Document:

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                                                                    Exhibit 10.7

           STANDARD INDUSTRIAL/COMMERCIAL SINGLE TENANT LEASE - GROSS
                (DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

1. Basic Provisions ("Basic Provisions")

     1.1 Parties. This Lease ("Lease"), dated for reference purposes only
October 1, 2000, is made by and between Robert Gordon, Trustee of the Robert
Gordon Trust ("Lessor") and ACME Medical Inc., a Delaware corporation dba Altus
Medical ("Lessee"), (collectively the "Parties," or individually a "Party").

     1.2 Premises. That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
known as 819-831 Cowan Road, Burlingame, located in the County of San Mateo,
State of California, and generally described as (describe briefly the nature of
the property and, if applicable, the "Project," if the property is located
within a Project) approximately 11,559 sq. ft. offices and warehouse
("Premises"). (See also Paragraph 2)

     1.3 Term. Five (5) years and 0 months ("Original Term") commencing October
1, 2000 ("Commencement Date") and ending September 30, 2005 ("Expiration Date").
(See also Paragraph 3)

     1.4 Early Possession. See Addendum Paragraph 58 ("Early Possession Date").
(See also Paragraphs 3.2 and 3.3)

     1.5 Base Rent. $15,027 per month ("Base Rent"), payable on the 1st day each
month commencing October 1, 2000. (See also Paragraph 4)

[X]  If this box is checked, there are provisions in this Lease for the Base
Rent to be adjusted and/or for common area maintenance charges.

     1.6 Bass Rent Paid Upon Execution. $15,027 as Base Rent for the period
October 1-October 31, 2000.

     1.7 Security Deposit. $15,027 ("Security Deposit"). (See also Paragraph 5)

     1.8 Agreed Use. General office training, research & development, light
manufacturing, assembly & storage of medical devices and any other legally
permitted use. (See also Paragraph 6)

     1.9 Insuring Party. Lessor is the "Insuring Party". The annual "Base
Premium" is $___________. (See also Paragraph 8)

     1.10  Real Estate Brokers. (See also Paragraph 15)

          (a) Representation: The following real estate brokers (collectively,
the "Brokers") and brokerage relationships exist in transaction (check
applicable boxes):

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[_] _______________________ represents Lessor exclusively ("Lessors Broker");

[_] _______________________ represents Lessee exclusively ("Lessees Broker"); or

[_] _______________________ represents both Lessor and Lessee ("Dual Agency").

          (b) Payment to Brokers: Upon execution and delivery of this Lease by
both Parties, Lessor shall pay to the Broker the fee agreed to in their separate
written agreement (or if there is no such agreement, the sum of ________% of the
total Base Rent for the brokerage services rendered by said Broker).

     1.11 Guarantor. The obligations of the Lessee under this Lease are to be
guaranteed by N/A ("Guarantor"). (See also Paragraph 37)

     1.12 Addenda and Exhibits. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 49 through 63 and Exhibits A, all of which constitute a
part of this Lease.

2. Premises.

   2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, the Premises, for the term, at the rental, and upon all of the terms,
covenants and conditions set forth in this Lease. Unless otherwise provided
herein, any statement of size set forth in this Lease, or that may have been
used in calculating rental, is an approximation which the Parties agree is
reasonable and the rental based thereon is not subject to revision whether or
not the actual size is more or less.

   2.2 Condition. Lessor shall deliver the Premises broom clean and free of
debris on the Commencement Date or the Early Possession Date, whichever first
occurs ("Start Date"), and warrants that the existing electrical, plumbing, fire
sprinkler, lighting, heating, ventilating and air conditioning systems ("HVAC"),
loading doors, if any, and all other such elements of the building, in the
Premises, other than those constructed by Lessee, shall be in good operating
condition on said date and that the surface and structural elements of the roof,
bearing walls and foundation of any buildings on the Premises (the "Building")
shall be free of material defects. If a non-compliance with said warranty exists
as of the Start Date, Lessor shall, except as otherwise provided in this Lease,
promptly after receipt of written notice from Lessee setting forth with
specificity the nature and extent of such non-compliance, rectify same at
Lessor's expense.

   2.3 Compliance. Lessor warrants that the improvements on the Premises
comply with all applicable laws, covenants or restrictions of record, building
codes, regulations and ordinances ("Applicable Requirements") in effect on the
Start Date. See Addendum Para. 53. Said warranty does not apply to the use to
which Lessee will put the Premises or to any Alterations or Utility
Installations (as defined in Paragraph 7.3(a)) made or to be made by Lessee.
NOTE: Lessee is responsible for determining whether or not the zoning is
appropriate for Lessee's intended use, and acknowledges that past uses of the
Premises may no longer be allowed. If the Premises do not comply with said
warranty, Lessor shall, except as otherwise provided, promptly after receipt of
written notice from Lessee setting forth with specificity the nature and extent
of such

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non-compliance, rectify the same at Lessor's expense. If the Applicable
Requirements are hereafter changed (as opposed to being in existence at the
Start Date, which is addressed in Paragraph 6.2(e) below) so as to require
during the term of this Lease the construction of an addition to or an
alteration of the Building, the remediation of any Hazardous Substance, or the
reinforcement or other physical modification of the Building ("Capital
Expenditure"), Lessor and Lessee shall allocate the cost of such work as
follows:

            (a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures
are required as a result of the specific and unique use of the Premises by
Lessee as compared with uses by tenants in general, Lessee shall be fully
responsible for the cost thereof, provided, however that if such Capital
Expenditure is required during the last two (2) years of this Lease and the cost
thereof exceeds six (6) months' Base Rent, Lessee may instead terminate this
Lease unless Lessor notifies Lessee, in writing, within ten (10) days after
receipt of Lessee's termination notice that Lessor has elected to pay the
difference between the actual cost thereof and the amount equal to six (6)
months' Base Rent. If Lessee elects termination, Lessee shall immediately cease
the use of the Premises which requires such Capital Expenditure and deliver to
Lessor written notice specifying a termination date at least ninety (90) days
thereafter. Such termination date shall, however, in no event be earlier than
the last day that Lessee could legally utilize the Premises without commencing
such Capital Expenditure.

            (b) If such Capital Expenditure is not the result of the specific
and unique use of the Premises by Lessee (such as, governmentally mandated
seismic modifications), then Lessor and Lessee shall allocate the obligation to
pay for such costs pursuant to the provisions of Paragraph 7.1 (c); provided,
however, that if such Capital Expenditure is required during the last two years
of this Lease or if Lessor reasonably determines that it is not economically
feasible to pay its share thereof, Lessor shall have the option to terminate
this Lease upon ninety (90) days prior written notice to Lessee unless Lessee
notifies Lessor, in writing, within ten (10) days after receipt of Lessor's
termination notice that Lessee will pay for such Capital Expenditure. If Lessor
does not elect to terminate, and fails to tender its share of any such Capital
Expenditure, Lessee may advance such funds and deduct same, with Interest, from
Rent until Lessor's share of such costs have been fully paid. If Lessee is
unable to finance Lessor's share, or if the balance of the Rent due and payable
for the remainder of this Lease is not sufficient to fully reimburse Lessee on
an offset basis, Lessee shall have the right to terminate this Lease upon thirty
(30) days written notice to Lessor.

            (c) Notwithstanding the above, the provisions concerning Capital
Expenditures are intended to apply only to non-voluntary, unexpected, and new
Applicable Requirements. If the Capital Expenditures are instead triggered by
Lessee as a result of an actual or proposed change in use, change in intensity
of use, or modification to the Premises then, and in that event, Lessee shall be
fully responsible for cost thereof, and Lessee shall not have any right to
terminate this Lease.

   2.4 Acknowledgements. Lessee acknowledges that: (a) it has been advised by
Lessor and/or Brokers to satisfy itself with respect to the condition of the
Premises (including but not limited to the electrical, HVAC and fire sprinkler
systems, security, environmental aspects, and compliance with Applicable
Requirements), and their suitability for Lessee's intended use; (b) Lessee has
made such

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investigation as it deems necessary with reference to such matters and assumes
all responsibility therefor as the same relate to its occupancy of the Premises;
and (c) neither Lessor, Lessor's agents, nor any Broker has made any oral or
written representations or warranties with respect to said matters other than as
set forth in this Lease. In addition, Lessor acknowledges that: (a) Broker has
made no representations, promises or warranties concerning Lessee's ability to
honor the Lease or suitability to occupy the Premises; and (b) it is Lessor's
sole responsibility to investigate the financial capability and/or suitability
of all proposed tenants.

   2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in
Paragraph 2 shall be of no force or effect if immediately prior to the Start
Date Lessee was the owner or occupant of the Premises. In such event, Lessee
shall be responsible for any necessary corrective work.

3. Term.

   3.1 Term. The Commencement Date, Expiration Date and Original Term of this
Lease are as specified in Paragraph 1.3.

   3.2 Early Possession. If Lessee totally or partially occupies the Premises
prior to the Commencement Date, the obligation to pay Base Rent shall be abated
for the period of such early possession. All other terms of this Lease shall,
however, be in effect during such period. Any such early possession shall not
affect the Expiration Date.

   3.3 Delay In Possession. Lessor agrees to use its best commercially
reasonable efforts to deliver possession of the Premises to Lessee by the
Commencement Date. If, despite said efforts, Lessor is unable to deliver
possession as agreed, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease. Lessee shall not, however,
be obligated to pay Rent or perform its other obligations until it receives
possession of the Premises. If possession is not delivered within sixty (60)
days after the Commencement Date, Lessee may, at its option, by notice in
writing within ten (10) days after the end of such sixty (60) day period, cancel
this Lease, in which event the Parties shall be discharged from all obligations
hereunder. If such written notice is not received by Lessor within said ten (10)
day period, Lessee's right to cancel shall terminate. Except as otherwise
provided, if possession is not tendered to Lessee by the Start Date and Lessee
does not terminate this Lease, as aforesaid, any period of rent abatement that
Lessee would otherwise have enjoyed shall run from the date of delivery of
possession and continue for a period equal to what Lessee would otherwise have
enjoyed under the terms hereof, but minus any days of delay caused by the acts
or omissions of Lessee. If possession of the Premises is not delivered within
four (4) months after the Commencement Date, this Lease shall terminate unless
other agreements are reached between Lessor and Lessee, in writing.

   3.4 Lessee Compliance. Lessor shall not be required to tender possession of
the Premises to Lessee until Lessee complies with its obligation to provide
evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee
shall be required to perform all of its obligations under this Lease from and
after the Start Date, including the payment of Rent, notwithstanding Lessor's
election to withhold possession pending receipt of such evidence of insurance.
Further, if Lessee is

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required to perform any other conditions prior to or concurrent with the Start
Date, the Start Date shall occur but Lessor may elect to withhold possession
until such conditions are satisfied.

4. Rent.

   4.1 Rent Defined. All monetary obligations of Lessee to Lessor under the
terms of this Lease (except for the Security Deposit) are deemed to be rent
("Rent").

   4.2 Payment. Lessee shall cause payment of Rent to be received by Lessor in
lawful money of the United States, without offset or deduction (except as
specifically permitted in this Lease), on or before the day on which it is due.
Rent for any period during the term hereof which is for less than one (1) full
calendar month shall be prorated based upon the actual number of days of said
month. Payment of Rent shall be made to Lessor at its address stated herein or
to such other persons or place as Lessor may from time to time designate in
writing. Acceptance of a payment which is less than the amount then due shall
not be a waiver of Lessor's rights to the balance of such Rent, regardless of
Lessor's endorsement of any check so stating.

5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the
Security Deposit as security for Lessee's faithful performance of its
obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults
under this Lease, Lessor may use, apply or retain all or any portion of said
Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of said Security Deposit, Lessee shall within ten (10) days after written
request therefor deposit monies with Lessor sufficient to restore said Security
Deposit to the full amount required by this Lease. Should the Agreed Use be
amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase the
Security Deposit to the extent necessary, in Lessor's reasonable judgment, to
account for any increased wear and tear that the Premises may suffer as a result
thereof. If a change in control of Lessee occurs during this Lease and following
such change the financial condition of Lessee is, in Lessor's reasonable
judgment, significantly reduced, Lessee shall deposit such additional monies
with Lessor as shall be sufficient to cause the Security Deposit to be at a
commercially reasonable level based on said change in financial condition.
Lessor shall not be required to keep the Security Deposit separate from its
general accounts. Within fourteen (14) days after the expiration or termination
of this Lease, if Lessor elects to apply the Security Deposit only to unpaid
Rent, and otherwise within thirty (30) days after the Premises have been vacated
pursuant to Paragraph 7.4(c) below, Lessor shall return that portion of the
Security Deposit not used or applied by Lessor. No part of the Security Deposit
shall be considered to be held in trust, to bear interest or to be prepayment
for any monies to be paid by Lessee under this Lease.

6. Use.

   6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use,
or any other legal use which is reasonably comparable thereto, and for no other
purpose. Lessee shall not use or permit the use of the Premises in a manner that
is unlawful, creates damage, waste or a nuisance, or that disturbs owners and/or
occupants of, or causes damage to neighboring properties. Lessor shall

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not unreasonably withhold or delay its consent to any written request for a
modification of the Agreed Use, so long as the same will not impair the
structural integrity of the improvements on the Premises or the mechanical or
electrical systems therein, or is not significantly more burdensome to the
Premises. If Lessor elects to withhold consent, Lessor shall within five (5)
business days after such request give written notification of same, which notice
shall include an explanation of Lessor's objections to the change in use.

   6.2 Hazardous Substances.

            (a) Reportable Uses Require Consent. The term "Hazardous Substance"
as used in this Lease shall mean any product, substance, or waste whose
presence, use, manufacture, disposal, transportation, or release, either by
itself or in combination with other materials expected to be on the Premises, is
either: (i) potentially injurious to the public health, safety or welfare, the
environment or the Premises, (ii) regulated or monitored by any governmental
authority, for environmental, health, or safety reasons. Hazardous Substances
shall include, but not be limited to, hydrocarbons, petroleum, gasoline, and/or
crude oil or any products, by-products or fractions thereof. Lessee shall not
engage in any activity in or on the Premises which constitutes a Reportable Use
of Hazardous Substances without the express prior written consent of Lessor and
timely compliance (at Lessee's expense) with all Applicable Requirements.
"Reportable Use" shall mean (i) the installation or use of any above or below
ground storage tank, (ii) the generation, possession, storage, use,
transportation, or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration or business plan
is required to be filed with, any governmental authority, and/or (iii) the
presence at the Premises of a Hazardous Substance with respect to which any
Applicable Requirements requires that a notice be given to persons entering or
occupying the Premises or neighboring properties. Notwithstanding the foregoing,
Lessee may use any ordinary and customary materials reasonably required to be
used in the normal course of the Agreed Use, so long as such use is in
compliance with all Applicable Requirements, is not a Reportable Use, and does
not expose the Premises or neighboring property to any meaningful risk of
contamination or damage or expose Lessor to any liability therefor. In addition,
Lessor may condition its consent to any Reportable Use upon receiving such
additional assurances as Lessor reasonably deems necessary to protect itself,
the public, the Premises and/or the environment against damage, contamination,
injury and/or liability, including, but not limited to, the installation (and
removal on or before Lease expiration or termination) of protective
modifications (such as concrete encasements) and/or increasing the Security
Deposit.

            (b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause
to believe, that a Hazardous Substance has come to be located in, on, under or
about the Premises, other than as previously consented to by Lessor, Lessee
shall immediately give written notice of such fact to Lessor, and provide Lessor
with a copy of any report, notice, claim or other documentation which it has
concerning the presence of such Hazardous Substance.

            (c)Lessee Remediation. Lessee shall not release or spill any
Hazardous Substance in, on, under, or about the Premises (including through the
plumbing or sanitary sewer system) and shall promptly, at Lessee's expense, take
all investigatory and/or remedial action reasonably

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recommended, whether or not formally ordered or required, for the cleanup of any
contamination of, and for the maintenance, security and/or monitoring of the
Premises or neighboring properties, that was caused or materially contributed to
by Lessee, or pertaining to or involving any Hazardous Substance brought onto
the Premises during the term of this Lease, by or for Lessee, or any third
party.

            (d) Lessee Indemnification. Lessee shall indemnity, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, harmless from
and against any and all loss of rents and/or damages, liabilities, judgments,
claims, expenses, penalties, and attorneys' and consultants' fees arising out of
or involving any Hazardous Substance brought onto the Premises by or for Lessee,
or any third party (provided, however, that Lessee shall have no liability under
this Lease with respect to underground migration of any Hazardous Substance
under the Premises from adjacent properties). Lessee's obligations shall
include, but not be limited to, the effects of any contamination or injury to
person, property or the environment created or suffered by Lessee, and the cost
of investigation, removal, remediation, restoration and/or abatement, and shall
survive the expiration or termination of this Lease. No termination,
cancellation or release agreement entered into by Lessor and Lessee shall
release Lessee from its obligations under this Lease with respect to Hazardous
Substances, unless specifically so agreed by Lessor in writing at the time of
such agreement.

            (e) Lessor Indemnification. Lessor and its successors and assigns
shall indemnify, defend, reimburse and hold Lessee, its employees and lenders,
harmless from and against any and all environmental damages, including the cost
of remediation, which existed as a result of Hazardous Substances on the
Premises prior to the Start Date or which are caused by the gross negligence or
willful misconduct of Lessor, its agents or employees. Lessor's obligations, as
and when required by the Applicable Requirements, shall include, but not be
limited to, the cost of investigation, removal, remediation, restoration and/or
abatement, and shall survive the expiration or termination of this Lease.

            (f) Investigations and Remediations. Lessor shall retain the
responsibility and pay for any investigations or remediation measures required
by governmental entities having jurisdiction with respect to the existence of
Hazardous Substances on the Premises prior to the Start Date, unless such
remediation measure is required as a result of Lessee's use (including
alterations) of the Premises, in which event Lessee shall be responsible for
such payment. Lessee shall cooperate fully in any such activities at the request
of Lessor, including allowing Lessor and Lessor's agents to have reasonable
access to the Premises at reasonable times in order to carry out Lessor's
investigative and remedial responsibilities.

            (g) Lessor Termination Option. If a Hazardous Substance Condition
occurs during the term of this Lease, unless Lessee is legally responsible
therefor (in which case Lessee shall make the investigation and remediation
thereof required by the Applicable Requirements and this Lease shall continue in
full force and effect, but subject to Lessor's rights under Paragraph 6.2(d) and
Paragraph 13), Lessor may, at Lessor's option, either (i) investigate and
remediate such Hazardous Substance Condition, if required, as soon as reasonably
possible at Lessor's expense, in which event

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this Lease shall continue in full force and effect, or (ii) if the estimated
cost to remediate such condition exceeds twelve (12) times the then monthly Base
Rent or $100,000, whichever is greater, give written notice to Lessee, within
thirty (30) days after receipt by Lessor of knowledge of the occurrence of such
Hazardous Substance Condition, of Lessor's desire to terminate this Lease as of
the date sixty (60) days following the date of such notice. In the event Lessor
elects to give a termination notice, Lessee may, within ten (10) days
thereafter, give written notice to Lessor of Lessee's commitment to pay the
amount by which the cost of the remediation of such Hazardous Substance
Condition exceeds an amount equal to twelve (12) times the then monthly Bass
Rent or $100,000, whichever is greater. Lessee shall provide Lessor with said
funds or satisfactory assurance thereof within thirty (30) days following such
commitment. In such event, this Lease shall continue in full force and effect,
and Lessor shall proceed to make such remediation as soon as reasonably possible
after the required funds are available. If Lessee does not give such notice and
provide the required funds or assurance thereof within the time provided, this
Lease shall terminate as of the date specified in Lessor's notice of
termination.

