Document:

<PAGE>   1
* Certain information on all pages has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                                                  Exhibit 10.38A

                                                                          PAGE 1

                               STATE OF DELAWARE

                        OFFICE OF THE SECRETARY OF STATE

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

     I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF FORMATION
OF "ASIVI, LLC", FILED IN THIS OFFICE ON THE SECOND DAY OF MARCH, A.D. 2000, AT
5 O'CLOCK P.M.

[SECRETARY OF STATE SEAL]                   /s/ Edward J. Freel
                                            -----------------------------------
                                            Edward J. Freel, Secretary of State

3141736 8100                                AUTHENTICATION:  0293184

001107575                                             DATE:  03-03-00
<PAGE>   2
                            CERTIFICATE OF FORMATION
                                       OF
                                   ASIVI, LLC

     This Certificate of Formation of ASIVI, LLC, dated as of March 2, 2000, is
being duly executed and filed by Mark J. Casper, as an authorized person, to
form a limited liability company under the Delaware Limited Liability Company
Act.

     FIRST. The name of the limited liability company formed hereby is ASIVI,
LLC (the "LLC").

     SECOND. The name of the registered office of the LLC in the State of
Delaware is c/o Capitol Services, Inc., 9 East Loockerman Street,
Dover, Delaware 19901.

     THIRD. The name and address of the registered agent for service of process
on the LLC in the State of Delaware Capital Services, Inc., 9 East Loockerman
Street, Suite 214, Dover, Delaware 19901 Kent County.

     IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation as the date first above written.

                                                            /s/ Mark J. Casper
                                                            --------------------
                                                            Name: Mark J. Casper
                                                            Authorized Person

                                                  STATE OF DELAWARE
                                                 SECRETARY OF STATE
                                              DIVISION OF CORPORATIONS
                                             FILED 05:00 PM 03/02/2000
                                                001107575 - 3141736

<PAGE>   3
                               TABLE OF CONTENTS

                                                                            Page
                                                                            ----

SECTION 1 DEFINITIONS.......................................................   1
     1.1  Specific Definitions..............................................   1
     1.2  General Usage.....................................................   5

SECTION 2 FORMATION.........................................................   6
     2.1  Formation and Name................................................   6
     2.2  Term..............................................................   6
     2.3  Purpose and Scope.................................................   6
     2.4  Principal Office..................................................   6
     2.5  Delaware Office and Agent.........................................   6
     2.6  Names and Contact Information of the Members......................   6
     2.7  Additional Documents..............................................   7
     2.8  Title to Property.................................................   7

SECTION 3 CAPITALIZATION....................................................   7
     3.1  Capital Commitments...............................................   7
     3.2  Capital Contributions.............................................   7
     3.3  Limitation on Capital Contributions...............................   7
     3.4  Withdrawal and Return of Capital..................................   7
     3.5  Loans to the Company..............................................   8
     3.6  Interest on Capital...............................................   8
     3.7  Limitation of Liability; Return of Certain Distributions..........   8
     3.8  Contributed Property..............................................   8

SECTION 4 PROFITS AND LOSSES................................................   8
     4.1  Allocations of Company Profits and Losses.........................   8
     4.2  Nonallocation of Distributions to Increases in Minimum Gain.......  10
     4.3  Allocation of Liabilities.........................................  10
     4.4  Modifications to Preserve Underlying Economic Objectives..........  10
     4.5  Withholding Taxes.................................................  10
     4.6  Special Allocation................................................ 101

SECTION 5 DISTRIBUTIONS.....................................................  12
     5.1  Operating Distributions...........................................  12
     5.2  Liquidating Distributions.........................................  13
     5.3  Limitation on Distributions.......................................  13
     5.4  Licensing Agreement Distribution..................................  13
     5.5  No Right to Distributions of Property.............................  13

SECTION 6 ADMINISTRATION....................................................  13
     6.1  Management Powers and Authority of the Managing Members...........  13
     6.2  Managing Members' Power to Bind the Company.......................  14
     6.3  Other Ventures and Activities.....................................  14
     6.4  Duties to the Company.............................................  14

                                      -i-
<PAGE>   4
                               TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<CAPTION>
                                                                     PAGE
                                                                     ----
<S>  <C>    <C>                                                      <C>
     6.5    Officers................................................  15
     6.6    Member Expenses.........................................  15
     6.7    Member Compensation.....................................  15
     6.8    Tax Matters Partner.....................................  15
     6.9    Records and Financial Statements........................  16
     6.10   Confidentiality.........................................  16
     6.11   Disclosures.............................................  16
     6.12   Valuation of Company Assets and Interests...............  16

SECTION 7 TRANSFERS AND WITHDRAWALS.................................  17

     7.1    Transfers of Interests..................................  17
     7.2    Withdrawal/Removal of a Member..........................  17
     7.3    Procedures Following Member Withdrawal/Removal..........  18

SECTION 8 DISSOLUTION AND LIQUIDATION...............................  18

     8.1    Dissolving Events.......................................  18
     8.2    Winding Up and Liquidation..............................  18

SECTION 9 LIABILITY AND INDEMNIFICATION.............................  20

     9.1    Liability...............................................  20
     9.2    Indemnification.........................................  20
     9.3    Contribution............................................  21

SECTION 10 GENERAL PROVISIONS.......................................  21

     10.1   Meetings................................................  21
     10.2   Action Without a Meeting of All Members.................  22
     10.3   Entire Agreement........................................  22
     10.4   Amendments..............................................  22
     10.5   Governing Law...........................................  22
     10.6   Severability............................................  22
     10.7   Counterparts; Binding upon Members and Assignees........  22
     10.8   No Third Party Beneficiaries............................  23
     10.9   Notices, Consents, Elections, Etc. .....................  23
     10.10  Certain Member Representations and Covenants............  23
     10.11  Avoidance of Publicly Traded Partnership Status.........  24
     10.12  Dispute Resolution......................................  24
     10.13  Remedies for Breach of this Agreement...................  25
     10.14  Timing..................................................  25
     10.15  Status Under the Act....................................  25
     10.16  Partnership for Tax Purposes Only.......................  25
     10.17  Miscellaneous...........................................  25
</TABLE>

                                      -ii-
<PAGE>   5

                               TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<CAPTION>
                                                                     PAGE
                                                                     ----
<S>  <C>    <C>                                                      <C>
SECTION 11 ADDITIONAL WARRANTIES AND OBLIGATIONS...................   216

     11.1   Additional Warranties of AndroSolutions, Inc. .........   216
     11.2   Additional Warranties of VIVUS, Inc. ..................   226
     11.3   Definitive Agreements..................................   226
     11.4   Press Release..........................................   226
     11.5   Joint Product Development Committee....................   226
     11.6   Royalty-Free Right and License.........................   226
     11.7   Intellectual Property Analysis.........................    22
</TABLE>

SCHEDULE A (Including Schedule A-1 and Schedule A-2)
EXHIBIT 1 Technology Transfer Agreement (VIVUS, Inc.) (Including Schedule A)
EXHIBIT 2 Technology Transfer Agreement (AndroSolutions, Inc.) (Including
          Schedule A)

                                     -iii-
<PAGE>   6
     ---------------------------------------------------------------------

                               OPERATING AGREEMENT
                                       OF
                                   ASIVI, LLC
                      A DELAWARE LIMITED LIABILITY COMPANY
                               FEBRUARY 29, 2000

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

NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THIS OPERATING AGREEMENT OR THE
LIMITED LIABILITY COMPANY MEMBERSHIP INTERESTS ("INTERESTS") PROVIDED FOR
HEREIN. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

THE INTERESTS HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THE COMPANY IS UNDER NO OBLIGATION
TO REGISTER THE INTERESTS UNDER THE SECURITIES ACT IN THE FUTURE.

AN INTEREST MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
ADDITIONAL RESTRICTIONS ON THE TRANSFER OF INTERESTS ARE CONTAINED IN SECTION 7
OF THIS AGREEMENT. BASED UPON THE FOREGOING, EACH ACQUIRER OF AN INTEREST MUST
BE PREPARED TO BEAR THE ECONOMIC RISK OF INVESTMENT THEREIN FOR AN INDEFINITE
PERIOD OF TIME.
<PAGE>   7
     THIS OPERATING AGREEMENT of ASIVI, LLC, a Delaware limited liability
company, is entered into as of February 29, 2000.

                       ----------------------------------
                                   SECTION 1

                                  DEFINITIONS
                       ----------------------------------

     1.1  SPECIFIC DEFINITIONS. As used in this Agreement:

     ACT shall mean the Delaware Limited Liability Company Act, Title 6,
Delaware Code Ann., Section 18-101 et. seq., as amended.

     AFFILIATE shall mean, with respect to any Person, any other Person with
regard to which the Person is controlling, controlled or commonly controlled.
For purposes of the preceding sentence, "control" shall mean the power to
direct the principal business management and activities of a Person, whether
through ownership of voting securities, by agreement, or otherwise.

     AGREEMENT shall mean this Operating Agreement of ASIVI, LLC, a Delaware
limited liability company, including all schedules, appendices, and exhibits
hereto, as amended in accordance with the terms hereof.

     ALLOCATION PERCENTAGE shall mean, for each Member, as of the date of
determination, the percentage specified for such Member on Schedule A (as
adjusted pursuant to this Agreement).

     BANK shall mean the Bank of America National Trust & Savings Assn., San
Francisco, California main branch (or any successor entity thereto).

     BANKRUPTCY shall mean, with respect to a Member, the following: (i) a
Member shall seek liquidation under the bankruptcy laws of the United States or
under the insolvency, liquidation, receivership or other similar laws of any
jurisdiction, domestic or foreign, now or hereafter existing, or (ii) a
proceeding is commenced against a Member for liquidation, dissolution or
similar relief under the bankruptcy laws of the United States or other similar
laws of any jurisdiction, domestic or foreign, now or hereafter existing, which
is not dismissed, bonded or discharged within 60 days from the commencement of
such proceedings.

     BENEFICIAL OWNER shall mean, with respect to a Member, any Person that
holds an equity interest in such Member, either directly or indirectly through
a nominee or agent or through one or more intervening entities qualifying as
partnerships, grantor trusts or S corporations, in each case as determined for
Federal income tax purposes.

     BUSINESS shall mean the actions, operations and activities associated with
conducting research and development regarding manufacturing, marketing,
selling, distributing, and otherwise dealing in (directly or indirectly,
through employees, agents or independent contractors) products and methods for
the treatment of female dysfunction.

     CAPITAL ACCOUNT shall mean, for each Member, a separate account that is:

                                       1

<PAGE>   8
         (a)  Increased by: (i) the amount of such Member's Capital Contribution
and (ii) allocations of Profit to such Member pursuant to Section 4;

         (b)  Decreased by: (i) the amount of cash distributed to such Member by
the Company, (ii) the Fair Market Value of any other property distributed to
such Member by the Company (determined as of the time of distribution, without
regard to Section 7701(g) of the Code, and net of liabilities secured by such
property that the Member assumes or to which the Member's ownership of the
property is subject) and (iii) allocations of Loss to such Member pursuant to
Section 4;

         (c)  Revalued in connection with any event described in Treasury
Regulation Section 1.704-1(b)(2)(iv)(f); and

         (d)  Otherwise adjusted so as to conform to the requirements of
Sections 704(b) and (c) of the Code and the Treasury Regulations issued
thereunder.

     CAPITAL COMMITMENT shall have the meaning set forth in Section 3.1(a).

     CAPITAL CONTRIBUTION shall mean, for any Member, the sum of the net amount
of cash and the Fair Market Value of any other property (determined as of the
time of contribution, without regard to Section 7701(g) of the Code, and net of
liabilities secured by such property that the Company assumes or to which the
Company's ownership of the property is subject) contributed by such Member to
the capital of the Company. The term "capital contribution" (where not
capitalized) shall mean any contribution to the capital of the Company valued in
accordance with the rules set forth in the preceding sentence. For purposes of
this Agreement, each capital contribution shall be deemed to have been made at
the later of: (i) the Close of Business on the due date of such capital
contribution as determined in accordance with this Agreement; or (ii) the Close
of Business on the date on which such capital contribution is actually received
by the Company.

     CLOSE OF BUSINESS shall mean 5:00 p.m., local time, in San Francisco,
California.

     CODE shall mean the United States Internal Revenue Code of 1986, as
amended.

     COMPANY shall mean ASIVI, LLC, a Delaware limited liability company.

     DERIVATIVE COMPANY INTEREST shall mean any actual, notional or constructive
interest in, or right in respect of, the Company (other than a Member's total
interest in the capital, profits and management of the Company) that, under
Treasury Regulation Section 1.7704-1(a)(2), is treated as an interest in the
Company for purposes of Section 7704 of the Code. Pursuant to the foregoing,
"Derivative Company Interest" shall include any financial instrument that is
treated as debt for Federal income tax purposes and (i) is convertible into or
exchangeable for an interest in the capital or profits of the Company or (ii)
provides for one or more payments of equivalent value.

     DISPUTE NOTICE shall have the meaning set forth in Section 6.12.

     DISSOLUTION shall mean, with respect to a legal entity other than a natural
person, that such entity has "dissolved" within the meaning of the partnership,
corporation, limited liability company, trust or other statute under which such
entity was organized.

     FAIR MARKET VALUE shall have the meaning set forth in Section 6.12.

                                       2
<PAGE>   9
     FISCAL YEAR shall mean the period from January 1 through December 31 of
each year (unless otherwise required by law).

     GAAP shall mean United States Generally Accepted Accounting Principles,
consistently applied.

     INDEMNIFIED PERSON shall mean each Managing Member and each equityholder,
member, director, officer, employee, or agent of a Managing Member. In
addition, "Indemnified Person" shall mean any Non-Managing Member, employee or
agent of the Company to the extent determined by the Managing Members in their
reasonable discretion. A Person that has ceased to hold a position that
previously qualified such Person as an Indemnified Person shall be deemed to
continue as an Indemnified Person with regard to all matters arising or
attributable to the period during which such Person held such position.

     INTEREST shall mean, for each Member, such Member's rights, duties and
interest in respect of the Company in such Member's capacity as such (as
distinguished from any other capacity such as employee, debtor or creditor) and
shall include such Member's right, if any, to vote on Company matters, bind the
Company vis-a-vis third parties, or receive distributions as well as such
Member's obligation, if any, to provide services, make capital contributions to
take any other action.

     LICENSING AGREEMENT shall mean that certain Licensing Agreement by and
among the Company and VIVUS, Inc. of even date herewith (the "Licensing
Agreement").

     LIQUIDATING MEMBER shall mean VIVUS, Inc.

     MAJORITY-IN-INTEREST OF THE MEMBERS OR MANAGING MEMBERS shall mean a group
of Members or Managing Members whose aggregate Allocation Percentages at the
time of determination exceed 50 percent of the total Allocation Percentages of
all the Members or Managing Members, as applicable, at such time.

     MANAGING MEMBER shall mean each Person listed on Schedule A as such, for
so long as such Person does not become a Withdrawn Member. Except where the
context otherwise requires, or as provided in Section 6.1(b), a reference in
this Agreement to "the Managing Members" shall mean all of the Managing Members
(taken together or acting unanimously, as appropriate).

     MATERIAL MISCONDUCT shall mean, with respect to an Indemnified Person,
gross negligence, willful and material breach of this Agreement, fraud, or the
commission of a felony (except in the case of a felony where the Indemnified
Person reasonably believed that no such felony would occur in consequence of
such Indemnified Person's action or inaction, as the case may be). For
purposes of the preceding sentence: (i) an Indemnified Person shall be deemed
to have acted in good faith and without negligence with regard to any action or
inaction that is taken in accordance with the advice or opinion of an attorney,
accountant or other expert advisor so long as such advisor was selected with
reasonable care and the Indemnified Person made a good faith effort to inform
such advisor of all the facts pertinent to such advice or opinion; and (ii) an
Indemnified Person's reliance upon the truth and accuracy of any written
statement, representation or warranty of a Member shall be deemed to have been
reasonable and in good faith absent such Indemnified Person's actual knowledge
that such statement, representation or warranty was not, in fact, true and
accurate.

     MEMBER shall mean any Person listed on Schedule A as a Member. Except
where the context requires otherwise, a reference in this Agreement to "the
Members" shall mean all of the Members (taken together or acting unanimously,
as appropriate).

                                       3
<PAGE>   10
     MEMBER NONRECOURSE DEDUCTION shall mean an item of loss, expense or
deduction attributable to a nonrecourse liability of the Company for which a
Member bears the economic risk of loss within the meaning of Treasury Regulation
Section 1.704-2(i).

     MINIMUM GAIN of the Company shall, as provided in Treasury Regulation
Section 1.704-2, mean the total amount of gain the Company would realize for
Federal income tax purposes if it disposed of all assets subject to nonrecourse
liability for no consideration other than full satisfaction thereof.

     NONRECOURSE DEDUCTION shall mean an item of loss, expense or deduction
(other than a Member Nonrecourse Deduction) attributable to a nonrecourse
liability of the Company within the meaning of Treasury Regulation Section
1.704-2(b).

     OBJECTING MEMBER shall have the meaning set forth in Section 6.12(b).

     PATENT RIGHTS shall mean all United States and foreign patents (including
all reissues, extensions, substitutions, re-examinations, supplementary
protection certificates and the like, and patents of addition) and patent
applications (including, without limitation, all continuations,
continuations-in-part and divisions thereof) owned or controlled by Company, in
each case, which claim an invention which is necessary to develop, produce,
make, have made, import, have imported, export, have exported, use, offer for
sale and sell Products, in each case that are controlled by Company.

     PERSON shall mean an individual, partnership, corporation, limited
liability company, unincorporated organization, trust, joint venture,
governmental agency, or other entity, whether domestic or foreign.

     PRINCIPAL OFFICE shall have the meaning set forth in Section 2.4.

     PRODUCT is a product containing prostaglandin E and/or other vasodilators
useful for the treatment of female sexual dysfunction ("FSD") covered by the
intellectual property ("IP") contributed by AndroSolutions, Inc. and VIVUS,
Inc. to Company pursuant to the Technology Assignment Agreements attached
hereto as Exhibits 1 and 2 and as further described on attached Schedule A-1
and Schedule A-2.

     PROFITS AND LOSSES shall mean, for any period, the Company's items of
income and gain (including items not subject to Federal income tax) as well as
items of loss, expense and deduction (including items not deductible,
depreciable, amortizable or otherwise excludable from income for Federal income
tax purposes), respectively, as determined under Federal income tax principles;
provided, however, that Profits and Losses attributable to assets with a book
value that differs from tax basis (as determined under Federal income tax
rules) shall be determined with regard to such book value in the manner
required under Treasury Regulation Section 1.704-1(b).

     SECURITIES ACT shall mean the United States Securities Act of 1933, as
amended, including the rules and regulations promulgated thereunder.

     STATE shall mean any constituent state of the United States, as well as
the District of Columbia.

     TAX MATTERS PARTNER shall mean VIVUS, Inc.

     TAX PERCENTAGE shall have the meaning set forth in Section 5.1(a)(ii).

                                       4
<PAGE>   11
     Term shall have the meaning set forth in Section 2.2. Where not
capitalized, "term" shall mean the entire period of the Company's existence,
including any period of winding-up and liquidation following the Dissolution of
the Company pursuant to Section 8.1.

     Termination shall mean, with respect to a legal entity other than a natural
person, that such entity has Dissolved, completed its process of winding-up and
liquidation, and otherwise ceased to exist.

     Transfer shall mean any sale, exchange, transfer, gift, encumbrance,
assignment, pledge, mortgage, hypothecation or other disposition, whether
voluntary or involuntary.

     Treasury Regulation shall mean a regulation issued by the United States
Treasury Department and relating to a matter arising under the Code.

     United States shall mean the United States of America.

     Updated Capital Account shall mean, with respect to a Member, such Member's
Capital Account determined as if, immediately prior to the time of
determination, all of the Company's assets had been sold for Fair Market Value
and any previously unallocated Profits or Losses had been allocated pursuant to
Section 4.

     Valuation Notice shall have the meaning set forth in Section 6.12(a).

     Withdrawal Event shall have the meaning set forth in Section 7.3.

     Withdrawn Member shall have the meaning set forth in Section 7.3.

     1.2 General Usage. The section headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement. Except where the context clearly requires to the contrary: (i)
each reference in this Agreement to a designated "Section," "Schedule,"
"Exhibit," or "Appendix" is to the corresponding Section, Schedule, Exhibit, or
Appendix of or to this Agreement; (ii) instances of gender or entity-specific
usage (e.g., "his" "her" "its" "person" or "individual") shall not be
interpreted to preclude the application of any provision of this Agreement to
any individual or entity; (iii) the word "or" shall not be applied in its
exclusive sense; (iv) "including" shall mean "including, without limitation";
(v) references to laws, regulations and other governmental rules, as well as to
contracts, agreements and other instruments, shall mean such rules and
instruments as in effect at the time of determination (taking into account any
amendments thereto effective at such time without regard to whether such
amendments were enacted or adopted after the effective date of this Agreement)
and shall include all successor rules and instruments thereto; (vi) references
to "$" or "dollars" shall mean the lawful currency of the United States; (vii)
references to "Federal" or "federal" shall be to laws, agencies or other
attributes of the United States (and not to any State or locality thereof);
(viii) the meaning of the terms "domestic" and "foreign" shall be determined by
reference to the United States; (ix) references to "days" shall mean calendar
days; references to "business days" shall mean all days other than Saturdays,
Sundays and days that are legal holidays in the State of California; (x)
references to months or years shall be to the actual calendar months or years at
issue (taking into account the actual number of days in any such month or year);
(xi) days, business days and times of day shall be determined by reference to
local time in San Francisco, California; and (xii) the English language version
of this Agreement shall govern all questions of interpretation relating to this
Agreement, notwithstanding that this Agreement may have been translated into,
and executed in, other languages.

                                       5
<PAGE>   12
                    -----------------------------------------
                                   SECTION 2

                                   FORMATION
                    -----------------------------------------

     2.1  Formation and Name. The Members hereby enter into and form the Company
as a limited liability company in accordance with the Act.

          (a)  The name of the Company shall be "ASIVI, LLC".

     2.2  Term. The "Term" of the Company shall commence on the date first above
written and shall continue until the Close of Business on February 28, 2029.
Except as specifically provided in Section 8.1, the Company shall not be
Dissolved prior to the end of its Term.

     2.3  Purpose and Scope.

          (a)  Within the meaning and for purposes of the Act, the purpose and
scope of the Company shall include any lawful action or activity permitted to a
limited liability company under the Act.

          (b)  Solely for purposes of determining the rights and obligations of
each Member vis-a-vis the other Members and the Company under this Agreement,
and without any consequence for the binding nature of an action taken on behalf
of the Company by any Member, the purpose and scope of the Company shall be
limited to conducting and engaging in the Business, and engaging in such other
lawful actions and activities as are reasonably determined by the Managing
Members to be necessary or advisable in furtherance thereof.

     2.4  Principal Office. The Company shall have a single "Principal Office"
which shall at all times be located within the United States. The Principal
Office initially shall be located at 1172 Castro Street, Mountain View,
California 94040, and may thereafter be changed from time to time only by the
unanimous consent of the Managing Members.

     2.5  Delaware Office and Agent. The Company shall maintain a Delaware
registered office and agent for service of process as required by the Act. In
the event the registered agent ceases to act as such for any reason or the
registered office shall change, the Managing Members shall promptly designate a
replacement registered agent or file a notice of change of address, as the case
may be.

     2.6  Names and Contact Information of the Members. Set forth below the name
of each Member on Schedule A shall be appropriate contact information for such
Member (including such Member's mailing address, telephone number, and facsimile
number as well as, in the case of a Member that is an entity, the name or title
of an individual to whom notices and other correspondence should be directed).
Each Member shall promptly provide the Company with the information required to
be set forth for such Member on Schedule A and shall thereafter promptly notify
the Company of any change to such information.

                                       6
<PAGE>   13
     2.7  Additional Documents.

          (a) The Managing Members shall cause to be executed, filed, recorded,
published, or amended any documents, as the Managing Members in their reasonable
discretion determine to be necessary or advisable, (x) in connection with the
formation, operation, Dissolution, winding-up, or Termination of the Company
pursuant to applicable law or (y) to otherwise give effect to the terms of this
Agreement. The terms and provisions of each document described in the preceding
sentence shall be initially established and shall be amended as necessary to
cause such terms and provisions to be consistent with the terms and provisions
of this Agreement.

     2.8  Title to Property. Title to all Company property shall be held in the
name of the Company.

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

                                   SECTION 3

                                 CAPITALIZATION

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

     3.1  Capital Commitments.

          (a) Initial Capital Commitments. Concurrently with its execution of
this Agreement, each Member shall make a capital contribution as set forth as
such Member's Capital Commitment on Schedule A. Except as specifically provided
in this Agreement, the "Capital Commitment" of a Member: (i) shall represent the
maximum aggregate amount of cash and property that such Member shall be required
to contribute to the capital of the Company; and (ii) shall not be changed
during the term of the Company.

          (b) Increased Capital Commitments. The Capital Commitments of the
Members may be increased (in proportion to the Members' respective Allocation
Percentages) at such times and in such amounts as shall be determined by the
Managing Members based upon their good faith determination that any such
increase is necessary or advisable for the proper and effective functioning of
the Company.

     3.2  Capital Contributions. Except to the extent set forth on Schedule A or
provided in Section 3.7, all capital contributions shall be in cash. The
obligation of a Member to satisfy its Capital Commitment shall be without
interest. Capital Contributions otherwise required to be made by a Member under
Section 3.1(b) shall be due and payable, upon not less than 10 days notice, only
at such times and in such amounts as shall be specified in one or more capital
calls issued by the Managing Members. The Managing Members or either of them may
decline to issue or consent to a capital call in their sole and absolute
discretion.

     3.3  Limitation on Capital Contributions. Except as specifically provided
in this Section 3 or Section 4.5(c), no Person shall be permitted or required to
make a contribution to the capital of the Company.

     3.4  Withdrawal and Return of Capital. No Member may withdraw any portion
of its Capital Contribution or Capital Account balance. Except as provided in
Sections 5 and 8, no Member shall be entitled to the return of such Member's
Capital Contribution, a distribution in respect of such Member's Capital Account
balance, or any other distribution in respect of such Member's Interest.

                                       7

<PAGE>   14
     3.5  LOANS TO THE COMPANY. No Member shall be required to lend any money
to the Company or to guaranty any Company indebtedness.

     3.6  INTEREST ON CAPITAL. No Member shall be entitled to interest on such
Member's Capital Contribution, Capital Account balance, or share of unallocated
Profits.

     3.7  LIMITATION OF LIABILITY; RETURN OF CERTAIN DISTRIBUTIONS.

          (a)  Except as otherwise required by applicable law, a Member shall
have no personal liability for the debts and obligations of the Company.

          (b)  A Member that receives a distribution (i) in violation of this
Agreement or (ii) that is required to be returned to the Company under
applicable law shall return such distribution within 30 days after demand
therefor by any Member.

          (c)  Nothing in this Section 3.7 shall be applied to release any
Member from (i) its obligation to make capital contributions or other payments
specifically required under this Agreement or (ii) its obligations pursuant to
any relationship between the Company and such Member acting in a capacity other
than as a Member (including, for example, as a borrower or independent
contractor).

     3.8  CONTRIBUTED PROPERTY. With respect to any property contributed by a
Member to the Company, such Member shall provide to the Company any information
reasonably requested by the Company for purposes of determining the Company's
tax basis in such property.

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

                                   SECTION 4

                               PROFITS AND LOSSES

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

     4.1  ALLOCATIONS OF COMPANY PROFITS AND LOSSES.

          (a)  GENERAL. Except as otherwise provided in this Section 4, the
items of Company Profit and Loss for each fiscal quarter (or shorter period
selected by the Managing Members) shall be allocated among the Members in
proportion to their respective Allocation Percentages.

          (b)  ALLOCATION ADJUSTMENTS REQUIRED TO COMPLY WITH SECTION 704(b) OF
               THE CODE.

               (i)  LIMITATION ON ALLOCATION OF LOSSES. There shall be no
allocation of Losses to any Member to the extent that such allocation would
create a negative balance in the Member's Capital Account (or increase the
amount by which the Member's Capital Account balance is negative) unless such
allocation would be treated as valid under Section 704(b) of the Code. Any
Losses that, pursuant to the preceding sentence, cannot be allocated to a
Member shall be reallocated to the other Members (but only to the extent that
such other Members can be allocated Losses without violating the requirements
of the preceding sentence) in proportion to their respective Allocation
Percentages.

                                       8

<PAGE>   15
         (ii)      QUALIFIED INCOME OFFSET. If in any Fiscal Year a Member
receives (or is reasonably expected to receive) a distribution, or an
allocation or adjustment to the Member's Capital Account, that creates a
negative balance in such Account (or increases the amount by which the balance
in such Account is negative), there shall be allocated to the Member such items
of Company income or gain as are necessary to satisfy the requirements of a
"qualified income offset" within the meaning of Treasury Regulation Section
1.704-1(b).

          (iii)     MEMBER NONRECOURSE DEDUCTIONS. In accordance with the
provisions of Treasury Regulation Section 1.704-2(i), each item of Member
Nonrecourse Deduction shall be allocated among the Members in proportion to the
economic risk of loss that the Members bear with respect to the nonrecourse
liability of the Company to which such item of member Nonrecourse Deduction is
attributable.

