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                                                                   EXHIBIT 10.17

                                                                    Etobicoke #3

This INDENTURE made the 20th day of July 1998
IN PURSUANCE OF THE SHORT FORM OF LEASES ACT

BETWEEN:

                                        COMWEST PROPERTIES LIMITED

                                        (hereinafter called the "Landlord")

                                        OF THE FIRST PART

                                        - and -

                                        VISIBLE GENETICS INC.

                                        (herein called the "Tenant")

                                        OF THE SECOND PART

                  WITNESSETH:

                  1. That in consideration of the rents, covenants and
                  agreements hereinafter reserved and contained on the part of
                  the Tenant to be paid, observed and performed, the Landlord
                  doth demise and lease unto the Tenant that designated portion
                  containing approximately 10,500 square feet of the buildings
                  erected upon the lands and premises situate, lying and being
                  in the City of Toronto and in the Province of Ontario
                  municipal known as 291 AND 295 Evans Avenue, including in
                  premises demised hereunder the windows and exterior doors
                  thereof, together with the right at all times with others
                  entitled thereto, to use the common driveways and the parking
                  areas appurtenant thereto (hereinafter called the "common
                  outside areas"), the said premises and rights being
                  hereinafter sometimes collectively called the "demised
                  premises"; provided that the Landlord shall have the right to
                  make such changes and improvements or alterations as the
                  Landlord may, from time to time, decide in respect of the
                  common outside areas, including the rights to change the
                  location and layout of the parking areas and to increase or
                  reduce the size thereof; further provided, however, that the
                  Landlord shall not reduce the number of parking spaces on the
                  said lands and premises to less than the minimum number
                  required by the applicable laws and regulations.

                  2. To have and to hold the demised premises unless such term
                  shall be sooner terminated as hereinafter provided, for and
                  during the term of two (5) years to be computed from and
                  inclusive of the 1st day of September, 1998 (hereinafter
                  called the "lease commencement date" and from henceforth next
                  ensuing and fully to be completed and ended on the 31st day of
                  August, 2003.

                  PROVIDED, and it is hereby agreed, that if the whole of the
                  demised premises are not ready for occupancy by the Tenant on
                  the lease commencement date, then the rent shall be
                  apportioned proportionately according to the amount of space
                  ready for occupancy and no responsibility whatsoever shall
                  attach to the Landlord if the demised premises are not so
                  ready by the lease commencement date. The certificate of the
                  Landlord's architect shall be final and binding upon both
                  parties as to whether or not the entire demised premises are
                  ready for occupancy and, if not, as to the proportion of space
                  therein that is available for occupancy. In such event the
                  term of this lease shall be extended by a number of days equal
                  to the number of days from and including the lease
                  commencement date to and including the date as of which the
                  demised premises are ready for occupancy as so certified.

Use of premises   3. The tenant shall use and occupy the demised premises only
                  for office and storage and for no other purpose; provided the
                  Tenant, in the use and occupation of any business therein,
                  shall comply with all requirements of all laws, orders,
                  ordinances, rules and regulations of the Federal, provincial
                  and Municipal authorities and with any direction or
                  certificate of occupancy issued pursuant to any law by any
                  public office or Officers. The Tenant covenants that it will
                  not use or permit the demised premises or any part thereof to
                  be used for any dangerous, noxious or offensive trade or
                  business and will not cause or maintain any nuisance in, at or
                  on the demised premises.

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Rent              4.    (a)   Yielding and paying therefor yearly and every year
                              during the term hereby granted the sum of
                              $62,425.00 of lawful money of Canada to be paid
                              without any deduction or set-off whatever in
                              advance in equal consecutive monthly installments
                              of $5,206.25 each on the first day of each month
                              in each year during the term hereby demised, (it
                              being understood that such annual rental is
                              calculated at the rate of $5.95 per sq. ft. per
                              annum), together with additional rent hereinafter
                              reserved.

                        (b)   Where the term of this lease commences other than
                              on the first day, or ends earlier than on the last
                              day, of a calendar month:

                                   (i)   the rent for the period or periods of
                                         less than a full calendar month shall
                                         be that fraction of the monthly
                                         installment of rent of which the
                                         numerator is the number of days of such
                                         month within the term of this lease and
                                         the denominator is the number of days
                                         of such month.

                                   (ii)  the rent for the period of less than
                                         one calendar month occurring at the
                                         commencement of the term of this lease
                                         shall be payable on or before the lease
                                         commencement date.

                                   (iii) the rent for the period of less than
                                         one calendar month occurring at the end
                                         of the term of this lease shall be
                                         payable on or before the first day of
                                         the last calendar month commencing
                                         during the term of this lease.

Payment           5.    All payments required to be made by the Tenant under or
                        in respect of this lease shall be made to the Landlord
                        at the Landlords office 365 Evans Avenue, Suite 601 in
                        Toronto or to such agent or agents of the Landlord or at
                        such other place as the Landlord shall hereafter from
                        time to time direct in writing to the Tenant.

Payment of              The Landlord acknowledges receipt of $13,750.00 from the
Security                Tenant to be held by the Landlord as security for the
                        due performance by the Tenant of all its covenants and
                        obligations on its part herein contained and to be
                        applied to the damages resulting from default by the
                        Tenant on any of its covenants and obligations
                        hereunder, or towards the payment or reduction of any
                        claim of the Landlord against the Tenant; provided that
                        the Tenant is not in default or in breach of any of its
                        covenants or obligations and has not been declared
                        bankrupt, then the aforesaid security deposit shall be
                        returned to the Tenant within fifteen (15) days after
                        the expiration of the lease term.

Free Rent               Notwithstanding any thing prior herein, there shall be
                        no rent payable for the month of September 1999 nor for
                        the month of September 2000. The Tenant shall still be
                        required to pay additional rent and utility charges for
                        the said two months.

Tenant's          6.    The Tenant covenants with the Landlord.
Covenants

Rent                    (a)   to pay rent:

Taxes and               (b)   (i) as additional rent, in each and ever year
Utilities                     during the term hereof, to pay and discharge in
                              the proportion that the area of the demised
                              premises within the said building (measured from
                              the outside of the outside walls to the centre of
                              the demising walls) bears to the total rentable
                              area (measured from and to the outside of all
                              outside walls) of all buildings erected on the
                              lands (hereinafter called the "Tenant's
                              proportion"), all taxes (including local
                              improvement rates), charges, rates, duties and
                              assessments that may be levied, rated, charges or
                              assessed against the lands and the buildings
                              erected thereon, the Tenant's proportion of all
                              business taxes, if any from time to time payable
                              in respect of the parking areas, entrances, exits,
                              pedestrian walkways, roadways, service areas or
                              any part thereof, and the whole of every other
                              tax, charge, rate, duty, assessment or payment
                              which may become a charge or encumbrance upon or
                              levied or collected upon or in respect of the
                              demised premises or any part thereof, whether
                              charged by any municipal, parliamentary or other
                              body during the said Term. The taxes, local
                              improvement rates, charges, rates, duties
                              assessments and payments as hereinbefore defined
                              are hereinafter referred to as the "real property
                              taxes" and shall include a tax or excise on rents
                              or other tax however described, levied by any
                              relevant governmental authority against the
                              Landlord or the rent, as a clearly ascertainable
                              substitute in whole or inpart for taxes assessed
                              or imposed on the land and buildings or either of
                              them, of which the demised

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                              premises form a part. The Landlord will, at the
                              commencement of this lease and thereafter by
                              calendar year, estimate the real property taxes
                              levied against the said lands and buildings and
                              the demised premises for the next ensuing year and
                              the Tenant shall pay one-twelfth (1/12) of the
                              Tenant's proportion hereof at the times at which
                              rent is payable hereunder.

