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                               AGREEMENT OF LEASE


         THIS AGREEMENT OF LEASE (the "Lease") is made as of this 22nd day of
March, 2000, by and between ROBERT K. MERICLE, an adult individual d/b/a
"MERICLE PROPERTIES", with an office located at c/o Mericle Development Corp.,
600 Baltimore Drive, East Mountain Corporate Center, Wilkes-Barre, Pennsylvania
18702 (the "Lessor") and LECHTERS PENNSYLVANIA, INC., a Pennsylvania
corporation, with offices located at 1 Cape May Street, Harrison, New Jersey
07029-2404 (the "Lessee").


                              W I T N E S S E T H:

         WHEREAS, Lessor is the fee simple owner of certain real property
containing an aggregate of approximately 16.472 acres of land located within
that certain industrial park known as the "Humboldt Industrial Park" (the
"Park") and specifically located at Parcel No. 46 and Parcel No. 46A, Oak Ridge
Road, Humboldt Industrial Park, Hazle Township, Luzerne County, Pennsylvania, as
more particularly described on Exhibit "A-1" attached hereto and made a part
hereof (collectively, "Parcel No. 46"); and

         WHEREAS, Lessor is also the fee simple owner of certain additional real
property containing approximately 18.308 acres of land also located within the
Park and specifically located at Parcel # 49, Oak Ridge Road, Humboldt
Industrial Park, Hazle Township, Luzerne County, Pennsylvania, as more
particularly described on Exhibit "A-2" attached hereto and made a part hereof
("Parcel No. 49"); and

         WHEREAS, Parcel No. 46 and Parcel No. 49 are adjacent and contiguous to
one another; and

         WHEREAS, the Lessor shall, after the date of this Lease, subdivide
Parcel No.49 into two (2) parcels, the first of which shall contain
approximately 5.308 acres of land, approximately as shown as "Parcel No. 49A" on
Exhibit "A-3" attached hereto and made a part hereof ("Parcel No. 49A"), and the
second of which shall contain approximately 13 acres of land, approximately as
shown as "Parcel No. 49B" also on Exhibit "A-3" attached hereto and made a part
hereof ("Parcel No. 49B"); and

         WHEREAS, the Lessor shall combine Parcel No. 46 and Parcel No. 49A into
one (1) contiguous parcel of land which shall contain a total of approximately
21.78 acres of land, approximately as shown on Exhibit "A-4" attached hereto and
made a part hereof (the "Real Property"); and


         WHEREAS, Parcel No. 46 is, as of the date of this Lease, improved with,
inter alia, a commercial/industrial building containing one hundred and ten
thousand (110,000) square feet of space, as shown by the shaded area on Exhibit
"B-1" attached hereto and made a part hereof (the "Phase I Building"); and

         WHEREAS, the Lessor and the Lessee are both desirous of having the
Lessor construct on a portion of the remaining lands of Parcel No. 46 an
addition to the Phase I Building, which addition to the Phase I Building shall
contain an additional ninety-nine thousand (99,000) square feet of space, as
shown by the shaded area on Exhibit "B-2" attached hereto and made a part hereof
(the "Phase II Building"); and

         WHEREAS, the Phase I Building and the Phase II Building are hereinafter
collectively shown as the shaded area on Exhibit "B-3" attached hereto and made
a part hereof and are hereinafter collectively referred to as the "Building";
and

         WHEREAS, the Lessor desires to lease the Building to the Lessee, upon
the terms and conditions
<PAGE>   2
 hereinafter contained; and

         WHEREAS, the Lessor desires to permit the Lessee to utilize (i) a
portion of Parcel No. 46 as shown by the shaded area on Exhibit "C-1" attached
hereto and made a part hereof for the Lessee's use for the parking of forty-six
(46) vehicles (the "Phase I Parking Area"), and (ii) another portion of Parcel
No. 46 as shown by the shaded area on Exhibit "C-4" attached hereto and made a
part hereof for the Lessee's use for the storage of approximately forty (40)
trailers (the "Trailer Storage Area"), and (iii) another portion of Parcel No.
46 as shown by the shaded area on Exhibit "D-1" attached hereto and made a part
hereof for the Lessee's use for purposes of vehicular and pedestrian ingress and
egress (the "Phase I Access Area"), all upon the terms and provisions
hereinafter contained; and

         WHEREAS, subsequent to the Lessor's substantial completion of the
construction of the Phase II Building on a portion of the remaining lands of
Parcel No. 46, the Lessor desires to permit the Lessee to also utilize (i)
another portion of Parcel No. 46 as shown by the shaded area on Exhibit "C-2"
attached hereto and made a part hereof for the Lessee's use for the parking of
an additional forty (40) vehicles (the "Phase II Parking Area"), and (ii)
another portion of Parcel No. 46 as shown by the shaded area on Exhibit "D-2"
attached hereto and made a part hereof for the Lessee's use for purposes of
vehicular and pedestrian ingress and egress (the "Phase II Access Area"), all
upon the terms and provisions hereinafter contained; and

         WHEREAS, the Phase I Parking Area and the Phase II Parking Area are
hereinafter collectively shown as the shaded area on Exhibit "C-3" attached
hereto and made a part hereof and are hereinafter collectively referred to as
the "Parking Area"; and

         WHEREAS, the Phase I Access Area and the Phase II Access Area are
hereinafter collectively shown as the shaded area on Exhibit "D-3" attached
hereto and made a part hereof and are hereinafter collectively referred to as
the "Access Area"; and

         WHEREAS, the Lessee desires to lease the Building from the Lessor and
to utilize the Parking Area, the Trailer Storage Area and the Access Area, all
upon the terms and provisions hereinafter contained.

         NOW, THEREFORE, in consideration of the sum of One Dollar ($1.00) to
each in hand paid, the receipt of which is hereby acknowledged, and the mutual
covenants, promises and agreements herein set forth, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged between the parties, the Lessor and Lessee, intending to be legally
bound, hereby agree as follows:

         1. Subdivision of Parcel No. 49. Promptly after the date of the
execution of this Lease first above written, the Lessor shall, at its sole cost
and expense, file all submissions necessary for, and diligently and in good
faith pursue to final approvals, the subdivision of Parcel No. 49 into Parcel
No. 49A and Parcel 49B and, thereafter, or concurrently therewith, the Lessor
shall combine Parcel No. 46 and Parcel No. 49A into one (1) contiguous parcel of
land to form the Real Property.

         2. Construction of the Phase II Building. The Lessor shall, promptly
after the date of the execution of this Lease first above written and at the
Lessor's sole cost and expense, commence the construction of the Phase II
Building as hereinafter more particularly set forth. The Lessor shall,
thereafter, diligently and in good faith, pursue to completion the construction
of the Phase II Building.

         3. Lease and Use of the Building; Use of the Parking Area, the Access
Area and the Trailer Storage Area.

                  (a)      Lessor does hereby demise and let unto the Lessee the
Building and the Lessee does hereby hire and rent from the Lessor the Building
upon the terms and conditions set forth in this Lease. The
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use of the Building by Lessee shall be only for general office space and for use
as a warehouse/distribution center for the warehousing and distribution of goods
and products which do not pose a serious threat of environmental risk to the
Lessor, the Building or the Real Property or which are not highly flammable
goods and products which would not pose a serious threat of risk of fire to the
Lessor or the Building, and no other uses shall be conducted from the Building.
All of such uses shall be subject to the covenants, terms and conditions
hereinafter contained and the covenants, conditions and restrictions applicable
to the Park. The Lessee shall not carry on any unlawful business in or about the
Building.

                  (b)      The Lessee may utilize the Parking Area only for the
parking of vehicles and may utilize the Trailer Storage Area only for the
parking or storage of excess trailers and other vehicles and may utilize the
Access Area only for vehicular and pedestrian ingress and egress. The Lessee
shall not park, and shall use reasonable good faith efforts to prohibit its
agents, employees, visitors or invitees from parking, within the Access Area at
any time and the Lessee shall use reasonable good faith efforts to keep the
Access Area open and accessible at all times to provide emergency vehicle access
to and through the Real Property.

         4.       Term.

                  (a)      The term of this Lease (the "Term") shall be for a
period of ten (10) years and six (6) months from the Phase I Commencement Date
(hereinafter defined) unless the Term is otherwise extended pursuant to the
provisions of Paragraphs 38 or 39 of this Lease. The Term of this Lease shall,
with respect to the Phase I Building, commence on approximately June 1, 2000
(the "Anticipated Phase I Commencement Date"), but the exact date shall be that
date (the "Phase I Commencement Date") which is the later to occur of (i) the
date upon which the Lessor has substantially completed the construction of the
Phase I Lessor's Improvements (hereinafter defined), or (ii) June 1, 2000. The
parties anticipate that by (i) no later than April 1, 2000, the Lessor shall
cause the Contractor (hereinafter defined) to commence the construction of the
Phase I Lessor's Improvements, (ii) no later than April 15, 2000, the Lessor
shall provide the Lessee with construction access to the office portion of the
Phase I Building, subject to the Lessee's Early Access Compliance Requirements
(hereinafter defined), in order for the Lessee's telecommunications contractor
to commence the installation of the Lessee's telecommunications wiring, (iii) no
later than May 1, 2000, the Lessor shall provide the Lessee with construction
access to the warehouse portion of the Phase I Building, subject to the Lessee's
Early Access Compliance Requirements, in order for the Lessee's contractor to
commence the installation of the Lessee's racking systems within the warehouse
portion of the Phase I Building (the "Anticipated Phase I Racking Installation
Date"), (iv) no later than May 15, 2000, the Lessor shall provide the Lessee
with access to either of the front or rear office area(s) of the Phase I
Building, subject to the Lessee's Early Access Compliance Requirements, in order
for the Lessee to interview potential employees, and (v) no later than the
Anticipated Phase I Commencement Date (i.e., by no later than June 1, 2000), the
Lessor shall substantially complete the construction of the Phase I Lessor's
Improvements, subject to the Lessor' s subsequent completion of any punch list
items with respect thereto. Possession of the Phase I Building for purposes of
the Lessees's occupancy thereof shall be delivered to the Lessee on the Phase I
Commencement Date in a substantially completed condition with respect to the
Phase I Lessor's Improvements, all as set forth in Paragraph 20 of this Lease.

                  (b)      The Term of this Lease shall, with respect to the
Phase II Building, commence on approximately October 15, 2000 (the "Phase II
Outside Completion Date"), but the exact date shall be that date (the "Phase II
Commencement Date") upon which the Lessor has substantially completed the
construction of the Phase II Lessor's Improvements (hereinafter defined). The
parties further anticipate that by (i) no later than September 15, 2000, the
Lessor shall provide the Lessee with construction access to the warehouse
portion of the Phase II Building, subject to the Lessee's Early Access
Compliance Requirements, in order for the Lessee's contractor to commence the
installation of the Lessee's racking systems within the warehouse portion of the
Phase II Building (the "Anticipated Phase II Racking Installation Date"), (ii)
no later than October 1, 2000, the Lessor shall provide the Lessee with access
to the Phase II Building, subject to the Lessee's Early Access Compliance
Requirements, for the Lessee to begin to deliver product into the
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Phase II Building (the "Anticipated Phase II Product Delivery Date"), and (iii)
no later than the Phase II Outside Completion Date, the Lessor shall
substantially complete the construction of the Phase II Lessor's Improvements,
subject to the Lessor's subsequent completion of any punch list items with
respect thereto. Possession of the Phase II Building for purposes of the
Lessee's occupancy thereof shall be delivered to the Lessee on the Phase II
Commencement Date with respect to the Phase II Lessor's Improvements, all as set
forth in Paragraph 20 of this Lease.

                  (c)      The Term shall expire, unless otherwise extended
pursuant to the provisions of Paragraphs 38 and 39 of this Lease, at 12:00
midnight on that date which is ten (10) years and six (6) months following the
Phase I Commencement Date (the "Termination Date"). Anything contained in this
Lease to the contrary notwithstanding, the Termination Date shall be the same
date for the termination of this Lease with respect to both the Phase I Building
and the Phase II Building and, therefore, the Term with respect to the entire
Building shall expire on the Termination Date. Upon the Termination Date, this
Lease shall terminate and the Lessee shall surrender the entire Building (i.e.,
the Phase I Building and the Phase II Building and the Phase III Building
(hereinafter defined), if applicable) to the Lessor in accordance with the terms
and conditions of this Lease.

                  (d)      With respect to the Lessee's early access to the
Building, or portions thereof, as hereinabove expressly set forth in Paragraphs
4(a) and (b) above, the Lessee shall have access to those portions of the
Building as hereinabove expressly provided prior to the Phase I Commencement
Date and the Phase II Commencement Date, as the case may be, for the sole
purposes as expressly provided in Paragraphs 4(a) and (b) above; provided,
however, such early access by the Lessee into such portions of the Building
prior to the Phase I Commencement Date with respect to early access to the Phase
I Building, and prior to the Phase II Commencement Date with respect to early
access to the Phase II Building, shall all be subject to the Lessee's compliance
with the following qualifications and limitations (collectively, the "Lessee's
Early Access Compliance Requirements"): (i) the Lessee shall have such early
access only to such applicable portions of the Building upon which the Lessor
has substantially completed the construction of the applicable Lessor's
Improvements (hereinafter defined) as hereinafter set forth; (ii) the Lessee
shall provide to the Lessor, prior to such early access by the Lessee,
acceptable certificates of all insurance policies which the Lessee is required
to obtain under this Lease; (iii) the Lessee's early access, prior to the Phase
I Commencement Date or the Phase II Commencement Date, as the case may be, shall
be coordinated with the Contractor in order to minimize any interference with
the Lessor's construction of the Phase II Building and the applicable Lessor's
Improvements in the Phase I Building and/or the Phase II Building; and (iv) the
Lessee shall enter the Building and install the Lessee's equipment, racking and
the Lessee's Improvements (hereinafter defined) therein prior to the applicable
Commencement Date at the Lessee's sole risk, cost and expense and the Lessee
shall indemnify, defend and hold the Lessor harmless from and against any
damages, costs, expenses or claims incurred by the Lessor arising out of the
Lessee's negligence or willful misconduct in connection with the Lessee's entry
into the Building prior to such applicable Commencement Date.