   6.3 Lessee's Compliance with Applicable Requirements. Except as otherwise
provided in this Lease, Lessee shall, at Lessee's sole expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance underwriter or
rating bureau, which relate in any manner to Lessee's particular use of the
Premises, without regard to whether said requirements are now in effect or
become effective after the Start Date. Lessee shall, within ten (10) days after
receipt of Lessor's written request, provide Lessor with copies of all permits
and other documents, and other information evidencing Lessee's compliance with
any Applicable Requirements specified by Lessor, and shall Immediately upon
receipt, notify Lessor in writing (with copies of any documents involved) of any
threatened or actual claim, notice, citation, warning, complaint or report
pertaining to or involving the failure of Lessee or the Premises to comply with
any Applicable Requirements.

   6.4 Inspection; Compliance. Lessor and Lessor's "Lender" (as defined in
Paragraph 30 below) and consultants shall have the right to enter into Premises
at any time, in the case of an emergency, and otherwise at reasonable times, for
the purpose of inspecting the condition of the Premises and for verifying
compliance by Lessee with this Lease. The cost of any such inspections shall be
paid by Lessor, unless a violation of Applicable Requirements, or a
contamination is found to exist or be imminent, or the inspection is requested
or ordered by a governmental authority. In such case, Lessee shall upon request
reimburse Lessor for the cost of such inspections, so long as such inspection is
reasonably related to the violation or contamination.

7. Maintenance; Repairs, Utility Installations; Trade Fixtures and Alterations.

   7.1 Lessee's Obligations.

            (a) In General. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code),
6.3 (Lessee's Compliance with Applicable Requirements), 7.2 (Lessor's
Obligations), 9 (Damage and Destruction), and 14 (Condemnation), Lessee shall,
at Lessee's sole expense, keep the Premises, Utility Installations, and
Alterations in good order, condition and repair (whether or not the portion of
the Premises requiring

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repairs, or the means of repairing the same, are reasonably ore readily
accessible to Lessee, and whether or not the need for such repairs occurs as a
result of Lessee's use, any prior use, the elements or the age of such portion
of the Premises), including, but not limited to, all equipment or facilities,
such as plumbing, heating, ventilating, air-conditioning, electrical, lighting
facilities, boilers, pressure vessels, fire protection system, fixtures, walls
(interior and exterior), ceilings, floors, windows, doors, skylights,
landscaping, driveways, parking lots, fences, signs, sidewalks and parkways
located in, on, or adjacent to the Premises. Lessee is also responsible for
keeping the roof and roof drainage clean and free of debris. Lessor shall keep
the surface and structural elements of the roof, foundations, and bearing walls
in good repair (see paragraph 7.2). Lessee, in keeping the Premises in good
order, condition and repair, shall exercise and perform good maintenance
practices. Lessee's obligations shall include restorations, replacements or
renewals when necessary to keep the Premises and all improvements thereon or a
part thereof in good order, condition and state of repair. Lessee shall, during
the term of this Lease, keep the exterior appearance of the Building in a
first-class condition (including, e.g., graffiti removal) consistent with the
exterior appearance of other similar facilities of comparable age and size in
the vicinity, including, when necessary, the exterior repainting of the
Building.

            (c) Replacement. Subject to Lessee's indemnification of Lessor as
set forth in Paragraph 8.7 below, and without relieving Lessee of liability
resulting from Lessee's failure to exercise and perform good maintenance
practices, if the Basic Elements described in Paragraph 7.1(b) cannot be
repaired other than at a cost which is in excess of 50% of the cost of replacing
such Basic Elements, then such Basic Elements shall be replaced by Lessor, and
the cost thereof shall be prorated between the Parties and Lessee shall only be
obligated to pay, each month during the remainder of the term of this Lease, on
the date on which Base Rent is due, an amount equal to the product of
multiplying the cost of such replacement by a fraction, the numerator of which
is one, and the denominator of which is the number of months of the useful life
of such replacement as such useful life is specified pursuant to Federal income
tax regulations or guidelines for depreciation thereof (including interest on
the unamortized balance as is then commercially reasonable in the judgment of
Lessor's accountants), with Lessee reserving the right to prepay its obligation
at any time.

   7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code), 9
(Damage or Destruction) and 14 (Condemnation), it is intended by the Parties
hereto that Lessor have no obligation, in any manner whatsoever, to repair and
maintain the Premises, or the equipment therein, all of which obligations are
intended to be that of the Lessee, except for the surface and structural
elements of the roof, foundations and bearing walls, the repair of which shall
be the responsibility of Lessor upon receipt of written notice that such a
repair is necessary. It is the intention of the Parties that the terms of this
Lease govern the respective obligations of the Parties as to maintenance and
repair of the Premises, and they expressly waive the benefit of any statute now
or hereafter in effect to the extent it is inconsistent with the terms of this
Lease.

   7.3 Utility Installations; Trade Fixtures; Alterations.

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            (a) Definitions; Consent Required. The term "Utility Installations"
refers to all floor and window coverings, air lines, power panels, electrical
distribution, security and fire protection systems and signs, communication
systems, lighting fixtures, HVAC equipment, plumbing, and fencing in or on the
Premises. The term "Trade Fixtures" shall mean Lessee's machinery and equipment
that can be removed without doing material damage to the Premises. The term
"Alterations" shall mean any modification of the improvements, other than
Utility Installations or Trade Fixtures, whether by addition or deletion.
"Losses Owned Alterations and/or Utility Installations" are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make any Alterations or
Utility Installations to the Premises without Lessor's prior written consent.
Lessee may, however, make non-structural Utility Installations to the interior
of the Premises (excluding the roof) without such consent but upon notice to
Lessor, as long as they are not visible from the outside, do not involve
puncturing, relocating or removing the roof, and the cost thereof does not
exceed $10,000.

            (b) Consent. Any Alterations or Utility installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. Consent shall be deemed
conditioned upon Lessee's: (i) acquiring all applicable governmental permits,
(ii) furnishing Lessor with copies of both the permits and the plans and
specifications prior to commencement of the work, and (iii) compliance with all
conditions of said permits and other Applicable Requirements in a prompt and
expeditious manner. Any Alterations or Utility Installations shall be performed
in a workmanlike manner with good and sufficient materials. Lessee shall
promptly upon completion furnish Lessor with as-built plans and specifications.
For work which costs an amount equal to the greater of one month's Base Rent, or
$10,000, Lessor may condition its consent upon Lessee providing a lien and
completion bond in an amount equal to one and one-half times the estimated cost
of such Alteration or Utility Installation and/or upon Lessee's posting an
additional Security Deposit with Lessor.

            (c) Indemnification. Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for Lessee
at or for use on the Premises, which claims are or may be secured by any
mechanic's or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than ten (10) days' notice prior to the
commencement of any work in, on or about the Premises, and Lessor shall have the
right to post notices of non-responsibility. If Lessee shall contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense defend and protect itself. Lessor and the Premises against the same and
shall pay and satisfy any such adverse judgment that may be rendered thereon
before the enforcement thereof. If Lessor shall require, Lessee shall furnish a
surety bond in an amount equal to one and one-half times the amount of such
contested lien, claim or demand, indemnifying Lessor against liability for the
same. If Lessor elects to participate in any such action, Lessee shall pay
Lessor's attorneys' fees and costs.

   7.4 Ownership; Removal; Surrender; and Restoration.

            (a) Ownership. Subject to Lessor's right to require removal or elect
ownership as hereinafter provided, all Alterations and Utility Installations
made by Lessee shall be the property of

                                      -10-

<PAGE>

Lessee, but considered a part of the Premises. Lessor may, at any time, elect in
writing to be the owner of all or any specified part of the Lessee Owned
Alterations and Utility Installations. Unless otherwise instructed per Paragraph
7.4(b) hereof, all Lessee Owned Alterations and Utility Installations shall, at
the expiration or termination of this Lease, become the property of Lessor and
be surrendered by Lessee with the Premises.

            (b) Removal. By delivery to Lessee of written notice from Lessor not
earlier than ninety (90) and not later than thirty (30) days prior to the end of
the term of this Lease, Lessor may require that any or all Lessee Owned
Alterations or Utility Installations be removed by the expiration or termination
of this Lease. Lessor may require the removal at any time of all or any part of
any Lease Owned Alterations or Utility Installations made without the required
consent.

            (c) Surrender/Restoration. Lessee shall surrender the Premises by
the Expiration Date or any earlier termination date, with all of the
Improvements, parts and surfaces thereof broom clean and free of debris, and in
good operating order, condition and state of repair, ordinary wear and tear
excepted. "Ordinary wear and tear" shall not include any damage or deterioration
that would have been prevented by good maintenance practice. Lessee shall repair
any damage occasioned by the installation, maintenance or removal of Trade
Fixtures, Lessee Owned Alterations and/or Utility Installations, furnishings,
and equipment as well as the removal of any storage tank installed by or for
Lessee, and the removal, replacement, or remediation of any soil, material or
groundwater contaminated by Lessee. Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee. The failure by Lessee to timely vacate
the Premises pursuant to this Paragraph 7.4(c) without the express written
consent of Lessor shall constitute a holdover under the provisions of Paragraph
26 below.

8. Insurance; Indemnity.

    8.1 Payment of Premium Increases.

            (a) Lessee shall pay to Lessor any insurance cost increase
("Insurance Cost Increase") occurring during the term of this Lease. "Insurance
Cost Increase" is defined as any increase in the actual cost of the insurance
required under Paragraph 8.2(b), 8.3(a), and 8.3(b) ("Required Insurance"), over
and above the Base Premium as hereinafter defined calculated on an annual basis.
"Insurance Cost Increase" shall include but not be limited to increases
resulting from the nature of Lessee's occupancy, any act or omission of Lessee,
requirements of the holder of mortgage or deed of trust covering the Premises,
increased valuation of the Premises and/or a premium rate increase. The parties
are encouraged to fill in the Base Premium in Paragraph 1.9 with a reasonable
premium for the Required Insurance based on the Agreed Use of the Premises. If
the parties fail to insert a dollar amount in Paragraph 1.9, then the Base
Premium shall be the annual premium applicable to the twelve (12)-month period
following the Commencement Date. In no event, however, shall Lessee be
responsible for any portion of the increase in the premium cost attributable to
liability insurance carried by Lessor under Paragraph 8.1(b) in excess of
$2,000,000 per occurrence.

                                      -11-

<PAGE>

         (b) Lessee shall pay any such Insurance Cost Increase to Lessor within
thirty (30) days after receipt by Lessee of a copy of the premium statement or
other reasonable evidence of the amount due. If the insurance policies
maintained hereunder cover other property besides the Premises, Lessor shall
also deliver to Lessee a statement of the amount of such Insurance Cost Increase
attributable only to the Premises showing in reasonable detail the manner in
which such amount was computed. Premiums for policy periods commencing prior to,
or extending beyond the term of this Lease, shall be prorated to correspond to
the term of this Lease.

   8.2 Liability Insurance.

         (a) Carried by Lessee. Lessee shall obtain and keep in force a
CommercialGeneral Liability Policy of Insurance protecting Lessee and Lessor
against claims for bodily injury, personal injury and property damage based upon
or arising out of the ownership, use, occupancy or maintenance of the Premises
and all areas appurtenant thereto. Such insurance shall be on an occurrence
basis providing single limit coverage in an amount not less than $2,000,000 per
occurrence with an "Additional Insured-Managers or Lessors of Premises
Endorsement" and contain the "Amendment of the Pollution Exclusion Endorsement"
for damage caused by heat, smoke or fumes from a hostile fire. The Policy shall
not contain any intra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability assumed under this Lease
as an "insured contract" for the performance of Lessee's indemnity obligations
under this Lease. The limits of said insurance shall not, however, limit the
liability of Lessee nor relieve Lessee of any obligation hereunder. All
insurance carried by Lessee shall be primary to and not contributory with any
similar insurance carried by Lessor, whose insurance shall be considered excess
insurance only.

         (b) Carried by Lessor. Lessor shall maintain liability insurance as
described in Paragraph 8.2(a), in addition to, and not in lieu of, the insurance
required to be maintained by Lessee. Lessee shall not be named as an additional
insured therein.

  8.3 Property Insurance--Building, Improvements and Rental
Value.

         (a) Building and Improvements. The Insuring Party shall obtain and keep
in force a policy or policies in the name of Lessor, with loss payable to
Lessor, any groundlessor, and to any Lender(s) insuring loss or damage to the
Premises. The amount of such insurance shall be equal to the full replacement
cost of the Premises, as the same shall exist from time to time. If Lessor is
the Insuring Party, however, Lessee Owned Alterations and Utility Installations,
Trade Fixtures, and Lessee's personal property shall be insured by Lessee under
Paragraph 8.4 rather than by Lessor. Lessor's policy or policies shall insure
against all risks of direct physical loss or damage (except the perils of flood
and/or earthquake unless included in the Base Premium), including coverage for
debris removal and the enforcement of any Applicable Requirements requiring the
upgrading, demolition, reconstruction or replacement of any portion of the
Premises as the result of a covered loss. Said policy or policies shall also
contain an agreed valuation provision in lieu of any coinsurance clause, waiver
of subrogation, and inflation guard protection causing an increase in the annual
property insurance coverage amount by a factor of not less than the adjusted
US Department

                                      -12-

<PAGE>

of Labor Consumer Price Index for All Urban Consumers for the city nearest
to where the Premises are located.

        (b) Rental Value. The Insuring Party shall obtain and keep in force a
policy or policies in the name of Lessor, with loss payable to Lessor and any
Lender, insuring the loss of the full Rent for one (1) year. Said insurance
shall provide that in the event the Lease is terminated by reason of an insured
loss, the period of indemnity for such coverage shall be extended beyond the
date of the completion of repairs or replacement of the Premises, to provide for
one full year's loss of Rent from the date of any such loss. Said insurance
shall contain an agreed valuation provision in lieu of any coinsurance clause,
and the amount of coverage shall be adjusted annually to reflect the projected
Rent otherwise payable by Lessee, for the next twelve (12) month period.

        (c) Adjacent Premises. If the Premises are part of a larger building, or
of a group of buildings owned by Lessor which are adjacent to the Premises, the
Lessee shall pay for any increase in the premiums for the property insurance of
such building or buildings if said increase is caused by Lessee's acts,
omissions, use or occupancy of the Premises, other than the permitted uses.

    8.4 Lessee's Property/Business Interruption Insurance.

        (a) Property Damage. Lessee shall obtain and maintain insurance coverage
on all of Lessee's personal property, Trade Fixtures, and Lessee Owned
Alterations and Utility Installations. Such insurance shall be full replacement
cost coverage. The proceeds from any such insurance may be used by Lessee for
the replacement of personal property, Trade Fixtures and Lessee Owned
Alterations and Utility Installations. Lessee shall provide Lessor with written
evidence that such insurance is in force.

        (b) Business Interruption. Lessee shall obtain and maintain loss of
income and extra expense insurance in amounts as will reimburse Lessee for
direct or indirect loss of earnings attributable to all perils commonly insured
against by prudent lessees in the business of Lessee or attributable to
prevention of access to the Premises as a result of such perils.

        (c) No Representation of Adequate Coverage. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business operations or
obligations under this Lease.

    8.5 Insurance Policies. Insurance required herein shall be by companies duly
licensed or admitted to transact business in the state where the Premises are
located, and maintaining during the policy term a "General Policyholders Rating"
of at least B+, V, as set forth in the most current issue of "Best's Insurance
Guide", or such other rating as may be required by a Lender. Lessee shall not do
or permit to be done anything which invalidates the required insurance policies.
Lessee shall, prior to the Start Date, deliver to Lessor certified copies of
policies of such insurance or certificates evidencing the existence and amounts
of the required insurance. No such policy shall be cancelable or subject to
reduction except after thirty (30) days prior written notice to Lessor. Lessee
shall, at least thirty (30) days prior to the expiration of such policies,
furnish Lessor with evidence of renewals or "insurance binders" evidencing
renewal thereof, or Lessor may order such insurance and

                                      -13-

<PAGE>

charge the cost thereof to Lessee, which amount shall be payable by Lessee to
Lessor upon demand. Such policies shall be for a term of at least one year, or
the length of the remaining term of this Lease, whichever is less. If either
Party shall fall to procure and maintain the insurance required to be carried by
it, the other Party may, but shall not be required to, procure and maintain the
same.

    8.6 Waiver of Subrogation. Notwithstanding anything to the contrary
contained herein, Lessee and Lessor each hereby release and relieve the other,
and waive their entire right to recover damages against the other, for loss of
or damage to its property arising out of or incident to the perils required to
be insured against herein. The effect of such releases and waivers is not
limited by the amount of insurance carried or required, or by any deductibles
applicable hereto. The Parties agree to have their respective property damage
insurance carriers waive any right to subrogation that such companies may have
against Lessor or Lessee, as the case may be, so long the insurance is not
invalidated thereby.

    8.7 Indemnity. Except for Lessor's gross negligence or willful misconduct,
Lessee shall indemnify, protect, defend and hold harmless, Lessor and its
agents, Lessor's master or ground lessor, partners and Lenders from and against
any and all claims, loss of rents and/or damages, liens, judgments, penalties,
attorneys' and consultants' fees, expenses and/or liabilities to the extent
arising out of, involving, or in connection with, the use of the Premises by
Lessee. If any action or proceeding is brought against Lessor by reason of any
of the foregoing matters, Lessee shall upon notice defend the same at Lessee's
expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate
with Lessee in such defense. Lessor need not have first paid any such claim in
order to be defended or indemnified.

    8.8 Exemption of Lessor from Liability. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing, HVAC or lighting fixtures, or from any other cause,
whether the said injury or damage results from conditions arising upon the
Premises or upon other portions of the Building of which the Premises are a
part, or from other sources or places. Lessor shall not be liable for any
damages arising from any act or neglect of any other tenant of Lessor.
Notwithstanding Lessor's negligence or breach of this Lease, Lessor shall under
no circumstances be liable for injury to Lessee's business or for any loss of
income or profit therefrom.

9. Damage or Destruction.

    9.1 Definitions.
        (a) "Premises Partial Damage" shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations, Utility
Installations and Trade Fixtures, which can reasonably be repaired in six (6)
months or less from the date of the damage or destruction. Lessor shall notify
Lessee in writing within thirty (30) days from the date of the damage or
destruction as to whether or not the damage is Partial or Total.

                                      -14-

<PAGE>

        (b) "Premises Total Destruction" shall mean damage or destruction to the
Premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures, which cannot reasonably be repaired in six (6) months or less
from the date of the damage or destruction. Lessor shall notify Lessee in
writing within thirty (30) days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.

        (c) "Insured Loss" shall mean damage or destruction to improvements on
the Premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures, which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(a), irrespective of any deductible amounts
or coverage limits involved.

        (d) "Replacement Cost" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of Applicable Requirements, and without
deduction for depreciation.

    9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is an
Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such damage
(but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000 or less, and, in such event, Lessor shall make any
applicable insurance proceeds available to Lessee on a reasonable basis for that
purpose. Notwithstanding the foregoing, if the required insurance was not in
force or the insurance proceeds are not sufficient to effect such repair, the
Insuring Party shall promptly contribute the shortage in proceeds as and when
required to complete said repairs. In the event, however, such shortage was due
to the fact that, by reason of the unique nature of the improvements, full
replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover same, or adequate assurance thereof,
within ten (10) days following receipt of written notice of such shortage and
request therefor. If Lessor receives said funds or adequate assurance thereof
within said ten (10) day period, the party responsible for making the repairs
shall complete them as soon as reasonably possible and this Lease shall remain
in full force and effect. If such funds or assurance are not received, Lessor
may nevertheless elect by written notice to Lessee within ten (10) days
thereafter to: (i) make such restoration and repair as is commercially
reasonable with Lessor paying any shortage in proceeds, in which case this Lease
shall remain in full force and effect; or (ii) have this Lease terminate thirty
(30) days thereafter. Lessee shall not be entitled to reimbursement of any funds
contributed by Lessee to repair any such damage or destruction. Premises Partial
Damage due to flood or earthquake shall be subject to Paragraph 9.3,
notwithstanding that there may be some insurance coverage, but the net proceeds
of any such insurance shall be made available for the repairs if made by either
Party.

