TEKELEC
LEASE AGREEMENT
<DOCUMENT>
<TYPE>EX-10.12
<SEQUENCE>3
<FILENAME>d25239_ex10-12.txt
<DESCRIPTION>LEASE AGREEMENT
<TEXT>

                                                                   EXHIBIT 10.12














                         LEASE AGREEMENT BY AND BETWEEN


                               TEKELEC, as Tenant


                                       AND


               DUKE CONSTRUCTION LIMITED PARTNERSHIP, as Landlord


                                       AT


                         PERIMETER PARK, MORRISVILLE, NC



<PAGE>


                                TABLE OF CONTENTS

1.   PREMISES AND TERM.

2.   BASE RENT, TAXES, INSURANCE, COMMON AREA MAINTENANCE, AND SECURITY DEPOSIT.

3.   COMPLIANCE WITH LAWS AND USE.

4.   REPAIR AND MAINTENANCE.

5.   ALTERATIONS.

6.   SIGNS.

7.   INSPECTION.

8.   UTILITIES.

9.   ASSIGNMENT AND SUBLETTING.

10.  FIRE AND CASUALTY DAMAGE.

11.  LIABILITY.

12.  CONDEMNATION.

13.  HOLDING OVER.

14.  QUIET ENJOYMENT.

15.  EVENTS OF DEFAULT.

16.  REMEDIES.

17.  LANDLORD'S LIEN.

18.  MORTGAGES.

19.  MECHANIC'S LIENS.

20.  NOTICES.

21.  BROKER'S CLAUSE.

22.  LANDLORD'S LIABILITY.

23.  RULES AND REGULATIONS.

24.  HAZARDOUS MATERIALS.

25.  [INTENTIONALLY DELETED.]

26.  COVENANT OF TENANT.

27.  MISCELLANEOUS.


                                       i


<PAGE>


EXHIBIT A - THE LAND

EXHIBIT B - FLOOR PLAN

EXHIBIT C - PLANS AND SPECIFICATIONS

EXHIBIT C-1 -  SCHEDULE

EXHIBIT C-2 - DESIGN CRITERIA

EXHIBIT D - RULES AND REGULATIONS


                                       ii


<PAGE>
                                                                   EXHIBIT 10.12




                                 LEASE AGREEMENT

     THIS LEASE AGREEMENT (the "Lease"), is made and entered into as of the 19th
day of July,  2000,  by and  between  TEKELEC,  a  California  corporation  (the
"Tenant"),  and  DUKE  CONSTRUCTION  LIMITED  PARTNERSHIP,  an  Indiana  limited
partnership (the "Landlord").

                              W I T N E S S E T H:
                               -------------------

1. PREMISES AND TERM. In  consideration  of the obligation of Tenant to pay rent
as herein  provided,  and in  consideration  of the other terms,  provisions and
covenants hereof, Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord,  certain premises as described below (referred to herein  collectively
as the  "Premises")  comprised of a total of 155,037  rentable  square feet in a
building to be  constructed  by Landlord in  Perimeter  Park  formerly  known as
Paramount Center (the  "Building")  situated on certain land (the "Land") in the
Town of  Morrisville,  the  County  of  Wake,  State  of  North  Carolina,  more
particularly  described on Exhibit A, attached hereto and incorporated herein by
reference,  together with all rights, privileges,  easements,  appurtenances and
immunities  belonging to or in any way  pertaining to the premises  (hereinafter
referred  to as the  "Premises").  The  obligations  of  Tenant  shall  commence
hereunder upon the Phase I Commencement  Date (as  hereinafter  defined) and the
delivery of the Phase I Expansion Space (as hereinafter  defined) by Landlord to
Tenant. The Premises shall include the following space:

     (i)  Approximately  78,294  rentable  square  feet (the  "Phase I Expansion
          Space");
     (ii) Approximately  39,729  rentable  square feet (the "Phase II  Expansion
          Space");  and
     (iii)Approximately  37,014  rentable  square feet (the "Phase III Expansion
          Space").

     A floor plan of the  Premises is attached  hereto and made a part hereof as
Exhibit B. All  measurements  of the Building shall be performed  using the BOMA
standards for commercial office buildings,  1996 edition,  currently  applicable
for a Class A office  building  comparable to the Building.  Except as expressly
set forth herein, the Premises are leased by Tenant "as is". Any upfit performed
by Landlord to prepare the Premises  for  occupancy by Tenant shall be conducted
in a good and  workmanlike  manner.  The taking of possession by Tenant shall be
deemed conclusively to establish that the Premises and any improvements  thereto
are in good and satisfactory  condition as of when possession was taken.  Tenant
further  acknowledges that no  representations as to the repair of the Premises,
nor  promises  to alter,  remodel  or  improve  the  Premises  have been made by
Landlord,  unless such  representations  or promises are  expressly set forth in
this Lease. Within five days of the Commencement Date, Tenant shall, upon demand
of Landlord,  execute and deliver to Landlord a letter of acceptance of delivery
of the Premises,  acknowledging  the Commencement Date and Termination Date, the
square footage  leased,  the square  footage of the Building,  and the dates for
increase in payment of base rent hereunder.  The aforesaid  letter shall reflect
an adjustment of the  Commencement  Date and the  Termination  Date hereunder to
reflect the corrected dates for purposes of this Lease in the event the Premises
are not occupied on the Commencement Date provided in this Lease. Landlord shall
act  reasonably  to provide  Tenant with thirty days prior notice of the Phase I
Commencement Date and Tenant shall be allowed to enter upon the Premises for the
purpose  of  installing  its  furniture,  telephones,  and to wire and cable its
network  systems.  Upon the entry by Tenant onto the Premises the  provisions of
this Lease concerning  insurance and liability  matters shall apply as set forth
in  paragraphs  10 and 11 hereof and  Tenant  shall  ensure  that  Landlord  has
evidence of the insurance maintained by Tenant as required hereunder. Should the
entry by  Tenant  onto the  Premises  unreasonably  disrupt  the  completion  by
Landlord of the upfit of the Premises,  Landlord  shall have the right to refuse
further entry by Tenant upon the Premises until the Phase I Commencement Date.

     Notwithstanding anything to the contrary contained herein, Tenant shall not
be  required to take any  corrective  action with  respect to any  condition  or
design which  constitutes  a latent defect in the Premises by virtue of Tenant's
acceptance  of the  Premises.  If  any  latent  defect  affects  Tenant's  quiet
enjoyment of the Premises,  constitutes a dangerous  condition or is required to
be corrected by law,  then Landlord will  undertake the  appropriate  corrective
action at  Landlord's  cost.  As between  Landlord  and Tenant,  nothing in this
paragraph  shall be  construed  to impose on  Tenant  or  subject  Tenant to any
liability  to any third party for injury to  property or persons  arising out of
latent  defects  unless  such  latent  defects  were  created  by  Tenant or its



                                       1
<PAGE>


employees,  agents or  contractors  in the  course of  repair  work or  physical
improvements  or  alterations  to  the  Premises  performed  by  Tenant  or  its
employees,  agents or contractors.  As between  Landlord and Tenant,  nothing in
this paragraph  shall be construed to impose on Landlord or subject  Landlord to
any  liability to any third party for injury to property or persons  arising out
of latent  defects  unless such latent  defects  were created by Landlord or its
employees,  agents or contractors in the course of  construction of the upfit of
the Premises by Landlord, its employees, agents or contractors.

     All upfit of the Premises shall be performed by Landlord in accordance with
plans and specifications for the Premises (the "Plans") which are subject to the
approval of Landlord  and Tenant,  a copy of which shall be attached  hereto and
made a part hereof as Exhibit C. No charge shall be assessed  against  Tenant by
Landlord  for the review and approval by Landlord of the Plans.  Landlord  shall
provide Tenant with an allowance in an amount up to .10 per rentable square foot
of the  Premises  for use by Tenant in its  preliminary  space  planning for the
upfit of the Premises. All space planning by Tenant is subject to the review and
approval of  Landlord.  Landlord  shall  provide  Tenant with an allowance in an
amount up to $1.00 per rentable square foot of the Premises for use by Tenant in
its turnkey design of the Premises. All design of the Premises is subject to the
review and approval of Landlord. The contractor of Landlord shall use reasonable
efforts to solicit three bids from  subcontractors  for each of the Major Trades
performing upfit of the Premises, including,  mechanical,  electrical, plumbing,
and drywall.  Evidence of all upfit costs  expended by Landlord for Major Trades
shall be kept at the offices of  Landlord  for review by Tenant upon its written
request to Landlord.  Major Trades are defined on Exhibit E, attached hereto and
made a part hereof.  Tenant may, at its expense,  and with the prior  reasonable
approval of Landlord  institute  at the  Premises  the  various  site  amenities
depicted in the plan developed by Allience Architecture dated May 2, 2000.

     Landlord shall provide  Tenant with an upfit  allowance for the Premises in
the  amount of $20.49 per  rentable  square  foot of the  Premises  (the  "Upfit
Allowance").  The Upfit Allowance shall be used to upfit the Premises based upon
the provisions of Exhibit C. Tenant may use a portion of the Upfit Allowance for
the purchase of Smed movable  furniture.  The base  building  design shall be in
accordance with the Design  Criteria,  attached hereto and made a part hereof as
Exhibit  C-2.  Should the upfit  costs for the Phase I Expansion  Space,  or the
Phase II Expansion  Space exceed $20.49 per rentable square foot up to a maximum
of $25.49 per  rentable  square  foot,  this excess shall be applied to the base
rent paid by Tenant  hereunder  at an 11.2  percent  return  to  Landlord.  Upon
completion of the upfit of the Phase III Expansion  Space and  determination  of
the total upfit costs for the Premises,  Landlord shall perform a reconciliation
of such total costs. If upon completion of all upfit of the Premises,  the upfit
costs of Tenant for the Premises exceed the Upfit Allowance, the excess over the
Upfit  Allowance up to an amount equal to $25.49 per rentable square foot of the
Premises  (together with the financing  costs and commissions of Landlord) shall
be  amortized  and repaid at a rate of return of eleven and  two-tenths  percent
(11.2%)  per annum,  proportionately  over the entire  Lease term as  Additional
Rent,  all as reasonably  determined  by Landlord (and any current  increases in
base rent each year shall remain at the same percentage increase).  Any cost and
expense  incurred by Landlord in upfitting  the Premises in excess of $25.49 per
rentable square foot of the Premises (the "Excess") shall be borne by Tenant and
payable  by Tenant to  Landlord  within  thirty  days of demand by  Landlord  to
Tenant. Failure by Tenant to pay the Excess upon demand as aforesaid is an event
of default  hereunder,  and in  addition,  to all other  remedies  available  to
Landlord at law, or in equity for such event of  default,  Landlord  may recover
from Tenant the cost it incurs in  preparing  the  Premises  for another  tenant
which amount shall be reduced by any amounts that Landlord may recoup from a new
tenant.

     Should the upfit  costs of Tenant at the  Premises  be less than $20.00 per
rentable  square foot, as  reasonably  determined  by Landlord,  Landlord  shall
reduce the base rent of Tenant  over the term of this Lease based upon an eleven
percent return on tenant  improvement  costs but any such reduction in base rent
shall  reflect a cost of no less than $15.00 per  rentable  square foot in upfit
costs.  In addition,  the leasing  commissions,  fees,  and  financing  costs of
Landlord shall reflect any reduction based upon a yield of eleven percent.

     Attached hereto as Exhibit C-1 is a schedule for the upfit of the Premises,
including  the dates by which Tenant must make certain  decisions  regarding the
Premises  (the  "Schedule").  Landlord and Tenant shall use diligent  good faith
efforts to ensure construction of the Premises




                                       2
<PAGE>

remains on schedule in accordance with the Schedule,  provided, however, that in
no event shall the  failure of Landlord to deliver the  Premises to Tenant on or
prior to the Commencement Date (as hereinafter  defined) constitute a default by
Landlord under this Lease.  Tenant may not communicate  directly with Landlord's
subcontractors  unless Landlord gives written consent and said  communication is
for the benefit of maintaining the Schedule.  Tenant hereby agrees that it shall
not communicate  directly with the subcontractors of Landlord,  and Tenant shall
instruct its employees,  agents, and independent  contractors not to communicate
directly  with  same  unless   Landlord   provides   written  consent  and  said
communication is for the benefit of maintaining the Schedule.

