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                                                                   EXHIBIT 10.18

                                      LEASE


      THIS LEASE AGREEMENT "Lease", entered into August 5, 1999 between
William C. Martin or his Assignee (hereinafter referred to as "Host") whose
address is C/O First Martin Corporation, 115 Depot Street, Ann Arbor, Michigan
48104 and MECHANICAL DYNAMICS, INC., a Michigan corporation (hereinafter
referred to as "Guest") whose address is 2301 Commonwealth Boulevard, Ann Arbor,
Michigan 48105 until commencement of the term hereof and thereafter the
Premises, by which the parties agree as follows:

1.    Leased  Premises.  Subject to and upon the terms hereinafter set forth,
      and in consideration of the sum of Ten Dollars ($10.00), the premises, and
      the mutual covenants set forth herein, the receipt and sufficiency of
      which are hereby acknowledged, Host does hereby lease to Guest certain
      premises (hereinafter referred to as the "Premises") consisting of a
      building (hereinafter referred to as the ("Building") in the Traverwood
      Business Center located in Ann Arbor, Michigan, on the site described in
      Exhibit A-1 attached hereto (hereinafter referred to as the "Site"), such
      leased Premises being approximately 66,878 square feet of Gross Building
      Area as generally described in Paragraph 3 hereof; the preliminary site
      plan for the Building is attached hereto as Exhibit A-2. Together the
      Building and Site are sometimes referred to herein as the "Project". As
      used herein, "Gross Building Area" or "GBA" shall refer to the total
      square footage of all floor area (including floor area which is below
      grade) measured to the predominant outside surface of the Building
      exterior walls (or in the case of floor area below grade, the inside face
      of the foundation walls).

2.    Term.

      (a)   Initial Term.  The term of this Lease shall commence fifteen (15)
            days after the date of Substantial Completion of the improvements to
            be made by Host ("Host's Improvements", as defined in Paragraph 3 of
            this Lease), and shall continue for a period of ten (10) years from
            the first of the month coincident with or next following such date
            of commencement (hereinafter referred to as the "Commencement
            Date"). Guest and Host mutually agree that in the event Substantial
            Completion is achieved between December 1, 2000 and January 2, 2001,
            Guest may delay the Commencement Date of the Lease until January 15,
            2001. As used herein, "Substantial Completion" shall mean the
            completion of Host's Improvements in substantial compliance with the
            plans, specifications and other contract documents for such
            Improvements except for punchlist items which in the aggregate do
            not materially interfere with the use and occupancy of the subject
            space for its intended purposes and which can be completed without
            interfering with the use of such space. Guest acknowledges that a
            certificate of occupancy cannot be secured until Guest's cubicles
            are installed and wired. Guest shall be allowed access to install
            the same as soon as reasonably possible. Should Substantial
            Completion of Host's Improvements be delayed due to either (i)
            Guest's failure to approve the plans and specifications for said
            Improvements


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            in a timely manner (as set forth in Paragraph 3), or (ii) change
            orders initiated by Guest, then the Commencement Date shall be that
            date on which Host's Improvements would have otherwise been
            substantially completed but for such delays. Change orders shall
            state the delay which will result thereby, if any, in the
            Substantial Completion of Host's Improvements. As used herein, the
            term "Lease Year" shall mean a period of twelve (12) consecutive
            months. The first Lease Year shall begin on the date of commencement
            of the term of this Lease if such Commencement Date shall occur on
            the first day of a month, or, if not, then on the first day of the
            following month.

      (b)   Renewal Option. Provided Guest is not then in default, Guest shall
            have the right to renew the term of this Lease for two (2)
            additional successive periods of five (5) years each (the "Option
            Periods") on the same terms and conditions with the exception that
            (i) Guest shall have no further implied right to renew beyond the
            properly exercised Option Periods, (ii) Guest shall not have the
            right to assign said rights to any sublessee of the Premises or
            assignee of the Lease, nor may any such sublessee or assignee
            exercise such renewal rights, and (iii) the leasehold improvements
            shall be provided in their then-existing condition (on an "as is"
            basis) at the time the Option Periods commence. If Guest elects to
            exercise any expansion options as provided in Paragraph 36 hereof,
            then the Option Periods shall commence at the expiration of the term
            of the Lease as extended pursuant to the provisions of such
            expansion options. Guest shall give Host notice that it is
            exercising any such right not less than eighteen (18) months prior
            to the expiration date of the then current term of the Lease.

      (c)   Completion Date. Host shall use its best efforts to obtain
            Substantial Completion on or before November 1, 2000. In the event
            that Substantial Completion of Host's Improvements has not been
            attained on or before May 1, 2001, Guest shall have the right to
            terminate this Lease by delivery of fifteen (15) days' prior written
            notice of termination to Host, unless during such fifteen (15) day
            period, Host agrees in writing to extend (i) the lease between First
            Properties Associates Limited Partnership and Guest, as lessee, date
            July 12, 1989, covering certain premises located at 2301
            Commonwealth Boulevard, Ann Arbor, Michigan (the "Old Lease"), and
            (ii) the Rent Credit as defined in an amendment to the Old Lease
            described as the Third Amendment to Lease dated as of August 5,
            1999, in both cases, for a period thirty (30) days beyond the date
            of actual Substantial Completion of Host's Improvements. Guest
            agrees to act promptly in all matters requiring Guest's approval,
            including but not limited to approval of plans and specifications so
            as not to delay the project commencement and completion.

3.    Improvements.

      (a)   Host's Improvements. Host shall cause to be constructed on the
            Land a Building with a Gross Building Area of approximately 66,878
            square feet including site work, building shell, mechanical systems,
            and interior partitions and finishes but


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            excluding the installation of cubicles (including electrical wiring)
            and computer and communications cabling (herein sometimes referred
            to as "Host's Improvements"). Guest shall be responsible for the
            layout, design and installation of all cubicles (including
            electrical wiring) and computer and communications cabling; said
            design and Guest's contractors must be approved by Host in writing
            in advance.

      (b)   Plans and Specifications.  Host's Improvements shall be constructed
            in accordance with plans and specifications mutually approved and
            agreed upon by Host and Guest as provided hereinafter. The architect
            for Host's improvements shall be Jickling, Lyman and Powell. The
            maximum number of parking spaces allowed by the City of Ann Arbor
            shall be provided not to exceed five spaces per 1,000 square feet of
            Gross Building Area, subject to receiving site plan approval from
            the City of Ann Arbor for the amount of parking. Host shall submit
            to Guest for its approval the site plan and the final plans and
            specifications for Host's Improvements; said plans and
            specifications shall be deemed approved unless rejected in writing
            within five (5) business days of receipt. A working set of site
            plans and building plans and specifications which are approximately
            75% complete will be made available for review at least two weeks
            prior to submission of final plans. Any denial of such approval
            shall be fair and reasonable.

      (c)   Building Construction. The general contractor for Host's
            Improvements shall be O'Neal Construction, Inc. ("O'Neal"). Host and
            Guest shall jointly negotiate a contract with O'Neal, which contract
            shall provide a guaranteed maximum price which includes a 3%
            construction contingency. Host shall provide an allowance (the "Hard
            Construction Cost Allowance") of up to $100.00 per square foot of
            Gross Building Area for the direct construction costs for Host's
            Improvements; "direct construction costs" includes bonding and
            permits but excludes extraordinary costs relating to poor soil
            conditions, which costs shall be the sole responsibility of Host,
            and soft costs such as base building architectural and design
            services, legal services, construction financing, permanent
            financing origination, title insurance, builder's risk insurance,
            brokerage commissions, development fees, real estate taxes and other
            carrying costs for the Site. Upon Guest's written request received
            on or before the date of commencement of said Improvements, Host
            shall increase said Allowance to up to $110.00 per square foot of
            Gross Building Area, subject to Host securing additional financing
            acceptable to Host within thirty (30) days of notice from Guest that
            it wishes to increase said Allowance. Any direct construction costs
            for Host's Improvements in excess of said Allowance shall be paid to
            Host by Guest within 30 days of date of invoice. O'Neal shall
            provide a warranty of one year on all work with the exception of the
            roof, which shall have a ten year warranty; said warranties shall
            commence as of the date of Substantial Completion of Host's
            Improvements. The additional cost of any change orders requested by
            Guest shall be paid to Host within ten (10) days of date of invoice
            and shall include an administrative fee of 10%.


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4.    Rent.

      (a)   Base Rent. Guest shall pay to Host as annual base rent for the
            Premises for the term hereof an amount which shall be determined by
            multiplying the Rent Factor by the Total Development Cost for the
            Project, as further defined below:

            (i) "Rent Factor" is the sum of the Rental Rate Constant and the
            Debt Service Constant.

            (ii) "Rental Rate Constant" is 200 basis points.

            (iii) "Debt Service Constant" is the percentage calculated by
            dividing the annual payment of principal and interest required for
            the Permanent Mortgage Loan by the original principal amount of said
            Loan. The Debt Service Constant shall not change if Host refinances
            the Permanent Mortgage Loan or pays off said Loan subsequent to the
            Commencement Date of the Lease.

            (iv) "Permanent Mortgage Loan" is the loan which is secured by
            Host to finance the Total Development Cost. Said loan shall (a) have
            a minimum term of ten (10) years, (b) be non-recourse to Host, (c)
            have a twenty-five year amortization schedule which provides for
            level annual payments, and (d) be otherwise acceptable to Host. If
            said loan has not been closed as of the Commencement Date, then the
            terms set forth in the commitment for said Loan shall be used.

