Document:

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                                                                    EXHIBIT 10.7

[NOVACEPT LOGO]
Healthcare for Women

                                  May 16, 2000

David Renzi
16301 N. 109th Street
Scottsdale, AZ 85259

Dear Dave,

On behalf of the Novacept management team and Board of Directors, we are
delighted to make you this offer to join us as the Vice President of Marketing
and Sales of Novacept Inc. I have summarized your employment terms below.

POSITION

You will become the Vice President of Marketing and Sales and an officer of the
Company, working out of the Company's headquarters in Palo Alto, California. You
will have the overall responsibility for the marketing and sales of our products
around the world. You will report to the President and CEO of the Company. You
agree that to the best of your abilities and experience you will at all times,
loyally and conscientiously perform all the duties and obligations required of
and from you pursuant to the expressed and implicit terms hereof, and to the
reasonable satisfaction of the Company. During the term of your employment, you
agree to devote all of your business time and attention to the business of the
Company, and, that you will not render commercial or professional services of
any nature to any person or organization, whether or not for compensation,
without the prior written consent of the President and CEO. In addition, you
will not directly or indirectly engage or participate in any business that is
competitive in any manner with the business of the Company. Nothing in this
letter agreement will prevent you from accepting speaking or presentation
engagements in exchange for honoraria or from serving on the Board of Directors
of companies and receiving customary compensation in exchange for such services
or from serving on Boards of charitable organizations.

START DATE

Your start date for beginning your employment at Novacept will be no later than
June 5, 2000.

PROOF OF RIGHT TO WORK

In accordance with federal immigration law, you will be required to provide to
the Company documentary evidence of your identity and eligibility for employment
in the United States. Such documentation must be provided to the Company within
three (3) business days of your hire date, or our employment relationship with
you may be terminated.

COMPENSATION

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Base Salary

Your annual base salary will be $178,200. You will be paid a monthly salary of
$14,850. You will also be eligible for annual salary increases.

Bonus

You will be eligible to receive an annual incentive bonus of up to 30% of your
base salary. 50% of this bonus will be guaranteed over the next four years, and
paid to you on a quarterly basis. However, for any percentage increase in your
salary that you might receive in any year, your guaranteed bonus for the next
year will be reduced by the same percentage, e.g. a six percent (6%) increase in
base salary would reduce the guaranteed bonus from 20% to 14%. Payment of the
remainder of the bonus will be based on the achievement of mutually agreed upon
objectives.

Stock Options

In connection with the commencement of your employment, the Company will
recommend that the Board of Directors grant you an option to purchase 173,000
shares of the Company's common stock with an exercise price equal to the fair
market value on the date of the grant. The current fair market value of the
Company's common stock as most recently determined by the Board of Directors is
$0.475 per share. 173,000 of these shares will vest over 4 years at the rate of
1/8th on the six months anniversary of your employment start date and 1/48th per
month thereafter. Vesting of course will depend on your continued employment
with the Company. Upon discontinuation of your full time employment with the
Company, any unvested shares will be subject to repurchase by the company. The
option will be an incentive stock option to the maximum extent allowed by the
tax code and will be subject to the terms of the Company's 1997 Stock Option
Plan and the Stock Option Agreement between you and the Company. In the future,
you will be eligible to receive additional grants of stock options or purchase
rights subject to terms and conditions as the Board of Directors shall determine
as of the date of any such grant.

BENEFITS

Insurance Benefits

The Company will provide you with the Company's standard medical and dental
insurance benefits. In addition, the Company currently indemnifies all officers
and directors to the maximum extent permitted by law and you will be requested
to enter into the Company's standard Indemnification Agreement giving you such
protection.

Vacation

You will be entitled to 3 weeks of paid vacation per year. Pro-rated for the
remainder of this calendar year you will be eligible for two weeks (10 days)
vacation.

Relocation Expenses

In connection with your relocation from Arizona to the San Francisco Bay area,
the company will reimburse you for all the usual and customary relocation
expenses. Included are moving of personal property, house hunting trips, travel,
expenses associated with the sale of your current residence, costs associated
with the purchase of a new residence, mortgage points up to 1 point,

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and other closing costs, etc. These reimbursements will be grossed up to account
for your federal and state income taxable liability.

Down Payment Assistance

We understand that you plan to provide assets for a new residence down payment
that equal up to 20% of the purchase price of the new residence. The Company
will provide you with a forgivable loan of up to $125,000 so that you can meet
this 20% down payment requirement. This loan will be given on a pro rata basis
over the four years commencing on the date of your employment with the Company
or, at your choice, will accumulate interest and be forgiven in the future but
no later than the 4 year anniversary of your start date.

Mortgage Assistance

In addition, the Company will give you a mortgage assistance payment of $3,650
per month for the first two years of employment. In year three you will receive
a monthly payment of $2,920, in year four a monthly payment of $2,555, and in
year five a monthly payment of $2,190

In the event that you terminate your employment with the Company before the end
of the first year of employment, you agree to repay the company 100% of the
relocation and mortgage assistance costs incurred by the company and to repay
the remaining unforgiven portion of the above mentioned loan.

Temporary Living Costs

In order to assist you with any short-term rental housing expense prior to the
sale of your home in Arizona, the company will reimburse your cost of housing in
the San Francisco Bay area for a period of up to 6 months.

CONFIDENTIALITY OF TERMS

You agree to follow the Company's strict policy that employees must not
disclose, either directly or indirectly, any confidential information, including
any of the terms of this agreement to any person including other employees of
the Company. However, you may discuss such terms with members of your immediate
family and any legal, tax, or accounting specialists who provide you with
services.

AT WILL EMPLOYMENT

Your employment with the Company will be on an "at will" basis, meaning that
either you or the company may terminate your employment at any time for any
reason or no reason, without further obligation or liability.

CHANGE OF CONTROL

Should the Company undergo a change in control by merger, reorganization,
consolidation, sale of assets or otherwise, in which 50% or more of the
ownership of the company is controlled by one entity, your unvested stock would
immediately vest in full, prior to the change in control and become exercisable.

TERMINATION/SEVERANCE

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Should the Company terminate your employment for reasons other than cause you
will receive 6 months salary and healthcare benefits. In addition, your mortgage
assistance would continue for one year.

Dave, I believe this represents our discussion and is an exceptionally
attractive package, especially when coupled with the equity appreciation
opportunity and the higher probability of success now that you are joining the
Company. We would like to conclude our agreement and extend this offer to expire
at 5:00 p.m. on May 19, 2000 if not previously accepted. If these terms are
agreeable please sign both copies of this letter and return one to me. We are
looking forward to your acceptance and, under your leadership, beginning of the
exciting marketing phase of the Company's development.

Sincerely,

David M. Clapper
President and Chief Executive Officer

ACCEPTED AND AGREED

David Renzi

Signature

/s/ David Renzi
________________________

5/16/00
________________________
Date<PAGE>

                                                                    EXHIBIT 10.9

                               McCANDLESS LIMITED

                                       AND

                           ENVISION SURGICAL SYSTEMS

                                      LEASE

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                               McCANDLESS LIMITED

1.  DATE OF LEASE:

2.  LANDLORD:                           McCandless Limited
                                        3945 Freedom Circle, Suite 640
                                        Santa Clara, California 95054

3.  TENANT:                             ENVISION SURGICAL SYSTEMS

4.  PREMISES:                           1047 Ewell Court
                                        Palo Alto, California

5.  SQUARE FEET :                       8,650 square feet

6.  PERMITTED USE :                     General office, research & development,
                                        and warehouse

7.  TERM:                               3 years

    (a) SCHEDULED COMMENCEMENT DATE:    August 26, 1993

    (b) SCHEDULED EXPIRATION DATE:      August 25, 1996

8.  RENT:

    (a) BASIC RENT:                     $7,352.50 per month (Lease months 1-12)

    (b) ADJUSTMENTS TO BASIC RENT:      $7,750.00 per month (Lease months 13-24)

                                        $8,217.50 per month (Lease months 25-36)

    (c) TENANT'S ESTIMATED SHARE OF
        COMMON AREA CHARGES:            $951.50 per month

9.  SECURITY DEPOSIT:                   $8,304.00

10. PARKING SPACES PROVIDED :           Thirty-four (34)

11. OTHER IMPORTANT PROVISIONS:         Reduced Rent
                                        Option to Extend Term
                                        First Right to Lease

THIS SUMMARY OF LEASE IS INTENDED TO SUMMARIZE CERTAIN KEY PROVISIONS IN THE
ATTACHED LEASE. IN THE EVENT OF ANY CONFLICT OR INCONSISTENCY BETWEEN THE
PROVISIONS OF THIS SUMMARY AND THE LEASE, THE PROVISIONS OF THE LEASE SHALL
GOVERN.

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                                TABLE OF CONTENTS

ITEM                                                                   PAGE
----                                                                   ----
1.  USE
2.  TERM
3.  POSSESSION
4.  MONTHLY RENT
5.  ADJUSTMENT OF BASIC RENT
6.  RESTRICTION ON USE
7.  COMPLIANCE WITH LAWS
8.  ALTERATIONS
9.  REPAIR AND MAINTENANCE
10. LIENS
11. INSURANCE
12. UTILITIES AND SERVICE
13. TAXES AND OTHER CHARGES
14. ENTRY BY LANDLORD
15. COMMON AREA; PARKING
16. COMMON AREA CHARGES
17. DAMAGE BY FIRE; CASUALTY
18. INDEMNIFICATION
19. ASSIGNMENT AND SUBLETTING
20. DEFAULT
21. LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT
22. EMINENT DOMAIN
23. NOTICE AND COVENANT TO SURRENDER
24. TENANT'S QUITCLAIM
25. HOLDING OVER
26. SUBORDINATION
27. CERTIFICATE OF ESTOPPEL
28. SALE BY LANDLORD
29. ATTORNMENT TO LENDER OR THIRD PARTY
30. DEFAULT BY LANDLORD
31. CONSTRUCTION CHANGES
32. MEASUREMENT OF PREMISES
33. ATTORNEY FEES
34. SURRENDER
35. WAIVER
36. EASEMENTS; AIRSPACE RIGHTS
37. RULES AND REGULATIONS
38. NOTICES
39. NAME
40. GOVERNING LAW; SEVERABILITY
41. DEFINITIONS
42. TIME
43. INTEREST ON PAST DUE OBLIGATIONS; LATE CHARGE
44. ENTIRE AGREEMENT
45. CORPORATE AUTHORITY
46. RECORDING
47. REAL ESTATE BROKERS
48. EXHIBITS AND ATTACHMENTS
49. ENVIRONMENTAL MATTERS
50. SIGNAGE
51. SUBMISSION OF LEASE
52. PREMISES TAKEN "AS IS"
53. ADDITIONAL RENT
54. CAPITAL EXPENDITURES
55. REDUCED RENT
56. OPTION TO EXTEND TERM
57. FIRST RIGHT TO LEASE

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                                      LEASE

         THIS LEASE is made this ________ day of ________________________, 1993,
by and between McCANDLESS LIMITED, a California limited partnership
("Landlord"), and ENVISION SURGICAL SYSTEMS, a California corporation
("Tenant").

                              W I T N E S S E T H :

         Landlord leases to Tenant and Tenant leases from Landlord those certain
premises outlined in red on Exhibit A (the "Premises") commonly known as 1047
Elwell Court, Palo Alto, California, which Landlord and Tenant hereby agree
consists of approximately eight thousand six hundred fifty (8,650) square feet.
As used herein the term "Project" shall mean and include all of the land
described in Exhibit B and all the buildings, improvements, fixtures and
equipment now or hereafter situated on said land.

         Tenant covenants, as a material part of the consideration of this
lease, to perform and observe each and all of the terms, covenants and
conditions set forth below, and this lease is made upon the condition of such
performance and observance.

         1.       USE

                  Subject to the restrictions contained in paragraph 6 hereof,
Tenant shall use the Premises for general office, research & development, light
manufacturing and warehouse purposes and shall not use or permit the Premises to
be used for any other purpose.

         2.       TERM

                  The term shall be for three (3) years (unless sooner
terminated as hereinafter provided) and shall commence on August 26, 1993 and
end on August 25, 1996.

         3.       POSSESSION

                  (a) If Landlord for any reason cannot deliver possession of
the Premises to Tenant by the date of commencement set forth in paragraph 2,
this lease shall not be void or voidable, Landlord shall not be liable to Tenant
for any loss or damage on account thereof and Tenant shall not be liable for
rent until Landlord delivers possession of the Premises to Tenant. If

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the term commences on a date other than the date specified in paragraph 2 above,
then the parties shall immediately execute an amendment to this lease stating
the actual date of commencement and the revised expiration date. The expiration
date of the term shall be extended by the same number of days that Tenant's
possession of the Premises was delayed from that set forth in paragraph 2.

                  (b) Tenant's inability or failure to take possession of the
Premises when delivery is tendered by Landlord shall not delay the commencement
of the term of this lease or Tenant's obligation to pay rent. Tenant
acknowledges that Landlord shall incur significant expenses upon the execution
of this lease, even if Tenant never takes possession of the Premises, including
without limitation brokerage commissions and fees, legal fees and other
professional fees, Tenant acknowledges that all of said expenses shall be
included in measuring Landlord's damages should Tenant breach the terms of this
lease.

