EXHIBIT 10.1


                          STANDARD FORM LEASE AGREEMENT










                     LANDLORD: TOPANGA & VICTORY PARTNERS LP

         TENANT: BRILLIANT DIGITAL ENTERTAINMENT, A DELAWARE CORPORATION





                            DATED: SEPTEMBER 21, 2003
                          (FOR REFERENCE PURPOSES ONLY)


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                                TABLE OF CONTENTS
                                                                            PAGE

ARTICLE 1 - PREMISES...........................................................3
         Section 1.1  Lease of Premises........................................3
         Section 1.2  Rentable Area............................................3

ARTICLE 2 - TERM...............................................................3
         Section 2.1  Effective Date...........................................3
         Section 2.2  Term of Lease............................................3
         Section 2.3  Commencement Date........................................3
         Section 2.4  Delivery of Premises.....................................3
         Section 2.5  Definition of Tenant Improvements,
                      Ready For Occupancy and Tenant Delays....................3
         Section 2.6  Notice of Commencement Date..............................3
         Section 2.7  Option to Renew..........................................4

ARTICLE 3 - RENT...............................................................4
         Section 3.1  Payment of Rental........................................4
         Section 3.2  Governmental Assessments.................................5
         Section 3.3  Special Charges for Special Services.....................5
         Section 3.4  Definition of Rent.......................................5
         Section 3.5  Late Charge..............................................5
         Section 3.6  Disputes as to Payments of Rent..........................5
         Section 3.7  Special Assessment.......................................5

ARTICLE 4 - ADJUSTMENTS TO RENT................................................6
         Section 4.1  Operating Expense Adjustments............................6
         Section 4.2  Procedure for Payment of Operating
                      Expense Adjustments......................................6
         Section 4.3  Certain Defined Terms....................................6
         Section 4.4  Review of Operating Expenses.............................9

ARTICLE 5 - SECURITY DEPOSIT...................................................9

ARTICLE 6 - USE................................................................9
         Section 6.1  Permitted Use............................................9
         Section 6.2  Restriction on Use.......................................9
         Section 6.3  Compliance by Other Tenants.............................10

ARTICLE 7 - ALTERATIONS AND ADDITIONS.........................................10
         Section 7.1  Tenant's Rights To Make Alterations.....................10
         Section 7.2  Installation of Alterations.............................10
         Section 7.3  Tenant Improvements; Alterations -
                      Treatment at End of Lease...............................11

ARTICLE 8 - TENANT'S REPAIRS..................................................11

ARTICLE 9 - LIENS BY TENANT...................................................11

ARTICLE 10 - LANDLORD'S REPAIRS...............................................11
         Section 10.1  Scope of Landlord's Repairs............................11
         Section 10.2  Landlord's Right of Entry to Make
                       Repairs................................................12

ARTICLE 11 - BUILDING SERVICES................................................12
         Section 11.1  Standard Building Services.............................12
         Section 11.2  Additional Services....................................12
         Section 11.3  Landlord's Right To Cease
                       Providing Services.....................................12

ARTICLE 12 - ASSIGNMENT AND SUBLETTING........................................13
         Section 12.1  Right to Assign and Sublease...........................13
         Section 12.2  Procedure For Assignment and
                       Sublease/ Landlord's Recapture
                       Rights.................................................13
         Section 12.3  Conditions Regarding Consent to
                       Sublease and Assignment................................13
         Section 12.4  Affiliated Companies/Restructuring
                       of Business Organization...............................14
         Section 12.5  Landlord's Right to Assign.............................14

ARTICLE 13 - INDEMNIFICATION; INSURANCE.......................................14
         Section 13.1  Indemnification........................................14


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         Section 13.2  Insurance..............................................14
         Section 13.3  Assumption of Risk.....................................15
         Section 13.4  Allocation of Insured Risks and Subrogation............15

ARTICLE 14 - DAMAGE OR DESTRUCTION............................................15
         Section 14.1  Loss Covered By Insurance..............................15
         Section 14.2  Loss Not Covered By Insurance..........................16
         Section 14.3  Destruction During Final Year..........................17
         Section 14.4  Destruction of Tenant's Personal
                       Property, Tenant Improvements or
                       Property of Tenant's Employees.........................17
         Section 14.5  Exclusive Remedy.......................................17

ARTICLE 15 - EMINENT DOMAIN...................................................17
         Section 15.1  Permanent Taking - When Lease Can
                       Be Terminated..........................................17
         Section 15.2  Permanent Taking - When Lease
                       Cannot Be Terminated...................................17
         Section 15.3  Temporary Taking.......................................17
         Section 15.4  Exclusive Remedy.......................................17
         Section 15.5  Release Upon Termination...............................17

ARTICLE 16 - DEFAULTS.........................................................18
         Section 16.1  Default by Tenant......................................18
         Section 16.2  Default by Landlord....................................18

ARTICLE 17 - LANDLORD'S REMEDIES AND RIGHTS...................................18
         Section 17.1  Remedies Upon Breach of Lease..........................18
         Section 17.2  Re-Entry...............................................19
         Section 17.3  Termination............................................19
         Section 17.4  Landlord's Damages.....................................19
         Section 17.5  Fixtures and Personal Property.........................20
         Section 17.6  Waiver of Redemption...................................20
         Section 17.7  Right to Perform.......................................20

ARTICLE 18 - ATTORNEYS' FEES..................................................20

ARTICLE 19 - SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE....................20
         Section 19.1  Obligations of Tenant..................................20
         Section 19.2  Landlord's Right to Assign.............................20
         Section 19.3  Attornment by Tenant...................................20
         Section 19.4  Non-Disturbance........................................21
         Section 19.5  Attorney-In-Fact.......................................21

ARTICLE 20 - RULES AND REGULATIONS............................................21

ARTICLE 21 - HOLDING OVER.....................................................21
         Section 21.1  Surrender of Possession................................21
         Section 21.2  Payment of Money After Termination.....................21

ARTICLE 22 - INSPECTIONS AND ACCESS...........................................21

ARTICLE 23 - NAME OF BUILDING.................................................22

ARTICLE 24 - SURRENDER OF LEASE...............................................22

ARTICLE 25 - WAIVER...........................................................22

ARTICLE 26 - SALE BY LANDLORD.................................................22

ARTICLE 27 - FORCE MAJEURE....................................................22

ARTICLE 28 - ESTOPPEL CERTIFICATES............................................22

ARTICLE 29 - RIGHT TO PERFORMANCE.............................................23

ARTICLE 30 - PARKING FACILITIES...............................................23


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ARTICLE 31 - SECURITY SERVICES................................................23
         Section 31.1  Landlord's Obligation to Furnish
                       Security Services......................................23
         Section 31.2  Tenant's Right to Install Security
                       System.................................................23

ARTICLE 32 - NOTICES..........................................................23

ARTICLE 33 - HAZARDOUS WASTE..................................................23

ARTICLE 34 - MISCELLANEOUS....................................................24
         Section 34.1  Authorization to Sign Lease............................24
         Section 34.2  Entire Agreement.......................................24
         Section 34.3 Construction/Separability...............................24
         Section 34.4  Covenants and Conditions...............................24
         Section 34.5  Gender and Headings....................................25
         Section 34.6  Exhibits...............................................25
         Section 34.7  Modification For Lender................................25
         Section 34.8  No Recordation.........................................25
         Section 34.9  Cumulative Remedies....................................25
         Section 34.10  Confidentiality.......................................25
         Section 34.11  Waiver of Trial by Jury...............................25
         Section 34.12  Successors and Assigns. ..............................25
         Section 34.13  Governing Law/Venue...................................25
         Section 34.14  Brokers...............................................25
         Section 34.15  Delivery of Financial Statements......................25
         Section 34.16  Delivery of Statement Regarding
                        Lawsuits..............................................25
         Section 34.17  Consent...............................................26


ARTICLE 35 - REPRESENTATIONS AND WARRANTIES OF LANDLORD.......................26


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Exhibit Index

         Exhibit A --      PREMISES
         Exhibit B --      FORM OF NOTICE OF COMMENCEMENT DATE
         Exhibit C --      CONSTRUCTION AGREEMENT
         Exhibit D --      RULES AND REGULATIONS
         Exhibit E --      STANDARD BUILDING SERVICES
         Exhibit F --      FORM OF ESTOPPEL CERTIFICATE
         Exhibit G --      PARKING
         Exhibit H --      GUARANTEE  [Intentionally omitted.]


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                              OFFICE LEASE SUMMARY

         This  Office  Lease  Summary  summarizes  certain  terms  of the  Lease
Agreement to which it is attached.  The summary contained herein is qualified by
and subject to the terms of the Lease Agreement.

(a)      Landlord:           Topanga & Victory Partners L.P.
                             6355 Topanga Canyon Boulevard
                             Suite 230
                             Woodland Hills, California  91367

(b)      Landlord's Agent:   Toibb Enterprises

(c)      Tenant:             Brilliant Digital Entertainment

(d)      Building:           6355 Topanga Canyon  Boulevard
                             Woodland  Hills, California  91367

(e)      Premises:  That  certain  portion  of  the  fifth  (5th)  floor  of the
         Building, as shown cross-hatched on Exhibit "A" attached hereto (and to
         be commonly known as Suite 520).

(f)      Rentable Area of Project: 158,751 rentable square feet ("RSF")

(g)      Rentable Area of Premises: Approximately 4,271 RSF

(h)      Scheduled Commencement Date: See Section 2.3

(i)      Expiration  Date: The day which is immediately  preceding the day which
         is sixty  (60)  months  after  the  Commencement  Date (as such term is
         defined in Section 2.3 herein).

(j)      Initial  Rental:  Seven  Thousand Six Hundred  Eighty-Seven  and 80/100
         Dollars ($7,687.80) per month.

(k)      Base Year: Calendar year 2004

(l)      Allowance: See Section 4.3

(m)      Tenant's Pro Rata Share: 2.69%

(n)      Security  Deposit:  Two Thousand  Three Hundred Nine and 05/100 Dollars
         ($2,309.05)

(o)      Use:  General  office and other uses legally  permitted  in  connection
         therewith,  related to the development of interactive computer software
         and technology

(p)      Tenant's Address for Notices:

                                           Brilliant Digital Entertainment
                                           6355 Topanga Canyon Boulevard
                                           Suite 520
                                           Woodland Hills, CA  91367

         Copy to:                          Troop Meisinger Steuber & Pasich, LLP
                                           10940 Wilshire Boulevard
                                           Los Angeles, CA 90024
                                           Attn: Murray Markiles, Esq.

(q)      Landlord's Address for Notices:

                                           Toibb Enterprises
                                           6355 Topanga Canyon Boulevard
                                           Suite 230
                                           Woodland Hills, California  91367
                                           Attention:  Don Kinder


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         Copy to:                          Hamburg, Karic, Edwards & Martin LLP
                                           1900 Avenue of the Stars
                                           Suite 1800
                                           Los Angeles, California 90067
                                           Attention:  Barry G. Edwards, Esq.

(r)      Brokers:

         For Landlord:       Told Partners
         For Tenant:         [Not applicable.]

(s)      Parking Privileges: Per Exhibit G

(t)      Date of Lease:      September 21, 2003 (for reference purposes only)


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                                 LEASE AGREEMENT


         This LEASE AGREEMENT ("Lease"),  dated as of September 21, 2003 is made
and entered into by and between  Topanga & Victory  Partners  L.P., a California
limited partnership ("Landlord") and Brilliant Digital Entertainment, a Delaware
corporation ("Tenant"), who agree as follows:

ARTICLE 1 - PREMISES

         SECTION 1.1 LEASE OF PREMISES.  Landlord  leases to Tenant,  and Tenant
leases from Landlord,  the premises ("Premises")  consisting of the office space
cross-hatched  on the  attached  Exhibit "A" and  described  as Suite Number 520
located in an office building ("Building"), the address of which is 6355 Topanga
Canyon Boulevard, Woodland Hills, California 91367, situated on a parcel of real
property ("Land") located in Woodland Hills, California, (collectively, the Land
and the Building and that certain medical office building,  the address of which
is 6325 Topanga Canyon Boulevard,  Woodland Hills, California 91367 are referred
to herein as the "Project").

         SECTION 1.2 RENTABLE AREA. The rentable area of the Premises and of the
Building are  stipulated  in Sections (g) and (f),  respectively,  of the Office
Lease Summary.

ARTICLE 2 - TERM

         SECTION 2.1 EFFECTIVE DATE. The Lease will become  effective on the day
the Lease has been signed by the Landlord and Tenant ("Effective Date").

         SECTION 2.2 TERM OF LEASE.  The term of the Lease ("Term") shall be for
sixty (60)  months  beginning  on the  Commencement  Date (as defined in Section
2.3).  If the  Commencement  Date  falls on a date other than the first day of a
month,  the Term shall be extended by that partial  month from the  Commencement
Date to the first day of the following month.

         SECTION 2.3 COMMENCEMENT DATE. The Term of this Lease shall commence on
the date the Premises are "Ready for  Occupancy"  (defined  below),  taking into
account  "Tenant  Delays"  (defined  below)  estimated  to be  November  1, 2003
("Commencement Date").

         SECTION 2.4  DELIVERY OF PREMISES.  The  Premises  will be delivered to
Tenant Ready for Occupancy,  subject to Tenant Delays on the Commencement  Date,
in its "As Is" condition with the Tenant Improvements  completed as described in
Exhibit "C" attached hereto.  Tenant hereby  acknowledges:  (i) that it has been
advised by the  Landlord  and/or  brokers to satisfy  itself with respect to the
condition  of the  Premises  (including  but not limited to the  electrical  and
sprinkler systems, security, environmental aspects, compliance with the Laws, as
defined in Section 4.3) and the present and future  suitability  of the Premises
for Tenant's  intended use; (ii) that Tenant has made such  investigation  as it
deems  necessary with  reference to such matters and assumes all  responsibility
therefor as the same relate to Tenant's  occupancy  of the  Premises;  and (iii)
that  neither  Landlord,  nor any of  Landlord's  agents,  has  made any oral or
written  representations  or  warranties  with respect to the said matters other
than as set forth in this Lease.  Notwithstanding said Commencement Date, if for
any reason Landlord cannot deliver  possession of the Premises to Tenant on said
date, Landlord shall not be subject to any liability  therefore,  nor shall such
failure affect the validity of this Lease or the obligations of Tenant hereunder
or extend the term hereof, but in such case Tenant shall not be obligated to pay
Rent (as defined in Section 3.4 below) under this Lease until  possession of the
Premises is  tendered  to Tenant.  Tenant  currently  occupies  suite 120 in the
Building  pursuant  to that  certain  written  Lease  Agreement  by and  between
Landlord  and  Tenant  dated  May  16,  1997  ("05/16/97   Lease").  As  of  the
Commencement  Date,  the Landlord and Tenant agree to cancel the 05/16/97  Lease
and, except as otherwise provided herein,  discharge and release each other from
all obligations under the 05/16/97 Lease.

         SECTION 2.5 DEFINITION OF TENANT IMPROVEMENTS,  READY FOR OCCUPANCY AND
TENANT  DELAYS.  The terms "Tenant  Improvements"  and "Ready for Occupancy" are
defined in the attached  Exhibit "C."  "Tenant  Delays"  consist of those delays
defined in Exhibit "C" attached hereto.

         SECTION 2.6 NOTICE OF  COMMENCEMENT  DATE.  Landlord  shall send Tenant
notice of the  occurrence of the  Commencement  Date in the form of the attached
Exhibit "B," which notice  Tenant shall  acknowledge  by executing a copy of the
notice and returning it to the Landlord.  If Tenant fails to sign and return the
notice to Landlord  within ten (10) days of receipt of the notice from Landlord,
the notice as sent by Landlord  shall be deemed to have  correctly set forth the
Commencement  Date. Failure of Landlord to send such notice shall have no effect
on the Commencement Date.


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         SECTION 2.7  OPTION TO RENEW.

         (a) Provided  that Tenant has at no time  committed an Event of Default
under the Lease,  Tenant is given the option  ("Renewal  Option")  to extend the
Term of this Lease on all the  provisions  contained  in this Lease except as to
Rental (as defined  below).  Such  Renewal  Option shall be for one (1) five (5)
year term (the "Option Term") to commence  immediately  following the expiration
of the Term hereinabove set forth in Section 2.2 of this Lease. If Tenant elects
to exercise  such  Renewal  Option,  such  Renewal  Option shall be exercised by
Tenant  giving  written  notice of exercise of the Renewal  Option (the  "Option
Notice")  to  Landlord  at least six (6)  months but not more than  twelve  (12)
months  before the  expiration  of the Term.  If such Option  Notice is not sent
during  such six (6) month  period or Tenant has  committed  an Event of Default
under this Lease at any time during the Term,  then such Renewal Option shall be
null and void and in no event shall  Tenant have any right to extend the Term of
this Lease  beyond the Term even if Tenant  otherwise  attempts to exercise  the
Renewal Option set forth herein.

         (b) Tenant shall pay to Landlord, as Rental for the Premises during the
Option  Term,  the Renewal  Rental Rate (as  hereinafter  defined).  The Renewal
Rental Rate shall be prevailing fair market rental rate as reasonably determined
by  Landlord  six (6)  months  prior  to the end of the  Lease  term.  The  term
"prevailing  fair market  rental  rate" for the purposes of the Lease shall mean
what a willing, comparable, new, non-expansion,  non-renewal,  non-equity tenant
would pay, and a willing, comparable landlord of a comparable office building in
the vicinity of the Building would accept, at arm's length,  giving  appropriate
consideration to the rental rate per rentable square foot, the ratio of rentable
square feet to usable square feet, escalation (including type and base year) and
abatement  provisions  reflecting free rent,  length of the lease term, size and
location of premises being leased,  building  standard work letter and/or tenant
improvement  allowances,  if any, and other generally  applicable  conditions of
tenancy  for the space in question so that this Tenant will obtain the same rent
and  other  benefits  that  Landlord  would  otherwise  give  to any  comparable
prospective  tenant.  If Tenant does not agree with Landlord's  determination of
the  Renewal  Rental  Rate,  Tenant  shall,   within  three  (3)  days  of  such
determination, deliver written notice to Landlord stating Tenant's disagreement.
Within ten (10) days of Tenant's delivery of said notice each party, at its sole
cost,  shall  appoint  a real  estate  appraiser  with at least  five (5)  years
full-time  commercial  appraisal  experience  in  the  San  Fernando  Valley  to
determine  the  Renewal  Rental  Rate for the Option Term based upon fair market
rental rate  specified  above.  If either  party does not  appoint an  appraiser
within such ten (10) day period,  then the single appraiser  appointed shall set
the Renewal  Rental Rate. If the two (2)  appraisers  are unable to agree on the
Renewal  Rental Rate but their  respective  appraisals of the fair market rental
rate are within ten percent  (10%) of each other,  then the Renewal  Rental rate
shall be  determined  by adding the two (2)  appraisals  of fair  market  rental
together and dividing the total by two (2); the resulting  quotient shall be the
Renewal  Rental Rate.  If the two (2)  appraisals  of fair market rental are not
within ten percent (10%) of each other, then the two (2) appraisers shall select
a third  appraiser  who meets the  qualifications  stated in this  Section  2.7.
Landlord and Tenant shall each bear fifty percent (50%) of the cost of the third
appraiser.  Within thirty (30) days after the selection of the third  appraiser,
the  majority of  appraisers  shall set the  Renewal  Rental Rate for the Option
Term. If a majority of the  appraisers are unable to set the Renewal Rental Rate
within the thirty  (30) day  period,  the three (3)  appraisals  of fair  market
rental  shall be added  together  and their  total  divided by three (3) and the
resultant  quotient shall be the Renewal Rental Rate.  Except for the adjustment
to Rental as provided above,  all Rental payable during the Option Term shall be
payable  in the same  manner  as  Rental  is paid  during  the  initial  Term in
accordance with the provisions of Section 3.1.

