunder, Tenant waives and releases its rights, including its right
to make repairs at Landlord's expense, under California Civil Code Sections
1941-1942 or any similar law, statute, or ordinance now or hereafter in effect.
If, after written notification to Landlord by Tenant of the need for repairs and
maintenance, Landlord has not performed the repairs and maintenance within three
(3) days after written notice, or Landlord has failed to diligently prosecute
the required work if more than three (3) days are reasonably required to
complete it, Tenant may, upon twenty-four (24) hours telephonic notice, perform
the requested repairs and maintenance. After final adjudication in a court of
law of competent jurisdiction, if the court determines that such repairs and
maintenance were properly Landlord's responsibility, Landlord shall reimburse
Tenant for the reasonable third-party costs incurred by Tenant in undertaking
such repair or maintenance, to the extent the court has determined Landlord was
liable to perform the repairs and maintenance, and if Landlord fails to do so
within ten (10) days of such adjudication, Tenant may deduct such amount from
its Rent obligations hereunder.

Article 11
ALTERATIONS AND ADDITIONS

11.1 LANDLORD'S CONSENT TO ALTERATIONS. Tenant may not make any
improvements, alterations, additions, or changes to the Premises ("Alterations")
without obtaining Landlord's prior written consent. Tenant shall request such
consent by written notice to Landlord, which written notice must be accompanied
by detailed and complete plans and specifications for the proposed work. As a
condition of its consent to Alterations, Landlord may impose any reasonable
requirements that Landlord considers appropriate under the circumstances
including, without limitation, evidence of adequate financial capability and
provision of appropriate insurance. Landlord shall not unreasonably withhold or
delay its consent to any proposed Alternations. Landlord will be deemed to be
acting reasonably if it withholds consent for, among other Alterations, any
Alterations that would or could: (a) affect the structure of the Building or any
portion of the Building other than the interior of the Premises; (b) affect the
Base Building Systems; (c) result in the Landlord being required under any Laws
and Orders to perform any work that Landlord could otherwise avoid or defer
("Additional Required Work"); (d) result in an increase in the demand for
utilities or services that Landlord is required to provide; or (e) cause in
increase in the premiums for hazard or liability insurance carried by Landlord.
The term "Base Building Systems" means all systems an equipment (including,
without limitation, plumbing; heating, ventilation, and air condition;
electrical; fire/life safety; elevator; and security systems) that serve all or
part of the Building. Tenant shall reimburse Landlord for the reasonable fees
and costs of any architects, engineers, or other consultants reasonable retained
by Landlord to review the proposed Alterations. Tenant shall have the right,
without obtaining Landlord's prior written consent (but only following ten (10)

days' prior written notice), to make alterations to the Premises that comply
with all of the following: (a) cost less than $10,000.00 in any calendar year;
(b) affect only the interior of the Premises, and (c) do not cause or
potentially cause any of the conditions set forth in (a) through (e) above.
This Section 11.1 shall not apply to the Tenant Improvements defined in Exhibit
C.

11.2. COMPLIANCE OF ALTERATIONS WITH LAWS AND INSURANCE REQUIREMENTS.
If Landlord approves any Alterations, Tenant shall cause all Alterations to
comply with the following: (a) applicable Laws and Orders; (b) applicable
requirements of a fire rating bureau; or (c) applicable requirements of
Landlord's hazard insurance carrier to the extent that Tenant is informed of
them. Tenant shall also comply with those requirements in the course of
constructing the Alterations. Before beginning construction of any Alteration,
Tenant shall obtain a valid building permit and any other permits required by
any government entity having jurisdiction over the Premises. Tenant shall
provide copies of those permits to Landlord before the work begins. Tenant
shall, at Tenant's sole expense, perform any Additional required Work, which
shall be subject to the same requirements as any Alteration. If any Additional
Required Work must be performed outside the Premises, Landlord may elect to
perform that work at Tenant's expense. No consent by Landlord to any proposed
Alterations shall constitute a waiver of Tenant's obligations under this
paragraph.

11.3. MANNER OF CONSTRUCTION. Tenant shall build all Alterations
entirely within the Premises and in conformance with Landlord's construction
rules and regulations, using only contractors and subcontractors approved in
writing by Landlord (which approval will not unreasonably be withheld). All
work relating to any Alterations shall be done in a good and workmanlike manner,
using new materials equivalent in quality to those used in the construction of
the initial improvements to the Premises. All work shall be diligently
prosecuted to completion. Tenant shall ensure that all work is performed in a
manner that does not obstruct access to or through the Building or its common
areas and that it does not interfere either with other tenants' use of their
premises or with any other work being undertaken in the Building. Tenant shall
take all measures necessary to ensure that labor peace is maintained at all
times. Within twenty (20) days after completion of any Alterations, Tenant
shall deliver to Landlord a reproducible copy of the drawings of the
Alterations, as built.

11.4. PAYMENT FOR IMPROVEMENTS. Tenant shall promptly pay all charges
and costs incurred in connection with any Alteration, as and when required by
the terms of any agreements with contractors, designers, or suppliers. On
completion of any Alteration, Tenant shall: (a) cause a timely notice of
completion to be recorded in the office of the San Diego County Recorder in
accordance with Civil Code Section 3093 or any successor statute; (b) deliver to
Landlord evidence of full payment and unconditional final waivers of all liens
for labor, services, or materials; and (c) pay Landlord any reasonable expenses
incurred by Landlord in connection with Tenant's work.

11.5. LANDLORD'S PROPERTY. All Alterations and fixtures that may be
installed or placed in or about the Premises from time to time shall be and
become the property of Landlord upon installation; except that Tenant may remove
any trade fixtures or freestanding office equipment and furniture unless
Landlord can substantiate that such items have been paid for with any Tenant
Improvement Allowance funds (if any) provided to Tenant by Landlord. Tenant
must repair any damage to the Premises and the Building caused by such removal.
In addition, by written notice to Tenant at the time consent to install any
Alteration(s) is given, Landlord may require Tenant, at Tenant's sole expense,
to remove any Alterations upon termination or expiration of this Lease, and
restore the Premises to their configuration and condition before the Alterations
were made. If Tenant fails to complete that restoration before expiration of
the Lease Term or, in the case of earlier termination, within fifteen (15) days
after written notice from Landlord requesting the restoration, Landlord may do
so and charge the cost of the restoration to Tenant. Notwithstanding the
foregoing, tenant shall not be required to remove (or pay Landlord to remove)
the tenant improvements made pursuant to attached Exhibit C.

11.6. INITIAL IMPROVEMENTS. The terms of the Tenant Improvement
Agreement, attached to this Lease as Exhibit C, and not the terms of this
Article shall govern the construction of the initial tenant improvements to the
Premises.

Article 12
COVENANT AGAINST LIENS

12.1. COVENANT AGAINST LIENS. Tenant shall not be the cause or object
of any liens or allow such liens to exist, attach to, be placed on, or encumber
Landlord's or Tenant's interest in the Premises, the Building, or the Project by
operation of law or otherwise. Tenant shall not suffer or permit any lien of
mechanics, material suppliers, or others to be placed against the Premises, the
Building, or the Project with respect to work or services performed or claimed
to have been performed for Tenant or materials furnished or claimed to have been
furnished to Tenant or the Premises (other than by Landlord). Landlord has the
right at all times to post and keep posted on the Premises any notice that it
considers necessary for protection from such liens. At least seven (7) days
before beginning construction of any Alteration or Tenant Improvements, Tenant
shall give Landlord written notice of the expected commencement date of that
construction to permit Landlord to post and record a notice of
non-responsibility in connection therewith. If any such lien attaches or Tenant
receives notice of any such lien, Tenant shall cause the lien to be immediately
released and removed of record or, if Tenant in good faith disputes such lien,
Tenant may post a bond acceptable to Landlord provided that Tenant then
diligently pursues the resolution of such matter and the removal of such lien.
Despite any other provision of this Lease, if the lien is not released and
removed or bonded around within ten (10) days after Landlord delivers notice of
the lien to Tenant, Landlord may immediately take all action necessary to
release and remove the lien, without any duty to investigate the validity of it.
All expenses (including reasonable attorney fees) incurred by Landlord in

connection with the lien shall be considered Additional Rent under this Lease
and be immediately due and payable by Tenant.

Article 13
EXCULPATION, INDEMNIFICATION, AND INSURANCE

13.1. DEFINITION OF "TENANT PARTIES" AND "LANDLORD PARTIES". For
purposes of this Article, the term "Tenant Parties" refers singularly and
collectively to Tenant and Tenant's officers, members, partners, agents,
employees, and independent contractors as well as to all persons and entities
claiming through any of these persons or entities. The term "Landlord Parties"
refers singularly and collectively to Landlord and Landlord's officers,
directors, shareholders, members, parents, subsidiaries, and any other
affiliated entities, personal representatives, executors, heirs, assigns,
licensees, invitees, beneficiaries, agents, servants, employees, and independent
contractors of these persons or entities, but not including other tenants or
occupants of the Project.

13.2. EXCULPATION. To the fullest extent permitted by law, Tenant, on
its behalf and on behalf of all Tenant Parties, (i) waives all claims (in law,
equity, or otherwise) against Landlord Parties arising out of, (ii) knowingly
and voluntarily assumes the risk of, and (iii) agrees that Landlord Parties
shall not be liable to Tenant Parties for any of the following: (a) injury to or
death of any person; or (b) loss of, injury or damage to, or destruction of any
tangible or intangible property, including the resulting loss of use, economic
losses, and consequential or resulting damage of any kind from any cause. This
exculpation clause shall not apply, however, to claims against Landlord Parties
to the extent that a final judgment of a court of competent jurisdiction
establishes that the injury, loss, damage, or destruction was proximately caused
by the Landlord Parties' fraud, gross negligence, willful injury to person or
property, or breach by Landlord of any duty imposed by this Lease or by law.
The provisions of this paragraph will survive the expiration or earlier
termination of this Lease until all claims within the scope of this paragraph
are fully, finally, and absolutely barred by the applicable statutes of
limitations. Tenant acknowledges that this paragraph was part of the
consideration to Landlord under this Lease.

13.3. INDEMNIFICATION.

13.3.1. TENANT'S INDEMNIFICATION OF LANDLORD PARTIES. To the
fullest extent permitted by law, Tenant shall, at Tenant's sole expense and with
counsel reasonably acceptable to Landlord, indemnify, defend, and hold harmless
the Landlord Parties from and against all Claims (as defined below), from any
cause, to the extent arising out of or relating (directly or indirectly) to this
Lease, the tenancy created under this Lease, or the Premises, including: (a) the
use or occupancy, or manner of use or occupancy, of the Premises or Building by
the Tenant Parties; (b) any negligent or wrongful act, error, or omission of the
Tenant Parties or of any invitee, guest, or licensee of Tenant in, on, or about
the Project; (c) Tenant's conduct of its business; (d) any Alterations,
activities, work, or things done, omitted, permitted, allowed, or suffered by
Tenant Parties in, at, or about the Premises, the Building, or the Project,
including the violation of or failure to comply with any applicable Laws and
Orders (except as otherwise provided in Sections 1.1 and 7.2), or judgments
against Tenant Parties in existence on the Lease Commencement Date or enacted,
promulgated, or issued after the date of this Lease; and (c) any breach or
default in performance of any obligation on Tenant's part to be performed under
this Lease, whether before or during the Lease Term or after its expiration or
earlier termination. The indemnification in this paragraph shall not apply to
the extent that a final judgment of a court of competent jurisdiction
establishes that a Claim against one Landlord Party was proximately caused by
the gross negligence, willful misconduct or breach of this Lease or duty imposed
by law by that Landlord Party. In that event, however, this indemnification
shall remain valid for all other Landlord Parties. This indemnification extends
to and includes Claims for: (a) injury to any persons (including death at any
time resulting from that injury); (b) loss of, injury or damage to, or
destruction of property (including all loss of use resulting from that loss,
injury, damage, or destruction); and (c) all economic losses and consequential
or resulting damage of any kind.

13.3.2. DEFINITION OF CLAIMS. For purposes of this Lease, "Claims"
means any and all claims, losses, costs, damage, expenses, liabilities, liens,
actions, causes of action (whether in tort or contract, law or equity, or
otherwise), charges, assessments, fines, and penalties of any kind (including
reasonable consultant and expert expenses, court costs, and attorney fees
actually incurred).

13.3.3. INDEMNIFICATION INDEPENDENT OF INSURANCE OBLIGATIONS. The
indemnifications provided in this Article and Tenant's waiver of any claim for
damages contained anywhere in this Lease may not be construed or interpreted as
in any way restricting, limiting, or modifying Tenant's or Landlord's insurance
or other obligations under this Lease and is independent thereof. Compliance
with the insurance requirements and other obligations under this Lease shall not
in any way restrict limit, or modify Tenant's or Landlord's indemnification
obligations under this Lease. Notwithstanding the foregoing, the
indemnification provisions of this Article shall not apply to the extent that
the loss for which indemnification is sought is fully covered by insurance, as
long as such insurance is not invalidated by this provision.

13.3.4. ATTORNEY FEES. The prevailing party shall be entitled to
recover its actual attorney fees and court costs incurred in enforcing or
contesting the indemnification clauses set forth in this Article.

13.3.5. SURVIVAL OF INDEMNIFICATION. The indemnification clauses in
this Article shall survive the expiration or earlier termination of this Lease
until all claims involving any of the indemnified matters are fully, finally,
and absolutely barred by the applicable statutes of limitations.

13.4. COMPLIANCE WITH INSURER REQUIREMENTS. Subject to Landlord's
obligations under Section 7.2, Tenant shall, at Tenant's sole expense, comply
with all requirements, guidelines, rules, orders, and similar mandates and
directives pertaining to the use of the Premises and the Building, whether
imposed by Tenant's insurers, Landlord's insurers, or both. If Tenant's
business operations, conduct, or use of the Premises or the Building cause any
increase in the premium for any insurance policies carried by Landlord, Tenant
shall, within ten (10) business days after receipt of written notice from
Landlord, reimburse Landlord for the increase. Tenant shall, at Tenant's sole
expense, comply with all rules, orders, regulations, or requirements of the
American Insurance Association (formerly the National Board of Fire
Underwriters) and of any similar body.

