Document:

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                                                                    Exhibit 10.7

                                     [LOGO]

                                 Lease between
              Sobrato Interests, a California limited partnership
                                      and
                               VISX, Incorporated

<Table>
<Caption>
Section                                                                  Page  #
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<S>                                                                      <C>
Parties.....................................................................   1
Premises....................................................................   1
Use.........................................................................   1
Term and Rental.............................................................   1
    Rental Adjustment.......................................................   2
Security Deposit............................................................   2
Late Charges................................................................   2
Construction and Possession.................................................   3
Acceptance of Possession and Covenants to Surrender.........................   4
Uses Prohibited.............................................................   4
Alterations and Additions...................................................   5
Maintenance of Premises.....................................................   5
    Landlord and Tenant's Obligations Regarding Common Area Costs...........   5
    Common Area Costs.......................................................   5
    Tenant's Allocable Share................................................   6
    Waiver of Liability.....................................................   6
    Tenant's Obligations....................................................   6
    Landlord's Obligations..................................................   7
Hazard Insurance............................................................   7
    Tenant's Use............................................................   7
    Landlord's Insurance....................................................   7
    Tenant's Insurance......................................................   7
    Waiver..................................................................   7
Taxes.......................................................................   8
Utilities...................................................................   8
Abandonment.................................................................   8
Free From Liens.............................................................   8
Compliance With Governmental Regulations....................................   9
Toxic Waste and Environmental Damage........................................   9
     Tenant's Responsibility................................................   9
     Tenant's Indemnity Regarding Hazardous Materials.......................   9
     Environmental Monitoring...............................................  10
Indemnity...................................................................  10
Advertisements and Signs....................................................  10
Attorney's Fees.............................................................  10
Tenant's Default............................................................  10
     Remedies...............................................................  11
     Right to Re-enter......................................................  11
     Abandonment............................................................  11
     No Termination.........................................................  12
Surrender of Lease..........................................................  12
Habitual Default............................................................  12
Landlord's Default..........................................................  12
Notices.....................................................................  13
Entry by Landlord...........................................................  13
Destruction of Premises.....................................................  13
     Destruction by an Insured Casualty.....................................  13

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     Destruction by an Uninsured Casualty ................................... 13
Assignment or Sublease ...................................................... 14
     Consent by Landlord .................................................... 14
     Assignment or Subletting Consideration ................................. 14
     No Release ............................................................. 15
     Effect of Default ...................................................... 15
Condemnation ................................................................ 15
Effects of Conveyance ....................................................... 16
Subordination ............................................................... 16
Waiver ...................................................................... 16
Holding Over ................................................................ 16
Successors and Assigns ...................................................... 16
Estoppel Certificates ....................................................... 16
Option to Extend the Lease Term ............................................. 17
     Grant and Exercise of Option ........................................... 17
     Determination of Fair Market Rental .................................... 17
     Resolution of a Disagreement over the Fair Market Rental ............... 18
     Tenant's Right to Rescind Exercise of Option ........................... 18
Options ..................................................................... 18
Quiet Enjoyment ............................................................. 18
Brokers ..................................................................... 18
Landlord's Liability ........................................................ 19
Authority of Parties ........................................................ 19
     Corporate Authority .................................................... 19
     Limited Partnerships ................................................... 19
Transportation Demand Management Programs ................................... 19
Right of First Offer ........................................................ 19
Miscellaneous Provisions .................................................... 20
     Rent ................................................................... 20
     Management Fee ......................................................... 20
     Performance by Landlord ................................................ 20
     Interest ............................................................... 20
     Rights and Remedies .................................................... 20
     Survival of Indemnities ................................................ 20
     Severability ........................................................... 20
     Choice of Law .......................................................... 20
     Time ................................................................... 20
     Entire Agreement ....................................................... 20
     Representations ........................................................ 20
     Headings ............................................................... 20
Exhibit "A" ................................................................. 22
Exhibit "B" ................................................................. 23
Exhibit "C" ................................................................. 24
Exhibit "D" ................................................................. 25
Exhibit "E" ................................................................. 26
Exhibit "F" ................................................................. 27

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--------------------------------     [LOGO]     --------------------------------

     1.   PARTIES: THIS LEASE, is entered into on this 16th day of July, 1992,
between Sobrato Interests, a California limited partnership, whose address is
10600 North De Anza Boulevard, Cupertino, California, 95014 and VISX,
Incorporated, a California corporation, whose address is 3400 Central
Expressway, Santa Clara, California, hereinafter called respectively Landlord
and Tenant.

     2.   PREMISES: Landlord hereby leases to Tenant, and Tenant hires from
Landlord those certain Premises with the appurtenances, situated in the City of
Santa Clara, County of Santa Clara, State of California, and more particularly
described as follows, to-wit:

That certain real property commonly known and designated as 3400 Central
Expressway consisting of 52,344 rentable square feet on the ground floor of a
larger, two-story building of 108,844 square feet ("Building") and 185 parking
stalls in a project consisting of a total of five (5) buildings, including the
Premises, totaling 412,171 square feet ("Project") as outlined in red on
Exhibit "A". The parking stalls shall be available for Tenant's exclusive use
but shall not be designated or segregated from the balance of the parking area.

As an appurtenant right to Tenant's right to the use of the Premises, Tenant
shall have the non-exclusive right to use the Common Areas in conjunction with
other tenants of the Project and their invitees, subject to the limitations on
such use as set forth in Paragraphs 9 and 11, and solely for the purposes for
which they were designed and intended. Tenant's right to use the Common Areas
shall terminate concurrently with any termination of this Lease.

     3.   USE: Tenant shall use the Premises only for the following purposes
and shall not change the use of the Premises without the prior written consent
of Landlord: Office, research, development, testing, light manufacturing,
ancillary warehouse, and other legal uses not prohibited by private
restrictions. Landlord makes no representation or warranty that any specific
use of the Premises desired by Tenant is permitted pursuant to any Laws.

     4.   TERM AND RENTAL: The term ("Lease Term") shall be for sixty (60)
months, commencing on the 1st day of October, 1992 ("Intended Commencement
Date"), and ending on the 30th day of September, 1997 ("Expiration Date"),
unless either (i) Landlord is unable to deliver possession of the Premises
to Tenant on the Intended Commencement Date, in which case the Lease
Commencement Date shall be as determined pursuant to Paragraph 7 below, or (ii)
Tenant enters into possession of the Premises prior to the Intended
Commencement Date, in which case the Lease Commencement Date shall be deemed to
have occurred on such earlier date (the "Lease Commencement Date"). If the Lease
Commencement Date is later than the Intended Commencement Date, then the
Expiration Date shall be sixty months after the Lease Commencement Date, unless
extended pursuant to Paragraph 37 below. The "Lease Term" shall be that period
of time commencing on the Lease Commencement Date and ending on the Expiration
Date. In addition to all other sums payable by Tenant under this Lease, Tenant
shall pay as base monthly rent ("Base Monthly Rent") for the Premises the sum
of Forty Three Thousand One Hundred Eighty Three and 80/100 Dollars
($43,183.80) per month. Base Monthly Rent shall be due on or before the first
day of each calendar month during Lease Term. All sums payable by Tenant under
this Lease shall be paid in lawful money of the United States of America,
without offset or

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deduction, and shall be paid to Landlord at such place or places as may be
designated from time to time by Landlord. Base Monthly Rent for any period less
than a calendar month shall be a pro rata portion of the monthly installment.

Concurrently with Tenant's execution of this Lease, Tenant shall pay to
Landlord the sum of Forty Three Thousand One Hundred Eighty Three and 80/100
Dollars ($43,183.80) as prepaid rent for the first month of the Lease.

     A. Rental Adjustment: Beginning thirty-one (31) months after the
Commencement Date, the Base Monthly Rent shall be subject to one adjustment that
will remain in effect for the balance of the Lease Term, based on the increase,
if any, in the Consumer Price Index ("Adjustment Date"). The basis for computing
the adjustment shall be the U.S. Department of Labor, Bureau of Labor
Statistic's Consumer Price Index for All Urban Consumers, All Items,
1982-84=100, for the San Francisco-Oakland-San Jose area, ("Index"). The Index
most recently published preceding the commencement of the Lease (or previous
Adjustment Date, as applicable), shall be considered the "Base Index". If the
Index most recently published preceding the Adjustment Date ("Comparison Index")
is greater than the Base Index, the then payable Base Monthly Rent shall be
increased by multiplying the Base Monthly Rent by a fraction, the numerator of
which is the Comparison Index and the denominator of which is the Base Index.
Notwithstanding any subsequent decrease in the Index, the increase in the Index
for any calendar year shall be deemed not less than three percent (3%) per year
compounded annually nor more than seven percent (7%) per year compounded
annually. Landlord's calculation of the Base Monthly Rent escalation shall be
conclusive and binding unless Tenant objects to said calculation within a thirty
(30) day period. On adjustment of the Base Monthly Rent. Landlord shall notify
Tenant by letter stating the new Base Monthly Rent. If the Index base year is
changed so that it differs from 1982-84=100, the Index shall be converted in
accordance with the conversion factor published by the United States Department
of Labor, Bureau of Labor Statistics. If the Index is discontinued or revised
during the Lease Term, such other government index or computation with which it
is replaced shall be used in order to obtain substantially the same result as
would be obtained if the index had not been discontinued or revised.

     5. SECURITY DEPOSIT: Concurrently with Tenant's execution of this Lease,
Tenant has deposited with Landlord the sum of Forty Five Thousand and No/100
Dollars ($45,000.00) as a security deposit. If Tenant defaults with respect to
any provisions of this Lease, including but not limited to the provisions
relating to payment of Base Monthly Rent or other charges, Landlord may, to the
extent reasonably necessary to remedy Tenant's default, use all or any part of
said deposit for the payment of Base Monthly Rent or other charges in default or
the payment of any other payment of any other amount which Landlord may spend or
become obligated to spend by reason of Tenant's default or to compensate
Landlord for any other loss or damage which Landlord may suffer by reason of
Tenant's default. Landlord shall promptly notify Tenant that it has incurred an
expense pursuant to the preceding sentence. If any portion of said deposit is so
used or applied, Tenant shall, within ten (10) days after written demand
therefor, deposit cash with Landlord in an amount sufficient to restore said
deposit to the full amount hereinabove stated and shall pay to Landlord such
other sums as shall be necessary to reimburse Landlord for any sums paid by
Landlord. Said deposit shall be returned to Tenant within thirty (30) days after
the Expiration Date and surrender of the Premises to Landlord, less any amount
deducted in accordance with this paragraph and not previously restored to
Landlord, together with Landlord's written notice itemizing the amounts and
purposes for such retention. In the event of termination of Landlord's interest
in this Lease, Landlord shall transfer said deposit to Landlord's successor in
interest.

     6. LATE CHARGES: Tenant hereby acknowledges that late payment by Tenant to
Landlord of Base Monthly Rent and other sums due hereunder will cause Landlord
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, administrative, processing, accounting charges, and late charges, which may
be

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imposed on Landlord by the terms of any contract, revolving credit, mortgage or
trust deed covering the Premises. Accordingly, if any installment of Base
Monthly Rent or any other sum due from Tenant shall not be received by Landlord
or Landlord's designee when due, Tenant shall pay to Landlord a late charge
equal to five (5%) percent of such overdue amount which shall be due and
payable with the payment then delinquent. Landlord agrees to waive said late
charge in the event the Base Monthly Rent or other sum due is received within
ten (10) days after receipt by Tenant of Landlord's notice to quit or pay rent.
The parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Landlord will incur by reason of late payment by Tenant.
Acceptance of such late charge by Landlord shall in no event constitute a
waiver of Tenant's default with respect to such overdue amount, nor prevent
Landlord from exercising 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 Monthly Rent, then
Landlord shall notify Tenant in writing that for the balance of the Lease Term,
rent shall automatically become due and payable quarterly in advance, rather
than monthly, notwithstanding any provision of this Lease to the contrary.

     7.  CONSTRUCTION AND POSSESSION: The Tenant Improvements shall be
constructed, at Landlord's sole expense, in accordance with the Final Working
Drawings and under the supervision of Landlord and shall comply with all
existing applicable municipal, local, state and federal laws, statutes, rules,
regulations and ordinances. Landlord shall at its sole expense repair all latent
defects respecting the Premises and all violations of laws, statutes, rules,
regulations and ordinances in effect as of the Commencement Date. Landlord's
obligations with respect to the correction of such defects shall be limited to
the cost to correct the defective work and Landlord shall not be liable for any
consequential damages or other loss or damage incurred by Tenant.

Landlord and Tenant have approved the architectural, mechanical and electrical
working drawings ("Working Drawings") attached as Exhibit "B", and the scope of
work and budget ("Budget") attached as Exhibit "C". Prior to August 3, 1992,
Tenant agrees to reduce the scope of work of the Working Drawings so as to
reduce the Budget to a maximum cost of Nine Hundred Fifty Thousand and No/100
Dollars ($950,000.00) ("Maximum Tenant Improvement Cost"). Landlord and Tenant
shall be responsible for and shall pay the cost of the Tenant Improvements as
defined in Exhibit "B" and Exhibit "C" as follows: Landlord shall pay (i) the
first 785,160 and (i) Fifty Percent (50%) of the remaining cost up to the
Maximum Tenant Improvement Cost. Tenant shall pay the balance of the cost of the
Tenant Improvements.

