EXHIBIT 10.24



[LOGO]                    CALIFORNIA CHAPTERS OF THE
     SOCIETY OF INDUSTRIAL AND OFFICE REALTORS-REGISTERED TRADEMARK-, INC.

                          INDUSTRIAL REAL ESTATE LEASE
                            (MULTI-TENANT FACILITY)

ARTICLE ONE:  BASIC TERMS

     This Article One contains the Basic Terms of this Lease between the 
Landlord and Tenant named below.  Other Articles, Sections and Paragraphs of 
the Lease referred to in this Article One explain and define the Basic Terms 
and are to be read in conjunction with the Basic Terms.

     Section 1.01.  DATE OF LEASE:                  August 5, 1996
                                    -------------------------------------------
     Section 1.02.  LANDLORD (INCLUDE LEGAL ENTITY):   Ruth Waltenspiel and 
                                                            Dixie Walker
                                                      -------------------------
Address of Landlord:  P.O. Box 2125 Napa, CA 94558
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     Section 1.03.  TENANT (INCLUDE LEGAL ENTITY):  Arterial Vascular 
                                                    Engineering, Inc., a 
                                                    Delaware Corporation
                                                   ----------------------------
Address of Tenant:  5355 Skylane Blvd. Santa Rosa, California
                   ------------------------------------------------------------

     Section 1.04.  PROPERTY:  The Property is part of Landlord's multi-tenant
real property development known as  5341-5347 Skylane Blvd. Santa Rosa, 
                                    California (Building B on Exhibit A)  
                                   --------------------------------------------
and described or depicted in Exhibit "A" (the "Project").  The Project 
includes the land, the buildings and all other improvements located on the 
land, and the common areas described in Paragraph 4.05(a).  The Property is 
(include street address, approximate square footage and description)
5341, 5343, 5345 & 5347 Skylane Blvd. Consisting of approximately 26,129 square
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feet as shown on Exhibit A attached hereto.
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                                           (See (1) below)
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     Section 1.05.  LEASE TERM:  -1-  years  -1-  months  BEGINNING ON 
                               ------       -----
December 1, 1996  or such other date as is specified in this Lease, and 
-----------------
ENDING ON  November 30, 1997
           -----------------

     Section 1.06.  PERMITTED USES:  (See Article Five)  Design, engineering, 
                                                         ----------------------
and production of medical equipment and supplies
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     Section 1.07.  TENANT'S GUARANTOR: (If none, so state)  None
                                                            -------------------
     Section 1.08.  BROKERS:  (See Article Fourteen) (If none, so state)
Landlord's Broker:  Airport Properties
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Tenant's Broker:
                 --------------------------------------------------------------

     Section 1.09.  COMMISSION PAYABLE TO LANDLORD'S BROKER:  (See Article 
Fourteen) $   By separate agreement
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     Section 1.10.  INITIAL SECURITY DEPOSIT:  (See Section 3.03) $ 19,113.00
                                                                    -----------

     Section 1.11.  VEHICLE PARKING SPACES ALLOCATED TO TENANT:  (See Section 
4.05)  Fifty (50)
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     Section 1.12.  RENT AND OTHER CHARGES PAYABLE BY TENANT:

     (a)  BASE RENT:  Nineteen Thousand One Hundred Thirteen and 00/00  
                     ----------------------------------------------------------
Dollars ($ 19,113.00) per month for the first 12th months, as provided in 
           ---------                          ----
Section 3.01, and shall be increased on the first day of the  13th  month(s) 
                                                              ----
after the Commencement Date, either (i) as provided in Section 3.02, or (ii) 

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---------------------------------------------.  (If (ii) is completed, then (i)
and Section 3.02 are inapplicable.)

     (b)  OTHER PERIODIC PAYMENTS:  (i) Real Property Taxes (See Section 
4.02); (ii) Utilities (See Section 4.03); (iii) Insurance Premiums (See 
Section 4.04); (iv) Tenant's Initial Pro Rata Share of Common Area Expenses  
100%  (See Section 4.05); (v) Impounds for Insurance Premiums and Property 
---
Taxes (See Section 4.08); (vi) Maintenance, Repairs and Alterations (See 
Article Six)(Expenses shall be $4,847.00 monthly)

     Section 1.13.  LANDLORD'S SHARE OF PROFIT ON ASSIGNMENT OR SUBLEASE:  
(See Section 9.05)  Fifty  percent (50%) of the Profit (the "Landlord's Share").
                    -----           --
     Section 1.14.  RIDERS: The following Riders are attached to and made a 
part of this Lease: (If none, so state)

             Addendum One
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             Exhibit A - Site Plan & Parking Plan
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             Exhibit B - Hazardous Materials Disclosure
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             Exhibit C - Agency Disclosure
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(1)  It is mutually understood that the premises at 5343 Skylane Blvd. is 
currently occupied by another tenant who's lease expires on November 30, 
1996.  Should Landlord be able to terminate that existing earlier than 
November 30, 1996, then Tenant shall have the right to immediate occupancy of 
said premises ("Early Occupancy").  Rent for the premises at 5343 Skylane 
Blvd. for the Early Occupancy period, shall be Four Thousand Seventy Six and 
00/100 ($4,076.00) Dollars per month.  Said rent shall include all common 
area operating expenses for the building.

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ARTICLE TWO: LEASE TERM

     Section 2.01.  LEASE OF PROPERTY FOR LEASE TERM.  Landlord leases the 
Property to Tenant and Tenant leases the Property from Landlord for the Lease 
Term. The Lease Term is for the period stated in Section 1.05 above and shall 
begin and end on the dates specified in Section 1.05 above, unless the 
beginning or end of the Lease Term is changed under any provision of this 
Lease. The "Commencement Date" shall be the date specified in Section 1.05 
above for the beginning of the Lease Term, unless advanced or delayed under 
any provision of this Lease.

     Section 2.02.  DELAY IN COMMENCEMENT.  Landlord shall not be liable to 
Tenant if Landlord does not deliver possession of the Property to Tenant on 
the Commencement Date. Landlord's non-delivery of the Property to Tenant on 
that date shall not affect this Lease or the obligations of Tenant under this 
Lease except that the Commencement Date shall be delayed until Landlord 
delivers possession of the Property to Tenant and the Lease Term shall be 
extended for a period equal to the delay in delivery of possession of the 
Property to Tenant, plus the number of days necessary to end the Lease Term on 
the last day of a month. If Landlord does not deliver possession of the 
Property to Tenant within sixty (60) days after the Commencement Date, Tenant 
may elect to cancel this Lease by giving written notice to Landlord within 
ten (10) days after the sixty (60) day period ends. If Tenant gives such 
notice, the Lease shall be cancelled and neither Landlord nor Tenant shall 
have any further obligations to the other. If Tenant does not give such 
notice, Tenant's right to cancel the Lease shall expire and the Lease Term 
shall commence upon the delivery of possession of the Property to Tenant. If 
delivery of possession of the Property to Tenant is delayed, Landlord and 
Tenant shall, upon such delivery, execute an amendment to this Lease setting 
forth the actual Commencement Date and expiration date of the Lease. Failure 
to execute such amendment shall not affect the actual Commencement Date and 
expiration date of the Lease.

      Section 2.03.  EARLY OCCUPANCY.  If Tenant occupies the Property prior 
to the Commencement Date, Tenant's occupancy of the Property shall be 
subject to all of the provisions of this Lease. Early occupancy of the 
Property shall not advance the expiration date of this Lease. Tenant shall 
pay Base Rent and all other charges specified in this Lease for the early 
occupancy period.

      Section 2.04.  HOLDING OVER.  Tenant shall vacate the Property upon the 
expiration or earlier termination of this Lease. Tenant shall reimburse 
Landlord for and indemnify Landlord against all damages which Landlord incurs 
from Tenant's delay in vacating the Property. If Tenant does not vacate the 
Property upon the expiration or earlier termination of the Lease and Landlord 
thereafter accepts rent from Tenant, Tenant's occupancy of the Property shall 
be a "month-to-month" tenancy, subject to all of the terms of this Lease 
applicable to a month-to-month tenancy, except that the Base Rent then in 
effect shall be increased by twenty-five percent (25%).

ARTICLE THREE:  BASE RENT

     Section 3.01.  TIME AND MANNER OF PAYMENT.  Upon execution of this 
Lease, Tenant shall pay Landlord the Base Rent in the amount stated in 
Paragraph 1.12(a) above for the first month of the Lease Term. On the first 
day of the second month of the Lease Term and each month thereafter, Tenant 
shall pay Landlord the Base Rent, in advance, without offset, deduction or 
prior demand. The Base Rent shall be payable at Landlord's address or at such 
other place as Landlord may designate in writing.

     Section 3.02.  COST OF LIVING INCREASES.  The Base Rent shall be 
increased on each date (the "Rental Adjustment Date") stated in Paragraph 
1.12(a) above in accordance with the increase in the United States Department 
of Labor, Bureau of Labor Statistics, Consumer Price Index for All Urban 
Consumers (all items for the geographical Statistical Area in which the 
Property is located on the basis of 1982-1984 = 100) (the "Index") as follows:

     (a)  The Base Rent (the "Comparison Base Rent") in effect immediately 
before each Rental Adjustment Date shall be increased by the percentage that 
the Index has increased from the date (the "Comparison Date") on which 
payment of the Comparison Base Rent began through the month in which the 
applicable Rental Adjustment Date occurs. The Base Rent shall not be reduced 
by reason of such computation. Landlord shall notify Tenant of each increase 
by a written statement which shall include the Index for applicable 
Comparison Date, the Index for the applicable Rental Adjustment Date, the 
percentage increase between those two Indices, and the new Base Rent. Any 
increase in the Base Rent provided for in this Section 3.02 shall be subject 
to any minimum or maximum increase, if provided for in Paragraph 1.12(a).

     (b)  Tenant shall pay the new Base Rent from the applicable Rental 
Adjustment Date until the next Rental Adjustment Date. Landlord's notice may 
be given after the applicable Rental Adjustment Date of the increase, and 
Tenant shall pay Landlord the accrued rental adjustment for the months 
elapsed between the effective date of the increase and Landlord's notice of 
such increase within ten (10) days after Landlord's notice. If the format or 
components of the Index are materially changed after the Commencement Date, 
Landlord shall substitute an index which is published by the Bureau of Labor 
Statistics or similar agency and which is most nearly equivalent to the Index 
in effect on the Commencement Date. The substitute index shall be used to 
calculate the increase in the Base Rent unless Tenant objects to such index 
in writing within fifteen (15) days after receipt of Landlord's notice. If 
Tenant objects, Landlord and Tenant shall submit the selection of the 
substitute index for binding arbitration in accordance with the rules and 
regulations of the American Arbitration Association at its office closest to 
the Property. The cost of arbitration shall be borne equally by Landlord and 
Tenant.

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     Section 3.03. SECURITY DEPOSIT; INCREASES.

     (a) Upon the execution of this Lease, Tenant shall deposit with Landlord 
a cash Security Deposit in the amount set forth in Section 1.10 above. 
Landlord may apply all or part of the Security Deposit to any unpaid rent or 
other charges due from Tenant or to cure any other defaults of Tenant. If 
Landlord uses any part of the Security Deposit, Tenant shall restore the 
Security Deposit to its full amount within ten (10) days after Landlord's 
written request. Tenant's failure to do so shall be a material default under 
this Lease. No interest shall be paid on the Security Deposit. Landlord shall 
not be required to keep the Security Deposit separate from its other accounts 
and no trust relationship is created with respect to the Security Deposit.

