Document:

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                                                                    EXHIBIT 10.1

                     CONFIDENTIAL PORTIONS HAVE BEEN OMITTED
                 BASED UPON A REQUEST FOR CONFIDENTIAL TREATMENT
        PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934 AND
                 HAVE BEEN SEPARATELY FILED WITH THE COMMISSION

                                    AGREEMENT
                                 BY AND BETWEEN
                            MICRO THERAPEUTICS, INC.
                                       AND
                               ABBOTT LABORATORIES

        THIS AGREEMENT (the "Agreement") is entered into as of June 28, 2000
(the "Effective Date") by and between MICRO THERAPEUTICS, INC., a Delaware
corporation, having a place of business at 2 Goodyear, Irvine, California 92618
("MTI") and ABBOTT LABORATORIES, an Illinois corporation, having offices at 200
Abbott Park Road, Abbott Park, Illinois 60064 ("Abbott").

                               W I T N E S E T H:

        WHEREAS, the parties entered into an Exclusive Distribution Agreement
(the "Distribution Agreement") and other agreements on August 12, 1998, under
which the parties agreed that Abbott would act as exclusive distributor and
promoter of the Products (as hereinafter defined);

        WHEREAS, the parties have determined that it would be more efficient and
advantageous for the parties to co-promote together the Products in the
Territory (as hereinafter defined);

        WHEREAS, MTI and Abbott wish to enter into an agreement to co-promote
together such Products throughout the Territory and allow Abbott to exclusively
distribute such Products throughout the Territory;

        NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth below, the parties agree as follows:

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                             ARTICLE 1 - DEFINITIONS

The following words and phrases, when used herein with capital letters, shall
have the meaning set forth or referenced below:

1.1     "Affiliate" means any company or entity that controls, is controlled by,
        or is under common control with, a party to this Agreement. As used
        herein, "control" means the direct or indirect ownership of fifty
        percent (50%) or more of the authorized issued voting shares in such
        entity or such other relationship as in fact legally results in
        effective control over the management, business and affairs of such
        entity.

1.2     "ASP" or "Average Selling Price" means the Net Sales (as defined
        hereinbelow) of any given Product divided by the total number of units
        of that Product shipped (excluding non-revenue units, such as samples)
        and invoiced by Abbott or its Affiliates to Customers (as hereinafter
        defined).

1.3     "Business Day" means any day Monday through Friday excluding Abbott
        observed holidays.

1.4     "Change of Control Event" means any sale of all or substantially all of
        a party's assets or stock or a change in ownership or control (as
        "control" is defined in Section 1.1) of a party, whether by merger or
        acquisition or otherwise.

1.5     "Confidential Information" means proprietary, non-public information
        owned or controlled by one party to this Agreement to which the other
        party has access hereunder, including but not limited to, trade secrets,
        discoveries, ideas, concepts, know-how, techniques, designs,
        specifications, drawings, diagrams, data, business activities and
        operations, customer lists, reports, studies and other technical and
        business information.

1.6     "Cost" means the transfer price paid by Abbott to MTI for each Product
        purchased under this Agreement, pursuant to Section 7.1.

1.7     "Customer" means any end-user that purchases Products for use in the
        Territory.

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1.8     "FDA" means the United States Food and Drug Administration and any
        successor agency thereto.

1.9     "Field" means devices and methods of use directed toward diagnosis,
        treatment or prevention of blood clot disorders in the peripheral
        vasculature, including related peripheral blood clot therapy access
        products.

1.10    "First Commercial Sale" means the first sale by MTI of any Product to a
        Customer after the Effective Date. "First Commercial Sale" shall not
        include any sales to MTI Affiliates or to any third party in connection
        with any clinical trials or regulatory or safety testing.

1.11    "LES" means MTI's Liquid Embolic System (Onyx(TM)) that includes an
        embolic agent and delivery system.

1.12    "Margin" means Net Sales minus the Cost of the Product sold.

1.13    "MTI Sales Representatives" means an individual who is regularly
        employed by MTI on a full-time basis as a member of its hospital sales
        force and who is qualified and has been trained by MTI to make sales
        presentations for MTI's hospital-based device products to physicians and
        hospitals.

1.14    "MTI's Successor" means a third party that assumes control of MTI's
        management, business and affairs following an MTI Change of Control
        Event.

1.15    "Net Sales" means gross amounts recorded by Abbott on the accrual method
        minus reasonable reserves for bad debt consistent with Generally
        Accepted Accounting Principles ("GAAP") consistently applied by Abbott
        for sales of, and in connection with, Abbott's purchase, transportation
        and importation of the Product, less any discounts, rebates and credit
        for damaged, outdated, returned, withdrawn and recalled goods, less any
        allowances for partial-revenue or non-revenue units (e.g., samples),
        less any trade discounts earned or granted, less any cash discounts,
        management fees or rebates paid to Customers (including but not limited
        to Group Purchasing Organizations ("GPOs"),

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        Integrated Heath Care Systems ("IHSs") and government agencies) and less
        all freight charges, insurance and other costs of shipping and handling,
        taxes, duties and the like, all to the extent that any of the foregoing
        may be recorded or incurred by Abbott in connection with the sale of
        Products under this Agreement. For sales outside of the United States,
        the aforementioned shall be converted to United States dollars each
        calendar quarter, using Abbott's standard practices to determine Net
        Sales.

1.16    "PMA Code" means the Pharmaceutical Manufacturers Association's Code of
        Pharmaceutical Marketing Practices, as amended from time to time.

1.17    "Products" means all of the current MTI products referenced in the
        attached Exhibit 1.17 as well as MTI's devices or technology developed
        or otherwise acquired by MTI after the Effective Date that have any
        application in the Field, including but not limited to any improvements,
        enhancements or line extensions thereto. The parties shall amend Exhibit
        1.17 from time to time to reflect any and all Product improvements,
        enhancements and line extensions of new Products and, as applicable,
        shall amend Sections 7.1 and 7.2 accordingly.

1.18    "Product Lines" means the following five (5) categories of Products as
        of the Effective Date: thrombolytic brushes, infusion catheters,
        infusion guidewires, peripheral micro catheters and accessory kits.
        "Products Lines" also shall include other Product categories that may be
        developed during the Term (as hereinafter defined).

1.19    "Promotion Effort" means or refers to a sales presentation in the
        Territory by an MTI Sales Representative authorized by MTI during which
        presentation such representative promotes Products to Customers such as
        hospital-based (including free-standing surgical centers) surgeons,
        physicians and other appropriate reference physicians, as well as,
        appropriate purchasing personnel within Customer's organization.

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1.20    "Promotional Materials" means printed matter, including printed
        literature and reprints, or graphic matter relating or referring to the
        Product that is deemed by MTI to be essential for use by the MTI Sales
        Representatives in Promotion Efforts.

1.21    "QSR" or "Quality System Regulations" means all applicable standards
        relating to manufacturing practices for medical devices promulgated by
        the FDA in the form of laws, regulations or guidance documents
        (including but not limited to advisory opinions, compliance policy
        guides and guidelines), and which guidance documents MTI knows or
        reasonably should have known to be applicable, current, feasible and
        valuable in ensuring device quality within the device manufacturing
        industry for such products in effect on the Effective Date or at any
        time thereafter during the Term.

1.22    "Sampling Act" means the Prescription Drug Marketing Act of 1987, as
        amended from time to time and any regulations promulgated thereunder.

1.23    "Specifications" means MTI's most current specifications for the
        manufacture of each of the Products.

1.24    "Standard Manufacturing Cost" means, with respect to any Product, MTI's
        fully allocated cost of manufacturing such Product (in accordance with
        QSR and the Specifications) as determined in accordance with Generally
        Accepted Accounting Principles ("GAAP") consistently applied, including
        all direct and indirect costs related to the manufacture of such
        Product, including without limitation, costs for labor, materials
        (including, without limitation, components of such Product), quality
        control, regulatory compliance, manufacturing administrative expenses,
        subcontractors, fixed and variable manufacturing overhead costs and
        business unit, division or company costs reasonably allocable to the
        manufacture, packaging and labeling of such Product, in each case,
        respectively.

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1.25    "Term" means the "Initial Term" (as defined in Section 11.1) unless
        earlier terminated pursuant to Sections 11.2, 11.3 or 11.4.

1.26    "Territory" means the fifty (50) states of the United States of America
        and territories of the United States (including but not limited to
        Puerto Rico) as well as Canada. The Territory may be expanded from time
        to time by mutual agreement of the parties to include additional
        countries not currently committed by MTI to alternative distributors for
        the Products.

         ARTICLE 2--APPOINTMENT TO DISTRIBUTE PRODUCTS; ABBOTT'S DUTIES

2.1     Appointment. MTI hereby appoints Abbott as the exclusive distributor of
        the Products to Customers in the Territory. During the Term, MTI shall
        not itself or through its Affiliates (i) appoint or authorize any other
        distributor or sales representative to make sales of any Products within
        the Territory or (ii) sell any Products to any entity that it knows or
        has reason to know will sell such Products in the Territory, without
        Abbott's prior written permission. Abbott may, in its discretion,
        distribute, market and sell the Products in the Territory through any
        Affiliate of Abbott or use other subdistributors and agents of its own
        choosing in distributing any Products in the Territory. Abbott shall
        have the right during the Term to represent to the public that it is an
        authorized exclusive independent distributor of the Products within the
        Territory.

2.2     Abbott's Duties. Abbott shall use reasonable commercial efforts to
        introduce, promote the sale of, solicit and obtain orders for Products
        from Customers in accordance with the terms of this Agreement.
        Additionally, Abbott shall be responsible for all order entry,
        distribution, billing, collection of sales revenue, Customer service
        support (excluding technical Product support), contracting and
        processing of returns for the Products in the Territory. In particular,
        Abbott shall assume the following responsibilities:

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        2.2.1  Sales. Subject to the provisions of Article 3, Abbott shall
               assume responsibility for all sales and marketing activities for
               the Products in the Territory, through its Abbott Critical Care
               Systems commercial organization or another commercial
               organization, at Abbott's sole discretion. Except as otherwise
               expressly stated herein, Abbott shall be responsible for its own
               sales and marketing costs, including but not limited to, training
               and maintenance of its sales organization.

        2.2.2  Contracting and Pricing. As of the Effective Date, except as
               otherwise mutually agreed herein, Abbott shall assume full
               responsibility for negotiating and entering into all Customer
               contracts, including but not limited to, all hospital, GPO and
               IHS sales contracts for the Products in the Territory. Abbott
               shall be solely responsible for establishing sales prices for
               Products for all Customers in the Territory. Current product
               prices shall be as set forth on Exhibit 2.2.2. Pursuant to
               Article 3, Abbott shall provide MTI with Abbott's current
               Customer lists as well as current and proposed Customer contracts
               for the Products. Abbott shall administer all of its pre-existing
               sales contracts with Customers for the Products in the Territory
               during the Term. In addition, Abbott shall administer all
               contracts executed by MTI pursuant to Article 3. MTI Sales
               Representatives shall consult with Abbott's Hospital Products
               Division's Contract Marketing Department pursuant to Section 3.9
               to coordinate presentation and content of Customer contract
               proposals and implement distribution of Products to Customers.
               MTI understands and agrees that any Customer who is a member of a
               group purchasing organization (hereinafter, "GPO") may have
               membership obligations to such GPO. MTI agrees that it shall not
               offer Products to such Customers at prices that are below such
               Customer's GPO contracted price established by Abbott for such
               GPO without prior written approval from Abbott.

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2.3     Forecast. Abbott and MTI shall prepare and agree upon a new Forecast
        prior to September 30 of each calendar year during the Term. Each
        Forecast shall encompass a one year Forecast, with projections gaited on
        a monthly basis. Such Forecasts shall include a sales Forecast by
        Product Line, anticipated quantity and quarterly estimated delivery
        dates. With respect to Product Line extensions, the parties shall make
        Forecast adjustments as mutually agreed upon, commensurate with the
        expanded total available market opportunity associated with the expanded
        Product offerings.

2.4     No Minimum Purchase Requirements. Nothing herein shall be construed to
        obligate Abbott to purchase any minimum quantity of any of the Products.

2.5     Compliance with Laws. Subject to Article 4 below, Abbott shall, at all
        times during the Term, maintain any necessary legal permits and licenses
        required by any governmental unit or agency to distribute the Products
        hereunder and shall comply with all applicable national, state, regional
        and local laws and regulations, in performing its duties hereunder and
        in any of its dealings with respect to the Products as an independent
        distributor, except where the failure to obtain such permits or licenses
        or failure to comply will not have a material adverse effect on Abbott's
        ability to distribute the Products.

2.6     Commission. As consideration for MTI's performance of its obligations
        hereunder, Abbott shall pay MTI a commission pursuant to Section 7.2.

2.7     Pricing and Marketing Strategies. Abbott, as exclusive distributor
        hereunder, shall solely and exclusively formulate all prices, pricing
        strategies and marketing strategies relating to the Product in the
        Territory. Abbott shall pre-approve a limited price range within which
        MTI Sales Representatives can present sales contracts to Customers as
        provided in Section 3.9. In the event that an MTI Sales Representative
        desires to contract outside of the pre-approved contract price range
        provided in Section 3.9, such MTI Sales Representative shall contact
        Abbott's Hospital Products Division's Contract Marketing

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        Department and shall obtain from such Department the Product prices.
        Neither MTI nor any MTI Sales Representative shall have the right to
        establish Product prices. Abbott shall have the right to quarterly
        review prices for Products and adjust such prices accordingly.

2.8     Accounts Receivable. Abbott shall notify MTI and the appropriate MTI
        Sales Representative of any Customers placed on "credit hold" status
        within forty-eight (48) hours of such action by Abbott. Abbott also
        shall provide to MTI the name of the Abbott sales representative
        responsible for such Customer account. These responsibilities imposed on
        Abbott as described in this Section 2.8 are referred to in Sections 7.7
        and 11.5 as the "Accounts Receivable Performance Standard."

2.9     Customer Service. Abbott shall fill Customer orders according to
        Abbott's current policy, as follows: Customer orders placed by 12 noon
        shall be shipped the same business day as the order was placed. Customer
        orders placed after 12 noon shall be shipped either: (i) on an emergency
        basis with the Customer paying shipping charges; or (ii) the next
        business day. In the event that Product cannot be shipped according to
        Abbott's current policy, Abbott shall inform MTI within forty-eight (48)
        hours of the order's placement that such order cannot be filled and of
        the underlying circumstances. These responsibilities imposed on Abbott
        as described in this Section 2.9 are referred to in Sections 7.7 and
        11.5 as the "Customer Service Performance Standard."

          ARTICLE 3 - APPOINTMENT TO CO-PROMOTE; MTI'S RESPONSIBILITIES

3.1     Appointment. Abbott hereby appoints MTI, on an exclusive basis, to
        co-promote the Products with Abbott in the Territory through the use of
        MTI Sales Representatives for the Term. MTI's duties shall include, but
        not be limited to, the following provisions of this Article 3.

3.2     Product Promotion.

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        3.2.1  General. During the Term, MTI, by and through MTI Sales
               Representatives, shall perform Promotion Efforts in accordance
               with the terms of this Agreement. MTI shall consult with Abbott
               from time to time with respect to the manner in which MTI shall
               promote the Products, including the indications for the Products
               and the frequency with which the MTI Sales Representatives shall
               perform Promotion Efforts to any particular Customer. MTI shall
               make the final determination with respect to the manner in which
               either party shall promote the Products, except that Abbott shall
               not be required to violate the PMA Code or any applicable
               federal, state or local laws or regulations. MTI shall perform
               Promotion Efforts of the Products only in strict accordance with:
               (i) the PMA Code; (ii) the approved Product labeling; and (iii)
               the applicable federal, state and local laws and regulations of
               the Territory including, but not limited to, the Sampling Act and
               the Controlled Drug Act. Neither party shall be deemed to be in
               default of this obligation as a result of any administrative or
               judicial determination that either an item of Promotional
               Material or MTI's advertising for the Product(s) is in violation
               of: (x) the PMA Code; or (y) the approved Product labeling; or
               (z) any applicable federal, state or local laws and regulations
               of the Territory. As part of the Promotion Effort, and in
               accordance with Sections 3.6.2 and 3.7 hereof, the MTI Sales
               Representatives shall distribute Promotional Materials to
               Customers to whom the MTI Sales Representatives make Promotion
               Efforts and shall arrange for MTI's distribution of samples to
               Customers.

        3.2.2  Number of Promotion Efforts. During the Term, MTI, by and
               through the MTI Sales Representatives, shall use its reasonable
               best efforts to promote the Products and to obtain a commitment
               from Customers to conduct trial evaluation of Products.
               Thereafter, MTI, by and through the MTI Sales Representatives,
               shall

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                use its reasonable best efforts to maintain Product usage
                profiles. MTI shall prepare quarterly reports to Abbott
                summarizing its Promotion Efforts.