    9.3 Partial Damage - Uninsured Loss.  If a Premises Partial Damage that is
not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make

                                      -15-

<PAGE>

the repairs at Lessee's expense), Lessor may either: (i) repair such damage
as soon as reasonably possible at Lessor's expense, in which event this Lease
shall continue in full force and effect, or (ii) terminate this Lease by giving
written notice to Lessee within thirty (30) days after receipt by Lessor of
knowledge of the occurrence of such damage. Such termination shall be effective
sixty (60) days following the date of such notice. In the event Lessor elects to
terminate this Lease, Lessee shall have the right within ten (10) days after
receipt of the termination notice to give written notice to Lessor of Lessee's
commitment to pay for the repair of such damage without reimbursement from
Lessor. Lessee shall provide Lessor with said funds or satisfactory assurance
thereof within thirty (30) days after making such commitment. In such event this
Lease shall continue in full force and effect, and Lessor shall proceed to make
such repairs as soon as reasonably possible after the required funds are
available. If Lessee does not make the required commitment, this Lease shall
terminate as of the date specified in the termination notice.

    9.4 Total Destruction. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs, this Lease shall terminate sixty (60) days
following such Destruction. If the damage or destruction was caused by the gross
negligence or willful misconduct of Lessee, Lessor shall have the right to
recover Lessor's damages from Lessee, except as provided in Paragraph 8.6.

    9.5 Damage Near End of Term. If at any time during the last six (6) months
of this Lease there is damage to the Premises for which the cost to repair
exceeds one (1) month's Base Rent, whether or not an Insured Loss, Lessor may
terminate this Lease effective sixty (60) days following the date of occurrence
of such damage by giving a written termination notice to Lessee within thirty
(30) days after the date of occurrence of such damage. Notwithstanding the
foregoing, if Lessee at that time has an exercisable option to extend this Lease
or to purchase the Premises, then Lessee may preserve this Lease by exercising
such option on or before the earlier of (i) the date which is ten days after
Lessee's receipt of Lessor's written notice purporting to terminate this Lease,
or (ii) the day prior to the date upon which such option expires. If Lessee duly
exercises such option during such period, Lessor shall, at Lessor's commercially
reasonable expense, repair such damage as soon as reasonably possible and this
Lease shall continue in full force and effect. If Lessee fails to exercise such
option and provide such funds or assurance during such period, then this Lease
shall terminate on the date specified in the termination notice and Lessee's
option shall be extinguished.

    9.6 Abatement of Rent; Lessee's Remedies.

        (a) Abatement. In the event of Premises Partial Damage or Premises Total
Destruction or a Hazardous Substance Condition for which Lessee is not
responsible under this Lease, the Rent payable by Lessee for the period required
for the repair, remediation or restoration of such damage shall be abated in
proportion to the degree to which Lessee's use of the Premises is impaired. All
other obligations of Lessee hereunder shall be performed by Lessee, and Lessor
shall have no liability for any such damage, destruction, remediation, repair or
restoration except as provided herein.

        (b)Remedies. If Lessor shall be obligated to repair or restore the
Premises and does not commence, in a substantial and meaningful way, such repair
or restoration within ninety (90) days after such obligation shall accrue,
Lessee may, at any time prior to the commencement of such

                                      -16-

<PAGE>

repair or restoration, give written notice to Lessor and to any Lenders of
which Lessee has actual notice, of Lessee's election to terminate this Lease on
a date not less than sixty (60) days following the giving of such notice. If
Lessee gives such notice and such repair or restoration is not commenced within
thirty (30) days thereafter, this Lease shall terminate as of the date specified
in said notice. If the repair or restoration is commenced within said thirty
(30) days, this Lease shall continue in full force and effect. "Commence" shall
mean either the unconditional authorization of the preparation of the required
plans, or the beginning at the actual work on the Premises, whichever first
occurs.

    9.7 Termination-Advance Payments. Upon termination of this Lease pursuant to
Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made
concerning advance Base Rent and any other advance payments made by Lessee to
Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's Security
Deposit as has not been, or is not then required to be, used by Lessor.

    9.8 Waive Statutes. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises with
respect to the termination of this Lease and hereby waive the provisions of any
present or future statute to the extent inconsistent herewith.

10. Real Property Taxes.

    10.1 Definition of "Real Property Taxes." As used herein, the term "Real
Property Taxes" shall include any form of assessment; real estate, general,
special, ordinary or extraordinary, or tax (other than inheritance, personal
income or estate taxes); improvement bond; and/or license fee imposed upon or
levied against any legal or equitable interest of Lessor in the Premises, by any
authority having the direct or indirect power to tax and where the funds are
generated with reference to the Building address and where the proceeds so
generated are to be applied by the city, county or other local taxing authority
of a jurisdiction within which the Premises are located. The term "Real Property
Taxes" shall also include any tax, fee, levy, assessment or charge, or any
increase therein, imposed by reason or events occurring during the term of this
Lease.

10.2

        (a) Payment of Taxes. Lessor shall pay the Real Property Taxes
applicable to the Premises provided, however, that Lessee shall pay to Lessor
the amount, if any, by which Real Property Taxes applicable to the Premises
increase over the fiscal tax year during which the Commencement Date occurs
("Tax Increase"). Subject to Paragraph 10.2b), payment of any such Tax Increase
shall be made by Lessee to Lessor within thirty (30) days after receipt of
Lessor's written statement setting forth the amount due and the computation
thereof. If any such taxes shall cover any period of time prior to or after the
expiration or termination of this Lease, Lessee's share of such taxes shall be
prorated to cover only that portion of the tax bill applicable to the period
that this Lease is in effect.

        (b) Advance Payment.  In the event Lessee incurs a late charge on any
Rent payment, Lessor may, at Lessor's option, estimate the current Real Property
Taxes, and require that

                                      -17-

<PAGE>

the Tax increase be paid in advance to Lessor by Lessee, either: (i) in a lump
sum amount equal to the amount due, at least twenty (20) days prior to the
applicable delinquency date; or (ii) monthly in advance with the payment of the
Bass Rent. If Lessor elects to require payment monthly in advance, the monthly
payment shall be an amount equal to the amount of the estimated installment of
the Tax Increase divided by the number of months remaining before the month in
which said installment becomes delinquent. When the actual amount of the
applicable Tax Increase is known, the amount of such equal monthly advance
payments shall be adjusted as required to provide the funds needed to pay the
applicable Tax Increase. If the amount collected by Lessor is insufficient to
pay the Tax Increase when due, Lessee shall pay Lessor, upon demand, such
additional sums as are necessary to pay such obligations. All moneys paid to
Lessor under this Paragraph may be intermingled with other moneys of Lessor and
shall not bear interest. In the event of a Breach by Lessee in the performance
of its obligations under this Lease, then any balance of funds paid to Lessor
under the provisions of this Paragraph may at the option of Lessor, be treated
as an additional Security Deposit.

        (c) Additional Improvements. Notwithstanding anything to the contrary in
this Paragraph 10.2, Lessee shall pay to Lessor upon demand therefor the
entirety of any increase in Real Property Taxes assessed by reason of
Alterations or Utility Installations placed upon the Premises by Lessee or at
Lessee's request.

    10.3 Joint Assessment. If the Premises are not separately assessed, Lessee's
liability shall be an equitable proportion of the Tax Increase for all of the
land and improvements included within the tax parcel assessed, such proportion
to be conclusively determined by Lessor from the respective valuations assigned
in the assessor's work sheets or such other information as may be reasonably
available.

    10.4 Personal Property Taxes. Lessee shall pay, prior to delinquency, all
taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee. When possible, Lessee shall cause such property to be assessed and
billed separately from the real property of Lessor. If any of Lessee's said
personal property shall be assessed with Lessor's real property, Lessee shall
pay Lessor the taxes attributable to Lessee's property within ten (10) days
after receipt of a written statement.

11. Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered.

12. Assignment and Subletting.

    12.1 Lessor's Consent Required.

        (a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or encumber (collectively, "assign or assignment") or sublet
all or any part of Lessee's interest in this Lease or in the Premises without
Lessor's prior written consent.

                                      -18-

<PAGE>

        (b) A change in the control of Lessee shall constitute an assignment
requiring consent. The transfer, on a cumulative basis, of twenty-five percent
(25%) or more of the voting control of Lessee shall constitute a change in
control for this purpose.

        (c) The involvement of Lessee or its assets in any transaction, or
series of transactions (by way of merger, sale, acquisition, financing,
transfer, leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation of this Lease or Lessee's assets occurs, which results or will
result in a reduction of the Net Worth of Lessee by an amount greater than
twenty-five percent (25%) of such Net Worth as it was represented at the time of
the execution of this Lease or at the time of the most recent assignment to
which Lessor has consented, or as it exists immediately prior to said
transaction or transactions constituting such reduction, whichever was or is
greater, shall be considered an assignment of this Lease to which Lessor may
withhold its consent. "Net Worth of Lessee" shall mean the net worth of Lessee
(excluding any guarantors) established under generally accepted accounting
principles.

        (d) An assignment or subletting without consent shall, at Lessor's
option, be a Default curable after notice per Paragraph 13.1(c), or a noncurable
Breach without the necessity of any notice and grace period. If Lessor elects to
treat such unapproved assignment or subletting as a noncurable Breach, Lessor
may either: (i) terminate this Lease, or (ii) upon thirty (30) days written
notice, increase the monthly Base Rent to one hundred ten percent (110%) of the
Base Rent then in effect. Further, in the event of such Breach and rental
adjustment, (i) the purchase price of any option to purchase the Premises held
by Lessee shall be subject to similar adjustment to one hundred ten percent
(110%) of the price previously in effect, and (ii) all fixed and non-fixed
rental adjustments scheduled during the remainder of the Lease term shall be
increased to One Hundred Ten Percent (110%) of the scheduled adjusted rent.

        (e) Lessee's remedy for any breach of Paragraph 12.1 by Lessor shall be
limited to compensatory damages and/or injunctive relief.

    12.2 Terms and Conditions Applicable to Assignment and Subletting.

        (a) Regardless of Lessor's consent, any assignment or subletting shall
not: (i) be effective without the express written assumption by such assignee or
sublessee of the obligations of Lessee under this Lease; (ii) release Lessee of
any obligations hereunder; or (iii) alter the primary liability of Lessee for
the payment of Rent or for the performance of any other obligations to be
performed by Lessee.

        (b) Lessor may accept Rent or performance of Lessee's obligations from
any person other than Lessee pending approval or disapproval of an assignment.
Neither a delay in the approval or disapproval of such assignment nor the
acceptance of Rent or performance shall constitute a waiver or estoppel of
Lessor's right to exercise its remedies for Lessee's Default or Breach.

        (c) Lessor's consent to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting.

                                      -19-

<PAGE>

        (d) In the event of any Default or Breach by Lessee, Lessor may proceed
directly against Lessee, any Guarantors or anyone else responsible for the
performance of Lessee's obligations under this Lease, including any assignee or
sublessee, without first exhausting Lessor's remedies against any other person
or entity responsible therefore to Lessor, or any security held by Lessor.

        (e) Each request for consent to an assignment or subletting shall be in
writing, accompanied by information relevant to Lessor's determination as to the
financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any. Lessee agrees to provide Lessor
with such other or additional information and/or documentation as may be
reasonably requested. See Addendum Paragraph 60.

        (f) Any assignee of, or sublessee under, this Lease shall, by reason of
accepting such assignment or entering into such sublease, be deemed to have
assumed and agreed to conform and comply with each and every term, covenant,
condition and obligation herein to be observed or performed by Lessee during the
term of said assignment or sublease, other than such obligations as are contrary
to or inconsistent with provisions of an assignment or sublease to which Lessor
has specifically consented to in writing.

    12.3 Additional Terms and Conditions Applicable to Subletting. The following
terms and conditions shall apply to any subletting by Lessee of all or any part
of the Premises and shall be deemed included in all subleases under this Lease
whether or not expressly incorporated therein:

        (a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all Rent payable on any sublease, and Lessor may collect such Rent
and apply same toward Lessee's obligations under this Lease; provided, however,
that until a Breach shall occur in the performance of Lessee's obligations,
Lessee may collect said Rent. Lessor shall not, by reason of the foregoing or
any assignment of such sublease, nor by reason of the collection of Rent, be
deemed liable to the sublessee for any failure of Lessee to perform and comply
with any of Lessee's obligations to such sublessee. Lessee hereby irrevocably
authorizes and directs any such sublessee, upon receipt of a written notice from
Lessor stating that a Breach exists in the performance of Lessee's obligations
under this Lease, to pay to Lessor all Rent due and to become due under the
sublease. Sublessee shall rely upon any such notice from Lessor and shall pay
all Rents to Lessor without any obligation or right to inquire as to whether
such Breach exists, notwithstanding any claim from Lessee to the contrary.

        (b) In the event of a Breach by Lessee, Lessor may, at its option,
require sublessee to attorn to Lessor, in which event Lessor shall undertake the
obligations of the sublessor under such sublease from the time of the exercise
of said option to the expiration of such sublease; provided, however, Lessor
shall not be liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior Defaults or Breaches of such
sublessor.

        (c) Any matter requiring the consent of the sublessor under a sublease
shall also require the consent of Lessor.

                                      -20-

<PAGE>

        (d) No sublessee shall further assign or sublet all or any part of the
Premises without Lessor's prior written consent.

13. Default; Breach; Remedies.

    13.1 Default; Breach.  A "Default" is defined as a failure by the Lessee to
comply with or perform any of the terms, covenants, conditions or rules under
this Lease. A "Breach" is defined as the occurrence of one or more of the
following Defaults, and the failure of Lessee to cure such Default within any
applicable grace period:

        (a) The abandonment of the Premises; or the vacating of the Premises
without providing a commercially reasonable level of security, and/or Security
Deposit or where the coverage of the property insurance described in Paragraph
8.3 is jeopardized as a result thereof, or without providing reasonable
assurances to minimize potential vandalism.

        (b) The failure of Lessee to make any payment of Rent or any Security
Deposit required to be made by Lessee hereunder, whether to Lessor or to a third
party, when due, to provide reasonable evidence of insurance or surety bond, or
to fulfill any obligation under this Lease which endangers or threatens life or
property, where such failure continues for a period of five (5) business days
following written notice to Lessee.

        (c) The failure by Lessee to provide (i) reasonable written evidence of
compliance with Applicable Requirements, (ii) the service contracts, (iii) the
rescission of an unauthorized assignment or subletting, (iv) a Estoppel
Certificate, (v) a requested subordination, (vi) evidence concerning any
guaranty and/or Guarantor, (vii) any document requested under Paragraph 42
(easements), or (viii) any other documentation or information which Lessor may
reasonably require of Lessee under the terms of this Lease, where any such
failure continues for a period of thirty (30) days following written notice to
Lessee.

        (d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
other than those described in subparagraphs 13.1(a), (b) or (c), above, where
such Default continues for a period of thirty (30) days after written notice;
provided, however, that if the nature of Lessee's Default is such that more than
thirty (30) days are reasonably required for its cure, then it shall not be
deemed to be a Breach if Lessee commences such cure within said thirty (30) day
period and thereafter diligently prosecutes such cure to completion.

        (e) The occurrence of any of the following events: (i) the making of any
general arrangement or assignment for the benefit of creditors; (ii) becoming a
"debtor" as defined in 11 U.S.C. ss. 101 or any successor statute thereto
(unless, in the case of a petition filed against Lessee, the same is dismissed
within sixty (60) days); (iii) the appointment of a trustee or receiver to take
possession of substantially all of Lessee's assets located at the Premises or of
Lessee's interest in this Lease, where possession is not restored to Lessee
within thirty (30) days; or (iv) the attachment, execution or other judicial
seizure of substantially all of Lessee's assets located at the Premises or of
Lessee's interest in this Lease, where such seizure is not discharged within
thirty (30) days;

                                      -21-

<PAGE>

provided, however, in the event that any provision of this subparagraph (a) is
contrary to any applicable law, such provision shall be of no force or
effect, and not affect the validity of the remaining provisions.

        (f) The discovery that any financial statement of Lessee or of any
Guarantor given to Lessor was intentionally materially false.

        (g) If the performance of Lessee's obligations under this Lease is
guaranteed: (i) the death of a Guarantor; (ii) the termination of a Guarantor's
liability with respect to this Lease other than in accordance with the terms of
such guaranty; (iii) a Guarantor's becoming insolvent or the subject of a
bankruptcy filing; (iv) a Guarantor's refusal to honor the guaranty; or (v) a
Guarantor's breach of its guaranty obligation on an anticipatory basis, and
Lessee's failure, within sixty (60) days following written notice of any such
event, to provide written alternative assurance or security, which, when coupled
with the then existing resources of Lessee, equals or exceeds the combined
financial resources of Lessee and the Guarantors that existed at the time of
execution of this Lease.

    13.2 Remedies. If Lessee fails to perform any of its affirmative duties or
obligations, within the time set forth above (or in case of an emergency,
without notice), Lessor may, at its option, perform such duty or obligation on
Lessee's behalf, including but not limited to the obtaining of reasonably
required bonds, insurance policies, or governmental licenses, permits or
approvals. The costs and expenses of any such performance by Lessor shall be due
and payable by Lessee upon receipt of invoice therefor. If any check given to
Lessor by Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its option, may require payments during the following 12-month period
to be made by Lessee to be by cashier's check. In the event of a Breach, Lessor
may, with or without further notice or demand, and without limiting Lessor in
the exercise of any right or remedy which Lessor may have by reason of such
Breach:

        (a) Terminate Lessee's right to possession of the Premises by any lawful
means, in which case this Lease shall terminate and Lessee shall immediately
surrender possession to Lessor. In such event Lessor shall be entitled to
recover from Lessee: (i) the unpaid Rent which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that the Lessee proves could have
been reasonably avoided; (iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises reasonable attorneys' fees. The worth
at the time of award of the amount referred to in provision (iii) of the
immediately preceding sentence shall be computed by discounting such amount at
the discount rate of the Federal Reserve Bank of the District within which the
Premises are located at the time of award plus one percent (1%). Efforts by
Lessor to mitigate damages caused by Lessee's Breach of this Lease shall not
waive Lessor's right to recover damages under Paragraph 12.

                                      -22-

<PAGE>

If termination of this Lease is obtained through the provisional remedy of
unlawful detainer, Lessor shall have the right to recover in such proceeding any
unpaid Rent and damages as are recoverable therein, or Lessor may reserve the
right to recover all or any part thereof in a separate suit. If a notice and
grace period required under Paragraph 13.1 was not previously given, a notice to
pay rent or quit, or to perform or quit given to Lessee under the unlawful
detainer statute shall also constitute the notice required by Paragraph 13.1. In
such case, the applicable grace period required by Paragraph 13.1 and the
unlawful detainer statute shall run concurrently, and the failure of Lessee to
cure the Default within the greater of the two such grace periods shall
constitute both an unlawful detainer and a Breach of this Lease entitling Lessor
to the remedies provided for in this Lease and/or by said statute.

        (b) Continue this Lease and Lessee's right to possession and recover the
Rent as it becomes due, in which event Lessee may sublet or assign, subject only
to reasonable limitations. Acts of maintenance, efforts to relet, and/or the
appointment of a receiver to protect the Lessor's interests, shall not
constitute a termination of the Lessee's right to possession.

