AGREEMENT OF LEASE



                                     between



                            201 INDUSTRIAL WAY, INC.

                                    Landlord



                                       and



                                 OSTEOTECH, INC.

                                     Tenant




                                    Premises:

               The land and the building and improvements thereon

              located at 201 Industrial Way, Eatontown, New Jersey,

designated as Block 3601, Lot 1 (formerly known as Block 134, Lot 2) on the Tax
                                   Map of the

                    Borough of Eatontown, County of Monmouth



                              Date: August 5, 2005



<PAGE>


                                TABLE OF CONTENTS


                                                                       Page


ARTICLE 1. DEMISE OF PREMISES............................................1
         Section 1.1      Demise.........................................1

ARTICLE 2. TERM..........................................................2
         Section 2.1      Initial Term...................................2
         Section 2.2      Renewal Period.................................2
         Section 2.3      Lease Year.....................................2

ARTICLE 3. RENT..........................................................3
         Section 3.1      Rent...........................................3
         Section 3.2      Fixed Rent.....................................3
         Section 3.3      Tenant's Tax Rent..............................4
         Section 3.4      Absolute Net Lease.............................5
         Section 3.5      [INTENTIONALLY OMITTED]........................6
         Section 3.6      [INTENTIONALLY OMITTED]........................6
         Section 3.7      Late Charge/Default Rate of Interest...........6
         Section 3.8      Security Deposit...............................6

ARTICLE 4. [INTENTIONALLY OMITTED].......................................7

ARTICLE 5. USE...........................................................7
         Section 5.1      Permitted Use..................................7
         Section 5.2      Prohibited Uses................................7

ARTICLE 6. ASSIGNMENT/SUBLETTING.........................................7
         Section 6.1      Consent Required...............................7
         Section 6.2      [INTENTIONALLY OMITTED]........................8
         Section 6.3      Consent of Landlord............................8
         Section 6.4      [INTENTIONALLY OMITTED]........................8
         Section 6.5      Tenant's Affiliates............................8
         Section 6.6      Continuation of Liability......................8

ARTICLE 7. REPAIRS AND MAINTENANCE.......................................8
         Section 7.1      Tenant's Obligations...........................8
         Section 7.2      Landlord's Obligations.........................9

ARTICLE 8. COMPLIANCE WITH LAW...........................................9
         Section 8.1      Legal Requirements.............................9
         Section 8.2      Hazardous Materials............................9
         Section 8.3      Environment Matters...........................10

ARTICLE 9. UTILITIES....................................................11

ARTICLE 10. ALTERATIONS.................................................11

ARTICLE 11. INSURANCE...................................................12
         Section 11.1      Tenant's Coverages...........................12
         Section 11.2      Failure to Maintain..........................13
         Section 11.3      Landlord's Coverages.........................13
         Section 11.4      Tenant's Premium Payment.....................15
         Section 11.5      Policies Generally...........................15
         Section 11.6      Waiver of Subrogation........................16
<PAGE>

ARTICLE 12. DAMAGE AND DESTRUCTION......................................17
         Section 12.1      Notice.......................................17
         Section 12.2      Casualty During Lease Years 1-8..............17
         Section 12.3      Casualty During Lease Years 9-20.............17
         Section 12.4      [INTENTIONALLY OMITTED]......................18
         Section 12.5      Effect on Lease..............................18

ARTICLE 13. EMINENT DOMAIN..............................................19
         Section 13.1      Taking.......................................19
         Section 13.2      Termination..................................19
         Section 13.3      Restoration by Landlord......................19
         Section 13.4      [INTENTIONALLY OMITTED]......................19
         Section 13.5      Effect on Lease..............................19
         Section 13.6      Award........................................20

ARTICLE 14. LANDLORD'S COVENANTS........................................20

ARTICLE 15. DEFAULT; REMEDIES AND DAMAGES...............................20
         Section 15.1      Event of Default.............................20
         Section 15.2      Remedies.....................................21

ARTICLE 16. UNAVOIDABLE DELAYS, FORCE MAJEURE...........................23

ARTICLE 17. NOTICES.....................................................23

ARTICLE 18. ACCESS......................................................24

ARTICLE 19. SIGNS.......................................................25

ARTICLE 20. END OF TERM.................................................25
         Section 20.1      Surrender....................................25
         Section 20.2      Survival.....................................25
         Section 20.3      Vacant Possession............................25

ARTICLE 21. HOLDING OVER................................................26

ARTICLE 22. INDEMNITY...................................................26

ARTICLE 23. SUBORDINATION...............................................27
         Section 23.1      Fee Mortgage.................................27
         Section 23.2      Subordination................................27
         Section 23.3      Attornment...................................27
         Section 23.4      Tenant's Financing Terms.....................27

ARTICLE 24. CERTIFICATES................................................28

ARTICLE 25. MISCELLANEOUS...............................................28
         Section 25.1      No Waiver....................................28
         Section 25.2      Relationship of Parties......................28
         Section 25.3      Recording....................................28
         Section 25.4      Captions.....................................28
         Section 25.5      Applicable Law...............................29
         Section 25.6      Mechanics Liens..............................29
         Section 25.7      Brokerage....................................29
         Section 25.8      Limitation of Landlord's Liability...........29
         Section 25.9      Attorneys' Fees..............................30
         Section 25.10       Waiver of Trial by Jury....................30
         Section 25.11       Interest Rate..............................30
         Section 25.12       Excavations on Adjoining Property..........30
         Section 25.13       Non-Binding Until Executed.................30
         Section 25.14       [INTENTIONALLY OMITTED]....................30
         Section 25.15       Independent Covenants......................30
         Section 25.16       Interpretation.............................31
         Section 25.17       Entire Agreement...........................31
         Section 25.18       Binding Effect.............................31
<PAGE>

ARTICLE 26. TENANT'S RIGHT OF FIRST OFFER...............................31

ARTICLE 27. FAIR MARKET RENT............................................32



EXHIBIT A         Legal Description of the Property
EXHIBIT B         Demised Premises
<PAGE>



     THIS AGREEMENT OF LEASE made and entered into as of this 5th day of August,
2005, by and between 201 INDUSTRIAL WAY, INC., a New Jersey  corporation  having
its principal office at 80 Corbett Way, Eatontown, New Jersey 07724 ("Landlord")
and OSTEOTECH,  INC., a corporation of the State of Delaware,  having an address
of 51 James Way, Eatontown, New Jersey 07724 ("Tenant").

                              W I T N E S S E T H:

                              Preliminary Statement

     A.  Simultaneously  with the execution hereof,  Landlord will purchase from
Tenant and become the owner of that certain  parcel of real property  designated
as Block 3601, Lot 1 (formerly  known as Block 134, Lot 2) on the Tax Map of the
Borough  of  Eatontown,  County  of  Monmouth,  New  Jersey,  more  particularly
described  on  Exhibit  A  annexed  hereto  (the  "Land"),  and  the  structural
components  of the single  story,  flex  building  (the  "Building")  containing
approximately  73,000  square  feet (the  "Floor  Area")  situated  on the Land,
including  the roof  structure,  surface,  joists and drains,  the  exterior and
structural  walls and columns,  windows and doors,  the foundation  footings and
floor slabs, and the mechanical  systems  currently used in the operation of the
Building as a building  and not  directly  related to the  operation of Tenant's
business, including, without limitation, heating, ventilation, air conditioning,
plumbing,  electrical,  fire sprinklers,  and all other such systems serving the
Building to the points where such are plumbed,  wired or otherwise  connected to
any of the  Excluded  Property  (as defined in Section  10.03),  and the parking
areas, sidewalks, driveways, landscaping, and other exterior improvements now or
hereafter situated on the Land (collectively, the "Improvements"); together with
certain real property fixtures,  built-in machinery and equipment currently used
in the  operation,  repair and  maintenance  of the Land,  the  Building and the
Improvements  (but not directly  related to the operation of Tenant's  business)
and situated thereon (the "Personal Property") .

     B. Tenant  desires to lease the Building,  the  Improvements,  the Personal
Property and the Land  (collectively,  the "Demised  Premises"),  which shall be
used for general office, research, design, production,  storage and other lawful
purposes only, together with any accessory uses thereto, and Landlord desires to
lease  the  Demised  Premises  to  Tenant  upon and  subject  to the  terms  and
conditions hereinafter set forth.

     NOW,  THEREFORE,  in consideration  of the terms,  covenants and conditions
herein set forth, Landlord and Tenant hereby covenant and agree as follows:

                                   ARTICLE 1.
                               DEMISE OF PREMISES

     Section 1.1 Demise. Upon and subject to the covenants,  agreements,  terms,
provisions  and  conditions  of this Lease,  Landlord  hereby leases the Demised
Premises to Tenant,  and Tenant hereby takes the Demised Premises from Landlord,
together with the exclusive  right of Tenant to all of the parking spaces on the
Land.
<PAGE>

                                   ARTICLE 2.
                                      TERM

     Section 2.1 Initial Term.  Tenant shall have and hold the Demised Premises,
together with any and all appurtenances  thereto, and the easements,  rights and
privileges  herein  granted  to  Tenant,  for and  during the term of this Lease
("Lease  Term").  The Lease Term shall  commence upon the date which the Demised
Premises is acquired by Landlord (the  "Commencement  Date") and,  unless sooner
terminated  or extended as provided  elsewhere  in this Lease,  shall end on the
last  day  of the  month  in  which  the  twentieth  (20th)  anniversary  of the
Commencement Date falls (the "Expiration Date").

     Section 2.2 Renewal  Period.  Provided  that Tenant has not been in default
under this Lease beyond any applicable notice and cure period at any time during
the Lease Term,  Landlord  hereby grants to Tenant the option to extend the term
of this  Lease  for two (2)  consecutive  terms of five (5) years  each  (each a
"Renewal  Term") at the Fixed Rent (as defined  below) set forth  below.  Tenant
shall give  Landlord  written  notice of its  intention  to exercise the renewal
option at least six (6) months prior to the expiration of the  applicable  Lease
Term or Renewal Term.

     Within  thirty  (30)  days  of  Tenant  timely  notifying  Landlord  of its
intention  to exercise  its renewal  option,  Landlord  shall  provide to Tenant
written  notice of Landlord's  determination  of annual fair market rent for the
applicable  Renewal Term.  The "Fair Market Rent" shall be the fixed annual rent
charged  under triple net leases for similar  properties  located in the general
geographic area of the Demised Premises.  Thereafter, Tenant shall have ten (10)
business days from the date which Landlord notifies Tenant of its calculation to
object to Landlord's determination. In the event the parties are unable to reach
a mutual  agreement as to the Fair Market Rent within  thirty (30) days from the
date which Tenant notifies Landlord of its objection, as Tenant's sole recourse,
Tenant  shall  have the right to  nullify  the  exercise  of its  option or seek
arbitration in accordance with Section 27.1 hereof. Tenant shall continue to pay
the Fixed  Rent  payable  during the last year of the  applicable  Lease Term or
Renewal Term during any arbitration proceedings. Provided, however, in the event
Tenant either: (i) fails to timely object to the Landlord's  calculation of Fair
Market Rent in the first instance;  or (ii) fails to  affirmatively  nullify the
exercise of its option or seek arbitration at the expiration of said thirty (30)
day period,  the Fixed Rent for the  applicable  Renewal  Term shall be the Fair
Market Rent as previously determined by Landlord in its notice.

     Section 2.3 Lease Year. As used herein, the term Lease Year shall mean each
successive period of twelve (12) consecutive calendar months,  commencing on the
first day of the month following the month in which the Commencement Date falls.
If the  Commencement  Date is other than the first day of a calendar month,  the
first Lease Year shall include the period from the Commencement Date through the
first day of the following month as well as the twelve (12) consecutive calendar
months thereafter.

                                       2
<PAGE>


                                   ARTICLE 3.
                                      RENT

     Section 3.1 Rent. From and after the  Commencement  Date and throughout the
Lease Term and any Renewal Term, Tenant shall pay to Landlord the sums set forth
in this Article as rent or additional  rent,  except as set forth in this Lease,
without prior demand  therefor and without  deduction or setoff  therefrom.  The
term  "Rent"  shall be deemed to  include  Fixed  Rent and all  additional  sums
payable by Tenant to Landlord pursuant to this Lease  ("Additional  Rent").  All
payments of Rent shall be paid to or on behalf of  Landlord  in lawful  money of
the United  States which shall be legal tender for payment of public and private
debts, without demand or notice and without any abatement,  deduction or set-off
whatsoever,  except as otherwise  expressly provided in this Lease. All payments
of Rent shall be  delivered  to  Landlord at the address set forth in this Lease
for notices, or to any other place designated by Landlord.

     Section 3.2 Fixed Rent.

     (a) Tenant  shall pay to Landlord as rental for the  Demised  Premises,  an
annual rent (the "Fixed Rent") of:

                                           Total                   Total
                                           Annual                  Monthly
(i)      Lease Years                       Fixed Rent              Fixed Rent

         One                               $2,326,000.00           $193,833.33
         Two                               $2,326,000.00           $193,833.33
         Three                             $2,326,000.00           $193,833.33
         Four                              $2,326,000.00           $193,833.33
         Five                              $2,326,000.00           $193,833.33
         Six                               $2,326,000.00           $193,833.33
         Seven                             $2,326,000.00           $193,833.33
         Eight - Twenty           See Sections 3.2(a)(ii)-(iv)

(ii) The Fixed  Rent for Lease  Years  eight (8)  through  twelve  (12) shall be
     $1,460,000.00 per annum ($121,666.66 per month).