3.3     Sales Force. At all times during the Term, MTI shall maintain a minimum
        sales force of at least two (2) representatives.

3.4     Sales Representative Training. MTI shall be responsible for training and
        supervising the MTI Sales Representatives in the promotion of the
        Product. In addition, MTI shall provide reasonable initial training of
        Abbott's personnel in the use of the Products, upon Abbott's reasonable
        request. Abbott shall pay the cost of any travel and lodging for its
        personnel attending any such training, and MTI shall pay the cost of the
        trainers and materials.

3.5     MTI Sales Representatives' Incentive Compensation. For the Term, MTI, at
        its sole cost and at its sole discretion, shall award incentive
        compensation, bonuses or prizes to MTI Sales Representatives for
        achieving goals for volume of sales generated for the Products in such
        MTI Sales Representative's sales territory. Pursuant to Section 2.2.2,
        Abbott shall supply certain sales information to aid MTI in the
        determination of incentive compensation related to the Products.

3.6     Development and Distribution of Promotional Materials.

        3.6.1   Promotional Materials. Upon Abbott's request, MTI shall furnish
                Abbott, without charge (except as otherwise agreed in writing),
                with reasonable quantities of technical, advertising and selling
                information and literature in English concerning the Products
                which Abbott may distribute, incorporate or include with its own
                marketing materials and information relating to the Products.
                Abbott shall have the right to develop and distribute its own
                marketing materials, brochures and other information regarding
                the Products in connection with its sales and marketing
                activities under this Agreement, subject to the prior approval
                of MTI,

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                which approval shall not be unreasonably withheld. If Abbott
                determines that any Promotional Material conflicts with the PMA
                Code or any law or regulation of the Territory, Abbott shall
                inform MTI of such determination as soon as reasonably possible,
                and Abbott shall not be required to distribute such Promotional
                Material. If MTI decides to use such Promotional Material, such
                Promotional Material shall be printed or reprinted, as the case
                may be, without the Abbott logo or name thereon.

        3.6.2   Distribution of Promotional Materials. In connection with the
                Promotion Efforts, MTI Sales Representatives shall distribute
                Promotional Materials to Customers. MTI shall consult with
                Abbott with respect to the distribution of the Promotional
                Materials. It is understood, however, that MTI shall have the
                final decision with respect to such distribution, except as
                otherwise provided herein.

3.7     Responsibility for Samples. MTI shall, at its expense, supply samples to
        Customers as part of its Promotion Efforts hereunder and as MTI
        reasonably deems appropriate, to support its Promotion Efforts. On an
        as-needed basis and at Abbott's request, MTI also shall provide Abbott
        with a reasonable amount of samples of each of the Products to assist
        Abbott in its sales presentations and medical meeting demonstrations or
        presentations and for Customer testing purposes. Such samples shall be
        provided to Abbott at MTI's expense.

3.8     Requests for Information by Third Parties. In the event Abbott's Medical
        Affairs Liaison appointed pursuant to Section 4.12 receives inquiries
        which relate to the efficacy, safety or other medical issues regarding
        the Product(s) from third parties, Abbott's Medical Affairs Liaison
        shall direct such inquiries within two (2) business days of such
        liaison's receipt of such inquiry to MTI's Medical Affairs Liaison
        appointed pursuant to Section 4.12.1, unless such inquiry is of a
        routine nature and the response is clearly set forth in

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        either the Product labeling or the Product inquiry report supplied by
        MTI to Abbott. The Product inquiry report shall set forth the standard
        responses used by MTI to respond to questions of a routine nature
        directed to MTI with respect to the Product. MTI shall supply the
        Product inquiry report to Abbott within a reasonable time period prior
        to the Product Launch Date.

3.9     Responsibilities of MTI's Sales Representatives. MTI Sales
        Representatives shall have the right, through their Promotion Efforts,
        to present contracts to Customers at prices that are within the limited
        price range pre-approved by Abbott as set forth in Exhibit 2.2.2 and
        pursuant to Section 2.7. All such contracts shall be sent to Abbott;
        Abbott Laboratories Inc., HPD Contract Marketing, Attention: Manager,
        Major Accounts, D36J, AP30-2 Center, 200 Abbott Park Road, Abbott Park,
        IL 60064.

         ARTICLE 4. MANUFACTURING, REGULATORY AND SAFETY CONSIDERATIONS

4.1     Regulatory and Safety Testing Requirements. MTI shall be considered to
        be the finished device manufacturer for the Products and shall be
        responsible for compliance with all regulatory and safety testing
        requirements for the Products in the Territory. MTI shall provide Abbott
        with the data and results from clinical trials with respect to each of
        the Products.

4.2     Regulatory Approvals and Registrations. MTI shall establish and maintain
        all regulatory approvals required to manufacture and permit sale of the
        Products in the Territory, including, at a minimum all necessary, FDA
        approvals and the equivalent Canadian approvals for each Product.

4.3     Quality System Compliance. MTI shall be solely responsible for
        compliance with all Quality System Regulations affecting the Products,
        including, at a minimum, International Standards Organization ("ISO")
        certification and compliance with FDA

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        Quality System Regulations. During the Term, MTI shall manage the
        complaint files associated with the Products in the Territory and
        provide copies of those complaint files to Abbott upon Abbott's request.
        In accordance with a timetable to be mutually agreed upon by the
        parties, Abbott shall have the right to review MTI's manufacturing
        operations in order to ensure compliance with Quality System
        Regulations. Abbott may, in its discretion, make QSR recommendations to
        MTI and MTI shall use reasonable efforts to implement any QSR
        recommendations made by Abbott.

4.4     Post-Marketing Regulatory Reporting. MTI shall be responsible for
        reporting any reportable events, including but not limited to patient
        deaths or injuries, associated with the Products to the FDA and other
        appropriate authorities; provided, however, that to the extent required
        by applicable law Abbott may also report such events to the applicable
        authorities. Abbott shall notify MTI of any such event within two (2)
        Business Days after Abbott learns of such an event. Abbott shall use
        reasonable commercial efforts to notify MTI of any such event prior to
        notifying the FDA or other appropriate authorities. Each party shall
        provide the other party with any assistance reasonably requested by the
        other party in connection with such activities, including without
        limitation access to the Product files. MTI shall update Abbott
        periodically (in accordance with a timetable to be mutually agreed upon
        by the parties) on any reportable events involving the Products in the
        Territory for which MTI has filed reports with the FDA or other
        regulatory authorities in the Territory.

4.5     Post-Marketing Clinical Trials. MTI shall fund, conduct and complete
        post-approval clinical trials in order to establish clinical/commercial
        user preference status for the Products, in accordance with the
        Post-Market Clinical Development Program attached hereto as Exhibit 4.5.
        Upon mutual agreement of the parties regarding appropriate

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        timetables, these clinical trials shall be conducted by MTI, with
        assistance from Abbott if so requested by MTI.

4.6     Reimbursement. MTI shall use its best efforts to assist Customers in
        obtaining reimbursement from governmental agencies, third-party payors,
        or other parties from whom reimbursement may be sought in connection
        with sales of the Products to Customers.

4.7     Cooperation. To assist in selling and marketing the Products in the
        Territory, each party shall, as applicable:

                (i) provide the other party with any information reasonably
                requested by the other party for the purpose of complying with
                regulatory and other legal requirements relating to the
                Products;

                (ii) provide the other party with information on marketing and
                promotional plans for the Products as well as copies of
                marketing, advertising, sales and promotional literature
                concerning the Products, if any; and

                (iii) provide the other party with certificates of free sale,
                trademark authorizations and any other documents relating to the
                Products which the other party may reasonably request to satisfy
                the requirements of the laws of the various jurisdictions within
                the Territory and of any competent authority.

4.8     Trade Shows. For trade shows and congresses pertinent to the Field in
        the Territory, Abbott shall use reasonable efforts to assist MTI,
        subject to mutual written agreement of the parties, with the promotion
        of the Products. Such assistance may include sharing of costs, provision
        of personnel and materials as well as joint exhibits.

4.9     Product Changes. MTI shall provide Abbott with at least ninety (90) days
        prior written notice of any change in the Specifications or the
        processes, materials, equipment, inspection, testing, manufacturing
        location and the like of which it has knowledge that

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        may have any effect on the Products or their uses. MTI shall give due
        consideration to any comments or suggestions Abbott may make with
        respect to such changes.

4.10    MTI's Manufacturing Responsibilities. MTI shall use reasonable
        commercial efforts to maintain adequate manufacturing capacity and
        sufficient supply of the Products during the Term. Should MTI fail to
        maintain adequate manufacturing capacity and/or sufficient supply of the
        Products, MTI and Abbott shall in good faith use their best efforts to
        develop jointly a plan to ensure continued Product supply, which plan
        may include, at Abbott's reasonable discretion, Abbott's exercise of its
        standby right to manufacture the Products under Section 4.11 and
        appropriate mutually agreed upon Forecast adjustments pursuant to
        Section 2.3. MTI shall use commercially reasonable efforts to develop
        appropriate Product Line extensions in order to assure maintenance of
        market-competitive Products in the Field. MTI shall give due
        consideration to recommendations from Abbott in this regard.

4.11    Standby Right to Manufacture. If MTI is unable or unwilling for any
        reason (other than where determined as due to Abbott's breach of this
        Agreement or due to bona fide dispute that the parties have submitted
        for resolution pursuant to the provisions of Section 12.5) to supply any
        Products as and when ordered by Abbott in accordance with this
        Agreement, then, after the expiration of a reasonable period of time
        (not to exceed [*] ([*]) days), during which MTI may remedy the cause of
        its inability to supply the Products, Abbott, shall have the right, but
        not the obligation, to manufacture or have manufactured the Products
        under MTI's patents and other intellectual property rights during the
        period that MTI is unable to supply.

*       CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.

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        To the extent necessary to implement Abbott's standby manufacturing
        rights under this Section 4.11, MTI hereby grants Abbott a
        non-exclusive, royalty-free license under MTI patents and other
        intellectual property rights to make, have made, use, import, sell and
        offer for sale the Products in the Territory. During such period, MTI
        shall provide Abbott with manufacturing know-how and reasonable
        assistance to enable Abbott (and, as applicable, Abbott's third party
        manufacturer) to manufacture the Products. At such time as MTI can
        demonstrate to Abbott's reasonable satisfaction that MTI is capable of
        resuming the manufacture and supply of Products, Abbott's license
        hereunder shall cease and Abbott shall resume purchasing Products from
        MTI and Abbott shall return to MTI all MTI equipment and technology
        utilized by Abbott for the manufacture of Products.

4.12    Notification of Adverse Events.

        4.12.1 Communication. Within thirty (30) days after the execution of
               this Agreement, the parties shall each appoint a primary liaison
               (the "Medical Affairs Liaison") to communicate with each other
               with regard to information required pursuant to this Section
               4.12.1. Either party may change its Medical Affairs Liaison by
               notice to the other party.

        4.12.2 Notification. During the term of this Agreement, Abbott shall
               give MTI notice as set forth in this Section 4.12.2 of any
               adverse device experience, as defined in 21 CFR 314.80,
               associated with the Product as to which Abbott obtains
               information in accordance with the following:

                      (a) Any adverse device experience information obtained by
                  Abbott shall be reported to MTI's Medical Affairs Liaison, by
                  telephone or in writing (only by facsimile) within three (3)
                  working days after Abbott's initial receipt of the
                  information; provided however, any report of a serious
                  unlabelled event or any report of a death shall be reported to
                  MTI's Medical Affairs Liaison within

<PAGE>   18

                twenty-four (24) hours of Abbott's receipt of the information.
                Abbott shall use reasonable commercial efforts to notify MTI
                prior to notifying the FDA or other appropriate authorities;

                   (b) Abbott's reports to MTI shall contain: (i) the date the
                report was received by Abbott; (ii) the name of the reporter and
                the reporter's title; (iii) the address and telephone number of
                the reporter; (iv) a description of the adverse device
                experience; (v) the indication for treatment; (vi) the outcome
                of the event; (vii) the dose and duration of treatment; and
                (viii) the lot number of the Product, if available; and

                   (c) in accordance with 21 CFR 314.80, Abbott shall maintain a
                record of the adverse device experience, including: (i) a copy
                of the device experience report; (ii) the date the report was
                received; (iii) the date the report was provided to MTI; and
                (iv) MTI's name and address.

        4.12.3 Product Report. If, during the Term, MTI determines it is
               necessary to issue a report to its representatives with respect
               to the medical efficacy or side effects of the Product(s), MTI
               shall also provide such report to Abbott within five (5) business
               days of its issuance to the MTI Sales Representatives, which
               report Abbott shall immediately distribute to the Abbott sales
               representatives.

4.13    Recalls. The parties shall give prompt notice of any contemplated recall
        of any Products to the other party (including notice by MTI to Abbott of
        any such recall outside the Territory). The parties shall give each
        other full cooperation throughout the recall process whether such recall
        is voluntary or otherwise, and shall comply in full with applicable
        laws, regulations and governmental agency directives with respect to
        such recall. Any recall expenses incurred by Abbott resulting from MTI
        QSR

<PAGE>   19

        deficiencies, Product quality defects, Product performance defects or
        government actions will be fully reimbursed to Abbott from MTI.

                            ARTICLE 5 - NEW PRODUCTS

5.1      Right of First Discussion. During the Term, MTI shall provide to Abbott
         an exclusive right of first discussion if MTI elects to consider and/or
         pursue discussions with third parties on potential commercial
         collaborations in the Territory for potential peripheral vascular
         applications of MTI's LES (Onyx(TM)) embolization product currently
         under development. If MTI considers and/or desires to pursue potential
         third party sales, marketing and/or distribution collaborations for
         peripheral applications of LES in the Territory, MTI shall negotiate
         first and in good faith with Abbott for a period of not less than [*]
         ([*]) days for distribution rights for such products. If the parties do
         not execute an agreement for distribution of such products within such
         [*] ([*]) day period (or such longer period as may be mutually agreed
         upon by the parties), MTI shall have no further obligations to Abbott
         in this regard. MTI shall give serious consideration to any reasonable
         commercial terms proposed by Abbott in writing with regard to
         peripheral LES applications. If the parties are unable to agree on the
         terms of such written offer, then for a period of [*] ([*]) [*]
         following the above-referenced discussion period, MTI shall not accept
         a third party offer for commercialization of peripheral LES
         applications that, in MTI's sole opinion, is less favorable to MTI than
         Abbott's last written offer, considering all relevant factors,
         including without limitation, any equity components as well as
         milestones, commissions and/or royalties.

*        CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.

<PAGE>   20

                               ARTICLE 6. INTELLECTUAL PROPERTY

6.1     General. MTI shall use reasonable commercial efforts to file, prosecute,
        protect and maintain its intellectual property rights (including
        patents, know-how and MTI Trademarks, as defined below) relevant to the
        Products in the Territory at its own expense. If either party becomes
        aware of any actual or potential third party infringement of such
        intellectual property rights or any third party claim that MTI's
        manufacture and sale of the Products to Abbott hereunder or Abbott's
        sale of Products to Customers infringes any third party intellectual
        property rights, either party shall promptly notify the other.

6.2     Trademark License. During the Term, MTI hereby grants to Abbott an
        exclusive, royalty-free license to use the current and future
        trademarks, trade names and logos used by MTI at any time during the
        Term to identify the Products (the "MTI Trademarks") solely in the
        course of Abbott's advertisement, promotion, distribution and sale of
        the Products in the Territory. Abbott's use of the MTI Trademarks shall
        be in accordance with MTI's policies that are provided to Abbott in
        writing from time to time. Abbott shall display the MTI Trademarks on
        the Products distributed under this Agreement. Use of the MTI Trademarks
        on the Products shall not give Abbott any proprietary rights in the MTI
        Trademarks except for the license rights granted in this Section 6.2.

6.3     Trademark Ownership. Abbott acknowledges that, subject only to the
        license granted herein to Abbott, MTI owns and retains all proprietary
        rights in all MTI Trademarks.

6.4     No Continuing Rights. Upon termination of this Agreement, Abbott shall
        cease all further display, advertising and use of all MTI Trademarks
        except in connection with the sale of Products in inventory as provided
        in Section 11.6.2 below.

6.5     Trademarks Used In Labeling. In addition to the MTI Trademarks, the
        Products may bear trademarks selected by Abbott ("Abbott Trademarks") in
        a manner mutually agreed

<PAGE>   21

        upon by the parties. Notwithstanding anything to the contrary set forth
        herein, MTI shall not use the Abbott Trademarks on any Product sold
        outside the Territory without the prior written consent of Abbott. Upon
        termination of this Agreement, MTI shall cease all use of the Abbott
        Trademarks.