            (v) "Total Development Cost" is the sum of:

                -  "Land Cost", which is deemed to be $1,050,000.00;

                -  "Hard Construction Cost", which is the portion of the Hard
                    Construction Cost Allowance which is used; and

                -  "Soft Cost", which is deemed to be One Million Five Hundred
                    Eighty-Three Thousand Four Hundred ($1,583,400) Dollars.


            The manner in which the annual rent is to be calculated is
            illustrated using estimated costs in Exhibit B attached hereto.

      (b)   Payment Schedule. Said annual rent shall be due and payable in equal
            monthly installments in advance on the first day of each calendar
            month during the term hereof. Rent for partial months shall be
            prorated based on a 365 day year. If any rent payment due hereunder
            is more than six (6) days late, Guest shall pay Host a service fee
            equal to two percent (2%) of said rent payment. The payment of this
            late payment service fee will not constitute a waiver by Host of any
            default by Guest under this Lease. The rent to be paid by Guest
            hereunder shall not be


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            diminished by the additional payments to be made by Guest as
            provided in Paragraphs 5,6,7,8 and 16 or elsewhere in this Lease.

      (c)   Escalation.  The annual base rent payable under this Lease shall be
            adjusted annually at the beginning of the second Lease Year and each
            succeeding Lease Year during the term of this Lease and any renewals
            thereof by 2.65%. Commencing with the seventh Lease Year, in the
            event the Consumer Price Index (as hereinafter defined and referred
            to as "CPI") increases more than 7.0% in the twelve month period
            immediately preceding the third month prior to the month in which
            such adjustment is to take effect, then the annual increase in the
            rent will be 80% of the percentage increase in the CPI during such
            period. Adjusted monthly installments of rent shall be rounded to
            the nearest whole dollar.. As used herein, "Consumer Price Index"
            means the Consumer Price Index for All Urban Consumers, U.S. City
            Average, All Items, 1982-84 = 100, as issued by the Bureau of Labor
            Statistics, United States Department of Labor. If at any time during
            the term hereof the Bureau of Labor Statistics should modify the
            methodology used in computing the CPI and should said Bureau
            determine that, as a result, the CPI is likely to be different in
            the future than would otherwise be the case, then in calculating
            rent increases hereunder the CPI shall be adjusted as follows.
            Commencing with the first rent adjustment date after the new
            methodology becomes effective, the percentage increase in the CPI
            during the relevant twelve month period shall be multiplied by an
            adjustment factor, which shall be the quotient of a) the increase in
            the CPI using the old methodology during the twelve month period
            prior to the date the new methodology becomes effective, divided by
            the increase in the CPI during said twelve month period using the
            new methodology (as estimated by the Bureau of Labor Statistics). If
            at any time during the term hereof the United States Bureau of Labor
            Statistics shall discontinue the issuance of the CPI, then the
            parties agree to use any other standard, nationally recognized cost
            of living index then issued and available, which is published by the
            United States Government, and if no governmental index is then
            published, then by any generally recognized privately published
            index of the cost of living.

5.    Net Features.  The rent during the term of this Lease shall be on a
      net-net-net basis. That is to say, Guest, and not Host, shall be
      responsible for and pay all costs connected with the Premises and the
      grounds and parking facilities subject to the limitations contained in
      section 37 hereof appurtenant thereto, including but not limited to: real
      estate taxes as hereinafter defined (or any other tax or charge imposed by
      any governmental authority expressly designated and identifiable as a
      substitute for such taxes), personal property taxes, special assessments,
      utilities, service charges, janitorial service, maintenance (including:
      (i) maintenance repair and replacement, as necessary, of all plumbing,
      electrical, heating/cooling and other mechanical systems; (ii) the
      building doors, windows, roof and structure; and (iii) the grounds and
      parking facilities), insurance and management. Such items shall be paid
      before they become overdue or delinquent. Failure to do so shall be a
      default of the Lease. There shall be no deduction from the rent


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      on account of Guest's payment of such costs. Latent defects in the roof,
      windows, or structure discovered subsequent to the one year warranty
      period and prior to the seventh anniversary of the lease Commencement Date
      shall be the Host's responsibility to repair or replace as necessary.

6.    Real Estate Taxes. From and after the Commencement Date, Guest shall pay
      all real estate taxes connected with the Premises and one-half of real
      estate taxes connected with the Site (or a greater portion should Guest
      exercise its expansion options as provided in Paragraph 36 ("Expansion
      Options")). As used herein, "real estate taxes" shall mean: (i) all real
      estate, ad valorem or personal property taxes levied with respect to the
      Premises, the Site, any fixtures, equipment or other property, real or
      personal, located on or about the Premises or the Site; (ii) any other
      tax, general or special assessment or other governmental charge of any
      description imposed upon or in respect to the Premises or Site, including,
      without limitation, a tax upon any rent therefrom, or any occupancy or use
      thereof; (iii) any water and sewer general or special assessments,
      charges, excises, levies, license and permit fees, transfer taxes, and all
      other similar charges, if any, which are levied, assessed, or imposed upon
      or become due and payable in connection with, or liens upon, the Premises,
      Site or facilities used in connection therewith, and rentals or receipts
      therefrom; and (iv) all taxes of whatsoever nature that are imposed in
      substitution for or in lieu of any taxes, assessments or other charges
      included in this definition. Host shall obtain from the taxing authority a
      separate tax parcel for the Site.. Guest's liability for real estate taxes
      hereunder shall be paid to Host in the manner set forth in Paragraph 8
      hereof. In the event Host is required under any mortgage covering the
      Building to escrow real estate taxes, Host may, but shall not be obligated
      to, use the amount required to be so escrowed as a basis for its estimate
      of such monthly installments. Provided Guest is the sole occupant of the
      Building, Guest shall have the right to contest the assessed value of the
      Premises after first consulting with Host. If the building becomes
      multi-tenant, Host and Guest may mutually agree to contest the assessed
      value. In such case, Host will negotiate or contest the assessed value
      with the City of Ann Arbor. Real estate taxes for the first and last years
      of this Lease shall be prorated between Host and Guest using the due date
      method.

7.    Utilities. From and after the Commencement Date, Guest shall be
      responsible for the cost of all utilities for the Project including, but
      not limited to, the cost of electricity, gas, water, sewer, stormwater
      discharge and power for heating, lighting, air-conditioning and
      ventilating the Project. Such costs shall be paid by Guest directly to the
      providers of such utilities.

8.    Operating Expenses:  Maintenance and Repair.

      (a)   Operating Expenses Defined. From and after the Commencement Date,
            Guest shall pay Host the Operating Expenses for the Project as
            additional rent. As used herein, "Operating Expenses" shall include
            all costs of maintaining, repairing , replacing, decorating,
            cleaning, operating, servicing and protecting the Project together
            with a management fee equal to 5% of the sum of all other Operating



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            Expenses and the base rent as set forth in Paragraph 4 hereof. Such
            costs shall include but not be limited to:

            (i)   wages and salaries, including taxes, insurance and benefits,
            of all on-site employees engaged in operations and maintenance, as
            reasonably allocated by Host.

            (ii)  cost of all supplies, tools, equipment materials and
            professional fees to the extent used in operations and maintenance,
            as reasonably allocated by Host;

            (iii) cost of all maintenance and service agreements and the
            equipment therein, including, but not limited to, parking lot and
            facility maintenance, repair and snow removal, window cleaning,
            elevator maintenance, janitorial service, landscaping and irrigation
            maintenance, hvac systems, roof, carpet, windows, doors, etc.;

            (iv)  cost of repairs, replacements and general maintenance
            (excluding repairs, replacements, alterations and general
            maintenance paid by proceeds of insurance);

            (v)   cost of any system, apparatus, device, or equipment which is
            installed for the principal purpose of (a) reducing Operating
            Expenses, (b) promoting safety or (c) complying with governmental
            requirements which become effective after the Commencement Date;

            (vi)  the cost of all insurance, including, but not limited to,
            the cost of casualty, rent loss and liability insurance, and
            insurance on Host's personal property, plus the cost of all
            deductible payments made by Host in connection therewith, as more
            specifically provided in Paragraph 16 hereof; and

            (vii) the cost of real estate taxes, as such term is defined in
            Paragraph 6.

      (b)   Method of Payment. At the Commencement Date and prior to the
            beginning of each calendar year thereafter, Host shall have the
            right to estimate the Operating Expenses for such calendar year or
            portion thereof and notify Guest of its liability for such Operating
            Expenses, which amount shall then be due and payable in monthly
            installments in advance in accordance with the provisions of
            Paragraph 4(b) hereof for the payment of rent. Host may adjust the
            estimated monthly installment at the end of any calendar quarter on
            the basis of Host's experience and anticipated costs. Within ninety
            (90) days following the end of such calendar year (or in the case of
            the last calendar year of the Lease term, the termination date),
            Host shall furnish Guest with a statement covering the calendar year
            just expired showing the total Operating Expenses for such calendar
            year and payments made by Guest during such year. If Guest's
            liability exceeds Guest's payments for estimated Operating Expenses
            during such year, then Guest shall pay Host the deficiency within
            fifteen (15) days after receipt of such statement


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                   without the necessity of additional demand or notice thereof.
                   If Guest's payments exceed Guest's liability, Guest shall be
                   entitled to offset such excess payments against payments
                   next thereafter to come due Host under this Paragraph 8;
                   provided, that upon the expiration or earlier termination of
                   this Lease, Host shall refund to Guest such excess payments
                   so long as Guest is not in default hereunder.

