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                                   COVER SHEET

                                       FOR

                                 LEASE AGREEMENT


                                     OWNER:

                    SKY HARBOR ASSOCIATES LIMITED PARTNERSHIP


                                     TENANT:

                        CET ENVIRONMENTAL SERVICES, INC.


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                                TABLE OF CONTENTS


BASIC LEASE PROVISIONS


GENERAL LEASE PROVISIONS:

             1.    Incorporation of Attachments; Definitions
             2.    Lease Grant
             3.    Term
             4.    Payment of Rent
             5.    Base Rent and Percentage Rent
             6.    Additional Rent; Escalation
             7.    Late Charge and Interest on Overdue Rent
             8.    Security Deposit
             9.    Use of Premises; Merchant's Association; Covenant's
            10.    Use of Common Areas; Parking
            11.    Rules and Regulations
            12.    Building Services and Utilities
            13.    Owner's Construction of Premises
            14.    Tenant's Alterations
            15.    Repairs and Maintenance
            16.    Signs and Advertising
            17.    Mechanics' Liens
            18.    Indemnification and Exculpation
            19.    Tenant's Liability insurance; Subrogation Rights
            20.    Subordination
            21.    Estoppel Certificates
            22.    Assignment and Subletting by Tenant
            23.    Holding Over
            24.    Acceptance of Surrender of Premises
            25.    Condemnation
            26.    Fire and Other Casualty
            27.    Events of Default
            28.    Owner's Remedies
            29.    Owner's Lien
            30.    Certain Rights Reserved by Owner
            31.    Intentionally Omitted
            32.    Brokers
            33.    Quiet Enjoyment
            34.    Notices
            35.    Force Majeure
            36.    Entire Agreement; Amendments; Waivers; Binding Effect
            37.    Severability
            38.    Joint and Several Liability of Tenant
            39.    Owner's Liability Limitation
            40.    Arbitration
            41.    Waiver of Trial by Jury
            42.    Applicable Law
            43.    Miscellaneous
            44.    Special Provisions
            45.    Acts to be Performed by Tenant Prior to Tenant's Construction
            46.    Personal Property Taxes
            47.    Transfer of Interest
            48.    Special Provisions

RIDERS

             I     Additional Rent; Escalation
            II     Building Services and Utilities

ADDENDUM NO. 1 TO LEASE AGREEMENT


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                                TABLE OF CONTENTS



EXHIBITS

        A-1      Description of Land
        A-2      Description of Building
        A-3      Proposed Floor Plan
        B        Rules and Regulations
        C        Work Letter
        D        Lease Commencement Date Memorandum



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                             BASIC LEASE PROVISIONS


LEASE DATE:    March 1, 1999

TENANT:        Name:  CET Environmental Services, Inc.
               Legal Form: Corporation
               Legal Situs: (State of Residence, Incorporation or Formation):
                            California
               Address:  7032 S. Revere Pkwy., Ste. 300
               Authorized Representative: Stephen H. Davis
               Telephone: 303-708-1360 x215

OWNER:         Name: Sky Harbor Associates Limited Partnership
               Legal Form: Limited Partnership
               Legal Situs: Michigan
               Address: 74 E. Long Lake Road, Bloomfield Hills, MI 48304-2379
               Authorized Representative: Cytryn/Tischler Properties, Inc.
               Telephone: (303) 777-2500

LAND:          The tract of land located in Arapahoe County and described in
               Exhibit A-1.

BUILDING:      The building commonly know as 7032 S. Revere Parkway
               Englewood, Colorado situated on the Land and described in or
               depicted on Exhibit A-1.

PREMISES:      Suite 300, being the Building shown on the Floor Plan,
               Exhibit A-3

STATE:         Colorado

TERM:          5 years 0 months (subject to adjustment pursuant to Paragraph 3).

ENDING DATE OF TERM (pursuant to paragraph 3): April 30, 2004
                                   Initials:      Owner
                                                         ---------
                                                  Tenant
                                                         ---------

ESTIMATED COMMENCEMENT DATE:  May 1, 1999

ACTUAL COMMENCEMENT DATE: (pursuant to paragraph 3):
                                                    ---------------
                                   Initials:      Owner
                                                         ---------
                                                  Tenant
                                                         ---------

BASE RENT: $ See Addendum No. 1 per year, payable in monthly installments of $
See Addendum No. 1 per month

OVERDUE INTEREST RATE: Ten (10)% per annum (but never to exceed the maximum rate
of interest permitted by applicable law to be charged Tenant for the use,
forbearance or detention of money).

LATE CHARGE: Five Percent (5%)

SECURITY DEPOSIT: $8,268.56

FIRST OPERATING COST YEAR: Means the twelve (12) month period commencing on the
first day of January, 1999.

INITIAL MONTHLY ESTIMATED ADDITIONAL RENT: $3.75 per square foot per year =
$3,758.44 per month for the Premises.

TENANT'S PROJECT PROPORTIONATE SHARE: The percentage which expresses the ratio
between the number of square feet leased and the rentable square feet within the
project (initially approximately 108,021) which for the purpose of the Lease
shall initially be conclusively deemed to be 11.13%. This percentage shall be
the initial Tenant's Project Proportionate Share. If and at such times as




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the Project is expanded or diminished, Owner shall equitably adjust Tenant's
Project Proportionate Share to reflect the increased or decreased rentable
square feet within the Project using the formula set forth above.

RENTABLE AREA: Project 108,021 square feet
                               Premises 12,027 square feet


     The rentable area and the usable area of the Premises may be different, but
     have been stipulated and agreed to by the parties, and the Rent and
     Tenant's Allocated Share shall not be changed even if it is determined that
     the Premises contains either a larger or a smaller area than indicated.

PERMITTED USE: General office & storage of files and materials/equipment

BROKER:   Frederick Ross Company & Re/max Commercial Services, Inc.


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                            GENERAL LEASE PROVISIONS


         This LEASE AGREEMENT ("Lease") is entered into as of the Lease Date
between Owner and Tenant. In consideration of the mutual covenants herein set
forth, and intending to be legally bound hereby, Owner and Tenant agree as
follows:

         1. Incorporation of Attachments: Definitions. This Lease consists of
the Cover Sheet, Table of Contents, Basic Lease Provisions, General Lease
Provisions, Riders, Addendums and Exhibits all of which are attached and
incorporated by reference for all purposes. The terms defined in the Basic Lease
Provisions, General Lease Provisions, Riders, Addendum and Exhibits shall be
deemed to have the meanings ascribed, wherever used herein. The Cover Sheet,
Table of Contents and headings of paragraphs, Riders, Addendum and Exhibits are
for convenience only and shall not be deemed to enlarge or diminish the meanings
of the provisions of this Lease.

         2. Lease Grant. Owner leases to Tenant and Tenant leases from Owner the
Premises for the Term and upon the provisions and subject to the conditions set
forth herein.

         3. Term.

            (a) The Commencement Date of the Term shall be the earlier of (i)
the date on which Tenant, with Owner's approval, takes possession of the
Premises for the Permitted Use, or (ii) on the thirtieth (30th) day following
the date on which Owner notifies Tenant that the Premises will be available for
occupancy, provided that Owner's work on the Premises is substantially completed
as specified in paragraph 13 by such date, and if not then substantially
completed, (iii) five (5) days following the date of substantial completion of
such work. Upon notification as provided in (ii) above, Owner and Tenant shall
schedule a preoccupancy inspection of the Premises at which time all mechanical
systems will be demonstrated to Tenant, a punchlist of outstanding items, if
any, shall be completed by Owner for conformance to construction plans, and a
letter of acceptance of the Premises shall be executed by Tenant, on Owner's
usual form. If the Commencement Date is other than the first day of a calendar
month, the Term shall be deemed extended by the period from (including) the
Commencement Date to the end of such month.

            (b) Notwithstanding said commencement date, if for any reason Owner
cannot deliver possession of the Premises to Tenant on said date, Owner shall
not be subject to any liability therefor, nor shall such failure affect the
validity of this Lease or the obligations of Tenant hereunder. However, in such
case Tenant shall not be obligated to pay rent until possession of the Premises
is tendered to Tenant. Upon Owner's request, the parties agree to execute in
writing an Addendum to certify the Commencement Date and expiration date hereof,
but this Lease shall not be affected in any manner if either party fails or
refuses to execute such Addendum.

         4. Payment of Rent. The term "Rent" means Base Rent, Additional Rent
and any charges, fees and other amounts due from Tenant to Owner hereunder,
Tenant agrees to pay all Rent to Owner, in lawful currency of the United States
of America, at Owner's Address or at such other location as Owner may specify by
notice to Tenant, without notice or demand (except as may be expressly provided
for herein with regard to a particular portion of Rent) and without setoff or
deduction. Tenant's obligation to pay any and all Rent owing by Tenant to Owner
under this Lease shall survive any expiration or termination of this Lease.

         5. Base Rent. Base Rent is payable in monthly installments in advance
on the first day of each calendar month during the Term, except that the monthly
installment of Base Rent due for the first full calendar month of the Term shall
be paid on the Lease Date. If the Commencement Date is other than the first day
of a calendar month, Tenant shall pay on the Commencement Date a pro rata
portion of the monthly installment of Base Rent for the month during which the
Commencement Date falls, such pro rata portion being equal to one-thirtieth of
the monthly installment times the number of days from (including) the
commencement Date to the end of such month.

         6. Additional Rent; Escalation. Additional Rent shall be calculated
and is payable as provided in Rider I.

         7. Late Charge and Interest on Overdue Rent. If any installment of Base
Rent or Additional Rent is not received within ten (10) days after the due date
thereof (without in any way implying Owner's consent to such late payment),
Tenant agrees to pay Owner the Late Charge, to the extent permitted by law, in
addition to said installment of Base Rent or Additional Rent, it being
understood that the Late Charge shall constitute liquidated damages and such
liquidated damages shall be solely for the purpose of reimbursing Owner for the
additional costs and expenses which Owner presently expects to incur in
connection with the handling and processing of late payments of Base Rent and/or
Additional Rent. Owner and Tenant agree that in the event of any such late
payment by Tenant, the damages resulting to Owner will be difficult to ascertain


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precisely, and that the Late Charges constitutes a reasonable and good faith
estimate by the parties of the extent of such damages. In addition to the Late
Charge, Tenant agrees to pay Owner interest, at the Overdue Interest Rate, on
any installment of Base Rent or Additional Rent not paid within thirty (30) days
after the due date thereof, which interest shall accrue from the due date to the
date of payment. Notwithstanding the foregoing, the Late Charge shall not apply
to any sum which may have been advanced by Owner to or for the benefit of Tenant
pursuant to any provision of this Lease, it being understood that such sum shall
bear interest, which Tenant agrees to pay Owner, at the Interest Rate specified
in such provision.

         8. Security Deposit. The Security Deposit and the first month's rent
shall be delivered by Tenant to Owner on the Lease Execution Date, and shall be
held by Owner, without liability for interest, as security for the performance
by Tenant of Tenant's covenants and obligations under this Lease, it being
expressly understood that the Security Deposit shall not be considered an
advance payment of Rent or a measure of Owner's damages in case of default by
Tenant. Upon the occurrence of any Event of Default, Owner, from time to time
and without prejudice to any other remedy, may use the Security Deposit to the
extent necessary to make good any arrearages of Rent and any other damage,
injury, expense or liability caused to Owner by such Event of Default. Following
any such application of the Security Deposit, Tenant shall pay Owner on demand
the amount so applied in order to restore the Security Deposit to its original
amount. If Tenant is not then in default hereunder, any remaining balance of the
Security Deposit shall be returned by Owner to Tenant within a reasonable period
of time after the termination of this Lease, and in any event within the time
period prescribed by State law, if any. If Owner transfers its interest in the
Premises during the Term, Owner may assign the Security Deposit (or so much
thereof as has not been used and not restored by Tenant) to the transferee and
thereafter Owner shall have no further liability to Tenant for the return of the
Security Deposit.

         9. Use of Premises. Tenant shall use the Premises only for the
Permitted Use. Tenant will not occupy or use the Premises, or permit any portion
of the Premises to be occupied or used, for any business or purpose other than
the Permitted Use or for any use or purpose which is unlawful in part or in
whole or deemed to be disreputable in any manner or extra hazardous on account
of fire or other casualty, nor permit anything to be done which will in any way
increase the rate of insurance on the Building or contents; and in the event
that, by reason of acts of Tenant or Tenant's servants, employees, agents,
contractors, licensees or invitees ("Tenant Parties"), there shall be any
increase in rate of insurance on the Building or contents, then such acts shall
be deemed to be an Event of Default hereunder and Tenant hereby agrees to pay to
Owner the amount of such increase on demand. Tenant will conduct its business
and control Tenant Parties in such a manner as not to create any nuisance, nor
interfere with, annoy or disturb other tenants or Owner in the ownership or
management of the Land or Building. Tenant will maintain the Premises in a
clean, healthful and safe condition and will comply with all laws, ordinances,
orders, rules and regulations (of federal, state, municipal and other agencies
or bodies having any jurisdiction thereof), and any restrictive covenants and
condominium association by-laws, rules and regulations of which Tenant has been
advised, with reference to the use, condition or occupancy of the Premises.

         10. Use of Common Areas: Parking.

             (a) Tenant shall have the right, nonexclusive and in common with
others, to use (i) any common hallways, entrances, lobbies, elevators,
stairways, common restroom facilities and similar common areas of the Building
for the purposes for which the same were designed and (ii) to use the exterior
paved driveways and walkways of the Land for vehicular and pedestrian access to
the Building. Tenant shall also have the right, non-exclusive and in common
with other tenants of the Building and Owner, to use the designated free
parking areas of the Land, if any, for the parking of automobiles and other
vehicles of Tenant and its employees and business visitors; incident to Tenant's
Permitted Use of the Premises; provided that Owner shall have the right to
restrict or limit Tenant's utilization of such parking areas in the event the
same become overburdened and in such case to allocate on a proportionate basis
or assign parking spaces among Tenant and the other tenants of the Building.
Owner shall have the right to establish other reasonable regulations,
applicable to all tenants, governing the use of or access to any interior or
exterior common areas, and such regulations; when communicated by written
notification from Owner to Tenant, shall be deemed incorporated by reference
into Exhibit B hereof.

             (b) Tenant covenants and agrees that all loading and unloading of
freight, merchandise, supplies, construction materials, trade fixtures and other
goods delivered to or from the Premises shall be done only in the loading dock
area of the Premises or the Building, as applicable. Under no circumstances
shall Tenant allow freight, merchandise, supplies, construction materials, trade
fixtures or other goods delivered to or from the Premises to be stored on,
accumulate on, or obstruct the entrances of the Building or the loading dock
area, roads, trash bay, sidewalks, driveways or parking areas within the
Project. A violation or violations of this sub-paragraph shall constitute a
material breach of this lease.


             (c) Tenant shall not perform or permit work to be done on the
loading dock, roads, sidewalks, driveways, parking areas, landscaped areas or
any other exterior areas within the Project. This



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includes, but is not limited to, assembly, construction, mechanical work,
painting, drying, layout, cleaning or repair of goods or materials.

