APPROXIMATELY 6500 RENTABLE SQUARE -------------------------------------------- ------------------------------------ FEET LOCATED AT: ------------------------- ------------------------------------------------------- 5451 AVENIDA ENCINAS, STES A,B,C,J...

[LOGO] EXHIBIT 10.1

SOUTHERN CALIFORNIA CHAPTER OF THE
SOCIETY OF INDUSTRIAL AND OFFICE REALTORS,-Registered Trademark- INC.

INDUSTRIAL REAL ESTATE LEASE
(MULTI -TENANT FACILITY)

ARTICLE ONE: BASIC TERMS

This Article One contains the Basic Terms of this Lease between the
Landlord and Tenant named below. Other Articles, Sections and Paragraphs of
the Lease referred to in this Article One explain and define the Basic Terms
and are to be read in conjunction with the Basic Terms.

Section 1.01. DATE OF LEASE: JULY 7, 1998
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Section 1.02. LANDLORD (INCLUDE LEGAL ENTITY): OCEAN POINT TECH CENTRE
------------------------------

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ADDRESS OF LANDLORD: 0000 XXXXXXX XXXXXXX, XXX #110
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CARLSBAD, CA 92008
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Section 1.03. TENANT (INCLUDE LEGAL ENTITY): VISTA MEDICAL TECHNOLOGIES INC.,
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ADDRESS OF TENANT: 0000 XXXXXXX XXXXXXX, STES A,B,C,J & K
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CARLSBAD, CA. 92008
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Section 1.04. PROPERTY: The Property is part of Xxxxxxxx's multi-tenant real
property development known as OCEAN POINT TECH CENTRE
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and described or depicted in Exhibit "A" (the "Project"). The Project
includes the land, the buildings and all other improvements located on the
land, and the common areas described in Paragraph 4.05(a). The Property is
(include street address, approximate square footage and description)

APPROXIMATELY 6500 RENTABLE SQUARE
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FEET LOCATED AT:
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5451 AVENIDA XXXXXXX, STES A,B,C,J & K
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CARLSBAD, CA 92008
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Section 1.05. LEASE TERM: 2 years 0 months BEGINNING ON DECEMBER 01, 1998
--- --- -----------------
or such other date as is specified in this Lease, and ENDING ON NOVEMBER 30, 2000
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Section 1.06. PERMITTED USES: (See Article Five) GENERAL OFFICE FOR MEDICAL
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RESEARCH COMPANY.
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Section 1.07. TENANT'S GUARANTOR: (If none, so state) NONE
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Section 1.08. BROKERS: (See Article Fourteen) (If none, so state)
LANDLORD'S BROKER: NONE
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TENANT'S BROKER: NONE
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Section 1.09. COMMISSION PAYABLE TO LANDLORD'S BROKER: (See Article Fourteen)
$ N/A
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Section 1.10. INITIAL SECURITY DEPOSIT: (See Section 3.03) $ 9,425.00
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Section 1.11. VEHICLE PARKING SPACES ALLOCATED TO TENANT: (See Section 4.05) NONE ASSIGNED
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Section 1.12. RENT AND OTHER CHARGES PAYABLE BY TENANT:

(a) BASE RENT: EIGHT THOUSAND FOUR HUNDRED FIFTY AND XX/100 Dollars ($ 8450.00 )
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per month for the first 24 months, as provided in Section 3.01, and shall be increased on the
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first day of the 25 month(s) after the Commencement Date, either (i) as provided in
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Section 3.02, or (ii) SEE RENTAL SCHEDULE
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. (If (ii) is completed, then (i) and Section 3.02 are inapplicable.)
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(b) OTHER PERIODIC PAYMENTS: (i) Real Property Taxes above the "Base Real Property Taxes" (See
Section 4.02); (ii) Utilities (See Section 4.03); (iii) Increased Insurance Premiums above "Base Premiums" (See
Section 4.04); (iv) Tenant's Initial Pro Rata Share of Common Area Expenses 7,95 % (See Section
----------------
4.05); (v) Impounds for Tenant's Share of Insurance Premiums and Property Taxes (See Section 4.08); (vi)
Maintenance, Repairs and Alterations (See Article Six).

Section 1.13. COSTS AND CHARGES PAYABLE BY LANDLORD: (a) Base Real Property Taxes (See Section 4.02);
(b) Base Insurance Premiums (See Section 4.04(c)); (c) Maintenance and Repair (See Article Six).

Section 1.14. LANDLORD'S SHARE OF PROFIT ON ASSIGNMENT OR SUBLEASE: (See Section 9.05) ONE
----------------
HUNDRED percent (100%) of the Profit (the "Landlord's Share").
---------------------- ------
Section 1.15. RIDERS: The following Rider's are attached to and made a
part of this Lease: (If none, so state)

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SECTION 15, 16, 17, 18, & 19
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ARTICLE TWO: LEASE TERM

Section 2.01. LEASE OF PROPERTY FOR LEASE TERM. Landlord leases the
Property to Tenant and Tenant leases the Property from Landlord for the Lease
Term. The Lease Term is for the period stated in Section 1.05 above and
shall begin and end on the dates specified in Section 1.05 above, unless the
beginning or end of the Lease Term is changed under any provision of this
Lease. The "Commencement Date" shall be the date specified in Section 1.05
above for the beginning of the Lease Term, unless advanced or delayed under
any provision of this Lease.

Section 2.02. DELAY IN COMMENCEMENT. Landlord shall not be liable to
Tenant if Landlord does not deliver possession of the Property to Tenant on
the Commencement Date. Landlord's non-delivery of the Property to Tenant on
that date shall not affect this Lease or the obligations of Tenant under this
Lease except that the Commencement Date shall be delayed until Landlord
delivers possession of the Property to Tenant and the Lease Term shall be
extended for a period equal to the delay in delivery of possession of the
Property to Tenant, plus the number of days necessary to end the Lease Term
on the last day of a month. If Landlord does not deliver possession of the
Property to Tenant within sixty (60) days after the Commencement Date, Tenant
may elect to cancel this Lease by giving written notice to Landlord within
ten (10) days after the sixty (60) -day period ends. If Tenant gives such
notice, the Lease shall be cancelled and neither Landlord nor Tenant shall
have any further obligations to the other. If Tenant does not give such
notice, Xxxxxx's right to cancel the Lease shall expire and the Lease Term
shall commence upon the delivery of possession of the Property to Tenant. If
delivery of possession of the Property to Tenant is delayed, Landlord and
Tenant shall, upon such delivery, execute an amendment to this Lease setting
forth the actual Commencement Date and expiration date of the Lease. Failure
to execute such amendment shall not affect the actual Commencement Date and
expiration date of the Lease.

Section 2.03. EARLY OCCUPANCY. If Tenant occupies the Property prior
to the Commencement Date, Xxxxxx's occupancy of the Property shall be subject
to all of the provisions of this Lease. Early occupancy of the Property
shall not advance the expiration date of this Lease. Tenant shall pay Base
Rent and all other charges specified in this Lease for the early occupancy
period.

Section 2.04. HOLDING OVER. Tenant shall vacate the Property upon the
expiration or earlier termination of this Lease. Tenant shall reimburse
Landlord for and indemnify Landlord against all damages which Landlord incurs
from Xxxxxx's delay in vacating the Property. If Tenant does not vacate the
Property upon the expiration or earlier termination of the Lease and Landlord
thereafter accepts rent from Tenant, Xxxxxx's occupancy of the Property shall
be a "month-to-month" tenancy, subject to all of the terms of this Lease
applicable to a month-to-month tenancy, except that the Base Rent then in
effect shall be increased by twenty-five percent (25%).

ARTICLE THREE: BASE RENT

Section 3.01. TIME AND MANNER OF PAYMENT. Upon commencement of this
Lease, Tenant shall pay Landlord the Base Rent in the amount stated in Paragraph
1.12(a) above for the first month of the Lease Term. On the first day of the
second month of the Lease Term and each month thereafter, Tenant shall pay
Landlord the Base Rent, in advance, without offset, deduction or prior demand.
The Base Rent shall be payable at Landlord's address or at such other place as
Landlord may designate in writing.

Section 3.02 Deleted.

Section 3.03 SECURITY DEPOSIT; INCREASES.

(a) Upon the commencement of this Lease, Tenant shall deposit with
Landlord a cash Security Deposit in the amount set forth in Section 1.10 above.
Landlord may apply all or part of the Security Deposit to any unpaid rent or
other charges due from Tenant or to cure any other defaults of Tenant. If
Landlord uses any part of the Security Deposit Tenant shall restore the Security
Deposit to its full amount within ten (10) days after Landlord's written
request. Tenant's failure to do so shall be a material default under this
Lease. No interest shall be paid on the Security Deposit. Landlord shall not
be required to keep the Security Deposit separate from its other accounts and no
trust relationship is created with respect to the Security Deposit.

(b) Each time the Base Rent is increased, Tenant shall deposit additional
funds with Landlord sufficient to increase the Security Deposit to an amount
which bears the same relationship to the adjusted Base Rent as the initial
Security Deposit bore to the initial Base Rent.

Section 3.04. TERMINATION; ADVANCE PAYMENTS. Upon termination of this
Lease under Article Seven (Damage or Destruction), Article Eight (Condemnation)
or any other termination not resulting from Xxxxxx's default, and after Tenant
has vacated the Property in the manner required by this Lease, Landlord shall
refund or credit to Tenant (or Xxxxxx's successor) the unused portion of the
Security Deposit, any advance rent or other advance payments made by Tenant to
Landlord, and any amounts paid for real property taxes and other reserves which
apply to any time periods after termination of the Lease.

ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT

Section 4.01. ADDITIONAL RENT. All charges payable by Tenant other than
Base Rent are called "Additional Rent." Unless this Lease provides otherwise,
Tenant shall pay all Additional Rent then due with the next monthly installment
of Base Rent. The term "rent" shall mean Base Rent and Additional Rent.

Section 4.02. PROPERTY TAXES.

(a) REAL PROPERTY TAXES. Landlord shall pay the "Base Real Property
Taxes" on the Property during the Lease Term. Base Real Property Taxes are
real property taxes applicable to the Property as shown on the tax bill for
the most recent tax fiscal year ending prior to the Commencement Date.
However, if the structures on the Property are not completed by the tax lien
date of such tax fiscal year, the Base Real Property Taxes are the taxes
shown on the first tax bill showing the full assessed value of the Property
after completion of the structures. Tenant shall pay Landlord the amount, if
any, by which the real property taxes during the Lease Term exceed the Base
Real Property Taxes. Subject to Paragraph 4.02(c), Tenant shall make such
payments within fifteen (15) days after receipt of Landlord's statement
showing the amount and computation of such increase. Landlord shall
reimburse Tenant for any real property taxes paid by Tenant covering any
period of time prior to or after the Lease Term.