            (c)    Guest Oversight. Inasmuch as Guest will be reimbursing Host
                   for Operating Expenses pursuant to this Section 8, Host
                   hereby agrees that Guest shall have the right to annually
                   review with Host all contracts which are to be let for the
                   provision of services included in Operating Expenses for the
                   ensuing Lease Year to insure that (i) the Project is
                   maintained in good order and repair and in a first class
                   condition and (ii) Operating Expenses are minimized to the
                   greatest extent possible, consistent with such standard of
                   maintenance and repair. Host and Guest agree to cooperate
                   with each other in minimizing Operating Expenses and
                   contracting with such service providers as will provide good
                   quality services at the best possible cost.

9.          Security Deposit. As security for Guest's faithful performance of
            its obligations hereunder. Guest shall (a) deposit with Host upon
            execution hereof the amount of thirty-one thousand, seven hundred
            and forty-three ($31,743) Dollars, and (b) deliver a letter to First
            Properties Associates Limited Partnership ("FPALP") instructing
            FPALP to pay to Host the security deposit in the amount of fifty-two
            thousand, five hundred ($52,500) Dollars currently held by FPALP
            pursuant to a lease between FPALP and Guest for certain premises at
            2301 Commonwealth Blvd., Ann Arbor, Michigan at the time said lease
            is terminated; together such amounts are hereinafter referred to as
            the "deposit". If Guest fails to pay the rent or otherwise defaults
            with respect to any provision of this Lease, Host may use, apply or
            retain all or any portion of said deposit for the payment of any
            rent or other charge in default, or for the payment of any other sum
            to which Host may become obligated by reason of Guest's default or
            to compensate Host for any loss or damage which Host may suffer
            thereby. Said deposit shall not be a limitation on Host's damages or
            other rights under this Lease, or a payment of liquidated damages or
            an advance payment of the rent. If Host so uses or applies all or
            any portion of said deposit, Guest shall, within five (5) days after
            written demand thereof, deposit cash with Lessor in an amount
            sufficient to restore said deposit to the full amount hereinabove
            stated and Guest's failure to do so shall be a material breach of
            this Lease. Host shall not be required to keep said deposit separate
            from its general accounts. If Guest performs all of Guest's
            obligations hereunder, said deposit, or so much thereof as has not
            theretofore been applied by Host, shall be returned, without payment
            of interest or other increment for its use, to Guest at the
            expiration of the term hereof and after Guest has vacated the
            Premises. No trust relationship is created herein between Host and
            Guest with respect to said security deposit.

10.         Place and Form for Payment of Rent. All payments of rent shall be
            delivered to Host at First Martin Corporation, 115 Depot Street, Ann
            Arbor, Michigan 48104 or at such other


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            place as Host shall designate from time to time in writing. Rent
            payments shall be made payable to Host.

11.         Financing. (a) If in connection with obtaining by Host of any
            financing or refinancing for the Building, the lender shall request
            reasonable modifications in this Lease as a condition to such
            financing or refinancing, Guest will not unreasonably withhold,
            delay or defer its consent thereto, provided that such modifications
            do not increase the obligations of Guest hereunder or in a material
            manner adversely affect the leasehold interest hereby created.

            (b) Guest agrees that this Lease shall be subordinate to any
            mortgages that may hereafter be placed or made upon the Building,
            provided the mortgagee named in any such mortgages shall agree to
            recognize the lease of Guest in the event of foreclosure if Guest is
            not in default.

            (c) Guest agrees within ten (10) days after request by Host to
            execute in recordable form and deliver to Host (i) a subordination
            agreement as required by any such mortgagee provided that such an
            agreement contains recognition/nondisturbance provisions
            satisfactory to Guest, and (ii) an estoppel certificate certifying
            (a) that this Lease is in full force and effect, (b) the date of
            commencement of the term of this Lease, (c) that rent is paid
            currently without any off-set or defense thereto, (d) the amount of
            rent, if any, paid in advance, (e) that there are no uncured
            defaults by Host or stating those claimed by Guest (provided that,
            in fact, such facts are accurate and ascertainable), and (f) such
            other information pertaining to the Lease as may be required by any
            such mortgagee.

            (d) If proceedings are brought for the foreclosure of, or in the
            event of exercise of the power of sale under, any mortgage made by
            Host covering the leased Premises, Guest shall become the tenant of,
            and attorn to, the purchaser upon any such foreclosure or sale and
            recognize such purchaser as the Host under this Lease. The
            obligation of Guest hereunder to attorn to the purchaser shall be
            conditioned upon the agreement of such purchaser to recognize the
            rights of Guest under this Lease. Guest agrees within ten (10) days
            after request by Host to execute in recordable form and deliver to
            Host an attornment agreement evidencing the provisions of this
            subparagraph.

12.         Use of Premises. (a) Guest shall use and occupy the Premises only
            for office use consistent with the zoning of the Land.

            (b) Guest will keep the Premises clean and shall not create any
            nuisance, noises, vibrations, electrical discharges, radiation or
            other disturbances that shall in any way unreasonably impair the
            peace, quietness, comfort, or security of the building wherein the
            Premises are situated nor do anything that will cause any extra
            hazard, impair the validity of any policy of insurance now or
            hereafter placed on the Building, or any of its contents, or that
            will increase the rate of premium on any such policy or that will
            violate any prohibitions in any such policy.


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            (c) Guest, shall, at its own cost and expense, comply with all of
            the requirements of all valid laws and regulations, municipal, state
            and federal, now in force, or which may hereafter be in force,
            pertaining to the Premises, and the use and occupancy thereof.

            (d) Guest shall not sell, rent or keep drug paraphernalia,
            pornographic materials or sexually explicit materials in or from the
            Premises; Guest shall not use the Premises for any activity included
            in the definition of "adult entertainment business" in the City of
            Ann Arbor Zoning Ordinance, regardless of whether an activity is a
            "principal" activity.

13.         Acceptance of Premises. Except as Host and Guest may otherwise agree
            in writing at such time, the taking of possession by Guest shall be
            conclusive evidence that Guest has examined the Premises, has found
            them to be in satisfactory condition and accepts the Premises
            "as-is" subject to completion of punch list items, and that Host up
            to such time had performed all of its obligations hereunder.

14.         Host's Repairs. (a) Subject to the provisions of Paragraph 5, 8 and
            34 hereof, Host shall maintain and repair the Premises, the Common
            Areas and the structural and public areas of the Building such as
            lobbies, stairs, corridors, common restrooms, roof, elevators, and
            structural elements; provided, however, should Guest elect to
            self-manage the Project (as provided in Paragraph 34), then Guest,
            and not Host, shall be responsible for all such maintenance and
            repair. Notwithstanding anything herein to the contrary, Guest shall
            be solely responsible for locking and unlocking Building entry
            doors, security alarms and services.

            (b) Except as otherwise provided in the Paragraph hereof relating to
            Destruction and in the Paragraph hereof relating to Eminent Domain,
            there shall be no allowance, abatement of rental, or liability to
            Guest for diminution of rental value or interference with Guest's
            business and no claim by Guest for eviction from said Premises by
            reason of inconvenience, annoyance or injury to Guest arising from
            any repairs, alterations, replacements or improvements made to said
            Premises, Building, Common Areas or any portion thereof by Host, its
            agents, employees or contractors, or by Host's mortgagee. To the
            extent Host may be responsible for repairs under this Lease, Host
            shall not be liable to Guest for failure to make repairs to the
            Premises, Building, Common Areas or any portion thereof, unless Host
            has received from Guest written notice of the need for such repairs
            and has failed to commence and diligently complete such repairs
            within thirty (30) days of such notice or such greater length of
            time as is reasonably required by Host to make such repairs.

            (c) The Guest covenants and agrees that if the demised Premises
            consists of only a part of a structure owned or controlled by the
            Host, the Host may enter the demised Premises at reasonable times
            and upon reasonable notice and install or repair pipes, wires and
            other appliances or make any repairs deemed by the Host essential to
            the use and occupancy of other parts of the Host's building.

            (d) Guest acknowledges that the Building cooling system is designed
            for a maximum


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            internally generated heat load per zone or room of 1 person per 220
            square feet and 4.5 watts of lighting and equipment per square foot
            in the aggregate. Should the heat load in the Premises exceed the
            aforesaid maximum, Guest shall be responsible for the cost of any
            consequent modification to the cooling system.

15.         Alterations by Guest. Guest shall not make any alterations,
            additions and improvements to the Premises without the Host's
            written consent, and all alterations, additions and improvements
            made by either of the parties hereto upon the Premises, except
            movable office furniture and trade fixtures put in at the expense of
            the Guest, shall be the property of the Host, and shall remain upon
            and be surrendered with the Premises at the termination of this
            Lease; provided, however, that the Guest shall have the option of
            removing additions made by it if the Premises are restored to good
            condition following such removal and any damages to the Premises
            resulting from such removal are repaired. Host may, at its option,
            require Guest to remove, at Guest's sole expense, improvements made
            for or by Guest and repair any damage resulting therefrom, upon the
            expiration or earlier termination of this Lease. Should Guest make
            any alterations to the Premises, Guest shall have the plans for the
            Premises revised to reflect such alterations and shall provide Host
            with a set of the revised plans.

16.         Insurance. (a) During the term hereof Host shall maintain insurance
            coverage as follows:

                   (i) Host shall keep the Building covered by a policy of fire
                   and extended coverage insurance equal to 100% for the
                   replacement cost of the Building with an "agreed amount"
                   endorsement so as to prevent Host from becoming a co-insurer
                   of any loss. Such policy of insurance shall name Host as the
                   loss payee. During any reconstruction, alteration or material
                   remodeling of the Premises such policy shall be in "builder's
                   risk" form if there would be an exclusion under Host's fire
                   and extended coverage policy as a result of such
                   construction, reconstruction, alteration or material
                   remodeling.