                              Notwithstanding any thing hereinbefore contained,
                              in the event that at the time when the payment of
                              the real property taxes due, the Landlord shall
                              not have on deposit a sufficient sum to pay the
                              full amount thereof, the Tenant shall forthwith
                              upon demand pay the Tenant's proportion of the
                              amount of any deficiency to the Landlord. When
                              final bills for the real property taxes in any
                              year have been received, the Landlord and Tenant
                              will adjust such in accordance with such bills. If
                              the Tenant has not paid the full amount of the
                              Tenant's proportion thereof, the amount of the
                              underpayment shall be paid by the Tenant to the
                              Landlord forthwith without demand. If the Tenant
                              has overpaid the Tenant's proportion, the amount
                              of such overpayment shall be forthwith paid by the
                              Landlord to the Tenant. The certificate of the
                              Landlord's auditor as to any amount which may be
                              owing by either party to the other under this
                              subclause shall, in the event of dispute, be
                              binding on the Landlord and the Tenant.

                              As an alternative to the foregoing method of
                              determining the share of the real property taxes
                              which the Tenant is obligated to pay pursuant to
                              the provisions of this paragraph 6 the Landlord
                              may, in its sole discretion and at its option,
                              base the Tenant's share of the real properly Taxes
                              upon the value of the demised premises as compared
                              to the value of the buildings of which the demised
                              premises may form a part from time to time. As
                              information as to such value may be made
                              available, firstly, by the relevant municipal
                              authorities through the separate assessments of
                              the demised premises and the said building or,
                              secondly, as may be ascertained through the realty
                              or business tax assessment rolls of the City of
                              Toronto or, thirdly, if separate assessments are
                              not available in order to determine the aforesaid
                              values, the Tenant shall pay a share of the real
                              property taxes as allocated to the demised
                              premises by the Landlord, the Landlord shall
                              allocate the real property taxes firstly with
                              respect to said outside common areas and
                              facilities and secondly, with respect to premises
                              intended for leasing and the Landlord shall make a
                              further allocation of such taxes as between each
                              of the individual premises intended for leasing on
                              an equitable basis having regard, amongst other
                              things, to the various users of the premises
                              intended for leasing comprising the whole of the
                              lands and premises of which the demised premises
                              form a part as aforesaid; in making such
                              allocation, the Landlord shall, at all times, act
                              reasonably and as would a prudent owner and in no
                              event shall the real property taxes collected by
                              the Landlord from all tenants of the Building of
                              which the demised premises form a part and from
                              all tenants of other buildings located on the said
                              lands and premises exceed 100 per cent of the real
                              property taxes as may be levied by the relevant
                              taxing authority, in any given year, against the
                              whole of the said lands, premises and buildings;

                              (ii) to pay business and other governmental taxes,
                              charges, rates, duties and assessments levied in
                              respect of the Tenant's occupancy of the demised
                              premises, or in respect of the personal property
                              or business of the Tenant on the demised premises,
                              as and when the same become due; and also if the
                              Tenant or any permitted assignee or subtenant of
                              the Tenant shall elect to have the demised
                              premises, or any part thereof, assessed for
                              separate school taxes, the Tenant shall, on
                              demand, pay to the Landlord, notwithstanding
                              anything hereinbefore contained, as soon as the
                              amount of the separate school tax is ascertained,
                              any amount by which the separate school taxes
                              exceed the amount which would have been payable
                              for school taxes had such election not been made.

                              (iii) to pay as the same become due respectively
                              all charges for public and private utilities,
                              including without limitation, water, gas,
                              electrical power or energy, steam or hot water
                              used upon or in respect of time demised premises
                              and for fittings, machines, apparatus, meters or
                              other things leased in respect thereof, and for
                              all work or services performed by any corporation
                              or commission in connection with such public
                              utilities; if no separate meter is provided for
                              any such utility, the Tenant shall pay to the
                              Landlord the Tenant's proportion of the total cost
                              of such utility with respect to the buildings of
                              which the demised

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                              premises form a part, as estimated by the
                              Landlord, upon periodic demand of the Landlord;
                              provided in the event the Landlord should
                              determine, in its discretion, that the Tenant's
                              use of such commonly metered utility is in any way
                              unusual, the Landlord may, at its option, but at
                              the expense of the Tenant, install for the demised
                              premises a separate or sub-meter with respect to
                              such utility, whereupon the Tenant's cost in
                              connection with such utility shall be determined
                              in accordance with such separate or sub-meter;

                              (iv) the Tenant shall has the right to contest, by
                              appropriate legal proceedings, at its own expense,
                              the validity of any tax, rate (including local
                              improvement rates), assessment or other charges
                              referred to in this paragraph. Notwithstanding
                              anything in this lease to the contrary, such
                              contestation by the Tenant shall not be deemed to
                              be a default in the payment of such taxes, rates
                              (including local improvement rates), assessments
                              or other charges until the outcome thereof is
                              finally determined provided it is lawful to
                              postpone such payment until such time;

Cost of                 (c)   (i) as additional rent, in each and every year
Maintenance             during the term hereof, to pay to the Landlord in
                        addition to the rental specified in paragraph 4 hereof
                        its proportionate share (as hereinafter defined) of the
                        Landlord's actual costs and expenses of maintaining,
                        operating, repairing and administering the Buildings of
                        which the demised premises are a part, and the common
                        areas and facilities of the said buildings such costs
                        and expenses to include, without limitation;

                              (A) the total costs and expenses incurred by the
                              Landlord in insuring the lands, buildings,
                              improvements, equipment and other property from
                              time to time comprising the said buildings and the
                              common areas and facilities thereof, in such
                              manner and in such companies and form, and with
                              such coverage and in such amounts as the Landlord,
                              at its sole discretion, from time to time shall
                              determine including, without limitation, fire
                              insurance with extended coverage endorsement,
                              public liability and property damage insurance and
                              loss of rental insurance;

                              (B) real property taxes ( including school taxes
                              and local improvement rates) and all business and
                              other taxes, if any, from time to time payable by
                              the Landlord levied or assessed both against or
                              allocated by the Landlord pursuant to paragraph
                              6(b)(1) hereof, against or in respect of the
                              common areas and facilities of the said buildings
                              or against the Landlord on account of its
                              ownership thereof and capital tax imposed upon the
                              Landlord in respect of the capital employed by it
                              in the ownership of the buildings computed as if
                              the buildings were the only real property of the
                              Landlord;

                              (C) the total costs of operating, maintaining,
                              lighting, cleaning including snow and ice
                              removable and clearance), supervising, policing,
                              landscaping, repairing and replacing all common
                              areas and facilities of the said buildings
                              including, without limitation, all monies paid to
                              persons, firms or corporations employed by the
                              Landlord to perform same; and

                              (D) all expenses incurred or paid by the Landlord
                              in connection with the maintenance, repair,
                              replacement operation and management of the said
                              buildings and all services connected therewith,
                              together with an administrative fee of five
                              percent of such annual costs and expenses
                              aforesaid.