(iii) The Fixed  Rent for Lease  Years  thirteen  (13)  through  seventeen  (17)
     ("Fixed Rent 17") shall be the Fair Market Rent (as  determined in the same
     manner as in Section 2.2 above) but not less than  $1,460,000.00  per annum
     ($121,666.66   per  month)  or  greater   than   $1,533,000.00   per  annum
     ($127,750.00 per month).

(iv) The Fixed Rent for Lease Years  eighteen  (18) through  twenty (20) ("Fixed
     Rent 20") shall be the Fair Market Rent (as  determined  in the same manner
     as in  Section  2.2  above)  but not less than  Fixed Rent 17 per annum (in
     equal  monthly  installments)  or  greater  than  $1,609,650.00  per  annum
     ($134,137.50 per month).

(v)  The Fixed Rent for the first  Renewal  Term shall be the Fair  Market  Rent
     ("Fixed Rent  Renewal") (as determined in the same manner as in Section 2.2
     above)  but not  less  than  Fixed  Rent 20 per  annum  (in  equal  monthly
     installments)  or greater than  $1,690,132.50  per annum  ($140,844.38  per
     month).

                                       3
<PAGE>

(vi) The Fixed Rent for the second  Renewal  Term shall be the Fair  Market Rent
     (as  determined  in the same  manner as in Section  2.2 above) but not less
     than  Fixed  Rent  Renewal  per annum (in equal  monthly  installments)  or
     greater than $1,774,639.12 per annum ($147,886.59 per month).

     (b) Fixed Rent shall be paid in equal monthly installments in advance on or
before the first day of each month  during the Lease Term and any Renewal  Term.
If the  Commencement  Date is not the first day of a calendar month,  Fixed Rent
for the period from the Commencement  Date to the last day of the month in which
the  Commencement  Date occurs shall be  apportioned  on the basis of the actual
number of days in such month and paid in advance on the  Commencement  Date. The
first full monthly  installment  of Fixed Rent shall be paid on the first day of
the month following the Commencement Date.

     (c) As used  herein,  the  "Commencement  Date"  shall have the meaning set
forth in Section 2.1, above.

     (d) Upon the  determination of the Commencement  Date,  Landlord and Tenant
shall  execute,  acknowledge  and exchange  duplicate  originals of a recordable
agreement  setting forth the  Commencement  Date and the Expiration  Date of the
Lease Term and each Renewal Term.

     Section 3.3 Tenant's Tax Rent.

     (a) Commencing on the  Commencement  Date and throughout the Lease Term and
any Renewal Term,  Tenant shall pay, directly to the applicable taxing authority
as  Additional  Rent,  all "Real Estate  Taxes"  affecting  and imposed upon the
Demised Premises (due to its single tenancy of the Building) which accrue during
the Lease Term, as hereinafter provided ("Tenant's Tax Rent"). Tenant's Tax Rent
shall be equal to the Real Estate Taxes assessed  against the Demised  Premises.
Landlord  shall  promptly  furnish to Tenant any Real  Estate Tax bills it shall
receive.

     (b) The term  "Real  Estate  Taxes"  shall mean all real  estate  taxes and
assessments,  special or  otherwise,  levied upon or with respect to the Demised
Premises imposed by Federal,  State or local  governments (but shall not include
income, franchise,  capital stock, estate or inheritance taxes or taxes based on
receipts of rentals, unless the same shall be in substitution for, or in lieu of
a real estate tax or assessment), provided that if, because of any change in the
method of taxation of real estate,  any other or additional tax or assessment is
imposed  upon  Landlord or upon or with  respect to the Demised  Premises or the
rents or income therefrom or upon any fixtures, machinery, equipment, apparatus,
systems  and  appurtenances  in,  upon or used in  connection  with the  Demised
Premises for the operation thereof,  as or in substitution for or in lieu of any
tax or assessment  which would otherwise be a real estate tax, such other tax or
assessment shall also be deemed a real estate tax.  Landlord has, to the best of
its  knowledge,  no knowledge of any proposed  public  improvements  which might
result in a future levy or  assessment,  and has received no notice of the same;
and in the  event  during  the  Lease  Term  or any  Renewal  Term,  any  public
improvements  or  betterments  are made which would impose a special  assessment
against the Demised  Premises  which is  permitted  to be paid in  installments,
Landlord  shall elect to pay such  assessment in  installments  over the longest
period of time  permitted by Law, and Tenant shall only be  responsible  for its
share of  installment  payments  paid by  Landlord  during the Lease Term or any
Renewal  Term,  together  with its share of any interest  charged as a result of
having elected to make such payments in installments.

                                       4
<PAGE>

     (c) [INTENTIONALLY OMITTED].

     (d) Any Real Estate Taxes for a real estate  fiscal tax year only a part of
which is included  within the Lease Term or any Renewal Term,  shall be adjusted
between  Landlord  and  Tenant  on  the  basis  of a  365-day  year  as  of  the
Commencement Date or the Expiration Date or sooner termination of the Lease Term
or any Renewal Term,  as the case may be, for the purpose of computing  Tenant's
Tax Rent.

     (e) Tenant shall have the right, but not the obligation  except as provided
below,  to contest or appeal any assessment  for Real Estate Taxes,  at Tenant's
sole cost,  and at no cost to Landlord,  and subject to the terms and conditions
of this  subparagraph (e), by appropriate  proceedings  conducted in good faith,
whereupon Landlord shall reasonably  cooperate with Tenant,  execute any and all
documents required in connection  therewith and, if required by any governmental
authority having jurisdiction,  join with Tenant in the prosecution thereof. If,
as a result of any  contest or  otherwise,  any rebate or refund of Real  Estate
Taxes is received,  whether before or after the Expiration Date, with respect to
Real Estate Taxes  attributable  to the Lease Term or any Renewal  Term,  Tenant
shall be entitled to the same (after reasonable and customary  expenses incurred
by Landlord  and/or Tenant in connection with such contest are paid to the party
which incurred such expense),  and Landlord hereby  covenants to pay the same to
Tenant.  Accordingly,  this  covenant  shall  survive the  expiration  or sooner
termination of this Lease.

     (f) In addition to Tenant's Tax Rent, Tenant shall pay, before  delinquent,
any and all taxes and assessments levied against (1) fixtures,  equipment, signs
and  personal  property  located  or  installed  in,  about or upon the  Demised
Premises;  (2) any rent,  income or other payments  received by Tenant or anyone
claiming by,  through or under  Tenant;  (3) the use or occupancy of the Demised
Premises as a tenant; or (4) any document to which Tenant is a party creating or
transferring an interest or estate in the Demised Premises.  In the event Tenant
is delinquent in the payment of any taxes and assessments,  Tenant shall pay any
and all late fees and penalties associated with same.

     Section 3.4 Absolute Net Lease.

     (a) It is expressly  understood  and agreed by and between the parties that
this Lease is a triple net lease and,  except as specifically  provided  herein,
Landlord is not  obligated  to expend any funds in  connection  with the Demised
Premises.

     (b)  Without  limitation,   Tenant  shall  be  responsible  for  all  those
reasonable  and  customary   amounts  incurred  in  respect  of  the  operation,
maintenance,  management and  safekeeping of the Demised  Premises in accordance
with  accepted  principles  of sound  management  practices  as  applied  to the
operation,  maintenance and safekeeping of a similar  property as may be located
in the general geographic area of the Demised Premises,  such as cleaning;  snow
removal and  treatment  of ice;  maintaining  and  repairing  the parking  area;
replanting  and  replacing  landscaping;  maintaining,  repairing  and replacing
common utility lines;  water and sewerage  charges;  maintaining,  repairing and
replacing the roof  coating/membrane and drains;  electricity charges;  premiums
for  insurance  policies  Landlord is  required to maintain  pursuant to Section
11.3; wages, salaries and worker's compensation (including employee benefits and
unemployment  and  social  security  taxes and  insurance)  of staff  performing
services in connection with the Demised Premises;  and security  services.  Such
expenses shall not include interest and amortization payments on any mortgage or
mortgages, and rental under any ground or underlying lease or leases.

                                       5
<PAGE>

     (c) Except as expressly and specifically provided to the contrary elsewhere
in this Lease,  no  abatement,  diminution  or  reduction of Fixed Rent shall be
claimed by or allowed to Tenant,  or any persons  claiming  under it,  under any
circumstances, whether for inconvenience,  discomfort, interruption of business,
or  otherwise,  arising  from the  making of  alterations,  changes,  additions,
improvements  or repairs to the  Demised  Premises;  by virtue or because of any
present or future Legal Requirements;  or by virtue or arising from, and during,
the restoration of the Demised  Premises after the destruction or damage thereof
by fire or other casualty or the taking or condemnation of a portion thereof.

     Section 3.5 [INTENTIONALLY OMITTED].

     Section 3.6 [INTENTIONALLY OMITTED].

     Section 3.7 Late  Charge/Default  Rate of  Interest.  There shall be a late
charge equal to five (5%) percent on all  payments of Rent  hereunder  which are
made more than ten (10) days after its due date, or in the case Additional Rent,
within five (5) days after written  notice  thereof from Landlord to Tenant that
said  Additional  Rent has not been  received by Landlord when due. In the event
Tenant  fails or refuses to pay Rent  hereunder  beyond  any  applicable  notice
and/or grace period,  Tenant agrees to reimburse  Landlord,  as Additional  Rent
hereunder,  for all reasonable  expenses incurred by Landlord in connection with
the  collection  of  such  monies.  In  the  event  of  any  legal  action,  the
non-prevailing  party shall  reimburse  the  reasonable  attorney's  fees of the
prevailing  party to the prevailing  party. Any payment which is not made within
thirty (30) days of its due date shall  accrue  interest at the  Interest  Rate,
which term is defined in Section 25.11.

     Sedtion 3.8 Security Deposit.  Upon execution of this Lease Agreement,  the
sum of $365,000 shall be paid by Tenant to Landlord as security for the faithful
performance  and  observance by Tenant of the terms,  covenants,  conditions and
provisions of this Lease on Tenant's  part to be  performed.  In the event of an
"Event of Default"  hereunder,  Landlord  may draw up to the full amount of said
deposit, in one or multiple draws, to the extent required for the payment of any
Rent or any other  sum as to which  Tenant  is in  default  or for any other sum
which  Landlord  may expend or may be  required  to expend by reason of Tenant's
default.  In the event  Landlord  applies or retains  any  portion or all of the
security deposit delivered hereunder,  Tenant shall forthwith restore the amount
so applied or  retained so that at all times the amount  deposited  shall be not
less than the security deposit  required  pursuant to the first sentence of this
Section 3.8. In the event Tenant shall fully and  faithfully  comply with all of
the terms,  covenants,  conditions and provisions of this Lease on Tenant's part
to be performed,  Landlord shall, within thirty (30) days after the later of the
date of  expiration  of the  Lease  Term  or any  Renewal  Term  or the  date of
surrender of possession of the Demised  Premises to Landlord in accordance  with
this Lease,  return said security deposit, or such portion thereof as shall then
remain, to Tenant.


                                       6
<PAGE>

                                   ARTICLE 4.
                             [INTENTIONALLY OMITTED]



                                   ARTICLE 5.
                                       USE

     Section 5.1 Permitted Use. The use of the Demised  Premises  shall,  at all
times  during the Lease  Term and any  Renewal  Term,  be for  general  offices,
research,  design,  production,  storage  and  other  lawful  purposes  (and any
accessory uses thereto) and for no other use or purpose.

     Section 5.2  Prohibited  Uses.  With regard to the  Permitted  Use,  Tenant
acknowledges  that the Fixed Rent  specifically  takes into account the intended
use of the Premises.


                                   ARTICLE 6.
                              ASSIGNMENT/SUBLETTING

     Section 6.1 Consent Required.  Tenant,  for itself,  its heirs,  executors,
administrators,  successors and assigns,  expressly  covenants that it shall not
assign,  mortgage or encumber this Lease, nor underlet,  or suffer or permit the
Demised  Premises  or any part  thereof to be used by others,  without the prior
written  consent  of  Landlord  in each  instance,  which  consent  shall not be
unreasonably  withheld,  conditioned  or  delayed.  For so long as Tenant  shall
remain a corporation, a change in control of Tenant through any merger of Tenant
where Tenant is the surviving corporation or otherwise,  or the sale or purchase
of a  controlling  equity  interest  in  Tenant,  shall  not be  deemed to be an
assignment of this Lease. If this Lease be assigned,  or if the Demised Premises
or any part  thereof be  underlet  or  occupied  by anyone  other  than  Tenant,
Landlord  may,  after  default  beyond  applicable  notice and/or cure period by
Tenant,  collect rent from the assignee,  undertenant  or occupant and apply the
net  amount  collected  to the rent  herein  reserved,  but no such  assignment,
underletting, occupancy or collection shall be deemed a waiver of this covenant,
or the  acceptance  of the  assignee,  undertenant  or occupant as Tenant,  or a
release of Tenant from the further performance by Tenant of all covenants on the
part of Tenant  herein  contained.  The consent by Landlord to an  assignment or
underletting shall not in any wise be construed to relieve Tenant from obtaining
the  express  consent  in writing  of  Landlord  to any  further  assignment  or
underletting, nor shall the same release or discharge Tenant from any liability,
past,  present or future,  under this Lease,  and Tenant  shall  continue  fully
liable in all respects hereunder. Notwithstanding the language set forth in this
Section 6.1, Tenant shall have the right,  without the provisions of Section 6.1
being  applicable,  to assign this Lease or sublet the Premises,  in whole or in
part, to (a) any parent or subsidiary of Tenant,  or in connection with a merger
or consolidation of Tenant where Tenant is not the surviving corporation or sale
of the assets of Tenant,  provided that the surviving entity in such a merger or
consolidation  or the  sale  of the  assets  shall  have a  tangible  net  worth
(determined in accordance  with generally  accepted  accounting  principles) not
less  than the then  tangible  net  worth of  Tenant  immediately  prior to such
transaction,  or in connection with the sale of all or substantially  all of the
assets of Tenant to a different  entity,  which entity meets the  aforesaid  net
worth  test;  (b) to a  subsidiary  created  in  connection  with a merger  or a
consolidation;  or (c) to an affiliate  entity that is under common control with
Tenant, controlled by Tenant, or controls Tenant. In each instance of assignment
or subletting  and the various carve outs set forth in this Article 6.1,  Tenant
shall remain liable on the Lease.