     11. Rules and Regulations. Tenant will comply fully with all requirements
of the Rules and Regulations set forth in Exhibit B. Owner shall at all times
have the right to change the Rules and Regulations or to promulgate other Rules
and Regulations in such manner as Owner may deem advisable for safety, care, or
cleanliness of the Building, Land and Premises, and for preservation of good
order therein, all of which additional Rules and Regulations, changes and
amendments will be forwarded to Tenant in writing and shall be carried out and
observed by Tenant. Tenant shall further be responsible for compliance with
such Rules and Regulations by Tenant Parties. Nothing in this Lease shall be
construed to impose upon Owner any duty or obligation to enforce the rules and
Regulations or terms, covenants or conditions in any other lease, against any
other tenant, and Owner shall not be liable to Tenant for violation of the same
by any other tenant, its tenant parties, or other visitors.

     12. Building Services and Utilities. Building services and utilities shall
be provided by Owner as provided in Rider II.

     13. Owner's Construction of Premises.

          (a) Before the Commencement Date, Owner will substantially complete
the construction of the Building (if not substantially completed as of the Lease
Date) to the stage that the Building is operable for Tenant's purposes, which
shall be defined as occurring when the public entrances of the Building,
including ground floor lobbies and the public hallways of the floor(s)
containing the Premises (or portions of said lobbies and hallways necessary to
provide reasonable and safe access to the Premises) are substantially completed
and elevators necessary (if any) to provide service to the Premises, the heating
and air conditioning system (as required for the season and then prevailing
climate) and all other mechanical systems required for service to the Premises
are in regular operation.

          (b) The Premises shall be deemed to be substantially completed when
all work specified to be done in Exhibit C ("Tenant Finish") has been
substantially completed, except for (i) minor items of finishing and
construction of a nature which are not necessary to make the Premises reasonably
tenantable for the Permitted Use, and (ii) items not then completed because of
delay by Tenant in furnishing any drawings, plans or approvals (collectively,
"Plans") required by Exhibit C or because of approved requests made by Tenant
subsequent to delivery of Plans, for changes or additions therein.

          (c) Intentionally Omitted

          (d) Owner shall have the Premises substantially completed by the
Estimated Commencement Date, except for delays due to Force Majeure or Tenant's
failure to timely furnish the Plans, any of which shall extend the Estimated
Commencement Date for a period equal to the total of the duration of each such
delay. If the Premises is not substantially completed within three (3) months
following the Estimated Commencement Date, as the same may be extended in
accordance herewith, Tenant, as Tenant's sole right thereby arising, may
terminate this Lease by notice to Owner given thereafter, provided that the Term
shall not have commenced within thirty (30) days after the giving of such notice
by Tenant. This Lease shall terminate in such case upon expiration of thirty
(30) days after Owner's receipt of such notice without substantial completion
having occurred, whereupon Owner shall return all rent and the Security Deposit
paid by Tenant to Owner in advance, and all further obligations of the parties
hereunder shall end. It is understood that in the event of such termination by
Tenant, Owner shall have no responsibility to reimburse Tenant for any cost or
expense which Tenant may have directly or indirectly incurred with respect to
this Lease or the projected occupancy of the Premises, whether arranging for, or
termination of arrangements for, other space, or any Alterations to the
Premises or otherwise.

     14. Tenant's Alterations.

          (a) Tenant will not make or allow to be made any alterations,
additions or improvements ("Alterations") in or to the Premises without the
prior written consent of Owner. Alterations to the Premises shall be done by
Owner or by contractors approved in writing by Owner), at Tenant's sole cost and
expense. If Owner approves Tenant's proposed Alterations and agrees to permit
Tenant's contractor to do the work, Tenant's contractor must first furnish to
Owner insurance coverage against such risks and in such amounts as Owner may
require, including but not limited to Workman's Compensation Insurance (as
required under the Workman's Compensation Act of Colorado), issued by such
companies as Owner may approve. All Alterations permitted by Owner must
conform to all rules and regulations established from time to time by the
Underwriters' Association (or comparable organization) of the local area in
which the Land and Building are located, and conform to all requirements of all
governmental entities having jurisdiction. Tenant's contractor shall also
furnish all applicable building and occupancy permits required by law. Owner
shall have the right to have Tenant's contractor's work inspected by architects
and engineers, the cost of which shall be paid by



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Tenant to Owner on demand, with interest thereon at the Reimbursement Interest
Rate from the due date until paid. At any time Tenant either desires to, or is
required to make repairs or Alterations in accordance with this Lease, Owner
may, in addition to its other options, require Tenant at Tenant's sole cost and
expense, to obtain and provide to Owner a lien and completion bond (or such
other applicable bond as reasonably determined by Owner) in an amount equal to
one and one-half (1.5) times the estimated cost of such improvements to insure
Owner against risk and liability, including but not limited to liability for
mechanics and materialman's lien, and to insure the completion of the work.

          (b) All Alterations (whether temporary or permanent in character and
whether made with or without Owner's consent) made in or upon the Premises,
either by Owner or Tenant, shall be Owner's property upon installation and shall
remain on the Premises without compensation to Tenant unless Owner shall, by
written notice, elect to have the alterations so made be removed upon expiration
of the Term or termination of this Lease. Owner may give this notice of election
to Tenant at any time during the Term of the Lease, and for a period of three
(3) days after the expiration of the Term or the termination of this Lease. If
Owner shall make such election that Alterations so made shall be removed, then
Tenant agrees to cause same to be removed and to restore the Premises to their
former condition at Tenant's sole cost and expense, and should Tenant fail to
remove the same and restore the Premises, then Owner may cause same to be
removed and the Premises restored at Tenant's expense, and Tenant agrees to
reimburse Owner on demand for the cost of such removal and restoration, together
with any and all damages which Owner may suffer and sustain by reason of the
failure of Tenant to remove the same with interest thereon at the Reimbursement
Interest Rate from the due date until paid.

          (c) At the Ending Date of Term or other termination of this Lease, all
furniture, movable trade fixtures and personal property of Tenant may be removed
by Tenant if Tenant so elects and no Event of Default then exists, and shall be
so removed if required by Owner, or if not so removed shall, at the option of
Owner, become the property of Owner.

          (d) All Alterations, installations, removals and restoration shall be
accomplished in a good and workmanlike manner so as not to damage the Premises
or the Building, and in such manner as not to disturb other tenants in their use
and occupancy of the Building.

     15. Repairs and Maintenance.

          (a) Owner shall be responsible for repair and maintenance of the
foundation, floors (beneath the carpet or other floor covering), roof, the
exterior walls (excluding all glass windows, window frames and doors), and the
electrical service to the wall box (before any Tenant finish), the plumbing to
the wall stubs and common areas. Owner shall also be responsible for the
preventative maintenance contract for the roof mounted air conditioning and
heating apparatus. Tenant shall pay for these items as provided for in Rider I.

          (b) Tenant shall use, operate and maintain the Premises and its
systems, including all fixtures and equipment installed by Tenant, in such
manner as to keep the same in good order and condition, making all repairs and
replacements necessary to maintain such good order and condition all at Tenant's
expense, including but not limited to, plumbing from the wall stubs, electrical
service from the wall box, sewer, water and heating pipes from the exterior
wall, and all glass. Tenant shall be responsible for the maintenance (other than
preventative maintenance) and repair and/or replacement of any heating,
ventilating, air conditioning, plumbing, electrical or other systems and
fixtures installed solely to service the Premises, whether installed or paid for
by Owner or Tenant. The performance by Tenant of its obligations to maintain the
Premises shall be conducted only by contractors approved in writing by Owner, it
being understood that Tenant shall procure and maintain and shall cause
contractors engaged by or on behalf of Tenant to procure and maintain insurance
coverage against such risks and in such amounts as Owner may require, including
but not limited to Workmen's Compensation Insurance (as required under the
Workmen's Compensation Act of Colorado), issued by such companies as Owner may
approve, in connection with such maintenance. If Tenant fails to make any repair
within fifteen (15) days after the occurrence of the damage necessitating same,
or fails to cause other maintenance to be performed within fifteen (15) days
after notice from Owner of the need therefor, Owner at its option may make such
repair, or cause such other maintenance to be performed, and Tenant, shall on
demand therefor, pay Owner for the cost thereof, with interest thereon at the
Reimbursement Interest Rate from the due date until paid. At the Ending Date of
Term or other termination of this Lease, Tenant shall deliver up the Premises
including all Alterations (except as otherwise herein provided), in good repair
and condition, reasonable wear and tear excepted, and shall deliver to Owner all
keys to the Premises.

          (c) Tenant shall give Owner prompt written notice of any damage to or
defects in, the Premises and in the plumbing, electrical, heating, air
conditioning and other systems and apparatus located in the Premises. The
obligation to repair such damages or defects shall be as stated in this
paragraph 15. In no event shall Owner be obligated to repair any damage to the
Premises or the Building caused by any act,



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omission or negligence of Tenant or Tenant Parties. Tenant shall reimburse Owner
for all costs and expenses of repairing and replacing all damage to the Premises
and Building and to fixtures and equipment caused by Tenant or Tenant Parties
or as the result of all or any of them moving in or out of Building or by
installation or removal of furniture, fixtures or other property. Such costs and
expenses shall be paid by Tenant to Owner on demand, with interest thereon at
the Reimbursement Interest Rate from the due date until paid.

          (d) Owner shall not be liable by reason of any injury to or
interference with Tenant's business arising from the making of any repairs or
alterations in or to the Premises or the Building or to any appurtenances or
equipment therein. There shall be no abatement of Rent because of such repairs
or alterations, or because of any delay by Owner in making the same.

     16. Signs and Advertising. No sign, advertisement or notice shall be
inscribed, painted, affixed or otherwise displayed on any part of the outside or
the inside of the Building except on the directories and doors of offices, and
then only in such place, number, size, color and style as is approved by Owner
and provided by Owner at Tenant's cost and expense, if any such sign,
advertisement or notice is nevertheless exhibited by Tenant, Owner shall have
the right to remove same and Tenant shall be liable for any and all expenses
incurred by Owner in said removal, which shall be payable by Tenant to Owner on
demand, with interest thereon at the Reimbursement Interest Rate from the due
date until paid. Owner shall have the right to prohibit (by injunction or
otherwise) any advertisement of Tenant which in Owner's opinion tends to impair
the reputation of the Building or its desirability. Upon written notice from
Owner, Tenant shall immediately refrain from and discontinue any such
advertisement.

     17. Mechanic's Liens.

          (a) Tenant will not suffer or permit any mechanic's, laborer's or
materialman's lien to be filed against the Land, Building, or Premises, or any
part thereof, by reason of work, labor services or materials supplied or claimed
to have been supplied to Tenant; and if any such lien shall at any time be
filed, Tenant, within ten (10) days after notice of the filing thereof, shall
cause it to be discharged of record by payment, deposit, bond, order of a court
of competent jurisdiction or as otherwise provided by law. If Tenant shall fail
to cause such lien to be discharged within the period aforesaid, then in
addition to any other right or remedy, Owner may, but shall not be obligated to,
discharge it either by paying the amount claimed to be due or by procuring the
discharge of such lien by deposit or by bonding or other proceedings. Owner may
at its option and without waiving any of its rights set forth in the immediately
preceding sentence, permit Tenant to contest validity of any such lien or claim,
provided that in such circumstances the Tenant shall at its expense defend
itself and Owner against the same and shall pay and satisfy any such adverse
judgment that may be rendered thereon before the enforcement thereof against the
Owner, the Premises or the building, provided further that Owner may at any time
require the Tenant to post a bond with an entity satisfactory to Owner in an
amount on and one-half (1.5) times the amount of the lien or to deposit with the
Court exercising jurisdiction over such claim such amount as either the Court or
statute may determine to be sufficient as a release and discharge of the lien.
If Tenant shall not immediately make such payment upon the request of Owner,
Owner may make said payment in the amount so paid together with interest thereon
from the date of payment and all legal costs and charges, including attorney
fees incurred by Owner in connection with said payment shall be deemed
Additional Rent and shall be payable on the next date on which a base rental
installment is due. Any amount so paid by Owner, plus all of Owner's costs and
expenses associated therewith, shall be paid by Tenant to Owner on demand, with
interest thereon at the Reimbursement Interest Rate from the due date until
paid.

          (b) Nothing in this Lease, nor any approval by Owner of any of
Tenant's Alterations or contractors, shall be deemed or construed in any way
as constituting consent by Owner for the making of any alterations or additions
by Tenant within the meaning of any State law, or constituting a request by
Owner, expressed or implied, to any contractor, subcontractor, laborer or
materialman for the performance of any labor or the furnishing of any materials
for the use or benefit of Owner.

     18. Indemnification and Exculpation.

          (a) Tenant indemnifies and agrees to hold harmless Owner against and
from any and all claims arising from Tenant's use of the Premises, or from the
conduct of Tenant's business or from any activity, work or things done,
permitted or suffered by Tenant in or about the Premises, Land, Building or
elsewhere, and Tenant further indemnifies and agrees to hold harmless Owner
against and from any and all claims arising from any breach or default in the
performance of any obligation on Tenant's part to be performed under the terms
of this Lease, or arising from any negligence of Tenant or Tenant Parties, and
from and against all costs, attorney's fees, expenses and liabilities incurred
in the defense of any such claims or any action or proceeding brought thereon,
and if any action or proceeding is brought against Owner by reason of any such
claim, Tenant upon notice from Owner shall defend the same at Tenant's expense
by counsel satisfactory to Owner.

          (b) Owner shall not be liable or responsible for any loss or damage to
any property or death or injury to any person occasioned by theft, fire, act of
God or public enemy, criminal conduct of third



                                       5

<PAGE>   11

parties, injunction, riot, strike, insurrection, war, court order, requisition
or other act of governmental body or authority, acts of other tenants of the
Building, or any other matter beyond the control of Owner, or for any injury or
damage or inconvenience which may arise through repair or alteration of any part
of the Building, failure to make repairs, or from any cause whatever except
Owner's gross negligence or willful wrong.

     19. Tenant's Liability Insurance; Subrogation Rights.

          (a) Tenant shall obtain and keep in effect throughout the Term, an
insurance policy or policies, issued by insurance carriers reasonably
satisfactory to Owner, providing general public liability insurance against
claims for personal injury (including death), property damage, or otherwise,
arising out of or in any way connected with the Premises or this Lease, in
amounts of not less than a combined single limit of $1,000,000.00 or such
higher amounts as Owner shall reasonably require from time to time. Such
insurance shall not be subject to cancellation, reduction of coverage or
other modification without at least thirty (30) days prior notice to all
insureds, and such insurance shall name Owner, first mortgagee and Tenant as
insured and if requested by Owner shall also name as additional insureds any
lessor and any other mortgagee.

          (b) Prior to the commencement of the Term, Tenant shall provide
Owner with original certificates or duplicate originals of the policy or
policies of insurance referred to in subparagraph (a) with evidence that
premiums have been paid in full for the respective policy periods. Tenant also
shall furnish to Owner throughout the Term, replacement certificates or renewal
policies, together with evidence of like premium payment at least ten (10) days
prior to the respective expiration dates of the then current policy or policies.

          (c) Each party hereto hereby waives any cause of action it might have
against the other party on account of any loss or damage that is insured against
under any insurance policy (to the extent that such loss or damage is
recoverable under such insurance policy and only to the extent of and with
respect to any loss or damage occurring during such time as the policy or
policies of insurance covering said loss shall contain a clause or endorsement
to the effect that this waiver shall not adversely affect or impair said
insurance or prejudice the right of the insured to recover thereunder) that
covers the Building, the Land, the Premises, Owner's or Tenant's fixtures,
personal property, leasehold improvements or business and which names Owner or
Tenant, as the case may be, as a party insured. Each party hereto agrees that it
will request its insurance carrier to endorse all applicable policies waiving
the carrier's rights of recovery under subrogation or otherwise against the
other party.