                                (See (1) below)

     (b)  Each time the Base Rent is increased, Tenant shall deposit 
additional funds with Landlord sufficient to increase the Security Deposit to 
an amount which bears the same relationship to the adjusted Base Rent as the 
initial Security Deposit bore to the initial Base Rent.

     Section 3.04.  TERMINATION; ADVANCE PAYMENTS.  Upon termination of this 
Lease under Article Seven (Damage or Destruction), Article Eight 
(Condemnation) or any other termination not resulting from Tenant's default, 
and after Tenant has vacated the Property in the manner required by this 
Lease, Landlord shall refund or credit to Tenant (or Tenant's successor) the 
unused portion of the Security Deposit, any advance rent or other advance 
payments made by Tenant to Landlord, and any amounts paid for real property 
taxes and other reserves which apply to any time periods after termination of 
the Lease.

ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT

     Section 4.01.  ADDITIONAL RENT.  All charges payable by Tenant other 
than Base Rent are called "Additional Rent." Unless this Lease provides 
otherwise, Tenant shall pay all Additional Rent then due with the next 
monthly installment of Base Rent. The term "rent" shall mean Base Rent and 
Additional Rent.

     Section 4.02.  PROPERTY TAXES.

     (a) REAL PROPERTY TAXES. Tenant shall pay all real property taxes on the 
Property (including any fees, taxes or assessment against, or as a result of, 
any tenant improvements installed on the Property by or for the benefit of 
Tenant) during the Lease Term. Subject to Paragraph 4.02(c) and Section 4.08 
below, such payment shall be made at least ten (10) days prior to the 
delinquency date of the taxes. Within such ten (10) day period, Tenant shall 
furnish Landlord with satisfactory evidence that the real property taxes have 
been paid. Landlord shall reimburse Tenant for any real property taxes paid 
by Tenant covering any period of time prior to or after the Lease Term. If 
Tenant fails to pay the real property taxes when due, Landlord may pay the 
taxes and Tenant shall reimburse Landlord for the amount of such tax payment 
as Additional Rent.

     (b) DEFINITION OF "REAL PROPERTY TAX."  "Real property tax" means: (i) 
any fee, license tax, business license fee, commercial rental tax, levy, 
charge, assessment, penalty or tex imposed by any taxing authority against 
the Property; (ii) any tax on the Landlord's right to receive, or the receipt 
of, rent or income from the Property or against Landlord's business of 
leasing the Property; (iii) any tax or charge for fire protection, streets, 
sidewalks, road maintenance, refuse or other services provided to the 
Property by any governmental agency; (iv) any tax imposed upon this 
transaction or based upon a re-assessment of the Property due to a change of 
ownership, as defined by applicable law, or other transfer of all or part of 
Landlord's interest in the Property; and (v) any charge or fee replacing any 
tax previously included within the definition of real property tax. "Real 
property tax" does not, however, include Landlord's federal or state income, 
franchise, inheritance or estate taxes.

     (c) JOINT ASSESSMENT.  If the Property is not separately assessed, 
Landlord shall reasonably determine Tenant's share of the real property tax 
payable by Tenant under Paragraph 4.02(a) from the assessor's worksheets or 
other reasonably available information. Tenant shall pay such share to 
Landlord within fifteen (15) days after receipt of Landlord's written 
statement.

     (d)  PERSONAL PROPERTY TAXES.

          (i)  Tenant shall pay all taxes charged against trade fixtures, 
furnishings, equipment or any other personal property belonging to Tenant. 
Tenant shall try to have personal property taxed separately from the Property.

          (ii) If any of Tenant's personal property is taxed with the 
Property, Tenant shall pay Landlord the taxes for the personal property 
within fifteen (15) days after Tenant receives a written statement from 
Landlord for such personal property taxes.

     Section 4.03.  UTILITIES.  Tenant shall pay, directly to the appropriate 
supplier, the cost of all natural gas, heat, light, power, sewer service, 
telephone, water, refuse disposal and other utilities and services supplied 
to the Property. However, if any services or utilities are jointly metered 
with other property, Landlord shall make a reasonable determination of 
Tenant's proportionate share of the cost of such utilities and services and 
Tenant shall pay such share to Landlord within fifteen (15) days after 
receipt of Landlord's written statement.


            (1) Currently Landlord is holding a security deposit in the amount
                of $4,338.91 for the premises at 5341 Skylane Blvd. and an
                additional security deposit of $4,760.00 for the premises at
                5347 Skylane Blvd. Therefore, Upon execution hereof, Tenant
                shall pay to Landlord the amount of Ten Thousand Fourteen and
                09/100 ($10,014.09) Dollars as an increased security deposit.


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     Section 4.04.  INSURANCE POLICIES.

     (a) LIABILITY INSURANCE. During the Lease Term, Tenant shall maintain a 
policy of commercial general liability insurance (sometimes known as broad 
form comprehensive general liability insurance) insuring Tenant against 
liability for bodily  injury, property damage (including loss of use of 
property) and personal injury arising out of the operation, use or occupancy 
of the Property. Tenant shall name Landlord as an additional insured under 
such policy. The initial amount of such insurance shall be One Million 
Dollars ($1,000,000) per occurrence and shall be subject to periodic increase 
based upon inflation, increased liability awards, recommendation of 
Landlord's professional insurance advisers and other relevant factors. The 
liability insurance obtained by Tenant under this Paragraph 4.04(a) shall (i) 
be primary and non-contributing; (ii) contain cross-liability endorsements; 
and (iii) insure Landlord against Tenant's performance under Section 5.05, if 
the matters giving rise to the indemnity under Section 5.05 result from the 
negligence of Tenant. The amount and coverage of such insurance shall not 
limit Tenant's liability nor relieve Tenant of any other obligation under 
this Lease. Landlord may also obtain comprehensive public liability insurance 
in an amount and with coverage determined by Landlord insuring Landlord 
against liability arising out of ownership, operation, use or occupancy of 
the Property. The policy obtained by Landlord shall not be contributory and 
shall not provide primary insurance.

     (b) PROPERTY AND RENTAL INCOME INSURANCE.  During the Lease Term, 
Landlord shall maintain policies of insurance covering loss of or damage to 
the Property in the full amount of its replacement value. Such policy shall 
contain an Inflation Guard Endorsement and shall provide protection against 
all perils included within the classification of fire, extended coverage, 
vandalism, malicious mischief, special extended perils (all risk), sprinkler 
leakage and any other perils which Landlord deems reasonably necessary. 
Landlord shall have the right to obtain flood and earthquake insurance if 
required by any lender holding a security interest in the Property. Landlord 
shall not obtain insurance for Tenant's fixtures or equipment or building 
improvements installed by Tenant on the Property. During the Lease Term, 
Landlord shall maintain a rental income insurance policy, with loss payable 
to Landlord, in an amount equal to one year's Base Rent, plus estimated real 
property taxes and insurance premiums. Tenant shall be liable for the payment 
of any deductible amount under Landlord's or Tenant's insurance policies 
maintained pursuant to this Section 4.04, in an amount not to exceed Ten 
Thousand Dollars ($10,000). Tenant shall not do or permit anything to be done 
which invalidates any such insurance policies.

     (c)  PAYMENT OF PREMIUMS.  Subject to Section 4.08, Tenant shall pay all 
premiums for the insurance policies described in Paragraphs 4.04(a) and (b) 
(whether obtained by Landlord or Tenant) within fifteen (15) days after 
Tenant's receipt of a copy of the premium statement or other evidence of the 
amount due, except Landlord shall pay all premiums for non-primary 
comprehensive public liability insurance which Landlord elects to obtain as 
provided in Paragraph 4.04(a). For insurance policies maintained by Landlord 
which cover improvements on the entire Project, Tenant shall pay Tenant's 
prorated share of the premiums, in accordance with the formula in Paragraph 
4.05(e) for determining Tenant's share of Common Area costs. If insurance 
policies maintained by Landlord cover improvements on real property other 
than the Project, Landlord shall deliver to Tenant a statement of the premium 
applicable to the Property showing in reasonable detail how Tenant's share of 
the premium was computed. If the Lease Term expires before the expiration of 
an insurance policy maintained by Landlord, Tenant shall be liable for 
Tenant's prorated share of the insurance premiums. Before the Commencement 
Date, Tenant shall deliver to Landlord a copy of any policy of insurance 
which Tenant is required to maintain under this Section 4.04. At least thirty 
(30) days prior to the expiration of any such policy, Tenant shall deliver to 
Landlord a renewal of such policy. As an alternative to providing a policy of 
insurance, Tenant shall have the right to provide Landlord a certificate of 
insurance, executed by an authorized officer of the insurance company, 
showing that the insurance which Tenant is required to maintain under this 
Section 4.04 is in full force and effect and containing such other 
information which Landlord reasonably requires.

     (d)  GENERAL INSURANCE PROVISIONS.

          (i) Any insurance which Tenant is required to maintain under this 
Lease shall include a provision which requires the insurance carrier to give 
Landlord not less than thirty (30) days' written notice prior to any 
cancellation or modification of such coverage.

         (ii) If Tenant fails to deliver any policy, certificate or renewal 
to Landlord required under this Lease within the prescribed time period or if 
any such policy is cancelled or modified during the Lease Term without 
Landlord's consent, Landlord may obtain such insurance, in which case Tenant 
shall reimburse Landlord for the cost of such insurance within fifteen (15) 
days after receipt of a statement that indicates the cost of such insurance.

        (iii) Tenant shall maintain all insurance required under this Lease 
with companies holding a "General Policy Rating" of A-12 or better, as set 
forth in the most current issue of "Best Key Rating Guide". Landlord and 
Tenant acknowledge the insurance markets are rapidly changing and that 
insurance in the form and amounts described in this Section 4.04 may not be 
available in the future. Tenant acknowledges that the insurance described in 
this Section 4.04 is for the primary benefit of Landlord. If at any time 
during the Lease Term, Tenant is unable to maintain the insurance required 
under the Lease, Tenant shall nevertheless maintain insurance coverage which 
is customary and commercially reasonable in the insurance industry for 
Tenant's type of business, as that coverage may change from time to time. 
Landlord makes no representation as to the adequacy of such insurance to 
protect Landlord's or Tenant's interests. Therefore, Tenant shall obtain any 
such additional property or liability insurance which Tenant deems necessary 
to protect Landlord and Tenant.

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     (iv)  Unless prohibited under any applicable insurance policies 
maintained, Landlord and Tenant each hereby waive any and all rights of 
recovery against the other, or against the officers, employees, agents or 
representatives of the other, for loss of or damage to its property or the 
property of others under its control, if such loss or damage is covered by 
any insurance policy in force (whether or not described in this Lease) at the 
time of such loss or damage. Upon obtaining the required policies of 
insurance, Landlord and Tenant shall give notice to the insurance carriers of 
this mutual waiver of subrogation.

     Section 4.05.  COMMON AREAS; USE, MAINTENANCE AND COSTS.