In the event Tenant makes any changes to the Final Working Drawings which
increase the Tenant Improvement cost ("Cost Increase"), the Cost Increase shall
be paid for by Tenant in cash within seven (7) days after payment by Landlord to
the General Contractor. In the event Tenant makes any changes to the Final
Working Drawings after August 3, 1992 which cause the General Contractor's
construction schedule to be delayed, the Commencement Date shall occur one (1)
day in advance of Substantial Completion as defined below for each day of delay.

Landlord shall deliver possession of the Building in good condition and repair,
broom clean, reasonable wear and tear excepted, on or before the Intended
Commencement Date. Landlord by delivery of possession to Tenant represents that
the Building is structurally sound and meets all code requirements as of the
Commencement Date. Landlord shall provide a warranty, excluding routine
maintenance or damage caused by the negligence or misuse by Tenant, on the
Building for one (1) year from the Commencement Date.

If Landlord is unable to deliver possession of the Premises to Tenant on or
before the Intended Commencement Date, for whatever reason, Landlord shall not
be in default under this Lease, nor shall this Lease be void, voidable or
cancelable by Tenant until the lapse of forty five (45) days after the Intended
Commencement Date (the "Delivery Grace Period"); however, the Lease
Commencement Date shall not be deemed to have

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occurred until such date as Landlord notifies Tenant that the Premises are
ready for occupancy and substantial completion of the Premises has occurred.
Notwithstanding the foregoing, the Delivery Grace Period shall be extended one
day for every day of delay in completion caused by labor strikes, material
shortages, inclement weather, or other causes beyond the reasonable control of
Landlord. If Landlord is unable to deliver possession of the Premises to Tenant
within the Delivery Grace Period, Tenant shall be entitled to rental abatement
hereunder of one day's rent for each day beyond said 45-day period in which the
Premises are not substantially complete. The delay in the commencement of rent
shall be the sole and exclusive remedy of Tenant with respect by the failure by
Landlord to achieve substantial completion within the delivery grace period.

"Substantial Completion" shall mean that: (i) all necessary governmental
approvals, permits, consents, and certificates have been obtained by us for
Landlord for the lawful construction by Landlord, and occupancy by Tenant, or
said Premises, excluding work attributable to any special fit-up requested or
required by Tenant, (ii) all of the Premises interior fully meet all of the
Final Working Drawings, excluding Tenant's special fit-up, (iii) all of the
Premises exterior substantially meets the applicable Final Working Drawings,
including paved parking areas, and (iv) said interior is in a "broom clean"
finished condition.

     8.   ACCEPTANCE OF POSSESSION AND COVENANTS TO SURRENDER: By entry
hereunder, Tenant accepts the Premises as being in good and sanitary order,
condition and repair and accepts the Building and the other improvements in
their present condition, except for Tenant's "punch list" of incomplete and/or
improper work, which Tenant shall submit to Landlord within thirty (30) days
after Landlord notifies Tenant that the Premises are ready for occupancy. The
Tenant agrees on Expiration Date, or on the sooner termination of this Lease, to
surrender the Premises to Landlord in good condition and repair, reasonable wear
and tear excepted. "Good condition" shall mean that the interior walls, floors,
suspended ceilings, and carpeting within the Premises will be cleaned to the
same condition as existed at the commencement of the Lease, reasonable wear and
tear excepted. Tenant agrees, at its sole cost, to remove all phone and data
cabling from the suspended ceiling and repair or replace broken ceiling tiles,
and re-level the ceiling, if required, so as to be as level as when Tenant took
possession of the Premises. Tenant shall ascertain from Landlord within thirty
(30) days before the Expiration Date whether Landlord desires to have the
Premises or any part or parts thereof restored to their condition as of the
Commencement Date or to cause Tenant to surrender all Alterations (as defined in
Paragraph 10) in place to Landlord. If Landlord shall so desire and has
previously notified Tenant at the time the Alterations were made, then Tenant
shall remove such Alterations as Landlord may require and shall repair and
restore said Premises or such part or parts thereof before the Expiration Date
at Tenant's sole cost and expense. Tenant on or before the Expiration Date or
sooner termination of this Lease, shall remove all its personal property and
trade fixtures from the Premises, and all property and fixtures not so removed
shall be deemed to be abandoned by Tenant. If the Premises are not surrendered
at the Expiration Date or sooner termination of this Lease in the condition
required by this paragraph, Tenant shall indemnify, defend, and hold harmless
Landlord against loss or liability resulting from delay by Tenant in so
surrendering the Premises including, without limitation, any claims made by any
succeeding tenant founded on such delay.

     9.   USES PROHIBITED: Tenant shall not commit, or suffer to be committed,
any waste upon the said Premises, or any nuisance, or other act or thing which
may disturb the quiet enjoyment of any other tenant in or around the Building or
allow any sale by auction upon the Premises, or allow the Premises to be used
for any unlawful or objectionable purpose, or place any loads upon the floor,
walls, or ceiling which endanger the structure, or use any machinery or
apparatus which will in any manner vibrate or shake the Building, or place any
harmful liquids, waste materials, or hazardous materials in the drainage system
of, or upon or in the soils surrounding the Building. No materials, supplies,
equipment, finished products or semi-finished products, raw materials or
articles of any nature or any waste materials, refuse, scrap or debris shall be
stored upon or permitted to remain on any portion of the Premises

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outside of the Building proper without Landlord's prior approval, which approval
may be withheld in its sole discretion. Landlord shall use commercially
reasonable efforts to ensure that the other tenants in the Project comply with
the terms of this paragraph 9.

     10. ALTERATIONS AND ADDITIONS: Tenant shall not make, or suffer to be made,
any alteration or addition to the said Premises ("Alterations"), or any part
thereof, without (i) the written consent of Landlord first had and obtained, and
(ii) delivering to Landlord the proposed architectural and structural plans for
all such Alterations. Any Alterations, except movable furniture and trade
fixtures, shall become at once a part of the realty and belong to Landlord.
Alterations which are not to be deemed as trade fixtures shall include heating,
lighting, electrical systems, air conditioning, partitioning, carpeting, or any
other installation which has become an integral part of the Premises. The term
"Alterations" is not intended to include any of the items listed above which are
included in the Premises or the Tenant Improvements. After having obtained
Landlord's consent, Tenant agrees that it will not proceed to make such
Alterations until (i) Tenant has obtained all required governmental approvals
and permits, and (ii) Tenant has provided Landlord reasonable security, in form
reasonably approved by Landlord, to protect Landlord against mechanics' lien
claims. Tenant further agrees to provide Landlord (i) written notice of the
actual start date of the work, (iii) a complete set of as-built drawings. All
Alterations shall be maintained, replaced or repaired at Tenant's sole cost and
expense. Tenant acknowledges Landlord's right to and hereby consents to
construction of additional building(s) on the land where the Premises are
located or on adjacent land owned by Landlord, indicated on Exhibit "A".

Notwithstanding the provisions of this Paragraph 10, Tenant shall be entitled
without obtaining Landlord's consent to make any alteration or addition to the
Premises which does not affect the structure of the Building, provided that each
such alteration costs no more than $10,000, and all such alterations in any
twelve (12) month period do not exceed an aggregate of $25,000.

     11. MAINTENANCE OF PREMISES:

          A. Landlord and Tenant's Obligations Regarding Common Area Costs:
Tenant agrees to reimburse Landlord for the expenses resulting from Landlord's
payment of Common Area Costs as defined in paragraph 11(B) incurred by Landlord
because the cost is not directly allocable to or payable by a single tenant in
the Building or the Project. Tenant agrees to pay Tenant's Allocable Share as
defined in paragraph 11(C) of the Common Area Costs, as additional rental,
within ten (10) days of written invoice from Landlord.

          B. Common Area Costs: Except as provided otherwise in this Lease, for
purposes of calculating Tenant's Allocable Share of Building and of Project
Costs, the term "Common Area Costs" shall mean all costs and expenses of the
nature hereinafter described which are incurred in connection with ownership and
operation of the Building or the Project in which the Premises are located, as
the case may be not directly allocable to or payable by a single tenant in the
Building or the Project, provided however, that any special assessments for
additional facilities shall not be included in Common Area Costs. All costs and
expenses shall be determined in accordance with generally accepted accounting
principles which shall be consistently applied (with accruals appropriate to
Landlord's business), including but not limited to, the following: (i) common
area utilities, including water and power, heating, lighting, air-conditioning,
ventilating and Building utilities to the extent not separately metered; (ii)
common area maintenance and service agreements for the Building or the Project
and the equipment therein including, without limitation, common area janitorial
services, alarm and security services, exterior window cleaning, and maintenance
of the sidewalks, landscaping, waterscape, roof membrane, parking areas,
driveways, service areas, mechanical rooms, elevators, and the building
exterior; (iii) insurance premiums and costs, including without limitation, the
premiums and cost of fire, casualty and liability coverage and rental abatement
and earthquake (if commercially available) insurance applicable to the Building
or Project; (iv) repairs, replacements and general

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maintenance (excluding repairs and general maintenance paid by proceeds of
insurance or by Tenant or other third parties, and repairs or alterations
attributable solely to tenants of the Building or Project other than Tenant);
and (v) All real estate taxes, special assessments, service payments in lieu of
taxes, excises, transit charges, housing fund assessment, levies, fees or
charges and including any substitutes or additions thereto which may occur
during the Lease Term (and Renewal Terms, if any) or this lease which are
assessed, or imposed by any public authority upon the Building or Project, the
act of entering this Lease, the occupancy by Tenant, the rent provided for in
this Lease and including real estate tax increases due to a sale or transfer of
the Building or the Project, in which the Premises are located, as such taxes
are levied or appear on the City and County tax bills and assessment rolls. This
shall be a Net Lease and the Base Monthly Rent shall be paid to Landlord
absolutely net of all costs and expenses. The provision for payment of Common
Area Costs by means of periodic payment of Tenant's Allocable Share of Building
and/or Project Costs are intended to pass on to Tenant and reimburse Landlord
for all costs of operating and managing the Building and/or Project. Tenant
shall have the right, one time per year, to audit Landlord's books related to
costs and expenses for the Premises to determine compliance with the
determination of costs and expenses pursuant to this paragraph.

      C. Tenant's Allocable Share: For purposes of prorating Common Area Costs
which Tenant shall pay, Tenant's Allocable Share of Building Costs is computed
by multiplying the total Common Area Costs for services shared by the Building
by a fraction, the numerator of which is the rentable square footage of the
Premises and the denominator of which is the total rentable square footage of
the Building (excluding common areas). Tenant's Allocable Share of Project
Costs shall be computed on a shared service by service basis, by either (i)
multiplying the total Common Area Costs for services shared by the Building and
one or more buildings in the Project by a fraction, the numerator of which is
the rentable square footage of the Premises and the denominator of which is the
total rentable square footage of the Buildings in the Project which share the
services; or (ii) some other equitable method agreed by the parties if method
(i) above does not fairly allocate a particular expense. It is understood and
agreed by Landlord and Tenant that Tenant's Allocable Share of Building Costs
is 48.09% and of Project Costs is 12.69%. It is understood and agreed that
Tenant's obligation to share in Common Area Costs shall be adjusted to reflect
the commencement and termination dates of the Lease Term and are subject to
recalculation in the event of expansion of the Building or Project.

      D. Waiver of Liability: Failure by Landlord to perform any defined
services, or any cessation thereof, when such failure is caused by accident,
breakage, repairs, strikes, lockout or other labor disturbances or labor
disputes of any character, or by any other cause, similar or dissimilar, beyond
the reasonable control of Landlord, shall not render Landlord liable in any
respect for damages to either person or property, nor be construed as an
eviction of Tenant, nor cause an abatement of rent nor relieve Tenant from
fulfillment of any covenant or agreement hereof. Should any of the equipment or
machinery utilized in supplying the services listed herein break down, or for
any cause cease to function properly, upon receipt of written notice from Tenant
of any deficiency or failure of any defined Services, Landlord shall use
reasonable diligence to repair the same promptly, but Tenant shall have no right
to terminate this Lease, and shall have no claim for rebate of rent or damages,
on account of any interruptions in service occasioned thereby or resulting
therefrom. Tenant shall have the right to make repairs should Landlord fail to
do so, and to bill Landlord for the cost so incurred, but shall have no right to
deduct such cost from the rent. Landlord shall not be liable for a loss of or
injury to property, however occurring, through or in connection with or
incidental to furnishing or its failure to furnish any of the foregoing.

