Document:

<PAGE>

                                                                   EXHIBIT 10.14

                                     LEASE

THIS LEASE is made on the 2nd day of August, 1996, by and between Huettig &
Schromm/Heaton & Keyser (hereinafter called "Lessor") and Oratec Interventions
(hereinafter called "Lessee").

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

1.   Premises. Lessor leases to Lessee, and Lessee leases from Lessor, upon the
     --------
     terms and conditions herein set forth, those certain Premises ("Premises")
     situated in the City of Menlo Park, County of San Mateo, California, as
     outlined in Exhibit "A" attached hereto and described as follows: +/-15,440
     square foot building commonly known as 3700 Haven Court, Menlo Park,
     California. Lessee's pro-rata share of the building is 100%.

2.   Term. The term of this Lease shall be for four (4) years, commencing on
     ----
     October 1, 1996, or on the later date on which Lessor delivers the Premises
     with all tenant improvements to be installed by Lessor complete, and final
     city approvals or approval necessary for lawful occupancy of the Premises
     having been received, and ending on September 30, 2000, unless sooner
     terminated pursuant to any provision hereof.

3.   Rent. Lessee shall pay to Lessor rent for the Premises of Eighteen Thousand
     ----
     Five Hundred Twenty-Eight Dollars ($18,528.00) per month in lawful money of
     the United States of America, subject to adjustment as provided in Section
     A of this Paragraph. Rent shall be paid without deduction or offset, prior
     notice, or demand, at such place as may be designated from time to time by
     Lessor as follows: $18,528.00 shall be paid upon execution of the Lease by
     both Lessor and Lessee, which sum represents the amount of the first
     month's rent. A deposit of $18,528.00 as a Security Deposit shall be made
     by Lessee and held by Lessor pursuant to Paragraph 5 of this Lease, and
     shall be paid upon execution of the Lease by both Lessor and Lessee. If
     Lessee is not in default of any provision of this Lease, this sum, without
     interest thereon, shall be applied toward the rent due for the last month
     of the term of this Lease or the extended term, pursuant to any extension
     of the initial term in accordance with the provisions of this Lease.
     Monthly rent shall be paid in advance on the first (1st) day of each
     calendar month as follows:

<TABLE>
<CAPTION>
             Months       Monthly Rent/NNN
             ------       ----------------
             <S>          <C>
             01-12              $18,528.00
             13-24              $19,300.00
             25-36              $20,072.00
             37-48              $20,844.00
</TABLE>

     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. Lessee
     acknowledges that late payment by Lessee to Lessor of rent or any other
     payment due Lessor will cause Lessor 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 Lessor 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 Lessee is not received by Lessor within ten (10) days following the
     date it is due and payable, Lessee shall pay to Lessor an additional sum of
     ten percent (10%) of the overdue amount as a late charge. The parties agree
     that this late charge represents a fair and reasonable estimate of the
     costs that Lessor will incur by reason of late payment by Lessee.
     Acceptance of any late charge shall not constitute a waiver of Lessee's
     default with respect to the overdue amount, nor prevent Lessor from
     exercising any of the other rights and remedies available to Lessor.

                                       1

<PAGE>

          If, for any reason whatsoever, Lessor cannot deliver possession of the
Premises on the commencement date set forth in Paragraph 2 above, this Lease
shall not be void or voidable, nor shall Lessor be liable to Lessee for any loss
or damage resulting therefrom; but in such event, Lessee shall not be obligated
to pay rent until possession of the Premises is tendered to Lessee and the
commencement and termination dates of this Lease shall be revised to conform to
the date of Lessor's delivery of possession. In the event that Lessor shall
permit Lessee to occupy the Premises prior to the commencement date of the term,
such occupancy shall be subject to all of the provisions of this Lease,
including the obligation to pay rent at the same monthly rate as that prescribed
for the first month of the Lease term. Lessee shall have the right to enter the
Premises prior to commencement date to install fixtures and equipment, provided
Lessee shall not unreasonably interfere with construction of improvements by
Lessor's contractors.

     A.   Cost-of-Living Increase.  Not applicable.
          -----------------------   --------------

     B.   All taxes, insurance premiums, Outside Area Charges, late charges,
          costs and expenses which Lessee is required to pay hereunder, together
          with all interest and penalties that may accrue thereon in the event
          of Lessee's failure to pay such amounts, and all reasonable damages,
          costs, and attorney's fees and expenses which Lessor may incur by
          reason of any default of Lessee or failure on Lessee's part to comply
          with the terms of this Lease, shall be deemed to be additional rent
          (hereinafter, "Additional Rent"), and, in the event of non-payment by
          Lessee, Lessor shall have all of the rights and remedies with respect
          thereto as Lessor has for the non-payment of monthly installment of
          rent.

4.   Option to Extend Term.
     ---------------------

     A.   Lessee shall have the option to extend the term on all the provisions
          contained in this Lease for one (1) three (3)-year periods ("extended
          term(s)") at an adjusted rental calculated as provided in Subparagraph
          B below on the condition that:

          (i)  Lessee has given to Lessor written notice of exercise of that
               option ("option notice") at least six (6) months before
               expiration of the initial term or extended term(s), as the case
               may be.

          (ii) Lessee is not in default in the performance of any of the terms
               and conditions of the Lease on the date of giving the option
               notice, and Lessee is not in default on the date that the
               extended term is to commence, in each case beyond the grace
               period provided herein.

     B.   Monthly rent for the extended term shall be the then prevailing market
          rent for similar buildings in the area as agreed upon by the parties
          within no more than thirty (30) days after exercise by Lessee of the
          option described herein. If the parties are unable to agree on such
          amount within that time period, Lessee may rescind its option exercise
          or, by written notice to Lessor, request that the rent be determined
          by an appraisal conducted in a manner reasonably acceptable to both
          parties.

     C.   In no event shall the monthly rent for any extended term be less than
          the monthly rent paid immediately prior to such extended term.

5.   Security Deposit.  Lessor acknowledges that Lessee has deposited with
     ----------------
     Lessor a Security Deposit in the sum of $18,528.00 to secure the full and
     faithful performance by Lessee of each term, covenant, and condition of
     this Lease. If Lessee shall at any time fail to make any payment or fail to

                                       2

<PAGE>

     keep or perform any term, covenant, or condition on its part to be made or
     performed or kept under this Lease, Lessor may, but shall not be obligated
     to and without waiving or releasing Lessee from any obligation under this
     Lease, use, apply, or retain the whole or any part of said Security Deposit
     (a) to the extent of any sum due to Lessor; or (b) to compensate Lessor for
     any loss, damage, attorneys' fees or expense sustained by Lessor due to
     Lessee's default. In such event, Lessee shall, within five (5) days of
     written demand by Lessor, remit to Lessor sufficient funds to restore the
     Security Deposit to its original sum. No interest shall accrue on the
     Security Deposit. Should Lessee comply with all the terms, covenants, and
     conditions of this Lease and, at the end of the term of this Lease, leave
     the Premises in the condition required by this Lease, then said Security
     Deposit or any balance thereof, less any sums owing to Lessor, shall be
     returned to Lessee within fifteen (15) days after the termination of this
     Lease and vacancy of the Premises by Lessee. Lessor can maintain the
     Security Deposit separate and apart from Lessor's general funds, or can co-
     mingle the Security Deposit with the Lessor's general and other funds.

6.   Use of the Premises. The Premises shall be used exclusively for the purpose
     -------------------
     of research and development, storage, distribution, offices and marketing
     of medical devices.

          Lessee shall not use or permit the Premises, or any part thereof, to
     be used for any purpose or purposes 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, which will increase the existing rate
     of insurance upon the building in which the Premises are located, or cause
     a cancellation of any insurance policy covering said building, or any part
     thereof, nor shall Lessee 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. Lessee 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 disturb the quiet enjoyment of any other
     tenant in the building in which the premises are located; nor, without
     limiting the generality of the foregoing, shall Lessee allow the Premises
     to be used for any improper, immoral, unlawful, or objectionable purpose.

