LEASE

     THIS LEASE (this  "Lease") is entered  into as of the ____ day of November,
2000 (the  "Commencement  Date"),  by and between  Verde  Investments,  Inc., an
Arizona  corporation  (the  "Landlord"),  whose  address for  purposes of notice
hereunder is 2575 East Camelback Road, Suite 700, Phoenix,  Arizona,  85016, and
Ugly Duckling Car Sales And Finance  Corporation,  an Arizona  corporation  (the
"Tenant"),  whose  address for purposes of notice  hereunder  is Attn.:  General
Counsel, 2525 East Camelback Road, Suite 500, Phoenix, Arizona 85016.

                                R E C I T A L S

     This Lease is made with reference to the following facts and objectives:

     Landlord is the owner of the following:  (i) certain  tract(s) or parcel(s)
of land  located in Phoenix,  Arizona,  and more  particularly  described on the
attached and incorporated  Exhibit "A" (the land described above,  together with
all  rights,  interests,  easements,  rights  of way and  appurtenances  related
thereto,  shall  hereinafter be referred to as the "Land");  and (ii) a building
located on the Land and all other structures and improvements  existing or to be
constructed on the Land,  together with all fixtures and equipment therein owned
by  Landlord  and  used  in  the  operation  of  the  same  (collectively,   the
"Improvements"). The Land and Improvements are hereinafter collectively referred
to as the  "Premises."  No easement for light,  air or view is included  with or
appurtenant to the Premises.

     Pursuant to all of the terms, conditions,  covenants and provisions of this
Lease, Tenant desires to lease the Premises from Landlord,  and Landlord desires
to lease the Premises to Tenant,  for the rents and during the terms hereinafter
set forth.

     Tenant has examined the title of the  Premises,  the physical  condition of
the  Premises,  environmental  studies  and  reports  of the  Premises,  and the
economic feasibility of conducting its business in and from the Premises. Tenant
has determined that the same are satisfactory to Tenant,  and Tenant accepts the
Premises  on an "AS IS - WHERE IS"  basis.  TENANT  ACKNOWLEDGES  THAT  LANDLORD
(WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND
WILL NOT MAKE,  NOR SHALL  LANDLORD  BE DEEMED TO HAVE  MADE,  ANY  WARRANTY  OR
REPRESENTATION,  EXPRESS OR IMPLIED, WITH RESPECT TO THE PREMISES, INCLUDING ANY
WARRANTY OR  REPRESENTATION  AS TO ITS  FITNESS  FOR USE OR  PURPOSE,  DESIGN OR
CONDITION FOR ANY PARTICULAR  USE OR PURPOSE,  AS TO THE QUALITY OF THE MATERIAL
OR WORKMANSHIP THEREIN,  LATENT OR PATENT, AS TO LANDLORD'S TITLE THERETO, OR AS
TO  VALUE,   COMPLIANCE   WITH   SPECIFICATIONS,   LOCATION,   USE,   CONDITION,
MERCHANTABILITY,  QUALITY, DESCRIPTION, DURABILITY OR OPERATION, IT BEING AGREED
THAT ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT.  Tenant  acknowledges
that the Premises are of its selection and to its  specifications,  and that the
Premises have been inspected by Tenant and are  satisfactory to it. In the event
of any defect or  deficiency  in the Premises of any nature,  whether  patent or
latent,  Landlord  shall not have any  responsibility  or liability with respect
thereto  or for  any  incidental  or  consequential  damages  (including  strict
liability in tort).

     It is the parties'  objective to provide for an absolute "bond  equivalent"
net net net lease to Landlord;  the Basic Rent (as hereinafter  defined) payable
by Tenant hereunder shall be an absolute "bond equivalent" net net net return to
Landlord and Tenant  shall pay all costs and  expenses  relating to the Premises
and Tenant's operations thereon. Landlord would not have entered into this Lease
if it did not meet the aforesaid criteria.

     NOW,  THEREFORE,  IN  CONSIDERATION  of  the  aforesaid  Recitals,  and  in
consideration  of the  Premises  leased by  Landlord  to Tenant  hereby,  and in
consideration  of the rents and  covenants  to be paid and  performed  by Tenant
hereunder,  and for other  good and  valuable  consideration,  the  receipt  and
sufficiency of which are hereby acknowledged,  the parties covenant and agree as
follows:

1.   LEASE.

     1.1. Demise of Premises Landlord hereby demises the Premises to Tenant, and
Tenant hereby lets and accepts the Premises from  Landlord,  for the term herein
described.

     1.2.  Title and  Condition The Premises are demised and let "AS IS" subject
to all  matters  of record and all other  title  exceptions,  including  but not
limited to (a) the rights of any parties in possession and the existing state of
the title as of the  commencement  of the term of this  Lease,  (b) any state of
facts which an accurate  survey or physical  inspection  thereof might show, (c)
all  zoning   regulations,   restrictions,   rules  and   ordinances,   building
restrictions  and other laws and regulations now in effect or hereafter  adopted
by any  governmental  authority  having  jurisdiction  over the condition of any
buildings,  structures and other  improvements  located  thereon,  all as of the
commencement of the term of this Lease,  without  representation  or warranty by
Landlord.  Tenant represents that it has examined the title to and the condition
of the Premises and has found the same to be satisfactory to it.

     1.3. Use of Leased Premises

          (a)  Tenant  shall use the  Premises  for the  purpose  of  commercial
     offices and activities incidental and related thereto (the "Intended Use").
     Tenant  agrees to remain open for  business and to operate the Intended Use
     in all or  substantially  all of the Premises  during the Term.  Tenant may
     occupy and use the  Premises for no use other than the Intended Use without
     Landlord's consent, which shall not be unreasonably withheld conditioned or
     delayed. In no event,  however,  shall the Premises be used for a use which
     would (i) have a permanent and material  adverse effect on the value of the
     Premises,  (ii)  increase  (when  compared to use as the Intended  Use) the
     likelihood that Tenant,  Landlord or Lender would incur liability under any
     provisions  of any  Environmental  Laws, or (iii) result in or give rise to
     any material  environmental  deterioration  or degradation of the Premises.
     Tenant shall not create or suffer to exist any public or private  nuisance,
     hazardous or illegal condition or waste on or with respect to the Premises.
     Tenant  shall not use,  occupy or permit any of the  Premises to be used or
     occupied,  nor  do or  permit  anything  to be  done  in or on  any  of the
     Premises,  in a manner which would (A) make void or voidable any  insurance
     which Tenant is required  hereunder to maintain  then in force with respect
     to any of the  Premises,  or (B) affect the ability of Tenant to obtain any
     insurance  which  Tenant is  required  to  furnish  hereunder,  (C)  impair
     Landlord's  title to the  Premises,  or in such manner as might  reasonably
     make possible a claim or claims of adverse  usage or adverse  possession by
     the public,  as such,  or third  Persons,  or of implied  dedication of the
     Premises  or any  portion  thereof,  or (D)  conflict  with  the  terms  or
     conditions  of any  instrument  or agreement  between  Landlord and Tenant.
     Nothing  contained  in this  Lease  and no  action  by  Landlord  shall  be
     construed to mean that  Landlord has granted to Tenant any  authority to do
     any act or make any  agreement  that may  create  any such  third  party or
     public right, title,  interest,  lien, charge or other encumbrance upon the
     estate of the Landlord in the Premises.

          (b) Tenant  shall not conduct its  business  operation in the Premises
     unless and until (and only during such time as) all necessary  certificates
     of occupancy,  permits,  licenses and consents from any and all appropriate
     governmental authorities have been obtained by Tenant and are in full force
     and effect.

     1.4.  Quiet  Enjoyment  For so long as no Event of Default (as  hereinafter
defined) has occurred and is continuing  hereunder,  Landlord  warrants peaceful
and quiet enjoyment of the Premises by Tenant against acts of Landlord or anyone
claiming through Landlord,  provided that Landlord and its agents may enter upon
and examine the Premises at reasonable times. Exercise by Landlord of its rights
to come upon the  Premises  as set forth in this Lease  shall not  constitute  a
violation of this Section.

2.   TERM.

     2.1. Term Subject to the terms and conditions hereof, Tenant shall have and
hold the  Premises  for a  primary  term  (herein  called  the  "Primary  Term")
commencing on the Commencement  Date and ending at midnight on December 31, 2020
unless this Lease shall be sooner terminated or extended.  Tenant shall have the
right and option to extend this Lease for four (4)  consecutive  extended terms,
of five (5) years each (herein,  collectively  called the  "Extended  Terms" and
individually,  an "Extended Term" and together with the Primary Term,  sometimes
hereinafter  called the "Term"  "term of this  Lease" or "term  hereof").  If no
Event of  Default  shall  exist at the time of  exercise  of such  option,  each
Extended Term shall  commence on the day  immediately  succeeding the expiration
date of the  Primary  Term or the  preceding  Extended  Term  and  shall  end at
midnight on the day immediately preceding the fifth anniversary of the first day
of such Extended  Term.  Provided no Event of Default shall exist at the time of
exercise of such  option,  Tenant may  exercise  each said option to extend this
Lease for an Extended Term by giving  written notice to that effect at least six
(6) months prior to the expiration of the then existing term. If Tenant fails to
exercise  an  option  to extend  the Term six (6)  months  or more  prior to the
expiration  of the then current Term,  Tenant's  option to extend the Term shall
not be terminated  and this Lease shall not expire unless  Landlord  delivers to
Tenant written  notice of Tenant's  failure to exercise its option to extend the
Term of this Lease and Tenant then fails to exercise the option  within  fifteen
(15) days after receipt of the written notice from Landlord.  If Tenant does not
exercise any such option in a timely manner,  then Landlord shall have the right
during the remainder of the Term of this Lease to advertise the  availability of
the Premises for reletting and to erect upon the Premises signs  appropriate for
the purpose of indicating such availability.  The term "Lease Year" shall mean a
calendar  year,  except that the first  partial  "Lease  Year" (the "First Lease
Year") shall commence on the "Commencement Date and expire on December 31, 2000.

3.   BASIC RENT; ADDITIONAL RENT

     3.1.  Basic Rent Tenant  covenants to pay to Landlord as and for the rental
of the Premises the amounts set forth below (the ---------- "Basic Rent"):

          (a) For and  with  respect  to the  First  Lease  Year the  amount  of
     $18,750.00 per calendar month (but if the Commencement  Date does not occur
     on the first day of a calendar  month,  the installment for the period from
     the  Commencement  Date to the  end of the  calendar  month  in  which  the
     Commencement  Date occurs shall be paid on the Commencement  Date and shall
     be prorated based on a thirty (30) day month).

          (b) For and with respect to the second Lease Year (i.e., calendar year
     2001), the amount of $ 225,000.00, payable in equal monthly installments of
     $18,750.00 .

          (c) Basic Rent shall be adjusted  commencing  with the first (1st) day
     of the third  Lease  Year and as of the first  (1st) day of each Lease Year
     thereafter  (each such date being  referred to herein as an "BR  Adjustment
     Date" and each such Lease Year  commencing  with the third Lease Year being
     referred  to herein as a "BR  Period").  Basic Rent for the first BR Period
     and for each  subsequent  BR Period,  including  each BR Period  during any
     Extended  Terms,  will be  adjusted on the first BR  Adjustment  Date by an
     amount  calculated  by  multiplying  the Basic  Rent then in effect by five
     percent (5%).

          (d) If an option to extend the Term is exercised, for and with respect
     to the applicable  Extended Term, at the rate equal to ninety-five  percent
     (95%) of fair market rental value, but in no event less than the Basic Rent
     payable in the last year of the prior portion of the Term  ("Extended  Term
     Basic  Rent").  Fair market rental value will be determined as of the first
     day of the  applicable  Extended  Term but at the time and on the basis set
     forth in Section 11.3 hereof.