         4.       MONTHLY RENT

                  (a) Basic Rent. Tenant shall pay to Landlord as basic rent for
the Premises, in advance and subject to adjustment as provided in paragraph 5,
the sum of Seven Thousand Three Hundred Fifty Two and 50/100 Dollars ($7,352.50)
on or before the first day of the first full calendar month of the term and on
or before the first day of each and every successive calendar month. Basic rent
for any partial month shall be payable in advance and shall be prorated at the
rate of 1/30th of the monthly basic rent per day.

                  (b) Common Area Charges. In addition to the above basic rent
and as additional rent, Tenant shall pay to Landlord, subject to adjustments and
reconciliation as provided in paragraph 16 of this lease, the sum of Nine
Hundred Fifty-One and 50/100 Dollars ($951.50) on or before the first day of the
first full calendar month of the term and on the first day of each and every
successive calendar month, said sum representing Tenant's estimated payment of
its percentage share of common area charges as provided for in paragraph 16 of
this lease. Payment of common area charges for any partial month shall be
payable in advance and shall be prorated at the rate of 1/30th of the monthly
payment of common area charges per day.

                  (c) Manner and Place of Payment. All payments of basic rent
and common area charges shall be paid to Landlord, without deduction or offset,
in lawful money of the United States of America, at the office of Landlord at
3945 Freedom Circle, Suite 640, Santa Clara, California 95054, or to such other
person or place as Landlord may from time to time designate in writing.

                  (d) Third Month's Rent. Concurrently with Tenant's execution
of this lease, Tenant shall deposit with Landlord the

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sum of Eight Thousand Three Hundred Four Dollars ($8,304.00), to be applied
against the basic rent and common area charges for the third lease month of the
term.

                  (e) Security Deposit. Concurrently with Tenant's execution of
this lease, Tenant shall deposit with Landlord the sum of Eight Thousand Three
Hundred Four ($8,304.00) Dollars $8,304.00), which sum shall be held by Landlord
as a security deposit for the faithful performance by Tenant of all of the
terms, covenants and conditions of this lease to be kept and performed by
Tenant. If Tenant defaults with respect to any provision of this lease,
including but not limited to, the provisions relating to the payment of basic
rent and common area charges, Landlord may (but shall not be required to) use,
apply, or retain all or any part of this security deposit for the payment of any
amount which Landlord may spend by reason of Tenant's default or to compensate
Landlord for any other loss or damage which Landlord may suffer by reason of
default. If any portion of said deposit is so used, Tenant shall, within ten
(10) after written demand therefor, deposit cash with Landlord in the amount
sufficient to restore the security deposit to its original amount; Tenant's
failure to do so shall be a material breach of this lease. Landlord shall not be
required to keep this security deposit separate from its general funds and
Tenant shall not be entitled to interest on such deposit. If Tenant is not in
default at the expiration or termination of this lease, the security deposit or
any balance thereof shall be returned to Tenant after Tenant has vacated the
Premises. In the event of termination of Landlord's interest in this lease,
Landlord shall transfer said deposit to Landlord's successor in interest, and
Tenant agrees that Landlord shall thereupon be released from liability for the
return of such deposit or any accounting therefor.

         5.       ADJUSTMENT OF BASIC RENT

                  The basic rent provided for in paragraph 4(a) shall be
adjusted periodically and the monthly basic rent for each period shall be as set
forth below:

                           Lease Months  1 - 12    $7,352.50 per month

                           Lease Months 13 - 24    $7,750.00 per month

                           Lease Months 25 - 36    $8,217.50 per month

         6.       RESTRICTION ON USE

                  Tenant shall not do or permit to be done in or about the
Premises or the Project, nor bring or keep or permit to be brought or kept in or
about the Premises or Project, anything

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which is prohibited by or will in any way increase the existing rate of, or
otherwise affect, fire or any other insurance covering the Project or any part
thereof, or any of its contents, or will cause a cancellation of any insurance
covering the Project or any part thereof, or any of its contents. Tenant shall
not do or permit to be done anything in or about the Premises or the Project
which will constitute waste or which will in any way obstruct or interfere with
the rights of other tenants or occupants of the Project or injure or annoy them,
or use or allow the Premises to be used for any unlawful purpose, nor shall
Tenant cause, maintain or permit any nuisance in or about the Premises or the
Project. No loudspeaker or other device, system or apparatus which can be heard
outside the Premises shall be used in or at the Premises without the prior
written consent of Landlord. Tenant shall not use the Premises in any manner
that will cause or emit any objectionable odor, noise or light into the
adjoining premises or Common Area. Tenant shall not do anything on the Premises
that will cause damage to the Project and Tenant shall not overload the floor
capacity of the Premises or the Project. No machinery, apparatus or other
appliance shall be used or operated in or on the Premises that will in any
manner injure, vibrate or shake the Premises. Landlord shall be the sole judge,
of whether such odor, noise, light or vibration is such as to violate the
provisions of this paragraph. No waste materials or refuse shall be dumped upon
or permitted to remain upon any part of the Premises or the Project except in
trash containers placed inside exterior enclosures designated for that purpose
by Landlord, or where otherwise designated by Landlord; and no toxic or
Hazardous Materials (as defined in paragraph 49) shall be disposed of through
the plumbing or sewage system. No materials, supplies, equipment, finished
products or semifinished products, raw materials or articles of any nature shall
be stored or permitted to remain outside of the building proper. No retail sales
shall be made on the Premises. Tenant shall comply with any covenant, condition
or restriction ("C.C. & R.'s") affecting the Premises.

         7.       COMPLIANCE WITH LAWS

                  Tenant shall, in connection with its use and occupation of the
Premises, at its sole cost and expense, promptly observe and comply with (i) all
laws, statutes, ordinances and governmental rules, regulations and requirements
of federal, state, county, municipal and other governmental authorities, now or
hereafter in effect, which shall impose any duty upon Landlord or Tenant with
respect to the use, occupancy or alteration to the Premises, (ii) with the
requirements of any board of fire underwriters or other similar body now or
hereafter constituted and (iii) with any direction or occupancy certificate
issued pursuant to law by any public authority; provided, however, that no such
failure shall be deemed a breach of these provisions if Tenant, immediately upon
notification, commences to remedy or rectify said failure. The judgment of any
court of competent

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jurisdiction or the admission of Tenant in any action against Tenant (whether or
not Landlord is a party thereto) that Tenant has violated any such law, statute,
ordinance or governmental rule, regulation, requirement, direction or provision,
shall be conclusive of that fact as between Landlord and Tenant. This lease
shall remain in full force and effect notwithstanding any loss of use or other
effect on Tenant's enjoyment of the Premises by reason of any governmental laws,
statutes, ordinances, rules, regulations and requirements now or hereafter in
effect.

         8.       ALTERATIONS

                  Tenant shall not make or suffer to be made any alteration,
addition or improvement to or of the Premises or any part thereof (collectively
referred to herein as "alterations") without (i) the prior written consent of
Landlord, (ii) a valid building permit issued by the appropriate governmental
authority and (iii) otherwise complying with all applicable laws, regulations
and requirements of governmental agencies having jurisdiction and with the
rules, regulations and requirements of any board of fire underwriters or similar
body. Notwithstanding the foregoing, Tenant may make non-structural alterations
costing in the aggregate less than Five Thousand Dollars ($5,000) in any one
year of the term without the prior written consent of Landlord, provided that
Tenant promptly informs Landlord in writing of the nature of the alterations,
the cost thereof and the contractor engaged or proposed to be engaged to perform
such work, and provided further that all such work complies with clauses (ii)
and (iii) above. Landlord's consent to any requested alteration shall not create
on the part of Landlord or cause Landlord to incur any responsibility or
liability for such alteration's compliance with all laws, rules and regulations
of federal, state, county, municipal and other governmental authorities. Any
alteration made by Tenant (excluding moveable furniture and trade fixtures not
attached to the Premises) shall at once become a part of the Premises and belong
to Landlord. Without limiting the foregoing, all heating, lighting, electrical
(including all wiring, conduit, outlets, drops, buss ducts, main and subpanels),
air conditioning, partitioning, drapery and carpet installations made by Tenant,
regardless of how attached to the Premises, together with all other alterations
that have become an integral part of the Project in which the Premises are a
part, shall be and become part of the Premises and belong to Landlord upon
installation and shall not be deemed trade fixtures, and shall remain upon and
be surrendered with the Premises at the termination of the lease.

                  Regardless of whether Landlord's consent is required in
connection with the making of any alteration by Tenant, the same shall be made
by Tenant at its sole risk, cost and expense and only after Landlord's written
approval of any contractor or person selected by Tenant for that purpose, and
the same shall be made at such time and in such manner as Landlord may from time
to

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time designate. Tenant shall, if required by Landlord, secure at Tenant's cost a
completion and lien indemnity bond for such work. Upon Tenant's request,
Landlord shall advise Tenant in writing whether it reserves the right to require
Tenant to remove any Alterations from the Premises upon termination of the
Lease. Upon the expiration or sooner termination of the term, Landlord may, at
its sole option, require Tenant, at Tenant's sole cost and expense, to promptly
both remove any such alteration made by Tenant and designated by Landlord to be
removed and repair any damage to the Premises caused by such removal and shall
restore the Premises to the surrender condition as provided in paragraph 23
herein. Any moveable furniture and equipment or trade fixtures remaining on the
Premises at the expiration or other termination of the term shall become the
property of the Landlord unless promptly removed by Tenant.

                  If during the term any alteration, addition or change of the
Premises is required by law, regulation, ordinance or order of any public
authority, Tenant, at its sole cost and expense, shall promptly make the same.
If during the term any alterations, additions or changes to the Common Area or
to the Project in which the Premises is located is required by law, regulation,
ordinance or order of any public or quasi-public authority, and it is
impractical in Landlord's judgment for the affected tenants to individually make
such alterations, additions or changes, Landlord shall make such alterations,
additions or changes and the cost thereof shall be a common area charge and
Tenant shall pay its percentage share of such cost to Landlord as provided in
paragraph 16.

                  All trade fixtures, personal property and Alterations
installed in the Premises at Tenant's expense ("Tenant's Property") shall be
deemed Tenant's property and Tenant shall be entitled to all depreciation,
amortization and other tax benefits with respect thereto.

         9.       REPAIR AND MAINTENANCE

                  By entry hereunder, Tenant accepts the Premises as being in
good and sanitary order, condition and repair. Except as expressly provided
below, Tenant shall at its sole cost keep and maintain the entire Premises and
every part thereof including, without limitation, the windows, window frames,
plate glass, glazing, elevators within the Premises, truck doors, doors and all
door hardware, the interior walls and partitions, lighting and the electrical,
mechanical, and plumbing systems. Tenant shall also repair and maintain the
heating and air conditioning systems (unless Landlord has elected to keep and
maintain the heating and air conditioning systems as provided below) which shall
include, without limitation, a periodic maintenance agreement with a reputable
and licensed heating and air conditioning service company. If Tenant's use of
the heating and air conditioning systems is limited to normal business hours

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(8:00 a.m. to 6:00 p.m.), such agreement shall provide for service at least as
often as every 60 days; if Tenant's use of the heating or air conditioning
systems extends beyond such normal business hours this service shall be as often
as may be required by Landlord and in any event such service shall meet all
warranty enforcement requirements of such equipment and comply with all
manufacturer recommended maintenance. Landlord may elect, at its option, to keep
and maintain the heating and air conditioning systems of the Premises and in
such event, Tenant shall pay to Landlord upon demand the full cost of such
maintenance.

         As of the commencement date of this lease the Premises, including the
roof, shall be in good condition and repair with all building systems (e.g.,
electrical, mechanical, plumbing and HVAC) operating and to Landlord's actual
knowledge the Premises were constructed in compliance with applicable law when
built. Subject to the provisions of paragraph 17, Landlord shall keep and
maintain the roof, structural elements, and exterior walls of the buildings
constituting the Project and Common Area in good order and repair. Tenant waives
all rights under and benefits of California Civil Code Sections 1932(1), 1941,
and 1942 and under any similar law, statute or ordinance now or hereafter in
effect. The cost of the repairs and maintenance which are the obligation of
Landlord hereunder, including without limitation, maintenance contracts and
supplies, materials, equipment and tools used in such repairs and maintenance
shall be a common area charge and Tenant shall pay its percentage share of such
costs to Landlord as provided in paragraph 16; provided, however, that if any
repairs or maintenance is required because of an act or omission of Tenant, or
its agents, employees or invitees, Tenant shall pay to Landlord upon demand the
full cost of such repairs or maintenance.

         10.      LIENS

                  Tenant shall keep the Premises and the Project free from any
liens arising out of any work performed, materials furnished or obligations
incurred by Tenant, its agents, employees or contractors. Upon Tenant's receipt
of a preliminary twenty (20) day notice filed by a claimant pursuant to
California Civil Code Section 3097, Tenant shall immediately provide Landlord
with a copy of such notice. Should any lien be recorded against the Project,
Tenant shall give immediate notice of such lien to Landlord. In the event that
Tenant shall not, within ten (10) days following the imposition of such lien,
cause the same to be released of record, Landlord shall have, in addition to all
other remedies provided herein and by law, the right, but no obligation, to
cause the same to be released by such means as it shall deem proper, including
payment of the claim giving rise to such lien. All sums paid by Landlord for
such purpose, and all expenses (including attorneys' fees) incurred by it in
connection therewith, shall be payable to Landlord by Tenant on demand with

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interest at the rate of twelve percent (12%) per annum or the maximum rate
permitted by law, whichever is less. Landlord shall have the right at all times
to post and keep posted on the Premises any notices permitted or required by
law, or which Landlord shall deem proper for the protection of Landlord, the
Premises and the Project and any other party having an interest therein, from
mechanics' and materialmen's liens and like liens. Tenant shall give Landlord at
least fifteen (15) days prior notice of the date of commencement of any
construction on the Premises in order to permit the posting of such notices. In
the event Tenant is required to post an improvement bond with a public agency in
connection with any work performed by Tenant on or to the Premises, Tenant shall
include Landlord as an additional obligee.

