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                                                                   EXHIBIT 10.12

Stuart D. Edwards
President & CEO
Chief Technical Officer
Chairman of the Board
                                                                October 20, 1998

John Schulte
6 Kenilworth Road
Wellesley, MA 02482
(781) 237-5358

Dear John,

On behalf of Somnus Medical Technologies, Inc. (the "Company"), I am pleased to
offer you the position of President and Chief Executive Officer of the Company,
reporting to the Chairman of the Board of Directors and Chief Technical Officer.
The purpose of this letter is to set forth the terms of this offer.

We are offering you the following:

     1.  Your position will be as a regular full-time employee beginning on a
         mutually agreeable date. Your position is classified as exempt. You
         will be a regular full-time employee entitled to vacation and sick
         leave, paid holidays and benefits, pursuant to "Company" policies and
         procedures.

     2.  Your bi-weekly salary will be $9615.38. This equates to a monthly
         salary of $20,833.33. Your salary will be payable in accordance with
         the Company's standard payroll policies (subject to normal required
         withholding). You will be entitled to accrue 3 weeks vacation and 10
         days of sick per year, which may be taken or accrued pursuant to our
         policy. You will also receive a car allowance of $500.00 per month and
         a competitive relocation package. The relocation compensation (for you
         and your family) will be calculated and paid according to reasonable
         geographical costs customarily associated with such relocations. This
         includes a temporary housing allowance for a period that is customary
         and reasonable. In addition, you will participate in the current
         executive bonus program (see attached). As agreed this date (October
         19, 1998), your bonus range as CEO will be based on the plan parameters
         (minimums and maximums) of 40% to 60% of bonus target level.

     3.  Somnus has major medical, vision and dental insurance, as well as life
         insurance for all regular full-time employees. The details of this
         program will be available upon first day orientation with Personnel.
         These benefits as well as all other Company compensation and benefits
         programs are subject to change from time to time as deemed appropriate
         and necessary by the Company.
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     4.  Subject to grant by the Board of Directors, upon joining the Company as
         an employee, you will receive an option to purchase 500,000 shares of
         Common Stock at the Company's current fair market value on the date of
         grant. Additionally, for every one cent ($0.01) by which your exercise
         price exceeds $2.50, your stock option shall be increased by an
         additional four hundred (400) shares of Common Stock, up to a maximum
         of 100,000 additional shares. 12/48 of the shares shall vest twelve
         full calendar months following the date of grant and 1/48 of such
         shares shall vest at the end of each full calendar month thereafter
         until all such shares are exercisable, based upon your continued
         relationship with the Company (so that if you remain in our employ, at
         the end of four years your option would be fully vested).

     5.  You will be required to sign a confidentiality and assignment of
         proprietary inventions contract. Further, by accepting this offer, you
         agree that you will not bring with you to "Company", or use in any way
         during your employment at "Company", any confidential information,
         trade secrets, or proprietary materials or processes of any former
         employer, company or individual for whom you have performed services.
         You further confirm that by accepting this offer you will not breach
         any contract or agreement to which you are a party.

     6.  All employment at "Company" is at-will as provided by California law.
         This means that the employment relationship may be terminated by either
         party at any time with or without notice or cause.

     7.  You will agree to follow the Company's strict policy that employees
         must not disclose any information regarding salary, bonuses, or stock
         purchase or option allocation to other employees, either directly or
         indirectly.

     8.  In compliance with the Federal Immigration Reform and Control Act,
         you must present to "Company", the required documents on your first day
         of employment. You will also be asked to verify and attest, on a form
         provided by the US Department of Justice, that you are authorized to
         work in the United States. It is extremely important that you comply
         with these requirements. If you fail to comply, we will not be able to
         allow you to work and our offer of employment may be withdrawn.

     9.  In the event the Company is acquired and such acquisition leads to the
         elimination of your position or the transfer of the position to a
         location outside of the Bay Area, "Company" will extend to you a twelve
         (12) month severance package consisting of your base salary plus any
         bonuses for which you may have been eligible, and the reimbursement of
         Cobra premiums for twelve (12) months provided you elect Cobra
         coverage. In addition, the shares of stock referenced in item #4 of
         this letter shall vest immediately upon said event.

    10.  In the event that you are terminated without cause within a two-year
         period of your start date, the "Company" will extend to you a twelve
         (12) month severance package consisting of your base salary plus any
         bonuses for which you would have been eligible, and the reimbursement
         of Cobra premiums for twelve (12) months provided 

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         you elect Cobra coverage. In addition, the shares of stock referenced
         in item #4 of this letter shall vest immediately upon said event.

Acceptance of this offer may be acknowledged by signing below and returning this
document to me.  This offer expires October 30, 1998, at 12:00 noon if not
accepted.  Again, let me indicate how pleased we all are to extend this offer,
and how much we look forward to working together.

Sincerely,

/s/ Stuart D. Edwards

Stuart D. Edwards
President & CEO

SDE/

Signature  /s/ John Schulte
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           John Schulte

Date:  11/2/98
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Start Date:  1/1/99 full time, part time effective immediately
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