     Tenant  unconditionally  and  irrevocably  agrees  to make the  Basic  Rent
payments directly to Landlord or Landlord's  designee and to pay the same on the
first day of each month, commencing on the Commencement Date. After any Event of
Default,  Landlord shall have the right to require that such payments be made in
immediately available funds.

     3.2 Lease Security On or before the Commencement  Date, Tenant shall pay to
Landlord the sum of  $375,000.00  as and for a security  deposit (the  "Security
Deposit").  The Security  Deposit  shall be held by Landlord as security for the
faithful  performance by Tenant of all the terms,  covenants,  and conditions of
this Lease to be kept and performed by Tenant during the Lease Term. Landlord is
not  required to hold the Security  Deposit in trust and may hold and  commingle
the  Security  Deposit  with  other  funds of  Landlord.  Landlord  shall not be
required to pay to Tenant any interest on the Security  Deposit at any time.  If
Tenant  defaults with respect to any provision of this Lease,  Landlord may, but
shall not be required to, use,  apply or retain all or any part of this Security
Deposit for the payment of any Rent or any other  amount  payable by Tenant,  or
for the payment of any amount which  Landlord  may spend or become  obligated to
spend by reason of Tenant's  default,  or to  compensate  Landlord for any other
loss or damage which Landlord may suffer by reason of Tenant's  default.  If any
portion of the Security Deposit is so used or applied, Tenant shall, within five
(5) days after written demand therefor,  deposit cash with Landlord in an amount
sufficient to restore the Security  Deposit to its original  amount and Tenant's
failure  to do so  shall  be a  material  breach  of  this  Lease.  If  Landlord
terminates  this Lease as a result of any default of Tenant,  then the  Security
Deposit  shall be applied to the damages  suffered by. If Tenant shall fully and
faithfully  perform  every  provision  of this Lease to be  performed by it, the
Security  Deposit or any  balance  thereof  shall be  returned  to Tenant or, at
Landlord's  option,  to the last  assignee of Tenant's  interest  hereunder,  no
earlier  than thirty (30) days after the  expiration  of the Lease Term.  In the
event of  termination  of  Landlord's  interest  in this Lease,  Landlord  shall
transfer the Security  Deposit to Landlord's  successor in interest and Landlord
shall   be   discharged   from   all   liability   in   regard    thereto.    No
successor-in-interest  to Landlord  shall be liable for the return of all or any
portion  of the  Security  Deposit to Tenant  except to the extent the  Security
Deposit  transferred  to such  successor-in-interest.  Performance  of  Tenant's
obligations under this Lease shall also be secured by the Tenant's  interests in
and  possession of the Premises.  Upon the occurrence of any event of default by
Tenant,  Landlord may  terminate  Tenant's  interests in and  possession  of the
Premises  in  accordance  with  Section  10  hereof.   Performance  of  Tenant's
obligations  under this Lease shall also be secured by a  statutory  lien on all
personal property of Tenant at any time located on or at the Premises and Tenant
shall  execute any and all  security  agreements  and  financing  statements  as
Landlord  may require  from time to time to evidence  and perfect the  statutory
lien.  Neither the Security Deposit,  Tenant's interest in and possession of the
Premises,   Landlord's  statutory  lien  or  any  other  security  for  Tenant's
obligations under this Lease shall limit or reduce Landlord's exercise of any or
all of its rights and remedies under this Lease.

     3.3.  Additional Rent Tenant shall pay and discharge  before the imposition
of any fine,  lien,  interest or penalty may be added  thereto for late  payment
thereof,  as Additional  Rent,  all other amounts and  obligations  which Tenant
assumes or agrees to pay or  discharge  pursuant  to this Lease,  together  with
every fine,  penalty,  interest and cost which may be added by the party to whom
such payment is due for  nonpayment or late payment  thereof.  All references in
this Lease to Basic Rent shall  include the  Additional  Rent  payable by Tenant
pursuant  to this  Lease.  In the  event  of any  failure  by  Tenant  to pay or
discharge  any of the  foregoing,  Landlord  shall have all  rights,  powers and
remedies  provided  herein,  by law or otherwise,  in the event of nonpayment of
Basic Rent.

     3.4. Late Charge If any  installment  of Basic Rent is not paid within five
(5) days after  notice  that the same is due and not paid,  Tenant  shall pay to
Landlord or Lender,  as the case may be, on demand,  as Additional  Rent, a late
charge  equal  to  three  percent  (3%)  (the  "Late  Charge")  on such  overdue
installment of Basic Rent. Such payment shall be in addition to, and not in lieu
of, the interest payable pursuant to Section 11.17.

     3.5.  True Lease  Landlord and Tenant agree that this Lease is a true lease
and does not  represent a financing  arrangement.  Each party shall  reflect the
transactions  represented  by this Lease in all  applicable  books,  records and
reports  (including,  without  limitation,  income  tax  filings)  in  a  manner
consistent with "true lease" treatment rather than "financing" treatment.

     3.6. Net Lease; Non-Terminability

          (a) This is an absolutely  net lease to Landlord.  It is the intent of
     the parties hereto that the Basic Rent payable under this Lease shall be an
     absolutely  net return to Landlord  and that Tenant shall pay all costs and
     expenses  relating  to the  Premises  and  operations  carried on  therein,
     including  but not  limited to costs and  expenses  relating  to any period
     prior to the Commencement Date. Any amount or obligation herein relating to
     the Premises  which is not expressly  declared to be that of Landlord shall
     be deemed to be an obligation of Tenant to be timely performed by Tenant at
     Tenant's  expense.  Basic Rent,  Additional Rent and all other sums payable
     hereunder  by  Tenant,  shall  be paid  without  notice,  demand,  set-off,
     counterclaim, abatement, suspension, deduction or defense.

          (b) This Lease shall not  terminate nor shall Tenant have any right to
     terminate  this Lease,  nor shall  Tenant be entitled to any  abatement  or
     reduction of rent hereunder, nor shall the obligations of Tenant under this
     Lease be affected by reason of: (i) any damage to or  destruction of all or
     any part of the Premises from whatever  cause;  (ii) the taking in whole or
     in part of the Premises or any portion thereof by condemnation, requisition
     or  otherwise  except as  provided  in Article  7;  (iii) the  prohibition,
     limitation  or  restriction  of  Tenant's  use of all  or any  part  of the
     Premises, or any interference with such use; (iv) any eviction by paramount
     title or otherwise;  (v) Tenant's acquisition or ownership of all or any of
     the Premises otherwise than as expressly provided herein;  (vi) any default
     on the part of Landlord under this Lease,  or under any other  agreement to
     which  Landlord  and Tenant may be parties;  (vii) any  abandonment  of the
     Premises by Tenant or (viii) any other cause whether  similar or dissimilar
     to  the   foregoing,   any   present   or  future   law  to  the   contrary
     notwithstanding.  It is  the  intention  of the  parties  hereto  that  the
     obligations of Tenant hereunder shall be separate and independent covenants
     and agreements, that the Basic Rent, the Additional Rent and all other sums
     payable by Tenant  hereunder shall continue to be payable in all events and
     that the obligations of Tenant hereunder shall continue unaffected,  unless
     the  requirement  to pay or perform  the same  shall  have been  terminated
     pursuant to Article 7 of this Lease.

          (c) Tenant  agrees that it will remain  obligated  under this Lease in
     accordance  with its terms,  and it will not take any action to  terminate,
     rescind or avoid this Lease because of: (i) any readjustment,  liquidation,
     dissolution,  or winding-up or other proceeding  affecting  Landlord or its
     successors-in-interest  or (ii) any action with respect to this Lease which
     may  be  taken  by  any   trustee   or   receiver   of   Landlord   or  its
     successors-in-interest or by any court in any such proceeding.

          (d) To the extent  permitted  by  applicable  law,  Tenant  waives all
     rights  which  may  now or  hereafter  be  conferred  by law  (i) to  quit,
     terminate or surrender  this Lease or the Premises or any part thereof,  or
     (ii) to any  abatement,  suspension,  deferment  or  reduction of the Basic
     Rent, Additional Rent or any other sums payable under this Lease.

4.  PAYMENT  OF  IMPOSITIONS,  TAXES  AND  ASSESSMENTS;   COMPLIANCE  WITH  LAW;
ENVIRONMENTAL MATTERS

     4.1.  Payment of Impositions  Tenant shall pay or discharge all Impositions
(as  hereinafter  defined) when due,  including  but not limited to  Impositions
relating  to any period  prior to the  Commencement  Date.  Notwithstanding  the
foregoing provision of this Section 4.1, Tenant shall not be required to pay any
franchise,  corporate,  estate,  inheritance,  succession,  transfer (other than
transfer taxes,  recording fees, or similar charges payable in connection with a
conveyance  hereunder  to Tenant),  income or excess  profits  taxes of Landlord
hereunder.  Tenant  agrees to furnish to Landlord  and  Lender,  evidence of the
payment of the taxes  described in Section  11.12(a)(i)  within thirty (30) days
after payment  thereof.  Tenant  agrees to furnish  evidence of payment of other
Impositions with fifteen (15) days of Landlord's request therefor.  In the event
that any  Imposition  levied or assessed  against the  Premises  becomes due and
payable during the term hereof and may be legally paid in  installments,  Tenant
shall have the option to pay such  Imposition  in  installments.  In such event,
Tenant shall be liable only for those  installments which become due and payable
during the term hereof or which were due and payable prior to the term hereof.

     4.2.  Compliance  with Laws Tenant shall,  at its expense,  comply with and
shall cause the Premises to comply with all governmental statutes,  laws, rules,
orders, regulations and ordinances,  including without limitation, the Americans
with Disabilities Act of 1990, as the same may be amended from time to time, all
fire regulations,  occupational health and safety laws, applicable point of sale
laws,  building  codes,  Environmental  Laws,  zoning  and  land  use  laws  and
regulations,  and any other law the  failure  to comply  with  which at any time
would materially affect Landlord or the Premises or any part thereof, or the use
thereof, including those which require the making of any structural,  unforeseen
or  extraordinary  changes,  whether or not any of the same  involve a change of
policy on the part of the body enacting the same.  Tenant shall, at its expense,
comply with all changes  required in order to obtain the Required  Insurance (as
hereinafter  defined),  and with the  provisions of all  contracts,  agreements,
instruments  and  restrictions  existing  at the  commencement  of this Lease or
thereafter  suffered or permitted by Tenant  affecting  the Premises or any part
thereof or the ownership, occupancy or use thereof.

     4.3.  Permitted Contests Provided that Tenant shall have complied with, and
shall continue to comply with,  its  obligations  under Section 4.2,  Tenant may
contest,  in good faith and at its expense and in  accordance  with all laws and
governmental  requirements,  the  existence,  the amount or the  validity of the
requirements  imposed  pursuant to Section  4.2, or the extent of its  liability
therefor,  by  appropriate  proceedings.  At least thirty (30) days prior to any
such contest, and as a condition thereto, Tenant shall notify Landlord as to the
proposed  contest in  reasonable  detail,  and Landlord  shall have the right to
require  Tenant to post  security  in amount  and form  reasonably  required  by
Landlord. No such contest or proceedings shall in any way eliminate or otherwise
interfere  with Tenant's  obligation  to make timely  payments of Basic Rent and
Additional  Rent under this Lease.  Tenant further agrees that each such contest
shall be promptly prosecuted to a final conclusion.  Tenant shall pay, indemnify
and save Landlord harmless against, any and all losses,  judgments,  decrees and
costs (including all attorneys' fees, appearance costs and expenses) incurred by
Landlord  during the Lease Term in  connection  with any such contest and shall,
promptly  after  the  final  settlement,  compromise  or  determination  of such
contest,  fully pay and discharge  the amounts which shall be levied,  assessed,
charged or  imposed or be  determined  to be  payable  therein or in  connection
therewith,  together with all penalties,  fines,  interests,  costs and expenses
thereof or in connection  therewith,  and perform all acts,  the  performance of
which shall be ordered or decreed as a result  thereof.  No such  contest  shall
subject  Landlord to the risk of any  criminal  liability  or shall  subject the
Premises to the risk of foreclosure.