6.6     Lot Numbers and List Numbers in Labeling. As soon as commercially
        feasible after the Effective Date, MTI shall make the following Product
        labeling changes: (a) each saleable unit of the Products shall have an
        Abbott list number printed on the label (including the case labeling)
        and (b) each saleable unit of the Products shall have identification
        numbers using the Abbott lot numbering convention and expiration dating
        formats (in compliance with [*], which Abbott shall supply to MTI) on
        the label (including the case labeling). Abbott shall supply MTI with
        Product list numbers, lot number suffix and lot number blocks as soon as
        commercially feasible after the Effective Date.

                  ARTICLE 7. FINANCIAL TERMS AND PRODUCT ORDERS

7.1     Cost. The Cost to Abbott for each Product purchased by Abbott from MTI
        under this Agreement shall be a percent of the Average Selling Price of
        such Product for the years 2000 - 2008, commencing on January 1, 2000,
        calculated according to the following schedule:

*       CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.

<PAGE>   22

                     COST (as a % of Average Selling Price)

<TABLE>
<CAPTION>

            -----------------------------------------------------------------------
                                            Immediately Prior   Immediately Prior
            MTI Product Line                Quarter Net Sales   Quarterly Net
                                              Less Than [*]%    Sales Greater
                                                                Than or Equal To
                                                                [*]
            -----------------------------------------------------------------------

            -----------------------------------------------------------------------
            <S>                             <C>                 <C>
            Infusion Catheters                     [*]%                [*]%
            -----------------------------------------------------------------------
            Infusion Guidewires                    [*]%                [*]%
            -----------------------------------------------------------------------
            Peripheral Micro Catheters             [*]%                [*]%
            -----------------------------------------------------------------------
            Mechanical Thrombolytic                [*]%                [*]%
            Devices
            -----------------------------------------------------------------------
            Accessory Kits                         [*]%                [*]%
            -----------------------------------------------------------------------
</TABLE>

7.2     Commissions. Net Sales shall be calculated by Abbott and reviewed by the
        parties on a quarterly basis. As consideration for MTI's performance of
        its obligations hereunder, Abbott shall pay MTI a commission, on a
        calendar quarterly basis, as follows:

        7.2.1  For Net Sales up to and including [*] Dollars ($[*]) in any
               calendar quarter during the year 2000, such commission shall be
               paid as follows:

               (a)    Within forty-five (45) days following the end of each
                      calendar quarter, Abbott shall pay MTI a portion of the
                      commission equal to [*]% of such calendar quarter's Net
                      Sales.

               (b)    Upon each of (i) the Effective Date and (ii) a date within
                      ninety (90) days following the Effective Date, Abbott
                      shall pay MTI, as a prepaid, minimum, non-refundable
                      commission, [*] Dollars ($[*]), for a total of [*] Dollars
                      ($[*]).

*       CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.

<PAGE>   23

        7.2.2  For Net Sales up to and including [*] Dollars ($[*]) in any
               calendar quarter during the year 2001 Abbott shall pay MTI a
               commission equal to [*] percent ([*]%) within forty-five (45)
               days following the end of each such calendar quarter.

        7.2.3  For Net Sales in excess of [*] Dollars ($[*]) in any calendar
               quarter beginning subsequent to April 1, 2000 and through 2001,
               Abbott shall pay MTI a commission equal to [*] ([*]%) within
               forty-five (45) days following the end of each such calendar
               quarter.
        7.2.4  For Net Sales in any calendar quarter during each of the years
               2002 through 2008, Abbott shall pay MTI a commission equal to [*]
               ([*]%) within forty-five (45) days following the end of each such
               calendar quarter.

7.3     Order Placement

        7.3.1  Purchase Orders. All purchases of the Products by Abbott from MTI
               shall be made by written purchase order specifying Product type,
               quantity, price, requested delivery schedule, delivery location,
               and shipping instructions. All purchases of the Products by
               Abbott from MTI during the Term shall be subject to the terms and
               conditions of this Agreement. Any additional or different terms
               and conditions in a purchase order or confirmation form which
               conflict with this Agreement shall be of no force and effect
               unless the parties specifically agree in writing to such
               conflicting terms and conditions.

*       CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.

<PAGE>   24

        7.3.2  Acceptance of Orders. All orders and modifications to orders are
               subject to acceptance by MTI; provided, however, that MTI shall
               accept all purchase orders by Abbott for the Products as long as
               such orders are consistent with the current Forecasts (as
               described in Section 2.3 above). MTI shall use commercially
               reasonable efforts to fill all other orders by Abbott for the
               Products hereunder. If MTI believes that it will not be able to
               satisfy Abbott's orders for the Products, MTI shall promptly
               notify Abbott, specifying the reasons for the delay and its
               expected duration.

7.4     Product Delivery

        7.4.1  Title and Delivery. All Products shall be delivered FOB, MTI's
               United States manufacturing facility, to the carrier designated
               by Abbott. If no such designation is made by Abbott, MTI shall
               select the most cost-effective carrier, given the time
               constraints known to MTI. MTI's title and the risk of loss to the
               Products shall pass to Abbott upon delivery of the Products to
               the carrier.

        7.4.2  Taxes. Abbott shall pay all taxes (including, without limitation,
               sales, value-added and similar taxes) payable with respect to the
               sale and purchase of Products under this Agreement, except for
               taxes based on MTI's income.

        7.4.3  Shipping Instructions and Charges. All Products shall be suitably
               packed for shipment and marked by MTI for shipment to Abbott's
               United States facilities designated in the purchase order. Abbott
               shall not export the Product outside the Territory, and shall pay
               all freight, insurance and other shipping expenses, as well as
               any special packing expense.

        7.4.4  Partial Shipments. MTI may make partial shipments against
               Abbott's purchase orders upon mutual agreement of the parties.

<PAGE>   25

        7.4.5  Rejected Products. Any delivery of Products by MTI to Abbott
               which fail to meet the Specifications shall be promptly returned
               to MTI at MTI's expense.

7.5     Order Changes

        7.5.1  Rescheduling of Delivery. Abbott may reschedule each order once,
               provided no such rescheduling shall exceed forty-five (45) days
               from the originally scheduled ship date. MTI shall work with
               Abbott in good faith on a case by case basis to resolve any
               issues related to market changes and potential impact on orders
               placed with MTI.

        7.5.2  Cancellation of Orders. Abbott may cancel all or any portion of
               an order or change the scope of an order at any time prior to
               fifteen (15) days before the scheduled ship date. Thereafter,
               Abbott may do so only with MTI's written approval.

7.6     Payment Terms. Abbott shall pay to MTI within forty-five (45) days of
        the receipt of invoice an estimated amount mutually agreed by the
        parties for the Cost specified in Section 7.1 above for each Product
        delivered during that month. Additionally, Abbott shall pay to MTI
        within forty-five (45) days of the end of each calendar quarter an
        actual amount for the commission on Product sales during such quarter as
        specified in Section 7.2. All payments shall be made in United States
        dollars. In accordance with Section 3.7, Abbott may distribute clinical
        samples of Products provided to Abbott under this Agreement pursuant to
        Section 3.7 without payment of commissions. Such samples will be
        included in any reconciliation as Net Sales at the price (if any) for
        such samples at zero dollars if the sample was distributed by Abbott
        free of charge.

        7.6.1  Quarterly Reconciliation. At the end of each calendar quarter,
               Abbott shall reconcile the estimated payments made to MTI under
               Section 7.1 above with the actual Cost for the Products
               purchased during such calendar quarter and shall

<PAGE>   26

        provide a report to MTI of such reconciliation within thirty (30) days
        after the end of such quarter. Specifically, reconciliations shall be
        made

                      (i) to account for unanticipated changes to Product ASPs,
                      if such ASP changes served to affect Abbott's Costs paid
                      pursuant to Sections 7.1 and 7.6, and

                      (ii) to account for non-revenue (e.g., sample) units
                      distributed by Abbott but previously paid for by Abbott
                      pursuant to Section 7.1.

               If the reconciliation reveals that Abbott owes MTI additional
               amounts, Abbott shall remit payment of such amount with its
               report. If the reconciliation reveals that Abbott has overpaid in
               its estimated payment, MTI shall reimburse Abbott within ten (10)
               days of receipt of the report.

7.7     Abbott's Records. No more frequently than once in any twelve (12) month
        period during the Term, upon MTI's request and at MTI's expense, Abbott
        shall allow an independent auditor mutually agreed upon by the parties
        to examine Abbott's books and records only as such relate to the
        distribution and sale of the Products for the sole purpose of verifying
        (a) Abbott's compliance with its obligations to MTI relating to the
        Accounts Receivable and Customer Service Performance Standards as such
        compliance relates solely to filling orders of Products as described in
        Sections 2.8 and 2.9, respectively, and referred to in Section 11.5, and
        (b) the payments made by Abbott pursuant to Section 7.6. If, as a result
        of such examination, an underpayment or overpayment is found, the
        applicable party will rectify the underpayment or overpayment within
        thirty (30) days; provided that if such examination shows an
        underpayment by Abbott of more than ten percent (10%), then Abbott shall
        pay the cost of such audit. The audit shall take place during Abbott's
        normal business hours, at a location to be designated by Abbott, and may
        not disrupt the operation of Abbott's business. The audit shall be
        completed within five (5) Business

<PAGE>   27

        Days and shall cover a period not more than two (2) years back from the
        date of the audit. Scheduling of the audit shall be subject to mutual
        agreement of the parties.

7.8     Returns

        7.8.1  If Product Does Not Meet Warranty. Abbott may return for a refund
               any Product that does not meet MTI's warranty as set forth in
               Section 9.2. MTI shall issue a return material authorization
               ("RMA") number for such defective Product upon Abbott's request.
               At MTI's expense, Abbott shall return any such defective Product
               to MTI with documentation referencing the applicable RMA number.
               MTI shall submit such refund and reimbursement of the return
               shipment cost to Abbott within forty-five (45) days of receiving
               the defective Product.

        7.8.2  Remaining Shelf Life. Each Product delivered under this Agreement
               shall have, upon Abbott's receipt of such Product, at least
               seventy-five percent (75%) of the applicable original Product
               shelf-life remaining, except as otherwise agreed in writing by
               Abbott. At MTI's expense, Abbott may return for a refund or
               replacement, at Abbott's option, any Product that does not meet
               this requirement. MTI shall submit such refund and reimbursement
               for shipping costs or replacement Product to Abbott within
               forty-five (45) days of receiving the returned Product.

                      ARTICLE 8. CONFIDENTIAL INFORMATION

8.1.    Identification of Confidential Information. Confidential Information
        provided by the disclosing party (or any of its Affiliates) and entitled
        to protection under this Agreement shall be identified as such by
        appropriate markings on any documents exchanged. If the disclosing party
        provides information other than in written form, such information shall
        be considered Confidential Information only if the information by its
        nature would

<PAGE>   28

        reasonably be considered of a confidential nature or if the receiving
        party, due to the context in which the information was disclosed, should
        have reasonably known it to be confidential, and the disclosing party
        gives written notice within ten (10) days of disclosure that such
        information is to remain confidential or the disclosing party had
        previously confirmed in writing that such information was confidential.

8.2     Protection of Confidential Information. Each party acknowledges that the
        other party claims its Confidential Information as a special, valuable
        and unique asset. During the Term and for three (3) years thereafter,
        for itself and on behalf of its Affiliates, officers, directors, agents,
        and employees, each party agrees to the following:

        8.2.1  Disclosure to Third Parties. Receiving party shall not disclose
               the Confidential Information to any third party or disclose to an
               employee unless such third party or employee has a need to know
               the Confidential Information in order to enable the disclosing
               party to exercise its rights or perform its obligations under
               this Agreement. Receiving party shall use the Confidential
               Information only for the purposes of exercising its rights or
               fulfilling its obligations under this Agreement and shall not
               otherwise use it for its own benefit. In no event shall the
               receiving party use less than the same degree of care to protect
               the Confidential Information as it would employ with respect to
               its own information of like importance which it does not desire
               to have published or disseminated;

        8.2.2  Required Disclosure. If the receiving party faces legal action or
               is subject to legal proceedings requiring disclosure of
               Confidential Information, then, prior to disclosing any such
               Confidential Information, the receiving party shall promptly
               notify the disclosing party and, upon the disclosing party's
               request, shall cooperate with the disclosing party in responding
               to and/or contesting such request.

<PAGE>   29

8.3     Return of Confidential Information. All information furnished under this
        Agreement shall remain the property of the disclosing party and shall be
        returned to it or destroyed or purged promptly at its request upon
        termination of this Agreement; provided, however, that Abbott may retain
        Confidential Information of MTI as reasonably necessary for Abbott to be
        able to complete the sale of Products on order or in inventory at the
        time of termination and to support Products already sold by Abbott under
        this Agreement. All documents, memoranda, notes and other tangible
        embodiments whatsoever prepared by the receiving party based on or which
        includes Confidential Information shall be destroyed to the extent
        necessary to remove all such Confidential Information upon the
        disclosing party's request, except that one copy of such information
        that may be retained in the legal files of the receiving party. Upon the
        request of the disclosing party, all destruction under this Section 8.3
        shall be certified in writing to the disclosing party by an authorized
        representative of the receiving party.

8.4     Residual Information. Either party shall be free to use for any purpose
        (including, but not limited to, use in the development, manufacture,
        marketing and maintenance of its own products and services) the
        Residuals resulting from access to or work with Confidential Information
        of the other party, provided that the party maintains the
        confidentiality of the Confidential Information as provided herein. The
        term "Residuals" shall mean information in non-tangible form that may be
        inadvertently retained by persons who have had rightful access to the
        Confidential Information, including the ideas, concepts, know-how or
        techniques contained therein. Notwithstanding the provisions of this
        Section 8.4, during the Term, neither party may avoid its obligations
        toward a particular item of the Confidential Information merely by
        having a person commit such item to memory so as to reduce it to a
        non-tangible form. Further, this Section 8.4 does not provide to either

<PAGE>   30

        party a license to use any patented, trademarked or copyrighted material
        of the other party.

8.5     Limitations. The confidentiality obligations set forth in this Article 8
        shall not apply to disclosed information which the receiving party can
        prove receiving party knows at the time of disclosure, free of any
        obligation to keep it confidential, as evidenced by written records; is
        or becomes generally publicly known through no fault of the receiving
        party; receiving party independently developed without the use of any
        Confidential Information, as evidenced by written records; or receiving
        party rightfully obtains from a third party who has the right to
        transfer or disclose it.

8.6     Public Announcements. Notwithstanding anything to the contrary contained
        in this Agreement, neither party may initiate any public announcement
        concerning the subject matter of this Agreement without the prior
        written approval of the other party; provided, however, that this
        Section 8.6 shall not be construed to limit Abbott's ability to market,
        or MTI's ability to co-promote, the Products as either party deems
        necessary or appropriate.

                   ARTICLE 9 -- REPRESENTATIONS AND WARRANTIES

9.1     Reciprocal Representations and Warranties. Each party represents and
        warrants to the other party as follows:

        (i) It is a corporation duly organized and validly existing under the
        laws of its state or other jurisdiction of incorporation or formation;

        (ii) It has the power and authority to execute and deliver this
        Agreement, and to perform its obligations hereunder;

        (iii) The execution, delivery and performance by it of this Agreement
        and its compliance with the terms and provisions hereof does not and
        will not conflict with or result in a breach of any of the terms and
        provisions of or constitute a default under (a) any loan

<PAGE>   31

        agreement, guaranty, financing agreement, agreement affecting a product
        or other agreement or instrument binding or affecting it or its
        property, including but not limited to any agreements resulting in a
        Change of Control Event; (b) the provisions of its charter documents or
        by-laws; or (c) any order, writ, injunction or decree of any court or
        governmental authority entered against it or by which any of its
        property is bound; (iv) No authorization, consent or approval of any
        governmental authority or third party is required for the execution,
        delivery or performance by it of this Agreement, and the execution,
        delivery or performance of this Agreement will not violate any law, rule
        or regulation applicable to such party; and (v) This Agreement has been
        duly authorized, executed and delivered and constitutes its legal, valid
        and binding obligation enforceable against it in accordance with its
        terms and subject, as to enforcement, to bankruptcy, insolvency,
        reorganization and other laws of general applicability relating to or
        affecting creditors' rights and to the availability of particular
        remedies under general equity principles.