                  (e)      (A) Anything contained in this Lease to the contrary
notwithstanding, (i) if the construction of the Phase I Lessor's Improvements
have not been substantially completed by that date which is fifteen (15) days
after the Anticipated Phase I Commencement Date (the "Phase I Commencement
Damages Date"), or (ii) if the Lessor has not provided the Lessee with
construction access to the warehouse portion of the Phase I Building in order
for the Lessee's contractor to commence the installation of the Lessee's racking
systems within the warehouse portion of the Phase I Building by that date which
is fifteen (15) days after the Anticipated Phase I Racking Installation Date
(the "Phase I Racking Damages Date")(provided, however, such Anticipated Phase I
Commencement Date, Anticipated Phase I Racking Installation Date, Phase I
Commencement Damages Date and the Phase I Racking Damages Date shall all be
automatically extended for delays caused by Force Majeure (hereinafter defined)
or delays caused by, or attributable to, the Lessee), then the Lessee may
require the Lessor to pay to the Lessee, as compensation for damages and not as
a penalty, and the Lessee's
<PAGE>   5
sole remedy for any such delay shall be the sum of One Thousand Eighty-Five and
00/100 Dollars ($1,085.00) per day for each day of delay in the substantial
completion of the construction of the Phase I Lessor's Improvements after the
Phase I Commencement Damages Date or for each day of delay in providing the
Lessee with construction access to the warehouse portion of the Phase I Building
in order for the Lessee's contractor to commence installation of the Lessee's
racking systems in the warehouse portion of the Phase I Building after the Phase
I Racking Damages Date (subject to an automatic extension thereof due to delays
caused by Force Majeure or delays caused by, or attributable to, the Lessee);
provided, however, if both of such delays by the Lessor shall occur, then the
Lessee shall only be entitled to recover such damages of One Thousand
Eighty-Five and 00/100 Dollars ($1,085.00) per day for both delays and not the
sum of Two Thousand One Hundred Seventy and 00/100 Dollars ($2,170.00) per day
(i.e., the Lessee may not recover double damages).

                  (B)      In addition, (i) if the Phase II Building or the
Phase II Lessor's Improvements have not been substantially completed by that
date which is fifteen (15) days after the Phase II Outside Completion Date (the
"Phase II Commencement Damages Date"), or (ii) if the Lessor has not provided
the Lessee with construction access to the warehouse portion of the Phase II
Building in order for the Lessee's contractor to commence the installation of
the Lessee's racking systems within the warehouse portion of the Phase II
Building by that date which is fifteen (15) days after the Anticipated Phase II
Racking Installation Date (the "Phase II Racking Damages Date"), or (iii) if the
Lessor has not provided the Lessee with access to the Phase II Building in order
for the Lessee to begin to deliver product into the Phase II Building by that
date which is fifteen (15) days after the Anticipated Phase II Product Delivery
Date (the "Phase II Product Delivery Damages Date") (provided, however, such
Phase II Outside Completion Date, Anticipated Phase II Racking Installation
Date, Phase II Commencement Damages Date, Phase II Racking Damages Date,
Anticipated Phase II Product Delivery Date and Phase II Product Delivery Damages
Date shall all be automatically extended for delays caused by Force Majeure or
delays caused by, or attributable to, the Lessee), then the Lessee may require
the Lessor to pay to the Lessee, as compensation for damages and not as a
penalty, and the Lessee' sole remedy for any such delay, shall be the sum of
Nine Hundred Seventy-Five and 00/100 Dollars ($975.00) per day for each day of
delay in the substantial completion of the construction of the Phase II Building
or the Phase II Lessor's Improvements after the Phase II Commencement Damages
Date or for each day of delay in providing the Lessee with construction access
to the warehouse portion of the Phase II Building in order for the Lessee's
contractor to commence installation of the Lessee's racking systems in the
warehouse portion of the Phase II Building after the Phase II Racking Damages
Date or for each day of delay in providing the Lessee with access to the Phase
II Building in order for the Lessee to begin to deliver product into the Phase
II Building after the Phase II Product Delivery Damages Date (subject to an
automatic extension thereof due to delays caused by Force Majeure or delays
caused by, or attributable to, the Lessee); provided, however, if both of such
delays by the Lessor shall occur, then the Lessee shall only be entitled to
recover such damages of Nine Hundred Seventy-Five and 00/100 Dollars ($975.00)
per day for both delays and not the sum of One Thousand Nine Hundred Fifty and
00/100 Dollars ($1,950.00) per day (i.e., the Lessee may not recover double
damages). In addition, if the construction of (W) the Phase I Lessor's
Improvements have not been substantially completed by July 1, 2000, or (X) the
Phase II Building and the Phase II Lessor's Improvements have not been
substantially completed by November 15, 2000, then , in either of such events,
the Lessor shall use its reasonable efforts to locate alternate, short-term
space for the Lessee's conduct of its business (the "Alternate Space") until
such time as the Lessor has substantially completed the construction of the
Phase I Lessor's Improvements and the Phase II Building and the Phase II
Lessor's Improvements; provided, however, if any such delay is caused by the
Lessor (and not the result of Force Majeure or delays caused by, or attributable
to, the Lessee), then the Lessor shall be responsible for the payment of all
rent with respect to the Alternate Space, but if any such delay is
<PAGE>   6
caused by, or attributable to, the result of Force Majeure or delays caused by,
or attributable to, the Lessee, then the Lessee shall be responsible for the
payment of all rent with respect to the Alternate Space. In either event,
however, the Lessor shall waive any leasing fees or commissions otherwise
payable to the Lessor as a commercial real estate broker with respect to the
leasing of such Alternate Space to the Lessee. Anything further contained in
this Lease to the contrary notwithstanding, if the construction of (Y) the Phase
I Lessor's Improvements have not been substantially completed by August 1, 2000
(subject to an extension thereof due to delays caused by Force Majeure or delays
caused by, or attributable to, the Lessee), or (Z) the Phase II Building and the
Phase II Lessor's Improvements have not been substantially completed by December
31, 2000 (subject to an extension thereof due to delays caused by Force Majeure
or delays caused by, or attributable to, the Lessee), then, in either of such
events, the Lessee shall have the right to terminate this Lease with respect to
the entire Building by providing written notice thereof to the Lessor, whereupon
this Lease shall so terminate and, thereafter, neither the Lessor nor the Lessee
shall have any further liability and obligations under this Lease.

                  (f)      Any provisions of this Lease to the contrary
notwithstanding, the Lessee's obligation to commence paying Rent (hereinafter
defined) with respect to the Phase I Building shall begin on the earlier of (i)
the date that the Lessee actually commences its full business operations from
the Phase I Building without any material interference with the Lessee's
business operations by the Lessor as a result of the Lessor's completion of its
construction activities within the Building (provided, however, the Lessee's
early access to the Phase I Building as provided in Paragraph 4(d) above and as
necessary for the Lessee to construct the Phase I Lessee's Improvements pursuant
to Paragraph 20 shall not be deemed to be the Lessee's commencement of its full
business operations from the Phase I Building), or (ii) the date of substantial
completion of the construction of the Phase I Lessor's Improvements. The
Lessee's obligation to commence paying Rent with respect to the Phase II
Building shall begin on the earlier of (i) the date that the Lessee actually
commences its full business operations from the Phase II Building without any
material interference with the Lessee's business operations by the Lessor as a
result of the Lessor's completion of its construction activities within the
Building (provided, however, the Lessee's early access to the Phase II Building
as provided in Paragraph 4(d) above and as necessary for the Lessee to construct
the Phase II Lessee's Improvements pursuant to Paragraph 20 shall not be deemed
to be the Lessee's commencement of its full business operations from the Phase
III Building), or (ii) the date of substantial completion of the construction of
the Phase II Lessor's Improvements. For purposes of this Lease, "substantially
complete", "substantially completed" or "substantial completion" shall mean that
construction of the applicable Lessor's Improvements have been completed in
accordance with the Plans and Specifications set forth on Exhibits "E-1" or
"E-2" respectively attached hereto and made a part hereof (other than for de
minimus field changes and construction variations), subject to the completion of
any punch list items, and that the Lessor has obtained plans approved by the
Pennsylvania Department of Labor and Industry with respect to such applicable
Lessor's Improvements and provided that the Lessor's Improvements have been
completed so as to permit the lawful use and occupancy thereof. The Lessor shall
notify the Lessee no less than ten (10) days prior to the anticipated Phase I
Commencement Date and the anticipated Phase II Commencement Date with respect to
the Lessor's anticipated substantial completion of the Phase I Lessor's
Improvements and the Phase II Building and the Phase II Lessor's Improvements.
Upon the Termination Date, this Lease shall automatically terminate and the
Lessee shall surrender the Building to the Lessor in accordance with the terms
and conditions of this Lease. The Lessor and the Lessee hereby acknowledge and
agree that the Lessee may, upon the Termination Date, elect to either (i) remove
the Lessee's racking from the Building provided, however, if the Lessee elects
to do so, then the Lessee shall cut all bolts and other fasteners which are used
to secure such racking to the floor so that they are completely flush with the
floor and then fill and grout such areas so that the affected portions of the
floor are left smooth and not pitted, or (ii) leave the Lessee's racking in the
Building, whereupon such
<PAGE>   7
racking shall automatically become the property of the Lessor.

         5.       Minimum Rent. Lessee shall pay to Lessor as minimum rent (the
"Minimum Rent") for the Building the following:

                  (a)      Commencing on the Phase I Commencement Date and
continuing thereafter during the next approximately four (4) months through the
day immediately preceding the Phase II Commencement Date, the monthly Minimum
Rent for the Lessee's lease of the Phase I Building shall be Thirty-Three
Thousand and 00/100 Dollars ($33,000.00), which shall be payable in equal
monthly installments of Thirty-Three Thousand and 00/100 Dollars ($33,000.00)
each, based upon an annual Minimum Rent of Three and 60/100 Dollars ($3.60) per
square foot multiplied by the total number of square feet contained in the Phase
I Building (i.e., 110,000 square feet).

                  (b)      Commencing on the Phase II Commencement Date and
continuing thereafter during the next twelve (12) months through the day
immediately preceding the first (1st) anniversary of the Phase II Commencement
Date, the total annual Minimum Rent for the entire Building (i.e., the Phase I
Building and the Phase II Building) shall be, subject to adjustment as
hereinafter provided, Seven Hundred Fifty-Two Thousand Four Hundred and 00/100
Dollars ($752,400.00), payable in equal monthly installments of Sixty-Two
Thousand Seven Hundred and 00/100 Dollars ($62,700.00) each (based upon an
annual Minimum Rent of Three and 60/100 Dollars ($3.60) multiplied by the total
number of square feet of space contained in the entire Building (i.e., the Phase
I Building and the Phase II Building, or 209,000 square feet). The Phase II
Building shall contain ninety-nine thousand (99,000) square feet of space as
measured by the Lessor's architect or engineer (and verified by the Lessee) from
structural line to structural line of the Phase II Building (the "structural
line" shall be the outside face of the structural steel of the Phase II
Building). If the Phase II Building contains less than ninety-nine thousand
(99,000) square feet of space, then the Minimum Rent for the Phase II Building
shall be reduced to reflect the actual number of square feet of space contained
in the Phase II Building.

                  (c)      Commencing on the first (1st) anniversary of the
Phase II Commencement Date and continuing thereafter on each anniversary date
thereof through the Termination Date (each of said dates is hereinafter referred
to as an "Adjustment Date"), the annual Minimum Rent shall be increased by
adding to the Minimum Rent which was in effect for the lease year immediately
preceding the applicable Adjustment Date that amount which is determined by
multiplying the annual Minimum Rent which was in effect for the lease year
immediately preceding the applicable Adjustment Date by two percent (2%).

                  (d)      The Minimum Rent only attributable to each of the
Abatement Months (hereinafter defined) shall be abated and the Lessee shall not
be obligated to pay the Minimum Rent attributable to the Phase I Building, the
Phase II Building or the Phase III Building, as the case may be, for the
Abatement Months. With respect to the following phases of the Building, the
following months of Minimum Rent only shall be abated (collectively, the
"Abatement Months"): (i) with respect to the Phase I Building, the Minimum Rent
only attributable to the first two (2) months of the first (1st) lease year of
the Term applicable only to the Phase I Building (i.e., the first and second
month immediately following the Phase I Commencement Date) shall be abated, (ii)
with respect to the Phase II Building, the Minimum Rent only attributable to the
first two (2) months of the first (1st) lease year of the Term applicable only
to the Phase II Building (i.e., the first and second month immediately following
the Phase II Commencement Date) shall be abated, and (iii) with respect to the
Phase III Building (if the Lessee properly exercises its Expansion Option as
hereinafter expressly provided in Paragraph 39 of this Lease), the Minimum Rent
only attributable to the first two (2) months of the first (1st) lease year of
the Term applicable only to the Phase III Building (if any) (i.e., the first and
second month immediately following the Phase III Commencement Date (hereinafter
defined)) shall be abated. During the Abatement Months, the Minimum Rent only
attributable to the applicable Phase of the Building shall be abated and the
Lessee shall not be obligated to pay the Minimum Rent attributable to such
applicable Phase I Building, the Phase II Building or the Phase III Building
only during each of the applicable
<PAGE>   8
Abatement Months; provided, however, the Lessee shall be responsible for the
payment of all Additional Rent (hereinafter defined) during all of the Abatement
Months.

                  (e)      In each instance, the Minimum Rent shall be payable
in advance, without prior notice or demand and without any right of offset of
the Lessee (except as hereinafter expressly provided), at the address of the
Lessor, the first of such monthly installments with respect to the Phase I
Building to be payable within ten (10) days after notice from the Lessor that
the Phase I Commencement Date has occurred (or shall occur on a date certain)
and, thereafter, on or before the first day of each month and the first of such
monthly installments with respect to the Phase II Building to be payable within
ten (10) days after notice from the Lessor that the Phase II Commencement Date
has occurred (or shall occur on a date certain) and, thereafter, on or before
the first day of each month, all of which is subject to the Minimum Rent
abatement provisions during the Abatement Months as set forth in Paragraph 5(d)
above. In the event that any Minimum Rent or Additional Rent (the Minimum Rent
and the Additional Rent are hereinafter collectively referred to as the "Rent")
is not received by Lessor on the date set forth for payment, then Lessee shall
pay to Lessor (i) a late fee equal to five percent (5%) of the delinquent
installment of Rent (the "Late Fee"), (ii) interest on such delinquent
installment at a rate equal to the "Prime Rate of Interest" published from time
to time in the "Money Mart" Section of The Wall Street Journal (the "Prime
Rate") plus three percent (3%) from the date that such installment was due
through the date that such installment is actually received by the Lessor (the
"Late Interest"), and (iii) all reasonable costs and charges incurred by Lessor
in connection with its collection of the late payment (collectively, the "Late
Costs"), all of which shall be due under this Lease as, and shall become,
Additional Rent. If any month of the Term, or if the period of time between the
Phase I Commencement Date and the day immediately preceding the Phase II
Commencement Date, contain, in either event, less than a full calendar month,
then the Rent shall be pro-rated for the actual number of days contained in such
month or during such period of time. The foregoing notwithstanding, the Lessor
hereby agrees to waive its right to collect the Late Fee and the Late Interest
only two (2) times in any period of twelve (12) consecutive months during the
Term of this Lease if the Lessor receives the delinquent installment of Rent
from the Lessee within ten (10) days following the date upon which the Lessor
has provided the Lessee with a written notice stating that the Lessor has not
received the installment of Rent when due.