     4.4. Hazardous Materials Tenant shall:

          (a) not cause, or permit any Hazardous  Material (as defined below) to
     exist on or discharge  from the Premises  (except for items sold or used in
     the  ordinary  course of  Tenant's  business  and for  which  any  required
     licenses  and  permits  are  issued  and in any  event in  accordance  with
     Environmental Laws), and shall promptly:  (i) pay any claim against Tenant,
     Landlord,  Lender or the Premises;  (ii) remove any charge or lien upon any
     of the Premises;  and (iii) defend,  indemnify and hold Landlord and Lender
     harmless  from any and all  claims,  expenses,  liability,  loss or  damage
     (including   reasonable  attorneys'  fees)  resulting  from  any  Hazardous
     Material  that at any time  exists on or is  discharged  from the  Premises
     except to the extent it is the direct result of the actual gross negligence
     or willful misconduct of Landlord;

          (b) not  cause  or  permit  any  Hazardous  Material  to  exist  on or
     discharge  from any property  owned or used by Tenant which would result in
     any charge or lien upon the Premises and shall promptly:  (i) pay any claim
     against Tenant, Landlord, Lender or the Premises; (ii) remove any charge or
     lien upon the Premises;  and (iii) defend,  indemnify and hold Landlord and
     Lender  harmless  from any and all  claims,  expenses,  liability,  loss or
     damage (including  reasonable attorneys' fees) resulting from the existence
     or discharge of any such Hazardous  Material except to the extent it is the
     direct  result of the actual  gross  negligence  or willful  misconduct  of
     Landlord;

          (c) notify Landlord and Lender within ten (10) days after Tenant first
     has knowledge of any of the following:

               (i) that Hazardous Material exists on or has been discharged from
          or onto the Premises (whether  originating thereon or migrating to the
          Premises from other property);

               (ii) that Tenant is subject to  investigation by any governmental
          authority  evaluating whether any remedial action is needed to respond
          to the release or threatened  release of any  Hazardous  Material into
          the environment from the Premises;

               (iii)  notice  or claim to the  effect  that  Tenant is or may be
          liable to any person as a result of the release or threatened  release
          of any Hazardous Material into the environment from the Premises;

               (iv) notice  that the  Premises  are subject to an  environmental
          lien;

               (v) notice of  violation  to Tenant or  awareness  by Tenant of a
          condition  which might  reasonably  result in a notice of violation of
          any applicable Environmental Law.

          (d) comply, and cause the Premises to comply, with all statutes, laws,
     ordinances,   rules  and  regulations  of  all  local,   state  or  federal
     authorities  having  authority over the Premises or any portion  thereof or
     their  use,  including  without  limitation,   relative  to  any  Hazardous
     Material, petroleum products, asbestos containing materials or PCB's.

          (e) comply with all provisions of that certain  Prospective  Purchaser
     Agreement with the Arizona Department of Environmental  Quality dated on or
     about May 28, 1999.

          (f)  "Hazardous  Material"  means  any  hazardous  or toxic  material,
     substance  or waste  which is  defined  by  those  or  similar  terms or is
     regulated as such under any Environmental Laws.  "Environmental Laws" means
     any statute, law, ordinance, rule or regulation of any local, county, state
     or federal  authority having  jurisdiction over the Property or any portion
     thereof or its use as the same may be amended from time to time,  including
     but not limited to: (i) the Federal Water Pollution  Control Act (33 U.S.C.
     Section  1317) as  amended;  (ii) the  Federal  Resource  Conservation  and
     Recovery  Act (42  U.S.C.  Section  6901 et seq.)  as  amended;  (iii)  the
     Comprehensive  Environmental  Response  Compensation  and Liability Act (42
     U.S.C.  Section 9601 et seq.) as amended;  (iv) the Toxic Substance Control
     Act (15  U.S.C.  Section  2601) as  amended;  and (v) the Clean Air Act (42
     U.S.C. Section 7401) as amended.

          (g) The Tenant's  obligations and  liabilities  under this Section 4.4
     shall  survive  the  expiration  or  termination  of this  Lease  and shall
     include,  without  limitation,  matters  arising prior to the  Commencement
     Date.

5.   MAINTENANCE AND REPAIR; ALTERATIONS

     5.1.  Maintenance and Repair Tenant  acknowledges  that it has received the
Premises in good condition,  repair and  appearance.  Tenant agrees that, at its
expense, it will keep and maintain the Premises, including any altered, rebuilt,
additional or substituted buildings,  structures and other improvements thereto,
in good  condition  and  repair.  It will  make  promptly,  all  structural  and
nonstructural,  foreseen and unforeseen,  ordinary and extraordinary changes and
repairs or  replacements  of every kind which may be required to be made to keep
and maintain the Premises in such good  condition,  repair and appearance and it
will keep the Premises  orderly and free and clear of rubbish.  Tenant covenants
not to install any underground storage tanks on the Premises. Tenant agrees that
its  obligation to maintain and repair the Premises as set forth in this Section
5.1 benefit both Landlord and Tenant, are the sole responsibility of Tenant, and
may not be delegated.  Tenant further covenants to perform or observe all terms,
covenants or conditions of any reciprocal  easement or maintenance  agreement to
which  it may at any  time be a party or to which  the  Premises  are  currently
subject.  Tenant  shall,  at its  expense,  use  its  best  efforts  to  enforce
compliance with any reciprocal easement or maintenance  agreement benefiting the
Premises by any other person  subject to such  agreement.  Landlord shall not be
required to  maintain,  repair or  rebuild,  or to make any  Alterations  of any
nature to the Premises, or any part thereof,  whether ordinary or extraordinary,
structural  or  nonstructural,  foreseen or not  foreseen,  or to  maintain  the
Premises or any part  thereof in any way.  Tenant  hereby  expressly  waives the
right to make  repairs at the expense of Landlord  which may be provided  for in
any law in effect at the time of the  commencement  of the term of this Lease or
which may thereafter be enacted. If Tenant shall abandon the Premises,  it shall
give Landlord and Lender immediate notice thereof. The obligations of the Tenant
to pay  Basic  Rent  and  Additional  Rent  shall  not be  eliminated,  reduced,
suspended,  or otherwise impaired by reason of such abandonment of the Premises.
In the event that the  Premises  shall  violate  any law and as a result of such
violation an  enforcement  action is threatened or commenced  against  Tenant or
with  respect to the  Premises,  then Tenant  shall  either (i) obtain valid and
effective  waivers  or  settlements  of  all  claims,  liabilities  and  damages
resulting  from each such  violation,  whether the same shall  affect  Landlord,
Tenant or both,  or (ii) take such action as shall be  necessary  to remove such
violation,   including,   if  necessary,   making  any   necessary   repairs  or
replacements, structural or otherwise.

     5.2.  Engineering Report Beginning the Sixth Lease Year, and every five (5)
years  thereafter,  Tenant  shall  provide  Landlord,  upon  Landlord's  written
request,  with an  engineering  study  of the  Premises  ("Engineering  Report")
addressed to  Landlord,  in form,  content and scope  reasonably  acceptable  to
Landlord, prepared by a qualified engineering firm. The Engineering Report shall
include,  without  limitation,  a  study  or  analysis  of  (a)  all  structural
components of the Premises,  (b) all  mechanical,  electrical,  plumbing,  HVAC,
sprinkler, fire suppression, elevators, and other building systems and equipment
designated by Landlord, and (c) the roof of all buildings.

     5.3. Encroachments If any Improvements situated on the Premises at any time
during  the Term of this  Lease  shall  encroach  upon any  property,  street or
right-of-way  adjoining  or  adjacent  to the  Premises,  or shall  violate  the
agreements or conditions  contained in any  restrictive  covenant  affecting the
Premises  or any part  thereof,  or shall  impair the rights of others  under or
hinder or  obstruct  any  easement or  right-of-way  to which the  Premises  are
subject,  then,  promptly  after the  written  request of Landlord or any person
affected  by  any  such  encroachment,   violation,   impairment,  hindrance  or
obstruction,  Tenant shall, at its expense, either (i) obtain effective waivers,
or settlements of all claims,  liabilities and damages  resulting from each such
encroachment,  violation,  impairment, hindrance or obstruction whether the same
shall  affect  Landlord,  Tenant  or both,  or (ii)  make  such  changes  in the
improvements on the Premises and take such other action as shall be necessary to
remove such encroachments, hindrances or obstructions and to end such violations
or  impairments,  including,  if  necessary,  the  alteration  or removal of any
improvement  on the  Premises.  Any such  alteration or removal shall be made in
conformity with the  requirements of Section 5.4 hereof to the same extent as if
such  alteration or removal were an Alteration  under the  provisions of Section
5.4.

     5.4.  Alterations  Tenant  may,  at  its  expense,  make  additions  to and
alterations  of the  Improvements  to the  Premises and make  substitutions  and
replacements  thereto  (sometimes   hereinafter   collectively  referred  to  as
"Alterations"),  provided that: (i) Landlord approves,  which approval shall not
be  unreasonably  withheld,  conditioned  or  delayed,  any  Alterations  to the
Premises  before such  alterations  are  commenced,  after having  received from
Tenant a complete set of plans and specifications for the proposed work, (ii) in
Landlord's  reasonable  judgment,  the  market  value  of the  Premises  and the
Intended Use shall not thereby be reduced or impaired and the  appearance of the
Property   will  not  be  adversely   affected;   (iii)  the   Alterations   are
architecturally  consistent  with existing  Improvements;  (iv) the  Alterations
shall be performed  in a good and  workmanlike  manner;  (v) such work shall not
violate any term of any  restriction  to which the  Premises  are subject or the
requirements  of any  insurance  policy  required  to be  maintained  by  Tenant
hereunder,  and shall be  expeditiously  completed in compliance  with all laws,
ordinances,  rules,  regulations and requirements applicable thereto,  including
without  limitation,  the  Americans  with  Disabilities  Act of  1990  and  all
regulations issued thereunder, as the same may be amended from time to time; and
(vi) no  Improvements  shall  be  demolished  unless  Tenant  shall  have  first
furnished  Landlord  with such  surety  bonds or other  security  acceptable  to
Landlord as shall be necessary to assure rebuilding of such Improvements. Tenant
shall promptly pay all costs and expenses of each such Alteration, discharge all
liens  arising  therefrom  and  procure  and pay for all  permits  and  licenses
required in connection therewith.  All such Alterations shall be and remain part
of the realty and the  property of Landlord  and shall be subject to this Lease.
Tenant may place upon the Premises any inventory,  trade fixtures,  machinery or
equipment  belonging  to Tenant or third  parties and may remove the same at any
time  during the Term.  Tenant  shall  repair any damage to the  Premises or any
portion thereof (including all Improvements thereon) caused by such removal.

     5.5. No Liens Tenant will not, directly or indirectly,  create or permit to
be created or to remain,  and shall  within  thirty  (30) days of filing of any,
mechanics,  contractors or other liens,  discharge or bond, at its expense,  any
liens with  respect to, the  Premises or any part  thereof or Tenant's  interest
therein or the Basic Rent, Additional Rent or other sums payable by Tenant under
this Lease,  other than the lien for real estate taxes which are not yet due and
payable.  Nothing contained in this Lease shall be construed as constituting the
consent or request,  expressed or implied, by Landlord to the performance of any
labor or services or of the  furnishing of any  materials  for any  Alterations,
repair  or  demolition  of or to  the  Premises  or  any  part  thereof  by  any
contractor,  subcontractor,  laborer,  materialman  or vendor.  Notice is hereby
given that  Landlord  will not be liable for any labor,  services  or  materials
furnished or to be furnished to Tenant, or to anyone holding the Premises or any
part thereof,  and that no mechanic's or other liens for any such labor services
or  materials  shall  attach to or affect the interest of Landlord in and to the
Premises.