                   (ii) Host shall maintain an owner/lessor's policy of
                   commercial general liability and property damage insurance
                   with limits which are secured for other comparable buildings
                   owned and/or managed by First Martin Corporation; however, in
                   no event shall said limit ever be less than $3 million.

                   (iii) Host shall maintain a policy of insurance covering loss
                   of rents resulting from the interruption of Guest's business
                   due to fire or other casualty for a period of not less than
                   twelve (12) months. Such policy shall name Host as the loss
                   payee.

            (b) Guest shall pay Host the cost of the insurance to be maintained
            by Host hereunder as provided in Paragraph 8.

            (c) Guest shall maintain, at Guest's expense, a policy of commercial
            general liability and property damage insurance with a combined
            single occurrence limit of not less than $3 million insuring Host
            and Guest against any liability arising out of the ownership, use,


                                       11


<PAGE>   12


      occupancy or maintenance of the Premises. Host, although named as an
      additional insured party under said policy, shall nonetheless be entitled
      to recover under said policy for any loss sustained by it as the result of
      the acts or omissions of Guest. Said single limit shall be adjusted at the
      beginning of the sixth Lease year and every fifth year thereafter to the
      amount then typically being required by new leases for comparable
      facilities in southeastern Michigan as mutually agreed upon by Host and
      Guest; but in no event shall said limit ever be less than $3 million.
      Guest shall cause the issuer of such policy of insurance to deliver to
      Host a copy of or Certificate of Insurance for such policy naming Host as
      an additional insured party prior to the Commencement Date hereof and with
      respect to the renewal or replacement policies, not less than thirty (30)
      days prior to the expiration of the policy being renewed or replaced. No
      such policy shall be cancelable or subject to reduction of coverage or
      other modification except after thirty (30) days' prior written notice to
      Lessor. In addition, Guest shall maintain a policy of fire and extended
      coverage insurance on its personal property.

      (d) All insurance required under this paragraph shall be written by
      companies acceptable to Host, shall be reasonably satisfactory to Host in
      all respects and shall provide an effective waiver by the insurer of all
      rights of subrogation against any named insured and against such insured's
      interest in the Premises and any income derived therefrom. Host and Guest
      and all other parties claiming under them hereby mutually release and
      discharge each other from all claims and liability to the extent covered
      by insurance, regardless of the cause of any damage, loss or injury to
      person or property to the extent such waiver of liability is permitted by
      any applicable policies of insurance maintained by Host and/or Guest, as
      the case may be. Provided other tenants of Host waive subrogation against
      Guest, Guest waives any and all rights Guest may have against said other
      tenants for damage to or destruction of the demised Premises due to any
      casualty insurable by the customary form of fire and extended coverage
      insurance, whether such damage or destruction be due to said tenants'
      negligence or otherwise.

17.   Guest's Personal Property. All personal property of Guest kept on the
      Premises shall be at Guest's sole risk, and Guest hereby waives all right
      of recovery which it might otherwise have against Host for any loss, theft
      or damage to Guest's personal property.

18.   Destruction - Fire or Other Cause. If the Premises shall be rendered
      untenantable by fire or other casualty, then Host shall make the Premises
      tenantable as speedily as possible, and the rent shall be abated in whole
      or in part, according to the portion of the Premises which is rendered
      untenantable, during the period of untenantability, except that there
      shall be no such abatement if such fire or other casualty shall be caused
      by the gross negligence of Guest or its agents, employees, invitees or
      licensees, and further, there shall be no abatement for the time required
      for the replacement or repair of any property of Guest, in excess of the
      time required to make the Premises tenantable. In the event that the
      Premises cannot be made tenantable within ninety (90) days, then either
      Host or Guest may terminate this Lease by notification to the other of
      such termination within ten (10) days after Host shall have notified Guest
      of the time required to make them tenantable. Host shall, in its sole
      judgment, reasonably exercised, determine the length of


                                       12


<PAGE>   13


      time required to make the Premises tenantable, and shall notify Guest of
      such determination within ten (10) days after the occurrence of the fire
      or other casualty. Notwithstanding the foregoing, in the event that the
      Premises shall be so damaged by fire or other casualty that demolition or
      substantial reconstruction is required, then Host or Guest may terminate
      this Lease by notifying the Guest or Host of such termination within
      thirty (30) days after the date of such damage.

19.   Eminent Domain. In the event that all or a substantial portion of the
      Premises be lawfully condemned or taken in any manner for any public or
      quasipublic use, this Lease shall terminate as of the date of actual
      taking. In the event that any insubstantial part of the Premises be so
      condemned or taken, Host or Guest shall have the right to terminate this
      Lease as of the date of actual taking by giving Guest or Host written
      notice of such termination; but should Host or Guest not so terminate this
      Lease, this Lease shall cease as to the part taken and the rent adjusted
      so that Guest shall pay a pro rata portion of the rent determined by the
      amount of space (and rate therefor) remaining after the taking. Host shall
      be entitled to receive the entir award from any such condemnation or
      taking of the Premises or any part thereof, without deduction therefrom
      for any estate or interest granted to Guest by this Lease, provided, that
      nothing herein contained shall be deemed to prevent Guest from claiming
      compensation for relocation costs or loss for interruption of business in
      the event an award with respect thereto is provided for by law or is fixed
      in the proceeding in which such taking shall occur. In the event of a
      partial taking insufficient in size to cause termination of the Lease,
      Host shall build, repair or replace any outer walls, floor, or roof
      necessary to make the Premises tenantable.

20.   Assignment and Subletting. Guest shall not assign this Lease or sublet the
      Premises or any part thereof without the written consent of Host, which
      consent shall not be unreasonably withheld. Under no circumstances shall
      Guest have the right to sublease the Premises to more than three (3)
      sublessees. Any other provision of this Paragraph to the contrary
      notwithstanding, Host shall not be required to give its consent to an
      assignment or subletting of the leased Premises, or any part thereof, if
      the effect of such assignment or subletting would be to create a profit
      for the Guest. In such cases, any profit from the assignment or subletting
      shall be paid to the Host. Guest agrees that it shall not be unreasonable
      for Host to withhold its consent to a proposed assignment or subletting
      if: (i) Host believes that the proposed assignee or sublessee of 35,000
      square feet or more in the premises is not as financially responsible as
      Guest on the date hereof; (ii) Host believes that the proposed assignee or
      sublessee will not conduct on the Premises a business of a quality equal
      to that conducted by Guest; or (iii) Host believes that the business of
      the proposed assignee or sublessee, conducted on the Premises, will have
      an impact upon the common facilities dissimilar to that of Guest's
      business or will require services of Host dissimilar to those required by
      Guest. Host's consent to one assignment or sublease shall not waive the
      requirement of its consent to any subsequent assignment or sublease. In
      the event Host consents to Guest's subletting, Guest shall include in such
      sublease all of the pertinent terms contained herein, and Guest shall
      furnish Host with a certified copy of any and all subleases affecting the
      demised Premises prior to such consent; and in case of default by Guest
      giving Host right of entry for breach of condition


                                       13


<PAGE>   14


      subsequent, Guest, at Host's option, shall assign all of Guest's right,
      title and interest in any subleases to Host, and Guest shall incorporate
      such provision in any and all subleases made by Guest. Host's consent to
      an assignment shall not be effective until Host has received a written
      document in which the assignee has assumed and agreed to perform all of
      Guest's obligations in the Lease. Host's consent to an assignment or
      sublease shall not release the Guest from the payment and performance of
      its obligations in the Lease, but rather the Guest and its assignee shall
      be jointly and severally primarily liable for such payment and
      performance.

21.   Default, Eviction, Termination, and Damages. If Guest shall fail to pay
      any rent or other charges due hereunder within ten (10) days of the date
      said charges are due, or if Guest shall fail to comply with any details,
      provisions, or covenants of this Lease other than the payment of rent and
      shall not cure such failure within thirty (30) days after written notice
      thereof, or if Guest shall be adjudged bankrupt by a court of competent
      jurisdiction, or if a receiver or trustee shall be appointed for all or
      substantially all of the assets of Guest, then in any such event, Guest
      shall be deemed in default. When Guest is in default, Host, besides other
      rights or remedies it may have, shall have the right to declare this Lease
      terminated and the term ended, shall have the right to evict Guest under
      Summary Proceeding law, and shall have the additional and immediate right
      of reentry and may remove all persons and property from the leased
      Premises and such property may be removed and stored in a public warehouse
      or elsewhere at the cost of, and for the account of Guest, without
      evidence of notice or resort to legal process and without being deemed
      guilty of trespass, or becoming liable for any loss or damage which may be
      occasioned thereby. Should Host elect to reenter, as herein provided, or
      should it take possession pursuant to legal proceedings or pursuant to any
      notice provided for by law, it may either terminate this Lease or it may
      from time to time, without terminating this Lease, make such alterations
      and repairs as it may deem appropriate in order to re-rent the Premises,
      and re-rent said Premises or any part thereof for such term or terms
      (which may be for a term extending beyond the term of this Lease) and at
      such rental or rentals and upon such other terms and conditions as Host in
      its sole discretion may deem advisable. If Host has other unoccupied space
      similar to the Premises, Host shall be under no duty to attempt to re-rent
      these Premises (and Guest shall be entitled to no reduction in its
      indebtedness to Host as a result of any such failure by Host) until such
      other space has been rented. Upon each such re-renting, all rentals and
      other sums received in any month by Host from such re-renting shall be
      applied, first to the payment of any indebtedness other than rent due
      hereunder from Guest to Host; second, to the payments of any costs and
      expenses of such re-renting, including reasonable brokerage fees and
      attorneys' fees and of costs of such alterations and repairs; third, to
      the payment of rent and other charges due and unpaid hereunder; and the
      residue, if any, shall be held by Host and applied in payment of future
      rent as the same may become due and payable hereunder. If such rentals and
      other sums received from such re-renting during any month be less than
      that to be paid during that month by Guest hereunder, Guest shall pay such
      deficiency to Host. Such deficiency shall be calculated and paid monthly.
      No such re-entry or taking possession of said Premises by Host shall be
      construed as an election on its part to terminate this Lease unless a
      written notice of such intention is given to Guest or unless the
      termination