     As part of the upfit of the Premises,  Landlord  shall  construct a walkway
between  the  Building  and  5200  Paramount  Parkway,   Morrisville,   NC  (the
"Walkway"),  the two  buildings  of  Landlord  that will be  occupied by Tenant.
Tenant shall pay all costs to construct the Walkway (the "Walkway  Costs"),  and
the plans  and  specifications  for same  shall be  subject  to the  review  and
approval of both Landlord and Tenant not to be unreasonably withheld or delayed.
Tenant  shall have the option of repaying  the Walkway  Costs (i) in full within
thirty  days of demand  made by Landlord or (ii) in an amount up to a maximum of
$3.00 per  rentable  square foot of the  Premises  over the initial term of this
Lease  with  interest  at  the  rate  of  twelve  percent  per  annum  in  equal
installments  with each  monthly  payment of base rent  hereunder  by Tenant and
repaying the balance  within  thirty days of demand by Landlord.  Any default by
Tenant  hereunder  in payment of the Walkway  Costs shall be treated in the same
manner as a nonpayment by Tenant hereunder of rent.

     Tenant may use a portion of its Upfit Allowance to purchase and install its
wiring and cabling and for architectural fees for the Premises.

     Tenant has advised  Landlord  that it may wish to  construct  a  volleyball
court  in the  area  between  the  Building  and  5200  Paramount  Parkway  (the
"Volleyball  Court").  Should  Tenant  advise  Landlord  that  it  does  wish to
construct the  Volleyball  Court,  Landlord  shall have the right to approve the
location,  and plans and  specifications  for same. In addition,  Landlord shall
provide Tenant with a credit in an amount equal to the  landscaping  costs saved
by Landlord  due to the  construction  by Tenant of the  Volleyball  Court which
credit shall be applied by Tenant against the Excess,  and the estimated  amount
of the credit for saved landscaping costs of landlord is $650.00.

     TO HAVE AND TO HOLD the same for a term as follows:

     (i) the term of this Lease for the Phase I Expansion  Space shall  commence
     upon the date that a temporary  certificate of occupancy is issued for same
     by the Town of Morrisville, NC which is estimated to be August 1, 2001 (the
     "Phase I Commencement Date");

     (ii) the term of this Lease for the Phase II Expansion Space shall commence
     upon the date that a temporary  certificate of occupancy is issued for same
     by the Town of Morrisville, NC (the "Phase II Commencement Date"); and

     (iii)  the term of this  Lease  for the Phase  III  Expansion  Space  shall
     commence upon the date that a temporary  certificate of occupancy is issued
     for  same by the  Town of  Morrisville,  NC (the  "Phase  III  Commencement
     Date").

     The Phase I Commencement  Date,  Phase II Commencement  Date, and Phase III
     Commencement  Date  shall  be  referred  to  herein   collectively  as  the
     "Commencement Date."

     The term of the Lease for the  Premises  shall end on the date which is one
     hundred and twenty  months (120)  months  after the Phase III  Commencement
     Date (the "Termination  Date"),  unless sooner  terminated  pursuant to the
     provisions hereof.

     Notwithstanding the foregoing,  the Commencement Date of any portion of the
     Premises,  and Termination  Date of same may be modified,  at the option of
     the Landlord, due to delays beyond the control of Landlord,  including, but
     not limited to, permitting,  availability of materials, acts of God, delays
     caused  by  Tenant,  its  agents,   employees,



                                       3
<PAGE>

     invitees,  licensees, or independent contractors,  and/or inclement weather
     but in no event  shall the  Termination  Date be more than one  hundred and
     twenty (120) months after the Phase III Commencement Date. In addition,  in
     the event the  Commencement  Date of any portion of the Premises is delayed
     due to acts or  omissions  of  Tenant,  its  agents,  employees,  invitees,
     licensees,  or independent contractors  (collectively,  the "Tenant Delay")
     and any such Tenant  Delay is not  compensated  for later in the  Schedule,
     such Tenant  Delay shall not delay the  commencement  of this Lease and the
     payment of base rent and other  charges by Tenant  hereunder.  If  Landlord
     causes the delay of the delivery of any portion of the Premises, this Lease
     shall not commence  with respect to such portion  until such portion can be
     delivered to Tenant in accordance with this Lease.

     Option to Renew. Provided there is no default or event of default by Tenant
under the Lease, Tenant shall have the option to renew the term of the Lease for
one  renewal  term of five years  (the  "Renewal  Term") at the then  prevailing
market rate,  as  determined by Landlord but in no event shall the base rent for
the first year of the Renewal Term be less than the base rent for the final year
of the initial  term hereof,  provided  Tenant shall  provide  Landlord  written
notice of its desire to renew the term of the Lease at least twelve months prior
to the  Termination  Date.  Failure  of  Tenant  to  provide  Landlord  with the
aforesaid  written  notice  shall render the rights of Tenant to renew or extend
the term of this Lease null and void.  Upon the exercise by Tenant of its option
to renew,  all of the terms and  conditions  of this Lease shall apply with base
rent being the then  prevailing  market  rate,  and Tenant shall have no further
rights to renew or extend the term of this Lease.  The date of the  commencement
of the Renewal Term shall be the date after the end of the initial term hereof.

     2. BASE RENT,  TAXES,  INSURANCE,  LAWN  DRIVEWAY  AND PAVED  PARKING  AREA
MAINTENANCE, SECURITY DEPOSIT.

          (a) BASE  RENT.  Commencing  upon the  Phase I  Commencement  Date and
     continuing  until the  Termination  Date,  Tenant  agrees  to make  monthly
     payments  of base rent to  Landlord  for the  Premises  ("base  rent"),  in
     advance, without demand, deduction or offset, in lawful money of the United
     States,  in the amount of $13.15 per  rentable  square foot of the Premises
     for lease year one,  and for each lease  year  thereafter,  base rent shall
     increase  on each  anniversary  of the Phase I  Commencement  Date by three
     percent  over the base rent paid the previous  lease year.  Notwithstanding
     the foregoing,  should any  Commencement  Date occur prior to the estimated
     date  shown in the  Schedule,  base rent for the lease  year one  hereunder
     shall be modified by Landlord to reflect the  reduction  in interest  carry
     costs to  Landlord,  if any,  as  reasonably  determined  by  Landlord  and
     Landlord  shall  provide  Tenant  with  a  statement  from  its  accounting
     department stating the total amount of interest carry costs.

          Rent  payments for any  fractional  calendar  month at the end, or the
     beginning  of the term of the  Lease,  shall be  prorated.  Subject  to the
     provisions  of Section 1 hereof  and the  occurrence  of any Tenant  Delays
     which shall require that Tenant commence the payment of base rent and other
     charges hereunder as if such delay(s) had not occurred,  no base rent shall
     be due and payable for the (i) Phase II Expansion  Space until the Phase II
     Commencement  Date, and (ii) Phase III Expansion  Space until the Phase III
     Commencement Date.

          (b) TAXES

          Beginning  on the Phase I  Commencement  Date and  continuing  for the
     entire term hereof,  Tenant shall pay to Landlord,  as  additional  rental,
     Tenant's pro rata share of all taxes,  assessments and governmental charges
     of any kind or nature  whatsoever  levied or assessed  against the Land and
     the Building by any municipality, county, or other governmental agency (the
     "Taxes"),  which  shall be  based  upon the  ratio of the  rentable  square
     footage of the  Building  occupied by Tenant to the total  rentable  square
     footage of the  Building.  Tenant shall pay its pro rata share of the Taxes
     in advance in equal monthly  installments in such amounts as are reasonably
     estimated  for each year by Landlord at the beginning of each calendar year
     during the term,  each such  installment  being made along with payments of
     base rent  hereunder.  Tenant's  share of Taxes for the initial year of the
     term is  estimated  by  Landlord  to be $.95  per  square  foot per year or
     $12,273.76 per month.  Landlord  shall promptly  notify Tenant of the total
     actual taxes assessed  against the Land and the Building,  attaching a copy




                                       4
<PAGE>

     of the tax or special  assessment  bill and shall  specify (i) Tenant's pro
     rata share thereof, and (ii) the excess, if any, of Tenant's pro rata share
     over Landlord's estimation of Taxes for such tax year. Tenant shall pay the
     excess amount so specified to Landlord  within  fifteen (15) days following
     receipt by Tenant of Landlord's  letter.  Failure by Tenant to pay Landlord
     such amount within the period  designated shall constitute a non-payment of
     rent by Tenant and a default of Tenant's  obligation  under the Lease,  and
     Landlord shall be entitled to all remedies  provided for in this Lease upon
     default in payment of rent.  If the first year for which  Tenant's pro rata
     share of the  Taxes  are due or the  final  year of the term  hereof do not
     coincide with the calendar  year,  Tenant's pro rata share of the Taxes for
     the  portion  of that year  shall be  prorated  according  to the number of
     months during which Tenant was in possession of the Premises.  In the event
     Landlord's estimation of Taxes shall exceed the actual amount of Taxes, the
     amount paid by Tenant for such year shall be adjusted  between Landlord and
     Tenant and Tenant shall receive a credit  against the next due  installment
     of rent  hereunder in such excess  amount  unless this Lease has expired or
     been otherwise terminated, in which event Landlord shall pay to Tenant such
     excess  amount  within  fifteen  (15) days  following  receipt by Tenant of
     Landlord's letter.

          (c) INSURANCE

          Beginning  on the Phase I  Commencement  Date and  continuing  for the
     entire term hereof,  Tenant shall pay to Landlord,  as  additional  rental,
     Tenant's pro rata share of the insurance premiums (the "Insurance Expense")
     for  commercial  general  liability,  fire  and  extended  coverage  on the
     Building and the Land,  which shall be based upon the ratio of the rentable
     square footage of the Building to the total rentable  square footage of the
     Building.  Tenant shall pay its pro rata share of the Insurance  Expense in
     advance in equal  monthly  installments  in such amounts as are  reasonably
     estimated  by Landlord at the  beginning of each  calendar  year during the
     term,  each such  installment  being made along with  payments of base rent
     hereunder. Tenant's pro rata share of the Insurance Expense for the initial
     year of the term is  estimated  by  Landlord to be $.03 per square foot per
     year or $387.59 per month.  Landlord  shall  promptly  notify Tenant of the
     total  amount of the actual  Insurance  Expense,  and at Tenant's  request,
     attaching a copy of the Insurance Expense invoice related thereto and shall
     specify (i) Tenant's pro rata share thereof,  and (ii) the excess,  if any,
     of Tenant's  pro rata share over  Landlord's  estimation  of the  Insurance
     Expense for such year.  Tenant shall pay the excess  amount so specified to
     Landlord within fifteen (15) days following receipt by Tenant of Landlord's
     letter.  Failure by Tenant to pay  Landlord  such amount  within the period
     designated  shall  constitute a non-payment of rent by Tenant and a default
     of Tenant's  obligation  under the Lease, and Landlord shall be entitled to
     all remedies provided for in this Lease upon default in payment of rent. If
     the first year for which  Tenant's pro rata share of the Insurance  Expense
     is due or the  final  year of the  term  hereof  do not  coincide  with the
     calendar  year,  Tenant's pro rata share of the  Insurance  Expense for the
     portion of that year shall be  prorated  according  to the number of months
     during  which  Tenant  was in  possession  of the  Premises.  In the  event
     Landlord's  estimation  of the  Insurance  Expense  shall exceed the actual
     amount of the  Insurance  Expense,  the amount paid by Tenant for such year
     shall be adjusted  between  Landlord and Tenant and Tenant shall  receive a
     credit  against the next due  installment  of rent hereunder in such excess
     amount unless this Lease has expired or been otherwise terminated, in which
     event  Landlord  shall pay to Tenant such excess amount within fifteen (15)
     days following receipt by Tenant of Landlord's letter