          (d) Tenant shall obtain and keep in effect throughout the Term of the
Lease an insurance policy or policies with coverage known as business
interruption or business continuation insurance. This policy shall name Owner
as an additional insured. Such insurance shall not be subject to cancellation,
reduction of coverage or other modification without at least thirty (30) days
prior written notice to Owner.

          (e) Any insurance required by Tenant hereunder shall be in companies
rated A+, AAA or better in "Best's Insurance Guide". If in the reasonable
opinion of Owner, the amount of liability insurance required hereunder or the
coverage under such policy is not adequate, then not more frequently than twice
during this Lease and any extension or renewal term of this Lease, if any,
Tenant shall reasonably increase said insurance coverage, either in an amount or
breadth of insurance as required by Owner provided however that in no event
shall the amount of the liability insurance increase by more than fifty per cent
(50%) of the amount of the insurance during the preceding term of this Lease.

     20. Subordination.

          (a) This Lease and all rights of Tenant hereunder are subject and
subordinate to any first deed of trust, first mortgage or other first instrument
of security (a "Mortgage"), and at Owner's option, this Lease and all rights of
Tenant hereunder are subject and subordinate to any junior deed of trust, junior
mortgage or other junior instrument of security, as well as to any ground Lease
or primary Lease (an "Underlying Lease") that now or hereafter covers all or any
part of the Building, the Land, or any interest of Owner therein, and to any and
all advances made on the security thereof, and to any and all increases,
renewals, modifications, consolidations, replacements and extensions of any
Mortgage or Underlying Lease. This provision is self-operative and no further
instrument shall be required to effect such subordination of this Lease. Tenant
shall, however, upon demand at any time or times execute, acknowledge and
deliver to Owner or to the holder ("Holder") of any Mortgage, or lessor
("Lessor") in any Underlying Lease, any and all instruments and certificates
that in the judgment of Owner, Holder or Lessor may be necessary or desirable to
confirm or evidence such subordination. Not in limitation of the generality of
the foregoing, Tenant agrees that any Holder shall have the right at any time to
subordinate any Mortgage to this Lease on such terms and subject to such
conditions as such Holder may deem appropriate in its discretion. Tenant further
covenants and agrees upon demand by Holder or Lessor at any time, before or
after the institution of any proceedings for foreclosure or sale pursuant to any
Mortgage, or termination of any Underlying Lease, to attorn to the purchaser
upon such foreclosure or sale or to Lessor upon such termination, and to
recognize such purchaser



                                       6

<PAGE>   12

or Lessor as Owner under this Lease. The agreement of Tenant to attorn contained
in the immediately preceding sentence shall survive any such foreclosure, sale
or termination. Tenant, upon demand at any time or times, before or after any
such foreclosure, sale or termination, shall execute, acknowledge and deliver to
Holder or Lessor any and all instruments that in the judgment of Holder or
Lessor may be necessary or desirable to confirm or evidence such attornment and
Tenant hereby irrevocably authorizes Holder or Lessor to execute, acknowledge
and deliver any such instruments on Tenant's behalf.

          (b) If Owner shall be or is alleged to be in default of any of its
obligations owing to Tenant under this Lease, Tenant agrees to give to Holder
and Lessor a copy of any written notice (by registered or certified mail or by
delivery service) of any such default which Tenant shall have served upon Owner,
provided that prior thereto Tenant has been notified in writing (by way of
notice of assignment of rents and/or leases, or otherwise) of the name and
addresses of any such Holder and Lessor. Tenant shall not be entitled to
exercise any right or remedy as may exist because of any default by Owner
without having given such notice to Holder and Lessor; and Tenant further agrees
that if Owner shall fail to cure such default; (i) Holder or Lessor shall have
an additional thirty (30) days (measured from the later of the date on which the
default should have been cured by Owner, or the date of Holder's or Lessor's
receipt of such notice from Tenant), provided that if such default could not be
cured within such thirty (30) day period and Holder or Lessor is diligently
pursuing the remedies necessary to effectuate the cure (including but not
limited to foreclosure or termination proceedings, if appropriate) such
longer period as may be necessary, within which to cure such default; and (ii)
Tenant shall not exercise any right or remedy as may exist or arise because of
Owner's default, as may be expressly provided for herein or available to
Tenant as a matter of law, if the Holder or Lessor either has cured the default
within such thirty (30) day period, or as the case may be, has initiated the
cure of same within such thirty (30) day period and is diligently pursuing the
cure of same as aforesaid.

          (c) If any Holder or Lessor, or a successor of either, succeeds to the
interest of Owner in the Land or Building, or acquires the right to possession
of the Land or Building, such person shall not be (i) liable for any act or
omission of Owner under this Lease; (ii) liable for the performance of Owner's
covenants hereunder which arise and accrue prior to such person's succeeding to
the interest of Owner hereunder or acquiring such right to possession; (iii)
subject to any offsets or defenses which Tenant may have at any time against
Owner; (iv) bound by any rent which Tenant may have prepaid for more than one
month; (v) in the event the unexpired term of this Lease exceeds three years at
the time of such succession or acquisition of the right to possession, bound by
any amendment or modification hereof relating to the reduction of rent,
shortening of term, or effecting a cancellation or surrender hereof and made
without the consent of such person; or (vi) liable for the performance of any
covenant of Owner under this Lease which is capable of performance only by the
original Owner.

     21. Estoppel Certificates. Tenant agrees, from time to time as may be
requested by Owner, Holder or Lessor, within five (5) days after such request,
to execute, acknowledge and deliver to such person(s) as may be specified in the
request, a certificate confirming and containing such factual certifications
and representations with respect to Tenant and this Lease, as may be deemed
appropriate by Owner, Holder or Lessor. Not in limitation of the foregoing, such
certificate shall confirm that this Lease is in full force end effect and has
not been amended, modified or superseded, that Owner has satisfactorily
completed all construction work required by this Lease (subject to completion of
punchlist items), that Tenant has accepted the Premises and is then in
possession thereof, that Tenant has no defense, offsets or counterclaims
hereunder or otherwise against Owner with respect to this Lease or the Premises,
that Owner is not in default hereunder, that Tenant has no knowledge of any
pledge or assignment of this Lease or rentals hereunder (other than to Holder),
and that Rent is accruing under this Lease but has not been paid more than one
month in advance (and specifying the date to which Rent has been paid). If any
of the foregoing shall not be the case, Tenant shall specify in reasonable
detail the extent and nature of the deviation therefrom.

     22. Assignment and Subletting by Tenant.

          (a) Without the prior written consent of Owner, Tenant shall not (i)
assign or in any manner transfer this Lease or any estate or interest therein,
or (ii) permit any assignment of this Lease or any estate or interest therein by
operation of law, or (iii) sublet the Premises or any part thereof, or (iv)
grant any license, concession or other right of occupancy of any portion of the
Premises, or (v) permit the use of the Premises by any parties other than
Tenant, its agents and employees, and any such acts without Owner's prior
written consent shall be void and of no effect. Consent by Owner to one or more
assignments or sublettings shall not operate as a consent to, or a waiver of
Owner's rights with respect to, any subsequent assignments and sublettings.
Notwithstanding any assignment or subletting, Tenant and any guarantor of
Tenant's obligations under this Lease shall at all times remain fully
responsible and liable for the payment of the Rent and for compliance with
all of Tenant's other obligations under this Lease. If an Event of Default
should occur while the Premises or any part thereof is then assigned or sublet,
Owner, in addition to any other remedies herein provided or provided by law, may
at its option collect directly from such assignee or sublessee all payments
becoming due to Tenant under such assignment or sublease and apply such
payments against any sums due to Owner by Tenant hereunder, and Tenant hereby
authorizes and directs any such assignee or



                                       7
<PAGE>   13


sublessee to make such payments directly to Owner upon receipt of notice from
Owner. No direct collection by Owner from any such assignee or sublessee
(regardless of whether or not such assignee or sublessee shall be deemed to be
void and of no effect as stated in the first sentence of this (a)) shall be
construed to constitute a novation or a release of Tenant or any guarantor of
Tenant from the further performance of its obligations hereunder. Receipt by
Owner of payments from any assignee, sublessee or occupant of the Premises shall
not be deemed a waiver of the covenants in this Lease against assignment and
subletting, or a release of Tenant under this Lease. The receipt by Owner from
any such assignee or sublessee obligated to make payments shall be a full and
complete release, discharge, and acquittance to such assignee or sublessee to
the extent of any such amount so paid to Owner. Owner is authorized and
empowered on behalf of Tenant to endorse the name of Tenant upon any check,
draft, or other instrument payable to Tenant evidencing payment under an
assignment or sublease to Tenant, and to receive and apply the proceeds thereof
in accordance with the terms hereof.

     (b) Tenant shall not mortgage, pledge or otherwise encumber this Lease or
any estate or interest therein or in the Premises.

     (c) If Tenant requests Owner's consent to an assignment of the Lease or
subletting of all or a part of the Premises, it shall submit to Owner, in
writing, the name of the proposed assignee or subtenant and the nature and
character of the business of the proposed assignee or subtenant, the term, use,
rental rate and other particulars of the proposed subletting or assignment,
including without limitation, evidence satisfactory to Owner that the proposed
subtenant or assignee is financially responsible and will immediately occupy and
thereafter use the Premises (or any sublet portion thereof) for the remainder of
the Term (or for the entire term of the sublease, if shorter). In addition,
Tenant shall submit to Owner $300.00 which shall be deemed to be Owner's expense
in reviewing the materials referred to in the immediately preceding sentence.
Owner shall be under no obligation to review any of the materials until such
time as Owner receives said $300.00. This review is made solely for the purpose
of determining suitability from Owner's point of view of the proposed subtenant
and subtenancy or proposed assignee and assignment. Owner shall have the option
(to be exercised within thirty (30) days from receipt of Tenant's written
request) to cancel this Lease (or to cancel this Lease with respect to the
applicable portion of the Premises, as to a partial subletting) as of the
commencement date provided for in the subletting or assignment. If Owner elects
to cancel this Lease as dated, then the Term, and the tenancy and occupancy of
the Premises by Tenant under this Lease, shall terminate with respect to that
portion of the Premises proposed to be so assigned or sublet, as if the
cancellation date were the Ending Date of Term, and Tenant shall pay to Owner
all costs or charges which are the responsibility of Tenant hereunder with
respect to that portion of the Premises, and Tenant shall, at its own cost and
expense, discharge in full any outstanding commission obligation of Owner with
respect to this Lease, or any part hereof so cancelled, and/or reimburse Owner
for the portion of any such commission paid by Owner relating to the portion of
the Term which is cancelled. Thereafter Owner may lease the Premises to any
person, including the prospective subtenant or assignee, without liability to
Tenant. If Owner does not thus cancel this Lease, the terms and provisions of
subparagraph (a) hereof will apply.

     (d) If Owner consents to any subletting or assignment by Tenant as above
provided, and subsequently any payments received by Tenant under any such
sublease are in excess of the Rent payable by Tenant under this Lease, or any
additional consideration is paid to Tenant by the assignee under any such
assignment, then Owner may, at its option, either (i) declare such excess
payments under such sublease or such additional consideration for such
assignment to be due and payable by Tenant to Owner as Additional Rent
hereunder, or (ii) elect to cancel this Lease as provided in subparagraph (c)
hereof.

     (e) All of the foregoing notwithstanding, Tenant shall not enter into any
lease, sublease, license, concession or other agreement for the use, occupancy
or utilization of the Premises or any portion thereof, which provides for a
rental or other payment for such use, occupancy or utilization based in whole or
in part on the income or profits derived by any persons from the property
leased, occupied or utilized (other than an amount based on a fixed percentage
or percentages of receipts or sales). Any such purported lease, sublease,
license, concession or other agreement shall be absolutely void and ineffective
as a conveyance of any right or interest in the possession, use or occupancy of
any part of the Premises.

     23. Holding Over. Tenant shall, at the expiration or earlier termination of
the Term, promptly quit and surrender the Premises in good order and condition
and in conformity with the applicable provisions of this Lease, excepting only
reasonable wear and tear and damage by fire or other insured casualty. Tenant
shall have no right to hold over beyond the expiration or earlier termination of
the Term and in the event Tenant shall fail to deliver possession of the
Premises as herein provided, such occupancy shall not be construed to effect or
constitute other than a tenancy at sufferance, at a daily rental equal to (a)
the greater of (i) twice the Rent (calculated on a per diem basis) in effect for
the last day of the Term, or (ii) the then current market rental (calculated on
a per diem basis) for the Premises, plus (b) all damages, costs and expenses
sustained by Owner by reason of Tenant's holding over. Without limiting any
rights and remedies of Owner as a result of the holding over by Tenant, and
without creating any right in Tenant to continue in possession of the Premises,
all of Tenant's obligations provided for in this Lease with respect to the use,
occupancy and



                                        8

<PAGE>   14

maintenance of the Premises shall continue during such hold over period. The
inclusion of this paragraph shall not be construed as Owner's consent for Tenant
to hold over.

         24.      Acceptance of Surrender of Premises. During the Term, tenant
shall continuously occupy the Premises and shall not permit the Premises to
become vacant or abandoned. No act or thing done by Owner or its agents during
the Term shall be deemed an acceptance of a surrender of the Premises, and no
agreement to accept a surrender of the Premises shall be valid unless the same
is made in writing and signed by Owner.

         25.      Condemnation.

                  (a) If any taking by condemnation, or sale in lieu thereof,
pursuant to an exercise of a power of eminent domain ("Condemnation") occurs
with respect to the Building or Land or any portion of either, which would
leave the remainder of the Building or Land unsuitable for use comparable
(economically or otherwise) to its use prior to the Condemnation, in Owner's
reasonable judgment, then Owner may terminate this Lease.

                  (b) If any Condemnation occurs with respect to the entire
Premises, or more than 25% thereof (by floor area), or such portion of the
Premises as renders the remainder thereof unsuitable for use comparable
(economically or otherwise) to its use prior to the Condemnation, in Owner's
reasonable judgment, then Owner or Tenant may terminate this Lease.

                  (c) If Owner determines that the compensation awarded for
Condemnation, available for restoration of the Land, Building or Premises will
not be sufficient to pay the cost of restoration, or if such award is required
to be applied on account of any Mortgage or Underlying Lease, or if Owner
determines that the length of the Term remaining after restoration would make
restoration impractical (whether for economic or other reasons), Owner may
terminate this Lease.

                  (d) Any termination of this Lease pursuant to this paragraph
shall be effective upon the earlier of the date title to or possession of the
condemned real estate vests in the condemnor. All Rent shall be apportioned
equitably and paid in full by Tenant to Owner to that date. In the event of a
Condemnation which does not effect a termination of this Lease but does deprive
Tenant of the use of a portion of the Premises, there shall be an equitable
reduction of the Rent, taking into account the period for which and the extent
to which such portion of the Premises is not reasonably usable for the
Permitted Use.

                  (e) All compensation awarded for any Condemnation of the
Building or Land or any portion of either shall be the property of Owner, and
Tenant shall have no claim thereto, the same being expressly waived by Tenant.
Tenant assigns to Owner all rights to compensation for damages, if any,
sustained by Tenant on any Condemnation, except for loss of business, or for
Condemnation of equipment, fixtures and/or improvements which Tenant, on
expiration of the Term, is entitled to remove, if and to the extent a separate
award is made by the condemner to Tenant for such items.