                                       14


<PAGE>   15


      thereof is decreed by a court of competent jurisdiction. Notwithstanding
      any such re-renting without termination, Host may at any time hereafter
      elect to terminate this Lease for such previous default. Should Host at
      any time terminate this Lease for any default, in addition to any other
      remedies it may have, it may recover from Guest all damages it may incur
      by reason of such default, including the cost of recovering the leased
      Premises, reasonable attorneys' fees, and including the worth at the time
      of such termination of the excess, if any, of the amount of rent and
      charges equivalent to the rent reserved in this Lease for the remainder of
      the stated term over the then reasonable rental value of the leased
      Premises for the remainder of the stated term, all of which amounts shall
      be immediately due and payable from Guest to Host. In case suit shall be
      brought for recovery of possession of the leased Premises, for the
      recovery of rent or any other amount due under the provisions of this
      Lease, or because of the failure by Guest to abide by any other detail,
      provision, or covenant herein contained, Guest shall pay to Host all
      expenses incurred therefore, including reasonable attorneys' fees. Guest
      and Host hereby waive their rights to jury trial in any litigation that
      may arise relating to this Lease.

22.   Surrender of Premises. Upon the expiration or the termination of the term
      of this Lease, Guest shall quit and surrender the Premises to Host in good
      order and condition, ordinary wear, damage by the elements, and damage
      which is the responsibility of Host excepted; and Guest shall remove all
      of its property and shall repair any damage to the Premises caused by such
      removal. Any personal property of Guest or of anyone claiming under Guest
      which shall remain on the Premises after the expiration or termination of
      the Lease term shall be deemed to have been abandoned by Guest, and either
      may be removed by Host as its property or may be disposed of in such
      manner as Host may see fit, and Host shall not be responsible for the
      same.

23.   Access to Premises. Host shall have the right to enter upon the Premises
      at all reasonable hours upon reasonable notice for the purpose of
      inspecting the same, preventing waste, loss, or destruction, removing
      obstructions, making such repairs or alterations as it is obligated to
      make under the terms of this Lease, or to enforce any of Host's rights or
      powers under this instrument, and Host shall not be liable nor responsible
      for any loss that may accrue to Guest's business by reason thereof. The
      Host may show the Premises to prospective tenants at any time during the
      last eighteen (18) months of the term of this Lease and display a "for
      rent" sign subject to Guest's approval of design and location.

24.   Heirs and Assigns. The covenants, conditions, and agreements contained in
      this Lease shall bind and inure to the benefit of Host and Guest and their
      respective heirs, distributees, executors, administrators, successors,
      and, except as otherwise provided in this Lease, their assigns.

25.   Confidentiality. Guest shall not disclose the terms and conditions of this
      Lease to third parties, except to professional advisors of Guest and as
      required by securities laws affecting Guest, without the advance written
      consent of Host.


                                       15


<PAGE>   16


26.   Quiet Enjoyment. So long as Guest pays the rent and performs all of its
      obligations in this Lease, Guest's possession of the Premises will not be
      disturbed by Host, its successors or assigns.

27.   Signs. Other than the signage shown on the Project plans and
      specifications mutually agreed upon by Host and Guest (as provided in
      Paragraph 3), Guest or Host shall not fasten to or paint upon any part of
      the Site or Building any sign, advertisement, notice or handbill without
      the prior written consent of the Host or Guest. Host may, without notice
      to Guest, remove any such sign, advertisement, notice or handbill painted
      or affixed in violation of this clause without any liability whatsoever
      for damages or otherwise to Guest, and Guest shall be responsible for the
      cost of such removal. Host reserves the right to place other signage on
      the Site or Building in the event the Building becomes multi-tenanted.

28.   Holding Over. In the event that Guest shall hold over after the term of
      the Lease, it is agreed that thereafter the tenancy shall be from month to
      month in the absence of a written agreement to the contrary on the same
      terms and conditions contained herein, with the exception that the rent
      shall increase to 120% of the rent in effect at the termination of the
      term of the Lease for the first three months and 150% thereafter.

29.   Parking. Subject to the provisions of Paragraph 36 (h), Guest shall have
      an exclusive license for the use of its agents, employees, suppliers, and
      customers over the driveways and parking lots on the Site. Guest shall not
      allow its employees, agents or invitees to park on Traverwood Drive or in
      lots of other buildings in Traverwood Business Park.

30.   Notices. Whenever any notice is required hereunder it shall be made in
      writing and served personally or by certified mail, return receipt
      requested, at the following addresses (or at such other addresses as the
      parties may hereafter designate in writing):

                                    Host:       William C. Martin
                                                c/o First Martin Corporation
                                                115 Depot Street
                                                Ann Arbor, Michigan 48104


                                    Guest:      Mechanical Dynamics, Inc.
                                                2301 Commonwealth Boulevard
                                                Ann Arbor, Michigan 48105

      until the commencement date of the Lease and thereafter the Premises.
      If served personally, service shall be conclusively deemed made at the
      time of such service. If served by certified mail, service shall be
      conclusively deemed made forty-eight (48) hours after the deposit thereof
      in the United States Mail.


                                       16


<PAGE>   17


31.   Host's Liability. (a) Guest and Host shall mutually indemnify, defend
      and hold harmless each other and their respective officers, employees,
      agents and invitees from all losses, damage, claims or liability arising
      out of any and all injuries to or death of any person or damage to any
      property arising out of any occurrence in or about the Premises, or
      arising out of any occurrence in or about the Building arising from the
      act or neglect of Guest or Host or their respective agents or invitees.
      Notwithstanding the foregoing, neither party shall have any obligation to
      indemnify the other party against the sole negligence of that party.

      (b) The Host shall not be responsible or liable to the Guest for any
      loss or damage that may be occasioned by or through the acts or omissions
      of persons occupying adjoining premises or any part of the premises
      adjacent to or connected with the Premises hereby leased or any part of
      the Building of which the leased Premises are a part or for any loss or
      damage resulting to the Guest or his property from bursting, stoppage or
      leaking of water, gas, sewer or steam pipes.

      (c) If Host shall fail to perform any provision of this Lease and if as
      a consequence of such default Guest shall recover a money judgement
      against Host, such judgement shall be satisfied only out of the proceeds
      of sale received upon execution of such judgement and levied against the
      interest of Host in the Building or the consideration received by Host
      from the sale of Host's interest.

32.   Rules and Regulations. Guest and its employees and invitees, shall
      faithfully observe and comply with the Rules and Regulations attached to
      this Lease, and all reasonable modifications of and additions thereto as
      may be from time to time put into effect by Host. Host shall not be
      responsible to Guest for the nonperformance of any of said Rules and
      Regulations by any other Guest or occupant of the Building. In the event
      of a conflict between the terms and provisions of this Lease and the
      referenced Rules and Regulations, this Lease shall control. Prior to the
      effective date of any intended modifications of or additions to the Rules
      and Regulations annexed hereto, Host shall furnish Guest with a written
      copy of same.

33.   Environmental Law Compliance. The parties acknowledge that there are
      certain federal, state and local laws, regulations and guidelines now in
      effect, and that additional laws, regulations and guidelines may hereafter
      be enacted, concerning the impact on the environment of land use, the
      maintenance and operation of structures, and the conduct of business.
      Guest will not cause, or permit to be caused, any act or practice on or
      about the premises which would adversely affect the environment or violate
      any of such laws, regulations, or guidelines. In particular, without
      limiting the generality of the foregoing, Guest will not use the premises
      to produce, store, process or transport any hazardous waste or hazardous
      substance, as those terms are defined in the Comprehensive Environmental
      Response, Compensation, and Liability Act of 1980, as amended ("CERCLA"),
      or in the Resource Conservation Recovery Act of 1980, as amended ("RCRA").
      Any violation of this covenant shall be an event of default under this
      Lease. In the event that a governmental authority deems the Premises,
      Building or underlying


                                       17


<PAGE>   18


      land unsafe for occupancy due to Guest's tenancy, or the operation of its
      business at the Premises, then Guest shall be liable and shall fully
      compensate Host for the resulting loss sustained by Host. Such liability
      shall extend to any and all of Guest's officers, principals, general
      partners and guarantors under the Lease. Guest agrees to indemnify and
      hold Host harmless against all losses, costs, expense and liability
      whatsoever, including Host's costs of defending against the foregoing,
      which will include reasonable attorney's fees, and against any costs
      necessary in connection with the cleanup or removal of any hazardous waste
      or hazardous substance from the premises, caused, or permitted to be
      caused, by any act, practice or neglect of Guest with respect to the use
      of the premises. Guest shall have no claim against Host by reason of any
      changes which Host may be required to make to the premises pursuant to
      such laws, regulations, or guidelines. Host hereby represents to Guest
      that, to the best of Host's knowledge, no condition currently exists on
      the Site which constitutes a violation of any environmental law described
      in this Section 33 or otherwise, and Host hereby agrees to indemnify,
      defend and hold harmless Guest from any liability, claim, damage or
      expense arising out of any environmental condition associated with the
      Site in existence prior to the Commencement Date.