          (d)  LAWN,  DRIVEWAY,  INTERIOR  COMMON AREA,  AND PAVED  PARKING AREA
               MAINTENANCE

          Beginning  on the Phase I  Commencement  Date and  continuing  for the
     entire term hereof,  Tenant shall pay to Landlord,  as  additional  rental,
     Tenant's  pro rata  share of the cost to  Landlord  of the  lawn,  interior
     common area, and driveway and paved parking area maintenance related to the
     Land upon which the Premises are located (the "CAM Expense") which shall be
     based  upon the  ratio  of the  rentable  square  footage  of the  Building
     occupied by Tenant to the total  rentable  square  footage of the Building.
     The CAM  Expense  shall  include,  without  limitation,  the  costs of lawn
     maintenance, driveway and parking area maintenance for the Premises and for
     the streets and  roadways  providing  access to the  Building and the Land,
     management  and  supervisory  fees,  exterior  lighting  maintenance,  snow
     removal,  waste removal,  repair and  maintenance of paved areas,  cleaning
     supplies,




                                       5
<PAGE>

     miscellaneous  building supplies,  sweeper brushes,  supplies for materials
     used in common by all  tenants  of the  complex in which the  Premises  are
     located, external paint for the Building, exterior and interior common area
     maintenance,  elevator repair and  maintenance,  external  plumbing for the
     Building, exterior lighting in common areas, insect and pest extermination,
     security  guards for the complex in which the Premises  are located,  signs
     for the complex in which the Premises  are  located,  fuel for vehicles and
     street  sweepers  used by Landlord in the complex in which the Premises are
     located and miscellaneous  maintenance  expenses.  Tenant shall pay its pro
     rata share of the CAM Expense in advance in equal monthly  installments  in
     such amounts as are reasonably  estimated for each year of the term of this
     Lease by Landlord at the  beginning of each  calendar year during the term,
     each  such  installment  being  made  along  with  payments  of  base  rent
     hereunder.  Tenant's pro rata share of the CAM Expense for the initial year
     of the term is  estimated  by Landlord to be $1.56 per square foot per year
     or  $20,154.81  per month.  Failure by Tenant to pay  Landlord  said amount
     within the period  designated  shall  constitute a  non-payment  of rent by
     Tenant and a default of Tenant's  obligation  under the Lease, and Landlord
     shall be entitled to all  remedies  provided for in this Lease upon default
     in payment of rent. In the event  Landlord's  estimation of the CAM Expense
     shall exceed the actual amount thereof,  calculated on an annual basis, the
     amount paid by Tenant for such year shall be adjusted  between Landlord and
     Tenant and Tenant shall receive a credit  against the next due  installment
     of rent  hereunder in such excess  amount  unless this Lease has expired or
     been otherwise terminated, in which event Landlord shall pay to Tenant such
     excess amount within  fifteen (15) days  following the receipt by Tenant of
     Landlord's  letter.  Landlord shall notify Tenant on an annual basis of the
     actual CAM Expense of Tenant for the Premises.

          (e)  RECONCILIATION OF EXPENSES.

          Landlord  shall  promptly  notify Tenant of the total actual (i) Taxes
     assessed  against the Land and the Building,  (ii) Insurance  Expense,  and
     (iii) CAM Expense,  attaching a copy of the tax or special assessment bill,
     the insurance  invoice,  or the calculation of CAM Expense,  as applicable,
     and shall specify (i) Tenant's pro rata share thereof, and (ii) the excess,
     if any,  of Tenant's  pro rata share over  Landlord's  estimation  for each
     calendar year.  Tenant shall pay the excess amount so specified to Landlord
     within fifteen (15) days following receipt by Tenant of Landlord's  letter.
     Failure by Tenant to pay Landlord such amount within the period  designated
     shall  constitute a non-payment of rent by Tenant and a default of Tenant's
     obligation  under the Lease, and Landlord shall be entitled to all remedies
     provided  for in this Lease upon  default in payment of rent.  If the first
     year for which Tenant's pro rata share of Taxes,  Insurance Expense, or CAM
     Expense  (hereinafter  collectively,  the  "Expenses") are due or the final
     year of the term hereof do not coincide  with the calendar  year,  Tenant's
     pro rata share of  Expenses  for the portion of that year shall be prorated
     according to the number of months  during which Tenant was in possession of
     the Premises.  In the event Landlord's  estimation of Expenses shall exceed
     the actual  amount of  Expenses,  the  amount  paid by Tenant for such year
     shall be adjusted  between  Landlord and Tenant and Tenant shall  receive a
     credit  against the next due  installment  of rent hereunder in such excess
     amount unless this Lease has expired or been otherwise terminated, in which
     event  Landlord  shall pay to Tenant such excess amount within fifteen (15)
     days following receipt by Tenant of Landlord's letter.

          In the  event  Tenant  shall  dispute  the  amount  set  forth  in any
     statement  provided by Landlord under this  subparagraph  (e), Tenant shall
     have the right,  not later than thirty days  following  the receipt of such
     statement and upon  condition that Tenant shall first deposit with Landlord
     the  undisputed  portion,  if any,  to elect to have  Landlord's  books and
     records  with  respect to such  calendar  year to be  audited  by  auditors
     selected  by Tenant and subject to  Landlord's  reasonable  approval.  Such
     audit must be completed no later than 60 days after  receipt of  Landlord's
     letter,  with  such  time  limit to be  extended  due to  delays  caused by
     Landlord. All costs for the audit shall be borne by Tenant unless the audit
     disclosed an overcharge of five percent or more, in which case the costs of
     the audit not to exceed $1,000 shall be borne by Landlord.  If Tenant shall
     not request an audit in accordance  with the  provisions of this  paragraph
     within thirty days of receipt of Landlord's  statement provided pursuant to
     this  subparagraph  (e), such statement  shall be final and binding for all
     purposes hereof.



                                       6
<PAGE>

          For purposes of this  Section 2, the prorata  share of Tenant shall be
     defined as the percentage of the Building currently being leased by Tenant.

          (f) SECURITY DEPOSIT.

          Tenant  shall pay to Landlord on or before the  execution  date hereof
     the sum of  one-half  of one  month's  base rent to be held by  Landlord as
     security for the performance by Tenant of all obligations imposed on Tenant
     pursuant to this Lease  (hereinafter  the "security  deposit").  Within ten
     days of any increase in the base rent payable by Tenant  hereunder,  Tenant
     shall deposit with Landlord the amount needed to ensure that Landlord holds
     at all times an amount  equal to one  month's  base rent  hereunder  as the
     security  deposit.  Landlord  shall  not be  required  to apply  all or any
     portion of the security deposit with respect to any particular violation or
     default by Tenant but Landlord may apply all or any portion of the security
     deposit to any violation, breach, or default by Tenant hereunder.  LANDLORD
     SHALL DEPOSIT THE SECURITY  DEPOSIT IN AN INTEREST  BEARING ESCROW ACCOUNT,
     WITH ALL INTEREST ACCRUED THEREON TO BE FOR THE BENEFIT OF LANDLORD. Tenant
     shall  reimburse  Landlord  for such  portions of the  security  deposit as
     Landlord  shall  from time to time apply  with  respect  to any  violation,
     breach, or default by Tenant hereunder promptly upon written notice of such
     application by Landlord.  Any portion of the security deposit which has not
     been  appropriated  by Landlord in accordance  with the  provisions  hereof
     shall be returned to Tenant upon the termination of this Lease.

          If Landlord conveys Landlord's interest under this Lease, the security
     deposit,  or any part thereof not  previously  applied,  may be released by
     Landlord to Landlord's grantee,  and if so released,  Tenant agrees to look
     solely to such  grantee for the proper  application  and return  thereof in
     accordance with the terms of this Section 2. Tenant agrees that Tenant will
     not assign,  and that neither  Landlord,  nor its  successors  and assigns,
     shall be bound by any such  assignment,  encumbrance  or pledge,  attempted
     assignment,  attempted  pledge,  or attempted  encumbrance  of the security
     deposit.

          Any mortgagee or ground lessor shall not be  responsible to Tenant for
     the  return or  application  of the  security  deposit,  whether  or not it
     succeeds to the position of Landlord hereunder, unless the security deposit
     shall have been received in hand by such mortgagee or ground lessor.

          (g) PROVISIONS TO SURVIVE LEASE TERMINATION

          All  outstanding  obligations  of Tenant under the  provisions of this
     Section 2 shall survive the termination of the Lease,  for whatever reason,
     or any extension or renewal hereof.

          3. COMPLIANCE WITH LAWS AND USE.

               (a) The Premises  shall be used only for the following  purposes:
          for  a  service   center,   research   and   development,   and  light
          manufacturing,  and general office use related  thereto.  Tenant shall
          conduct  no  activity  that will  result in the  discharge  of harmful
          gases, affluents or other wastes or toxic substances. Outside storage,
          including,   without  limitation,   trucks  and  other  vehicles,   is
          prohibited  without  Landlord's  prior  written  consent,  not  to  be
          unreasonably  withheld.  Tenant  shall  at its sole  cost and  expense
          obtain any and all business licenses and permits necessary for its use
          of the  Premises.  Tenant  shall  comply with all  governmental  laws,
          ordinances and  regulations  relating to the use of the Premises,  and
          shall promptly comply with all governmental  orders and directives for
          the  correction,  prevention and abatement of nuisances in or upon, or
          connected  with, the Premises,  all at Tenant's sole expense,  only if
          caused by Tenant,  its  agents,  employees,  licensees,  or  invitees.
          Tenant shall not permit any objectionable or unpleasant odors,  smoke,
          dust,  gas,  noise or  vibrations  to permeate in or emanate  from the
          Premises,  nor take any other action which would constitute a nuisance
          or would  disturb or  endanger  any other  tenants of the  Building or
          unreasonably   interfere  with  their  respective  premises.   Without
          Landlord's prior written consent,  Tenant shall not receive,  store or
          otherwise  handle  any  product,  material  or  merchandise  which  is
          explosive, inflammable,  combustible, corrosive, caustic or poisonous,
          other than in the normal course of its business,  in which event,  all
          such  materials  shall be handled in  accordance  with all



                                       7
<PAGE>

     applicable  laws.  Tenant  will not permit the  Premises to be used for any
     purpose  or in any manner  (including,  without  limitation,  any method of
     storage)  which would render the  insurance  thereon void or the  insurance
     risk  more  hazardous  or  cause  the  State  Board of  Insurance  or other
     insurance  authority to disallow any sprinkler  credits.  Tenant shall give
     notice to Landlord  immediately  upon the occurrence of any accident in the
     Premises  or upon  Tenant's  discovery  of any  defects  thereon  or in any
     fixtures  or  equipment  located  therein  or upon  the  occurrence  of any
     emergency in the Premises or the Building.

          (b) Tenant,  at its expense,  in its use of the Premises and in making
     any alterations,  renovations, upfit or modifications of the Premises shall
     comply with all laws,  ordinances,  orders, rules and regulations of state,
     federal, municipal or other agencies or bodies having jurisdiction relating
     to the use,  condition and occupancy of the  Premises,  including,  but not
     limited to, the provisions of the Americans with  Disabilities Act of 1990,
     as  amended,  and with  recorded  covenants,  conditions  and  restrictions
     applicable for the Land and Building.

          4. REPAIRS AND MAINTENANCE.

          (a) Landlord shall at its expense maintain only the roof,  downspouts,
     gutters,  foundation,  utility lines  located  outside the Premises and the
     structural  soundness  of the  exterior  walls  of  the  Building  in  good
     condition  and repair in  accordance  with the  standards  for buildings of
     similar size and utility in Wake County,  NC subject to reasonable wear and
     tear.  Landlord  shall  wash the  exterior  windows  of the  Premises  on a
     quarterly  basis.  Tenant  shall  repair,  and pay for,  any  damage to the
     foregoing caused by the negligence of Tenant or Tenant's employees,  agents
     or invitees,  or caused by Tenant's default hereunder.  The term "walls" as
     used herein shall not include windows, glass or plate glass, doors, special
     store fronts or office  entries.  Tenant shall  immediately  give  Landlord
     written  notice of defect or need for repairs,  after which  Landlord shall
     have reasonable opportunity to repair same or cure such defect.  Landlord's
     liability  with respect to any defects,  repairs or  maintenance  for which
     Landlord is responsible  under any of the provisions of this Lease shall be
     limited to the cost of such  repairs or  maintenance  or the curing of such
     defect and any costs to repair any resultant  damage to the trade  fixtures
     of Tenant.