        (c) Pursue any other remedy now or hereafter available under the laws or
judicial decisions of the state wherein the Premises are located. The expiration
or termination of this Lease and/or the termination of Lessee's right to
possession shall not relieve Lessee from liability under any indemnity
provisions of this Lease as to matters occurring or accruing during the term
hereof or by reason of Lessee's occupancy of the Premises.

    13.3 Inducement Recapture. Any agreement for free or abated rent or other
charges, or for the giving or paying by Lessor to or for Lessee of any cash or
other bonus, inducement or consideration for Lessee's entering into this Lease,
all of which concessions are hereinafter referred to as "Inducement Provisions,"
shall be deemed conditioned upon Lessee's full and faithful performance of all
of the terms, covenants and conditions of this Lease. Upon Breach of this Lease
by Lessee, any such Inducement Provision shall automatically be deemed deleted
from this Lease and of no further force or effect, and any rent, other charge,
bonus, inducement or consideration theretofore abated, given or paid by Lessor
under such an Inducement Provision shall be immediately due and payable by
Lessee to Lessor, notwithstanding any subsequent cure of said Breach by Lessee.
The acceptance by Lessor of rent or the cure of the Breach which initiated the
operation of this paragraph shall not be deemed a waiver by Lessor of the
provisions of this paragraph unless specifically so stated in writing by Lessor
at the time of such acceptance.

    13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee of
Rent will cause Lessor to incur costs not contemplated by this Lease, the exact
amount of which will be extremely difficult to ascertain. Such costs include,
but are not limited to, processing and accounting charges, and late charges
which may be imposed upon Lessor by any Lender. Accordingly, if any Rent shall
not be received by Lessor within five (5) days after such amount shall be due,
then, without any requirement for notice to Lessee, Lessee shall pay to Lessor a
one-time late charge equal to ten percent (10%) of each such overdue amount. The
parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Lessor will incur by reason of such late payment.
Acceptance of such late charge by Lessor shall in no event constitute a waiver
of Lessee's

                                      -23-

<PAGE>

Default or Breach with respect to such overdue amount, nor prevent the exercise
of any of the other rights and remedies granted hereunder. In the event that a
late charge is payable hereunder, whether or not collected, for three (3)
consecutive installments of Base Rent, then notwithstanding any provision of
this Lease to the contrary, Base Rent shall, at Lessor's option, become due and
payable quarterly in advance.

    13.5 Interest. Any monetary payment due Lessor hereunder, other than late
charges, not received by Lessor, when due as to scheduled payments (such as Base
Rent) or within thirty (30) days following the date on which it was due for
non-scheduled payment, shall bear interest from the date when due, as to
scheduled payments, or the thirty-first (31st) day after it was due as to
non-scheduled payments. The interest ("Interest") charged shall be equal to the
prime rate reported in the Wall Street Journal as published closest prior to the
date when due plus 4%, but shall not exceed the maximum rate allowed by law.
Interest is payable in addition to the potential late charge provided for in
Paragraph 13.4.

    13.6 Breach by Lessor.

        (a) Notice of Breach. Lessor shall not be deemed in breach of this Lease
unless Lessor fails within a reasonable time to perform an obligation required
to be performed by Lessor. For purposes of this Paragraph, a reasonable time
shall in no event be less than thirty (30) days after receipt by Lessor, and any
Lender whose name and address shall have been furnished Lessee in writing of
written notice for such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days are
reasonably required for its performance, then Lessor shall not be in breach if
performance is commenced within such thirty (30) day period and thereafter
diligently pursued to completion.

        (b) Performance by Lessee on Behalf of Lessor. In the event that neither
Lessor nor Lender cures said breach within thirty (30) days after receipt of
said written notice, or if having commenced said cure they do not diligently
pursue it to completion, then Lessee may elect to cure said breach at Lessee's
expense and offset from Rent an amount equal to the greater of one month's Base
Rent or the Security Deposit, and to pay an excess of such expense under
protest, reserving Lessee's right to reimbursement from Lessor. Lessee shall
document the cost of said cure and supply said documentation to Lessor.

14. Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(collectively "Condemnation"), this Lease shall terminate as to the part taken
as of the date the condemning authority takes title or possession, whichever
first occurs. If more than ten percent (10%) of any building portion of the
premises, or more than twenty-five percent (25%) of the land area portion of the
premises not occupied by any building, is taken by Condemnation, Lessee may, at
Lessee's option, to be exercised in writing within ten (10) days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice, within ten (10) days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease

                                      -24-

<PAGE>

shall remain in full force and effect as to the portion of the Premises
remaining, except that the Base Rent shall be reduced in proportion to the
reduction in utility of the Premises caused by such Condemnation. Condemnation
awards and/or payments shall be the property of Lessor, whether such award shall
be made as compensation for diminution in value of the leasehold, the value of
the part taken, or for severance damages; provided, however, that Lessee shall
be entitled to any compensation for Lessee's relocation expenses, loss of
business goodwill and/or Trade Fixtures, without regard to whether or not this
Lease is terminated pursuant to the provisions of this Paragraph. All
Alterations and Utility Installations made to the Premises by Lessee, for
purposes of Condemnation only, shall be considered the property of the Lessee
and Lessee shall be entitled to any and all compensation which is payable
therefor. In the event that this Lease is not terminated by reason of the
Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.

15. Brokers' Fee.

    15.1 Additional Commission. In addition to the payments owed pursuant to
Paragraph 1.10 above, and unless Lessor and the Brokers otherwise agree in
writing, Lessor agrees that: (a) if Lessee exercises any Option; (b) if Lessee
acquires any rights to the Premises or other premises owned by Lessor and
located within the same Project, if any, within which the Premises is located;
(c) if Lessee remains in possession of the Premises, with the consent of Lessor,
after the expiration of this Lease; or (d) if Base Rent is increased, whether by
agreement or operation of an escalation clause herein, then, Lessor shall pay
Brokers a fee in accordance with the schedule of said Brokers in effect at the
time of the execution of this Lease.

    15.2 Assumption of Obligations. Any buyer or transferee of Lessor's interest
in this Lease shall be deemed to have assumed Lessor's obligation hereunder.
Each Broker shall be a third party beneficiary of the provisions of Paragraphs
1.10, 15, 22 and 31. If Lessor fails to pay to a Broker any amounts due as and
for commissions pertaining to this Lease when due, then such amounts shall
accrue Interest. In addition, if Lessor fails to pay any amounts to Lessee's
Broker when due, Lessee's Broker may send written notice to Lessor and Lessee of
such failure and if Lessor fails to pay such amounts within ten (10) days after
said notice, Lessee shall pay said monies to its Broker and offset such amounts
against Rent. In addition, Lessee's Broker shall be deemed to be a third party
beneficiary of any commission agreement entered into by and/or between Lessor
and Lessor's Broker.

    15.3 Representations and Indemnities of Broker Relationships. Lessee and
Lessor each represent and warrant to the other that it has had no dealings with
any person, firm, broker or finder (other than the Brokers, if any) in
connection with this Lease, and that no one other than said named Brokers is
entitled to any commission or finders fee in connection herewith. Lessee and
Lessor do each hereby agree to indemnify, protect, defend and hold the other
harmless from and against liability for compensation or charges which may be
claimed by any such unnamed broker, finder or other similar party by reason of
any dealings or actions of the indemnifying Party including any costs, expenses,
attorneys' fees reasonably incurred with respect thereto.

16. Estoppel Certificates.

                                      -25-

<PAGE>

     (a) Each Party (as "Responding Party") shall within ten (10) days after
written notice from the other Party (the "Requesting Party") execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current "Estoppel Certificate" form published by the
American Industrial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.

     (b) If the Responding Party shall fail to execute or deliver the Estoppel
Certificate within such ten day period, the Requesting Party may execute an
Estoppel Certificate stating that: (i) the Lease is in full force and effect
without modification except as may be represented by the Requesting Party; (ii)
there are no uncured defaults in the Requesting Party's performance; and (iii)
if Lessor is the Requesting Party, not more than one month's rent has been paid
in advance. Prospective purchasers and encumbrancers may rely upon the
Requesting Party's Estoppel Certificate, and the Responding Party shall be
estopped from denying the truth of the facts contained in said Certificate.

     (c) If Lessor desires to finance, refinance, or sell the Premises, or any
part thereof, Lessee and all Guarantors shall deliver to any potential lender or
purchaser designated by Lessor such financial statements as may be reasonably
required by such lender or purchaser, including but not limited to Lessee's
financial statements for the past three (3) years. All such financial statements
shall be received by Lessor and such lender or purchaser in confidence and shall
be used only for the purposes herein set forth.

17. Definition of Lessor. The term "Lessor" as used herein shall mean the owner
or owners at the time in question of the fee title to the Premises, or, if this
is a sublease, of the Lessee's interest in the prior lease. In the event of a
transfer of Lessor's title or interest in the Premises or this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such
transfer or assignment and delivery of the Security Deposit, as aforesaid, the
prior Lessor shall be relieved of all liability with respect to the obligations
and/or covenants under this Lease thereafter to be performed by the Lessor.
Subject to the foregoing, the obligations and/or covenants in this Lease to be
performed by the Lessor shall be binding only upon the Lessor as hereinabove
defined. Notwithstanding the above, and subject to the provisions of Paragraph
20 below, the original Lessor under this Lease, and all subsequent holders of
the Lessor's interest in this Lease shall remain liable and responsible with
regard to the potential duties and liabilities of Lessor pertaining to Hazardous
Substances as outlined in Paragraph 6 above.

18. Severability. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.

19. Days. Unless otherwise specifically indicated to the contrary, the word
"days" as used in this Lease shall mean and refer to calendar days.

20. Limitation on Liability. Subject to the provisions of Paragraph 17 above,
the obligations of Lessor under this Lease shall not constitute personal
obligations of Lessor, the individual partners of Lessor or its or their
individual partners, directors, officers or shareholders, and Lessee shall look
to

                                      -26-

<PAGE>

the Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse
against the individual partners of Lessor, or its or their individual partners,
directors, officers or shareholders, or any of their personal assets for such
satisfaction.

21. Time of Essence. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.

22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.

23. Notices.

     23.1 Notice Requirements. All notices required or permitted by this Lease
shall be in writing and may be delivered in person (by hand or by courier) or
may be sent by regular, certified or registered mail or US Postal Service
Express Mail, with postage prepaid, or by facsimile transmission, and shall be
deemed sufficiently given if served in a manner specified in this Paragraph 23.
The addresses noted adjacent to a Party's signature on this Lease shall be that
Party's address for delivery or mailing of notices. Either Party may by written
notice to the other specify a different address for notice, except that upon
Lessee's taking possession of the Premises, the Premises shall constitute
Lessee's address for notice. A copy of all notices to Lessor shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate in writing.

     23.2 Date of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail the notice shall be deemed given two (2) business days after the
same is addressed as required herein and mailed with postage prepaid. Notices
delivered by United States Express Mail or overnight courier that guarantee next
day delivery shall be deemed given one business day after delivery of the same
to the Postal Service or courier. Notices transmitted by facsimile transmission
or similar means shall be deemed delivered upon telephone confirmation of
receipt, provided a copy is also delivered via delivery or mail. If notice is
received on a Saturday, Sunday or legal holiday, it shall be deemed received on
the next business day.

24. Waivers. No waiver by Lessor of the Default or Breach of any term, covenant
or condition hereof by Lessee, shall be deemed a waiver of any other term,
covenant or condition hereof, or of any subsequent Default or Breach by Lessee
of the same or of any other term, covenant or condition hereof. Lessor's consent
to, or approval of, any act shall not be deemed to render unnecessary the
obtaining of Lessor's consent to, or approval of, any subsequent or similar act
by Lessee, or be construed as the basis of an estoppel to enforce the provision
or provisions of this Lease requiring such consent. The acceptance of Rent by
Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by
Lessee may be accepted by Lessor on account of moneys or damages due Lessor,
notwithstanding any qualifying statements or conditions made by Lessee in
connection

                                      -27-

<PAGE>

therewith, which such statements and/or conditions shall be of no force or
effect whatsoever unless specifically agreed to in writing by Lessor at or
before the time of deposit of such payment.

25. Recording. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees applicable thereto.

26. No Right To Holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee holds over, then the Base Rent shall be increased to
one hundred twenty-five percent (125%) of the Base Rent applicable during the
month immediately preceding the expiration or termination. Nothing contained
herein shall be construed as consent by Lessor to any holding over by Lessee.

27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.

28. Covenants and Conditions; Construction of Agreement. All provisions of this
Lease to be observed or performed by Lessee are both covenants and conditions.
In construing this Lease, all headings and titles are for the convenience of the
parties only and shall not be considered a part of this Lease. Whenever required
by the context, the singular shall include the plural and vice versa. This Lease
shall not be construed as if prepared by one of the parties, but rather
according to its fair meaning as a whole, as if both parties had prepared it.

29. Binding Effect; Choice of Law. This Lease shall be binding upon the parties,
their personal representatives, successors and assigns and be governed by the
laws of the State in which the Premises are located. Any litigation between the
Parties hereto concerning this Lease shall be initiated in the county in which
the Premises are located.

30. Subordination; Attornment; Non-Disturbance.

     30.1 Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed upon the Premises, to any and all advances made on the security
thereof, and to all renewals, modifications, and extensions thereof. Lessee
agrees that the holders of any such Security Devices (in this Lease together
referred to as "Lender") shall have no liability or obligation to perform any of
the obligations of Lessor under this Lease. Any Lender may elect to have this
Lease and/or any Option granted hereby superior to the lien of its Security
Device by giving written notice thereof to Lessee whereupon this Lease and such
Options shall be deemed prior to such Security Device notwithstanding the
relative dates of the documentation or recordation thereof.

     30.2 Attornment. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior

                                      -28-

<PAGE>

to acquisition of ownership except continuing defaults; (ii) be subject to
any offsets or defenses which Lessee might have against any prior lessor; or
(iii) be bound by prepayment of more than one (1) month's rent.

     30.3 Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance
Agreement provides that Lessee's possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in Breach hereof and attorns to the record owner of the
Premises. Further, within sixty (60) days after the execution of this Lease,
Lessor shall use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder of any pre-existing Security Device which is secured
by the Premises. In the event that Lessor is unable to provide the
Non-Disturbance Agreement within said sixty (60) days, then Lessee may, at
Lessee's option, directly contact Lessor's lender and attempt to negotiate for
the execution and delivery of a Non-Disturbance Agreement.

     30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be
effective without the execution of any further documents; provided, however,
that, upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of the Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.

31. Attorneys' Fees. If any Party or Broker brings an action or proceeding
involving the Premises to enforce the terms hereof or to declare rights
hereunder, the Prevailing Party (as hereafter defined) in any such proceeding,
action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such
fees may be awarded in the same suit or recovered in a separate suit, whether or
not such action or proceeding is pursued to decision or judgment. The term,
"Prevailing Party" shall include, without limitation, a Party or Broker who
substantially obtains or defeats the relief sought, as the case may be, whether
by compromise, settlement, judgment, or the abandonment by the other Party or
Broker of its claim or defense. The attorneys' fees award shall not be computed
in accordance with any court fee schedule, but shall be such as to fully
reimburse all attorneys' fees reasonably incurred. In addition, Lessor shall be
entitled to attorneys' fees, costs and expenses incurred in the preparation and
service of notices of Default and consultations in connection therewith, whether
or not a legal action is subsequently commenced in connection with such Default
or resulting Breach.

32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents shall
have the right to enter the Premises at any time, in the case of an emergency,
and otherwise at reasonable times for the purpose of showing the same to
prospective purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises as Lessor may deem necessary.
All such activities shall be without abatement of rent or liability to Lessee.
Lessor may at any time place on the Premises any ordinary "For Sale" signs and
Lessor may during the last six (6) months of the term hereof place on the
Premises any ordinary "For Lease" signs. Lessee may at any time place on or
about the Premises any ordinary "For Sublease" sign.

                                      -29-

<PAGE>

33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction
upon the Premises without Lessor's prior written consent. Lessor shall not be
obligated to exercise any standard of reasonableness in determining whether to
permit an auction.

34. Signs. Except for ordinary "For Sublease" signs, Lessee shall not place any
sign upon the Premises without Lessor's prior written consent. All signs must
comply with all Applicable Requirements.

35. Termination; Merger. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenancies. Lessor's failure within ten (10) days following any such
event to elect to the contrary by written notice to the holder of any such
lesser interest, shall constitute Lessor's election to have such event
constitute the termination of such interest.

36. Consents. Except as otherwise provided herein, wherever in this Lease the
consent of a Party is required to an act by or for the other Party, such consent
shall not be unreasonably withheld or delayed. Lessor's actual reasonable costs
and expenses (including but not limited to architects', attorneys', engineers'
and other consultants' fees) incurred in the consideration of, or response to, a
request by Lessee for any Lessor consent, including but not limited to consents
to an assignment, a subletting or the presence or use of a Hazardous Substance,
shall be paid by Lessee upon receipt of an invoice and supporting documentation
therefor. Lessor's consent to any act, assignment or subletting shall not
constitute an acknowledgment that no Default or Breach by Lessee of this Lease
exists, nor shall such consent be deemed a waiver of any than existing Default
or Breach, except as may be otherwise specifically stated in writing by Lessor
at the time of such consent. The failure to specify herein any particular
condition to Lessor's consent shall not preclude the imposition by Lessor at the
time of consent of such further or other conditions as are then reasonable with
reference to the particular matter for which consent is being given. In the
event that either Party disagrees with any determination made by the other
hereunder and reasonably requests the reasons for such determination, the
determining party shall furnish its reasons in writing and in reasonable detail
within ten (10) business days following such request.

37. Guarantor.

     37.1 Execution. The Guarantors, if any, shall each execute a guaranty in
the form most recently published by the American Industrial Real Estate
Association, and each such Guarantor shall have the same obligations as Lessee
under this Lease.

     37.2 Default. It shall constitute a Default of the Lessee if any Guarantor
fails or refuses, upon request to provide: (a) evidence of the execution of the
guaranty, including the authority of the party signing on Guarantor's behalf to
obligate Guarantor, and in the case of a corporate Guarantor, a certified copy
of a resolution of its board of directors authorizing the making of such
guaranty, (b) current financial statements, (c) a Estoppel Certificate, or (d)
written confirmation that the guaranty is still in effect.

                                      -30-

<PAGE>

38. Quiet Possession. Subject to payment by Lessee of the Rent and performance
of all of the covenants, conditions and provisions on Lessee's part to be
observed and performed under this Lease, Lessee shall have quiet possession and
quiet enjoyment of the Premises during the term hereof.

39. Options.

     39.1 See Addendum Paragraph 63.

     39.2 Options Personal To Original Lessee. Each Option granted to Lessee in
this Lease is personal to the original Lessee, and cannot be assigned or
exercised by anyone other than said original Lessee and only while the original
Lessee is in full possession of the Premises and, if requested by Lessor, with
Lessee certifying that Lessee has no intention of thereafter assigning or
subletting.

     39.4 Effect of Default on Options.

     (a) Lessee shall have no right to exercise an Option: (i) during the period
commencing with the giving of any notice of Default and continuing until said
Default is cured; (ii) during the period of time any Rent is unpaid (without
regard to whether notice thereof is given Lessee); (iii) during the time Lessee
is in Breach of this Lease; or (iv) in the event that Lessee has been given
three (3) or more notices of separate Default, whether or not the Defaults are
cured, during the twelve (12) month period immediately preceding the exercise of
the Option.

     (b) The period of time within which an Option may be exercised shall not be
extended or enlarged by reason of Lessee's inability to exercise an Option
because of the provisions of Paragraph 39.4(a).