      E. Tenant's Obligations: Except as provided in 11(A) above, Tenant shall,
at its sole cost, keep and maintain, repair and replace, said Premises and
appurtenances and every part hereof, including but not limited to, plumbing,
glazing, electrical and HVAC systems, and all the Tenant Interior Improvements
in good and sanitary order, condition, and repair. Notwithstanding the
foregoing, Landlord at its sole cost and expense, shall maintain in good
condition, order, and repair, and replace

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as and when necessary, all structural and exterior portions of the Building,
including, without limitation, the foundation, exterior load bearing walls and
roof structure of the Building Shell. Tenant shall provide Landlord with a copy
of a service contract between Tenant and a licensed air-conditioning and
heating contractor which contract shall provide for bi-monthly maintenance of
all air conditioning and heating equipment at the Premises. Tenant shall pay
the cost of all air-conditioning and heating repairs or replacements which are
either excluded from such service contract or any existing equipment
warranties. All wall surfaces and floor tile are to be maintained in an as good
a condition as when Tenant took possession free of holes, gouges, or
defacements. Tenant agrees to limit attachments to vinyl demountable wall
surfaces exclusively to V-joints.

          F.   LANDLORD'S OBLIGATIONS:  Landlord shall, at all times during the
Lease Term, maintain in good condition and repair, (i) the exterior and
structural parts of the Building (including the foundation, subflooring,
load-bearing and exterior walls, and roof structure), (ii) the Common Area, and
(iii) the electrical and plumbing systems located outside the Premises which
service the Building. Additionally, to the extent that the Building contains
central heating, ventilation and/or air conditioning systems located outside
the Premises which are designed to service and are then servicing more than a
single tenant within the Building ("Common HVAC"), Landlord shall maintain in
good operating condition and repair such Common HVAC equipment and systems. The
provisions of this subparagraph 11.F shall in no way limit Landlord's right to
charge to Tenant as Common Area Costs the costs incurred by Landlord in making
such repairs and/or performing such maintenance.

     12.  HAZARD INSURANCE

          A.   TENANT'S USE:  Tenant shall not use, or permit said Premises, or
any part thereof, to be used, for any purpose other than that for which the
said Premises are hereby leased and Landlord acknowledges that Tenant intends
to use the Premises primarily for the purpose described in Exhibit "D"; and no
use shall be made or permitted to be made of the said Premises, nor acts done,
which will cause an increase in premiums or a cancellation of any insurance
policy covering said Building, or any part thereof, nor shall Tenant sell or
permit to be kept, used or sold, in or about said Premises, any article which
may be prohibited by fire insurance policies. Tenant shall, at its sole cost
and expense, comply with any and all requirements, pertaining to said Premises,
of any insurance organization or company, necessary for the maintenance of
reasonable fire and public liability insurance, covering said Building and
appurtenances.

          B.   LANDLORD'S INSURANCE:  Landlord agrees to purchase, on a
competitive bid basis, and keep in force fire and extended coverage, earthquake
(at Landlord's election), and 12 month rental loss insurance covering the
Premises in amounts not to exceed the actual insurable value of the Building as
determined by Landlord's insurance company's appraisers. Landlord shall have
no responsibility to either purchase or keep in force insurance covering
Tenant's personal property. The Tenant agrees to pay to the Landlord as
additional rent, on demand, the full cost of said insurance as evidenced by
insurance billings to the Landlord, and in the event of damage covered by said
insurance, the amount of any deductible under such policy. Payment shall be due
to Landlord within ten (10) days after written invoice to Tenant.
Notwithstanding the foregoing, Tenant's obligation to pay for the cost of any
earthquake insurance premiums shall be limited to an amount equal or less than
four (4) times the cost of the fire and extended coverage premiums. It is
understood and agreed that Tenant's obligation under this paragraph will be
prorated to reflect the commencement and termination dates of this Lease.

          C.   TENANT'S INSURANCE:  Tenant, at its sole cost, agrees to insure
its Alterations for their full replacement value (without depreciation) and to
obtain worker's compensation and public liability and property damage
insurance for occurrences within the Premises with a $4,000,000.00 combined
single limit for bodily injury and property damage. Tenant shall name Landlord
and Landlord's lender as an additional insured, shall deliver a copy of the
policies and renewal certificates to

                                     Page 7
<PAGE>
Landlord. All such policies shall provide for thirty (30) days' prior written
notice to Landlord of any cancellation, termination, or reduction in coverage.

          D.  Waiver.  Landlord and Tenant hereby waive any and all rights each
may have against the other on account of any loss or damage occasioned to the
Landlord or the Tenant as the case may be, or to the Premises or its contents,
and which may arise from any risk covered by their respective insurance
policies, as set forth above. The parties shall use their reasonable efforts to
obtain from their respective insurance companies a waiver of any right of
subrogation which said insurance company may have against the Landlord or the
Tenant, as the case may be.

     13.  TAXES:  Tenant shall be liable and shall pay prior to delinquency, for
all taxes and assessments levied against personal property and trade or business
fixtures, and agrees to pay, as additional rental, all real estate taxes and
assessment installments (special or general) or other impositions or charges
which may be levied on the Premises, upon the occupancy of the Premises and
including any substitute or additional charges which may be imposed during, or
applicable to the Lease Term including real estate tax increases due to a sale
or other transfer of the Premises (but not city or county deed conveyance
taxes), as they appear on the City and County tax bills during the Lease Term,
and as they become due. It is understood and agreed that Tenant's obligation
under this paragraph will be prorated to reflect the Commencement and Expiration
Dates of this Lease. In any time during the Lease Term a tax, excise on rents,
business license tax, or any other tax, however described, is levied or assessed
against Landlord, as a substitute or addition in whole or in part for taxes
assessed or imposed on land or Buildings in the Project, Tenant shall pay and
discharge his pro rata share of such tax or excise on rents or other tax before
it becomes delinquent, except that this provision is not intended to cover net
income taxes, inheritance, gift or estate tax imposed upon the Landlord. In the
event that a tax is placed, levied, or assessed against Landlord and the taxing
authority takes the position that the Tenant cannot pay and discharge his pro
rata share of such tax on behalf of the Landlord, then at the sole election of
the Landlord, the Landlord may increase the rental charged hereunder by the
exact amount of such tax and Tenant shall pay such increase as additional rent
hereunder.

Notwithstanding the provisions of this Paragraph 13, if property taxes increase
during the lease term as a result of a reassessment due to a voluntary change of
ownership, Tenant's shall be responsible for payment of the resulting property
tax increase as follows: during the first twelve months, Tenant shall be
responsible for payment of one third (1/3) of the tax increase; during the
second twelve months, Tenant shall be responsible for payment of two thirds
(2/3) of the tax increase, thereafter Tenant shall be responsible for payment of
the entire tax increase.

     14.  UTILITIES:  Tenant shall pay directly to the providing utility all
water, gas, heat, light, power, telephone and other utilities supplied to the
Premises which are separately metered. Landlord shall not be liable for a loss
of or injury to property, however occurring, through or in connection with or
incidental to furnishing or failure to furnish any utilities to the Premises and
Tenant shall not be entitled to abatement or reduction of any portion of the
Base Monthly Rent so long as any failure to provide and furnish the utilities to
the Premises is due to any cause beyond the Landlord's reasonable control
provided, however, that Landlord shall use its best efforts to assist Tenant to
arrange for the prompt restoration of services that are interrupted for any
reason.

     15.  ABANDONMENT:  Tenant shall not abandon the Premises at any time during
the Lease Term; and if Tenant shall abandon said Premises, or be dispossessed by
process of law, or otherwise, any personal property belonging to Tenant and left
on the Premises shall be deemed to be abandoned, at the option of Landlord,
except such property as may be mortgaged to Landlord. Notwithstanding the
foregoing, Tenant shall be entitled to suspend its operations on the Premises
and vacate the Premises provided that Tenant continues to timely pay rent and
perform all other obligations of Tenant under this Lease, and further provided
that Tenant provides a security guard or

                                     Page 8
<PAGE>
other reasonable security protection for the Premises.

          16.  FREE FROM LIENS:  Tenant shall keep the Premises and the Building
free from any liens arising out of any work performed, materials furnished, or
obligations incurred by Tenant or claimed to have been performed for Tenant. In
the event Tenant fails to discharge, or fails to take action acceptable to
Landlord to discharge, any such lien within ten (10) days after receiving notice
of the filing, Landlord shall be entitled to discharge such lien at Tenant's
expense and all resulting costs incurred by Landlord, including attorney's fees
shall be due from Tenant as additional rent.

          17.  COMPLIANCE WITH GOVERNMENTAL REGULATIONS:  Tenant shall, at its
sole cost and expense, comply with all of the requirements of all Municipal,
State and Federal authorities now in force, or which may hereafter be in force,
pertaining to the said Premises, and shall faithfully observe in the use of the
Premises all Municipal ordinances and State and Federal statutes now in force or
which may hereafter be in force. The judgment of any court or competent
jurisdiction, or the admission of Tenant in any action or proceeding against
Tenant, whether Landlord be a party thereto or not, that Tenant has violated any
such ordinance or statute in the use of the Premises, shall be conclusive of
that fact as between Landlord and Tenant.

          18.  TOXIC WASTE AND ENVIRONMENTAL DAMAGE

               A.   TENANT'S RESPONSIBILITY:  Except for the materials listed on
Exhibit "E", Tenant shall not, without the prior written consent of Landlord,
bring, use, or permit upon the Premises, or generate, emit, or dispose from the
Premises any chemicals, toxic or hazardous gaseous, liquid or solid materials,
or waste, including without limitation, material or substance having
characteristics of ignitability, corrosivity, reactivity, or toxicity or
substances or materials which are listed on any of the Environmental Protection
Agency's lists of hazardous wastes or which are identified in Sections 66680
through 66685 of Title 22 of the California Administrative Code as the same may
be amended from time to time ("Hazardous Materials"). Tenant may use small
quantities of household chemicals such as adhesive, lubricants, and cleaning
fluids in order to conduct its business at the Premises. In order to obtain
consent, Tenant shall deliver to Landlord its written proposal describing the
toxic material to be brought onto the Premises, measures to be taken for storage
and disposal thereof, safety measures to be employed to prevent pollution of the
air, ground, surface, and ground water. Landlord hereby acknowledges and
consents to Tenant's initial proposal, attached in the form of the list on
Exhibit "E". Landlord's approval as to future proposals may be withheld in its
reasonable judgment. In the event Landlord consents to Tenant's use of Hazardous
Materials on the Premises, Tenant represents and warrants that Tenant will (i)
adhere to all reporting and inspection requirements imposed by Federal, State,
County or Municipal laws, ordinances or regulations and upon request, will
provide Landlord a copy of any such reports or agency inspections, (ii) obtain
and upon request, provide Landlord copies of all necessary permits required for
the use and handling Hazardous Materials on the Premises, (iii) enforce
Hazardous Materials handling and disposal practices consistent with industry
standards, and (iv) properly close the facility with regard to Hazardous
Materials including the removal or decontamination of any process piping,
mechanical ducting, storage tanks, containers, or trenches which have come into
contact with Hazardous Materials and obtain a closure certificate from the local
administering agency prior to the Expiration Date. Landlord may employ, at
Tenant's  expense, an independent engineer or consultant to periodically inspect
Tenant's operations to verify that Tenant is complying with its obligations
under this paragraph. Such inspections shall only be conducted (i) after twenty
four (24) hours' written notice to Tenant, and (ii) during Tenant's normal
business hours.

               B.   TENANT'S INDEMNITY REGARDING HAZARDOUS MATERIALS:  Tenant
shall comply, at its sole cost, with all laws pertaining to, and shall indemnify
and hold Landlord harmless from any claims, liabilities, costs or expenses
incurred or suffered by Landlord arising from such bringing, using, permitting,
generating, emitting or disposing of Hazardous Materials by Tenant. Tenant's
indemnification and hold

                                     Page 9
<PAGE>
harmless obligations include, without limitation, (i) claims, liability, costs
or expenses resulting from or based upon administrative, judicial (civil or
criminal) or other action, legal or equitable, brought by any private or public
person under common law or under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Resource Conservation and
Recovery Act of 1980 ("RCRA") or any other Federal, State, County or Municipal
law, ordinance or regulation, (ii) claims, liabilities, costs or expenses
pertaining to the identification, monitoring, cleanup, containment, or removal
of Hazardous Materials from soils, riverbeds or aquifers including the provision
of an alternative public drinking water source, and (iii) all costs of defending
such claims.

          C. ENVIRONMENTAL MONITORING:  Landlord and its agents shall have the
right, at Tenant's sole cost and expense to inspect, investigate, sample and/or
monitor the Premises, including any air, soil, water, groundwater or other
sampling or any other testing, digging, drilling or analysis to determine
whether Tenant is complying with the terms of this paragraph 18. If Landlord
discovers that Tenant is not in compliance with the terms of this paragraph, any
such costs incurred by Landlord, including attorneys' and consultants' fees
shall be due and payable by Tenant to Landlord within five days following
Landlord's written demand therefore.