                        (ii)  The term "proportionate share" used in this
                              paragraph 6(c) shall mean a fraction, the
                              numerator of which is the rentable area of the
                              demised premises and the denominator of which
                              total rentable area of the said buildings of which
                              the demised premises form part.

                        (iii) The amounts payable by the Tenant pursuant to this
                              paragraph 6(c) may be estimated by the Landlord
                              for such period or periods as the Landlord may
                              determine and the Tenant agrees to pay to the
                              Landlord its proportionate share as so estimated,
                              of such amounts in monthly installments in advance
                              during such period(s) together with all other
                              rental payments provided for in this Lease.

                              Notwithstanding the foregoing, as soon as bills
                              for all or any portion of the said amounts so
                              estimated are received, the Landlord may bill the
                              Tenant for its proportionate share thereof (less
                              all amounts previously

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                                                                               5


                              paid by the Tenant on the basis of the Landlord's
                              estimate aforesaid which have not already been so
                              applied) and the Tenant shall pay to the Landlord
                              such amounts so billed as additional rent on
                              demand. At the end of the period for which such
                              estimated payments have been made, the Landlord
                              shall deliver to the Tenant a statement of the
                              actual amounts and costs referred to in this
                              paragraph 6(c) and the determination of the
                              Tenant's proportionate share thereof, and if
                              necessary, an adjustment shall be made between the
                              parties hereto. If the Tenant shall have paid in
                              excess of such actual amounts, the excess shall be
                              refunded by the Landlord within a reasonable
                              period of time after delivery of the said
                              statement. If the amount the Tenant paid is less
                              than such actual amounts, the Tenant agrees to pay
                              to the Landlord any such extra amount or amounts
                              with the next monthly payment of rent.

Repairs                 (d) at its own expense, to maintain and keep the
                        interior of the demised premises and every part thereof
                        in good order and condition and promptly to make all
                        needed interior repairs and replacements (reasonable
                        wear and tear and damage by fire, lightning and tempest
                        only excepted) and, without limiting the foregoing, to
                        keep the demised premises well painted, clean and in
                        such condition as would a careful owner;

Inspection              (e) that it shall be lawful for the Landlord and its
                        agents at all reasonable times during the said term, to
                        enter the demised premises to inspect the condition
                        thereof and to make repairs, alterations, or
                        improvements to the demised premises or to the building
                        of which the demised premises form part and the Tenant
                        shall not be entitled to compensation for any
                        inconvenience, nuisance or discomfort caused thereby.
                        Where an inspection reveals repairs, which are the
                        obligation of the Tenant hereunder to make, are
                        necessary, the Landlord shall give to the Tenant notice
                        in writing, and thereupon the Tenant will, within one
                        (1) calendar month from the date of delivery of the
                        notice, make necessary repairs in a good and workmanlike
                        manner, failing which the Landlord may make such repairs
                        and the cost thereof shall be payable by the Tenant.

Leave                   (f) at the expiration or sooner determination of the
Premises                term hereof, peaceably to surrender and yield up to the
In Good                 Landlord the demised premises with the appurtenances,
Repair                  together with all buildings or erections which at any
                        time during the said term shall be made therein or
                        thereon, in good and substantial repair and condition,
                        reasonable wear and tear and damage by fire, lightning,
                        tempest and structural defect only excepted:

Heating and             (g) to heat the demised premises in a reasonable manner
Air                     at its own expense from heating equipment supplied by
Conditioning            the Landlord and to maintain, keep in good repair and
                        replace, if necessary, at its own expense, the said
                        heating equipment and such air conditioning equipment as
                        may be supplied by the Landlord. Heating of the demised
                        premises is to be maintained so that at all times the
                        demised premises and the contents thereof shall be
                        protected from damage by cold or frost. The Landlord
                        shall, to the extent the same are assignable, assign to
                        the Tenant all guarantees and warrants with respect to
                        such equipment;

Public Orders           (h) to comply promptly with all requirements of the
                        Local Board of Health, Police or Fire Department and
                        Municipal authorities respecting the demised premises:

Assignment              (i) (i) not to assign, sublet or part with possession of
Subletting              the demised premises or part thereof or permit the
                        demised premises or any part thereof to be occupied by
                        anyone other than the Tenant, without the prior written
                        consent of the Landlord, provided such consent shall not
                        be unreasonably withheld, and further provided that the
                        Landlord may, within ten (10) days of receiving a
                        request for such consent, give notice in writing to the
                        Tenant terminating this lease effective not earlier than
                        the proposed date of the assignment or commencement of
                        the subtenancy. The Landlord shall not be deemed to have
                        withheld such consent unreasonably if;

                              (A) the Tenant, when requesting such consent, does
                              not submit to the Landlord the full name and
                              address of the proposed sub-tenant or assignee, a
                              statement of the use to which the proposed
                              sub--tenant or assignee wishes to put the demised
                              premises, the proposed effective date of any
                              assignment or the proposed effective date of a
                              sublease, the net rent per square foot to be paid
                              by a proposed sub-tenant of the total
                              consideration to be paid by a proposed assignee
                              for an assignment of the Lease, a copy of the
                              proposed sub-lease for an assignment of the Lease,
                              a copy of the proposed sub-lease and either
                              reasonably satisfactory financial references from
                              a chartered bank or a copy of the

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                                                                               6


                              latest audited financial statements of the
                              proposed sub--tenant or assignee which shall not
                              be in respect of a period ended more than Eighteen
                              (18) months prior to the date of the Tenant's
                              request:

                              (B) the proposed sub-tenant or assignee wishes to
                              use the demised premises for a use or uses other
                              than that or those permitted hereunder.

                        (ii)  the following shall be deemed to be conditions of
                              any consent given by the Landlord pursuant to the
                              provisions of this subparagraph 6(h) whether or
                              not expressed to be so in such consent;

                              (A)   notwithstanding the granting of consent to a
                                    sub-tenancy the Tenant shall remain liable
                                    to the Landlord on all the covenants and
                                    agreements herein contained;

                              (B)   if the net rent per square foot to be paid
                                    by a sub-tenant, whether in cash, goods,
                                    services or other consideration, exceeds the
                                    net rent per square foot, payable hereunder,
                                    the Tenant shall pay the Landlord monthly
                                    the amount of, or an amount equivalent to,
                                    such excess;

                              (C)   if the Tenant receives, whether directly or
                                    indirectly and whether in the form of cash,
                                    goods or services, any consideration for the
                                    assignment of this lease such amount, or the
                                    equivalent in money of such amount, shall be
                                    paid to the Landlord;

                              (D)   no sub-tenant or assignee shall further
                                    assign or sublet without the consent of the
                                    Landlord, which consent shall not be
                                    unreasonably withheld and the provisions of
                                    this subparagraph 6(h) shall apply, to all
                                    requests for such consent as if the
                                    sub-tenant or assignee seeking such consent
                                    were the Tenant named herein;

                        Upon an Assignee assuming all of the Tenant's
                        obligations and entering into an Agreement of Assignment
                        of Lease prepared by the Landlord at the cost of the
                        Tenant, which cost shall not be unreasonable in the
                        circumstances, the tenant shall be released from all
                        further obligations hereunder.