     (c) An Option shall terminate and be of no further force or effect,
notwithstanding Lessee's due and timely exercise of the Option, if, after such
exercise and prior to the commencement of the extended term, (i) Lessee fails to
pay Rent for a period of thirty (30) days after such Rent becomes due (without
any necessity of Lessor to give notice thereof), (ii) Lessor gives to Lessee
three (3) or more notices of separate Default during any twelve (12) month
period, whether or not the Defaults are cured, or (iii) if Lessee commits a
Breach of this Lease.

40. Multiple Buildings. If the Premises are a part of a group of buildings
controlled by Lessor, Lessee agrees that it will observe all reasonable rules
and regulations which Lessor may make from time to time for the management,
safety, and care of said properties, including the care and cleanliness at the
grounds and including the parking, loading and unloading of vehicles, and that
Lessee will pay its fair share of common expenses incurred in connection
therewith.

41. Security Measures. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.

                                      -31-

<PAGE>

42. Reservations. Lessor reserves to itself the right, from time to time, to
grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.

43. Performance Under Protest. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay.

44. Authority. If either Party hereto is a corporation, trust, limited liability
company, partnership, or similar entity, such party represents that each
individual executing this Lease on behalf of such entity represents and warrants
that he or she is duly authorized to execute and deliver this Lease on its be
behalf. Each party shall, within thirty (30) days after request, deliver to the
other party satisfactory evidence of such authority.

45. Conflict. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.

46. Offer. Preparation of this Lease by either Party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.

47. Amendments. This Lease may be modified only in writing, signed by the
Parties in interest at the time at the modification. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by a Lender in connection with the obtaining of normal financing or
refinancing of the Premises.

48. Multiple Parties. If more than one person or entity is named herein as
either Lessor or Lessee, such multiple Parties shall have joint and several
responsibility to comply with the terms of this Lease.

49. Mediation and Arbitration of Disputes. An Addendum requiring the Mediation
and/or the Arbitration of certain disputes between the Parties and/or Brokers
arising out at this Lease [x] is [ ] is not attached to this Lease. See Addendum
Paragraph 63.

                                      -32-

<PAGE>

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.

ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
---------
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES. THE PARTIES ARE URGED TO:

1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE
PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE
PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL
INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY
OF THE PREMISES FOR LESSEE'S INTENDED USE.

WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
-------
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES ARE LOCATED.

                                      -33-

<PAGE>

The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.

Executed at:                               Executed at:
            ----------------------------               -----------------------
on:                                        on:
    ------------------------------------      --------------------------------
By LESSOR:                                 By LESSEE:

GORDON FAMILY TRUST /s/ Robert Gordon      ACME MEDICAL INC., a Delaware
----------------------------------------   -----------------------------------
                                           corporation dba Altus Medical
----------------------------------------   -----------------------------------

By: ROBERT GORDON, Trustee                 By: /s/ Kevin Connors
   -------------------------------------       -------------------------------
Name Printed: Robert D. Gordon             Name Printed:  Kevin Connors
              --------------------------                 ---------------------
Title: President                           Title: CEO
       ---------------------------------         -----------------------------

By:                                        By:
   -------------------------------------      --------------------------------
Name Printed:                              Name Printed:
              --------------------------                ----------------------
Title:                                     Title:
       ---------------------------------         -----------------------------
Address:                                   Address:
         -------------------------------           ---------------------------

----------------------------------------   -----------------------------------
Telephone: (    )                          Telephone: (    )
                 -----------------------                    ------------------
Facsimile: (    )                          Facsimile: (    )
                 -----------------------                    ------------------
Federal ID No.                             Federal ID No.
               -------------------------                 ---------------------

NOTE: These forms are often modified to meet changing requirements of law and
      industry needs.  Always write or call to make sure you are utilizing the
      most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700 So.
      Flower Street, Suite 600, Los Angeles, California 90017 (213) 687-8777.
      Fax No. (213) 687-8616

                                      -34-

<PAGE>

      (C)Copyright 1997 - By American Industrial Real Estate
      Association. All rights reserved. No part of these works may be
      reproduced in any form without permission in writing.

                                                                 FORM STG-6-2/97

                                      -35-

<PAGE>

                   ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL
                           SINGLE-TENANT LEASE--GROSS

                               819-831 COWAN ROAD
                             BURLINGAME, CALIFORNIA

     Lessor and Lessee hereby agree that, notwithstanding anything contained in
the Standard Industrial/Commercial Single-Tenant Lease--Gross (the "Lease"), to
the contrary, the provisions set forth below shall be deemed part of the Lease,
and shall supersede, to the extent appropriate, any contrary provision in the
Lease. All references in the Lease and in this Addendum to the "Lease," shall be
construed to mean the Lease as amended and supplemented by this Addendum, and
all capitalized terms not otherwise defined in this Addendum shall have the
meanings ascribed to them in the Lease.

     50.  Monthly Base Rent.
          -----------------

          Year 1:           $15,027.00
          Year 2:           $15,478.00
          Year 3:           $15,942.00
          Year 4:           $16,420.00
          Year 5:           $16,913.00

     51.  Current Lease's Effect.  The current Standard Industrial/Commercial
          ----------------------
 Multi-Tenant Lease--Gross, dated June 28, 1999, or 821-829 Cowan Road (the
"Current Lease"), shall remain in effect through and including September 30,
2000, at which time the Current Lease shall superseded by the Lease, and the
Current Lease shall thenceforth be of no further effect.

     52.  Tenant Improvements.  Lessor, at Lessor's sole cost and expense, shall
          -------------------
provide the following tenant improvements to the Premises:

          (a) With respect to 819 Cowan Road, new paint and new carpet for the
     office area, including patching, base, repair of all broken and damaged
     outlet and network wall fixtures, and repair of all damaged or destroyed
     ceiling tiles.

          (b) With respect to 831 Cowan Road, new carpet and or new floor tiling
     (with PCT), installation of integrated air conditioning, and a $10,000.00
     allowance for moving walls.

     53.  Condition of Premises.  Notwithstanding Paragraph 2.2 of the Lease,
          ---------------------
Lessor warrants and represents that as of the Commencement Date: (a) the
Premises, the Building and the Industrial Center shall comply with all
applicable laws, rules, regulations, codes, ordinances, underwriters'
requirements, covenants, conditions and restrictions (collectively, "Laws"); (b)
the Premises shall be in good and clean operating condition and repair; (c) the
electrical, mechanical, heating, plumbing, sewer, elevator, and other systems
serving the Premises and the Building shall be in good operating condition and
repair, except for the integrated air conditioning for 831 Cowan

<PAGE>

Road, (see Paragraph 52(b); (d) the roof of the Building shall be in good
condition and water tight. Lessor further warrants and represents that the
Tenant Improvements shall be completed as soon as practicable after the full
execution and delivery of the Lease, in a good and workmanlike manner using new
materials of good quality. Lessee's acceptance of the Premises shall not be
deemed a waiver of Lessee's right to have patent defects in the Tenant
Improvements or the Premises repaired at Lessor's sole expense, provided that
Lessee shall have ten (10) business days after receipt of the Premises to
deliver a list to Lessor (and, with respect to the newly installed integrated
air conditioning, ten (10) business days after installation), which Lessor shall
remedy within a reasonable time at Lessor's sole cost and expense.

     54.  Hazardous Substances.
          --------------------

          (a) To the best knowledge of Lessor: a) no Hazardous Substances are
     present on the Industrial Center or the soil, surface water, or groundwater
     thereof, except that Lessor has no knowledge of the activities of Lessee
     with respect Hazardous Substance at 821-829 Cowan Road during Lessee's
     occupancy under the Current Lease (as defined in Paragraph 51 above); (b)
     no underground storage tanks or asbestos containing building materials are
     present on the Industrial Center; and (c) no action, proceeding, or claim
     is pending or threatened involving the Industrial Center concerning any
     Hazardous Substances or pursuant to any Applicable Law or Requirement.
     Under no circumstances shall Lessee be liable for or indemnify Lessor from,
     and Lessor shall indemnify, defend, and hold harmless Lessee, its agents,
     contractors, stockholders, directors, successors, representatives, and
     assigns from and against, all losses, costs, claims, liabilities and
     damages (including attorneys' and consultants' fees) of every type and
     nature, directly or indirectly arising out of or in connection with any
     Hazardous Substance present at any time on or about the Industrial Center,
     Lease, or the soil, air, improvements, groundwater or surface water
     thereof, or the violation of any Applicable Laws or Requirements, relating
     to any such Hazardous Substance, except to the extent that any of the
     foregoing actually results from the release or emission of Hazardous
     Substances on or about the Premises by Lessee, its agents, contractors,
     stockholders, directors, or employees in violation of any Applicable Law or
     Requirement, including, but not limited to the time of Lessee's occupancy
     under the Current Lease.

          (b) For the purposes of Paragraph 6.2 of the Lease only, the term
     "Applicable Requirements," as defined in Paragraph 2.3 of the Lease, is
     modified to the effect that reportable uses requiring consent (i) with
     respect to environmental conditions, apply to environmental conditions on,
     in, under, or about the Premises, including soil and groundwater
     conditions, only those created by Lessee; and (ii) with respect to the use,
     generation, manufacture, production, installation, maintenance, removal,
     transportation, storage, spill, or release of any Hazardous Substance,
     apply only those by Lessee.

     55.  Lessee's Compliance with Requirements. Lessee shall not be required to
          -------------------------------------
comply, cause the Premises to comply, or pay the cost of complying with any
Applicable Law or

                                      -2-

<PAGE>

Requirement properly capitalized under generally accepted accounting principles,
unless such compliance is necessitated solely as a result of Lessee's use of the
Premises.

     56. Lessor's Access to Premises. Lessor and its agents, except in the case
         ---------------------------
of an emergency, shall provide Lessee with at least twenty-four (24) hours'
notice prior to entering the Premises. Any entry by Lessor or Lessor's agents
shall comply with Lessee's reasonable security measures and shall not impair
Lessee's operations more than is reasonably necessary.

     57. Rules and Regulations. Lessee shall not be required to comply with any
         ---------------------
new rule or regulation which unreasonably interferes with Lessee's use of the
Premises or Lessee's parking rights and or which materially increases the
obligations or decreases the rights of Lessee under the Lease.

     58. Early Entry. Upon the full execution and delivery of the Lease, and at
         -----------
no additional cost to Lessee, Lessee shall be permitted immediate access to the
portion of the Premises not currently leased to Lessee under the Current Lease
for the purposes of planning, constructing, installing and outfitting the
Premises for Lessee's use.

     59. Signage. Lessee, at Lessee's sole cost and expense, shall have the
         -------
right to eyebrow signage on the Building and on a monument sign, as approved by
the City of Burlingame.

     60. Assignment and Subletting. As a condition of Lessor's consent to an
         -------------------------
assignment or sublease under the Lease, Lessee shall reimburse Lessor for its
actual attorneys' and accountants' fees in connection with such assignment or
subletting.

     61. Option to Renew. Provided Lessee is not in default of the terms and
         ---------------
conditions of the Lease at such time, Lessee shall be entitled to renew the
Lease for one (1) additional five (5)-year term. If Lessee desires to exercise
its option to renew, it must provide written notice to Lessor of its intention
to renew no earlier than one hundred and twenty (120) days, and no later than
thirty (30) days prior to the expiration of the term of the Lease. All of the
terms and conditions of the Lease shall apply during the extended term, except
that the monthly Base Rent for the first year of the renewal term shall be
adjusted to the then "Fair Market Rent;" provided, however, that in no event
shall the monthly Base Rent for the first year of the renewal term be less than
the monthly Base Rent for the calendar month preceding the expiration of the
Lease term plus three percent (3%).

     62. Parking. Lessee shall have access to the exclusive use of not less than
         -------
thirty-five (35) reserved parking spaces to be designated by Lessor.

     63. Mediation and Arbitration.
         -------------------------

          (a) Mediation of Disputes. Notwithstanding anything to the contrary
              ---------------------
     contained in this Lease, with the exception of unlawful detainer
     proceedings for the non-payment of rent, which shall not be subject to
     prior mediation nor arbitration, with respect to any claim or controversy
     arising out of or relating to the Lease, a breach of it, or the
     transactions contemplated under the Lease, the parties shall first attempt
     in good faith to settle any such

                                       -3-

<PAGE>

dispute by mediation before proceeding to arbitration. A party that refuses to
mediate in good faith shall not be entitled to recover any attorneys' fees it
may incur in litigation or arbitration.

          (b) Arbitration of Disputes. Except as otherwise provided in this
              -----------------------
     Paragraph 63, any claim or controversy arising out of or relating to this
     Agreement, a breach of it, or the transactions contemplated under it shall
     be settled by arbitration in accordance with the Rules of the American
     Arbitration Association in the County of Santa Mateo, State of California,
     and the judgment upon the award rendered by the Arbitrator(s) may be
     entered in any court having jurisdiction. In addition to a monetary award,
     the Arbitrator(s)' shall have the power to order any other applicable
     remedy. The parties shall have the right to discovery as provided by
     California Code of Civil Procedure Section 1283.05. The prevailing party in
     the arbitration may be awarded its reasonable attorneys' fees and costs in
     the discretion of the Arbitrator(s). The parties agree to expedite
     arbitration and the American Arbitration Association is to be instructed
     that any arbitration proceeding conducted pursuant to the Agreement shall
     be expedited.

     NOTICE: BY INITIALING THE SPACE BELOW, YOU ARE AGREEING TO HAVE DISPUTES
     ARISING OUT OF OR RELATING TO THIS AGREEMENT DECIDED BY NEUTRAL ARBITRATION
     AS PROVIDED BY CALIFORNIA LAW, AND YOU ARE SURRENDERING YOUR RIGHT TO HAVE
     ANY SUCH DISPUTE LITIGATED IN A COURT OF LAW, INCLUDING BY JURY TRIAL. YOU
     ARE ALSO SURRENDERING YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, EXCEPT
     AS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THIS ARBITRATION PROVISION. IF
     YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU
     MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF
     CIVIL PROCEDURE. AGREEING TO THIS ARBITRATION PROVISION IS VOLUNTARY.

     THE UNDERSIGNED HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT
     TO NEUTRAL ARBITRATION DISPUTES ARISING OUT OF OR RELATED TO THIS
     AGREEMENT.

     LESSOR: /s/ Robert Gordon             LESSEE:  /s/ Kevin Connors
            --------------------                    --------------------

                                       -4-<PAGE>

                                                                    Exhibit 10.8
                        ALTUS MEDICAL, INC. and Continuum

                             Distribution Agreement

         This Distribution Agreement (the "Agreement") is effective as of
September 1, 2001 (the "Effective Date") by and between HOYA PHOTONICS, INC., a
California corporation doing business as CONTINUUM, CONTINUUM ELECTRO-OPTICS,
INC. and as CONTINUUM BIOMEDICAL, having its principal place of business located
at 3150 Central Expressway, Santa Clara, CA 95051 ("CONTINUUM") and Altus
Medical Inc., a Delaware corporation having its principal place of business at
821 Cowan Road, Burlingame, CA 94010 ("ALTUS").

                                    RECITALS

         WHEREAS, ALTUS desires to serve as a distributor for and on behalf of
CONTINUUM and CONTINUUM's Q-switched Medical Products, in the territories and
for the accounts or types of accounts designated below;

         WHEREAS, CONTINUUM wishes to appoint ALTUS as CONTINUUM's brand name
distributor for such purposes.

         NOW, THEREFORE, the parties hereby agree as follows:

                                    AGREEMENT

         1.  Appointment. Subject to the terms and conditions of the Agreement
and except as otherwise provided herein, CONTINUUM hereby appoints ALTUS as
CONTINUUM's distributor in the defined territories of the United States
exclusively, Puerto Rico exclusively and Canada co-exclusively (the other
authorized distributors in Canada are set forth in Section 3 ("Co-Distributors
in Canada") of Annex I ("Products and Territory")) (collectively the
"Territory"), for the Medlite and MultiLight branded products listed in Section
1 (the "Products") of Annex I ("Products"), for the limited purpose of selling
Products to customers within the Territory who have certified to ALTUS in
writing that they are adequately licensed by the applicable state or federal
medical licensing authority to buy such Products and who buy the Products for
personal or ordinary business use and not for further distribution or resale
("End Users") and providing support to such End Users in accordance with this
Agreement, and for the limited purpose of selling Products to "ALTUS
Distributors" (as defined in Section 3.2 ("No Authority to Bind") below) in
compliance with the terms and conditions of this Agreement. ALTUS hereby accepts
such appointment and agrees to sell and support the Products within the
Territory in accordance with the terms and conditions set forth herein.
Notwithstanding the forgoing, CONTINUUM reserves the non-exclusive right to sell
the Products to the house accounts in existence prior to the Effective Date,
which house accounts are listed in Section 2 ("Continuum House Accounts") of
Annex I ("Products"). CONTINUUM additionally reserves the non-exclusive right to
negotiate with and sell the Products directly and indirectly to federal, state
and local government agencies in the Territory. CONTINUUM further reserves the
right to sell the Medlite II branded product in the Territory for a period of
six (6) months following the Effective Date and Medlite IV branded Products in
the Territory for a period of

* Indicates that information has been omitted pursuant to a request for
  confidential information and filed separately with the United States
  Securities and Exchange Commission.

                                        1

<PAGE>

three (3) months following receipt of initial FDA clearance on the Medlite C6
Product. Following such periods, should CONTINUUM desire that CONTINUUM's
remaining inventory of Medlite II and/or Medlite IV Products be sold in the
Territory, CONTINUUM will allow ALTUS to sell such products, and ALTUS agrees to
use its best efforts to distribute the balance of the Medlite II and Medlite IV
product line within the Territory at a negotiated transfer price to be mutually
agreed upon at a later date.

         2.  Good Faith and Fair Dealing. In carrying out each of their
respective obligations under the terms of this Agreement the parties will act in
accordance with the principles of good faith and fair dealing. The provisions of
this Agreement, as well as any statements made by the parties in connection with
this relationship, shall be interpreted in good faith.

         3.  ALTUS Functions.

             3.1  Marketing. ALTUS agrees to use its best efforts to promote and
support the Products within the markets in the Territory in accordance with
CONTINUUM's reasonable instructions and shall protect CONTINUUM's interests with
the diligence of a responsible businessperson. ALTUS will use its best efforts
to promote and market the Products in the Territory and further agrees that its
marketing and advertising efforts will be of the same quality as ALTUS'
marketing and advertising for ALTUS products, in good taste, and will preserve
the professional image and reputation of CONTINUUM and the Products. ALTUS
agrees not to remove any of the CONTINUUM trade names, trademarks, copyright
notices or other legends from the Products. CONTINUUM agrees to provide to
ALTUS, as requested by ALTUS, a reasonable amount of the promotional material
that is in existence on the Effective Date, for use by ALTUS in ALTUS' efforts
to market the Products. In the event an ALTUS marketing project is determined by
the parties to be mutually beneficial to both ALTUS and CONTINUUM, both parties
will define the scope of the project as well as the associated budget
requirements ("Joint Marketing Project"). Upon written consent by both parties,
all authorized costs associated with the production of the Joint Marketing
Project will be divided equally between both parties.

             3.2  No Authority to Bind. ALTUS shall have no authority to execute
any agreements or conclude or assume any contractually binding commitments on
behalf of, or in any way to bind, CONTINUUM with third parties. ALTUS' authority
shall only be to market and solicit orders from End Users, sell Products to End
Users, collect payment from End Users, provide installation and clinical
instruction for the Products and provide warranty support as directed by
CONTINUUM in accordance with Section 3.6 ("Authorized Warranty Center") of this
Agreement. ALTUS is authorized to offer the Medlite C products through ALTUS'
distributors within the Territories ("ALTUS Distributors"), provided that, prior
to receipt, promotion or sale of any Products, such ALTUS Distributors have
executed an agreement with ALTUS ("Distributor Agreement") which Distributor
Agreement contains the minimum terms set forth on Annex VII ("ALTUS Distributor
Minimum Terms"). In addition, all pricing and commissions to ALTUS Distributors
are the sole responsibility of ALTUS. Finally, ALTUS hereby does and will
designate CONTINUUM as a third party beneficiary of such Distributor Agreements
and hereby agrees to indemnify, defend and hold CONTINUUM harmless from any
third party claim arising out of an ALTUS Distributor's promotion, marketing,
sale or support of

                                       2

<PAGE>

any Product which is based on or is the result of a breach by the ALTUS
Distributor of the Distribution Agreement or the negligence of the ALTUS
Distributor.