     19. INDEMNITY:  As a material part of the consideration to be rendered to
Landlord, Tenant hereby waives all claims against Landlord for damages to goods,
wares and merchandise, and all other personal property in, upon or about said
Premises and for injuries to persons in or about said Premises, from any cause
arising from Tenant's or Tenant's agents, employees, or Invitees use of the
Premises, and Tenant will hold Landlord harmless from any damage or injury to
any person, or to the goods, wares and merchandise and all other personal
property of any person, arising from the use of the Premises by Tenant, or from
the failure of Tenant to keep the Premises in good condition and repair, as
herein provided. Further, in the event Landlord is made party to any litigation
due to the acts or omission of Tenant, Tenant will indemnify and hold Landlord
harmless from any such claim or liability including Landlord's costs and
expenses and reasonable attorney's fees incurred in defending such claims, to
the extent that Landlord is not contributorily negligent. Landlord will hold
Tenant harmless from any damage or injury to any person, or to the goods, wares
and merchandise and all other personal property of any person, arising from the
use of the Premises by Landlord or from Landlord's failure to keep the Premises
in good condition and repair, as herein provided. Further, in the event Tenant
is made party to any litigation due to the acts or omission of Landlord,
Landlord will indemnify and hold Tenant harmless from any such claim or
liability including Tenant's costs and expenses and reasonable attorney's fees
incurred in defending such claims, to the extent that Tenant is not
contributorily negligent.

     20. ADVERTISEMENTS AND SIGNS:  Tenant will not place or permit to be
places, in, upon or about the said Premises any unusual or extraordinary signs,
or any signs not approved by the city or other governing authority. The Tenant
will not place, or permit to be placed, upon the Premises, any signs,
advertisements or notices without the written consent of the Landlord as to
type, size, design, lettering, coloring and location, and such consent will not
be unreasonably withheld. Landlord hereby consents to the placement of a sign
with the dimensions and at the location described on Exhibit "F". Any sign so
placed on the Premises shall be removed by Tenant, at its expense, prior to the
Expiration Date or promptly following the earlier termination of the lease and
Tenant shall repair any damage or injury to the Premises caused thereby, and if
not so removed by Tenant then Landlord may have same so removed at Tenant's
expense.

     21. ATTORNEY'S FEES:  In case any proceeding or suit should be brought for
the possession of the Premises, for the recovery of any sum due hereunder, or
because of the breach of any other covenant herein, the losing party shall pay
to the prevailing party a reasonable attorney's fee as part of its costs which
shall be deemed to have accrued on the commencement of such action.

                                    Page 10
<PAGE>
     22. TENANT'S DEFAULT:  The occurrence of any of the following shall
constitute a material default and breach of this Lease by Tenant: a) Any failure
by Tenant to pay the rental or to make any other payment required to be made by
Tenant hereunder provided however, that Tenant may cure such default by payment
to Landlord of the Base Monthly Rent or other sum due within ten (10) days after
receipt by Tenant of written notice specifying Landlord has failed to receive
the amount in question; b) The abandonment of the Premises by Tenant; c) A
failure by Tenant to observe and materially perform any other provision of this
Lease to be observed or performed by Tenant, where such failure continues for
thirty (30) days after written notice thereof by Landlord to Tenant; provided,
however, that if the nature of such default is such that the same cannot
reasonably be cured within such thirty (30) day period Tenant shall not be
deemed to be in default if Tenant shall within such period commence such cure
and thereafter diligently prosecute the same to completion; d) The making by
Tenant of any general assignment for the benefit of creditors; the filing by or
against Tenant of a petition to have Tenant adjudged a bankrupt or of a petition
for reorganization or arrangement under any law relating to bankruptcy (unless,
in the case of a petition filed against Tenant, the same is dismissed after the
filing); the appointment of a trustee or receiver to take possession of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where possession is not restored to Tenant within thirty
(30) days; or the attachment, execution or other judicial seizure of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where such seizure is not discharged within thirty (30)
days. The notice requirements set forth herein are in lieu of and not in
addition to the notices required by California Code of Civil Procedure Section
1161.

          A. REMEDIES:  In the event of any such default by Tenant, then in
addition to any other remedies available to Landlord at law or in equity,
Landlord shall have the immediate option to terminate this Lease and all rights
of Tenant hereunder by giving written notice of such intention to terminate. In
the event that Landlord shall elect to so terminate this Lease then Landlord may
recover from Tenant: a) the worth at the time of award of any unpaid rent which
had been earned at the time of such termination; plus b) the worth at the time
of award of the amount by which the unpaid rent would have been earned after
termination until the time of award exceeds the amount of such rental loss
Tenant proves could have been reasonably avoided; plus c) the worth at the time
of award of the amount by which the unpaid rent for the balance of the Lease
Term after the time of award exceeds the amount of such rental loss that Tenant
proves could be reasonably avoided; plus d) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant's failure to perform his obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom, and e) at
Landlord's election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable California law.
The term "rent", as used herein, shall be deemed to be and to mean the minimum
monthly installments of Base Monthly Rent and all other sums required to be paid
by Tenant pursuant to the terms of this Lease, all other such sums being
deemed to be additional rent due hereunder. As used in (a) and (b) above, the
"worth at the time of award" to be computed by allowing interest at the rate of
the discount rate of the Federal Reserve Bank of San Francisco plus five (5%)
percent per annum. As used in (c) above, the "worth at the time of award" to be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one (1%) percent.

          B. RIGHT TO RE-ENTER:  In the event of such default by Tenant,
Landlord shall also have the right, with or without terminating this Lease, to
re-enter the Premises and remove all persons and property from the Premises;
such property may be removed and stored in a public warehouse or elsewhere at
the cost of and for the account of Tenant and disposed of by Landlord in any
manner permitted by law.

          C. ABANDONMENT:  In the event of the abandonment of the Premises by
Tenant or in the event that Landlord shall elect to re-enter as provided in
paragraph 22(B) above or shall take possession of the Premises pursuant to legal
proceeding or pursuant to any notice provided by law, then if Landlord does not
elect to terminate

                                    Page 11
<PAGE>
this Lease as provided in paragraph 22(A) above, then the provisions of
California Civil Code Section 1951.4, as amended from time to time, shall apply
and Landlord may from time to time, without terminating this Lease, either
recover all rental as it becomes due or relet the Premises or any part thereof
for such term or terms and at such rental or rentals and upon such other terms
and conditions as Landlord in its sole discretion may deem advisable with the
right to make alterations and repairs to the Premises. In the event that
Landlord shall elect to so relet, then rentals received by Landlord from such
reletting shall be applied; first, to the payment of any indebtedness other than
Base Monthly Rent due hereunder from Tenant to Landlord; second, to the payment
of any cost of such reletting; third, to the payment of the cost of any
alterations and repairs to the Premises necessary to relet the Premises; fourth,
to the payment of Base Monthly Rent due and unpaid hereunder; and the residue,
if any, shall be held by Landlord and applied in payment of future Base Monthly
Rent as the same may become due and payable hereunder. Should that portion of
such rentals received from such reletting during any month, which is applied by
the payment of rent hereunder, be less than the rent payable during that month
by Tenant hereunder, then Tenant shall pay such deficiency to Landlord
immediately upon demand therefor by Landlord. Such deficiency shall be
calculated and paid monthly. Tenant shall also pay to Landlord, as soon as
ascertained, any costs and expenses incurred by Landlord in such reletting or in
making such alterations and repairs not covered by the rentals received from
such reletting.

         D. NO TERMINATION: No re-entry or taking possession of the Premises by
Landlord pursuant to 22(B) or 22(C) of this Article 22 shall be construed as an
election to terminate this Lease unless a written notice of such intention be
given to Tenant or unless the termination thereof be decreed by a court of
competent jurisdiction. Notwithstanding any reletting without termination by
Landlord because of any default by Tenant, Landlord may at any time after such
reletting elect to terminate this Lease for any such default.

     23. SURRENDER OF LEASE: The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, shall not automatically effect a
merger of the Lease with Landlord's ownership of the Building or Premises.
Instead, at the option of Landlord, Tenant's surrender may terminate all or any
existing sublease or subtenancies, or may operate as an assignment to Landlord
of any or all such subleases or subtenancies, thereby creating a direct
Landlord-Tenant relationship between Landlord and any subtenants.

     24.  HABITUAL DEFAULT: Notwithstanding anything to the contrary contained
in paragraph 22, 22(A)(B)(C) and (D), the parties hereto agree that if the
Tenant shall have defaulted in the performance of any (but not necessarily the
same) term or condition of this Lease for three or more times during any twelve
month period during the Lease Term hereof, then such conduct shall, at the
election of the Landlord, represent a separate event of default which cannot be
cured by the Tenant. Tenant acknowledges that the purpose of this provision is
to prevent repetitive defaults by the Tenant under the Lease, which work a
hardship upon the Landlord, and deprive the Landlord of the timely performance
by the Tenant hereunder.

     25. LANDLORD'S DEFAULT: In the event of Landlord's failure to perform any
of its covenants or agreements under this Lease, Tenant shall give Landlord
written notice of such failure and shall give Landlord thirty (30) days or such
other reasonable opportunity to cure or to commence to cure such failure prior
to any claim for breach or for damages resulting from such failure. In addition,
upon any such failure by Landlord, Tenant shall give notice by registered or
certified mail to any person or entity with a security interest in the Premises
("Mortgagee") that has provided Tenant with notice of its interest in the
Premises, and shall provide such Mortgagee a reasonable opportunity to cure such
failure, including such time to obtain possession of the Premises by power of
sale or judicial foreclosure, if such should prove necessary to effectuate a
cure. Tenant agrees that each of the Mortgagees to whom this Lease has been
assigned is an expressed third party beneficiary hereof. Tenant shall not make
any prepayment of rent more than one (1) month in advance without the prior
written

                                    Page 12

<PAGE>

consent of such Mortgagee. Tenant waives any right under California Civil Code
Section 1950.7 or any other present or future law to the collection of any
payment or deposit from such Mortgagee or any purchaser at a foreclosure sale
of such Mortgagee's interest unless such Mortgagee or such purchaser shall have
actually received and not refunded the applicable payment or deposit.

     26.  NOTICES: All notices, demands, requests, or consents required to be
given under this Lease shall be sent in writing by U.S. certified mail, return
receipt requested, by acknowledged facsimile, or by personal delivery addressed
to the party to be notified at the address for such party specified in paragraph
1 of this Lease, or to such other place as the party to be notified may from
time to time designate by at least fifteen (15) days prior notice to the
notifying party.

     27. ENTRY BY LANDLORD: Tenant shall permit Landlord and his agents to enter
into and upon said Premises at all reasonable times subject to any security and
safety regulations of Tenant for the purpose of inspecting the same or for the
purpose of maintaining the Premises or for the purpose of making repairs,
alterations or additions to any other portion of said Premises or for the
purpose of erecting additional building(s) and improvements on the land where
the Premises are situated, or on adjacent land owned by Landlord, including the
erection and maintenance of such scaffolding, canopies, fences and props as may
be required without any abatement or reduction of Base Monthly Rent or without
any liability to Tenant for any loss of occupation or quiet enjoyment of the
Premises thereby occasioned; and Tenant shall permit Landlord and his agents, at
any time within one hundred eighty (180) days prior to the Expiration Date (or
at any time during the Lease if Tenant is in default hereunder), to place upon
the Premises any "For Sale" or "For Lease" signs and exhibit the Premises to
real estate brokers and prospective tenants at reasonable hours.

Notwithstanding the provisions of this Paragraph 27, Landlord (i) shall not
enter the Premises without first giving twenty-four (24) hours notice to Tenant
of such entry except in the case of emergency, (ii) shall be accompanied by an
employee of Tenant at all times while in the Premises, (iii) shall comply with
Tenant's safety and security procedures applicable to the Premises, and (iv)
shall not unreasonably interfere with Tenant's use of the Premises.

     28. DESTRUCTION OF PREMISES:

         A. Destruction by an Insured Casualty: In the event of a partial
destruction of the Premises by a casualty for which Landlord has received
insurance proceeds sufficient to repair the damage or destruction during the
Lease Term from any cause, Landlord shall inspect the Premises within five (5)
business days and shall notify Tenant within ten (10) business days thereafter
of Landlord's intent to repair such damage or destruction, together with an
estimate of when the restoration work required may be complete. If restoration
of the Premises cannot be substantially completed within (i) 180 days, or (ii)
50% of the remaining Lease Term, Landlord or Tenant shall have the option to
terminate this Lease by delivery to the other of a written notice of election to
terminate within seven (7) days after Tenant receives the estimate from
Landlord. Tenant shall be entitled to a proportionate reduction of Base Monthly
Rent while such repairs are being made, such proportionate reduction to be based
upon the extent to which the making of such repairs shall interfere with the
business carried on by Tenant in the Premises, in the reasonable judgment of
Landlord. For purposes of this paragraph "partial destruction" shall mean (i)
destruction of no greater than one-third (1/3) of the replacement cost of the
Premises, including the replacement cost of the Tenant improvements paid for by
Landlord, or (ii) destruction of a single portion of the Building which prevents
Tenant from conducting its normal course of business. In the event the Premises
are more than partially destroyed, Landlord or Tenant may elect to terminate
this Lease. Landlord shall not be required to restore Alterations or replace
Tenant's fixtures or personal property. In respect to any partial destruction
which Landlord is obligated to repair or may elect to repair under the terms of
this paragraph, the provision of Section 1932, Subdivision 2, and of Section
1933, Subdivision 4, of the Civil Code of the State of California and any other
similarly enacted statute are waived

                                    Page 13
<PAGE>
by Tenant and the provisions of this paragraph 28 shall govern in the case of
such destruction.