         6.       Security Deposit. The Lessee has delivered to the Lessor on or
before the date of this Lease the aggregate sum of Sixty-Two Thousand Seven
Hundred and 00/100 Dollars ($62,700.00) as the security deposit under this Lease
(together with any interest earned thereon, the "Deposit"). The Deposit shall be
applied by the Lessor as security for the full and faithful performance by
Lessee of Lessee's obligations under this Lease and for the payment of repairing
any damages to the Building, the Parking Area, the Trailer Storage Area or the
Access Area which arise during this Lease and for which the Lessee is liable
hereunder in either event, which Lessee fails to perform in accordance with the
terms of this Lease after any notice from the Lessor which is required to be
provided under this Lease has been so provided and after the expiration of any
applicable cure period therefor without such cure having been made. The Deposit
shall be held in a separate, interest-bearing security deposit account (such
account shall not be co-mingled with Lessor's funds) in a financial institution
of Lessor's choice. Interest accruing while the Deposit is in the account shall
be charged to the Lessee's Employer Identification Number 22-2273840. Upon the
termination of this Lease, the portion of the Deposit then being held by the
Lessor hereunder, less any amount applied for damages caused by the Lessee or
sums due Lessor for any breach or default under this Lease by Lessee, will be
promptly refunded to the Lessee.

         7.       Property Taxes.

                  (a)      The Lessee shall pay to the Lessor any and all real
property taxes and assessments attributable to the Building and the Real
Property payable for the Term of this Lease including, but not limited to, taxes
resulting from any increases in the assessed value of, or for improvements made
to, the Building and the Real Property (collectively, the "Property Taxes"). The
Property Taxes for which the Lessee
<PAGE>   9
shall be responsible for payment shall be all Property Taxes which are incurred
during, or attributable to, all periods of time within the Term and any Property
Taxes which are attributable to a period of time which is prior to the
commencement of the Term or which extends beyond the Term shall be pro rated so
that the Lessee's portion of Property Taxes shall be only that portion which is
incurred during, or attributable to, the Term. The Lessee's payment of such
Property Taxes shall be payable by Lessee, as Additional Rent to Lessor either:
(i) within thirty (30) days following written notice of the total amount thereof
from Lessor to Lessee, together with copies of receipted tax bills for prior
years requested by Lessee not previously delivered to Lessee, but in no event
more than ten (10) days prior to the final day of any applicable "rebate period"
or "discount period" for the payment of such Property Taxes, or (ii) in twelve
(12) equal monthly installments pursuant to the Property Tax Budget (hereinafter
defined) as hereinafter set forth. The Lessor shall provide to the Lessee a copy
of the bill or invoice for such Property Taxes which Lessor receives from the
applicable taxing authority, together with a written explanation indicating in
reasonable detail the manner in which the Lessor calculated the amount of
Property Taxes due by the Lessee pursuant to this Paragraph 7. In addition, the
Lessor shall provide to the Lessee, upon the request of the Lessee, copies of
the "paid" tax bills for the Property Taxes paid with respect to the Building
and the Real Property during the Term.

                  (b)      Anything contained in Paragraph 7(a) above or
elsewhere in this Lease to the contrary notwithstanding, if the Property Taxes
attributable solely to the Phase I Building and the Phase I Land (hereinafter
defined) for the first twelve (12) months of the Term following the Phase I
Commencement Date (provided, however, such first year Property Taxes
attributable to the Phase I Building and the Phase I Land shall be finally
determined only after the Lessor's completion of any and all tax assessment
appeals with respect thereto) exceed Sixty Thousand Five Hundred and 00/100
Dollars ($60,500.00) (i.e., $0.55 per square foot of space contained in the
Phase I Building), then any such excess therein (any such excess above such
$0.55 per square foot of space contained in the Phase I Building is hereinafter
referred to as the "Phase I First Year Excess Property Tax Amount") shall be
paid for by the Lessor throughout the Term; provided, however, the Lessee shall
continue to be responsible for any and all increases in the Property Taxes
attributable to the Phase I Building and the Phase I Land (other than the Phase
I First Year Excess Property Tax Amount, for which the Lessor shall be
responsible) resulting from any cause, such as, but not limited to, millage
increase, re-assessments and so forth. For purposes of this Paragraph 7, the
term "Phase I Land" shall mean only that certain portion of Parcel No. 46
containing approximately 8.31 acres of land as more particularly shown as the
shaded area on Exhibit "A-5" attached hereto and made a part hereof.
Accordingly, as of the date of this Lease, Parcel No. 46 contains approximately
16.472 acres of land, and 8.31 acres of which is the Phase I Land and,
therefore, the Phase I Land is comprised of 50.5% of all of Parcel No. 46 (such
percentage having been determined by dividing the total number of acres
contained in the Phase I Land (i.e., 8.31 acres) by the total number of acres
contained in all of Parcel No. 46 (i.e., 16.472 acres)). As of the date of this
Lease, Property Taxes, in Luzerne County, Pennsylvania, are determined based
upon the sum of (i) an assessment based upon the value of the improvements, and
(ii) another assessment based upon the value of the land. For purposes of
illustration only, if, based upon the final determination of the property tax
assessment with respect to Parcel No. 46 and the Phase I Building (i.e.,
following the final determination of the property tax assessment with respect to
Parcel No. 46 and the Phase I Building and after the Lessor's final completion
of any and all property tax assessment appeals with respect to such property tax
assessment), the total Property Taxes with respect to the Phase I Building and
all of Parcel No. 46 for the first twelve (12) months following the Phase I
Commencement Date is $66,000 and, if such amount of Property Taxes is comprised
of $60,000.00 attributable to the improvements (i.e., the Phase I Building) and
if the remaining $6,000.00 of such total amount of Property Taxes is
attributable to the land portion of the assessment (i.e, the entire Parcel No.
46), then, of such $6,000.00 amount attributable to the land assessment with
respect to all of Parcel No. 46, $3,030.00 of such land portion of the Property
Taxes shall be deemed to be applicable to the Phase I Land (i.e., 50.5% of
$6,000.00). Accordingly, the total amount of Property Taxes attributable to the
Phase I Building and the Phase I Land, during the first twelve (12) months of
the Term following the Phase I Commencement Date (as shall be determined
following the final conclusion of any and all property tax assessment appeals)
would be $63,030 (i.e., $60,000 attributable to the Phase I Building plus
$3,030.00
<PAGE>   10
attributable to the Phase I Land) and , therefore, the Phase I First Year Excess
Property Tax Amount would be $2,530.00 (i.e., $63,030.00 less $60,500.00) and
the Lessor would, therefore, throughout the Term, be responsible for the payment
of the Phase I First Year Excess Property Tax Amount only and the Lessee would
be responsible for all other Property Taxes. Anything contained in this Lease to
the contrary notwithstanding, if the total Property Taxes with respect to the
Phase I Building and the Phase I Land for the first twelve (12) months following
the Phase I Commencement Date (as shall be determined following the final
conclusion of any and all property tax assessment appeals and as the same shall
be calculated as hereinabove provided) is equal to, or less than, $60,500, then
the Phase I First Year Excess Property Tax Amount shall be -0- and, therefore,
the Lessor shall have no responsibility for the payment of any Phase I First
Year Excess Property Tax Amount throughout the Term of the Lease.

                  (c)      Anything contained in this Lease to the contrary
notwithstanding, if the Lessor's lender(s), from time to time, requires the
monthly payment to, and escrow of, Property Taxes with Lessor's lender, then the
Lessor may, at any time during the Term, elect to provide the Lessee with a
budget of the annual Property Taxes based upon the current or prior year's, tax
bill or the Lessor's good faith estimate of the tax bills to be received in the
applicable calendar year; provided, however, Lessor's estimate(s) shall be made
based upon the approved budgets of the applicable taxing authorities and the
approved millages therefrom and multiplied by the then applicable assessments
(the "Property Tax Budget"). The Lessor's preparation of the Property Tax Budget
shall be the Lessor's good faith estimate thereof only and the Lessee shall be
responsible for the full payment of any and all actual Property Taxes (other
than the Phase I First Year Excess Property Tax Amount, if any, as determined in
Paragraph 7(b) above) irrespective of the amounts therefor set forth in the
Property Tax Budget. If the Lessor elects to prepare a Property Tax Budget as
hereinabove set forth, then the Lessee shall pay to the Lessor on the first
(1st) day of each calendar month during the Term one-twelfth (1/12th) of the
amount set forth in the Property Tax Budget. As soon as reasonably practicable
after the Lessor's receipt of the actual tax bill, the Lessor shall provide the
Lessee with an invoice indicating the difference between the amounts of Property
Taxes actually due and the amounts paid thereon by the Lessee pursuant to the
Property Tax Budget, together with copies of paid bills required by the Lessee.
The Lessee shall, within thirty (30) days after the Lessee's receipt of such
invoice, pay to the Lessor any amount set forth therein which represents an
underpayment of the amount of Property Taxes actually due. If, however, the
amount paid by the Lessee toward all of the Property Taxes pursuant to the
Property Tax Budget exceeds the actual amounts therefor, then the Lessor shall
credit such excess amount against the Lessee's next monthly payment(s) of the
budgeted Property Taxes unless such refund would occur following the Termination
Date, in which event the Lessor will promptly refund such overpayment to the
Lessee.

                  (d)      If, at any time during the Term, (i) a surcharge,
fee, excise or tax is levied or imposed upon utilities consumed at, or waste
discharged from, the Building, or upon parking spaces which are a part of the
Parking Area or the Trailer Storage Area, or for any governmental service
furnished to the Building or persons visiting or occupying the same; or (ii) the
method of taxation of real property is changed from the method in existence on
the date of this Lease, so that real estate taxes are replaced by one or more
other types of alternative tax (collectively hereinafter referred to as
"Replacement Taxes"); then, the Lessee shall pay either to the governmental body
involved or, if assessed against, or collectible by, the Lessor or if the same
shall be lienable against the Real Property or the Building, then in any of such
events, the Lessee shall pay the same to the Lessor, as Additional Rent, the
amount of such (A) surcharge, fee, excise or tax on utilities, waste, parking
spaces or governmental services; and (B) such Replacement Taxes. Nothing herein
contained is intended to require the Lessee to pay any tax levied, assessed or
imposed upon Lessor based upon Lessor's net income, excise profits or net
taxable revenues or receipts.

                  (e)      If, at any time during the Term, the Lessee believes
that the Property Taxes are excessive, then the Lessee may request that the
Lessor appeal such property taxes to the Luzerne County Board of Assessment
Appeals or any other applicable governmental entity provided that all of the
reasonable costs and expenses associated with any such tax appeal shall be
borne, and paid for, by the Lessee and, upon
<PAGE>   11
the Lessor's receipt of such a request from the Lessee and the Lessor's receipt
of such costs and expenses from the Lessee, the Lessor shall appeal such
property tax assessment and promptly, diligently and in good faith pursue such
tax appeal. If any such appeal of such property tax assessment is successful
resulting in a refund of Property Taxes previously and actually paid by the
Lessee, then the Lessor shall promptly pay to the Lessee any refund thereof
actually received by the Lessor and to which the Lessee is entitled to a refund
pursuant to this sentence. If, however, the Lessor has failed or refused to
commence the appeal not later than fifteen (15) days prior to the deadline for
filing such appeal, then the Lessee may, at its sole cost and expense and after
providing prior notice to the Lessor (and giving the Lessor the opportunity to
appear at all hearings and meetings with the Lessee), appeal such property tax
assessment and the Lessee shall be repaid by the Lessor for any amounts
previously paid to Lessor in connection with the requested appeal.

                  (f)      In the event that any special assessments shall be
payable in a lump sum or on an installment basis, Lessor shall elect to pay such
special assessments on the installment basis, and Lessee shall reimburse Lessor
only those installments which shall become due and payable during the Term of
this Lease. Any such installments due and payable in the years in which this
Lease commences and terminates shall be prorated proportionately.

         8.       Insurance.

                  (a)      Liability Insurance. The Lessee, at its sole cost and
expense, shall secure and maintain throughout the Term commercial general
liability insurance issued by a reputable insurance company licensed to issue
such insurance in the Commonwealth of Pennsylvania and insuring both Lessor and
Lessee against death and personal injuries to one or more persons in the amount
of Three Million Dollars ($3,000,000.00) (provided, however, the aforesaid
amount shall be increased, from time to time, during the Term to reflect
increases in the rate of inflation) with respect to property damage/bodily
injury or death to one or more persons in any one occurrence in connection with
Lessee's use and occupancy of the Building and the Lessee's use of the Parking
Area, the Trailer Storage Area, the Access Area and the Real Property and
irrespective of whether such liability arises as a consequence of the negligence
of Lessor, its agents, servants or employees. Lessee shall, prior to the Phase I
Commencement Date, furnish to Lessor a certificate of the insurance company
issuing such insurance evidencing such coverage with the Lessor included as an
additional insured and such certificate shall contain a provision to the effect
that such coverage may not be canceled, materially changed or not renewed
without providing prior written notice to Lessor, such written notice shall be
given to the Lessor no less than ten (10) days prior to the effective date of
any such cancellation, change or renewal (but the Lessee shall use reasonable,
good faith efforts to require its insurer to provide no less than thirty (30)
days' prior written notice to the Lessor of the effective date of any such
cancellation, change or non-renewal).

                  (b)      Casualty Insurance. The Lessor shall secure and
maintain throughout the Term fire, casualty and extended coverage insurance
covering the Building including all improvements now or hereafter made thereto,
for no less than eighty percent (80%) of the replacement cost thereof and
together with rent interruption insurance. Lessee shall, however, pay to the
Lessor, as Additional Rent, in connection with the Budget set forth in Paragraph
10(b) of this Lease, the total premium due for such insurance with respect to
the Building. The foregoing notwithstanding, the Lessee shall, at its sole cost
and expense, be responsible for, and pay the cost of, fire and extended coverage
insurance on all of Lessee's personal property, furniture, trade fixtures and
trade equipment located within the Building. Lessee further agrees to install in
the Building, fire extinguishers, or any other devices of a non-capital nature,
as is required by Lessor's insurance carrier and local building codes prior to
the occupancy of the Building and further agrees that in the event the insurance
company or local building codes should require change in the nature of this
equipment (but not with respect to the Building's fire suppression/sprinkler
system within the Building which shall be the responsibility of the Lessor),
Lessee will effect such changes at Lessee's sole cost and expense.

         9.       Utilities. The Lessee shall pay all bills, when due, which may
be incurred during the Term
<PAGE>   12
for all utilities to the Building including, without limitation, all light,
electric power, gas, heat, water (including potable and fire sprinkler water),
sewer, trash removal, telephone, cable and any and all other utilities
(collectively the "Utilities") and any and all other fees, costs, expenses or
charges applicable to all Utilities consumed by the Lessee or applicable to the
Building, the Parking Area, the Trailer Storage Area, the Access Area and the
Real Property. The Utilities to the Building shall be separately-metered and,
therefore, the Lessee shall pay all bills therefor when due directly to the
utility company providing such Utilities. Should the Lessee fail to pay any
bills as aforesaid, the Lessor shall have the right, after providing written
notice to the Lessee and Lessee's failure to pay the same within thirty (30)
days after the date of Lessor's notice, to pay the same, and the amount so paid
shall be chargeable to the Lessee as Additional Rent and shall be paid
immediately with interest allowable at the Prime Rate plus three percent (3%),
from the date of such payment by the Lessor. The Lessee shall, upon the request
of the Lessor, provide the Lessor with a signed Written Request and
Authorization Form authorizing all utility companies that provide utility
service(s) to the Building (i.e., utility services which are provided to the
Building and which are billed directly to the Lessee and not through the Lessor
as a pass-through expense) to provide to the Lessor any information requested by
the Lessor regarding the demand, usage and consumption of such utility(ies)
within the Building. The Lessor may utilize any such utility demand, usage and
consumption information for, inter alia, purposes of comparing the utilities
used within the Building with utility consumption within other buildings owned
and/or managed by the Lessor.