             3.3  FDA Compliance. When negotiating with any third parties, ALTUS
shall offer the Products strictly in accordance with the United States Food and
Drug Administration ("FDA") cleared applications, capabilities and indications
for use for the Products. In order to assist ALTUS with this requirement,
CONTINUUM agrees to promptly provide ALTUS with copies of any notices received
by CONTINUUM from the FDA which relate to the Products.

             3.4  Sales and Support Organization. ALTUS shall provide an
adequate organization for sales and support, with all necessary means and
personnel, in order to ensure the fulfillment of ALTUS' obligations throughout
the Territory under this Agreement. ALTUS shall maintain an office in the
United States and shall be solely responsible for the acts and expenses of its
employees and ALTUS Distributors.

             3.5  Distributor Prohibitions. ALTUS agrees not to distribute the
Products (i) by mail order to any party that is not an End User and who has not
signed an agreement with ALTUS for the purchase of Products in compliance with
the terms of this Agreement prior to shipment of the Product to such End User,
(ii) by rental (iii) with knowledge or reason to know that the Products will be
transported outside the Territory. ALTUS shall not (i) use the Products to
provide any services, (ii) translate the user manuals (in printed or media form
or otherwise), or (iii) do any other act with respect to the Products not
specifically authorized by this Agreement.

             3.6  Authorized Warranty Center.

                  (a) ALTUS Obligations. ALTUS shall function as a CONTINUUM
        authorized warranty center and shall be responsible for interfacing with
        the End User for any Product warranty claims under the warranty provided
        by CONTINUUM to the End User ("End User Warranty"). In the event that an
        End User contacts ALTUS regarding a claim under a current End User
        Warranty, ALTUS will notify CONTINUUM that ALTUS has received a warranty
        claim, which notice will be via facsimile transmission sent no later
        than one (1) business day from the End User's notice to ALTUS, which
        facsimile is confirmed received by CONTINUUM. Such notice is to contain
        such information as CONTINUUM reasonably requests, including without
        limitation the following minimum information: the End User name, End
        User contact information, related Product ID number and any available
        error codes on the Product that the End User is able to relay to ALTUS
        following ALTUS' request for such information.

                  (b) CONTINUUM Obligations. CONTINUUM agrees to use best
        efforts to maintain service parts inventory for the Products for the
        term of the Agreement. CONTINUUM further agrees to use best efforts to
        contact any End User making a claim under a current End User Warranty
        within one (1) business day of CONTINUUM's receipt of notice from ALTUS
        of such End User's reported End User Warranty claim. In the event of a
        claim under a valid End User Warranty which requires, in CONTINUUM's
        reasonable discretion, CONTINUUM to service the End User's Product at
        the End User site ("Field Incident"), CONTINUUM agrees to use best
        efforts to maintain service response to such Field Incidents within two
        (2) business days of ALTUS' report of the

                                       3

<PAGE>

        incident to CONTINUUM. If an End User has a persistent product
        performance problem or extended down time which problems are covered by
        a valid End User Warranty, CONTINUUM may agree, based on the
        circumstances, to provide a unit on loan at no charge to the customer or
        ALTUS until product performance can be restored. In the event CONTINUUM
        cannot provide any service to an End User for a valid End User Warranty
        claim within two (2) business days of CONTINUUM's receipt of notice from
        ALTUS about the claim in compliance with Section 3.0(a) ("ALTUS
        Obligations") above, and such failure is not the result of End User
        withholding reasonable cooperation from CONTINUUM in the provision of
        the service, ALTUS reserves the right to dispatch a qualified ALTUS
        engineer or qualified 3rd party service engineer to the site; provided,
        however, that CONTINUUM is notified in advance of any such event as well
        as estimated associated cost of dispatching an ALTUS or qualified 3rd
        party service engineer and CONTINUUM consents to such dispatch, which
        consent will not be unreasonably withheld, conditioned or delayed. If
        the claim is under a valid CONTINUUM End User Warranty, or, if not under
        such a warranty, has been deemed to be covered by CONTINUUM on the basis
        that ALTUS received written confirmation from CONTINUUM that the claim
        would be covered by such a warranty, CONTINUUM will absorb all approved,
        reasonable and customary expenses and costs incurred from the
        corresponding Product repair.

             3.7  In Service. ALTUS will perform the End User in-service for any
newly installed Product(s) consistent with the agreed upon order processing
procedure and CONTINUUM standards, including, at a minimum, visiting the End
User site and training the End User on the use of the Product(s), operator
related troubleshooting and responding to End User questions related to the
Product(s).

         4.  Undertaking Not to Compete. Without the prior written authorization
of CONTINUUM, ALTUS shall not represent, manufacture or distribute any [*]
during the term of this Agreement. If at any time ALTUS wishes to represent,
manufacture or distribute any product(s) that may directly compete with the
Medlite C3 and Medlite C6 series based on current FDA cleared applications,
ALTUS must provide CONTINUUM with a written notification of ALTUS' intent to do
so no later than ninety (90) days before commencement of distribution of such
new product(s). After such notification, if CONTINUUM determines in its
reasonable discretion that such new product(s) will adversely affect or impact
the sales of the Medlite C3 and/or the Medlite C6 product line, CONTINUUM may so
notify ALTUS in writing. In the case where ALTUS has received written notice
from CONTINUUM, ALTUS may choose to distribute such competing products and
CONTINUUM, may elect, at its discretion, by means of written notice effective as
of the date received by ALTUS to make the appointment in Section 1
("Appointment") non-exclusive or to terminate this Agreement as of the effective
date of CONTINUUM's notice. Notwithstanding the foregoing definition of
competing products, ALTUS shall be permitted to manufacture, market and
distribute the ALTUS CoolGlide or CoolGlide Excel for any FDA-cleared
application; provided, however, that ALTUS agrees to provide CONTINUUM with
written notification of any additional FDA clearances received after the
Effective Date for the CoolGlide or CoolGlide Excel, which clearances will be
subject to CONTINUUM's review procedures and remedies for

* Indicates that information has been omitted pursuant to a request for
  confidential information and filed separately with the United States
  Securities and Exchange Commission.

                                       4

<PAGE>

competition described above in this Section 4 ("Undertaking Not to Compete").
Also, ALTUS may represent, distribute or manufacture any products that are not
competitive with the Products, provided that ALTUS first informs CONTINUUM in
advance of such activity and CONTINUUM agrees in writing that such Products are
not competitive. ALTUS declares that it presently represents, distributes and/or
manufactures, directly or indirectly, the products listed on Annex III
("Products and Principals Represented by ALTUS") as of the Effective Date. If
ALTUS makes any changes to ALTUS' representation during the term of this
Agreement, including any additions to or deletions from the products or entities
represented, ALTUS shall notify CONTINUUM of those changes in writing within
thirty (30) days of any such change. Written notification of additions to the
list shall identify the entities being added by name (including itself) and
shall describe each of the products of that entity to be so represented.

         5.  Purchase Requirements, Sales Targets and Forecasts.

             5.1 Minimum Purchase Requirement. Upon the initial FDA clearance of
the Medlite C6 Product, ALTUS will issue a binding purchase order to CONTINUUM
for a minimum number of Products as set forth under Annex V ("Minimum Purchase
Requirement"). The Products ordered through such binding purchase order will
ship during the second three month period (Q2), third three month period (Q3)
and fourth three month period (Q4) of the one (1) year period following the date
of the initial FDA clearance of the Medlite C6 Product (the "Forecast Year") as
set forth under Annex V ("Minimum Purchase Requirement"). ALTUS will make its
best effort to determine the exact system mix at the time the first rolling
forecast is submitted by ALTUS pursuant to Section 5.4 ("Forecasts"). ALTUS will
not be penalized for adjustments in the mix during the "Planning Zone" in
compliance with Section 5.4 ("Forecasts"). The first [*] of the Forecast Year,
however, will be considered a [*] period for ALTUS. During the [*] period, it is
expected that [*] units will be purchased or shipped. If ALTUS is unable to
purchase the number of units required under the Minimum Purchase Requirement as
a result of the failure of fifty one percent (51%) of the Products shipped to
ALTUS to substantially conform to their specifications during the first thirty
(30) days following shipment to ALTUS, ALTUS shall give notice to CONTINUUM and
allow CONTINUUM thirty (30) days to remedy such claimed deficiencies. In the
event such claimed deficiencies cannot be cured within thirty (30) days, the
remaining balance of the purchase order for the Minimum Purchase Requirement
shall be postponed by the amount of additional time required by CONTINUUM to
cure the deficiency, or, if CONTINUUM elects in its sole discretion, the
remaining balance of the purchase order will be cancelled without penalty or
liability.

             5.2 CONTINUUM mayrequest an increase of such Minimum Purchase
Requirement at the end of each contract year. In the event that CONTINUUM makes
a request for an increase, which request is not agreed upon by ALTUS within
thirty (30) days of the start of the new contract year, then both parties may
negotiate a mutually acceptable Minimum Purchase Requirement. If both parties
can not arrive at an mutually acceptable Minimum Purchase Requirement then
either party may elect to terminate the Agreement effective the first day of the
fourth (4th) month of the new contact year.

             5.3  Sales Target. The parties will meet and agree upon a minimum
annual sales target at least thirty days prior to commencement of each contract
year. ALTUS shall use

* Indicates that information has been omitted pursuant to a request for
  confidential information and filed separately with the United States
  Securities and Exchange Commission.

                                       5

<PAGE>

its best efforts to attain the forecasted targets agreed upon. Failure by
ALTUS to meet the forecasted sales targets shall not be deemed to be a breach of
a contractual obligation on the part of ALTUS, but if ALTUS fails to achieve the
forecasted annual sales targets for a given twelve month period, such failure
may allow CONTINUUM to elect, in CONTINUUM's sole discretion, to either remove
the exclusivity conditions in Section 1 ("Appointment") or to terminate this
Agreement

             5.4  Forecasts. At least thirty (30) days following the date that
initial FDA clearance is provided on the Medlite C6 Product, ALTUS will provide
CONTINUUM with a written [*] month rolling forecast for ALTUS' purchase
of Products which forecast, at a minimum, will, if followed, result in the
purchase of the Minimum Purchase Requirement for each contract [*]. The first
[*] months of each forecast ("Firm Period") shall at all times be binding
and ALTUS agrees to place firm purchase orders in accordance with such Firm
Period forecast at least sixty (60) days prior to the scheduled delivery dates
described in such purchase order. ALTUS may, at its discretion, provide
tentative delivery dates and delivery destinations in such purchase orders,
which tentative delivery dates and tentative delivery destinations will be
confirmed or revised by the mutual agreement of the parties within forty five
(45) days of such purchase order. If delivery dates and times are not confirmed
or revised within such period, then CONTINUUM shall ship the ordered Products to
ALTUS' principal place of business on the date sixty (60) days following the
date the purchase order is placed. Notwithstanding the foregoing, CONTINUUM will
not ship the ordered Products if CONTINUUM receives written notice (the
"Warehouse Notice") from ALTUS before the date sixty (60) days following the
date the purchase order is placed (i) requesting that CONTINUUM hold the ordered
Products at CONTINUUM's facilities until such time as the tentative delivery
dates and tentative delivery destinations are confirmed or revised by the mutual
agreement of the parties; (ii) stating that ALTUS accepts the ordered Products
as of the date the Warehouse Notice is received by CONTINUUM; and (iii)
confirming that all risk of loss, title and insurance obligations transfer to
ALTUS as of the date CONTINUUM receives the Warehouse Notice. The parties
acknowledge and agree that upon CONTINUUM's receipt of the Warehouse Notice, (i)
ALTUS will be deemed to have accepted the ordered Products; (ii) all risk of
loss, title and insurance obligations will be deemed to transfer to ALTUS; and
(iii) in no event will CONTINUUM be liable to ALTUS or any third party for any
loss or damage to the ordered Products or any claims relating to losses or
damages caused by the Products or loss of use of the Products. ALTUS will update
the forecast by the first day of each month by providing CONTINUUM with a
revised [*] month rolling forecast. As each "[*] month" in the rolling
forecast moves into the Firm Period, the number of Products forecasted shall not
change (increase or decrease) by more than fifty percent (50%) from the quantity
forecasted when such month became the [*] month in the forecast.
Accordingly, month [*] and month [*] will be referred to as the
"Semi-firm Zone." Months [*] through [*] will be referred to as the
"Planning Zone" and will be nonbinding estimates only, although the quantities
described shall be provided in good faith and consistent with ALTUS' current
knowledge of its requirements as updated internally by ALTUS. Notwithstanding
the nonbinding nature of the Planning Zone forecast, CONTINUUM may apprise ALTUS
in writing as to certain strategic advance purchases of components or materials
which may be advisable to ensure a timely delivery of Products or to obtain more
favorable economic terms. Based on ALTUS' prior written approval, CONTINUUM may
make such additional purchases and ALTUS shall be obligated to reimburse
CONTINUUM for such costs if such components or

* Indicates that information has been omitted pursuant to a request for
  confidential information and filed separately with the United States
  Securities and Exchange Commission.

                                       6

<PAGE>

materials are not subsequently used in the Products, provided that such
components or materials are not usable by CONTINUUM in other products or are not
sold to other CONTINUUM End Users. Each time the forecast is republished, all of
the Product forecast quantities included in the Planning Zone, may be increased
or decreased by ALTUS as such quantities roll forward within the Planning Zone
based on ALTUS' updated knowledge of ALTUS' requirements.

         6.  Order and Shipment Terms.

             6.1  Order Procedure. The terms and conditions of this Agreement
shall apply to all orders for the Products and shall supersede any conflicting,
different or additional terms on purchase orders submitted to CONTINUUM by
ALTUS. All purchase orders placed by ALTUS shall reference this Agreement and
shall be deemed to incorporate and be subject to the terms and conditions set
forth in this Agreement, and neither party shall seek to introduce any terms or
conditions in purchase or acknowledgment documents which could be interpreted to
add to, alter or conflict with the terms and conditions of this Agreement.
Purchase orders submitted to CONTINUUM will conform to the Firm Period forecast,
will be provided sixty (60) days or more before the requested delivery date and
are solely for the purpose of requesting delivery dates, quantities and
specifying destination. All orders placed with CONTINUUM shall be subject to
acceptance by CONTINUUM at CONTINUUM's principal place of business. Unless
CONTINUUM rejects a purchase order by written notice to ALTUS within two (2)
working days after receipt, such purchase order will be deemed accepted.

             6.2  Shipment; Acceptance. CONTINUUM will ship all ordered Products
F.O.B. CONTINUUM such that risk of loss, title and insurance obligations
transfer to ALTUS, and such Products are deemed accepted by ALTUS, when
CONTINUUM or its agent makes the Products available for shipment at CONTINUUM's
facilities. CONTINUUM will use commercially reasonable efforts to meet shipping
schedules on accepted purchase orders. In no event shall CONTINUUM be liable to
ALTUS for any loss or financial compensation arising from late delivery or
errors in filling any order, unless such compensation is negotiated and agreed
upon on a case-by-case basis in a prior written agreement signed by the parties.
If orders for Products exceed CONTINUUM'S inventory, CONTINUUM shall allocate
available inventory on a basis CONTNUUM, in its sole discretion deems equitable.

             6.3  Packaging. CONTINUUM will provide commercial packing adequate
under normal conditions to protect the Products in shipment and to identify the
contents. ALTUS agrees that any Products sold to End Users shall be provided in
the packaging and with each of the contents, including without limitation any
CONTINUUM warranty, initially provided by CONTINUUM to ALTUS. Should ALTUS
request any special packaging, it shall be provided by CONTINUUM at ALTUS'
expense.

             6.4  Product Discontinuance. Nothing herein is intended to limit
CONTINUUM's right to discontinue or modify any Products. Should CONTINUUM elect
to discontinue production and/or sale of any Product which is the subject of
this Agreement prior to CONTINUUM's delivery of units of the Product ordered by
ALTUS, CONTINUUM may elect in CONTINUUM's sole discretion to cancel ALTUS' order
of such Product as to the unshipped units by providing written notice within
ninety (90) days of discontinuance to ALTUS, at which point any order as to
unshipped units of such Product placed by ALTUS under this Agreement

                                       7

<PAGE>

will be cancelled without liability to CONTINUUM; provided, however, that
any amounts paid by ALTUS to CONTINUUM towards the purchase of such unshipped
units of such Product will be refunded by CONTINUUM within thirty (30) days of
the date of notice of discontinuance.

             6.5  Installation. All installations of Products must be performed
by CONTINUUM or a CONTINUUM certified installer. ALTUS will request for
installation assistance from CONTINUUM by sending a written notice to CONTINUUM
with the corresponding Product order which notice sets forth the Products,
installation location and requested installation period. Installation services
will be performed by CONTINUUM for ALTUS in a professional, workmanlike manner
for the installation/warranty fees set forth on Annex IV ("Pricing to ALTUS")
within five (5) working days of the requested date. In the event such services
are not performed in a professional, workmanlike manner, ALTUS sole and
exclusive remedy will be to notify CONTINUUM in writing and to describe the
portion of the services which did not meet the required standard and for
CONTINUUM to subsequently reperform the installation services at no additional
cost to ALTUS.

         7.  Records and Reports.

             7.1  Records. ALTUS shall maintain complete and accurate books and
records (including, but not limited to, records containing the information
required to be supplied in the reports provided by ALTUS to CONTINUUM in
accordance with Paragraph 7.2 ("Reports")). ALTUS shall retain originals or
copies of all relevant correspondence, quotations, orders and other documents
relating to ALTUS' obligations (and the performance thereof) under this
Agreement and ALTUS Distributors' obligations under their related agreement for
a minimum of one (1) year following the termination of this Agreement. CONTINUUM
and its agents shall have the right, no more than once every quarter, during the
term of this Agreement and for a period of one (1) year following termination of
this Agreement, to examine such books, records, correspondence, quotations,
orders and other documents as CONTINUUM may deem necessary or appropriate upon
reasonable advance notice to ALTUS. During any such examination, CONTINUUM may
make copies of the examined materials for its records, provided that such copies
are treated as the "Confidential Information" of ALTUS pursuant to the
provisions of Section 11 ("Protection of Confidential Information" below.)

             7.2  Reports. ALTUS shall exercise due diligence to keep CONTINUUM
informed about ALTUS activities, market conditions and the state of competition
within the markets in the Territory. ALTUS shall promptly answer any reasonable
request for information made by CONTINUUM. In addition ALTUS shall comply with
the Code of Federal Regulations Title 21, CFR Part 803, Medical Device
Reporting. Each party agrees to comply with all relevant provisions of the
United States Food, Drug and Cosmetic Act (the "Act").

         8.  Continuum Intellectual Property. For purposes of this Agreement,
the term "CONTINUUM Intellectual Property" means any and all rights, including,
but not limited to, all copyrights (whether patents are pending or issued),
rights to inventions and discoveries (whether or not patentable) and trademark,
trade name, service mark, service name and any trade secrets the ownership of or
right of use to which belongs to CONTINUUM, and which are utilized by CONTINUUM
in the Products or production, manufacture, assembly and/or repair of the
Products. ALTUS hereby acknowledges that nothing contained in this Agreement is
or shall be

                                       8

<PAGE>

construed to confer upon ALTUS any license or ownership rights to utilize the
CONTINUUM Intellectual Property; and ALTUS agrees that ALTUS shall not reverse
engineer the Products at any time, or design a Q-switched product that has
significant similar technology attributes during the term of the Agreement, nor
make any use whatsoever of the CONTINUUM Intellectual Property or CONTINUUM
Confidential Information at any time during or after the term of the Agreement.
ALTUS shall also protect all CONTINUUM Intellectual Property with the same
degree of care as ALTUS regularly utilizes with respect to the protection by
ALTUS of its own confidential proprietary intellectual property, but in no event
less than reasonable care.