9.2     MTI Product Warranties. MTI warrants that the Products manufactured by
        MTI and delivered to Abbott hereunder shall (i) from the date of
        shipment until the end of the specified shelf-life (as specified in
        Section 7.9 .2) conform to the Specifications and all applicable laws
        and regulations relating to the manufacture of the Product, including,
        but not limited to FDA and Canadian Quality System Regulations, (ii) be
        transferred free and clear of any security interest, liens, and
        encumbrances, and (iii) not infringe any third party patents,
        trademarks, copyrights, or other third party proprietary rights.

                          ARTICLE 10 -- INDEMNIFICATION

10.1    Indemnification. Subject to Section 10.3 below, MTI shall at its own
        expense, defend Abbott (including its Affiliates, directors, officers,
        employees and shareholders) against

<PAGE>   32

        an "Indemnified Claim," as defined in Section 10.2 below, and hold
        Abbott (including its Affiliates, directors, officers, employees and
        shareholders) harmless and indemnify Abbott (including its Affiliates,
        directors, officers, employees and shareholders) from any loss, expense,
        liability and/or settlement (including attorneys' fees) resulting from
        an Indemnified Claim.

10.2    Indemnified Claim. For purposes of this Agreement, an "Indemnified
        Claim" shall mean: (i) any claim asserting that Abbott's sale or
        manufacturing in accordance with Section 4.11, or Abbott's or any
        Customer's purchase, possession or use of the Products or any part
        thereof infringes any third party patent, trade secret, trademark,
        copyright or other proprietary right; (ii) any claim arising from or
        related to a failure of MTI to comply with its representations and
        warranties under this Agreement; and (iii) any claim asserting that the
        Products caused injury or death to a person or damage to property;
        except to the extent such Indemnified Claims arise from Abbott's
        negligence, willful misconduct or breach of this Agreement in which
        event Abbott shall indemnify MTI (including its Affiliates, directors,
        officers, employees and shareholders) from such claims.

10.3    Limitations. Each party's obligation to indemnify the other party is
        contingent upon the party seeking indemnification (i) promptly notifying
        the indemnifying party of such claim and (ii) cooperating with the
        indemnifying party in the defense thereof, of which the indemnifying
        party shall have control at the indemnifying party's expense.
        Notwithstanding the above, the party seeking indemnification shall have
        the right but not the obligation, at its own expense, to participate in
        any such defense.

10.4    Infringements. If a claim of patent or other proprietary right
        infringement is made by a third party with respect to a Product, then
        MTI, at its option, shall (i) obtain for Abbott the right to continue to
        market and distribute the Product at MTI's own expense, (ii) replace the
        Product with a functionally-equivalent non-infringing Product, or (iii)
        modify

<PAGE>   33

        the Product so that it becomes non-infringing, so long as the
        functionality of the Product is not adversely affected. If MTI is unable
        to accomplish any of the foregoing within one hundred eighty (180) days
        of the initial claim of infringement, MTI shall grant Abbott a full
        refund of Costs paid by Abbott to MTI for all affected Products and
        accept return of them, and the parties shall remove all such affected
        Products from the Forecast for the remainder of the Term.

10.5    Limitation of Liability. EXCEPT FOR THE INDEMNIFICATION OBLIGATIONS
        UNDER ARTICLE 10, NEITHER PARTY SHALL, BY REASON OF THE TERMINATION OF
        THIS AGREEMENT OR OTHERWISE, BE LIABLE TO THE OTHER PARTY FOR ANY
        CONSEQUENTIAL, SPECIAL, INCIDENTAL, OR OTHER DAMAGES (INCLUDING WITHOUT
        LIMITATION LOSS OF PROFIT) WHETHER OR NOT ADVISED OF THE POSSIBILITY OF
        SUCH DAMAGES.

10.7    Insurance. MTI shall at all times during the Term maintain product
        liability insurance covering the Products with minimum annual limits of
        Two Million Dollars ($2,000,000) per occurrence and Two Million Dollars
        ($2,000,000) in the aggregate. MTI shall maintain such insurance for a
        minimum of five (5) years after termination of this Agreement. Within
        thirty (30) days of the Effective Date, MTI shall deliver to Abbott a
        certificate of insurance evidencing such insurance and stating that the
        policy will not be canceled or modified without at least thirty (30)
        days prior written notice to Abbott.

<PAGE>   34

                       ARTICLE 11 -- TERM AND TERMINATION

11.1    Initial Term and Extensions. Unless earlier terminated pursuant to
        Sections 11.2, 11.3, 11.4 or 11.5, or renegotiated pursuant to Section
        11.5, and subject to Section 11.6, the Initial Term of this Agreement
        shall commence on the Effective Date and shall expire on December 31,
        2008; provided, that one party has provided written notice of such
        termination to the other party at least six (6) months prior to such
        termination. During the Initial Term, the parties may negotiate and
        mutually agree to extend the Initial Term, whether for renewal periods
        or for a fixed period.

11.2    Termination by Abbott. Abbott may terminate this Agreement at any time
        upon one hundred and eighty (180) days written notice to MTI.

11.3    Termination Based on Change of Control Event. MTI or MTI's Successor may
        terminate this Agreement for a Change of Control Event affecting MTI
        upon ninety (90) days prior written notice to Abbott. Termination
        subsequent to a Change of Control Event shall occur by one of the
        following two mechanisms:

        11.3.1 Abbott Buyout of Product Lines. For a period of ninety (90) days
               following Abbott's receipt of notice from MTI of a Change in
               Control Event, the parties shall discuss Abbott's potential
               buyout of the Product Lines. Upon mutual agreement of Abbott and
               MTI's Successor, Abbott shall purchase all of the pertinent
               manufacturing assets (tooling, assembly and packaging equipment,
               manufacturing know-how and specifications) for the Products and
               all intellectual property rights (patents, additional commercial
               know-how and the MTI Trademarks) for the Products in the Field
               and in the Territory from MTI's

<PAGE>   35

               Successor for a price of [*] times ([*]X) the aggregate [*] for
               the twelve-month period preceding the Change of Control Event.

        11.3.2 MTI's Successor Buyout of Agreement. In the event that Abbott and
               MTI's Successor do not agree to proceed with the Abbott buyout of
               Product Lines pursuant to Section 11.3.1 within ninety (90) days,
               MTI 's Successor may terminate this Agreement, and Abbott shall
               thereby relinquish all distribution rights under this Agreement,
               upon one hundred and eighty (180) days prior written notice,
               conditioned upon payment of a "Termination Fee" to Abbott. For
               purposes of determining the Termination Fee herein, the term
               "Abbott's Net Sales" shall mean the [*] of the Products in the
               twelve (12) months preceding the Effective Date of the
               Termination to the extent such sales are equal to or less than
               [*] Dollars ($[*]) plus [*] percent ([*]%) of all sales of the
               Products during such period in excess of such amount. The
               Termination Fee shall be calculated and payable over a five (5)
               year period as follows:
<TABLE>
<CAPTION>

               Year After                      Amount Payable as a % of Abbott's Net Sales in
     Effective Date of Termination            12 Months Preceding Effective Date of Termination
     -----------------------------            -------------------------------------------------
     <S>                                      <C>
                 Year 1                                             [*]%
                 Year 2                                             [*]%
                 Year 3                                             [*]%
                 Year 4                                             [*]%
                 Year 5                                             [*]%
</TABLE>

               Such amounts shall be payable by MTI's Successor to Abbott once
               annually on the anniversary of the effective date of termination
               for a period of five (5) years

*       CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.

<PAGE>   36

               following termination of this Agreement.
               Following an MTI Change of Control Event, if MTI's Successor
               fails to notify Abbott of its intention to terminate this
               Agreement within ninety (90) days of such MTI Change of Control
               Event, the Agreement shall remain in effect, provided that if MTI
               ceases to exist as a corporate entity, MTI's Successor has taken
               assignment of and assumed all rights and obligations of MTI under
               the terms and conditions of the Agreement for the remainder of
               the Term.

11.4    Termination For Cause. Either party may terminate this Agreement by
        giving the other party ninety (90) days written notice of such
        termination if the other party materially breaches or defaults in any of
        the material terms or conditions of this Agreement and fails to cure
        such breach or default within ninety (90) days of receiving notice
        thereof.

11.5    Termination or Renegotiation For Lack of Performance By Abbott.

        11.5.1  Performance Through June 30, 2002. If, on or prior to June 30,
                2002, any of the following events has not occurred, MTI shall
                have the right, upon written notice to Abbott which shall be
                delivered to Abbott no later than July 31, 2002, to terminate,
                effective December 31, 2002, or renegotiate the terms and
                conditions of, this Agreement:

                A. [*] is available for sale;

                b. Net sales for the twelve months ending June 30, 2002
                   aggregates [*] Dollars ($[*]) or greater; and

                c. During the period from the Effective Date through June 30,
                   2002, Abbott is in ninety-nine percent (99%) or greater
                   compliance with the Accounts Receivable and Customer Service
                   Performance Standards described in

*       CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.

<PAGE>   37

                  Sections 2.8 and 2.9, respectively, and referred to in Section
                  7.7, as evidenced by Abbott's records.

        11.5.2  Performance Subsequent to June 30, 2002. On June 30 of each year
                from 2003 through 2007, MTI shall have the right, upon written
                notice to Abbott which shall be delivered to Abbott no later
                than July 31 of the same year, to terminate, effective December
                31 of the same year, or renegotiate the terms and conditions of,
                this Agreement if any of the following events has not occurred:

                a.      [*] is available for sale;

                b.      Net sales for the twelve months ending on the most
                        recent June 30 aggregates [*] Dollars ($[*]) or greater;
                        and

                c.      During the period from the Effective Date through the
                        applicable June 30, Abbott is in ninety-nine percent
                        (99%) or greater compliance with the Accounts Receivable
                        and Customer Service Performance Standards set forth in
                        Sections 2.8 and 2.9, respectively, and referred to in
                        Section 7.7 as evidenced by Abbott's records.

11.6    The Effect of Termination

        11.6.1  Delivery of Previously Ordered Products. Upon any termination of
                this Agreement by MTI, Abbott shall be entitled to have
                delivered the Products ordered prior to termination.

        11.6.2  Disposition of Inventory. Upon any termination of this
                Agreement, Abbott may sell all or any part of its remaining
                inventory of the Products to Customers, or,

*       CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.

<PAGE>   38

               upon mutual agreement between Abbott and MTI, MTI may agree to
               repurchase all or any part of Abbott's remaining inventory of the
               Products (excluding discontinued and demonstration units). The
               price for such inventory shall be the Cost paid by Abbott to MTI
               for such Products, plus Abbott's shipping and handling costs.

        11.6.3 Termination Fee. In the event that MTI terminates or otherwise
               cancels this Agreement pursuant to Section 11.5, MTI shall make
               the following payment to Abbott within thirty (30) days of such
               cancellation or termination.
<TABLE>
<CAPTION>

                   ---------------------------------------------
                   Year of Cancellation/      MTI Payment to
                        Termination               Abbott
                   ---------------------------------------------
                   <S>                        <C>
                            2002                   $[*]
                   ---------------------------------------------
                            2003                   $[*]
                   ---------------------------------------------
                            2004                   $[*]
                   ---------------------------------------------
                            2005                   $[*]
                   ---------------------------------------------
                            2006                   $[*]
                   ---------------------------------------------
                            2007                   $[*]
                   ---------------------------------------------
</TABLE>

11.7    Survival. Articles 8 and 10, Sections 4.12, 7.7 (for the term
        indicated), , 9.2, 11.3, 11.6, 12.1, 12.2 and 12.5 through and including
        12.12 shall survive any termination of this Agreement.

*       CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.

<PAGE>   39

                        ARTICLE 12 -- GENERAL PROVISIONS

12.1    Independent Contractors. The parties at all times are and shall be
        independent contractors in all matters relating to this Agreement. Each
        party and its employees are not agents or partners of the other party
        for any purposes and, except as otherwise expressly agreed in writing by
        the other party, have no power or authority to bind or commit the other
        party in any way.

12.2    No Waiver. The failure of either party to enforce at any time or for any
        period any of the provisions of this Agreement shall not be construed to
        be waiver of those provisions or of the right of that party thereafter
        to enforce each and every provision hereof.

12.3    Assignment. Except as otherwise provided herein, this Agreement shall
        not be assignable by either party without the prior written consent of
        the other party. Any attempted assignment not otherwise permitted herein
        shall be void. The provisions hereof shall be binding upon and inure to
        the benefit of the parties, their successors and permitted assigns.

12.4    Notices. Any notice, report or statement to either party required or
        permitted under this Agreement shall be in writing and shall be sent by
        certified mail, return receipt requested, postage prepaid, or by
        facsimile transmission with confirmation sent by certified mail as
        above, or by courier, such as Federal Express, DHL or the like, with
        confirmation of receipt by signature requested, directed to the other
        party at its mailing address set forth below, or to such other mailing
        address as the party may from time to time designate by prior written
        notice in accordance herewith. Any such notice, report or statement sent
        in accordance with this Section 12.4 shall be deemed duly given upon
        receipt.

12.5    Governing Law and Dispute Resolution. This Agreement (and any other
        documents referred to herein) shall be construed in accordance with the
        laws of the State of California without reference to choice of law
        principles, as to all matters, including, but

<PAGE>   40

        not limited to, matters of validity, construction, effect or
        performance. Any disputes between the parties relating to this Agreement
        that cannot be resolved amicably shall be resolved by binding
        Alternative Dispute Resolution in accordance with the attached Exhibit
        12.5.

12.6    Force Majeure. The parties shall not be liable for any delay or failure
        of obligations under this Agreement, in whole or in part, for any causes
        beyond the reasonable control of the parties, including, but not limited
        to, acts of God, war, riot, civil disturbances, strikes, lockouts or
        other labor disputes, accident of transportation or other force majeure.
        If MTI is unable to supply to Abbott any of the Products for any period
        of time, then MTI shall immediately notify Abbott of such inability,
        stating the reasons therefor and the estimated time of the delay and the
        Forecasts shall be adjusted accordingly by mutual written agreement. In
        such event, and upon Abbott's request, the Term shall be extended for a
        period equal to the period of time in which MTI is unable to supply
        Products to Abbott.

12.7    Titles of Sections. The titles of the various sections of this Agreement
        are used for convenience of reference only and are not intended to and
        shall not in any way enlarge or diminish the rights or obligations of
        the parties or affect the meaning or construction of this document.

12.8    Investigation; Joint Preparation. Each party acknowledges that it has
        had adequate opportunity to make whatever investigation or inquiry it
        deems necessary or desirable in connection with the subject matter of
        this Agreement prior to the execution hereof. Each party further
        acknowledges that it has read and understands each provision of this
        Agreement. This Agreement has been prepared jointly by the parties and
        shall not be strictly construed against either party, it being agreed
        that each party has had an

<PAGE>   41

        opportunity to consult with counsel of its own choosing regarding the
        term and conditions of this Agreement.

12.9    Binding Effect. This Agreement shall be binding upon and inure to the
        benefits of the parties hereto and, and their respective successor and
        permitted assigns.

12.10   Integration/Modification/Entire Agreement. This Agreement, together with
        the attached Exhibits, sets forth the entire agreement and understanding
        between the parties as to the subject matter hereof, and supersedes,
        integrates and merges all prior discussions, correspondence,
        negotiations, understandings or agreements. This Agreement may not be
        altered, amended, modified or otherwise changed in any way except by a
        written instrument, which specifically identifies the intended
        alteration, amendment, modification or other change, clearly expresses
        the intention to so change this Agreement, and is signed by an
        authorized representative of each of the parties.

12.11   Counterparts. This Agreement may be executed in two or more
        counterparts, each of which when executed shall be deemed an original,
        and all of which together shall constitute one and the same instrument.

12.12   Severability. If any provision, or portion thereof, of this Agreement
        shall be held to be invalid, illegal, void or otherwise unenforceable,
        such provision, or portion thereof, shall be amended to achieve as
        nearly as possible the same economic effect as the original provision to
        the fullest extent permitted by applicable law, and the validity,
        legality and enforceability of the remainder of the Agreement will
        remain in full force and effect.

<PAGE>   42

        IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the Effective Date.

ABBOTT LABORATORIES                         MICRO THERAPEUTICS, INC.