6.   INSURANCE; INDEMNIFICATION

     6.1.  Insurance  Tenant shall maintain,  or cause to be maintained,  at its
sole expense,  the following  insurance on the Premises --------- (herein called
the "Required Insurance"):

          (a)  Insurance  against  loss  or  damage  to  the  Improvements  (the
     "Improvements  Insurance") under a fire and broad form of all risk extended
     coverage  insurance  policy  (which shall  include  flood  insurance if the
     Premises is located  within a flood hazard  area),  together with an agreed
     value endorsement. Such insurance shall be in amounts sufficient to prevent
     Landlord  or  Tenant  from  becoming  a  co-insurer  under  the  applicable
     policies,  and not less than the full  replacement cost of the Improvements
     (excluding  footings and  foundations  and other parts of the  Improvements
     which are not  insurable)  as  reasonably  determined  from time to time by
     Landlord but not more  frequently  than once in any 12-month  period.  Such
     insurance policies may contain reasonable exclusions and deductible amounts
     as are common to properties similar to the Premises.

          (b) General  public  liability  insurance for the benefit of Landlord,
     Tenant  and  Lender  against  claims  for  damages  to person  or  property
     occurring  on,  in  or  about  the  Premises  and  the  adjoining  streets,
     sidewalks, gutters, curbs, passageways and other areas adjacent thereto, if
     any,  with a  combined  single  limit  of at  least  Five  Million  Dollars
     ($5,000,000.00)  for personal injury and property damage, such insurance to
     include full coverage of the indemnity set forth in Section 6.10.  Policies
     for such insurance shall be for the mutual benefit of Landlord,  Tenant and
     Lender, as their respective interests may appear.

          (c) Workers' compensation insurance to the extent necessary to protect
     Landlord,  Tenant and the Premises  against workers'  compensation  claims,
     covering all persons  employed in connection with any work done on or about
     the Premises  with respect to which claims for death or bodily injury could
     be  asserted  against  Landlord,  Tenant or the  Premises.  Such  policy of
     workers'  compensation  insurance shall comply with all of the requirements
     of applicable state law.

          (d)  At  any  time  when  any  portion  of  the   Premises  are  being
     constructed,  altered or replaced,  builder's  risk insurance (in completed
     value  non-reporting form) in an amount no less than the actual replacement
     value of the Improvements, exclusive of foundations and excavations.

     6.2.  Permitted  Insurers  The  Required  Insurance  shall  be  written  by
companies of recognized  financial standing  authorized to do insurance business
in the state in which the Premises are located and have Bests  ratings of A X or
better.  The Required  Insurance  shall name as the insured  parties  thereunder
Landlord and Tenant, as their interests may appear,  and Lender as an additional
insured under a standard "mortgagee"  endorsement or its equivalent satisfactory
to Landlord.  Landlord shall not be required to prosecute any claim against,  or
to contest any settlement  proposed by, an insurer.  Tenant may, at its expense,
prosecute any such claim or contest any such settlement in the name of Landlord,
Tenant or both with the consent of Landlord,  and Landlord  will join therein at
Tenant's  written  request  upon the receipt by Landlord  of an  indemnity  from
Tenant against all costs, liabilities and expenses in connection therewith.

     6.3.   Insurance  Claims  Insurance  claims  by  reason  of  damage  to  or
destruction  of any  portion of the  Premises  shall be  primarily  adjusted  by
Tenant, but both Landlord and Lender shall have the right to join with Tenant in
adjusting any such loss and approve any adjustment proposed by Tenant.

     6.4.  Insured  Parties Any loss under any such policy shall be made payable
to Landlord (or, if Landlord so elects, to Lender),  subject to the requirements
of Section 6.9.  Every policy of Required  Insurance  shall contain an agreement
that the  insurer  will not cancel such policy  except  after  thirty (30) days'
written  notice to  Landlord  and  Lender  and that any loss  otherwise  payable
thereunder shall be payable  notwithstanding  any act or negligence of Landlord,
Tenant or Lender which might,  absent such agreement,  result in a forfeiture of
all or a part of such insurance payment and  notwithstanding (i) any foreclosure
or other action taken by a creditor pursuant to any provision of any Mortgage or
other  Loan  Document  upon the  happening  of a  default  or  Event of  Default
thereunder or (ii) any change in ownership of the Premises.

     6.5.  Delivery of Policies Tenant shall deliver to Landlord  promptly after
the delivery of this Lease, the original or duplicate policies or Accord-27 form
certificates of insurers, satisfactory to Lender, evidencing all of the Required
Insurance.  Tenant shall, prior to the expiration of any such policy, deliver to
Landlord another original or duplicate of such policy or certificates evidencing
the  renewal  of any such  policy.  If  Tenant  fails to  maintain  or renew any
Required  Insurance,  or  to  pay  the  premium  therefor,  or to  deliver  such
certificate,  then  Landlord,  at its option,  but without  obligation to do so,
procure such  insurance.  Any sums so expended by Landlord  shall be  Additional
Rent  hereunder  and shall be repaid by Tenant within five (5) days after notice
to Tenant of such  expenditure  and the amount  thereof.  together with interest
thereon at the Interest Rate.

     6.6. No Double Coverage Tenant shall not obtain or carry separate insurance
covering the same risks as any Required  Insurance  unless Tenant,  Landlord and
Lender are included  therein as named insured,  with loss payable as provided in
this Lease and the policy contains a first mortgagee endorsement in favor of the
Lender.  Tenant shall  immediately  notify  Landlord  whenever any such separate
insurance is obtained and shall deliver to Landlord the policies or certificates
evidencing  the same.  Any insurance  which Landlord may elect to carry shall be
excess and not primary coverage.

     6.7. Blanket Insurance Anything contained in this Article 6 to the contrary
notwithstanding,  all  Required  Insurance  may be carried  under a "blanket" or
"umbrella"  policy or policies covering other property or liabilities of Tenant,
provided that such policies  otherwise  comply with the provisions of this Lease
and specify the coverage and amounts thereof with respect to the Premises.

     6.8.  Damages for Tenant's  Failure to Properly  Insure  Landlord or Lender
shall not be limited in the proof of any  damages  which  Landlord or Lender may
claim against Tenant arising out of or by reason of Tenant's  failure to provide
and keep in force  insurance,  as provided above, to the amount of the insurance
premium or  premiums  not paid or  incurred  by Tenant and which would have been
payable under such insurance;  but Landlord and Lender shall also be entitled to
recover as damages for such breach,  the  uninsured  amount of any loss,  to the
extent of any  deficiency  in the  Required  Insurance  and  damages,  costs and
expenses of suit suffered or incurred by reason of or damage to, or  destruction
of, the Premises,  occurring  during any period when Tenant shall have failed to
provide the Required Insurance. Tenant shall indemnify, defend and hold harmless
Landlord and Lender for any liability incurred by Landlord or Lender arising out
of any deductibles for Required Insurance.

     6.9.  Casualty  If all or any  part of the  Premises  shall be  damaged  or
destroyed  by casualty  which is insured or  required  to be insured  under this
Lease,  or by any other  casualty if the cost to repair such other casualty does
not  exceed  twenty  percent  (20%)  of  the  total   replacement  cost  of  the
Improvements, Tenant shall promptly notify the Landlord thereof, and shall, with
reasonable promptness and diligence,  rebuild,  replace and repair any damage or
destruction to the Premises, at its expense, in conformity with the requirements
of Section 5.4(a)  hereof,  in such manner as to restore the same to the same or
better condition as existed prior to such casualty,  using materials of the same
or better grade than that of the materials being replaced, and there shall be no
abatement of Basic Rent or Additional  Rent.  Proceeds of casualty  insurance of
$100,000.00  or less shall be paid to Tenant.  Proceeds in excess of $100,000.00
shall be held by Landlord or a proceeds trustee (which may be Lender,  an escrow
or title company, or a bank or trust company designated by Landlord) and paid to
Tenant,  but only against  certificates of Tenant,  appropriate lien waivers and
such other information  reasonably  required by Landlord or the proceeds trustee
delivered to Landlord from time to time, but not more  frequently  than once per
calendar month, as such work or repair  progresses.  Each such certificate shall
describe the work or repair for which Tenant is requesting  payment and the cost
incurred  by Tenant in  connection  therewith  and  stating  that Tenant has not
theretofore received payment for such work and has sufficient funds remaining to
complete the work free of liens or claims.  Any proceeds  remaining after Tenant
has repaired the Premises  shall be delivered to Tenant No payment shall be made
to Tenant if there  exists any Event of Default  under this Lease.  If Tenant is
not required to restore after a casualty,  this Lease shall nevertheless  remain
in full force and effect,  with no abatement of Basic Rent or  Additional  Rent,
except that Landlord  shall have the right to terminate  this Lease by notice to
Tenant if Tenant  does not agree to  restore  within  sixty  (60) days after the
casualty,  or if Tenant agrees to restore but does not diligently  proceed to do
so.

     6.10. Indemnification

          (a) Tenant agrees to pay, and to protect,  defend,  indemnify and save
     harmless  Landlord,  Lender and their  agents  from and against any and all
     actual  liabilities,   losses,  damages,  costs,  expenses  (including  all
     reasonable  attorneys'  fees and  expenses of Landlord but  excluding  lost
     profits and all other indirect or consequential damages), causes of action,
     suits,  claims,  demands or judgments of any nature  whatsoever (i) arising
     from any  injury  to,  or the death of,  any  person or damage to  property
     (including property of employees and invitees of Tenant) on the Premises or
     upon adjoining sidewalks,  streets or ways, to the extent not occasioned by
     the actual gross negligence or willful misconduct of Landlord, (ii) arising
     from the use, non-use, condition,  maintenance, repair or occupation of the
     Premises or any part thereof or adjoining  sidewalks,  streets or ways,  to
     the  extent  not  occasioned  by the  actual  gross  negligence  or willful
     misconduct  of  Landlord,  (iii)  arising  from  violation by Tenant of any
     agreement or condition  of this Lease or any  sublease  (including  without
     limitation the failure to pay Impositions), or any contract or agreement to
     which Tenant is a party, or any restriction,  law,  ordinance or regulation
     (including without limitation,  the Americans With Disabilities Act of 1990
     and all regulations issued  thereunder)  affecting the Premises or any part
     thereof  or the  ownership,  occupancy  or use  thereof,  to the extent not
     occasioned  by  the  actual  gross  negligence  or  willful  misconduct  of
     Landlord;  or (iv)  arising  out of any  permitted  contest  referred to in
     Section 4.3  (collectively,  "Indemnified  Matters").  Without limiting the
     generality of the foregoing,  the Indemnified Matters shall include matters
     arising prior to the Commencement Date. If Landlord, Lender or any agent of
     Landlord or Lender shall be made a party to any such  litigation  commenced
     against  Tenant,  and if  Tenant,  at its  expense,  shall  fail to provide
     Landlord,  Lender or their agents with counsel  (upon  Landlord's  request)
     reasonably approved by Landlord,  Tenant shall pay all costs and attorneys'
     fees and expenses  incurred or paid by Landlord,  Lender or their agents in
     connection with such litigation. Tenant's obligations and liabilities under
     this Section 6.10 shall survive the expiration of this Lease. Tenant waives
     all claims against  Landlord  arising from any liability  described in this
     Section  6.10  (a),  except  to  the  extent  caused  by the  actual  gross
     negligence  or willful  misconduct  of Landlord.  The waiver and  indemnity
     provisions  in this  paragraph  are  intended to  exculpate  and  indemnify
     Landlord (i) from and against the direct consequences of its own negligence
     or fault when Landlord is solely  negligent or  contributorily,  partially,
     jointly,  comparatively or concurrently  negligent with Tenant or any other
     person  (but  is not  grossly  negligent  and  has  not  committed  willful
     misconduct)  and (ii) from and against any  liability of Landlord  based on
     any applicable doctrine of strict liability unless resulting from the gross
     negligence or willful misconduct of Landlord.