34.   Management by Guest. Provided Guest is the sole Lessee of the initial
      Building or after expansions, Guest shall have the right to assume
      responsibility for the management, maintenance and repair (including
      replacement, as necessary) of the Project by giving Host written notice of
      its intentions to assume management of the Project on the date specified
      in such notice (which date must be on the first day of a Lease Year): (a)
      within six (6) months of Lease execution; or (b) six (6) months prior to
      the fifth anniversary of the Commencement Date; or (c) six (6) months
      prior to the tenth anniversary of the Commencement Date; or (d) six (6)
      months prior to the commencement of the First Option Term hereunder,
      provided Guest has properly exercised such Option; or (e) six (6) months
      prior to the commencement of the Second Option Term hereunder, provided
      Guest has properly exercise such Option. Performance of such
      responsibility by Guest shall be on the terms and conditions which are as
      follows. Host shall be relieved of its obligation to maintain and repair
      the Project (as set forth in Paragraph 14). Guest shall maintain the
      Project in good order and repair and in a first-class condition. Guest
      shall pay the Operating Expenses for maintenance and repair set forth in
      Paragraph 8 directly to the providers of maintenance and repair services.
      Guest shall enter into and keep in force maintenance contracts for the
      services which are follows: (a) parking facility sweeping, snow removal
      and salting; (b) comprehensive landscaping maintenance, including mowing,
      fertilization, pruning and the planting of spring and summer annual
      flowers; (c) elevator maintenance (full maintenance contract, including
      replacements); and (d) heating/cooling systems preventive maintenance (4
      times per year). Guest shall police the grounds and the parking facilities
      of the Project each day so that said grounds and parking facilities are as
      free of litter and debris as is reasonably possible. Should Guest fail to
      perform any of its maintenance obligations hereunder within thirty (30)
      days of notice from Host, Host shall have the right to enter the Premises,
      perform such maintenance and bill Guest the reasonable cost thereof. Guest
      shall not engage a third party to manage such maintenance and repair
      without the advance written approval of


                                       18


<PAGE>   19


      Host. Upon assumption of Project management by Guest hereunder, Host shall
      have all of the rights provided to Guest under Section 8 (c) hereof with
      respect to oversight of Project management. In the event Host expands the
      Building pursuant to the terms of Paragraph 36 (h), Guest shall cease to
      be responsible for the maintenance and repair of the Project and Host
      shall assume such responsibility as of the date construction of such
      expansion commences in accordance with the terms of this Lease. Host
      represents to the best of its knowledge that the premises prior to and
      during the construction process does not violate any such laws and
      indemnifies Guest against any loss caused by a condition existing prior to
      lease commencement.

35.   Michigan House Lease. A default by Guest under the lease between First
      Properties Associates Limited Partnership (as Assignee of Plymouth Square)
      and Guest dated July 12, 1989 for certain premises at 2301 Commonwealth
      Boulevard, Ann Arbor, Michigan shall be a default under this Lease.

36.   Expansion Options. At the option of Guest, Host shall expand the Building
      as hereinafter provided.

      (a)   Building Additions. The expansion of the Building shall be in the
            form of two, two-story additions containing, in the aggregate, a
            Gross Building Area of approximately 60,000 square feet; the
            approximate overall footprint of said additions is depicted on
            Exhibit C attached hereto. The first such addition is hereinafter
            referred to as the "Phase I Expansion Space"; the second such
            addition, the "Phase II Expansion Space".

      (b)   Guest's Expansion Options. Guest shall have the option to lease the
            Phase I Expansion Space as an addition to the Premises. The Phase I
            Expansion Space shall have a Gross Building Area between 20,000 and
            30,000 square feet. Guest shall determine the exact size of the
            Phase I Expansion Space; the bay sizing shall govern the increments
            to the area. Said option shall terminate on the date (the "Option
            Termination Date") two years from the Commencement Date of this
            Lease. Guest shall exercise said option by giving Host notice thirty
            (30) days prior to the Option Termination Date. Guest shall have the
            right to extend the Option Termination Date by a period of two years
            (i.e., to that date four years from the Commencement Date) by giving
            Host notice thirty (30) days prior to the then current Option
            Termination Date and paying all carrying costs for the land required
            for the Phase I Expansion Space for said two year period, which land
            is deemed to be 25% of the Site. As used herein, "carrying costs"
            shall mean real estate taxes and assessments (prorated on a due date
            basis) and interest on the value of said land at the then prime rate
            minus 200 basis points. The value of said land is deemed to be $4.00
            per square foot of land area. As used herein, "prime rate" shall
            mean the prime rate reported in the Wall Street Journal as such rate
            may change from time to time. Carrying costs shall be paid in
            monthly installments. If Guest exercises its option for the Phase I
            Expansion Space, Guest shall have an option to lease the Phase II
            Expansion Space as an addition to the


                                       19


<PAGE>   20


            Premises. The Gross Building Area of the Phase II Expansion Space
            shall be approximately the difference between 60,000 square feet and
            the Gross Building Area of the Phase I Expansion Space. Said Phase
            II option shall terminate on the date (the "Phase II Option
            Termination Date) two years from the date the Phase I Expansion
            Space becomes part of the leased Premises. Guest shall exercise said
            Phase II option by giving Host notice not later than thirty (30)
            days prior to the Phase II Option Termination Date. Guest shall have
            the right to extend the Phase II Option Termination Date by a period
            of one year by giving Host notice thirty (30) days prior to the then
            current Termination Date and paying all carrying costs (as described
            above) for the land required for the Phase II Expansion Space for
            said one year period, which land is deemed to be 25% of the Site.
            Exercise by Guest of either of the aforesaid expansion options shall
            be subject to Guest not having been in default under this Lease.
            Host and Guest acknowledge that while Host shall secure site plan
            approval for the entire 120,000 square foot Building forthwith, each
            expansion option and Host's ability to perform same, are subject to
            securing all necessary governmental approvals. Within thirty days of
            the date Guest exercises either of the aforesaid expansion options,
            Host and Guest shall execute an amendment to the Lease which adds
            the expansion space to the Premises and includes the other pertinent
            provisions of this Paragraph 36. Exercise of either expansion option
            by Guest shall be subject to a determination by Host in its
            reasonable judgement that Guest's financial condition and financial
            prospects as of the date Guest gives Host notice of such exercise
            are as strong as Guest's financial condition and financial prospects
            as of the date hereof. Host shall make such determination within
            fifteen (15) days of the date such notice is given; Guest shall
            provide Host with such financial data and other information as is
            reasonably required by Host to make such determination.

      (c)   Term. Should Guest exercise the Phase I option, the term of this
            Lease shall be extended for a period of ten years from the date of
            occupancy of the Phase I expansion space. Should Guest exercise the
            Phase II option, the term of the Lease will not change. The Phase I
            and Phase II Expansion Spaces shall become part of the leased
            Premises (and rent shall become due) as of the date of Substantial
            Completion of Host's Expansion Improvements (as hereinafter defined)
            with respect to each phase.

      (d)   Improvements.  From the date an amendment for an expansion space is
            executed, Host and Guest shalldiligently prosecute the completion of
            the Expansion Space. Host shall cause the construction of the
            expansion space , including site work, building shell, mechanical
            systems, and interior partitions and finishes but excluding the
            installation of cubicles (including electrical wiring) and computer
            and communications cabling (herein sometimes referred to as "Host's
            Expansion Improvements"). Guest shall be responsible for the layout,
            design and installation of all cubicles (including electrical
            wiring) and computer and communications cabling; said design and
            Guest's contractors must be approved by Host in writing in advance.
            Host's Expansion Improvements shall be constructed in accordance



                                       20
<PAGE>   21

            with plans and specifications mutually determined and agreed upon by
            Host and Guest as provided hereinafter. The architect for Host's
            improvements shall be Jickling, Lyman and Powell, or, at Host's
            option, another qualified architect. The maximum number of parking
            spaces allowed by the City of Ann Arbor shall be provided not to
            exceed five spaces per 1,000 square feet of Gross Building Area.
            Host shall submit to Guest for its approval the site plan and final
            plans and specifications for Host's Expansion Improvements; said
            plans and specifications shall be deemed approved unless rejected in
            writing within five (5) business days of receipt. A working set of
            site plans and building plans and specifications which are
            approximately 75% complete will be made available for review at
            least two weeks prior to submission of final plans. Any denial of
            such approval shall be fair and reasonable. The general contractor
            for Host's Expansion Improvements shall be O'Neal Construction or,
            at Host's option, another qualified contractor selected by Host
            ("Contractor"). Host and Guest shall jointly negotiate a contract
            with the Contractor, which contract shall provide a guaranteed
            maximum price which includes a 3% design and construction
            contingency. Host shall provide an allowance (the "Expansion Hard
            Construction Cost Allowance") negotiated by Host and Guest for the
            direct construction costs for Host's Expansion Improvements; "direct
            construction costs" includes bonding and permits but excludes
            extraordinary costs relating to poor soil conditions, which costs
            shall be the sole responsibility of Host, and soft costs such as
            architectural and design services, legal services, construction
            financing, permanent financing origination, title insurance,
            builder's risk insurance, brokerage commissions, development fees,
            real estate taxes and other carrying costs for the Site. Any direct
            construction costs for Host's Expansion Improvements in excess of
            said improvement allowance shall be paid to Host by Guest within ten
            (10) days of date of invoice. Contractor shall provide a warranty of
            one year on all work with the exception of the roof, which shall
            have a ten year warranty; said warranties shall commence as of the
            date of Substantial Completion of Host's Expansion Improvements. The
            additional cost of any change orders requested by Guest shall be
            paid to Host within ten (10) days of invoice and shall include an
            administrative fee of 10%. Host shall not be liable for failure to
            give possession of the Expansion Space or any part thereof by reason
            of Governmental interference, act of God, labor disputes, fire,
            unavoidable casualties or other causes beyond Host's control.