By:     /s/ Richard A. Gonzalez             By:    /s/ George Wallace
   -------------------------------             ---------------------------------
        Richard A. Gonzalez

Title:  President HPD                       Title: President & CEO
      ----------------------------                ------------------------------

Date: 6/29/00                               Date: 6/28/00
     -----------------------------               -------------------------------
<PAGE>   43

                                LIST OF EXHIBITS

1.17    Products

2.2.2   Product Prices and Pre-Approved Product Price Ranges

4.5     Post-Marketing Clinical Development Program

12.5    Alternative Dispute Resolution

<PAGE>   44

                                    AGREEMENT
                                 by and between
                            Micro Therapeutics, Inc.
                                       and
                               Abbott Laboratories

                                  Exhibit 1.17
                                    Products

                              LIST OF PRODUCTS FROM
                     PRODUCT CATALOGUE (DOMESTIC PRICE LIST)

                            Valved Infusion Catheters

      Current Exp. 18 months (36 month expiration pending, September 1998)

                   Cragg-McNamara(R) Valved Infusion Catheters
<TABLE>
<CAPTION>

    Model #        Diameter (F)   Usable Length (Cm)   Infusion Length (Cm)  Max. Guidewire (In.)
===================================================================================================
<S>                <C>            <C>                  <C>                   <C>
    201-0236            4                 40                    5                    .035
    201-0237            4                 40                    10                   .035
    201-0238            4                 40                    20                   .035
    201-0230            4                 65                    5                    .035
    201-0232            4                 65                    10                   .035
    201-0234            4                 65                    20                   .035
    201-0231            4                 100                   5                    .035
    201-0233            4                 100                   10                   .035
    201-0235            4                 100                   20                   .035
    201-0239            4                 135                   5                    .035
    201-0240            4                 135                   10                   .035
    201-0241            4                 135                   20                   .035
===================================================================================================
    201-0216            5                 40                    5                    .038
    201-0217            5                 40                    10                   .038
    201-0218            5                 40                    20                   .038
    201-0210            5                 65                    5                    .038
    201-0212            5                 65                    10                   .038
</TABLE>

<PAGE>   45

<TABLE>
<CAPTION>

<S>                     <C>               <C>                   <C>                  <C>
    201-0214            5                 65                    20                   .038
    201-0211            5                 100                   5                    .038
===================================================================================================
    201-0213            5                 100                   10                   .038
    201-0215            5                 100                   20                   .038
    201-0227            5                 100                   30                   .038
    201-0228            5                 100                   40                   .038
    201-0229            5                 100                   50                   .038
    201-0219            5                 135                   5                    .038
    201-0220            5                 135                   10                   .038
    201-0221            5                 135                   20                   .038
    201-0222            5                 135                   30                   .038
    201-0223            5                 135                   40                   .038
    201-0224            5                 135                   50                   .038
</TABLE>

                      Focused(TM) Valved Infusion Catheters

      Current Exp. 18 months (36 month expiration pending, September 1998)

<TABLE>
<CAPTION>

    Model #        Diameter (F)   Usable Length (Cm)   Infusion Length (Cm)  Max. Guidewire (In.)
===================================================================================================
<S>                <C>            <C>                  <C>                   <C>
    201-0225            5                 65                    1                    .038
    201-0226            5                 100                   1                    .038
</TABLE>

<PAGE>   46

                           Peripheral Micro Catheters

      Current Exp. 12 months (36 month expiration pending, September 1998)

                    MicroMewi(TM) Sidehole Infusion Catheters

<TABLE>
<CAPTION>

    Model #        Diameter (F)   Usable Length (Cm)   Infusion Length (Cm)  Max. Guidewire (In.)
===================================================================================================
<S>                <C>            <C>                  <C>                   <C>
    201-0120           2.9                150                   5                    .018
    201-0121           2.9                150                   10                   .018
    201-0122           2.9                40                    5                    .018
    201-0124           2.9                180                   5                    .018
    201-0125           2.9                180                   10                   .018
</TABLE>

                  Micro Patency(TM) Endhole Infusion Catheters

                                  Exp. 5 years

<TABLE>
<CAPTION>

    Model #        Diameter (F)   Usable Length (Cm)   Infusion Length (Cm)  Max. Guidewire (In.)
===================================================================================================
<S>                <C>            <C>                  <C>                   <C>
    201-5020           2.9                40                 Endhole                 .018
    201-5021           2.9                100                Endhold                 .018
    201-5022           2.9                150                Endhole                 .018
</TABLE>

<PAGE>   47

                           Sidehole Infusion Catheters

      Current Exp. 18 months (36 month expiration pending, September 1998)

                     Mewi-5(TM) Sidehole Infusion Catheters
<TABLE>
<CAPTION>

    Model #        Diameter (F)   Usable Length (Cm)   Infusion Length (Cm)  Max. Guidewire (In.)
===================================================================================================
<S>                <C>            <C>                  <C>                   <C>
    201-0150            5                 40                    5                    .035
    201-0151            5                 40                    10                   .035
    201-0152            5                 40                    15                   .035
    201-0153            5                 65                    5                    .035
    201-0154            5                 65                    10                   .035
    201-0155            5                 65                    15                   .035
    201-0156            5                 100                   5                    .035
    201-0157            5                 100                   10                   .035
    201-0158            5                 100                   15                   .035
    201-0160            5                 40                    5                    .038
    201-0161            5                 40                    10                   .038
    201-0162            5                 40                    15                   .038
    201-0163            5                 65                    5                    .038
    201-0164            5                 65                    10                   .038
    201-0165            5                 65                    15                   .038
    201-0166            5                 100                   5                    .038
    201-0167            5                 100                   10                   .038
    201-0168            5                 100                   15                   .038
</TABLE>

<PAGE>   48

                            Mechanical Thrombolysis

                          Cragg Thrombolytic Brush(TM)

                                 Exp. 18 months
<TABLE>
<CAPTION>

                     Catheter
    Model #        Diameter (F)   Usable Length (Cm)   Infusion Length (Cm)   Brush Diameter (mm)
===================================================================================================
<S>                <C>            <C>                  <C>                    <C>
    202-0101            6                 65                 Endhole                   6
</TABLE>

Contents:
A System contains one Brush Catheter and one Brush Motor Drive Unit

                        Castaneda Over-The-Wire Brush(TM)

                                 Exp. 18 months
<TABLE>
<CAPTION>

                     Catheter
    Model #        Diameter (F)   Usable Length (Cm)   Infusion Length (Cm)   Brush Diameter (mm)
===================================================================================================
<S>                <C>            <C>                  <C>                    <C>
    202-0107            6                 65            Endhole & Sidehole             6
</TABLE>

Max Guidewire: .035
Contents:
A System contains one Brush Catheter and one Brush Motor Drive Unit

<PAGE>   49

                                   Accessories

                               Introducer Sheaths

                                  Exp. 5 years

<TABLE>
<CAPTION>

            Model #                         Size (F)                  Sheath Length (Cm)
===============================================================================================
<S>       <C>                               <C>                       <C>
          203-6001-P10                          6                             5.5
          203-6002-P10                          5                             40
</TABLE>

Contents Per Pack (all models)
1-Hemostasis value with hi-flow sideport and removable 3-way stopcock
1-radiopaque sheath
1-vessel dilator

                           Pulse-Spray Accessory Pack

                                    Exp. 2001

Model #
================================================================================
203-9000-P5                                      Contents Per Pack (all models):
                                                 1-dual check valve
                                                 1-1cc luer lock syringe
                                                 1-20cc luer lock syringe

<PAGE>   50

                                 Infusion Wires

                                 Exp. 18 months

                        ProStream Sidehole Infusion Wires

<TABLE>
<CAPTION>

    Model #       Diameter (In.)   Usable Length (Cm)  Infusion Length (Cm)  Max. Guidewire (In.)
===================================================================================================
<S>               <C>              <C>                 <C>                   <C>
    201-0410           .035               145                   3                     N/A
    201-0411           .035               145                   6                     N/A
    201-0412           .035               145                   9                     N/A
    201-0413           .035               145                   12                    N/A
    201-0414           .035               175                   3                     N/A
    201-0415           .035               175                   6                     N/A
    201-0416           .035               175                   9                     N/A
    201-0417           .035               175                   12                    N/A
    201-0610           .035               145                Endhole                  N/A
    201-0611           .038               145                Endhole                  N/A
</TABLE>

<PAGE>   51

                                    AGREEMENT
                                 by and between
                            Micro Therapeutics, Inc.
                                       and
                               Abbott Laboratories

                                  Exhibit 2.2.2

                        Pre-approved Product Price Range

In conformity with Sections 2.2.2 and 3.9 of the Agreement, MTI shall have the
right to present contracts to Customers that provide the customer with up to a
[*] percent ([*]%) deduction off of the published list price for each Product
under this Agreement. MTI shall not have the right to deviate from this price
range without prior written approval from Abbott. Abbott shall have the sole
right to amend this Product price range at any time during the Agreement, and
shall provide MTI with written notice when doing so.

*       CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.

<PAGE>   52

                                    AGREEMENT
                                 by and between
                            Micro Therapeutics, Inc.
                                       and
                               Abbott Laboratories

                                   Exhibit 4.5
                   Post-Marketing Clinical Development Program

This exhibit will be mutually agreed to by the parties to the Agreement no later
than September 30, 2000.

<PAGE>   53

                                    AGREEMENT
                                 by and between
                            Micro Therapeutics, Inc.
                                       and
                               Abbott Laboratories

                                  Exhibit 12.5
                         Alternative Dispute Resolution

                      ADR (ALTERNATIVE DISPUTE RESOLUTION)

The parties recognize that a bona fide dispute as to certain matters may arise
from time to time during the term of this Agreement which relates to either
party's rights and/or obligations. To have such a dispute resolved by this
Alternative Dispute Resolution ("ADR") provision, a party first must send
written notice of the dispute to the other party for attempted resolution by
good faith negotiations between their respective presidents (or their
equivalents) of the affected subsidiaries, divisions, or business units within
twenty-eight (28) days after such notice is received (all references to "days"
in this ADR provision are to calendar days).

If the matter has not been resolved within twenty-eight (28) days of the notice
of dispute, or if the parties fail to meet within such twenty-eight (28) days,
either party may initiate an ADR proceeding as provided herein. The parties
shall have the right to be represented by counsel in such a proceeding.

1.      To begin an ADR proceeding, a party shall provide written notice to the
        other party of the issues to be resolved by ADR. Within fourteen (14)
        days after its receipt of such notice, the other party may, by written
        notice to the party initiating the ADR, add additional issues to be
        resolved within the same ADR.

2.      Within twenty-one (21) days following receipt of the original ADR
        notice, the parties shall select a mutually acceptable neutral to
        preside in the resolution of any disputes in this ADR proceeding. If the
        parties are unable to agree on a mutually acceptable neutral within such
        period, either party may request the President of the CPR Institute for
        Dispute Resolution ("CPR"), 366 Madison Avenue, 14th Floor, New York,
        New York 10017, to select a neutral pursuant to the following
        procedures:

                             (a) The CPR shall submit to the parties a list of
                      not less than five (5) candidates within fourteen (14)
                      days after receipt of the request, along with a Curriculum
                      Vitae for each candidate. No candidate shall be an
                      employee, director, or shareholder of either party or any
                      of their subsidiaries or affiliates.

<PAGE>   54

                                (b) Such list shall include a statement of
                        disclosure by each candidate of any circumstances likely
                        to affect his or her impartiality.

                                (c) Each party shall number the candidates in
                        order of preference (with the number one (1) signifying
                        the greatest preference) and shall deliver the list to
                        the CPR within seven (7) days following receipt of the
                        list of candidates. If a party believes a conflict of
                        interest exists regarding any of the candidates, that
                        party shall provide a written explanation of the
                        conflict to the CPR along with its list showing its
                        order of preference for the candidates. Any party
                        failing to return a list of preferences on time shall be
                        deemed to have no order of preference.

                                (d) If the parties collectively have identified
                        fewer than three (3) candidates deemed to have
                        conflicts, the CPR immediately shall designate as the
                        neutral the candidate for whom the parties collectively
                        have indicated the greatest preference. If a tie should
                        result between two candidates, the CPR may designate
                        either candidate. If the parties collectively have
                        identified three (3) or more candidates deemed to have
                        conflicts, the CPR shall review the explanations
                        regarding conflicts and, in its sole discretion, may
                        either (i) immediately designate as the neutral the
                        candidate for whom the parties collectively have
                        indicated the greatest preference, or (ii) issue a new
                        list of not less than five (5) candidates, in which case
                        the procedures set forth in subparagraphs 2(a) - 2(d)
                        shall be repeated.

3.      No earlier than twenty-eight (28) days or later than fifty-six (56) days
        after selection, the neutral shall hold a hearing to resolve each of the
        issues identified by the parties. The ADR proceeding shall take place at
        a location in the State of California agreed upon by the parties. If the
        parties cannot agree, the neutral shall designate a location in the
        State of California other than the principal place of business of either
        party or any of their subsidiaries or affiliates.

4.      At least seven (7) days prior to the hearing, each party shall submit
        the following to the other party and the neutral:

                                (a) a copy of all exhibits on which such party
                        intends to rely in any oral or written presentation to
                        the neutral;

                                (b) a list of any witnesses such party intends
                        to call at the hearing, and a short summary of the
                        anticipated testimony of each witness;

                                (c) a proposed ruling on each issue to be
                        resolved, together with a request for a specific damage
                        award or other remedy for each issue. The proposed
                        rulings and remedies shall not contain any recitation of
                        the facts or any legal arguments and shall not exceed
                        one (1) page per issue.

                                (d) a brief in support of such party's proposed
                        rulings and remedies, provided that the brief shall not
                        exceed twenty (20) pages. This page limitation shall
                        apply regardless of the number of issues raised in the
                        ADR proceeding.

<PAGE>   55

        Except as expressly set forth in subparagraphs 4(a) - 4(d), no discovery
        shall be required or permitted by any means, including depositions,
        interrogatories, requests for admissions, or production of documents.

5.      The hearing shall be conducted on two (2) consecutive days and shall be
        governed by the following rules:

                             (a) Each party shall be entitled to five (5) hours
                      of hearing time to present its case. The neutral shall
                      determine whether each party has had the five (5) hours to
                      which it is entitled.

                             (b) Each party shall be entitled, but not required,
                      to make an opening statement, to present regular and
                      rebuttal testimony, documents or other evidence, to
                      cross-examine witnesses, and to make a closing argument.
                      Cross-examination of witnesses shall occur immediately
                      after their direct testimony, and cross-examination time
                      shall be charged against the party conducting the
                      cross-examination.

                             (c) The party initiating the ADR shall begin the
                      hearing and, if it chooses to make an opening statement,
                      shall address not only issues it raised but also any
                      issues raised by the responding party. The responding
                      party, if it chooses to make an opening statement, also
                      shall address all issues raised in the ADR. Thereafter,
                      the presentation of regular and rebuttal testimony and
                      documents, other evidence, and closing arguments shall
                      proceed in the same sequence.

                             (d) Except when testifying, witnesses shall be
                      excluded from the hearing until closing arguments.

                             (e) Settlement negotiations, including any
                      statements made therein, shall not be admissible under any
                      circumstances. Affidavits prepared for purposes of the ADR
                      hearing also shall not be admissible. As to all other
                      matters, the neutral shall have sole discretion regarding
                      the admissibility of any evidence.

6.      Within seven (7) days following completion of the hearing, each party
        may submit to the other party and the neutral a post-hearing brief in
        support of its proposed rulings and remedies, provided that such brief
        shall not contain or discuss any new evidence and shall not exceed ten
        (10) pages. This page limitation shall apply regardless of the number of
        issues raised in the ADR proceeding.

7.      The neutral shall rule on each disputed issue within fourteen (14) days
        following completion of the hearing. Such ruling shall adopt in its
        entirety the proposed ruling and remedy of one of the parties on each
        disputed issue but may adopt one party's proposed rulings and remedies
        on some issues and the other party's proposed rulings and remedies on
        other issues. The neutral shall not issue any written opinion or
        otherwise explain the basis of the ruling.

<PAGE>   56

8.      The neutral shall be paid a reasonable fee plus expenses. These fees and
        expenses, along with the reasonable legal fees and expenses of the
        prevailing party (including all expert witness fees and expenses), the
        fees and expenses of a court reporter, and any expenses for a hearing
        room, shall be paid as follows:

                             (a) If the neutral rules in favor of one party on
                      all disputed issues in the ADR, the losing party shall pay
                      100% of such fees and expenses.

                             (b) If the neutral rules in favor of one party on
                      some issues and the other party on other issues, the
                      neutral shall issue with the rulings a written
                      determination as to how such fees and expenses shall be
                      allocated between the parties. The neutral shall allocate
                      fees and expenses in a way that bears a reasonable
                      relationship to the outcome of the ADR, with the party
                      prevailing on more issues, or on issues of greater value
                      or gravity, recovering a relatively larger share of its
                      legal fees and expenses.

9.      The rulings of the neutral and the allocation of fees and expenses shall
        be binding, non-reviewable, and non-appealable, and may be entered as a
        final judgment in any court having jurisdiction.