                                       7
<PAGE>

     Section 6.2 [INTENTIONALLY OMITTED].

     Section 6.3 Consent of Landlord. Landlord agrees that, provided that Tenant
remains  liable on the  Lease,  Landlord  shall not  unreasonably  withhold  its
consent to the proposed sublease or assignment.

     Section 6.4 [INTENTIONALLY OMITTED].

     Section 6.5 Tenant's Affiliates.  Tenant,  without Landlord's prior written
consent  thereto and without being  subject to the  provisions of Section 6.1 or
Section 6.3,  shall have the right to assign this Lease or sublet any portion of
the Demised Premises to, or allow the Demised Premises to be otherwise  occupied
by, any parent,  subsidiary,  affiliate,  group or division of Tenant; provided,
however, that no such assignment or subletting shall be deemed to relieve Tenant
of  liability  for the  full  and  faithful  performance  of all the  terms  and
conditions on its part to be performed under this Lease.

     Section 6.6  Continuation  of Liability.  In the event Tenant  assigns this
Lease,  as  permitted  by this  Article 6, such  assignment  shall not be deemed
effective or binding on Landlord  unless  there is delivered to Landlord  within
ten  (10)  business  days of the  execution  of such  assignment,  a  duplicate,
executed copy of such assignment and a duplicate,  executed copy of an agreement
on the part of the assignee,  reasonably satisfactory to Landlord, to the effect
that the assignee  agrees to and shall assume all of the obligations on the part
of Tenant to be kept, observed and performed pursuant to this Lease.  Consent by
Landlord to any  assignment  or sublease  shall not,  nor shall it be deemed to,
relieve or release the assigning Tenant from liability for the full and faithful
performance of all the terms,  covenants,  provisions and conditions required to
be performed under this Lease by "Tenant" for the remainder of the term. No oral
or verbal  assignment,  or  sublease,  or receipt by  Landlord of any payment of
rental or other  amounts,  or acceptance by Landlord of  performance of Tenant's
obligations hereunder by any purported assignee or sublessee,  shall be deemed a
waiver of any obligation of Tenant hereunder.


                                   ARTICLE 7.
                             REPAIRS AND MAINTENANCE

     Section 7.1 Tenant's Obligations.

     (a)  Except  repairs  and  replacements  required  to be made  by  Landlord
pursuant to Section 7.2 hereof, Tenant shall, at Tenant's sole cost and expense,
keep and  maintain  in good  order and  condition  the  Demised  Premises,  both
exterior and interior, as and when needed to preserve them in good working order
and  condition,  including,  without  limitation,  the  equipment,  fixtures and
facilities  appurtenant thereto;  the heating,  ventilating and air conditioning
system therein;  the electrical,  plumbing,  sewer and other Building mechanical
systems; and the loading docks, if any.

                                       8
<PAGE>

     (b) Tenant shall keep the sidewalks  adjoining the Demised Premises and the
parking areas in good repair,  free from snow, ice, rubbish,  dirt,  garbage and
other refuse.

     (c) Tenant  shall  cause all  repairs to be made in a good and  workmanlike
manner and in accordance with the provisions of Article 10 hereof.

     (d) Tenant shall cause all janitorial services to be performed.

     (e) As used herein, the term "repairs" shall mean all maintenance, repairs,
alterations,  additions and  betterments,  foreseen or  unforeseen,  ordinary or
extraordinary,  required to maintain  the  Demised  Premises to the  standard to
which  similar  buildings  in the general  geographic  area of the  Building are
maintained.  All repairs  shall be in quality  and class  equal to the  original
construction and shall be in compliance with applicable  Legal  Requirements (as
defined below).

     Section 7.2 Landlord's Obligations.

     (a) Landlord agrees, at its sole cost and expense, without reimbursement by
Tenant, to make all repairs and replacements to the roof surface  (excluding any
membrane/coating),  joists and  structure,  the  exterior  walls and  foundation
footings of the  Building  (but not the floor slab) and to keep the same in good
order and  condition.  If the same  shall be  required  as a result of  Tenant's
misuse or neglect, then Tenant shall be responsible for the costs of the same.


                                   ARTICLE 8.
                              COMPLIANCE WITH LAW

     Section 8.1 Legal Requirements.  Tenant, at Tenant's expense,  shall comply
with  all  laws  and   ordinances,   and  all  rules,   orders  and  regulations
(individually  and collectively,  the "Legal  Requirements") of all governmental
authorities (the "Governmental Authorities") and of all insurance bodies, at any
time duly issued or in force,  applicable  to the  Demised  Premises or any part
thereof or to Tenant's use thereof, except that Tenant shall not hereby be under
any  obligation to comply with any Legal  Requirement  requiring any  structural
alteration of or in connection with the Demised Premises, unless such alteration
is  required  by reason of a  condition  which  has been  created  by, or at the
instance of,  Tenant,  or is  attributable  to the use or manner of use to which
Tenant puts the Demised  Premises (as opposed to the use or manner of use of the
Building  generally),  or is  required  by reason of a breach of any of Tenant's
covenants and agreements  hereunder.  Where any  structural  alteration of or in
connection with the Demised Premises is required by any such Legal  Requirement,
and, by reason of the express  exception  hereinabove  contained,  Tenant is not
under any  obligation to make such  alteration,  then  Landlord  shall make such
alteration and pay the cost thereof without reimbursement by Tenant.

     Section 8.2 Hazardous Materials.

     (a) Tenant agrees to refrain,  and to use all reasonable efforts to prevent
its employees,  invitees, agents, contractors and subtenants,  from bringing any
Hazardous  Materials  onto the Demised  Premises,  except for any such Hazardous
Material  used in the course of Tenant's  business and used in compliance in all
material respects with applicable  Environmental  Legal Requirements (as defined
below).

                                       9
<PAGE>

     (b) The  term  "Hazardous  Materials"  shall  mean any  hazardous  or toxic
substances,  materials,  wastes,  and  pollutants  which are defined as such in,
and/or regulated by (or become regulated by), any Legal Requirements  including,
without limitation,  the Comprehensive  Environmental  Response Compensation and
Liability  Act  (42  U.S.C.  ss.ss.  9601  et  seq.),  the  Hazardous  Materials
Transportation  Act (49 U.S.C. ss. 1801 et seq.), the Clean Water Act (33 U.S.C.
ss. 1251 et seq.),  the Resource  Conservation  and Recovery Act (42 U.S.C.  ss.
6901 et seq.),  the  Clean  Air Act (42  U.S.C.  ss.  7401 et  seq.),  the Toxic
Substances  Control Act (15 U.S.C. ss. 2601 et seq.),  the Federal  Insecticide,
Fungicide,  and Rodenticide  Act (7 U.S.C.  ss. 136 et seq.),  the  Occupational
Safety and Health Act (29 U.S.C.  ss. 651 et seq.), the Industrial Site Recovery
Act ("ISRA") (N.J.S.A. 13:1k-6 et seq., and its predecessor statutes), the Spill
Compensation and Control Act (N.J.S.A.  58:10-23.11, et seq.), the Air Pollution
Control Act (N.J.S.A.  26:2C-2, et seq.), the New Jersey Water Pollution Control
Act (N.J.S.A.  58:10A-1,  et seq.),  the Underground  Storage Tank Act (N.J.S.A.
58:10A-21, et seq.), the Solid Waste Management Act (N.J.S.A.  13:1E-1, et seq.,
any other Legal  Requirement  which is presently in effect or hereafter  enacted
relating to environmental  matters, any rules and regulations  promulgated under
any of the foregoing, and any and all amendments to the foregoing (collectively,
"Environmental Legal  Requirements").  The provisions of this Article VIII shall
survive the expiration or sooner termination of this Lease.

     Section 8.3 Environment Matters.

         Tenant further covenants and agrees that:

     (a) with respect to its operations at the Demised Premises, Tenant shall be
in compliance in all material respects with all Environmental Legal Requirements
and all  terms and  conditions  of any  permits,  licenses,  and  authorizations
required by or arising under Environmental Legal Requirements,  and Tenant shall
be  in  compliance  in  all  material  respects  with  all  other   limitations,
restrictions,  conditions,  standards,  requirements,  schedules, and timetables
contained in the Environmental Legal Requirements.

     (b) With respect to its operations at the Demised Premises,  Tenant has not
received,  has not been notified of, and is not subject to any (i) notice of any
violation,  (ii) civil or  criminal  complaint,  or (iii)  other  allegation  of
non-compliance   with  or  third-party  claim  under  any  Environmental   Legal
Requirements.

     (c) Tenant shall fully comply with the  requirements of the ISRA. If Tenant
has not fully complied with ISRA prior to the  expiration or sooner  termination
of the Lease,  then this Lease shall be extended and  continued at the option of
Landlord and Tenant shall pay the Fixed Rent and other  charges set forth herein
(i.e., Real Estate Taxes, water, sewer and other utilities),  which shall be due
and payable  until such  approvals  are  received  and  delivered  to  Landlord.
Notwithstanding  the  foregoing,  Tenant shall not be permitted to occupy or use
the Demised Premises except for the purpose of compliance with ISRA.

                                       10
<PAGE>


                                   ARTICLE 9.
                                    UTILITIES

     Section  9.1 Tenant  agrees to pay or cause to be paid all charges for gas,
water, sewer, electricity,  light, heat, power, telephone or other communication
service or other utility or kind of service used,  rendered or supplied to, upon
or in  connection  with the Demised  Premises  throughout  the Lease Term or any
Renewal Term,  and Tenant  agrees to defend and  indemnify  Landlord and save it
harmless  against any  liability or damages for failure to pay and causing liens
to be  imposed on such  account,  except to the  extent  such  failure to pay or
imposition of liens is due to Landlord's act or omission.

     Sectio 9.2 Tenant  covenants  and agrees  that its use of utility  services
(including, without limitation,  electric, gas, water and sewer) will not exceed
either the  capacity or maximum  load of the utility  lines  serving the Demised
Premises  (provided  Landlord has advised  Tenant of such  capacities or maximum
loads) or which may from time to time be prescribed  by applicable  Governmental
Authorities.

     Section 9.3 Landlord  shall in no event be liable or  responsible to Tenant
for any loss,  damage or expense which Tenant may sustain or incur if either the
quantity or character of utility  services is changed or is no longer  available
or suitable for Tenant's purposes unless caused solely by Landlord's intentional
or negligent act.


                                  ARTICLE 10.
                                   ALTERATIONS

     Section  10.1  Tenant  shall  not make any  structural  alterations  to the
Demised Premises without the prior consent of Landlord,  which consent shall not
be unreasonably withheld. Tenant may make non-structural,  interior alterations,
including to the equipment,  fixtures and facilities  appurtenant  thereto;  the
heating,  ventilating  and air  conditioning  systems  therein;  the electrical,
plumbing, sewer and other Building mechanical systems; and the loading docks, if
any, without obtaining  Landlord's consent but upon giving Landlord prior notice
thereof and in accordance with all Legal Requirements.

     Sectio  10.2 Any  alterations  that  Tenant  has a right  to make,  and any
alterations that Landlord has approved,  shall be made at Tenant's sole cost and
expense,  and in  making  any such  alterations  Tenant  shall  comply  with the
following conditions:

     (a) Tenant shall submit to Landlord a copy of any plans and  specifications
prepared  in  connection  with  any  proposed   alteration   (including  layout,
architectural, mechanical and structural drawings) and, if such alteration shall
require  Landlord's  consent  hereunder,  Tenant  shall  not  commence  any such
alteration  without  first  obtaining  Landlord's  approval  of such  plans  and
specifications;

     (b) no alterations shall be undertaken until Tenant shall have procured and
paid  for,  so far as the  same  may be  required,  all  necessary  permits  and
authorizations of all municipal departments and governmental subdivisions having
jurisdiction.  Landlord  shall  join in the  application  for  such  permits  or
authorizations  upon  request  of  Tenant if  necessary,  provided  Landlord  is
promptly reimbursed for any filing or other costs, fees or expenses incurred;

                                       11
<PAGE>

     (c) before  commencing any alterations,  Tenant shall provide any necessary
and appropriate riders for fire and extended coverage, and comprehensive general
commercial  liability and property damage  insurance,  covering the risks during
the course of such alteration;

     (d) any alterations  shall be made with reasonable  diligence  (Unavoidable
Delays (as defined in Section 16.1) excepted),  in a good and workmanlike manner
and in compliance with all applicable permits,  authorizations,  building codes,
zoning laws, and all other laws,  ordinances,  orders,  rules,  regulations  and
requirements  of all  governmental  departments  having  jurisdiction,  and upon
completion  Tenant shall obtain and deliver to Landlord any necessary  amendment
to the certificate of occupancy; and

     (e) the  cost of any  alterations  shall be  promptly  paid so that the fee
estate and leasehold  estates in the Demised Premises at all times shall be free
of liens for labor and  materials  supplied or claimed to have been  supplied to
Tenant or the Demised Premises.