      B. Destruction by an Uninsured Casualty: In the event of a total or
partial destruction of Premises by an uninsured casualty the Lease shall
automatically terminate, unless (i) Landlord elects to rebuild, and (ii) the
damage can be repaired within one hundred eighty (180) days. If Landlord elects
to contribute to payment for an uninsured loss, such contributed amount shall be
amortized over the useful life of the improvements and such amortization shall
be reimbursed by Tenant to Landlord as additional rent together with interest at
the prime rate of Union Bank plus two percent (2%).

   29. ASSIGNMENT OR SUBLEASE:

      A. Consent by Landlord: In the event Tenant desires to assign this Lease
or any interest therein including, without limitation, a pledge, mortgage or
other hypothecation, or sublet the Premises or any part thereof, Tenant shall
deliver to Landlord executed counterparts of any such agreement and of all
ancillary agreements with the proposed assignee or subtenant, financial
statements, and any additional information as reasonably required to determine
whether it will consent to the proposed assignment or sublease. The notice shall
give the name and current address of the proposed assignee/subtenant, proposed
use of the Premises, rental rate and current financial statement; and upon
request to Tenant, Landlord shall be given additional information as reasonably
required to determine whether it will consent to the proposed assignment or
sublease. Landlord shall then have a period of thirty (30) days following
receipt of such notice within which to notify Tenant in writing that Landlord
elects (i) to terminate this Lease as to the space so affected as of the date so
specified by Tenant in which event Tenant will be relieved of all further
obligations hereunder as to such space, (ii) to permit Tenant to assign or
sublet such space to the named assignee/subtenant on the terms and conditions
set forth in the notice, or (iii) to refuse consent. If Landlord should fail to
notify Tenant in writing of such election within said thirty (30) day period,
Landlord shall be deemed to have elected option (ii) above. If Landlord
exercises its option to terminate this Lease in part in the event Tenant desires
to sublet or assign part of the Premises, then (i) this Lease shall end and
expire, with respect to such part of the Premises, on the date upon which the
proposed sublease was to commence, and (ii) from and after such date, the Base
Monthly Rent and Tenant's allocable share of all other costs and charges shall
be adjusted, based upon the proportion that the rentable area of the Premises
remaining bears to the total rentable area of the Premises. If Landlord does not
exercise its option to terminate this Lease, Landlord's consent (which must be
in writing and in form reasonably satisfactory to Landlord) to the proposed
assignment or sublease shall not be unreasonably withheld or delayed, provided
and upon condition that: (i) The proposed assignee or subtenant is engaged in a
business that is limited to the use expressly permitted under this Lease; (ii)
The proposed sublease shall be in form reasonably satisfactory to Landlord;
(iii) Tenant shall reimburse Landlord on demand for any costs that may be
incurred by Landlord in connection with said assignment or sublease, including
the costs of making investigations as to the acceptability of the proposed
assignee or subtenant and legal costs incurred in connection with the granting
of any requested consent; and (iv) Tenant shall not have advertised or
publicized in any way the availability of the Premises without prior notice to
Landlord.

      B. Assignment or Subletting Consideration: Any rent or other economic
consideration realized by Tenant under any such sublease and assignment in
excess of the rent payable hereunder (including an allocation of the purchase
price attributable to Tenant's leasehold interest in the event of a sale of the
Tenant's business), after the net unamortized cost of the Tenant Improvements
for which Tenant has itself paid, and reasonable subletting and assignment
costs, shall be divided and paid sixty-seven percent (67%) to Landlord and
thirty-three percent (33%) to Tenant. Tenant's obligation to pay over Landlord's
portion of the consideration shall constitute an obligation for additional rent
hereunder. The above provisions relating to Landlord's right to terminate the
Lease and relating to the allocation of bonus rent are independently negotiated
terms of the Lease, constitute a material inducement for the Landlord to

                                    Page 14
<PAGE>
enter into the Lease, and are agreed as between the parties to be commercially
reasonable. No assignment or subletting by Tenant shall relieve Tenant of any
obligation under this Lease. Any assignment or subletting which conflicts with
the provisions hereof shall be void.

     C. No Release: Any assignment or sublease shall be made only if and shall
not be effective until the assignee or subtenant shall execute, acknowledge and
deliver to Landlord an agreement, in form and substance satisfactory to
Landlord, whereby the assignee or subtenant shall assume all of the obligations
of this Lease on the part of Tenant to be performed or observed and shall be
subject to all of the covenants, agreements, terms, provisions and conditions
contained in this Lease. Notwithstanding any such sublease or assignment and the
acceptance of rent or additional rent by Landlord from any subtenant or
assignee, Tenant or any guarantor shall and will remain fully liable for the
payment of the rent and additional rent due, and to become due hereunder, for
the performance of all of the covenants, agreements, terms, provisions and
conditions contained in this Lease on the part of Tenant to be performed and for
all acts and omissions of any licensee, subtenant, assignee or any other person
claiming under or through any subtenant that shall be in violation of any of the
terms and conditions of this Lease, and any such violation shall be deemed to be
a violation by Tenant. Tenant shall further indemnify, defend and hold Landlord
harmless from and against any and all losses, liabilities, damages, costs and
expenses (including reasonable attorney fees) resulting from any claims that may
be made against Landlord by the proposed assignee or subtenant or by any real
estate brokers or other persons claiming a commission or similar compensation in
connection with the proposed assignment or sublease.

     D. Effect of Default: In the event of Tenant's default, Tenant hereby
assigns all rents due from any assignment or subletting to Landlord as security
for performance of its obligations under this Lease and Landlord may collect
such rents as Tenant's Attorney-in-Fact, except that Tenant may collect such
rents unless a default occurs as described in paragraph 22 above. The
termination of this Lease due to Tenant's default shall not automatically
terminate any assignment or sublease then in existence. At the election of
Landlord, the assignee or subtenant shall attorn to Landlord and Landlord shall
undertake the obligations of the Tenant under the sublease or assignment;
provided the Landlord shall not be liable for prepaid rent, security deposits or
other defaults of the Tenant to the subtenant or assignee, or any acts or
omissions of Tenant, its agents, employees or invitees.

     30. CONDEMNATION: If any part of the Premises shall be taken for any public
or quasi-public use, under any statute or by right of eminent domain or private
purchase in lieu thereof, and a part thereof remains which is suitable for
Tenant's intended use hereunder, Landlord shall inspect the Premises within five
(5) days after receiving notice of such taking, and shall notify Tenant within
ten (10) days thereafter of Landlord's intent to continue or terminate this
Lease, together with an estimate of the impact of such taking on the Premises
and Tenant's ability to continue operating its business. If the taking is for no
more than one-third (1/3) of the Premises nor any single portion of the Building
such that the taking would prevent Tenant from conducting its normal course of
business, this Lease shall as to the part so taken, terminate as of the date
title shall vest in the condemnor or purchaser, and the Base Monthly Rent
payable hereunder shall be adjusted so that the Tenant shall be required to pay
for the remainder of the Lease Term only such portion of such rent as the value
of the part remaining after such taking bears to the value of the entire
Premises prior to such taking; but in such event Landlord shall have the option
to terminate this Lease as of the date when title to the part so taken vests in
the condemnor or purchaser. If all of the Premises, or such part thereof be
taken so that there does not remain a substantial portion suitable for Tenant's
intended use hereunder or there does not remain sufficient portion to permit
Tenant to continue operating its business, this Lease shall thereupon terminate.
If a part or all of the Premises be taken, all compensation awarded upon such
taking shall go to the Landlord and the Tenant shall have no claim thereto but
Landlord shall cooperate with Tenant to recover compensation for damage to or
taking of any Alterations or for Tenant's moving costs. Tenant hereby waives the
provisions of

                                    Page 15

<PAGE>
California Code of Civil Procedures Section 1265.130 and any other similarly
enacted statue are waived by Tenant and the provisions of this paragraph 30
shall govern in the case of such destruction.

     31.  EFFECTS OF CONVEYANCE:  The term Landlord as used in this Lease, means
only the owner for the time being of the land and Building containing the
Premises, so that, in the event of any sale or other conveyance of said land or
Building, or in the event of a master Lease of the Building, the Landlord shall
be and hereby is entirely freed and relieved of all covenants and obligations of
the Landlord hereunder, provided that the purchaser or master tenant of the
Building has assumed and agreed to carry out any and all covenants and
obligations of the Landlord hereunder. Landlord shall transfer and deliver
Tenant's security deposit to the purchaser at any such sale or the master tenant
of the Building, and thereupon the Landlord shall be discharged from any further
liability in reference thereto.

     32.  SUBORDINATION:  In the event Landlord notifies Tenant in writing,
this Lease shall be subordinate to any ground Lease, deed of trust, or other
hypothecation for security now or hereafter placed upon the real property of
which the Premises are a part and to any and all advances made on the security
thereof and to renewals, modifications, replacements and extensions thereof.
Tenant agrees to promptly execute and deliver any documents which may be
required to effectuate such subordination. Notwithstanding such subordination,
Tenant's right to quiet possession of the Premises shall not be disturbed if
Tenant is not in default and so long as Tenant shall pay the rent and observe
and perform all of the provisions of this Lease. At the request of any lender,
Tenant agrees to execute and deliver any reasonable modifications of this Lease
which do not materially adversely affect Tenant's rights hereunder.

     33.  WAIVER:  The waiver by Landlord of any breach of any term, covenant
or condition, herein contained shall not be deemed to be a waiver of such term,
covenant or condition or any subsequent breach of the same or any other term,
covenant or condition herein contained. The subsequent acceptance of rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding
breach by Tenant of any team, covenant or condition of this Lease, other than
the failure of Tenant to pay the particular rental so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of
such rent. No delay or omission in the exercise of any right or remedy by
Landlord shall impair such right or remedy or be construed as a waiver thereof
by Landlord. No act or conduct of Landlord, including, without limitation, the
acceptance of keys to the Premises shall constitute acceptance of the surrender
of the Premises by Tenant before the Expiration Date. Landlord's consent to or
approval of any act by Tenant which require Landlord's consent or approvals
shall not be deemed to waive or render unnecessary Landlord's consent to or
approval of any subsequent act by Tenant.

     34.  HOLDING OVER:  Any holding over after the termination or Expiration
Date, shall be construed to be a tenancy from month to month terminable on
thirty (30) days written notice from either party and Tenant shall pay Base
Monthly Rent to Landlord at a rate equal to the greater of (i) one hundred
fifty percent (150%) of the Base Monthly Rent due in the month preceding the
termination of Expiration Date or (ii) one hundred fifty percent (150%) of the
Fair Market Rental (as defined in paragraph 37). Any holding over shall
otherwise be on the terms and conditions herein specified, except those
provisions relating to the Lease Term and any options to extend or renew, which
provisions shall be of no further force and effect following the expiration of
the applicable exercise period. Tenant shall indemnify, defend, and hold
Landlord harmless from all loss or liability (including, without limitation,
any loss or liability resulted from any claim against Landlord made by any
succeeding tenant) founded on or resulting from Tenant's failure to surrender
the Premises and losses to Landlord due to lost opportunities to lease the
Premises to succeeding tenants.

     35.  SUCCESSORS AND ASSIGNS:  The covenants and conditions herein
contained shall, subject to the provisions of paragraph 28, apply to and bind
the heirs, successors, executors, administrators and assigns of all the parties
hereto; and all of the

                                    Page 16
<PAGE>
parties hereto shall be jointly and severally liable hereunder.

     36. ESTOPPEL CERTIFICATES: Tenant shall at any time during the Lease Term,
within ten (10) days following written notice from Landlord, execute and
deliver to Landlord a statement in writing certifying that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
such modification) and the date to which the rent and other charges are paid in
advance, if any, and acknowledging that there are not, to Tenant's knowledge,
any uncured defaults on the part of Landlord hereunder or specifying such
defaults if they are claimed. Any such statement may be conclusively relied
upon by any prospective purchaser or encumbrancer of the Premises. Tenant's
failure to deliver such statement within such time shall be conclusive upon
the Tenant that: (i) this Lease is in full force and effect, without
modification except as may be represented by Landlord; (ii) there are not
uncured defaults in Landlord's performance. Tenant also agrees to provide the
most current three (3) years of audited financial statements within five (5)
days of a request by Landlord for Landlord's use in financing the Premises with
commercial lenders.

     37. OPTION TO EXTEND THE LEASE TERM:

          A. Grant and Exercise of Option: Landlord hereby grants to Tenant,
upon and subject to the terms and conditions set forth in this paragraph, the
option (the "Option") to extend the Lease Term for an additional term (the
"Option Term"), which Option Term shall be a period of sixty (60) months. The
Option Term shall be exercised, if at all, by written notice to Landlord on or
before the date that is six (6) months prior to the Expiration Date. If Tenant
exercises the Option, each of the terms, covenants and conditions of this
Lease except this paragraph shall apply during the Option Term as though the
expiration date of the Option Term was the date originally set forth herein as
the Expiration Date, provided that the Base Monthly Rent to be paid shall be
the greater of (i) the Base Monthly Rent applicable to the period immediately
prior to the commencement of the Option Term, or (ii) the Fair Market Rental,
as hereinafter defined, for the Premises for the Option Term. Anything
contained herein to the contrary notwithstanding, if Tenant is in monetary or
material non-monetary default under any of the terms, covenants or conditions
of this Lease either at the time Tenant exercises the Option or at any time
thereafter prior to the commencement date of the Option Term, Landlord shall
have, in addition to all of Landlord's other rights and remedies provided in
this Lease, the right to terminate the Option upon notice to Tenant, in which
event the expiration date of this Lease shall be and remain the Expiration
Date. As used herein, the term "Fair Market Rental" for the Premises shall mean
the rental and all other monetary payments including any escalations and
adjustments thereto (including without limitation Consumer Price Indexing) then
being obtained for new leases of space comparable in age and quality to the
Premises in the locality of the Building that Landlord could obtain during the
Option Term from a third party desiring to lease the Premises for the Option
Term. Fair Market Rental shall further take into account that (i) that Tenant
is in occupancy of the Premises and making functional use of the space in its
then existing condition, and (ii) that no brokerage commission is payable.