10.     Except as provided in paragraph 9 or as required by law, the existence
        of the dispute, any settlement negotiations, the ADR hearing, any
        submissions (including exhibits, testimony, proposed rulings, and
        briefs), and the rulings shall be deemed Confidential Information. The
        neutral shall have the authority to impose sanctions for unauthorized
        disclosure of Confidential Information.<PAGE>   1

                                                                    EXHIBIT 10.1

                                     [LOGO]

                  AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

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

1.      BASIC PROVISIONS ("BASIC PROVISIONS").

        1.1     PARTIES: This Lease ("LEASE"), dated for reference purposes
only, May 16, 2000, is made by and between Goss-Jewett Company of Northern
California ("LESSOR") and Pain Therapeutics, Inc., a California Corporation
("LESSEE"), (collectively the "PARTIES," or individually a "PARTY").

        1.2     PREMISES: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
known as 416 Browning Way, South San Francisco, located in the County of San
Mateo, State of California, and generally described as (describe briefly the
nature of the property and, if applicable, the "PROJECT", if the property is
located within a Project) a freestanding +/- 10,000 square foot concrete tilt-up
building and surrounding parking areas. ("PREMISES"). (See also Paragraph 2)

        1.3     TERM: 10 years and 0 months ("ORIGINAL TERM")
commencing October 1, 2000 ("COMMENCEMENT DATE") and ending September 30, 2010
("EXPIRATION DATE"). (See also Paragraph 3)

        1.4     EARLY POSSESSION: June 1, 2000 ("EARLY POSSESSION DATE"). (See
also Paragraphs 3.2 and 3.3)

        1.5     BASE RENT: $12,500.00 per month ("BASE RENT"), payable on the
1st day of each month commencing October 1, 2000. (See also Paragraph 4)

[X] If this box is checked, there are provisions in this Lease for the Base Rent
    to be adjusted. (See also Paragraph 51)

        1.6     BASE RENT PAID UPON EXECUTION: $12,500.00 as Base Rent for the
period October 1, 2000 thru October 31, 2000.

        1.7     SECURITY DEPOSIT: $75,000.00 ("SECURITY DEPOSIT"). (See also
Paragraph 5)

        1.8     AGREED USE: General Office (See also Paragraph 6)

        1.9     INSURING PARTY: Lessee is the "INSURING PARTY" unless otherwise
stated herein. (See also Paragraph 8)

        1.11    GUARANTOR. The obligations of the Lessee under this Lease are to
be guaranteed by _______________________________________________________________
_________________________________________ ("GUARANTOR"). (See also Paragraph 37)

        1.12    ADDENDA AND EXHIBITS. Attached hereto is an Addendum or Addenda
consisting of Paragraphs ______ through ______ and Exhibits ____________________
_________________________________, all of which constitute a part of this Lease.

2.      PREMISES.

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

        2.2     CONDITION. Lessor shall deliver the Premises to Lessee broom
clean and free of debris on the Commencement Date or the Early Possession Date,
whichever first occurs ("START DATE").

        2.3     COMPLIANCE. Lessor warrants that to the best of Lessor's
knowledge the improvements on the Premises comply with all applicable laws,
covenants or restrictions of record, building codes, regulations and ordinances
("APPLICABLE REQUIREMENTS") in effect on the Start Date. Said warranty does not
apply to the use to which Lessee will put the Premises or to any Alterations or
Utility Installations (as defined in Paragraph 7.3(a)) made or to be made by
Lessee. NOTE: Lessee is responsible for determining whether or not the zoning is
appropriate for Lessee's intended use, and acknowledges that past uses of the
Premises may no longer be allowed. If the Premises do not comply with said
warranty. If Lessee does not give Lessor written notice of a non-compliance with
this warranty within six (6) months following the Start Date, correction of that
non-compliance shall be the obligation of Lessee at Lessee's sole cost and
expense. If the Applicable Requirements are hereafter changed (as opposed to
being in existence at the Start Date, which is addressed in Paragraph 6.2(e)
below) so as to require during the term of this Lease the construction of an
addition to or an alteration of the Building, the remediation of any Hazardous
Substance, or the reinforcement or other physical modification of the Building
("CAPITAL EXPENDITURE"), Lessor and Lessee shall allocate the cost of such work
as follows:

               (a) Subject to Paragraph 2.3(c) below, if such Capital
Expenditures are required as a result of the specific and unique use of the
Premises by Lessee as compared with uses by tenants in general, Lessee shall be
fully responsible for the cost thereof, provided, however that if such Capital

                                  Page 1 of 11
<PAGE>   2

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

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

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

        2.4     ACKNOWLEDGEMENTS. Lessee acknowledges that: (a) it has been
advised by Lessor and/or Brokers to satisfy itself with respect to the condition
of the Premises (including but not limited to the electrical, HVAC and fire
sprinkler systems, security, environmental aspects, and compliance with
Applicable Requirements), and their suitability for Lessee's intended use; (b)
Lessee has made such investigation as it deems necessary with reference to such
matters and assumes all responsibility therefor as the same relate to its
occupancy of the Premises; and (c) neither Lessor, Lessor's agents, nor any
Broker has made any oral or written representations or warranties with respect
to said matters other than as set forth in this Lease. In addition, Lessor
acknowledges that: (a) Broker has made no representations, promises or
warranties concerning Lessee's ability to honor the Lease or suitability to
occupy the Premises; and (b) it is Lessor's sole responsibility to investigate
the financial capability and/or suitability of all proposed tenants.

        2.5     LESSEE AS PRIOR OWNER/OCCUPANT.

3.      TERM.

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

        3.2     EARLY POSSESSION. If Lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to pay Base Rent shall
be abated for the period of such early possession. All other terms of this Lease
(including, but not limited to, the obligations to pay Real Property Taxes and
insurance premiums and to maintain the Premises) shall, however, be in effect
during such period. Any such early possession shall not affect the Expiration
Date.

        3.3     DELAY IN POSSESSION. Lessor agrees to use its best commercially
reasonable efforts to deliver possession of the Premises to Lessee by the
Commencement Date. If, despite said efforts, Lessor is unable to deliver
possession as agreed, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease. Lessee shall not, however,
be obligated to pay Rent or perform its other obligations until it receives
possession of the Premises. If possession is not delivered within sixty (60)
days after the Commencement Date, Lessee may, at its option, by notice in
writing within ten (10) days after the end of such sixty (60) day period, cancel
this Lease, in which event the Parties shall be discharged from all obligations
hereunder. If such written notice is not received by Lessor within said ten (10)
day period, Lessee's right to cancel shall terminate.

        3.4     LESSEE COMPLIANCE. Lessor shall not be required to tender
possession of the Premises to Lessee until Lessee complies with its obligation
to provide evidence of insurance (Paragraph 8.5). Pending delivery of such
evidence, Lessee shall be required to perform all of its obligations under this
Lease from and after the Start Date, including the payment of Rent,
notwithstanding Lessor's election to withhold possession pending receipt of such
evidence of insurance. Further, if Lessee is required to perform any other
conditions prior to or concurrent with the Start Date, the Start Date shall
occur but Lessor may elect to withhold possession until such conditions are
satisfied.

4.      RENT.

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

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

5.      SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof
the Security Deposit as security for Lessee's faithful performance of its
obligations under this Lease. If Lessee is in breach under this Lease, Lessor
may use, apply or retain all or any portion of said Security Deposit for the
payment of any amount due Lessor or to reimburse or compensate Lessor for any
liability, expense, loss or damage which Lessor may suffer or incur by reason
thereof. If Lessor uses or applies all or any portion of said Security Deposit,
Lessee shall within ten (10) days after written request therefor deposit monies
with Lessor sufficient to restore said Security Deposit to the full amount
required by this Lease.

6.      USE.

        6.1     USE. Lessee shall use and occupy the Premises only for the
Agreed Use, or any other legal use which is reasonably comparable thereto, and
for no other purpose. Lessee shall not use or permit the use of the Premises in
a manner that is unlawful, creates damage, waste or a nuisance, or that disturbs
owners and/or occupants of, or causes damage to neighboring properties. Lessor
shall not unreasonably withhold or delay its consent to any written request for
a modification of the Agreed Use, so long as the same will not impair the
structural integrity of the improvements on the Premises or the mechanical or
electrical systems therein, is not significantly more burdensome to the
Premises. If Lessor elects to withhold consent, Lessor shall within five (5)
business days after such request give written notification of same, which notice
shall include an explanation of Lessor's objections to the change in use.

        6.2     HAZARDOUS SUBSTANCES.

                (a) REPORTABLE USES REQUIRE CONSENT. The term "HAZARDOUS
SUBSTANCE" as used in this Lease shall mean any product, substance, or waste
whose presence, use, manufacture, disposal, transportation, or release, either
by itself or in combination with other materials expected to be on the Premises,
is either: (i) potentially injurious to the public health, safety or welfare,
the environment or the Premises, (ii) regulated or monitored by any

                                  Page 2 of 11
<PAGE>   3
governmental authority, or (iii) a basis for potential liability of Lessor to
any governmental agency or third party under any applicable statute or common
law theory. Hazardous Substances shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products
or fractions thereof. Lessee shall not engage in any activity in or on the
Premises which constitutes a Reportable Use of Hazardous Substances without the
express prior written consent of Lessor and timely compliance (at Lessee's
expense) with all Applicable Requirements. "REPORTABLE USE" shall mean (i) the
installation or use of any above or below ground storage tank, (ii) the
generation, possession, storage, use, transportation, or disposal of a Hazardous
Substance that requires a permit from, or with respect to which a report,
notice, registration or business plan is required to be filed with, any
governmental authority, and/or (iii) the presence at the Premises of a Hazardous
Substance with respect to which any Applicable Requirements requires that a
notice be given to persons entering or occupying the Premises or neighboring
properties. Notwithstanding the foregoing, Lessee may use any ordinary and
customary materials reasonably required to be used in the normal course of the
Agreed Use, so long as such use is in compliance with all Applicable
Requirements, is not a Reportable Use, and does not expose the Premises or
neighboring property to any meaningful risk of contamination or damage or expose
Lessor to any liability therefor. In addition, Lessor may condition its consent
to any Reportable Use upon receiving such additional assurances as Lessor
reasonably deems necessary to protect itself, the public, the Premises and/or
the environment against damage, contamination, injury and/or liability,
including, but not limited to, the installation (and removal on or before Lease
expiration or termination) of protective modifications (such as concrete
encasements) and/or increasing the Security Deposit.

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

               (c) LESSEE REMEDIATION. Lessee shall not cause or permit any
Hazardous Substance to be spilled or released in, on, under, or about the
Premises (including through the plumbing or sanitary sewer system) and shall
promptly, at Lessee's expense, take all investigatory and/or remedial action
reasonably recommended, whether or not formally ordered or required, for the
cleanup of any contamination of, and for the maintenance, security and/or
monitoring of the Premises or neighboring properties, that was caused or
materially contributed to by Lessee, or pertaining to or involving any Hazardous
Substance brought onto the Premises during the term of this Lease, by or for
Lessee, or any third party.

               (d) LESSEE INDEMNIFICATION. Lessee shall indemnify, defend and
hold Lessor, its agents, employees, lenders and ground lessor, if any, harmless
from and against any and all loss of rents and/or damages, liabilities,
judgments, claims, expenses, penalties, and attorneys' and consultants' fees
arising out of or involving any Hazardous Substance brought onto the Premises by
or for Lessee, or any third party (provided, however, that Lessee shall have no
liability under this Lease with respect to underground migration of any
Hazardous Substance under the Premises from adjacent properties). Lessee's
obligations shall include, but not be limited to, the effects of any
contamination or injury to person, property or the environment created or
suffered by Lessee, and the cost of investigation, removal, remediation,
restoration and/or abatement, and shall survive the expiration or termination of
this Lease. NO TERMINATION, CANCELLATION OR RELEASE AGREEMENT ENTERED INTO BY
LESSOR AND LESSEE SHALL RELEASE EITHER PARTY FROM ITS OBLIGATIONS UNDER THIS
LEASE WITH RESPECT TO HAZARDOUS SUBSTANCES, UNLESS SPECIFICALLY SO AGREED BY
LESSOR IN WRITING AT THE TIME OF SUCH AGREEMENT.

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

               (f) INVESTIGATIONS AND REMEDIATIONS. Lessor shall retain the
responsibility and pay for any investigations or remediation measures required
by governmental entities having jurisdiction with respect to the existence of
Hazardous Substances on the Premises prior to the Start Date, unless such
remediation measure is required as a result of Lessee's use (including
"Alterations", as defined in Paragraph 7.3(a) below) of the Premises, in which
event Lessee shall be responsible for such payment. Lessee shall cooperate fully
in any such activities at the request of Lessor, including allowing Lessor and
Lessor's agents to have reasonable access to the Premises at reasonable times in
order to carry out Lessor's investigative and remedial responsibilities.

               (g) LESSOR TERMINATION OPTION. If a Hazardous Substance Condition
occurs during the term of this Lease, unless Lessee is legally responsible
therefor (in which case Lessee shall make the investigation and remediation
thereof required by the Applicable Requirements and this Lease shall continue in
full force and effect, but subject to Lessor's rights under Paragraph 6.2(d) and
Paragraph 13), Lessor may, at Lessor's option, either (i) investigate and
remediate such Hazardous Substance Condition, if required, as soon as reasonably
possible at Lessor's expense, in which event this Lease shall continue in full
force and effect, or (ii) if the estimated cost to remediate such condition
exceeds twelve (12) times the then monthly Base Rent or $100,000, whichever is
greater, give written notice to Lessee, within thirty (30) days after receipt by
Lessor of knowledge of the occurrence of such Hazardous Substance Condition, of
Lessor's desire to terminate this Lease as of the date sixty (60) days following
the date of such notice. In the event Lessor elects to give a termination
notice, Lessee may, within ten (10) days thereafter, give written notice to
Lessor of Lessee's commitment to pay the amount by which the cost of the
remediation of such Hazardous Substance Condition exceeds an amount equal to
twelve (12) times the then monthly Base Rent or $100,000, whichever is greater.
Lessee shall provide Lessor with said funds or satisfactory assurance thereof
within thirty (30) days following such commitment. In such event, this Lease
shall continue in full force and effect, and Lessor shall proceed to make such
remediation as soon as reasonably possible after the required funds are
available. If Lessee does not give such notice and provide the required funds or
assurance thereof within the time provided, this Lease shall terminate as of the
date specified in Lessor's notice of termination.

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

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

7.      MAINTENANCE; REPAIRS, UTILITY INSTALLATIONS; TRADE FIXTURES AND
        ALTERATIONS.

        7.1     LESSEE'S OBLIGATIONS.

                (a) IN GENERAL. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance), 6.3 (Lessee's Compliance with Applicable
Requirements), 7.2 (Lessor's Obligations), 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee's sole expense, keep the Premises,
Utility Installations, and Alterations in good order, condition and repair
(whether or not the portion of the Premises requiring repairs, or the means of
repairing the same, are reasonably or readily accessible to Lessee, and whether
or not the need for such repairs occurs as a result of Lessee's use, any prior
use, the elements or the age of such portion of the Premises), including, but
not limited to, all equipment or facilities, such as plumbing, heating,
ventilating, air-conditioning, electrical, lighting facilities, boilers,
pressure vessels, fire protection system, fixtures, walls (interior and
exterior), foundations, ceilings, roofs, floors, windows, doors, plate glass,
skylights, landscaping, driveways, parking lots, fences, retaining walls, signs,
sidewalks and parkways located in, on, or adjacent to the Premises. Lessee, in
keeping the Premises in good order, condition and repair, shall exercise and
perform good maintenance practices, specifically including the procurement and
maintenance of the service contracts required by Paragraph 7.1(b) below.
Lessee's obligations shall include restorations, replacements or renewals when
necessary to keep the Premises and all improvements thereon or a part thereof in
good order, condition and state of repair. Lessee shall, during the term of this
Lease, keep the exterior appearance of the Building in a first-class condition
consistent with the exterior appearance of other similar facilities of
comparable age and size in the vicinity, including, when necessary, the exterior
repainting of the Building.

               (b) SERVICE CONTRACTS. Lessee shall, at Lessee's sole expense,
procure and maintain contracts, with copies to Lessor, in customary form and
substance for, and with contractors specializing and experienced in the
maintenance of the following equipment and improvements, if any, if and when
installed on the Premises: (i) HVAC equipment, (ii) boiler, and pressure
vessels, (iii) fire extinguishing systems, including fire alarm and/or smoke
detection, (iv) landscaping and irrigation systems, (v) roof covering and
drains, (vi) driveways and parking lots, (vii) clarifiers (viii) basic utility
feed to the perimeter of the Building, and (ix) any other equipment, if
reasonably required by Lessor.