Nuisance                (j) that it will not do or omit or permit to be dome or
                        omitted upon or about the demised premises anything
                        which shall be or result in a nuisance or menace to the
                        Landlord or other any Tenant of the buildings located on
                        the lands and premises;

Insurance               (k) (i) that in the event the Tenant's use and
                        occupation of the demised premises, whether or not the
                        Landlord has consented to the same, causes any increase
                        in premiums for fire and extended coverage insurance,
                        rental, boiler, casualty and other types of insurance
                        carried by the Landlord from time to time on the
                        Building of which the demised premises from a part,
                        above the rate for the lease hazardous type of occupancy
                        legally permitted in the demised premises, the Tenant
                        shall pay the additional premium on the policies
                        aforementioned caused by reason thereof. The Tenant
                        shall also pay in such event, any additional premium on
                        the rent insurance policies that may be carried by the
                        Landlord for the Landlord's protection against rent lost
                        through fire or other casualty. If notice of
                        cancellation shall be given respecting any insurance
                        policy or any insurance policy on the said buildings or
                        any part thereof shall be cancelled or refused to be
                        renewed by an insurer by reason of the use or occupation
                        of the demised premises by the Tenant, whether or not
                        the Landlord has consented to such use and occupation,
                        the Tenant shall forthwith remedy or rectify such use or
                        occupation upon being requested to do so in writing by
                        the Landlord, and if the Tenant shall fail to do so
                        forthwith and before any such insurance is cancelled or
                        otherwise terminated, the Landlord may, at its option,
                        determine this lease forthwith by leaving upon the
                        demised premises notice in writing of its intention to
                        do so, and thereupon rent and any other payment for
                        which the Tenant is liable under this lease shall be
                        apportioned and paid up in full to the date of such
                        determination of the lease, and the Tenant shall
                        immediately deliver up vacant possession of the demised
                        premises to the Landlord;

                              (ii) in the event that any premiums for fire and
                              extended coverage insurance and all other types of
                              insurance carried by the Landlord from time to
                              time as aforesaid on the building of which the
                              demised premises form a part, be increased over
                              the rates established for the first year of the
                              term of this lease, the Tenant shall pay to the
                              Landlord the Tenant's proportion of such increase;

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                                                                               7


                              (iii) bills for such additional premiums as
                              aforementioned shall be rendered by the Landlord
                              to the Tenant at such times as the Landlord may
                              elect, and shall be due from and payable by the
                              Tenant when rendered, and the amount thereof shall
                              be deemed to be, and paid as, additional rent;

                              (iv) the Tenant will provide the Landlord with a
                              certificate of liability insurance covering the
                              Tenant and the Landlord in respect of the demised
                              premises and its operations therein to the extend
                              of not less than $1,000,000 inclusive of all
                              injuries or death to persons and damage to
                              property of others arising from any one occurrence
                              and a certificate of fire and extended coverage
                              insurance on all improvements made by the Tenant
                              to the demised premises;

                              (v) the Tenant shall, at its own expense replace
                              any plate glass or other glass that has been
                              broken or removed during the said term or of any
                              renewal thereof, and will during the said term
                              keep the plate glass fully insured, pay the
                              premium such insurance and provide the Landlord
                              with a certificate of such plate glass insurance;

                              (vi) all policies of insurance required to be
                              taken out by the Tenant hereunder and all
                              certificates thereof required to be furnished to
                              the Landlord shall provide that the same are not
                              cancellable by the insurer without fifteen (15)
                              days prior written notice to the Landlord.

Seizure           7.    Provided, and it is hereby expressly agreed:
and
Bankruptcy              (a) that, in case, without written consent of the
                        Landlord, the demised premises shall become and remain
                        vacant or not used for a period of thirty (30) days
                        while the same are suitable for use by the Tenant, or if
                        the demised premises or any part thereof be used by any
                        other person than the Tenant and approved assignees or
                        subtenants, or in case the term hereby granted or any of
                        the goods and chattels of the Tenant shall be at any
                        time seized or taken in execution or in attachments by
                        any creditor of the Tenant, or the Tenant shall make any
                        assignment of the benefit of creditors or give any bill
                        of sale without complying with the Bulk Sales Act
                        (Ontario), or become bankrupt or insolvent, or take the
                        benefit of any act now or hereafter in force for
                        bankrupt or insolvent debtors or any Order shall be made
                        for the winding-up or the Tenant, then and in every such
                        case the then current month's rent and the next ensuing
                        there (3) months' rent shall immediately become due and
                        payable, and at the option of the Landlord, this lease
                        shall cease and determine and the said term shall
                        immediately become forfeited and void, in which event
                        the Landlord may re-enter and take possession of the
                        demised premises as thought the Tenant or any occupant
                        or occupants of the demised premises was or were holding
                        over after the expiration of the term without any right
                        whatever;

Distress                (b) that notwithstanding the benefit of any present or
                        future Statute taking away or limiting the Landlord's
                        right of distress none of the goods and chattels of the
                        Tenant on the demised premises at any time during the
                        said term shall be exempt from levy by distress for rent
                        in arrears;

Public                  (c) that save and except for structural defect, the
Liability               negligence or wrong doing of the Landlord, its
                        employees, workmen, agents, contractors or invitees, the
                        Landlord shall not in any event whatsoever be liable or
                        responsible in any way for any personal injury or death
                        that may be suffered or sustained by the Tenant or any
                        employees of the Tenant or any other person who may be
                        upon the demised premises or any truckways, platforms or
                        corridors in connection therewith or the common inside
                        areas or for any loss or damage or injury to any
                        property belonging to the Tenant or its employees or to
                        any other person while such property is on the demised
                        premises and, in particular, (but without limiting the
                        generality of the foregoing), the Landlord shall not be
                        liable for any damage, direct or consequential, to any
                        such property caused, either directly or indirectly, by
                        steam, water, rain or snow which may leak into, issue or
                        flow from any part of the building of which the demised
                        premises form part or adjoining premises or from the
                        water, steam, sprinkler or drainage pipes or plumbing
                        works thereof or from any other place or quarter or for
                        any damage caused by or attributable to the condition or
                        arrangement of any electrical or other wiring or for any
                        damage by anything done or omitted to be done by any
                        Tenant;

Indemnification         (d) The Tenant will indemnify and save harmless the
Of Landlord             Landlord from any and all liabilities, fines, suits,
                        claims, demands, costs and actions of any kind or nature
                        whatsoever to which the Landlord shall or may become
                        liable for, or suffer by reason of any breach, violation
                        or non-performance by the Tenant of