13.5. TENANT'S INSURANCE COVERAGE. Tenant shall, at Tenant's sole
expense, throughout the Lease Term maintain the following coverages:

13.5.1. PUBLIC LIABILITY AND PROPERTY DAMAGE INSURANCE. Tenant
shall, at Tenant's sole expense, obtain and maintain public liability and
property damage insurance (i) with a single combined liability limit and
property damage limit of not less than $2,000,000.00, (ii) insuring (a) against
all liability of Tenant and Tenant's agents, employees, contractors, licensees,
and invitees arising out of or in connection with Tenant's use or occupancy of
the Premises, and (b) performance by Tenant of the indemnity provisions set
forth in this Lease, (iii) naming Landlord, its agent, and any lender having a
security interest against the Project ("Lender") as additional named insureds,
(iv) containing cross-liability endorsements, and (v) which includes products
liability insurance (if Tenant is to sell merchandise or other products derived
from the Premises). Not more frequently than once every year, if in the
reasonable opinion of Landlord the amount or scope of such insurance at that
time is not adequate, Tenant shall increase such insurance as reasonably
required by Landlord.

13.5.2. FIRE AND EXTENDED COVERAGE INSURANCE. Tenant shall, at
Tenant's sole expense, maintain on Tenant's Alterations and Tenant's personal
property and fixtures a policy of standard fire and extended coverage insurance,
with vandalism and malicious mischief endorsements, coverage with respect to
increased costs due to building ordinances, demolition coverage, boiler and
machinery insurance, and sprinkler leakage coverage, in each case to the extent
of at least 100 percent of full replacement value, issued in the names of
Landlord, Tenant, and Landlord's Lender, as their interests may appear. Such
"full replacement value" shall be determined by the company issuing such policy
at the time the policy is initially obtained. Not more frequently than once
every two years, either Landlord or Tenant may, at its election, notify the
other that it elects to have the replacement value redetermined by an insurance
company. Such redetermination shall be made promptly and in accordance with the
rules and practices of the Board of Fire Underwriters, or a like board
recognized and generally accepted by the insurance company, and Landlord and
Tenant shall be promptly notified of the results by the company. Such policy
shall be promptly adjusted according to such redetermination.

13.5.3. TENANT'S WORKERS' COMPENSATION AND EMPLOYER LIABILITY
COVERAGE. Tenant shall procure and maintain workers' compensation insurance as
required by law and employer's liability insurance with limits of no less than
the greater of (i) the statutorily required limits, or (ii) $1,000,000.00.

13.6. DELIVERY OF CERTIFICATE, POLICY, AND ENDORSEMENTS. Before the
Lease Commencement Date, Tenant shall deliver to Landlord the endorsements
referred to in this Article as well as a certified copy of Tenant's liability
policy or policies and an original certificate of insurance, executed by an
authorized agent of the insurer or insurers, evidencing compliance with the
liability insurance requirements. The certificate shall provide for no less
than thirty (30) days' advance written notice to Landlord from the insurer or
insurers of any cancellation, non-renewal, or material change in coverage or
available limits of liability and shall confirm compliance with the liability
insurance requirements in this Lease. The "endeavor to" and "failure to mail
such notice shall impose no obligation or liability of any kind upon the
Company" language and any similar language shall be stricken from the
certificate.

13.7. INSURANCE GENERALLY. If Tenant fails during the Lease Term to
maintain any insurance required to be maintained by Tenant under this Lease,
then Landlord may, at its election, arrange for any such insurance, and tenant
shall reimburse Landlord for any premiums for any such insurance within five
business days after Tenant receives a copy of the premium notice. If any such
premiums are allocable to a period, a portion of which occurs during the Lease
Term and the remainder of which occurs before or after the Lease Term, then such
premiums shall be apportioned between Landlord and Tenant based upon the number
of days during such period that occur during the Lease Term and the number of
days that occur before or after the Lease Term, such that tenant pays for the
premiums that are allocable to the period during the Lease Term. Insurance
required to be maintained by Tenant under this Lease (i) shall be issued as a
primary policy with respect to the Premises only by insurance companies
authorized to do business in the state in which the Premises are located with a
Best's Rating of at least "A-" and a Best's Financial Size Category rating of at
least "VIII," as set forth in the most current edition of "Best's Insurance
Reports" (unless otherwise approved by Landlord), or such higher rating as may
be required by Landlord's lender, (ii) shall name Landlord and Landlord's lender
as additional named insureds (the additional insured endorsement must be on ISO
form CG 20 11 11 85 or an equivalent acceptable to Landlord, with such
modifications as Landlord may require), (iii) shall consist of "occurrence"
based coverage, without provision for subsequent conversion to "claims" based
coverage, (iv) shall not be cancelable or subject to reduction of coverage or
other modification except after 30 days' prior written notice to Landlord and
Landlord's lender, (v) the coverage afforded to Landlord and any lender of
Landlord must be at least as broad as that afforded to Tenant and may not
contain any terms, conditions, exclusions, or limitations applicable to Landlord
or any lender of Landlord that do not apply to Tenant, and (vi) shall not
provide for a deductible or co-insurance provision in excess of $10,000.00.
Tenant shall, at least 30 days prior to the expiration of each such

policy, furnish Landlord with a renewal of or "binder" extending such policy.
Tenant shall promptly upon request deliver to Landlord copies of such policy or
policies or certificates evidencing the existence and amounts of such insurance
together with evidence of payment of premiums.

13.8. WAIVER OF SUBROGATION. Landlord and Tenant each release the
other and their respective agents from any claims for damage that are caused by
risks covered by insurance under this Lease, and agree to cause the insurance
companies issuing their respective property (first party) insurance to waive any
subrogation rights that those companies may have against Tenant or Landlord,
respectively, as long as the insurance is not invalidated by the waiver. If the
waivers of subrogation are contained in their respective insurance policies,
Landlord and Tenant waive any right that either may have against the other on
account of any loss or damage to their respective property to the extent that
the loss or damage is insured under their respective insurance policies.

13.9. LANDLORD'S INSURANCE. Landlord shall at all times while this
Lease is in effect maintain (subject to recoupment as an Operating Expense) the
following types of insurance: (a) insurance against fire and such other perils
as may be included in a standard fire and extended coverage insurance policy on
the Building in an amount not less than 95% of its actual replacement cost
(exclusive of footings and foundations) with a commercially reasonable
deductible and (b) commercial general liability insurance on an occurrence basis
with limits of liability in an amount not less than $2,000,000.00 combined
single limit for each occurrence. Tenant understands and agrees that Landlord
will not be required to insure Tenant's property and that any insurance
maintained by Landlord may be maintained under a blanket or umbrella policy.
Landlord's liability insurance shall be primary with respect to Landlord
Parties' activities in, on or about the Project and the Premises.

Article 14
DAMAGE AND DESTRUCTION

14.1. REPAIR OF DAMAGE BY LANDLORD. Tenant agrees to notify Landlord
in writing promptly of any damage to the Premises resulting from fire,
earthquake, or any other identifiable event of a sudden, unexpected, or unusual
nature ("Casualty"). If the Premises are damaged by a Casualty or any common
areas of the Building providing access to the Premises are damaged to the extent
that Tenant does not have reasonable access to the Premises and if neither
Landlord nor Tenant has elected to terminate this Lease in the manner provided
below, Landlord shall promptly and diligently restore such damaged areas
(excluding Tenant's Alterations) to substantially the same condition as existed
before the Casualty, except for modifications required by building codes and
other laws and except for any other modifications to the common areas considered
desirable by Landlord. In making these modifications, Landlord shall not
materially impair Tenant's access to the Premises. Landlord's obligation to
restore is subject to reasonable delays for insurance adjustment and other
matters beyond Landlord's reasonable control and subject to the other clauses of
this Article. If Tenant requests that Landlord modify the original Landlord
constructed tenant improvements in connection with the rebuilding, Landlord may
condition its consent to those modifications on: (a) Tenant's payment to
Landlord before construction is begun of any sums in excess of the amount of
insurance proceeds received by Landlord that are needed to complete the tenant
improvements; and (b) Confirmation by Landlord's architect or contractor that
the modifications will not materially increase the scope of work or the time
necessary to complete the tenant improvements.

14.2. REPAIR PERIOD NOTICE. Landlord shall, within the earlier of (a)
fifteen (15) days after the date on which Landlord determines the full extent of
the damage caused by the Casualty, (b) twenty (20) days after Landlord has
determined the extent of the insurance proceeds available to effectuate repairs,
or (c) sixty (60) days after the occurrence of the Casualty provide written
notice to Tenant indicating the reasonably anticipated period for repairing the
Casualty (the "Repair Period Notice"). The Repair Period Notice shall also
state, if applicable, Landlord's election either to repair or to terminate the
Lease as provided below).

14.3. LANDLORD'S OPTION TO TERMINATE OR REPAIR. If: (a) the Repair
Period Notice estimates that the period for repairing the Casualty exceeds one
hundred and eighty (180) days from the date insurance proceeds become available
to Landlord, or would have been available to Landlord if the insurance required
under section 13.9 was in effect; (b) the estimated repair cost exceeds the
insurance proceeds, if any, available for such repair (not including the
deductible, if any, on Landlord's casualty insurance), plus any amount that
Tenant is obligated or elects to pay for such repair; (c) the estimated repair
cost of the Premises or the Building, even though covered by insurance, exceeds
fifty percent (50%) of the full replacement cost thereof; or (d) the Building
cannot be restored except in a substantially different structural or
architectural form than existed before the Casualty, Landlord may elect either
to (i) terminate this Lease provided Landlord terminates all other leases for
space adjacent to the Premises which may be terminated by Landlord, or (ii) to
effectuate repairs. Landlord's election shall be stated in the Repair Period
Notice.

14.4. TENANT'S OPTION TO TERMINATE. If the Repair Period Notice
provided by Landlord indicates that the anticipated period for repairing the
Casualty exceeds one hundred eighty (180) days, Tenant may elect to terminate
this Lease by providing written notice ("Tenant's Termination Notice") to
Landlord within ten (10) days after receiving the Repair Period Notice. If
Tenant does not elect to terminate within this ten (10) day period, Tenant shall
be considered to have waived the option to terminate.

14.5. RENT ABATEMENT DUE TO CASUALTY. Landlord and Tenant agree that,
if (a) the Casualty was not the result of the negligence or willful misconduct
of Tenant or Tenant's agents, employees, contractors, licensees, or invitees or
(b) the casualty was caused by the negligence of Tenant's agents, employees,
contractors,

licensees, or invitees, and Landlord is maintaining, as an Operating Expense,
rental abatement insurance, then to the extent Landlord is entitled to proceeds
from such insurance Tenant shall be provided with a proportionate abatement of
Rent based on the Rentable Square Footage of the Premises rendered unusable and
not used by Tenant. That proportional abatement, if any, shall be provided
during the period beginning on the later of (a) the date of the Casualty or (b)
the date on which Tenant ceases to occupy the affected portion of the Premises
and ending on the date of Substantial Completion of Landlord's restoration
obligations as provided in this Article. Subject to Tenant's termination right
described above, the Rent abatement provided in this paragraph is Tenant's sole
remedy due to the occurrence of the Casualty. Landlord shall not be liable to
Tenant or any other person or entity for any direct, indirect, or consequential
damage (including but not limited to lost profits of Tenant or loss of or
interference with Tenant's business), whether or not caused by the negligence of
Landlord or Landlord's employees, contractors, licensees, or invitees, due to,
arising out of, or as a result of the Casualty (including but not limited to the
termination of the Lease in connection with the Casualty). If deemed
appropriate by Tenant, Tenant may maintain business interruption insurance to
provide coverage regarding such matters.

14.6. DAMAGE NEAR END OF TERM. Despite any other provision of this
Article, if the Premises or the Building is destroyed or damaged by a Casualty
during the last twelve (12) months of the Lease Term, Landlord and Tenant shall
each have the option to terminate this Lease by giving written notice to the
other of the exercise of that option within thirty (30) days after the
occurrence of the Casualty, unless Tenant has an Option to Extend the Lease term
and has timely exercised such option.

14.7. EFFECTIVE DATE OF TERMINATION; RENT APPORTIONMENT. If Landlord
or Tenant elects to terminate this Lease under this Article in connection with a
Casualty, such termination shall be effective thirty (30) days after delivery of
notice of such election. Tenant shall pay Rent, properly apportioned up to the
date of the Casualty. After the effective date of the termination, Landlord and
Tenant shall be discharged of all future obligations under this Lease, except
for those provisions that, by their terms, survive the expiration or earlier
termination of the Lease.

14.8. WAIVER OF STATUTORY PROVISIONS. The provisions of this Lease,
including those in this Article, constitute an express agreement between
Landlord and Tenant that applies in the event of any Casualty to the Premises,
the Building, or the Project. Tenant, therefore, fully waives the provisions of
any statute or regulation, including California Civil Code Sections 1932(2) and
1933(4), for any rights or obligations concerning a Casualty.

Article 15
CONDEMNATION

15.1. DEFINITION OF "CONDEMNATION". As used in this Lease, the term
"Condemnation" means a permanent taking through (a) the exercise of any
government power (by legal proceedings or otherwise) by any public or quasi
public authority or by any other party having the right of eminent domain
("Condemnor") or (b) a voluntary sale or transfer by Landlord to any Condemnor,
either under threat of exercise of eminent domain by a Condemnor or while legal
proceedings for condemnation are pending.

15.2. EFFECT ON RIGHTS AND OBLIGATIONS. If, during the Lease Term or
the period between the date of execution of this Lease and the date on which the
Lease Term begins, there is any Condemnation of all or part of the Premises,
Building, or Project on which the Premises and Building are constructed, the
rights and obligations of the parties shall be determined under this Article,
and Rent shall not be affected or abated except as expressly provided in this
Article. Landlord shall notify Tenant in writing of any Condemnation within
thirty (30) days after the later of (a) the filing of a complaint by Condemnor
or (b) the final agreement and determination by Landlord and Condemnor of the
extent of the taking ("Condemnation Notice").

15.3. TERMINATION OF LEASE.

15.3.1. DEFINITION OF "TERMINATION DATE". The "Termination Date"
shall be the earliest of: (a) the date on which Condemnor takes possession of
the property that is subject to the Condemnation; (b) the date on which title to
the property subject to the Condemnation is vested in Condemnor; (c) if Landlord
has elected to terminate, the date on which Landlord requires possession of the
property in connection with the Condemnation, as specified in a written notice
delivered to Tenant no less than thirty (30) days before that date; or (d) if
Tenant has elected to terminate, as provided below, thirty (30) days after
Landlord's receipt of written notice of termination from Tenant. If both
Landlord and Tenant have elected to terminate under this Article, the
Termination Date shall be the earliest of the dates described in (a) - (c)
above.

15.3.2. AUTOMATIC TERMINATION. If the Premises are totally taken by
Condemnation, this Lease shall terminate as of the Termination Date, and the
Condemnation Award shall be allocated between Landlord and Tenant as provided
below.