     (a) COMMON AREAS.  As used in this Lease, "Common Areas" shall mean all 
areas within the Project which are available for the common use of tenants of 
the Project and which are not leased or held for the exclusive use of Tenant 
or other tenants, including, but not limited to, parking areas, driveways, 
sidewalks, loading areas, access roads, corridors, landscaping and planted 
areas. Landlord, from time to time, may change the size, location, nature and 
use of any of the Common Areas, convert Common Areas into leasable areas, 
construct additional parking facilities (including parking structures) in the 
Common Areas, and increase or decrease Common Area land and/or facilities. 
Tenant acknowledges that such activities may result in inconvenience to 
Tenant. Such activities and changes are permitted if they do not materially 
affect Tenant's use of the Property.

     (b) USE OF COMMON AREAS.  Tenant shall have the nonexclusive right (in 
common with other tenants and all others to whom Landlord has granted or may 
grant such rights) to use the Common Areas for the purposes intended subject 
to such reasonable rules and regulations as Landlord may establish from time 
to time. Tenant shall abide by such rules and regulations and shall use its 
best effort to cause others who use the Common Areas with Tenant's express or 
implied permission to abide by Landlord's rules and regulations. At any time, 
Landlord may close any Common Areas to perform any acts in the Common Areas 
as, in Landlord's judgment, are desirable to improve the Project. Tenant 
shall not interfere with the rights of Landlord, other tenants or any other 
person entitled to use the Common Areas.

     (c)  SPECIFIC PROVISION RE: VEHICLE PARKING.  Tenant shall be entitled 
to use the number of vehicle parking spaces in the Project allocated to 
Tenant in Section 1.11 of the Lease without paying any additional rent. 
Tenant's parking shall be those spaces designated with the letter "T" on 
Exhibit A attached hereto, and shall be limited to vehicles no 
larger than standard size automobiles or pickup utility vehicles. Tenant 
shall not cause large trucks or other large vehicles to be parked within the 
Project or on the adjacent public streets. Temporary parking of large 
delivery vehicles in the Project may be permitted by the rules and 
regulations established by Landlord. Vehicles shall be parked only in striped 
parking spaces and not in driveways, loading areas or other locations not 
specifically designated for parking. Handicapped spaces shall only be used by 
those legally permitted to use them. If Tenant parks more vehicles in the 
parking area than the number set forth in Section 1.11 of this Lease, such 
conduct shall be a material breach of this Lease. In addition to Landlord's 
other remedies under the Lease, Tenant shall pay a daily charge determined by 
Landlord for each such additional vehicle.

     (d)  MAINTENANCE OF COMMON AREAS.  Landlord shall maintain the Common 
Areas in good order, condition and repair and shall operate the Project, in 
Landlord's sole discretion, as a first-class industrial/commercial real 
property development. Tenant shall pay Tenant's pro rata share (as determined 
below) of all costs incurred by Landlord for the operation and maintenance of 
the Common Areas. Common Area costs include, but are not limited to, costs 
and expenses for the following: gardening and landscaping; utilities, water 
and sewage charges; maintenance of signs (other than tenants' signs); premiums 
for liability, property damage, fire and other types of casualty insurance on 
the Common Areas and worker's compensation insurance; all property taxes and 
assessments levied on or attributable to the Common Areas and all Common Area 
improvements; all personal taxes levied on or attributable to personal 
property used in connection with the Common Areas; straight-line
depreciation on personal property owned by Landlord which is consumed in the
operation or maintenance of the Common Areas; rental or lease payments paid
by Landlord for rented or leased personal property used in the operation or
maintenance of the Common Areas; fees for required licenses and permits;
repairing, resurfacing, repaving, maintaining, painting, lighting,
cleaning, refuse removal, security and similar items; reserves for roof
replacement and exterior painting and other appropriate reserves; and a
reasonable allowance to Landlord for Landlord's supervision of the Common
Areas (not to exceed five percent (5%) of the gross rents of the Project
for the calendar year). Landlord may cause any or all of such services to
be provided by third parties and the cost of such services shall be included
in Common Area costs. Common Area costs shall not include depreciation
of real property which forms part of the Common Areas.


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     [e]  TENANT'S SHARE AND PAYMENT. Tenant shall pay Tenant's annual pro 
rata share of all Common Area costs (prorated for any fractional month) upon 
written notice from Landlord that such costs are due and payable, and in any 
event prior to delinquency.  Tenant's pro rata share shall be calculated by 
dividing the square foot area of the Property, as set forth in Section 1.04 
of the Lease, by the aggregate square foot area of the Project which is 
leased or held for lease by tenants, as of the date on which the computation 
is made. Tenant's initial pro rata share is set out in Paragraph 1.13(b). Any 
changes in the Common Area costs and/or the aggregate area of the Project 
leased or held for lease during the Lease Term shall be effective on the 
first day of the month after such change occurs. Landlord may, at Landlord's 
election, estimate in advance and charge to Tenant as Common Area costs, all 
real property taxes for which Tenant is liable under Section 4.02 of the 
Lease, all insurance premiums for which Tenant is liable under Section 4.04 
of the Lease, all maintenance and repair costs for which Tenant is liable 
under Section 6.04 of the Lease, and all other Common Area costs payable by 
Tenant hereunder. At Landlord's election, such statements of estimated Common 
Area costs shall be delivered monthly, quarterly or at any other periodic 
intervals to be designated by Landlord. Landlord may adjust such estimates at 
any time based upon Landlord's experience and reasonable anticipation of 
costs. Such adjustments shall be effective as of the next rent payment date 
after notice to Tenant. Within sixty (60) days after the end of each calendar 
year of the Lease Term, Landlord shall deliver to Tenant a statement prepared 
in accordance with generally accepted accounting principles setting forth, in 
reasonable detail, the Common Area costs paid or incurred by Landlord during 
the preceding calendar year and Tenant's pro rata share. Upon receipt of such 
statement, there shall be an adjustment between Landlord and Tenant, with 
payment to or credit given by Landlord (as the case may be) so that Landlord 
shall receive the entire amount of Tenant's share of such costs and expenses 
for such period. Tenants share of expenses hereunder shall be fixed at 
$3,827.00.

     Section 4.06.  LATE CHARGES. Tenant's failure to pay rent promptly may 
cause Landlord to incur unanticipated costs. The exact amount of such costs 
are impractical or extremely difficult to ascertain. Such costs may include, 
but are not limited to, processing and accounting charges and late charges 
which may be imposed on Landlord by any ground lease, mortgage or trust deed 
encumbering the Property. Therefore, if Landlord does not receive any rent 
payment within ten (10) days after it becomes due, Tenant shall pay Landlord 
a late charge equal to ten percent (10%) of the overdue amount. The parties 
agree that such late charge represents a fair and reasonable estimate of the 
costs Landlord will incur by reason of such late payment.

     Section 4.07. INTEREST ON PAST DUE OBLIGATIONS. Any amount owed by 
Tenant to Landlord which is not paid when due shall bear interest at the rate 
of fifteen percent (15%) per annum from the due date of such amount. However, 
interest shall not be payable on late charges to be paid by Tenant under 
this Lease. The payment of interest on such amounts shall not excuse or cure 
any default by Tenant under this Lease. If the interest rate specified in 
this Lease is higher than the rate permitted by law, the interest rate is 
hereby decreased to the maximum legal interest rate permitted by law.

     Section 4.08. IMPOUNDS FOR INSURANCE PREMIUMS AND REAL PROPERTY TAXES. 
If requested by any ground lessor or lender to whom Landlord has granted a 
security interest in the Property, or if Tenant is more than ten (10) days 
late in the payment of rent more than once in any consecutive twelve 
(12)-month period, Tenant shall pay Landlord a sum equal to one-twelfth 
(1/12) of the annual real property taxes and insurance premiums payable by 
Tenant under this Lease, together with each payment of Base Rent. Landlord 
shall hold such payments in a non-interest bearing impound account. If 
unknown, Landlord shall reasonably estimate the amount of real property taxes 
and insurance premiums when due. Tenant shall pay any deficiency of funds in 
the impound account to Landlord upon written request. If Tenant defaults 
under this Lease, Landlord may apply any funds in the impound account to any 
obligation then due under this Lease.

ARTICLE FIVE: USE OF PROPERTY

     Section 5.01. PERMITTED USES. Tenant may use the Property only for the 
Permitted Uses set forth in Section 1.06 above.

     Section 5.02. MANNER OF USE. Tenant shall not cause or permit the 
Property to be used in any way which constitutes a violation of any law, 
ordinance, or governmental regulation or order, which annoys or interferes 
with the rights of tenants of the Project, or which constitutes a nuisance or 
waste. Tenant shall obtain and pay for all permits, including a Certificate 
of Occupancy, required for Tenant's occupancy of the Property and shall 
promptly take all actions necessary to comply with all applicable statutes, 
ordinances, rules, regulations, orders and requirements regulating the use by 
Tenant of the Property, including the Occupational Safety and Health Act.

     Section 5.03. HAZARDOUS MATERIALS. As used in this Lease, the term 
"Hazardous Material" means any flammable items, explosives, radioactive 
materials, hazardous or toxic substances, material or waste or related 
materials, including any substances defined as or included in the definition 
of "hazardous substances", "hazardous wastes", "hazardous materials" or 
"toxic substances" now or subsequently regulated under any applicable 
federal, state or local laws or regulations, including without limitation 
petroleum-based products, paints, solvents, lead, cyanide, DDT, printing inks, 
acids, pesticides, ammonia compounds and other chemical products, asbestos, 
PCBs and similar compounds, and including any different products and 
materials which are subsequently found to have adverse effects on the 
environment or the health and safety of persons. Tenant shall not cause or 
permit any Hazardous Material to be generated, produced, brought upon, used, 
stored, treated or disposed of in or about the Property by Tenant, its 
agents, employees, contractors, sublessees or invitees without the prior 
written consent of Landlord. Landlord shall be entitled to take into account 
such other factors or facts as Landlord may reasonably determine to be 
relevant in determining whether to grant or withhold consent to Tenant's 
proposed activity with respect to Hazardous Material. In no event, however, 
shall Landlord be required to consent to the installation or use of any 
storage tanks on the Property.

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     Section 5.04. SIGNS AND AUCTIONS. Tenant shall not place any signs on 
the Property without Landlord's prior written consent. Tenant shall not 
conduct or permit any auctions or sheriff's sales at the Property.

     Section 5.05. INDEMNITY. Tenant shall indemnify Landlord against and 
hold Landlord harmless from any and all costs, claims or liability arising 
from: (a) Tenant's use of the Property; (b) the conduct of Tenant's business 
or anything else done or permitted by Tenant to be done in or about the 
Property, including any contamination of the Property or any other property 
resulting from the presence or use of Hazardous Material caused or permitted 
by Tenant; (c) any breach or default in the performance of Tenant's 
obligations under this Lease; (d) any misrepresentation or breach of warranty 
by Tenant under this Lease; or (e) other acts or omissions of Tenant. Tenant 
shall defend Landlord against any such cost, claim or liability at Tenant's 
expense with counsel reasonably acceptable to Landlord or, at Landlord's 
election, Tenant shall reimburse Landlord for any legal fees or costs 
incurred by Landlord in connection with any such claim. As a material part of 
the consideration to Landlord, Tenant assumes all risk of damage to property 
or injury to persons in or about the Property arising from any cause, and 
Tenant hereby waives all claims in respect thereof against Landlord, except 
for any claim arising out of Landlord's gross negligence or willful 
misconduct. As used in this Section, the term "Tenant" shall include Tenant's 
employees, agents, contractors and invitees, if applicable.