          Lessee shall not place any harmful liquids in the drainage system of
     the Premises or of the building of which the Premises form a part. No waste
     materials or refuse shall be dumped upon or permitted to remain upon any
     part of the Premises outside of the building proper except in trash
     containers placed inside exterior enclosures designated for that purpose by
     Lessor, or inside the building proper where designated by Lessor. No
     materials, supplies, equipment, finished or semi-finished products, raw
     materials, or articles of any nature shall be stored upon or permitted to
     remain on any portion of the Premises outside of the building proper.
     Lessee shall comply with all the covenants, conditions, and/or restrictions
     ("C.C. & R.'s") affecting the Premises

          Lessor represents and warrants to Lessee that an underground storage
     tank has been removed from the property. Remedial action has been completed
     and site closure has been received. Lessor represents and warrants to
     Lessee that to the best of its knowledge there are no Toxic or Hazardous
     materials present on, at or under the Premises, which shall be deemed to
     include underlying land and groundwater, at the time of Lessee's occupancy.
     Lessor shall indemnify, defend and hold harmless Lessee, its partners,
     directors, officers, employees, lenders, and successors against all claims,
     obligations, liabilities, demands, damages, judgements, and costs,
     including reasonable attorneys' fees arising from or in connection with any
     prior Toxic or Hazardous materials that existed prior to Lessee's occupancy
     of the Premises. Lessee in turn represents to Lessor that it does not now
     and will not in the future permit the use or storage on the Premises of
     Toxic or Hazardous materials, excluding, however basic janitorial,
     maintenance and office supplies, and materials commonly used in connection
     with Lessee's business as described in paragraph 6 hereof. For purposes of
     this paragraph 6 "Toxic or Hazardous Materials" shall mean any product,
     substance, chemical, material or waste whose presence, nature, quality
     and/or intensity or existence, use, manufacture, disposal, transportation,
     spill, release or effect, either by itself or in combination with other
     materials expected to be on the leased premises, is either (i) potentially

                                       3

<PAGE>

     injurious to the public health, safety or welfare, the environment, or the
     leased premises; (ii) regulated or monitored by any governmental authority;
     or (iii) a basis for potential liability of Lessee and Lessor to any
     governmental agency or third party under any applicable statute or common
     law theory. "Toxic or Hazardous Materials" shall include, but not be
     limited to, hydrocarbons, petroleum, gasoline, crude oil or any products or
     by-products thereof. Lessee hereunder shall be responsible for and
     indemnify, and hold Lessor and its partners, directors, officers,
     employees, lenders, successors and assigns harmless from all claims,
     obligations, liabilities, demands, damages, judgments and costs, including
     reasonable attorneys' fees arising at any time during or in connection with
     Lessee's causing or permitting any materials referred to under any
     governmental provisions or regulatory scheme as "hazardous" or "toxic" or
     which contain petroleum, gasoline, or other petroleum product, to be
     brought upon, stored, manufactured, generated, handled, disposed, or used
     on, under or about the Premises. Lessee's and Lessor's obligations
     hereunder shall survive the termination of this Lease.

          If, at any time during the term of this Lease, Lessor suspects that
     toxic waste, spillage, or other contaminants may be present on the
     Premises, Lessor may order a soils report, or its equivalent. If Lessee has
     breached the terms of this Section 6, Lessee shall pay the expense of
     preparing the referenced report, and Lessee shall pay such costs within
     fifteen (15) days from the date of the invoice by Lessor. If any such toxic
     waste, spillage, or other contaminants are found upon the Premises, Lessee
     shall deposit with Lessor, within fifteen (15) days of notice from Lessor
     to Lessee to do so, the amount necessary to remove the substances and
     remedy the problem.

          Lessee 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, provided
     nothing herein will require Lessee to pay for or perform any of the
     following: removal, remediation, investigation or clean up of any Hazardous
     Substances the presence of which is not attributable to Lessee, its agents,
     employees or contractors.

7.   Improvements: Lessor will provide an allowance of $112,000 for improvements
     ------------
     to the Premises as specified in Exhibit "B". Any costs in excess of said
     allowance shall be the sole responsibility of Lessee. Lessee may either pay
     such excess costs at the time of occupancy or may choose to have the excess
     costs amortized as additional rent over a period of three years at a rate
     of Bank of America's Prime Rate plus 3%. Lessor will make reasonable
     efforts to complete such improvements prior to October 1, 1996. Possession
     of the premises, pursuant to Paragraph 13 of this lease, shall be deemed
     tendered upon receipt of final city approvals.

8.   Taxes and Assessments.
     ---------------------

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

     B.   All property taxes or assessments levied or assessed by or hereafter
     levied or assessed by any governmental authority against the Premises or
     any portion of such taxes or assessments which becomes due or accrued
     during the term of this Lease shall be paid by Lessor. Lessee shall pay to
     Lessor Lessee's proportionate share of such taxes or assessments within
     thirty (30) days before delinquency and following timely receipt of
     Lessor's invoice demanding such payment. Lessee's

                                       4

<PAGE>

     liability hereunder shall be prorated to reflect the commencement and
     termination dates of this Lease.

9.   Insurance.
     ---------

     A.   Indemnity. Lessee agrees to indemnify and defend Lessor against and
          ---------
     hold Lessor 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
     attorneys' fees) on account of, or arising out of, the use, or occupancy of
     the Premises. This Lease is made on the express condition that Lessor 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 condition,
     use, or occupancy of the Premises, specifically including, without
     limitation, any liability for injury to the person or property of Lessee,
     its agents, officers, employees, licensees, and invitees occurring for any
     reason other than gross negligence or willful misconduct of Lessor its
     agents, employees or contractors, or a breach of the obligations of Lessor
     hereunder.

     B.   Liability Insurance. Lessee shall obtain, and at all times during the
          -------------------
     term hereof, keep in force, at its own cost and expense, Commercial General
     Liability insurance with limits of $1,000,000 combined single limit for
     Bodily Injury and Property Damage per occurrence and in the aggregate.
     Tenant's insurance shall name Lessor as additional insured as respects the
     use and occupancy of the leased Premises and shall provide that Lessee's
     insurance company shall endeavor to furnish Lessor with 30 days advance
     notice of cancellation of Lessee's insurance policy. Lessee shall furnish
     Lessor with a certificate of insurance to this effect.

     C.   Property Insurance. Lessor shall obtain and keep in force during the
          ------------------
     term of this Lease a policy or policies of insurance covering loss or
     damage to the Premises in "all risk" extended coverage form, in the amount
     of the full replacement value thereof. Lessee shall pay to Lessor its pro-
     rata share of the cost of said insurance within ten (10) days of Lessee's
     receipt of Lessor's invoice demanding such payment. Lessee acknowledges
     that such insurance procured by Lessor shall contain a deductible which
     reduces Lessee's cost for such insurance, and, in the event of loss or
     damage, Lessee shall be required to pay to Lessor the amount of such
     deductible, which payment shall not exceed Five Thousand Dollars ($5,000)
     for any one occurrence.

          Lessor does not currently carry earthquake insurance. However, Lessor
     reserves the right to do so (and Lessee shall reimburse Lessor for said
     cost) should it become available at commercially reasonable rates.

     D.   Lessee and Lessor hereby release each other and their respective
     partners, officers, agents, employees, and servants, from any and all
     claims, demands, loss, expense, or injury to the Premises or to the
     furnishings, fixtures, equipment, inventory, or other property of the
     releasing party in, about, or upon the Premises, which is caused by or
     results from perils, events, or happenings which are the subject of
     insurance in force at the time of such loss, however, that such waiver
     shall be effective only to the extent permitted by the insurance covering
     such loss..