                  (f) If this Lease is not terminated as provided above, Owner
shall make such repairs, if any, as are reasonably necessary to restore the
part of the Premises not condemned to tenantable condition. Owner, in so doing,
shall not be required to expend more than the net amount Owner reasonably
expects to be available for restoration of the Premises, unless Tenant agrees
to pay the amount of the excess expenditure and, before commencement of the
restoration, provides Owner with reasonable security for such payment by
Tenant. Restoration, if any, shall begin promptly after Tenant vacates the part
of the Premises condemned and shall be completed with reasonable diligence,
subject, however, to delays incident to Force Majeure.

         26.      Fire and Other Casualty.

                  (a) Except as provided below, in case of damage to the
Premises or other portions of the Building by fire or other insured casualty,
Owner shall repair the damage. Such repair work shall be commenced promptly
following notice of the damage and completed with reasonable diligence, taking
into account the time required for Owner to effect a settlement with and procure
insurance proceeds from the insurer, except for delays due to Force Majeure.

                  (b) If the damage is of a nature or extent that, in Owner's
reasonable judgment, the repair and restoration work would require more than
180 days to complete after commencement of work, assuming normal work crews
not engaged in overtime, Owner shall so notify Tenant within a reasonable time
after such determination, and either party, for a period of fifteen (15) days
after such notice, shall have the right to terminate this Lease by notice to
the other, as of the date, not later than thirty (30) days thereafter,
specified in such termination notice. Further, if Owner reasonably determines
that the Building is damaged to such extent as to make repair thereof
unfeasible or that the length of the Term remaining after restoration would
make restoration impractical (in either case, whether for economic or other
reasons), within a reasonable time after such determination Owner shall have
the right to terminate this Lease by notice to Tenant, as of the date,



                                       9

<PAGE>   15
not later than thirty (30) days thereafter, specified in such termination
notice.

                  (c) If the insurance proceeds received or to be received by
Owner (excluding any rental interruption insurance proceeds) would not be
sufficient to pay for repairing the damage or are required to be applied on
account of any Mortgage or Underlying Lease, or if the nature of loss is not
covered by Owner's hazard insurance coverage, Owner may elect either to (i)
repair the damage as above provided notwithstanding such fact, or (ii)
terminate this Lease, by giving Tenant within thirty (30) days after Owner's
knowledge of the damage and determination of availability or sufficiency of
insurance proceeds, notice of Owner's election; and if the election is to
terminate, specifying the termination date, which termination date shall be not
earlier than fifteen (15) days nor later than thirty (30) days thereafter.

                  (d) All injury or damage to the Premises or the Building
caused by Tenant or Tenant Parties shall be repaired at Tenant's sole cost and
expense. Owner shall have the right to make such repairs, and any cost or
expense so incurred by Owner shall be paid by Tenant to Owner on demand, with
interest thereon at the Reimbursement Interest Rate from the due date until
paid.

                  (e) Owner shall not be obligated to repair any Alterations
which Tenant may have installed (whether or not Tenant has the right or the
obligation to remove the same or is required to leave the same on the Premises
as of the Ending Date of Term or earlier termination of this Lease) unless
Tenant, in a manner satisfactory to Owner, assures payment in full of all
costs which may be incurred by Owner in connection therewith. Owner shall not be
required to insure any Alterations to the Premises in excess of Building
standard tenant improvements, or any fixtures, equipment or other property of
Tenant. Tenant shall have the right, at its sole expense, to insure the value
of its leasehold improvements, fixtures, equipment or other property located in
the Premises, for the purpose of providing funds to Owner to repair the
Premises. Except as otherwise provided in this Lease, any insurance which may
be carried by Owner or Tenant against loss or damage to the Building or to the
Premises shall be for the sole benefit of the party carrying such insurance and
under its sole control.

                  (f) If this Lease is terminated pursuant to this paragraph,
all Rent shall be apportioned equitably and paid in full by Tenant to Owner to
the date of termination. This provision shall not relieve Tenant of liability to
Owner for damages (including damages arising due to early termination of this
Lease) arising out of the negligence or other tortious conduct of Tenant or
Tenant Parties.

                  (g) In the event of a fire or other casualty damage not
arising out of the negligence or other tortious conduct of Tenant or Tenant
Parties, which does not result in termination of this Lease pursuant to this
paragraph but does deprive Tenant of the use of a portion of the Premises,
there shall be an equitable reduction of the Rent, taking into account the
period for which and the extent to which such portion of the Premises is not
reasonably usable for the Permitted Use.

         27.      Events of Default. In addition to any Event of Default
specified elsewhere in this Lease, each of the following events shall be deemed
to be an "Event of Default" by Tenant under this Lease:

                  (a) Failure by Tenant to pay when due any installment of Rent
payable by Tenant hereunder or any rental or other sum under any other lease
now or hereafter executed by Tenant in connection with space in the Building).

                  (b) Failure by Tenant to comply with or observe any other
provision of this Lease (or any other Lease now or hereafter executed by Tenant
in connection with space in the Building) after ten (10) days notice of such
failure.

                  (c) Vacation or abandonment by Tenant or any portion of the
Premises.

                  (d)      (i) Appointment of a receiver to take possession of,
or making of an attachment or execution against, Tenant's assets or any
substantial portion thereof, or Tenant's interest in this Lease; or

                           (ii) Making by Tenant of a general assignment for
the benefit or creditors; or

                           (iii) Admission by Tenant in writing of its
inability to meet its obligations as they mature; or

                           (iv) Commission by Tenant of any other act of
bankruptcy or filing by Tenant of a petition or institution of a proceeding on
its behalf under any section or chapter of the Bankruptcy Code of the United
States, as amended, or under any similar law or statute of the United States
or any state thereof ("Bankruptcy Laws"); or

                           (v) Filing by any third party of a petition or
institution by any third party of a




                                       10
<PAGE>   16

proceeding against Tenant under any Bankruptcy Law, and such petition or
proceeding is not dismissed within thirty (30) days; or

                           (vi) Adjudication of Tenants as a bankrupt; or

                           (vii) Occurrence of any of the foregoing actions
in this subparagraph (d) with respect to any guarantor of Tenant's obligations
under this Lease, or default by such guarantor in performance of any
provision under its guaranty.

         28.      Owner's Remedies. If an Event of Default shall occur, the
following provisions shall apply and Owner shall have the rights and remedies,
cumulatively if possible, set forth herein, which rights and remedies may be
exercised, separately or cumulatively, notwithstanding any election of
remedies, upon or at any time following the occurrence of an Event of Default
unless, prior to such exercise, Owner shall agree in writing with Tenant that
the Event of Default has been cured by Tenant in all respects:

                  (a)      Acceleration of Rent.

                           (i) By notice to Tenant, Owner shall have the right
to accelerate all Base Rent and all Additional Rent due hereunder and
otherwise payable in installments over the remainder of the Term, and,
at Owner's option, any other Additional Rent and other Rent to the extent that
such Additional Rent and other Rent can be determined and calculated (which may
be reasonably estimated by Owner) to a fixed sum; and the amount of all of such
accelerated Rent, without further notice or demand for payment, shall be due
and payable by Tenant within five (5) days after Owner has so notified Tenant.
Additional Rent and other Rent which has not been included in accelerated Rent,
shall be due and payable by Tenant during the remainder of the Term, in the
amounts and at the times otherwise provided for in this Lease.

                           (ii) Notwithstanding the foregoing or the
application of any rule of law based on election of remedies or otherwise, if
Tenant fails to pay the accelerated Rent in full when due, Owner thereafter
shall have the right by notice to Tenant. (A) to terminate Tenant's further
right to possession of the Premises and (B) to terminate this Lease under
subparagraph (c) below; and if Tenant shall have paid part but not all of the
accelerated Rent, the portion thereof attributable to the period equivalent to
the part of the Term remaining after Owner's termination of possession or
termination of this Lease shall be applied by Owner against Tenant's
obligations owing to Owner as determined by the applicable provisions of
subparagraphs (d) and (f) below.

                  (b)      Taking of Possession - Curing Tenant's Defaults.

                           (i) With or without notice, Owner shall have the
right to enter upon and take possession of the Premises and expel or remove
Tenant and any other person who may be occupying the Premises or any part
thereof, by force if necessary, without being liable for prosecution or any
claim for damages therefor. No re-entry or taking possession of the Premises
by Owner shall be construed as an election on its part to terminate this Lease,
unless a written notice of termination is given to Tenant.

                           (ii) With or without re-entering and taking
possession of the Premises, and with or without notice to Tenant, Owner may
make any payment which Tenant was obligated but failed to make under this
Lease, and perform or attempt to perform any other obligation of Tenant under
this Lease which Tenant has failed to perform.

                  (c)      Termination of Lease.

                           (i) By notice to Tenant, Owner shall have the right
to terminate this Lease as of a date specified in the notice. Tenant's rights
to the possession and use of the Premises shall end absolutely as of the
specified termination date, and this Lease shall terminate in all respects
except for the provisions hereof regarding Owner's damages and Tenant's
liabilities arising prior to, out of and following the Event of Default and
the ensuing termination, and the provisions hereof which by their terms survive
termination. Therefore after termination of the Lease, Tenant shall remain
liable to Owner for damages as calculated pursuant to 28.(f)

                           (ii) Following such termination (as well as upon any
other termination of this Lease by expiration of the Term or otherwise) Owner
immediately shall have the right to recover possession of the Premises; and to
that end, Owner may enter the Premises and take possession, without the
necessity of giving Tenant any notice to quit or any other notice, with or
without legal process or proceedings, and in so doing Owner may remove Tenant's
property (including any improvements or additions to the Premises which Tenant
made, unless made with Owner's consent which expressly permitted Tenant to not
remove the same upon expiration of the Term), as well as the property of others
as may be in the Premises, and make disposition thereof in such manner as Owner
may deem to be commercially reasonable under the circumstances.



                                       11

<PAGE>   17

                  (d)      Tenant's Continuing Obligations - Owner's Re-letting
Rights.

                           (i) Unless and until Owner shall have in writing
terminated this Lease under subparagraph (c) above, Tenant shall remain fully
liable and responsible to perform all of the covenants and to observe all the
conditions of this Lease throughout the remainder of the Term; and, in addition,
whether or not Owner shall have terminated this Lease, Tenant shall pay to
Owner, on demand and with interest thereon at the Reimbursement Interest Rate
from the due date until paid, the total sum of all costs, losses and expenses,
including reasonable counsel fees, as Owner incurs, directly or indirectly,
because of any Event of Default having occurred.

                           (ii) If Owner either terminates Tenant's right to
possession without terminating this Lease or terminates this Lease and Tenant's
leasehold estate as above provided, Owner shall have the unrestricted right to
re-let the Premises or any part thereof to such tenants, on such provisions, and
for such periods as Owner may deem appropriate. It is understood that Owner
shall have no obligation to have the Premises available for re-letting or
otherwise endeavor to re-let so long as Owner (or any affiliated entity) has
other comparable or competing vacant space or property available for leasing to
others in the Building or in other buildings in the general market area of which
the Building is a Part; and that notwithstanding nonavailability of other space
or property, Owner's obligation to mitigate damages shall be limited to such
efforts as Owner, in its reasonable judgement, deems appropriate.

                  (e)      Bankruptcy Assurances.

                           Owner and Tenant understand that, notwithstanding
certain provisions to the contrary contained herein, a trustee or debtor in
possession under the Bankruptcy Code of the United States (or other Bankruptcy
Laws) may have certain rights to assume or assign this Lease. Owner and Tenant
further understand that in any event Owner is entitled under the Bankruptcy Code
(or other Bankruptcy Laws) to adequate assurances of future performance of the
terms and provisions of this Lease. For purposes of any such assumption or
assignment, the parties hereto agree that the term "adequate assurance" shall
include at least the following:

                           (i) In order to assure Owner that the proposed
assignee will have the resources with which to pay the Rent, any proposed
assignee must have demonstrated to Owner's satisfaction a net worth (as defined
in accordance with generally accepted accounting principles consistently
applied) at least as great as the net worth of Tenant on the commencement Date,
increased by ten percent (10%) for each year from the Commencement Date through
the date of the proposed assignment. The financial condition and resources of
Tenant were a material inducement to Owner in entering into this Lease.

                           (ii) Any proposed assignee must have been engaged in
the business conducted by Tenant in the Premises, allowable pursuant to the
Permitted Use, for at least five (5) years prior to any such proposed
assignment.

                           (iii) Any proposed assignee must agree to use the
Premises only for the Permitted Use. In entering into this Lease, Owner
considered extensively the Permitted Use and determined that such Permitted Use
would add substantially to Owner's tenant balance and that were it not for
Tenant's agreement to use the Premises only for the Permitted Use, Owner would
not have entered into this Lease. Owner's overall operation will be
substantially impaired if the trustee in bankruptcy or any assignee of this
Lease makes any use of the Premises other than the Permitted Use.

                  (f)      Owner's Damages.

                           (i) Whether the Lease is terminated or not the
damages which Owner shall be entitled to recover from Tenant shall be the sum
of:

                                    (a) All Rent accrued and unpaid as of the
termination date or the date Owner retakes possession of the premises
(whichever occurs later); and

                                    (b) (1) all costs and expenses incurred by
Owner in recovering possession of the Premises, including removal and storage
of Tenant's property, improvements and Alterations therefrom, (2) the costs
and expenses of curing or attempting to cure any default by Tenant, (3) the
costs and expenses of restoring the Premises to the condition in which the same
were to have been surrendered by Tenant as of the Ending Date of Term, or, in
lieu thereof, the costs and expenses of remodeling or altering the Premises or
any part for re-letting the same, (4) the costs of re-letting (exclusive of
those covered by the foregoing) including brokerage fees and reasonable counsel
fees, and (5) any special overhead expenses related to the vacancy of the
Premises not in excess of ten percent (10%) of the monthly Base Rent otherwise
to be paid by Tenant over the remainder of the Term, for each month or part
between the date of termination and the re-



                                       12

<PAGE>   18

letting of the entire Premises; and

                                    (c) All Base Rent and Additional Rent and
other Rent (to the extent that the amount of Additional Rent and other Rent
has been then determined or estimated as provided above) otherwise payable by
Tenant over the remainder of the Term; and

                                    (d) All reasonable attorney fees, court
costs, arbitration costs, witness fees and similar costs of enforcing
this Lease;

                                    (e) Less [deducting from the total
determined under subparagraphs (a), (b), (c) and (d)] all Rent and Additional
Rent which Owner receives from other tenants by reason of the leasing of the
Premises or part thereof during or attributable to any period falling within
what would otherwise have been the remainder of the Term. If the premises
covered by a new lease by other tenants include other premises not part of the
Premises of this Lease, a fair apportionment of the rent received from such new
lease and expenses incurred in connection therewith as provided aforesaid will
be made in determining the net proceeds from such new lease. If the existing
term of a new lease by other tenants is different from the Term of this Lease
any rent concessions will be equally apportioned over the term of the new
lease.


                  (ii) The damages payable by Tenant under the preceding
provisions of this subparagraph (f) shall be payable on demand from time to time
as the amounts are determined; and if from Owner's subsequent receipt of rent
as aforesaid from re-letting, there shall be any excess payment(s) by Tenant by
reason of the crediting of such rent thereafter received, the excess payment(s)
shall be refunded by Owner to Tenant, without interest.