          (b) Tenant  shall at its own cost and expense  keep and  maintain  all
     parts of the  Premises  (except  those  for  which  Landlord  is  expressly
     responsible  under the terms of this  Lease)  in good  condition,  promptly
     making all necessary repairs and replacements,  including,  but not limited
     to,  windows,  glass and plate  glass,  doors,  any special  office  entry,
     interior walls,  finish work,  floors and floor  covering,  heating and air
     conditioning systems, dock boards, truck doors, dock bumpers, plumbing work
     and fixtures and regular  removal of trash and debris.  Tenant shall not be
     obligated to repair any casualty  covered by the insurance to be maintained
     by Landlord  pursuant to  subparagraph  10(A) below.  To the extent  deemed
     necessary by Landlord,  Landlord shall make available to Tenant for its use
     in effecting  repairs,  any  warranties  with respect to  components of the
     Building.

          (c) Tenant shall enter into a maintenance  contract  providing for the
     periodic maintenance of all hot water, heating and air conditioning systems
     and units in the  Premises,  and removal and  replacement  of filters,  and
     shall enter into a janitorial  contract providing for the daily cleaning of
     the Premises. These contracts shall be with parties and upon such terms and
     conditions  as shall be  reasonably  approved  by  Landlord.  Tenant  shall
     provide Landlord a copy of such contracts within thirty days of the Phase I
     Commencement Date.

          (d) Tenant  shall not damage any  demising  wall of the  Building,  or
     disturb the integrity and support  provided by any demising wall and shall,
     at its sole cost and expense,  promptly  repair any damage or injury to any
     demising wall caused by Tenant or its employees, agents or invitees.

          (e) Tenant and its employees,  customers and licensees  shall have the
     non-exclusive  right  to use the  parking  areas  as may be  designated  by
     Landlord  in  writing,



                                       8
<PAGE>

     subject to reasonable  rules and  regulations  as Landlord may from time to
     time  prescribe  and  subject  to rights  of  ingress  and  egress of other
     tenants.  Parking shall be available at the Building for the  non-exclusive
     use of Tenant at a ratio of 4.7  spaces  per 1,000  rentable  square  feet.
     Landlord shall not be  responsible  for enforcing  Tenant's  parking rights
     against any third parties. Landlord may require, at its option, in its sole
     discretion, that Tenant, its employees,  invitees, and visitors use certain
     numbered spaces to be designated by Landlord.


                                       9
<PAGE>



     5. ALTERATIONS.


          (a) Tenant shall not make any  alterations,  additions or improvements
     to the Premises (including, but not limited to, roof and wall penetrations)
     without the prior  written  consent of  Landlord.  Tenant may,  without the
     consent  of  Landlord,  but at  its  own  cost  and  expense  and in a good
     workmanlike manner, erect such shelves,  bins, machinery and trade fixtures
     as it may deem advisable, without altering the basic character or structure
     of the Premises or  improvements  and without  overloading  or damaging the
     Premises or  improvements,  and in each case  complying with all applicable
     governmental laws, ordinances,  regulations and other requirements.  Tenant
     shall not make any  alterations,  additions or improvements to the Premises
     which will contravene  Landlord's  policies insuring against loss or damage
     by fire or other hazards,  including but not limited to commercial  general
     public  liability,  or which  will  prevent  Landlord  from  securing  such
     policies in  companies  acceptable  to Landlord.  If any such  alterations,
     additions or improvements  cause the rate of fire or other insurance on the
     Premises by companies  acceptable  to Landlord to be  increased  beyond the
     minimum rate from time to time  applicable  to the  Premises for  permitted
     uses thereof,  Tenant shall pay as  additional  rent the amount of any such
     increase  promptly  upon  demand  by  Landlord.  Any and  all  alterations,
     additions, improvements, partitions and fixtures erected by Tenant shall be
     the property of Landlord and shall remain at the Premises upon  termination
     of the Lease or upon earlier vacating of the Premises.  All shelves,  bins,
     machinery and trade  fixtures  installed by Tenant may be removed by Tenant
     prior  to the  termination  of this  Lease  provided  such  removal  may be
     accomplished  without damage to the Premises or to the primary structure or
     structural  qualities of the buildings and other  improvements  situated on
     the Premises;  provided,  however,  any Smed movable furniture purchased by
     Tenant with the Upfit  Allowance  must remain upon the Premises and may not
     be  removed  by Tenant  therefrom.  Tenant  shall  repair any damage to the
     Premises,  or the  Building  as a result  of any  alteration,  or repair by
     Tenant, its employees, agents, invitees, or contractors to the Premises.

          (b)  Tenant may submit a written  request  to  Landlord  no later than
     ninety (90) days prior to the  Termination  Date of its desire to leave its
     wiring  and  cabling  in the  Building.  Landlord  shall  provide a written
     response to any such  request by Tenant  within  thirty (30) days after its
     receipt of same  advising  Tenant as to whether  (i) Tenant must remove all
     wiring and cabling  from the Building at the expense of Tenant prior to the
     vacation by Tenant of the Building, or (ii) Tenant may leave all wiring and
     cabling in the Building.

     6. SIGNS.

          (a) Tenant  shall have the right to  install  signs upon the  Premises
     only when first  approved in writing by Landlord,  such  approval not to be
     unreasonably  withheld,  and subject to any applicable  governmental  laws,
     ordinances,  regulations  and other  requirements.  Tenant shall remove all
     such signs upon the  termination  of this  Lease.  Such  installations  and
     removals  shall be made in such manner as to avoid injury or  defacement of
     the Premises, and Tenant shall repair any injury or defacement,  including,
     without   limitation,   discoloration   of  the  Building  caused  by  such
     installation and/or removal.

          (b)  Included  within the Upfit  Allowance  shall be  signage  for the
     Premises  that shall  include (i) a monument sign on the Land with the name
     of Tenant; and (ii) a sign on the exterior of the Premises. In addition, at
     the expense of Tenant,  Tenant may put its name and logo on parapet signage
     on the  exterior of the  Building  with the logo using the company  colors,
     provided that Landlord will adapt and afffix the name and logo of Tenant to
     the parapet signage. All signage shall be in form, substance, color, shape,
     and dimensions subject to the reasonable approval of Landlord

     7. INSPECTION.  Landlord and Landlord's  agents and  representatives  shall
     have the right to enter and inspect the  Premises  at any  reasonable  time
     during  business  hours upon  reasonable  notice  except in the event of an
     emergency when Landlord or Landlord's agents may access the Premises at any
     time and without  notice for the purpose of



                                       10
<PAGE>

     ascertaining the condition of the Premises or in order to make such repairs
     as may be required or permitted  to be made by Landlord  under the terms of
     this Lease or in order to show the Premises to any prospective purchaser or
     lender.  During the period  that is six (6) months  prior to the end of the
     term hereof,  Landlord and Landlord's agents and representatives shall have
     the right to enter the  Premises at any  reasonable  time  during  business
     hours upon reasonable notice for the purpose of showing the Premises to any
     prospective  tenant  and shall  have the right to erect on the  Premises  a
     suitable sign indicating the Premises are available.  Tenant shall schedule
     with  Landlord at least sixty (60) days prior to  vacating  the  Premises a
     time mutually agreeable to the parties hereto for a joint inspection of the
     Premises prior to vacating. In the event of Tenant's failure to give notice
     or  arrange  such  joint  inspection,  Landlord's  inspection  at or  after
     Tenant's  vacating the Premises  shall be  conclusively  deemed correct for
     purposes  of  determining   Tenant's   responsibilities   for  repairs  and
     restoration.

     8.  UTILITIES.  Landlord  agrees to provide at its cost,  all utility  line
     connections into the Premises.  Tenant shall pay all charges for all water,
     electrical,  telephone,  sewer,  and other utilities or services used on or
     from the Premises,  together with any taxes,  penalties,  surcharges or the
     like  pertaining  thereto,  including,  but not  limited  to, any costs for
     utilities used by Tenant at the Premises after normal business hours,  8:00
     AM to 5:00 PM,  Monday -  Friday.  Tenant  shall  also pay for any  utility
     maintenance charges and shall furnish all replacement  electric light bulbs
     and replacement  tubes required for the Premises.  If any such services are
     not separately metered to Tenant,  Tenant shall pay a reasonable proportion
     as determined by Landlord of all charges jointly metered with other tenants
     of the Building.  Landlord shall in no event be liable for any interruption
     or  failure of  utility  services  on the  Premises,  unless  caused by the
     negligence of Landlord in which event Landlord shall use reasonable efforts
     to effect the reconnection of such services.

     9. ASSIGNMENT AND SUBLETTING. Tenant shall not sublet the Premises in whole
     or in part or sell, assign, lien, encumber,  or in any manner transfer this
     Lease or assign or delegate the  management  or permit the use or occupancy
     of the Premises or any part thereof by anyone other than Tenant without the
     prior written consent of Landlord,  which consent shall not be unreasonably
     withheld.  Landlord  and Tenant  acknowledge  and agree that the  foregoing
     provisions  have been  freely  negotiated  by the  parties  hereto and that
     Landlord would not have entered into this Lease without Tenant's consent to
     the terms of this Paragraph 9.

          No  assignment,  transfer,  mortgage,  sublease or other  encumbrance,
     whether or not  approved,  and no  indulgence  granted by  Landlord  to any
     assignee  or  subtenant,  shall in any way  impair the  continuing  primary
     liability  (which after an  assignment  shall be joint and several with the
     assignee) of Tenant  hereunder,  and no approval in a  particular  instance
     shall be  deemed  to be a waiver of the  obligation  to  obtain  Landlord's
     approval  in any other case.  If for any  approved  assignment  or sublease
     Tenant receives rent or other  consideration,  either initially or over the
     term of the assignment or sublease,  in excess of the base rent  hereunder,
     or in case of a sublease of part of the Premises,  in excess of the portion
     of such rent fairly allocable to such part, after  appropriate  adjustments
     to assure that all other  payments  called for hereunder are  appropriately
     taken  into  account,  Tenant  shall pay to  Landlord  as  additional  rent
     one-half of the excess of each such payment of rent or other  consideration
     received  by Tenant  (net of actual,  reasonable  and  documented  expenses
     incurred  by  Tenant in any such  sublease)  promptly  after  its  receipt.
     Subject to the foregoing remittance by Tenant to Landlord,  no charge shall
     be  assessed  by  Landlord  against  Tenant  for any  request  by Tenant of
     Landlord for consent to a sublease or assignment hereunder. Notwithstanding
     the  foregoing,  Tenant may not  sublease  or assign at any time during the
     term of this Lease,  and any renewal or extension  hereof,  more than fifty
     percent  (50%) of the total  combined  rentable  square  footage  leased by
     Tenant in the Building and in that certain  building  leased by Tenant from
     Landlord and known as 5200 Paramount Parkway, Morrisville, NC in any twelve
     month  period.  For  example,  if Landlord  shall  approve the  sublease or
     assignment by Tenant of fifty percent of the total combined rentable square
     footage  leased by Tenant in the  Building and in 5200  Paramount  Parkway,
     Morrisville,  NC on January 1, 2005,  Tenant shall have no further right to
     sublease or assign any  remaining  space  leased by Tenant in either of the
     aforesaid



                                       11
<PAGE>

     buildings  until January 1, 2006, and such sublease or assignment  shall be
     subject to the provisions hereof.

          Anything contained in the foregoing  provisions of this section to the
     contrary  notwithstanding,  neither  Tenant nor any other person  having an
     interest in the  possession,  use occupancy or  utilization of the Premises
     shall  enter  into  any  lease,  sublease,  license,  concession  or  other
     agreement for use,  occupancy or utilization of space in the Premises which
     provides for rental or other payment for such use, occupancy or utilization
     base,  in whole or in part,  on the net  income or  profits  derived by any
     person from the Premises leased, used, occupied, or utilized (other than an
     amount based on a fixed  percentage or  percentages  of receipts or sales),
     and any  such  purported  lease,  sublease,  license,  concession  or other
     agreement  shall be absolutely  void and ineffective as a conveyance of any
     right or interest in the possession,  use,  occupancy or utilization of any
     part of the Premises.