         10.      Additional Rent; Annual Budget.

                  (a)      It is the agreement and intention of the Lessor and
the Lessee that the Minimum Rent to Lessor be "net, net, net" of any and all
Property Taxes (other than the Phase I First Year Excess Property Tax Amount, if
any), insurance costs and premiums, Utilities, maintenance costs and expenses,
management fees (as the same shall be limited as hereinafter expressly set
forth) and any and all other costs and expenses attributable to the Building
(except as otherwise expressly set forth herein), the Real Property, the Parking
Area and the Access Area, except as otherwise expressly provided for in this
Lease. Accordingly, in addition to the Lessee's payment of all Property Taxes
(other than the Phase I First Year Excess Property Tax Amount) as hereinabove
set forth in Paragraph 7(b) of this Lease, and its payment of all insurance
costs and premiums incurred by the Lessor as hereinabove set forth in Paragraph
8 of this Lease, and all Utilities as hereinabove set forth in Paragraph 9 of
this Lease, the Lessee shall also pay for (i) all Grounds Maintenance Costs
(hereinafter defined) as hereinafter set forth in this Paragraph 10 of this
Lease, and (ii) all maintenance costs and expenses, management fees (as the same
shall be limited as hereinafter expressly set forth) and any and all such other
costs and expenses attributable to the Building, the Real Property, the Parking
Area, the Trailer Storage Area and the Access Area, and (iii) all of the
maintenance costs and expenses attributable to the upkeep, maintenance and
repairs to the Building (except only for structural repairs only to the roof,
foundation and exterior walls of the Building, underground utility lines to the
Building and for keeping the roof of the Building in a watertight condition (but
not excluding costs associated with the cleaning of gutters and down spouts for
which the Lessee shall be responsible for payment) and the "Warranty Items"
(hereinafter defined) for a period of twelve (12) months after the (A) Phase I
Commencement Date as to those Warranty Items within the Phase I Building and as
to those Warranty Items which have been, or which are required under the terms
of this Lease to be, completed as of the Phase I Commencement Date, and (B)
Phase II Commencement Date, as to those Warranty Items which are required to be
completed in connection with the Lessor's construction of the Phase II Building,
all of which shall be the Lessor's sole responsibility as provided for
hereinafter). Any and all sums which may become due and payable by Lessee under
the terms of this Lease (other than the Minimum Rent), together with any late
fees, penalties or additional interest thereon for non-payment, shall
hereinafter collectively be referred to as "Additional Rent." The Lessor shall
provide to the Lessee, upon request, an allocation of the Additional Rent
showing in reasonable detail the manner in which the Additional Rent was
calculated by the Lessor.

                  (b)      The Lessor shall provide the Lessee with an annual
budget (as the same may be amended at any time and from time to time by the
Lessor, the "Budget") setting forth the Lessor's projection
<PAGE>   13
of (i) all insurance costs and premiums, and (ii) all Grounds Maintenance Costs,
and (iii) the management fee (as the same shall be limited as hereinafter
expressly set forth), and (iv) any and all other costs and expenses included in
the Additional Rent which the Lessor reasonably and in good faith anticipates
for the current year of the Term (collectively, "Service Costs"); provided,
however, Services Costs shall not include any repairs actually covered by any
warranty or proceeds of insurance. The foregoing notwithstanding, the costs for
Utilities for the Building shall not be included in the Budget and the Lessee
shall pay for all of such Utilities directly to the company providing such
Utilities to the Building at the time that the Lessee is billed therefor.
Anything contained in this Lease to the contrary notwithstanding, the Lessor's
preparation of the Budget shall be Lessor's good faith estimate thereof only
based upon the actual costs incurred for the prior calendar year plus any
reasonably anticipated costs and expenses for the then applicable year, plus any
anticipated increases in the actual costs incurred for the prior calendar year
(provided, however, any such increases shall not exceed five percent (5%) of
said prior year's costs) and the Lessor shall have no liability for any errors
or omissions therein and the Lessee shall be responsible for the full payment of
any and all actual amounts incurred with respect to all of the foregoing items
irrespective of the amounts therefor set forth in the Budget. The Lessee shall
pay to the Lessor on the first (1st) day of each calendar month during the Term
of this Lease one-twelfth (1/12th) of the amount set forth in the Budget. As
soon as reasonably practicable after the expiration of each calendar year, the
Lessor shall provide the Lessee with an invoice indicating the difference
between the amounts actually incurred for all of the foregoing items for such
calendar year and the amounts paid thereon by the Lessee. The Lessor shall, upon
the request of the Lessee, provide the Lessee with copies of invoices and
back-up documentation used by the Lessor in preparing and providing all
Additional Rent statements to the Lessee. The Lessee shall, within thirty (30)
days after the Lessee's receipt of such invoice and the back-up documentation
reasonably requested by the Lessee, pay to the Lessor any amount set forth
therein which represents an underpayment of the amount actually incurred
therefor during such calendar year or, if the amount paid by the Lessee toward
all of the foregoing items exceeds the actual amounts incurred therefor during
such calendar year, then the Lessor shall credit to the Lessee's next monthly
payment(s) of Minimum Rent such excess amounts unless such credit for such
excess amount paid would occur following the Termination Date, in which event
the Lessor will promptly refund such overpayment to the Lessee. The foregoing
notwithstanding, if at any time during the Term, the Lessor determines that the
Budget is inaccurate, the Lessor may amend such Budget by providing written
notice thereof to the Lessee, together with supporting documentation and an
explanation of the reason why the Lessor has determined that the Budget is
inaccurate. In addition, the Lessor may at any time during the Term provide the
Lessee with an additional invoice and supporting documentation for any
significant amounts not included in the Budget, whereupon the Lessee shall,
within thirty (30) days after the Lessee's receipt of such invoice, pay to the
Lessor any amount set forth therein.

         11.      Maintenance of the Building; Parking Area, Trailer Storage
Area and Access Area.

                  (a)      The Lessee shall be responsible for all repairs to
the Building (excluding only structural repairs only to the roof, foundation and
exterior walls of the Building, underground utility lines to the Building and
for keeping the roof of the Building in a watertight condition (but not
excluding costs associated with the cleaning of gutters and down spouts for
which the Lessee shall be responsible for payment) and the Warranty Items for a
period of twelve (12) months after the substantial completion thereof, all of
which the Lessor shall be responsible for) and the Lessee shall maintain the
same in good condition and repair, normal wear and tear excepted, and shall
furnish Lessor prompt written notice of any and all material accidents, fires or
other damage occurring on or to the Building. All refuse of any kind shall be
removed from the Building at reasonable intervals by, and at the sole cost of,
the Lessee.

                  (b)      The Lessee shall also be responsible for the costs of
exterior landscape maintenance of the Real Property, the Parking Area, the
Trailer Storage Area and the Access Area (including grass cutting, the upkeep,
maintenance and replacement of all shrubs, plantings and other landscape
materials), and snow and ice removal from the Access Area, the Parking Area and
the Trailer Storage Area; provided, however, the Lessor shall provide any such
exterior landscape maintenance services to the Building and the Real Property
<PAGE>   14
and the Lessee shall reimburse the Lessor for all Grounds Maintenance Costs as
set forth in Paragraph 10 of this Lease. The Lessee shall make, and shall be
responsible for the costs and expenses associated with making, any and all other
repairs to the Building, the Parking Area, the Trailer Storage Area and the
Access Area except only for structural repairs only to the roof, foundation and
exterior walls of the Building, underground utility lines to the Building and
for keeping the roof of the Building in a watertight condition (but not
excluding costs associated with the cleaning of gutters and down spouts for
which the Lessee shall be responsible for payment) and for the Warranty Items
during the period of twelve (12) months after the substantial completion
thereof. The foregoing notwithstanding, the Lessor may, at its option, elect to
provide, or elect to have provided, any maintenance services and repairs with
respect to the Building including the mechanical, electrical, plumbing and HVAC
system(s) thereof and equipment located therein and, if the Lessor elects to
provide any such services, the Lessor may charge, and the Lessee shall pay, such
fees for such services as would otherwise be paid to outside parties on a
competitive basis. In addition, the Lessor may charge a reasonable management
fee with respect to its management of the Building and, in such event, the
Lessee shall be responsible for the payment thereof; provided, however, such
annual management fee shall equal three percent (3%) of the annual Minimum Rent
and such management fee shall be in lieu of any administrative fee or overhead
charges of the Lessor with respect to its management of the Building. In
addition, the Lessor shall make available to the Lessee the benefit of any
manufacturer's warranties that the Lessor receives from the manufacturer(s) of
any building equipment or systems with respect to the Building or the equipment
or systems located therein; provided, however, the Lessor makes no
representation or warranty to the Lessee with respect to the existence of, nor
to the extent of, any such warranty(ies). In addition, with respect to the
Lessor's Improvements and the existing improvements to the Phase I Building
(including the HVAC units, the mechanical equipment in the Building, the
structural integrity of the floors, the structural integrity of the concrete
dolly pads for the trailer loading areas, the roads and the paved areas only
(collectively, the "Warranty Items"), the Lessor shall be responsible for any
defects in the construction, workmanship, materials and equipment (but not for
ordinary maintenance, servicing and routine repairs for which the Lessee shall
be responsible) for a period of twelve (12) months after the (A) Phase I
Commencement Date as to those Warranty Items within the Phase I Building and as
to those Warranty Items which have been, or which are required under the terms
of this Lease to be, completed as of the Phase I Commencement Date, and (B)
Phase II Commencement Date as to those Warranty Items within the Phase II
Building and as to those Warranty Items which are required to be completed in
connection with the Lessor's construction of the Phase II Building; provided,
however, the Lessor shall have no responsibility for any such items if any
damages are caused by the Lessee's improper use or maintenance thereof and the
Lessor shall have no responsibility for any such items after such twelve (12)
month period. For purposes of this Paragraph 11, "Grounds Maintenance Costs"
shall be any and all costs and expenses incurred by the Lessor with respect to
the grounds maintenance and upkeep of the Real Property including, without
limitation, all landscape maintenance such as grass cutting, the upkeep,
maintenance and replacement of all shrubs, plantings and other landscape
materials, snow and ice removal from all exterior portions of the Real Property
including all sidewalks, stairways, entrances and exits, the Parking Area, the
Trailer Storage Area and the Access Area. If, during the Term of this Lease (but
not more frequently than one (1) time in any lease year), the Lessee reasonably
believes that the costs being charged by any third party vendor for any services
being provided by such vendor to the Real Property or the Building are excessive
and if the Lessee is able to procure the same services from another reputable
service provider at a cost which is significantly less than the cost that is
then being charged, then the Lessee shall so notify the Lessor thereof and the
Lessor shall be required to obtain at least two (2) competitive bids (in
addition to the Lessee's procured bid) for such services from reputable service
providers and the Lessor shall select the lowest qualified bid for such service
at the end of the then applicable contract term of the current service provider.

                  12.      Quiet Enjoyment. If the Lessee faithfully and
diligently performs the terms of this Lease imposed on Lessee, the Lessee shall
have exclusive, peaceful possession, use, and quiet enjoyment of the Building
during the Term.

                  13.      Waiver of Subrogation. Each party hereby waives any
and every claim which arises or may
<PAGE>   15
arise in its favor and against the other party hereto during the Term for any
and all loss or damage to any of its property located within, or upon, or
constituting a part of, the Building, which loss or damage is, or is to be,
covered, by the terms of this Lease, by valid and collectible fire and extended
coverage insurance policies, and if and to the extent reimbursement is made,
even if such loss or damage shall be brought about by default or negligence of
the other party or by its employees, agents, servants or any persons claiming
under them and each party shall include a waiver of subrogation provision in its
applicable insurance policy(ies).

         14.      Damage or Destruction of the Building. Except as otherwise
hereinafter set forth, in the event the Building is damaged or partially
destroyed by fire or other casualty, Lessor shall restore the same to
substantially the same condition as existed prior to the occurrence of such fire
or other casualty. However, in the event the Building shall be damaged or
destroyed by fire or other casualty during the last year of the Term to such
extent as to preclude the repair and replacement thereof within one hundred and
twenty (120) days subsequent to the date of such event, Lessor shall have the
right to either utilize the insurance proceeds, if any, to reconstruct the
Building or, in the alternative, elect to receive payment of the insurance
proceeds and terminate this Lease; provided, however, in such event, if the
Lessee properly exercises its Extension Option (hereinafter defined) pursuant to
the provisions of Paragraph 38 of this Lease, then the Lessor's right to so
terminate this Lease shall become null and void and the Lessor shall then be
obligated to so reconstruct the Building. Lessee shall not be obligated to pay
any rentals or other amounts under this Lease applicable to any period when the
Building is untenantable due to any such damage or destruction; provided,
however, the Lessee shall be obligated to pay Rent with respect to any portion
of the Building which is actually being occupied and used by the Lessee during
the period when the Building is being repaired or restored.

         15.      Condemnation.

                  (a)      In the event that all or twenty-five percent (25%) or
more of the Building is taken by any condemnation or eminent domain proceedings,
then either the Lessee or Lessor shall have the right to terminate this Lease by
delivering written notice of such election to the other party, and, in such
event, all obligations of Lessee and Lessor hereunder with respect to the period
of time subsequent to such taking, shall, thereafter, terminate and this Lease
shall be null and void and of no further force and effect. If, however, less
than twenty-five percent (25%) of the Building is taken by the exercise of the
right of condemnation or eminent domain, this Lease shall continue with respect
to the remaining portion of the Building, and the Minimum Rent herein specified
to be paid by Lessee shall be ratably reduced according to the area of the
Building which is so taken. Lessor shall be entitled to assert and receive any
damages due from the condemning governmental unit or other entity exercising any
such right of condemnation or eminent domain. The foregoing notwithstanding, the
Lessee shall have the right to assert against any such condemning governmental
unit or other entity exercising any such right of condemnation or eminent domain
a claim for any damages incurred by the Lessee with respect to costs and
expenses incurred by the Lessee in connection with the relocation of its
business from the Building to another location or losses sustained to its
business as a result of the condemnation or eminent domain proceeding or with
respect to losses incurred by the Lessee with respect to the value of the
Lessee's equipment and trade fixtures and if any such award is not payable
directly to Lessee by the condemning authority, then the Lessee shall have the
right to receive such award from the award payable to the Lessor if the Lessee's
award was contained in, and made a part of, the award paid to the Lessor;
provided, however, the Lessee shall not have the right to assert any claim for
losses incurred with respect to the Lessee's loss of its leasehold interest.