(b) DEFINITION OF "REAL PROPERTY TAX." "Real property tax" means: (i)
any fee, license fee, license tax, business license fee, commercial rental
tax, levy, charge, assessment, penalty or tax imposed by any taxing authority
against the Property; (ii) any tax on the Landlord's right to receive, or the
receipt of, rent or income from the Property, or against Landlord's business
of leasing the Property; (iii) any tax or charge for fire protection,
streets, sidewalks, road maintenance, refuse or other services provided to
the Property by any governmental agency; (iv) any tax imposed upon this
transaction or based upon a re-assessment of the Property due to a change of
ownership, as defined by applicable law, or other transfer of all or part of
Landlord's interest in the Property; and (v) any charge or fee replacing any
tax previously included within the definition of real property tax. "Real
property tax" does not, however, include Landlord's federal or state income,
franchise, inheritance or estate taxes.

(c) JOINT ASSESSMENT. If the Property is not separately assessed,
Landlord shall reasonably determine Tenant's share of the real property tax
payable by Tenant under Paragraph 4.02(a) from the assessor's worksheets or
other reasonably available information. Tenant shall pay such share to
Landlord within fifteen (15) days after receipt of Landlord's written
statement.

(d) PERSONAL PROPERTY TAXES.

(i) Tenant shall pay all taxes charged against trade
fixtures, furnishings, equipment or any other personal property
belonging to Xxxxxx. Tenant shall try to have personal property
taxed separately from the Property.

(ii) If any of Tenant's personal property is taxed with the
Property, Tenant shall pay Landlord the taxes for the personal
property within fifteen (15) days after Xxxxxx receives a written
statement from Landlord for such personal property taxes.

Section 4.03. UTILITIES. Tenant shall pay, directly to the appropriate
supplier, the cost of all natural gas, heat, light, power, sewer service,
telephone, water, refuse disposal and other utilities and services supplied
to the Property. However, if any services or utilities are jointly metered
with other property, Landlord shall make a reasonable determination of
Tenant's proportionate share of the cost of such utilities and services and
Tenant shall pay such share to Landlord within fifteen (15) days after
receipt of Landlord's written statement.

Section 4.04 INSURANCE POLICIES.

(a) LIABILITY INSURANCE. During the Lease Term, Tenant shall maintain
a policy of commercial general liability insurance (sometimes known as broad
form comprehensive general liability insurance) insuring Tenant against
liability for bodily injury, property damage (including loss of use of
property) and personal injury arising out of the operation, use or occupancy
of the Property. Tenant shall name Landlord as an additional insured under
such policy. The initial amount of such insurance shall be One Million
Dollars ($1,000,000) per occurrence and shall be subject to periodic increase
based upon inflation, increased liability awards, recommendation of
Landlord's professional insurance advisers and other relevant factors. The
liability insurance obtained by Tenant under this Paragraph 4.04(a) shall (i)
be primary and non-contributing; (ii) contain cross-liability endorsements;
and (iii) insure Landlord against Tenant's performance under Section 5.05, if
the matters giving rise to the indemnity under Section 5.05 result from the
negligence of Tenant. The amount and coverage of such insurance shall not
limit Tenant's liability nor relieve Tenant of any other obligation under
this Lease. Landlord may also obtain comprehensive public liability
insurance in an amount and with coverage determined by Landlord insuring
Landlord against liability arising out of ownership, operation, use or
occupancy of the Property. The policy obtained by Landlord shall not be
contributory and shall not provide primary insurance.

(b) PROPERTY AND RENTAL INCOME INSURANCE. During the Lease Term,
Landlord shall maintain policies of insurance covering loss of or damage to
the Property in the full amount of its replacement value. Such policy shall
contain an Inflation Guard Endorsement and shall provide protection against
all perils included within the classification of fire, extended coverage,
vandalism, malicious mischief, special extended perils (all risk), sprinkler
leakage and any other perils which Landlord deems reasonably necessary.
Landlord shall have the right to obtain flood and earthquake insurance if
required by any lender holding a security interest in the Property. Landlord
shall not obtain insurance for Tenant's fixtures or equipment or building
improvements installed by Tenant on the Property. During the Lease Term,
Landlord shall also maintain a rental income insurance policy, with loss
payable to Landlord, in an amount equal to one year's Base Rent, plus
estimated real property taxes and insurance premiums. Tenant shall be liable
for the payment of any deductible amount under Landlord's or Tenant's
insurance policies maintained pursuant to this Section 4.04, in an

amount not to exceed Ten Thousand Dollars ($10,000). Tenant shall not do or
permit anything to be done which invalidates any such insurance policies.

(i) Landlord shall pay the "Base Premiums" for the
insurance policies maintained by Landlord under Paragraph
4.04(b). If the Property has been previously fully occupied, the
"Base Premiums" are the insurance premiums paid during or
applicable to the last twelve (12) months of such prior
occupancy. If the Property has not been previously fully
occupied or has been occupied for less than twelve (12) months,
the Base Premiums are the lowest annual premiums reasonably
obtainable for the required insurance for the Property as of the
Commencement Date.

(ii) Tenant shall pay Landlord the amount, if any, by which
the insurance premiums for all policies maintained by Landlord
under Paragraph 4.04(b) have increased over the Base Premiums,
whether such increases result from the nature of Tenant's
occupancy, any act or omission of Tenant, the requirement of any
lender referred to in Article Eleven (Protection of Lenders), the
increased value of the Property or general rate increases.
However, if Landlord substantially increases the amount of
insurance carried or the percentage of insured value after the
period during which the Base Premiums were calculated, Tenant
shall only pay Landlord the amount of increased premiums which
would have been charged by the insurance carrier if the amount of
insurance or percentage of insured value had not been
substantially increased by Landlord. This adjustment in the
amount due from Tenant shall be made only once during the Lease
Term. Thereafter, Tenant shall be obligated to pay the full
amount of any additional increases in the insurance premiums,
including increases resulting from any further increases in the
amount of insurance or percentage of insured value. Subject to
Section 4.05, Tenant shall pay Landlord the increases over the
Base Premiums within fifteen (15) days after receipt by Tenant of
a copy of the premium statement or other evidence of the amount
due. If the insurance policies maintained by Landlord cover
improvements or real property other than the Property, Landlord
shall also deliver to Tenant a statement of the amount of the
premiums applicable to the Property showing, in reasonable
detail, how such amount was computed. If the Lease Term expires
before the expiration of the insurance period, Tenant's liability
shall be pro rated on an annual basis.

(d) GENERAL INSURANCE PROVISIONS.

(i) Any insurance which Tenant is required to maintain
under this Lease shall include a provision which requires the
insurance carrier to give Landlord not less than thirty (30)
days' written notice prior to any cancellation or modification of
such coverage.

(ii) If Tenant fails to deliver any policy, certificate or
renewal to Landlord required under this Lease within the
prescribed time period or if any such policy is cancelled or
modified during the Lease Term without Landlord's consent,
Landlord may obtain such insurance, in which case Tenant shall
reimburse Landlord for the cost of such insurance within fifteen
(15) days after receipt of a statement that indicates the cost of
such insurance.

(iii) Tenant shall maintain all insurance required under
this Lease with companies holding a "General Policy Rating" of A-
12 or better, as set forth in the most current issue of 'Best Key
Rating Guide". Landlord and Tenant acknowledge the insurance
markets are rapidly changing and that insurance in the form and
amounts described in this Section 4.04 may not be available in
the future. Tenant acknowledges that the described in this
Section 4.04 is for the primary benefit of Landlord. If at any
time during the Lease Term, Tenant is unable to maintain the
insurance required under the Lease, Tenant shall nevertheless
maintain insurance coverage which is customary and commercially
reasonable in the insurance industry for Tenant's type of
business, as that coverage may change from time to time, Landlord
makes no representation as to the adequacy of such insurance to
protect Landlord's or Tenant's interests. Therefore, Tenant
shall obtain any such additional property or liability insurance
which Tenant deems necessary to protect Landlord and Tenant.

(iv) Unless prohibited under any applicable insurance
policies maintained, Landlord and Tenant each hereby waive any
and all rights of recovery against the other, or against the
officers, employees, agents or representatives of the other, for
loss of or damage to its property or the property of others under
its control, if such loss or damage is covered by any insurance
policy in force (whether or not described in this Lease) at the
time of such loss or damage. Upon obtaining the required
policies of insurance, Landlord and Tenant shall give notice to
the insurance carriers of this mutual waiver of subrogation.

Section 4.05. COMMON AREAS; USE, MAINTENANCE AND COSTS.

(a) COMMON AREAS. As used in this Lease, "Common Areas" shall mean all
areas within the Project which are available for the common use of tenants of
the Project and which are not leased or held for the exclusive use of Tenant or
other tenants, including, but not limited to, parking areas, driveways,
sidewalks, loading areas, access roads, corridors, landscaping and planted
areas. Landlord, from time to time, may change the size, location, nature and
use of any of the Common Areas, convert Common Areas into leaseable areas,
construct additional parking facilities (including parking structures) in the
Common Areas, and increase or decrease Common Area land and/or facilities.

Tenant acknowledges that such activities may result in inconvenience to
Tenant. Such activities and changes are permitted if they do not materially
affect Xxxxxx's use of the Property.

(b) USE OF COMMON AREAS. Tenant shall have the nonexclusive right (in
common with other tenants and all others to whom Landlord has granted or may
grant such rights) to use the Common Areas for the purposes intended, subject to
such reasonable rules and regulations as Landlord may establish from time to
time. Tenant shall abide by such rules and regulations and shall use its best
effort to cause others who use the Common Areas with Xxxxxx's express or implied
permission to abide by Landlord's rules and regulations. At any time, Landlord
may close any Common Areas to perform any acts in the Common Areas as, in
Landlord's judgment, are desirable to improve the Project. Tenant shall not
interfere with the rights of Landlord, other tenants or any other person
entitled to use the Common Areas.

(c) SPECIFIC PROVISION RE: VEHICLE PARKING. Tenant shall be entitled to
use the number of vehicle parking spaces in the Project allocated to Tenant in
Section 1.11 of the Lease without paying any additional rent. Tenant's parking
shall not be reserved and shall be limited to vehicles no larger than standard
size automobiles or pickup utility vehicles. Tenant shall not cause large
trucks or other large vehicles to be parked within the Project or on the
adjacent public streets. Temporary parking of large delivery vehicles in the
Project may be permitted by the rules and regulations established by Landlord.
Vehicles shall be parked only in striped parking spaces and not in driveways,
loading areas or other locations not specifically designated for parking.
Handicapped spaces shall only be used by those legally permitted to use them.