      (e)   Rent. Guest shall pay to Host as annual base rent for each Expansion
            Space for the term hereof an amount which shall be determined by
            multiplying the Rent Factor by the Expansion Total Development Cost,
            as further defined below:

            (i)  "Rent Factor" is the sum of the Rental Rate Constant and the
            Debt Service Constant

            (ii) "Rental Rate Constant" is 200 basis points.


                                       21


<PAGE>   22


           (iii) "Debt Service Constant" is the percentage calculated by
            dividing the annual payment of principal and interest required for
            the Expansion Permanent Mortgage Loan by the original principal
            amount of said Loan.

            (iv)  "Expansion Permanent Mortgage Loan" is the loan which is
            secured by Host to finance the Expansion Total Development Cost.
            Said loan shall (a) have a minimum term of ten (10) years, (b) be
            non-recourse, (c) have a twenty-five year amortization schedule
            which provides for level annual payments, and (d) be otherwise
            acceptable to Host. If said loan has not been closed as of the date
            the Expansion Space becomes part of the leased Premises, then the
            terms set forth in the commitment for said Loan shall be used.

            (v)   "Expansion Total Development Cost" is the sum of :

            -     "Expansion Land Cost" which is deemed to be $17.50  per square
                  foot of Gross Building Area on the first and second floors of
                  the Expansion plus $4.00 per square foot of additional land
                  required in order to provide necessary supplemental parking
                  should Guest elect finish-off the lower plaza level for office
                  occupancy;

            -     "Expansion Hard Construction Cost" which is the portion of the
                  Expansion Hard Construction Cost Allowance which is used;

            -     "Expansion Soft Cost", which shall be negotiated by the Host
                  and Guest and shall include but not be limited to the cost for
                  the Expansion of interim financing, permanent financing
                  origination, architectural and engineering, real estate taxes
                  during construction, builder's risk, insurance, appraisals
                  legal, accounting, and a contingency of 2%, but shall exclude
                  the developer's fee and overhead; and

            -     "Developer's Fee and Overhead" which shall be 3.0% of the sum
                  of: (a) Expansion Land Cost; (b) Expansion Hard Construction
                  Cost; and(c) Expansion Soft Cost.

      (f)   Additional Space. Should Guest require additional space after
            exercising both Expansion Options, Host shall use its best efforts
            to find additional space at similar terms and conditions coterminous
            with the Lease.

      (g)   Assignment. Guest shall not have the right to assign either
            Expansion Option to third parties. Should Guest assign its interest
            in the Lease, the Expansion Options shall be terminated.

      (h)   Host's Right to Expand. Should Guest not exercise either of the
            aforesaid options for Expansion Space, Host shall have the right to
            construct the Expansion Space and lease such space to third parties.
            Should Host exercise said right, upon the


                                       22


<PAGE>   23


            substantial completion of the Expansion Space, the Building entry
            lobby, and elevators, hallways and stairwells which do not
            exclusively serve the leased Premises shall cease to be part of the
            leased Premises and shall become common area over which Guest shall
            have a non-exclusive easement in common with the other tenants of
            the Building. In such an event, the rent payable to Host by Guest
            hereunder shall be ratably reduced; such reduction shall be computed
            based on the rentable area of the Premises (as hereinafter defined)
            before and after the common area conversion. As used herein,
            "rentable area" shall mean the sum of the Gross Building Area of the
            leased Premises (after deduction of the Gross Building Area of the
            common areas) and a pro rata share of the Gross Building Area of the
            common areas. Where the leased Premises abuts the common area, Gross
            Building Area shall be determined by measuring to the midpoint of
            common walls. Guest shall pay its pro rata share of the Project Real
            Estate Taxes and Operating Expenses for the common areas, grounds
            and parking lots of the Project. Said share shall be the proportion
            which the rentable area of the Premises after expansion bears to the
            total Gross Building Area after expansion. Guest acknowledges
            inconveniences may arise during the expansion of the Building. Host
            shall not cause any unreasonable inconveniences such as limiting
            Guest's access to the Premises or curtailing the services which Host
            is obligated to provide hereunder. Should Guest exercise its option
            for the Phase I Expansion Space, Guest shall, in the design process
            for the Phase I Expansion Space, cooperate with Host in
            incorporating into the plans for the Phase I Expansion Space
            possible future means of access from the Building entry lobby and
            elevator(s) to the Phase II Expansion Space. Should Guest not
            exercise its option for the Phase II Expansion Space, then, should
            Host exercise its right to construct the Phase II Expansion Space,
            Guest shall agree to relinquish, at Host's option, the portion of
            the Premises required for such means of egress at the time of such
            construction; and the rent and expenses payable hereunder shall be
            ratably reduced. If Host should exercise its rights to expand the
            Building, then (i) Guest's right to manage the Project shall
            terminate as of the date Hosts commences construction of such
            expansion, and (ii) Guest's license to use the parking lots on the
            Site shall be restated as follows. Guest shall have an exclusive
            license for parking for its visitors in a portion of the parking lot
            to the west of the Building, and Guest shall have a non-exclusive
            license for parking for its employees and agents in the parking lot
            to the northeast of the Building as depicted in Exhibit D attached
            hereto.

37.   Parking Structure. Host shall have the right to construct a parking
      structure on the Site in substitution, in whole or in part, for the
      Project parking lots and Guest shall have a non-exclusive license for the
      use of said structure in common with others. The total number of spaces
      which Guest is entitled to use in the structure and remaining parking lots
      shall be the same as the number of spaces Guest was entitled to use prior
      to the construction of the parking structure. Guest shall be responsible
      for its pro rata share of the cost of maintaining and repairing such
      structure, which cost shall be included in Operating Expenses but shall
      not be higher than the costs to maintain surface parking.


                                       23


<PAGE>   24


38.   Miscellaneous. (a) The failure of either party to enforce any covenant or
      condition of this Lease shall not be deemed a waiver thereof or of the
      right of either party to enforce each and every covenant and condition of
      this Lease. No provision of this Lease shall be deemed to have been waived
      unless such waiver is in writing.

      (b)   This Lease and the Exhibits attached hereto and forming a part
      hereof, set forth the entire agreements between Host and Guest concerning
      the leased Premises. Any amendment shall be in writing and signed by each
      party.

      (c)   Each party represents and warrants that there are no claims for
      brokerage commissions or finder's fees in connection with the execution of
      this Lease with the exception of a commission due to Guest's broker, GVA
      Strategis, and each party agrees to indemnify the other against, and hold
      it harmless from, all liability arising from any such claim. Guest shall
      be liable for the payment of a commission in the amount of Two Hundred
      Ninety-Three Thousand Five Hundred ($293,500) Dollars to GVA Strategis;
      Host shall reimburse Guest the amount of said commission within ten (10)
      days of the date Guest takes occupancy of the Premises.

      (d)   Guest shall not record this Lease without the written consent of
      Host. Upon the request of either party the other party shall join in the
      execution of a memorandum of this Lease for recording which shall describe
      the parties, the leased Premises, the term and any special provisions.

      (e)   In the event of any transfer of Host's interest in the Premises, the
      transferor shall be automatically relieved of all obligations and
      liabilities on the part of Host accruing from and after the date of such
      transfer. The release of Host from such obligations and liabilities shall
      be expressly conditioned upon an assumption by any transferee of all of
      the unperformed terms, covenants and conditions of this Lease arising
      after the date of such transfer, including the application of Guest's
      security deposit in accordance with the provisions of Paragraph 9 hereof.

      (f)   Any amount due from Guest to Host which is not paid when due shall
      bear interest at the highest legal rate from the date due until paid,
      unless otherwise specifically provided herein, but the payment of such
      interest shall not excuse or cure any default by Guest.

      (g)   No payment by Guest of a lesser amount than the monthly rent shall
      be deemed to be other than on account of the earliest rent, nor shall any
      endorsement or statement on any check or any letter accompanying any
      payment be deemed an accord and satisfaction, and Host shall accept such
      payment without prejudice to Host's right to recover the balance of such
      rent or pursue any other remedy.

      (h)   Guest agrees to furnish to Host the financial statements of Guest
      in a form acceptable to Host at least annually and within thirty days
      after Host's request.


                                       24


<PAGE>   25


      (i)   This Lease shall be governed by, and construed in accordance with,
      the laws of the State of Michigan. If any provision of this Lease shall,
      to any extent, be invalid or unenforceable, the remainder of this Lease
      shall not be affected and each provision shall be valid and enforceable to
      the fullest extent permitted by law.

      (j)   In the event that during the term of this Lease, Host is afforded
      the opportunity to rent space on the roof of Phase I or subsequent phases
      of the Building solely occupied by Guest for the location of one or more
      antennae, Guest agrees to such rental; provided, that no such antenna
      shall interfere with any antenna, satellite dish or other communications
      or similar device that Guest has installed on the roof with Host's
      approval and; further provided, that Host shall negotiate any such rental
      agreement and, after reimbursement of all of Host's expenses related to
      such negotiations, shall share such rental amounts, 50% to Host and 50% to
      Guest, provide an accounting of expenses and rent collections to Guest and
      remit Guest's share as such rents are collected.

Intentional page break.


























                                       25


<PAGE>   26


This agreement is hereby signed on behalf of the parties effective as of the
date first written above.