10.  Reimbursable Expenses and Utilities. Lessee shall pay for all water, gas,
     -----------------------------------
     light, heat, power, electricity, telephone, trash removal, landscaping,
     sewer charges, and all other services, including normal and customary
     property management fees (not to exceed three percent (3%) of the base rent
     payable hereunder), supplied to or consumed on the Premises. In the event
     that any such services are billed directly to Lessor, then Lessee shall pay
     Lessor for such expenses within ten (10) days of Lessee's receipt of
     Lessor's invoice demanding payment.

                                       5

<PAGE>

11.  Repairs and Maintenance.
     -----------------------

     A.   Subject to provisions of paragraph 15, Lessor shall keep and maintain
     in good order, condition and repair the structural elements of the Premises
     including the roof, roof membrane, paving, floor slab, foundation, exterior
     walls, landscaping, irrigation and elevators. Lessor shall make such
     repairs, replacements, alterations or improvements as Lessor deems
     reasonably necessary with respect to such structural elements and Lessee
     shall pay to Lessor, within ten (10) business days of Lessor's invoice to
     Lessee therefor, Lessee's pro-rata share of such repairs, replacements,
     alterations or improvements; provided, however, that replacement and
     improvement costs in excess of $5,000 per occurrence shall be amortized
     over the useful life of such replacements or improvements, and Lessee shall
     be obligated to pay, as additional rent, only the amount which coincides
     with the remaining term of the Lease. Notwithstanding the foregoing, if the
     reason for any repair, replacement, alteration or improvement is caused by
     Lessee or arises because of a breach of Lessee's obligations under this
     Lease, then Lessee shall pay 100% of the costs or expense to remedy the
     same.

     B.   Except as expressly provided in Subparagraph A above, Lessee shall, at
     its sole cost, keep and maintain the entire Premises and every part
     thereof, including, without limitation, the windows, window frames, plate
     glass, glazing, truck doors, doors, all door hardware, interior of the
     Premises, interior walls and partitions, and electrical, plumbing,
     lighting, heating, and air conditioning systems in good and sanitary order,
     condition, and repair subject to the limitations set forth in Section 11A
     above. Lessee shall, at all times during the Lease term and at his expense,
     have in effect a service contract for the maintenance of the heating,
     ventilating, and air-conditioning (HVAC) equipment with an HVAC repair and
     maintenance contractor approved by Lessor which provides for periodic
     inspection and servicing at least once every three (3) months during the
     term hereof. Lessee shall further provide Lessor with a copy of such
     contract and all periodic service reports.

          Should Lessee fail to maintain the Premises or make repairs required
     of Lessee hereunder forthwith upon notice from Lessor, Lessor, in addition
     to all other remedies available hereunder or by law, and without waiving
     any alternative remedies, may make the same, and in that event, Lessee
     shall reimburse Lessor as additional rent for the cost of such maintenance
     or repairs on the next date upon which rent becomes due.

          Lessee hereby expressly waives the provision 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 Lessor, as provided in
     Section 942 of said Civil Code.

12.  Alterations  and Additions.  Lessee 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 prior written consent of Lessor,
     which shall not be unreasonably withheld or delayed, and without a valid
     building permit issued by the appropriate governmental authority. Lessor
     retains, at his sole option, the right to retain a General Contractor of
     his own choosing to perform all repairs, alterations, improvements, or
     additions in, on, about, or to said Premises or any part thereof. As a
     condition to giving such consent, Lessor may require that Lessee agree to
     remove any such alterations, improvements, or additions at the termination
     of this Lease, and to restore the Premises to their prior condition. Upon
     Lessee's written request, Lessor shall designate, at the time that Lessor
     consents to the installation of any such alteration, improvement or
     addition, whether removal of any such alteration, improvement or addition
     will be required. Any alteration, addition, or improvement to the Premises,
     shall become the property of Lessor upon the expiration or earlier
     termination of the Lease term (except with respect to those items which
     have been installed at the sole expense of Lessee, which Lessee may remove,
     provided that Lessee repairs any damage attributable to such

                                       6

<PAGE>

     removal), and shall remain upon and be surrendered with the Premises at the
     termination of this Lease. Alterations and additions which are not to be
     deemed as trade fixtures include heating, lighting, electrical systems, air
     conditioning, partitioning, electrical signs, carpeting, or any other
     installation which has become an integral part of the Premises. In the
     event that Lessor consents to Lessee's making any alterations,
     improvements, or additions, Lessee shall be responsible for the timely
     posting of notices of non-responsibility on Lessor's behalf, which shall
     remain posted until completion of the alterations, additions, or
     improvements. Lessee's failure to post notices of non-responsibility as
     required hereunder shall be a breach of this Lease.

          Notwithstanding anything to the contrary herein, if, during the term
     hereof, any alteration, addition, or change of any sort through all or any
     portion of the Premises or of the building of which the Premises form a
     part, is required by law, regulation, ordinance, or order of any public
     agency, then if such legal requirement is not imposed because of Lessee's
     specific use of the Premises and is not "triggered" by Lessee's alterations
     or Lessee's application for a building permit or any other governmental
     approval (in which instance Lessee shall be responsible for 100% of the
     cost of such improvement), Lessor shall be responsible for constructing
     such improvement and Lessee shall be responsible for its proportional share
     of the cost for said improvement, amortized over the useful life of such
     improvement that coincides with the remaining Lease term including any
     extensions.

13.  Acceptance of the Premises and Covenant to Surrender. By entry and taking
     ----------------------------------------------------
     possession of the Premises pursuant to this Lease, Lessee accepts the
     Premises as being in good and sanitary order, condition, and repair, and
     accepts the Premises in their condition existing as of date of such entry,
     and Lessee further accepts any tenant improvements to be constructed by
     Lessor, if any, as being completed in accordance with the plans and
     specifications for such improvements, subject to items identified by Lessee
     in one final punch list submitted to Lessor within thirty (30) days of
     occupancy, which items Lessor shall promptly correct.

          Lessee agrees on the last day of the term hereof, or on 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 Lessor or Lessee, unto Lessor in good and sanitary
     order, condition, and repair, excepting for such wear and tear as would be
     normal for the period of the Lessee's occupancy. Lessee, on or before the
     end of the term or sooner termination of this Lease, shall remove all its
     personal property and trade fixtures from the Premises, and all property
     not so removed shall be deemed abandoned by Lessee. Lessee further agrees
     that at the end of the term or sooner termination of this Lease, Lessee, at
     its sole expense, shall have the carpets steam cleaned, the walls and
     columns painted, the flooring waxed, any damaged ceiling tile replaced, the
     windows cleaned, the drapes cleaned, and any damaged doors replaced, if
     necessary to restore the Premises to its original condition, normal wear
     and tear excepted.

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

14.  Default.  In the event of any breach of this Lease by the Lessee, or an
     --------
     abandonment of the Premises by the Lessee, which is not cured within ten
     (10) days after written notice thereof in the case of any monetary
     obligation and which is not cured within ten (10) days after written notice
     thereof in the case of any non-monetary obligation, the Lessor has the
     option of (1.) removing all persons and property from the Premises and
     repossessing the Premises, in which case any of the Lessee's property which
     the Lessor removes from the Premises may be stored in a public warehouse or
     elsewhere at the cost of, and for the account of, Lessee; or (2.) allowing
     the Lessee to remain in full possession and control of the Premises. If the
     Lessor chooses to repossess the Premises, the Lease will automatically
     terminate in accordance with the provisions of the California Civil Code,
     Section 1951.2. In the event of such termination of the Lease, the Lessor
     may recover from the

                                       7

<PAGE>

     Lessee: (1.) the worth at the time of award of the unpaid rent which had
     been earned at the time of termination, including interest at the maximum
     rate an individual is permitted by law to charge; (2.) the worth at the
     time of award of the amount by which the unpaid rent which would have been
     earned after termination until the time of award exceeds the amount of such
     rental loss that the Lessee proves could have been reasonably avoided,
     including interest at the maximum rate an individual is permitted by law to
     charge; (3.) the worth at the time of award of the amount by which the
     unpaid rent for the balance of the term after the time of award exceeds the
     amount of such rental loss that the Lessee proves could be reasonably
     avoided; and (4.) any other amount necessary to compensate the Lessor for
     all the detriment proximately caused by the Lessee's failure to perform his
     obligations under the Lease or which, in the ordinary course of things,
     would be likely to result therefrom. "The worth at the time of award," as
     used in (1.) and (2.) 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 award," as used in (3.) 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 award, plus one percent (1%).