         (c)  Landlord  and  Tenant  shall   execute  and  deliver   appropriate
documentation to evidence any renewal of this Lease and the terms and conditions
of this Lease during the Option Term.

         (d) The Renewal Option shall be available  only to the original  Tenant
under this Lease and shall not be available to any assignee,  sublessee or other
transferee of the original Tenant.  Time is of the essence  regarding all of the
provisions  of this  Article 2 relating  to  Tenant's  exercise  of the  Renewal
Option.  Tenant's  failure to comply with any of the time or other  requirements
set forth in this  Article 2 shall  cause the  Renewal  Option to  automatically
cease and  terminate  and, in such event,  the Lease  shall  terminate  upon the
expiration of the Term.

ARTICLE 3 - RENT

         SECTION 3.1 PAYMENT OF RENTAL.  Tenant  agrees to pay  Landlord as rent
for the Premises the sum of Seven Thousand Six Hundred  Eighty-Seven  and 80/100
Dollars  ($7,687.80)  per month  during the first twelve (12) months of the Term
(the  "Rental").  The Rental shall be increased,  annually,  at the rate of five
cents ($0.05) per RSF per month on the anniversary of the Commencement Date. The
first increase shall occur one (1) year after the Commencement  Date. The Rental
for the first  month of the Term shall be due and  payable  on the  Commencement
Date, and for the remaining months of the Term, Rental shall be due,


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in advance,  on or before the first day of each calendar  month during the Term.
In  addition  to the  payment of  Rental,  Tenant  shall also pay all  Operating
Expense Adjustments computed pursuant to Section 4.1 of the Lease and such other
payment as are described in this Lease.

         SECTION 3.2 GOVERNMENTAL ASSESSMENTS. In addition to the Rental, Tenant
shall pay,  prior to  delinquency,  (a) all personal  property  taxes,  charges,
rates,  duties  and  license  fees  assessed  against  or levied  upon  Tenant's
occupancy of the  Premises,  or upon any Tenant  Improvements,  trade  fixtures,
furnishings,  equipment or other personal property owned or leased by Tenant and
contained in the Premises (collectively  "Personal Property"),  and (b) Tenant's
Pro Rata Share (as defined in Section 4.3) of any governmental  fees or charges,
general and special,  ordinary and  extraordinary of any kind whatsoever  (other
than Taxes,  as defined in Section 4.3 (n), which shall be handled in accordance
with the  provisions of Article 4)  (collectively  "Assessments").  Tenant shall
cause such Assessments upon Personal  Property to be billed  separately from the
property of Landlord. Tenant hereby indemnifies and holds Landlord harmless from
and against the payment of all such Assessments.

         SECTION 3.3 SPECIAL CHARGES FOR SPECIAL SERVICES.  Tenant agrees to pay
to Landlord,  within ten (10) days following written demand, all charges for any
services,  utilities,  goods or  materials  furnished  by  Landlord  at Tenant's
request  which are not  required to be  furnished  by  Landlord  under the Lease
without separate charge or reimbursement.

         SECTION 3.4  DEFINITION OF RENT. Any and all payments of Rental and any
and all taxes, fees,  charges,  costs,  expenses,  insurance  obligations,  late
charges,  Assessments,  Operating Expense  Adjustments,  and all other payments,
disbursements or reimbursements (collectively "Rent") which are attributable to,
payable by or the  responsibility  of Tenant under the Lease,  constitute "rent"
within the meaning of California Civil Code Section 1951(a). Any Rent payable to
Landlord by Tenant for any  fractional  month shall be prorated based on a three
hundred sixty (360) day year.  All payments owed by Tenant under the Lease shall
be paid, without deduction, set off or counterclaim, to Landlord in lawful money
of the United States of America at the location  specified by Landlord  pursuant
to Article 32 of the Lease.

         SECTION 3.5 LATE CHARGE.  Tenant  acknowledges that the late payment of
Rent will cause Landlord to incur damages,  including administrative costs, loss
of use of the overdue funds and other costs,  the exact amount of which would be
impractical and extremely difficult to ascertain. Landlord and Tenant agree that
if Landlord does not receive a payment of Rent on or before the tenth (10th) day
following the date that such payment is due, Tenant shall pay to Landlord a late
charge  equal  to the sum of five  percent  (5%) of the  overdue  amount  ("Late
Charge").  Acceptance  of the Late  Charge by  Landlord  shall not cure or waive
Tenant's  default,  nor prevent Landlord from  exercising,  before or after such
acceptance,  any of the rights and remedies for a default provided by this Lease
or at law. Payment of the Late Charge is not an alternative means of performance
of Tenant's obligation to pay Rent at the times specified in this Lease.

         SECTION 3.6 DISPUTES AS TO PAYMENTS OF RENT.  Tenant  agrees to pay the
Rent  required  under this Lease within the time limits set forth in this Lease.
If Tenant receives from Landlord an invoice or statement,  which invoice is sent
by Landlord in good faith,  and Tenant in good faith disputes whether all or any
part of such Rent is due and owing,  Tenant shall  nevertheless  pay to Landlord
the amount of the Rent  indicated  on the  invoice  or  statement  until  Tenant
receives  a final  judgment  from a court  of  competent  jurisdiction  (or when
arbitration is permitted or required, receives a final award from an arbitrator)
relieving or mitigating  Tenant's  obligation to pay such Rent. In such instance
where Tenant  disputes its  obligations to pay all or part of the Rent indicated
on such invoice or  statement,  Tenant shall,  concurrently  with the payment of
such Rent,  provide  Landlord with a letter or notice  entitled  "Payment  Under
Protest,"  specifying in detail why Tenant is not required to pay all or part of
such Rent.  Tenant  will be deemed to have  waived its right to contest any past
payment  of Rent  unless  it has  filed a  lawsuit  against  Landlord  (or  when
arbitration  is  permitted  or required,  filed for  arbitration  and has served
Landlord  with  notice of such  filing),  and has served a summons on  Landlord,
within one (1) year of such payment.

         SECTION 3.7 SPECIAL  ASSESSMENT.  Tenant  shall pay  Tenant's  Pro Rata
Share of any special assessment levied upon the Land by any governmental  entity
having authority to impose such assessment ("Special Assessment").  Tenant shall
pay Tenant's Pro Rata Share of the Special  Assessment  in  accordance  with the
provisions of Article 4. If the bill for the Special  Assessment  specifies that
it applies to a given period of time,  Tenant's  obligations  under this Section
3.7 shall be  amortized  to the extent  that Term does not  include  all of such
period.


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ARTICLE 4 - ADJUSTMENTS TO RENT

         SECTION 4.1  OPERATING  EXPENSE  ADJUSTMENTS.  Commencing on January 1,
2005,  Tenant shall pay, in addition to the Rental  computed and due pursuant to
Section 3.1, an additional sum as an operating  expense  adjustment  ("Operating
Expense Adjustment") an amount equal to Tenant's Pro Rata Share of any excess of
Operating Expenses (as defined in Section 4.3) over the Allowance (as defined in
Section 4.3).

         SECTION 4.2  PROCEDURE  FOR PAYMENT OF OPERATING  EXPENSE  ADJUSTMENTS.
Tenant shall pay for the Operating Expenses Adjustment as follows:

         (a) Commencing on the  expiration of the Base Year,  Landlord may, from
time to time by ten (10) days notice to Tenant,  reasonably  estimate in advance
the  amounts  Tenant  shall owe on a monthly  basis for  excesses  of  Operating
Expenses over the  Allowance for any full or partial  calendar year of the Term.
In such event,  Tenant shall pay such estimated amounts,  on a monthly basis, on
or before the first day of each calendar month,  together with Tenant's  payment
of  Rental.  Such  estimate  may be  reasonably  adjusted  from  time to time by
Landlord by written notice to Tenant.

         (b) Within one hundred twenty (120) days after the end of each calendar
year, or as soon thereafter as  practicable,  Landlord shall provide a statement
(the "Statement") to Tenant showing: (i) the amount of actual Operating Expenses
for such  calendar  year,  (ii) any amount  paid by Tenant  towards  excesses of
Operating  Expenses over the Allowance during such calendar year on an estimated
basis and (iii) any revised  estimate of Tenant's  obligations  for  excesses of
Operating Expenses over the Allowance for the current calendar year.

         (c) If the Statement shows that Tenant's  estimated  payments were less
than Tenant's  actual  obligations  for excesses of Operating  Expenses over the
Allowance for such year, Tenant shall pay the difference. If the Statement shows
an increase in Tenant's estimated payments for the current calendar year, Tenant
shall pay the difference  between the new and former  estimates,  for the period
from  January 1 of the  current  calendar  year  through  the month in which the
Statement is sent. Tenant shall make such payments within thirty (30) days after
Landlord sends the  Statement.  If the Statement  shows that Tenant's  estimated
payments exceeded Tenant's actual obligations for excesses of Operating Expenses
over the  Allowance,  Tenant shall receive a credit of such  difference  against
payments  of Rent next due. If the Term shall have  expired and no further  Rent
shall be due,  Tenant shall  receive a refund of such  difference  within thirty
(30) days after Landlord sends the Statement.

         (d) So long  as  Tenant's  obligations  hereunder  are  not  materially
adversely affected,  Landlord reserves the right to reasonably change, from time
to time, the manner or timing of the foregoing payments. No delay by Landlord in
providing the Statement  (or separate  Statements)  shall be deemed a default by
Landlord  or a  waiver  of  Landlord's  right to  require  payment  of  Tenant's
obligations  for actual or  estimated  excesses of Operating  Expenses  over the
Allowance.

         (e) If the Term  commences  other than on January 1, or ends other than
on December 31, Tenant's obligations to pay estimated and actual amounts towards
excesses  of  Operating  Expenses  over the  Allowance  for such  first or final
calendar  years  shall be  prorated,  based on a 360 day year,  to  reflect  the
portion of such years included in the Term.

         SECTION 4.3 CERTAIN DEFINED TERMS.  "Tenant's Pro Rata Share" means the
ratio,  from time to time,  of the  rentable  square feet of the Premises to the
rentable  square  feet  in  the  Project.  Tenant's  Pro  Rata  Share  as of the
Commencement Date is stipulated to be the percentage set forth in Section (m) of
the Office Lease  Summary.  The  "Allowance"  will be the total dollar amount of
Operating  Expenses  incurred during the Base Year,  adjusted  (except for Taxes
which are not adjusted) to reflect what the Operating  Expenses  would have been
had the Building  been  ninety-five  percent  (95%)  occupied for the Base Year.
"Operating  Expenses"  are  defined  to be the sum of all costs,  expenses,  and
disbursements,  of every kind and nature  whatsoever,  incurred  by  Landlord in
connection   with   the   ownership,   management,    maintenance,    operation,
administration  and repair of all or any portion of the Project,  and the roads,
walks,  plazas,  landscaped  areas,  common areas,  improvements  and facilities
thereon, including Parking Facilities (collectively,  "Property") including, but
not limited to the following:

         (a) All costs  for  materials,  utilities  (excluding  electricity  for
Tenant's  normal  business use and excluding  the cost of up to fifty-five  (55)
hours per week of HVAC usage),  goods and services (but  excluding all costs for
materials,  utilities,  goods and services  furnished by Landlord  which are not
required to be furnished by Landlord,  and which have been  directly paid for by
Tenant or other tenants to Landlord);


                                       6
<PAGE>


         (b) All  wages  and  benefits  and costs of  employees  or  independent
contractors  or employees of independent  contractors  engaged in the operation,
maintenance and security of the Property;

         (c) All  expenses  for  janitorial,  maintenance,  security  and safety
services;

         (d) All repairs to,  replacement  of, and physical  maintenance  of the
Property,  including the cost of all supplies,  uniforms,  equipment,  tools and
materials;

         (e) Any license, permit and inspection fees required in connection with
the operation of the Property;

         (f) Any  auditor's or  accounting  fees  provided for the operation and
maintenance of the Property;

         (g) Any  legal  fees,  costs and  disbursements  as would  normally  be
incurred  in  connection  with the  operation,  maintenance  and  repair  of the
Property (except for such fees, costs and  disbursements  incurred in connection
with any legal proceeding against any tenant in the Building other than Tenant);

         (h)  All  reasonable  fees  for  management   services  provided  by  a
management company and/or by Landlord and/or an agent of the Landlord;

         (i) The annual  amortization of costs,  including  financing  costs, if
any,  incurred  by  Landlord  after  completion  of the  Project for any capital
improvements  installed  or paid for by  Landlord  and  required  by any new (or
change in) laws, rules or regulations of any governmental or  quasi-governmental
authority (collectively "Laws");

         (j) The annual  amortization of costs,  including  financing  costs, if
any, of any equipment,  device or capital improvement purchased or incurred as a
labor-saving   measure  or  to  affect  other  economies  in  the  operation  or
maintenance of the Property  (provided the annual amortized cost does not exceed
the actual cost savings  realized  and such savings do not redound  primarily to
the benefit of any particular tenant);

         (k) The annual amortization of costs, if any, incurred after completion
of the Property,  for the replacement of (i) exterior perimeter window draperies
or blinds  provided by Landlord  and (ii)  carpeting  and wall  coverings in the
public areas of the Building;

         (l) All insurance  premiums and other charges incurred by Landlord with
respect to the  insuring of the  Property  including,  without  limitation,  the
following to the extent carried by the Landlord:  (i) fire and extended coverage
insurance,  windstorm,  hail and explosion;  (ii) riot attending a strike, civil
commotion, aircraft, vehicle and smoke insurance; (iii) public liability, bodily
injury and property  damage  insurance;  (iv) elevator  insurance;  (v) workers'
compensation insurance for the employees specified in Section 4.3(b) above; (vi)
boiler and machinery  insurance,  sprinkler  leakage,  water  damage,  property,
burglary,  fidelity and pilferage  insurance on equipment and  materials;  (vii)
loss  of  rent,  rent  abatement,   rent  continuation,   business  interruption
insurance, and similar types of insurance; (viii) earthquake insurance; and (ix)
such other insurance as is customarily  carried by operators of other comparable
office buildings in Southern California;

         (m)  Such  other  usual  costs  and  expenses  which  are paid by other
landlords  for the purpose of providing  for the on-site  operation,  servicing,
maintenance  and repair of similar  first-class  office  buildings  in  Southern
California; and

         (n) All actual taxes,  assessments,  levies,  charges,  water and sewer
charges,  rapid  transit and other similar or  comparable  governmental  charges
(collectively  "Taxes")  levied or assessed on, imposed upon or  attributable to
the  calendar  year in  question  (i) to the  Property,  (ii) any  increases  in
property  taxes  directly  attributable  to a  hypothecation  or transfer of the
ownership of the Building during the Term,  and/or (iii) to the operation of the
Property,  including  but not limited to Taxes  against the  Property,  personal
property taxes or assessments levied or assessed against the Property,  plus any
tax measured by gross  rentals  received  from the  Property,  together with any
costs incurred by Landlord,  including  attorneys'  fees, in contesting any such
Taxes  but  excluding  any net  income,  franchise,  capital  stock,  estate  or
inheritance  taxes imposed by the State of California or the United States or by
their respective  agencies,  branches or departments.  If at any time during the
Term there shall be levied,  assessed or imposed on Landlord or the  Property by
any governmental  entity, any general or special, ad valorem or specific excised
capital  levy or other taxes on the  payments  received  by Landlord  under this
Lease or other leases  affecting the Property  and/or any license fee, excise or
franchise  taxes measured by or based,  in whole or in part, upon such payments,
and/or  transfer,  transaction,  or taxes based directly or indirectly  upon the
transaction  represented


                                       7
<PAGE>


by this Lease or other leases affecting the Property, and/or any occupancy, use,
per  capita  or  other  taxes,  based  directly  or  indirectly  upon the use or
occupancy of the Premises or the  Property,  then all such taxes shall be deemed
to be included within the definition of the term Taxes.

         The annual  amortization  of costs shall be  determined by dividing the
original cost of such capital  expenditure by the number of years of useful life
of the capital item acquired,  which useful life shall be reasonably  determined
by  Landlord.  Operating  Expenses  shall be computed  according  to the cash or
accrual basis of accounting,  as Landlord may elect in accordance  with standard
and reasonable accounting principles employed by Landlord.

         Notwithstanding anything to the contrary contained in this Section 4.3,
Operating Expenses shall not include:

         a.       Legal  fees  incurred  in  negotiating  and  enforcing  tenant
leases.

         b.       Real estate brokers' leasing commissions

         c.       Initial improvements or alterations to tenant spaces.

         d.       The  cost  of  providing  any  service  directly  to and  paid
directly by any tenant.

         e.       Costs of any items for which Landlord  receives  reimbursement
from insurance  proceeds or a third party.  Insurance proceeds shall be deducted
from or  offset  against  Operating  Expenses  in the  year in  which  they  are
received, except that any deductible amount permitted under this Lease under any
insurance policy shall be included within Operating Expenses.

         f.       Costs of  Capital  improvements  to the  Building  and/or  the
Project, except as provided for in Lease.

         g.       Interest, principal, depreciation,  reports, points, fees, and
other lender costs and on any mortgage or mortgages,  ground lease payments,  or
other debt instrument encumbering the Building and/or the Project.

         h.       Insurance  deductibles  in excess of  commercially  reasonable
levels for comparable  buildings or projects,  as well as any recovery sought by
Landlord form Tenant with regard to insurance  deductibles after the termination
of this Lease pursuant to Article 14.

         i.       Any bad debt loss, rent loss, or reserves for bad debt or rent
loss.

         j.       Landlord's  costs of electricity and other  utilities,  items,
benefits,  and services  that are sold or provided to other tenants or occupants
but that are not offered or provide to Tenant.

         k.       Costs,  fees,  and  compensation  paid  to  Landlord,   or  to
Landlord's subsidiaries or affiliates, for services in or to the Building and/or
the Project to the extent that they exceed the charges for  comparable  services
rendered  by an  unaffiliated  third  party  of  comparable  skill,  competence,
stature, and reputation.

         l.       Advertising and promotional  expenditures  primarily  directed
toward  leasing  tenant space in the Project and the costs of signs in or on the
Building  and/or the Project  (except the Building  and/or Project  Directories)
identifying any tenant of the Building and/or Project.

         m.       Costs  incurred  because the  Building,  the Project or common
areas of the Building and/or the Project violate any valid,  applicable building
code, regulation,  or law in effect and as interpreted by government authorities
before the Effective Date. This exclusion from Operating  Expenses shall include
fines, penalties, interest, and the costs of repairs, replacements, alterations,
or improvements  necessary to make the Building,  the Project or


                                       8
<PAGE>


common areas of the Building and/or the Project comply with applicable past laws
in effect and as  interpreted  by  government  authorities  before the Effective
Date, such as sprinkler  installation  or  requirements  under the American With
Disabilities Act of 1990 (42 U.S.C. ss.ss.12101-12213).