                  (iii) If this Lease is terminated, then Owner shall have the
additional options to determine the damages as follows:

                                    (a) Tenant shall be liable for amounts
determined pursuant to 28, Owner's Remedies, (a)(i). Owner may have damages
determined under this section A. even if Owner did not previously accelerate
the rent pursuant to 28 (a)(i).

                                    (b) Owner shall be entitled to recover
forthwith against Tenant as damages for loss of the bargain, and not as a
penalty, an aggregate sum which, at the time of such termination of this lease,
represents the aggregate of the rent and all other sums payable by Tenant
hereunder that would have accrued for the balance of the term discounted
present worth at the rate of 4% per annum.

                  (g)      Interest on Damages Amounts. Any sums payable by
Tenant hereunder which are not paid after the same shall be due shall bear
interest, from the due date until paid, at the Overdue Interest Rate.

                  (h)      Owner's Statutory Rights. Owner shall have all
rights and remedies now or hereafter existing at law or in equity with respect
to the enforcement of Tenant's obligations hereunder and the recovery of the
Premises. No right or remedy herein conferred upon or reserved to Owner shall
be exclusive of any other right or remedy, but shall be cumulative and in
addition to all other rights and remedies given hereunder or now or hereafter
existing at law or in equity. Owner shall be entitled to injunctive relief in
case of the violation, or attempted or threatened violation, by Tenant of any
covenant, agreement, condition or provision of this Lease, or to a decree
compelling performance of any covenant, agreement, condition or provision of
this Lease. If Tenant is in default, Tenant may not remove property subject to
the security interest referred to in paragraph 29. Owner's Lien. Owner shall be
entitled to injunctive relief in case Tenant attempts to remove property
subject to the security interest referred to in paragraph 29. Owner's Lien.
This injunctive relief includes, but is not limited to a temporary or permanent
restraining order. Tenant hereby agrees to the issuance of such restraining
order ex parte. Tenant acknowledges that Owner's remedy at law in such a case
would be inadequate and that the equitable relief may be brought without the
necessity of proof of actual damage or inadequacy or any legal remedy.
Notwithstanding any statute to the contrary, Owner shall have the right to
such restraining order without the necessity of a bond.

                  (i)      Remedies Not Limited. Nothing herein contained shall
limit or prejudice the right of Owner to exercise any or all rights and
remedies available to Owner by reason of default or to prove and obtain in
proceedings under any Bankruptcy Laws, an amount equal to the maximum
allowance permitted by any law in effect at the time when, and governing the
proceedings in which, the damages are to be proved, whether or not the amount
is greater, equal to, or less than the amount of the loss or damages referred
to above.

                  (j)      No termination Except by Owner in writing. No action
by Owner, including without limitation legal proceedings for eviction, unlawful
detainer or similar actions that may be available under the laws of the State,
shall be deemed a termination of this Lease or of Tenant's obligations
hereunder unless Owner specifies in writing that the Lease is terminated and
that Tenant has no further liability hereunder.



                                       13

<PAGE>   19

                  (k)      No Waiver by Owner. No delay or forbearance by Owner
in exercising any right or remedy hereunder, or Owner's undertaking or
performing any act or matter which is not expressly required to be undertaken by
Owner shall be construed, respectively, to be a waiver of Owner's rights or to
represent any agreement by Owner to undertake or perform such act or matter
thereafter. Waiver by Owner of any breach by Tenant of any covenant or condition
herein contained (which waiver shall be effective only if so expressed in
writing by Owner) or failure by Owner to exercise any right or remedy in respect
of any such breach shall not constitute a waiver or relinquishment for the
future of Owner's right to have any such covenant or condition duly performed or
observed by Tenant, or of Owner's rights arising because of any subsequent
breach of any such covenant or condition, nor bar any right or remedy of Owner
in respect of such breach or any subsequent breach. Owner's receipt and
acceptance of any payment from Tenant which is tendered not in conformity with
the provisions of this Lease or following an Event of Default (regardless of any
endorsement or notation on any check or any statement in any correspondence
accompanying any payment) shall not operate as an accord and satisfaction or a
waiver of the right of Owner to recover any payments then owing by Tenant which
are not paid in full, or act as a bar to the termination of this Lease and the
recovery of the Premises because of Tenant's previous default.

         29.      Owner's Lien. In addition to any applicable statutory Owner's
lien, which is not waived but is supplemented hereby, Owner shall have, at all
times, and Tenant hereby grants to Owner, a valid security interest to secure
payment of all Rent and other sums of money becoming due hereunder from Tenant,
and to secure payment of any damages or loss which Owner may suffer by reason of
any Event of Default, upon all goods, wares, equipment, fixtures, furniture,
improvements and other personal property of Tenant presently or which may
hereafter be situated in the Premises or the Building or on the Land
("Property"), and all proceeds thereof, and the Property shall not be removed
therefrom without the consent of Owner until all arrearages in Rent as well as
any and all other sums of money then due to Owner hereunder shall first have
been paid and discharged and all the covenants, agreements and conditions hereof
have been fully complied with and performed by Tenant. Upon the occurrence of an
Event of Default in addition to any other remedies provided herein, Owner may
enter upon the Premises and take possession of any and all Property, without
liability for trespass or conversion, and sell the same at public or private
sale, with or without having the Property at the sale, after giving Tenant
reasonable notice of the time and place of any public sale or of the time after
which any private sale is to be made, at which sale Owner or its assigns may
purchase unless prohibited by law. Unless otherwise provided by law, and without
intending to exclude any other manner of giving Tenant reasonable notice, the
requirement of reasonable notice shall be met if such notice is given, in the
manner prescribed in this Lease, at least five (5) days before the time of sale.
The proceeds from any such disposition, less any and all expenses connected with
the taking of possession, holding and selling of the Property (including
reasonable attorneys' fees and other expenses), shall be applied as a credit
against the payments secured by the security interest granted in this paragraph.
Any surplus shall be paid to Tenant or as otherwise required by law, and Tenant
shall pay any deficiencies forthwith. Upon request by Owner, from time to time,
Tenant agrees to execute and deliver to Owner a financing statement or
statements in form sufficient to perfect the security interest of Owner in the
Property and proceeds thereof under the provisions of the Uniform Commercial
Code in force in the State. In addition, Tenant hereby agrees to grant Owner a
power of attorney to act as Tenant's agent to execute any financing agreement or
financing statement in order to perfect the security interest referred to in
this paragraph 29.

         30.      Certain Rights Reserved by Owner. Owner (acting itself or
through persons authorized by it) shall have the following rights, exercisable
from time to time without notice and without liability to Tenant for damage or
injury to property, persons or business and without effecting an eviction,
constructive or actual, or disturbance of Tenant's use or possession of the
Premises or giving rise to any claim for set off or abatement of Rent or
otherwise affecting Tenant's obligations hereunder:

                  (a) To decorate and to make repairs, alterations, additions,
changes or improvements whether structural or otherwise, in and about the
Building, or any part thereof, and for such purposes to enter upon the Premises,
and during the continuance of any such work, to temporarily close doors,
entryways, common areas, public space and corridors in the Building, to
interrupt or temporarily suspend Building Services and facilities and to change
the arrangement and location of entrances or passageways, doors and doorways,
corridors, elevators, stairs, toilets, or other public parts of the Building, so
long as the Premises are reasonably accessible and Tenant is not unreasonably
disturbed in use or possession thereof.

                  (b) To have and retain paramount title to the Premises free
and clear of any act of Tenant purporting to burden or encumber the Premises.

                  (c) To grant to anyone the exclusive right to conduct any
business in or render any service to the Building, provided such exclusive right
shall not operate to exclude Tenant from the Permitted Use.

                  (d) To prohibit the placing of vending or dispensing machines
of any kind in or about the Premises without the prior written permission of
Owner.



                                       14

<PAGE>   20

                  (e) To have access for Owner and other tenants of the
Building to any mail chutes located on the Premises according to the rules of
the United States Postal Service.

                  (f) To take all such reasonable measures as Owner may deem
advisable for the security of the Building and its occupants, including without
limitation, the search of persons entering or leaving the Building, the
evacuation of the Building for cause, suspected cause, or for drill purposes,
the temporary denial of access to the Building, and the closing of the Building
after normal business hours and on Saturdays, Sundays and holidays, subject,
however to Tenant's right to admittance when the Building is closed after
normal business hours under such reasonable regulations as Owner may prescribe
from time to time which may include by way of example but not of limitation,
that persons entering or leaving the Building, whether or not during normal
business hours, identify themselves to a security officer by registration or
otherwise and that such persons establish their right to enter or leave the
Building.

                  (g) To enter the Premises to perform Owner's covenants under
this Lease, to exercise Owner's remedies under this Lease, to ascertain if
Tenant is in compliance with its covenants under this Lease, to inspect the
Premises, and to exhibit the Premises to Mortgagees and Lessors and to
prospective lenders, purchasers and tenants.

                  (h) To change the name by which the Building is designated.

                  (i) To transfer, assign and convey, in whole or in part, the
Building and any and all of its rights under this Lease, and in the event Owner
assigns its rights under this Lease, Owner shall thereby be released from any
further obligations hereunder, and Tenant agrees to attorn to and look solely to
such successor in interest of the Owner for performance of such obligations.

         31.      Intentionally Omitted

         32.      Brokers. Each party warrants to the other that it has had no
dealings with any broker or agent in connection with the negotiation or
execution of this Lease except as may be named in the Basic Lease Provisions,
and each party agrees to indemnify the other against all costs, expenses,
attorney's fees or other liability for commissions or other compensation or
charges claimed by any broker or agent claiming the same by through or under
said indemnifying party.

         33.      Quiet Enjoyment. Provided Tenant has performed all of the
terms and conditions of this Lease, including the payment of Rent, to be
performed by Tenant, Tenant shall peaceably and quietly hold and enjoy the
Premises for the Term, without hindrance from Owner, subject to the terms and
conditions of this Lease.

         34.      Notices. Each provision of this Lease, or of any applicable
governmental law, ordinance or regulation, or other requirement, with reference
to the sending, mailing or delivery of any notice or document, or with reference
to the making of any payment by Tenant to Owner, shall be deemed to be complied
with when and if the following steps are taken:

                  (a) All Rent and other payments required to be made by Tenant
to Owner hereunder shall be payable to Owner at Owner's Address set forth in the
Basic Lease Provisions or at such other address as Owner may specify from time
to time by notice to Tenant, and shall be deemed delivered only upon actual
receipt (and if other than in cash, subject to collection).

                  (b) Any notice or document required to be delivered hereunder
shall be deemed to be delivered if actually received and whether or not received
when deposited in the United States mail, postage prepaid, certified or
registered mail (with return receipt requested), addressed to the party to
receive same at its address set forth in the basic Lease Provisions or at such
other address as said party has theretofore specified to the other by notice.

         35.      Force Majeure. Whenever a period of time is herein prescribed
for action to be taken by Owner, Owner shall not be liable or responsible for,
and there shall be excluded from the computation of any such period of time, any
delays due to strikes, riots, acts of God, shortages of labor or materials, war,
governmental laws, regulations or restrictions or any other causes of any kind
whatsoever which are beyond the control of Owner ("Force Majeure").

         36.      Entire Agreement; Addendums; Waivers; Binding Effect. This
Lease contains and embodies the entire agreement of the parties hereto with
respect to the subject matter hereof, and no representations, inducements or
agreements, oral or otherwise, between the parties not contained in this Lease
shall be of any force or effect. This Lease may not be supplemented or amended,
except by instrument in writing signed by both parties hereto. No provision of
this Lease shall be deemed to have been waived by Owner unless such



                                       15

<PAGE>   21

waiver is in writing signed by Owner and addressed to Tenant, nor shall any
custom or practice which may evolve between the parties in the administration of
the terms thereof be construed to waive or lessen the right of Owner to insist
upon performance by Tenant in strict accordance with the terms hereof. The terms
and conditions contained in this Lease shall apply to, inure to the benefit of,
and be binding upon the parties hereto, and upon their respective successors in
interest and legal representatives, except as otherwise herein expressly
provided.

         37.      Severability. If any clause or provision of this Lease is
illegal, invalid, or unenforceable under present or future laws effective
during the Term, the remainder of this Lease shall not be affected thereby and
in lieu of such clause or provision, there shall be deemed added as a part of
this Lease a clause or provision as similar in terms thereto as may be possible
and be legal valid and enforceable.

         38.      Joint and Several Liability of Tenant. If there is more than
one person comprising Tenant, the obligations imposed upon Tenant hereunder
shall be joint and several. If there is a guarantor or there are guarantors of
Tenant's obligations hereunder, the obligations imposed upon Tenant shall be
the joint and several obligations of Tenant and each such guarantor and Owner
need not first proceed against Tenant before proceeding against any such
guarantor, nor shall any such guarantor be released from its guaranty for any
reasons whatsoever, including without limitation, any amendment hereto, waiver
of any provision hereof or failure to give such guarantor any notice
hereunder.

         39.      Owner's Liability Limitation. The liability of Owner to
Tenant for fulfillment of any obligation of Owner or for any default by Owner
under the terms of this Lease shall be limited to the interest of Owner in the
Building and the Land; Tenant shall look solely to such interest for
satisfaction thereof; and Owner shall not be personally liable for any
deficiency.

         40.      Arbitration.

                  (a) At Owner's option, all claims, disputes and other
matters in question or calling for mutual agreement, between Owner and Tenant
arising out of, or relating to this Lease or the breach hereof, shall be decided
by arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then obtaining. At Owner's option, any
arbitration arising out of or relating to this Lease or any breach hereof shall
include, by consolidation, joinder or joint filing any other person not a party
to this Lease to the extent necessary for the final resolution of the matter in
controversy. This agreement by Tenant to arbitrate shall be specifically
enforceable by Owner under the prevailing arbitration law. The award rendered
by the arbitrators shall be final, and judgment may be entered upon it in
accordance with applicable law in any court having jurisdiction thereof.

                  (b) Notice of the demand for arbitration shall be filed by
Owner in writing with Tenant and with the American Arbitration Association. The
demand for arbitration shall be made within a reasonable time after the claim,
dispute or other matter has arisen, and in no event shall it be made after the
date when institution of legal or equitable proceedings based on such claim,
dispute or other matter would be barred by the applicable statute of
limitations.

                  (c) Unless otherwise agreed in writing by Owner, Owner and
Tenant shall continue to perform their obligations under this Lease in
accordance with Owner's interpretation of the claim, dispute or other matter
during any arbitration proceedings, until final resolution thereof.

                  (d) At Owner's option, the venue for arbitration or
litigation with respect to all claims, controversies and disputes arising out
of or relating to this Lease or any breach hereof, shall be the county in
which the Land and Building are located.

         41.      Waiver of Trial by Jury. To the extent such waiver is
permitted by applicable law, Owner and Tenant waive trial by jury in any action
or proceeding brought in connection with this Lease or the Premises.

         42.      Applicable Law. This Lease and the rights and obligations of
Owner and Tenant hereunder shall be construed in accordance with and governed by
the laws of the State of Colorado.