                                  Page 3 of 11
<PAGE>   4

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

        7.2     LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs
2.2 (Condition), 2.3 (Compliance), 9 (Damage or Destruction) and 14
(Condemnation), it is intended by the Parties hereto that Lessor have no
obligation, in any manner whatsoever, to repair and maintain the Premises, or
the equipment therein, all of which obligations are intended to be that of the
Lessee. It is the intention of the Parties that the terms of this Lease govern
the respective obligations of the Parties as to maintenance and repair of the
Premises, and they expressly waive the benefit of any statute now or hereafter
in effect to the extent it is inconsistent with the terms of this Lease.

        7.3     UTILITY INSTALLATIONS; TRADE FIXTURES; ALTERATIONS.

               (a) DEFINITIONS; CONSENT REQUIRED. The term "UTILITY
INSTALLATIONS" refers to all floor and window coverings, air lines, power
panels, electrical distribution, security and fire protection systems,
communication systems, lighting fixtures, HVAC equipment, plumbing, and fencing
in or on the Premises. The term "TRADE FIXTURES" shall mean Lessee's machinery
and equipment that can be removed without doing material damage to the Premises.
The term "ALTERATIONS" shall mean any modification of the improvements, other
than Utility Installations or Trade Fixtures, whether by addition or deletion.
"LESSEE OWNED ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make any Alterations or
Utility Installations to the Premises without Lessor's prior written consent.
Lessee may, however, make non-structural Utility Installations to the interior
of the Premises (excluding the roof) without such consent but upon notice to
Lessor, as long as they are not visible from the outside, do not involve
puncturing, relocating or removing the roof or any existing walls, and the
cumulative cost thereof during this Lease as extended does not exceed $50,000 in
the aggregate or $10,000 in any one year.

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

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

        7.4     OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION.

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

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

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

8.      INSURANCE; INDEMNITY.

        8.1     PAYMENT FOR INSURANCE. Lessee shall pay for all insurance
required under Paragraph 8 except to the extent of the cost attributable to
liability insurance carried by Lessor under Paragraph 8.2(b) in excess of
$2,000,000 per occurrence. Premiums for policy periods commencing prior to or
extending beyond the Lease term shall be prorated to correspond to the Lease
term. Payment shall be made by Lessee to Lessor within ten (10) days following
receipt of an invoice.

        8.2     LIABILITY INSURANCE.

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

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

        8.3     PROPERTY INSURANCE -- BUILDING, IMPROVEMENTS AND RENTAL VALUE.

                (a) BUILDING AND IMPROVEMENTS. The Insuring Party shall obtain
and keep in force a policy or policies in the name of Lessor, with loss payable
to Lessor, any groundlessor, and to any Lender(s) insuring loss or damage to
the Premises. The amount of such insurance shall be equal to the full
replacement cost of the Premises, as the same shall exist from time to time, or
the amount required by any Lenders, but in no event more than the commercially
reasonable and available insurable value thereof. If Lessor is the Insuring
Party, however, Lessee Owned Alterations and Utility Installations, Trade
Fixtures, and Lessee's personal property shall be insured by Lessee under
Paragraph 8.4 rather than by Lessor. If the coverage is available and
commercially appropriate, such policy or policies shall insure against all risks
of direct physical loss or damage (except the perils of flood and/or earthquake
unless required by a Lender), including coverage for debris removal and the
enforcement of any Applicable Requirements requiring the upgrading, demolition,
reconstruction or replacement of any portion of the Premises as the result of a
covered loss. Said policy or policies shall also contain an agreed valuation
provision in lieu of any coinsurance clause, waiver of subrogation, and
inflation guard protection causing an increase in the annual property insurance
coverage amount by a factor of not less than the adjusted U.S. Department of
Labor Consumer Price Index for All Urban Consumers for the city nearest to

                                  Page 4 of 11
<PAGE>   5

where the Premises are located. If such insurance coverage has a deductible
clause, the deductible amount shall not exceed $1,000 per occurrence, and Lessee
shall be liable for such deductible amount in the event of an Insured Loss.

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

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

        8.4     LESSEE'S PROPERTY/BUSINESS INTERRUPTION INSURANCE.

                (a) PROPERTY DAMAGE. Lessee shall obtain and maintain insurance
coverage on all of Lessee's personal property, Trade Fixtures, and Lessee Owned
Alterations and Utility Installations. Such insurance shall be full replacement
cost coverage with a deductible of not to exceed $1,000 per occurrence. The
proceeds from any such insurance shall be used by Lessee for the replacement of
personal property, Trade Fixtures and Lessee Owned Alterations and Utility
Installations. Lessee shall provide Lessor with written evidence that such
insurance is in force.

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

                (c) NO REPRESENTATION OF ADEQUATE COVERAGE. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business operations or
obligations under this Lease.

        8.5     INSURANCE POLICIES. Insurance required herein shall be by
companies duly licensed or admitted to transact business in the state where the
Premises are located, and maintaining during the policy term a "General
Policyholders Rating" of at least B+, V, as set forth in the most current issue
of "Best's Insurance Guide". Lessee shall not do or permit to be done anything
which invalidates the required insurance policies. Lessee shall, prior to the
Start Date, deliver to Lessor certified copies of policies of such insurance or
certificates evidencing the existence and amounts of the required insurance. No
such policy shall be cancelable or subject to modification except after thirty
(30) days prior written notice to Lessor. Lessee shall, at least thirty (30)
days prior to the expiration of such policies, furnish Lessor with evidence of
renewals or "insurance binders" evidencing renewal thereof, or Lessor may order
such insurance and charge the cost thereof to Lessee, which amount shall be
payable by Lessee to Lessor upon demand. Such policies shall be for a term of at
least one year, or the length of the remaining term of this Lease, whichever is
less. If either Party shall fail to procure and maintain the insurance required
to be carried by it, the other Party may, but shall not be required to, procure
and maintain the same.

        8.6     WAIVER OF SUBROGATION. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and waive
their entire right to recover damages against the other, for loss of or damage
to its property arising out of or incident to the perils required to be insured
against herein. The effect of such releases and waivers is not limited by the
amount of insurance carried or required, or by any deductibles applicable
hereto. The Parties agree to have their respective property damage insurance
carriers waive any right to subrogation that such companies may have against
Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.

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

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

9.      DAMAGE OR DESTRUCTION.

        9.1     DEFINITIONS.

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

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

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

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

                (e) "HAZARDOUS SUBSTANCE CONDITION" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.

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

        9.3     PARTIAL DAMAGE -- UNINSURED LOSS. If a Premises Partial Damage
that is not an Insured Loss occurs, unless caused by a negligent or willful act
of Lessee (in which event Lessee shall make the repairs at Lessee's expense),
Lessor may either: (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) terminate this Lease by giving written notice to Lessee within
thirty (30) days after receipt by Lessor of knowledge of the occurrence of such
damage. Such termination shall be effective sixty (60) days following the date
of such notice. In the event Lessor elects to terminate this Lease, Lessee shall
have the right within ten (10) days after receipt of the termination

                                  Page 5 of 11
<PAGE>   6

notice to give written notice to Lessor of Lessee's commitment to pay for the
repair of such damage without reimbursement from Lessor. Lessee shall provide
Lessor with said funds or satisfactory assurance thereof within thirty (30) days
after making such commitment. In such event this Lease shall continue in full
force and effect, and Lessor shall proceed to make such repairs as soon as
reasonably possible after the required funds are available. If Lessee does not
make the required commitment, this Lease shall terminate as of the date
specified in the termination notice.

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

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

        9.6     ABATEMENT OF RENT; LESSEE'S REMEDIES.

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

                (b) REMEDIES. If Lessor shall be obligated to repair or restore
the Premises and does not commence, in a substantial and meaningful way, such
repair or restoration within ninety (90) days after such obligation shall
accrue, Lessee may, at any time prior to the commencement of such repair or
restoration, give written notice to Lessor and to any Lenders of which Lessee
has actual notice, of Lessee's election to terminate this Lease on a date not
less than sixty (60) days following the giving of such notice. If Lessee gives
such notice and such repair or restoration is not commenced within thirty (30)
days thereafter, this Lease shall terminate as of the date specified in said
notice. If the repair or restoration is commenced within said thirty (30) days,
this Lease shall continue in full force and effect. "COMMENCE" shall mean either
the unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first occurs.

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

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

10.     REAL PROPERTY TAXES.

        10.1    DEFINITION OF "REAL PROPERTY TAXES." As used herein, the term
"REAL PROPERTY TAXES" shall include any form of assessment; real estate,
general, special, ordinary or extraordinary, or rental levy or tax (other than
inheritance, personal income or estate taxes); improvement bond; and/or license
fee imposed upon or levied against any legal or equitable interest of Lessor in
the Premises, Lessor's right to other income therefrom, and/or Lessor's business
of leasing, by any authority having the direct or indirect power to tax and
where the funds are generated with reference to the Building address and where
the proceeds so generated are to be applied by the city, county or other local
taxing authority of a jurisdiction within which the Premises are located. The
term "REAL PROPERTY TAXES" shall also include any tax, fee, levy, assessment or
charge, or any increase therein, imposed by reason of events occurring during
the term of this Lease, including but not limited to, a change in the ownership
of the Premises.

        10.2

                (a) PAYMENT OF TAXES. Lessee shall pay the Real Property Taxes
applicable to the Premises during the term of this Lease. Subject to Paragraph
10.2(b), all such payments shall be made at least ten (10) days prior to any
delinquency date. Lessee shall promptly furnish Lessor with satisfactory
evidence that such taxes have been paid. If any such taxes shall cover any
period of time prior to or after the expiration or termination of this Lease,
Lessee's share of such taxes shall be prorated to cover only that portion of the
tax bill applicable to the period that this Lease is in effect, and Lessor shall
reimburse Lessee for any overpayment. If Lessee shall fail to pay any required
Real Property Taxes, Lessor shall have the right to pay the same, and Lessee
shall reimburse Lessor therefor upon demand.

                (b) ADVANCE PAYMENT. In the event Lessee incurs a late charge on
any Rent payment, Lessor may, at Lessor's option, estimate the current Real
Property Taxes, and require that such taxes be paid in advance to Lessor by
Lessee, either: (i) in a lump sum amount equal to the installment due, at least
twenty (20) days prior to the applicable delinquency date, or (ii) monthly in
advance with the payment of the Base Rent. If Lessor elects to require payment
monthly in advance, the monthly payment shall be an amount equal to the amount
of the estimated installment of taxes divided by the number of months remaining
before the month in which said installment becomes delinquent. When the actual
amount of the applicable tax bill is known, the amount of such equal monthly
advance payments shall be adjusted as required to provide the funds needed to
pay the applicable taxes. If the amount collected by Lessor is insufficient to
pay such Real Property Taxes when due, Lessee shall pay Lessor, upon demand,
such additional sums as are necessary to pay such obligations. All monies paid
to Lessor under this Paragraph may be intermingled with other monies of Lessor
and shall not bear interest. In the event of a Breach by Lessee in the
performance of its obligations under this Lease, then any balance of funds paid
to Lessor under the provisions of this Paragraph may, at the option of Lessor,
be treated as an additional Security Deposit.

        10.3    JOINT ASSESSMENT.

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

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

12.     ASSIGNMENT AND SUBLETTING.

        12.1    LESSOR'S CONSENT REQUIRED.

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

                                  Page 6 of 11

<PAGE>   7

        12.2    TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.

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

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

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

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

                (e) Each request for consent to an assignment or subletting
shall be in writing, accompanied by information relevant to Lessor's
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not limited
to the intended use and/or required modification of the Premises, if any,
together with a fee of $1,000, as consideration for Lessor's considering and
processing said request. Lessee agrees to provide Lessor with such other or
additional information and/or documentation as may be reasonably requested.

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

        12.3    ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:

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

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

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

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

                (e) Lessor shall deliver a copy of any notice of Default or
Breach by Lessee to the sublessee, who shall have the right to cure the Default
of Lessee within the grace period, if any, specified in such notice. The
sublessee shall have a right of reimbursement and offset from and against Lessee
for any such Defaults cured by the sublessee.

13.     DEFAULT; BREACH; REMEDIES.

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

                (a) The abandonment of the Premises;

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

                (c) The failure by Lessee to provide (i) reasonable written
evidence of compliance with Applicable Requirements, (ii) the service contracts,
(iii) the rescission of an unauthorized assignment or subletting, (iv) a Tenancy
Statement, (v) a requested subordination, (vi) evidence concerning any guaranty
and/or Guarantor, (vii) any document requested under Paragraph 42 (easements),
or (viii) any other documentation or information which Lessor may reasonably
require of Lessee under the terms of this Lease, where any such failure
continues for a period of ten (10) days following written notice to Lessee.

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

                (e) The occurrence of any of the following events: (i) the
making of any general arrangement or assignment for the benefit of creditors;
(ii) becoming a "DEBTOR" as defined in 11 U.S.C. Section 101 or any successor
statute thereto (unless, in the case of a petition filed against Lessee, the
same is dismissed within sixty (60) days); (iii) the appointment of a trustee or
receiver to take possession of substantially all of Lessee's assets located at
the Premises or of Lessee's interest in this Lease, where possession is not
restored to Lessee within thirty (30) days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Lessee's assets located at the
Premises or of Lessee's interest in this Lease, where such seizure is not
discharged within thirty (30) days; provided, however, in the event that any
provision of this subparagraph 13.1 (e) is contrary to any applicable law, such
provision shall be of no force or effect, and not affect the validity of the
remaining provisions.

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

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

        13.2    REMEDIES. If Lessee fails to perform any of its affirmative
duties or obligations, within ten (10) days after written notice (or in case of
an emergency, without notice), Lessor may, at its option, perform such duty or
obligation on Lessee's behalf, including but not limited to the obtaining of
reasonably required bonds, insurance policies, or governmental licenses, permits
or approvals. The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee upon receipt of invoice therefor. If any check given
to Lessor by Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its option, may require all future payments to be made by Lessee to
be by cashier's check. In the event of a Breach, Lessor may, with or without
further notice or demand, and without limiting Lessor in the exercise of any
right or remedy which Lessor may have by reason of such Breach:

                (a) Terminate Lessee's right to possession of the Premises by
any lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession to Lessor. In such event Lessor shall be
entitled to recover from Lessee: (i) the unpaid Rent which had been earned at

                                  Page 7 of 11
<PAGE>   8

the time of termination; (ii) the worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that the Lessee proves
could have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of the District within which the Premises are located
at the time of award plus one percent (1%). Efforts by Lessor to mitigate
damages caused by Lessee's Breach of this Lease shall not waive Lessor's right
to recover damages under Paragraph 12. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the right
to recover in such proceeding any unpaid Rent and damages as are recoverable
therein, or Lessor may reserve the right to recover all or any part thereof in a
separate suit. If a notice and grace period required under Paragraph 13.1 was
not previously given, a notice to pay rent or quit, or to perform or quit given
to Lessee under the unlawful detainer statute shall also constitute the notice
required by Paragraph 13.1. In such case, the applicable grace period required
by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and
the failure of Lessee to cure the Default within the greater of the two such
grace periods shall constitute both an unlawful detainer and a Breach of this
Lease entitling Lessor to the remedies provided for in this Lease and/or by said
statute.

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

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

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

        13.4    LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease,
the exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within five (5) days after such amount shall be
due, then, without any requirement for notice to Lessee, Lessee shall pay to
Lessor a one-time late charge equal to five percent (5%) of each such overdue
amount. The Parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of such late
payment. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent the exercise of any of the other rights and remedies granted hereunder.
In the event that a late charge is payable hereunder, whether or not collected,
for three (3) consecutive installments of Base Rent, then notwithstanding any
provision of this Lease to the contrary, Base Rent shall, at Lessor's option,
become due and payable quarterly in advance.

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

        13.6    BREACH BY LESSOR.

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

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

14.     CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(collectively "CONDEMNATION"), this Lease shall terminate as to the part taken
as of the date the condemning authority takes title or possession, whichever
first occurs. If more than ten percent (10%) of any building portion of the
Premises, or more than twenty-five percent (25%) of the land area portion of the
Premises not occupied by any building, is taken by Condemnation, Lessee may, at
Lessee's option, to be exercised in writing within ten (10) days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice, within ten (10) days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in proportion
to the reduction in utility of the Premises caused by such Condemnation.
Condemnation awards and/or payments shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold, the value of the part taken, or for severance damages; provided,
however, that Lessee shall be entitled to any compensation for Lessee's
relocation expenses, loss of business goodwill and/or Trade Fixtures, without
regard to whether or not this Lease is terminated pursuant to the provisions of
this Paragraph. All Alterations and Utility Installations made to the Premises
by Lessee, for purposes of Condemnation only, shall be considered the property
of the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefor. In the event that this Lease is not terminated by reason of
the Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.