         SECTION 4.4 REVIEW OF OPERATING EXPENSES. Tenant shall have a period of
six (6) months following receipt of each Statement,  within which to inspect, at
Landlord's  office during normal  business hours,  Landlord's  books and records
concerning  Operating  Expenses  for  the  preceding  calendar  year  period  in
question. Such inspection may only be done by a certified public accountant.  If
Tenant shall not have availed itself of such inspection,  Tenant shall be deemed
to have accepted as final and  determinative the amounts shown on the Statement.
If Tenant  shall  have  availed  itself of its  right to  inspect  the books and
records,  and  then  disputes  the  accuracy  of the  information  set  forth in
Landlord's  books and  records  with  respect  to the  Statement,  Tenant  shall
nevertheless  continue to pay the amounts as required by the  provisions of this
Article 4; provided however,  that no later than six (6) months after receipt of
the Statement, Tenant must (or its right to contest such charges shall be deemed
waived)  institute  arbitration  proceedings  against Landlord in an arbitration
proceeding  governed by the rules of the  American  Arbitration  Association  to
collect and recover any overpayments made by Tenant resulting from errors in the
books and records of Landlord;  and provided further,  that Tenant shall, within
ten (10) days of  filing of the  complaint,  serve  Landlord  with a copy of the
complaint  filed  in  any  such  proceeding.  Tenant  shall  be  precluded  from
contesting Operating Expenses and Landlord's computations of the amounts payable
by  Landlord  or Tenant  pursuant  to this  Article  4,  unless  an  arbitration
complaint  is filed and  served  within  such six (6) month  period.  Should the
arbitrator  find errors in excess of five  percent (5%) of the  Statement,  then
Landlord  shall be responsible  for all reasonable  fees incurred by Tenant with
respect to the arbitration proceeding. Should the arbitrator find errors of less
than five  percent (5%) but more than two percent  (2%) of the  Statement,  then
Tenant  and  Landlord  shall each be  responsible  for  one-half  (1/2 ) of fees
incurred with respect to the arbitration proceeding.  Should the arbitrator find
errors  of two  percent  (2%) or less of the  Statement,  then  Tenant  shall be
responsible for all the reasonable fees incurred by Landlord with respect to the
arbitration proceeding.

         If Tenant institutes such arbitration  procedures,  then the arbitrator
shall have the power to, and shall inquire into and determine,  not only whether
or not Tenant was  overcharged  for any excesses of Operating  Expenses over the
Allowance,  but  whether or not Tenant was  undercharged  for such  excesses  of
Operating Expenses.  At the conclusion of the arbitration,  the arbitrator shall
issue a ruling as to what the  excesses of Operating  Expenses  should have been
had Landlord  strictly  complied with the provisions of this Lease.  If Landlord
overcharged  Tenant  for  excesses  of  Operating  Expenses,  the  amount of the
overcharge  shall be returned to Tenant  within  thirty (30) days  following the
conclusion of the  arbitration.  If the  arbitrator  determines  that Tenant was
undercharged for excesses of Operating Expenses,  Tenant shall pay the amount of
such  undercharge to Landlord  within thirty (30) days following the issuance of
the arbitration ruling.

ARTICLE 5 - SECURITY DEPOSIT.

         In accordance  with the  provisions of the 05/16/97  Lease,  Tenant has
deposited  with  Landlord the sum of Two Thousand  Three Hundred Nine and 05/100
Dollars  ($2,309.05)  ("Deposit"),  which the parties  hereto agree shall now be
held by Landlord as security for the full and faithful  performance  of Tenant's
covenants and obligations under this Lease. The Deposit is not an advance Rental
deposit,  an advance  payment  of any other  kind,  or a measure  of  Landlord's
damages in case of Tenant's default. If Tenant fails to comply with the full and
timely performance of any or all of Tenant's covenants and obligations set forth
in this Lease,  then Landlord may, from time to time,  without waiving any other
remedy  available  to Landlord,  use the  Deposit,  or any portion of it, to the
extent  necessary to cure or remedy such failure or to  compensate  Landlord for
all damages  sustained by Landlord  resulting  from  Tenant's  failure to comply
fully and timely  with its  obligations  pursuant to this  Lease.  Tenant  shall
immediately  pay to Landlord on demand the amount so applied in order to restore
the Deposit to its original  amount,  and Tenant's  failure to immediately do so
shall  constitute a default under the Lease. If Tenant is in compliance with the
covenants  and  obligations  set  forth  in this  Lease  at the time of both the
expiration or  termination  of the Lease and Tenant's  vacating of the Premises,
Landlord  shall  return the Deposit to Tenant  promptly  thereafter.  Landlord's
obligations with respect to the Deposit are those of a debtor and not a trustee.
Landlord  shall not be required to maintain the Deposit  separate and apart from
Landlord's  general or other funds,  and Landlord may commingle the Deposit with
any of  Landlord's  general  or other  funds.  Tenant  shall  not at any time be
entitled to interest on the Deposit.

ARTICLE 6 - USE

         SECTION 6.1  PERMITTED  USE.  The  Premises  shall be used only for the
purpose described in Section (o) of the Office Lease Summary.


                                       9
<PAGE>


         SECTION 6.2  RESTRICTION  ON USE.  Tenant  shall not do or permit to be
done in or about the  Property  nor bring,  keep or permit to be brought or kept
therein,  anything  which is  prohibited  by the attached  Exhibit "D" or by any
standard  form fire  insurance  policy  or which  will in any way  increase  the
existing rate of, or affect,  any fire or other  insurance  upon the Building or
its  contents,  or which will cause a weight  load or stress on the floor or any
other  portion of the  Premises in excess of the weight load or stress which the
floor or other portion of the Premises is designed to bear.  Tenant, at Tenant's
sole cost,  shall  comply with all Laws  affecting  the  Premises,  and with the
requirements  of any Board of Fire  Underwriters  or other  similar  body now or
hereafter  instituted,  and shall  also  comply  with any  order,  directive  or
certificate  of  occupancy  issued  pursuant  to  any  Laws,  which  affect  the
condition, use or occupancy of the Premises,  including, but not limited to, any
requirements  of  structural  changes  related to or affected by Tenant's  acts,
occupancy or use of the  Premises.  Tenant shall not conduct  retail  operations
from the  Premises or use the Premises  for any other  office  purpose  which is
different from the office operations  permitted by Landlord of its other tenants
in the Project.

         SECTION 6.3 COMPLIANCE BY OTHER  TENANTS.  Landlord shall not be liable
to Tenant for any other  occupant's  or  tenant's  failure to conduct  itself in
accordance  with the  provisions  of this  Article  6, and  Tenant  shall not be
released or excused from the  performance  of any of its  obligations  under the
Lease in the event of any such failure;  provided,  however that Landlord shall,
at all times, use its reasonable efforts to enforce the provisions of its leases
with other tenants.

ARTICLE 7 - ALTERATIONS AND ADDITIONS

         SECTION 7.1 TENANT'S RIGHTS TO MAKE ALTERATIONS.  Following the date on
which Tenant first occupies the Premises,  Tenant, at its sole cost and expense,
shall have the right upon receipt of Landlord's  consent,  to make  alterations,
additions,  or  improvements to the Premises if such  alterations,  additions or
improvements  are made in accordance with this Article 7, are normal for general
office use and the conduct of Tenant's  business,  do not  adversely  affect the
utility or value of the  Premises or the  Building  for future  tenants,  do not
alter the exterior  appearance of the Building,  are not of a structural nature,
do not require excessive removal expenses and are not otherwise prohibited under
the Lease  (collectively  called  "Alterations").  Any Alterations  installed by
Tenant in the Premises after  commencement  of this Lease shall be in compliance
with all laws and regulations,  including without  limitation,  the rules of the
Americans with Disabilities Act and shall be at Tenant's sole cost and expense.

         SECTION 7.2 INSTALLATION OF ALTERATIONS.  Any Alterations  installed by
Tenant  during  the Term  shall  be done in  strict  compliance  with all of the
following:

         (a) No such work shall proceed without Landlord's prior approval of (i)
Tenant's  contractor(s);  (ii)  certificates  of  insurance  from a  company  or
companies  approved by Landlord,  furnished to Landlord by Tenant's  contractor,
for combined single limit bodily injury and property damage  insurance  covering
comprehensive general liability and automobile liability,  in an amount not less
than One  Million  Dollars  ($1,000,000)  per  occurrence  and  endorsed to show
Landlord as an  additional  named  insured,  and for  workers'  compensation  as
required by law,  endorsed to show a waiver of subrogation by the insurer to any
claims Tenant's contractor may have against Landlord (provided, however, nothing
in this Section 7.2 (a) shall release Tenant of its other insurance  obligations
hereunder); and (iii) detailed plans and specifications for such work;

         (b) All such work shall be done in a first-class workmanlike manner and
in conformity  with a valid building permit and/or all other permits or licenses
when and where  required,  copies of which shall be furnished to Landlord before
the work is commenced, and any work not acceptable to any governmental authority
or agency having or exercising  jurisdiction  over such work, or not  reasonably
satisfactory to Landlord,  shall be promptly  replaced and corrected at Tenant's
expense.  Landlord's  approval  or consent to any such work shall not impose any
liability  upon  Landlord.  No work shall proceed until and unless  Landlord has
received at least ten (10) days' notice that such work is to commence;

         (c) Tenant shall  immediately  reimburse  Landlord  for any  reasonable
expense   incurred  by  Landlord  in  reviewing  and  approving  the  plans  and
specifications  for such work or by reason of any faulty  work done by Tenant or
Tenant's  contractors,  or by reason of delays caused by such work, or by reason
of inadequate cleanup;

         (d)  Tenant  or its  contractors  will in no event be  allowed  to make
plumbing, mechanical, or electrical improvements to the Premises which adversely
affect the Building or any structural modification to the Building without first
obtaining  Landlord's  consent,  which  Landlord  can  withhold  in its sole and
absolute discretion; and


                                       10
<PAGE>


         (e) All work by Tenant shall be scheduled through Landlord and shall be
diligently and continuously  pursued from the date of its  commencement  through
its completion.

         SECTION 7.3 TENANT  IMPROVEMENTS;  ALTERATIONS  -  TREATMENT  AT END OF
LEASE. All interior improvements defined in Exhibit "C" as "Tenant Improvements"
and  Alterations  (as such term is defined in Section 7.1 herein) made by or for
Tenant, whether temporary or permanent in character,  made either by Landlord or
Tenant,  shall be Landlord's  property,  and shall be surrendered to Landlord in
good condition  upon  expiration of the Term or termination of the Lease without
compensation  to Tenant;  provided  however,  that at the  election of Landlord,
exercisable by notice to Tenant at the time of their installation, Tenant shall,
at Tenant's sole expense,  prior to the expiration of the Term,  remove from the
Premises  all  Alterations  (or that portion of the  Alterations  required to be
removed  by  Landlord)  and repair  all  damage to the  Premises  caused by such
removal. All moveable furniture,  trade fixtures,  and equipment not attached to
the Building or the Premises, shall be completely removed by Tenant prior to the
expiration of the Term;  provided  however,  that Tenant shall repair all damage
caused by such removal prior to the expiration of the Term and provided however,
that any furniture, fixtures or equipment not so removed by Tenant shall, at the
option of Landlord,  automatically become the property of Landlord.  Thereafter,
Landlord may retain or dispose in any manner of said furniture,  fixtures and/or
equipment not so removed, without liability to Tenant.

ARTICLE 8 - TENANT'S REPAIRS

         Tenant shall,  at Tenant's sole cost and expense,  keep the Premises in
good  condition and repair at all times during the Term.  All damage,  injury or
breakage to any part or portion of the  Premises or the  Property  caused by the
willful or negligent act or omission of Tenant or Tenant's agents,  contractors,
licensees,   directors,  officers,  partners,  trustees,  visitors  or  invitees
(collectively,  "Tenant's  Employees")  shall be promptly repaired by Tenant, at
Tenant's  sole cost and expense,  to the  satisfaction  of  Landlord;  provided,
however, that Tenant shall be entitled to receive reimbursement for such expense
to the extent that the cost of any such repair is covered by insurance  obtained
by  Landlord  as part of  Operating  Expenses  and is  related  to damage to the
Property rather than expenses.  Upon forty-eight (48) hours prior written notice
from  Landlord to Tenant,  Landlord  may make any repairs  which are not made by
Tenant within a reasonable  amount of time (except in the case of emergency when
such repairs can be made  immediately),  and charge  Tenant for the cost of such
repairs.  Except as  otherwise  provide in Exhibit  "C",  Tenant shall be solely
responsible  for  the  design  and  function  of  all  Tenant  Improvements  and
Alterations.  Tenant waives all rights to make repairs to the Premises or to the
Property at the expense of Landlord,  or to deduct the cost of such repairs from
any payment owed to Landlord under the Lease.

ARTICLE 9 - LIENS BY TENANT

         Tenant  shall at all times  keep the  Premises,  the  Building  and the
Property  free from any liens  arising out of any work  performed  or  allegedly
performed, materials furnished or allegedly furnished or obligations incurred by
or for Tenant; provided that, if Tenant desires to contest a lien, Tenant shall,
within sixty (60) days after the receipt of notice of the filing of such a lien,
cause such lien to be released of record by payment,  bond,  order of a court of
competent jurisdiction,  or otherwise.  Tenant shall hold Landlord harmless from
any  reasonable  costs or  expenses,  or liability  resulting  from such claims,
including,  without  limitation,  reasonable  attorney's fees.  Tenant agrees to
indemnify  and hold  Landlord  harmless  from and against any and all claims for
mechanics',  materialmen's  or other liens in connection  with any  Alterations,
repairs, or any work performed,  materials furnished or obligations  incurred by
or for Tenant. Landlord reserves the right to enter the Premises for the purpose
of posting  such  notices of  non-responsibility  as may be permitted by law, or
desired by Landlord.

         Notwithstanding the foregoing,  Tenant shall have the right at any time
to grant a  security  interest  in any  goods  and  property  of every  type and
description owned by Tenant, and installed or kept on the Premises to the extent
not installed by Landlord as part of the Landlord  Tenant  Improvement  (defined
below). Landlord hereby consents to any such security interest and disclaims any
interest of any kind in any goods and property installed or kept on the Premises
to the  extent  not  installed  by  Landlord  as  part  of the  Landlord  Tenant
Improvement, Landlord agrees that it will within ten (10) days after any written
request by Tenant confirm the foregoing consent and disclaimer in writing,  in a
form reasonably acceptable to Landlord.

ARTICLE 10 - LANDLORD'S REPAIRS

         SECTION  10.1  SCOPE  OF   LANDLORD'S   REPAIRS.   Landlord   shall  be
responsible,  at its sole cost and expense,  subject to Tenant's  obligation  to
reimburse, as specifically provided in the Lease, for maintaining, repairing and
replacing  the  structural  elements  and the  public  and  common  areas of the
Building as the


                                       11
<PAGE>


same may exist  from time to time,  shall be  responsible,  at its sole cost and
expense,  subject to Tenant's obligation to reimburse,  as specifically provided
in the Lease, for maintaining, repairing and replacing

         Landlord shall promptly  commence and diligently  pursue the completion
of any repairs or replacements  required  hereunder,  but in no event later than
five (5)  business  days after  receipt of written  notice from Tenant that such
repairs or replacements  are necessary.  If Landlord fails to promptly  commence
and diligently pursue the completion of any repairs or replacements necessary to
protect the  Premises or keep the  Premises in a neat,  clean,  safe and orderly
condition,  Tenant may,  after ten (10) business days  following the delivery of
written notice to Landlord,  commence such repairs or  replacements,  and demand
payment therefor by delivering a notice to Landlord,  which notice shall contain
a description of the work performed and a copy of all invoices and bills related
thereto.  Landlord shall reimburse  Tenant for reasonable  costs and expenses of
any such necessary  repairs or replacements  within ten (10) business days after
written  demand  therefor.  In the event  Landlords  obligations  to maintain or
repair relate to the heating, air conditioning, ventilation, elevator, plumbing,
electrical systems, telephone systems and/or utilities services of the Premises,
the  Building  or the  Property,  Tenant  shall  further  be  entitled  to  such
additional remedies as provided in Section 11.3 below.

         SECTION 10.2  LANDLORD'S  RIGHT OF ENTRY TO MAKE REPAIRS.  Landlord and
Landlord's  Employees  (as defined in Section  13.1 of the Lease) shall have the
right to enter the  Premises at all  reasonable  times for the purpose of making
any  alterations,  additions,  improvements  or repairs to the  Premises  or the
Property as Landlord  may deem  necessary  or  desirable,  without  liability to
Tenant, provided, however, that Landlord shall at all times take such actions in
such a manner as to minimize to the extent reasonably  possible any interference
with Tenant's conduct of its business.  Landlord shall give at least forty-eight
(48)  hours  notice to Tenant of  Landlord's  intent to enter the  Premises  and
effect  repairs,  except,  however in an emergency  situation,  in which case no
prior notice shall be required.

ARTICLE 11 - BUILDING SERVICES

         SECTION 11.1 STANDARD BUILDING SERVICES.  Subject to the performance in
all material respects by Tenant of all of Tenant's  obligations under the Lease,
Landlord  shall  furnish the Premises  with the standard  building  services and
utilities as set forth in the attached Exhibit "E."

         SECTION 11.2 ADDITIONAL  SERVICES.  Tenant agrees to immediately pay on
demand all reasonable  charges imposed by the Landlord from time to time for all
building services and utilities supplied to or used by Tenant in excess of or in
addition to those standard building services and utilities which Landlord agrees
to provide to Tenant in accordance  with Exhibit "E" (said excess and additional
building  services  and  utilities  are referred to as  "Additional  Services").
Landlord may at any time cause a switch and/or  metering  system to be installed
at Tenant's expense (which expense Tenant shall pay within ten (10) working days
of receipt of an invoice from  Landlord  covering the  installment  cost of such
switch or metering system) to measure the amount of building services, utilities
and/or Additional Services consumed by Tenant or used in the Premises.

         SECTION 11.3  LANDLORD'S  RIGHT TO CEASE PROVIDING  SERVICES.  Landlord
reserves the right in in its reasonable discretion to reduce, interrupt or cease
service of the  heating,  air  conditioning,  ventilation,  elevator,  plumbing,
electrical systems, telephone systems and/or utilities services of the Premises,
the Building or the Property, for any or all of the following reasons or causes:

         (a) any accident,  emergency,  governmental regulation,  or Act of God,
including,  but not  limited to, any cause set forth in Article 27 of the Lease;
or

         (b) the making of any repairs,  additions,  alterations or improvements
to the Premises or the Property  until said repairs,  additions,  alterations or
improvements  shall have been  completed  provided that Landlord  shall promptly
commence and diligently pursue to completion such actions.

         No such  interruption,  reduction  or  cessation  of any such  building
services or utilities  shall  constitute an eviction or  disturbance of Tenant's
use or  possession  of the Premises or  Property,  or an ejection or eviction of
Tenant from the Premises, or a breach by Landlord of any of its obligations,  or
render  Landlord  liable  for any  damages,  including  but not  limited  to any
damages,  compensation  or claims arising from any  interruption or cessation of
Tenant's business,  or entitle Tenant to be relieved from any of its obligations
under the Lease,  or result in any  abatement of Rent.  In the event of any such
interruption,  reduction or cessation,  Landlord shall promptly commence and use
reasonable  diligence  to restore  such  service  where it is within  Landlord's
reasonable  control to do so. It is  understood  and agreed  that  Landlord  and
Tenant have entered into this Lease on the express  understanding  and agreement
that Landlord  shall not have any liability to Tenant  whatsoever as a result of
Landlord's  inability to furnish any of the utilities or services required to be
furnished by Landlord hereunder,  whether resulting from breakdown, removal


                                       12
<PAGE>


from service for maintenance,  repairs, or any of the items set forth in Article
27; provided, however, that if such failure or inability is the direct result of
Landlord's  negligence or willful  misconduct  or if Landlord is not  proceeding
diligently  to  correct  such  failure  or  inability,  and  due  to  Landlord's
negligence, willful misconduct, or failure to proceed diligently to correct such
failure or  inability,  any  portion of the  Premises  is  rendered  unusable or
inaccessible by Tenant for a continuous period of five (5) business days, Tenant
shall be entitled to an abatement of the Rent (based on a square foot  analysis)
with respect to such  portion of the  Premises  for the period  beginning on the
sixth  (6th)  business  day that such  portion of the  Premises  is  unusable or
inaccessible  and  continuing  until the use or access  of such  portion  of the
Premises is restored to Tenant.