          If the Lessor chooses not to repossess the Premises, but allows the
     Lessee to remain in full possession and control of the Premises, then, in
     accordance with provisions of the California Civil Code, Section 1951.4,
     the Lessor may treat the Lease as being in full force and effect, and may
     collect from the Lessee all rents as they become due through the
     termination date of the Lease, as specified in the Lease. For the purpose
     of this paragraph, the following do not constitute a termination of
     Lessee's right to possession: (1.) acts of maintenance or preservation, or
     efforts to relet the property; (2.) the appointment of a receiver on the
     initiative of the Lessor to protect his interest under this Lease.

          Lessee shall be liable immediately to Lessor for all costs Lessor
     incurs in reletting the Premises, including, without limitation, brokers'
     commissions, reasonable 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. Lessee shall pay to Lessor the rent
     due under this Lease on the dates the rent is due, less the rent Lessor
     receives from any reletting. No act by Lessor allowed by this Section shall
     terminate this Lease unless Lessor notifies Lessee that Lessor elects to
     terminate this Lease. After Lessee's default and for as long as Lessor does
     not terminate Lessee's right to possession of the Premises, if Lessee
     obtains Lessor's consent, Lessee shall have the right to assign or sublet
     its interest in this Lease, but Lessee shall not be released from
     liability. Lessor's consent to a proposed assignment or subletting shall
     not be unreasonably withheld.

          If Lessor elects to relet the Premises as provided in this Paragraph,
     rent that Lessor receives from reletting shall be applied to the payment
     of: (1.) any indebtedness from Lessee to Lessor other than rent due from
     Lessee; (2.) all costs, including for maintenance, incurred by Lessor in
     reletting; (3.) rent due and unpaid under this Lease. After deducting the
     payments referred to in this Paragraph, any sum remaining from the rent
     Lessor receives from reletting shall be held by Lessor and applied in
     payment of future rent as rent becomes due under this Lease. In no event
     shall Lessee by entitled to any excess rent received by Lessor. If, on the
     date rent is due under this Lease, the rent received from reletting is less
     than the rent due on that date, Lessee shall pay to Lessor, in addition to
     the remaining rent due, all costs, including for maintenance, Lessor
     incurred in reletting that remain after applying the rent received from the
     reletting, as provided in this Paragraph.

          Lessor, at any time after Lessee commits a default, can cure the
     default at Lessee's cost. If Lessor at any time, by reason of Lessee's
     default, pays any sum or does any act that requires the payment of any sum,
     the sum paid by Lessor shall be due immediately from Lessee to Lessor 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 Lessor until Lessor is reimbursed by Lessee. The
     sum, together with interest on it, shall be additional rent.

          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.

                                       8
<PAGE>

15.  Destruction. In the event the Premises are destroyed in whole or in part
     -----------
     from any cause, Lessor may, at its option, (1.) rebuild or restore the
     Premises to their condition prior to the damage or destruction or (2.)
     terminate the Lease.

          If Lessor does not give Lessee notice in writing within thirty (30)
     days from the destruction of the Premises of its election either to rebuild
     and restore the Premises, or to terminate this Lease, Lessor shall be
     deemed to have elected to rebuild or restore them, in which event Lessor
     agrees, at its expense, promptly to rebuild or restore the Premises to its
     condition prior to the damage or destruction. If Lessor does not complete
     the rebuilding or restoration within one hundred eighty (180) days
     following the date of destruction (such period of time to be extended for
     delays caused by the fault or neglect of Lessee of because of acts of God,
     acts of public agencies, labor disputes, strikes, fires, freight embargoes,
     rainy or stormy weather, inability to obtain materials, supplies or fuels,
     acts of contractors or subcontractors, or delay of the contractors or
     subcontractors due to such causes or other contingencies beyond control of
     Lessor), then Lessee shall have the right to terminate this Lease by giving
     fifteen (15) days prior written notice to Lessor. Lessor's obligation to
     rebuild or restore shall not include restoration of Lessee's trade
     fixtures, equipment, merchandise, or any improvements, alterations, or
     additions made by Lessee to the Premises. If Lessor reasonably estimates
     that the restoration referenced herein will require 180 days or more, which
     estimate shall be delivered to Lessee within nor more than thirty (30) days
     after the occurrence of the casualty, Lessee shall be entitled to terminate
     this Lease effective upon written notice of such election to Lessor,
     provided Lessee is not the cause of said damage or destruction.

          Unless this Lease is terminated pursuant to the foregoing provisions,
     this Lease shall remain in full force and effect. Lessee hereby expressly
     waives the provisions of Section 1932, Subdivision 2, and Section 1933,
     Subdivision 4, of the California Civil Code.

          In the event that the building in which the Premises are situated is
     damaged or destroyed to the extent of not less than fifty (50%) of the
     replacement cost thereof, Lessor may elect to terminate this Lease, whether
     the Premises be injured or not.

16.  Condemnation.  If any part of the Premises  shall be taken for any public
     ------------
     or quasi-public use, under any statute of by right of eminent domain, or
     private purchase in lieu thereof, and a part thereof remains, which is
     susceptible of occupation hereunder, this Lease shall, as to the part so
     taken, terminate as of the date title shall vest in the condemnor or
     purchaser, and the rent payable hereunder shall be adjusted so that the
     Lessee shall be required to pay for the remainder of the term only such
     portion of such rent as the value of the part remaining after taking such
     bears to the value of the entire Premises prior to such taking. Lessor
     shall have the option to terminate this Lease in the event that such taking
     causes a reduction in rent payable hereunder by fifty percent (50%) or
     more. If all of the Premises or such part thereof be taken so that there
     does not remain a portion susceptible for occupation hereunder, as
     reasonably necessary for Lessee's conduct of its business as contemplated
     in this Lease, this Lease shall thereupon terminate. If a part of all of
     the Premises be taken, all compensation awarded upon such taking shall go
     to the Lessor, and the Lessee shall have no claim thereto, and the Lessee
     hereby irrevocably assigns and transfers to the Lessor any right to
     compensation or damages to which the Lessee may become entitled during the
     term hereof by reason of the purchase or condemnation of all or a part of
     the Premises, except that Lessee shall have the right to recover its share
     of any award or consideration for (1.) moving expenses; (2.) loss or damage
     to Lessee's trade fixtures, furnishings, equipment, and other personal
     property; and (3.) business goodwill. Each party waives the provisions of
     the 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.  Lessee  shall (1.) pay for all labor and services
     ---------------
     performed for materials used by or

                                       9
<PAGE>

     furnished to Lessee, or any contractor employed by Lessee with respect to
     the Premises, and (2.) indemnify, defend, and hold Lessor 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
     for materials used by or furnished to Lessee or any contractor employed by
     Lessee with respect to the Premises, and (3.) give notice to Lessor in
     writing five (5) days prior to employing any laborer or contractor to
     perform services related, or receiving materials for use upon the Premises,
     and (4.) shall post, on behalf of Lessor, a notice of non-responsibility in
     accordance with the statutory requirements of the California Civil Code,
     Section 3904, or any amendment thereof. In the event an improvement bond
     with a public agency in connection with the above is required to be posted,
     Lessee agrees to include Lessor as an additional obligee.