(d) MAINTENANCE OF COMMON AREAS. Landlord shall maintain the Common Areas
in good order, condition and repair and shall operate the Project, in Landlord's
sole discretion, as a first-class industrial/commercial real property
development. Tenant shall pay Tenant's pro rata share (as determined below) of
all costs incurred by Landlord for the operation and maintenance of the Common
Areas. Common Area costs include, but are not limited to, costs and expenses
for the following: gardening and landscaping; utilities, water and sewage
charges; maintenance of signs (other than tenants' signs); premiums for
liability, property damage, fire and other types of casualty insurance on the
Common Areas and worker's compensation insurance; all property taxes and
assessments levied on or attributable to the Common Areas and all Common Area
improvements; all personal property taxes levied on or attributable to personal
property used in connection with the Common Areas; straight-line depreciation on
personal property owned by Landlord which is consumed in the operation or
maintenance of the Common Areas; rental or lease payments paid by Landlord for
rented or leased personal property used in the operation or maintenance of the
Common Areas; fees for required licenses and permits; repairing, resurfacing,
repaving, maintaining, painting, lighting, cleaning, refuse removal, security
and similar items; reserves for roof replacement and exterior painting and other
appropriate reserves; and a reasonable allowance to Landlord for Landlord's
supervision of the Common Areas (not to exceed five percent (5%) of the gross
rents of the Project for the calendar year). Landlord may cause any or all of
such services to be provided by third parties and the cost of such services
shall be included in Common Area costs. Common Area costs shall not include
depreciation of real property which forms part of the Common Areas.

(e) TENANT'S SHARE AND PAYMENT. Tenant shall pay Tenant's annual pro rata
share of all Common Area costs (prorated for any fractional month) upon written
notice from Landlord that such costs are due and payable, and in any event prior
to delinquency. Tenant's pro rata share shall be calculated by dividing the
square foot area of the Property, as set forth in Section 1.04 of the Lease, by
the aggregate square foot area of the Project which is leased or held for lease
by tenants, as of the date on which the computation is made. Tenant's initial
pro rata share is set out in Paragraph 1.13(b). Any changes in the Common Area
costs and/or the aggregate area of the Project leased or held for lease during
the Lease Term shall be effective on the first day of the month after such
change occurs. Landlord may, at Landlord's election, estimate in advance and
charge to Tenant as Common Area costs, all real property taxes for which Tenant
is liable under Section 4.02 of the Lease, all insurance premiums for which
Tenant is liable under Section 4.04 of the Lease, all maintenance and repair
costs for which Tenant is liable under Section 6.04 of the Lease, and all other
Common Area costs payable by Tenant hereunder. At Landlord's election, such
statements of estimated Common Area costs shall be delivered monthly, quarterly
or at any other periodic intervals to be designated by Landlord. Landlord may
adjust such estimates at any time based upon Xxxxxxxx's experience and
reasonable anticipation of costs. Such adjustments shall be effective as of the
next rent payment date after notice to Tenant. Within sixty (60) days after the
end of each calendar year of the Lease Term, Landlord shall deliver to Tenant a
statement prepared in accordance with generally accepted accounting principles
setting forth, in reasonable detail, the Common Area costs paid or incurred by
Landlord during the preceding calendar year and Xxxxxx's pro rata share. Upon
receipt of such statement, there shall be an adjustment between Landlord and
Tenant, with payment to or credit given by Landlord (as the case may be) so that
Landlord shall receive the entire amount of Tenant's share of such costs and
expenses for such period.

Section 4.06. LATE CHARGES. Xxxxxx's failure to pay rent promptly may
cause Landlord to incur unanticipated costs. The exact amount of such costs are
impractical or extremely difficult to ascertain. Such costs may include, but
are not limited to, processing and accounting charges and late charges which may
be imposed on Landlord by any ground lease, mortgage or trust deed encumbering
the Property. Therefore, if Landlord does not receive any rent payment within
ten (10) days after it becomes due, Tenant shall pay Landlord a late charge
equal to ten percent (10%) of the overdue amount. The parties agree that such
late charge represents a fair and reasonable estimate of the costs Landlord will
incur by reason of such late payment. There will be a $50.00 charge assessed
for Non Sufficient Funds.

Section 4.07. INTEREST ON PAST DUE OBLIGATIONS. Any amount owed by Tenant
to Landlord which is not paid when due shall bear interest at the rate of Ten
percent (10%) per annum from the due date of such amount. However, interest
shall not be payable on late charges to be paid by Tenant under this Lease. The
payment of interest on such amounts shall not excuse or cure any default by
Tenant under this Lease. If the interest rate specified in this Lease is higher
than the rate permitted by law, the interest rate is hereby decreased to the
maximum legal interest rate permitted by law.

Section 4.08 Deleted.

ARTICLE FIVE: USE OF PROPERTY

Section 5.01. PERMITTED USES. Tenant may use the Property only for the
Permitted Uses set forth In Section 1.06 above.

Section 5.02. MANNER OF USE. Tenant shall not cause or permit the
Property to be used in any way which constitutes a violation of any law,
ordinance, or governmental regulation or order, which annoys or interferes with
the rights of tenants of the Project, or which constitutes a nuisance or waste.
Tenant shall obtain and pay for all permits, including a Certificate of
Occupancy, required for Tenant's occupancy of the Property and shall promptly
take all actions necessary to comply with all applicable statutes, ordinances,
rules, regulations, orders and requirements regulating the use by Tenant of the
Property, including the Occupational Safety and Health Act.

Section 5.03. HAZARDOUS MATERIALS. As used in this Lease, the term
"Hazardous Material" means any flammable items, explosives, radioactive
materials, hazardous or toxic substances, material or waste or related
materials, including any substances defined as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous materials" or "toxic
substances" now or subsequently regulated under any applicable federal, state or
local laws or regulations, including without limitation petroleum-based
products, paints, solvents, lead, cyanide, DDT, printing inks, acids,
pesticides, amonnia compounds and other chemical products, asbestos, PCBs and
similar compounds, and including any different products and materials which are
subsequently found to have adverse effects on the environment or the health and
safety of persons. Tenants shall not cause or permit any Hazardous Material to
be generated, produced, brought upon, used, stored, treated or disposed of in or
about the Property by Tenant, its agents, employees, contractors, sublessees or
invitees without the prior written consent of Landlord. Landlord shall be
entitled to take into account such other factors or facts as Landlord may
reasonably determine to be relevant in determining whether to grant or withhold
consent to Tenant's proposed activity with respect to Hazardous Material. In no
event, however, shall Landlord be required to consent to the installation or use
of any storage tanks on the Property.

Section 5.04. SIGNS AND AUCTIONS. Tenant shall not place any signs on the
Property without Landlord's prior written consent. Tenant shall not conduct or
permit any auctions or sheriff's sales at the Property.

Section 5.05. INDEMNITY. Tenant shall indemnify Landlord against and hold
Landlord harmless from any and all costs, claims or liability arising from: (a)
Tenant's use of the Property; (b) the conduct of Tenant's business or anything
else done or permitted by Tenant to be done in or about the Property, including
any contamination of the Property or any other property resulting from the
presence or use of Hazardous Material caused or permitted by Tenant; (c) any
breach or default in the performance of Tenant's obligations under this Lease;
(d) any misrepresentation or breach of warranty by Tenant under this Lease; or
(e) other acts or omissions of Tenant. Tenant shall defend Landlord against any
such cost, claim or liability at Xxxxxx's expense with counsel reasonably
acceptable to Landlord or, at Landlord's election, Tenant shall reimburse
Landlord for any legal fees or costs incurred by Landlord in connection with any
such claim. As a material part of the consideration to Landlord, Xxxxxx assumes
all risk of damage to property or injury to persons in or about the Property
arising from any cause, and Tenant hereby waives all claims in respect thereof
against Landlord, except for any claim arising out of Landlord's gross
negligence or willful misconduct. As used in this Section, the term "Tenant"
shall include Tenant's employees, agents, contractors and invitees, if
applicable.

Section 5.06. LANDLORD'S ACCESS. Landlord or its agents may enter the
Property at all reasonable times to show the Property to potential buyers,
investors or tenants or other parties; to do any other act or to inspect and
conduct tests in order to monitor Tenant's compliance with all applicable
environmental laws and all laws governing the presence and use of Hazardous
Material; or for any other purpose Landlord deems necessary. Landlord shall
give Tenant prior notice of such entry, except in the case of an emergency.
Landlord may place customary "For Sale" or "For Lease" signs on the Property.

Section 5.07. QUIET POSSESSION. If Tenant pays the rent and complies with
all other terms of this Lease, Tenant may occupy and enjoy the Property for the
full Lease Term, subject to the provisions of this Lease.

ARTICLE SIX: CONDITION OF PROPERTY; MAINTENANCE, REPAIRS AND ALTERATIONS

Section 6.01. EXISTING CONDITIONS. Tenant accepts the Property in its
condition as of the execution of the Lease, subject to all recorded matters,
laws, ordinances, and governmental regulations and orders. Except as provided
herein, Xxxxxx acknowledges that neither Xxxxxxxx nor any agent of Landlord has
made any representation as to the condition of the Property or the suitability
of the Property for Xxxxxx's intended use. Tenant represents and warrants that
Tenant has made its own inspection of and inquiry regarding the condition of the
Property and is not relying on any representations of Landlord or any Broker
with respect thereto. If Landlord or Landlord's Broker has provided a

Property Information Sheet or other Disclosure Statement regarding the
Property, a copy is attached as an exhibit to the Lease.

Section 6.02. *EXEMPTION OF LANDLORD FROM LIABILITY. Landlord shall not
be liable for any damage or injury to the person, business (or any loss of
income therefrom), goods, wares, merchandise or other property of Tenant,
Tenant's employees, invitees, customers or any other person in or about the
Property, whether such damage or injury is caused by or results from: (a) fire,
steam, electricity, water, gas or rain; (b) the breakage, leakage, obstruction
or other defects of pipes, sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures or any other cause; (c) conditions arising in
or about the Property or upon other portions of the Project, or from other
sources or places; or (d) any act or omission of any other tenant of the
Project. Landlord shall not be liable for any such damage or injury even though
the cause of or the means of repairing such damage or injury are not accessible
to Tenant. The provisions of this Section 6.02 shall not, however, exempt
Landlord from liability for Landlord's gross negligence or willful misconduct.
*Reference Improvement Page.

Section 6.03. LANDLORD'S OBLIGATIONS. Subject to the provisions of
Article Seven (Damage or Destruction) and Article Eight (Condemnation), and
except for damage caused by any act or omission of Tenant, or Tenant's
employees, agents, contractors or invitees, Landlord shall keep the foundation,
roof and structural portions of exterior walls of the improvements on the
Property in good order, condition and repair. However, Landlord shall not be
obligated to maintain or repair windows, doors, plate glass or the surfaces of
walls. Landlord shall not be obligated to make any repairs under this Section
6.03 until a reasonable time after receipt of a written notice from Tenant of
the need for such repairs. Tenant waives the benefit of any present or future
law which might give Tenant the right to repair the Property at Landlord's
expense or to terminate the Lease because of the condition of the Property.

Section 6.04. TENANT'S OBLIGATIONS.