                  (b)      In the event that any material portion of the Parking
Area or the Trailer Storage Area is permanently taken by any condemnation or
eminent domain proceedings, then, unless the Lessor shall relocate such Parking
Area or Trailer Storage Area so taken to another reasonable location on the Real
Property in order to restore the parking spaces and/or the trailer storage
spaces so taken, the Lessee may elect to terminate this Lease by delivering
written notice thereof to the Lessor, whereupon all
<PAGE>   16
obligations of Lessee and Lessor under this Lease shall terminate and this Lease
shall become null and void and of no further force and effect and, thereafter,
neither the Lessor nor the Lessee shall have any further liability under this
Lease. Finally, if the access to the Real Property or the Building is
permanently taken by any condemnation or eminent domain proceedings so that the
Lessee cannot gain access to the Real Property or the Building and if reasonable
access to the Real Property or the Building cannot be restored, relocated or
otherwise provided to the Real Property and the Building, then the Lessee shall
have the right to terminate this Lease by delivering written notice thereof to
the Lessor, whereupon all obligations of Lessee and Lessor under this Lease
shall terminate and this Lease shall become null and void and of no further
force and effect and, thereafter, neither the Lessor nor the Lessee shall have
any further liability under this Lease.

         16.      No Waste. No waste shall be committed by the Lessee, and at
the end of the Term, the Building shall be returned to the Lessor in
substantially as good condition as existed on the Phase I Commencement Date with
respect to the Phase I Building and as existed on the Phase II Commencement Date
with respect to the Phase II Building, ordinary wear and tear and damage by
casualty or condemnation excepted.

         17.      Hazardous Substances.

                  (a)      The Lessee represents and warrants to the Lessor that
the Building, the Parking Area, the Trailer Storage Area, the Access Area and
the Real Property shall be kept free from contamination by or from any hazardous
substances or hazardous waste (as such terms are defined and/or used in
applicable state or federal law or in the regulations issued thereunder
including, without limitation, the Federal Comprehensive Environmental Response,
Compensation and Liability Act) released by Lessee, its agents, employees or
contractors. The Lessee also agrees that it will not store, utilize or engage in
operations at or within the Building, the Parking Area, the Trailer Storage
Area, the Access Area and the Real Property or affecting the Building, the
Parking Area, the Trailer Storage Area, the Access Area and the Real Property
which involve the generation, manufacture, refining, transportation, treatment,
storage, handling or disposal of hazardous substances or hazardous waste,
medical waste or medical waste products or environmentally deleterious material;
provided, however, the Lessee may use and store limited quantities of those
hazardous materials as are routinely used in (i) office operations, and/or (ii)
warehouse and distribution center operations with respect to the warehousing and
distribution of household products and consumer good products for sale to the
general public provided the Lessee will at all times, at Lessee's cost and
expense, comply with and conform to all laws, statutes, ordinances, rules,
regulations, notices and orders of all governmental and regulating authorities
or any board of fire underwriters, or any insurance organization or company with
respect to the handling, storage, use and treatment of any hazardous substances
or waste on or which affect the Building, the Parking Area, the Trailer Storage
Area, the Access Area and the Real Property used, stored or released by the
Lessee, its agents, employees or contractors. The Lessee shall not cause or
permit to exist as a result of an intentional or unintentional action or
omission on its part or on the part of any of the Lessee's agents of releasing,
spilling, leaking, pumping, pouring, emitting, emptying or dumping from, on or
about the Building or the Real Property of any such hazardous substances or
waste.

                  (b)      The Lessee shall indemnify, defend and hold harmless,
the Lessor, its successors and assigns, any officer, director, shareholder,
employee or any agent of Lessor from any and all liability, damages, costs,
claims, suits, actions, legal or administrative proceedings, interests, losses,
expenses, and attorney's fees and appellate attorneys' fees (including any such
fees and expenses incurred in enforcing this indemnity) resulting from or
arising out of, or in any way connected with, injury to, or the death of, any
person (including any indemnified party) or damage to property of any kind
wherever located and by whomever owned (including that of any indemnified party)
or otherwise arising out of, or in any way
<PAGE>   17
connected with, the presence on, in or under the Building, the Parking Area, the
Trailer Storage Area, the Access Area and the Real Property of any hazardous
substances or hazardous waste; provided, however, that it must be shown that
such hazardous substance or hazardous waste were introduced in, to or under the
Building, the Parking Area, the Trailer Storage Area, the Access Area and the
Real Property by the Lessee, or its employees, contractors, agents, invitees,
guests, or its successors, assigns or sublessees, if any. This indemnification
is an independent covenant and shall survive the expiration or earlier
termination of this Lease. Lessee will not be liable in any way for any
environmental contamination occurring prior to the Phase I Commencement Date or
resulting from acts or omissions that took place prior thereto unless caused by
the acts or omissions of the Lessee.

                  (c)      Based solely upon those two (2) certain Phase I
Environmental Site Assessments, both prepared by Synergist, Inc., one dated
January 13, 1997 and the other dated February 12, 1999 (collectively, the "Phase
I Assessment"), the Lessor represents and warrants to the Lessee that the Lessor
has no knowledge of the existence in the Building or on the Real Property of any
contamination by or from any hazardous substances or hazardous waste (as such
terms are defined and/or used in applicable state or federal law or in the
regulations issued thereunder including, without limitation, the Federal
Comprehensive Environmental Response, Compensation and Liability Act). The
Lessor represents and warrants to the Lessee that the Phase I Assessment is the
only report prepared by or for the Lessor regarding the environmental condition
of the Real Property and that a true and complete copy of the Phase I Assessment
has been provided to the Lessee. The Lessor also agrees that it will not store,
utilize or engage in operations at or within the Building, the Parking Area, the
Trailer Storage Area, the Access Area and the Real Property or affecting the
Building, the Parking Area, the Trailer Storage Area, the Access Area and the
Real Property which involve the generation, manufacture, refining,
transportation, treatment, storage, handling or disposal of hazardous substances
or hazardous waste, medical waste or medical waste products or environmentally
deleterious material and the Lessor will at all times, at Lessor's cost and
expense, comply with and conform to all laws, statutes, ordinances, rules,
regulations, notices and orders of all governmental and regulating authorities
or any board of fire underwriters, or any insurance organizations or company
with respect to the treatment of any hazardous substances or waste on or which
affect the Building, the Parking Area, the Trailer Storage Area, the Access Area
and the Real Property. The Lessor shall not cause or permit to exist as a result
of an intentional or unintentional action or omission on its part or on the part
of any of the Lessor's agents of releasing, spilling, leaking, pumping, pouring,
emitting, emptying or dumping from, on or about the Building or the Real
Property of any hazardous substances or waste.

                  (d)      The Lessor shall indemnify, defend and hold harmless,
the Lessee, its successors and assigns, any officer, director, shareholder,
employee or any agent of Lessee from any and all liability, damages, costs,
claims, suits, actions, legal or administrative proceedings, interests, losses,
expenses, and attorney's fees and appellate attorneys' fees (including any such
fees and expenses incurred in enforcing this indemnity) resulting from or
arising out of, or in any way connected with, injury to, or the death of, any
person (including any indemnified party) or damage to property of any kind
wherever located and by whomever owned (including that of any indemnified party)
or otherwise arising out of, or in any way connected with, the presence on, in
or under the Building, the Parking Area, the Trailer Storage Area, the Access
Area and the Real Property of any hazardous substances or hazardous waste
existing on, in, or under the Building or the Real Property, the Parking Area,
the Trailer Storage Area and/or the Access Area prior to the Phase I Building
Commencement Date, or if it is shown to have been introduced in, to or under the
Building, the Parking Area, the Trailer Storage Area, the Access Area and the
Real Property during the Term, or any extension or renewal thereof or at any
other time, by the Lessor, or its employees, contractors, agents, invitees,
guests or other lessees. This indemnification is an independent covenant and
shall survive the expiration or earlier termination of this Lease.
<PAGE>   18
         18.      Compliance with Laws. The Lessor shall construct the Lessor's
Improvements in such a manner so that the Lessor's Improvements shall meet and
comply with the current building codes of Hazle Township, Luzerne County, the
Commonwealth of Pennsylvania and all Federal requirements (other than for the
ADA (hereinafter defined)) including, without limitation, the Pennsylvania
Universal Accessibility Act. Lessee shall, thereafter, comply with all
requirements of duly constituted public authorities, and with the terms of any
state or federal statute, regulation, and of any local ordinance, applicable to
the Lessee or to the Lessee's use of the Building, the Parking Area, the Trailer
Storage Area and the Access Area; provided, however, the Lessee shall have the
right to contest the applicability of any such statute, regulation, ordinance or
requirements so long as the Lessee takes such measures as are reasonably
required(such as the posting of a bond or other surety) in order to assure the
Lessor that the Lessor's interests in the Building and the Real Property shall
not be jeopardized in anyway by the Lessee's contest of the applicability of any
such statute, regulation, ordinance or requirements. In addition, the Lessee
shall indemnify, defend and save Lessor harmless from any and all penalties,
fines, costs or other damages resulting from the Lessee's failure to so comply
with all of such requirements, statutes, regulations or ordinances. With respect
to the ADA, if it is finally determined in the form of a non-appealable decision
by a court of competent jurisdiction of an enforcement action that the Lessor's
Improvements (for which the Lessor is, or was, responsible for the initial
construction or renovation pursuant to the provisions of this Lease) fail to
comply with the requirements of the Americans with Disabilities Act of 1990 (the
"ADA"), as of the date of this Lease, then the Lessor shall, at the Lessor's
cost and expense, correct such Lessor's Improvements so that the Lessor's
Improvements so initially constructed by the Lessor do comply with the ADA, as
of the date of this Lease, and Lessor shall indemnify, defend and save the
Lessee harmless from an against all claims and costs (including reasonable
attorney's fees and court costs) resulting from Lessor's Improvements' failure
to so comply with the requirements of the ADA.

         19.      Hold Over. Except as Lessor otherwise may consent in writing,
Lessee agrees, without further notice or demand, to promptly surrender
possession of the Building to Lessor at the expiration, or earlier termination,
of this Lease. Any holding over by Lessee beyond the Term shall be under and
subject to the same terms and provisions as contained herein, except, however,
that the Minimum Rent shall, after the end of the Term, be one hundred and fifty
percent (150%) of the Minimum Rent as existed in the immediately preceding month
and, in all such events, the term of any such hold over shall be on a
month-to-month basis and shall be terminable upon thirty (30) days notice to
either party by the other.

         20.      Improvements to Building; Alterations.

                  (a)      The Lessor shall, prior to (i) the Phase I
Commencement Date, substantially complete, or cause Mericle Construction, Inc.
(the "Contractor") to substantially complete, those improvements to the Phase I
Building as are more particularly described on the Plans and Specifications set
forth on Exhibit "E-1" attached hereto and made a part hereof (the "Phase I
Lessor's Improvements"), and (ii) the Phase II Commencement Date, substantially
complete, or cause the Contractor to substantially complete, the construction of
the Phase II Building and those improvements to the Phase II Building as are
more particularly described on the Plans and Specifications set forth on Exhibit
"E-2" attached hereto and made a part hereof (the "Phase II Lessor's
Improvements"). The Phase I Lessor's Improvements and the Phase II Lessor's
Improvements are hereinafter collectively referred to as the "Lessor's
Improvements". The Lessor, or the Contractor, shall construct the Lessor's
Improvements in a good and workmanlike manner.

                  (b)      The Lessee shall substantially complete, or cause the
substantial completion of, those improvements to (i) the Phase I Building as are
more particularly described on the Plans and Specifications set forth on Exhibit
"F-1" attached hereto and made a part hereof (the "Phase I Lessee's
Improvements"), and (ii) the Phase II Building as are more particularly
described on the Plans and Specifications set forth on Exhibit "F-2" attached
hereto and made a part hereof (the "Phase II Lessee's
<PAGE>   19
Improvements"). The Phase I Lessee's Improvements and the Phase II Lessee's
Improvements are hereinafter collectively referred to as the "Lessee's
Improvements". The Lessee may commence construction of the applicable Lessee's
Improvements only after providing reasonable prior notice to the Lessor. Lessor
and Lessee shall coordinate the performance of their respective construction
activities with one another so that the Lessor and the Lessee minimize
interference with the other party's construction activities. The Lessee shall
construct, or cause to be constructed, the Lessee's Improvements in a good and
workmanlike manner. Except as provided in Subparagraph 20(c) below, the Lessee
may not make any changes, alterations or substitutions to the Lessee's
Improvements once they have been approved by the Lessor without first obtaining
the Lessor's prior written consent to any such changes, alterations or
substitutions, such consent of the Lessor shall not be unreasonably withheld.
conditioned or delayed.

                  (c)      The Lessee may not make any structural alterations
(other than the Lessee's Improvements as hereinabove defined) to the Building
without Lessor's prior written consent, which consent shall be in the sole and
absolute discretion of the Lessor. In addition, the Lessee may not make any
other alterations, changes or improvements to the Building which affect, in any
way, the mechanical, electrical or plumbing systems of the Building without
first obtaining the Lessor's prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed. The foregoing notwithstanding,
the Lessee may, however, construct any non-structural alterations or
improvements to the Building or any other alterations or improvements which do
not affect, in any way, the mechanical, electrical or plumbing systems of the
Building after providing notice to the Lessor (along with a copy of the plans,
if any, and a list of materials to be used with respect to any such
non-structural alterations or improvements or any other alterations or
improvements which do not affect, in any way, the mechanical, electrical or
plumbing systems of the Building), but without requiring the Lessor's consent
with respect thereto. All such alterations and improvements permitted hereunder
or made with the Lessor's prior written consent as hereinabove set forth shall
become the property of the Lessor upon the termination of this Lease without the
necessity of any further notice or action on the part of the Lessor or the
Lessee and without any reimbursement or compensation therefor by the Lessor to
the Lessee; provided, however, that, notwithstanding the foregoing, so long as
the Lessee is not in default under this Lease, and, during the Term, the Lessor
shall not have title to, and Lessee shall have the right to remove, its trade
fixtures, moveable office equipment and furniture.

                  (d)      Except as otherwise provided in this Lease, the
Lessee shall, at its own cost and expense, immediately upon the expiration or
earlier termination of this Lease, return the Building to the Lessor in
substantially as good condition as existed on the Phase I Commencement Date with
respect to the Phase I Building, ordinary wear and tear and damages by casualty
or condemnation excepted and as existed on the Phase II Commencement Date with
respect to the Phase II Building, ordinary wear and tear and damages by casualty
or condemnation excepted and, in the event that the Lessee does not do so in a
good and workmanlike manner, the Lessor may do so and, in such event, the Lessee
shall be responsible for all costs and expenses associated therewith and the
Lessor may, in addition to all other rights and remedies available to it in law
or at equity, apply the Deposit toward the same. The foregoing notwithstanding,
the Lessee shall not be obligated to remove any of the Lessor's Improvements or
those portions of the Lessee's Improvements which were constructed in the
Building (i) with the prior written approval of the Lessor and to which the
Lessor did not indicate in writing, at the time of its providing such prior
written approval for the construction thereof, that the Lessee would be under an
obligation to remove the same at the expiration or earlier termination of this
Lease, or (ii) as expressly permitted under this Lease without the Lessor's
approval; provided, however, the Lessor's Improvements and such Lessee's
Improvements shall immediately and automatically become the property of the
Lessor upon the expiration or earlier termination of this Lease without the
necessity of any further notice or action on the part of the Lessor or the
Lessee and without any reimbursement or compensation therefor by the Lessor to
the Lessee. Any Lessee's Improvements or other alterations made to the Building
either without the Lessor's prior written consent where such consent was
required, or with such prior written consent of the Lessor but to which the
Lessor indicated must be removed upon the expiration or earlier termination of
this Lease, shall be removed by the Lessee upon the expiration
<PAGE>   20
or earlier termination of this Lease and the Building shall be restored by the
Lessee to the same condition as existed as of the Commencement Date, all at the
Lessee's sole cost and expense. The Lessor and the Lessee hereby acknowledge and
agree that the Lessee may, upon the Termination Date, elect to either (i) remove
the Lessee's racking from the Building provided, however, if the Lessee elects
to do so, then the Lessee shall cut all bolts and other fasteners which are used
to secure such racking to the floor so that they are completely flush with the
floor and then fill and grout such areas so that the affected portions of the
floor are left smooth and not pitted, or (ii) leave the Lessee's racking in the
Building, whereupon such racking shall automatically become the property of the
Lessor.