18.  Compliance with Laws. Lessee 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. Notwithstanding anything contained
     in Paragraphs 11, 12 and 18 of Lease, if it becomes necessary to make
     capital improvements required by laws enacted or legal requirements imposed
     by governmental agency(ies), then if such legal requirement is not imposed
     because of Lessee's specific use of the Premises and is not "triggered" by
     Lessee's alterations or Lessee's application for a building permit or any
     other governmental approval (in which instance Lessee shall be responsible
     for 100% of the cost of such improvement), Lessor shall be responsible for
     constructing such improvement and Lessee shall be responsible for its
     proportional share of the cost for said improvement, amortized over the
     useful life of such improvement that coincides with the remaining Lease
     term and any extensions thereof.

19.  Subordination.  Lessee agrees that this Lease shall, at the option of
     -------------
     Lessor, be subjected and subordinated to any mortgage, deed of trust, or
     other instrument of security, which has been or shall be placed on the land
     and building, or land or building of which the Premises form a part, and
     this subordination is hereby made effective without any further act of
     Lessee or Lessor. The Lessee shall, at any time hereinafter, on demand,
     execute any instruments, releases, or other documents that may be required
     by any 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 Lessee fails to execute and deliver any such documents or instruments,
     Lessee irrevocably constitutes and appoints Lessor as Lessee's special
     attorney-in-fact to execute and deliver any such documents or instruments.

20.  Abandonment. Lessee shall not vacate or abandon the Premises at any time
     -----------
     during the term; and if Lessee shall abandon, vacate, or surrender said
     Premises, or be dispossessed by process of law, or otherwise, any personal
     property belonging to Lessee and left on the Premises shall be deemed to be
     abandoned, at the option of Lessor, except such property as may be
     mortgaged to Lessor; provided, however, that Lessee shall not be deemed to
     have abandoned or vacated the Premises so long as Lessee continues to pay
     all rents as and when due, and otherwise performs pursuant to the terms and
     conditions of this Lease.

21.  Assignment and Subletting. Lessee's interest in this Lease is not
     -------------------------
     assignable, by operation of law or otherwise, nor shall Lessee have the
     right to sublet the Premises, transfer any interest of Lessee's therein, or
     permit any use of the Premises by another party, without the prior written
     consent of Lessor to such assignment, subletting, or transfer of use, which
     consent shall not be unreasonably withheld or delayed.

          If Lessee is a partnership, a withdrawal or change, voluntary,
     involuntary, or by operation of law, of any partner (s) owning fifty
     percent (50%) or more of the partnership, of the dissolution of the
     partnership, shall be deemed as a voluntary assignment.

          If Lessee consists of more than one person, a purported assignment,
     voluntary, involuntary,

                                       10
<PAGE>

     or by operation of law, from one person to the other or from a majority of
     persons to the others, shall be deemed a voluntary assignment.

          If Lessee is a corporation, any dissolution, merger, consolidation, or
     other reorganization of Lessee, or the sale or other transfer of a
     controlling percentage of the capital stock of Lessee, or sale of at least
     fifty-one percent (51%) of the value of the assets of Lessee, shall be
     deemed a voluntary assignment. The phrase "controlling percentage" means
     the ownership of, and the right to vote, stock possessing at least fifty-
     one percent (51%) of the total combined voting power of all classes of
     Lessee's capital stock issued, outstanding, and entitled to vote for the
     election of directors. This Paragraph shall not apply to corporations the
     stock of which is traded through an exchange or over the counter.

          In the event of any subletting or transfer which is consented to, or
     not consented to, by Lessor, a subtenant or transferee agrees to pay monies
     or other consideration, whether by increased rent or otherwise, in excess
     of or in addition to those provided for herein, then all of such excess or
     additional monies or other consideration (after first deducting Lessee's
     reasonable costs associated with said subletting or transfer) shall be paid
     solely to Lessor, and this shall be one of the conditions to obtaining
     Lessor's consent.

          Lessee immediately and irrevocably assigns to Lessor, as security for
     Lessee's obligations under this Lease, all rent from any subletting of all
     or a part of the Premises as permitted by this Lease, and Lessor, as
     assignee and as attorney-in-fact for Lessee, or a receiver for Lessee
     appointed on Lessor's application, may collect such rent and apply it
     toward Lessee's obligations under this Lease; except that, until the
     occurrence of an act of default by the Lessee, Lessee shall have the right
     to collect such rent.

          A consent to one assignment, subletting, occupation, or use by another
     party shall not be deemed to be a consent to any subsequent assignment,
     subletting, occupation, or use by another party. Any assignment or
     subletting without such consent shall be void and shall, at the option of
     the Lessor, terminate this Lease. Lessor's waiver or consent to any
     assignment or subletting hereunder shall not relieve Lessee from any
     obligation under this Lease unless the consent shall so provide. If Lessee
     requests Lessor to consent to a proposed assignment or subletting, Lessee
     shall pay to Lessor, whether or not consent is ultimately given, Lessor's
     reasonable attorneys' fees incurred in conjunction with each such request.

22.  Parking Charges. Lessee agrees to pay upon demand, based on its percent of
     ---------------
     occupancy of the entire Premises, its pro-rata share of 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, parking surcharge imposed by or under the authority of the
     Federal Environmental Protection Agency.

23.  Insolvency or Bankruptcy. Either (1.) the appointment of a receiver to take
     ------------------------
     possession of all or substantially all of the assets of Lessee, or (2.) a
     general assignment by Lessee for the benefit of creditors, or (3.) any
     action taken or suffered by Lessee under any insolvency or bankruptcy act
     shall constitute a breach of this Lease by Lessee. Upon the happening of
     any such event, this Lease shall terminate ten (10) days after written
     notice of termination from Lessor to Lessee. This section is to be applied
     consistent with the applicable state and federal law in effect at the time
     such event occurs.

24.  Lessor Loan or Sale.  Lessee agrees promptly following request by Lessor
     -------------------
     to (1.) execute and deliver to Lessor any documents, including estoppel
     certificates presented to Lessee by Lessor, (a.) 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, and (b.) acknowledging that there are
     not, to Lessee's knowledge, any uncured defaults on the part of Lessor
     hereunder, and (c.)

                                       11
<PAGE>

     evidencing the status of the Lease as may be required either by a lender
     making a loan to Lessor, to be secured by deed of trust or mortgage
     covering the Premises, or a purchaser of the Premises from Lessor, and (2.)
     to deliver to Lessor the current financial statements of Lessee with an
     opinion of a certified public accountant, including a balance sheet and
     profit and loss statement, for the current fiscal year and the two
     immediately prior fiscal years, all prepared in accordance with Generally
     Accepted Accounting Principles consistently applied, or if Lessee does not
     prepare financial statements in the manner specified above, Lessee shall
     provide Lessor with the financial statements which most accurately reflect
     the financial condition of Lessee. Lessee's failure to deliver an estoppel
     certificate within three (3) days following such request shall constitute a
     default under this Lease and shall be conclusive upon Lessee that this
     Lease is in full force and effect and has not been modified except as may
     be represented by Lessor. If Lessee fails to deliver the estoppel
     certificates within the three (3) days, Lessee irrevocably constitutes and
     appoints Lessor as its special attorney-in-fact to execute and deliver the
     certificate to any third party.

25.  Surrender of Lease. The voluntary or other surrender of this Lease by
     ------------------
     Lessee, or a mutual cancellation thereof, shall not work a merger nor
     relieve Lessee of any of Lessee's obligations under this Lease, and shall,
     at the option of Lessor, terminate all or any existing Subleases or
     Subtenancies, or may, at the option of Lessor, operate as an assignment to
     him of any or all such Subleases or Subtenancies.