         9.  Pricing and Payment Terms.

             9.1  Pricing. Prices for the Products are set forth in Annex IV
("Pricing to ALTUS"). Pricing and volume discounts for Products purchased under
this Agreement will be adjusted in accordance with increased sales volume as set
forth in Annex IV ("Pricing to ALTUS") of this Agreement. Prices will be
reviewed by the parties every twelve (12) months for the sole purpose of
determining the extent to which, if any, of an increase or decrease in the
prices charged to ALTUS is required in order to reflect any increases or
decreases in production costs incurred by CONTINUUM as determined by CONTINUUM.
In the event the parties cannot agree to renew the existing prices, or to
approve new prices, by the end of the month following the twelfth month, then
ALTUS will place orders pursuant to the existing prices for the second, third
and fourth month of the new contract year which comply with the "Firm Period"
forecast in effect for the twelve (12) months following such thirteenth month
and thereafter the Agreement will automatically terminate as of the last day of
the fourth month of such current contract year unless the parties otherwise
agree in writing. In the event the parties do agree on new pricing, such new
pricing will apply to any purchase orders issued by ALTUS after the date of the
agreement on pricing.

             9.2  Payment. All payments are due thirty (30) days from (i)
shipment to ALTUS or to such location in the Territory as ALTUS directs; or (ii)
receipt by CONTINUUM of a Warehouse Notice pursuant to Section 5.4
("Forecasts"). Payment of the relevant purchase price set forth in Annex IV
("Pricing to ALTUS") will be sent pursuant to Annex II ("Lock Box Payments").

             9.3  Taxes and Duties. Unless ALTUS has provided CONTINUUM with an
exemption resale certificate in the appropriate form for the jurisdiction of
ALTUS' place of business and any jurisdiction to which Products are to be
directly shipped hereunder or unless such sale is otherwise exempt from such
taxes, in addition to any payments due under this Agreement, ALTUS shall pay any
taxes, duties or other amounts, however designated, which are levied or based
upon such payments, or upon this Agreement, provided, however, that ALTUS shall
not be liable for taxes based on CONTINUUM's net income. ALTUS agrees to
indemnify and hold harmless CONTINUUM for any liability for such tax as well as
the collection or withholding thereof, including penalties and interest thereon.
When applicable, such transportation, insurance and taxes shall appear as
separate items on CONTINUUM's invoice.

             9.4  Credit. CONTINUUM reserves the right to establish and/or
change credit and payment terms extended to ALTUS when, in CONTINUUM's sole
opinion, ALTUS' financial condition or previous payment record warrants such
action. Further, should ALTUS'

                                       9

<PAGE>

account be delinquent on a repeated or continuing basis CONTINUUM shall not
be obligated to ship Products or otherwise continue performance under this
Agreement with ALTUS until such time as ALTUS' account is brought current.

             9.5  Security Interest. CONTINUUM retains a security interest in
the Products delivered to ALTUS, and in their accessories, replacements,
accessions, proceeds and products, including accounts receivable (collectively,
the "Collateral") to secure payment of all amounts due under this Agreement. If
ALTUS fails to pay any amount when due, CONTINUUM shall have the rights and
remedies of a secured creditor under the California Commercial Code and other
applicable laws including but not limited to the right to retain or repossess
and remove all or any part of the Collateral from ALTUS, but not from ALTUS'
customers. CONTINUUM's failure to request any such document shall not be deemed
to be a waiver of any of the rights granted to CONTINUUM herein. Any
repossession or removal shall be without prejudice to any other remedy of
CONTINUUM hereunder, at law or in equity. ALTUS agrees, from time to time, to
take any act and execute and deliver any document, including but not limited to
such UCC-1 financing statements and other instruments as CONTINUUM may
reasonably deem necessary to transfer, create, perfect, preserve, protect and
enforce this security interest.

         10. Continuum's Trademarks.

             10.1  Limited Right to Use Trademark. CONTINUUM hereby grants to
ALTUS a non-exclusive, non-transferable limited right to use the CONTINUUM
trademarks, as designated in Annex VI ("CONTINUUM Trademarks") or as otherwise
designated by CONTINUUM from time to time, in ALTUS' Product marketing,
advertising and promotional materials. ALTUS agrees that prior to ALTUS use, or
any ALTUS Distributor's use, of any literature, promotion or advertising
concerning the Products literature, promotion and advertising for the Products,
ALTUS will provide CONTINUUM with copies of such materials and ALTUS will obtain
"CONTINUUM's prior written consent for the use of such materials, which consent
will not be unreasonably withheld, conditioned or delayed. ALTUS may permit
ALTUS Distributors to utilize CONTINUUM trademarks with respect to promotional
and advertising activities for the Products subject to ALTUS Distributor's
agreement to use the trademarks in compliance with CONTINUUM's current Trademark
Usage Guidelines, which guidelines, once received by ALTUS, ALTUS shall provide
to each ALTUS Distributor.

             10.2  ALTUS' Use. ALTUS' use of CONTINUUM's trademarks shall be in
accordance with applicable trademark law and CONTINUUM's policies regarding
advertising and trademark usage as established and amended from time to time, a
current copy of which is attached hereto as Annex VII ("CONTINUUM Trademark
Usage Guidelines"). ALTUS agrees not to attach additional trademarks, logos or
trade designations to the Products. ALTUS further agrees not to affix any
CONTINUUM trademark to products other than the genuine Products. ALTUS agrees
not to use any other trademark or service mark in proximity to any of the
CONTINUUM trademarks or combine the marks without the prior written approval of
CONTINUUM.

             10.3  Trademark Obligations. ALTUS agrees that whenever CONTINUUM's
trademarks are used in advertising or in any other manner, they shall clearly
indicate CONTINUUM as the trademark owner. ALTUS shall not do or cause to be
done any act or

                                       10

<PAGE>

anything contesting or in any way impairing or reducing CONTINUUM's right,
title, and interest in the trademarks. ALTUS agrees not to register any
CONTINUUM trademarks or confusingly similar trademarks. ALTUS understands and
agrees that use of the CONTINUUM trademarks in connection with the Products
shall not create any right, title, or interest, in or to the use of the
CONTINUUM trademarks and that all such uses and goodwill associated with the
CONTINUUM trademarks will inure to the benefit of CONTINUUM. ALTUS shall take
all necessary steps to ensure its employees comply with all the terms and
conditions applicable to the CONTINUUM trademarks described herein. ALTUS agrees
that the nature and quality of any products or services ALTUS supplies in
connection with the CONTINUUM trademarks shall conform to the standards set by
CONTINUUM. ALTUS agrees to cooperate with CONTINUUM in facilitating CONTINUUM's
monitoring and control of the nature and quality of such products and services,
and to supply CONTINUUM with specimens of use of the CONTINUUM trademarks upon
request. Should CONTINUUM notify ALTUS in writing that the use of the CONTINUUM
trademarks by ALTUS or an ALTUS Distributor does not conform to the standards
set by CONTINUUM, ALTUS shall have forty-five (45) days to bring such use into
conformance and to provide CONTINUUM with specimens of such conforming use.

             10.4  Infringement Proceedings. ALTUS agrees to use reasonable
efforts to promptly notify CONTINUUM of any unauthorized use of the CONTINUUM
trademarks by others as it comes to ALTUS' attention. CONTINUUM shall have the
sole right and discretion to bring legal or administrative proceedings to
enforce CONTINUUM's trademark rights including actions for trademark
infringement or unfair competition proceedings involving the CONTINUUM
trademarks.

             10.5  Trademark Registrations. ALTUS, at CONTINUUM's request and
expense, shall provide CONTINUUM with any specimens, execute all applications
for trademark registrations, trademark assignments or similar documents, and
shall perform any other similar act reasonably necessary (i) for CONTINUUM to
secure or maintain any and all CONTINUUM trademark rights in any country,
provided that ALTUS is marketing the Products in association with such
trademarks in such country or (ii) to effectuate the lawful right to use product
names, designations or trademarks in the Territory as reasonably required by
CONTINUUM.

             10.6  Termination of Trademark License. ALTUS' right to use
CONTINUUM'S trademarks, trade names or logos, as provided under Section 10.1
("Limited Rights to Use Trademarks"), shall cease immediately upon the
expiration or termination, for any reason, of this Agreement.

         11. Protection of Confidential Information. During the term of this
Agreement certain information of a confidential nature may be provided by one
party to the other party, which information may pertain to subjects which either
or both parties may wish to remain confidential. "Confidential Information"
means all nonpublic information, whether in oral, written or other tangible form
that the party disclosing the information (the "Disclosing Party") designates to
the receiving party ("Recipient") as being confidential, including without
limitation, the terms and conditions of this Agreement, or which information has
a reasonable basis for being presumed confidential, such as price lists,
marketing strategies, and gross and net profit margins. Notwithstanding the
foregoing, Confidential Information does not include

                                       11

<PAGE>

information that: (a) is or becomes generally available to the public other
than (i) as a result of a disclosure by Recipient or its employees or any other
person who directly or indirectly receives such information from Recipient or
its employees or (ii) in violation of a confidentiality obligation to Disclosing
Party known to Recipient; (b) is or becomes available to Recipient on a
nonconfidential basis from a source which is entitled to disclose it to
Recipient; (c) was developed by employees or agents of the Recipient
independently of and without reference to any information communicated to
Recipient by the Disclosing Party; or (d) is required by law to be disclosed by
the Recipient. A disclosure of Confidential Information which is (x) in response
to a valid order by a court or other governmental body, (y) otherwise required
by law, or (z) necessary to establish the rights of either party under this
Agreement, shall not be considered to be a breach of this Agreement or a waiver
of confidentiality for other purposes; provided however, that the Recipient
disclosing such information shall provide prompt written notice thereof to the
Disclosing Party to enable the Disclosing Party to seek a protective order or
otherwise prevent such disclosure. Recipient shall hold the Confidential
Information of the Disclosing Party in confidence, disclosing the Confidential
Information only to such of Recipient's employees, contractors and advisors who
have a need to know for the purpose of fulfilling Recipient's obligations under
this Agreement. Recipient shall advise any such individuals that the
Confidential Information is confidential and that by receiving such information
such individuals are agreeing to be bound by the terms of this Section 11
("Protection of Confidential Information"), and to not use such information for
any purpose other than as authorized herein. Recipient shall employ all
reasonable steps to protect the Confidential Information from unauthorized or
inadvertent disclosure or use, including, without limitation, all steps that
Recipient takes to protect Recipient's own information that Recipient considers
a trade secret.

         12. Complaints by End Users. ALTUS shall immediately inform CONTINUUM
of any observations or complaints received by ALTUS or ALTUS Distributors from
End Users and/or any "adverse events," as such term is utilized by the FDA, in
respect to the Products. The parties shall deal promptly and properly with such
complaints as directed by the Act. ALTUS shall have no authority to engage
CONTINUUM in any way unless ALTUS has received a specific prior written
authorization to such effect.

         13. ALTUS to be Kept Informed. CONTINUUM shall provide ALTUS with
written information relating to the Products as well as with the information
reasonably required in CONTINUUM's opinion by ALTUS to carry out ALTUS'
obligations under the Agreement.

         14. Referrals. If ALTUS, when dealing with customers in the Territory,
obtains an order which would result in sales for shipment outside of the
Territory, and if CONTINUUM accepts such order, then ALTUS shall be entitled to
receive a sales commission in the amount of [*] of the amount paid by the
customer for such Products net of shipping charges and related sales taxes. If
CONTINUUM requests ALTUS to perform after-sale follow-up with such customer, the
parties will mutually agree upon the terms and additional commission applicable
to such services. Commissions are deemed to cover all additional costs of sale
of ALTUS for such services.

         15. Additional Discounts. A reduced discount applicable solely to a
specific customer sale may be mutually agreed upon in advance between CONTINUUM
and ALTUS in a

* Indicates that information has been omitted pursuant to a request for
  confidential information and filed separately with the United States
  Securities and Exchange Commission.

                                       12

<PAGE>

signed writing in appropriate circumstances where an End User is to be
granted terms or conditions that are more favorable than ALTUS' standard terms
and conditions of sale.

         16. No Further CONTINUUM Obligation for Expenses. Unless otherwise
agreed in writing, the discounts provided by CONTINUUM to ALTUS with respect to
the CONTINUUM Product list prices are intended to cover and compensate ALTUS for
all expenses incurred by ALTUS in fulfilling ALTUS' obligations under this
Agreement and CONTINUUM shall have no obligation with regard to such expenses.

         17. Demonstration Units. ALTUS may purchase a maximum of [*] "demo"
units (combined total of Medlite C3 and Medlite C6) per twelve (12) month
period. These demo units will be purchased for [*] for the Medlite C3 Product
and [*] for the Medlite C6 Product. In consideration of the
installation/warranty fees invoiced to ALTUS, CONTINUUM shall be required to
perform one (1) installation service within the Territory on the related demo
unit for ALTUS. All payments for demo units are net thirty (30) days from
delivery to ALTUS, FOB CONTINUUM's facility in Santa Clara, Ca. Payments will be
sent by ALTUS per Annex II ("Lock Box Payments"). These demo purchases, and any
others agreed to by the parties from time to time shall not be included in the
calculation of volume discounts contained in Annex IV ("Transfer Pricing to
ALTUS"), nor the thirty (30) unit purchase requirement contained in Annex V
("Forecast for First Year After Effective Date"). ALTUS understands and agrees
that any installations of demo units, whether for ALTUS, an End User or
otherwise, must be performed by CONTINUUM or a CONTINUUM certified installer for
Medlite Products. If CONTINUUM has already performed any required installation
service on a particular demo unit, ALTUS may request, and CONTINUUM may agree in
its discretion to perform, additional installation services on a time and
materials basis.

         18. Sale of Demo Products. Demo units may be sold to End Users during
the term of this Agreement after a minimum of six (6) months of field use by
ALTUS. Upon such sale, ALTUS shall pay to CONTINUUM [*] of the sale price, minus
the prepaid demo price, not to exceed the full transfer price. ALTUS understands
and agrees that any sale of "demo" units of the Product will constitute a sale
of used goods, that such sales and corresponding installations shall be the sole
obligation of ALTUS and that any warranty originally provided by CONTINUUM on
any Product demo unit will apply for the remainder of the Product's original
warranty period regardless of ownership. If a customer wishes to have warranty
coverage outside the original warranty period, additional coverage may be
provided by ALTUS at its discretion, which additional coverage will be the
obligation of ALTUS and will be provided solely at ALTUS' expense. ALTUS agrees
that all sales of Product demo units will comply with the rules and regulations
of the United States Federal Trade Commission, as well as all applicable laws or
regulations of any other state or federal government or agency having
jurisdiction over the sales. ALTUS further agrees that it will clearly disclose
on the used Product, Product packaging, related invoices, and in any related
advertising that the Product is used.

         19. Product Recalls and Retrofits. CONTINUUM agrees to assume full
responsibility for all costs associated, including materials, manpower, handling
and travel

* Indicates that information has been omitted pursuant to a request for
  confidential information and filed separately with the United States
  Securities and Exchange Commission.

                                       13

<PAGE>

expenses for any product recall or mandatory product retrofit, which recall
or retrofit is required to be performed by product manufacturers by the FDA
during the term of the Agreement.

         20. Term of Agreement.

             20.1 Term. This Agreement shall be effective as of the Effective
Date, and shall continue for an initial period of three (3) years unless earlier
terminated in accordance with this Section 20 ("Term of Agreement") or as
otherwise provided in the Agreement. Thereafter, unless notice of termination is
provided by either party no less than sixty (60) days prior to the end of the
initial term, any renewal term, the Agreement shall automatically renew for
additional one (1) year renewal periods until terminated by either party as
provided below or as otherwise provided in the Agreement.

             20.2 Termination. Either party shall have the right to terminate
this Agreement upon a ninety (90) day written notice, or as soon thereafter as
applicable law permits, or take such other action as specified below, upon the
occurrence of any of the following events:

                  (a) The commission or sufferance of any material breach or
        default by the other party of any of the terms, obligations, covenants,
        representations or warranties under this Agreement which breach or
        default is not waived, in writing, by the non-defaulting party, where
        such breach or default, if curable, is not cured within sixty (60) days
        following notice, or if not susceptible to cure, then upon the
        occurrence of the breach or default.

                  (b) The other party is declared insolvent or bankrupt or makes
        an assignment for the benefit of creditors, or a receiver is appointed
        for substantially all of the business and assets of the other party, or
        if the other party files a voluntary petition in bankruptcy or
        reorganization or suffers the filing of an involuntary petition against
        it to have itself declared bankrupt or reorganized and such involuntary
        petition is not vacated within thirty (30) days from the date of the
        filing, or if the other party discontinues the active conduct of its
        business for more than thirty (30) days, or if the other party assigns
        substantially all of its assets for the benefit of its creditors.

                  (c) If ALTUS fails to satisfy the agreed upon Minimum Purchase
        Requirement for any twelve month period, as formulated pursuant to
        Section 5 ("Purchase Requirements, Sales Targets and Forecasts") above.

                  (d) In the event either party provides written notice of
        termination of this Agreement to the other party following the
        assignment of this Agreement by either party in accordance with Section
        25.6 ("Assignment").

             20.3 Survival. The provisions of Section 7 ("Records and Reports"),
Section 8 ("Continuum Intellectual Property"), Section 9 ("Pricing and Payment
Terms"), Section 10.5 ("Trademark Registrations"), Section 11 ("Protection of
Confidential Information"), Section 12 ("Complaints by End Users"), Section 21
("Activities After Termination"), Section 22 ("Indemnity for Termination"),
Section 23 ("Return of Documents and Samples"), Section 24 ("Indemnification")
and Section 25 ("Miscellaneous") shall survive any expiration or termination of
this Agreement.

                                       14

<PAGE>

         21.  Activities After Termination. ALTUS agrees to use best efforts to
sell all of ALTUS' inventory of Products prior to termination or expiration of
this Agreement, and shall provide CONTINUUM with a list of inventory remaining
after termination, whereupon CONTINUUM may, at its discretion, elect to purchase
all or some of such Products at a price agreed upon by the parties, but in no
event more than the initial purchase price paid by ALTUS to CONTINUUM for such
Products. Promptly upon expiration of the term or other termination for any
reason of this Agreement, ALTUS shall, and shall instruct ALTUS Distributors of
their obligation to, immediately cease to solicit orders for Products or
represent in any manner that ALTUS is an authorized CONTINUUM distributor. Any
amounts due by CONTINUUM or ALTUS to the other party pursuant to the terms of
this Agreement shall remain due and payable notwithstanding such termination,
and termination shall not relieve either of the parties from any obligations
arising prior to or upon such termination except as expressly set forth herein.
Any orders placed by ALTUS with CONTINUUM pursuant to the terms of this
Agreement before expiration or termination of this Agreement will be fulfilled
by CONTINUUM but may be subject to prepayment by ALTUS if placed within sixty
(60) days prior to expiration or termination of this Agreement.

         22. Indemnity for Termination. Neither CONTINUUM, ALTUS nor any ALTUS
Distributor shall be entitled to an indemnity for goodwill or similar
compensation ("goodwill indemnity") upon the termination of this Agreement.

         23. Return of Documents and Samples. Upon expiration or termination of
this Agreement, ALTUS shall return to CONTINUUM all advertising material and
other documents and samples which have been supplied to ALTUS by CONTINUUM and
which are in ALTUS' possession or under ALTUS' control.