(a) Except as provided in Article Seven (Damage or Destruction) and
Article Eight (Condemnation), Tenant shall keep all portions of the Property
(including structural, nonstructural, interior, systems and equipment) in
good order, condition and repair (including interior repainting and
refinishing, as needed). If any portion of the Property or any system or
equipment in the Property which Tenant is obligated to repair cannot be fully
repaired or restored, Tenant shall promptly replace such portion of the
Property or system or equipment in the Property, regardless of whether the
benefit of such replacement extends beyond the Lease Term; but if the benefit
or useful life of such replacement extends beyond the Lease Term (as such
term may be extended by exercise of any options), the useful life of such
replacement shall be prorated over the remaining portion of the Lease Term
(as extended), and Tenant shall be liable only for that portion of the cost
which is applicable to the Lease Term (as extended). Landlord shall
undertake the responsibility for preventive maintenance of the heating and
air conditioning system at Tenant's expense. In addition, Tenant shall, at
Tenant's expense, repair any damage to the roof, foundation or structural
portions of walls caused by Tenant's acts or omissions. It is the intention
of Landlord and Tenant that, at all times during the Lease Term, Tenant shall
maintain the Property in an attractive, first-class and fully operative
condition.

(b) Tenant shall fulfill all of Tenant's obligations under this Section
6.04 at Tenant's sole expense. If Tenant fails to maintain, repair or replace
the Property as required by this Section 6.04, Landlord may, upon ten (10) days'
prior notice to Tenant (except that no notice shall be required in the case of
an emergency), enter the Property and perform such maintenance or repair
(including replacement, as needed) on behalf of Tenant. In such case, Tenant
shall reimburse Landlord for all costs incurred in performing such maintenance
or repair immediately upon demand.

Section 6.05. ALTERATIONS, ADDITIONS, AND IMPROVEMENTS.

(a) Tenant shall not make any alterations, additions, or improvements to
the Property without Landlord's prior written consent, except for non-structural
alterations which do not exceed Ten Thousand Dollars ($10,000) in cost
cumulatively over the Lease Term and which are not visible from the outside of
any building of which the Property is part. Landlord may require Tenant to
provide demolition and/or lien and completion bonds in form and amount
satisfactory to Landlord. Tenant shall promptly remove any alterations,
additions, or improvements constructed in violation of this Paragraph 6.05(a)
upon Landlord's written request. All alterations, additions, and improvements
shall be done in a good and workmanlike manner, in conformity with all
applicable laws and regulations, and by a contractor approved by Landlord. Upon
completion of any such work, Tenant shall provide Landlord with "as built"
plans, copies of all construction contracts, and proof of payment for all labor
and materials.

(b) Tenant shall pay when due all claims for labor and material furnished
to the Property. Tenant shall give Landlord at least twenty (20) days' prior
written notice of the commencement of any work on the Property, regardless of
whether Xxxxxxxx's consent to such work is required. Landlord may elect to
record and post notices of non-responsibility on the Property.

Section 6.06. CONDITION UPON TERMINATION. Upon the termination of the
Lease, Xxxxxx shall surrender the Property to Landlord, broom clean and in the
same condition as received except for ordinary wear and tear which Tenant was
not otherwise obligated to remedy under any provision of this Lease. However,
Tenant shall not be obligated to repair any damage which Landlord is required to
repair under Article Seven (Damage or Destruction). In addition, Landlord may
require Tenant to remove any alterations, additions or improvements (whether or
not made with Xxxxxxxx's consent) prior to the expiration of the Lease and to
restore the Property to its prior condition, all at Tenant's expense. All
alterations, additions and improvements which Landlord has not required Tenant
to remove shall become Landlord's property and shall be surrendered to Landlord
upon the expiration or earlier termination of the Lease, except

that Tenant may remove any of Tenant's machinery or equipment which can be
removed without material damage to the Property. Tenant shall repair, at
Tenant's expense, any damage to the Property caused by the removal of any
such machinery or equipment. In no event, however, shall Tenant remove any of
the following materials or equipment (which shall be deemed Landlord's
property) without Landlord's prior written consent: any power wiring or power
panels; lighting or lighting fixtures; wall coverings; drapes, blinds or
other window coverings; carpets or other floor coverings; heaters, air
conditioners or any other heating or air conditioning equipment; fencing or
security gates; or other similar building operating equipment and decorations.

ARTICLE SEVEN: DAMAGE OR DESTRUCTION

Section 7.01. PARTIAL DAMAGE TO PROPERTY.

(a) Tenant shall notify Landlord in writing immediately upon the
occurrence of any damage to the Property. If the Property is only partially
damaged (i.e., less than fifty percent (50%) of the Property is untenantable as
a result of such damage or less than fifty percent (50%) of Tenant's operations
are materially impaired) and if the proceeds received by Landlord from the
insurance policies described in Paragraph 4.04(b) are sufficient to pay for the
necessary repairs, this Lease shall remain in effect and Landlord shall repair
the damage in 180 days. Landlord may elect (but is not required) to repair any
damage to Tenant's fixtures, equipment, or improvements.

(b) If the insurance proceeds received by Landlord are not sufficient to
pay the entire cost of repair, or if the cause of the damage is not covered by
the insurance policies which Landlord maintains under Paragraph 4.04(b) Landlord
may elect either to (i) repair the damage as soon as reasonably possible, in
which case this Lease shall remain in full force and effect, or (ii) terminate
this Lease as of the date the damage occurred. Landlord shall notify Tenant
within thirty (30) days after receipt of notice of the occurrence of the damage
whether Landlord elects to repair the damage or terminate the Lease. If
Landlord elects to repair the damage, Tenant shall pay Landlord the "deductible
amount" (if any) under Landlord's insurance policies and, if the damage was due
to an act or omission of Tenant, or Tenant's employees, agents, contractors or
invitees, the difference between the actual cost of repair and any insurance
proceeds received by Landlord. If Landlord elects to terminate this Lease,
Tenant may elect to continue this Lease in full force and effect, in which case
Tenant shall repair any damage to the Property and any building in which the
Property is located. Tenant shall pay the cost of such repairs, except that
upon satisfactory completion of such repairs, Landlord shall deliver to Tenant
any insurance proceeds received by Landlord for the damage repaired by Tenant.
Tenant shall give Landlord written notice of such election within ten (10) days
after receiving Landlord's termination notice.

(c) If the damage to the Property occurs during the last six (6) months of
the Lease Term and such damage will require more than thirty (30) days to
repair, either Landlord or Tenant may elect to terminate this Lease as of the
date the damage occurred, regardless of the sufficiency of any insurance
proceeds. The party electing to terminate this Lease shall give written
notification to the other party of such election within thirty (30) days after
Xxxxxx's notice to Landlord of the occurrence of the damage.

Section 7.02. SUBSTANTIAL OR TOTAL DESTRUCTION. If the Property is
substantially or totally destroyed by any cause whatsoever (i.e., the damage to
the Property is greater than partial damage as described in Section 7.01), and
regardless of whether Landlord receives any insurance proceeds, this Lease shall
terminate as of the date the destruction occurred. Notwithstanding the
preceding sentence, if the Property can be rebuilt within six (6) months after
the date of destruction, Landlord may elect to rebuild the Property at
Landlord's own expense, in which case this Lease shall remain in full force and
effect. Landlord shall notify Tenant of such election within thirty (30) days
after Xxxxxx's notice of the occurrence of total or substantial destruction. If
Landlord so elects, Landlord shall rebuild the Property at Landlord's sole
expense, except that if the destruction was caused by an act or omission of
Tenant, Tenant shall pay Landlord the difference between the actual cost of
rebuilding and any insurance proceeds received by Landlord.

Section 7.03. TEMPORARY REDUCTION OF RENT. If the Property is destroyed
or damaged and Landlord or Tenant repairs or restores the Property pursuant to
the provisions of this Article Seven, any rent payable during the period of such
damage, repair and/or restoration shall be reduced according to the degree, if
any, to which Xxxxxx's use of the Property is impaired. However, the reduction
shall not exceed the sum of one year's payment of Base Rent, insurance premiums
and real property taxes. Except for such possible reduction in Base Rent,
insurance premiums and real property taxes, Tenant shall not be entitled to any
compensation, reduction, or reimbursement from Landlord as a result of any
damage, destruction, repair, or restoration of or to the Property.

Section 7.04. WAIVER. Tenant waives the protection of any statute, code
or judicial decision which grants a tenant the right to terminate a lease in the
event of the substantial or total destruction of the leased property. Tenant
agrees that the provisions of Section 7.02 above shall govern the rights and
obligations of Landlord and Tenant in the event of any substantial or total
destruction to the Property.

ARTICLE EIGHT: CONDEMNATION

If all or any portion of the Property is taken under the power of eminent
domain or sold under the threat of that power (all of which are called
"Condemnation"), this Lease shall terminate as to the part taken or sold on
the date the condemning authority takes title or possession, whichever occurs
first. If more than twenty percent (20%) of the floor area of the building in
which the Property is located, or which is located on the Property, is taken,
either Landlord or Tenant may terminate this Lease as of the date the
condemning authority takes title or possession, by delivering written notice
to the other within ten (10) days after receipt of written notice of such
taking (or in the absence of such notice,

within ten (10) days after the condemning authority takes title or
possession). If neither Landlord nor Tenant terminates this Lease, this
Lease shall remain in effect as to the portion of the Property not taken,
except that the Base Rent and Additional Rent shall be reduced in proportion
to the reduction in the floor area of the Property. Any Condemnation award
or payment shall be distributed in the following order: (a) first, to any
ground lessor, mortgagee or beneficiary under a deed of trust encumbering the
Property, the amount of its interest in the Property; (b) second, to Tenant,
only the amount of any award specifically designated for loss of or damage to
Tenant's trade fixtures or removable personal property; and (c) third, to
Landlord, the remainder of such award, whether as compensation for reduction
in the value of the leasehold, the taking of the fee, or otherwise. If this
Lease is not terminated, Landlord shall repair any damage to the Property
caused by the Condemnation, except that Landlord shall not be obligated to
repair any damage for which Tenant has been reimbursed by the condemning
authority. If the severance damages received by Landlord are not sufficient
to pay for such repair, Landlord shall have the right to either terminate
this Lease or make such repair at Landlord's expense.

ARTICLE NINE: ASSIGNMENT AND SUBLETTING

Section 9.01. LANDLORD'S CONSENT REQUIRED. No portion of the Property or
of Tenant's interest in this Lease may be acquired by any other person or
entity, whether by sale, assignment, mortgage, sublease, transfer, operation of
law, or act of Tenant, without Xxxxxxxx's prior written consent, except as
provided in Section 9.02 below. Landlord has the right to grant or withhold its
consent as provided in Section 9.05 below. Any attempted transfer without
consent shall be void and shall constitute a non-curable breach of this Lease.
If Tenant is a partnership, any cumulative transfer of more than twenty percent
(20%) of the partnership interests shall require Landlord's consent. If Tenant
is a corporation, any change in the ownership of a controlling interest of the
voting stock of the corporation shall require Landlord's consent.

Section 9.02. TENANT AFFILIATE. Tenant may assign this Lease or sublease
the Property, without Landlord's consent, to any corporation which controls, is
controlled by or is under common control with Tenant, or to any corporation
resulting from the merger of or consolidation with Tenant ("Tenant's
Affiliate"). In such case, any Tenant's Affiliate shall assume in writing all
of Tenant's obligations under this Lease.