<PAGE>

                                                                               8


                        any covenant, term or provision hereof, or by reason of
                        any injury, loss, damage or death resulting from,
                        occasioned to or suffered by any person or persons, or
                        any property by reason of any act, neglect or default on
                        the part of the Tenant, or any of its sub-lessees,
                        agents, customers, employees, contractors, licensee or
                        invitees, in or about the demised premises or any
                        truckways, platforms or corridors in connection,
                        therewith or the common outside areas; such
                        indemnification in respect of any such breach,
                        violation, non-performance, damage to property, loss,
                        injury or death occurring during the term of this Lease
                        shall survive any termination of this lease, anything in
                        this lease to the contrary notwithstanding;

Overholding             (e) that if the Tenant shall continue to occupy the
                        demised premises after the expiration of this lease,
                        with or without the consent of the Landlord, and without
                        any further written agreement, the Tenant shall be a
                        monthly Tenant at a monthly rental herein reserved and
                        otherwise on the terms and conditions herein set forth,
                        except as to the length of Tenancy;

Overloading             (f) that the Tenant will not bring upon the demised
                        premises or any part thereof any machinery, equipment,
                        article or thing that by reason of its weight, size or
                        use might damage the floors of the demised premises and
                        that if any damage is caused to the demised premises by
                        any machinery, equipment, article or thing or by
                        overloading or by any act, neglect or misuse on the part
                        of the Tenant or any of its agents or employees or any
                        person having business with the Tenant, the Tenant will
                        forthwith repair the same or pay to the Landlord the
                        cost of making good the same;

Payments                (g) that in the event of the Tenant failing to pay any
Deemed Rent             taxes, rates, insurance premiums or other charges which
                        it has herein covenanted to pay, the Landlord may pay
                        the same and shall be entitled to charge the sums so
                        paid to the Tenant who shall pay them forthwith on
                        demand; and the Landlord, in addition to any other
                        rights, shall have the same remedies and may take the
                        same steps for the recovery of all such sums as it might
                        have and take for the recovery of rent in arrears under
                        the terms of this lease; all payments required to be
                        made by the Tenant pursuant to the terms of this lease
                        shall be deemed rent. All rent in arrears and all
                        amounts collectible hereunder as if rent in arrears
                        shall bear interest at an annual rate being five (5)
                        percentage points above the prime bank lending rate
                        being charged from time to time by the Chartered Banks
                        for commercial loans to its best commercial customers,
                        which shall be charged from the respective due dates of
                        such amounts until paid; provided that this shall in no
                        way affect any claim for damages by the Landlord for any
                        breach or default by the Tenant;

Refuse                  (h) that the Tenant will keep the demised premises and
                        every part thereof in a clean and tidy condition and
                        will not permit waste paper, garbage, ashes or waste, or
                        objectionable material to accumulate thereon;

Notice of Damage        (i) in the event of any substantial damage to the
                        demised premises or any part thereof or any appurtenance
                        thereto, including without limitation, damage to the
                        heating equipment, plumbing system, electrical equipment
                        or sprinkler system, the Tenant shall forthwith upon
                        becoming aware of such damage give notice in writing
                        thereof to the Landlord;

Loading and             (j) that all loading and unloading of merchandise,
Unloading               supplies, materials, garbage and other chattels shall be
                        effected only through or by means of such doorways or
                        corridors as the Landlord shall designate;

Demised                 (k) whenever in this lease reference is made to the
Premises Defined        demised premises, it shall include all structure,
                        improvements and erections, save and except Tenant's
                        fixtures and those Tenant's improvements the title to
                        which has not vested in the Landlord pursuant to
                        paragraph 16 hereof, in or upon the demised premises or
                        any part thereof from time to time;

Evidence of             (l) the Tenant shall from time to time at the request of
Payments by Tenant      the Landlord produce to the Landlord satisfactory
                        evidence of the due payment by the Tenant of all
                        payments required to be made by the Tenant under this
                        lease;

Adjustment Taxes        (m) the taxes and local improvement rates in respect of
                        the first and last calendar years falling within the
                        term hereof shall be adjusted between the Landlord and
                        the Tenant;

Expropriation           (n)   (i) if, at any time during the term hereof a
                              portion of the common areas and facilities
                              referred to in this lease or any portion of the
                              demised premises not covered by buildings or
                              structures are taken by expropriation or an
                              easement or right or license in the nature of an
                              easement over, upon or under a portion of the
                              lands expropriated, and


<PAGE>

                                                                               9


                              such taking or expropriation does not materially
                              affect the Tenant's use or enjoyment of the
                              demised premises, then the whole of the
                              compensation awarded or settlement for the lands
                              so expropriated, whether fixed by agreement or
                              otherwise, shall be paid to or received by the
                              Landlord and the Tenant hereby assigns, transfers
                              and sets over unto the Landlord all the right,
                              title and interest of the Tenant therein and
                              thereto, and this lease shall thereafter continue
                              in effect with respect to the demised premises
                              without any abatement of rent;

                              (ii) in the event that any expropriation does
                              materially affect the Tenant's use or enjoyment of
                              the demised premises, the whole of the
                              compensation awarded or settlement, whether fixed
                              by agreement or otherwise for the said lands so
                              expropriated, shall nevertheless be paid to or
                              received by the Landlord, and the Tenant hereby
                              assigns, transfers and sets over unto the Landlord
                              all the right, title and interest of the Tenant
                              therein and thereto but the rent thereafter
                              payable by the Tenant shall abate accordingly;

                              (iii) if the landlord and the Tenant shall be
                              unable to agree, within thirty (30) days after the
                              amount of compensation, award or settlement as
                              aforesaid has been fixed, as to whether such
                              taking or expropriation materially affects the
                              Tenant's use or enjoyment of the demised premises
                              or as to the extent to which the rent shall abate,
                              then the same shall be determined by arbitration
                              as set out in paragraph 25 hereof;

                              (iv) in the event that such taking or
                              expropriation so affects the demised premises as
                              not to terminate this lease but as to require the
                              reconstruction or replacement of some portion of
                              the demised premises, such reconstruction or
                              replacement shall be carried out at the Landlord's
                              expense in a good and workmanlike manner and as
                              expeditiously as reasonably practicable, provided
                              the cost thereof does not exceed the amount of the
                              compensation awarded or fixed by agreement or
                              otherwise;

                              (v) if the entire demised premises are
                              expropriated or if so much thereof or of the
                              appurtenances thereof or such part of the means of
                              access to and egress from the demised premises
                              shall be taken that it shall not be practical or
                              feasible to use the part thereof not taken in the
                              operation of the Tenant's business, at the rent
                              and subject to the covenants and conditions of
                              this lease, this lease shall, upon vesting of
                              title in the expropriating authority, terminate
                              and rent, all other payments required to be made
                              hereunder as additional rent with respect to
                              periods after the vesting of title in the
                              expropriating authority shall be refunded and the
                              whole of the compensation awarded or settlement
                              whether fixed by agreement or otherwise, for the
                              said lands and premises or part thereof so
                              expropriated shall nevertheless be paid to or
                              received by the Landlord and the Tenant hereby
                              assigns, transfers and sets over unto the Landlord
                              all the right, title and interest of the Tenant
                              therein and thereto.