     Section 10.3 All such alterations made by Tenant,  except for any fixtures,
personal  property and equipment  directly  related to the operation of Tenant's
business,   including,  without  limitation,  any  trade  fixtures,   machinery,
equipment,  furniture and other personal  property which may be removed  without
material  damage to the Demised  Premises,  built-in  casework  and cabinets and
other similar additions and improvements built into the Demised Premises even if
such has become an  integral  part of the  Demised  Premises,  such as,  without
limitation,  fume hoods which penetrate the roof or plenum area,  built-in clean
rooms,  built-in  laboratories,   walk-in-freezers,   deionized  water  systems,
filtering systems, glass washing equipment,  autoclaves,  chillers, supplemental
plumbing,  electrical and  mechanical  equipment and systems from the point such
equipment  or system was  plumbed,  wired or  otherwise  connected to any of the
Building systems,  and any power generators and transfer switches (the "Excluded
Property"), shall immediately be and become part of the realty. and the sole and
absolute property of Landlord, and shall remain upon and be surrendered with the
Demised  Premises at the  expiration  or other  termination  of this Lease.  The
Excluded Property shall be and shall remain at all times the exclusive  property
of Tenant.  Notwithstanding the foregoing,  however, Landlord, upon notice given
at the time Landlord  consents to any  alteration,  may require Tenant to remove
such  alteration,  and to repair and restore in good and workmanlike  manner any
damage to the Demised Premises caused by such removal and restore the same to as
reasonably  close  to  the  condition  that  existed  immediately  prior  to the
alteration.


                                  ARTICLE 11.
                                    INSURANCE

     Section 11.1 Tenant's  Coverages.  Commencing  with the date of delivery of
possession of the Demised  Premises to Tenant and  throughout the Lease Term and
any Renewal Term, Tenant shall, at Tenant's cost and expense,  provide and cause
to be maintained the following insurance coverages:

     (a)  comprehensive   general  commercial   liability  insurance  (including
contractual liability coverage) insuring against claims for bodily injury, death
or property  damage that may arise from or be occasioned  by (x) the  condition,
use or  occupancy  of the Demised  Premises,  the  sidewalks  adjacent  thereto,
parking  areas  and  the  loading  docks  and  other  appurtenances,  or (y) any
negligent  act or  omission  of  Tenant,  its  subtenants,  or their  respective


                                       12
<PAGE>

contractors,  licensees, agents, servants, employees, invitees or visitors; such
insurance to afford minimum protection of not less than $5,000,000 in respect of
bodily  injury or death to any one person,  and of not less than  $5,000,000  in
respect of any one accident,  and of not less than $500,000 for property damage.
The liability insurance requirements hereunder may be reviewed by Landlord every
three (3) years for the  purpose  of  increasing  (in  consultation  with  their
respective insurance advisors) the minimum limits of such insurance from time to
time to limits which shall be reasonable and customary for similar facilities of
like size and operation in accordance with generally accepted insurance industry
standards;

     (b) "All-risk"  insurance  (including  coverages  against loss or damage by
fire, lightning,  windstorm, hail, explosion,  vandalism and malicious mischief,
riot and civil commotion,  smoke and all other perils now or hereafter  included
in extended coverage  endorsements)  covering the Excluded Property and Tenant's
merchandise,  inventory,  furnishings,  equipment,  alterations  (but not  those
alterations that are the property of Landlord under the terms of this Lease) and
all other  items of  personal  property  of Tenant  located  on, in or about the
Demised Premises, in an amount equal to one hundred percent (100%) of the actual
replacement  cost  thereof  (with  provisions  for  a  deductible  as  shall  be
reasonable in comparison with similar properties);

     (c) during  performance of any alteration,  Tenant shall maintain  Worker's
Compensation, commercial liability and builder's risk form of casualty insurance
in amounts  appropriate  to the status of the  construction  being  performed by
Tenant.

     (d) such  other  insurance  as may be  required  by the  holder  of any Fee
Mortgage  (as defined in Section  23.1) or such  lender's  assigns or  successor
("Lender").

     Section  11.2  Failure  to  Maintain.  If  Tenant  fails,  after a ten (10)
business day notice and cure period,  to maintain the  insurance  required to be
maintained  by Tenant  hereunder,  the same may be  purchased by Landlord at the
expense of Tenant, and the expense therefor incurred by Landlord,  with interest
thereon at the  Interest  Rate,  shall be paid to  Landlord as  Additional  Rent
within thirty (30) days after rendition of a bill or statement therefor.

     Section 11.3 Landlord's  Coverages.  Commencing with the Commencement  Date
and throughout the Lease Term and any Renewal Term, Landlord shall maintain,  or
cause to be maintained the following insurance coverages:

                                       13
<PAGE>

     (a)  Insurance  with  respect  to the  Demised  Premises  and all  building
equipment  (other than the  Excluded  Property  and  property  covered by Tenant
pursuant  to  Section  11.1(b))  insuring  against  any peril  now or  hereafter
included  within the  classification  "All Risks of Physical Loss" in amounts at
all times  sufficient to prevent  Lender from  becoming a co-insurer  within the
terms of the applicable policies and under applicable law, but in any event such
insurance  shall  be  maintained  in  an  amount  which,  after  application  of
deductible,  shall be equal to the full insurable  value of the  improvements on
the Demised Premises and building equipment, (other than the Excluded Property),
the term "full insurable value" to mean One Hundred (100%) percent of the actual
replacement cost of the improvements on Demised Premises and building  equipment
(without  taking into account any  depreciation,  and exclusive of  excavations,
footings and  foundations,  landscaping  and paving)  determined  annually by an
insurer, a recognized  independent  insurance broker or an independent appraiser
selected and paid by Landlord  and in no event less than the  coverage  required
pursuant to the terms of this Lease;

     (b)  Comprehensive  general  liability  insurance  (including   contractual
liability  coverage),   including  bodily  injury,  death  and  property  damage
liability,  insurance against any and all claims,  including all legal liability
to the extent  insurable and imposed upon Landlord or Lender and all court costs
and  attorneys'  fees  and  expenses,  arising  out  of or  connected  with  the
possession,  use,  leasing,  operation,  maintenance or condition of the Demised
Premises in such amounts as are generally  available at commercially  reasonable
premiums and are  generally  required by  institutional  lenders for  properties
comparable to the Demised  Premises but in any event for a combined single limit
of at least $5,000,000;

     (c) Statutory workers'  compensation  insurance with respect to any work on
or about the Demised Premises;

     (d)  Business  income  insurance  (i) with loss  payable  to  Lender;  (ii)
covering  all risks  required  to be covered by the  insurance  provided  for in
subsection  11(a)  above  for a period  commencing  at the time of loss for such
length  of time as it takes to  repair  or  replace  with  the  exercise  of due
diligence  and  dispatch;  (iii)  containing  an  extended  period of  indemnity
endorsement  which provides that after the physical loss to the  improvements on
the Demised Premises and personal property has been repaired, the continued loss
of income will be insured until such income either  returns to the same level it
was at prior to the loss,  or the  expiration  of eighteen  (18) months from the
date that the  Demised  Premises is repaired  or  replaced  and  operations  are
resumed,  whichever first occurs, and notwithstanding that the policy may expire
prior to the end of such  period;  and (iv) in an  amount  equal to one  hundred
percent  (100%) of the  projected  gross income from the Demised  Premises for a
period from the date of loss to a date  (assuming  total  destruction)  which is
eighteen  (18)  months  from the date that the  Demised  Premises is repaired or
replaced  and  operations  are  resumed.  The  amount  of such  business  income
insurance  shall be  determined  prior to the date hereof and at least once each
year thereafter based on Landlord's reasonable estimate of the gross income from
the Demised Premises for the succeeding  eighteen (18) month period,  based upon
the  assumption  that no casualty  has or will occur.  All  proceeds  payable to
Lender pursuant to this subsection  shall be held by Lender and shall be applied
to the  obligations  owing  by  Landlord  to  Lender  from  time to time due and
payable;

     (e) Broad form  boiler  and  machinery  insurance  (without  exclusion  for
explosion)  covering  all  boilers or other  pressure  vessels,  machinery,  and
equipment  located in, on or about the Demised  Premises and  insurance  against
loss of  occupancy  or use arising  from any  breakdown  in such  amounts as are
generally  required by  institutional  lenders for properties  comparable to the
Demised Premises;

     (f) If required by Lender  hereof,  flood  insurance  in an amount at least
equal to the lesser of (i) the principal balance of the obligation to Lender, or
(ii) the maximum limit of coverage  available for the Demised Premises under the
National Flood Insurance Act of 1968, The Flood Disaster  Protection Act of 1973
or the National Flood Insurance Reform Act of 1994, as each may be amended;

                                       14
<PAGE>

     (g)  At  all  times  during  which  structural  construction,   repairs  or
alterations  are being made with  respect  to the  improvements  on the  Demised
Premises (i) owner's  contingent  or  protective  liability  insurance  covering
claims not covered by or under the terms or  provisions  of the above  mentioned
commercial  general liability  insurance policy; and (ii) the insurance provided
for in Subsection  11.3(a)(i)  written in a so-called  builder's  risk completed
value form (A) on a non-reporting  basis,  (B) against all risks insured against
pursuant  to  Subsection  11.3(a)  including  permission  to occupy the  Demised
Premises,  and (iii)  with an agreed  amount  endorsement  waiving  co-insurance
provisions; and

     (h) Such other insurance with respect to the Demised  Premises against loss
or damage of the kinds from time to time customarily insured against and in such
amounts as are required by  institutional  lenders for properties  comparable to
the Demised  Premises.  The comprehensive all risk insurance and business income
insurance  policies  required  under  subsections  (a) and (d)  above  shall  be
required to cover perils of terrorism and acts of terrorism (for the amounts set
forth in  subsections  (a) and (d) above and with  deductibles  no greater  than
those provided in subsections (a) and (d) above).

     Section 11.4 Tenant's Premium Payment.  Commencing on the Commencement Date
and  throughout  the  Lease  Term and any  Renewal  Term,  Tenant  shall  pay to
Landlord,  as Additional Rent, the premiums for the insurance coverages Landlord
is required  to  maintain  pursuant  to Section  11.3 above  ("Tenant's  Premium
Payment"). Tenant shall pay Tenant's Premium Payment to Landlord within five (5)
business  days after  Landlord's  notice to Tenant of the amount of the Tenant's
Premium Payment.

     Section 11.5 Policies Generally.

     (a) Landlord and Tenant  shall  provide to the other,  and to the holder of
any Fee Mortgage (as defined in Section  23.1),  certificates  of such policies.
Each such  policy  shall  contain a  provision  that no act or  omission  of the
insured shall affect or limit the obligation of the insurance company to pay the
amount of any loss  sustained  and an  agreement by the insurer that such policy
shall not be modified  or canceled  without at least  30-days'  prior  notice to
Landlord and to any Fee Mortgagee.

     (b)  Insurance  provided  for in this  Article XI hereof  shall be obtained
under valid and  enforceable  policies (the  "Policies" or in the singular,  the
"Policy"), and shall be issued by one or more domestic primary insurer(s) having
(i) a general policy rating of A or better and a financial class of VI or better
by A.M.  Best Company,  Inc. (or if a rating of A.M.  Best  Company,  Inc. is no
longer available, a similar rating from a similar or successor service) and (ii)
a claims paying ability  rating by a credit rating agency  approved by Lender (a
"Rating  Agency") of not less than AA by Standard & Poor's  Ratings  Services or
such  comparable  rating by such other Rating  Agency.  All  insurers  providing
insurance  required by this  Security  Instrument  shall be  authorized to issue
insurance  in the state in which the Demised  Premises  is  located.  The Policy
referred to in  Subsection  11.3 (b) above  shall name  Lender as an  additional
named insured and the Policies referred to in Subsection 11.3 (a), (d), (e), (f)
and (g), and as applicable (h), above shall provide that all proceeds be payable
to Lender.  The Policies  referred to in Subsections  113 (a), (d), (e), (f) and
(g) shall also contain: (i) a standard  "noncontributory  mortgagee" endorsement


                                       15
<PAGE>

or its equivalent  relating,  inter alia, to recovery by Lender  notwithstanding
the  negligent  or  willful  acts or  omission  of  Lender;  (ii) to the  extent
available at commercially  reasonable rates, a waiver of subrogation endorsement
as to Lender; and (iii) an endorsement providing for a deductible per loss of an
amount not more than that which is  customarily  maintained by prudent owners of
similar  properties in the general vicinity of the Demised  Premises,  but in no
event in excess of $10,000.  The Policy referred to in Subsection 11.3 (a) above
shall provide coverage for contingent liability from Operation of Building Laws,
Demolition Costs and Increased Cost of Construction  Endorsements  together with
an  "Ordinance  or Law  Coverage"  or  "Enforcement"  endorsement  if any of the
Improvements  or the use of the Demised  Premises  shall at any time  constitute
legal  non-conforming  structures  or uses,  All  Policies  shall  contain (i) a
provision  that such Policies  shall not be cancelled or  terminated,  nor shall
they expire,  without at least thirty (30) days' prior written  notice to Lender
in each  instance;  and (ii)  include  effective  waivers by the  insurer of all
claims  for  Insurance   Premiums  (defined  below)  against  any  loss  payees,
additional  insureds and named insureds (other than  Borrower).  Certificates of
insurance  with  respect  to all  renewal  and  replacement  Policies  shall  be
delivered to Lender not less than twenty (20) days prior to the expiration  date
of any of the Policies required to be maintained  hereunder,  which certificates
shall bear notations  evidencing payment of applicable  premiums (the "Insurance
Premiums").  Originals or  certificates  of such  replacement  Policies shall be
delivered to Lender  promptly after  Landlord's  receipt thereof but in any case
within thirty (30) days after the effective date thereof.