ARTICLE 12 - ASSIGNMENT AND SUBLETTING

         SECTION  12.1  RIGHT TO ASSIGN  AND  SUBLEASE.  This  Article  12 is an
economic  provision,  like Rent,  and Landlord's  right to share in profits,  is
granted  by Tenant to  Landlord  in  consideration  of  certain  other  economic
concessions  granted by Landlord to Tenant.  Tenant may  voluntarily  assign its
interest in this Lease or in the  Premises,  or sublease  all or any part of the
Premises,  or allow any other  person or entity to occupy or use all or any part
of the Premises,  upon first obtaining  Landlord's prior consent,  which consent
shall not be  unreasonably  withheld,  conditioned or delayed,  but only if such
assignment  or sublease  does not conflict with or result in a breach of Section
6.1 and if such proposed assignee or sublessee of Tenant's  proposed  assignment
or sublease is not:

         (a) a governmental entity;

         (b) a person with whom  Landlord has  negotiated  with for space in the
Building  during the twelve  (12) month  period  ending  with the date  Landlord
receives notice of such assignment, encumbrance or subletting; or

         (c) a present Tenant in the Building.

         Any  assignment,  encumbrance  or  sublease  without  Landlord's  prior
consent  shall be  voidable,  at  Landlord's  election,  and shall  constitute a
default. No consent to an assignment,  encumbrance, or sublease shall constitute
a further waiver of the provisions of this Article 12.

         SECTION  12.2  PROCEDURE  FOR   ASSIGNMENT  AND  SUBLEASE/   LANDLORD'S
RECAPTURE RIGHTS.  Tenant shall advise Landlord by notice of (a) Tenant's intent
to assign,  encumber,  or  sublease  this  Lease,  (b) the name of the  proposed
assignee or sublessee,  and evidence  reasonably  satisfactory  to Landlord that
such proposed  assignee or sublessee is comparable  in  reputation,  stature and
financial  condition to the other tenants then leasing  comparable  space in the
Building,  and (c) the terms of the proposed assignment or subletting.  Landlord
shall,  within ten (10) days of the later of receipt of such  notice and receipt
of any  additional  information  requested by Landlord  concerning  the proposed
assignee's or sublessee's financial responsibility, elect one of the following:

         (i) Consent to such proposed assignment, encumbrance or sublease; or

         (ii) Refuse such consent, which refusal shall be on reasonable grounds.

         SECTION 12.3 CONDITIONS  REGARDING  CONSENT TO SUBLEASE AND ASSIGNMENT.
As a condition for obtaining  Landlord's consent to any assignment,  encumbrance
or sublease, if Landlord so requests,  Tenant shall require that the assignee or
sublessee remit directly to Landlord on a monthly basis,  all Rent due to Tenant
by said  assignee or sublessee.  In the event that Landlord  shall consent to an
assignment or sublease under the provisions of this Article 12, Tenant shall pay
Landlord's  reasonable  processing  costs and attorneys' fees incurred in giving
such consent, not to exceed $750.00. Notwithstanding any permitted assignment or
subletting,  Tenant  shall at all times  remain  directly,  primarily  and fully
responsible  and liable for all payments  owed by Tenant under the Lease and for
compliance with all obligations under the terms, provisions and covenants of the
Lease. If for any proposed assignment or sublease, Tenant receives Rent or other
consideration,  either initially or over the term of the assignment or sublease,
in excess of the Rent required by this Lease, or, in the case of the sublease of
a portion  of the  Premises,  in excess of such Rent  fairly  allocable  to such
portion, after appropriate  adjustments to assure that all other payments called
for hereunder are taken into account, Tenant shall pay to Landlord as additional
Rent,  fifty  percent  (50%) of the excess of each such payment of Rent or other
consideration  received by Tenant within five (5) days of its receipt or, in the
event the sublessee or assignee makes payment directly to the Landlord, Landlord
shall retain fifty percent (50%) of such excess.


                                       13
<PAGE>


         SECTION   12.4   AFFILIATED    COMPANIES/RESTRUCTURING    OF   BUSINESS
ORGANIZATION.  Occupancy  of all or  part of the  Premises  by a  subsidiary  or
affiliated companies of Tenant ( a "Permitted  Assignee") shall not be deemed an
assignment or subletting  provided that such subsidiary or affiliated  companies
were not formed as a subterfuge  to avoid the  obligation of this Article 12 and
Tenant  owns  more  than a  fifty-percent  (50%)  interest  if  such  entity  is
controlled by Tenant.  If Tenant is a corporation,  unincorporated  association,
trust or general or limited partnership, then the sale, assignment,  transfer or
hypothecation of any shares,  partnership  interest, or other ownership interest
of such entity which from time to time in the  aggregate  exceeds  fifty-percent
(50%) of the  total  outstanding  shares,  partnership  interests  or  ownership
interests of such entity or which effects a change in the  management or control
of Tenant, or the dissolution, merger, consolidation, or other reorganization of
such entity,  or the sale,  assignment,  transfer or  hypothecation of more than
forty-percent  (40%) of the value of the assets of such entity,  shall be deemed
an assignment subject to the provisions of this Article 12.

         SECTION 12.5 LANDLORD'S RIGHT TO ASSIGN.  Landlord shall have the right
to sell,  encumber,  convey,  transfer,  and/or  assign  any of its  rights  and
obligations under the Lease.

ARTICLE 13 - INDEMNIFICATION; INSURANCE

         SECTION  13.1  INDEMNIFICATION.  Tenant  shall at its  expense  defend,
indemnify,  and hold Landlord and  Landlord's  agents,  contractors,  licensees,
employees,  directors,  officers,  partners, trustees and invitees (collectively
"Landlord's  Employees")  harmless from and against any and all claims,  arising
out of or in connection  with Tenant's use of the Premises or the Property,  the
conduct of Tenant's business,  any activity,  work or things done,  permitted or
allowed by Tenant in or about the Premises or the Property, Tenant's or Tenant's
Employees' nonobservance or nonperformance of any statute, law, ordinance,  rule
or  regulation,  or any negligence or willful act or failure to act of Tenant or
Tenant's Employees.

         Landlord shall at its expense  defend,  indemnify,  and hold Tenant and
Tenant's  agents,  contractors,   licensees,   employees,  directors,  officers,
partners,  trustees and invitees  (collectively  "Tenant's  Employees") harmless
from and  against  any and all  claims,  arising  out of or in  connection  with
Landlord's ownership of the Property,  the conduct of Landlord's  business,  any
activity,  work or things done, permitted or allowed by Landlord in or about the
Property, Landlord's or Landlord's Employees' nonobservance or nonperformance of
any statute,  law, ordinance,  rule or regulation,  or any negligence or willful
act or failure to act of Landlord or Landlord's Employees.

         SECTION  13.2  INSURANCE.  Tenant  shall have the  following  insurance
obligations:

         (a) LIABILITY  INSURANCE.  Tenant shall obtain and keep in full force a
policy  of  comprehensive   general  liability  and  property  damage  insurance
(including  automobile,  personal injury,  broad form contractual  liability and
broad form  property  damage)  under  which  Tenant is named as the  insured and
Landlord,  Landlord's  agent and any lessors and  mortgagees  (whose names shall
have been furnished to Tenant) are named as additional  insureds and under which
the insurer  agrees to indemnify and hold the Landlord,  its managing  agent and
all  applicable  lessors  and  mortgagees  harmless  from and  against all cost,
expense and/or liability resulting from bodily injury or property damage arising
out  of  or  relating  to  Tenant's  business   operations,   conduct,   assumed
liabilities,  or use or  occupancy  of  the  Premises.  The  minimum  limits  of
liability  shall be a combined  single limit with respect to each  occurrence of
not less than One Million Dollars ($1,000,000). The policy shall contain a cross
liability  endorsement and shall be primary coverage for Tenant and Landlord for
any liability arising out of Tenant's and Tenant's  Employees' use, occupancy or
maintenance of the Premises and all areas  appurtenant  thereto.  Such insurance
shall provide that it is primary insurance and not "excess over" or contributory
with any other  valid,  existing  and  applicable  insurance  in force for or on
behalf of Landlord.

         (b) TENANT'S PROPERTY  INSURANCE.  Tenant at its cost shall maintain on
all of its Personal  Property and Alterations  in, on, or about the Premises,  a
policy of standard fire and extended coverage insurance,  with theft,  vandalism
and malicious mischief endorsements,  to the extent of at least full replacement
value without any deduction for depreciation.  The proceeds from any such policy
shall be used by Tenant for the  replacement  of such  personal  property or the
restoration  of  such  Alterations.   The  "full   replacement   value"  of  the
improvements  to be insured  under this  Article 13 shall be  determined  by the
company  issuing  the  insurance  policy  at the time the  policy  is  initially
obtained.

         (c) WORKER'S COMPENSATION.  Tenant shall maintain Worker's Compensation
and Employer's Liability insurance as required by law.


                                       14
<PAGE>


         (d) BUSINESS  INTERRUPTION.  Tenant shall  maintain  loss of income and
business  interruption  insurance in such amounts as will  reimburse  Tenant for
direct or indirect loss of earnings  attributable to all perils commonly insured
(except  earthquake and flood)  against by prudent  tenants or  attributable  to
prevention  of access to the  Premises  or to the  Building  as a result of such
perils  but in no event in an amount  less than the Rent  hereunder  for six (6)
months.

         (e) INSURANCE  CRITERIA.  All the insurance  required  under this Lease
shall:

                  (i) Be issued by insurance companies authorized to do business
         in the State of California, with a financial rating of at least an A:IX
         status as rated in the most recent edition of Best's Insurance Reports;

                  (ii) Contain an endorsement requiring thirty (30) days written
         notice from the  insurance  company to both  parties and to  Landlord's
         lender before cancellation or change in the coverage,  scope, or amount
         of any policy; and

                  (iii) With respect to property loss or damage by fire or other
         casualty,  a waiver of  subrogation  must be  obtained,  as required by
         Section 13.4.

         (f) EVIDENCE OF COVERAGE. A duplicate original policy, or a certificate
of the policy with the actual policy attached, together with evidence of payment
of premiums,  shall be deposited with Landlord on the  Commencement  Date and on
renewal of the policy,  not less than twenty (20) days before  expiration of the
term of the policy.

         Landlord shall obtain and keep in full force a policy of  comprehensive
general liability and property damage insurance (including automobile,  personal
injury,  broad form contractual  liability and broad form property damage) under
which Landlord is named as the insured. The minimum limits of liability shall be
a combined  single  limit with respect to each  occurrence  of not less than One
Million Dollars ($1,000,000).

         SECTION 13.3  ASSUMPTION  OF RISK.  Tenant,  as a material  part of the
consideration  to  Landlord,  hereby  assumes  all risk of  damage  to  Tenant's
Personal  Property or injury to persons,  in, upon or about the Premises  and/or
the  Property  from any  cause  (except  for  damage  or  injury  caused  by the
negligence of Landlord or Landlord's Employees, subcontractors, representatives,
agents or invitees) and Tenant hereby waives all such claims  against  Landlord.
Landlord and Landlord's  Employees  shall not be liable for any damage to any of
Tenant's Personal Property  entrusted to Landlord or Landlord's  Employees,  nor
for loss or damage to any of Tenant's  Personal  Property by theft or otherwise,
except  for loss or  damage by or caused by the  willful  act or  negligence  of
Landlord or  Landlord's  Employees . Tenant shall give prompt notice to Landlord
in case of fire or accidents in the Premises or in the Building.

         SECTION 13.4 ALLOCATION OF INSURED RISKS AND SUBROGATION.  Landlord and
Tenant  release  each other from any claims and demands of  whatever  nature for
damage,  loss or injury to the Premises  and/or the Building,  or to the other's
property in, on or about the Premises  and the  Building,  that are caused by or
result  from  risks or  perils  insured  against  under any  insurance  policies
required  by the Lease to be carried by Landlord  and/or  Tenant and in force at
the time of any such  damage,  loss or injury.  Landlord  and Tenant shall cause
each  insurance  policy  obtained by them or either of them to provide  that the
insurance  company  waives all right of recovery by way of  subrogation  against
either  Landlord or Tenant in connection  with any damage covered by any policy.
Neither  Landlord nor Tenant shall be liable to the other for any damage  caused
by fire or any of the risks insured against under any insurance  policy required
by the  Lease.  If an  insurance  policy  cannot  be  obtained  with a waiver of
subrogation,  or is  obtainable  only by the  payment of an  additional  premium
charge above that charged by insurance companies issuing policies without waiver
of subrogation,  the party  undertaking to obtain the insurance shall notify the
other  party of this fact.  The other party shall have a period of ten (10) days
after  receiving the notice either to place the insurance with a company that is
reasonably  satisfactory  to the other  party and that will carry the  insurance
with a waiver of subrogation,  or to agree to pay the additional premium if such
a policy is obtainable at additional  cost. If the insurance  cannot be obtained
or the party in whose favor a waiver of  subrogation  is desired  refuses to pay
the additional premium charged, the other party is relieved of the obligation to
obtain  a  waiver  of  subrogation  with  respect  to the  particular  insurance
involved.

ARTICLE 14 - DAMAGE OR DESTRUCTION

         SECTION  14.1 LOSS COVERED BY  INSURANCE.  If, at any time prior to the
expiration  or  termination  of this Lease,  the Premises or the Building or the
Property is wholly or partially damaged or destroyed by a casualty,  the loss to
Landlord from which is fully covered (except for the normal deductible) or would
have been fully covered by insurance  required to be maintained  under the Lease
by Landlord or for  Landlord's


                                       15
<PAGE>


benefit,  which casualty renders the Premises totally or partially  inaccessible
or unusable by Tenant in the ordinary conduct of Tenant's business,  then within
thirty (30) days of notice to Landlord of such damage or  destruction,  Landlord
shall provide Tenant with notice of its  determination  of whether the damage or
destruction can be repaired within three (3) months following the date of notice
to  Landlord of such  damage or  destruction  without the payment of overtime or
other premium.:

         (a) REPAIRS WHICH CAN BE COMPLETED WITHIN THREE (3) MONTHS. If all such
repairs to the Building or Premises  can, in Landlord's  judgment,  be completed
within three (3) months  following the date of notice to Landlord of such damage
or destruction without the payment of overtime or other premium, Landlord shall,
at Landlord's  expense,  promptly  commence and diligently  pursue to repair the
same and this Lease  shall  remain in full force and effect and a  proportionate
reduction of Rental shall be allowed  Tenant for such portion of the Premises as
shall be rendered  inaccessible or unusable to Tenant,  and which is not used by
Tenant,  during the period of time that such portion is unusable or inaccessible
and not used by Tenant.  If such  repairs  are not  completed  within the period
stated in this Section 14.1 (a),  Tenant may,  within thirty (30) days following
the end of such period (but prior to the completion of such repairs),  terminate
this Lease subject to the conditions set forth in Section 14.1 (b) hereinbelow.

         (b) REPAIRS WHICH CANNOT BE COMPLETED  WITHIN THREE (3) MONTHS.  If all
such repairs to the Building and Premises  cannot,  in Landlord's  judgment,  be
completed  within three (3) months  following  the date of notice to Landlord of
such damage or  destruction  without the payment of overtime or other  premiums,
then either Landlord or Tenant may, by written notice to the other no later than
ninety (90) days after the  occurrence  of such damage or  destruction  elect to
terminate  this  Lease  as of the  date  of the  occurrence  of such  damage  or
destruction.  Tenant's election to terminate this Lease pursuant to Section 14.1
(a) and this  Section 14.1 (b) is also  subject to the  conditions:  (i) that no
Event of Default under the Lease (subject to notice and cure periods provided in
this Lease) has  occurred at any time during the Term;  and (ii) that Tenant pay
to Landlord concurrently with delivery of the termination notice an amount equal
to:

         A. Sixty  Thousand and 00/100  Dollars  ($60,000)  if Tenant  elects to
terminate during months one (1) through twelve (12) months of the Term;

         B. Forty-Five Thousand and 00/100 Dollars ($45,000) if Tenant elects to
terminate during months thirteen (13) and twenty-four (24) of the Term;

         C. Thirty  Thousand and 00/100  Dollars  ($30,000) if Tenant  elects to
terminate during months twenty-five (25) through thirty-six (36) of the Term;

         D. Fifteen  Thousand and 00/100  Dollars  ($15,000) if Tenant elects to
terminate during months thirty-seven (37) through fifty-four (54) of the Term.

         If neither  Landlord or Tenant elects to terminate  this Lease pursuant
to the  provisions of this Section 14.1 (b) Landlord shall repair such damage or
destruction at Landlord's expense,  and in such event, this Lease shall continue
in full  force and effect but the  Rental  shall be  proportionately  reduced as
hereinabove provided in Section 14.1(a).

         SECTION  14.2 LOSS NOT COVERED BY  INSURANCE.  If, at any time prior to
the expiration or termination of this Lease, the Premises or the Building or the
Property is totally or partially damaged or destroyed from a casualty,  the loss
(except  for the  deductible)  to  Landlord  from which is not fully  covered by
insurance  require3d  under  this  Lease to be  maintained  by  Landlord  or for
Landlord's benefit,  which damage renders the Premises  inaccessible or unusable
to Tenant in the ordinary  course of its business,  Landlord may, at its option,
upon written  notice to Tenant  within thirty (30) days after notice to Landlord
of the occurrence of such damage or destruction, elect to repair or restore such
damage or destruction,  or Landlord may elect to terminate this Lease.  Landlord
shall provide  Tenant with notice of its  determination  within thirty (30) days
after  notice to Landlord of the  occurrence  of such damage or  destruction  of
whether in Landlord's  judgment the damage or destruction can be repaired within
three (3) months of such damage or  destruction  without the payment of overtime
or other premium. If such damage or destruction can be repaired within three (3)
months of such damage without the payment of overtime or other  premium,  and if
Landlord  elects to repair or restore  such  damage or  destruction,  this Lease
shall continue in full force and effect but the Rental shall be  proportionately
reduced as provided in Section 14.1(a).  If Landlord does not elect by notice to
Tenant to repair such damage this Lease shall terminate. If the damage is not or
cannot, in Landlord's  judgment,  be completed within three (3) months following
the date of  notice  to  Landlord  of such  damage or  destruction,  Tenant  may
terminate this Lease provided  Tenant  satisfies all of the conditions set forth
in Sections 14.1 (a) and/or 14.1 (b) hereinabove.


                                       16
<PAGE>


         SECTION 14.3 DESTRUCTION DURING FINAL YEAR. Notwithstanding anything to
the contrary contained in Sections 14.1 or 14.2, if the Premises or the Building
or the Property are wholly or  partially  damaged or destroyed  within the final
twelve (12) months of the Term of this  Lease,  and no renewal  rights have been
exercised prior to such damage or destruction, and if as a result of such damage
or destruction Tenant is denied access or use of the Premises for the conduct of
its business  operations  for a period of seven (7)  consecutive  business days,
Landlord or Tenant may, at its  option,  by giving the other  written  notice no
later than sixty (60) days after the  occurrence of such damage or  destruction,
elect to terminate the Lease.

         SECTION  14.4  DESTRUCTION  OF  TENANT'S  PERSONAL   PROPERTY,   TENANT
IMPROVEMENTS OR PROPERTY OF TENANT'S EMPLOYEES. In the event of any damage to or
destruction  of  the  Premises  or  the  Building  or  the  Property,  under  no
circumstances  shall Landlord be required to repair any injury, or damage to, or
make any repairs to or replacements of, Tenant's Personal Property.  However, as
part of  Operating  Expenses,  Landlord  shall  cause to be  insured  the Tenant
Improvements and Alterations  which do not consist of Tenant's Personal Property
and shall cause such Tenant  Improvements  and  Alterations  to be repaired  and
restored at  Landlord's  sole  expense  except  that  Tenant  shall pay for such
portion   which  is  covered  by  the   deductible.   Landlord   shall  have  no
responsibility  for any  contents  placed or kept in or on the  Premises  or the
Building or the Property by Tenant or Tenant's Employees.