                  (e)      Whenever a period of time is prescribed in this Lease
for action to be taken by the Lessor regarding the construction of the Lessor's
Improvements, the Lessor shall not be liable or responsible for, and there shall
be excluded from the computation of any such period of time, any unavoidable
delays due to force majeure, which term shall include strikes, riots, acts of
God, shortages of labor or materials, war, governmental approvals, laws,
regulations or restrictions or any other cause of any kind whatsoever which is
beyond the reasonable control of the Lessor (collectively, "Force Majeure").

                  (f)      If any mechanics' liens are placed upon the Building
or the Real Property as a result of Lessee's act or omission, Lessee will, upon
being notified of same, promptly remove them as a lien against the Building and
the Real Property either by payment, bonding or other method prescribed by law.
The foregoing notwithstanding, the Lessee shall have the right to contest any
such mechanic's liens provided the Lessee posts a bond or other surety
reasonably acceptable to the Lessor in order to remove any such lien against the
Building or the Real Property pending the Lessee's final resolution thereof.

         21.      Signs. Except as otherwise expressly set forth in this
Paragraph 21, the Lessee hereby agrees that it will not place or suffer to be
placed or maintained on any exterior door, exterior wall or window of the
Building or elsewhere on the Real Property any sign, awning or canopy, or
advertising matter of any kind, and will not place or maintain any decoration,
lettering or advertising matter on the glass of any window or exterior door of
the Building, which is not, in all events, in conformity with the rules and
regulations of the Park, without first obtaining Lessor's prior written approval
and consent, such approval and consent thereto not to be unreasonably withheld,
conditioned or delayed by the Lessor. The foregoing notwithstanding, the Lessee
shall have the right to erect, at its sole cost and expense, a tombstone sign at
the entrance to the Real Property and the Lessee shall also have the right to
affix to the exterior walls of the Building, building-mounted signage once the
Lessor has reviewed and approved the Lessee's proposed design, size, location
and method of installation of such signage, such approval not to be unreasonably
withheld, conditioned or delayed. Once the Lessor has approved the Lessee's
signage, the Lessor may not revoke or change any such approval. Lessee further
agrees to maintain such sign as may be approved by Lessor in good condition and
repair at all times and upon the expiration of this Lease, the Lessee shall, at
the direction of the Lessor and at the Lessee's cost and expense, remove any
such identification signage (leaving any pylon, monument, base, frame or other
mechanism to which the Lessee's identification sign was attached and all
lighting and electrical appurtenances thereto) and the Lessee shall repair any
damage to the Building, pylon, monument, base, frame or other mechanism to which
the Lessee's identification sign was attached as a result of the Lessee's
attachment of its signage thereto. In addition, the Lessor's name and logo shall
be included on any monument sign in front of the Building (such Lessor's sign
shall be situated on the monument sign beneath the Lessee's identification sign)
indicating that the Building is owned and managed by the Lessor (the size, style
and colors of any such Lessor's sign and logo shall be similar to Lessor's other
signs and logo within Northeastern Pennsylvania).
<PAGE>   21
         22.      Liability. The Lessor shall not be liable for any injury to
any person while on or in the Building or on the Real Property or for damage to
property while located in or on the Building or the Real Property, whether owned
by Lessor, Lessee or third parties, whether caused by or resulting from any act,
or omission, of Lessor or any of its respective agents, servants or employees,
or by fire, or by any other casualty or condition existing on or resulting to
the Building or the Real Property during the Term (except for acts caused
intentionally or by the negligence of Lessor, its agents, employees or
contractors or resulting from the Lessor's failure to perform its obligations
under this Lease), and Lessee shall maintain all of the insurance policies and
coverages referred to in this Lease which the Lessee is required to secure and
carry under this Lease and to insure Lessor against any loss or liability on
account of any such claim. Lessor shall not be liable for any damage to any
property at any time located within or about the Building or the Real Property
including, but not limited to, property of Lessee, by whatsoever cause (except
for acts caused intentionally or by the negligence of Lessor, its agents,
employees or contractors or resulting from the Lessor's failure to perform its
obligations under this Lease), nor shall Lessor be liable in any claim for
damages by reason of inconvenience or interruption to the business of Lessee,
irrespective of the cause therefor (except for acts caused intentionally or by
the negligence of Lessor, its agents, employees or contractors or resulting from
the Lessor's failure to perform its obligations under this Lease).

         23.      Assignment and Sublease.

                  (a)      The Lessee may, at any time, sublease the Building or
any portion thereof or assign this Lease without the prior written consent of
the Lessor; provided, however, that (i) in the event of any such subletting or
assignment, the Lessee and the Guarantor (hereinafter defined) shall, except as
otherwise hereinafter expressly provided, both continue to remain liable to
Lessor for all sums due hereunder and for the performance of all covenants and
duties of Lessee, and (ii) the Lessee must prove, to the reasonable satisfaction
of the Lessor, that the business of such proposed assignee or sublessee poses no
greater fire, casualty risk, or potential for environmental contamination to the
Building than did the business of the Lessee. In the event of any sublease or
assignment by the Lessee under this Paragraph 23, the Lessee shall be
responsible, at its sole cost and expense, for performing all of the leasehold
improvements and tenant fit-out requirements (i.e., the construction of any
demising walls and so forth) required to comply with all building codes and
other governmental approvals with respect to any such sublease or assignment.
Anything contained in this Lease to the contrary notwithstanding, if the Lessee
elects to assign this Lease to an assignee which is a company designated to be
in the top 50 of the "Fortune 500" companies, as of the effective date of any
such proposed assignment, then, and in such event, upon such assignment to a top
50 "Fortune 500" company and upon such company's assumption or guaranty of all
of the Lessee's obligations under this Lease in a manner which is reasonably
acceptable to the Lessor, the Lessee and the Guarantor shall be relieved of all
further liability under this Lease.

                  (b)      If, pursuant to the provisions of this Paragraph 23,
the Lessee subleases any portion of the Building or assigns its interest under
this Lease as permitted under this Lease, then the Lessee shall pay to Lessor
fifty percent (50%) of the Sublease Profits (hereinafter defined) when received
in respect of such sublease or assignment. The "Sublease Profits," as such term
is used in this Paragraph 23 of this Lease, shall mean any rent, consideration,
income, remuneration or other sums or value received from any sublessee or
assignee which is in excess of the Minimum Rent and all Additional Rent payable
by the Lessee under this Lease for such period of time; provided, however, in
calculating any such excess, any reasonable and direct costs and expenses
actually incurred and paid by the Lessee to secure any such sublessee or
assignee (such as reasonable leasing commissions, reasonable attorney's fees and
expenses or rent abatements or inducements or subtenant improvement allowances
and including any recapture of the Lessee's initial fit-out costs of the
Building, but not the costs of moving to the Building) shall be credited
against, and deducted from, any such rent, consideration, income or other sum
received by the Lessee in connection with any such sublease or assignment;
provided, however, Lessee's obligation to pay Rent shall in no way be reduced in
the event the rent, consideration, income or other sum received by Lessee in
connection with such sublease or assignment
<PAGE>   22
is less than the Rent payable hereunder. Nothing contained in this Paragraph 23
shall be construed as modifying, in any way, the requirements for an assignment
of this Lease or sublease of the Building pursuant to this Paragraph 23 nor
construed as modifying, in any way, the Lessee's (or the Guarantor's) continued
liability for all of the payment and performance obligations of the Lessee under
this Lease. The foregoing notwithstanding, the Sublease Profits shall be split
50/50 between the Lessor and the Lessee, but only with respect to the initial
Term of this Lease and, therefore, with respect to any subleases which occur
during either of the Extension Periods, all Sublease Profits shall be paid to,
and retained by, the Lessor and the Lessee shall have no right to any such
Sublease Profits during either of the Extension Periods.

                  (c)      If, following a permitted sublease as hereinabove set
forth, the Lessee is in breach of any of the obligations under this Lease, then
the Lessor agrees to send a written notice of such breach to such sublessee(at
the last known address of such sublessee which was provided to the Lessor in
writing) (as well as to the Lessee) and such sublessee shall have the same time
periods provided to the Lessee hereunder in order to cure any such breach;
provided, however, if such breach is not properly cured by the Lessee within
such permitted time period, the sublessee hereunder shall have an additional ten
(10) days after the expiration of such permitted time period within which to
cure such breach. In addition, if, following a permitted assignment of this
Lease as hereinabove set forth, the assignee is in breach of the obligations
under this Lease, then the Lessor agrees to send a written notice of such breach
to the prior (i.e., assignor) Lessee (at the last known address of the Lessee
which was provided to the Lessor in writing by the Lessee) (as well as to the
then current Lessee) and the prior (i.e., assignor) Lessee shall have the same
time periods provided to the then current Lessee hereunder in order to cure any
such breach; provided, however, if such breach is not properly cured by the then
current Lessee within such permitted time period, the prior (i.e., assignor)
Lessee hereunder shall have an additional ten (10) days after the expiration of
such permitted time period within which to cure such breach.

         24.      Inspection of the Building. It is further agreed and
understood that the Lessor may enter the Building at any time during the Term,
upon reasonable advance notice to Lessee, in the presence of the Lessee and
during Lessee's business hours for the purposes of (a) ascertaining whether the
Building is kept in good order and repair; except, however, in an emergency
situation, in which event, the Lessor shall have the right to enter in and upon
the Building absolutely and without notice, and (b) showing the Building for the
Lessor's marketing purposes to other prospective tenants, purchasers, lenders or
other parties with whom the Lessor conducts, or is interested in conducting,
business provided, however, the Lessor shall first coordinate any such showing
of the Building pursuant to this subparagraph 24(b) with the Lessee's senior
management at the Building in order to minimize any interference with the
Lessee's business operations within the Building.

         25.      Default; Cumulative Remedies.

                  (a)      If the Lessee (i) does not pay in full any
installment of Rent, and/or other charge or payment herein agreed to be paid by
Lessee, within the period of ten (10) days after notice thereof from the Lessor
to the Lessee, or (ii) violates or fails to perform or otherwise breaches any
covenant or agreement herein contained, which violation, failure or breach
remains uncured for a period of thirty (30) days after written notice has been
given by Lessor to Lessee (provided, however, if any such non-monetary default
of the Lessee requires more than thirty (30) days within which to cure such
non-monetary default, then the Lessee shall have an additional reasonable period
of time within which to cure such default and no breach or default shall be
deemed to exist so long as the Lessee promptly commences such cure and
diligently and in good faith pursues such cure to completion and so long as such
additional reasonable period of time for Lessee's cure does not jeopardize the
Lessor's interest in the Building or the Real Property or impose any additional
risk upon the Lessor), or (iii) makes an assignment for the benefit of
creditors, or if a petition is filed by (and granted) or filed against Lessee
for the appointment of a receiver, resulting in an order or decree which
continues unstayed and in effect for a period in excess of sixty (60) days, or a
bill in equity or other proceeding for the appointment of a receiver of Lessee
is filed and granted, resulting in an order or decree which continues unstayed
and in effect for a period in excess of sixty (60) days or if proceedings for
<PAGE>   23
reorganization or composition of creditors under any state or federal law is
instituted by or against Lessee, resulting in an order or decree which continues
unstayed and in effect for a period in excess of sixty (60) days, THEN, and in
any of said events, there shall be deemed to be by virtue thereof, a breach of
this Lease and Lessor may:

                  (A)      declare all or any part of the Rent for the entire
unexpired balance of the Term of this Lease to be immediately due and payable
and the Lessee shall be obligated to pay the same and, with respect to any
installment of Rent which is not received by the Lessor on the date set forth
for payment, the Lessee shall be obligated to pay to the Lessor, the Late Fee,
the Late Interest and the Late Costs, all of which shall be due under this Lease
as, and shall become, Additional Rent; provided, however, any such accelerated
Rent which shall be paid by the Lessee to the Lessor prior to the date upon
which it would have otherwise been due and payable had no such breach or default
of the Lessee occurred, shall be discounted to its then present value, as of the
date of the Lessee's actual payment thereof, using an annual discount rate equal
to the Prime Rate as then exists; and provided, further, the Lessor shall use
reasonable efforts to relet the Building and otherwise mitigate the Lessee's
damages and any Rent actually received by the Lessor from any replacement lessee
which is applicable to the then unexpired balance of the Term of this Lease
shall be used first to pay the Lessor for all of its costs and expenses
associated with reletting the Building and then any amounts actually received by
the Lessor from any such replacement lessee which is applicable to the then
unexpired balance of the Term of this Lease and which is in excess of the Rent
due for the then unexpired balance of the Term of this Lease shall be promptly
refunded to the Lessee until the Lessee has been repaid for the accelerated Rent
which it actually paid to the Lessor; and/or

                  (B)      terminate the Term of this Lease by legal proceedings
without any right on the part of the Lessee to save the forfeiture by payment of
any sum then due or by other performance of any condition, term or covenant;
and/or

                  (C)      collect from Lessee any and all reasonable costs and
expenses incurred by Lessor or as a result of the Lessee's breach including,
without limitation, reasonable attorneys' fees which Lessor was required to
incur in enforcing the terms of this Lease and utilize the Deposit to pay the
same; and/or

                  (D)      assert and pursue any and all such other rights and
remedies available to Lessor in law or at equity.

         (b)      All of the remedies hereinbefore given to Lessor and Lessee
and all rights and remedies given to them by law or equity shall be cumulative
and concurrent. The exercise by either Lessor or Lessee of any particular right
shall not be a waiver by either party of any other right herein granted to
Lessor and/or Lessee. If Lessor, at any time or times, shall accept the Rent or
the payment of other charges due from Lessee hereunder after the same shall
become due and payable, such acceptance shall not excuse delay upon subsequent
occasion or constitute or be construed as a waiver of any of Lessor's rights.