         11.      INSURANCE

                  Tenant, at its sole cost and expense, shall keep in force
during the term (i) commercial general liability and property damage insurance
with a combined single limit of at least $2,000,000 per occurrence insuring
against personal or bodily injury to or death of persons occurring in, on or
about the Premises or Project and any and all liability of the insureds with
respect to the Premises or arising out of Tenant's maintenance, use or occupancy
of the Premises and all areas appurtenant thereto, (ii) direct physical
loss-special insurance covering the leasehold improvements in the Premises and
all of Tenant's equipment, trade fixtures, appliances, furniture, furnishings,
and personal property from time to time located in, on or about the Premises,
with coverage in the amount of the full replacement cost thereof, and (iii)
Worker's Compensation Insurance as required by law, together with employer's
liability coverage with a limit of not less than $1,000,000 for bodily injury
for each accident and for bodily injury by disease for each employee. Tenant's
commercial general liability and property damage insurance and Tenant's Workers
Compensation Insurance shall be endorsed to provide that said insurance shall
not be cancelled or reduced except upon at least thirty (30) days prior written
notice to Landlord. Further, Tenant's commercial general liability and property
damage insurance shall be primary and shall be endorsed to provide that Landlord
and McCandless Management Corporation, and their respective partners, officers,
directors and employees and such other persons or entities as directed from time
to time by Landlord shall be named as additional insureds for all liability
using ISO Bureau Form CG20111185 (or a successor form) or such other endorsement
form reasonably acceptable to Landlord; shall contain a severability of interest
clause and a cross-liability endorsement; shall be endorsed to provide that the
limits and aggregates apply per location using ISO Bureau Form CG25041185 (or a
successor form) or such other endorsement form reasonably acceptable to
Landlord; and shall be issued by an insurance company admitted to transact
business in the State of California and rated A+VIII or better in

                                       8
<PAGE>

Best's Insurance Reports (or successor report). The deductibles for all
insurance required to be maintained by Tenant hereunder shall be satisfactory to
Landlord. The commercial general liability insurance carried by Tenant shall
specifically insure the performance by Tenant of the indemnification provisions
set forth in paragraph 18 of this lease provided, however, nothing contained in
this paragraph 11 shall be construed to limit the liability of Tenant under the
indemnification provisions set forth in said paragraph 18. If Landlord or any of
the additional insureds named on any of Tenant's insurance, have other insurance
which is applicable to the covered loss on a contributing, excess or contingent
basis, the amount of the Tenant's insurance company's liability under the policy
of insurance maintained by Tenant shall not be reduced by the existence of such
other insurance. Any insurance carried by Landlord or any of the additional
insureds named on Tenant's insurance policies shall be excess and
non-contributing with the insurance so provided by Tenant.

                  Tenant shall, prior to the commencement of the term and at
least thirty (30) days prior to any renewal date of any insurance policy
required to be maintained by Tenant pursuant to this paragraph, provide Landlord
with a completed Certificate of Insurance, using a form acceptable in Landlord's
reasonable judgement, attaching thereto copies of all endorsements required to
be provided by Tenant under this lease. Tenant agrees to increase the coverage
or otherwise comply with changes in connection with said commercial general
liability, property damage, direct physical loss and Worker's Compensation
Insurance as Landlord or Landlord's lender may from time to time require.

                  Landlord shall obtain and keep in force a policy or policies
of insurance covering loss or damage to the Premises and Project, in the amount
of the full replacement value thereof, providing protection against those perils
included within the classification of "all risk" insurance, with increased cost
of reconstruction and contingent liability (including demolition), plus a policy
of rental income insurance in the amount of one hundred percent (100%) of twelve
(12) months' rent (including sums paid as additional rent) and such other
insurance as Landlord or Landlord's lender may from time to time require.
Landlord may, but shall not be obligated to, obtain flood and/or earthquake
insurance. Landlord shall have no liability to Tenant if Landlord elects not to
obtain flood and/or earthquake insurance. The cost of all such insurance
purchased by Landlord, plus any charges for deferred payment of premiums and the
amount of any deductible incurred upon any covered loss within the Project,
shall be common area charges and Tenant shall pay to Landlord its percentage
share of such costs as provided in paragraph 16 (provided that the amount of the
deductible under earthquake insurance shall not exceed ten percent (10%) of
replacement cost and shall be treated as a capital expenditure and the cost to
Tenant shall be limited as provided therein). If

                                       9

<PAGE>

the cost of insurance is increased due to Tenant's use of the Premises, then
Tenant shall pay to Landlord upon demand the full cost of such increase.

                  Landlord and Tenant hereby mutually waive any and all rights
of recovery against one another for real or personal property loss or damage
occurring to the Premises or the Project, or any part thereof, or to any
personal property therein, from perils insured against under fire and extended
insurance and any other property insurance policies existing for the benefit of
the respective parties so long as such insurance permits waiver of liability and
contains a waiver of subrogation without additional premiums.

                  If Tenant does not take out and maintain insurance as required
pursuant to this paragraph 11, Landlord may, but shall not be obligated to, take
out the necessary insurance and pay the premium therefor, and Tenant shall repay
to Landlord promptly on demand, as additional rent, the amount so paid. In
addition, Landlord may recover from Tenant and Tenant agrees to pay, as
additional rent, any and all reasonable expenses (including attorney fees) and
damages which Landlord may sustain by reason of the failure of Tenant to obtain
and maintain such insurance, it being expressly declared that the expenses and
damages of Landlord shall not be limited to the amount of the premiums thereon.

         12.      UTILITIES AND SERVICE

                  Tenant shall pay for all water, gas, light, heat, power,
electricity, telephone, trash pickup, sewer charges and all other services
supplied to or consumed on the Premises. In the event that any service is not
separately metered or billed to the Premises, the cost of such utility service
or other service shall be a common area charge and Tenant shall pay its
percentage share of such cost to Landlord as provided in paragraph 16. In
addition, the cost of all utilities and services furnished by Landlord to the
Common Area shall be a common area charge and Tenant shall pay its percentage
share of such cost to Landlord as provided in paragraph 16.

                  If Tenant's use of any such utility or service is materially
in excess of the average furnished to the other tenants of the Project, and such
utility or service is not separately metered, then Tenant shall pay to Landlord
upon demand, as additional rent, the full cost of such excess use, or Landlord
may cause such utility or service to be separately metered, in which case Tenant
shall pay the full cost of such utility or service and reimburse Landlord upon
demand for the cost of installing the separate meter.

                  Landlord shall not be liable for, and Tenant shall not be
entitled to any abatement or reduction of rent by reason of,

                                       10

<PAGE>

the failure of any person or entity to furnish any of the foregoing services
when such failure is caused by accident, breakage, repairs, strikes, lockouts or
other labor disturbances or labor disputes of any character, governmental
moratoriums, regulations or other governmental actions, or by any other cause,
similar or dissimilar, beyond the reasonable control of Landlord. In addition,
Tenant shall not be relieved from the performance of any covenant or agreement
in this lease because of any such failure, and no eviction of Tenant shall
result from such failure.

         13.      TAXES AND OTHER CHARGES

                  All real estate taxes and assessments and other taxes, fees
and charges of every kind or nature, foreseen or unforeseen, which are levied,
assessed or imposed upon Landlord and/or against the Premises, building, Common
Area or Project, or any part thereof by any federal, state, county, regional,
municipal or other governmental or quasi-public authority, together with any
increases therein for any reason, shall be a common area charge and Tenant shall
pay its percentage share of such costs to Landlord as provided in paragraph 16.
By way of illustration and not limitation, "other taxes, fees and charges" as
used herein include any and all taxes payable by Landlord (other than state and
federal personal or corporate income taxes measured by the net income of
Landlord from all sources, and premium taxes), whether or not now customary or
within the contemplation of the parties hereto, (i) upon, allocable to, or
measured by the rent payable hereunder, including, without limitation, any gross
income or excise tax levied by the local, state or federal government with
respect to the receipt of such rent, (ii) upon or with respect to the
possession, leasing, operation, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises or any part thereof, (iii) upon or
measured by the value of Tenant's personal property or leasehold improvements
located in the Premises, (iv) upon this transaction or any document to which
Tenant is a party creating or transferring an interest or estate in the
Premises, (v) upon or with respect to vehicles, parking or the number of persons
employed in or about the Project, and (vi) any tax, license, franchise fee or
other imposition upon Landlord which is otherwise measured by or based in whole
or in part upon the Project or any portion thereof. If Landlord contests any
such tax, fee or charge, the cost and expense incurred by Landlord thereby
(including, but not limited to, costs of attorneys and experts) shall also be
common area charges and Tenant shall pay its percentage share of such costs to
Landlord as provided in paragraph 16. In the event the Premises and any
improvements installed therein by Tenant or Landlord are valued by the assessor
disproportionately higher than those of other tenants in the building or Project
or in the event alterations or improvements are made to the Premises, Tenant's
percentage share of such taxes, assessments, fees and/or charges shall be
readjusted upward accordingly and Tenant agrees

                                       11

<PAGE>

to pay such readjusted share. Such determination shall be made by Landlord from
the respective valuations assigned in the assessor's work sheet or such other
information as may be reasonably available and Landlord's determination thereof
shall be conclusive.

                  Tenant agrees to pay, before delinquency, any and all taxes
levied or assessed during the term hereof upon Tenant's equipment, furniture,
fixtures and other personal property located in the Premises, including
carpeting and other property installed by Tenant notwithstanding that such
carpeting or other property has become a part of the Premises. If any of
Tenant's personal property shall be assessed with the Project, Tenant shall pay
to Landlord, as additional rent, the amount attributable to Tenant's personal
property within ten (10) days after receipt of a written statement from Landlord
setting forth the amount of such taxes, assessments and public charges
attributable to Tenant's personal property.

         14.      ENTRY BY LANDLORD

                  Landlord reserves, and shall at all reasonable times have, the
right to enter the Premises (i) to inspect the Premises, (ii) to supply services
to be provided by Landlord hereunder, (iii) to show the Premises to prospective
purchasers, lenders or tenants and to put 'for sale' or 'for lease' signs
thereon, (iv) to post notices required or allowed by this lease or by law, (v)
to alter, improve or repair the Premises and any portion of the Project, and
(vi) to erect scaffolding and other necessary structures in or through the
Premises or the Project where reasonably required by the character of the work
to be performed. Landlord shall not be liable in any manner for any
inconvenience, disturbance, loss of business, nuisance or other damage arising
from Landlord's entry and acts pursuant to this paragraph and Tenant shall not
be entitled to an abatement or reduction of rent if Landlord exercises any
rights reserved in this paragraph. For each of the foregoing purposes, Landlord
shall at all times have and retain a key with which to unlock all of the doors
in, on and about the Premises (excluding Tenant's vaults, safes and similar
areas designated in writing by Tenant in advance), and Landlord shall have the
right to use any and all means which Landlord may deem proper to open said doors
in an emergency in order to obtain entry to the Premises. Any entry by Landlord
to the Premises pursuant to this paragraph shall not under any circumstances be
construed or deemed to be a forcible or unlawful entry into or a detainer of the
Premises or an eviction, actual or constructive, of Tenant from the Premises or
any portion thereof.

                  Notwithstanding the foregoing, and except in the case of
emergency, Landlord shall give Tenant at least twenty-four (24) hours prior
notice of its intent to enter the Premises, and such entry shall be subject to
the reasonable security

                                       12

<PAGE>

requirements of Tenant. In the course of such entry, Landlord shall not
unreasonably interfere with Tenant's use of the Premiss unless reasonably
required in order for Landlord to fulfill its obligations under the Lease.

         15.      COMMON AREA; PARKING

                  Subject to the terms and conditions of this lease and such
rules and regulations as Landlord may from time to time prescribe, Tenant and
Tenant's employees and invitees shall, in common with other occupants of the
Project, and their respective employees and invitees and others entitled to the
use thereof, have the nonexclusive right to use the access roads, parking areas
and facilities within the Project provided and designated by Landlord for the
general use and convenience of the occupants of the Project which areas and
facilities shall include, but not be limited to, sidewalks, parking, refuse,
landscape and plaza areas, roofs and building exteriors, which areas and
facilities are referred to herein as "Common Area". This right shall terminate
upon the termination of this lease.

                  Landlord reserves the right from time to time to make changes
in the shape, size, location, amount and extent of the Common Area. Landlord
shall also have the right at any time to change the name, number or designation
by which the Project is commonly known. Landlord further reserves the right to
promulgate such rules and regulations relating to the use of the Common Area,
and any part thereof, as Landlord may deem appropriate for the best interests of
the occupants of the Project. The rules and regulations shall be binding upon
Tenant upon delivery of a copy of them to Tenant and Tenant shall abide by them
and cooperate in their observance. Such rules and regulations may be amended by
Landlord from time to time, with or without advance notice.