         SECTION 14.5 EXCLUSIVE  REMEDY.  This Article 14 shall be Tenant's sole
and exclusive  remedy in the event of damage or  destruction  to the Premises or
the Building or the Property, and Tenant, as a material inducement to Landlord's
entering into this Lease,  irrevocably waives and releases Tenant's rights under
California Civil Code Sections 1932(2) and 1933(4). No damages,  compensation or
claim shall be payable by Landlord for any  inconvenience,  any  interruption or
cessation of Tenant's business, or any annoyance,  arising from any damage to or
destruction  of all or  any  portion  of the  Premises  or the  Building  or the
Property.

ARTICLE 15 - EMINENT DOMAIN

         SECTION 15.1 PERMANENT  TAKING - WHEN LEASE CAN BE  TERMINATED.  If the
whole of the  Premises,  or so much of the  Premises  as to render  the  balance
unusable by Tenant,  shall be taken under the power of eminent domain, the Lease
shall  automatically  terminate  as of  the  date  of  final  judgment  in  such
condemnation, or as of the date possession is taken by the condemning authority,
whichever  is earlier.  A sale by Landlord  under threat of  condemnation  shall
constitute  a  "taking"  for the  purpose of this  Article  15. No award for any
partial or entire taking shall be apportioned and Tenant assigns to Landlord any
award which may be made in such taking or condemnation, together with all rights
of  Tenant  to  such  award,  including,   without  limitation,   any  award  or
compensation for the value of all or any part of the leasehold estate;  provided
that nothing  contained in this Article 15 shall be deemed to give  Landlord any
interest in or to require  Tenant to assign to Landlord any award made to Tenant
for (a) the taking of Tenant's  personal  property,  or (b)  interruption  of or
damage to Tenant's  business,  or (c)  Tenant's  unamortized  cost of the Tenant
Improvements to the extent paid for by Tenant.

         SECTION 15.2 PERMANENT TAKING - WHEN LEASE CANNOT BE TERMINATED. In the
event of a partial  taking which does not result in a  termination  of the Lease
under Section 15.1, Rental shall be proportionately reduced based on the portion
of the Premises  rendered  unusable,  and Landlord shall restore the Premises or
the  Building  to the  extent  of  available  condemnation  proceeds;  provided,
however,  that if the remaining  usable  portion of the Premises is, in Tenant's
reasonable  opinion,  insufficient for the conduct of Tenant's business,  Tenant
may terminate the Lease as of the date of final  judgment in such  condemnation,
or as of the date possession is taken by the condemning authority,  whichever is
earlier.

         SECTION 15.3 TEMPORARY  TAKING.  No temporary taking of the Premises or
any part of the Premises  and/or of Tenant's  rights to the Premises  under this
Lease shall  terminate  this Lease;  however,  Rental  shall be  proportionately
reduced based on the portion of the Premises rendered  unusable.  Any award made
to Tenant by reason of such temporary taking shall belong entirely to Tenant.

         SECTION 15.4 EXCLUSIVE  REMEDY.  This Article 15 shall be Tenant's sole
and  exclusive  remedy in the event of a taking or  condemnation.  Tenant hereby
waives the benefit of California Code of Civil Procedure Section 1265.130.

         SECTION 15.5 RELEASE UPON  TERMINATION.  Upon  termination of the Lease
pursuant to this Article 15,  Tenant and  Landlord  hereby agree to release each
other from any and all  obligations  and  liabilities  with respect to the Lease
except such  obligations  and  liabilities  which arise or accrue  prior to such
termination.


                                       17
<PAGE>


ARTICLE 16 - DEFAULTS

         SECTION  16.1  DEFAULT BY  TENANT.  Each of the  following  shall be an
"Event of Default" by Tenant and a material breach of the Lease:

         (a) The  failure  by Tenant to make any  payment of Rental or any other
payment  required to be made by Tenant  hereunder,  as and when due,  where such
failure  shall  continue  for a period of ten (10)  days  after  written  notice
thereof from Landlord to Tenant.

         (b) The  failure  of Tenant  to  observe  or  perform  in all  material
respects any of the  covenants,  conditions  or  provisions  of this Lease to be
observed or  performed by Tenant,  other than  described  in  sub-paragraph  (a)
above,  where such failure shall continue for a period of thirty (30) days after
written notice thereof from Landlord to Tenant;  provided,  however, that if the
nature of the  Tenant's  default  is such that  more than  thirty  (30) days are
reasonably  required  for its  cure,  then  Tenant  shall not be deemed to be in
default if Tenant  commences  such cure  within  said thirty (30) day period and
thereafter diligently pursues such cure to completion;

         (c) The vacating or abandonment of the Premises by Tenant;

         (d) The making by Tenant of any general  assignment  for the benefit of
creditors;

         (e) The  filing by or  against  Tenant  of a  petition  to have  Tenant
adjudged a bankrupt or a petition for  reorganization  or arrangement  under any
law relating to  bankruptcy  (unless,  in the case of a petition  filed  against
Tenant, the same is dismissed within ninety (90) days);

         (f) The  appointment of a trustee or receiver to take possession of all
or  substantially  all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where possession is not restored to Tenant within ninety
(90) days; or

         (g) The  attachment,  execution  or other  judicial  seizure  of all or
substantially  all of Tenant's  assets  located at the Premises,  or of Tenant's
interest in this Lease,  where such seizure is not discharged within ninety (90)
days.

         SECTION 16.2 DEFAULT BY LANDLORD.  Landlord  shall not be in default in
the  performance  of any  obligation  required to be performed  under this Lease
unless  Landlord has failed to perform such  obligation  within thirty (30) days
after the receipt of notice from Tenant specifying in detail Landlord's  failure
to perform;  provided,  however,  that if the nature of Landlord's obligation is
such that more than  thirty  (30) days are  required  for its  performance,  the
Landlord  shall not be deemed in default if it shall  commence such  performance
within  thirty  (30)  days  and  thereafter   diligently  pursues  the  same  to
completion.  Tenant  shall have no rights as a result of any default by Landlord
until Tenant gives  thirty (30) days' notice to the then current  lender(s)  who
have a recorded  interest  pertaining to the Building,  specifying the nature of
the  default.  Such person shall then have the right to cure such  default,  and
Landlord shall not be deemed in default if such person cures such default within
thirty (30) days after  receipt of notice of the default,  or within such longer
period of time as may  reasonably be necessary to cure the default.  If Landlord
or such person does not cure the  default,  Tenant may  exercise  such rights or
remedies  or shall be  provided  or  permitted  by law to  recover  any  damages
proximately caused by such default.  Notwithstanding anything to the contrary in
the Lease,  Tenant's  remedy for any  breach of the Lease by  Landlord  shall be
limited to an action  for  damages.  Tenant  agrees  that,  in the event that it
becomes  entitled to receive damages from Landlord,  Tenant shall not be allowed
to  recover  from  Landlord  consequential  damages  or damages in excess of the
out-of-pocket  expenditures  incurred  by Tenant  as a result  of a  default  by
Landlord.  In any event,  Landlord's  liability to Tenant for damages  resulting
from  Landlord's  breach of any  provision or  provisions of the Lease shall not
exceed  the value of  Landlord's  equity  interest  in the  Building.  Except as
expressly   provided   otherwise  in  this  Lease,   Tenant  hereby  waives  and
relinquishes any right which Tenant may have to terminate this Lease or withhold
any  payment  owed  by  Tenant  under  the  Lease,  on  account  of any  damage,
condemnation,  destruction  or state of disrepair  of the  Premises  (including,
without limiting the generality of the foregoing,  those rights under California
Civil Code Sections 1932, 1933(4), 1941, 1941.1 and 1942).

ARTICLE 17 - LANDLORD'S REMEDIES AND RIGHTS

         SECTION 17.1  REMEDIES UPON BREACH OF LEASE.  On the  occurrence of any
breach of this Lease by Tenant,  Landlord may, at any time  thereafter,  with or
without  notice or demand and without  limiting  Landlord in the exercise of any
right or remedy which Landlord may have:


                                       18
<PAGE>


                  (a) Terminate Tenant's right to possession of the Premises and
re-enter  the  Premises  by any lawful  means,  in which  case this Lease  shall
terminate.  In such case Tenant shall  immediately  surrender  possession of the
Premises to Landlord; or

                  (b) Maintain Tenant's right to possession of the Premises,  in
which  case this  Lease  shall  continue  in effect  whether  or not  Tenant has
abandoned the Premises.  In such event Landlord shall be entitled to enforce all
Landlord's rights and remedies under this Lease,  including the right to recover
the Rental and additional charges as they become due and Landlord shall have the
right to occupy or re-let the whole or any part of the  Premises for the account
of Tenant; or

                  (c) Pursue  any other  remedy now or  hereafter  available  to
Landlord under the laws or judicial decisions of the state of California; or

                  (d)  Landlord's  exercise of any right or remedy,  whether set
forth herein or provided by law, shall not prevent it from  exercising any other
right or remedy set forth  herein or  provided  by law,  and  Landlord  shall be
entitled,  to the  maximum  extent  permitted  by law,  to avail  itself  of all
remedies provided for herein or under applicable law.

         SECTION 17.2  RE-ENTRY.  If Landlord  re-enters the Premises  under the
provisions of Article  17.1(b),  Landlord shall not be deemed to have terminated
this Lease,  or the  liability of Tenant to pay any Rental or other charges that
are due or thereafter  accruing,  or Tenant's liability for damages under any of
the  provisions  hereof.  In the event of any entry or taking  possession of the
Premises as  aforesaid,  Landlord  shall have in  addition  to its rights  under
Article 17.5, the right, but not the obligation, to remove from the Premises any
personal  property  located  therein  and to  place  it in  storage  at a public
warehouse at the expense and risk of Tenant.

         SECTION 17.3 TERMINATION.  Notwithstanding  any other term or provision
hereof to the contrary,  this Lease shall terminate on the occurrence of any act
which affirms  Landlord's  intention to terminate this Lease as provided in this
Article 17, including the filing of an unlawful  detainer action against Tenant.
On such termination, Landlord's damages for default shall include all reasonable
costs and fees,  including  reasonable  attorneys' fees, incurred by Landlord in
connection with the filing, commencement, pursuing or defending of any action in
any bankruptcy  court or other court with respect to the Lease, the obtaining of
relief from any stay in bankruptcy  restraining  any action to evict Tenant,  or
the pursuing of any action with respect to Landlord's right to possession of the
Property.  All such  damages  suffered  (apart from Rental and other  additional
charges payable  hereunder)  shall  constitute  pecuniary  damages which must be
reimbursed  to  Landlord  prior to  assumption  of the  Lease by  Tenant  or any
successor to Tenant in any bankruptcy or other proceeding.

         SECTION 17.4 LANDLORD'S  DAMAGES.  If Landlord elects to terminate this
Lease and Tenant's  right to possession  of the Premises in accordance  with the
provisions  of this Lease,  Landlord may recover from Tenant as damages,  all of
the following:

                  (a) The  worth at  the time of award of  any unpaid Rental and
other charges which has been earned at the time of such termination; plus

                  (b) The worth at the time of award of the  amount by which the
unpaid Rental and other  charges which would have been earned after  termination
until the time of award  exceeds the amount of such  rental  loss Tenant  proves
Landlord could have reasonably avoided; plus

                  (c) The worth at the time of award of the  amount by which the
unpaid  Rental and other charges which Tenant would have paid for the balance of
the Term after the time of award  exceeds  the amount of such  rental  loss that
Tenant proves Landlord could have reasonably avoided; plus

                  (d) Any other amount necessary to compensate  Landlord for all
the detriment  proximately caused by Tenant's failure to perform its obligations
under this Lease or which in the  ordinary  course of things  would be likely to
result therefrom including without limitation,  any reasonable costs or expenses
incurred by Landlord in (i)  maintaining  or preserving  the Premises after such
default,  (ii)  recovering  possession  of the  Premises,  including  reasonable
attorneys'  fees  therefor,  (iii)  expenses of reletting  the Premises to a new
tenant,   including  necessary  renovations  or  alterations  of  the  Premises,
reasonable attorneys' fees incurred, and leasing commissions incurred (provided,
however,  that such expenses  shall be amortized  over the lease term of the new
tenant and Tenant  shall only  compensate  Landlord for the  amortized  expenses
allocable to the balance of the Term); plus

                  (e) At Landlord's election,  such other amounts in addition to
or in lieu of the foregoing as may be permitted from time to time by the laws of
the State of California.


                                       19
<PAGE>


         As used in  subparagraphs  (a) and (b) above, the "worth at the time of
award" is  computed by  allowing  interest on unpaid  amounts at the rate of ten
percent (10%) per annum.  As used in subparagraph  (c) above,  the "worth at the
time of award" is computed by  discounting  such amount at the discount  rate of
the Federal  Reserve Bank located  nearest to the Building in effect at the time
of award, plus one percent (1%). For purposes of this Article 17, all additional
charges other than Rental,  shall,  for purposes of  calculating  any amount due
under the provisions of subparagraph  (c) above, be computed on the basis of the
average  monthly  amount  of  additional  rent  payable  by  Tenant  during  the
immediately  preceding  thirty-six (36) month period,  except that if it becomes
necessary to compute such charges before such thirty-six (36) months of the term
hereof has expired,  then such additional charges shall be computed on the basis
of the average monthly amount of additional  charges payable during such shorter
period.

         SECTION  17.5  FIXTURES  AND  PERSONAL  PROPERTY.  Subject to rights of
parties granted  security  interests in accordance with Section 9 of this Lease,
in the  event of  Tenant's  default,  all of  Tenant's  merchandise,  furniture,
fixtures,  equipment and other  personal  property shall remain on the Premises,
and during the period of default  Landlord  shall have the right,  with a proper
court order, to take the exclusive possession of such items and to use them free
of charge until all defaults are cured,  or, at  Landlord's  option,  to require
Tenant to forthwith remove such items.

         SECTION 17.6  WAIVER OF REDEMPTION. [Intentionally omitted].

         SECTION 17.7 RIGHT TO PERFORM.  If Tenant fails to perform any covenant
or condition to be  performed by Tenant,  Landlord may perform such  covenant or
condition at its option,  after notice to Tenant. All costs incurred by Landlord
in so performing shall immediately be reimbursed to Landlord by Tenant, together
with  interest at the Interest  Rate.  Any  performance  by Landlord of Tenant's
obligations shall not waive or cure such default.  Landlord may perform Tenant's
defaulted  obligations  at Tenant's sole cost and expense  without notice in the
case of any emergency.  All costs and expenses  incurred by Landlord,  including
reasonable attorneys' fees (whether or not legal proceedings are instituted), in
collecting  Rent or enforcing the obligations of Tenant under the Lease shall be
paid by Tenant to Landlord upon demand.

ARTICLE 18 - ATTORNEYS' FEES

         If either  Landlord or Tenant  commences or engages in, or threatens to
commence or engage in, any action or litigation or arbitration against the other
party  arising  out of or in  connection  with the Lease,  the  Premises  or the
Building or the Property,  including but not limited to, any action for recovery
of any payment owed by either party under the Lease, or to recover possession of
the Premises, or for damages for breach of the Lease, the prevailing party shall
be entitled to have and recover from the losing party reasonable attorneys' fees
and other costs incurred in connection  with the action and in  preparation  for
said action.

ARTICLE 19 - SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE

         SECTION 19.1 OBLIGATIONS OF TENANT. The Lease and the rights granted to
Tenant by the Lease are and shall be subject and subordinate at all times to (a)
all ground or underlying leases affecting all or any part of the Property now or
later existing and all  amendments,  renewals,  modifications,  supplements  and
extensions  of the leases,  and (b) all deeds of trust or mortgages now or later
affecting or  encumbering  all or any part of the Property  and/or any ground or
underlying  leasehold estate;  provided however,  that if Landlord elects at any
time to have  Tenant's  interest in the Lease be or become  superior,  senior or
prior to any such  instrument,  then upon receipt by Tenant of written notice of
such  election,  Tenant shall  immediately  execute all necessary  subordination
instruments or other documents  confirming the  subordination  of such mortgage,
deed of trust,  ground  or  underlying  lease to the  Lease.  In the event  that
Landlord  shall require  Tenant to execute  subordination  instruments  or other
documents  confirming the subordination of such mortgage,  deed of trust, ground
or underlying lease to the Lease more than twice during the Term, Landlord shall
pay Tenant's reasonable  processing costs and attorneys' fees incurred in giving
such subordination not to exceed $500.00.

         SECTION 19.2  LANDLORD'S  RIGHT TO ASSIGN.  Landlord's  interest in the
Lease may be assigned to any mortgagee or trust deed  beneficiary  as additional
security.  Nothing  in this Lease  shall  empower  Tenant to do any act  without
Landlord's prior consent which can, shall or may encumber the title of the owner
of all or any part of the Property.

         SECTION 19.3 ATTORNMENT BY TENANT.  In the event of the cancellation or
termination of any or all ground or underlying  leases affecting all or any part
of the Project in accordance with its terms or by the surrender thereof, whether
voluntary,  involuntary or by operation of law, or by summary proceedings, or in


                                       20
<PAGE>


the  event  of any  foreclosure  of  any or all  mortgages  or  deeds  of  trust
encumbering  all or any  part  of  the  Project  by  trustee's  sale,  voluntary
agreement,  deed in lieu of foreclosure,  or by the commencement of any judicial
action seeking  foreclosure,  Tenant,  at the request of the then Landlord under
the Lease,  shall attorn to and recognize  (a) the ground or underlying  lessor,
under the ground or underlying lease being  terminated or canceled,  and (b) the
beneficiary or purchaser at the foreclosure sale, as Tenant's landlord under the
Lease, and Tenant agrees to execute and deliver at any time upon request of such
ground or underlying lessor,  beneficiary,  purchaser, or their successors,  any
instrument to further evidence such attornment.  Tenant hereby waives its right,
if any,  to elect to  terminate  the  Lease or to  surrender  possession  of the
Premises in the event of any such ground or  underlying  lease  cancellation  or
termination or mortgage or deed of trust foreclosure.

         SECTION 19.4 NON-DISTURBANCE.  Notwithstanding any of the provisions of
this Article 19 to the contrary,  Tenant shall be allowed to occupy the Premises
subject to the  conditions of this Lease,  and this Lease shall remain in effect
until an Event of Default occurs or until Tenant's  rights because of an Eminent
Domain proceeding  pursuant to Article 15 or because of the occurrence of damage
and  destruction  pursuant  to  Article  14.  Landlord  shall  use  commercially
reasonable efforts to obtain a non-disturbance agreement from the current lender
on the Property. Failure of Landlord to obtain a non-disturbance agreement shall
have no effect on the enforceability of this Lease.

         SECTION 19.5  ATTORNEY-IN-FACT. [Intentionally omitted].

ARTICLE 20 - RULES AND REGULATIONS

         Tenant shall faithfully  observe and comply with the Building rules and
regulations ("Rules"), a copy of which is attached to this Lease as Exhibit "D,"
and all  reasonable  modifications  and additions to the Rules from time to time
put into  effect  by  Landlord,  provided,  however,  that no  modifications  or
additions  to the Rules  shall  interfere  with  Tenant's  permitted  use of the
Premises  as set forth in Section  6.1.  Landlord  shall not be  responsible  to
Tenant  for the  nonperformance  of any of the  Rules by any other  occupant  or
tenant of the Property, but Landlord shall make commercially  reasonably efforts
to enforce the Rules with regard to other occupants or tenants of the Project..