         43.      Miscellaneous.

                  (a) Any approval by Owner or Owner's architects and/or
engineers of any of Tenant's Plans shall not in any way be construed or
operate to bind Owner or to constitute a representation or warranty of Owner
as to the adequacy or sufficiency of such Plans or the Alterations to which
they relate, for any use, purpose, or condition, but such approval shall merely
be the consent of Owner as may be required hereunder.

                  (b) Nothing contained in this Lease shall be deemed or
construed to create a partnership or joint venture of or between Owner and
Tenant, or to create any other relationship between the parties hereto other
than that of Owner and Tenant.


                                       16
<PAGE>   22



                  (c) Words of any gender used in this Lease shall be held and
construed to include any other gender, and words in the singular number shall
be held to include the plural, unless the context otherwise requires. The word
"person" as used in this Lease means any natural person, legal entity, or body
politic.

                  (d) The submission of this Lease to Tenant shall not be
construed as an offer, nor shall Tenant have any rights with respect thereto
unless and until Owner shall have executed a copy of this Lease and delivered
the same to Tenant.

                  (e) If Tenant is a corporation, each of the persons executing
this Lease on behalf of Tenant hereby warrants that Tenant is a duly formed and
existing corporation, qualified to do business in the State, that the Tenant
has the full right and authority to enter into the Lease, and that each of the
persons signing on behalf of Tenant are authorized to do so.

                  (f) The covenants and obligations of Owner and Tenant
hereunder are independent, such that the obligations of Tenant to pay rent
hereunder are not contingent upon any act or failure to act by Owner.

                  (g) If Owner consults with an attorney to enforce any
provision of this Lease then all costs, including reasonable attorney fees
from the date any such matter is turned over to an attorney shall be
recoverable by Owner from Tenant.

         44.      Recording. Tenant hereby covenants and agrees not to place
the Lease of record. If so requested by Owner, Tenant shall execute a short
form memorandum of lease which memorandum may, at Owner's option, be placed of
record. Any recording of the Lease or of any notice or memorandum thereof by
Tenant without Owner's prior written consent shall be a default under the Lease
and Owner shall have all of the rights and remedies set forth therein for a
default. In addition, if requested by Owner, Tenant shall execute a memorandum
of lease to be filed with the Colorado Department of Revenue on such form as may
be prescribed by said department within ten (10) days after execution of the
Lease, or any other such memorandum so that Owner may avail itself of such
statutes as Section 39-22-604 (7)(c) of the Colorado Revised Statutes(1973).

         45.      Acts to be performed by Tenant Prior to Tenant's Construction.

                  (a) In the event that Tenant receives Owner's prior written
approval to commence any alterations, additions, improvements or construction
of whatever kind or nature to be done by Tenant in or about the Premises (the
"Alterations"), which approval or disapproval shall be in Owner's sole and
subjective discretion, then, as a condition precedent to Tenant's commencing
such Alterations, Tenant shall submit to Owner the following items:

                           (i) All architectural, engineering, construction
and/or design drawings, plans, specifications, studies, reports, bids and other
material of every kind relating to the Alterations (the "Plans and
Specifications");

                           (ii) An originally signed copy of the contract
between Tenant and any and all contractors, subcontractors, materialmen or
suppliers together with copies of any and all subcontracts and supply contracts
relating to the Alterations;

                           (iii) A standard indemnification in a form approved
by Owner.

                           (iv) Originally signed lien waivers from all
subcontractors and materialmen or suppliers for all work done and/or material
supplied in connection with the Alterations in a form approved by Owner; and

                           (v) An originally signed general release of liens
from Tenant's general contractor in a form approved by Owner; and

                           (vi) A standard form of notice to be posted at the
Property in a form approved by Owner.

                  (b)      Upon completion of the Alterations, Tenant shall
submit to Owner:

                           (i) A certification from Tenant's general contractor
and, if requested by Owner, from Tenant's architect, certifying that each has
inspected the Premises not more than five (5) days prior to the date of the
certification and that the Alterations have been constructed in good and
workmanlike manner and in substantial accordance with the Plans and
Specifications and with the requirements of the governmental



                                       17

<PAGE>   23

authorities having jurisdiction or control over same, and that all materials
for which payment has been made by Tenant have been delivered to and have been
incorporated into the Premises; and

                           (ii) Final unconditional certificate(s) of
occupancy, or the equivalent issued by the applicable governmental authority.

         46.      Personal Property Taxes. Tenant shall pay, prior to
delinquency, all taxes, assessments, license fees and public charges levied,
assessed or imposed upon or measured by the value of its personal property and
business operations, including but not limited to, the furniture, fixtures,
leasehold improvements, equipment and other property of Tenant at any time
situated upon or installed in the Premises by Tenant. Tenant shall cause all
such personal property to be assessed and billed separately from the real
property of Owner.

         47.      Transfer of Interest. If Tenant is a partnership or
corporation, the transfer, sale, conveyance and disposition of a controlling
interest in Tenant to any third party, including without limitation, to an
affiliate of Tenant shall be deemed as assignment or transfer of Tenant's
interest under the Lease for purposes of Section 22 of the Lease. As used
herein, the term "affiliate" shall mean any subsidiary or parent company of
Tenant and any subsidiary of a parent company of Tenant, or any entity related
to Tenant or held in common control with Tenant.

         48.      Special Provisions. Special Provisions, if any, are provided
in Addendum I.



IN WITNESS WHEREOF, Owner and Tenant have executed this Lease as of the Lease
date.


OWNER:                                          TENANT:

SKY HARBOR ASSOCIATES LIMITED                   CET ENVIRONMENTAL SERVICES, INC.
PARTNERSHIP

By:   Pomeroy Investment Corporation            By: /s/ STEPHEN H. DAVIS
      Corporation, General Partner                 -----------------------------
                                                      Stephan H. Davis

                                                Its:  President
By: /s/ HOWARD LESHMAN
   ---------------------------------
   Howard Leshman

Its: Vice President



                                       18
<PAGE>   24
                                     RIDER I


This Rider to Lease is attached to and forms a part of that certain lease
between Sky Harbor Associates Limited Partnership ("Owner") and CET
Environmental Services, Inc. ("Tenant") dated as of the 1st day of March 1999
(the "Lease"), and sets forth additional terms and provisions to be incorporated
into the Lease.


     ADDITIONAL RENT. It is expressly agreed that Tenant will pay in addition to
the Base Rent, Additional Rent, herein defined as those items enumerated in this
Rider.

         A.       Tenant shall pay to Owner as Additional Rental commencing
with the First Operating Cost Year (as said term is hereinafter defined), and
for each Subsequent Operating Cost Year thereafter an amount equal to Tenant's
Project Proportionate Share (as said term in hereinbefore defined) of the total
aggregate of Operating Costs (as said term is hereinafter defined) of said
Operating Cost Year.

         B.       The term "Operating Costs" means the total amounts paid or
payable, whether by Owner or otherwise on behalf of Owner, in connection with
the ownership, management, maintenance, repair and operation of the Building,
including by way of illustration and not a limitation, and without limiting the
generality of the foregoing, the aggregate of the amounts paid or payable for;
(i) all electricity furnished to the Building except those amounts paid
directly by Tenant or tenants; (ii) the amount paid or payable for all water
furnished to the Building other than those amounts paid directly by Tenant or
tenants; (iii) labor and or wages and other payments made by Owner in the
operation, maintenance and repair of the Building, including, without
limitation, the cost to Owner of workman's compensation and disability
insurance, payroll taxes, and contributions to any social security,
unemployment insurance, welfare, pension or similar fund and payments for other
fringe benefits made to or on behalf of all employees of Owner performing
services rendered in connection with the operation and maintenance of the
Building, including, without limitation, porters, janitors, handymen,
watchmen, persons engaged in patrolling and protection the Building,
carpenters, engineers, mechanics, electricians, plumbers, building manager,
clerical and administrative personnel, contractors, subcontractors (It is
understood that Owner is under no obligation to have employed any or all of
such above-referred to employees.); (iv) the total charges of any independent
contractors employed in the repair, care, operation, maintenance and cleaning
of the Building; (v) the cost of replacements for tools and equipment used in
the operation and maintenance of the Building, including without limitation
electric light bulbs, tubes and ballasts used in connection with Building
Common Areas and parking lots; (vi) the cost of telephone service, postage,
office supplies, maintenance and repair of office equipment and similar costs
related to operation of the Building and manager's office (whether in the
Building or not); (vii) the cost of licenses, permits and similar fees and
charges related to the operation, repair, maintenance of the Building (viii)
the cost of maintenance of parking areas and driveways, including, but not
limited to cleaning, snow removal, repaving, relining and repainting; (ix)
cleaning cost for the Building, including the windows, sidewalks, all snow
removal (including separate contracts therefore) and the cost of all labor,
supplies, equipment and materials incidental thereto; (x) the cost of premiums
and other charges incurred by Owner with respect to all insurance relating to
the Building and the operation and maintenance thereof, including without
limitation, fire and extended coverage insurance, including windstorm, hail,
explosion, riot, rioting attending a strike, civil commotion, aircraft, vehicle
and smoke insurance, public liability, elevator, workman's compensation, boiler
and machinery, rent, use and occupancy, and health, accident and group life
insurance of all employees; (xi) the cost of sales and excise taxes and the
like upon any of the expenses enumerated herein; (xii) the cost of decorating,
repainting or otherwise maintaining the exterior of the Building; (xiii) the
cost of auditing fees necessarily incurred in connection with the maintenance
and operation of the Building and accounting fees incurred in connection with
the preparation and certification of the real estate tax escalation and the
operating expense escalation statements pursuant to this Rider; (xiv) fees for
legal, inspection, accounting and consulting services; (xv) all costs incurred
by Owner to retrofit any portion or all of the Building to comply with change in
existing legislation or introduction of new legislation, whether federal, state
or municipal, state, county or municipal (including any agency or arm of said
governmental unit; (xvi) the cost of repairs, replacements and improvements
which are appropriate for the continued operation of the Building; (xvii) all
expenses associated with the installation of any energy, cost or labor saving
devices; (xviii) costs of all landscaping; (xix) costs of any security guards
or security; (xx) any and all other expenditures of Owner in connection with
the operation, repair or maintenance of a Building which are properly expensed
in accordance with generally accepted accounting principles consistently
applied with respect to the operation and repair and maintenance of comparable
buildings in the southern Metro Denver Area. The above enumeration of any
Operating Cost shall not create any obligation (express or implied) on the part
of Owner to furnish such service.

                  If Owner shall purchase any item of capital equipment or make
any capital expenditure as described in (xv), (xvi), or (xvii) above, then the
cost for the same shall be included in operating expenses in the year of
installation and in subsequent years amortized in accordance with generally
accepted accounting principles. If Owner shall lease such item of capital
equipment, then the rentals or other operating costs paid



                                        1
<PAGE>   25
pursuant to such leasing shall be included in operating expenses for each year
in which they are incurred.

                  In addition, Operating Cost shall also include all Real
Estate Taxes. The term Real Estate Taxes includes, without limitation, general
and special taxes, assessments, duties and levies, charged and levied upon or
assessed against the Building, the land upon which it is located, and
improvements situated on the real property, any leasehold improvements,
fixtures, installations, additions and equipment used in the maintenance or
operation of the Building, whether owned by Owner or Tenant and not paid
directly by Tenant, including, without limitation, real estate taxes, personal
property taxes, general or special assessments, any duties or levies charged or
levied upon or assessed against the building and the property and personal
property transfer taxes, all costs and expenses (including legal fees and court
costs) charged for the protest or reduction of property taxes or assessments in
connection with the property and the Building, or any tax or excise on rent or
any other tax (however described) on account of rental received for use and
occupancy of any or all of the Building and the property, whether any such
taxes are imposed by the United States, the State of Colorado, the County in
which the Building is located, or any local governmental municipality,
authority or agency or any political subdivision of any thereof. Real Estate
Taxes shall not include franchise, gift, estate or inheritance taxes. Further,
if at any time during the Term the method of taxation of real estate prevailing
at the time of execution hereof shall be, or has been, altered so as to cause
the whole or any part of the taxes now or hereafter levied, assessed or imposed
on real estate to be levied assessed or imposed upon Owner, wholly or partially
as a capital levy or otherwise, or on or measured by the rents received, then
such new or altered taxes attributable to the Demised Premises shall be deemed
to be included within the term Real Estate Taxes for purposes of this
paragraph, save and except that such shall not be deemed to include any
increase in said tax not attributable to the Building. Furthermore, if at any
time during the term hereof a tax or excise on rents or income or other tax
however described (herein called Rent Tax) is levied or assessed by the State
of Colorado, or any political subdivision thereof, on account of the rents
hereunder of the interest of Owner under this Lease, such Rent Tax shall
constitute Real Estate Taxes, provided, further, in no event shall Tenant be
obligated to (i) pay for any year any greater amount by any of such Rent Tax
than would have been payable by Tenant had the rentals paid to the Owner under
all Building leases (being the rentals upon which such Rent Tax is imposed)
been the sole taxable income of Owner for the year in question or (ii) to pay
or to reimburse Owner for any tax of any kind assessed against Owner on account
of any such Rent Tax having been reimbursed.

                  Operating costs shall not include (1) leasing commissions,
advertising expenses and other costs incurred in leasing or procuring new
Tenant; (2) the cost of any capital addition made to the Building, including
the cost to prepare space for occupancy by a new Tenant; (3) depreciation and
amortization of the Building, other than (a) capital expenditures which under
generally applied real estate practices are expensed or regarded as deferred
expenses; (b) capital expenditures appropriate to a building comparable to this
in the southern Metro Denver Area or required by law as described in (xv) and
(xvi) above; and (c) capital expenditures designed to result in savings or
reductions in operating expenses as described in (xvii) above; (4) interest and
principal payments on mortgages and other debt costs; (5) Any cost or
expenditure (or portion thereof) for which Owner is reimbursed, whether by
insurance proceeds or otherwise (Base Rent adjustments under any provision of
this Rider and under similar provisions and other Tenant leases are not
reimbursements); and (6) cost of any service furnished to any other occupant
of the Building which Owner does not provide to Tenant hereunder.

                  In the event during all or any portion of any calendar year
the Building is not fully rented and occupied, Owner may elect to make an
appropriate adjustment of Operating Costs for such year, employing sound
accounting and management principles, to determine the Operating Cost that
would have been paid or incurred by Owner had the Building been fully rented
and occupied and the amount so determined shall be deemed to have been the
Operating Costs for such year. If Owner selects an accrual accounting basis
rather than a cash accounting basis for operating expenses purposes, operating
expenses shall be deemed to have been paid when such expenses have accrued.

                  All references to "Building" in this Rider shall include all
other Buildings in the Project (as defined in Basic Lease Provisions) and all
related facilities, including without limitation, corridors, lobbies,
sidewalks, grounds, parking spaces, driveway areas, elevators and other common
or public areas contained in or around the real estate as well as landscaping,
exterior walkways, and improvements or facility utilized in common by the
Building (and other Buildings of the projects upon or adjacent to the real
property). It is the express intent of the parties that all Operating Costs be
determined on the Project level, rather than at an individual Building level.

                           (i) First Operating Cost Year is as defined in Basic
Lease Provisions.

                           (ii) Subsequent Operating Cost Year means each twelve
month calendar period following the First Operating Cost Year, the whole or any
part of which full period is included within the Term.



                                        2

<PAGE>   26

                  (iii) The Amount of Operating Costs for any period shall be
the amount as determined by the Owner in accordance with generally accepted
accounting principles.