                                    Host:

                                    William C. Martin



                                    /s/ W.C. Martin
                                    -----------------------------



                                    Guest:

                                    MECHANICAL DYNAMICS, INC.,
                                    A Michigan corporation



                                    By:   /s/ David Peralta
                                          -----------------------

                                    Its:  /s/ VP & CFO
                                          -----------------------
















                                       26



<PAGE>   27





                       ACKNOWLEDGEMENT OF CORPORATE GUEST


STATE OF
                       ss.
COUNTY OF



The foregoing instrument was acknowledged before me this 5th day of
August, 1999 by

                      the                      of
----------------------   ----------------------  ----------------------
----------------------,

a                     corporation, on behalf of the corporation.
 ---------------------

                                    /s/ Shawn Siddall-Benoit
                                    -----------------------------------

                                    Notary Public, Livingston County

                                    My commission expires: May 17, 2002


















                                       27



<PAGE>   28


                                   EXHIBIT A-1

                          LEGAL DESCRIPTION OF THE LAND

Commencing at the South 1/4 corner of Section 15, T2s, R6E, City of Ann Arbor,
Washtenaw County, Michigan; thence N 01(degree)10'27" W 1000.01 feet along the
North-South 1/4 line of said Section 15 for a PLACE OF BEGINNING; thence N
71(degree)15'31" W 325.00 feet; thence N 30(degree)29'46" W 215.77 feet; thence
S 53(degree)14'25" W 482.04 feet; thence the following four courses along the
Easterly right-of-way line of Traverwood Drive (70 feet wide): 418.79 feet along
the arc of a 672.98-foot radius nontangential circular curve to the right, with
a central angle of 35(degree)39'18", having a chord which bears N
05(degree)57'27" E 412.06 feet, N 23(degree)47'10" E 347.36 feet, 129.14 feet
along the arc of a 538.00-foot radius circular curve to the right, with a
central angle of 13(degree)45'10", having a chord which bears N 30(degree)39'46"
E 128.83 feet, and N 37(degree)32'08" E 307.25 feet; thence S 51(degree)49'25" E
446.69 feet along the Southerly right-of-way line of Huron Parkway (variable
width); thence S 01(degree)10'27" E 808.10 feet to the Place of Beginning, being
a part of the Southwest 1/4 of said Section 15, containing 13.19 acres of land,
more or less, being subject to easements and restrictions of record, if any.

























                                       28


<PAGE>   29


                                   EXHIBIT A-2

                              PRELIMINARY SITE PLAN


























                                       29



<PAGE>   30




                                    EXHIBIT B

            ILLUSTRATION OF HYPOTHETICAL RENTAL PAYMENT CALCULATION
                             (Using Estimated Costs)





<TABLE>
<S>                                                                           <C>
            Hard costs (66,878 sq. ft. @ $100.00)                               $6,687,800
            Soft costs (60,000 sq. ft. @ $26.39)*                                1,583,400
            Land Cost  (60,000 sq. ft. @ $17.50)                                 1,050,000
                                                                                ----------
            EST. TOTAL DEVELOPMENT COST                                         $9,321,200

            X  EST. RENT FACTOR (Rental Rate Constant + Debt Service            x    10.75%
                                                                                ----------
            Constant) (2.00% + 8.75% = 10.75%)

            ESTIMATED ANNUAL BASE RENTAL                                        $1,002,029
</TABLE>

*NOTE:  Soft Costs are based on first two floors only,  and not the  approximate
        6,878 sq. ft. on the lower plaza level.

















                                       30



<PAGE>   31


                                    EXHIBIT C

                         FOOTPRINT OF BUILDING ADDITIONS





































                                       31



<PAGE>   32


                                    EXHIBIT D

                                EXPANSION PARKING





































                                       32


<PAGE>   33


                                    EXHIBIT E

                              RULES AND REGULATIONS

1.    The sidewalks and grounds of the Building are not for the use of the
      general public, and Host shall in all cases retain the right to control
      and prevent access thereto of all persons whose presence in the judgment
      of Host shall be prejudicial to the safety, character, reputation and
      interests of the Building and its Guests, provided that nothing herein
      contained shall be construed to prevent such access to employees or other
      persons with whom any Guest normally deals in the ordinary course of its
      business, unless such persons are engaged in illegal activities. No Guests
      and no employee, agent or invitee of any Guest shall go upon the roof of
      the Building.

2.    No awnings or other projection shall be attached to the outside walls of
      the Building. No curtains, blinds, shades or screens shall be attached to
      or hung in, or used in connection with, any window or door of the Premises
      without prior written consent of Host. All electric ceiling fixtures hung
      in offices or spaces along the perimeter of the Building must be
      fluorescent, of a quality, type, design and bulb color approved by Host.
      Neither the interior nor exterior of any windows shall be coated or
      otherwise unscreened without the written consent of the Host.

3.    No bicycles, vehicles, birds or animals of any kind shall be brought into
      or kept in or about the Premises. Any preparation of food or beverages in
      the Premises shall be done only with equipment approved by Host which does
      not overload the electrical wiring of the Premises. No Guest shall cause
      or permit any unusual or objectionable odors to be produced or permeate
      the Premises.

4.    Except with the prior written consent of Host, no Guest shall occupy or
      permit any portion of his Premises to be occupied as an office for a
      public stenographer or typist, or for the manufacture or sale of liquor,
      narcotics or tobacco in any form, or as a barber or manicure shop, in or
      on the Premises. No Guest shall engage or pay any employees on the
      Premises, except those actually working for Guest on the Premises, nor
      advertise for laborers giving an address at the Premises. The Premises
      shall not be used for lodging or sleeping or for any illegal purposes.

5.    No Guest shall make, or permit to be made, any unseemly or disturbing
      noises or disturb or interfere with occupants of this or neighboring
      buildings or premises or those having business with them, whether by the
      use of any musical instrument, radio, phonograph, unusual noise, or any
      other way. No Guest shall throw anything out of door, windows or skylights
      or down the passageways.

6.    Guest shall provide Host with a key for any exterior doors installed by
      Guest in the Premises. Each Guest must, upon the termination of its
      tenancy, restore to the Host all keys of stores, offices, and toilet
      rooms, either furnished to, or otherwise procured by, such Guest and in
      the event of the loss of any keys so furnished, such Guest shall pay to
      the Host the cost of


                                       33



<PAGE>   34


      replacing the same or of changing the lock or locks opened by such lost
      key if Host shall deem it necessary to make such change.

7.    Host shall have the right to prohibit any advertising by any Guest which,
      in Host's opinion, tends to impair the reputation of the Building or its
      desirability as an office/research building and upon written notice from
      Host any Guest shall refrain from or discontinue such advertising.

8.    Each guest shall see that the doors of its Premises are closed and
      securely locked and must observe strict care and caution that all water
      faucets, water apparatus and utilities are shut off before employees leave
      the Premises, so as to prevent waste or damage, and for any default or
      carelessness Guest shall make good all injuries sustained by other tenants
      or occupants of the Building or Host. On multiple-tenancy floors, all
      Guests shall keep all doors to the Building corridors closed at all times
      except for ingress and egress.

9.    The requirements of Guest will be attended to only upon application to
      Host. Employees and agents of Host shall not perform any work or do
      anything outside of their regular duties unless under special instruction
      from Host.

10.   Canvassing, soliciting and peddling in the Building are prohibited and
      each Guest shall cooperate to prevent the same.

11.   Guest shall not cause any noise, odor, vibration or light disturbing or
      annoying to other tenants of the Building or to tenants of neighboring
      buildings.

12.   No air conditioning unit or other similar apparatus shall be installed or
      used by any Guest without the written consent of Host.

13.   No Guest shall install any radio or television antenna, loudspeaker or
      other device on the roof or exterior walls of the Building without Host's
      consent which consent will not be unreasonably withheld.

14.   Each Guest shall store all its trash and garbage within its Premises.
      No material shall be placed in the trash boxes or receptacles if such
      materials is of such nature that it may not be disposed of in the ordinary
      and customary manner of removing and disposing of trash and garbage in the
      City of Ann Arbor without being in violation of any law or ordinance
      governing such disposal. All garbage and refuse disposal shall be made
      only through entryways provided for such purposes and at such times as
      Host shall designate. Should the amount of trash generated by Guest exceed
      the amount typically generated by users of office space, Guest shall be
      responsible for the cost of disposing of such excess. All boxes shall be
      broken down before being placed in the Building trash boxes or
      receptacles.

15.   Host may waive any one or more of these Rules and Regulations for the
      benefit of any particular Guest or Guests, but no such waiver by Host
      shall be construed as a waiver of such Rules and Regulations in favor of
      any other Guest or Guests, nor prevent Host from


                                       34


<PAGE>   35


      thereafter enforcing any such Rules and Regulations against any or all of
      the Guests of the Building.

16.   These Rules and Regulations are in addition to and shall not be construed
      to in any way modify, alter or amend, in whole or in part, the terms,
      covenants, agreements and conditions of any lease of premises in the
      Building.

17.   Guest shall not operate any equipment that sends out radio frequencies or
      otherwise distorts electric power to the building.

18.   Smoking is prohibited in the Building restrooms, hallways, lobbies,
      lunchrooms and other common areas and on the Building grounds except in
      those areas designated by Host. Host shall not be obligated to designate
      any such areas.

19.   Guest shall place chair mats under all chairs with casters with the
      exception of conference room chairs; if Guest does not, Host shall have
      the right to provide such chair mats and Guest shall reimburse Host for
      the cost of such mats.

20.   The moving into or out of the Building of any safes, freight, furniture,
      or other bulky matter of any description may only take place during the
      hours determined by Host in its absolute discretion. The moving of such
      bulky matter may only be made after notice to Host and the persons
      employed by any Guest for such work must be acceptable to Host.

21.   Host reserves the right to make such other and reasonable rules and
      regulations as in its judgment may from time to time be needed for the
      safety, care and cleanliness of the Building, and for the preservation of
      good order therein.





























                                       35