     (c) Landlord and Tenant shall comply with all  insurance  requirements  and
shall not bring or keep or permit to be brought or kept any article  upon any of
the Demised  Premises or cause or permit any  condition to exist  thereon  which
would  be  prohibited  by an  insurance  requirement,  or would  invalidate  the
insurance coverage required hereunder to be maintained on or with respect to any
part of the Demised Premises.

     (d) All policies of general  commercial  liability  insurance  provided for
under this Article shall name the insuring  party as the insured,  and the other
party as an additional  insured party,  and the holder of any Fee Mortgage as an
additional insured party pursuant to a standard first mortgagee clause,  subject
in all respects to the terms of this Lease.

     (e) Any  insurance  provided  for in this  Article 11 may be  effected by a
blanket  policy or policies of insurance,  provided that the amount of the total
insurance  available  shall be at least the  protection  equivalent  to separate
policies in the amounts  herein  required,  and  provided  further that in other
respects,  any such policy or policies  shall comply with the provisions of this
Article 11. An  increased  coverage  or  "umbrella  policy" may be provided  and
utilized to increase the coverage  provided by individual or blanket policies in
lower amounts, and the aggregate liabilities provided by all such policies shall
be  satisfactory  provided  they  otherwise  comply with the  provisions of this
Article 11.

     (f) Each  policy  carried  by either  party  shall be  written as a primary
policy not  contributing  with,  and not in excess of,  coverage  carried by the
other.

     Section  11.6 Waiver of  Subrogation.  Every  insurance  policy  carried by
either party shall include provisions denying to the insurer  subrogation rights
against  the other  party and the holder of any Fee  Mortgage to the extent such
rights  have been  waived by the insured  prior to the  occurrence  of damage or
loss.  Each party hereby  waives any rights of recovery  against the other party
for any direct damage or  consequential  loss for which such party is covered by
insurance,  to the extent of the proceeds paid under such  policies,  whether or
not such damage or loss shall have been caused by any acts or  omissions  of the
other party.

                                       16
<PAGE>


                                   ARTICLE 12
                             DAMAGE AND DESTRUCTION

     Section 12.1 Notice. If the Demised Premises, or any portion thereof, shall
be damaged by fire or other casualty,  Tenant shall promptly give notice thereof
to Landlord.

     Section 12.2 Casualty During Lease Years 1-7.

     (a) In the  event  the  whole or any part of the  Demised  Premises  shall,
during  Lease Years One (1) through  Seven (7) of the Lease Term,  be damaged or
destroyed  by fire or other  casualty,  this  Lease  shall  not  terminate,  and
Landlord shall promptly repair,  restore and/or rebuild the Demised Premises, or
damaged portions thereof,  substantially to the condition and character existing
immediately prior to such fire or casualty (the "Restoration").  Tenant shall be
entitled to no abatement,  diminution or reduction of the Rent hereunder  during
the  Restoration,  provided  that  Landlord  shall  substantially  complete  the
Restoration within twelve (12) months from the date of such fire or casualty. In
the event that Landlord  shall fail to  substantially  complete the  Restoration
within  said  twelve  (12)  months,  the Rent  hereunder,  or an amount  thereof
apportioned   according  to  the  area  of  the  Demised  Premises  so  rendered
untenantable,  shall abate commencing thirteen (13) months from the date of such
fire or casualty and continuing until Landlord shall so  substantially  complete
the Restoration.

     (b) In the event the whole or any portion of the Excluded  Property  shall,
during  Lease Years One (1) through  Seven (7) of the Lease Term,  be damaged or
destroyed  by fire or other  casualty,  whether or not the Demised  Premises are
damaged,  this Lease  shall not  terminate,  and Tenant  shall be entitled to no
abatement,  diminution or reduction of Fixed Rent or any additional rent. Tenant
shall not be obligated to repair,  restore and/or rebuild all or any part of the
Excluded  Property.  Provided  that  Tenant is not in default  hereunder  beyond
applicable  notice and/or cure period,  Tenant may use the Demised  Premises for
any lawful purpose and may make any necessary  alterations thereto in accordance
with the requirements of Article 10.

     (c) In no event  shall  Landlord  be  required  to  repair or  replace  the
Excluded   Property  or  Tenant's   merchandise,   inventory,   trade  fixtures,
furnishings,  equipment,  alterations  or other  items of  personal  property of
Tenant.

     Section 12.3 Casualty During Lease Years 8-20.

     (a) In the event  either the  Demised  Premises  or the  Excluded  Property
shall, during Lease Years Eight (8) through Twenty (20) of the Lease Term or any
Renewal  Term,  be damaged or  destroyed,  in whole or in part, by fire or other
casualty  and (i) it will take  longer  than six (6) months to  repair,  restore
and/or rebuild the Demised  Premises  and/or the Excluded  Property,  or damaged
portions  thereof,   substantially  to  the  condition  and  character  existing
immediately  prior to such fire or casualty  (the  "Restoration");  or (ii) such
fire or casualty  occurs  during the last two (2) years of the Lease Term or any
Renewal Term, then Tenant shall have the right to terminate this Lease by giving
notice of such  election to Landlord  within  sixty (60) days after such fire or
casualty  shall have occurred.  If such notice shall be given,  this Lease shall
terminate as of the last day of the calendar  month  immediately  following  the
month  in  which  such  notice  shall  have  been  given.  In the  event of such
termination,  Tenant  shall not be required to restore or rebuild the damaged or
destroyed Excluded Property,  or any portion thereof, and all insurance proceeds
payable through Tenant's  insurance policies required under Section 11.1 of this
Lease on account of such damage or destruction may be retained by Tenant and all
insurance proceeds payable through Landlord's  insurance policies required under


                                       17
<PAGE>

Section  11.3 of this  Lease on  account of such  damage or  destruction  may be
retained by Landlord.  If such termination  notice shall not be given,  Landlord
shall promptly repair,  restore and/or rebuild the Demised Premises,  or damaged
portions  thereof,   substantially  to  the  condition  and  character  existing
immediately prior to such fire or casualty

     (b) Notwithstanding  the foregoing,  in the event that the Demised Premises
(and/or any methods of ingress  and egress to and from the  Building  and/or any
portions  of the  parking  areas)  shall,  during  Lease Years Eight (8) through
Twenty (20) of the Lease Term or any Renewal  Term,  be so damaged or destroyed,
in whole or in part,  that there is a material  impact on Tenant's then existing
business  operations  for a period of six (6) months  (subject to extension  for
Unavoidable Delays) from the date of such casualty,  Tenant shall have the right
to  terminate  this  Lease on thirty  (30)  days  written  notice  to  Landlord;
provided,  however,  that Landlord may nullify  Tenant's  termination  notice by
substantially  completing the repair and restoration of the Demised Premises and
delivering the Demised Premises to Tenant within such thirty (30) day period.

     (c) If the Demised Premises, or any part thereof, shall, during Lease Years
Eight (8) through Twenty (20) of the Lease Term or any Renewal Term, be rendered
untenantable  by reason of such damage or  destruction  to the Demised  Premises
and/or  the  Excluded  Property,  the  Rent  hereunder,  or  an  amount  thereof
apportioned   according  to  the  area  of  the  Demised  Premises  so  rendered
untenantable, shall be abated for the period from the date of such damage to the
date when the damage shall have been repaired as aforesaid.

     Section 12.4 [INTENTIONALLY OMITTED].

     Section 12.5 Effect on Lease.

     (a) Except to the extent specifically  provided in this Lease, no damage or
destruction  of the  Demised  Premises  by  fire  or  other  casualty,  nor  the
untenantability  of the Demised Premises,  shall permit Tenant to terminate this
Lease or  surrender  the Demised  Premises,  nor shall  relieve  Tenant from its
obligation to perform any of Tenant's other obligations under this Lease.

     (b) Except to the extent specifically provided in this Lease, Tenant hereby
expressly waives any rights now or hereafter  conferred by any law or statute to
terminate this Lease or surrender the Demised Premises,  or any portion thereof,
or to suspend,  diminish,  abate or reduce Rent on account of any such damage or
destruction.

     (c) Tenant  shall not be entitled  to and hereby  waives any and all claims
against  Landlord for any  compensation or damage for loss of use of the Demised
Premises,  or any portion  thereof,  and/or for any  inconvenience  or annoyance
resulting from any damage,  destruction,  repair or  restoration;  however,  the
foregoing shall in no way be deemed to be a waiver of any constructive  eviction
claim that Tenant may have under this Lease.


                                       18
<PAGE>

                                  ARTICLE 13.
                                 EMINENT DOMAIN

     Section  13.1  Taking.  In  the  event  of  a  taking  for  any  public  or
quasi-public  use by any lawful  power or  authority by exercise of the right of
condemnation or eminent domain or by agreement between Landlord and those having
the  authority  to  exercise  such  right  (herein  called  "Taking")  of all or
substantially all of the Demised Premises, then this Lease shall terminate as of
the date of vesting of title or transfer  of  possession,  whichever  is earlier
(the "Vesting Date"). In the event of a Taking of less than substantially all of
the  Demised  Premises,  then this Lease  shall  terminate  with  respect to the
portion so taken on the Vesting Date and the Rent hereunder shall be apportioned
according to the area of the Demised Premises so taken.

     Section  13.2  Termination.   In  the  event  of  a  Taking  of  less  than
substantially  all of the  Demised  Premises,  Landlord  or Tenant  may elect to
terminate  this Lease if there is any Taking  occurring  during the last two (2)
years of the Lease Term or any  Renewal  Term;  or it shall not be  economically
feasible  to restore and replace the  Building,  the Demised  Premises,  or part
thereof,  to tenantable  condition  capable of being  operated for use set forth
hereunder in an economical manner. In the event either party elects to terminate
this Lease pursuant to this  Subsection  13.2,  such party shall,  within ninety
(90) days of the  Taking,  give  notice to the other,  and the Lease Term or any
Renewal  Term shall expire and come to an end as of the last day of the calendar
month in which such notice is given.

     Section 13.3 Restoration by Landlord.

     (a) If this  Lease is not  terminated  pursuant  to  Section  13.2  hereof,
Landlord  shall, to the extent of the award received by Landlord as compensation
for a Taking  of the  Demised  Premises,  repair,  restore  and/or  rebuild  the
remaining  portions of the Demised  Premises  to a complete  architectural  unit
substantially to the condition and character existing as of the date immediately
prior to the date on which such taking is effective.

     Section 13.4 [INTENTIONALLY OMITTED].

     Section 13.5 Effect on Lease.

     (a) If there is a  Taking  and the  Lease  is not  terminated  pursuant  to
Section 13.2 hereof,  then  commencing on the Vesting Date,  Fixed Rent shall be
the  product of (i) Fixed Rent  immediately  preceding  the  Taking,  and (ii) a
fraction,  the  numerator  of which  shall  be the  Floor  Area of the  Building
remaining after the Taking, and the denominator of which shall be the Floor Area
of the Building immediately preceding the Taking.

     (b) Except as otherwise  provided herein,  this Lease shall not be affected
in any  manner  by  reason  of a Taking  of the  Demised  Premises,  or any part
thereof,  and Tenant,  notwithstanding  any law or  statute,  present or future,
waives all rights to quit or surrender the Demised Premises or any part thereof,
and Landlord's and Tenant's respective  obligations under this Lease,  including
the payment of Rent,  shall continue as though none of those events had occurred
and without abatement, suspension, or reduction of any kind.

                                       19
<PAGE>

     Seciton 13.6 Award. All compensation  awarded or paid in respect of a total
or partial Taking of the Demised Premises, or any part thereof,  shall belong to
and be the property of Landlord  without any  participation  by Tenant.  Nothing
herein shall be construed to preclude Tenant from prosecuting any claim directly
against the  condemning  authority in such  condemnation  proceeding  for moving
expenses;  any  fixtures  or  equipment  owned by Tenant,  including  any of the
Excluded  Property;  and  the  unamortized  cost  of  Tenant's  betterments  and
improvements,  including  any of the Excluded  Property,  provided  that no such
claim shall (x) diminish or otherwise  adversely affect  Landlord's award or the
award of the  holder  of any Fee  Mortgage,  or (y)  include  any  value for the
leasehold estate created hereby or the unexpired term of this Lease.