          C. If only part of the Term is included within any Operating Cost
Year, then such amount payable by Tenant for such Operating Cost Year shall be
estimated by Owner acting reasonably and reduced proportionately on a per diem
basis and shall be payable according to the terms and conditions in subparagraph
D. below.

          D. Any additional Rent payable by Tenant under this Rider shall be
payable as follows, unless otherwise provided:

               During the Term, Tenant shall pay to owner monthly in advance and
               every month during the Term, one-twelfth (1/12th) of the amount
               of such Additional Rent as estimated by Owner, from time to time,
               in advance, acting reasonably, to be due from Tenant. Within a
               reasonable time after the close of each calendar year, Owner
               shall give Tenant a statement of the year's Operating Costs and
               the total amount of the Additional Rent, if any. If such year's
               Operating Cost is different than the estimated amount paid by
               Tenant, Tenant shall pay Owner or Owner shall credit Tenant, as
               applicable, within 30 days of the date of the Statement, Tenant's
               proportionate share which has either (i) not be paid by Tenant or
               (ii) overpaid by Tenant pursuant to an estimate. One-twelfth of
               the amount of Additional Rent, as reasonably estimated by Owner,
               for the First Operating Cost Year, to be paid by Tenant with each
               month's Base Rent as Additional Rent shall be as stated in Basic
               Lease Provisions as "Initial Monthly Estimated Additional Rent".
               This amount shall be paid monthly until such time as Owner, in
               writing, reasonably adjusts the estimated Additional Rent
               pursuant to the first sentence of this paragraph.

               For purposes of calculating Additional Rent, Tenant's
               proportionate share of the total shall be deemed to be as set
               forth in paragraph F. below.

          E. For the protection of Tenant, Owner shall maintain books of account
which shall be open to Tenant and its representatives for thirty days after
billing for Additional Rent, at all reasonable times so that Tenant can
determine that such Additional Rent costs have, in fact, been paid or incurred.
Tenant shall have the right to contest or question the amount and the
appropriateness of the Operating Cost and Additional Rent for a period of thirty
(30) days after the billing for Additional Rent. If Tenant does not so contest
or question within said thirty (30) day period, then all the determinations by
Owner shall be conclusive.

          F. Tenant's Project Proportionate Share is as defined in Basic Lease
Provisions.

          G. Except as otherwise expressly provided in the Lease, the parties
agree that Owner shall have no obligation of any kind to make any expenditures
upon or with respect to the Premises. It is intended that Tenant shall
throughout the term, at its sole expense, maintain in good condition, repair and
order all of the Premises and all parts thereof and shall pay to Owner
Additional Rent as stated in this Rider



                                        3

<PAGE>   27



                                    RIDER II

                  This Rider to Lease is attached to and forms a part of that
certain lease between Sky Harbor Associates Limited Partnership ("Owner") and
CET Environmental Services, Inc. ("Tenant") dated as of the 1st day March,
1999, (the "Lease"), and sets forth additional Terms and provisions to be
Incorporated into the Lease.

Building Services and Utilities

         (a)      Subject to the limitation herein set forth, Owner will
furnish Tenant while occupying the Premises and while Tenant is not in default
under this Lease:

                  (i) water to the wall stub of the Premises;

                  (ii) snow removal and snow plowing of all common areas of the
Building and Project;

                  (iii) cleaning and maintenance of driveways and parking areas
of the Project;

                  (iv) trash and refuse removal;

                  (v) maintenance and repair of all building standard
air-conditioning and heating apparatus.

                  In addition, Owner will maintain the public and common areas
of the Building and Project, such as walkways, stairs, and landscaping, if any,
in reasonable good order and condition, except for damage occasioned by Tenant
or Tenant's parties.

         (b)      Utilities, Owner shall have the option to have: (i) Tenant
pay promptly all charges for heating, natural gas and electrical service used
on the Premises directly to the appropriate public utility company. If Tenant
shall fail to pay any utilities as required above, Owner shall have the right,
at his option, but without any obligation to do so, to pay such utilities
(without affecting any other remedy available to Owner) on account of Tenant
and the same shall constitute Additional Rent hereunder and shall be repaid by
Tenant to Owner forthwith; or (ii) Tenant pay all charges for heating, natural
gas and electrical service used on the Premises as Additional Rent pursuant to
Rider I. Owner shall make an election pursuant to this paragraph from time to
time, by 30 day notice to Tenant. Owner may elect to have certain utilities
paid pursuant to (i) above and to have other utilities paid pursuant to (ii)
above. If Owner makes no written election, then all utilities that are
separately metered shall be paid pursuant to (i) above and all items that are
not separately metered shall be paid pursuant to (ii) above.

                  Notwithstanding the above, Tenant covenants and agrees that
at all times its use of electric current shall never exceed the capacity of the
existing feeders to the Building or the risers or wiring installations. Any
risers or wiring to meet Tenant's excess electrical requirements will be
installed by Owner at the sole cost and expense of Tenant (if, in Owner's
sole judgment, the same are necessary and will not cause permanent damage or
injury to the Building or the Premises or cause or create a dangerous or
hazardous condition or entail excessive or unreasonable alterations, repairs
or expense or interfere with or disturb other tenants or occupants).

                  If initially Tenant is paying all or any public utilities
pursuant to (ii) above, Owner may at its option, upon not less than 30 days
prior written notice to Tenant discontinue the availability of such utility
service. If Owner gives any such notice of discontinuance, Owner shall make
all necessary arrangements with the public utility supplying the utilities to
the area in which the Building is located with respect to obtaining such utility
service to the Premises, but Tenant will contract directly with such public
utility for the supplying of such utility service to the Premises. In the event
Owner deems it appropriate to make available separately metered service to the
Premises, Owner may require that separate submeters be installed in or for the
Premises, at Owner's expense, and Tenant will be billed monthly from such
sub-meter in a manner provided hereinbefore, provided that no such sub-metering
shall relieve Tenant from its obligation to pay Tenant's share of other utility
charges under this paragraph.

                  Owner shall not in any way be liable or responsible to Tenant
for any loss or damage or expense which Tenant may sustain or incur if either
the quantity or character of any utility service is changed or no longer
available or is no longer suitable for Tenant's requirements.

         (c)      Failure to any extent to make available, or any slow-down,
stoppage or interruption of, these defined services resulting from any cause
(including, but not limited to, Owner's compliance with (i) any voluntary or
similar governmental or business guideline now or hereafter published or (ii)
any requirements now or hereafter established by any governmental agency, board
or bureau having jurisdiction over the



                                       1

<PAGE>   28

operation and maintenance of the Building) shall not render Owner liable in any
respect for damages to either person, property or business, nor be construed as
an eviction of Tenant or work an abatement of rent, nor relieve Tenant from
fulfillment of any covenant or agreement hereof. Should any equipment or
machinery which Owner is obligated to maintain and repair pursuant to this Lease
break down or for any reason cease to function properly, Owner shall use
reasonable diligence to repair same promptly, but Tenant shall have no claim for
abatement of rent or damages on account of any interruptions in service
occasioned thereby or resulting therefrom.

         (d)      Notwithstanding any termination of this Lease prior to the
Ending Date of Term, Tenant's obligations to pay any and all Rent pursuant to
this Rider shall continue and shall cover all periods up to the actual
expiration date of the Term; provided, however, if Owner terminates this Lease
without waiving Owner's right to seek damages against Tenant, Tenant's
obligation to pay any and all Rent pursuant to this Rider shall not terminate
as a result thereof.

         (e)      Trash and Refuse Removal. If Owner determines, in its sole
discretion, that Owner provides Tenant with more than normal and ordinary Trash
and Refuse Removal ("Excess Removal"), then Owner shall have the option to i)
charge Tenant, as Additional Rent, an amount for such Excess Removal (Owner's
determination of such amount shall be binding on the parties), or ii) cease
providing Tenant with Trash and Refuse Removal.



                                        2

<PAGE>   29
                                 ADDENDUM NO. 1
                                       TO
                                 LEASE AGREEMENT

             BY AND BETWEEN SKY HARBOR ASSOCIATES LIMITED PARTNERSHIP
                                    AS OWNER
                                       AND
                        CET ENVIRONMENTAL SERVICES, INC.
                                    AS TENANT

         This Addendum No. 1 to one certain Lease Agreement dated March 1, 1999
by and between Sky Harbor Associates Limited Partnership as Owner and CET
Environmental Services, Inc., as Tenant, is entered into this 1st day of March,
1999 by and between Sky Harbor Associates Limited Partnership as Owner and CET
Environmental Services, Inc., as Tenant. For and in consideration of the mutual
covenants herein contained and contained in the Lease Agreement, the parties do
hereby agree as follows:

         1. Base Rent: Monthly Base Rental for years one through five is as
follows:

<TABLE>
<CAPTION>

            YEAR       BASE RENT    INSTALLMENT       ANNUAL PSF COST
            ----      -----------   -----------       ---------------
<S>         <C>       <C>           <C>               <C>
             1        $ 87,195.75   $  7,266.31       $ 7.25/SF NNN
             2        $ 90,202.50   $  7,516.87       $ 7.50/SF NNN
             3        $ 93,209.25   $  7,767.44       $ 7.75/SF NNN
             4        $ 96,216.00   $  8,018.00       $ 8.00/SF NNN
             5        $ 99,222.75   $  8,268.56       $ 8.25/SF NNN
</TABLE>

         2. Commencement Date: Notwithstanding anything in the Lease to the
contrary, the Commencement Date of the Lease shall be the date upon which Tenant
takes occupancy of the Premises, which is estimated to be May 1, 1999.

         3. Owner's Tenant Finish: Owner shall construct the tenant improvements
in accordance with Exhibit A-3 and Exhibit C0.

         4. Environmental Compliance:

            (a) All operations and activities to be conducted by Tenant at the
Premises are described in Basic Lease Provision of the Lease. Tenant agrees that
Tenant will not conduct any operations or activities not specifically described
in Basic Lease Provisions at the Premises without the prior specific written
consent of Owner.

            (b) All operations and activities of Tenant on the Premises will
comply with all applicable federal, state and local environmental laws and
regulations and shall be conducted in a manner which will not give rise to any
environmental hazard or claim. Operations and activities of Tenant involving the
handling, storage, disposal or transportation to and from the Premises of
hazardous materials, substances and/or waste (hereinafter "hazardous materials")
shall be conducted in accordance with all applicable laws and regulations and in
a manner so as to prevent any releases of hazardous materials.

            (c) As used herein, "Environmental Cleanup Liability" shall mean any
liability, loss, cost, expense, fine or penalty of any nature incurred or
imposed by any authority as a result of the necessity to contain, dispose,
remove, treat, remedy or abate any air, soil, groundwater or other contamination
on or off the Premises and on or off the property of which the Premises are a
part, only to the extent arising from Tenant's acts or omissions in the storage,
disposal or transportation of chemicals or other products of Tenant on or to the
Premises including but not limited to; (a) costs or expenses for investigation,
study, assessment, legal representation, cost recovery by government agency, or
monitoring of such contamination; and (b) cost, expense, loss or damage incurred
as a result of actions or measures necessary to implement or effectuate any
containment, removal, disposal, treatment, remediation, cleanup or abatement of
such contamination.

            (d) Tenant agrees to protect, defend, indemnify and hold Owner
harmless from any Environmental Cleanup Liability to the extent that such
liability arises from the operations, acts or omissions of Tenant on the
Premises including but not limited to Tenant's disposal from the Premises or
transportation of hazardous materials to or from the Premises. This agreement of
Tenant to protect, defend, indemnify and hold Owner harmless shall extend to
all acts or omissions of Tenant and shall not be limited to negligent or
wrongful acts or omissions of Tenant.

            (e) The obligations of this Section 5 shall survive the termination
of this lease.


                                        1


<PAGE>   30


         5 Change in Regulations: Tenant and Owner acknowledge and agree that if
at any time during the term of the Lease the rules and regulations of the
Uniform Building Code or the Uniform Fire Code pertaining to hazardous materials
change so as to require an additional investment in fire protection equipment in
the Premises then such additional investment shall be the obligation of Tenant,
provided however that such additional investment shall not be required as a
result of any action of Owner with respect to the Premises, the Building or the
Project.

         6. Tenant shall have the obligation to conduct an inspection of the
Premises with Owner and its representatives within fourteen (14) days after
substantial completion of the Tenant Finish and to give Owner, within said
fourteen day period, a punch list of all items to be completed and/or corrected.
Any items not on such punch list shall be deemed accepted by Tenant, except for
latent defects which exception shall be effective for one (1) year following the
Commencement Date (unless such defect or subsequent damage was caused by Tenant
or its agents, employees, invitees, contractors or suppliers). Owner shall
correct any punch list items after receipt of said punch list.

         7. Owner's Default: Notwithstanding any other provisions of this Lease,
if default shall be made by Owner in the performance of the agreements,
conditions or covenants of this Lease to be performed by Owner, and said default
shall have continued for thirty (30) days after written notice thereof to Owner
or if such default cannot be cured within such thirty (30) day period if Owner
shall have failed to commence and diligently pursue such cure, then Tenant in
addition to all other remedies now or hereafter provided by law, may at its
election, perform such covenant or agreement for or on behalf of Owner, or make
good any such default, and any amount or amounts which Tenant shall advance
pursuant thereto shall be repaid by Owner to Tenant on demand.

         8. Utilities Interruption: Owner agrees to use reasonable efforts to
remedy any situation (other than caused by default by Tenant) which gives rise
to interruption or failure to furnish any utility services. Additionally, if the
Premises are rendered untenantable or Inaccessible due to interruption of
service attributable solely to Owner's fault, rent shall be abated for the
period of such untenantability.

         9. Save and except the foregoing provisions, all other paragraphs and
covenants of the Lease Agreement, Riders and Exhibits shall remain in full force
and effect as therein stated. In the event of a conflict between the provisions
of this Addendum No. 1 and the Lease Agreement or its Riders and/or Exhibits,
then the provisions of this Addendum No. 1 shall prevail.

         10. The Lease Agreement, Riders, Exhibits and this Addendum No. 1 may
only be modified in a writing executed by both parties.

         11. Additional Provisions:

             Early Termination: Tenant will be given the right to terminate the
             lease after the initial three (3) years of the terms provided the
             following: a) Tenant agrees to give Landlord six (6) months prior
             notice of its intent to terminate; b) Tenant agrees to pay Landlord
             a penalty at termination equal to the remaining unamortized Tenant
             improvements, commissions and three (3) months base rent equal to
             the current base rent in year three of the lease. In the event that
             Tenant is in the process of negotiating a new government contract,
             Landlord will grant Tenant a thirty (30) to forty-five (45) day
             reduction of the six (6) month provision, however, Tenant must keep
             Landlord informed of the contract negotiation pursuant to provision
             (a). Dated as of the 1st day of March, 1999.