Section 9.03. NO RELEASE OF TENANT. No transfer permitted by this Article
Nine, whether with or without Landlord's consent, shall release Tenant or change
Tenant's primary liability to pay the rent and to perform all other obligations
of Tenant under this Lease. Xxxxxxxx's acceptance of rent from any other person
is not a waiver of any provision of this Article Nine. Consent to one transfer
is not a consent to any subsequent transfer. If Xxxxxx's transferee defaults
under this Lease, Landlord may proceed directly against Tenant without pursuing
remedies against the transferee. Landlord may consent to subsequent assignments
or modifications of this Lease by Xxxxxx's transferee, without notifying Tenant
or obtaining its consent. Such action shall not relieve Xxxxxx's liability
under this Lease.

Section 9.04. OFFER TO TERMINATE. If Tenant desires to assign the Lease
or sublease the Property, Tenant shall have the right to offer, in writing, to
terminate the Lease as of a date specified in the offer. If Landlord elects in
writing to accept the offer to terminate within twenty (20) days after notice of
the offer, the Lease shall terminate as of the date specified and all the terms
and provisions of the Lease governing termination shall apply. If Landlord does
not so elect, the Lease shall continue in effect until otherwise terminated and
the provisions of Section 9.05 with respect to any proposed transfer shall
continue to apply.

Section 9.05. LANDLORD'S CONSENT.

(a) Xxxxxx's request for consent to any transfer described in Section 9.01
shall set forth in writing the details of the proposed transfer, including the
name, business and financial condition of the prospective transferee, financial
details of the proposed transfer (e.g., the term of and the rent and security
deposit payable under any proposed assignment or sublease), and any other
information Landlord deems relevant. Landlord shall have the right to withhold
consent, if reasonable, or to grant consent, based on the following factors: (i)
the business of the proposed assignee or subtenant and the proposed use of the
Property; (ii) the net worth and financial reputation of the proposed assignee
or subtenant; (iii) Tenant's compliance with all of its obligations under the
Lease; and (iv) such other factors as Landlord may reasonably deem relevant. If
Landlord objects to a proposed assignment solely because of the net worth and/or
financial reputation of the proposed assignee, Tenant may nonetheless sublease
(but not assign), all or a portion of the Property to the proposed transferee,
but only on the other terms of the proposed transfer.

(b) If Tenant assigns or subleases, the following shall apply:

(i) Tenant shall pay to Landlord as Additional Rent under
the Lease the Landlord's Share (stated in Section 1.14) of the
Profit (defined below) on such transaction as and when received
by Xxxxxx, unless Xxxxxxxx gives written notice to Xxxxxx and the
assignee or subtenant that Landlord's Share shall be paid by the
assignee or subtenant to Landlord directly. The "Profit" means
(A) all amounts paid to Tenant for such assignment or sublease,
including "key" money, monthly rent in excess of the monthly rent
payable under the Lease, and all fees and other consideration
paid for the assignment or sublease, including fees under any
collateral agreements, less (B) costs and expenses directly
incurred by Tenant in connection with the execution and
performance of such assignment or sublease for real estate
broker's commissions and costs of renovation or construction of
tenant improvements required under such assignment or sublease.
Tenant is entitled to recover such costs and expenses before
Tenant is obligated to pay the Landlord's Share to Landlord. The
Profit in the case of a sublease of less than all the Property IS
the rent allocable to the subleased space as a percentage on a
square footage basis.

(ii). Tenant shall provide Landlord a written statement
certifying all amounts to be paid from any assignment or sublease
of the Property within thirty (30) days after the transaction
documentation is signed, and Landlord may inspect Tenant's books
and records to verify the accuracy of such statement. On written
request, Tenant shall promptly furnish to Landlord copies of all
the transaction documentation, all of which shall be certified by
Tenant to be complete, true and correct. Xxxxxxxx's receipt of
Landlord's Share shall not be a consent to any further assignment
or subletting. The breach of Tenant's obligation under this
Paragraph 9.05(b) shall be a material default of the Lease.

Section 9.06. NO MERGER. No merger shall result from Xxxxxx's sublease of
the Property under this Article Nine, Xxxxxx's surrender of this Lease or the
termination of this Lease in any other manner. In any event, Landlord may
terminate any or all subtenancies or succeed to the interest of Tenant as
sublandlord under any or all subtenancies.

ARTICLE TEN: DEFAULTS; REMEDIES

Section 10.01. COVENANTS AND CONDITIONS. Xxxxxx's performance of each of
Tenant's obligations under thy Lease is a condition as well as a covenant.
Xxxxxx's right to continue in possession of the Property is conditioned upon
such performance. Time is of the essence in the performance of all covenants
and conditions.

Section 10.02. DEFAULTS. Tenant shall be in material default under this
Lease:

(a) If Xxxxxx abandons the Property or if Xxxxxx's vacation of the
Property results in the cancellation of any insurance described in Section 4.04;

(b) If Tenant fails to pay rent or any other charge; within five (5)
business days after receipt of notice.

(c) If Tenant fails to perform any of Xxxxxx's non-monetary obligations
under this Lease for a period of thirty (30) days after written notice from
Landlord; provided that if more than thirty (30) days are required to complete
such performance, Tenant shall not be in default if Tenant commences such
performance within the thirty (30) -day period and thereafter diligently pursues
its completion. However, Landlord shall not be required to give such notice if
Xxxxxx's failure to perform constitutes a non-curable breach of this Lease, The
notice required by this Paragraph is intended to satisfy any and all notice
requirements imposed by law on Landlord and is not in addition to any such
requirement.

(d) (i) If Tenant makes a general assignment or general arrangement for
the benefit of creditors; (ii) if a petition for adjudication of bankruptcy or
for reorganization or rearrangement is filed by or against Tenant and is not
dismissed within thirty (30) days; (iii) if a trustee or receiver is appointed
to take possession of substantially all of Tenant's assets located at the
Property or of Tenant's interest in this Lease and possession is not restored to
Tenant within thirty (30) days; or (iv) if substantially all of Tenant's assets
located at the Property or of Tenant's interest in this Lease is subjected to
attachment, execution or other judicial seizure which is not discharged within
thirty (30) days. If a court of competent jurisdiction determines that any of
the acts described in this subparagraph (d) is not a default under this Lease,
and a trustee is appointed to take possession (or if Tenant remains a debtor in
possession) and such trustee or Tenant transfers Tenant's interest hereunder,
then Landlord shall receive, as Additional Rent, the excess, if any, of the rent
(or any other consideration) paid in connection with such assignment or sublease
over the rent payable by Tenant under this Lease.

(e) If any guaranor of the Lease revokes or otherwise terminates, or
purports to revoke or otherwise terminate, any guaranty of all or any portion of
Tenant's obligations tinder the Lease. Unless otherwise expressly provided, no
guaranty of the Lease is revocable.

Section 10.03. REMEDIES. On the occurrence of any material default by
Tenant, Landlord may, at any time thereafter, with or without notice or demand
and without limiting Landlord in the exercise of any right or remedy which
Landlord may have:

(a) Terminate Xxxxxx's right to possession of the Property by any lawful
means, in which case this Lease shall terminate and Tenant shall immediately
surrender possession of the Property to Landlord. In such event, Landlord shall
be entitled to recover from Tenant all damages incurred by Landlord by reason of
Tenant's default, including (i) the worth at the time of the award of the unpaid
Base Rent, Additional Rent and other charges which Landlord had earned at the
time of the termination; (ii) the worth at the time of the award of the amount
by which the unpaid Base Rent, Additional Rent and other charges which Xxxxxxxx
would have earned after termination until the time of the award exceeds the
amount of such rental loss that Tenant proves Landlord could have reasonably
avoided; (iii) the worth at the time of the award of the amount by which the
unpaid Base Rent, Additional Rent and-other charges which Xxxxxx would have paid
for the balance of the Lease term after the time of award exceeds the amount of
such rental loss that Tenant proves Landlord could have reasonably avoided; and
(iv) any other amount necessary to compensate Landlord for all the detriment
proximately caused by Xxxxxx's failure to perform its obligations under the
Lease or which in the ordinary course of things would be likely to result
therefrom, including, but not limited to, any costs or expenses Landlord incurs
in maintaining or preserving the Property after such default, the cost of
recovering possession of the Property, expenses of reletting, including
necessary renovation or alteration of the Property, Xxxxxxxx's reasonable
attorneys' fees incurred in connection therewith, and any real estate commission
paid or payable. As used in subparts (i) and (ii) above, the "worth at the

time of the award" is computed by allowing interest on unpaid amounts at the
rate of fifteen percent (15%) per annum, or such lesser amount as may then be
the maximum lawful rate. As used in subpart (iii) above, the "worth at the
time of the award" is computed by discounting such amount at the discount
rate of the Federil Reserve Bank of San Francisco at the time of the award,
plus one percent (1%). If Tenant has abandoned the Property, Landlord shall
have the option of (i) retaking, possession of the Property and recovering
from Tenant the amount specified in this Paragraph 10.03(a), or (ii)
proceeding under Paragraph 10.03(b);

(b) Maintain Tenant's right to possession, in which case this Lease shall
continue in effect whether or not Tenant has abandoned the Property. In such
event, Landlord shall be entitled to enforce all of Landlord's rights and
remedies under this Lease, including the right to recover the rent as it becomes
due;

(c) Pursue any other remedy now or hereafter available to Landlord under
the laws or judicial decisions of the state in which the Property is located.

Section 10.04. REPAYMENT OF "FREE" RENT. If this Lease provides for a
postponement of any monthly rental payments, a period of "free" rent or other
rent concession, such postponed rent or "free" rent is called the "Abated
Rent". Tenant shall be credited with having paid all of the Abated Rent on
the expiration of the Lease Term only if Xxxxxx has fully, faithfully, and
punctually performed all of Tenant's obligations hereunder, including the
payment of all rent (other than the Abated Rent) and all other monetary
obligations and the surrender of the Property in the physical condition
required by this Lease. Tenant acknowledges that its right to receive credit
for the Abated Rent is absolutely conditioned upon Tenant's full, faithful
and punctual performance of its obligations under this Lease. If Tenant
defaults and does not cure within any applicable grace period, the Abated
Rent shall immediately become due and payable in full and this Lease shall be
enforced as if there were no such rent abatement or other rent concession.
In such case Abated Rent shall be calculated based on the full initial rent
payable under this Lease.

Section 10.05. AUTOMATIC TERMINATION. Notwithstanding any other term or
provision hereof to the contrary, the Lease shall terminate on the occurrence of
any act which affirms the Landlord's intention to terminate the Lease as
provided in Section 10.03 hereof, including the filing of an unlawful detainer
action against Tenant. On such termination, Xxxxxxxx's damages for default
shall include all costs and fees, including reasonable attorneys' fees that
Landlord incurs in connection with the filing, commencement, pursuing and/or
defending of any action in any bankruptcy court or other court with respect to
the Lease; the obtaining of relief from any stay in bankruptcy restraining any
action to evict Tenant; or the pursuing of any action with respect to Landlord's
right to possession of the Property. All such damages suffered (apart from Base
Rent and other rent payable hereunder) shall constitute pecuniary damages which
must be reimbursed to Landlord prior to assumption of the Lease by Tenant or any
successor to Xxxxxx in any bankruptcy or other proceeding.