         24. Indemnification.

             24.1 By ALTUS. Except at to those losses (as hereafter defined)
caused solely by proven defects in material and workmanship of the products
existing during the period of Continuum's warranty obligations pursuant to this
Agreement, ALTUS assumes liability for, and hereby agrees, at ALTUS' expense, to
defend, indemnify, protect and hold harmless CONTINUUM and its successors and
assigns and their respective agents, employees, officers, directors, parents,
subsidiaries and stockholders, from and against any and all liabilities,
obligations, losses, damages, injuries, claims, demands, actions, costs and
expenses (including actual attorney fees and costs) of whatsoever kind and
nature (collectively "Losses"), arising out of (i) ALTUS extending
representations or warranties regarding the Products beyond those authorized by
CONTINUUM hereunder; (ii) ALTUS' customer training regarding use of the Products
not in accordance with CONTINUUM's specifications; (iii) ALTUS' support of the
Products outside the scope of CONTINUUM'S instruction; (iv) the modification of
any Product by ALTUS or an End User or any damages resulting from any such
modification; or (v) any action of the FDA related to any duty or obligation of
distributors. The foregoing described in (i)-(v) shall be referred to as the
"ALTUS Indemnity".

             24.2 By CONTINUUM. CONTINUUM assumes liability for, and hereby
agrees, at CONTINUUM's expense, to defend, indemnify, protect and hold harmless
ALTUS and ALTUS' successors and assigns and their respective agents, employees,
officers, directors,

                                       15

<PAGE>

parents, subsidiaries and stockholders, from and against any and all
Losses, directly arising out of: (i) an allegation that any Product or any part
thereof, standing alone and as delivered by CONTINUUM, infringes any patent,
copyright, trade secret or any other intellectual property right of any third
party; (ii) any action of the FDA for an obligation or duty of manufacturers in
connection with the Products as delivered by CONTINUUM; (iii) any use of
CONTINUUM trademarks by ALTUS in compliance with this Agreement infringes a
third party's trademark; or (iv) a product liability claim on a Product as
delivered by CONTINUUM to ALTUS, with the exception of Product Liability claims
that arise from a failure to warn by ALTUS (the "CONTINUUM Indemnity").

             24.3 The foregoing indemnity obligations are subject to the party
to be indemnified: (a) giving the indemnifying party prompt written notice of
any such claim; (b) allowing the indemnifying party to control the defense and
settlement of such claim; (c) not entering into any settlement or compromise of
such claim which would subject the indemnifying party to liability; and (d)
providing all reasonable assistance requested by the indemnifying party in the
defense or settlement of such claim, at the indemnifying party expense.

         25. Miscellaneous.

             25.1 Arbitration. With the exception of a breach by ALTUS of any of
ALTUS' obligations related to CONTINUUM's intellectual property rights, three
arbitrators, one designated by ALTUS, one by CONTINUUM and the third by the two
arbitrators selected by the parties, shall finally and on a binding basis settle
any dispute arising out of or in connection with this Agreement in Santa Clara
County, California and in accordance with the rules of the American Arbitration
Association ("AAA"). Except as set forth herein, this Agreement shall be
governed by and construed in accordance with the laws of the State of
California, United States of America, without regard to its conflicts of laws
principles. The United Nations Convention on the International Sale of Goods
shall specifically not apply to transactions taking place pursuant to this
Agreement.

             25.2 Annexes Form an Integral Part. The annexes attached to this
Agreement form an integral part of the Agreement.

             25.3 Entire Agreement. This Agreement and the annexes attached
hereto are the entire agreement between the parties with regard to the subject
matter set forth herein and supersede any other preceding or contemporaneous
agreement or understanding between the parties.

             25.4 Modification; Waiver. No additions to or modifications of this
Agreement shall be valid unless made in writing and signed by the parties. No
provision of this Agreement may be waived orally or by any course of conduct.

             25.5 Severability. The nullity of a particular clause of this
Agreement shall not entail the nullity of the whole Agreement unless such clause
is to be considered as material, i.e., if the clause is of such importance that
the parties (or the party to the benefit of which such clause is made) would not
have entered into the Agreement if that party had known that the

                                       16

<PAGE>

clause would not be valid, in which case the parties will work together and
agree upon a replacement clause that sets forth the intent of the null clause in
a lawful manner.

             25.6 Assignment. This Agreement may not be assigned without the
prior written agreement between the parties. Notwithstanding the foregoing,
either party may assign this Agreement without the other party's prior written
consent in the event of merger, acquisition or sale of assets. This Agreement
will be binding on all successors and permitted assigns.

             25.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by a party, and all of which
together shall constitute one instrument. Delivery may be effected by facsimile
transmittal of a signed counterpart.

             25.8 Attorneys' Fees. In the event of any litigation, arbitration
or proceeding or other dispute arising as a result of this Agreement, the
prevailing party shall be entitled, in addition to any other damages assessed,
to its reasonable attorneys' fees and all other costs and expenses incurred in
connection with settling or resolving such dispute. The attorneys' fees which
the prevailing party shall be entitled to recover shall include any fees for
prosecuting or defending any appeal and supplemental proceedings until the final
judgment is satisfied in full, and for any post-judgment proceedings to collect
or enforce the judgment. Subject to the provisions of local law, the prevailing
party shall recover all such fees, costs or disbursements as costs taxable by
the court or arbiter in the action or proceeding itself without the necessity
for a cross-action by the prevailing party.

             25.9 No Warranty. ALTUS UNDERSTANDS AND AGREES THAT THE PRODUCTS
ARE PROVIDED TO ALTUS AS IS AND WITHOUT WARRANTY. ANY WARRANTY PROVIDED WITH ANY
PRODUCT RUNS TO THE END USER ONLY AND NOT TO ALTUS, UNLESS ALTUS IS ACQUIRING
THE PRODUCT FOR USE AS A DEMO UNIT AS SET FORTH IN SECTION 17 ("DEMONSTRATION
UNITS"). CONTINUUM AND ITS SUPPLIERS DISCLAIM ALL WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF TITLE,
MERCHANTABILITY, SATISFACTORY QUALITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT.

             25.10 Consequential Damages Waiver; Limitation of Liability. EXCEPT
FOR LIABILITY ARISING FROM A BREACH OF ALTUS' DUTIES SET FORTH IN SECTION 3.6(a)
("ALTUS OBLIGATIONS"), IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR
SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, EVEN IF SUCH PARTY SHALL
HAVE BEEN ADVISED OF THE POSSIBILITY OF THE SAME. EXCEPT FOR LIABILITY ARISING
UNDER SECTIONS 11 ("PROTECTION OF CONFIDENTIAL INFORMATION") AND 24
("INDEMNIFICATION"), IN NO EVENT SHALL EITHER PARTY'S AGGREGATE LIABILITY
ARISING OUT OF THIS AGREEMENT EXCEED AMOUNTS PAID BY ALTUS TO CONTINUUM
HEREUNDER.

             25.11 Force Majeure. If performance of this Agreement, or any
obligation hereunder (other than the making of payments), is
prevented,restricted or interfered with by any

                                       17

<PAGE>

act or condition whatsoever beyond the reasonable control of the affected
party, the party so affected, upon giving prompt notice to the other party, will
be excused from such performance to the extent of such prevention, restriction
or interference; provided, however, that in the event such non-performance
extends beyond a period of ninety (90) days, the performing party will have the
right to terminate the Agreement upon written notice to the non-performing
party.

     25.12 Headings. The headings used herein and in any of the documents
attached hereto as annexes are descriptive only and for the convenience of
identifying provisions, and are not determinative of the meaning or effect of
any such provisions.

     25.13 Notices. All notices required under this Agreement shall be in
writing, and sent by prepaid certified or registered airmail, return receipt
requested, personally delivered, or sent by facsimile with receipt of
transmission, and shall be effective as of the date on which personally
delivered, or on the fifth business day after the day when stamped and deposited
in the mail addressed to a party at its respective address set forth in this
Agreement or to any other address which the party may from time to time
designate in writing as an address for the purpose of notice, or on the date
when sent by facsimile to the respective facsimile numbers set forth below the
names of the parties at their signatures below or to such other facsimile
numbers of which one party shall have given notice to the other party in the
manner prescribed herein.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date last signed below.

CONTINUUM:                                     ALTUS:

HOYA PHOTONICS, INC.                           ALTUS MEDICAL, INC.

By   /s/ Gerald W. Bottero                     By   /s/ Kevin Connors
   ------------------------------------------     ------------------------------

Print Name   Gerald W. Bottero                 Print Name:  Kevin Connors
           ----------------------------------             ----------------------

Title   President and CEO                      Title   CEO
      ---------------------------------------        ---------------------------

Date   31 August 2001                          Date   8/31/01
     ----------------------------------------       ----------------------------

                                       18

<PAGE>

                                     ANNEX I

                                    PRODUCTS

1.           Products:                                              Part Number
                      Medlite C3
                      Medlite C6
                      MultiLite Dye Laser Handpiece for Medlite C6
                      All parts and supplies for above
2.           CONTINUUM House Accounts:
                      [*]
3.           Co-Distributors in Canada

                      [*]

* Indicates that information has been omitted pursuant to a request for
  confidential information and filed separately with the United States
  Securities and Exchange Commission.

                                       19

<PAGE>

                                    ANNEX II

                                LOCK BOX PAYMENTS

Continuum
P.O. Box 515183
Los Angeles, CA
90051-5183

                                       20

<PAGE>

                                    ANNEX III

                  PRODUCTS AND PRINCIPALS REPRESENTED BY ALTUS

         This Annex shall be applicable only if filled in by the parties

         ALTUS hereby declares that ALTUS represents (and/or distributes or
manufactures) the following products, directly or indirectly, at the time of the
execution of the Agreement. ALTUS shall provide amendments to this form within
thirty (30) days of adding any new products during the term of the Agreement.

                  Principal                                 Products
                  ALTUS                                     COOLGLIDE
                  ALTUS                                     COOLGLIDE EXCEL

                                       21

<PAGE>

                                    ANNEX IV

                                Pricing to ALTUS
<TABLE>
<CAPTION>
<S>                                            <C>                             <C>                     <C>

           Product                  Description                 Annual (Contract Year)        Price Per Unit
                                                                        Volume
--------------------------------------------------------------------------------------------------------------
Medlite C3                  Laser system, Accessory      [*]                                  [*]
Order Number 624-A          Kit with Operators           [*]                                  [*]
Suggested List [*]          Manual, Safety Warning       [*]                                  [*]
ASP=[*]                     Sign, Handpiece Kit,         Note: Demo units shall not be
                            Printer Paper                included in volume calculations.
--------------------------------------------------------------------------------------------------------------
Medlite C6                  Laser System,(647)           [*]                                  [*]
Order Number 647/646-A      532/1064nm                   [*]                                  [*]
Suggested List [*]          Accessory Kit with           [*]                                  [*]
ASP=[*]                     Operators Manual, Safety     Note: Demo units shall not be
                            Warning Sign, Multi-Spot     included in volume calculations.
                            Handpiece, Printer Paper,
                            Multilite Dye Laser
                            Handpiece Kit(646)
                            585/650nm
--------------------------------------------------------------------------------------------------------------
Telescopic Lens                                                                               [*]
Order Number #______
Order Number To be
determined
--------------------------------------------------------------------------------------------------------------
Installation and Twelve                                                                       [*]
(12) Month Warranty To
End User- Applies to
Medlite C3 & Medlite C6
--------------------------------------------------------------------------------------------------------------
Multilite Dye Laser          585/650nm laser                                                  [*]
Handpiece
Order Number (646-
0020A)
Suggested List [*]
--------------------------------------------------------------------------------------------------------------
All other parts and                                                                           [*]
supplies
--------------------------------------------------------------------------------------------------------------

</TABLE>

* Indicates that information has been omitted pursuant to a request for
  confidential information and filed separately with the United States
  Securities and Exchange Commission.

                                       22

<PAGE>

                                     ANNEX V

                          MINIMUM PURCHASE REQUIREMENT
                     FOR TWELVE MONTHS AFTER EFFECTIVE DATE

1.   Total minimum purchase of [*] units for the first 12 months of the Forecast
     Year as follows: First three-month ("Q1") distribution purchase requirement
     of units of Products due to ramp up of training, sales and marketing;
     second three-month ("Q2") distribution purchase requirement of [*] units of
     Products; third three-month ("Q3") distribution purchase requirement of [*]
     units of Products; and fourth three-month ("Q4") distribution purchase
     requirement of [*] units of Products.

- Q1 to begin first day of the next calendar month following the Effective Date.

 -----------------------------------------
        Minimum Purchase Requirement

 -----------------------------------------
     Quarter       Units          $
      ("Q")                    (Annex
                                 IV)

       [*]          [*]
       [*]          [*]
       [*]          [*]
       [*]          [*]

   [*] Months       [*]
   ---------------------------------------

2.   ALTUS may have access, at CONTINUUM's sole discretion, to the installed
     base of CONTINUUM Medlite products, as well as all open leads or sales
     quotes for additional upgrades and marketing opportunities.
3.   CONTINUUM is open to discussions concerning field service management with
     ALTUS.

* Indicates that information has been omitted pursuant to a request for
  confidential information and filed separately with the United States
  Securities and Exchange Commission.

                                       23

<PAGE>

                                    ANNEX VI

                              CONTINUUM Trademarks

                                [TO BE INSERTED]

                                       24

<PAGE>

                                    ANNEX VII

                      CONTINUUM Trademark Usage Guidelines

Trademark Usage Guidelines
<TABLE>
<CAPTION>
<S>                                                                          <C>

                      Rule                                                Explanation

-------------------------------------------------  ---------------------------------------------------------
When used in print, the trademarks must always      (Insert font type/size);
be distinguished from other words.                  Color restricted to Altus corporate blue.
-------------------------------------------------  ---------------------------------------------------------
The trademarks must always be used as an            If a trademark is used as a noun, it
adjective accompanied by the                        runs the risk of becoming an
common word identifying the product.                unprotectable (generic) product name.
-------------------------------------------------  ---------------------------------------------------------
Always use the singular form.
-------------------------------------------------  ---------------------------------------------------------
Never use trademarks possessively.
-------------------------------------------------  ---------------------------------------------------------
The trademarks should never be used as a
verb or in a contractual form.
-------------------------------------------------  ---------------------------------------------------------
Presentation of the trademarks must always be       Spell the trademark as one word and never hyphenate or
consistent.                                         split on separate lines of copy.
-------------------------------------------------  ---------------------------------------------------------
The trademarks should indicate the source of        Place an asterisk (*) after the trademark or identify
the product.                                        the trademark with a TM or(R), as appropriate, in
                                                    advertising, publications or marketing materials and
                                                    refer the reader to a footnote which states that the
                                                    trademark is owned by the Company.

</TABLE>

                                       25

<PAGE>

                                   ANNEX VIII

                         ALTUS Distributor Minimum Terms

Any terms not defined herein shall have the meaning set forth in the Agreement.

The following terms shall appear in substantially similar language in each ALTUS
agreement for distribution of the Products with an ALTUS Distributor ("ALTUS
Distributor Agreement"):

1. FDA Compliance. When negotiating with any third parties, ALTUS' Distributor
shall offer the Products strictly in accordance with the United States Food and
Drug Administration ("FDA") cleared applications, capabilities and indications
for use for the Products.

2. End Users. ALTUS' Distributor agrees to only sell or otherwise distribute the
Products to End Users within the Territory.

3. Distributor Prohibitions. ALTUS' Distributor agrees not to distribute the
Products (i) by mail order to any party that is not an End User and who has not
signed an agreement with ALTUS' Distributor for the purchase of Products in
compliance with the terms of this Agreement prior to shipment of the Product to
such End User, (ii) by rental (iii) with knowledge or reason to know that the
Products will be transported outside the Territory. ALTUS' Distributor shall not
(i) use the Products to perform any service, (ii) translate the user manuals (in
printed or media form or otherwise), or (iii) do any other act with respect to
the Products not specifically authorized by this Agreement.

4. Product Packaging. ALTUS' Distributor agrees that any Products sold to
End Users shall be provided in the packaging and with each of the contents,
including without limitation any CONTINUUM warranty, initially provided by
CONTINUUM to ALTUS.

5. Marketing. ALTUS Distributor shall protect CONTINUUM's interests with the
diligence of a responsible businessperson. ALTUS Distributor agrees that its
marketing and advertising efforts will be of the same quality as ALTUS'
marketing and advertising for ALTUS products, in good taste, and will preserve
the professional image and reputation of CONTINUUM and the Products. ALTUS
Distributor agrees not to remove any of the CONTINUUM trade names, trademarks,
copyright notices or other legends from the Products and agrees not to apply any
ALTUS, ALTUS Distributor or other third party trademarks or logos to the
Products.

6. End User Warranty Claims. ALTUS Distributor will promptly notify ALTUS of
any warranty claim under a CONTINUUM warranty by an End User.

7. In Service. ALTUS Distributor agrees to cooperate with ALTUS in the
performance of ALTUS' obligation to provide End User in-service for any newly
installed Products.

8. CONTINUUM Trademarks. CONTINUUM has agreed to permit ALTUS Distributor
to utilize the CONTINUUM trademarks in conjunction with the promotional and
advertising

                                       26

<PAGE>

activities ALTUS Distributor conducts with respect to the Products, subject to
ALTUS Distributor's compliance with the current CONTINUUM Trademark Guidelines
which have been provided to ALTUS Distributor by ALTUS. ALTUS Distributor
understands that CONTINUUM has the right to contact ALTUS Distributor directly
to notify ALTUS Distributor of any misuse of a CONTINUUM trademark and ALTUS
Distributor agrees that it shall cease or correct such misuse upon such
notification by CONTINUUM.

9. Complaints by End Users. ALTUS Distributor agrees to immediately inform
ALTUS of any observations or complaints received by ALTUS Distributor from End
Users and/or any "adverse events," as such term is utilized by the FDA, in
respect to the Products.

10. Records. ALTUS Distributor shall maintain complete and accurate books and
records related to the Products. ALTUS Distributors shall retain originals or
copies of all relevant correspondence, quotations, orders and other documents
relating to ALTUS Distributor's obligations (and the performance thereof) under
the ALTUS Distributor Agreement for a minimum of one (1) year following the
termination of the ALTUS Distributor Agreement. CONTINUUM and its agents shall
have the right, no more than once every quarter, during the term of this
Agreement and for a period of one (1) year following termination of this
Agreement, to examine such books, records, correspondence, quotations, orders
and other documents as CONTINUUM may deem necessary or appropriate upon
reasonable advance notice to ALTUS Distributor. During any such examination,
CONTINUUM may make copies of the examined materials for its records, provided
that such copies are treated as the Confidential Information of ALTUS
Distributor for which CONTINUUM agrees to employ all reasonable steps to protect
from unauthorized or inadvertent disclosure or use, including, without
limitation, all steps that CONTINUUM takes to protect CONTINUUM's own
information that CONTINUUM considers a trade secret.

11. Confidential Information. CONTINUUM may from time to time provide ALTUS
Distributor with Confidential Information of CONTINUUM, which information ALTUS
Distributor agrees to hold in confidence during and after the term of the ALTUS
Distributor Agreement. To this end, ALTUS Distributor agrees to employ all
reasonable steps to protect the Confidential Information from unauthorized or
inadvertent disclosure or use, including, without limitation, all steps that
ALTUS Distributor takes to protect ALTUS Distributor's own information that
ALTUS Distributor considers a trade secret.

12. Third Party Beneficiary. ALTUS' Distributor understands and agrees that
CONTINUUM is a third party beneficiary of this ALTUS Distributor Agreement and
has the right to enforce the terms thereof for CONTINUUM's benefit.

                                       27

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