OWNER:                                            TENANT:

SKY HARBOR ASSOCIATES,                            CET ENVIRONMENTAL SERVICES,
INC.
a Michigan limited partnership                    a California corporation

By:  Pomeroy Investment Corporation               By: /s/ STEPHEN H. DAVIS
                                                     ---------------------------
     General Partner                                      Stephen H. Davis
                                                  Its: President

By: /s/ HOWARD LESHMAN
   -----------------------------
       Howard Leshman
Its: Vice President


                                        2


<PAGE>   31


                                   EXHIBIT A-1

                               DESCRIPTION OF LAND




 Building B, Block 1, Linpro Arapahoe Land Limited, County of Arapahoe, Colorado











                                       1


<PAGE>   32



                                  EXHIBIT A-3





                                  [FLOOR PLAN]




2/16/98 Proposal 1 for CET Environmental Services, 7032 South Revere Parkway




<PAGE>   33



                                  EXHIBIT A-2




                                  [FLOOR PLAN]




SKY HARBOR

At Centennial Airport Center
7002-7042 South Revere Parkway
Englewood, Colorado
<PAGE>   34


                                    EXHIBIT B

                              RULES AND REGULATIONS

     1. SIGNS

        A. No Sign, advertisement, notice, placard, picture, name or other
lettering shall be exhibited, inscribed, printed displayed or affixed on or to
any part of the inside or outside of the Demised Premises of the Building
without the prior written consent of Owner. Owner shall have the right to remove
any such sign, advertisement, notice, placard, picture, logo, name or other
lettering without notice and at the expense of Tenant.

        B. All approved signs or lettering on doors shall be printed, painted,
affixed or inscribed at the expense of Tenant by a person selected by Owner.

     2. SIDEWALKS, OBSTRUCTIONS. The sidewalks, halls, entrances, exits,
passages, stairways and elevators of the Building shall not be obstructed by
Tenant, its agents or employees, nor shall they be used for any purpose other
than ingress and egress to and from the Premises. The halls, passages,
entrances, exits, stairways, elevators, balconies and roof are not for the use
of the general public, and Owner shall in all cases retain the right to control
and prevent access thereto by all persons whose presence in the judgment of
Owner might be prejudicial to the safety, reputation and interests of the
Building and its tenants, provided that nothing herein contained shall be
construed to prevent such access to persons with whom Tenant normally deals in
the ordinary course of Tenant's business, unless such persons are engaged in
illegal activities. No tenant and no employees or invitees of any tenant shall
go upon the roof of the Building.

     3. LOCKS. Tenant shall not alter any lock or install any new or place
additional locks or any bolts or mail slots on any door, wall or window of the
Premises without the prior written consent of Owner.

     4. KEYS. All keys to the Building, Premises, rooms and toilet rooms shall
be and remain the property of Owner and shall be obtained from Owner's Building
Management Office, and Tenant shall not from any other source duplicate, obtain
keys or have keys made. Tenant, upon termination of the tenancy, shall deliver
to Owner all keys to the Building, Premises, rooms and toilet rooms that have
been furnished or shall pay the Owner the cost of replacing same or of changing
the lock or locks opened by such lost key(s) if Owner deems it necessary to make
such change.

     5. WATER FIXTURES. The toilet rooms, urinals, wash bowls, drinking
fountains and other apparatus shall not be used for any purposes other than that
for which they were constructed, and no foreign substance of any kind whatsoever
shall be thrown therein. The expense of any breakage, stoppage or damage
resulting from the violation of this rule shall be borne by the Tenant who, or
whose employees or invitees, shall have caused it. No person shall waste water
by leaving faucets open or in any other manner.

     6. FLOOR LOADING. Tenant shall not overload the floor of the Premises.
Owner shall prescribe, after consultation with the appropriate architects and
engineers, the floor loading permissible.

     7. ALTERATIONS. In addition to the provisions of the Lease, Tenant shall
not mark, paint, drill into, drive nails or screw into or in any way deface or
change any part of the Premises or the Building. Owner will direct electricians
as to where electric and telephone wires are to be introduced. No boring,
cutting or stringing of wires will be allowed except as approved and directed by
Owner. The locations of telephones, call boxes and other office equipment
affixed to the Premises shall be subject to the approval of Owner. Owner shall
permit reasonable numbers of picture hangers and other reasonable attachments to
be made to walls, floors and ceilings.

     8. FLOOR COVERINGS. The only floor coverings shall be the building standard
carpet, or such other covering(s) as Owner may approve in writing. The expense
of repairing any damage resulting from Tenant's violation of this rule or from
removal of any floor covering shall be borne by the Tenant by whom, or by whose
contractors, employees or invitees, the damage shall have been caused.

     9. DISTURBANCES AND USE.

        A. Tenant shall not use, keep or permit to be used or kept any food
(other than that to be kept in reasonable amounts for the consumption by its own
employees and all of that to be kept in tightly sealed containers and/or in a
refrigerator) or noxious gas or substance in the Premises, or permit or suffer
the Premises to be occupied or used in a manner offensive or objectionable to
Owner or to other occupants of the Building by reason of noise, odors and/or
vibrations, or interfere in any way with other tenants or those having business
therein.




                                       1

<PAGE>   35

         B. Only incidental cooking for the use of Tenant may be done on the
Premises, and that only using equipment and in a place within the Premises
specifically authorized in writing by Owner, and in a way so that no odors of
food are observed by other occupants of the Building.

         C. No vending or machines of any description may be installed,
maintained or operated in the Premises without the written consent of Owner.

         D. No animals or birds may be brought in or kept in or about the
Premises or the Building.

         E. No tenant, employee or invitee of any tenant shall make or permit to
be made any unseemly or disturbing noises or disturb or interfere with occupants
of this or neighboring buildings or Premises or those having business with them
whether by use of any musical instrument, radio, phonograph, unusual noise, or
in any other way.

         F. No tenant, employee or invitee of any tenant shall throw anything
out of doors or down any passageway, any stairway, elevator shaft or ventilating
duct or shaft of the Building.

         G. Tenant shall not disturb, solicit, peddle or canvass any occupancy
of the Building and shall cooperate to prevent same.

         H. Tenant shall be responsible for keeping any children visiting or
accompanying anyone visiting the Premises under control and quiet so that they
do not disturb other occupants of the Building.

         I. Tenant shall not use the Premises for any purpose other than that
described in the Lease, for manufacturing, for the storage of merchandise,
except as such storage may be incidental to the use of the Premises for the
purpose(s) described in the Lease, for washing clothes, for lodging or for
illegal, improper, immoral or objectionable purpose.

         J. Tenant shall not advertise for laborers giving an address at the
Building or Premises.

     10. FIRE AND OTHER GOVERNMENTAL REGULATIONS. Tenant shall not do or permit
anything to be done in the Premises, or bring or keep anything therein, which
will in any way increase the fire insurance rates on the building or on the
property kept therein; or obstruct or interfere with the rights of other
tenants, or in any way injure or annoy them or conflict with the laws relating
to fire, or with any regulations of the fire department, or with any insurance
policy upon the Building or any part thereof or conflict with any of the rules
or ordinances of the governmental jurisdictions in which the Building lies.

         A. Tenant agrees that it will comply with all fire and security
regulations that may be issued from time to time by Owner, and Tenant also shall
provide Owner with the name of a designated employee responsible to represent
Tenant in all matters pertaining to such fire or security regulations.

         B. Tenant shall not use or keep in the Premises any gasoline, kerosene
or inflammable, combustible, or explosive fluid or material, other than nominal
amounts of ordinary office fluids to be used for duplicating or photocopying
machines or other, similar office equipment.

         C. Tenant shall not use any method of heating or air conditioning other
than that supplied by Owner.

         D. Tenant shall install and properly maintain, at Tenant's sole cost
and expense, an adequate, visibly marked and at all times properly operational
fire extinguisher next to any duplicating or photocopying machine or any cooking
device or any similar heat-producing equipment which may or may not contain
combustible material in the Premises.

     11. LEAVING THE PREMISES. Tenant shall see that the doors of the Premises
are closed and securely locked before leaving the Building and must observe
strict care and caution that all water faucets or other water apparatus in the
Premises are entirely shut off before Tenant leaves the Building, and that all
unnecessary electricity shall likewise be carefully shut off so as to prevent
waste or damage. For any default or carelessness, Tenant shall make good all
injuries sustained by Tenant, by other tenants or occupants of the Building.

         All doors opening to public corridors shall be kept closed except for
normal ingress and egress from the Premises.



                                       2

<PAGE>   36


     12. OBJECTIONABLE BUILDING OCCUPANTS. Owner reserves the right to exclude
or expel from the Building any person who, in the judgement of Owner, appears
intoxicated or under the influence of alcohol or drugs, or who shall in any
manner do any act in violation of any of the rules and regulations of the
Building.

     13. PAINTING AND DECORATING. All painting and decorating in the Premises
must be agreed to in writing and in advance by Owner. Any such work as may be
agreed to be done by and at the expense of Owner shall be done during regular
working hours. Should Tenant desire such work to be done outside of regular
working hours, Tenant shall pay the extra cost thereof.

     14. WINDOW COVERINGS. No curtains, blinds, shades, draperies, screens or
other materials shall be attached to, hung in or used in connection with any
window or sidelight of the Premises other than those supplied by or otherwise
agreed to by Owner.

         A. The sashes, sash doors, skylights, windows and sidelights that
reflect or admit light or air into the halls, passageways or other public places
in the Building shall not be covered or obstructed by Tenant.

         B. Tenant shall not place anything or allow anything to be placed near
the glass of any window, skylights, door, partition or wall which may, in the
sole opinion of Owner, appear unsightly from outside the Premises.

     15. LIGHT FIXTURES. No electrical fixtures shall be hung or otherwise
installed in the Premises other than those supplied by or otherwise agreed to by
Owner.

     16. SHOW CASES. No show case or other articles shall be put in front of or
affixed to any part of the exterior of the Building, nor placed in public
portions thereof.

     17. INFESTATION. If the Premises is or becomes infested with vermin as a
result of the use or any misuse or neglect of Premises by Tenant, Owner shall
forthwith at Tenant's sole cost and expense cause the same to be exterminated
from time to time to the satisfaction of Owner.

     18. TENANT'S CONTRACTORS. Tenant's contractor(s) (any of which shall be
subject to the prior written approval of Owner) shall, while in the Building or
elsewhere on the Property, be subject to and under the control and direction of
Owner or Owner's agent(s) but said contractor(s) shall not be the agent or
servant of Owner or Owner's agent(s).

     19. TENANT'S NEEDS. The requirements of Tenant will be attended to only
upon application at the office of the Building. Owner's employees shall not
perform any work or do anything outside of their regular duties unless under
special instructions from Owner.

     20. ADVERTISING. Without the prior written consent of Owner, Tenant shall
not use the name of the Building nor any picture of the Building in connection
with or in promoting or advertising the business of Tenant, or on its stationery
or in any other manner except as Tenant's address.

     21. BUILDING NAME. Owner shall have the right, exercisable without notice
and without liability to Tenant, to change the name and the street address of
the Building.

     22. GOVERNMENT REGULATIONS. If, as a result of any governmental rule or
regulation, Owner imposes a curtailment of services or equipment in Premises or
the Building, Tenant shall comply therewith and shall be liable to Owner for any
surcharge imposed for any violation by Tenant.

     23. OUTSIDE SERVICES. No tenant shall obtain for use in the Premises towel
or other similar service or accept barbering, boot-blacking or other similar
services on the Premises, except from persons authorized by the Owner and at the
hours and under regulations fixed by the Owner.

     24. BUILDING OPERATION. Owner shall have the right to control and operate
the public portions and the public facilities of the Building and the heating
and air conditioning, as well as facilities furnished for the common use of the
tenants, in such manner as it deems best for the benefit of the tenants
generally.

     25. PARKING.

         A. Tenant shall not park any vehicles in any driveways, service
entrances or areas posted either as "No Parking" or as "Visitor Parking".



                                        3
<PAGE>   37

         B. Tenant shall not park any vehicles in any parking space designated
for handicapped parking unless such vehicle bears a current handicapped license
plate or windshield placard.

         C. Tenant shall not park in such a manner as to occupy more than one
parking space per vehicle, except in such case where a delivery vehicle too
large for one space is parked for the purpose of making a specific delivery to
or pickup from the Premises.

     26. DEFINITIONS. For the purposes of the Rules and Regulations, in every
case where the word "Tenant" is used, it shall be deemed to mean the Tenant, its
employees, agents, servants, contractors, licensees, visitors, delivery people
and invitees.

     27. RULE WAIVER. Owner reserves the right by written notice to Tenant to
rescind, alter, waiver or add any rule or regulations prescribed for the
Building at any time when, in Owner's sole judgment, it is necessary, desirable
or proper for the best interest of the Building and its tenants.



                                       4
<PAGE>   38


                                    EXHIBIT C

                                   WORK LETTER

March 1, 1999

Re:   Tenant:  CET Environmental Services, Inc.

    Building:  7022 S. Revere Parkway, Englewood, CO
               -------------------------------------

    Suite:     100
               ---

    Address:   7022 S. Revere Parkway, Englewood, CO
               -------------------------------------

Gentlemen:

     Concurrently herewith, you, as Tenant, and the undersigned, as Owner, have
executed a Lease covering the above captioned suite (the Premises, as defined in
the Lease). The provisions of said Lease are hereby incorporated by reference as
if fully set forth herein. In consideration of the execution of said Lease,
Owner and Tenant mutually agree as follows:

     Landlord agrees to complete standard improvements to the premises per
     mutually agreeable space plan and shall contribute up to $5.00 PSF to the
     cost of completion thereof which cost includes engineering, construction
     coordination and all other associated costs of construction. Any additional
     improvements exceeding this allowance shall be paid for by Tenant prior to
     occupancy.

     Any unused Tenant finish shall be given to Tenant to be designated a
     "moving allowance". Tenant agrees that the final space plan will include
     new carpet, paint and other improvements substantially similar to those on
     the attached space plan dated February 16, 1999.

   ACCEPTED AND APPROVED THIS 1ST DAY OF MARCH, 1999.

   OWNER:                               TENANT:

   SKY HARBOR ASSOCIATES                CET ENVIRONMENTAL SERVICES, INC.
   a Michigan Limited Partnership       a California corporation


   By:  Pomeroy Investment              By:  /s/ STEPHEN H. DAVIS
        Corporation, General Partner         --------------------
                                             Stephen H. Davis

                                        Its: President

   By:  /s/ HOWARD LESHMAN
        ------------------
        Howard Leshman

   Its: Vice President



                                       1
<PAGE>   39

                                    EXHIBIT D


                       LEASE COMMENCEMENT DATE MEMORANDUM



LANDLORD:      Sky Harbor Associates Limited Partnership

TENANT:        CET Environmental Services, Inc.

LEASE DATE:    March 1, 1999

PREMISES:      7032 South Revere Parkway
               Englewood, Colorado 80112

               Square Feet of Premises             12,027
               Square Feet of Project             108,021


Pursuant to the above referenced Lease, Landlord and Tenant agree and certify
the Lease commencement date is May 27, 1999, and the expiration date is
May 31, 2004.


Rent shall commence under the following rates:

Base Rent:                $ (per Addendum No. 1 of the Lease Agreement)
Operating Expenses:       $ (per Addendum No. 1 of the Lease Agreement)


Commencement Date for Base Rent:                  May 27, 1999
                                                  ------------

Commencement Date for Additional Rent:            May 27, 1999
                                                  ------------

LANDLORD:                     TENANT:

Sky Harbor Associates         CET Environmental Services,
                              Inc., a California corporation
By:  Pomeroy Investment
     Corporation              By:  /s/ STEPHEN H. DAVIS
                                 ----------------------
                                   Stephen H. Davis

By:  /s/ HOWARD LESHMAN       Date: May 28, 1999
   --------------------            -------------
     Howard Leshman
     Vice President

Date: 6/15/99
     ------------------