          (iv)      MINIMUM GAIN CHARGEBACK. This Section 4.1(b)(iv) hereby
incorporates by reference the "minimum gain chargeback" provisions of Treasury
Regulation Section 1.704-2. In general, upon a reduction of the Company's
Minimum Gain, the preceding sentence shall require that items of income and gain
be allocated among the Members in a manner that reverses prior allocations of
Nonrecourse and Member Nonrecourse Deductions as well as reductions in the
Members' Capital Account balances resulting from distributions that,
notwithstanding Section 4.2, are allocable to increases in the Company's Minimum
Gain. Subject to the provisions of Section 704 of the Code and the Treasury
Regulations thereunder, if the Managing Members determine at any time that
operation of such "minimum gain chargeback" provisions likely will not achieve
such a reversal by the conclusion of the liquidation of the Company, such
Members shall adjust the allocation provisions of this Section 4.1 as necessary
to accomplish that result.

          (v)       ALLOCATIONS SUBSEQUENT TO CERTAIN ALLOCATION ADJUSTMENTS.
Any special allocations of items of Profit or Loss pursuant to Section
4.1(b)(i) or 4.1(b)(ii) shall be taken into account in computing subsequent
allocations pursuant to Section 4.1(a) so that, for each Member, the net amount
of any such special allocations and all allocations pursuant to Section 4.1(a)
shall, to the extent possible and taking into account any adjustments
previously made pursuant to Section 4.1(g), be equal to the net amount that
would have been allocated to such Member pursuant to the provisions of Section
4.1(a) without application of Section 4.1(b)(i) or 4.1(b)(ii).

     (c)  BOOK - TAX ACCOUNTING DISPARITIES. If Company property is reflected
in the Capital Accounts of the Members at a value that differs from the
adjusted tax basis of such property (whether because such property was
contributed to the Company by a Member or because of a revaluation of the
Members' Capital Accounts under Treasury Regulation Section 1.704-1(b)),
allocations of depreciation, amortization, income, gain or loss with respect to
such property shall be made among the Members in a manner which takes such
difference into account in accordance with Code Section 704(c) and the Treasury
Regulations issued thereunder.

     (d)  ALLOCATIONS IN EVENT OF TRANSFER. If an Interest is Transferred in
accordance with this Agreement, allocations of Profits and Losses as between
the transferor and transferee shall be made using any method selected by the
Managing Members and permitted under Section 706 of the Code.

     (e)  ADJUSTMENT TO CAPITAL ACCOUNTS FOR DISTRIBUTIONS OF PROPERTY. If
property distributed in kind is reflected in the Capital Accounts of the
Members at a book value that differs from the Fair Market Value of such
property at the time of distribution, the difference shall be treated as Profit
or Loss on the sale of the property and shall be allocated among the Members in
accordance with the provisions of this Section 4.1.

                                       9
<PAGE>   16
          (f)  TAX CREDITS AND SIMILAR ITEMS. Any tax credits or similar items
not allocable pursuant to Section 4.1(a) through 4.1(e) shall be allocated to
the Members in proportion to their respective Allocation Percentages.
Notwithstanding the preceding sentence, if Company expenditures that give rise
to tax credits also give rise to Member Nonrecourse Deductions, the tax credits
attributable to such expenditures shall be allocated in accordance with
Treasury Regulation Section 1.704-1(b)(4)(ii).

          (g)  REALLOCATION OF CERTAIN LOSSES. To the extent that: (i) Losses
which otherwise would have been allocated to a Member under this Section 4.1
were allocated to one or more other Members pursuant to Section 4.1(b)(i) or
any other provision of this Agreement that prohibits the allocation to a Member
of Losses which would reduce such Member's Capital Account (or Updated Capital
Account) balance below a specified amount; (ii) such allocation has not been
reversed pursuant to the subsequent operation of Section 4.1(b)(v) or this
Section 4.1(g); and (iii) the Member thereafter returns a distributed amount as
required under Section 3.7 or otherwise makes a contribution to the capital of
the Company, the Capital Accounts of the Members shall be adjusted in
connection with such return or contribution (to the extent of the value
thereof) to effect a reallocation, in reverse order, of such Losses to the
Member.

     4.2  NONALLOCATION OF DISTRIBUTIONS TO INCREASES IN MINIMUM GAIN. To the
extent permitted under Treasury Regulation Section I.704-2(h), distributions to
Members shall not be allocable to increases in the Company's Minimum Gain. In
general, and except as provided in such Treasury Regulation, the preceding
sentence is intended to ensure that reductions in a Member's Capital Account
balance resulting from distributions of money or other property to that Member
are not reversed by the minimum gain chargeback provisions of Section
4.1(b)(iv).

     4.3  ALLOCATION OF LIABILITIES. Solely for purposes of determining the
Members' respective shares of the nonrecourse liabilities of the Company within
the meaning of Treasury Regulation Section 1.752-3(a)(3), each Member's
interest in Company Profits shall be equal to the ratio that such Member's
Allocation Percentage bears to the aggregate Allocation Percentages of the
Members.

     4.4  MODIFICATIONS TO PRESERVE UNDERLYING ECONOMIC OBJECTIVES. If, in the
opinion of counsel to the Company, there is a change in the Federal income tax
law (including the Code as well as the Treasury Regulations, rulings, and
administrative practices thereunder) which makes it necessary or prudent to
modify the allocation provisions of this Section 4 in order to preserve the
underlying economic objectives of the Members as reflected in this Agreement,
the Managing Members shall make the minimum modification necessary to achieve
such purpose.

     4.5  WITHHOLDING TAXES.

          (a)  The Company shall withhold taxes from distributions to, and
allocations among, the Members to the extent required by law (as determined by
the Managing Members in their reasonable discretion). Except as otherwise
provided in this Section 4.5, any amount so withheld by the Company with regard
to a Member shall be treated for purposes of this Agreement as an amount
actually distributed to such Member pursuant to Section 5.1. An amount shall be
considered withheld by the Company if, and at the time, remitted to a
governmental agency without regard to whether such remittance occurs at the
same time as the distribution or allocation to which it relates; provided,
however, that an amount actually withheld from a specific distribution or
designated by the Managing Members as withheld from a specific allocation shall
be treated as if distributed at the time such distribution or allocation occurs.

                                       10

<PAGE>   17
          (b) To the extent that operation of Section 4.5(a) would create a
negative balance in a Member's Updated Capital Account or increase the amount by
which such Updated Capital Account balance is negative, the amount of the deemed
distribution shall instead be treated as a loan by the Company to such Member,
which loan shall be payable upon demand by the Company and shall bear interest
at a floating rate equal to the prime rate as announced from time to time by the
Bank, compounded daily.

          (c) In the event that the Managing Members determine in their
reasonable discretion that the Company lacks sufficient cash available to pay
withholding taxes in respect of a Member, one or more of the Managing Members
may, in their sole and absolute discretion (but only with the consent of the
Managing Members), make a loan or capital contribution to the Company to enable
the Company to pay such taxes. Any such loan shall be full-recourse to the
Company and shall bear interest at a floating rate equal to the prime rate as
announced form time to time by the Bank, compounded daily. Notwithstanding any
provision of this Agreement to the contrary, any loan (including interest
accrued thereon) or capital contribution made to the Company by a Managing
Member pursuant to this Section 4.5(c) shall be repaid or returned as promptly
as is reasonably possible.

          (d) Each Member hereby agrees to indemnify the Company and the other
Members for any liability they may incur for failure to properly withhold taxes
in respect of such Member; moreover, each Member hereby agrees that neither the
Company nor any other Member shall be liable for any excess taxes withheld in
respect of such Member's Interest and that, in the event of overwithholding, a
Member's sole recourse shall be to apply for a refund from the appropriate
governmental authority.

          (e) Taxes withheld by third parties from payments to the Company shall
be treated as if withheld by the company for purposes of this Section 4.5. Such
withholding shall be deemed to have been made in respect of all the Members in
proportion to their respective allocative shares under this Section 4 of the
underlying items of Profit to which such third party payments are attributable.
In the event that the Company receives a refund of taxes previously withheld by
a third party from one or more payments to the Company, the economic benefit of
such refund shall be apportioned among the Members in a manner reasonably
determined by the Managing Members to offset the prior operation of this Section
4.5(e) in respect of such withheld taxes.

          (f) In the event that the Company is required to recognize income or
gain for income tax purposes under Section 684 of the Code (or similar provision
of State or local law) in respect of an in-kind distribution to a Member, then,
solely for such income tax purposes, to the maximum extent permitted by
applicable law (as determined by the Managing Members in their reasonable
discretion), the income or gain shall be allocated entirely to such Member.

          (g) In the event that the Company is required to remit cash to a
governmental agency in respect of a withholding obligation arising from an
in-kind distribution by the Company or the Company's receipt of an in-kind
payment, the Managing Members may cause the Company to sell an appropriate
portion of the property at issue and, to the extent permitted by applicable law
(as determined by the Managing Members in their reasonable discretion), any
resulting income or gain shall be allocated solely for income tax purposes
entirely to the Members in respect of whom such withholding obligation arises.

     4.6 Special Allocation. Notwithstanding anything to the contrary contained
in this Agreement, [*] of the Company's income up to an amount equivalent to all
amounts earned in a Fiscal Year under the Licensing Agreement shall be allocated
to AndroSolutions, Inc.

                                       11
<PAGE>   18
                   -----------------------------------------

                                   SECTION 5

                                 DISTRIBUTIONS

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

     5.1     OPERATING DISTRIBUTIONS.  Except as otherwise provided in this
Agreement, distributions prior to the Dissolution of the Company shall be made
in accordance with this Section 5.1 and each Member actually receiving amounts
pursuant to a specific distribution by the Company shall receive a pro rata
share of each item of cash or property of which such distribution is
constituted (based upon such Member's share under this Agreement of the total
amount to be included in such distribution).

             (a)  MANDATORY TAX DISTRIBUTIONS.

                    (i)  The Company shall distribute to each Member, not later
than 90 days after the close each Fiscal Year, an amount of cash equal to the
sum of the following:

                         (A)  The product of the Tax Percentage for such Fiscal
Year and such Member's allocated share of the Company's net long-term capital
gain (as defined in Section 1222(7) of the Code) for such Fiscal Year as shown
on the Company's Federal income tax return (subject to the modification
described in Section 5.1(a)(iii); and

                         (B)  The product of the Tax Percentage for such Fiscal
Year and such Member's allocated share of the Company's net ordinary income and
net short-term capital gain (as defined in Section 1222(5) of the Code) for
such Fiscal Year as shown on the Company's Federal income tax return (subject
to the modification described in Section 5.1(a)(iii)).

                    (ii)  For purposes of this Section 5.1(a): (x) the "Tax
Percentage" with respect to each specific item of net long-term capital gain
shall be the highest blended Federal and State marginal income tax rate
applicable to such specific item of net long-term capital gain recognized by an
individual resident, or a corporation doing business, in the state with the
highest marginal individual or corporate income tax rate applicable to items of
net long-term capital gain; and (y) the "Tax Percentage" with respect to items
of net ordinary income and net short-term capital gain shall be the highest
blended Federal and State marginal income tax rate applicable to ordinary
income recognized by an individual resident, or a corporation doing business,
in the State with the highest marginal individual or corporate income tax rate
applicable to items of ordinary income. In all cases, the highest marginal
income tax rate shall be the highest statutory rate applicable to the specific
type of income or gain in question and shall be determined without regard to
phaseouts of deductions or similar adjustments; moreover, a corporate franchise
tax imposed in lieu of an income tax shall be treated as an income tax. The
Managing Members, acting in their reasonable discretion, may adjust the
determination of Tax Percentages pursuant to this Section 5.1(a)(ii): (x) as
necessary to ensure that the distribution required to be made to each Member
pursuant to Section 5.1(a)(i) for any Fiscal Year is not less than such
Member's actual Federal and State income tax liability in respect of
allocations made to such Member by the Company for such Fiscal Year, or (y) to
reflect any city or other local income tax to which any Member or Members may
be subject; provided, however, that the Tax Percentage with regard to a
particular type of income or gain shall in all events be the same percentage
for all Members.

                                       12
<PAGE>   19
               (iii)  For purposes of calculating the Company's net income and
gain under clause (i), above, there shall be disregarded any items of loss,
expense or deduction the ultimate deductibility of which may, in respect of any
Member or equityholder of a Member, be subject to limitation under Section 67 of
the Code.

               (iv)  For purposes of determining whether the Company has
satisfied its distribution obligation under Section 5.1(a)(i), all cash
distributions made during a Fiscal Year shall be treated as distributions made
pursuant to Section 5.1(a)(i) in respect of such Fiscal Year (except to the
extent that such distributions were required to satisfy the obligations of the
Company under Section 5.1(a)(i) in respect of one or more prior Fiscal Years, in
which case such distributions shall be treated as having been made pursuant to
Section 5.1(a)(i) in respect of such prior Fiscal Year or Years).

          (b)  DISCRETIONARY DISTRIBUTIONS.  In addition to the distributions
provided for in Section 5.1(a), the Managing Members may cause the Company to
distribute cash or property to the Members, in proportion to the Members'
respective Allocation Percentages, at such times and in such amounts as the
Managing Members shall determine in their sole and absolute discretion.

     5.2  LIQUIDATING DISTRIBUTIONS.  Notwithstanding the provisions of Section
5.1, cash or property of the Company available for distribution upon the
Dissolution of the Company (including cash or property received upon the sale or
other disposition of assets in anticipation of or in connection with such
Dissolution) shall be distributed in accordance with the provisions of Section
8.2.

     5.3  LIMITATION ON DISTRIBUTIONS.  No distribution shall be made to a
Member pursuant to Section 5.1 if and to the extent that such distribution
would: (i) create a negative balance in the Updated Capital Account of such
Member or increase the amount by which such Updated Capital Account balance is
negative; (ii) cause the Company to be insolvent; or (iii) render the Member
liable for a return of such distribution under applicable law.

     5.4  LICENSING AGREEMENT DISTRIBUTION

     [*] of all payments made under the Licensing Agreement shall be distributed
to AndroSolutions, Inc. within ten (10) days after the date the Company receives
such payments. Notwithstanding the foregoing, no mandatory tax distributions as
described in Section 5.1(a) hereof shall be made under this Section 5.4.

     5.5  NO RIGHT TO DISTRIBUTIONS OF PROPERTY.  Except as otherwise provided
in this Agreement, a Member shall have no right to require that distributions to
such Member consist of any specific item or items of property.

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

                                   SECTION 6

                                 ADMINISTRATION

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

     6.1  MANAGEMENT POWERS AND AUTHORITY OF THE MANAGING MEMBERS. Except as
otherwise specifically provided in this Agreement:

                                       13
<PAGE>   20
          (a)  The Company and its business shall be managed, controlled and
operated exclusively by the Managing Members, who shall be the "managers" of
the Company within the meaning of Section 18-101(10) of the Act and shall have
all of the powers and authority in respect of the Company permitted to managers
under the Act; and

          (b)  As among the Managing Members, the determination by a Majority-
In-Interest of the Managing Members to take any action or make any decision
(for, in respect of, or on behalf of, the Company) shall control.

     6.2  MANAGING MEMBERS' POWER TO BIND THE COMPANY.

          (a)  Except as specifically provided for in this Agreement, a
Managing Member acting alone shall not have the authority to bind the Company.
A contract, agreement, deed, lease, note or other document or instrument
purportedly executed on behalf of the Company by a Managing Member shall not be
deemed to have been duly executed by the Company unless executed by all
Managing Members. Third parties shall not be entitled to rely upon the
statement or the signature of only one Managing Member on any contract,
agreement, deed, lease, note or other document or instrument.

          (b)  Notwithstanding the provisions of Section 6.2(a), the Tax
Matters Partner and the Liquidating Member shall have the exclusive authority
to act for or on behalf of the Company with regard to liquidation and tax
matters as described in Sections 6.8 and 8.2 (including, but without
limitation, the authority to execute on behalf of the Company and to file with
any governmental entity, on behalf of the Company and the Members, a
certificate or similar instrument that evidences its power to bind the Company
with respect to liquidation and tax matters).

     6.3       OTHER VENTURES AND ACTIVITIES.

               (a)  The Members: (i) acknowledge that the Members and their
respective Affiliates, equityholders, and other related Persons, as well as
their respective clients are or may be involved in other business, financial,
investment and professional activities; and (ii) agree that, except as
otherwise specifically set forth in Section 6.4, each Member and its
Affiliates, equityholders, and other related Persons, as well as their
respective clients may engage for their own accounts and for the accounts of
others in any such ventures and activities (without regard to whether the
interests of such ventures and activities conflict with those of the Company).
Except as specifically set forth in Section 6.4: (i) neither the Company nor
any Member shall have any right by virtue of this Agreement or the existence of
the Company in and to such ventures or activities or to the income or profits
derived therefrom; and (ii) the Members, their Affiliates, equityholders, and
other related Persons, as well as their respective clients shall have no duty
or obligation to make any reports to the Members or the Company with respect to
any such ventures or activities.

     6.4  DUTIES TO THE COMPANY.

          (a)  A Member shall not utilize any assets or confidential
information of the Company other than for the exclusive benefit of the Company,
a purpose reasonably related to protecting such Member's Interest (in a manner
not inconsistent with the interests of the Company), or to comply with the
requirements of applicable law. For purposes of the preceding sentence, a
business opportunity within the scope of the Business which is made available
to a Managing Member solely or principally in consequence of such Person's
status as such shall be deemed an asset of the Company.

                                       14
<PAGE>   21
          (b)  The Managing Members shall devote to the Company such reasonable
amounts of time, effort and attention as shall be necessary to cause the
Company and its business to be diligently and prudently managed.

     6.5  OFFICERS.  The Managing Members may, in their sole and absolute
discretion, appoint, replace and remove, from time to time, Company officers to
whom the Managing Members shall delegate such powers, authority and duties in
respect of the Company as the Managing Members shall determine.

     6.6  MEMBER EXPENSES.

          (a)  GENERAL.  Except as otherwise provided in this Section 6.6, no
Member shall be reimbursed for expenses incurred on behalf of, or otherwise in
connection with, the Company. Any reimbursement paid by a third party for
expenses actually reimbursed by the Company shall be retained by (or paid over
by the recipient thereof to) the Company.

          (b)  MANAGING MEMBERS. Each Managing Member shall be reimbursed by
the Company for reasonable out-of-pocket expenses incurred by such Managing
Member on behalf of the Company; provided, however, that a Managing Member
shall receive more than $1,000 in respect of expenses incurred on behalf of the
Company during any specific Fiscal Year only with the approval of the Managing
Members.

     6.7  MEMBER COMPENSATION.  The Company shall not be obligated to pay a
salary, bonus or similar compensation to any Member in respect of services
provided to the Company by such Member in its capacity as such.

     6.8  TAX MATTERS PARTNER.

          (a)  GENERAL.  The Tax Matters Partner is hereby designated the "tax
matters partner" of the Company within the meaning of Section 6231(a)(7) of the
Code. Except to the extent specifically provided in the  Code or the Treasury
Regulations (or the laws of relevant non-Federal taxing jurisdictions), the Tax
Matters Partner shall have exclusive authority to act for or on behalf of the
Company with regard to tax matters, including the authority to make (or decline
to make) any available tax elections.

          (b)  PARTNERSHIP CLASSIFICATION FOR TAX PURPOSES.  Except to the
extent otherwise required by applicable law (disregarding for this purpose any
requirement that can be avoided through the filing of an election or similar
administrative procedure), the Tax Matters Partner shall cause the Company to
take the position that the Company is a "partnership" for Federal, State and
local income tax purposes and shall cause to be filed with the appropriate tax
authorities any elections or other documents necessary to give due legal effect
to such position. A Member shall not file (and each Member hereby represents
that it has not filed) any income tax election or other document that is
inconsistent with the Company's position regarding its classification as a
"partnership" for applicable Federal, State and local income tax purposes.

          (c)  NOTICE OF INCONSISTENT TREATMENT OF COMPANY ITEM.  No Member
shall file a notice with the United States Internal Revenue Service under
Section 6222(b) of the Code in connection with such Member's intention to treat
an item on such Member's Federal income tax return in a manner which is
inconsistent with the treatment of such item on the Company's Federal income tax
return unless such Member has, not less than 30 days prior to the filing of such
notice, provided the Tax Matters Partner with a copy of the notice and
thereafter in a timely manner provides such other information related thereto as
the Tax Matters Partner shall reasonably request.

                                       15
<PAGE>   22
          (d)  NOTICE OF SETTLEMENT AGREEMENT.  Any Member entering into a
settlement agreement with the United States Department of the Treasury which
concerns a Company item shall notify the Tax Matters Partner of such settlement
agreement and its terms within 60 days after the date thereof.

     6.9  RECORDS AND FINANCIAL STATEMENTS.

          (a)  The Company shall maintain true and proper books, records,
reports, and accounts in which shall be entered all transactions of the
Company. The Company shall also maintain all schedules to this Agreement and
shall update such schedules promptly upon receipt of new information relating
thereto. Copies of such books, records, reports, accounts and schedules shall be
located at the Principal Office and shall be available to any Member for
inspection and copying, upon at least two business days' notice, during
reasonable business hours.

          (b)  Within 90 days after the end of each Fiscal Year, the Company
shall furnish to each Member a statement, which need not be audited, of: (i)
the assets and liabilities of the Company, (ii) the net Profit or Loss of the
Company, and (iii) the Capital Account balance of such Member. In addition,
within 90 days after the end of each Fiscal Year, the Company shall supply all
information reasonably necessary to enable the Members to prepare their Federal
income tax returns and (upon request therefor) to comply with other reporting
requirements imposed by law.

     6.10  CONFIDENTIALITY.  The Members acknowledge and agree that all
information provided to them by or on behalf of the Company or a Managing
Member concerning the business or assets of the Company or any Member shall be
deemed strictly confidential and shall not, without the prior consent of the
Managing Members, be (i) disclosed to any Person (other than a Member) or (ii)
used by a Member other than for a Company purpose or a purpose reasonably
related to protecting such Member's Interest (in a manner not inconsistent with
the interests of the Company). The Managing Members hereby consent to the
disclosure by each Member of Company information to such Member's accountants,
attorneys and similar advisors bound by a duty of confidentiality; moreover,
the foregoing requirements of this Section 6.10 shall not apply to a Member
with regard to any information that is currently or becomes: (i) required to be
disclosed pursuant to applicable law (but only to the extent of such
requirement); (ii) required to be disclosed in order to protect such Member's
Interest (but only to the extent of such requirement and only after
consultation with the Managing Members); (iii) publicly known or available in
the absence of any improper or unlawful action on the part of such Member; or
(iv) known or available to such Member other than through or on behalf of the
Company or a Managing Member. For purposes of this Section 6.10, Company
information provided by one Member to another shall be deemed to have been
provided on behalf of the Company. Provided that the Company or a Managing
Member may disclose any information to the extent necessary or advisable for
the formation, operation, Dissolution, winding-up, or Termination of the
Company (as determined by the Managing Members in their reasonable discretion),
the Company and the Managing Members shall similarly refrain from disclosing
any confidential information furnished by a Member pursuant to Section 6.11.

     6.11  DISCLOSURES.  Each Member shall furnish to the Company upon request
any information with respect to such Member reasonably determined by the
Managing Members to be necessary or convenient for the formation, operation,
Dissolution, winding-up, or Termination of the Company.

     6.12  VALUATION OF COMPANY ASSETS AND INTERESTS.

          (a)  GENERAL.  In the event that the fair market value of a Company
asset or Interest must be determined for purposes of this Agreement, such value
shall be determined by the Managing Members,

                                       16
<PAGE>   23
acting in good faith. Within 90 days after such determination, the Managing
Members shall provide notice thereof to all the Members (a "Valuation Notice").

          (b)  DISPUTE. In the event that, within 30 days after having been
given a Valuation Notice, any Member (an "Objecting Member") provides notice to
the Company asserting that the value set forth in such Valuation Notice is
materially inaccurate due to manifest error (a "Dispute Notice"), the Managing
Members and the Objecting Member shall undertake reasonable efforts to resolve
their differences regarding such valuation through consultation and
negotiation. In the event that the Managing Members and the Objecting Member
agree upon a revised value, such revised value shall be set forth in a new
Valuation Notice to all the Members. In the event that the Managing Members and
the Objecting Member do not reach agreement within 60 days after the date of
the Dispute Notice, the Objecting Member may, by notice to the Company within
30 days after the end of such 60 day period, require that the matter be
submitted to arbitration pursuant to Section 10.12; provided, however, that the
arbitrator shall determine a value for the asset or Interest in question only
if the arbitrator first determines that the value described in the Valuation
Notice is materially inaccurate due to manifest error.

          (c)  BINDING EFFECT. The value of any Company asset or Interest
determined pursuant to this Section 6.12 shall be binding upon the Company and
the Members and shall establish the "Fair Market Value" of such asset or
Interest for all purposes under this Agreement. Unless and until such time as
the value of an asset or Interest is determined pursuant to arbitration as
described in Section 6.12(b), the value determined by the Managing Members
pursuant to Section 6.12(a) and 6.12(b) shall be deemed the Fair Market Value
of such asset or Interest.

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

                                   SECTION 7

                           TRANSFERS AND WITHDRAWALS

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

     7.1  TRANSFERS OF INTERESTS.

          (a)  A Member shall not Transfer all or any portion of its Interest;
provided, however, a Member shall have the right to transfer its entire
Interest to an Affiliate or to a transferee of all, or substantially all of a
Member's assets. Any permitted transferee shall be bound by and subject to all
provisions of this Agreement as if a Member.

          (b)  Any attempted Transfer in violation of this Section 7:  (i)
shall be null and void as against the Company and the other Members; and (ii)
shall not be recognized or permitted by, or duly reflected in the official
books and records of, the Company.

     7.2  WITHDRAWAL/REMOVAL OF A MEMBER.

          (a)  A Member shall not withdraw from the Company or otherwise cease
to be a Member without the consent of the other Member, which consent may be
withheld in such Member's sole and absolute discretion; provided, however, a
Member shall be deemed to have withdrawn without the consent of the other
Member upon such Member's Bankruptcy, Dissolution or Termination.

                                       17
<PAGE>   24
          (b)  A Member shall not be removed from the Company without its
               consent.

     7.3  PROCEDURES FOLLOWING MEMBER WITHDRAWAL/REMOVAL. A Member that is
deemed to have withdrawn from the Company in accordance with the provisions of
Section 7.2(a) or otherwise ceases to be a member of the Company under the Act
(each a "Withdrawal Event" and a "Withdrawn Member") shall not be relieved of
any obligations arising under this Agreement. A Withdrawn Member shall not be
entitled to any redemption of its Interest, distribution or payment in
connection with its Withdrawal Event or otherwise in consequence of its status
as a Withdrawn Member. A Withdrawal Event shall cause a Dissolution of the
Company pursuant to Section 8.

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

                                   SECTION 8

                          DISSOLUTION AND LIQUIDATION

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

     8.1  DISSOLVING EVENTS. The Company shall be Dissolved upon the occurrence
of any of the following events:

          (a)  Expiration of the Company's Term;

          (b)  Failure of the Company to have at least one Managing Member;

          (c)  Permanent cessation of the Company's business;

          (d)  An election to dissolve the Company executed by all of the
               Managing Members;

          (e)  A Withdrawal Event;

          (f)  Termination or cancellation of the Licensing Agreement;

          (g)  Any other event that results in a mandatory Dissolution of the
               Company under the Act.

To the maximum extent permitted by the Act, the Members hereby waive their
rights to seek a judicial dissolution of the Company for reasons other than
those listed in clauses (a) through (g) of this Section 8.1.

     8.2  WINDING UP AND LIQUIDATION.

     (a)  Upon Dissolution of the Company, the Liquidating Member shall
promptly wind up the affairs of, liquidate and Terminate the Company. In
furtherance thereof, the Liquidating Member shall: (i) have all of the
administrative and management rights and powers of the Managing Members
(including the power to bind the Company); and (ii) be reimbursed for Company
expenses it incurs. Following Dissolution, the Company shall sell or otherwise
dispose of assets determined by the Liquidating Member to be unsuitable for
distribution to the Members, but shall engage in no other business activities
except as may be necessary, in the reasonable discretion of the Liquidating
Member, to preserve the value of the Company's assets during the

                                       18
<PAGE>   25
period of winding-up and liquidation. In any event, the Liquidating Member
shall use its reasonable best efforts to prevent the period of winding-up and
liquidation of the Company from extending beyond the date which is two years
after the Company's date of Dissolution. At the conclusion of the winding-up
and liquidation of the Company, the Liquidating Member shall: (1) designate one
or more Persons to hold the books and records of the Company (and to make such
books and records available to the Members on a reasonable basis) for not less
than six years following the termination of the Company under the Act; and (ii)
execute, file and record, as necessary, a certificate of termination or similar
document to effect the termination of the Company under the Act and other
applicable laws.

     (b)  Distributions to the Members in liquidation may be made in cash or in
kind, or partly in cash and partly in kind, as determined by the Liquidating
Member. Distributions in kind shall be valued at Fair Market Value as
determined by the Liquidating Member in accordance with the provisions of
Section 6.12 and shall be subject to such conditions and restrictions as may be
necessary or advisable in the reasonable discretion of the Liquidating Member
to preserve the value of the property so distributed or to comply with
applicable law.