     10. FIRE AND CASUALTY DAMAGE.

     A.  Landlord  agrees  to  maintain  standard  fire  and  extended  coverage
     insurance  covering  the  Building  in an amount not less than 8O% (or such
     greater percentage as may be necessary to comply with the provisions of any
     co-insurance  clauses of the policy) of the  "replacement  cost" thereof as
     such term is defined in the  Replacement  Cost  Endorsement  to be attached
     thereto,  insuring against special causes of loss, including, the perils of
     fire, and  lightning,  such  coverages and  endorsements  to be as defined,
     provided  and  limited  in the  standard  bureau  forms  prescribed  by the
     insurance regulatory authority for the State of North Carolina.  Subject to
     the  provisions  of  subparagraphs  10(C),  10(D)  and  10(E)  below,  such
     insurance  shall be for the sole  benefit  of  Landlord  and under its sole
     control.

     B. If the Premises  should be damaged or destroyed by any peril  covered by
     the insurance to be provided by Landlord  under  subparagraph  10(A) above,
     Tenant shall give immediate written notice thereof to Landlord.

     C. If the Premises should be totally  destroyed by any peril covered by the
     insurance to be provided by Landlord under  subparagraph 10(A) above, or if
     they should be so damaged  thereby  that  rebuilding  or repairs  cannot in
     Landlord's reasonable estimation be completed within one hundred and eighty
     (180) days after the date upon which Landlord is notified by Tenant of such
     damage,  this Lease shall terminate and the rent shall be abated during the
     unexpired portion of this Lease,  effective upon the date of the occurrence
     of such damage.

     D. If the Premises  should be damaged by any peril covered by the insurance
     to be provided by Landlord under subparagraph 10(A) above, but only to such
     extent that rebuilding or repairs can, in Landlord's reasonable estimation,
     be  completed  within one hundred and eighty (180) days after the date upon
     which  Landlord is notified by Tenant of such damage,  this Lease shall not
     terminate,  and Landlord  shall,  at its sole cost and  expense,  thereupon
     proceed  with  reasonable  diligence  to rebuild and repair the Premises to
     substantially  the  condition in which they  existed  prior to such damage,
     except that  Landlord  shall not be required to rebuild,  repair or replace
     any part of the  partitions,  fixtures,  additions  and other  improvements
     which may have been placed in, on or about the  Premises by Tenant.  If the
     Premises are  untenantable  in whole or in part following such damage,  the
     rent  payable  hereunder  during the period in which they are  untenantable
     shall be reduced to such extent as may be fair and reasonable  under all of
     the circumstances.

     E. Notwithstanding anything herein to the contrary, in the event the holder
     (the "Holder") of any  indebtedness  secured by a mortgage or deed of trust
     covering the Premises  requires that the  insurance  proceeds be applied to
     such  indebtedness,  then Landlord  shall have the right to terminate  this
     Lease by delivering  written notice of termination to Tenant within fifteen
     (15) days after such requirement is made by any such holder,  whereupon all
     rights  and  obligations  hereunder  thereafter  accruing  shall  cease and
     terminate;  provided,  however,  upon its receipt of notice from the Holder
     that insurance proceeds shall be applied toward the indebtedness,  Landlord
     shall act reasonably to seek


                                       12
<PAGE>

     to obtain  sufficient  financing  to repair and restore the  Premises at an
     interest  rate,  under  terms  and  conditions,  and with a  lender  all as
     approved by Landlord, in its sole discretion.

     F. Each of Landlord and Tenant  hereby  releases the other from any loss or
     damage to property  caused by fire or any other perils  insured  through or
     under either by way of  subrogation  or otherwise for any loss or damage to
     property  caused  by  fire or any  other  perils  insured  in  policies  of
     insurance  covering such  property,  even if such loss or damage shall have
     been caused by the fault or  negligence  of the other party,  or anyone for
     whom such party may be responsible;  provided,  however,  that this release
     shall be  applicable  and in force and effect only with respect to the loss
     or damage  occurring  during such times as the  releasor's  policies  shall
     contain a clause of  endorsement  to the effect that any such release shall
     not adversely  affect or impair said policies or prejudice the right of the
     releasor to recover thereunder and then only to the extent of the insurance
     proceeds  payable under such  policies.  Each of Landlord and Tenant agrees
     that it will request its insurance carriers to include in its policies such
     a clause or  endorsement.  If extra cost shall be  charged  therefor,  each
     party shall  advise the other  thereof and of the amount of the extra cost,
     and the other party,  at its election,  may pay the same,  but shall not be
     obligated to do so.

     11.  LIABILITY.  Landlord  shall  not  be  liable  to  Tenant  or  Tenant's
employees,  agents, patrons or visitors, or to any other person whomsoever,  for
any  injury to person or damage  to  property  on or about the  Premises  to the
extent  resulting  from and/or caused by the negligence or misconduct of Tenant,
its agents, employees, patrons or visitors, or of any other person entering upon
the  Premises.  Tenant  hereby  covenants  and agrees  that it will at all times
indemnify,  defend  and hold  safe and  harmless  Landlord  (including,  without
limitation,  its  trustees  and  beneficiaries  if  Landlord  is a  trust),  and
Landlord's  agents,  employees,  patrons and visitors from any loss,  liability,
claims, suits, costs, expenses, including without limitation attorney's fees and
damages,  arising  out of any such  damage or injury,  excluding  only injury to
persons or damage to  property  to the extent such injury or damage is caused by
the negligence,  willful misconduct, acts or omissions of Landlord or its agents
or  employees,  or the failure of  Landlord  to repair any part of the  Premises
which Landlord is obligated to repair and maintain hereunder within a reasonable
time after the receipt of written notice from Tenant of needed repairs.

     Tenant  shall not be liable to Landlord or  Landlord's  employees,  agents,
patrons,  or  visitors,  or to any other  person  whomsoever,  for any injury to
person or damage to property on or about the Premises,  to the extent  resulting
from and/or caused by the  negligence  or  misconduct  of Landlord,  its agents,
employees,  patrons or visitors.  Landlord  hereby  covenants and agrees that it
will  at  all  times  indemnify,  defend  and  hold  safe  and  harmless  Tenant
(including,  without  limitation,  its trustees and beneficiaries if Tenant is a
trust),  and Tenant's agents,  employees,  patrons,  and visitors from any loss,
liability,  claims,  suits,  costs,  expenses,   including,  without  limitation
attorneys' fees and damages, arising out of any such damage or injury, excluding
only injury to persons or damage to property to the extent such injury or damage
is caused by the negligence,  willful misconduct, acts or omissions of Tenant or
its  agents or  employees,  or the  failure  of Tenant to repair any part of the
Premises  which Tenant is obligated  to repair and maintain  hereunder  within a
reasonable  time after the  receipt of written  notice  from  Landlord of needed
repairs.

     Tenant  shall  procure  and  maintain  throughout  the term of this Lease a
policy or policies of  insurance,  at its sole cost and expense,  insuring  both
Landlord and Tenant against all claims,  demands or actions arising out of or in
connection  with:  (i) the Premises;  (ii) the condition of the Premises;  (iii)
Tenant's  operations  in and  maintenance  and  use of the  Premises;  and  (iv)
Tenant's  liability  assumed under this Lease, in which the limits of commercial
general  liability  shall not be less than  $5,000,000.00  with  respect to each
occurrence, not less than $5,000,000 with respect to personal injury or death of
a single person, not less than $5,000,000  general aggregate,  and not less than
$5,000,000 with respect to products completed operations aggregate.

     All such policies  shall be procured by Tenant from  responsible  insurance
companies  with at least an A  rating  from  Best's.  Certified  copies  of such
policies,  together with receipt evidencing payments of premiums thereof,  shall
be delivered to Landlord prior to the Phase I  Commencement  Date. Not less than
fifteen (15) days prior to the expiration  date of any such


                                       13
<PAGE>

policies, certified copies of the renewals thereof (bearing notations evidencing
the payment of renewal  premiums) shall be delivered to Landlord.  Such policies
shall further  provide that not less than thirty (30) days prior written  notice
shall be given to  Landlord  before  such  policy may be  canceled or changed to
reduce insurance provided thereby.

     12. CONDEMNATION.

     A. If the whole or any substantial part of the Premises should be taken for
     any  public or  quasi-public  use under  governmental  law,  ordinance,  or
     regulation,  or by right of eminent domain,  or by private purchase in lieu
     thereof,  and the taking would prevent or materially interfere with the use
     of the  Premises by Tenant for the  purposes  provided  herein,  this Lease
     shall  terminate and the rent shall be abated during the unexpired  portion
     of this Lease,  effective  when the physical  taking of the Premises  shall
     occur.

     B. If part of the  Premises  shall be taken for any public or  quasi-public
     use under any  governmental  law,  ordinance or regulation,  or by right of
     eminent domain,  or by private purchase in lieu thereof,  and this Lease is
     not terminated as provided in the subparagraph  above, this Lease shall not
     terminate but the rent payable  hereunder  during the unexpired  portion of
     this Lease  shall be reduced to such  extent as may be fair and  reasonable
     under all of the circumstances.

     C. In the event of any such  taking or private  purchase  in lieu  thereof,
     Landlord  shall be  entitled  to  receive  and  retain all awards as may be
     awarded in any  condemnation  proceedings  other  than  those  specifically
     awarded Tenant for a taking of Tenant's personal property, loss of business
     and moving expenses.

     13. HOLDING OVER. Tenant will, at the termination of this Lease by lapse of
time or otherwise, yield up immediate possession to Landlord. If Landlord agrees
in writing that Tenant may hold over after the expiration or termination of this
Lease, unless the parties hereto otherwise agree in writing on the terms of such
holding over,  the hold over tenancy shall be subject to termination by Landlord
at any time upon not less  than ten (10)  days  advance  written  notice,  or by
Tenant at any time upon not less than thirty (30) days advance  written  notice,
and all of the other  terms and  provisions  of this Lease  shall be  applicable
during that period, except that Tenant shall pay Landlord from time to time upon
demand,  as rental for the period of any hold over,  an amount  equal to one and
one-half (1-1/2) the rent in effect on the termination date, computed on a daily
basis for each day of the hold over period.  No holding over by Tenant,  whether
with or without  consent of Landlord,  shall operate to extend this Lease except
as otherwise expressly provided.  The preceding  provisions of this Paragraph 13
shall not be construed as Landlord's consent for Tenant to hold over.

     14. QUIET  ENJOYMENT.  Landlord  covenants that it now has, or will acquire
before Tenant takes possession of the Premises, good title to the Premises, free
and clear of all liens and  encumbrances,  excepting  only the lien for  current
taxes not yet due, deed of trust(s), or mortgage(s) of record, zoning ordinances
and other building and fire ordinances and governmental  regulations relating to
the use of such property,  and easements,  restrictions  and other conditions of
record. Landlord represents and warrants that it has full right and authority to
enter into this Lease and that Tenant,  upon paying the rental  herein set forth
and  performing  its other  covenants  and  agreements  herein set forth,  shall
peaceably  and quietly  have,  hold and enjoy the  Premises  for the term hereof
without  hindrance  or  molestation  from  Landlord,  subject  to the  terms and
provisions of this Lease.

     15. EVENTS OF DEFAULT. The following events shall be deemed to be events of
default by Tenant under this Lease:

(a) Tenant  shall fail to pay (i) any  installment  of the rent herein  reserved
within five days after the due date  thereof,  or (ii)  payment  with respect to
taxes  hereunder,  or any other payment or  reimbursement  to Landlord  required
herein, within ten (10) days after the due date thereof.

(b)  Tenant  shall  become  insolvent,  or  shall  make a  transfer  in fraud of
creditors, or shall make an assignment for the benefit of creditors.




                                       14
<PAGE>

(c) Tenant shall file a petition  under any section or chapter of the Bankruptcy
Reform Act, as amended or under any similar law or statute of the United  States
or any state  thereof;  or Tenant  shall be adjudged  bankrupt or  insolvent  in
proceedings filed against Tenant thereunder.

(d) A receiver or trustee shall be appointed for all or substantially all of the
assets of Tenant.

(e) Tenant  shall  desert or vacate all or a portion of the Premises and fail to
maintain a clean and neat appearance thereon.

(f) Tenant  shall fail to comply  with any term,  provision  or covenant of this
Lease  (other  than  the  subparagraphs  (a),  (b),  (c),  (d),  and (e) of this
Paragraph  15),  and shall not cure such failure  within  thirty (30) days after
written  notice  thereof to Tenant;  provided,  however,  in the event Tenant is
proceeding with due diligence to effect a cure under this  subparagraph  (f) and
addition  time is  needed by Tenant to  complete  its cure,  Landlord  shall act
reasonably to grant such additional time.