                  Tenant shall have the nonexclusive use of thirty-four (34)
parking spaces in the Common Area as designated from time to time by Landlord.
Landlord reserves the right at its sole option to assign and label parking
spaces, but it is specifically agreed that Landlord is not responsible for
policing any such parking spaces. Tenant shall not at any time park or permit
the parking of Tenant's trucks or other vehicles, or the trucks or other
vehicles of others, adjacent to loading areas so as to interfere in any way with
the use of such areas; nor shall Tenant at any time park or permit the parking
of Tenant's vehicles or trucks, or the vehicles or trucks of Tenant's suppliers
or others, in any portion of the Common Area not designated by Landlord for such
use by Tenant. Tenant shall not park or permit any inoperative vehicle or
equipment to be parked on any portion of the Common Area.

                  Landlord shall operate, manage and maintain the Common Area.
The manner in which the Common Area shall be operated,

                                       13

<PAGE>

managed and maintained and the expenditures for such operation, management and
maintenance shall be at the sole discretion of Landlord. The cost of such
maintenance, operation and management of the Common Area, including but not
limited to landscaping, repair of paving, parking lots and sidewalks, security
and exterminator services and salaries and employee benefits (including union
benefits) of on-site and accounting personnel engaged in such maintenance and
operations management, shall be a common area charge and Tenant shall pay to
Landlord its percentage share of such costs as provided in paragraph 16.

         16.      COMMON AREA CHARGES

                  Tenant shall pay to Landlord, as additional rent, an amount
equal to fifty-five and 52/100 percent (55.52%) of the total common area charges
as defined below. Tenant's percentage share of common area charges shall be paid
as follows:

                  Tenant's estimated monthly payment of common area charges
payable by Tenant during the calendar year in which the term commences is set
forth in paragraph 4(b) of this lease. Prior to the commencement of each
succeeding calendar year of the term (or as soon as practicable thereafter),
Landlord shall deliver to Tenant a written estimate of Tenant's monthly payment
of common area charges. Tenant shall pay, as additional rent, on the first day
of each month during the term in accordance with paragraph 4(b) of the lease,
its monthly share of common area charges as estimated by Landlord. Within one
hundred twenty (120) days of the end of each calendar year and of the
termination of this lease (or as soon as practicable thereafter), Landlord shall
deliver to Tenant a statement of actual common area charges incurred for the
preceding year. If such statement shows that Tenant has paid less than its
actual percentage then Tenant shall on demand pay to Landlord the amount of such
deficiency. If Tenant fails to pay such deficiency due within ten (10) days
after demand, Tenant shall pay an additional ten percent (10%) of the amount due
as a penalty. If such statement shows that Tenant has paid more than its actual
percentage share then Landlord shall, at its option, promptly refund such excess
to Tenant or credit the amount thereof to the rent next becoming due from
Tenant. Landlord reserves the right to revise any estimate of common area
charges if actual or projected common area charges show an increase or decrease
in excess of 10% from any earlier estimate for the same period. In such event,
Landlord shall deliver the revised estimate to Tenant, together with an
explanation of the reasons therefor, and Tenant shall revise its payments
accordingly. Landlord's and Tenant's obligation with respect to adjustments at
the end of the term or earlier expiration of this lease shall survive such
termination or expiration.

                  As used in this lease, "common area charges" shall include,
but not be limited to, (i) all items identified in

                                       14

<PAGE>

paragraphs 8, 9, 11, 12, 13 and 15 as being common area charges; (ii)
amortization of such capital improvements having a useful life greater than one
year as Landlord may have installed for the purpose of reducing operating costs
and/or to comply with all laws, rules and regulations of federal, state, county,
municipal and other governmental authorities now or hereinafter in effect
(Tenant's share of any such capital improvement shall equal Tenant's
proportionate share of the fraction of the cost of such capital improvement
equal to the remaining term of the lease over the useful life of such capital
improvement); (iii) salaries and employee benefits (including union benefits) of
personnel engaged in the operation and maintenance of the Project (or the
building in which the Premises are located) and payroll taxes applicable
thereto; (iv) supplies, materials, equipment and tools used or required in
connection with the operation and maintenance of the Project; (v) licenses,
permits and inspection fees; (vi) a reasonable reserve for repairs and
replacement of equipment used in the maintenance and operation of the Project;
(vii) all other operating costs incurred by Landlord in maintaining and
operating the Project; and (viii) an amount equal to five percent (5%) of the
actual expenditures for the aggregate of all other common area charges as
compensation for Landlord's accounting and processing services.

                  Notwithstanding anything to the contrary in this paragraph 16,
common area charges shall not include the following: (i) any costs occasioned by
a breach of the obligations of Landlord, or the negligence of Landlord, its
agents, employees or contractors, (ii) costs related to any construction defects
existing as of the commencement date of this lease, (iii) any costs related to
remediation of Hazardous Materials in, on or about the Premises or the Project
(this shall not limit Tenant's obligations set forth in paragraph 49 of this
lease), and (iv) any costs for which Landlord has a right of reimbursement from
third parties.

         17.      DAMAGE BY FIRE; CASUALTY

                  In the event the Premises are damaged by any casualty which is
covered under an insurance policy required to be maintained by Landlord pursuant
to paragraph 11, Landlord shall be entitled to the use of all insurance proceeds
and shall repair such damage as soon as reasonably possible and this lease shall
continue in full force and effect.

                  In the event the Premises are damaged by any casualty not
covered under an insurance policy required to be maintained pursuant to
paragraph 11, Landlord may, at Landlord's option, either (i) repair such damage,
at Landlord's expense, as soon as reasonably possible, in which event this lease
shall continue in full force and effect, or (ii) give written notice to Tenant
within thirty (30) days after the date of the occurrence of such damages of
Landlord's intention to cancel and terminate this

                                       15

<PAGE>

lease as of the date of the occurrence of the damages; provided, however, that
if such damage is caused by an act or omission of Tenant or its agent, servants
or employees, then Tenant shall repair such damage promptly at its sole cost and
expense. In the event Landlord elects to terminate this lease pursuant hereto,
Tenant shall have the right within ten (10) days after receipt of the required
notice to notify Landlord in writing of Tenant's intention to repair such damage
at Tenant's expense, without reimbursement from Landlord, in which event this
lease shall continue in full force and effect and Tenant shall proceed to make
such repairs as soon as reasonably possible. If Tenant does not give such notice
within the ten (10) day period, this lease shall be cancelled and terminated as
of the date of the occurrence of such damage. Under no circumstances shall
Landlord be required to repair any injury or damage to (by fire or other cause),
or to make any restoration or replacement of, any of Tenant's personal property,
trade fixtures or property leased from third parties, whether or not the same is
attached to the Premises.

                  If the Premises are totally destroyed during the term from any
cause (including any destruction required by any authorized public authority),
whether or not covered by the insurance required under paragraph 11, this lease
shall automatically terminate as of the date of such total destruction;
provided, however, that if the Premises can reasonably and lawfully be repaired
or restored within twelve (12) months of the date of destruction to
substantially the condition existing prior to such destruction and if the
proceeds of the insurance payable to the Landlord by reason of such destruction
are sufficient to pay the cost of such repair or restoration, then the insurance
proceeds shall be so applied, Landlord shall promptly repair and restore the
Premises and this lease shall continue, without interruption, in full force and
effect. If the Premises are totally destroyed during the last twelve (12) months
of the term, Landlord may at Landlord's option cancel and terminate this lease
as of the date of occurrence of such damage by giving written notice to Tenant
of Landlord's election to do so within thirty (30) days after the occurrence of
such damage.

                  If the Premises are partially or totally destroyed or damaged
and Landlord or Tenant repair them pursuant to this lease, the rent payable
hereunder for the period during which such damage and repair continues shall be
abated only in proportion to the square footage of the Premises rendered
untenantable to Tenant by such damage or destruction. Tenant shall have no claim
against Landlord for any damage, loss or expense suffered by reason of any such
damage, destruction, repair or restoration. The parties waive the provisions of
California Civil Code sections 1932(2) and 1933(4) (which provisions permit the
termination of a lease upon destruction of the leased premises), and hereby
agree that the provisions of this paragraph 17 shall govern in the event of such
destruction.

                                       16

<PAGE>

                  Landlord shall notify Tenant within thirty (30) days following
any damage to or destruction of the Premises (or the Building if such damage or
destruction interferes with Tenant's use of the Premises) the length of time
Landlord reasonably estimates to be necessary for repair or restoration. Tenant
shall have the right to terminate the lease within thirty (30) days following
receipt of such notice if restoration or repair of the Premises will take more
than two hundred forty (240) days from the date of the damage or destruction and
Tenant's use of the Premises will still be materially interfered with at the end
of such two hundred forty (240) day period.

         18.      INDEMNIFICATION

                  Landlord shall not be liable to Tenant and Tenant hereby
waives all claims against Landlord for any injury to or death of any person or
damage to or destruction of property in or about the Premises or the Project by
or from any cause whatsoever except (i) the negligence or willful misconduct of
Landlord or Landlord's agents, employees or contractors; or (ii) a breach of
Landlord's obligations or representations under this lease. Without limiting the
foregoing, Landlord shall not be liable to Tenant for any injury to or death of
any person or damages to or destruction of property by reason of, or arising
from, any latent defect in the Premises or Project or the act or negligence of
any other tenant of the Project. Tenant shall immediately notify Landlord of any
defect in the Premises or Project.

                  Except as to injury to persons or damage to property the
principal cause of which is (i) the negligence or willful misconduct of Landlord
or Landlord's agents, employees or contractors; or (ii) a breach of Landlord's
obligations or representations under this lease, Tenant shall hold Landlord
harmless from and defend Landlord against any claim, liability, loss, damage or
expense (including attorney fees) arising out of any injury to or death of any
person or damage to or destruction of property occurring in, on or about the
Premises from any cause whatsoever or on account of the use, condition,
occupational safety or occupancy of the Premises. Tenant shall further hold
Landlord harmless from and defend Landlord against any claim, liability, loss,
damage or expense (including attorney fees) arising (i) from Tenant's use of the
Premises or from the conduct of its business or from any activity or work done,
permitted or suffered by Tenant or its agents or employees in or about the
Premises or Project, (ii) out of the failure of Tenant to observe or comply with
Tenant's obligation to observe and comply with laws or other requirements as set
forth in paragraph 7, (iii) by reason of Tenant's use, handling, storage, or
disposal of toxic or Hazardous Materials or waste, (iv) by reason of any labor
or service performed for, or materials used by or furnished to, Tenant or any
contractor engaged by Tenant with respect to the Premises, or (v) from any other
act, neglect, fault or omission of Tenant or its agents or employees.

                                       17

<PAGE>

                  The provisions of this paragraph 18 shall survive the
expiration or earlier termination of this lease.

         19.      ASSIGNMENT AND SUBLETTING

                  Tenant shall not voluntarily assign, encumber or otherwise
transfer its interest in this lease or in the Premises, or sublease all or any
part of the Premises, or allow any other person or entity to occupy or use all
or any part of the Premises, without first obtaining Landlord's written consent,
which consent shall not be unreasonably withheld or delayed, and otherwise
complying with the requirements of this paragraph 19. Any assignment,
encumbrance or sublease without Landlord's consent, shall constitute a default.

                  If Tenant desires to sublet or assign all or any portion of
the Premises, Tenant shall give Landlord written notice thereof, specifying the
projected commencement date of the proposed sublet or assignment (which date
shall be not less than thirty (30) days or more than ninety (90) days after the
date of Landlord's receipt of such notice), the portions of the Premises
proposed to be sublet or assigned, the terms and conditions of the proposed
assignment or sublease (including the rent to be paid by the proposed assignee
or subtenant) and the name, address and telephone number of the proposed
assignee or subtenant. Tenant shall further provide Landlord with such other
information concerning the proposed assignee or subtenant as requested by
Landlord. In the case of an assignment or a sublet of more than fifty percent
(50%) of the Premises, for a period of fifteen (15) days after Landlord's
receipt of Tenant's written notice, Landlord shall have the option, exercisable
by delivering written notice to Tenant, to terminate this lease as of the date
specified in Landlord's written notice to Tenant, which date shall not be less
than thirty (30) days nor more than ninety (90) days after the date of
Landlord's written notice to Tenant. If Landlord exercises its option to
terminate this lease as provided in the foregoing sentence, Landlord may, if it
so elects, enter into a new lease for the Premises or any portion thereof with
the proposed assignee or subtenant or any other third party on such terms as
Landlord and such proposed assignee or subtenant or other third party may agree;
in such event, Tenant shall not be entitled to any portion of the profit, if
any, which Landlord may realize on account of such termination and reletting.

                  If Landlord does not elect to terminate this lease as provided
hereinabove in this paragraph 19 and if Landlord consents in writing to the
proposed assignment or sublet, Tenant shall be free to assign or sublet all or a
portion of the Premises subject to the following conditions: (i) any sublease
shall be on the same terms set forth in the notice given to Landlord; (ii) no
sublease shall be valid and no subtenant shall take possession of the sublet
premises until an executed counterpart of such sublease has been delivered to
Landlord;

                                       18

<PAGE>

(iii) no subtenant shall have a further right to sublet; (iv) any sums or other
economic consideration received by Tenant as a result of such assignment or
sublet (except rental or other payments received which are attributable to the
amortization over the term of this lease of the cost of leasehold improvements
constructed for such assignees or subtenant, and brokerage fees) whether
denominated rentals or otherwise, which exceed, in the aggregate, the total sums
which Tenant is obligated to pay Landlord under this lease (prorated to reflect
obligations allocable to that portion of the Premises subject to such sublease),
shall be payable to Landlord as additional rent under this lease without
affecting or reducing any other obligation of Tenant hereunder; (v) no sublet or
assignment shall release Tenant of Tenant's obligation or alter the primary
liability of Tenant to pay the rent and to perform all other obligations to be
performed by Tenant hereunder; and (vi) any assignee or subtenant must expressly
agree to assume and perform all of the covenants and conditions of Tenant under
this lease. Tenant shall pay to Landlord promptly upon demand as additional
rent, Landlord's actual attorneys' fees and other costs incurred for reviewing,
processing or documenting any requested assignment or sublease, whether or not
Landlord's consent is granted; provided that Landlord's attorney's fees shall be
limited to One Thousand Dollars ($1,000) if Tenant uses Landlord's standard form
of assignment or sublease without material modifications. Tenant shall not be
entitled to assign this lease or sublease all or any part of the Premises (and
any attempt to do so shall be voidable by Landlord) during any period in which
Tenant is in default under this lease.