Section 10.06. CUMULATIVE REMEDIES. Xxxxxxxx's exercise of any right or
remedy shall not prevent it from exercising any other right or remedy.

ARTICLE ELEVEN: PROTECTION OF LENDERS

Section 11.01. SUBORDINATION. Landlord shall have the right to subordinate
this Lease to any ground lease, deed of trust or mortgage encumbering the
Property, any advances made on the security thereof and any renewals,
modifications, consolidations, replacements or extensions thereof, whenever made
or recorded. Tenant shall cooperate with Landlord and any lender which is
acquiring a security interest in the Property or the Lease. Tenant shall
execute such further documents and assurances as such lender may require,
provided that Tenant's obligations under this Lease shall not be increased in
any material way (the performance of ministerial acts shall not be deemed
material), and Tenant shall not be deprived of its rights under this Lease.
Xxxxxx's right to quiet possession of the Property during the Lease Term shall
not be disturbed if Tenant pays the rent and performs all of Tenant's
obligations under this Lease and is not otherwise in default. If any ground
lessor, beneficiary or mortgagee elects to have this Lease prior to the lien of
its ground lease, deed of trust or mortgage and gives written notice thereof to
Tenant, this Lease shall be deemed prior to such ground lease, deed of trust or
mortgage whether this Lease is dated prior or subsequent to the date of said
ground lease, deed of trust or mortgage or the date of recording thereof.

Section 11.02. ATTORNMENT. If Xxxxxxxx's interest in the Property is
acquired by any ground lessor, beneficiary under a deed of trust, mortgagee, or
purchaser at a foreclosure sale, Tenant shall attorn to the transferee of or
successor to Xxxxxxxx's interest in the Property and recognize such transferee
or successor as Landlord under this Lease. Tenant waives the protection of any
statute or rule of law which gives or purports to give Tenant any right to
terminate this Lease or surrender possession of the Property upon the transfer
of Landlord's interest.

Section 11.03. SIGNING OF DOCUMENTS. Tenant shall sign and deliver any
instrument or documents necessary or appropriate to evidence any such attornment
or subordination or agreement to do so. If Tenant fails to do so within ten
(10) days after written request, Tenant hereby makes, constitutes and
irrevocably appoints Landlord, or any transferee or successor of Landlord, the
attorney-in-fact of Tenant to execute and deliver any such instrument or
document.

Section 11.04. ESTOPPEL CERTIFICATES.

(a) Upon Landlord's written request, Tenant shall execute, acknowledge and
deliver to Landlord a written statement certifying: (i) that none of the terms
or provisions of this Lease have been changed (or if they have been changed,
stating how they have been changed); (ii) that this Lease has not been cancelled
or terminated; (iii) the last date of payment of the Base Rent and other charges
and the time period covered by such payment; (iv) that Landlord is not in
default under this Lease (or, if Landlord is claimed to be in default, stating
why); and (v) such other representations or information with respect to Tenant
or the Lease as Landlord may reasonably request or which any

prospective purchaser or encumbrancer of the Property may require. Tenant
shall deliver such statement to Landlord within ten (10) days after
Xxxxxxxx's request. Landlord may give any such statement by Tenant to any
prospective purchaser or encumbrancer of the Property. Such purchaser or
encumbrancer may rely conclusively upon such statement as true and correct.

(b) If Tenant does not deliver such statement to Landlord within such ten
(10)-day period, Landlord, and any prospective purchaser or encumbrancer, may
conclusively presume and rely upon the following facts: (i) that the terms and
provisions of this Lease have not been changed except as otherwise represented
by Landlord; (ii) that this Lease has not been cancelled or terminated except as
otherwise represented by Landlord; (iii) that not more than one month's Base
Rent or other charges have been paid in advance; and (iv) that Landlord is not
in default under the Lease. In such event, Tenant shall be estopped from
denying the truth of such facts.

Section 11.05. TENANT'S FINANCIAL CONDITION. Within ten (10) days after
written request from Landlord, Tenant shall deliver to Landlord such financial
statements as Landlord reasonably requires to verify the net worth of Tenant or
any assignee, subtenant, or guarantor of Tenant. In addition, Tenant shall
deliver to any lender designated by Landlord any financial statements required
by such lender to facilitate the financing or refinancing of the Property.
Tenant represents and warrants to Landlord that each such financial statement is
a true and accurate statement as of the date of such statement. All financial
statements shall be confidential and shall be used only for the purposes set
forth in this Lease.

ARTICLE TWELVE: LEGAL COSTS

Section 12.01. LEGAL PROCEEDINGS. If Tenant or Landlord shall be in breach
or default under this Lease, such party (the "Defaulting Party") shall reimburse
the other party (the "Nondefaulting Party") upon demand for any costs or
expenses that the Nondefaulting Party incurs in connection with any breach or
default of the Defaulting Party under this Lease, whether or not suit is
commenced or judgment entered. Such costs shall include legal fees and costs
incurred for the negotiation of a settlement, enforcement of rights or
otherwise. Furthermore, if any action for breach of or to enforce the
provisions of this Lease is commenced, the court in such action shall award to
the party in whose favor a judgment is entered, a reasonable sum as attorneys'
fees and costs. The losing party in such action shall pay such attorneys' fees
and costs. Tenant shall also indemnify Landlord against and hold Landlord
harmless from all costs, expenses, demands and liability Landlord may incur if
Landlord becomes or is made a party to any claim or action (a) instituted by
Tenant against any third party, or by any third party against Tenant, or by or
against any person holding any interest under or using the Property by license
of or agreement with Tenant; (b) for foreclosure of any lien for labor or
material furnished to or for Tenant or such other person; (c) otherwise arising
out of or resulting from any act or transaction of Tenant or such other person;
or (d) necessary to protect Landlord's interest under this Lease in a bankruptcy
proceeding, or other proceeding under Title 11 of the United States Code, as
amended. Tenant shall defend Landlord against any such claim or action at
Tenant's expense with counsel reasonably acceptable to Landlord or, at
Landlord's election, Tenant shall reimburse Landlord for any legal fees or costs
Landlord incurs in any such claim or action.

Section 12.02. LANDLORD'S CONSENT. Tenant shall pay Landlord's reasonable
attorneys' fees incurred in connection with Xxxxxx's request for Xxxxxxxx's
consent under Article Nine (Assignment and Subletting), or in connection with
any other act which Xxxxxx proposes to do and which requires Xxxxxxxx's consent.

ARTICLE THIRTEEN: MISCELLANEOUS PROVISIONS

Section 13.01. NON-DISCRIMINATION. Tenant promises, and it is a condition
to the continuance of this Lease, that there will be no discrimination against,
or segregation of, any person or group of persons on the basis of race, color,
sex, creed, national origin or ancestry in the leasing, subleasing,
transferring, occupancy, tenure or use of the Property or any portion thereof.

Section 13.02. LANDLORD'S LIABILITY; CERTAIN DUTIES.

(a) As used in this Lease, the term "Landlord" means only the current
owner or owners of the fee title to the Property or Project or the leasehold
estate under a ground lease of the Property or Project at the time in question.
Each Landlord is obligated to perform the obligations of Landlord under this
Lease only during the time such Landlord owns such interest or title. Any
Landlord who transfers its title or interest is relieved of all liability with
respect to the obligations of Landlord under this Lease to be performed on or
after the date of transfer. However, each Landlord shall deliver to its
transferee all funds that Tenant previously paid if such funds have not yet been
applied under the terms of this Lease.

(b) Tenant shall give written notice of any failure by Landlord to perform
any of its obligations under this Lease to Landlord and to any ground lessor,
mortgagee or beneficiary under any deed of trust encumbering the Property whose
name and address have been furnished to Tenant in writing. Landlord shall not
be in default under this Lease unless Landlord (or such ground lessor, mortgagee
or beneficiary) fails to cure such non-performance within thirty (30) days after
receipt of Tenant's notice. However, if such non-performance reasonably
requires more than thirty (30) days to cure, Landlord shall not be in default if
such cure is commenced within such thirty (30) -day period and thereafter
diligently pursued to completion.

(c) Notwithstanding any term or provision herein to the contrary, the
liability of Landlord for the performance of its duties and obligations under
this Lease is limited to Landlord's interest in the Property and the Project,
and neither

the Landlord nor its partners, shareholders, officers or other principals
shall have any personal liability under this Lease.

Section 13.03. SEVERABILITY. A determination by a court of competent
jurisdiction that any provision of this Lease or any part thereof is illegal or
unenforceable shall not cancel or invalidate the remainder of such provisions or
this Lease, which shall remain in full force and effect.

Section 13.04. INTERPRETATION. The captions of the Articles or Sections of
this Lease are to assist the parties in reading this Lease and are not a part of
the terms or provisions of this Lease. Whenever required by the context of this
Lease, the singular shall include the plural and the plural shall include the
singular. The masculine, feminine and neuter genders shall each include the
other. In any provision relating to the conduct, acts or omissions of Tenant,
the term "Tenant" shall include Tenant's agents, employees, contractors,
invitees, successors or other using the Property with Xxxxxx's expressed or
implied permission.

Section 13.05. INCORPORATION OF PRIOR AGREEMENTS; MODIFICATIONS. This
Lease is the only Agreement between the parties pertaining to the lease of the
Property and no other agreements are effective. All amendments to this Lease
shall be in writing and signed by all parties. Any other attempted amendment
shall be void.

Section 13.06. NOTICES. All notices required or permitted under this Lease
shall be in writing and shall be personally delivered or sent by certified mail,
return receipt requested, postage prepaid. Notices to Tenant shall be delivered
to the address specified in Section 1.03 above, except that upon Xxxxxx's taking
possession of the Property, the Property shall be Tenant's address for notice
purposes. Notices to Landlord shall be delivered to the address specified in
Section 1.02 above. All notices shall be effective upon delivery. Either party
may change its notice address upon written notice to the other party.

Section 13.07. WAIVERS. All waivers must be in writing and signed by the
waiving party. Landlord's failure to enforce any provision of this Lease or its
acceptance of rent shall not be a waiver and shall not prevent Landlord from
enforcing that provision or any other provision of this Lease in the future. No
statement on a payment check from Tenant or in a letter accompanying a payment
check shall be binding on Landlord. Landlord may, with or without notice to
Tenant, negotiate such check without being bound to the conditions of such
statement.

Section 13.08. NO RECORDATION. Tenant shall not record this Lease without
prior written consent from Landlord. However, either Landlord or Tenant may
require that a "Short Form" memorandum of this Lease executed by both parties be
recorded. The party requiring such recording shall pay all transfer taxes and
recording fees.