     16.  REMEDIES.  Upon the occurrence of any event of default in Paragraph 15
hereof,  after the expiration of any applicable grace or cure periods,  Landlord
shall have the option to pursue any remedy at law or in equity,  including,  but
not  limited  to, one or more of the  following  remedies  without any notice or
demand whatsoever:

     (a) Terminate this Lease, in which event Tenant shall immediately surrender
     the  Premises to  Landlord,  and if Tenant  fails to do so,  Landlord  may,
     without  prejudice to any other remedy which it may have for  possession or
     arrearage in rent, enter upon and take possession of the Premises and expel
     and remove Tenant and any other person who may be occupying the Premises or
     any part thereof,  with or without  judicial  approval,  by any legal means
     necessary,  secure the  Premises  against  unauthorized  entry;  and Tenant
     agrees to pay to Landlord on demand the amount of all loss and damage which
     Landlord  may  suffer  by  reason  of  such  termination,  whether  through
     inability to relet the Premises on satisfactory terms or otherwise.

     (b) Enter  upon and take  possession  of the  Premises  and expel or remove
     Tenant and any other person who may be occupying  such Premises or any part
     thereof,  with or without judicial approval,  by any legal means necessary,
     receive the rent thereof;  secure the Premises against  unauthorized entry;
     store any  property  located on the  Premises  at the  expense of the owner
     thereof and Tenant agrees to pay to Landlord on demand any deficiency  that
     may arise by reason of such reletting.  In the event Landlord is successful
     in  reletting  the Premises at a rental in excess of that agreed to be paid
     by Tenant  pursuant  to the terms of this Lease,  Landlord  and Tenant each
     mutually agree that Tenant shall not be entitled,  under any circumstances,
     to such excess rental, and Tenant does hereby  specifically waive any claim
     to such excess rental.

     (c) Enter upon the  Premises,  with or without  judicial  approval,  by any
     legal means necessary,  secure the Premises against  unauthorized entry and
     do whatever  Tenant is obligated  to do under the terms of this Lease;  and
     Tenant  agrees to  reimburse  Landlord  on demand  for any  expenses  which
     Landlord may incur in thus effecting  compliance with Tenant's  obligations
     under this Lease.

     (d)  Accelerate  and demand the payment of all base rent and other  charges
     due and payable hereunder over the term of this Lease.

     In the event Tenant fails to pay any installment of base rent or additional
rent hereunder within fifteen days of the due date of such  installment,  Tenant
shall pay to Landlord on demand a late charge in an amount  equal to one percent
(1%) of such  installment  per  month  to help  defray  the  additional  cost to
Landlord for  processing  such late payment.  The provision for such late charge
shall be in addition to all of Landlord's other rights and remedies hereunder or
at  law  and  shall  not be  construed  as  liquidated  damages  or as  limiting
Landlord's  remedies in any  manner.  If, on account of any breach or default by
Tenant in Tenant's  obligations under the terms and conditions of this Lease, it
shall become  necessary or appropriate for Landlord to employ or consult with an
attorney concerning or to enforce or defend any of Landlord's rights or remedies
hereunder,  Tenant  agrees  to pay  any and all  reasonable  attorneys'  fees so
incurred.


                                       15
<PAGE>

     Pursuit of any of the foregoing  remedies shall not preclude pursuit of any
of the other remedies herein  provided or any other remedies  provided by law or
equity, nor shall pursuit of any remedy herein provided  constitute a forfeiture
or waiver of any rent due to Landlord  hereunder  or of any damages  accruing to
Landlord  by  reason  of the  violation  of any of  the  terms,  provisions  and
covenants  herein  contained.  No act or thing  done by  Landlord  or its agents
during the term hereby granted shall be deemed a termination of this Lease or an
acceptance of the surrender of the Premises,  and no agreement to terminate this
Lease or accept a surrender  of the  Premises  shall be valid  unless in writing
signed by Landlord.  No waiver by Landlord of any  violation or breach of any of
the  terms,  provisions  and  covenants  herein  contained  shall be  deemed  or
construed to constitute a waiver of any other  violation or breach of any of the
terms,  provisions and covenants herein contained.  Landlord's acceptance of the
payment of rental or other payments  hereunder  after the occurrence of an event
of default shall not be construed as a waiver of such default,  unless  Landlord
so notifies  Tenant in writing,  and no receipt of money by Landlord from Tenant
after the  termination of this Lease or after service of any notice or after the
commencement  of any suit or after final judgment for possession of the Premises
shall  reinstate,  continue  or extend the term of this Lease or affect any such
termination,  notice,  suit or judgment,  unless  Landlord so notifies Tenant in
writing.  Forbearance by Landlord to enforce one or more of the remedies  herein
provided upon an event of default shall not be deemed or construed to constitute
waiver of such default or of Landlord's  right to enforce any such remedies with
respect to such default or any subsequent default.

     17. LANDLORD'S LIEN. [INTENTIONALLY DELETED.]

     18. MORTGAGES.  Tenant  accepts this Lease subject and  subordinate to any
mortgage(s) and/or deed(s) of trust now or at any time hereafter  constituting a
lien or charge upon the Premises or the improvements situated thereon; provided,
however, that if the mortgagee,  trustee, or holder of any such mortgage or deed
of trust  elects to have  Tenant's  interest in this Lease  superior to any such
instrument,  then by notice to Tenant  from such  mortgagee,  trustee or holder,
this  Lease  shall be deemed  superior  to such  lien,  whether  this  Lease was
executed  before or after said  mortgage or deed of trust.  Tenant  shall at any
time hereafter on demand execute any  instruments,  releases or other  documents
which may be  required  by any  mortgagee  or trustee for the purpose of further
subjecting and subordinating this Lease to the lien of any such mortgage or deed
to trust.

     19. MECHANIC'S LIENS.  Tenant shall have no authority,  express or implied,
to  create  or place any lien or  encumbrance  of any kind or nature  whatsoever
upon,  or in any manner to bind,  the interest of Landlord in the Premises or to
charge  the  rentals  payable  hereunder  for any  claim in favor of any  person
dealing with Tenant,  including those who may furnish materials or perform labor
for any construction or repairs,  and each such claim shall affect and each such
lien shall attach to, if at all, only the leasehold  interest  granted to Tenant
by this instrument.  Tenant covenants and agrees that it will pay or cause to be
paid all sums legally due and payable by it on account of any labor performed or
materials  furnished in  connection  with any work  performed on the Premises on
which any lien is or can be validly and legally  asserted  against its leasehold
interest in the Premises or the  improvements  thereon and that it will save and
hold  Landlord  harmless  from any and all  loss,  cost or  expense  based on or
arising out of asserted claims or liens against the leasehold  estate or against
the right,  title and interest of Landlord in the Premises or under the terms of
this Lease.

     20.  NOTICES.  Each  provision  of  this  instrument  or of any  applicable
governmental laws, ordinances, regulations, or other requirements with reference
to the sending, mailing, or delivery of any notice by Landlord to Tenant or with
reference  to the sending,  mailing,  or delivery of any notice or the making of
any payment by Tenant to Landlord  shall be deemed to be complied  with when and
if the following steps are taken:

     (a) All rent and other  payments  required to be made by Tenant to Landlord
     hereunder shall be payable to Landlord at the address hereinbelow set forth
     or at such  other  address as  Landlord  may  specify  from time to time by
     written notice delivered in accordance  herewith.  Tenant's  obligations to
     pay rent and any  other  amounts  to  Landlord  under the terms and of this
     Lease shall not be deemed  satisfied until such rent and other amounts have
     been actually received by Landlord.



                                       16
<PAGE>

     (b) Any notice or document required or permitted to be delivered  hereunder
     shall be deemed  to be  delivered  whether  actually  received  or not when
     deposited  in the United  States  Mail,  postage  prepaid,  sent by federal
     express or other  nationally  recognized  overnight  courier,  Certified or
     Registered Mail, return receipt requested,  addressed to the parties hereto
     at the  respective  addresses set out below,  or at other such addresses as
     they have  heretofore  specified by written notice  delivered in accordance
     therewith.


                                       17
<PAGE>




         LANDLORD:

         Duke Construction Limited Partnership
         1800 Perimeter Park Drive
         Suite 200
         Morrisville, North Carolina 27560
         Attention: Mr. Robert Cutlip

         and

         Cathy M. Rudisill, Esq.
         Smith Helms Mulliss & Moore, L.L.P.
         2800 Two Hannover Square
         Raleigh, North Carolina  27601

         TENANT:

         Tekelec
         26580 West Agoura Road
         Calabasas, California  91302
         Attention:  Dave Frankie

If and when included  within the term  "Landlord",  as used in this  instrument,
there is more than one person,  firm or  corporation,  all shall jointly arrange
among  themselves  for their joint  execution of such a notice  specifying  some
individual at some  specific  address for the receipt of notices and payments to
Landlord;  if and  when  included  within  the  term  "Tenant",  as used in this
instrument,  there is more  than one  person,  firm or  corporation,  all  shall
jointly  arrange  among  themselves  for their joint  execution of such a notice
specifying  some  individual at some  specific  address  within the  continental
United States for the receipt of notices to Tenant.  All parties included within
the  terms  "Landlord"  and  "Tenant",  respectively,  shall be  deemed  to have
received  notices in accordance  with the  provisions of this paragraph with the
same effect as if each had received such notice.

     21. BROKER'S CLAUSE. Tenant warrants and represents to Landlord that it has
had no dealings  with any real estate  broker or agent in  connection  with this
Lease other than Corporate  Realty  Advisors,  and Tenant covenants to pay, hold
harmless,  and indemnify Landlord from and against any and all costs,  expenses,
liabilities  (including reasonable attorneys' fees), causes of action, claims or
suits in connection with any compensation,  commission,  fee, or charges claimed
by any other  real  estate  broker or agent  with  respect  to this Lease or the
negotiation  thereof,  arising out of any act of Tenant.  Landlord  warrants and
represents  to Tenant that it has had no dealings with any real estate broker or
agent in  connection  with this  Lease,  and  Landlord  covenants  to pay,  hold
harmless,  and  indemnify  Tenant from and against any and all costs,  expenses,
liabilities  (including reasonable attorneys' fees), causes of action, claims or
suits in connection with any compensation,  commission,  fee, or charges claimed
by any other  real  estate  broker or agent  with  respect  to this Lease or the
negotiation thereof, arising out of any act of Landlord.

     22.  LANDLORD'S  LIABILITY.   Notwithstanding   anything  to  the  contrary
contained in this Lease,  Tenant agrees and  understands  that Tenant shall look
solely  to the  estate  and  property  of  Landlord  in  the  Building  for  the
enforcement  of a judgment (or other judicial  decree)  requiring the payment of
money by  Landlord  to  Tenant by reason of  default  or breach of  Landlord  in
performance of its  obligations  under this Lease,  it being intended that there
will be absolutely no personal liability on the part of Landlord, its successors
and assigns with respect to any of the terms, covenants,  and conditions of this
Leases, and no other assets of Landlord or of Landlord's partners, if any, shall
be subject to levy,  execution,  attachment  or any other legal  process for the
enforcement or  satisfaction  of the remedies  pursued by Tenant in the event of
such default or breach, this exculpation of liability to be absolute and without
exception whatsoever.

     23.  RULES AND  REGULATIONS.  Tenant  shall fully comply with the Rules and
Regulations  attached hereto as Exhibit D and made a part hereof and any and all
modifications  thereof or  amendments  thereto  with  respect to which  Landlord
notifies  Tenant  and which are


                                       18
<PAGE>

applied on a  non-discriminatory  basis to all tenants in the  building in which
the Premises are located.

     24. HAZARDOUS MATERIALS.

     (a) Tenant  agrees that it will not release,  discharge,  place,  hold,  or
     dispose of any Hazardous Material (as hereinafter  defined) on, under or at
     the Premises, in the Building, or on the Land, and that it will not use the
     Premises,  the  Building,  the Land,  or any  other  portion  thereof  as a
     treatment,  storage,  or disposal (whether permanent or temporary) site for
     any Hazardous  Material.  Tenant  further  agrees that it will not cause or
     allow any asbestos to be incorporated  into any improvements or alterations
     which it makes or causes to be made to the Premises, or the Building.