                  If Tenant is a partnership, a withdrawal or change, voluntary
or involuntary or by operation of law, of any general partner or the dissolution
of the partnership shall be deemed an assignment of this lease subject to all
the conditions of this paragraph 19. If Tenant is a corporation any dissolution,
merger, consolidation or other reorganization of Tenant or the sale or other
transfer of a controlling percentage of the capital stock of Tenant or the sale
of more than fifty percent (50%) of the value of Tenant's assets shall be an
assignment of this lease subject to all the conditions of this paragraph 19. The
term "controlling percentage" means the ownership of, and the right to vote,
stock possessing more than 50% of the total combined voting power of all classes
of Tenant's capital stock issued, outstanding and entitled to vote. This
paragraph shall not apply if Tenant is a corporation the stock of which is
traded through an exchange.

                  The acceptance of rent by Landlord from any other person shall
not be deemed to be a waiver by Landlord of any provision hereof. Consent to one
assignment or sublet shall not be deemed consent to any subsequent assignment or
sublet. In the event of default by any assignee of Tenant or any successor of
Tenant in the performance of any of the terms hereof, Landlord

                                       19
<PAGE>

may proceed directly against Tenant without the necessity of exhausting remedies
against such assignee or successor. Landlord may consent to subsequent
assignments or sublets of this lease or amendments or modifications to this
lease with assignees of Tenant, without notifying Tenant, or any successor of
Tenant, and without obtaining its or their consent thereto and such action shall
not relieve Tenant of liability under this lease.

                  No interest of Tenant in this lease shall be assignable by
operation of law (including, without limitation, the transfer of this lease by
testacy or intestacy). Each of the following acts shall be considered an
involuntary assignment: (i) if Tenant is or becomes bankrupt or insolvent, makes
an assignment for the benefit of creditors or institutes a proceeding under the
Bankruptcy Act in which Tenant is the bankrupt; or, if Tenant is a partnership
or consists of more than one person or entity, if any partner of the partnership
or other person or entity is or becomes bankrupt or insolvent, or makes an
assignment for the benefit of creditors; (ii) if a writ of attachment or
execution is levied on this lease; or (iii) if, in any proceeding or action to
which Tenant is a party, a receiver is appointed with authority to take
possession of the Premises. An involuntary assignment shall constitute a default
by Tenant and Landlord shall have the right to elect to terminate this lease, in
which case this lease shall not be treated as an asset of Tenant.

                  Tenant immediately and irrevocably assigns to Landlord, as
security for Tenant's obligations under this lease, all rent from any subletting
of all or a part of the Premises as permitted by this lease, and Landlord, as
assignee and as attorney-in-fact for Tenant, or a receiver of Tenant appointed
on Landlord's application, may collect such rent and apply it toward Tenant's
obligations under this lease; except that, until the occurrence of an act or
default by Tenant, Tenant shall have the right to collect such rent, subject to
promptly forwarding to Landlord any portion thereof to which Landlord is
entitled pursuant to this paragraph 19.

         Notwithstanding the above requirement that Tenant obtain the consent of
Landlord prior to any assignment or sublet, Tenant may, without obtaining the
prior consent of Landlord, assign or sublease the whole or any part of the
Premises to (a) any corporation or other entity which is wholly owned by Tenant
or of which Tenant is a wholly owned subsidiary, or which is wholly-owned by
either of the foregoing, (b) a successor corporation related to Tenant by merger
or consolidation, so long as the liabilities of the corporations participating
in such merger or consolidation are assumed by the surviving corporate entity,
or (c) any corporation acquiring this lease and substantially all of Tenant's
assets, provided that (i) Tenant shall give written notice thereof to Landlord
in the manner required for other assignments or subleases by this paragraph 19,
(ii) Tenant (or the surviving corporation in the case of a merger

                                       20
<PAGE>
 or consolidation) shall continue to be fully obligated under this lease, (iii)
 any such assignee shall expressly assume and perform and any such sublessee
 shall expressly agree to abide by and perform all the terms and conditions of
 this lease to be performed by Tenant; and (iv) any such assignment or sublet
 shall be subject to all other terms and conditions of this paragraph 19
 pertaining to assignments and/or sublets (excepting only the requirement
 concerning prior written consent of Landlord).

         20.      DEFAULT

                  The occurrence of any of the following shall constitute a
default by Tenant: (i) failure of Tenant to pay any rent or other sum payable
hereunder within five (5) days of when due; (ii) abandonment of the Premises
(Tenant's failure to occupy and conduct business in the Premises for fourteen
(14) consecutive days shall be deemed an abandonment; provided, however, if
Tenant continues to meet all other obligations of Tenant under the lease
including but not limited to payment of rent and common area charges then the
failure to occupy and conduct business shall not constitute an abandonment); or
(iii) failure of Tenant to perform any other term, covenant or condition of this
lease if the failure to perform is not cured within thirty (30) days after
notice thereof has been given to Tenant (provided that if such default cannot
reasonably be cured within thirty (30) days, Tenant shall not be in default if
Tenant commences to cure such failure to perform within the thirty (30) day
period and diligently and in good faith continues to cure the failure to
perform). The notice referred to in clause (iii) above shall specify the failure
to perform and the applicable lease provision and shall demand that Tenant
perform the provisions of this lease within the applicable period of time. No
notice shall be deemed a forfeiture or termination of this lease unless Landlord
so elects in the notice. No notice shall be required in the event of abandonment
or vacation of the Premises.

                  In addition to the above, the occurrence of any of the
following events shall also constitute a default by Tenant: (i) Tenant admits in
writing its inability to pay its debts, or makes a general assignment for the
benefit of creditors (for purposes of determining whether Tenant is not paying
its debts as they become due, a debt shall be deemed overdue upon the earliest
to occur of the following: thirty (30) days from the date a statement therefor
has been rendered; the date on which any action or proceeding therefor is
commenced; or the date on which a formal notice of default or demand has been
sent); or (ii) any financial statements given to Landlord by Tenant, any
assignee of Tenant, subtenant of Tenant, any guarantor of Tenant, or successor
in interest of Tenant (including, without limitation, any schedule of Tenant's
aged accounts payable) are materially false. At any time during the term of this
lease Landlord, at Landlord's option, shall have the right to receive from
Tenant, upon Landlord's request, a current annual balance sheet for

                                       21
<PAGE>

Landlord's review.

                  In the event of a default by Tenant, then Landlord, in
addition to any other rights and remedies of Landlord at law or in equity, shall
have the right either to terminate Tenant's right to possession of the Premises
(and thereby terminate this lease) or, from time to time and without termination
of this lease, to relet the Premises or any part thereof for the account and in
the name of Tenant for such term and on such terms and conditions as Landlord in
its sole discretion may deem advisable, with the right to make alterations and
repairs to the Premises.

                  Should Landlord elect to keep this lease in full force and
effect, Landlord shall have the right to enforce all of Landlord's rights and
remedies under this lease, including but not limited to the right to recover and
to relet the Premises and such other rights and remedies as Landlord may have
under California Civil Code Section 1951.4 (or successor Code section) or any
other California statute. If Landlord relets the Premises, then Tenant shall pay
to Landlord, as soon as ascertained, the costs and expenses incurred by Landlord
in such reletting and in making alterations and repairs. Rentals received by
Landlord from such reletting shall be applied (i) to the payment of any
indebtedness due hereunder, other than basic rent and common area charges, from
Tenant to Landlord; (ii) to the payment of the cost of any repairs necessary to
return the Premises to good condition normal wear and tear excepted, including
the cost of alterations and the cost of storing any of Tenant's property left on
the Premises at the time of reletting; and (iii) to the payment of basic rent or
common area charges due and unpaid hereunder. The residue, if any, shall be held
by Landlord and applied in payment of future rent or damages in the event of
termination as the same may become due and payable hereunder and the balance, if
any at the end of the term of this lease, shall be paid to Tenant. Should the
basic rent and common area charges received from time to time from such
reletting during any month be less than that agreed to be paid during that month
by Tenant hereunder, Tenant shall pay such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly. No such reletting of the
Premises by Landlord shall be construed as an election on its part to terminate
this lease unless a notice of such intention is given to Tenant or unless the
termination hereof is decreed by a court of competent jurisdiction.
Notwithstanding any such reletting without termination, Landlord may at any time
thereafter elect to terminate this lease for such previous breach, provided it
has not been cured.

                  Should Landlord at any time terminate this lease for any
breach, in addition to any other remedy it may have, it shall have the immediate
right of entry and may remove all persons and property from the Premises and
shall have all the rights and remedies of a landlord provided by California
Civil Code Section

                                       22
<PAGE>

1951.2 or any successor code section. Upon such termination, in addition to all
its other rights and remedies, Landlord shall be entitled to recover from Tenant
all damages it may incur by reason of such breach, including the cost of
recovering the Premises and including (i) the worth at the time of award of 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 Tenant proves could have been reasonably avoided; (iii) the
worth at the time of the 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 Tenant proves could be reasonably avoided; and (iv) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant's failure to perform its obligations under this lease or which in the
ordinary course of events would be likely to result therefrom. The "worth at the
time of award" of the amounts referred to in (i) and (ii) above is computed by
allowing interest at the rate of twelve percent (12%) per annum. The "worth at
the time of award" of the amount referred to in (iii) above shall be computed by
discounting such amount at the discount rate of the federal reserve bank of San
Francisco at the time of award plus one percent (1%). Tenant waives the
provisions of Section 1179 of the California Code of Civil Procedure (which
Section allows Tenant to petition of court of competent jurisdiction for relief
against forfeiture of this lease). Property removed from the Premises may be
stored in a public or private warehouse or elsewhere at the sole cost and
expense of Tenant. In the event that Tenant shall not immediately pay the cost
of storage of such property after the same has been stored for a period of
thirty (30) days or more, Landlord may sell any or all thereof at a public or
private sale in such manner and at such times and places that Landlord, in its
sole discretion, may deem proper, without notice to or demand upon Tenant.

         21.      LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT

                  Landlord, at any time after Tenant commits a default, may, but
shall not be obligated to, cure the default at Tenant's cost. If Landlord at any
time, by reason of Tenant's default, pays any sum or does any act that requires
the payment of any sum, the sum paid by Landlord shall be due immediately from
Tenant to Landlord and shall bear interest at the rate of twelve percent (12%)
per annum or the maximum rate permitted by law, whichever is less, from the
date the sum is paid by Landlord until Landlord is reimbursed by Tenant.
Amounts due Landlord hereunder shall be additional rent.

         22.      EMINENT DOMAIN

                  If all or any part of the Premises shall be taken by

                                       23
<PAGE>

any public or quasi-public authority under the power of eminent domain or
conveyance in lieu thereof, this lease shall terminate as to any portion of the
Premises so taken or conveyed on the date when title vests in the condemnor, and
Landlord shall be entitled to any and all payments, income, rent, award or any
interest therein whatsoever which may be paid or made in connection with such
taking or conveyance. Tenant shall have no claim against Landlord or otherwise
for the value of any unexpired term of this lease. Notwithstanding the
foregoing, Tenant shall be entitled to any compensation for depreciation to and
cost of removal of Tenant's equipment and fixtures and any compensation for its
relocation expenses necessitated by such taking, but in each case only to the
extent the condemning authority makes a separate award therefor or specifically
identifies a portion of the award as being therefor. Each party waives the
provisions of Section 1265.130 of the California Code of Civil Procedure (which
section allows either party to petition the Superior Court to terminate this
lease in the event of a partial taking of the Premises).

                  If any action or proceeding is commenced for such taking of
the Premises or any portion thereof or of any other space in the Project, or if
Landlord is advised in writing by any entity or body having the right or power
of condemnation of its intention to condemn the Premises or any portion thereof
or of any other space in the Project, and Landlord shall decide to discontinue
the use and operation of the Project or decide to demolish, alter or rebuild the
Project, then Landlord shall have the right to terminate this lease by giving
Tenant written notice thereof within sixty (60) days of the earlier of the date
of Landlord's receipt of such notice of intention to condemn or the commencement
of said action or proceeding. Such termination shall be effective as of the last
day of the calendar month next following the month in which such notice is given
or the date on which title shall vest in the condemnor, whichever occurs first.

                  In the event of a partial taking, or conveyance in lieu
thereof, of the Premises and fifty percent (50%) or more of the number of square
feet in the Premises are taken then Tenant may terminate this lease. Any
election by Tenant to so terminate shall be by written notice given to Landlord
within sixty (60) days from the date of such taking or conveyance and shall be
effective on the last day of the calendar month next following the month in
which such notice is given or the date on which title shall vest in the
condemnor, whichever occurs first.