                                  ARTICLE 14.
                              LANDLORD'S COVENANTS

     Section 14.1 Landlord  covenants  that if, and so long as, Tenant is not in
default beyond the applicable  grace period  provided herein with respect to the
performance of the terms and  conditions on its part to be performed  under this
Lease,  Tenant shall quietly  enjoy the Demised  Premises  without  hindrance or
molestation  by  Landlord or by any other  person  lawfully  claiming  the same,
subject to the covenants,  agreements,  terms, provisions and conditions of this
Lease and to any  ground  leases  and/or  underlying  leases  and/or  mortgages,
extensions, renewals,  modifications,  alterations and substitutions thereof, to
which  this  Lease is now and may  hereafter  be  subject  and  subordinate,  as
hereinbefore set forth.


                                   ARTICLE 15
                          DEFAULT; REMEDIES AND DAMAGES

     Section  15.1 Event of Default.  Each of the  following  shall be deemed an
"Event of Default":

     (a) Tenant  shall make an  assignment  of its  property  for the benefit of
creditors or shall file a voluntary  petition under any bankruptcy or insolvency
law, or an involuntary  petition under any bankruptcy or insolvency law shall be
filed  against  Tenant and such  involuntary  petition is not  dismissed  within
ninety (90) days after the filing thereof,

     (b) A  petition  is filed by or  against  Tenant  under the  reorganization
provisions of the United State Bankruptcy Act or under the provisions of any law
of like import, unless such petition under said reorganization provisions be one
filed  against  Tenant  which is  dismissed  within  ninety  (90) days after its
filing,

     (c) Tenant shall file a petition  under the  arrangement  provisions of the
United States Bankruptcy Act or under the provisions of any law of like import,

     (d) A permanent  receiver,  trustee or  liquidator  shall be appointed  for
Tenant or of or for the  property  of  Tenant,  and such  receiver,  trustee  or
liquidator shall have not been discharged  within ninety (90) days from the date
of his appointment,

                                       20
<PAGE>

     (e) Tenant  shall  default in the  payment of any Fixed Rent or  Additional
Rent  payable  hereunder  by Tenant to  Landlord on any date upon which the same
becomes due, and such default shall  continue for twenty (20) days after written
notice,

     (f) Tenant shall default in the due keeping,  observing or  performance  of
any material covenant,  agreement, term, provision or condition of this Lease on
the part of Tenant to be kept, observed or performed,  and if such default shall
continue  and shall not be  remedied  by Tenant  within  thirty  (30) days after
Landlord shall have given to Tenant a written notice specifying same, or, in the
case of such a default which for causes beyond Tenant's  control cannot with due
diligence be cured  within said period of thirty (30) days,  if Tenant (1) shall
not,  promptly upon giving such notice,  advise  Landlord in writing of Tenant's
intention to duly  institute  all steps  necessary to remedy such  default,  (2)
shall not duly institute and thereafter  diligently  prosecute to completion all
steps  necessary  to remedy the same,  or (3) shall not remedy the same within a
reasonable time after the date of the giving of said notice by Landlord.

     (g)  Any  interest  of  Tenant  hereunder  shall  pass to  another  without
Landlord's  consent,  except for those  assignments  and subleases  which may be
effected without Landlord's consent pursuant to Sections 6.1 and 6.5 hereof.

     Section 15.2 Remedies.

     (a) If an Event of Default shall occur,  Landlord shall, in addition to any
other right or remedy available at law, in equity or otherwise, have the right:

     (i)  to bring suit for the  collection of the Fixed Rent,  Additional  Rent
          and/or other  amounts for which  Tenant may be in default,  or for the
          performance of any other covenant or agreement  devolving upon Tenant,
          all without entering into possession or terminating this Lease;

     (ii) terminate this Lease,  and after this Lease is  terminated,  Landlord,
          its agents or  representatives,  may re-enter the Demised  Premises by
          summary proceedings, force or otherwise, and dispossess Tenant and any
          other occupants  thereof,  remove their effects not previously removed
          by them and hold the Demised Premises free of this Lease; or

     (iii) without  terminating  this Lease,  re-enter  the Demised  Premises by
          summary proceedings,  force or otherwise and dispossess Tenant and any
          other occupants  thereof,  remove their effects not previously removed
          by them and hold the Demised Premises free of this Lease.

     No such re-entry or taking  possession of the Demised  Premises by Landlord
     shall be construed as election on its part to terminate this Lease unless a
     written  notice  of such  intention  be  given to  Tenant  or  unless  such
     termination be decreed by a court of competent jurisdiction.

     (b) After such a  dispossession  or removal,  (x) Fixed Rent and Additional
Rent shall be paid up to the date  thereof,  (y) Landlord may relet the Premises
or any part or parts thereof either in the name of Landlord or otherwise,  for a
term or terms which may, at the option of  Landlord,  be less than or exceed the
period which would otherwise have  constituted the balance of the Lease Term (or
any Renewal Term,  the  commencement  of which shall have occurred prior to such


                                       21
<PAGE>

dispossession  or removal) and (z) Tenant  shall pay to Landlord any  deficiency
between  the sum of  Fixed  Rent and  Additional  Rent  due  hereunder  plus the
reasonable  costs and expenses  incurred or paid by Landlord in terminating this
Lease or in re-entering the Demised Premises and in securing possession thereof,
as well as the reasonable expenses of reletting the Demised Premises, including,
without limitation,  repairing,  altering and preparing the Demised Premises for
new  tenants,   brokers'  commissions,   legal  fees,  and  other  expenses  and
concessions  ("Default  Costs"),  and the  amount  of rents  and  other  charges
collected on account of the new lease or leases of the Demised Premises for each
month of the period which would  otherwise have  constituted  the balance of the
Lease Term (not including any Renewal Term, the  commencement of which shall not
have occurred prior to such dispossession or removal).  Such deficiency shall be
paid by Tenant in monthly  installments on the dates specified in this Lease for
payment  of  Fixed  Rent.  Landlord  reserves  the  right to  bring  actions  or
proceedings  for the recovery of any deficits  remaining  unpaid  without  being
obliged  to  await  the  end of  the  Lease  Term  (or  any  Renewal  Term,  the
commencement  of  which  shall  have  occurred  prior to such  dispossession  or
removal) for a final determination of Tenant's account,  and the commencement or
maintenance  of any one or more  actions or  proceedings  shall not bar Landlord
from bringing other or subsequent  actions or proceedings  for further  accruals
pursuant to the  provisions of this Section.  Any rent received by Landlord from
such reletting shall be applied first to the payment of any indebtedness  (other
than Rent due  hereunder) of Tenant to Landlord;  second,  to the payment of any
Default Costs;  third, to the payment of Rent due and unpaid hereunder;  and the
balance, if any, shall be held by Landlord and applied in payment of future Rent
as it may come due and payable hereunder. In the alternative, following any such
dispossession  or  removal,  Landlord  may  claim as  damages  no more  than the
difference  between the balance of Fixed Rent and  Additional  Rent payable over
the  remainder of the Lease Term and the Fair Market Rental value of the Demised
Premises  over the same period,  discounted  to present value at a discount rate
equal to the prime interest rate set by Citibank, N.A.

     (c) If Landlord is required by Legal  Requirements to mitigate its damages,
then Tenant agrees that  Landlord's  duty to mitigate (i) shall arise only after
Landlord  regains  possession  of the  Demised  Premises,  (ii)  shall be deemed
satisfied  if Landlord  has used  commercially  reasonable  efforts to relet the
Demised  Premises,  whether or not such efforts are successful,  and (iii) shall
not  require  Landlord to market the Demised  Premises  ahead of other  property
which is vacant or about to become vacant in properties owned by Landlord or its
affiliates within two (2) miles of the Demised Premises.

     (d) In addition to the foregoing,  if an Event of Default shall occur other
than as to the  payment of Rent,  Landlord,  in  addition  to any other right or
remedy  available  at law or in  equity,  shall  have  the  right,  but  not the
obligation,  to cure such failure.  Notwithstanding the provisions of Subsection
(a) above,  if, in Landlord's  reasonable  judgment,  an emergency  shall exist,
Landlord  may cure such  Event of Default  upon such  notice to Tenant as may be
reasonable under the  circumstances  (and may be without any prior notice if the
circumstances  shall so require).  If Landlord  cures such failure as aforesaid,
Tenant shall pay to Landlord on demand,  as Additional  Rent, the reasonable and
necessary cost or amount thereof, together with interest thereon at the Interest
Rate from the date of outlay of expense until payment.

     (e) In the event of a breach or threatened breach by Tenant, or any persons
claiming  through or under  Tenant,  of any term,  covenant or condition of this
Lease,  Landlord  shall  have the right to enjoin  such  breach and the right to
invoke  any other  remedy  allowed by law or in equity as if  re-entry,  summary
proceedings and other special  remedies were not provided in this Lease for such
breach.

                                       22
<PAGE>

     (f) The right to invoke the remedies  hereinbefore  set forth is cumulative
and shall not preclude  Landlord from invoking any other remedy  allowed at law,
in equity or otherwise.

     (g) The words "re-enter", "re-entry: and "re-entered" as used in this Lease
shall not be deemed to be restricted to their technical legal meanings.


                                  ARTICLE 16.
                        UNAVOIDABLE DELAYS, FORCE MAJEURE

     SECTION 16.1 If either party shall be prevented or delayed from  punctually
performing any  obligation or satisfying  any condition  under this Lease by any
strike,  lockout,  labor  dispute,  inability  to  obtain  labor,  materials  or
reasonable  substitutes  therefor,  Act of God,  weather or future  governmental
restrictions,  regulation  or  control,  insurrection,  sabotage,  fire or other
casualty,  or any other  condition  beyond the reasonable  control of the party,
other than unavailability of funds or financing  (individually and collectively,
"Unavoidable Delays"),  then the time to perform such obligation or satisfy such
condition  shall be extended by the delay caused by such event.  If either party
shall as a result of an  Unavoidable  Delay be unable to  exercise  any right or
options within any time limit provided  therefor in this Lease,  such time limit
shall be deemed extended for a period equal to the duration of such  Unavoidable
Delays.


                                   ARTICLE 17
                                     NOTICES

     Section  17.1 Any notices,  consents,  approvals,  elections,  submissions,
requests  or  demands  required  or  permitted  to be given  under this Lease or
pursuant to any law or governmental  regulation  (individually  and collectively
"notice")  by Landlord  to Tenant or by Tenant to  Landlord  shall be in writing
(whether or not expressly so provided) at the following respective addresses:

         To Tenant:                 OSTEOTECH, INC.
                                    51 James Way
                                    Eatontown, NJ 07724
                                    Attention:  Michael Jeffries

         With a copy to:   DORSEY & WHITNEY LLP
                                    250 Park Avenue
                                    New York, NY 10177
                                    Attention:  Kevin T. Collins, Esq.

         To Landlord:               201 INDUSTRIAL WAY, INC.
                                    c/o Donato Group
                                    80 Corbett Way
                                    Eatontown, New Jersey 07724
                                    Attn: John Donato, Jr., Manager

         With a copy to:   ANSELL ZARO GRIMM & AARON, P.C.
                                    1500 Lawrence Avenue - CN 7807
                                    Ocean Township, New Jersey 07712
                                    Attn: Michael V. Benedetto, Esq.

                                       23
<PAGE>

Notices shall be deemed given upon  personal  delivery;  being  deposited in the
United States mail,  registered or certified  mail,  return  receipt  requested,
postage  prepaid;  or  being  sent  by  overnight  express  mail  or  nationally
recognized courier service (e.g., Federal Express) to Landlord or Tenant, at the
respective  addresses  hereinafter set forth,  and shall be deemed received upon
actual  receipt or  rejection.  Notices may be signed by the  attorneys  for the
party on whose behalf the notice is sent. Changes in addresses may be designated
by written notice as provided in this Section 17.1.

                                   ARTICLE 18.
                                     ACCESS

     Section 18.1 Landlord  and/or its  designees  shall have the right to enter
the Demised Premises at all reasonable  times, and upon prior reasonable  notice
(except for  emergencies) (1) for the making of such  inspections,  alterations,
improvements  and  repairs,  as  Landlord  may  deem  reasonably   necessary  or
desirable; (2) for any purpose whatsoever relating to the safety,  protection or
preservation  of the Demised  Premises;  and (3) to take  material into and upon
said Premises.  If a representative of Tenant shall not be personally present to
open and  permit  an  entry  into the  Demised  Premises  at any time in case of
emergency  when an entry shall be reasonably  necessary,  Landlord or its agents
may  enter by a master  key or may  forcibly  enter the same  without  rendering
Landlord  or its agents  liable  therefor  (provided  that,  during  such entry,
reasonable  care  shall be  accorded  to avoid  damage  or  injury  to  Tenant's
property),  and without in any manner affecting the obligations and covenants of
this Lease.  Without  incurring  any  liability  to Tenant,  Landlord may permit
access to the Demised Premises and open the same, whether or not Tenant shall be
present,  upon  demand of any  receiver,  trustee,  assignee  for the benefit of
creditors,  sheriff,  marshal  or  court  officer  entitled  to,  or  reasonably
purporting  to be entitled to, such access for the purpose of taking  possession
of, or removing,  Tenant's  property or for any other  lawful  purpose (but this
provision and any action by Landlord hereunder shall not be deemed a recognition
by  Landlord  that the person or  official  making  such demand has any right or
interest in or to this Lease, or in or to the Demised Premises),  or upon demand
of any  representative  of the  fire,  police,  building,  sanitation  or  other
department of the city, state or federal governments.