15.3.3. LANDLORD'S RIGHT TO TERMINATE. Landlord shall have the
option to terminate this Lease if: (a) ten percent (10%) or more of the Rentable
Square Feet of the Building or the Premises is taken through Condemnation; (b)
any portion of the Building or Project necessary for Landlord to operate the
Building efficiently is taken through Condemnation; or (c) any other areas
providing access to the Premises or Building are taken through Condemnation. To
elect to terminate the Lease under this paragraph, Landlord must provide written
notice of its election ("Landlord's Taking Termination Notice") to Tenant within
thirty (30) days after

the later of (a) the filing of a complaint by Condemnor or (b) the final
agreement and determination by Landlord and Condemnor of the extent of the
taking. In that event, this Lease shall be terminated on the Termination Date,
and all Rent shall be prorated to that date. If Landlord does not elect to
terminate under this paragraph, Landlord shall be obligated to reasonably
restore (to the extent feasible) the Premises (excluding Tenant's Alterations)
or access to the Premises, subject to Landlord's obtaining all necessary
approvals, permits, and authorizations relating to such work.

15.3.4. TENANT'S RIGHT TO TERMINATE. Tenant shall have the option
to terminate this Lease by providing thirty (30) days' written notice to
Landlord if one or both of the following are taken through Condemnation: (a) ten
percent (10%) or more of the Usable Square Feet of the Premises; or (b) any
portion of the Building that provides Tenant with its access to the Premises and
that, if taken, would eliminate Tenant's access to the Premises. Tenant's
notice must be given within thirty (30) days after Tenant's receipt of the
Condemnation Notice.

15.3.5. TENANT'S WAIVER. Tenant agrees that its rights to terminate
this Lease due to partial Condemnation are governed by this Article. Tenant
waives all rights it may have under California Code of Civil Procedure Section
1265.130, or otherwise, to terminate this Lease based on a partial Condemnation.

15.3.6. PRORATION OF RENT. If this Lease is terminated under this
Article, the termination shall be effective on the Termination Date, and
Landlord shall prorate Rent to that date. Tenant shall be obligated to pay Rent
for the period up to, but not including, the Termination Date as prorated by
Landlord. Landlord shall return to Tenant any prepaid Rent allocable to any
period on or after the Termination Date.

15.4. EFFECT OF CONDEMNATION IF LEASE IS NOT TERMINATED. If any part
of the Premises is taken by Condemnation and this Lease is not terminated, Rent
shall be proportionately reduced based on the Rentable Square Footage of the
Premises taken. Landlord and Tenant agree to enter into an amendment to this
Lease within thirty (30) days after the partial taking, confirming the reduction
in Rentable Square Footage of the Premises and the reduction in Rent.

15.5. ALLOCATION OF AWARD.

15.5.1. LANDLORD'S RIGHT TO AWARD. Except as provided in the next
paragraph, in connection with a Condemnation: (a) Landlord shall be entitled to
receive all compensation and anything of value awarded, paid, or received in
settlement or otherwise (Award); and (b) Tenant irrevocably assigns and
transfers to Landlord all rights to and interests in the Award and fully
releases and relinquishes any claim to, right to make a claim on, or interest in
the Award, including any amount attributable to any excess of the market value
of the Premises for the remainder of the Lease Term over the present value as of
the Termination Date of the Rent payable for the remainder of the Term (commonly
referred to as the "bonus value" of the Lease).

15.5.2. TENANT'S RIGHT TO COMPENSATION. Notwithstanding the
foregoing, Tenant shall have the right to make a separate claim in the
Condemnation proceeding, as long as the Award payable to Landlord is not reduced
thereby, for: (a) the taking of the unamortized or under appreciated value of
any leasehold improvements owned by Tenant that Tenant has the right to remove
at the end of the Lease Term and that Tenant elects not to remove; (b)
reasonable removal and relocation costs for any leasehold improvements that
Tenant has the right to remove and elects to remove (if Condemnor approves of
the removal); and (c) relocation costs under Government Code Section 7262.

15.6. TEMPORARY TAKING. If a temporary taking of part of the Premises
occurs through (a) the exercise of any government power (by legal proceedings or
otherwise) by a Condemnor or (b) a voluntary sale or transfer by Landlord to any
Condemnor, either under threat of exercise of eminent domain by a Condemnor or
while legal proceedings for condemnation are pending, Rent shall ▇▇▇▇▇ during
the time of such taking in proportion to the portion of the Premises taken;
provided, however, that if the period of such temporary taking exceeds one
hundred twenty (120) days, Tenant shall have the option to terminate this Lease.
The entire Award relating to the temporary taking shall be and remain the
property of Landlord. Tenant irrevocably assigns and transfers to Landlord all
rights to and interest in the Award and fully releases and relinquishes any
claim to, right to make a claim on, and any other interest in the Award

Article 16
ASSIGNMENT AND SUBLEASING

16.1. RESTRICTED TRANSFERS.

16.1.1. CONSENT REQUIRED. Definition of "Transfer". Tenant shall
obtain Landlord's written consent before entering into or permitting any
Transfer. a "Transfer" consists of any of the following, whether voluntary or
involuntary and whether effected by death, operation of law, or otherwise: (a)
any assignment, mortgage, pledge, encumbrance, or other transfer of any interest
in this Lease; (b) any sublease or occupancy of any portion of the Premises by
any persons other than Tenant and its employees; and (c) any change of ownership
or reorganization included in the definition of Transfer as provided in Section
16.6.1 below. Any person to whom any Transfer is made or sought to be made is a
"Transferee".

16.1.2. LANDLORD'S REMEDIES. If a Transfer fails to comply with
this Article, Landlord may, at its option, do either or both of the following:
(a) void the Transfer or (b) declare Tenant in material default hereunder.

16.2. TRANSFER PROCEDURE. Before entering into or permitting any
Transfer, Tenant shall provide to Landlord a written "Transfer Notice" at least
twenty (20) days before the proposed effective date of the Transfer. The
Transfer Notice shall include all of the following: (a) information regarding
the proposed Transferee, including the name, address, and ownership of
Transferee; the nature of Transferee's business; Transferee's character and
reputation; and Transferee's current financial statement (certified by an
officer, a partner, or an owner of Transferee); (b) all the terms of the
proposed Transfer, including the consideration payable by Transferee; the
portion of the Premises that is subject to the Transfer ("Subject Space"); a
general description of any planned alterations or improvements to the Subject
Space; the proposed use of the Subject Space; the effective date of the
Transfer; a calculation of the "Transfer Premium" (as defined below), payable in
connection with the Transfer; and a copy of all documentation concerning the
proposed Transfer; (c) any other information or documentation reasonably
requested by Landlord; and (d) an executed estoppel certificate from Tenant in
the form attached to this Lease as Exhibit F. As a condition to the
effectiveness of the Transfer Notice, Tenant shall, when providing a Transfer
Notice, pay an application fee of $300.00 toward Landlord's administrative and
other costs in reviewing and processing the Transfer Notice. If Landlord
consents to any Transfer, the following limits apply: (i) Landlord does not
agree to waive or modify the terms and conditions of this Lease; (ii) Landlord
does not consent to any further Transfer by either Tenant or Transferee; (iii)
Tenant shall remain liable under this Lease, and any guarantor of the Lease
shall remain liable under the guaranty; (iv) Tenant may enter into that Transfer
in accordance with this Article if: (1) the Transfer occurs within six (6)
months after Landlord's consent; (2) the Transfer is on substantially the same
terms as specified in the Transfer Notice; and (3) Tenant delivers to Landlord,
promptly after execution, an original, executed copy of all documentation
pertaining to the Transfer in a form reasonably acceptable to Landlord; (v) if
the Transfer does not occur within six (6) months of delivery of the Transfer
Notice, or the terms of the Transfer have materially changed from those in the
Transfer Notice, Tenant shall submit a new Transfer Notice, requesting
Landlord's consent. A material change is one the terms of which would have
entitled Landlord to refuse to consent to the Transfer initially or would cause
the proposed Transfer to be more favorable to Transferee than the terms in the
original Transfer Notice.

16.3. LANDLORD'S CONSENT.

16.3.1. REASONABLE CONSENT. Landlord may not unreasonably withhold,
delay or condition its consent to any proposed Transfer that complies with this
Article. Reasonable grounds for denying consent include (among other grounds)
any of the following: (a) Transferee's character, reputation, credit history, or
business is not consistent with the character or quality of the Building; (b)
Transferee would be a significantly less prestigious occupant of the Building
than Tenant; (c) Transferee is either a government agency or an instrumentality
of one; (d) Transferee's intended use of the Premises is inconsistent with the
Permitted Use or will materially and adversely effect Landlord's interest; (e)
Transferee's financial condition is or may be inadequate to support the Lease
obligations of Transferee under the Transfer documents; (f) the Transfer would
cause Landlord to violate another lease or agreement to which Landlord is a
party or would give a tenant of the Project the right to cancel or modify its
lease; or (g) if space comparable to the Subject Space is available in the
Building at the time of the proposed Transfer or will become available within
ninety (90) days of Landlord's receipt of the Transfer Notice, the rent charged
by Tenant to Transferee during the term of that Transfer, using a present value
analysis, is less than ninety percent (90%) of the rent then being quoted by
Landlord for comparable space in the Building for a comparable term ("Quoted
Rent"), using a present value analysis.

16.3.2. LANDLORD'S WRITTEN RESPONSE. Within five (5) business days
after receipt of a proper and complete Transfer Notice, Landlord shall approve
or disapprove the proposed Transfer in writing. Landlord's failure to respond
within such five (5) business day period shall be deemed Landlord's disapproval
of the proposed Transfer unless the Transfer Notice specifies, in bold capital
letters at the top of the Transfer Notice, "LANDLORD'S FAILURE TO RESPOND WITHIN
FIVE (5) BUSINESS DAYS AFTER RECEIPT SHALL BE DEEMED LANDLORD'S APPROVAL OF
TRANSFER", in which event Landlord's failure to respond within such five (5)
business day period shall be deemed Landlord's approval of Tenant's proposed
Transfer.

16.4. TRANSFER PREMIUM.

16.4.1. TRANSFER PREMIUM. As a reasonable condition to Landlord's
consent to any Transfer, Tenant shall pay to Landlord fifty percent (50%) of any
Transfer Premium (as defined below). "Transfer Premium" means all Base Rent,
additional rent, and other consideration payable by Transferee to Tenant
(including key money and bonus money and any payment in excess of fair market
value for services rendered by Tenant to Transferee or assets, fixtures,
inventory, equipment, or furniture transferred by Tenant to Transferee in
connection with the Transfer ("Transferee Rent")), after deducting reasonable
amounts payable by Tenant on account of the Transfer, such as the application
fee to be paid by Tenant pursuant to Section 16.2 above, reasonable Tenant's
legal fees and costs, leasing commissions, Tenant improvement costs and the Rent
payable by Tenant under this Lease (excluding the Transfer Premium) for the
Subject Space ("Tenant Rent"). Tenant shall pay the Transfer Premium on a
monthly basis, together with its payment of Base Rent. In calculating the
Transfer Premium, Tenant Rent, Transferee Rent, and Quoted Rent, the parties
shall first adjust the rent to the actual effective rent to be paid, taking into
consideration any and all leasehold concessions, including any rent credit and
tenant improvement allowance. For purposes of calculating the effective rent,
all those concessions shall be amortized on a straight-line basis over the
relevant term. On Landlord's request, Tenant shall furnish a

complete statement, certified by an independent certified public accountant or
Tenant's chief financial officer, describing in detail the computation of any
Transfer Premium that Tenant has derived or will derive from the Transfer. If
Landlord's independent certified public accountant finds that the Transfer
Premium for any Transfer has been understated, Tenant shall, within thirty (30)
days after demand, pay the deficiency and, if such understatement exceeds three
(3) percent of the total Transfer Premium, Landlord's costs of that audit.

16.5. EFFECT OF TRANSFER. If, with Landlord's consent, this Lease is
assigned, Landlord may collect Rent directly from the Transferee. If all or
part of the Premises is subleased and Tenant defaults, Landlord may collect Rent
directly from the Transferee. Landlord may then apply the amount collected from
the Transferee to Tenant's monetary obligations under this Lease. Collecting
Rent from a Transferee or applying that Rent to Tenant's monetary obligations
does not waive any provisions of this Article.

16.6. TRANSFERS OF OWNERSHIP INTERESTS AND OTHER ORGANIZATIONAL
CHANGES.

16.6.1. CHANGE OF OWNERSHIP; REORGANIZATION. For purposes of this
Article, "Transfer" also includes: (a) if Tenant is a partnership or limited
liability company: (1) a change in ownership effected voluntarily,
involuntarily, or by operation of law within a twelve (12) month period, of
forty-nine percent (49%) or more of the partners or members or forty-nine
percent (49%) or more of the partnership or membership interests; or (2) the
dissolution of the partnership or limited liability company without its
immediate reconstitution; and (b) during such portion of the Lease Term that
Tenant is a closely held corporation (i.e., one whose stock is not publicly held
and not traded through an exchange or over the counter): (1) the sale or other
transfer, within a twelve (12) month period, of more than an aggregate of
forty-nine percent (49%) of the voting shares of Tenant (other than, pursuant to
an initial public offering, a long as management of Tenant remains substantially
the same to immediately family members or a family trust by reason of gift or
death); (2) the sale, mortgage, hypothecation, or pledge, within a twelve (12)
month period, of more than an aggregate of forty-nine percent (49%) of the value
of Tenant's unencumbered assets; or (3) the dissolution, merger, consolidation,
or other reorganization of Tenant.

16.6.2. TRANSFER TO AFFILIATE. Despite any other provision of the
Lease, Landlord's consent is not required for any Transfer to an Affiliate, as
defined below, as long as the following conditions are met: (a) at least ten
(10) business days before the Transfer, Landlord receives written notice of the
Transfer (as well as any documents or information reasonably requested by
Landlord regarding the Transfer or Transferee); (b) the Transfer is not a
subterfuge by Tenant to avoid its obligations under the Lease; (c) if the
Transfer is an assignment, Transferee assumes in writing all of Tenant's
obligations under this Lease relating to the Subject Space; and (d) Transferee
has a tangible net worth, as evidenced by financial statements delivered to
Landlord and certified by an independent certified public accountant in
accordance with generally accepted accounting principles that are consistently
applied ("Net Worth"), at least equal to Tenant's Net Worth either immediately
before the Transfer or as of the date of this Lease, whichever is greater.