                  If a portion of the Premises is taken by power of eminent
domain or conveyance in lieu thereof and neither Landlord nor Tenant terminates
this lease as provided above, then this lease shall continue in full force and
effect as to the part of the Premises not so taken or conveyed and all payments
of rent shall be apportioned as of the date of such taking or conveyance so that
thereafter the amounts to be paid by Tenant shall be in

                                       24
<PAGE>

the ratio that the area of the portion of the Premises not so taken bears to the
total area of the Premises prior to such taking.

         23.      NOTICE AND COVENANT TO SURRENDER

                  Except for damage to the Premises caused by casualty or the
acts or negligence of Landlord or Landlord's agents, employees or contractors,
on the last day of the term or on the effective date of any earlier termination,
Tenant shall surrender to Landlord the Premises in its condition existing as of
the commencement of the term (normal wear and tear excepted) including removal
of alterations made to the Premises by Tenant except for such improvements and
alterations which Tenant is not required to remove pursuant to the terms of
paragraph 8 of this lease, which improvements and alterations shall be
surrendered in their condition existing as of the date of completion of
construction and/or installation (normal wear and tear excepted), with all
originally painted interior walls washed or repainted if marked or damaged,
interior vinyl covered walls cleaned and repaired or replaced if marked or
damaged, all carpets shampooed and cleaned, the air conditioning and heating
system serviced and repaired by a reputable and licensed service firm (unless
Landlord has elected to maintain such system pursuant to paragraph 9 of this
lease) and all floors cleaned and waxed; all to the reasonable satisfaction of
Landlord. On or prior to the last day of the term or the effective date of any
earlier termination, Tenant shall remove all of Tenant's personal property and
trade fixtures, together with improvements or alterations that Tenant is
obligated to remove pursuant to the provisions of paragraph 8 of this lease,
from the Premises, and all such property not removed shall be deemed abandoned.
In addition, on or prior to the expiration or earlier termination of this lease,
Tenant shall remove, at Tenant's sole cost and expense, all telephone, other
communication, computer and any other cabling and wiring of any sort installed
in the space above the suspended ceiling of the Premises or anywhere else in the
Premises and shall promptly repair any damage to the suspended ceiling, lights,
light fixtures, walls and any other part of the Premises resulting from such
removal.

                  If the Premises are not surrendered as required in this
paragraph, Tenant shall indemnify Landlord against all loss, liability and
expense (including but not limited to, attorney fees) resulting from the failure
by Tenant in so surrendering the Premises, including, without limitation, any
claims made by any succeeding tenants. It is agreed between Landlord and Tenant
that the provisions of this paragraph shall survive termination of this lease.

         24.      TENANT'S QUITCLAIM

                  At the expiration or earlier termination of this lease,

                                       25
<PAGE>

Tenant shall execute, acknowledge and deliver to Landlord, within ten (10) days
after written demand from Landlord to Tenant, any quitclaim deed or other
document required to remove the cloud or encumbrance created by this lease from
the real property of which the Premises are a part. This obligation shall
survive said expiration or termination.

         25.      HOLDING OVER

                  Any holding over after the expiration or termination of this
lease with the written consent of Landlord shall be construed to be a tenancy
from month to month at the monthly rent, as adjusted, in effect on the date of
such expiration or termination. All provisions of this lease, except those
pertaining to the term and any option to extend, shall apply to the month to
month tenancy. The provisions of this paragraph are in addition to, and do not
affect, Landlord's right of reentry or other rights hereunder or provided by
law.

                  If Tenant shall retain possession of the Premises or any part
thereof without Landlord's consent following the expiration or sooner
termination of this lease for any reason, then Tenant shall pay to Landlord for
each day of such retention for the first thirty (30) days one hundred
twenty-five percent (125%) of the daily rental in effect during the last month
prior to the date of such expiration or termination and thereafter Tenant shall
pay to Landlord for each day of such retention double the amount of the daily
rental in effect during the last month prior to the date of such expiration or
termination. Tenant shall also indemnify and hold Landlord harmless from any
loss, liability and expense (including, but not limited to, attorneys fees)
resulting from delay by Tenant in surrendering the Premises, including without
limitation any claims made by any succeeding tenant founded on such delay.
Acceptance of rent by Landlord following expiration or termination shall not
constitute a renewal of this lease, and nothing contained in this paragraph
shall waive Landlord's right of re-entry or any other right. Tenant shall be
only a Tenant at sufferance, whether or not Landlord accepts any rent from
Tenant, while Tenant is holding over without Landlord's written consent.

         26.      SUBORDINATION

                  In the event Landlord's title or leasehold interest is now or
hereafter encumbered in order to secure a loan to Landlord, Tenant shall, at the
request of Landlord or the lender, execute in writing an agreement subordinating
its rights under this lease to the lien of such encumbrance, or, if so
requested, agreeing that the lien of lender's encumbrance shall be or remain
subject and subordinate to the rights of Tenant under this lease. Tenant hereby
irrevocably appoints Landlord the attorney-in-fact of Tenant to execute, deliver
and record any such instrument or instruments for and in the name and on behalf
of Tenant.

                                       26
<PAGE>

Notwithstanding any such subordination, Tenant's possession under this lease
shall not be disturbed if Tenant is not in default and so long as Tenant shall
pay all amounts due hereunder and otherwise observe and perform all provisions
of this lease. In addition, if in connection with any such loan the lender shall
request reasonable modifications of this lease as a condition to such financing,
Tenant will not unreasonably withhold, delay or defer its consent thereof,
provided that such modifications do not increase the obligations of Tenant
hereunder or materially adversely affect the leasehold interest hereby created
or Tenant's rights hereunder.

         27.      CERTIFICATE OF ESTOPPEL

                  Each party shall, within five (5) calendar days after request
therefor, execute and deliver to the other party, in recordable form, a
certificate stating that the lease is unmodified and in full force and effect,
or in full force and effect as modified and stating the modifications. The
certificate shall also state the amount of the monthly rent, the date to which
monthly rent has been paid in advance, the amount of the security deposit and/or
prepaid monthly rent, and, if the request is made by Landlord, shall include
such other items as Landlord or Landlord's lender may reasonably request.
Failure to deliver such certificate within such time shall constitute a
conclusive acknowledgment by the party failing to deliver the certificate that
the lease is in full force and effect and has not been modified except as may be
represented by the party requesting the certificate. Any such certificate
requested by Landlord may be conclusively relied upon by any prospective
purchaser or encumbrancer of the Premises or Project. Further, within five (5)
calendar days following written request made from time to time by Landlord,
Tenant shall furnish to Landlord current financial statements of Tenant.

         28.      SALE BY LANDLORD

                  In the event the original Landlord hereunder, or any successor
owner of the Project or Premises, shall sell or convey the Project or Premises,
all liabilities and obligations on the part of the original Landlord, or such
successor owner, under this lease accruing thereafter shall terminate, and
thereupon all such liabilities and obligations shall be binding upon the new
owner. Tenant agrees to attorn to such new owner and to look solely to such new
owner for performance of any and all such liabilities and obligations.

         29.      ATTORNMENT TO LENDER OR THIRD PARTY

                  In the event the interest of Landlord in the land and
buildings in which the Premises are located (whether such interest of Landlord
is a fee title interest or a leasehold interest) is encumbered by deed of trust,
and such interest is

                                       27
<PAGE>

acquired by a lender or any other third party through judicial foreclosure or by
exercise of a power of sale at private trustee's foreclosure sale, Tenant hereby
agrees to release Landlord of any obligation arising on or after any such
foreclosure sale and to attorn to the purchaser at any such foreclosure sale and
to recognize such purchaser as the Landlord under this lease.

         30.      DEFAULT BY LANDLORD

                  Landlord shall not be in default unless Landlord fails to
perform obligations required of Landlord within a reasonable time, but in no
event earlier than thirty (30) days after written notice by Tenant to Landlord
and to the holder of any first mortgage or deed of trust covering the Premises
specifying wherein Landlord has failed to perform such obligations; provided,
however, that if the nature of Landlord's obligations is such that more than
thirty (30) days are required for performance, then Landlord shall not be in
default if Landlord commences performance within such thirty (30) day period and
thereafter diligently prosecutes the same to completion.

                  If Landlord is in default of this lease, Tenant's sole remedy
shall be to institute suit against Landlord in a court of competent
jurisdiction, and Tenant shall have no right to offset any sums expended by
Tenant as a result of Landlord's default against future rent and other sums due
and payable pursuant to this lease. If Landlord is in default of this lease, and
as a consequence Tenant recovers a money judgment against Landlord, the judgment
shall be satisfied only out of the proceeds of sale received on execution of the
judgment and levy against the right, title and interest of Landlord in the
Project of which the Premises are a part, and out of rent or other income from
such real property receivable by Landlord or out of the consideration received
by Landlord from the sale or other disposition of all or any part of Landlord's
right, title and interest in the Project of which the Premises are a part.
Neither Landlord nor any of the partners comprising the partnership designated
as Landlord shall be personally liable for any deficiency.

         31.      CONSTRUCTION CHANGES

                  It is understood that the description of the Premises and the
location of ductwork, plumbing and other facilities therein are subject to such
changes as Landlord or Landlord's architect determines to be desirable in the
course of construction of the Premises and/or the improvements constructed or
being constructed therein, and no such changes or any changes in plans for any
other portions of the Project, shall affect this lease or entitle Tenant to any
reduction of rent hereunder or result in any liability of Landlord to Tenant.

                                       28
<PAGE>

         32.      MEASUREMENT OF PREMISES

                  Tenant understands and agrees that any reference to square
footage of the Premises is approximate only and includes all interior partitions
and columns, one-half of exterior walls, and one-half of the partitions
separating the Premises from the rest of the Project, Tenant's proportionate
share of the Common Area and, if applicable, covered areas immediately outside
the entry doors or loading docks. Tenant waives any claim against Landlord
regarding the accuracy of any such measurement and agrees that there shall not
be any adjustment in basic rent or common area charges or other amounts payable
hereunder by reason of inaccuracies in such measurement.

         33.      ATTORNEY FEES

                  If either party commences an action against the other party
arising out of or in connection with this lease, the prevailing party shall be
entitled to have and recover from the losing party all expenses of litigation,
including, without limitation, travel expenses, attorney fees, expert witness
fees, trial and appellate court costs, and deposition and transcript expenses.
If either party becomes a party to any litigation concerning this lease, or
concerning the Premises or the Project, by reason of any act or omission of the
other party or its authorized representatives, the party that causes the other
party to become involved in the litigation shall be liable to the other party
for all expenses of litigation, including, without limitation, travel expenses,
attorney fees, expert witness fees, trial and appellate court costs, and
deposition and transcript expenses.

         34.      SURRENDER

                  The voluntary or other surrender of this lease or the Premises
by Tenant, or a mutual cancellation of this lease, shall not work a merger, and
at the option of Landlord shall either terminate all or any existing subleases
or subtenancies or operate as an assignment to Landlord of all or any such
subleases or subtenancies.

         35.      WAIVER

                  No delay or omission in the exercise of any right or remedy of
Landlord on any default by Tenant shall impair such right or remedy or be
construed as a waiver. The receipt and acceptance by Landlord of delinquent rent
or other payments shall not constitute a waiver of any other default and
acceptance of partial payments shall not be construed as a waiver of the balance
of such payment due. No act or conduct of Landlord, including, without
limitation, the acceptance of keys to the Premises, shall constitute an
acceptance of the surrender of the Premises by Tenant before the expiration of
the term. Only a

                                       29
<PAGE>

written notice from Landlord to Tenant shall constitute acceptance of the
surrender of the Premises and accomplish a termination of this lease. Landlord's
consent to or approval of any act by Tenant requiring Landlord's consent or
approval shall not be deemed to waive or render unnecessary Landlord's consent
to or approval of any subsequent act by Tenant. Any waiver by Landlord of any
default must be in writing and shall not be a waiver of any other default
concerning the same or any other provision of this lease.

         36.      EASEMENTS; AIRSPACE RIGHTS

                  Landlord reserves the right to alter the boundaries of the
Project and grant easements and dedicate for public use portions of the Project
without Tenant's consent, provided that no such grant or dedication shall
interfere with Tenant's use of the Premises or otherwise cause Tenant to incur
cost or expense. From time to time, and upon Landlord's demand, Tenant shall
execute, acknowledge and deliver to Landlord, in accordance with Landlord's
instructions, any and all documents, instruments, maps or plats necessary to
effectuate Tenant's covenants hereunder.

                  This lease confers no rights either with regard to the
subsurface of or airspace above the land on which the Project is located or with
regard to airspace above the building of which the Premises are a part. Tenant
agrees that no diminution or shutting off of light or view by a structure which
is or may be erected (whether or not by Landlord) on property adjacent to the
building of which the Premises are a part or to property adjacent thereto, shall
in any way affect this lease, or entitle Tenant to any reduction of rent, or
result in any liability of Landlord to Tenant.

         37.      RULES AND REGULATIONS

                  Landlord shall have the right from time to time to promulgate
rules and regulations for the safety, care and cleanliness of the Premises, the
Project and the Common Area, or for the preservation of good order. On delivery
of a copy of such rules and regulations to Tenant, Tenant shall comply with the
rules and regulations, and a violation of any of them shall constitute a default
by Tenant under this lease. If there is a conflict between the rules and
regulations and any of the provisions of this lease, the provisions of this
lease shall prevail. Such rules and regulations may be amended by Landlord from
time to time with or without advance notice.

         38.      NOTICES

                  All notices, demands, requests, consents and other
communications which may be given or are required to be given by either party to
the other shall be in writing and shall be sufficiently made and delivered if
personally served or if sent

                                       30
<PAGE>

by United States first class mail, postage prepaid. Prior to the commencement
date, all such communications from Landlord to Tenant shall be served or
addressed to Tenant at 3350 Scott Road, Bldg. 6, Santa Clara, CA 95054; on or
after the commencement date all such communications from Landlord to Tenant
shall be addressed to Tenant at the Premises. All such communications by Tenant
to Landlord shall be sent to Landlord at its offices at 3945 Freedom Circle,
Suite 640, Santa Clara, California 95054. Either party may change its address by
notifying the other of such change. Each such communication shall be deemed
received on the date of the personal service or mailing thereof in the manner
herein provided, as the case may be.

         39.      NAME

                  Tenant shall not use the name of the Project for any purpose,
other than as the address of the business conducted by Tenant in the Premises,
without the prior written consent of Landlord.

         40.      GOVERNING LAW; SEVERABILITY

                  This lease shall in all respects be governed by and construed
in accordance with the laws of the State of California. If any provision of this
lease shall be held or rendered invalid, unenforceable or ineffective for any
reason whatsoever, all other provisions hereof shall be and remain in full force
and effect.

         41.      DEFINITIONS

                  As used in this lease, the following words and phrases shall
have the following meanings:

                  AUTHORIZED REPRESENTATIVE: any officer, agent, employee or
independent contractor retained or employed by either party, acting within
authority given him by that party.

                  ENCUMBRANCE: any deed of trust, mortgage or other written
security device or agreement affecting the Premises or the Project that
constitutes security for the payment of a debt or performance of an obligation,
and the note or obligation secured by such deed of trust, mortgage or other
written security device or agreement.

                  LEASE MONTH: the period of time determined by reference to the
day of the month in which the term commences and continuing to one day short of
the same numbered day in the next succeeding month; e.g., the tenth day of one
month to and including the ninth day in the next succeeding month.

                  LENDER: the beneficiary, mortgagee or other holder of an
encumbrance, as defined above.

                                       31
<PAGE>

                  LIEN: a charge imposed on the Premises by someone other than
Landlord, by which the Premises are made security for the performance of an act.
Most of the liens referred to in this lease are mechanic's liens.

                  MAINTENANCE: repairs, replacement, repainting and cleaning.

                  MONTHLY RENT: the sum of the monthly payments of basic rent
and common area charges.

                  PERSON: one or more human beings, or legal entities or other
artificial persons, including, without limitation, partnerships, corporations,
trusts, estates, associations and any combination of human being and legal
entities.

                  PROVISION: any term, agreement, covenant, condition, clause,
qualification, restriction, reservation or other stipulation in the lease that
defines or otherwise controls, establishes or limits the performance required or
permitted by either party.

                  RENT: basic rent, common area charges, additional rent, and
all other amounts payable by Tenant to Landlord required by this lease or
arising by subsequent actions of the parties made pursuant to this lease.

         Words used in any gender include other genders. If there be more than
one Tenant, the obligations of Tenant hereunder are joint and several. All
provisions whether covenants or conditions, on the part of Tenant shall be
deemed to be both covenants and conditions. The paragraph headings are for
convenience of reference only and shall have no effect upon the construction or
interpretation of any provision hereof.

         42.      TIME

                  Time is of the essence of this lease and of each and all of
its provisions.

         43.      INTEREST ON PAST DUE OBLIGATIONS; LATE CHARGE

                  Any amount due from Tenant to Landlord hereunder which is not
paid when due shall bear interest at the rate of ten percent (10%) per annum
from when due until paid, unless otherwise specifically provided herein, but the
payment of such interest shall not excuse or cure any default by Tenant under
this lease. In addition, Tenant acknowledges that late payment by Tenant to
Landlord of basic rent or common area charges or of any other amount due
Landlord from Tenant, will cause Landlord to incur costs not contemplated by
this lease, the exact amount of such costs being extremely difficult and
impractical to fix. Such costs include, without limitation, processing and
accounting

                                       32
<PAGE>

charges, and late charges that may be imposed on Landlord, e.g., by the terms of
any encumbrance and note secured by any encumbrance covering the Premises.
Therefore, if any such payment due from Tenant is not received by Landlord when
due, Tenant shall pay to Landlord an additional sum of five percent (5%) of the
overdue payment as a late charge. The parties agree that this late charge
represents a fair and reasonable estimate of the costs that Landlord will incur
by reason of late payment by Tenant. Acceptance of any late charge shall not
constitute a waiver of Tenant's default with respect to the overdue amount, nor
prevent Landlord from exercising any of the other rights and remedies available
to Landlord. No notice to Tenant of failure to pay shall be required prior to
the imposition of such interest and/or late charge, and any notice period
provided for in paragraph 20 shall not affect the imposition of such interest
and/or late charge. Any interest and late charge imposed pursuant to this
paragraph shall be and constitute additional rent payable by Tenant to Landlord.

         44.      ENTIRE AGREEMENT

                  This lease, including any exhibits and attachments,
constitutes the entire agreement between Landlord and Tenant relative to the
Premises and this lease and the exhibits and attachments may be altered, amended
or revoked only by an instrument in writing signed by both Landlord and Tenant.
Landlord and Tenant agree hereby that all prior or contemporaneous oral
agreements between and among themselves or their agents or representatives
relative to the leasing of the Premises are merged in or revoked by this lease.

         45.      CORPORATE AUTHORITY

                  If Tenant is a corporation, each individual executing this
lease on behalf of the corporation represents and warrants that he is duly
authorized to execute and deliver this lease on behalf of the corporation in
accordance with a duly adopted resolution of the Board of Directors of said
corporation and that this lease is binding upon said corporation in accordance
with its terms. If Tenant is a corporation, Tenant shall deliver to Landlord,
within ten (10) days of the execution of this lease, a copy of the resolution of
the Board of Directors of Tenant authorizing the execution of this lease and
naming the officers that are authorized to execute this lease on behalf of
Tenant, which copy shall be certified by Tenant's president or secretary as
correct and in full force and effect.

         46.      RECORDING

                  Neither Landlord nor Tenant shall record this lease or a short
form memorandum hereof without the consent of the other.

                                       33
<PAGE>

         47.      REAL ESTATE BROKERS

                  Each party represents and warrants to the other party that it
has not had dealings in any manner with any real estate broker, finder or other
person with respect to the Premises and the negotiation and execution of this
lease except Blickman Turkus. Except as to commissions and fees to be paid as
provided in this paragraph, each party shall indemnify and hold harmless the
other party from all damage, loss, liability and expense (including attorneys'
fees and related costs) arising out of or resulting from any claims for
commissions or fees that may or have been asserted against the other party by
any broker, finder or other person with whom Tenant or Landlord has or
purportedly has dealt with in connection with the Premises and the negotiation
and execution of this lease. To the extent agreed to between Landlord and
Blickman Turkus. Landlord shall pay all broker leasing commissions to Blickman
Turkus incurred in connection with the Premises and the negotiation and
execution of this lease.

         48.      EXHIBITS AND ATTACHMENTS

                  All exhibits and attachments to this lease are a part hereof.

         49.      ENVIRONMENTAL MATTERS

                  A.       TENANT'S COVENANTS REGARDING HAZARDOUS MATERIALS.

                           (1) HAZARDOUS MATERIALS HANDLING. Tenant, its agents,
invitees, employees, contractors, sublessees, assigns and/or successors shall
not use, store, dispose, release or otherwise cause to be present or permit the
use, storage, disposal, release or presence of Hazardous Materials (as defined
below) on or about the Premises or Project, except for the items listed on
Exhibit C attached hereto and in quantities not to exceed the maximum quantities
specified in Exhibit C, which shall be used, stored, transported and handled by
Tenant in accordance with all Hazardous Materials Laws and shall not be released
or disposed of by Tenant in any manner in, on or about the Premises or the
Project. The list of Hazardous Materials permitted to be used by Tenant may be
supplemented from time to time to include such other materials, similar in
composition and quantity to the items listed in Exhibit C, as are required in
the conduct of Tenant's business, provided that Tenant shall have received
Landlord's prior written consent, which shall not be unreasonably withheld.
As used herein "Hazardous Materials" shall mean any petroleum or petroleum
by-products, flammable explosives, asbestos, urea formaldehyde, radioactive
materials or waste and any "hazardous substance", "hazardous waste", "hazardous
materials", "toxic substance" or "toxic waste" as those terms are defined under
the provisions of the California Health and Safety Code and/or the provisions of
the Comprehensive Environmental

                                       34
<PAGE>

Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq), as
amended by the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C.
Section 9601 et seq.), or any other hazardous or toxic substance, material or
waste which is or becomes regulated by any local governmental authority, the
State of California or any agency thereof, or the United States Government or
any agency thereof.

                           (2) NOTICES. Tenant shall immediately notify Landlord
in writing of: (i) any enforcement, cleanup, removal or other governmental or
regulatory action instituted, completed or threatened pursuant to any law,
regulation or ordinance relating to the industrial hygiene, environmental
protection or the use, analysis, generation, manufacture, storage, presence,
disposal or transportation of any Hazardous Materials (collectively "Hazardous
Materials Laws"); (ii) any claim made or threatened by any person against
Tenant, the Premises, Project or buildings within the Project relating to
damage, contribution, cost recovery, compensation, loss or injury resulting from
or claimed to result from any Hazardous Materials; and (iii) any reports made to
any environmental agency arising out of or in connection with any Hazardous
Materials in, on or removed from the Premises, Project or buildings within the
Project, including any complaints, notices, warnings, reports or asserted
violations in connection therewith. Tenant shall also supply to Landlord as
promptly as possible, and in any event within five (5) business days after
Tenant first receives or sends the same, with copies of all claims, reports,
complaints, notices, warnings or asserted violations relating in any way to the
Premises, Project or buildings within the Project or Tenant's use thereof.
Tenant shall promptly deliver to Landlord copies of hazardous waste manifests
reflecting the legal and proper disposal of all Hazardous Materials removed from
the Premises.

                  B.       INDEMNIFICATION OF LANDLORD. Tenant shall indemnify,
defend (by counsel acceptable to Landlord), protect, and hold Landlord, and each
of Landlord's partners, employees, agents, attorneys, successors and assigns,
free and harmless from and against any and all claims, liabilities, penalties,
forfeitures, losses or expenses (including attorneys' fees) for death of or
injury to any person or damage to any property whatsoever (including water
tables and atmosphere), arising from or caused in whole or in part, directly or
indirectly, by Tenant's use, analysis, storage, transportation, disposal,
release, threatened release, discharge or generation of Hazardous Materials to,
in, on, under, about or from the Premises, Project or buildings within the
Project, or (ii) Tenant's failure to, comply with any Hazardous Materials Laws
whether knowingly, unknowingly, intentionally or unintentionally. Tenant's
obligations hereunder shall include, without limitation, and whether foreseeable
or unforeseeable, all costs of any required or necessary repair, cleanup or
detoxification or decontamination of the Premises, Project or buildings within
the Project, and the

                                       35
<PAGE>

preparation and implementation of any closure, remedial action or other required
plans in connection therewith. In addition, Tenant shall reimburse Landlord for
(i) losses in or reductions to rental income resulting from Tenant's use,
storage or disposal of Hazardous Materials, (ii) all costs of refitting or other
alterations to the Premises, Project or buildings within the Project required as
a result of Tenant's use, storage, or disposal of Hazardous Materials including,
without limitation, alterations required to accommodate an alternate use of the
Premises, Project or buildings within the Project, and (iii) any diminution in
the fair market value of the Premises, Project or buildings within the Project
caused by Tenant's use, storage, or disposal of Hazardous Materials. For
purposes of this paragraph 49, any acts or omissions of Tenant, or by employees,
agents, assignees, contractors or subcontractors of Tenant or others acting for
or on behalf of Tenant (whether or not they are negligent, intentional, willful
or unlawful) shall be strictly attributable to Tenant.

                  C.       LANDLORD'S REPRESENTATION. Landlord has no actual
knowledge of the presence of any Hazardous Materials on the Premises in
quantities that would require remediation under existing Hazardous Materials
Laws. Landlord has not performed any investigation or environmental audits and
Tenant acknowledges that Landlord is not obligated to do so and has not relied
on any such investigation or audit.

                  D.       SURVIVAL. The provisions of this paragraph 49 shall
survive the expiration or earlier termination of the term of this lease.

         50.      SIGNAGE

                  Tenant shall not, without obtaining the prior written consent
of Landlord, install or attach any sign or advertising material on any part of
the outside of the Premises, or on any part of the inside of the Premises which
is visible from the outside of the Premises, or in the halls, lobbies, windows
or elevators of the building in which the Premises are located or on or about
any other portion of the Common Area or Project. If Landlord consents to the
installation of any sign or other advertising material, the location, size,
design, color and other physical aspects thereof shall be subject to Landlord's
prior written approval and shall be in accordance with any sign program
applicable to the Project. In addition to any other requirements of this
paragraph 50, the installation of any sign or other advertising material by or
for Tenant must comply with all applicable laws, statutes, requirements, rules,
ordinances and any C.C. & R.'s or other similar requirements. With respect to
any permitted sign installed by or for Tenant, Tenant shall maintain such sign
or other advertising material in good condition and repair and shall remove such
sign or other advertising material on the expiration or earlier termination of

                                       36
<PAGE>

the term of this lease. The cost of any permitted sign or advertising material
and all costs associated with the installation, maintenance and removal thereof
shall be paid for solely by Tenant. If Tenant fails to properly maintain or
remove any permitted sign or other advertising material, Landlord may do so at
Tenant's expense. Any cost incurred by Landlord in connection with such
maintenance or removal shall be deemed additional rent and shall be paid by
Tenant to Landlord within ten (10) days following notice from Landlord. Landlord
may remove any unpermitted sign or advertising material without notice to Tenant
and the cost of such removal shall be additional rent and shall be paid by
Tenant within ten (10) days following notice from Landlord. Landlord shall not
be liable to Tenant for any damage, loss or expense resulting from Landlord's
removal of any sign or advertising material in accordance with this paragraph
50. The provisions of this paragraph 50 shall survive the expiration or earlier
termination of this lease.

         51.      SUBMISSION OF LEASE

                  The submission of this lease to Tenant for examination or
signature by Tenant is not an offer to lease the Premises to Tenant, nor an
agreement by Landlord to reserve the Premises for Tenant. Landlord will not be
bound to Tenant until this lease has been duly executed and delivered by both
Landlord and Tenant.

         52.      PREMISES TAKEN AS IS

                  Tenant is leasing the Premises from Landlord "as is" in its
condition existing as of the date hereof. Landlord shall have no obligation to
alter or improve the Premises except to paint the interior walls of the Premises
with Building Standard finishes and to repair, at Landlord's sole cost, the HVAC
system as specified in the Therma inspection report dated May 7, 1993.

         53.      ADDITIONAL RENT

                  All costs, charges, fees, penalties, interest and any other
payments (including Tenant's reimbursement to Landlord of costs incurred by
Landlord) which Tenant is required to make to Landlord pursuant to the terms and
conditions of this lease and any amendments to this lease shall be and
constitute additional rent payable by Tenant to Landlord when due as specified
in this lease and any amendments to this lease.

         54.      CAPITAL EXPENDITURES

                  Notwithstanding anything to the contrary in paragraphs 7, 8
and 9, (i) as to any required capital improvement to the Premises having a
useful life of more than one year and which is not required by reason of
Tenant's specific use of or activities on the Premises or by Tenant's negligence
or willful misconduct

                                       37
<PAGE>

or Tenant's failure to perform Tenant's obligations under this lease, Landlord
shall make such capital improvement and Tenant shall pay to Landlord, as
additional rent and in equal monthly installments over the remaining term of
this lease, the fraction of the cost of such capital improvement equal to the
remaining term of this lease over the useful life of such capital improvement;
(ii) as to any required capital improvement to the common area having a useful
life of more than one year and which is not required by Tenant's specific use of
or activities in, on or about the Premises, the cost thereof shall be included
within common area charges ratably over the useful life of such capital
improvement and Tenant shall pay its proportionate share thereof. Any
determination of what constitutes a capital improvement and what is the useful
life of a capital improvement, as such terms are used in this paragraph 54,
shall be reasonably made by Landlord.

         55.      REDUCED RENT

                  As consideration for Tenant's performance of all obligations
to be performed by Tenant under this lease and notwithstanding the provisions of
paragraph 4, Landlord hereby conditionally excuses Tenant from the payment of
basic rent for the first two (2) lease months of the term of this lease;
provided, however, Tenant does not commit a default hereunder at any time during
the term of this lease. Should Tenant at any time during the term be in default
hereunder then the total sum of such basic rent so conditionally excused shall
become immediately due and payable by Tenant to Landlord. If at the expiration
of the term of this lease Tenant has not committed a default hereunder, Landlord
shall waive any payment of basic rent and so conditionally excused. Landlord and
Tenant agree that no portion of the basic rent charges paid by Tenant during the
portion of the term of this lease occurring after the expiration of any period
during which such rent was abated shall be allocated, for income tax purposes,
by Landlord or Tenant to such rent abatement period, nor is such rent intended
by the parties to be allocable, for income tax purposes, to any abatement
period.

         56.      OPTION TO EXTEND TERM

                  Landlord grants to Tenant the option to extend the term for
one period of two (2) years (the "Extended Term") following the expiration of
the initial term set forth in paragraph 2 ("Initial Term") under all the
provisions of this lease except for the amount of the basic rent. The basic rent
for the Extended Term shall be adjusted to ninety-five percent (95%) of the
market rate provided that in no event shall the basic rent for the Extended Term
be less than the basic rent in effect at the expiration of the Initial Term.
This option is further subject to the following terms and conditions:

                                       38
<PAGE>

                  (a) Tenant must deliver its irrevocable written notice of
Tenant's exercise of this option to Landlord not less than six (6) lease months,
nor more than twelve (12) lease months, prior to the expiration of the Initial
Term. Time is of the essence with respect to the time period during which Tenant
must deliver to Landlord its written notice of exercise and, therefore, if
Tenant fails to give Landlord its irrevocable written notice of its exercise of
this option within the period provided above, this option shall expire and be of
no further force or effect.

                  (b) The parties shall have thirty (30) days from the date
Landlord received Tenant's notice of exercise in which to agree on the amount
constituting the market rate. If Landlord and Tenant agree on the amount of the
market rate, they shall immediately execute an amendment to this lease setting
forth the expiration date of the Extended Term and the amount of the basic rent
to be paid by Tenant during the Extended Term. If Landlord and Tenant are unable
to agree on the amount of the market rate within such time period, then, at the
request of either party, the market rate shall be determined in the following
manner: (i) within thirty (30) days of the request of either party, Landlord and
Tenant shall each select a licensed real estate broker with not less than five
(5) years experience in the business of commercial leasing of property of the
same type and use and in the same geographic area, as the Premises; (ii) within
fifteen (15) days of their appointment, such two real estate brokers shall
select a third broker who is similarly qualified; (iii) within thirty (30) days
from the appointment of the third broker, the three brokers so selected shall,
acting as a board of arbitrators, then determine the amount of the market rate,
basing their determination on standard procedures and tests normally employed in
determining market rates and applying the factors included within the definition
of market rate set forth in subparagraph (c) below. The decision of the majority
of said brokers shall be final and binding upon the parties hereto. If a
majority of the brokers are unable to agree on the market rate within the
stipulated period of time, the three opinions of the market rate shall be added
together and their total divided by three; the resulting quotient shall be the
market rate. If, however, the low opinion and/or the high opinion are/is more
than 15% lower and/or higher than the middle opinion, the low opinion and/or the
high opinion, as the case may be, shall be disregarded. If only one opinion is
disregarded, the remaining two opinions shall be added together and their total
divided by two and the resulting quotient shall be the market rate. If both the
low opinion and the high opinion are disregarded as stated in this paragraph,
the middle opinion shall be the market rate. If a party does not appoint a
qualified broker within the required time period, the broker appointed by the
other party shall be the sole broker and shall determine the market rate. If the
two brokers appointed by the parties are unable to agree on the third broker,
either of the parties to the lease, by giving ten (10) days' notice to the other
party, can apply to the then president

                                       39
<PAGE>

of the county real estate board of the county in which the Premises are located,
or to the presiding judge of the superior court of that county, for the
selection of a third broker who meets the qualifications stated in this
paragraph. Each party shall pay the expenses and charges of the brokers
appointed by it and the parties shall pay the expenses and charges of the third
broker in equal shares. When the market rate has been so determined, Landlord
and Tenant shall immediately execute an amendment to this lease stating the
basic rent for the Extended Term.

                  (c) As used herein, the "market rate" shall be the effective
monthly rent (triple net) then obtained for two (2) year fixed rent leases of
comparable terms for premises in the Project and in buildings and/or projects
within the same geographical area of similar types and identity, quality and
location as the Project.

                  (d) Common area charges shall continue to be determined and
payable as provided in paragraph 16 of this lease.

                  (e) Tenant shall not assign or otherwise transfer this option
or any interest therein and any attempt to do so shall render this option null
and void. Tenant shall have no right to extend the term beyond the Extended
Term. If Tenant is in default under this lease at the date of delivery of
Tenant's notice of exercise to Landlord, then such notice shall be of no effect
and this lease shall expire at the end of the Initial Term; if Tenant is in
default under this lease at the last day of the Initial Term, then Landlord may
in its sole discretion elect to have Tenant's exercise of this option be of no
effect, in which case this lease shall expire at the end of the Initial Term.

         57.      FIRST RIGHT TO LEASE

                  Landlord herein grants to Tenant the first right to lease that
certain space located at 1049 Elwell Court, Palo Alto, California, consisting of
approximately six thousand nine hundred thirty (6,930) square feet, as outlined
in blue on Exhibit B (the "Expansion Space"), subject to the following terms and
conditions:

                  (a) This first right to lease shall only become effective
after the current lease for the Expansion Space is terminated and shall only be
effective during the initial term of this lease to Tenant. Subject to the
foregoing, upon the Expansion Space thereafter becoming available for leasing at
any time during the initial lease term, Landlord shall notify Tenant in writing
of the availability for lease of the Expansion Space and such notice shall set
forth the terms and conditions, including, but not limited to, basic rent and
term (not to exceed three (3) years), under which Landlord will lease the
expansion

                                       40
<PAGE>

space to tenant ("Offer").

                  (b) Tenant shall have ten (10) calendar days from the date of
the notice from Landlord (which notice may be given at any time after Landlord
determines that the space is or will be coming available) to deliver to Landlord
its written unconditional and irrevocable acceptance of such offer. If Tenant
accepts the offer, an amendment to this lease or a new lease covering the
Expansion Space and incorporating said terms and conditions shall promptly be
executed. If a new lease is executed with Tenant covering the Expansion Space
such new lease shall provide that any default under this lease will also
constitute a default under such new lease and Tenant agrees that any default by
it under such new lease will also constitute a default under this lease. In the
event Tenant rejects the offer, or does not answer within the specified time, or
fails for any reason (unless such failure is due to the fault or delay of
Landlord) to execute such amendment or new lease within fifteen (15) days of
Tenant's acceptance of the Offer, Landlord shall thereafter be released from any
further obligation to Tenant hereunder with respect to the Expansion Space and
be free to negotiate with any number of third parties and to lease (without
further obligation to Tenant) the Expansion Space or any portion thereof upon
any terms and conditions (whether more or less favorable) that Landlord and such
third party may agree (provided that the amount of basic rent is at least ninety
percent (90%) of the amount of basic rent offered to Tenant); if the amount of
basic rent is less than ninety percent (90%) of the amount of basic rent
previously offered to Tenant, Landlord shall be obligated to extend such offer
to Tenant. In addition, if the Expansion again becomes available for lease
during the initial term of this lease, then this first right to lease shall
again apply.

                  (c) This right of refusal shall not apply and Tenant shall
have no rights hereunder in the event any tenant (or its successors or assigns)
that now or hereafter occupies all or any portion of the Expansion Space desires
to extend, renew or otherwise modify its lease or desires to expand its premises
to include any portion of the Expansion Space, and Landlord shall be free to
extend, renew or modify such lease or amend such lease to add any portion of the
Expansion Space without notice to Tenant.

                  (d) This first right to lease shall be void and of no force
and effect and shall confer no rights on Tenant during any period in which
Tenant is in default under this lease.

                  (e) Notwithstanding anything in this paragraph to the
contrary, Tenant's exercise of this first right to lease shall be subject to
Landlord's review and approval of Tenant's financial condition (including,
without limitation, Tenant's net worth, current ratio and working capital
reserves) at the time Tenant exercises this first right to lease and
notwithstanding Tenant's

                                       41
<PAGE>

rights hereunder Landlord shall have no obligation to lease the Expansion Space
to Tenant unless Tenant's financial condition at the time of exercise is
acceptable to Landlord.

                  (f) All rights granted to Tenant pursuant to this paragraph
are personal to Tenant and may not be transferred or assigned. If Landlord
transfers its ownership interest in the Premises or Project this first right to
lease shall lapse and be of no further force or effect.

         IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered
this lease on the date first above written.

Landlord:                               Tenant:

McCANDLESS LIMITED                      ENVISION SURGICAL SYSTEMS,
a California limited partnership        a California corporation

By:/s/ Birk S. McCandless               By: /s/ Peter P. Soltesz
   ----------------------                  --------------------------------
   Birk S. McCandless, as Tenant               (Signature)
   under the Birk S. McCandless
   and Mary McCandless Inter             PETER P. SOLTESZ
   Vivos Trust Agreement dated          ------------------------------------
   February 17, 1982, a General              (Printed Name)
   Partner                              V. P. OF OPERATIONS
                                        ------------------------------------
                                                (Title)
        9/1/93                                 08/26/1993
------------------------                ------------------------------------
      (Date)                                  (Date)

                                       42
<PAGE>

                                  [FLOOR PLAN]

                                   EXHIBIT B

<PAGE>

                                    EXHIBIT C

                            HAZARDOUS MATERIALS LIST

<TABLE>
<CAPTION>
ITEM                                              QUANTITY
----                                              --------
<S>                                               <C>
1.  Acetone                                       1 Liter
2.  Isopropyl Alcohol                             8 Liters
3.  Kerosene                                      1 Liter
4.  Spindle Oil                                   1 Liter
5.  Polydimethylsiloxane                          1 Liter
    (medical grade silicon liquid)
6.  Methacrylic Adhesive                          1 Liter
7.  Cyanoacrylate Ester Adhesive                  1 Liter
8.  Alkaline Soap                                 1 Liter
</TABLE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00060-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00060-of-00352.parquet"}]]