Removal of
Fixtures          8. Provided all rent due or to become due under the terms of
                  this lease is fully paid, the Tenant may remove its trade
                  fixtures and shall make good all damage caused by such
                  removal; provided further that the Tenant shall not remove or
                  carry away from the demised premises any building or plumbing,
                  heating or ventilation plant or equipment or other building
                  services or improvements.

Re-Entry          9. Proviso for re-entry by the said landlord on non-payment of
                  rent or non-performance of covenants.

                        The above powers may be exercised, whether legal demand
                  for the rent has been made or not. Provided that
                  notwithstanding anything hereinbefore contained, the
                  Landlord's right of re-entry hereunder for non-payment of
                  rent, non-performance of covenant's seizure or forfeiture of
                  the said term shall become exercisable immediately upon such
                  default being made. Provided, further, that upon such re-entry
                  by the Landlord under the term of this paragraph or any other
                  provision or provisions of this lease, the Landlord may, in
                  addition to any other remedies to which the Landlord may be
                  entitled at its option, at any time and from time to time
                  relet the demised premises or any part or parts thereof for
                  the account of the Tenant or otherwise and receive and collect
                  the rents therefor, applying the same first to the payment of
                  such expenses as the Landlord may have incurred in recovering
                  possession of the demised premises, including the legal
                  expenses and solicitor's fees and for putting the same into
                  good order or condition or preparing or altering the same for
                  re-rental and all other expenses, commissions and charges
                  paid, assumed or incurred by the Landlord in or about
                  reletting the premises

<PAGE>

                                                                              10


                  and then to the fulfillment of the covenants of the Tenant
                  hereunder. Any such reletting herein provided for may be for
                  the remainder of the term as originally granted or for a
                  longer or shorter period. In any such case and whether or not
                  the demised premises or any part thereof be relet the Tenant
                  shall pay to the Landlord the rental hereby reserved and all
                  other sums required to be paid by the Tenant up to the time of
                  the termination of this lease or of recovery of possession of
                  the demised premises by the Landlord, as the case may be, and
                  if required by the Landlord thereafter the Tenant shall pay to
                  the Landlord until the end of the term of this lease the
                  equivalent of the amount of all the rentals hereby reserved
                  and all other sums required to be paid by the Tenant
                  hereunder, less the net avails of reletting, if any, and upon
                  each of the days herein provided for payment of rental, the
                  Tenant shall pay to the Landlord the amount of the deficiency
                  then existing.

Net Lease         10. It is the intention of this lease that, save as expressly
                  herein provided, the said rentals herein provided to be paid
                  shall be net and without set-off to the Landlord and clear of
                  all taxes, except the Landlord's income taxes, costs and
                  charges arising from or relating to the demised premises and,
                  save as aforesaid, that the Tenant shall pay all charges,
                  impositions, expenses of every nature and kind relating to the
                  demised premises and the Tenant covenants with the Landlord
                  accordingly.

Quiet Enjoyment   11. The Landlord covenants with the Tenant for quiet
                  enjoyment.

Snow Removal      12. The Landlord shall maintain and keep in good repair the
                  common outside areas and the landscaped areas and shall
                  provide reasonably adequate snow clearance of the parking
                  areas and of the entrances and exits to and from the demised
                  premises and the said parking areas.

Inspection        13. Provided that during the term hereof any person or persons
                  may inspect the demised Premises and all parts thereof at all
                  reasonable times, in producing a written order to that effect
                  signed by the Landlord or its agents.

Removal of        14. Provided that in case of removal by the Tenant of the good
Goods             and chattels of the Tenant from off the demised premises, the
                  Landlord may follow the same for thirty (30) days in the same
                  manner as is provided for in the Landlord and Tenant Act.

Notices for       15. Provided that the Landlord shall have the right during the
Sale or to Let    term of this lease to place upon the demised premises a notice
                  stating that the demised premises are for sale and shall,
                  within three (3) months from the termination of the said term,
                  have the right to place upon the demised premises a notice
                  stating that the demised premises are for Rent; and further
                  provided that the Tenant will not remove such notice or permit
                  the same to be removed.

Improvements      16. Any alterations, erections or improvements, save and
                  except Tenant's trade fixtures placed or erected upon the
                  demised premises, shall become a part thereof and shall not be
                  removed and shall be subject to all the provisions of this
                  lease. No alteration, erection or improvement shall be made or
                  erected upon the demised Premises without the written prior
                  consent of the Landlord. All improvements made to the demised
                  premises by the Tenant shall become part of the demised
                  premises and title therein shall vest in the Landlord on the
                  termination of this lease or, if the term of this lease is
                  renewed or extended, upon the termination of the original term
                  hereof.

Fire              17. Provided, and it is hereby expressly agree, that if and
                  whenever during the term hereof the building of which the
                  demised premises form a part shall be destroyed or damaged by
                  fire, lightning or tempest, or any of the perils normally
                  insured against under the provisions of standard extended
                  coverage fire insurance policies, then, and in every such
                  event:

                        (a) if the damage or destruction is such that in the
                        opinion of the Landlord, seventy five percent (75%) or
                        more of the building of which the demised premises form
                        a part is rendered wholly unfit for occupancy or
                        impossible or unsafe for use and occupancy, the Landlord
                        may, at its option to be exercised within twenty (20)
                        days of the happening of such damage or destruction,
                        terminate this lease by giving to the Tenant notice in
                        writing of its opinion and of such termination, in which
                        event, this lease and the term hereby demised shall
                        cease and be at any end as of the date of such
                        destruction or damage, and the rent and all other
                        payments for which the Tenant is liable under the terms
                        of this lease shall be apportioned and paid in full to
                        the date of such destruction or damage. Failing exercise
                        by the Landlord of the said option to terminate this
                        lease, the Landlord shall, as soon as circumstances
                        reasonably permit, commence to repair or rebuild the
                        demised premises and or the said buildings and rent
                        shall abate until repairs arc complete.