         (c)      Should any party hereto employ an attorney for the purpose of
enforcing rights under this Lease, or any amendment thereto, or any judgment
based on this Lease, in any legal proceeding whatsoever, including bankruptcy,
arbitration, declaratory relief or other litigation, the prevailing party shall
be entitled to receive from the other party reimbursement for all reasonable
attorneys' fees and all court costs and expenses, and such reimbursement shall
be included in any settlement, judgment or final order issued with respect to
that proceeding. The "prevailing party" means the party which has clearly
prevailed with respect to its position.

         (d)      If the Lessor violates or fails to perform or otherwise
breaches any covenant or agreement herein contained, which violation, failure or
breach remains uncured for a period of thirty
<PAGE>   24
(30) days after written notice has been given by Lessee to Lessor, which written
notice from Lessee to Lessor shall expressly include a statement that Lessee may
resort to self-help pursuant to the provisions of Subparagraph (A) below if the
Lessor has not cured such violation, failure or breach within such time period
(provided, however, if any such default of the Lessor requires more than thirty
(30) days within which to cure such default, then the Lessor shall have an
additional reasonable period of time within which to cure such default and no
breach or default shall be deemed to exist so long as the Lessor promptly
commences such cure and diligently and in good faith pursues such cure to
completion), then, or in such event, there shall be deemed to be by virtue
thereof, a breach of this Lease and Lessee may:

                  (A)      resort to self-help in order to cure Lessor's
violation, failure or breach and seek reimbursement from the Lessor for all
reasonable costs and expenses incurred by the Lessee in curing Lessor's
violation, failure or breach; provided, however, the Lessee shall have no right
to offset Rent with respect to such reimbursement of such costs and expenses
except as otherwise expressly provided in Subparagraph (B) below; and/or

                  (B)      collect from the Lessor any and all reasonable and
actual direct costs and expenses (but not any consequential or punitive damages)
incurred by Lessee as a result of the Lessor's violation, failure or breach
including, without limitation, reasonable attorney's fees which Lessee was
required to incur in enforcing the terms of this Lease; provided, however, the
Lessee shall not offset Rent with respect to such reimbursement of such costs
and expenses until after the Lessee has obtained from a court of competent
jurisdiction a final and non-appealable judgment against the Lessor with respect
to such violation, failure or breach by the Lessor and, in the event the Lessee
has so obtained from a court of competent jurisdiction a final and
non-appealable judgment against the Lessor with respect to such violation,
failure or breach by the Lessor, then such offset of Rent may only be up to the
amount set forth in such judgment; and/or

                  (C)      assert and pursue any and all such other rights and
remedies available to Lessee in law or at equity provided, however, any such
other rights and remedies shall be specifically limited and controlled by the
provisions of Subparagraphs 25(d)(A) and (B) above.

         26.      Representations and Warranties.

                  (a)      Lessee's Representations and Warranties. The Lessee
hereby represents and warrants to the Lessor as follows:

                           (i)      the Lessee is a corporation legally
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania;

                           (ii)     the Lessee has the full legal authority and
power to enter into, and to perform its obligations under, this Lease;

                           (iii)    all requisite corporate action has been
taken by the Lessee to legally authorize the execution and delivery of this
Lease and the performance of its obligations hereunder; and

                           (iv)     this Lease is, and shall be, legally binding
upon, and enforceable against, the Lessee in accordance with its terms.
<PAGE>   25
                  (b)      Lessor's Representations and Warranties. The Lessor
hereby represents and warrants to the Lessee as follows:

                           (i)      the Lessor is an adult individual residing
in the Commonwealth of Pennsylvania;

                           (ii)     the Lessor has the full legal authority and
power to enter into, and to perform its obligations under, this Lease; and

                           (iii)    the Lessor owns fee simple title to the Real
Property, subject to any liens, claims, encumbrances or restrictions of records;
and

                           (iv)     this Lease is, and shall be, legally binding
upon, and enforceable against, the Lessor in accordance with its terms.

         27.      Binding Upon Successors and Assigns. All rights and
liabilities herein given to or imposed upon the respective parties hereto shall
extend to, and be binding upon, their respective heirs, personal
representatives, successors and permitted assigns.

         28.      Mortgages. This Lease shall become subject and subordinate to
all mortgages which hereafter affect this Lease or the Building, and to all
renewals, modifications, consolidations, replacements and extensions thereof
upon the holder of any mortgage upon the Building or the Real Property providing
to the Lessee an agreement, in a form which is mutually and reasonably
acceptable to the Lessee and the Lessor's mortgage holder, providing, among
other things, that so long as the Lessee is not in default of its obligations
under this Lease after receipt of required notice thereof and expiration of any
applicable cure periods, the Lessee's rights under this Lease shall continue
without disturbance by such mortgage holder. In confirmation of such
subordination, non-disturbance and attornment, the Lessee shall execute promptly
any reasonable certificate that Lessor, or its mortgagee(s), may request
pursuant thereto.

         29.      Severable. The terms, covenants and provisions of this Lease
are severable and divisible and, if any of the said terms, covenants and
provisions shall be invalidated by law or for other reason, the force and effect
of the other terms, covenants and provisions shall be deemed to be unaffected
and be legally enforceable as though the provisions invalidated had not been
herein set forth.

         30.      Notice. Any notice required to be given hereunder shall be
given to parties hereto as follows or at such other addresses as the parties
hereto, or either of them, may from time to time designate by notification to
the other in writing by registered or certified mail, postage prepaid:

                  If to Lessor:              Mr. Robert K. Mericle
                                             c/o Mericle Development Corp.
                                             600 Baltimore Drive
                                             East Mountain Corporate Center
                                             Wilkes-Barre, Pennsylvania 18702
<PAGE>   26
                  With a copy to:            Lewis A. Sebia
                                             Chief Operating Officer
                                             Mericle Development Corp.
                                             600 Baltimore Drive
                                             East Mountain Corporate Center
                                             Wilkes-Barre, Pennsylvania  18702

                  If to Lessee:              Lechters Pennsylvania, Inc.
                                             1 Cape May Street
                                             Harrison, New Jersey  07029-2404
                                             Attention: Chief Financial Officer

                  With a copy to:            Lechters, Inc.
                                             (as the Guarantor)
                                             1 Cape May Street
                                             Harrison, New Jersey  07029-2404
                                             Attention: Chief Financial Officer

                  And with a copy to:        Sheon Karol, Esquire
                                             Vice President and General Counsel
                                             Lechters, Inc.
                                             1 Cape May Street
                                             Harrison, New Jersey  07029-2404

         31.      No Recording. This Lease shall not be recorded with the
Recorder of Deeds or in any other public office for the recording of documents.
Both Lessor and Lessee agree that this Lease is binding upon each of them and is
enforceable with respect to the Building without such recording; provided,
however, the Lessor and the Lessee hereby agree to execute and record in the
Office of the Recorder of Deeds in and for Luzerne County, Pennsylvania a
Memorandum of this Lease in the form attached as Exhibit "G" hereto and made a
part hereof (the "Memorandum") and the cost of recording such Memorandum shall
be borne by the Lessee. Simultaneously with the execution of the Memorandum, the
Lessor and the Lessee shall also execute and deliver to the escrow agent (the
"Escrow Agent") identified in the Escrow Agreement (hereinafter defined) a
Termination of Memorandum which shall be in the form attached as Exhibit "H"
hereto and made a part hereof (the "Termination"). The Escrow Agent shall hold
the Termination in escrow pursuant to the terms and conditions set forth in the
Escrow Agreement which shall be executed by each of the Lessor, the Lessee and
the Escrow Agent simultaneously with the execution of this Lease and which
Escrow Agreement shall be in the form attached as Exhibit "I" hereto and made a
part hereof (the "Escrow Agreement"). The Escrow Agent shall immediately record
the Termination in the Office of the Recorder of Deeds in and for Luzerne
County, Pennsylvania in accordance with the terms of the Escrow Agreement.

         32.      Broker. Except as otherwise expressly set forth in this
Paragraph 32, neither party has any responsibility to compensate any broker in
connection with the execution of this Lease. The foregoing notwithstanding, upon
the execution and commencement of this Lease, the Lessor shall pay a leasing
brokerage commission to Insignia ESG (the "Broker") pursuant to a separate
written agreement between the Lessor and the Broker. Except for the leasing
commission to the Broker, each party hereby agrees to indemnify, defend and hold
the other harmless from and against any liability, obligation, cost, fee or
expenses arising as a result of any claim by or through the indemnitor. The
Lessor shall indemnify, defend and hold the Lessee harmless from and against
<PAGE>   27
any liability, obligation, cost, fee or expense arising as a result of any claim
by the Broker.

         33.      Estoppel Certificates. The Lessor and the Lessee agree at any
time, within twenty (20) days' written request of the other, to execute,
acknowledge and deliver to the other party a written statement certifying that
this Lease is unmodified and in full force and effect (or, if there have been
modifications), and the dates to which the Minimum Rent, Additional Rent and
other charges have been paid in advance, if any, it being intended that any such
statement pursuant to this Paragraph 33 may be relied upon by the parties and
any prospective purchaser, mortgagee, permitted assignee or permitted sublessee
of the Building or Real Property.

         34.      Guaranty. The Lessee shall, on or before the date of this
Lease, deliver to the Lessor a fully-executed Guaranty and Suretyship Agreement
in the form attached as Exhibit "K" hereto and made a part hereof (the
"Guaranty") from Lechters, Inc., the Lessee's parent company (the "Guarantor").
Pursuant to the Guaranty, the Guarantor shall unconditionally and irrevocably
guaranty all of the payment and performance obligations of the Lessee under this
Lease.

         35.      Financial Information. The Lessee shall deliver to the Lessor,
prior to the date of this Lease and thereafter from time to time during the Term
and upon the request of the Lessor, the most recent Annual Report of the
Guarantor.

         36.      Limited Liability of Lessor. Notwithstanding any provision to
the contrary contained herein, Lessee shall look solely to the estate of Lessor
in and to the Real Property and the Building only (and the proceeds of any sale
thereof but only if the Lessee has prior to, or as of, the actual date of any
such sale, secured a judgment from a court of competent jurisdiction against the
Lessor and then the proceeds of such sale of the Building or the Real Property
may be attached by the Lessee, but only up to the amount of the judgment so
secured prior to, or as of, the date of such sale in order to satisfy the
judgment so secured by the Lessee and if the Lessor's default under this Lease
relates to the Lessor's failure to restore the Building following an event of
casualty or condemnation action as it is required to do under the terms of this
Lease, then the insurance proceeds or condemnation awards received by the Lessor
shall be included as well) (collectively, the "Specified Assets") in the event
of any claim against Lessor arising out of or in connection with this Lease, the
relationship of Lessor and Lessee or Lessee's use of the Building (collectively,
"Lessee's Claims"), and Lessee agrees that the liability of Lessor arising out
of or in connection therewith shall be limited to the Specified Assets. No
properties or assets of Lessor, other than the Specified Assets, shall be
subject to levy, execution or other enforcement procedures for the satisfaction
of any judgment (or other judicial process) or for the satisfaction of any other
remedy of Lessee arising out of or in connection with the Lessee's Claims.
Anything contained in this Lease to the contrary notwithstanding, the Lessor
may, at its option, and without providing notice to, or obtaining the consent
of, the Lessee, sell, transfer or convey the Real Property or the Building
thereon and, in accordance therewith, the Lessor may, at its option, and without
providing notice to, or obtaining the consent of, the Lessee, assign this Lease
to any purchaser or transferee of the Real Property, the Building or any portion
thereof and upon such assignment, the Lessor's assignee shall automatically
become the Lessor under this Lease and the Lessor herein stated shall, from and
after the effective date of such assignment, be relieved of all further
liability under this Lease.

         37.      Paragraph 37 Has Been Intentionally Deleted.

<PAGE>   28
         38.      Extension Options.

                  (a) The Lessor grants to the Lessee two (2) consecutive
options (individually, an "Extension Option" and collectively, the "Extension
Options") to extend the Term of this Lease, each of such options being for a
period of five (5) years (hereinafter collectively referred to as the "Extension
Periods"), provided the Lessee exercises such Extension Options as set forth
below, and provided further that, except as otherwise provided in Paragraph
39(c) below, there has been no assignment of this Lease or sublease of the
Building or any portion thereof by the Lessee and provided that there exists
either on the date the Lessee notifies the Lessor of its intent to exercise
either of the Extension Options or at any time thereafter up to and including
the date upon which the applicable Extension Period is to commence, no uncured
default under this Lease. The Extension Options shall be personal to the Lessee
and, except as otherwise provided in Paragraph 39(c) below, the same shall not
be applicable to any successor or assignee of the Lessee (other than a corporate
successor or affiliate of the Lessee) and, except as otherwise provided in
Paragraph 39(c) below, the Lessee's successors or assigns (other than a
corporate successor or affiliate of the Lessee) may not exercise the Extension
Options as set forth in this Lease and as permitted under the terms of this
Lease. The Lessee may exercise each of such Extension Options only by serving on
the Lessor written notice of its intent to exercise the applicable Extension
Option (the "Lessee's Exercise Notice") on that date which is twelve (12) months
prior to (i) the Termination Date in the case of the first Extension Period (the
"First Extension Period"), and (ii) the expiration of the First Extension Period
in the case of the second Extension Period (the "Second Extension Period"). The
First Extension Period, if properly exercised pursuant to the provisions of this
Paragraph 38, shall commence (except as may otherwise be provided under
Paragraph 39(f) below) on that date which is ten (10) years and six (6) months
after the Phase I Commencement Date and the Second Extension Period, if properly
exercised pursuant to the provisions of this Paragraph 38, shall commence
(except as may otherwise be provided under Paragraph 39(f) below) on that date
which is fifteen (15) years and six (6) months afer the Phase I Commencement
Date. In the event the Lessee does not timely and properly exercise its
Extension Options to extend the Term of this Lease for the Extension Periods, or
if the Lessor has not received the Lessee's Exercise Notice by that date which
is twelve (12) months prior to (a) the Termination Date, in the case of the
First Extension Period, and (b) the expiration of the First Extension Period in
the case of the Second Extension Period, then this Paragraph 38 shall become
null and void and of no further force and effect and the Lessee shall have no
such Extension Options.