26.  Attorneys' Fees. If, for any reason, any suit be initiated to enforce any
     ---------------
     provision of this Lease, the prevailing party shall be entitled to legal
     costs, expert witness expenses, and reasonable attorneys' fees, as fixed by
     the court.

27.  Notices. All notices to be given to Lessee may be given in writing,
     -------
     personally, or by depositing the same in the United States mail, postage
     prepaid, and addressed to Lessee at the said Premises, whether or not
     Lessee has departed from, abandoned, or vacated the Premises. Any notice or
     document required or permitted by this Lease to be given Lessor shall be
     addressed to Lessor at the address set forth below, or at such other
     address as it may have theretofore specified by notice delivered in
     accordance herewith:

          LESSOR: Huettig & Schromm/Heaton & Keyser
                  900 Welch Road, Suite 10
                  Palo Alto, California  94304

          LESSEE: Oratec Interventions
                  3700 Haven Court
                  Menlo Park, CA 94025

28.  Transfer of Security. If any security be given by Lessee to secure the
     --------------------
     faithful performance of all or any of the covenants of this Lease on the
     part of Lessee, Lessor may transfer and/or deliver the security, as such,
     to the purchaser of the reversion, in the event that the reversion be sold,
     and thereupon Lessor shall be discharged from any further liability in
     reference thereto, upon the assumption by such transferee of lessor's
     obligations under this Lease.

29.  Waiver. The waiver by Lessor or Lessee 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, or any subsequent breach of the same or any
     other term, covenant, or condition herein contained. The subsequent
     acceptance of rent hereunder by lessor shall not be deemed to be a waiver
     of any preceding breach by Lessee of any term, covenant, or condition of
     this Lease, other than the failure of Lessee to pay the particular rental
     so accepted, regardless of Lessor's knowledge of such

                                       12
<PAGE>

     preceding breach at the time of acceptance of such rent.

30.  Holding Over. Any holding over after the expiration of the term or any
     ------------
     extension thereof, with the consent of lessor, shall be construed to be a
     tenancy from month-to-month, at a rental of one and one-half (1 1/2) times
     the previous month's rental rate per month, and shall otherwise be on the
     terms and conditions herein specified, so far as applicable.

31.  Covenants, Conditions, and Restrictions. Not applicable.
     ---------------------------------------

32.  Limitation on Lessor's Liability.  If Lessor is in default of this Lease,
     ---------------------------------
     and, as a consequence, Lessee recovers a money judgment against Lessor, the
     judgment shall be satisfied only out of the proceeds of sale received on
     execution of the judgment and levy against the right, title, and interest
     of Lessor in the Premises, or in the building, other improvements, and land
     of which the Premises are part, and out of rent or other income from such
     real property receivable by Lessor or out of the consideration received by
     Lessor from the sale or other disposition of all or any part of Lessor's
     right, title, and interest in the Premises or in the building, other
     improvements, and land of which the Premises are part. Neither Lessor nor
     any of the partners comprising the partnership designated as Lessor shall
     be personally liable for any deficiency.

33.  Letter of Credit. Upon commencement of the Lease, Lessee shall provide
     Lessor with an irrevocable Letter of Credit in the amount of the total
     tenant improvement costs (which the parties estimate will be approximately
     $147,000) less the amount of the security deposit. This Letter of Credit
     can be drawn on by Lessor if Lessee defaults on any material obligation
     under the terms of this Lease. However, if there is no material default on
     the part of Lessee, the Letter of Credit shall be reduced on an annual
     basis as follows:

<TABLE>
        <S>              <C>
        Month 13         Reduced by 33.33%
        Month 25         Reduced by 33.33%
        Month 37         Released in its entirety
</TABLE>

34.  Miscellaneous.

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

     B.   The term "building" shall mean the building in which the Premises are
          situated.

     C.   If the building is leased to more than one tenant, then each such
          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 areas located on the parcel of land
          on which the building is situated, except such parking areas as may
          from time to time be leased for exclusive use by other Tenant(s).

     D.   Lessee's such reasonable use of parking areas shall not exceed that
          percent of the total parking areas which is equal to the ratio which
          floor space of the Premises bears to floor space of the building.

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

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

                                       13
<PAGE>

     G.   All parties hereto have equally participated in the preparation of
          this Lease.

     H.   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.

     I.   Lessor has made no representation(s) whatsoever to Lessee (express or
          implied) except as may be expressly stated in writing in this Lease
          instrument.

     J.   This instrument contains all of the agreements and conditions made
          between the parties hereto, 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.

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

     L.   The covenants and conditions herein contained shall, subject to the
          provisions as to assignment, apply to and bind the heirs, successors,
          executors, and administrators, and assigns of all the parties hereto;
          and all of the parties hereto shall jointly and severally be liable
          hereunder.

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

     N.   All exhibits to which reference is made are deemed incorporated into
          this Lease, whether covenants or conditions, on the part of Lessee
          shall be deemed to be both covenants and conditions.

IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease on the date first
above-written.

LESSOR:                                     LESSEE:

BY: /s/ Howard J. White                BY: /s/ Nancy Westcott
   ---------------------                  ----------------------

ITS: General Partner                   ITS:_____________________
    --------------------

DATE: 6/4/98                           DATE: 6/1/98
     -------------------                    --------------------

                                       14<PAGE>

                                                                   EXHIBIT 10.16

                           INDEMNIFICATION AGREEMENT
                           -------------------------

     This Indemnification Agreement (the "Agreement") is made as of ___________,
                                          ---------
by and between ORATEC Interventions, Inc., a Delaware corporation (the
"Company"), and ((IndemniteeName)) (the "Indemnitee").
 -------                             ----------

                                   RECITALS
                                   --------

     The Company and Indemnitee recognize the increasing difficulty in obtaining
liability insurance for directors, officers and key employees, the significant
increases in the cost of such insurance and the general reductions in the
coverage of such insurance.  The Company and Indemnitee further recognize the
substantial increase in corporate litigation in general, subjecting directors,
officers and key employees to expensive litigation risks at the same time as the
availability and coverage of liability insurance has been severely limited.
Indemnitee does not regard the current protection available as adequate under
the present circumstances, and Indemnitee and agents of the Company may not be
willing to continue to serve as agents of the Company without additional
protection.  The Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, and to indemnify its directors,
officers and key employees so as to provide them with the maximum protection
permitted by law.

                                   AGREEMENT
                                   ---------

     In consideration of the mutual promises made in this Agreement, and for
other good and valuable consideration, receipt of which is hereby acknowledged,
the Company and Indemnitee hereby agree as follows:

     1.   Indemnification.
          ---------------

          (a)  Third Party Proceedings.  The Company shall indemnify Indemnitee
               -----------------------
if Indemnitee is or was a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Company) by reason of the fact that Indemnitee is or was a
director, officer, employee or agent of the Company, or any subsidiary of the
Company, by reason of any action or inaction on the part of Indemnitee while an
officer or director or by reason of the fact that Indemnitee is or was serving
at the request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement (if such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld) actually and reasonably incurred by
Indemnitee in connection with such action, suit or proceeding if Indemnitee
acted in good faith and in a manner Indemnitee reasonably believed to be in or
not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe Indemnitee's
conduct was unlawful.  The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that Indemnitee did
not act in good faith and in a manner which Indemnitee
<PAGE>

reasonably believed to be in or not opposed to the best interests of the
Company, or, with respect to any criminal action or proceeding, that Indemnitee
had reasonable cause to believe that Indemnitee's conduct was unlawful.