          B. Determination of Fair Market Rental: If Tenant exercises the
Option, Landlord shall send to Tenant a notice setting forth the Fair Market
Rental for the Premises for the Option Term, on or before the date that is one
hundred fifty (150) days prior to the Expiration Date. If Tenant disputes
Landlord's determination of the Fair Market Rental for the Option Term, Tenant
shall, within thirty (30) days after the date of Landlord's notice setting
forth the Fair Market Rental for the Option Term, send to Landlord a notice
stating that Tenant either (i) elects to terminate its exercise of the Option,
in which event the Option shall lapse and this Lease shall terminate on the
Expiration Date, or (ii) disagrees with Landlord's determination of Fair Market
Rental for the Option Term and elects to resolve the disagreement as provided
in paragraph 37(C) below. If Tenant does not send to Landlord a notice as
provided in the previous sentence, Landlord's determination of the Fair Market
Rental shall be the basis for determining the Base Monthly Rent to be paid by
Tenant hereunder during the Option Term. If Tenant elects to resolve the
disagreement as provided in paragraph 37(C) below and such procedures shall not
have been concluded prior to the commencement

                                    Page 17
<PAGE>
date of the Option Term, Tenant shall pay Base Monthly Rent to Landlord
hereunder adjusted to reflect the Fair Market Rental as determined by Landlord
in the manner provided above. If the amount of Fair Market Rental is finally
determined pursuant to paragraph 37(C) below is greater than Landlord's
determination, Tenant shall pay to Landlord the difference between the amount
paid by Tenant and the Fair Market Rental as so determined in paragraph 37(C)
below within thirty (30) days after the determination. If the Fair Market Rental
as finally determined in paragraph 37(C) below is less than Landlord's
determination, the difference between the amount paid by Tenant and the Fair
Market Rental as so determined in paragraph 37(C) below shall be credited
against the next installments of rent due from Tenant to Landlord hereunder.

      C. Resolution of a Disagreement over the Fair Market Rental: Any
disagreement regarding the Fair Market Rental shall be resolved as follows:

            1. Within thirty (30) days after Tenant's response to Landlord's
notice to Tenant of the Fair Market Rental, Landlord and Tenant shall meet no
less than two (2) times, at a mutually agreeable time and place, to attempt to
resolve any such disagreement.

            2. If within the thirty (30) day period referred to in (i) above,
Landlord and Tenant can not reach agreement as to the Fair Market Rental, they
shall each select one appraiser to determine the Fair Market Rental. Each such
appraiser shall arrive at a determination of the Fair Market Rental and submit
their conclusions to Landlord and Tenant within thirty (30) days after the
expiration of the thirty (30) day consultation period described in (i) above.

            3. If only one appraisal is submitted within the requisite time
period, it shall be deemed to be the Fair Market Rental. If both appraisals are
submitted within such time period, and if the two appraisals so submitted differ
by less than ten percent (10%) of the higher of the two, the average of the two
shall be the Fair Market Rental. If the two appraisals differ by more than ten
percent (10%) of the higher of the two, then the two appraisers shall
immediately select a third appraiser who shall within thirty (30) days after his
or her selection make a determination of the Fair Market Rental and submit such
determination to Landlord and Tenant. This third appraisal will then be averaged
with the closer of the two previous appraisals and the result shall be the Fair
Market Rental.

            4. All appraisers specified pursuant to this paragraph shall be
members of the American Institute of Real Estate Appraisers with not less than
ten (10) years experience appraising office and industrial properties in the
Santa Clara Valley. Each party shall pay the cost of the appraiser selected by
such party and one-half of the cost of the third appraiser plus one-half of any
other costs incurred in resolving the dispute pursuant to this paragraph.

      D. Tenant's Right to Rescind Exercise of Option: If the determination of
fair market value pursuant to the foregoing provision results in a fair market
value which is in excess of an amount Tenant believes is appropriate, Tenant
shall be entitled to rescind its exercise of the option to extend within ten
(10) days after the date on which Tenant is notified of the determination of
fair market value, in which event the term of this lease shall be extended from
the date on which the Lease would have expired if the option were never
exercised plus an additional period of four months.

   38. OPTIONS: All Options provided Tenant in this Lease are personal and
granted to original Tenant and are not exercisable by any third party should
Tenant assign or sublet all or a portion of its rights under this Lease, unless
Landlord consents to permit exercise of any option by any assignee or subtenant,
in Landlord's sole discretion. In the event that Tenant hereunder has any
multiple options to extend this Lease, a later option to extend the Lease cannot
be exercised unless the prior option has been so exercised.

   39. QUIET ENJOYMENT: Upon Tenant's faithful and timely performance of

                                    Page 18
<PAGE>
all the terms and covenants of the Lease, Tenant shall quietly have and hold the
Premises for the Lease Term and any extensions thereof.

     40. BROKERS: Tenant represents it has not utilized or contacted a real
estate broker or finder with respect to this Lease other than Grubb & Ellis
Commercial Real Estate and Tenant agrees to indemnify and hold Landlord harmless
against any claim, cost, liability or cause of action asserted by any other
broker or finder claiming through Tenant.

     41. LANDLORD'S LIABILITY: If Tenant should recover a money judgment against
Landlord arising in connection with this Lease, the judgment shall be satisfied
only out of Landlord's interest in the Premises including the improvements and
real property and neither Landlord or any of its partners, officers, directors
or employees shall be liable personally for any deficiency.

     42. AUTHORITY OF PARTIES:

          A. Corporate Authority: If Tenant is a corporation, each individual
executing this Lease on behalf of said corporation represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of said
corporation, in accordance with a duly adopted resolution of the Board of
Directors of said corporation or in accordance with the by-laws of said
corporation, and that this Lease is binding upon said corporation in accordance
with its terms.

          B. Limited Partnerships: If the Landlord herein is a limited
partnership, it is understood and agreed that any claims by Tenant on Landlord
shall be limited to the assets of the limited partnership. And furthermore,
Tenant expressly waives any and all rights to proceed against the individual
partners or the officers, directors or shareholders of any corporate partner,
except to the extent of their interest in said limited partnership.

     43. TRANSPORTATION DEMAND MANAGEMENT PROGRAMS: Should a government agency
or municipality require Landlord to institute TDM (Transportation Demand
Management) facilities and/or program after the Lease Commencement Date, Tenant
hereby agrees that the cost of TDM imposed facilities required on the Premises,
including but not limited to employee showers, lockers, cafeteria, or lunchroom
facilities, shall be included as Tenant Improvement Costs and any ongoing costs
or expenses associated with a TDM program, such as an on-site TDM coordinator,
which are required for the Premises and not provided by Tenant shall be provided
by Landlord with such costs being included as additional rent and reimbursed to
Landlord by Tenant. Landlord shall capitalize all such costs as are permitted to
be capitalized.

     44. RIGHT OF FIRST OFFER: Landlord grants Tenant a right of first offer to
lease the remaining portion of the building in which the Premises are a part,
which is currently leased by Wells Fargo Bank ("Upstairs Space"), together with
the right in accordance with this Lease to use the parking spaces and other
common areas on the real property on which the parking and other common areas
are located ("Additional Premises"). The location and dimension of the
Additional Premises are depicted on Exhibit "A."

Prior to each lease or voluntary sale by Landlord of all or any portion of the
Additional Premises, Landlord will notify Tenant in writing of its intention,
setting forth the terms and conditions under which it proposes to lease
("Notice"). Tenant will have the 15 day period immediately after the Notice has
been given to notify Landlord in writing that Tenant elects to lease the space
so offered. Tenant will be entitled to lease the Upstairs Space on the same
terms and conditions as Landlord proposes to offer to third parties. If Tenant
elects to lease the Upstairs Space, Landlord and Tenant will promptly negotiate
in good faith and execute an appropriate amendment to this Lease consistent with
this Paragraph 44, and thereafter any reference in this Lease to the Premises
will include the Additional Premises.

                                    Page 19
<PAGE>
If Tenant decides not to lease the Upstairs Space or fails to respond within
the 15 day period after the Notice, then without further notice to Tenant,
Landlord may offer the Upstairs Space to others for lease during the following
90-day period on the same terms and conditions originally offered Tenant. Any
Landlord offer to lease or voluntarily sell after that 90-day period will
require an additional notice to Tenant in accordance with this provision.

     45.  MISCELLANEOUS PROVISIONS:

          A.  Rent:  All monetary sums due from Tenant to Landlord under this
Lease shall be deemed to be rent.

          B.  Management Fee:  All maintenance and utility services administered
by Landlord and subject to reimbursement by Tenant shall include a property
management fee to Landlord of fifteen percent (15%) of such services.

          C.  Performance by Landlord:  If Tenant fails to perform any
obligation required under this Lease or by law or government regulation,
Landlord in its sole discretion may without notice perform such obligation, in
which event Tenant shall pay Landlord as additional rent all sums paid by
Landlord in connection with such substitute performance within ten (10) days
following Landlord's written notice for such payment.

          D.  Interest:  All sums hereunder, including rent and additional rent,
if not paid when due, shall bear interest at the maximum rate permitted under
California law accruing from the date due until the date paid to Landlord.

          E.  Rights and Remedies:  All rights and remedies hereunder are
cumulative and not alternative to the extent permitted by law and are in
addition to all other rights and remedies in law and in equity.

          F.  Survival of Indemnities:  All indemnification, defense, and hold
harmless obligations of Landlord and Tenant under the Lease shall survive the
expiration or sooner termination of the Lease.

          G.  Severability:  If any term or provision of this Lease is held
unenforceable or invalid by a court of competent jurisdiction, the remainder of
the Lease shall not be invalidated thereby but shall be enforceable in
accordance with its terms, omitting the invalid or unenforceable term.

          H.  Choice of Law:  This Lease shall be governed by and construed in
accordance with California law.

          I.  Time:  Time is of the essence hereunder.

          J.  Entire Agreement:  This instrument contains all of the agreements
and conditions made between the parties hereto and may not be modified orally or
in any other manner other than by an agreement in writing signed by all of the
parties hereto or their respective successors in interest.

          K.  Representations:  Tenant acknowledges that neither Landlord or its
affiliates or agents have made any agreements, representations, warranties or
promises with respect to the demised Premises or the Building of which they are
a part, or with respect to present or future rents, expenses, operations,
tenancies or any other matter. Except as herein expressly set forth herein,
Tenant relied on no statement of Landlord or its agents for that purpose.

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

                                    Page 20
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have executed these presents, the day
and year first above written.

LANDLORD: Sobrato Interests,            TENANT, VISX: Incorporated,
a California limited partnership        a California corporation

BY: [Illegible]                         BY: [Illegible]
   -----------------------------           -------------------------------
ITS: General Manager                    ITS: Vice President Chairman
                                             [Illegible]
                                             CEO

                                    Page 21
<PAGE>
                                  EXHIBIT "A"
                                    PREMISES

                                     [MAP]

                                  [FLOOR PLAN]

                                    Page 22

<PAGE>
                                  EXHIBIT "B"
                                Working Drawings

                                    Page 23
<PAGE>
                                  EXHIBIT "C"
                                     BUDGET

VISX, Incorporated
3400 Central Expressway       VISX Budget-7/14/02
Santa Clara, CA.                        52,344 Sq. Ft.