ARTICLE 21 - HOLDING OVER

         SECTION 21.1 SURRENDER OF POSSESSION. Tenant shall surrender possession
of the Premises  immediately  upon the  expiration of the Term or termination of
the Lease. If Tenant shall continue to occupy or possess the Premises after such
expiration  or  termination  without  the consent of the  Landlord,  then unless
Landlord and Tenant have otherwise  agreed in writing,  Tenant shall be a tenant
from month-to-month. All the terms, provisions and conditions of the Lease shall
apply  to  this  month-to-month  tenancy  except  those  terms,  provisions  and
conditions  pertaining  to the  Term,  and  except  that  the  Rental  shall  be
immediately  adjusted  upward upon the expiration or termination of the Lease to
equal one hundred  twelve and  one-half  percent  (112.5%) of the Rental for the
Premises  in effect  under this Lease  during the month which  includes  the day
immediately  prior to the date of the  expiration or  termination  of the Lease.
This month-to-month  tenancy may be terminated by Landlord or Tenant upon thirty
(30) days prior notice to the  non-terminating  party.  In the event that Tenant
fails to surrender the Premises upon such termination or expiration, then Tenant
shall  indemnify  and hold  Landlord  harmless  against  all  loss or  liability
resulting  from or arising out of Tenant's  failure to surrender  the  Premises,
including,  but not limited to, any amounts required to be paid to any tenant or
prospective  tenant who was to have occupied the Premises after said termination
or  expiration  and  any  related  reasonable   attorneys'  fees  and  brokerage
commissions.

         SECTION 21.2 PAYMENT OF MONEY AFTER TERMINATION. No payment of money by
Tenant to Landlord after the termination of the Lease by Landlord,  or after the
giving of any notice of  termination  to Tenant by  Landlord  which  Landlord is
entitled to give Tenant under the Lease, shall reinstate, continue or extend the
Term of the Lease or shall  affect any such notice  given to Tenant prior to the
payment of such money,  it being agreed that after the service of such notice or
the  commencement of any suit by Landlord to obtain  possession of the Premises,
Landlord may receive and collect  when due any and all  payments  owed by Tenant
under the Lease, and otherwise  exercise its rights and remedies.  The making of
any such payments by Tenant shall not waive such notice, or in any manner affect
any pending suit or judgment obtained.

ARTICLE 22 - INSPECTIONS AND ACCESS

         Upon  forty-eight  (48) hours prior written notice to Tenant,  Landlord
may enter the  Premises  during  reasonable  business  hours for any  reasonable
purpose.  If Tenant shall not be personally  present to open and permit an entry
into the Premises at any time previously  agreed to by Tenant and when due to an
emergency  such entry by Landlord is  necessary  or  permitted  under the Lease,
Landlord may enter by


                                       21
<PAGE>


means of a master key  without  liability  to Tenant  except for any  failure to
exercise due care for Tenant's  Personal  Property,  and without  affecting  the
Lease.

ARTICLE 23 - NAME OF BUILDING

         Tenant  shall not use any name,  insignia,  or logotype of the Building
for any  purpose.  Tenant may not use any picture of the Building or the Project
or the Property in its  advertising,  stationery  or any other manner upon first
obtaining  Landlord's  prior  consent,  which consent shall not be  unreasonably
withheld. Landlord expressly reserves the right, in Landlord's sole and absolute
discretion, at any time to change the name, insignia or logotype of the Building
or the Property without in any manner being liable to Tenant.

ARTICLE 24 - SURRENDER OF LEASE

         The  voluntary or other  surrender of the Lease by Tenant,  or a mutual
cancellation of the Lease,  shall not work a merger, and shall, at the option of
Landlord,  terminate all or any existing  subleases or subtenancies,  or may, at
the option of Landlord,  operate as an assignment to it of Tenant's  interest in
any or all such subleases or subtenancies.

ARTICLE 25 - WAIVER

         The waiver by Landlord or Tenant of any term,  covenant,  agreement  or
condition  contained  in this  Lease  shall  not be deemed to be a waiver of any
subsequent  breach  of the  same  or of any  other  term,  covenant,  agreement,
condition or provision of this Lease, nor shall any custom or practice which may
develop between the parties in the  administration  of the Lease be construed to
waive or lessen the right of Landlord  or Tenant to insist upon the  performance
by the other in strict accordance with all of the terms, covenants,  agreements,
conditions,  and provisions of the Lease. The subsequent  acceptance by Landlord
of any  payment  owed by Tenant to Landlord  under the Lease,  or the payment of
Rent by Tenant,  shall not be deemed to be a waiver of any  preceding  breach by
Tenant of any term,  covenant,  agreement,  condition or provision of the Lease,
other than the  failure of Tenant to make the  specific  payment so  accepted by
Landlord,  regardless  of  Landlord's  or Tenant's  knowledge of such  preceding
breach at the time of the making or acceptance of such payment.

ARTICLE 26 - SALE BY LANDLORD

         In the event Landlord shall sell,  assign,  convey or transfer all or a
part of its interest in the Property or any part of the Property,  Tenant agrees
to attorn to such transferee,  assignee or new owner,  and upon  consummation of
such sale,  conveyance or transfer,  Landlord shall  automatically  be freed and
relieved from all liability and obligations accruing or to be performed from and
after the date of such sale, transfer, or conveyance. In the event of such sale,
assignment,  transfer or conveyance, Landlord shall transfer to such transferee,
assignee  or new owner of the  Property  the  balance  of the  Deposit,  if any,
remaining after lawful  deductions and in accordance with California  Civil Code
Section 1950.7, after notice to Tenant, and Landlord shall thereupon be relieved
of all liability with respect to the Deposit.

ARTICLE 27 - FORCE MAJEURE

         Landlord  shall not be chargeable  with,  liable for, or responsible to
Tenant for  anything or in any amount for any failure to perform or delay caused
by: fire; earthquake;  explosion; flood; hurricane; the elements; acts of God or
the  public  enemy;  actions,  restrictions,   limitations  or  interference  of
governmental  authorities or agents;  war;  invasion;  insurrection;  rebellion;
riots;  strikes or lockouts;  inability to obtain  necessary  materials,  goods,
equipment,  services,  utilities or labor; or any other cause whether similar or
dissimilar to the foregoing which is beyond the reasonable  control of Landlord;
and any such  failure  or delay due to said  causes or any of them  shall not be
deemed a breach of or default in the performance of the Lease by Landlord.

ARTICLE 28 - ESTOPPEL CERTIFICATES

         Tenant  shall,  at any time  and  from  time to time  upon  request  of
Landlord,  within ten (10) days following  notice of such request from Landlord,
execute,  acknowledge and deliver to Landlord in recordable  form, a certificate
("Estoppel  Certificate")  in writing in the form of the attached Exhibit "F" or
in such other form as Landlord or any of its  lenders,  prospective  purchasers,
lien holders or assignees may deem appropriate. Failure by Tenant to deliver the
Estoppel  Certificate  within  this ten  (10) day  period  shall  be  deemed  to
conclusively  establish  that this Lease is in full force and effect and has not
been modified  except as may be  represented  by Landlord.  Tenant's  failure to
deliver the Estoppel  Certificate  within this ten (10) day period shall, at the
option of Landlord, constitute a default.


                                       22
<PAGE>


ARTICLE 29 - RIGHT TO PERFORMANCE [Intentionally omitted].

ARTICLE 30 - PARKING FACILITIES

         Landlord  shall  maintain and operate,  or cause to be  maintained  and
operated,  automobile parking facilities ("Parking  Facilities") in, adjacent to
or within a reasonable  distance from the Building.  Tenant's  privileges during
such time with respect to the Parking Facilities shall be in accordance with the
provisions of the attached Exhibit "G."

ARTICLE 31 - SECURITY SERVICES

         SECTION  31.1  LANDLORD'S  OBLIGATION  TO  FURNISH  SECURITY  SERVICES.
Landlord shall furnish  security  services for the Premises  and/or the Building
and/or the Property as it deems appropriate in its sole and absolute discretion.
In the event  Landlord  does  furnish or contract to furnish any such  services,
Tenant shall nevertheless have sole responsibility for the protection of itself,
Tenant's Employees and all property of Tenant and Tenant's Employees located in,
on or about the Premises or the Building or the Property,  and the provisions of
Section 13.3 shall nevertheless continue in full force and effect.

         SECTION  31.2  TENANT'S  RIGHT TO INSTALL  SECURITY  SYSTEM.  If Tenant
wishes to  establish  or install any  automated  and/or  non-automated  security
system in, on or about the  Premises,  Tenant  shall  first  notify  Landlord of
Tenant's plan for any such system,  and Landlord  shall have the right to review
and approve or disapprove said plan in Landlord's sole and absolute  discretion.
If  Landlord  approves  any such plan and Tenant  establishes  or  installs  any
automated and/or non-automated security system in, on or about the Premises, and
should  such  system  adversely  affect  the  Premises  or the  Property  or the
desirability  of the  Premises  or  Property  as office  space,  or as an office
building,  or have an adverse  effect on other  tenants  respectively,  Landlord
shall  subsequently  have the right to review Tenant's security system from time
to time and request Tenant to make such changes in personnel  and/or  equipment.
Tenant shall make said requested changes immediately thereafter.

ARTICLE 32 - NOTICES

         All notices, requests, consents, approvals, payments in connection with
the Lease,  or  communications  that  either  party  desires or is  required  or
permitted  to give or make to the other  party  under the  Lease  shall  only be
deemed to have been given, made and delivered, when made or given in writing and
personally  served,  or  deposited  in the  United  States  mail,  certified  or
registered  mail,  postage  prepaid,  or  deposited  with and sent by  overnight
courier and  addressed to the parties as provided for in Sections (p) and (q) of
the  Office  Lease  Summary  or to such other  address  or  addresses  as either
Landlord  or Tenant  may from  time to time  designate  to the other by  written
notice in accordance herewith.

ARTICLE 33 - HAZARDOUS WASTE

         Tenant  shall not cause or permit any  Hazardous  Material  (as defined
below) to be brought, kept or used in or about the Project by Tenant or Tenant's
Employees except for those office products normally used in conjunction with the
permitted use of the Premises.  Tenant indemnifies Landlord from and against any
breach by Tenant of the obligations stated in the preceding sentence, and agrees
to defend  and hold  Landlord  harmless  from and  against  any and all  claims,
judgments,  damages, penalties, fines, costs, liabilities, or losses (including,
without limitation,  diminution in value of the Project, damages for the loss or
restriction or use of rentable or usable space or of any amenity of the Project,
and sums paid in settlement of claims and attorneys' fees) which arise during or
after the term of this Lease as a result of such breach. This indemnification of
Landlord by Tenant includes,  without  limitation,  costs incurred in connection
with any investigation of site conditions or any cleanup, remedial,  removal, or
restoration work required by any federal, state, or local governmental agency or
political  subdivision  because  of  Hazardous  Material  present in the soil or
ground water on or under the Project.  Without  limiting the  foregoing,  if the
presence of any Hazardous  Material on the Project caused or permitted by Tenant
results in any  contamination  of the Project,  Tenant shall  promptly  take all
actions  at its sole  expense  as are  necessary  to return  the  Project to the
condition existing prior to the introduction of any such Hazardous Material.

         Landlord  shall not cause or permit any Hazardous  Material (as defined
below)  to be  brought,  kept or used in or about the  Project  by  Landlord  or
Landlord's  Employees,  except for those  products  normally used in conjunction
with the operation of the Project.  Landlord indemnifies Tenant from and against
any breach by Landlord of the obligations stated in the preceding sentence,  and
agrees to defend and hold Tenant  harmless  from and against any and all claims,
judgments,  damages,  penalties,  fines, cots liabilities, or losses (including,
without  limitation,  damages for the loss or  restriction or use of rentable or
usable space or of any amenity of the  Premises,  and sums paid in settlement of
claims and reasonable attorneys' fees) which arise during the term of this Lease
as a result of such breach. This indemnification of Tenant


                                       23
<PAGE>


by  Landlord  includes,   without  limitation,   reasonable  costs  incurred  in
connection with any  investigation of site conditions or any cleanup,  remedial,
removal,   or  restoration  work  required  by  any  Federal,   State  or  local
governmental  agency or  political  subdivision  because of  Hazardous  Material
present in the soil or ground water on or under the Premises.  Without  limiting
the foregoing,  if the presence of any Hazardous  Material on or in the Premises
caused or permitted by Landlord  results in any  contamination  of the Premises,
Landlord  shall  promptly  take all  actions at its sole cost and expense as are
necessary or advisable to return the Premises to the condition existing prior to
the introduction of any such Hazardous Material.

         Landlord and Tenant acknowledge that Landlord may become legally liable
for the costs of complying  with all laws relating to Hazardous  Material  which
are  not  the  responsibility  of  Landlord  or the  responsibility  of  Tenant,
including the following:  (i) Hazardous  Material  present in the soil or ground
water on the Project of which  Landlord has no knowledge as of the  Commencement
Date of this Lease;  (ii) a change in Laws which  relate to  Hazardous  Material
which make that  Hazardous  Material  which is present on the Property as of the
Commencement  Date of this  Lease,  whether  known or  unknown  to  Landlord,  a
violation of such new Laws;  (iii)  Hazardous  Material  that  migrates,  flows,
percolates, diffuses, or in any way moves on, to, or under the Project after the
effective  date of this Lease;  or  Hazardous  Material  present on or under the
Project as a result of any discharge, dumping or spilling (whether accidental or
otherwise)  on the  Project  by other  lessees of the  Project or their  agents,
employees,  contractors,  or invitees, or by others.  Accordingly,  Landlord and
Tenant agree that the cost of complying with Laws relating to Hazardous Material
on the  Project  for which  Landlord  is  legally  liable  and which are paid or
incurred by Landlord  shall be an Operating  Expense (in an amount not to exceed
Two Hundred Fifty Thousand Dollars ($250,000), and Tenant shall pay Tenant's Pro
Rata Share thereof, unless the cost of such compliance,  as between Landlord and
Tenant,  is made the  responsibility of Tenant as set forth above. To the extent
any such  Operating  Expense  relating to  Hazardous  Material  is  subsequently
recovered or reimbursed  through  insurance,  or recovery from responsible third
parties,  or  other  action,   Tenant  shall  be  entitled  to  a  proportionate
reimbursement  to the extent it has paid its share of such Operating  Expense to
which such recovery or reimbursement relates.

         Landlord and Tenant  acknowledge  that the Building  contains  asbestos
containing materials (found in fireproofing materials) located on (and contained
to) the horizontal beams of the Building.  Except as otherwise  provided herein,
Tenant shall not become  legally liable for the costs of complying with all laws
relating to Hazardous  Material  which are not placed in or about the Project by
Tenant or Tenant's Employees.

         As used herein,  the term  "Hazardous  Material" means any hazardous or
toxic substance,  material,  or waste which is or becomes regulated by any local
governmental authority, the State of California or the United States Government.

ARTICLE 34 - MISCELLANEOUS

         SECTION 34.1 AUTHORIZATION TO SIGN LEASE. The individual  executing the
Lease on behalf of Tenant  represents and warrants that he is duly authorized to
execute and deliver the Lease on behalf of Tenant.

         SECTION 34.2 ENTIRE AGREEMENT.  The Lease contains the entire agreement
between the parties  respecting  the Premises and all other  matters  covered or
mentioned in the Lease. The Lease may not be altered,  changed or amended except
by an instrument in writing signed by both parties hereto.

         SECTION  34.3  CONSTRUCTION/SEPARABILITY.  The Language in all parts of
this Lease shall in all cases be construed as a whole and in accordance with its
fair meaning.  The parties hereto acknowledge and agree that each has been given
the opportunity to  independently  review this Lease with legal counsel,  and/or
has the requisite  experience and  sophistication  to understand,  interpret and
agree to the particular language of the provisions hereof.  Accordingly,  in the
event of an ambiguity in or dispute regarding the  interpretation of this Lease,
this Lease shall not be interpreted or construed against the party preparing it.
If any  term or  provision  of this  Lease,  the  deletion  of which  would  not
adversely  affect the receipt of any material benefit by either party hereunder,
shall  be  held  by  a  court  of  competent   jurisdiction  to  be  invalid  or
unenforceable,  the  remainder  of this Lease shall not be affected  thereby and
each other term and  provision of this Lease shall be valid and  enforceable  to
the fullest extent  permitted by law. It is the intention of the parties to this
Lease that in lieu of each  clause or  provision  of this Lease that is illegal,
invalid or unenforceable,  there be added as a part of this Lease an enforceable
clause  or  provision  as  similar  in  terms  to  such   illegal,   invalid  or
unenforceable clause or provisions as may be possible.

         SECTION  34.4  COVENANTS  AND  CONDITIONS.   All  provisions,   whether
covenants or  conditions,  on the part of Tenant or Tenant shall be deemed to be
both covenants and conditions.


                                       24
<PAGE>


         SECTION 34.5 GENDER AND HEADINGS.  The words "Landlord" and "Tenant" as
used  herein  shall  include  the  plural  as well  as the  singular  and,  when
appropriate,  shall  refer to action  taken by or on behalf of the  Landlord  or
Tenant by their respective employees, agents, or authorized representatives.  If
there be more than one individual  comprising Tenant, the obligations  hereunder
imposed upon such individuals shall be joint and several. The paragraph headings
of the  Lease are not a part of the  Lease  and  shall  have no effect  upon the
construction or interpretation of any part hereof.

         SECTION 34.6 EXHIBITS.  Exhibits "A," "B," "C," "D," "E," "F," "G," and
"H" attached to the Lease, are hereby  incorporated by this reference and made a
part of the Lease.

         SECTION 34.7 MODIFICATION FOR LENDER. Upon Landlord's  request,  Tenant
agrees to modify  this Lease to meet the  requirements  of any or all lenders or
ground lessors selected by Landlord who request such modification as a condition
precedent  to providing  any loan or  financing  or to entering  into any ground
lease affecting or encumbering  the Property or any part thereof;  provided that
such  modification  does not (a) increase Rental,  or (b) alter the Term, or (c)
materially adversely affect Tenant's rights under this Lease.

         SECTION 34.8 NO RECORDATION. Landlord and Tenant agree that in no event
and under no circumstances shall the Lease be recorded by Tenant.

         SECTION  34.9  CUMULATIVE  REMEDIES.   No  right,  remedy  or  election
provided,  allowed  or given  by any  provision  of the  Lease  shall be  deemed
exclusive unless so indicated,  but shall, whenever possible, be cumulative with
all other rights or remedies in law or equity.

         SECTION  34.10  CONFIDENTIALITY.  Tenant  agrees  to  use  commercially
reasonable  to  keep  such  terms,   covenants,   obligations   and   conditions
confidential  and not to disclose  such matters to any other  landlord,  tenant,
prospective tenant, or broker.  Provided,  however, Tenant may provide a copy of
this Lease to a non-party  solely in conjunction  with anf  governmental  filing
requirements  and  Tenant's  effort to secure an assignee or  sublessee  for the
Premises.

         SECTION 34.11 WAIVER OF TRIAL BY JURY.  The  respective  parties hereto
shall  and they  hereby  do waive  trial by jury in any  action,  proceeding  or
counterclaim  brought by either of the parties  hereto  against the other on any
matter  whatsoever  arising out of or in any way connected with this Lease,  the
relationship of Landlord and Tenant,  Tenant's use or occupancy of the Premises,
or any claim of injury or damage,  or the  enforcement  of any remedy  under any
statute, emergency or otherwise.

         SECTION  34.12  SUCCESSORS  AND ASSIGNS.  Subject to the  provisions of
Articles 12 and 26, and except as  otherwise  provided  to the  contrary in this
Lease,  the terms,  conditions  and  agreements of this Lease shall apply to and
bind the heirs,  successors,  legal representatives and permitted assigns of the
parties hereto.