16.6.3. DEFINITION OF "AFFILIATE". an "Affiliate" means any entity
that controls, is controlled by, or is under common control with Tenant or will
control, or be controlled by, or be under common control of Tenant after any
Transfer. "Control" means the direct or indirect power to direct or cause the
direction of the management, affairs and policies of anyone, whether through the
ownership of voting securities, by contract or otherwise, or ownership of more
than fifty percent (50%) of the voting securities of an entity or possession of
the right to vote more than fifty percent (50%) of the voting interest in the
ordinary direction of the entity's affairs.

Article 17
SURRENDER OF PREMISES

17.1. SURRENDER OF PREMISES. No act of Landlord or its authorized
representatives shall constitute Landlord's acceptance of a surrender of the
Premises by Tenant unless that intent is specifically acknowledged in a writing
signed by Landlord. At the option of Landlord, a surrender and termination of
this Lease shall operate as an assignment to Landlord of all subleases or
sub-tenancies. Landlord shall exercise this option by giving notice of that
assignment to all subtenants within ten (10) days after the effective date of
the surrender and termination.

17.2. REMOVAL OF TENANT PROPERTY BY TENANT. On the expiration or
earlier termination of the Lease Term, Tenant shall quit the Premises and
surrender possession to Landlord in accordance with this paragraph. Tenant
shall leave the Premises in as good order and condition as when Tenant took
possession of the Premises, except for reasonable wear and tear. On expiration
or termination, Tenant shall, without expense to Landlord, remove or cause to be
removed from the Premises: (a) all debris and rubbish; (b) any items of
furniture, equipment, freestanding cabinet work, and other articles of personal
property owned by Tenant or installed or placed by Tenant at its expense in the
Premises; (c) any similar articles of any other persons claiming under Tenant
that Landlord, in Landlord's sole discretion, requires to be removed; and (d)
any alterations and improvements that Tenant is required to remove in accordance
with the provisions of this Lease relating to Alterations. Tenant shall, at
Tenant's sole expense, repair all damage or injury that may occur to the
Premises or the Building caused by Tenant's removal of those items.

Article 18
HOLDING OVER

18.1. HOLDOVER RENT. If Tenant remains in possession of the Premises
after expiration or earlier termination of this Lease with Landlord's express
written consent, Tenant's occupancy shall be a month to month tenancy at a rent
agreed on by Landlord and Tenant but in no event less than the Base Rent and
Additional Rent payable under this Lease during the last full month before the
date of expiration or earlier termination of this Lease. The month to month
tenancy shall be on the terms and conditions of this Lease except as provided in
(a) the preceding sentence and (b) the lease clauses (if any) concerning lease
term, expansion rights, purchase option, and extension rights. Landlord's
acceptance of rent after such holding over with Landlord's written consent shall
not result in any other tenancy or in a renewal of the original term of this
Lease. If Tenant remains in possession of the Premises after expiration or
earlier termination of this Lease without Landlord's express written consent,
Tenant's continued possession shall be on the basis of a tenancy at sufferance
and Tenant shall pay as rent during the holdover period an amount equal to one
hundred twenty percent (120%) of the Base Rent and Additional Rent payable under
this Lease for the last full month before the date of expiration or termination
on a per diem basis.

18.2. NO CONSENT OR WAIVER IMPLIED. Tenant shall construe nothing in
this Article as Landlord's implied consent to any holding over by Tenant.
Landlord expressly reserves the right to require Tenant to surrender possession
of the Premises to Landlord as provided in this Lease on expiration or other
termination of this Lease. The provisions of this Article shall not be
considered to limit or constitute a waiver of any other rights or remedies of
Landlord provided in this Lease or at law.

Article 19
ESTOPPEL CERTIFICATES

19.1. TENANT'S OBLIGATION TO PROVIDE ESTOPPEL CERTIFICATES. Within ten
(10) business days after a written request by Landlord, Tenant shall execute and
deliver to Landlord an estoppel certificate, substantially in the form of
Exhibit F (or such other form reasonably required by any existing or prospective
lender, mortgagee, or purchaser of all or part of the Project), indicating in
the certificate any exceptions to the statements in the certificate that may
exist at that time. The certificate shall also contain any other factual
information reasonably requested by Landlord or any existing or prospective
lender, mortgagee, or purchaser.

19.2. ADDITIONAL REQUESTED DOCUMENTS OR INSTRUMENTS. Within ten (10)
business days after a written request by Landlord (but only in connection with a
proposed sale or financing transaction related to the Building or the Project),
Tenant shall execute and deliver whatever other documents or instruments may be
reasonably required for sale or financing purposes, including (if requested by
Landlord) a current financial statement and financial statements for the year
preceding the current financial statement year. Those statements shall be
prepared in accordance with generally accepted accounting principles or tax
method accounting principles. All such financial statements shall be received
and held by Landlord and/or prospective purchaser(s) or lender(s) in confidence
and shall be used only for purposes contemplated by this Section 19.2.

19.3. FAILURE TO DELIVER. Tenant's failure to execute or deliver an
estoppel certificate in the required time period shall constitute an
acknowledgment by Tenant that the statements included in the estoppel
certificate are true and correct, without exception. Tenant's failure to
execute or deliver an estoppel certificate, financial statement, or other
document or instrument required under this Article in a timely manner shall
additionally be a material breach of this Lease.

Article 20
SUBORDINATION, NONDISTURBANCE, AND ATTORNMENT

20.1. AUTOMATIC SUBORDINATION. This Lease is subject and subordinate
to: (a) the lien of any mortgages, deeds of trust, or other encumbrances
("Encumbrances") of the Building and Project; (b) all present and future ground
or underlying leases ("Underlying Leases") of the Building and the Project now
or hereafter in force against the Building and the Project; (c) all renewals,
extensions, modifications, consolidations, and replacements of the items
described in clauses (a) and (b); and (d) All advances made or hereafter to be
made on the security of the Encumbrances; provided, however, that the holder of
any Encumbrance or Underlying Lease who succeeds to the interest of Landlord in
the Premises shall not disturb Tenant's use or occupancy in the Premises and
shall assume all of Landlord's duties under the Lease so long as Tenant is not
in default under the Lease beyond any applicable cure period for such default.
Despite any other provision of this Article, any Encumbrance holder or lessor
under an Underlying Lease may elect that this Lease shall be senior to and have
priority over that Encumbrance or Underlying Lease whether this Lease is dated
before or after the date of the Encumbrance or Underlying Lease.

20.2. SUBORDINATION AGREEMENT; AGENCY. The subordination provided for
in this Article is self-operative, and no further instrument of subordination is
required to make it effective. To confirm this subordination, however, Tenant
shall, within five (5) days after Landlord's request, execute any further
instruments or assurances in recordable form that Landlord reasonably considers
necessary or desirable to evidence or confirm the subordination or superiority
of this Lease to any such Encumbrances or Underlying Leases. Tenant's failure
to execute and deliver such instrument(s) shall constitute a default under this
Lease. Any such instrument of subordination shall include a provision
indicating that in the event of any foreclosure sale, deed in lieu of
foreclosure, or similar event by which the holder of an encumbrance or
Underlying Lease

succeeds to the Landlord's interest in the Premises, Tenant's use, possession,
and enjoyment of the Premises shall not be disturbed and this Lease shall
continue in full force and effect as long as Tenant is not in default under the
terms hereof beyond any applicable cure period for such default.

20.3. ATTORNMENT. Subject to Tenant's non-disturbance rights set forth
in this Article, Tenant covenants and agrees to attorn to the transferee of
Landlord's interest in the Building and/or Project by foreclosure, deed in lieu
of foreclosure, exercise of any remedy provided in any Encumbrance or Underlying
Lease, or operation of law (without any deductions or setoffs), if requested to
do so by the transferee, and to recognize the transferee as the lessor under
this Lease. The transferee shall not be liable for: (a) any acts, omissions, or
defaults of Landlord that occurred before the sale or conveyance; or (b) the
return of any security deposit except for deposits actually paid to the
transferee.

20.4. NOTICE OF DEFAULT; RIGHT TO CURE. Tenant agrees to give written
notice of any default by Landlord to the holder of any prior Encumbrance or
Underlying Lease provided Tenant has received a written request giving the name
and address of such holder. Tenant agrees that, before it exercises any rights
or remedies under the Lease, the lien-holder or lessor shall have the right, but
not the obligation, to cure the default within the same time, if any, given to
Landlord to cure the default, plus an additional ten (10) days.

Article 21
DEFAULTS AND REMEDIES

21.1. TENANT'S DEFAULT. The occurrence of any of the following shall
constitute a default by Tenant under this Lease: (a) Tenant's failure to pay
when due any monetary obligation required to be paid under this Lease
(including, without limitation, Base Rent or Additional Rent) if the failure
continues for three (3) business days after written notice of the failure from
Landlord to Tenant; (b) Tenant's failure to provide any instrument or assurance
as required by this Lease (including, without limitation, estoppel certificates,
financial statements, and subordination agreements) if the failure continues for
ten (10) business days after written notice of the failure from Landlord to
Tenant; (c) Tenant's failure to perform any other obligation under this Lease if
the failure continues for fifteen (15) days after written notice of the failure
from Landlord to Tenant (provided, however, in the event such failure cannot be
cured within such 15-day period, despite Tenant's best efforts, then such 15-day
period, despite Tenant's best efforts, then such 15-day period shall be extended
to the extent necessary to allow such cure to be completed, but in no event
longer than 60 days); (d) to the extent permitted by law: (1) a general
assignment by Tenant or any guarantor of the Lease for the benefit of creditors;
(2) the filing by or against Tenant, or any guarantor, of any proceeding under
an insolvency or bankruptcy law, unless (in the case of an involuntary
proceeding) the proceeding is dismissed within sixty (60) days; (3) the
appointment of a trustee or receiver to take possession of all or substantially
all the assets of Tenant or any guarantor, unless possession is unconditionally
restored to Tenant or that guarantor within thirty (30) days and the trusteeship
or receivership is dissolved; (4) any execution or other judicially authorized
seizure of all or substantially all the assets of Tenant located on the
Premises, or of Tenant's interest in this Lease, unless that seizure is
discharged within thirty (30) days; (e) the committing of waste on the Premises
that are not subject to cure in accordance with Clause (c) of this paragraph; or
(f) Tenant's failure to occupy the Premises within thirty (30) business days
after the Premises are ready for occupancy.

21.2. REPLACEMENT OF STATUTORY NOTICE REQUIREMENTS. When this Lease
(including, specifically, the preceding paragraph) requires service of a notice,
that notice shall replace rather than supplement any equivalent or similar
statutory notice, including any notices required by Code of Civil Procedure
Section 1161 or any similar or successor statute. When a statute requires
service of a notice in a particular manner, service of that notice (or a similar
notice required by this Lease) in the manner in which notices are required to be
delivered by this Lease shall replace and satisfy the statutory service of
notice procedures, including those required by Code of Civil Procedure Section
1162 or any similar or successor statute.

21.3. LANDLORD'S REMEDIES ON TENANT'S DEFAULT. On the occurrence of a
default by Tenant, Landlord shall have the right to pursue any one or more of
the following remedies in addition to any other remedies now or later available
to Landlord at law or in equity. These remedies are not exclusive but
cumulative.

21.3.1. TERMINATION OF LEASE. Landlord may, by written notice,
terminate this Lease and recover possession of the Premises. Once Landlord has
terminated this Lease, Tenant shall immediately surrender the Premises to
Landlord. On termination of this Lease, Landlord may recover from Tenant all of
the following: (a) the worth at the time of the award of any unpaid Rent that
had been earned at the time of the termination, to be computed by allowing
interest at the Default Rate (as defined below); (b) the worth at the time of
the award of the amount by which the unpaid Rent that would have been earned
between the time of the termination and the time of the award exceeds the amount
of unpaid Rent that Tenant proves could reasonably have been avoided, to be
computed by allowing interest at the Default Rate; (c) the worth at the time of
the award of the amount by which the unpaid Rent for the balance of the lease
Term after the time of the award exceeds the amount of unpaid Rent that Tenant
proves could reasonably have been avoided, to be computed by discounting that
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of the award plus one percent (1%); (d) any other amount necessary to
compensate Landlord for all the detriment proximately caused by Tenant's failure
to perform obligations under this Lease, or which in the ordinary course of
things would be likely to result therefrom; and (e) any other amounts, in
addition to or in lieu of those listed above, that may be permitted by
applicable law.

21.3.2. CONTINUATION OF LEASE IN EFFECT. Landlord may exercise the
remedy described in California Civil Code Section 1951.4, which provides that,
when a tenant has the right to sublet or assign

(subject only to reasonable limitations), the landlord may continue the lease in
effect after the Tenant's breach and abandonment and recover Rent as it becomes
due. Accordingly, if Landlord does not elect to terminate this Lease on account
of any default by Tenant, Landlord may enforce all of Landlord's rights and
remedies under this Lease, including the right to recover all Rent as it becomes
due.

21.3.3. TENANT'S SUBLEASES. Whether or not Landlord elects to
terminate this Lease on account of any default by Tenant, Landlord may: (a)
terminate any sublease, license, concession, or other consensual arrangement for
possession entered into by Tenant and affecting the Premises, (b) choose to
succeed to Tenant's interest in such an arrangement. If Landlord elects to
succeed to Tenant's interest in such an arrangement, Tenant shall, as of the
date of notice by Landlord of that election, have no further right to, or
interest in, the Rent or other consideration receivable under that arrangement.

21.4. EFFORTS TO RELET. For purposes of this Article, Tenant's right
to possession shall not be considered to have been terminated by Landlord's
efforts to relet the Premises, by Landlord's acts of maintenance or preservation
with respect to the Premises, or by appointment of a receiver to protect
Landlord's interests under this Lease. This list is merely illustrative of acts
that may be performed by Landlord without terminating Tenant's right to
possession. No act other than a written notice of termination from Landlord
shall constitute an election by Landlord to terminate this Lease.

21.5. ACCEPTANCE OF RENT WITHOUT WAIVING RIGHTS. Landlord may accept
Tenant's payments without waiving any rights under this Lease, including rights
under a previously served notice of default, other than the right to pursue
Tenant for non-payment of the amount so accepted. If Landlord accepts payments
after serving a notice of default, Landlord may nevertheless commence and pursue
an action to enforce rights and remedies under the previously served notice of
default without giving Tenant any further notice or demand.

21.6. LANDLORD'S RIGHT TO PERFORM TENANT'S OBLIGATIONS. In addition to
the foregoing rights, if Tenant's failure to perform a non-monetary obligation
under this Lease continues for five (5) days after Tenant has failed to cure a
default within the time permitted Tenant hereunder, Landlord may perform the
obligation on Tenant's behalf, without waiving Landlord's rights for Tenant's
failure to perform such obligation and without releasing Tenant from such
obligations. Within ten (10) days after receiving a statement from Landlord,
Tenant shall pay to Landlord the amount of expense reasonably incurred by
Landlord in performing Tenant's obligation, including a reasonable charge for
Landlord's overhead/supervision.