     (b) Tenant  hereby agrees to and does  indemnify,  defend and hold harmless
     Landlord  from  and  against  any and  all  losses,  liabilities,  damages,
     injuries,  costs,  expenses  and  claims of any and every  kind  whatsoever
     (including  without  limitation,  court costs and attorneys' fees) which at
     any time or from  time to time may be paid,  incurred  or  suffered  by, or
     asserted  against Landlord for, with respect to, or as a direct or indirect
     result of (i) any breach by Tenant of the provisions of this Paragraph,  or
     (ii) to the extent  caused or  allowed  by Tenant or any  agent,  employee,
     invitee,  or licensee of Tenant,  the presence on or under,  or the escape,
     seepage, leakage, spillage, discharge,  emission, or release from, onto, or
     into  the  Premises,  the  Building,  the  Land,  the  atmosphere,  or  any
     watercourse,  body of water,  or  groundwater,  of any  Hazardous  Material
     (including, without limitation, any losses, liabilities, damages, injuries,
     costs,  expenses  or claims  asserted  or arising  under the  Comprehensive
     Environmental  Response,  Compensation  and  Liability  Act, any  so-called
     "Superfund" or "Superlien" law, or any other Federal, state, local or other
     statute,  law,  ordinance,   code,  rule,   regulation,   order  or  decree
     regulating,  relating  to or imposing  liability  or  standards  of conduct
     concerning any Hazardous Material);  and the provisions of and undertakings
     and   indemnification  set  forth  in  this  paragraph  shall  survive  the
     termination or expiration of this Lease, for any reason, and shall continue
     to be the liability, obligation and indemnification of Tenant, binding upon
     Tenant forever.  The provisions of the preceding  sentence shall govern and
     control over any inconsistent provision of this Lease.

     (c) For purposes of this Lease, "Hazardous Material" means and includes any
     hazardous or toxic  substance,  pollutant,  contaminant,  gas, or petroleum
     product  defined  as  such  in  (or  for  purposes  of)  the  Comprehensive
     Environmental  Response,  Compensation,  and Liability Act, as amended, any
     so-called  "Superfund" or "Superlien",  law, the Toxic  Substances  Control
     Act,  as  amended,  or any  other  Federal,  state or local  statute,  law,
     ordinance, code, rule, regulation, order or decree regulating, relating to,
     or imposing  liability or standards of conduct  concerning,  any hazardous,
     toxic or dangerous  waste,  substance  or  material,  as now or at any time
     hereafter in effect,  or any other  hazardous,  toxic or dangerous,  waste,
     substance or material, gas or petroleum product.

     (d)  Notwithstanding  the foregoing,  Tenant shall have the right to handle
     Hazardous  Materials  in  the  normal  course  of its  business,  provided,
     however,  Tenant shall conduct all such  activities in accordance  with all
     applicable laws and regulations.

     25. [INTENTIONALLY DELETED.]

     26. COVENANT OF TENANT. If Landlord encounters  difficulties in negotiating
construction or permanent  financing for the Premises,  and after using its best
efforts  is  unable  to  resolve  those  difficulties  without  obtaining  minor
modifications to this Lease, Tenant will act in good faith to work with Landlord
in Landlord's efforts, but this agreement on the part of Tenant will not require
Tenant to make any changes that in Tenant's  reasonable  judgment alter the term
hereof, or adversely affect any substantive right or interest of Tenant, whether
legal or economic.

     27. MISCELLANEOUS.

     A. Words of any gender  used in this Lease shall be held and  construed  to
     include any other gender, and words in the singular number shall be held to
     include the plural, unless the context otherwise requires.


                                       19
<PAGE>

     B. The terms,  provisions  and covenants and  conditions  contained in this
     Lease  shall apply to,  inure to the  benefit  of, and be binding  upon the
     parties  hereto and upon their  respective  heirs,  legal  representatives,
     successors  and permitted  assigns,  except as otherwise  herein  expressly
     provided.  Landlord  shall  have the right to assign  any of its rights and
     obligations  under this Lease.  Each party  agrees to furnish to the other,
     promptly upon demand,  a  resolution,  or other  appropriate  documentation
     evidencing the due authorization of such party to enter into this Lease.

     C. The captions  inserted in this Lease are for convenience  only and in no
     way define,  limit or otherwise describe the scope or intent of this Lease,
     or any provision  hereof,  or in any way affect the  interpretation of this
     Lease.

     D. Tenant  agrees from time to time,  within ten (10) days after request of
     Landlord,  to deliver to  Landlord,  or  Landlord's  designee,  an estoppel
     certificate  stating that this Lease is in full force and effect,  the date
     to which  rent has been  paid,  the  unexpired  term of this Lease and such
     other matters  pertaining  to this Lease as may be reasonably  requested by
     Landlord.  It is understood and agreed that Tenant's  obligation to furnish
     such estoppel certificates in a timely fashion is a material inducement for
     Landlord's execution of this Lease.

     E.  This  Lease  may  not be  altered,  changed  or  amended  except  by an
     instrument in writing signed by both parties hereto.

     F. All obligations of Tenant and Landlord  hereunder not fully performed as
     of the  expiration or earlier  termination  of the term of this Lease shall
     survive  the  expiration  or  earlier   termination  of  the  term  hereof,
     including,  without  limitation,  all payment  obligations  concerning  the
     condition of the Premises.  Upon the  expiration or earlier  termination of
     the term hereof, and prior to Tenant's vacating the Premises,  Tenant shall
     pay to Landlord any amount reasonably estimated by Landlord as necessary to
     put the  Premises,  including,  without  limitation,  all  heating  and air
     conditioning  systems and equipment therein,  in good condition and repair.
     Tenant  shall also,  prior to vacating  the  Premises,  pay to Landlord the
     amount, as estimated by Landlord, of Tenant's obligation hereunder for real
     estate taxes and insurance premiums for the year in which the Lease expires
     or terminates up to the  Termination  Date.  All such amounts shall be used
     and held by Landlord for payment of such  obligations of Tenant  hereunder,
     with Tenant being liable for any  additional  costs therefor upon demand by
     Landlord,  or with any  excess  to be  returned  to  Tenant  after all such
     obligations  have been  determined and  satisfied,  as the case may be. Any
     security  deposit  held by Landlord  shall be  credited  against the amount
     payable by Tenant under this Paragraph 27(F).

     G. In the event of a transfer by Landlord of its interest in the  Premises,
     Landlord shall be released from all obligations  and liabilities  under the
     terms of this Lease subsequent to the date of such transfer. In the event a
     transferee  shall  agree to  assume  the  obligations  and  liabilities  of
     Landlord under the Lease prior to the date of the transfer,  Landlord shall
     be released from all obligations and liabilities under the Lease.

     H. If any  clause  or  provision  of this  Lease  is  illegal,  invalid  or
     unenforceable  under  present or future laws  effective  during the term of
     this Lease,  then and in that  event,  it is the  intention  of the parties
     hereto that the remainder of this Lease shall not be affected thereby,  and
     it is also the  intention of the parties to this Lease that in lieu of each
     clause  or   provision   of  this  Lease  that  is   illegal,   invalid  or
     unenforceable,  there be added as a part of this Lease contract a clause or
     provision  as similar in terms to such  illegal,  invalid or  unenforceable
     clause or provision as may be possible and be legal, valid and enforceable.

     I. [INTENTIONALLY DELETED.]

     J. All references in this Lease to "the date hereof" or similar  references
     shall be deemed to refer to the last date,  in point of time,  on which all
     parties hereto have executed this Lease.

     K. Time is of the essence of this Lease.


                                       20
<PAGE>


     L. Landlord shall not be in default in the performance of any of Landlord's
     obligations  hereunder  unless  and until  Landlord  shall  have  failed to
     perform  such  duties  or  obligations  within  thirty  (30)  days (or such
     additional  time as is  reasonably  required to correct  any such  default)
     after written  notice by Tenant to Landlord,  and to any  mortgagee  with a
     lien on the Land or the Building,  properly specifying wherein Landlord has
     failed to perform any such duty or  obligation.  Neither party hereto shall
     have any liability to the other party hereto for any  incidental,  special,
     indirect,  punitive,  or  consequential  damages of a party  hereto for any
     reason whatsoever.

     M.  In  the  event  that  Landlord  shall  default  in the  performance  of
     Landlord's  obligations  hereunder,   the  holder  of  a  mortgage  or  the
     beneficiary  of a deed of trust which  includes the Premises shall have the
     right,  but not the  obligation,  to perform or comply with any  covenants,
     agreements  and  provisions  violated  in  connection  with  such  default.
     Further, if such holder or beneficiary  notifies Tenant that such holder or
     beneficiary has taken over Landlord's right under this Lease,  Tenant shall
     not assert any right to deduct the cost of repairs or any  monetary  claims
     against Landlord  theretofore accrued from rent thereafter due and payable,
     but shall look solely to Landlord  and not such holder or  beneficiary  for
     satisfaction of such claim.

     N. This Lease does not create the relationship of partner or joint venturer
     between Landlord and Tenant. This Lease shall not result in the creation of
     an estate  for years in  Tenant.  Accordingly,  Tenant  shall  have only an
     usufruct  not  subject  to levy or sale.  Tenant  shall  have no  rights of
     assignment,  subletting, sale or transfer beyond those set forth herein and
     hereby waives any such rights existing pursuant to the laws of the State of
     North Carolina or otherwise. No estate shall pass out of Landlord to Tenant
     hereunder,  and Tenant  shall not be  entitled  to any award of  whatsoever
     nature  based on this Lease  and/or  Tenant's  right to occupy the Premises
     hereunder.

     O. The laws of the State of North Carolina shall govern the interpretation,
     the validity, performance and enforcement of this Lease.

     P. (i) If Tenant is a corporation,  the undersigned  officer of Tenant does
     hereby warrant and certify to Landlord that Tenant is a corporation in good
     standing and duly organized  under the laws of the State of North Carolina,
     or if  chartered  in a state other than the State of North  Carolina,  is a
     corporation  in good  standing  and duly  organized  under the laws of such
     state and is authorized to do business in the State of North Carolina.  The
     undersigned  officer of Tenant  hereby  further  warrants and  certifies to
     Landlord  that  such  officer  is  authorized  and  empowered  to bind  the
     corporation to the terms of this Lease by such officer's  signature hereto.
     (ii) If Tenant is a general or limited partnership, the undersigned general
     partner of Tenant does hereby  warrant and certify to Landlord  that Tenant
     is a  general  partnership  or  limited  partnership,  as the  case may be,
     validly  existing  under  the laws of the  State of North  Carolina,  or if
     formed  in a state  other  than the State of North  Carolina,  is a general
     partnership or limited  partnership validly existing under the laws of such
     state and is authorized to do business in the State of North Carolina.  The
     undersigned general partner of Tenant hereby further warrants and certifies
     to Landlord that such general  partner is authorized  and empowered to bind
     Tenant  to the  terms of this  Lease by such  general  partner's  signature
     hereto.

     Q. This Lease shall be executed in duplicate, each of which shall be deemed
     an original and complete of itself and may be  introduced  into evidence or
     used for any purpose without the production of any other copy. If Tenant is
     a corporation, two authorized corporate officers must execute this Lease in
     their appropriate capacity for Tenant and affix the corporate seal.

     R. The  provisions  contained  in the Rider  attached  hereto,  if any, are
     incorporated  herein by  reference  and made a part of this  Lease.  In the
     event of a  conflict  between  the  printed  portion  of this Lease and the
     Rider, the provisions of the Rider shall govern and control.


                                       21
<PAGE>

     S. Although the printed  provisions of this Lease were drafted by Landlord,
     such fact shall not cause this Lease to be construed  either for or against
     Landlord or Tenant.

     T. This Lease may not be  recorded.  Upon the request and at the expense of
     Tenant, Landlord shall execute a memorandum of Lease suitable for recording
     which shall omit the  financial  terms herein but which shall  identify the
     Premises and the term of this Lease.  Upon the  expiration of this Lease, a
     recorded  memorandum  of this Lease may be canceled of record by a document
     executed by Landlord, or its successor in interest for such purpose

     U. To the  best  of its  knowledge,  Landlord  certifies  that on or  after
     January 1, 2000,  all systems  installed in the Building by or on behalf of
     Landlord  to service  the  Premises,  including,  but not  limited  to, the
     heating, air conditioning,  sprinkler, security, electrical,  plumbing, and
     other  systems  installed by Landlord in the Building  will record,  store,
     process,  and present  calendar  dates in the same manner and with the same
     functionality as such Systems record,  store, process, and present calendar
     dates falling on or before December 31, 1999.