<PAGE>


                                                                              11


                        (b) if the damage or destruction is such that in the
                        opinion of the Landlord, the portion of the said
                        buildings hereby demised is rendered wholly unfit for
                        occupancy or it is impossible or unsafe to use or occupy
                        it and if, in either event the damage, in the written
                        opinion of the Landlord to be given to the Tenant within
                        twenty (20) days of the happening of such damage or
                        destruction, cannot be repaired with reasonable
                        diligence within one hundred and twenty (120) days from
                        the happening of such damage or destruction, then either
                        the Landlord or the Tenant may, within five (5) days
                        next succeeding the giving of the Landlord or the Tenant
                        may, within five (5) days next succeeding the giving of
                        the Landlord's opinion as aforesaid, terminate this
                        lease by giving to the other notice in writing of such
                        termination, in which event this lease and the term
                        hereby demised shall cease and be at an end as of the
                        date of such destruction or damage and the rent and all
                        other payments for which the Tenant is liable under the
                        terms of this lease shall be apportioned and paid in
                        full to the date of such destruction or damage; if the
                        Landlord does not, within the time limited, give its
                        written opinion to the Tenant that the damage or
                        destruction cannot be so repaired within such one
                        hundred and twenty (120) day period or if neither the
                        Landlord nor the Tenant so terminate this lease, then
                        the Landlord shall repair the said building with all
                        reasonable speed and the rent hereby reserved shall
                        abate from the date of the happening of the damage until
                        the damage shall be made good to the extent of enabling
                        the Tenant to use and occupy the demised premises;

                        (c) if the damage or destruction be such that, in the
                        opinion of the Landlord, the portion of the building
                        hereby demised is wholly unfit for occupancy, or if it
                        is impossible or unsafe to use or occupy it but if in
                        either event the damage, in the written opinion of the
                        Landlord, to be given to the Tenant within twenty (20)
                        days from the happening of such damage or destruction,
                        can be repaired with reasonable diligence within one
                        hundred and twenty (120) days from the happening of such
                        damage, or if the Landlord gives no such written opinion
                        to the Tenant, then the rent hereby reserved shall abate
                        from the date of the happening of such damage until the
                        damage shall be made good to the extent of enabling the
                        Tenant to use and occupy the demised premises and the
                        Landlord shall repair the damage with all reasonable
                        speed;

                        (d) if in the opinion of the Landlord the damage can be
                        made good as aforesaid within one hundred and twenty
                        (120) days of the happening of such destruction or
                        damage and the damage is such that the portion of the
                        building demised is capable of being partially used for
                        the purposes for which it is hereby demised, then until
                        such damage has been repaired, the rent shall abate in
                        the proportion that the area of the demised premises so
                        rendered unfit for occupancy bears to the whole of the
                        demised premises and the Landlord shall repair the
                        damage with all reasonable speed.

Assignment by     18. The Landlord may assign its rights under this lease to a
Landlord          Lending Institution as collateral security for a loan to the
                  Landlord and in the event that such an assignment is given and
                  executed by the Landlord and notification thereof is given to
                  the Tenant by or on behalf of the Landlord, it is expressly
                  agreed between the Landlord and the Tenant that this lease
                  shall not be cancelled, or modified for any reason whatsoever
                  except as provided for, anticipated or permitted by the terms
                  of this lease or by law, without the consent in writing of
                  such Lending Institution.

                        The Tenant covenants and agrees with the Landlord that
                  it will, if and whenever reasonably required by the Landlord
                  and at the Landlord's expense, consent to and become a party
                  to any instrument relating to this lease which may be required
                  by or on behalf of any purchase, bank or mortgagee from time
                  to time of the demised premises; provided always that the
                  rights of the Tenant as herein set out be not altered or
                  varied by the terms of such instrument or document and that
                  such instrument or document expressly so state.

Limitation of     19. The term "Landlord" as used in this lease so far as
Landlord's        covenants or obligations on the part of the Landlord are
Liability         concerned, shall be limited to mean and include only the owner
                  or owners at the time in question of the demised premises, and
                  in the event of any transfer or transfers of ownership, the
                  Landlord herein named, and in case of any subsequent transfer
                  or conveyances, the then vendor or transferor, shall be
                  automatically freed and relieved from and after the date of
                  such transfer or conveyance, of all liability as respects the
                  prformance of any convenants or obligations on the part of the
                  Landlord contained in the lease thereafter to be performed,
                  provided that:

                        (a) any funds in the hands of such Landlord or the then
                        vendor or transferor at the time of such transfer, in
                        which the Tenant has an interest, shall be turned over
                        to the purchaser or transferee and any amount then due
                        and payable to the Tenant by the Landlord or the then
                        vendor or transferor under any provision of this lease,
                        shall be paid to the Tenant; and
<PAGE>

                                                                              12


                        (b) upon any such transfer, the purchaser or transferee
                        shall be deemed it have assumed, subject to the
                        limitations of this paragraph, all of the terms
                        covenants and conditions in this lease contained to be
                        performed on the part of the Landlord;

                  it being intended hereby that the covenants and obligations
                  contained in this lease on the part of the Landlord shall,
                  subject as aforesaid, be binding on the Landlord, its
                  successors and assigns, only during and in respect of their
                  respective successive periods of ownership.

Waiver of         20. The failure of the Landlord to insist upon a strict
Breach            performance of any of the agreements, terms, covenants, and
                  conditions hereof shall not be deemed a waiver of any rights
                  or remedies that the Landlord may have and shall not be deemed
                  a waiver of any subsequent breach or default in any of such
                  agreements, terms, covenants and conditions.

Notices           21. Any notice, request or demand herein provided for or given
                  hereunder, if given by Tenant to the Landlord shall be
                  sufficiently given if mailed by registered mail, addressed to
                  the Landlord.

                        Any notice herein provided for or given hereunder if
                  given by the Landlord to the Tenant shall be sufficiently
                  given if mailed as aforesaid addressed to the Tenant.

                        Any notice mailed as aforesaid shall be conclusively
                  deemed to have been given on the third business day following
                  the day on which such notice is mailed as aforesaid, either
                  the Landlord, or the Tenant may at any time, give notice in
                  writing to the other or others of any change of address of the
                  party giving such notice. From and after the giving of such
                  notice, the address therein specified shall be deemed to be
                  the address of such party for the giving of such notices
                  thereafter.

Lease             22. Provided that this lease and everything herein contained
Subordinate       shall be deemed to be subordinate to any charge or charges
                  from time to time created by the Landlord with respect to the
                  building of which the demised premises form part, by way of
                  mortgage, and the Tenant hereby covenants and agrees that it
                  will promptly, at any time and from time to time, as required
                  by the Landlord during the term hereof, execute all documents
                  and give all further assurances to this proviso as may be
                  reasonably required to effectuate the postponement of its
                  rights and privileges hereunder to the holder or holders of
                  such charge or charges; provided, however, that no such
                  subordination by the Tenant shall have the effect of
                  permitting the holder or holders of any mortgage or lien or
                  other security, to disturb the occupation and possession by
                  the Tenant of the demised premises, so long as the Tenant
                  shall perform all of the terms, covenants, conditions,
                  agreements and provisos contained in this Lease.

Liens             23. If any Mechanics' or other liens or Order for the payment
                  of money shall be filed against the demised premises by
                  reason, or arising out of any labour or material, work or
                  service furnished to the Tenant or to anyone claiming through
                  the Tenant, the Tenant shall, within fifteen (15) days after
                  notice to the Tenant of the filing thereof, cause the the same
                  to be discharged by bonding, depostit, payment, Court Corder
                  or otherwise. The Tenant shall defend all suits to enforce
                  such lien or Order whether against the Tenant or the Landlord
                  at the Tenant's own expense. The Tenant hereby indemnifies the
                  Landlord against any expense or damage as a result of such
                  lien or Order.