          SECTION 34.13 GOVERNING LAW/VENUE.  The Lease shall be governed by and
construed  pursuant to the laws of the State of California.  Landlord and Tenant
each hereby  irrevocably  consent to the jurisdiction of the courts of the State
of California for all purposes in connection with any action or proceeding which
arises out of or is  related to this Lease and agree that any action  instituted
under  this  Lease  shall be  brought  only in the state  courts of the State of
California.

         SECTION 34.14  BROKERS.  Landlord and Tenant each represent and warrant
to the other that all negotiations with respect to the Lease (including, without
limitation,  preliminary  consideration of the Premises,  relevant economics and
final Lease  provisions)  were  accomplished  without the aid,  intervention  or
employment of any broker or finders of any kind,  other than the brokers  listed
at Section (r) of the Office Lease  Summary.  The party whose name precedes such
broker shall pay all fees,  costs and expenses of any kind to such brokers,  and
the other  party  shall not be liable  for any  fees,  costs,  or other  expense
associated  with the employment of any of such brokers,  and Landlord and Tenant
shall hold the other harmless from and against any and all claims arising out of
or in  connection  with any claims made by any person  (other than the broker(s)
listed at Section (r) of the Office  Lease  Summary)  claiming to be a broker or
finder  with  regard to the Lease  including,  without  limitation,  claims  for
commissions  and all  costs of  enforcing  this  indemnity  (including,  but not
limited to attorneys' fees and costs.)

         SECTION  34.15   DELIVERY  OF  FINANCIAL   STATEMENTS.   [Intentionally
omitted.]

         SECTION 34.16 DELIVERY OF STATEMENT REGARDING LAWSUITS.  [Intentionally
omitted.]


                                       25
<PAGE>


         SECTION  34.17  CONSENT.   Whenever  Landlord's  or  Tenant's  consent,
approval,  acceptance or  satisfaction  is required  under any provision of this
Lease,  such  consent,  approval,   acceptance  or  satisfaction  shall  not  be
unreasonably  withheld,  conditioned  or delayed by either  party,  unless  such
provision expressly so provides otherwise.

ARTICLE 35 - REPRESENTATIONS AND WARRANTIES OF LANDLORD

         Landlord hereby  represents,  warrants,  covenants and agrees that: (a)
Landlord  has full power and  authority  to execute  this Lease and  perform its
obligations  hereunder;  (b)  Landlord  owns legal and  beneficial  title to the
Project;  (c) no notices  of  violation  of law or  municipal  ordinances  or of
Federal, State, County or Municipal or other regulations, orders or requirements
relating to the Project  have been  received by  Landlord,  and  Landlord has no
reason to believe  that any such  notice may or will be entered or issued  which
may have a material  adverse  effect on Landlord,  the Project,  the Premises or
Tenant's  proposed  use  thereof;  (d) there is no pending  litigation  or labor
dispute against Landlord or the Project which may have a material adverse effect
on Landlord, the Project, the Premises or Tenant's proposed use thereof; and (e)
there are no other  leases,  licenses,  or any other  agreements  that  material
adversely  affect the  Premises or the Project  between  Landlord  and any third
parties except as otherwise  disclosed to Tenant in this Lease.  Landlord hereby
further  represents,  warrants,  covenants  and  agrees  that  to  the  best  of
Landlord's actual knowledge without investigation; (f) to the best of Landlord's
actual knowledge, there does not exist any condition on the Premises which would
give rise to any claim or  proceeding  that there exists a violation of any law,
rule, regulation and order of all Federal,  State and local government or agency
applicable  to the  Premises;  (g) the  Project  and any  and all  existing  and
proposed uses of the Project  and/or the Premises do not violate any  applicable
deed  restrictions or other  covenants,  restrictions  or agreements,  site plan
approvals,  zoning or  subdivision  regulations  or any  redevelopment  plans as
applicable  to the  Project as  modified  by any duly  issued  variances  or any
requirements  thereof;  and (h) no consent,  approval,  order,  authorization or
filing with any governmental or  administrative  agency shall be required on the
part  of  Landlord  as a  condition  to the  effectiveness  of the  transactions
provided for under the Lease.


                                       26
<PAGE>


         IN WITNESS WHEREOF,  the parties have executed the Lease as of the date
first set forth above,  acknowledged that each party has carefully read each and
every provision of the Lease,  that each party has freely entered into the Lease
of its own free will and volition, and that the terms, conditions and provisions
of the Lease are  commercially  reasonable  as of the day and year  first  above
written.


                             "Tenant"

                             Brilliant Digital Entertainment, a Delaware
                             corporation


                             By: /S/ TYLER TARR
                                 -------------------------------
                                 Tyler Tarr
                                 Its:  Chief Financial Officer

                             Date executed:  __________________
                             Place executed:  _________________


                             "Landlord"

                             Topanga & Victory Partners LP, a California
                             limited partnership

                             By: Toibb II Corporation, a California
                                 corporation, its general partner


                             By:  /S/ DON KINDER
                                  ------------------------------
                                  Don Kinder
                                  Its: Executive Vice-President

                             Date executed: ________________
                             Place executed: _______________



                                       27
<PAGE>


                                   EXHIBIT "A"

                                    PREMISES





                                       28


<PAGE>


                                   EXHIBIT "B"

                           NOTICE OF LEASE TERM DATES

To:

Date:

Re:      Lease dated September 21, 2003 between Topanga & Victory Partners LP, a
         California  limited  partnership  ("Landlord")  and  Brilliant  Digital
         Entertainment,  a Delaware corporation ("Tenant") concerning Suite 520,
         located at 6355 Topanga Canyon  Boulevard,  Woodland Hills,  California
         91367.

-------------:

         In  accordance  with the  Lease,  we wish to advise  and/or  confirm as
         follows:

         That the Premises  have been  accepted  herewith by the Tenant as being
         substantially  complete in accordance with the Lease, and that there is
         no deficiency in construction.

         That the Tenant has  possession of the Premises and  acknowledges  that
         under the provisions of the Lease,  the term of said Lease commenced as
         of  __________________  for  a  term  of  _________  years,  ending  on
         __________________.

         That in  accordance  with the  Lease,  Rental  commenced  to  accrue on
         __________________.

         If the  Commencement  Date of the Lease is other  than the first day of
         the month, the first billing will contain a pro rata  adjustment.  Each
         billing  thereafter  shall  be for  the  full  amount  of  the  monthly
         installment of Rental as provided for in said Lease.

         Rental is due and payable in advance on the first day of each and every
         month  during the term of said Lease.  Your rent checks  should be made
         payable  to  Topanga  &  Victory  Partners  LP at 6335  Topanga  Canyon
         Boulevard, Suite 230, Woodland Hills, California 91367.


                                       Topanga & Victory Partners, L.P., a
                                       California limited partnership

                                       By:    Toibb II Corporation, a California
                                              corporation, its general partner


                                              By:  __________________________
                                                           Don Kinder
                                              Its:   Executive Vice-President

                                              Date:    ________________________
                                                          (Landlord)


AGREED AND ACCEPTED:

Brilliant Digital Entertainment, a Delaware
corporation


By:      _______________________
         Tyler Tarr
Its:     Chief Financial Officer

Date:    _______________________
         (Tenant)


                                       29
<PAGE>


                                   EXHIBIT "C"

                                  BUILD TO SUIT
                             CONSTRUCTION AGREEMENT

         This Construction  Agreement  ("Agreement") is being entered into as of
___________  __,  2003,  between  Topanga & Victory  Partners  LP, a  California
limited partnership ("Landlord") and Brilliant Digital Entertainment, a Delaware
corporation  ("Tenant"),  in connection  with the execution of the Lease between
Landlord  and Tenant dated  September  21, 2003  ("Lease"),  who hereby agree as
follows:

         1.       GENERAL:

         (a)      The purpose of this Agreement is to set forth how the interior
                  improvements in the Premises ("Tenant Improvements") are to be
                  constructed,  who  will  do the  construction  of  the  Tenant
                  Improvements,  who will pay for the construction of the Tenant
                  Improvements,  and the time  schedule  for  completion  of the
                  construction of the Tenant Improvements.

         (b)      Except as defined in this Agreement to the contrary, all terms
                  utilized in this Agreement  shall have the same meaning as the
                  defined terms in the Lease.

         (c)      The provisions of the Lease, except where clearly inconsistent
                  or inapplicable to this Agreement,  are incorporated into this
                  Agreement.

         2.       COMMENCEMENT  DATE: The Commencement  Date shall be determined
in accordance with Article 2 of the Lease.

         3.       SPACE PLAN: A space plan and/or working  drawing,  including a
document entitled `scope of work" (collectively,  "Plans") which shall reflect a
build-out in  accordance  with the  provisions of the  Landlord's  Standard Work
Letter attached hereto as Schedule "1", has been prepared by Landlord,  approved
by Tenant and is attached hereto as Schedule "2".

         4.       DELIVERY OF PREMISES TO TENANT AND  CONDITION OF PREMISES UPON
EXECUTION OF THE LEASE:  Except for the Tenant  Improvements  to be  constructed
pursuant to this Agreement, Tenant accepts the Premises in its "As Is" condition
and acknowledges that it has had an opportunity to inspect the Premises prior to
signing the Lease and finds it in satisfactory condition.

         5.       CONSTRUCTION  SCHEDULE AND PROCEDURES:  Landlord shall arrange
for the construction of the Tenant Improvements in accordance with the following
schedule:

         (a)      The  Plans  shall  be  submitted   to  a  general   contractor
                  ("Contractor")  selected by Landlord (which  contractor may be
                  Toibb  Enterprises,  a  California  corporation,  the  current
                  property manager of the Project and an affiliate of Landlord).
                  Landlord  shall  instruct the  contractor  to build the Tenant
                  Improvements,  in  accordance  with  the  Plans,  as  soon  as
                  reasonably   possible  at  Landlord's  sole  cost,  except  as
                  provided in Section 6, below.

         (b)      Tenant agrees and  understands  that Landlord shall not be the
                  guarantor of, nor responsible for, the correctness or accuracy
                  of any such Plans or compliance of such Plans with  applicable
                  laws.

         6.       CONSTRUCTION: Landlord, as soon as this Agreement is executed,
shall make arrangements to construct, as soon as reasonably possible, consistent
with industry  custom and practice and using standard  building  materials,  the
Tenant Improvements  indicated on the Plans. Except as otherwise provided herein
and  only  during  the  initial  Term,  Landlord  will  pay for the  cost of the
construction of the Tenant  Improvements  indicated on the Plans ("Total Cost").
If the Total Cost of the Tenant  Improvements  is less than the amount  shown on
(or contemplated by) the Plans, the difference shall be retained by Landlord. In
the event that Tenant  requests  any changes to such Plans,  Landlord  shall not
unreasonably  withhold its consent to any such changes,  provided the changes do
not adversely  affect the Building's  structure,  systems,  equipment,  security
system or appearance,  but if such changes increase the Total Cost of the Tenant
Improvements  shown on the  Plans,  Tenant  shall  pay such  increased  costs to
Landlord at such time as the request is approved by Landlord.  The costs charged
by  Landlord  to Tenant  caused by  Tenant's  requesting  changes  to the Tenant
Improvements  shall be the  amount  of money  Landlord  has to pay to cause  the
Tenant Improvements,  as reflected by revised Plans, to be constructed above the
costs that Landlord would have had to pay to cause the Tenant Improvements to be
constructed if no changes had been made to the Plans  ("Differential"),  plus an
amount equal to ten percent  (10%) of the costs to  compensate  Landlord for its
time and  efforts  in  connection  with  such  changes.  If such  changes  delay
Landlord's


                                       30
<PAGE>


completion  of the work shown on the Plans,  then such  delay  shall  constitute
Tenant Delays. Any other actions of Tenant, or inaction by Tenant,  which delays
Landlord in completing  the Tenant  Improvements  shown on such Plans shall also
constitute  Tenant  Delays.  Whenever  possible  and  practical,  Landlord  will
utilize,  for  the  construction  of the  Tenant  Improvements,  the  items  and
materials designated in the Plans. However,  whenever Landlord determines in its
judgment that it is not practical or efficient to use such  materials,  Landlord
shall have the right, upon receipt of Tenant's consent,  which consent shall not
be  unreasonably   withheld  or  delayed  to  substitute  comparable  items  and
materials.  If Tenant refuses to grant such consent,  and Landlord is delayed in
causing the Tenant Improvements to be substantially complete because of Tenant's
failure to permit the substitution of comparable items and materials, such delay
shall constitute Tenant Delays.

         7.       READY FOR OCCUPANCY: The term "Ready For Occupancy" means that
Landlord  has  completed  the  Tenant  Improvements  and  other  work that it is
obligated  to perform  pursuant to this  Agreement,  and that this work shall be
deemed  complete,  notwithstanding  the fact that minor details of construction,
mechanical  adjustments  or decorations  which do not materially  interfere with
Tenant's use of the Premises remain to be performed (items normally  referred to
as  "Punch-List"  items).  The Premises shall be deemed Ready For Occupancy even
though Tenant's furniture, telephones, telexes, telecopiers, photocopy machines,
computers and other business machines or equipment have not been installed,  the
purchase  and  installation  of which  shall be  Tenant's  sole  responsibility.
Landlord shall cause the Punch-List  items to be corrected as soon as reasonably
possible and practical.


         Executed in Los Angeles,  California, on the ______ day of ___________,
2003.

Landlord:                                      Tenant:

Topanga & Victory Partners LP, a               Brilliant Digital Entertainment,
California limited partnership                 a Delaware corporation

By:  Toibb II Corporation, a California
     corporation, its general partner          By:      ________________________
                                                        Tyler Tarr
                                               Its:     Chief Financial Officer
     By:  __________________________
             Don Kinder
     Its:   Executive Vice-President


                                       31
<PAGE>


                                   EXHIBIT "D"

                              RULES AND REGULATIONS


         1. The sidewalks,  entrances,  exits, passages,  parking areas, courts,
elevators,  vestibules,  stairways,  corridors, terraces, lobbies or halls shall
not be  obstructed  or used for any purpose  other than ingress and egress.  The
halls, passages,  entrances,  exits, elevators and stairways are not for the use
of the  general  public,  and  Landlord  shall  retain the right to control  and
prevent  access  thereto of all  persons  whose  presence,  in the  judgment  of
Landlord, is deemed to be prejudicial to the safety,  character,  reputation and
interests of the Building and its tenants.  No Tenant or Tenant's employee shall
go on the roof of the Building.

         2. No curtains,  blinds, shades or screens shall be attached to or hung
in, or used in connection with, any window of the Premises other than Landlord's
standard window covering  without  Landlord's prior consent which consent may be
withheld in its sole and subjective  discretion.  All electric  ceiling fixtures
hung  in  offices  or  spaces  along  the  perimeter  of the  Building  must  be
fluorescent,  and of a quality, type, design and bulb color approved by Landlord
in its sole and subjective discretion.  Neither the interior nor exterior of any
windows  shall be coated or  otherwise  sun  screened  without  the  consent  of
Landlord which consent may be withheld in its sole and subjective discretion.

         3.  No  signs,  picture,  placard,  advertisement,  notice,  lettering,
direction  or handbill  shall be  exhibited,  distributed,  painted,  installed,
displayed,  inscribed,  placed  or  affirmed  by any  Tenant  on any part of the
exterior of Premises or the interior of the  Premises  which is visible from the
exterior of the Premises, the Building or the Property without the prior consent
of Landlord which consent may be withheld in its sole and subjective discretion.
In the event of the  violation  of the  foregoing  by any Tenant,  Landlord  may
remove same without any liability,  and may charge the expense  incurred in such
removal to the Tenant  violating  this rule.  Interior  signs on doors  shall be
inscribed,  painted or  affixed  for each  Tenant by the  Landlord  at  Tenant's
expense,  and shall be of a size,  color and style  acceptable  to the Landlord.
Nothing may be placed on the exterior of corridor  walls or corridor doors other
than  Landlord's  building  standard  sign on the  corridor  door,  applied  and
installed by Landlord.

         4. The Building directory will be provided  exclusively for the display
of the name and location of tenants of the  Building  and Landlord  reserves the
right to exclude any other names  therefrom.  Landlord shall provide tenant with
standard  building  signage on or next to  Tenant's  main  entrance  door to the
Premises.  The  Tenant's  name and any name(s) of Tenant's  principal  employees
which Tenant shall desire to have placed on the Building directory shall be paid
for by the Tenant.

         5. Tenant  shall not drill  into,  or in any way deface any part of the
Premises.  No boring,  cutting or  stringing  of wires or laying of  linoleum or
other similar floor coverings shall be permitted,  except with the prior consent
of the  Landlord  which  consent  may be  withheld  in its sole  and  subjective
discretion.

         6. No vehicles or animals of any kind shall be brought  into or kept in
or about the Premises or the Building and no cooking  shall be done or permitted
by Tenant on the  Premises,  except that the  preparation  of coffee,  tea,  hot
chocolate  and similar items and items  prepared in a microwave  oven for Tenant
and Tenant's  employees shall be permitted;  provided,  however,  that the power
required shall not exceed that amount which can be provided by a 30-amp circuit.
No Tenant  shall  cause or  permit  any  unusual  or  objectionable  odors to be
produced or to permeate the Premises or the Building.

         7. The Premises shall not be used for  manufacturing or for the storage
of  merchandise  except  as such  storage  may be  incidental  to the use of the
Premises  for general  office  purposes.  No Tenant  shall  occupy or permit any
portion of the 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,  or as an  employment  bureau,  or as a
travel agency, without the consent of Landlord, which consent may be withheld in
its sole and subjective  discretion.  No Tenant shall sell or permit the sale of
newspapers,  magazines,  periodicals,  theater  tickets  or any  other  goods or
merchandise  in or on the Premises.  No Tenant shall engage or pay any employees
on the Premises  except those  actually  working for such Tenant on the Premises
nor shall any Tenant  advertise for laborers  giving an address at the Premises.
The  Premises  shall not be used for  lodging or  sleeping or for any immoral or
illegal purposes.

         8. No Tenant  shall make,  or permit to be made,  any  unseemly  noises
which disturb other occupants of the Building, whether by the use of any musical
instrument, radio, television,  phonograph, screening room, or in any other way.
No  Tenant  shall  use,  keep or permit  to be used any foul or  noxious  gas or
substance in, on or about the Premises.


                                       32
<PAGE>


         9. No Tenant nor any of Tenant's  employees  shall at any time bring or
keep within the Premises or the Building any flammable, combustible or explosive
fluid, chemical substance, or material. Electric space heaters shall not be used
at any time by Tenant.

         10.  No new or  additional  locks or bolts of any kind  shall be placed
upon any of the doors by Tenant, nor shall any changes be made in existing locks
or the mechanism  thereof  without the consent of Landlord  which consent may be
withheld in its sole and subjective  discretion.  If Landlord consents to such a
lock change,  Tenant must furnish  Landlord  with a key.  Tenant must,  upon the
termination of its tenancy,  give,  return,  and restore to Landlord all keys of
stores,  offices,  vaults,  and toilet rooms,  either furnished to, or otherwise
procured  by  Tenant,  and in the  event  at any  time  of any  loss  of keys so
furnished,  Tenant shall pay to Landlord  the cost of  replacing  the same or of
changing  the lock or locks  opened by such lost key if  Landlord  shall deem it
necessary to make such changes.