15.     BROKERS' FEE.

                                  Page 8 of 11
<PAGE>   9
16.     ESTOPPEL CERTIFICATES.

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

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

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

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

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

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

20.     LIMITATION ON LIABILITY. Subject to the provisions of Paragraph 17
above, the obligations of Lessor under this Lease shall not constitute personal
obligations of Lessor, the individual partners of Lessor or its or their
individual partners, directors, officers or shareholders, and Lessee shall look
to the Premises and the insurance required hereunder, and to no other assets of
Lessor, for the satisfaction of any liability of Lessor with respect to this
Lease, and shall not seek recourse against the individual partners of Lessor, or
its or their individual partners, directors, officers or shareholders, or any of
their personal assets for such satisfaction.

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

22.     NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and is relying solely upon, its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party. The liability (including court costs and Attorneys'
fees), of any Broker with respect to negotiation, execution, delivery or
performance by either Lessor or Lessee under this Lease or any amendment or
modification hereto shall be limited to an amount up to the fee received by such
Broker pursuant to this Lease; provided, however, that the foregoing limitation
on each Broker's liability shall not be applicable to any gross negligence or
willful misconduct of such Broker.

23.     NOTICES.

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

                23.2    DATE OF NOTICE. Any notice sent by registered or
certified mail, return receipt requested, shall be deemed given on the date of
delivery shown on the receipt card, or if no delivery date is shown, the
postmark thereon. If sent by regular mail the notice shall be deemed given
forty-eight (48) hours after the same is addressed as required herein and mailed
with postage prepaid. Notices delivered by United States Express Mail or
overnight courier that guarantee next day delivery shall be deemed given
twenty-four (24) hours after delivery of the same to the Postal Service or
courier. If notice is received on a Saturday, Sunday or legal holiday, it shall
be deemed received on the next business day.

24.     WAIVERS. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or of any other term, covenant or condition hereof. Lessor's
consent to, or approval of, any act shall not be deemed to render unnecessary
the obtaining of Lessor's consent to, or approval of, any subsequent or similar
act by Lessee, or be construed as the basis of an estoppel to enforce the
provision or provisions of this Lease requiring such consent. The acceptance of
Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any
payment by Lessee may be accepted by Lessor on account of monies or damages due
Lessor, notwithstanding any qualifying statements or conditions made by Lessee
in connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor at
or before the time of deposit of such payment.

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

26.     NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee holds over, then the Base Rent shall be increased to
one hundred fifty percent (150%) of the Base Rent applicable during the month
immediately preceding the expiration or termination. Nothing contained herein
shall be construed as consent by Lessor to any holding over by Lessee.

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

28.     COVENANTS AND CONDITIONS; CONSTRUCTION OF AGREEMENT. All provisions of
this Lease are both covenants and conditions. In construing this Lease, all
headings and titles are for the convenience of the Parties only and shall not be
considered a part of this Lease. Whenever required by the context, the singular
shall include the plural and vice versa. This Lease shall not be construed as if
prepared by one of the Parties, but rather according to its fair meaning as a
whole, as if both Parties had prepared it.

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

30.     SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.

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

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

                                  Page 9 of 11
<PAGE>   10

defenses which Lessee might have against any prior lessor; or (iii) be bound by
prepayment of more than one (1) month's rent.

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

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

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

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

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

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

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

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

37.     GUARANTOR.

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

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

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

39.     OPTIONS.

        39.1    DEFINITION. "OPTION" shall mean: (a) the right to extend the
term of or renew this Lease or to extend or renew any lease that Lessee has on
other property of Lessor; (b) the right of first refusal or first offer to lease
either the Premises or other property of Lessor; (c) the right to purchase or
the right of first refusal to purchase the Premises or other property of Lessor.

        39.2    OPTIONS PERSONAL TO ORIGINAL LESSEE.

        39.3    MULTIPLE OPTIONS. In the event that Lessee has any multiple
Options to extend or renew this Lease, a later Option cannot be exercised unless
the prior Options have been validly exercised.

        39.4    EFFECT OF DEFAULT ON OPTIONS.

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

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

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

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

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

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

43.     PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to
any amount or sum of money to be paid by one Party to the other under the

                                 Page 10 of 11
<PAGE>   11

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

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

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

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

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

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

49.     MEDIATION AND ARBITRATION OF DISPUTES. An Addendum requiring the
Mediation and/or the Arbitration of all disputes between the Parties and/or
Brokers arising out of this Lease [ ] IS  [X] IS NOT attached to this Lease.

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

________________________________________________________________________________

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

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

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

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

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

Executed at:                             Executed at:
            -------------------------                ---------------------------
on:                                      on: July 21, 2000
   ----------------------------------       ------------------------------------

By LESSOR:                               By LESSEE:

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

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

By: /s/ STEVE LAMANET                    By: /s/ REMI BARBIER
   ----------------------------------       ------------------------------------

Name Printed: Steve Lamanet              Name Printed: Remi Barbier
             ------------------------                 --------------------------

Title: Vice President,                   Title: President & CEO
       Goss-Jewett Company                     ---------------------------------
      -------------------------------

By:                                      By:
   ----------------------------------       ------------------------------------

Name Printed:                            Name Printed:
             ------------------------                 --------------------------

Title:                                   Title:
      -------------------------------          ---------------------------------
Address:                                 Address:
        -----------------------------            -------------------------------

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

Telephone: (   )                         Telephone: (   )
                ---------------------                    -----------------------

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

                                 Page 11 of 11

<PAGE>   12

    ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE-NET DATED
    MAY 16, 2000 BETWEEN GOSS-JEWETT COMPANY OF NORTHERN CALIFORNIA AND PAIN
                               THERAPEUTICS, INC.

50. RENT INCREASE: During the first seven (7) years of the lease the monthly
base rent shall be increased annually on the anniversary date of the lease
agreement by three and one-half percent (3.5%). Beginning in the eighth (8th)
year through the tenth (10th) year of this lease, the monthly base rent shall be
increased annually on the anniversary date of the lease agreement by five
percent (5.0%). Thus, the rent schedule for the lease term shall be as follows:

<TABLE>
<CAPTION>
Month of Lease                               Monthly Rent
--------------                               ------------
<S>                                          <C>
1-12                                         $12,500.00
13-24                                        $12,937.50
25-36                                        $13,390.31
37-48                                        $13,858.97
49-60                                        $14,344.04
61-72                                        $14,846.08
73-84                                        $15,365.69
85-96                                        $16,133.97
97-108                                       $16,940.67
109-120                                      $17,787.71
</TABLE>

51. Except as otherwise provided herein, Lessee agrees to accept the Premises in
its "as-is" condition. All improvements made by Lessee will be at Lessee's sole
cost and expense, including any cost of improvements called for by the Americans
with Disabilities Act (ADA). The intention of the parties is that Lessor will
deliver the building in a broom clean, shell condition, with the existing office
improvements demolished and removed, and asbestos (if any) removed. Lessee shall
then renovate, upgrade and improve the building to first class office space at
Lessee's sole expense, a estimated expenditure between $500,000 and $1 million.

LESSOR:                                              LESSEE:

GOSS JEWETT COMPANY                           PAIN THERAPEUTICS, INC.
NORTHERN CALIFORNIA

by /s/ STEVEN LAMANET                         by /s/ REMI BARBIER
  --------------------------------              --------------------------------
  Steven Lamanet
  Its Authorized Officer

<PAGE>   13

                            SECOND ADDENDUM TO LEASE

        THIS SECOND ADDENDUM TO LEASE (the "Addendum") is made by and between
Goss Jewett Company of Northern California ("Lessor"), and Pain Therapeutics,
Inc. ("Lessee"), to be a part of that lease of even date herewith (the "Lease
Form"), between Lessor and Lessee concerning the real property and improvements
(collectively, the "Premises") located at 416 Browning Way, South San Francisco,
California. Lessor and Lessee agree that, notwithstanding anything to the
contrary in the Lease Form and the attached Addendum to Lease Agreement, the
Lease is hereby modified and supplemented as set forth below.

6.1     Term: The Lease shall commence on October 1, 2000. Prior to the
        Commencement Date, Lessor shall (i) remove all office improvements
        within the Building, (ii) complete all related asbestos abatement, and
        remove the interior office partitions, delivering a "shell" building to
        Lessee. Use: If the Premises should become unsuitable for Lessee's use
        as a consequence of cessation of utilities, interference with access to
        the Premises, Applicable Requirements or any Hazardous Substance
        Condition (which does not result from Lessee's occupancy of the premises
        ) and in any of the foregoing instances the interference with Lessee's
        use of the Premises persists for seven (7) consecutive calendar days,
        then Lessee shall be entitled to an equitable abatement of rent to the
        extent of the interference with Lessee's use of the Premises occasioned
        thereby. If such interference persists for more than ninety (90)
        consecutive calendar days, Lessee may terminate the Lease by delivery of
        written notice to Lessor at any time thereafter until such interference
        ceases.

6.2     Hazardous Substances: To the best knowledge of Lessor, except as
        disclosed to Lessee in writing (a) no Hazardous Substances are present
        on or about the Premises or the soil, surface water or groundwater
        thereof, (b) no underground storage tanks or asbestos-containing
        building materials are present on the Premises, and (c) no action,
        proceeding or claim is pending or threatened regarding the Premises
        concerning any Hazardous Substances or pursuant to any law. Lessor has
        delivered to Lessee all reports and environmental assessments of the
        Premises conducted at the request of or otherwise available to Lessor.
        Under no circumstance shall Lessee be liable for, and Lessor shall
        indemnify, defend with counsel reasonably acceptable to Lessee, protect
        and hold harmless Lessee, its employees, agents, contractors,
        stockholder, directors, officers, subtenants, successors,
        representatives, and assigns from and against, all claims, losses,
        costs, damages, liabilities, and expenses (including attorneys' and
        consultants' fees) of every type and nature, directly or indirectly
        arising out of or in connection with any Hazardous Substances present
        prior to the Commencement Date on or about the Premises or the soil,
        air, improvements, groundwater or surface water thereof, or the
        violation of any law relating to any such Hazardous Substance, except to
        the extent that any of the foregoing actually results from the occupancy
        of the Premises by Lessee or its agents or employees in violation of
        Applicable Requirements. Lessee's obligation to comply with all
        Applicable Requirements shall not include the obligation to take action
        required by any Applicable Requirements governing any Hazardous
        Substance not brought onto the Premises by Lessee, its agents, guests,
        invitees or employees or any Hazardous Substance condition that does not
        result from Lessee's occupancy of the Premises.

6.3     Lessee's Compliance with Applicable Requirements: Lessor shall be solely
        responsible for, and Lessee shall not be required to comply with or
        cause the Premises to comply with, any Applicable Requirements requiring
        the construction of alterations in the Premises unless such compliance
        is necessitated solely due to Lessee's improvements to be made to the
        Premises and Lessee's particular use of the.

6.4     Inspection; Compliance: Lessor and Lessor's agents, except in the case
        of emergency, shall provide Lessee with twenty-four (24) hours' notice
        prior to entry of the Premises. Any such entry by Lessor and Lessor's
        agents shall comply with all reasonable security measures of Lessee and
        shall not impair Lessee's operations more than reasonably necessary.

<PAGE>   14

Maintenance and Repairs: Lessee shall perform and construct, at Lessee's sole
cost and expense, and Lessor shall have no obligation to perform or pay for, any
repair, maintenance or improvements (a) to the roof and the structural elements
of the Premises, including exterior walls, load-bearing walls and the Building
foundation. However, after the initial improvements and upgrade to the Premises
to a first class office building are completed by Lessee, at Lessee's cost and
at no expense to Lessor, then if any of Lessor's or Lessee's obligations under
the Lease (as modified by this Addendum) would require Lessee to pay all or any
portion of any charge which would be treated as a capital improvement under
generally accepted accounting principles, then Lessor shall make such
replacement at its sole expense, but the cost thereof shall be amortized and
Lessee shall pay Additional Rent on account of such amortization in accordance
with the following procedures: the costs of such repair or replacement shall be
amortized on a straight line basis over the useful life of such replacement
(determined in accordance with generally accepted accounting principles). As
Additional Rent, Lessee shall pay an amount equal to such monthly amortization
payment for each month after such replacement is completed, together with
interest on the unamortized balance at the rate of ten percent (10%) per annum,
until the first to occur of (a) the expiration of the initial term of the Lease,
or (b) the end of the term over which such costs with interest were amortized.
The monthly amount of such Additional Rent shall be due at the same time the
Base Rent is due. In addition, Lessee shall perform all required maintenance to
the landscaping, parking lots and other external areas and to the building
systems serving the Premises, including electrical, plumbing, life safety and
heating, ventilating and air conditioning

7.2     Ownership Removal: All Trade Fixtures and personal property installed in
        the Premises at Lessee's expense ("Lessee's Property") shall at all
        times remain Lessee's property and Lessee shall be entitled to all
        depreciation, amortization and other tax benefits with respect thereto.
        Upon request, Lessor shall advise Lessee in writing whether it will
        require Lessee to remove any Alterations or Utility Installations from
        the Premises upon termination of the Lease. If Lessor fails to make such
        a requirement a condition to its approval, Lessee shall not be required
        to remove such Alterations or Utility Installations upon the termination
        of the Lease. Lessee shall be entitled to all insurance proceeds and
        condemnation awards and settlements payable with respect to Lessee's
        Property.

7.4(c)  Surrender: Lessee's obligation to surrender the Premises shall be
        fulfilled if Lessee surrenders possession of the Premises in the
        condition existing on the date of occupancy by Lessee, after the initial
        improvements and upgrade to a first class office building are completed,
        , ordinary wear and tear, acts of God, casualties, condemnation,
        Hazardous Substances (other than those resulting from Lessee's occupancy
        of the Premises during the Term hereof) and Alterations and Utility
        Installations which Lessee is permitted to surrender, all excepted.

8.3     Property Insurance: In no event shall Lessee or Lessor have any
        obligation to carry, pay or reimburse Lessor for any premiums or
        deductibles for flood or earthquake insurance, nor shall Lessor be
        liable to Lessee for any loss of occupancy or other losses resulting
        from flood or earthquake Lessee may, if it so desires, and with the
        cooperation of Lessor, obtain flood and/or earthquake insurance at
        Lessee's sole cost and expense, with the benefits payable to Lessor and
        Lessee as their interests may exist at the time of any such damage from
        flood or earthquake.

8.7     Indemnity: Lessor shall not be released from or indemnified for, and
        shall indemnify, defend, protect and hold harmless Lessee from, all
        losses, damages, liabilities, claims, costs and expenses arising from
        the gross negligence or willful misconduct of Lessor, or its agents,
        employees, contractors or invitees.

9.      Damage or Destruction: Lessor shall not have any right to terminate
        Lease following a casualty in the event such casualty damage results in
        damage in an amount less than five percent (5%) of the replacement costs
        of the Premises.

10.1    Real Properties: The term "Real Property Taxes" shall not include any
        charges, levies or fees in excess of the amount which would be payable
        if such tax or assessment expense were paid in installments over the
        longest permitted term. Lessee shall pay the Real Property taxes
        applicable to the

<PAGE>   15

Premises within (a) twenty (20) days after receipt of billing; or (b) ten (10)
days prior to the delinquency date of such Real Property taxes, whichever is
later.

12.0    Assignment and Subletting: Lessee may, without Lessor's prior written
        consent and without payment of any "profit" sublet any or all of the
        Premises or assign the Lease to: (a) an entity controlling, controlled
        by or under common control withy Lessee; (b) a successor entity related
        to Lessee by merger, consolidation, nonbankruptcy reorganization or
        government action; or (c) a purchaser of substantially all of lessee's
        assets located in the Premises (the "Permitted Assignees"), provided
        that Lessee provides Lessor with written notice at least five (5) days
        in advance of such assignment or sublease and provided that the assignee
        or sublessee shall have a net worth equal to or greater than Lessee at
        the time it enters into this Lease. Any sale or transfer of Lessee's
        capital stock shall not be deemed an assignment, subletting, or any
        other transfer of the Lease or the Premises.

55.     Effect of Addendum: All terms with initial capital Letter used herein as
        defined terms shall have the meanings scribed to them in the Lease Form,
        unless specifically defined herein. In the event of any inconsistency
        between this Second Addendum and the Lease Form or the First Addendum,
        the terms of this Second Addendum shall prevail.

LESSOR:                                              LESSEE:

GOSS JEWETT COMPANY                           PAIN THERAPEUTICS, INC.
NORTHERN CALIFORNIA

by /s/ STEVEN LAMANET                         by /s/ REMI BARBIER
  --------------------------------              --------------------------------
  Steven Lamanet
  Its Authorized Officer

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