Article 22
LATE PAYMENTS

22.1. LATE CHARGES. If any Base Rent or Additional Rent payment is not
received by Landlord or Landlord's designee within five (5) business days after
that payment is due, Tenant shall pay to Landlord a late charge equal to the
greater of $100.00, or ten percent (10%) of the overdue amount as liquidated
damages, in lieu of actual damages (other than interest under the next paragraph
and attorneys' fees and costs as provided below); provided that such late charge
shall not accrue upon the first instance of delinquent payment in any calendar
year if Tenant delivers such overdue amount within five (5) business days after
written notice from Landlord that such amount was not received when due. The
parties agree that this late charge represents a reasonable estimate of the
expenses that Landlord will incur because of any late payment of Rent (other
than interest and attorney fees and costs) and that such amount is fair and
reasonable under the facts and circumstances existing as of the date of this
Lease. Landlord's acceptance of any liquidated damages shall not constitute a
waiver of Tenant's default with respect to the overdue amount or prevent
Landlord from exercising any of the rights and remedies available to Landlord
under this Lease. Tenant shall pay the late charge as Additional Rent with the
next installment of Base Rent.

22.2. INTEREST. If any monetary obligation of Tenant is not received
by Landlord or Landlord's designee within thirty (30) days after the obligation
is due, Tenant shall pay to Landlord interest on the past due amount, from the
date due until paid, at the rate of four percent (4%) per annum above the then
applicable Wall Street Journal "prime rate", or an equivalent rate if there is
then no published prime rate (the "Default Rate"). Despite any other provision
of this Lease, the Default Rate shall not exceed the limits, if any, imposed in
such instance by the usury laws of the State of California. Any interest paid
in excess of those limits shall be refunded to Tenant by application of the
amount of excess interest paid against any sums outstanding in any order that
Landlord requires. If the amount of excess interest paid exceeds the sums
outstanding, Landlord shall refund the portion exceeding those sums in cash to
Tenant.

Article 23
NON-WAIVER

23.1. NON-WAIVER. No waiver of any provision of this Lease shall be
implied by any failure of either party to enforce any remedy for the violation
of that provision, even if that violation continues or is repeated. Any waiver
by either party of any provision of this Lease must be in writing. Such written
waiver shall affect only the provision specified and only for the time in the
manner stated in the writing.

23.2. ACCEPTANCE AND APPLICATION OF PAYMENT. NOT ACCORD AND
SATISFACTION. No receipt by Landlord of a lesser payment than the Rent required
under this Lease shall be considered to be other than on account of the earliest
amount due, and no endorsement or statement on any check or letter accompanying
a payment or check shall be considered an accord and satisfaction. Landlord may
accept checks or payments without prejudice to

Landlord's right to recover all amounts due and pursue all other remedies
provided for in this Lease. Landlord's receipt of monies from Tenant after
giving notice to Tenant terminating this Lease shall in no way reinstate,
continue, or extend the Lease Term or affect the Termination Notice given by
Landlord before the receipt of those monies. After serving notice terminating
this Lease, filing an action, or obtaining final judgment for possession of the
Premises, Landlord may receive and collect any Rent due, and the payment of that
Rent shall not waive or affect such prior notice, action, or judgment.

Article 24
WAIVER OF RIGHT TO JURY TRIAL

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

__________________________ _____________________________
Landlord's Initials Tenant's Initials

Article 25
ATTORNEY FEES AND COSTS

25.1. LEGAL COSTS. If either party incurs any costs or expenses in
connection with any action instituted by either party by reason of any dispute
pursuant to this Lease or for the recovery of any sum due under this Lease, or
because of the breach of any provisions of this Lease by either party, or for
any other relief pursuant to this Lease, or in the event of any other litigation
between the parties with respect to this Lease, then all costs and expenses,
including without limitation, its actual professional fees such as appraisers',
accountants, and attorneys' fees, incurred by the prevailing party therein shall
be paid by the other party, which obligation on the part of the other party
shall be deemed to have accrued on the date of the commencement of such action
or dispute and shall be enforceable whether or not the action is prosecuted to
judgment. The provisions contained in this paragraph shall survive the
expiration or earlier termination of this Lease, and in the event any action or
proceeding is instituted to recover possession of the Premises following the
expiration or earlier termination of this Lease, the provisions contained in
this paragraph shall be applicable.

Article 26
LANDLORD'S ACCESS TO PREMISES

26.1. LANDLORD'S ACCESS TO PREMISES. Landlord and its agents shall
have the right at all reasonable times and upon reasonable notice (except where
circumstances make giving of prior notice impractical or unreasonable, such as
in the case of an emergency, or where risk to personal property exists) to enter
the Premises to: (a) inspect the Premises; (b) show the Premises to prospective
purchasers, mortgagees, or tenants (during the last six (6) months of the Lease
Term) or to ground lessors or underlying lessors; (c) serve, post, and keep
posted notices required by law or that Landlord considers necessary for the
protection of Landlord or the Building; or (d) make repairs, replacements,
alterations, or improvements to the Premises or Building that Landlord considers
necessary or desirable. Despite any other provision of this Article, Landlord
may enter the Premises at any time to: (a) perform services required of
Landlord; (b) take possession due to any breach of this Lease; or (c) perform
any covenants of Tenant that Tenant fails to perform (subject to the limitation
set forth in Section 21.6 above). Any information obtained by Landlord or its
agents regarding Tenant's business pursuant to such entry shall be received and
held in confidence.

26.2. TENANT'S WAIVER. Landlord may enter the Premises without the
abatement of Rent and may take steps to accomplish the above-stated purposes.
Tenant waives any claims for damages caused by Landlord's entry, including
damage claims for: (a) injuries; (b) inconvenience to or interference with
Tenant's business; (c) lost profits; and (d) loss of occupancy or quiet
enjoyment of the Premises, other than claims resulting from Landlord's gross
negligence or intentional misconduct.

Article 27
SIGNS

27.1. BUILDING NAME; LANDLORD'S SIGNAGE RIGHTS. Subject to Tenant's
signage rights under this Article, Landlord may at any time change the name of
the Building and install, affix, and maintain all signs on the exterior and
interior of the Building as Landlord may, in Landlord's sole discretion, desire.
Tenant shall not have or acquire any property right or interest in the name of
the Building. Tenant may use the name of the Building or pictures or
illustrations of the Building in advertising or other publicity during the Lease
Term.

27.2. TENANT'S SIGNAGE RIGHTS WITHIN THE BUILDING.

27.2.1. SINGLE TENANT FLOOR. If the Premises comprise an entire
floor of the Building, Tenant may, at Tenant's sole expense but which cost may
be included as part of the Tenant Improvement Allowance, install identification
signs (including its logo) anywhere in the Premises, including the elevator
lobby of the

Premises, subject to the following requirements: (a) Tenant must obtain
Landlord's prior written approval for such signs, which Landlord may, in
Landlord's sole, reasonable discretion, grant or deny; (b) all signs must be in
keeping with the quality, design, and style of the Building; and (c) no sign may
be visible from the exterior of the Building.

27.2.2. MULTI-TENANT FLOOR. If other tenants occupy space on the
floor on which the Premises are located, Landlord shall provide Tenant's
identifying signs at Tenant's expense. The signs shall be comparable to those
used by Landlord for other similar floors in the Building and shall comply with
Landlord's Building standard signage program. Notwithstanding anything to the
contrary contained in this Lease, Landlord, at its sole cost and expense, shall
provide Tenant with "Building Standard" directory and suite signage.

27.2.3. PROHIBITED SIGNS AND OTHER ITEMS. Tenant may not display
any signs on the exterior or roof of the Building or in the common areas of the
Building or the Project. Tenant may not install or display any signs, window
coverings, blinds (even if located behind the Landlord approved window coverings
for the Building), or other items visible from the exterior of the Premises
without Landlord's prior written approval, which Landlord may, in Landlord's
sole discretion, grant or withhold. Any signs, notices, logos, pictures, names,
or advertisements that are installed by or for Tenant without Landlord's
approval may be removed without notice by Landlord at Tenant's expense.

27.2.4. BUILDING SIGNAGE. In addition to the foregoing rights, the
Tenant will be entitled to non-exclusive signage on top of the Building facing
Interstate 5 in a location to be mutually agreed upon by Landlord and Tenant
(the "Building Sign"). The Building Sign is subject to Landlord's approval and
must satisfy Landlord's Project sign criteria and all applicable City signage
and zoning regulations. All costs and expenses associated with such Building
Sign including, without limitation, costs of purchase, installation,
maintenance, and eventual removal shall be borne by Tenant but may be included
in the Tenant Improvements subject to the Tenant Improvement Allowance. In
addition, Tenant shall be responsible for all costs of repairing any damage
resulting from the installation, maintenance, or removal of such signage,
including costs of restoring the Building such that there are no residual marks
on the Building following removal of the Building Sign.

Article 28
TENANT PARKING

28.1. NUMBER OF PARKING PASSES. Tenant shall be entitled to receive,
at no charge, parking passes from Landlord for the number of parking spaces for
Tenant's use as is set forth in the Summary of Basic Lease Information. Tenant
shall pay Landlord the standard charge for any parking passes which must be
replaced due to loss or destruction. Tenant shall have no right to use any
parking spaces in excess of the number of parking passes provided to Tenant
pursuant hereto and neither Tenant nor Tenant's employees may use any guest
parking spaces in the Project.

28.2. LOCATION OF PARKING. Landlord specifically reserves the right to
designate and to change the location, size, configuration, design, layout, and
all other aspects of the parking facilities, including the initiation or
discontinuance of a valet system. Landlord may at reasonable times, and in a
reasonable manner, so as to minimize interference with Tenant's parking rights,
close off or restrict access to the parking facilities from time to time to
facilitate construction, alteration, or improvements, without incurring any
liability to Tenant and without any abatement of Rent under this Lease, provided
Landlord shall use reasonable efforts to provide reasonable replacement parking
facilities during the period of any closure if such replacement parking
facilities are available.

28.3. PARKING RULES AND REGULATIONS. Tenant's continued right to use
the parking passes is conditioned upon Tenant abiding by all non-discriminatory
rules and regulations prescribed from time to time by Landlord for the orderly
operation and use of the parking facilities. Tenant shall use all reasonable
efforts to ensure that Tenant's employees and visitors also comply with such
rules and regulations.

28.4. NONTRANSFERABLE PASSES. The parking passes issued by Landlord to
Tenant under this Article are provided to Tenant solely for use by Tenant's
personnel and any subtenant or assignees and their respective personnel (not
including Tenant's invitees and guests). These passes may not be transferred,
assigned, subleased, or otherwise alienated by Tenant without Landlord's prior
approval, which approval Landlord may withhold in its sole discretion.

Article 29
SECURITY

29.1. SECURITY. Tenant acknowledges (i) that the Base Rent does not
include the cost of any security measures for any portion of the Project (ii)
that Landlord shall have no obligation to provide any such security measures,
(iii) that Landlord has made no representation to Tenant regarding the safety or
security of the Project, and (iv) that Tenant will be solely responsible for
providing any security it deems necessary to protect itself, its property, and
Tenant's employees, agents, contractors, and invitees in, on, or about the
project. If Landlord provides any security measures at any time, then the cost
thereof shall be included as part of the Direct Expenses, but Landlord will not
be obligated to continue providing such security measures for any period of
time, Landlord may discontinue such service without notice and without liability
to Tenant, and Landlord will not be obligated to provide such security measures
with any particular standard of care. Tenant assumes all responsibility for the
security and safety of Tenant, Tenant's property, and Tenant's employees,
agents,

contractors, and invitees. Tenant releases Landlord from all claims for damage,
loss, or injury to Tenant, Tenant's employees, agents, contractors, and
invitees, and/or to the personal property of Tenant and/or of Tenant's
employees, agents, contractors, and invitees, even if such damage, loss, or
injury is caused by or results from the criminal or negligent acts of third
parties. Landlord shall have no duty to warn Tenant of any criminal acts or
dangerous conduct that has occurred in or near the Project, regardless of
Landlord's knowledge of such crimes or conduct, and Tenant is hereby instructed
to conduct its own investigation through local police agencies regarding any
criminal acts or dangerous conduct that has occurred in or near the Project.

Article 30
MISCELLANEOUS

30.1. CAPTIONS. The captions of articles and sections and the table of
contents of this Lease are for convenience only and have no effect on the
interpretation of the provisions of this Lease.

30.2. WORD USAGE. Unless the context clearly requires otherwise, the
plural and singular numbers shall each be considered to include the other; the
masculine, feminine, and neuter genders shall each be considered to include the
others; "Shall", "will", "must", "agrees", and "covenants" are each mandatory;
"May" is permissive; "Or" is not exclusive; and "Includes" and "including" are
not limiting.

30.3. COUNTING DAYS. Days shall be counted by excluding the first day
and including the last day. If the last day is a Saturday, Sunday, or legal
holiday as described in Government Code Sections 6700-6701, it shall be
excluded. Any act required by this Lease to be performed by a certain day shall
be timely performed if completed before 5 p.m. local time on that date. If the
day for performance of any obligation under this Lease is a Saturday, Sunday, or
legal holiday, the time for performance of that obligation shall be extended to
5 p.m. local time on the first following date that is not a Saturday, Sunday, or
legal holiday.

30.4. ENTIRE AGREEMENT; AMENDMENTS. This Lease and all exhibits,
addenda, schedules, and agreements referred to in this Lease constitute the
final, complete, and exclusive statement of the terms of the agreement between
Landlord and Tenant pertaining to Tenant's lease of space in the Building and
supersede all prior and contemporaneous understandings or agreements of the
parties. Neither party has been induced to enter into this Lease by, and
neither party is relying on, any representation or warranty outside those
expressly set forth in this Lease. This Lease may be amended only by an
agreement in writing signed by Landlord and Tenant.

30.5. EXHIBITS. The Exhibits and Addendum, if applicable, attached to
this Lease are a part of this Lease and incorporated into this Lease by
reference.

30.6. REASONABLENESS AND GOOD FAITH. Except as otherwise provided
elsewhere in this Lease, whenever this Lease requires Landlord or Tenant to give
its consent or approval to any action on the part of the other, such consent or
approval shall not be unreasonably withheld or delayed.

30.7. PARTIAL INVALIDITY. If a court or arbitrator of competent
jurisdiction holds any Lease clause to be invalid or unenforceable in whole or
in part for any reason, the validity and enforceability of the remaining
clauses, or portions of them, shall not be affected unless an essential purpose
of this Lease would be defeated by loss of the invalid or unenforceable
provision.