Force             24. It is understood and agreed that whenever and to the
Majeure           extent that either party shall be unable to fulfil or shall be
                  delayed or restricted in the fulfilment of any obligation
                  hereunder in respect of the supply or provision of any service
                  or utility or the doing of work or the making of any repairs
                  by reason of being unable to obtain the material, goods,
                  equipment, service or labour required to enable it to fulfil
                  such obligation, or by reason of any Statute, law or Order in
                  Council, or any regulation or Order passed or made pursuant
                  thereto, or by reason of the Order of Direction of any
                  Administrator, Comptroller, Board, Governmental Department or
                  Officer, or other authority, or by reason of any other cause
                  beyond its control, whether of the foregoing character or not,
                  that party shall be relieved from the fulfillment of such
                  obligation and neither party shall be entitled to compensation
                  for any inconvenience, nuisance or discomfort thereby
                  occasioned.

Arbitration       25. Disputes arising under paragraph 7 (n) hereof shall be
                  determined by a single Arbitrator if the parties can agree on
                  one within seven (7) days after the submission to Arbitration.
                  If the parties cannot agree on a single arbitrator within such
                  seven (7) day period, the dispute shall be determined by the
                  award of three (3) arbitrators or a majority of them, one to
                  be named by the Landlord and one by the Tenant no later than
                  seven (7) days after the expiration of such first seven (7)
                  day period and two (2) Arbitrators so chosen shall forthwith
                  select a third and their award or the award by a majority of
                  them shall be final and binding. If either landlord or Tenant
                  shall fail to
<PAGE>

                                                                              13


                  appoint its arbitrator within second seven (7) day period, the
                  single arbitrator appointed by the other party shall proceed
                  with the arbitration and the award of such single Arbitrator
                  shall be final and binding. If the two (2) arbitrators
                  appointed by the Landlord and the Tenant cannot agree in the
                  choice of a third arbitrator within seven (7) days of the
                  appointment of the latter of the first two (2) arbitrators,
                  such third arbitrator shall be appointed by a Judge of the
                  Supreme Court of Ontario.

Grammar           26. Words importing the singular number only shall include the
                  plural and vice-versa, and words importing the masculine
                  gender shall include the feminine gender and words importing
                  persons shall include firms and corporations and vice-versa.

Marginal          27. The marginal notes contained herein are inserted for the
Notes             sake of convenience and reference only and do not form a part
                  of this lease.

Binding           28. This indenture and everything herein contained shall
Nature            extend to and bind and enure to the benefit of the respective
                  heirs, executors, administrators, successors and assigns, as
                  the case may be, of each and every of the parties hereto,
                  subject to the consent of the Landlord being obtained, as
                  hereinbefore provided, to any assignment or sublease by Tenant
                  and, where there is more than one Landlord or Tenant or where
                  the Landlord or Tenant is male, female or a corporation, the
                  provisions herein shall be read with all grammatical changes
                  thereby rendered necessary. All covenants herein contained
                  shall be deemed joint and several and all rights and powers
                  reserved to Landlord may be exercised by either Landlord or
                  its agent or representatives.

Renewal           29. The Tenant, provided it is not in default hereunder of any
Option            covenant or condition in in its lease at the time of giving
                  notice exercising its right to renew and provided it has duly
                  and on time throughout the initial term of the lease observed
                  and performed the covenants and conditions therein contained
                  and all payments of rent and additional rent have been paid in
                  full and on time shall be entitled to renew this lease for
                  further term of five (5) years from and after the expiration
                  of the term hereof, and the option may be exercised by the
                  tenant forwarding written notice to the Landlord no sooner
                  than six (6) months but no later than three (3) months prior
                  to the expiration of the term hereof. All of the terms and
                  conditions of this lease shall apply to the renewal of the
                  term hereof, save that:

                        (a) The rent for the renewal term shall be mutually
                        agreeed between the parties within two (2) months prior
                        to expiration of the term thereof, failing which the
                        question of quantum of rent shall be determined by
                        binding arbitration and it shall be a condition of such
                        submission to arbitration that:

                              (i) the rent for the renewal term shall not be
                              less than the rent for the term hereof; and

                              (ii) in making their award the arbitrator or
                              arbitrators shall have regard to the current real
                              estate market conditions as they affect rent for
                              premises similar to the demised premises,
                              including all improvements thereto, in the
                              municipality in which the demised premises are
                              located or in the nearest municipality in which
                              similar premises are located and the length of the
                              renewal term.

                        (b) The provisions of paragraph 25 of this lease shall
                        apply to arbitration under this clause.

Right to First    Provided that the Tenant has not been in breach of its
Refusal to Lease  covenants and obligations under the lease, the Landlord hereby
Adjoining Space   grants to the Tenant the right of first refusal, during the
                  term or any renewal thereofany space known as 295 Evans Avenue
                  that may become available to be leased on the terms and
                  conditions of a bona fide offer to lease that is acceptable to
                  the Landlord. The Landlord agrees to deliver a true copy of
                  any such bona fide offer to the Tenant. The Tenant shall have
                  three (3) days from such delivery within which to exercise the
                  right of first refusal to lease adjoining space. This right
                  may only be exercised within such time by the Tenant
                  delivering a notice in writing of its acceptance to the
                  Landlord, whereupon a binding agreement to lease such premises
                  shall exist between the Landlord and the Tenant on the terms
                  and conditions contained in the said bona fide offer.

                  If the Tenant shall not so exercise this right of first
                  refussal to lease the said premises, the said premises may
                  thereafter be leassed by the Landlord to the party identified
                  in the said bona fide offer and subject to the terms and
                  conditions therein, but not otherwise, and failing leasing as
                  aforesaid, the provisions of this section shall apply again
                  the tenant shall not have the right to assign this right of
                  first refusal to lease space known as 295 Evans Avenue except
                  in conjunction with a permitted assignment of all its rights
                  under this lease.
<PAGE>

                                                                              14


Binding           There are no representations or terms of agreement between the
                  parties, save as expressed herein and there shall be no
                  amendment to these terms save as may be agreed to in writing
                  between the parties.

      IN WITNESS WHEREOF the parties hereto have executed these presents.

      SIGNED, SEALED AND
      DELIVERED
      in the presence of:               COMWEST PROPERTIES LIMITED


                                        ----------------------------------------
                                        Landlord: I have authority to bind the
                                        corporation


                                        VISIBLE GENETICS INC.


                                        ----------------------------------------
                                        Tenant: I have authority to bind the
                                        corporation
<PAGE>

                                                                              16

                                  SCHEDULE "A"

Square Footage:

10,500 square feet approximately

Term:

5 years

Base Rent:

$5.95 per square foot, for a total of $62,475.00 per annum payable in equal
consecutive monthly installments of $5,206.25 on the first day of each and every
month of the term.

Estimated CAM and Realty Tax Costs:

$3.05 per square foot for a total of $36,750.00 per annum payable in equal
consecutive monthly installments of $3,062.50 on the first day of each and every
month of the term.

Total monthly rent has been calculated as follows:

$5,206.25      Base Rent
   306.25      CAM
 2,362.50      Property Tax
---------
 7,875.00      Subtotal
   551.25      GST
---------
$8,426.25      TOTAL

Commencement Date:

September 1, 1998