     (c)  The Profits and Losses of the Company during the period of winding-up
and liquidation shall be allocated among the Members in accordance with the
provisions of Section 4. If any property is to be distributed in kind, the
Capital Accounts of the Members shall be adjusted with regard to such property
in accordance with the provisions of Section 4.1(e).

     (d)  Except as set forth in Section 8.2(e) below, the assets of the Company
(including proceeds from the sale or other disposition of any assets during the
period of winding-up and liquidation) shall be applied as follows:

          (i)    First, to repay any indebtedness of the Company, whether to
third parties or the Members, in the order of priority required by law;

          (ii)   Next, to any reserves which the Liquidating Member reasonably
deems necessary for contingent or unforeseen liabilities or obligations of the
Company (which reserves when they become unnecessary shall be distributed in
accordance with the provisions of clause (iii), below); and

          (iii)  Next, to the Members in proportion to their respective
positive Capital Account balances (after taking into account all adjustments to
the Members' Capital Accounts required under Section 8.2(c)). Notwithstanding
the foregoing, ASIVI Technology (as defined in the License Agreement) will be
jointly owned by ASI and VI, respectively, with equal rights under the
ASIVI Technology. The parties agree to cooperate in good faith and execute any
documentation to effectuate such joint ownership.

     (e)  In the event the Company is being dissolved as a result of a
Withdrawal Event, then the assets of the Company (including proceeds from the
sale or other disposition of any assets during the period of winding-up and
liquidation) shall be applied as follows:

          (i)    First, to repay any indebtedness of the Company, whether to
third parties or the Members, in the order of priority required by law;

          (ii)   Next, to any reserves which the Liquidating Member reasonably
deems necessary for contingent or unforeseen liabilities or obligations of the
Company (which reserves when they become unnecessary shall be distributed in
accordance with the provisions of clause (iii), below); and

                                       19
<PAGE>   26
               (iii) Next, to the Member that is not deemed to be the Withdrawn
Member.

          (f)  Except as otherwise specifically provided in this Agreement, a
Member shall have no liability to the Company or to any other Member in respect
of a negative balance in such Member's Capital Account during the term of the
Company or at the conclusion of the Company's Termination.

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

                                   SECTION 9

                         LIABILITY AND INDEMNIFICATION

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

     9.1  LIABILITY. Except as otherwise specifically provided in this
Agreement, no Indemnified Person shall be personally liable for the return of
any contributions made to the capital of the Company by the Members or the
distribution of Capital Account balances. Except to the extent that Material
Misconduct on the part of an Indemnified Person shall have given rise to the
matter at issue, such Indemnified Person shall not be liable to the Company or
the Members for any act or omission concerning the Company. Without limitation
on the preceding sentence, except to the extent that such action constitutes
Material Misconduct, an Indemnified Person shall not be liable to the Company
or to any Member in consequence of voting for, approving, or otherwise
participating in the making of a distribution by the Company pursuant to Section
5 or 8. An Indemnified Person shall not be liable to the Company or the Members
for losses due to the acts or omissions of any other Person serving as an
independent contractor, employee or other agent of the Company unless such
Indemnified Person was or should have been directly involved with the selection,
engagement or supervision of such Person and the actions or omissions of such
Indemnified Person in connection therewith constituted Material Misconduct.

     9.2  INDEMNIFICATION. Except to the extent that Material Misconduct on the
part of an Indemnified Person shall have given rise to the matter at issue, the
Company shall indemnify and hold such Indemnified Person harmless from and
against any loss, expense, damage or injury suffered or sustained by such
Indemnified Person by reason of any actual or threatened claim, demand, action,
suit or proceeding (civil, criminal, administrative or investigative) in which
such Indemnified Person may be involved, as a party or otherwise, by reason of
its actual or alleged management of, or involvement in, the affairs of the
Company. This Indemnification shall include, but not be limited to: (i) payment
as incurred of reasonable attorneys fees and other out-of-pocket expenses
incurred in investigating or settling any claim or threatened action (where, in
the case of a settlement, such settlement is approved by the Managing Members),
or incurred in preparing for, or conducting a defense pursuant to, any
proceeding up to and including a final non-appealable adjudication; (ii) payment
of fines, damages or similar amounts required to be paid by an Indemnified
Person; and (iii) removal of liens affecting the property of an Indemnified
Person.

          (b) Indemnification payments shall be made pursuant to this Section
9.2 only to the extent that the Indemnified Person is not entitled to receive
(or will not in any event receive) from a third party equal or greater
indemnification payments in respect of the same loss, expense, damage or injury.
In the event, however, that the Managing Members determine that an Indemnified
Person would be entitled to receive indemnification payments from the Company
but for the operation of the preceding sentence, the Managing Members may cause
the Company to advance indemnification payments to the Indemnified Person (with

                                       20
<PAGE>   27
repayment of such advance to be secured by the Indemnified Person's right to
receive indemnification payments from the applicable third party).

     (c) As a condition to receiving an indemnification payment pursuant to this
Section 9.2, an Indemnified Person shall execute an undertaking in form and
substance acceptable to the Managing Members providing that, in the event it is
subsequently determined that such Person was not entitled to receive such
payment (whether by virtue of such Person's Material Misconduct or otherwise),
such Person shall return such payment to the Company promptly upon demand
therefor by any Member.

     (d) Notwithstanding the foregoing provisions of this Section 9.2, the
Company shall be under no obligation to indemnify an Indemnified Person from and
against any reduction in the value of such Person's interest in the Company that
is attributable to losses, expenses, damages or injuries suffered by the Company
or to any other decline in the value of the Company's assets.

     (e) The indemnification provided by this Section 9.2 shall not be deemed to
be exclusive of any other rights to which any Indemnified Person may be entitled
under any agreement, as a matter of law, in equity or otherwise.

     9.3 CONTRIBUTION. In the event that, notwithstanding the provisions of
Sections 3.7 and 9.1, two or more Members share joint and several personal
liability:

     (a) In connection with any action, omission or situation that would entitle
such Members to indemnification pursuant to the provisions of Section 9.2 but
for the fact that such action, omission or situation included or constituted
Material Misconduct on the part of such Members; or

     (b) In connection with any action, omission or situation that entitles such
Members to indemnification pursuant to the provisions of Section 9.2, but the
assets of the Company are insufficient to provide for the full amount of
indemnification to which such Members are entitled or their entitlement to
indemnification is otherwise unenforceable; then

     (c) Such Members shall share the burden of the liability in a manner that
is fair and reasonable as determined by such Members or, if they are unable to
agree within a reasonable period of time, by an arbitrator selected and acting
in accordance with the provisions of Section 10.12(a).

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

                                   SECTION 10

                               GENERAL PROVISIONS

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

     10.1 MEETINGS. Meetings of the Members may be called as provided in this
Agreement as well as by the Managing Members. Any such meeting shall be held in
California, Tennessee, or such other location as mutually agreed to by the
Managing Members. Unless otherwise agreed to, the meetings will alternate
between California and Tennessee. Reasonable accommodation shall be made for any
Member that elects to attend a meeting via telephone or similar means pursuant
to which all Persons attending the meeting can hear one another. No action may
be taken at a meeting of the Members without the consent of that number or
percentage of the Members whose consent is otherwise required for such action
under this Agreement. Except

                                       21
<PAGE>   28
as specifically provided in this Agreement, there shall be no requirement of
annual or periodic meetings of the Company's members or managers within the
meaning of the Act.

     10.2 ACTION WITHOUT A MEETING OF ALL MEMBERS. Any action of the Members
(or a subset thereof) may be taken by written consent of that number or
percentage of the Members whose consent is otherwise required for such action
under this Agreement. The fact that a Member has not received notice of an
action taken by written consent, or taken at a meeting actually held, shall not
invalidate such action so long as it was taken with the consent of that number
or percentage of the Members whose consent is otherwise required for such
action under this Agreement; provided, however, that no consent, election,
approval or other action of any or all the Non-Managing Members that has the
effect of limiting the power or authority of the Managing Members shall be
effective until the Managing Members have received notice thereof.

     (b) A Member may authorize another Person to vote or otherwise act on its
behalf through a written proxy or power of attorney.

     (c) In order to facilitate the determination of whether any action of the
Members (or a subset thereof) has been taken by or with the consent of the
requisite number or percentage of the Members under this Agreement, the
Managing Members may adopt, from time to time upon not less than 10 days notice
to the Members, reasonable procedures for establishing the Members of record
entitled to vote, consent or otherwise take action on any matter; provided,
however, that any date as of which Members of record is determined shall not
precede the date of the related action by more than 60 days.

     10.3 ENTIRE AGREEMENT. This Agreement contains the entire understanding
among the Members and supersedes any prior written or oral agreement between
them respecting the Company. There are no representations, agreements,
arrangements, or understandings, oral or written, among the Members relating to
the Company which are not fully expressed in this Agreement.

     10.4 AMENDMENTS.

     (a) Except as otherwise provided in this Section 10.4, this Agreement may
be amended, in whole or in part, only through a written amendment executed by
all of the Managing Members.

     10.5 GOVERNING LAW. The interpretation and enforceability of this
Agreement and the rights and liabilities of the Members as such shall be
governed by the laws of the State of Delaware as such laws are applied in
connection with limited liability company operating agreements entered into and
wholly performed upon in Delaware by residents of Delaware. To the extent
permitted by the Act and other applicable law, the provisions of this Agreement
shall supersede any contrary provisions of the Act or other applicable law.

     10.6 SEVERABILITY. In the event that any provision of this Agreement is
determined to be invalid or unenforceable, such provision shall be deemed
severed from the remainder of this Agreement and replaced with a valid and
enforceable provision as similar in intent as reasonably possible to the
provision so severed, and shall not cause the invalidity or unenforceability of
the remainder of this Agreement.

     10.7 COUNTERPARTS; BINDING UPON MEMBERS AND ASSIGNEES. This Agreement may
be executed in any number of counterparts and, when so executed, all of such
counterparts shall constitute a single instrument binding upon all parties
notwithstanding the fact that all parties are not signatory to the original or
to the same counterpart.

                                       22
<PAGE>   29
     10.8  NO THIRD PARTY BENEFICIARIES. Except with regard to the Company's
obligation to Indemnified Persons as set forth in Section 9 and as otherwise
specifically provided in this Agreement, the provisions of this Agreement are
not intended to be for the benefit of or enforceable by any third party and
shall not give rise to a right on the part of any third party to (i) enforce or
demand enforcement of a Member's Capital Commitment, obligation to return
distributions, or obligation to make other payments to the Company as set forth
in this Agreement or (ii) demand that the Company or the Managing Members issue
any capital call.

     10.9  NOTICES, CONSENTS, ELECTIONS, ETC. Subject to the provisions of
Section 10.7, all notices, consents, agreements, elections, amendments, and
approvals provided for or permitted by this Agreement or otherwise relating to
the Company shall be in writing and signed copies thereof shall be retained with
the books of the Company.

           (a)  NOTICE TO MEMBERS. Except as otherwise specifically provided in
this Agreement, notice to a Member shall be deemed duly given upon the earliest
to occur of the following: (i) personal delivery to such Member, to the address
set forth on Schedule A for such Member, or to any other address which such
Member has provided to the Company for purposes of this Section 10.9(a); (ii)
the Close of Business on the third day after being deposited in the United
States mail, registered or certified, postage prepaid and addressed to such
Member at the address set forth on Schedule A for such Member, or at any other
address which such Member has provided to the Company for purposes of this
Section 10.9(a); (iii) the Close of Business on the first business day after
being deposited in the United States with a nationally recognized overnight
delivery service, with delivery charges prepaid and addressed as provided in the
preceding clause; or (iv) actual receipt by such Member via any other means
(including public or private mail, electronic mail, facsimile, telex or
telegram); provided, however, that notice sent via electronic mail shall be
deemed duly given only when actually received and opened by the Member to whom
it is addressed.

           (b)  NOTICE TO THE COMPANY. Notice to the Company shall be deemed
duly given when clearly identified as such and duly given to the Managing
Members in accordance with the procedures set forth in Section 10.9(a).

     10.10 CERTAIN MEMBER REPRESENTATIONS AND COVENANTS.

           (a)  Each member hereby represents that, with respect to its
Interest: (i) it is acquiring or has acquired such Interest for purposes of
investment only, for its own account (or a trust account if such Member is a
trustee), and not with a view to resell or distribute the same or any part
thereof; and (ii) no other Person has any interest in such Interest or in the
rights of such Member under this Agreement other than a spouse having a
community property or similar interest under applicable law. Each Member also
represents that it has the business and financial knowledge and experience
necessary to acquire its Interest on the terms contemplated herein and that it
has the ability to bear the risks of such investment (including the risk of
sustaining a complete loss of all its capital contributions) without the need
for the investor protections provided by the registration requirements of the
Securities Act.

           (b)  Except to the extent set forth in a notice provided to the
Company, each Member hereby represents that allocations, distributions and other
payments to such Member by the Company are not subject to tax withholding under
the Code. Each Member hereby agrees to promptly notify the Company in the event
that any allocation, distribution or other payment previously exempt from such
withholding becomes or is anticipated to become subject thereto.

                                       23
<PAGE>   30
           (c)  Each Member hereby acknowledges that certain provisions of this
Agreement (including Sections 6.3 and 9.1) have the effect of limiting the
fiduciary duties or obligations of some or all Members to the Company and the
other Members under applicable law. Each Member hereby represents that it has
carefully considered and fully understands each such provision and has made an
informed decision to consent thereto.

     10.11 AVOIDANCE OF PUBLICLY TRADED PARTNERSHIP STATUS.

           (a)  Except to the extent otherwise set forth in a notice provided to
the Company, each Member hereby represents that at least one of the following
statements with respect to such Member is true and will continue to be true
throughout the period during which such Member holds an Interest;

                (i)   Such Member is not a partnership, grantor trust or S
corporation for Federal income tax purposes;

                (ii)  With regard to each Beneficial Owner of such Member, the
principal purposes for the establishment and/or use of such Member do not
include avoidance of the 100 partner limitation set forth in Treasury
Regulation Section 1.7704-l(h)(l)(ii); or

                (iii) With regard to each Beneficial Owner of such Member, not
more than 75 percent of the value of such Beneficial Owner's interest in such
Member is attributable to such Member's Interest.

           (b)  In the event that a Member's representation pursuant to Section
10.11(a) shall at any time fail to be true, or the information set forth in a
notice provided by such Member to the Company pursuant to Section 10.11(a) shall
change, such Member shall promptly (and in any event within 10 days) notify the
Company of such fact and shall promptly thereafter deliver to the Company any
information regarding such Member and its Beneficial Owners reasonably requested
by counsel to the Company for purposes of determining the number of the
Company's "partners" within the meaning of Treasury Regulation Section.
1.7704-l(h).

           (c)  Each Member hereby acknowledges that the Managing Members will
rely upon such Member's representations, notices and other information as set
forth in this Section 10.11 for purposes of determining whether proposed
Transfers of Interests may cause the Company to be treated as a "publicly traded
partnership" within the meaning of Section 7704 of the Code and that failure by
a Member to satisfy its obligations under this Section 10.11 may cause the
Company to be treated as a corporation for Federal, State or local tax purposes.

     10.12 DISPUTE RESOLUTION.

           (a)  FORM AND VENUE. Except as otherwise specifically provided in
this Agreement, any controversy or claim arising out of or relating to this
Agreement shall be settled by arbitration in accordance with the rules of the
American Arbitration Association, and judgment upon an award arising in
connection therewith may be entered in any court of competent jurisdiction. Any
arbitration, mediation, court action, or other adjudicative proceeding arising
out of or relating to this Agreement shall be held in Chicago, Illinois, or, if
such proceeding cannot be lawfully held in such location, as near thereto as
applicable law permits.

           (b)  FEES AND COSTS. The prevailing party or parties in any
arbitration, mediation, court action, or other adjudicative proceeding arising
out of or relating to this Agreement shall be reimbursed by the

                                       24
<PAGE>   31
party or parties who do not prevail for their reasonable attorneys, accountants
and experts fees and related expenses (including reasonable charges for in-house
legal counsel and related personnel) and for the costs of such proceeding. In
the event that two or more parties are deemed liable for a specific amount
payable or reimbursable under this Section 10.12(b), such parties shall be
jointly and severally liable therefor.

     10.13  REMEDIES FOR BREACH OF THIS AGREEMENT.

            (a)  GENERAL. Except as otherwise specifically provided in this
Agreement, the remedies set forth in this Agreement are cumulative and shall not
exclude any other remedies to which a Person may be lawfully entitled.

            (b)  SPECIFIC PERFORMANCE. Without limiting the rights and remedies
otherwise available to the Company or any Member, each Member hereby: (i)
acknowledges that the remedy at law for damages resulting from its default under
Section 3, 6.10, 6.11 or 10.12 is inadequate; and (ii) consents to the
institution of an action for specific performance of its obligations in the
event of such a default.

            (c)  PENALTY PROVISIONS. Each Member hereby acknowledges that
certain provisions of this Agreement provide for specified penalties in the
event of a breach of this Agreement by a Member. Each Member hereby agrees that
the penalty provisions of this Agreement are fair and reasonable and, in light
of the difficulty of determining actual damages, represent a prior agreement
among the Members as to appropriate liquidated damages.

            (d)  EXERCISE OF DISCRETION BY THE MANAGING MEMBERS. In determining
what action, if any, shall be taken against a Member in connection with such
Member's breach of this Agreement, the Managing Member shall seek to obtain the
best result (as determined by such Managing Member in its sole and absolute
discretion) for the Company.

     10.14  TIMING. All dates and times specified in this Agreement are of the
essence and shall be strictly enforced. Except as otherwise specifically
provided in this Agreement, all actions that occur after the Close of Business
on a given day shall be deemed for purposes of this Agreement to have occurred
at 9:00 a.m. on the following day. In the event that the last day for the
exercise of any right or the discharge of any duty under this Agreement would
otherwise be a day that is not a business day, the period for exercising such
right or discharging such duty shall be extended until the Close of Business on
the next succeeding business day.

     10.15  STATUS UNDER THE ACT. This Agreement is the "limited liability
company agreement" of the Company within the meaning of Section 18-101(7) of
the Act.

     10.16  PARTNERSHIP FOR TAX PURPOSES ONLY. As set forth in Section 2.1, the
Members hereby form the Company as a limited liability company under the Act.
The Members expressly do not intend hereby to form a partnership except insofar
as the Company may be treated as a partnership solely for tax purposes.

     10.17  MISCELLANEOUS. No failure or delay by any party in exercising any
right, power or privilege under this Agreement shall operate as a waiver
thereof; any actual waiver shall be contained in a writing signed by the party
against whom enforcement of such waiver is sought. This Agreement shall not be
construed for or against any party by reason of the authorship or alleged
authorship of any provisions hereof or by reason of the status of the
respective parties. Each Member hereby specifically consents to the selection
of all other Members admitted to the Company pursuant to the terms of this
Agreement.

                                       25

<PAGE>   32
                   -----------------------------------------
                                   SECTION 11

                     ADDITIONAL WARRANTIES AND OBLIGATIONS
                   -----------------------------------------

     11.1  ADDITIONAL WARRANTIES OF ANDROSOLUTIONS, INC. AndroSolutions, Inc.
hereby warrants that Exhibit 3 is a list of all patents and pending patent
applications owned or controlled by AndroSolutions, Inc., Dr. Gary W. Neal,
their affiliates or beneficiaries that relate to the design, development,
manufacturing, and use of products containing prostaglandin E and/or other
vasodilators for the treatment of female sexual dysfunction, and that
AndroSolutions, Inc. is the lawful owner of the inventions claimed therein.

     11.2  ADDITIONAL WARRANTIES OF VIVUS, INC. VIVUS, Inc. hereby warrants that
Exhibit 4 is a list of all patents and pending patent applications owned or
controlled by VIVUS, Inc. or its affiliates that relate to the design,
development, manufacturing, and use of products containing prostaglandin E
and/or other vasodilators for the treatment of female sexual dysfunction, and
that VIVUS, Inc. is the lawful owner of the inventions claimed therein.

     11.3  DEFINITIVE AGREEMENTS. Nothing in this Agreement, the Licensing
Agreement or the Supply Agreement (as defined below) will impair AndroSolutions,
Inc.'s or VIVUS, Inc.'s right to independently acquire, license, develop for
itself, or have others develop for it, intellectual property and technology
performing similar functions as the Patent Rights or to market and distribute
products based on such other intellectual property and technology.

     11.4  PRESS RELEASE AND INITIAL PUBLICATION. The parties shall issue a
joint press release within ninety (90) days of execution of this agreement. [*]

     11.5  JOINT PRODUCT DEVELOPMENT COMMITTEE. Within one month of the
execution of this Agreement, VIVUS, Inc. and ASI will form a Joint Product
Development Committee to review the direction of the development and testing of
Products through the filing of an NDA, and to make recommendations accordingly.
The Joint Product Development Committee shall include one (1) representative
from ASI and such representatives of VIVUS, Inc. as VIVUS, Inc. deems
appropriate to comply with VIVUS, Inc.'s obligations under the License
Agreement. The Joint Product Development Committee shall meet at least
semi-annually, or more frequently as agreed by the Joint Product Development
Committee, at such location as these parties agree, and will otherwise
communicate regularly by telephone, electronic mail, facsimile or video
conference. The first meeting of the Joint Product Development Committee shall
occur within forty-five (45) days after the execution of this Agreement.

     11.6  ROYALTY-FREE RIGHT AND LICENSE. ASIVI grants to ASI a royalty-free
right and license to use the ASIVI Technology solely in connection with
research, development, testing, studies, and patient care, and in the
preparation of applications, registrations, amendments, supplements and other
filings with the FDA, foreign health regulatory agencies or other U.S. or
foreign governmental agencies, and to authorize third parties to conduct such
activities on ASI's behalf. ASIVI's "grant of rights" under this Section 11.6 is
not a grant of any rights to ASI under any Investigational New Drug application
of ASIVI or VI and the exercise of the rights granted in this Section 11.6 will
not result in any liability "of ASIVI or VI", and ASI agrees to indemnify ASIVI
and VI to the extent of any such liability. The right and license set forth in
this Section 11.6 is independent of the

                                       26

<PAGE>   33
option and conditional license grant set forth in Sections 2.1 through 2.3 of
that certain Manufacture and Supply Agreement between VIVUS, Inc. and
AndroSolutions, Inc. of even date herewith, and shall survive the expiration or
termination of that Agreement.

     11.7 INTELLECTUAL PROPERTY ANALYSIS. To the extent that VI's or ASI's "FSD"
IP discloses, claims, and/or relates to subject matter other than the design,
development, formulation, manufacturing and/or use of products containing
prostaglandin E and/or other vasodilators for the treatment of FSD, all rights
in and to such VI and ASI FSD IP shall be retained by VI or ASI, respectively.
Counsel for ASI and VI and the parties will cooperate in good faith to prepare
appropriate agreements and, if necessary, continuation or divisional
applications to facilitate the parties' retention of such rights.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

     MANAGING MEMBERS:

     VIVUS, INC.
     a Delaware corporation

     By:

     /s/ Leland Wilson
     ----------------------------
     Name: Leland Wilson
     Title: President/Chief Executive Officer

     ANDROSOLUTIONS, INC.,
     a Tennessee Corporation

     By:

     /s/ Gary Neal, M.D.
     ---------------------------
     Name: Gary Neal, M.D.
     Title: President

     NON-MANAGING MEMBERS:

     None as of February 29, 2000

                                       27
<PAGE>   34
                                   SCHEDULE A

                               MEMBER INFORMATION

<TABLE>
<CAPTION>
NAME AND CONTACT INFORMATION      ALLOCATION PERCENTAGE   CAPITAL COMMITMENT
----------------------------      ---------------------   ------------------
<S>                               <C>                     <C>
MANAGING MEMBERS:

VIVUS, Inc.                                 50%           $2,500 and the
1172 Castro Street                                        contribution of property
Mountain View, CA 94040                                   as described on attached
Attn: Leland F. Wilson, President                         Schedule A-1 and
Telephone: (650) 934-5200                                 contributed pursuant
Facsimile: (650) 934-5356                                 to that certain
                                                          Technology Assignment
                                                          Agreement of even date
                                                          herewith attached
                                                          hereto as Exhibit 1.

AndroSolutions, Inc.                        50%           $2,500 and the
200 Fort Sanders West Blvd.,                              contribution of
Suite 309                                                 property as described
Knoxville, TN 37922                                       on attached Schedule A-2
Attn: Gary W. Neal, M.D.,                                 and contributed pursuant
President                                                 to that certain Technology
Telephone: (423) 531-5991                                 Assignment Agreement of
Facsimile: (423) 531-6550                                 even date herewith
                                                          attached hereto as
                                                          Exhibit 2.
</TABLE>

                                       1
<PAGE>   35
                                  SCHEDULE A-1

        DESCRIPTION OF PROPERTY CONTRIBUTED TO ASIVI, LLC BY VIVUS, INC.

-    [*]

-    [*]

-    [*]

-    [*]

                                      SA-1
<PAGE>   36
                                  SCHEDULE A-2

   DESCRIPTION OF PROPERTY CONTRIBUTED TO ASIVI, LLC BY ANDROSOLUTIONS, INC.

<TABLE>
<CAPTION>
Matter No.          Title               Ending Date     App. No.      Pat. No.       Priority date
                                                                      Issue Date
--------------------------------------------------------------------------------------------------
<S>            <C>                      <C>            <C>            <C>            <C>
[*]            [*]                      [*]            [*]

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

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

[*]            [*]                      [*]            [*]
</TABLE>
<PAGE>   37
                                   EXHIBIT 1

                        TECHNOLOGY ASSIGNMENT AGREEMENT

                                   ASSIGNMENT

     VIVUS, Inc., a Delaware corporation having offices at 1172 Castro Street,
Mountain View, CA 94040 ("VIVUS"), for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, hereby assigns, sells
and transfers to ASIVI, LLC, a Delaware limited liability company, with offices
at 1172 Castro Street, Mountain View, CA 94040, and its successors, assigns and
legal representatives, all hereinafter referred to as the "Assignee":

     1.   its entire right, title and interest in and to any and all patents
and pending patent applications relating to, inter alia, the design,
development, manufacturing, and use of products containing prostaglandin E
and/or other vasodilators for the treatment of female sexual dysfunction, as
specified on Exhibit A hereto (the "FSD IP");

     2.   the full and complete right to file patent applications in the name
of the Assignee, its designee, or in the name of VIVUS as the Assignee, or its
designee's election, on the aforesaid FSD IP, in all countries of the world;

     3.   the entire right, title and interest in and to any Letters Patent
which may issue thereon in the United States or in any country, and any
renewals, revivals, reissues, reexaminations and extensions thereof, and any
patents of confirmation, registration and importation of the same; and

     4.   the entire right, title and interest in all Convention and Treaty
Rights of all kinds thereon, including without limitation all rights of
priority in any country of the world, in and to the above FSD IP.

     VIVUS hereby authorizes and requests the competent authorities to grant and
to issue any and all such Letters Patent in the United States and throughout the
world to Assignee of the entire right, title and interest therein, as fully and
entirely as the same would have been held and enjoyed by VIVUS had this
assignment, sale and transfer not been made.

     VIVUS further agrees at any time to execute and to deliver upon request of
Assignee such additional documents, if any, as are necessary or desirable to
secure patent protection on said FSD IP, throughout all countries of the world,
and otherwise to do the necessary acts to give full effect to and to perfect the
rights of Assignee under this Assignment, including the execution, delivery and
procurement of any and all further documents evidencing this assignment,
transfer and sale as may be necessary or desirable.

     VIVUS hereby covenants that no assignment, sale, agreement or encumbrance
has been or will be made or entered into which would conflict with this
assignment.

     VIVUS further covenants that it will, upon request by Assignee, provide
Assignee promptly with all pertinent facts and documents relating to said FSD IP
and said Letters Patent and legal equivalents as may be known and accessible to
VIVUS, and will testify as to the same in any interference, litigation or
proceeding related thereto and will promptly execute and deliver to Assignee or
its legal representatives any
<PAGE>   38
and all papers, instruments or affidavits required to apply for, obtain,
maintain, issue and enforce said application, said FSD IP and said Letters
Patent and said equivalents thereof which may be necessary or desirable to carry
out the purposes thereof.

                                            VIVUS, INC.

Date: 2/29/00                           By: /s/ Leland F. Wilson
      -------                               --------------------------
                                            Leland F. Wilson
                                            President/Chief Executive Officer

                                            ASIVI, LLC

Date: 2/29/00                           By: /s/ Leland F. Wilson
      -------                               --------------------------
                                            VIVUS, Inc.
                                            Managing Member
                                            Leland F. Wilson
                                            President/Chief Executive Officer

Date: March 1, 2000                     By: /s/ Gary W. Neal
      -------------                         --------------------------
                                            AndroSolutions, Inc.
                                            Managing Member
                                            Gary W. Neal, M.D.
                                            President

                                       3
<PAGE>   39
                                   EXHIBIT A

        DESCRIPTION OF PROPERTY CONTRIBUTED TO ASIVI, LLC BY VIVUS, INC.