30.8. BINDING EFFECT. Subject to the limitations on Transfer contained
herein, this Lease shall bind and benefit the parties to this Lease and their
legal representatives and successors in interest.

30.9. INDEPENDENT COVENANTS. This Lease shall be construed as though
the covenants between Landlord and Tenant are independent and not dependent.
Tenant expressly waives the benefit of any statute to the contrary and agrees
that if Landlord fails to perform its obligations under this Lease except as
specifically provided herein, Tenant shall not be entitled: (a) to make any
repairs or perform any acts at Landlord's expense; or (b) to any setoff of the
Rent or other amounts owing under this Lease against Landlord. The foregoing,
however, shall in no way impair Tenant's right to bring a separate action
against Landlord for any violation by Landlord of the provisions of this Lease
if notice is first given to Landlord and any lender of whose address Tenant has
been notified, and an opportunity is granted to Landlord and that lender to
correct those violations as provided above.

30.10. GOVERNING LAW. This Lease shall be construed and enforced in
accordance with the laws of the State of California.

30.11. NOTICES. All notices (including requests, demands, approvals, or
other communications) under this Lease shall be in writing. Notice shall be
sufficiently given for all purposes as follows: (a) when personally delivered
to the recipient, notice is effective on delivery, (b) when mailed first class
to the last address of the recipient known to the party giving notice, notice is
effective on delivery, (c) when mailed by certified mail with return receipt
requested, notice is effective on receipt if delivery is confirmed by a return
receipt, (d) when delivered by overnight delivery (FedEx/Airborne/United Parcel
Service/DHL WorldWide Express) with charges prepaid or charged to the sender's
account, notice is effective on delivery if delivery is confirmed by the
delivery service, (e) when sent by telex or fax to the last telex or fax number
of the recipient known to the party giving notice, notice is effective on
receipt as long as (1) the notice is delivered on a business day, and (2) a
duplicate copy of the notice is promptly given by first class or certified mail
or by overnight delivery or (3) the receiving party delivers a written
confirmation of receipt. Any notice given by telex or fax shall be considered
to

have been received on the next business day if it is received after 5 p.m.
(recipient's time) or on a non-business day. Any correctly addressed notice
that is refused, unclaimed, or undeliverable because of an act or omission of
the party to be notified shall be considered to be effective as of the first
date that the notice was refused, unclaimed, or considered undeliverable by the
postal authorities, messenger, or overnight delivery service. Addresses for
purposes of giving notice are set forth in the Summary of Basic Lease
Information. Either party may change its address or telex or fax number by
giving the other party notice of the change in any manner permitted by this
paragraph. If Tenant is notified of the identity and address of Landlord's
lender or ground or underlying lessor, Tenant shall give to that lender or
ground or underlying lessor written notice of any default by Landlord under the
terms of this Lease.

30.12. FORCE MAJEURE. If performance by a party of any portion of this
Lease is made impossible by any prevention, delay, or stoppage caused by
strikes; lockouts; labor disputes; acts of God; inability to obtain services,
labor, or materials or reasonable substitutes for those items; government
actions; civil commotion; fire or other casualty; or other causes beyond the
reasonable control of the party obligated to perform, performance by that party
for a period equal to the period of that prevention, delay, or stoppage is
excused. Tenant's obligation to pay Rent, however, is not excused by this
paragraph.

30.13. TIME OF THE ESSENCE. Time is of the essence of this Lease and
each of its provisions.

30.14. MODIFICATIONS REQUIRED BY LANDLORD'S LENDER. If any lender of
Landlord or ground lessor of the Building and/or Project requires a modification
of this Lease that will not increase Tenant's cost or expense or materially or
adversely change Tenant's rights and obligations, this Lease shall be so
modified and Tenant shall execute whatever documents are required and deliver
them to Landlord within ten (10) business days after the request.

30.15. RECORDING. Neither this Lease nor any memorandum, affidavit, or
other writing relating to this Lease may be recorded by Tenant or anyone acting
through, under, or on behalf of Tenant. Recordation in violation of this
provision constitutes an act of default by Tenant.

30.16. LIABILITY OF LANDLORD. Except as otherwise provided in this
Lease or applicable law, for any breach of this Lease the liability of Landlord
(including all persons and entities that comprise Landlord, and any successor
landlord) and any recourse by Tenant against Landlord shall be limited to the
interest of Landlord and Landlord's successors in interest in and to the
Building and Project and the income and proceeds therefrom. On behalf of itself
and all persons claiming by, through, or under Tenant, Tenant expressly waives
and releases Landlord (and its officers, directors, and shareholders) from any
personal liability for breach of this Lease.

30.17. TRANSFER OF LANDLORD'S INTEREST. Landlord has the right to
transfer all or part of its interest in the Building and Project and in this
Lease. On such a transfer, Landlord shall automatically be released from all
liability thereafter accruing under this Lease, and Tenant shall look solely to
that transferee for the performance of Landlord's obligations under this Lease
after the date of transfer if (i) any security deposit has been transferred by
Landlord to Landlord's successor, and (ii) Landlord's successor agrees to be
bound by the terms of this Lease. Landlord may assign its interest in this
Lease to a mortgage lender as additional security. This assignment shall not
release Landlord from its obligations under this Lease, and Tenant shall
continue to look to Landlord for the performance of its obligations under this
Lease.

30.18. JOINT AND SEVERAL OBLIGATIONS OF TENANT. If more than one
individual or entity comprises Tenant, the obligations imposed on each
individual or entity that comprises Tenant under this Lease shall be joint and
several.

30.19. SUBMISSION OF LEASE. Submission of this document for examination
or signature by the parties does not constitute an option or offer to lease the
Premises on the terms in this document or a reservation of the Premises in favor
of Tenant. This document is not effective as a lease or otherwise until
executed and delivered by both Landlord and Tenant.

30.20. LEGAL AUTHORITY.

30.20.1. CORPORATE AUTHORITY. If Tenant is a corporation, each
individual executing this Lease on behalf of that corporation represents and
warrants that: (a) the individual is authorized to execute and deliver this
Lease on behalf of that corporation in accordance with a duly adopted resolution
of the corporation's board of directors and in accordance with that
corporation's articles of incorporation or charter and bylaws; (b) the
corporation is a duly organized and legally existing corporation in good
standing in the State of California; and (c) the execution and delivery of this
Lease by that corporation shall not result in any breach of or constitute a
default under any mortgage, deed of trust, lease loan, credit agreement,
partnership agreement, or other contract or instrument to which that corporation
is a party or by which that corporation may be bound.

30.20.2. PARTNERSHIP AUTHORITY. If Tenant is a partnership, each
individual executing this Lease on behalf of the partnership represents and
warrants that: (a) the individual is duly authorized to execute and deliver this
Lease on behalf of the partnership in accordance with the partnership agreement,
or an amendment to the partnership agreement, now in effect; (b) the partnership
is a duly organized and legally existing partnership and has filed all
certificates required by law; and (c) the execution and delivery of this Lease
shall not result in any breach of or constitute a default under any mortgage,
deed of trust, lease, loan, credit agreement,

partnership agreement, or other contract or instrument to which the partnership
is a party or by which the partnership may be bound.

30.20.3. LIMITED LIABILITY COMPANY AUTHORITY. If Tenant is a limited
liability company, each individual executing this Lease on behalf of the company
represents and warrants that: (a) the individual(s) executing this Lease on
behalf of the company has/have full power and authority under the company's
governing documents to execute and deliver this Lease in the name of and on
behalf of the company and to cause the company to perform its obligations under
this Lease; (b) the company is a limited liability company duly organized and
validly existing under the laws of the State of California; and (c) the company
has the power and authority under applicable law and its governing documents to
execute and deliver this Lease and to perform its obligations under this Lease.

30.20.4. LANDLORD'S AUTHORITY. Each person executing this Lease on
behalf of Landlord represents and warrants that he or she is fully authorized
and empowered to do so and thereby bind Landlord hereunder.

30.21. RIGHT TO LEASE. Landlord reserves the absolute right to contract
with any other person or entity to be a tenant in the Building as Landlord, in
Landlord's sole business judgment, determines best to promote the interests of
the Building. Tenant does not rely on the expectation, and Landlord does not
represent, that any specific tenant or type or number of tenants will, during
the Lease Term, occupy any space in the Building.

30.22. NO AIR RIGHTS. No rights to any view from the Premises or to
exterior light or air to the Premises are created under this Lease.

30.23. BROKERS. Landlord and Tenant each represents to the other that
it has had no dealings with any real estate broker or agent in connection with
the negotiation of this Lease, except for the real estate brokers or agents
specified in the Summary of Basic Lease Information and that they know of no
other real estate broker or agent who is entitled to a commission or finder's
fee in connection with this Lease. Each party shall indemnify, protect, defend,
and hold harmless the other party against all claims, demands, losses,
liabilities, lawsuits, judgments, and costs and expenses (including reasonable
attorney fees) for any leasing commission, finder's fee, or equivalent
compensation alleged to be owing on account of the indemnifying party's dealings
with any real estate broker or agent other than the Brokers. The terms of this
Section shall survive the expiration or earlier termination of the Lease Term.

30.24. TRANSPORTATION MANAGEMENT. Tenant shall fully comply with all
current or future compulsory programs imposed by any public authority, intended
to manage parking, transportation, or traffic in and around the Building. In
connection with this compliance, Tenant shall take responsible action for the
transportation planning and management of all employees located at the Premises
by working directly with Landlord, any government transportation management
organization, or other transportation related committees or entities. This
provision includes programs such as the following: (a) restrictions on the
number of peak hour vehicle trips generated by Tenant; (b) encouragement of
increased vehicle occupancy through employer sponsored financial or in kind
incentives; (c) implementation of an in house or area wide ridesharing program
and appointment of an employee transportation coordinator; and (d) flexible work
shifts for employees.

30.25. QUIET ENJOYMENT. So long as Tenant timely and completely
performance all of its obligations hereunder, Landlord covenants that Tenant
shall have the quiet enjoyment of the Premises subject to all of the terms,
provisions, and conditions of this Lease.

30.26. DISCLAIMER. Nothing in this Lease shall constitute an offer to
lease, nor shall the terms of this Lease be binding until signed by both Tenant
and Landlord.

DATE: April 7, 1998

LANDLORD: TENANT:

Pacific Torrey Reserve Holdings, L.P., Collateral Therapeutics, Inc.
a California limited partnership a California corporation

By: American Assets, Inc.,
a California corporation
Agent for Owner By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------- ----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ Title: Chief Operating Officer
Chief Executive Officer ---------------------------
4/9/98

By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇, Ph.D.
----------------------------
Title: President & C.E.O
---------------------------

EXHIBIT A
SITE PLAN OF PROJECT

This EXHIBIT A is intended to show the general configuration of the Project and
the Building as of the Commencement Date and is not a representation or warranty
by Landlord as to the size, nature or exact configuration of the Project or
Building.

[PICTURE]

EXHIBIT B
DIAGRAM OF PREMISES

This EXHIBIT B is intended to show the general configuration of the Premises as
of the Commencement Date and is not a representation or warranty by Landlord as
to the size, nature or exact configuration of the Premises.

[PICTURE]

EXHIBIT D
NOTICE OF BASIC LEASE INFORMATION

To:
------------------------
------------------------
------------------------

RE: Office Lease, dated ______________________

LANDLORD:_______________________________________________________________________

TENANT:_________________________________________________________________________

PREMISES:_______________________________________________________________________

BUILDING: The Building located at______________________________________________

RESPONSE DEADLINE:______________________________________________________________

Dear Sir or Madam:

In accordance with the office lease referred to above (Lease), we wish to
advise you and confirm the following:

1. Construction of the Tenant Improvements is substantially completed, and
the Lease Term shall commence as of _________________, for a term of
________________ months, ending on _______________.

2. The exact Rentable Area of the Premises is ___________________ Rentable
Square Feet.

3. In accordance with the Lease, Base Rent began to accrue on , in
the amount of

4. If the Lease Commencement Date is other than the first day of the
month, the first billing shall contain a pro rata adjustment based on the actual
number of days in the first calendar month. Each subsequent billing, with the
exception of the final billing, shall be for the full amount of the monthly
installment as provided for in the Lease; provided that any prepaid rent in
excess of the amount set forth in the first billing shall be credited against
Rent for the second calendar month of the Lease Term.

5. Base Rent and any estimated Operating Expense and Tax payments are due
and payable in advance on the first day of each month during the Lease Term.
Your rent checks should be made payable to _________________________________ at
____________________________________________________________

6. Tenant's Share, as of the Commencement Date, and as adjusted based on
the exact number of Rentable Square Feet in the Premises, is _________________.

LANDLORD: TENANT:

Pacific Torrey Reserve Holdings, L.P., Collateral Therapeutic, Inc.
a California limited partnership a California corporation

By: American Assets, Inc. By:_____________________________
a California corporation Name:___________________________
Agent for Owner Title:__________________________

By:__________________________ By:_____________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ Name:___________________________
Chief Executive Officer Title:__________________________

EXHIBIT E
RULES AND REGULATIONS

Tenant shall comply with the following Rules and Regulations. Landlord
shall not be responsible to Tenant for the nonperformance of any of these Rules
and Regulations.

1. LOCKS; KEYS. Tenant shall not alter any lock or install any new or
additional locks or bolts on any doors or windows of the Premises without
obtaining Landlord's prior written consent. Tenant shall bear the cost of any
lock changes or repairs required by Tenant. Landlord for the Premises shall
furnish two keys, and any additional keys required by Tenant must be obtained
from Landlord at a reasonable cost to be established by Landlord.

2. DOORS OPENING TO PUBLIC CORRIDORS. All doors opening to public
corridors must be kept closed at all times except for normal ingress to and
egress from the Premises.

3. SECURING DOORS; ADMISSION TO BUILDING. Landlord reserves the right to
close and keep locked all entrance and exit doors of the Building during the
hours when Comparable Buildings are customarily closed and locked. When
departing after the Building's normal business hours, Tenant and Tenant's
employees and agents must be sure that the doors to the Building are securely
closed and locked. Any person, including Tenant and Tenant's employees and
agents, who enters or leaves the Building at any time when it is locked or at
any time considered to be after the Building's normal business hours, may be
required to sign the Building register. Access to the Building may be refused
unless the person seeking access has proper identification or has previously
arranged a pass for access to the Building. Landlord and its agents shall not
be liable for damages for any error concerning the admission to, or exclusion
from, the Building of any person. Landlord reserves the right, in the event of
invasion, mob, riot, public excitement, or other commotion, to prevent access to
the Building or Project during the continuance of that event by any means it
considers appropriate for the safety and protection of life and property.