         11. Furniture,  freight,  packages,  equipment,  safes, bulky matter or
supplies of any description  shall be moved in or out of the Building only after
the Building  Manager has been  furnished  with prior  notice and given  his/her
approval and only during such hours and in such manner as may be  prescribed  by
the Landlord from time to time. The scheduling and manner of all Tenant move-ins
and move-outs  shall be subject to the sole discretion and approval of Landlord,
and said  move-ins  and  move-outs  shall  only take place  after  6:00 P.M.  on
weekdays,  on  weekends,  or at such  other  times as  Landlord  may  designate.
Landlord  shall  have the right to approve  or  disapprove  the movers or moving
company  employed by Tenant,  and Tenant shall cause said movers to use only the
loading facilities and elevators  designated by Landlord.  In the event Tenant's
movers  damage the  elevator  or any other part of the  Property,  Tenant  shall
immediately  pay to Landlord  the amount  required to repair  said  damage.  The
moving of safes or other  fixtures or bulky or heavy  matter of any kind must be
done under the Building  Manager's  supervision,  and the person employed by any
Tenant for such work must be acceptable to Landlord,  but such persons shall not
be deemed to be agents or  servants of the  Building  Manager or  Landlord,  and
Tenant shall be responsible for all acts of such persons.  The Landlord reserves
the right to inspect all safes,  freight or other bulky or heavy  articles to be
brought into the Building and to exclude from the Building all safes, freight or
other bulky or heavy  articles  which violate any of these Rules or the Lease of
which these Rules are a part.  The Landlord  reserves the right to determine the
location and position of all safes, freight,  furniture or bulky or heavy matter
brought  onto the  Premises,  which must be placed  upon  supports  approved  by
Landlord to distribute the weight.

         12. No furniture  shall be placed in front of the  Building,  or in any
lobby or corridor or balcony,  without the prior  written  consent of  Landlord.
Landlord  shall have the right to remove all  non-permitted  furniture,  without
notice to Tenant, and at the expense of Tenant.

         13.  No  Tenant  shall  purchase  water,  ice,  towel,   janitorial  or
maintenance,  or other like services, from any person or persons not approved in
writing by the Landlord. No Tenant shall obtain or purchase food or beverages on
the Property from any vendor or supplier  except at hours and under  regulations
fixed by Landlord.

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

         15.  Landlord  reserves the right to exclude from the Building  between
the hours of 6:00 p.m. and 7:00 a.m., Monday through Friday, and at all hours on
Saturday, Sunday, state and federal holidays, all persons who are not authorized
by Tenant. Such authorization shall be in accordance with procedures established
by  Landlord  in its  sole  and  subjective  discretion.  Each  Tenant  shall be
responsible for all persons for whom it causes to be present in the Building and
shall  be  liable  to  Landlord  for all  acts of such  persons.  In the case of
invasion,  riot,  act of  God,  or  other  circumstance  rendering  such  action
advisable in Landlord's  opinion,  Landlord reserves the right to prevent access
of all persons,  including Tenant, to the Building during the continuance of the
same by such actions as Landlord may deem appropriate, including the closing and
locking of doors.

         16.  Any  persons  employed  by  Tenant  to do any work in or about the
Premises shall, while in the Building and outside of the Premises, be subject to
and under the control and direction of the  superintendent  of the Building (but
shall not be deemed to be an agent or servant of said  superintendent  or of the
Landlord), and Tenant shall be responsible for all acts of such persons.

         17. All doors  opening  onto  public  corridors  shall be kept  closed,
except when in use for ingress and egress.  All doors  leading to equipment  and
utility rooms shall be kept closed.


                                       33
<PAGE>


         18.  Canvassing and soliciting and peddling in the Building,  except as
expressly  permitted  herein,  are prohibited and each Tenant shall cooperate to
prevent the same.

         19. All office  equipment of any  electrical  nature shall be placed by
Tenant in the Premises in settings and locations approved by Landlord, to absorb
or prevent any vibration, noise and annoyance.

         20.  No air  conditioning  unit or  other  similar  apparatus  shall be
installed or used by Tenant without the consent of Landlord which consent may be
withheld in its sole and subjective discretion.

         21.  Tenant shall  faithfully  observe and comply with the terms of any
and all covenants, conditions and restrictions recorded against the Property.

         22.  Restrooms  and  other  water  fixtures  shall  not be used for any
purpose other than that which the same are intended, and any damage resulting to
the same from misuse on the part of Tenant or Tenant's  employees  shall be paid
for by Tenant.  Each Tenant shall be responsible  for causing all water faucets,
water apparatus and utilities to be shut off before Tenant or Tenant's employees
leave the  Premises  each day and Tenant shall be liable for any waste or damage
sustained by other  tenants or occupants of the Building or Landlord as a result
of Tenant's failure to perform said duty.

         23. The Building and the  Premises may be equipped  with an  electronic
access  control  device and Tenant  shall give  Landlord  the sum of Ten Dollars
($10.00)  for each  identification  key or card  issued  to  Tenant as a deposit
against the return of the identification key or card to Landlord. There shall be
a replacement  charge to Tenant,  or person designated by Tenant, of Twenty-Five
Dollars ($25.00) for loss of each  identification key or card. The amount of the
deposit and/or the replacement charge for each  identification key or card shall
be subject, from time to time, to an adjustment by Landlord at its discretion.

         24. For all purposes of this Exhibit  "D," the term  "Tenant"  shall be
defined to include and encompass Tenant's employees and Tenant's contractors.


                                       34
<PAGE>


                                   EXHIBIT "E"

                      STANDARDS FOR UTILITIES AND SERVICES


         The  furnishing  of building  services and utilities to Tenant shall be
accomplished  in  accordance  with and subject to the terms and  conditions  set
forth in this  Exhibit "E" and  elsewhere  in the Lease.  Landlord  reserves the
right to adopt from time to time such  reasonable  modifications  and  additions
hereto as Landlord may deem appropriate.

         1.  Subject  to the  full  performance  by  Tenant  of all of  Tenant's
obligations under the Lease, Landlord shall, on Monday through Friday, from 8:00
A.M. to 6:00 P.M., and on Saturday, from 9:00 a.m. to 1:00 p.m., excepting state
and federal holidays  ("Normal  Hours"),  provide the standard building services
and utilities set forth in this Paragraph 1. Landlord shall:

         (a) Provide  automatic  elevator  facilities on Monday through  Friday,
7:00 a.m. to 6:00 p.m.  only, and have one automatic  elevator  available at all
other times.

         (b) Provide to the Premises, during Normal Hours, heating, ventilation,
and air  conditioning  ("HVAC")  when,  in the judgment of  Landlord,  it may be
required for the  comfortable  occupancy of the Premises for the general  office
purposes  permitted  hereunder  (subject,  however,  to  any  governmental  act,
proclamation  or  regulation).  Landlord shall not be  responsible  for any room
temperatures  if Tenant's  lighting and receptacle  loads exceed those listed in
Paragraph  1(c) of this Exhibit,  or if the Premises are used for other than the
general office purposes  permitted  hereunder.  Tenant shall have the option, at
its sole cost (which cost shall be equal to Landlord's  actual cost of providing
HVAC or other  utilities)  to obtain  HVAC or other  utilities  for times  after
Normal Hours.

         (c) Provide to the  Premises on a 24 hour per day, 7 days a week basis,
electric  current for routine  lighting and the operation of the general  office
machines and equipment  such as  typewriters,  dictating  equipment,  desk model
adding  machines,   photocopy  machines  and  "small"  computers  incidental  or
necessary  for the conduct of Tenant's  business  in the  Premises as  permitted
hereunder of normal general office  business,  which use  110/220-volt  electric
power,  not to exceed  the  reasonable  capacity  of  building  standard  office
lighting  and  receptacles,   and  not  in  excess  of  limits  imposed  by  any
governmental  authority.  Tenant agrees,  should its electrical  installation or
electrical consumption be in excess of the aforesaid use or extend beyond Normal
Hours, to reimburse  Landlord for the excess utilities as provided in Article 11
of the Lease.

         (d)  Provide  at all times  reasonably  necessary  amounts of water for
restrooms furnished by Landlord.

         (e) Provide  janitorial  services to the Premises each evening,  Monday
through  Friday (except state and federal  holidays),  provided the Premises are
used  exclusively  in  accordance  with  Article  6 of the  Lease,  and are kept
reasonably in order by Tenant.  Tenant shall pay to Landlord the cost of removal
of any of Tenant's  refuse and rubbish,  to the extent that the same exceeds the
refuse and rubbish  usually  attendant  upon the use of the Premises for general
office  purposes.  Landlord  shall not be  responsible  or liable for any act or
omission  or  commission  on the part of the persons  employed  to perform  said
janitorial  services,  and  said  janitorial  services  shall  be  performed  at
Landlord's direction without interference by Tenant or Tenant's employees.

         (f) Provide 24 hours per day, 7 days per week access to the Building by
means of a card key entry system.

         2. Landlord shall have the exclusive  right to make any  replacement of
electric  light bulbs,  tubes and ballasts in the Premises  throughout the Term.
The Landlord may, at Landlord's sole discretion, adopt a system of relamping and
reballasting periodically on a group basis in accordance with good practice.

         3. No electrical  equipment,  air  conditioning  or heating  units,  or
plumbing  additions shall be installed,  nor shall any changes to the Building's
HVAC,  electrical  or plumbing  systems be made which could  possibly  adversely
affect the Building or such systems  without prior written  consent of Landlord,
which  consent shall be subject to Landlord's  sole and  subjective  discretion.
Landlord  reserves the right to designate  and/or  approve the  contractor to be
used by Tenant.  Any  permitted  installations  shall be made  under  Landlord's
supervision.  Tenant shall pay any  additional  cost on account of any increased
support  to  the  floor  load  or   additional   equipment   required  for  such
installations, and such installations shall otherwise be made in accordance with
Section 7.2 of the Lease.


                                       35
<PAGE>


         4.  Landlord  shall not provide in the Premises,  reception  outlets or
television or radio antennas for television or radio broadcast or reception, and
Tenant  shall not  install  any such  equipment  without the consent of Landlord
which can be withheld in Landlord's sole and subjective discretion.

         5. Tenant shall not,  without the prior  consent of  Landlord,  use any
apparatus, machine or device in the Premises, which will in any way increase the
amount of  electricity  or water  usually  furnished  or supplied for use of the
Premises permitted  hereunder as general office space, nor connect with electric
current,  except  through  existing  outlets in the  Premises,  any apparatus or
device for the  purpose  of using  electric  current  in excess of that  usually
furnished  or supplied for use of the  Premises  permitted  hereunder as medical
office space.

         6. Tenant shall  separately  arrange with the  applicable  local public
authorities,  utility companies and telephone companies, as the case may be, for
the furnishing of, and payment of, all telephone  services as may be required by
Tenant in the use of the Premises;  provided, however, that Tenant shall neither
bear the cost of nor be responsible  for  installation  of the telephone  wiring
stubbed to the  telephone  room.  Tenant shall  directly pay for such  telephone
services,  including the  establishment  and  connection  thereof,  at the rates
charged for such services by said authority,  telephone company or utility,  and
the failure of Tenant to obtain or to continue to receive such  services for any
reason  whatsoever shall not relieve Tenant of any of its obligations  under the
Lease nor constitute a breach of the Lease by Landlord.

         7.  Tenant  agrees to  cooperate  fully at all times with  Landlord  to
assure,  and to abide by all  regulations  and  requirements  which Landlord may
prescribe for the proper  functioning  and  protection of the  Building's  HVAC,
electrical,  security (if any), and plumbing  systems.  Tenant shall comply with
all laws,  statutes,  ordinances and  governmental  rules and regulations now in
force or which may later be enacted or promulgated  in connection  with building
services  furnished  to  the  Premises,   including,   without  limitation,  any
governmental  rule or  regulation  relating  to the  heating  and cooling of the
Building.

         8. Landlord shall provide, when reasonably necessary, and to Landlord's
reasonable satisfaction, appropriate vermin and pest control services to and for
the Building.


                                       36
<PAGE>


                                   EXHIBIT "F"

                              ESTOPPEL CERTIFICATE

Date:  ___________

To whom it may concern:

The undersigned hereby certifies as follows:

         1. Brilliant Digital Entertainment, a Delaware corporation, as "Tenant"
and  Topanga  &  Victory  Partners  LP, a  California  limited  partnership,  as
"Landlord," entered into a written lease dated September 21, 2003 ("Lease"),  in
which  Landlord  leased to Tenant  and  Tenant  leased  from  Landlord,  certain
"Premises"  described  in said Lease and located in the City of Woodland  Hills,
County of Los Angeles, California 91367.

         2. The Lease is in full  force  and  effect  and has not been  amended,
modified,  supplemented  or  assigned by Tenant  except by written  agreement[s]
dated,  ________ __, 200_.  The Lease  represents the entire  agreement  between
Landlord and Tenant.

         3. Tenant has accepted the Premises and presently occupies them, and is
paying rent on a current basis.  Tenant has no setoffs,  claims,  or defenses to
the enforcement of the Lease.

         4. As of the date of this Estoppel Certificate ("Certificate"),  Tenant
is not in default in the performance of any of its obligations  under the Lease,
and has not committed any breach of the Lease, and no notice of default has been
given to Tenant.

         5. As of the date of this  Certificate,  Landlord  is not in default in
the performance of any of its obligations under the Lease, and has not committed
any breach of the Lease, and no notice of default has been given to Landlord.

         6.  Rental (as  defined in the  Lease) in the amount of  $________  was
payable from _____ __, 200_.  No Rental has been paid by Tenant in advance under
the Lease except for a payment that becomes due on _______ __, 200_.  The amount
of the Operating Expense  Adjustment (as defined in the Lease) currently payable
by Tenant is $ ________  per month and  Tenant  has paid such  amounts up to and
including __________ __, 200_. A security deposit in the amount of $ ___________
was deposited with Landlord on ______ ______, 200_.

         7. Tenant has no claim against Landlord for any other security deposit,
prepaid fee or charge or prepaid  rent except as provided in Paragraph 6 of this
Certificate.

         8.  Tenant  is  executing  and  delivering  this  Certificate  with the
understanding that either a potential buyer is contemplating  acquiring all or a
part of the  Property or a potential  lender or ground  lessor is  contemplating
providing  financing  or a ground lease which  affects the  Building  and/or the
Property and that said buyer, lender or ground lessor will be entering into said
transaction in material reliance on this Certificate.

         Executed and effective on __________ __, 200_.



"Tenant":                            Brilliant Digital Entertainment, a Delaware
                                     corporation


                                     By:      _______________________
                                              Tyler Tarr
                                     Its:     Chief Financial Officer


                                       37
<PAGE>


                                   EXHIBIT "G"

                               PARKING FACILITIES


         So long as the  Lease  dated  September  21,  2003,  between  Topanga &
Victory Partners LP, a California limited partnership ("Landlord") and Brilliant
Digital Entertainment,  a Delaware corporation ("Tenant") pertaining to Premises
located at 6355 Topanga Canyon Boulevard,  Suite 520, Woodland Hills, remains in
effect and Tenant is not in default  thereunder,  Tenant and Tenant's designated
employees  shall be entitled  during the Term to (i) monthly  parking  licenses,
privileges or leases for up to fifteen(15)  automobiles  in the  aggregate,  and
(ii) park said automobiles,  on an as-available basis, in the parking facilities
adjacent  to the  Building  ("Parking  Facilities");  Tenant  shall  pay for the
parking  spaces at the monthly rate of Thirty-Two  Dollars ($32) per  unreserved
rooftop  space,   Fifty  Dollars  ($50)  per  unreserved   covered  space,   and
Seventy-Five Dollars ($75) for covered reserved space per month. Landlord may in
its sole  discretion  adjust or modify  said rates or charges  from time to time
during the Term, but in no event more than ten percent (10%) in any one calendar
year. In each case, Tenant (or its designated employee) shall enter into parking
licenses or lease agreements or other  arrangements  then in use by Landlord (or
Landlord's  operator) with respect to such monthly parking.  Tenant and Tenant's
designated  employees  shall be entitled  during the Term to additional  monthly
parking licenses, privileges or leases on an as-available basis only.

         A condition  of any parking  shall be  compliance  by all parkers  with
parking rules and regulations and all  modifications  and additions thereto from
time to time  established  by Landlord (or Landlord's  operator),  in their sole
discretion,  including any sticker or other identification system established by
Landlord (or Landlord's operator).  Landlord (and Landlord's operator) shall not
be  responsible  to  Tenant  for the  nonperformance  of any of said  rules  and
regulations  by any other  parker.  The rules and  regulations  for the  Parking
Facilities are as follows:

                              RULES AND REGULATIONS

         1. Parking hours are currently  established from 7:00 a.m. to 7:00 p.m.
Monday through Friday,  state and federal holidays excepted,  which Landlord can
adjust  and  change in the  exercise  of its  reasonable  discretion;  provided,
however,  Tenant shall have 24-hour access to the Parking facilities by way of a
key card entry system.

         2.  Automobiles  must be parked  entirely within the stall lines on the
pavement.

         3. All directional signs and arrows must be observed.

         4. The speed limit shall be 5 miles per hour.

         5.  Parking is  prohibited  in areas not  striped for  parking,  unless
specifically provided for by Landlord (or its operator).

         6.  Parking  stickers  or any other  device  or form of  identification
supplied by Landlord (or its operator) shall remain the property of Landlord (or
its operator). Such parking identification device must be displayed as requested
and may not be  mutilated  in any  manner.  The  serial  number  of the  parking
identification  device may not be obliterated.  Devices are not  transferable or
assignable  and any device in the possession of an  unauthorized  holder will be
void.  There will be a deposit of $10.00  required  for each  parking card and a
replacement  charge to Tenant or person designated by Tenant, of $10.00 for loss
or damage of any parking  card,  which amounts can be adjusted from time to time
by Landlord at its  discretion,  but in no event more than ten percent  (10%) in
any one calendar year

         7. The monthly rate for parking is payable one (1) month in advance and
must be paid on or before the fifth (5th) day of each calendar  month during the
entire Term of the Lease.  Failure to do so shall cause a penalty to be assessed
against  Tenant,  which penalty shall be the greater of five percent (5%) of the
overdue  amount or $100.00.  No deductions  or allowances  from the monthly rate
will be made for the days a parker does not use Parking Facilities.

         8.  Tenant,  at Tenant's  cost,  may validate  visitor  parking by such
method or methods as Landlord may approve or  establish,  at a  validation  rate
from time to time established by Landlord to be paid upon receipt of validation.


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         9.  Landlord  (and its  operator)  may  refuse to permit any person who
violates the within rules to park in the Parking Facility,  and any violation of
the rules shall subject the  automobile to removal from the Parking  Facility at
the parker's expense. In either of said events, Landlord (or its operator) shall
refund a pro rata portion of the current  monthly parking rate, and the sticker,
or any other form of identification supplied by Landlord (or its operator).

         10. Parking Facility  managers or attendants are not authorized to make
or allow any exceptions to these rules and regulations.

         11. Every  parker is required to park and lock his/her own  automobile.
All  responsibility  for any  loss or  damage  to  automobiles  or any  personal
property therein is assumed by the parker.

         12. Loss or theft of parking  identification  devices from  automobiles
must be reported  to the Parking  Facility  manager  immediately,  and a lost or
stolen report must be filed by the parker at that time.

         13. The  Parking  Facility  is for the sole  purpose of parking one (1)
automobile per space. Washing,  waxing,  cleaning or servicing of any vehicle by
the  parker  or  his/her  agents  is  prohibited  except  by  persons  expressly
authorized to do so in advance by Landlord.

         14.  Landlord  (and its  operator)  reserves  the right to  refuse  the
issuance of monthly  stickers  or other  parking  identification  devices to any
tenant  and/or  its  employees  who  refuse to comply  with the above  Rules and
Regulations and all posted and unposted city, state or federal ordinances,  laws
or agreements.

         15.  Tenant  agrees to  acquaint  all  employees  with these  rules and
regulations.


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                                   EXHIBIT "H"

                                    GUARANTEE

                            [Intentionally omitted.]




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