     V. Tenant shall provide to Landlord  within ninety days of the close of its
     fiscal year, and thereafter upon reasonable request of Landlord,  financial
     statements of Tenant  certified by the chief  financial  officer of Tenant,
     and Tenant shall act to ensure that any guarantor hereof provides  Landlord
     with copies of its financial  statements within ninety days of the close of
     its fiscal year.

     W. No remedy  conferred  herein is  intended to be  exclusive  of any other
     remedy  and each and  every  remedy  shall be  cumulative  and  shall be in
     addition to every other remedy  given  hereunder  or  thereunder  or now or
     hereafter existing at law or in equity or by statute or otherwise.

     X. Use of Roof.

          (i) Provided  Tenant is not in default  under the Lease,  and provided
          further that Tenant  complies with all zoning and other  municipal and
          county rules and regulations,  Tenant shall have the right, at its own
          cost and expense  and subject to the terms of this Lease,  to install,
          operate and  maintain on the roof of the  Building  for  Tenant's  use
          only,  microwave,   satellite  or  other  antennae  (collectively  the
          "Antennae"),  and any  replacements or modifications  thereto.  Tenant
          shall be solely  responsible  for obtaining any necessary  permits and
          licenses required to install and operate the Antennae.  Copies of such
          permits and licensees  shall be provided to Landlord.  No charge shall
          be  assessed by  Landlord  against  Tenant for its use of the roof for
          Antennae.

          (ii) The size,  location,  design  and manner of  installation  of the
          Antennae and all related  wiring shall be  designated  and approved by
          Landlord  prior to any  installation  by Tenant.  Tenant shall provide
          adequate screening for the Antennae.  After obtaining written approval
          of  Landlord,  Tenant  shall  have  reasonable  access to the roof for
          installation  and maintenance of the Antennae and shall have the right
          to install all reasonable  wiring  related  thereto.  However,  unless
          otherwise approved by Landlord in writing, in no event shall Tenant be
          permitted  to  penetrate  the roof  membrane  in  connection  with the
          installation or maintenance of the Antennae.

          (iii)  Tenant  represents  and  warrants  that  the  installation  and
          maintenance  of  the  Antennae  will  not  cause  any  damage  to  the
          structural  portions of the Building.  Tenant shall be responsible for
          repairing any such damages to the structure.

          (iv) Tenant  shall  install,  operate  and  maintain  the  Antennae in
          accordance  with all  federal,  state and local laws and  regulations.
          Prior to installation of the Antennae,  Tenant shall, on behalf of the
          installer, provide Landlord with a certificate of insurance reasonably
          satisfactory to Landlord.



                                       22
<PAGE>

          (v)  Tenant  shall be  responsible  for all costs of  removal  and for
          restoring the Building to its original  condition  after such removal.
          Notwithstanding the foregoing, Landlord reserves the right at any time
          during the Lease Term if Tenant  discontinues  use of the  Antennae or
          upon the  expiration of the Lease Term to demand by written  notice to
          Tenant  that  Tenant  remove the  Antennae  within  five (5) days from
          Tenant's  receipt  of  notice  thereof.   Such  removal  shall  be  in
          accordance  with all of the terms and conditions set forth herein.  If
          Tenant  elects  not to remove the  Antennae  from the  Building,  upon
          expiration or earlier  termination of this Lease, or after  expiration
          of the five (5) day notice period provided herein,  the Antennae shall
          be deemed  abandoned  by Tenant and shall  become the  property of the
          Landlord.

          (vi) Any language in the Lease notwithstanding,  Landlord shall not be
          liable and Tenant shall indemnify,  defend and hold Landlord  harmless
          from and against any and all  liability,  damages  (including  but not
          limited to  personal  injury,  death,  or  property  damages),  costs,
          expenses,  and attorneys'  fees incurred by Landlord  arising from any
          Antennae  related cause  whatsoever,  including those arising from the
          installation,  use,  maintenance and removal thereof,  except for that
          caused by the sole and direct gross negligence of Landlord.

          (vii) If Tenant  fails to comply with the terms stated  herein,  or if
          removal of the  Antennae  is required  by any  governmental  authority
          having jurisdiction thereof, this agreement to allow Tenant to install
          a Antennae  may be  terminated  by  Landlord  upon ten (10) days prior
          written notice to Tenant specifying the reason for such termination.

          (viii) Tenant's right to install, maintain and use such Antennae shall
          be  subordinate  and  inferior  to the rights of any and all  existing
          Tenants in the Building that have previously been granted the right to
          install and maintain their Antennae by the Landlord on the roof of the
          Building.  At the time of the execution of this Lease, no other tenant
          of the Building has a right superior to that of Tenant with respect to
          the use by Tenant of the roof for its Antennae.

[THE REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK]



                                       23
<PAGE>




     IN WITNESS WHEREOF,  the parties hereto have executed this Lease under seal
as of the day and year first above written.

                           LANDLORD:


                           DUKE CONSTRUCTION LIMITED  PARTNERSHIP,
                           an Indiana limited partnership

                           BY:  DUKE REALTY SERVICES LIMITED PARTNERSHIP,
                           an Indiana limited partnership

                           BY:  DUKE SERVICES, INC., an Indiana corporation, its
                                sole general partner

                           By:________________________________
                           Print Name:_________________________
                           Title:______________________________



                           TENANT:

                           TEKELEC, a California corporation

                           By:_____________________________
                           Print Name:_____________________
                           President


Witness/Attest:

___________________________
Print Name:________________
Title:_____________________

[CORPORATE SEAL]



                                       24
<PAGE>



                                    EXHIBIT A

                                    THE LAND






                                       25
<PAGE>



                                    EXHIBIT B

                                   FLOOR PLAN





                                       26
<PAGE>


                                    EXHIBIT C

                            PLANS AND SPECIFICATIONS

              [TO BE ATTACHED UPON APPROVAL BY LANDLORD AND TENANT



                                       27
<PAGE>



                                   EXHIBIT C-1

                                    SCHEDULE


                                       28
<PAGE>



                                   EXHIBIT C-2

                                 DESIGN CRITERIA



                                       29
<PAGE>



                                    EXHIBIT D

                              RULES AND REGULATIONS

     1. The sidewalks,  common areas, and public portions of the Building,  such
as entrances, passages, courts, elevators,  vestibules,  stairways, corridors or
halls,  and the streets,  alleys or ways  surrounding  or in the vicinity of the
Building shall not be obstructed by Tenant,  even temporarily,  or encumbered by
Tenant  or used for any  purpose  other  than  ingress  to and  egress  from the
Premises.

     2. No awnings or other  projections  shall be attached to the outside walls
of the Building.

     3. No sign,  advertisement,  notice or other  lettering shall be exhibited,
inscribed,  painted  or  affixed  by  Tenant on any part of the  outside  of the
Premises or Building unless approved by Landlord. Signs on entrance doors shall,
at Tenant's  expense,  be inscribed,  painted or affixed for each tenant by sign
makers  approved by Landlord.  In the event of the violation of the foregoing by
Tenant,  Landlord  may remove  same  without  notice to Tenant or any  liability
therefor, and may charge the expense incurred by such removal to Tenant.

     4. The sashes, sash doors, skylights, windows, heating, ventilating and air
conditioning vents and doors that reflect or admit light and air into the halls,
passageways  or other  public  places in the  Building  shall not be  covered or
obstructed by Tenant.

     5. No show cases or other  articles  shall be put in front of or affixed to
any part of the  exterior  of the  Building,  nor  placed in the  public  halls,
corridors, or vestibules without the prior written consent of Landlord.

     6. The bathrooms and plumbing  fixtures  shall not be used for any purposes
other than those for which they were designed, and no sweepings,  rubbish, rags,
or other  substances  shall be thrown  therein.  All damages  resulting from any
misuse of the bathrooms or fixtures shall be the responsibility of Tenant.

     7.  Tenant  shall not in any way  deface  any part of the  Premises  or the
Building.

     8. No bicycles,  vehicles,  or animals of any kind shall be brought into or
kept in or about the Premises,  or in the Building.  No cooking shall be done or
permitted by Tenant on the Premises  except in  conformity  with all  applicable
laws, statutes,  regulations and ordinances and then only in the area designated
as a kitchen,  if any, on the Premises of Tenant,  which is to be primarily used
by  Tenant's  employees  for  heating  beverages  and light  snacks,  and in the
cafeteria.  Tenant shall not cause or permit any unusual or objectionable  odors
to be produced upon or permeate from the Premises.

     9. [INTENTIONALLY DELETED.]

     10.  No space in the  Building  shall be used for the sale of  merchandise,
goods,  or  property  of any kind at  auction  except for food items sold in the
cafeteria located on the Premises.

     11. Tenant shall not make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere  with  occupants  of the Building or  neighboring
buildings or premises or those having business with them,  whether by the use of
any musical  instrument,  radio,  talking machine,  unmusical noise,  whistling,
singing,  or in any other way. Tenant shall not throw anything out of the doors,
windows or skylights or down the passageways.

     12.  Neither  Tenant,  nor any of  Tenant's  servants,  employees,  agents,
visitors,  or  licensees,  shall at any time bring or keep upon the Premises any
inflammable,  combustible or explosive fluid, or chemical substance,  other than
reasonable  amounts  of  cleaning  fluids or  solvents  required  in the  normal
operation of Tenant's business offices.

     13. No  additional  locks or bolts of any kind shall be placed  upon any of
the doors,  walls,  accessways,  or windows by Tenant,  nor shall any changes be
made in existing  locks or the  mechanism  thereof,  without  the prior  written
approval of Landlord  and unless and until a





                                       30
<PAGE>

duplicate key or access card, as  applicable,  is delivered to Landlord.  Tenant
shall,  upon the  termination of its tenancy (i) return to Landlord all keys for
the Premises and for any area of the Building, or common areas, either furnished
to, or otherwise procured by Tenant, (ii) restore the locks, walls,  accessways,
windows,  and doors to their  original  condition  on the date of this  Lease by
removing any security measures installed by Tenant,  repairing any damage to the
Premises or to the  Building as a result of the  restoration  and  removal,  and
(iii) in the event of the loss of any keys  furnished  to  Tenant  by  Landlord,
Tenant shall pay to Landlord the cost thereof.

     14. Tenant shall not overload any floor.

     15.  Tenant  shall not occupy or permit any  portion of the  Premises to be
used for the possession,  storage,  manufacture or sale of liquor, narcotics, or
tobacco in any form.

     16. Tenant shall be  responsible  for all persons for whom it issues passes
and/or keys and shall be liable to Landlord for all acts of such persons.

     17.  The  Premises  shall not be used for  lodging or  sleeping  or for any
immoral or illegal purpose.

     18. The  requirements of Tenant will be attended to only by Landlord or the
property manager of the Premises.

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

     20. All paneling, and other wood products not considered furniture shall be
of fire retardant materials.

     21. No smoking is permitted in the Premises, or in the Building. Smoking is
permitted outside the Building in designated  smoking areas. All cigarette butts
and other refuse should be placed in designated containers.

     22. No weapons  concealed or visible are permitted in the Premises,  in the
Building, or on the Land.

     23.  Landlord  shall  not be  responsible  to  Tenant  or  liable  for  the
non-observance  or violation of any of these Rules and  Regulations by any other
tenant.

     Whenever the above rules  conflict with any of the rights or obligations of
Tenant  pursuant to the  provisions  of the Lease,  the  provisions of the Lease
shall govern.




                                       31
<PAGE>


                                    EXHIBIT E

                                  MAJOR TRADES



Concrete/labor

Ornamental metals

Millwork

Drywall

Hard tile

Carpet

Paint and wallcoverings

Plumbing

HVAC

Electrical

Interior windows and glazing

Acoustical tile

Doors and hardware

Fire protection

[END OF LIST]





                                       32

</TEXT>
</DOCUMENT>