4. FURNITURE, FREIGHT, AND EQUIPMENT; SERVICE DELIVERIES. No furniture,
freight, or equipment of any kind may be brought into the Building without prior
notice to Landlord. All moving activity into or out of the Building must be
scheduled with Landlord and done only at the time and in the manner designated
by Landlord. No service deliveries (other than messenger services) shall be
allowed between the hours of 4 p.m. and 6 p.m., Monday through Friday. Landlord
may at any time restrict the elevators and areas of the Building into which
messengers may enter and may require that Tenant leave deliveries at the lobby
security desk for pickup. Landlord may prescribe the weight, size, and position
of all safes and other heavy property brought into the Building and the times
and manner of moving those items within and out of the Building. Tenant shall
not overload the floor of the Premises. If considered necessary by Landlord,
safes and other heavy objects must stand on supports that are adequate to
distribute the weight properly. Landlord shall not be responsible for loss of
or damage to any safe or property. Any damage to any part of the Building or to
its contents, occupants or visitors caused by moving or maintaining any safe or
other property referred to in this clause shall be the sole responsibility and
expense of Tenant.

5. RECEIPT OF DELIVERIES; USE OF ELEVATORS. No furniture, packages,
supplies, equipment, or merchandise may be received in the Building or carried
up or down in the elevators, except between those hours and in that specific
elevator that Landlord shall designate.

6. NO DISTURBANCE OF OTHER OCCUPANTS. Tenant shall not disturb, solicit,
or canvass any occupant of the Project and shall cooperate with Landlord and
Landlord's agents to prevent those actions.

7. USE OF RESTROOMS; RESPONSIBILITY FOR DAMAGE. The restrooms, urinals,
wash bowls, and other apparatus shall not be used for any purpose other than
that for which they were constructed, and no foreign substance of any kind shall
be thrown into them. The expense of any breakage, stoppage, or damage resulting
from violation of this rule shall be borne by the tenant who caused, or whose
employees or agents caused, the breakage, stoppage, or damage.

8. HEATING AND AIR-CONDITIONING. Tenant shall not use any method of
heating or air-conditioning, other than that supplied by Landlord, without
Landlord's prior written consent.

9. FOUL OR NOXIOUS GASES OR SUBSTANCES; NONINTERFERENCE WITH OTHERS.
Tenant shall not use or keep, or allow to be used or kept, any foul or noxious
gas or substance in or on the Premises. Tenant shall not allow the Premises to
be occupied or used in a manner causing noise, odors, or vibrations that are
offensive or objectionable of Landlord or other occupants of the Project.

10. ANIMALS, BIRDS, AND VEHICLES. Tenant shall not bring into, or keep
within, the Premises or the Building any animals, birds, or vehicles (e.g.,
bicycles).

11. COOKING; NO USE OF PREMISES FOR IMPROPER PURPOSES. Unless included in
Tenant's Permitted Use, no cooking shall be done or permitted on the Premises,
except that Underwriters' Laboratory (UL)-approved equipment and microwave ovens
may be used in the Premises for heating food and brewing coffee, tea, hot
chocolate, and similar beverages for employees and visitors. This use must be
in accordance with all applicable federal, state, and city laws, codes,
ordinances, rules and regulation.

12. TELEPHONE AND OTHER WIRES. Tenant may not introduce telephone wires
or other wires into the Premises without first obtaining Landlord's approval of
the method and location of such introduction. No boring or cutting for
telephone wires or other wires shall be allowed without Landlord's consent. The
location of telephones, call boxes, and other office equipment affixed to the
Premises shall be subject to Landlord's prior approval.

13. EXCLUSION AND EXPULSION. Landlord reserves the right to exclude or
expel from the Project any person who, in Landlord's judgment, is under the
influence of alcohol or drugs or commits any act in violation of any of these
Rules and Regulations.

14. LOITERING PROHIBITED. Tenant and Tenant's employees and agents shall
not loiter in or on the entrances, corridors, sidewalks, lobbies, halls,
stairways, elevators, or common areas for the purpose of smoking tobacco
products or for any other purpose. Tenant and Tenant's employees and agents
shall not obstruct those areas but use them only as a means of ingress to and
egress from the Premises.

15. OPERATION OF ELECTRICITY, WATER, AND AIR-CONDITIONING. Tenant shall
not waste electricity, water, or air-conditioning and shall cooperate fully with
Landlord to ensure the most effective operation of the Building's heating and
air-conditioning system. Tenant shall not adjust any controls of that heating
and air-conditioning system.

16. DISPOSAL OF TRASH AND GARBAGE. Tenant shall store all trash and
garbage within the interior of the Premises. Tenant shall not place or have
placed in the trash boxes or receptacles any material that may not or cannot be
disposed of in the ordinary and customary manner of removing and disposing of
trash in the vicinity of the Building. In disposing of trash and garbage,
Tenant shall comply fully with any law or ordinance governing that disposal.
All trash, garbage, and refuse disposal shall be made only through entry-ways
and elevators provided for that purpose and shall be made only at times
designated by Landlord.

17. COMPLIANCE WITH SAFETY REGULATIONS. Tenant shall comply with all
safety, fire protection, and evacuation procedures and regulations established
by Landlord or by any government agency.

18. PROTECTION OF PREMISES. Tenant shall assume all responsibility,
including keeping doors locked and other means of entry to the Premises closed,
for protecting the Premises from theft, robbery, and pilferage.

19. AWNINGS, CURTAINS AND ELECTRICAL CEILING FIXTURES. No awnings or
other projection shall be attached to the outside walls of the Building without
Landlord's prior written consent. No curtains, blinds, shades, or screens shall
be attached to, hung in, or used in connection with any window or door of the
Premises without Landlord's prior written consent. All electrical ceiling
fixtures hung in offices or spaces along the perimeter of the Building must be
fluorescent or of a quality, type, design, and bulb color approved by Landlord.
Tenant shall abide by Landlord's regulations concerning the opening and closing
of window coverings attached to those windows, if any, in the Premises that have
a view of any interior portion of the Building or Building Common Areas.

20. NON-OBSTRUCTION OF LIGHT. Tenant shall not cover or obstruct the
sashes, sash doors, skylights, windows, and doors that reflect or admit light
and air into the halls, passageways, or other public places in the Building.
Tenant shall not place any bottles, parcels, or other articles on the
windowsills.

21. PROVISION OF INFORMATION TO TENANT'S EMPLOYEES. Tenant shall comply
with requests by Landlord that Tenant inform Tenant's employees of items of
importance to Landlord.

22. HAND TRUCKS AND SIMILAR EQUIPMENT. Without Landlord's prior consent,
Tenant shall not use, in any space or in the public halls of the Building, any
hand trucks unless they are equipped with rubber tires and side guards or
similar equipment. Tenant shall not bring any other vehicles of any kind into
the Building.

23. PARKING RULES AND REGULATIONS. Without Landlord's prior written
consent, no automobile detailing or washing shall be permitted in the parking
areas of the Building or Project.

24. RULES CHANGES; WAIVERS. Landlord reserves the right at any time to
change or rescind any one or more of these Rules and Regulations or to make any
additional reasonable Rules and Regulations that, in Landlord's judgement, may
be necessary for: (a) The management, safety, care, and cleanliness of the
Premises, Building, and Project; (b) The preservation of good order; and (c) The
convenience of other occupants and tenants in the Premises, the Building, and
the Project.

Landlord may waive any one or more of these Rules and Regulations for the
benefit of any particular tenants. No waiver by Landlord shall be construed as
a waiver of those Rules and Regulations in favor of any other tenant, and no
waiver shall prevent Landlord from enforcing those Rules or Regulations against
any other tenant of the Project. Tenant shall be considered to have read these
Rules and Regulations and to have agreed to abide by them as a condition of
Tenant's occupancy of the Premises.

EXHIBIT F
ESTOPPEL CERTIFICATE

The undersigned certifies as follows:

1. The undersigned (Tenant) and _________________________, a
_____________________ (Landlord) entered into a written office lease dated
___________________, in which Landlord leased to Tenant and Tenant leased from
Landlord premises in the office building located at _____________________
(Building). The Building described in Lease Article 1 (Project, Building and
Premises). The Lease has been amended, modified, and supplemented as follows:
_________________________________________. The leased, as amended, modified,
and supplemented, is referred to in this Certificate as the "Lease."

2. Under the Lease, Tenant has leased approximately _____________
rentable square feet of space (Premises) in the Building and has paid to
Landlord a security deposit of ____________. The term of the Lease began on
_____________, and expires on _____________, subject to any options to extend
identified in Section 4 of this Exhibit. Tenant has paid Base Rent through
____________. The next payment of Base Rent in the amount of _____________ is
due on ___________________. Tenant is required to pay _____ percent of the
Direct Expenses (as defined in Lease Article 5) for the Building and Project, in
excess of Direct Expenses for the base year __________.

3. Tenant is entitled to _____________ unreserved parking spaces free of
charge.

4. The Lease provides for ____________ option(s) to extend the term of
the Lease for __________ years each. The rental rate for each extension term is
as follows: ________________________________

5. There are no oral or written amendments, modifications, or supplements
to the Lease except as stated in Section 1 of this Certificate. A true,
correct, and complete copy of the Lease, including all amendments,
modifications, and supplements, is attached to this Certificate. The Lease, as
amended, modified and supplemented is in full force and effect and represents
the entire agreement between Landlord and Tenant pertaining to the Premises, the
Building, and the Project.

6. All space and improvements leased by Tenant have been completed and
furnished in accordance with the provisions of the lease, and Tenant has
accepted and taken possession of the Premises. All contributions required to be
paid by Landlord to date for improvements to the Premises have been paid in
full.

7. To the best of Tenant's knowledge, Landlord is not in default in the
performance of any of the terms or provisions of the Lease. Tenant is not in
default in the performance of any of the terms or provisions of the Lease and
has not assigned, transferred, or hypothecated the Lease or any interest in the
Lease or subleased all or part of the Premises.

8. There are no setoffs or credits against Rent payable under the Lease.
No free periods or rental abatements, rebates, or concessions have been granted
to Tenant, except as follows: _____________________________________

9. Tenant has no actual knowledge of any processing, use, storage,
disposal, release, or treatment of any hazardous or toxic material or substance
on the Premises or the Project except as follows:
.

10. There are no pending actions, voluntary or involuntary, under any
bankruptcy or insolvency laws of the United States or any state against Tenant
or any guarantor of Tenant's obligations under the Lease.

This Certificate is given to ___________________ as [lender or purchaser]
with the understanding that he/she/it or his/her/its assignee shall rely on it
in connection with the [acquisition of the Building and/or Project/making a loan
secured by the Building, the land upon which the Building is located and the
Project]. Following that [acquisition/loan], Tenant agrees that the Lease shall
remain in full force and effect and shall bind and inure to the benefit of the
[purchaser/lender] and its successor in interest.

TENANT

___________________________
___________________________
___________________________

By:________________________
Name:___________________
Title:__________________

EXHIBIT G
LETTER OF CREDIT

Irrevocable Standby Letter of Credit No.________________ Date: MMM.XX, 199X
--------------------------------------------------------------------------------

------------------------------------ -------------------------------------
BENEFICIARY APPLICANT
PACIFIC TORREY RESERVE COLLATERAL THERAPEUTICS
HOLDINGS, L.P. (OR ITS ASSIGNEE)
C/O AMERICAN ASSETS, INC.
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇

EXPIRY DATE AND PLACE FOR AMOUNT
PRESENTATION USD $680,983.00
OF DOCUMENTS: U.S. DOLLAR CURRENCY SIX
DEC. 1, 1999 AT OUR COUNTERS: HUNDRED EIGHTY THOUSAND NINE
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇. HUNDRED AND EIGHTY ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------------------ -------------------------------------

WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT IN YOUR FAVOR
AVAILABLE BY PAYMENT OF YOUR DRAFT(S) DRAWN AT SIGHT ON IMPERIAL BANK,
INTERNATIONAL DIVISION, REDONDO BEACH, CALIFORNIA. DRAFT(S) MUST BE MARKED AS
DRAWN UNDER IMPERIAL BANK STANDBY LETTER OF CREDIT NO. _______________ AND
ACCOMPANIED BY THE FOLLOWING DOCUMENT(S):

1. THE ORIGINAL OF THIS STANDBY LETTER OF CREDIT AND AMENDMENT(S) IF ANY.

2. BENEFICIARY'S SWORN STATEMENT OR DECLARATION SIGNED BY TWO OFFICERS THAT
EITHER: (I) APPLICANT IS IN DEFAULT UNDER TERMS OF THE LEASE BETWEEN
BENEFICIARY, AS LANDLORD, AND APPLICANT AS TENANT, DATED APRIL 7, 1998
("LEASE") AND ANY CURE PERIODS PROVIDED IN SAID LEASE HAVE EXPIRED WITHOUT
SUCH DEFAULT HAVING BEEN REMEDIED OR CURED; OR (II) THIS LETTER OF CREDIT
HAS NOT BEEN RENEWED OR REPLACED WITHIN THIRTY (30) DAYS PRIOR TO ITS
EXPIRATION.

SPECIAL INSTRUCTIONS:

1. PARTIAL DRAWINGS ARE PERMITTED.

2. THE AMOUNT OF THIS STANDBY LETTER OF CREDIT MAY BE REDUCED ANNUALLY SO LONG
AS THE APPLICANT PROVIDES A SWORN STATEMENT OR DECLARATION SIGNED BY TWO
OFFICERS THAT SUCH REDUCTION IS IN ACCORDANCE WITH THE TERMS OF THE LEASE.

3. THIS STANDBY LETTER OF CREDIT TERMINATES WHEN COLLATERAL THERAPEUTICS, INC.
PROVIDES A SWORN STATEMENT OR DECLARATION

EXHIBIT G
LETTER OF CREDIT

SIGNED BY TWO OFFICERS THAT THE APPLICANT HAS RAISED AT LEAST TWENTY
MILLION DOLLARS ($20,000,000) THROUGH AN INITIAL PUBLIC OFFERING AND
IS NOT IN DEFAULT UNDER PROVISIONS OF THE LEASE.

WE HEREBY ENGAGE WITH YOU THAT ALL DRAFTS DRAWN UNDER AND IN COMPLIANCE WITH THE
TERMS OF THIS CREDIT WILL BE DULY HONORED IF DRAWN AND PRESENTED FOR PAYMENT AT
THIS OFFICE ON OR BEFORE THE EXPIRATION DATE OF THIS CREDIT.