          (b) Should any claim be made against  Landlord by a person not a party
     to this  Lease with  respect  to any  Indemnified  Matter,  Landlord  shall
     promptly  give Tenant  written  notice of any such claim,  and Tenant shall
     thereafter defend or settle any such claim, at its sole expense, on its own
     behalf and with counsel of its selection;  provided, however, that Tenant's
     counsel shall be competent counsel experienced in the type of litigation or
     claim at issue and shall be acceptable to Landlord, acting reasonably. Upon
     Tenant's  assumption of the defense of any claim against Landlord  pursuant
     to Tenant's indemnity,  Landlord shall have the right to participate in the
     defense or settlement of the claim with counsel retained and paid by it and
     Tenant shall cause the  attorneys  retained by it to consult and  cooperate
     fully with  counsel for  Landlord.  In such  defense or  settlement  of any
     claims,  Landlord  shall  provide  Tenant with  originals  or copies of all
     relevant  documents  and shall  cooperate  with and  assist  Tenant,  at no
     expense to Landlord.  Notwithstanding any provision of this Section 6.10 to
     the  contrary,  Tenant shall not enter into any  settlement or agreement in
     connection with any Indemnified Matters binding upon or adversely affecting
     either  Landlord or Lender,  or admit any liability or fact in  controversy
     binding upon or adversely affecting either Landlord or Lender,  without the
     prior  written  consent of Landlord or Lender,  as the case may be, in such
     party's sole discretion.

          (c) Landlord agrees to pay, and to protect, defend, indemnify and save
     harmless  Tenant and its agents from and  against any and all  liabilities,
     losses, damages (actual and consequential),  costs, expenses (including all
     reasonable  attorneys'  fees and  expenses  of  Tenant),  causes of action,
     suits,  claims,  demands or judgments of any nature whatsoever arising from
     the actual gross negligence or willful misconduct of Landlord in connection
     with the Premises.

7.   CONDEMNATION.

     7.1.  Assignment of Award Subject to the rights of Tenant set forth in this
Article 7, Tenant hereby irrevocably assigns to Landlord any award or payment to
which Tenant may be or become  entitled  with  respect to  Complete,  Partial or
Temporary  Taking of the Premises or any part thereof,  by condemnation or other
eminent  domain  proceedings  pursuant to any law,  general or  special,  by any
governmental authority,  whether the same shall be paid or payable in respect of
Tenant's  leasehold  interest  hereunder  or  otherwise.   Notwithstanding   the
foregoing,  Tenant  may  recover  the  value  of its  personal  property  at the
Premises,  including  leasehold  improvements if taken, so long as the amount of
the Net Award  received  by  Landlord is at least equal to the net book value of
the Premises as  reflected  on  Landlord's  financial  statements.  Landlord and
Lender shall be entitled to participate in any such proceeding.

     7.2. Definitions for Article 7

          (a)  "Complete  Taking"  shall  mean the  occurrence  of any actual or
     threatened  condemnation or other eminent domain proceeding pursuant to any
     general or special law, or any agreement with an authority having the power
     of eminent  domain,  which  results in the taking or  conveyance of (i) the
     entire Premises or (ii) such a significant portion of the Premises that, in
     the good faith  judgment of either Tenant or Landlord,  it is uneconomic to
     rebuild or restore the remaining  portion of the Premises for the continued
     operation of the business.

          (b)  "Partial  Taking"  shall mean the  occurrence  of any taking of a
     portion  of  the  Premises  by   condemnation   or  other  eminent   domain
     proceedings, or any agreement with an authority having the power of eminent
     domain,  which  does not  result  in the  taking  or  conveyance  of such a
     significant  portion of the Premises  that,  in the good faith  judgment of
     either  Tenant or  Landlord,  it is  uneconomic  to rebuild or restore  the
     remaining  portion  of the  Premises  for the  continued  operation  of the
     business.

          (c) "Temporary Taking" shall mean the occurrence of a temporary taking
     of the  use or  occupancy  of the  Premises  or  any  part  thereof  by any
     governmental authority.

          (d) "Net  Award"  shall  mean all  amounts  payable as a result of any
     condemnation  or other eminent domain  proceeding  and all amounts  payable
     pursuant to any agreement with any condemning  authority  (which  agreement
     shall be  deemed to be a taking)  which has been made in  settlement  of or
     under  threat  of any  condemnation  or  other  eminent  domain  proceeding
     affecting the Premises,  less all expenses incurred as a result thereof not
     otherwise paid by Tenant and the collection of such amounts.

          (e) "Purchase  Offer" shall mean a purchase offer as described in this
     Article 7.

     7.3.  Complete  Taking Upon the occurrence of a Complete Taking Landlord or
Tenant may elect to terminate  this Lease by delivering a notice of  termination
specifying a Termination  Date occurring not less than sixty (60) days after the
delivery of such notice,  and this Lease shall continue in full force and effect
without abatement of rent until the Termination Date.

     7.4.  Partial Taking Upon the occurrence of any Partial Taking,  this Lease
shall  continue in full effect  without  abatement  or  reduction of Basic Rent,
Additional Rent or other sums payable by Tenant.  In the event Landlord receives
a Net Award in connection with any such Partial Taking Landlord shall,  provided
there is no Event of Default hereunder,  make the Net Award available to Tenant,
and Tenant  shall,  regardless  of the  adequacy of the award,  make  repairs in
accordance with the  requirements of Section 5.4(a) hereof so that,  thereafter,
the  Premises  shall be, as nearly as  possible,  in a condition  as good as the
condition thereof immediately prior to such Taking, but, if such Net Award shall
be in excess of One Hundred Thousand Dollars  ($100,000),  the proceeds shall be
held by  Landlord  or a  proceeds  trustee  (which  may be  Lender  or  Lender's
designee, or a bank or trust company designated by Landlord), and paid only upon
delivery to Landlord of (i)  certificates of Tenant  identifying the repair work
for which  Tenant  is  requesting  payment  and the cost  incurred  by Tenant in
connection  therewith  and  stating  that  Tenant has not  theretofore  received
payment  for such work;  (ii)  appropriate  lien  waivers;  and (iii) such other
information as may be reasonably required by the proceeds trustee. Any Net Award
remaining  after such  repairs have been made shall be delivered to Tenant if no
Event of Default exists; otherwise, the excess shall be paid to Landlord.

     7.5.  Temporary Taking Upon the occurrence of any Temporary Taking,  Tenant
shall,  promptly after any such Temporary Taking ceases, at its expense,  repair
any damage caused thereby in conformity with the  requirements of Section 5.4(a)
hereof so that,  thereafter,  the Premises shall be, as nearly as possible, in a
condition as good as the condition  thereof  immediately prior to such Temporary
Taking.  In the event of such  Temporary  Taking,  Tenant  shall be  entitled to
receive the entire Net Award payable by reason of such  Temporary  Taking,  less
any costs incurred by the Landlord in connection  therewith.  If the cost of any
repairs  required to be made by Tenant pursuant to this Section 7.5 shall exceed
the amount of the Net Award, the deficiency shall be paid by Tenant. No payments
shall be made to Tenant  pursuant to this  Section  7.5, if any Event of Default
shall  exist  under this  Lease.  No Basic Rent or  Additional  Rent shall abate
through the duration of such Temporary Taking.

8.   ASSIGNMENT AND SUBLETTING.

     8.1.  Power to Assign and Sublet With  Landlord's  prior  written  consent,
which shall not be  unreasonably  withheld,  conditioned or delayed,  Tenant may
sublet all of the  Premises  and may assign all its rights and  interests  under
this Lease  (provided that each such sublease or assignment  shall  expressly be
made subject to all of the  provisions,  including the use provisions of Section
1.3 of this Lease).  Tenant shall,  within ten (10) days after the execution and
delivery of any such assignment or the sublease of all of the Premises,  deliver
a conformed copy thereof to Landlord.

     8.2.  Assumption by Assignee;  Tenant  Remains Liable If Tenant assigns its
rights and interests under this Lease,  the assignee under such assignment shall
expressly  assume  all the  obligations  of Tenant  hereunder  in an  instrument
delivered to Landlord at the time of such assignment.  No assignment or sublease
made  as  permitted  by  this  Article  8  shall  affect  or  reduce  any of the
obligations of Tenant  hereunder or the  obligations of any guarantor of Tenant,
and all such obligations  shall continue in full force and effect as obligations
of a principal  and not as  obligations  of a guarantor  or surety,  to the same
extent as though no  assignment  or  subletting  had been  made,  provided  that
performance  by any such  assignee or  sublessee  of any of the  obligations  of
Tenant under this Lease shall be deemed to be performance by Tenant. No sublease
or assignment  made as permitted by this Article 8 shall impose any  obligations
on Landlord or otherwise  affect any of the rights of Landlord under this Lease.
Tenant  hereby  grants a security  interest to Landlord in all subleases and all
rents,  issues  and  profits  derived  and to be  derived  therefrom,  to secure
performance of Tenant's obligations under this Lease.  Landlord hereby grants to
Tenant a license to collect  all rents  payable  under any  sublease  (up to one
month in  advance),  but upon any  Event of  Default,  Landlord  may in its sole
discretion revoke such license and collect the rents directly from any sublessee
and retain the same.

     8.3.  Other  Transfers  Void Neither this Lease nor the Term hereby demised
shall be mortgaged by Tenant,  nor shall Tenant  mortgage or pledge the interest
of  Tenant  in and to  any  sublease  of the  Premises  or the  rentals  payable
thereunder.  Any mortgage,  pledge,  sublease or assignment made in violation of
this Article 8 shall be void.

9.   FINANCIAL INFORMATION.

     Tenant will  furnish to Landlord  and Lender (i)  Tenant's  annual  audited
financial  statements  within ninety (90) days after the end of Tenant's  fiscal
year,  and  (ii)  Tenant's  unaudited  quarterly  financial   statements  within
forty-five (45) days after the end of each quarter.