<TABLE>
<CAPTION>
Description                   Subcontractor       SDC Costs      VISX Upgrades        Total          PSF
-----------                   -------------       ---------      -------------       --------       -----
<S>                           <C>                 <C>            <C>                 <C>            <C>
HVAC                          Therma               $88,200        $34,889            $123,109       $2.35
HVAC Equipment Rehab          Therma               $20,000             $0             $20,000       $0.38
Plumbing                      Therma               $14,234        $10,791             $26,025       $0.48
Electrical                    SASCO               $153,200        $60,800            $224,000       $4.28
Fire Sprinklers               Superior             $18,860         $7,327             $25,157       $0.50
Drywall/Acoust Insul          K&C                  $90,562        $34,602            $125,264       $2.39
Acoustical Ceilings           K&C                  $29,077             $0             $29,077       $0.58
Doors, Frames, Hdwr           Trim Tech            $52,318        $10,043             $52,359       $1.19
Ceramic Tile                  California Tile       $5,500             $0              $5,500       $0.11
Flooring                      Benessi              $89,638        $11,362            $101,000       $1.93
VCT Remove if ACM             Allow                 $9,000             $0              $9,000       $0.17
Rough Carp./Struct Modil      Permian               $2,819        $25,767             $28,586       $0.55
Concrete Sealer               B&W                   $3,000             $0              $3,000       $0.06
Toilet Access/Ptn's           Western Shower        $2,270             $0              $2,270       $0.04
Glass and Glazing             Buds                 $17,517         $2,483             $20,000       $0.38
Chain Link Fence              AAA                     $300         $4,850              $5,150       $0.10
Painting & VWC                A&B                  $17,500         $1,500             $19,000       $0.36
Blinds                        Buranzon                $200         $5,100              $5,300       $0.10
Fire Ext and Sign             K-Fire                $2,000             $0              $2,000       $0.04
Millwork                      Triad                     $0        $42,077             $42,077       $0.80
Landscape Rehab               Allow                 $2,500             $0              $2,500       $0.05
Projection Screens            Brookman                  $0         $2,210              $2,210       $0.04
Adjust Roll Up Doors          Allow                 $1,500             $0              $1,500       $0.03
Plan Check Fee                Allow                 $2,000             $0              $2,000       $0.04
Building Permit Fee           Allow                 $3,500             $0              $3,500       $0.07
Fire Dept Permit              Allow                     $0             $0                  $0       $0.00
Construction Cleanup          Allow                 $6,000             $0              $6,000       $0.11
Blueprinting                  Allow                 $3,000             $0              $3,000       $0.06
Mold Test                     Allow                   $500             $0                $500       $0.01
Architect                     Kobza                $20,000             $0             $20,000       $0.38
Traffic Impact Fees           Allow                     $0             $0                  $0       $0.00
Dumpsters/Toilets             Allow                 $7,500             $0              $7,500       $0.14
Construction Tax              Allow                     $0             $0                  $0       $0.00
Utility Company Fees          Excluded                  $0             $0                  $0       $0.00
School Tax                    Allow                     $0             $0                  $0       $0.00
                                                  --------       --------            --------      ------
Subtotal                                          $672,813       $253,801            $926,614      $17.70
Contingency @5%                                    $33,641        $12,690             $46,331       $0.89
SCC Fee @8%                                        $55,516        $21,319             $77,836       $1.49
                                                  --------       --------            --------      ------
Total                                             $762,970       $287,810          $1,050,780      $20.07
                                        PSF         $14.58          $5.50              $20.07
                                                  --------       --------            --------      ------
</TABLE>

Submitted by:                           Approved by:

----------------------------            ----------------------------
Donald A. Jones - V.P.                  E. Paul Eder - V.P/C.F.O.
Sobrato Construction Corporation        VISX, Incorporated,
                                        a California Corporation

Approved by:

----------------------------
John M. Sobrato - Trustee
Sobrato Interests.
a California limited partnership

                                     Page 1

                                   Page 24(A)

<PAGE>
VISX Budget Qualifications and Upgrades
Date: 7/14/92

Qualifications:
 1. Permits and fees are allowance items only.
 2. Office glass is to be 3/8" not 1/2" as specified.
 3. No wall coverings included. An allowance of $1500 for accent paint is
    included.
 4. Wood base in lobby only.
 5. No security hardware modifications to exterior doors have been provided for.
 6. Chain link fence to be 10' high, galvanized, non-painted.
 7. Excludes: Utility company fees
              Power poles for landscape partitions
              Exterior lighting upgrade
              Overtime
              Sound system
              Security
              Telephone cabling
              Data cabling
              Darco pricing issues. Note: a response from Sasco/Valley and
              budget pricing is attached. Therma's response and budget pricing
              is forthcoming. No costs associated with this report are included
              in the budget.
 8. An allowance of $9,000 is carried for removal of VCT in rooms #166, 167,
    168 and 169 should the VCT prove to be asbestos-containing material.

Upgrades:
 1. HVAC: $34,889 (see back-up)
 2. Plumbing: $10,791 (see back-up)
 3. Electrical: $60,800 (see back-up)
 4. Fire sprinklers: $7,327. This is to change existing heads to semi-recessed.
 5. Drywall/Acoustical Ceiling:
    a. Meeting room/Lunch room design                                $10,350
    b. Slot channel reveals                                            1,900
    c. Board room ceiling (premium)                                    8,600
    d. Lobby soffit                                                    2,600
    e. Box undergrid columns                                           2,880
    f. Radius walls:  9'-$1512 (premium)
                     17'-$2980 (premium)                               4,492
    g. Sound conditioning at lab #166                                  3,780
                                                                     -------
                                                                     $34,602
 6. Doors, frames and hardware: $10,043 Vinyl doors.
 7. Flooring: $11,362. Enhancer back if on carpet C-2.
 8. Rough carpentry/structural modification: $25,767 (see back-up).
 9. Glass and glazing: $2,483. New door #45 to exterior.
10. Chain link fence: $4,850 (tenant cost).
11. Painting: An allowance of $1500 is included for accent
    walls not currently defined.
12. Blinds: $5,100. Exterior application only, if desired.
13. Millwork: $42,077. All millwork is a tenant cost.
    Two low bids had spread of $200. (see back-up).
14. Projection screen: $2,210. Includes relocating
    existing screen and one (1) new 70" x 70" screen.

                                   Page 24(B)

<PAGE>
                                  EXHIBIT "D"
                                  Intended Use

                                    Page 25
<PAGE>
                                  EXHIBIT "E"
                                Toxic Chemicals

                                    Page 26
<PAGE>
                                  EXHIBIT "F"
                                    Signage

Landlord consents to construction by Tenant, at its expense, of either, (i) a
ground mounted monument sign in the landscape area adjacent to the Building or
(ii) a Building mounted sign on the panel located between the floors, of a size
and type consistent with those allowed the other tenants in the Park. In
addition Tenant shall be entitled to identification on the existing shared
monument signs at the project entries.

                                    Page 27
<PAGE>
                      [SOBRATO DEVELOPMENT COMPANIES LOGO]

SOBRATO DEVELOPMENT COMPANIES

                                           10600 N. De Anza Boulevard, Suite 200
                                                        Cupertino, CA 95014-2075
                                                                  (408) 446-0700
                                                              FAX (408) 446-0583

                            FIRST AMENDMENT TO LEASE

This Amendment is made this 2nd day of October, 1992 by and between Sobrato
Interests, a California limited partnership having an address at 10600 N. De
Anza Blvd., Suite 200, Cupertino, California 95014 ("Landlord") and Visx,
Incorporated, a California corporation having its principal place of business
at 3400 Central Expressway, Santa Clara, California ("Tenant").

                                   WITNESSETH

WHEREAS Landlord and Tenant entered into a lease ("Lease") dated July 16, 1992
for the premises ("Premises") located at 3400 Central Expressway, Santa Clara,
California; and

WHEREAS effective October 2, 1992, Landlord and Tenant wish to modify the Lease
to document the Commencement Date based on Substantial Completion of the Tenant
Improvements which occurred on October 1, 1992;

NOW, THEREFORE, in order to effect the intent of the parties as set forth above
and for good and valuable consideration exchanged between the parties, the
Lease is amended effective October 2, 1992 as follows:

  1. The Commencement Date of the Lease shall be October 1, 1992 and the Lease
     shall expire on September 30, 1997.

  2. Except as hereby amended, the Lease and all of the terms, covenants and
     conditions thereof are ratified and confirmed.

IN WITNESS WHEREOF, the parties hereto have set their hands to this Amendment
as of the day and date first above written.

LANDLORD: Sobrato Interests             TENANT: VISX, Incorporated,
a California limited partnership        a California corporation,

BY: /s/ [illegible]                     BY: /s/ [illegible]
   -------------------------------      -----------------------------------
Its: General Partner

<PAGE>

-------------------------(SOBRATO DEVELOPMENT COMPANIES LOGO)-------------------
SOBRATO                                    10600 N. De Anza Boulevard, Suite 200
DEVELOPMENT                                             Cupertino, CA 95014-2075
COMPANIES                                                         (408) 446-0700
                                                              FAX (408) 446-0583

                           SECOND AMENDMENT TO LEASE

This second amendment to lease ("Amendment") is made this 8th day of March,
1996 by and between Sobrato Interests, a California limited partnership having
an address at 10600 N. De Anna Blvd., Suite 200, Cupertino, California 95014
("Landlord") and VISX, Incorporated, a Delaware corporation having its
principal place of business at 3400 Central Expressway, Santa Clara, California
("Tenant").

                                   WITNESSETH

WHEREAS Landlord and Tenant entered into a lease dated July 16, 1992 and a
First Amendment to Lease dated October 2, 1992 (collectively the "Lease") for
the premises ("Premises") located at 3400 Central Expressway, Santa Clara; and

WHEREAS effective January 19, 1996, Landlord and Tenant wish to modify the
Lease to reflect the Tenant's exercise of its right of First Offering to Lease;

NOW, THEREFORE, in order to effect the intent of the parties as set forth above
and for good and valuable consideration exchanged between the parties, the
Lease is amended as follows:

     1.  PREMISES: The first sentence of the second paragraph of Section 2 of
the Lease (Premises) shall be replaced with the following: The entirety of that
certain real property commonly known as 3400 Central Expressway, Santa Clara,
California consisting of a two-story building of 108,844 square foot building
and 385 parking stalls in a project consisting of a total of five (5) buildings
including the Premises, totaling 412,171 square feet ("Project") as outlined in
red on Exhibit "A".

     2.  TERM & RENTAL: Section 4 of the Lease (Term & Rental) shall be replaced
with the following: The Commencement Date of the Lease occurred on October 1,
1992 and shall end eighty four (84) months following Substantial Completion of
the Tenant Improvements desired by Tenant to the second floor of the Premises
("Second Floor Commencement Date"). In addition to all other sums payable by
Tenant under this Lease, prior to the Second Floor Commencement Date Tenant
shall pay as base monthly rent ("Base Monthly Rent") for the Premises the sum of
Forty Six Thousand Five Hundred and 90/100 Dollars ($46,500.90) per month. From
the Second Floor Commencement

                                     Page 1
<PAGE>
Date through September 30, 1997, Tenant shall pay as Base Monthly Rent the sum
of One Hundred Two Thousand Four Hundred Thirty Five and 90/100 Dollars
($102,435.90) per month. Beginning on October 1, 1997 through the balance of
the Lease Term, subject to adjustment pursuant to Section 3 of this Amendment,
Tenant shall pay as Base Monthly Rent the sum of One Hundred Seven Thousand
Seven Hundred Fifty Five and 56/100 Dollars ($107,755.56) per month. Base
Monthly Rent shall be due on or before the first day of each calendar month
during Lease Term. All sums payable by Tenant under this Lease shall be paid in
lawful money of the United States of America, without offset or deduction, and
shall be paid to Landlord at such place or places as may be designated from
time to time by Landlord. Base Monthly Rent for any period less than a calendar
month shall be a pro rata portion of the monthly installment.

     3.  Rental Adjustment:  Section 4.A of the Lease (Rental Adjustment) shall
be replaced with the following: On the twenty fourth (24th) month following the
Second Floor Commencement Date and every twenty four (24) months thereafter,
(an "Adjustment Date"), the then payable Base Monthly Rent shall be subject to
adjustment based on the increase, if any, in the Consumer Price Index that has
occurred during the twenty four (24) months preceding the then applicable
Adjustment Date. The basis for computing the adjustment shall be the U.S.
Department of Labor, Bureau of Labor Statistic's Consumer Price Index for All
Urban Consumers, All Items, 1982-84=100, for the San Francisco-Oakland-San Jose
area ("Index"). The Index most recently published preceding the Second Floor
Commencement Date for the first Adjustment (or previous Adjustment Date, as
applicable), shall be considered the "Base Index". If the Index most recently
published preceding the Adjustment Date ("Comparison Index") is greater than
the Base Index, the then payable Base Monthly Rent shall be increased by
multiplying the then payable Base Monthly Rent by a fraction, the numerator of
which is the Comparison Index and the denominator of which is the Base Index.
Notwithstanding any subsequent decrease in the Index, the increase in the CPI
for any calendar year shall never be less than four percent (4%) per year
compounded annually nor more than eight percent (8%) per year compounded
annually. On adjustment of the Base Monthly Rent Landlord shall notify Tenant
by letter stating the new Base Monthly Rent. Landlord's calculation of the Base
Monthly Rent escalation shall be conclusive and binding unless Tenant objects to
said calculation within a thirty (30) day period following receipt from
Landlord of such calculation. Landlord's failure to adjust Base Monthly Rent on
an Adjustment Date shall not prevent Landlord from retroactively adjusting Base
Monthly Rent at any subsequent time during the Lease Term. If the Index base
year is changed so that it differs from 1982-84=100, the Index shall be
converted in accordance with the conversion factor published by the United
States Department of Labor, Bureau of Labor Statistics. If the Index is
discontinued or revised during the Lease Term, such other government index or
computation with which it is replaced shall be used in order to obtain
substantially the same result as would be obtained if the index had not been
discontinued or revised.