EXCEPT SO FAR AS OTHERWISE EXPRESSLY STATED, THIS CREDIT IS SUBJECT TO THE
"UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS" (1993 REVISION)
INTERNATIONAL CHAMBER OF COMMERCE (PUBLICATION NO. 500).

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

Collateral Therapeutics Inc.

----------------------------------
Authorized Signature
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chief Operating & Financial Officer

TENANT IMPROVEMENT AGREEMENT

Landlord and Tenant are executing simultaneously with this Tenant
Improvement Agreement ("Agreement"), a written lease ("Lease") covering those
certain premises more particularly described in Exhibit A to the Lease
("Premises"), in the Building more particularly described in the Lease.
Landlord and Tenant agree that Landlord shall improve and prepare the Premises
on Tenant's behalf and for Tenant's occupancy, on the terms and conditions set
forth in this Agreement. To induce Landlord and Tenant to enter into the Lease
(which is hereby incorporated by reference to the extent that the provisions of
this Agreement may apply thereto) and in consideration of the mutual covenants
hereinafter contained, Landlord and Tenant mutually agree as follows:

1. DEFINITIONS AND REPRESENTATIVES. All terms used herein which are not
defined shall have the meanings ascribed to them in the Lease. Landlord
appoints Landlord's Representative to act for Landlord and Tenant appoints
Tenant's representative to act for Tenant in all matters covered by this
Agreement. All inquiries, requests, instructions, authorizations and other
communications with respect to the matters covered by this Agreement will be
made to Landlord's Representative or Tenant's Representative, as the case may
be. Tenant will not make any inquiries of or requests to, and will not give any
instructions or authorizations to, any other employee or agent of Landlord,
including Landlord's architect, engineers and contractors or any of their agents
or employees, with regard to matters covered by this Agreement. Either party
may change its Representative under this Agreement at any time with three
business (3) days' prior written notice to the other party.

Tenant's Representative:
---------------------------------------------------
Landlord's Representative: ▇▇▇▇ ▇▇▇▇▇, Vice President,
c/o American Assets, Inc.
---------------------------------------------
Landlord's Space Planner ("Space Planner"): Facility Solutions
--------------------------------

Landlord's Contractor ("Contractor"): ▇▇▇▇▇▇▇▇ CONSTRUCTION COMPANY, WITH
ALL MAJOR SUBCONTRACTORS TO BE COMPETITIVELY BID, SUBJECT TO TENANT'S
REASONABLE APPROVAL OF THE SUBCONTRACTORS SELECTED BY LANDLORD.

2. PLANS AND SPECIFICATIONS/TENANT IMPROVEMENTS. The Premises shall be
improved by Landlord with certain tenant improvements ("Tenant Improvements") in
accordance with plans and specifications prepared by Landlord's Space Planner,
dated TBD , ("Plans and Specifications"). The Plans and Specifications shall
be approved by Landlord and Tenant prior to the date of this Agreement. Subject
to Landlord's approval, up to fifty percent (50%) of the ceiling area loft may
be left open and unfinished. Landlord's approval of the Plans and
Specifications for the Tenant Improvements shall create no responsibility or
liability on the part of Landlord for their completeness, design sufficiency, or
compliance with all laws, rules, and regulations of governmental agencies or
authorities. The cost of the Tenant Improvements shall he allocated between
Landlord and Tenant as provided in Section 7 of this Agreement. Landlord, at
its option, shall either (i) assign to Tenant any warranty it receives from the
Contractor with regard to the Tenant Improvements, provided any such warranty
shall be for a period of at least ninety (90) days or (ii) warrant to Tenant for
a period of one (1) year following the Lease Commencement Date the workmanship
of the Tenant Improvements to the standards set forth in the Plans and
Specifications. Upon delivery of such possession, Tenant shall immediately
proceed with due diligence, at its own expense, to install in the Premises
Tenant's personal property (meaning all items of Tenant's furnishings, trade
fixtures and equipment) without interference with Landlord's construction of the
Tenant Improvements and in compliance with all reasonable rules which Landlord
may reasonably make. Tenant shall, upon final completion of its work, furnish
Landlord with all certificates and approvals relating to any work or
installations done by Tenant that may be required by any governmental or
insurance requirement. Tenant shall be responsible for all permits and plan
checks required by governmental agencies for its work. Landlord shall have no
responsibility for any loss of or damage to any of Tenant's personal property so
installed or left in the Premises during the construction of the Tenant
Improvements. Tenant's entry into the Premises prior to the Commencement Date
shall be subject to all the provisions of this Lease other than the payment of
Rent; and at all times after such, entry, Tenant shall maintain or cause to be
maintained in effect, insurance compliant with the provisions of this Lease, and
Tenant shall provide a certificate of insurance to Landlord which so complies
with the terms of this Lease prior to Tenant's entry onto the Premises relating
to such work or installations. During the construction of the Tenant
Improvements, Landlord's representative shall meet with Tenant as is reasonably
necessary to discuss the progress of construction and shall provide Tenant with
monthly reports on the cost of construction of the Tenant Improvements.

3. CHANGE ORDERS. Tenant may authorize changes in the work during
construction, only by written instructions from Tenant's Representative to
Landlord's Representative on a form approved by Landlord. All such changes
shall be subject to Landlord's prior written approval in accordance with Section
4 of this Agreement. Prior to commencing any change, Landlord shall prepare and
deliver to Tenant, for Tenant's approval, a change order (the "Change Order")
setting forth the additional time required to perform the change and the total
cost of such change, which will include associated architectural, engineering
and construction contractor's fees, delay costs, additional coordination costs,
and the cost of Landlord's overhead at the rate of ten percent (10%) of the
amount of the Change Order, not to exceed $l,000.00 per Change Order. If Tenant
fails to approve such Change Order within two (2) business days after delivery
by Landlord, Tenant shall be deemed to have withdrawn the proposed Change Order
and Landlord shall not proceed to perform the change. Upon

Landlord's receipt of Tenant's approval, Contractor shall proceed to perform the
change and Tenant shall pay for such Change Order at the time Contractor starts
work on such Change Order.

4. LANDLORD'S APPROVAL. Landlord may withhold its approval of any
revisions to the Plans and Specifications requested by Tenant, or any Tenant
Change Orders which require work which: (i) exceeds or affects the structural
integrity of the Building or any part of the Utility Installations or HVAC
System; (ii) is not approved by the holder of any Mortgage encumbering the
Building at the time the work is proposed; (iii) violates any agreement which
affects the Building or which binds Landlord; (iv) Landlord reasonably believes
will increase the cost of operation or maintenance of any of the systems of the
Building; (v) Landlord reasonably believes will reduce the market value of the
Building at the end of the Term; (vi) does not conform to applicable building
codes or is not approved by any governmental authority with jurisdiction over
the Premises and/or the Building; (vii) does not conform to Landlord's "Building
Standard" tenant improvement specifications unless otherwise approved by
Landlord; or (vii) Landlord reasonably believes will result in a delay in the
completion of the Tenant Improvements, or result in an increase in the cost of
the Tenant Improvements (unless Tenant pays such excess in advance).

5. SUBSTANTIAL COMPLETION AND COMMENCEMENT DATE. The Commencement Date
under the Lease shall not occur until the earlier to occur of (i) Substantial
Completion of the Tenant Improvements and tender of possession of the Premises
to Tenant; or (ii) the date Tenant opens for business in the Premises; or (iii)
the date that Substantial Completion of the Tenant Improvements would have
occurred but for Tenant Delays (as defined below). If Substantial Completion of
the Tenant Improvements shall be delayed as a result of a Tenant Delay, the
Commencement Date shall be accelerated by the number of days of such Tenant
Delay; provided that, for those Tenant Delays included in clause (e) only,
Landlord shall provide Tenant written notice not less than ten business days
after Landlord discovers (or reasonably could have discovered) that such Tenant
Delay has commenced or occurred, but if Tenant cures such Tenant Delay within
one business day after receiving such notice from Landlord, the Commencement
Date will not be accelerated. Each of the following events shall be deemed a
"Tenant Delay": (a) delays resulting from any direction by Tenant that Landlord
suspend work or otherwise hold up construction of any portion of the Tenant
Improvements because of a possible Change Order by Tenant or for any other
reason directed by Tenant; (b) delays because portions of Tenant Improvements
cannot be performed until work to be performed by or on behalf of Tenant is
performed; (c) delays due to the failure of Tenant to pay when due any amount
payable pursuant to this Exhibit; (d) delays which result directly or indirectly
from Tenant's changes in the Plans and Specifications; or (e) any other action
or inaction of Tenant that directly or indirectly delays Landlord in completing
the Tenant Improvements. Tenant shall pay any actual and documented costs or
expenses incurred by Landlord as a result of any Tenant Delays, including
without limitation, any increases in costs or expenses for labor or materials.

As used in this Lease and this Agreement, the term "Substantial Completion
of the Tenant Improvements" shall mean that (i) all of the Base Building Systems
are operational to the extent necessary to service the Premises, (ii) Landlord
has procured an Authorization to Occupy/Certificate of Occupancy (or an
equivalent from the City for such work), either temporary or final, (iii)
Landlord has completed the Tenant Improvements substantially in accordance with
this Agreement except for finishing details of construction, decoration,
mechanical, and other adjustments and other items of the type commonly found on
an architectural "punch list", none of which materially interfere With Tenant's
use or occupancy of the Premises for normal business operations, and (iv) the
Premises have been professionally cleaned and free from debris.

6. TENANT'S PUNCH LIST. Upon Substantial Completion of the Tenant
Improvements, Landlord shall give Tenant three (3) business days prior
notification of a meeting for Tenant to inspect the Tenant Improvements.
Tenant's Representative shall completely examine the Premises and prepare with
Landlord's Representative and Contractor a list of all visible items to be
completed by Contractor to finish the Tenant Improvements. The list shall be
signed by both Landlord and Tenant and all items shall be completed as soon as
reasonably possible. Any items damaged during Tenant's move in or occupancy
shall be repaired or replaced by Contractor at Tenant's sole cost and expense
and not as part of the Tenant Improvement Allowance. Landlord agrees to proceed
with due diligence to complete all such punch list items within thirty (30) days
of its receipt of such list. Any additional punch list items discovered by
Tenant within thirty (30) days following the Commencement Date shall be
incorporated into the Punch List.

7. TENANT IMPROVEMENT ALLOWANCE. Landlord agrees to provide Tenant an
allowance (the "Tenant Improvement Allowance") in an amount not to exceed
$461,188.00 which amount represents $28.00 per Rentable Square Foot less the
square footage attributable to (i) the restrooms; (ii) janitor's closet; (iii)
telephone and electric rooms; and (iv) Tenant's share of the ground floor lobby.
Landlord also agrees to provide Tenant with an additional allowance toward the
cost of the Tenant Improvements of up to $8.00 per Rentable Square Foot of space
in the Premises, at Tenant's option ("Additional Tenant Improvement Allowance"),
provided that (a) Tenant gives Landlord written notice of its intention to
exercise its option to utilize the Additional Tenant Improvement Allowance
within thirty (30) days after the execution of this Lease, and (b) such
Additional Tenant Improvement Allowance shall be amortized over the Lease Term
and shall result in an increase of Monthly Base Rent of $.02 per Rentable Square
Foot of space in the Premises for each $l.00 per Rentable Square Feet of
Additional Tenant Improvement Allowance for which Tenant exercises its option.
The Tenant Improvement Allowance and Additional Tenant Improvement Allowance
shall be applied towards, without limitation, any and all costs of construction,
city permits, space planning, working drawings, engineering and the cost of
Landlord's overhead. Landlord agrees that the Contractor shall not be entitled
to general conditions as part of the costs to construct the Tenant Improvements,
as the Contractor is already on the Project site performing construction.
Landlord shall submit to Tenant, prior to commencement to construction of the

Tenant Improvements, a detailed written estimate of the total cost to construct
the Tenant Improvements in accordance with the Plans and Specifications ("Work
Cost Estimate"). Tenant shall approve or disapprove of the Work Cost Estimate
within five (5) business days after receipt thereof from Landlord. The failure
of Tenant to timely deliver notice of disapproval shall be deemed to be Tenant's
approval of the Work Cost Estimate. If Tenant timely reasonably disapproves the
Work Cost Estimate, Tenant shall immediately notify Landlord of such disapproval
and the specific bases for such disapproval within such five (5) business day
period and the parties shall immediately meet in order to revise the Plans and
Specifications so that the Work Cost Estimate can he adjusted to an amount which
is acceptable to Tenant. The amount by which the costs to construct the Tenant
Improvements exceed the Tenant Improvement Allowance, or Tenant Improvement
Allowance plus Additional Tenant Improvement Allowance, if Tenant exercises its
option for same, shall be defined as the "Tenant Extra Cost" and shall be the
sole responsibility of Tenant. Tenant shall pay to Landlord, within five (5)
business days of Landlord's written request therefor, the total amount payable
by Tenant for the Tenant Extra Cost. Any savings achieved during the
construction of the Tenant Improvements shall be applied first to reduce the
Tenant Extra Cost, and any excess Tenant Extra Cost held by Landlord at
completion of the Tenant Improvements shall be refunded to Tenant. Neither the
Tenant Improvement Allowance nor the Additional Tenant Improvement Allowance
will be applied to Tenant's furniture, trade fixtures, and personal property,
moving costs, or Tenant's obligations under the Lease.

8. TENANT WORK. All finish work and other decor work desired by Tenant
and not included within the scope of the Tenant Improvements as set forth in the
approved Plans and Specifications, including, without limitation, computer
systems, telecommunication systems, tenant's security systems and installation
of Tenant's trade fixtures, furnishings and personal property (the "Tenant
Work") shall be furnished and installed by Tenant at Tenant's sole cost and
expense. Commencement of any Tenant Work by Tenant shall not constitute
acceptance by Tenant of any work by Landlord or its Contractor or a waiver of
any rights that Tenant may have against Landlord, its Contractor or others with
respect to the Tenant Improvements.

9. CONFLICTS. In the event of any conflict between the terms of this
Agreement and the Lease, the terms of this Agreement shall control.

DATE: APRIL 7, 1998

LANDLORD: TENANT:

Pacific Torrey Reserve Holdings, L.P., Collateral Therapeutic, Inc.
a California limited partnership a California corporation

By: American Assets, Inc., By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
a California corporation --------------------------------
Agent for Owner Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Title: Chief Operating Officer
-----------------------------

By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇, Ph.D.
-------------------------- --------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇, Ph.D.
Chief Executive Officer ------------------------------
4/9/98 Title: President & CEO
-----------------------------

TORREY RESERVE OFFICE LEASE BETWEEN

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