     Section 5.06. LANDLORD'S ACCESS. Landlord or its agents may enter the 
Property at all reasonable times to show the Property to potential buyers, 
investors or tenants or other parties; to do any other act or to inspect and 
conduct tests in order to monitor Tenant's compliance with all applicable 
environmental laws and all laws governing the presence and use of Hazardous 
Material; or for any other purpose Landlord deems necessary. Landlord shall 
give Tenant prior notice of such entry, except in the case of an emergency. 
Landlord may place customary "For Sale" or "For Lease" signs on the Property.

     Section 5.07. QUIET POSSESSION. If Tenant pays the rent and complies 
with all other terms of this Lease, Tenant may occupy and enjoy the Property 
for the full Lease Term, subject to the provisions of this Lease.

ARTICLE SIX: CONDITION OF PROPERTY; MAINTENANCE, REPAIRS AND ALTERATIONS

     Section 6.01. EXISTING CONDITIONS. Tenant accepts the Property in its 
condition as of the execution of the Lease, subject to all recorded matters, 
laws, ordinances, and governmental regulations and orders. Except as provided 
herein, Tenant acknowledges that neither Landlord nor any agent of Landlord 
has made any representation as to the condition of the Property or the 
suitability of the Property for Tenant's intended use. Tenant represents and 
warrants that Tenant has made its own inspection of and inquiry regarding the 
condition of the Property and is not relying on any representations of 
Landlord or any Broker with respect thereto. If Landlord or Landlord's Broker 
has provided a Property Information Sheet or other Disclosure Statement 
regarding the Property, a copy is attached as an exhibit to the Lease.

     Section 6.02. EXEMPTION OF LANDLORD FROM LIABILITY. Landlord shall not 
be liable for any damage or injury to the person, business (or any loss of 
income therefrom), goods, wares, merchandise or other property of Tenant, 
Tenant's employees, invitees, customers or any other person in or about the 
Property, whether such damage or injury is caused by or results from: (a) 
fire, steam, electricity, water, gas or rain; (b) the breakage, leakage, 
obstruction or other defects of pipes, sprinklers, wires, appliances, 
plumbing, air conditioning or lighting fixtures or any other cause; (c) 
conditions arising in or about the Property or upon other portions of the 
Project, or from other sources or places; or (d) any act or omission of any 
other tenant of the Project. Landlord shall not be liable for any such damage 
or injury even though the cause of or the means of repairing such damage or 
injury are not accessible to Tenant. The provisions of this Section 6.02 
shall not, however, exempt Landlord from liability for Landlord's gross 
negligence or willful misconduct.

     Section 6.03.  LANDLORD'S OBLIGATIONS.

     (a) Except as provided in Article Seven (Damage or Destruction) and 
Article Eight (Condemnation), Landlord shall keep the following in good 
order, condition and repair; the foundations, exterior walls and roof of the 
Property (including painting the exterior surface of the exterior walls of 
the Property not more often than once every five (5) years, if necessary) and 
all components of electrical, mechanical, plumbing, heating and air 
conditioning systems and facilities located in the Property which are 
concealed or used in common by tenants of the Project. However, Landlord 
shall not be obligated to maintain or repair windows, doors, plate glass or 
the interior surfaces of exterior walls. Landlord shall make repairs under 
this Section 6.03 within a reasonable time after receipt of written notice 
from Tenant of the need for such repairs.

     (b) Tenant shall pay or reimburse Landlord for all costs Landlord incurs 
under Paragraph 6.03(a) above as Common Area costs as provided for in Section 
4.05 of the Lease. Tenant waives the benefit of any statute in effect now or 
in the future which might give Tenant the right to make repairs at Landlord's 
expense or to terminate this Lease due to Landlord's failure to keep the 
Property in good order, condition and repair.

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     Section 6.04. TENANT'S OBLIGATIONS.

     (a) Except as provided in Section 6.03, Article Seven (Damage or 
Destruction) and Article Eight (Condemnation), Tenant shall keep all portions 
of the Property (including structural, nonstructural, interior, systems and 
equipment) in good order, condition and repair (including interior repainting 
and refinishing, as needed). If any portion of the Property or any system or 
equipment in the Property which Tenant is obligated to repair cannot be fully 
repaired or restored, Tenant shall promptly replace such portion of the 
Property or system or equipment in the Property, regardless of whether the 
benefit of such replacement extends beyond the Lease Term; but if the benefit 
or useful life of such replacement extends beyond the Lease Term (as such 
term may be extended by exercise of any options), the useful life of such 
replacement shall be prorated over the remaining portion of the Lease Term 
(as extended). Tenant shall maintain a preventive maintenance contract 
providing for the regular inspection and maintenance of the heating and air 
conditioning system by a licensed heating and air conditioning contractor, 
unless Landlord maintains such equipment under Section 6.03 above. If any 
part of the Property or the Project is damaged by any act or omission of 
Tenant, Tenant shall pay Landlord the cost of repairing or replacing such 
damaged property, whether or not Landlord would otherwise be obligated to pay 
the cost of maintaining or repairing such property. It is the intention of 
Landlord and Tenant that at all times Tenant shall maintain the portions of 
the Property which Tenant is obligated to maintain in an attractive, 
first-class and fully operative condition.

     (b) Tenant shall fulfill all of Tenant's obligations under this Section 
6.04 at Tenant's sole expense. If Tenant fails to maintain, repair or replace 
the Property as required by this Section 6.04, Landlord may, upon ten (10) 
days' prior notice to Tenant (except that no notice shall be required in the 
case of an emergency), enter the Property and perform such maintenance or 
repair (including replacement, as needed) on behalf of Tenant. In such case, 
Tenant shall reimburse Landlord for all costs incurred in performing such 
maintenance or repair immediately upon demand.

     Section 6.05. ALTERATIONS, ADDITIONS, AND IMPROVEMENTS.

     (a) Tenant shall not make any alterations, additions, or improvements to 
the Property without Landlord's prior written consent, except for 
non-structural alterations which do not exceed Ten Thousand Dollars ($10,000) 
in cost cumulatively over the Lease Term and which are not visible from the 
outside of any building of which the Property is part. Landlord may require 
Tenant to provide demolition and/or lien and completion bonds in form and 
amount satisfactory to Landlord. Tenant shall promptly remove any 
alterations, additions, or improvements constructed in violation of this 
Paragraph 6.05(a) upon Landlord's written request. All alterations, 
additions, and improvements shall be done in a good and workmanlike manner, 
in conformity with all applicable laws and regulations, and by a contractor 
approved by Landlord. Upon completion of any such work, Tenant shall provide 
Landlord with "as built" plans, copies of all construction contracts, and 
proof of payment for all labor and materials.

     (b) Tenant shall pay when due all claims for labor and material 
furnished to the Property. Tenant shall give Landlord at least twenty (20) 
days' prior written notice of the commencement of any work on the Property, 
regardless of whether Landlord's consent to such work is required. Landlord 
may elect to record and post notices of non-responsibility on the Property.

     Section 6.06. CONDITION UPON TERMINATION. Upon the termination of the 
Lease, Tenant shall surrender the Property to Landlord, broom clean and in 
the same condition as received except for ordinary wear and tear which Tenant 
was not otherwise obligated to remedy under any provision of this Lease. 
However, Tenant shall not be obligated to repair any damage which Landlord is 
required to repair under Article Seven (Damage or Destruction). In addition, 
Landlord may require Tenant to remove any alterations, additions or 
improvements (whether or not made with Landlord's consent) prior to the 
expiration of the Lease and to restore the Property to its prior condition, 
all at Tenant's expense.  All alterations, additions and improvements which 
Landlord has not required Tenant to remove shall become Landlord's property 
and shall be surrendered to Landlord upon the expiration or earlier 
termination of the Lease, except that Tenant may remove any of Tenant's 
machinery or equipment which can be removed without material damage to the 
Property. Tenant shall repair, at Tenant's expense, any damage to the 
Property caused by the removal of any such machinery or equipment. In no 
event, however, shall Tenant remove any of the following materials or 
equipment (which shall be deemed Landlord's property) without Landlord's 
prior written consent; any power wiring or power panels; lighting or lighting 
fixtures; wall coverings; drapes, blinds or other window coverings; carpets 
or other floor coverings; heaters, air conditioners or any other heating or 
air conditioning equipment; fencing or security gates; or other similar 
building operating equipment and decorations.

ARTICLE SEVEN: DAMAGE OR DESTRUCTION

     Section 7.01 PARTIAL DAMAGE TO PROPERTY.

     (a) Tenant shall notify Landlord in writing immediately upon the 
occurrence of any damage to the Property. If the Property is only partially 
damaged (i.e., less than fifty percent (50%) of the Property is untenantable 
as a result of such damage or less than fifty percent (50%) of Tenant's 
operations are materially impaired) and if the proceeds received by Landlord 
from the insurance policies described in Paragraph 4.04(b) are sufficient to 
pay for the necessary repairs, this Lease shall remain in effect and Landlord 
shall repair the damage as soon as reasonably possible. Landlord may elect 
(but is not required) to repair any damage to Tenant's fixtures, equipment, 
or improvements.

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     (b) If the insurance proceeds received by Landlord are not sufficient to 
pay the entire cost of repair, or if the cause of the damage is not covered 
by the insurance policies which Landlord maintains under Paragraph 4.04(b), 
Landlord may elect either to (i) repair the damage as soon as reasonably 
possible, in which case this Lease shall remain in full force and effect, or 
(ii) terminate this Lease as of the date the damage occurred. Landlord shall 
notify Tenant within thirty (30) days after receipt of notice of the 
occurrence of the damage whether Landlord elects to repair the damage or 
terminate the Lease. If Landlord elects to repair the damage, Tenant shall 
pay Landlord the "deductible amount" (if any) under Landlord's insurance 
policies and, if the damage was due to an act or omission of Tenant, or 
Tenant's employees, agents, contractors or invitees, the difference between 
the actual cost of repair and any insurance proceeds received by Landlord. If 
Landlord elects to terminate this Lease, Tenant may elect to continue this 
Lease in full force and effect, in which case Tenant shall repair any damage 
to the Property and any building in which the Property is located. Tenant 
shall pay the cost of such repairs, except that upon satisfactory completion 
of such repairs, Landlord shall deliver to Tenant any insurance proceeds 
received by Landlord for the damage repaired by Tenant. Tenant shall give 
Landlord written notice of such election within ten (10) days after receiving 
Landlord's termination notice.

     (c) If the damage to the Property occurs during the last six (6) months 
of the Lease Term and such damage will require more than thirty (30) days to 
repair, either Landlord or Tenant may elect to terminate this Lease as of the 
date the damage occurred, regardless of the sufficiency of any insurance 
proceeds. The party electing to terminate this Lease shall give written 
notification to the other party of such election within thirty (30) days 
after Tenant's notice to Landlord of the occurrence of the damage.