Section 13.09. BINDING EFFECT; CHOICE OF LAW. This Lease binds any party
who legally acquires any rights or interest in this Lease from Landlord or
Tenant. However, Landlord shall have no obligation to Xxxxxx's successor unless
the rights or interests of Xxxxxx's successor are acquired in accordance with
the terms of this Lease. The laws of the state in which the Property is located
shall govern this Lease.

Section 13.10. CORPORATE AUTHORITY; PARTNERSHIP AUTHORITY. If Tenant is a
corporation, each person signing this Lease on behalf of Tenant represents and
warrants that he has full authority to do so and that this Lease binds the
corporation. Within thirty (30) days after this Lease is signed, Tenant shall
deliver to Landlord a certified copy of a resolution of Tenant's Board of
Directors authorizing the execution of this Lease or other evidence of such
authority reasonably acceptable to Landlord. If Tenant is a partnership, each
person or entity signing this Lease for Tenant represents and warrants that he
or it is a general partner of the partnership, that he or it has full authority
to sign for the partnership and that this Lease binds the partnership and all
general partners of the partnership. Tenant shall give written notice to
Landlord of any general partner's withdrawal or addition. Within thirty (30)
days after this Lease is signed, Xxxxxx shall deliver to Landlord a copy of
Xxxxxx's recorded statement of partnership or certificate of limited
partnership.

Section 13.11. JOINT AND SEVERAL LIABILITY. All parties signing this Lease
as Tenant shall be jointly and severally liable for all obligations of Tenant.

Section 13.12. FORCE MAJEURE. If Landlord cannot perform any of its
obligations due to events beyond Landlord's control, the time provided for
performing such obligations shall be extended by a period of time equal to the
duration of such events. Events beyond Xxxxxxxx's control include, but are not
limited to, acts of God, war, civil commotion, labor disputes, strikes, fire,
flood or other casualty, shortages of labor or material, government regulation
or restriction and weather conditions.

Section 13.13. EXECUTION OF LEASE. This Lease may be executed in
counterparts and, when all counterpart documents are executed, the counterparts
shall constitute a single binding instrument. Xxxxxxxx's delivery of this Lease
to Tenant shall not be deemed to be an offer to lease and shall not be binding
upon either party until executed and delivered by both parties.

Section 13.14. SURVIVAL. All representations and warranties of Landlord
and Tenant shall survive the termination of this Lease.

ARTICLE FOURTEEN: Deleted.

Landlord and Xxxxxx have signed this Lease at the place and on the dates
specified adjacent to their signatures below and have initialled all Riders
which are attached to or incorporated by reference In this Lease.

"LANDLORD"

Signed on 9-17-98 , 19 OCEAN POINT TECH CENTRE
-------------- ----- ----------------------------------------
at San Diego
------------------------------ ----------------------------------------

BY: /s/ X. X. Xxxxx
------------------------------------
Xxxxxxx X. Xxxxx

ITS: Executive Vice President
------------------------------------

BY:
-----------------------------------

ITS:
------------------------------------

"TENANT"

Signed on AUGUST 13, 1998 VISTA MEDICAL TECHNOLOGIES, INC.,
----------------- ----------------------------------------

at ------------------------------- ----------------------------------------

BY: /s/ Xxxxxx XxXxxxx
------------------------------------
Xxxxxx XxXxxxx

ITS: CHIEF FINANCIAL OFFICER/SECRETARY
------------------------------------

BY:
------------------------------------

ITS: -----------------------------------

IN ANY REAL ESTATE TRANSACTION, IT IS RECOMMENDED THAT YOU CONSULT WITH
A PROFESSIONAL, SUCH AS A CIVIL ENGINEER, INDUSTRIAL HYGIENIST OR OTHER
PERSON WITH EXPERIENCE IN EVALUATING THE CONDITION OF THE PROPERTY, INCLUDING
THE POSSIBLE PRESENCE OF ASBESTOS, HAZARDOUS MATERIALS AND UNDERGROUND
STORAGE TANKS.

THIS PRINTED FORM LEASE HAS BEEN DRAFTED BY LEGAL COUNSEL AT THE
DIRECTION OF THE SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND
OFFICE REALTORS,-Registered Trademark- INC. NO REPRESENTATION OR
RECOMMENDATION IS MADE BY THE SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF
INDUSTRIAL AND OFFICE REALTORS,-Registered Trademark- INC., ITS LEGAL
COUNSEL, THE REAL ESTATE BROKERS NAMED HEREIN, OR THEIR EMPLOYEES OR AGENTS,
AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT OR TAX CONSEQUENCES OF THIS LEASE
OR OF THIS TRANSACTION. LANDLORD AND TENANT SHOULD RETAIN LEGAL COUNSEL TO
ADVISE THEM ON SUCH MATTERS AND SHOULD RELY UPON THE ADVICE OF SUCH LEGAL
COUNSEL.

SECTION 15: This Rental Schedule is attached to and made part of that certain
----------
real estate Lease (the "Lease") dated: JULY 07, l998 By and between OCEAN POINT
------------- -----------
TECH CENTRE as Landlord, and VISTA MEDICAL TECHNOLOGIES INC., as Tenant,
----------- -------------------------------
covering property commonly known as 0000 XXXXXXX XXXXXXX, SUITES A, B, C, J & K,
--------------------------------------------
CARLSBAD, CA. 92008 The terms used in this Section shall have the same
-------------------
definitions as set forth in the Lease.

RENTAL SCHEDULE
---------------

BASE
DATE RENT NNN TOTAL RENT
---- -------- ------- ----------
12/01/98 - 11/30/00 $8450.00 $975.00 $9425.00

NNN CHARGES
-----------
The NNN charges are capped at $975.00 per month during entire Two (2) Year Lease
Term.

TAXES AND INSURANCE
-------------------
Taxes and Insurance are not applicable. Covered in NNN.

STANDARD LEASE ATTACHMENT
FOR

REPAIRS AND/REPLACEMENT

This Lease Attachment refers to that certain Lease dated JULY 7, 1998
--------------------
------------------ by and between OCEAN POINT TECH CENTRE
------------------------------------------
as Landlord and VISTA MEDICAL TECHNOLOGIES INC.,
------------------------------------------------------------
as Tenant for the premises known as 0000 XXXXXXX XXXXXXX, XXX A,B,C,J & K
------------------------------------------
CARLSBAD, CA 92008
------------------------------------------

The following paragraphs are hereby incorporated into the aforementioned lease
and made a part thereof:

PARAGRAPH # 16. OUTSIDE STORAGE. Lessee hereby grants permission to Lessor
to tow away and store, at Xxxxxx's expense, all automobiles or motor vehicles
belonging to Lessee or its employees or customers, which remain in the common
parking area for more than 40 consecutive hours. No automobiles or motor
vehicles shall be parked and left unattended in any part of the common area or
service yard not striped or designated for parking. Lessee shall not store in
the parking, service or common area any materials, supplies, equipment or
machinery outside the premises, whether in the open or in tanks, bin or other
container devices, and shall not otherwise obstruct parking, service or common
areas.

PARAGRAPH 17. REPAIRS AND/OR REPLACEMENT. Lessee shall, at its sole cost,
keep and maintain the Leased Premises and appurtenances and every part
thereof (excepting wall and roofs which Landlord agrees to repair unless
damage is caused by Lessee or Lessee's agents' or invitees), including but
not limited to windows and skylights, doors and store front, floors,
carpeting, ceilings, interior walls and interior surfaces of exterior walls
of the Leased premises, in good and sanitary order, condition, repair or
replacement. Lessee shall, at its sole cost, keep and maintain all
utilities, fixtures, hot water heater s and mechanical equipment used by
Lessee in good order, condition and repair and shall repair or replace any
asphalt paving damaged by Xxxxxx's agents or invitees.

PARAGRAPH 18. GLASS. Lessor shall replace, at the expense of the Lessee,
any and all plate and other glass damaged or broken from any cause whatsoever in
and about the leased premises, or Lessee may, at its option, replace such glass
at its expense provided Lessee receives approval from Lessor to perform this
repair.

Section 19 This Emissions; Storage, Use & Disposal of Waste is attached to and
----------
made part of that certain real estate Lease (the "Lease") dated JULY 7, 1998,
---------------
between the OCEAN POINT TECH CENTRE, as
----------------------------
Landlord and VISTA MEDICAL TECHNOLOGIES INC., as Tenant, Covering the
--------------------------------------
Property commonly known as: 5451 AVENIDA XXXXXXX, STES A,B,C, J & K
--------------------------------------------------
The terms used in this Section shall have the same definitions as set forth in
the Lease.

EMISSIONS; STORAGE, USE AND DISPOSAL OF WASTE

1. EMISSIONS. Tenant shall not:

a. Permit any vehicle on the premises to emit exhaust which is in
violation of any governmental law, rule, regulation or requirement;

b. Discharge, emit or permit to be discharged or emitted, any liquid,
solid or gaseous matter, or any combination thereof, into the
atmosphere, the ground or any body of water. which matter, as
reasonably determined by Lessor or any governmental entity, does, or
may, pollute or contaminate the same, or is, or may become,
radioactive or does, or may, adversely affect the (1) health or safety
of persons, wherever located, whether on the premises or anywhere
else, (2) condition, use or enjoyment of the promises or any other
real or personal property, whether on the premises or anywhere else,
or (3) premises or any of the improvements thereto or thereon
including buildings, foundations, pipes, utility lines, landscaping or
parking areas;

c. Produce, or permit to be produced, any intense glare, light or heat
except within an enclosed or screened area and then only in such
manner that the glare, light or heat shall not be discernible from
outside the premises;

d. Create, or permit to be created, any sound pressure level which will
interfere with the quiet enjoyment of any real property outside the
premises, of which will create a nuisance or violate any governmental
law, rule, regulation or requirement;

e. Create, or permit to be created, any ground vibration that is
discernible outside the premises;

f. Transmit, receive or permit to be transmitted or received, any
electromagnetic, microwave or other radiation which is harmful or
hazardous to any person or property in, on or about the premises, or
anywhere else.

2. STORAGE AND USE.

a. STORAGE. Subject to the uses permitted and prohibited to Tenant under
this lease, Tenant shall store in appropriate leak proof containers
all solid, liquid or gaseous matter, or any combination thereof, which
matter, if discharged or emitted into the atmosphere, the ground or
any body of water, does or may (1) pollute or contaminate the same, or
(2) adversely affect the (i) health or safety of persons, whether on
the premises or anywhere else, (ii) condition, use or enjoyment of the
premises or any real or personal property, whether on the promises or
anywhere else, or (iii) promises or any of the improvements thereto or
thereon.

b. USE. In addition, without Landlord's prior written consent, Tenant
shall not use, store or permit to remain on the premises any solid,
liquid or gaseous matter which is, or may become, radioactive. If
Landlord does give its consent, Tenant shall store the materials in
such a manner that no radioactivity will be detectable outside a
designated storage area and Tenant shall use the materials in such a
manner that (1) no real or personal property outside the designated
storage area shall become contaminated thereby or (2) there are and
shall be no adverse effects on the (i) health or safety of persons,
whether on the premises or anywhere else, (ii) condition, use or
enjoyment of the premises or any real or personal property thereon or
therein, or (iii) premises or any of the improvements thereto or
thereon.