          (b)  Proceedings By or in the Right of the Company.  The Company shall
               ---------------------------------------------
indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made
a party to any threatened, pending or completed action or proceeding by or in
the right of the Company or any subsidiary of the Company to procure a judgment
in its favor by reason of the fact that Indemnitee is or was a director,
officer, employee or agent of the Company, or any subsidiary of the Company, by
reason of any action or inaction on the part of Indemnitee while an officer or
director or by reason of the fact that Indemnitee is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) and, to the fullest extent permitted by
law, amounts paid in settlement (if such settlement is approved in advance by
the Company, which approval shall not be unreasonably withheld), in each case to
the extent actually and reasonably incurred by Indemnitee in connection with the
defense or settlement of such action or suit if Indemnitee acted in good faith
and in a manner Indemnitee reasonably believed to be in or not opposed to the
best interests of the Company and its stockholders, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which Indemnitee shall have been finally adjudicated by court order or judgment
to be liable to the Company in the performance of Indemnitee's duty to the
Company and its stockholders unless and only to the extent that the court in
which such action or proceeding is or was pending shall determine upon
application that, in view of all the circumstances of the case, Indemnitee is
fairly and reasonably entitled to indemnity for such expenses which such court
shall deem proper.

          (c)  Mandatory Payment of Expenses.  To the extent that Indemnitee has
               -----------------------------
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Section 1(a) or Section 1(b) or the defense of any
claim, issue or matter therein, Indemnitee shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by Indemnitee in
connection therewith.

     2.   No Employment Rights.  Nothing contained in this Agreement is intended
          --------------------
to create in Indemnitee any right to continued employment.

     3.   Expenses; Indemnification Procedure.
          -----------------------------------

          (a)  Advancement of Expenses.  The Company shall advance all expenses
               -----------------------
incurred by Indemnitee in connection with the investigation, defense, settlement
or appeal of any civil or criminal action, suit or proceeding referred to in
Section l(a) or Section 1(b) hereof (including amounts actually paid in
settlement of any such action, suit or proceeding).  Indemnitee hereby
undertakes to repay such amounts advanced only if, and to the extent that, it
shall ultimately be determined that Indemnitee is not entitled to be indemnified
by the Company as authorized hereby.

          (b)  Notice/Cooperation by Indemnitee.  Indemnitee shall, as a
               --------------------------------
condition precedent to his or her right to be indemnified under this Agreement,
give the Company notice in

                                      -2-
<PAGE>

writing as soon as practicable of any claim made against Indemnitee for which
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to the Chief Executive Officer of the Company and
shall be given in accordance with the provisions of Section 12(d) below. In
addition, Indemnitee shall give the Company such information and cooperation as
it may reasonably require and as shall be within Indemnitee's power.

          (c)  Procedure.  Any indemnification and advances provided for in
               ---------
Section 1 and this Section 3 shall be made no later than twenty (20) days after
receipt of the written request of Indemnitee.  If a claim under this Agreement,
under any statute, or under any provision of the Company's Certificate of
Incorporation or Bylaws providing for indemnification, is not paid in full by
the Company within twenty (20) days after a written request for payment thereof
has first been received by the Company, Indemnitee may, but need not, at any
time thereafter bring an action against the Company to recover the unpaid amount
of the claim and, subject to Section 11 of this Agreement, Indemnitee shall also
be entitled to be paid for the expenses (including attorneys' fees) of bringing
such action.  It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in connection with any action,
suit or proceeding in advance of its final disposition) that Indemnitee has not
met the standards of conduct which make it permissible under applicable law for
the Company to indemnify Indemnitee for the amount claimed, but the burden of
proving such defense shall be on the Company and Indemnitee shall be entitled to
receive interim payments of expenses pursuant to Section 3(a) unless and until
such defense may be finally adjudicated by court order or judgment from which no
further right of appeal exists.  It is the parties' intention that if the
Company contests Indemnitee's right to indemnification, the question of
Indemnitee's right to indemnification shall be for the court to decide, and
neither the failure of the Company (including its Board of Directors, any
committee or subgroup of the Board of Directors, independent legal counsel, or
its stockholders) to have made a determination that indemnification of
Indemnitee is proper in the circumstances because Indemnitee has met the
applicable standard of conduct required by applicable law, nor an actual
determination by the Company (including its Board of Directors, any committee or
subgroup of the Board of Directors, independent legal counsel, or its
stockholders) that Indemnitee has not met such applicable standard of conduct,
shall create a presumption that Indemnitee has or has not met the applicable
standard of conduct.

          (d)  Notice to Insurers. If, at the time of the receipt of a notice of
               ------------------
a claim pursuant to Section 3(b) hereof, the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of the
commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies.  The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf
of the Indemnitee, all amounts payable as a result of such proceeding in
accordance with the terms of such policies.

          (e)  Selection of Counsel. In the event the Company shall be obligated
               --------------------
under Section 3(a) hereof to pay the expenses of any proceeding against
Indemnitee, the Company, if appropriate, shall be entitled to assume the defense
of such proceeding, with counsel approved by Indemnitee, upon the delivery to
Indemnitee of written notice of its election so to do.  After delivery of such
notice, approval of such counsel by Indemnitee and the retention of such counsel

                                      -3-
<PAGE>

by the Company, the Company will not be liable to Indemnitee under this
Agreement for any fees of counsel subsequently incurred by Indemnitee with
respect to the same proceeding, provided that (i) Indemnitee shall have the
right to employ counsel in any such proceeding at Indemnitee's expense; and (ii)
if (A) the employment of counsel by Indemnitee has been previously authorized by
the Company, (B) Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and Indemnitee in the conduct of any
such defense or (C) the Company shall not, in fact, have employed counsel to
assume the defense of such proceeding, then the fees and expenses of
Indemnitee's counsel shall be at the expense of the Company.

     4.   Additional Indemnification Rights; Nonexclusivity.
          -------------------------------------------------

          (a)  Scope. Notwithstanding any other provision of this Agreement, the
               -----
Company hereby agrees to indemnify the Indemnitee to the fullest extent
permitted by law, notwithstanding that such indemnification is not specifically
authorized by the other provisions of this Agreement, the Company's Certificate
of Incorporation, the Company's Bylaws or by statute.  In the event of any
change, after the date of this Agreement, in any applicable law, statute, or
rule which expands the right of a Delaware corporation to indemnify a member of
its board of directors or an officer, such changes shall be deemed to be within
the purview of Indemnitee's rights and the Company's obligations under this
Agreement.  In the event of any change in any applicable law, statute or rule
which narrows the right of a Delaware corporation to indemnify a member of its
board of directors or an officer, such changes, to the extent not otherwise
required by such law, statute or rule to be applied to this Agreement shall have
no effect on this Agreement or the parties' rights and obligations hereunder.

          (b)  Nonexclusivity.  The indemnification provided by this Agreement
               --------------
shall not be deemed exclusive of any rights to which Indemnitee may be entitled
under the Company's Certificate of Incorporation, its Bylaws, any agreement, any
vote of stockholders or disinterested members of the Company's Board of
Directors, the General Corporation Law of the State of Delaware, or otherwise,
both as to action in Indemnitee's official capacity and as to action in another
capacity while holding such office.  The indemnification provided under this
Agreement shall continue as to Indemnitee for any action taken or not taken
while serving in an indemnified capacity even though he or she may have ceased
to serve in any such capacity at the time of any action, suit or other covered
proceeding.

     5.   Partial Indemnification. If Indemnitee is entitled under any provision
          -----------------------
of this Agreement to indemnification by the Company for some or a portion of the
expenses, judgments, fines or penalties actually or reasonably incurred in the
investigation, defense, appeal or settlement of any civil or criminal action,
suit or proceeding, but not, however, for the total amount thereof, the Company
shall nevertheless indemnify Indemnitee for the portion of such expenses,
judgments,  fines or penalties to which Indemnitee is entitled.