-    [*]

-    [*]

-    [*]

-    [*]
<PAGE>   40
                                   EXHIBIT 2

                        TECHNOLOGY ASSIGNMENT AGREEMENT

                                   ASSIGNMENT

     AndroSolutions, Inc., a Tennessee corporation with offices at Suite 309,
200 Fort Saunders West Blvd., Knoxville, TN 37922 ("AndroSolutions"), for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, hereby assigns, sells and transfers to ASIVI, LLC, a Delaware
limited liability company, with offices at 1172 Castro Street, Mountain View, CA
94040, and its successors, assigns and legal representatives, all hereinafter
referred to as the "Assignee":

     1.   its entire right, title and interest in and to any and all patents and
pending patent applications relating to, inter alia, the design, development,
manufacturing, and use of products containing prostaglandin E and/or other
vasodilators for the treatment of female sexual dysfunction, as specified on
Exhibit A hereto (the "FSD IP");

     2.   the full and complete right to file patent applications in the name
of the Assignee, its designee, or in the name of AndroSolutions, Inc. as the
Assignee, or its designee's election, on the aforesaid FSD IP, in all countries
of the world;

     3.   the entire right, title and interest in and to any Letters Patent
which may issue thereon in the United States or in any country, and any
renewals, revivals, reissues, reexaminations and extensions thereof, and any
patents of confirmation, registration and importation of the same; and

     4.   the entire right, title and interest in all Convention and Treaty
Rights of all kinds thereon, including without limitation all rights of
priority in any country of the world, in and to the above FSD IP.

     AndroSolutions hereby authorizes and requests the competent authorities to
grant and to issue any and all such Letters Patent in the United States and
throughout the world to Assignee of the entire right, title and interest
therein, as fully and entirely as the same would have been held and enjoyed by
AndroSolutions had this assignment, sale and transfer not been made.

     AndroSolutions further agrees at any time to execute and to deliver upon
request of Assignee such additional documents, if any, as are necessary or
desirable to secure patent protection on said FSD IP, throughout all countries
of the world, and otherwise to do the necessary acts to give full effect to and
to perfect the rights of Assignee under this Assignment, including the
execution, delivery and procurement of any and all further documents evidencing
this assignment, transfer and sale as may be necessary or desirable.

     AndroSolutions hereby covenants that no assignment, sale, agreement or
encumbrance has been or will be made or entered into which would conflict with
this assignment.

     AndroSolutions further covenants that it will, upon request by Assignee,
provide Assignee promptly with all pertinent facts and documents relating to
said FSD IP and said Letters Patent and legal equivalents as may be known and
accessible to AndroSolutions, and will testify as to the same in any
interference, litigation or proceeding related thereto and will promptly execute
and deliver to Assignee or its legal representatives any and all papers,
instruments or affidavits required to apply for, obtain, maintain,

<PAGE>   41
issue and enforce said application, said FSD IP and said Letters Patent and said
equivalents thereof which may be necessary or desirable to carry out the
purposes thereof.

                                                  ANDROSOLUTIONS, INC.

Date:                                             By:
      -------------------                             ------------------
                                                       Gary W. Neal, M.D.
                                                       President

                                                  ASIVI, LLC

Date:  2/29/00                                    By: /s/ Leland F. Wilson
      -------------------                             --------------------
                                                       VIVUS, Inc.
                                                       Managing Member
                                                       Leland F. Wilson
                                                       President/Chief Executive
                                                         Officer

Date:  March 1, 2000                              By: /s/ Gary W. Neal
      -------------------                             --------------------
                                                       AndroSolutions, Inc.
                                                       Managing Member
                                                       Gary W. Neal, M.D.
                                                       President

                                       3
<PAGE>   42
                                   EXHIBIT A

   DESCRIPTION OF PROPERTY CONTRIBUTED TO ASIVI, LLC BY ANDROSOLUTIONS, INC.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                               (Illegible heads)
                                                              Issue
                                                              Date
--------------------------------------------------------------------------------
<S>            <C>                      <C>         <C>       <C>    <C>
[ * ]               [ * ]                 [ * ]      [ * ]            [ * ]
--------------------------------------------------------------------------------
[ * ]               [ * ]                 [ * ]      [ * ]            [ * ]
--------------------------------------------------------------------------------
[ * ]               [ * ]                 [ * ]      [ * ]            [ * ]
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[ * ]               [ * ]                 [ * ]      [ * ]
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</TABLE><PAGE>   1
                                                                   Exhibit 10.39

                    [CORNISH & CAREY COMMERCIAL LETTERHEAD]

===============================================================================
                                    SUBLEASE
===============================================================================

SUBLESSOR: KVO Public Relations, Inc., an      SUBLEASED 1172 Castro Street
           Oregon corporation                  PREMISES: Mountain View, CA 94040

SUBLESSEE: VIVUS, Inc., a Delaware                 DATE: December 21, 1999
           corporation

1.   PARTIES:
     This Sublease is made and entered into as of December 21, 1999, by and
     between KVO Public Relations, Inc., an Oregon Corporation (Sublessor), and
     VIVUS, Inc., a Delaware corporation (Sublessee), under the Master Lease
     dated July 30, 1996, between DLC -- Castro Commons, a California Limited
     Partnership, as (Lessor) and KVO Public Relations, Inc., as (Lessee.) A
     copy of the Master Lease is attached hereto as Exhibit "A" and incorporated
     herein by this reference.

2.   PROVISIONS CONSTITUTING SUBLEASE:
 2.1.   This Sublease is subject to all of the terms and conditions of the
     Master Lease. Sublessee hereby agrees to perform all of the obligations of
     Lessee under the Master Lease to the extent said obligations apply to the
     Subleased Premises and Sublessee's use of the common areas, except as
     specifically set forth herein. Sublessor hereby agrees to use best efforts
     to cause Lessor, under the Master Lease, to perform all of the obligations
     of Lessor thereunder to the extent said obligations apply to the Subleased
     Premises and Sublessee's use of the common areas. Sublessee shall not
     commit or permit to be committed on the Subleased Premises or on any other
     portion of the Project any act or omission which violates any term or
     condition of the Master Lease. Sublessor shall not, without Sublessee's
     prior written consent, terminate the Master Lease, commit any acts that
     would entitle Lessor to terminate the Master Lease, or amend or waive any
     provisions of the Master Lease or make any elections, exercise any right
     or remedy or give any consent or approval under the Master Lease.

 2.2.   All of the terms and conditions contained in the Master Lease are
     incorporated herein, except as specifically provided below, and shall
     together with the terms and conditions specifically set forth in this
     Sublease constitute the complete terms and conditions of this Sublease.
     The following paragraphs of the Master Lease SHALL NOT be included in this
     Sublease:

        PARAGRAPH 2: First Sentence in Paragraph 5; Paragraph 6 (including
        Exhibit C); Subset (v) of Subsection A in paragraph 21; Paragraph 40.

3.   PREMISES:
     Sublessor leases to Sublessee and Sublessee leases from Sublessor the
     Subleased Premises upon all of the terms, covenants and conditions
     contained in this Sublease. The Subleased Premises consist of

                                                                     Page 1 of 7
<PAGE>   2
                                [C&C LETTERHEAD]

                                    SUBLEASE

     approximately Fourteen Thousand Two Hundred Thirty Seven (14,237) rentable
     square feet located at 1172 Castro Street, Mountain View, California as
     shown and described in Exhibit "B".

4.   RENT:

     Upon execution of this Agreement, Sublessee shall pay to Sublessor the sum
     of Thirty Nine Thousand One Hundred Fifty One and 75/100 Dollars
     ($39,151.75), representing the current Base Rent for the Subleased
     Premises, plus Thirteen Thousand Four Hundred Eighty Two and 00/100 Dollars
     ($13,482.00) representing the current monthly Operating Expenses for a
     total monthly rental amount of Fifty Two Thousand Six Hundred Thirty Three
     and 75/100 Dollars ($55,633.75). Sublessee acknowledges that the Base Rent
     and Operating Expenses shall be adjusted on February 1, 2000 and annually
     thereafter, beginning February 1, 2001 in accordance with the terms set
     forth in the Master Lease Paragraphs 3(A), 3(B), 3(C), 3(D).

     The total rental amount shall be paid to Sublessor, without deductions,
     offset, prior notice or demand. Such rental amounts shall be payable by
     Sublessee to Sublessor in consecutive monthly installments on or before the
     1st day of each calendar month during the Sublease term. If the
     commencement date or the termination date of the Sublease occurs on a date
     other than the first day or the last day, respectively, of a calendar
     month, then the Rent for such partial month shall be prorated and the
     prorated Rent shall be payable on the Sublease commencement date or on the
     first day of the calendar month in which the Sublease termination date
     occurs, respectively.

5.   SECURITY DEPOSIT:

     Upon execution of this Agreement, Sublessee shall pay to Sublessor One
     Hundred Twenty Thousand and 00/100 Dollars ($120,000.00) as a noninterest
     bearing Security Deposit. Provided Sublessee has met all of its rental
     obligations and has not been in default beyond applicable notice and cure
     provisions for the first eighteen (18) months of the Sublease term.
     Sublessor shall refund Forty Thousand and 00/100 Dollars ($40,000.00) of
     the Security Deposit to Sublessee on or before May 31, 2001. In addition,
     provided Sublessee has met all of its rental obligations and has not been
     in default beyond applicable notice and cure provisions for the first
     thirty six (36) months of the Sublease term, Sublessor shall refund Twenty
     Thousand and 00/100 Dollars ($20,000.00) of the Security Deposit to
     Sublessee on or before November 30, 2002. In the event Sublessee has
     performed all of the terms and conditions of this Sublease during the
     entire Sublease term, Sublessor shall return to Sublessee, within ten (10)
     days after Sublessee has vacated the Subleased Premises, the remaining
     Security Deposit less any sums due and owing to Sublessor; provided,
     however that if Sublessor fails to return the remaining Security Deposit
     (less any sums due and owing to Sublessor) to Sublessee in accordance with
     this sentence, then Sublessor shall assign its own security deposit
     (described in Paragraph 4 of the Master Lease) to Sublessee, and any
     obligation Landlord has of returning such security deposit to Sublessor
     shall be assigned to Sublessee. This shall not be Sublessee's sole remedy
     should Sublessor fail to return the deposit.

6.   RIGHTS OF ACCESS AND USE:

     6.1 Use:
     Sublessee shall use the Subleased Premises for General office purposes.

                                                                     Page 2 of 7
<PAGE>   3
                                [C&C LETTERHEAD]
================================================================================
                                S U B L E A S E
================================================================================

     represents both parties, then Sublessor and Sublessee consent to such dual
     representation and waive any conflict of interest arising out of such dual
     agency.

11.  COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT:
     Sublessee shall be responsible for the installation and cost of any and all
     improvements, alterations or other work required on or to the Subleased
     Premises or to any other portion of the property and/or building of which
     the Subleased Premises are a part, required or reasonably necessary because
     of: (1) Sublessee's particular use of the Subleased Premises or any portion
     thereof; (2) the particular use by a Sublessee by reason of assignment or
     sublease; or (3) both, including any improvements, alterations or other
     work required under the Americans With Disabilities Act of 1990. Compliance
     with the provisions of this Section 8 shall be a condition of Sublessor
     granting its consent to any assignment or Sublease of all or a portion of
     this Sublease and the Subleased Premises described in this Sublease.

12.  COMPLIANCE WITH NONDISCRIMINATION REGULATIONS:
     It is understood that it is illegal for Sublessor to refuse to display or
     sublease the Subleased Premises or to assign, surrender or sell the Master
     Lease, to any person because of race, color, religion, national origin,
     sex, sexual orientation, marital status or disability.

13.  TOXIC CONTAMINATION DISCLOSURE:
     Sublessor and Sublessee each acknowledge that Broker has no specific
     expertise with respect to environmental assessment or physical condition of
     the Subleased Premises, including, but not limited to, matters relating to:
     (i) problems which may be posed by the presence or disposal of hazardous or
     toxic substances on or from the Subleased Premises, (ii) problems which may
     be posed by the Subleased Premises being within the Special Studies Zone as
     designated under the Alquist-Priolo Special Studies Zone Act (Earthquake
     Zones), Section 2621-2630, inclusive of California Public Resources Code,
     and (iii) problems which may be posed by the Subleased Premises being
     within a HUD Flood Zone as set forth in the U.S. Department of Housing and
     Urban Development "Special Flood Zone Area Maps," as applicable.

     Sublessor and Sublessee each acknowledge that Broker has not made an
     independent investigation or determination of the physical or environmental
     condition of the Subleased Premises, including, but not limited to, the
     existence or nonexistence of any underground tanks, sumps, piping, toxic or
     hazardous substances on the Subleased Premises. Neither Sublessor nor
     Sublessee shall rely upon Broker to determine the physical and
     environmental condition of the Subleased Premises or to determine whether,
     to what extent or in what manner, such condition must be disclosed to
     potential Sublessees, assignees, purchasers or other interested parties.

14.  RENT ABATEMENT AND DAMAGES TO PERSONAL PROPERTY:
     In the event Sublessor, pursuant to the terms of the Master Lease, is
     entitled to and receives rent abatement, Sublessee shall be entitled to
     such rent abatement. In addition, any amounts paid or credited to Sublessor
     under the terms of the Master Lease for damage to personal property of the
     Sublessee shall be credited to Sublessee.

                                                                     Page 4 of 7
<PAGE>   4
                                [C&C LETTERHEAD]

===============================================================================
                                S U B L E A S E
===============================================================================

15.  CONDITIONS OF PREMISES: Sublessor shall deliver the Premises to Sublessee
     in "As Is" condition except for the following improvements:

     a.   Touch-up paint as needed
     b.   Professionally clean the Premises including the carpets

16.  ALTERATIONS AND ADDITIONS: Sublessee shall comply with all terms and
     conditions of paragraph 11 contained in Master Lease except that Sublessee
     shall not be required to remove any additions made to the Premises by
     Sublessor and/or restore the Premises to original condition if Sublessor
     had performed the alterations.

17.  ASSIGNMENT AND SUBLETTING: Sublessee shall have the right to
     Subsublease/Assign all or any portion of its Premises during the term of
     the sublease to a qualified Subsublessee or Subsublessees, subject to
     Sublessor's and Lessor's approval which shall not be unreasonably withheld
     or delayed and subject to Paragraph 21 [excluding subparagraph (A) subset
     (v)] and excluding the last two sentences of the first paragraph of
     Paragraph 21A of the Master Lease.

18.  SUBLESSORS REPRESENTATION: Sublessor hereby represents to Sublessee that
     (i) the Master Lease attached hereto as Exhibit A has been executed and
     delivered by Master Lessor and Sublessor, in full force and effect and has
     not been terminated, and constitutes the entire agreement of the parties,
     thereto relating to the Lease of the Subleased Premises, (ii) no default or
     breach by Sublessor or, to the best of Sublessor's knowledge, by Master
     Lessor exists under the Master Lease, (iii) no event has occurred that,
     with the passage of time, the giving of notice, or both, would constitute a
     default or breach by Sublessor or to the best of Sublessor's knowledge, by
     Master Lessor under the Master Lease, and (iv) subject to receipt of Master
     Lessor's written consent hereto. Sublessor has the right and power to
     execute and deliver this Sublease and perform its obligations hereunder.

19.  MUTUAL INDEMNITY: Each party shall indemnify, defend, protect and hold
     harmless the other from, all losses, damages, liabilities, judgments,
     actions, claims, attorneys' fees, consultants' fees, payments, costs or
     expenses arising from the negligence or willful misconduct of the
     indemnifying party or its agents, contractors, licensees or invitees, or a
     breach of the indemnifying party's obligations or representations under the
     Sublease.

20.  ASSIGNMENT AND SUBLETTING: Sublessee, without Sublessor's or Lessor's prior
     written consent and without being subject to any bonus rent provisions, may
     sublet the Premises or assign the Sublease to: (a) a corporation
     controlling, controlled by or under common control with Sublessee; (b) a
     corporation related to Sublessee by merger, consolidation or non-bankruptcy
     reorganization; or (c) a purchaser of substantially all of Sublessee's
     assets. A sale of Sublessee's capital stock shall not be deemed an
     assignment, subletting or other transfer of the Sublease or the Premises.

21.  SURRENDER OF PREMISES: In no event shall Sublessee's obligation to
     surrender the Subleased Premises require Sublessee to repair or restore the
     Subleased Premises to a condition better than the condition in which the
     Subleased Premises existed as of the Commencement Date of the Sublease, and
     Sublessee shall only be responsible for repairing or restoring or paying
     for the repair or restoration of those elements of the Subleased Premises
     damaged during the Sublease Term. Additionally,

                                                                     Page 5 of 7
<PAGE>   5

                                [C&C LETTERHEAD]

================================================================================
                                S U B L E A S E
================================================================================

     Sublessee shall not be required to remove at the Sublease term or
     otherwise, alterations or improvements to the Premises made by or for the
     account of Sublessor or personal property of Sublessor.

22.  QUIET ENJOYMENT: Sublessor conveys that if, and so long as, Sublessee keeps
     and performs each and every covenant, agreement, term, provision and
     condition herein contained on the part and on behalf of Sublessee to be
     kept and performed, Sublessee shall quietly enjoy the Premises from and
     against the claims of all persons.

23.  AUTHORIZATION TO DIRECT SUBLEASE PAYMENTS: Sublessee shall have the right
     to pay all rent and other sums owing by Sublessee to Sublessor hereunder
     for those items which also are owed by Sublessor to Master Landlord under
     the Master Lease directly to Master Landlord if Sublessee reasonably
     believes that Sublessor has failed to make any payment required to be made
     by Sublessor to master Landlord under the Master Lease and Sublessor fails
     to provide adequate proof of payment within two (2) business days after
     Sublessee's written demand requesting such proof. Notwithstanding the
     foregoing, (i) Sublessee shall provide to Sublessor concurrently with any
     payment to Master Landlord reasonable evidence of such payment, and (ii) if
     Sublessor notifies Sublessee that it disputes any amount demanded by Master
     Landlord, Sublessee shall not make any such payment to Master Landlord
     unless Master Landlord has provided a three-day notice to pay such amount
     or forfeit the Master Lease.

     Any sums paid directly by Sublessee to Master Landlord in accordance with
     this paragraph shall be credited toward the amounts payable by Sublessee to
     Sublessor under the Sublease. In the event Sublessee tenders payment
     directly to Master Landlord in accordance with this paragraph and Master
     Landlord refuses to accept such payment. Sublessee shall have the right to
     deposit such funds in an account with a national bank for the benefit of
     Master Landlord and Sublessor, and the deposit of said funds in such
     account shall discharge Sublessee's obligation under the Sublease to make
     the payment in question.

24.  SUBLESSOR'S OBLIGATIONS: Sublessor, with respect to the obligations of
     Master Landlord under the Master Lease, shall use Sublessor's diligent good
     faith efforts to cause Master Landlord to perform such obligations for the
     benefit of Sublessee. Such diligent good faith efforts shall include,
     without limitation: (a) upon Sublessee's written request, immediately
     notifying Master Landlord of its nonperformance under the Master Lease, and
     requesting that Master Landlord perform its obligations under the Master
     Lease; and (b) permitting Sublessee to commence a lawsuit or other action
     in Sublessee's name to obtain the performance required from Master Landlord
     under the Master Lease; provided, however, that if Sublessee commences a
     lawsuit or other action. Sublessee shall pay all costs and expenses
     incurred in connection therewith, and Sublessee shall indemnify Sublessor
     against, and hold Sublessor harmless from, all reasonable costs and
     expenses incurred by Sublessor in connection therewith.

25.  RENTAL ADJUSTMENTS: In no event shall Sublessee's obligation to pay
     Operating Expenses and Taxes exceed the amount of Operating Expenses and
     Taxes due and payable by Sublessor under the Master Lease and the Consent
     to Sublease. Sublessee shall pay Sublessee's share of such expenses as and

                                                                     Page 6 of 7
<PAGE>   6
                                [C&C LETTERHEAD]

================================================================================
                                S U B L E A S E
================================================================================

     when the same are due and payable to Sublessor under the Master Lease.
     Sublessee shall be entitled to its share of all credits, if any, given by
     Master Landlord to Sublessor for Sublessor's overpayment of such expenses.
     Notwithstanding anything to the contrary in the Sublease, Sublessee shall
     not be required to pay any additional rent or perform any obligation that
     is (i) fairly allocable to any period of time prior to the commencement
     date of the Sublease or following the expiration of the Sublease or (ii)
     payable as a result of a default by Sublessor of any of its obligations
     under the Master Lease.

26.  DEFAULT: Sublessee shall not be deemed in default of the Sublease in the
     event Sublessee fails to pay rent when due unless such failure continues
     for five (5) days after written notice of such failure, provided that
     Sublessor shall not be required to give such written notice on more than
     one occasion during each year of the Sublease.

SUBLESSOR:     KVO PUBLIC RELATIONS, INC.

By: /s/ signature illegible                  Date:     12/27/99
    -------------------------------------          -----------------------------

SUBLESSEE:     VIVUS, INC.

By: /s/ signature illegible                  Date:     12-22-99
    -------------------------------------          -----------------------------

NOTICE TO SUBLESSOR AND SUBLESSEE: CORNISH & CAREY COMMERCIAL, IS NOT AUTHORIZED
TO GIVE LEGAL OR TAX ADVICE; NOTHING CONTAINED IN THIS SUBLEASE OR ANY
DISCUSSIONS BETWEEN CORNISH & CAREY COMMERCIAL AND SUBLESSOR AND SUBLESSEE SHALL
BE DEEMED TO BE A REPRESENTATION OR RECOMMENDATION BY CORNISH & CAREY COMMERCIAL
OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL EFFECT OR TAX CONSEQUENCES OF THIS
DOCUMENT OR ANY TRANSACTION RELATING THERETO. ALL PARTIES ARE ENCOURAGED TO
CONSULT WITH THEIR INDEPENDENT FINANCIAL CONSULTANTS AND/OR ATTORNEYS REGARDING
THE TRANSACTION CONTEMPLATED BY THIS PROPOSAL.

EXHIBIT "A" MASTER LEASE

                                                                     PAGE 7 of 7

<PAGE>   7
                              CONSENT TO SUBLEASE

     THIS AGREEMENT ("Agreement") is made as of this 7th day of January, 2000,
by and among MOUNTAIN VIEW INCOME PARTNERS LLC, a California limited liability
company ("Landlord"), KVO PUBLIC RELATIONS, INC. an Oregon corporation
("Sublandlord"), and VIVUS, INC., a Delaware corporation ("Subtenant").

                                    RECITALS

     A. Landlord is the landlord, as successor-in-interest to DLC-Castro
Commons, a California limited partnership pursuant to that certain Assignment
of Leases dated December 8, 1997, and Sublandlord is the tenant under a lease
dated July 30, 1996, as amended by the First Amendment to Lease dated of even
date herewith (the "Master Lease"), for approximately 14,237 rentable square
feet of space (the "Premises"), located at the office building whose address is
1172 Castro Street, Mountain View, California (the "Building").

     B. Sublandlord has requested that Landlord consent to the subletting by
Sublandlord to Subtenant of a portion of the Premises ("Sublet Premises"),
pursuant to the Sublease dated December 21, 1999 (the "Sublease"), to which this
Agreement is attached.

                                   AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants contained herein, Landlord, Sublandlord and Subtenant hereby agree as
follows:

     Landlord hereby consents to the Sublease subject to and upon the following
terms and conditions, as to each of which Sublandlord and Subtenant expressly
agree; provided, however, that this Agreement shall not be effective until and
unless Sublandlord executes and delivers to Landlord an original Amendment to
Lease in the form attached hereto as EXHIBIT A:

     1. Notwithstanding any provision of the Sublease to the contrary, nothing
contained in this Agreement or the Sublease shall;

        (a) operate as a consent to or approval or ratification by Landlord of
any specific provisions of the Sublease or as a representation or warranty by
Landlord, or cause Landlord to be estopped or bound in any way by any of the
provisions of the Sublease; or

        (b) be construed to modify, waive or affect (i) any of the provisions,
covenants or conditions in the Master Lease, (ii) any of Sublandlord's
obligations under the Master Lease, or (iii) any rights or remedies of Landlord
under the Master Lease or otherwise; or to enlarge or increase Landlord's
obligations or Sublandlord's rights under the Master Lease or otherwise; or

       (c) be deemed to make Subtenant a third party beneficiary of the
provisions of the Master Lease, or create or permit any direct right of action
by Subtenant against Landlord for
<PAGE>   8
breach of the covenant of quiet enjoyment or any other covenant of Landlord
under the Master Lease; or

          (d) be construed to waive any past, present or future breach or
default on the part of Sublandlord under the Master Lease.

     2.   This consent is not assignable.

     3.   The Sublease shall be subject and subordinate at all times to the
Master Lease and to all of its provisions, covenants and conditions. Except
for rent payable under the Master Lease, Subtenant shall perform faithfully and
be bound by all the terms, covenants, conditions, provisions and agreements of
the Master Lease, for the period covered by the Sublease, but only to the
extent applicable to the Sublet Premises. In case of any conflict between the
provisions of the Master Lease and the provisions of the Sublease, the
provisions of the Master Lease shall prevail unaffected by the Sublease.

     4.   Neither the Sublease nor this consent thereto shall release or
discharge the Sublandlord from any liability under the Master Lease.
Sublandlord shall remain liable and responsible for the full performance and
observance of all the provisions, covenants and conditions set forth in the
Master Lease to be performed and observed by Sublandlord. Any breach or
violation of any provision of the Master Lease by Subtenant shall constitute a
default by Sublandlord in fulfilling such provision.

     5.   This consent by Landlord shall not be construed as a consent by
Landlord to any further subletting by Sublandlord or Subtenant or to any
assignment by Sublandlord of the Master Lease or assignment by Subtenant of the
Sublease, whether or not the Sublease purports to permit the same, and, without
limiting the generality of the foregoing, both Sublandlord and Subtenant agree
that Subtenant has no right whatsoever to assign, mortgage or encumber the
Sublease nor to sublet any portion of the Sublet Premises or permit any portion
of the Sublet Premises to be used or occupied by any other party; further, in
connection therewith, both Sublandlord and Subtenant agree that an assignment
by operation of law or a transfer of control of Subtenant (including but not
limited to a transfer of the controlling interest of the stock of Subtenant, if
Subtenant is a corporation) shall be deemed to be a prohibited assignment
hereunder. This consent shall not be construed as a consent by Landlord to any
modification, amendment, extension or renewal of the Sublease. Sublandlord and
Subtenant acknowledge and agree that the attempted exercise of any option to
extend the term of the Sublease or to expand the Sublet Premises by the
Subtenant shall, for purposes of the Master Lease and this Agreement,
constitute a further subletting subject to the provisions of this Article 5.

     6.   In the event of Sublandlord's default under any of the provisions of
the Master Lease, the rent due from Subtenant under the Sublease shall be
deemed assigned to Landlord and Landlord shall have the right, upon such
default, at any time at its option, to give notice to Subtenant and Sublandlord
of such assignment. Landlord shall credit Sublandlord with any rent received by
Landlord under such assignment, but the acceptance of any payment on account of
rent from Subtenant as the result of any such default shall in no manner
whatsoever serve to release Sublandlord from any liability under the terms,
covenants, conditions, provisions or agreements under the Master Lease, except
to the extent of the rent so credited.

                                       2

<PAGE>   9
     7.  If the Master Lease shall terminate during the term of the Sublease due
either to condemnation or to destruction by fire or other cause, the Sublease
and its term shall thereupon expire and come to an end and Subtenant shall
vacate the Sublet Premises on or before the effective date of such termination.
If the Master Lease shall expire or terminate during the term of the Sublease
for any reason other than either condemnation or destruction by fire or other
cause, or if Sublandlord shall surrender the Master Lease to Landlord during the
term of the Sublease, Landlord will so notify Sublandlord and Subtenant in
writing and within not more than thirty (30) days after the giving of such
written notice, Landlord will, in its sole discretion, either; (a) elect by
written notice to all such parties to require Subtenant to vacate the Sublet
Premises in not less than seventy-five (75) days after such written election, in
which event the Sublease and its term shall expire and come to an end on the
effective date stated in such notice; or (b) elect (by written notice to all
such parties) to continue the Sublease (without any additional or further
agreement of any kind on the part of Subtenant) with the same force and effect
as if Landlord as landlord and Subtenant as tenant had entered into a lease as
of the effective date of such expiration, termination or surrender for a term
equal to the then unexpired term of the Sublease and containing the same terms
and conditions as those contained in the Sublease, in which event Subtenant
shall attorn to Landlord and Landlord and Subtenant shall have the same rights,
obligations and remedies thereunder as were had by Sublandlord and Subtenant
thereunder prior to such effective date, except that in no event shall Landlord
be (1) liable for any act or omission by Sublandlord, (2) subject to any offsets
or defenses which Subtenant had or might have against Sublandlord, (3) bound by
any rent or additional rent or other payment paid by Subtenant to Sublandlord
more than thirty (30) days in advance, or (4) bound by any amendment to the
Sublease not consented to by Landlord. If Landlord fails to notify Sublandlord
and Subtenant of its election hereunder within the thirty (30) day period
provided above, the Sublease and its term shall automatically expire and come to
an end on the date which is seventy-five (75) days after the end of such thirty
(30) day period. Upon expiration of the Sublease pursuant to the provisions of
this Article 7, in the event of the failure of Subtenant to vacate the Sublet
Premises as herein provided, Landlord shall be entitled to all of the rights and
remedies available to a landlord against a tenant holding over without consent
after the expiration of a term.

     8.  In addition to complying with Sublandlord's obligations under the
Master Lease to maintain insurance, Subtenant shall add and maintain Landlord as
an additional insured under such insurance policies.