     Section 7.02. SUBSTANTIAL OR TOTAL DESTRUCTION. If the Property is 
substantially or totally destroyed by any cause whatsoever (i.e., the damage 
to the Property is greater than partial damage as described in Section 7.01), 
and regardless of whether Landlord receives any insurance proceeds, this 
Lease shall terminate as of the date the destruction occurred. 
Notwithstanding the preceding sentence, if the Property can be rebuilt within 
six (6) months after the date of destruction, Landlord may elect to rebuild 
the Property at Landlord's own expense, in which case this Lease shall remain 
in full force and effect. Landlord shall notify Tenant of such election 
within thirty (30) days after Tenant's notice of the occurrence of total or 
substantial destruction. If Landlord so elects, Landlord shall rebuild the 
Property at Landlord's sole expense, except that if the destruction was 
caused by an act or omission of Tenant, Tenant shall pay Landlord the 
difference between the actual cost of rebuilding and any insurance proceeds 
received by Landlord.

     Section 7.03. TEMPORARY REDUCTION OF RENT. If the Property is destroyed 
or damaged and Landlord or Tenant repairs or restores the Property pursuant 
to the provisions of this Article Seven, any rent payable during the period 
of such damage, repair and/or restoration shall be reduced according to the 
degree, if any, to which Tenant's use of the Property is impaired. However, 
the reduction shall not exceed the sum of one year's payment of Base Rent, 
insurance premiums and real property taxes. Except for such possible 
reduction in Base Rent, insurance premiums and real property taxes, Tenant 
shall not be entitled to any compensation, reduction, or reimbursement from 
Landlord as a result of any damage, destruction, repair, or restoration of or 
to the Property.

      Section 7.04. WAIVER. Tenant waives the protection of any statute, 
code or judicial decision which grants a tenant the right to terminate a 
lease in the event of the substantial or total destruction of the leased 
property. Tenant agrees that the provisions of Section 7.02 above shall 
govern the rights and obligations of Landlord and Tenant in the event of any 
substantial or total destruction to the Property.

ARTICLE EIGHT: CONDEMNATION

     If all or any portion of the Property is taken under the power of 
eminent domain or sold under the threat of that power (all of which are 
called "Condemnation"), this Lease shall terminate as to the part taken or 
sold on the date the condemning authority takes title or possession, whichever 
occurs first. If more than twenty percent (20%) of the floor area of the 
building in which the Property is located, or which is located on the 
Property, is taken, either Landlord or Tenant may terminate this Lease as of 
the date the condemning authority takes title or possession, by delivering 
written notice to the other within ten (10) days after receipt of written 
notice of such taking (or in the absence of such notice, within ten (10) days 
after the condemning authority takes title or possession). If neither 
Landlord nor Tenant terminates this Lease, this Lease shall remain in effect 
as to the portion of the Property not taken, except that the Base Rent and 
Additional Rent shall be reduced in proportion to the reduction in the floor 
area of the Property. Any Condemnation award or payment shall be distributed 
in the following order: (a) first, to any ground lessor, mortgagee or 
beneficiary under a deed of trust encumbering the Property, the amount of its 
interest in the Property; (b) second, to Tenant, only the amount of any award 
specifically designated for loss of or damage to Tenant's trade fixtures or 
removable personal property; and (c) third, to Landlord, the remainder of 
such award, whether as compensation for reduction in the value of the 
leasehold, the taking of the fee, or otherwise. If this Lease is not 
terminated, Landlord shall repair any damage to the Property caused by the 
Condemnation, except that Landlord shall not be obligated to repair any 
damage for which Tenant has been reimbursed by the condemning authority. If 
the severance damages received by Landlord are not sufficient to pay for such 
repair, Landlord shall have the right to either terminate this Lease or make 
such repair at Landlord's expense.

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ARTICLE NINE: ASSIGNMENT AND SUBLETTING

     Section 9.01.  LANDLORD'S CONSENT REQUIRED. No portion of the Property 
or of Tenant's interest in this Lease may be acquired by any other person or 
entity, whether by sale, assignment, mortgage, sublease, transfer, operation 
of law, or act of Tenant, without Landlord's prior written consent, except as 
provided in Section 9.02 below. Landlord has the right to grant or withhold 
its consent as provided in Section 9.05 below. Any attempted transfer without 
consent shall be void and shall constitute a non-curable breach of this 
Lease. If Tenant is a partnership, any cumulative transfer of more than 
twenty percent (20%) of the partnership interests shall require Landlord's 
consent. If Tenant is a corporation, any change in the ownership of a 
controlling interest of the voting stock of the corporation shall require 
Landlord's consent.

     Section 9.02.  TENANT AFFILIATE. Tenant may assign this Lease or 
sublease the Property, without Landlord's consent, to any corporation which 
controls, is controlled by or is under common control with Tenant, or to any 
corporation resulting from the merger of or consolidation with Tenant 
("Tenant's Affiliate"). In such case, any Tenant's Affiliate shall assume in 
writing all of Tenant's obligations under this Lease.

     Section 9.03.  NO RELEASE OF TENANT. No transfer permitted by this 
Article Nine, whether with or without Landlord's consent, shall release 
Tenant or change Tenant's primary liability to pay the rent and to perform 
all other obligations of Tenant under this Lease. Landlord's acceptance of 
rent from any other person is not a waiver of any provision of this Article 
Nine. Consent to one transfer is not a consent to any subsequent transfer. If 
Tenant's transferee defaults under this Lease, Landlord may proceed directly 
against Tenant without pursuing remedies against the transferee. Landlord may 
consent to subsequent assignments or modifications of this Lease by Tenant's 
transferee, without notifying Tenant or obtaining its consent. Such action 
shall not relieve Tenant's liability under this Lease.

     Section 9.04.  OFFER TO TERMINATE.  If Tenant desires to assign the 
Lease or sublease the Property, Tenant shall have the right to offer, in 
writing, to terminate the Lease as of a date specified in the offer. If 
Landlord elects in writing to accept the offer to terminate within twenty 
(20) days after notice of the offer, the Lease shall terminate as of the date 
specified and all the terms and provisions of the Lease governing termination 
shall apply. If Landlord does not so elect, the Lease shall continue in 
effect until otherwise terminated and the provisions of Section 9.05 with 
respect to any proposed transfer shall continue to apply.

     Section 9.05  LANDLORD'S CONSENT.

     (a)  Tenant's request for consent to any transfer described in Section 
9.01 shall set forth in writing the details of the proposed transfer, 
including the name, business and financial condition of the prospective 
transferee, financial details of the proposed transfer (e.g., the term of the 
rent and security deposit payable under any proposed assignment or sublease), 
and any other information Landlord deems relevant. Landlord shall have the 
right to withhold consent, if reasonable, or to grant consent, based on the 
following factors: (i) the business of the proposed assignee or subtenant and 
the proposed use of the Property; (ii) the net worth and financial reputation 
of the proposed assignee or subtenant; (iii) Tenant's compliance with all of 
its obligations under the Lease; and (iv) such other factors as Landlord may 
reasonable deem relevant. If Landlord objects to a proposed assignment solely 
because of the net worth and/or financial reputation of the proposed 
assignee, Tenant may nonetheless sublease (but not assign), all or a portion 
of the Property to the proposed transferee, but only on the other terms of 
the proposed transfer.

     (b)  If Tenant assigns or subleases, the following shall apply:

          (i)  Tenant shall pay to Landlord as Additional Rent under the 
Lease the Landlord's Share (stated in Section 1.13) of the Profit (defined 
below) on such transaction as and when received by Tenant, unless Landlord 
gives written notice to Tenant and the assignee or subtenant that Landlord's 
share shall be paid by the assignee or subtenant to Landlord directly. The 
"Profit" means (A) all amounts paid to Tenant for such assignment or 
sublease, including "key" money, monthly rent in excess of the monthly rent 
payable under the Lease, and all fees and other consideration paid for the 
assignment or sublease, including fees under any collateral agreements, less 
(B) costs and expenses directly incurred by Tenant in connection with the 
execution and performance of such assignment or sublease for real estate 
broker's commissions and costs of renovation or construction of tenant 
improvements required under such assignment or sublease. Tenant is entitled 
to recover such costs and expenses before Tenant is obligated to pay the 
Landlord's Share to Landlord. The Profit in the case of a sublease of less 
than all the Property is the rent allocable to the subleased space as a 
percentage on a square footage basis.

          (ii)  Tenant shall provide Landlord a written statement certifying 
all amounts to be paid from any assignment or sublease of the Property within 
thirty (30) days after the transaction documentation is signed, and Landlord 
may inspect Tenant's books and records to verify the accuracy of such 
statement. On written request, Tenant shall promptly furnish to Landlord 
copies of all the transaction documentation, all of which shall be certified 
by Tenant to be complete, true and correct. Landlord's receipt of Landlord's 
Share shall not be a consent to any further assignment or subletting. The 
breach of Tenant's obligation under this Paragraph 9.05(b) shall be a 
material default of the Lease.

     Section 9.06.  NO MERGER. No merger shall result from Tenant's sublease 
of the Property under this Article Nine, Tenant's surrender of this Lease or 
the termination of this Lease in any other manner. In any such event,
Landlord may terminate any or all subtenancies or succeed to the interest of 
Tenant as sublandlord under any or all subtenancies.


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ARTICLE TEN:  DEFAULTS; REMEDIES

     Section 10.01.  COVENANTS AND CONDITIONS. Tenant's performance of each 
of Tenant's obligations under this Lease is a condition as well as a 
covenant. Tenant's right to continue in possession of the Property is 
conditioned upon such performance. Time is of the essence in the performance 
of all covenants and conditions.

     Section 10.02.  DEFAULTS. Tenant shall be in material default under this 
Lease:

     (a)  If Tenant abandons the Property or if Tenant's vacation of the 
Property results in the cancellation of any insurance described in Section 
4.04;

     (b)  If Tenant fails to pay rent or any other charge when due;

     (c)  If Tenant fails to perform any of Tenant's non-monetary obligations 
under this lease for a period of thirty (30) days after written notice from 
Landlord; provided that if more than thirty (30) days are required to 
complete such performance, Tenant shall not be in default if Tenant commences 
such performance within the thirty (30)-day period and thereafter diligently 
pursues its completion. However, Landlord shall not be required to give such 
notice if Tenant's failure to perform constitutes a non-curable breach of 
this Lease. The notice required by this Paragraph is intended to satisfy any 
and all notice requirements imposed by law on Landlord and is not in addition 
to any such requirement.

     (d)  (i) If Tenant makes a general assignment or general arrangement for 
the benefit of creditors; (ii) if a petition for adjudication of bankruptcy 
or for reorganization or rearrangement is filed by or against Tenant and is 
not dismissed within thirty (30) days; (iii) if a trustee or receiver is 
appointed to take possession of substantially all of Tenant's assets located 
at the Property or of Tenant's interest in this Lease and possession is not 
restored to Tenant within thirty (30) days; or (iv) if substantially all of 
Tenant's assets located at the Property or of Tenant's interest in this Lease 
is subjected to attachment, execution or other judicial seizure which is not 
discharged within thirty (30) days. If a court of competent jurisdiction 
determines that any of the acts described in this subparagraph (d) is not 
default under this lease, and a trustee is appointed to take possession (or 
if Tenant remains a debtor in possession) and such trustee or Tenant 
transfers Tenant's interest hereunder, then Landlord shall receive, as 
Additional Rent, the excess, if any, of the rent (or any other consideration) 
paid in connection with such assignment or sublease over the rent payable by 
Tenant under this lease.