     4.  Construction and Possession:  The entirety of Section 7 of the Lease
(Construction and Possession) shall be replaced with the following:

                                     Page 2
<PAGE>
The Tenant Improvements shall be constructed by McLarney Construction, as
general contractor, ("General Contractor") in accordance with the working
drawings ("Working Drawings") attached as Exhibit "1" and budget for the cost
of the Tenant Improvements ("Budget") attached as Exhibit "2". The Tenant
Improvements constructed hereunder shall comply with all existing applicable
municipal, local, state and federal laws, statutes, rules, regulations and
ordinances. Landlord shall provide a warranty, excluding routine maintenance or
damage caused by the negligence or misuse by Tenant, on the Tenant Improvements
for one (1) year from the Second Floor Commencement Date. Landlord and Tenant
shall be responsible for and shall pay the cost of the Tenant Improvements as
allocated in the Budget attached as Exhibit "2". Tenant shall contract directly
with General Contractor for the portion of the Tenant Improvements to be
constructed at Tenant's expense and Tenant reserves the right to eliminate or
delay the construction of this work.

In the event Tenant makes any changes to the Working Drawings which increase
the cost of Tenant Improvements paid for by Landlord ("Cost Increase"), the
Cost Increase shall be paid for by Tenant in cash within seven (7) days after
payment by Landlord to the General Contractor. In the event Tenant makes any
changes to the Final Working Drawings after March 1, 1996 which cause the
General Contractor's construction schedule to be delayed, the Second Floor
Commencement Date shall occur one (1) day in advance of Substantial Completion
as defined below for each day of delay.

The Second Floor Commencement Date shall not be deemed to have occurred until
such date Landlord notifies Tenant that Substantial Completion of the Tenant
Improvements paid for by Landlord has occurred and the second floor of the
Premises is ready for occupancy. "Substantial Completion" shall mean that (i)
all necessary governmental approvals, permits, consents, and certificates have
been obtained by or for Landlord for the lawful construction by Landlord, and
occupancy by Tenant of the Premises, excluding any Tenant Improvement work paid
for by Tenant, (ii) the Tenant Improvements paid for by Landlord have been
completed consistent with the Working Drawings, and (iii) said interior is in a
"broom clean" finished condition.

      5. MAINTENANCE OF PREMISES: In the second to last sentence of Section
11.C of the Lease (Tenant's Allocable Share) change Tenant's Allocable Share of
Building Costs to 100% and Tenant's Allocable Share of Project Costs to 26.41%.
In addition add "Landlord agrees to replace to membrane of the roof of the
Premises within six (6) months following the date of this Amendment."

      6. OPTION TO EXTEND THE TERM OF THE LEASE: In the third sentence of
Section 37.A of the Lease (Grant & Exercise of Option) add "ninety five percent
(95%) of" before the phrase "Fair Market Rental".

      7. MISCELLANEOUS: All defined terms shall have the same meanings as in
the Lease, except as otherwise stated in this Amendment. Except as hereby
amended, the Lease and all of the terms,

                                     Page 3
<PAGE>
covenants and conditions thereof shall remain unmodified and in full force and
effect. In the event of any conflict or inconsistency between the terms
and provisions of this Amendment and the terms and provisions of the Lease, the
terms and provisions of this Amendment shall prevail.

IN WITNESS WHEREOF, the parties hereto have set their hands to this Amendment
as of the day and date first above written.

Landlord                                Tenant
Sobrato Interests,                      VISX, Incorporated
a California limited partnership        a Delaware corporation

By: [Illegible]                         By: [Illegible]
   -----------------------------           -------------------------------
Its: General Partner                    Its: CFO

                                     Page 4
<PAGE>
                        EXHIBIT "1" -- Working Drawings

Prepared by Arctec, dated 2/21/96, last revision date 3/5/96.

Sheets: A0.1, A1.0, A2.0, A2.1, A2.2, A6.0, A6.1, A6.2, A7.0, A8.0, A8.1, A9.0,

A9.1, A9.2, A10.0, A10.1, A10.2, A10.3, A10.5.

                                     Page 5
<PAGE>

10600 North De Anza Blvd.     408.445.0700
Suite 200                     Facsimile:  408.448.0583
Cupertino, CA 85014-2075      www.sobrato.com

                                            [SOBRATO DEVELOPMENT COMPANIES LOGO]

                            THIRD AMENDMENT TO LEASE

This third amendment to lease ("Third Amendment") is made this 29th day of
March, 2002 ("Effective Date") by and between Sobrato Interests, a California
Limited Partnership, having an address at 10600 N. De Anza Blvd., Suite 200,
Cupertino, California 95014 ("Landlord"), and VISX, Incorporated, having its
principal place of business at 3400 Central Expressway in Santa Clara,
California ("Tenant").

                                   WITNESSETH

WHEREAS Landlord and Tenant entered into a lease dated July 16, 1992 and
subsequent lease amendments dated October 2, 1992 and March 8, 1996
(collectively the "Lease") for the premises ("Premises") located at 3400
Central Expressway in Santa Clara, California; and

WHEREAS effective the date of this Third Amendment, Landlord and Tenant wish to
modify the Lease to: (i) extend the Lease Term; (ii) specify the Base Monthly
Rent due during the extended Lease Term; (iii) conditionally provide for
Landlord's participation in HVAC maintenance costs; and (iv) modify the timing
of Tenant's notice of intent to exercise its Lease Option pursuant to Lease
section 37.A.;

NOW, THEREFORE, in order to effect the intent of the parties as set forth above
and for good and valuable consideration exchanged between the parties, the
Lease is amended as of the Effective Date as follows:

1.  The current Expiration Date of the Lease is May 23, 2003. By virtue of this
    Third Amendment, the Lease Expiration Date is changed to May 31, 2008.

2.  Base Monthly Rent payable by Tenant during the extended Lease Term is
    payable according to the following schedule:

    May 24, 2003 through May 31, 2005:           $146,939.00 per month
    June 1, 2005 through May 31, 2006:           $152,382.00 per month
    June 1, 2006 through May 31, 2007:           $157,824.00 per month
    June 1, 2007 through May 31, 2008:           $163,266.00 per month

3.  Landlord agrees to reimburse Tenant for HVAC maintenance costs (excluding
    capital replacement costs) incurred by Tenant in excess of $25,000.00 during
    any year of the extended Lease Term provided Tenant does not defer, delay,
    or otherwise manipulate the timing of HVAC maintenance to its advantage
    under this paragraph.
<PAGE>
4. Tenant retains its Option to extend the Lease Term under the conditions
   specified in Lease section 37A. except that Tenant's notice shall be
   required no earlier than 18 months and no later than 9 months prior to the
   Lease Expiration Date.

5. All defined terms shall have the same meanings as in the Lease, except as
   otherwise stated in this Third Amendment.

Except as hereby amended, the Lease and all of the terms, covenants and
conditions thereof shall remain unmodified and in full force and effect. In the
event of any conflict or inconsistency between the terms and provisions of this
Third Amendment and the terms and provisions of the Lease, the terms and
provisions of this Third Amendment shall prevail.

IN WITNESS WHEREOF, the parties hereto have set their hands to this Third
Amendment as of the day and date first above written.

Landlord                                Tenant
Sobrato Interests,                      VISX, Incorporated
a California limited partnership

By:  [illegible]                        By:  [illegible]
   _____________________________           _____________________________

Its: General Partner                    Its: Executive V.P. OperationsSECOND AMENDMENT TO
RIGHTS AGREEMENT 

        This
Second Amendment (the “Amendment”), dated as of November 12, 2004, between
REGAL-BELOIT Corporation, a Wisconsin corporation (the “Company”), and EquiServe
Trust Company, N.A. (“EquiServe”), to the Rights Agreement between the Company
and EquiServe (as successor Rights Agent to BankBoston, N.A. (“BankBoston”)),
dated as of January 28, 2000, and as amended by the First Amendment to Rights
Agreement, dated as of June 11, 2002 (as so amended, the “Rights
Agreement”). 

W I T N E S S E T H 

        WHEREAS,
the Company and BankBoston previously entered into the Rights Agreement, pursuant to which
BankBoston was appointed to serve as the Rights Agent; and 

        WHEREAS,
on June 11, 2002, EquiServe became the Rights Agent under the Rights Agreement by
operation of Section 21 thereof, and the Company and EquiServe entered into the First
Amendment to Rights Agreement, dated as of June 11, 2002; and 

        WHEREAS,
pursuant to Section 27 of the Rights Agreement, under circumstances set forth therein, (i)
the Company may supplement or amend any provision of the Rights Agreement without the
approval of any holders of certificates representing Common Shares of the Company, and
(ii) upon the delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the terms of
Section 27 of the Rights Agreement, the Rights Agent shall execute such supplement or
amendment; and 

        WHEREAS,
the Company desires to amend the Rights Agreement as set forth herein and to direct
EquiServe as Rights Agent to execute this Amendment. 

        NOW,
THEREFORE, in consideration of the promises and the mutual agreements herein set
forth, the parties hereby agree as follows: 

        Section
1. Direction to Rights Agent. The Company hereby directs EquiServe, in its capacity
as Rights Agent and in accordance with the terms of Section 27 of the Rights Agreement, to
execute this Amendment. 

        Section
2. Certification of Appropriate Officer. The undersigned officer of the Company,
being duly authorized on behalf of the Company, hereby certifies on behalf of the Company
to EquiServe that (a) he is an “appropriate officer” as such term is used in
Section 27 of the Rights Agreement, and (b) this Amendment is in compliance with Section
27 of the Rights Agreement. 

        Section
3. Amendment of Rights Agreement. Section 1a of the Rights Agreement shall be
amended to read in its entirety as follows: 

	 	        a.                      “Acquiring
Person” shall mean any Person (as such term is hereinafter                defined)
who or which, together with all Affiliates and Associates (as such                terms
are hereinafter defined) of such Person, shall be the Beneficial Owner (as
               such term is hereinafter defined) of 15% or more of the Common Shares of
the                Company then outstanding, but shall not include the Company, any
Subsidiary (as                such term is hereinafter defined) of the Company, any
employee benefit plan of                the Company or any Subsidiary of the Company, any
entity holding Common Shares                for or pursuant to the terms of any such
plan, or any trustee, administrator or                fiduciary of such a plan.
Notwithstanding the foregoing,  

	 	        (i)                      General
Electric Company, a New York corporation, and its Subsidiaries
               (collectively, “General Electric”) shall be deemed an “Acquiring
               Person” only at such time as General Electric shall be the Beneficial
Owner                of 20% or more of the Common Shares of the Company then outstanding;
provided, however, that the exception provided by this clause (i)
               shall cease to apply from and after the first time General Electric ceases
to be                the Beneficial Owner of 15% or more of the Common Shares of the
Company; and  

	 	        (ii)                      no
Person shall become an “Acquiring Person” as a result of an
               acquisition of Common Shares by the Company which, by reducing the number
of                shares outstanding, increases the proportionate number of shares
beneficially                owned by such Person to 15% (20% in the case of General
Electric so long as the                exception provided by clause (i) is applicable) or
more of the Common Shares of                the Company then outstanding; provided,
however, that if a Person                would, but for the foregoing, become an
Acquiring Person by reason of share                purchases by the Company and shall,
after such share purchases by the Company,                become the Beneficial Owner of
any additional Common Shares of the Company at                any time that the Person is
or thereby becomes the Beneficial Owner of 15% (20%                in the case of General
Electric so long as the exception provided by clause (i)                is applicable) or
more of the Common Shares of the Company then outstanding                (other than
Common Shares acquired solely as a result of corporate action of the
               Company not caused, directly or indirectly, by such Person), then such
Person                shall be deemed to be an “Acquiring Person.” 

	 	
Notwithstanding
the foregoing, if the Board of Directors of the Company determines in good faith that a
Person who would otherwise be an “Acquiring Person,” as defined pursuant to the
foregoing provisions of this paragraph (a), has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of Common Shares so that such
Person would no longer be an “Acquiring Person,” as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall not be deemed to be an
“Acquiring Person” for any purposes of this Agreement. 

        Section
4. Effectiveness and Continued Effectiveness. In accordance with the resolutions of
the Company’s Board of Directors adopted on November 12, 2004, the amendment to
the Rights Agreement set forth in Section 3 above is effective as of the time at which
such resolutions were adopted. The parties hereto hereby acknowledge and agree that,
except as specifically supplemented and amended, changed or modified in Section 3 above,
the Rights Agreement, as previously amended to the date hereof, shall be unaffected by
this Amendment and remain in full force and effect in accordance with its terms. 

-2- 

        Section
5. Execution in Counterparts. This Amendment may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute one and the same instrument. 

        Section
6. Defined Terms. Except as otherwise expressly provided herein, or unless the
context otherwise requires, all terms used but not defined herein shall have the meanings
assigned to them in the Rights Agreement. 

        Section
7. Governing Law. This Amendment shall be deemed to be a contract made under the
laws of the State of Wisconsin and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and performed
entirely within such State. 

[Signature Page
Follows] 

-3- 

        IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as
of the day and year above written. 

		REGAL-BELOIT CORPORATION
	
 	By:  /s/Henry W. Knueppel
		        Henry W. Knueppel
		        President and Chief Operating Officer
	
 	EQUISERVE TRUST COMPANY, N.A.
	
 	By:  /s/ Carol Mulvey-Eori
		        Its:  Managing Director

-4-

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