                  (b) Once the Lessee exercises either of its Extension Options,
such exercise may not be revoked except as provided in Subparagraph (iii) below.
Anything contained in this Lease to the contrary notwithstanding, the Lessee's
exercise of either of its Extension Options shall be applicable only to the
entire Building (i.e., all of the Phase I Building and the Phase II Building and
the Phase III Building, if applicable) and the Lessee shall not have the right
to exercise either of its Extension Options for only a portion of the Building.
The Minimum Rent for the first (1st) year of the First Extension Period shall be
equal to one hundred and ten percent (110%) of the Minimum Rent as existed
immediately prior to the Termination Date. The Minimum Rent for the first (1st)
year of the Second Extension Period shall be equal to ninety-five percent (95%)
of the then "Fair Market Rental Rate" (hereinafter defined) for the Building;
provided, however, the Minimum Rent for the first (1st) year of the Second
Extension Period shall in no event be less than one hundred and ten percent
(110%) of the Minimum Rent as existed immediately prior to the final day of the
First Extension Period. The term "Fair Market Rental Rate" for the purposes of
this Lease shall mean the annual amount of Minimum Rent that a willing,
comparable lessee would pay, and a willing, comparable lessor of a comparable
building as the Building (in its "as is" condition) in the vicinity of the
Building would accept, at arm's length, for a comparable amount of space for a
comparable period of time. In order to determine the Minimum Rent for the first
(1st) year of the Second Extension Period, the Lessor shall propose to Lessee a
Fair Market Rental Rate by using its good faith judgment. The Lessor shall
provide to the Lessee written notice of such proposed Fair Market Rental Rate
within fifteen (15) days after the date that the Lessor receives the Lessee's
Exercise Notice applicable to the Second Extension Period. The Lessee shall have
fifteen (15) days (the "Lessee's Review Period") after receipt of the Lessor's
notice of the proposed Fair
<PAGE>   29
Market Rental Rate within which to accept or reject such proposed Fair Market
Rental Rate. If the Lessee does not accept the Lessor's proposed Fair Market
Rental Rate, then it must reject the same by providing written notice of such
rejection to the Lessor prior to the expiration of the Lessee's Review Period.
If the Lessee does not provide a written notice of rejection to the Lessor prior
to the expiration of the Lessee's Review Period, then the Lessee shall
conclusively be deemed to have accepted the Lessor's proposed Fair Market Rental
Rate and the Minimum Rent for the first (1st) year of the Second Extension
Period shall be equal to the Lessor's proposed Fair Market Rental Rate. In the
event, however, that the Lessee timely and properly rejects the Lessor's
proposed Fair Market Rental Rate by delivering to Lessor written notice of
Lessee's rejection thereof prior to the expiration of the Lessee's Review
Period, then the Lessee shall, at the time of providing its written notice to
Lessor rejecting the Lessor's proposed Fair Market Rental Rate, also provide to
the Lessor a written counter-proposal proposing a different Fair Market Rental
Rate for the Building for the first (1st) year of the Second Extension Period.
The Lessor and the Lessee shall negotiate in good faith to attempt to reach a
mutually acceptable Fair Market Rental Rate for the first (1st) year of the
Second Extension Period; provided, however, if, within fifteen (15) days after
the Lessor's receipt of the Lessee's counter-proposal, the Lessor and the Lessee
have been unable to reach a mutually agreeable Fair Market Rental Rate for the
first (1st) year of the Second Extension Period, then either party may require
that the determination of the Fair Market Rental Rate be made as follows:

(i)      The Lessor and the Lessee shall attempt to agree upon, and jointly
appoint, a single real estate appraiser who shall, by profession, be a licensed
real estate broker who shall have been active over the five (5) year period
ending on the date of such appointment in the leasing of
commercial/industrial/manufacturing properties in the vicinity of the Building
and shall not be affiliated with either of the Lessor or the Lessee. The real
estate appraiser so appointed shall determine the Fair Market Rental Rate of the
Building for the first (1st) year of the Second Extension Period within fifteen
(15) days of his/her appointment, taking into account the requirements of this
Paragraph 38 regarding the same. Such real estate appraiser may conduct such
investigation as the real estate appraiser, in his or her sole discretion,
determines is necessary.

                  (ii)     If the Lessor and the Lessee fail to agree upon and
                           appoint a real estate appraiser within fifteen (15)
                           days after the expiration of the Lessee's Review
                           Period, then each of the Lessor and the Lessee shall
                           appoint one (1) appraiser and the two (2) appraisers
                           so appointed shall appoint a third (3rd) appraiser
                           (all of such appraisers meeting the same
                           qualifications set forth in Subparagraph (i) above)
                           and the third (3rd) appraiser so appointed shall make
                           the determination of the Fair Market Rental Rate as
                           hereinabove set forth.

                  (iii)    The decision of the real estate appraiser with
respect to its determination of the Fair Market Rental Rate of the Building for
the first (1st) year of the Second Extension Period shall be communicated to the
Lessor and the Lessee and the Lessee shall then have five (5) business days
after receipt thereof within which to either accept or reject such determination
of the Fair Market Rental Rate of the Building for the first (1st) year of the
Second Extension Period and if the Lessee accepts such determination, then such
Fair Market Rental Rate shall be binding upon the Lessor and the Lessee;
provided, however, if the Lessee does not accept such determination, then the
Lessee's Extension Option with respect to the Second Extension Period shall
become null and void and shall be of no further force and effect and this Lease
shall, therefore, automatically terminate on the final day of the First
Extension Period.

                  (iv)     The cost of such determination by the real estate
appraiser(s) shall be paid for by the Lessor and the Lessee equally.

Commencing on the first (1st) day of the second (2nd) lease year of each
Extension Period and continuing thereafter on each anniversary date thereof
throughout each Extension Period (each of which dates is hereinafter referred to
as an "Extension Period Adjustment Date"), the Minimum Rent for each year of
each
<PAGE>   30
Extension Period following the applicable Extension Period Adjustment Date shall
be increased pursuant to the provisions set forth in Paragraph 5(c) above (i.e.,
the Minimum Rent shall be increased by two percent (2%) per annum).

         (c) All Additional Rent under this Lease shall continue uninterrupted
from the Phase I Commencement Date through the expiration of the Term and, if
applicable, the Extension Periods. The Lessor shall deliver the Building and the
Lessee shall accept the Building for each Extension Period in its then "as is"
condition. All other terms and conditions of this Lease shall remain in full
force and effect during the Extension Periods; provided, however, during the
First Extension Period, the Lessee shall have only one (1) option to extend the
Term of this Lease for the Second Extension Period and during the Second
Extension Period, the Lessee shall have no additional options to extend the Term
of this Lease.

         39.      Expansion Option.

                  (a) The Lessor and the Lessee hereby acknowledge and agree
that, subject to the terms and conditions hereinafter set forth, the Lessee
shall have the option (the "Expansion Option"), by providing a written notice to
the Lessor (the "Expansion Option Election Notice") at any time prior to the
second (2nd) anniversary of the Phase I Commencement Date (such two (2) year
period being hereinafter referred to as the "Expansion Option Exercise Period"),
of requiring the Lessor to expand the Building by constructing an additional
ninety-nine thousand (99,000) square feet of space as shown as the shaded area
on Exhibit "B-4" attached hereto and made a part hereof (the "Phase III
Building") for a total Phase I Building, Phase II Building and Phase III
Building of three hundred and eight thousand (308,000) square feet of space. The
Lessor's Improvements with respect to the Phase III Building (the "Phase III
Lessor's Improvements") shall be similar to the Phase II Lessor's Improvements,
but in any event, the Phase III Lessor's Improvements shall comply with all then
applicable laws. The actual date upon which the Lessor receives the Lessee's
Expansion Option Election Notice shall hereinafter be referred to as the
"Expansion Option Notification Date". If the Lessee properly exercises its
Expansion Option as hereinafter set forth, then the Lessor shall construct the
Phase III Building upon that certain portion of the Real Property immediately
adjacent to the westerly side wall of the Building as shown on Exhibit "B-4"
attached hereto and made a part hereof. If the Lessee fails to provide the
Lessor with the Expansion Option Election Notice by the final day of the
Expansion Option Exercise Period, then the Lessee's Expansion Option shall
automatically cease and terminate and the Lessee shall have no such Expansion
Option and thereupon the Lessor shall have the right to recapture and remove
from this Lease any or all of that portion of the Real Property as shown as the
shaded area on Exhibit "A-6" attached hereto and made a part hereof (the
"Recapture Land"), whereupon the Recapture Land, or such portion thereof as may
be so designated by the Lessor, shall be removed from the applicability of this
Lease and the Lessor may, thereafter, utilize and develop such portion of the
Recapture Land.

                  (b) The annual Minimum Rent for the Phase III Building for the
first twelve (12) months following the Phase III Commencement Date (hereinafter
defined) shall be Three and 75/100 Dollars ($3.75) per square feet of space
contained in the Phase III Building as measured by the Lessor's architect or
engineer (and verified by the Lessee) from structural line to "structural line"
of the Phase III Building (as defined in Paragraph 5(b) of this Lease), but not
exceeding ninety-nine thousand (99,000) square feet of space; provided, however,
such annual Minimum Rent for the Phase III Building shall be increased
commencing on the first (1st) anniversary of the Phase III Commencement Date and
continuing on each anniversary date thereafter, pursuant to the provisions of
Paragraph 5(c) above (i.e., the Minimum Rent attributable to the Phase III
Building shall be increased by two percent (2%) per annum). Upon the Lessee's
proper exercise of the Expansion Option, the entire Term of this
<PAGE>   31
Lease for the entire Building (i.e., the Phase I Building, the Phase II Building
and the Phase III Building) shall be automatically re-set to be a new ten (10)
year Term from the Phase III Commencement Date. Accordingly, the Term for the
entire Building (i.e., including the Phase I Building, the Phase II Building and
the Phase III Building) shall automatically be re-set to be a new ten (10) year
Term from the Lessor's substantial completion of the construction of the Phase
III Building (the "Phase III Commencement Date") and, therefore, the First
Extension Period, if properly exercised pursuant to the provisions of Paragraph
38 above, shall automatically be deemed to commence upon that date which is the
tenth (10th) anniversary date of the Phase III Commencement Date and the Second
Extension Period, if properly exercised pursuant to the provisions of Paragraph
38 above, shall automatically be deemed to commence upon that date which is the
fifteenth (15th) year anniversary date of the Phase III Commencement Date. Once
the Lessee exercises its Expansion Option, the exercise thereof may not be
revoked, except as provided in Paragraph 39(c) below. The Minimum Rent
attributable to the Phase III Building shall be "net, net, net" to the Lessor
and, therefore, the Lessee shall be responsible for the payment of all
Additional Rent with respect to the Phase III Building.

                  (c) If the Phase III Commencement Date has not occurred for
any reason on or before the date which is twelve (12) months after the Expansion
Option Notification Date (other than for delays caused by Force Majeure
(excluding any delays caused by governmental action or inaction) or delays
caused by, or attributable to, the Lessee), the Lessee may, by written notice to
Lessor:

                           (i) terminate this Lease, whereupon this Lease shall
so terminate as of a date specified in Lessee's notice and, thereafter, neither
the Lessor nor the Lessee shall have any further liability and obligations under
this Lease, or

                           (ii) continue this Lease with respect to the Phase I
Building and Phase II Building, in which event (x) the Lessor shall have the
right to recapture and remove all or any portion of the Recapture Land from the
applicability of this Lease and the Lessor may, thereafter, utilize and develop
such portion of the Recapture Land, (y) Paragraph 23(b) shall be deemed omitted
from this Lease, and (z) notwithstanding anything contained in Paragraph 38(a)
to the contrary, a successor or assignee of the Lessee may exercise the
Extension Options as set forth in this Lease.

         (d)      The Expansion Option shall be personal to the Lessee and the
                  same shall not be applicable to any successor or assignee of
                  the Lessee (other than a corporate successor or affiliate of
                  the Lessee) and the Lessee's successors or assigns (other than
                  a corporate successor or affiliate of the Lessee) may not
                  exercise the Expansion Option as set forth in this Lease and
                  as permitted under the terms of this Lease. The Lessee may
                  exercise its Expansion Option only by serving on the Lessor
                  the Lessee's Expansion Option Election Notice prior to the
                  expiration of the Expansion Option Exercise Period. In the
                  event the Lessee does not timely and properly exercise its
                  Expansion Option, then the Expansion Option shall
                  automatically become null and void and of no further force and
                  effect and the Lessee shall no longer have the Expansion
                  Option.

                  (e) Anything contained in this Paragraph 39 to the contrary
notwithstanding, the Minimum Rent applicable to the Phase I Building and the
Phase II Building shall continue to be as expressly set forth in this Lease and,
except as set forth in Subparagraph (f) below and on Exhibit "J" attached to
this Lease and made a part hereof, shall not be affected by the Lessee's
exercise of its Expansion Option.
<PAGE>   32
                  (f) The Lessor and the Lessee hereby acknowledge and agree
that the requirements under this Paragraph 39 for the re-setting of a new ten
(10) year term for the entire Building (i.e., including the Phase I Building,
the Phase II Building and the Phase III Building) upon the Lessee's exercise of
the Expansion Option must be reconciled within the context of the Lessee's two
(2) Extension Options of five (5) years each under Paragraph 38 of this Lease.
Accordingly, the Lessor and the Lessee hereby acknowledge and agree that, upon
the Lessee's exercise of its Expansion Option under this Paragraph 39, then the
first five (5) year Extension Period under Paragraph 38 of this Lease shall
commence upon the tenth (10th) year anniversary date of the Phase III
Commencement Date as opposed to that date which is ten (10) years and six (6)
months after the Phase I Commencement Date under this Lease and the second (2nd)
five (5) year Extension Period under Paragraph 38 of this Lease shall,
therefore, commence upon the fifteenth (15th) year anniversary date of the Phase
III Commencement Date as opposed to that date which is fifteen (15) years and
six (6) months after the Phase I Commencement Date under this Lease. For
purposes of illustration only, if the Lessee elects to have the Building
expanded pursuant to its Expansion Option under this Paragraph 39 and if the
Phase III Building is delivered by the Lessor to the Lessee on that date which
is two (2) years and six (6) months following the Phase I Commencement Date,
then the Term for the entire Building (i.e., including the Phase I Building, the
Phase II Building and the Phase III Building) would automatically be re-set to
be a new ten (10) year Term from the Phase III Commencement Date(i.e., ten (10)
years from that date which is two (2) years and six (6) months from the Phase I
Commencement Date) and, therefore, the Lessee's First Extension Period under
Paragraph 38 of this Lease would (if properly exercised by the Lessee as
expressly set forth in Paragraph 38 of this Lease) commence on that date which
is twelve (12) years and six (6) months following the Phase I Commencement Date
as opposed to commencing on what would have otherwise been the original
Termination Date under this Lease. Furthermore, anything contained in this Lease
to the contrary notwithstanding, upon the Lessee's proper exercise of its
Expansion Option as hereinabove set forth, the Termination Date under this Lease
shall automatically be extended to, and shall become, that date which is the day
immediately preceding the tenth (10th) year anniversary date of the Phase III
Commencement Date. If the Lessee properly exercises its Expansion Option as set
forth in this Paragraph 39, then the Minimum Rent for the Phase I Building, the
Phase II Building and the Phase III Building shall be as set forth on Exhibit
"J" attached to this Lease and made a part hereof.

         40. Not Construed Against Drafter. Any presumption of law which
provides that an agreement shall be construed against the drafter is hereby
waived by the parties to this Agreement, each party being represented by legal
counsel.



                            [SIGNATURE PAGE FOLLOWS]
<PAGE>   33
         IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties have caused this Lease to be duly executed as of the day and year first
above written.

WITNESS:                            LESSOR:

                                    ROBERT K. MERICLE, an adult individual d/b/a
                                    "MERICLE PROPERTIES"


_______________________             BY: ________________________________________
                                            ROBERT K. MERICLE


ATTEST:                              LESSEE:

                                              LECHTERS PENNSYLVANIA, INC.,
a Pennsylvania corporation


_________________________            BY: _______________________________________
Title:                                   Its:



_________         (CORP SEAL)