     (e)  If any guarantor of the Lease revokes or otherwise terminates, or 
purports to revoke or otherwise terminate, any guaranty of all or any portion 
of Tenant's obligations under the Lease. Unless otherwise expressly provided, 
no guaranty of the Lease is revocable.

     Section 10.03.  REMEDIES. On the occurrence of any material default by 
Tenant, Landlord may, at any time thereafter, with or without notice or 
demand and without limiting Landlord in the exercise of any right or remedy 
which Landlord may have:

     (a)  Terminate Tenant's right to possession of the Property by any 
lawful means, in which case this Lease shall terminate and Tenant shall 
immediately surrender possession of the Property to Landlord. In such event, 
Landlord shall be entitled to recover from Tenant all damages incurred by 
Landlord by reason of Tenant's default, including (i) the worth at the time 
of the award of the unpaid Base Rent, Additional Rent and other charges which 
Landlord had earned at the time of the termination; (ii) the worth at the 
time of the award of the amount by which the unpaid Base Rent, Additional 
Rent and other charges which Landlord would have earned after termination 
until the time of the award exceeds the amount of such rental loss that 
Tenant proves Landlord could have reasonably avoided; (iii) the worth at the 
time of the award of the amount by which the unpaid Base Rent, Additional 
Rent and other charges which Tenant would have paid for the balance of the 
Lease term after the time of award exceeds the amount of such rental loss 
that Tenant proves Landlord could have reasonable avoided; and (iv) any other 
amount necessary to compensate Landlord for all the detriment proximately 
caused by Tenant's failure to perform its obligations under the Lease or 
which in the ordinary course of things would be likely to result therefrom, 
including, but not limited to, any costs or expenses Landlord incurs in 
maintaining or preserving the Property after such default, the cost of 
recovering possession of the Property, expenses of reletting, including 
necessary renovation or alteration of Property, Landlord's reasonable 
attorney's fees incurred in connection therewith, and any real estate 
commission paid or payable. As used in subparts (i) and (ii) above, the 
"worth at the time of the award" is computed by allowing interest on unpaid 
amounts at the rate of fifteen percent (15%) per annum, or such lesser amount 
as may then be the maximum lawful rate. As used in subpart (iii) above, the 
"worth at the time of the award" is computed by discounting such amount at 
the discount rate of the Federal Reserve Bank of San Francisco at the time of 
the award, plus one percent (1%). If Tenant has abandoned the Property, 
Landlord shall have the option of (i) retaking possession of the Property and 
recovering from Tenant the amount specified in this Paragraph 10.03(a), or 
(ii) proceeding under Paragraph 10.03(b);

     (b)  Maintain Tenant's right to possession, in which case this Lease 
shall continue in effect whether or not Tenant has abandoned the Property. In 
such event, Landlord shall be entitled to enforce all of Landlord's rights 
and remedies under this Lease, including the right to recover the rent as it 
becomes due;

     (c)  Pursue any other remedy now or hereafter available to Landlord 
under the laws or judicial decision of the state in which the Property is 
located.

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<PAGE>

     Section 10.04.  REPAYMENT OF "FREE" RENT. If this Lease provides for 
a postponement of any monthly rental payments, a period of "free" rent or 
other rent concession, such postponed rent or "free" rent is called the 
"Abated Rent". Tenant shall be credited with having paid all of the Abated 
Rent on the expiration of the Lease Term only of Tenant has fully, 
faithfully, and punctually performed all of Tenant's obligations hereunder, 
including the payment of all rent (other than the Abated Rent) and other 
monetary obligations and the surrender of the Property in physical condition 
required by this Lease. Tenant acknowledges that its right to receive credit 
for the Abated Rent is absolutely conditioned upon Tenant's full, faithful 
and punctual performance of its obligations under this Lease. If Tenant 
defaults and does not cure within any applicable grace period, the Abated 
Rent shall immediately become due and payable in full and this Lease shall be 
enforced as if there were no such rent abatement or other rent concession. In 
such case Abated Rent shall be calculated based on the full initial rent 
payable under this Lease.

     Section 10.05.  AUTOMATIC TERMINATION. Notwithstanding any other term 
or provision hereof to the contrary, the Lease shall terminate on the 
occurrence of any act which affirms the Landlord's intention to terminate the 
Lease as provided in Section 10.03 hereof, including the filing of an 
unlawful detainer action against Tenant. On such termination, Landlord's 
damages for default shall include all costs and fees, including reasonable 
attorneys' fees that Landlord incurs in connection with the filing, 
commencement, pursuing and/or defending of any action in any bankruptcy court 
or other court with respect to the Lease; the obtaining of relief from any 
stay in bankruptcy restraining any action to evict Tenant; or the pursuing of 
any action with respect to the lease; the obtaining of relief from any stay 
in bankruptcy restraining any action to evict Tenant; or the pursuing of any 
action with respect to Landlord's right to possession of the Property. All 
such damages suffered (apart from Base Rent and other rent payable hereunder) 
shall constitute pecuniary damages which must be reimbursed to Landlord prior 
to assumption of the Lease by Tenant or any successor to Tenant in any 
bankruptcy or other proceeding.

     Section 10.06.  CUMULATIVE REMEDIES. Landlord's exercise of any right or 
remedy shall not prevent it from exercising any other right or remedy.

ARTICLE ELEVEN:  PROTECTION OF LENDERS
     
     Section 11.01.  SUBORDINATION. Landlord shall have the right to 
subordinate this Lease to any ground lease, deed of trust or mortgage 
encumbering the Property, any advances made on the security thereof and any 
renewals, modifications, consolidations, replacements or extensions thereof, 
whenever made or recorded. Tenant shall cooperate with Landlord and any 
lender which is acquiring a security interest in the Property or the Lease. 
Tenant shall execute such further documents and assurances as such lender may 
require, provided that Tenant's obligations under this lease shall not be 
increased in any material way (the performance of ministerial acts shall not 
be deemed material),and Tenant shall not be deprived of its rights under this 
Lease. Tenant's right to quiet possession of the Property during the Lease 
Term shall not be disturbed if Tenant pays the rent and performs all of 
Tenant's obligations under this lease and is not otherwise in default. If any 
ground lessor, beneficiary or mortgagee elects to have this lease prior to 
the lien of its ground lease, deed of trust or mortgage and gives written 
notice thereof to Tenant, this Lease shall be deemed prior to such ground 
lease, deed of trust or mortgage whether this Lease is dated prior or 
subsequent to the date of said ground lease, deed of trust or mortgage or the 
date of recording thereof.

     Section 11.02.  ATTORNMENT. if Landlord's interest in the Property is 
acquired by any ground lessor, beneficiary under a deed of trust, mortgagee, 
or purchaser at a foreclosure sale, Tenant shall attorn to the transferee of 
or successor to Landlord's interest in the Property and recognize such 
transferee or successor as Landlord under this Lease. Tenant waives the 
protection of any statute or rule of law which gives or purports to give 
Tenant any right to terminate this Lease or surrender possession of the 
Property upon the transfer of Landlord's interest.

     Section 11.03.  SIGNING OF DOCUMENTS. Tenant shall sign and deliver any 
instrument or documents necessary or appropriate to evidence any such 
attornment or subordination or agreement to do so. If Tenant fails to do so 
within ten (10) days after written request, Tenant hereby makes, constitutes 
and irrevocably appoints Landlord, or any transferee or successor of 
Landlord, the attorney-in-fact of Tenant to execute and deliver any such 
instrument or document.

     Section 11.04.  ESTOPPEL CERTIFICATES.

     (a)  Upon Landlord's written request, Tenant shall execute, acknowledge 
and deliver to Landlord a written statement certifying: (i) that none of the 
terms or provisions of this Lease have been changed (or if they have been 
changed, stating how they have been changed); (ii) that this Lease has not 
been cancelled or terminated; (iii) the last date of payment of the Base Rent 
and other charges and the time period covered by such payment; (iv) that 
Landlord is not in default under this Lease (or, if Landlord is claimed to be 
in default, stating why); and (v) such other representations or information 
with respect to Tenant or the lease as landlord may reasonably request or 
which any prospective purchaser or encumbrancer of the Property may require. 
Tenant shall deliver such statement to Landlord within ten (10) days after 
Landlord's request. Landlord may give any such statement by Tenant to any 
prospective purchaser or encumbrancer of the Property. Such purchaser or 
encumbrancer may rely conclusively upon such statement as true and correct. 

     (b)  If Tenant does not deliver such statement to Landlord within such 
ten (10) -day period, Landlord, and any prospective purchaser or 
encumbrancer, may conclusively presume and rely upon the following facts: (i) 
that the terms and provisions of this Lease have not been changed except as 
otherwise represented by landlord; (ii) that this Lease has not been 
cancelled or terminated except as otherwise represented by Landlord; (iii) 
that not more than one month's Base Rent or other charges have been paid in 
advance; and (iv) that landlord is not in default under the Lease. In such 
event, Tenant shall be estopped from denying the truth of such facts.

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     Section 11.05. TENANT'S FINANCIAL CONDITION. Within ten (10) days after 
written request from Landlord, Tenant shall deliver to Landlord such financial 
statements as Landlord reasonably requires to verify the net worth of Tenant 
or any assignee, subtenant, or guarantor of Tenant. In addition, Tenant shall 
deliver to any lender designated by Landlord any financial statements required 
by such lender to facilitate the financing or refinancing of the Property. 
Tenant represents and warrants to Landlord that each such financial statement 
is a true and accurate statement as of the date of such statement. All 
financial statements shall be confidential and shall be used only for the 
purposes set forth in this Lease.

ARTICLE TWELVE: LEGAL COSTS

     Section 12.01 LEGAL PROCEEDINGS. If Tenant or Landlord shall be in 
breach or default under this Lease, such party (the "Defaulting Party") shall 
reimburse the other party (the "Nondefaulting Party") upon demand for any 
costs or expenses that the Nondefaulting Party incurs in connection with any 
breach or default of the Defaulting Party under this Lease, whether or not 
suit is commenced or judgment entered. Such costs shall include legal fees 
and costs incurred for the negotiation of a settlement, enforcement of rights 
or otherwise. Furthermore, if any action for breach of or to enforce the 
provisions of this Lease is commenced, the court in such action shall award 
to the party in whose favor a judgment is entered, a reasonable sum as 
attorneys' fees and costs. The losing party in such action shall pay such 
attorneys' fees and costs. Tenant shall also indemnify Landlord against and 
hold Landlord harmless from all costs, expenses, demands and liability 
Landlord may incur if Landlord becomes or is made a party to any claim or 
action (a) instituted by Tenant against any third party, or by any third 
party against Tenant, or by or against any person holding any interest under 
or using the Property by license of or agreement with Tenant; (b) for 
foreclosure of any lien for labor or material furnished to or for Tenant or 
such other person; (c) otherwise arising out of or resulting from any act or 
transaction of Tenant or such other person; or (d) necessary to protect 
Landlord's interest under this Lease in a bankruptcy proceeding, or other 
proceeding under Title 11 of the United States Code, as amended. Tenant shall 
defend Landlord against any such claim or action at Tenant's expense with 
counsel reasonably acceptable to Landlord or, at Landlord's election, Tenant 
shall reimburse Landlord for any legal fees or costs Landlord incurs in any 
such claim or action.