3. DISPOSAL OF WASTE.

a. REFUSE DISPOSAL. Tenant shall not keep any trash, garbage, waste or
other refuse on the premises except in sanitary containers and shall
regularly and frequently remove same from the premises. Tenant shall
keep all incinerators, containers or other equipment used for the
storage or disposal of such materials in a clean and sanitary
condition.

b. SEWAGE DISPOSAL. Tenant shall properly dispose of all sanitary sewage
and shall not use the sewage disposal system (1) for the disposal of
anything except sanitary sewage or (2) excess of the lesser of the
amount (a) reasonably contemplated by the uses permitted under this
Lease or (b) permitted by any governmental entity. Tenant shall keep
the sewage disposal system free of all obstructions and in good
operating condition.

c. DISPOSAL OF OTHER WASTE. Tenant shall properly dispose of all other
waste or other matter delivered to, stored upon, located upon or
within, used on, or removed from, the premises in such a manner that
is does not, and will not, adversely affect the (1) health or safety
of persons, wherever located, whether on the premises or elsewhere,
(2) condition, use or enjoyment of the premises or any other real or
personal property, wherever located, whether on the premises or
anywhere else, or (3) premises or any of the improvements thereto or
thereon including buildings, foundations, pipes, utility lines,
landscaping or parking areas.

4. COMPLIANCE WITH LAW. Notwithstanding any other provision in this Lease to
the contrary, Tenant shall comply with all laws, statutes, ordinances,
regulations, rules and other governmental requirements in complying with
its obligations under this lease, and in particular, relating to the
storage, use and disposal of hazardous or toxic matter.

5. INDEMNIFICATION. Tenant shall defend, indemnify and hold Landlord harmless
from any loss, claim, liability or expense, including attorneys' fees and
costs, arising out of or in connection with its failure to observe or
comply with the provisions of this Lease.

LANDLORD: OCEAN POINT TECH CENTRE
----------------------------------------

By: /s/ X. X. Xxxxx
------------------------------------
X. X. Xxxxx, Executive Vice President

TENANT: VISTA MEDICAL TECHNOLOGIES INC.,
-------------------------------------

By: /s/ Xxxxxx XxXxxxx
-------------------------------------
Xxxxxx XxXxxxx

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

TENANT: VISTA MEDICAL TECHNOLOGIES INC.

UNIT ADDRESS:

0000 XXXXXXX XXXXXXX, XXXX X,B,C,J & K
CARLSBAD, CA 92008

QUALITY AND/OR SIZE
HEIGHT, LENGTH ETC.

ITEM:

X STANDARD IMPROVEMENT ONLY
-------

------- STANDARD IMPROVEMENTS PLUS THOSE SHOWN BELOW.

PARTITIONS:

CEILINGS:

FLOOR COVERINGS:

PLUMBING:

LIGHTS:

SWITCHES:

WALL ELEC. OUTLETS:

PHONE OUTLETS:

A/C OR VENT FAN:

A/C HOOK UP:

WATER HEATER:

PAINTING:

OTHER:

LESSEE SHALL HAVE NINETY (90) DAYS FROM COMMENCEMENT DATE TO NOTIFY LANDLORD IF
PLUMBING, MECHANICAL AND ELECTRICAL SYSTEMS ARE NOT IN GOOD WORKING ORDER. IF
NOTIFIED LANDLORD WILL MAKE REPAIRS AT LANDLORD'S SOLE COST.

UNLESS OTHERWISE STATED, THE IMPROVEMENTS LISTED ABOVE WILL BE FINAL. ANY
ADDITIONS WILL BE PAID FOR BY THE TENANT.

RULES AND REGULATIONS

EXHIBIT "D"

(Supplemental To Lease Provisions)

1. No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed or printed or affixed on or to any part of the outside
or inside of the Building without the written consent of Landlord first
hand and obtained and Landlord shall have the right to remove any such
sign, placard, picture, advertisement, name or notice without notice to and
at the expense of the Tenant.

All approved signs or lettering on doors shall be printed, painted, affixed
or inscribed at the expense of Tenant by a person approved of by Landlord.
Tenant shall not place anything or allow anything to be placed near the
glass or any window, door, partition or wall which may appear unsightly
from outside the Premises as determined by Landlord; provided, however,
Landlord may require a Building Standard window covering at all exterior
windows. Tenant shall not without prior written consent of Landlord cause
or otherwise sun screen any window.

2. The sidewalks, exits, entrances, shall not be obstructed by any of the
Tenants, or used by them for any purpose other than for ingress and egress
from their respective Premises.

3. Tenant shall not alter any lock or install any new or additional locks or
any bolts on any doors or windows of the Premises.

4. The toilet rooms, urinal, wash bowls and other apparatus shall not be used
for any purpose other than that for which there were constructed and no
foreign substance of any kind whatsoever shall be thrown therein and the
expense of any breakage, stoppage, or damage resulting from the violation
of this rule shall be borne by the Tenant who, or whose employees or
invitee(s) shall have caused it.

5. Tenant shall not in any way deface the Premises or any part thereof.

6. Tenant shall not use, keep or permit to be used or kept any foul or noxious
gas or substance in the Premises, or permit or suffer the Premises to be
occupied or used in a manner offensive or objectionable to the Landlord or
other occupants of the Building by reason of noise, odors, and/or
vibrations or interfere in any way with other Lessees or those having
business therein, nor shall any animals or birds be brought in or kept in,
on, or about the Premises or Building.

7. Lessee shall not use or keep in the Premises or the Building any kerosene
gasoline or inflammable or combustible fluid or material. or use any method
of heating or air conditioning other than that supplied by Landlord.

8. Landlord reserves the right to exclude or expel from the premises any
person who, in the judgement of Landlord is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in
violation of any of these Rules and Regulations.

9. No vending machine or machines of any description shall be installed,
maintained or operated upon the Premises without the written consent of the
Landlord.

10. Landlord shall have the right, exercisable without notice and without
liability to Landlord to change the name and street address of the Building
of which the Premises are a part.

11. Tenant shall not disturb, solicit, canvas any occupant of the Building and
shall cooperate to prevent same.

12. Without the written consent of Landlord, Tenant shall not use the name of
the Building in connection with or in promoting or advertising the business
of Tenant except as Xxxxxx's address.

13. All garbage and refuse shall be placed by Tenants in containers.

Page 1 of 2

RULES AND REGULATIONS

EXHIBIT "D"

(continued)

14. No aerial or antenna shall be erected on the roof or exterior walls of the
Lease Premises, or on the grounds without in each instance, the written
consent of Landlord first being obtained. Any aerial or antenna so
installed without such written consent shall be subject to removal by
Landlord at any time without notice.

15. No loud speakers, television, phonographs, radios or other devises shall be
used in a manner so as to be heard or seen outside of the Leased Premises
with the prior written consent of Landlord.

16. The outside areas immediately adjoining the Leased Premises shall be kept
clean and free from dirt and rubbish by Tenant, to the satisfaction of the
Landlord, and Tenant shall not place or permit any obstruction or materials
in such areas. No exterior storage shall be allowed including, without
limitation, the storage of motor vehicles, trucks, boars, trailers,
pallets, drums, or equipment of any kind or nature, without the permission
in writing from Landlord.

17. Tenant shall use at Tenant's cost such pest extermination contractor as
Landlord may direct and at such intervals as Landlord may require.

18. Tenant shall not burn any trash or garbage of any kind in or about the
Leased Premises or the Project.

19. No residential use, including without limiting the generality of the
foregoing, residing, sleeping or cooking are permitted on the Premises or
anywhere on the Project.

20. No animals of any type, including, without limiting the generality of the
foregoing, pets, guard dogs, exotic animals, reptiles or birds, are
permitted on the Premises or anywhere on the Project.

21. Landlord reserves the right, by written notice to Xxxxxx, to rescind, alter
or waive any rule or regulation at any time prescribed for the Building
when, in Landlord's judgment, it is necessary, desirable or proper for the
best interest of the Building and its Tenants.

22. The trash dumpsters in the common areas are designed for office and light
waste only. If a Tenant is a heavier generator of trash, it is the
responsibility of the Tenant to contract directly with a trash disposal
company for a dumpster and trash pick-ups. Under no circumstances are
contractors allowed to place construction debris in any dumpster in the
park.

Page 2 of 2

OCEAN POINT TECH CENTRE
-----------------------

SIGN CRITERIA
-------------

This criteria establishes the policy governing all tenant sign identification
within Ocean Point Tech Centre. The purpose is to maintain the high quality of
the Tech Centre. Conformance will be strictly enforced and any sign that does
not conform shall be brought into conformity at the expense of the tenant. All
tenants shall be required to have a window sign.

GENERAL REQUIREMENTS,
---------------------

1. Drawings have been attached hereto showing placement type and style of
permitted signs.

2. Landlord shall approve all copy and/or logo design prior to the
installation of the sign.

3. Landlord shall approve the placement and method of all signs to the
building prior to installation.

GENERAL SPECIFICATIONS
----------------------

1. SIGN TYPE G: Front Door Suite Identification for Buildings 5421, 5431,
5441, 5451 - shall be white vinyl letters applied to glass side panels.
Suite designation has been provided and company name shall be "3" caps and
lower case as shown on attached drawing. These letters are provided and
installed by Q.R.S. Signs at the expense of the tenant.

2. SIGN TYPE II; Major Tenant Building Identification. The size shall be
limited to an area not more than 2' high x and 10' long and shall be placed
on the concrete beam in front of Tenant's space. In the event there is no
beam in front, the sign may be placed on the third concrete panel from the
ground adjacent to tent's door. These signs shall be non-lit cut out
letters. The material used should be durable, weather and fade resistant.
Suggested materials are acrylic, foam sandwich with plex skin, etc. Colors
are encouraged, but all signs must be approved by landlord. Q. R. S. Signs
at 0000 "X" Xxxxxx, San Diego is the sign contractor for Ocean Point Tech
Centre.

3. Upon removal of any sign, any damage or disfiguration of the building will
be repaired at tenant's expense. It is a tenant's responsibility to
maintain their sign in a new condition at all times.

No other signs, placards, banners, pennants, insignias, trademarks, security
stickers or other descriptive materials shall be placed or affixed or maintained
upon any glass parts, wall surfaces, landscaped area, streets, or parking areas.

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SIGN TYPE: G

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SIGN TYPE: H

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[PICTURE]

250392.01 -- VIS/GEN INDUSTRIAL REAL ESTATE LEASE (MULTI-TENANT FACILITY)

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APPROXIMATELY 6500 RENTABLE SQUARE -------------------------------------------- ------------------------------------ FEET LOCATED AT: ------------------------- ------------------------------------------------------- 5451 AVENIDA ENCINAS, STES A,B,C,J...

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