     Section  18.2 Tenant  shall be  permitted  access to the  Demised  Premises
twenty-four (24) hours per day, seven (7) days per week.

                                       24
<PAGE>

                                   ARTICLE 19
                                     SIGNS

     Sectuiib 19.1 Landlord  hereby  consents to Tenant  placing  signage on the
outside of the  Building  and the Demised  Premises,  at Tenant's  sole cost and
expense,  subject to Legal Requirements governing signage, as well as Landlord's
prior review and approval,  which review and approval  will not be  unreasonably
withheld, conditioned or delayed.

     Section  19.2 No sign  permitted  by Landlord  shall be installed by Tenant
until  all  governmental  approvals  and  permits  required  therefor  are first
obtained and all fees  pertaining  thereto  have been paid.  Tenant shall comply
with all laws and ordinances of applicable Governmental Authorities with respect
to the installation and maintenance of all signs.


                                  ARTICLE 20.
                                   END OF TERM

     Section 20.1  Surrender.  Upon the  expiration or other  termination of the
Lease Term or any Renewal  Term,  Tenant  shall  peaceably  and quietly quit and
surrender the Demised  Premises,  together with all  alterations  which are then
part of the realty,  broom clean,  in good order and condition,  reasonable wear
and tear and the  provisions  of Articles 12 and 13 excepted,  and  otherwise in
accordance with the terms of this Lease, including, without limitation,  Article
10. Tenant shall have removed all alterations required by Landlord to be removed
in accordance  with Article 10.03 and shall have repaired and restored in a good
and workmanlike manner any damage to the Demised Premises caused by such removal
to as reasonably close to the condition that existed  immediately  prior to such
alteration  being  performed.   Additionally,   upon  the  expiration  or  other
termination  of the Lease Term or any Renewal Term,  failing an agreement of the
Landlord and Tenant to the  contrary,  Tenant shall be required to remove all of
the Excluded  Property in a good and workmanlike  manner and make any repairs or
restoration caused by the removal of same.

     Section 20.2 Survival. Upon the expiration of the Lease Term or any Renewal
Term or other  earlier  termination  of this  Lease,  any item of Rent  which is
payable to the date of the  expiration  of the Lease Term or any Renewal Term or
earlier  termination of this Lease which is not then ascertainable shall be paid
to Landlord or Tenant, as the case may be, when the same is determined.

     Section 20.3 Vacant Possession.  Any Excluded  Property,  personal property
and trade fixtures  remaining upon the Demised  Premises after the expiration of
the Lease Term or any Renewal  Term shall be deemed  abandoned  and shall become
the property of Landlord  without  payment  therefor;  provided,  however,  that
notwithstanding  the foregoing,  Tenant will,  upon request of Landlord made not
later than ten (10) days after the expiration or termination of the term hereof,
promptly remove from the Demised Premises any such Excluded  Property,  personal
property and fixtures at Tenant's own cost and expense.  Landlord may dispose of
or  store  any  Excluded  Property,  personal  property  and/or  trade  fixtures
remaining in, upon or about the Demised  Premises  after the  expiration of such
ten (10) day  period  and  Tenant  shall pay to  Landlord  the cost of  removal,
disposal or storage of same,  which  obligation  shall survive the expiration or
earlier  termination  of this Lease.  The  provisions of this Section 20.3 shall
survive the  expiration  of the Lease Term or any Renewal Term or other  earlier
termination of this Lease.

                                       25
<PAGE>


                                  ARTICLE 21.
                                  HOLDING OVER

     Section 21.1 Should  Tenant hold over in  possession  after the  Expiration
Date,  such  holding  over  shall not be deemed to extend  the Lease Term or any
Renewal Term or renew this Lease.  Tenant  agrees to indemnify and save Landlord
harmless from and against all claims, losses,  damages,  liabilities,  costs and
expenses  (including,   without  limitation,   reasonable  attorneys'  fees  and
disbursements)  resulting  from  delay by Tenant  in  surrendering  the  Demised
Premises,  including,  without  limitation,  any claims  made by any  succeeding
tenant founded on such delay. The parties recognize and agree that the damage to
Landlord resulting from any failure by Tenant to timely surrender  possession of
the Demised Premises as aforesaid will be extremely substantial, will exceed the
amount  of the  monthly  installments  of the  Fixed  Rent and  Additional  Rent
theretofore  payable  hereunder,  and will be impossible to accurately  measure.
Tenant  therefore  agrees  that if  possession  of the  Demised  Premises is not
surrendered to Landlord on the Expiration  Date, in addition to any other rights
and remedies  Landlord  may have  hereunder or at law, and without in any manner
limiting  Landlord's  right to demonstrate  and collect any damages  suffered by
Landlord and arising from Tenant's  failure to surrender the Demised Premises as
provided herein, Tenant shall pay to Landlord on account of use and occupancy of
the Demised  Premises  for each month and for each  portion of any month  during
which  Tenant holds over after the  Expiration  Date, a sum equal to 150% of the
Fixed Rent which was payable under this Lease during the last month of the Lease
Term or any  Renewal  Term for the  initial  thirty  (30) day  holdover  period.
Thereafter,  such sum shall be  calculated  at the rate of 175% for any  periods
after thirty (30) days following the Expiration  Date.  Nothing herein contained
shall be deemed to permit Tenant to retain  possession  of the Demised  Premises
after the Expiration Date or to limit in any manner  Landlord's  right to regain
possession of the Demised Premises through summary proceeding or otherwise,  and
no  acceptance  by Landlord of payments  from Tenant after the  Expiration  Date
shall be deemed to be other  than on  account of the amount to be paid by Tenant
in accordance  with the  provisions of this Section 21.1. The provisions of this
Section 21.1 shall survive the Expiration Date.


                                  ARTICLE 22.
                                    INDEMNITY

     Tenant shall indemnify and save harmless  Landlord against and from any and
all  claims  by  or  on  behalf  of  any  person  or  persons,  firm  or  firms,
corporations,  arising  from the  conduct or  management  of or from any work or
thing whatsoever done by or on behalf of Tenant in or about the Demised Premises
as well as from the use and  occupancy  of the Demised  Premises by Tenant,  and
further indemnify and save Landlord harmless against and from any and all claims
arising from breach or default  beyond  applicable  notice and/or cure period on
the part of Tenant in the  performance  of any covenant or agreement on the part
of Tenant to be performed  pursuant to the terms of this Lease,  or arising from
any negligence of Tenant, or any of its agents, contractors, servants, employees
or licensees,  and from and against all reasonable costs, counsel fees, expenses
and liabilities  incurred in the Demised  Premises in or about any such claim or
action or proceeding  brought  thereon;  and in case any action or proceeding be
brought against Landlord by reason of any such claim,  Tenant,  upon notice from
Landlord,  covenants  to resist or defend at  Tenant's  expense  such  action or
proceeding by counsel reasonably satisfactory to Landlord.

                                       26
<PAGE>


                                  ARTICLE 23.
                                  SUBORDINATION

     Seciton  23.1 Fee  Mortgage.  Subject to the terms and  conditions  herein,
Landlord  shall have the right at any time  during the Lease Term or any Renewal
Term to subject its  interest in the Demised  Premises  and/or this Lease to any
one or more  mortgages on Landlord's  interest  therein ("Fee  Mortgage") and to
renew,  modify,  consolidate,  replace,  extend  and/or  refinance  any such Fee
Mortgage.  Landlord  shall be entitled to all of the proceeds  from any such Fee
Mortgage at any time effected pursuant hereto.

     Section 23.2  Subordination.  Subject to the terms and  conditions  herein,
this Lease shall at all times be subordinate to any such Fee Mortgage,  provided
that Tenant shall  receive a  satisfactory  Subordination,  Non-Disturbance  and
Attornment  Agreement from the Fee Mortgagee and such Fee Mortgagee  shall agree
that  Tenant  shall  have the right at any time  during  the Lease  Term and any
Renewal Term to subject its  interests in the Excluded  Property and in Tenant's
merchandise,  inventory, furnishings,  equipment and all other forms of Tenant's
personal  property located on, in or about the Demised Premises on the terms set
forth below  (collectively,  "Tenant's  Collateral")  to any one or more secured
financings  and any renewals,  modifications,  consolidations,  replacements  or
extensions  thereof.  Tenant shall be entitled to all of the  proceeds  from any
such secured financing at any time effected pursuant hereto.

     Section 23.3  Attornment.  Notwithstanding  the  provisions of Section 23.2
hereof,  should any Fee  Mortgagee  require that this Lease be prior rather than
subordinate to any such Fee Mortgage,  Tenant shall,  within  fourteen (14) days
after request  therefor by Landlord or such Fee  Mortgagee,  and without  charge
therefor,  execute a document  effecting or acknowledging  such priority,  which
document shall contain, at the option of such requesting party, an attornment to
the Fee Mortgagee,  or any person acquiring the interest of Landlord as a result
of any  foreclosure  or the  granting  of a deed  in  lieu  of  foreclosure,  as
landlord,  upon the then  executory  terms and  conditions of this Lease for the
remainder of the Lease Term.

     Section 23.4 Tenant's Financing Terms. Notwithstanding any provision to the
contrary  contained  herein,  Landlord  and Fee  Mortgagee  hereby  release  and
disclaim any interest,  including any statutory or common law lien, on or in any
of Tenant's Collateral. Landlord and Fee Mortgagee shall consent to any right of
possession in and to the Demised Premises that Tenant may now or hereafter grant
to any lender and Landlord shall grant such lender the right to possess,  occupy
and use the Demised  Premises  for a  reasonable  period of time for purposes of
holding,  processing,   manufacturing,  selling,  using,  storing,  liquidating,
realizing  upon or otherwise  disposing of any of Tenant's  Collateral,  and for
related and incidental purposes, provided that such lender shall pay Landlord or
Fee  Mortgagee  Rent at the amounts set forth herein for the period during which
it has possession or occupies the Demised  Premises.  Landlord and Fee Mortgagee
shall agree to give notice to Tenant's lender of any breach of this Lease or the
Fee Mortgage by Landlord.

                                       27
<PAGE>


                                  ARTICLE 24.
                                  CERTIFICATES

     Section 24.1 On the request of Landlord,  at any time or from time to time,
Tenant shall execute,  acknowledge  and deliver to Landlord,  upon not less than
fifteen  (15) days  prior  notice,  or to anyone  Landlord  shall  designate,  a
statement of Tenant (or if Tenant is a corporation,  an  appropriate  officer of
Tenant)  in  writing  certifying  that to  Tenant's  knowledge,  this  Lease  is
unmodified  and in full force and effect  except as  modified  and  stating  the
modifications),  and the dates to which Rent has been paid in  advance,  if any,
and stating whether or not, to the knowledge of the signer of such  certificate,
Landlord  is in  default  in  performance  of  any  covenant,  agreement,  term,
provision or condition  contained in this Lease and, if so, specifying each such
default of which the signer may have knowledge;  it being intended that any such
statement  delivered  pursuant hereto may be relied upon by any lessor under any
ground of  underlying  lease,  or any lessee or  mortgagee,  or any  prospective
purchaser,  lessee,  mortgagee,  or assignee of any  mortgage,  of the  Building
and/or  the Land or of  Landlord's  interest  therein.  Similarly,  in the event
Tenant asks  Landlord  to execute,  acknowledge  and  deliver a  certificate  as
aforesaid,  Landlord shall execute the same within fifteen (15) days of Tenant's
written request for the same.

                                   ARTICLE 25.
                                  MISCELLANEOUS

     Section  25.1 No Waiver.  No delay on the part of the Landlord or Tenant in
exercising any right, power or privilege hereunder or to seek performance of any
covenant or condition of this Lease shall operate as a waiver  thereof nor shall
any single or partial  exercise of any right,  power or privilege,  preclude any
other or further exercise  thereof or the exercise of any other right,  power or
privilege.

     Section 25.2 Relationship of Parties. Nothing contained in this Lease shall
be construed to create the  relationship  of principal  and agent,  partnership,
joint venture or any other  relationship  between the parties  hereto other than
the relationship of Landlord and Tenant.  Nothing  contained herein shall in any
way impose any liability upon the members,  officers or directors of Landlord or
of Tenant.

     Section  25.3  Recording.  Neither  Landlord  nor Tenant  shall record this
Lease;  however,  upon the request of either party hereto, the other party shall
join in the execution of a memorandum or so-called "short form" of lease for the
purposes of  recordation.  Said memorandum or short form of lease shall describe
the  parties,  the Demised  Premises,  the Lease Term,  any  subordination,  any
special  provisions  other than those pertaining to Rent, and shall contain such
additional information as may be required for recordation in the jurisdiction in
which the Demised Premises is located.

     Section 25.4 Captions.  The captions,  section numbers, and index appearing
in this Lease are inserted only as a matter of convenience and in no way define,
limit,  construe,  or describe the scope or intent of such  sections or articles
nor in any way affect this Lease.

                                       28
<PAGE>

     Section 25.5  Applicable Law. This Lease shall be governed by and construed
in accordance with the laws of the State of New Jersey. If any provision of this
Lease or the application  thereof to any person or  circumstances  shall, to any
extent,  be invalid or  unenforceable,  the remainder of this Lease shall not be
affected  thereby and each provision of the Lease shall be valid and enforceable
to the fullest extent permitted by the law.