10.  DEFAULT.

     10.1.  Events of Default  Any of the  following  occurrences  or acts shall
constitute an event of default  (herein called an "Event of Default") under this
Lease:

          (a) If Tenant,  at any time during the  continuance of this Lease (and
     regardless of the pendency of any bankruptcy, reorganization, receivership,
     insolvency  or  other   proceedings  at  law,  in  equity,  or  before  any
     administrative  tribunal, which have or might have the effect of preventing
     Tenant from complying with the terms of this Lease), shall (i) fail to make
     any  payment  when due of Basic Rent,  Additional  Rent or other sum herein
     required  to be paid by Tenant  hereunder  for ten (10) days after  written
     notice of such failure;  (ii) fail to continuously operate the Premises for
     the Intended Use in accordance with the terms and conditions of Section 1.3
     of this Lease for thirty (30) days after written notice of such failure; or
     (iii) fail to observe or perform any other provision hereof for thirty (30)
     days after written notice of such failure to observe or perform; or

          (b) If any representation or warranty of Tenant hereunder or set forth
     in any notice,  certificate,  demand, request or other instrument delivered
     pursuant to, or in  connection  with this Lease or in  connection  with the
     acquisition of the Premises by Landlord,  shall either prove to be false or
     misleading in any material  respect as of the time when the same shall have
     been made and  Landlord  actually  suffers  damages  as a  proximate  cause
     thereof which are not paid by Tenant; or

          (c) If Tenant shall file a petition  commencing a voluntary case under
     the  Federal  Bankruptcy  Code  or any  federal  or  state  law  (as now or
     hereafter  in  effect)  relating  bankruptcy,  insolvency,  reorganization,
     winding-up  or  adjustment  of  debts  (hereinafter   collectively   called
     "Bankruptcy  Law") or if Tenant  shall:  (i) apply  for or  consent  to the
     appointment  of, or the taking of possession  by, any receiver,  custodian,
     trustee, United States Trustee or liquidator (or other similar official) of
     the Premises or any part thereof or of any substantial  portion of Tenant's
     property;  or (ii) generally not pay its debts as they become due, or admit
     in writing its inability to pay its debts  generally as they become due; or
     (iii) make a general  assignment for the benefit of its creditors;  or (iv)
     file a  petition  commencing  a  voluntary  case  under or  seeking to take
     advantage of any  Bankruptcy  Law; or (v) fail to  controvert in timely and
     appropriate  manner, or in writing acquiesce to, any petition commencing an
     involuntary  case against Tenant or otherwise filed against Tenant pursuant
     to any Bankruptcy Law; or (vi) take any action in furtherance of any of the
     foregoing; or

          (d) If an order for  relief  against  Tenant  shall be  entered in any
     involuntary  case under the Federal  Bankruptcy  Code or any similar  order
     against Tenant shall be entered pursuant to any other Bankruptcy Law, or if
     a petition  commencing an involuntary  case against Tenant or proposing the
     reorganization of Tenant under any Bankruptcy Law shall be filed and not be
     discharged or denied  within  ninety (90)) days after such filing,  or if a
     proceeding   or  case  shall  be   commenced  in  any  court  of  competent
     jurisdiction  seeking:  (i) the liquidation,  reorganization,  dissolution,
     winding-up or adjustment of debts of Tenant;  or (ii) the  appointment of a
     receiver,  custodian,  trustee, United States Trustee or liquidator (or any
     similar  official)  of the  Premises or any part thereof or of Tenant or of
     any substantial  portion of Tenant's property;  (iii) the attachment of the
     Premises or any portion  thereof,  or (iv) any similar  relief as to Tenant
     pursuant  to any  Bankruptcy  Law,  and any such  proceeding  or case shall
     continue undismissed for ninety (90) days after such relief is granted; or

          (e)  If the  Premises  shall  be  left  both  unattended  and  without
     maintenance  as provided  herein,  for a period of thirty (30)  consecutive
     days or more; or

          (f) If there occurs an "Event of Default" (as defined  therein)  under
     any of the  leases  listed on  Exhibit  "C" and the Event of Default is not
     cured within the applicable  cure period and as a result  thereof  Landlord
     either  terminates  the other lease or recovers  possession of the premises
     leased pursuant to the other lease.

     10.2. Landlord's Remedies

          (a) In the event of an Event of Default and  Tenant's  failure to cure
     the Event of Default within the applicable cure period, Landlord shall have
     the right at its election to give Tenant ten (10) days'  written  notice of
     Landlord's  intention  to  terminate  the  term  of  this  Lease  on a date
     specified in such notice.  Thereupon, the term of this Lease and the estate
     hereby granted shall terminate on such date as completely and with the same
     effect as if such date were the date fixed herein for the expiration of the
     term of this Lease, and all rights of Tenant hereunder shall terminate, but
     Tenant shall remain liable as provided herein.

          (b) In the event of an Event of Default and  Tenant's  failure to cure
     the Event of Default within the applicable cure period, Landlord shall have
     the immediate right,  whether or not the term of this Lease shall have been
     terminated  pursuant to Section 10.2(a),  to (i) re-enter and repossess the
     Premises or any part  thereof by force,  summary  proceedings,  ejection or
     otherwise,  and (ii)  remove all  persons and  property  therefrom,  Tenant
     hereby  expressly  waiving  any and all  notices  to quit,  cure or  vacate
     provided by current or any future law. Landlord shall be under no liability
     by reason of any such re-entry,  repossession or removal.  No such re-entry
     or taking of possession  of the Premises by Landlord  shall be construed as
     an election on Landlord's part to terminate the term of this Lease unless a
     written notice of such intention to be given to Tenant  pursuant to Section
     10.2(a).

          (c) At any time or from  time to time  after the  repossession  of the
     Premises or any part thereof  pursuant to Section  10.2(b),  whether or not
     the term of this  Lease  shall  have been  terminated  pursuant  to Section
     10.2(a),  Landlord  may (but  shall be under no  obligation  to)  relet the
     Premises  or any part  thereof  for the  account of Tenant,  in the name of
     Tenant or Landlord or otherwise, without notice to Tenant, for such term or
     terms (which may be greater or less than the period  which would  otherwise
     have  constituted  the  balance  of the  term  of this  Lease)  and on such
     reasonable  conditions (which may include concessions or free rent) and for
     such uses as Landlord may  reasonably  determine,  and Landlord may collect
     and receive any rents payable by reason of such  reletting.  Landlord shall
     not be  responsible  or liable for any failure to relet the Premises or any
     part  thereof  or for any  failure  to  collect  any rent due upon any such
     reletting.

          (d) No  termination  of the term of this  Lease  pursuant  to  Section
     10.2(a),  by  operation of law or  otherwise,  and no  repossession  of the
     Premises or any part thereof pursuant to Section 10.2(b) or otherwise,  and
     no  reletting  of the  Premises  or any part  thereof  pursuant  to Section
     10.2(c), shall relieve Tenant of its liabilities and obligations hereunder,
     all of which shall survive such  expiration,  termination,  repossession or
     reletting.

          (e) In the event of any such termination or repossession,  Tenant will
     pay to Landlord the Basic Rent,  Additional Rent and other sums required to
     be paid by  Tenant  to and  including  the  date  of  such  termination  or
     repossession  (together  with  interest  at the  Interest  Rate on past due
     amounts);  and, thereafter,  Tenant shall, until the end of what would have
     been  the  term  of this  Lease  in the  absence  of  such  termination  or
     repossession,  and whether or not the  Premises or any part  thereof  shall
     have been relet,  be liable to Landlord for, and shall pay to Landlord,  as
     liquidated and agreed current damages: (i) the Basic Rent,  Additional Rent
     and other  sums which  would be  payable  under this Lease by Tenant in the
     absence of such termination or repossession, less (ii) the net proceeds, if
     any,  of any  reletting  effected  for the  account of Tenant  pursuant  to
     Section  10.2(c),  after  deducting  from such  proceeds all of  Landlord's
     reasonable   out-of-pocket   expenses  incurred  in  connection  with  such
     reletting (including, without limitation, all repossession costs, brokerage
     commissions,  legal expenses,  attorneys' fees,  employees'  expenses,  and
     expenses of preparation for such  reletting).  Tenant will pay such current
     damages on the days on which the Basic Rent would have been  payable  under
     this Lease in the absence of such termination or repossession, and Landlord
     shall be entitled to recover the same from Tenant on each such day.

          (f) At any time after such  termination or  repossession  by reason of
     the occurrence of any Event of Default,  whether or not Landlord shall have
     collected any current damages pursuant to Section  10.2(e),  Landlord shall
     be  entitled  to recover  from  Tenant,  and Tenant will pay to Landlord on
     demand, as and for liquidated and agreed final damages for Tenant's default
     and in lieu of all current damages beyond the date of such demand (it being
     agreed that it would be  impracticable  or  extremely  difficult to fix the
     actual  damages),  an amount equal to the present value of all rent payable
     under the Lease beyond the date of such demand over the then present  value
     of the then fair market rental for the Premises, at the date of such demand
     for what would be the  unexpired  term of the Lease,  which  present  value
     shall in each case be determined by the application of a discount factor of
     ten percent  (10%) per annum.  If any law shall be  construed  to limit the
     amount of such  liquidated  final  damages  to less than the  amount  above
     agreed upon,  Landlord  shall be entitled to the maximum  amount  allowable
     under such statute or rule of law.

          (g)  Notwithstanding  anything to the contrary  stated  herein,  if an
     Event of Default  shall have  happened  and be  continuing,  whether or not
     Tenant shall have  abandoned the  Premises,  Landlord may elect to continue
     this  Lease  in  effect  for so long as the  Landlord  does  not  terminate
     Tenant's  right to  possession of the Premises and Landlord may enforce all
     of its rights and remedies hereunder  including,  without  limitation,  the
     right to recover all Basic  Rent,  Additional  Rent and other sums  payable
     hereunder as the same become due.

     10.3.  Additional  Rights of Landlord No right or remedy  herein  conferred
upon or reserved to Landlord is intended to be  exclusive  of any other right or
remedy,  and each and every right and remedy shall be cumulative and in addition
to any other right or remedy given hereunder or now or hereafter existing at law
or in equity or by  statute.  The failure of Landlord to insist at any time upon
the strict  performance  of any covenant or agreement or to exercise any option,
right,  power or remedy contained in this Lease shall not be construed as waiver
or a  relinquishment  thereof for the future. A receipt by Landlord of any Basic
Rent, any Additional  Rent or any other sum payable  hereunder with knowledge of
the breach of any  covenant or  agreement  contained  in this Lease shall not be
deemed a waiver of such  breach,  and no waiver by Landlord of any  provision of
this Lease  shall be deemed to have been made  unless  expressed  in writing and
signed by  Landlord.  In  addition  to other  remedies  provided  in this Lease,
Landlord  shall be  entitled,  to the extent  permitted  by  applicable  law, to
injunctive  relief  in  case  of  the  violation,  or  attempted  or  threatened
violation, of any of the covenants, agreements, conditions or provisions of this
Lease,  or  to  a  decree  compelling  performance  of  any  of  the  covenants,
agreements, conditions or provisions of this Lease, including but not limited to
the provisions of this Lease setting forth Tenant's  operating  covenant,  or to
any other remedy allowed to Landlord at law or in equity.

     10.4.  Waivers by Tenant To the extent  permitted by applicable law, Tenant
hereby  waives  and  surrenders  for  itself  and all those  claiming  under it,
including  creditors of all kinds, (i) any right or privilege which it or any of
them may have under any present or future  construction,  statute or rule of law
to redeem  the  Premises  or to have a  continuance  of this  Lease for the term
hereby  demised  after  termination  of Tenant's  right of occupancy by order or
judgment  of any court or by any legal  process  or writ,  or under the terms of
this  Lease or  after  the  termination  of the  term of this  Lease  as  herein
provided,  and (ii) the benefits of any present or future constitution,  statute
or rule of law which exempts  property  from  liability for debt or for distress
for rent.

     10.5.  Attorneys'  Fees In the event of an Event of  Default  and  Tenant's
failure to cure the Event of Default  within the applicable  cure period,  if an
action shall be brought by Landlord for the  enforcement  of any right set forth
herein in  connection  with,  and  subject  to, the  indemnification  provisions
contained  in  Section  6.10  hereof,  Tenant  shall  be  liable  for all of the
reasonable  out-of-pocket expenses incurred by Landlord in connection therewith,
including without limitation, attorneys' fees. However, should Tenant prevail in
an action for violation of quiet  enjoyment  under this Lease,  then and only in
such event  shall  Landlord  be liable  for  reasonable  out-of-pocket  expenses
incurred by Tenant in connection therewith, including attorneys' fees.