    Section 12.02. LANDLORD'S CONSENT. Tenant shall pay Landlord's reasonable 
attorneys' fees incurred in connection with Tenant's request for Landlord's 
consent under Article Nine (Assignment and Subletting), or in connection with 
any other act which Tenant proposes to do and which requires Landlord's 
consent.

ARTICLE THIRTEEN: MISCELLANEOUS PROVISIONS

     Section 13.01. NON-DISCRIMINATION. Tenant promises, and it is a 
condition to the continuance of this Lease, that there will be no 
discrimination against, or segregation of, any person or group of persons on 
the basis of race, color, sex, creed, national origin or ancestry in the 
leasing, subleasing, transferring, occupancy, tenure or use of the Property 
or any portion thereof.

     Section 13.02. LANDLORD'S LIABILITY; CERTAIN DUTIES.

     (a) As used in this Lease, the term "Landlord" means only the current 
owner or owners of the fee title to the Property or Project or the leasehold 
estate under a ground lease of the Property or Project at the time in 
question. Each Landlord is obligated to perform the obligations of Landlord 
under this Lease only during the time such Landlord owns such interest or 
title. Any Landlord who transfers its title or interest is relieved of all 
liability with respect to the obligations of Landlord under this Lease to be 
performed on or after the date of transfer. However, each Landlord shall 
deliver to its transferee all funds that Tenant previously paid if such funds 
have not yet been applied under the terms of this Lease.

     (b) Tenant shall give written notice of any failure by Landlord to 
perform any of its obligations under this Lease to Landlord and to any ground 
lessor, mortgagee or beneficiary under any deed of trust encumbering the 
Property whose name and address have been furnished to Tenant in writing. 
Landlord shall not be in default under this Lease unless Landlord (or such 
ground lessor, mortgagee or beneficiary) fails to cure such non-performance 
within thirty (30) days after receipt of Tenant's notice. However, if such 
non-performance reasonably requires more than thirty (30) days to cure, 
Landlord shall not be in default if such cure is commenced within such thirty 
(30) -day period and thereafter diligently pursued to completion.

     (c) Notwithstanding any term or provision herein to the contrary, the 
liability of Landlord for the performance of its duties and obligations under 
this Lease is limited to Landlord's interest in the Property and the Project, 
and neither the Landlord nor its partners, shareholders, officers or other 
principals shall have any personal liability under this Lease.

     Section 13.03. SEVERABILITY. A determination by a court of competent 
jurisdiction that any provision of this Lease or any part thereof is illegal 
or unenforceable shall not cancel or invalidate the remainder of such 
provision or this Lease, which shall remain in full force and effect.

     Section 13.04. INTERPRETATION. The captions of the Articles or Sections 
of this Lease are to assist the parties in reading this Lease and are not a 
part of the terms or provisions of this Lease. Whenever required by the 
context of this Lease, the singular shall include the plural and the plural 
shall include the singular. The masculine, feminine and neuter genders shall 
each include the other. In any provision relating to the conduct, acts or 
omissions of Tenant, the term "Tenant" shall include Tenant's agents, 
employees, contractors, invitees, successors or others using the Property 
with Tenant's expressed or implied permission.

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<PAGE>

    Section 13.05.  INCORPORATION OF PRIOR AGREEMENTS; MODIFICATIONS. This 
Lease is the only agreement between the parties pertaining to the lease of 
the Property and no other agreements are effective. All amendments to this 
Lease shall be in writing and signed by all parties. Any other attempted 
amendment shall be void.

    Section 13.06.  NOTICES. All notices required or permitted under this 
Lease shall be in writing and shall be personally delivered or sent by 
certified mail, return receipt requested, postage prepaid. Notices to Tenant 
shall be delivered to the address specified in Section 1.03 above, except 
that upon Tenant's taking possession of the Property, the Property shall be 
Tenant's address for notice purposes. Notices to Landlord shall be delivered 
to the address specified in Section 1.02 above. All notices shall be 
effective upon delivery. Either party may change its notice address upon 
written notice to the other party.

    Section 13.07.  WAIVERS. All waivers must be in writing and signed by the 
waiving party. Landlord's failure to enforce any provision of this Lease or 
its acceptance of rent shall not be a waiver and shall not prevent Landlord 
from enforcing that provision or any other provision of this Lease in the 
future. No statement on a payment check from Tenant or in a letter 
accompanying a payment check shall be binding on Landlord. Landlord may, with 
or without notice to Tenant, negotiate such check without being bound to the 
conditions of such statement.

    Section 13.08.  NO RECORDATION. Tenant shall not record this Lease 
without prior written consent from Landlord. However, either Landlord or 
Tenant may require that a "Short Form" memorandum of this Lease executed by 
both parties be recorded. The party requiring such recording shall pay all 
transfer taxes and recording fees.

    Section 13.09.  BINDING EFFECT; CHOICE OF LAW. This Lease binds any party 
who legally acquires any rights or interest in this Lease from Landlord or 
Tenant. However, Landlord shall have no obligation to Tenant's successor 
unless the rights or interests of Tenant's successor are acquired in 
accordance with the terms of this Lease. The laws of the state in which the 
Property is located shall govern this Lease.

    Section 13.10.  CORPORATE AUTHORITY; PARTNERSHIP AUTHORITY. If Tenant is 
a corporation, each person signing this Lease on behalf of Tenant represents 
and warrants that he has full authority to do so and that this Lease binds 
the corporation. Within thirty (30) days after this Lease is signed, Tenant 
shall deliver to Landlord a certified copy of a resolution of Tenant's Board 
of Directors authorizing the execution of this Lease or other evidence of 
such authority reasonably acceptable to Landlord. If Tenant is a partnership, 
each person or entity signing this Lease for Tenant represents and warrants 
that he or it is a general partner of the partnership, that he or it has full 
authority to sign for the partnership and that this Lease binds the 
partnership and all general partners of the partnership. Tenant shall give 
written notice to Landlord of any general partner's withdrawal or addition. 
Within thirty (30) after this Lease is signed, Tenant shall deliver to 
Landlord a copy of Tenant's recorded statement of partnership or certificate 
of limited partnership.

    Section 13.11.  JOINT AND SEVERAL LIABILITY. All parties signing this 
Lease as Tenant shall be jointly and severally liable for all obligations of 
Tenant.

    Section 13.12.  FORCE MAJEURE. If Landlord cannot perform any of its 
obligations due to events beyond Landlord's control, the time provided for 
performing such obligations shall be extended by a period of time equal to 
the duration of such events. Events beyond Landlord's control include, but 
are not limited to, acts of God, war, civil commotion, labor disputes, 
strikes, fire, flood or other casualty, shortages of labor or material, 
government regulation or restriction and weather conditions.

    Section 13.13.  EXECUTION OF LEASE. This Lease may be executed in 
counterparts and, when all counterpart documents are executed, the 
counterparts shall constitute a single binding instrument. Landlord's 
delivery of this Lease to Tenant shall not be deemed to be an offer to lease 
and shall not be binding upon either party until executed and delivered by 
both parties.

    Section 13.14.  SURVIVAL. All representations and warranties of Landlord 
and Tenant shall survive the termination of this Lease.


ARTICLE FOURTEEN: BROKERS

    Section 14.01.  BROKER'S FEE. When this Lease is signed by and delivered 
to both Landlord and Tenant, Landlord shall pay a real estate commission to 
Landlord's Broker named in Section 1.08 above, if any, as provided in the 
written agreement between Landlord and Landlord's Broker, or the sum stated 
in Section 1.09 above for services rendered to Landlord by Landlord's Broker 
in this transaction. Landlord shall pay Landlord's Broker a commission if 
Tenant exercises any option to extend the Lease Term or to buy the Property, 
or any similar option or right which Landlord may grant to Tenant, or if 
Landlord's Broker is the procuring cause of any other lease or sale entered 
into between Landlord and Tenant covering the Property. Such commission shall 
be the amount set forth in Landlord's Broker's commission schedule in effect 
as of the execution of this Lease. If a Tenant's Broker is named in Section 
1.08 above, Landlord's Broker shall pay an appropriate portion of its 
commission to Tenant's Broker if so provided in any agreement between 
Landlord's Broker and Tenant's Broker. Nothing contained in this Lease shall 
impose any obligation on Landlord to pay a commission or fee to any party 
other than Landlord's Broker.

    Section 14.02.  PROTECTION OF BROKERS. If Landlord sells the Property, or 
assigns Landlord's interest in this Lease, the buyer or assignee shall, by 
accepting such conveyance of the Property or assignment of the Lease, be 
conclusively deemed to have agreed to make all payments to Landlord's Broker 
thereafter required of Landlord under this Article Fourteen. Landlord's Broker 
shall have the right to bring a legal action to enforce or declare rights 
under this provision. The prevailing party in such action shall be entitled 
to reasonable attorneys' fees to be paid by the losing party. Such attorneys' 
fees shall be fixed by the court in such action. This Paragraph is included 
in this Lease for the benefit of Landlord's Broker.

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<PAGE>

    Section 14.03.  BROKER'S DISCLOSURE OF AGENCY. Landlord's Broker hereby 
discloses to Landlord and Tenant and Landlord and Tenant hereby consent to 
Landlord's Broker acting in this transaction as the agent of (check one):

    /x/  Landlord exclusively; or

    / /  both Landlord and Tenant.

    Section 14.04.  NO OTHER BROKERS. Tenant represents and warrants to 
Landlord that the brokers named in Section 1.08 above are the only agents, 
brokers, finders or other parties with whom Tenant has dealt who are or may 
be entitled to any commission or fee with respect to this Lease or the 
Property.

    ADDITIONAL PROVISIONS MAY BE SET FORTH IN A RIDER OR RIDERS ATTACHED 
HERETO OR IN THE BLANK SPACE BELOW. IF NO ADDITIONAL PROVISIONS ARE INSERTED, 
PLEASE DRAW A LINE THROUGH THE SPACE BELOW.






    Landlord and Tenant have signed this Lease at the place and on the dates 
specified adjacent to their signatures below and have initialled all Riders 
which are attached to or incorporated by reference in this Lease.


                                                       "LANDLORD"

                             
Signed on Aug 15  , 19 96                   /s/ Rebecca Ruth Waltenspiel
          --------    ----                  ----------------------------------
                                            Ruth Waltenspiel

at                                  .       /s/ Dixie Walker
  ----------------------------------        ----------------------------------
                                            Dixie Walker

                                           By:________________________________

                                           Its:_______________________________

                                           By:________________________________

                                           Its:_______________________________

                                                         "TENANT"

              
Signed on      August 7          , 19 96   Arterial Vascular Engineering, Inc.
         ------------------------    ----  -----------------------------------
              11:00 AM                     /s/ Brad Jendersec
at -----------------------------------.    -----------------------------------

                                           By: Brad Jendersec
                                              --------------------------------
                                           Its: President, CEO
                                               -------------------------------

                                           By:________________________________

                                           Its:_______________________________

    IN ANY REAL ESTATE TRANSACTION, IT IS RECOMMENDED THAT YOU CONSULT WITH A 
PROFESSIONAL, SUCH AS A CIVIL ENGINEER, INDUSTRIAL HYGIENIST OR OTHER PERSON 
WITH EXPERIENCE IN EVALUATING THE CONDITION OF THE PROPERTY, INCLUDING THE 
POSSIBLE PRESENCE OF ASBESTOS, HAZARDOUS MATERIALS AND UNDERGROUND STORAGE 
TANKS.