     Section 25.6 Mechanics Liens.

     (a) Throughout the Lease Term and any Renewal Term, Tenant shall not suffer
or permit any liens to stand  against the Demised  Premises or any part thereof,
by reason of any work,  labor,  services or materials done for, or supplied,  or
claimed to have been done for,  or  supplied  to,  Tenant or anyone  holding the
Demised  Premises or any part thereof through or under Tenant.  If any such lien
shall at any time be filed against the Demised Premises,  Tenant shall cause the
same to be discharged of record within ten (10) business days after Tenant shall
receive notice of the same, by either payment,  deposit or bond. If Tenant shall
fail to  discharge  any such lien within such period,  then,  in addition to any
other right or remedy of Landlord,  Landlord may, but shall not be obligated to,
procure the discharge of the same either by paying the amount  claimed to be due
by deposit in court or bonding,  and/or Landlord shall be entitled,  if Landlord
so elects,  to compel the  prosecution of an action for the  foreclosure of such
lien by the lienor and to pay the amount of the  judgment,  if any,  in favor of
the lienor with interest, costs and allowances.  Any amount paid or deposited by
Landlord for any of the aforesaid purposes,  and all legal and other expenses of
Landlord,  including  counsel  fees, in defending any such action or in or about
procuring  the  discharge  of such lien,  with all  necessary  disbursements  in
connection  therewith,  together with interest thereon at the Interest Rate from
the date of payment or deposit, shall become due and payable forthwith by Tenant
to  Landlord,  or, at the  option of  Landlord,  shall be  payable  by Tenant to
Landlord as Additional Rent.

     (b) Nothing in this Lease shall be deemed to be, or construed in any way as
constituting,  the consent or request of  Landlord,  expressed  or  implied,  by
inference or otherwise,  to any person,  firm or corporation for the performance
of  any  labor  or  the  furnishing  of  any  materials  for  any  construction,
rebuilding,  alteration  or repair of or to the  Demised  Premises,  or any part
thereof,  or as giving  Tenant any right,  power or authority to contract for or
permit the rendering of any services or the furnishing of any  materials,  which
might in any way give rise to the right to file any lien  against or  Landlord's
interest in the Demised Premises. Landlord shall have the right to post and keep
posted at all  reasonable  times upon the Demised  Premises  any  notices  which
Landlord shall be required so to post for the protection of Landlord  and/or the
Demised Premises from any such lien.

     Section  25.7  Brokerage.  Landlord and Tenant each  represent  that it has
dealt  with no  broker  or  brokers  or  other  person  in  connection  with the
negotiation,  execution  and  delivery of this Lease.  Each party shall  defend,
indemnify and hold the other harmless from and against any claims or demands for
any brokerage  commissions,  finder's fees and/or other  compensation  resulting
from a breach by it of the foregoing representation.

     Section 25.8 Limitation of Landlord's Liability.

     (a) The term  "Landlord"  as used in this Lease means only the owner of the
Demised  Premises,  for the  time  being,  so that in the  event  of any sale of
Landlord's interest in the Demised Premises or in this Lease,  Landlord shall be
and  hereby is  entirely  freed and  relieved  of all  obligations  of  Landlord
hereunder with respect to the Demised  Premises,  and it shall be deemed without
further  agreement between the parties and such purchaser(s) or assignee(s) that
the  purchaser  or  assignee  has  assumed and agreed to observe and perform all
obligations of Landlord hereunder relating to the Demised Premises.

                                       29
<PAGE>

     (b) It is  specifically  understood  and  agreed  that  there  shall  be no
personal  liability of Landlord in respect to any of the covenants,  conditions,
or provisions of this Lease.  In the event of a breach or default by Landlord of
any of its  obligations  under  this  Lease,  Tenant  shall  look  solely to the
interests  of Landlord  in the Demised  Premises  (and the rents,  profits,  and
proceeds  therefrom) for the  satisfaction of Tenant's  claims,  and to no other
property or assets of Landlord. No constituent of Landlord,  including,  without
limitation, any agent, partner, member,  shareholder,  or otherwise, shall be in
any manner personally liable under this Lease.

     Section 25.9  Attorneys'  Fees.  Should  either party hereto  institute any
action or proceeding in court to enforce any provision hereof, or for damages or
for  declaratory  or other  relief  hereunder,  the  prevailing  party  shall be
entitled to receive  from the losing  party,  in addition to court  costs,  such
amount as the court may adjudge to be reasonable as attorneys' fees for services
rendered  to said  prevailing  party,  and said amount may be made a part of the
judgment against the losing party.

     Section 25.10 Waiver of Trial by Jury.  Landlord and Tenant do hereby waive
trial by jury in any  action,  proceeding  or  counterclaim  brought  by  either
against  the other  upon any  matters  whatsoever  arising  out of or in any way
connected  with this Lease,  Tenant's use or occupancy of the Demised  Premises,
and/or any claim of injury or damage.  It is further mutually agreed that in the
event Landlord  commences any summary  proceedings  for non-payment of any Rent,
Tenant will not interpose any  non-mandatory  counterclaim of whatever nature or
description in any such proceeding.

     Section 25.11 Interest  Rate.  The "Interest  Rate" shall be considered the
Prime Rate of Interest as published in the Wall Street  Journal,  at the time of
default, plus three (3%) percent per annum until all sums due Landlord are paid.

     Section 25.12 Excavations on Adjoining Property. If any excavation or other
building operation shall be about to be made or shall be made upon any adjoining
premises or streets,  Tenant, upon reasonable prior written notice, shall permit
any  third  persons  obligated  by law to  protect  the  Building(s),  and their
respective  representatives,  to enter upon the  Demised  Premises  to shore the
foundations and walls thereof and to do any other act or thing necessary for the
safety or preservation thereof.

     Secion  25.13  Non-Binding  Until  Executed.  This  Lease  is  offered  for
signature  by Tenant and it is  understood  that this Lease shall not be binding
upon Landlord or Tenant unless and until Landlord and Tenant shall have executed
and unconditionally delivered a fully executed copy of this Lease to each other.

     Section 25.14 [INTENTIONALLY OMITTED].

     Section 25.15 Independent Covenants.  Tenant agrees that Tenant's covenants
and  obligations  under this Lease shall be independent of Landlord's  covenants
and  obligations  under this Lease and that each such covenant and obligation is
independent  of  any  other  covenant  or  obligation.   Landlord's   breach  or
non-performance  of any of Landlord's  covenants or obligations under this Lease
shall not, except as herein  provided,  excuse Tenant of Tenant's  covenants and
obligations under this Lease, and shall not be the basis for any defense, of any
kind or  nature  whatsoever,  to any suit by  Landlord  for  Tenant's  breach or
non-performance  of any of Tenant's  covenants or  obligations  under this Lease
(including, without limitation, Tenant's failure to pay Fixed Rent or Additional
Rent).  It is the express  agreement of Landlord and Tenant that all payments of
Fixed  Rent  and  Additional  Rent due  under  this  Lease  are  absolutely  and
unconditionally  due at the time set forth herein,  without any right of set-off
or deduction of any kind or nature  whatsoever,  except as expressly provided to
the contrary in this Lease.

                                       30
<PAGE>

     Seciton 25.16 Interpretation. No provision of this Lease shall be construed
against or interpreted to the  disadvantage  of either Landlord or Tenant by any
court or other  governmental or judicial  authority by reason of either Landlord
or Tenant  having or being deemed to have  drafted,  structured or dictated such
provision.

     Section 25.17 Entire Agreement. This Lease and the exhibits attached hereto
and forming a part hereof,  set forth all the covenants,  promises,  agreements,
conditions and understandings between Landlord and Tenant concerning the subject
matter hereof and there are no covenants,  promises,  agreements,  conditions or
understandings  heretofore  made,  either oral or  written,  between the parties
other than as herein set forth. No modification,  amendment,  change or addition
to this Lease shall be binding upon Landlord or Tenant unless reduced to writing
and signed by each party.

     Section 25.18 Binding  Effect.  The covenants and  agreements  contained in
this Lease shall bind and inure to the benefit of Landlord  and Tenant and their
respective heirs, personal representatives, successors and assigns.


                                  ARTICLE 26.
                          TENANT'S RIGHT OF FIRST OFFER

     Section 26.1 Exercise.  In the event  Landlord  desires to sell the Demised
Premises to an unaffiliated  third party,  Landlord shall provide written notice
of same to Tenant (the "Landlord Notice"). The Landlord Notice shall include all
of the  material  terms,  such as price,  deposit,  contingencies,  closing time
table,  et  cetera,  upon which  Landlord  seeks to sell the  Demised  Premises.
Thereafter,  Tenant shall have a period of ten (10)  business days from the date
of  receipt  of  Landlord's  Notice  to agree  upon the  terms  set forth in the
Landlord's  Notice  ("Tenant's  Right of First  Offer").  Tenant shall  exercise
Tenant's Right of First Offer,  if at all, by serving  written  notice  ("Tenant
Notice")  upon the Landlord  within said ten (10)  business  day period.  In the
event Tenant timely provides  Landlord with a Tenant Notice advising Landlord of
its intent to exercise Tenant's Right of First Offer, the parties shall promptly
and timely enter into an appropriate  contract of sale setting forth such terms.
The  parties  agree that the  contract  will be  completed  and  approved by all
parties not later than thirty (30) days from the date of the Tenant  Notice,  or
such longer period to which the parties may mutually agree.

     Section  26.2 Waiver.  In the event  Tenant:  (a) fails to timely  exercise
Tenant's Right of First Offer;  or (b) the parties fail to enter into a contract
within said thirty (30) days from the date of the Tenant Notice or such mutually
agreeable  longer  period,  the same  shall be  deemed  conclusive  evidence  of
Tenant's intent to waive Tenant's Right of First Offer.  In such case,  Landlord
shall be free to enter into  negotiations  and/or a contract for the sale of the
Demised Premises upon terms and conditions  acceptable to Landlord,  which terms
and  conditions  shall be  substantially  similar  to the terms set forth in the
Landlord Notice. With respect to the price, Landlord shall be permitted to enter
into a contract  which  provides  for a purchase  price with a variance of up to
five (5%)  percent  from the  purchase  price set forth in the  Landlord  Notice
(and/or  any  subsequent  negotiations  prior to  Tenant's  failure to  exercise
Tenant's Right of First Offer).  In the event  Landlord  desires to enter into a
contract with a third party upon terms which are  substantially  different  than
those set forth in the Landlord's  Notice,  Landlord shall provide an additional
notice to Tenant setting forth such material terms and, thereafter, Tenant shall
have a period of five (5)  business  days within  which to accept such terms and
enter into a contract within ten (10) business days  thereafter,  or such longer
period to which the parties may mutually agree.

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<PAGE>

     Section 26.3 Effectiveness This right of first offer shall only be valid if
Tenant is not in  material  breach  any of the terms of this  Lease  beyond  any
applicable notice and cure period. Moreover, Tenant's Right of First Offer shall
not be  applicable  to any  sale  or  transfer  of the  Demised  Premises  to an
affiliate of Landlord or any affiliate or family member of John Donato,  Jr. for
no  consideration  or for less than fair  market  value.  It being the  specific
intention of the parties that such transfers shall not trigger Tenant's Right of
First Offer.




                                  ARTICLE 27.
                                FAIR MARKET RENT

     Section 27.1 If Tenant  disputes  Landlord's  determination  of Fair Market
Rent under  Section  2.2, and Landlord and Tenant fail to agree as to the amount
thereof,  then the dispute shall be resolved by  arbitration.  Any dispute as to
Fair  Market  Rent  shall  be  determined  as  follows.  A senior  officer  of a
recognized  real estate and/or  commercial  leasing  brokerage  firm in Monmouth
County, New Jersey (the "Baseball  Arbitrator"),  shall be selected and paid for
jointly by Landlord and Tenant.  If Landlord and Tenant are unable to agree upon
the  Baseball  Arbitrator,  then the same shall be  designated  by the  American
Arbitration Association ("AAA"). The Baseball Arbitrator selected by the parties
or  designated  by the AAA shall not have been  employed  by  Landlord or Tenant
during the previous  five (5) year period and shall have at least ten (10) years
experience  in the  valuing  of  commercial  rental  property  in the  immediate
vicinity of the Demised  Premises.  Landlord and Tenant shall each submit to the
Baseball  Arbitrator and to the other its determination of the Fair Market Rent.
The Baseball  Arbitrator  shall determine which of the two  determinations  most
closely  represents  the  Fair  Market  Rent  for  the  Demised  Premises.   The
determination  of the Baseball  Arbitrator  shall be binding  upon  Landlord and
Tenant and shall serve as the  determination of Fair Market Rent for purposes of
Sections 2.2 and 3.2.



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     IN WITNESS WHEREOF, the parties have this day set their hands and seals.

                                    LANDLORD:  201 INDUSTRIAL WAY, INC.


                                    By:/s/ JOHN DONATO, JR.
                                         Name: John Donato, Jr.
                                         Title: President


                                    TENANT: OSTEOTECH, INC.


                                    By: /s/ MICHAEL J. JEFFRIES
                                         Name:  Michael J. Jeffries
                                         Title: Executive Vice President

 <PAGE>

                                    EXHIBIT A

                        Legal Description of the Property




                                     <PAGE>



                                    EXHIBIT B

                                Demised Premises