     9.  Both Sublandlord and Subtenant shall be and continue to be liable for
the payment of (a) all bills rendered by Landlord for charges incurred by or
imposed upon Subtenant for services and materials supplied to the Sublet
Premises beyond that which is required by the terms of the Master Lease, and (b)
any additional costs incurred by Landlord for maintenance and repair of the
Sublet Premises as the result of Subtenant occupying the Sublet Premises
(including, but not limited to, any excess costs to Landlord of services
furnished to or for the Sublet Premises).

     10.  Requests for (a) any service to be supplied by Landlord to the Sublet
Premises, (b) to make improvements or alterations to the Sublet premises, (c) to
further sublet the Sublet Premises or assign the Sublease and (d) all other
requests for Landlord's consent or approval may be made directly by Subtenant.
Landlord's consent to any such requests made directly by

                                       3
<PAGE>   10
Subtenant shall in no way alter Sublandlord's liability under the Master Lease
as set forth elsewhere herein and Sublandlord expressly acknowledges that it
shall remain liable and responsible for the full performance and observance of
all the provisions, covenants and conditions set forth in the Master Lease
including to the extent modified by such requests by Subtenant.

     11.  Sublandlord and Subtenant each covenants and agrees that under no
circumstances shall Landlord be liable for any brokerage commission or other
charge or expense in connection with the Sublease.

     12.  Sublandlord and Subtenant understand and acknowledge that Landlord's
consent herein is not a consent to any improvement or alteration work to be
performed in the Sublet Premises (including without limitation any improvement
work contemplated in the Sublease), that Landlord's consent for such work must
be separately sought, and that any such work shall be subject to all the
provisions of the Master Lease with respect thereto.

     13.  In the event of any conflict between the provisions of this Agreement
and the provisions of the Sublease, the provisions of this Agreement shall
prevail unaffected by the Sublease.

     14.  Any notice or communication that any party hereto may desire or be
required to give to any other party under or with respect to this Agreement
shall be given prepaid, by hand delivery, Federal Express, or other nationally
recognized overnight courier service, addressed to such other party, in the case
of Landlord, at Mountain View Partners LLC c/o Menlo Equities Management
Company LLC, 2901 Tasman Drive, Ste. 220 Santa Clara, CA 95054, and in the case
of either Sublandlord or Subtenant, at the Sublet Premises, or in any case at
such other address any party may have designated by notice given in accordance
with the provisions of this paragraph.

     15.  Sublandlord and Subtenant agree, at any time and from time to time,
upon not less than fifteen (15) days' prior notice by Landlord, to execute,
acknowledge and deliver to Landlord a statement in writing certifying that the
Sublease is unmodified and in full force and effect (or, if there have been
modifications, that the Sublease is unmodified and in full force and effect as
modified and stating the modification), and the dates to which the annual base
rental, additional rent and other charges have been paid, and stating whether
or not Sublandlord or Subtenant is in default in performance of any covenant,
agreement, term, provision or condition contained in the Sublease and, if so,
specifying each such default, it being intended that any such statement
delivered pursuant hereto may be relied upon by Landlord and any prospective
purchaser or lessee of the Building, or any trustee or beneficiary under any
deed of trust affecting the Building. Sublandlord and Subtenant also agree to
execute and deliver from time to time such other estoppel certificates as any
lender may require with respect to the Sublease.

     16.  In the event of any arbitration or action proceeding at law or in
equity between or among the parties to this Agreement as a consequence of any
controversy, claim or dispute relating to this Agreement or the breach thereof,
or to enforce any of the provisions and/or rights hereunder, the unsuccessful
party or parties to such arbitration, action or proceeding shall pay to the
prevailing party or parties all costs and expenses, including reasonable
attorney's fees

                                       4
<PAGE>   11
incurred therein by such prevailing party or parties, and if such prevailing
party or parties shall recover judgment in any such arbitration, action or
proceeding, such costs, expenses and fees shall be included in and as part of
such judgment.

     17.  Subtenant hereby agrees that it shall indemnify, defend and hold
Landlord harmless from and against any and all claims arising out of (a)
Subtenant's use of the Sublet Premises or any part thereof for the conduct of
its business, or (b) any activity, work or other thing done, permitted or
suffered by Subtenant in or about the Building or the Sublet Premises, or any
part thereof, or (c) any breach or default in the performance of any obligation
on Subtenant's part to be performed under the terms of the Sublease or this
Agreement, (d) any act, omission, or negligence of Subtenant or any officer,
agent, employee, contractor, servant, invitee or guest of Subtenant, or (e) any
claim for brokerage commissions or other charges or expenses in connection with
the Sublease; and in each case from and against any and all damages, losses,
liabilities, lawsuits, judgments, and costs and expenses (including without
limitation reasonable attorneys' fees) arising in connection with any such claim
or claims as described in clauses (a) through (e) above, or any action or
proceeding brought thereon. If any such action or proceeding be brought against
Landlord, Subtenant, upon notice from Landlord, shall defend such action or
proceeding at Subtenant's sole expense by counsel reasonably satisfactory to
Landlord. Subtenant, as a material part of the consideration to Landlord, hereby
assumes all risk of damage or loss to property or injury or death to persons,
in, upon or about the Sublet Premises, from any cause, and Subtenant hereby
waives all claims in respect thereof against Landlord.

     18.  This Agreement shall be construed in accordance with the laws of the
State of California and, together with the Sublease and the Master Lease,
contains the entire agreement of the parties hereto with respect to the subject
matter hereof and may not be changed or terminated orally or by course of
conduct.

     19.  Sublandlord agrees to reimburse to Landlord all reasonable costs and
reasonable attorneys' fees incurred by Landlord in conjunction with the
processing and documentation of the Sublease.

        [The remainder of this page has been intentionally left blank.]

                                       5
<PAGE>   12
     20.  This Agreement is hereby incorporated into the Sublease and shall be
attached to the Sublease.

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.

     LANDLORD:                MOUNTAIN VIEW INCOME PARTNERS LLC,
                              a California limited liability company

                              By:  Menlo Equities Associates VIII LLC, a
                                   California limited liability company

                                   By:  Menlo Equities LLC, a California
                                        limited liability company

                                        By:  Menlo Equities Inc., a
                                             California corporation

                                        By:  /s/ Henry D. Bullock
                                             ---------------------------
                                             Henry D. Bullock,
                                             President

SUBLANDLORD:                  KVO PUBLIC RELATIONS, INC., an Oregon
                              corporation

                              By:  /s/ Sharon VanSickle
                                   --------------------------------
                                   Name: Sharon VanSickle
                                         --------------------------
                                   Its:  President/CEO
                                         --------------------------

                              By:
                                   --------------------------------
                                   Name:
                                         --------------------------
                                   Its:
                                         --------------------------

SUBTENANT:                    VIVUS, INC., a Delaware corporation

                              By:  /s/ Richard Walliser
                                   --------------------------------
                                   Name: Richard Walliser
                                         --------------------------
                                   Its:  CFO
                                         --------------------------

                              By:  /s/ Leland F. Wilson
                                   --------------------------------
                                   Name: Leland F. Wilson
                                         --------------------------
                                   Its:  President CEO
                                         --------------------------

                                       6
<PAGE>   13
                                   EXHIBIT A
                           FORM OF AMENDMENT TO LEASE

     This AMENDMENT TO LEASE (this "Amendment") is dated as of this ____ day of
January ___, 2000 by and between MOUNTAIN VIEW INCOME PARTNERS LLC, a
California limited liability company ("Landlord"), and KVO PUBLIC RELATIONS,
INC., an Oregon corporation ("Tenant").

                                    RECITALS

     A.  DLC-Castro Commons, a California limited partnership ("DLC"), as
landlord, and Tenant, entered into that certain Office Lease dated July 30, 1996
(the "Lease"), for premises (the "Premises") with a street address of 1172
Castro Street, Mountain View, California, and more particularly described in the
Lease.

     B.  Landlord acquired the property on which the Premises are located on or
about December 8, 1997, and succeeded to the interest of DLC under the Lease.

     C.  Landlord and Tenant now desire to amend the Lease on the terms and
conditions set forth herein. Capitalized terms used in this Amendment and not
otherwise defined shall have the meanings assigned to them in the Lease.

                                   AGREEMENT

     NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree
as follows:

     1.   BASIC RENT.  The first paragraph of subparagraph 3.A of the Lease is
deleted in its entirety and replaced with the following:

          "Tenant shall pay to Landlord, as monthly rent ("Rent") for the
Premises the amount ("Basic Rent") of Thirty Seven Thousand One Hundred Fifty
Eight and 57/100 Dollars ($37,158.57) in lawful money of the United States of
America, subject to adjustment as provided in subparagraph 3.B, below. All Rent
shall be paid without deduction or offset, prior notice, abatement or demand,
except as herein provided to Landlord c/o Menlo Equities Management Company
LLC, 2901 Tasman Drive, Ste. 220, Santa Clara, California 95054 or at such
other place as may be designated from time to time by Landlord."

     2.   BASIC RENT INCREASES.  The first sentence of subparagraph 3.B of the
Lease is deleted in its entirety and replaced with the following:

          "The Basic Rent shall be subject to adjustment on each anniversary of
the Commencement Date as follows:"

                                       7
<PAGE>   14
     3.   USE OF THE PREMISES.  The first sentence of paragraph 5 of the Lease
is deleted in its entirety and replaced with the following:

          "The Premises shall be used exclusively for the purpose of general
and executive offices."

     4.   SUBLEASE PREMIUM.  Notwithstanding anything to the contrary contained
in paragraph 21.A of the Lease, Tenant may retain fourteen cents ($0.14) per
rentable square foot per month of all Basic Rent (or its equivalent) received
by Tenant in excess of the Basic Rent provided hereunder (the "Sublease
Premium") so long as (i) Vivus, Inc., a Delaware corporation is subleasing all
of the Premises pursuant to that certain sublease dated ______________, 1999
attached hereto as EXHIBIT A (the "Sublease"), (ii) Tenant is not in default of
the Lease beyond any applicable cure and notice periods and (iii) all remaining
amounts of the Sublease Premium are paid to Landlord at the same time as Basic
Rent. Tenant expressly acknowledges (i) that in the event the Sublease is
terminated or expires prior to the termination or earlier expiration of the
Lease or Tenant is in default beyond the applicable cure and notice periods,
this paragraph 4 shall be inoperative and the terms and conditions of paragraph
21.A shall govern the allocation of any Sublease Premium, and (ii) the
provisions of this paragraph 4 shall apply only to the Basic Rent (or its
equivalent) payable under the Sublease and not to any other rents or payments
made pursuant thereto.

     5.  RATIFICATION.  The Lease, as amended by this Amendment, is hereby
ratified by Landlord and Tenant and Landlord and Tenant hereby agree that the
Lease, as so amended, shall continue in full force and effect.

     6.   MISCELLANEOUS.

          (a)  VOLUNTARY AGREEMENT.  The parties have read this Amendment and
on the advice of counsel they have freely and voluntarily entered into this
Amendment.

          (b)  ATTORNEY'S FEES.  If either party commences an action against
the other party arising out of or in connection with this Amendment, the
prevailing party shall be entitled to recover from the losing party reasonable
attorney's fees and costs of suit.

          (c)  SUCCESSORS.  This Amendment shall be binding on and inure to the
benefit of the parties and their successors.

          (d)  COUNTERPARTS.  This Amendment may be signed in two or more
counterparts. When at least one counterpart has been signed by each party, this
Amendment shall be deemed to have been fully executed, each counterpart shall
be deemed to be an original, and all counterparts shall be deemed to be one and
the same agreement.

                                       8
<PAGE>   15
     IN WITNESS WHEREOF, Landlord and Tenant have executed this Agreement as of
the date first written above.

                                   LANDLORD:

                                   MOUNTAIN VIEW INCOME PARTNERS LLC,
                                   a California limited liability company

                                   By:  Menlo Equities Associates VIII LLC, a
                                        California limited liability company

                                        By:  Menlo Equities LLC, a California
                                             limited liability company

                                             By:  Menlo Equities Inc., a
                                                  California corporation

                                             By:
                                                  ---------------------------
                                                  Henry D. Bullock,
                                                  President

                                   TENANT

                                   KVO PUBLIC RELATIONS, INC., an Oregon
                                   corporation

                                   By:
                                       ------------------------------
                                       Name:
                                             ------------------------
                                       Its:
                                            -------------------------

                                   By:
                                       ------------------------------
                                       Name:
                                             ------------------------
                                       Its:
                                            -------------------------

                                       9
<PAGE>   16
                               AMENDMENT TO LEASE

     This AMENDMENT TO LEASE (this "Amendment") is dated as of this 7th day of
January   , 2000 by and between MOUNTAIN VIEW INCOME PARTNERS LLC, a California
limited liability company ("Landlord"), and KVO PUBLIC RELATIONS, INC., an
Oregon corporation ("Tenant").

                                    RECITALS

     A.   DLC-Castro Commons, a California limited partnership ("DLC"), as
landlord, and Tenant, entered into that certain Office Lease dated July 30, 1996
(the "Lease"), for premises (the "Premises") with a street address of 1172
Castro Street, Mountain View, California, and more particularly described in the
Lease.

     B.   Landlord acquired the property on which the Premises are located on or
about December 8, 1997, and succeeded to the interest of DLC under the Lease.

     C.   Landlord and Tenant now desire to amend the Lease on the terms and
conditions set forth herein. Capitalized terms used in this Amendment and not
otherwise defined shall have the meanings assigned to them in the Lease.

                                   AGREEMENT

     NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree
as follows:

     1.   BASIC RENT. The first paragraph of subparagraph 3.A. of the Lease is
deleted in its entirety and replaced with the following:

          "Tenant shall pay to Landlord, as monthly rent ("Rent") for the
Premises the amount ("Basic Rent") of Thirty Seven Thousand One Hundred Fifty
Eight and 57/100 Dollars ($37,158.57) in lawful money of the United States of
America, subject to adjustment as provided in subparagraph 3.B, below. All Rent
shall be paid without deduction or offset, prior notice, abatement or demand,
except as herein provided to Landlord c/o Menlo Equities Management Company LLC,
2901 Tasman Drive, Ste. 220, Santa Clara, California 95054 or at such other
place as may be designated from time to time by Landlord."

     2.   BASIC RENT INCREASES. The first sentence of subparagraph 3.B of the
Lease is deleted in its entirety and replaced with the following:

          "The Basic Rent shall be subject to adjustment on each anniversary of
the Commencement Date as follows:"

                                       1.
<PAGE>   17
     3.   USE OF THE PREMISES. The first sentence of paragraph 5 of the Lease
is deleted in its entirety and replaced with the following:

     "The Premises shall be used exclusively for the purpose of general and
executive offices."

     4.   SUBLEASE PREMIUM. Notwithstanding anything to the contrary contained
in paragraph 21.A of the Lease, Tenant may retain fourteen cents ($0.14) per
rentable square foot per month of all Basic Rent (or its equivalent) received
by Tenant in excess of the Basic Rent provided hereunder (the "Sublease
Premium") so long as (i) Vivus, Inc., a Delaware corporation is subleasing all
of the Premises pursuant to that certain sublease dated December 21, 1999
attached hereto as EXHIBIT A (the "Sublease"), (ii) Tenant is not in default of
the Lease beyond any applicable cure and notice periods and (iii) all remaining
amounts of the Sublease Premium are paid to Landlord at the same time as Basic
Rent. Tenant expressly acknowledges (i) that in the event the Sublease is
terminated or expires prior to the termination or earlier expiration of the
Lease or Tenant is in default beyond the applicable cure and notice periods,
this paragraph 4 shall be inoperative and the terms and conditions of paragraph
21.A shall govern the allocation of any Sublease Premium, and (ii) the
provisions of this paragraph 4 shall apply only to the Basic Rent (or its
equivalent) payable under the Sublease and not to any other rents or payments
made pursuant thereto.

     5.   RATIFICATION. The Lease, as amended by this Amendment, is hereby
ratified by Landlord and Tenant and Landlord and Tenant hereby agree that the
Lease, as so amended, shall continue in full force and effect.

     6.   MISCELLANEOUS.

          (a)  VOLUNTARY AGREEMENT. The parties have read this Amendment and on
the advice of counsel they have freely and voluntarily entered into this
Amendment.

          (b)  ATTORNEY'S FEES. If either party commences an action against the
other party arising out of or in connection with this Amendment, the prevailing
party shall be entitled to recover from the losing party reasonable attorney's
fees and costs of suit.

          (c)  SUCCESSORS. This Amendment shall be binding on and inure to the
benefit of the parties and their successors.

          (d)  COUNTERPARTS. This Amendment may be signed in two or more
counterparts. When at least one such counterpart has been signed by each party,
this Amendment shall be deemed to have been fully executed, each counterpart
shall be deemed to be an original, and all counterparts shall be deemed to be
one and the same agreement.

                                   2.
<PAGE>   18
     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment as of
the date first written above.

                                   LANDLORD:

                                   MOUNTAIN VIEW INCOME PARTNERS LLC,
                                   a California limited liability company

                                   By:  Menlo Equities Associates VIII LLC, a
                                        California limited liability company

                                        By:  Menlo Equities LLC, a California
                                             limited liability company

                                             By:  Menlo Equities Inc., a
                                                  California corporation

                                             By: /s/ Henry D. Bullock
                                                 ----------------------------
                                                     Henry D. Bullock,
                                                     President

                                   TENANT:

                                   KVO PUBLIC RELATIONS, INC., an Oregon
                                   corporation

                                        By: /s/ Sharon VanSickle
                                            ----------------------
                                            Name: Sharon VanSickle
                                            Its:  President/CEO

                                        By:
                                            ------------------------
                                            Name:
                                            Its:

                                       3.
<PAGE>   19
                                  OFFICE LEASE

THIS LEASE is made on the 30th day of July, 1996 by and between DLC-Castro
Commons, a California limited partnership (hereinafter called "Landlord"), and
Karakas Van Sickle Ouellette, an Oregon Corporation (hereinafter called
"Tenant").

     IN CONSIDERATION OF THE MUTUAL PROMISES CONTAINED HEREIN, THE PARTIES AGREE
AS FOLLOWS:

1.   Premises. Landlord leases to Tenant and Tenant leases from Landlord, upon
     the terms and conditions herein set forth, those certain premises (the
     "Premises") situated at 1172 Castro Street which is part of a two building
     ("Complex") in the City of Mountain View County of Santa Clara, California,
     as outlined in Exhibit A, attached hereto and incorporated herein by this
     reference, and described as follows: approximately fourteen thousand two
     hundred thirty-seven (14,237) rentable square feet on the first and second
     floors as shown on Exhibit "A".

2.   Term. The term of this Lease shall commence on the date ("Commencement
     Date") which is the earlier of the following:

     A. Ten (10) days following the date that the existing tenant (Syntex)
        vacates the Premises; or

     B. The date on which Tenant takes possession of the Premises.

     Landlord shall send to Tenant a notification, in the form attached hereto
     as Exhibit B and incorporated herein by this reference, stating the
     Commencement Date, when it is ascertained.

     The term of the Lease shall end ten (10) years from the Commencement Date,
     unless sooner terminated pursuant to any provision hereof. Should Lease not
     commence on the first (1st) day of the month, the Lease shall nonetheless
     terminate on the last day of the month of the last year of the Term as
     provided herein.

3.   Rent.

     A. Basic Rent. Tenant shall pay to Landlord, as monthly rent ("Rent") for
        the Premises the amount ("Basic Rent") of Thirty-One Thousand Three
        Hundred Twenty-One and 40/100ths Dollars ($31,321.40) in lawful money of
        the United States of America, subject to adjustment as provided in
        subparagraph 3.B, below. All Rent shall be paid without deduction or
        offset, prior notice, abatement or demand, except as herein provided, to
        Landlord, at c/o Dewey Land Company, 999 Baker Way, Suite 300, San
        Mateo, CA 94404. Attention: Accounting, or at such other place as may be
        designated from time to time by Landlord.

        Basic Rent for the term of this Lease shall be paid, in advance, on the
        first (1st) day of each calendar month until the end of the term; Rent
        for the first month of the term is paid pursuant to Paragraph 3E below.
        Rent for any period during the term hereof which is for less than one
        (1) full month shall be a pro rata portion of the monthly Rent payment.

        Tenant acknowledges that late payment by Tenant to Landlord of Rent or
        any other payment due Landlord will cause Landlord to incur costs not
        contemplated by this Lease, the exact amount of such costs being
        extremely difficult and impracticable to fix. Such costs include,
        without limitation, processing and accounting charges, and late charges
        that may be imposed on Landlord by the terms of any encumbrance and note
        secured by any encumbrance covering the Premises. Therefore, if any
        installment of Rent or other payment due from Tenant is not received by
        Landlord within five (5) days following the date it is due and payable,
        Tenant shall pay to Landlord, in addition to the Rent due, and in
        addition to interest thereon as provided in Paragraph 14, an additional
        sum of five percent (5%) of the overdue amount as a late charge. In the
        event Lender's late charge to Landlord as Borrower is higher, then
        Lender's late charge penalty shall be the percentage used for
        calculating such a late charge; in no event, however shall such late
        charge exceed ten percent (10%) of the amount delinquent. The parties
        agree that this late charge and interest 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. Upon receipt of the rent, late charge,
        or other sums due, this monetary default shall be deemed cured.

                                       1
<PAGE>   20
     If the parties hereto have agreed upon a specific date for the
     Commencement Date and if for any reason whatsoever Landlord cannot
     deliver possession of the Premises on the Commencement Date, this
     Lease shall not be void or voidable, nor shall Landlord be liable
     to Tenant for any loss or damage resulting therefrom; but in such event.
     Tenant shall not be obligated to pay Rent until possession of the Premises
     is tendered to Tenant, and the Commencement Date and termination date of
     this Lease shall be revised to conform to the date of Landlord's delivery
     of possession.

B.   BASIC RENT INCREASE. The Basic Rent shall be subject adjustment at the
     commencement of the third (3rd) lease year of the term and each successive
     year thereafter as follows:

     The base for computing the first adjustment is the Consumer Price Index.
     All Urban Consumers, San Francisco-Oakland-San Jose Metropolitan Area
     average (1982-1984-100), published by the United States Department of
     Labor, Bureau of Labor Statistics ("Index"), which is published most
     immediately preceding the Commencement Date ("Beginning Index"). The Index
     published most immediately preceding the adjustment date in question
     ("Extension Index") is to be used in determining the amount of the
     adjustment. If the Extension Index has increased over the Beginning Index,
     the Basic Rent for the following year (until the next Rent adjustment)
     shall be set by multiplying the monthly Basic Rent set forth in Paragraph
     3A by a fraction, the numerator of which is the Extension Index and the
     denominator of which is the Beginning Index. Beginning with the
     commencement of the fourth lease year, the Rent applicable immediately
     prior to the Adjustment date shall be multiplied by a fraction, the
     numerator of which is the Extension Index and the denominator of which is
     the index used in determining the last prior adjustment in no event shall
     the increase in the Basic Rent be less than two percent (2%) per year nor
     any greater than six percent (6%) per year.

     If the index is changed so that the base year differs from that in effect
     when the term commences, the Index shall be converted in accordance with
     the conversion factor published by the United States Department of Labor,
     Bureau of Labor Statistics. If the Index is discontinued or revised during
     the term, such other government index or computation with which it is
     replaced shall be used to obtain substantially the same result as would be
     obtained if the Index had not been discontinued or revised.

C.   ADDITIONAL RENT; OPERATING EXPENSES AND TAXES. For purposes of this Lease,
     the parties agree to the following:

     (1)  "Operating Expenses and Taxes" shall be the amount of the Operating
          Expenses and Taxes for the 1996 calendar year. Landlord's estimate
          for the calendar year 1996 is sixty-three cents ($0.63) per rentable
          square foot per month.

     (2)  Tenant's proportionate share of Operating Expenses and Taxes is agreed
          to be one hundred percent (100%) of the Building and thirty-four and
          three tenths percent (34.3%) of the Complex. (Tenant's share of the
          Complex's Operating Expenses and Taxes shall not include any costs for
          the 1172 Castro Building billed to and reimbursed by Tenant).

     (3)  "Operating Expenses" shall mean all direct costs of operating,
          maintaining and managing the Building and the Property (including
          parking areas) including, but not limited to, all charges paid or
          expenses incurred by Landlord for repairs; maintenance; utilities;
          water; capital improvements required to meet changed government
          regulations; cleaning and janitorial services; security services;
          modifications or additional capital improvements or replacement of
          existing building systems and equipment to reduce the Operating
          Expenses; replacement of capital improvements or Building sewer
          equipment existing as of the Commencement Date when required because
          of normal wear and tear; maintenance and replacement of landscaping,
          glazing, plumbing systems, electrical systems, heating and air
          conditioning systems, a fitness center including rent at the same per
          square foot rent that Tenant pays, automatic fire extinguishing
          systems, conference center including rent at the same per square foot
          rent that Tenant pays, roofs, down spouts, elevators, common area
          interiors, ceilings, and Building exterior and common area doors;
          rubbish removal; property and liability insurance; licenses, permits
          and inspections; reasonable accounting, administrative, property
          management equal to five percent (5%) of revenue, and legal expenses;
          amortization (together with interest at the rate of twelve percent
          (12%) per annum on the unamortized balance) on machinery and equipment
          used to maintain the Premises, the Building, the parking areas or the
          Property:

                                       2
<PAGE>   21
          amortization (together with interest at the rate of twelve percent
          (12%) per annum on the unamortized balance) on other personal property
          used by Landlord in the Building (including but not limited to window
          coverings and carpeting in public corridors and common areas); costs,
          expenses and overhead for maintaining and operating a management or
          tenant relations office in the Building; and the reasonable cost of
          contesting the validity or applicability of any government enactments
          that may affect Operating Expenses. Notwithstanding anything to the
          contrary herein, cost for replacement to the foundation and cost for
          the repair/replacement of the structural element of the exterior wall,
          i.e., structural beam, shall not be included as an Operating Expense
          (and any such cost shall be borne by Landlord except that should such
          repair or replacement be occasioned by the act or failure to act by
          Tenant, then Tenant shall pay all of such cost upon demand by
          Landlord). For example, should a major subsidence occur in the
          foundation whereby twenty-five percent (25%) or more of the foundation
          requires replacement, Landlord shall pay for such work. For example,
          should a structural member of the exterior wall, i.e., structural
          beam, fall, Landlord shall be responsible for cost of such
          replacement.

     (4)  "Taxes" shall mean all Real Property Taxes as hereafter defined in
          Paragraph 7, but excluding all other taxes which are paid by Landlord
          and reimbursed by Tenant under this Lease.

     In addition to the Base Rent, Tenant shall pay to Landlord, as Additional
     Rent, Tenant's pro-rata share of the Operating Expenses and Taxes
     (hereinafter "OPT"). For the calendar year 1998, the OPT is estimated to be
     sixty-three cents ($0.63) per rentable square foot.

     Notwithstanding anything in this Lease to the contrary, Landlord shall
     calculate Tenant's proportionate share of the OPT (for purposes of both
     estimated and actual calculations) as if the Building were fully occupied
     regardless of the actual occupancy rate.

     Tenant's pro rata share of OPT shall be Additional Rent and shall be paid
     to Landlord, except as otherwise provided in this Lease, as follows: prior
     to the commencement of each calendar year or within a reasonable period
     thereafter, Landlord shall estimate Tenant's pro rata share of such OPT for
     the following calendar year and Landlord shall notify Tenant of such
     estimate in writing. Commencing on the first day of the first month of the
     calendar year for which Landlord has notified Tenant of the estimated OPT,
     and on the first day of every month thereafter in such year, Tenant shall
     pay to Landlord, as Additional Rent, one-twelfth (1/12th) of Tenant's
     estimated pro rata share of the yearly OPT. Within ninety (90) days of the
     end of each calendar year for which Tenant has made estimated payments (the
     "Adjustment Date"), Landlord shall furnish Tenant a statement with respect
     to such year, showing actual charges for the past calendar year and the
     total payments made by Tenant on the basis of Landlord's estimate. If
     Tenant's actual pro rata share of the OPT exceeds the payments made by
     Tenant based on Landlord's estimate, Tenant shall pay the deficiency to
     Landlord within thirty (30) days of Tenant's receipt of Landlord's
     statement. If the total payments by Tenant based on Landlord's estimate
     exceed Tenant's actual pro rata share of the OPT, Tenant's excess payment
     shall be credited toward future payments by Tenant of Basic Rent and/or
     Additional Rent or refunded to Tenant within thirty (30) days of Landlord's
     statement to Tenant if no future Basic Rent or Additional Rent is to become
     due.

     Upon request by Tenant to Landlord, Landlord shall allow Tenant to review
     Landlord's records, at Landlord's office in place where the records are
     kept, with respect to Operating Expenses at all reasonable times. Tenant
     shall reimburse Landlord (within ten (10) days) for any costs incurred by
     Landlord during such review by Tenant.

     All Lease provisions with respect to late charges and interest on unpaid
     Rent shall be applicable to Additional Rent, as well as to Basic Rent and
     all other monetary amounts due from Tenant under this Lease.

D.   Monetary Obligations as Rent. All monetary amounts payable by Tenant to
     Landlord under this Lease including but not limited to Basic and Additional
     Rent, and amounts paid by Landlord to cure Tenant's default(s) shall be
     deemed "Rent" hereunder.