    THIS PRINTED FORM LEASE HAS BEEN DRAFTED BY LEGAL COUNSEL AT THE 
DIRECTION OF THE SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND 
OFFICE REALTORS,-REGISTERED TRADEMARK-INC. NO REPRESENTATION OR 
RECOMMENDATION IS MADE BY THE SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF 
INDUSTRIAL AND OFFICE REALTORS,-REGISTERED TRADEMARK-INC., ITS LEGAL COUNSEL, 
THE REAL ESTATE BROKERS NAMED HEREIN, OR THEIR EMPLOYEES OR AGENTS, AS TO THE 
LEGAL SUFFICIENCY, LEGAL EFFECT OR TAX CONSEQUENCES OF THIS LEASE OR OF THIS 
TRANSACTION. LANDLORD AND TENANT SHOULD RETAIN LEGAL COUNSEL TO ADVISE THEM 
ON SUCH MATTERS AND SHOULD RELY UPON THE ADVICE OF SUCH LEGAL COUNSEL.

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<PAGE>

                                     FIRST
                               AMENDMENT TO LEASE

      This First Amendment ("Amendment") to the Industrial Real Estate Lease 
is entered into this 5th day of August 1996, by and between Dixie Walker and 
Ruth Waltenspiel (herein called "Landlord") and Arterial Vascular Engineering 
Inc., a Delaware corporation (herein called "Tenant") covering approximately 
26,129 square feet, more or less, ("Premises") of Building B location on lot 
2 as numbered on the map of Airport Oaks Parcel Map #86-386 filed in the 
office of the county recorder on 1/26/87 book 394 of maps pages 11 & 12, 
Sonoma County Records, as described on Exhibit A and made a part hereof by 
reference, by and between Landlord and Tenant. All terms used herein with 
their initial letter capitalized shall have the same meaning as ascribed to 
such terms in the Lease.

                                    WITNESSETH

NOW THEREFORE, Landlord and Tenant hereby agree as follows:

1.   RIGHT OF FIRST REFUSAL - During the term of the Lease, and providing 
     Tenant is not in default, Landlord agrees that prior to leasing the 
     premises currently occupied by Tenant (the "Premises") to a third party, 
     Landlord shall submit to Tenant a copy of the proposed lease terms which 
     have submitted by the third party and which Landlord is prepared to enter 
     into with the third party (the "Offered Lease"). On or before the fifth 
     (5th) day after the date of such submission, Tenant shall have the right 
     (the "First Right of Refusal") to send Landlord a notice stating that 
     Tenant elects to rent the Premises upon the identical terms and 
     conditions set forth in the Offered Lease (the "Offered Lease Terms"). 
     Such notice must be postmarked within the fifth (5th) day period and sent 
     by registered or certified mail, return receipt requested.

     Tenant shall have only a two (2) day period to respond to such submission
     if less than 120 days remain on term of lease.

     If Tenant duly and timely exercises the First Right of Refusal, Landlord 
     and Tenant shall promptly enter into a lease for the Premises (the "New 
     Lease") under the terms of the Offered Lease. If for any reason Tenant 
     fails to duly and timely exercise the First Right of Refusal, or if 
     Tenant properly exercises such right but thereafter for any reason (other 
     than the fault of Landlord) does not timely enter into the New Lease, 
     Landlord shall be free to lease the Premises to another tenant on the 
     Offered Lease Terms and Right of First Refusal and Landlord's obligation 
     under this paragraph shall be null and void and without further force 
     and effect.

2.   LANDLORD'S RIGHT TO SHOW: During the term of the Lease, Landlord shall 
     have the right to show the Premises to prospective tenants by giving 
     Tenant reasonable notice during normal business hours.

All other terms and conditions of the Lease shall remain the same.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date 
specified adjacent to their signatures below and have initialed all Exhibits 
attached hereto or incorporated by reference.


           "LANDLORD"


/s/ Dixie Walker                         Date:  8-15-96
---------------------------------             -------------
Dixie Walker


/s/ Rebecca Ruth Waltenspiel             Date:  8-16-96
---------------------------------             -------------
Ruth Waltenspiel


            "TENANT"

Arterial Vascular Engineering, Inc.

/s/ Brad Jendersec                       Date:  8-7-96
---------------------------------             -------------
Brad Jendersen, President & CEO





<PAGE>

                                   EXHIBIT - A


                           SITE PLAN & PARKING PLAN
                            5441-5347 SKYLANE BLVD.
                                SANTA ROSA, CA








                                    [ M A P ]







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<PAGE>

                                                                    EXHIBIT - B
                                                                    -----------

             NOTICE TO OWNERS, BUYERS AND TENANTS REGARDING HAZARDOUS
               WASTES OR SUBSTANCES AND UNDERGROUND STORAGE TANKS


Comprehensive federal and state laws and regulations have been enacted in the 
last few years in an effort to develop controls over the use, storage, 
handling, cleanup, removal and disposal of hazardous wastes or substances. 
Some of these laws and regulations, such as, for example, the so-called 
"Super Fund Act", provide for broad liability schemes wherein an owner, 
tenant or other uses of the property may be liable for cleanup costs and 
damages regardless of fault. Other laws and regulations set standards for the 
handling of asbestos or establish requirements for the use, modification, 
abandonment, or closing or underground storage tanks.

It is not practical or possible to list all such laws and regulations in this 
Notice. Therefore, owners, buyers and tenants are urged to consult legal 
counsel to determine their respective rights and liabilities with respect to 
the issues described in this Notice as well as other aspects of the proposed 
transaction. If various materials that have been or may be in the future 
determined to be toxic, hazardous or undesirable, or are going to be used, 
stored, handled or disposed of on the property, or if the property has or may 
have underground storage tanks for storage of such hazardous materials, or 
that such materials may be in the equipment, improvements or soil, it is 
essential that legal and technical advice be obtained to determine, among 
other things, what permits and approvals have been or may be required, if 
any, the estimated costs and expenses associated with the use, storage, 
handling, cleanup, removal or disposal of the hazardous wastes or substances 
and what contractual provisions and protections are necessary or desirable. 
It may also be important to obtain expert assistance for site investigations 
and building inspections. The past uses of the property may provide valuable 
information as to the likelihood of hazardous wastes or substances, or 
underground storage tanks being on the property.

The term "hazardous wastes or substances" is used in this Notice in this very 
broadest sense and includes, but is not limited to, all those listed under 
Proposition 65, petroleum base products, paint and solvents, lead, cyanide, 
DDT, printing inks, acids, pesticides, ammonium compounds, asbestos, PCBs and 
other chemical products. Hazardous wastes or substances and underground 
storage tanks may be present on all types of real property. This Notice is, 
therefore, meant to apply to any transaction involving any type of real 
property whether improved or unimproved.

AIRPORT PROPERTIES, or its salespeople, will disclose any knowledge it 
actually possesses with respect to the existence of hazardous wastes or 
substances, or underground storage tanks on the property, AIRPORT PROPERTIES 
have not made investigations or obtain reports regarding the subject matter 
of this Notice, except as may be described in a separate written document, 
studies or investigation by experts. Therefore, unless there is an 
additional document or studies attached to this notice, lease or contract, 
this will serve as notification that AIRPORT PROPERTIES or its salespeople 
make no representation regarding the existence or non-existence of hazardous 
wastes or substances, or underground storage tanks on the property. You 
should contact a professional, such as a civil engineer, geologist, 
industrial hygienist or other persons with experience in these matters to 
advise you concerning the property.


AGREED:  /s/ BJ                                                     8-7-96
        -----------------------------------                        ----------
        Tenant                                                      Date



AGREED:  /s/ Dixie Walker                                           8-15-96
        -----------------------------------                        ----------
        Landlord                                                    Date

        /s/ Rebecca Ruth Waltenspiel                                6-16-96
        -----------------------------------                        ----------
                                                                    Date




                                                    Initials    /s/ BJ
                                                             ----------------
                                                             /s/ DW   /s/ RRW
                                                             ----------------

<PAGE>


                                                                    EXHIBIT C
                                                                    ---------

                  AGENT REPRESENTING BOTH LANDLORD AND TENANT

A real estate agent, either acting directly or through one or more associate 
licensees, can legally be the agent of both the Landlord and the Tenant in a 
transaction, but only with the knowledge and consent of both the Landlord and 
the Tenant.

In a dual agency situation, the agent has the following affirmative 
obligations to both the Landlord and the Tenant.

(a) A fiduciary duty of utmost care, integrity, honest and loyalty in the 
    dealings with either Landlord or Tenant.

(b) Other duties to the Landlord and the Tenant as states above in their 
    respective sections.

In representing both Landlord and Tenant, the agent may not, without the 
express permission of the respective party, disclose to the other party that 
the Landlord will accept a rent less than the listed rent or that the Tenant 
will pay a rent greater than the rent offered.

The above duties of the agent in a real estate transaction do not relieve a 
Landlord or Tenant from the responsibility to protect their own interests. 
You should carefully read all agreements to assure that they adequately 
express your understanding of the transaction. A real estate agent is a 
person qualified to advise about real estate. If legal or tax advice is 
desired, consult a competent professional.

You should read its contents each time it is presented to you, considering 
the relationship between you and the real estate agent in your specific 
transaction.

I/We acknowledge receipt of a copy of this disclosure.


/s/ Dixie Walker               Date:  8/15/96
-----------------------               ---------
(Landlord) Dixie Walker    


                               Date:
-----------------------               ---------
(Tenant) Arterial Vascular Engineering


                           DECLARATION REGARDING
                      REAL ESTATE AGENCY RELATIONSHIP


    Airport Properties
-------------------------- is the agent of (check one).
(Name of Listing Agent)


  X      
------   The Landlord exclusively; or

------   Both the Tenant and Landlord


CONFIRMED AND ACKNOWLEDGED:

     /s/ Dixie Walker              8/15/96
-----------------------------      -------------
(Landlord)  Dixie Walker           (Date)

 
/s/ Rebecca Ruth Waltenspiel       8-16-96
-----------------------------      -------------
(Landlord)  Ruth Waltenspiel       (Date)



Airport Properties                By:              Date: 
----------------------------         -----------         ---------
(Agent)

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


    Airport Properties      
------------------------------- is the agent of (check one):
(Name of Tenant agent if not 
the same as listing agent)
       
----- The Tenant exclusively; or

 X
----- The Landlord exclusively; or

----- Both the Tenant and Landlord


CONFIRMED AND ACKNOWLEDGED:


   Arterial Vascular Engineering
-----------------------------------------     -----------------
(Tenant)                                      (Date)


     /s/  BJ                                     8-7-96
-----------------------------------------     -----------------
(Tenant)                                      (Date)


Agent -----------------------------------     By: ---------    Date:  --------






                                                    Initials    /s/ BJ
                                                             ----------------
                                                             /s/ DW   /s/ RRW
                                                             ----------------