     6.   Mutual Acknowledgment.  Both the Company and Indemnitee acknowledge
          ---------------------
that in certain instances, Federal law or public policy may override applicable
state law and prohibit the Company from indemnifying its directors and officers
under this Agreement or otherwise.

                                      -4-
<PAGE>

For example, the Company and Indemnitee acknowledge that the Securities and
Exchange Commission (the "SEC") has taken the position that indemnification is
                          ---
not permissible for liabilities arising under certain federal securities laws,
and federal legislation prohibits indemnification for certain ERISA violations.
Indemnitee understands and acknowledges that the Company has undertaken or may
be required in the future to undertake with the SEC to submit the question of
indemnification to a court in certain circumstances for a determination of the
Company's right under public policy to indemnify Indemnitee.

     7.  Officer and Director Liability Insurance.  The Company shall, from time
         ----------------------------------------
to time, make the good faith determination whether or not it is practicable for
the Company to obtain and maintain a policy or policies of insurance with
reputable insurance companies providing the officers and directors of the
Company with coverage for losses from wrongful acts, or to ensure the Company's
performance of its indemnification obligations under this Agreement. Among other
considerations, the Company will weigh the costs of obtaining such insurance
coverage against the protection afforded by such coverage.  In all policies of
director and officer liability insurance, Indemnitee shall be named as an
insured in such a manner as to provide Indemnitee the same rights and benefits
as are accorded to the most favorably insured of the Company's directors, if
Indemnitee is a director; or of the Company's officers, if Indemnitee is not a
director of the Company but is an officer; or of the Company's key employees, if
Indemnitee is not an officer or director but is a key employee.  Notwithstanding
the foregoing, the Company shall have no obligation to obtain or maintain such
insurance if the Company determines in good faith that such insurance is not
reasonably available, if the premium costs for such insurance are
disproportionate to the amount of coverage provided, if the coverage provided by
such insurance is limited by exclusions so as to provide an insufficient
benefit, or if Indemnitee is covered by similar insurance maintained by a parent
or subsidiary of the Company.

     8.  Severability.  Nothing in this Agreement is intended to require or
         ------------
shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law.  The Company's inability, pursuant to court order,
to perform its obligations under this Agreement shall not constitute a breach of
this Agreement.  The provisions of this Agreement shall be severable as provided
in this Section 8.  If this Agreement or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any applicable
portion of this Agreement that shall not have been invalidated, and the balance
of this Agreement not so invalidated shall be enforceable in accordance with its
terms.

     9.  Exceptions.  Any other provision herein to the contrary
         ----------
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:

         (a)  Claims Initiated by Indemnitee.  To indemnify or advance expenses
              ------------------------------
to Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except with respect to
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or law or otherwise as required under
Section 145 of the Delaware General Corporation Law, but such indemnification or

                                      -5-
<PAGE>

advancement of expenses may be provided by the Company in specific cases if the
Board of Directors finds it to be appropriate;

          (b) Lack of Good Faith.  To indemnify Indemnitee for any expenses
              ------------------
incurred by Indemnitee with respect to any proceeding instituted by Indemnitee
to enforce or interpret this Agreement, if a court of competent jurisdiction
determines that each of the material assertions made by Indemnitee in such
proceeding was not made in good faith or was frivolous;

          (c) Insured Claims.  To indemnify Indemnitee for expenses or
              --------------
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement) to the
extent such expenses or liabilities have been paid directly to Indemnitee by an
insurance carrier under a policy of officers' and directors' liability insurance
maintained by the Company; or

          (d) Claims under Section 16(b).  To indemnify Indemnitee for expenses
              --------------------------
or the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute.

     10.  Construction of Certain Phrases.
          -------------------------------

          (a) For purposes of this Agreement, references to the "Company" shall
                                                                 -------
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
if Indemnitee is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, Indemnitee shall stand in
the same position under the provisions of this Agreement with respect to the
resulting or surviving corporation as Indemnitee would have with respect to such
constituent corporation if its separate existence had continued.

          (b) For purposes of this Agreement, references to "other enterprises"
                                                             -----------------
shall include employee benefit plans; references to "fines" shall include any
                                                     -----
excise taxes assessed on Indemnitee with respect to an employee benefit plan;
and references to "serving at the request of the Company" shall include any
                   -------------------------------------
service as a director, officer, employee or agent of the Company which imposes
duties on, or involves services by, such director, officer, employee or agent
with respect to an employee benefit plan, its participants, or beneficiaries;
and if Indemnitee acted in good faith and in a manner Indemnitee reasonably
believed to be in the interest of the participants and beneficiaries of an
employee benefit plan, Indemnitee shall be deemed to have acted in a manner "not
                                                                             ---
opposed to the best interests of the Company" as referred to in this Agreement.
--------------------------------------------

     11.  Attorneys' Fees.  In the event that any action is instituted by
          ---------------
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by Indemnitee

                                      -6-
<PAGE>

with respect to such action, unless as a part of such action, the court of
competent jurisdiction determines that each of the material assertions made by
Indemnitee as a basis for such action were not made in good faith or were
frivolous. In the event of an action instituted by or in the name of the Company
under this Agreement or to enforce or interpret any of the terms of this
Agreement, Indemnitee shall be entitled to be paid all court costs and expenses,
including attorneys' fees, incurred by Indemnitee in defense of such action
(including with respect to Indemnitee's counterclaims and cross-claims made in
such action), unless as a part of such action the court determines that each of
Indemnitee's material defenses to such action were made in bad faith or were
frivolous.

     12.  Miscellaneous.
          -------------

          (a) Governing Law.  This Agreement and all acts and transactions
              -------------
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
Delaware, without giving effect to principles of conflict of law.

          (b) Entire Agreement; Enforcement of Rights.  This Agreement sets
              ---------------------------------------
forth the entire agreement and understanding of the parties relating to the
subject matter herein and merges all prior discussions between them.  No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, shall be effective unless in writing signed by the parties
to this Agreement.  The failure by either party to enforce any rights under this
Agreement shall not be construed as a waiver of any rights of such party.

          (c) Construction.  This Agreement is the result of negotiations
              ------------
between and has been reviewed by each of the parties hereto and their respective
counsel, if any;  accordingly, this Agreement shall be deemed to be the product
of all of the parties hereto, and no ambiguity shall be construed in favor of or
against any one of the parties hereto.

          (d) Notices.  Any notice, demand or request required or permitted to
              -------
be given under this Agreement shall be in writing and shall be deemed sufficient
when delivered personally or sent by telegram or forty-eight (48) hours after
being deposited in the U.S. mail, as certified or registered mail, with postage
prepaid, and addressed to the party to be notified at such party's address as
set forth below or as subsequently modified by written notice.

          (e) Counterparts.  This Agreement may be executed in two or more
              ------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

          (f) Successors and Assigns.  This Agreement shall be binding upon the
              ----------------------
Company and its successors and assigns, and inure to the benefit of Indemnitee
and Indemnitee's heirs, legal representatives and assigns.

          (g) Subrogation.  In the event of payment under this Agreement, the
              -----------
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of

                                      -7-
<PAGE>

Indemnitee, who shall execute all documents required and shall do all acts that
may be necessary to secure such rights and to enable the Company to effectively
bring suit to enforce such rights.

                           [Signature Page Follows]

                                      -8-
<PAGE>

     The parties hereto have executed this Agreement as of the day and year set
forth on the first page of this Agreement.

                                ORATEC INTERVENTIONS, INC.

                                By:       _______________________________

                                Title:    _______________________________

                                Address:  3700 Haven Court
                                          Menlo Park, CA 94025

AGREED TO AND ACCEPTED:

((IndemniteeName))

_______________________________
(Signature)

Address:  ((IndemniteeAddress1))
          ((IndemniteeAddress2))

                                      -9-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00001-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00001-of-00352.parquet"}]]