11.  MISCELLANEOUS.

     11.1.  Notices,  Demands  and  Other  Instruments  All  notices,   demands,
requests,  consents, approvals and other instruments required or permitted to be
given  pursuant  to the terms of this  Lease  shall be in  writing  and shall be
deemed  to have been  properly  given if (a) with  respect  to  Tenant,  sent by
registered or certified mail with a return receipt  requested,  postage prepaid,
or sent  by  facsimile,  nationally  recognized  overnight  express  carrier  or
delivered by hand, in each case  addressed to Tenant at its notice address first
above set  forth,  and (b) with  respect  to  Landlord,  sent by  registered  or
certified  mail  with a return  receipt  request,  postage  prepaid,  or sent by
facsimile,  nationally recognized overnight express courier or delivered by hand
in each case,  addressed  to the  Landlord at its address  first above set forth
along  with a copy to the Lender  (if  Tenant  shall  have been  given  Lender's
address).  Landlord  and  Tenant  shall each have the right from time to time to
specify as its  address  for  purposes  of this  Lease any other  address in the
United States of America upon giving fifteen (15) days written  notice  thereof,
similarly given, to the other party.  Notices shall be deemed  communicated upon
the earlier of receipt,  or  seventy-two  (72) hours from the time of mailing if
mailed as provided in this Section 11.1.

     11.2. Estoppel Certificates and Consents

          (a) Tenant  will,  from time to time,  upon not less than  twenty (20)
     days prior written request by Landlord or by Lender,  execute,  acknowledge
     and deliver a certificate certifying: (i) that this Lease is unmodified and
     in full effect (or setting forth any modifications along with the statement
     that this Lease as  modified  is in full effect ); (ii) that the Basic Rent
     and  Additional  Rent  payable  and the  dates to  which  the  Basic  Rent,
     Additional Rent and other sums payable hereunder have been paid; (iii) that
     to the best  knowledge  of Tenant,  Landlord  is not in any  default of the
     Lease;  (iv) the  commencement  and expiration  dates of the Lease; (v) the
     amount of any  security or other  deposits;  (vi) that either  Tenant is in
     possession of the Premises or who is in possession;  (vii) any  concessions
     or other  rights  that Tenant  (including  first  refusal,  option or other
     occupancy  claims) or Landlord may have;  and (viii) such other  matters as
     may reasonably be required by the requesting  party.  Any such  certificate
     may be relied upon by any Lender,  prospective  purchaser,  or  prospective
     Lender of the Premises.  Tenant further agrees to reasonably cooperate with
     Lender and its affiliates in the preparation of disclosure  documents which
     may be issued in connection with a secondary market transaction involving a
     sale or securitization of its loan.

          (b) From time to time during the term of this Lease,  Landlord expects
     to secure financing of its interest in the Premises by assigning Landlord's
     interest in this Lease and the sums payable hereunder.  In the event of any
     such assignment to the Lender,  Tenant will, upon not less than twenty (20)
     days prior written request by Landlord, execute, acknowledge and deliver to
     Landlord a consent clearly indicating (i) that Tenant is to make Basic Rent
     payments or portions thereof directly to Lender if required by Lender,  and
     (ii)  consent  to  such  assignment  addressed  to  such  Lender  in a form
     satisfactory to Lender; and Tenant will produce, at Tenant's expense,  such
     certificates  and other  documents  as may be  reasonably  requested by the
     Lender.  Tenant  acknowledges  that, by execution  hereof, it has agreed to
     make payments of Basic Rent or portions thereof directly to Lender, without
     further notice or direction if required by Lender, and Landlord consents to
     said payments by Tenant to Landlord.

     11.3.  Determination  of Fair Market  Rental Value Fair market rental value
for  purposes  of setting  Extended  Term Basic Rent shall be  determined  by an
appraisal,  which shall be performed by an appraiser selected by Landlord within
thirty (30) days after notice to Landlord of Tenant's exercise of the option for
the  applicable  Extended  Term  and paid  one  half by  Tenant  and one half by
Landlord.  Any appraiser  selected by Landlord  shall have  qualifications  that
include a minimum of five (5) years of experience in the appraisal of commercial
real estate in the State in which the Premises are located. Such appraiser shall
be  disinterested,  and shall be a member of a nationally  recognized  appraisal
association.  Further,  any such  appraiser  shall comply with any licensing law
then in effect for appraisers  authorized to perform general  appraisals  within
such State.  If there are then any existing  Federal laws governing  appraisers,
said appraiser shall be in compliance with the then applicable  Federal laws for
appraisers  performing  appraisals of commercial real estate.  In the event that
Tenant  disputes  the  appraised  fair  market  rental  value  determined  by an
appraiser  (hereinafter  the "First  Appraiser"),  who  performed  an  appraisal
pursuant to this Section 11.3, it shall so notify  Landlord  within fifteen (15)
days after receipt of such written determination by the First Appraiser, and the
disagreement shall be resolved as follows:

          (a) Within five (5) days after the service of such notice by Tenant to
     Landlord,   Tenant  shall   designate  a  second   appraiser  (the  "Second
     Appraiser"),  who  shall  appraise  the  fair  market  rental  value of the
     Premises. This Second Appraiser shall render its opinion of the fair market
     rental  value no later than thirty (30) days after the service of notice by
     Tenant stated above. In the event that the higher of the two appraised fair
     market  rental  values  rendered  herein is not more than ten percent (10%)
     greater than the lower of the two appraised fair market rental values, then
     the mean  between  the two  appraised  values  shall be utilized to fix the
     appraised fair market rental value.

          (b) In the event  that the  higher of the two  appraised  fair  rental
     values  is more than ten  percent  (10%)  higher  than the lower of the two
     appraised  fair market  rental  values,  then the First  Appraiser  and the
     Second  Appraiser  will meet  within  fifteen  (15) days after  receipt and
     acceptance of the Second Appraisal by Tenant,  to attempt to agree upon the
     appraised  fair market  rental  value.  If the First  Appraiser  and Second
     Appraiser  do not agree upon the  appraised  fair  rental  value after such
     meeting, then they shall appoint a third appraiser (the "Third Appraiser").

          (c) If the First and  Second  Appraiser  shall be unable to agree upon
     the  appointment  of the Third  Appraiser  within  fifteen  (15) days after
     receipt and  acceptance of the Second  Appraisal by Tenant,  then the Third
     Appraiser  shall be  selected  by the Tenant and  Landlord  themselves.  If
     Tenant and Landlord cannot agree on the third  appraiser,  within a further
     period of five (5) days,  then either,  on behalf of both, may apply to the
     United  States  District  Court for the  District of where the Premises are
     located,  for the selection of the Third  Appraiser.  The fees and costs of
     the Second Appraiser will be borne by Tenant, and the fees and costs of the
     Third Appraiser,  will be divided equally between Tenant and Landlord.  The
     cost of  application  to the United States  District Court shall be divided
     equally between Tenant and Landlord.  In the event of the failure,  refusal
     or inability of any appraiser to act, a new appraiser shall be appointed in
     its stead,  which  appointment shall be made in the same manner as provided
     herein;  e.g., if the Second  Appraiser must be replaced,  then Tenant will
     have the right to  designate  its  replacement.  In the event  that a Third
     Appraiser  is  selected  in the  manner  aforesaid,  it  shall  perform  an
     appraisal of the fair market  rental  value of the  Premises in  accordance
     with the terms of this  Section  11.3  within  thirty  (30) days  after its
     appointment.  In the event that the  appraised  fair  market  rental  value
     rendered by the Third  Appraiser  is higher than the lower  appraised  fair
     market rental value, but lower than the higher appraised fair market rental
     value,  as rendered by the First Appraiser and the Second  Appraiser,  then
     the  appraised  fair market  rental value  rendered by the Third  Appraiser
     shall become the appraised  value.  In the event that the  appraised  value
     rendered by the Third  Appraiser is lower than the lower appraised value or
     higher  than the higher  appraised  fair rental  value,  as rendered by the
     First  Appraiser  and Second  Appraiser,  than an Appraisal  Panel shall be
     convened.

          The  "Appraisal  Panel,"  consisting  of the  First,  Second and Third
     Appraiser,  shall convene  within  fifteen (15) days after  submission of a
     written  appraisal  to Landlord  and Tenant by the Third  Appraiser  (which
     Third  Appraisal  does not resolve the appraised fair market value question
     in accordance with this Section 11.3).  The purpose of the formation of the
     Appraisal  Panel will be to attempt to reach a decision  by two  members of
     the Appraisal  Panel on the appraised fair rental value. A decision  joined
     in by any  two of  the  appraisers  of the  Appraisal  Panel  shall  be the
     decision  of the  Appraisal  Panel,  and shall be binding  upon the parties
     hereto  following  written  notice  thereof,  which  notice shall state the
     appraised  fair  rental  value of the  Premises.  If no two  members of the
     Appraisal Panel can concur in a decision of the appraised fair rental value
     within fifteen (15) days after the submission of the appraisal by the Third
     Appraiser to the parties,  then the parties shall go to a neutral  mediator
     for mediation.  If the parties are unable to agree upon a fair rental value
     through  mediation,  the matter will be  submitted  to binding  arbitration
     under the rules of the American Arbitration Association.

          (d) Each  appraiser  shall be instructed to assume that the provisions
     of this Lease  (excluding the Basic Rent provision) would govern for a five
     (5) year term, that the Premises may be used for any lawful  commercial use
     (regardless of their actual use), and that, as set forth in the Recitals to
     this Lease,  the Premises being leased (and the fair market rent applicable
     thereto) includes the Land and the Improvements.

     11.4.  No Merger  There  shall be no merger of this Lease or the  leasehold
estate hereby created with the fee estate in the Premises or any part thereof by
reason of the same person  acquiring or holding,  directly or  indirectly,  this
Lease or the leasehold estate hereby created or any interest in this Lease or in
such  leasehold  estate as well as the fee estate in the Premises or any portion
thereof.

     11.5.  Surrender Upon the termination of this Lease, Tenant shall peaceably
surrender  the  Premises to Landlord  in the same  condition  in which they were
received from Landlord at the  commencement of this Lease,  except as altered as
permitted or required by this Lease and except for normal wear and tear.  Tenant
shall remove from the Premises  prior to or within a reasonable  time after such
termination  (not to exceed thirty (30) days) all its personal  property that is
capable of removal  without  causing  damage to the  Premises,  and, at Tenant's
expense,  shall at such  times of  removal,  repair  any  damage  caused by such
removal. Property not so removed shall become the property of Landlord. Landlord
may thereafter cause such property to be removed and disposition of and the cost
of repairing  any damage  caused by such removal  shall be borne by Tenant.  Any
holding  over  by  Tenant  of the  Premises  after  the  expiration  or  earlier
termination  of the  term of this  Lease  or any  extensions  thereof,  with the
consent of Landlord,  shall  operate and be construed as a tenancy from month to
month only, at one hundred ten (110%) of the Basic Rent reserved herein and upon
the same terms and  conditions as contained in this Lease.  Notwithstanding  the
foregoing,  any holding over without  Landlord's consent shall entitle Landlord,
in addition to collecting Basic Rent at a rate of one hundred ten percent (110%)
thereof, to exercise all rights and remedies provided by law or in equity.

     11.6.  Separability Each and every covenant and agreement contained in this
Lease is  separate  and  independent,  and the breach of any thereof by Landlord
other than the covenant of quiet  enjoyment in Section 1.4,  shall not discharge
or relieve  Tenant from any  obligation  hereunder.  If any term or provision of
this Lease or the application  thereof to any person or  circumstances or at any
time to any extent be invalid and unenforceable, the remainder of this Lease, or
the application of such term or provision to persons or  circumstances or at any
time other than  those to which it is  invalid  or  unenforceable,  shall not be
affected  thereby,  and each term and provision of this Lease shall be valid and
shall be enforced to the extent permitted by law.