E.   First Month's Rent. Landlord hereby acknowledges that upon Tenant's
     execution of the Lease, Tenant shall have deposited Forth Thousand Two
     Hundred Ninety and 71/100ths Dollars ($40,290.71) which represents the
     First Month's Basic Rent of Thirty-One

                                       3
<PAGE>   22
          Thousand Three Hundred Twenty-One and 40/100ths Dollars ($31,321.40)
          and the estimated OPT for the first month of Eight Thousand Nine
          Hundred Sixty-Nine and 31/100ths Dollars ($8,969.31), i.e., $0.63 per
          rentable sq. ft.

4.   Security Deposit. Landlord acknowledges that, upon Tenant's execution of
     the Lease, Tenant shall have deposited with Landlord a security deposit in
     the sum of Forty Thousand and 00/100 Dollars ($40,000.00) to secure
     Tenant's full and faithful performance of each term, covenant, and
     condition of this Lease to be performed by Tenant. If Tenant fails to pay
     any Basic Rent, Additional Rent or any other monetary amount due from
     Tenant hereunder, or fails to keep or perform any term, covenant or
     condition on its part to be made or performed or kept under this Lease,
     then Landlord may, but shall not be obligated to, and without waiving or
     releasing Tenant from any obligation under this Lease, use, apply or
     retain the whole or any part of said security deposit (i) to the extent of
     any sum due to Landlord; or (ii) to make any required payment on Tenant's
     behalf; or (iii) to compensate Landlord for any loss, damage, attorneys'
     fees or expense sustained by Landlord due to Tenant's default. In such
     event, Tenant shall, within ten (10) days of written demand by Landlord,
     remit to Landlord sufficient funds to restore the security deposit to its
     original sum. Tenant's failure to do so shall be a material breach of this
     Lease. No interest shall accrue on the security deposit.

5.   Use of the Premises. The Premises shall be used exclusively for the
     purpose of office use for public relations and advertising uses. Tenant
     shall not use, or permit the Premises or any part thereof to be used, for
     any purpose other than the purpose for which the Premises are hereby
     leased; and no use shall be made or permitted to be made of the Premises,
     nor acts done in, on or about the Premises, which will increase the
     existing rate of insurance upon the Building, or cause a cancellation of
     any insurance policy covering the Building, or any part thereof, nor shall
     Tenant sell or permit to be kept, used or sold,in or about the Premises,
     any article which may be prohibited by the standard form of fire insurance
     policies. Tenant shall not commit, or suffer to be committed, any waste
     upon the Premises, or any public or private nuisance, or other act or
     thing which may injure, annoy or disturb the quiet enjoyment of any
     occupant of neighboring properties or other tenant in the Building or on
     the Property; nor, without limiting the generality of the foregoing, shall
     Tenant allow the Premises to be used for any improper, immoral, unlawful
     or objectionable purpose. Tenant shall not place any harmful liquids in
     the drainage system of the Premises or of the Building. Tenant shall not
     place any loads upon the floors, walls, ceilings or roof which might
     endanger the structure, nor overload any electrical, mechanical or other
     systems.

     No waste materials or refuse shall be dumped upon or permitted to remain
     upon any part of the Premises outside the Building except in trash
     containers placed inside exterior enclosures approved for that purpose by
     Landlord, or inside the Building proper where designated by Landlord. No
     materials or articles of any nature shall be stored upon or permitted to
     remain outside of the Building. Subject to the provisions of Paragraph 35
     of this Lease, Tenant shall not place anything or allow anything to be
     placed near the glass of any window, door, partition or wall which may
     appear unsightly from outside the Premises (including the common areas and
     hallways of the Building). 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 which consent
     may be granted at Landlord's absolute discretion.

     Tenant covenants and agrees that no diminution of light, air or view by
     any structure which may be hereafter erected, whether or not by Landlord,
     or use of the Building by any other occupants or use of neighboring
     buildings or areas by others, shall in any way affect this Lease, entitle
     Tenant to any reduction of Rent hereunder, or result in any liability of
     Landlord to Tenant.

     Tenant shall comply with all the covenants, conditions and/or restrictions
     ("CC&R's") affecting the Premises, the Building and the Property, and all
     rules and regulations affecting the Premises, which rules and regulations
     shall be enforced by Landlord in a non-discriminatory and non-arbitrary
     manner.

     The term "Hazardous Material" means 'any hazardous or toxic substance,
     material or waste, the storage, use or disposition of which is or becomes
     regulated by any local governmental authority, the State of California or
     the United States government. The term "Hazardous Material" includes,
     without limitation, any material or substance which is (i) defined as a
     "hazardous waste", "extremely hazardous waste" or "restricted hazardous
     waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to
     Section 25140, of the California Health and Safety Code, Division 20,
     Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a "hazardous
     substance" under Section 25136 of the California Health and Safety Code,
     Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance
     Account Act), (iii) defined as a "hazardous material", "hazardous
     substance" or "hazardous waste" under Section 25501 of the California
     Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials
     Release Response

                                       4
<PAGE>   23
     Plans and Inventory), (iv) defined as a "hazardous substance" under Section
     25281 of the California Health and Safety Code, Division 20, Chapter 6.7
     (Underground Storage of Hazardous Substances), (v) petroleum, (vi)
     asbestos, (vii) listed under Article 9 or defined as hazardous or extremely
     hazardous pursuant to Article 11 of Title 22 of the California
     Administrative Code, Division 4, Chapter 20, (viii) designated as a
     "hazardous substance" pursuant to Section 311 of the Federal Water
     Pollution Control Act (33 U.S.C. Section 1317), (ix) defined as a
     "hazardous waste", pursuant to Section 1004 of the Federal Resource
     Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq. (42 U.S.C.
     Section 6903), (x) defined as a "hazardous substance" pursuant to Section
     101 of the Comprehensive Environmental Response Compensation and Liability
     Act, 42 U.S.C. Section 9601 et seq. (42 U.S.C. Section 9601) or (xi) listed
     or defined as "hazardous waste", "hazardous substance" or other similar
     designation by any regulatory scheme of the State of California or the
     United States government.

     Tenant, at its sole cost, shall comply with all laws and regulations
     relating to the storage, use and disposal of Hazardous Materials on the
     premises. If Tenant does store, use or dispose of any Hazardous Materials
     on the Premises, Tenant shall notify Landlord, in writing, at least five
     (5) days prior to their first appearance on the Premises; provided,
     however, that Tenant shall have the right to store reasonable amounts of
     chemicals and/or solvents used for ordinary office equipment without
     notifying Landlord. Tenant shall be solely responsible for and shall
     defend, indemnify and hold Landlord, and Landlord's partners, officers,
     employees, successors, assigns and agents, harmless from and against all
     claims, demands, damages, costs and liabilities, including attorneys' fees
     and costs, arising out of or in connection with the storage, use or
     disposal of Hazardous Materials by Tenant, its agents, employees,
     contractors, or sublessees.

     If the presence of Hazardous Materials on the Premises caused or permitted
     by Tenant, its agents, employees, contractors, or sublessees results in or
     is likely to result in contamination or deterioration of water or soil
     resulting in a level of contamination greater than the safe levels
     established by any governmental agency having jurisdiction over such
     contamination, or if any investigation of conditions, or any clean-up,
     remedial removal or restoration work is required by any federal, state or
     local governmental agency or political subdivision ("Governmental Agency")
     because of the level of Hazardous Material in the soil or ground water or
     on the Premises caused or permitted by Tenant, its agents, employees,
     contractors and or sublessees, then Tenant shall promptly, and at its sole
     cost, take any and all action necessary to investigate and clean up such
     contamination. Tenant shall further be solely responsible for, and shall
     defend, indemnify and hold Landlord and Landlord's partners, officers,
     employees, successors, assigns and agents harmless from and against, all
     claims, demands, damages, costs and liabilities, including attorneys' fees
     and costs, arising out of or in connection with any removal, clean-up and
     restoration work and materials required hereunder to return the Premises,
     the Property or the surrounding properties to the condition existing prior
     to the appearance of the Hazardous Materials caused or permitted by Tenant,
     its agents, employees, contractors, or sublessees.

     If Landlord has good cause to believe that the Premises or the Property
     have or may become contaminated by Hazardous Materials, Landlord may cause
     tests to be performed, including wells to be installed on the Property, and
     may cause the soil or ground water to be tested to detect the presence of
     Hazardous Materials by the use of such tests as are then customarily used
     for such purposes. The cost of such tests of the installation, maintenance,
     repair and replacement of such wells shall be paid by Tenant.

     The termination of the Lease shall not terminate the parties' respective
     rights and obligations under this Paragraph 5, and the parties hereto
     expressly agree that the provisions contained herein shall survive the
     termination of Tenant's leasehold estate.

     Tenant shall abide by all laws, ordinances and statutes, as they now exist
     or may hereafter be enacted by legislative bodies having jurisdiction
     thereof, relating to its use and occupancy of the Premises.

     The provisions of this Paragraph 5 are for the benefit of the Landlord only
     and shall not be construed to be for the benefit of any other person or
     occupant of the Premises.

6.   Improvements. Landlord will, at its sole expense and using contractors of
     its choice, make improvements ("Improvements") to the Premises as specified
     in Exhibit C attached hereto and incorporated herein by this reference. On
     or before September 1, 1996, Tenant shall deliver to Landlord, for
     Landlord's approval, its final plans with detailed specifications and
     listing of finish materials, all of which have been approved by Tenant.
     Notwithstanding anything in this Lease to the contrary, if Tenant fails to
     provide Landlord with such final plans, specifications, and finish material
     approved by Tenant on or before the date specified for such delivery, or if
     Tenant changes any of the plans, specifications or finish materials
     subsequent to such date, then the Commencement Date shall be the
     Anticipated Completion Date as hereafter set forth, or the date

                                       5
<PAGE>   24
of Landlord's notification to Tenant of Substantial Completion (as hereinafter
defined) of the improvements, or the date on which Tenant takes possession of
the Premises, whichever shall first occur.

Upon Landlord's approval (which shall not be unreasonably withheld or delayed)
of such final plans and specifications including finish materials approved by
Tenant, and upon Landlord's approval of the same, Landlord shall diligently
undertake to construct the improvements in accordance with such final plans,
specifications and finish materials as approved by Landlord and Tenant
(collectively referred to as "Final Plans"). All such construction shall be
performed with due diligence and in substantial accordance with the Final Plans.
Landlord agrees to use all commercially reasonable efforts to substantially
complete the improvements by January 1, 1997 ("Anticipated Completion Date"),
but without any warranty as to when such improvements shall be substantially
completed.

Landlord's obligation to construct the improvements is specifically subject to
any changes or other requirements of or imposed by all applicable governmental
body(ies), agency(ies) and/or utility(ies); Landlord shall notify Tenant of any
such changes and/or requirements promptly after Landlord becomes aware of the
same. Any improvements to the Premises not expressly shown or stated in the
Final Plans shall be made by  Tenant at its sole cost and expense in accordance
with Paragraph 11 of this Lease; provided, however, that notwithstanding
anything in this Lease to the contrary, any delay in Landlord's construction of
the improvements caused in whole or in part by Tenant including, but not limited
to, delays caused by additional improvements made or any changes requested by
Tenant, shall not delay the Commencement Date of this Lease, and Substantial
Completion, as hereinafter defined, for purposes of determining the Commencement
Date of this Lease, shall be at such time as the improvements would have been
Substantially Complete absent such additional improvements made or changes
requested by Tenant.

It is understood that the Final Plans and the exact location of doors, walks,
lighting, plumbing and all other facilities and improvements are subject to such
minor changes (for example: Schlage lock set can be replaced with like kind
alternate) as Landlord, or Landlord's architect or general contractor in charge
of the construction of the improvements, determine to be necessary desirable in
the course of construction of or to the Premises, and no such changes shall
affect this Lease or constitute a breach by Landlord hereunder. Landlord agrees
to not materially deviate from the final approved plans without Tenant's
consent, which consent shall not be timely or unreasonably withheld.

Tenants shall have twenty (20) days from the date of Substantial Completion to
provide Landlord with a list of items requiring repair or replacement. Upon
Landlord's receipt of such list, Landlord shall proceed to correct such "punch
list" items with due diligence.

7.   Taxes and Assessments.

A.   Tenant shall pay before delinquency any and all taxes, assessments, license
     fees and public charges levied, assessed or imposed upon or against
     Tenant's fixtures, equipment, furnishings, furniture, appliances and
     personal property installed or located on or within the Premises. Tenant
     shall cause said fixtures, equipment, furnishings, furniture, appliances
     and personal property to be assessed and billed separately from the real
     property of Landlord. If any of Tenant's said personal property shall be
     assessed with Landlord's real property, Tenant shall pay to Landlord the
     taxes attributable to Tenant within thirty (30) days after receipt of a
     written statement from Landlord setting forth the taxes applicable to
     Tenant's property.

B.   All Real Property Taxes shall be paid by Landlord. The term "Real Property
     Taxes", as used herein, shall mean and include: (i) all taxes, assessments,
     levies and other charges of any kind or nature whatsoever, general and
     special, foreseen and unforeseen (including without limitation, all
     installments of principal and interest required to pay any general or
     special assessments for public improvements, and any increases resulting
     from reassessments caused by any change in ownership of the Premises, the
     Building or the Property, or otherwise) now or hereafter imposed by any
     governmental or quasi-governmental authority or special district having the
     direct or indirect power to tax or levy assessments, which are levied or
     assessed against, or with respect to the value, occupancy, or use of all or
     any portion of the Property, the Building or the Premises (as now
     constructed or as may at any time hereafter be constructed, altered, or
     otherwise changed) or Landlord's interest therein; any improvements located
     within the Property, the Building or the Premises (regardless of
     ownership); the fixtures, equipment and other property of Landlord, real or
     personal, that are an integral part of and located in, on or about the
     Property, the Building or the Premises; and landscaping areas, walkways and
     parking areas; and (ii) all costs and fees (including reasonable attorney's
     fees) incurred by

                                       6

<PAGE>   25
          Landlord in reasonably contesting any Real Property Tax and in
          negotiating with public authorities as to any Real Property Tax.

          "Real Property Taxes" shall not include any franchise, rental, income,
          inheritance or profit tax, capital levy or excise tax payable by
          Landlord.

          If at any time during the term of this Lease the taxation or
          assessment of the Property, the Building or the Premises prevailing as
          of the Commencement Date of this Lease shall be altered so that in
          lieu of or in addition to any Real Property Tax described above there
          shall be levied, assessed or imposed (whether by reason of a change in
          the method of taxation or assessment, creation of a new tax or charge,
          or any other cause) an alternate or additional tax or charge (i) on
          the value, use or occupancy of the Property, the Building or the
          Premises or Landlord's interest therein, or (ii) on or measured by the
          gross receipts, income or rentals from the Property, the Building or
          the Premises, on Landlord's business of leasing the Property, the
          Building or the Premises, or Landlord's interest therein, or based on
          parking, employment, production or the like in, on or about the
          Property, the Building or the Premises, or computed in any manner with
          respect to the operation of the Property, the Building or the
          Premises, then any such tax or charge, however designated, shall be
          included within the meaning of the term "Real Property Taxes" for
          purposes of this Lease. If any Real Property Tax is based in part upon
          property or rents unrelated to the Property, the Building or the
          Premises, then only that part of such Real Property Tax that is fairly
          allocable to the Property, the Building or the Premises shall be
          included within the meaning of the term "Real Property Taxes".

          If, at any time during the term of this Lease, any assessments which
          would be deemed to be Real Property Taxes are levied against the
          Premises, the Building or the Property, Landlord may elect either to
          pay the assessment in full or to allow the assessment to go to bond
          and to pay it in installments. In either case, however, Tenant shall
          only be obligated to pay to Landlord, with regard to any such
          assessment, each time payment of Real Property Taxes is made, a sum
          equal to that which would have been payable by Tenant as its pro rata
          percentage of the installments of principal and interest which would
          have become due during the term of this Lease had Landlord allowed the
          assessment to go to bond.

8.   Insurance.

     A.   Indemnity. Except for Landlord's gross negligence or willful
          misconduct, Tenant agrees to indemnify and defend (with counsel
          acceptable to Landlord) Landlord against the hold Landlord and
          Landlord's partners, employees, officers, assigns and successors
          harmless from any and all demands, claims, causes of action,
          judgments, obligations or liabilities, and all reasonable expenses
          incurred in investigating or resisting the same (including reasonable
          attorney's fees), on account of, or arising out of, the use or
          occupancy of the Premises. This Lease is made on the express condition
          that Landlord shall not be liable for, or suffer loss by reason of,
          injury to person or property, from whatever cause, in any way
          connected with the use or occupancy of the Premises specifically
          including, without limitation, any liability for injury to the person
          or property of Tenant, its agents, officers, employees, licensees and
          invitees.

     B.   Liability and Worker's Compensation Insurance. Tenant shall, at
          Tenant's expense, obtain and keep in force during the term of this
          Lease a policy of worker's compensation insurance and a policy of
          comprehensive public liability insurance insuring Landlord and Tenant,
          with cross-liability endorsements, against any liability arising out
          of the use or occupancy of the Premises and all areas appurtenant
          thereto, including parking areas. Such insurance shall be in an amount
          satisfactory to Landlord of not less than $1,000,000 combined single
          limit for bodily injury or death as a result of any one occurrence,
          and $1,000,000 for damage to property as a result of any one
          occurrence. The insurance shall be with companies admitted to do
          business in the State of California and companies of Best's Rating
          Guide of A+9 or better. Tenant shall deliver to Landlord, prior to
          taking possession of the Premises, a certificate of insurance
          evidencing the existence of the policy required hereunder, and such
          certificate shall certify that the policy (i) names Landlord as an
          additional insured; (ii) shall not be cancelled or altered without
          thirty (30) days prior written notice to Landlord; and (iii) the
          coverage is primary and any coverage carried or obtained by Landlord
          is in excess thereto.

          Landlord shall, at all times during the term hereof, maintain in
          effect a policy of public liability and property damage insurance
          insuring against any liability (including bodily injury or property
          damage) arising on or about the Property with policy limits determined
          by Landlord in its sole discretion. Such insurance costs shall be
          included in Operating Expenses described in Paragraph 3 above.

                                       7
<PAGE>   26
     C.   Insurance of Personal Property, Fixtures and Equipment. Tenant shall
          at all times during the term hereof, and at its sole cost and expense,
          maintain in effect policies of insurance covering: (i) its personal
          property, inventory, alterations, fixtures and equipment located on
          the Premises, in an amount not less than one hundred percent (100%) of
          their actual replacement value, providing protection against any peril
          included within the classification "Fire and Extended Coverage,"
          together with insurance against sprinkler damage, vandalism and
          malicious mischief; and (ii) all plate glass on the Premises. The
          proceeds of such insurance, so long as this Lease remains in effect,
          shall be used to repair or replace the personal property, inventory,
          alterations, fixtures, equipment and plate glass so insured. In
          addition, Tenant shall obtain and keep in force, at all times during
          the term of this Lease, a policy of business interruption insurance
          coverage, insuring that one hundred percent (100%) of the monthly
          Basic Rent, and all Additional Rent due hereunder, will be paid to
          Landlord for a period of not less than one (1) year, if the Premises
          are damaged or destroyed or rendered unfit for occupancy by a risk
          insured against by a policy of standard fire and extended coverage
          insurance, with vandalism, sprinkler damage and malicious mischief
          endorsements.

     D.   Property Insurance. Landlord shall obtain and keep in force during the
          term of this Lease a policy or policies of insurance coverage
          including fire and extended coverage (and, at Landlord's sole and
          absolute discretion, earthquake and flood), for loss or damage to the
          Premises and to the Building, in the amount of the full replacement
          value thereof. Such insurance costs and deductibles shall be included
          in Operating Expenses described in Paragraph 3 above.

     E.   Mutual Waiver of Subrogation. The parties hereto release each other
          and their respective authorized representatives, partners, officers,
          agents, employees and servants, from any and all claims, demands,
          loss, expense or injury to any person, or to the Premises or Building,
          or to the furnishings, fixtures or equipment located therein, caused
          by or resulting from perils, events or happenings which are the
          subject of insurance in force at the time of such loss. Each party
          shall cause each insurance policy obtained by it to provide that the
          insurer waives all right of recovery by way of subrogation against
          either party in connection with any damage covered by any policy.
          Neither party shall be liable to the other for any damage caused by
          fire or any of the risks insured against under any insurance policy in
          effect as required by this Lease.

9.   Operation, Management, Services and Utilities. All expenses of operation
     and management of the Premises and the Building or the Property, including,
     but not limited to, water, gas, light, heat, power, electricity, telephone,
     trash pick-up, property management services, landscaping, janitorial
     services, sewer charges, pest control, security charges, and all other
     services supplied to or consumed on the Premises or the Building or the
     Property shall be controlled by Landlord and be included in Operating
     Expenses described in Paragraph 3 above, except to the extent such charges
     are directly billed to Tenant. Landlord agrees to manage the Property in a
     first class manner similar to other comparable buildings in the El Camino
     Hospital/Mountain View marketplace. Landlord shall not be liable for and
     Tenant shall not be entitled to any abatement or reduction of Rent by
     reason of any interruption or failure of utility or other services to the
     Premises during the Lease term. Utilities and services shall be provided in
     accordance with the Standards for Utilities and Services set forth in
     Exhibit D attached hereto and incorporated herein. The parties agree to the
     terms and provisions set forth in the Standards and to any modifications or
     additions thereto.

10.  Repair and Maintenance.

     A.   Subject to provisions of Paragraph 15 of this Lease, below, Landlord
          shall keep and maintain the roof, paving, structural elements,
          landscaping, irrigation systems and exterior walls of the Building and
          the Property in good order and repair. Landlord shall also keep and
          maintain in good order and repair the windows, window frames, doors,
          hardware, interior walls, and the electrical, plumbing, lighting,
          heating and air conditioning systems. Landlord agrees to make such
          repairs as necessary as promptly as possible. Such expenses shall be
          included in Operating Expenses for purposes of Paragraph 3 above. If,
          however, any repairs or maintenance are required because of an act
          or omission of Tenant, or its agents, employees or invitees, then
          Tenant shall pay to Landlord upon demand one hundred percent (100%) of
          the costs of such repair or maintenance. Notwithstanding anything in
          this Lease to the contrary, after the initial construction of the
          improvements in the Premises by Landlord pursuant to the provisions of
          Paragraph 6 of this Lease, Landlord shall have no obligation to alter,
          remodel, improve, decorate, or paint the Premises or any part thereof.

     B.   Except as expressly provided in subparagraph 10.A above, Tenant shall,
          at its sole cost, keep and maintain the interior of the Premises in
          good and sanitary order, condition and repair.

                                       8
<PAGE>   27
          Should Tenant fail to maintain the Premises as required hereunder
          forthwith upon notice from Landlord, then Landlord, in addition to all
          other remedies available hereunder or by law, and without waiving any
          alternative remedies, may make or do the same, and in that event,
          Tenant shall reimburse Landlord for the cost of such maintenance or
          repairs as Additional Rent, at Landlord's election on demand or on the
          next date upon which Basic Rent becomes due.

          Tenant hereby expressly waives the provisions of Subsection 1 of
          Section 1932, and Sections 1941 and 1942 of the Civil Code of
          California and all rights to make repairs at the expense of Landlord,
          as provided in Section 1942 of said Civil Code.

     Alterations and Additions. Tenant shall not make, or suffer to be made, any
     alterations, improvements or additions in, on or about, or to the Premises
     or any part thereof, without the prior written consent of Landlord, which
     consent shall not be unreasonably withheld, and without a valid building
     permit issued by the appropriate governmental authority. Such alterations,
     improvements and additions shall then be performed by Landlord's
     contractors.

     As a condition to giving such consent, Landlord may require that Tenant
     agree to remove any such alterations, improvements or additions at the
     termination of this Lease, and to restore the Premises to their prior
     condition. Any alteration, addition or improvements to the Premises, except
     movable furniture and trade fixtures not affixed to the Premises, shall
     become the property of Landlord upon installation, and shall (subject to
     the provisions of the immediately preceding sentence) remain upon and be
     surrendered with the Premises at the termination of this Lease. Landlord
     can elect, however, within thirty (30) days before expiration of the term
     or within five (5) days after termination of the term, to require Tenant to
     remove any alterations, additions or improvements that Tenant has made to
     the Premises. If Landlord so elects, Tenant shall restore the Premises to
     the condition designated by Landlord in its election, before the last day
     of the term, or within thirty (30) days after notice of election is given,
     whichever is later.

     Alterations, additions and improvements which are not to be deemed trade
     fixtures include heating, lighting and electrical systems, air
     conditioning, partitioning, window coverings, carpeting, or any other
     installation which has become an integral part of the Premises.

     If Landlord consents to Tenant's making any alterations, improvements or
     additions in the Premises, Tenant shall be responsible for the timely
     posting of notices of non-responsibility on Landlord's behalf, which shall
     remain posted until completion of the alterations, additions or
     improvements, and Tenant shall provide Landlord with a copy of such notice
     of non-responsibility prior to commencement of any such construction.
     Tenant's failure to post notices of non-responsibility as required
     hereunder shall be a breach of this Lease and Tenant shall indemnify
     Landlord from and against all claims, losses, damages, and/or liability
     resulting therefrom, including reasonable attorney's fees.

     If, during the term hereof, any alteration, addition or change of any sort
     through all or any portion of the Premises is required, due to Tenant's
     particular use of the Premises, by law, regulation, ordinance or order of
     any public agency. Tenant, at its sole cost and expense, shall promptly
     make the same.

12.  Acceptance of the Premises and Covenant to Surrender. By entry and taking
     possession of the Premises pursuant to this Lease, upon Substantial
     Completion of the Improvements, Tenant, subject to Landlord's obligation to
     correct so-called "punch list" items, as provided in Paragraph 6, above,
     accepts the Premises as being in good and sanitary order, condition and
     repair, and accepts the Building and the Improvements included in the
     Premises in their condition existing as of the date of such entry and
     without representation or warranty by Landlord as to the condition of the
     Building or the Premises, or as to the use or occupancy which may be made
     thereof. Tenant further accepts any Improvements to be constructed by
     Landlord as being completed in accordance with the Final Plans for such
     improvements, except for items specified in writing as punch list items
     pursuant to Paragraph 6.

     Tenant agrees, on the last day of the term hereof, or on any sooner
     termination of this Lease, to surrender the Premises, together with all
     alterations, additions and improvements which may have been made in, to or
     on the Premises by Landlord or Tenant, to Landlord, broom clean, in good
     and sanitary order, condition and repair, except for such wear and tear as
     would be normal for the period of Tenant's occupancy. Tenant further agrees
     that at the end of the term of this Lease or upon any sooner termination of
     this Lease, Tenant, at its sole expense, shall have damage interior walls
     and columns patched and repainted as necessary, any damaged ceiling tile
     replaced, light lenses and ballasts restored to good order and repair, the
     drapes/blinds cleaned, any damaged doors and cabinetry replaced or repaired
     and the carpet steam cleaned and, if damaged, replaced to match the
     existing carpet.

     Tenant, on or before the end of the term of this Lease or on any sooner
     termination of this Lease, shall remove all its personal property and trade
     fixtures from the Premises, and all property not so

                                       9

<PAGE>   28
     removed shall be deemed to be abandoned by Tenant and title to the same
     shall thereupon pass to Landlord without compensation to Tenant. Landlord
     may, upon termination of this Lease, remove, store and/or sell all moveable
     personal property and trade fixtures so abandoned by Tenant, at Tenant's
     sole cost, and repair any damage caused by such removal at Tenant's sole
     cost.

     If the Premises are not so surrendered at the end of the term or sooner
     termination of this Lease, then Tenant shall indemnify Landlord against
     loss or liability resulting from the delay by Tenant in so surrendering the
     Premises, including, without limitation, any claims made by any succeeding
     tenant founded on such delay.

     No act or conduct of Landlord, whether consisting of the acceptance of the
     keys to the Premises or otherwise, shall be deemed to be or to constitute
     an acceptance of the surrender of the Premises by Tenant prior to the
     expiration of the term hereof, and such acceptance of any surrender by
     Tenant shall only be evidenced by a written acknowledgement of acceptance
     of surrender signed by Landlord. The voluntary or other surrender of the
     Premises by Tenant or a mutual cancellation of this Lease shall not work as
     a merger and, at the option of Landlord, shall either terminate all
     existing subleases or operate as an assignment to Landlord of all such
     subleases.

     After the expiration or earlier termination of this Lease, 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 by any reputable title company, licensed to operate in
     the State of California, to remove the cloud or encumbrance created by this
     Lease from the Property.

13.  Events of Default. The occurrence of any of one or more of the following
     events shall constitute a default hereunder by Tenant:

     A.  The abandonment of the Premises by Tenant. Abandonment is herein
         defined to include, but is not limited to, any absence by Tenant from
         the Premises for five (5) days or longer.

     B.  The failure by Tenant to make any payment of Rent, or other payment
         required to be made by Tenant hereunder, when due.

     C.  The failure by Tenant to observe or perform any of the express or
         implied covenants or provisions of this Lease to be observed or
         performed by Tenant, other than monetary or as specified in
         subparagraphs 13.A or 13.B, above, where such failure continues for a
         period of twenty (20) days after written notice thereof from Landlord
         to Tenant; provided, however, that any such notice shall be in lieu of,
         and not in addition to, any notice required under California Code of
         Civil Procedure Section 1161; provided further, that if the nature of
         Tenant's default is such that more than twenty (20) days are reasonably
         required for its cure, then Tenant shall not be deemed to be in default
         if Tenant shall commence such cure within said twenty (20) day period
         and thereafter diligently prosecute such cure to completion.

     D.  Any assignment or subletting of this Lease without the consent of
         Landlord, including, without limitation, an involuntary assignment as
         defined in Paragraph 21, below.

     E.  Chronic delinquency by Tenant in the payment of Rent or any other
         periodic payments required to be paid by Tenant under this Lease.
         "Chronic delinquency" shall mean failure by Tenant to pay Rent, or any
         other payments required to be paid by Tenant under this Lease, within
         three (3) days after written notice thereof for any three (3) months
         (consecutive or nonconsecutive) during any twelve (12) month period. In
         the event of a chronic delinquency, at Landlord's option, Landlord
         shall have the right, in addition to all other remedies under this
         Lease and at law, to require that Rent be paid by Tenant quarterly, in
         advance. This provision shall not limit in any way nor be construed as
         a waiver of the rights and remedies of Landlord provided herein or by
         law in the event of even one instance of delinquency.

14.  Remedies for Default.

     A.  In the event of any breach of this Lease by Tenant, or an abandonment
         of the Premises by Tenant, Landlord has the option of (i) removing all
         persons and property from the Premises and repossessing the Premises,
         in which case any of Tenant's property which Landlord removes from the
         Premises may be stored in a public warehouse or elsewhere at the cost
         of, and for the account of, Tenant, or (ii) allowing Tenant to remain
         in full possession and control of the Premises. If Landlord chooses to
         repossess the Premises, then this Lease will automatically terminate in
         accordance with the provisions of California Civil Code Section 1951.2.
         In the event of such termination of this Lease, Landlord may recover
         from Tenant: (a) the worth at the time of award of the unpaid Rent
         which had

                                       10
<PAGE>   29
     been earned at the time of termination, including interest at the maximum
     rate an individual is permitted by law to charge; (b) 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,
     including interest at the maximum rate an individual is permitted by law to
     charge; (c) the worth at the time of award of the amount by which the
     unpaid Rent for the balance of the term after the time of award exceeds the
     amount of such rental loss that Tenant proves could be reasonably avoided;
     and (d) 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 things, would be
     likely to result therefrom. "The worth at the time of the award", as used
     in (a) and (b) of this paragraph, is to be computed by allowing interest at
     the maximum rate an individual is permitted by law to charge. "The worth at
     the time of the award", as referred to in (c) of this paragraph, is to be
     computed by discounting the amount at the discount rate of the Federal
     Reserve Bank of San Francisco at the time of the award, plus one percent
     (1%).

B.   If Landlord chooses not to repossess the Premises, but allows Tenant to
     remain in full possession and control of the Premises, in accordance with
     provisions of California Civil Code Section 1951.4, then Landlord may treat
     this Lease as being in full force and effect, and may collect from Tenant
     all Rents as they become due through the termination date of this Lease, as
     specified in this Lease. For the purpose of this Paragraph 14, the
     following shall not constitute a termination of Tenant's right to
     possession:

     (1)  Acts of maintenance or preservation, or efforts to relet the Premises;

     (2)  The appointment of a receiver on the initiative of Landlord to protect
          its interest under this Lease.

C.   Tenant shall be liable immediately to Landlord for all costs Landlord
     incurs in reletting the Premises, including, without limitation, brokers'
     commissions, expenses of remodeling the Premises required by the reletting,
     and like costs. Reletting can be for a period shorter or longer than the
     remaining term of this Lease. Tenant shall pay to Landlord the Rent due
     under the new lease, on the dates the Rent is due, less the Rent Landlord
     receives from this Lease, unless Landlord notifies Tenant that Landlord
     elects to terminate this Lease. After Tenant's default and for as long as
     Landlord does not terminate Tenant's right to possession of the Premises,
     if Tenant obtains Landlord's consent, Tenant shall have the right to assign
     its Interest in this Lease, or sublet all or a portion of the Premises, but
     Tenant shall not be released from liability and obligations under this
     Lease. Landlord's consent to a proposed assignment or subletting shall be
     as required in Paragraph 21.

D.   If Landlord elects to relet the Premises as provided in this Paragraph 14,
     then any Rent that Landlord receives from reletting shall be applied to the
     payment of:

     (1)  First, any indebtedness from Tenant to Landlord other than Rent due
          from Tenant;

     (2)  Second, all costs, including for maintenance, incurred by Landlord in
          reletting; and

     (3)  Third, Rent due and unpaid under this Lease.

E.   After deducting the payments referred to in this Paragraph 14, any sum
     remaining from any Rent which Landlord receives from reletting shall be
     held by Landlord and applied in payment of future Rent as Rent becomes due
     under this Lease. In no event shall Tenant be entitled to any excess Rent
     received by Landlord. If, on the date Rent is due under this Lease, the
     Rent received from any reletting is less than the Rent due on that date,
     then Tenant shall pay to Landlord, in addition to the remaining Rent due,
     all costs which Landlord incurred in reletting, including without
     limitation maintenance, that remain after applying the Rent received from
     the reletting, as provided in this Paragraph 14.

F.   Landlord, at any time after Tenant commits a default, can 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, then the
     sum paid by Landlord shall be due immediately from Tenant to Landlord at
     the time the sum is paid and, if paid at a later date, shall bear interest
     at the maximum rate an individual is permitted by law to charge from the
     date the sum is paid by Landlord until Landlord is reimbursed by Tenant.
     The sum, together with interest on it, shall be Additional Rent.

                                       11

<PAGE>   30
     G.   Any Rent not paid when due shall bear interest at the maximum rate an
          individual is permitted by law to charge from the date due until paid
          and shall be subject to the late charge set forth in subparagraph 3.A
          above.

15.  Destruction.

     A.   In the event the Premises or the Building are damaged by any casualty
     which is covered under insurance carried by Tenant or Landlord, then
     Landlord or Tenant, whichever receives such insurance proceeds, shall
     restore such damage to the extent that the insurance proceeds are
     available provided such restoration can be completed within ninety (90)
     days after the commencement of the work. In such event, this Lease shall
     continue in full force and effect except that Tenant shall be entitled to
     proportionate reduction of Rent while such restoration takes place, such
     proportionate reduction to be based upon the extent to which the
     restoration efforts interfere with the Tenant's business in the Premises.
     Landlord shall, at all times during the Term of this Lease, procure and
     continue the force insurance coverage to cover an amount equal to at least
     ninety (90%) replacement value of the building. Notwithstanding the
     foregoing, if any such damage or destruction occurs during the last six
     (6) months of the term of this Lease and Tenant has not previously
     exercised its option to renew pursuant to Section 39 hereof, Landlord
     shall not be obligated to repair such damage.

     B.   If the Premises, the Building or common areas are damaged by risks
     not covered by such insurance or the insurance proceeds available to
     Landlord are less than ninety percent (90%) of the cost of restoration, or
     if the restoration cannot be completed within six (6) months after the
     commencement of work in the opinion of the architect or engineer appointed
     by Landlord, then Landlord shall have the option to (i) repair or restore
     such damage, this Lease continuing in full force and effect so long as the
     Premises can be used by Tenant but the Base Rent and Additional Rent to be
     equitably reduced, or (ii) give notice to Tenant at any time within ninety
     (90) days after such damage terminating this Lease as of the date to be
     specified in such notice, which date shall not be less than thirty (30)
     and no more than sixty (60) days after giving of such notice.
     Notwithstanding the foregoing, if any such uninsured damage or destruction
     occurs during the last six (6) months of the term of this Lease, and
     Tenant has not previously exercised its option to renew pursuant to
     Section 39 hereof, Landlord shall not be obligated to repair such damage.

     C.   If the Premises are destroyed ("Destroyed" shall mean more than fifty
     percent (50%) of the Premises), in whole or in part, from any cause,
     Landlord shall, at its option, either:

     (1)  Rebuild or restore the Premises to their condition prior to the
          damage or destruction; or

     (2)  Terminate this Lease.

     If Landlord does not give Tenant notice in writing within sixty (60) days
     from the destruction of the Premises of its election to either rebuild and
     restore the Premises, or to terminate this Lease, and provided that
     insurance proceeds actually available to Landlord for the purpose of
     restoring the complex or the Premises are sufficient to rebuild or restore
     the Premises, then Landlord shall be deemed to have elected to rebuild or
     restore the Premises, in which event Landlord agrees, at its expense,
     promptly to rebuild or restore the Premises to the condition existent as of
     the date of Substantial Completion.

     If Landlord does not complete the re-building or restoration within one
     hundred eighty (180) days following the date of destruction (such period
     of time to be extended for delays as provided in Paragraph 36, then Tenant
     shall have the right to terminate this Lease by giving written notice to
     Landlord within fifteen (15) days of the expiration of such period.

     Landlord's obligation to rebuild or restore the Premises shall not include
     restoration of Tenant's trade fixtures, equipment or merchandise, or any
     improvements, alterations or additions made by Tenant to the Premises.
     Unless this Lease is terminated pursuant to the foregoing provisions, this
     Lease shall remain in full force and effect. Tenant hereby expressly
     waives the provisions of Section 1932, Subdivision 2, and Sections 1933,
     Subdivision 4, of the California Civil Code.

     In case of destruction or damage caused by a risk not covered by business
     interruption insurance described in Paragraph 8, there shall be an
     abatement or reduction of Rent between the date of destruction and the
     date of substantial completion of restoration, based on the extent to
     which the destruction interferes with Tenant's use of the Premises.

     If the Complex is damaged or destroyed to the extent of not less than
     thirty three and one third percent (33 1/3%) of the replacement cost
     thereof, then Landlord may elect to terminate this Lease, whether the
     Premises are injured or not, provided that Landlord terminates the leases
     of all other tenants in the Complex similarly situated in terms of damage
     or destruction to their respective premises.

                                       12
<PAGE>   31
16.  Condemnation. If any part of the Premises shall be taken for any public or
     quasi-public use, under any statute or by right of eminent domain, or
     private purchase in lieu thereof, and a part thereof remains which is
     susceptible of occupancy hereunder, then this Lease shall, as to the part
     so taken, terminate as of the date title vests in the condemnor or
     purchaser, and the Rent payable hereunder shall be adjusted so that Tenant
     shall be required to pay for the remainder of the term only such portion of
     the Rent as the value of the part remaining after such taking bears to the
     value of the entire Premises prior to such taking. Landlord shall have the
     right to terminate this Lease in the event that such taking causes a
     reduction in Rent payable hereunder by twenty-five percent (25%) or more.
     If all of the Premises or such part thereof is taken so that there does not
     remain a portion susceptible for occupancy hereunder, as reasonably
     necessary for Tenant's conduct of its business as contemplated in this
     Lease, then this Lease shall thereupon terminate. If a part or all of the
     Premises is taken, then all compensation awarded upon such taking shall go
     to Landlord and Tenant shall have no claim thereto, and Tenant hereby
     irrevocably assigns and transfers to Landlord any right to compensation or
     damages to which Tenant may become entitled during the term hereof by
     reason of the purchase or condemnation of all or a part of the Premises.
     Tenant shall have the right to separately petition and to claim and recover
     from the condemning authority, but not from Landlord, such compensation as
     may be separately awarded or recoverable by Tenant in Tenant's own right on
     account of any and all damage to Tenant's business, including without
     limitation the loss of goodwill by reason of any appropriation, and for or
     on account of any cost or loss to which Tenant might be put in removing and
     relocating Tenant's merchandise, furniture, movable trade fixtures and
     equipment. In no event, however, shall the loss of goodwill include any
     diminution in the value of the leasehold or the bonus value of this Lease.
     Each party waives the provisions of Code of Civil Procedure, Section
     1265.130, allowing either party to petition the Superior Court to terminate
     this Lease in the event of a partial taking of the Premises.

17.  Free from Liens. Tenant shall (i) pay for all labor and services performed
     or materials used by or furnished to Tenant or any contractor employed by
     Tenant with respect to the Premises, and (ii) indemnify, defend and hold
     Landlord and the Premises harmless and free from any liens, claims,
     demands, encumbrances or judgments created or suffered by reason of any
     labor or services performed or materials used by or furnished by Tenant or
     any contractor employed by Tenant with respect to the Premises.

18.  Compliance with Laws. Tenant shall, at its own cost, comply with and
     observe all requirements of all municipal, county, state and federal
     authority now in force, or which may hereafter be in force, pertaining to
     the use and occupancy of the Premises.

19.  Subordination. Tenant agrees that this Lease shall, at the option of
     Landlord, be subject and subordinate to any mortgage, deed of trust or
     other instrument of security which has been or shall be placed on the
     Property and the Building, and this subordination is hereby made effective
     without any further act of Tenant or Landlord. Tenant shall, at any time
     hereinafter, on demand, execute any instruments, releases or other
     documents that may be required by a mortgagee, mortgagor, trustor or
     beneficiary under any deed of trust, for the purpose of subjecting or
     subordinating this Lease to the lien of any such mortgage, deed of trust or
     other instrument of security. If Tenant fails to execute and deliver any
     such documents or instruments, such failure shall, at Landlord's option,
     constitute a default by Tenant under this Lease.

     If this Lease is or becomes subordinate to any encumbrance now of record or
     any encumbrance recorded after this date affecting the Premises, then
     Tenant agrees to attorn to any purchaser at any foreclosure sale, or to any
     grantee or transferee designated in any deed given in lieu of foreclosure.
     In such event, Tenant shall execute, at Landlord's or the lender's request,
     such recognition and attornment agreement as the lender, at its option, may
     require. Landlord agrees to use its best efforts and negotiate in good
     faith with any Lender to obtain quiet enjoyment of the Premises provided
     that Tenant is in conformance with the terms and conditions of the Lease.

20.  Abandonment. Tenant shall not vacate nor abandon the Premises at any time
     during the term of this Lease; and if Tenant shall abandon, vacate or
     surrender said Premises, or be dispossessed by process of law, or
     otherwise, then any personal property belonging to Tenant and left on the
     Premises shall be deemed to be abandoned, at the option of Landlord, except
     such property as may be mortgaged to Landlord.

21.  Assignment and Subletting.

     A.   Landlord's Consent Required. Tenant shall not, either voluntarily or
          by operation of law, sell, encumber, pledge or otherwise transfer all
          or any part of Tenant's leasehold estate hereunder or permit the
          Premises to be occupied by anyone other than Tenant or Tenant's
          employees, or sublet the Premises or any portion thereof, without
          Landlord's prior written consent in each instance, which consent may
          not unreasonably be withheld by Landlord. In exercising its reasonable
          discretion, Landlord may consider all commercially relevant factors
          involved in the leasing, subleasing or assignment of the space,
          including but not limited to, the following: (i) the creditworthiness
          and financial

                                       13
<PAGE>   32
     stability of the prospective assignee or sublessee; (ii) the compatibility
     of the prospective assignee or sublessee with other tenants in the
     Building; (iii) the references from prior landlords of such prospective
     sublessee or assignee; (iv) the past history of such sublessee or assignee
     with respect to involvement in litigation and bankruptcy proceedings; (v)
     whether the proposed use of the Premises by the prospective sublessee or
     assignee falls within the use permitted under Paragraph 5; (vi) whether the
     proposed use is suitable and in keeping with the ambiance and tone of the
     Building; (vii) the impact of said sublessee or assignee and the proposed
     use of the Premises on pedestrian and vehicular traffic and parking
     facilities; and (viii) the anticipated use, storage, generation, treatment
     and disposal of Hazardous Materials by such prospective sublessee or
     assignee. The presence of one negative factor enumerated above shall be
     deemed reasonable justification for Landlord's withholding consent. Tenant
     shall provide Landlord with prior notice of any proposed assignment or
     sublease as provided in subparagraph 21.B, below. Consent by Landlord to
     one or more assignments of this Lease or to one or more subletting of the
     Premises shall not operate to exhaust Landlord's rights under this
     Paragraph 21. If Tenant is a corporation, unincorporated association, or
     partnership, the transfer, assignment, or hypothecation of any stock or
     ownership interest in such corporation, unincorporated association or
     partnership in excess of forty-nine percent (49%) shall be deemed an
     assignment within the meaning and provision of this Paragraph 21. If in
     excess of forty-nine percent (49%) of the ownership of Tenant's stock is
     transferred, or all or substantially all of its assets are transferred or
     Tenant merges with another corporation, then such transferee of the stock
     shall promptly execute a guarantee ("Guarantee") of the Lease as attached
     hereto in Exhibit "F" and in the case of a transfer of assets or a merger,
     such transferee or merged corporation shall assume this Lease without
     modification.

     As a condition of Landlord's consent to an assumption of the Lease by the
     transferee after such a stock transfer, asset sale or merger, which
     condition Tenant agrees is reasonable, the proposed transferee shall have a
     minimum net worth equal to Ten Million and No/100ths U.S. Dollars
     ($10,000,000.00) at the time of the transfer of Tenant's stock or assets.
     The voluntary or other surrender of this Lease by Tenant or a mutual
     cancellation hereof shall not work a merger, and shall, at the option of
     Landlord, terminate all or any existing subleases or subtenancies. All Rent
     received by Tenant from its subtenants in excess of the Rent payable by
     Tenant to Landlord under this Lease shall be paid to Landlord, and any sums
     to be paid by an assignee to Tenant in consideration of the assignment of
     this Lease shall be paid to Landlord. However, from the sublease rent in
     excess of the Base and Additional Rent hereunder, Tenant may recover its
     direct documented third-party expenses of subleasing of reasonable legal
     fees, reasonable brokerage commissions, and reasonable tenant improvement
     costs. Any sublease or assignment permitted herein, shall, at Landlord's
     election, automatically terminate Tenant's option(s), if any, to extend the
     term of this Lease and, in such event, any such options shall not be
     available to any sublessee or other transferee.

B.   Notice to Landlord. If Tenant desires at any time to assign this Lease or
     to sublet the Premises or any portion thereof, it shall first notify
     Landlord of its desire to do so and shall submit in writing to Landlord (i)
     the name of the proposed sublessee or assignee; (ii) the nature of the
     proposed sublessee's or assignee's business to be carried on in the
     Premises; (iii) the material business terms of the proposed sublease or
     assignment; and (iv) such reasonable financial information concerning the
     proposed sublessee or assignee as Landlord may need to make a prudent and
     considered decision. Tenant shall also provide to Landlord a copy of the
     sublease or assignment after such document has been fully executed.

C.   Tenant Not Released. No subletting or assignment, even with the written
     consent of Landlord, shall relieve Tenant of its obligation to pay the Rent
     and perform all of the other obligations to be performed by Tenant
     hereunder. Tenant shall indemnify and hold Landlord harmless from any and
     all claims, damages, liability and expenses, including reasonable
     attorneys' fees and costs, arising out of any claims by brokers or others
     for commissions or finder's fees with respect to any subletting or
     assignment by Tenant. The acceptance of Rent by Landlord from any other
     person shall not be deemed to be a waiver by Landlord of any provision of
     this Lease or to be a consent to any assignment or subletting. Tenant
     immediately and irrevocably assigns to Landlord, as security for Tenant's
     obligations under this Lease, all Rent from any subletting, and Landlord,
     as assignee and attorney in fact for Tenant, or any receiver for 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 any act of default by Tenant. Tenant shall have the right to
     collect such Rent.

                                       14

<PAGE>   33
     D.   Involuntary Assignment. No interest of Tenant in this Lease shall be
          assignable by operation of law. Without limiting the foregoing, each
          of the following acts shall be considered an involuntary assignment:

          (i)       Transfer of this Lease by testacy or intestacy;

          (ii)      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 general partner of the
                    partnership or other person or entity is or becomes bankrupt
                    or insolvent, or makes an assignment for the benefit of
                    creditors;

          (iii)     The appointment of a trustee or receiver to take possession
                    of substantially all of Tenant's assets located at the
                    Premises or of Tenant's interests in this Lease, where
                    possession is not restored to Tenant within thirty (30)
                    days; or

          (iv)      The attachment, execution or other judicial seizure of
                    substantially all of Tenant's assets located at the Premises
                    or of Tenant's interest in this Lease, where seizure is not
                    discharged within thirty (30) days.

          An involuntary assignment shall constitute a default by Tenant under
          this Lease, and in such event 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.

     E.   Tenant to Reimburse Landlord for Expenses. Tenant agrees to reimburse
          Landlord, as Additional Rent, upon demand, for Landlord's reasonable
          costs and attorney's fees, incurred in conjunction with the
          processing, investigation and documentation of any requested
          assignment, subletting, transfer, change of ownership or hypothecation
          of this Lease or Tenant's interest in and to the Premises, regardless
          of whether any request actually results in a permitted assignment,
          sublease or other transfer.

22.  Parking. Any parking charges, surcharges or any other cost hereafter levied
     or assessed by local, state or federal governmental agencies in connection
     with the use of the parking facilities serving the Premises, including,
     without limitation, any parking surcharge imposed by or under the authority
     of the Federal Environmental Protection Agency, shall be included in
     Operating Expenses as defined in Paragraph 3, above.

     Each tenant, its agents, officers, employees and invitees, shall have the
     non-exclusive right (in conjunction with the use of the part of the
     Building leased to such tenant) to make reasonable use of any driveways,
     sidewalks and parking area located on the Property, except such parking
     areas as may from time to time be leased for exclusive use by other
     tenant(s). Tenant's reasonable use of the parking area shall not exceed
     that percent of the total parking area which is equal to Tenant's
     proportionate share of Operating Expenses and Taxes set forth in
     subparagraph 3.C. above. Notwithstanding anything in this Lease to the
     contrary, Landlord reserves the right, at any time during the Lease term,
     to convert the parking area to a pay-for-parking lot with charges for
     parking determined by Landlord in its sole discretion. However, Landlord
     agrees not to charge Tenant or its employees for parking during the initial
     ten (10) years of the lease term.

23.  Insolvency or Bankruptcy. Any of (i) the appointment of a receiver to take
     possession of all or substantially all of the assets of Tenant, and such
     possession is not fully restored to Tenant within thirty (30) days, or (ii)
     a general assignment by Tenant for the benefit of creditors, or (iii) any
     action taken or suffered by Tenant under any insolvency or bankruptcy act
     shall constitute a breach of this Lease by Tenant. Upon the happening of
     any such event, this Lease shall terminate ten (10) days after written
     notice of termination from Landlord to Tenant. The provisions of this
     Paragraph 23 are to be applied consistent with applicable state and
     federal law in effect at the time such event occurs.

24.  Landlord Loan or Sale. Tenant agrees, promptly following request by
     Landlord, to execute and deliver to Landlord any documents, including
     estoppel certificates presented to Tenant by Landlord, (i) certifying that
     this Lease is unmodified and in full force and effect (or, if modified,
     stating the nature of such modification and certifying that this Lease, as
     so modified, is in full force and effect) and the date to which the Rent
     and other charges are paid in advance, if any; (ii) acknowledging that
     there are not, to Tenant's knowledge, any uncured defaults on the part of
     Landlord hereunder (or, if there are any such uncured defaults, stating the
     nature of any such default[s]; and (iii) evidencing the status of the Lease
     as may be required either by a lender making a loan to Landlord, to be
     secured by deed of trust or mortgage covering the Premises, or a purchase
     of the Property, the Building or the Premises from Landlord. Tenant's
     failure to deliver an estoppel certificate with three (3) days following
     such request shall constitute a default under this Lease and shall be
     conclusive upon Tenant that this Lease is in full force and effect and has

                                       15
<PAGE>   34
     not been modified except as may be represented by Landlord, and that there
     are no uncured defaults in Landlord's performance. In addition, if
     requested by Landlord, Tenant shall deliver to any prospective lender or
     purchaser of the Property and/or the Building, audited financial
     statements of Tenant covering the two (2) fiscal years immediately
     preceding the request, certified by an independent certified public
     accountant (or, if such statements are not normally prepared, audited and
     certified by an independent public accountant, then certified by the chief
     financial officer or a principal of Tenant).

25.  Surrender of Lease. The voluntary or other surrender of this Lease by
     Tenant, or a mutual cancellation thereof, shall not work a merger nor
     relieve Tenant of any of Tenant's obligations under this Lease, and shall,
     at the option of Landlord, either terminate all or any existing subleases
     or subtenancies, or operate as an assignment to Landlord of any or all such
     subleases or subtenancies.

26.  Attorneys' Fees. If, for any reason, any action or other proceeding is
     initiated to enforce or interpret any provision of this Lease, the
     prevailing party shall be entitled to legal costs, expert witnesses
     expenses and reasonable attorneys' fees as fixed by the court.

27.  Notices. All notices to be given to either party shall be given in
     writing, personally or by depositing the same in the United States mail,
     postage prepaid, or by commercial overnight courier, and addressed to
     Tenant at the said Premises, whether or not Tenant has departed from,
     abandoned or vacated the Premises, as well as to the address set forth
     below, or to such other address as Tenant may specify by notice given in
     accordance with the provisions of this Paragraph 27. Any notice Lease to
     be given to Landlord shall be addressed to Landlord at the address set
     forth below, or at such other address as it may have theretofore specified
     by notice delivered in accordance herewith:

     Landlord:      DLC-CASTRO COMMONS
                    c/o Dewey Land Company, Inc.
                    999 Baker Way, Suite 300
                    San Mateo, CA 94404
                    (415) 571-1010 Fax (415) 571-1019

     Tenant:        BEFORE COMMENCEMENT:
                    Karakas Van Sickle Ouellette            After Commencement:
                    200 SW Market Street                    At the Premises
                    Suite 1400
                    Portland, OR 97201-5741
                    503/221-1551 (Fax) 503/221-0564

28.  Waiver. The waiver by Landlord or Tenant of any breach of any term,
     covenant or condition herein contained shall not be deemed to be a waiver
     of such term, covenant or condition. The subsequent acceptance of Rent
     hereunder by Landlord shall not be deemed to be a waiver of any preceding
     breach by Tenant of any term, covenant or condition of this Lease, other
     than the failure of Tenant to pay the particular Rent so accepted,
     regardless of Landlord's knowledge of such preceding breach at the time of
     acceptance of such Rent.

29.  Holding Over. Any holding over by Tenant after the expiration of the term
     of this Lease or any extension hereof, with the consent of Landlord, shall
     be construed to be a tenancy from month-to-month, at a Basic Rent of one
     and one-half (1-1/2) times the monthly Basic Rent in effect during the
     last month of the Lease term, of any extension thereof, and shall
     otherwise be on the terms and conditions herein specified, so far as
     applicable.

30.  Covenants, Conditions and Restrictions. The parties by this reference
     incorporate herein as if set out in full, all Covenants, Conditions and
     Restrictions ("CC&R's") pertaining to the Building and/or to the Property.
     As a condition to this Lease, Tenant agrees to abide by all of said
     CC&R's. Moreover, such reasonable rules and regulations as may be
     hereafter adopted by Landlord for the safety, care and cleanliness of the
     Building and/or Premises and the preservation of good order thereon, are
     hereby expressly made a part hereof, and Tenant agrees to obey all such
     rules and regulations.

31.  Limitation on Landlord's Liability. If Landlord is in default of this
     Lease, and as a consequence Tenant recovers a money judgment against
     Landlord, any such judgment shall be satisfied only out of the proceeds of
     sale received on execution of the judgement and levy against the right,
     title and interest of Landlord in the Premises, or in the Building, other
     improvements and the Property, 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 Premises or in the Building,
     other improvements and the Property. Neither Landlord nor any of the
     partners comprising the partnership or officers of the corporation
     designated as Landlord shall be personally liable for any deficiency.

                                       16
<PAGE>   35
32.  Sale or Transfer of Premises. If Landlord sells or transfers all or any
     portion of the Premises, the Building or the Property, then Landlord, on
     consummation of the sale or transfer, shall be released from any liability
     thereafter accruing under this Lease. If any security deposit or prepaid
     Rent has been paid by Tenant, Landlord agrees to transfer the security
     deposit or prepaid Rent to Landlord's successor, other than any portion of
     the security deposit applied or retained to compensate Landlord for any
     loss or damage which Landlord may have suffered as a result of Tenant's
     default, and thereupon Landlord shall be discharged from any further
     liability in reference thereto.

33.  Landlord's Right to Perform. All terms, covenants and conditions of this
     Lease to be performed or observed by Tenant shall be performed or observed
     by Tenant, at Tenant's sole cost and expense, and without any reduction of
     Rent. If Tenant fails to pay any sum of money required to be paid by it
     hereunder or fails to perform or observe any other term hereunder on its
     part to be performed or observed, then Landlord may, at its option, without
     waiving or releasing Tenant from any obligation of Tenant hereunder, make
     any such payment, or perform or observe any such other term or act on
     Tenant's part to be performed or observed. All sums so paid by Landlord and
     all reasonably necessary costs of such performance or observation by
     Landlord together with interest thereon from the date incurred at the
     maximum rate an individual is permitted by law to charge, shall be paid by
     Tenant to Landlord as Additional Rent, on demand, in which event and as to
     the same Landlord shall have the rights and remedies against Tenant as in
     the case of nonpayment of Rent hereunder.

34.  Landlord's Right of Entry. Landlord (and/or its representatives) shall have
     the right, at all reasonable times, to enter the Premises in order to post
     notices; to improve, or alter the Building; to inspect or repair the
     Premises or the Building; and to erect scaffolding and other necessary
     structures in or near the Premises (provided the same do not unreasonably
     impair access to the Premises), the Building and the Property; and to post
     "For Sale" signs with respect to the Building or the Property. During the
     last six (6) months of the then current term of this Lease, Landlord
     (and/or its representatives) shall have the right, at all reasonable times,
     to enter the Premises to place "For Lease" signs on the Premises. Landlord
     and any purchaser, lessee or encumbrancer may enter the Premises, at all
     reasonable times, with respect to any existing or prospective sale, lease
     or encumbrance. Landlord shall also have the right to enter the Premises at
     any time, without prior notice, in those emergency situations which could
     involve potential injury to persons or loss of property. All of the above
     shall be without abatement of Rent and any such entry shall not be
     construed as a forcible or unlawful entry, or a detainer, or an actual or
     constructive eviction of Tenant from the Premises.

35.  Signs. No sign, placard, picture, advertisement, name or notice shall be
     inscribed, displayed, printed or affixed on or to any part of the outside
     of the Premises, or any exterior windows of the Premises, or any interior
     windows visible from common areas of the Building, without the prior
     written consent of Landlord (which consent may be granted in Landlord's
     absolute discretion) and Landlord shall have the right to remove the same
     without notice to and at the expense of Tenant. If Tenant is allowed to
     display a sign on or about the Premises, then, at Landlord's option, upon
     expiration or other sooner termination of this Lease, Tenant shall, at
     Tenant's sole cost, remove such sign, repair all damage caused thereby and
     restore the appearance of the Premises to its condition prior to the
     placement of said sign. All approved signs (or lettering on outside doors)
     shall be done at the expense of Tenant by a person contracted by Landlord.

36.  Force Majeure. Subject to the provisions of Paragraphs 15 and 16 of this
     Lease, neither Landlord nor Tenant shall be deemed in default of their
     respective obligations under this Lease if performance thereof is delayed
     or becomes impossible because the fault or neglect of the other party, or
     because acts of God, war (whether declared or undeclared), earthquake,
     fire, labor dispute, strike, acts of public agencies, embargoes, rainy,
     stormy or other adverse weather, riot, civil commotion, insurrection,
     blockade, inability to obtain materials, supplies or fuels, acts and delays
     of subcontractors or contractors, and such other contingencies beyond the
     control of the performing party. Upon such an event, the time for
     performance shall be reasonably extended, but in no event shall such
     extension be longer than sixty (60) days beyond the original date for
     performance, in which case the party to whom the obligation is owned may
     terminate this Lease by giving notice to the other party. This Paragraph 36
     shall not be applicable to the payment of Rent or other monetary sums under
     this Lease.

37.  Exercise Facility. By its execution of this Lease, Tenant acknowledges that
     it is aware that the Building may, in the future, contain an exercise
     facility. Tenant and its employees over the age of eighteen (18) years may
     reasonably use the exercise facility and its equipment; provided, however,
     that no person shall use the exercise facility or its equipment unless
     he/she has signed a waiver and release in the form attached hereto as
     Exhibit E and made a part hereof, and the original of such executed waiver
     and release has been delivered to Landlord. In consideration for the right
     to use the exercise facility, Tenant agrees to faithfully enforce the
     provision of this Paragraph 37, and to indemnify and hold Landlord harmless
     from any claims or damages, including attorney's fees, incurred as a result
     of the use of the exercise facility and its equipment

                                       17
<PAGE>   36
     pursuant to this Paragraph 37. Use of the exercise facility in violation of
     the provisions of this Paragraph 37 or any other unauthorized use of the
     exercise facility shall constitute a material breach of this Lease.

38.  Quiet Enjoyment. Landlord covenants that if, and so long as, Tenant keeps
     and performs each and every covenant, agreement, term, provision and
     condition herein contained on the part and on behalf of Tenant to be kept
     and performed, Tenant shall quietly enjoy the Premises from and against the
     claims of all persons.

39.  Miscellaneous.

     A.   Time is of the essence of this Lease, and each and all of its
          provisions.

     B.   The term "Building" shall mean the building in which the Premises are
          situated; the term "Complex" shall mean both buildings at the
          Property.

     C.   The term "Property" shall mean the real property on which the Building
          is situated.

     D.   The term "assign" shall include the term "transfer".

     E.   The invalidity or unenforceability of any provision of this Lease
          shall not affect the validity or enforceability of the remainder of
          this Lease.

     F.   The headings and titles to the paragraphs of this Lease are not a part
          of this Lease and shall have no effect upon the construction or
          interpretation of any part thereof.

     G.   Landlord has made no representation(s) whatsoever to Tenant (express
          or implied) except as may be expressly stated in writing in this
          Lease.

     H.   This instrument contains all of the agreements and conditions between
          the parties hereto with respect to the Premises, and may not be
          modified orally or in any other manner than by agreement in writing,
          signed by all of the parties hereto or their respective successors in
          Interest.

     I.   It is understood and agreed that the remedies herein given to Landlord
          shall be cumulative, and the exercise of any one remedy by Landlord
          shall not be to the exclusion of any other remedy.

     J.   The covenants and conditions herein contained shall, subject to the
          provisions as to assignment, apply to and bind the heirs, successors,
          executors, administrators and assigns of all the parties hereto.

     K.   This Lease has been negotiated jointly by the parties hereto, and the
          language hereof shall not be construed for or against either party.

     L.   All exhibits to which reference is made in this Lease are deemed
          incorporated into this Lease, whether or not actually attached.

     M.   All provisions of this Lease, whether covenants or conditions,
          applicable to Tenant shall be deemed to be both covenants and
          conditions.

     N.   This Lease shall in all respects be governed by, and construed and
          enforced in accordance with the laws of the State of California.

     O.   As used in this Lease, the term "Effective Date" shall mean the latest
          date when executed by Landlord and Tenant.

                                       18
<PAGE>   37
     P.   Tenant hereby warrants that each individual executing this Lease has
          been duly authorized to execute and deliver this Lease by all
          necessary corporate action. Tenant warrants that it is qualified to do
          business in and is in good standing in the State of California.

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

                                   LANDLORD
                                   DLC-CASTRO COMMONS,
                                   a California limited partnership

                                   By MIRAMONTE CASTRO CORPORATION
                                   A California corporation
                                   its General Partner

                                   By   /s/  Richard R. Dewey, Jr.
                                   -------------------------------------
                                   Richard R. Dewey, Jr.
                                   President

                                   Date   8/6/96
                                        --------------------------------

                                   TENANT

                                   Karakas Van Sickle Ouellette
                                   an Oregon Corporation

                                   By   /s/ Sharon Van Sickle
                                   -------------------------------------

                                   Date    7/31/96
                                        --------------------------------

                                       19
<PAGE>   38
                                    ADDENDUM

TO THAT CERTAIN LEASE DATED July 30, 1996, BY AND BETWEEN DLC-CASTRO COMMONS A
CALIFORNIA LIMITED PARTNERSHIP ("LANDLORD") AND KARAKAS VAN SICKLE OUELLETTE AN
OREGON CORPORATION ("TENANT").

39.  Option to Extend.  Tenant shall have the option to renew the term of this
     Lease for one (1) additional seven (7) year term the "Extended Term". The
     option rent shall be Fair Market Rent including annual increases as
     reflected in the determination of Fair Market Rent as provided herein. Fair
     Market Rent shall be defined to be rent for first class well maintained
     mid-rise office projects located proximate to the Property, including the
     most recent comparable leases Landlord has consummated with other tenants
     at the Complex. Should Landlord and Tenant be unable to agree upon the Fair
     Market Rent within twenty-one (21) days of Landlord's timely receipt of
     Tenant's written notice as required herein, then Tenant may elect to either
     (i) revoke its written notice and have the lease expire at the end of the
     lease term as provided in this Lease or (ii) notify Landlord within five
     (5) days that it elects to set the Fair Market Rent by appraisal.

     Following such election to set the Fair Market Rent by appraisal, each
     party, within fifteen (15) days at its cost and by giving notice to the
     other party, shall appoint a licensed real estate appraiser (MAJ) with at
     least five (5) years' full-time commercial appraisal experience in the area
     in which the Premises are located to determine the Fair Market Rental as
     specified above. If a party does not appoint an appraiser within fifteen
     (15) days, the single appraiser appointed shall be the sole appraiser and
     shall set the Fair Market Rent for the extended Term. If the two appraisers
     are appointed by the parties as stated in this paragraph, they shall meet
     promptly and attempt to set the Fair Market Rent for the extended term. If
     they are unable to agree within twenty (20) days after the second appraiser
     has been appointed, they shall elect a third appraiser meeting the
     qualifications stated in this paragraph within ten (10) days after the last
     day the two appraisers are given to set the Fair Market Rent. The cost of
     said third appraiser shall be borne equally by Landlord and Tenant.

     Within five (5) days after the selection of the third appraiser, a majority
     of the appraisers shall set the Fair Market Rent for the Extended Term. If
     a majority of the appraisers are unable to set the Fair Market Rent within
     the stipulated period of time, then the two (2) closest appraisals shall be
     added together and their total divided by two (2); the resulting quotient
     shall be the Base Rent for the Premises during the Extended Term. In no
     event shall Fair Market Rent be less than the Basic Rent paid in the last
     month of the primary term of the Lease. Said minimum monthly rental as set
     by the appraisers shall be binding upon the parties hereto and the Lease
     shall remain in effect through the Extended Term. Tenant shall have no
     other right to extend the term beyond the Extended Term herein granted.

     Tenant shall notify Landlord of its desire to exercise such option within
     a minimum of nine (9) months and a maximum of twelve (12) months prior to
     the expiration date of the primary lease term. This option shall be void,
     at Landlord's option, if Tenant has been chronically delinquent as defined
     in Section 13 of this Lease, or is in default at the time of exercise
     or at any time subsequent to Tenant giving timely notice up to commencement
     of the Extended Term. This option is personal to Tenant and may not be
     assigned or transferred without Landlord's expressed written consent which
     may be withheld in Landlord's sole and absolute discretion. TIME IS OF THE
     ESSENCE.

     Except for adjustments to the Rent, any extended term shall be at the same
     terms and conditions as the Primary Term of the Lease.

40.  Right to Terminate.  Tenant shall have the right to terminate this Lease
     effective at the first day of the eighth (8th) lease year of the term by
     providing Landlord with:

     (i)  Advance written notice so stating that Tenant is electing to terminate
          this Lease effective of the first day of the eighth year of the Lease
          Term; said notice must be received by Landlord on or before the
          expiration of the third (3rd) month of the seventh (7th) year of the
          Lease Term ("Notice Date"). For example, if the Lease Term commences
          on January 1, 1997, then Tenant must tender its written notice to
          Landlord on or before March 31, 2003 to be effective as of January 1,
          2004.

                                       20
<PAGE>   39
ADDENDUM - Page 2

(ii)   Pay to Landlord as a cancellation penalty the sum of Seventy Thousand
       and No/100ths Dollars ($70,000.00) on or before the Notice Date.

     TIME IS OF THE ESSENCE.

<TABLE>
<S>                                                   <C>
AGREED AND ACCEPTED:                                  AGREED AND ACCEPTED:

LANDLORD                                              TENANT

DLC-CASTRO COMMONS                                    KARAKAS VAN SICKLE OUELLETTE
a California limited partnership                      an Oregon corporation

by MIRAMONTE CASTRO CORPORATION
a California corporation
Its General Partner

By: /s/ Richard R. Dewey, Jr.   Date: 8/6/96          By: /s/ Sharon Van Sickle      Date: 7/31/96
--------------------------------------------          --------------------------------------------
 Richard R. Dewey, Jr.                                   Authorized Officer
 President                                            Its: Treasurer
                                                           ---------------------------------------
</TABLE>
<PAGE>   40
                                   EXHIBIT A

Description of Premises, including description of Property on which the
Premises are located:
<PAGE>   41
                                                                        [LEGEND]

COMMON

CONFERENCE
CENTER

OCTOBER ?, 199?
CASTRO COMMONS
PROFESSIONAL
CENTER
                            [GRAPHIC OF FLOOR PLAN]

1172 CASTRO
BUILDING 1
FIRST FLOOR

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

DEWEY
LAND COMPANY

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

ARCHITOPIA

                                  EXHIBIT "A"

<PAGE>   42

                                                              [ARROW LEFT] NORTH
                                                                    [LEGEND]

                              [FLOOR PLAN GRAPHIC]

                                                           FEBRUARY ?, 199?
                                                           CASTRO
                                                           COMMONS
                                                           PROFESSION
                                                           CENTER

                                                           1172 CASTRO
                                                           BUILDING 1
                                                           SECOND FLOOR
                                                           ------------
                                                           DEWEY
                                                           LAND
                                                           COMPANY
                                                           ------------
                                  EXHIBIT "A"              ARCHITOPIA

<PAGE>   43
                                   EXHIBIT B

                                     [Date]

Karakas Van Sickle Ouellette
200 SW Market Street
Suite 1400
Portland, OR 97201-5741

Re:  Commencement Date under Lease dated July 30, 1996 Between DLC-Castro
Commons, a California limited partnership, as Landlord, and Karakas Van Sickle
Ouellette an Oregon Corporation as Tenant

Dear ________________:

     Pursuant to Paragraph 2 of the above-mentioned Lease, you are hereby
informed of the following:

     Commencement Date of the term of the Lease;

     Expiration Date of the term of the Lease:

                                   Very truly yours,

                                   DLC-CASTRO COMMONS,
                                   a California limited partnership

                                        By MIRAMONTE CASTRO CORPORATION
                                        A California corporation
                                        Its General Partner

                                        Richard R. Dewey, Jr.
                                        President

                                        RD/vc

<PAGE>   44
                                   EXHIBIT C

Improvements
------------

Landlord shall provide a Tenant improvement allowance of thirty five thousand
dollars and No/100ths Dollars ($35,000.00) ("Base Allowance") in order to assist
in the recarpeting and re-painting of the Premises (or towards any other
modifications to the Premises). It is understood that Landlord's general
contractor will complete all improvements done at the Premises. Landlord shall
provide Tenant with its written cost summary of the improvements (construction
costs, city fees, architectural/structural fees, etc.) plus a contingency of
five percent (5%). Should the estimated cost of the improvements exceed the Base
Allowance, then, within ten (10) days from receipt of Landlord's written
estimate, Tenant shall deposit such estimated amount in excess of the Base
Allowance with Landlord. Tenant's failure to so timely forward said excess
amount shall be deemed a default under the Lease as well as a delay caused by
Tenant. During construction, any additional costs in excess of the Base
Allowance, shall be paid by Tenant to Landlord within ten (10) days of Tenant's
receipt of Landlord's invoice. Tenant's failure to timely pay as required herein
shall be a default under the Lease as well as a delay as caused by Tenant. At
the end of the construction of the improvements, Landlord shall provide Tenant
with a cost summary of the actual costs of the improvements. Should the actual
cost of the improvements be in excess of the Base Allowance plus the cost so
paid by Tenant, Tenant shall pay this difference (i.e. actual cost of the
improvements less Base Allowance, less amount paid by Tenant) to Landlord within
ten (10) days of receipt of written invoice.

<PAGE>   45
                                  EXHIBIT "D"

                      STANDARDS FOR UTILITIES AND SERVICES

The following Standards for Utilities and Services shall apply to the Building.
Landlord reserves the right to adopt nondiscriminatory modifications and
additions hereto at any time as Landlord, in its sole discretion, deems
advisable.

A.   On the Commencement Date through the date the Lease terminates, during
     usual business hours (and at other times for a reasonable additional
     charge to be fixed by Landlord), Landlord shall ventilate the Premises and
     furnish air-conditioning or heating on such days and hours, when in the
     judgment of Landlord it may be required for the comfortable occupancy of
     the Premises. The air-conditioning system achieves maximum cooling when
     the window coverings are closed. Landlord shall not be responsible for
     room temperatures if Tenant does not keep all window coverings in the
     Premises closed whenever the system is in operation. Tenant agrees to
     cooperate fully at all times with Landlord, and to abide by all
     regulations and requirements which Landlord may prescribe for the proper
     functioning and projection of said air-conditioning system. Tenant agrees
     not to connect any apparatus, device, conduit or pipe to the Building
     air-conditioning supply lines. Tenant further agrees that neither Tenant
     nor its servants, employees, agents, visitors, licensees or contractors
     shall at any time enter mechanical installations or facilities of the
     Building or adjust, tamper with, touch or otherwise in any manner affect
     said installations or facilities.

B.   The Landlord shall furnish to the Premises during the usual business
     hours, electric current as required by the Building's standard office
     lighting and fractional horsepower office lighting and fractional
     horsepower office business machines in the amount of approximately three
     (3) watts per square foot. The Tenant agrees, should its electrical
     installation or electrical consumption be in excess  of the aforesaid
     quantity or extend beyond usual business hours, to reimburse Landlord
     monthly on the date Basic Rent is due for the measured consumption at the
     terms, classifications and rates charged similar consumers by said public
     utility serving the neighborhood in which the Building is located. If a
     separate meter is not installed at Tenant's cost, such excess cost will be
     established by an estimate agreed upon by Landlord and Tenant, and if the
     parties fail to agree, as established by an independent licensed engineer,
     selected by Landlord and approved by Tenant, Tenant agrees not to use any
     apparatus or device in, or upon, or about the Premises which may in any
     way increase the amount of such services usually furnished or supplied to
     said Premises, and Tenant further agrees not to connect any apparatus or
     device with wires, conduits or pipes, or other means by which such
     services are supplied, for the purpose of using additional or unusual
     amounts of such services without the prior written consent of Landlord.
     Should Tenant use the same to excess, Tenant shall pay to Landlord, upon
     demand, the amount established by Landlord for such excess usage. At all
     times Tenant's use of electric current shall never exceed the capacity of
     the feeders to the Building or the risers or wiring installation and
     Tenant shall not install or use or permit the installation or use of any
     computer or electronic data processing equipment in the Premises without
     the prior written consent of Landlord.

C.   Water will be available in public areas for drinking and lavatory purposes
     only, but if, in Landlord's sole determination, Tenant requires, uses or
     consumes water for any purpose in addition to ordinary drinking and
     lavatory purposes, Landlord may install a water meter and thereby measure
     Tenant's water consumption for all purposes. Tenant shall pay Landlord,
     upon demand, for the cost of the meter and the cost of the installation
     thereof and throughout the duration of Tenant's occupancy Tenant shall
     keep said meter and installation equipment in good working order and repair
     at Tenant's own cost and expense. If Tenant is in default of its
     obligations to keep the meter and equipment in good repair, then Landlord,
     in addition to all other remedies for breach in this Lease and at law, may
     cause such meter and equipment to be replaced or repaired and collect the
     cost thereof from Tenant. Tenant agrees to pay for water consumed, as
     shown on said meter, as and when bills are rendered, and on default in
     making such payment, Landlord may, in addition to all other remedies for
     breach in this Lease and at law, pay such charges and collect the same from
     Tenant.

D.   The Landlord shall provide janitorial services on the Premises, provided
     the same are used exclusively as offices and are kept reasonably in order
     by Tenant. If the Premises are not used exclusively as offices, they shall
     be kept clean and in order by Tenant, at Tenant's expense, and to the
     satisfaction of Landlord, and by persons approved by Landlord. Tenant shall
     pay to Landlord, upon demand, the cost of removal of Tenant's refuse and
     rubbish, to the extent that the same exceeds the refuse and rubbish
     usually attendant upon the use of the Premises as offices

<PAGE>   46
Exhibit "D"
Page 2

E.   "Holidays" for purposes of this Lease, shall be defined as holidays
     observed by the United States Post Office. "Usual business hours" for
     purposes of this Lease, are from 8:00 a.m. until 6:00 p.m., Monday through
     Friday, except holidays.

Tenant may operate its business at hours other than usual business hours
     provided that Tenant acknowledges that it shall pay the cost of operation
     of HVAC and electricity for power and lighting on a monthly basis as
     invoiced by Landlord and payable by Tenant to landlord within fifteen (15)
     days of invoice for Landlord to Tenant.

Landlord reserves the right to stop service of the elevator, plumbing,
ventilation, air-conditioning and electric systems, when necessary, by reason of
accident or emergency or for repairs, alterations or improvements, in the
judgment of Landlord desirable or necessary to be made, until said repairs,
alterations or improvements shall have been completed. Landlord's obligations to
provide utilities and services hereunder shall also be subject to and limited by
the Force Majeure provisions of the Lease. Any failure to supply utilities or
services, whether caused by a Force Majeure described in the Lease or by reason
of accident, emergency, repair, alteration or improvement, shall not be
construed as an eviction of Tenant, whether actual or constructive, and shall
not cause an abatement of Rent, either in whole or in part.

Landlord shall have no obligation whatsoever to supply utilities and services to
the Premises if Tenant is in default of any term, covenant, or condition of this
Lease.

Any costs or expenses incurred by Landlord with respect to Tenant's default
hereunder as well as all payments to be made by Tenant to Landlord pursuant to
the above provisions, as stated herein or as may be later modified, shall be
deemed to be Additional Rent under the Lease and Landlord shall have all its
rights and remedies under the Lease and at law with respect to the same
including but not limited to the right to late fees and interest upon default.

The cost for operating the HVAC at times other than usual business hours is
forty and No/100ths Dollars ($40.00) per hour. This cost shall be adjusted to
reflect increases in the Index as provided in Paragraph 3B of the Lease.

The cost for operating the lighting systems at times other than usual business
hours is twelve and No/100ths Dollars ($12.00) per hour. This cost shall be
adjusted to reflect increases in the Index as provided in Paragraph 3B of the
Lease.

<PAGE>   47
                                  EXHIBIT "E"

                               WAIVER AND RELEASE

     In consideration for being authorized to use the Exercise Facility, I, the
undersigned, for myself, my heirs, executors, administrators and assigns waive
and release all rights and claims for damages for death, personal injury or
loss of property which I may have as a result of my utilization of the Exercise
Facility and its equipment located at                          .
                                      -------------------------

     I, the undersigned, for myself, my heirs, executors, administrators and
assigns release and forever discharge the building owners, lessees of the
building, and management of the building and their respective agents,
directors, partners, officers, employees and representative from any and all
liability, losses, claims, and damages arising out of or connected in any way
with my use of the Exercise Facility. I understand that exercise entails risk
of personal injury and my participation is voluntary and done entirely at my
own risk. I attest that I have no medical condition which would increase the
usual risks of physical exercise.

     I have read and fully understand everything written above.

Dated:
      ------------------
Signature:
          --------------
Printed Name:
             -----------

<PAGE>   48
                                  EXHIBIT "F"

                                LEASE GUARANTEE

     WHEREAS, Karakas, Vansickle, Ouellete an Oregon Corporation (the "Tenant"),
has entered into a lease agreement dated July 30, 1996 as Tenant, with
DLC-Castro Commons, a California limited partnership ("Landlord") concerning
real property commonly known as 1172 Castro Street, Mountain View, California
(the "Lease"); and

     WHEREAS, Tenant has entered into or desires to enter into a transaction
which is defined as an assignment of the Lease according to the provisions
thereof; and

     WHEREAS, the undersigned Guarantor is willing to execute and deliver this
Lease Guarantee for the express and intended purpose of inducing Landlord to
consent to the assignment of the Lease.

     NOW, THEREFORE, the Guarantor, in order to induce Landlord to consent to
the assignment of Lease with Tenant, does hereby absolutely and unconditionally
guarantee to Landlord the full and prompt payment of all amounts which Tenant,
any sublessee and/or any assignee of the Lease (collectively, "Obligors"), may
at any time owe under the Lease, any extensions, renewals or modifications
thereof, and further guarantees to Landlord and shall be liable to Landlord for
the full, prompt and faithful performance of the Obligors of each and all of
the covenants, terms, and conditions of the Lease, or any extensions,
modifications or renewals thereof, to be hereafter performed and kept by the
lessee of the Lease, or any Obligor.

     The Guarantor's obligations hereunder are independent of the obligations
of the Obligors, and a separate action or actions may be brought and prosecuted
against the Guarantor whether or not action is brought against the Obligors or
whether or not the Obligors be joined in any such action or actions. Landlord's
rights hereunder shall not be exhausted by its exercise of any of its rights or
remedies or by any such action or by any number of successive actions until and
unless all indebtedness and obligations, the payment and performance of which
are hereby guaranteed, have been paid and fully performed.

     The Guarantor authorizes Landlord, without notice or demand and without
affecting the liability of Guarantor hereunder, from time to time to (a)
consent to any extensions, accelerations or other changes in the time for any
payment provided for in the Lease, or consent to any other alteration of any
covenant, term or condition of the Lease in any respect so long as Tenant
consents thereto, and to consent to any assignment, subletting or reassignment
of the Lease; (b) take and hold security for any payment provided for in the
Lease or for the performance of any covenant, term or condition of the Lease,
or exchange, waive or release any such security; (c) apply such security and
direct the order or manner of sale thereof as Landlord in its discretion may
determine. Landlord may, without notice, assign this Guarantee to any party who
assumes the obligations of lessor under the Lease. Notwithstanding any
termination, renewal, extension or holding over of the Lease, this Guarantee
shall continue until all of the covenants, terms and conditions on the part of
the Obligors to be performed have been fully and completely performed by the
Obligors, and the Guarantor shall not be released of any obligation or
liability hereunder so long as there is any claim against the Obligors arising
out of the Lease that has not been settled or discharged in full.

     Guarantor hereby waives and relinquishes all rights and remedies accorded
by applicable law to guarantors and agrees not to assert or take advantage of
any such rights or remedies including but not limited to: (a) any right to
require Landlord to

<PAGE>   49
proceed against any Obligor or any other person or to proceed against or
exhaust any security held by Landlord at any time or to pursue any other remedy
in Landlord's power before proceeding against Guarantor; (b) the defense of the
statute of limitations in any action hereunder or in any action for the
collection of any obligation or indebtedness or the performance of any
obligation hereby guaranteed; (c) any defense that may arise by reason of the
incapacity, lack of authority, death or disability of any other person or
persons or the failure of Landlord to file or enforce a claim against the
estate (in administration, bankruptcy or any other proceeding) or any other
person or persons; (d) demand, protest and notice of any kind, including but
not limited to notice of the existence, creation or incurring of any new or
additional obligation or of any action or non-action on the part of Landlord,
any Obligor or on the part of any other person whomsoever under this or any
other instrument in connection with any obligation hereby guaranteed; (e) any
defense based upon an election of remedies by Landlord, which destroys or
otherwise impairs the subrogation rights of Guarantor or the right of Guarantor
to proceed against Tenant and/or the Obligors for reimbursement or both; (f)
any defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in other respects
more burdensome than that of the principal; (g) any duty on the part of
Landlord to disclose to Guarantor any facts Landlord may now or hereafter know
about Tenant, regardless of whether Landlord has reason to believe that any
such facts materially increase the risk beyond that which Guarantor intends to
assume or has reason to believe that such facts are unknown to Guarantor or has
a reasonable opportunity to communicate such facts to Guarantor, it being
understood and agreed that the Guarantor is fully responsible for being and
keeping informed of the financial condition of Tenant and of all circumstances
bearing on the risk of non-performance of any obligation of the lessee under
the Lease; (h) any defense arising because of Landlord's election, in any
proceeding instituted under the federal Bankruptcy Code, of the application of
Section 1111(b)(2) of the federal Bankruptcy Code; (i) any defense based on any
borrowing or grant of a security interest under Section 364 of the federal
Bankruptcy Code; and (j) any defense based on the assumption or rejection of
the Lease by any Obligor or any bankruptcy trustee under Section 365(a) of the
federal Bankruptcy Code. Without limiting the generality of the foregoing or
any other provision hereof, Guarantor hereby expressly waives any and all
benefits which might otherwise be available to Guarantor under California Civil
Code Sections 2809, 2810, 2819, 2839, 2845, 2849, 2850, 2899 and 3433.

     The Guarantor shall have no right of subrogation and waives, any right to
proceed against any Obligor for reimbursement, as well as any right to enforce
any remedy which Landlord now has or may hereafter have against any Obligor,
and waives any benefit of, and any right to participate in, any security now or
hereafter held by Landlord.

     The Guarantor waives all demands upon and notices to Guarantor or to any
Obligor, including demands for performance, notices of non-performance, notices
of non-payment and notice of acceptance of this Guarantee.

     Guarantor agrees to pay reasonable attorneys' fees and all other costs and
expenses which may be incurred by Landlord in the enforcement of this Guarantee.

     No right or power of Landlord shall be deemed to have been waived by any
act or conduct on the part of Landlord, or by any neglect to exercise such
right or power, or by any delay in so doing; and every right and power of
Landlord shall continue in full
<PAGE>   50
force and effect until such right or power is specifically waived by an
instrument in writing executed by Landlord.

     This Guarantee shall bind the Guarantor, its successors and assigns, and
shall inure to the benefit of Landlord and its successors and assigns.

     This Guarantee and each and every term and provision thereof shall be
construed in accordance with the laws of the State of California. Venue for an
action on this Guarantee shall be in the proper courts for the County of San
Mateo, State of California, and the undersigned consents to the jurisdiction of
said courts.

     If any provision or portion thereof of this Guarantee is declared
unenforceable by a court of competent jurisdiction, the remaining provisions
shall continue in full force and effect.

     Notwithstanding the above to the contrary, provided Tenant has timely
performed each and every covenant of the Lease, including the payment of Rent
when due, and no default under the lease has occurred, this Guarantee shall
expire at the expiration of the fifth (5th) year of this Lease.

     IN WITNESS WHEREOF, Guarantor has executed this instrument on this day ___
of ________________.

                                        "GUARANTOR"

                                        ______________________________

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