     11.7.  Merger,  Consolidation  or Sale of  Assets  It shall be a  condition
precedent to the merger of Tenant into another corporation, to the consolidation
of  Tenant  with  one or  more  other  corporations  and to the  sale  or  other
disposition  of all or  substantially  all the  assets  of Tenant to one or more
other  entities that the surviving  entity or transferee of assets,  as the case
may be, shall  deliver to Landlord and to Lender an  acknowledged  instrument in
recordable  form assuming all  obligations,  covenants and  responsibilities  of
Tenant hereunder and under any instrument  executed by Tenant  consenting to the
assignment  of  Landlord's  interest in this Lease to the Lender as security for
indebtedness.  Tenant covenants that it will not merge or consolidate or sell or
otherwise  dispose  of all or  substantially  all of its assets  unless  such an
instrument  shall have been so  delivered  and  unless the entity  with which it
intends to merge,  consolidate,  sell or otherwise  transfer its assets to has a
credit rating at least equal to Tenant's then current credit rating.

     11.8. Savings Clause No provision contained in this Lease which purports to
obligate  Tenant to pay any amount of  interest  or any fees,  costs or expenses
which  are in  excess of the  maximum  permitted  by  applicable  law,  shall be
effective  to the extent that it calls for payment of any interest or other sums
in excess of such maximum.

     11.9.  Binding  Effect;  Limitation  of  Liability  All of  the  covenants,
conditions  and  obligations  contained  in this Lease shall be binding upon and
inure to the benefit of the  respective  successors  and assigns of Landlord and
Tenant to the same  extent as if each  successor  and  assign  were in each case
named,  except that a successor and assign of Landlord shall only be bound as to
covenants,    conditions   and   obligations   arising   after   the   transfer.
Notwithstanding  anything to the contrary  set forth in this Lease,  if Landlord
shall  fail to  perform  any  covenant,  term or  condition  of this  Lease upon
Landlord's part to be performed,  and if as a consequence of such default Tenant
shall recover a judgment against Landlord, such judgment shall be satisfied only
out of the proceeds of sale  received  upon  execution of such judgment and levy
thereon against the right,  title and interest of Landlord in the Premises,  and
Landlord shall not be personally  liable therefor,  provided  Landlord then owns
the Premises and such  limitation of liability  shall not apply if Landlord does
not then own the Premises.

     11.10.  Table of Contents  and  Headings The table of contents and headings
used in this Lease are for  convenience  of reference  only and shall not to any
extent have the effect of modifying, amending or changing the provisions of this
Lease.

     11.11.  Governing Law This Lease shall be governed by and interpreted under
the laws of the state in which the Premises is located,  but not including  such
state's conflict of laws rules.

     11.12. Certain Definitions

          (a) The term "Imposition" means:

               (i) All real estate taxes imposed by governmental  authorities of
          any kind;

               (ii)  All  other  taxes  and  any   payments  in  lieu   thereof,
          assessments  (including  assessments for benefits from public works or
          improvements,   whether  or  not  begun  or  completed  prior  to  the
          commencement  of the  term  of this  Lease  and  whether  or not to be
          completed within said term),  levies,  fees, water and sewer rents and
          charges, and all other governmental charges of every kind, general and
          special,  ordinary  and  extraordinary,  whether or not the same shall
          have been within the  express  contemplation  of the  parties  hereto,
          together with any interest and penalties thereon, which are, , imposed
          or levied  upon or  assessed  against:  (A) the  Premises  or any part
          thereof;  (B) any Basic Rent, any Additional  Rent reserved or payable
          hereunder;  and/or  (C) this  Lease or the  leasehold  estate  created
          hereby  or  which  arise  in  respect  of the  operation,  possession,
          occupancy or use of the  Premises,  to the extent  payable  during the
          Lease Term.

               (iii) Any gross receipts or similar taxes imposed or levied upon,
          assessed against or measured by the Basic Rent, Additional Rent or any
          other sums  payable by Tenant  hereunder  or levied  upon or  assessed
          against the Premises to the extent payable during the Lease Term;

               (iv) All  sales and use  taxes  which  may be levied or  assessed
          against  or  payable  by  Landlord   and  Tenant  on  account  of  the
          acquisition,  leasing or use of the  Premises or any  portion  thereof
          including  but not limited to any taxes  levied on the rental  payable
          hereunder to the extent payable during the Lease Term; and

               (v)  All  charges  for  water,  gas,  light,   heat,   telephone,
          electricity,  power and other  utilities and  communications  services
          rendered or used on or about the Premises during the Lease Term.

          (b) The term  "Landlord"  means the owner,  for the time being, of the
     rights of the lessor under this Lease, and its successors and assigns,  and
     upon any  assignment  or transfer of such rights,  except an  assignment or
     transfer  made as security for an  obligation,  the assignor or  transferor
     shall be relieved of all future  duties and  obligations  under this Lease,
     provided the assignee or transferee  assumes in writing in recordable  form
     all such  future  duties  and  obligations  of  Landlord  and such  written
     assumption is delivered to Tenant.

          (c) The term  "Lease"  means this Lease as amended and  modified  from
     time to time  together  with any  memorandum or short form of lease entered
     into for the purpose of recording.

          (d) The term "Lender"  means the holder of a mortgage or deed of trust
     ("Mortgage") or other security agreement encumbering Landlord's interest in
     the Premises and its successors and assigns.  The documents,  including but
     not limited to the Mortgage,  evidencing and securing any loan  encumbering
     Landlord's interest in the Premises are herein called "Loan Documents".

          (e) The term "Tenant's Certificate" means a written certificate signed
     by the Chairman of the Board, the Chief Executive  Officer,  the President,
     any Vice President or the Secretary of Tenant.

          (f) The term  "Termination  Date"  means the date on which  this Lease
     terminates in accordance with its terms,  and shall be any business day and
     not a Saturday, Sunday or legal holiday.

     11.13.  Exhibits  The  exhibits  to this Lease are hereby  incorporated  by
reference herein and made a part hereof. The Guaranty attached hereto as Exhibit
B is being executed and delivered on the  Commencement  Date, and such execution
and  delivery,  at  the  election  of  Landlord,  shall  be a  condition  to the
effectiveness of this Lease.

     11.14.  Integration This Lease, the exhibits hereto and the memorandum,  if
any,  hereof,  constitute the entire  agreement  between the parties hereto with
regard to the subject  matter  hereof,  and supersede any prior  understandings,
agreements or negotiations.  This Lease may not be amended or modified except by
a writing executed by Tenant and Landlord, with the consent of any Lender.

     11.15.  Lease  Memorandum  Each  of  Landlord  and  Tenant  shall  execute,
acknowledge  and  deliver  to the  other a  written  memorandum  of  this  Lease
("Memorandum")   to  be  recorded  in  the  appropriate   land  records  of  the
jurisdiction  in which the Premises is located,  in order to give public  notice
and protect the validity of this Lease. In the event of any discrepancy  between
the provisions of the recorded  Memorandum and the provisions of this Lease, the
provisions of this Lease shall prevail.

     11.16. Subordination to Landlord Financing

          (a)  (i)  Subject to the  provisions  of Section  11.16(a)(ii)  below,
          Tenant  agrees  that  this  Lease  shall at all times be  subject  and
          subordinate  to  the  lien  of any  Mortgage,  provided  the  original
          principal  amount  of the  Mortgage  does not  exceed  90% of the fair
          market  value  of the  Premises  at the  time  of  origination  of the
          Mortgage and Tenant  agrees,  upon demand,  without  cost,  to execute
          instruments  as may be  reasonably  required to further  effectuate or
          confirm such subordination.

               (ii)  Tenant's  agreement  to  subordinate  set forth in  Section
          11.16(a)(ii)  above is  conditioned  upon the  Lender  agreeing  that:
          Tenant's  tenancy and  Tenant's  rights  under this Lease shall not be
          disturbed,  terminated or otherwise adversely affected, nor shall this
          Lease be affected, by any default under any Mortgage, and in the event
          of a foreclosure or other enforcement of any Mortgage, or sale in lieu
          thereof,  the  purchaser  at such  foreclosure  sale shall be bound to
          Tenant for the Term of this  Lease,  the  rights of Tenant  under this
          Lease shall  expressly  survive,  and this Lease shall in all respects
          continue  in full force and effect so long as no Event of Default  has
          occurred and is  continuing;  provided,  however,  that such purchaser
          shall not:

                    (A) be liable for any prior act or omission of Landlord;

                    (B) be  subject  to any  defense,  counterclaim,  set-off or
               offset which Tenant may then have against Landlord;

                    (C) be bound by any  payment  of rent that  Tenant  may have
               made to Landlord  more than thirty (30) days before the date such
               rent was first due and payable  under this Lease with  respect to
               any period after the date of attornment  other than,  and only to
               the extent that, this Lease expressly required such a prepayment;

                    (D) be bound by any obligation to make any payment to Tenant
               which was  required  to be made prior to the time such  successor
               landlord succeeded to Landlord's interest;

                    (E) be bound by any  obligation  to  perform  any work or to
               make improvements to the Premises; or

          (b) Notwithstanding the provisions of Section 11.16(a),  the holder of
     any Mortgage to which this Lease is subject and subordinate  shall have the
     right,  at its sole option,  at any time,  to  subordinate  and subject the
     Mortgage,  in whole or in part,  to this Lease by  recording  a  unilateral
     declaration to such effect.

          (c) At any time prior to the expiration of the Term, Tenant agrees, at
     the election and upon demand of any owner of the Leased  Premises,  or of a
     Lender  who has  granted  non-disturbance  to Tenant  pursuant  to  Section
     11.16(a) above, to attorn,  from time to time, to any such owner or lender,
     upon the terms and conditions of this Lease, for the remainder of the Term.
     The  provisions of this Section  11.16(c) shall inure to the benefit of any
     such owner or Lender, shall apply notwithstanding that, as a matter of law,
     this Lease may terminate  upon the  foreclosure  of the Mortgage,  shall be
     self-operative  upon any such demand,  and no further  instrument  shall be
     required to give effect to said provisions.

          (d) Each of Tenant,  Landlord and Lender, however, upon written demand
     of the other, hereby agrees to execute,  from time to time,  instruments in
     confirmation of the foregoing provisions of Sections 11.16(a) and 11.16(c),
     in the form customarily  used by such Lender to the extent  consistent with
     the  requirements  of  such  Sections,  acknowledging  such  subordination,
     non-disturbance and attornment as are provided in such Sections and setting
     forth the terms and conditions of its tenancy.

     11.17 Waiver of Statutory Liens Landlord hereby forever waives and releases
any and all liens, security interests and rights of Landlord created, granted or
imposed by  statute,  law or  regulation  ("Statutory  Liens")  on, in or to any
tangible  personal  property of Tenant  located at any time at the Premises (the
"Tenant  Personalty").  Landlord  acknowledges and agrees that Tenant may convey
the Tenant  Personalty,  including  granting  security  interests  in the Tenant
Personalty,  from time to time free and clear of all Statutory  Liens.  Landlord
and Lender shall,  upon written demand of Tenant from time to time,  execute and
deliver to Tenant such  documents as may  reasonably be required to evidence and
confirm Landlord's waiver of the Statutory Liens.

     11.18  Interest  Rate Any amount due from  either  party to the other under
this Lease which is not paid within ten (10) days after written notice that such
amount was not received when due (including,  without limitation, amounts due as
reimbursement  for  costs  incurred  in  performing  obligations  of such  party
hereunder  upon its failure to so perform) shall bear interest at the prime rate
of Bank of America NA  ("Interest  Rate") from the date due until  paid,  unless
otherwise  specifically  provided herein, but the payment of such interest shall
not excuse or cure any default by Tenant under this Lease.


<PAGE>

IN WITNESS  WHEREOF,  the parties  hereto have executed this Lease as of the day
and year first above set forth.

LANDLORD:                               Verde Investments, Inc.,
                                        an Arizona corporation

                                        By:
                                        Title:



TENANT:                                 Ugly Duckling Car Sales and Finance
                                        Corporation, a Delaware corporation

                                        By:
                                        Title:

                                        By:
                                        Title: